Climate change mitigation: should “avoided deforestation” be rewarded?

It is hotly debated today whether the reduction of tropical deforestation should be supported by a mechanism within the Convention for Climate Change. This mechanism, known as “avoided deforestation,” would benefit developing countries that voluntarily reduce their deforestation rates, thereby generating at least two positive impacts: (a) an increase in the financial resources available to curb tropical deforestation, with expected positive side effects on biodiversity conservation, the environmental services provided by these forests, and sustainable development as a whole; and (b) a greater effectiveness of the global fight against climate change, because tropical deforestation contributes extensively to world carbon emissions. Several proposals were designed for such a mechanism, yet their implementation poses significant methodological problems: first, sophisticated tools available to measure the reduction of emissions might be ineffective when combined with baselines on a national level; secondly, baselines calculated ex ante lack accuracy because of insufficient knowledge concerning the direct and underlying causes of deforestation; thirdly, baselines calculated ex post lack legitimacy because they only refer to past trends; and fourthly, it is challenging to relate a reduction in deforestation rates to public policy options in the host country.Drawing lessons from our analysis of the methodological problems for the implementation of the mechanism, we recommend not promoting any mechanism based on financial rewards for an assumed voluntary reduction of national tropical deforestation rates. Two reasons justify our perspective: not only would the mechanism probably generate fake reductions (“hot air”), but undesirable side effects—detailed in this paper—would also appear. Instead, we encourage industrialized countries to better use already existing multi- and bilateral instruments, which focus on the correction of governance deficiencies in countries home to tropical forests. It is also necessary to focus on the suppression of “perverse incentives” from public policies in tropical countries.