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Reports of CDM/JI Feasibility Studies: FY2004

Title of the researchComparison of Feasibilty Between Large Scale and Small Scale A/R CDM Cooperated with Local People in East Java Indonesia
FYFY 2004
Main research organizationSumitomo Forestry Co, .Ltd.
Research partner(s)PT. Kutai Timber Indonesia, Bogor Agricultural University
Location of the projectThe Republic of Indonesia
Summary of the research report (PDF)200421.pdf(302kb)
Description of the projectName of the Project: AR CDM Project in Probolinggo Distric, East Java Province
Category of CDM: Sink
Project type: Reforestation / Afforestation
Objective of the Project: (1) Increase the CO2 sequestration (2) Supply wood materials and reduce the felling pressure on the natural forest (3) Improve the land productivities and prevent land degradation (4) Contribution for the local economy and local peoples' life
Object area and boundary of the project site: Four sub-districts in Probolinggo district, East Java, Indonesia. The total area is 1,500ha.
Project period: 20 years
Project Structure : Cooperated project by Sumitomo Forestry (SFC), KTI company, land owners/farmers, leader of farmers (president of university in Probolinggo)
Roles of participants:
SFC: Funding, technology transfer, Coordinate of CDM project, administration on CDM
KTI: Implementation of the Project, monitoring
Land owners: Participants of the project
Sector of the projectAfforestation/Reforestation
Duration of the project activity/ crediting period20 years
Baseline methodology/additionalityThe Diameters at Breast Height (DBHs) and heights of fence trees as border of land in a plot established in December 2003 in Grati sub-district, Pasuruan district, were measured. The growth of trees in a year was estimated 617kg/ha/year in dry weight or 1.131tonCO2/ha/year. These trees and branches are used for feed of farmers' domestic animals or fuel woods. Therefore the growth of trees is estimated to be stable in long term. The baseline of tree growth on borders is defined as Zero.
Irrigation system by deep wells will be introduced to improve the agriculture of this area as an incentive of participating farmers. The additionality of this project is establishment of irrigation system by deep wells. Irrigation system will improve the agricultural yield by more than two times harvest in a year, increase the possibility to chose the planting species both crops and trees and promote the growth of planted trees.
Common business of plantation trees or forestation will not be implemented in this heavy drought area, because more fertile and unnecessary irrigation system area is widely spread in East Java Province. The aforestation/reforestation in this area will be implemented only under the A/R CDM system.
Estimation of GHG emissionsCarbon sequestration in 1,500ha plantation model is estimated to be 153,000 ton-CO2 for first ten years and 60,000 ton-CO2 for the second ten years. Baseline is Zero because of no net growth of trees on border of land, emission and leakage for first 6 years is 65,600 ton-CO2 and 175,100 ton-CO2 in total after 7th year. Risk is estimated 5% of total carbon sequestration. The net anthropogenic GHGs removal by sinks is 144,000 ton-CO2 for the first 10 years and 56,000 ton-CO2 for the second 10 years.
While carbon sequestration in 500ha plantation model is estimated to be 51,000 ton-CO2 for first ten years and 20,000 ton-CO2 for the second ten years. Baseline, emission, leakage and risks are 1/3 of the 1,500ha model. The net anthropogenic GHGs removal by sinks is 48,000 ton-CO2 for the first 10 years and 18,000 ton-CO2 for the second 10 years.
Monitoring methodologyMeasurement method of carbon pool
(1) Carbon sequestration in above ground biomass and below ground biomass
Above ground biomass will be estimated from diameter at breast height (DBH) and height from destructive sampling and below ground biomass will be estimated from aboveground biomass using conversion factors.
Project participants (farmers and/or land owners) will measure all trees belonging them and report the project developer. The developer will record all data such as measuring date, owners name, all DBH and height of alive trees, estimated below-ground biomass, etc. in computer. If the difference between estimated growth and actual growth is too bigger or too smaller than estimation at the beginning of the project, the growth late and plan of planting and harvest will be revised.
(2) Soil carbon
Soil-carbon is monitored in the steep areas only. Developer will establish plots, and collect soil samples and analyze by Walkley and Black method in every 5 years.

Monitoring will be carried out on the following subjects;
(1) Use of fossil fuel for transportation
(2) Fossil fuel consumption for harvesting
(3) Use of fossil fuel for pumping water
(4) Energy from oming and going of materials and labors by/for agriculture
(5) Fossil fuel and electric energy of project participants
Environmental impactThe environmental impact assesment (EIA) guideline, which is provided by Indonesian government, requests the EIA implementation if the area of an A/R project is beyond 10,000ha. In our project, EIA is not nessesary because our project area is smaller than this guideline. However we assessed the impact of wells that we would establish there.
20,000-milion m3 of rainfall is provided to the water vein every year. And the water comsumption of our project was estimated to be only 0.9 million m3/year so we concluded that the wells would not have a little bad effect on the water vein.
Issues and tasks for project implementationWe focused expense for land use and CER price. Expense for land use is studied two ways, one is sharing harvest system and land lease. In this sharing harvest system, the share of landowner and developer is 50:50. Three prices of land lease are studied, 50 USD/ha/year, 100USD/ha/year and 150 USD/ha/year, respectively. Prices of CER are considered from 0 USD/ton-CO2 to 20 USD/ton-CO2, and IRR of each case is calculated.
The results are as follows;
(1) Under the standard of investment of IRR is more than 20%, it is feasible in large scale (1,500ha) A/R CDM only in case of land lease is less than 100USD/ha/year and CER price is more than 15 USD /ton-CO2.
(2) In small scale (500ha) A/R CDM, the cost of the project is lower and feasibility is better than large scale. But the high price, more than 15 USD/ton-CO2, of CER is needed for clear the investment standard of IRR.
(3) The price of CER is very important to shorten the reaching time to the annual surplus or dissolution of deficit, in particular, in case of adopting sharing harvest system or high price of land lease.

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