Leakage

Leakage is defined as the unanticipated decrease or increase in carbon emissions or removal outside a project's accounting boundary (see Chapter 8 for more information on project boundary) as a result of project activities. It can be referred to as the offsite effect (Aukland et al. 2003; Sathaye and Andrasko 2006). For example, reforestation of an area used for grazing can lead animal owners to take the livestock to new land outside the project boundary for grazing. The type of leakage varies with the type of projects, but most land-based projects are subject to leakage. Occurrence of leakage requires assessments outside the project boundary (Ravindranath and Sathaye 2002).

There are different types of leakages (Table 6.4), which can arise from both market effects and shifting of activity and can have both positive and negative impacts. From a carbon inventory point of view, both positive and negative leakages are important although the negative impacts in terms of carbon mitigation or climate benefits are of greater concern.

Primary leakage occurs when carbon benefits of a project are entirely or partially negated by similar processes in another area. This means that the negative activity has moved elsewhere as a direct effect of the implementation of the project. Primary leakage can include processes such as extraction of fuelwood,

Table 6.4 Different types of leakages and their features

Type of leakage

Description

Positive spillover

Implementation of a project could lead to replication of activities such as forest conservation, sustainable extraction, reforestation and grassland reclamation practices outside the project boundary, possibly driven by socioeconomic benefits, ultimately enhancing carbon storage outside the project boundary.

Shifting land conversion

Implementation of a project activity may stop land conversion within the project boundary but shift it to locations outside the project boundary. This will lead to carbon emissions outside the project boundary, which will be a negative leakage, negating the overall carbon benefit of the project.

Shifting source of biomass extraction or livestock grazing

Implementation of a project may lead to shifting of extraction of biomass (fuelwood or timber) and grazing to outside the project boundary. Such a shift in woody biomass extraction or grazing may lead to carbon emission outside the project boundary.

Table 6.5 Implications of leakage for carbon mitigation and other land-based projects

Issue

Carbon mitigation projects

Land-based projects

Project

- Project boundary definition involves

- Project boundary usually

boundary

inclusion of areas likely to be affected

restricted to area subjected to

by project activities, even if outside the

direct project activities

project intervention area, for leakage

- Area directly subjected to project

estimation

activities is the project boundary

- Boundary needs to be defined for

for most projects, except forest

carbon inventory

conservation

Importance

- Critical for estimation of net additional

- Roundwood production and land

carbon benefits and for all mitigation

development projects: leakage

projects, most critical for avoided

not an issue

deforestation

- Forest conservation: a critical

issue from the perspective of

biodiversity, flow of forest

products, loss of tree crown

Methods

- Approved methods to be adopted, e.g.

- No specific methods

- CDM: http://cdm.unfccc.int

- Relevant only to forest

- GEF: Pearson et al. (2005a)

conservation projects

- Methods require monitoring of car-

- Monitoring of non-project area

bon stocks in land area outside the

impacted may be necessary

project area

Pools

- All carbon pools, particularly soil

- Forest conservation: above-

organic carbon and above-ground bio-

ground biomass and soil carbon

mass for projects involving land-use

if land-use change is involved

change

Frequency

- Periodicity similar to that for monitor-

- Monitoring at the end of the

ing carbon pools

project may be adequate

timber and grazing in another area and it can also occur because of shifting of land conversion or biomass extraction outside the project boundary, leading to CO2 emissions.

Secondary leakage occurs when a project's output creates incentives to increase carbon emission elsewhere. Unlike primary leakage, secondary leakage activities are not directly linked to or carried out by someone directly involved in the project. If project implementation leads to oversupply of timber, causing a reduction in prices in the region and increased timber consumption because timber is cheap, it can be regarded as secondary leakage.

Leakage estimation is an integral component of carbon mitigation projects and to some extent of forest conservation (non-climate-related) projects. Biodiversity conservation or watershed protection could be the focus of forest conservation or protected area management projects. Conservation in project area should not lead to deforestation or land conversion outside the project boundary. Leakage estimation may not be relevant to roundwood production, agroforestry and land reclamation projects. The implications of leakage to carbon mitigation and other land-based projects are presented in Table 6.5. The project boundary is critical for assessment of leakage in both carbon mitigation and other land-based projects.

6.5 Project Boundary

The project boundary is the geographically delineated area dedicated to the project activity. Projects can vary in size from hundreds of hectares to hundreds of thousands of hectares either as a contiguous unit or distributed as multiple parcels under a single project management. The spatial boundaries of the land need to be clearly defined and properly documented for measurements and monitoring. Defining project boundary is necessary to estimate the leakage of carbon benefits due to implementation of the project. A project area can have a primary boundary and a secondary boundary:

• A primary project boundary is the geographic boundary restricted to areas, locations and land-use systems directly subjected to project intervention or activities such as protection, management and planting.

