Tropical forests and the emerging CO2 market

R. Castro, S. Cordero

Abstract


Since the Earth Summit gathered in Rio Janeiro in 1992, more than 180 countries of the world have been negotiating the United Nations Framework Convention on Climate Change including a strategy to reduce the emissions of gases that are thought to contribute to global warming. The Kyoto Protocol (1997) –that was announced recently will be ratified– includes provisions to allow countries where emissions reductions are very costly to meet their reduction targets by buying credits from countries where emissions reductions are cheaper. This strategy is still being debated; moreover, the sixth conference of the parties (COP VI) reached only a partial agreement. Costa Rica has been a pioneer in developing and selling emission reduction credits. Costa Rica’s carbon credits came primarily from two sources. First, converting cultivated fields and pastures into forests and second, from reducing deforestation. In 1996, in an unprecedented transaction, Costa Rica sold its first 200,000 tons of carbon emission reduction credits to Norway for $10 per ton of carbon. In early 1998, however, Costa Rica received no bids when it tried to auction an additional 1,000,000 tons of carbon credits with a floor price of $20 per ton. During the year 2001, other 8 Latin American countries offered credits to the World Bank’s Prototype Carbon Fund at prices between $2.9 and $20 per ton. Carbon trade final results will depend on the ultimate rules, regulations, and carbon prices.

Keywords


Tropical forest; Climate Change; CO2; Protected areas





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