IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01024447.html
   My bibliography  Save this paper

Unveiling information on opportunity costs in REDD: Who obtains the surplus when policy objectives differ?

Author

Listed:
  • Philippe Delacote

    (LEF - Laboratoire d'Economie Forestière - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Charles Palmer
  • Ryiong Kim Bakkegaard

    (IFRO - Institute of Food and Resource Economics [Copenhagen] - Faculty of Science [Copenhagen] - UCPH - University of Copenhagen = Københavns Universitet)

  • Bo Jellesmark Thorsen

    (Center Macroecology, Evolution and Climate - Globe Institute - Faculty of Health and Medical Sciences - UCPH - University of Copenhagen = Københavns Universitet)

Abstract

Improving information about individual opportunity costs of deforestation agents has the potential to increase the efficiency of REDD when it takes the form of a payment for environmental services scheme. However, objectives pursued in REDD projects may vary across policy makers. Within a theoretical framework, this paper explores the impacts of different policy objectives under two opportunity cost settings: asymmetric and full information. For a policy maker aiming to maximize net income from REDD, having full information may not increase the amount of forest conserved but could lead to a redistribution of rents away from agents. By contrast, for an environmental policy maker focused on maximizing the amount of forest conserved under REDD having full information increases the amount of forest conserved while reducing the rents received by agents. For a policy maker pursuing poverty alleviation objectives in REDD-affected communities, having full information makes no difference to overall welfare as rents remain with agents. The amount of deforestation avoided will at least be as high as under asymmetric information. These results are illustrated with data collected on opportunity costs in Amazonas State, Brazil.

