Financial Management in REDD+ Projects at the Local Level: Lessons
Learned from Community Carbon and Poverty Alleviation Projects
Antonio Ferreira Augusto Serra (Envirotrade)

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Financial Management in REDD+ Projects at the Local Level: Lessons Learned from Community
Carbon and Poverty Alleviation Projects
Antonio Ferreira Augusto Serra (Envirotrade)

Tokyo 3-4 February 2015

Financial management in the REDD+
project at local level ‐ lessons learned
from community carbon and poverty
alleviation project
I would like to take this opportunity to share what we are doing on the ground in Mozambique. We
are still small but with more than a decade of experience in implementing community carbon project inMozambique.

1. Where are the Projects?

Where are the projects?
Quirimbas(2008)

Zambezi Delta(2007)
Nhambita-Gorongosa(2003)The pilot project starts here. It is on the buffer zone of one of the most famous and important
protected areas in Gorongosa National Park.

The project was in partnership with the EU, the University of

Edinburgh, and the Edinburgh Centre for Carbon Management1. The EU funded about 80% of the project
and Envirotrade participated with about 20% of total of about $2 million for a five year project.
The University of Edinburgh, apart from managing the financials and funds from EU, wasresponsible to do a research on the project.

The ECCM2 had the responsibility to develop all of the technicalspecifications that we use to implement the carbon project.

Then, in 2007, we move to Zambezi Delta also

close to the buffer zone of one of the protected areas. It is one of the two Ramsar areas in Mozambique andincludes a part of a buffalo reserve and two forest reserves includes also game hunting concessions with a huge12

http://www.eccm.uk.com/ (Currently Unavailable)
Edinburgh Centre for Carbon Management

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potential for REDD projects.

The four game hunting concessions have about 300,000 hectares of pristine

forests, so with a huge potential to develop REDD project.
However, until now, we only manage to work with the community on the agro forest, and we are on
the process of engaging the other stakeholders who are managing the other areas like the hunting concessions,the buffer reserves, and the forest reserves.

However, this process is taking much longer than we expected.

Then, in 2008, we move to the north of Mozambique and we start another project also on the bufferzone of one of the protected areas, so which is Quirimbas National Park.

However, this project lasted about

three years and we gave up because we did not manage to attract investors to go straight to this year’s standard.
Therefore, we decided to give up.

2. Common Problems & Challenges

Common problems• Extreme poverty;• Lack of infrastructure;
High human pressure‐ Deforestation;‐ Poaching; and‐ Bushfires.

All of these three areas have in common because we were coming from a long and destructive civil
war.

These three areas have in common extreme poverty, a lack of all kind of infrastructure including clinics,

schools, and roads.

All of these people are living there.

than 300,000 people living there.

For example, in the Zambezi Delta, there are more

In Gorongosa, there are more than 100,000 people living there.

people depend on the natural resources.

The pressure on natural resources is very high.

All these

Essentially, inside

the protected areas, people survived by poaching and by extracting all of the natural resources available in these
protected areas.

We had high rates of deforestation, poaching, and also bushfires.

The challenge
Innovation* Provide food security;* Create livelihoods;* Change land use;
* Conserve biodiversity; and* Mitigate greenhouse gas emissions

When we started with the project in Gorongosa, we were challenged by the Gorongosa National

Financial Management in REDD+ Projects at the Local Level: Lessons
Learned from Community Carbon and Poverty Alleviation Projects
Antonio Ferreira Augusto Serra (Envirotrade)

Park Authority.

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Since they were suffering of the pressure from the people around, they challenged

Envirotrade and the other partners to bring something innovative and contributing to the park conservation by
providing food security, creating different source of livelihoods, and changing land use by conserving also thebiodiversity and mitigating greenhouse gas emissions.

This was the big challenge raised by the park authority

at the time that Envirotrade portended to initiate with the pilot project in Gorongosa.

Envirotrade Sofala Projects

STANDARD

Aim to contribute to rebuilding the local
economy by establishing environmentally
responsible farming and food security
Incentivize farmers to change land use &sustainable use of forest: believes transactions
are the basis for sustainable development

The project aimed to contribute to rebuild from the civil war, rebuild the local economy byestablishing environmentally responsible farming and the food security.

