Reducing Emissions from Deforestation and Degradation (REDD) in the Cofán Bermejo Reserve, Ecuador: An assessment of forest carbon sequestration capability and potential entry into an emerging carbon market A Group Project submitted in partial satisfaction of the requirements for the degree of Master’s in Environmental Science and Management Project Members: Heather Abbey Carolyn Ching Tyson Eckerle Scott Webb Emily Welborn Faculty Advisor: Christina Tague March 2009 Reducing Emissions from Deforestation and Degradation (REDD) in the Cofán Bermejo Reserve, Ecuador As authors of this Group Project report, we are proud to archive this report on the Bren School’s website such that the results of our research are available for all to read. Our signatures on the document signify our joint responsibility to fulfill the archiving standards set by the Bren School of Environmental Science & Management. Heather Abbey Carolyn Ching Tyson Eckerle Scott Webb Emily Welborn The mission of the Bren School of Environmental Science & Management is to produce professionals with unrivaled training in environmental science and management who will devote their unique skills to the diagnosis, assessment, mitigation, prevention, and remedy of the environmental problems of today and the future. A guiding principal of the School is that the analysis of environmental problems requires quantitative training in more than one discipline and an awareness of the physical, biological, social, political, and economic consequences that arise from scientific or technological decisions. The Group Project is required of all students in the Master’s of Environmental Science and Management (MESM) Program. It is a three-quarter activity in which small groups of students conduct focused, interdisciplinary research on the scientific, management, and policy dimensions of a specific environmental issue. This Final Group Project Report is authored by MESM students and has been reviewed and approved by: Christina Tague March 2009 ACKNOWLEDGEMENTS We are grateful for the support we have received from our advisor Christina Tague, professor at the Donald Bren School of Environmental Science and Management, UC Santa Barbara. We appreciate her vision for our project and guidance. Without her support, our project would not be as successful. We greatly appreciate the financial support and interest in our project from Nature and Culture International and especially the enthusiasm from Ivan Gayler. We would like to thank our client, the FSC, including Sadie Siviter and Randy Borman, not only for the opportunity to complete this project, but also their continuous support of knowledge and information. We also want to thank those that made our summer field work possible and successful: Mateo Espinosa (FSC); Park Guards Roberto, Eduardo, Alejandro, and Edison; the Cofán; Paulina Arroyo (The Nature Conservancy); and Gosia Bryja (Wildlife Conservation Society). We value all the input we have received from the following individuals who have guided our project along the way: Lee Hannah, Hallie Eakin, Christopher Still, Frank Davis, Jacob Olander, Nikki Virgilio, and Erin Myers. Lastly, we want to thank mothers, fathers, brothers, sisters, wife, fiancée, friends, and lovers; especially Julia for her delicious homemade cakes which we faithfully taste-tested, and Nacho for his late-night entertainment. v ABSTRACT Deforestation and degradation in tropical forests creates approximately twenty percent of annual global carbon emissions through the burning or decomposition of biomass (IPCC 2007). The Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) does not currently recognize any carbon-trading mechanisms that provide incentive for reducing emissions from deforestation and degradation (REDD). However, REDD may be recognized by the UNFCCC as a carbon-trading mechanism in the future, and existing voluntary carbon markets already accept REDD-based carbon offsets. This project assesses the feasibility of creating a REDD project within the 55,451-hectare Cofán Bermejo Reserve, located in northwest Ecuador and stewarded by the indigenous Cofán people. To facilitate this assessment, we consider the current political context of REDD, compare the project against voluntary REDD standards, and calculate the amount of potentially salable carbon credits held within the Reserve. Overall, our analysis demonstrates that a REDD project is conceptually feasible within the Reserve, provided the Cofán find a willing buyer and gain Ecuadorian government support. Furthermore, based on our carbon loss estimate, historic market rates, and expected implementation costs, a REDD project in the Reserve can be economically viable. Should the Cofán pursue a REDD project, we recommend advocating for UNFCCC acceptance of REDD-based carbon projects to increase their carbon asset value. vi TABLE OF CONTENTS EXECUTIVE SUMMARY..................................................................................................................1 1.0 PROBLEM STATEMENT ..............................................................................................4 1.1 Problem .............................................................................................................................4 1.2 Purpose..............................................................................................................................6 1.3 Research Question.........................................................................................................6 1.4 Project Significance.......................................................................................................7 2.0 BACKGROUND.................................................................................................................7 2.1 Cofán People and the Cofán Bermejo Reserve....................................................7 2.2 Geographic Scope...........................................................................................................9 2.3 World Forest Carbon Storage and the Cofán Bermejo Reserve................ 10 2.4 Deforestation and Degradation Activities Threatening the Reserve...... 11 2.5 International Political Climate............................................................................... 15 2.5.1 United Nations Framework Convention on Climate Change........... 15 2.5.2 Emerging Carbon Markets............................................................................ 16 2.5.3 REDD to address Climate Change .............................................................. 18 2.5.4 REDD to Address Deforestation ................................................................. 20 2.5.5 Voluntary REDD Standards .......................................................................... 21 3.0 FEASIBILITY ANALYSIS............................................................................................ 29 3.1 International REDD Policy and Political Climate of Ecuador..................... 29 3.1.1 International Political Climate.................................................................... 30 3.1.2 Political Climate of Ecuador......................................................................... 32 3.2 Additionality................................................................................................................. 35 3.2.1 Linking Carbon Storage and Deforestation Estimates to REDD..... 36 3.2.2 Methods to Estimate Carbon Storage....................................................... 36 3.2.3 Deforestation and Degradation .................................................................. 40 3.2.4 Linking Carbon Loss to Deforestation...................................................... 45 3.2.5 Demonstrating Additionality....................................................................... 49 3.3 Permanence .................................................................................................................. 53 3.3.1 Non Permanence Risk Assessment ........................................................... 53 3.3.2 Long term Monitoring.................................................................................... 57 3.3.3 Strategies to Mitigate Potential Reversals.............................................. 58 3.4 Assessing and Managing Leakage......................................................................... 59 3.4.1 Sources of Leakage .......................................................................................... 60 3.4.2 Managing the Leakage Zones....................................................................... 62 3.5 Indigenous Cultural Consideration...................................................................... 63 3.5.1 Impact of Entering REDD Market on Life and Culture of Cofán..... 63 3.5.2 Potential Opportunity Costs......................................................................... 64 3.6 Conclusions of the Feasibility Analysis .............................................................. 65 4.0 COST BENEFIT ANALYSIS ....................................................................................... 66 5.0 RECOMMENDATIONS AND ALTERNATIVES ................................................... 79 5.1 Recommendations for Pursuing Carbon Market Participation................. 79 vii 5.2 Alternatives for Generating Funding................................................................... 81 6.0 REFERENCES...............................................................................................................