Reconciling timber provision with carbon sequestration opportunities in the tropical forests of Central America

Abstract

The Millennium Ecosystem Assessment (MEA, 2005) has classified a number of ecosystems good and services (EGS) provided by tropical forests, namely cultural, provisioning, regulatory and support services. The primary focus of this paper is to carry out an economic assessment by comparing the financial costs and returns of selected EGS, namely carbon and timber in the tropical forests of Central America. Timber is unusual from the other EGS provided by forests in that it competes with the other services, i.e. biodiversity, recreation and water services. Carbon storage is the non-timber value most often included in forest accounts and can be equated directly with timber available in terms of biomass content.

The study provides a quantitative appraisal of the carbon and timber stocks and flows of tropical (primary) forests by evaluating them simultaneously using data from a number of sources. The provision of reliable and accurate estimates of the economic value of these services is crucial to plan adequate conservation policies that encourage the protection and sustainable management of tropical forests such as those under REDD+. Results indicate that the economic return for managing natural forests is influenced by timber and carbon prices as well as the discount rate applied. Timber on face value is the better land use option; however, there are many issues that need to be considered when valuing timber, especially regarding the management regimes. Revenues under REDD+ option would be higher if co-benefits, which include monies from the extraction of timber under Sustainable Forestry Management (SFM) are considered.

Introduction

The forestry sector is unique in that it not only contributes significantly to global carbon dioxide (CO₂) emissions through deforestation, pests and fire, but it also provides opportunities to lower the levels of CO₂ by reducing the amounts from the atmosphere through a process referred to as the carbon cycle. The carbon cycle is driven by respiration and photosynthesis, where CO₂ is stored as carbon¹ in biomass in tree trunks, branches, foliage, roots, providing the long-term storage in vegetation, soils, and geological formations (Khatun et al., 2010). The carbon reservoir of the forest biosphere is gigantic, around an estimated 1146 gigatonnes (Gt) of carbon (GtC) are stored within the 4.17 billion hectares of tropical, temperate and boreal forest area, a third of which is stored in forest vegetation and the rest in forest soils (Watson et al., 2000). The most recent forest resource assessment (FAO, 2010) estimates that the world's forests store 289 GtC in their biomass alone. Fig. 1 illustrates the global spatial distribution of terrestrial carbon sequestration,² where the rates vary by tree species, soil type, regional climate, topography and management practices, which are substantially higher in the tropics than in other type of forest biome. However, it is important to recognize that carbon sequestered in trees and soils can be released back to the atmosphere, and that there is a finite amount of carbon that can ultimately be sequestered. Forests can act as sources or sinks at varying stages of the growth cycles as well as during different seasons of the year. On a global scale, forest and agriculture play an important role in the global carbon cycle, as they have high rates of ecosystem productivity, and therefore of carbon sequestration, and thus have the capacity of temporarily storing large amounts of carbon per unit land area (Houghton, 2003).

Although burning fossil fuels remains the largest contributor to human-induced emissions, according to data from the United Nation's Food and Agriculture Organization (FAO, 2005), the destruction of the world's forests (mainly in the tropics) releases about two billion tonnes of carbon per year thus tropical deforestation accounts for around 25% of anthropogenic emissions of CO₂ and 12–18% of total greenhouse gases. Deforestation is mainly due to aquaculture (the farming of fish, crustaceans, molluscs etc.) in coastal areas, land use change (forest to agriculture and forest to cattle pastures) and timber extraction-the topic of interest in this paper. The latest figures by the FAO (2010) indicate that these numbers are decreasing in several countries but nonetheless continue at an alarmingly high rate in others. Globally, around 13 million hectares of forest were converted to other uses or lost through natural causes each year in the last decade compared to 16 million hectares per year in the 1990s. For the world as a whole, carbon stocks in forest biomass decreased by an estimated 0.5 Gt annually during the period 2005–2010, mainly because of a reduction in the global forest area (FAO, 2010). The loss of forest ecosystem services driven by deforestation is expected to be serious if the rate is maintained at the current high levels. Deforestation and therefore natural resource depletion have become major threats to the environment and economies of many developing countries as well as globally due to the large amounts of CO₂ that are being emitted due to forest clearing. This has been judged to be a huge cost to society; regionally in terms of local resources, impacts on the biodiversity and severe environmental problems of soil erosion, soil fertility loss, watershed deterioration, and the destruction of coastal fisheries habitats, all with adverse effects on the livelihoods the rural population (De Groot & Ruben, 1997).

