Policies to Reduce Emissions from Deforestation and Degradation ...

Executive Summary
Land-use changes account for approximately 20 percent of today’s total greenhouse
gas (GHG) emissions, more than the total transportation sector worldwide. Most
of these emissions come from deforestation in developing countries where forests
are being cleared for agriculture and timber. Currently, climate change policymakers
are considering how to create incentives for reducing emissions from deforestation
and forest degradation in developing countries, or REDD. This report examines the issues
facing the incorporation of REDD activities into mainstream market-based climate policies,
paying particular attention to REDD-generated carbon credits that could be traded in the regulatory
market.
Forests and the Carbon Cycle
Forests play an integral role in mitigating climate change. Not only are forests one of the most
important carbon sinks, storing more carbon than the world’s oil reserves, they also constantly
remove carbon from the atmosphere through photosynthesis, which converts atmospheric carbon
to organic matter. However, while forests are absorbing atmospheric carbon, deforestation is
putting carbon right back into the atmosphere at an annual rate of 5.9 Gt CO2. In other words,
60 percent of all of the carbon that is absorbed by forests is emitted back into the atmosphere by
deforestation.
Analyses examining the cost of REDD activities predict that abating deforestation is a low-cost
means to achieve emissions reductions. Although the studies vary in their methods and assumptions,
most analyses support the idea that substantial carbon benefits can be realized through REDD
activities at low initial carbon prices, $3/tCO2 or less. In its conservative calculations, the Intergovernmental
Panel on Climate Change (IPCC) estimates that 25 percent of deforestation emissions
can be abated for less than $20/tCO2. For comparison, in the first quarter of 2008, carbon
was trading at $35/tCO2 in the European Union Emissions Trading Scheme (EU ETS).
Given the magnitude of deforestation emissions and predicted low cost to abate, there is general
agreement that REDD activities are a cost-effective way of reducing greenhouse gas emissions,
and thus emissions from deforestation should be addressed immediately (Nabuurs et al. 2007). In
addition to the carbon benefits of REDD activities, abating deforestation can have significant sustainable
development and environmental co-benefits, including biodiversity conservation, watershed
protection, protection of fisheries, sustained income for local communities, and reduction
of runoff, siltation, and flooding (Nabuurs et al. 2007).
Policies to Reduce Emissions from Deforestation and Degradation in Developing Countries