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Carbon in Drylands: Desertification, Climate
Change and Carbon Finance

A UNEP-UNDP-UNCCD Technical Note for
Discussions at CRIC 7, Istanbul, Turkey - 03-14
November, 2008

Prepared on behalf of UNEP by UNEP-WCMC

Authors: Kate Trumper, Corinna Ravilious and Barney Dickson

31" October 2008

Disclaimer: The contents of this report do not necessarily reflect the views or policies
of UNEP-WCMC or contributory organisations. The designations employed and the
presentations do not imply the expressions of any opinion whatsoever on the part of
UNEP-WCMC or contributory organisations concerning the legal status of any
country, territory, city or area or its authority, or concerning the delimitation of its
frontiers or boundaries.

Technical Note: Carbon in drylands - Desertification,
climate change and carbon finance

Introduction

Drylands cover about 40% of the Earth’s land surface, excluding Antarctica and
Greenland, and are home to more than two billion people (WRI 2002). They are
susceptible to desertification, land degradation and drought (DLDD) and their
populations, agriculture and ecosystems are vulnerable to climate change and
variability. The United Nations Convention to Combat Desertification (UNCCD), one
of the three ‘Rio’ conventions born out of the 1992 United Nations Conference on
Environment and Development (UNCED), aims to address these issues and
emphasises action to promote sustainable development at the community level.

The other Rio conventions are the United Nations Framework Convention on Climate
Change (UNFCCC) and the Convention on Biological Diversity (CBD). The areas of
interest of the three Conventions are closely linked and each has accepted the need to
work in concert. One area of joint interest is that of the uptake of carbon dioxide from
the atmosphere by plants and its storage in ecosystems. It is perhaps the only
practicable way of removing carbon dioxide from the atmosphere in the short term
and therefore one of the few options for addressing its existing carbon load, as distinct
to slowing future loading by reducing current and future emissions. Most attention so
far has focussed on carbon sequestration by tropical forests. More recently, some have
argued for a more holistic approach to terrestrial carbon (The Terrestrial Carbon
Group, 2008). This paper reviews the potential for carbon sequestration in dryland
ecosystems, which includes forests, but also covers other habitats, such as grasslands,
and, importantly, soils. It also considers ways in which carbon storage in drylands
affects land degradation issues.

Carbon storage in drylands

Plants take up carbon dioxide from the atmosphere and incorporate it into plant
biomass through photosynthesis. Some of this carbon is emitted back to the
atmosphere but what is left—the live and the dead plant parts, above and below
ground —make up an organic carbon reservoir. Some of the dead plant matter is
incorporated into the soil in humus, thereby enhancing the soil organic carbon pool.

Plant biomass per unit area of drylands is low (about 6 kilograms per square meter)
compared with many terrestrial ecosystems (about 10-18 kilograms). But the large
surface area of drylands gives dryland carbon sequestration a global significance. In
particular, total dryland soil organic carbon reserves comprise 27% of the global soil
organic carbon reserves (MA 2005). The soil properties, such as the chemical
composition of soil organic matter and the matrix in which it is held, determine the
different capacities of the land to act as a store for carbon that has direct implications
for capturing greenhouse gases (FAO 2004). The fact that many of the dryland soils
have been degraded means that they are currently far from saturated with carbon and
their potential to sequester carbon may be very high (Farage et al. 2003).

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The map above shows how the density of carbon stored, that is, the mass of carbon
per hectare, varies throughout drylands. The carbon densities are derived from two
global datasets: the carbon stock in biomass is from a map based on IPCC Tier-1
Methodology using global land cover data. (Ruesch & Gibbs, in review); soil carbon
is from Global Soil Data Products CD-ROM. (IGBP-DIS 2000). The delineation of
drylands is from UNEP-WCMC’s map of areas of relevance to the CBD’s programme
of work on dry and sub-humid lands (UNEP-WCMC 2007). The UNCCD defines
drylands according to an aridity index: the ratio of mean annual precipitation to mean
annual potential evapotranspiration. The CBD definition of ‘drylands’ used within its
Programme of Work on Dry and Subhumid Lands (UNEP/CBD/SBSTTA/5/9) differs
from the UNCCD definition described above in two ways:

i. It includes hyperarid zones (CCD does not) (UNEP/CBD/SBSTTA/5/9),
which represent approximately 6.6 percent of the Earth’s land surface.

ii. Major vegetation types are used to define dryland areas in addition to those
defined according to the aridity index (UNEP/CBD/SBSTTA/S/9).

