Validated by:
65 Millet St. Suite 201
Richmond, VT 05477 USA
Tel: 802-434-5491
Fax: 802-434-3116
www.rainforest-alliance.org
Carbon Forestry Validation Audit
Managed by:
Mesoamerica Regional Office Rainforest
Alliance/ SmartWood Program
8a Avenida 15-62, Zone 10
Guatemala, Guatemala
Tel: (502) 2383 - 5757
Fax: (502) 2383 - 5788
Contact person: Adolfo Lemus
Email: alemus@ra.org
Validation Assessment
Report for:
Producción, Industrialización, Comercialización
y Asesoría de Hule Natural, Sociedad Anónima
(PICA)
in
Guatemala
Date Final Report Issued:
Date Draft Final Report Issued:
Date Draft Report Issued:
Audit Dates:
Lead Auditor:
Second Audit Team Member:
Senior Internal Reviewer:
Audit Standard:
Validation Code(s):
Validation Statement Issued:
Project Latitude/Longitude:
Project Proponent Contact:
Project Proponent Address:
Doc. No. C-56 May2010
26 October 2010
22 September 2010
30 June 2010
20 to 22 April, 2010
William Arreaga
Jared Nunery
Adam Gibbon
VCS, 2007.1, Nov 2008
Voluntary Carbon Standard Program Update 21 January 2010
VCS, Tool for AFOLY Methodological Issues,
Nov 2008
VCS, Guidance for AFOLU Projects, Nov 2008
VCS, Program Guidelines, Nov 2008
VCS, Tool for AFOLU Non-Permanence Risk
Analysis and Buffer Determination, Nov 2008
VCS Program updates.
RA-VAL-VCS-013806
26 October 2010
Lat: 14.62366
Long: -90.51681
Ing. Glenda Lee, Coordinadora de Econegocios
7a. Avenida 7-33 Zona 9
Guatemala City, Guatemala
Page 1
Voluntary Carbon Standard 2007
Validation Report:
Name of Verification company:
Date of the issue:
Rainforest Alliance
26 October 2010
Report Title:
Approved by:
PICA_VCS valid 10
Adam Gibbon
Client:
Project Title:
Producción, Industrialización, Comercialización y
Promoting Sustainable Development through
Asesoría de Hule Natural, Sociedad Anónima (PICA) Natural Rubber Tree Plantations in Guatemala
Summary:
This project is designed to promote sustainable development through the establishment of natural rubber
tree plantations in two distinct regions of Guatemala. The proposed project activities involve certifying the
proposed project areas under the Forest Stewardship Council (FSC) forest management certification, in
addition to the validation of the project as an Afforestation, Reforestation, and Revegetation (ARR) project
with the VCS.
The project involves the reforestation of 2,366.16 hectares of degraded pastureland, with a variety of clones
of Hevea brasiliensis. The Project Design Document (PDD) and supporting documents were designed to
conform to the VCS 2007.1 standard, specifically as an ARR project under the AFOLU project types. The
project employed an approved CDM Afforestation and Reforestation methodology, AR-ACM0001 v.3.
This project aims to be the first FSC certified rubber tree plantation in Guatemala. The project intends to
diversify investment opportunities for businesses in Guatemala interested in investing in sustainable rubber
production. The project area includes 7 different farms, divided geographically in both the north (3 farms)
and the south (4 farms) of Guatemala. Traditional rubber production currently exists in the south of
Guatemala; however, this practice is less common in the north, where soils are less productive, and a longer
rainy season presents additional challenges with increased impacts of a fungus that affects rubber
plantations. The project intends to sequester a total of 1,739,855 t CO2e over the course of the 42 year
crediting period. The project includes a financial analysis that demonstrates the impact of the sale of carbon
credits associated with project activities, resulting in an increased rate of return for investors above a
minimum investment threshold that decreases the financial risk of the project making investments in project
activities possible. The project asserts that without the sale of carbon credits, it would not be able to meet
the minimum investment return threshold. Although rubber production is common in the south with
traditional rubber production, this project intends to increase the sustainability of rubber production through
certification of FSC, which is not common throughout the entirety of Guatemala. The rubber plantations
involved in project activities will be managed for rubber production for a minimum of 36 years (note the
planted areas will be staggered, hence the 42 year crediting period), according to interviews with Project
Proponents, plantation managers, and management plans. Following this rotation period, the rubber trees
will be harvested, and the plantations will be re-planted as rubber tree plantations.
The validation of project activities was requested of Rainforest Alliance by PICA. The audit of the PDD,
supporting documentation, field visit, and interviews has provided Rainforest Alliance with the evidence to
determine successful fulfillment to the VCS 2007.1 standard with reasonable assurance.
Doc. No. C-56 May2010
Page 2
Work carried out by:
Rainforest Alliance
Doc. No. C-56 May2010
Number of pages:
56
Page 3
Table of Contents
1
Introduction........................................................................................................................................................ 6
1.1 Objective ..................................................................................................................................................... 6
1.2 Scope and Criteria ....................................................................................................................................... 6
1.3 VCS project Description .............................................................................................................................. 6
1.4 Level of assurance ...................................................................................................................................... 7
2 Methodology ...................................................................................................................................................... 8
2.1 Description of the Audit Process ................................................................................................................. 8
2.2 Audit team ................................................................................................................................................... 9
2.3 Stakeholder Consultation Process .............................................................................................................. 9
2.4 Review of Documents.................................................................................................................................. 9
2.5 Follow-up Interviews .................................................................................................................................. 13
2.6 Resolution of any material discrepancy ..................................................................................................... 13
3 Validation Overview ......................................................................................................................................... 14
3.1 Validation summary ................................................................................................................................... 14
3.2 Correct Action Requests............................................................................................................................ 15
3.3 Observations ............................................................................................................................................. 24
3.4 Actions taken by the Project Proponent Prior to Report Finalisation ......................................................... 25
4 Validation Findings .......................................................................................................................................... 27
4.1 Project Design ........................................................................................................................................... 27
4.1.1 Project title, Purposes and Objectives ................................................................................................ 27
4.1.2 Type of GHG project ........................................................................................................................... 27
4.1.3 Project Location .................................................................................................................................. 27
4.1.4 Technology used................................................................................................................................. 28
4.1.5 Project duration, crediting time and project start date ......................................................................... 28
4.1.6 Ownership/Proof of Title/Right of Use ................................................................................................. 29
4.1.7 Double counting and whether the project participated in another emission trading programme ......... 30
4.1.8 Project applicability to the VCS for projects rejected under other GHG programme (if applicable) ..... 30
4.1.9 Whether the project is eligible under the VCS .................................................................................... 30
4.1.10 Chronological plan for project initiation and monitoring....................................................................... 31
4.1.11 Roles and responsibilities ................................................................................................................... 31
4.1.12 Observation of local laws and regulations ........................................................................................... 32
4.2 Baseline..................................................................................................................................................... 32
4.2.1 Conditions prior to project initiation ..................................................................................................... 32
4.2.2 Approval of the baseline methodology ................................................................................................ 33
4.2.3 Application of methodology deviations or revisions (if applicable) ...................................................... 33
4.2.4 Conformance with methodology applicability conditions ..................................................................... 34
4.2.5 Correct application and justification of selected baseline methodology .............................................. 35
4.2.6 Appropriate setting of baseline scenario ............................................................................................. 36
4.2.7 Assessment and demonstration of additionality should be summarised in this section. ..................... 37
4.3 Monitoring Plan ......................................................................................................................................... 38
4.3.1 Approval of the monitoring methodology............................................................................................. 38
4.3.2 Correct application and justification of selected monitoring methodology ........................................... 38
4.3.3 Conformance with VCS specific criterion relating to monitoring (VCS 2007.1 section 5.11 and Tool for
AFOLU Methodological Issues Step 6) ........................................................................................................... 39
4.3.4 Whether the monitoring plan provides detailed information related to the collection and archiving of all
relevant data.................................................................................................................................................... 40
4.4 Calculation of GHG Emissions .................................................................................................................. 40
4.4.1 The appropriateness of the source, sink and reservoir (pools) ........................................................... 40
Doc. No. C-56 May2010
Page 4
4.4.2 The correctness and transparency of formulas and factors used ....................................................... 41
4.4.3 Calculation of emissions in the baseline scenario (ex-ante estimate) ................................................. 44
4.4.4 Calculation of emissions from project activities (ex-ante estimate) ..................................................... 45
4.4.5 Calculation of emissions reductions or avoided emissions due to the project (ex-ante estimate) ....... 45
4.4.6 Calculation of emissions from leakage (ex-ante estimate) .................................................................. 46
4.4.7 Calculation of net VCUs to be issued (ex-ante estimate) .................................................................... 47
4.4.8 The assumptions made for estimating GHG emission reductions ...................................................... 47
4.4.9 Uncertainties ....................................................................................................................................... 48
4.5 Environmental Impact ................................................................................................................................ 48
4.5.1 Requirements for and approval of an Environmental Impact Assessment (if applicable).................... 48
4.5.2 Comments by stakeholders ................................................................................................................ 48
4.5.3 Negative environmental and socio-economic impacts of the project................................................... 49
5 VCS Risk Assessment..................................................................................................................................... 51
5.1 Risk factors applicable to all project types ................................................................................................. 51
5.2 Risk factors applicable to ARR projects..................................................................................................... 52
5.2.1 Default buffer withholding percentages for ARR projects .................................................................... 55
6 Validation Conclusion ...................................................................................................................................... 57
Appendix A: Company Details ............................................................................................................................... 58
6.1 Contacts .................................................................................................................................................... 58
6.2 On-line Certification Contact ...................................................................................................................... 58
Doc. No. C-56 May2010
Page 5
1 Introduction
1.1
Objective
The purpose of this report is to document the conformance of the Promoting Sustainable Development through Natural Rubber
Tree Plantations in Guatemala project with the requirements of the Voluntary Carbon Standard (VCS) validation standards. The
project was developed by Producción, Industrialización, Comercialización y Asesoría de Hule Natural, Sociedad Anónima
(PICA) with assistance from Winrock International, hereafter referred to as “Project Proponent”. The report presents the findings
of qualified Rainforest Alliance auditors who have evaluated the Project Proponent’s systems and performance against the
applicable standard(s). Section 6 below provides the audit conclusions.
The Rainforest Alliance’s SmartWood program was founded in 1989 to certify forestry practices conforming to Forest
Stewardship Council (FSC) standards and now focuses on providing a variety of forest auditing services. In addition to being an
ANSI ISO 14065:2007 accredited verifier and validator with VCS, Rainforest Alliance SmartWood program is also a member of
the Climate, Community, and Biodiversity Alliance (CCBA) standards, and an approved verification body with a number of other
forest carbon project standards. For a complete list of the services provided by Rainforest Alliance see http://www.rainforestalliance.org/climate.cfm?id=international_standards.
Dispute resolution: If Rainforest Alliance clients encounter organizations or individuals having concerns or comments about
Rainforest Alliance / SmartWood and our services, these parties are strongly encouraged to contact the SmartWood program
headquarters directly.
1.2 Scope and Criteria
Scope: The scope of the validation audit is to assess the conformance of the Promoting Sustainable Development through
Natural Rubber Tree Plantations in Guatemala Reforestation project in Guatemala against the VCS 2007.1 standard. The
objectives of this audit included an assessment of the project’s conformance with the VCS 2007.1 requirements and any
additional requirements of VCS AFOLU projects. In addition, the audit assessed the project with respect to the baseline
scenarios presented in the project design document. The project covers an area of 2,366.16 ha. The land is privately owned.
The forest type will be reforested to a rubber tree plantation with a variety of clones of Hevea brasiliensis. The project has a
lifetime of 42 years, and estimates it will lead to an average carbon stock increase of 1,739,855 tCO2e over the project crediting
period. The audit will assess the GHG assertions and baseline estimates made by the project against agreed validation criteria
of the VCS.
Standard criteria: Criteria from the following documents were used to assess this project:
Voluntary Carbon Standard, 2007.1, Nov 2008
Voluntary Carbon Standard, Tool for AFOLU Methodological Issues, Nov 2008
Voluntary Carbon Standard, Guidance for Agriculture, Forestry and Other Land Use Projects, Nov 2008
Voluntary Carbon Standard, Program Guidelines, Nov 2008
Voluntary Carbon Standard, Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination, Nov 2008
Applicable Voluntary Carbon Standard Program Updates
Applicable VCS Association Policy Announcements
Approved VCS methodology used for project activities
Materiality: All stocks and emissions equal to or greater than 5% of the total GHG assertion as defined in section 7.3.1 of the
VCS 2007.1 standard.
1.3 VCS project Description
The carbon project developed by the Project Proponent, intends to find new ways to promote sustainable development through
natural rubber tree plantations in Guatemala. This project aims to become the first FSC certified rubber tree plantation in
Guatemala. The project intends to diversify investment opportunities for businesses in Guatemala interested in investing in
sustainable rubber production. The project area includes 7 different farms, divided geographically in both the north (3 farms)
and the south (4 farms) of Guatemala. Traditional rubber production currently exists in the south of Guatemala; however, this
practice is less common in the north, where soils are less productive, and a longer rainy season presents additional challenges
with increased impacts of a fungus that affects rubber plantations. The project intends to sequester a total of 1,739,855 tCO2e
over the course of the 42 year VCS crediting period. The project includes a financial analysis that demonstrates the impact of
Doc. No. C-56 May2010
Page 6
the sale of carbon credits associated with project activities, resulting in an increased rate of return for investors above a
minimum investment threshold that decreases the financial risk of the project making investments in project activities possible.
Without the sale of carbon credits, the project would not be able to meet the minimum investment return threshold. Although
rubber production is common in the south with traditional rubber production, this project intends to increase the sustainability of
rubber production through certification of FSC, which is not common throughout the entirety of Guatemala. According to
interviews with Project Proponents, plantation managers, and review of management plans the rubber plantations involved in
project activities will be managed for a minimum one complete rotation with the commitment to replant rubber tree plantations
following the culmination of the 36 year rotation period. Following this rotation period, the rubber trees will be harvested, and
the plantations will be re-planted as rubber tree plantations.
1.4 Level of assurance
The GHG assertion will be validated to a reasonable level of assurance. Based on the audit findings, a positive validation
statement reasonably assures that the project GHG assertion is materially correct and is a fair representation of the GHG data
and information. Additionally, the GHG assertion is prepared in accordance with the VCS 2007.1 standard.
Doc. No. C-56 May2010
Page 7
2 Methodology
2.1 Description of the Audit Process
The audit was conducted in a two step process. The first step consisted of a pre-validation assessment, conducted through a
remote desk audit of the Project Design Document (Doc #1), and all corresponding annexes (Docs #2 – 75). The purpose of the
pre-validation assessment is to identify any major gaps within the project design document, and to determine if the project is
ready for a field visit. As part of the pre-validation audit, 19 gaps were identified, and the Project Proponent was notified of
these findings on April 7th, 2010 with the submission of the pre-validation report. This process offers the Project Proponent a
minimum of 3 weeks to address any gaps identified in the pre-validation assessment prior to the arrival of auditors for the field
audit.
The field audit for the validation of the Promoting Sustainable Development through Natural Rubber Tree Plantations in
Guatemala project corresponded with the first assessment of project area for FSC certification. In total, 9 farms were included
in the FSC and VCS scopes; however, not all farms were included in the scope of both audits. Below is a table describing the
farms included in each of the audit scopes, as well as those farms that were visited during the field audit.
Farm Owner
Farm Name
Included in the Scope of
the FSC Certification
Included in the Scope of
the VCS Validation
Visited During Field
Audit
Agropalmeras S.A.
Palmeras
Yes
Yes
Yes
Agropalmeras S.A.
Río Frío
Yes
Yes
Yes
Ingenio Magdalena, S.A.
El Horizonte
No
Yes
No
Ingenio Magdalena, S.A.
Asunción
No
Yes
No
Ingenio Magdalena, S.A.
Los Patos
No
Yes
Yes
Inversiones Agrícolas
Palafox, S.A.
Bello Horizonte
Yes
Yes
Yes
Sistemas Operativos del
Norte, S.A. (SONORSA)
Concepción
No
Yes
No
Inversiones Agrícolas
Las Animas S.A.
Animas
Yes
No
Yes
Inversiones Agrícolas
Palafox, S.A..
Palafox
Yes
No
Yes
The field audit consisted of a total of 8 days, visiting both of the project strata (3 days field visit in the south, 3 days field visit in
the north, and 2 days in the Guatemalan City office of PICA). In total, 4 of the 7 farms included within the scope of the VCS
validation were visited. In addition to those farms visited as part of the VCS validation, 2 farms were visited as part of the FSC
certification. Stakeholder interviews were conducted at all farms visited, including interviews of farm managers, farm workers,
and members of the neighbouring farm community. As part of the field audit, the following project areas were visited:
Location/Facility
Date(s)
Length of
Audit
Auditor(s)
Palafox Farm
04 May 2010
6 hours
William Arreaga and Jared Nunery
Environmental Ministry of Guatemala,
Suchitepequez
04 May 2010
1 hour
William Arreaga and Jared Nunery
Labour Ministry, Suchitepequez
Social Security Institute, Suchitepequez
Municipal Forestry Office, Suchitepequez
National Institute of Forests (INAB),
Suchitepequez
04 May 2010
5 hours
William Arreaga
Animas Farm
05 May 2010
5 hours
William Arreaga and Jared Nunery
Doc. No. C-56 May2010
Page 8
Los Patos Farm
05 May 2010
5 hours
William Arreaga and Jared Nunery
Palmeras Farm
06 May 2010
10 hours
William Arreaga and Jared Nunery
Grupo Agroindustrial Occidente
Headquarters, Guatemala City
07 May 2010
6 hours
William Arreaga and Jared Nunery
Labour Ministry;
Social Security Institute;
National of Protected Areas Council
(CONAP), Izabal
10 May 2010
1 day
William Arreaga
Bello Horizonte Farm
11 May 2010
4 hours
William Arreaga
Río Frío Farm
11 May 2010
3 hours
William Arreaga
2.2 Audit team
Auditor(s)
William Arreaga, Rainforest Alliance,
Forester, SmartWood Central America
Region
Contact info:
warreaga@ra.org
Phone: (502) 2383-5757
Jared Nunery, Rainforest Alliance,
SmartWood Program Carbon Technical
Specialist
Contact info:
jnunery@ra.org
Phone: +1(802) 434-8732
Qualifications
William is a Rainforest Alliance Lead Carbon Auditor.
Guatemalan; Forestry Specialist, Central American SmartWood Office. Forestry
degree from the Escuela Nacional Central de Agricultura, and an engineering
degree from USAC; in 2002; he received an M.Sc. in Tropical Forest Management
and Biodiversity Conservation from CATIE (Costa Rica). His work has been
focused in plantations and natural forests managed in Central America. He also
has experience in carbon storage and carbon flows in natural forests and
plantations. In 2007, he spent two months at Winrock International as a fellow.
Jared has led the technical review of multiple validation assessments for the VCS.
In addition he has participated in two Improved Forest Management
methodological assessments for the VCS. Before joining the Rainforest Alliance,
Jared worked as a member of the Carbon Dynamics Lab at the University of
Vermont, where he conducted research on the effects of forest management on
carbon sequestration. Jared has published multiple scientific articles on forest
carbon dynamics as well as general forest ecological processes.
Jared has a B.S. in Environmental Sciences from the University of Vermont and
earned his M.Sc. in Forestry from the University of Vermont. Jared has extensive
experience in forest stand dynamics, forest carbon dynamics, forest mensuration,
GHG quantification, forest growth and yield modeling, and wildlife habitat
conservation. In addition, Jared is a certified lead auditor with the Climate Action
Reserve for Forest and Urban Forest projects.
