Presented by Arild Angelsen (Professor, School of Economics and Business, Norwegian University of Life Sciences (UMB) - CIFOR Senior Associate) at "GFOI 2023 Plenary: Myths, realities, and solutions towards high-integrity forest carbon credits" on 9-11 May 2023

1. Introduction:
REDD+ credits and carbon markets
Arild Angelsen
Professor, School of Economics and Business,
Norwegian University of Life Sciences (UMB), Ås, Norway
& Senior Associate, CIFOR, Bogor, Indonesia
arild.angelsen@nmbu.no

2. REDD+ as PES
• The main idea of REDD+ was/is “policy approaches and positive
incentives” (COP15, 2007)
• Positive incentives ≈ PES ≈ Result-based payment etc.
• Design and implementation have struggled to move forward
… but is increasingly doing so
• What does it take to create a carbon market*?
* “market” in a broad sense, including public funding for results

3. Key elements of a market
Commodity/service
(CER/VER)
Sellers
Buyers
Institutions
MRV
Ref.level
Compliance
(CAT)
Voluntary
Public
Carbon rights
Benefit sharing
Market place,
standards, etc.
REDD+ credit credibility
linked to all four elements of
the market

4. Buyers: three sources
Compliance market
• The original idea (Cap and
Trade - CAT)
• A mixed bag
Voluntary market
• Companies
• Net zero commitments
• Project-focus
Public funding
• A growing part of ODA
Voluntary carbon market report (2021)

5. Sellers
• Who owns an emission reduction in the forest?
• Different rationales for benefit sharing (Luttrell et al. 2013)
1. emission reductions
2. cost-compensation
3. facilitation
4. legal rights
5. stewardship
6. pro-poor
• In practice: a compromise between effectiveness/efficiency and
equity (stakeholders’ interest)

6. Defining an emission reduction (ER)
∆ER = (∆Ha – RL) * EF RL = ref.level; EF = emission factor = C/ha
• Define impact (“did it work?”)
• Define success (reputation, re-election, …)
• Define payments in a result-based system
Why is setting RL tricky?
• Hypothetical: the counterfactual
• Strong economic and political interests
• Conceptual confusion: BAU, crediting baseline, ambition …
 UNFCCC shifted from BAU to crediting baseline
(or perhaps consider that BAU should be the crediting baseline)
“A reference level is
a benchmark set so
low that success is
guaranteed.”
(Unknown)

7. BAU vs. crediting baseline
Historical
deforestation
and forest
degradation
National
circumstances
relevant for
BAU (e.g.,
drivers)
National
circumstances
relevant for
crediting baseline
(e.g., capabilities,
climate debt)
BAU baseline
Crediting baseline
Other
considerations
(e.g., efficient use
of funds &
uncertainty)
COP 15 (2009): Develop FREL/FRL, “taking into account historical data and
adjust for national circumstances”

8. Institutions (rules)
• Need for independent verification/certification
• Less incentives for quality control by byers or sellers
• Carbon is not coffee: “We don’t have ER for breakfast”
• UNFCCC FREL/FRL process
• COP 19 (2013): “To offer a facilitative, non-intrusive, technical exchange of
information …”
• Like saying: “Please suggest from what point you would like to get paid!”
Voluntary market certification
• Credibility
• No correct formula

9. Contribution of science
• Learn from lessons in other fields
 Setting RLs is key in science:
• Impact assessment
• Establishing causality (the core of science)
• Independent scrutiny on all aspects
“Whenever the struggle resurfaces between the champions of the general
interest and that of the private interest, you will find us [statisticians] at our
post, armed and ready to march”
(Alfred de Foville. 1892. “Le rôle de la statistique dans le présent et dans l’avenir”,
Journal de la Société de Statistique de Paris.)

10. Thank you!