Table 1 gives a breakdown of the carbon stored in each region in drylands. Figures for
the total carbon stock in each region are from Campbell et a/. (2008) and are derived
from the same data as the dryland figures. Estimates of carbon stored in each region
are sensitive to changes in land cover type. Therefore for detailed regional or national
purposes, it will be necessary to refine global land cover data with more detailed local
data. Nevertheless, this global overview shows that dryland carbon storage accounts
for more than one third of the global stock. In some regions, such as the Middle East
and Africa, a very high proportion of carbon is in drylands, so any sequestration
measures there would need to address dryland ecosystems. Even in regions such as
Africa and South Asia, where moist forests contain a lot of carbon, dryland carbon
storage is still significant.

Table 1. Comparison of total and drylands carbon stocks in regions of the world

Map Total carbon Share of
number stock per regional
region (Gt) Carbon carbon stock
stock in held in
Region drylands(Gt) | drylands (%)
4 North America 388 123 31
2 Greenland 5 0 0
3 Central America &
Caribbean 16 1 7
4 South America 341 115 4
5 Europe 100 | 18 18
6 North Eurasia 404 96 24
wf Africa 356 211 59
8 Middle East 44 41 94
9 South Asia 54 26 49
10 East Asia 124 41 33
11 South East Asia 132 3 2
12 Australia/New Zealand 85 68 80
[ 13 Pacific 3 0 0
Total | 2053 743 36

Land degradation and carbon emissions

According to the Millennium Ecosystem Assessment, “some 10-20% of the world’s
drylands suffer from one or more forms of land degradation. Despite the global
concern aroused by desertification, the available data on the extent of land
degradation in drylands (also called desertification) are extremely limited. In the early
1990s, the Global Assessment of Soil Degradation, based on expert opinion, estimated
that 20% of drylands (excluding hyper-arid areas) were affected by soil degradation.
A study based on regional data sets (including hyper-arid drylands) derived from
literature reviews, erosion models, field assessments and remote sensing found much
lower levels of land degradation in drylands. Coverage was not complete, but the
main areas of degradation were estimated to cover 10% of global drylands.” The MA
estimated that the true level of degradation lay somewhere between the 10% and 20%
figures. (MA 2005). The Land Degradation Assessment in Drylands (LADA) project,
funded by the Global Environmental Facility (GEF) and carried out by the Food and
Agriculture Organization of the United Nations (FAO) is drawing together
information about degradation and developing ways of assessing the extent of land
degradation and its impacts.

Land use change and degradation are important sources of greenhouse gases globally,
responsible for about 20% of emissions (IPCC, 2007). Land degradation leads to
increased carbon emissions both through loss of biomass when vegetation is
destroyed and through increased soil erosion. Erosion leads to emissions in two ways:
by reducing primary productivity, thereby reducing soils’ potential to store carbon and
through direct losses of stored organic matter. Although not all carbon in eroded soil
is returned to the atmosphere immediately, the net effect of erosion is likely to be
increased carbon emissions (MA, 2005).

There have been a number of estimates of the rate of carbon emissions due to land
degradation in drylands at different scales. At the global scale, Lal (2001) estimated
that dryland ecosystems contribute 0.23 — 0.29 Gt of carbon a year to the atmosphere,
which is about 4% of global emissions from all sources combined (MA 2005). In
China, degradation of grassland, particularly on the Qinghai-Tibetan Plateau, has led
to the loss of 3.56 Gt soil organic carbon over the last 20 years. It is estimated that
the soils of China overall now act as a net carbon source, with a loss of 2.86 Gt in the
same period (Xie et al., 2007). It is therefore vital from a climate perspective that this
region is managed to enhance carbon sequestration (Xu et al., 2004) and further study
is clearly required in this area (ESPA China 2008).

Grace et al. (2006) reviewed carbon fluxes in tropical savannas. They found that
carbon sequestration rates in these ecosystems may average 0.14 tonnes carbon per
hectare per year or 0.39 tonnes carbon per hectare per year. They concluded that “if
savannas were to be protected from fire and grazing, most of them would accumulate
substantial carbon and the sink would be larger. Savannas are under anthropogenic
pressure, but this has been much less publicized than deforestation in the rain forest
biome. The rate of loss is not well established, but may exceed 1% per year,
approximately twice as fast as that of rain forests. Globally, this is likely to constitute
a flux to the atmosphere that is at least as large as that arising from deforestation of
the rain forest.”

