VCS_Guidance for AFOLU Projects

8/14/2019 VCS_Guidance for AFOLU Projects

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VCS Guidance or Agriculture, Forestry and Other Land Use Projects

www.v-c-s.org VCS Association

Voluntary Carbon Standard

Guidance or Agriculture, Forestry

and Other Land Use Projects


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Voluntary Carbon Standard

Guidance or Agriculture, Forestry and Other Land Use Projects

18 November 2008

Table o Contents

1) Guidance to the Program Guidelines where Relevant to AFOLU Projects:..........................6

Section 3.5.2 o the Program Guidelines: Validator and VerierSection 6.1.2 o the Program Guidelines: Registration steps, Step 2Section 6.1.5 o the Program Guidelines: Registration steps, Step 5Section 7.1 o the Program Guidelines: AFOLU Pooled Buer Account

2) Guidance to the VCS 2007.1 Requirements in Relation to AFOLU Projects.........................6

Section 3.4 o the VCS 2007.1: Additional Requirements or AFOLU, eligible activitiesSection 3.4 o the VCS 2007.1: Additional Requirements or AFOLU, methodological issues

Section 3.4 o the VCS 2007.1: Additional Requirements or AFOLU, impactsSection 3.4 o the VCS 2007.1: Additional Requirements or AFOLU, buer and risk analysisSection 3.5 o the VCS 2007.1: Double Approval ProcessSection 5.7 o the VCS 2007.1: Content o the VCS PD

3) Guidance to the Tool or Methodological Issues:....9

Eligible AFOLU ActivitiesStep 2: determine the project boundaryStep 3: determine the carbon poolsStep 4: establish a project baselineStep 5: assess and manage leakageStep 6: estimate and monitor net project greenhouse gas benets

4) Guidance to the Tool or AFOLU Non-Permanence Risk Analysis and Buer Determination

(hereater reerred to as the Risk Tool):.........................32

Step 1 o the Risk Tool: conduct a risk assessmentSub-step 1a o the Risk Tool: conduct a risk assessmentSub-step 1b o the Risk Tool: Determination o the risk actors associated with thespecic project types

Step 2 o the Risk Tool: Deposit the appropriate amount o credits into the AFOLU PooledBuer AccountStep 3 o the Risk Tool: Repeat the previous steps every time a project seeks VCS vericationand adjust the projects buer withholding accordingly

Appendix 1: Financial Analysis o Buer Withholding under Dierent Project Scenarios

Glossary.........40

Acronyms.................43


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Using this Document

This document provides guidance and additional context or users o the Voluntary CarbonStandard (VCS), the VCS Program Guidelines, and the VCS Agriculture, Forestry and OtherLand Use (AFOLU) project tools. At the beginning o each section, relevant content rom therespective VCS document (VCS, the VCS Program Guidelines, and the VCS AFOLU project tools)is presented verbatim in a box ater which the relevant guidance is provided. In case o anydiscrepancies between: a.) this guidance document; and b.) the most up-to-date versions o theVCS, the VCS Program Guidelines, or VCS AFOLU project tools documents, inormation containedin the documents mentioned under b.) is considered binding. This document should be cited as:Voluntary Carbon Standard Guidance or Agriculture, Forestry and Other Land Use Projects(VCS 2007.1, 2008). VCS Association. Available at: www.v-c-s.org

Foreword

The rules contained in the VCS 2007.1, VCS Program Guidelines, and the AFOLU project toolshave been developed to enable high-quality AFOLU projects rom around the world to generateVoluntary Carbon Units (VCUs) that are credible, robust, permanent and ungible.

The result o an intensive eighteen-month development process managed by the VCS AFOLUAdvisory Group and overseen by the VCS Steering Committee, these guidelines employ innovativeand best-practice thinking in order to create standards that are at once rigorous and workable.Ater considerable public input, working groups composed o leading experts in each o theour AFOLU project categories authored this guidance and the associated AFOLU text ound inthe VCS, Program Guidelines and Tools. More than twenty independent reviewers, includingpreeminent risk experts, investors, NGO representatives and project developers supported theseeorts and provided detailed eedback during the evolution o these AFOLU rules and guidance.

The ollowing individuals were the primary contributors:

VCS AFOLU Advisory Group

Ken Newcombe (VCS AFOLU AG Chair) Goldman Sachs, USAToby Janson-Smith (VCS AFOLU project lead) Conservation International, USABernhard Schlamadinger TerraCarbon, AustriaTanja Havemann Climate Change Capital, UK

Aorestation, Reorestation and Revegetation (ARR) Expert Group

Igino Emmer (lead author) Emmer Internationaal, The NetherlandsNeil Bird Joanneum Research, AustriaManuel Estrada National Institute o Ecology, MexicoMartin Schrder TV SD, GermanyFrank Werner Swiss Federal Institute o Technology, Switzerland

Agricultural Land Management (ALM) Expert Group

Keith Paustian (lead author) Colorado State University, USAHenry Janzen Agriculture and Agri-Food Canada, CanadaDaniel Martino Carbosur, UruguayDavid Powlson Rothamsted Research, UKMike Robinson Syngenta, UK

Improved Forest Management (IFM) Expert Group

Sandra Brown (lead author) Winrock International, USA

Brian Murray Duke University, USATimothy Pearson Winrock International, USABrent Sohngen Ohio State University, USA


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Reduced Emissions rom Deorestation and Degradation (REDD) Expert Group

Sandra Brown (co-lead author) Winrock International, USALucio Pedroni (co-lead author) CATIE, Costa RicaManuel Estrada National Institute o Ecology, MexicoCharlotte Streck Climate Focus, The NetherlandsEveline Trines Treeness Consult, The NetherlandsXiaoquan Zhang Chinese Academy o Forestry, Peoples Republic o China

VCS AFOLU Consultants

Eveline Trines (developer o AFOLU methodological and risk tools) Treeness Consult,The NetherlandsAmanda Hawn (general editor) Ecosystem Marketplace, USAMichael Jenkins (program development) Forest Trends, USADavid Shoch (buer fnancial analyst) The Nature Conservancy, USA

Independent Reviewers

Jergen Blaser Intercooperation, SwitzerlandBenot Bosquet Carbon Finance Unit, World Bank, USABruce Cabarle WWF, USAPhil Cottle ForestRe, UKPhilip Fearnside Instituto Nacional de Pesquisas da Amaznia (INPA), BrazilJan Fehse, Till Nee EcoSecurities, UKMitch Feierstein Cheyne Capital, UKSteven de Gryze Terra Global Capital, USARadha Kuppali, Marisa Meizlish New Forests, AustraliaMartin Schrder TV SD, GermanyJoerg Seiert-Granzin FAN, BoliviaBill Stanley, Zoe Kant The Nature Conservancy, USA

Marc Steininger Conservation International, USAMarc Stuart EcoSecurities, USACraig Trotter Landcare Research, New ZealandMartijn Wilder Baker & McKenzie, AustraliaXiaoquan Zhang Chinese Academy o Forestry, Peoples Republic o China

This expert work and the development o this document were made possible through the generousnancial support o the UK Department or International Development (DFID) and the SyngentaFoundation or Sustainable Agriculture.

The VCS AFOLU work is dedicated to Dr. Bernhard Schlamadinger, who passed away on 28August 2008. Bernhard was a tireless champion or the worlds orests, and was instrumental indeveloping the VCS Programs groundbreaking rules or Agriculture, Forestry and Other Land-

Use Projects.


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Introduction

As part o its drive or credibility and innovation (combined with the act that orestry projectsaccount or a large portion o osets sold within the voluntary carbon market), the VCS includesAgriculture, Forestry and Other Land Uses (AFOLU) in the list o eligible project activities basedon a new approach to manage non-permanence risks. To begin with, the ollowing our categorieso AFOLU project activities are covered under the VCS 2007.1:

Afforestation, Reforestation and Revegetation (ARR)

Agricultural Land Management (ALM)

Improved Forest Management (IFM)

Reduced Emissions from Deforestation and Degradation (REDD)

In the uture, the VCS Board may consider adding new AFOLU project categories (e.g., avoidedconversion o non-orest land) as best-practices become dened and robust methodologicalrameworks are established.

The major contribution o land-based activities to climate change is widely recognized by thescientic community. Dominated by deorestation in the tropics, land-use change generatesabout 20 percent o global GHG emissions, and i agriculture is included this rises to more than30%. Deorestation is also the leading cause o species extinctions and a signicant source owater pollution, air pollution, soil erosion and the impoverishment o rural communities. AFOLUprojects are unique in that they have the potential to mitigate climate change, while at the sametime addressing these other pressing social and environmental challenges.

