NGO
Another Way (Stichting Bakens
Verzet), 1018 AM
01. E-course : Diploma in Integrated Development (Dip. Int.Dev.)
Edition
08: 03 March, 2011
Study points
: 05 points out of 18
Minimum study
time : 125 hours out of 504
The
study points are awarded upon passing the consolidated exam for
Section C : The Model.
[Study points 03
out of 18]
[Minimum study time: 85 hours
out of 504]
The study
points are awarded upon passing the consolidated exam for
Section C : The Model.
Sect. 5 : Kyoto Treaty : Analysis
of possibilities for finance. (Additional)
03. Potential areas of application of CDM
mechanisms to integrated development projects.
04. Small-scale CDM activities.
06. Selection of the CDM
methodologies for the applications listed in section 03.
08. Notes specific to the role of bamboo in afforestation and reforestation (AR)
projects.
09. CDM funding indications for
the selected applications and methodologies.
SECTION 01. EXECUTIVE SUMMARY.
“……greening not only generates increases in wealth, in particular a gain
in ecological commons or natural capital, but also (over a period of six years)
produces a higher rate of GDP growth…..[there is an]
inextricable link between poverty eradication and better maintenance and
conservation of the ecological commons, arising from the benefit flows from
natural capital that are received directly by the poor.” (Towards a Green Economy : Pathways to Sustainable Development and Poverty –
A Synthesis for Policy Makers, United Nations Environment Programme (UNEP, www.unep.org/greeneconomy,
March 2011).
Ecological,
sustainable, local integrated development projects for the world’s poor provide
simple, down-to-earth practical solutions to poverty- and development-related
problems in individual project areas each with about 50.000 inhabitants.
Social, financial, productive and service structures are set up in each project
area in a critical order of sequence and carefully integrated with each other. That
way, cooperative, interest-free, inflation-free local economic environments are formed
there so that local initiative and true competition are free to flourish. The
execution of each integrated development project meets and surpasses the objectives of all eight of the
millennium development goals in its project area, with the exception of
vaccination campaigns and curative medicines.
Integrated
development projects provide all the
services necessary for a good quality of life for all of the inhabitants in
their project area. Each project in non-pastoralist areas costs about €
5.000.000, of which 25% is provided by the inhabitants themselves by way of
work carried out under local money systems set up in an early phase of project
execution. This leaves a formal money (Euros) initial financial requirement of
about € 3.750.000 per project. Projects
in pastoralist areas on the other hand cost about € 7.000.000 each of which 20%
is provided by the inhabitants themselves by way of work carried out under
local money systems set up in an early phase of project execution. This leaves a formal money (Euros) initial
financial requirement for pastoralist areas of about € 5.600.000 per project.
The difference between pastoralist and non-pastoralist areas is determined by
the additional drinking water and food supply requirements of herds in
pastoralist areas.
Some
2500 integrated development projects are needed for the integrated development
of West Africa (excluding
The
initial financial requirements of respectively € 3.750.000 (non-pastoralist
areas) and € 5.600.000 (pastoralist areas) must be deposited up-front to cover
project execution over the two-year period foreseen for that purpose. This
initial capital can be reimbursed over the following years through funds
provided by the sale of certified emission reduction (CER)
units issued under the Clean Development Mechanism (CDM)
system set up under the Kyoto Protocol.
This is
possible through the application of batches of small-scale Clean Development
Mechanisms (CDM) methodologies common to all
individual integrated development projects and based on Programmes of
Activities (PoA) organised in two layers.
The
first level Programme of Activities (PoA) is the
mother PoA. For the integrated development of, say,
West Africa (excluding
The
second level comprises a batch of 13 sub-Programmes of Activities (PoAs) each using a specific CDM
methodology. Each of the 2500 individual integrated projects may choose to
apply any one, any combination, or all of the 13 second level PoAs in accordance with the local requirements there. For
instance, one project area may apply methodology AR AMS-003, Version 1 for the reforestation of wetlands, another may
choose to apply AR-AMS-0005 (Version 2, 8 April 2009)
in an area with low inherent potential to support living biomass, while a third
project area with both wet and very dry areas may choose to apply both
methodologies and a fourth project may not apply either of them.
