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Abstract
Recently scientists have started to examine how land-uses and land-use
technologies can help mitigate carbon emissions. The half million small-scale farmers
inhabiting the Amazon frontier sequester large stocks of carbon in their forests and other
land uses that they might be persuaded to maintain or even increase through the Clean
Development Mechanism (CDM) of the Kyoto Protocol. On average, small-scale farmers
in the Pedro Peixoto settlement project of Acre (Western Brazilian Amazon), had a stock of
10,067 tons of above- and below-ground carbon on their farms in 1994, 88 percent of
which was stored in their forest reserves. The income and carbon mitigation effects of three
types of carbon payments are analyzed in this paper: (1) above- or total-carbon stock
payments paid for carbon retained in the forest or stored in all land-uses, (2) above- or
total-carbon flow payments paid for carbon stored in all land-uses, and (3) above- or total carbon
net stock payments paid for carbon stored in all land-uses. The main conclusions
are that carbon payments can be effective in preserving forest and carbon, but should be
based on carbon stocks or net carbon stock rather than carbon flows. Payments tied to
forest carbon or carbon in all land-uses provide inexpensive carbon offset potential, and
payments based on total instead of above-ground carbon only slightly dilute the forest
preservation effect of carbon payments. One-time carbon payments as low as R$15/t of
carbon stock would preserve half of the existing forest carbon on these farms. Carbon flow
payments, on the other hand, do not provide an adequate economic incentive to slow
deforestation because forests are more or less in equilibrium and thus do not sequester
additional carbon. If the Kyoto Protocol were amended to allow for conservation of forest
carbon, a few potential CDMs could provide inexpensive carbon offsets, alleviate poverty,
and preserve biodiversity. Sustainable forest management, for instance, increases both farm
income and carbon and forest preservation and could provide inexpensive carbon offsets.
Other projects could also provide inexpensive carbon offsets and preserve biodiversity, but
would require additional income and technology transfers to compensate farmers for their
lost incomes.