Despite their clear potential, AFOLU projects can be quite challenging to design, implementand monitor. Fortunately, dened solutions or dealing with permanence, additionality, leakage,measurement, and monitoring have emerged in the last ew years. The document that ollows

has been designed to refect these latest solutions and to provide best-practice guidance or thedierent AFOLU project activities so that veriers can credibly and robustly account or themunder the VCS. In particular, this document delineates the recommended criteria or:

Dening eligible AFOLU project activities;

Identifying, assessing and mitigating project risks; and,

Determining the acceptability of new AFOLU methodologies that might be proposed to the VCS.

In order to ollow the structure o VCS Program and its documents, this guidance document isdivided into our sections, providing specic AFOLU guidance on: (1) VCS Program Guidelines,(2) VCS, (3) Tool or AFOLU Methodological Issues, and (4) Tool or AFOLU Non-Permanence RiskAnalysis and Buer Determination.

In order to oster cost-eective integrated projects1 under the VCS, project proponents may combinea variety o activities spanning the our general AFOLU categories (ARR, ALM, IFM, REDD) intoa single VCS Project Description and verication event. However, separate methodologies andnon-permanence risk assessments must be applied to each project category using the relevantguidance sections in this document.

1 For example, some agroorestry / enrichment planting (ARR) and community orestry (IFM) practices maybe combined into a single project so as to avoid duplication, given that armers oten integrate these activitieswithin a single landscape. Similarly, orest conservation (REDD) may be combined with orest management(IFM), or with ast-growing woodlots (ARR) and improved agricultural management practices (ALM), tomaximize eciencies/synergies within a single project.


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1) Guidance to the Program Guidelines where Relevant to AFOLU Projects

Section 3.5.2 o the Program Guidelines: Validator and Verier

Valuators and veriers are accredited to:

Validate and verify GHG Projects;

Validate new GHG project methodologies, baseline and additionality performance standards

and Perform gap analyses of other GHG Programs

Guidance:

VCS veriers can only perorm validations/verications within the sectoral scopes or whichthey are accredited. There are two VCS AFOLU sectoral scopes: (1) Aorestation/reorestation,improved orest management, and reduced emissions rom deorestation & degradation coveringARR, IFM and REDD projects; and (2) Agricultural land management covering ALM projects.

Validators & Veriers are considered accredited or the AFOLU activities under the VCS i they are:

Accredited for scope 14 (Afforestation & Reforestation) of the CDM

Accredited for scopes 14.1 & 14.2 of the ISO 14065 by ANSI

Section 6.1.2 o the Program Guidelines: Registration steps, Step 2

1. An accredited VCS Program validator or verier then assesses the claim against the VCS2007.1 and produces:

a validation report - validation of the VCS PD including an assessment of additionality; a verication report - report of a periodic formal independent review and ex-post determination

o the monitored GHG emission reductions and removals, which includes a written assurance(verication statement) issued by the VCS Program verier that the GHG emission reductionsand removals have been achieved in accordance with the VCS. For AFOLU projects theverication report shall also conrm the projects non-permanence risk rating and the amounto credits that must be deposited in the AFOLU Pooled Buer Account.

Guidance:

For a description o how the non-permanence risk rating is obtained, see the guidance providedwith section 3.4 o the VCS 2007.1: additional requirements or AFOLU.

2) Guidance to the VCS 2007.1 Requirements in Relation to AFOLU Projects

Section 3.4 o the VCS 2007.1: Additional Requirements or AFOLU, methodological issues

Project proponents shall use the Tool or AFOLU Methodological Issues or thedetermination o project type and land eligibility, project boundary, carbon pools, baseline,leakage and the net project GHG benets (see www.v-c-s.org)

Guidance:

For guidance in relation to the Tool or AFOLU Methodological Issues see chapter 3 o thisdocument covering Guidance to the Tool or AFOLU Methodological Issues.


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Section 3.4 o the VCS 2007.1: Additional Requirements or AFOLU, ancillary impacts

AFOLU projects shall identiy potential negative environmental and socio-economic impactsand shall take steps to mitigate them prior to generating Voluntary Carbon Units (VCUs).

AFOLU projects that convert native ecosystems to generate carbon credits are not eligibleunder the VCS. Documented evidence shall be provided in the VCS PD that no ARR orALM project areas were cleared o native ecosystems within the ten year period prior to theproposed Project Start Date.

Guidance:

It is important to recognize that AFOLU projects have the potential to generate both positiveand negative socio-economic and environmental impacts. The positive socio-economic andenvironmental benets o a project can increase its overall attractiveness. In contrast, poorlydesigned and/or poorly managed projects may negatively impact the environment and/or socio-economic system in which they take place, thus reducing their overall attractiveness and

increasing project risk. Consequently, the VCS requires all AFOLU projects to identiy potentialnegative environmental and socio-economic2 impacts and take steps to mitigate them prior togenerating Voluntary Carbon Units (VCUs).

The VCS encourages AFOLU projects to use relevant tools and best-practice standards to ensurethat projects are appropriately designed, and where possible generate social and environmental benets beyond climate change mitigation. For example, projects in their design or earlyimplementation stage may choose to be independently validated under the Climate, Community& Biodiversity Standards (www.climate-standards.org) to demonstrate project quality acrossmultiple dimensions in advance o VCS verication. Forestry projects may also nd the EnCoFor(www.joanneum.at/encoor) CDM toolkit helpul or assessing environmental and social impacts.For orest management projects, Forest Stewardship Council (FSC: www.fsc.org) certication

can provide assurance that the project is managed sustainably. The application o such multiple- benet tools and standards can result in holistic projects with lower risk proles in terms ocarbon non-permanence and leakage than single-dimension projects ocusing exclusively oncarbon benets.3

The VCS does not wish to provide potential perverse incentives or the clearing o native ecosystemsin order to generate carbon credits rom AFOLU activities. Thereore, in order to be eligible orcrediting under the VCS, ARR and ALM project proponents must demonstrate that the project areawas not cleared o native ecosystems, such as orests, grasslands, scrublands or wetlands, to createVCUs. Such proo is not required i such clearing or conversion took place at least ten years priorto the proposed VCS project start. The burden o proo rests with the project proponent.

2 The VCS encourages projects to undertake a stakeholder consultation process to help identiy socio-economicimpacts o the project.

3 Multiple-benet AFOLU projects can mitigate project risks in a number o ways. First, by taking an holisticapproach towards meeting the various resource needs o local communities (e.g., by generating sustainablelivelihoods and incorporating agroorestry systems to meet local wood and agricultural needs), they canminimize leakage and non-permanence risks because local people are less likely to be driven to undertake

resource-depleting activities on- or o-site. Second, the carbon rom projects that restore or protect biodiverseecosystems is less susceptible to loss because species richness increases resilience to natural threats such as

pests and re. Finally, projects that deliver tangible social and environmental benets to the host country aregenerally preerred and less likely to ace approval and implementation roadblocks rom local communitiesand the government.


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Section 3.4 o the VCS 2007.1: Additional Requirements or AFOLU, buer and risk analysis

AFOLU projects shall establish an adequate buer o non-tradable AFOLU carbon creditsusing the Tool or Non-Permanence Risk Analysis and Buer Determination or AFOLUProjects in order to address the risk o non-permanence.

Guidance:

For guidance in relation to the Tool or AFOLU Non-Permanence Risk Analysis and BuerDetermination see chapter 4: Guidance to the Tool or AFOLU Non-Permanence Risk Analysisand Buer Determination.

Section 3.5 o the VCS 2007.1: Double Approval Process

Under the VCS Program, methodologies, the risk assessment to determine the buer onon-tradable AFOLU carbon credits, IFM and REDD market leakage assessments, new tools

and additionality perormance standards shall be assessed by two independent parties.The rst assessment shall be carried out by a validator or verier accredited or the VCSProgram and appointed by the project proponent. This assessment shall cover all relevantVCS Program requirements.

The VCS Secretariat, acting on behal o the VCS Board, shall choose a dierent VCS Programaccredited validator or verier to carry out a second assessment. This second assessmentshall cover all relevant VCS Program requirements.

Guidance:

A number o elements o the VCS project cycle are subject to the Double Approval Process wherebytwo VCS veriers assess the same element. These are:

1. New Methodologies: I no methodology exists or the project type, the project proponentmust submit to the VCS Board a new methodology. New AFOLU project methodologies willbe subject to the standard VCS double approval process.

2. The Risk Assessment: The outcome o the risk assessment at rst VCU issuance will besubjected to the VCS double approval process, as will subsequent risk assessments where theproject is classied as lower risk compared to the previous assessment. Risk assessmentsconducted at validation stage, and those conducted during verications where the project isclassied as the same or higher risk compared to the previous assessment are not requiredto undergo the double approval process.