In the other words, it is to create

some incentive to involve people on the sustainable forest management because we believe that thetransactions are the basis for sustainable development.
At the beginning, we use the Plan Vivo3 standard.

One of the partners, which is the University of

Edinburgh, was a part of developing this standard in Mexico previously.
started the project.

We adopted the Plan Vivo when we

Later on in 2010, we had also the CCB Standards4.

3. Project Activities

Project activities
1. Reforestation/agroforestry
 Individual contracts (7 years);
 2,799 farms (39% women)+ 28 groups
 4,628 active contracts
2. Forest management (REDD)
 Community contract
 About 12,000ha

We have two main project activities.

In agro-forest, we sign individual contracts not with thehousehold but with individual owners of the field or crop field.
3
4

We have involved on this contract about

http://www.planvivo.org/
The Climate, Community & Biodiversity Alliance: http://www.climate-standards.org/

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2800 farmers, from which about 39 are women and 28 groups.
small organizations.

Groups mean schools, churches, and other

From this activity or from the agro-forest contracts, we have about 4600 contracts.

seems not make sense because we have 2000 farmers and 4000 contracts.

It

What has happened is some of the

farmers have more than one contract with us. The contract has a seven year validity.
The other activities, the forest management what we normally call REDD areas and the contract
here is with the community has all, and we are managing together about 12,000 hectares.

This is only in

Gorongosa because we have not yet concluded the process of managing the forest at the Zambezi delta.

Other Project activities
3. Research
4. Environmental education
5. Micro‐enterprises

Apart from this, and because we recognize from the beginning that the carbon money will not solve
all the problem at local level, the contribution of carbon money is a small part of our problem.
promote research, environmental education, and essential micro enterprises.

We also

The idea of micro enterprises is

to generate more jobs and also diversify the income sources of the people living on these areas.

4. Financial Model

Project governance
Responsibility &benefit sharing

Appropriation

 Community
 Labor Land Local knowledge
 Envirotrade Technical assistance Inputs
 Market Envirotrade time horizon : 15 years
 Exchange of roles

Government, NGO’s,clients & donor’s

In terms of project governance, we have two main pillars.
and the other one is appropriation.

One is responsibility and benefit sharing

On the responsibility and benefit sharing, we mean that the community

has a responsibility and also will benefit from participating on this and they participate with labor, land, andlocal knowledge.

Envirotrade also will share both benefiting and responsibility by giving technical assistance,some other inputs, and also facilitating the market.
On appropriation, we mean that the project stays in the community for a maximum of 15 year.

Financial Management in REDD+ Projects at the Local Level: Lessons
Learned from Community Carbon and Poverty Alleviation Projects
Antonio Ferreira Augusto Serra (Envirotrade)

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During this period, it transfers all of the responsibility from Envirotrade to the community through thecommunity association we have in these areas.

At the end of 15 years, we had probably the role of advisingand facilitate the market, which is one of the hardest things to be done by the community. We are working onthese two pillars with the government (essentially local government), NGOs essential for training thecommunities, clients, and also donors.

Financial model1/3 to farmers & community Directly to farmers pocketCommunity funds

1/3 to project operation
Staff & equipment
Seedling & forest management activities

1/3 profit/re‐investment other areas

In terms of financial model, from the beginning, we decided the income or the sales will be shared inthree parts: one-third to the farmers and communities, one-third to the project operations, and one-third tohave profits reinvested in other project areas.

Farmers contract & PES
Individual contract valid for 7 years;
 Price negotiated with farmer $4/tCO2;
Contracts signed in advancePES made until 2013: $ 2,136,744.00

So far, we have already paid to these two community projects about $2 million from the credit selling.
Under the current price, we are paying to the farmer because unfortunately we sign a contract from before wesell the carbon, and at the time the price of the carbon was about $12 per ton.

Because this sharing

mechanism or model of one-third, we signed with the farmer contract of to pay them $4 per ton.

