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Unveiling information on opportunity costs in REDD: Who obtains the surplus when policy objectives differ?

Author

Listed:
  • Philippe Delacote

    (LEF - Laboratoire d'Economie Forestière - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Charles Palmer
  • Ryiong Kim Bakkegaard

    (IFRO - Institute of Food and Resource Economics [Copenhagen] - Faculty of Science [Copenhagen] - UCPH - University of Copenhagen = Københavns Universitet)

  • Bo Jellesmark Thorsen

    (Center Macroecology, Evolution and Climate - Globe Institute - Faculty of Health and Medical Sciences - UCPH - University of Copenhagen = Københavns Universitet)

Abstract

Improving information about individual opportunity costs of deforestation agents has the potential to increase the efficiency of REDD when it takes the form of a payment for environmental services scheme. However, objectives pursued in REDD projects may vary across policy makers. Within a theoretical framework, this paper explores the impacts of different policy objectives under two opportunity cost settings: asymmetric and full information. For a policy maker aiming to maximize net income from REDD, having full information may not increase the amount of forest conserved but could lead to a redistribution of rents away from agents. By contrast, for an environmental policy maker focused on maximizing the amount of forest conserved under REDD having full information increases the amount of forest conserved while reducing the rents received by agents. For a policy maker pursuing poverty alleviation objectives in REDD-affected communities, having full information makes no difference to overall welfare as rents remain with agents. The amount of deforestation avoided will at least be as high as under asymmetric information. These results are illustrated with data collected on opportunity costs in Amazonas State, Brazil.

Suggested Citation

  • Philippe Delacote & Charles Palmer & Ryiong Kim Bakkegaard & Bo Jellesmark Thorsen, 2014. "Unveiling information on opportunity costs in REDD: Who obtains the surplus when policy objectives differ?," Post-Print hal-01024447, HAL.
    • Handle: RePEc:hal:journl:hal-01024447
    DOI: 10.1016/j.reseneeco.2013.07.002
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    2. Philippe Delacote & Gwenolé Le Velly & Gabriela Simonet, 2018. "A tale of REDD+ projects. How do location and certification impact additionality?," Working Papers 1808, Chaire Economie du climat.
    3. Koch, Nicolas & Reuter, Wolf Heinrich & Fuss, Sabine & Grosjean, Godefroy, 2017. "Permits vs. offsets under investment uncertainty," Resource and Energy Economics, Elsevier, vol. 49(C), pages 33-47.
    4. Laing, Timothy & Palmer, Charles, 2015. "Economy-wide impacts of REDD when there is political influence," Resource and Energy Economics, Elsevier, vol. 40(C), pages 107-126.
    5. Delacote, Philippe & Le Velly, Gwenolé & Simonet, Gabriela, 2022. "Revisiting the location bias and additionality of REDD+ projects: the role of project proponents status and certification," Resource and Energy Economics, Elsevier, vol. 67(C).
    6. 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.
    7. 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.
    8. Wolfersberger, Julien & Amacher, Gregory S. & Delacote, Philippe & Dragicevic, Arnaud, 2022. "The dynamics of deforestation and reforestation in a developing economy," Environment and Development Economics, Cambridge University Press, vol. 27(3), pages 272-293, June.
    9. Gren, Ing-Marie & Zeleke, Abenezer Aklilu, 2016. "Policy design for forest carbon sequestration: A review of the literature," Forest Policy and Economics, Elsevier, vol. 70(C), pages 128-136.
    10. Guadalupe, Vicente & Sotta, Eleneide Doff & Santos, Valdenira Ferreira & Gonçalves Aguiar, Leonardo José & Vieira, Marta & de Oliveira, Cinthia Pereira & Nascimento Siqueira, João Vitor, 2018. "REDD+ implementation in a high forest low deforestation area: Constraints on monitoring forest carbon emissions," Land Use Policy, Elsevier, vol. 76(C), pages 414-421.
    11. Palmer, Charles & Taschini, Luca & Laing, Timothy, 2017. "Getting more ‘carbon bang’ for your ‘buck’ in Acre State, Brazil," Ecological Economics, Elsevier, vol. 142(C), pages 214-227.
    12. Philippe Delacote & Gwenolé Le Velly & Gabriela Simonet, 2020. "Distinguishing potential and effective additionality to revisit the location bias of REDD+ project," Working Papers hal-01954923, HAL.
    13. Reutemann, Tim & Engel, Stefanie & Pareja, Eliana, 2016. "How (not) to pay — Field experimental evidence on the design of REDD+ payments," Ecological Economics, Elsevier, vol. 129(C), pages 220-229.
    14. Guillaume Lestrelin & Jean-Christophe Castella & Qiaohong Li & Thoumthone Vongvisouk & Nguyen Dinh Tien & Ole Mertz, 2019. "A Nested Land Uses–Landscapes–Livelihoods Approach to Assess the Real Costs of Land-Use Transitions: Insights from Southeast Asia," Land, MDPI, vol. 8(1), pages 1-20, January.
    15. Paula Cordero Salas & Brian E. Roe & Brent Sohngen, 2018. "Additionality When REDD Contracts Must be Self-Enforcing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 195-215, January.

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    More about this item

    Keywords

    deforestation; Asymmetric information; Brazil; Opportunity costs; REDD; Payment for environmental services;
    All these keywords.

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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