Community members on contested land, park boundary marker Photo: Connor J. Cavanagh

Suggested Citation: Cavanagh CJ, Freeman OE. 2017. Paying for carbon at Mount Elgon: two contrasting approaches at a transboundary park in East Africa. In: Namirembe S, Leimona B, van Noordwijk M, Minang P, eds. Co- investment in ecosystem services: global lessons from payment and incentive schemes. Nairobi: World Agroforestry Centre (ICRAF). Chapter 28 | 1 CHAPTER 28 Paying for carbon at Mount Elgon: two contrasting approaches at a transboundary park in East Africa

Connor J Cavanagh and Olivia E Freeman

Highlights • We compare and contrast delivery of community benefits under two approaches to PES. • UWA-FACE provided employment; MERECP negotiated CRMAs and revolving funds. • By 2004 more than 44% of UWA-FACE forest units were compromised by encroachment. • MERECP’s community revolving funds have been met with mixed success. • Both market and fund-based PES approaches require locally-relevant benefit sharing.

28.1 Introduction

Across East Africa and beyond, resource management authorities have begun to experiment with various payment for ecosystem service (PES) mechanisms for strengthening the governance of protected areas. Perhaps the most widespread of these are payment for carbon sequestration and avoided deforestation initiatives, in which finances are disbursed to forest users or managers via either trust funds or voluntary markets. Though often identified as a ‘triple win’ solution for biodiversity conservation, climate change mitigation, and socioeconomic development, such potential benefits of course will only be realized if these initiatives are sustainably designed, effectively governed, and attentive to local perceptions of social and environmental justice. In this chapter, we compare and contrast two such schemes, focusing on their benefit-sharing structures at protected areas on Mount Elgon: namely, the Uganda Wildlife Authority-Forest Absorbing Carbon Emissions (UWA-FACE) project and the transboundary Mount Elgon Regional Ecosystem Conservation Programme (MERECP). For each, we focus on the delivery mechanisms of benefits to local communities through the respective project/programme’s structure. Whereas the UWA-FACE project reportedly involved the sale of carbon offsets derived from forest plantations on Mount Elgon via contractual transfers and voluntary markets, MERECP involves fund-based payments for sustainable ecosystem management and avoided deforestation to the communities living adjacent to protected areas on the mountain. While Mount Elgon is located in both Uganda and Kenya, we primarily focus here on project activities in Uganda in the interest of analytical clarity and concision. In comparing and contrasting the underlying principles and provisional effects of these initiatives’ benefit- sharing schemes, we aim to extract a series of insights for the sustainable implementation of protected area-based PES schemes in East Africa. In doing so, we also aim to contribute to a refined theory of change for achieving desirable pro-poor and socio-environmentally just outcomes from conservation and development initiatives through the delivery of benefits to local communities.

Chapter 28 | 1 28.2 Background and Study Area

At approximately 4,321 meters above sea level, Mount Elgon is one of the largest inactive volcanoes in East Africa. The mountain straddles the border between Uganda and Kenya, and its forests serve as an important watershed for more than two million people in the surrounding region. In 2009, Mount Elgon was recognized as a UNESCO Man and Biosphere Reserve in acknowledgement of its rare afromontane flora and fauna, as well as its practical and cultural significance to surrounding communities. In Uganda, the Mount Elgon Forest Reserve was upgraded to a national park in 1992-3 with funding from the International Union for the Conservation of Nature (IUCN) and the Norwegian Agency for Development Cooperation (Norad)’s Mount Elgon Conservation and Development Project (MECDP), as well as from country-level programmes initiated by the United States Agency for International Development (USAID) and the European Community1,2. The Uganda Wildlife Authority (UWA), charged with managing the park, has since taken a strong paramilitary enforcement management approach3,4,5. Despite this, the status of the national park does allow for some consumptive extraction by certain communities living adjacent to the park through collaborative agreements6 7,8. However, the scope and content of these agreements is largely not negotiated with communities, and agreements do not extend to parishes close to the park – but not bordering it – who have traditionally also depended on forest resources9. During Uganda’s post-independence period and the turbulent regimes of – consecutively – Milton Obote, Idi Amin, and Milton Obote, some 25,000 hectares of the forest reserve on the Ugandan side were settled or otherwise encroached upon by local communities. In particular, this was facilitated by Amin’s 1975 Land Reform Decree and related “economic war”, which had the effect of encouraging rural populations to expand agricultural cultivation into forests in order to compensate for currency hyperinflation and the state’s mismanagement of the national economy more broadly4. In 1992, a Dutch NGO, the FACE Foundationa, approached the Ugandan government with an offer to finance the reforestation of these 25,000 hectares. This was on the condition that FACE would retain the rights to the carbon sequestered in these new plantations, and that UWA would maintain the boundaries of the new plantations for an initial period of 99 years. Although external auditors expected the project to sequester 3.73 million tons of carbon dioxide equivalent between 1994 and 2034, reforestation activities declined in 2003-4 as a result of conflicts with local communities4,10. MERECP is the successor to MECDP11,12,13. Initially and jointly financed by Norway and Sweden from 2005 to 2009, MERECP was re-designed for a second phase between 2009 to 201114. In contrast to its predecessor, MERECP is transboundary in scope, and is anchored in the East African Community’s Lake Victoria Basin Commission (LVBC). Unlike UWA-FACE, MERECP aims to facilitate “sustainable use of shared natural resources benefiting livelihoods and mitigating and adapting to anticipated climate change impacts in the Mt Elgon trans-boundary ecosystem of the East African Community (EAC)”14. It has been designed to do so through four natural resources co-management models. Two of the four models include payment schemes for adopting sustainable resource management activities, community revolving funds (CRFs) and deforestation avoidance14. Our focus in this chapter is based on the MERECP’s CRFs model, and in particular on benefit delivery in Uganda.

