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Smallholder Agroforestry Projects: Potential for carbon sequestration and poverty alleviation

  • Oscar J. Cacho
  • Graham R. Marshall
  • Mary Milne

This paper provides an assessment of the potential for small-holder agro-forestry projects to be competitive in markets for carbon emission reduction credits, and explores the ways in which small-holder participation in such markets may be facilitated. The paper begins with an overview of the issue of global warming and the role of carbon sinks in mitigating climate change. Then an economic model of the carbon emission reduction (CER) market is presented, which includes the impact of transactions costs. An in-depth survey of the economic literature on transactions costs and their implications in the design of markets for CER follows. An assessment of the emission abatement and transaction costs likely to be associated with smallholder agro-forestry projects is presented, based on case study information from Latin America and Indonesia. The paper concludes with policy recommendations on how to design carbon sequestration projects to benefit small-holders and suggests institutional reforms which will be necessary for reducing the transactions costs associated with small-holder participation in the market. The paper also includes a detailed annex with information on carbon sequestration projects involving small-holders which are already under implementation.

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Paper provided by Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) in its series Working Papers with number 03-06.

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Length: 81 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:fao:wpaper:0306
Contact details of provider: Postal: Agricultural Sector in Economic Development Service FAO Viale delle Terme di Caracalla 00153 Rome Italy
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  1. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
  2. Oscar J. Cacho & Robyn L. Hean & Russell M. Wise, 2003. "Carbon-accounting methods and reforestation incentives," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(2), pages 153-179, 06.
  3. Joyotee Smith, 2002. "Afforestation and reforestation in the clean development mechanism of the Kyoto Protocol: implications for forests and forest people," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 2(3/4), pages 322-343.
  4. Posner, R.A. & Rasmusen, E., 1998. "Creating and Enforcing Norms, with Special Reference to Sanctions," Papers 98-005, Indiana - Center for Econometric Model Research.
  5. De Jong, Ben H. J. & Tipper, Richard & Montoya-Gomez, Guillermo, 2000. "An economic analysis of the potential for carbon sequestration by forests: evidence from southern Mexico," Ecological Economics, Elsevier, vol. 33(2), pages 313-327, May.
  6. Daniel W. Bromley, 1997. "Rethinking Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1383-1393.
  7. Otsuka, Keijiro & Place, Frank, 2001. "Land tenure and natural resource management," Food policy statements 34, International Food Policy Research Institute (IFPRI).
  8. Posner, Richard A, 1997. "Social Norms and the Law: An Economic Approach," American Economic Review, American Economic Association, vol. 87(2), pages 365-69, May.
  9. Michael Dutschke, Axel Michaelowa, 2000. "Climate cooperation as development policy: the case Of Costa Rica," International Journal of Sustainable Development, Inderscience Enterprises Ltd, vol. 3(1), pages 63-94.
  10. repec:cup:cbooks:9780521348911 is not listed on IDEAS
  11. Nee, Victor, 1998. "Norms and Networks in Economic and Organizational Performance," American Economic Review, American Economic Association, vol. 88(2), pages 85-89, May.
  12. Dahlman, Carl J, 1979. "The Problem of Externality," Journal of Law and Economics, University of Chicago Press, vol. 22(1), pages 141-62, April.
  13. Philip Fearnside & Daniel Lashof & Pedro Moura-Costa, 2000. "Accounting for time in Mitigating Global Warming through land-use change and forestry," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 5(3), pages 239-270, September.
  14. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
  15. Grist, P. & Menz, Kenneth M. & Thomas, 1998. "Modified BEAM Rubber Agroforestry Models: RRYIELD and RRECON," Technical Reports 113817, Australian Centre for International Agricultural Research.
  16. Fehr, Ernst & Gachter, Simon, 1998. "Reciprocity and economics: The economic implications of Homo Reciprocans1," European Economic Review, Elsevier, vol. 42(3-5), pages 845-859, May.
  17. Posner, Richard A. & Rasmusen, Eric B., 1999. "Creating and enforcing norms, with special reference to sanctions1," International Review of Law and Economics, Elsevier, vol. 19(3), pages 369-382, September.
  18. Lecocq, Franck & Chomitz, Kenneth, 2001. "Optimal use of carbon sequestration in a global climate change strategy : is there a wooden bridge to a clean energy future ?," Policy Research Working Paper Series 2635, The World Bank.
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