NGO "ANOTHER WAY" (STICHTING BAKENS VERZET), NETHERLANDS, SUSTAINABLE INTEGRATED SELF-FINANCING DEVELOPMENT PROJECTS AND ADVANCED DEVELOPMENT TECHNOLOGIES

“……greening not only generates increases in wealth, in particular a gain in ecological commons or natural capital, but also (over a period of six years) produces a higher rate of GDP growth…..[there is an] inextricable link between poverty eradication and better maintenance and conservation of the ecological commons, arising from the benefit flows from natural capital that are received directly by the poor.” (Towards a Green Economy : Pathways to Sustainable Development and Poverty – A Synthesis for Policy Makers, United Nations Environment Programme (UNEP, www.unep.org/greeneconomy, March 2011).

Apart from the above citation, the ambitious 626 page UNEP document is subject to severe criticism. See, for example, Verzola P (Jr), Quintos P., Green Economy : Gain or Pain for the Earth’s Poor,

IBON International, Quezon City, November, 2011. At page 6, the authors write :

“By focusing on getting “the economy right” [ that is, “framing…greening strategies in terms of capital, prices, cost-benefit analysis…..seeking an early and solid buy-in from big business, mainstream economists, and developed countries] proponents of the Green Economy and Green growth end up getting development wrong. It does not deliver enough on poverty eradication, may likely worsen inequity within and between countries, and does not veer us away from the path to irreversible ecological catastrophe ” (p.6).

The authors continue :

“The social agenda in the green economy is largely relegated to trickle-down poverty alleviation, effectively side-lining issues of redistribution.” (p.8).

and conclude :

“We should move towards more democratic modes such as cooperative, community-based, commons or public forms of ownership to ensure that economic activity provides sustainable livelihoods for all and meets the development goals of the community and society…. to promote sufficiency-based economies, i.e. those that cater primarily towards meeting local needs and demands, developing local capacities, based on available resources, appropriate technologies and resource sharing. ” (p. 10)

A third of all [man-made] carbon dioxide emissions come from burning coal. (Greenpeace "Quit coal" campaign).

The world’s biggest banks (“climate killer banks”) have invested € 232 billion in coal mining and the construction of coal-fired power plants and the companies running them since the Kyoto Protocol entered into force in 2005 :

“Big banks are destabilizing our climate system. Since the Kyoto Protocol came into force, banks have nearly doubled their support for the coal industry, the single largest source of [man-made] CO2 emissions heating up our planet. ” (Shücking H. et al, Bankrolling Climate Change, Urgewald, groundWork, Earthlife Africa Johannesburg, Bank Track, Sassenberg, December 2011, p. 58.) As the authors put it : “Today’s investments are tomorrow’s emissions.” (p.58)

“For the short-term gains won by supporting the coal mining industry, banks are in fact setting the stage for long-term catastrophic climate change” (Shücking et al, see above, p. 19).

“In China, two new coal plants are being completed per week. If China’s carbon usage keeps up this pace the country’s carbon dioxide emissions in 2030 will equal the entire world’s CO2 production today.’’ (Shücking et al, see above, pp. 30-31, citing Madrigal A, “China’s 2030 Emission Could Equal the Entire World’s Today’, Wired Science, February 08, 2008, citing in turn Zeng, N. et al, “Climate Change – The Chinese Challenge”, Science Magazine, Washington, 08 February 2008, Vol. 319, no. 5864, pp. 730-731.)

Ecological, sustainable, local integrated development projects for the world’s poor provide simple, down-to-earth practical solutions to poverty- and development-related problems in individual project areas each with about 50.000 inhabitants. Social, financial, productive and service structures are set up in each project area in a critical order of sequence and carefully integrated with each other. That way, cooperative, interest-free, inflation-free local economic environments are formed there so that local initiative and true competition are free to flourish. The execution of each integrated development project meets and surpasses the objectives of all eight of the millennium development goals in its project area, with the exception of vaccination campaigns and curative medicines.

Integrated development projects provide all the services necessary for a good quality of life for all of the inhabitants in their project area. Each project in non-pastoralist areas costs about € 5.000.000, of which 25% is provided by the inhabitants themselves by way of work carried out under local money systems set up in an early phase of project execution. This leaves a formal money (Euros) initial financial requirement of about € 3.750.000 per project. Projects in pastoralist areas on the other hand cost about € 7.000.000 each of which 20% is provided by the inhabitants themselves by way of work carried out under local money systems set up in an early phase of project execution. This leaves a formal money (Euros) initial financial requirement for pastoralist areas of about € 5.600.000 per project. The difference between pastoralist and non-pastoralist areas is determined by the additional drinking water and food supply requirements of herds in pastoralist areas.

