Rainforest Conservation Reduces Costs of International Climate Policy

Preserving tropical rainforests is not only important for the protection of biodiversity but represents a particularly cost-efficient instrument of climate policy. If the world's rainforests were involved in the international emissions trading to reduce climate-changing greenhouse gases, industrialised countries as well as developing countries would benefit in the long term. A recent study conducted by the Centre for European Economic Research (ZEW) suggests that avoiding emissions by protecting large rainforest areas is not only effective for climate protection but also cost-efficient. Integrating rainforest protection in a new climate policy agreement (after the Kyoto Protocol expiry in 2012) would thus considerably increase the effectiveness and affordability of future climate politics.

A new policy proposal entitled "Reducing Emissions from Deforestation and Degradation" (REDD) aims at integrating tropical rainforest conservation in international trading of emission allowances. Land clearance to create agricultural areas releases the stored carbon into the earth’s atmosphere as greenhouse gas and thereby contributes to climate change. REDD would acknowledge and value carbon emissions reduced by avoiding tropical deforestation, as developing countries would be rewarded with corresponding emissions credits which could then be sold to industrialised countries. The latter could use these credits to achieve their climate protection goals.

Industrialised countries could save costs by means of REDD while reaching their climate protection goals, as reducing emissions by protecting tropical rainforests is more cost-efficient than avoiding emissions by technical innovations in Europe, for example. The reason is that industrialised countries already use highly developed technologies to decrease carbon emissions. To save even more emissions, the countries would thus have to invest considerably in expensive technological innovations and their implementation. "Integrating tropical rainforests into international emissions trading would cut the costs for emissions rights. Future climate protection goals could thus be reached more cost-efficiently, and more ambitious goals of reducing emissions could be realised without extra burdens for industrialised countries", says ZEW expert Niels Anger.

In particular, also tropical regions could benefit from the REDD mechanism. The study indicates that the revenues of selling emissions credits considerably exceed the opportunity costs of rainforest conservation in the form of foregone returns for land use (for example from selling timber or creating agricultural areas). Developing countries would thereby benefit in economic terms and simultaneously preserve their forests. Furthermore, integrating rainforest protection in emissions trading could also help to win important industrialised countries as well as emerging developing countries for a future international climate policy agreement.

Contact

Niels Anger, E-Mail: anger@zew.de