IDEAS home Printed from https://ideas.repec.org/p/unp/wpaper/201105.html
   My bibliography  Save this paper

Structuring national and sub-national economic incentives to reduce emissions from deforestation in Indonesia

Author

Listed:
  • Jonah Busch

    () (Conservation International, Arlington, VA)

  • Ruben Lubowski

    () (Environmental Defense Fund, Washington, DC)

  • Fabiano Godoy

    () (Conservation International, Arlington, VA)

  • Marc Steininger

    () (Conservation International, Arlington, VA)

  • Arief Anshory Yusuf

    () (Department of Economics, Padjadjaran University)

  • Kemen Austin

    () (World Resources Institute, Washington, DC)

  • Jenny Hewson

    () (Conservation International, Arlington, VA)

  • Daniel Juhn

    () (Conservation International, Arlington, VA)

  • Muhammad Farid

    () (Conservation International, Jakarta, Indonesia)

  • Frederick Boltz

    () (Conservation International, Arlington, VA)

Abstract

We estimate the impacts that alternative national and sub-national economic incentive structures for reducing emissions from deforestation (REDD+) in Indonesia would have had on greenhouse gas emissions and national and local revenue if they had been in place from 2000-2005. The impact of carbon payments on deforestation is calibrated econometrically from the pattern of observed deforestation and spatial variation in the benefits and costs of converting land to agriculture over that time period. We estimate that at an international carbon price of $10/tCO2e, a “basic voluntary incentive structure” modeled after a traditional payment-for-ecosystem-services (PES) program would have reduced emissions nationally by 62 MtCO2e/yr, or 8% below the without-REDD+ reference scenario (95% CI: 45-76 MtCO2e/yr; 6-9%), while generating a programmatic budget shortfall. By making four policy improvements—paying for net emission reductions at the scale of an entire district rather than site-by-site, paying for reductions relative to estimated business-as-usual levels rather than historical levels, sharing a portion of district-level revenues with the national government, and sharing a portion of the national government’s responsibility for costs with districts—an “improved voluntary incentive structure” would have reduced emissions by 175 MtCO2e/yr, or 22% below the reference scenario (95% CI: 136-207 MtCO2e/yr; 17-26%), while generating a programmatic budget surplus. A “regulatory incentive structure” such as a cap-and-trade or symmetric tax-and-subsidy program would have reduced emissions by 211/yr, or 26% below the reference scenario (95% CI: 163-247 MtCO2e/yr; 20-31%), and would not have required accurate predictions of business-as-usual emissions to guarantee a programmatic budget surplus.

Suggested Citation

  • Jonah Busch & Ruben Lubowski & Fabiano Godoy & Marc Steininger & Arief Anshory Yusuf & Kemen Austin & Jenny Hewson & Daniel Juhn & Muhammad Farid & Frederick Boltz, 2011. "Structuring national and sub-national economic incentives to reduce emissions from deforestation in Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 201105, Department of Economics, Padjadjaran University, revised Jun 2011.
  • Handle: RePEc:unp:wpaper:201105
    as

    Download full text from publisher

    File URL: http://ceds.feb.unpad.ac.id/wopeds/201105.pdf
    File Function: First version, 2011
    Download Restriction: no

    References listed on IDEAS

    as
    1. Douglas J. Miller, 1999. "An Econometric Analysis of the Costs of Sequestering Carbon in Forests," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 812-824.
    2. Gerald C. Nelson & Daniel Hellerstein, 1997. "Do Roads Cause Deforestation? Using Satellite Images in Econometric Analysis of Land Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 80-88.
    3. Kenneth M. Chomitz & Timothy S. Thomas, 2003. "Determinants of Land Use in Amazônia: A Fine-Scale Spatial Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1016-1028.
    4. Montero, Juan-Pablo, 2000. "Optimal design of a phase-in emissions trading program," Journal of Public Economics, Elsevier, vol. 75(2), pages 273-291, February.
    5. Budy P Resosudarmo & Arief A Yusuf & Djoni Hartono & Ditya A Nurdianto, 2009. "Regional Economic Modelling for Indonesia: Implementation of the IRSA-INDONESIA5," Departmental Working Papers 2009-21, The Australian National University, Arndt-Corden Department of Economics.
    6. van Benthem, Arthur A. & Kerr, Suzi, 2011. "Bigger is Better: Avoided Deforestation Offsets in the Face of Adverse Selection," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100569, Australian Agricultural and Resource Economics Society.
    7. Cattaneo, Andrea, 2011. "Robust design of multiscale programs to reduce deforestation," Environment and Development Economics, Cambridge University Press, vol. 16(04), pages 455-478, August.
    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. Patrick Doupe, 2014. "Reduced Deforestation and Economic Growth," CCEP Working Papers 1402, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
    2. Suzi Kerr & Adam Millard-Ball, 2012. "Cooperation to Reduce Developing Country Emissions," Working Papers 12_03, Motu Economic and Public Policy Research.

    More about this item

    Keywords

    Climate change; land-use change; REDD+; reference levels; economic incentives;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:unp:wpaper:201105. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Arief Anshory Yusuf). General contact details of provider: http://edirc.repec.org/data/lppadid.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.