2.3 Stakeholder Consultation Process
During the field audit, local stakeholders affected by proposed project activities were interviewed by the audit team. Interviews
included both in person conversations in the field, visits to local stakeholder offices, visits to community school, and telephone
interviews with those stakeholders which were unavailable or inaccessible during the field audit.
The audit team interviewed a diverse group of stakeholders (see table in section 2.5 below). All interviews were conducted
without the presence of the Project Proponent team members immediately involved in project activities, in order to avoid
potential biases. Additionally, stakeholder consultations were conducted by the Project Proponent (see section 4.5.2 below).
These meetings were documented by video and photographs which were reviewed by the audit team during the field audit.
2.4 Review of Documents
Documents were reviewed at three times during the audit process. The first review occurred during the time period of March
31st to April 2nd 2010. The first review consisted of a preliminary desk audit of the project documents (reference number 1 thru
75 below), and assessment against the VCS 2007.1 Standard. All documents were then reviewed a second time during the
field audit against the VCS 2007.1 Standard, as well as to ensure consistency between project documents (e.g. ensuring the
PDD followed the guidance of the selected CDM methodology).
Doc. No. C-56 May2010
Page 9
The second review consisted of a more thorough audit where references within the PDD were cross-referenced to ensure
accuracy. When greater than 20 references were cited in one section of the PDD (see for example Doc #37 – 42 where species
specific wood densities from Chave et al. 2005 (Doc #43)) a sample of 10% of the total references were checked. If errors were
found in the initial sample, a complete census of all references was conducted. In total 89 documents were reviewed during the
audit process.
The third review consisted of a review of revised documents that were originally submitted during the field validation audit.
Included in the third audit was also a review of additional evidence to support the use of the Morales allometric equations (see
Docs 110 – 120).
The following documents were viewed in the audit process:
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
Title, Author(s), Version, Date
PICA VCS PDD 03/09/2010
Afforestation and reforestation on degraded
land
Combined tool to identify the baseline
scenario and demonstrate additionality in A/R
CDM project activities
Memoria Tecnica
Proceso definición Bosque MDL
DATA, SOIL DEGRADATION
Plan de Manejo Bello-Horizonte
Plan de Manejo Rio Frio
Plan_de_Manejo_Palmeras_V3
EIA Asuncion
EIA Bello Horizonte
EIA El Horizonte
EIA Los Patos
EIA Palmeras
EIA Rio Frio
Entregas MARN magdalena
Resolucion MARN plan de gestion
Proyectos Animas Palmeras Palafox
CONCEPCION cattle sale receipts and
argument
PICA - Leakage Analysis
Los Patos - Transfer of Grazing Animals
Palmeras - Cattle Sale Receipts
Ganaderia Las Vegas, SA
PICA - Leakage Analysis - Tables
List of participants at public meetings held at
Lost Patos and Asunción
CAMBIOS BELLO HORIZONTE
Eligibility Analysis - Methods
Remote Sensing Data utilized by
Geotecnologica
Asuncion Maps (5)
Bello Horizonte Maps (5)
Concepcion Maps (4)
El Horizonte Maps (5)
Los Patos Maps (5)
Palmeras Maps (5)
Rio Frio Maps (6)
Doc. No. C-56 May2010
Electronic Filename
PICA_-_VCS_PD_03_09_10
AR-ACM0001 v04
ar-am-tool-02-v1
Memoria Tecnica
Proceso definición Bosque MDL
DATA, SOIL DEGRADATION
Plan de Manejo Bello-Horizonte
Plan de Manejo Rio Frio
Plan_de_Manejo_Palmeras_V3
EIA Asuncion
EIA Bello Horizonte
EIA El Horizonte
EIA Los Patos
EIA Palmeras
EIA Rio Frio
entregas MARN magdalena
resolucion MARN plan de gestion
ProyectosAnimasPalmerasPalafox[1]
CONCEPCION cattle sale receipts and argument
PICA - Leakage Analysis
Los Patos - Transfer of Grazing Animals
Palmeras - Cattle Sale Receipts
Ganaderia Las Vegas, SA
PICA - Leakage Analysis - Tables
LISTOF~1
CAMBIOS_BELLOHORIZONTE_english
Eligibility Analysis - Methods
GIS_Data
Asuncion Maps
Bello Horizonte Maps
Concepcion Maps
El Horizonte Maps
Los Patos Maps
Palmeras Maps
Rio Frio Maps
Page 10
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
PICA - Baseline Report
Baseline Measurements - Results Asunción
2009
Baseline Measurements - Results Bello
Horizonte 2009
Baseline Measurements - Results El
Horizonte 2009
Baseline Measurements - Results Los Patos
2009
Baseline Measurements - Results Palmeras
2009
Baseline Measurements - Results Rio Frío
2009
Chave_et_al-2005
Dulphy et al. 1997
Morales 2000
Palm et al 2000
Post and Mann 1990
Reyes et al 1992
FORMAT DATA COLLECTION FOR
MONITORING
Boleta PICA PPM
PICA - Monitoring Plan
Monitoring Plot Maps (6)
Marupa Growth Model
PICA - VCS PD - Tables
Calculation of BSL Removals, Project
Emissions, Net Removals
PDD Final Estimation
Modelo Cultivo del Hule 2009 PDD
Sequestration PDD Rubber only CERs
Variables Riesgo ModF
Sequestration GAO Rubber plantations
Sequestration PDD Rubber Total
Investment Analysis
Planting Records and Projections
Sensitivity Analysis
Statement of Intent PICA 2007
Summary - Statements of Intent
GUATEMALA CATTLE HISTORY
Mapa de cobertura vegetal y uso de la tierra
Prospects for Change in International
Investment Patterns in
Performance Benchmarks 2007
Hastings Hancock International Timberland
Fund Annual Report
Forest and Paper Products Investment
FSC Principles and Criteria
Guatemala-2005-INFORME-INCENDIOS
Guatemala Statistics 2002
Andres M Cuesta Perez C.V.
Francisco Manuel Andiocoechea Alegria C.V.
Joachim Gunther Lottmann Meinecke C.V.
Ronald Pazos Estrada C.V.
Pablo Ignacio Dominguez C.V.
Doc. No. C-56 May2010
PICA - Baseline Report
Baseline Measurements - Results Asunción 2009
Baseline Measurements - Results Bello Horizonte 2009
Baseline Measurements - Results El Horizonte 2009
Baseline Measurements - Results Los Patos 2009
Baseline Measurements - Results Palmeras 2009
Baseline Measurements - Results Rio Frío 2009
Chave_et_al-2005
Dulphy et al. 1997
Morales 2000
Palm et al 2000
Post and Mann 1990
Reyes et al 1992
FORMAT DATA COLLECTION FOR MONITORING
Boleta PICA PPM
PICA - Monitoring Plan
Monitoring Plot Maps
Marupa Growth Model
PICA - VCS PD - Tables
Calculation of BSL Removals, Project Emissions, Net Remova
PDD Final Estimation
Modelo Cultivo del Hule 2009 PDD
SequestrationPDDRubberonlyCERs
Variables Riesgo ModF
SequestrationGAORubberplantations
SequestrationPDDRubberTotal
Investment Analysis
Planting Records and Projections
Sensitivity Analysis
Statement of Intent PICA 2007
Summary - Statements of Intent
GUATEMALA CATTLE HISTORY
Mapa de cobertura vegetal y uso de la tierra
Prospects for Change in International Investment Patterns in
Performance Benchmarks 2007
Hastings Hancock International Timberland Fund Annual Report
Forest and Paper Products Investment
FSC Principles and Criteria
Guatemala-2005-INFORME-INCENDIOS
Guatemala Statistics 2002
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
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81
82
Luis Alejandro Mejía Caniz
Not Applicable
Medición de Línea Base Boletas de Campo
Not Applicable
Estrado Norte
83
Monitoreo Año 2009 PICA, Boletas de
Not Applicable
campo, Medición de Fijación de Carbono
84
El Infranscrito Registrador de la Propiedad
Not Applicable
Certifica Que
85
Registro General de la Propiedad Referencia
Not Applicable
de Incripción No: 085003254
86
Central American Investment Risk Ratings
http://www.fitchca.com/ratings.php?id_sector=7&id_pais=1&id_ambito=2
87
An Ecosystem-based Forestry Investment
An Ecosystem-based Forestry Investment Strategy
Strategy
88
Calculation of BSL Removals, Project
Calculation of BSL Removals, Project Emissions, Net Removals, LK
Emissions, Net Removals, LK
89
A/R Tool 09 Estimation of GHG emissions
A-R Tool 09 Estimation of GHG emissions related to displacement of
related to displacement of grazing activities
grazing activities in A/R CDM project activity
in A/R CDM project activity
90
PICA_Annual biomass accumulation and net
PICA_Annual biomass accumulation and net GHG Removals_august
GHG Removals_august 25*
25*
91
Financial Analysis Rubber*
Financial Analysis Rubber 25 08 10*
92
Sensitivity Analysis*
Sensitivity Analysis*
93
Proof of Title and leasing Los Patos*
Proof of Title and leasing Los Patos*
94
Proof of Title Concepcion*
Proof of Title Concepcion*
95
Proof of Title Rio Frio*
Proof of Title Rio Frio*
96
Proof of Title and leasing Asuncion*
Proof of Title and leasing Asuncion*
97
Proof of Title El Horizonte*
Proof of Title El horizonte*
98
Proof of Title Bello Horizonte*
Proof of Title Bello Horizonte*
99
Proof of Title Palmeras Sur*
Proof of Title Palmeras Sur*
100 PICA_VCS_PD 26 08 10*
PICA_VCS_PD 26 08 10*
101 PICA - Monitoring Plan_EN*
PICA - Monitoring Plan_EN*
102 CONCEPCION STATEMENT*
CONCEPCION STATEMENT*
103 RIO FRIO_STATEMENT*
RIO FRIO_STATEMENT*
104 PALMERAS SOUTH AND BELLO
PALMERAS SOUTH AND BELLO HORIZONTE
HORIZONTE NORTH_STATEMENT*
NORTH_STATEMENT*
105 PATOS, EL HORIZONTE AND
PATOS, EL HORIZONTE AND CONCEPCION_STATEMENT*
CONCEPCION_STATEMENT*
106 Glenda Lee*
Glenda Lee*
107 ALLOMETRIC BROADLEVES EQUATIONS,
ALLOMETRIC BROADLEVES EQUATIONS, GLEE*
GLEE*
108 luis Alejandro Mejia*
luis Alejandro Mejia*
109 Pablo Dominguez*
Pablo Dominguez*
110 Allometric Equations Rubber
Allometric Equations Rubber
111 CARs 09 10 ARGUMENT's last review
CARs 09 10 ARGUMENT's last revew
112 Monitoring presampling 2009
Monitoring presampling 2009
113 Real DBH measurements at rubber trees
Real DBH measurements at rubber trees
114 Apresentação 1 - Brazil Rubber Congress
Apresentação 1 - Brazil Rubber Congress 110810 - 2
110810 - 2
115 Carbon seq potential of N rubber plant
Carbon seq potential of N rubber plant
116 Carbon Sequestration Thailand
Carbon Sequestration Tailand December2009
December2009
117 RRII Higher carbon sequestration
RRII Higher carbon sequestration
118 Rubber board
Rubber board
119 statement_final density
statement_final density
120 Yogaratnam article 2
Yogaratnam articule 2
*Revised documents reviewed as evidence to close identified CARs
Doc. No. C-56 May2010
Page 12
2.5 Follow-up Interviews
Major stakeholders identified by the audit team, in addition to those identified in the PDD were interviewed during the field
audits. Interviews were conducted in person by the audit team. During the audit, the auditors divided into two teams in order to
increase sampling intensity. One team, consisting of a Guatemalan forest engineer with 6 years experience in FSC certification,
focused on stakeholder interviews with community members, farm workers, farm managers, and other stakeholders identified as
being potentially impacted by the project activities. In total 30 interviews were conducted as part of the field audit. Additional
expert consultation was conducted following the field audit to obtain additional information on the project conformance to the
VCS 2007.1 standard.
The following is a list of the people interviewed as part of the audit:
Audit
Date
Name
Title
4May10
4May10
4May10
4May10
Francisco Manuel Andicoechea Alegria
Luis Alejandro Mejia Caniz
Glenda Lee
Jose Luis Garcia Ayala
5May10
5May10
5May10
5May10
5May10
5May10
5May10
5May10
5May10
5May10
5May10
5May10
5May10
6May10
6May10
6May10
Lázaro Cruz
Agusto De La Cruz Rosales
Fernando Hernández
Alvaro Mérida
Waldemar Dell
Elder Pérez
Diana Pineda
Clara Rodríguez
Irma Suc Chubac
Jacinto Kejnai Ramos
Hosytiniano Xula Paul
Victor Ramirez Caporal
Pablo Ignacio Dominguez
Andreas M. Cuesta Perez
Marvin Noe Bernardino
Carlos López
6May10
6May10
7May10
14Jun10
14Jun10
14Jun10
14Jun10
14Jun10
18Jun10
18Jun10
Jose Gelista
Carla Zunun
Carlos Alberto Duarte
Carlos Caal
Adolfo del Cid
Cristopher Boy
Héctor Bris
Carlos Alonso
Carlos Alemán
Manuel Morales
Manager of Agricultural Division, PICA
Ecobusiness Manager, PICA
Ecobusiness Coordinator, PICA
Environmental Monitoring and Evaluation Director, Environmental
Ministry of Guatemala, Suchitepéquez
Finca Los Patos Administrator
Los Patos Chief Manager
Los Patos Caporal (tapper chief)
Los Patos Technical Manger
General Farm Manger
Los Patos Assessors
Animas School Director
Neighbor of the Animas, community leader
Neighbor of the Animas, community leader
Rubber Tapper for Inversiones Agrícolas Las Animas S.A.
Rubber Tapper for Inversiones Agrícolas Las Animas S.A.
Rubber Tapper for Inversiones Agrícolas Las Animas S.A.
Technical Sustainability and Carbon Manager, PICA
Farm Manager Palmeras/Palafox
Rubber Tapper Palmeras, Monitoring Team member
Manager of Chemical Warehouse, Palafox, Inversiones Agrícolas
Palafox, S.A.
Manger of Maintenance, Palafox, Inversiones Agrícolas Palafox, S.A.
Administrator of Office, Palafox, Inversiones Agrícolas Palafox, S.A.
Remote Sensing Analyst, Geotecnologica
National of Protected Areas Council, Alta Verapaz
Neighbor Palafox and Animas Farms
Neighbour Animas Farm
Neighbour Palmeras Farm
Neighbour Palafox Farm
Neighbour Río Frío Farm
Neighbour Bello Horizonte Farm
2.6 Resolution of any material discrepancy
During the field audit, multiple material discrepancies were indentified. These material discrepancies are described below in
section 3.2. On August 3rd, the Project Proponent submitted the revised PDD and annexes to RA as evidence to close those
open CARs identified in the Draft Report. On August 23rd, a meeting was held between RA and PICA to discuss the revised
documents and open CARs. Following this meeting on August 26th PICA submitted additional documents to address those
CARs identified in the Draft Report. Following the review of the additional material seventeen (17) CARs were closed. Two (2)
CARs remain open. In order to close the remaining two CARs, PICA submitted Docs 110 – 120 on October 7th, 2010. This
material was reviewed on October 19th, and found to be sufficient to close CARs 09/10 and 10/10.
The findings related to all identified CARs are discussed in section 3.2 below.
Doc. No. C-56 May2010
Page 13
3 Validation Overview
Based on Project’s conformance with VCS requirements, the auditor makes the following recommendation:
Final Report Conclusions
Validation approved: Following the issuance of the Draft Final Report, PICA submitted additional evidence to
support the use of the Morales allometric equations, and clarify the definition of the project area. As such
CARs 09/10 and 10/10 have been closed. Following the closure of these two CARs, the audit team has found
that with a reasonable level of assurance, the PICA project title “Promoting Sustainable Development through
Natural Rubber Tree Plantations in Guatemala” meets the requirements of the VCS 2007.1 Standard.
No CARs issued
Validation not approved:
Conformance with CAR(s) required
Draft Final Report Conclusions
Validation approved:
No CARs issued
Validation not approved:
Conformance with CAR(s) required
The Project proponent has 7 days from the date of this report to submit
any comments related to the factual accuracy of the report or the
correctness of decisions reached. The auditors will not review any new
material.
Draft Report Conclusions
Validation approved:
No CARs issued
The Project Proponent has 30 days from the date of this report to revise
documentation and provide any additional evidence necessary to close
the open corrective action request. If new material is submitted the
auditor will review the material and add updated findings to this report
and close CARs appropriately. If all CARs are successfully addressed,
the report will be finalized and proceed towards issuance of a validation
statement. If no new material is received before the 30 day deadline, or
the new material was insufficient to close all open CARs this report will
be finalized with the CARs open, and with validation not yet achieved.
Validation not approved:
Conformance with CAR(s) required
3.1 Validation summary
The PICA project presents an approach to promote sustainable management of rubber tree plantations in Guatemala.
Specifically, the sale of carbon credits helps to offset the increased costs of sustainably managing rubber tree plantations under
FSC certification. PICA makes an argument for additionality of the project through a financial analysis. The financial analysis is
based on the ex ante estimates of net climate benefits from project activities. The analysis shows that the additional revenue
generated from the sale of carbon credits resulting from project activities, increases the investment return above the benchmark
required rate of return for investment, hence without the carbon project, the proposed FSC certified rubber plantations would not
be planted.
During the field audit, it was found that an initial failure to accurately define the project crediting period led to a chain of several
non-conformities within the PDD and supporting documents. In total 19 corrective action requests (CARs) were identified. CAR
01/10 was raised for the non-conformance with the defined project crediting period. This led to non-conformance with the VCS
rules for ARR rotational forestry projects (see CAR 09/10). These issues were raised during the field audit, and additional clarity
was sought from the VCS following the field audit. Rainforest Alliance has received clarification from the VCS that rotational
forestry projects must include all harvests planned during the project lifetime, and the project crediting period shall reflect the
project lifetime. In the case of this project, the project lifetime is a minimum of one complete rotation, and hence the crediting
period must be a minimum of 42 years instead of 20 years. In the revised documents submitted to Rainforest Alliance, the
crediting period was changed to be consistent with the project lifetime. The crediting period is now 42 years, to reflect the 36
year rotation length, as well as 6 additional years to reflect the staggered planting of rubber tree plantations. Following the field
audit, additional documentation validating the estimated ex ante project scenario carbon stocks was submitted to the audit team.
This additional documentation provided evidence that the ex ante carbon stock estimates were conservative relative to other
known studies on rubber tree plantations globally.
Doc. No. C-56 May2010
Page 14
Below is a complete listing of the 19 corrective action requests identified during the validation audit. Included in each CAR table
is a description of the evidence provided by the Project Proponent to address the non-conformance. Additionally, 8
observations were noted as potential areas of improvement in future revisions of the PDD and supporting documents. At the
issuance of this final report, all 19 corrective action requests have been closed, and the audit team has determined that the
PICA carbon project titles “Promoting Sustainable Development through Natural Rubber Tree Plantations in Guatemala” meets
the VCS 2007.1 standard with a reasonable level of assurance.
3.2
Corrective Action Requests
Note: A non-conformance is defined in this report as a deficiency, discrepancy or misrepresentation that in
all probability materially affects carbon credit claims. Corrective Action Request (CAR) language uses
“shall” to suggest its necessity but is not prescriptive in terms of mechanisms to mitigate the CAR. Each
CAR is brief and refers to a more detailed finding in the appendices.
