Is peat swamp worth more than palm oil plantations?

Could peat swamp be worth more intact as a carbon offset than as palm oil plantations for their oil? Analysis shows that with an offfset of $6.75 per ton of carbon, Indonesian peat swamps are more valuable as carbon offsets than as oil palm plantations. While such offsets are not yet a reality, it is likely that avoided deforestation will be incorporated as an emissions offset during the next UN round. Properly executed, the carbon market could increase transparency for Indonesia, boost tax revenue, and improve the livelihood of rural populations, some of whom are among the poorest in the world.
Peat swamps in Indonesia store large amounts of carbon. The destruction and degradation of peat swamps is estimated to release 2 billion tons of carbon — about 8 percent of global emissions — each year. Much of this destruction is caused by conversion for oil palm plantations which produce palm oil, increasingly used as a biofuel. Nevertheless, oil palm plantations are presently the best economic option for much of rural Indonesia.



Carbon finance could change all this. Preliminary work suggests that carbon offsets through “avoided deforestation” mechanisms — whereby landowners and communities receive payments for preserving ecosystems that would otherwise be converted — could generate income that exceeds returns from oil palm plantations.



NOTE: With carbon offsets trading at an average of $18.60/ton in 2006 ($30B/1612M t CO2), a $6.75/ton payment to land owners of peat swamps is not out of the realm of possibility.