a

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C

ARE CARBON CREDITS THE NEXT s

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b
INVESTMENT OPPORTUNITY? f
e
By Donal Yeang m
i
Deforestation and forest degradation munities, responding to rural livelihood needs, Even though the performance base payment e
account for up to 20% of the total annual an- conserving biodiversity, and supporting hy- scheme is the core concept of REDD payment, F
thropogenic greenhouse gas emissions (GHG) drological regimes (Poffenberger et al, 2009). Wertz-Kanounnikoff and Kongphan-apirak p
(Van der werf et al, 2009). As a result, current In addition, the project has been submitted to (2009) emphasized that governance improve- c
approaches to address climate change include m
strategies to reduce deforestation and forest n
degradation in developing countries (REDD). i
REDD initiative is an effort to create a finan- a
cial value for the carbon stored in forests, of- l
fering incentives for developing countries t
to reduce emissions from forested lands and a
invest in low-carbon paths to sustainable de- r
velopment. In addition, reducing emission de-
forestation and forest degradation is relatively e
cheap and cost effective for climate change U
mitigation (Stern, 2006). Even though REDD i
is still under discussion within the United a
Nations Framework Convention on Climate R
Change (UNFCCC), many REDD pilot proj- t
ects are being implemented across the tropics. e
In Cambodia, the Community Forestry Carbon the Voluntary Carbon Standard (VCS) and the ment and broader policy reform need to be ad- f
Offset Project in Oddar Meanchey province is Climate Community Biodiversity Alliance dressed. Poor forest governance is not a new c
being implemented to generate carbon cred- (CCBA) for validation. The carbon credits are issue for Cambodia since the forestry reform C
its for selling in the voluntary carbon market. expected to be sold at the end of this year. has been taking place for years. It is a long m
It is estimated that the project may generate In this REDD pilot project, more than term process that the government needs to take w
approximately US$31 million of net carbon 50% of net incomes from the project will ac- a leading role. c
revenues over 30 years (FA et al, 2009). The crue to the local communities. In addition, Due to the state ownership on the f
primary goal of this project is to successfully the Cambodia government has institutional- lands in the projects, carbon rights have been f
enhance storage and sequestration of carbon ized benefit sharing distribution through the nationalized in this REDD project. In this re- I
in the natural forests of northwest Cambodia Government Decision No.699 to ensure the spect, Angelsen (2008) warned that the nation- b
under emerging REDD initiative and to assess maximum benefits will flow to the communi- alization carbon rights may result in inequitable (
a climate-related payment mechanism for for- ties who are participating in the project. This sharing of benefits, state capture and corrup- p
est conservation. The secondary goals include meant that the carbon based revenues from the tion which prevent benefits to reach the local
supporting the implementation of the national REDD project are depended on the stakehold- communities. However, sometime the ques- a
community forestry program, securing long- ers’ involvement in reducing deforestation or tion of who own forest carbon credits become c
term tenure rights for forest-dependent com- in another word performance based payments. less important than how the local communities r

Vol: 32 Issue Date: October 2010 34

 are compensated for sequestering carbon. Ac-
cording to Transparency International (2009),
Cambodia was ranked 158 out of 180 and it
showed that the corruption level in the country
is still high. Therefore, an ongoing effort have
been made to fight corruption in Cambodia,
for instance the national assembly has recently
enact the Anti-Corruption Law. The new Law
may give legal support to prevent corruption
in benefit sharing scheme of the project but the
t enforcement of this law remains to be seen.
, Furthermore, the revenues from the REDD
k project will be channeled through the Techni-
- cal Working Group on Forestry and Environ-
ment (TWG F&E). The TWG F&E is a mecha-
nism for government-donor coordination that
is financially audited by external agencies. As
a result, the transparency of benefit sharing is
likely to be ensured in the project but it may be
too early to make this claim since the projects degradation (or REDD). The UN-REDD pro- tion.html
are still in the early stage and the flow of the gramme is a collaborative partnership between FA (Forestry Administration) et al. (2009).
revenues is not started yet. the United Nations Environment Program Project Design Document: Reduced Emis-
Butler (2006) estimates the potential (UNEP), the United Nations Development sions from Deforestation and Forest Degrada-
earnings from REDD for Cambodia at between Program (UNDP) and the Food and Agri- tion in Oddar Meanchey Province, Cambodia:
US$ 85 – US$875 million per year, depend- culture Organization of the United Nations A Community Forestry Initiative for Carbon
ing on the extent of forest protected for REDD (FAO). It is a multi-donor trust fund which and Biodiversity Conservation and Poverty
and market price of carbon credits, and that was established in July 2008 for donors to pool Reduction. (Submitted to the Climate, Com-
REDD can increase the country’s GDP by be- resources and provides funding for the REDD munity & Biodiversity Standard)
tween 1.7% - 18.5%. The large tracks of for- program. It aims to assist developing countries Poffenberger, M., De Gryze, S., and Dursch-
ests in Cambodia make it a suitable country to get ready to participate in the REDD mecha- inger, L. (2009). Designing Collaborative
- for REDD as well as opportunity for carbon nism through supporting capacity building of REDD projects: A case study from Oddar
w credit investment. The Royal Government of national government and promoting stakehold- Meanchey Province, Cambodia. Community
m Cambodia (RGC) strongly supports the REDD er’s involvement. Furthermore, the UN-REDD Forestry International and Terra Global Capi-
g mechanism and believes not only that REDD Programme works in close coordination with tal. Retrieved from: http://www.terraglobal-
e will help to reduce GHG emissions, but also the FCPF at both the international level and capital.com/press/ReddProjects.pdf
contribute to alleviating poverty, improving national level to support processes for REDD Stern, N. (2006). Stern Review: The econom-
e forest governance, and enhancing sustainable readiness and contributes to the development ics of climate change. Cambridge University
n forest management in the nation (FA, 2008). of national REDD strategies. Press, Cambridge, UK.
- Indeed, the country is already participating in References Van der werf et al, (2009). CO2 emissions from
- both the Forest Carbon Partnership Facility Angelsen, A. (ed.). (2008). Moving Ahead forest loss. Nature Geoscience 2, 737 - 738
e (FCPF) of the World Bank and the UN-REDD with REDD: Issues, Options and Implications. Wertz-Kanounnikoff, S. and Kongphan-apirak,
- programme. Center for International Forestry Research (CI- M. (2009). Emerging REDD+: a preliminary
l The FCPF came into action in 2008 FOR). Bogor, Indonesia. survey of demonstration and readiness activi-
- and it aims to build the capacity of developing Butler, R. (2006). Calculating the value of ties. Center for International Forestry Research
e countries in tropical and subtropical regions to avoided deforestation. Retrieved from: http:// (CIFOR), Bogor, Indonesia.
s reduce emissions from deforestation and forest news.mongabay.com/2006/1031-deforesta-

Vol: 32 Issue Date: October 2010 35