Subscribe to CGD’s weekly newsletter below, and watch for an email with the option to receive more of what interests you.

(if not affiliated type "individuals")
Already subscribed? Please click “manage subscriptions” on any email from Center for Global Development (cgd@email.cgdev.org) to update your preferences.

Working Papers

From REDD to Green: A Global Incentive System to Stop Tropical Forest Clearing - Working Paper 282

David Wheeler, Dan Hammer, and Robin Kraft
Download PDF

In this paper, David Wheeler and co-authors develop and illustrate a prototype incentive system for promoting rapid reduction of forest clearing in tropical countries. Their proposed Tropical Forest Protection Fund (TFPF) is a cash-on-delivery system that rewards independently monitored performance without formal contracts. The TFPF incorporates both monetary and reputational incentives, calculated quarterly, and includes rewards for (1) exceeding long-run expectations, given a country’s forest clearing history and development status; (2) meeting or exceeding global REDD+ goals; and (3) achieving an immediate reduction in forest clearing.

The authors drawing on monthly forest clearing indicators from the new FORMA (Forest Monitoring for Action) database to illustrate a prototype TFPF for eight East Asian countries: Cambodia, China, Indonesia, Lao PDR, Malaysia, Myanmar, Thailand, and Vietnam.

The results demonstrate the importance of designing financial flexibility into the proposed TFPF. Its incentives are calculated to induce a massive, rapid reduction of tropical forest clearing. If that occurs, a TFPF for East Asia will need standby authority for disbursements that may total $10–14 billion annually for the next two decades. The TFPF is designed to self-liquidate once all recipient countries have achieved clearly specified benchmarks; its major financial responsibility would be discharged by 2040.

Data disclosure: The data and Stata code behind this analysis are available as a data set.