REDD: The pitfalls of market-compliant forest conservation


The concept of REDD (Reducing Emissions from Deforestation and forest Degradation) was introduced into UN climate talks in 2005 with the promise to reduce deforestation as well as the greenhouse gas emissions resulting from forest loss. REDD is now becoming the dominant international forest policy mechanism.

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Destroyed forest in Uganda

The concept of REDD (Reducing Emissions from Deforestation and forest Degradation) was introduced into UN climate talks in 2005 with the promise to reduce deforestation as well as the greenhouse gas emissions resulting from forest loss. Financial support from governments and philanthropic organisations has since totalled well over a billion US dollars, with the government of Norway being the largest funder. REDD pilot schemes such as the World Bank’s Forest Carbon Partnership Facility and the REDD Early Movers Programme, managed by the German development bank KfW, have further contributed to REDD becoming the dominant international forest policy mechanism.

As the name implies, the objective of REDD is to reduce emissions resulting from forest destruction. The means to achieve this objective is to offer financial incentives that would make standing trees worth more than felled ones. REDD is thus designed as a payment for environmental services (PES) scheme, with the continued storage of carbon in the forest being the service that is remunerated. One additional requirement in REDD is that the recipient of funds has to show that, without the payment, the carbon stored in the trees would have been released into the atmosphere. This is important because REDD was to be funded through the sale of carbon credits. Carbon credits allow polluters of greenhouse gases to claim that the climate damage from their own greenhouse gas emissions has been cancelled out by someone foregoing a planned emissions activity elsewhere. In the case of REDD, this someone is the owner of a REDD project. Because payments are usually made after documentation has been provided that carbon emissions from deforestation have been reduced, the remuneration is often referred to as 'payment for results'.

Critics of REDD raised concerns early on about the social and human rights implications of implementing a mechanism focused solely on financial incentives being tied to carbon storage in a forest. Forests are much more than stores of carbon, and the root causes of deforestation are complex and political as much as financial in nature. In addition, forest use is often caught up in conflicts over rights to access and ownership, and carbon storage levels in forests fluctuate naturally. In attempting to integrate these dimensions into REDD, the seemingly simple concept of paying to keep forests standing evolved into a complex REDD approach. This approach includes multiple accounting levels, certification standards assessing hypothetical scenarios of what might happen to the forest carbon, and a growing number of secondary objectives and safeguards addressing the conflicts often associated with forest use. Although the volume of handbooks on forest carbon accounting and REDD safeguards grew rapidly, few tangible details materialised about how this new concept would actually tackle the larger drivers of forest loss. The result 15 years on is that REDD has become a huge accounting exercise, but it has been unable to tackle the root causes of forest loss, with the outcome being the continued destruction of forests around the globe.

Two separate REDD tracks

Implementation of REDD has moved along two separate tracks: Governments and UN climate negotiators favoured a version of REDD that covers whole administrative areas such as counties, provinces, and even an entire country. This version of REDD is based on the assumption that the prospect of payments would incentivise governments to change or implement policies that will drive down the rate of deforestation. A large portion of REDD funding since 2005 has been spent on consultants – usually from industrialised countries – and setting up national forest carbon monitoring systems and accounting regimes in the Global South. The forest carbon balance sheets are based on satellite images and calculations that turn the displayed forest area into tonnes of carbon. The calculations are only partially based on direct measurements. To a large extent, the figures are derived from the extrapolation and assumptions of figures presented in the literature. Unsurprisingly, uncertainty ranges for the figures presented in forest carbon balance sheets are large.

Where government policies have been changed as part of REDD programmes, they tend to target peasant farming and scapegoat shifting cultivation and traditional agricultural practices that involve burning land. Large-scale deforestation, by contrast, continues to be largely unaffected by national REDD policies. Payments for such jurisdictional REDD programmes go to governments, which in turn allocate the funds at their discretion, though some jurisdictional REDD payment schemes require that the funding received be reinvested into REDD programmes.

Conservation NGOs and corporate proponents of REDD favour a project-based version of REDD. Such private-sector REDD projects have to demonstrate that the release of emissions within a defined project area has been prevented. Although criticised early on for only shifting deforestation from one location to another, the project-based approach to REDD remains popular. Private-sector REDD projects provide the majority of REDD credits sold to companies and individuals seeking to offset (a portion of) their greenhouse gas emissions. Corporations – from Shell to insurance company Allianz – advertise REDD credit purchases as being part of their response to climate change. Many of these private-sector REDD projects have been exposed for overestimating the volume of avoided emissions, for causing conflicts over land use and evictions, and for reinforcing historical injustices of land allocation or for being linked to human rights violations.

To address the growing tensions between REDD project accounting and jurisdictional REDD accounting following the adoption of the UN Paris Agreement on climate change in 2015, a so-called nested REDD approach has been proposed. Private-sector REDD projects are ‘nested’ inside the forest carbon accounting of the government in order to avoid alleged emission reductions from being counted twice – once by the private-sector REDD project selling carbon credits and once in the government’s carbon accounts as a contribution towards the national greenhouse gas reduction target.

REDD financing model with inconsistencies

Assumptions underpinning the financing for REDD have been challenged ever since the concept was introduced into UN climate talks in 2005. Three aspects have been particularly controversial.

First, REDD has been designed with the sale of carbon credits as a core financing mechanism, though the costs to set up the necessary infrastructure and initial forest carbon databanks are covered through philanthropic and development cooperation funding. Carbon offsets, however, do not reduce emissions. At best, they shift them from one place to another. With the risk of climate chaos increasing in light of inadequate action to end fossil fuel burning, many critics note that a REDD mechanism based on carbon offset sales undermines the aim of preventing runaway climate change.

