Potential Benefits from Carbon Potential Benefits from Carbon Trading to Smallholder FarmsTrading to Smallholder Farms- comparison of Ethiopian and Finnish average forest farms- comparison of Ethiopian and Finnish average forest farms

Veli PohjonenVeli PohjonenTana-Beles WME projectTana-Beles WME project

Zenbaba Union / Agricord workshop in Zenbaba Union / Agricord workshop in Support to Forest Producers’ Support to Forest Producers’

OrganizationOrganizationIn AmharaIn Amhara

Bahir Dar 19 January 2012Bahir Dar 19 January 2012

COCO22 in our air in our air

Despite climate conventions in Kyoto, Despite climate conventions in Kyoto, Copenhagen and Durban (South Africa):Copenhagen and Durban (South Africa):

COCO22 concentration of the air is rising concentration of the air is rising

11 per cent in Kyoto period 1990 – 201211 per cent in Kyoto period 1990 – 2012

No effect from CONo effect from CO22 emission reductions emission reductions

Carbon dioxide in accelerating increaseCarbon dioxide in accelerating increase

Two ways to combatTwo ways to combat

Through the Through the sourcessources: reduce CO: reduce CO22 emissions. Technological way.emissions. Technological way.

Through the Through the sinkssinks: increase Carbon : increase Carbon

Offsets to trees and soils. Ecological Offsets to trees and soils. Ecological way.way.

Carbon Offsets via treesCarbon Offsets via trees

Conserve and manage the existing Conserve and manage the existing natural forestsnatural forests

Establish (large) block plantationsEstablish (large) block plantations

Agroforests , forest farmsAgroforests , forest farms

Carbon Offsets in agroforests and Carbon Offsets in agroforests and forests farms forests farms

Plant treesPlant trees Count the trees in year 1Count the trees in year 1 Define carbon stock in year 1 (= A, tn Define carbon stock in year 1 (= A, tn

C/farm)C/farm) Recount the trees in year 2Recount the trees in year 2 Define carbon stock in year 2 (= B, tn Define carbon stock in year 2 (= B, tn

C/farm)C/farm) Carbon Offset = B – A (tn C/farm/yr)Carbon Offset = B – A (tn C/farm/yr)

Average Amhara smallholder farm: Average Amhara smallholder farm: assume 1500 agroforestry trees (stems); how much carbon is assume 1500 agroforestry trees (stems); how much carbon is

Offsetted in a year, how many Birr is it worth of?Offsetted in a year, how many Birr is it worth of?

Tana-Beles farms (8) Carbon OffsetTana-Beles farms (8) Carbon Offset

Year 2010: 2077 trees (stems), Year 2010: 2077 trees (stems), Carbon stock 4.005 tn/farmCarbon stock 4.005 tn/farm

Year 2009 : 1055 trees, Carbon stock Year 2009 : 1055 trees, Carbon stock 3.333 tn/farm3.333 tn/farm

Carbon Offset B–A=0.672 tn C/yr/farmCarbon 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 principleCarbon trading pricing principle

Daily price of Carbon dioxide is found in Daily price of Carbon dioxide is found in http://www.pointcarbon.comhttp://www.pointcarbon.com

Price on 18.1.2012 = 6.85 Euro / tn COPrice on 18.1.2012 = 6.85 Euro / tn CO22

Price of C = 25.12 Euro / tn C Price of C = 25.12 Euro / tn C ((factor factor 44/12)44/12)

Price of C = 556 Birr / tn C Price of C = 556 Birr / tn C (exchange rate (exchange rate 22.14)22.14)

Value of Carbon changes daily at international Value of Carbon changes daily at international marketmarket

Tana-Beles average farms (8): Tana-Beles average farms (8): Birr value of Offsetted Carbon Birr value of Offsetted Carbon

Carbon Offset in one year B-A = Carbon Offset in one year B-A = 0.672 tn C/farm/yr0.672 tn C/farm/yr

Price of Carbon 556 Birr/tn CPrice of Carbon 556 Birr/tn C

Value of Offsetted Carbon: 373 Value of Offsetted Carbon: 373 Birr/yr/farm Birr/yr/farm

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

How about average forest farm in Finland? How about average forest farm in Finland? Would Carbon Trading give added value?Would Carbon Trading give added value?

Average size of Finnish forest farm: Average size of Finnish forest farm: 31 ha31 ha

The per hectare tree stock has The per hectare tree stock has increased in Kyoto period from 83 to increased in Kyoto period from 83 to 100 m3/ha (national averages)100 m3/ha (national averages)

For 22 years the average Finnish For 22 years the average Finnish forest farm has Offsetted Carbonforest farm has Offsetted Carbon

How many Euros per year?How many Euros per year?

Ten per cent added valueTen per cent added value The Carbon Offset 1990-2012 to average The Carbon Offset 1990-2012 to average

Finnish forest ha: 0.383 tn C/ha/yrFinnish forest ha: 0.383 tn C/ha/yr Carbon price 25.12 Euro/tn CCarbon price 25.12 Euro/tn C Carbon Trading value: 9.63 Euro/ha/yr Carbon Trading value: 9.63 Euro/ha/yr

(or 299 Euros/farm/yr)(or 299 Euros/farm/yr) Based on commercial tree growth and Based on commercial tree growth and

sales the average annual forestry sales the average annual forestry income is about 100 Euros/haincome is about 100 Euros/ha

Carbon trading would give 10 per cent Carbon trading would give 10 per cent added value.added value.

Forest Producers Organization Forest Producers Organization to take over the Carbon tradingto take over the Carbon trading

Smallholder farm is the basic unit both in Smallholder farm is the basic unit both in Ethiopia and FinlandEthiopia and Finland

Smallholder farmers get added value to Smallholder farmers get added value to their annual sales (up to 20 per cent in their annual sales (up to 20 per cent in Ethiopia, 10 per cent in Finland)Ethiopia, 10 per cent in Finland)

FPO would be suitable basic unit for FPO would be suitable basic unit for Carbon tradingCarbon trading

FPO would get share of Carbon trading, to FPO would get share of Carbon trading, to finance its administration & management finance its administration & management

How to organize Carbon trade?How to organize Carbon trade?

Smallholder farmerSmallholder farmers group into s group into Forest Forest Producers OrganizationProducers Organization (FPO) (FPO)

FPO buys once a year (or once in 3 years, or FPO buys once a year (or once in 3 years, or once in 5 years) the Carbon Offsets from once in 5 years) the Carbon Offsets from member farmersmember farmers

FPO sells the Carbon Offsets to International FPO sells the Carbon Offsets to International Carbon Trade marketsCarbon Trade markets

Carbon Offsets become a new export Carbon Offsets become a new export commodity (like atana – poles in Amhara)commodity (like atana – poles in Amhara)

This possibility and potential should be This possibility and potential should be presented in the next Climate conference presented in the next Climate conference (December 2012)(December 2012)

Carbon Tower gets greenerCarbon Tower gets greener

Thank youThank you

veli.pohjonen@gmail.com

http://veli.pohjonen.org