I am happy to be here today to discuss the concept of credit for voluntary early action and the Conservancy's experience in developing carbon sequestration projects as a climate change mitigation strategy. We believe that a well crafted early action bill can be a critical and cost effective step in the process of slowing the build-up of greenhouse gases in the atmosphere while achieving other important societal benefits. In particular, the Conservancy hopes that any early action legislation will contain scientifically valid, credible carbon sequestration provisions that will provide incentives for projects which slow or reverse the pace of deforestation of sensitive environmental areas in both the U.S and abroad, and encourage better forestry and agricultural management practices. Deforestation and land degradation account for more than 20% of the annual greenhouse gas emissions and thus is an important component of any effort to address the threats of climate change. We believe that carbon sequestration, properly designed, can achieve real and measurable greenhouse gas benefits while protecting biodiversity and enhancing sustainable development. There are also important opportunities in the agricultural sector. Dr. Rattan Lal, a leading expert of soil science at Ohio State University, states that 116 million tons of carbon is released into the atmosphere each year from conventional agricultural activities in the U.S. Through better soil conservation practices such as reduced tillage, we have the potential to conserve substantial amounts of soil carbon, and reward farmers for good agricultural practices. We commend Senator Chafee and his co-sponsors for introducing legislation to start the process of creating these incentives.
The Conservancy's experience with carbon sequestration projects, funded voluntarily by private companies, has shown us the potential inherent in this mechanism. Our experience in developing and helping implement these types of projects has convinced us that we can meet the technical challenges of demonstrating and quantifying carbon sequestration benefits. Projects developed by the Conservancy to slow the release of carbon dioxide and enhance carbon reserves into the atmosphere are protecting two of the most important natural areas in the world, sequestering over 20 millions tons of carbon in a cost-effective manner and helping local communities develop their economies in a sustainable way. Governmental action to provide companies with clear incentives in this area could have dramatic positive results for greenhouse gas reductions and mitigation as well as other environmental benefits by encouraging more of these types of investments.
I would like tell you about several of our projects in order to help you understand the potential that we believe could lie in well-crafted incentives for carbon sequestration projects. Our first project is in the country of Belize and was carried out with significant support from Wisconsin Energy, a company that is represented here today. Wisconsin Energy approached The Nature Conservancy in 1994 with the idea of undertaking a project that would demonstrate the potential of forest conservation and sustainable forest management to address the build-up of greenhouse gases. Both the company and The Conservancy were aware that, according to experts such as the World Resources Institute, forests act as both a source of CO2 emissions and also as an important carbon "sink", absorbing atmospheric CO2 concentrations through the process of photosynthesis and storing it as biomass --both above and below ground. The volume of carbon stored by forestland increases as the volume of biomass increases.
The Conservancy has long sought the protection of the rainforests of central and western Belize for conservation activities. This is one of the world's hotspots of biodiversity. These forests are home to 70 different mammals (including several cat species like the jaguar and howler monkeys), 340 species of birds (many of which spend their summers in the U.S) and 240 different species of trees. Unfortunately, these forests are being bulldozed, burned and converted to agricultural fields in many areas. The result is a significant emission of carbon dioxide into the atmosphere as well as a tremendous loss of biodiversity.
In 1995, a 14,000-acre parcel of rainforest was put up for sale by a local land owner. The leading bidder was a local farm interest that intended to use the land for soybean production. Instead, Wisconsin Energy and other companies - Cinergy, Detroit Edison, PacifiCorp, and Utilitree Carbon Company - gave the Conservancy and its Belizean partner, Programme for Belize, $2.6 million. With this funding Programme for Belize was able to purchase the land and set aside funding for its management. Special care was taken to ensure that the potential for "leakage" of benefits was adequately addressed through project design. Funding also allowed for a small-scale sustainable forestry operation, certified by the Forest Stewardship Council, as well as community education programs. This provided jobs and income for the local population. In 1998, with additional funding from Wisconsin Energy and Suncor, a Canadian oil company, the Conservancy and Programme for Belize were able to purchase an additional parcel of land and add it to the holdings managed under the carbon sequestration project. In all, $5.6 million has been generated for this project. This would not have been possible without investments from companies seeking to demonstrate the validity of this mechanism through the U.S. government's initiative on Joint Implementation. Our estimate is that, if the area purchased had been converted to agriculture instead of maintained as an intact forest, the additional carbon dioxide released into the atmosphere and the decrease in carbon stored would total 2.4 million tons over the next 40 years. This estimate is based on an analysis undertaken by the Winrock International Institute for Agricultural Development, a non-profit organization with considerable expertise in carbon measurement. Winrock was retained to develop a system to measure the greenhouse gas benefits of the project. The monitoring protocol involved the use of permanent sample plots in which carbon from soil, trees and leaves is measured and analyzed in laboratories. Thus, the actual carbon sequestered by the project, which is registered with the U.S. Initiative on Joint Implementation, is backed by a scientifically rigorous measurement system.
