Payments for Carbon Sequestration in Africa: Status and Challenges to Scaling up

Abstract

"Kyoto Protocol's Clean Development Mechanism allows industrialized countries to set up carbon offset projects in developing countries. Similarly, environmental markets are now trading in carbon credits worth several million dollars, representing financial incentives for forest managers and other land owners in developing countries to conserve forests for their carbon sequestration functions. Such carbon investments are particularly relevant for Africa, given its extreme poverty and ecological vulnerability due to large-scale degradation of natural resource base in the region.

"This paper presents an overview of the carbon sequestration sector in Africa and its potential for growth. It is based on field research with local communities in Mozambique and Kenya where new carbon projects are being taken up, and in all reviews 19 carbon sequestration projects in 16 countries. The present carbon market in Africa constitutes less than 10% of the international carbon trading. Most projects in Africa are non-Kyoto compliant and represent voluntary emissions reductions. However, this situation is now changing with seven new projects being funded by the World Bank's BioCarbon Fund.

"Details of carbon credits were available in 13 projects, which are expected to sequester about 35.23 million tons of CO2. There is evidence from the field that some of these projects have improved local incomes and contributed to sustainable development in the area. Household survey in Mozambique revealed that carbon payments represented a significant proportion of the annual incomes for many poor families. Similarly, forestry activities have improved the natural resource base in Uganda. However, there are also concerns that conversion of grasslands into tree plantations can be detrimental for the local ecology unless these projects are located carefully. Tenure insecurity and ambiguity in property rights in many African countries are major impediments against new carbon projects. In order to yield sustainable development benefits for rural communities, it is imperative to work with small landholders. This is associated with high transaction costs. Such costs can be overcome by building strong community institutions, as witnessed in the case of TIST, Tanzania. The CDM Executive Board is also simplifying guidelines to reduce transaction costs for small projects. Finally, African governments would need to build capacity at national level in order to attract more projects. This requires improving general governance as well as organizing Designated National Authorities that can identify relevant carbon projects."