CARs identified during draft validation reports must be successfully closed by the Project Proponents
before Rainforest Alliance submits the final validation report and opinion to the VCS. Any open CARs will
result in a negative validation statement which lists: (a) all corrective action requests, (b) rationale for each
request, and (c) impact of each material finding on GHG assertion. Qualified validation statements are not
accepted by VCS.
CAR: 01/10
Non-conformance:
Reference Standard & Requirement: 4.1.5, 4.4.2
Within the PDD, PICA describes multiple crediting periods of 10 years. Additionally, the
PDD describes the project lifetime as 30 years, as this represents the planned rotation
length for planted rubber trees, and hence the lifetime of the project. As VCS requires that
the project lifetime is equivalent to the project crediting period for rotational forestry, the
current description of the project crediting period is not in conformance with VCS
requirements.
Corrective Action Request: PICA shall define the project crediting period following the criteria mandated by the VCS.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: PICA has revised the PDD and some of the supporting annexes to reflect a newly defined
42 year crediting period. See detailed findings in section 4.1.5 regarding the changes to
the project crediting period.
CAR Status:
Follow-up Actions:
As the crediting period is now in conformance with the VCS standard, this CAR is closed,
however PICA is strongly encouraged to amend all tables within the PDD to reflect the
increased crediting period to avoid any potential confusion. (see OBS 08/10)
Closed.
Not applicable.
CAR: 02/10
Non-conformance:
Reference Standard & Requirement: 4.1.6.
During the field audit, documented evidence of the proof of ownership, and/or right to GHG
emissions reductions were presented to the audit team. However, as noted in section 5.7
of the VCS 2007.1 standard, these documents are required to be submitted with the PDD.
Corrective Action Request: PICA shall include documented evidence in the PDD or supporting documents that
demonstrates proof of ownership of the project area lands.
Timeline
for 30 days
conformance:
Evidence to close CAR: A file named Annex G Contracts of Assignment of Rights was reviewed. This Annex
consists of old contracts where it is stated that both parties (project proponent and the
owner of the land) agree to work together sharing duties and responsibilities during the
following 13 years. The file also consists of all the new contracts which are in summary, an
Doc. No. C-56 May2010
Page 15
CAR Status:
Follow-up Actions:
amendment of the previous contracts. There was only one basic modification, from 13
years to 20 years starting on May 2007. According to this new contracts, ownership of the
land and ownership of the GHG removals are clear. This closes CAR 02/10.
Closed.
Not applicable.
CAR: 03/10
Non-conformance:
Reference Standard & Requirement: 4.1.10
The schedule presented in the PDD appears to be based on the forest management
activities. This is not in line with the project crediting period of 20 years, creating an
unclear representation of the VCS project schedule.
Corrective Action Request: PICA shall clearly present the project schedule in section 7 of the PDD, in conformance
with the timelines outlined in section 1.6 and 3.4.1.2 of the PDD.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: PICA has revised Table 7 in section 7 of the PDD. This table now clearly illustrates the
project schedule throughout the 42 year crediting period, as well as indicating the variation
between staggered planting crediting periods. The revised table is now in conformance
with the VCS Standard.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
CAR: 04/10
Non-conformance:
Reference Standard & Requirement: 4.1.11, 4.3.2, 4.3.3
The PDD does not clearly explain who is responsible for each phase of the project (e.g.
site preparation, planting, GHG calculations, monitoring, etc.). The table in section 1.15
includes a list of entities involved, a description of the entity, and the function; however, the
responsibility of each participant as well as the relationship between entities is unclear.
Corrective Action Request: PICA shall clearly explain the roles and responsibilities of project participants.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: The revised PDD submitted to RA includes a new table in section 1.16 “Roles and
responsibilities”. This table includes detailed descriptions of relevant project activities, and
identifies the person(s) responsible for implementing identified tasks. With the addition of
the table in the new section 1.16, the PDD is now in conformance with the VCS and
Methodological requirements regarding the description of project roles and responsibilities.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
Doc. No. C-56 May2010
Page 16
CAR: 05/10
Non-conformance:
Reference Standard & Requirement: 4.2.5, 4.2.7
The baseline analysis identified 4 alternative land use scenarios: pastureland, cropland,
FSC rubber plantation without carbon project, and reforestation with timber species. Not
included in this list is a common practice on the farms where project activities are located - rubber plantations without FSC certification and without carbon projects. This was raised
during the field visit, as the audit team inquired why this land use was not considered. The
project proponent identified that this was not a possibility as a result of a statement of
intent signed by PICA at the initiation of project activities, where it stated that new rubber
plantations producing rubber for PICA must be FSC certified. This was confirmed by the
review of the statement of intent (Doc #65) by the audit team. Hence this land use would
not be credible as outlined in #11 of sub-step 1a. However, it is not clear why this isn’t
considered as an initial alternative land use, and then tested with the barrier analysis in
step 2 and 3. The field audit confirmed that non-FSC certified rubber tree plantations are a
likely land use practice in the southern stratum. Although this land use may not pass the
barrier analyses as a result of the PICA statement of intent, it is not transparent to dismiss
this likely land use.
Corrective Action Request: PICA shall include the establishment of a non-FSC rubber tree plantation without the sale
of carbon credits as an alternative land use.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: Sub-step 2a identifies the barriers that prevent Non FSC certified rubber cultivation without
registration as a VCS project from being a likely baseline scenario. In this section, the
Project Proponent outlines why barriers exist that prevent this scenario from likely
happening. The identified barriers corroborate with the findings from the May 2010 field
visit, outlined in section 4.2.5 of this report. The revised additionality argument is now in
conformance with the VCS 2007.1 standard.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
CAR: 06/10
Non-conformance:
Reference Standard & Requirement: 4.3.3, 4.3.4
The Monitoring Plan included in Annex M explains the methodological procedures to be
used during project activities however; it does not clearly define the management of
monitoring data. Similarly this is not outlined in the PDD. During the site visit, it was
apparent that PICA staff was responsible for the management of monitoring, including data
retention and management; however, this was not included in the project documents.
Corrective Action Request: PICA shall include specific guidance regarding the retention of monitoring data.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: A revised English version of Doc #101 was submitted as evidence to close this CAR. The
revised monitoring plan includes a description of the custody of monitoring data, and is
found to be in conformance with the VCS standard.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
Doc. No. C-56 May2010
Page 17
CAR: 07/10
Non-conformance:
Reference Standard & Requirement: 4.4.1, 4.4.3
Table 2 of the AR-ACM0001 methodology requires that CH4 is included for the burning of
woody biomass. During the field visit, burn scars and charred wood from fires used during
site preparation activities was apparent. Interviews with farm managers, farm workers,
and PICA staff confirmed that the burning of pastureland is a common practice as part of
site preparation activities. In the baseline calculations, baseline carbon stocks are
conservatively considered to be instantaneously emitted, but this is not clear within project
documents (see section 4.4.3 below). It is not clear how CH4 associated with the burning
of woody biomass is accounted for as required by the methodology. The methodology
does allow for the omission of CH4, provided project proponents have applied the most
recent version of the “Tool for testing significance of GHG emissions in A/R CDM project
activities”, and this leads to the conclusion that the emission source is insignificant. It is not
evident that PICA applied this tool to test the significance of CH4 emissions from site
preparation activities in order to justify the omission of this emission (see also 4.4.4 below).
Corrective Action Request: PICA shall apply the AR-ACM0001 guidance for justifying the omission of CH4 emissions
from site preparation activities.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: The revised PDD now reflects the site preparation burning of some biomass on Los Patos
and Palmeras farms in section 2.3 of the PDD. As additional evidence of no use of fire as
part of site preparation activities on other farms, signed statements from all farm managers
involved in the project were submitted (see Docs # 102-105). These documents were
reviewed and found to be sufficient evidence of the use of fire as site preparation activities.
CAR Status:
Follow-up Actions:
Furthermore, section 3.4.3.2 of the PDD describes the use of the CDM tool, “Estimation of
emissions from clearing, burning and decay of existing vegetation due to implementation of
an A/R CDM project activity” to estimate emissions from site preparation biomass burning
on Los Patos and Palmeras farms. These emissions are quantified within Annex T Doc
#90, in worksheet “ARACM1 exante Calcs” cell AC8. Recognizing that the emissions from
site preparation burning are now accounted for as required by the AR-ACM00001
methodology, the project is now in conformance with the methodology, and hence the VCS
standard.
Closed.
Not applicable.
CAR: 08/10
Non-conformance:
Reference Standard & Requirement: 4.4.2
The calculation of aboveground live biomass in the baseline scenario, is calculated from
field measurements of dead wood in project areas (see 4.4.1 above). The project
conservatively assumes that all dead wood was live prior to the initiation of site preparation
activities; however, this assumption is not clearly explained in the PDD or in PICA Baseline Report (Doc #36). This assumption is not transparently described in project
documents, although during the field audit the project proponents demonstrated the
measurement procedures that were used to calculate aboveground live biomass from
current dead wood stocks on project areas.
Corrective Action Request: PICA shall clearly explain how aboveground live biomass was estimated in the baseline
scenario.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: Section 9 of the PDD was revised to accurately explain the baseline measurement
process. The revised description reflects the findings from the field audit from interviews
with baseline measurement team members. The revised section 9 of the PDD now clearly
describes the assumptions founded in the baseline carbon stock estimates, and as such is
in conformance with the VCS standard.
CAR Status:
Closed.
Doc. No. C-56 May2010
Page 18
Follow-up Actions:
Not applicable.
CAR: 09/10
Non-conformance:
Reference Standard & Requirement: 4.4.2
Recognizing that the project crediting period must reflect the project lifetime, when the
crediting period is corrected to reflect the planned harvest (as noted in CAR 01/10), the
VCS rule for ARR and IFM rotational forestry projects is required. The calculation of the
maximum number of carbon credits to be assigned to the project (as defined above),
exceeds the carbon stock value averaged across the proposed 30 year rotation period.
This is not in conformance with the requirements outlined in Step 6 of the Guidance for
AFOLU Projects.
Corrective Action Request: PICA shall calculate the maximum number of carbon credits to be assigned to the project
following the VCS guidance for rotational forestry ARR projects (outlined in Step 6 of the VCS Guidance for AFOLU
Projects).
Timeline
for 30 Days.
conformance:
Evidence to close CAR: In order to address CAR 09/10, the crediting period of the project has been increased to 42
years. Additionally, PICA submitted a revised version Doc 91, which includes the
calculation of the maximum number of available credits to be earned by the project,
following the guidance of the VCS. In cell AL54 of worksheet “ARACM1 exante Calcs” of
Doc 91, the average carbon stock over the crediting period is calculated. The average
carbon stock is based on the summed values from column AL which are derived in the Doc
90 in the worksheet titled “ARACM1 exante calcs”.
Ex ante carbon stock estimates are based on biomass to DBH ratios obtained from the
Morales 2000 thesis (see column C in the “ARACM1 exante calcs” sheet in Doc 90). In
this column, the biomass equation from p.24 of the Morales 2000 thesis is applied to the
estimated diameters of the trees based on the Marupa Growth Model and field studies.
However, the use of the Morales biomass equations results in extremely high biomass
values. At the culmination of the rubber tree plantation cycle, the total tree (as the Morales
equation estimates total tree dry weight in kilograms and this is then converted to CO2e for
the entire project area) as 3,959,381 tCO2e (note this is the net carbon stock, versus the
average carbon stock used for estimation of total number of credits to be issued as per
VCS guidance on rotational forestry projects). As there are 2,366.16 ha in the project
area, this represents a total of 1,673.4 tCO2e per ha. This would then be 456.3 tC per ha,
or approximately 912.6 t.d.m per ha (assuming 0.5 tC/t.d.m). When compared to other
forest type values in the IPCC 2006 Guidelines for National GHG Inventories, Chapter 4
Forestry (see Table 4.7 on p.53), the biomass levels estimated for the proposed project
activities are greater than any other forest type.
It should be noted that the carbon stock values cannot be compared directly to those
values in Table 4.7 of the IPCC report, as these values are for aboveground biomass
(tonnes t.d.m. per ha), however the comparison does serve as an indicator of the high
estimated carbon stocks in this project relative to other forest types globally. Recognizing
the high biomass estimates associated with the use of the Morales 2000 biomass
equations, the ex ante estimates were validated against other known biomass stocks for
rubber plantations in order to justify the extremely high carbon stock estimates. PICA
submitted additional documentation on October 7th, where the ex ante carbon estimated in
the project area were compare to 4 other known allometric equations rubber plantations
globally. This comparison found that the ex ante carbon stock estimates for project
activities were within the range of other values found in similar forest types.
As additional evidence of validation of the use of the Morales equations, PICA compared
the Morales allometric equations to 3 other known allometric equations (see Doc 110 and
111). This validation with the additional evidence found in similar rubber tree plantations
Doc. No. C-56 May2010
Page 19
CAR Status:
Follow-up Actions:
around the world provides evidence to validate the high ex ante estimates within the PDD,
and as such this CAR is now closed.
Closed.
Not Applicable.
CAR: 10/10
Non-conformance:
Reference Standard & Requirement: 4.4.3
Baseline carbon stock estimates were calculated on an area basis. As GHG estimates
were calculated on a per area basis, the exclusion of vegetated areas within sample plots
in baseline estimates is acceptable, as these areas were not included in ex ante or ex post
estimates. However, these excluded areas are not articulated well within the PDD, or
supporting documents. The project GHG emission estimates are based on the assumption
that project area is calculated from planting density, rather than remotely sensed
measurements, or field based measurements. This is not clearly articulated in the PDD or
project documents.
Corrective Action Request: PICA shall clearly explain how project area was calculated.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: The PDD has been revised to include section 4.3.2.4 Project area calculation and GHG
emission estimates. The revised PDD now clearly describes the multiple processes used
to calculate project area, and as such this CAR is closed.
CAR Status:
Follow-up Actions:
Closed.
Not Applicable.
CAR: 11/10
Non-conformance:
Reference Standard & Requirement: 4.4.4
Field visits to project sites, as well as interviews conducted during field visits confirmed
that statements within the PDD regarding site preparation activities were inaccurate. Field
visits to project areas confirmed that burning was utilized as part of project site-preparation
at Los Patos farm, as well as at Palmeras.
Corrective Action Request: PICA shall accurately describe site-preparation activities within the PDD.
Timeline
for
conformance:
Evidence to close CAR:
CAR Status:
Follow-up Actions:
Doc. No. C-56 May2010
30 Days.
See response to CAR 07/10. The PDD is now in conformance with this requirement.
Closed.
Not applicable.
Page 20
CAR: 12/10
Non-conformance:
Reference Standard & Requirement: 4.4.5
Within the spreadsheet Calculation of BSL Removals Project Emissions Net Removals
LK.xlsx (Doc #55), ∆Ct is calculated in column G of worksheet “Net GHG anthro.removals”.
These values are calculated from the sum of column H in worksheet “Change SOC pool”
and column C in worksheet “Sum changes in project”. Column C in worksheet “Sum
changes in project” is calculated in column I in worksheet “Ex ante project removals” or
spreadsheet PDD Final Estimation (Doc #56). However, the worksheet “Ex ante project
removals” does not appear to separate the project area into strata, as defined in the PDD.
Equation 14 of AR-ACM0001 requires that ∆Ct is calculated by summing the individual
pools in each stratum, see equation 14 below:
It is not clear how the two strata are summed in the ex ante calculations to estimate ex
ante changes in carbon stocks.
Corrective Action Request: PICA shall follow AR-ACM0001 guidance for the calculation of ex ante carbon stock
changes.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: As part of the evidence submitted to RA to close the open CARs, all annexes were
included. The Project Proponent included revised Doc #90, which presents a clear
estimation of ex ante carbon stock changes (though please note those findings relevant to
CAR 09/10). Furthermore, Doc 88 has been revised to correctly estimate the change in
soil carbon in column H of the worksheet “change SOC pool”.
CAR Status:
Follow-up Actions:
As noted above, Doc #90 presents a calculation method where identified carbon pools are
summed to estimate ex ante carbon sequestration. Additional review found that the
revised calculation spreadsheets are now in conformance with the methodology.
Closed.
Not applicable.
CAR: 13/10
Non-conformance:
Reference Standard & Requirement: 5.1.
The farms are privately owned, or are leased by PICA under long-term 50 year contracts.
Additionally, a 13 year GHG agreements exist with land owners. However these contracts
do not exist for the full length of the project crediting period.
Corrective Action Request: PICA shall increase the risk of unclear land tenure to medium to account for the lack of a
GHG agreement for the full length of the project crediting period.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: Since there are now new contracts between parties (project proponent and owner of the
land) where it is stated that they agree duties and responsibilities regarding GHG removals
and ownership of the land, CAR 13/10 is no longer applicable.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
CAR: 14/10
Non-conformance:
Reference Standard & Requirement: 5.1.
The justification of low geologic risk in the PDD focuses on earthquakes, which may be a
low risk in the region. However, risks of volcanic eruption or landslides on steep slopes
during heavy rains are potential risks to project areas.
Corrective Action Request: PICA shall reflect the increased risk in the region from volcanic eruptions and landslides,
or provide evidence to justify the low risk rating.
Doc. No. C-56 May2010
Page 21
Timeline
for 30 days.
conformance:
Evidence to close CAR: Through independent studies, PICA demonstrated there is no need to rise from low to
medium the risk rating. See more details in 5.1. Risk factors applicable to all project types.
CAR Status:
Closed
Follow-up Actions:
Not applicable
CAR: 15/10
Non-conformance:
Reference Standard & Requirement: 5.2
The VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination
defines a long term commitment period as “projects with rotation periods of more than 25
years and a commitment to replant, and those with primarily a forest rotation and habitat
emphasis”. Similarly, the tool describes medium-term commitment periods as “projects
with rotation periods of more than 25 years, but no commitment to replant”. This project
has a 30 year rotation period with a commitment to replant, however the forest restoration
and habitat emphasis are not the primary focus of project activities. The primary focus of
the afforestation project is the production of rubber latex. Recognizing the medium risk
rating associated with project longevity does not accurately reflect the impermanence of
the credits issued related to project activities. The current version of the PDD does not
accurately reflect the project lifetime (see CAR 01/10) in the project crediting period.
Recognizing that the current project crediting period does not include the planned harvest
at year 30 (see CAR 09/10), the current version of the PDD describes a significant
commitment period risk, as the effects of the planned timber harvest are not included
within the carbon calculations (see CAR 09/10).
Corrective Action Request: PICA shall raise the risk rating associated with project longevity to high to reflect the
definitions of commitment periods in the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
Determination.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: As the crediting period has been increased to 42 years, including a 36 year rotation within
the rubber tree plantations, as well as a commitment to replant, this CAR is no longer
applicable.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
CAR: 16/10
Non-conformance:
Reference Standard & Requirement: 5.2
The project land is privately owned, however during field visits to Los Patos, auditors
learned that PICA leased the land from Ingenio Magdalena S.A. The VCS Tool for AFOLU
Non-Permanence Risk Analysis and Buffer Determination states that “rented or tenantoperated land” must use a medium risk rating. As not all project areas are owned by the
project proponent, the low risk rating does not reflect the VCS defined risk definitions.
Corrective Action Request: PICA shall increase the risk rating associated with ownership type to medium to reflect
the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination definition for rented lands.
