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Walia Special Edition on the Bale Mountains (2011) - Zoologische ...

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or meet <strong>the</strong> minimum costs necessary for project implementati<strong>on</strong>.<br />

Annual Income (USD$)<br />

2,000,000<br />

1,800,000<br />

1,600,000<br />

1,400,000<br />

1,200,000<br />

1,000,000<br />

800,000<br />

600,000<br />

400,000<br />

200,000<br />

0<br />

$4 $6 $20 COST<br />

Breakeven Point $6<br />

Breakeven Point $4<br />

75 151 226 301 376<br />

Area c<strong>on</strong>served per year (ha)<br />

Figure 1. Figure showing <strong>the</strong> total area of forest need to be c<strong>on</strong>served per annum<br />

depending <strong>on</strong> price received per t<strong>on</strong> of carb<strong>on</strong>, in order for <strong>the</strong> park to break even financially<br />

(including 10% discount rate and 30% buffer costs)<br />

A financial forecast over <strong>the</strong> project lifespan was also carried out. Here we assumed a 20 year<br />

project lifespan. Typically if <strong>the</strong> forecast shows negative equity or a decrease in profits over <strong>the</strong> years<br />

<strong>the</strong>n it is usually deemed an unfeasible business opportunity. However in <strong>the</strong> case of carb<strong>on</strong> REDD<br />

projects, payment is usually periodically and so income is not typically received <strong>on</strong> an annual basis.<br />

Thus, in this instance it made more sense to examine <strong>the</strong> cumulative total. Keeping in mind that<br />

<strong>the</strong> main aim of this REDD project is to meet <strong>the</strong> costs of forest c<strong>on</strong>servati<strong>on</strong> while also providing<br />

income from revenue sharing, our forecast model showed that to achieve <strong>the</strong>se objectives over<br />

<strong>the</strong> 20 year project life span, a minimum of 25%, 15% and less than 5% of avoided deforestati<strong>on</strong><br />

would be necessary per year at $4, $6 and $20 per t<strong>on</strong> of carb<strong>on</strong> dioxide respectively. Modelling<br />

<strong>the</strong> different scenarios shows that at 15% avoided deforestati<strong>on</strong> (226 ha per year) receiving $20 per<br />

tCO , would result in a cumulative profit (i.e. <strong>on</strong>ce costs have been met over project lifetime) for<br />

2<br />

<strong>the</strong> BMNP and <strong>the</strong> o<strong>the</strong>r stakeholders of over $6 milli<strong>on</strong> each (Table 1) or 25% AD at $6 per tCO2, resulting in ETB 2.2m profit per stakeholder Taking into account <strong>the</strong> funds for forest protecti<strong>on</strong><br />

and <strong>the</strong> profit to <strong>the</strong> park following revenue sharing, both <strong>the</strong>se scenarios (15%/$20 and 25%/$6)<br />

could actually meet <strong>the</strong> annual funding requirements of optimal and critical GMP implementati<strong>on</strong><br />

respectively, as costed in <strong>the</strong> BMNP Business Plan (Kinahan 2010).<br />

Market analysis and competitive advantage<br />

In 2008, <strong>the</strong> voluntary carb<strong>on</strong> market almost doubled from 2007 with $705 milli<strong>on</strong> worth of GHG<br />

<str<strong>on</strong>g>Walia</str<strong>on</strong>g>-<str<strong>on</strong>g>Special</str<strong>on</strong>g> <str<strong>on</strong>g>Editi<strong>on</strong></str<strong>on</strong>g> <strong>on</strong> <strong>the</strong> <strong>Bale</strong> <strong>Mountains</strong> 301

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