As well as contributing to greenhouse gas emissions, drylands are themselves
vulnerable to the effects of climate change and the impacts of climate change in these
areas may lead in turn to further carbon emissions. Any further failure of plant growth
due to increased temperatures would further reduce carbon inputs to the soil,
accelerating its degradation. Smith et al point out that ‘even partial loss of vegetation
integrity could make soils more vulnerable to degradation through other agents such
as grazing and cultivation.’ (Smith et al 2008)

Climate change mitigation through addressing DLDD

Addressing land degradation in dryland ecosystems presents two complementary
ways of mitigating climate change. First, by slowing or halting degradation,
associated emissions can be similarly reduced. Second, and arguably of greater
significance, changes in land management practices can lead to greater carbon
sequestration, that is, to removing carbon from the atmosphere. In general, the carbon
storage potential of dryland ecosystems is lower than for moist tropical systems, but
the large area of drylands means that overall they have significant scope for
sequestration.

Managing drylands for carbon sequestration

Since carbon losses from drylands are associated with loss of vegetation cover and
soil erosion, management interventions that slow or reverse these processes can
simultaneously achieve carbon sequestration. There is a wide range of strategies to
increase the stock of carbon in the soil. Examples include enhancing soil quality,
erosion control, afforestation and woodland regeneration, no-till farming, cover crops,
nutrient management, manuring and sludge application, optimal livestock densities,
water conservation and harvesting, efficient irrigation, land-use change (crops to
grass/trees), set-aside, agroforestry, and the use of legumes (FAO 2004, Lal 2004,
Smith 2008).

There is a growing interest in assessing the carbon sequestration potential of such
strategies quantitatively. Using a modelling approach, Farage et al (2007) found the
most effective practices for increasing soil carbon storage were those that maximised
the input of organic matter, particularly farmyard manure (up to 0.09 tonnes C per
hectare per year), maintaining trees (up to 0.15 tonnes C per hectare per year) and
adopting zero tillage (up to 0.04 tonnes C per hectare per year (Farage et al 2007).

Tiessen et al. (1998) reviewed data on carbon and biomass budgets under different
land use in tropical savannas and some dry forests in West Africa and North-Eastern
Brazil. They found that improvements in the carbon sequestration in these semi arid
regions depended on an increase in crop production under suitable rotations, improved
fallow and animal husbandry, and a limitation on biomass burning. Use of fertilizer
was required for improved productivities but socioeconomic constraints largely
prevented such improvements, resulting in a very limited scope for changes in soil
carbon management.

Increasing carbon stocks in the soil increases soil fertility, workability, water holding
capacity, and reduces erosion risk and can thus reduce the vulnerability of managed
soils to future global warming (Smith, 2008). However, hidden costs also need to be

considered, such as the addition of mineral or organic fertilizer (especially nitrogen
and phosphorus) and water, which would need significant capital investment (MA
2005).

Estimates of dryland carbon sequestration potential

Several studies have attempted to assess the potential for carbon sequestration in
drylands. Considering all drylands ecosystems, Lal (2001) estimated that they had the
potential to sequester up to 0.4-0.6 Gt of carbon a year if eroded and degraded
dryland soils were restored and their further degradation were stopped. In addition, he
suggested that various active ecosystem management techniques, such as reclamation
of saline soils, could increase carbon sequestration by 0.5—1.3 Gt of carbon a year.
Squires et al (1995) estimated similar figures. Keller and Goldstein (1998) reached the
slightly higher figure of 0.8 Gt of carbon per year using estimates of areas of land
suitable for restoration in woodlands, grasslands, and deserts, combined with
estimates of the rate at which restoration can proceed.

