Taking stock of REDD seven years after Stern

Charles PalmerBy Dr Charles Palmer*

The release of the Stern Review in 2006, which looked at a wide range of evidence to estimate the cost of a changing climate, was an important milestone in our understanding of the economics of climate change. It made a convincing economic case for protecting the climate function of forests, particularly with respect to tropical forests. Until Stern, biomass in such forests, both below and above ground, were long known to store vast quantities of carbon, the release of which was contributing to anthropogenic climate change.  While the term ‘reducing emissions from deforestation and forest degradation’ (REDD) had not yet been coined, Stern demonstrated that slowing down deforestation had the potential to be a cost-effective strategy in the fight to mitigate against some of the effects of climate change.

Although REDD was excluded from the Kyoto Protocol, an international agreement that binds countries to reduce their GHG emissions, it continues to be discussed as one component of a future, international climate policy architecture, at least within the United Nations Framework Convention on Climate Change (UNFCCC) circles. Parties to the UNFCCC have still to agree on the final form of an international REDD architecture and, perhaps most crucially, precisely how it might be funded and implemented. In the meantime, various REDD initiatives and strategies have emerged from the ground up. These include standalone pilot projects; initiatives that develop capacity for monitoring, reporting and verification (MRV); and bilateral arrangements. The latter are perhaps best illustrated by the agreements negotiated between Norway and respectively, Brazil, Guyana, and Indonesia.

Growing interest from public policy makers in REDD has triggered perhaps the biggest injection of funding, primarily from public sources, ever seen in tropical forest conservation and policy. This has, on one hand, been a boon for practitioners and NGOs working in forest policy and related areas; on the other, concerns have also been raised about the potential implications of REDD for forests and those that depend on forests for their livelihoods and incomes. Since Stern, a growing body of research suggests a number of obstacles to achieving REDD; in particular, a form of REDD that can be considered effective, efficient, equitable and, last but not least, politically acceptable.

It is generally accepted that to be effective, REDD first needs to demonstrate emissions reductions below some predetermined baseline of deforestation (‘additionality’). It also needs to ensure that emissions prevented as a results of REDD activities are not displaced elsewhere (‘leakage’). Finally, procedures need to be established, which ensure that emissions reductions from reducing deforestation are accounted for over time while minimizing the risk of future carbon reversal (‘permanence’).

Despite the recent development of procedures and protocols for dealing with these three in projects, activities at this scale are considered inferior to broader strategies nested within jurisdictions such as nation states. Such strategies can account not only for emissions reductions from REDD but also for those originating across different sectors of the economy. Although some tropical countries have begun the process of building national strategies, including carbon accounting procedures and national-level baselines, they obviously need time to develop. Also, there is still a need for international cooperation among key tropical forest countries in order to ensure consistency in procedures and standards if not to account for the leakage of emissions across international borders.

In the event of a majority of countries actually agreeing to common standards and procedures of carbon accounting, there is then the question of who should actually pay for REDD. This is the real elephant in the room. Indeed this question goes beyond REDD and is relevant for climate policy more generally.

When the Kyoto Protocol was being negotiated, much of the focus was on the distribution of historical responsibility for current levels of greenhouse gases in the atmosphere and the distribution of climate change impacts across the planet. Climate policy implemented today, including REDD, is, however, going to affect the distribution of costs and benefits of climate change not only across space but also across future generations.

One of the key selling points of REDD for policy makers is the prevention of large-scale emissions of forest carbon into the atmosphere over a relatively (at least from a climate perspective) short period of time. Regardless of whether or not REDD can be considered cost-effective as a climate mitigation strategy, numerous studies have demonstrated that REDD even at a regional scale will likely cost at least a few billion US dollars per year. Such estimates dwarf the scale of funding typically channelled into forest conservation worldwide.

The recent surge in public funds for REDD activities around the world is a blip that is unlikely to be sustained. This is the main reason why there have been concerted efforts to explore the potential of carbon markets in order to draw in private sector finance for REDD strategies and activities. Suffice to say, the use of carbon markets to fund REDD continues to be subject to often furious debate (see our discussions on the challenges of deforestation reduction programs, the problem with carbon markets, and some of Bolivia’s proposed solutions). Yet, for REDD to provide sufficient incentives to reduce emissions from deforestation at a scale necessary for it to be effective, there is a clear need to move away from a dependence on public funds alone.

Seven years on from Stern, SimPachamama is shown to be a useful thought experiment, one which shows how REDD could potentially be implemented on the ground, and its potential impacts on the welfare of those most directly affected by policy implementation. It also demonstrates the impacts from possible policy alternatives. Perhaps one of the most important insights from SimPachamama is just how difficult it is for policy to have meaningful impacts over a timescale of decades in the absence of sustainable sources of funding.

Dr. Charles Palmer is a Lecturer in Environment and Development at LSE

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