Potential Benefits from Carbon Trading to Smallholder Farms - comparison of Ethiopian and Finnish average forest farms Veli Pohjonen Tana-Beles WME project Zenbaba Union / Agricord workshop in Support to Forest Producers’ Organization In Amhara Bahir Dar 19 January 2012 Bahir Dar 19 January 2012

CO 2 in our air Despite climate conventions in Kyoto, Copenhagen and Durban (South Africa): CO 2 concentration of the air is rising 11 per cent in Kyoto period 1990 – 2012 No effect from CO 2 emission reductions

Carbon dioxide in accelerating increase

Two ways to combat Through the sources: reduce CO 2 emissions. Technological way. Through the sources: reduce CO 2 emissions. Technological way. Through the sinks: increase Carbon Offsets to trees and soils. Ecological way. Through the sinks: increase Carbon Offsets to trees and soils. Ecological way.

Carbon Offsets via trees Conserve and manage the existing natural forests Conserve and manage the existing natural forests Establish (large) block plantations Establish (large) block plantations Agroforests, forest farms Agroforests, forest farms

Carbon Offsets in agroforests and forests farms Plant trees Plant trees Count the trees in year 1 Count the trees in year 1 Define carbon stock in year 1 (= A, tn C/farm) Define carbon stock in year 1 (= A, tn C/farm) Recount the trees in year 2 Recount the trees in year 2 Define carbon stock in year 2 (= B, tn C/farm) Define carbon stock in year 2 (= B, tn C/farm) Carbon Offset = B – A (tn C/farm/yr) Carbon Offset = B – A (tn C/farm/yr)

Average Amhara smallholder farm: assume 1500 agroforestry trees (stems); how much carbon is Offsetted in a year, how many Birr is it worth of?

Tana-Beles farms (8) Carbon Offset Year 2010: 2077 trees (stems), Carbon stock tn/farm Year 2010: 2077 trees (stems), Carbon stock tn/farm Year 2009 : 1055 trees, Carbon stock tn/farm Year 2009 : 1055 trees, Carbon stock tn/farm Carbon Offset B–A=0.672 tn C/yr/farm Carbon Offset B–A=0.672 tn C/yr/farm How much in Birr is B – A? How much in Birr is B – A?

Carbon trading pricing principle Daily price of Carbon dioxide is found in Daily price of Carbon dioxide is found in Price on = 6.85 Euro / tn CO 2 Price on = 6.85 Euro / tn CO 2 Price of C = Euro / tn C (factor 44/12) Price of C = Euro / tn C (factor 44/12) Price of C = 556 Birr / tn C (exchange rate 22.14) Price of C = 556 Birr / tn C (exchange rate 22.14) Value of Carbon changes daily at international market

Tana-Beles average farms (8): Birr value of Offsetted Carbon Carbon Offset in one year B-A = tn C/farm/yr Carbon Offset in one year B-A = tn C/farm/yr Price of Carbon 556 Birr/tn C Price of Carbon 556 Birr/tn C Value of Offsetted Carbon: 373 Birr/yr/farm Value of Offsetted Carbon: 373 Birr/yr/farm

How potential Carbon trading 373 Birr/yr/farm compares to smallholder farm annual sales?

How about average forest farm in Finland? Would Carbon Trading give added value? Average size of Finnish forest farm: 31 ha Average size of Finnish forest farm: 31 ha The per hectare tree stock has increased in Kyoto period from 83 to 100 m3/ha (national averages) The per hectare tree stock has increased in Kyoto period from 83 to 100 m3/ha (national averages) For 22 years the average Finnish forest farm has Offsetted Carbon For 22 years the average Finnish forest farm has Offsetted Carbon How many Euros per year? How many Euros per year?

Ten per cent added value The Carbon Offset to average Finnish forest ha: tn C/ha/yr The Carbon Offset to average Finnish forest ha: tn C/ha/yr Carbon price Euro/tn C Carbon price Euro/tn C Carbon Trading value: 9.63 Euro/ha/yr (or 299 Euros/farm/yr) Carbon Trading value: 9.63 Euro/ha/yr (or 299 Euros/farm/yr) Based on commercial tree growth and sales the average annual forestry income is about 100 Euros/ha Based on commercial tree growth and sales the average annual forestry income is about 100 Euros/ha Carbon trading would give 10 per cent added value. Carbon trading would give 10 per cent added value.

Forest Producers Organization to take over the Carbon trading Smallholder farm is the basic unit both in Ethiopia and Finland Smallholder farm is the basic unit both in Ethiopia and Finland Smallholder farmers get added value to their annual sales (up to 20 per cent in Ethiopia, 10 per cent in Finland) Smallholder farmers get added value to their annual sales (up to 20 per cent in Ethiopia, 10 per cent in Finland) FPO would be suitable basic unit for Carbon trading FPO would be suitable basic unit for Carbon trading FPO would get share of Carbon trading, to finance its administration & management FPO would get share of Carbon trading, to finance its administration & management

How to organize Carbon trade? Smallholder farmers group into Forest Producers Organization (FPO) Smallholder farmers group into Forest Producers Organization (FPO) FPO buys once a year (or once in 3 years, or once in 5 years) the Carbon Offsets from member farmers FPO buys once a year (or once in 3 years, or once in 5 years) the Carbon Offsets from member farmers FPO sells the Carbon Offsets to International Carbon Trade markets FPO sells the Carbon Offsets to International Carbon Trade markets  Carbon Offsets become a new export commodity (like atana – poles in Amhara)  This possibility and potential should be presented in the next Climate conference (December 2012)

Carbon Tower gets greener

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