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An Assessment of Costs of Carbon Trading Under the REDD+ Scheme for Community-Based Forest Management System in Nepal
Thakur P Bhattarai

Last modified: 2017-08-28


The growing concern over the REDD+ initiative is whether the income that local communities are likely to receive from national and international carbon payment schemes will cover both the opportunity costs and the costs of undertaking REDD+ activities, from the initial planning stage to the sale of carbon credits in the market. A three year research study was carried out in four watersheds in three different physiographic regions of central Nepal from 2009 to estimate these costs. The findings indicate that the total average costs for the entire process of REDD+ for individual community forest user groups would be US$ 30.5 per ha in the first year, which was reduced by one third to the following years. Expanding the community level REDD+ programme to a wider scale, making the watershed the unit of management, substantially lowered costs (US$ 22/ha/yr).The costs and the forgone value vary with the size of forests at both community and watershed levels, which would be expected as a result of economies of scale. As these forests sequester an average 7.5 tCO2/ha/yr, if the local communities attract a payment of US$5 tCO2 /ha/yr from the international carbon payment scheme, they could generate a net additional income of 3% to 300% of their current annual income from the forests at a local level and 9% between and 400% at a watershed level.Key words: Ecosystem Service, REDD+, Costs, Community, Watershed, Carbon Credits and Payment

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