This project leverages forest carbon finance for economic development amongst smallholder farmers in Nicaragua. This is achieved by encouraging smallholder farming families to reforest the under-utilized parts of their farms with multiple small-scale native species. The project addresses the causes of deforestation, ensures direct, ongoing community involvement and technical training, and provides financial benefits for participants throughout the project. Participants’ livelihoods are better adapted to climate change because trees are more resilient to droughts and flooding than traditional agricultural crops so their livelihoods are partially hedged against the risk of extreme weather events caused by climate change.

To ensure that the benefits are long-lived, the program is specifically designed so that the forest plantations provide ongoing livelihood benefits to participating smallholder farmers in the following ways:Participants receive direct payments for ecosystem services (PES) over a 10- year period, which amount to 60% of the carbon credit sale price. As the densely planted trees start to crowd each other out, they are selectively harvested to allow the plantation as a whole to continue to grow, thus optimising long-run carbon sequestration while providing sustainably produced merchantable timber.Participants’ livelihoods are better adapted to climate change because trees are more resilient to droughts and flooding than traditional agricultural crops so their livelihoods are partially hedged against the risk of extreme weather events caused by climate change. Moreover, forest plantations are additional to agricultural activities and the income that they provide is designed to be counter-cyclical to the agricultural season, thus helping to distribute livelihood activities to the times of the year when they are the most needed.Up to December 2014, the project has achieved the following impacts and benefits:o Total Employment generation: since 2011, 1006 seasonal or permanent jobs have been created o No. of landless farmers employed: 235o No. of women employed: 207o 280 participating smallholder families have established multifunctional native species forest plantationso Community payments to date: $557,600o Total funds allocated to the community: $1,020,100o Trees planted: 1,183,600o Area reforested: 866 hao Tonnes CO2 issued: 256,600

The project is in the process of developing a forest processing facility to handle large volumes of small diameter wood coming from the plantation thinings. Besides continually training farmers in forest plantation management, they are educated to perceive trees as a additional crop with a value. By creating a market for smaller trees creates additional financial incentives for farmers to keep trees on their farms and encourages more smallholders to grow trees on their farms beyond the time carbon or PES payment have finished.

Taking Root Nicaragua, a Canadian non-profit organisation that has a base in Nicaragua and the Nicaraguan non-profit association APRODEIN, are the project implementer and coordinator respectively. Taking Root is responsible for the certification, monitoring, marketing and sales of carbon credits, whereas APRODEIN is responsible for field implementation activities with the local farmers (training & capacity building, nurseries, conducting annual monitoring). The Swiss non-profit foundation myclimate supports the project with marketing, buying credits and developing a monitoring system how to report the sustainable development benefits of the project.

Foundation myclimate, Taking Root Nicaragua, APRODEIN