a The FACE Foundation has since rebranded itself as ‘Face the Future’.

2 | Paying for carbon at Mount Elgon: two contrasting approaches at a transboundary park in East Africa 28.3 Project Design, Approaches to Ecosystem Service Valuation, and Delivery of Benefits to Communities

While both UWA-FACE and MERECP seek to enhance carbon sequestration through forest conservation at Mount Elgon, they differ substantially in the precise nature of the mechanisms through which this is to be achieved (Table 1). This is particularly acute in relation to each initiative’s approach to the valuation of ecosystem services and delivery of benefits to communities. First, UWA-FACE generated its carbon offsets through the attempted restoration of the above- mentioned 25,000 hectares of encroached land at Mount Elgon National Park in Uganda. Some of the resulting offsets were then also reportedly sold onward via a number of third- party brokers10,15,16. However, as a result of this project model – which was implicitly based on the reforestation of ‘encroached’ and therefore contested state land – the eviction of large numbers of local residents constituted a necessary precondition for the project’s implementation4,31. Despite concerns related to human rights abuses10,17,18, both the project and forest management at Mount Elgon National Park were able to successfully complete numerous SGS Agrocontrol and Qualifor audits. In turn, this resulted in Forest Stewardship Council (FSC) certification19,20. While the initial project design did not include an explicit focus on equity or the protection of vulnerable groups21,22, SGS auditors have (somewhat controversially) deemed the project to be in conformance with FSC principles related to community relations and indigenous peoples’ rightsb. By contrast, MERECP offers payments for enhanced ecosystem services including avoided deforestation via a community fund-based rather than a state-centric or market-based approach. This built upon IUCN’s experiences with MECDP, which acknowledged the need to support the diversification of highly forest-dependent livelihoods among rapidly growing populations adjacent to Mount Elgon National Park12. Unlike UWA-FACE, MERECP includes an explicit focus on equity and benefit sharing in its objectives, with the establishment of CRFs and other benefit-sharing mechanisms being key outputs of the programme. CRFs grant community-based organizations (CBOs) in both countries up to 10,000 USD to be loaned to members for the adoption of activities to diversify local livelihoods away from forest dependence. The aim of the CRFs is that the fund will grow over time as a result of reinvestment through members’ repayments of loans. Despite these advantages, however, audits of the programme have also expressed concerns related to the MERECP’s high administrative costs, which were estimated to be at least 65.8% of the programme’s budget at the time of its first mid-term review, with less than 20% of project funds reaching local communities23. Furthermore, results from CRFs have been more limited than anticipated due to lack of capacity to manage and communicate the function of the funds14. As such, MERECP allows for greater flexibility and community input in benefit-sharing than UWA-FACE, given that CRFs enable communities to invest in activities of relevance or interest to themselves. In other words, the ultimate form in which benefits are shared is not dictated by MERECP’s programme design, but by both community and individual perceptions of worthwhile investment opportunities. Additionally, CRFs at least hypothetically generate financial growth of the fund’s initial value, which can in turn be reinvested by the community. In contrast, UWA-FACE’s project design emphasized the enforcement of reserve boundaries rather than co-management and sustainable engagement with community stakeholders over time, and did not see fit to acknowledge or address historical grievances. As demonstrated by the eventual decline of the UWA-FACE project between 1993 and 2003, however, neglect of b see, for example, a critique by Lang & Byakola 200610: 83–94 and Cavanagh 201537