Some 2500 integrated development projects are needed for the integrated development of West Africa (excluding Nigeria and Ghana). Another 2500 projects are needed for the integrated development of Nigeria and Ghana. Since all individual projects are applications of a single Model for integrated development projects, all project areas have populations of about 50.000 people. They all provide the same basic set of social, financial productive and service structures needed for a good quality of life for all. This means that human and environmental needs and the size of structures and activities are common to all individual project areas, subject to minor local variations.

The initial financial requirements of respectively € 3.750.000 (non-pastoralist areas) and € 5.600.000 (pastoralist areas) must be deposited up-front to cover project execution over the two-year period foreseen for that purpose. This initial capital can be reimbursed over the following years through funds provided by the sale of certified emission reduction (CER) units issued under the Clean Development Mechanism (CDM) system set up under the Kyoto Protocol.

This is possible through the application of batches of small-scale Clean Development Mechanisms (CDM) methodologies common to all individual integrated development projects and based on Programmes of Activities (PoA) organised in two layers.

The first level Programme of Activities (PoA) is the mother PoA. For the integrated development of, say, West Africa (excluding Nigeria and Ghana) there will therefore be about 2500 applications of the first-level (mother) Programme of Activities (PoA).

The second level comprises a batch of 13 sub-Programmes of Activities (PoAs) each using a specific CDM methodology. Each of the 2500 individual integrated projects may choose to apply any one, any combination, or all of the 13 second level PoAs in accordance with the local requirements there. For instance, one project area may apply methodology AR AMS-003, Version 1 for the reforestation of wetlands, another may choose to apply AR-AMS-0005 (Version 2, 8 April 2009) in an area with low inherent potential to support living biomass, while a third project area with both wet and very dry areas may choose to apply both methodologies and a fourth project may not apply either of them.

The scheme with two layers of PoAs proposed here is different from anything done under the CDM mechanism until now. It will take time, financial investment, and full engagement at sub-regional level to get it accepted by the Executive Board of the Clean Development Mechanism. That acceptance could lead to a breakthrough in the financing of projects for the integrated development of the world’s poorest countries. Promotion of the CDM proposal presented here is a high risk enterprise involving substantial costs which must be paid up front without guarantee of success.

There are two main sectors for intervention under the CDM system. The first one is CDM funding through reduction of CO2 emissions in project areas through the use of improved cooking stoves, more efficient lighting systems and switches from non-renewable biomass to renewable biomass and similar. The possibilities under this first main sector are limited in developing countries by the fact that relatively little energy is consumed by the world’s poor. The second one is CDM funding through increase of CO2 sinks through various afforestation and reforestation projects. This second main sector offers more possibilities in poor areas, provided enough water and labour are available for the purpose.

A preliminary analysis shows that the potential total average gross CDM income over 50 years for all 13 applications together in each integrated development project area could be to the order of € 28.000.000. This is a cautious, non-scientific, initial approximation. It is subject to the deduction of at least 15% to cover administration and validation costs. It is expressed in present day Euros and based on CO2/tonne values on 14^th November 2009 (about € 14 per tonne CO2). The amount has not been discounted over 10-20 year periods according to traditional cost-benefit calculation practices. Various CDM methodologies currently prescribe different validation periods. Afforestation and reforestation (AR) projects, for example, are usually long-term. They provide for choice of time for the first validation, then validations just once every five years after that. The analysis also assumes enough water and labour are available to start the various afforestation/reforestation projects more or less contemporaneously. If this is not so, afforestation/reforestation applications may need to be phased. This would not affect the total of the CDM income, but would prolong the period for repayment of the initial project capital.

A first level (mother) PoA with 2.500 applications representing 2.500 individual integrated development project areas (125.000.000 people) in West Africa could generate up to € 70.000.000.000 of (gross) CDM funding. This would eliminate poverty in the areas concerned and surpass all of the millennium development goals there except those relating to vaccinations and curative medicines.

Click here to see a general overview of expected gross CDM income for each Programme of Activity (Total per project area about € 28.000.000).

Click here to view a general graph showing annual distribution of expected gross CDM income for each individual integrated development project area over a period of 50 years . (Total per project area about € 28.000.000).

The graph is intended to show that, whatever happens and however the calculations are made, each individual integrated development project can repay its initial capital cost investments over just a few years of operation.

