An Economic Analysis of REDD Carbon Payments on Agricultural Expansion in Bolivia
Abstract
As deforestation accounts for a significant percentage of worldwide carbon emissions,
reducing emissions from deforestation and degradation (REDD) has been the focus of
intense international debate. REDD programs offer a financial mechanism to compensate
areas that would have been deforested for avoided carbon emissions above an established
baseline. This study examined the feasibility of such a program in El Chore Forest
Reserve in Bolivia, which faces destruction from the illegal seizure of land by poor
immigrant farmers.
Three main components were used to obtain a spatial distribution of the minimum price
of carbon required for conservation (i.e. compensate for the opportunity cost of agriculture):
estimation of biomass, prediction of deforestation, and calculation of the opportunity
cost. A map of biomass was estimated by regressing spectral enhancements of 2007
satellite imagery on a spatially coarse reference map of the Amazon region. It was
concluded that the reserve has an average biomass of 121.1 Mg biomass/ha with a standard
deviation of 15.58.
The spatial probability of future deforestation was calculated using a logistic analysis
on deforestation between 2001 and 2004 based on biophysical variables. By applying
a projection of area deforested per year based on historical trends, the results indicated
the area that would be deforested. In the absence of intervention, it was predicted
that 44% of the forest reserve would be converted to agriculture by 2036 (Kappa: 0.57).
The opportunity cost was modeled using profit predictions of the four main crops (rice,
soybean, maize, wheat). Depending on the crop, projections indicated that prices
would increase 35-100% and yields were expected to increase 55-88% by 2040. Expected
profits were scaled based on the suitability of the land by crop. The average opportunity
cost for a three-year time period ranged from $904/ha in 2006 to $2143/ha in 2036.
Using an economic model with an 8% discount rate the average price would need to be
$21.17/tC. Since the biomass estimate is conservative, this is likely an upper bound
on the price of carbon. These results could be used to inform the development of
a carbon program and determine target areas for conservation initiatives.
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https://hdl.handle.net/10161/962Citation
Stich, Monica (2009). An Economic Analysis of REDD Carbon Payments on Agricultural Expansion in Bolivia.
Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/962.Collections
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