North / South Contractual Design through the REDD+ Scheme

Mireille Chiroleu-Assouline, Jean-Christophe Poudou and Sébastien Roussel
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Sébastien Roussel: Université Montpellier 3 Paul Valéry & Université Montpellier 1, UMR5474 LAMETA

No 2012.89, Working Papers from Fondazione Eni Enrico Mattei

Abstract: In this paper we aim at theoretically grounding the Reducing Emissions from Deforestation and Forest Degradation + (REDD+) scheme as a contractual relationship between countries in the light of the theory of incentives. Considering incomplete information about reference levels of deforestation as well as exogenous implementation and transaction costs, we compare two types of contracts: a deforestation performance-based contract and a conditional avoided deforestation-based contract. Because of the implementation and transaction costs, each kind of REDD+ contract implies a dramatically different information rent/efficiency trade-off. If the contract is performance-based (resp. conditionality-based), information rents are awarded to countries with the ex ante lowest (resp. highest) deforestation. In a simple quadratic setting, there is a reference level threshold in terms of efficiency towards less deforestation. In terms of expected welfare, conditional avoided deforestation-based schemes are preferred.

Keywords: Conditionality; Contract; Deforestation; Hidden Information; Incentives; Performance; Reducing Emissions from Deforestation and Forest Degradation + (REDD+) (search for similar items in EconPapers)
JEL-codes: D82 O13 Q23 Q54 (search for similar items in EconPapers)
Date: 2012-11
New Economics Papers: this item is included in nep-cta and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: North / South Contractual Design through the REDD+ Scheme (2012)
Working Paper: North / South Contractual Design through the REDD+ Scheme (2012)
Working Paper: North / South Contractual Design through the REDD+ Scheme (2012)
Working Paper: North / South Contractual Design through the REDD+ Scheme (2012)
Working Paper: North / South Contractual Design through the REDD+ Scheme (2012)
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