Our second and largest project to-date is the Noel Kempff Climate Action Project in Bolivia. This $10 million project, supported by American Electric Power, PacifiCorp, and BP Amoco, has been used to retire forestry concessions in one of the most biologically diverse areas in Latin America. This allowed the Bolivian government to double the size of the Noel Kempff National Park, a long-time goal. While much of the rainforest in Bolivia has been destroyed by unsustainable forestry practices, Noel Kempff has now been expanded by 1.5 million acres and is protected by one of the best-funded management programs in the region. In addition to funding the retirement of forestry concessions and the establishment of a permanent endowment for the park, funding also has been used to rehabilitate a local school and health facility and to provide capital to local communities for sustainable economic development projects.
The carbon sequestered by the project has been estimated using scientifically rigorous methodology developed by Winrock. Of the $10 million project budget, nearly $2 million is for monitoring and verification of greenhouse gas benefits. Our current estimate is that the project will reduce, avoid or mitigate 15 million tons of carbon in the next 30 years. This amount is equal to the lifetime emissions of approximately 850,000 cars. These estimates will be verified periodically over the life of the project by on-the-ground measurement. The project and its monitoring and verification protocol is viewed as an important model in demonstrating scientifically valid carbon measurements.
In addition to these two projects, The Nature Conservancy is working closely with other companies to encourage support for other carbon sequestration projects domestically and internationally that can help achieve climate change mitigation and conservation benefits. We know from these discussions that many companies are hesitant to commit to this kind of investment without assurances that these investments will be recognized. It is important to remember that the size of these investments vastly exceeds traditional corporate giving for conservation purposes and that the companies which have been involved to date have done so in an effort to help develop new cost-effective mechanisms for climate mitigation. They have been leading by doing.
We believe the potential to expand this mechanism to slow the build-up of greenhouse gases, preserve carbon sinks and simultaneously achieve conservation goals will not be achieved unless the U.S. government offers some incentives and clear guidelines to companies prepared to act now. Without clear rules, companies which have acted responsibly and made investments in slowing the build-up of greenhouse gases will be treated the same as those which ignored the problem. We believe this would be a mistake, and a lost opportunity.
As I have noted earlier, the Conservancy strongly favors the inclusion of carbon sequestration provisions in any early action program. We do encourage legislators to move carefully in creating such provisions so as to create measurable greenhouse gas benefits and improvements in the ways in which lands are managed and to avoid the creation of perverse incentives that might have a counter-productive impact. Some principals we think the committee should keep in mind are:
* All projects should be subjected to rigorous monitoring and verification and transparent reporting.
* Credits for forest conservation should take into account potential displacement of these benefits to other areas, to ensure that "leakage" is addressed.
* Carbon sequestration provisions under early action should be awarded for additional changes in land management above and beyond current practices. There should be no credit in cases where landowners deforest land and then engage in tree planting. Neither should credits be accrued for business as usual scenarios.
* International projects screened by the joint implementation program should be eligible for early action credits. The key sources of emissions from the land use sector stem from deforestation of the tropics. Companies should have an incentive to help address this issue.
With these principles, we believe that carbon sequestration projects can play an important role in an early action program. We thank you for the opportunity to present our views here and look forward to providing the committee with whatever assistance we can as it continues its work.