Validation Assessment Report for: Producción, Industrialización, Comercialización y Asesoría de Hule Natural, Sociedad Anónima (PICA) in Guatemala pot

Doc. No. C-56 May2010 Page 1












Validation Assessment
Report for:
Producción, Industrialización, Comercialización
y Asesoría de Hule Natural, Sociedad Anónima
(PICA)
in
Guatemala





Validated by:

65 Millet St. Suite 201
Richmond, VT 05477 USA
Tel: 802-434-5491

Fax: 802-434-3116
www.rainforest-alliance.org









Carbon Forestry Validation Audit
Managed by:
Mesoamerica Regional Office Rainforest
Alliance/ SmartWood Program


8a Avenida 15-62, Zone 10
Guatemala, Guatemala
Tel: (502) 2383 - 5757
Fax: (502) 2383 - 5788
Contact person: Adolfo Lemus
Email:

Date Final Report Issued:
26 October 2010
Date Draft Final Report Issued:
22 September 2010
Date Draft Report Issued:
30 June 2010
Audit Dates:
20 to 22 April, 2010
Lead Auditor:
William Arreaga
Second Audit Team Member:
Jared Nunery
Senior Internal Reviewer:
Adam Gibbon
Audit Standard:
VCS, 2007.1, Nov 2008
Voluntary Carbon Standard Program Update 21 January 2010
VCS, Tool for AFOLY Methodological Issues,
Nov 2008
VCS, Guidance for AFOLU Projects, Nov 2008
VCS, Program Guidelines, Nov 2008
VCS, Tool for AFOLU Non-Permanence Risk
Analysis and Buffer Determination, Nov 2008
VCS Program updates.
Validation Code(s):
RA-VAL-VCS-013806
Validation Statement Issued:
26 October 2010
Project Latitude/Longitude:

Lat: 14.62366
Long: -90.51681
Project Proponent Contact:
Ing. Glenda Lee, Coordinadora de Econegocios
Project Proponent Address:
7a. Avenida 7-33 Zona 9
Guatemala City, Guatemala

Doc. No. C-56 May2010 Page 2




Voluntary Carbon Standard 2007


Validation Report:

Name of Verification company:
Date of the issue:
Rainforest Alliance
26 October 2010
Report Title:
Approved by:
PICA_VCS valid 10
Adam Gibbon
Client:
Project Title:
Producción, Industrialización, Comercialización y
Asesoría de Hule Natural, Sociedad Anónima (PICA)

Promoting Sustainable Development through
Natural Rubber Tree Plantations in Guatemala
Summary:
This project is designed to promote sustainable development through the establishment of natural rubber
tree plantations in two distinct regions of Guatemala. The proposed project activities involve certifying the
proposed project areas under the Forest Stewardship Council (FSC) forest management certification, in
addition to the validation of the project as an Afforestation, Reforestation, and Revegetation (ARR) project
with the VCS.

The project involves the reforestation of 2,366.16 hectares of degraded pastureland, with a variety of clones
of Hevea brasiliensis. The Project Design Document (PDD) and supporting documents were designed to
conform to the VCS 2007.1 standard, specifically as an ARR project under the AFOLU project types. The
project employed an approved CDM Afforestation and Reforestation methodology, AR-ACM0001 v.3.

This project aims to be the first FSC certified rubber tree plantation in Guatemala. The project intends to
diversify investment opportunities for businesses in Guatemala interested in investing in sustainable rubber
production. The project area includes 7 different farms, divided geographically in both the north (3 farms)
and the south (4 farms) of Guatemala. Traditional rubber production currently exists in the south of
Guatemala; however, this practice is less common in the north, where soils are less productive, and a longer
rainy season presents additional challenges with increased impacts of a fungus that affects rubber
plantations. The project intends to sequester a total of 1,739,855 t CO
2
e over the course of the 42 year
crediting period. The project includes a financial analysis that demonstrates the impact of the sale of carbon
credits associated with project activities, resulting in an increased rate of return for investors above a
minimum investment threshold that decreases the financial risk of the project making investments in project
activities possible. The project asserts that without the sale of carbon credits, it would not be able to meet
the minimum investment return threshold. Although rubber production is common in the south with
traditional rubber production, this project intends to increase the sustainability of rubber production through
certification of FSC, which is not common throughout the entirety of Guatemala. The rubber plantations

involved in project activities will be managed for rubber production for a minimum of 36 years (note the
planted areas will be staggered, hence the 42 year crediting period), according to interviews with Project
Proponents, plantation managers, and management plans. Following this rotation period, the rubber trees
will be harvested, and the plantations will be re-planted as rubber tree plantations.

The validation of project activities was requested of Rainforest Alliance by PICA. The audit of the PDD,
supporting documentation, field visit, and interviews has provided Rainforest Alliance with the evidence to
determine successful fulfillment to the VCS 2007.1 standard with reasonable assurance.

Doc. No. C-56 May2010 Page 3
Work carried out by:
Number of pages:
Rainforest Alliance
56


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Table of Contents
1 Introduction 6
1.1 Objective 6
1.2 Scope and Criteria 6
1.3 VCS project Description 6
1.4 Level of assurance 7
2 Methodology 8
2.1 Description of the Audit Process 8
2.2 Audit team 9
2.3 Stakeholder Consultation Process 9
2.4 Review of Documents 9
2.5 Follow-up Interviews 13

2.6 Resolution of any material discrepancy 13
3 Validation Overview 14
3.1 Validation summary 14
3.2 Correct Action Requests 15
3.3 Observations 24
3.4 Actions taken by the Project Proponent Prior to Report Finalisation 25
4 Validation Findings 27
4.1 Project Design 27
4.1.1 Project title, Purposes and Objectives 27
4.1.2 Type of GHG project 27
4.1.3 Project Location 27
4.1.4 Technology used 28
4.1.5 Project duration, crediting time and project start date 28
4.1.6 Ownership/Proof of Title/Right of Use 29
4.1.7 Double counting and whether the project participated in another emission trading programme 30
4.1.8 Project applicability to the VCS for projects rejected under other GHG programme (if applicable) 30
4.1.9 Whether the project is eligible under the VCS 30
4.1.10 Chronological plan for project initiation and monitoring 31
4.1.11 Roles and responsibilities 31
4.1.12 Observation of local laws and regulations 32
4.2 Baseline 32
4.2.1 Conditions prior to project initiation 32
4.2.2 Approval of the baseline methodology 33
4.2.3 Application of methodology deviations or revisions (if applicable) 33
4.2.4 Conformance with methodology applicability conditions 34
4.2.5 Correct application and justification of selected baseline methodology 35
4.2.6 Appropriate setting of baseline scenario 36
4.2.7 Assessment and demonstration of additionality should be summarised in this section. 37
4.3 Monitoring Plan 38
4.3.1 Approval of the monitoring methodology 38

4.3.2 Correct application and justification of selected monitoring methodology 38
4.3.3 Conformance with VCS specific criterion relating to monitoring (VCS 2007.1 section 5.11 and Tool for
AFOLU Methodological Issues Step 6) 39
4.3.4 Whether the monitoring plan provides detailed information related to the collection and archiving of all
relevant data 40
4.4 Calculation of GHG Emissions 40
4.4.1 The appropriateness of the source, sink and reservoir (pools) 40

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4.4.2 The correctness and transparency of formulas and factors used 41
4.4.3 Calculation of emissions in the baseline scenario (ex-ante estimate) 44
4.4.4 Calculation of emissions from project activities (ex-ante estimate) 45
4.4.5 Calculation of emissions reductions or avoided emissions due to the project (ex-ante estimate) 45
4.4.6 Calculation of emissions from leakage (ex-ante estimate) 46
4.4.7 Calculation of net VCUs to be issued (ex-ante estimate) 47
4.4.8 The assumptions made for estimating GHG emission reductions 47
4.4.9 Uncertainties 48
4.5 Environmental Impact 48
4.5.1 Requirements for and approval of an Environmental Impact Assessment (if applicable) 48
4.5.2 Comments by stakeholders 48
4.5.3 Negative environmental and socio-economic impacts of the project 49
5 VCS Risk Assessment 51
5.1 Risk factors applicable to all project types 51
5.2 Risk factors applicable to ARR projects 52
5.2.1 Default buffer withholding percentages for ARR projects 55
6 Validation Conclusion 57
Appendix A: Company Details 58
6.1 Contacts 58
6.2 On-line Certification Contact 58

Doc. No. C-56 May2010 Page 6

1 Introduction

1.1 Objective

The purpose of this report is to document the conformance of the Promoting Sustainable Development through Natural Rubber
Tree Plantations in Guatemala project with the requirements of the Voluntary Carbon Standard (VCS) validation standards. The
project was developed by Producción, Industrialización, Comercialización y Asesoría de Hule Natural, Sociedad Anónima
(PICA) with assistance from Winrock International, hereafter referred to as “Project Proponent”. The report presents the findings
of qualified Rainforest Alliance auditors who have evaluated the Project Proponent’s systems and performance against the
applicable standard(s). Section 6 below provides the audit conclusions.

