The main objectives of the project activity are wood production, land restoration and carbon sequestration through afforestation. All practices follow FSC standard for sustainable forest management, while enhancing biodiversity conservation by increasing the connectivity of forests and generating income and job opportunities for local communities/ rural areas of Uruguay.

The project comprises a total of 18.576 hectares of land previously under extensive grazing by beef cattle, on which forest plantations for obtaining high-value, long-lived timber products and for sequestering large amounts of carbon dioxide from the atmosphere were established. The total area affected by the project is 33,225 hectares, if we include buffer zones, grasslands and native forests.

Forests were based mainly on Eucalyptus grandis and to a lesser extent Eucalyptus dunnii, Eucalyptus tereticornis and Pinus taeda plantations in 16 to 22-year rotations, managed with pruning (to a minimum height of 12 m) and two to three thinning operations, to obtain knot-free, high-diameter logs suitable for saw-milling and veneering. Plantation is already completed, and forests will be replanted after clear-cut harvest. Guanaré first areas were planted in 2006 and the last ones in 2011. Practices will be compatible with FSC standard for sustainable forest management. Planted forests will remove carbon dioxide from the atmosphere and store it in different carbon pools (living above-ground and below-ground biomass, soil, litter, non-tree vegetation, dead wood and harvested wood products).

The baseline study determined that continuation of extensive grazing is the most likely use of the land.

Additionality is demonstrated through the fact that the expected internal rate of return of the proposed project activity without considering carbon finance is lower than the benchmark internal rate of return for this type of investment in Uruguay. In addition, barriers analysis and common practice analysis showed that afforestation in the area of the proposed project activity is not likely to occur without carbon financing. Leakage is assumed to be zero. See chapter below.

The potential non-permanence of stored carbon was considered by the non-permanence risk analysis and buffer determination, and by the fact that a significant fraction of the sequestered carbon will be stored in long-lived products which will not be accounted.

As it was demonstrated during validation, the project implementation does not and did not cause any displacement of activities. The only activity in the project area prior to the start date is extensive grazing by beef cattle, which continues to occur after project start. This can be audited by the verification team during on site visit. It was also stated and validated in the PD that there was no need for a leakage management plan neither for leakage mitigation options. The information regarding aspects related to the non permanence risks of the project, it is presented as a separate document called “Non Permanence Risk Report”.

The project will result in a significant contribution to sustainable development of Uruguay, mainly through:
i) increased employment and quality of employment;
iii) rural development (decentralization);
iv) increased gross value of production;
v) improved fiscal balance;
vi) biodiversity preservation
and vii) improvement and preservation of soil quality.