In the search for economic instruments to mitigate global climate change, reducing emissions from deforestation and degradation (REDD) has recently been embraced by proponents in both developing and developed nations. This research project investigates the interactions between REDD credits and international carbon markets. REDD certificates have been heralded as potentially both inexpensive and plentiful. Both global funds and the introduction of REDD units to international emissions markets have been proposed as options to finance REDD activities. Economic efficiency gains from a market approach could enable extended emissions reductions targets by the industrialized world. However, concerned parties have expressed reservations that the inflow of REDD credits may impact markets and long-term climate mitigation strategies by depressing carbon prices. Against this background, restrictions of the supply and demand of REDD credits have been suggested. We employ a multiregional equilibrium model of the global carbon market to assess the economic implications of introducing REDD credits in international emissions trading in several post-2012 scenarios for the year 2020. In particular, we investigate the carbon-market implications of REDD supply and demand restictions as well as more stringent emission reduction commitments by the industrialized world.

Project duration

01.09.2008 - 30.11.2008

Contact
Project members

Niels Anger (Coordinator)
Prof. Dr. Andreas Löschel

Client

Ministry of Agriculture and Forestry, Wellington, Neuseeland, NZ

Cooperation partner

The Marketplace Company Limited, Wellington, Neuseeland, NZ