American Electric Power: Investing in Forest Conservation Harvard Case Solution & Analysis

American Electric Power: Investing in Forest Conservation Case Solution

This task would resolve the two problems targeted by REDD by ending both logging from the regional neighborhoods' conversion of land from forest to farmland and forest destruction from industrial logging. REDD tasks used a considerable chance to alleviate environment modification, as logging and forest destruction contributed roughly 15-20 percent of international greenhouse gas (GHG) emissions. Securing Bosque Rojo might avoid the release of countless lots of co2 (CO2). The job partners and financiers would acquire licensed balanced out credits comparable to the decrease in emissions over the 30-year job life time.

Amongst U.S. power business, AEP had among the highest levels of CO2 emissions. It approximated its 2009 emissions would reach 150M metric tonnes. With environment modification regulations on the horizon, it wished to set an example for Congress to reveal that REDD offsets might result in affordable decrease in GHG emissions, as well as acquire experience in the global REDD scene. AEP anticipated to need to significantly decrease its own emissions (e.g. by replacing wind power for coal in electrical power generation) or get balanced out credit histories either on the free market or through direct involvement in exterior emission decrease tasks. AEP thought that REDD tasks would be more affordable than all of its other choices to acquire balanced out credits. To validate this belief, the business had to compute a net present worth (NPV) for the job, comprehend the job's threats, and identify if Bosque Rojo was, undoubtedly, the very best use business funds.

This case concentrates on a chance that American Electric Power (AEP) needs to invest, with The Nature Conservancy (TNC), in among the world's very first tasks for Lowering Emissions from Logging and Forest Deterioration (REDD). The proposed strategy was to secure 812,000 hectares of abundant, biologically varied forest land, called Bosque Rojo, in main Peru.

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