Forests provide a wide range of services: food, fuel, building materials, freshwater, climate regulation, flood control, maintenance of biodiversity, and cultural services, to name a few. The cost of providing these services often falls on local land managers. However, it may be more profitable for the land manager to convert the land for other uses, such as agriculture.
Clearing forest to use the land for other purposes contributes to around 20 per cent of global GHGs. This tends to take place in tropical regions. In recognition of the role played by forests in storing carbon, it is possible that reducing emissions from deforestation and forest degradation (REDD) in developing countries could become part of the new climate agreement to be reached in Copenhagen in December 2009.
The report focused on a number of issues for REDD activities, and reviews 13 Payments for Ecosystem Services (PES) projects in Africa, Southeast Asia and Latin America. PES are designed to provide financial incentives to the land owner to preserve the forest and are thought to be an effective instrument for implementing REDD. Under PES, payments for environmental services are conditional and are only made if the service, such as conserving forest areas, is delivered.
Performance-based payments are the most promising feature of REDD schemes. However, policy and legal frameworks are needed to support compliance. In addition, monitoring, verification and reporting, as well as sanctions for non-compliance, are important REDD activities. However, the researchers suggest these are difficult to achieve in practice. Accurately measuring and monitoring forest change is a major challenge in many developing countries. The study recommends providing free or low-cost access to satellite imagery to track deforestation, technical training and establishing transparent data analysis to support local REDD activities.
Strong governance of forest resources is key to successful REDD projects. Effective and fair rules, frameworks and institutions at both local and national levels, are essential for a successful PES approach. For example, clearly identifying land rights, natural resources and protection of the rights of forest-dependent communities. The study found that governance is often weakest in areas where deforestation is highest.
Payment schemes should be monitored to ensure that poor and marginalised groups are not unfairly affected by REDD activities. To date, most PES initiatives have been small-scale and have had some positive impacts. But where REDD schemes are implemented on a large scale or governance is weak, care should be taken to ensure that such schemes do not lead to social inequality. Strong property rights are essential if local individuals and communities are to benefit from funding for REDD activities.
Costs of reducing forest emissions through PES schemes include both opportunity and transaction costs. Opportunity costs are borne by landholders who potentially could earn more money if forest land was used for alternative purposes, such as agricultural production. Opportunity costs depend on the actual scheme implemented and the anticipated level of GHG reductions to be achieved. Transaction costs cover government and private costs to set up and run the scheme.