| European
Tropical Forest Research Network |
LEAKAGE IN CDM PROJECTS: ARE FOREST AND ENERGY PROJECTS EQUALLY TROUBLED?
By Arild Angelsen, Jens Aune, Stein Holden and Solveig Glomsrød
What are the properties of land-use change and forest projects versus energy projects in the context of the Clean Development Mechanism (CDM), and what are the leakages associated with such projects when the project boundaries are widened? We seek to answer these questions by simulating farm household adaptation to a carbon sequestration premium in Ethiopia and by then comparing the results with work done earlier on leakage in energy projects in China and elsewhere. The results challenge a widespread view that carbon leakage from energy projects in developing countries is moderate and lower than land-use and forestry projects.
Our model simulates a coordinated adjustment of farm production and consumption following a CDM-induced change in economic incentives. The carbon cycle and sequestration of carbon associated with different farm activities is explicitly modelled. Household energy use is included in the carbon cycle, along with different land uses, farming practices and consumption activities.
As a result, the efficiency of carbon sequestration and the resulting farm earnings in the hypothetical CDM project can be traced. The leakage effects will be discussed based on the gap between the on-farm response to the carbon premium and the resources available within the farm boundaries.
Possible off-farm effects are also reviewed. In the event of tree planting being stimulated and the associated products such as firewood or poles competing directly with products from natural forests, the leakage can even be negative. Generally, the leakage will depend both on the product and labour market characteristics and the effects in some stylised cases are discussed.
We compare the potential leakage in the land-use change project in relation to empirical studies of leakage in energy-related CDM projects in developing countries. Empirical evidence from China indicates substantial carbon leakages in energy projects. We discuss the relevance of these results for CDM projects in developing countries and their possible implications for an improved design of CDM projects in poor rural economies.
Further information:
Dr Arild Angelsen (arild.angelsen@ios.nlh.no)
and Stein Holden (stein.holden@ios.nlh.no),
Dept. of Economics and Social Sciences, Agricultural University of Norway
PO Box 5033, N-1432 Ås, Norway
Dr Jens Aune (jens.aune@noragric.nhl.no),
See address above.
Dr Solveig Glomsrød (sgl@ssb.no)
Statistics Norway
Kongens gt. 6, N-0033 Oslo, Norway