IDEAS home Printed from https://ideas.repec.org/a/eee/ecoser/v40y2019ics221204161930021x.html
   My bibliography  Save this article

Incentivizing REDD+: The role of cost-sharing mechanisms in encouraging stakeholders to reduce emissions from deforestation and degradation

Author

Listed:
  • Sheng, Jichuan
  • Tang, Weizong
  • Zhu, Bangzhu

Abstract

Many types of costs should be considered in the contract design of Reducing Emissions from Deforestation and Degradation (REDD+). However, the existing benefit-sharing mechanism in REDD+ ignores the fact that different types of costs are distributed among multiple stakeholders, leading to the adoption of command-and-control subsidies rather than market-based incentives to motivate stakeholders’ emission reductions. This study uses the Nash model and Stackelberg model to demonstrate the decision-making behavior of private investors and landholders under two REDD+ contracts and the effects on their own profits. Moreover, numerical simulations and sensitivity analyses were carried out to compare the effects of the two REDD+ contracts on the emission reduction and profit of private investors and landholders. The findings demonstrate that the cost-sharing REDD+ contract creates benefits by encouraging stakeholders to reduce emissions rather than one party’s deprivation of the other and is, therefore, a fair and effective mechanism. The neoliberal incentive structure constructed by this cost-sharing REDD+ contract helps to overcome the shortcomings of existing benefit-sharing mechanism in REDD+ that relies on command-and-control subsidies. Thus, such a contract is a feasible solution to encourage more countries to include REDD+ in their Nationally Determined Contributions and to ensure the attractiveness for the private sector.

