THE ROLE OF TRANSACTION COSTS IN LUCF PROJECTS. Oscar Cacho School of Business, Economics and Public Policy University of New England AUSTRALIA. Research funded by ACIAR. Outline. Background The CDM project cycle Carbon accounting-issues Implications for REDD
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School of Business, Economics and Public Policy
University of New England
Research funded by ACIAR
Clean Development Mechanism (CDM) allows Kyoto signatories to reduce greenhouse gas emissions in developing countries (Article 12).
The medium of exchange is the Certified Emission Reduction (CER)
CDM projects can operate in the energy sector (reduced emissions) or in the land-use change and forestry (LUCF) sector (sinks).
Afforestation and reforestation projects are eligible within the LUCF sector.
cost of participating in the CER market (CT).
opportunity cost of land-use change (SP).
host government (DNA)
approval by host country
operational entity (DOE)
CDM executive board
verification + certification
CDM executive board
Carbon sequestered by the project must be additional to “business as usual”
Carbon sequestration can be reversed through fire and deforestation
Emission reductions achieved within a project cause increased emissions outside the project boundary
An FCA system measures all changes, positive and negative, in all carbon stocks from all lands continuously…
lands are monitored permanently over contiguous commitment periods…
“ultimately the atmosphere does not differentiate (and neither should climate policy) between carbon dioxide molecules produced by fossil fuel combustion and such molecules produced through forest destruction”
Bonnie et al (2002), p. 1871
enforcement and insurance
search and negotiation
Generate & disseminate information
Teach landholders to measure C
Encourage community self-regulation
Promote secure land tenure
“It is unlikely that developing countries will be willing to take emission budgets that require FCA unless they gain experience in successfully curbing tropical deforestation while also providing for the needs of their citizens”
Bonnie et al (2002), p. 1872