Second, the price paid for a tonne of forest carbon saved through REDD has been around €5 on average. This does not provide a financial incentive for those responsible for large-scale deforestation. Clearing forests for oil palm plantations, for example, can easily result in an annual gain of US$1,000 per hectare – not counting revenue from the sale of timber from the destroyed forest. REDD thus lacks the financial clout to act as a credible economic instrument against wholesale deforestation on a large scale. The Ecosystem Marketplace, a US-based organisation that advocates trading ecosystem credits, has noted false expectations with regard to REDD: “REDD didn’t create an incentive to save forests, because anyone who responded to purely economic incentives would opt for palm oil. What REDD did create was a financing mechanism that might make it possible for people who wanted to save the forest to do so.”

Third, the costs for changing land use and verifying that the carbon remains stored in the forest continue to accrue for decades after a REDD payment has been received. This is particularly relevant if the payment came from the sale of carbon credits: The carbon credit allows the buyer to claim that any climate damage resulting from them releasing fossil carbon into the atmosphere has been undone. For this claim to be honoured, the carbon represented by the REDD carbon credit has to be stored in the forest for as long as the fossil carbon interferes with the climate. In other words, forest carbon tied to a REDD credit has to be stored for a very long time after the REDD credit has been sold and the payment received.

Payments despite rising deforestation

Another pitfall in the financing of REDD has been exposed by payments for jurisdictional REDD programmes under payment for results schemes. Three payments made by the Green Climate Fund in 2019 and 2020 illustrate how governments are receiving payments declared ‘results-based payments for REDD’ even when the rates of deforestation are rising. In other words, payments for alleged results are made even though the rising deforestation rates in these jurisdictions show that the long-term storage of carbon at risk of release through deforestation cannot be guaranteed.

In February 2019, the Green Climate Fund agreed to pay US$96 million to the government of Brazil for 18.82 million tonnes of carbon dioxide. The Brazilian government claims that this amount of carbon was not released into the atmosphere as a result of government action to reduce deforestation in the Brazilian Amazon in connection with REDD in 2014 and 2015. The payment underscores two pitfalls of the REDD financing model. First, a payment for results was awarded even though changes in government policy following the election of Jair Bolsonaro as president in late 2018 have led to skyrocketing levels of deforestation in the Amazon. Between August 2018 and July 2019, deforestation increased by 30 per cent from the previous year and rose to the highest level since 2007–08.

The risk that REDD payments of the Green Climate Fund are made for results that exist only on paper is further exacerbated by the fact that REDD rules approved during UN climate negotiations allow for highly inflated reference levels. The size of the payment is determined by comparing actual rates of deforestation to the average rate of deforestation over the past 10-15 years (or 10-20 years in some cases). As the graph below shows, a wide range of emission ‘reductions’ can be calculated by choosing the period used to determine the reference level. Had the Green Climate Fund opted to use, for example, the Brazilian government’s 2009 commitment to reduce deforestation as a reference level, the 2015 levels of deforestation would have been above the reference level, and the government of Brazil would not have qualified for results-based REDD+ payments for 2015. For 2014, only a small “result” would have been eligible for payment.

Grafic REDD

In August 2020, the government of Indonesia was awarded US$103 million for reducing emissions from deforestation during the period 2014 to 2016. This period includes 2015, when fires in forests and peatlands in Indonesia released more greenhouse gases than Japan emits in a year. Altogether a total of 9.9 million hectares of tree cover were destroyed in Indonesia between 2010 and 2015. How, then, could a payment for results be awarded for reducing emissions from deforestation? This was made possible by not including a large source of greenhouse gas emissions in the calculations: Emissions from peatlands are not included in Indonesia’s figures for its greenhouse gas emissions. The omission is justified with the argument that measuring emissions from peatlands is complex, and that the existing figures do not meet the requirements for REDD payments. Had these emissions from peatlands been included in the greenhouse gas balance sheet, however, there might have been no justification for results-based payments from the Green Climate Fund.

At the same meeting, the Green Climate Fund Board approved a REDD results-based payment to the government of Colombia. The US$28.2 million payment covered alleged emission reductions for the period 2015 to 2016. However, deforestation levels rose sharply following the 2016 Peace Accord in Colombia. Several Board members pointed out that the payment to Colombia was not results-based. Yet, the funding request submitted under the pilot programme for results-based REDD payments was approved – with a condition that Colombia produce the missing results by curbing deforestation in the future. The Green Climate Fund funding decision notes that the “host country will reduce emissions from deforestation in a way that reverts [3.1 million tonnes of] surplus emissions generated in the period covering years 2013 to 2017 inclusive, and demonstrates reductions of up to 20 Mio tCO2e up until the end of the implementation period of the funded activity, in order to avoid compromising REDD+ [results-based payment] commitments or agreements in Colombia.”

The risk of REDD payments being made for emission reductions that exist only on paper also arises in the case of private-sector REDD projects that use inflated reference levels. In this case, the REDD carbon credit sold to compensate for fossil carbon emissions is not backed by an additional reductions of greenhouse gas emissions by the REDD project. In other words, the fossil carbon emissions increase greenhouse gas concentrations in the atmosphere because the REDD emission reduction was generated via accounting methods rather than the reduction of actual emissions that would have been released otherwise.

This article is part of our dossier "New Economy of Nature".

Further reading:

  1. Lauren Gifford (2020): You can’t value what you can’t measure”: A critical look at forest carbon accounting. Summary: EN
  2. REDD-Monitor (2020): Green Climate Fund approves US$103 million for “results-based” REDD to Indonesia. Don’t mention the peat fires in 2015.
  3. Global Forest Coalition (2020): 15 years of REDD. Has it been worth the money?
  4. World Rainforest Movement (2015): REDD: A collection of conflicts, contradictions and lies.