Thinking about REDD+ benefit sharing mechanism (BSM): Lessons from community forestry (CF) in Nepal and Indonesia

Abstract

•Benefit sharing (BS) approaches in community forestry (CF) are differentiated into: rights allocation-based, input-based and performance-based, from initiation to implementation and each approach has specific and complementary roles in ensuring effectiveness, efficiency and equity of benefit sharing mechanisms (BSMs). •Rights allocation-based BSMs provide a more sustainable incentive than payment-based incentives for maintaining involvement in CF under conditions of inadequate financing. Maintaining the sustainability of payment-based incentives is problematic because of the need to price incentives correctly relative to transaction and opportunity costs. The need to compensate for opportunity costs is less relevant under rights-based BSMs. •The type of rights matters. Clear, comprehensive and secure tenure rights that include rights to access, withdraw, manage and exclude, induces strong collective action. •Effectiveness and efficiency of BSMs can be enhanced by structuring benefits as incentives to change behavior, particularly when compared to some input-based incentives that are not directly linked to halting of deforestation and degradation. • Equity in BSM can be enhanced if revenues are allocated for development activities such as community infrastructure and facilities and social services and by explicitly weighting for the poor, women and marginalized groups. •Though there can be equity trade-offs compared to funding individual payments, our case studies suggest a preference for development activities, especially if such payments are not that significant compared to current shared benefits. •Transaction costs and the failure to compensate for these act as a barrier to smallholders and the poor • For equity and long-term commitment, opportunity costs are important in deciding how benefits are shared, particularly if land-use competition is high. There are different types of opportunity costs (i.e. the opportunity costs of revenues from behavior change of individual household versus the rent of alternative land uses in the area included in a REDD+ scheme) and these differences should be considered in the design.

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