Forests are at the major agendas of international climate change, with the strong discussions about the 'avoided deforestation' scheme, which is known as REDD (Reductions of Emissions from Deforestation and Degradation). The goal of such scheme is to generate incentives for developing countries to curtail or reduce deforestation and forest degradation. The principle was agreed on at the 13th Conference of UNFCCC parties held in December 2007 in Bali. Though, whilst the principle has been approved, the scheme and its rules for implementation have yet to be established. Various controversial and difficult issues were also yet to be discussed, for example, whether to associate the concern with Kyoto's derived carbon markets and schemes like the Clean Development Mechanism and the European Trading Scheme, the use and design of baselines, methods of addressing degradation and the query of potential non-permanence. The proposals of these debates and anticipated decisions will be vital in shaping the rising international forestry regime. Moreover, as the amount of carbon credits at stake are at the pick, they may well have a negative effect on the carbon market and ultimately on the present international regime which have its center of attention on combating against climate change based on the cap and- trade architecture adopted by the Kyoto Protocol1.
The discussion will review the major proposals for REDD architecture and illustrate the limitations of those which propose to reward countries for an outcome against an anticipated deforestation or baseline of past. We shall then consider the "avoided degradation" concern and how to take care of it. The discussion will cover the issue of political economy of REDD and the proposed incentives, and will bring in the learnt lessons from long time experience with official development assistance. We will do our analysis about an architecture based on an international fund for tackling deforestation as preferable to a market-based one as it avoids flooding of carbon market and give opportunity for structural measures and supporting policies to be implemented inside and outside the forest sector, as well as payment for environmental services schemes. We will scrutinize the effect of REDD debates on international strategies of some forest-rich developing countries which are in need of remuneration for their standing forests.
MAIN PROPOSALS RELATED TO REDD ARCHITECTURE
The first proposal tabled by Costa Rica and Papua-New-Guinea PNG in 2005 was to adopt a historical reference, for example the average of earlier deforestation transformed into carbon emissions. On the other hand, this kind of proposal has serious weaknesses. Forest transition theory which frequently starts with enormous deforestation, indicates that's it is not likely that such high rates of deforestation are retained over time. Behind forest transition theory, there is the rising marginal cost of deforestation of landlocked places. Hyde, and others, (Hyde et al. 1996, Hyde 1998) have had a say to this debate on the causal affiliation between deforestation and the frontier of the economic rent. This frontier progress with decision and relative prices such as public road building is capable of moving the profitability perimeter of deforestation. However when outstanding forests tend to focus in mountainous highlands, as can be realized in several Asian countries as well as Borneo, the reject in terms of annual deforested area inevitable: the merely uncertainty is to establish when the inflexion point will be arrived at and what will be the pace of the slow-down.
Countries which have experienced extreme deforestation in the earlier is possible to mechanically gain from REDD credits and may perhaps enjoy a high likelihood of being rewarded, with no changes of public policies concerning the forest. This kind of historical baseline, regardless of Brazil's support, is not taken as favorably by countries having immense expanses of forest, comparatively reduced deforestation rates which are still on board for a development wave which would pull them out from a widespread poverty. This is also the same case as of Congo Basin countries, in which inadequate rates of deforestation has little concerning early efforts of forests preservation: alternatively, low deforestation is connected to poor transport infrastructure, low population densities in rural forested areas, high timber extraction costs and lack of attractiveness for large agricultural investments which is because of unclear property rights and obstacles to smooth business.
A number of researchers have recommended baseline scenario, for example predicting deforestation rates on a particular period under "business as usual" setting. Chomitz et al. (2007) propose computing a "normative reference level based on standardized approximate of the rate of an added agricultural production, in tune for an estimate of the rate of raise in agricultural productivity with the mean carbon content of forestland at the agricultural margin. Conversely, they also realized significant connection in the Brazilian Amazon between beef price at farm gate and deforestation rates; as well as with rainfall. The association between deforestation rates and agricultural prices in open economies of forested and developed countries is recognized. The current circumstance of Brazil is worth mentioning: once a sharp fall in deforestation rates in the Amazon, some argue that the current -- and worldwide - raise in agricultural commodities prices has facilitated a restoration of high deforestation rates in the Amazon.
Prices of agricultural commodities have risen sharply, and additional deforestation has proceeded, with no policy change from Brazilian Government which had formerly presented low rate of deforestation as the direct outcome of policy-making. Policy efforts have been efficient, particularly the ones associated to the formation of new areas of conservation. Nevertheless, it is only a single factor among many explaining disparity in rate of deforestation over time. Persson and Azar (2007) indicate the high unevenness of deforestation rates in Brazil, particularly when compared with industrial emissions, which are greatly predictable as compared to the erratic deviation in inter-annual rate of deforestation. This high variability shows the sheer number of parameters drawn in the deforestation which are not only prices, but also currency exchange rates, real interest rate, etc. And their multifaceted interactions, as analyzed by several researchers.
This also propose that one parameters rate for example, increase agricultural production attached with productivity, are not enough proxies to foretell deforestation in a specified dedicated period of a few years (currently 5 years under Kyoto agreement). In addition, agricultural commodities prices are volatiles because they are formed by speculation and anticipation, the same as oil and many other primary resources and also as the pace of economic growth of emerging countries. These factors are not predictable, and also they are not the result of the present debates which are vital for the fate of forests in most of the countries and about the significance to be given to the bio-fuels use in industrial countries.
Setting scenario for a certain 5-year period (business as usual) thus is not only challenging but also they are more possibly to look like 'random scenarios' as compared to anything else. Yearly adjustments of these scenarios to consider changes in the environmental factors and market would definitely result to more perfect previsions. They would fundamentally force experts to separate an embedded array of factors, sorting out what is capable of being the net impact of policies and measures efficiently taken by the authorities to undertake deforestation for example, removal of agricultural subsidies, stringent law enforcement, with others and factors from external such as drought occurrence causing forest fires, involuntary changes in market prices for agricultural commodities, as well as abnormally high rainfalls. As per the negotiation perspective, this formula would be very complex to solve because countries would not get a specific idea of the baseline prior to the commitment period for assessment are easiest to make ex-post rather than ex-ante.
Numerous revisions of baselines would as well add the opportunities for political pressure through the process of negotiation, which would badly undercut the credibility of the mechanism. In this respect, is doubtful that countries will acknowledge the suggestion of having a group of independent experts to stand for disentangling, yearly, external factors coming from measurable policy impacts. At this time, complexity of expertise is possible to conflict with national interests of countries negotiating for the most excellent state for themselves, to make best use of expected gains without having to adopt measures and policies that are costly excessively, both politically and socially.
Some proposals of other countries are probable to create 'hot air' mechanically. In particular, the PNG proposal, followed by the one for COMIFAC, to adopt a "development adjustment factor" indicating coming national development needs. This would as a whole result to more deforestation and more REDD credits.
Discounting inadequate decrease against predicted margins, Schlamadinger et al. (2005) have proposed an essential formula with the purpose of reconciling environmental integrity and incentives. They recommend that the goal should be put as an upper and lower bound between which still coming emissions from deforestation are expected to lie. Emissions decrease below the upper bound will be credited although at a discounted rate. The nearer one gets to the lower bound, the less credits are discounted, and beneath the…