Chapter 28 | 3 community interests and grievances can result in severe conflict and the destruction of newly established forest plantations. This is not to say, however, that MERECP’s fund-based approach to benefit sharing constitutes some sort of panacea for resolving tensions between community interests and avoided deforestation. Indeed, external evaluations conclude that the programme’s first phase was characterized by high administrative costs and perhaps also a degree of questionable financial management more broadly23. Still, MERECP’s flexibility relative to UWA-FACE allowed for a community-based focus for delivery of benefits through CRFs, which – although imperfect in their implementation – proved to be significantly more inclusive and therefore somewhat more socially sustainable. Table 1 provides a summary of the different benefit- sharing approaches each initiative took, and how they perform against different benefit- sharing criteria such as inclusiveness, degree of community ownership and degree of success in achieving environmental or conservation goals.

Table 28.1 Characterization of benefit-sharing schemes in UWA-FACE and MERECP initiatives.

UWA-FACE MERECP

Types of benefits Employment opportunities – tree Participatory benefit-sharing delivered to planting and seedling agreements, CRFs. communities procurement. Community and Low or non-existent level of Significant level of community stakeholder ownership community ownership; high ownership (via CRFs); high degree of degree of national ownership national (UWA) and regional (UWA). ownership (EAC and LVBC). Participation and Benefits only reaching a small Inclusion of select communities. inclusion portion of population surrounding Explicit inclusion of equity the park. No explicit provisions for considerations into programme equity or the protection of objectives, outputs, and activities; vulnerable groups. emphasis on benefit sharing. Long-term impact of Negative results involving early Mixed results. Potential for long- benefits delivered project closure and creating only term delivery of benefits through (Sustainability) temporary employment for a CRFs, but challenges encountered limited number of people. with proper use of funds and high administrative costs. Success in achieving Poor. 44% of the reforested area Unknown. Primary data currently environmental and was encroached upon with project lacking to determine the conservation goals activities closing 30 years ahead of programme’s impact on the project end date. conservation and stewardship of forested areas. Land tenure and land Poor. Reforestation activities Community involvement in rights conducted on contested land, resource sharing agreements, but resulting in community resistance limited to the inclusion of select to the project and eventually communities. project failure. Historical and contemporary grievances unacknowledged.

4 | Paying for carbon at Mount Elgon: two contrasting approaches at a transboundary park in East Africa 28.4 Nature and Local Acceptability of Community Benefits

Perhaps the most striking differences between UWA-FACE and MERECP relate to the perceived acceptability of shared benefits to local communities. First, UWA-FACE’s emphasis

on restoring government control over Mount Elgon National Park reflects a broader position among state resource management authorities in Uganda that encroachers are simply illegal squatters on state property24. In light of this, benefits from UWA-FACE were not intended to compensate for the negative socioeconomic costs of project implementation. Benefits were mainly limited to employment opportunities as labourers and tree-planters, as well as the farming of seedlings that would be procured by the project. Given that large numbers of evictees were rendered landless via project implementation, they became excluded de facto from access to revenue from the cultivation and sale of such seedlings. Further, according to an SGS (2001)19 audit, only approximately 250 individuals were directly employed by the project as laborers on a full-time basis, and only when reforestation activities were at their peak between 1994 and 2002. This is relative to a population of approximately 1.5 million individuals in park-adjacent districts, wherein population densities in some locations exceed 800 persons per square kilometer25. Finally, no explicit provisions were made for the redistribution of revenues received from FACE as a result of its sale of carbon offsets over voluntary markets26 27. By the early 2000s, local protests over the nature and perceived unacceptability of the scale of these benefits emerged in the form of the destruction of seedling stocks and nurseries28, as well as the intentional deforestation of project compartments27. By the cessation of reforestation activities in 2003-4, such intentional encroachment had compromised more than 44 percent of the plantation compartments that had so far been established, which also exceeded the ‘risk buffer’ specified by SGS auditors for ensuring the reliable calculation of carbon offsets4). By contrast, MERECP includes an explicit focus on benefit sharing and co-management models. This takes two interrelated forms: i) the establishment of participatory benefit-sharing agreements that allow for the sustainable use of protected resources, and ii) the establishment of CRFs to both reward communities for sustainable resource management and contribute to the diversification of protected area-adjacent livelihoods. In Uganda, the participatory benefit-sharing agreements built upon collaborative agreements already established Displaced community member with between UWA and communities adjacent to the park. For land title. Photo: Connor J. Cavanagh the CRFs, these were granted to existing CBOs that already engaged with some kind of environmental or resource management activities prior to any involvement with MERECP14. While most CRFs supported income generating activities which included tree nurseries or other tree-growing activities, they also involved livelihood diversification activities such as dairy production, bee keeping and support of porters’ associations for tourism14.

