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

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of CO 2 e reduction in the EU ETS or CDM). The first two options have the advantage of limiting
the potential negative impacts of REDD payments on other carbon markets, but will greatly
reduce the total amount of potential payments. The last option could maintain a large market for
REDD emissions reductions, albeit at an arbitrarily set discount, and would reduce but not
eliminate the risk to other carbon markets. A sequence of the first and third options could also
be used, with the first (segmented market) option used to allow price discovery in the REDD
market, which could be used to establish a market-based discount factor to apply in the third
option. Alternatively, the price for REDD payments in voluntary markets, where trades based on
REDD projects are allowed, could be used to establish a discount factor.
Challenges to payments for AFOLU activities
Incorporating payments for AFOLU activities such as conservation tillage, agroforestry, and
rangeland management into a post-Kyoto regime and successfully reaching small scale farmers
in SSA would also face many challenges and constraints. The transactions costs of establishing
projects, monitoring and verifying emissions reductions could be prohibitive relative to the
potential payments that farmers might receive. For example, consider the range of emissions
reductions credit offered by the CCX for conservation tillage (0.5 to 1.5 t CO 2 e per hectare) and
a carbon price of $5 to $10 per t CO 2 e. With this range of credits and price of carbon, farmers
could earn between $2.50 and $15 per hectare for adopting conservation tillage. This may well
be worth it in terms of the farmers’ opportunity costs, since in many cases conservation tillage is
more profitable than conventional tillage. Nevertheless, the transaction costs of participating in a
payment scheme could easily swamp the value of the payment, especially for small farmers with
only a few hectares of land.
For small farmers in Africa (and elsewhere) to benefit substantially from AFOLU
payments, the transaction costs per farmer must be very small. This means that expensive
measurements for verification, such as soil and biomass samples to measure carbon sequestration
levels on individual farms, are not likely to be feasible. A less costly approach, if measurement
is desired, would be to have community or farmer organizations participate in a payment scheme,
and use a sampling approach within these organizations to measure and verify carbon
sequestration. Even less costly would be to establish norms for soil carbon sequestration
achieved by particular types of land management practices, such as used by the CCX and the
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