Avoided Deforestation as an IPES Opportunity

Annah Peterson, Duke UniversityLouise Gallagher, UNEP ETB

David Huberman, IUCNIvo Mulder, The Dutch Fund

Outline

• Background• Example of a REDD project in voluntary

markets• Structure of non-profit implemented REDD

projects• Structure of for-profit REDD projects• Exploring how for-profit REDD projects

can bundle payments for reduced emissions and biodiversity conservation

Reduced Emissions from Deforestation and Degradation

(REDD)

• REDD = an emission abatement mechanism whereby greenhouse gas emissions are reduced by decreasing deforestation and land degradation.

• REDD focuses specifically on the conservation of existing carbon stocks in biomass and is distinct from afforestation and reforestation which aim to sequester carbon from the atmosphere through tree planting and growth.

Practical Issues with REDD

• Interpretations of REDD vary greatly (Many different country submissions).

• Implementation is very difficult! (Establishing baselines, measuring leakage, ensuring permanence)

• Ensuring additionality and preventing perverse incentives concerning protected areas.

• It is very unclear what the future of REDD will look like (National vs. project level approaches; voluntary vs. regulatory markets).

• Issues with local livelihoods and ensuring equitable outcomes.

Noel Kempff Climate Action Project

www.noelkempff.com

• Protects 832,000 hectares of tropical forest in Bolivia

• Offsets awarded to the Bolivian Government to be sold on Chicago Climate Exchange

• Revenue earned will go to park protection, community development and climate change capacity building

Investors Contribution(Million US$)

Offsets to be Assigned (tCO2e)

The Nature Conservancy 2.6 0

Private Investors (AEP, BP, Pacificorp)

8.25 527,427

Government of Bolivia 0 506,743

Total 10.85 1,034,170

Non-Profit REDD Projects

BC

Investors

Third Party Verifier

RE VERsVERs

$

Non-

Profit Org

$$

RE = Reduced EmissionsVER = verified emission reductionsBC = Biodiversity Conservation

Project Area

For-Profit REDD Projects

CI

BC

$$

REVERs

Third Party Verifier

Positive Externality

?

Project Area

RE = Reduced EmissionsVER = verified emission reductionsBC = Biodiversity Conservation

Third Party Verifier

CI

BC

REVERs

$

$ $$

?

CI

BC

$$

REVERs

Third Party Verifier

Positive Externality

Project Area

Project Area ?

A Cost-Sharing Approach to Investment in REDD

2 Types of Biodiversity Beneficiaries

• GeneralA globally diffuse set of actors who demand general conservation efforts for the option and existence values they provide

• SpecificGroups that benefit from the conservation of biodiversity within a specific area (non-profits, pharmaceutical companies, ecotourism companies, research institutions, governments, communities)

Fund

Partnership

2 Possible Payment

Mechanisms

FundFundPer hectare subsidy offered to only high biodiversity REDD

projects

PROSPROS• Addresses the public goods

nature of biodiversity conservation

CONSCONS• Quantifying biodiversity• Defining threshold• Deciding subsidy amount• Diverting financing

PartnershipPartnership matching of carbon

investors with biodiversity investors in a virtual

marketplace

PROSPROS• No quantifying biodiversity,

defining thresholds, deciding subsidy amounts or coming up with financing necessary

CONSCONS• Limited application – there

are only so many specific biodiversity demanders

In Summary…

1) The ability to bundle payments for ecosystem services is crucial for effective conservation finance through IPES.

2) The next frontier of IPES thinking should involve brainstorming different potential ways for bundling payments for ecosystem services.

3) This chapter begins this brainstorming process by highlighting options for bundling payments for both reduced emissions and biodiversity conservation into one investment in REDD.

4) Practical issues of determining beneficiaries also need to be addressed.