Climate, Community & Biodiversity Alliance Project ... · Climate, Community & Biodiversity Alliance . Project Validation Report . Panama Canal Authority Sustainable Forest Cover

Climate, Community & Biodiversity Alliance Project Validation Report

Panama Canal Authority Sustainable Forest Cover Establishment Project –

Project Design Document Version 4 (March 2012)

30 March 2012

Project No. VO11009.00

Validation Conducted by:

Environmental Services, Inc. Forestry, Carbon, and GHG Services Division

Corporate Offices at: 7220 Financial Way, Suite 100

Jacksonville, Florida 32256 Phone: 904-470-2200; Fax: 904-470-2112

Panama Canal Authority Sustainable Forest Establishment Project

068-FOR-CCBA Validation Report Template – final – v2 2 Controlled Document 7 July 2011

Table of Contents Introduction ................................................................................................................................................................... 4

Contact Information ...................................................................................................................................................... 4

Validation Details ......................................................................................................................................................... 5

Validation Standard .................................................................................................................................................. 5

Validation Criteria .................................................................................................................................................... 5

Level of Assurance ................................................................................................................................................... 5

Validation Scope ...................................................................................................................................................... 5

Validation Date(s) .................................................................................................................................................... 5

Materiality ................................................................................................................................................................ 5

Site Visits ................................................................................................................................................................. 5

Final Documents from Client ................................................................................................................................... 5

Timeline.................................................................................................................................................................... 5

Public Comment Period ............................................................................................................................................ 6

Project Description ....................................................................................................................................................... 6

Executive Summary of Validation Results ................................................................................................................... 7

Validation Findings ...................................................................................................................................................... 8

G1 Original Conditions in the Project Area........................................................................................................ 8

G2 Baseline Projections .................................................................................................................................... 12

G3 Project Design and Goals ............................................................................................................................ 17

G4 Management Capacity and Best Practices .................................................................................................. 25

G5 Legal Status and Property Rights ................................................................................................................ 30

CL1 Net Positive Climate Impacts.................................................................................................................. 33

CL2 Offsite Climate Impacts (“Leakage”) ..................................................................................................... 37

CL3 Climate Impact Monitoring..................................................................................................................... 40

CM1 Net Positive Community Impacts ........................................................................................................... 41

CM2 Offsite Stakeholder Impacts .................................................................................................................... 43

CM3 Community Impact Monitoring .............................................................................................................. 45

B1 Net Positive Biodiversity Impacts .............................................................................................................. 46

B2 Offsite Biodiversity Impacts ....................................................................................................................... 49

B3 Biodiversity Impact Monitoring ................................................................................................................. 51

Gold Level Section ..................................................................................................................................................... 52

GL1 Climate Change Adaptation Benefits ...................................................................................................... 52

GL2 Exceptional Community Benefits ........................................................................................................... 52



GL3 Exceptional Biodiversity Benefits .......................................................................................................... 52

Public Shareholder Comments .................................................................................................................................... 53

Validation Conclusion ................................................................................................................................................ 53

Submittal Information ................................................................................................................................................. 54



Introduction This report presents the findings of an audit conducted by Environmental Services, Inc., (ESI) to validate the claims made by the Panama Canal Authority that their Sustainable Forest Cover Establishment Project conforms to the Climate, Community & Biodiversity Project Design Standards (Second Edition- December 2008). ESI is accredited by the American National Standards Institute (ANSI) under ISO 14065:2007 for Greenhouse Gas Validation and Verification Bodies and is approved by the Climate, Community & Biodiversity Alliance (CCBA) to perform such validations. Contact Information Client Name Address

Panama Canal Authority (ACP) Edificio 706, Corozal Oeste Panama

Contact Name Address Phone

Angel Urena Vargas ACP Especialista en Proteccion Ambiental 507-276-2396

3rd Party Auditors Environmental Services, Inc. Lead Validator Shawn McMahon – Lead Validator (330-833-9941 / [email protected])

Environmental Services, Inc. 3800 Clermont Street NW North Lawrence, Ohio 44666 330-833-9941

Validation Team Caitlin Sellers – Validation Trainee (904-361-8227 / [email protected]) Nacho Escorriola Giovannini – Translator/Team Member ([email protected]) Janice McMahon – QA/QC (330-833-9941 / [email protected])

mailto:[email protected]






Validation Details

Validation Standard Climate, Community and Biodiversity Project Design Standards (Second Edition – December 2008)

Validation Criteria The criteria will follow the validation guidance documents provided by CCBA located at www.climate-standards.org. These documents include the following: a) Project Design Standards (Second Edition, December 2008) b) Rules for the use of the Climate, Community & Biodiversity Standards,

Version June 21, 2010.

Level of Assurance The level of assurance was used to determine the depth of detail that the validator placed in the validation plan to determine if there were any errors, omissions, or misrepresentations (ISO 14064-3:2006). ESI selected samples of data and information to be validated and verified, to provide reasonable assurance.

Validation Scope The scope of the validation included the review of all project documentation provided by the project developer and the appropriate level of fact finding by the validator during the on-site visit. The validator used evidence such as, but not limited to, interviews with stakeholders and project proponents, review of supporting records and reports.

Validation Date(s) 27 May 2011 – 30 March 2012

Materiality Materiality is a concept that errors, omissions and misrepresentations could affect the project design assertions and influence the intended users. CCB does not specifically outline a materiality threshold; however, ESI used a 5% threshold for evidence. If a non-conformance was discovered, the project developer was given the opportunity to correct the non-conformity to the project design document within a reasonable timeframe (within 30 days).

Site Visits 27 June – 01 July 2011

Final Documents from Client

2012-03-27 PDD Panama Canal Authority.pdf

Timeline • 25 May 2010 – ESI Internal Conflict of Interest (COI) process completed

and approved (no issues) • 27 May 2011 – Validation opening meeting • 07 June 2011 – Validation Plan approved by ACP • 27 June - 01 July 2011 – site visits • 14 June 2011 – Round 1 Corrective Action Requests (CARs)/Opportunities

for Improvement (OFIs) issued to ACP • 07 September 2011 – Round 2 CARs/OFIs issued to ACP • 22 November 2011 – Round 3 CARs/OFIs issued to ACP • 31 January 2012 – responses to CARs/OFIs and revised PDD received from

ACP



• 07 February 2012 – additional clarification requested by ESI (via email) • 05 March 2012 – final meeting and clarification received; CARs closed • 27 March 2012 – final PDD received from ACP • 20 March 2012 – draft report sent to ACP • 29 March 2012 – Closing Meeting

Public Comment Period Number of Comments Received

• 08 June to 08 July 2011 – Project listing on CCB website for public comment

• No comments received

Project Description Completion of the Panama Canal in 1914 led to recognition of the importance of the Panama Canal Watershed (PCW) that supports the millions of gallons of water required for each ship to pass through the Canal. In addition, the PCW is widely acclaimed for its ecological importance, as it sits in the center of one of the world’s most biologically diverse areas (Myers et al. 2000 and Condit et al. 2001). Today the watershed is home to many of the people living in Panama, for it borders the cities of Colón and Panama City. The watershed supports suburban life as well as agriculture, ranching, and forestry. At the end of 1999, the operation of the Panama Canal was turned over to Panama. Since then, the ACP is responsible of the conservation of hydric resources in the watershed, which it is related with land-use changes1. Some of the watershed is undergoing rapid changes in land use in the form of forest destruction. There is concern about the compatibility of urban and economic development with hydrological needs and conservation of the watershed (Condit et al. 2001). Human activities like deforestation, land degradation and erosion in the PCW are affecting the future ecological resources and thus the carbon storage potential.

There are several causes that have led forest destruction in the PCW, such as forests clearance for “cash” crops (i.e., bananas and coffee), logging operations, cattle ranching and subsistence farming. Thus, as the

1Political Constitution of Panama, Art. 316: Se crea una persona jurídica autónoma de Derecho Público, que se denominará Autoridad del Canal de Panamá, a la que corresponderá privativamente la administración, funcionamiento, conservación, mantenimiento y modernización del Canal de Panamá y sus actividades conexas, con arreglo a las normas constitucionales y legales vigentes, a fin que funcione de manera segura, continua, eficiente y rentable. Tendrá patrimonio propio y derecho de administrarlo. A la Autoridad del Canal de Panamá corresponde la responsabilidad por la administración, mantenimiento, uso y conservación de los recursos hídricos de la cuenca hidrográfica del Canal de Panamá, constituidos por el agua delos lagos y sus corrientes tributarias, en coordinación con los organismos estatales que la Ley determine. Los planes de construcción, uso de las aguas, utilización, expansión, desarrollo de los puertos y de cualquiera otra obra o construcción en las riberas del Canal de Panamá, requerirán la aprobación previa de la Autoridad del Canal de Panamá. los lagos y sus corrientes tributarias, en coordinación con los organismos estatales que la Ley determine. Los planes de construcción, uso de las aguas, utilización, expansión, desarrollo de los puertos y de cualquiera otra obra o construcción en las riberas del Canal de Panamá, requerirán la aprobación previa de la Autoridad del Canal de Panamá.



international prices for cash crops go up, an accelerated forest destruction is observed as more people are trying to take advantage of such price increases (CREA 2005).

To reverse the negative trends, the ACP has initiated different conservation projects within the PCW that includes support to establish forestry plantations with native and non-nuisance exotic species, and the establishment of agroforestry and silvo-pastoral farms.

