Tuesday, June 09, 2009

April Salome

April Salome is a forest of about 521,000 hectares in East Sepik Province, of Papua New Guinea (PNG). The roughly 20,000 people who live there would like to find some way of living sustainably with their forest, without cutting it down.

Kevin Conrad, PNG's climate ambassador, says that a Dutch project in the area was abandoned quite suddenly, leaving the locals high and dry. Schools had no teachers, and clinics had no nurses. And so now the area is a pilot project for REDD. This means that it hopes to meet the eventual qualifications for a project that avoids carbon emissions, and can thus generate credits that can be traded on the anticipated global mandatory market.

In short, the rich world will pay April Salome to keep its forest intact in order to reduce carbon emissions and the landowners will be a little less poor than they are. (For more background on the REDD project read The Economist's green.view column this week)

There are plenty of questions about whether April Salome will qualify for REDD. But lets not get ahead of ourselves, that isn't a question anyone can really answer right now because everyone is still arguing how REDD will work. What is clear is that there is an active voluntary market for carbon credits, and South Pole Carbon, based in Zurich, are working to qualify the forest against the Voluntary Carbon Standard (or VCS). Borrowing words from the VCS standard website, it is intended to provide a... robust, new global standard for voluntary offset projects. It ensures that carbon offsets that businesses and consumers buy can be trusted and have real environmental benefits. So April Salome has two possible ways to sell credits, through the voluntary market which already exists and through the mandatory REDD market if this materialises.

If I as a customer, wanted to buy an option right now on the delivery of future certified credits from April Salome forest right now would that make me criminal or clever? It might be unwisely hasty but it would be legitimate. It might also be a good deal because the options I buy now could be worth a great deal more down the line. The only point at which it becomes a problem is if I pretend my stake is something that it isn't, i.e. I say I own REDD credits. Another possible issue is if I buy into a project like this, and also at the same time am financially involved in the qualification of the credits. The problem here is that there is a conflict of interests. My only incentive would be to qualify the credits and thus increase the value of my options. (N.B. I am not suggesting that either of these things are happening)

The other thing to know about April Salome is the locals want their forest developed this way. This isn't being imposed. South Pole Carbon say that four public stakeholder consultations took place between 4 and 15 May 2009 in Sepik Center of Hope, Wewak, and three villages within the April Salome Area with valuable assistance from the World Wildlife Fund’s (WWF) Sepik River Programme. The entities inviting for this event were The National Office for Climate Change and Environmental Sustainability, the landowner group and Earthsky Ltd.

A Charitable Foundation has been established known as the April Salome Sustainable Forest Management Project Foundation, (ASSFMPF) managed with DNA involvement to distribute the benefits from utilising the UNFCCC (REDD) programme with April Salome Forestry Assets. For more information check out the new website.

That website explains: "South Pole, in cooperation with the PNG DNA [Designated National Authority] office, the landowner groups and the above NGOs, is currently working to address any question or issue raised during that consultation. The stakeholder consultation report, to be published in June, will be available to anyone interested. The project has been endorsed in writing by 163 landowner groups living in the April Salome Forest Management Area. A Benefit Sharing Agreement has been signed where the landowner groups will directly receive the largest share of the net proceeds from this project, while 2% of the proceeds will be donated to the UNFCCC Adaptation Fund and aditional funding will be made available from the project owners to the PNG government in form of project funding (with no cash being disbursed to the government). South Pole is not involved in this revenue sharing agreement and is not responsible for its distribution.

South Pole is contributing to the development of April Salome Sustainable Forest Management project in hope that this and other projects will contribute to further development of the REDD carbon market in order to significantly and reliably contribute to climate change mitigation while generating sustainable development benefits in some of the poorest countries on earth."

Hostage to fortune

Jun 8th 2009
Trading carbon credits based on avoided deforestation

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