Deforestation Project In Aceh

There are several stakeholders in the 750 000 hectare Aceh project designed to reduce deforestation by 85 percent in 30 years, thus avoiding the emission of 3.3 million tonnes of carbon dioxide annually. The project area, the Ulu Masen Forest Ecosystem, is the last large unprotected area of rainforest in Sumatra, containing the Sumatran Elephant (Elephus maximus), the Clouded Leopard (Neofelis nebulusa), the Sumatran Tiger (Panthera tigris sumatrae) and the Sumatran Orangutan (Pongo albelii) (Mapala, 2007).

The major project partners are the local communities, the Government of Aceh, Fauna & Flora International, a UK-based environmental organization, and Carbon Conservation Ltd, an Australian ecosystem services company. A third party, the Rainforest Alliance, audited and validated the project against the project design standards for ancillary social and biodiversity benefits set by the Climate Community & Biodiversity Alliance (2008b). A reduction in logging is expected to generate carbon credits and profits.

To raise investment funds Merrill Lynch is offering its retail and commercial clients voluntary carbon credits at an expected initial price of US$5-10 per tonne of CO2e. This is expected to facilitate an investment of US$48 million in the first five years, half of which will be spent on economic development in villages through the cultivation of palm oil, coffee and cocoa, to be marketed under the brand name 'Aceh Green' (Ecosystem Marketplace, 2008; Rainforest Alliance, 2008).

The chapter finishes with a review of innovative funding of biodiversity conservation through REDD.

4.4.4 Biodiversity Implications of Innovative Funding Mechanisms for Voluntary REDD Schemes

The World Bank's BioCarbon Fund has pioneered A/R activities under the CDM of the Kyoto Protocol. The BioCarbon Fund funded the Pearl River Basin project in China, the first CDM project to be registered, reviewed in Chapter 2, and assessed for its biodiversity impacts above. A

second fund of the World Bank, the Forest Carbon Partnership Facility (FCPF), is aimed at REDD by applying value to the carbon in standing forestry. By implication, projects that avoid deforestation will at the same time lead to the conservation of the biodiversity in the reprieved forests.

The FCPF has two parts, the Readiness Mechanism and the Carbon Finance Mechanism. The former assists 20 tropical and subtropical countries in voluntarily readying themselves for future REDD. Strategies are prepared and emissions monitored from deforestation and degradation. The Carbon Finance Mechanism will subsequently select a few countries for the pilot phase, which will make incentive payments for independently verified emission reductions by REDD. A variety of approaches will be considered for financing and testing. For example, macro policy and legal reforms in forest conservation and management, land-use policies, payments for environmental services, establishment of parks and intensification of agriculture. The target size for the Readiness Mechanism is US$100 million and for the Carbon Finance Mechanism US$200, the sources being both private and government. It is intended that much larger financial flows will be made possible over the medium term through the knowledge and experience developed in the pilot phase (World Bank, 2008).

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