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North / South Contractual Design through the REDD+ Scheme

Author

Listed:
  • Mireille Chiroleu-Assouline
  • Jean-Christophe Poudou
  • Sébastien Roussel

Abstract

In this paper we aim at theoretically grounding the Reducing Emissions from Deforestation and Forest Degradation + (REDD+) scheme as a contractual relationship between countries in the light of the theory of incentives. Considering incomplete information about reference levels of deforestation as well as exogenous implementation and transaction costs, we compare two types of contracts: a deforestation performance-based contract and a conditional avoided deforestation-based contract. Because of the implementation and transaction costs, each kind of REDD+ contract implies a dramatically different information rent / effciency trade-off. If the contract is performance- based (resp. conditionality-based), information rents are awarded to countries with the ex ante lowest (resp. highest) deforestation. In a simple quadratic setting, there is a reference level threshold in terms of effciency towards less deforestation. In terms of expected welfare, conditional avoided deforestation-based schemes are preferred.

Suggested Citation

  • Mireille Chiroleu-Assouline & Jean-Christophe Poudou & Sébastien Roussel, 2012. "North / South Contractual Design through the REDD+ Scheme," Working Papers 12-31, LAMETA, Universitiy of Montpellier, revised Oct 2012.
  • Handle: RePEc:lam:wpaper:12-31
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    References listed on IDEAS

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    1. Figuieres, Charles & Leplay, Solenn & Midler, Estelle & Thoyer, Sophie, 2012. "The REDD Scheme to Curb Deforestation: A Well-designed System of Incentives?," Strategic Behavior and the Environment, now publishers, vol. 2(3), pages 239-257, September.
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    4. Mireille Chiroleu-Assouline & Sébastien Roussel, 2010. "Contract Design to Sequester Carbon in Agricultural Soils," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00505137, HAL.
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    Cited by:

    1. Bård Harstad & Torben K. Mideksa, 2017. "Conservation Contracts and Political Regimes," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1708-1734.
    2. repec:kap:enreec:v:69:y:2018:i:1:d:10.1007_s10640-016-0072-9 is not listed on IDEAS

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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