Panama, Republic of: Forest Finance
(Biocarbon Fund Tranche 2)
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Mixed species reforestation |
The ForestFinance Group plans to reforest over 3,000 ha of degraded, abandoned grasslands by 2017 (5,000 ha by 2019). The lands, formerly used for extensive cattle ranching, will be reforested with a mix of several native species and teak to create new forest plantation ecosystems with high biodiversity, stability and improved soil conditions. ForestFinance’s concept of sustainable forestry follows three main objectives: 1) to be economically profitable; 2) to generate ecological benefits for the project itself and the whole natural habitat by working towards sustainable resource management, increased biodiversity, ecological corridor creation, habitat regeneration and protection, and the extensive use of ecologically sound technologies and resources; and 3) to have positive social impacts on the company’s employees, surrounding local communities and on the regions around the company’s project.
Total sequestration from the project is estimated to be 0.63 Mt CO2e by 2017 (0.22 Mt CO2e or 35% by 2012). The project activities were founded on the premise that the carbon market could be harnessed and carbon finance (primarily from voluntary sources in Germany) has been a source of cash for the ForestFinance Group through a product called CO2OL. CO2OL has distinguished the ForestFinance Group among forestry investment vehicles and remains a pillar concept of the company’s reforestation approach. In the absence of reforestation, land area would likely be used for cattle ranching activities and/or would remain abandoned (permanently) or semi-abandoned as part of a shifting cultivation cycle following slash-and-burn. The project faces several barriers which could prevent its implementation or replication if it did not receive CDM certification. These include: a) Traditional barriers as Panama does not have a significant forestry history or economic sector; b) Financial barriers since the initial investment cost to establish such a project is very high and it is unlikely that local agro-pastoralists would be able to obtain the necessary financing to develop a similar type of project; and c) Technical barriers because Panama does not have a strong forestry sector and there is a significant lack of national expertise and access to forestry technology which impede the development of large-scale, financially viable reforestation projects. The premise of obtaining additional revenues from the commercialization of emission reductions through the CDM has strongly contributed to making the project more economically attractive and environmentally sound to the project’s sponsors. The risks to permanence will be mitigated by a monitoring plan and through the significant community buy-in for the project.
CO2OL is a brand of the ForestFinance Group. The objectives of CO2OL are the reduction of the greenhouse effect through the binding and neutralization of carbon dioxide emissions and to enhance the ecological reforestation of tropical forests.
CO2OL is a brand of the ForestFinance Group, Bonn, Germany
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