Suggested Citation

  • Philippe Delacote & Charles Palmer & Ryiong Kim Bakkegaard & Bo Jellesmark Thorsen, 2014. "Unveiling information on opportunity costs in REDD: Who obtains the surplus when policy objectives differ?," Post-Print hal-01024447, HAL.
    • Handle: RePEc:hal:journl:hal-01024447
    DOI: 10.1016/j.reseneeco.2013.07.002
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Wu, JunJie & Zilberman, David & Babcock, Bruce A., 2001. "Environmental and Distributional Impacts of Conservation Targeting Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 333-350, May.
    2. Paul J. Ferraro & R. David Simpson, 2002. "The Cost-Effectiveness of Conservation Payments," Land Economics, University of Wisconsin Press, vol. 78(3), pages 339-353.
    3. Solenn Leplay & Jonah Busch & Philippe Delacote & Sophie Thoyer, 2011. "Implementation of national and international REDD mechanism under alternative payments for environemtal services: theory and illustration from Sumatra," Working Papers 11-02, LAMETA, Universtiy of Montpellier, revised Feb 2011.
    4. Dutschke, Michael & Schlamadinger, Bernhard & Wong, Jenny L.P. & Rumberg, Michael, 2004. "Value and Risks of Expiring Carbon Credits from CDM Afforestation and Reforestation," Discussion Paper Series 26347, Hamburg Institute of International Economics.
    5. Amacher, Gregory S., 2006. "Corruption: A challenge for economists interested in forest policy design," Journal of Forest Economics, Elsevier, vol. 12(2), pages 85-89, June.
    6. Wu, JunJie & Babcock, Bruce A., 1995. "Optimal Design Of A Voluntary Green Payment Program Under Asymmetric Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(2), pages 1-12, December.
    7. Signe ANTHON & Peter BOGETOFT & Bo Jellesmark THORSEN, 2007. "A Bureaucrat'S Procurement Strategy: Budget Constraints And Rationing," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 78(2), pages 221-244, June.
    8. Anthon, Signe & Bogetoft, Peter & Thorsen, Bo Jellesmark, 2007. "Socially optimal procurement with tight budgets and rationing," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1625-1642, August.
    9. Asquith, Nigel M. & Vargas, Maria Teresa & Wunder, Sven, 2008. "Selling two environmental services: In-kind payments for bird habitat and watershed protection in Los Negros, Bolivia," Ecological Economics, Elsevier, vol. 65(4), pages 675-684, May.
    10. Börner, Jan & Wunder, Sven & Wertz-Kanounnikoff, Sheila & Tito, Marcos Rügnitz & Pereira, Ligia & Nascimento, Nathalia, 2010. "Direct conservation payments in the Brazilian Amazon: Scope and equity implications," Ecological Economics, Elsevier, vol. 69(6), pages 1272-1282, April.
    11. Palmer, Charles, 2011. "Property rights and liability for deforestation under REDD+: Implications for 'permanence' in policy design," Ecological Economics, Elsevier, vol. 70(4), pages 571-576, February.
    12. Gary Stoneham & Vivek Chaudhri & Arthur Ha & Loris Strappazzon, 2003. "Auctions for conservation contracts: an empirical examination of Victoria's BushTender trial," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 477-500, December.
    13. Subhrendu K. Pattanayak & Sven Wunder & Paul J. Ferraro, 2010. "Show Me the Money: Do Payments Supply Environmental Services in Developing Countries?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 254-274, Summer.
    14. Richard D. Horan & Roger Claassen, 2007. "Targeting Green Payments under a Budget Constraint," Land Economics, University of Wisconsin Press, vol. 83(3), pages 319-330.
    15. Till Neeff & Francisco Ascui, 2009. "Lessons from carbon markets for designing an effective REDD architecture," Climate Policy, Taylor & Francis Journals, vol. 9(3), pages 306-315, May.
    16. Vosti, Stephen A. & Witcover, Julie & Carpentier, Chantal Line, 2002. "Agricultural intensification by smallholders in the Western Brazilian Amazon: from deforestation to sustainable land use," Research reports 130, International Food Policy Research Institute (IFPRI).
    17. JunJie Wu & Bruce A. Babcock, 1996. "Contract Design for the Purchase of Environmental Goods from Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 935-945.
    18. Muñoz-Piña, Carlos & Guevara, Alejandro & Torres, Juan Manuel & Braña, Josefina, 2008. "Paying for the hydrological services of Mexico's forests: Analysis, negotiations and results," Ecological Economics, Elsevier, vol. 65(4), pages 725-736, May.
    19. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801.
    20. Muller, Jeffrey & Albers, Heidi J., 2004. "Enforcement, payments, and development projects near protected areas: how the market setting determines what works where," Resource and Energy Economics, Elsevier, vol. 26(2), pages 185-204, June.
    21. Ian A. MacKenzie & Markus Ohndorf & Charles Palmer, 2012. "Enforcement-proof contracts with moral hazard in precaution: ensuring 'permanence' in carbon sequestration," Oxford Economic Papers, Oxford University Press, vol. 64(2), pages 350-374, April.
    22. Bulte, Erwin H. & Lipper, Leslie & Stringer, Randy & Zilberman, David, 2008. "Payments for ecosystem services and poverty reduction: concepts, issues, and empirical perspectives," Environment and Development Economics, Cambridge University Press, vol. 13(3), pages 245-254, June.