Timeline
for 30 days.
conformance:
Evidence to close CAR: The updated PD was reviewed specifically in page 14, PICA increased the risk to medium.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
Doc. No. C-56 May2010
Page 22
CAR: 17/10
Non-conformance:
Reference Standard & Requirement: 5.2
The risk rating associated with management capacity is unclear, as different language
from the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination is
used. The PDD states “Substantial previous project experience (<5 projects) with on-site
management team”. This is not one of the categories defined in the VCS Tool for AFOLU
Non-Permanence Risk Analysis and Buffer Determination. PICA does have substantial
experience with rubber tree plantation development; however, PICA has not demonstrated
substantial previous project experience with the development of carbon projects.
Recognizing that PICA has limited experience in carbon project development, it is not clear
why the risk rating is not medium.
Corrective Action Request: PICA shall amend the risk rating associated with management capacity of project
developer to reflect the definitions used in the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
Determination.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: The revised PDD now states:
“Substantial previous project experience (≥ 5 projects) with on-site management team”
CAR Status:
Follow-up Actions:
CAR: 18/10
Non-conformance:
This now reflects the categories defined in the VCS Tool for AFOLU Non-Permanence
Risk Analysis and Buffer Determination. Furthermore, PICA has included additional
evidence of the management experience with carbon measurement and quantification in
Docs #106-109. With the clarified text in the PDD and additional evidence as proof of the
teams carbon quantification skills, combined with the evidence of PICA’s management
experience reviewed during the field audit, the audit team has obtained enough evidence
to assure that PICA is in conformance with this requirement, and “low” is an appropriate
risk rating for this category.
Closed.
Not applicable.
Reference Standard & Requirement: 5.2.1
The 13April2010 VCS Program Update was released after PICA submitted their project
documents to Rainforest Alliance for review. However, communications with the VCS
confirmed that the 13April2010 VCS Program Update is effective immediately upon
release, and hence the PICA project shall be in accordance with the program update.
The VCS 13April2010 Program Update states that the greatest risk rating shall determine
the overall self risk rating. The risk assessment included within the PDD is not in
conformance with this requirement.
Corrective Action Request: PICA shall determine the self risk rating following the guidance of the 13April2010 VCS
Program Update.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: The revised PDD now states in Section 1.11 on p.9:
“Based on both the general risk and the project specific risk analyses performed below, the
project falls into the “medium” risk category. In the case of ARR projects under the VCS,
the buffer requirement for a project with a “medium” risk category rating is 20-40% of
issued credits. In terms of project specific risks, the majority of the risk factors have a
“low” risk rating. This is also true for “general” risks that apply to all AFOLU projects. For
these reasons, a 20% buffer is applied to the project.”
As the highest identified risk within the self assessment is identified as medium, this is now
Doc. No. C-56 May2010
Page 23
CAR Status:
Follow-up Actions:
CAR: 19/10
Non-conformance:
in conformance with the 13April2010 VCS Program Update.
Closed.
Not applicable.
Reference Standard & Requirement: 5.2.1
The 13April2010 VCS Program Update was released after PICA submitted their project
documents to Rainforest Alliance for review. However, communications with the VCS
confirmed that the 13April2010 VCS Program Update is effective immediately upon
release, and hence the PICA project shall be in accordance with the program update.
The VCS 13April2010 Program Update states that the greatest buffer contribution relative
to the self assessment risk rating shall be used, unless evidence is provided to justify a
lower buffer withholding. The buffer determination included within the PDD is not in
conformance with this requirement.
Corrective Action Request: PICA shall determine the buffer contribution following the guidance of the 13April2010
VCS Program Update.
Timeline
for 30 Days.
conformance:
Evidence to close CAR: As noted in the evidence submitted to close CAR 18/10, the PDD has been revised to
conform to the 13April2010 VCS Program Update. In the revised PDD self risk
assessment in section 1.11, 4 our 19 self assessment risk categories are identified as
medium. Additionally, PICA has identified efforts to help mitigate these risks, and reduce
the chance of their effect on the project. Recognizing this, a self assessment risk of 20%
is justified, and is appropriate given the level of risk and mitigation effort identified.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.
Note: Observations are issued for areas that the auditor sees the potential for improvement in
implementing standard requirements or in the quality system; observations may lead to direct
non-conformances if not addressed
3.3
Observations
OBS 01/10
Reference Standard & Requirement: 4.2.1
The PDD describes management plans specific to the project farms, and references these plans as a source for
additional information. Management plans exist for several of the farms; however, management plans were not
available during the audit for all farms. In Step 3 of section 2.4 of the PDD implies that management plans exist for
all farms, which supporting evidence during the field audit could not be provided.
Observation: PICA should include management plans for all farms within the annexed documents.
OBS 02/10
Reference Standard & Requirement: 4.2.2
The project uses an approved CDM methodology (AR-ACM0001 V03) “Afforestation and reforestation of degraded
land”. As this is an approved CDM methodology, it is accepted by the VCS. The PDD states in section 2.1 on p.20:
“The project is fully applicable to methodology AR-ACM0001 V03.” It appears that the project follows the approved
methodology. It is should be noted that the most current version of the methodology (version 4). In Step 2 of section
2.4 of the PDD the methodology is described as AR-ACM001 V01, rather than V03.
Observation: PICA should correctly label the version of theAR-ACM0001 methodology in Step 2 of Section 2.4 of the
PDD.
Doc. No. C-56 May2010
Page 24
OBS 03/10
Reference Standard & Requirement: 4.2.7
In section 2.5 Step 1 of the PDD, PICA identifies the credible alternative land use scenarios to the proposed VCS
project. Note that in the section, as well as in multiple sections prior to this the PDD uses the term CDM where it
appears to mean VCS, and also the term CERs appears to be used instead of VCUs (see Step 0).
Observation: PICA should correctly reference the VCS and all applicable acronyms associated with VCS project
activities throughout the PDD.
OBS 04/10
Reference Standard & Requirement: 4.4.2
It is not clear how the all of the identified carbon SSRs are incorporated into the baseline calculations of carbon stock
changes. Specifically, Table 8 on p.46 includes the stratification of the project area, however it is unclear how the
additional SOC carbon pool is incorporated into the ex ante baseline GHG estimation. Furthermore, it appears that
the average live tree biomass levels for the north and south strata have been switched in Table 7, as this is opposite
from the values presented in the spreadsheet Calculation of BSL Removals, Project Emissions, Net Removals, LK
(Doc #88) presented to the audit team by Erin Swails of Winrock International on May 10th, 2010.
Observation: PICA should correct the values presented in table 7 for average live tree biomass in the north and
south strata.
OBS 05/10
Reference Standard & Requirement: 4.4.2
Table 15 in section 4.4, in the third column, no label of this column is included, leading to ambiguity within the table.
Observation: PICA should label all column headings in Table 15 on p.54 section 4.4 of the PDD.
OBS 06/10
Reference Standard & Requirement: 4.4.7
Table 15 of section 4.4 of the PDD shows the net calculation of estimated cumulative anthropogenic GHG removals.
As mentioned in the PDD, it is assumed that emissions from the baseline carbon pools are instantaneously released
into the atmosphere. This is reflected in the first 7 rows of table 15 where the estimate baseline removals are
accounted for. It should be noted that table 15 comes from the spreadsheet Calculation of BSL removals, Project
Emissions, Net Removal (Doc #55) in Annex N. In this spreadsheet the total baseline removals are estimated in
column AH as a sum of carbon stocks in the two project strata. In column AH these values are labelled as a total
baseline GHG removals, however these values are labelled as “net GHG removals” in Table 15. It is not clear how
these values are net values, and if in fact they do represent net values, why net values are used instead of total
baseline values.
Observation: PICA should clarify why net values for baseline removals are included in table 15 of section 4.4 of the
PDD.
OBS 07/10
Reference Standard & Requirement: 4.5.3
The PDD does not acknowledge any negative environmental or socio-economic impacts. On the contrary the PDD
notes that the project is expected to have a net positive impact on the environment and surrounding population. The
PDD does not expand on what these positive impacts will be.
Observation: PICA should describe the “net positive impact on the environment and on the surrounding population”
described in section 5 of the PDD.
New OBS 08/10
Reference Standard & Requirement: 4.1.5, 4.4.5
Multiple tables within the PDD (see Tables 6, 8, 10, and 17 as well as the worksheet “SOC Removals” in Doc # 90)
do not reflect the changed crediting period. All relevant tables and supporting annexes shall be revised to reflect the
changed crediting period.
Observation: PICA should amend all tables within the PDD to reflect the increased crediting period to avoid any
potential confusion.
3.4 Actions taken by the Project Proponent Prior to Report Finalization
Following the issuance of the Draft Validation Report, the Project Proponent submitted additional evidence and a revised PDD
to address the identified non-conformances found in during the field audit. This evidence was found by the audit team to be
Doc. No. C-56 May2010
Page 25
sufficient to close all open CARs. A listing of the revised documents and additional evidence is included in section 2.4 of this
report. Additionally, findings from the audit team assessment of additional documentation and revised documents are included
in section 4 of this report.
Doc. No. C-56 May2010
Page 26
4 Validation Findings
4.1
Project Design
The conclusions regarding (as required by VCS 2007.1, Section 5.7 PDD requirements):
project title, purpose(s) and objective(s);
Type of GHG project;
project location, including geographic and physical information allowing for the unique identification and delineation of
the specific extent of the project;
The conclusions regarding (as required by VCS 2007 Validation Template, Section 3.1):
the technology used
project duration, crediting time and project start date
Ownership
o Proof of title
o Double counting and whether the project participated in another emission trading programme
Project applicability to the VCS for projects rejected under other GHG programme (if applicable)
Whether the project is eligible under the VCS
Any relevant findings relating to the project should be summarised in this section.
4.1.1 Project title, Purposes and Objectives
Findings from Audit on 30 JUNE 2010
The carbon project title: Promoting Sustainable Development through Natural Rubber Tree Plantations in Guatemala,
accurately reflects the proposed project. The additionality argument of this carbon project is founded in the financial analyses
based on the Project Proponent’s dedication to promoting sustainable development of rubber plantations in Guatemala. This
dedication is expressed in the text on page 3 of the 2007 PICA statement of intent, which declares the Project Proponents
dedication to the promotion of Forest Stewardship Council Certification of rubber tree plantations. The primary argument of
the project proponent is that by meeting the 10 principals of FSC certification, PICA will be able to increase the sustainability
of their rubber plantations both environmentally and economically through the pursuit of new markets for the sale of Nontimber Forest Products (NTFPs).
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.1.2 Type of GHG project
Findings from Audit on 30 JUNE 2010
The PDD clearly states on page 1:
“The project can be classified as an Afforestation, Reforestation, and Revegetation (ARR) project under the VCS Standard.”
Afforestation, Reforestation, and Revegetation (ARR) projects are one of the four project types listed by the VCS 2007.1
Standard under the AFOLU project types. The project is not currently a grouped project; however, the PDD does clearly state
that the Project Proponent does intend to register this project as a grouped project in the future. Additionally, interviews
during the field audit with staff members of PICA indicated that the project has acquired additional degraded pasture lands,
which it intends to enroll as similar reforestation of degraded pasture lands. However, the enrollment of additional project
lands as a “grouped project” is not currently included in the scope of the project activities.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.1.3 Project Location
Findings from Audit on 30 JUNE 2010
PICA employed Geotecnologica to produce numerous maps of the project area. Included in these maps (see Doc #29 – 34)
are georeferenced project area boundaries. These maps are included as supplementary documents in Annex H of the PDD.
Figure 1 of the PDD includes smaller scale maps identifying the location of the 7 farms involved in project activities.
Doc. No. C-56 May2010
Page 27
Furthermore, Table 1 on p.4 of the PDD provides the Lat/Long coordinates of individual farms involved in project activities.
On May 6th, Geotecnologica staff responsible for the remote sensing analysis demonstrated the GIS methodology used to
perform the eligibility analysis as well as the techniques used to create project area maps. This was demonstrated with the
original GIS files/layers used to develop maps included in the annexed documents. Finally, the GIS maps were confirmed
during field visits visually, as well as using the original hand held GPS equipment used to georeference project area
boundaries, as well as project monitoring plots and sampling plot boundaries.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.1.4 Technology used
Findings from Audit on 30 JUNE 2010
PICA has more than 50 years of rubber cultivation in Guatemala. Combined with experience, PICA uses proven plantation
establishment techniques, and has established specific nurseries to provide stock for the plantings. Additionally, PICA has
well established plans to mitigate mortality within plantations and maximize individual tree growth.
During the field visit, PICA demonstrated technical capacity within company-owned nurseries to provide clonal seedlings used
for reforestation activities. During field visit to the clonal nursery, PICA staff with the assistance of farm workers
demonstrated the grafting techniques used to graft desired clones onto rubber tree seedlings. Furthermore, visits to existing
rubber tree plantations owned by PICA and PICA’s business partners involved in project activities, demonstrated the
technical capacity to develop rubber tree plantations in Guatemala.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.1.5 Project duration, crediting time and project start date
Findings from Audit on 30 JUNE 2010
The PICA project crediting period is 20 years, which is the minimum crediting period length for AFOLU projects under the
VCS. The project start date is May 31, 2007, which is the date that the formal decision to commit financial resource to the
development of a carbon project was signed by the board of directors of PICA; however, the crediting period start date is
June 30th, 2007, as this is the date of the first project activity (site preparation).
The PDD states on p.5:
“The VCS project crediting period is ten years, which will be renewed once for a total of 20 years.”
The VCS Guidance for AFOLU Projects defines the project crediting period on p.17 as:
“Project crediting period: This is the period of time for which the net GHG emissions reductions or removals will be verified,
which under the VCS is equivalent to the project lifetime. The project must have a robust operating plan covering this period.
The project crediting period for ALM projects focusing exclusively on emissions reductions of N2O, CH4 and/or fossil-derived
CO2 shall not exceed 10 years, renewable at most two times19. The project crediting period for all other AFOLU projects
shall be between 20 and 100 years.”
The PDD describes the use of two 10 year crediting periods; however, this is not allowed under VCS standards for AFOLU
ARR projects, as noted above. Additionally, as noted in the quote above, the VCS define the project crediting period as
“equivalent to the project lifetime”. Discussions with VCS staff, confirmed that the project lifetime for AFOLU ARR and IFM
projects practicing rotational forestry must include a minimum of one complete rotation length, as this is included in the
project lifetime. The current crediting period for this project is ambiguously described as 20 years, which is not in
conformance with the rotation length that is described in the PDD as 30 years (see section 4.4.2 below). (CAR 01/10)
Conformance
Yes
No
N/A
CAR 01/10: PICA shall define the project crediting period following the criteria mandated by the VCS.
CAR/OBS
Doc. No. C-56 May2010
Page 28
Findings from Audit on 22 September 2010
PICA has revised the PDD and supporting annexes to reflect a newly defined 42 year crediting period. This crediting period
reflects the planned 36 year rubber tree plantation rotation length, as well as the 6 year staggered planting of the project area.
The revised 42 year crediting period is now equal to a minimum of one complete rotation length of the entire project area, and
hence equal to the project lifetime. The revised crediting period is now in conformance with the VCS standard.
However, it should be noted that multiple tables within the PDD (see Tables 6, 8, 10, and 17 as well as the worksheet “SOC
Removals” in Doc # 90) do not reflect the changed crediting period. All relevant tables and supporting annexes shall be
revised to reflect the changed crediting period. (OBS 08/10)
As the crediting period is now in conformance with the VCS standard, this CAR is closed, however PICA is strongly
encouraged to amend all tables within the PDD to reflect the increased crediting period to avoid any potential confusion.
Conformance
Yes
No
N/A
CAR 01/10 (Closed)
CAR/OBS
OBS 08/10: PICA should amend all tables within the PDD to reflect the increased crediting period to avoid
any potential confusion.
4.1.6 Ownership/Proof of Title/Right of Use
Findings from Audit on 30 JUNE 2010
The project area consists of seven different farms, located in three zones: Suchitepéquez, Izabal, and Alta Verapaz. PICA
S.A. as the project proponent, does not own any of those farms by itself. All the farms belong to different Sociedades
Anónimas (LLC), where PICA has the explicit rights to manage and sell the carbon credits.
Land ownership is defined in Table 1 on p.4 of the PDD. This table includes the Number of the Registered Legal Title,
however, the actual titles, or copies of titles are not included in the annexed documents. The VCS 2007.1 standard, section
5.7 requires:
“The VCS PD shall be accompanied by Proof of Title, which shall contain one of the following:
• a legislative right;
• a right under local common law;
• ownership of the plant, equipment and/or process generating the reductions/
removals; or
• a contractual arrangement with the owner of the plant, equipment or process that grants all reductions/removals to
the proponent.”
During the field visit, land tenure documents for project areas were provided by project proponents. A sub-sample of these
documents was thoroughly reviewed by auditors. Additionally, PICA has entered into contractual agreements with farm
owners, declaring the ownership of the GHG rights through the year 2022, a 13 year period. It should be noted that clear
ownership of the GHG rights for the entire 20 year project crediting period is not established by these contracts. The VCS
requires only one of these types of documents (see excerpt from the VCS 2007.1 standard above), and the contractual
arrangement with land owners was presented as supplementary evidence in addition to the proof of ownership documents for
each farm, hence the documents are in conformance with the standard. However, these documents were not included in the
annexed documents with the PDD, as required by the VCS. (CAR 02/10)
Conformance
Yes
No
N/A
CAR 02/10: PICA shall include documented evidence in the PDD or supporting documents that
CAR/OBS
demonstrates proof of ownership of the project area lands or clear ownership of the GHG removals
associated with project activities.
Findings from Audit on 22 September 2010
A file named Annex G Contracts of Assignment of Rights was reviewed. This Annex consists of old contracts where it is
stated that both parties (project proponent and the owner of the land) agree to work together sharing duties and
Doc. No. C-56 May2010
Page 29
responsibilities during the following 13 years. The file also consists of all the new contracts which are in summary, an
amendment of the previous contracts. There was only one basic modification, from 13 years to 20 years starting on May
2007. According to this new contracts, ownership of the land and ownership of the GHG removals are clear. This closes
CAR 02/10.
Conformance
Yes
No
N/A
CAR 02/10 (Closed)
CAR/OBS
4.1.7 Double counting and whether the project participated in another emission trading programme
Findings from Audit on 30 JUNE 2010
Section 1.13 of the PDD states:
“The project is not seeking to generate any other environmental credits other than carbon credits associated with the VCS.
FSC certification for project activities will not generate environmental credits.”
This is in conformance with the requirements of the VCS standard described in section 5.7 of the VCS 2007.1 standard. This
was validated through interviews with PICA staff during the field audit. Conversations with PICA staff revealed that the
project proponent does intend to possibly transfer the project to the CDM, following validation to the VCS. As this is not
definite, and is based on favourable markets, this was described as a possibility, and the consequences of the transfer (e.g.
loss of VCUs contributed to the Buffer) were acknowledge by the Project Proponent, in addition to the VCS double counting
rules.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.1.8 Project applicability to the VCS for projects rejected under other GHG programme (if applicable)
Findings from Audit on 30 JUNE 2010
Section 1.14 of the PDD states that this is not applicable for this project. This was confirmed by PICA staff during the field
audit.
Conformance
Yes
No
N/A
CAR/OBS
Not Applicable
4.1.9 Whether the project is eligible under the VCS
Findings from Audit on 30 JUNE 2010
Section 1.16 of the PDD describes the project eligibility. The project conforms to the eligibility requirements of the VCS. The
project uses an approved CDM methodology (AR-ACM0001 v03). Additionally, the project utilizes multiple CDM tools to
determine project eligibility. The project applied “Procedures to demonstrate the eligibility of lands for afforestation and
reforestation CDM project activities” with an adaptation to accommodate updated criteria in the VCS 2007.1 standard (all
areas have not been forested for at least ten years prior to the proposed VCS project start date).
