Public Policies to Support the Transition

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Governments can take specific steps immediately to support the needed transition by integrating agriculture, land use, and climate action programs at national and local landscape levels. Costa Rica is a leader in these efforts. The government has committed to achieving "climate neutrality" by 2021, with an ambitious agenda including mitigation through land use change. Costa Rica is a participant in the Coalition for Rainforest Nations, a group encouraging avoided-defor-estation programs, and has already increased its forest cover from 21 percent in 1986 to 51 percent in 2006. The country is taking advantage of markets that make payments for ecosystem services and ecotourism to support these efforts.57

Currently, governments spend billions of dollars each year on agricultural subsidy payments to farmers for production and inputs, primarily in the United States ($13 billion in 2006, which was 16 percent of the value of agricultural production) and Europe ($77 billion, or 40 percent of agricultural production value) but also in Japan, India, China, and elsewhere. Most of these payments exacerbate chemical use, the expansion of cropland to sensitive areas, and overexploitation of water and other resources while distorting trade and reinforcing unsustainable agricultural practices. Some countries are beginning to redirect subsidy payments to agri-environmental payments for all kinds of ecosystem services, and these can explicitly include carbon storage or emissions reduction.58

Growth in commercial demand for agricultural and forest products from increased populations and incomes in developing countries and demand for biofuels in industrial

Farming and Land Use to Cool the Planet

Box 3-2. Paying Farmers for Climate Benefits

Paying farmers and land managers to reduce carbon emissions or store greenhouse gases is a critical way to both mitigate climate change and generate ecosystem and livelihood benefits. The carbon market for land use has three main components: carbon emissions offsets for the regulatory market, as established by the Kyoto Protocol; offset activities in emerging U.S. regulatory markets operating outside the Kyoto Protocol; and the sale of voluntary carbon offsets coming from land use, land use change, and forestry, primarily to individual consumers, philanthropic buyers, and the private sector.

Developing countries can implement afforestation and reforestation projects that count toward emission reduction targets of industrial countries through the Clean Development Mechanism of the Kyoto Protocol.The treaty authorizes afforestation and reforestation but excludes agricultural or forest management, avoided deforestation or degradation, and soil carbon storage. However, each CDM project must address thorny issues of nonpermanence of carbon uptake by vegetation and soil, risks of potential displacement of emissions as deforestation just moves elsewhere, and sustainable development prospects in the host country that can limit implementation.

There is more innovation in the voluntary market, where buyers value multiple benefits.The value of forestry plus land use projects more than doubled from $35 million in 2006 to $72 million in 2007.Work is proceeding to lend more credibility,transparency, and uniformity in methods used for creating land-based carbon credits.

There are several ongoing initiatives to promote diverse types of land-use-based payments:

• The World Bank's $91.9-million BioCarbon Fund is financing afforestation, reforestation, REDD, agroforestry, and agricultural and ecosystem-based projects that not only promote biodiversity conservation and poverty alleviation but also sequester carbon.

• The Regional Greenhouse Gas Initiative in the nations is stimulating investments by both private and public sectors. In 2003, African northeastern United States will include afforestation and methane capture from U.S. farms.

• The trading system in New South Wales, Australia—the world's first—provides for carbon sequestration through forestry, including on-farm forest regeneration.

• The New Zealand government is investing more than $ 175 million over five years in a Sustainable Land Management and Climate Change Plan to help the agriculture and forestry sectors adapt to, mitigate, and take advantage of the business opportunities of climate change. This scheme will include specific cap-and-trade allocations to the dairy sector and will incorporate cash grants to encourage new plantings by landowners, increased research funding, technology transfer, and incentives to use more wood products and bio-energy.

• Rabobank,the world's largest agricultural financier, will pay farmers $83,000 to reforest, which will be sold as carbon offsets; the bank may use some of these credits to offset its own activities.This is the first transaction of its kind in Brazil's Xingu province, which has the country's highest deforestation rates. Soy and cattle farmers are targeted, and replanting is planned for riparian stretches through the region.

• REDD payments for avoided deforestation in Mato Grosso state alone in Brazil are estimated at $388 million annually.

Much larger initiatives are needed now to link carbon finance with investments to achieve rural food security by "re-greening" degraded watersheds, promoting agroforestry, restoring soil organic matter, rehabilitating degraded pastures, controlling fires, or protecting threatened forests and natural areas important for local livelihoods. If low-income landowners and managers are to benefit from payments for ecosystem services, they need secure rights, clear indicators of performance, and systems for aggregating buyers and sellers to keep transaction costs low.

Source: See endnote 56.

governments committed to increase public investment in agriculture to at least 10 per-

Farming and Land Use to Cool the Planet cent a year, although only Rwanda and Zambia have done this so far. The World Bank and the Bill & Melinda Gates Foundation have committed to large increases in funding in the developing world. There is a major window of opportunity right now to put climate change adaptation and mitigation at the core of these strategies.59

This is beginning to happen in small steps. Brazil is crafting a diverse set of investment programs to support rural land users who invest in land use change for climate change mitigation and adaptation. The U.N. Environment Programme is initiating dialogues on "greening" the international response to the food crisis, linking goals of international environmental conventions with the Millennium Development Goals.60

Many available technologies and management practices could lighten the climate footprint of agriculture and other land uses and protect existing carbon sinks in natural vegetation.

But much more comprehensive action is needed. If not, this otherwise positive trend could seriously undermine climate action programs. A new vision is needed to respond to this food crisis that not only provides a short-term Band-Aid to refill next year's grain bins but also puts the planet on a trajectory toward sustainable, climate-friendly food systems.

National policy, however, is not enough. It is essential to invest in building capacity at local levels to manage ecoagricultural landscapes—to enable multistakeholder platforms to plan, implement, and track progress in achieving climate-friendly land use systems that benefit local people, agricultural production, and ecosystems.

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