Working Papers

Supplementing REDD+ with Biodiversity Payments: The Paradox of Paying for Multiple Ecosystem Services - Working Paper 347

11/14/13
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This article first appeared in Land Economics 89(4), published by the University of Wisconsin Press, copyright © 2013 by the Board of Regents of the University of Wisconsin System.

Abstract

An international mechanism to reduce emissions from deforestation using carbon payments (REDD+) can be leveraged to make payments for forests’ biodiversity as well. Paradoxically, under conditions consistent with emerging REDD+ programs, money spent on a mixture of carbon payments and biodiversity payments has the potential to incentivize the provision of greater climate benefits than an equal amount of money spent only on carbon payments.
 
This paradoxical result arises when diversifying payments across multiple services allows a funding agency to spend less on additional rents to existing suppliers of avoided deforestation and more on incentivizing the participation of new suppliers.