The economics of the carbon sequestration potential of plantation forestry in south-western Uganda

Abstract

This study assessed the amount of carbon stored and the economic viability of the small-scale Clean Development Mechanism (CDM) carbon offsets in Pinus caribaea and Eucalyptus grandis plantations under varying rotations. Volume equations were used to estimate carbon stocks and merchantable wood volume in the plantations, while net present value (NPV) and annual equivalent value (AEV) were used as measures of profitability at the optimum economic rotation age as well as at the CDM-defined crediting period of 20 years. The findings show that over a 20-year rotation, E. grandis and P. caribaea plantations sequestered 638 and 418 t CO2-e ha−1, respectively. The NPVs of E. grandis and P. caribaea with carbon credits over the CDM carbon-crediting period of 20 years were US$2 540 ha−1 and US$1 814 ha−1, respectively. This is higher than the NPVs without carbon credits of US$1 543 ha−1 and US$1 390 ha−1 for E. grandis and P. caribaea, respectively. The AEV of E. grandis harvested at its optimal economic rotation of 10 years was US$316 ha−1. This is slightly higher than the AEV of US$298 ha−1, utilising the CDM carbon-crediting period of 20 years. In contrast, the AEV of P. caribaea under the 20-year CDM carbon-crediting period was higher than harvesting at the optimal economic rotation of 16 years without carbon credits. When the average CDM contract establishment costs exceed US$500 ha−1 and US$1 000 ha−1 for P. caribaea and E. grandis woodlots, respectively, it is not economically viable for one to participate in the CDM forest carbon offsets programme. In conclusion, the study results indicate that whereas E. grandis has a higher biological potential to sequester carbon than P. caribaea, it is currently not economically viable for participation in the CDM forest carbon offset scheme. In contrast, it is economically viable for P. caribaea plantations to participate in the CDM, if the CDM contract establishment costs are low.