Suggested Citation

  • Sheng, Jichuan & Tang, Weizong & Zhu, Bangzhu, 2019. "Incentivizing REDD+: The role of cost-sharing mechanisms in encouraging stakeholders to reduce emissions from deforestation and degradation," Ecosystem Services, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:ecoser:v:40:y:2019:i:c:s221204161930021x
    DOI: 10.1016/j.ecoser.2019.101037
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S221204161930021X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecoser.2019.101037?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Muradian, Roldan & Corbera, Esteve & Pascual, Unai & Kosoy, Nicolás & May, Peter H., 2010. "Reconciling theory and practice: An alternative conceptual framework for understanding payments for environmental services," Ecological Economics, Elsevier, vol. 69(6), pages 1202-1208, April.
    2. Noel Castree, 2008. "Neoliberalising Nature: The Logics of Deregulation and Reregulation," Environment and Planning A, , vol. 40(1), pages 131-152, January.
    3. Tilahun, Mesfin & Damnyag, Lawrence & Anglaaere, Luke C.N., 2016. "The Ankasa Forest Conservation Area of Ghana: Ecosystem service values and on-site REDD+ opportunity cost," Forest Policy and Economics, Elsevier, vol. 73(C), pages 168-176.
    4. Zhonghua Cheng & Lianshui Li & Jun Liu, 2018. "The spatial correlation and interaction between environmental regulation and foreign direct investment," Journal of Regulatory Economics, Springer, vol. 54(2), pages 124-146, October.
    5. Ickowitz, Amy & Sills, Erin & de Sassi, Claudio, 2017. "Estimating Smallholder Opportunity Costs of REDD+: A Pantropical Analysis from Households to Carbon and Back," World Development, Elsevier, vol. 95(C), pages 15-26.
    6. Dunlop, Tessa & Corbera, Esteve, 2016. "Incentivizing REDD+: How developing countries are laying the groundwork for benefit-sharing," Environmental Science & Policy, Elsevier, vol. 63(C), pages 44-54.
    7. Farley, Joshua & Costanza, Robert, 2010. "Payments for ecosystem services: From local to global," Ecological Economics, Elsevier, vol. 69(11), pages 2060-2068, September.
    8. Cadman, Timothy & Maraseni, Tek & Ma, Hwan Ok & Lopez-Casero, Federico, 2017. "Five years of REDD+ governance: The use of market mechanisms as a response to anthropogenic climate change," Forest Policy and Economics, Elsevier, vol. 79(C), pages 8-16.
    9. Leng, Mingming & Parlar, Mahmut, 2010. "Game-theoretic analyses of decentralized assembly supply chains: Non-cooperative equilibria vs. coordination with cost-sharing contracts," European Journal of Operational Research, Elsevier, vol. 204(1), pages 96-104, July.
    10. Kim, Yeon-Su & Bae, Jae Soo & Fisher, Larry A. & Latifah, Sitti & Afifi, Mansur & Lee, Soo Min & Kim, In-Ae, 2016. "Indonesia's Forest Management Units: Effective intermediaries in REDD+ implementation?," Forest Policy and Economics, Elsevier, vol. 62(C), pages 69-77.
    11. Lee J. Alston & Krister Andersson, 2011. "Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of REDD," NBER Working Papers 16756, National Bureau of Economic Research, Inc.
    12. Fletcher, Robert & Büscher, Bram, 2017. "The PES Conceit: Revisiting the Relationship between Payments for Environmental Services and Neoliberal Conservation," Ecological Economics, Elsevier, vol. 132(C), pages 224-231.
    13. Do, Trong Hoan & Vu, Tan Phuong & Nguyen, Van Truong & Catacutan, Delia, 2018. "Payment for forest environmental services in Vietnam: An analysis of buyers’ perspectives and willingness," Ecosystem Services, Elsevier, vol. 32(PA), pages 134-143.
    14. Cecilia Luttrell & Erin Sills & Riza Aryani & Andini Desita Ekaputri & Maria Febe Evinke, 2018. "Beyond opportunity costs: who bears the implementation costs of reducing emissions from deforestation and degradation?," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 23(2), pages 291-310, February.
    15. Rakatama, Ari & Pandit, Ram & Ma, Chunbo & Iftekhar, Sayed, 2017. "The costs and benefits of REDD+: A review of the literature," Forest Policy and Economics, Elsevier, vol. 75(C), pages 103-111.
    16. Sheng, Jichuan & Qiu, Hong, 2018. "Governmentality within REDD+: Optimizing incentives and efforts to reduce emissions from deforestation and degradation," Land Use Policy, Elsevier, vol. 76(C), pages 611-622.
