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

“A key feature of a green economy is that it seeks to provide diverse opportunities for economic development and poverty alleviation without liquidating or eroding a country’s natural assets. This is particularly necessary in low-income countries, where ecosystem goods and services are a large component of the livelihoods of poor rural communities and ecosystems and their services provide a safety net against natural disasters and economic shocks. ” .” (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, p. 17).

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)

The initial financial requirements of respectively Euro 3.750.000 (non-pastoralist areas) and Euro 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 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.

There are two main sectors for intervention under the CDM mechanism. 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 second one is CDM funding through increase of CO2 sinks through various afforestation and reforestation projects.

A preliminary analysis shows that the potential total average gross CDM income over 50 years for each integrated development project could be about Euro 28.000.000 (gross). This is a cautious non-scientific initial approximation. It is subject to the deduction of at least 10% 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). It is, therefore, not discounted over 10-20 year periods according to traditional cost-benefit calculation practices. It assumes annual validation by the CDM Designated Operational Entity (DOE), while various CDM methodologies currently prescribe different validation periods. It also assumes enough water and labour is available to start the various afforestation/reforestation projects more or less contemporaneously. If this is not so, they may need to be phased.

A first level (mother) PoA with 2.500 applications representing 2.500 individual integrated development project areas (125.000.000 people) 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 . (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.

The first lot of gross CDM income, which is attributable to the second year of activities, is about Euro 550.000. This could mature for sale of CER units at the end of the third year. The second lot of gross CDM income, which is attributable to the third year of activities, is about Euro 1.150.000. This could mature for sale of CER units at the end of the fourth year. The third lot of gross CDM income, which is attributable to the fourth year of activities, is about Euro 1.600.000. This could mature for payment at the end of the fifth year. The fourth instalment of gross CDM income, which is attributable to the fifth year of activities, is +/- Euro 1.600.000. This could mature for payment at the end of the sixth year. The fifth instalment of gross CDM income, which is attributable to the sixth year of activities, is Euro 1.300.000 which would mature for payment at the end of the seventh year. … and so on. Only application 02 (afforesttion/reforestation of natural reserves) and 03 (settlements, afforestation/reforestation first part) extend beyond 21 years. Application 06, Mangroves for wetlands, would extend for 30 years but is not included in the indicative baseline calculation.

Indicative incomes are gross of DOE validation and administration costs. An allowance of at least 15% should therefore be made to cover these costs. So the net figures from the preceding paragraph are:

Total expected net CDM income per project Euro 24.00.000

Expected net CDM income relative to the first project year € 0.

Expected net CDM income relative to second year +/- € 450.000

Expected net CDM income relative to third year +/- € 950.000

Expected net CDM income relative to fourth year +/- € 1.350.000.

Expected net CDM income relative to fifth year +/- € 1.400.000.

Expected net CDM income relative to sixth year +/- € 1.100.000.

These indicative CDM incomes are subject to substantial change where, because of limitations in water supply and/or labour, activities have to be phased in. In that case the general total does not change, but the rate of repayment would be lower and the repayment spread over a longer period.

Not all of the potential CDM funding capacity has been absorbed. 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 AR AMS-003, Version 1 for wetlands with mangroves, which give a much higher CDM return. Use of methodology AMS-III-R for methane recovery 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 has been rated at zero until information on the quantities of materials typically available for recycling is received. This aspect is discussed in more detail in section 01. Introduction.

How rapidly the initial capital input of integrated development projects is repaid is a political issue. A sub-regional project owner such as the UEMOA may make a call on 100% of CDM funds as they come in, or may accept for example of 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 provide them encouragement and a great stimulus. Rapid re-entry of funds 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.

Subject to the above comments, expected net CDM incomes projects in non-pastoralist areas with an initial capital input of Euro 3.750.000 would in principle enable repayment of the initial capital input fully repaid 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 Euro 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 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.

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 programme of CDM applications provides many major benefits to the local populations as well as funds to pay 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 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. The Jatropha produces limited amounts of bio-fuel to drive local generators and equipment. All CDM activities improve the quality of the environment and maintain bio-diversity. All these benefits are all in addition to those already listed in the report on costs and benefits which is part of the Model for Integrated Development Projects.