The Rainforest Alliance’s SmartWood program was founded in 1989 to certify forestry practices conforming to Forest
Stewardship Council (FSC) standards and now focuses on providing a variety of forest auditing services. In addition to being an
ANSI ISO 14065:2007 accredited verifier and validator with VCS, Rainforest Alliance SmartWood program is also a member of
the Climate, Community, and Biodiversity Alliance (CCBA) standards, and an approved verification body with a number of other
forest carbon project standards. For a complete list of the services provided by Rainforest Alliance see nforest-
alliance.org/climate.cfm?id=international_standards.

Dispute resolution: If Rainforest Alliance clients encounter organizations or individuals having concerns or comments about
Rainforest Alliance / SmartWood and our services, these parties are strongly encouraged to contact the SmartWood program
headquarters directly.

1.2 Scope and Criteria
Scope: The scope of the validation audit is to assess the conformance of the Promoting Sustainable Development through
Natural Rubber Tree Plantations in Guatemala
Reforestation
project in Guatemala against the VCS 2007.1 standard. The

objectives of this audit included an assessment of the project’s conformance with the VCS 2007.1 requirements and any
additional requirements of VCS AFOLU projects. In addition, the audit assessed the project with respect to the baseline
scenarios presented in the project design document. The project covers an area of 2,366.16 ha. The land is privately owned.
The forest type will be reforested to a rubber tree plantation with a variety of clones of Hevea brasiliensis. The project has a
lifetime of 42 years, and estimates it will lead to an average carbon stock increase of 1,739,855 tCO
2
e over the project crediting
period. The audit will assess the GHG assertions and baseline estimates made by the project against agreed validation criteria
of the VCS.

Standard criteria: Criteria from the following documents were used to assess this project:
Voluntary Carbon Standard, 2007.1, Nov 2008
Voluntary Carbon Standard, Tool for AFOLU Methodological Issues, Nov 2008
Voluntary Carbon Standard, Guidance for Agriculture, Forestry and Other Land Use Projects, Nov 2008
Voluntary Carbon Standard, Program Guidelines, Nov 2008
Voluntary Carbon Standard, Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination, Nov 2008
Applicable Voluntary Carbon Standard Program Updates
Applicable VCS Association Policy Announcements
Approved VCS methodology used for project activities

Materiality: All stocks and emissions equal to or greater than 5% of the total GHG assertion as defined in section 7.3.1 of the
VCS 2007.1 standard.

1.3 VCS project Description
The carbon project developed by the Project Proponent, intends to find new ways to promote sustainable development through
natural rubber tree plantations in Guatemala. This project aims to become the first FSC certified rubber tree plantation in
Guatemala. The project intends to diversify investment opportunities for businesses in Guatemala interested in investing in
sustainable rubber production. The project area includes 7 different farms, divided geographically in both the north (3 farms)
and the south (4 farms) of Guatemala. Traditional rubber production currently exists in the south of Guatemala; however, this
practice is less common in the north, where soils are less productive, and a longer rainy season presents additional challenges

with increased impacts of a fungus that affects rubber plantations. The project intends to sequester a total of 1,739,855 tCO
2
e
over the course of the 42 year VCS crediting period. The project includes a financial analysis that demonstrates the impact of

Doc. No. C-56 May2010 Page 7
the sale of carbon credits associated with project activities, resulting in an increased rate of return for investors above a
minimum investment threshold that decreases the financial risk of the project making investments in project activities possible.
Without the sale of carbon credits, the project would not be able to meet the minimum investment return threshold. Although
rubber production is common in the south with traditional rubber production, this project intends to increase the sustainability of
rubber production through certification of FSC, which is not common throughout the entirety of Guatemala. According to
interviews with Project Proponents, plantation managers, and review of management plans the rubber plantations involved in
project activities will be managed for a minimum one complete rotation with the commitment to replant rubber tree plantations
following the culmination of the 36 year rotation period. Following this rotation period, the rubber trees will be harvested, and
the plantations will be re-planted as rubber tree plantations.


1.4 Level of assurance
The GHG assertion will be validated to a reasonable level of assurance. Based on the audit findings, a positive validation
statement reasonably assures that the project GHG assertion is materially correct and is a fair representation of the GHG data
and information. Additionally, the GHG assertion is prepared in accordance with the VCS 2007.1 standard.



Doc. No. C-56 May2010 Page 8
2 Methodology

2.1 Description of the Audit Process
The audit was conducted in a two step process. The first step consisted of a pre-validation assessment, conducted through a
remote desk audit of the Project Design Document (Doc #1), and all corresponding annexes (Docs #2 – 75). The purpose of the

pre-validation assessment is to identify any major gaps within the project design document, and to determine if the project is
ready for a field visit. As part of the pre-validation audit, 19 gaps were identified, and the Project Proponent was notified of
these findings on April 7
th
, 2010 with the submission of the pre-validation report. This process offers the Project Proponent a
minimum of 3 weeks to address any gaps identified in the pre-validation assessment prior to the arrival of auditors for the field
audit.

The field audit for the validation of the Promoting Sustainable Development through Natural Rubber Tree Plantations in
Guatemala project corresponded with the first assessment of project area for FSC certification. In total, 9 farms were included
in the FSC and VCS scopes; however, not all farms were included in the scope of both audits. Below is a table describing the
farms included in each of the audit scopes, as well as those farms that were visited during the field audit.

Farm Owner
Farm Name
Included in the Scope of
the FSC Certification
Included in the Scope of
the VCS Validation
Visited During Field
Audit
Agropalmeras S.A.
Palmeras
Yes
Yes
Yes
Agropalmeras S.A.
Río Frío
Yes
Yes

Yes
Ingenio Magdalena, S.A.
El Horizonte
No
Yes
No
Ingenio Magdalena, S.A.
Asunción
No
Yes
No
Ingenio Magdalena, S.A.
Los Patos
No
Yes
Yes
Inversiones Agrícolas
Palafox, S.A.
Bello Horizonte
Yes
Yes
Yes
Sistemas Operativos del
Norte, S.A. (SONORSA)
Concepción
No
Yes
No
Inversiones Agrícolas
Las Animas S.A.

Animas
Yes
No
Yes
Inversiones Agrícolas
Palafox, S.A
Palafox
Yes
No
Yes

The field audit consisted of a total of 8 days, visiting both of the project strata (3 days field visit in the south, 3 days field visit in
the north, and 2 days in the Guatemalan City office of PICA). In total, 4 of the 7 farms included within the scope of the VCS
validation were visited. In addition to those farms visited as part of the VCS validation, 2 farms were visited as part of the FSC
certification. Stakeholder interviews were conducted at all farms visited, including interviews of farm managers, farm workers,
and members of the neighbouring farm community. As part of the field audit, the following project areas were visited:


Location/Facility
Date(s)
Length of
Audit
Auditor(s)
Palafox Farm
04 May 2010
6 hours
William Arreaga and Jared Nunery
Environmental Ministry of Guatemala,
Suchitepequez
04 May 2010

1 hour
William Arreaga and Jared Nunery
Labour Ministry, Suchitepequez
Social Security Institute, Suchitepequez
Municipal Forestry Office, Suchitepequez
National Institute of Forests (INAB),
Suchitepequez
04 May 2010
5 hours
William Arreaga
Animas Farm
05 May 2010
5 hours
William Arreaga and Jared Nunery

Doc. No. C-56 May2010 Page 9
Los Patos Farm
05 May 2010
5 hours
William Arreaga and Jared Nunery
Palmeras Farm
06 May 2010
10 hours
William Arreaga and Jared Nunery
Grupo Agroindustrial Occidente
Headquarters, Guatemala City
07 May 2010
6 hours
William Arreaga and Jared Nunery
Labour Ministry;

Social Security Institute;
National of Protected Areas Council
(CONAP), Izabal
10 May 2010
1 day
William Arreaga
Bello Horizonte Farm
11 May 2010
4 hours
William Arreaga
Río Frío Farm
11 May 2010
3 hours
William Arreaga

2.2 Audit team
Auditor(s)
Qualifications
William Arreaga, Rainforest Alliance,
Forester, SmartWood Central America
Region
Contact info:

Phone: (502) 2383-5757
William is a Rainforest Alliance Lead Carbon Auditor.