    23. Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
    24. Carmen Arguedas & Daan Soest, 2011. "Optimal Conservation Programs, Asymmetric Information and the Role of Fixed Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(2), pages 305-323, October.
    25. Rodney B.W. Smith, 1995. "The Conservation Reserve Program as a Least-Cost Land Retirement Mechanism," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 93-105.
    26. Dutschke, Michael & Schlamadinger, Bernhard & Wong-Leung, Jenny P. & Rumberg, Michael, 2004. "Value and Risks of Expiring Carbon Credits from CDM Afforestation and Reforestation," HWWA Discussion Papers 290, Hamburg Institute of International Economics (HWWA).
    27. Ian A. MacKenzie & Markus Ohndorf & Charles Palmer, 2010. "Enforcement-proof contracts with moral hazard in precaution: ensuring �permanence� in carbon sequestration," GRI Working Papers 27, Grantham Research Institute on Climate Change and the Environment.
    28. Britaldo Silveira Soares-Filho & Daniel Curtis Nepstad & Lisa M. Curran & Gustavo Coutinho Cerqueira & Ricardo Alexandrino Garcia & Claudia Azevedo Ramos & Eliane Voll & Alice McDonald & Paul Lefebvre, 2006. "Modelling conservation in the Amazon basin," Nature, Nature, vol. 440(7083), pages 520-523, March.
    29. Charles Palmer, 2005. "The Nature of Corruption in Forest Management," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 6(2), pages 1-10, April.
    30. Pagiola, Stefano & Bosquet, Benoit, 2009. "Estimating the costs of REDD at the country level," MPRA Paper 13726, University Library of Munich, Germany.
    31. Groom, Ben & Palmer, Charles, 2010. "Cost-effective provision of environmental services: the role of relaxing market constraints," Environment and Development Economics, Cambridge University Press, vol. 15(2), pages 219-240, April.
    32. Wunder, Sven & Engel, Stefanie & Pagiola, Stefano, 2008. "Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries," Ecological Economics, Elsevier, vol. 65(4), pages 834-852, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wolfersberger, Julien & Amacher, Gregory S. & Delacote, Philippe & Dragicevic, Arnaud, 2022. "The dynamics of deforestation and reforestation in a developing economy," Environment and Development Economics, Cambridge University Press, vol. 27(3), pages 272-293, June.
    2. Nicola K Abram & Douglas C MacMillan & Panteleimon Xofis & Marc Ancrenaz & Joseph Tzanopoulos & Robert Ong & Benoit Goossens & Lian Pin Koh & Christian Del Valle & Lucy Peter & Alexandra C Morel & Isa, 2016. "Identifying Where REDD+ Financially Out-Competes Oil Palm in Floodplain Landscapes Using a Fine-Scale Approach," PLOS ONE, Public Library of Science, vol. 11(6), pages 1-23, June.
    3. Gren, Ing-Marie & Zeleke, Abenezer Aklilu, 2016. "Policy design for forest carbon sequestration: A review of the literature," Forest Policy and Economics, Elsevier, vol. 70(C), pages 128-136.
    4. Guadalupe, Vicente & Sotta, Eleneide Doff & Santos, Valdenira Ferreira & Gonçalves Aguiar, Leonardo José & Vieira, Marta & de Oliveira, Cinthia Pereira & Nascimento Siqueira, João Vitor, 2018. "REDD+ implementation in a high forest low deforestation area: Constraints on monitoring forest carbon emissions," Land Use Policy, Elsevier, vol. 76(C), pages 414-421.
    5. Philippe Delacote & Gwenolé Le Velly & Gabriela Simonet, 2018. "A tale of REDD+ projects. How do location and certification impact additionality?," Working Papers 1808, Chaire Economie du climat.
    6. Koch, Nicolas & Reuter, Wolf Heinrich & Fuss, Sabine & Grosjean, Godefroy, 2017. "Permits vs. offsets under investment uncertainty," Resource and Energy Economics, Elsevier, vol. 49(C), pages 33-47.
    7. Palmer, Charles & Taschini, Luca & Laing, Timothy, 2017. "Getting more ‘carbon bang’ for your ‘buck’ in Acre State, Brazil," Ecological Economics, Elsevier, vol. 142(C), pages 214-227.
    8. Philippe Delacote & Gwenolé Le Velly & Gabriela Simonet, 2020. "Distinguishing potential and effective additionality to revisit the location bias of REDD+ project," Working Papers hal-01954923, HAL.
    9. Laing, Timothy & Palmer, Charles, 2015. "Economy-wide impacts of REDD when there is political influence," Resource and Energy Economics, Elsevier, vol. 40(C), pages 107-126.
    10. Delacote, Philippe & Le Velly, Gwenolé & Simonet, Gabriela, 2022. "Revisiting the location bias and additionality of REDD+ projects: the role of project proponents status and certification," Resource and Energy Economics, Elsevier, vol. 67(C).
    11. Reutemann, Tim & Engel, Stefanie & Pareja, Eliana, 2016. "How (not) to pay — Field experimental evidence on the design of REDD+ payments," Ecological Economics, Elsevier, vol. 129(C), pages 220-229.
    12. Guillaume Lestrelin & Jean-Christophe Castella & Qiaohong Li & Thoumthone Vongvisouk & Nguyen Dinh Tien & Ole Mertz, 2019. "A Nested Land Uses–Landscapes–Livelihoods Approach to Assess the Real Costs of Land-Use Transitions: Insights from Southeast Asia," Land, MDPI, vol. 8(1), pages 1-20, January.
    13. Paula Cordero Salas & Brian E. Roe & Brent Sohngen, 2018. "Additionality When REDD Contracts Must be Self-Enforcing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 195-215, January.