Assuming an allowance of 15% to cover validation and administration, the total expected net CDM income per project over 50 years would be about € 24.000.000.

Indicative net figures for the first five years of CDM operations would be:

Expected net CDM income relative to first year € 0.

Expected net CDM income relative to second year about € 450.000.

Expected net CDM income relative to third year about € 950.000.

Expected net CDM income relative to fourth year about € 1.350.000

Expected net CDM income relative to fifth year about € 1.400.000

Expected net CDM income relative to sixth year about € 1.100.000

Not all of the potential CDM funding capacity has been absorbed in the examples given. It has been assumed that more projects will use application 07 AR-AMS-0005 (Version 2, 8 April 2009) for very dry areas with Jatropha, than application 06 AR AMS-003, Version 1 for wetlands with mangroves, which give a much higher CDM return. Use of methodology AMS-III-AR for methane recovery in application 10 has been rated at zero until advice on the energy applications it could replace is received. The use of methodology AMS-III-AJ for the recycling of plastics and other materials under application 13 has also been rated at zero until information on the quantities of materials typically available for recycling is received. These aspect are discussed in more detail in section 02. Introduction.

The way the initial capital input of integrated development projects is repaid under the CDM mechanism is a political issue. A regional project owner such as ECOWAS/UEMOA may make a call on 100% of CDM funds as they come in, or may accept for example repayment of 50%, allowing the remaining 50% to be distributed amongst the populations in the project areas, or any other combination of the two. Partial distribution of funds to the populations would provide them with encouragement and stimulus. Rapid repayment of initial capital loans on the other hand provides revolving finance for new integrated development projects and more rapid execution of all projects included in the regional development plan in question.

Even with the use of small-scale Clean Development Mechanisms (CDM) activities based on Programmes of Activities (PoAs), delays of up to 12 months can be expected between the submission of periodic CDM project reports and the issue and sale of the Carbon Emission Reduction (CER) units in question.

Subject to the above comments, expected total net CDM incomes for projects in non-pastoralist areas with an initial capital input of € 3.750.000 would in principle enable full repayment of the initial capital input during the sixth year of activities, on the basis of CDM income from the first five years. In non-pastoralist areas with an initial capital input of € 5.600.000 the initial capital input could in principle be fully repaid at the end of the eighth year of activities, on the basis of CDM income from the first seven years.

Once the initial capital for a given integrated development project has been fully repaid, all remaining CDM income is paid from time to time to the project’s Cooperative for the On-going Administration of the Project Structures (of which all adults in the project area are members) and either equally distributed amongst the members or used to cover extensions to project structures.

CDM income payments start in the third or the fourth year of project operation. The execution of each integrated development project is expected to last two years. Therefore the full amount of the initial project capital necessary for the execution of each integrated development project must always be paid up front.

The proposed series of 13 sub-Projects of Activities (PoAs) provides major benefits to the local populations as well as funds enabling them to repay the initial capital for their integrated development projects. Food safety is greatly increased through the supply of fruit and nuts and hedgerows for protecting crops in semi-arid and arid areas. The bamboo plantations foreseen provide food in the form of bamboo shoots, material for uncountable productive activities, and biomass for the production of mini-briquettes for cooking purposes. Moringa trees provide “spinach leaves” for food, edible oils for cooking, and Moringa paste for water purification purposes. Jatropha trees produce limited amounts of bio-fuel to drive local generators and motorised equipment. All proposed CDM activities improve the quality of the environment and help recover and maintain bio-diversity. For a complete list of all benefits see the costs and benefits analysis set out in Section 3 or Block 8 of the course for the Diploma in Integrated Development (Dip. Int. Dev.) available at website www.integrateddevelopment.org.

Graphs showing details of the expected gross CDM income for each of the first nine years of project operation , as well as those for each of the 13 applications foreseen ,are available in Section 10.Graphs and conclusions of this report.

A schematic presentation of a typical sub-regional integrated development plan with CDM funding is shown in a structural proposal for West Africa.

Table 1 shows the plan of the Mother PoA and the 13 sub-PoAs. For the development of West Africa, the mother PoA would be expected to have about 2500 applications. Each of the sub-PoAs may have a single application at project level, or up to about 45 applications at intermediate development unit level, or up to about 250 applications at local development unit level, or up to about 10.000 applications at household level. Note that applications 02 and 03 continue through 50 years – the last 30 years are not shown. Application 06 continues through 30 years – the last 10 years are not shown.

