Background

Polluting emissions from the burning of fossil fuels are gradually warming the global atmosphere, leading to significant climate disruptions. Over 80% of the human produced CO2 emissions that have accumulated in the atmosphere over the past 150 years have come from the northern nations through industrialization and growth in consumption.

Per capita CO2 emissions for some selected countries in the world

Country Co2 emissions per person per year (ton)

United States 20.1

Netherlands 9.4

Romania 4.0

Armenia 1.0

India 1.2

Brazil 1.8

Nepal 0.2

Tanzania 0.1

Average per world inhabitant 3.6

Co2 sustainability level 2.0

(Source: Climate Plan, ICCO2007)

The Clean Development Mechanism (CDM) is an essential part of the Kyoto Protocol allowing industrialised countries with a greenhouse gas reduction commitment (called Annex 1 countries) to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. (Source: Wikipedia) Participants in the CDM would commit themselves to do three things (1) to diminish their use of fossil fuel energy, by changing to sustainable life styles (2) to switch to the use of sustainable forms of energy and (3) to pay financial compensation for emissions that still exceed 2 tons per person.

There are three major carbon markets in the world - the US based Chicago Climate Exchange (CCX), European Union Emission Trading System and New South Wales GHG Abatement Scheme (Australian). The Chicago Climate Exchange (CCX) was set up in 2003 to provide an opportunity to business houses and other large entities to voluntarily reduce their carbon emissions. Members can trade in carbon credits to fulfill their yearly emission reduction targets.

Payment for Environmental Services – what is it and its relevance

In this background, new mechanisms like Payment for Environmental Services (PES), based on ‘polluter pays and provider gets principle,’ increasingly being discussed in various countries as appropriate mechanisms for facilitating sustainability of environmental development are worth considering in our country as well.

Environmental services are those services provided by healthy ecosystems that are essential to sustain human societies and other living beings. Well managed ecosystems can provide environmental services such as enhanced water harvest, prevention of landslide and erosion, renewed soil fertility, reduced fossil fuel use, reduced deforestation and reduced green house gas emission, biodiversity conservation, carbon sequestration and storage. While water is a local service, biodiversity and carbon are global services. The basic principle behind PES is that "those who produce environmental services should be paid by those who pollute the environment". This is a new conservation paradigm, which is different from the traditional input intensive non-sustainable conservation tools. PES, through the payment, is trying to tip the balance in favour of the desired land use. Apart from payment for the services, the producers also get benefits in the form of better biomass, better productivity of their animals, better income etc. PES is definitely not a scheme to make poor people rich. Theory says that PES schemes can make both sellers and buyers of environmental services better off and help to better protect the environment.

Some misunderstand PES as privatization of environment. In principle, PES is not privatization of environment, but is a mechanism to improve the environment on a sustainable basis by providing incentive to those who produce environmental services. PES does not provide subsidy to polluters for not polluting or to not degrade but incentive to those who produce services or improve the environment, which will act as positive inducement for such action. PES is not a system that substitutes for failure of institutional frameworks but a tool to promote positive environmental outcomes.

Some existing PES schemes are found in developed countries and the majority of these are state run. For instance, EU charges 2.5% of fuel cost as environmental tax, which is used for environmental conservation activities. Some pilot schemes exist in the developing countries also. In Philippines the energy producers (private), as per the Act, have to contribute one third of the total value of their electricity sale to a special fund, which is used for agro forestry and afforestation activities. The private sector /industrial polluters have significant potential as payers /buyers of ‘environmental services’. The sellers /producers of environmental services are mainly the land holders but there are cases where the landless are also participating in PES schemes (e.g. Philippines) when user right is provided to them to develop and use public land owned by the state. The PES schemes running as pilot projects for the last four years in a few Latin American countries (Costa Rica, Colombia, Nicaragua) are reported to be a success.

The LEAD (Livestock, Livelihood, Environment Interaction) study conducted in the arid and semi-arid zones of India revealed that the common /public lands are in the process of continuous degradation. Large number of livestock and high intensity of grazing pressure are factors catalyzing the degradation process in the common /public lands in India. The environmental development programmes (including watershed development) are now facing the challenge of sustaining the development interventions. The proposed market based mechanisms might act as sustainable mechanisms for production and maintenance of environmental services in the common land. Poor communities depending on these lands can produce environmental services, receive payments from potential polluters like industries, big /rich companies etc. in the area. Government investment used for environmental development /afforestation activities, revenue from ecotourism, environmental taxes etc. are potential sources of payment. The poor communities, besides the payment for environmental services, would also get other production benefits like increased biomass for their livestock, improved animal productivity etc.

Forestry initiative of Seva Mandir and its potential under CDM

Seva Mandir works in partnership with village level institutions, which take responsibility for managing various activities implemented by the organization. Representatives of these institutions are regularly trained to improve their skill levels. Since late 1980s, the organization has taken up several forestry initiatives to increase local incomes by improving the natural resource base in the area. The central focus of this work is to reverse the ecological degradation of village common lands, which are often over-exploited and unable to fulfill local needs. Productivity is restored through tree plantations and soil and water conservation measures. Seva Mandir’s forestry interventions that can be considered as potential activities for earning carbon sequestration credits under CDM include, Pasture Land Development, Joint Forest Management and plantation on Private lands.

Annual carbon sequestration potential

Carbon sequestration potential is defined as the amount of carbon dioxide (CO₂) fixed by plants through their photosynthetic activity, although plants fix CO₂ both as above-ground biomass and below-ground soil carbon.

The Chicago Climate Exchange (CCX) rules currently allow for trading in only above-ground biomass contained in live plants, planted after 1990. Forestry projects are thus designated on the basis of their annual carbon sequestration potential:

Small projects sequester <2000 t CO₂ per annum;

Medium projects sequester between 2000 - 12,500 t CO₂ per annum; and

Large projects sequester >12,500 t CO₂ per annum.

Table 1: Current carbon sequestration and its market value from Seva Mandir‘s Forestry Projects