How to Include Terrestrial Carbon in Developing Nations in the Overall Climate Change Solution

Ralph Ashton and Warwick J. McKibbin
Warwick McKibbin
Warwick J. McKibbin Former expert - Economic Studies, Center on Regulation and Markets, Distinguished Professor of Economics & Public Policy - Crawford School of Public Policy, The Australian National University

July 31, 2008

Editor’s Note: In a new report by the Terrestrial Carbon Group, Senior Fellow Warwick McKibbin and co-author Ralph Ashton, argue that policymakers should consider action to unlock the potential of terrestrial carbon, including trees, soil and peat, to help alleviate climate change. The following abstract summarizes the critical issues. View the full report by the Terrestrial Carbon Group, of which both authors are members.


“We know enough to unlock up to 25% of the climate change solution by providing incentives to change land management decisions in developing nations. Now is the time to turn knowledge into policy and policy into action.”

Human-induced climate change is caused by the build-up of greenhouse gases in the atmosphere. Greenhouse gases have only two other places to go: the oceans and the terrestrial system (including land and vegetation).

Climate change is not just an environmental issue; it has impacts on all facets of life in developed and developing nations. Avoiding dangerous climate change is an essential task for the whole world. It is a difficult task, and we must therefore use all available means.

Terrestrial carbon (including trees, soil, and peat) can be used to provide up to 25% of the climate change solution.

Terrestrial carbon is not coherently part of the international response to climate change. Importantly, reducing the business as usual emissions of terrestrial carbon in developing nations is excluded from the Kyoto Protocol. The world agreed in Montreal in 2005 (and again in Bali in 2007) to explore including the reduction of greenhouse gas emissions from deforestation and forest degradation (REDD) in developing nations in the post-2012 international climate framework. A successful response to climate change must eventually include forests and all other terrestrial carbon. The immediate and ongoing effective reduction of emissions from deforestation and forest degradation is essential, and should and can be the first step on the path to a more holistic approach to terrestrial carbon.

Under the Bali Roadmap agreed in December 2007, developed nations agreed to pursue new “quantified emission limitation and reduction objectives”, and developing nations agreed to undertake “nationally appropriate mitigation actions”. Action on terrestrial carbon could contribute to fulfilling these commitments.

Over the coming decades, vegetated land in developing nations will be increasingly threatened with conversion to agricultural and plantation use, and to human settlements and infrastructure. The exception will be land that is protected by law, protected by biophysical conditions, or protected by economic constraints. This increasing threat will be driven by the dynamic links between (a) population, (b) demand for food, fibre, fuel, carbon, and land, (c) prices for those commodities, and (d) land use decisions. The business as usual scenario is that most existing terrestrial carbon on unprotected land will be emitted. As land is taken out of production to be “protected” for carbon sequestration, land for other uses will become scarcer, more valuable, and under even more pressure for conversion.

To harness the potential of terrestrial carbon in the climate change solution, we need a response that values terrestrial carbon so that it can compete in this dynamic global context.

The good news is that, while some uncertainty remains, we know enough to unlock the potential of terrestrial carbon in the climate change solution. The science on the problem and the solution is clear enough. The economics is clear enough. The drivers of land-use decisions are well enough understood. And the institutional arrangements are possible.

Action on terrestrial carbon that is consistent with the following nine guiding principles will be an effective contribution to addressing climate change:

1. Maximise long-term terrestrial carbon volumes

2. Maintain existing terrestrial carbon and create new terrestrial carbon

3. Include all types of terrestrial carbon (using a phased approach starting with carbon and CO2 in peatlands, forest, and lands that can become secondary forest)

4. Use a mix of complementary approaches (market and non-market, public and private)

5. Take action on terrestrial carbon in addition to, not in substitution for, reductions in greenhouse gas emissions from all other sources across the world

6. Recognise sovereignty over land management

7. Build appropriate national and international institutions

8. Avoid perverse outcomes

9. Adapt to best available information

Both market and non-market approaches to terrestrial carbon and climate change are necessary. Within that context, the Terrestrial Carbon Group proposes a system to credibly include terrestrial carbon in developing nations in the international response to climate change using carbon markets.

The proposed system addresses the longstanding hurdles of additionality, leakage, and permanence.

The system encourages broad participation because it provides incentives to developing nations regardless of their historic rates of deforestation and terrestrial carbon emissions.

The system does not restrict economic use of land, but instead opens up one new economic development option – generating and selling terrestrial carbon credits.

Read the full report »