3. Market Leakage Assessment: IFM and REDD market leakage assessments may be subjectto diering interpretations, which could signicantly impact the number o VCUs issuedto projects. Thereore, the outcome o the market leakage assessment at rst VCU issuancewill be subjected to the VCS double approval process. This will be done at the same time andollow the same procedures (without additional cost to the project) as the second verierreview o the risk assessment. Market leakage assessments conducted at validation stageand at verication other than the rst VCU issuance are not required to undergo the doubleapproval process.

The double approval process is described in more detail in the guidance provided to Step 1 o theRisk Tool, ound later in this document. Where double approvals are required or buer or market

leakage assessments, i no agreement can be reached by the two VCS veriers on the percentageo credits the project must set aside, the project can opt to go with the more conservative o thedeterminations or appeal to the VCS Association.


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Approval o modules and tools

In addition to approving complete methodologies, the VCS will support innovation by approvingmodules and tools that lower the cost and/or increase the transparency o project design,methodology approval, monitoring and verication.

New modules and tools approved under the VCS should satisy three main criteria: Theyshould: (1) be as simple as possible in order to acilitate their low-cost application; (2) useconservative and transparent approaches, and; (3) be as broadly applicable as possible (i.e., notsingle-project speciic).

The VCS automatically accepts all tools approved by the Clean Development Mechanism (CDM)Executive Board and Joint Implementation Supervisory Committee. Tools and modules reerencedin new methodologies may also be approved under the VCS, subject to the usual double approvalprocess. All approved tools and modules will be posted on the VCS website to acilitate their use.

Section 5.7 o the VCS 2007.1: Content o the VCS PD

In case o an AFOLU project, the VCS PD shall also be accompanied by a project riskanalysis prepared in accordance with the Tool or AFOLU Non-Permanence Risk Analysisand Buer Determination.

Guidance:

For guidance in relation to the Tool or AFOLU Non-Permanence Risk Analysis and BuerDetermination see chapter 4: Guidance to the Tool or AFOLU Non-Permanence Risk Analysisand Buer Determination.

3) Guidance to the Tool or AFOLU Methodological Issues

Eligible AFOLU Activities

For the sake o brevity, the Eligible AFOLU Activities text rom the Methodological Tool hasnot been repeated here.

Guidance:

Aorestation, Reorestation, and Revegetation (ARR)

Eligible activities in the ARR project category consist o establishing, increasing or restoring

vegetative cover through the planting, sowing or human-assisted natural regeneration o woodyvegetation to increase carbon (C) stocks in woody biomass and, in certain cases, soils.

Forest management practices such as enrichment planting and liberation thinning should be considered using the criteria specied or Improved Forest Management (IFM) projects.Revegetation activities that primarily target woody biomass production should be consideredusing the ARR guidelines that ollow. ARR project activities planning to harvest timber arenot excluded because harvesting practices will simply be incorporated into the risk analysisprocess surrounding the issue o non-permanence and must account or the carbon losses due toharvesting. Examples o envisaged VCS ARR activities include: reorestation o orest reserves;reorestation or revegetation o protected areas and other high priority sites; reorestation orrevegetation o degraded lands; and rotation orestry with long harvesting cycles.

Forest land converted to non-orest land within the ten year period preceding project start iseligible or ARR activities only to the extent that the ARR activity is a leakage prevention measureor a REDD or IFM project activity and this is independently veried.


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Agricultural Land Management (ALM)

Land use and management activities that have been demonstrated to reduce net greenhousegas (GHG) emissions on cropland and grassland (see IPCC 2006 GL or AFOLU 4) by increasingcarbon (C) stocks (in soils and woody biomass) and/or decreasing CO2, N2O and/or CH4 emissionsrom soils are eligible or certication under the VCS as ALM projects. Three broad categories oactivities are included: (A) improved cropland management; (B) improved grassland managementand, (C) cropland and grassland land-use conversions. Land conversions o cropland or grasslandto orest vegetation are considered ARR activities and are not discussed here. Biouel cropproduction activities are eligible or crediting under VCS AFOLU only to the extent that theygenerate measurable increases in carbon stocks (above-ground, below-ground, and/or soil).

A. Improved cropland management activities

Improved cropland management activities include the adoption o practices that demonstrablyreduce net GHG emissions rom a dened land area by increasing soil C stocks, reducing soil N2Oemissions, and/or reducing CH4 emissions.5

Soil C stocks can be increased by practices that increase residue inputs to soils and/or reduce

soil C mineralization rates. Such practices include, but are not limited to the: adoption o no-till; elimination o bare allows; use o cover crops; creation o eld buers (e.g. windbreaks,riparian buers); use o improved vegetated allows; conversion rom annual to perennialcrops; and introduction o agroorestry practices on cropland. Where perennial woody speciesare introduced as part o cropland management (e.g. eld buers, agroorestry), C storage inperennial woody biomass may be included as part o emission reduction credits.

Reducing soil N2O emissions generally involves enhancing the N use eciency o targetedcrops to reduce the amount o N added as ertilizer or manure. Examples o specicpractices that improve eciency while reducing total N additions include: improved timingo application (e.g., split application), improved ormulations (e.g., slow release ertilizers,nitrication inhibitors) and improved placement o N.

Reducing soil CH4 emissions is an applicable practice primarily in fooded rice cultivation.Practices that reduce CH4 emissions include: improved water management; and the use orice cultivars with reduced capacity or methane production and transport.

B. Improved grassland management activities

These activities include the adoption o practices that increase soil C stocks and/or reduce N2Oand CH4 emissions.

Soil C stocks can be enhanced by practices that increase belowground inputs or slow

decomposition. Such practices include: increasing orage productivity (e.g. through improvedertility and water management); introducing species with deeper roots and/or more root

growth; and reducing degradation rom overgrazing.

Reducing N2O emissions involves N ertilizer management practices similar to those outlinedabove or cropland management.

Reducing re frequency and/or intensity can reduce N2O and CH4 emissions rom burning.

Reducing emissions of CH4 and N2O rom grazing animals can be achieved, inter alia, byimproved livestock genetics, improving the eed quality (e.g., by introducing new oragespecies, or by eed supplementation); and/or by reducing stocking rates. I these practicesinvolve displacement o animals to outside the project area, leakage should be accounted or,particularly i displaced animals cause a reduction in carbon stocks outside the project area.

4 www.ipcc-nggip.iges.or.jp/public/2006gl/vol4.htm

5 Guidance relating to manure management is provided elsewhere in the VCS (i.e., outside o AFOLU scope).


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C. Cropland and grassland land-use conversions

Cropland conversion to perennial grass vegetation is likely to be the dominant land use conversionor ALM projects. However, some grassland conversions to cropland production (e.g., introducingorchard crops or agroorestry practices on degraded pastures) could increase soil and biomass Cstocks (thereby reducing net GHG emissions). Under such conditions, these conversion practiceswould also be considered eligible or project certication. However, projects converting grasslandsmust demonstrate that they do not harm local ecosystems as outlined in the general AFOLUguidance (see section B. Community and/or environmental impacts o projects).

The conversion of cropland to perennial grasses can increase soil carbon by increasing

belowground C inputs and eliminating/reducing soil disturbance. Reductions in N ertilizerand/or manure additions associated with conversion to grassland may also reduce N2Oemissions. However, special attention should be given to accounting or leakage associatedwith conversion o cropland (particularly to conservation set-asides), associated with boththe displacement o crop production to previously uncropped lands (causing soil C losses) aswell as the displacement o N ertilizer and/or manure additions to existing or new croplands(causing increases in N2O emissions) to compensate or the loss o agricultural production.

Conversion of drained, farmed organic (e.g., peat) soils6 to perennial non-woody vegetation,along with reductions or elimination o drainage, can reduce emissions o CO2 and N2O romorganic soils. However, potential increases in CH4 emissions would need to be accounted or.

Biouel crop production activities are eligible or crediting under VCS AFOLU only to the extentthat they generate measurable increases in carbon stocks (above-ground, below-ground, and/or soil).

Improved Forest Management (IFM)

Activities related to improved orest management are those implemented on orest lands managedor wood products such as sawtimber, pulpwood, and uelwood and are included in the IPCC category

orests remaining as orests (see IPCC AFOLU 2006 Guidelines

7

). Only areas that have beendesignated, sanctioned or approved or such activities (e.g., as logging concessions or plantations)by the national or local regulatory bodies are eligible or crediting under the VCS Improved ForestManagement (IFM) category. Activities to reduce emissions rom unsanctioned orest degradation(e.g., illegal logging) is not eligible or crediting under the IFM category, but may be creditableas a Reduced Emissions rom Deorestation and Degradation activity (REDD). Various sanctionedorest management activities can be changed that could increase carbon stocks and/or reduce GHGemissions, but only a subset o these activities make a measurable dierence to the long-term increasein GHG benets compared to business-as-usual practices. Improvements in orest management couldlead to a potential reduction in the fow o timber o the site, thereby causing leakage through thedisplacement o logging activity to other orest areas. This leakage must be accounted or using theleakage table provided in the Tool or AFOLU Methodological Issues.