    17. Ghosh, Debabrata & Shah, Janat, 2015. "Supply chain analysis under green sensitive consumer demand and cost sharing contract," International Journal of Production Economics, Elsevier, vol. 164(C), pages 319-329.
    18. Rodrigo Muniz & Maria João Cruz, 2015. "Making Nature Valuable, Not Profitable: Are Payments for Ecosystem Services Suitable for Degrowth?," Sustainability, MDPI, vol. 7(8), pages 1-27, August.
    19. Maraseni, Tek Narayan & Bhattarai, Nabin & Karky, Bhaskar Singh & Cadman, Timothy & Timalsina, Niroj & Bhandari, Trishna Singh & Apan, Armando & Ma, Hwan Ok & Rawat, R.S. & Verma, Nemit & San, Su Mon , 2019. "An assessment of governance quality for community-based forest management systems in Asia: Prioritisation of governance indicators at various scales," Land Use Policy, Elsevier, vol. 81(C), pages 750-761.
    20. Neudert, Regina & Olschofsky, Konstantin & Kübler, Daniel & Prill, Laura & Köhl, Michael & Wätzold, Frank, 2018. "Opportunity costs of conserving a dry tropical forest under REDD+: The case of the spiny dry forest in southwestern Madagascar," Forest Policy and Economics, Elsevier, vol. 95(C), pages 102-114.
    21. Andrew McGregor & Edward Challies & Peter Howson & Rini Astuti & Rowan Dixon & Bethany Haalboom & Michael Gavin & Luca Tacconi & Suraya Afiff, 2015. "Beyond Carbon, More Than Forest? REDD+ Governmentality in Indonesia," Environment and Planning A, , vol. 47(1), pages 138-155, January.
    22. Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
    23. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
    24. West, Thales A.P. & Grogan, Kelly A. & Swisher, Marilyn E. & Caviglia-Harris, Jill L. & Sills, Erin O. & Roberts, Dar A. & Harris, Daniel & Putz, Francis E., 2018. "Impacts of REDD+ payments on a coupled human-natural system in Amazonia," Ecosystem Services, Elsevier, vol. 33(PA), pages 68-76.
    25. Tim Cadman & Tek Maraseni, 2012. "The governance of REDD+: an institutional analysis in the Asia Pacific region and beyond," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 55(5), pages 617-635, August.
    26. W. P. Pauw & Richard J. T. Klein & Kennedy Mbeva & Adis Dzebo & Davide Cassanmagnago & Anna Rudloff, 2018. "Beyond headline mitigation numbers: we need more transparent and comparable NDCs to achieve the Paris Agreement on climate change," Climatic Change, Springer, vol. 147(1), pages 23-29, March.
    27. Kaysara Khatun & Nicole Gross-Camp & Esteve Corbera & Adrian Martin & Steve Ball & Glory Massao, 2015. "When Participatory Forest Management makes money: insights from Tanzania on governance, benefit sharing, and implications for REDD+," Environment and Planning A, , vol. 47(10), pages 2097-2112, October.
    28. Irawan, Silvia & Tacconi, Luca & Ring, Irene, 2013. "Stakeholders' incentives for land-use change and REDD+: The case of Indonesia," Ecological Economics, Elsevier, vol. 87(C), pages 75-83.
    29. Pelletier, Johanne & Horning, Ned & Laporte, Nadine & Samndong, Raymond Achu & Goetz, Scott, 2018. "Anticipating social equity impacts in REDD+ policy design: An example from the Democratic Republic of Congo," Land Use Policy, Elsevier, vol. 75(C), pages 102-115.
    30. Noel Castree, 2006. "From Neoliberalism to Neoliberalisation: Consolations, Confusions, and Necessary Illusions," Environment and Planning A, , vol. 38(1), pages 1-6, January.
    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. Sheng, Jichuan, 2020. "Private sector participation and incentive coordination of actors in REDD+," Forest Policy and Economics, Elsevier, vol. 118(C).
    2. Hu, Yuan & Kuhn, Lena & Zheng, Wenxue, 2021. "Promote or Inhibit？the Effects of Forest Carbon Sinks Projects on Agricultural Development: Evidence from Sichuan, China," 2021 Conference, August 17-31, 2021, Virtual 315381, International Association of Agricultural Economists.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sheng, Jichuan, 2020. "Private sector participation and incentive coordination of actors in REDD+," Forest Policy and Economics, Elsevier, vol. 118(C).
    2. Sheng, Jichuan & Hong, Qiu & Han, Xiao, 2019. "Neoliberal conservation in REDD+: The roles of market power and incentive designs," Land Use Policy, Elsevier, vol. 89(C).
