Determining the economic viability of small-Holder caebon sequestration in Kakamega
Climate change refers to the variation in the earth's global climate or in regional climates over time scales ranging from decades to millions of years. Climate change is caused in a large measure by human activity. It has many serious and damaging effects. Global warming is harmful for agricultural productivity. The working group on climate change reports that the maximum temperature in Kericho, a highland area in the Rift Valley province where most of Kenya's tea exports originate, has increased by 3.5°C during the past 20 years. In Lamu, on Kenya's north east coast near Somalia, the maximum temperature has increased by more than 3°C since the 1940s. This is potentially dangerous for two of Kenya's most important revenue earners, tourism and tea. Droughts are becoming more intense and more frequent in Kenya due to climate change. An international agreement to combat climate change is the Clean Development Mechanism under the Kyoto Protocol. This is an institutional framework for direct foreign investments in GHG mitigation projects in developing countries. It is an arrangement allowing industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries. Carbon sequestration is the process by which atmospheric carbon dioxide is absorbed by trees through photosynthesis and stored as carbon in biomass, which are biological material derived from living, or recently living organisms such as tree trunks, branches, foliage and roots, and soils. Carbon sinks where forests and vegetation are used to absorb carbon dioxide from the atmosphere and store it as carbon offer one potential route to link poverty reduction and climate change mitigation. Increased forest and tree cover can bring major social, economic and environmental benefits to rural areas as well as reducing net emissions of carbon dioxide. This study sought to explore the benefits and costs that are likely to be faced by a private firm acting as an aggregator by engaging small hold farmers in a carbon sequestration project. This was achieved by calculating the NPV. The data used for the research was secondary data collected from the Green Belt Movement. The costs and benefits were measured in current market rates. The project lifetime is 12 years and the chosen rate of discount is 12%. The NPV was calculated to be US $ -333.68 an indication that at the current conditions the project is not viable. It is necessary therefore to set a price that is high enough to yield significant economic benefits to the project implementers but low enough to encourage participation in the carbon market by the developed countries. A price that is slightly higher than US $ 10.10 ensures that the project is viable. Other alternative methods of carbon sequestration including agro-forestry, conservation tillage, cover crops and recycled waste should also be explored.