A combination of aerial photographs, orthophotos, multispectral Landsat images, and forest cover maps, were used to
determine historic land use practices. Annex H includes project area maps, which show the results of the forest cover
eligibility analysis performed. The DNA of Guatemala definition of a forest was used to perform the analysis (see p. 19 of the
PDD). The analysis was performed for a 20 year period to ensure conformance with VCS, CDM, and FSC eligibility rules for
afforestation activities. During the field audit, Geotecnologica demonstrated the methodology and techniques used to
conduct the land use eligibility assessment (see 4.1.3 above). The auditors noted that the VCS requires only a 10 year
eligibility assessment, and expanded to a 20 year assessment of land use practices may be too great, as it may not capture
potential reforestation and subsequent clearing (e.g. short rotation forestry) within the 20 year eligibility assessment period.
In some of the project areas (e.g. Los Patos) the abandoned pasture was reforested in 2007 and 2008, so onsite validation of
land-use practices was not possible.
In order to obtain evidence that intensive short term rotational forestry was not practiced on project lands during the 20 year
period within the eligibility assessment, neighbours of the farms were contacted by phone, by the audit team. All of the
neighbours interviewed (six) mentioned that prior to establish the rubber plantations, the land was used for agricultural
Doc. No. C-56 May2010
Page 30
projects such as sugar cane, pasture land or cattle. No forestry plantations existed in the project area during 1997-2007.
Some parts of natural forest still exist in the farms, but as riparian forests and according to maps, those areas are not
considered within the project area.
PICA and Geotecnológica submitted additional remotely sensed data from 1996 to 2000 for each of the farms included in the
project area. The additional maps submitted for review confirm that the project areas were not forested within the 20 year
period included in the original eligibility analysis. On this topic, people interviewed mentioned that it is a common practice to
stratify the land according to the potential of the land, so the owner can decide whether the area should be planted with sugar
cane, or be used for another agricultural use. In this case, the project area for VCS purposes includes all the lands that had
no potential for predominant use in the zone (pasture or sugar cane), so no intensive short term rotational forestry existed
prior or during 1997-2007. Finally, according to Forest National Institute (INAB) representatives it is not a common practice
either, to plant trees and replace it with another one that promises better financial incomes in short terms.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.1.10 Chronological plan for project initiation and monitoring
Findings from Audit on 30 JUNE 2010
Section 7 of the PDD outlines a clear schedule for project activities. However, this schedule appears to be based on the
forest management activities and not on the VCS project activities. The end date for the project is listed as 2037,
representing a 30 year project length. This is not in conformance with the proposed 20 year crediting period for this project
(see section 1.6 of the PDD). It is unclear if the scheduled presented in section 7 reflects the carbon project activities, or the
proposed forest management plan for the plantation.
Additionally, the schedule presented in section 7 shows that monitoring activities will begin in 2009. This contradicts what is
written in section 3.4.1.2 of the PDD where it states:
“The following monitoring activities shall be conducted in the first three years of plantation establishment...”
It is not clear how “plantation establishment” is defined. It is assumed that this period of time represents the period from the
initial site preparation (which began in 2007 at some sites) to the first tapping of trees (which is described as approximately 6
- 7 years after planting). According to the schedule presented in section 7, no monitoring is preformed during the first two
years of the project crediting period, which does not follow the guidance presented in the monitoring section. (CAR 03/10)
VCS 2007.1 (section 5.7) states that are VCS PD must contain,
"chronological plan for the date of initiating project activities, date of terminating the project, frequency of monitoring and
reporting and the project period, including relevant project activities in each step of the GHG project cycle.” (p.15)
Conformance
Yes
No
N/A
CAR 03/10: PICA shall clearly present the project schedule in section 7 of the PDD, in conformance with
CAR/OBS
the timelines outlined in section 1.6 and 3.4.1.2 of the PDD.
Findings from Audit on 22 September 2010
PICA has revised Table 7 in section 7 of the PDD. This table now clearly illustrates the project schedule throughout the 42
year crediting period, as well as indicating the variation between staggered planting crediting periods. The revised table is
now in conformance with the VCS Standard.
Conformance
Yes
No
N/A
CAR 03/10 (Closed)
CAR/OBS
4.1.11 Roles and responsibilities
Findings from Audit on 30 JUNE 2010
Section 1.15 of the PDD defines the roles and responsibilities of the 5 major proponents of this project. Included in this
Doc. No. C-56 May2010
Page 31
section is a table that lists the primary contact for the primary project proponent (PICA) as well as contacts for the four
different land owners. It is not clear why the primary contact person for the four land owners has the same address as PICA.
In section 1.2 of the PDD, it states that four different land owners own the 7 different farms included in this project. It is not
clear from the table in section 1.15 if the landowners of Agropalmeras, S.A., and Inversiones Agrícolas Palafox, S.A., are
employees of PICA, or if they are being represented by employees.
During the field audit, the ownership structure of the Grupo Agroindustrial Occidente, which is the parent company to PICA,
was explained in great detail to the audit team. This ownership structure is not well articulated within the PDD, which creates
some confusion for readers. However, explanations during the field audit clarified the ownership structure described in the
PDD.
The PDD does not clearly explain who is responsible for each phase of the project (e.g. site preparation, planting, GHG
calculations, monitoring, etc.). The table in section 1.15 includes a list of entities involved, a description of the entity, and the
function; however, the responsibility of each participant as well as the relationship between entities is unclear. (CAR 04/10).
Conformance
Yes
No
N/A
CAR 04/10: PICA shall clearly explain the roles and responsibilities of project participants.
CAR/OBS
Findings from Audit on 22 September 2010
The revised PDD submitted to RA includes a new table in section 1.16 “Roles and responsibilities”. This table includes
detailed descriptions of relevant project activities, and identifies the person(s) responsible for implementing identified tasks.
With the addition of the table in the new section 1.16, the PDD is now in conformance with the VCS and Methodological
requirements regarding the description of project roles and responsibilities.
Conformance
Yes
No
N/A
CAR 04/10 (Closed)
CAR/OBS
4.1.12 Observation of local laws and regulations
Findings from Audit on 30 JUNE 2010
Section 1.10 of the PDD describes the relevant Guatemalan laws, and the demonstration of compliance by the project
proponent. Included in the annexed documents (see annex C), are Environmental Impact Assessments for each of the farms
where EIAs are required, and the diagnostic reports for those farms where EIAs are not required. The project appears to be
in compliance with all applicable Guatemalan laws.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.2
Baseline
The conclusions regarding (as required by VCS 2007.1, Section 5.7 PDD requirements):
Conditions prior to project initiation
The conclusions regarding (as required by VCS 2007 Validation Template, Section 3.2):
Correct application and justification of selected baseline methodology,
Approval of the baseline methodology,
Application of methodology deviations or revisions (if applicable),
Conformance with methodology applicability conditions (added by Rainforest Alliance to aid reporting clarity)
Appropriate setting of baseline scenario, and
Assessment and demonstration of additionality should be summarised in this section.
4.2.1 Conditions prior to project initiation
Findings from Audit on 30 JUNE 2010
Step 3 of section 2.4 describes the pre-existing conditions and the baseline strata. The baseline conditions were identified
through the use of land use cover maps, satellite and aerial imagery, literature reviews of site information (see 4.1.3 above),
Doc. No. C-56 May2010
Page 32
as well as field observations and measurements. Furthermore, management plans exist for several of the farms; however,
management plans were not available during the field audit for all farms. In Step 3 of section 2.4 of the PDD implies that
management plans exist for all farms; however, evidence to support this was not available at the time of the field audit. (OBS
01/10) The baseline report included in Annex I (see Doc #36) further described the initial baseline conditions.
Visits to project sites were not able to validate conditions prior to project initiation in all cases, as most of the project areas
have already been planted, and hence baseline conditions no longer exist. However, in the case of Rio Frio, where planting
has not yet begun, baseline conditions and measurements were able to be validated by the audit team.
Common practice within the region was validated by the audit team. Degraded pastureland and sugar cane production were
the dominant land uses other than other rubber tree plantations. For example, at Los Patos, adjacent lands to project areas
were recently cleared and burned to begin sugar cane production, and similar land use practices were witnessed in other
adjacent lands during the field audit.
Conformance
Yes
No
N/A
OBS 01/10: PICA should include management plans for all farms within the annexed documents.
CAR/OBS
Findings from Audit on 22 September 2010
The findings from the 30th June 2010 report are still relevant in the revised PDD.
Conformance
Yes
No
N/A
OBS 01/10
CAR/OBS
4.2.2 Approval of the baseline methodology
Findings from Audit on 30 JUNE 2010
The project uses an approved CDM methodology (AR-ACM0001 V03) “Afforestation and reforestation of degraded land”. As
this is an approved CDM methodology, it is accepted by the VCS. The PDD states in section 2.1 on p.20:
“The project is fully applicable to methodology AR-ACM0001 V03.”
The project follows the approved methodology. It should be noted that the most current version of the methodology (version
4) was not used for the project design, as this version was released following the initiation of project activities. During the
field audit, discussions with PICA staff clarified that v. 3 of AR-ACM0001 was used, as v. 4 was not yet released at the time of
the project development initiation. It should be noted that version 3 of the methodology was valid from 08 April 2009 to 08
April 2010, however the CDM accepts requests for registration with version 3 of AR-ACM001 until 08 December 2010 (see
http://cdm.unfccc.int/methodologies/DB/X4VOLW3Y7IJCH9WXSBXBC2Q0JKG9UZ/view.html), and as such the use of this
version is acceptable following the VCS guidance on methodology element revisions. Additionally, in Step 2 of section 2.4 of
the PDD the methodology is described as AR-ACM001 V01, rather than V03 (OBS 02/10).
Conformance
Yes
No
N/A
OBS 02/10: PICA should correctly label the version of the AR-ACM0001 methodology in Step 2 of Section
CAR/OBS
2.4 of the PDD.
Findings from Audit on 22 September 2010
The revised PDD now consistently and correctly labels the AR-ACM0001 v3 methodology used for project activities.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised
4.2.3 Application of methodology deviations or revisions (if applicable)
Findings from Audit on 30 JUNE 2010
The PDD states in section 2.1 on p.20:
Doc. No. C-56 May2010
Page 33
“The project is fully applicable to methodology AR-ACM0001 V03.”
Neither the PDD nor the project proponent acknowledged any deviations or revisions to the methodology. During the field
audit no significant deviations or revisions to the AR-ACM0001 methodology were identified.
Conformance
Yes
No
N/A
CAR/OBS
Not applicable.
4.2.4 Conformance with methodology applicability conditions
Findings from Audit on 30 JUNE 2010
Section 2.2 of the PDD describes the justification of the chosen methodology, and why it is applicable to the project activity.
This section addresses the four key applicability criteria outlined in section 1.4 of AR-ACM0001 V04 (note that the most
recent version of the methodology is quoted below).
Applicability Condition
Finding
The A/R CDM project activity is implemented on degraded Although the field audit could not validate the pre-existing
lands, which are expected to remain degraded or to continue conditions in all cases (as noted above most project areas
to degrade in the absence of the project, and hence the land had already been planted at the time of the validation audit),
cannot be expected to revert to a non-degraded state without the audit team was able to collect additional evidence to
human intervention
confirm that the project areas were in fact degraded
pasturelands as identified in the remote sensing analysis.
This evidence was collected through interviews with farm
managers, farm workers, farm neighbours, and monitoring
teams who conducted field measurements of project areas
prior to planting activities. Furthermore, visual confirmation
of surrounding land use, and qualitative assessment of
common land use on adjacent properties confirmed that the
project areas were likely to remain degraded or continue to
degrade in the absence of the project activities.
Encroachment of natural tree vegetation that leads to the Continued grazing of project activities, coupled with the
establishment of forests according to the host country common practice in the area of burning pastureland to
definition of forest for CDM purposes is not expected to occur
prevent regeneration of forests, would likely continue to
prohibit the encroachment of natural tree vegetation on
project lands.
Flooding irrigation is not applied in the project activity
The PDD explicitly states: “No flooding irrigation will take
place in the project activities”. No flooding irrigation was
identified during field visits to farms.
If at least a part of the project activity is implemented on The PDD explicitly states: “The project does not take place
organic soils, drainage of these soils is not allowed and not on organic soils”. This was confirmed during the field visits
more than 10% of their area may be disturbed as result of soil to project areas by the audit team.
preparation for planting
The establishment of project shall not decrease availability of The establishment of the project will not decrease the
fuelwood
availability of fuelwood, as no fuelwood is currently collected
on project areas according to project proponents, and
interviews with stakeholders during the field visit. On the
contrary, interviews with rubber tappers and plantation
managers in existing project proponent rubber plantations
revealed that the collection of fuelwood from fallen trees and
limbs in active rubber tree plantations is allowed, and
consequently the establishment of rubber tree plantations
will likely increase the availability of fuelwood to rubber
tappers working in the plantations.
Conformance
Yes
No
N/A
CAR/OBS
Doc. No. C-56 May2010
No CAR or OBS raised.
Page 34
4.2.5 Correct application and justification of selected baseline methodology
Findings from Audit on 30 JUNE 2010
The AR-ACM0001 v. 4 methodology requires that project proponents use the most recent version of the “Combined tool to
identify the baseline scenario and demonstrate additionality in A/R CDM project activities”. This requirement was followed by
the Project Proponent, and described in section 2.5 of the PDD. Furthermore, the PDD describes how it meets the two
applicability criteria for the A/R Methodological tool (see section I. Applicability Conditions of the A/R Methodological Tool
“Combined tool to identify the baseline scenario and demonstrate additionality in A/R CDM project activities”).
Baseline Determination Step
Findings
Step 0 Preliminary screening based on the starting date of the The project starting date was identified as May 31, 2007,
A/R project activities
which is the date that the formal decision to commit financial
resource to the development of a carbon project was signed
by the board of directors of PICA; however, the crediting
period start date is June 30th, 2007, as this is the date of the
first project activity (site preparation) (see section 4.1.5
above). Both of these dates are well after 31 Dec 1999 as
identified in number 7 of the A/R Methodological Tool.
Furthermore the financial analysis included in Annex N (Doc
#56-59) provides evidence of the intent for the sale of VCUs
from the initiation of project activities.
Step 1 Identification of alternative land use scenarios to the The baseline analysis identified 4 alternative land use
proposed A/R CDM project activity
scenarios: pastureland, cropland, FSC rubber plantation
without carbon project, and reforestation with timber
species. Not included in this list is the common practice on
the farms where project activities are located in, rubber
plantations without FSC certification and without carbon
projects. This was raised during the field visit, as the audit
team inquired why this land use was not considered, and the
project proponent identified that this was not a possibility as
a result of a statement of intent signed by PICA at the
initiation of project activities, where it stated that new rubber
plantations on project lands must be FSC certified. This
was confirmed by the review of the statement of intent (Doc
#65) by the audit team. Hence this land use would not be
credible as outlined in #11 of sub-step 1a. However, it is not
clear why this isn’t considered as an initial alternative land
use, and then tested with the barrier analysis in step 2 and
3. The field audit confirmed that non-FSC certified rubber
tree plantations are a likely land use practice in the southern
stratum. Although this land use may not pass the barrier
analyses as a result of the PICA statement of intent, it is not
transparent to dismiss this likely land use.(CAR 05/10)
Step 2 Barrier Analysis
Barrier analyses for each alternative land uses were
conducted by the project proponent and are outlined on p3133. This follows the A/R Methodological Tool.
Step 3 Investment Analysis
Investment analysis barriers were conducted for land use
practices following the step identified by the A/R
Methodological Tool. Investment ratings were confirmed by
the audit team (see Doc #86).
Step 4 Common practice analysis
The common practice analysis is included on p. 39 of the
PDD and is in conformance with the A/R Methodological
Tool. Specifically the PDD notes that although rubber
plantations do exist in the south, large-scale FSC certified
rubber plantations are “not common practice”. Finally the
PDD includes step 5 Impact of VCS registration, an
Doc. No. C-56 May2010
Page 35
Conformance
CAR/OBS
additional step than those required by the A/R
Methodological Tool. This step describes the financial
analysis that shows the additional funding provided by the
sale of VCUs allows the project to secure finance from
private equity of the bundled project participants by reaching
the required rate of return (RRR), which demonstrates the
commitment of project funding. The financial argument was
further reviewed during the field audit.
All financial
calculations were explained by PICA staff responsible for
the financial calculations. Specifically, financial modelling
(Doc #62-64) were reviewed by the audit team, and the
derivation and source of literature values were validated by
the audit team. As the financial analysis was founded under
the overestimated number of VCUs (see CAR 09/10), it is
not clear if once corrected the RRR threshold will be met.
The additionality argument is founded on the basis of the
sale of carbon credits allowing the project to meet the RRR.
Yes
No
N/A
CAR 05/10: PICA shall include the establishment of a non-FSC rubber tree plantation without the sale of
carbon credits as an alternative land use.
Findings from Audit on 22 September 2010
Section 2.5 of the revised PDD now includes:
“Land use scenario d: Non FSC certified rubber cultivation without registration as a VCS project
The traditional and common practice land use is crop production (see Land use scenario b), pasture lands (see land use
scenario a) and small scale natural rubber tree plantations (Non FSC certified and without Registration as a VCS project).
The project proponent was committed since 2007 to lead the creation of incentives to responsibly increase the rate of rubber
plantation’s establishment. In order to do so, the need to create diversified sources of revenue that allows rubber plantations
to compete, under a financial perspective, with traditional land use scenarios, was identified. In addition, the historical high
fluctuation of rubber prices introduces uncertainty to financial models and expected future profits. This situation marks the
need to diversify revenues from rubber plantations different from rubber production. This scenario in the south is prevented
because the all PICA’s new model here explained is different from the traditional and common practice land use scenario,
which is coincident with Land use scenario d. Although rubber production in the south exists, almost all rubber production in
southern Guatemala is produced by smallholders with plantations of less than 50 ha in size. Only 5% of the plantations
associated with the Rubber Producers Association of Guatemala (Gremial de Huleros de Guatemala) are greater than 200 ha
in size. The size of each proposed project plantation in the South is at least double the most common size of rubber
plantations in Guatemala (50 ha) up to seven or twelve times the size of typical rubber plantations. Therefore, the project will
lead to an increased rate of reforestation in southern Guatemala that would not occur in the absence of the project activity
and that this results from direct intervention by the project activity, and can be considered additional.”
Sub-step 2a identifies the barriers that prevent Non FSC certified rubber cultivation without registration as a VCS project from
being a likely baseline scenario. In this section, the Project Proponent outlines why barriers exist that prevent this scenario
from likely happening. Included in these barriers are: ecological conditions creating barriers for agricultural production,
investment barriers for FSC certified rubber cultivation without registration as a VCS project, and technological barriers (most
notably with infrastructure) in the northern region of Guatemala where rubber production is not a common practice.. The
identified barriers corroborate with the findings from the May 2010 field visit, outlined in section 4.2.5 of this report. The
revised additionality argument is now in conformance with the VCS 2007.1 standard.
Conformance
Yes
No
N/A
CAR 05/10 (Closed)
CAR/OBS
4.2.6 Appropriate setting of baseline scenario
Findings from Audit on 30 JUNE 2010
Doc. No. C-56 May2010
Page 36
The baseline land use was established as the current land use practice, pastureland. This was selected through the use of
the appropriate A/R Methodological tool, as required by the AR-ACM0001. However, it should be noted that not all likely land
use scenarios were considered (see CAR 05/10).
