Estimations of REDD+ opportunity costs: Aligning methods with objectives. Issue 145 (July 2023)

• Record Type: Journal Article
• Authors: Pirard, Romain; Philippot, Katia; Romero, Claudia
• Is Part Of: Environmental science & policy. Issue 145(2023)
• Page Start: 188
• Page End: 199
• Publication Date: 2023-07
• Subjects: Opportunity costs -- REDD+ -- Avoided deforestation -- Climate change mitigation -- Compensations levels -- Forest conservation; Environmental policy -- Periodicals; Environmental sciences -- Periodicals; Environnement -- Politique gouvernementale -- Périodiques; Sciences de l'environnement -- Périodiques; Environmental policy; Environmental sciences; Periodicals; Electronic journals; 363.70561
• DOI: 10.1016/j.envsci.2023.04.004
• Languages: English
• ISSNs: 1462-9011

Abstract

Abstract: Since the early 2000′s when discussions started around the concept of REDD+ , numerous studies estimated the opportunity costs often implicitly viewed as proxies for the total costs of avoided deforestation. We reviewed their methods and the stated objectives to assess their alignment, suitability and robustness. We found a lack of correspondence between methods and objectives, which include setting compensation levels, identifying cost-efficient activities, or assessing financial viability with respect to carbon markets. While the search for perfect accuracy is a fallacy, some major mistakes must be avoided, e.g. equating the costs of avoided deforestation to opportunity costs or including an inappropriate group of economic agents in the calculations. Best practises must be followed to ensure that estimations properly inform intervention design, decisions and policies; they refer to methods applied and their suitability for related decisions. They include: the need to first define objectives and then adapt methods because estimations can be done variously with contrasted results; to cautiously determine the scope - which stakeholders and stages of value chain are considered - while prioritising the broad picture and avoiding getting lost in estimation details; to discuss sensitivity of results and recognise uncertainties; and to consider the implications of scale in the study design. Given the urgency to preserve natural forest and mitigate climate change in the most cost-effective way, we believe that our analysis and its recommendations are a step in this direction with expected increased emissions reductions due to improved interventions. Highlights: Opportunity costs are essential for allocation of avoided deforestation funding. Review shows shortcomings in methods used and lack of their justification. Most important is to align methods with objectives and define relevant scope. A few best practices are discussed to avoid major mistakes. We provide guidance to orient future studies with reasonable methodological choices.