The ollowing improved orest management practices, in upland orests and wetland orests (e.g. peat-swamps, mangroves, etc.) and planted orests (plantations), qualiy as eligible activitiesunder the VCS:

1. Conversion rom conventional logging to reduced impact logging (RIL) typically reducescarbon emissions during timber harvesting due to: reductions in damage to other trees(by implementing directional elling or vine cutting, etc.); improved selection o trees orharvesting based on inventoried knowledge concerning tree location and size; improvedplanning o skid trails (in peat swamp orests this could include avoiding the use o canalsto extract the logs the canals drain the peat and increase CO 2 emissions) and roads; and,the reduced size o logging roads.

6 Organic soils reers to peat- or muck-derived soils with high organic matter content, and not toorganically armed soils



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2. Conversion o logged orests to protected orests (LtPF) includes: (1) protecting currentlylogged or degraded orests and plantations rom urther logging and degradation; and,(2) protecting unlogged orests that would be logged in the absence o carbon nance.Generally speaking, converting logged orests to protected orests reduces emissions causedby harvesting (i.e., protects carbon stocks) and increases the carbon stock as the orest re-grows and/or continues to grow.

3. Extending the rotation age o evenly aged managed orests (ERA) (e.g., pine or teakplantations) also can increase carbon stocks. Trees are typically harvested at an economicor optimal rotation age; extending the age at which the trees are cut increases the averagecarbon stock on the land. There is no xed period o years over which the extension shouldoccur, but generally the longer the period (on the order o 5-20 years), the more the averagecarbon stock increases.

4. Conversion o low-productive orests to high-productive orests (LtHP), or improving thestocking o poorly stocked orests, can also increase the carbon stock. Low productivityorests usually satisy one o the ollowing conditions: they qualiy as orest as denedby the host country, but do not contain much timber o commercial value; they are eitherdegraded or in the process o degrading due to requent disturbance (re, animal grazing,

uelwood gathering, etc.); or they have a very slow growth rate or low crown cover. Projectactivities may include the introduction o other tree species with higher timber value orgrowth rate, the mitigation o disturbance events, the adoption o enrichment planting toincrease the density o trees, and/or other orest management techniques (e.g., ertilization,liming) to increase carbon stocks.

Guidelines or other activities that could increase carbon onsite (e.g., actions to reduce orest res)are not included in this document because o unresolved scientic and technical challenges (e.g., toestablish a credible baseline is complex). However, work on these issues is ongoing and, as they areresolved, the VCS will consider covering such new activities in uture versions o the VCS.

Reduced Emissions rom Deorestation and Degradation (REDD)

Activities that reduce the conversion o native or natural8 orests to non-orest land, which are otencoupled with activities that reduce orest degradation9 and enhance carbon stocks o degraded and/or secondary orests that would be deorested in absence o the REDD project activity, are creditableunder the VCS according to the guidance provided in this Reduced Emissions rom Deorestationand Degradation (REDD) section. Activities that protect or reduce the conversion o planted orestsare covered under the Improved Forest Management (LtPF) section o the VCS.

Deorestation is generally considered to be the direct, human-induced conversion o orest land tonon-orest land. Thus, the estimation o deorestation is aected by how orest and non-orestare dened. Forest denitions are myriad; however, common to most denitions are thresholdparameters including minimum orest area, tree height and level o crown cover. Under the KyotoProtocol, a orest is dened according to these three parameters as selected by the host country. To

be eligible or VCS crediting, REDD project orests must meet internationally accepted denitions

8 The idea behind the REDD mechanism is to reduce emissions rom the ongoing deorestation o native/natural orestsmostly tropical orests, where the vast majority o global deorestation is taking placethus the ocus o VCS REDD on native or natural orests as commonly accepted by the host country or usingthe FAO denition o natural orest: A orest composed o indigenous trees not established by planting or/and seeding in the process o aorestation or reorestation.

9 Regarding degraded oreststhe key question is whether the degradation is caused by the orest beinglegally sanctioned or logging or whether it is illegally being logged and degraded. I the orest was subjectto legally sanctioned logging, then stopping the logging activity and protecting the orest is an eligible

activity under VCS-IFM. I the logging activity is NOT sanctioned and is part o the cause o deorestationand degradation then it qualies under VCS-REDD but guidance is provided or the degradation componentin the section VCS-IFM


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o what constitutes a orest, e.g., based on UNFCCC host-country thresholds or FAO denitions 10.The denition o a orest may include mature orests, secondary orests11, and degraded orests.Wetland orests (e.g., peat swamp orests or mangrove orests) are also eligible or crediting underVCS REDD, as long as they meet the orest denition requirements mentioned above.

Deorestation within a country can be planned (designated and sanctioned) or unplanned(unsanctioned). In both cases, the VCS REDD scheme provides or crediting i orest conversionrates are reduced. Planned deorestation can encompass a wide variety o activities such as:national resettlement programs rom non-orested to orested regions; national land plans to reducethe orest estate and convert it to industrial-scale production o commodities such as soybeans,pulpwood12, and oil palm; plans to convert well-managed community-owned orests to other non-orest uses; or planned orest conversion or urban, rural, and inrastructure development. Otherorms o planned deorestation could include decisions by individual land owners or communitygroups, whose land is legally zoned or agriculture, to convert their orest(s) to crop productionor biouel plantations. These planned deorestation activities would be outlined in land planningor management documents, and could thereore be readily veried under the VCS.

Unplanned or unsanctioned deorestation generally occurs as a result o socio-economic orcesthat promote alternative uses o orested land, and the inability o institutions to control these

activities. Population growth and the expansion o roads and other inrastructure oten leads tosubsistence ood production and uelwood gathering taking place on lands not designated orsuch activities. Meanwhile, poor law enorcement and a lack o property rights may allow the piecemeal conversion o orested lands. Unplanned activities include, or example, subsistencearming occurring on both public lands legally designated or timber production and on publicor communal lands that are poorly managed or otherwise degraded.

Not only is deorestation planned or unplanned but it also occurs under dierent regional orestlandscape congurationstermed here as rontier or mosaic13. The orest rontier congurationis where humans and their inrastructure are encroaching into areas with relatively little humanactivity (Figure 1 below). The orest mosaic conguration is where human populations andassociated agricultural activities and inrastructure (roads, towns, etc.) are spread out across the

landscape and most areas o orest within such a congured region or country are accessible(Figure 2 below).

In addition to presenting distinct management challenges, the two landscape types wheredeorestation occursrontier and mosaicalso are treated dierently by the rules governing VCSREDD outlined below. For example, while historic orest conversion rates in mosaic landscapesmay provide a reasonable indication o the threat o deorestation, rontier conversion rates aretypically very low prior to the incursion o roads and populations, so alternative means orassessing uture threats are needed.

Avoiding deorestation/degradation can aect emissions and removals o greenhouse gases in anumber o ways, all o which are eligible or crediting under the VCS REDD category:

The main effect is on CO2 emissions that are reduced by preventing the conversion o orestlands with high carbon stocks to non-orested lands with lower carbon stocks. Moreover, ithe orest is young or degraded, stopping its urther degradation and deorestation allows

10 See FAO Global Forest Resources Assessment 2000 Appendix 2 Terms and Denitions:http://www.fao.org/DOCREP/004/Y1997E/y1997e1m.htm#bm58

11 For VCS purposes, secondary orests are orests that have been cleared and have recovered naturally orarticially, that are at least 10 years old and meet, or have the potential to meet, the lower bound o theorest threshold parameters at maturity.

12 Avoiding the conversion o natural orests to pulpwood plantations could qualiy as reducing emissionsrom orest degradation, as pulpwood plantations generally contain much less carbon than natural orests,

yet they may still meet the denition o a orest.

13 Brown, S., M. Hall, K. Andrasko, F. Ruiz, W. Marzoli, G. Guerrero, O. Masera, A. Dushku, B. DeJong, andJ. Cornell, 2007. Baselines or land-use change in the tropics: application to avoided deorestation projects.Mitigation and Adaptation Strategies or Global Change, 12 (6):1001-1026.


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or additional sequestration o carbon on the land as the orest regrows (with or withoutassisted regeneration).

As deforestation is often accompanied by the use of re to clear the land, avoiding deforestation

can reduce non-CO2 emissions by preventing the burning o biomass.

Finally, avoiding conversion of forests to cropland or pasture can reduce emissions of N2Oand CH4, which are associated with ertilizer use and other agricultural practices that wouldhave occurred i the orests had been converted.

