1. Exploring potential to link smallholder dairy farmers in Kenya with carbon markets Andreas Wilkes UNIQUE forestry and landuse GmbH andreas.wilkes@unique-landuse.de

2. The concept 2 Source: S Fraval presentation at Nairobi workshop, January 2013

3. Collaborating organizations FAO (Food and Agriculture Organization of the UN): the UN specialized body focused on agriculture. The Animal Production and Health Division's global assessment of GHG mitigation potential in global dairy systems identified synergies between mitigation and productivity gains in smallholder systems as a global dairy sector priority. ILRI (International Livestock Research Institute): a member of the Consultative Group on International Agricultural Research focusing on livestock production for livelihoods in developing Countries. Based in Kenya, ILRI has extensive research on the Kenyan smallholder dairy sector. Ministry of Agriculture, Livestock and Fisheries, Government of Kenya: the Dairy Services Division and Climate Change Unit are both directly involved in the project. Unique forestry and landuse GmbH and Climate Check: consulting companies with extensive experience of research, advisory services and methodology development in the agriculture sector. 3

4. Contents Production systems in the region GHG emissions profiles and pathways Concept for GHG accounting and monitoring Potential institutional arrangements 4

5. Pilot project context Location of pilot: North Rift Valley region of Kenya. Average cattle herd size: 6-7 head (max. 25) Feeding systems: Grazing only: 77% Grazing + stall feeding: 11% Stall feeding only: 9% 5

6. What do we know about emissions? (1) 6 Source: FAO unpublished study, 2013

7. 7 What do we know about emissions? (2) Source: Global Environmental Assessment Model (GLEAM), FAO, 2013

8. What do household surveys show? Ayrshire n=174 Friesian n=177 Mean yield by site (Friesian) (KG/12 months) *Significant at 10% C.I. Milk yields are low (averaging 1620 - 2000 liters / cow / year) but with large variation, indicating potential for improvement Recent interventions (e.g. improved breeds, improved feed production on-farm, increased use of purchased feeds, animal health interventions) show that significant milk yield increases can be achieved. 8

9. Milk yield kgCO2e / kg milk Grazers Graze + stall Zero grazers Baseline for grazers Baseline for graze + stall Baseline for zero grazers How emission reductions would be measured (1) 9

10. Included: Methane emissions from enteric fermentation of lactating cows Emissions embodied in feed production May be excluded: Manure (if data shows there is no increase per liter milk due to improving productivity) Farm buildings (likely to be insignificant over a 10-20 year lifetime) Replacement herd (if improved management of lactating cows does not increase emissions from other cattle)  Implies only need to monitor milk yields. 10 How emission reductions would be measured (2)

11. Community benefits Western Kenya has the highest concentration of poor people in Kenya. Dairy is the main source of income for 80% of the farmers in the project area. Manure from dairy cows provides essential nutrients for productive and sustainable crop production. Dairy is an economic step-up from crop production, and is a key pathway out of poverty, providing employment and a regular source of cash income for poor households. A significant proportion of milk is consumed on-farm, contributing vital protein and nutrients for children and other family members. Smallholders access dairy markets through community-based enterprises, building economic resilience and social capital. 11

12. Economic benefits (EADD example) 127% Source: ILRI evaluation report. 12

13. So what is the potential role of carbon revenues? Hypothetical estimations: One hub with 4000 households with 2 lactating cows, increasing yield from 1700 l to 2700 l over a 5 year period: Household mitigation = 0.3 t/CO2-e Hub mitigation = 1200 t/CO2-e Price US$ / tCO2e 51015 Total carbon revenue60001200018000 Annual carbon revenue120024003600  Carbon revenues may be sufficient to fund one extension worker for each hub, thus ensuring continued practice improvement 13

14. Potential institutional arrangements 14

15. Our investigations continue  Analysis of household data to assess rationale for including and excluding GHG sources and to set baseline emission levels  Development of draft methodology in collaboration with the Gold Standard  Discussions with local, national and international stakeholders on pilot activity design 15

16. Thank you ! Andreas Wilkes andreas.wilkes@unique-landuse.de