With so much talk lately about reduced emissions from deforestation and forest degradation (REDD), CIFOR's Sven Wunder - Principal Scientist with the Forests and Livelihoods program - draws on his experience with Payments for Environmental Services (PES) to discuss some of the key issues that will need to be addressed if REDD is to be successfully implemented.

CN: "The ideal PES recipient is the guy who has enough capital to buy a chainsaw, and is on the verge of putting it to work" (POLEX). May that also happen with REDD schemes?

SW: Indeed! Most REDD compensations will need to pay people that are seriously planning to deforest, and leverage a tightly monitored change in their 'business plan'. Otherwise, REDD risks becoming another 'feel-good' market, producing PR for buyers, yet achieving no real reduction in emissions. This well-justified fear of exploiting the system was a major reason behind REDD's exclusion from the Kyoto Protocol's first commitment period. For comparison, the Clean Development Mechanism (CDM) has also largely paid 'bad guys' (high-polluting developing countries). Some people expect REDD to create lots of cash for rewarding benign forest users' good stewardship. That may be illusionary - except, for example, when REDD is extremely cheap and creates large "environmental rents".

CN: Could this potentially unfair scenario become an impediment to REDD / carbon schemes?

SW: Sometimes, yes. If people see REDD as radically unfair, it will be politically unviable. An example from Brazil: an environmental NGO consortium - assisted by CIFOR and the Amazon Initiative - recently proposed a REDD system for Mato Grosso state, which is currently dominated by aggressive deforestation on commercial soy and cattle farms. In response, there was an outcry from the social sector - "How can you propose to pay 'the bad guys', the ones that have always destroyed the environment???". This REDD scheme was initially to be financed by Brazilian taxpayers, which raises legitimate expectations for equitable outcomes - much more so than if the funds were to come from international carbon markets. I think REDD will need to walk a fine line between efficiency and fairness. Some rewards for good stewardship are surely needed, but REDD incentives must focus on the highest returns for protecting carbon stocks, otherwise they will simply not perform.

CN: Can you explain how REDD would reduce illegal logging?

SW: You cannot pay the illegal logger for not logging, and paying even one could perversely attract others. But in situations of illegal or quasi-open access, REDD can finance improved command-and-control systems: more forest guards, better remote-sensing monitoring, and more efficient judiciary systems to prosecute and convict offenders. This also concerns illegal land clearing, even if there is no rightful owner to compensate. Obviously, sharper controls could increase local tensions, by leading to the capture of more 'small fish' while the big, politically influential offenders continue to go free. In my opinion, however, that should not be an argument against doing it - rather one for doing it better.

CN: How easy will it be to implement REDD locally?

SW: I think the implementation challenges are being under-estimated. Current REDD debates focus on fundraising and transfer mechanisms, while few people are considering how this money can be spent to actually deliver REDD results. First, deforestation champions like Indonesia or Brazil are mega-countries: should funds go to distant central governments, or newly decentralized provinces and federal states? Second, how can one sensibly distribute REDD funds when nobody has clear titles or control over the land? Third, how do we deal with illegal and informal land uses without providing perverse incentives? Broadly speaking, REDD will only succeed where the predominant 'land-abundance inertia' - the mentality of exploiting one plot and moving on to the next - can be changed. But closing a society's 'agricultural frontier' is complex, and probably time-consuming. This will raise REDD transaction costs, and lower success rates. REDD still very promising, but early experimental action is needed to tease out where, how, and how much avoided deforestation the REDD money will really be able to buy.

"Some people expect REDD to create lots of cash for rewarding benign forest users' good stewardship. That may be illusionary." - Sven Wunder, CIFOR