Issue Brief

The Feasible Supply of RED Credits: Less than Predicted by Technical Models

Nov 23, 2010 | Erin Myers Madeira, Michael J. Coren, Charlotte Streck

Since 2005, the effort to create incentives for reducing emissions from deforestation and forest degradation (REDD) has gained prominence as a way to reduce global greenhouse gas (GHG) emissions. In 2010, the UN climate conference in Cancun established an incentive mechanism for REDD+ (including conservation, sustainable management and enhancement of forest carbon stocks), and opened the door for countries to generate emission reduction credits from forest carbon in the future.

Climate legislation contemplated in the United States has promoted REDD+ as a cost-effective option for GHG mitigation and a source of revenue for countries wishing to pursue sustainable development strategies and conserve forests.

Prior research shows large volumes of REDD+ offsets could be generated at reasonable prices based on the biophysical potential of the forest sector. However, feasible potential of REDD+ credits may be much lower given the political, technical, and institutional obstacles to generate and deliver these offsets. In the RFF Issue Brief "The Feasible Supply of RED Credits: Less than Predicted by Technical Models," authors Erin Myers Madeira, Michael J. Coren, and Charlotte Streck conclude that actual deliveries of credits from REDD+ may be less than 50 percent of the technical supply.

According to the authors, the feasible REDD+ credit supply could range from 35 percent below technical supply at $10 per ton to 40 percent lower at $20 per ton based on data from RFF and Climate Advisers' Forest Carbon Index. Furthermore, without support from developed countries to help foster local governance and capacity-building to implement REDD+ projects in Brazil, Indonesia and other major developing forest nations, estimates could be even lower than those described in the report.