Compensated Reduction and Climate Change

Cutting greenhouse gas emissions by slowing tropical deforestation

Greenhouse gas (GHG) emissions are produced primarily by industrial processes, power plant and car motors (mostly by burning fossil fuels). But there is a fourth major source of GHG emissions that is too often neglected: tropical deforestation. The clearing and burning of tropical forests accounts for up to 25% of annual anthropogenic GHG emissions. If current rates of deforestation are not reduced sharply, the continued loss of forests poses a major threat to the global climate system.

A system designed to reduce emissions will only be successful if it addresses both the burning of fossil fuels and tropical deforestation. Compensated Reduction is a plan that provides incentives for developing countries to reduce their deforestation rates.

If the current rates of deforestation in Brazil and Indonesia alone were to remain the same through 2012, the emissions from this deforestation would offset nearly 80% of the emission reductions gained from the Kyoto Protocol.

Yet, this does not have to happen. The Compensated Reduction plan would reward those countries that can demonstrate a real decrease in their deforestation rates. A baseline is established using any historical average since the 1970s. If a country were to reduce its deforestation rate below this baseline, it would be eligible for compensation.

• Compensation would be post facto. Countries would be eligible for compensation, in the form of tradable credits, at the end of the Kyoto period after real reductions were concretely measured.
• Reductions would be verified by a robust and reliable satellite imagery system.
• Once a country received compensation, it would have to make a continued effort to stabilize or further reduce deforestation rates in the future.

The Compensated Reduction plan involves a nation's entire forest system, not just particular forests, which helps avoid many of the problems that have made consensus on forest issues difficult in the past. Moreover, compensation is based on past performance and future effort, not merely one or the other. The multiple benefits Compensated Reduction would offer include the following:

• By preserving forests it will preserve biodiversity in threatened tropical forests;
• It will encourage the participation of developing nations in the climate treaty process; and
• It will help link the Kyoto period with subsequent agreements.

Find Out More

• Compensated Reduction overview [PDF]

• Tropical Deforestation and the Kyoto Protocol: An Editorial Essay [PDF] Also:  

  One-Page Overview of Compensated Reductions:
  Translated in French [PDF] | Translated in Spanish [PDF]

  Authors: Marcio Santilli, Instituto Socioambiental (ISA), Instituto de Pesquisa Ambiental da Amazonia (IPAM); Paulo Moutinho, Instituto de Pesquisa Ambiental da Amazonia (IPAM); Stephan Schwartzman, Environmental Defense; Daniel Nepstad, Instituto de Pesquisa Ambiental da Amazonia (IPAM), Woods Hole Research Center; Lisa Curran, Yale School of Forestry and Environmental Studies; Carlos Nobre, Centro de Previsao de Tempo e Estudos Climaticos (INPE)

• RainForest Credits [PDF] - Creating carbon credits from avoided deforestation was a surprise topic on the agenda at the climate talks in Montreal in late 2005. This article looks at its chances of success. Carbon Finance, December 2005/January 2006.

• Tropical Deforestation and Climate Change [PDF] (Dec. 2005, edited by Paulo Moutinho and Stephan Schwartzman) - Explains how reducing tropical deforestation (through economic incentives) is a critical piece of any international emissions reduction regime to slow the warming of the Earth's atmosphere and to preserve the planet's biodiversity. Stopping or slowing deforestation can contribute to the continuity and strengthening of a robust, comprehensive international emissions reductions regime post-2012 -- and vice-versa.

• Preserving Biodiversity and Reducing Greenhouse Gas Emissions: A Discussion of Issues and Options for Addressing Land Use, Land Use Change & Forestry in Future Climate Regimes - (December 2004, COP 10 Roundtable, Buenos Aires, Argentina, co-sponsored by Environmental Defense) - Considers a range of issues concerning the global nature of the challenges, such as a reduction in Amazon forest cover reducing the amount of rain in other areas of South America.

• Possible Role of LULUCF in Future Regimes [PowerPoint] (by Bas Clabbers, Ministry of Agriculture, Nature and Food Quality, the Netherlands) - Looks at what the European Union is doing to prepare to address the possible inclusion of LULUCF in future climate change regimes. [368 Kb Powerpoint file] Please note that Mr. Clabbers' presentation was made in his personal capacity.

• Compensated Reductions of Deforestation [PDF] (by Marcio Santilli, Instituto de Pesquisa Ambiental da Amazonia (IPAM)) - Summarizes CR with a focus on its impact on the Brazilian Amazon, highlighting the incentives to reduce deforestation rates, as well as deforestation monitoring in real time.

• Reducing Emissions From Deforestation; Applying Compensated Reduction in Ghana [PowerPoint] (by Yaw Osafo, an Environmental Policy and Legislation consultant) - Poses the possible benefits that would accrue to Ghana with compensated reductions.

• COP-10: The Future of Kyoto - On-the-ground reports and updates, agendas, presentations and fact sheets from the Tenth Conference of the Parties to the UN Framework Convention on Climate Change, held in Buenos Aires. (December 2004)

• Help Developing Countries Cut Carbon, Not Trees - Our Climate 411 blog posts on CR

For more information about the Compensated Reduction concept, please contact Annie Petsonk, Steve Schwartzman or Gustavo Silva-Chavez of Environmental Defense.

For information about Compensated Reductions in Portuguese, visit IPAM - Instituto de Pesquisa Ambiental da Amazonia.

Posted: 11-Apr-2007; Updated: 13-Dec-2007