Who will bear the cost of REDD+?
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Evidence from the incidence of implementation and opportunity costs in subnational REDD+ initiatives
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Who will bear the cost of REDD+?
- 1. Who will bear the cost of REDD+? Evidence from the incidence of implementation and opportunity costs in subnational REDD+ initiatives Cecilia Luttrell, Erin Sills, Riza Aryani, Desita Andini, Maria Febe Evinke Asia Pacific Forestry Week February 24th 2016, Clark, Philippines Session on: REDD+: What do we know and what comes next? Relevant insights from CIFOR Global comparative study (GCS) REDD+ research for the tropical forests of the Asia-pacific region
- 2. Introduction: fears that failure to cost will bring failure to compensate Concerns that costs will be imposed on disadvantaged stakeholders who will not be compensated 1. small holders and informal forest users will bear opportunity costs; 2. REDD+ country institutions will bear implementation costs; 3. but because they are minor players without formal rights, their costs will not be recognized or compensated.
- 3. BRAZILPERU TANZANIA CAMEROON INDONESIA VIETNAM 3 7 8 6 4 2 1 5 9 10 11 16 13 14 15 12 22 19 20 18 17 23 21 BRAZIL 1.Acre 2.BolsaFloresta 3.Cotriguaçu 4.Jari/Amapá 5. SFX 6.Transamazon PERU 7.MadredeDios 8.Ucayali CAMEROON 9.Mt.Cameroon 10.SECameroon REDD+ initiatives Legend TANZANIA 11.Kigoma 12.Zanzibar 13.Kilosa 14.Lindi 15.Mpingo 16.Shinyanga INDONESIA 17.KFCP 18.Katingan 19.KCCP 20.RimbaRaya 21.TNCwithin BFCP 22.UluMasen VIETNAM 23. Cat Tien Location of subnational initiatives included in the CIFOR GCS study
- 4. Degree of entry into carbon market
- 5. Concerns around opportunity costs - The distribution of opportunity costs helps identify the groups most likely to suffer net costs from REDD+ and thus most likely to resist implementation - Concerns about using standard estimates of opportunity costs to design REDD+ include: - distribution of opportunity costs reflects the current distribution of income, leading to conclusion that “the poor need to be compensated less” - challenge of overlapping rights and multiple users (with different opportunity costs) - do not account for ambiguous land tenure - do not capture subsistence and other non-market use
- 6. Concerns around implementation costs • Implementation costs were ignored or oversimplified in initial discussions about REDD+ • But increasingly recognized as significant • ‘Implementation costs’ = start-up and running costs of administration, actions to reduce deforestation or forest degradation, MRV, institutional arrangements, FPIC and direct payments • Concerns include • hidden costs of REDD+ for government • NGOs either siphoning funds for non-carbon objectives or subsidizing REDD+ to ensure successful launch Both leading to sustainability/commitment problems
- 7. The percentage composition per type for each level 24% 18% 31% 15% 21% 71% 23% 45% 46% 29% 77% n=42 n=39 n=45 n=13 0% 20% 40% 60% 80% 100% International National Subnational Village %oftypeofstakeholderinstitutions Level of stakeholder institution Civil Society Government Private Donors and research
- 8. Types of institutions implementing REDD+ - Large number of institutions involved in implementation - Most from civil society (60/139) and government (43/139) - Only 19/139 from the private (for-profit) sector But, - In initiatives that have sold credits, 37% are private sector and no government institutions are involved - In the 4 expired initiatives, 33% were government
- 9. The percentage of each type of SFM practiced by different stakeholder institution types 19% 14% 12% 4% 27% 22% 2% 11% 19% 28% 45% 21% 35% 36% 41% 64% n=26 n=36 n=49 n=28 0% 20% 40% 60% 80% 100% SFM including certification central to strategy SFM important part of strategy SFM activities minor or not yet implemented Seek to stop illegal logging but do not promote SFM %ofstakeholderinstitutinsbytype Degree of importance of SFM Civil Society Government Private Donors and research
- 10. The percentage composition per type for each level 24% 18% 31% 15% 21% 71% 23% 45% 46% 29% 77% n=42 n=39 n=45 n=13 0% 20% 40% 60% 80% 100% International National Subnational Village %oftypeofstakeholderinstitutions Civil Society Government Private Donors and research
- 11. Challenging the notions of REDD+ as i) a centralizing force ii) a polycentric arrangement Subnational institutions are highly involved in implementation - particularly in Brazil Only 4 initiatives in Brazil and Tanzania have no national institutions significantly involved Polycentricism - does this increase or reduce transaction costs? Hollow core – many SNIs have no ‘significant’ village level institutions SNIs that are selling credits or are certified have no village institutions and a lower % of subnational institutions
- 12. The percentage composition per type for each level 24% 18% 31% 15% 21% 71% 23% 45% 46% 29% 77% n=42 n=39 n=45 n=13 0% 20% 40% 60% 80% 100% International National Subnational Village %oftypeofstakeholderinstitutions Civil Society Government Private Donors and research
- 13. The percentage of each type and level of stakeholder institution that is burden-sharing versus those that are covering their costs 60% 67% 33% 15% 38% 31% 40% 62% 2% 3% 27% 23% n=42 n=39 n-45 n=13 0% 20% 40% 60% 80% 100% Burden sharing & benefitting Burden-sharing All costs covered 60% 67% 33% 15% 38% 31% 40% 62% 2% 3% 27% 23% n=42 n=39 n-45 n=13 0% 20% 40% 60% 80% 100%
- 14. High level of subsidization: many are prepared to share the cost burden Many institutions are subsidizing REDD+ particularly: More than half of government institutions (56%) 84% of subnational government institutions incurring more costs than benefits from involvement in REDD+ Motivation for covering costs in the early stages To build readiness? To generate non carbon benefits? To meet climate mitigation commitments? But is this support ‘crowding in’ or ‘crowding out’ non-state investment?