Guatemalan; Forestry Specialist, Central American SmartWood Office. Forestry
degree from the Escuela Nacional Central de Agricultura, and an engineering
degree from USAC; in 2002; he received an M.Sc. in Tropical Forest Management
and Biodiversity Conservation from CATIE (Costa Rica). His work has been

focused in plantations and natural forests managed in Central America. He also
has experience in carbon storage and carbon flows in natural forests and
plantations. In 2007, he spent two months at Winrock International as a fellow.
Jared Nunery, Rainforest Alliance,
SmartWood Program Carbon Technical
Specialist
Contact info:

Phone: +1(802) 434-8732
Jared has led the technical review of multiple validation assessments for the VCS.
In addition he has participated in two Improved Forest Management
methodological assessments for the VCS. Before joining the Rainforest Alliance,
Jared worked as a member of the Carbon Dynamics Lab at the University of
Vermont, where he conducted research on the effects of forest management on
carbon sequestration. Jared has published multiple scientific articles on forest
carbon dynamics as well as general forest ecological processes.

Jared has a B.S. in Environmental Sciences from the University of Vermont and
earned his M.Sc. in Forestry from the University of Vermont. Jared has extensive
experience in forest stand dynamics, forest carbon dynamics, forest mensuration,
GHG quantification, forest growth and yield modeling, and wildlife habitat
conservation. In addition, Jared is a certified lead auditor with the Climate Action
Reserve for Forest and Urban Forest projects.

2.3 Stakeholder Consultation Process
During the field audit, local stakeholders affected by proposed project activities were interviewed by the audit team. Interviews
included both in person conversations in the field, visits to local stakeholder offices, visits to community school, and telephone
interviews with those stakeholders which were unavailable or inaccessible during the field audit.

The audit team interviewed a diverse group of stakeholders (see table in section 2.5 below). All interviews were conducted

without the presence of the Project Proponent team members immediately involved in project activities, in order to avoid
potential biases. Additionally, stakeholder consultations were conducted by the Project Proponent (see section 4.5.2 below).
These meetings were documented by video and photographs which were reviewed by the audit team during the field audit.

2.4 Review of Documents
Documents were reviewed at three times during the audit process. The first review occurred during the time period of March
31
st
to April 2
nd
2010. The first review consisted of a preliminary desk audit of the project documents (reference number 1 thru
75 below), and assessment against the VCS 2007.1 Standard. All documents were then reviewed a second time during the
field audit against the VCS 2007.1 Standard, as well as to ensure consistency between project documents (e.g. ensuring the
PDD followed the guidance of the selected CDM methodology).

Doc. No. C-56 May2010 Page 10

The second review consisted of a more thorough audit where references within the PDD were cross-referenced to ensure
accuracy. When greater than 20 references were cited in one section of the PDD (see for example Doc #37 – 42 where species
specific wood densities from Chave et al. 2005 (Doc #43)) a sample of 10% of the total references were checked. If errors were
found in the initial sample, a complete census of all references was conducted. In total 89 documents were reviewed during the
audit process.

The third review consisted of a review of revised documents that were originally submitted during the field validation audit.
Included in the third audit was also a review of additional evidence to support the use of the Morales allometric equations (see
Docs 110 – 120).

The following documents were viewed in the audit process:

Ref

Title, Author(s), Version, Date
Electronic Filename
1
PICA VCS PDD 03/09/2010
PICA_-_VCS_PD_03_09_10
2
Afforestation and reforestation on degraded
land
AR-ACM0001 v04
3
Combined tool to identify the baseline
scenario and demonstrate additionality in A/R
CDM project activities
ar-am-tool-02-v1
4
Memoria Tecnica
Memoria Tecnica
5
Proceso definición Bosque MDL
Proceso definición Bosque MDL
6
DATA, SOIL DEGRADATION
DATA, SOIL DEGRADATION
7
Plan de Manejo Bello-Horizonte
Plan de Manejo Bello-Horizonte
8
Plan de Manejo Rio Frio
Plan de Manejo Rio Frio
9

Plan_de_Manejo_Palmeras_V3
Plan_de_Manejo_Palmeras_V3
10
EIA Asuncion
EIA Asuncion
11
EIA Bello Horizonte
EIA Bello Horizonte
12
EIA El Horizonte
EIA El Horizonte
13
EIA Los Patos
EIA Los Patos
14
EIA Palmeras
EIA Palmeras
15
EIA Rio Frio
EIA Rio Frio
16
Entregas MARN magdalena
entregas MARN magdalena
17
Resolucion MARN plan de gestion
resolucion MARN plan de gestion
18
Proyectos Animas Palmeras Palafox
ProyectosAnimasPalmerasPalafox[1]
19

CONCEPCION cattle sale receipts and
argument
CONCEPCION cattle sale receipts and argument
20
PICA - Leakage Analysis
PICA - Leakage Analysis
21
Los Patos - Transfer of Grazing Animals
Los Patos - Transfer of Grazing Animals
22
Palmeras - Cattle Sale Receipts
Palmeras - Cattle Sale Receipts
23
Ganaderia Las Vegas, SA
Ganaderia Las Vegas, SA
24
PICA - Leakage Analysis - Tables
PICA - Leakage Analysis - Tables
25
List of participants at public meetings held at
Lost Patos and Asunción
LISTOF~1
26
CAMBIOS BELLO HORIZONTE
CAMBIOS_BELLOHORIZONTE_english
27
Eligibility Analysis - Methods
Eligibility Analysis - Methods
28
Remote Sensing Data utilized by

Geotecnologica
GIS_Data
29
Asuncion Maps (5)
Asuncion Maps
30
Bello Horizonte Maps (5)
Bello Horizonte Maps
31
Concepcion Maps (4)
Concepcion Maps
32
El Horizonte Maps (5)
El Horizonte Maps
33
Los Patos Maps (5)
Los Patos Maps
34
Palmeras Maps (5)
Palmeras Maps
35
Rio Frio Maps (6)
Rio Frio Maps

Doc. No. C-56 May2010 Page 11
36
PICA - Baseline Report
PICA - Baseline Report
37
Baseline Measurements - Results Asunción

2009
Baseline Measurements - Results Asunción 2009
38
Baseline Measurements - Results Bello
Horizonte 2009
Baseline Measurements - Results Bello Horizonte 2009
39
Baseline Measurements - Results El
Horizonte 2009
Baseline Measurements - Results El Horizonte 2009
40
Baseline Measurements - Results Los Patos
2009
Baseline Measurements - Results Los Patos 2009
41
Baseline Measurements - Results Palmeras
2009
Baseline Measurements - Results Palmeras 2009
42
Baseline Measurements - Results Rio Frío
2009
Baseline Measurements - Results Rio Frío 2009
43
Chave_et_al-2005
Chave_et_al-2005
44
Dulphy et al. 1997
Dulphy et al. 1997
45
Morales 2000

Morales 2000
46
Palm et al 2000
Palm et al 2000
47
Post and Mann 1990
Post and Mann 1990
48
Reyes et al 1992
Reyes et al 1992
49
FORMAT DATA COLLECTION FOR
MONITORING
FORMAT DATA COLLECTION FOR MONITORING
50
Boleta PICA PPM
Boleta PICA PPM
51
PICA - Monitoring Plan
PICA - Monitoring Plan
52
Monitoring Plot Maps (6)
Monitoring Plot Maps
53
Marupa Growth Model
Marupa Growth Model
54
PICA - VCS PD - Tables
PICA - VCS PD - Tables
55

Calculation of BSL Removals, Project
Emissions, Net Removals
Calculation of BSL Removals, Project Emissions, Net Remova
56
PDD Final Estimation
PDD Final Estimation
57
Modelo Cultivo del Hule 2009 PDD
Modelo Cultivo del Hule 2009 PDD
58
Sequestration PDD Rubber only CERs
SequestrationPDDRubberonlyCERs
59
Variables Riesgo ModF
Variables Riesgo ModF
60
Sequestration GAO Rubber plantations
SequestrationGAORubberplantations
61
Sequestration PDD Rubber Total
SequestrationPDDRubberTotal
62
Investment Analysis
Investment Analysis
63
Planting Records and Projections
Planting Records and Projections
64
Sensitivity Analysis
Sensitivity Analysis

