Unveiling information on opportunity costs in REDD: Who obtains the surplus when policy objectives differ?

Philippe Delacote, Charles Palmer, Riyong Kim Bakkegaard and Bo Thorsen

Resource and Energy Economics, 2014, vol. 36, issue 2, 508-527

Abstract: Improving information about individual opportunity costs of deforestation agents has the potential to increase the efficiency of REDD when it takes the form of a payment for environmental services scheme. However, objectives pursued in REDD projects may vary across policy makers. Within a theoretical framework, this paper explores the impacts of different policy objectives under two opportunity cost settings: asymmetric and full information. For a policy maker aiming to maximize net income from REDD, having full information may not increase the amount of forest conserved but could lead to a redistribution of rents away from agents. By contrast, for an environmental policy maker focused on maximizing the amount of forest conserved under REDD having full information increases the amount of forest conserved while reducing the rents received by agents. For a policy maker pursuing poverty alleviation objectives in REDD-affected communities, having full information makes no difference to overall welfare as rents remain with agents. The amount of deforestation avoided will at least be as high as under asymmetric information. These results are illustrated with data collected on opportunity costs in Amazonas State, Brazil.

Keywords: Asymmetric information; Brazil; Deforestation; Opportunity costs; Payments for environmental services; REDD (search for similar items in EconPapers)
JEL-codes: H23 Q23 Q54 Q56 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:36:y:2014:i:2:p:508-527

DOI: 10.1016/j.reseneeco.2013.07.002

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