The scheme with two layers of PoAs
proposed here is different from anything done under the CDM mechanism until now. It will take time, financial
investment, and full engagement at sub-regional level to get it accepted by the
Executive Board of the Clean Development Mechanism. That acceptance could lead
to a breakthrough in the financing of projects for the integrated development
of the world’s poorest countries. Promotion of the CDM
proposal presented here is a high risk enterprise involving substantial costs
which must be paid up front without guarantee of success.
There
are two main sectors for intervention
under the CDM system. The first one is CDM funding through reduction of CO2 emissions in project
areas through the use of improved cooking stoves, more efficient lighting
systems and switches from non-renewable biomass to renewable biomass and
similar. The possibilities under this first main sector are limited in
developing countries by the fact that relatively little energy is consumed by
the world’s poor. The second one is CDM funding
through increase of CO2 sinks through various afforestation
and reforestation projects. This second main sector offers more possibilities
in poor areas, provided enough water and labour are available for the
purpose.
A
preliminary analysis shows that the potential total average gross CDM income over 50 years for all 13 applications together
in each integrated development project area could be to the order of € 28.000.000. This is a cautious,
non-scientific, initial approximation. It is subject to the deduction of
at least 15% to cover administration and validation costs. It is expressed in
present day Euros and based on CO2/tonne values on 14th November
2009 (about € 14 per tonne CO2). The amount has not been discounted over 10-20
year periods according to traditional cost-benefit calculation practices.
Various CDM methodologies currently prescribe
different validation periods. Afforestation and
reforestation (AR) projects, for example, are usually
long-term. They provide for choice of time for the first validation, then
validations just once every five years after that. The analysis also assumes
enough water and labour are available to start the various afforestation/reforestation
projects more or less contemporaneously. If this is not so, afforestation/reforestation
applications may need to be phased. This would not affect the total of the CDM income, but would prolong the period for repayment of
the initial project capital.
A first
level (mother) PoA with 2.500 applications
representing 2.500 individual integrated development project areas (125.000.000
people) in West Africa could generate up to € 70.000.000.000 of (gross) CDM funding. This would eliminate poverty in the areas
concerned and surpass all of the millennium development goals there except
those relating to vaccinations and curative medicines.
Click
here to see a general overview of expected gross CDM income
for each Programme of
Activity (Total
per project area about € 28.000.000).
Click
here to view a general graph showing annual
distribution of expected gross CDM income for each
individual integrated development project area over a period of 50 years . (Total per project area about €
28.000.000).
The
graph is intended to show that, whatever happens and however the calculations
are made, each individual integrated development project can repay its initial capital
cost investments over just a few years of operation.
Assuming
an allowance of 15% to cover validation and administration, the total expected
net CDM income per project over 50 years would be
about € 24.000.000.
Indicative
net figures for the first five years of CDM
operations would be:
Expected
net CDM income relative to first year € 0.
Expected
net CDM income relative to second year about € 450.000.
Expected
net CDM income relative to third year about € 950.000.
Expected
net CDM income relative to fourth year about € 1.350.000
Expected
net CDM income relative to fifth year about € 1.400.000
Expected
net CDM income relative to sixth year about € 1.100.000
Not all
of the potential CDM funding capacity has been
absorbed in the examples given. It has been assumed that more projects will use
application 07 AR-AMS-0005 (Version 2, 8 April 2009) for very dry areas with Jatropha,
than application 06 AR AMS-003, Version 1 for wetlands with mangroves,
which give a much higher CDM return. Use of methodology
AMS-III-AR for methane recovery in application 10 has
been rated at zero until advice on the energy applications it could replace is
received. The use of methodology AMS-III-AJ
for the recycling of plastics and other materials under application 13 has also
been rated at zero until information on the quantities of materials typically
available for recycling is received.
These aspect are discussed in more detail in
section 02. Introduction.