• A secondary project boundary may have to be delineated and marked to include locations and land-use systems outside the project boundary impacted or experiencing leakage due to shifting of land conversion or biomass extraction or livestock grazing. This area can also be subject to the actual project activity.

Both boundaries should be identified and described for carbon mitigation projects. The choice of an accounting boundary influences the carbon stock gains that are assigned to a project. The project boundary is critical for carbon mitigation projects, incorporating the need to include area outside the boundary to assess the impacts on carbon stocks. This issue is not relevant to other land-based projects, except forest conservation projects (Table 6.5).

6.6 Scale of the Project

The size of a project determines the methods to be used for carbon inventory: carbon stock changes in small-scale projects could be monitored using field measurements whereas large-scale projects may require adoption of remote sensing and modelling techniques. Small-scale projects are likely to be more homogeneous with respect to soil, topography, species dominance and silvicultural practices than large-scale projects, which are likely to be heterogeneous, requiring multistage stratification. The heterogeneity or homogeneity of a project also determines the methods to be adopted for boundary determination, stratification, sampling and selection of carbon pools.

Small-scale projects, which are likely to be more homogeneous, can be adequately served by simple methodologies, which reduce the cost of estimating carbon stocks under baseline and project scenario. Small-scale afforestation and reforestation projects are included in this category and recommended default factors can be used for assessing the existing carbon stock taking into account issues such as soil, lifetime of project and climatic conditions (Sanz et al. 2005).

The concept of bundling refers to the idea of combining a number of small and similar projects into a single monitoring system to reduce the transaction cost associated with monitoring. Bundling is permitted under the Clean Development Mechanism (CDM) projects, which means that projects may be bundled as long as the total size is below the limit for a single CDM project (Lee 2004). Implications of the scale of project for carbon mitigation and other projects Scale of the project may not impact the carbon pools to be selected or periodicity of monitoring for carbon mitigation or other land-based projects.

6.7 Conclusions

Carbon inventory for land-based carbon mitigation and other conservation and development projects is influenced by several methodological issues with implications for the inventory: (i) large heterogeneity of soil, topography and vegetation types with implications for rates of carbon stock changes; (ii) need for a baseline scenario to determine additional carbon stocks; (iii) non-permanence of carbon stock gained; (iv) leakage of carbon stock gained within the primary project boundary; (v) need for estimating the net additional or incremental carbon stock gain over the baseline stock gain or loss; (vi) scale of the project with implications for heterogeneity of land-use systems; and (vii) project areas directly impacted by the project activities and areas indirectly impacted by the project activities.

These factors have implications for the methods to be adopted for the carbon inventory (field measurement or remote sensing or modelling), stratification and sampling (single or multistage sampling), selection of carbon pools (single or multiple) and frequency of monitoring. The contentious issues in land-based carbon mitigation projects addressed in this chapter are baseline development, additionally of carbon benefits, non-permanence of carbon stock gains, leakage of carbon benefits, project boundary, and scale of the projects. It was shown that these issues have implications for carbon inventory methods for carbon mitigation projects. However, issues such as baseline and permanence are not of much relevance to forest, grassland and agroforestry development projects. These other land-based conservation projects aim at roundwood production or soil reclamation or biodiversity conservation. A summary of implications of various methodological issues for carbon mitigation and other land-based conservation and development projects is given in Table 6.6.

Table 6.6 Implications of different methodological issues for carbon mitigation and land-based conservation and development projects

Issue

Carbon mitigation projects

Land-based projects

Baseline

■ Very critical for estimating net carbon benefits

Approved methodologies to be used Requires periodic monitoring of relevant carbon pools if carbon stocks are dynamic

■ Not very critical for assessing roundwood production or soil fertility

■ Estimates of carbon stocks at the beginning of the projects adequate

Additionality - Estimation of additional carbon stock gains over the baseline carbon stock changes is necessary

- Approved methodologies to be used

- Periodic monitoring of carbon pools in project and baseline scenario necessary

- Multiple carbon pools are relevant

- Carbon stock estimates at a given period such as at the end of rotation or project

- Standard textbook methods adequate

- Need to monitor only one or two carbon pools

Leakage - Estimation of leakage of carbon benefits outside the area subjected to direct project activities necessary for estimating net carbon benefits - Approved methodologies to be used

■ Leakage relevant to forest conservation projects, if protection in one area leads to forest conversion in another area

Permanence - Estimation of reversal or loss of carbon benefits required - Carbon Stock-Difference method estimates any loss due to reversal of carbon

■ Not an issue for most land-based projects

Project boundary - Includes areas directly subjected to project activities as well as areas not directly subjected to project activities but where carbon stocks will be impacted

- Not an issue for most land-based projects, except forest conservation projects

Scale

Has implications for carbon inventory methods and cost of monitoring

■ Has implications for carbon inventory methods

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