REDD funding would be decoupled from the overallreduction target. A 20 % reduction target by Annex-1countries (until 2020) would have to exclude any REDDoffsets (target too low) and could not generate anymoney. Selling a fraction of AAUs or emission allow-ances from domestic carbon markets, however, wouldstill provide funding, though of course to a lesser extent(fewer AAUs, lower proceeds).Systems with partial fungibility must address account-ing and permanence more stringently to avoid hot air.This does not imply that a non-fungible system shouldbe lax on these issues. However, non-permanence inthe case of a non-fungible approach would meanwasted money and fewer additional emission reduc-tions. In the case of a partly fungible system, it wouldalso impact on the overall reduction effort.High accounting and compliance standards could, how-ever, delay the participation of many countries, whichcould result in little political support as well as in inter-national displacement of emissions. This issue has beenaddressed by CCAP and Greenpeace. Discount factorskeyed to the quality of accounting and countries’ ca-pacities as well as the portfolio-performance approachwould provide solutions for this. However, they wouldalso create additional issues to be negotiated within avery short timeframe.Finally, using carbon credit units (TDERM, Dual Markets)means paying for a carbon service, which makes itharder to incorporate issues such as biodiversity andpoverty considerations. By contrast, the CAN/Norwayproposal would make it possible to better address otherrelevant issues related to deforestation and providefunding for adaptation and technology transfer as well.To summarize, negotiations on financing REDD shouldstrongly bear in mind the following points:
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Financing REDD directly via the IETS would putstabilization of greenhouse gases in the atmos-phere at 450 ppm at risk, which could thus lead todangerous climate change. This must be avoided,also since forests are anything but immune to theadverse impacts of climate change.
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Market-linked approaches represent a viable alter-native to providing several billion US$ per year. Thecriteria for selection should be simplicity in design(few subjects to be negotiated), implications formethodological issues, and impact and depend-ency on the overall reduction target.
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Even though the Dual Markets approach andTDERM are very comprehensive, the proposal madeby CAN and Norway is most promising. The Euro-pean Commission’s proposal to raise funds fortropical forest preservation from EU ETS auctionproceeds goes in the same direction. Several re-gional funding efforts may provide a realistic fall-back option in case a global solution should not bepossible, although the latter would be more desir-able.
Can REDD turn the tide without addressing the under-lying causes of deforestation?
Human development is the root cause of deforestationand forest degradation. Conversion of forest land toother land-use systems is induced by underlying causesrelated to structural changes, namely demographic,technological and economic development as well ascultural variables and political decisions. Deforestationhas often followed an inverse U-shape trajectory. It haspeaked when wood has been substituted as a primaryenergy source and/or policies for sustainable forestmanagement and forest protection have been intro-duced. While it is highly questionable whether this clas-sic trajectory would occur in developing countries undertoday’s global economic pressures, we can simply notafford to let it happen. Apart from their role in stabiliz-ing the global climate system, tropical forests providemanifold other ecosystem services, such as local provi-sion of forest products to millions of people or mainte-nance of regional hydrological cycles for agriculture andhydropower. In essence, tropical forests are a funda-mental part of the global life support system uponwhich all human societies depend, regardless of theirtechnological development stage.Therefore, it is evident that first, for reasons beyondclimate change mitigation, tropical forests must bepreserved in the long-term. And second, human devel-opment in both North and South must be decoupledfrom land-intensive consumption patterns. Suchchanges will not come about by offering carbon pay-ments alone, they require policy reforms in developingand developed countries. These reforms must addressthe underlying causes of deforestation, which include:
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at the international level, commodity prices forfossil and mineral resources, palm oil, soy, beef andtimber which are linked to foreign countries’ con-sumption patterns, currency fluctuations and poli-cies (e. g. agro-fuel quotas),
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at the national level, national development plans,including infrastructure and subsidies for agricul-ture, deficient forest laws and lack of enforcement,no or insufficient land tenure systems, demo-graphic development,
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at the national and sub-national level, unemploy-ment and poverty, lack of social security systems,and corruption.This broad range of underlying causes illustrates a cou-ple of points. First, deforestation may well be beyondthe control of national governments, thus requiringconcerted international action beyond the UNFCCC.This should include revision of international trade poli-cies, introduction of socio-ecological import standardsand reforms of agro-fuel quotas and other relevantpolicies in the EU, the US and elsewhere. Second, com-bating deforestation requires an integrated approach,i.e. cross-sectoral action on different administrativelevels, as most of the underlying causes lie outside theforestry sector. As a result, efforts to reduce or stop
Deutsches Institut für Entwicklungspolitik
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