| This blog was updated on 19 January 2023 to further incorporate details related to revenues and estimating the Kariba project's baseline; clarifying why we used the VM09 methodology, but also how the VM09 has an in-built safety valve to ensure that credits issued from the project equate to actual rates of deforestation on the ground over the full duration of the Kariba project. |
In reality, it isn't anywhere near this easy.
With few regulatory frameworks or policies in place to stop deforestation, the voluntary carbon market (VCM) is one of the key tools that creates incentives and means for the private sector and local communities to become active agents in protecting their forests and critical ecosystems, all while helping to mitigate global warming.
Today, however, the whole space of forest protection is undergoing a huge transformation: moving from private sector leadership under the VCM to more involvement by governments, from action at project scale to national scale, from a purely market-driven approach to a more country-to-country 'payment for results' approach.
At the same time, substantial leaps in climate science, technology, and methodologies have been made in the past decade – and all of these will help us further improve the way forest protection projects are developed and managed.
For years, projects in forest-rich, emerging economies have been using the voluntary carbon market as one of the few available sources to finance the conservation of their vast forests, generally through REDD+ projects. These forests have been shrinking at frightening speeds, under pressure from farmers, the logging industry, oil and gas development, and simple urbanisation. Most governments don't have the funds, and sometimes lack the political ability, to protect their forests. Local banks are not available to provide financing and even NGOs can rarely produce a reliable and long term financial solution to protect forests.
The financial incentives that the VCM provides by compensating landowners for keeping their trees standing has worked. To date, the forests and the benefits to our environment are monitored and verified regularly by external auditors.
But developing a REDD+ project is much more complex than “letting the trees stand". To be successful and sustainable in the long term, such projects involve changing entire socio-economic systems that previously relied on axing the forest. Incentivising a logging company with a land concession to forgo chopping the forest and instead work to protect it is one example; training local communities in sustainable agriculture, beekeeping (bees need trees, and trees need bees!) and honey-making is another. Yet the transition from turning local communities and industries from forest-choppers to forest-protectors can be hard on the pocketbook at first – which is why the key to forest protection carbon projects is to create a new revenue stream which helps finance the new activities.
One example of how to incentivize the change from deforestation to forest protection is the Kariba REDD+ project, which protects almost 785,000 hectares of forests and wildlife on the southern shores of Lake Kariba, near the Zimbabwe-Zambia border.
The project is managed on the ground by Carbon Green Africa (CGA) and initially financed by Carbon Green Investments (CGI), with South Pole in charge of the technical project development work and sale of credits. The local communities living in the Kariba project area are the owners and main beneficiaries of the project.
During its 10 years of operations, the Kariba project has channelled revenue from voluntary carbon credit sales to finance managing the project and activities that help conserve and sustain livelihoods, and to co-financing the operations of the Rural District Councils (the local government of rural areas in Zimbabwe in charge of socioeconomic development).
South Pole is paid on average 25% of the carbon credit revenues in return for its carbon consulting work, initial planning, marketing, and reporting-related work. The certification process for projects involves many organisations who also need to be paid for their work – standards, auditors, registries, project developers, and marketers. Yet all of them are crucial in ensuring the integrity of carbon credits and in helping the project owner access carbon finance.
The remaining revenue is split between the project stakeholders according to a benefit sharing mechanism: it allocates 30% to CGI, the company that funded the project in its early days and finances project operations. Of the remaining 70%, we understand from Carbon Green that the relevant revenues are split in this proportion:
These activities, in turn, have resulted in significant and measurable social and environmental benefits – including improved food security through the sustainable cultivation of vegetables and moringa, revenue from honey and beekeeping, and better carbon capture potential of trees thanks to systematic fire management to help forests recover. These activities and benefits are reported on a monthly basis by CGA to all interested stakeholders.
Kariba REDD+ has consistently followed all of the rules and requirements of the VCS standard set by Verra – the world's most widely used voluntary emissions reduction standard – and the REDD+ methodology, and has been validated and verified by a third-party accredited auditor. When the Kariba project first started in 2012, the only applicable REDD+ methodology that was considered suitable was Verra's methodology 9 (vm0009). This methodology uses something known as a Cumulative Deforestation Model, which takes into account the fact that deforestation can accelerate as the forest frontier is pushed back, infrastructure is built and the local economy develops, with more and more people moving into the area.
As with any pioneering climate solution, it is difficult to predict the future and, in this case, future deforestation rates a decade ahead – which is exactly why approaches are constantly improving and evolving. This is also why methodologies – including VM9 – have a self-correcting mechanism built into them to adjust the issuance of carbon credits to match actual deforestation rates over the full lifespan of a project (in this case, Kariba).
In the simplest terms, this methodology requires quantifying deforestation in the project's historical reference area for a period of minimum 10 years (in Kariba's case, 2000-2011) via analysis of satellite data.
The satellite data was obtained through remote sensing and processed using a 'supervised classification procedure', with in situ ground points to obtain better data accuracy. An overall accuracy of more than 90% was attained. This data was then used to project future deforestation rates using a cumulative deforestation model. This is a model commonly used to project deforestation of areas that are under threat, for example because of an uptick in deforestation from people encroaching on the forest in what is called a 'mosaic' pattern. Such pattern of expansion over time has been seen in forested areas around the world (examples include Rondónia, Brazil 1, Bolivia2, the lowlands of Sumatra3, in the Pico Bonito area in Honduras4, and in tropical forests in general5).
