There is a new international policy focus on reducing emissions from deforestation and forest degradation (REDD), as well as promoting forest conservation, the sustainable management of forests and the enhancement of forest carbon stocks (REDD-plus). The recent Conference of Parties meeting of 196 countries of the United Nations Framework Convention on Climate Change (UNFCCC) in Cancun, Mexico (December 2010) was able to advance initiatives on REDD-plus even while there was limited progress on fossil fuel related aspects of an international climate change agreement. The Cancun meeting recognised that there was strong and broad support for REDD-plus and was able to agree to the development of a formal Mechanism under the UNFCCC for incentivizing REDD-plus activities. Implementing the Mechanism is another matter, and will require the development and coordination of country REDD-plus readiness and financing, including detailed consideration of country reference levels, measurement, reporting and verification methodologies, and sub-national and national program coordination.
Deforestation and forest degradation have been significant sources of historic carbon emissions and therefore important contributors to climate change. Projections suggest that future global forest and related carbon losses could be substantial unless there are forest and/or carbon stock conservation policies or incentives. Previous economic analyses have estimated that there may be significant and relatively inexpensive and cost-effective opportunities for protecting and enhancing global forest carbon stocks. Of course, motivation for protecting tropical forests extends beyond carbon benefits and low-cost greenhouse gas abatement. Carbon storage is just one of numerous local and global public and private goods and services provided by tropical forests.
While carbon potential analyses and local development prospects have whet the global policy appetite for REDD, there is a dearth of analyses on the economic efficiency, equity and implementation realities of transitioning to effective REDD policies. Currently, the Kyoto Protocol excludes avoided deforestation projects in developing countries as a creditable mitigation option, while the steps taken in Cancun are in the direction of country- rather than project-based REDD programs. The time is therefore right for delving into the details and implications of alternative REDD schemes. Legitimate, beneficial REDD policies cannot be instantly activated. Individual countries must decide that REDD is a priority, programs must be initiated, and data, tools, protocols and trained people need to be developed. Understanding the implications of how this might unfold and the development of implementation capacity are paramount. Therefore, this special issue offers a set of papers focused specifically on REDD policy design and implementation.
Conceptually linking forest carbon sequestration and climate policy is economically efficient for managing climate. However, significant challenges must be confronted for implementation – related to managing, measuring, monitoring and enforcing forest carbon gains, and related to policy design. This special issue discusses issues that arise in the practical implementation of reduced deforestation in conjunction with climate policy. REDD might transform deforestation dynamics worldwide, substantially lower climate policy compliance costs and facilitate efforts to achieve more ambitious climate targets, and/or become the next opportunity for escaping the poverty trap in developing countries. REDD policies might also accelerate near-term deforestation, lower incentives for clean energy innovation, and/or become the next resource curse. Realizing any of these potential outcomes depends on our ability to implement REDD, which hinges on capabilities and information not historically available in tropical regions. These multiple and varied aspects of REDD make it a theme of tremendous importance for a journal dealing with Environment and Development Economics.
A central question to thinking about REDD in practical terms concerns the costs of implementing programs and country readiness for implementation. In this issue, Sathaye, Andrasko and Chan report on the latest World Bank estimates of REDD costs for different key countries, showing that these might be low in Africa but several times higher in Latin America and Southeast Asia. Costs are mainly affected by the level of unsustainable high-revenue logging, by transaction and program implementation costs, and by barriers to implementation, including governance issues. The uncertainty surrounding cost factors is currently very high for many countries. This suggests that caution is merited in interpreting and using cost estimates, and sets the stage for the other papers in this issue.
Henry, Maniatis, Gitz, Huberman and Valentini discuss fundamental information and implementation challenges to characterizing and realizing REDD-plus carbon benefits in Africa, particularly Sub-Saharan Africa. They discuss the lack of understanding of historic land-use change and find that Sub-Saharan Africa is currently a net sink, but that there are order of magnitude uncertainties in historic forest carbon stocks and fluxes to the atmosphere.
REDD costs will also vary with the type of sequestration activity, e.g., avoided degradation vs. reforestation alternatives. The type of activity also has important effects on biodiversity and non-monetary considerations. This is the focus of the paper by Caparros, Ovando, Oviedo and Campos, which looks at two specific case studies to assess the magnitude and role of non-monetary considerations in assessing different sequestration programs.
Since the level of readiness of countries differs substantially, Rose and Sohngen look at the effects of staggered regional RED-plus participation (forest degradation is not modelled). Since the level of readiness might differ for some activities, they also look into the effects of limiting the eligibility of forest sequestration activities. Using a global forest and land-use model they find that afforestation-only policies would be fundamentally flawed and could potentially stimulate significant accelerated deforestation. On the other hand, delayed comprehensive forest carbon programs could reduce, but not eliminate, near-term accelerated deforestation and eventually produce substantial sequestration. However, in all cases, RED's role is significantly reduced and there are forest composition consequences. In addition to policy insights, they also clearly illustrate that afforestation, avoided deforestation and forest management are not independent and, in particular, afforestation and avoided deforestation increase the cost of one another.
The size of REDD emission reduction credits for a country will depend on the defined crediting reference level, which in reality is uncertain. Hence, participating in REDD entails stakeholder risk, the distribution of which will depend on the design of the REDD program. In particular, national implementation requires coordinating multiple geographical scales, which adds complexity and uncertainty. Cattaneo lays out a framework for structuring REDD programs with specific attention to the problem of coordination among different implementing entities at multiple geographic scales. The author defines sufficient conditions for scale-neutrality whereby, for a given REDD design, crediting relative to the reference level at a given scale is not affected by errors in reference levels at scales below it.
The macro-economic effects of a RED program and implications for investments and innovation in the energy sector are the subject of two papers in the special issue. Bosetti, Lubowski, Golub and Markandya look at a long-term climate policy with an integrated assessment model and find that linking RED to the carbon market induces modest reductions in overall clean energy innovation. Interestingly, by deferring investments in breakthrough technologies it also enhances the development of particular fossil fuel greenhouse gas emissions control technologies, e.g., carbon dioxide capture with geologic storage. Meanwhile, Fuss, Szolgayova, Golub and Obersteiner analyze the macro-economic role of REDD with the help of a real options model. In particular, they model the option to invest in less carbon-intensive energy technology vs. the option to purchase REDD credits, which may (or may not) be exercised in the future. Given the many uncertainties related to REDD implementation and overall climate policy, holding REDD options could provide producers with valuable flexibility in abatement and investment decisions. The actual cost of implementing a REDD project or program would become clearer in the future as more information becomes available on the severity of the climate problem and policy stringency. At that point, the REDD option could be exercised or expire.
In summary, looking across the papers in this special issue, we find useful reinforced themes for researchers, analysts and decision makers to consider. For instance, the importance of characterizing and acknowledging implementation requirements, details and current challenges for calibrating expectations, interpreting modelling results, and ultimately implementing REDD-plus programs (Sathaye et al., Henry et al., Cattaneo, Caparros et al.). From aggregated perspectives, we find the importance of interactions between forest activities, regions, forest and non-forest sectors, and time periods for estimating and analyzing REDD-plus costs, benefits and its role in investment (Bosetti et al., Rose and Sohngen, Fuss et al.). As a whole, we hope this collection of papers will provide a more advanced analytical and economic foundation for discussing the future of REDD-plus, for designing effective REDD-plus programs, and for pursuing future research.