Other studies have examined specific ecosystems in particular locations. For example,
Glenday (2008) measured forest carbon densities of 58 to 94 tonnes C/ha in the dry
Arabuko-Sokoke Forest in Kenya and concluded that improved management of wood
harvesting and rehabilitation forest could substantially increase terrestrial carbon
sequestration. Farage et al. (2007) used soil organic matter models to explore the
effects of modifying agricultural practices to increase soil carbon stocks in dryland
farming systems in Nigeria, Sudan and Argentina. Modelling showed that it would be
possible to change current farming systems to convert these soils from carbon sources
to net sinks without increasing farmers’ energy demand. The models indicated that
annual rates of carbon sequestration of 0.08-0.17 tonnes per ha per year averaged over
the next 50 years could be obtained.

Despite these studies, significant gaps in knowledge remain. Better information is
needed on the impact of land use changes and desertification on carbon sequestration
and the cost-benefit ratio of soil improvement and carbon sequestration practices for
small landholders and subsistence farmers in dryland ecosystems (MA 2005).

Linking drylands development and carbon markets

There are two markets for carbon sequestration: a) the compliance market governed
by the United Nations Framework Convention on Climate Change (UNFCCC)
through its Kyoto Protocol and b) the voluntary market. The role of the natural
biosphere in climate change mitigation is recognised in the UNFCCC through Land
Use Land Use Change and Forestry (LULUCF).

Annex I Parties, under Article 3.3 of the Kyoto Protocol, can use "direct human-
induced land-use change and forestry activities, limited to afforestation, reforestation
and deforestation since 1990, measured as verifiable changes in carbon stocks," to
meet emissions reductions targets. In addition, they can elect Forest Management,
Grassland Management, Cropland Management, and Revegetation for inclusion in the
accounting process. There are calls by some to include all lands and associated
processes in the LULUCF, rather than the narrow activities specified above.

The rules for LULUCF were only set after emission reduction targets had been
agreed. This has been viewed as a limitation, as in effect land use activities ‘offset’
emissions in other sectors, rather than acting as an integral part of the mitigation
portfolio. Issues still remain over the permanence of sequestration activities as
management changes or natural disturbances can quickly release any carbon
accumulated.

The opportunities for Non Annex | countries to participate in such activities is also
limited, and restricted to the Clean Development Mechanism (CDM); where Annex I
countries can gain carbon credits through activities in developing countries. CDM
activities are restricted to Afforestation, Reforestation and Deforestation activities,
and can make up only 1% of the emissions reduction portfolio for Annex I countries.

As yet few forestry-based carbon sequestration activities have been funded through
the CDM, partly because of concerns about additionality, permanence and leakage.
Voluntary markets have developed their own regulations and protocols, and are the
only outlet for reduced deforestation programmes at the moment.

However, the UNFCCC is considering introducing a financial mechanism to reduce
emissions from deforestation and forest degradation (REDD) in developing countries.
There is still a great deal of uncertainty about the form of the mechanism, not least
how it will be funded. One option is to do so though a specific fund, another is a
market-based mechanism that would allow developing countries to sell carbon credits
on the basis of successful reductions in emissions from deforestation and forest
degradation. A market-based mechanism is expected to generate a much greater
supply of funds; one estimate, based on a relatively low carbon price of U.S. $10 per
ton and an estimate of individual countries’ ability to slow deforestation, suggests a
potential market of U.S. $1.2 billion a year (Niles et al., 2002).

The United Nations Collaborative Programme on Reducing Emissions from
Deforestation and Forest Degradation in Developing Countries (UN-REDD
Programme) is a collaboration between FAO, UNDP and UNEP. It is aimed at
“tipping the economic balance in favour of sustainable management of forests so that
their formidable economic, environmental and social goods and services benefit
countries, communities and forest users while also contributing to important
reductions in greenhouse gas emissions”. Its immediate goal is to assess whether
carefully structured payment structures and capacity support can create the incentives
to ensure actual, lasting, achievable, reliable and measurable emission reductions
while maintaining and improving the other ecosystem services forests provide. The
UN-REDD programme has nine initial pilots, two of which — Tanzania and Zambia —
are dryland woodland countries.

The potential scale of funding available through a market-based REDD has drawn
attention to both its potential for achieving other benefits simultaneously and the risk
of displacing degradation into areas that may have low carbon storage potential, but
that are valuable in other ways (Miles and Kapos 2008). There are technical and
statistical challenges of measuring changes in above and belowground carbon stocks
over large areas in drylands with the required accuracy, and further research is
required to demonstrate the feasibility of large area measurement schemes. The pros

and cons of carbon accounting at different scales (e.g. individual land user, watershed,
national level) and the associated transaction costs in administering such schemes also
still need to be evaluated.

