Estimating Transaction Costs of REDD+
Mary Nantongo and
Ecological Economics, 2019, vol. 156, issue C, 1-11
Reducing emissions from deforestation and forest degradation (REDD+) is generally believed to be a cost-effective mitigation strategy against climate change. Some suggest, however, that costs of REDD+ are underestimated because many studies either exclude or undervalue transaction costs. A major challenge in this field of research is the absence of a common framework and methodology for assessing such costs. This paper uses the notion of governance structures to suggest a generic definition and methodology for measuring transaction costs. The methodology is subsequently used in an analysis of transaction costs for REDD+ pilots in RDS Rio Negro, Brazil and Kilosa, Tanzania. Results indicate higher unit costs – costs per ton of reduced CO2 – of establishing the REDD+ governance structures in Kilosa, while unit costs of using those structures are higher in RDS Rio Negro. The results also show that while REDD+ was originally conceived as a market i.e., a direct trade between buyers and sellers, it could also take on a non-market governance structure or a mixture of market and non-market elements. These different forms of governance structures have implications for transaction costs.
Keywords: Transaction costs; REDD+ policy; Governance structures; Brazil; Tanzania (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:156:y:2019:i:c:p:1-11
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