The way the initial capital input of
integrated development projects is repaid under the CDM
mechanism is a political issue. A regional project owner such as
ECOWAS/UEMOA may make a call on 100% of CDM funds as they come in, or may accept for example
repayment of 50%, allowing the remaining 50% to be distributed amongst the
populations in the project areas, or any other combination of the two. Partial
distribution of funds to the populations would provide them with encouragement
and stimulus. Rapid repayment of initial capital loans on the other hand
provides revolving finance for new integrated development projects and more
rapid execution of all projects included in the regional development plan in
question.
Even
with the use of small-scale Clean Development Mechanisms (CDM)
activities based on Programmes of Activities (PoAs),
delays of up to 12 months can be expected between the submission of periodic CDM project reports and the issue and sale of the Carbon
Emission Reduction (CER) units in question.
Subject
to the above comments, expected total net CDM incomes
for projects in non-pastoralist areas with an initial capital input of €
3.750.000 would in principle enable full repayment of the initial capital input during the sixth year of
activities, on the basis of CDM income from
the first five years. In non-pastoralist areas with an initial capital input of
€ 5.600.000 the initial capital input could in principle be fully repaid at the end of the eighth year of activities, on
the basis of CDM income from the first seven years.
Once
the initial capital for a given integrated development project has been fully
repaid, all remaining CDM income is paid from time to
time to the project’s Cooperative for the On-going
Administration of the Project Structures (of which all adults in the
project area are members) and either equally distributed amongst the members or
used to cover extensions to project structures.
CDM income payments start in the third or the fourth
year of project operation. The execution of each integrated development project is expected to
last two years. Therefore the full amount of the initial project capital necessary for the
execution of each integrated development project must always be paid up front.
The proposed series of 13 sub-Projects of Activities (PoAs) provides major benefits to the local populations as
well as funds enabling them to repay the initial capital for their integrated
development projects. Food safety is greatly increased through the supply of
fruit and nuts and hedgerows for protecting crops in semi-arid and arid areas.
The bamboo plantations foreseen provide food in the form of bamboo shoots,
material for uncountable productive activities, and biomass for the production
of mini-briquettes for cooking purposes. Moringa
trees provide “spinach leaves” for food, edible oils for cooking, and Moringa paste for water purification purposes. Jatropha trees produce limited amounts of bio-fuel to drive
local generators and motorised equipment. All proposed CDM
activities improve the quality of the environment and help recover and maintain
bio-diversity. For a complete list of all benefits see the costs and benefits analysis set out in Section
3 or Block 8 of the course for the Diploma in Integrated Development (Dip. Int. Dev.) available at website www.integrateddevelopment.org.
Graphs
showing details of the expected gross CDM income for
each of the first nine years of project operation , as
well as those for each of the 13 applications foreseen ,are available in
Section 10.Graphs and conclusions of
this report.
A
schematic presentation of a typical sub-regional integrated development plan
with CDM funding is shown in a structural proposal for West Africa.
Table 1
shows the plan of the Mother PoA and the 13 sub-PoAs. For the development of
Table 1 : The two Programme of Activities (PoA) layers.
Return to :
Sect. 5 : Kyoto Treaty : Analysis
of possibilities for finance. (Additional)
03. Potential areas of application of CDM
mechanisms to integrated development projects.
04. Small-scale CDM activities.
06. Selection of the CDM
methodologies for the applications listed in section 03.
08. Notes specific to the role of bamboo in afforestation and reforestation (AR)
projects.
09. CDM funding indications for
the selected applications and methodologies.
Exam Block 8 : [4 hours]
Consolidated exam : Section
C. [6 hours].
◄ Eighth block : Section. 5 : Kyoto Treaty : Analysis
of possibilities for finance.
◄ Eighth block : Economic Aspects.
◄ Main index for the Diploma
in Integrated Development (Dip. Int. Dev.)
"Money is not the key that opens the gates of the market but the
bolt that bars them."
Gesell, Silvio, The Natural Economic Order,
revised English edition, Peter Owen,
“Poverty is created scarcity”
Wahu Kaara,
point 8 of the Global Call to Action Against Poverty, 58th annual
NGO Conference, United Nations,
This
work is licensed under a Creative Commons
Attribution-Non-commercial-Share Alike 3.0 Licence.