    3. Fletcher, Robert & Büscher, Bram, 2017. "The PES Conceit: Revisiting the Relationship between Payments for Environmental Services and Neoliberal Conservation," Ecological Economics, Elsevier, vol. 132(C), pages 224-231.
    4. Yang, Hongqiang & Li, Xi, 2018. "Potential variation in opportunity cost estimates for REDD+ and its causes," Forest Policy and Economics, Elsevier, vol. 95(C), pages 138-146.
    5. Yvonne Hargita & Lukas Giessen & Sven Günter, 2020. "Similarities and Differences between International REDD+ and Transnational Deforestation-Free Supply Chain Initiatives—A Review," Sustainability, MDPI, vol. 12(3), pages 1-33, January.
    6. Sheng, Jichuan, 2019. "Neoliberal environmentality and incentive-coordinated REDD+ contracts," Land Use Policy, Elsevier, vol. 81(C), pages 400-407.
    7. Campanhão, Ligia Maria Barrios & Ranieri, Victor Eduardo Lima, 2019. "Guideline framework for effective targeting of payments for watershed services," Forest Policy and Economics, Elsevier, vol. 104(C), pages 93-109.
    8. Sheng, Jichuan & Han, Xiao, 2022. "Practicing policy mobility of payment for ecosystem services through assemblage and performativity: Lessons from China's Xin'an River Basin Eco-compensation Pilot," Ecological Economics, Elsevier, vol. 191(C).
    9. Neudert, Regina & Olschofsky, Konstantin & Kübler, Daniel & Prill, Laura & Köhl, Michael & Wätzold, Frank, 2018. "Opportunity costs of conserving a dry tropical forest under REDD+: The case of the spiny dry forest in southwestern Madagascar," Forest Policy and Economics, Elsevier, vol. 95(C), pages 102-114.
    10. Jichuan Sheng & Weihai Zhou & Alex De Sherbinin, 2018. "Uncertainty in Estimates, Incentives, and Emission Reductions in REDD+ Projects," IJERPH, MDPI, vol. 15(7), pages 1-21, July.
    11. Poudyal, Bishnu Hari & Maraseni, Tek & Cockfield, Geoff, 2020. "An assessment of the policies and practices of selective logging and timber utilisation: A case study from natural forests of Tarai Nepal and Queensland Australia," Land Use Policy, Elsevier, vol. 91(C).
    12. Weimin Ma & Ranran Zhang & Shiwei Chai, 2019. "What Drives Green Innovation? A Game Theoretic Analysis of Government Subsidy and Cooperation Contract," Sustainability, MDPI, vol. 11(20), pages 1-24, October.
    13. Rakatama, Ari & Pandit, Ram & Iftekhar, Sayed & Ma, Chunbo, 2018. "Heterogeneous public preference for REDD+ projects under different forest management regimes," Land Use Policy, Elsevier, vol. 78(C), pages 266-277.
    14. Timothy Cadman & Tek Maraseni & Upama Ashish Koju & Anita Shrestha & Sikha Karki, 2023. "Forest Governance in Nepal concerning Sustainable Community Forest Management and Red Panda Conservation," Land, MDPI, vol. 12(2), pages 1-23, February.
    15. Raza, Syed Asif & Govindaluri, Srikrishna Madhumohan, 2019. "Pricing strategies in a dual-channel green supply chain with cannibalization and risk aversion," Operations Research Perspectives, Elsevier, vol. 6(C).
    16. Nantongo, Mary & Vatn, Arild, 2019. "Estimating Transaction Costs of REDD+," Ecological Economics, Elsevier, vol. 156(C), pages 1-11.
    17. Kolinjivadi, Vijay & Adamowski, Jan & Kosoy, Nicolás, 2014. "Recasting payments for ecosystem services (PES) in water resource management: A novel institutional approach," Ecosystem Services, Elsevier, vol. 10(C), pages 144-154.
    18. Sheng, Jichuan & Qiu, Hong & Zhang, Sanfeng, 2019. "Opportunity cost, income structure, and energy structure for landholders participating in payments for ecosystem services: Evidence from Wolong National Nature Reserve, China," World Development, Elsevier, vol. 117(C), pages 230-238.
    19. Kaiser, Josef & Krueger, Tobias & Haase, Dagmar, 2023. "Global patterns of collective payments for ecosystem services and their degrees of commodification," Ecological Economics, Elsevier, vol. 209(C).
    20. Ekawati, Sulistya & Subarudi, & Budiningsih, Kushartati & Sari, Galih Kartika & Muttaqin, Muhammad Zahrul, 2019. "Policies affecting the implementation of REDD+ in Indonesia (cases in Papua, Riau and Central Kalimantan)," Forest Policy and Economics, Elsevier, vol. 108(C), pages 1-1.

    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:eee:ecoser:v:40:y:2019:i:c:s221204161930021x. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/ecosystem-services .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.