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22383 Public Disclosure Authorized ARGENTINA: Carbon and Forests Prepared by Roger A. Sedjo and Eduardo Ley Resourcesfor the Future Public Disclosure Authorized 1616 P Street NW Washington. D. C. December 4, 1995 Public Disclosure Authorized Report Prepared for the Global Environmental Facility of the World Bank Public Disclosure Authorized FILE COPY ARGENTINA: Carbon and Forests' Roger A. Sedjo and Eduardo Ley Resources for the Future December 4, 1995 EXECUTIVE SUMMARY AND CONCLUSIONS 1. GLO13AL W ARM ING AND CARBO N ......................................................................................... 1 1 THE CuRRENT SrruATIoN.................................................................................................................. 5 1.2 TYPESOF H umAN REspoNsEs............................................................................................................ 6 13 TooLs To MTGATE THE BUILD-UP OF ATMOSPHERIc CARBON......................................................... 6 2. FOREST MANAGEMENT: MITIGATION ACTIVITIES AND SINK ENHANCEMENT.... 8 2.1 How M ucH FOREST?......................................................................................................................... 9 2.2 FoREST M EGATION POUCIES............................................................................................................ 9 3. ARGENTINA: CARBON AND FORESTS ...................................................................... 6.........16 3.1 FoREsTs Iq ARGENTNA .................................................................................................................... 16 3.1.1 Native Forests............................................................................................................................ 17 3.1.2 PlantationForests ...................................................................................................................... 1 3.1.3 Biodiversity................................................................................................................................ 19 3.1.4 The Role of PlantationsWorldwide and in Argentina ................................................................ 19 3.1.5 M arket Conditions.....................................................................................................................21 3.2 Sum mSDIES FOR TREE PLANTING jN ARGENTnA ................................................................................. 21 3.2 I The RationaleforTree PlantingSubsidies in Argentina.............................................................21 3.2.2 The Nature of Tree Planting Subsidies ....................................................................................... 22 3.23 Biddingfor Subsidies ................................................................................................................. 24 4. POT.CY ALTERNATIVES FROM THE THE BASE LINE STUATION.................................28 4.1 OPpoRTu rnEs To SEQUESTER CARBON iN FoREss ......................................................................... 29 4.2 PR T'ECTION OF NATIVE FORESS......................................................................................................30 4.3 N ATURAL FOREST M ANAG ENT.....................................................................................................31 4.4 PLANTATIONS .................................................................................................................................. 34 4.4.1 Carbon and Cost Implications of An Even-Aged Regulated Forest..............................................35 4.4.2 Cost Implications of a Plantationin M esopotamia ..................................................................... 37 4.4.3 Silv o-pastoral............................................................................................................................. 39 4.4.4 Mixed Species Plantations.......................................................................................................... 39 4.4.5 Carbon and Cost Implications of a IndustrialPlantation in PatagoniaOver a 5-year Period......41 4.4.6 M ixed Species Plantationsin Patagonia.....................................................................................4 4.5 SUMMARY OF CARBON SEQUESTERED AND COSTS.............................................................................46 5. OTHER CON SIDERATION S ........................................................................................................ 48 5.1 O HER SCENARIOS........................................................................................................................... 48 5.2 THE ROLE oF DiscouNTI4 .............................................................................................................. 48 6. SOME RECOMMENDATIONS FOR A GEF POLICY .............................................................. 49 7. BIBLIO GRAPH IC REFEREN CES ................................................................................................. 51 Report Prepared for the Global Environmental Facility of the World Bank. i 8. APPEN DICES .................................................................................................................................. 53 LIST OF TABLES Table 1. Main categories of CO reduction options and related marginal abatement cost (MAC) in Denmark. Table 2. Fast-Growing Industrial Plantations (circa the late 1980s) Table 3. Cost1 Estimates of Sequestering Carbon Through Forest Projects: Selected Cases ($/ton) Table 4. Establishment costs of cost-efficient practices Table 5. Estimates of Marginal Cost1 of Carbon Sequestered by Tree Planting: Some Comparative Results for the U.S. Table 6. Argentina: Native Forests Table 7. Plantation Forests: By Region and Type Table 8. Lands Suitable for Plantation Forests Table 9. Maximum Payments for Plantation Establishment ($1ha) Table 10. Tree Plantation Establishment by Region, 1993-1/11/94 Table 11. Implications for GEF Funding Table 12. Summary of Carbon Sequestered and Costs ii FIGURES Figure 1 Sedjo /Solomon map Figure 2. Protection of One Hectare of Native Forest Figure 3. Time Profile of Carbon in One Hectare of Managed Native Forest Figure 4. Time Profile of Carbon From Wood Product of One Hectare of Managed Native Forest Figure 5. Time Profile of Total Carbon Associate with One Hectare of Managed Native Forest Figure 6a Mesopotamia: Forest Carbon, Wood and Silvo-Pastoral Plantations Figure 6b. Mesopotamia: Wood Products Carbon, Wood and Silvo-pastoral Plantations Figure 7. Mesopotamia: Total Carbon in Forest Stock and Wood Products: Wood Plantations and Silvo-pastoral Figure 8. Carbon from Mixed Species Plantations (indefinite growth, no harvests) Figure 9a. Patagonia: Pine Plantations and Forest Carbon Figure 9b. Patagonia: Wood Products Carbon Figure 10. Patagonia: Total Carbon Figure 11. Mixed Species Plantations in Patagonia (no harvest) APPENDICES Appendix A Literature Review Appendix B Technical Appendix Appendix C Carbon Sequestration and Tree Plantations: A Case Study in Argentina iii Executive Summary and Conclusions This Report examines the possibilities of using forests as a low cost means of carbon sequestration in Argentina. The first section presents a broad overview of the current situation involving global warming and carbon noting a variety of human responses and a number of tools that might be used to mitigate the build- up of green-house-gases (GHG), the major one of which is carbon. The second section examines the potential of forests to play a significant role in carbon mitigation. It provides estimates of how much carbon would be required to seouester the global annual increase of atmospheric carbon. Although forests are, in themselves, unlikely to sequester enough carbon to offset the entire increases, they do have the potential to be a significant contributor in a program of global mitigation. In addition, forests offer what appear to be among the more low cost of the carbon sequestration techniques. Costs of carbon sequestration using forests commonly run in the range of $2 to $10 per ton. Additionally, most forestry applications involve using a known technology to undertaken common tasks, e.g., tree-planting. Also, forests generate other useful services, such as wild-life habitat, water protection and recreation. Finally, since forests may be planted or managed for market values in the form of industrial wood, many situations offer the possibility of having some of the costs of carbon sequestration borne voluntarily by the private sector. The third section begins by examining the specifics of the forest and carbon situation in Argentina. An overview is provided of native forests, plantation forests, biodiversity, the role of plantations both worldwide and in Argentina and market conditions. Although industrial forest plantations are becoming important sources of the world's industrial wood supply, Argentina's role in world markets is minimal, even though the majority of domestic production is provided from plantations. By contrast, some of Argentina's neighbors, especially Chile and Brazil, are important world-wide suppliers of industrial wood. A major disadvantage to plantation forests in Argentina is the location of most of the plantation forests, which are typically a considerable distance from the ports. The report also discusses the recent policy reforms in Argentina and their likely long-term effects. this report then turns to a investigation of the nature of subsidies for tree planting in Argentina.