selected research frontiers in the economics of redd+kyoto protocol negotiated 1st commitment period...
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Selected research frontiers in the economics of REDD+
Jonah Busch, Ph.D. (Conservation International)12th Annual BIOECON Conference
Venice, ItalyWednesday, September 29, 2010
With appreciation to…• Arild Angelsen, Norway University of Life Sciences (UMB)• Ralph Ashton, Terrestrial Carbon Group• Andrea Cattaneo, OECD• Philippe Delacote, Laboratoire de Economie Forestiere, INRA• Daniel Morris, Resources for the Future (RFF)• Brian Murray, Nicholas Institute, Duke University• Ramon Ortiz, Basque Centre for Climate Change (BC3)• Erin Sills, North Carolina State University• Charlotte Streck, Climate Focus• Michael Wolosin, Climate Advisers
Source: MIT Joint Program on the Science and Policy of Global Change
Timeline of International Climate Negotiations
1992 1996 2000 2004 2008 2012
Rio Treaty
UNFCCC enters into
force
Kyoto Protocol
negotiated
1st Commitment Period (2005-2013)
COP-13 Bali
COP-14 Poznan
COP-15 Copenhagen
Kyoto Protocol
enters into force
PNG and Costa Rica
propose RED
COP-16 Cancun
Source: REDD+ Training Course (Cortez et al)
The TragedyOf the COP
The ActionHeroes
0.1/yr 0.25
0.075
0.4
0.25
4.5
1
0.25
1
25/yr
15/yr
0.1/yr
0
1
2
3
4
5
6
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Approximate size of emerging REDD+ systems(US$1 billion)
Voluntary market (annual)FCPFUNREDDFIPGEFREDD+ partnershipNorway-BrazilNorway-GuyanaNorway-IndonesiaUNFCCC (annual)USA (annual)GCF (annual)
Voluntary/“pre-compliance”
MultilateralReadiness
Bilateral InternationalCompliance
Timeline of International Climate Negotiations
1992 1996 2000 2004 2008 2012
Rio Treaty
UNFCCC enters into
force
Kyoto Protocol
negotiated
1st Commitment Period (2005-2013)
COP-13 Bali
COP-14 Poznan
COP-15 Copenhagen
Kyoto Protocol
enters into force
PNG and Costa Rica
propose RED
COP-16 Cancun
REDD+ policy
developed rapidly
Silver lining of tragic policy
inaction:Time for scholarly
input
Avoided deforestationexcluded fromKyoto Protocol
Efforts to stop deforestation are not new. What is novel about REDD+?
Payment for performance National (or jurisdictional) scale incentivesMagnitude of fundingPositive (one-sided) incentive structure
The untested hypothesis:“Greenhouse gas emissions from forests can be stopped with money”
What does this mean for economic researchers?
We can test the hypothesis…We can quantify the impacts…We can develop new sub-hypotheses…
1. How much would REDD+ really cost?2. How to design elements of an international REDD+ mechanism to be
effective, efficient and equitable?3. Which national policies and measures reduce deforestation?4. How to incentivize local actions?5. Leakage: what drives it? How can it be addressed?6. How do macroeconomic factors impact deforestation?7. How can REDD+ support broader low-carbon development
aspirations?8. How to achieve mitigation in forests beyond deforestation?9. How to achieve multiple benefits?10.How to achieve natural mitigation beyond forests?11.Political reality: Can REDD+ be built from the bottom up?12.The long view: What happens to REDD+ into the future?
Some open economic questions on REDD+
Source: IPCC 4AR
Source: McKinsey, 2009
How much would REDD+ really cost?Reviews: Norway Options Assessment Report
(Angelsen et al, 2009)Murray, Lubowski and Sohngen, 2009
More primary data needed estimating and mapping opportunity costs
Opportunity costs represent minimum, not typical cost of REDD+ (Gregersen et al)
Startup costs, transaction costs, costs of institutional and cultural changes
What is the functional relationship between opportunity cost and deforestation probability?
100%
0%
“opportunity cost”
How to design an international REDD+ mechanism that is effective, efficient and equitable?scale, leakage, reference levels, finance, MRV...
• Parties’ proposals (Little REDD+ Book, Global Canopy Programme)
• Technical overview of options (CIFOR, Moving Ahead with REDD+)
• Comparisons of reference level designs Busch et al., 2009, Env Res LettersGriscom et al., 2009, Env Sci TechHuettner et al., 2009, Carbon Balance Mgmt
Reference levels affect the equity, effectiveness and efficiency of REDD+
Adapted from Mollicone et al, 2007
Reduction inEmissions
payment receivedby country
Increase inEmissions no penalty
Emis
sion
s
Reference Period
AccountingPeriod
Reference Level
Emissions
National policies and measures: Which can be shown empirically to
reduce deforestation? At what cost?
Source: Peskett et al., “Making REDD work for the poor”
National policies and measures: Which can be shown empirically to
reduce deforestation? At what cost?Overview: “Realising REDD+” (CIFOR)
Overview: “Policy Impacts on Deforestation” (Duke Nicholas Institute)
• Protected areas (Bruner; Ferraro; Andam; Soares-Filho, PNAS, 2009…)
• Roads (Pfaff, Amazonia, multiple)• Forest product certification• Alternative livelihood programs; ICDPs
“Global Comparative Study on REDD+”: What works in six countries? (CIFOR, in prep.)