Activities covered under the REDD VCS project category are those that are designed to stop plannedor unplanned deorestation/degradation in orest rontiers or orest mosaic congurations. Forexample, activities that stop unplanned deorestation/degradation on orest lands (whether undera rontier or mosaic conguration) that have been legally sanctioned by the national or localregulatory bodies or logging activities or timber production (e.g., illegal logging and slash-and-burn agriculture in a timber concession) would be covered under the VCS-REDD projectcategory. However, activities that reduce or stop logging only, ollowed by protection, on orestlands legally designated or sanctioned or orestry activities are included within the ImprovedForest Management (IFM) VCS project category and so are not discussed urther here.

The ollowing REDD practices qualiy as eligible activities under the VCS:

1. Avoiding planned deorestation (APD)14: Reduces GHG emissions by stopping deorestationon orest lands that are legally authorized and documented to be converted to non-orestland15. This REDD practice can occur in degraded to mature orests, either at the orestrontier or in the orest mosaic conguration. APD project proponents must provide theverier with evidence showing that the project area was planned to be converted.

2. Avoiding unplanned rontier deorestation and degradation (AUFDD): Reduces GHGemissions by stopping deorestation/degradation o degraded to mature orests at the orestrontier that has been expanding historically, or will expand in the uture, as a result o

improved orest access, oten through construction o roads.

3. Avoiding unplanned mosaic deorestation and degradation (AUMDD): Reduces GHG emissionsby stopping deorestation/degradation o degraded to mature orests occurring in a mosaic pattern. Such deorestation/degradation typically occurs where population pressure andlocal land use practices produce a patchwork o cleared lands, degraded orests, secondaryorests o various ages, and mature orests; where the orests are accessible; and where theagents o deorestation/degradation typically are present within the region containing thearea to be protected.

14 Avoiding planned degradation (e.g., legally sanctioned timber extraction) is covered under VCS IFM. APD,as an eligible REDD activity, only reers to planned deorestation. However in many countries, valuabletimber would likely be extracted beore the land was deorested and this would have to be taken intoaccount in the baseline (see IFM section or guidance on how to address this wood product component).

15 APD could include projects initiated by local communities and/or other landowners to protect their orestedlands. For example, a community (e.g., ejidos in Mexico) may determine that carbon credits rom orest

protection are more valuable than the potential revenue rom crop production. Similarly, an owner o landzoned or conversion to agriculture or urban development may choose to protect orested lands by partneringwith a conservation organization, either in a joint management agreement or an outright sale.


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Figure 1. Frontier-type conguration at the regional scale (rom Madre de Dios, Peru) 16.Deorestation rontiers can be seen on either side o the major road.

Figure 2. Mosaic-type orest conguration at the regional scale (rom Jambi and Sumatera

Selatan provinces, Indonesia)

16 Map based on remote sensing data or 2000 provided to S. Brown rom G. Asner based onthe paper: Oliveira, P. J. C., et al. 2007. Land-use Allocation Protects the Peruvian Amazon.(http://asnerlab.stanford.edu/publications/oliveira_etal_2007.pdf)


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B. Eligible activities shall meet the ollowing criteria:

All areas included within the REDD project boundary must have qualied as a forest (see

denitions in REDD introductory paragraph) or a minimum o 10 years beore the projectstart date. This length o time is necessary because it is very dicult to discriminate, throughsatellite imagery, young orests rom certain types o crops and accurately delineate theorest boundary at the start o the project.

The REDD project boundary may include several land-use activities, but the boundaries of the

REDD activity must be clearly delineated and dened, ensuring that only land qualiying asorest is included.

If the REDD project activity includes avoiding unplanned deforestation/degradation activities

(e.g., agricultural expansion) as well as stopping logging17 in an area designated or legallysanctioned logging, project proponents need to ollow the REDD guidelines or the unplanneddeorestation/degradation activities and the IFM section or the legal logging activities.18

Step 0 and Step 1 o the Tool or AFOLU Methodological Issues:

general methodological guidance and determine the land eligibility

Guidance:

No additional guidance.

Step 2 o the Tool or Methodological Issues: determine the project boundary

4. The project proponent must determine the project boundary which is dened by:

a. The geographic boundary within which the project will be implemented;b. The project crediting period;c. The source and sinks, and associated types o greenhouse gases (i.e. CO2, N2O,

CH4), the project will aect, andd. The carbon pools that the project will consider.

Guidance:

Geographical area: Project participants need to clearly dene the spatial boundaries o a projectso as to acilitate accurate measuring, monitoring, accounting, and veriying o the projectsemissions reductions/removals. The area o implementation or the VCS AFOLU project may besmaller than the entire project area to allow or eective leakage management.

At project verication, the project boundary encompasses the area under the control o theproject participants as dened in the VCS PD. In cases where project validation occurs beoreverication, the project boundary encompasses the area under the control or to become under thecontrol o the project participants as dened in the VCS PD. The entire area is to be validated asi it were under control and ready to be implemented. For validations where less than 80% o thetotal proposed area o the project is under current control, the project participants must:

17 See the Noel Kemp Climate Action Project (http://www.noelkempff.com/English/Welcome.htm andhttp://conserveonline.org/workspaces/climate.change/ClimateActionProjects/NoelKempff/NKPDD ) as anexample o a project that stopped both unplanned deorestation and sanctioned logging activities.

18 For such combined projects, the credits generated by IFM and REDD activities must be kept separate toaccount or potentially dierent risk ratings and buer withholding requirements applied to each.


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A. Demonstrate that the diering area (i.e., whether under control now or in the uture) doesnot aect the outcome o the additionality test; and,

B. Assure that i the area is eventually smaller than intended, there are provisions that increasedemissions attributable to the project activity in the areas that at verication have not comeunder control o project shall be considered as leakage. This requires the selection o theappropriate methodology beorehand or the eventuality that this may happen; and,

C. Design a monitoring plan that is fexible enough to deal with changes in the size o theproject; and,

D. Veriy the project within ve years o validation.

At verication, the size o the project becomes xed and the certier veries whether the projecttook sucient account o leakage and monitoring accuracy.

When describing physical project boundaries, it is necessary to include the ollowing inormation: nameo the project area (e.g., compartment number, allotment number, local name, etc.); map(s) o the area;geographic coordinates (preerably obtained rom a GPS); total land area; and details o ownership.

Project crediting period: This is the period o time or which the net GHG emissions reductions orremovals will be veried, which under the VCS is equivalent to the project lietime. The project musthave a robust operating plan covering this period. The project crediting period or ALM projectsocusing exclusively on emissions reductions o N2O, CH4 and/or ossil-derived CO2 shall not exceed 10years, renewable at most two times19. The project crediting period or all other AFOLU projects shallbe between 2020 and 100 years.

Eligible gases: Projects must account or any signicant sources (sinks are optional) o carbon dioxide(CO2), nitrous oxide (N2O) and methane (CH4) that are reasonably attributable to project activities thesum o decreases in carbon pools and increases in emissions that may be neglected shall be less than5% o the total project GHG benets. For example, projects must also account or increases in emission

sources o N2

O and CH4

rom soils i they exceed 5% o the total CO2

-eq benets

21

. Emissions o N2

Omust be addressed i any nitrogen ertilizer was applied during the crediting period.

Carbon pools: VCS projects should consider the ollowing ve pools: above-ground biomass, below-ground biomass, dead wood, litter and soil carbon. Activities that reduce the harvest o timber mayalso reduce the production o long-lived wood products. Thereore, accounting or the change in woodproducts must be included to avoid overestimating the net GHG benet o the project. The IPCC 2003Good Practice Guidance or greenhouse gas inventories22 sets a precedent or including this pool i itchanges. The IFM section that ollows also provides guidance concerning how to include wood productsas a carbon pool. Pools can be omitted i their exclusion leads to conservative estimates o the numbero carbon credits generated23.

19 Such ALM emissions reductions projects are not subject to non-permanence risk (or buer withholding),and thereore shall ollow the VCS Program rules governing non-AFOLU projects in terms o an acceptablecrediting period (i.e., a maximum o 10 years which may be renewed at most two times.)

20 20 years in considered the minimum acceptable AFOLU project crediting period or the buer approach toserve as an eective non-permanence risk mitigation tool.

21 The ollowing EB tool can be used to test the signicance o emissions sources -http://cdm.unfccc.int/EB/031/eb31_repan16.pdf

22 Winjum, J. K., S. Brown, and B. Schlamadinger. 1998. Forest harvests and wood products: sources and sinkso atmospheric carbon dioxide. Forest Science 44:272-284; and Lim, B., S. Brown, and B. Schlamadinger.1999. Carbon accounting or orest harvesting and wood products: a review and evaluation o possibleapproaches. Environmental Science and Policy 2: 207-216; Also see Chapter 12, IPCC Guidelines or

National GHG Inventories, 2006.

