Deforestation and Climate Change

Deforestation and Climate Change

Reducing Carbon Emissions from Deforestation and Forest Degradation

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Valentina Bosetti and Ruben Lubowski

Deforestation and forest degradation have long been recognized as environmental problems, with concerns over conservation of natural habitats and biological diversity capturing both scientific and public attention. More recently, the debate over tropical forest conservation has radically shifted to the approximately fifteen percent of global greenhouse gas emissions that are caused by deforestation and forest degradation, and to the potential synergies from integrating forest management with climate change policies.

Chapter 6: Incentives to Reduce Emissions from Deforestation: A Stock-Flow Approach with Target Reductions

Andrea Cattaneo

Subjects: economics and finance, environmental economics, environment, climate change, environmental economics


Andrea Cattaneo 6.1 INTRODUCTION Reducing greenhouse gas emissions from deforestation and forest degradation has become widely recognized as an important option in the policy toolkit for mitigating climate change. In the process, the debate has shifted from whether to pursue the reduction of emissions from deforestation and forest degradation (REDD), to how to implement it, and the challenges involved. One of the challenges in the context of international negotiations is to determine the distribution of incentives among countries so that the system is cost-effective but at the same time provides incentives for all countries to reduce or not increase emissions, since participation in REDD will be voluntary. To this end, a central element of designing a system of positive incentives for REDD is determining a country’s reference level emissions. In proposed REDD designs, emissions reductions from participating countries would be measured relative to an agreed-upon reference level. Countries’ actual emissions from deforestation would then be monitored and verified. Any country whose actual level of emissions from deforestation is less than its reference level would be eligible to credit this difference as an emissions reduction achievement. These credits may be sold on the carbon market or be bought through a fund.1 There are a number of proposed methods for establishing such crediting reference levels and these proposals differ in terms of credits generated from REDD activities and in the distribution of REDD incentives for countries to participate in a REDD program. Countries with high past rates of deforestation will have ample...

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