Leakage is defined as the unanticipated decrease or increase in GHG
benefits outside of the project's accounting boundary (the boundary defined
for the purposes of estimating the project's net GHG impact) as a result of
project activities. For example, conserving forests that otherwise would have
been deforested for agricultural land may displace farmers to an area outside
of the project's boundaries. There, the displaced farmers may engage in deforestation-and
the resulting carbon emissions are referred to as leakage.
Projects may also yield greater GHG benefits than anticipated-positive leakage
or "spillover." For example, if a project introduced a new land management approach
or technology-such as increased use of agroforestry or cover crops or increased
saw mill efficiency-and this technology was more widely adopted outside the
project's boundaries, the net GHG benefits would be larger than initially estimated.
188.8.131.52. Assessing Leakage
Leakage has been divided into various effects. This section discusses leakage
effects that are most relevant to forest and land-use projects.
Market effects occur when project activities change the supply/demand equilibrium,
such as if demand is unmet because a project reduces supply or because it unexpectedly
increases demand. For example, large-scale plantation projects may depress the
local price of wood products, causing nearby plantations to be replaced with
pasture or other low-biomass land uses (Fearnside, 1995). Activity-shifting
occurs when the activity that causes carbon loss in the project area is displaced
outside the project boundary. For example, prevention of deforestation in the
project area may displace the GHG-emitting activity.
Although project experience to date is limited, case studies have indicated
that landscape dynamics may signal if the project has no or low potential for
leakage or a moderate to high risk for leakage.
No/Low Leakage Potential: Experience to date indicates that projects
implemented on land that has few or no competing uses are unlikely to impact
areas outside of project activities, and leakage potential is minimal. For example,
the Krkonose project in the Czech Republic (see Table
5-2 and Box 5-1) is situated in a protected
area with virtually no danger of encroachment or displacement because the park
had protected status for many years (Brown et al., 1997).
Moderate/High Leakage Potential: Where land has competing uses or in
dynamic settings where factors such as population growth, logging or agricultural
production for export, subsistence agriculture, fuelwood needs, and concerns
about deforestation interact, a project's impact may extend beyond the area
of direct project activities (Brown, 1998). If net GHG benefits estimated and
monitored fail to account for emissions that arise because of the project outside
the area of direct activities, leakage is an issue. For example, a project that
stops the conversion of forest to agricultural land or ends timber harvest by
effectively "putting a fence around the forest" will face leakage problems because
if an economic activity in the forest is stopped with no alternative taking
its place, people will shift the activity to a surrounding area.
Changes in national or international policies also can lead to leakage. For
example, when a government changes its policy to lower the country's overall
emissions, the emissions may be displaced to other countries (see Section 2.1.1).