Improving Productivity, Profitability and Sustainability of Degraded Grasslands Through Tree-Based Land Use Systems in the Philippines - Smallholder Tree Growing for Rural Development and Environmental Services - page 290

The inclusion of soil carbon payments increased NPVs significantly in relation to
the biomass carbon payments only. The lowest value of biomass carbon was predicted
under TIMPLUS system while zero payment was received for both IMPLUS and
FPLUS systems since they do not accumulate standing biomass over time. For soil
carbon payments, the TPLUS system obtained the highest NPV and the lowest was
from the FPLUS system. This occurred because of high carbon losses through erosion
and lower decomposing organic matter from leaf litters under the FPLUS system.
The net present value increased further when all carbon pools were valued
and accounted for in the analysis. Like in the previous scenario, TPLUS system
earned the highest NPV (PhP 1,327,170ha −1 over 20 years) and the highest
annual income (PhP 140,785 ha −1 year −1 ). For this system, carbon sequestration
benefits helped reduce the period with negative net returns. However, the
amounts were still insufficient to cover the deficit resulting from the establish-
ment costs and maintenance costs before the harvest. In the case of the TIMPLUS
and TCSFLUS systems, the value of sequestered carbon reduced the deficit
period to only one year. The results clearly illustrate the importance of carbon
payments in reducing the income risk involved in tree growing to enhance
investment in timber-based systems, and consequently influence the climate
mitigation policy that would support smallholder farmers' provision for environ-
mental services such as carbon sequestration.
The marginal benefits from switching land use would be more meaningful since
the opportunity costs of existing land use are taken into account. This is particularly
relevant in the imputed value of carbon sequestration since the net effect on carbon
storage of implementing a tree-based system depends on the carbon content of the
land use practices that are replaced. On the basis of this perspective, a switch in
land use from the IMPLUS system to TPLUS resulted in the highest marginal ben-
efits of PhP 42,321 ha −1 from biomass carbon and PhP 861 ha −1 year −1 from soil car-
bon. Thus, the highest marginal NPV with biomass and soil carbon payments
occurred under the TPLUS system (PhP 1,061,890ha −1 ), which is equivalent to
about PhP 109,626 ha −1 of annual income.
14.3.5 EnvironmentalImpacts
14.3.5.1 SoilErosion
The annual and cumulative soil erosion of the six land use systems, predicted
over 20 years, is represented graphically in Fig. 14.3. It was observed that the
soil erosion predicted has increased over time in all of the land use systems. This
occurred most rapidly under the FPLUS system with the highest average soil
erosion of 48 t ha −1 year −1 over 20 years (Appendix 3). Predicted soil erosion
under the timber-based systems averaged one to 10 t ha −1 year −1 ; the lowest has
been observed under the TPLUS system and it was significantly lower than the