HOW CAN AFRICAN AGRICULTURE ADAPT TO CLIMATE CHANGE? INSIGHTS FROM ETHIOPIA AND SOUTH AFRICA

Global Carbon Markets
Are There Opportunities for Sub-Saharan Africa?


INTERNATIONAL FOOD
POLICY RESEARCH INSTITUTE

Elizabeth Bryan, Wisdom Akpalu, Claudia Ringler, and Mahmud Yesuf

Human activities such as fossil fuel burning and deforestation
have significantly increased the atmospheric concentration of
greenhouse gases (GHG) leading to global climate change. Global
climate change and its associated weather extremes pose considerable
challenges worldwide, and mitigating the adverse impacts of climate
change is a high priority for the international community.
To reduce global emissions and curb the threat of climate
change, many countries are participating in carbon trading. Carbon
trading includes allowance-based agreements that impose national
caps on emissions and allow participating countries to engage in
emission trading as well as project-based transactions (for example,
through the CDM or Clean Development Mechanism). The CDM
allows industrialized countries with greenhouse gas reduction
commitments to invest in emission-reducing projects in developing
countries as an alternative to generally more costly emission
reductions in their own countries. Funds made available by the
CDM for carbon offsets provide an opportunity for cash-strapped
developing countries to fund much needed adaptation measures.
The potential annual value stream for Sub-Saharan Africa from
mitigating GHG emissions is estimated to be US$4.8 billion at
carbon prices of US$0–20/tCO2e. Moreover, agricultural mitigation
measures, including soil and water conservation and agroforestry
practices, also enhance ecosystem functioning, providing resilience
against droughts, pests, and climate-related shocks.
Yet the potential for Africa to contribute to global reductions in
GHG emissions is quite substantial.
Estimates suggest Africa could
potentially contribute to GHG
reductions of 265 MtCO2e (million
tons of carbon dioxide or equivalent)
per year at carbon prices of up to
US$20 through agricultural
measures and 1,925 MtCO2e/yr at
carbon prices of up to
US$100/tCO2e by 2030 through
changes in the forestry sector. These
amounts constitute 17 and
14 percent, respectively, of the global
total potential for mitigation in these
sectors. However, countries in
Sub-Saharan Africa are marginalized
in global carbon markets.

Sub-Saharan Africa’s share of the CDM market is nine times smaller
than its global share of GHG emissions, including emissions from
land use and land-use change.
This brief is based on a paper that examines Sub-Saharan Africa’s
current involvement in carbon markets, potential for GHG emission
reductions, constraints to further participation in carbon markets, and
opportunities for expanding Sub-Saharan Africa’s market share.
Sub-Saharan Africa’s market sh are
and potential
As the largest project-based market aimed at developing countries, the
CDM provides the largest outlet for carbon offset projects in Sub-
Saharan Africa. As of October 2008, Sub-Saharan Africa accounted
for only 1.4 percent of all registered CDM projects—only 17 out of
1,186 projects—and most of these projects (14 out of 17) were located
in just one country, South Africa. Thus, African projects still represent
a small fraction of the entire CDM market. China dominates the
CDM market with about 73 percent of volumes transacted (in 2007).
While Sub-Saharan Africa’s contribution to global emissions is
relatively small—5 percent of the global total—there is significant
potential for the region to contribute to climate change mitigation,
particularly in the forestry and agriculture sectors, which together
accounted for 73 percent of emissions from the region (and 13 percent
of the global total emissions from these sectors). Moreover, Africa’s
emissions from agriculture and land-use change and deforestation are
expected to grow in the future due to projected intensification of
agricultural production and the expansion of unexploited areas.
The mitigation potential from agricultural production is greatest
in East, West, and Central Africa, with mitigation potentials of
109, 60, and 49 MtCO2e/yr, respectively, at prices of US$0–20/tCO2e
(see Table 1). The agricultural practices that appear to be the most
promising include cropland management, grazing/land management,
and restoration of organic soils.
Moreover, Africa contributes 18 percent of the total global GHG
emissions from land use, land-use change, and forestry. As such, soil
carbon sequestration, fire management, and avoided deforestation
offer additional opportunities for mitigating GHG emissions and
promoting sustainability in Africa. Africa has the potential to mitigate
1,160 MtCO2e/yr from avoided deforestation by 2030, 29 percent of
the global total, as well as 665 MtCO2e/yr from afforestation and
100 MtCO2e/yr from forest management at carbon prices of
US$0–100/tCO2e.
Constraints to Sub-Saharan Africa’s
participation in global carbon markets
While Sub-Saharan Africa could contribute considerably to global
reductions in GHG emissions, numerous barriers would have to be
overcome. For instance, to be considered eligible to engage in carbon
trading under the CDM, a clear baseline for a project must be
established, and it must be demonstrated that emission reductions
would not have occurred in the absence of the project (additionality
rule). For many developing countries, lack of technical training and
support on setting benchmarks, as well as poor availability and
quality of data, are major obstacles to defining an adequate baseline
and demonstrating additionality.
Africa’s participation in the CDM is also constrained by high
transaction costs. The costs of carbon projects include the cost of
providing information about carbon benefits to potential buyers,
communicating with project partners, and ensuring parties fulfill their
contractual obligations. Measurement and monitoring costs are also
often considerable. Likewise, the costs of negotiating land-use
decisions for carbon projects involving large numbers of geographically
dispersed people with different land-use objectives can be prohibitive.
In addition, the CDM targets energy and power sources, overlooking
soil carbon sequestration and avoided deforestation projects, which are
highly important for climate change mitigation in many African
countries. The exclusion of these activities limits CDM participation by
African countries and hinders their mitigation opportunities.