23 See, or example, the A/R CDM tool or the conservative exclusion o soil organic carbonhttp://cdm.unfccc.int/EB/033/eb33_repan15.pdf


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Step 3 o the Tool or Methodological Issues: determine the carbon pools

The carbon pools that shall be accounted or are listed in Table 1 below.Emissions o N2O shall also be accounted or, unless insignicant, i any nitrogen ertilizerand/or manure is applied, or N-xing species planted, during the crediting period.

Guidance:

ARR

Eligible carbon pools comprise: aboveground biomass, belowground biomass, dead wood, litter,soil organic carbon, and wood products.

ALM

Soil carbon is the primary pool o concern or ALM, although activities that include a woodybiomass component (e.g., agroorestry, silvipasture, orchards) also need to consider aboveground

woody biomass C stocks.

IFM

For carbon accounting, all pools that are expected to decrease their carbon stocks above a deminimis (less than 5% o total increase in carbon stock) as a result o project activities must bemeasured and monitored in both the baseline and project case.24 For RIL and LtPF, changes insoil C are likely to be less than the de minimis or orests on mineral upland soils, but could beconsiderably lower than the baseline or orests growing in wetland areas such as peat-swamporests or mangroves and although conservative to omit, they could provide signicant carbonbenets i measured and estimated.

As noted below, wood products must be included in activities that reduce the harvest o timberand the production o long-lived wood products because reducing the quantity o live biomass (i.e.carbon) in the harvested timber does not necessarily entail an atmospheric emissions reduction below the established baseline (see discussion o estimating net emissions). Similarly, projectsundertaking RIL and LtPF must account or the dead wood pool in their baseline and project casedocuments. Both o these activities reduce the amount o timber extracted per unit area, which,in turn, reduces the dead wood pool in the project case (ewer trees harvested means less slash,less collateral damage, ewer skid trails etc.).

For ERA, the issue with the dead wood pool is slightly more complex because it depends onhow post-harvest slash is treated. Slash can either be piled and burned on site (as happens inre prone areas) or let on site to decompose. Extending a harvest rotation would increase theamount o dead wood produced because the trees would be somewhat larger when harvested and

thus more slash would remain. Because the dead wood pool would increase (probably more thanthe de minimis), this pool is deemed optional. (Note: by extending rotation age there is likely tobe an increase in the above ground biomass associated with increased logging residues).

The measurement o belowground biomass is optional in all cases because changes in the carbonstocks o roots can be dicult and complex to account or in logged orests. Furthermore, theextent to, and rate at, which decomposition occurs when trees are harvested is unknown, soeorts to model root biomass as a unction o aboveground biomass (as is common practice) otenencounter problems. In all cases it is conservative to exclude belowground biomass.

24 For VCS AFOLU projects, GHG sources that account or less than 5% o the total CO2-eq generated by theproject are considered insignicant. The ollowing CDM EB tool can be used to test the signicance oemissions sources: http://cdm.unfccc.int/EB/031/eb31_repan16.pdf


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REDD

For carbon accounting, all pools that are expected to show a decrease in carbon stocks betweenthe baseline and the project greater than a de minimis (5% or less o total dierence) as a resulto project activities must be measured and monitored in both the baseline and project case. 25

Above-ground biomass is the primary pool o concern or REDD, although carbon stock changesin other carbon pools may also be included, depending on the magnitude and direction o change.Non-tree biomass must be included in the baseline case i the pool is likely to be relatively largesuch as when oil palms, short-rotation woody crops or pulp, and the like, are commonly plantedin the region where the project is located. Although the below-ground living biomass pool isoptional, it is highly recommended that it be included because it can amount to 25% or more othe aboveground biomass (see IPCC 2006 GL26).

Soil carbon need not be included i the planned or unplanned conversion was to pasture grassesor other perennial crops given that the body o scientic evidence shows such conversions otropical orests do not signicantly decrease soil carbon stocks. However, conversion o orests toannual crops can cause a large decrease in soil carbon stocks, so the project developer may nd itadvantageous to include this in their methodology, though as indicated in the table below it is an

optional pool. For wetland orests on peat soils, inclusion o soil carbon is highly recommendedas large emissions o CO2 can result i the land is drained during deorestation/degradation andrapid oxidation o the peat occurs. Whilst robust methods or estimating changes in mineral soilcarbon stocks are provided in the IPCC 2006 GL, the method or peat soils is not well developedyet and a new methodology would need to be developed or including emissions rom this pool.

Wood products must be included i removal o timber is associated with deorestation/degradationbecause signicant quantities o carbon can be stored in long-term wood products rather than beingemitted into the atmosphere. Thus the quantity o live biomass (i.e., carbon) going into long-termtimber products in the baseline scenario must be quantied (see IFM section or more detail).

Step 4 o the Tool or Methodological Issues: establish a project baseline

12. All AFOLU projects are subject to the same baseline rules as dened by the VCS. Inaddition, the ollowing guidance or specic project types is provided.

13. ALM project activities shall consider current and previous management activities. I activity-based methods are used or soil C stocks, stock estimates shall be determined relative tothe computed maximum C stocks that occurred in the designated land area within theprevious 10 years. Minimum baseline estimates or N2O and CH4 emissions shall be basedon veriable management records (e.g. ertilizer purchase records, manure productionestimates, livestock data) averaged over the 5 years prior to project establishment.

14. In the case o IFM project activities, project developers using a project-based approach

(rather than a perormance/benchmark standard) or establishing a baseline shall providethe ollowing inormation to prove that they meet minimum acceptable standards:

a. A documented history o the operator (e.g., operator shall have 5 to 10 years o managementrecords to show normal historical practices). Common records would include data ontimber cruise volumes, inventory levels, harvest levels, etc. on the property; and

b. The legal requirements or orest management and land use in the area, unlessveriable evidence can be provided demonstrating that common practice in the areadoes not adhere to such requirements; and

25 For VCS AFOLU projects, GHG sources that account or less than 5% o the total CO2-eq generated by theproject are considered insignicant, or de minimis. The ollowing CDM EB tool can be used to test thesignicance o emissions sources: http://cdm.unfccc.int/EB/031/eb31_repan16.pdf

26 http://www.ipcc-nggip.iges.or.jp/public/2006gl/vol4.htm


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c. Proo that their environmental practices equal or exceed those commonly considereda minimum standard among similar landowners in the area.

The baseline or the IFM project is then the management plan projected through the lie othe project, satisying at a minimum the three standards given above.

15. For REDD projects the baseline has two main components: a land-use and land-cover (LU/LC) change component and the associated carbon stock change component. Developingthe LU/LC change component o the baseline is handled dierent or the three eligibleREDD activity types.

Avoiding planned deforestation (APD): Project documentation must clearly demonstrate

that the land would have been converted to non-orest use i not or the REDD project(i.e., clear demonstration o the projects additionality). The project developer mustprovide veriable evidence to demonstrate that, based on government- and landowner-planned land use changes, the project area was intended to be cleared. The annualrate o orest conversion would be based on the common practice in the areathat ishow much orest is typically cleared each year by similar baseline activities.

I it is common practice in the area or timber to be removed beore clearing, then theamount o carbon that ended up in long-lived wood products must be estimated anddeducted rom the baseline emissions estimates (subject to the de minimis rule o 5%).See the IFM section or urther guidance on how to estimate the amount o carbontranserred to long-lived wood products.

Avoiding unplanned frontier deforestation and degradation (AUFDD): The project

developer must demonstrate that the project area is located geographically wheredeorestation/degradation will likely happen during the crediting period. Wherethe expansion o the deorestation rontier into the project area is linked to thedevelopment o inrastructure that does not yet exist, evidence must be provided to

the veriers that such inrastructure would have been developed in the absence o theREDD project.

Avoiding unplanned mosaic deforestation and degradation (AUMDD): A baseline

projection o deorestation and degradation under this activity must be developed orthe region in which the project area is located, making sure it takes into account suchactors as historical deorestation/degradation rates and that the proposed regional baseline area is similar to the project area in terms o: drivers o deorestation/degradation, landscape conguration, and socio-economic and cultural conditions.

16. For all REDD projects types, project proponents shall, or the duration o the project,reassess the project baseline at least once every 10 years and have this reassessment validatedat the same time as the next VCS verication. The baseline methodology must outline the

measurements, calculations and assumptions used to estimate the annual amount and likelygeneral location o the expected deorestation/degradation under baseline conditions.

17. The baseline net GHG emissions and removals must be estimated or each year o theproposed crediting period.

Guidance:

All AFOLU projects are subject to the same baseline rules as dened by the VCS.