- 15. Only some lenses on opportunity costs bring costs to smallholders into focus Elicited opinions on which stakeholder groups will bear the greatest opportunity cost of REDD+ • Greatest = highest financial cost, or • Greatest = largest number of people affected When define ‘greatest’ in terms of financial value, respondents cite large scale land users When define ‘greatest’ in terms of number of people, respondents cite small scale users Reminder that REDD+ must be designed to provide incentives as well as compensation
- 17. Denying benefits to those without legal rights will disproportionately affect certain groups High level of uncertainty over legality of land uses Land uses affecting greatest number of people tend to be illegal Higher value land uses tend to be clearly legal BUT high value land uses are exclusively legal (with no ambiguity) in fewer than half of the initiatives Problematic for benefit sharing system based entirely on land use
- 18. Conclusions: implications for the design of REDD+ Concerns around costs do play out in GCS sites Need to understand the motivations and incentives facing these actors - not always about covering costs or generating a profit Need to consider multiple perspectives on incidence of costs and recognize inherent biases GCS data illustrate the challenges of characterizing target groups for benefit-distribution systems Make distribution of costs and ways of calculating transparent in order to design ‘fair’ benefit sharing systems Has value for programs and processes beyond REDD+.
- 19. Thank you! http://www.cifor.org/redd-benefit-sharing/ With co-financing from: The CIFOR REDD+ Benefit Sharing project is supported by:
- 20. • Key publications: Assembe-Mvondo et al. 2015. Comparative Assessment of Forest and Wildlife Revenue Redistribution in Cameroon. CIFOR working paper 190. Loft, L. et al. 2015. Taking stock of carbon rights in REDD+ candidate countries: Concept meets reality. Forests 6:1031- 1060. Börner et al. 2015. Mixing Carrots and Sticks to Conserve Forests in the Brazilian Amazon: A Spatial Probabilistic Modeling Approach. PLoS ONE 10(2): e0116846. doi:10.1371/journal.pone.0116846 Luttrell et al. 2015. Lessons from voluntary partnership agreements for REDD+ benefit sharing. CIFOR Occasional Paper no 134. Luttrell et al. 2014 Who should benefit from REDD+? Rationales and realities. Ecology and Society 18(4): 52. Pham et al. 2014. Local preferences and strategies for effective, efficient and equitable PES benefit distribution options in Vietnam: Lessons for REDD+. Human Ecology DOI: 10.1007/s10745-014-9703-3 Pham et al. 2013. Approaches to benefit sharing: A preliminary comparative analysis of 13 REDD+ countries CIFOR working paper. Assembe, S. et al. 2013. Assessment of the effectiveness, efficiency and equity of benefit sharing schemes under large-scale agriculture: Lessons from land fees in Cameroon, European Journal of Development Research • Series of information briefs: Arwida S. et al. 2015. Lessons from anti-corruption measures in Indonesia, CIFOR InfoBrief 120. Nawir A. et al. 2015. Lessons from community forestry in Nepal and Indonesia, CIFOR InfoBrief 112. Gebara MF. et al. 2014. Lessons from local environmental funds for REDD+ benefit sharing with indigenous people in Brazil. CIFOR InfoBrief 98. Kowler LF. et al. 2014. The legitimacy of multilevel governance structures for benefit sharing: REDD+ and other low emissions options in Peru. CIFOR InfoBrief 101. Loft L. et al. 2014. Lessons from payments for ecosystem services for REDD+ benefit-sharing mechanisms. CIFOR InfoBrief 68. Myers et al. (2014) Who holds power in land use decisions? Implications for REDD+ in Indonesia. CIFOR InfoBrief 100. Wong G. (2014). The experience of conditional cash transfers: Lessons for REDD+ benefit sharing. CIFOR InfoBrief 97.
