Reconciling timber provision with carbon sequestration opportunities in the tropical forests of Central America
Highlights
► The main incentive for conservation is influenced by the carbon price path. ► The discount rates strongly influence the Present Value (PV) and the Net Present Value (NPV) for both carbon and timber. ► The analysis does not reflect the multiple revenue sources available from forests.► The protection and sustainable management of forests need to be considered as positive practices to avoid deforestation.
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+.
Section snippets
Location
Central America consisting of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, collectively contains 22,411 hectares of tropical forest, approximately 43.9% of the total land area. Overall, Central America lost 19% of its forest between 1990 and 2005; in 1999. The rate of loss was estimated at about 2% annually in recent decades, among the highest of any region in the world (FAO, 1999). However, consistent with global trends, the deforestation rates are slowing, total
Aims and objectives
The main aim is to compare the commercial value of three native timber species with carbon benefits of natural (primary) forest systems for the Central American region. 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.
The study analyses the impact of deforestation in Central America by assessing carbon and timber
Discount rates
The notion of discounting originates from the study of finance and more specifically the concept of the time value of money. Discount rates are the rate, per year, at which future values are diminished to make them comparable to values in the present (Deardorff's, 2010). The discount rate aims to make the costs and benefits of future activities comparable with current ones. The rates of return vary across regions but are held constant over time. In developing countries the discount rate could
Results and discussion
This section presents the findings and discusses some of the policy implications of the results.
The main findings can be summarized by the following points:
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The main incentive for conserving tropical forests is strongly influenced by the carbon price path.
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From Table 3 we can see that the total value of carbon stock for Central America forests range from $399–$606 at carbon price of $3; $997–$1515 at a price path of $7.5 and $2659–$4041 for $20 in the year 2005, per hectare from the sale of
Conclusions
The protection and sustainable management of forests need to be considered as positive practices to avoid deforestation. The response of governments, forestry officials, private institutes, and rural communities are likely to be influenced by the price path of carbon over time and the value of forests is highly contingent on which user perspective is applied. The REDD+ concepts are works in progress and there is a consistent shifting of key concerns and positions among countries but for many
Acknowledgement
I would like to thank the anonymous reviewers for their invaluable comments. The study has been developed in the course of the CLIMBE project (Climate Change and Biodiversity Loss: The Effects 0n Ecosystem Services), financed under the 2009 grant program on Biodiversity Conservation of the BBVA Foundation.
Kaysara Khatun is a researcher at the Basque Centre for Climate Change in Bilbao. Her research focuses on the interdisciplinary areas of climate change policy, socioeconomics of forestry and natural resource management.
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Kaysara Khatun is a researcher at the Basque Centre for Climate Change in Bilbao. Her research focuses on the interdisciplinary areas of climate change policy, socioeconomics of forestry and natural resource management.