In addition, or ARR projects the (ex-ante) determination and quantication o the baseline

scenario must ollow either the IPCC 2006 Inventory Guidelines on the topic or approved A/RCDM methodologies. In the case o emissions by sources occurring under the baseline scenario,these emissions can also be estimated by reerring to the IPCC 2006 Inventory Guidelines orapproved A/R CDM methodologies, taking into account their applicability conditions.


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For ALM projects, pre-project C stocks or baseline estimation can be determined rom measuredinventory estimates using approved methodologies and/or activity-based estimation methods(e.g. IPCC 2006 GL), considering current and previous management activities. I activity-basedmethods are used or soil C stocks, stock estimates should be determined relative to the computedmaximum C stocks that occurred in the designated land area within the previous 10 years. 27Minimum baseline estimates or N2O and CH4 emissions should be based on veriable managementrecords (e.g. ertilizer purchase records, manure production estimates, livestock data) averagedover the 5 years prior to project establishment.

IFM project developers using a project-based approach (rather than a perormance benchmark28)or establishing a baseline must provide the ollowing inormation to prove that they meetminimum baseline standards or improved orest management projects:

A documented history of the operator (e.g., operator must have 5 to 10 years of management

records to show normal historical practices). Common records would include data on timbercruise volumes, inventory levels, harvest levels, etc. on the property29; and

The legal requirements for forest management and land use in the area; however if these are

not enorced then this requirement does not have to be met; and

Proof that their environmental practices equal or exceed those commonly considered a

minimum standard among similar landowners in the area.

The baseline or the IFM project is then the without-project management practices projectedthrough the lie o the carbon project, satisying at a minimum the three standards given above.

The baseline or REDD project activities has two main components: a land-use and land-cover(LU/LC) change component and the carbon stock component. These can be addressed separatelyas their scale o analysis may dier. In general, the rate o change in LU/LC will be estimated ata dierent scale than the carbon stock.

General guidance or estimating the carbon stock component is provided in several sourcesincluding the IPCC 2006 GL30 (e.g., section covering orests converted to cropland, grassland,other land) and the project design document or the Noel Kemp Climate Action Project. 31 TheNoel Kemp document provides methods or estimating the baseline carbon stocks or orestsprojected to be deorested and degraded, including logging, orest regrowth, and dead wood. Theguidance on methods provided in the aorementioned documents or the carbon stock componento the baseline can be used or any o the eligible activities under REDD. For inclusion o the non-CO2 gases, the project developer must provide evidence that the practice or which they plan toclaim credit is the common practice in the area. The guidance in the IPCC GPG (Ch. 4.3) and IPCCGL 2006 can be used to estimate such non-CO2 emissions.

27 For example, i C stocks on the project area were 100 tonnes C/ha in 2002, then declined to 90 tonnes/haby 2007 ater intensive tillage, the minimum baseline C stock or a project established in 2008 would be100 tonnes/ha.

28 See Additionality section o VCS 2007.1 or description o how a Perormance Test versus Project Test maybe applied under the VCS.

29 For new management entities with no history o logging practices in the project region, the baseline shouldrefect just the common practices and legal requirements. However, i the common practice is unsustainableand unsustainable practices contravene the mission o the implementing entity then a sustainable baselineis the minimum that can be adopted. For projects ocused on stopping logging or reducing the impact ologging, where the implementing entity takes over ownership o a property specically as a carbon projectto reduce orest management emissions, then the project baseline may be based on the management planso the previous property owners (i.e., the baseline must represent what would have most likely occurred in

the absence o the carbon project).

30 http://www.ipcc-nggip.iges.or.jp/public/2006gl/vol4.htm

31 http://conserveonline.org/workspaces/climate.change/ClimateActionProjects/NoelKempff/NKPDD


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Developing the LU/LC change component o the baseline is dierent or the eligible activities.

Avoiding planned deorestation (APD): Project documentation must clearly demonstratethat the land would have been converted to non-orest use i not or the REDD project (i.e.,clear demonstration o the projects additionality). The project developer must provideveriable evidence to demonstrate that, based on government- and landowner-planned landuse changes, the project area was intended to be cleared. The annual rate o orest conversionwould be based on the common practice in the areathat is how much orest is typicallycleared each year by similar baseline activities.

I it is common practice in the area that timber is removed beore clearing, then the amounto carbon that ended up in long-lived wood products must be estimated and deducted rom thebaseline emissions estimates (subject to the de minimis rule o 5%). See the IFM section or urtherguidance on how to estimate the amount o carbon transerred to long-lived wood products.

Avoiding unplanned rontier deorestation and degradation (AUFDD): Developing a baselineprojection or the LU/LC change component o this activity is probably the most complex othe three eligible activities described here. In most cases the orest area to be protected willhave low rates o historical deorestation/degradation because most o the project area was

not accessible in the past to the agents o deorestation/degradation expected to encroachduring the project term. For rontier deorestation/degradation, the project developer mustdemonstrate that the project area is located geographically where deorestation/degradationwill likely happen during the crediting period. Where the expansion o the deorestationrontier into the project area is linked to the development o inrastructure that does not yetexist, strong evidence must be provided to the veriers that such inrastructure would havebeen developed in the absence o the REDD project. Strong evidence includes maps showingconstruction plans, construction contracts or open tenders, and/or an approved budget.

Avoiding unplanned mosaic deorestation and degradation (AUMDD): A baseline projectiono deorestation and degradation under this activity must be developed or the region inwhich the project area is located, making sure it takes into account such actors as historical

deorestation/degradation rates and that the proposed regional baseline area is similar to theproject area in terms o: drivers o deorestation/degradation, landscape conguration, andsocio-economic and cultural conditions.

For all REDD projects activities, project proponents shall reassess the project baseline at leastonce every 10 years, and have this validated at the same time as the next VCS verication. Baselineprojections or deorestation/degradation beyond a 10-year period are not likely to be realistic because rates o land-use change are subject to many actors that are dicult to predict overthe long term, hence the need or periodic re-assessment o the baseline. This re-assessment willcapture changes in deorestation/degradation drivers (e.g., changes in national/local policies,population growth, changes in opportunity costs, new roads, new protected areas, etc.) that mustthen be incorporated into estimates o the rates and patterns o land-use change 32.

For each o these three REDD activity types, the baseline methodology must outline themeasurements, calculations and assumptions used to estimate the annual amount and likelygeneral location o the expected deorestation/degradation under baseline conditions. The baseline net GHG emissions and removals must be estimated or each year o the proposedcrediting period.

Step 5 o the Tool or Methodological Issues: assess and manage leakage

18. Leakage is dened as any increase in greenhouse gas emissions that occurs outside aprojects boundary (but within the same country), but is measurable and attributable tothe project activities. Its eects on all carbon pools shall be assessed and signicant

32 Brown, S., M. Hall, K. Andrasko, F. Ruiz, W. Marzoli, G. Guerrero, O. Masera, A. Dushku, B. DeJong, andJ. Cornell, 2007. Baselines or land-use change in the tropics: application to avoided deorestation projects.Mitigation and Adaptation Strategies or Global Change, 12 (6):1001-1026.


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eects taken into account when calculating net emission reductions. Accounting or positiveleakage is not allowed.

19. For small-scale ALM land set-aside projects (< 10,000 ha), leakage due to displaced activitiescan be assumed to be zero.

20. IFM project developers must demonstrate that there is no leakage within their operations i.e., on other lands they manage/operate outside the bounds o the VCS carbon project.

21. Leakage shall be assessed and managed or the three eligible REDD activity types as ollows:

a. In the case o avoiding planned deorestation (APD) leakage shall be controlled andmeasured directly by monitoring the activities o the project landowner who was originally planning on deoresting the project area (i.e., the baseline deorestation agents). Anyleakage identied must be quantied and subtracted rom the net carbon benets claimedby the project.

b. In the case o avoiding unplanned rontier or mosaic deorestation and degradation (AUFDD

or AUMDD) developers need to design and implement activities to minimize leakage, andmonitor and account or leakage using approved methodologies.

22. I leakage prevention measures or any eligible REDD activity include tree planting, agriculturalintensication, ertilization, odder production and/or other measures to enhance croplandand grazing land areas, then any signicant increase in GHG emissions associated with theseactivities shall be estimated and subtracted rom the projects net emissions reductions.

23. Leakage caused by market eects is not considered except or the case where timber productionis signicantly aected.

24. Table 2 outlines adjustments that shall be made to IFM project credits to account or potential

market leakage resulting rom a reduction o timber production.

25. For REDD projects, any carbon credits generated rom stopping illegal logging activities (tothe extent they supply regional/global timber markets) shall also be subject to these marketleakage discounts (ollowing the Table 2 guidance or activities that Substantially reduceharvest level permanently).

26. Instead o applying the deault market leakage discounts (rom Table 2), project proponentsmay opt to estimate the projects market leakage eects across the entire country and/or useanalysis(es) rom other similar projects to justiy a dierent market leakage value.