Conformance
Yes
No
N/A
CAR 05/10
CAR/OBS
Findings from Audit on 22 September 2010
See findings from 4.2.5
Conformance
Yes
CAR 05/10 (Closed)
CAR/OBS
No
N/A
4.2.7 Assessment and demonstration of additionality should be summarised in this section.
Findings from Audit on 30 JUNE 2010
In section 2.5 Step 1 of the PDD, PICA identifies the credible alternative land use scenarios to the proposed VCS project.
Note that in the section, as well as in multiple sections prior to this, the PDD uses the term CDM where it appears to mean
VCS, and also the term CERs appears to be used instead of VCUs (see Step 0). (OBS 03/10)
In Step 1, the following alternative land use scenarios are identified:
Continuation of the pre-project land use: pastureland
Crop production
FSC certified rubber cultivation without registration as a VCS project
Reforestation through direct planting of timber species without registration as a VCS project
Step 2 of section 2.5 identifies the barriers present for each land use type, in order to identify the most likely base line
scenario. Step 2.c determined that pastureland (the current land use practice) is the most likely scenario. Step 3 utilized a
financial benchmark analysis; where the investment rate of return for the project was compared with a required rate of return
obtained from a benchmark done in Equity Funds for Timberland.
The addition of revenue from the sale of carbon credits (proponents estimate price of carbon at USD $6 per ton CO2e)
increases the rate of return from 11% to 12.6%, which allows the project to meet its required rate of return benchmark
(identified as 12%). This is how the proponent presents that a financial barrier exists in the implementation of the project
activities without the revenue from the sale of carbon credits.
Additionally, Step 4 included an assessment of the common practice in the land; however, this was restricted to rubber
plantations. The assessment did not include other reforestation activities that may be common in the area.
The additionality argument of the proposed project hinges on the following two points:
1) Common practice in the southern stratum of non-FSC certified rubber tree plantations is not a credible alternative
land-use scenario based on the Statement of Intent signed by PICA in 2007; and
2) The sale of VCUs from project activities provides the additional revenue to exceed the 12% required rate of return
identified by project proponents (obtained from literature values, which were validated during the field audit (see Doc #
62, 71 and 87)
As the initiation of rubber tree plantations without FSC certification is not included as a land use scenario, the selection of the
most appropriate land use scenario is not transparent. During the field audit, the project proponent explained why this was
not included (CAR 05/10); however, this is not transparent in the PDD, and leads to confusion as to why this scenario was not
included.
Conformance
Yes
No
N/A
CAR 05/10
CAR/OBS
Doc. No. C-56 May2010
Page 37
OBS 03/10
Findings from Audit on 22 September 2010
See findings from 4.2.5 above regarding the closure of CAR 05/10.
Conformance
Yes
No
CAR 05/10 (Closed)
CAR/OBS
4.3
N/A
Monitoring Plan
The conclusions regarding (as required by VCS 2007 Validation Template, Section 3.3):
Approval of the monitoring methodology,
Correct application and justification of selected monitoring methodology, and
Whether the monitoring plan provides detailed information related to the collection and archiving of all relevant data
needed to:
 Estimate or measure emissions occurring from GHG sources, sinks and reservoirs
 Determine the baseline emissions
 Estimate changes in emissions from the site should be summarised in this section.
The conclusions regarding conformance with VCS specific criterion relating to monitoring (VCS 2007.1 section 5.11 and
Tool for AFOLU Methodological Issues).
4.3.1
Approval of the monitoring methodology
Findings from Audit on 30 JUNE 2010
The project follows the AR-ACM0001 methodology, which is an approved afforestation and reforestation methodology under
the CDM. The justification for this methodology is described in section 2.2 of the PDD.
During the field audit, the PICA staff member responsible for monitoring activities demonstrated the monitoring methodology
used by project activities. Additionally, 4 monitoring crew members were interviewed, and also participated in the
demonstration of field measurements used in baseline inventory, as well as field measurement techniques used in monitoring
plots. Furthermore, 10% of monitoring plots (which were all permanently monumented) were visited at los Patos and
Palmeras farms. Additionally, monitoring plot field data sheets and measurements (see Doc #83) were verified through field
measurements at 10% of the plots at Los Patos and Palmeras farms.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.3.2 Correct application and justification of selected monitoring methodology
Findings from Audit on 30 JUNE 2010
Annual monitoring will be conducted by a “professional team consisting of a coordinator, a field technician, and a data
analyst. The coordinator will report directly to the project manager”. However the PDD does not specifically define who is
responsible for organizing such a team, and who the field technicians will be (CAR 04/10). The VCS 2007.1 standard states
in section 5.11:
“Monitoring procedures should include the following:
• purpose of monitoring;
• types of data and information to be reported - including units of measurement;
• origin of the data;
• monitoring methodologies, including estimation, modelling, measurement or
calculation approaches;
• monitoring times and periods, considering the needs of intended users;
• monitoring roles and responsibilities;
• GHG information management systems, including the location and retention of stored data.”
Doc. No. C-56 May2010
Page 38
The PDD references the PICA Monitoring Plan (see footnote 92 in section 3.2), however the VCS 2007.1 standard, as well as
the AR-ACM0001 methodology require that monitoring methodologies (defined in AR-ACM0001 as SOPs) are included in the
PDD.
Conformance
CAR/OBS
Yes
see CAR 04/10
Findings from Audit on 22 September 2010
See findings from 4.1.11 above
Conformance
Yes
CAR 04/10 (Closed)
CAR/OBS
No
N/A
No
N/A
4.3.3
Conformance with VCS specific criterion relating to monitoring (VCS 2007.1 section 5.11 and Tool for AFOLU
Methodological Issues Step 6)
Findings from Audit on 30 JUNE 2010
In addition to the requirements of the selected methodology used for project activities, the VCS 2007.1 standard has
additional requirements related to monitoring procedures.
From VCS 2007.1 Section 5.11: The project proponent shall establish and maintain criteria and procedures for obtaining,
recording, compiling and analysing data and information important for quantifying and reporting GHG emissions and/or
removals relevant for the project and baseline scenario (i.e. GHG information system). Monitoring procedures should include
the following:
VCS Required Monitoring Procedures
Findings
Purpose of monitoring
The purpose of the monitoring is described in the Monitoring Plan included
in Annex M (see Doc #51). The purpose is described as monitoring current
carbon stocks as well as increase in carbon stocks from growth of
plantations. Additionally, the purpose of monitoring is described in section
3.2 of the PDD as:
“The purpose of monitoring is to gather information on plantation growth
and project activities that will allow the estimation of VERs at the end of an
accreditation period.”
Types of data and information to be reported - Section 3.3 of the PDD includes a table of all data and parameters that will
including units of measurement
be monitored.
Monitoring methodologies, including estimation, Modelling methodologies are included in the Monitoring Plan Annex M (see
modelling, measurement or calculation
Doc #51). Monitoring methodologies were demonstrated during field visits
approaches
as described in section 4.3.1 above.
Monitoring times and periods, considering the The monitoring frequency of each parameter to be monitored is included in
needs of intended users
the table in section 3.3 of the PDD. Generally, plots will be re-measured
annually, following the guidance in the Monitoring Plan.
As noted above (see CAR 04/10), neither the Monitoring Plan, nor the PDD
Monitoring roles and responsibilities
explicitly describe the roles and responsibilities related to monitoring
project activities.
GHG information management systems,
The Monitoring Plan included in Annex M explains the methodological
including the location and retention of stored
procedures to be used during project activities; however, it does not clearly
Doc. No. C-56 May2010
Page 39
data
Conformance
CAR/OBS
define the management of monitoring data. Similarly this is not outlined in
the PDD. During the site visit, it was apparent that PICA was responsible
for the management of monitoring, including data retention and
management; however, this was not specified in the project documents.
(CAR 06/10)
No
N/A
Yes
CAR 04/10
CAR 06/10: PICA shall include specific guidance regarding the retention of monitoring data.
Findings from Audit on 22 September 2010
See findings from 4.1.11 above regarding the closure of CAR 04/10.
In order to address CAR 04/10, the table in section 1.16 of the PDD was revised. This table now clearly identifies who is
responsible for the maintenance of monitoring data.
Furthermore, a revised English version of Doc #101 was submitted as evidence to close this CAR. The revised monitoring
plan includes a description of the custody of monitoring data, and is found to be in conformance with the VCS standard.
Conformance
Yes
No
N/A
CAR 04/10 (Closed)
CAR/OBS
CAR 06/10 (Closed)
4.3.4
Whether the monitoring plan provides detailed information related to the collection and archiving of all relevant
data
Findings from Audit on 30 JUNE 2010
The Monitoring Plan included in Annex M includes specific guidance regarding methodological procedures to be employed by
monitoring teams (see 4.3.3 above). However, as mentioned in 4.3.3 above, the plan does not include guidance as to the
retention and archiving of monitoring data.
Conformance
Yes
No
N/A
CAR 06/10
CAR/OBS
Findings from Audit on 22 September 2010
See findings from 4.3.3 above.
Conformance
Yes
CAR 06/10 (Closed)
CAR/OBS
4.4
No
N/A
Calculation of GHG Emissions
The conclusions regarding (as required by VCS 2007 Validation Template, Section 3.4):
The appropriateness of the source, sink and reservoir (pools),
The correctness and transparency of formulas and factors used,
The assumptions made for estimating GHG emission reductions, and
Uncertainties should be summarised in this section.
4.4.1 The appropriateness of the source, sink and reservoir (pools)
Findings from Audit on 30 JUNE 2010
AR-ACM0001 Methodology requires the following sinks:
Aboveground biomass
Belowground biomass
Additionally, the methodology requires that deadwood, litter, and soil organic carbon be included unless it is conservative to
not include these pools. The PICA project includes aboveground and belowground biomass. Dead wood and litter are
Doc. No. C-56 May2010
Page 40
omitted based on conservative assumptions. Soil organic carbon (SOC) is included in the south, and this pool is not included
for those lands in the north. The justification for the inclusion or exclusion of SSRs appears to be in conformance with the
AR-ACM0001 methodology.
During the interviews with the field crews responsible for field measurements for both monitoring and baseline estimates, it
was discovered that aboveground biomass in the baseline scenario was calculated from dead wood. This was due to the fact
that baseline monitoring began after the existing shade trees and live fences on degraded pasturelands were removed to
begin project activities. For this reason, all down dead wood was measured, and measurements were input into allometric
equations to calculate the dead wood as aboveground live biomass. Following this method, dead wood was not included as it
was all calculated as live wood. This is in conformance with the required pools within the methodology. Table 2 of the ARACM0001 methodology requires that CH4 is included for the burning of woody biomass.
During the field visit, burn scars and charred wood from fires used during site preparation activities was apparent. Interviews
with farm managers, farm workers, and PICA staff confirmed that the burning of pastureland is a common practice as part of
site preparation activities and were used in site preparation activities at Los Patos. During the baseline calculations, baseline
carbon stocks are conservatively considered to be instantaneously emitted; however, this is not clear within project
documents (see section 4.4.3 below). However, it is not clear how CH4 associated with the burning of woody biomass is
accounted for as required by the methodology. The methodology does allow for the omission of CH 4, provided project
proponents have applied the most recent version of the “Tool for testing significance of GHG emissions in A/R CDM project
activities”, and this leads to the conclusion that the emission source is insignificant. It is not clear that PICA applied this tool to
test the significance of CH4 emissions from site preparation activities, in order to justify the omission of this emission (see also
4.4.4 below). (CAR 07/10)
Conformance
Yes
No
N/A
CAR 07/10: PICA shall apply the AR-ACM0001 guidance for justifying the omission of CH4 emissions from
CAR/OBS
site preparation activities.
Findings from Audit on 22 September 2010
The revised PDD now reflects the site preparation burning of some biomass on Los Patos and Palmeras farms in section 2.3
of the PDD. As additional evidence of no use of fire as part of site preparation activities on other farms, signed statements
from all farm managers involved in the project were submitted (see Docs # 102-105). These documents were reviewed and
found to be sufficient evidence of the use of fire as site preparation activities.
Furthermore, section 3.4.3.2 of the PDD describes the use of the CDM tool, “Estimation of emissions from clearing, burning
and decay of existing vegetation due to implementation of an A/R CDM project activity” to estimate emissions from site
preparation biomass burning on Los Patos and Palmeras farms. These emissions are quantified within Annex T Doc #90, in
worksheet “ARACM1 exante Calcs” cell AC8. Recognizing that the emissions from site preparation burning are now
accounted for as required by the AR-ACM00001 methodology, the project is now in conformance with the methodology, and
hence the VCS standard.
Conformance
Yes
No
N/A
CAR 07/10 (Closed)
CAR/OBS
4.4.2 The correctness and transparency of formulas and factors used
Findings from Audit on 30 JUNE 2010
It is not clear how the all of the identified carbon SSRs are incorporated into the baseline calculations of carbon stock
changes. Specifically, Table 8 on p.46 includes the stratification of the project area, however it is unclear how the additional
SOC carbon pool is incorporated into the ex ante baseline GHG estimation. Furthermore, it appears that the average live
tree biomass levels for the north and south strata have been switched in Table 7, as this is opposite from the values
presented in the spreadsheet Calculation of BSL Removals, Project Emissions, Net Removals, LK (Doc #88) presented to
the audit team by Winrock International on May 10th, 2010. (OBS 04/10)
The calculation of aboveground live biomass in the baseline scenario is calculated from field measurements of dead wood in
project areas (see 4.4.1 above). The project conservatively assumes that all dead wood was live prior to the initiation of site
preparation activities, but this assumption is not clearly explained in the PDD or in PICA - Baseline Report (Doc #36). This
Doc. No. C-56 May2010
Page 41
assumption is not transparently described in project documents, although during the field audit the project proponents clearly
demonstrated the measurement procedures that were used to calculate aboveground live biomass from current dead wood
stocks on project areas. (CAR 08/10)
Note: Table 15 in section 4.4, in the third column, no label of this column is included, leading to ambiguity within the table.
(OBS 05/10)
It is not clear how the GHG estimations account for the criteria outlined in Step 6 of the Guidance for AFOLU Projects, where
it states:
“In the case of ARR or IFM rotation forestry projects, the maximum number of carbon credits to be assigned to the project
shall not exceed the project’s net carbon stock benefits (i.e., project minus baseline carbon stocks, including long-lived wood
products) averaged across the current harvesting/rotation cycle adjusted for project emissions of CO2, N2O and CH4, and
leakage.
This is to prevent proponents from unrealistically inflating the project’s carbon benefits, and number of credits issued, by
timing verification events to coincide with peak carbon stocks and not accounting for subsequent carbon losses from
harvesting.”
During the field audit this issue was raised to the Project Proponent’s attention, and the Project Proponent explained that
since no harvesting or timber stand improvement (TSI) work is scheduled during the project crediting period then this rule is
not applicable. Further clarification was sought by the audit team through multiple discussions with Naomi Swickard of the
VCS. These conversations revealed that the VCS defines the project crediting period in the VCS 2007.1 standard as:
“Project Crediting Period
For non-AFOLU projects and ALM projects focusing exclusively on emissions reductions of N2O, CH4 and/or fossil-derived
CO2, a maximum of 10 years which may be renewed at most two times. For AFOLU projects other than such ALM projects, a
minimum of 20 years up to a maximum of 100 years.”
This is further specified in the guidance for AFOLU projects as:
“Project crediting period: This is the period of time for which the net GHG emissions reductions or removals will be verified,
which under the VCS is equivalent to the project lifetime. The project must have a robust operating plan covering this period.
The project crediting period for ALM projects focusing exclusively on emissions reductions of N2O, CH4 and/or fossil-derived
CO2 shall not exceed 10 years, renewable at most two times19. The project crediting period for all other AFOLU projects
shall be between 2020 and 100 years.”
Discussions with Naomi Swickard of the VCS clarified that for projects that intend to practice rotational forestry, the project
crediting period shall include the planned rotation as this is a part of the project lifetime. Recognizing that the proposed
project activities intend to harvest the planted rubber trees following 30 years of growth, the proposed 20 year project
crediting period does not represent the project lifetime as required by the VCS Guidance for AFOLU Projects (see also 4.1.5
above). As the final harvest is considered to be part of the project lifetime, as specified by the VCS, the VCS guidance for
ARR and IFM rotational forestry projects applies. CAR 01/10
Recognizing that the project crediting period must reflect the project lifetime, as described above, when the crediting period is
corrected to reflect the planned harvest (as noted in CAR 01/10), the VCS rule for ARR and IFM rotational forestry projects is
required. The calculation of the maximum number of carbon credits to be assigned to the project (as defined above),
exceeds the averaged carbon stock value across the proposed 30 year rotation period. This is not in conformance with the
requirements outlined in Step 6 of the Guidance for AFOLU Projects.(CAR 09/10)
Conformance
Yes
No
N/A
CAR 01/10
CAR/OBS
CAR 08/10: PICA shall clearly explain how aboveground live biomass was estimated in the baseline
scenario.
CAR 09/10: PICA shall calculate the maximum number of carbon credits to be assigned to the project
following the VCS guidance for rotational forestry ARR projects (outlined in Step 6 of the VCS Guidance
Doc. No. C-56 May2010
Page 42
for AFOLU Projects).
OBS 04/10: PICA should correct the values presented in table 7 for average live tree biomass in the north
and south strata.
OBS 05/10: PICA should label all column headings in Table 15 on p.54 section 4.4 of the PDD.
Findings from Audit on 22 September 2010
CAR 01/10:
See findings above from 4.1.5 regarding the closure of CAR 01/10.
CAR 08/10:
Section 9 of the PDD was revised to accurately explain the baseline measurement process. The revised description reflects
the findings from the field audit from interviews with baseline measurement team members. The revised section 9 of the PDD
now clearly describes the assumptions founded in the baseline carbon stock estimates, and as such is in conformance with
the VCS standard.
CAR 09/10:
In order to address CAR 09/10, the crediting period of the project has been increased to 42 years. Additionally, PICA
submitted a revised version Doc 91, which includes the calculation of the maximum number of available credits to be earned
by the project, following the guidance of the VCS, In cell AL54 of worksheet “ARACM1 exante Calcs” of Doc 91, the average
carbon stock over the crediting period is calculated. The average carbon stock is based on the summed values from column
AL which are derived in the Doc 90 in the worksheet titled “ARACM1 exante calcs”.
Ex ante carbon stock estimates are based on biomass to DBH ratios obtained from the Morales 2000 thesis (see column C in
the “ARACM1 exante calcs” sheet in Doc 90). In this column, the biomass equation from p.24 of the Morales 2000 thesis is
applied to the estimated diameters of the trees based on the Marupa Growth Model and field studies. However, the use of
the Morales biomass equations results in extremely high biomass values. At the culmination of the rubber tree plantation
cycle, the total tree (as the Morales equation estimates total tree dry weight in kilograms and this is then converted to CO 2e
for the entire project area) as 3,959,381 tCO2e. As there are 2,366.16 ha in the project area, this represents a total of 1,673.4
tCO2e per ha. This would then be 456.3 tC per ha, or approximately 912.6 t.d.m per ha (assuming 0.5 tC/t.d.m). When
compared to other forest type values in the IPCC 2006 Guidelines for National GHG Inventories, Chapter 4 Forestry (see
Table 4.7 on p.53), the biomass levels estimated for the proposed project activities are greater than any other forest type.
