A Core Participation Requirement for Creation of a REDD market

Author(s): Brian Murray and Lydia Olander

Published: May 2008

download: policy brief (.pdf) >

Current proposals for including Reduced Emissions from Deforestation and Degradation (REDD) in an international climate agreement go beyond the requirements of the Clean Development Mechanism (CDM) by advancing national- or subnational-level accounting, which addresses concerns about project-level leakage. One of the remaining challenges of including (REDD) in the international trading of greenhouse gas allowances is concern over international leakage. REDD market participation by non-Annex I countries would be voluntary. Voluntary participation can create problems if those countries that opt in take action to reduce their emissions, but deforestation, degradation and the associated emissions merely shift to countries that do not opt into the system. This is the essence of international leakage. Our research shows that international leakage potential can be quite high if only a small portion of the potential REDD sources are participating. Leakage diminishes as more countries opt in1. Therefore it is important to include as many countries as possible in an agreement to ensure that the efforts of those who do participate are not undermined by those who don’t. While this is clearly a problem not only for forests and REDD, it is one worth trying to solve if the objective is to ensure that REDD activities result in real emission reductions which is critical for REDD credits to be fully fungible within the global carbon market. Because the solution - greater participation - advances the overall goals of global policy, introducing incentives to accomplish this would be a positive feature. But it should be introduced in a way that it does not slow the development of REDD activity for early action and builds the needed experience to do REDD activities well.