What can a clean development mechanism do to enhance trees in the land scape? Experience with rubber, coffee and timber-based agroforestry systems in Indonesia.

Terrestrial carbon storage is one of a broader array of environmental services and lessons that can be shared between the mechanisms developed or under development for watershed functions, biodiversity, carbon storage and landscape beauty. In many situations a “bundling” of services will be needed to provide suffi cient incentives for smallholders to avoid conversion to low-ES land use types. The Clean Development Mechanism (CDM) is often considered to be intended for project-scale investment, with the reforestation CDMs focussed on fast growing trees. In fact, the mechanism can also be used by local government units to use an array of incentives to stimulate their farmers to convert the landscape to a more tree-based land use pattern, as long as a suffi cient part of the landscape makes the transition from non-forest (less than 30% crown cover with Indonesia’s operational forest defi nition) to forest (more than 30% crown cover of trees potentially growing to more than 5 m tall, at a 0.5 ha scale). A number of constraints to more tree-based land use can be identifi ed and efforts to remove the key constraints at local scale can qualify under the Clean Development Mechanism, as long as there is a measurable increase in overall carbon stock. As a delivery mechanism, the reduction of taxes and of transaction costs for land use agreements (HKM) may be more effective for farmers than direct payments. The paper discusses the land use patterns in three benchmark sites of the Alternatives to Slash and Burn (ASB) program in Indonesia, with rubber and coffee-based land use systems. van Noordwijk et al. | 93 Introduction Rewards and payments for terrestrial carbon storage is part of a broader issue: rewards for environmental services provided by land use (Table 1). Based on the CGIAR’s commitment to poverty reduction and meeting the Millenium Development Goals, we are specifi cally interested in the use of such reward and payment mechanisms in the context of smallholder farmers—with carbon stocks, biodiversity, watershed functions and landscape beauty as four categories of environmental service (ES) functions. In the context of the RUPES project (Rewarding Upland Poor for the Environmental Services they provide), a typology of environmental services was developed (van Noordwijk 2005) that leads to the distinction of 12 prototypes of situations where the upland-lowland relationship is focused on a specifi c environmental service function (Table 2). For each of these situations we need to understand the perspective of the ES providers/sellers, the ES users/buyers and the intermediaries who try to broker between the two parties. Although avoiding degradation may be easier and less costly than restoring a degraded situation, the politics of attribution make it diffi cult to design effective reward systems. The international debate on CDM has demonstrated that investment for rehabilitation (reforestation) is easier to generate than for avoided deforestation or for avoided loss from peat soils. Table 1. Environmental services relating to carbon stocks among 25 environmental services in 5 main categories (Van Noordwijk 2005). Biodiversity functions (B) 7 services Watershed functions (W) 5 services Carbon stocks (C) 4 services: C1 Protecting natural forest area, peat soils and other carbon storage areas C2 Protecting aboveand/or belowground carbon stocks in areas used for (agro)forestry and/or agriculture C3 Restoration, increase in tree cover (in a ‘sustainable harvest’ regime the timeaveraged C stock of a land use system does not depend on the growth rate, but on maximum stock at time of harvest) C4 Accumulating wood and other products derived from recent plant production in, for example, the form of houses, furniture, paper, organic waste dumps. Productivity and direct profi tability (P) 4 services Human health & landscape beauty (H) 5 services 94 | What Can a CDM Do to Enhance Trees in the Land scape? Figure 1. Key relationships in landscapes where local guardians and stewards are rewarded for the carbon storage services they provide (Van Noordwijk 2005). Box 1. Oxygen supply a forest function? The counterpart process of carbon sequestration is the release of oxygen to the atmosphere. Decomposition of the sequestered carbon will tend to re-use the same amount of oxygen as was produced. Popular accounts of forest functions and benefi ts of having trees around, tend to include production of oxygen as a service that should be included in valuing trees and forests. People can’t live without oxygen, so any increase in oxygen supply should be welcome. Counter arguments are: With over 20% of the atmosphere consisting of O 2 there is no shortage of oxygen, except in locations with poor atmospheric contact (in water, in wet soils, in closed air spaces), so only local supply within locations with shortages are relevant, not additions to the global atmosphere, A doubling of atmospheric CO 2 concentration due to the oxidation of stored carbon (biomass or fossil fuels) will be linked to a change the atmospheric O 2 concentration of only 0.03%, which is negligible. It has been suggested that oxygen supply is an additional environmental services provided through trees. As there is no global shortage of oxygen, this is not a service that is likely to merit rewards (Box 1) van Noordwijk et al. | 95 Table 2. Twelve prototype situations for ES rewards in upland agricultural systems (Van