- Just as the financial mechanism should be attractive to investors, it should also aim appeal to farmers by offering more revenue than business-as-usual agriculture
- Certification schemes or additional financial mechanisms can strengthen a project’s profitability.
- Carbon markets may catalyse or even completely fund sustainable landscape projects in the future.
Producer certification schemes are a mechanism to consider when trying to increase farmer profitability. Certification may allow them to access preferential sourcing schemes, in a similar way to revenue guarantees.
These schemes also allow producers to use recognised branding to label their products as Fairtrade, organic or sustainable. This allows producers to generate additional income from selling their product at a premium.
In the Unlocking Forest Finance project, proposed sustainability Codes of Conduct were closely aligned with existing certification standards, for example for organic milk or sustainable palm oil. Meeting these codes of conduct can prepare producers for entry into certification schemes.
Carbon market finance may be another source of revenue for farmers, potentially increasing returns. These systems are based on permits, generated by maintaining or increasing carbon stocks in the forest. They can be sold to offset emissions elsewhere.
There is still a lot of uncertainty regarding the marketing of carbon offsets. For example, each country is yet to define who can negotiate carbon credits and in which market. In some situations only the national government can negotiate credits internationally, in other cases sub-national governments have this right. It remains to be seen what will emerge as countries continue to negotiate mechanisms such as REDD+.
In the case of voluntary markets, managers of individual projects may negotiate carbon credits. The voluntary carbon market may bring additional revenue to a project. This is driven by consumer demand for offsets, for example to mitigate the effects of taking flights. The value of the voluntary carbon market was US$278 million in 2015, offsetting 84 million tonnes of carbon dioxide equivalent.
If international carbon markets become more effective, they could become a real source of finance for sustainable landscape projects.
However, there are currently several obstacles. The carbon price is too low, and the transaction cost is too high. This was highlighted during the planning stages of Unlocking Forest Finance, when researchers found that registering a timber scheme for carbon credits would have been an overall cost rather than a benefit.