The result of this projection of future deforestation (which is called the 'baseline') is then compared to the observed deforestation in the project area. Project emissions and the effects of leakage (which is when deforestation is pushed outside of the protected area) are then deducted to determine the emission reductions achieved by the project.
The project has consistently followed this approach since 2012 and has passed four independent verifications (with a fifth underway right now) by three different international auditors ( ESI, SCS and AENOR) under the rules of the VCS and the CCBS, both Verra Standards.
In summary, Kariba has followed all the rules and requirements of the VCS standard, their REDD+ methodology, and the latest available best practice when developing the project – and it will continue doing so going forward, as best practice continues to evolve.
Carbon science, the availability of satellite imagery and Verra's methodologies have progressed substantially in the last 10 years, and the latest monitoring technologies, scientific advancements, and learnings from the 10 years have improved how the Kariba project is able to monitor its impact. There is better data available than ever before, and it is now easier to verify the projected baseline deforestation rate in the project's reference area.
To start with, there are substantial difficulties in using satellite data for open dry forest ecosystems in Africa. For example, the Hansen et al. (2013) Global Forest Watch (GFW) dataset still has shortcomings to accurately capture dry forests and so misses some forest cover and forest loss. In the Kariba REDD+ project, GFW data does not provide an accurate assessment of baseline deforestation based on their own analysis. A high percentage of false negatives in the forest loss classification, specifically in tropical regions (16.9%) means that GFW misses a lot of real deforestation, though there are also a lot of false positives for that biome. However, in sub-Saharan Africa, the percentage of false positives (4.0%) is far lower than the percentage of false negatives (48.0%), leading to a significant underestimation of deforestation on average.
At the same time, the threat profile of a forest changes over time. Luckily, deforestation in Zimbabwe has gone down in the past decade, thanks to successful forest projects and new government policies that no longer encourage people to move back to their communal lands and scale up unsustainable slash and burn agricultural activities. Within Kariba's project area, deforestation went down even further thanks to the many activities that gave higher value to healthy forest ecosystems.
This positive development in Zimbabwe has also meant that the projected difference between how much deforestation was expected around the Kariba project area (the reference area) and how much deforestation occurred within the project area as a result of the project was not as high as forecasted. An explanation could be that while the cumulative deforestation model is a good predictor of typically expected deforestation patterns, political developments and other macroeconomic developments have had a stronger than expected impact on the real patterns observed on the ground.
These leaps in climate science, technology, methodologies and on-the-ground experience are shifting the way that REDD+ projects are developed. As a result, existing and new forest protection projects like Kariba must continue to follow best practice, as it evolves and improves. The project is soon due for an updated baseline analysis and revalidation. South Pole is analysing if the project should shift to a Jurisdictional REDD+ (JNR) approach jointly executed with the government, or if the project should use the updated REDD+ methodologies from Verra, which also use jurisdiction-wide data to allocate a baseline to the project.
In more simple terms, this means that the Kariba project will be shifted from a site specific baseline for calculating emission reductions to a baseline that is aligned with Zimbabwe's national accounting. Such a jurisdictional baseline would be applicable across all projects in the region, and the new baseline setting would include a “risk allocation" approach, assigning predicted deforestation mainly to areas close (4-6 km) to existing recent deforestation.
A shift so substantial will require collaboration with multiple parties and additional remote sensing work, as well as time and careful planning - which South Pole is already in the midst of.
The requirements of the methodologies, along with the broader developments and improvements in how REDD+ projects are developed will affect the calculation of future emission reductions, commonly known as carbon credits. Going forward, there are several points that will need to be considered for this calculation:
The Kariba project communities continue to be engaged in the carbon market based on the rules and approaches that are valid under Verra's standards. Updating the project baseline, incorporating removal effects, and embracing Verra's new REDD+ accounting approach which is based on jurisdiction-wide deforestation risk are already underway. Ensuring a workable and high quality project will help to assure that communities continue to benefit from payments for environmental outcomes in the future.
Kariba has been a success and is working as intended: it has helped bring down deforestation rates, change human behaviour, and, importantly, support sustainable social development and livelihoods in a large area in Zimbabwe, all by assigning more value to forests when standing than cut down. This is thanks to the concerted efforts and the investment of time and millions of dollars by Carbon Green Investments, project communities and local councils – as well as South Pole - even at a time when the carbon market was nascent, fetching no or very low payments for the carbon credits produced.
The systems we have at hand to tackle climate change are not perfect, but the Kariba project demonstrates how we can continually strive to improve our methods in response to developing science, evolving best practices, improving technology, and constructive criticism. And by channelling investment and assigning value to forests today, we can help ensure a sustainable future for the communities hardest hit by the most pressing issue of our time, climate change.
1 Arellano-Neri & Frohn, 2001
2 Kaimowitz, Mendez, Puntodewo, & Vanclay, 2002
3 Linkie, Smith, & Leader-Williams, 2004
4 Ludeke, Maggio, & Reid, 1990
5 Mahapatra & Kant, 2005
Read our principles on the credible use of carbon credits as part of corporate climate strategies and learn about the role of carbon finance in reaching global climate goals.