REDD is applicable to forested ecosystems only, but other carbon markets may
include projects based in other ecosystems, depending on their carbon sequestration
potential. Regardless of the market, the price of carbon strongly influences whether
interventions to manage land degradation and carbon sequestration simultaneously are
cost effective. At present, the price of soil organic carbon, for example, is low, at
about $1 per tonne, so only low-cost interventions are likely to be cost effective for
land managers. For example, Smith (2008) concluded that there was technically the
potential to increase soil organic carbon stocks by about 1—1.3 Gt per year. However,
he found that if carbon prices were less than US$20 per tonne it would only be
economically feasible to increase soil carbon stocks by up to 0.4 Gt carbon per year.
At higher carbon prices, costlier interventions may generate sufficient revenue
through carbon credits to be worth undertaking.

The important questions for drylands, then, are first to identify areas, forest or
otherwise, where the carbon storage potential is great enough to attract carbon finance
based on that alone and second to consider whether REDD and other mechanisms
could prioritise schemes that also delivered co-benefits such as watershed or erosion
protection.

The studies referred to in this technical note indicate that, although carbon density
(tonnes of carbon stored per hectare) of drylands is low, the total amount stored can
be large as the areas involved are large. As such, interventions that increase the
amount of carbon stored in drylands, particularly those that are relatively low cost,
may be attractive to carbon markets. Tropical dry forests can store significant
amounts of carbon (ECCM 2007) so REDD may be a suitable finance mechanism for
anti-degradation measures in these ecosystems, particularly in dryland nations that do
not have carbon-rich moist forest. However, it would be helpful to have more
information on the characteristics of dryland forest and their carbon storage potential,
as well as greater clarity of the form that REDD mechanism will take, to estimate the
likely scale finance available for UNCCD-relevant forests.

It is clear that dryland carbon sequestration, particularly in soils, can provide other
ecosystem and social benefits such as as the rebuilding of the biophysical foundations
of a sustainable natural environment — biodiversity, forests, livestock, soils, water,
natural ecosystems - thus increasing productivity, improving water quality, and
restoring degraded soils and ecosystems. In its 2004 report on carbon sequestration in
dryland soils, the FAO concluded that “actions for soil improvement through carbon
sequestration are a win - win situation where increases in agronomic productivity may
help mitigate global warming, at least in the coming decades, until other alternative
energy sources are developed” (FAO 2004).

Conclusions

Sustainable land management practices that address desertification, land degradation
and drought (DLDD) in drylands can also have significant carbon sequestration
potential, particularly where they increase the organic carbon content of soils. As Lal
(2004) pointed out, the carbon sink capacity of tropical dryland soils is high in part

because they have already lost a lot of carbon. Restoring that carbon offers long-term
sequestration and can improve crop yields and increase ecosystems’ resilience to
future climate variability. Indeed, the UNCCD’s 10 year strategic plan (10YSP)
recognises the links between DLDD and climate change. One indicator of the plan’s
strategic objective 3 “to generate global benefits through effective implementation of
the UNCCD” is to achieve an “increase in carbon stocks (soil and plant biomass) in
affected areas” (indicator S-6).

However, weak institutions, limited infrastructure and resource-poor agricultural
systems often limit the capacity to address soil carbon and DLDD. Carbon markets
offer a possible way of financing measures to do so in some areas. However, for
significant carbon finance to be channelled to dryland ecosystems, it may be
necessary that market mechanisms allow prioritisation or a premium for schemes that
offer other benefits. Both forest and non-forest ecosystems have carbon sequestration
potential, but the price of carbon traded in the voluntary market is often too low to
influence land management practices at present. The 10YSP has already set a strategic
objective (Strategic objective 4) of mobilising resources to support implementation of
the Convention through building effective partnerships between national and
international actors. Work that encourages national and international carbon markets
to consider co-benefits in terms of ecosystem serves as well as carbon is in line with
this objective.

Given that soil carbon sequestration has much to offer climate change mitigation, land
and livelihood protection and resilience to climate change, but that actions to enhance
it may be hampered by lack of finance, lack of data and perhaps capacity to
implement changes, it is all the more important that policies and institutions
addressing these issues should work co-operatively, as set out in 10YSP.

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