65
Statement of Intent PICA 2007
Statement of Intent PICA 2007
66
Summary - Statements of Intent
Summary - Statements of Intent
67
GUATEMALA CATTLE HISTORY
GUATEMALA CATTLE HISTORY
68
Mapa de cobertura vegetal y uso de la tierra
Mapa de cobertura vegetal y uso de la tierra
69
Prospects for Change in International
Investment Patterns in
Prospects for Change in International Investment Patterns in
70
Performance Benchmarks 2007
Performance Benchmarks 2007
71
Hastings Hancock International Timberland
Fund Annual Report
Hastings Hancock International Timberland Fund Annual Report
72
Forest and Paper Products Investment
Forest and Paper Products Investment
73
FSC Principles and Criteria
FSC Principles and Criteria
74

Guatemala-2005-INFORME-INCENDIOS
Guatemala-2005-INFORME-INCENDIOS
75
Guatemala Statistics 2002
Guatemala Statistics 2002
76
Andres M Cuesta Perez C.V.
Not Applicable
77
Francisco Manuel Andiocoechea Alegria C.V.
Not Applicable
78
Joachim Gunther Lottmann Meinecke C.V.
Not Applicable
79
Ronald Pazos Estrada C.V.
Not Applicable
80
Pablo Ignacio Dominguez C.V.
Not Applicable

Doc. No. C-56 May2010 Page 12
81
Luis Alejandro Mejía Caniz
Not Applicable
82
Medición de Línea Base Boletas de Campo
Estrado Norte
Not Applicable
83

Monitoreo Año 2009 PICA, Boletas de
campo, Medición de Fijación de Carbono
Not Applicable
84
El Infranscrito Registrador de la Propiedad
Certifica Que
Not Applicable
85
Registro General de la Propiedad Referencia
de Incripción No: 085003254
Not Applicable
86
Central American Investment Risk Ratings

87
An Ecosystem-based Forestry Investment
Strategy
An Ecosystem-based Forestry Investment Strategy
88
Calculation of BSL Removals, Project
Emissions, Net Removals, LK
Calculation of BSL Removals, Project Emissions, Net Removals, LK
89
A/R Tool 09 Estimation of GHG emissions
related to displacement of grazing activities
in A/R CDM project activity
A-R Tool 09 Estimation of GHG emissions related to displacement of
grazing activities in A/R CDM project activity
90
PICA_Annual biomass accumulation and net

GHG Removals_august 25*
PICA_Annual biomass accumulation and net GHG Removals_august
25*
91
Financial Analysis Rubber*
Financial Analysis Rubber 25 08 10*
92
Sensitivity Analysis*
Sensitivity Analysis*
93
Proof of Title and leasing Los Patos*
Proof of Title and leasing Los Patos*
94
Proof of Title Concepcion*
Proof of Title Concepcion*
95
Proof of Title Rio Frio*
Proof of Title Rio Frio*
96
Proof of Title and leasing Asuncion*
Proof of Title and leasing Asuncion*
97
Proof of Title El Horizonte*
Proof of Title El horizonte*
98
Proof of Title Bello Horizonte*
Proof of Title Bello Horizonte*
99
Proof of Title Palmeras Sur*
Proof of Title Palmeras Sur*

100
PICA_VCS_PD 26 08 10*
PICA_VCS_PD 26 08 10*
101
PICA - Monitoring Plan_EN*
PICA - Monitoring Plan_EN*
102
CONCEPCION STATEMENT*
CONCEPCION STATEMENT*
103
RIO FRIO_STATEMENT*
RIO FRIO_STATEMENT*
104
PALMERAS SOUTH AND BELLO
HORIZONTE NORTH_STATEMENT*
PALMERAS SOUTH AND BELLO HORIZONTE
NORTH_STATEMENT*
105
PATOS, EL HORIZONTE AND
CONCEPCION_STATEMENT*
PATOS, EL HORIZONTE AND CONCEPCION_STATEMENT*
106
Glenda Lee*
Glenda Lee*
107
ALLOMETRIC BROADLEVES EQUATIONS,
GLEE*
ALLOMETRIC BROADLEVES EQUATIONS, GLEE*
108
luis Alejandro Mejia*

luis Alejandro Mejia*
109
Pablo Dominguez*
Pablo Dominguez*
110
Allometric Equations Rubber
Allometric Equations Rubber
111
CARs 09 10 ARGUMENT's last review
CARs 09 10 ARGUMENT's last revew
112
Monitoring presampling 2009
Monitoring presampling 2009
113
Real DBH measurements at rubber trees
Real DBH measurements at rubber trees
114
Apresentação 1 - Brazil Rubber Congress
110810 - 2
Apresentação 1 - Brazil Rubber Congress 110810 - 2
115
Carbon seq potential of N rubber plant
Carbon seq potential of N rubber plant
116
Carbon Sequestration Thailand
December2009
Carbon Sequestration Tailand December2009
117
RRII Higher carbon sequestration
RRII Higher carbon sequestration

118
Rubber board
Rubber board
119
statement_final density
statement_final density
120
Yogaratnam article 2
Yogaratnam articule 2
*Revised documents reviewed as evidence to close identified CARs

Doc. No. C-56 May2010 Page 13

2.5 Follow-up Interviews
Major stakeholders identified by the audit team, in addition to those identified in the PDD were interviewed during the field
audits. Interviews were conducted in person by the audit team. During the audit, the auditors divided into two teams in order to
increase sampling intensity. One team, consisting of a Guatemalan forest engineer with 6 years experience in FSC certification,
focused on stakeholder interviews with community members, farm workers, farm managers, and other stakeholders identified as
being potentially impacted by the project activities. In total 30 interviews were conducted as part of the field audit. Additional
expert consultation was conducted following the field audit to obtain additional information on the project conformance to the
VCS 2007.1 standard.

The following is a list of the people interviewed as part of the audit:

Audit
Date
Name
Title
4May10
Francisco Manuel Andicoechea Alegria

Manager of Agricultural Division, PICA
4May10
Luis Alejandro Mejia Caniz
Ecobusiness Manager, PICA
4May10
Glenda Lee
Ecobusiness Coordinator, PICA
4May10
Jose Luis Garcia Ayala
Environmental Monitoring and Evaluation Director, Environmental
Ministry of Guatemala, Suchitepéquez
5May10
Lázaro Cruz
Finca Los Patos Administrator
5May10
Agusto De La Cruz Rosales
Los Patos Chief Manager
5May10
Fernando Hernández
Los Patos Caporal (tapper chief)
5May10
Alvaro Mérida
Los Patos Technical Manger
5May10
Waldemar Dell
General Farm Manger
5May10
Elder Pérez
Los Patos Assessors
5May10

Diana Pineda
Animas School Director
5May10
Clara Rodríguez
Neighbor of the Animas, community leader
5May10
Irma Suc Chubac
Neighbor of the Animas, community leader
5May10
Jacinto Kejnai Ramos
Rubber Tapper for Inversiones Agrícolas Las Animas S.A.
5May10
Hosytiniano Xula Paul
Rubber Tapper for Inversiones Agrícolas Las Animas S.A.
5May10
Victor Ramirez Caporal
Rubber Tapper for Inversiones Agrícolas Las Animas S.A.
5May10
Pablo Ignacio Dominguez
Technical Sustainability and Carbon Manager, PICA
6May10
Andreas M. Cuesta Perez
Farm Manager Palmeras/Palafox
6May10
Marvin Noe Bernardino
Rubber Tapper Palmeras, Monitoring Team member
6May10
Carlos López
Manager of Chemical Warehouse, Palafox, Inversiones Agrícolas
Palafox, S.A.

