Reports & Analysis
Estimating the Opportunity Costs of REDD+
The UN-REDD Programme recently collaborated with a team of experts from the World Bank Institute (WBI), the Forest Carbon Partnership Facility (FCPF) and the ASB-Partnership at the World Agroforestry Center (ICRAF) to provide critical training to identify the range of costs associated with REDD+.
REDD+ experts from nine African countries, all members of the FCPF and/or the UNREDD Programme attended the training session entitled, “Estimating the Opportunity Costs of REDD+”, held for the first time in Arusha, Tanzania, on 22-25 November 2010.
In order to receive REDD+ funding, countries and communities must reduce deforestation and forest degradation; a goal which is generally not free of costs. In fact, reducing deforestation and degradation foregoes the benefits of alternative land uses, such as crop and livestock production. These foregone benefits or opportunity costs can be a significant component of the costs of REDD+. In addition, there are other costs such as implementation, administration and transaction costs.
“A thorough understanding of the economics of land use change is key for the success of REDD+ schemes”, said Gerald Kapp, Senior Knowledge Management Specialist on behalf to the World Bank Institute and FCPF, at the opening of the workshop. “In many areas, land owners will only maintain their forests and not convert to agriculture if they can achieve sufficient income through forests, including carbon credits,” said Mr. Kapp.
“In order to develop the right incentives for forest maintenance, project developers and policy makers need to know what profits a land owner can get from different forms of land use. With this training course, we want to help them to develop tools for economic analysis of land uses and for making informed decisions”, says Pablo Benitez, Senior Economist at the World Bank Institute.
Attendees of the training were senior technical experts from ministries, national research institutes and other organizations involved in the preparation, implementation, and discussion of national REDD+ strategies in their countries. They learned about data requirements for opportunity cost analysis as well as the possible applications and limitations of the opportunity cost approach.
Colleagues of the FCPF and UN-REDD Programme in Democratic Republic of the Congo spoke about their advanced stage of REDD+ readiness and expressed interest to cooperate on future efforts to estimate the administrative and implementation costs of REDD+ as well as efforts to further define procedures of measurement, reporting and verification (MRV).
Participants from Tanzania and other countries preparing REDD+ initiatives, stated that available information is highly variable. This makes estimations of present values and averages difficult to generate. Attendees emphasized that technical support from the UN-REDD Programme and World Bank will be needed to help countries establish full cost estimations of REDD+ and abatement cost curves.
The UN-REDD Programme in Tanzania supported more than 20 Tanzanian experts to attend the training. “We are working with several REDD+ pilot projects in Tanzania that are keen to understand the cost of REDD+ project development. We will continue analyzing opportunity costs of REDD+ in the Tanzanian context, but also include implementation costs, transaction costs and institutional costs in further studies to get a more complete picture of the real cost of REDD+ projects”, explained Ralf Ernst, UN-REDD Programme Coordinator in Tanzania.
In the closing ceremony, training organizers committed to continue cooperating to further assisting REDD+ readiness in African, Asian and Latin American countries with technical support and resources.