Growth, deforestation and the efficiency of the REDD mechanism

Abstract

This paper assesses the long term impacts of an international transfer called the Reduced Emissions from Deforestation and Degradation (REDD) mechanism, which aims at preserving tropical forests of the recipient economy. This two-sector economy faces a dilemma between economic growth and deforestation. The rural sector can substitute reproducible capital for agricultural land whereas the manufacturing sector only requires capital. The model shows that the REDD mechanism has a non-monotonic effect on steady state welfares. For low transfer schemes, the agricultural output increases with the transfer even though less land is under cultivation. For high transfer schemes, the increase in the transfer may not offset the decrease in the agricultural output. The open-loop symmetric Nash equilibrium in a dynamic deforestation game predicts that redistributing the transfer among a finite number of producers is less efficient in reducing deforestation than in the social optimum.

Modelling Land Use, Deforestation, and Policy: A Hybrid Optimisation-Heterogeneous Agent Model with Application to the Bolivian Amazon

“…In response, policy makers have increasingly sought to design interventions which not only aim to conserve forests but also improve the incomes and livelihoods of forest users (e.g., see Merger et al, 2011;Ollivier, 2012;Groom and Palmer, 2012). Targeted towards agents of deforestation, interventions such as payments for environmental services (PES) and the provision of off-farm labour opportunities could, under certain conditions, enhance their welfare as well as conserve forests Palmer, 2010, 2014).…”

Financing the Reduction of Emissions from Deforestation: A Differential Game Approach

“…The aim of Ollivier [2012] is to determine whether REDD on national or individual level is preferable. For that purpose a two-sector growth model with Cobb-Douglas production functions that contains land and capital is developed.…”

Key issues in REDD+ verification: Study commissioned by CIFOR

“…In these 3 years, a total of 2.4bn US$ were disbursed. There is some doubt by developed country parties as to the absorptive capacities in many developing countries, and concern about corruption (Ollivier 2012). Although the Cancun Agreements call for it, predictable long-term finance for climate change mitigation in developing countries is yet out of sight.…”