6May10
Jose Gelista
Manger of Maintenance, Palafox, Inversiones Agrícolas Palafox, S.A.
6May10
Carla Zunun
Administrator of Office, Palafox, Inversiones Agrícolas Palafox, S.A.
7May10
Carlos Alberto Duarte
Remote Sensing Analyst, Geotecnologica
14Jun10
Carlos Caal
National of Protected Areas Council, Alta Verapaz
14Jun10
Adolfo del Cid
Neighbor Palafox and Animas Farms
14Jun10
Cristopher Boy
Neighbour Animas Farm
14Jun10
Héctor Bris
Neighbour Palmeras Farm
14Jun10
Carlos Alonso
Neighbour Palafox Farm
18Jun10
Carlos Alemán
Neighbour Río Frío Farm
18Jun10
Manuel Morales
Neighbour Bello Horizonte Farm

2.6 Resolution of any material discrepancy
During the field audit, multiple material discrepancies were indentified. These material discrepancies are described below in
section 3.2. On August 3
rd
, the Project Proponent submitted the revised PDD and annexes to RA as evidence to close those
open CARs identified in the Draft Report. On August 23
rd
, a meeting was held between RA and PICA to discuss the revised
documents and open CARs. Following this meeting on August 26
th
PICA submitted additional documents to address those
CARs identified in the Draft Report. Following the review of the additional material seventeen (17) CARs were closed. Two (2)
CARs remain open. In order to close the remaining two CARs, PICA submitted Docs 110 – 120 on October 7
th
, 2010. This
material was reviewed on October 19
th
, and found to be sufficient to close CARs 09/10 and 10/10.
The findings related to all identified CARs are discussed in section 3.2 below.

Doc. No. C-56 May2010 Page 14
3 Validation Overview
Based on Project’s conformance with VCS requirements, the auditor makes the following recommendation:
Final Report Conclusions

Validation approved: Following the issuance of the Draft Final Report, PICA submitted additional evidence to
support the use of the Morales allometric equations, and clarify the definition of the project area. As such
CARs 09/10 and 10/10 have been closed. Following the closure of these two CARs, the audit team has found
that with a reasonable level of assurance, the PICA project title “Promoting Sustainable Development through

Natural Rubber Tree Plantations in Guatemala” meets the requirements of the VCS 2007.1 Standard.
No CARs issued

Validation not approved:
Conformance with CAR(s) required
Draft Final Report Conclusions

Validation approved:
No CARs issued
The Project proponent has 7 days from the date of this report to submit
any comments related to the factual accuracy of the report or the
correctness of decisions reached. The auditors will not review any new
material.

Validation not approved:
Conformance with CAR(s) required
Draft Report Conclusions

Validation approved:
No CARs issued
The Project Proponent has 30 days from the date of this report to revise
documentation and provide any additional evidence necessary to close
the open corrective action request. If new material is submitted the
auditor will review the material and add updated findings to this report
and close CARs appropriately. If all CARs are successfully addressed,
the report will be finalized and proceed towards issuance of a validation
statement. If no new material is received before the 30 day deadline, or
the new material was insufficient to close all open CARs this report will
be finalized with the CARs open, and with validation not yet achieved.

Validation not approved:
Conformance with CAR(s) required

3.1 Validation summary
The PICA project presents an approach to promote sustainable management of rubber tree plantations in Guatemala.
Specifically, the sale of carbon credits helps to offset the increased costs of sustainably managing rubber tree plantations under
FSC certification. PICA makes an argument for additionality of the project through a financial analysis. The financial analysis is
based on the ex ante estimates of net climate benefits from project activities. The analysis shows that the additional revenue
generated from the sale of carbon credits resulting from project activities, increases the investment return above the benchmark
required rate of return for investment, hence without the carbon project, the proposed FSC certified rubber plantations would not
be planted.

During the field audit, it was found that an initial failure to accurately define the project crediting period led to a chain of several
non-conformities within the PDD and supporting documents. In total 19 corrective action requests (CARs) were identified. CAR
01/10 was raised for the non-conformance with the defined project crediting period. This led to non-conformance with the VCS
rules for ARR rotational forestry projects (see CAR 09/10). These issues were raised during the field audit, and additional clarity
was sought from the VCS following the field audit. Rainforest Alliance has received clarification from the VCS that rotational
forestry projects must include all harvests planned during the project lifetime, and the project crediting period shall reflect the
project lifetime. In the case of this project, the project lifetime is a minimum of one complete rotation, and hence the crediting
period must be a minimum of 42 years instead of 20 years. In the revised documents submitted to Rainforest Alliance, the
crediting period was changed to be consistent with the project lifetime. The crediting period is now 42 years, to reflect the 36
year rotation length, as well as 6 additional years to reflect the staggered planting of rubber tree plantations. Following the field
audit, additional documentation validating the estimated ex ante project scenario carbon stocks was submitted to the audit team.
This additional documentation provided evidence that the ex ante carbon stock estimates were conservative relative to other
known studies on rubber tree plantations globally.


Doc. No. C-56 May2010 Page 15
Below is a complete listing of the 19 corrective action requests identified during the validation audit. Included in each CAR table
is a description of the evidence provided by the Project Proponent to address the non-conformance. Additionally, 8

observations were noted as potential areas of improvement in future revisions of the PDD and supporting documents. At the
issuance of this final report, all 19 corrective action requests have been closed, and the audit team has determined that the
PICA carbon project titles “Promoting Sustainable Development through Natural Rubber Tree Plantations in Guatemala” meets
the VCS 2007.1 standard with a reasonable level of assurance.


3.2 Corrective Action Requests



CAR: 01/10
Reference Standard & Requirement: 4.1.5, 4.4.2
Non-conformance:

Within the PDD, PICA describes multiple crediting periods of 10 years. Additionally, the
PDD describes the project lifetime as 30 years, as this represents the planned rotation
length for planted rubber trees, and hence the lifetime of the project. As VCS requires that
the project lifetime is equivalent to the project crediting period for rotational forestry, the
current description of the project crediting period is not in conformance with VCS
requirements.
Corrective Action Request: PICA shall define the project crediting period following the criteria mandated by the VCS.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
PICA has revised the PDD and some of the supporting annexes to reflect a newly defined
42 year crediting period. See detailed findings in section 4.1.5 regarding the changes to
the project crediting period.

As the crediting period is now in conformance with the VCS standard, this CAR is closed,

however PICA is strongly encouraged to amend all tables within the PDD to reflect the
increased crediting period to avoid any potential confusion. (see OBS 08/10)
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 02/10
Reference Standard & Requirement: 4.1.6.
Non-conformance:

During the field audit, documented evidence of the proof of ownership, and/or right to GHG
emissions reductions were presented to the audit team. However, as noted in section 5.7
of the VCS 2007.1 standard, these documents are required to be submitted with the PDD.
Corrective Action Request: PICA shall include documented evidence in the PDD or supporting documents that
demonstrates proof of ownership of the project area lands.
Timeline for
conformance:
30 days
Evidence to close CAR:
A file named Annex G Contracts of Assignment of Rights was reviewed. This Annex
consists of old contracts where it is stated that both parties (project proponent and the
owner of the land) agree to work together sharing duties and responsibilities during the
following 13 years. The file also consists of all the new contracts which are in summary, an
Note: A non-conformance is defined in this report as a deficiency, discrepancy or misrepresentation that in
all probability materially affects carbon credit claims. Corrective Action Request (CAR) language uses
“shall” to suggest its necessity but is not prescriptive in terms of mechanisms to mitigate the CAR. Each
CAR is brief and refers to a more detailed finding in the appendices.

CARs identified during draft validation reports must be successfully closed by the Project Proponents

before Rainforest Alliance submits the final validation report and opinion to the VCS. Any open CARs will
result in a negative validation statement which lists: (a) all corrective action requests, (b) rationale for each
request, and (c) impact of each material finding on GHG assertion. Qualified validation statements are not
accepted by VCS.

