The financial costs of REDD (Reducing Emissions from Deforestation and forest Degradation: evidence from Brazil and Indonesia

Abstract

Opportunities to mitigate climate change by reducing emissions from deforestation and forest degradation (REDD), especially in developing countries, have risen to the top of the international climate policy agenda, attracting increasing attention and investment from environmental organizations, development assistance agencies and the business community. Deforestation is one of the largest sources of global greenhouse gas (GHG) emissions and produces about 17 percent of total emissions (IPCC, 2007). There is growing consensus that REDD may offer a large pool of relatively low-cost emission reductions, which could significantly reduce the costs of meeting GHG reduction targets (see Beinhocker et al., 2008; Stern, 2006; Grieg-Gran, 2008). However, proponents of REDD are still striving to win political endorsement for the approach as a compliance mechanism. The potential of REDD and other land-based carbon storage and sequestration opportunities as part of a post-2012 climate change regime remains uncertain, in part due to lack of detailed information on the likely costs associated with forest carbon projects, and REDD programmes in particular.