Stock-Flow Approach to Sub-national RELs:

Example from Central Xingu

Bronson Griscom & Rane Cortez

Edenise Garcia

Science Coordinator – Amazon Conservation Program

March 8, 2012

Photo by Peter Ellis

What is a Stock-Flow Approach?

A mechanism that provides incentive payments to conserve forests in both historically high- and low-deforestation

regions while maintaining a level of environmental integrity through an actual impact on mitigation

A portion of payments for emissions reductions would be

put into a “stabilization fund” that would re-allocate payments based on forest carbon stocks

Incentive for maintaining forest carbon stocks

Here’s an example of how this could be applied

in Central Xingu REDD+ Project, Para, where

TNC is working…

Central Xingu Program Area, Southern Para

Potential Emissions Reductions by Zones in Central Xingu

(based on simple historic REL)

Source Data: Griscom & Kerkering, 2010, based on data from INPE, Asner et. al. 2005, Saatchi et. al. 2007

Carbon Stocks by Zones in Central Xingu

Source Data: Griscom & Kerkering, 2010, based on data from INPE, Asner et. al. 2005, Saatchi et. al. 2007

Reference Emissions Level (REL)

• Historic emissions baseline

• “Business as usual” projection

Accounting vs. Crediting

Basic Principles

Qualifier: This is just an example for technical discussion – many questions

remain to be resolved by Brazilian stakeholders before a municipality scale

REL approach is resolved.

a direct reflection of

carbon emissions

involves additional issues

of equity and political

negotiations

Basic Principles

• The design of RELs will affect:

– cost of obtaining the reductions (efficiency)

– distribution of REDD+ revenue across countries and regions (equity), and

– the ability of the REDD+ mechanism to produce credible emissions

reductions (environmental integrity),

• Trade-off between efficiency and equity (and integrity).

A stock-flow approach uses two instruments to minimize the

trade-offs:

Accounting REL determined as simple historic average emissions.

A “stock fund”

We propose that the REL is simply the

historic mean emissions.

Because:1) Transparency

2) Broaden applicability

3) More complex ≠ more accurate

Why?

Simple historic REL vs. RELs based

on linear trend analysis

Only three States with statistically significant historic linear

trends…

Comparison of:•Actual Deforestation (solid line)

•Modeled linear projection (dotted line)

•Simple Historic mean projection (dashed line)

DO NOT DISTRIBUTE - INTERNAL TNC DOCUMENT

Simple historic mean Error

Simple historic REL vs. RELs based

on linear trend analysis

OK, but then how do we include areas with low historic

emissions but high stocks, such as Indigenous Lands?

Answer: A “Stock Fund” to re-distribute a portion of incentives

from emissions reductions to areas with high stocks.

historic average REL

Em

issi

on

s(G

tCO

2/y

r)

+20ySTART +10y-10 y

crediting

allocation to

Stock Fund

>1% 10% 1% 27% 22% 39%Stocks:

•25% ERs

•10 “incentive

nuggets” per

ton CO2

Scenario:

Source Data: Griscom & Kerkering, 2010, based on data from INPE, Asner et. al. 2005, Saatchi et. al. 2007

Scenario 1: Simple Historic Mean REL, No Stock Re-Allocation

Central Xingu REDD+ Project Area

Indigenous Lands

would receive less

than 20% of

incentives, while

holding over 60%

of stocks

>1% 10% 1% 27% 22% 39%Stocks:

•25% ERs

Scenario:

•15% set aside for

Stabilization Fund.

•10 “incentive

nuggets” per

ton CO2

Scenario 2: Simple Historic Mean REL, 15% Stock Re-Allocation

Central Xingu REDD+ Project Area

>1% 10% 1% 27% 22% 39%Stocks:

Scenario:

•25% ERs

•30% set aside for

Stabilization Fund.

•10 “incentive

nuggets” per

ton CO2

Scenario 3: Simple Historic Mean REL, 30% Stock Re-Allocation

Central Xingu REDD+ Project Area

½ Municipality mean

Start 20 yrs

REL Zone Y

PA’s & IL’s: Low past deforestation

eligible for SF

develop.

Emissions Rate

Start 20 yrs

REL Zone X

Private Lands: High past deforestation

eligible for SF

Emissions Rate

Municipality Mean

Rules for Eligibility to Stock Funding

Advantages of Stock-Flow Approach

•Environmental Integrity.

•Focus stakeholder negotiations on decision

about trade-off between Equity and Efficiency.

•Can be adjusted to address leakage

issue.

•Relieves pressure to attempt to project

changes from historic rates.

thanks!

Edenise Garcia (egarcia@tnc.org)

Rane Cortez (rcortez@tnc.org)

Bronson Griscom (bgriscom@tnc.org)

Em

issi

on

s(G

tCO

2/y

r)

historic average Reference Emissions Level (REL)

+20ySTART +10y +30y-10 y +40y

country’s self-financed actions

and/or public $

crediting