It’s estimated that the annual global greenhouse gas (GHG) emission from the
deforestation and degradation of tropical forest account for nearly 20% of global GHG emission and
Therefore, how to effectively reduce the GHG emission resulted from degraded forest has become
one of the most prominent topic in the context of dealing with the adverse effects of anthropogenic
climate change. The United Nations Collaborative Initiative on
Reducing Emissions from Deforestation and forest Degradation (REDD+) in developing countries
thus was discussed since 2005 and lunched in 2008 to create a tradable value for the carbon
stored in forests and provide economic incentives for developing countries to reduce emissions
from forested lands and invest in low-carbon measures to achieve sustainable development.
Given the nature of forest, the conflicting interests lie behind the policy selection
in dealing with GHG emission from deforestation is between the environmental benefits of
eco-service provided by forest’s carbon sequestration and large coverage of biodiversity
and the economic values of numerous natural resources that can generate considerable profit
to further economic development.
Therefore, the policy approaches and positive incentives adopted in REDD+ Program
for state parties, particularly for developing states under UNFCCC and
its subsequent agreements REDD+ that aims to include forest-related GHG reductions into the global
carbon market has become a controversial topic for states and relevant stakeholders.
Generally, those who demands for the carbon market are developed countries with quantified
emissions limitation and reduction objectives (QELRO) under the Kyoto Protocol Mechanism,
private entities with mandatory emissions targets under domestic emissions trading schemes
(with the EU Emissions Trading System currently acting as the benchmark); and 
entities and
individuals wishing to offset their emissions on a voluntary basis. 
Under this scheme, developing
countries are considered as a beneficiary of the funding and technology.
After Paris Agreement, it is expected that there will be increasingly demands and participation
in the carbon market due to the expansion of obligation to include not only Annex I parties through
the designation of Nationally Determined Contributions (NDC).
Generally, market-based approach is based on the presumption of scarcity and thus provides
economic incentives for states and private stakeholders to participate in the
climate friendly activities voluntarily and further meaningful mitigation of
the impact of climate change and to achieve the goal of sustainable development.
Generally, carbon instruments are designed as tradable rights can be created
within the so-called cap-n-trade or baseline-n-credit mechanism.
From the party states perspective, it serves the function to offset their
GHG emission reduction obligations by credits or allowance under international climate regime.
For developing countries, it can be funded through international or regional financial arrangements
to strengthen its capacity-building and trigger technology development to implement
the principle of common but differentiated responsibility and to further the objectives of
climate change regime. On the other hand, from the perspective of private stakeholders,
it provides an incentive for them to invest in climate-friendly project and lower
the risk of pollution costs and hence promote public awareness,
meaningful participation, and good governance from the government.
However, the market approach adopted by the REDD+ program also draws a lot of controversies.
First, there is insufficient contribution to sustainable development.
The necessary consequence in using market base approach to promote emission
reduction from deforestation and degradation is that the stakeholders will be driven to
invest in the most cost-effective sector to generate highest credit value at the lowest costs.
With the operation of market mechanism under this cost-benefit driven incentive,
the ultimate goal of sustainable development is often disregarded. Without taking account
also to the impacts on the environment, such as biodiversity loss and habitat degradation,
and society, especially the right and enjoyment of the local community, the economic gains
will become an end rather than means to tackle adverse effects of climate change.
One notable example is that the carbon market would result in ‘offsetting’ excessive
GHG emission activities rather than achieving the net GHG reduction gain.
In addition, since forest is the largest carbon sinks and sequestration,
one Norway report estimates that mere credits generated from the
conservation of Amazon forest is able to offset ten-times of Norway’s annual GHG emission.
Consequently, it allows industry and private company to disregard adopting holistic approach
or implement structural change to achieve climate goals and keep engage in high GHG emission
activity by purchasing the “right to pollute”.
The market mechanism is based on the presumption of scarcity.
Once the price of carbon drops significantly, the market will shrink and impede the goal
it aims to achieve. The forest, by its nature, is able to generate huge amount of carbon credits,
which if flooded into the existing carbon market will cause the price to decrease sharply.
And hence it will decrease the incentive for investment into forest conservation efforts and
projects and ultimately hamper the capacity-building and technology transfer process of
developing countries.
One possible solution is to keep decreasing the ‘cap’ or gradually increasing the baseline to
balance the supply and demand of carbon credits and to maintain the reasonable price for
emission reduction. Therefore, it needs a sound market monitoring and adjustment system
as well as the effective implementation of the progressive iNDC goals.
Another concern is the “permanence” issue of the forests.
