The Role of Sustainable Land Management for Climate ... - CAADP

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allowances and offsets are within the range of prices currently observed for CERs under the
CDM. It may be that transactions costs and uncertainties affecting the CDM market will
continue to keep prices for CERs low in the future and hence limit farmers’ incentives to
participate, although prices are likely to be higher with official U.S. participation in the carbon
market than without it (as long as offsets from other countries are allowed). Furthermore, U.S.
cap and trade legislation may restrict the prices allowable for emission offsets to no more than a
maximum amount (e.g., $20 per tCO 2 e). With limited increase in carbon market prices, and
given the very small number of projects related to SLM in SSA under the current CDM, even a
substantial expansion of the CDM market may have small impacts on such activities in SSA,
unless other changes to the CDM are enacted in the post-Kyoto treaty.
Beyond the impacts on the volume and prices of trades in the global carbon market, U.S.
leadership in climate change mitigation and adaptation activities could mean substantially greater
commitments of U.S. foreign assistance to support such activities in SSA and other developing
regions. This might prove to have larger impacts on support for SLM activities related to climate
change in SSA in the near to medium term than the global market impact of U.S. ratification of a
post-Kyoto treaty.
Reducing emissions from deforestation and forest degradation
The 2007 Bali Action Plan, which was adopted at 13 th session of the Conference of Parties
(COP) of the UNFCCC in Bali, Indonesia, established a process for developing the post-Kyoto
treaty and specifically proposed consideration of payments for reducing emissions from
deforestation and forest degradation (REDD). 11 The potential magnitude of such payments is
very large. According to one estimate, global REDD markets could be as large as $46 billion,
assuming a carbon price of $30 per tCO 2 and that annual deforestation rates are reduced by 50%
(Figure 4-1). With more conservative (and probably more realistic) assumptions about
reductions in deforestation rates and carbon prices the size of this market would be smaller, but
still could be very substantial. For example, with a carbon price of $10 per tCO 2 and assuming a
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$$ !Among other actions to mitigate GHG emissions, the Bali Action Plan urged consideration of “Policy approaches
and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in
developing countries; and the role of conservation, sustainable management of forests and enhancement of forest
carbon stocks in developing countries”. !
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