Opportunities for integrating
Sub-Saharan Africa into the global
carbon market
There are several opportunities for further integrating Sub-Saharan
African and other developing countries into global carbon markets.
Simplifying the CDM rules for determining baselines, monitoring
carbon emissions, and enforcing offsets and broadening the range of
eligible projects to include avoided deforestation and soil carbon
sequestration would facilitate the participation of Sub-Saharan African
countries. These countries should also explore opportunities to
increase participation in voluntary carbon markets. In order to take
full advantage of the opportunities provided by carbon markets,
Sub-Saharan African countries will also need to strengthen their
institutional capacity and engage both private and public sectors in
project development and implementation. International advisory
services could be established to assist potential investors, project
designers and managers, national policymakers, and leaders of local
organizations and federations in negotiating deals and complying with
measurement and monitoring requirements.
Policymakers should take care to ensure that the needs of the poor
are taken into consideration. Reducing the transaction costs associated
with small-scale carbon offset projects would allow the poor within
these countries to benefit from carbon trading. Working with intermediary
organizations that are accountable to local producers, building
community-management capacity, strengthening property rights, and
improving regulation of offset projects would also help ensure that
social and environmental goals are met and that the poor benefit from
the carbon trading system. Thus, expanding pro-poor mitigation
through linking Sub-Saharan Africa to global carbon markets is both
feasible and desirable for the region in terms of conserving its natural
resources, contributing to the good of the global environment, and
generating income to finance its development activities.
for further READIN G
Bryan, E., W. Akpalu, C. Ringler, and M. Yesuf, 2008. Global Carbon
Markets: Are There Opportunities for Sub-Saharan Africa? IFPRI
Discussion Paper (Washington, DC: International Food Policy
Research Institute, 2008 forthcoming).
Smith, P., D. Martino, Z. Cai, D. Gwary, H. Janzen, P. Kumar, B.
McCarl, S. Ogle, F. O’Mara, C. Rice, B. Scholes, O. Sirotenko, M.
Howden, T. McAllister, G. Pan, V. Romanenkov, U. Schneider, S.
Towprayoon, M. Wattenbach, and J. Smith, “Greenhouse-Gas
Mitigation in Agriculture,” Philosophical Transactions of the Royal
Society B 363 (2008).
E. Bryan (e.bryan@cgiar.org) is a senior research assistant in the Environment and Production Technology Division (EPTD) of the International Food Policy Research
Institute. W. Akpalu (akpaluw@farmingdale.edu) is a professor at the State University of New York-Farmingdale. C. Ringler (c.ringler@cgiar.org) is a is a senior research
fellow with EPTD at IFPRI. M. Yesuf (mahmudyesuf@yahoo.com) is a fellow at the Ethiopian Development Research Institute and Addis Ababa University.
This series of IFPRI Research Briefs is based on research supported by the Federal Ministry for Economic Cooperation and Development, Germany, under the
project “Food and Water Security under Global Change: Developing Adaptive Capacity with a Focus on Rural Africa,” which forms part of the CGIAR
Challenge Program on Water and Food. Through collaboration with the Center for Environmental Economics and Policy in Africa, the Ethiopian Development
Research Institute, the Ethiopian Economics Association, and the University of Hamburg, the project aims to provide policymakers and stakeholders in
Ethiopia and South Africa with tools to better understand and analyze the consequences of global change—in particular climate change—and to form policy
decisions that facilitate adaptation in these countries and beyond.


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