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REDD sticks and carrots in the Brazilian Amazon: assessing costs and livelihood implications
 

REDD sticks and carrots in the Brazilian Amazon: assessing costs and livelihood implications

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Presentation by Jan Börner (CIFOR), Sven Wunder (CIFOR), Sheila Wertz-Kanounnikoff (CIFOR), Glenn Hyman (CIAT) and Nathalia Nascimento (UFPA).

Presentation by Jan Börner (CIFOR), Sven Wunder (CIFOR), Sheila Wertz-Kanounnikoff (CIFOR), Glenn Hyman (CIAT) and Nathalia Nascimento (UFPA).

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    REDD sticks and carrots in the Brazilian Amazon: assessing costs and livelihood implications REDD sticks and carrots in the Brazilian Amazon: assessing costs and livelihood implications Presentation Transcript

    • REDD sticks and carrots in the Brazilian Amazon: assessing costs and livelihood implications Washington DC, 26.8.2011 Jan B örner (CIFOR) Sven Wunder (CIFOR) Sheila Wertz-Kanounnikoff (CIFOR) Glenn Hyman (CIAT) Nathalia Nascimento (UFPA) The CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS), is a strategic partnership of the Consortium of International Agricultural Research Centers (CGIAR) and the Earth System Science Partnership (ESSP). The program is supported by the European Union (EU), the United States Agency for International Development (USAID), the Canadian International Development Agency (CIDA), New Zealand’s Ministry of Foreign Affairs and Trade, the Danish International Development Agency (Danida) and the UK Department for International Development (DFID), with technical support from the International Fund for Agricultural Development (IFAD). The views expressed in this document cannot be taken to reflect the official opinions of these agencies, nor the official position of the CGIAR or ESSP.
    • Post-Canc ú n REDD+
      • Policy approaches and positive incentives on issues relating to:
      • R educing E missions from
      • D eforestation
      • D egradation
      • + Conservation of forest carbon stocks
      • + Sustainable forest management
      • + Forest carbon stock enhancement
      Washington DC, 26.8.2011
    • REDD perspectives
      • Over US$ 27 billion in pledges
      • National governments as prime recipients
      • National autonomy in policy instrument choice
      Washington DC, 26.8.2011
    • Context: Brazilian Amazon Washington DC, 26.8.2011 Reduce annual average deforestation (19,500 km 2 , 1996-2005) by 80% until 2016
    • Features of the Brazilian REDD Approach
      • Regulatory mechanisms „Command-and-Control (C&C)“ - Sticks
        • Improving existing measures
      • National program of payments for environmental services (PES) - Carrots
        • Complementary conditional compensation
      • Improved territorial planning
      Washington DC, 26.8.2011
    • What scope for PES? Washington DC, 26.8.2011 Over 1.4 million km 2 threatened until 2050 B ö rner et al, 2010, Ecological Economics, 69
    • What scope for PES? Washington DC, 26.8.2011 Over 50% of threatened forests exhibit offset market competitive opportunity costs. Total annual cost > R$ 17 billion ~ US$ 9 billion B ö rner et al, 2010, Ecological Economics, 69
    • What scope for PES? Washington DC, 26.8.2011 B ö rner et al, 2010, Ecological Economics, 69 Only 25% of threatened forest land boast institutional preconditions for conditional incentives (i.e., well defined property rights)
    • Follow-up research questions
      • How much would it cost to achieve the 80% reduction target through stick type of policies?
      • How would such policies play out in terms of welfare and equity impacts?
      Washington DC, 26.8.2011
    • The workings of stick policies Washington DC, 26.8.2011 To deforest or not to deforest…. unprofitable profitable Opportunity costs Based on Becker, 1968 “Crime and punishment: an economic approach”, JPE Enforcement probability Fine
    • Cost-effectiveness of stick policies Washington DC, 26.8.2011 Additionality Implementation costs
    • Measuring the costs of stick policies at the farm forest frontier Washington DC, 26.8.2011 Liability establishment Cost categories Coercion and administrative processes Fine revenues Spatial unit
    • Welfare effect of stick policies Washington DC, 26.8.2011 Opportunity cost Fine payments
    • Travel time (costs) in the Amazon Washington DC, 26.8.2011
    • Determining p enf – a resource allocation problem Washington DC, 26.8.2011 Subject to: Maximizing deterrence by targeting largest offenders Operational budget limitations when acting at remote forest frontiers
    • Data sources Washington DC, 26.8.2011 Data type Source Annual deforestation polygons (2002-9) INPE-PRODES (2002-9) 1 Municipal-level average profits from agricultural activities and timber extraction (i.e. REDD opportunity costs) Börner et al. 2010 Location and size of land-reform settlements, protected areas, and indigenous territories. IBAMA (provided in 2007) Location and size of protected areas and indigenous territories IBAMA, at: http://siscom.ibama.gov.br (accessed in 2009) Costs and locations (districts) of C&C enforcement operations (2003-2008) IBAMA records, provided in June 2009 Population estimates (Amazon region) IBGE 2 Agricultural Census 2006
    • Actual and optimal enforcement strategies Washington DC, 26.8.2011 Observed enforcement Simulated enforcement 70% overlap
    • p enf as a function of deforestation polygon size and distance Washington DC, 26.8.2011
    • Implementation costs and C&C effectiveness - aggregate Washington DC, 26.8.2011
    • C&C cost-effectiveness in space Washington DC, 26.8.2011
    • Welfare effects in space Washington DC, 26.8.2011
    • Summary
      • Scope for positive REDD incentives at national level is limited
        • pre-existing use right restrictions
        • weak/poorly defined property rights at many forest frontiers
      • C&C policies much cheaper to implement than PES (<US$700 million versus >US$ 9 billion annually), but with contentious social welfare implications.
      Washington DC, 26.8.2011
    • Implications for the design of REDD+ sticks
      • The current enforcement strategy follows the “Becker paradigm” of low enforcement pressure and high fines – i.e. lower fine levels and higher enforcement pressure may increase both compliance and cost-effectiveness
      • Stronger focus on cross-compliance mechanism
      • In states with poor transport infrastructure, C&C enforcement cannot be self-financing, i.e. sub-national compensation mechanisms
      Washington DC, 26.8.2011
    • Implications for the design of REDD+ carrots
      • Positive incentives can only take the form of “compliance subsidies”
      • Given pre-existing C&C enforcement pressure, actual opportunity costs may be lower that most profit-based estimates suggest
      • Imperfect enforcement of direct compensation payments (like currently under C&C) may produce huge inefficiencies in REDD schemes
      • History of lax enforcement represents a political economy barrier to compensation based on pure additionality criteria
      Washington DC, 26.8.2011
    • Beware of REDD sticks dressed as carrots! Washington DC, 26.8.2011