Since forest has its natural cycle that affect the volume of carbon it sinks and
it is vulnerable to forest fire, pests, natural disaster, etc., one primary concern is
how to make sure the accredited emission is sustained over time without prejudice to
the investment. One option to solve the permanent issues is to create a reserve account of
credits to buffer the impact of natural loss of the forests.
Most of the developing countries have yet defined the legal nature of emission reduction credits,
which can be either defined as property or non-property rights by either legislation or contracts.
If the reduction credit is defined as a sovereign rights, it would inevitably discourage the
participation of private sectors. But if the credit is recognized as a property right,
it may be easily manipulated by private hands without scrutiny and therefore hamper the
ultimate goal of emission reduction. Some commentators suggests hybrid system that
adopt the mix sovereign and private ownership of credits to encourage meaningful
participation of private sector with necessary government power to control market stability.
Another relevant concern is the title of forest and the lack of accurate land tenure.
Private individual or companies own most of the land titles in forest. Sometimes the title may
involve multiple parties including the autonomous area enjoyed by indigenous people and local
communities. How to settle the land issue in incorporating REDD+ related projects in a
fair and equitable way become a difficult issue in a lot of developing countries.
As Professor Saunders put it, “tackling systematic poor governance is a prerequisite
for achieving investment in long-term forest management or any broader environment
or development aims for the sector”. Internationally, a specific REDD+ measuring, reporting,
and verification system is important to the transparency and accountability of the forest
carbon market. In terms of the measuring problem, the most important issue would be the
establishment of reliable inventory and the determination of national reference and baseline.
Reporting obligation further strengthens the credibility and transparency of the market and
enhances investor’s confidence. For verification, independent institution consists of experts of
various field is required.
A strong local governance is much more critical in successfully implementing the REDD+ program.
The government should adopt various domestic legal frameworks in implementing
its obligations under international climate regime, especially the need to achieve
sustainable management and conservation of forest supplementing to the forest carbon market.
Implementing REDD+ program involves complex arrangements between
a wide ranges of stakeholders. Strong governance structures and transparent procedures
on the design and implementation of socioeconomic benefit sharing, especially for the
affected indigenous and local communities, shall then be defined and enforced in
participating developing countries.
Another critical indicators of good governance including political stability, due process,
remedial procedure, and the scope and scale of the framework should also be taken
into account to ensure the fair and effective market base approach to achieve the
emission reduction results and sustainable management of forests.
The fact that the forest area serves as the major carbon sink in the earth
and account for nearly 20% of the GHG emission and the serious problems of
deforestation and forest degradation urge the international world to take immediate action
to mitigate the impact and stop the irreversible harm. At the same time, international society
are trying to develop the best way to reconcile the need to economic development and
protection of forest and the impact of climate change.
Under this scenario, market base approach in encouraging relevant stakeholders to
participate in climate friendly activities and efforts in the context of forest are
an inevitable way to mitigate the impact of climate change.
Yet, one should never forget market base is only a means instead of an end to
achieve an ultimate goal as defined by the UNFCCC and inherited by
the recent Paris Agreement, which is “-aims to strengthen the global response to the threat
of climate change, in the context of sustainable development and efforts to eradicate poverty-”
Therefore, holistic approach that incorporates measures to achieve sustainable development
including environmental concern and socio-economic impacts should be implemented in
every policy moves. Otherwise, once the market mechanism develops unfettered,
the cost-effective consideration and decision-making may in turn devastate the ultimate objectives.
Follow this logic, there are several prerequisite conditions developed before the
Redd+ program can be enforced in a way expected by the international community.
First, establish transparency framework of the government and the market management.
This may reflects on the establishment of clear substantive and procedural domestic
legal system and international supervision. Accurate measurement, reliable reporting
and accountable verification framework is needed to enhance the credibility and confidence
of the relevant stakeholders.
Second, carbon market mechanism must take sustainable management of forest and biodiversity
into consideration as well as several human rights concern such as, vulnerable local communities,
job increase, and indigenous people’s right.
Furthermore, government must take measure to ensure the stability and fairness of
the market by providing clear legal guidance to follow and due process to remedy.
Third, the requirement of additionality must be strictly enforced in counting the
forest carbon credit into existing carbon market. This should be accomplished by a
credible and independent institution consisting of experts from various relevant fields and
perhaps maximum credit from the forest GHG emission reduction can be imposed.
Forth, the global inventory and progressive standard of national baseline should be
established to achieve the 2 degree goals. This can be incorporated with the progressive
iNDC enumerated by the Paris Agreement which entails a non-backsliding obligations.
Finally, political reality is the key factors of the successful implementation of REDD+.
Those countries that most of the forest located and the need of developing government
should be contemplated and incorporated into the arrangement. Not only for the
economic development of those developing countries but also for the development of
capacity and necessary technology to mitigate the impacts resulted from climate changes.