Scoping Study and Feasibility Assessment for the Development of Carbon Finance Project in Sikkim

About the Project

Nestled in the Eastern Himalayas, Sikkim is one of India's most ecologically significant states, with over 82 per cent of its geographical area designated as Recorded Forest Area (RFA). Recognizing its immense potential for forest-based climate action, TERI undertook a comprehensive scoping and feasibility study to assess the viability of carbon finance projects in the state under the Agriculture, Forestry, and Other Land Use (AFOLU) sector.

Commissioned in collaboration with the Forest and Environment Department, Government of Sikkim, the study employed advanced Remote Sensing (RS) and Geographic Information System (GIS) technologies to analyze land-use and forest cover changes between 2009 and 2023.

Objectives

The study aimed to identify eligible areas and develop strategic project plans for three primary carbon finance mechanisms: Afforestation, Reforestation, and Revegetation (ARR); Reducing Emissions from Deforestation and Forest Degradation (REDD+); and Improved Forest Management (IFM).

Key objectives included:

• Mapping non-forest and degraded forest land suitable for ARR over a ten-year baseline period.
• Delineating potential REDD+ and IFM sites based on historical forest degradation trends.
• Identifying major anthropogenic and natural drivers of forest loss.
• Projecting future degradation under a 'Business-as-Usual' (BAU) scenario.
• Evaluating the suitability of existing government plantation sites for inclusion in carbon project registries.

Key Outcomes

The study identified approximately 470 hectares of high-potential ARR project sites across Sikkim, with the Chungthang, Gangtok, Namchi, and Namthang ranges showing the greatest promise. For REDD+ initiatives, seven forest ranges, spanning over 1,233 sq. km, were found to exhibit consistent degradation. Furthermore, significant degradation was noted within protected areas, including Khangchendzonga National Park and Barsey Rhododendron Sanctuary.

The analysis pinpointed six primary drivers of forest degradation:

• Forest fires
• Population growth
• Resource dependency
• Shifting cultivation
• Developmental pressures
• Unsustainable tourism

By mapping these findings against the rigorous requirements of leading voluntary carbon market standards, such as Verra and the Gold Standard, the study provides a robust, data-driven foundation for developing credible carbon finance projects. These initiatives will support sustainable forest management in Sikkim while contributing significantly to India's national climate commitments (NDCs).