The ACP hopes that the implementation of the proposed project would help recover the land cover on approximately 10,000 hectares of degraded areas and mitigate water resource problems in the PCW in terms of quantity and quality of the water.

The ACP, with its own funds, is implementing the project PIEA (Programa de Incentivos Económicos Ambientales / Environmental Economic Incentives Program) focused on promoting forest restoration, forest and biodiversity conservation, and alternative livelihood through reforestation, silvo-pastoral and agro-forestry systems. The project will cover approximately 10,000 hectares of degraded lands (formerly pasture grassland with low carrying capacity). The forest cover establishment project has been implemented annually since 2007, and it is expected to continue until 2013. So far, 3,057 ha of reforestation, agroforestry and silvo-pastoral systems have been established in the project area.

Executive Summary of Validation Results Criterion Required/

Optional Conformance

Y/N N/A G1 Original Conditions in the Project Area Required Yes G2 Baseline Projections Required Yes G3 Project Design and Goals Required Yes G4 Management Capacity and Best Practices Required Yes G5 Legal Status and Property Rights Required Yes CL1 Net Positive Climate Impacts Required Yes CL2 Offsite Climate Impacts (“Leakage”) Required Yes CL3 Climate Impact Monitoring Required Yes CM1 Net Positive Community Impacts Required Yes CM2 Offsite Stakeholder Impacts Required Yes CM3 Community Impact Monitoring Required Yes B1 Net Positive Biodiversity Impacts Required Yes B2 Offsite Biodiversity Impacts Required Yes B3 Biodiversity Impact Monitoring Required Yes GL1 Climate Change Adaptation Benefits Optional N/A GL2 Exceptional Community Benefits Optional N/A GL3 Exceptional Biodiversity Benefits Optional Yes



Validation Findings

G1 Original Conditions in the Project Area Indicator G1.1 – The location of the project and basic physical parameters (e.g. soil, geology, climate).

The PDD sufficiently details the location and physical parameters of the project site.

Evidence Used to Assess Conformance:

PDD, field validation

Findings: The validation findings support the information provided in the PDD and during the site visit.

Indicator G1.2 – The types and condition of vegetation within the project area.

The PDD provides sufficient detail describing the types and condition of vegetation within the project area.




Indicator G1.3 – The boundaries of the project area and the project zone.

The PDD sufficiently details the boundaries of the project area and project zone.




Indicator G1.4 - Current carbon stocks within the project area(s), using stratification by land-use or vegetation type and methods of carbon calculation (such as biomass plots, formulae, default values) from the Intergovernmental Panel on Climate Change’s 2006 Guidelines for National GHG Inventories for Agriculture, Forestry and Other Land Use5 (IPCC 2006 GL for AFOLU) or a more robust and detailed methodology.

The PDD sufficiently describes the current carbon stocks using stratification by vegetation type/land use. The values are derived from a combination of IPCC Guidelines and peer reviewed literature.


PDD, IPCC Guidelines, referenced literature

Findings: The validation findings support the information provided in the



PDD. Indicator G1.5 - A description of communities located in the project zone, including basic socio-economic and cultural information that describes the social, economic and cultural diversity within communities (wealth, gender, age, ethnicity etc.), identifies specific groups such as Indigenous Peoples8 and describes any community characteristics.

The PDD describes the basic socioeconomic and cultural information, with the exception of the age groups.


PDD

Findings: Though the PDD sufficiently describes the socio-economic and cultural information with regard to wealth, gender, ethnicity, it does not provide a discussion of the age groups within the project zone.

Corrective Actions Requests (CAR) to address non-conformance:

Though there is a mention of the age in the discussion of gender, there is no breakdown of approximate age groups within the project zone. Please provide specific information regarding the age demographics.

Date issued 14 June 2011 Project proponent response/actions and date

Project proponent provided an age distribution graph for the Panama Canal watershed.

Evidence used to close CAR PCW graph provided in “2011-07-25 MGM Innova Answerst CAR.docx”, PDD Page 41

Date closed 26 August 2011 Indicator G1.6 - A description of current land use and customary and legal property rights including community property in the project zone, identifying any ongoing or unresolved conflicts or disputes and identifying and describing any disputes over land tenure that were resolved during the last ten years (see also G5).

The PDD provides a description of the current land use and legal property rights in the project zone and identifies the primary source of conflict (lack of land title).


PDD

Findings: Though the PDD describes the current land use and how the ACP program is addressing lack of land titles in the



community, more detail is needed. Corrective Actions Requests (CAR) to address non-conformance:

For those land owners who currently do not have land titles, is customary tenure the current type of land holding? If so, how is clear right to land title determined? Also, it is unclear if any of the project lands include protected land, or just those lands held by inhabitants that desire a proper land title. Please clarify.


Project proponent response: “For this project, one of the selection criteria is to have a land title. By this reason this project is focusing in the areas where ACP is conducting a massive cadaster and land titling project, which means: 100% of the farms in the area of Cirí-Trinidad have been already cadaster, 39% of the total farms already have a land title, and the rest are in process to get it. The land title is released by the national entities that have the authority to do this process (ANATI is this entity).” It appears all properties within the project will eventually hold clear land title. G1.6 addressed.

Evidence used to close CAR Response provided in #2 of “2011-07-25 MGM Innova Answerst CAR.docx”

Date closed 26 August 2011 Indicator G1.7 - A description of current biodiversity within the project zone (diversity of species and ecosystems) and threats to that biodiversity, using appropriate methodologies, substantiated where possible with appropriate reference material.

The PDD includes the current biodiversity within the project zone (diversity of species and ecosystems) and threats to that biodiversity.


PDD, referenced literature

Findings: The PDD sufficiently describes the current biodiversity within the project zone (diversity of species and ecosystems) and threats to that biodiversity, using appropriate methodologies, substantiated where possible with appropriate reference material.

Indicator G1.8 - An evaluation of whether the project zone includes any of the following High Conservation Values (HCVs) and a description of the qualifying attributes.

The PDD describes the high conservation values within the project zone.



Indicator 8.1 - Globally, regionally or nationally significant concentrations of biodiversity values: a. protected areas

b. threatened species

c. endemic species

d. areas that support significant concentrations of a species during any time in their lifecycle (e.g. migrations, feeding grounds, breeding areas). Indicator 8.2 - Globally, regionally or nationally significant large landscape-level areas where viable populations of most if not all naturally occurring species exist in natural patterns of distribution and abundance. Indicator 8.3 Threatened or rare ecosystems. Indicator 8.4 - Areas that provide critical ecosystem services (e.g., hydrological services, erosion control, fire control). Indicator 8.5 - Areas that are fundamental for meeting the basic needs of local communities (e.g., for essential food, fuel, fodder, medicines or building materials without readily available alternatives). Indicator 8.6 - Areas that are critical for the traditional cultural identity of communities (e.g., areas of cultural, ecological, economic or religious significance identified in collaboration with the communities). Evidence Used to Assess PDD, High Conservation Value Resource Network, referenced



Conformance: literature Findings: The PDD sufficiently describes the globally significant

concentrations of threatened and endemic species of flora and fauna, and the areas that support significant concentrations of avian species during their lifecycle (HCV 1). The PDD further details areas within the project zone that provide critical ecosystem services, including reducing sedimentation/siltation to maintain water storage capacity and traffic channels on the Panama Canal, and retaining water flow to maintain temporal patterns of water flow in the dry season (HCV4).

G2 Baseline Projections Indicator G2.1 - Describe the most likely land-use scenario in the absence of the project following IPCC 2006 GL for AFOLU or a more robust and detailed methodology,

describing the range of potential land use scenarios and the associated drivers of GHG emissions and justifying why the land-use scenario selected is most likely.

The PDD describes the potential range of current land uses and the drivers of deforestation/GHG emissions.


PDD, IPCC 2006 Guidelines

Findings: Though the PDD discusses the drivers of deforestation and the range of potential land uses, in section G2.1 it does not specifically select and justify a current land use scenario. Additionally it does not appear to utilize the IPCC 2006 GL for AFOLU or a more robust methodology to do so.


Please utilize the IPCC 2006 GL for AFOLU or a more robust methodology to select, describe and justify the most likely land-use scenario in the absence of the project.


Section G2.2 of the PDD states that “According with IPCC 2006 GL for AFOLU was described and justified the most likely land-use scenario in the absence of the project” however it is not clear which approach from the IPCC 2006 GL for AFOLU was utilized. However the tracked revised version of the PDD does not appear to indicate any changes that were made in section G2.1. Additionally, section G2.1 still does not appear to explicitly state/select a current land use scenario.


In section G2.1 please state which approach the PDD utilizes from the IPCC 2006 GL for AFOLU to select and justify the most likely land use scenario is in the absence of the project.



Additionally, please state and justify what the most likely land use scenario is in the absence of the project.

Date issued 22 October 2011 Project proponent response/actions and date

Response provided in #3 of “2011-07-25 MGM Innova Answerst CAR.docx”

Evidence used to close CAR or Additional Corrective Action Request

Response provided in #3 of “2011-07-25 MGM Innova Answerst CAR.docx” Item 5 is missing any text identifying alternative land uses. Please add here the language from section G2.2 about alternative land use scenarios. Follow up: Language has been added as requested in the latest version of the PDD.

