Speaking at the 4th Brussels Development Briefing, Leo Peskett from ODI introduced the ‘Reduce Emissions from Deforestation and Degradation’ (REDD) mechanism. REDD offers a high potential to further both environment and development, but its weaknesses make it less likely that small farmers will benefit from the financial flows.
Up to 20% of carbon emissions are from deforestation and degradation. This motivated the UN to look into a new mechanism of compensation payments to tropical countries to encourage them to protect their rainforests. Under this scheme, developing countries would be expected to reduce deforestation and degradation through policies and measures such as agricultural intensification or sustainable forest management in return for payments from industrialized countries. REDD could provide significant new financial flows to developing countries. According to estimates, between $US 2,2 and 13,5 billion annually.
However, REDD is a politically charged subject. Like the Clean Development Mechanism (CDM), it can be criticized both as an excuse by developing countries not to reduce emissions at home and as a way to ‘reward’ countries with poor environmental performance.
Peskett explored the benefits of this mechanism for small rural producers, asking how the financial flows can be be channeled so they are not captured by the elite, but reach the small farmers.
Although small farmers could potentially benefit from direct financial payments and indirect growth advantages, REDD suffers from the same weaknesses as the CDM. The complex institutional arrangements, the high transaction costs and the asymmetry of information could put small farmers at a disadvantage. Moreover, investors are likely to only finance areas where land rights are well defined. This makes it less likely that the poorest and unstable regions would profit from REDD projects.
Concluding, Peskett maintained that there is a “need for increased emphasis on processes that help the rural poor to access the benefits”, which includes legal and financial support. These will help ensure that REDD is truly ‘pro-poor’ and is able to change the political economy of forest sectors in developing countries.
Links:
Summary of presentation (doc format)
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