Policies to Reduce Emissions from Deforestation and Degradation ...

2008; Strassburg et al. 2008). The studies use different methodologies and underlying assumptions,
making direct comparison difficult. Some studies focus on the one-time benefits of a specific
forestry project (Osborne and Kiker 2005). Other studies use models based on local opportunity
costs aggregated to a national or multinational level (Greig-Gran 2006, Nepstad et al. 2007; Strassburg
et al. 2008). Other studies use global models that construct REDD carbon supply curves at different
carbon prices (Sohngen and Beach 2006; Anger and Sathaye 2008; Sathaye et al. 2005; Kinderman
et al. 2006). The results of these studies are summarized in Table 2.3. Although the results
vary, all but one study support the conclusion that substantial carbon benefits can be realized
through REDD activities at low initial carbon prices ($10/tC or less); the exception is the McKinsey
report by Enkvist et al. (2007).
The McKinsey report found that reducing deforestation by 50 percent in Africa and 75 percent
in Latin America could be achieved for about $183.50/tC ($50/tCO2) and abate 3 GtCO2 emissions
(Enkvist et al. 2007). Enkvist et al. (2007) found that abating deforestation rates in Asia would
be more expensive because of higher opportunity costs for forests. Additionally, they found that
avoiding deforestation was more expensive than other forest mitigation measures.
Osafo (2005), Osborne and Kiker (2005), and Silva-Chavez (2005) calculate the break-even price
for carbon based on the opportunity cost of forested land in the regions studied. Greig-Gran (2006)
calculates the discounted return per hectare and not the price of land, explaining that land prices
do not reflect avoided deforestation costs because of land tenure issues surrounding tropical
forests. These studies draw on information about current drivers of deforestation, such as the percentage
of land cleared for soy farming, cattle ranching, timber harvest, and the like to calculate
the opportunity cost. Osafo (2005) accounts for revenues from agriculture but not the production
costs and thus may overestimate the opportunity cost (Greig-Gran 2006). Greig-Gran (2006) includes
transaction costs estimated from the administrative costs of payment-for-ecosystem-services
(PES) programs in place in other countries. Specifically, Greig-Gran (2006) uses
$4–$15/ha/year based on PES programs in place in Costa Rica, Mexico, and Ecuador. It is not clear
how appropriate it is to extrapolate worldwide transaction costs based on these estimates. Greig-
Gran (2006) does not include monitoring costs in her calculations. However, she estimates that
monitoring costs would add $2 million/year for each of the eight countries studied. None of the
other studies explicitly account for administrative and transaction costs. Osborne and Kiker (2005)
note that costs for REDD pilot projects range from $0.10 to $15 per ton carbon worldwide and $1 to
$6 per ton carbon in Latin America, though they do not include this in their cost calculations.
Sathaye et al. (2005) use a dynamic partial equilibrium model to examine the response of the
forestry sector to carbon prices. Kindermann et al. (2006) use a spatially explicit integrated biophysical
and socioeconomic land-use model. Sohngen and Beach (2006) use a global timber model
to calculate the carbon supply curves for REDD activities at different carbon prices. Sohngen and
Beach’s (2006) results are broken out by region, as shown in Figures 2.4 and 2.5.
In regions where forests are relatively abundant, carbon stocks are high, and deforestation rates
are high, avoiding deforestation may offer the highest potential for CO2 mitigation (Trines et al.
2006; Nabuurs et al. 2007; Stern 2007). Other forest mitigation measures include AR, forest management
to increase the carbon stocks of a forest, and bioenergy as a substitute for fossil fuel use.
Trines et al. (2006) identify reducing deforestation in the three tropical regions (Central and South
America, Africa, and tropical Asia) as three of the four forest mitigation measures with “large” potential
to mitigate CO2. The fourth is forest management in North America.
24 Policies to Reduce Emissions from Deforestation and Degradation in Developing Countries