Table 1 : The two Programme of Activities (PoA) layers.

Year of operation

Sub-PoAs

One application at project level, or up to 45 applications at intermediate unit level, or up to 250 applications at local development level, or up to 10.000 applications at household level

One

Application under the mother

PoA

for each project

09-01. CO2 savings through the reduced use of non-renewable biomass for cooking purposes through the introduction of improved stoves. Small-scale project. Methdology. AMS-II-G (version 5). (21 years)

09-02. Demonstration project for the recovery of forest lands and natural parks and reserves using traditional species. Small-scale project. Methodology AR-AMS-0004 , version 2. (60 years) (Up to 60 years also in case of repetition of projects.)

09-03. Afforestation activities in settlements as defined for the distributed planting of fruit and nut trees and similar. Small-scale project. Methodology : AR-AMS-0002 (version 2). (60 years). (No repetition foreseen).

09-04. Small-scale agro-forestry activities – such as distributed bamboo plantations on grasslands and croplands. Small-scale application. Methodology AR-AMS-0001. (10 years). No repetition foreseen).

09-05. Small-scale agro-forestry activities – distributed demonstration plantations for practical purposes for local use, including but not limited to Moringa plantations on marginal lands. Small-scale application. Methodology : AR-AMS-0004 , version 2. (10 years) (Up to 60 years in case of repetition of projects).

09-06. Demonstration afforestation and/or reforestation (AR) projects on wetlands using traditional species. Small-scale project. Methodology : using traditional species. AR AMS-003, Version 1. (30 years). (Up to 60 years in case of repetition of projects).

09-07. Demonstration afforestation and/or reforestation projects on lands having low inherent potential to support living biomass. Small-scale project. Methodology:

AR-AMS-0005 (Version 2, 8 April 2009) (14 years). (Up to 60 years in case of repetition of projects).

09-08. Use of renewable biomass instead of non-renewable biomass with improved cook stoves. Small-scale project. Methodology : AMS 1.E (21 years).

09-09. Recycling of human waste to avoid the use of industrial fertilisers. Small-scale project. Simplified administration. Methodology : AMS-III-Y (21 years).

09-10. Methane recovery from animal waste for cooking and lighting purposes especially in pastoralist areas. Small-scale project. Simplified administration. Methodology : AMS-III-R (Reserved pending information on applications). (21 years).

09-11. Replacement of kerosene lamps, incandescent light bulbs, and of the use of throw-away batteries by renewable energy sources (wind, solar and/or renewable bio-mass including but not limited to plant oil, gasification of biomass). Small-scale application. Simplified administration. Methodology : AMS-III-AR. (21 years).

09-12. Replacement of non-renewable electrical, diesel- and battery-driven sources for mechanical equipment such as pumps and mills and, where applicable, pubic lighting systems. Small-scale project. Methodology :AMS-I-A. (21 years).

09-13. Local recycling and recovery of materials from solid wastes, including but not limited to plastics. Small-scale project. Simplified administration. Methodology:

AMS-III-AJ. (Reserved pending information on applications). (21 years).

Return to :

Sect. 5 : Kyoto Treaty : Analysis of possibilities for finance. (Additional)

01. Executive summary.

02. Introduction.

03. Potential areas of application of CDM mechanisms to integrated development projects.

04. Small-scale CDM activities.

05. Programmes of activities.

06. Selection of the CDM methodologies for the applications listed in section 03.

07. Information specific to afforestation/reforestation (AR) methodologies specifically applicable to integrated development projects.

08. Notes specific to the role of bamboo in afforestation and reforestation (AR) projects.

09. CDM funding indications for the selected applications and methodologies.

10. Graphs and conclusions.

Exam Block 8 : [4 hours]

Consolidated exam : Section C. [6 hours].

◄ ►

◄ Eighth block : Section. 5 : Kyoto Treaty : Analysis of possibilities for finance.

◄ Eighth block : Economic Aspects.

◄ Main index for the Diploma in Integrated Development (Dip. Int. Dev.)

◄ List of key words.

◄ List of references.

◄ Course chart.

◄ Technical aspects.

◄ Courses available.

◄ Homepage Bakens Verzet

"Money is not the key that opens the gates of the market but the bolt that bars them."

Gesell, Silvio, The Natural Economic Order, revised English edition, Peter Owen, London 1958, page 228.

“Poverty is created scarcity”

Wahu Kaara, point 8 of the Global Call to Action Against Poverty, 58^th annual NGO Conference, United Nations, New York 7^th September 2005.

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