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

  • Philippe Delacote

    ()

    (Laboratoire d'Economie Forestière, INRA
    Institut des Sciences et Industries du Vivant et de l'Environnement
    CEC, Chaire économie du Climat)

  • Charles Palmer

    (London School of Economics and Political Science)

  • Ryiong Kim Bakkegaard

    (Department of Food and Resource Economics, University of Copenhagen)

  • Bo Jellesmark Thorsen

    (Department of Food and Resource Economics, Centre for Macroecology, Evolution and Climate, University of Copenhagen)

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.

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File URL: http://dx.doi.org/10.1016/j.reseneeco.2013.07.002
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Paper provided by Institut National de la Recherche Agronomique, France in its series Working Papers with number 205537.

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Length: 508-527
Date of creation: 2014
Date of revision:
Publication status: Published in Resource and Energy Economics
Handle: RePEc:inr:wpaper:205537
Contact details of provider: Postal: 4, Allée Adolphe Bobierre, CS 61103, 35011 Rennes Cedex
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