1. Economic Potential of Land- Use Change and Forestry for Carbon Sequestration and Poverty Reduction

2. Presentation Outline Background Output Objective Farm LevelPolicy Level Recommendation for Future research

3. Problem 2 (tropical countries) deforestation, land degradation, poverty Problem 1 Global Warming demand for CERs supply of CERs the market energy sector industrial plantations smallholder agroforestry Transformation Costs Transaction Costs Background

4. 1.Determine the most appropriate farm forestry systems for capturing carbon credit payments and assisting in poverty reduction Objectives 2.Estimate the transaction costs of actual projects and identify principles of project design to minimise these costs

5. Objective 1 deals with farm-level analysis with tools and outcomes:  The MUTAN spreadsheets containing details (inputs, outputs, prices, costs and carbon) of 24 farm forestry systems  Relational plant-species information database, for both trees and shrubs, (currently called TreeSmart) contains over 100 species.  The SCUAF model (Soils Changes under Agroforestry) has been rewritten. The new version (SCUAF 5) is designed to work in conjunction with a spreadsheet. Examples include shifting cultivation, rotations and agroforestry systems. The software and examples are available for free download at: http://www.une.edu.au/carbon/scuaf.php http://www.une.edu.au/carbon/scuaf.php MUTAN stands for Model Usahatani Hutan (Farm Forestry Model)MUTAN Output

6. Figure 1. Mean annual increment (MAI) and current annual increment (CAI) of two tree species in different sites. Arrows represent the cycle length based On the traditional forester solution (maximisation of MAI)

7. Figure 2. Net present Value (NPV) of two species of trees grown in different sites And under two accounting procedures: with no carbon credits (thin line) or with Carbon credits under the ideal accounting system (solid line). Arrow represent the optimal Cycle length

8. Table 1. Financial Analysis

9. SOURCE: CESERF-ACIAR, 2003 Performance of the Systems: Small Scale CDM

10. Objective 2 deals with transaction costs and project design  Now that the Kyoto Protocol has been ratified, there has been some activity under the Clean Development Mechanism (CDM). However, the projects approved under the CDM so far do not include LUCF projects. So our analysis has been based on existing smallholder development projects from East Nusa Tenggara (IFSP and HKM), Muara Sungkai (Lampung) ICRAF Project and Lombok (JIFPRO). Output

11. Project Design Document project developer National approval host government (DNA) Implementation + Monitoring CDM executive board Verification and certification CER issuance operational entity CDM executive board Validation Stakeholder comments Registration project developer CDM Cycle

12. Project Design Document National approval Implementation + Monitoring Verification and certification CER issuance Validation Stakeholder comments Registration Rp. 361.52 juta Rp. 0 Incl in certification 2% of CERs Rp. 148.4 juta Rp. 400 juta * projects < 15,000 t C/y projects >8000 ha Estimation of Transaction Costs for JIFPRO Pre-CDM Project Sumber: Prasetyo, 2005.

13. search and negotiation approvalproject management monitoringenforcement and insurance Generate & disseminate information Bundle projects Teach landholders to measure C Encourage community self- regulation Promote secure land tenure Reducing transaction costs

14. PublicationsPublications: 16 working papers available in ACIAR manuscript 4 published journals and 3 under review Computer Programs: BRASS (Bioeconomic Rubber Agroforestry Support System)BRASS SCUAF (Soil Change Under Agroforestry)SCUAF MUTAN (Model Usahatani Hutan / Farm Forestry Model)MUTAN TreeSmart (Relational Tree Database) Output Disemination

15. Eligible Location (TA ADB Project 2005/6)  Deli Serdang, Nth. Sumatra  Singkarak, West Sumatra  West Lampung, Lampung  Sidrap, South Sulawesi  Bombana, SE Sulawesi  Hu. Su. Sel., S. Kalimantan Indonesian closed forest cover - 1995

16. 1.Potential of carbon trading for regional economic and community development 2.Research on designing simplified carbon trading 3.Research on how CDM community forestry have effect on combating global change Possibility for future research :