27. IFM and REDD market leakage assessments (whether using deault discounts or project-specic analysis(es)) shall be subject to the VCS double approval process.

Guidance:

Many GHG mitigation activities (whether energy, industrial process or AFOLU based) have the potentialto cause leakage (i.e., impacts outside the project boundary that increase emissions). Based on themethodological guidance provided or each AFOLU project category, project proponents must identiypotential leakage and mitigate it to the extent possible.

In the context o AFOLU projects, leakage is dened as any increase in greenhouse gas emissions thatoccurs outside a projects boundary (but within the same country33), but is measurable and attributableto the project activities. Leakage caused by market eects is not considered except or the case where

timber production is signicantly aected (see guidance provided under IFM section below).

Veriers and project proponents can test the signicance o o-site climate impacts using the

33 Following the CDM and VCS policy o not accounting or international leakage.


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Leakage in relation to ARR

ARR leakage impacts can result rom, but are not limited to, the: shiting o grazing animals,shiting o households or communities, shiting o agricultural activities, shiting o uelwoodcollection, increased use o wooden ence posts, and emissions rom transportation and machineryuse. The requirements or assessing and managing leakage in ARR projects are, in principle,similar to those or A/R CDM project activities.

If deforestation increases outside of a projects boundary because the project has displaced

agricultural practices to orested areas, then the eects o this deorestation on all carbonpools must be assessed and taken into account when calculating net emission reductions;

If fuelwood collection or similar activities (e.g., grazing) increase outside of a projects

boundary because the project has simply displaced these activities to a new area, then, aslong as the activities are not signicantly degrading the orest (i.e., the extracted volumeresults in emissions equivalent to less than 5% o total GHG removals by sinks), only theportion o the gathered wood that is non-renewable must be assessed and taken into accountwhen calculating net emission reductions. In the case that orests are signicantly degraded,the eects o this degradation on all carbon pools must be assessed and taken into account

when calculating net emission reductions (see methods or Participatory Rural Appraisal(PRA) and Eq. 2.13 or uelwood removal as outlined in IPCC 2006 GL or AFOLU36.

The determination and quantication of off-site GHG impacts must follow the relevant IPCC

2006 Guidelines and/or use approved A/R CDM methodologies applicable under the givenconditions o a project.

Leakage in relation to ALM

Leakage potential should be assessed or all project activities using ull GHG accountingprinciples and, where signicant, estimated leakage must be deducted rom the net CO2 benetsgenerated by the project. Potential sources o leakage or ALM projects are listed below:

Reductions in C stocks outside the project area due to the displacement of pre-project activities.

Increases in N2O, CH4 and production-related ossil CO2 emissions outside the project areadue to the displacement o pre-project activities.

Other emissions of CO2 rom ossil uel use that are attributable directly to the project butoccur outside o project boundaries; or example, the transportation o products rom theproject that are additional to those accounted or in the baseline.

For ALM projects involving cropland or grassland management activities, the leakage risks arelikely to be negligible because the land is being actively maintained or commodity production.

For projects involving land set-asides, i.e., cropland or pastures converted to grasslandconservation set-asides, leakage could occur due to displacement o pre-project activities toareas outside the project area. For small-scale land set-asides (< 10,000 ha), leakage due todisplaced activities can be assumed to be zero. Projects above this size, should estimate leakageor displacement o pre-project activities, taking into account possible reductions in biomass, Cstocks, and emissions o N2O, CH4 and ossil CO2 emissions. Guidance on accounting or leakageassociated with shiting o pre-project activities due to land conversions rom agriculture tograssland are unctionally similar to conversion o land to orest vegetation under ARR (seeARR section or reerences to CDM-derived guidance). Alternatively, projects should considerincluding leakage management zones37 as part o the overall project design.


37 Leakage management zones could minimize the displacement o land use activities to areas outside o a projectsboundaries by providing or the maintenance o goods and services (e.g. agricultural products) within areasunder the control o project participants. To avoid displacing activities to new (possibly unmanaged lands),more ecient production per unit area o land would be required within a leakage management zone.


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Leakage in relation to IFM

IFM project developers are responsible or demonstrating that there is no leakage within their operations e.g., on other lands they operate outside the bounds o the specic project. The project developer mustdemonstrate to the VCS verier that the management plans and/or land-use designations o other ownedlands have not materially changed as a result o the IFM project (e.g., increasing harvest rates, or clearinglands that would otherwise have been set aside) because such changes could lead to reductions in carbonstocks or increases in GHG emissions. At each verication, documentation must be provided covering theother owned lands where leakage could occur, including, at a minimum, their location(s), existing landuse(s), and management plans.

In addition, when improved orest management activities result in a signicant reduction o timberproduction, it is likely that timber production could shit to other areas to make up the reduction. Thetable below denes adjustments that must be made to account or this potential market leakage.

Project Action Leakage Risk Leakage Credit Adjustment(discount)

Reduced impact logging withno eect or minimal eect ontotal timber harvest volumes

None 0%

Extend rotations moderately(5-10 years) leading to a shitin harvests across time periodsbut minimal change in totaltimber harvest over time

Low 10%

Substantially reduce harvestlevels permanently (e.g., RILactivity that reduces timberharvest by 25% or more acrossthe project area38; or, a orestprotection/no logging project)

Moderate to High Depends on where timberharvest is likely to be shited

Similar carbon dense forestswithin country: 40%

Less carbon dense forests

within country: 20% More carbon dense forestswithin country: 70%

Out of country: 0% (accordingto stated VCS and CDMpolicy o not accounting orinternational leakage)

*38

Project proponents not wishing to use the deault market leakage discounts provided in thistable may justiy using a dierent market leakage value by estimating the projects marketleakage eects across the entire country (the required scale or such analysis) and/or reerring

to existing leakage analysis(es) rom other similar projects.39

38 Only the RIL carbon credits associated with activities that will reduce timber production are subject tothe market leakage discount.

39 The ollowing papers may be helpul to project proponents (and veriers) seeking to estimate carbon projectmarket leakage eects:

Murray, B.C., B.A. McCarl, and H. Lee. 2004. Estimating Leakage from Forest Carbon SequestrationPrograms. Land Economics 80(1):109-124. (http://ideas.repec.org/p/uwo/uwowop/20043.html)

Murray, B.C., B.L. Sohngen, et al. 2005. EPA-R-05-006. Greenhouse Gas Mitigation Potential in U.S.Forestry and Agriculture. Washington, D.C: U.S. Environmental Protection Agency, Oce o AtmosphericPrograms. (www.epa.gov/sequestration/pdf/greenhousegas2005.pdf)

Sohngen, B. and S. Brown. 2004. Measuring Leakage from Carbon Projects in Open Economies: AStop Timber Harvesting Project as a Case Study. Canadian Journal o Forest Research. 34: 829-839(http://www.winrock.org/ecosystems/les/Sohngen_Brown_2004.pdf)

Noel Kempff Climate Action Project PDD:http://conserveonline.org/workspaces/climate.change/ClimateActionProjects/NoelKempff/NKPDD


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Given that this market leakage assessment may be subject to diering interpretations, whichcould signicantly impact the number o VCUs issued to projects, the outcome o the IFM (orREDD) market leakage assessment conducted at rst VCU issuance (whether using the deaultdiscounts or relying on project-specic analysis(es)) will be subjected to the VCS double approvalprocess. This will be done at the same time and ollow the same procedures as the second verierreview o the original veriers risk/buer analysis o the project, as described in the guidanceor Step 1 o the Risk Tool ound later in this document. Market leakage assessments conductedat validation stage and at verication other than the rst VCU issuance are not required toundergo the double approval process.

Leakage in relation to REDD

Projects designed to avoid deorestation and degradation activities are prone to leakage,particularly activity shiting, which is the displacement o deorestation/degradation activitiesrom the project area to outside the project area, leading to a decrease in carbon stocks and/orincrease in GHG emissions.

Assessment and management o leakage or each o the three eligible activities is discussed below:

1. Avoiding planned deorestation (APD): Under this situation, displacement o baselineactivities can be controlled and measured directly by monitoring the activities o the projectlandowner who was originally planning on deoresting the project area (i.e., the baselinedeorestation agents). These landowners (including individuals, communities, privatecompanies, or local/national governments) may own multiple parcels o orest land withinthe country that could be used to make up or the generation o goods and/or services lostthrough implementation o the carbon project. In such cases, the landowner shall demonstrateto the VCS verier that the management plans and/or land-use designations o other ownedlands have not materially changed as a result o the REDD project (e.g., designating newlands as timber concessions, increasing harvest rates in lands already managed or timber,clearing intact orests or agricultural production, or increasing ertilizer use to enhanceagricultural yields) because such change

VCS_Guidance for AFOLU Projects

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