Doc. No. C-56 May2010 Page 16
amendment of the previous contracts. There was only one basic modification, from 13
years to 20 years starting on May 2007. According to this new contracts, ownership of the
land and ownership of the GHG removals are clear. This closes CAR 02/10.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 03/10
Reference Standard & Requirement: 4.1.10
Non-conformance:

The schedule presented in the PDD appears to be based on the forest management
activities. This is not in line with the project crediting period of 20 years, creating an
unclear representation of the VCS project schedule.
Corrective Action Request: PICA shall clearly present the project schedule in section 7 of the PDD, in conformance
with the timelines outlined in section 1.6 and 3.4.1.2 of the PDD.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
PICA has revised Table 7 in section 7 of the PDD. This table now clearly illustrates the
project schedule throughout the 42 year crediting period, as well as indicating the variation
between staggered planting crediting periods. The revised table is now in conformance

with the VCS Standard.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 04/10
Reference Standard & Requirement: 4.1.11, 4.3.2, 4.3.3
Non-conformance:

The PDD does not clearly explain who is responsible for each phase of the project (e.g.
site preparation, planting, GHG calculations, monitoring, etc.). The table in section 1.15
includes a list of entities involved, a description of the entity, and the function; however, the
responsibility of each participant as well as the relationship between entities is unclear.
Corrective Action Request: PICA shall clearly explain the roles and responsibilities of project participants.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
The revised PDD submitted to RA includes a new table in section 1.16 “Roles and
responsibilities”. This table includes detailed descriptions of relevant project activities, and
identifies the person(s) responsible for implementing identified tasks. With the addition of
the table in the new section 1.16, the PDD is now in conformance with the VCS and
Methodological requirements regarding the description of project roles and responsibilities.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

Doc. No. C-56 May2010 Page 17
CAR: 05/10
Reference Standard & Requirement: 4.2.5, 4.2.7
Non-conformance:

The baseline analysis identified 4 alternative land use scenarios: pastureland, cropland,
FSC rubber plantation without carbon project, and reforestation with timber species. Not
included in this list is a common practice on the farms where project activities are located -
- rubber plantations without FSC certification and without carbon projects. This was raised
during the field visit, as the audit team inquired why this land use was not considered. The
project proponent identified that this was not a possibility as a result of a statement of
intent signed by PICA at the initiation of project activities, where it stated that new rubber
plantations producing rubber for PICA must be FSC certified. This was confirmed by the
review of the statement of intent (Doc #65) by the audit team. Hence this land use would
not be credible as outlined in #11 of sub-step 1a. However, it is not clear why this isn’t
considered as an initial alternative land use, and then tested with the barrier analysis in
step 2 and 3. The field audit confirmed that non-FSC certified rubber tree plantations are a
likely land use practice in the southern stratum. Although this land use may not pass the
barrier analyses as a result of the PICA statement of intent, it is not transparent to dismiss
this likely land use.
Corrective Action Request: PICA shall include the establishment of a non-FSC rubber tree plantation without the sale
of carbon credits as an alternative land use.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
Sub-step 2a identifies the barriers that prevent Non FSC certified rubber cultivation without
registration as a VCS project from being a likely baseline scenario. In this section, the
Project Proponent outlines why barriers exist that prevent this scenario from likely
happening. The identified barriers corroborate with the findings from the May 2010 field

visit, outlined in section 4.2.5 of this report. The revised additionality argument is now in
conformance with the VCS 2007.1 standard.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 06/10
Reference Standard & Requirement: 4.3.3, 4.3.4
Non-conformance:

The Monitoring Plan included in Annex M explains the methodological procedures to be
used during project activities however; it does not clearly define the management of
monitoring data. Similarly this is not outlined in the PDD. During the site visit, it was
apparent that PICA staff was responsible for the management of monitoring, including data
retention and management; however, this was not included in the project documents.
Corrective Action Request: PICA shall include specific guidance regarding the retention of monitoring data.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
A revised English version of Doc #101 was submitted as evidence to close this CAR. The
revised monitoring plan includes a description of the custody of monitoring data, and is
found to be in conformance with the VCS standard.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

Doc. No. C-56 May2010 Page 18
CAR: 07/10
Reference Standard & Requirement: 4.4.1, 4.4.3
Non-conformance:

Table 2 of the AR-ACM0001 methodology requires that CH
4
is included for the burning of
woody biomass. During the field visit, burn scars and charred wood from fires used during
site preparation activities was apparent. Interviews with farm managers, farm workers,
and PICA staff confirmed that the burning of pastureland is a common practice as part of
site preparation activities. In the baseline calculations, baseline carbon stocks are
conservatively considered to be instantaneously emitted, but this is not clear within project
documents (see section 4.4.3 below). It is not clear how CH
4
associated with the burning
of woody biomass is accounted for as required by the methodology. The methodology
does allow for the omission of CH
4
, provided project proponents have applied the most
recent version of the “Tool for testing significance of GHG emissions in A/R CDM project
activities”, and this leads to the conclusion that the emission source is insignificant. It is not
evident that PICA applied this tool to test the significance of CH
4
emissions from site
preparation activities in order to justify the omission of this emission (see also 4.4.4 below).
Corrective Action Request: PICA shall apply the AR-ACM0001 guidance for justifying the omission of CH
4
emissions
from site preparation activities.

Timeline for
conformance:
30 Days.
Evidence to close CAR:
The revised PDD now reflects the site preparation burning of some biomass on Los Patos
and Palmeras farms in section 2.3 of the PDD. As additional evidence of no use of fire as
part of site preparation activities on other farms, signed statements from all farm managers
involved in the project were submitted (see Docs # 102-105). These documents were
reviewed and found to be sufficient evidence of the use of fire as site preparation activities.

Furthermore, section 3.4.3.2 of the PDD describes the use of the CDM tool, “Estimation of
emissions from clearing, burning and decay of existing vegetation due to implementation of
an A/R CDM project activity” to estimate emissions from site preparation biomass burning
on Los Patos and Palmeras farms. These emissions are quantified within Annex T Doc
#90, in worksheet “ARACM1 exante Calcs” cell AC8. Recognizing that the emissions from
site preparation burning are now accounted for as required by the AR-ACM00001
methodology, the project is now in conformance with the methodology, and hence the VCS
standard.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 08/10
Reference Standard & Requirement: 4.4.2
Non-conformance:

The calculation of aboveground live biomass in the baseline scenario, is calculated from
field measurements of dead wood in project areas (see 4.4.1 above). The project
conservatively assumes that all dead wood was live prior to the initiation of site preparation

activities; however, this assumption is not clearly explained in the PDD or in PICA -
Baseline Report (Doc #36). This assumption is not transparently described in project
documents, although during the field audit the project proponents demonstrated the
measurement procedures that were used to calculate aboveground live biomass from
current dead wood stocks on project areas.
Corrective Action Request: PICA shall clearly explain how aboveground live biomass was estimated in the baseline
scenario.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
Section 9 of the PDD was revised to accurately explain the baseline measurement
process. The revised description reflects the findings from the field audit from interviews
with baseline measurement team members. The revised section 9 of the PDD now clearly
describes the assumptions founded in the baseline carbon stock estimates, and as such is
in conformance with the VCS standard.
CAR Status:
Closed.

Doc. No. C-56 May2010 Page 19
Follow-up Actions:
Not applicable.

CAR: 09/10
Reference Standard & Requirement: 4.4.2
Non-conformance:

Recognizing that the project crediting period must reflect the project lifetime, when the
crediting period is corrected to reflect the planned harvest (as noted in CAR 01/10), the
VCS rule for ARR and IFM rotational forestry projects is required. The calculation of the

maximum number of carbon credits to be assigned to the project (as defined above),
exceeds the carbon stock value averaged across the proposed 30 year rotation period.
This is not in conformance with the requirements outlined in Step 6 of the Guidance for
AFOLU Projects.
Corrective Action Request: PICA shall calculate the maximum number of carbon credits to be assigned to the project
following the VCS guidance for rotational forestry ARR projects (outlined in Step 6 of the VCS Guidance for AFOLU
Projects).
Timeline for
conformance:
30 Days.
Evidence to close CAR:
In order to address CAR 09/10, the crediting period of the project has been increased to 42
years. Additionally, PICA submitted a revised version Doc 91, which includes the
calculation of the maximum number of available credits to be earned by the project,
following the guidance of the VCS. In cell AL54 of worksheet “ARACM1 exante Calcs” of
Doc 91, the average carbon stock over the crediting period is calculated. The average
carbon stock is based on the summed values from column AL which are derived in the Doc
90 in the worksheet titled “ARACM1 exante calcs”.

Ex ante carbon stock estimates are based on biomass to DBH ratios obtained from the
Morales 2000 thesis (see column C in the “ARACM1 exante calcs” sheet in Doc 90). In
this column, the biomass equation from p.24 of the Morales 2000 thesis is applied to the
estimated diameters of the trees based on the Marupa Growth Model and field studies.
However, the use of the Morales biomass equations results in extremely high biomass
values. At the culmination of the rubber tree plantation cycle, the total tree (as the Morales
equation estimates total tree dry weight in kilograms and this is then converted to CO
2
e for
the entire project area) as 3,959,381 tCO
2

e (note this is the net carbon stock, versus the
average carbon stock used for estimation of total number of credits to be issued as per
VCS guidance on rotational forestry projects). As there are 2,366.16 ha in the project
area, this represents a total of 1,673.4 tCO
2
e per ha. This would then be 456.3 tC per ha,
or approximately 912.6 t.d.m per ha (assuming 0.5 tC/t.d.m). When compared to other
forest type values in the IPCC 2006 Guidelines for National GHG Inventories, Chapter 4
Forestry (see Table 4.7 on p.53), the biomass levels estimated for the proposed project
activities are greater than any other forest type.

