property rights and access (including carbon) world bank land and poverty conference leslie...

PROPERTY RIGHTS AND ACCESS (INCLUDING CARBON)

World Bank Land and Poverty Conference

Leslie Durschinger, John Lewis, Micah Heaney

March 23-27 2015

TOPICS

1. Landscape of Land and Emission Reduction Tenure 2. 5 Case Studies at Different Scales

3. Implications for Private Sector Investment4. ER Tenure Implications when Harmonizing Scales

5. Effect of CCB Verification on Sale

Landscape of Land and Carbon Tenure

Fragmented Systems Evolving for ER related tenure

Government Owned/Managed

Land/Natural Resource Tenure

Private Ownership

Co-Management

Indigenous Law

Community Forestry

Concession

Unclassified Public Lands

Environmental - Service,Property

orAsset

Mgmt. Practices

and Polices

What is Created?Mechanisms used

“secure” ER related Tenure

Received by Land/NR Tenure Holder

Federal Laws

Implied (i.e. have NR tenure, than have ER tenure)

State/Provincial laws

Contractual Agreements

“First come-First Claim” (e.g. cookstoves near REDD+)

Non-ER Denominated Payments (for ERs)

Tax Credits

ER Denominated Payments

ER Credit/Offset Ownership

Non-ER Denominated Payments (water, bio)

How linked should NR Tenure and ER Tenure be if changes in NR use

generate ERs?

Often devolved and generally defined

Evolving, overlapping,

and/or absent

Created Through

BenefitsShared

Often centralized and often undefined

Case Study 1 – National Level Costa Rica

REDD+ program with Non-ER Denominated PaymentsComments/Risks National Laws Possible financial risk

between ER $ (in) and PES $ (out)

Land holders may prefer to participate directly in ER markets

Integrates multiple funding sources

Case Study 2 – State Level, Acre BrazilNested REDD+ with Non-ER Payments and Direct ER Ownership

CDSA PPP (51% Government/50% Private)

InternationalER Standards

REMResults-based

ER Direct Crediting

ER Direct Crediting

$$ for ERs

Comments/Risks State Laws + contracts Federal ER ownership

unclear Provides attractive

structure for projects and investors

Seeking VCS JNR verification and REDD+ SES Intl Review

Case Study 3 – Landscape Level, Malawi

Co-Management of Protected Areas – Co-owned ERs

Department of National Parks and

Wildlife (DNPW)

Terra Global(Carbon Developer/

Investor)

Total LandCare (TLC)

COMPANY LIMITED BY GUARANTEE

Seller’s/Benefit Mgt Entity for communities and

government funds mgt

Community Forestry Groups

(TA,GVH,VH,HH)

a. Community Associations (Bi-laws and Constitution)

Carbon DevelopmentAgreement (under USAID grant)

Carbon Agreementsw/responsibilities detailed,

benefits sharing and carbon rights assigned to Sellers Entity (tri-party)

Co-Mgt agreement

Intl Carbon Buyer/Investor

ERPAER

Community Agreement-activities- benefits

ImplementationAgreement (tripartite)

Annual workplans-activities-budgets- benefits

Annual workplans-activities-budgets- benefits

Terra Umbrella ERPA

(facilitates multiple sales)

$$

International Carbon Standards/Registries

(ER Issued)ER Issued and held in Approved Registry

ERs

$$

Comments/Risks Contracts ER Revenue follows

tenure Requires capacity for

Seller’s Entity management

National REDD+ just started

Case Study 4 – National/Community, Cambodia

Government Owns ERs, 50% invested in Community REDD+ Program

Sellers Entity:

Gov. of

Cambodia

TWG F&E

Community Forestry

Associations

$ (50% Net Income to fund programs)

Terra Global Capital (Carbon

Developer)

Pact (Implementing

Partner)

CDA, Monks Community

Forestry Association

(Local Partners)

Other REDD+ Program Development of new

REDD projects Benefits to

Communities Local Capacity

Buiding

$

$ for implementation

Sar. Char. Nor. No. 699

Carbon Rights

Prime Minister Endorsement

Intl Carbon Buyer/Investor

Terra Umbrella ERPA

(facilitates multiple sales)

$$

ERs

$$EPRA/ER

Comments/Risks Project specific legal

decision, contracts ER controlled by

government, with funding for communities

100% dependent on VERs sales

Grandfathered (contractually) under future national program)

Case Study 5 – Project Level, Mexico

Logged to Protected, Ejidos fully own ERs

Sellers Entity:

Trust Managed

for Ejidos

VoluntaryBuyers

ER / $

Ejidos (landowners)

$

Terra Global Capital (Carbon

Developer)

Amigos de Calakmul

(local NGO)

GovernmentCONEP

$ for technical assistance

Technical CommitteeApproval

Tax Credit (?)

