Benefits and costs of deforestation by smallholders: Implications for forest conservation and climate policy

a r t i c l e i n f o Deforestation is a leading cause of biodiversity loss and an important source of global carbon emissions. This means that there are important synergies between climate policy and conservation policy. The highest rates of deforestation occur in tropical countries, where much of the land at the forest frontier is managed informally by smallholders and where governance systems tend to be weak. These features must be considered when designing policies to reduce emissions from deforestation such as REDD+. Deforestation is often accompanied by fires that release large amounts of carbon dioxide. These emissions are especially high in the case of peatlands which contain thick layers of carbon-rich matter. In this paper we derive marginal abatement cost (MAC) curves using data from a farmer survey in Sumatra, where rates of peatland deforestation are high. Comparing these results with farmers' stated willingness to accept payment not to clear forest to establish oil palm suggests that REDD + policies may be more expensive than MAC estimates suggest The extent to which this is true depends on the types of soils being deforested. Land-use change and agriculture account for approximately one third of global greenhouse gas emissions (FAO, 2011; Smith et al., 2007), but these sectors also have considerable potential as carbon sinks, mostly in the form of forests (Bloomfield and Pearson, 2000; Cacho et al., 2008; Watson et al., 2000). For this reason, there has been much interest in the synergies between forest conservation and climate policy (e.g. Reducing emissions from deforestation and forest degradation, in its most recent form as REDD+, is currently the most prominent international mechanism to capture these synergies (Angelsen et al., 2009; Harvey et al., 2010; Sandker et al., 2010). The key feature of this policy should be the ability for developing countries to capture carbon offset payments in return for reductions in deforestation. A core idea of REDD+ is performance-based payments that are conditional on the outcome of an action. Funds may be spent on (i) capacity building and 'readiness', (ii) policies to address the drivers of forest carbon loss and (iii) rewards for performance (i.e. quantified forest carbon change or emissions avoided). The open-access nature of tropical forests, the contested nature of property rights, public policies that have encouraged deforestation, and alternative land uses that are more profitable than forests, have combined to result in large scale …