Carbon and livelihoods in Post-Kyoto: Assessing voluntary carbon markets

Abstract

1. IntroductionThe first Kyoto commitment period ends in 2012 with no clearconsensus regarding post-Kyoto governance. There is nonethelessan increased recognition that efforts to adapt to climate change areas important as mitigation strategies (World Bank, 2010). Adaptationobjectivesbuildonlong-termeffortstorelatemorefullyclimatechangemitigation—embodied by the establishment of carbon markets—to theenhancement of adaptive capacity and sustainable development (Smitand Pilifosova, 2003). Ideally, carbon marketscan contribute toadapta-tion and mitigation objectives by reducing greenhouse gas emissionswhile also contributing to sustainable development outcomes; a win–win agenda that is explicitly represented in the dual-goals of theClean-Development Mechanism (CDM). Milder et al. (2010) estimatethat25to50 million low-income landstewardscouldbenefitfromcar-bon markets alone by 2030 especially if carbon projects invest in liveli-hood enhancing practices.Despite the rapid growth of carbon offsets over the past decade,sustainable development objectives for the developing world are lag-ging(Boydet al.,2009;Olsen,2007;SutterandParreno,2007).Toun-derstand the dynamics at play, I relate mitigation actions driven byland-based carbon projects to livelihood outcomes in the developingworld. I focus specifically on voluntary carbon markets (VCMs),situating them within the wider carbon governance system (i.e.CDM), because these markets have been at the forefront of newdevelopments in carbon governance facilitating for instance theadvent of reduced emissions for deforestation and degradation(REDD+) mechanisms. While carbon markets have the potential tofoster pro-poor growth and environmental conservation; in practicelinking carbon markets to livelihoods is greatly constrained by thecomplexity of socio-economic, political and environmental conditionson the ground as well as difficulty in building trust and linkages acrossscales.2. Voluntary carbon market within the wider regulatory contextof carbon financeThe Kyoto protocol (1997) was instrumental to the developmentof global carbon finance mechanisms including regulatory frame-works such as the CDM and parallel voluntary markets. These mar-kets support the trade of carbon offsets to reduce, sequester oravoid the emission of greenhouse gases globally. Despite their rapidgrowth during the past 7 years, carbon markets have slowed downdue to their vulnerability to global economic crises as well as abroader uncertainty relating to the fate of the Kyoto agreementpost-2012 (Linacre et al., 2011; Peters-Stanley et al., 2011). Whilethe total value of global carbonstabilized around$142 billion, the pri-mary CDM decreased by 50% since 2009 for a total value of 1.5 billion,less than 2005 when the Kyoto protocol was first implemented(Linacre et al., 2011: 9). Given these uncertainties, lessons learnedfrom the voluntary carbon will be extremely valuable to assess howcarbon markets may evolve.VCMs are considerably smaller than regulatory frameworks with0.1% of the value and 0.02% of the volume of the global carbon market(Peters-Stanley et al., 2011:11). Yet their impact on the trajectory ofcarbon markets is not negligible. In opposition to a declining CDM,131.2 MtCO2e were traded in 2010 for an overall value of 424 millionUSD—34% more than 2009 and even exceeding historic trends. 45% ofthese credits were land-based, and 29% were related to the burgeon-ing REDD carbon market (Peters-Stanley et al., 2011: 11). The volumeof VCMs even exceeded that of the primary CDM in 2010 (Fig. 1).The CDM was developed to reach a twofold agenda: reduce GHGemissions by facilitating the trade of carbon offsets between industri-alized countries that ratified the Kyoto protocol and the developingworld while simultaneously contributing to sustainable developmentin the host countries. While in theory synergies exist between thetwo objectives, in practice there are trade-offs between cost-efficient mitigation and sustainable development goals, which resultlimited sustainable development outcomes (Boyd et al., 2009; Olsen,2007; Sutter and Parreno, 2007). Sustainable development efforts