Date closed 26 August 2011 Indicator G2.2 - Document that project benefits would not have occurred in the absence of the project, explaining how existing laws or regulations would likely affect land use and justifying that the benefits being claimed by the project are truly ‘additional’ and would be unlikely to occur without the project.

The PDD describes the investment, technological and institutional barriers to establishing timber production and agroforestry in the region.


PDD

Findings: Though the PDD details the appropriate barriers to establishment of timber and agroforestry, it does not discuss how existing law and regulations would likely affect land use. This appears to be addressed to some degree in section G2.1, however as required by CCB, it must be included in the appropriate section as well.


Please include a discussion of existing laws and regulations would likely affect land use.


In section G2.1 the project proponent provides a discussion of applicable laws, however the PDD still does not provide a discussion of the laws in the appropriate section (section G2.2).


Please add or relocate the discussion of existing laws and regulations would likely affect land use to this section (G2.2).


Response provided in #4 of “2011-07-25 MGM Innova Answerst CAR.docx”

Evidence used to close CAR: Response provided in #4 of “2011-07-25 MGM Innova Answerst CAR.docx” (pending additional evidence) There is no



discussion about laws in this section which was requested in the last round of CAR’s. Follow up: Revised PDD (2012-01-18 PDD PCA (Final with Track changes CAR -3a).docx) includes a reference to the location of the discussion regarding laws that would affect land use. CAR addressed.

Date closed 19 January 2012 Indicator G2.3 - Calculate the estimated carbon stock changes associated with the ‘without project’ reference scenario described above. This requires estimation of carbon stocks for each of the land-use classes of concern and a definition of the carbon pools included, among the classes defined in the IPCC 2006 GL for AFOLU. The timeframe for this analysis can be either the project lifetime (see G3) or the project GHG accounting period, whichever is more appropriate. Estimate the net change in the emissions of non-CO2 GHG emissions such as CH4 and N2O in the ‘without project’ scenario. Non-CO2

gases must be included if they are likely to account for more than 5% (in terms of CO2-equivalent) of the project’s overall GHG impact over each monitoring period. Projects whose activities are designed to avoid GHG emissions (such as those reducing emissions from deforestation and forest degradation (REDD), avoiding conversion of non-forest land, or certain improved forest management projects) must include an analysis of the relevant drivers and rates of deforestation and/or degradation and a description and justification of the approaches, assumptions and data used to perform this analysis. Regional-level

The PDD provides a conservative per hectare average from the IPCC default estimates for standing biomass grassland in tropical moist and wet climates.



estimates can be used at the project’s planning stage as long as there is a commitment to evaluate locally-specific carbon stocks and to develop a project-specific spatial analysis of deforestation and/or degradation using an appropriately robust and detailed carbon accounting methodology before the start of the project. Evidence Used to Assess Conformance:

PDD, IPCC 2006 GL

Findings: Though the PDD provides an estimation of carbon stocks for each of the land-use classes of concern (ag/pastures/scrub), a description of the carbon pools included is not detailed in this section (only provided in G1.4). Please include this here. Additionally, the estimate is only given on a per hectare basis, and is not analyzed for either the project lifetime or the project GHG accounting period, whichever is more appropriate.


Please provide a description of all carbon pools in this section. Also, please provide an analysis of the estimated carbon stock changes in the baseline case for either the project lifetime or the project GHG accounting period, whichever is more appropriate.


The same response was provided as was in the original PDD. It is unclear how the approach utilized is consistent with the methodology AR-AM0005. Possibly this detail is provided in the TARAM spreadsheet, however a more detailed description needs to be provided in this section. It is also requested that a meeting be set up between the verifier and MGM Innova to walkthrough the TARIM spreadsheet, baseline, without and with project scenarios.


As only a summary of the analysis of estimated carbon stock changes is provided here, please provide a reference to the TARAM spreadsheet and provide an output of TARAM results in an appendix for reference.


TARAM results are given along with a reference to the spreadsheet.

Evidence used to close CAR Summary of TARAM results is given along with a reference to the spreadsheet. Timeframe of 30 years is listed. Spreadsheet was not found in recent docs submitted by client. Follow up: In 2012-01-18 PDD PCA (Final with Track changes



CAR -3a).docx changes have been made to the table to reflect just the 20 year project period. The TARAM spreadsheet states the same values through year 20 so it will not be edited (30 years will still be shown). NCR addressed.

Date closed 19 January 2012 Indicator G2.4 - Describe how the ‘without project’ reference scenario would affect communities in the project zone, including the impact of likely changes in water, soil and other locally important ecosystem services.

The PDD describes the consequences of the “without project” reference scenario on the project zone.


PDD

Findings: The PDD describes the consequences of the communities in the “without project” reference scenario on the project zone, but does not detail how the communities would be affected by the “without project” reference scenario.


Please provide a description of how the ‘without project’ reference scenario would affect communities in the project zone, including the impact of likely changes in water, soil and other locally important ecosystem services.


It does not appear that any response was provided by the project developer to address the CAR. Please address. Follow up: Language was added to this section to sufficiently describe how the without project reference scenario would affect communities in the project zone.

Evidence used to close CAR 2011-11-09 PDD PCA.doc Date closed 22 June 2011

Indicator G2.5 - Describe how the ‘without project’ reference scenario would affect biodiversity in the project zone (e.g., habitat availability, landscape connectivity and threatened species).

The PDD describes how biodiversity in the project zone would be affected in the “without project” scenario.


PDD

Findings: The PDD sufficiently describes how the ‘without project’ reference scenario would affect biodiversity in the project zone,



primarily through loss of wildlife habitat, fragmentation, hunting and increase of invasive species.

G3 Project Design and Goals Indicator G3.1 - Provide a summary of the project’s major climate, community and biodiversity objectives.

The PDD describes the project’s major climate and community objectives.


PDD

Findings: The PDD describes the project’s major climate and community objectives.


Although it is later outlined in the PDD, it must be addressed in this section. Please provide a description of the biodiversity objectives of the project.


It does not appear that any response was provided by the project developer to address the CAR. Please address. Follow up: PDD revision sufficiently provides a description of the biodiversity objectives of the project.

Evidence used to close CAR 2011-11-09 PDD PCA.doc Date closed 22 October 2011

Indicator G3.2 - Describe each project activity with expected climate, community and biodiversity impacts and its relevance to achieving the project’s objectives.

Biodiversity impacts and relevance are described on Pages 68-70. Community impacts and relevance are described on Pages 71-74.


PDD

Findings: Although Community and Biodiversity impacts and relevance are described in the PD, Section G3.2 did not appear to contain a reference to Climate impacts and relevance expected from the project.


Please provide an additional description of Climate impacts and relevance expected from the project.


Project proponent response: “Taking into account that the principal activities of the project are the reforestation and the establishment of silvo-pastoral and agro-forestry systems the climate in the region would be positively impacted due to the



incorporating trees builds a micro–climate favorable for microorganisms and animals, and helping to prevent soil erosion, being this reflected in the soil productivity. Besides of that benefits the vegetation cover established through the development of project will mean the removal of the carbon from the atmosphere, which in a short-term response to global warming caused by the accumulation of carbon dioxide in the atmosphere.” Though the response was provided in the MGM Answers documents, the newest draft of the PDD does not show this language included in section G3.2. This will be considered addressed when the PDD is revised to include the language in section G3.2. Follow up: The newest draft of the PDD shows the appropriate language included in section G3.2.


Indicator G3.3 - Provide a map identifying the project location and boundaries of the project area(s), where the project activities will occur, of the project zone and of additional surrounding locations that are predicted to be impacted by project activities (e.g. through leakage).

PDD contains Figure 6, Eligible Areas, displaying the Project zone and Eligible area.


PDD

Findings: Project zone and Eligible area are identified on a map. Indicator G3.4 - Define the project lifetime and GHG accounting period and explain and justify any differences between them. Define an implementation schedule, indicating key dates and milestones in the project’s development.

PDD contains a short description of the project timing.


PDD

Findings: Although the general project timeframe of 2007-2013 is given



with an Accounting period of 20 years, there are no specific dates in Section G3.4 and a detailed implementation schedule is lacking. In addition, in the first paragraph of Page 76 (Section G3.7), the project’s timeline is stated to be 25 years.


Though it is stated elsewhere in the document, please provide the exact project start and end date within Section G3.4. Please provide define an implementation schedule, indicating key dates and milestones in the project’s development. Please ensure the timeframe is consistent throughout the document (Section G3.7).


It does not appear that a response was provided to address this CAR. Please address. Follow up: The revised version of the PDD sufficiently provides the implementation schedule, start date and end date.


Indicator G3.5 - Identify likely natural and human-induced risks to the expected climate, community and biodiversity benefits during the project lifetime and outline measures adopted to mitigate these risks.

The PDD outlines Project Risks and Mitigation Measures for Community.


PDD

Findings: Risks and mitigation measures to the Community aspect of the project are outlined in Section G3.5. The risks to Climate and Biodiversity are very general.


Please separately address the risks to Climate and Biodiversity, and provide specific details on the plans for mitigation to those risks. These mitigation plans should be measurable, and verifiable. For example, “Periodically visits to the forest by a ACP representative” should be followed by a timeline and action steps for this mitigation step.