In the past, the rationale for forest conservation was simply to sustain the forests’ productive role for the timber industry; it is now acknowledged that forests provide a range of services, timber production is just one. The Millennium Ecosystem Assessment (MEA, 2005) has classified a number of Ecosystem Goods and Services (EGS) provided by tropical forests, namely cultural, provisioning, regulatory and support services. Carbon falls under regulatory and timber under provisioning. Current global timber harvests are approximately 1.6 billion m³ of industrial roundwood per year (FAO, 2005). An assessment of timber market studies suggests that these figures could rise to 1.9–3.1 billion m³ by 2050, depending on timber demand growth and relative price changes (Solberg et al., 1996). A number of papers (Irland et al., 2001, Sohngen and Sedjo, 2000, Sohngen et al., 1999, Sohngen et al., 2001, Lindner et al., 2002, Sohngen, 2009, Sohngen et al., 2009) have projected timber production under climate change; these studies conclude that both timber stocks and the harvest intensities are predicted to increase. Their results suggest that the assumed climate change scenarios would generally be beneficial for the timber-products sector over a 120-year projection. The assumption being that increased forest growth leads to increased log supply and hence to reductions in log prices that, in turn, means that consumers generally benefit. The aforementioned studies have carried out their analysis with the producers and consumers of timber in mind and have not taken into account other benefits provided by forests. The conclusions contrast with estimates by Ravindranath et al. (2006) who predict that there will be large negative consequences from climate change, particularly in developing countries, where ecosystems are likely to shift and the natural forests areas are expected to decline due to the impacts of climate change.

The major strategies for preventing increased build-up of atmospheric CO₂ concentration through Land use, Land Use Change and Forestry (LULUCF) activities are to preserve existing forest carbon stocks through better management, reduce deforestation and to increase existing carbon stocks through planting trees. Analysis by Nordhaus (2009) indicates that if society follows an ‘optimal’ carbon abatement policy using afforestation, reforestation and deforestation (collectively known as ARD), forestry could accomplish roughly 30% of total abatement over the century. Around 42% of this would arise from avoided deforestation, with the rest roughly equally split between afforestation and forest management options. Many LULUCF activities can be carried out immediately, appear to present a relatively cost-effective emission reduction component of international climate policy, and may generate environmental co-benefits.

The role of forestry in the stabilization of Green House Gas (GHG) emissions was officially recognized at Thirteenth Conference of the Parties (COP13) in Bali to the United Nations Convention on Climate Change (UNFCCC) in December 2007 as a vital issue. The five elements of REDD+ were laid out in the Bali Action Plan (2007), with the core being reducing emissions from deforestation and forest degradation (REDD) ‘plus’ the three supplementary elements–conservation, sustainable management of forests and enhancement of forest carbon stocks (Parker et al., 2009). However the REDD text that emerged in the Copenhagen Accord at the Fifteenth Conference of the Parties (COP15) in December 2009 followed by the Cancún negotiations in 2010 included all five elements on an equal basis. Thus the term ‘REDD’ is inadequate to describe the issues under current discussion by negotiators. It has been replaced in all key texts and discussions by ‘REDD+’ (FAO & RECOFTC, 2010). These enhancement activities are not linked to emissions reductions; rather, it is a call for investment in tropical forests (Varghese, 2009) for the other services they provide. REDD+ has the potential to deliver a range of ‘co-benefits’, allowing for a system of practices for stewardship and use of forest land aimed at fulfilling relevant ecological, economic and social functions of the forest in a sustainable manner.

Achieving emission reduction whilst helping developing countries achieve sustainable development is among the central goals of the Kyoto protocol (2008–2012), and any climate change agreement post Kyoto is likely to retain this element. Policy responses such as REDD+ will need to reflect the multiplicity and the complex context in which forest practices occur and the extreme diversity of the stakeholders (forest dwellers, governments, farmers etc.) involved. REDD+ can enable community based forestry to be implemented directly and aid towards development and poverty alleviation goals in the forested regions of the world. Forestry projects are still the only means through which much of the world's poor communities can hope to access financial benefits from internationals tools such as REDD+.