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Results-based payment (RBP): Who should be paid, and for what?

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Presented by Arild Angelsen (Professor, Norwegian University of Life Sciences (NMBU) & Senior Associate, CIFOR) at "Informações, análises e ferramentas para apoiar programas subnacionais de REDD+ no Brasil" on 17 December 2020

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Results-based payment (RBP): Who should be paid, and for what?

  1. 1. Results-based payment (RBP): who should be paid, and for what? Arild Angelsen Professor, Norwegian University of Life Sciences (NMBU) & Senior Associate, CIFOR arild.angelsen@nmbu.no
  2. 2. What is RBP? Many names: PES, Performance-/Output-based Payment, COD, etc. but essentially the same idea Three main criteria (Perrin, 2013) 1. Payment based on predefined results 2. Recipient discretion to decide how to achieve results 3. Independent verification of results Does current “RBP” funding meet these criteria? Only partially! Result-based REDD+ payments 2
  3. 3. Challenge 1: What to pay for? Two dimensions: 1. Where to pay along the impact chain • Corresponds roughly to the 3 REDD+ phases. • Strong arguments to pay for what matters (= impacts or results), • but measurement, risk-spreading and ref. levels are more tricky as we move to the right 2. Which outcomes: Carbon vs. NCBs (non-carbon benefits) • How to include NCBs? 1. Constraints (e.g. safeguards) 2. Extra payments: • VCS price USD 2.3 per tCO2 (2016) • VCS + CCB: USD 3.9 (+ 70%) Result-based REDD+ payments 3 Inputs Activities Outputs Outcomes Impacts
  4. 4. Ways forward (C1) • Incentives for all REDD+ phases • Important steps towards the ultimate goal (payment for results) • Fair as countries and provinces are at different stages • Focus on carbon, with safeguards and NCB as additional incentives • Carbon (climate change) sufficiently important to be main focus • Conserving largely compatible with other objectives (biodiversity, livelihoods), particularly if use PES (Duchelle et al. 2018) Result-based REDD+ payments 4
  5. 5. Challenge 2: Setting FRELs = Defining ER • Emission reduction (ER) = actual emission – ref.level (baseline) • Two meanings • BAU baseline • basis for assessing impact • the counterfactual • Crediting baseline • basis for pay • FREL = BAU? Result-based REDD+ payments 5 Time ’Historical baseline’ Realised path Crediting baseline (FREL) BAU baseline REDD credits Carbon stock (forest cover)
  6. 6. Two issues (UNFCCC submissions): Time period (Brazil) & trends (Peru) FREL 20% above 2015 level 0.000 5.000 10.000 15.000 20.000 25.000 30.000 Deforestation, Amazon (Brazil), km2 Annual def 96-05 avg 01-10 avg 96-15 avg 06-15 avg Did Brazil reduce its emissions in 2019 & 2020? Depends on the FREL used!
  7. 7. Ways forward (C2) • Need to clarify key aspects • Standardize the period for historical emissions • Eligible “national (or regional) circumstances” • Independent, third party review • The provider of funding should “outsource” some tasks Result-based REDD+ payments 7
  8. 8. Challenge 3: whom to pay? • Who owns (is entitled to) the emission reductions (ER)? • 6 potential recipients (Luttrell et al. (2013)) • But tricky: • Was the deforestation and forest degradation (semi)illegal? • Who owns the ER from a concession NOT granted? Result-based REDD+ payments 8 Who own the emission reductions (ER)? Land owners Actors achieving ER Forest stewards Actors incurring costs REDD+ facilitators The poor
  9. 9. Ways forward (C3) • Balancing effectiveness, efficiency and equity (3E) • Main principles: incurred costs & attribution of results • Opportunity costs of forest conservation • The foregone benefits of forest conversion, normally agricultural and timber profit • May include the loss of tax revenue for local governments • What is fair? • What all stakeholders can agree on Result-based REDD+ payments 9
  10. 10. Takk for oppmerksomheten / Obrigado pela sua atenção