Project Design and Boundaries

Recommendation 5

Projects should be designed to satisfy the primary demands driving land-use change. Addressing demands leading to land-use change will avoid leakage and result in greater carbon sequestration gains. Projects that have identified and dealt with the root causes of land-use change had credible baselines and therefore avoided leakage attributable to erroneous baseline assumptions.

Recommendation 6

Projects should use transferable technologies, so as not to restrict social benefits to a limited area. The Olafo and CARE/Guatemala projects introduced green cover crops and agroforestry, respectively, to address the causes of land-use change. These technologies have ensured that the projects' benefits could be duplicated elsewhere, thus avoiding leakage from market effects, potentially increasing carbon storage and creating local incentives that help guarantee project success.

Recommendation 7

The determination of project boundaries should be based not on the area of project activities but on the spatial relationship between the demand driving land-use change and the supply source. The use of this relationship to help identify project boundaries will help avoid activity shifting because it accounts for a project's complete sphere of influence. The Leakage Index provides a useful guide for determining a project's spatial boundaries to correctly estimate net carbon sequestered. Thinking in terms of supply and demand will also help identify residual demand, which must either be incorporated into the net carbon calculation, or if possible, the project design.

Recommendation 8

Conditions resulting in leakage should be anticipated at the front-end of project design to avoid leakage effects. Use of a logical framework, such as the Leakage Index, may help to systematically address the potential for leakage. As the index indicates, unmet demand will result in leakage, and will not sequester as much carbon as estimated. Project designers must be sure to remember the fundamental rule of economics: markets will adjust to changes in supply and demand. If projects restrict supplies, other sources of supply will be found and potentially nullify the carbon gains claimed by an individual project.