Chapter 28 | 5 While the MERECP model more directly targets communities within their benefit-sharing scheme, further exploration of the distribution of benefits is needed. That said, efforts to quantify MERECP’s delivery of benefits will be complicated by the legacy of previous approaches on Ugandan Mount Elgon. For example, before MERECP, Ugandan authorities signed collaborative agreements and disbursed shared revenue to CBOs within select communities around the park, and actively targeted communities that were not in conflict with UWA78. With the introduction of the MERECP CRFs, UWA again chose which CBOs were eligible for receiving support29. As a result, MERECP support was largely provided to communities already previously benefiting from UWA’s community benefit-sharing arrangements, and did not extend necessarily to poor and marginalized populations more prone to conflict with conservation authorities2. Furthermore the anticipated proliferation of benefit distribution through reinvestment of CRFs has been much more limited in practice than expected due to low repayments rates and lower returns received for some income generating activities than initially estimated14.

28.5 Conclusion and Recommendations

The above comparison and contrast of the UWA-FACE and MERECP initiatives suggests a number of implications for protected area- based carbon offsetting projects in East Africa. First, resource access and land use rights cannot be underestimated as a source of risk to the sustainability of project design. Among other factors30, conflicts over land resulting from resettlement processes in both Kenya and Uganda were found to be one of the major drivers of deforestation in the Mount Elgon area31 32. In Uganda, conflicts stemming from the strong law enforcement approach adopted by UWA and FACE, coupled with the lack of effective benefit-sharing arrangements, provides an example of how local communities Personnel and community members. may pose a series of challenges to both Photo: UWA-FACE/Connor Joseph Cavanagh conservation and the sustainable sequestration of carbon in forested protected areas4 5 33 34. Second, as suggested by the experience of the UWA-FACE project in particular, community interests must be accounted for in natural resource and forest management plans, ideally in the form of sustainable benefit-sharing mechanisms. CRFs constitute one of several promising design options for a sustainable benefit-sharing programme, as in theory these inherently retain the potential for future growth. Such funds are not a panacea, however – while fund- based mechanisms have the benefit of flexibility, given that they can be invested in a wide range of income-generating activities selected by particular community, checks and balances must be in place to prevent elite capture of these finances, the distribution of funds according to principles other than merit, and/or the ineffective use of resources. Third, while market-based funds have the potential to provide frameworks for accountability, these must take into account the broader social-political context, as well as the inclusion of, and benefits for, local and indigenous communities. As suggested by controversies over SGS’ assessment of FSC principles in relation to the UWA-FACE project, compliance with the latter’s protections for indigenous communities may be so broadly interpreted as to overshadow

6 | Paying for carbon at Mount Elgon: two contrasting approaches at a transboundary park in East Africa controversies expressed by civil society and advocacy groups. While it may seem expeditious from the perspective of project managers to ignore, gloss, or otherwise marginalize such claims, they may prove to constitute significant challenges to the legitimacy – and thus to both the use and exchange value – of produced carbon offsets4,5,35. Fourth, while the MERECP case demonstrates that there have been a number of initiatives to make forest management around Mount Elgon more inclusive, actualization of these inclusive frameworks still remains a challenge36. To address deforestation, the context underlying its proximate drivers must be understood and targeted (see, inter alia37). Fostering stronger community ownership while providing access rights that allow for sustainable extraction is certainly one key aspect in this regard. Drawing on both market and fund-based resources can act as facilitators as long as inclusive benefit-sharing mechanisms are inherent in the project design that benefit marginalized and poor communities in addition to those already engaged in protected area benefit-sharing schemes. In short, carbon offsetting at Mount Elgon and other densely-populated regions of East Africa is likely to remain contentious. Nonetheless, the integration of the above recommendations and a broader commitment to the pursuit of socio-environmental justice will contribute to an improved theory of change for ensuring pro-poor outcomes in East African forest governance.

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