Costa Rica First to Negotiate Sale of Forestry Carbon Credits

The Government of Costa Rica and the Forest Carbon Partnership Facility (FCPF) signed today a Letter of Intent (LOI) to negotiate an Emission Reductions Payment Agreement (ERPA) worth up to $63 million.

This would make Costa Rica the first country in the world to access large-scale performance-based payments for conserving its forests, regenerating degraded lands, and scaling up agro-forestry systems for sustainable landscapes and livelihoods.

The signing ceremony of the Letter of Intent (LOI) was presided by Laura Chinchilla, President of Costa Rica, and Fabrizio Zarcone, World Bank Representative for Costa Rica. The LOI was signed by Rene Castro, Minister of Environment and Energy, and Laurent Msellati, World Bank Sector Manager in the Sustainable Development Department for the Latin America and the Caribbean.

The LOI commits the FCPF Carbon Fund to negotiate the purchase of carbon emission reductions (commonly known as carbon credits) up to a value of US$63 million. The country’s proposal to the FCPF Carbon Fund would help meet pending demand for additional landowners to participate in the Payments for Environmental Services (PES) program that will protect and regenerate forests on about 340,000 hectares of privately owned land and also in Indigenous People’s territories.

The proposed program to reduce emissions from deforestation and forest degradation (REDD+) is the first implemented at a quasi-national level and one of the largest to date. A novel aspect of the program is that 10 percent of the target area will be in Indigenous Peoples’ territories.

Costa Rica has long been a global pioneer in preserving tropical forests and exploring innovative ways to change its development path and pursue sustainable green growth. Additionally, the country’s ambitious transition to carbon-neutrality by 2021 depends on better management of forested and agricultural land, where approximately 80 percent of its projected carbon emission reductions are expected to come from.

Embarking on a number of new initiatives, Costa Rica is building on the success of a more than a decade-old program of Payments for Environmental Services (PES), which compensates landowners for planting and protecting trees on their property, and for enhancing biodiversity conservation and improved hydrological flows.

Costa Rica was an early adopter of the REDD+ concept, formalized in 2005 as one of the founders of the Rainforest Coalition, and was the first country to put the concept of REDD+ onto the agenda of international climate negotiations.

Currently, Costa Rica is tackling greenhouse gas emissions from all sectors, including transport, industry and housing, by developing a domestic carbon market in a flexible, cost-effective way. At the same time, it is providing financial incentives to the private sector for investments in low emission technology and to develop the country’s eco-competitive strategies.

Source | World Bank