INFOR (Instituto Forestal) No. ODEPA (Oficina de Estudio y Politicas Agrarias, Ministerio de Agricultura) CONAF (Corporacion Nacional Forestal) INDAP (Instituto de Desarollo Agropecuario) FIA (Fundacion para la Innovacion Agraria) Republic of Chile Capacity Development and Enhancement of A/R CDM in Republic of Chile Final Report March 2009 JAPAN INTERNATIONAL COOPERATION AGENCY MITSUBISHI RESEARCH INSTITUTE, INC. GED JR 09-044 PREFACE In response to a request from the Government of the Republic of Chile, the Government of Japan decided to conduct the Study on Capacity Development and Enhancement of A/R CDM and entrusted the Study to the Japan International Cooperation Agency (JICA). JICA dispatched a team to Chile between December 2005 and March 2009, which was headed by Mr. HATANAKA Kunio of Mitsubishi Research Institute, INC. and consists of Mitsubishi Research Institute, INC. and Japan Forest Technology Association. The JICA Study Team held a series of discussions with the relevant officials of the Government of Chile and conducted the study in Chile. Upon returning to Japan, the Team duly finalized the study and delivered this report. I hope that this report will contribute to promotion of AR-CDM in Chile and to enhancement of friendly relations between the two countries. Finally, I wish to express my sincere appreciation to the officials of the Government of Chile for their close cooperation. March 2009 MATSUMOTO Ariyuki Vice President Japan international Cooperation Agency Executive Summary After ratifying the Framework Convention on Climate Change in December 1995 and the Kyoto Protocol in 2002, the Chilean government has been materializing efforts in relation to strategies against global warming. In 2003, DNA (Designated National Authority) was established, being composed by several governmental agencies including the National Commission of the Environment (CONAMA) as a system of governmental authorization for CDM (Clean Development Mechanism) projects. It is now widely recognized that Chile is one of the host countries with the most streamlined system to promote CDM in the world. Also, in the course of the development of different projects in Chile, some baseline and monitoring methodologies for CDM project were approved by CDM executive board. Moreover Chile is a leading silvicultural country, but until the present, reforestation has mainly been carried out by major national forestry companies. The Chilean government recognizes the importance of the recovery of vegetation on degraded lands and reforestation by small-scale landowners as a counterpart to the large-scale industrial forestry production. In this context Chile has a system of government subsidies which stimulates and supports reforestation and investment. However, until the moment reforestation by small landowners has not produced the expected results. Within this context, the government of Chile is considering the application of CDM in order to promote reforestation by the private landowners. The government of Chile made independent efforts to carry out studies in relation to reforestation with CDM. However it recognizes that the system of government organisms and implementation capacities are still insufficient. For this reason the Chilean government has asked for cooperation from Japanese government in order to contribute to the improvement of these capacities, both on a scientific and organizational level, in view of the preparation and implementation of a reforestation project under CDM. Consequently, after the examination by JICA preliminary evaluation team in October 2004 to carry out a basic CDM study in potential sequestration areas in the different countries of South America and a preliminary study, the agreement about the scope of the definite study was signed by both parties in June 2005. Under such circumstances, this development study got a green light and seven missions in total were conducted by JICA study team for the study; the first mission was from February 27 to April 7, 2006, the second was from July 3 to August 3, 2006, the third was from November 19 to December 23, 2006, the fourth was from May 13 to June 24, 2007, the fifth and the sixth were from September 23 to March 6, the seventh was from June 22. During these missions, the JICA study team has engaged in efforts of capacity buildings and enhancement of A/R CDM among Chilean stakeholders through conducting activities include pilot projects in Region X and Region XI, various workshops, seminars, In-Japan training and preparation and dissemination of the manual. Pilot Project in Region XI The purpose of the pilot Project in Region XI falls within Type 3 Rehabilitation of degraded land of the CDM forestation project type defined by the National Strategy Study for CDM. The project will be implemented in the commune of Coyhaique, where some 50 years ago large area of forest was fired to develop habitable area, by which soil was degraded. Due to i the cold climate of the region the vegetation cover could not regenerate, so that today there are large extensions of land where the dead trees are still not completely decomposed. In accordance with the Chilean definition (Forest law 701), the area is categorized as degraded land, fragile land and land in endangered of the desertification. This project will use pinus ponderosa for forestation in order to rehabilitate soil and get carbon credits. Region XI pilot project will be conducted at where grazing activities are currently taking place and these livestock will be relocated beyond the project boundary for the project implementation. Once the project is started, grazing activities are not allowed within the boundary till the first pruning planned at approximately age 12. As INFOR was conducting a research on Region XI pilot project with Seremi Agricola funds, the team focused on information sharing with counterpart stakeholders and establishing effective system for project implementation at the first mission. Practical study was started from the second mission including consideration of whole PDD items and methodology selection. AR-AM0003, approved methodology applicable to grazing land, was selected based on general conditions of the land even though the candidate area had not been determined. Moreover, workshops for counterpart organizations and seminars for academics, NGO, forest engineers were conducted in order to establish a base for enhancing project effects. During the third mission, based on the project idea and the results of the land eligibility study, the co-development work of PDD with counterparts was started and farmers workshops for the recruitment of the project participants were held. Prior to the fourth mission, project participants were almost finalized, baseline study of the actual project area was started, and socio economic study was conducted. In the fifth and sixth missions, identification of remained issues toward PDD finalization, discussion about possible solutions of such issues, support of DOE selection, coordination of institutionalization of project participants were carried out. PDD was finalized with cange of methodloty to AR-ACM0001 and application for institutionalization of project participants was submitted during the seventh mission. The remained project period will be spent on support of validation and submission. The summary of the pilot project is shown in Table 1. Table 1 Initial plan of Region XI pilot project Region XI Project surface 489.5 ha Project participants PULMAHUE S.A. (A closed stock company consists of 5 large/medium land owners) Current land use grazing land (grass land) Planting tree Pinus Ponderosa Forest management Pruning x2, thinning x1, trimming 40 years Crediting period 30 years Methodology AR-ACM0001 ver.2 Plantation 2008 and 2009 The estimation of carbon sink volume by planted trees used the harvest estimation model developed by INFOR for Pinus Ponderosa. Anthropogenic net GHG absorption was calculated as 243,136.8 tons of CO2 in total for 30 years. ii Region X Pilot Project Region X pilot project is placed as a model of Type I A/R CDM project (small-scale, plantation to low income farmers’ land) and its objectives are set as follows. improvement of living environment through efficient land use and productivity recovery establishment of high quality timber production model and technology transfer rural poverty eradication by enhancing employment and technical training reduction of atmospheric CO2 and obtaining income by CER sales The initial plan for this pilot project is summarized in the following table. Table 2 Initial plan for Region X pilot project Region X Area 6,000ha in total (La Union, San Pablo, San Juan de La Costa, Osorno)（Initial plan） Land-owner small land owners Authorities being jointly considered by INFOR, FIA, INDAP and CONAF Planting tree Eucalyptus nitens Method of operation 20yrs trimming Implementation framework Institutionalization of small farmers From the first mission to the third mission, information required for PDD preparation was collected. At the same time, issues for project implementation were analyzed and, as a result of the analysis, many issues need to be solved were identified among the areas of organizing farmers, project’s additionality and its methodology. Considering such obstacles, Chilean couterpart desiced to develop a small-scale CDM project during the third mission. Participating farmer：30～50 people Planting area ：approx.120 ha Methodology ：Small-scale A/R CDM（AR-AMS0001） Eucalyptus nitens was selected as the specie