- 21. With co-financing from: The CIFOR REDD+ Benefit Sharing project is funded by: REDD+ Benefit Sharing research team: Grace Wong, Sven Wunder, William Sunderlin, Anne Larson, Esther Mwangi, Imogen Badgery- Parker, Maria Brockhaus, Cecilia Luttrell, Pham Thu Thuy, Samuel Assembe-Mvondo, Le Ngoc Dung, Annie Yang, Shintia Arwida, Januarti Tjajadi, Ashwin Ravikumar, Jazmin Gonzales, Eduardo Marinho, Ani Nawir, Jan Boerner, Lasse Loft, Erin Sills, Krister Andersson, Naya Paudel, Maria Fernandes Gebara, Peter May, Rodd Myers, Laura Kowler, Anna Sanders, Martin Kijazi, Sofi Mardiah, Vu Tan Phuong, Thang Manh Le, Dan Cooney, Adinda Hassan, Cynthia Maharani, Demetrius Kweka, Noah Greenberg, Christopher Martius
Editor's Notes
- The theme of this presentation is our analysis of what type of costs actors who are involved in the startup phase of REDD sub national initiatives have been facing. Understanding costs is a fundamental question for the design of benefit sharing systems as it is NET benefits that matter, in addition to this there is the need to clarify on whom costs are falling. These are key questions we now face post –Paris with the increased attention on results based finance and what this means for benefit sharing. There are many concerns about REDD costs and some of these lie at the basis of barriers and possible resistance to REDD so there are advantages in understanding thee concerns better . There are 2 main groups of concerns: the first is that disadvantaged groups, such as smallholders and those without formal claims to forest land, will not be fully compensated for the opportunity costs they bear. The second is that the costs of implementing REDD+ are much higher than is generally recognized, and that they fall on REDD country institutions who will not be compensated
- So what we have done in this analysis is to look for evidence around these concerns about costs based on the types of stakeholders bearing costs in a sample of 22 subnational REDD+ initiatives across five countries - six sites in Indonesia, six in Tanzania, five in Brazil, three in Cameroon, and two in Peru.
- Of this 3 initiatives have already sold credits in a voluntary or subnational market Four that have been certified but have not yet made any sales Four that have completed at least one step towards certification Four have not made any progress towards selling credits, although they remain interested in doing so Three have decided that they are opposed to selling credits And four initiatives had expired or been put ‘on hold’, as of the end of 2014 Our data was collected from expert knowledge and interviews with key informants in the organizations implementing these initiative. From this we were able to explore the concerns around costs by (i) looking at which institutions are bearing significant implementation costs (we define ‘significant’ as those institution who had spent, at least 5% of total initiative budget, at least one month of person-days in the start-up phase, or at least five days per month on implementation (ii) and secondly the stakeholder groups expected to bear the greatest opportunity costs,
- The term ‘opportunity cost’ is commonly used in REDD to refer to the foregone profit from alternative uses of land as a result of introducing REDD. These cost are key for design of benefit-sharing as they help identify the groups most likely to suffer costs from REDD+ and also those likely to resist implementation. Opp costs can been estimated using a range of approaches and there are many concerns over these methods including that the estimate only reflects the current land uses and distribution of income with the implication that “the poor need to be compensated a lot less simply because they are poor, there are also challenges of overlapping rights and multiple users (with different opportunity costs), and worries that subsistence and non-market benefits re not included, just to name a few concerns
- We use the term ‘implementation costs’ to refer to start-up and running costs of administration, actions to reduce deforestation or degradation, MRV , institutional development, FPIC , as well as any direct payments Implementation costs tend to be less emphasized partly due to a lack of information, and partly due to uncertainty regarding the future design of REDD+. But there are concerns that it is the institutions in REDD countries will actually bear many of the hidden implementation costs. Some claim that the failure to take them into account is linked to the poor performance of many deforestation policies. Concerns have also been raised about the degree to which NGOs and the private sector are subsidizing REDD+ in the short-term, which potentially create challenges for long-term commitment.
- SO what de our data show. The first thing to note is that a large number of implementing stakeholder institutions are involved in REDD. Most are, civil society institutions with government institutions the second most frequently occurring AND the smallest category being the private sector
- We found some apparent relationship between an initiative’s approaches to the carbon credit market: those initiatives that have sold carbon credits (which you could say is one definition of success) have more than a third of institutions are from the private sector and no government institutions are involved. ON the other hand in the expired initiatives a third of implementing institutions were government
- We also noted an apparent relationship between the role of forest management in the initiative’s strategy and institution type. Specifically, the larger the percentage of civil society institutions the less institutions involved increases according to the SNI’s degree of attention to SFM
- Our data also show the range of levels, which are ere involved in the start-up phases The largest numbers of institutions operate at the subnational (45 out of 139) and international (42) levels The latter is not a surprising result given the international focus of the mechanisms but the dominance of subnational is interesting.