It should be noted that the carbon stock values cannot be compared directly to those
values in Table 4.7 of the IPCC report, as these values are for aboveground biomass
(tonnes t.d.m. per ha), however the comparison does serve as an indicator of the high
estimated carbon stocks in this project relative to other forest types globally. Recognizing
the high biomass estimates associated with the use of the Morales 2000 biomass
equations, the ex ante estimates were validated against other known biomass stocks for
rubber plantations in order to justify the extremely high carbon stock estimates. PICA
submitted additional documentation on October 7
th
, where the ex ante carbon estimated in
the project area were compare to 4 other known allometric equations rubber plantations
globally. This comparison found that the ex ante carbon stock estimates for project
activities were within the range of other values found in similar forest types.

As additional evidence of validation of the use of the Morales equations, PICA compared
the Morales allometric equations to 3 other known allometric equations (see Doc 110 and
111). This validation with the additional evidence found in similar rubber tree plantations

Doc. No. C-56 May2010 Page 20

around the world provides evidence to validate the high ex ante estimates within the PDD,
and as such this CAR is now closed.
CAR Status:
Closed.
Follow-up Actions:
Not Applicable.

CAR: 10/10
Reference Standard & Requirement: 4.4.3
Non-conformance:

Baseline carbon stock estimates were calculated on an area basis. As GHG estimates
were calculated on a per area basis, the exclusion of vegetated areas within sample plots
in baseline estimates is acceptable, as these areas were not included in ex ante or ex post
estimates. However, these excluded areas are not articulated well within the PDD, or
supporting documents. The project GHG emission estimates are based on the assumption
that project area is calculated from planting density, rather than remotely sensed
measurements, or field based measurements. This is not clearly articulated in the PDD or
project documents.
Corrective Action Request: PICA shall clearly explain how project area was calculated.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
The PDD has been revised to include section 4.3.2.4 Project area calculation and GHG
emission estimates. The revised PDD now clearly describes the multiple processes used
to calculate project area, and as such this CAR is closed.
CAR Status:
Closed.
Follow-up Actions:

Not Applicable.

CAR: 11/10
Reference Standard & Requirement: 4.4.4
Non-conformance:

Field visits to project sites, as well as interviews conducted during field visits confirmed
that statements within the PDD regarding site preparation activities were inaccurate. Field
visits to project areas confirmed that burning was utilized as part of project site-preparation
at Los Patos farm, as well as at Palmeras.
Corrective Action Request: PICA shall accurately describe site-preparation activities within the PDD.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
See response to CAR 07/10. The PDD is now in conformance with this requirement.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.


Doc. No. C-56 May2010 Page 21
CAR: 12/10
Reference Standard & Requirement: 4.4.5
Non-conformance:

Within the spreadsheet Calculation of BSL Removals Project Emissions Net Removals
LK.xlsx (Doc #55), ∆C
t

is calculated in column G of worksheet “Net GHG anthro.removals”.
These values are calculated from the sum of column H in worksheet “Change SOC pool”
and column C in worksheet “Sum changes in project”. Column C in worksheet “Sum
changes in project” is calculated in column I in worksheet “Ex ante project removals” or
spreadsheet PDD Final Estimation (Doc #56). However, the worksheet “Ex ante project
removals” does not appear to separate the project area into strata, as defined in the PDD.
Equation 14 of AR-ACM0001 requires that ∆C
t
is calculated by summing the individual
pools in each stratum, see equation 14 below:


It is not clear how the two strata are summed in the ex ante calculations to estimate ex
ante changes in carbon stocks.
Corrective Action Request: PICA shall follow AR-ACM0001 guidance for the calculation of ex ante carbon stock
changes.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
As part of the evidence submitted to RA to close the open CARs, all annexes were
included. The Project Proponent included revised Doc #90, which presents a clear
estimation of ex ante carbon stock changes (though please note those findings relevant to
CAR 09/10). Furthermore, Doc 88 has been revised to correctly estimate the change in
soil carbon in column H of the worksheet “change SOC pool”.

As noted above, Doc #90 presents a calculation method where identified carbon pools are
summed to estimate ex ante carbon sequestration. Additional review found that the
revised calculation spreadsheets are now in conformance with the methodology.
CAR Status:

Closed.
Follow-up Actions:
Not applicable.

CAR: 13/10
Reference Standard & Requirement: 5.1.
Non-conformance:

The farms are privately owned, or are leased by PICA under long-term 50 year contracts.
Additionally, a 13 year GHG agreements exist with land owners. However these contracts
do not exist for the full length of the project crediting period.
Corrective Action Request: PICA shall increase the risk of unclear land tenure to medium to account for the lack of a
GHG agreement for the full length of the project crediting period.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
Since there are now new contracts between parties (project proponent and owner of the
land) where it is stated that they agree duties and responsibilities regarding GHG removals
and ownership of the land, CAR 13/10 is no longer applicable.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 14/10
Reference Standard & Requirement: 5.1.
Non-conformance:

The justification of low geologic risk in the PDD focuses on earthquakes, which may be a

low risk in the region. However, risks of volcanic eruption or landslides on steep slopes
during heavy rains are potential risks to project areas.
Corrective Action Request: PICA shall reflect the increased risk in the region from volcanic eruptions and landslides,
or provide evidence to justify the low risk rating.

Doc. No. C-56 May2010 Page 22
Timeline for
conformance:
30 days.
Evidence to close CAR:
Through independent studies, PICA demonstrated there is no need to rise from low to
medium the risk rating. See more details in 5.1. Risk factors applicable to all project types.
CAR Status:
Closed
Follow-up Actions:
Not applicable

CAR: 15/10
Reference Standard & Requirement: 5.2
Non-conformance:

The VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination
defines a long term commitment period as “projects with rotation periods of more than 25
years and a commitment to replant, and those with primarily a forest rotation and habitat
emphasis”. Similarly, the tool describes medium-term commitment periods as “projects
with rotation periods of more than 25 years, but no commitment to replant”. This project
has a 30 year rotation period with a commitment to replant, however the forest restoration
and habitat emphasis are not the primary focus of project activities. The primary focus of
the afforestation project is the production of rubber latex. Recognizing the medium risk
rating associated with project longevity does not accurately reflect the impermanence of

the credits issued related to project activities. The current version of the PDD does not
accurately reflect the project lifetime (see CAR 01/10) in the project crediting period.
Recognizing that the current project crediting period does not include the planned harvest
at year 30 (see CAR 09/10), the current version of the PDD describes a significant
commitment period risk, as the effects of the planned timber harvest are not included
within the carbon calculations (see CAR 09/10).
Corrective Action Request: PICA shall raise the risk rating associated with project longevity to high to reflect the
definitions of commitment periods in the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
Determination.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
As the crediting period has been increased to 42 years, including a 36 year rotation within
the rubber tree plantations, as well as a commitment to replant, this CAR is no longer
applicable.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 16/10
Reference Standard & Requirement: 5.2
Non-conformance:

The project land is privately owned, however during field visits to Los Patos, auditors
learned that PICA leased the land from Ingenio Magdalena S.A. The VCS Tool for AFOLU
Non-Permanence Risk Analysis and Buffer Determination states that “rented or tenant-
operated land” must use a medium risk rating. As not all project areas are owned by the
project proponent, the low risk rating does not reflect the VCS defined risk definitions.

Corrective Action Request: PICA shall increase the risk rating associated with ownership type to medium to reflect
the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination definition for rented lands.
Timeline for
conformance:
30 days.
Evidence to close CAR:
The updated PD was reviewed specifically in page 14, PICA increased the risk to medium.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.