Graphs:

Graphs showing details of the expected gross CDM income application by application for the second year of operation, the third year of operation, the fourth year of operation, the fifth year of operation, the sixth year of operation, the seventh year of operation, the eighth year of operation and the ninth year of operation. Similar graphs for other years can be supplied on request.

Graphs showing expected gross CDM income year by year for application 01. CO2 savings through the reduced use of non-renewable biomass for cooking purposes through the introduction of improved stoves (methodology AMS-II-G.(Version 2)), application 02. Demonstration project for the recovery of forest lands and natural parks and reserves using traditional species (methodology AR-AMS-0004 version 2, 11 June, 2009 ) ; application 03 Afforestation activities in settlements as defined for the distributed planting of fruit trees and nut trees and similar, ( Methodology AR-AMS-0002 (version 2, 17 October 2008); application 04. Small-scale agro-forestry activities – such as distributed bamboo plantations on grasslands and croplands (Methodology AR-AMS-0001); application 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 (Methodology AR-AMS-0004 , version 2, 11 June, 2009);application 06. Demonstration afforestation and/or reforestation (AR) projects on wetlands using traditional species (Methodology AR AMS-003, Version 1),application 07 Demonstration afforestation and/or reforestation projects using Jatropha on lands having low inherent potential to support living biomass (Methodology AR-AMS-0005 (Version 2, 8 April 2009), application 08. Use of renewable biomass instead of non-renewable biomass with improved cook stoves (Methodology AMS 1.E Small-scale Switch from non-renewable biomass for thermal applications by the user), application 09, Recycling of human waste to avoid the use of industrial fertilisers (No currently available methodology); application 10 : Methane recovery from animal waste for cooking and lighting purposes especially in pastoralist areas (Methodology AMS-III-R ); application 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 (Methodology AMS-III-AR); application 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 (methodology AMS-I-A); and 13. Local recycling and recovery of materials from solid wastes, including but not limited to plastics (methodology AMS-III-AJ.)

Table 1 shows the plan of Mother PoA and sub-PoAs. For the development of West Africa, the mother PoA would be expected to have about 2500 applictions. 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 250 applications at local development unit level. Aplications 01 and 02 continue through 50 years. Application 06 continues through 30 years.

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

Year of operation

Sub-PoA

Mother

PoA

01. CO2 savings reduced use of non-renewable biomass for cooking purposes through the introduction of improved stoves. AMS-II-G.(Version 2) (50 years)

02. Demonstration projects for the recovery of forest lands and natural parks and reserves. AR-AMS-0004 , version 2. (50 years)

03. Afforestation activities in settlements as defined Distributed planting of fruit and nut trees and similar. AR-AMS-0002 (version 2)

04. Small-scale agro-forestry activities – such as distributed bamboo plantations on grasslands and croplands. AR-AMS-0001

05 Small-scale agro-forestry activities – distributed demonstration Moringa plantations on marginal lands, AR-AMS-0004 , version 2.

06. Demonstration afforestation and/or reforestation (AR) projects on wetlands using traditional species. AR AMS-003, Version 1. (30 years)

07 Demonstration Jatropha projects on lands having low inherent potential to support living biomass. AR-AMS-0005 (Version 2, 8 April 2009)

08. Use of renewable biomass instead of non-renewable biomass with improved cook stoves. AMS 1.E .

09. Recycling of human waste to avoid the use of industrial fertilisers . No existing methodology available.

10. Methane recovery from animal waste for cooking and lighting purposes especially in pastoralist areas. AMS-III-R (Reserve pending applications)

11. Replacement of kerosene lamps etc (wind, solar and/or renewable bio-mass including plant oil, gasification of biomass). Methodology AMS-III-AR

12. Replacement of non-renewable electrical, diesel- and battery-driven sources for mechanical equipment AMS-I-A

13. Local recycling and recovery of materials from solid wastes, including but not limited to plastics. AMS-III-AJ. (Reserve pending applications)

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.

This work is licensed under a Creative Commons Attribution-Non-commercial-Share Alike 3.0 Licence.