Supporting soil carbon, ecosystem health and productivity restoration with climate finance

Issue

Grassland degradation is a source of CO₂ emissions and biodiversity loss. It also reduces long term productivity and economic returns, and reduces the capacity of land holders to adapt to climate change. Grassland restoration and enhancement has the potential to address each of these issues and thus deliver mitigation, adaptation and producer livelihood benefits. Further, given that grassland restoration and enhancement has similar capacity as croplands and forestry to sequester carbon, there is great potential to support these actions with mitigation finance accessed through carbon markets.  Presently, this vast potential remains untapped, mainly due to the absence of i) carbon accounting methodology that is affordable but sufficiently accurate to support credit creation and trade in carbon markets, and ii) an international program (e.g. as forestry has in UN REDD)  to overcome these and other barriers, coordinate R&D  and implementation.

Problem statement

Grasslands are estimated to contain 343 billion tonnes of carbon, nearly 50% more than is stored in forests worldwide (FAO, 2010), and their global potential to sequester carbon is of the same order as that of croplands and forests. To-date very little has been done or planned to realize this massive potential. As outlined, This largely due to the absence of i) carbon accounting methodology that is affordable but sufficiently accurate to support credit creation and trade in carbon markets, and ii) an international program/initiative to overcome these and other barriers, and to coordinate R&D and implementation

The first of these issues is partly being addressed by the development of grassland carbon accounting methodologies, including the recent methodology submission to the Verified Carbon Standard (VCS) by FAO. Nevertheless, once approved the application of such a methodology to any particular region will involve the collection of substantial biophysical data and the development and implementation of grassland management plans. Moreover, there are significant monitoring and enforcement challenges associated with protecting and ensuring the permanence of soil C stocks. Consequently, interventions to sequester and measure soil C will only be affordable in grasslands with relatively large sequestration potential. Moreover, carbon markets are only likely to be able to fund a limited fraction of this potential; trade in the voluntary carbon market is still very thin, with a total transaction volume of 94 million tCO₂-eq in 2009, for all mitigation sources (of which grassland projects comprise a small fraction), which is tiny compared to grasslands total annual mitigation potential of 1,465 million tCO₂-eq. While carbon markets are expected to grow significantly over time, other  avenues for financing including the World Bank Climate Investment Funds, as well as the financial mechanisms that are expected to evolve from the Green Climate Fund (GCF); which is being proposed by Parties to the UNFCCC as a mechanism for mobilizing the proposed $30 billion available immediately as “fast track” funds and the $100 billion by 2020, pledged by higher income countries in Copenhagen and Cancun. One possible way these finances can be accessed may be through the development of Nationally Appropriate Mitigation Actions (NAMAs).

Institutional and policy design issues in collectively managing natural resources are another key challenge, as the tenure systems in much of the worlds grazing lands fall between a continuum of open access and common property. Around 987 million or 70% of the world’s 1.4 billion “extreme poor” depend on livestock. Of these around 301 million are in grazing only systems, many of which comprise pastoralists in poor countries (e.g. in the Horn of Africa and the Sahel) (FAO, 2010).  While there is significant soil C sequestration potential in some of these regions (e.g. in the Ethiopian highlands), finding the right blend of policies and institutions to capitalize on this potential is a major challenge.

In the absence of effective collective action, individuals have incentives both to overexploit and to under-invest in pasture resources. While no doubt challenging, a well-designed carbon sequestration payment program can improve incentives to undertake collective action. This requires the development of a community-based management framework in which pastoralists are rewarded for their collective efforts to generate public goods in terms of soil C, increased biodiversity, reduced soil erosion, and increased biomass. These benefits depend on compliance mechanisms that ensure everyone abides by new limits, without incurring prohibitively high enforcement costs. Community-based monitoring mechanisms offer one avenue for minimizing these costs. Moreover, the development of communal tenure institutions to facilitate the transition from open access towards more secure forms of land tenure, including common property regimes, will greatly improve the ease and efficiency with which carbon (and other environmental good and service) revenues can be generated and allocated among herders. Further, grassland restoration projects in traditional pastoralist regions must also be sensitive to the multi-functionality, from a livelihood perspective, of grazing systems. In these cases environmental goods and services may not only have to be traded off with livestock income, but also with production of fuel, draught power, fertilizer and building materials.