Doc. No. C-56 May2010 Page 23
CAR: 17/10
Reference Standard & Requirement: 5.2
Non-conformance:

The risk rating associated with management capacity is unclear, as different language
from the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination is
used. The PDD states “Substantial previous project experience (<5 projects) with on-site
management team”. This is not one of the categories defined in the VCS Tool for AFOLU
Non-Permanence Risk Analysis and Buffer Determination. PICA does have substantial
experience with rubber tree plantation development; however, PICA has not demonstrated
substantial previous project experience with the development of carbon projects.
Recognizing that PICA has limited experience in carbon project development, it is not clear
why the risk rating is not medium.
Corrective Action Request: PICA shall amend the risk rating associated with management capacity of project
developer to reflect the definitions used in the VCS Tool for AFOLU Non-Permanence Risk Analysis and Buffer
Determination.

Timeline for
conformance:
30 Days.
Evidence to close CAR:
The revised PDD now states:

“Substantial previous project experience (≥ 5 projects) with on-site management team”

This now reflects the categories defined in the VCS Tool for AFOLU Non-Permanence
Risk Analysis and Buffer Determination. Furthermore, PICA has included additional
evidence of the management experience with carbon measurement and quantification in
Docs #106-109. With the clarified text in the PDD and additional evidence as proof of the
teams carbon quantification skills, combined with the evidence of PICA’s management
experience reviewed during the field audit, the audit team has obtained enough evidence
to assure that PICA is in conformance with this requirement, and “low” is an appropriate
risk rating for this category.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 18/10
Reference Standard & Requirement: 5.2.1
Non-conformance:

The 13April2010 VCS Program Update was released after PICA submitted their project
documents to Rainforest Alliance for review. However, communications with the VCS
confirmed that the 13April2010 VCS Program Update is effective immediately upon
release, and hence the PICA project shall be in accordance with the program update.

The VCS 13April2010 Program Update states that the greatest risk rating shall determine
the overall self risk rating. The risk assessment included within the PDD is not in
conformance with this requirement.
Corrective Action Request: PICA shall determine the self risk rating following the guidance of the 13April2010 VCS
Program Update.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
The revised PDD now states in Section 1.11 on p.9:

“Based on both the general risk and the project specific risk analyses performed below, the
project falls into the “medium” risk category. In the case of ARR projects under the VCS,
the buffer requirement for a project with a “medium” risk category rating is 20-40% of
issued credits. In terms of project specific risks, the majority of the risk factors have a
“low” risk rating. This is also true for “general” risks that apply to all AFOLU projects. For
these reasons, a 20% buffer is applied to the project.”

As the highest identified risk within the self assessment is identified as medium, this is now

Doc. No. C-56 May2010 Page 24
in conformance with the 13April2010 VCS Program Update.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.

CAR: 19/10
Reference Standard & Requirement: 5.2.1
Non-conformance:

The 13April2010 VCS Program Update was released after PICA submitted their project
documents to Rainforest Alliance for review. However, communications with the VCS
confirmed that the 13April2010 VCS Program Update is effective immediately upon
release, and hence the PICA project shall be in accordance with the program update.

The VCS 13April2010 Program Update states that the greatest buffer contribution relative
to the self assessment risk rating shall be used, unless evidence is provided to justify a
lower buffer withholding. The buffer determination included within the PDD is not in
conformance with this requirement.
Corrective Action Request: PICA shall determine the buffer contribution following the guidance of the 13April2010
VCS Program Update.
Timeline for
conformance:
30 Days.
Evidence to close CAR:
As noted in the evidence submitted to close CAR 18/10, the PDD has been revised to
conform to the 13April2010 VCS Program Update. In the revised PDD self risk
assessment in section 1.11, 4 our 19 self assessment risk categories are identified as
medium. Additionally, PICA has identified efforts to help mitigate these risks, and reduce
the chance of their effect on the project. Recognizing this, a self assessment risk of 20%
is justified, and is appropriate given the level of risk and mitigation effort identified.
CAR Status:
Closed.
Follow-up Actions:
Not applicable.


3.3 Observations

OBS 01/10
Reference Standard & Requirement: 4.2.1
The PDD describes management plans specific to the project farms, and references these plans as a source for
additional information. Management plans exist for several of the farms; however, management plans were not
available during the audit for all farms. In Step 3 of section 2.4 of the PDD implies that management plans exist for
all farms, which supporting evidence during the field audit could not be provided.
Observation: PICA should include management plans for all farms within the annexed documents.

OBS 02/10
Reference Standard & Requirement: 4.2.2
The project uses an approved CDM methodology (AR-ACM0001 V03) “Afforestation and reforestation of degraded
land”. As this is an approved CDM methodology, it is accepted by the VCS. The PDD states in section 2.1 on p.20:

“The project is fully applicable to methodology AR-ACM0001 V03.” It appears that the project follows the approved
methodology. It is should be noted that the most current version of the methodology (version 4). In Step 2 of section
2.4 of the PDD the methodology is described as AR-ACM001 V01, rather than V03.
Observation: PICA should correctly label the version of theAR-ACM0001 methodology in Step 2 of Section 2.4 of the
PDD.

Note: Observations are issued for areas that the auditor sees the potential for improvement in
implementing standard requirements or in the quality system; observations may lead to direct
non-conformances if not addressed

Doc. No. C-56 May2010 Page 25
OBS 03/10
Reference Standard & Requirement: 4.2.7
In section 2.5 Step 1 of the PDD, PICA identifies the credible alternative land use scenarios to the proposed VCS
project. Note that in the section, as well as in multiple sections prior to this the PDD uses the term CDM where it
appears to mean VCS, and also the term CERs appears to be used instead of VCUs (see Step 0).

Observation: PICA should correctly reference the VCS and all applicable acronyms associated with VCS project
activities throughout the PDD.

OBS 04/10
Reference Standard & Requirement: 4.4.2
It is not clear how the all of the identified carbon SSRs are incorporated into the baseline calculations of carbon stock
changes. Specifically, Table 8 on p.46 includes the stratification of the project area, however it is unclear how the
additional SOC carbon pool is incorporated into the ex ante baseline GHG estimation. Furthermore, it appears that
the average live tree biomass levels for the north and south strata have been switched in Table 7, as this is opposite
from the values presented in the spreadsheet Calculation of BSL Removals, Project Emissions, Net Removals, LK
(Doc #88) presented to the audit team by Erin Swails of Winrock International on May 10
th
, 2010.
Observation: PICA should correct the values presented in table 7 for average live tree biomass in the north and
south strata.

OBS 05/10
Reference Standard & Requirement: 4.4.2
Table 15 in section 4.4, in the third column, no label of this column is included, leading to ambiguity within the table.
Observation: PICA should label all column headings in Table 15 on p.54 section 4.4 of the PDD.

OBS 06/10
Reference Standard & Requirement: 4.4.7
Table 15 of section 4.4 of the PDD shows the net calculation of estimated cumulative anthropogenic GHG removals.
As mentioned in the PDD, it is assumed that emissions from the baseline carbon pools are instantaneously released
into the atmosphere. This is reflected in the first 7 rows of table 15 where the estimate baseline removals are
accounted for. It should be noted that table 15 comes from the spreadsheet Calculation of BSL removals, Project
Emissions, Net Removal (Doc #55) in Annex N. In this spreadsheet the total baseline removals are estimated in
column AH as a sum of carbon stocks in the two project strata. In column AH these values are labelled as a total
baseline GHG removals, however these values are labelled as “net GHG removals” in Table 15. It is not clear how

these values are net values, and if in fact they do represent net values, why net values are used instead of total
baseline values.
Observation: PICA should clarify why net values for baseline removals are included in table 15 of section 4.4 of the
PDD.

OBS 07/10
Reference Standard & Requirement: 4.5.3
The PDD does not acknowledge any negative environmental or socio-economic impacts. On the contrary the PDD
notes that the project is expected to have a net positive impact on the environment and surrounding population. The
PDD does not expand on what these positive impacts will be.
Observation: PICA should describe the “net positive impact on the environment and on the surrounding population”
described in section 5 of the PDD.

New OBS 08/10
Reference Standard & Requirement: 4.1.5, 4.4.5
Multiple tables within the PDD (see Tables 6, 8, 10, and 17 as well as the worksheet “SOC Removals” in Doc # 90)
do not reflect the changed crediting period. All relevant tables and supporting annexes shall be revised to reflect the
changed crediting period.
Observation: PICA should amend all tables within the PDD to reflect the increased crediting period to avoid any
potential confusion.



3.4 Actions taken by the Project Proponent Prior to Report Finalization
Following the issuance of the Draft Validation Report, the Project Proponent submitted additional evidence and a revised PDD
to address the identified non-conformances found in during the field audit. This evidence was found by the audit team to be