Project proponent addresses additional methods to mitigate climate, social and biodiversity risks. However, the response appears to be incomplete (contains notes for additional information to be added and blanks which need to be completed). Please provide a complete response and include



the language in the PDD in section G3.5


Please separately address (state) the risks to Climate Community and Biodiversity, and provide specific details on the plans for mitigation to Climate and Biodiversity. These mitigation plans should be measurable, and verifiable. For example, “Periodically visits to the forest by a ACP representative” should be followed by a timeline and action steps for this mitigation step.

Date issued 22 October 2011 Evidence used to close CAR Adequate response provided in #7 of “2011-07-25 MGM

Innova Answerst CAR.docx” Date closed 22 December 2011

Indicator G3.6 - Demonstrate that the project design includes specific measures to ensure the maintenance or enhancement of the high conservation value attributes identified in G1 consistent with the precautionary principle.

The PDD restates the high conservation values achieved by the project.


PDD, Page 75, Section G3.6

Findings: Section G3.6 restates the high conservation values achieved by the project. However, this section does not specifically address how those values are going to be maintained and enhanced.


Please provide specific details on how high conservation values will be maintained and enhanced consistent with the precautionary principle.


It does not appear that a response was provided to address this CAR. Please address. Follow up: Details on how high conservation values will be maintained and enhanced were provided, consistent with the precautionary principle.


Indicator G3.7 - Describe the measures that will be taken to maintain and enhance the climate,

The PDD details creation of a Reforestation Cooperative to be in place after the completion of the project.



community and biodiversity benefits beyond the project lifetime. Evidence Used to Assess Conformance:

PDD

Findings: The reforestation cooperative appears to fully satisfy the requirements of Section G3.7 to maintain the project activities after the completion of the project.

Indicator G3.8 - Document and defend how communities and other stakeholders potentially affected by the project activities have been identified and have been involved in project design through effective consultation, particularly with a view to optimizing community and stakeholder benefits, respecting local customs and values and maintaining high conservation values. Project developers must document stakeholder dialogues and indicate if and how the project proposal was revised based on such input. A plan must be developed to continue communication and consultation between project managers and all community groups about the project and its impacts to facilitate adaptive management throughout the life of the project.

The PDD identifies stakeholders and documents the steps the project has taken to include them in the process.


PDD

Findings: Stakeholder workshops were held at the beginning of the project. However, Section G3.8 does not document the specific dates of the stakeholder workshops or provide the specific outcomes of the meetings (meeting minutes, recordings, etc.). In addition, it does not appear there is a specific plan to continue communication and consultation between project managers and all community groups about the project and its impacts to facilitate adaptive management throughout the life of the project.


Please provide the dates and outcomes of the meetings that have already occurred. Please provide a specific plan to continue communication and consultation between project managers and



all community groups about the project and its impacts to facilitate adaptive management throughout the life of the project.


It does not appear that a response was provided to address this CAR. Please address. Follow up: The PDD (and Annex 4) provides the dates and outcomes of the meetings that have already occurred. They also provide a specific plan to continue communication and consultation between project managers and all community groups about the project and its impacts to facilitate adaptive management throughout the life of the project.

Evidence used to close CAR 2011-11-09 PDD PCA.doc, Annex 4 Date closed 22 October 2011

Indicator G3.9 - Describe what specific steps have been taken, and communications methods used, to publicize the CCBA public comment period to communities and other stakeholders and to facilitate their submission of comments to CCBA. Project proponents must play an active role in distributing key project documents to affected communities and stakeholders and hold widely publicized information meetings in relevant local or regional languages.

The PDD addresses publication of the public comment period.


PDD

Findings: The PDD states that the PDD will be posted on the CCBA webpage and made available to the public at the ACP offices. However the CCB indicator requires that Project proponents must play an active role in distributing key project documents to affected communities and stakeholders and hold widely publicized information meetings in relevant local or regional languages.


Please discuss the information meetings PCA held with the communities and how they were widely publicized (newspaper, internet, other.)

Date issued 14 June 2011 Project proponent response/actions It does not appear that a response was provided to address this



and date CAR. Please address. Follow up: The PDD sufficiently describes how the project proponent played an active role in distributing key documents to affected communities.

Evidence used to close CAR 2011-11-09 PDD PCA.doc, Annex 4 Date closed 22 October 2011

Indicator G3.10 - Formalize a clear process for handling unresolved conflicts and grievances that arise during project planning and implementation. The project design must include a process for hearing, responding to and resolving community and other stakeholder grievances within a reasonable time period. This grievance process must be publicized to communities and other stakeholders and must be managed by a third party or mediator to prevent any conflict of interest. Project management must attempt to resolve all reasonable grievances raised, and provide a written response to grievances within 30 days. Grievances and project responses must be documented.

The PDD provides a general statement about conflict resolution tools.


PDD

Findings: The general statement about conflict resolution in Section G3.10 of the PDD does not adequately address the requirements of CCBA.


Please outline a specific process that details how unresolved conflicts and grievances that arise during project planning and implementation will be addressed. Please include a process for hearing, responding to and resolving community and other stakeholder grievances within a reasonable time period. Please document how the grievance process will be publicized to communities and other stakeholders. Please discuss how the process will be managed by a third party or mediator to prevent any conflict of interest.

Date issued 14 June 2011



Project proponent response/actions and date

It does not appear that a response was provided to address this CAR. Please address. Follow up: Though a detailed process discussing how grievances are handled, additional information is needed regarding how the grievance process is publicized to communities and how grievances are resolved (third party or mediator) to address any conflict of interest.


Please provide additional information regarding how the grievance process is publicized to communities, and how grievances are resolved (third party or mediator) to address any conflict of interest.

Date issued 22 October 2011 Evidence used to close CAR or Additional corrective Action

PDD states that beneficiaries can give their complaints to staff and these complaints are given to contractors to make adjustments. No mention is given as to any follow up, conflict resolution (3rd party mediator) or any mention of how this process is advertised to the public. Follow up: 2012-01-18 PDD PCA (Final with Track changes CAR -3a).docx language was added to describe how the process is publicized. CAR addressed.

Date closed 19 January 2012 Indicator G3.11 - Demonstrate that financial mechanisms adopted, including projected revenues from emissions reductions and other sources, are likely to provide an adequate flow of funds for project implementation and to achieve the anticipated climate, community and biodiversity benefits.

The PDD provides general information about the financial mechanisms providing adequate funds for project implementation.


PDD

Findings: A more specific cost/benefits analysis is needed, in addition to how the funds will affect the climate, community, and biodiversity benefits.


Although a general discussion exists, please provide a more specific cost/benefit analysis that thoroughly demonstrates the project is adequately funded and that the climate, community, and biodiversity benefits will be achieved.

Date issued 14 June 2011 Project proponent response/actions It does not appear that a response was provided to address this



and date CAR. Please address. Follow up: A budget sheet for budget years 2010-2012 is provided, along with the future expenditures for the entire project in Annex 12. However an annual financial analysis for the project lifetime is not provided.


Please provide an annual financial analysis for the project lifetime (cost vs. available funds).

Date issued 22 October 2011 Evidence used to close CAR The PDD provides a yearly liabilities and expenses scenario,

but this is incomplete as is does not continue through 2029. It also appears that project assumes no costs after 2013. Please detail how this is possible. Follow up: 2012-01-11 PDD PCA (Final with Track changes CAR -3a).docx A new table has been added. CAR addressed.

Date closed 13 January 2012

G4 Management Capacity and Best Practices Indicator G4.1 - Identify a single project proponent which is responsible for the project’s design and implementation. If multiple organizations or individuals are involved in the project’s development and implementation the governance structure, roles and responsibilities of each of the organizations or individuals involved must also be described.

The PDD states the project proponent is ACP, but also states that ANAM, MIDA, and BDA have jurisdiction over the project.


PDD

Findings: Although ACP is the project proponent, other institutions have jurisdiction over the project site.


Please describe roles and responsibilities of each of the organizations or individuals involved.


It does not appear that a response was provided to address this CAR. Please address. Follow up: The PDD sufficiently describes the roles and responsibilities of each of the organizations or individuals involved.




Indicator G4.2 - Document key technical skills that will be required to implement the project successfully, including community engagement, biodiversity assessment and carbon measurement and monitoring skills. Document the management team’s expertise and prior experience implementing land management projects at the scale of this project. If relevant experience is lacking, the proponents must either demonstrate how other organizations will be partnered with to support the project or have a recruitment strategy to fill the gaps.

The PDD describes technical and management expertise of ACP.


PDD

Findings: The personnel of ACP have the key technical skills required to implement the project successfully, but it is unclear if they have worked on a land management project at this scale.


Please document the management team’s prior experience implementing land management projects at the scale of this project.


It does not appear that a response was provided to address this CAR. Please address. Follow up: The PDD sufficiently documents the management team’s prior experience implementing land management projects at the scale of this project.


Indicator G4.3 - Include a plan to provide orientation and training for the project’s employees and relevant people from the communities with an objective of building locally useful

Section G4.3 of the PDD contains a general list of desired future training for stakeholders.



skills and knowledge to increase local participation in project implementation. These capacity building efforts should target a wide range of people in the communities, including minority and underrepresented groups. Identify how training will be passed on to new workers when there is staff turnover, so that local capacity will not be lost. Evidence Used to Assess Conformance:

PDD

Findings: Although Section G4.3 of the PDD contains a general list of future stakeholder trainings, Section G3.2 indicates some trainings have already occurred. However, it is unclear from either section whether minority and under-represented groups were included, or how training will be passed on to new workers when there is staff turnover. Also, it is unclear if there has been an orientation for ACP employees to this project.