It should be noted that the carbon stock values cannot be compared directly to those values in Table 4.7 of the IPCC report,
as these values are for aboveground biomass (tonnes t.d.m. per ha); however, the comparison does serve as an indicator of
the high estimated carbon stocks in this project relative to other forest types globally. Recognizing the high biomass
estimates associated with the use of the Morales 2000, the ex ante estimates were validated against other known biomass
stocks for rubber plantations. In order to validate the high ex ante estimates of carbon stocks within the project area, PICA
produced the additional documentation numbers 110 – 120. Included in document 111 is a comparison from 5 different
sources of additional studies of rubber plantations around the world. These studies found similar estimates of carbon stocks
within rubber tree plantations.
As additional evidence of validation of the use of the Morales equations, PICA compared the Morales allometric equations to
3 other known allometric equations (see Doc 110 and 111). This validation with the additional evidence found in similar
rubber tree plantations around the world provides evidence to validate the high ex ante estimates within the PDD.
OBS 04/10:
PICA has corrected Table 7 in the revised PDD.
OBS 05/10:
PICA has labelled all table headings in Table 15 of the revised PDD.
Conformance
Yes
No
CAR
01/10
(Closed)
CAR/OBS
Doc. No. C-56 May2010
N/A
Page 43
CAR 08/10 (Closed)
CAR 09/10 (Closed)
4.4.3
Calculation of emissions in the baseline scenario (ex-ante estimate)
Findings from Audit on 30 JUNE 2010
Baseline calculations were based on field inventory of the project sites conducted from December 2009 to January 2010. Field
inventories were conducted by local workers and PICA employees, and field inventory data was reviewed by PICA employees
or Winrock International (see Doc #37-42). The project area was stratified following the guidance in the AR-ACM0001
methodology (resulting in two strata (north and south) separated geographically, and representing distinct stratum).
Sample plots represented complete management blocks (ranging from ~10 to 30 ha), where all trees within the block were
measured. This data was then summarized and used to calculate average carbon stock values per hectare per stratum.
Within sample plots, all remaining dead wood at the time of the baseline sampling was measured and calculated as
aboveground live biomass (see CAR 07/10). During the field visit, the audit team confirmed that existing vegetated areas
within sample plots, such as riparian areas, that were not cleared, were not included in baseline measurements. Baseline
carbon stock estimates were then calculated on an area basis. As GHG estimates were calculated on a per area basis, the
exclusion of vegetated areas within sample plots in baseline estimates is acceptable, as these areas were not included in ex
ante or ex post estimates. However, these excluded areas are not articulated well within the PDD, or supporting documents.
The project GHG emission estimates are based on the assumption that project area is calculated from planting density, rather
than remotely sensed measurements or field based measurements. This is not clearly explained in the PDD or project
documents. (CAR 10/10) During the field audit, PICA staff explained that project area was calculated based on actual planting
densities of rubber trees at each farm. Following this method, areas that were not planted decrease the planting density on a
per hectare density, and hence are excluded from the GHG emission estimates.
Growth curves from the Marupa Growth Model were used to estimate carbon sequestration in the baseline scenario (see Table
6 in the PDD). Communications with Winrock International post-field audit confirmed that the data used to derive the Marupa
Growth Model was sourced from the Recavarren P. 2007 Marupa plantation volume accumulation study in the Loreto Region.
Winrock International informed the auditors that they obtained unpublished data from a study that was conducted for a previous
project in Peru to estimate biomass accumulation in the baseline. The data used to model foregone growth in the baseline
scenario was included in the Marupa Growth Model (Doc #53). Communications with Winrock International post-field audit
confirmed that this data is unpublished, so validation of published data was not possible.
During the field audit, PICA staff responsible for baseline scenario estimates, ex ante estimates, and ex post calculations
demonstrated the calculation methodology used by the project to calculate GHG emissions associated with baseline and
project activities. During these demonstrations, allometric equations obtained from Chave et al. (Doc #43) were confirmed.
Conformance
Yes
No
N/A
CAR 07/10
CAR/OBS
CAR 10/10: PICA shall clearly explain how project area was calculated.
Findings from Audit on 22 September 2010
See findings from 4.4.1 regarding the closure of CAR 07/10.
The PDD has been revised to include section 4.3.2.4 Project area calculation and GHG emission estimates. This section
states:
“The planting areas listed in Table 4 Ex ante strata in the PD correspond to the project areas identified in the eligibility
analysis.
Areas were calculated using two different methods:
• The first one was using GIS information specifically to establishing project boundary which corresponds to eligible
area (see section 2.4, Step 1: Project boundary and eligibility of land, for detail explanation).
• The area calculated by planting density was used in the whole ex ante GHG emissions estimations. This method
was used given the available information from project’s plantations established during years 2007, 2008 and 2009,
Doc. No. C-56 May2010
Page 44
which represent real values. The project area was calculated using this method with propose of calculating ex ante
GHG sequestration estimates by rubber tree plantations. The use of this method allowed the exclusion of small
vegetated areas within baseline boundaries, keeping conservative ex ante GHG sequestration estimates.
During the field audit, discussions with the project proponent confirmed that planting density was used to calculate ex ante
estimates, and GIS was used for baseline estimates. The differentiation between these two methods is also highlighted in
section 1.4 of the revised PDD where it states:
“The real or effective planted area corresponds to 2,252.23 hectares which is given by planting density of natural rubber
plantations. This area excludes other vegetated areas within project boundary such as creeks, borders’ vegetation, and small
spots of vegetation.”
The methodology goes on to further clarify this point in section 1.17 where the use of GIS data for the delineation of the
project boundary at the start of the project is further explained. Finally, section 2.4 of the revised PDD where the stratification
of the project area is described.
Conformance
Yes
No
N/A
CAR 07/10 (Closed)
CAR/OBS
CAR 10/10 (Closed)
4.4.4 Calculation of emissions from project activities (ex-ante estimate)
Findings from Audit on 30 JUNE 2010
AR-ACM0001 requires that increased GHG emissions as a result of the implementation of the proposed project activity with the
project boundary are calculated if determined to be significant (see section 5.2 of AR-ACM0001). In section 2.3 the PDD
states:
“Biomass burning will not occur as part of site preparation activities, therefore there is no need to account for CH 4 emissions in
the project.”
However, during the field visit interviews with farm managers, farm workers, project proponent, as well as visual inspection of
the project areas confirmed that fire was used during site preparation activities (see also 4.4.1 above). Section 3.3.3.2 of the
PDD also states:
“Considering the limited combustible material in degraded lands, under the applicability condition of AR‐ACM0001 fire is not
likely to be a major source of GHG emissions in the site preparation. Furthermore, as defined in the Management Plans,
burning will not be applied as a part of site preparation activities, and non‐CO2 GHG emissions are assumed to be equal to
zero.”
This was repeated again on p. 51 of the PDD in section 4.3.2.3. Field visits to project sites, as well as interviews conducted
during field visits confirmed that these statements regarding site preparation activities were inaccurate. Field visits to project
areas confirmed that burning was utilized as part of project site-preparation at Lost Patos farm as well as at Palmeras. (CAR
11/10)
Conformance
Yes
No
N/A
CAR 11/10: PICA shall accurately describe site-preparation activities within the PDD.
CAR/OBS
Findings from Audit on 22 September 2010
As noted in 4.4.1 above, regarding the closure of CAR 07/10, the PDD now clearly describes the site-preparation activities.
The PDD is now in conformance with this requirement.
Conformance
Yes
No
N/A
CAR 11/10 (Closed)
CAR/OBS
4.4.5 Calculation of emissions reductions or avoided emissions due to the project (ex-ante estimate)
Findings from Audit on 30 JUNE 2010
During the field audit, PICA staff described the ex ante estimation methodology. Chronosequence sampling methods were used
to develop a model to estimate DBH in project area plantations. Growth within the project area was estimated using the
Doc. No. C-56 May2010
Page 45
Morales equations. PICA staff, led by Luis Alejandro Mejia Caniz sampled plots in plantations planted in 1999, 2001, 2002,
2004, 2006, and 2007. Plot data was extrapolated using linear regression to estimate incremental diameter growth for a 30
year period. Diameter estimates were then input into a carbon fixation equation developed in Guatemala for Hevea
brasiliensis. This equation came from Morales 2000 (Doc #45), and was confirmed by the audit team during the field visit. The
Morales equation was then used to calculate biomass, based on estimated average diameters (estimated from sample plots in
project owned plantations in the region). Biomass was converted to carbon dioxide equivalent in the PDD Final Estimation
document included in Annex N (Doc #56).
Within the spreadsheet Calculation of BSL Removals Project Emissions Net Removals LK.xlsx (Doc #55), ∆Ct is calculated in
column G of worksheet “Net GHG anthro.removals”. These values are calculated from the sum of column H in worksheet
“Change SOC pool” and column C in worksheet “Sum changes in project”. Column C in worksheet “Sum changes in project” is
calculated in column I in worksheet “Ex ante project removals” or spreadsheet PDD Final Estimation (Doc #56). However, the
worksheet “Ex ante project removals” does not appear to separate the project area into strata, as defined in the PDD. Equation
14 of AR-ACM0001 requires that ∆Ct is calculated by summing the individual pools in each stratum, see equation 14 below:
It is not clear how the two strata are summed in the ex ante calculations to estimate ex ante changes in carbon stocks. (CAR
12/10)
Conformance
Yes
No
N/A
CAR 12/10: PICA shall follow AR-ACM0001 guidance for the calculation of ex ante carbon stock changes.
CAR/OBS
Findings from Audit on 22 September 2010
As part of the evidence submitted to RA to close the open CARs, all annexes were included. The Project Proponent included
revised Doc #90, which presents a clear estimation of ex ante carbon stock changes (though please note those findings
relevant to CAR 09/10). Furthermore, Doc 88 has been revised to correctly estimate the change in soil carbon in column H of
the worksheet “change SOC pool”. However, many documents have not been revised to reflect the changed crediting period.
For example, worksheet “schedule” in Doc 88 outlines a 30 year schedule, which is consistent with the 42 year crediting
period. It is clear that many of the annexes have been revised at multiple states, which has resulted in a great deal of
inconsistencies between the annexes. As such, a great deal of confusion is created by the many varying values, and varying
temporal lengths of calculation spreadsheets. (OBS 08/10)
The submission of multiple spreadsheets used to calculate the carbon emissions with varying timelines and final carbon stock
change estimates is very confusing. As noted above, Doc #90 presents a calculation method where identified carbon pools
are summed to estimate ex ante carbon sequestration, and as such the project is in conformance with the methodology.
(OBS 08/10)
PICA should assure that all annexes are consistent, and follow the same project crediting period.
documents included in Annex N should be updated prior to Verification to avoid potential confusion.
Conformance
Yes
No
N/A
CAR
12/10
(Closed)
CAR/OBS
OBS 08/10
Specifically, those
4.4.6 Calculation of emissions from leakage (ex-ante estimate)
Findings from Audit on 30 JUNE 2010
As cattle grazing activities were identified in the PDD as the dominant land use, the restriction of the leakage analysis to
grazing activities is appropriate. The PDD assumes that there are not leakage activities resulting from the displacement of
cattle from project activities, as a majority of the cattle were slaughtered (see cattle sales receipts from Concepcion and
Palmeras farms included in Annex D). The PICA leakage assessment provides a detailed description of the leakage
calculation, and describes a stakeholder interview that was used to verify the sale of cattle to slaughter (see footnote 2 on p.1
of the PICA leakage assessment). Landowner statements confirming the sale/receipt of cattle were included in annexed
documents. The PICA leakage assessment concluded:
Doc. No. C-56 May2010
Page 46
“As shown in Table 2, in no farm does the area required to sustain the grazing activities exceed the area of the receiving parcel.
The methodology allows the assumption that the displacement of grazing animals to these parcels is zero.”
Grazing activities were calculated following the Version 02 of the A/R Methodological tool 09 “Estimation of GHG emissions
related to displacement of grazing activities in A/R CDM project activity”.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised
4.4.7 Calculation of net VCUs to be issued (ex-ante estimate)
Findings from Audit on 30 JUNE 2010
Table 15 of section 4.4 of the PDD shows the net calculation of estimated cumulative anthropogenic GHG removals. As
mentioned in the PDD, it is assumed that emissions from the baseline carbon pools are instantaneously released into the
atmosphere. This is reflected in the first 7 rows of table 15 where the estimate baseline removals are accounted for. It should
be noted that table 15 comes from the spreadsheet Calculation of BSL removals, Project Emissions, Net Removal (Doc #55) in
Annex N. In this spreadsheet the total baseline removals are estimated in column AH as a sum of carbon stocks in the two
project strata. In column AH these values are labelled as a total baseline GHG removal; however, these values are labelled as
“net GHG removals” in Table 15. It is not clear how these values are net values, and if in fact they do represent net values, it is
not clear why net values are used instead of total baseline values. (OBS 06/10)
Conformance
Yes
No
N/A
OBS 06/10: PICA should clarify why net values for baseline removals are included in table 15 of section 4.4
CAR/OBS
of the PDD.
Findings from Audit on 22 September 2010
Carbon calculation spread sheets and corresponding tables have been revised within the additional documented submitted
following the issuance of the Draft Validation Report. Furthermore, the revised documentation now clearly articulates how the
average carbon stock is calculated to estimate the maximum number of VCUs to be issued corresponding proposed project
activities. As noted in 4.4.2, the project documents now account for rotational forestry carbon stock losses through the
averaging of carbon stocks across the rotation period.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.4.8 The assumptions made for estimating GHG emission reductions
Findings from Audit on 30 JUNE 2010
The PDD explains assumptions used for estimating GHG emissions. The two primary assumptions are those incorporated in
the financial assessment as part of the additionality argument, and those incorporated in the leakage assessment. Section 4.3
of the PDD states:
“In none of the farms receiving grazing animals does the area required to sustain grazing activities exceed the total area of the
receiving parcel. Therefore, the methodology allows the assumption that displacement of animals to these parcels does not
result in leakage. Leakage due to grazing will be monitored ex post according to the monitoring plan.”
Additionally, the project assumes that emissions related to site preparation result in an instantaneous release of baseline
carbon stocks. Section 4.3.2.3 of the PDD states:
“The simplified default approach to estimation of emissions due to site preparation is applied. Under this approach, all existing
vegetation is considered to be instantaneously oxidized at the time of site preparation. Under the instant oxidation assumption,
the CO2 emissions for each stratum are given
by:
”
This assumption is conservative, however it is not clear if the omission of CH4 related to site preparation activities is appropriate
Doc. No. C-56 May2010
Page 47
based on field audit observations (see 4.4.4 above).
Conformance
Yes
No
CAR/OBS
No CAR or OBS raised
N/A
4.4.9 Uncertainties
Findings from Audit on 30 JUNE 2010
The project uses multiple measures to address uncertainty associated with project activities and GHG calculations.
Specifically for GHG calculations, PICA employs a stratification technique following the guidance of AR-ACM0001. In order
to address future financial uncertainties, PICA recognizes that carbon is only one of multiple sources of revenue associated
with project activities. The dominant source of revenue will be in the sale of rubber, as well as timber following the reduction
in rubber production. The sale of carbon credits helps ensure that the project meets the 12% benchmark rate of return
established by investors (benchmark based on literature values confirmed during the field audit). By diversifying the financial
sources of revenue for the project activities, PICA helps ensure project stability, and the likelihood that the project will not fail
during the proposed 20 year VCS crediting period, as well as the proposed 30 project lifetime.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.5
Environmental Impact
The conclusions regarding (as required by VCS 2007 Validation Template, Section 3.5):
Requirements for and approval of an Environmental Impact Assessment (if applicable)
The sufficient documentation of environmental impact should be summarised in this section.
4.5.1 Requirements for and approval of an Environmental Impact Assessment (if applicable)
Findings from Audit on 30 JUNE 2010
During the field visit, audit team interviewed the National Protected Areas Council (CONAP) representatives in both north and
south sites. They mentioned that according to the National Law, it is necessary to submit an environmental impact
assessment document to the Environmental Ministry (MARN) and CONAP if the project area is within a protected area. In this
case, only Río Frío Farm is located near, but not within, two National Parks: Parque Nacional Río Dulce, and Reserva de
Manantiales Cerro San Gil, both in Izabal, Guatemala (north site).
National regulations (Government Accord 431-2007) states that PICA had to submit the correspondent environmental
instrument depending on the kind of project, in this case an Environmental Impact Assessment for the new rubber
plantations, and an Environmental Diagnostic for the older ones. The objective of both is to establish the impacts and a plan
to mitigate those.
In the Annex C Environmental Impact Assessment, PICA shows all the environmental instruments used to meet the VCS
requirement. All EIAs were written in the official template design by MARN (low environmental impact template). All the
projects of PICA are considered by MARN as Code 0111 according to an internal list (agricultural and silvicultural activities).
In this document, PICA considers all the potential impacts to biodiversity, soil, water, and humans for example waste
management and generation, transportation, noise, energy, pesticides, cultural values, others. A plan was written to mitigate
these impacts.
Representatives of MARN in both sites mentioned that PICA has submitted all the documents, some of them are still under
revision since certain minor details are missing. All of the environmental instruments of south projects are now approved. It is
expected that the documents of north site will be approved soon.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.5.2
Comments by stakeholders
The conclusions regarding (as required by VCS 2007 Validation Template, Section 3.6):
Findings from Audit on 30 JUNE 2010
Doc. No. C-56 May2010
Page 48
As part of the planning process for the project, PICA hosted various stakeholder consultations in December of 2009, with
communities adjacent to the project areas. These meetings include the sharing of information about the projects, as well as
offered stakeholders the opportunity to provide feedback on the project activities. These meetings were recorded and
reviewed by facilitators to create the Stakeholder Communication Strategy document. During the field audit, photographs and
video of these meetings was provided to the auditors by PICA. Additional interviews with PICA staff during the field audit
confirmed the stakeholder consultation process described in the PDD.
Conformance
Yes
No
N/A
CAR/OBS
No CAR or OBS raised.
4.5.3
Negative environmental and socio-economic impacts of the project.
The conclusions regarding (as required by VCS 2007.1 section 3.4):
AFOLU projects potential negative environmental and socio-economic impacts and mitigation steps prior to generating
Voluntary Carbon Units (VCUs).
Findings from Audit on 30 JUNE 2010
The PDD does not acknowledge any negative environmental or socio-economic impacts. On the contrary the PDD notes that
the project is expected to have a net positive impact on the environment and surrounding population. The PDD does not
expand on what these positive impacts will be. (OBS 07/10). During the field audit, discussions with farm managers and
farm employees identified that increased jobs as a result of project activities are likely, and rubber tapper positions are a
skilled trade that provide adequate salaries and stable positions. In addition, PICA is currently in the process of certifying the
project area under the FSC certification.
Conformance
Yes
No
N/A
OBS 07/10: PICA should describe the “net positive impact on the environment and on the surrounding
CAR/OBS
population” described in section 5 of the PDD.
Findings from Audit on 22 September 2010
The PDD has revised section 5 to now state:
“The project is expected to have a net positive impact on the environment given the change of 2,366.16 from pasture to
natural rubber tree plantations; this also implies recovery of degraded soil. Also the project area will function as a buffer zone
to rivers and natural reserve; and have a positive impact on the surrounding population, mainly when providing a long-term
job, legal benefits, training, education, and health benefits. The specific positive impacts identified are:
o
Geology: The geology of the site will not be affected, because the activity has no direct action in their construction
and operation activities of the movement of land masses. However, it notes that the activity will have a positive
impact, since reforestation of the area to some extent mitigates the negative impacts of flooding in the area.
o
Soils: It is expected that the revegetation of the site allows an enrichment of the soil, and mitigates the effects of
erosion by wind and water.
o
Air: This project ensures the fixation of carbon dioxide, which is an activity contributing to mitigation of climate
change.
o
Land Use: The project changes the current land use of pasture which has resulted in degradation of the project
area to reforestation which will result in rehabilitation of the area
o
Hydrology: Forest cover is to ensure water recharge areas, so that will be a positive impact.
o
Noise: The project activities do not produce sounds outside the 60 decibel (speaking volume).
o
Landscape: The project will have a high positive impact on the landscape as vegetation is recovered”
The PDD now clearly outlines the net positive impacts anticipated from project activities.
