Activity displacement could occur, for example, if a silvicultural plantation or a forest reserve were created at a given location and the people who were formerly living at the site were displaced and continued to clear forest elsewhere. This kind of leakage can occur across international borders. An example is provided by the logging ban in Thailand instituted in 1989. In addition to leakage at identifiable sites, a diffuse form of leakage occurs through global markets. Demand displacement occurs when a forest protection or management project reduces the supply of a marketed product, resulting in increased logging elsewhere to satisfy the demand for that product.
Leakage can also result from supply displacement.
Changes in national or international policies can lead to leakage for example, when a government changes policy to lower the country s overall emissions but the emissions are displaced to other countries. If the logging were shifted to Canada, the emissions might be captured in Canada s national inventory and consequent mitigation commitments, but if the logging were shifted to a country with no cap, carbon would be emitted but not accounted for. Leakage is one effect of ARD activities that cannot be avoided through choices of definitions. Additional wood supply on the world market will reduce the price of wood compared to prices without this additional supply. Thus, reducing the establishment of other new forests would have a negative consequence, although where it occurs within Annex B countries it will be accounted for within those countries adjustments to their assigned amounts.