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Avoided Deforestation as an IPES Opportunity

This chapter explores the potential for bundling payments for reduced emissions and biodiversity conservation in avoided deforestation projects, focusing on the structure of both non-profit and for-profit REDD projects. It also addresses the practical issues and challenges with implementing REDD, such as establishing baselines, measuring leakage, ensuring additionality, and considering local livelihoods and equitable outcomes. The chapter concludes by discussing the importance of bundling payments for ecosystem services and the need to determine beneficiaries.

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Avoided Deforestation as an IPES Opportunity

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  1. Avoided Deforestation as an IPES Opportunity Annah Peterson, Duke University Louise Gallagher, UNEP ETB David Huberman, IUCN Ivo Mulder, The Dutch Fund

  2. Outline • Background • Example of a REDD project in voluntary markets • Structure of non-profit implemented REDD projects • Structure of for-profit REDD projects • Exploring how for-profit REDD projects can bundle payments for reduced emissions and biodiversity conservation

  3. Reduced Emissions from Deforestation and Degradation (REDD) • REDD = an emission abatement mechanism whereby greenhouse gas emissions are reduced by decreasing deforestation and land degradation. • REDD focuses specifically on the conservation of existing carbon stocks in biomass and is distinct from afforestation and reforestation which aim to sequester carbon from the atmosphere through tree planting and growth.

  4. Practical Issues with REDD • Interpretations of REDD vary greatly (Many different country submissions). • Implementation is very difficult! (Establishing baselines, measuring leakage, ensuring permanence) • Ensuring additionality and preventing perverse incentives concerning protected areas. • It is very unclear what the future of REDD will look like (National vs. project level approaches; voluntary vs. regulatory markets). • Issues with local livelihoods and ensuring equitable outcomes.

  5. Noel Kempff Climate Action Projectwww.noelkempff.com • Protects 832,000 hectares of tropical forest in Bolivia • Offsets awarded to the Bolivian Government to be sold on Chicago Climate Exchange • Revenue earned will go to park protection, community development and climate change capacity building

  6. $$ $ Non- Profit Org Investors VERs RE VERs BC Third Party Verifier Non-Profit REDD Projects Project Area RE = Reduced Emissions VER = verified emission reductions BC = Biodiversity Conservation

  7. $$ CI BC VERs RE Third Party Verifier For-Profit REDD Projects Project Area Positive Externality ? RE = Reduced Emissions VER = verified emission reductions BC = Biodiversity Conservation

  8. A Cost-Sharing Approach to Investment in REDD $$ ? CI BC Positive Externality $ $$ BC VERs RE $ Third Party Verifier CI VERs RE Third Party Verifier Project Area ? Project Area

  9. 2 Possible Payment Mechanisms 2 Types of Biodiversity Beneficiaries Fund • General A globally diffuse set of actors who demand general conservation efforts for the option and existence values they provide • Specific Groups that benefit from the conservation of biodiversity within a specific area (non-profits, pharmaceutical companies, ecotourism companies, research institutions, governments, communities) Partnership

  10. PROS Addresses the public goods nature of biodiversity conservation CONS Quantifying biodiversity Defining threshold Deciding subsidy amount Diverting financing FundPer hectare subsidy offered to only high biodiversity REDD projects Partnershipmatching of carbon investors with biodiversity investors in a virtual marketplace PROS • No quantifying biodiversity, defining thresholds, deciding subsidy amounts or coming up with financing necessary CONS • Limited application – there are only so many specific biodiversity demanders

  11. In Summary… • The ability to bundle payments for ecosystem services is crucial for effective conservation finance through IPES. • The next frontier of IPES thinking should involve brainstorming different potential ways for bundling payments for ecosystem services. • This chapter begins this brainstorming process by highlighting options for bundling payments for both reduced emissions and biodiversity conservation into one investment in REDD. • Practical issues of determining beneficiaries also need to be addressed.

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