Opportunity costs of carbon sequestration in a forest concession in central Africa

Background A large proportion of the tropical rain forests of central Africa undergo periodic selective logging for timber harvesting. The REDD+ mechanism could promote less intensive logging if revenue from the additional carbon stored in the forest compensates financially for the reduced timber yield. Results Carbon stocks, and timber yields, and their associated values, were predicted at the scale of a forest concession in Gabon over a project scenario of 40 yr with reduced logging intensity. Considering that the timber contribution margin (i.e. the selling price of timber minus its production costs) varies between 10 and US$40 m −3, the minimum price of carbon that enables carbon revenues to compensate forgone timber benefits ranges between US$4.4 and US$25.9/tCO 2 depending on the management scenario implemented. Conclusions Where multiple suppliers of emission reductions compete in a REDD+ carbon market, tropical timber companies are likely to change their management practices only if very favourable conditions are met, namely if the timber contribution margin remains low enough and if alternative management practices and associated incentives are appropriately chosen. Electronic supplementary material The online version of this article (doi:10.1186/s13021-014-0004-3) contains supplementary material, which is available to authorized users.

L: the logging damage matrix = K × K diagonal matrix whose ith element on the diagonal is i m s : mortality rate for species s = the probability for a tree of species s to die between two successive time steps M s (t, c): cumulative biomass for species s at time t, given that logging occurred at time c N s (0): K × 1 column vector [N 1s (0), . . . , N Ks (0)] n: index of a parameter of the model N is (0): the initial number of trees of species s in the ith diameter class, as provided by the management inventory N s (t, c): K × 1 column vector [N 1s (t, c), . . . , N Ks (t, c)] N is (t, c): the number of individuals of species s in diameter class i at time t, given that logging occurred at time c NPV ( j) C : net present value of carbon under project scenario j NPV ( j) T : net present value of timber under project scenario j p s : growth propensity = p s /(1 − m s ) = the conditional probability for a tree of species s to move up to the next diameter class between two successive time steps knowing that it has stayed alive p s : the upgrowth rate = the probability for a tree of species s to stay alive and move up to the next diameter class between two successive time steps q s : the stasis rate = the probability for a tree of species s to stay alive in the same diameter class between two successive time steps Q: fixed costs of logging (including fixed taxes) r: proportion of timber that is lost between the log yard and the mill entry s: index of a species (1 ≤ s ≤ S) S: number of species t: index of time T : the rotation = the length of the felling cycle (must be a multiple of 5 years) ( volume of a tree with species s and dbh D w: S-vector (w 1 , . . . , w S ) w s : wood density (in g cm −3 ) W s (t, c): harvested timber volume for species s at time t, given that logging occurred at time c X s (t): harvested timber volume for species s at time t at the concession level 1.2 Greek symbols α: conversion rate from dry biomass to carbon = 0.47 ton of C per ton of dry biomass β s : variable costs (including variable logging costs, transportation costs, and variable taxes) for species s γ: mass proportion of carbon in CO 2 = 0.273 ton of C per ton of CO 2 δ : discount rate ∆: a small additive change of a parameter value ∆C(t): net carbon benefit (in tCO 2 ha −1 ) at time t with respect to the reference scenario ζ : fraction of issuable carbon credits that can be issued, the remaining fraction being withheld as a buffer reserve for the non-permanence risk θ : a vector of parameters of the model θ : a parameter of the model λ s : population growth rate for species s ξ : a small proportional change of a parameter value π: S-vector (π 1 , . . . , π S ) of the specific contribution margins π C : the price of certificates of emission reductions (in US$ per tCO 2 ) π * C : the break-even price of carbon credits (in US$ per tCO 2 ) π s : contribution margin for species s ϖ s : market price of untransformed timber for species s ρ s : logging intensity = proportion of all trees with a dbh greater than or equal to d s that are harvested by logging σ θ : the sensitivity of the break-even price π C to parameter θ τ: time interval (in yr) between two successive time steps ω: the width of the diameter classes (in cm) Ω: duration of the carbon project (in yr; must be a multiple of 5 years)

Non-alphabetic symbols
1: vector of length K full of ones 2 Risk analysis for an improved forest management REDD+ project in Haut Abanga, Gabon The risk analysis aims at determining the non-permanence risk rating, which shall be used to determine the number of buffer credits that the project shall deposit into a pooled buffer account. The risk analysis was conducted following the VCS non-permanence risk tool version 3.2 (Verified Carbon Standard, 2012) and yielded an overall risk rating of 22 (Table S1-1). In comparison, TEREA (2013) for a virtual improved forest management REDD+ project in the Haut Nyong, Cameroon, obtained an overall risk rating of 24. For the Maï Ndombé REDD+ project in the Democratic Republic of Congo (project #934 in the VCS project database), an overall risk rating of 25 was used. For the Pikounda REDD+ project in Congo (project #1052 in the VCS project database), an overall risk rating of 21 was used.

Risk
Value Score Explanation A. Internal risks A1. Project management risks a) Species planted (where applicable) associated with more than 25% of the stocks on which GHG credits have previously been issued are not native or proven to be adapted to the same or similar agro-ecological zone(s) in which the project is located.

0
The Haut Abanga forest is a natural forest with no plantations that contribute to the project.

Risk Value Score Explanation b)
Ongoing enforcement to prevent encroachment by outside actors is required to protect more than 50% of stocks on which GHG credits have previously been issued.

0
The Haut Abanga forest is an isolated area with no outside actors nearby.
c) Management team does not include individuals with significant experience in all skills necessary to successfully undertake all project activities (ie, any area of required experience is not covered by at least one individual with at least 5 years experience in the area). −2 0 Current forest management plans are not adaptive (in the sense given by VCS). Total for project management 0 A2. Financial viability risks a-d) Project cash flow breakeven point greater than 4 and up to 7 years from the current risk assessment The project would include support from donors interested in the development of alternative forest management practices. e-h) Project has secured 40% to less than 80% of funding needed to cover the total cash out required before the project reaches breakeven 0-3 1 Forest concessionaires are cautious regarding REDD+ projects and would not run into them without ensuring that enough funding is available. i) Mitigation: Project has available as callable financial resources at least 50% of total cash out before project reaches breakeven −2 0 Total for financial viability 2 A3. Opportunity costs risks a-f) NPV from the most profitable alternative land use activity is expected to be at least 100% more than that associated with project activities; or where baseline activities are subsistence-driven, net positive community impacts are not demonstrated 0-8 8 The NPV were computed on the basis of a contribution margin of π s = 25 US$/m 3 for timber and of a carbon price of 12,7 US$/tCO 2 . g) Mitigation: Project proponent is a non-profit organization The project proponent is from the private sector.