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Carbon generated & sold
Carbon credits:
 Agroforestry: 316,884 t
REDD: 187,562 t

Carbon sold:Agroforestry: 294,923 t
REDD+ : 145.315 t

Average price: about $6
Carbon available: 64.208 tonnes

From these two activities, we generate for agro-forest about 316,000 tons of carbon.
hectares of REDD area, we generate about 200,000 tons.
and 145,000 from REDD areas.

From 12,000

From this, we sold about 300,000 from agro-forest

The average price now in the last few years since 2010 is about $6, but insome cases, we had to sell at less than $4 per ton.

We still have about 64,000 tons of carbon to sell.

MarketSwedish broker (Europe)
 European travel companies;
Dairy cooperative;
A hamburger chain, andHotels

Broker in Mauritius
 an office automation company
Hotel group in Mauritius and Maldives

In terms of market, we have two big niches.
We are working through brokers.
clients.

One is in Sweden and the other one in Mauritius.

They buy from us and they resell and also we work together to find new

We are working with, essentially, two brokers, although we deal with some other clients directly, but

for the small amount of carbon.

5. Project Impact

Project Impact
1. Social/local economy
 Over 140 “green jobs”;
 Income diversification;
 Social infrastructure(2 schools, clinic, cleanwater);
 Food security improved;
 Living standards improved

Financial Management in REDD+ Projects at the Local Level: Lessons
Learned from Community Carbon and Poverty Alleviation Projects
Antonio Ferreira Augusto Serra (Envirotrade)

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In terms of project impact, I would divide this in three. In terms of social and local economy, we
consider it, until now, as a big success because jobs were created.

Some infrastructure like schools were builtwith the money from the carbon and also the food security and living standard was improved.

Project impact
2. Environmental Over a million trees planted;
 About 12,000 ha of forest under sustainable
management

In terms of environmental impact, we planted already this year over a million trees in both projects,
and also we are protecting 12,000 hectares.

Project Impact
3. Business & sustainability
 The price (low) is the biggest problem; Project contracted to pay very high price tofarmer=> Too small to be financially viable
Example: project selling for $1.5/tonne but
generate more than 1 million tonnes/year

In terms of business and sustainability, the other two impacts we consider positive, but in terms ofbusiness and sustainability we are considering negative because of the current project carbon prices, and also
because the size of the REDD area.

The amount of carbon we can generate in that small area is not enoughto compensate the current price of carbon.
In fact, we are too small (taking account these two issues; size and the price) to be financially viable.
We cannot compete, for example, with the big project in Zimbabwe who is selling $1.5 per ton, but incompensation, they generate about one million tons per year.

The size of the areas and the amount of credit

that they can generate cannot compensate these low prices, and we cannot compete with this kind of projects.

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6. Testimony Gallery

Testimony gallery

I would like also to share some of the pictures from what is happening there.
before the project.

This was the school

Immediately after the war, some of the international organizations helped with the roof

and they built the school. With the carbon project money, they managed to build two schools. This is oneof the schools.

One of our clients also donated 200 computers to the local schools.

This is another school, thesecond school and also people are earning some money to buy some assets like motorbikes, roofing, and also
improving the houses.
Also, people are already investing in vegetable gardens.
community nurseries.

This is a picture of a nursery.

We are buying seedling to distribute to the farmers.

we have five

We are not running the nursery.

The idea is to create this extra income, and we are also developing beekeeping and carpentry.

Financial Management in REDD+ Projects at the Local Level: Lessons
Learned from Community Carbon and Poverty Alleviation Projects
Antonio Ferreira Augusto Serra (Envirotrade)

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Thank you !

By: Antonio Serra
antonio.serra@sofala-carbon.org
Antonioserra05@yahoo.com.br
www.envirotrade.net

Here, I would like to show some of the plantations.
which is nitrogen fixing.
areas in Gorongosa.

This is one of the species we are promoting,This is a pod mahogany that they are planting also. This is the view of the project

Here is a farmer showing his orchards were planted under the project.

More details I think you can find on the website or you can email me for these two addresses.

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