Please provide evidence that minority and underrepresented groups were included in the trainings. Please document how training will be passed on to new workers when there is staff turnover. Please document if there has been an orientation for ACP employees to this project.


It does not appear that a response was provided to address this CAR. Please address. Follow up: The PDD sufficiently details how the project complies with the “Organic Law” but does not discuss how staff turnover and orientation are addressed.


Please discuss how staff turnover and orientation are addressed.

Date issued 22 November 2011 Evidence used to close CAR A statement of staff turnover and trainings has been added, as

well as references to supporting documents that show the format for closing evaluation reports.

Date closed 22 December 2011 Indicator G4.4 - Show that people from the communities will be given an equal opportunity to fill all employment positions (including

PDD describes ACP’s policy to hire irrespective of gender or religion.



management) if the job requirements are met. Project proponents must explain how employees will be selected for positions and where relevant, must indicate how local community members, including women and other potentially underrepresented groups, will be given a fair chance to fill positions for which they can be trained. Evidence Used to Assess Conformance:

PDD

Findings: It is unclear if ACP’s hiring policy includes ethnicity. Also, it is unclear if ACP’s policy will be extended outside of ACP, where local landowners, villagers, and other stakeholders are involved.


Please provide additional documentation that hiring both internal and external to ACP is open to anyone, regardless of ethnicity, as long as the individual is qualified for the position.


It does not appear that a response was provided to address this CAR. Please address. Follow up: CAR addressed.


Indicator G4.5 - Submit a list of all relevant laws and regulations covering worker’s rights in the host country. Describe how the project will inform workers about their rights. Provide assurance that the project meets or exceeds all applicable laws and/or regulations covering worker rights and, where relevant, demonstrate how compliance is achieved.

The PDD states that ACP complies with all applicable labor laws.


PDD

Findings: The general labor law statement does not comply with all of the requirements of Section G4.5 of CCBA’s Standards.

Corrective Actions Requests (CAR) Please submit a list of all relevant laws and regulations covering



to address non-conformance: worker’s rights in Panama. Describe how the project will inform workers about their rights. Provide assurance that the project meets or exceeds all applicable laws and/or regulations covering worker rights and, where relevant, demonstrate how compliance is achieved.


It does not appear that a response was provided to address this CAR. Please address. Follow up: The PDD provides assurance that the project meets or exceeds all applicable laws and/or regulations covering worker rights. It does not however provide a list of all relevant laws and regulations covering worker’s rights in Panama or describe how the project will inform workers about their rights.


Please provide a list of all relevant laws and regulations covering worker’s rights in Panama and describe how the project will inform workers about their rights.

Date issued 22 November 2011 Evidence used to close CAR Laws have been provided as well as a description of how

workers are informed of their rights when they sign up for employment.

Date closed 22 December 2011 Indicator G4.6 - Comprehensively assess situations and occupations that pose a substantial risk to worker safety. A plan must be in place to inform workers of risks and to explain how to minimize such risks. Where worker safety cannot be guaranteed, project proponents must show how the risks will be minimized using best work practices.

The PDD provides a general statement about employee safety.


PDD

Findings: The general statement on employee safety does not appear to comply with all of the requirements of Section G4.6 of CCBA’s Standards.


Please comprehensively assess situations and occupations that pose a substantial risk to worker safety. A plan must be in place to inform workers of risks and to explain how to minimize such risks. Where worker safety cannot be guaranteed, project proponents must show how the risks will be



minimized using best work practices. Date issued 14 June 2011 Project proponent response/actions and date

It does not appear that a response was provided to address this CAR. Please address. Follow up: The PDD does not comprehensively assess situations and occupations that pose a substantial risk to worker safety or provide a specific plan to minimize such risks.


Please comprehensively assess situations and occupations that pose a substantial risk to worker safety and provide a specific plan to minimize such risks.

Date issued 22 November 2011 Evidence used to close CAR Detail provided that satisfies this requirement. Plan has been

provided to verifier. Date closed 22 December 2011

Indicator G4.7 - Document the financial health of the implementing organization(s) to demonstrate that financial resources budgeted will be adequate to implement the project.

The PDD states the project proponent is financially solvent and provides an internet link to their financial statement.


PDD

Findings: CCBA requirement G4.7 satisfied.

G5 Legal Status and Property Rights Indicator G5.1 - Submit a list of all relevant national and local laws and regulations in the host country and all applicable international treaties and agreements. Provide assurance that the project will comply with these and, where relevant, demonstrate how compliance is achieved.

The PDD contains a general statement on local laws and regulations.


PDD

Findings: Although ACP is an entity of the Government of Panama, a list of all applicable laws related to property rights is required by CCBA and must be submitted in the PDD.


Please provide a list of all applicable national and local laws related to property rights.

Date issued 14 June 2011




It does not appear that a response was provided to address this CAR. Please address. Follow up: A list of all applicable laws related to property rights is provided by CCBA in the PDD.


Indicator G5.2 - Document that the project has approval from the appropriate authorities, including the established formal and/or traditional authorities customarily required by the communities.

The PDD provides a general statement documenting legal approval.


PDD

Findings: As ACP is an entity of the Government of Panama, it appears they do not need to seek or already have the approval of the appropriate authorities, including the established formal and/or traditional authorities customarily required by the communities.

Indicator G5.3 - Demonstrate with documented consultations and agreements that the project will not encroach uninvited on private property, community property, or government property and has obtained the free, prior, and informed consent of those whose rights will be affected by the project.

The PDD states that the project will obtain the free, prior, and informed consent of all landowners.


PDD

Findings: The PDD states that the project will obtain the free, prior, and informed consent of all landowners.


Placeholder as the contract is current being reviewed.


Contract reviewed and acceptable.

Evidence used to close CAR Annex 2 of 2012-01-18 PDD PCA (Final with Track changes CAR -3a).docx

Date closed 26 August 2011



Indicator G5.4 - Demonstrate that the project does not require the involuntary relocation of people or of the activities important for the livelihoods and culture of the communities. If any relocation of habitation or activities is undertaken within the terms of an agreement, the project proponents must demonstrate that the agreement was made with the free, prior, and informed consent of those concerned and includes provisions for just and fair compensation.

The PDD states that no involuntary relocations will occur as a result of the project.


PDD

Findings: No involuntary relocations will occur as a result of the project. Indicator G5.5 - Identify any illegal activities that could affect the project’s climate, community or biodiversity impacts (e.g., logging) taking place in the project zone and describe how the project will help to reduce these activities so that project benefits are not derived from illegal activities.

The PDD describes the current illegal activities occurring in the project area.


PDD

Findings: Section G5.5 does not contain a description of how the project will help to reduce the listed illegal activities so that project benefits are not derived from illegal activities.


Please describe how the projects will help to reduce the listed illegal activities.


Project proponent states that during the monitoring and harvesting stages, unskilled labor will be needed, which should alleviate the illegal activity caused by poverty. Furthermore, forest alternative uses such as tourism and the planned extraction on non-timber products will generate economic benefits, further alleviating poverty (the cause of illegal activities. Finally, the project will improve land productivity, ensuring the long-term sustainability of the communities. CAR Addressed.




Date closed 26 August 2011 Indicator G5.6 - Demonstrate that the project proponents have clear, uncontested title to the carbon rights, or provide legal documentation demonstrating that the project is undertaken on behalf of the carbon owners with their full consent. Where local or national conditions preclude clear title to the carbon rights at the time of validation against the Standards, the project proponents must provide evidence that their ownership of carbon rights is likely to be established before they enter into any transactions concerning the project’s carbon assets.

The PDD discusses ACP’s carbon rights.


PDD

Findings: The PDD states that through the binding agreement with landowners, ACP has the right over carbon capture generated by the project activities.


This serves as a placeholder as the carbon rights contract language is currently under review.


Contracts provided were interpreted, and based on the interpretation, the property owner gives ACP the rightful use (usufruct) of the selected area (Globo de Terreno /and or Cobertura Arborea – Forested Area), regarding the Environmental Services / Servicios Ambientales (SA) – Carbon Rights. Other SA, remain in the hands of the property owners. CAR addressed.

Evidence used to close CAR Annex 2 of 2012-01-18 PDD PCA (Final with Track changes CAR -3a).docx

Date closed 26 August 2011

CL1 Net Positive Climate Impacts Indicator CL.1 - Estimate the net change in carbon stocks due to the

The PDD estimates the carbon stock changes with the project.



project activities using the methods of calculation, formulae and default values of the IPCC 2006 GL for AFOLU or using a more robust and detailed methodology. The net change is equal to carbon stock changes with the project minus carbon stock changes without the project (the latter having been estimated in G2). This estimate must be based on clearly defined and defendable assumptions about how project activities will alter GHG emissions of carbon stocks over the duration of the project or the project GHG accounting period. Evidence Used to Assess Conformance:

PDD, CDM AR-AM0005

Findings: The PDD estimates the carbon stock changes with the project but does not appear to satisfy the additionality criteria of the selected methodology (CSM AR-AM0005). Specifically, the first methodology applicability criteria states that “landcover within the project boundary is degraded grasslands, which are expected to remain degraded without human intervention…” The PDD specifically states that the pre-project conditions of the project lands was forested lands, and that the current use includes a mixture of degraded grassland (Saccharum spontaneum), agriculture, pasture, and scrubland.


