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UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP

                                           A. Cost to landowners (opportunity co...
5
                                              www.umb.no
       Some costs estimates
Institutt for økonomi og ressursfor...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
                                           Institutt for økonomi og ressursforval...
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REDD

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Transcript of "REDD"

  1. 1. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning What will REDD cost? RFN, 18.6.2009 Arild Angelsen Professor, Dept. of Econ. and Resource Mgt., Norwegian University of Life Sciences (UMB), Ås & Senior Associate, Center for International Forestry Research (CIFOR), Indonesia www.umb.no 1
  2. 2. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning Introduction  Title: “What will it cost? Paying for avoided emissions, paying for ecosystem services or paying to pollute? Costs and consequences of alternative models for maintaining forests and forest carbon”  Three types of costs: 1. Landowners costs (opportunity costs) 2. Government costs (budget costs) 3. International payment for REDD (Annex I transfer to non-Annex I)  The costs also depend very much on: – How much REDD we want – What type of REDD mechanisms we have in mind – How rights (and duties) are defined www.umb.no 2
  3. 3. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning The global REDD scheme International 3. level Compliance Aid Global (offset) (ODA) markets fund International REDD Emission Payments reductions REDD-PES scheme 2. National level National National REDD REDD Fund ‘DNA’ Other? National REDD Emission REDD-PES Payments reductions scheme Sub-national 1. level Land Local Com- govern- users munities ments www.umb.no 3
  4. 4. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP A. Cost to landowners (opportunity costs) What is the forsaken opportunities? • Agricultural rent (profit) + timber rent • NPV (what would it cost to buy the land?) $/tC Agric. rent Carbon price REDD rent REDD costs BAU Ref. Actual 0 Change defore- level defore- in tC station station (forest cover) www.umb.no
  5. 5. 5 www.umb.no Some costs estimates Institutt for økonomi og ressursforvaltning UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP
  6. 6. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning B. Government (budgetary) costs National reductions done thorugh a PES system: 1. Opportunity costs: – Should everyone be compensated? • Illegal uses? • New regulations: compensate all losers? – Compensating what? • Emission reductions = actual emissions – BAU (hypothetical) • Forest conservation: stock based payments – “Not just compensating the bad guys” – A practical and cheaper approach – Additionality issues Opp. costs www.umb.no 6
  7. 7. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning Govt. costs (cont.) 2. REDD rent – Paying the triangle (opp. cost) vs. the rectangle (opp. cost + REDD rent)? – Typically increase costs 3x – Who owns the REDD rent (global & national & local)? • What should be the distribution of costs for slowing global warming? – Practical ways of organizing a system of differentiated pay REDD • Brazil example: Differentiate between 3 rent categories of land users can save some 50 %. (Boerner and Wunder, 2008) • Is it fair? Pay less because they poor? Opp. costs www.umb.no 7
  8. 8. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning Govt. costs (cont.) 3. Targeting of PES payments – How to identify those that plan to deforest Adm next year, and target them – and only them costs – Non-targeting may increase payment 2-100x (McKinsey, 2008) Non- – Not economic costs, just transfers target trans- 4. Administrative and transaction costs fers – Start-up costs: MRV for C & $ – Running costs: Typical estimate <USD1 per REDD tCO2e rent – Might be underestimated Opp. costs www.umb.no 8
  9. 9. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning Govt. costs: Non-PES policies 5. Costs of policies – Typical policies: • Tenure & land reforms • Community forest management • Agricultural intensification • Energy efficiency and fuel substitution ? • Infrastructure ? – Compensation? ? • Probably limited ? – Some REDD policies have negative costs ? • Not building a road ? • Removing agric subsidies ? – Wide range of estimates; largely unknown ? www.umb.no 9
  10. 10. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning C. International payment for REDD  Which costs to use as basis: – Only economic costs (opportunity costs + admin & transaction costs)? • May then achieve much less in the short run  What share of costs to be born by REDD countries? – What does the principle of “common but differentiated responsibilities” (CBDR) imply?  Setting reference levels – RL = BAU + CBDR – Balance: Ensure participation vs. effective use of limited funds (or “tropical hot air”) (Angelsen, 2008)  Payment depends, of course, on the success of REDD www.umb.no 10
  11. 11. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning Summary What are the costs? International 3. level Aid Compliance Global A political decision (offset) (ODA) markets fund International REDD Emission Payments reductions REDD-PES scheme National level 2. National National Highly uncertain: REDD REDD Fund ‘DNA’ 0-100x opp. costs Other? National REDD Emission REDD-PES Payments reductions scheme Sub-national 1. level Land Local govern- Low, compared Com- users munities ments to other mitigation options www.umb.no 11
  12. 12. UNIVERSITETET FOR MILJØ- OG BIOVITENSKAP Institutt for økonomi og ressursforvaltning Summary  How productive is the REDD numbers game?  Look at FOREST CARBON as a new cash crop: – Assistance to start production • Define the product = actual emissions (MRV) - reference level • Producing the product: domestic PES systems and policies – Pay for results  Get started, and learn – More important than the fine-tuning of mechanism – There is no better way to learn how to grow coffee than to start growing coffee www.umb.no 12
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