- Some analysis has suggested that REDD+ is supporting the recentralization of forest management due to its heavy requirements but our findings challenge this notion. Even if policy discussion in our sample countries is dominated by the national level, the subnational level are highly involved in implementation. This is particularly the case in the Brazilian and Indonesian sites. Indeed, four of the initiatives in our sample received no significant input from national institutions. There has been some discussion that polycentric systems (i.e. those which involves institution across a range of levels can be advantageous, particularly if these different institution have complementary strengths. Indeed, three of the four initiatives that lacked national level institutions are those that have expired.
- However we are not seeing a classic polycentric pattern – indeed many (13 out of 22) initiatives, particularly in Brazil, Peru and Indonesia has no significant village level institutions involved. The exception is Tanzania, where, in most casa initiatives, village level institutions were the most frequently occurring institution. This may reflect the way in which Norwegian funding for REDD+ in Tanzania specifically targeted local capacity building, in order to move forward while national institutions + were still being developed. IT is also interesting to note that initiatives that sold credits and those that were certified, had no village institutions and a lower percentage of subnational institutions.
- We also collected data on the TYPE of costs whether institutions (i) have their costs fully covered (or possibly more than fully covered i.e. making a profit) by the initiative’s e budget, or (ii) or they were sharing the financial burden i.e. subsiding implementation One fear is that big unfunded costs of REDD+ will discourage the participation of REDD country institutions. We found a high level of subsidization by government particularly those at the subnational level. 84% of government institutions at the subnational level putting more into the initiative than they are benefitting from it
- One possible explanation for this pattern is that subnational organizations have the greatest interest in securing non-carbon benefits from REDD+ and are thus willing to use public funds to reduce emissions, with the hope that their investment will leverage other investment or act as part of voluntary national contributions to mitigations However an important area to look at further is whether these public investments are ‘crowding out’ or ‘crowding in’ investments by the private sector and NGOs
- Turning now to fears around OCs, a huge concern in the debate is that vulnerable groups such as smallholders will not be properly compensated for losses they incur as a result of REDD+. In each initiative we collected data on the land or forest use that would be foregone and the stakeholder group that they considered to be the ‘most significant’ which would be affected. Significant was judged according to two criteria: i) foregoing the greatest financial profit (OC$), and ii) negatively affecting the largest number of people (OCP). Our data suggests that different criteria for calculating opportunity costs hugely affects which stakeholder groups are identified as bearing the greatest costs and this has large implications for the distribution of benefits . Defining opportunity costs in terms of financial value foregone is more likely to result in a focus of benefits on medium and large-scale land users and vice versa Though not unexpected grasping this difference is useful as it encourages us to move away from original notions of REDD+ as compensation for financial costs, towards a model that creates incentives. .For example minimizing opportunity costs to large-scale commercial land users might involve attention to subsidies, while minimizing costs to subsistence users may require attention to poverty reduction
- Turning now to the question of legality we find that in most of our sites there is a very high level of uncertainty over tenure or the legality of land use, Agricultural land uses have particularly unclear tenure. And the land uses that affect the largest number of people tend to be illegal and in only six out of 21 sites where they clearly legal. In all of the Brazilian sites, and four out of the five Indonesian sites, the this land use was illegal or legally ambiguous. However, in less than half of the sites (9 out of 21), the land use identified as generating the highest financial opportunity costs was characterized as clearly legal.
- The considerable level of illegal or legally ambiguous land uses raises questions regarding the compensation of ‘illegal’ opportunity costs, and the implications for benefit sharing. Should illegal users be entitled to share benefits, and if so how? To withhold compensation risks further reducing viable strategies for the poor, particularly in the case of small-scale subsistence use.
- So overall our findings suggest that concerns regarding who will bear the costs of REDD+ may be well founded. Subnational actors are playing a far larger role than is often assumed, and these actors are often prepared to subsidize the REDD+ initiatives this suggests that these intermediaries require greater attention, in terms of understanding their motivations. It is clear that Motivations for getting involved in REDD+ are not always about ensuring costs are compensated or financial profit. This suggests a need for a shift towards more of a development model, which creates incentives and is not only about paying actors to change behavior. This you is a need to use multiple approaches to define those cost bearing groups, and to be explicit about the inherent biases of the approaches used. In so doing, we hope that this process can also provide information about the characterization of target groups which is of value for benefit-distribution systems wide than REDD+ alone.