Please provide a justification of how the project satisfies the applicability criteria of the CDM AR-AM0005 methodology. Additionally, if justification can be provided, please provide for review the TARAM Excel spreadsheet that was used to calculate net carbon stock changes for the project.


TARAM V1.3 spreadsheet provided. Project Proponent includes a step-by-step eligibility analysis of the project to AR-AM0005. However, it is still unclear how the project meets the first eligibility criteria of degraded “grasslands” as the PDD still states that “In the project area, the parcels to be reforested or to be used for agroforestry systems are currently used for agriculture/pasture/scrub systems.” Please address. It is also requested that a meeting be set up between the verifier and MGM Innova to walkthrough the TARIM spreadsheet, baseline, without and with project scenarios.



Follow up: Though the PDD does not satisfy the eligibility criteria of “grasslands” as ag and grazing lands are included, it is clear (after review of the project and calculations in the TARAM spreadsheet) that the project satisfies CCB’s requirement that “The net change is equal to carbon stock changes with the project minus carbon stock changes without the project.”

Evidence used to close CAR Response provided in #9 of “2011-07-25 MGM Innova Answerst CAR.docx”, TARAM V1.3 (PCA_version final_10000ha).xls

Date closed 22 November 2011 Indicator CL.2 - Estimate the net change in the emissions of non-CO2

GHG emissions such as CH4 and N2O in the with and without project scenarios if those gases are likely to account for more than a 5% increase or decrease (in terms of CO2-equivalent) of the project’s overall GHG emissions reductions or removals over each monitoring period.

The PDD states that the net change in the emissions of non-CO2

GHG emissions are not likely to account for more than a 5% increase or decrease of the project’s overall GHG emissions removals over each monitoring period, and can therefore be neglected. Further the PDD states that the CDM Executive Board agreed at its 42nd meeting GHG emissions in A/R CDM project activities from (i) fertilizer application, (ii) removal of herbaceous vegetation, and (iii) transportation may be considered as insignificant and hence can be neglected in A/R baseline and monitoring methodologies


PDD, CDM AR-AM0005, CDM-EB-42

Findings: The PDD sufficiently demonstrated that non-CO2 GHG emissions can be considered insignificant and can be neglected.

Indicator CL.3 - Estimate any other GHG emissions resulting from project activities. Emissions sources include, but are not limited to, emissions from biomass burning during site preparation, emissions from fossil fuel combustion, direct emissions from the use of synthetic fertilizers, and emissions from the decomposition of N-fixing species.

The PDD provides an estimate of other GHG emissions resulting from project activities.


PDD, CDM AR-AM0005

Findings: The PDD uses equation 5.2.2.1 of the CDM AR-AM0005 methodology to provide an estimate of other GHG emissions resulting from project activities, however the data/variables



used in this equation are not provided for validation. Corrective Actions Requests (CAR) to address non-conformance:

Please provide the data/variables used in equation 5.2.2.1 of the CDM AR-AM0005 methodology so they can be validated.


Project proponent has provided the data and variables used in Equation 5.2.2.1 of the methodology. CAR addressed.


Date closed 26 August 2011 Indicator CL.4 - Demonstrate that the net climate impact of the project is positive. The net climate impact of the project is the net change in carbon stocks plus net change in non-CO2

GHGs where appropriate minus any other GHG emissions resulting from project activities minus any likely project-related unmitigated negative offsite climate impacts (see CL2.3).

The PDD states that the net climate impact of the project is positive.


PDD, CDM AR-AM0005

Findings: To be determined once CL1.1 regarding the applicability of the selected methodology is addressed.


Placeholder until CL1.1 is addressed.


CL1.1 regarding applicability does not appear to have been sufficiently addressed. Please address CL1.1. It is also requested that a meeting be set up between the verifier and MGM Innova to walkthrough the TARIM spreadsheet, baseline, without and with project scenarios. Follow up: Though the PDD does not satisfy the eligibility criteria of “grasslands” as ag and grazing lands are included, it is clear (after review of the project and calculations in the TARAM spreadsheet) that the project satisfies CCB’s requirement that “The net change is equal to carbon stock changes with the project minus carbon stock changes without the project.”

Evidence used to close CAR Response provided in #9 of “2011-07-25 MGM Innova Answerst CAR.docx”, TARAM V1.3 (PCA_version final_10000ha).xls



Date closed 22 November 2011 Indicator CL.5 - Specify how double counting of GHG emissions reductions or removals will be avoided, particularly for offsets sold on the voluntary market and generated in a country with an emissions cap.

The PDD states that the projects emission reductions will be registered and held by an independent public third-party registry to insure property accounting.


PDD

Findings: The PDD sufficiently addresses how double counting of GHG emission reductions will be addressed.

CL2 Offsite Climate Impacts (“Leakage”) Indicator CL2.1 - Determine the types of leakage that are expected and estimate potential offsite increases in GHGs (increases in emissions or decreases in sequestration) due to project activities. Where relevant, define and justify where leakage is most likely to take place.

The PDD describes the anticipated types of leakage and how they are not proposed to be mitigated by project conditions.


PDD, CDM AR-AM0005

Findings: The PDD does not appear to apply the leakage formula as outlined in the selected methodology.


Please provide the results of the leakage formula as required by the methodology.


Project proponent states that Leakage is determined to be zero on the basis that grazing is not currently at its maximum capacity within the project area so areas within the project area have the capacity to receive a greater number of animals, avoiding off-site leakage. To support this argument please provide estimates as to the existing number of grazing animals within the project area and provide some estimate of the grazing carrying capacity of the project areas. Please include sources of estimates. Follow up: The argument supporting the case for the total number of



grazing animals is not clear. Corrective Actions Requests (CAR) to address non-conformance:

The argument supporting the case for the total number of grazing animals is not clear. From which document is the 126,934 ha under agricultural use and the estimate of 24% of the watershed in grazing use? Is the assumption that lands which are currently under agricultural use will serve to absorb any overflow of grazing activities, preventing leakage? If this is the case, would there not be the potential threat of leakage from displaced agriculture? Possibly a phone call is needed to ensure the verifier comprehensively understands the leakage argument.

Date issued 22 November 2011 Additional Corrective Action Request (CAR):

The overall description in the PDD is confusing. It seems that the PDD initially makes a statement that grazing leakage will not occur and then makes an argument regarding the under-utilization of grazing areas and shows calculations for potential leakage of grazing into surrounding areas. References are made for source of comparative livestock per ha number. Also where do the 1507.5 and 1593 come from? Follow up: Page 114 now reads “animals, on the other hand, the landowner can decide to continue the activity and move to outside the project area.” Which seems to indicate that leakage could take place. Please discuss. Follow up: Annex 2 of 2012-01-18 PDD PCA (Final with Track changes CAR -3a).docx states They will change the sentence to state that there will be no movement outside the project area. They will also change the text to reflect that “1770 acres” of reforestation on page 114 (not 1700 acres). The argument is sufficient for leakage – the numbers now appear to be appropriate.

Evidence used to close CAR ESI and ACP held multiple meetings to discuss the final fuelwood leakage issue. ACP found research that states a figure of 29 m3. While this number seems low to ESI, the official documentation/research was provided document/research and there is a lack of information in general on fuelwood consumption in Panama. From research ESI conducted, it was clear that Panama is among the lowest for fuelwood consumption in all of Central America. As this is an afforestation project, ESI believes ACP has clearly demonstrated there will be more fuelwood available in the project scenario than in the without project scenario, and therefore considers this issue addressed.



Date closed 05 March 2012 IndicatorCL2.2 - Document how any leakage will be mitigated and estimate the extent to which such impacts will be reduced by these mitigation activities.

The PDD states that there are no foreseen offsite impacts.


PDD, CDM AR-AM0005

Findings: The PDD does not document how leakage will be mitigated, rather it states that there will be none.


Please see the CAR in indicator CL2.1

Date issued 22 November 2011 Project proponent response/actions and date

The client has sufficiently demonstrated there is no leakage to a reasonable level of assurance.

Evidence used to close CAR PDD Date closed 18 January 2012

Indicator CL2.3 - Subtract any likely project-related unmitigated negative offsite climate impacts from the climate benefits being claimed by the project and demonstrate that this has been included in the evaluation of net climate impact of the project (as calculated in CL1.4).

The PDD states that there are no foreseen negative offsite climate impacts.


PDD, CDM AR-AM0005

Findings: The PDD does deduct project related negative offsite impacts, rather it states that there will be none.






Indicator CL2.4 - Non-CO2 gases must be included if they are likely to account for more than a 5% increase or decrease (in terms of CO2-

The PDD states that there are no foreseen negative offsite climate impacts.



equivalent) of the net change calculations (above) of the project’s overall off-site GHG emissions reductions or removals over each monitoring period. Evidence Used to Assess Conformance:

PDD, CDM AR-AM0005

Findings: The PDD does discuss any potential increase in non-CO2 gasses; rather it states that there will be none.