Doc. No. C-56 May2010
Page 49
Conformance
CAR/OBS
Doc. No. C-56 May2010
Yes
No CAR or OBS raised.
No
N/A
Page 50
5 VCS Risk Assessment
5.1
Risk factors applicable to all project types
Self
Assessment
Risk Rating
Note: Risk factors are determined through a qualitative analysis conducted, following the guidance of the VCS
Tool for Non-Permanence Risk Analysis and Buffer Determination, combined with the 13 April 2010 VCS
Program Update. Evidence supporting the qualitative assessment must be provided by the project
proponent.
Risk Factor
Risk of unclear land tenure and Low
potential for disputes
Risk of financial failure
Low
Risk of technical failure
Low
Risk of management failure
Low
Risk of rising land opp. costs Low
causing
reversal
of
sequestration/protection
Risk of political instability
Low
Risk of social instability
Medium
Risk of devastating fire
Low
Risk of
attacks
pest
and
Doc. No. C-56 May2010
disease Low
Findings from 30 June 2010
OBS/CAR
The farms are privately owned, or are leased
by PICA under long-term 50 year contracts.
Additionally, a 13 year GHG agreements exist
with land owners. However these contracts
do not exist for the full length of the project
crediting period.
PICA is the largest processor and exporter of
rubber and latex in Guatemala, and has
extensive experience managing finances.
Furthermore, PICA has performed financial
analysis on project activity over the project
crediting period that show stability within the
project.
PICA is working with contracted professionals,
and has a strong foundational knowledge of
rubber plantation production in the region.
PICA has extensive experience in rubber
production and has a management plans for
several of the farms within the project area.
The PDD describes the alternative landuse of
pastureland is unlikely to compete financially
with the returns from the sale of rubber.
Additionally,
the
substantial
upfront
investment in rubber plantations binds land
owners to maintain plantations in order to pay
off establishment costs.
The PDD cites multiple studies indicating
increased stability within Guatemala relative
to other Latin America countries.
Guatemala has significant security problems,
and comparative rankings to other countries
show that Guatemala has a high social
instability risk. PICA recognizes these risks
and proposes an increased medium risk level
to reflect these findings.
Fire is an infrequent disturbance in the region,
and the PDD includes fire prevention tactics.
Plantation forestry increases the risk of pest
and disease attacks due to decreased
biological diversity and subsequent resiliency.
However, common pests and fungi in rubber
tree plantations in the area are well known,
and preventative actions to mitigate these
CAR 13/10
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No CAR or OBS raised
No CAR or OBS raised
No CAR or OBS raised
No CAR or OBS raised
No CAR or OBS raised
No CAR or OBS raised
No CAR or OBS raised
No CAR or OBS raised
Risk of extreme weather Medium
events (e.g. floods, drought,
winds)
Geological risk (e.g. volcanoes, Low
earthquakes, landslides)
risks are under way. Additionally, as the loss
of trees represents an additional financial loss
to project proponents (from loss of rubber
production), it is likely that preventative
measures discussed in the PDD will be
applied.
PICA recognizes that hurricanes pose a
potential risk to rubber tree plantations, and
has reflected this through the increased risk
rating associated with risk of extreme
weather.
The justification of low geologic risk in the
PDD focuses on earthquakes, which may be a
low risk in the region. However, volcanic
eruptions and landslides on steep slopes
during heavy rains are potential risks to
project areas.
No CAR or OBS raised
CAR 14/10
Summary of findings and assessment of risk rating
Generally the risk ratings provided by PICA were accurate, with the exception of those self risk ratings for Risk of unclear
land tenure, and the Geologic risks.
CAR/OBS:
CAR 13/10: PICA shall increase the risk of unclear land tenure to medium to account for the lack of a
GHG agreement for the full length of the project crediting period.
CAR 14/10: PICA shall reflect the increased risk in the region from volcanic eruptions and landslides, or
provide evidence to justify the low risk rating.
Findings from Audit on 22 September 2010
Since there are now new contracts between parties (project proponent and owner of the land) where it is stated that they
agree duties and responsibilities regarding GHG removals and ownership of the land, CAR 13/10 is no longer applicable.
Additionally, PICA demonstrated through maps that the risk of landslides and volcano activity is low. These maps are part of
two independent technical studies performed by IARNA (Environmental and Natural Resources Institute) and MAGA
(Agricultural Ministry).
According to the methodology of these studies, only in a part of one of the farms (north of Asunción) there is a medium
threat of occurrence of landslides, so project proponents consider that there is a low risk. Audit team agrees with this risk
rating. This closes CAR 14/10.
Conformance
Yes
No
N/A
CAR 13/10 (Closed)
CAR/OBS
CAR 14/10 (Closed)
Risk factors applicable to ARR projects
Risk Factor
Project
longevity/
Commitment period
Doc. No. C-56 May2010
Self
Assessment
Risk Rating
5.2
Medium
Findings from 30 June 2010
OBS/CAR
The VCS Tool for AFOLU NonPermanence Risk Analysis and Buffer
Determination defines a long term
commitment period as “projects with
rotation periods of more than 25 years
and a commitment to replant, and those
with primarily a forest rotation and habitat
emphasis”. Similarly, the tool describes
CAR 15/10: If PICA does not
account for harvesting in carbon
calculations, PICA shall raise the
risk rating associated with project
longevity to high to reflect the
definitions of commitment periods
in the VCS Tool for AFOLU NonPermanence Risk Analysis and
Page 52
Low
Ownership type and user
rights
Low
Technical capability
Low
Financial capacity
Medium
Management capacity
project developer
Doc. No. C-56 May2010
of
medium-term commitment periods as
“projects with rotation periods of more
than 25 years, but no commitment to
replant”. This project has a 30 year
rotation period with a commitment to
replant, however forest restoration and
habitat emphasis are not the primary
focus of project activities. The primary
focus of the afforestation project is the
production of rubber. Recognizing the
medium risk rating associated with project
longevity does not accurately reflect the
impermanemce of the credits issued
related to project activities. The current
version of the PDD does not accurately
reflect the project lifetime (see CAR
01/10) in the project crediting period.
Recognizing that the current project
crediting period does not include the
planned harvest at year 30 (see CAR
09/10), the current version of the PDD
describes a significant commitment period
risk, as the effects of the planned timber
harvest are not included within the carbon
calculations (see CAR 09/10). (CAR
15/10)
The land is privately owned, however
during field visits to Los Patos, auditors
learned that PICA leased the land from
Ingenio Magdalena S.A. The VCS Tool
for AFOLU Non-Permanence Risk
Analysis and Buffer Determination states
that “rented or tenant-operated land” must
use a medium risk rating. As not all
project areas are owned by the project
proponent, the low risk rating does not
reflect the VCS defined risk definitions.
(CAR 16/10)
During the field audit PICA demonstrated
their technical capacity to conduct project
activities as outlined in the PDD.
PICA has performed a financial analysis
to identify financial risks, and demonstrate
financial capacity to conduct project
activities.
The
risk
rating
associated
with
management capacity is unclear. The
PDD states “Substantial previous project
experience (<5 projects) with on-site
management team”. This is not one of
the categories defined in the VCS Tool for
AFOLU Non-Permanence Risk Analysis
and Buffer Determination. It is unclear if
this is meant to be “Substantial previous
project experience (≥5 projects) with onsite management team” in which case the
risk rating would be low; or if this is meant
Page 53
Buffer Determination.
CAR 16/10
No CAR or OBS raised
No CAR or OBS raised
CAR 17/10
to be “Limited project experience (<5
projects) with on site management team”,
in which case the risk rating would be
medium. (CAR 17/10)
Low
The financial analysis conducted by PICA No CAR or OBS raised
demonstrates
the
future
income
associated with the sale of carbon credits
as well as the sale of latex and rubber
Future income
from the plantations.
Low
Section 2.4 of the PDD describes the No CAR or OBS raised
likelihood of alternative land uses
becoming more financially attractive than
the project activities. It is unlikely that
other land uses will become more
Future/current
opportunity
financially
viable
following
the
costs
establishment of rubber plantations.
Low
PICA outlined in the statement of intent its No CAR or OBS raised
endorsement of the carbon project, and
the promotion of sustainable rubber
Endorsement of project
production.
Summary of findings and assessment of risk rating
See findings specific to risk ratings above.
CAR/OBS:
CAR 15/10: If PICA does not account for harvesting in carbon calculations, PICA shall raise the risk rating
associated with project longevity to high to reflect the definitions of commitment periods in the VCS Tool for
AFOLU Non-Permanence Risk Analysis and Buffer Determination.
CAR 16/10: PICA shall increase the risk rating associated with ownership type to medium to reflect the VCS
Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination definition for rented lands.
CAR 17/10: PICA shall amend the risk rating associated with management capacity of project developer to
reflect the definitions used in the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
Determination.
Findings from Audit on 22 September 2010
CAR 15/10:
As the crediting period has been increased to 42 years, including a 36 year rotation within the rubber tree plantations, as
well as a commitment to replant, this CAR is no longer applicable.
CAR 16/10:
PICA increased the risk to medium since Los Patos and Asunción are leased to Ingenio Magdalena S.A. The audit team
agrees with the increased risk assessment, and as such this CAR is closed.
CAR 17/10:
The revised PDD now states:
“Substantial previous project experience (≥ 5 projects) with on-site management team”
This now reflects the categories defined in the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
Determination. Furthermore, PICA has included additional evidence of the management experience with carbon
measurement and quantification in Docs #106-109. With the clarified text in the PDD and additional evidence as proof of the
teams carbon quantification skills, combined with the evidence of PICA’s management experience reviewed during the field
audit, the audit team has obtained enough evidence to assure that PICA is in conformance with this requirement, and “low”
is an appropriate risk rating for this category.
Conformance
Yes
No
N/A
CAR 15/10 (Closed)
CAR/OBS
Doc. No. C-56 May2010
Page 54
CAR 16/10 (Closed)
CAR 17/10 (Closed)
5.2.1
Default buffer withholding percentages for ARR projects
Rating/Amount Findings from 30 June 2010
Self Assessment Risk Class Low (note this The 13April2010 VCS Program Update included the following changes to
has been raised the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
to medium in Determination:
the final report,
see
findings “When determining the overall non-permanence risk rating for the project,
from
22 verifiers shall weigh all the risk factors together. However, certain risks may
September
be significant enough that their individual rating determines the project’s
2010 below)
overall risk rating, no matter what the project scored on other risk
dimensions.”
Was changed to;
“When determining the overall non-permanence risk classification, the risk
factor with the highest rating determines the project’s overall risk class and
shall be used to determine the required buffer withholding percentage.”
Self Assessment Buffer 20%
Withholding Percentage
As written, the PDD uses a generalized average self risk rating of “low”
which is no longer appropriate following the changes in the 13April2010
Program Update (CAR 18/10). Recognizing the 13April2010 Program
Update, and CAR 15/10 from this report, the appropriate risk rating
category for this project is “high”.
The 13April2010 VCS Program Update includes the following changes to
the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
Determination:
“Table [x] below provides the default buffer withholding ranges for [x]
projects associated with low, medium and high non-permanence risk
classes. Verifiers must use their expert judgment to determine the
appropriate withholding percentage within each range based on whether
the project is deemed to be at the low, medium or high end of a given risk
class.
Was changed to;
Table [x] below provides the default buffer percentage ranges for [x]
projects associated with low, medium and high non-permanence risk
classes. The required buffer withholding percentage shall be the maximum
percentage in the buffer range for the determined risk class, unless
justification for a lower withholding percentage can be demonstrated.”
Currently the PDD does not include specific justification for a lower buffer
determination as noted in the last sentence in the revised language
following the 13April2010 VCS Program Update. Without the justification
for a lower buffer determination, the updated VCS standard states that the
maximum percentage in the buffer range shall be used. Following CAR
15/10, a change to high risk rating would mandate a 60% buffer
determination if no justification for a decreased buffer determination is
provided. However, if evidence to justify a lower buffer contribution is
provided the buffer contribution can be reduced to a minimum of 40%
following the 13April2010 VCS Program Update. (CAR 19/10)
CAR/OBS:
CAR 15/10
Doc. No. C-56 May2010
Page 55
CAR 18/10: PICA shall determine the self risk rating following the guidance of the 13April2010 VCS Program
Update.
CAR 19/10: PICA shall determine the buffer contribution following the guidance of the 13April2010 VCS
Program Update.
Findings from Audit on 22 September 2010
CAR 15/10:
See findings from 5.2 above regarding the closure of CAR 15/10
CAR 18/10:
The revised PDD now states in Section 1.11 on p.9:
“Based on both the general risk and the project specific risk analyses performed below, the project falls into the “medium”
risk category. In the case of ARR projects under the VCS, the buffer requirement for a project with a “medium” risk category
rating is 20-40% of issued credits. In terms of project specific risks, the majority of the risk factors have a “low” risk rating.
This is also true for “general” risks that apply to all AFOLU projects. For these reasons, a 20% buffer is applied to the
project.”
As the highest identified risk within the self assessment is identified as medium, this is now in conformance with the
13April2010 VCS Program Update.
CAR 19/10:
As noted in the evidence submitted to close CAR 18/10, the PDD has been revised to conform to the 13April2010 VCS
Program Update. In the revised PDD self risk assessment in section 1.11, 4 out of 19 self assessment risk categories are
identified as medium. PICA has identified efforts to help mitigate these risks, and reduce the chance of their effect on the
project. For example, on p.12, the reduced buffer contribution associated with the medium risk classification for risk of
extreme weather events is justified based on the return intervals of Class 5 hurricanes (the most likely extreme natural
disturbance) in relation to the project crediting period. Furthermore, the reduced buffer contribution associated with the
medium risk rating for risk of social instability is justified through the projects commitment to FSC certification and rural
location. The medium risk associated with long-term commitment to harvesting is mitigated through a clear dedication to replant project areas following the final harvest. The clear dedication to replant was supported by findings during the field
audit where interviews with farm managers found that all farms intended to replant following the harvest of rubber trees.
This was further supported by a logical argument presented by the Project Proponents, who highlighted that once the
infrastructure and capacity was established within the farms to produce rubber, it was not financially prudent to not replant,
as the significant investment in building infrastructure and capacity would be lost. This was further supported with interviews
with farm workers who described the training required to gain the necessary skills to tap rubber trees, representing a
significant investment (multiple years) in training workers as part of capacity building required to establish new rubber
plantations.
The risk associated with private land is mitigated through demonstrated long-term leases with land owners, as well as
contracts for the clear ownership of GHG rights. Recognizing this, a self assessment risk of 20% is justified, and is
appropriate given the level of risk and mitigation effort identified.
Conformance
Yes
No
N/A
CAR 15/10 (Closed)
CAR/OBS
CAR 18/10 (Closed)
CAR 19/10 (Closed)
Doc. No. C-56 May2010
Page 56
6
Validation Conclusion
Summary from Final Report
The revised documents submitted to Rainforest Alliance for review have resulted in the closure of 17 of the 19 open CARs from
the Draft Report. Two CARs remained open. One of these CARs was regarding the extremely high biomass estimates used to
set the maximum number of credits issued, as this project is a rotational forestry ARR project, and as such is subject to the VCS
IFM and ARR rotational forestry requirements. Biomass equations from Morales 2000 were used in combination with local
diameter growth studies to estimate expected biomass accumulation. During the review of the project documents, the audit
team found that ex ante biomass estimates were extremely high relative to other global forest types. As such, the audit team
requested that the Project Proponent provide additional evidence to justify the biomass estimates used to set the maximum
amount of allowable credits (see Doc 90 and 91). In order to provide evidence to support the use of the Morales equations,
PICA provided the audit team with Documents 110 – 120. Review of these documents showed that the use of the ex ante
carbon stock estimates are within the range of known carbon stock estimates for rubber tree plantations globally. Furthermore,
PICA also provided validation of the use of the Morales equations and estimate diameter growth predictions. In addition to the
documentation supporting the biomass and carbon stock estimates, PICA also submitted a revised PDD with added clarification
on the delineation of the project area. The audit team found the additional documentation submitted sufficient to close all open
CARs.
The audit team would like to note that as numerous revisions have been made to the PDD and supporting documents, multiple
minor inconsistencies exist within the revised documents. These inconsistencies make tracking changes through the supporting
documents difficult. The Project Proponent should be aware of this issue, and ensure that all documents reflect the updates
made to the revised PDD prior to project verification (see OBS 08/10).
Summary from Draft Report
The PICA project presents an approach to utilize the sale of carbon credits to fund sustainable management of rubber tree
plantations in Guatemala. Currently the PDD and supporting documents are not in conformance with the VCS 2007.1 standard.
Most notably, the carbon calculations within the project do not account for the effects of planned harvests at the end of the 30
year project lifetime. As noted in the findings above, the project crediting period must reflect the project lifetime (see CAR
01/10). This leads to compounding issues within the project documents, as the project crediting period is assumed to be
restricted to the 20 year crediting period which does not include the planned harvest of rubber trees at year 30. Conversations
with the VCS confirmed that this is not in conformance with the VCS requirements for ARR rotational forestry projects. The
failure to follow VCS guidance results in an over-estimation of the number of carbon credits anticipated to be earned from
project activities. This is then further compounded in the additionality argument.
The additionality argument of the “Promoting Sustainable Development through Natural Rubber Tree Plantations in Guatemala”
is founded on the calculations within the financial analysis spreadsheets. The financial calculations show that the sale of
estimated number of carbon credits from project activities results in an increase in the investment return from project activities.
This increase makes the project profitable enough to exceed the required rate of return for project investors. Hence, without the
sale of carbon credits, the project would not meet the required rate of return for investment, and hence would not be funded.
However, as the number of carbon credits that this argument is based on is over-estimated, the financial analysis will need to be
re-calculated with an adjusted number of carbon credits estimated following the requirements of the VCS 2007.1 standard.
The validation report describes numerous material discrepancies where the project is not in conformance with the VCS 2007.1
standard. The proposed project cannot be validated until the identified corrective action requests (CARs) within this report have
been addressed.
Doc. No. C-56 May2010
Page 57
Appendix A: Company Details
6.1
Contacts
Primary Contact for Coordination with SmartWood
Primary Contact, Position:
Ing. Glenda Lee, Coordinadora de Econegocios
Address:
7a. Avenida 7-33 Zona 9, Guatemala City, Guatemala
Tel/Fax/Email:
(502) 2279-9000/ glee@occidente.corp.gt
Billing Contact
Contact, Position:
Same as above
Address:
Same as above
Tel/Fax/Email:
Same as above
6.2
On-line Certification Contact
Note: upon Validation, the SmartWood web site posts and maintains
Customer Fact Sheets for companies with the information in the table below at
http://www.rainforest-alliance.org/climate.cfm?id=international_standards
Field
Text for Customer Fact Sheet
Has this Info Changed?
Contact, Title:
Ing. Glenda Lee, Coordinadora de
Econegocios
Yes
No
Address:
7a. Avenida 7-33 Zona 9, Guatemala City,
Guatemala
Yes
No
Tel/Fax/Email/Website:
(502) 2279-9000/ glee@occidente.corp.gt
Yes
No
Products/Descriptions:
N/A
Yes
No
--End--
Doc. No. C-56 May2010
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