First time it discussed, REDD has been attracting too many agencies and carbon traders. Reducing emission from deforestation and degradation (REDD) as general term is representing international policy and finance mechanism that will enable the funding for forests conservation and establishment as well as buying and selling its carbon.
Nowadays, REDD projects are being tested in several countries in voluntary path. In Bali Action Plan, REDD is revised to REDD+ and defined as policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation; and the role of conservation, sustainable management of forest and enhancement of forest carbon stocks in developing countries.
The revised definition has similarity on helping of reducing emission. However, business entities are addressed in latest definitions as it meet with the requirement of sustainable forest management (SFM) criteria and practices. Wood based business, especially logging extraction business, is introduced to SFM practices in recent years. The SFM model is intended to minimize the destruction while extracted timber logs from designed forest.
Money grows on trees if REDD mechanism is working. Kindermann estimated that halving emission from deforestation between 2005 and 2030 would require financial flows of US$17 to 28 billion per year. The halving is related to 1.7 to 2.5 billion tons of carbon dioxide (CO2) emissions. For some countries that number of fund might be very attractive. It seems easy to grow money from their land without doing something really heavy. Is it true?
An approach to estimate the costs of REDD mechanism is using opportunity cost. The approach is widely known for some govt elites, companies in emission trading business and carbon scientists. The opportunity cost approach has unique characteristics which is very useful to draw the magnitude of REDD mechanism. How big the mechanism will be implemented can be predicted with this approach.
Opportunity cost approach shows a range of various economic benefits raised from possible activities in the targeted area. Thus by estimating the opportunity costs, we can reveal what is the hardest driver of carbon emission. Some studies found that oil palm plantation is one of the main drivers.
But the opportunity cost approach has limitation. The approach do not cover the implementation and transaction cost of REDD mechanism. This issue has been pushed by Rainforest Foundation; a London based environmental pressure group. Because of the limitation, opportunity cost approach could raise misleading for decision makers.
REDD could be too cheap for conserving rainforests and global warming. The tropical forest countries should be more prudent employing single approach for REDD mechanism.