1. Participation of Smallholders in Carbon Certified Agroforestry: What are the Determinants? Emmanuel Olatunbosun Benjamin (Bergische Universität Wuppertal / Technische Universität München) Dr. Matthias Blum (Queen´s University Belfast)

2. Outline of presentation 1.Introduction 2.Conceptual Framework 3.Research Methodology & Results 4.Conclusion 5.Reference 1

3. Introduction 2 Payment for Ecosystem Services (PES) in Agroforestry Clean Development Mechanism (CDM) Voluntary Carbon Standards (VCS) Reducing emissions from deforestation and forest degradation (REDD+) 1 23 Smallholder Farmers

4. 3 Introduction Identify agroforestry carbon offset project Project evaluation and auditing (National) Project validation (International) Project registration Certificate issuance Payment for Ecosystem Services (PES)

5. 4 Introduction Success of ecosystem service programs: Good governance and secure property rights “ The most important step in (ecosystem service programs) is to design the payment mechanism so as not to exclude poor land users.” Pagiola et al. 2005 The overall research objectives are…  To review the determinants of smallholder participation in agroforestry carbon offset projects with payment for ecosystem services (PES).  To analyze whether determinants of project participation may create an exclusive clubs – anti-poor. Source: Gouyon 2003; Pagiola et al. 2004; Grieg-Gran et al. 2006; Wunder 2007; Tallis et al. 2009.

6. Introduction The International Small Group and Tree Planting Program (TIST) - Kenya 5 Source: www.tist.orgwww.tist.org

7. 5 Conceptual Framework Case study: The International Small Group and Tree Planting Program (TIST) Kenya  Non Governmental organization (NGO): India, Kenya, Tanzania and Uganda  Total Number of trees: 7,370,638  Number of farmers: 59,553  Amount of Carbon dioxide (CO 2 ) sequestrated: 250,000 tons (2012)  Year of survey: 2013  Number of Observations: 210 (TIST and Non-TIST farmers)  Areas surveyed: Embu, Meru and Nanyuki Source: www.tist.org; Shames et al. (2012).www.tist.org

8. 6 Conceptual Framework Reason for spread of TIST…  Financial incentives of PES  Est. US$0.02 per tree (2013)  Low transaction cost  Other benefits associated with agroforestry Utility function U c = Utility of conservation farming (Agroforestry carbon offset project) U a = Utility of conventional farming (Alternative land use)

9. 7 Research Methodology Information (Wunscher et al. 2011) “ Generating and disseminating information is one of the largest source of transactions costs in carbon projects” Oscar Cacho and Leslie Lipper, 200 7

10. 8 Research Methodology

11. Results Hypothesized relationship of farm(er) variables and adoption of forestry carbon offset in Kenya VariableMeasurementExpected effect Neighbor is PES program memberDiscrete+ Co-operative memberDiscrete+ Farm sizeHectares+/- Farm slopeDiscrete+/- Distance to marketKm+/- Labor supplyDiscrete+ Credit constraint (yes/no)Discrete+ Interest rate (in %)%- AgeYears+/- EducationYears+/- Mass mediaDiscrete+/- 9

12. Results Determinants of forestry carbon offset adoption among smallholder farmers in the Mount Kenyan region Note: Robust z-statistics in parentheses; *** p<0.01, ** p<0.05, * p<0.1 10 VARIABLESModel 1Model 2Model 3Model 4Model 5 Neighbor is member of agroforestry with PES program (TIST)3.13***3.71***3.12***2.49***3.03*** (4.05)(4.79)(4.08)(2.87)(3.84) Co-operative member1.41***1.34***1.41***2.162.06*** (2.63)(3.23)(2.66)(1.53)(3.02) Age0.020.03**0.020.050.04* (1.28)(2.34)(1.28)(1.04)(1.66) Observations15617915659129

13. 11 Source: *Pagiola et al. 2005 Results In the logit regression analysis we controlled for: Education Labor Credit constraint Farm size Price Per ton of carbon Limitations of participation in a PES program correlates with poverty aspects*: Insecure land tenure Lack of title Small farm holdings Lack of access to credit Statistically insignificant / Opp. effect

14. Conclusion  Carbon offset forestry programs (e.g. TIST, Kenya) do NOT provide an avenue to exclude poorer smallholder farmers.  Formal and informal Networking is vital for participation or adoption.  Older farmers also participate in Carbon offset forestry programs.  Participation in TIST is not limited or restricted due to farm size, Education or Credit Constraint.  Low carbon dioxide (CO 2 ) per ton prices unlikely to encourage smallholder ecosystem services adoption especially given high opportunity cost. 11

15. Thank you for your attention 12

16. Reference Benjamin 2015 Financial institutions and trends in sustainable agriculture: Synergy in rural sub- Saharan Africa. Published dissertation [online] URL: http://elpub.bib.uni- wuppertal.de/edocs/dokumente/fbb/wirtschaftswissenschaft/diss2015/benjaminhttp://elpub.bib.uni- wuppertal.de/edocs/dokumente/fbb/wirtschaftswissenschaft/diss2015/benjamin Cacho, O., and L. Lipper. 2006. Abatement and transaction costs of carbon-sink projects involving smallholders. ESA Working Paper Number 06-13. Food and Agriculture Organization, Rome, Italy. [online] URL: ftp://ftp.fao.org/docrep/fao/009/ah632e/ ah632e00.pdf. Gouyon, A. 2003. Rewarding the upland poor for environmental services: a review of initiatives from developed countries.World Agroforestry Centre (ICRAF). Grieg-Gran, M. Noel, S. and Porras, I. 2006 Lessons learned from payments for environmental services. Green Water Credits Report 2, ISRIC Report 2006/5, ISRIC, Wageningen Pagiola, S., Agostini, P., Gobbi, J., de Haan, C., Ibrahim, M.,Murgueitio, E., Ramírez, E., Rosales, M., Ruíz, J.P., 2004. Paying for biodiversity conservation services in agricultural landscapes. Environment Department Paper, vol. 96. World Bank, Washington 13

17. Reference Shames, S., Wollenberg, E., Buck, L.E., Kristjanson, P., Masiga, M. and Biryahaho, B. (2012). Institutional innovations in African smallholder carbon projects.CCAFS Report no. 8. CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS). Available online at: www.ccafs.cgiar.org. (Accessed 27 February 2011) Tallis, H., Goldman, R., Uhl, M. & Brosi, B., 2009. Integrating conservation and development in the field:implementing ecosystem service projects. Frontiers in Ecology and Environment, 7: 12- 20. Wunder, S. 2007. The efficiency of payments for environmental services in tropical conservation. Conservation Biology 21(1):48-58. Wunscher,T., Engel, S. and Wunder, S. (2011). Opportunity Costs as a Determinant of Participation in Payments for Ecosystem Service Schemes paper presented at the European Association of Agricultural Economists Conference, 30th Aug. – 24th Sept. 24, Zurich, Switzerland. 14