CL3 Climate Impact Monitoring Indicator CL3.1 - Develop an initial plan for selecting carbon pools and non-CO2 GHGs to be monitored, and determine the frequency of monitoring. Potential pools include aboveground biomass, litter, dead wood, belowground biomass, wood products, soil carbon and peat. Pools to monitor must include any pools expected to decrease as a result of project activities, including those in the region outside the project boundaries resulting from all types of leakage identified in CL2. A plan must be in place to continue leakage monitoring for at least five years after all activity displacement or other leakage causing activity has taken place. Individual GHG sources may be considered ‘insignificant’ and do not have to be accounted for if together such omitted decreases in carbon pools and increases in GHG emissions amount to less than 5% of the total CO2-equivalent benefits

The PDD provides an initial monitoring plan to address all carbon pools and non-CO2GHG’s to be monitored.



generated by the project. Non-CO2

gases must be included if they are likely to account for more than 5% (in terms of CO2-equivalent) of the project’s overall GHG impact over each monitoring period. Direct field measurements using scientifically robust sampling must be used to measure more significant elements of the project’s carbon stocks. Other data must be suitable to the project site and specific forest type. Evidence Used to Assess Conformance:

PDD, CDM AR-AM0005

Findings: Initial monitoring plan appears consistent with CL3.1 Indicator CL3.2 - Commit to developing a full monitoring plan within six months of the project start date or within twelve months of validation against the Standards and to disseminate this plan and the results of monitoring, ensuring that they are made publicly available on the internet and are communicated to the communities and other stakeholders.

The PDD commits to developing a full carbon monitoring plan and will disseminate this on the internet within twelve months of validation of the project against the CCBA standards.


PDD

Findings: The PDD sufficiently commits to developing a full monitoring plan within the required period.

CM1 Net Positive Community Impacts Indicator CM1.1 - Use appropriate methodologies to estimate the impacts on communities, including all constituent socio-economic or cultural groups such as indigenous peoples (defined in G1), resulting from planned project activities. A credible estimate of impacts must include changes in community well-being due to project activities and an

The PDD describes the positive community benefits anticipated to be derived from the project and that the future benefits will be estimated based on socio-economic indicators.



evaluation of the impacts by the affected groups. This estimate must be based on clearly defined and defendable assumptions about how project activities will alter social and economic well-being, including potential impacts of changes in natural resources and ecosystem services identified as important by the communities (including water and soil resources), over the duration of the project. The ‘with project’ scenario must then be compared with the ‘without project’ scenario of social and economic well-being in the absence of the project (completed in G2). The difference (i.e., the community benefit) must be positive for all community groups. Evidence Used to Assess Conformance:

PDD

Findings: While the PDD describes the community benefits anticipated to be derived, it does not include an evaluation of the impacts by the affected groups. Further, the estimate does not provide sufficient detail in the comparison of the “with project” scenario compared to the “without project” scenario.


Please provide an evaluation of the community impacts by the affected groups within the community, with particular focus on the indigenous groups identified in G1 (i.e. community feedback on the anticipated positive/negative impacts of the proposed project activities). Additionally, please provide a more detailed comparison of the “without project” to the “with project” scenario with regard to community impacts.


It does not appear that a response was provided to address this CAR. Please address. Follow up: The PDD provides a detailed comparison of the community impacts of the with and without project scenario, however it does not discuss the impact, or lack of impact specifically on indigenous groups (the Kuna, Emberá, Ngöbe, etc.).


Please discuss the impact, or lack of impact specifically on indigenous groups (the Kuna, Emberá, Ngöbe, etc.).



Date issued 22 November 2011 Evidence used to close CAR PDD describes the impact as being positive to indigenous

groups. Date closed 22 December 2011

Indicator CM1.2 - Demonstrate that no High Conservation Values identified in G1.8.4-6 will be negatively affected by the project. (Projects must maintain or enhance the High Conservation Values (identified in G1) in the project zone that are of particular importance to the communities’ well-being.)

The PDD states that HCV’s in the project zone will not be negatively impacted by the project.


PDD

Findings: While the PDD topically states that that HCV’s in the project zone will not be negatively impacted by the project, more discussion (what specific types of new incomes, anticipated levels of income increase comparing the without project and with project income levels) is needed in this section to fully demonstrate that no High Conservation Values identified in G1.8 that are of particular importance to the communities well-being will be negatively affected.


Please provide additional discussion regarding the positive impacts to the HCV’s of greatest importance in the project zone. Specifically, what types of new incomes, what are the anticipated levels of income increase comparing the without project and with project income levels.


It does not appear that a response was provided to address this CAR. Please address.


Please specifically discuss what types of new incomes anticipated, and what are the anticipated levels of income increase comparing the without project and with project income levels.

Date issued 22 October 2011

CM2 Offsite Stakeholder Impacts Indicator CM2.1 - Identify any potential negative offsite stakeholder impacts that the project activities are likely to cause.

The PDD identifies any potential negative offsite stakeholder impacts that the project activities are likely to cause.




PDD

Findings: The PDD sufficiently describes the anticipated potential negative offsite stakeholder impacts resulting from project activities. The study discussed in CM2.2 will further address this issue.


Please include in this section (CM2.1) a discussion of the proposed study to assess the potential impact of price dampening, and detail how and at what frequency it will be implemented.


Project proponent includes a general discussion to mitigate stakeholder risks but does not further address the study previously described. The response appears to be incomplete (notes in column indicate additional information is needed from ACP). Please address. Follow up: The PDD has been revised to complete this section. During verification the study can be reconsidered and assessed to determine its effectiveness in determining the impact of oversupply of fruits.


Indicator CM2.2 - Describe how the project plans to mitigate these negative offsite social and economic impacts.

The PDD describes how the project plans to mitigate price dampening due to oversupply of certain agronomic products.


PDD

Findings: The PDD discusses the possibility of marketing agronomic products to larger market, such as Panama City or abroad markets to minimize over supply in local markets.

Indicator CM2.3 - Demonstrate that the project is not likely to result in net negative impacts on the well-being of other stakeholder groups.

The PDD states that the possible negative offsite community impacts of the project will be mitigated.


PDD

Findings: The PDD sufficiently demonstrates that the project is not likely to result in net negative impacts on the well-being of other stakeholder groups.



CM3 Community Impact Monitoring Indicator CM3.1 - Develop an initial plan for selecting community variables to be monitored and the frequency of monitoring and reporting to ensure that monitoring variables are directly linked to the project’s community development objectives and to anticipated impacts (positive and negative).

The PDD commits to conducting a socio-economic survey annually to record information on land use, demography, occupation, types and sizes of agricultural operations, livelihood alternatives, etc.


PDD

Findings: The community monitoring plan provides opportunities for assessment of the specific categories listed. Consider adding language that additional indicators will be added if deemed appropriate from community input.


Consider adding language that additional indicators will be added if deemed appropriate from community input.


It does not appear that a response was provided to address this CAR. Follow up: No additional language was provided to address this CAR.


Consider adding language that additional indicators will be added if deemed appropriate from community input. Follow up: Additional language has been added as requested.


Indicator CM3.2 - Develop an initial plan for how they will assess the effectiveness of measures used to maintain or enhance High Conservation Values related to community well-being (G1.8.4-6) present in the project zone.

The PDD provides monitoring indicators along with their methods and frequencies for collection.


PDD

Findings: The PDD provides monitoring indicators along with their methods and frequencies for collection, however there is no discussion of how the data will be utilized and reported.

Corrective Actions Requests (CAR) Please provide a discussion of how the stated monitoring



to address non-conformance: indicators will be utilized and reported to determine the effectiveness in the efforts to maintain or enhance high conservation values.


Project proponent response: “The monitoring indicators will be analyzed throughout scientific studies to make graphics with the indicators vs. Time and statistics, which will show, how the efforts are being reflected in the increase of the high conservation values, this will also determinate if the efforts are enough or if is necessary to take others measures to obtain better results.” Issue addressed.


Date closed 26 August 2011 Indicator CM3.3 - Commit to developing a full monitoring plan within six months of the project start date or within twelve months of validation against the Standards and to disseminate this plan and the results of monitoring, ensuring that they are made publicly available on the internet and are communicated to the communities and other stakeholders.

The PDD states that ACP is committed to developing a full community monitoring plan and will disseminate this on the internet within twelve months of validation of the project against the CCBA standards.


PDD

Findings: The PDD sufficiently commits to development of a full community monitoring plan within the required timeframe.

B1 Net Positive Biodiversity Impacts Indicator B1.1 - Use appropriate methodologies to estimate changes in biodiversity as a result of the project in the project zone and in the project lifetime. This estimate must be based on clearly defined and defendable assumptions. The ‘with project’ scenario should then be compared with the baseline ‘without project’ biodiversity scenario completed in G2. The difference (i.e., the net

The PDD is unclear in its assessment of biodiversity with and without the project.



biodiversity benefit) must be positive. Evidence Used to Assess Conformance:

PDD

Findings: Section B1.1 of the PDD lacks a description of the analysis of how biodiversity was studied before the project (baseline) and how the net biodiversity benefits of the project will be calculated.


Please provide a detailed analysis, with appropriate scientific documents (peer-reviewed studies), estimating changes in biodiversity as a result of the project in the project zone and in the project lifetime. The ‘with project’ scenario should then be compared with the baseline ‘without project’ biodiversity scenario completed in G2. The difference (i.e., the net biodiversity benefit) must be positive.


Project proponent provides discussion on peer-reviewed studies that show teak wood plantations can eventually provide the same biodiversity benefits as natural forests. There does not appear to be a “with project/without project” comparison in this discussion, which is required to satisfy this requirement. Please address. Follow up: The PDD sufficiently compares the “with project/ without project” case.

