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PART II ▶ MODULE 2 ▶ SESSION 6
REDD+: COMPARING COSTS AND BENEFITS
directly implementing it. Examples of such costs are expenses you have when planning and preparing the REDD+ project, when you conduct negotiations with government agencies, NGOs or companies, costs you may have for lawyers or experts to advice you, or the costs of monitoring, reporting, and verifying (MRV) the emission reductions. Especially the MRV (including its preparation at the start of the project) can be quite expensive if you have to use a recognized certifier. We will get back to MRV and the certifier later. An important part of any REDD+ activity is stabilization, which means the need to prevent deforestation or degradation from moving to another area. In REDD+ this “moving somewhere else” is called “leakage”. Communities can deal with leakage only to a certain extent, within their own territories and maybe in neighbouring areas. Leakage has to be addressed also at a higher level, the national level, by the government of your country. So it is not yet clear to what extent communities participating in REDD+ will have to include costs for stabilization, i.e. preventing leakage. The implementation and transaction costs of REDD The estimates for the implementation and transaction costs vary considerably. Some estimate them to lie between US$2 and 10 per ton CO2e. (Olsen, N. and J. Bishop 2009). According to others it is between US$2 and 4 USD per ton of avoided emissions. (The Economist 2010.)
Opportunity costs These are the costs which result from the decision to stop a particular kind of land use and do something else (like REDD+) instead. Or, in other words, they are the costs of the loss of the income or other benefits you would have received had you continued with the kind of land use you were practicing. There are direct and indirect economic opportunity costs, and there are also social and cultural costs that need tom be taken into account.
Direct costs For example, activities that are considered a kind of forest degradation, like selective logging, the collection of firewood or other forest products, or the grazing of animals in forest areas provide considerable benefits to people. If you decide to stop some or all of these activities in a certain area for a REDD+ project you are losing these benefits. And the loss of these benefits are (part of) the opportunity costs of REDD+. Or you may consider turning part of your forest into a rubber garden, or plant coffee, fruit tree or oil palms, which would generate a certain regular income. If you decide not to deforest that area and use it for your REDD+ activities instead, you are losing that (future) income from the planned garden or plantation. This loss of a future income is also an opportunity cost of the REDD+ project. The direct opportunity costs are in most cases the biggest part of the costs of a REDD+ project.
Indirect costs Since a REDD+ project may bring about changes in land use, this can affect not just the people practicing it, but also other people who are somehow linked to that form of land use. For example, if logging is stopped in an area the saw mills will have no more logs to process, or there might be a local plywood or furniture factory which will have difficulty obtaining the wood they need. The price for wood may increase in that area, and the government will get less income from fees and taxes.