Federal Standards

International Standards

Tax Credits ER

Tax Credit / $

Comments/Risks Ejidos have clear ER

ownership Federal GHG

compliance tax system started 2014 for reporting

CERs can be used for credit, possible for forestry tax credits

Implications for Private Sector Investment

Scale of Program Matters to Investors who provide up-front capital Investors require ability to perform a risk (chance of loss) and return

(financial projections) assessment Larger scale programs, harder to assess, unless structured like “revenue-

based project finance”

Clear and enforceable land tenure Clarifying land tenure is a key aspect of REDD program design &

development REDD requires demarcation of program area boundaries Conflicting or overlapping claims require resolution Many buyers/investors inexperienced with tenure and will require education

Carbon rights must be secured Entity with land tenure not always same as carbon rights holder(s) “Belt and Suspenders” approach to Agreements, especially for countries

without legal carbon rights framework Communal tenure schemes require formation of community forestry groups

to aggregate rights Most ER standards require demonstrating “right of use” arising by virtue of a

“statutory, property or contractual right” to carbon

Design of Program and Tenure Treatments Matters

Page 2

ER Tenure Implications when Harmonizing Scales

Issues Impacting the Evolution of ER Tenure While NR tenure has been evolved, many governments are

centralizing ER tenure– Are there legal or ethical issues in this approach?– Is there a “Win-Win in devolving ER Tenure”

Carbon Accounting (REL and MRV), will need to be spatially explicit– Cases where there is direct crediting of ERs or ER dominated

payments– How do different carbon accounting systems (Carbon Fund, VCS

JNR) co-exist in the same area? ER registries need to support nested ER tracking

– Possibly support domestically and internationally issued ERs– Integrate with local PES programs on other environmental

credits Carbon markets, an important source of on-going funding are weak

– VER market very shallow and prices uncertain– International compliance market too uncertain

What works at national level, may work at local level

Page 10

Buyers Demand Multiple BenefitsCarbon sequestration is only baseline verificationBuyers demand that a project benefits its ecosystem and people85% of offsets transacted by VCS also developed:

By Climate, Community and Biodiversity guidelines, and/orOn Forest Stewardship Council lands

Expectations especially high for REDD+ projectsCCB is More Popular

2.3 million tonnes (Mt) of credits sold w/o additional verification9.3 Mt of credits sold w/ CCB at $4/tAn additional 2.3 Mt of CCB credits sold in other capacitiesTotal CCB credits exceed half the total market

CBB Creates CompetitionPre-validated VCS + CCB credits sold at $6/tValidated and Verified VCS + CCB credits sold at $7/t

“State of the Forest Carbon Markets 2014” by Forest Trends

Effect of CCB Verification on Sale

Credits Sell Faster for Higher Competition (2013 Data)

CCB is a good indicator of tenure equity, security, and transparency:

• The Climate, Community & Biodiversity Alliance (CCBA) is a partnership of NGOs

without ulterior interest in validation/verification

• VCS oversees CCBA, ensuring seamless monitoring

• CCBA evaluates projects from design to implementation, and then monitors

• CCB Standards intentionally include risk mitigation for investors and offset buyers

• CCB Standards add a transparency to better inform investors if their involvement is

improving livelihoods, conserving biodiversity, and combating climate change

Why is CCB a Good Indicator?

CCB stimulates buyer interest because buyers want to

better the lives of rural communities with the insurance

of an eventual benefit, the most obvious being risk

reduction in the form of higher opportunity costs for

clearance on tenure secure land

CCB Buyer Stimulation Hypothesis

Status Total Transacted Volume 2013

Average Price/t 2013

CCB 11.6 Mt $4 w/ FSCand/or VCS Issued

$6-7 before Issuance$22 w/ Clean Development

Mechanism (CDM) Issued

VCS Only 2.3 Mt $9 Pre-Validated$7 Validated$2 Verified$7 Issued

CCB vs. VCS Only Certification - Table

COUNTRY CCB CERTIFIED

Belize ✓Bolivia ✓

Cambodia ✓Chile

Colombia ✓Congo

The DRC ✓Ghana

Guatemala ✓India ✓

Effect of CCB Verification – Table 1

Countries with at Least One Certification


Indonesia ✓Kenya ✓

Madagascar ✓Malawi ✓

Malaysia

Mali

Mexico ✓Nicaragua ✓

Papua New Guinea

Paraguay ✓


Peru ✓Senegal

South Africa ✓Tanzania ✓Uganda ✓Uruguay

Zambia ✓Zimbabwe ✓

Effect of CCB Verification – Table 2

Countries with at Least One Certification

TERRA GLOBAL CAPITAL

Name John Lewis, Managing Dir., Natural Resource MgmtPhone (202)-246-1969Email [email protected] www.terraglobalcapital.com

Thank you

Contact Information

http://www.terraglobalcapital.com/

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