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The Economics of International Policy Agreements to Reduce Emissions from Deforestation and Degradation

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  • Suzi Kerr

    ()
    (Motu Economic and Public Policy Research)

Abstract

This paper provides a synthesis of the key conceptual insights from economics that can contribute to the design of effective, efficient, and fair international policy that creates incentives and strengthens capability to reduce deforestation and forest degradation and promote reforestation (REDD+ in United Nations terminology) as part of the international climate change mitigation effort. Most of the emphasis is on the contribution of economics to effective design of results-based policies that introduce a price incentive for strong states to address deforestation, degradation, and reforestation. The paper emphasizes the value of large-scale agreements to minimize leakage and adverse selection, the importance of allocating uncertainty with care, and the need to differentiate clearly among potentially conflicting objectives. It explores the conflicts between cost sharing and efficiency that arise because of private information and the inability of states to make long-term commitments. It also canvasses policies that complement price incentives, and, for weak states only, substitutes for results-based agreements.

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Bibliographic Info

Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 12_12.

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Length: 34 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:mtu:wpaper:12_12

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Related research

Keywords: Greenhouse gas emissions; climate change; deforestation; developing countries; REDD; reducing emissions from deforestation and degradation;

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References

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  1. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  13. Kahn, James R. & McDonald, Judith A., 1995. "Third-world debt and tropical deforestation," Ecological Economics, Elsevier, vol. 12(2), pages 107-123, February.
  14. 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.
  15. Amacher, Gregory S. & Ollikainen, Markku & Koskela, Erkki, 2012. "Corruption and forest concessions," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 92-104.
  16. Carolyn Fischer & Alan K. Fox, 2007. "Output-Based Allocation of Emissions Permits for Mitigating Tax and Trade Interactions," Land Economics, University of Wisconsin Press, vol. 83(4), pages 575-599.
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