Targeting REDD+ programs in Indonesia: what influences landowner engagement?
What influences landowners to sign and implement contracts on land-use change? Implementation of REDD+ requires knowledge of the factors influencing these decisions and actions. In an article published in World Development, Samuel Skidmore (University of Sydney), Paulo Santos (Monash University) and Beria Leimona (World Agroforestry Centre) show that location and individual preferences play a more significant role than opportunity costs in these decisions. The authors, who used primary data from Indonesia to contrast two approaches, also discuss the resulting implications for targeting REDD+ programs.
Reducing Emissions from Deforestation and Degradation (REDD+) continues to be one of the few internationally agreed upon ways of reducing global greenhouse gas emissions and thereby mitigating climate change. The perceived low cost of using forests to sequester carbon and the significant contribution of deforestation to greenhouse gas emissions—approximately 12% of global emissions—contribute to this view. Consequently, there is increased interest in the specific actions that can be included in these efforts, particularly afforestation and reforestation activities—the “+” in REDD+. Indeed, these activities are eligible for funding in most REDD+ proposals put forward by NGOs and governments.
A key challenge in the practical implementation of REDD+ programs in the developing world is conflicting local and governmental claims over land. Also, landowners have a private valuation of the reforestation project, have no incentive to reveal it to the potential buyer of environmental goods, and are only interested in pushing rents that can be extracted from the buyer to the highest possible amount. This is typical of most programs that rely on the voluntary participation of beneficiaries.
Decisions related to how much should be paid and to whom in order to encourage program participation while minimizing the costs of carbon sequestration, have been addressed in two ways. One, is by estimating the opportunity cost of land-use change. The other is to use mechanisms that create incentives for individuals to reveal private information, such as auctions. Despite their theoretical advantages and the growing experience with their use in the field, auctions are time consuming and expensive to implement. If the use of auctions does not yield significantly different results from what is obtained through simpler approaches, such as those based on the estimation of opportunity costs, the use of the latter could be justified by their relatively lower cost.
A study was conducted in Senamat Ulu and Tebing Tinggi, two villages in the Province of Jambi, Central Sumatra, Indonesia, to compare the supply of carbon sequestration elicited through two approaches to securing reforestation contracts: a reverse, second-price experimental auction and estimates of opportunity costs obtained from a detailed household survey. The two villages were chosen due to their location in areas where local farmers have been encroaching into the native forest. Information on the costs and returns of current land-use were used to estimate the opportunity costs of any change in land-use, and compared with household decisions in an experimental auction that was designed to directly elicit willingness to accept land-use change contracts.
Although average values of bids and estimates of opportunity costs are not statistically different, the supply curves associated with the two approaches differ for a wide range of prices. The study analysed the determinants of bidding behaviour and confirms the lack of relation between the estimates of opportunity costs and bids. Indeed it suggests that only spatial heterogeneity and behavioral preferences toward risk and time play a significant role in explaining these decisions.
The analysis identified three aspects that seem important for the implementation of REDD+:
- Firstly, reforestation contracts seem clearly feasible given what is usually assumed about market prices for carbon and what is known about transaction costs associated with these types of contracts.
- Secondly, spatial location and individual preferences (namely time preferences and risk aversion) were major determinants of such values while measures of opportunity costs were not.
- Thirdly, the use of auctions to allocate land-use change contracts may be an important way to reduce the costs of implementing this type of program.
Determining the existence of a similar lack of relation between auction bids and opportunity costs in the case of forest conservation contracts is potentially much more complicated, given the lack of private property rights in much of the forest area in developing countries. Considering the potential impacts on forest conservation, climate change mitigation and poverty alleviation, this seems a particularly important area for future research.
Skidmore S, Santos P and Leimona B (2014) Targeting REDD+: An Empirical Analysis of Carbon Sequestration in Indonesia. World Development 64, pp. 781–790.
Climate change adaptation and mitigation, which considers how forests, trees and agroforestry can play a role in climate change mitigation and also how they can help people adapt to climate change is a key focus of the CGIAR’s Collaborative Research Project 6 on Trees, Forests and Agroforestry—of which the World Agroforestry Centre is a key partner.