Evidence used to close CAR Response provided in #14 of “2011-07-25 MGM Innova Answerst CAR.docx”, 2011-11-09 PDD PCA.doc’

Date closed 22 November 2011 Indicator B1.2 - Demonstrate that no High Conservation Values identified in G1.8.1-3 will be negatively affected by the project.

The PDD provides a general statement that no high conservation values will be negatively affected by the project.


PDD

Findings: The PDD provides a general statement that no high conservation values will be negatively affected by the project.


As stated in this requirement, please provide a discussion demonstrating that no High Conservation Values identified in G1.8.1-3 will be negatively affected by the project.



Date issued 07 September 2011 Project proponent response/actions and date

The PDD provides a sufficient argument demonstrating that no High Conservation Values identified in G1.8.1-3 will be negatively affected by the project


Indicator B1.3 - Identify all species to be used by the project and show that no known invasive species will be introduced into any area affected by the project and that the population of any invasive species will not increase as a result of the project.

The PDD documents all species to be used in the project.


PDD

Findings: All species to be used for the project are native, with the exception of teak (Tectona grandis).


Please provide scientific documentation demonstrating that although teak is exotic, it is not an invasive species.


Project proponent states teak is only invasive in Cuba, but that due to the permanent monitoring, the probability for teak to invade the natural forests in Panama is low.


Date closed 26 August 2011 Indicator B1.4 - Describe possible adverse effects of non-native species used by the project on the region’s environment, including impacts on native species and disease introduction or facilitation. Project proponents must justify any use of non-native species over native species

The PDD provides a justification for using teak, a non-native species.


PDD

Findings: The PDD does not provide an analysis of whether utilizing teak will increase the likelihood of non-native diseases or pest outbreaks in the project area. The PDD does not describe how teak affects the native species. The PDD does not detail



whether additional native species were evaluated for their use in the project area instead of teak.


Please provide an analysis of whether utilizing teak will increase the likelihood of non-native diseases or pest outbreaks in the project area. Please describe how teak affects native species. Please detail whether additional native species were evaluated for their use in the project area instead of teak.


Project proponent states that some pests are associated with teak, but there are not studies that prove utilizing teak will increase the probability of non-native diseases or pest outbreaks. Issue addressed.


Date closed 26 August 2011 IndicatorB1.5 - Guarantee that no GMOs will be used to generate GHG emissions reductions or removals.

The PDD addresses the use of genetically modified organisms.


PDD

Findings: The PDD guarantees the project will not use any genetically modified species in its operations.

B2 Offsite Biodiversity Impacts Indicator B2.1 - Identify potential negative offsite biodiversity impacts that the project is likely to cause.

The PDD details how seed collecting may negatively impact the project.


PDD

Findings: It is unclear how seed collecting will impact offsite biodiversity. The PDD does not specifically address negative offsite biodiversity impacts.


Please detail how offsite biodiversity will be impacted by seed collecting. Please describe any additional negative biodiversity impacts to offsite areas.


It does not appear that a response was provided to address this CAR. Follow up: The PDD sufficiently describes how offsite biodiversity will be impacted by seed collecting.




Indicator B2.2 - Document how the project plans to mitigate these negative offsite biodiversity impacts.

The PDD describes a general plan to mitigate negative effects of seed collecting.


PDD

Findings: As mentioned above, it is unclear how seed collecting will impact offsite biodiversity. The findings are “to be determined” (TBD) based on the response to the above CAR.


TBD based on response to B2.1 CAR.


The PDD sufficiently describes how seed collecting will impact offsite biodiversity.


Indicator B2.3 - Evaluate likely unmitigated negative offsite biodiversity impacts against the biodiversity benefits of the project within the project boundaries. Justify and demonstrate that the net effect of the project on biodiversity is positive.

PDD provides discussion of biodiversity impacts.


PDD

Findings: The findings are TBD based on responses to previous CARs. Please note, this section did not appear to address “offsite” biodiversity impacts, as required by CCBA.


Please provide a discussion of the potential for or lack of any offsite biodiversity impacts.


The PDD does not detail the off-site biodiversity impacts in this section.


Please provide a discussion of the potential for or lack of any offsite biodiversity impacts.

Date issued 22 November 2011 Evidence used to close CAR PDD describes positive offsite impacts in the form of corridors,

and adjacency of project vegetation to provide heterogeneity. Date closed 22 December 2011



B3 Biodiversity Impact Monitoring Indicator B3.1 - Develop an initial plan for selecting biodiversity variables to be monitored and the frequency of monitoring and reporting to ensure that monitoring variables are directly linked to the project’s biodiversity objectives and to anticipated impacts (positive and negative).

The PDD describes the initial monitoring plan.


PDD

Findings: The PDD describes the monitoring plan to a sufficient level for initial planning purposes at the design state. It is expected that additional details will be required during future verification.

Indicator B3.2 - Develop an initial plan for assessing the effectiveness of measures used to maintain or enhance High Conservation Values related to globally, regionally or nationally significant biodiversity (G1.8.1-3) present in the project zone.

The PDD describes the initial monitoring plan.


PDD

Findings: The same overall monitoring plan methodology will also be utilized to monitor high conservation value areas.

Indicator B3.3 - Commit to developing a full monitoring plan within six months of the project start date or within twelve months of validation against the Standards and to disseminate this plan and the results of monitoring, ensuring that they are made publicly available on the internet and are communicated to the communities and other stakeholders.

The PDD states that the project developer is committed to developing a full monitoring plan within 12 months of validation and posting it on the internet for stakeholder access.


PDD

Findings: The PDD states that the project developer is committed to developing a full monitoring plan within 12 months of validation and posting it on the internet for stakeholder access.



Gold Level Section GL1 Climate Change Adaptation Benefits Conformance: N/A GL2 Exceptional Community Benefits Conformance: N/A GL3 Exceptional Biodiversity Benefits Conformance: Yes Indicator GL3.1 – Vulnerability Regular occurrence of a globally threatened species (according to the IUCN Red List) at the site: 1.1 - Critically Endangered (CR) and Endangered (EN) species - presence of at least a single individual; or 1.2 - Vulnerable species (VU) - presence of at least 30 individuals or 10 pairs.

The PDD describes adjacent land uses and planned infrastructure, which would likely occur in the project area in the absence of the project. It provides a statement on endemic species located in the project area.


PDD, IUCN Red List

Findings: It is unclear if one of the 4 species listed in the IUCN Red List and present on the site included a Critically Endangered (CR) or Endangered (EN) species, as required by CCBA.


Please indicate if one of the 4 species listed in the IUCN Red List and present on the site included a CR or EN species, as required by CCBA.

Date issued: 14 June 2011 Project proponent response/actions and date

Table 1 in Project Proponent response outlines at least three species considered EN. Issue will be considered addressed when the PDD is revised to include this language.


Date closed 26 August 2011 OR Indicator GL3.2 – Irreplaceability A minimum proportion of a species’ global population present at the site at any stage of the species’ lifecycle according to the following thresholds:

2.1 - Restricted-range species - species with a global range less than 50,000

The PDD describes the significantly large number of variable species located within the project area.



km2 and 5% of global population at the site; or 2.2 - Species with large but clumped distributions - 5% of the global population at the site; or 2.3 - Globally significant congregations - 1% of the global population seasonally at the site; or 2.4 - Globally significant source populations - 1% of the global population at the site. Evidence Used to Assess Conformance:

PDD

Findings: If the CCBA indicator for Vulnerability is found to be sufficient (if the above CAR is satisfied), then the indicator for Irreplaceability is not needed.


Please confirm which Gold Level Indicator (Vulnerability or Irreplaceability) will be used for this project. If Irreplaceability is to be used, then please confirm which threshold (2.1, 2.2, 2.3, or 2.4) will be utilized for this project.

Date Issued: 14 June 2011 Project proponent response/actions and date:

Project proponent states “The Gold level Indicator chosen is Vulnerability.” Issue addressed.

Evidence used to close CAR: Response provided in #17 of “2011-07-25 MGM Innova Answerst CAR.docx”

Date closed: 26 August 2011

Public Shareholder Comments The PDD public comment period was held between 08 June and 08 July 2011. No comments were received.

Validation Conclusion ESI confirms all validation activities, including objectives, scope and criteria, level of assurance, and the PDD adherence to the CCB Project Design Standards, Second Edition, as documented in this report are complete. ESI concludes without any qualifications or limiting conditions that the CCB Project Design Documentation entitled Panama Canal Authority Sustainable Forest Cover Establishment Project (Version 4, March 2012) meets the requirements of the CCB Project Design Standards (Second Edition – December 2008) and Gold Level Exceptional Biodiversity Benefits.



Submittal Information Report Submitted to: Panama Canal Authority (ACP)

Climate, Community & Biodiversity Alliance

Report Submitted (CCBA-Approved Validator) by:

Environmental Services, Inc. 7220 Financial Way, Suite 100 Jacksonville, Florida 32256

Lead Validator and Regional Technical Manager (QA/QC) Names and Signatures:

Shawn McMahon- Lead Validator

Janice McMahon – Vice President / Regional Technical Manager - Forestry, Carbon, and GHG Services Division

Date: 30 March 2012 CLS/SMM/JPM/rmb/VO11009.00 CCBA Valid Final report.doc K: pf 03/30/12f