ISSN: 1659-2751

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The Potential of the Clean Development Mechanism for Forest Plantations in Panama

Abstract

We determined the potentiality of the Clean Development Mechanism (CDM) for forest plantation projects in Panama. Additionality and land eligibility are the two most restrictive issues for afforestation/reforestation projects under the CDM. Additionality and land eligibility were evaluated with a spatial approach to locate the areas with more potentiality in Panama. The potentiality of the CDM is composed of two factors: a low profitability without the CDM and a high profitability with the CDM, both depending on soil quality, distance to exportation port, and land value. An economic analysis was applied with a general equation representing the profit value of the plantations by districts. This equation used the Land Expected Value (LEV) as an economic efficiency criterion and compared the LEV with the market land value, assumed to be a proxy of the LEV for the best land use if land speculation is not considered. Fuzzy variables were used to represent the variability and ambiguity of the parameters and their values. Teak was selected as the representative species for forest plantations in Panama. Results showed that areas with greater potential of additionality and land eligibility were located in the regions of Veraguas (36 %), Panama (28 %), Herrera (9 %) and Darien (12 %).

Key words: Economic additionality, land eligibility, fiscal incentives, CDM, forest plantations, potential, teak, Kyoto lands, fuzzy variables.

Artículo en español (pdf) (575)