REDD: management of the local commons and global market forces

If you expect a global agreement on curbing greenhouse gas emissions, the upcoming climate negotiations in Cancun will certainly disappoint you. A climate bill was stalled in US Senate, and without the US China will not move either. However, meanwhile negotiators focus on more tangible topics, such as REDD (reducing emissions from deforestation and forest degradation). UN parties are ready to settle on a agreement that includes a 4.5 billion dollar fund that is used to refund the protection of forests. Hence, global forests and the ecosystem service they provide get a market price. As deforestation and land-use change contribute currently to 20% of annual greenhouse emissions, a reduced rate of deforestation would finally benefit the climate.

One caveat with the market-based approach comes from the literature on managing the commons. Elinor Ostrom (Nobel Price 2009) and co-workers have accumulated massive evidence on how commons - such as forests - are successfully managed. They demonstrate that a decentralized just sharing of resources, monitoring and social sanctions are crucial ingredients of commons management. Inversely, a pure market-based approach, especially if it is top-down, can decrease acceptance of local stakeholders and increase the risk of gaming: Stakeholders could follow REDD literally but not in spirit, e.g. by substituting bioversity rich forest with tree monocultures.

Now, deforestation and GHG emissions are a global problem and, hence, need a global solution. REDD is urgently needed. Ostrom’s results, however, suggest that REDD (beside qualifications that aim to avoid gaming) would profit from explicit inclusion of local shareholders, such as indigenious tribes and squatters. In many cases, ownership of forests is not well defined (offering opportunities for land grabbing). In these cases, community-based commons management, requiring the build up of institutional capacity, may be the best way forward.

From another perspective, however, there is not enough market involved in REDD. More precisely, a crucial market distortion is painfully ignored. There are drivers of deforestation and increasing land consumption, mostly economic forces. Locally, squatters live on burning down rain forest to gain land for agricultural production. Logging companies live from selling wood. In addition, however, global market forces demand further land: population growth, increased demand of meat, and increased demand of biofuels. Industrially produced biofuels and industrially produced meat have been shown to produce large carbon footprints, a significant part of which is related to land-use change. A suitable market signal, hence, would be for the US and the EU to reconsider their 2020 quota targets for (first generation) biofuels, and for OECD countries and China to introduce carbon taxes for biofuels and meat. This would decrease deforestation pressure in countries such as Brazil and Indonesia and would provide a strong stick complement to the REDD carrot. Income of taxes can then fund REDD and other forest protection schemes.