REDD+ as a multi-level PES program: Incentivizing local actions
• “National accounting, sub-national implementation”
• “Nested” approach (Pedroni et al 2009)
• National REDD+ incentive design (Cattaneo, in review)
• Estimating and mapping impacts of incentive policies (Busch et al, in preparation)
• PES vs. regulation: Advantages of scale? (Angelsen, in prep.)
• Opportunity costs vs. carbon price (Leplay et al, in prep.)
• Analytical models of forest frontier dynamics (Delacote, Laboratoire de EconomieForestiere)
Source: Angelsen, A., C. Streck, L. Peskett, J. Brown, and C. Luttrell. 2008. What is the right scale for REDD?In: Moving Ahead with REDD: Issues, Options and Implications.
Without REDD+ (modeled)Deforestation: 4.68 mha/5yrsEmissions: 3.79 gtCO2e/5yrs
With REDD+: $5/tCO2eDeforestation: 4.11 mha/5yrsEmissions: 3.24 gtCO2e/5yrs
With REDD+: $15/tCO2eDeforestation: 3.00 mha/5yrsEmissions: 2.26 gtCO2e/5yrs
Deforestation Probability MapIndonesia, 2000-2005
Leakage: how much occurs; what drives it; how to address it?
• Review piece: Murray, 2008
• Vietnam logging ban and imports (Meyfroidt and Lambin, PNAS, 2009)
• Modeling of global timber market (Gan and McCarl, Ecological Economics, 2008)
• Mapping forest carbon at risk: triple filter of biophysical, economic, legal accessibility (Terrestrial Carbon Group)
• Biofuels and indirect land use change
Macro-economic factors and REDD+
Economic growth and the forest transition (Environmental Kuznets Curve)
Demand-side management (Commodity roundtables; consumer pressure campaigns)
Import restrictions (FLEGT; Lacey Act; CITES)
National indebtedness
National investment security
How can REDD+ support broader low-carbon development aspirations?Poverty alleviation: Making REDD+ work for the
Poor (Poverty Environment Partnership)
More sophisticated integration of forest policy in CGE models (Amazon, BC3; Global, Cornell)
What does “low-carbon economic growth” look like? What is a “green economy?”
• Suriname Green• Ecuador SocioBosque• Guyana Low Carbon Development Strategy• Indonesia National Council on Climate
Change (DNPI) Reports (www.dnpi.go.id)
In many forestcountries, REDD+ envisioned within context of broader
low-carbon development
Forest mitigation beyond deforestationForest degradation (TNC/Rainforest
Alliance)
Conservation – how to pay to protect forests not under historical threat?
Carbon stock enhancement afforestation/reforestation/assisted regeneration
Sustainable forest management –carbon management in logging regimes
Which instruments? Quantitative limits?
How can REDD+ fit with programs to provide multiple forest benefits?Potential co-benefits of REDD+ in the Amazon (Stickler et al, Global
Change Biology)
Achieving biodiversity co-benefits through REDD+ (Harvey et al, Conservation Letters)
Financial mechanisms to increase biodiversity benefits of REDD+ (Busch et al, in prep
Testing community benefits of REDD in India (BC3/TERI)
REDD+ Social and Environmental Standards (CCBA/CARE)
Protected areas and REDD+ (Dudley, WWF)
Ecosystem-based carbon mitigation beyond forests
AFOLU: “Agriculture, Forests and Other Land Uses”
AgricultureGrasslandsWetlandsPeatlands
“Blue carbon” (UNEP)
Policies for blue carbon (RFF, in prep.)
Different policy mechanisms required?
Political realities:REDD+ may develop “bottom
up,” not top-down
Can multi-lateral agreements build to a global mechanism?
What can national REDD+ mechanisms learn from site-level “demonstration activities?”
Realistic view of governance and institutions: What works?
Political economy: Optimizations, or political competitions?
REDD+ into the futureLong-range predictions of BAU
forest loss and national readiness (Boucher, UCS; Climate Focus for DFID)
Reference levels over time
What is the endgame? Post-REDD+ mechanism for conserving forests
Permanence, climate change and tipping points (Lubowski et al, in prep.)
1. How much would REDD+ really cost?2. How to design elements of an international REDD+ mechanism to be
effective, efficient and equitable?3. Which national policies and measures reduce deforestation?4. How to incentivize local actions?5. Leakage: what drives it? How can it be addressed?6. How do macroeconomic factors impact deforestation?7. How can REDD+ support broader low-carbon development
aspirations?8. How to achieve mitigation in forests beyond deforestation?9. How to achieve multiple benefits?10.How to achieve natural mitigation beyond forests?11.Political reality: Can REDD+ be built from the bottom up?12.The long view: What happens to REDD+ into the future?
Some open economic questions on REDD+
to find out more…• Arild Angelsen, Norway University of Life Sciences (UMB)• Ralph Ashton, Terrestrial Carbon Group• Jonah Busch, Conservation International• Andrea Cattaneo, OECD• Philippe Delacote, Laboratoire de Economie Forestiere, INRA• Daniel Morris, Resources for the Future (RFF)• Brian Murray, Nicholas Institute, Duke University• Ramon Ortiz, Basque Centre for Climate Change (BC3)• Erin Sills, North Carolina State University• Charlotte Streck, Climate Focus• Michael Wolosin, Climate Advisers
(contact information available upon request)
