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Potential variation in opportunity cost estimates for REDD+ and its causes

Hongqiang Yang () and Xi Li

Forest Policy and Economics, 2018, vol. 95, issue C, 138-146

Abstract: REDD+ programs and projects aim to mitigate climate change by reducing deforestation and forest degradation and enhancing forest carbon stocks. The viability of REDD+ programs depends in a large part on their opportunity costs (OCs); however, large variation exists in the estimated OC. This study aims to quantify the variation in OC reported in the literature and identify its causes. In addition to a careful description, a meta-analysis was conducted to examine the heterogeneities across the different estimating methods, data sources, deforestation drivers, and geographic regions found in previous studies. Our results show a large variation in the estimated OC because of differences in data sources, assumptions about future markets, and factors, such as carbon density, crop price and yield, and time horizon. Furthermore, variation exists even among studies of the same driver(s) of deforestation and forest degradation, within the same continent, and from the same data source. Time horizon is the largest contributor to cost variation, followed by carbon density and crop price. Geographically, the OCs are $19.49/tCO2e in Africa, $9.19/tCO2e in Asia Pacific, and $4.33/tCO2e in Latin America, respectively. Despite their large variation, the REDD+ OCs remain fairly low in most reasonable cases.

Keywords: REDD+; Opportunity cost; Time horizon; Carbon density; Crop (forest products) price (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:forpol:v:95:y:2018:i:c:p:138-146