Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of REDD
Understanding and minimizing the transaction costs of policy implementation are critical for reducing tropical forest losses. As the international community prepares to launch REDD+, a global initiative to reduce greenhouse gas emissions from tropical deforestation, policymakers need to pay attention to the transactions costs associated with negotiating, monitoring and enforcing contracts between governments and donors. The existing institutional design for REDD+ relies heavily on central government interventions in program countries. Analyzing new data on forest conservation outcomes, we identify several problems with this centralized approach to forest protection. We describe options for a more diversified policy approach that could reduce the full set of transaction costs and thereby improve the efficiency of the market-based approach for conservation.
We thank Arun Agrawal, Eric Alston, Richard Jessor, Gary Libecap, Terrence McCabe, Bernardo Mueller, Esther Mwangi, Michael Oppenheimer, Elinor Ostrom, James Poterba, Ashwin Ravikumar, and Barry Weingast,for constructive criticism on earlier drafts. Funding provided by the Institute of Behavioral Science at the University of Colorado, Boulder, and National Science Foundation (HSD- 0527138; SEB-0648447; and SEB-0528146). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Alston, Lee J., and Krister Ander sson, “Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of Implementing REDD,” Climate Law 3 (2011): 1‐9. Earlier version published as NBER Working Paper No. 16