Rainforest conservation as a strategy of climate policy

Tropical forest conservation in developing countries has repeatedly been highlighted as a new element in international climate policy. However, no clear ideas yet exist as to what shape such a conservation strategy might take. In the present paper, we would like to make some observations to this end. It is shown how projects in order to reduce CO₂-emissions resulting from deforestation and degradation (REDD) can be integrated into a system of tradable emission rights in an industrialised country and which requirements ought to be fulfilled. Instruments are emission credits and emission allowances. Driving actors interested in emission rights through forest projects may be private investors or the rainforest state itself. The efficiency of the system depends on a great extent on a binding reference path for the tolerable emissions from deforestation, which has been agreed upon and adhered to by the rainforest country by means of a forest law aimed at limiting deforestation. Our considerations lead us to conclude that the national baseline approach with an appropriate contribution by the rainforest country coupled with a decentralised system with private investors seems the most viable option. Since additional burdens are imposed on the rainforest country to some extent, a compromise could consist of agreeing on a moderate deforestation path, which is harmonised with the benefits from the forest projects. Combining both programmes (offset credits and emission allowances) is particularly attractive because all participants, and especially the industrialised country, benefit from it. The industrialised country can expand its climate conservation programme without any additional costs to a certain degree.