    14. Cecilia Luttrell & Erin Sills & Riza Aryani & Andini Desita Ekaputri & Maria Febe Evinke, 2018. "Beyond opportunity costs: who bears the implementation costs of reducing emissions from deforestation and degradation?," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 23(2), pages 291-310, February.
    15. Jichuan Sheng & Weihai Zhou & Alex De Sherbinin, 2018. "Uncertainty in Estimates, Incentives, and Emission Reductions in REDD+ Projects," IJERPH, MDPI, vol. 15(7), pages 1-21, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Susan Stratton Sayre, 2019. "Pay for the Option to Pay? The Impact of Improved Scientific Information on Payments for Ecosystem Services," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(2), pages 591-625, June.
    2. Engel, Stefanie & Palmer, Charles & Taschini, Luca & Urech, Simon, 2012. "Cost-effective payments for reducing emissions from deforestation under uncertainty," LSE Research Online Documents on Economics 44837, London School of Economics and Political Science, LSE Library.
    3. Palmer, Charles & Taschini, Luca & Laing, Timothy, 2017. "Getting more ‘carbon bang’ for your ‘buck’ in Acre State, Brazil," Ecological Economics, Elsevier, vol. 142(C), pages 214-227.
    4. Kim-Bakkegaard, Riyong & Jacobsen, Jette Bredahl & Wunder, Sven & Thorsen, Bo Jellesmark, 2017. "Comparing tools to predict REDD+ conservation costs to Amazon smallholders," Resource and Energy Economics, Elsevier, vol. 49(C), pages 48-61.
    5. Ma, Zhao & Bauchet, Jonathan & Steele, Diana & Godoy, Ricardo & Radel, Claudia & Zanotti, Laura, 2017. "Comparison of Direct Transfers for Human Capital Development and Environmental Conservation," World Development, Elsevier, vol. 99(C), pages 498-517.
    6. Laing, Timothy & Palmer, Charles, 2015. "Economy-wide impacts of REDD when there is political influence," Resource and Energy Economics, Elsevier, vol. 40(C), pages 107-126.
    7. Börner, Jan & Baylis, Kathy & Corbera, Esteve & Ezzine-de-Blas, Driss & Honey-Rosés, Jordi & Persson, U. Martin & Wunder, Sven, 2017. "The Effectiveness of Payments for Environmental Services," World Development, Elsevier, vol. 96(C), pages 359-374.
    8. Schomers, Sarah & Matzdorf, Bettina, 2013. "Payments for ecosystem services: A review and comparison of developing and industrialized countries," Ecosystem Services, Elsevier, vol. 6(C), pages 16-30.
    9. Reutemann, Tim & Engel, Stefanie & Pareja, Eliana, 2016. "How (not) to pay — Field experimental evidence on the design of REDD+ payments," Ecological Economics, Elsevier, vol. 129(C), pages 220-229.
    10. Francisco Alpízar & Anna Nordén & Alexander Pfaff & Juan Robalino, 2017. "Unintended Effects of Targeting an Environmental Rebate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(1), pages 181-202, May.
    11. Carmen Arguedas & Daan Soest, 2011. "Optimal Conservation Programs, Asymmetric Information and the Role of Fixed Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(2), pages 305-323, October.
    12. Hejnowicz, Adam P. & Raffaelli, David G. & Rudd, Murray A. & White, Piran C.L., 2014. "Evaluating the outcomes of payments for ecosystem services programmes using a capital asset framework," Ecosystem Services, Elsevier, vol. 9(C), pages 83-97.
    13. Alix-Garcia, Jennifer & Wolff, Hendrik, 2014. "Payment for Ecosystem Services from Forests," IZA Discussion Papers 8179, Institute of Labor Economics (IZA).
    14. Sims, Katharine R.E. & Alix-Garcia, Jennifer M., 2017. "Parks versus PES: Evaluating direct and incentive-based land conservation in Mexico," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 8-28.
    15. Alain‐Désiré Nimubona & Jean‐Christophe Pereau, 2022. "Negotiating over payments for wetland ecosystem services," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(3), pages 1507-1538, August.
    16. Martin Persson, U. & Alpízar, Francisco, 2013. "Conditional Cash Transfers and Payments for Environmental Services—A Conceptual Framework for Explaining and Judging Differences in Outcomes," World Development, Elsevier, vol. 43(C), pages 124-137.
    17. Whitten, Stuart M., 2017. "Designing and implementing conservation tender metrics: Twelve core considerations," Land Use Policy, Elsevier, vol. 63(C), pages 561-571.
    18. Fortmann, Lea & Cordero-Salas, Paula & Sohngen, Brent & Brian, Roe, 2016. "Incentive Contracts for Environmental Services and their Potential in REDD," International Review of Environmental and Resource Economics, now publishers, vol. 9(3-4), pages 363-409, September.
    19. Rodríguez, Luis C. & Pascual, Unai & Muradian, Roldan & Pazmino, Nathalie & Whitten, Stuart, 2011. "Towards a unified scheme for environmental and social protection: Learning from PES and CCT experiences in developing countries," Ecological Economics, Elsevier, vol. 70(11), pages 2163-2174, September.
    20. Palmer, Charles, 2011. "Property rights and liability for deforestation under REDD+: Implications for 'permanence' in policy design," Ecological Economics, Elsevier, vol. 70(4), pages 571-576, February.

    More about this item

    Keywords

    deforestation; Asymmetric information; Brazil; Opportunity costs; REDD; Payment for environmental services;
    All these keywords.

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01024447. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.