Incentives + How can REDD improve well-being in forest communities ?

REDD initiatives are more likely to succeed  • if they build on the interests of forest communities and indigenous people. More attention is needed to the balance  • of incentives, benefits, rights and political participation across levels of decision making, interest groups and administration. Incentives can include payments or  • other benefits for good practices, developing alternative livelihoods, formalising land tenure and local resource rights and intensifying productivity on nonforest lands. The pressure to reduce deforestation needs  • to be spread across many levels to reduce the burden on forest communities. Incentives + How can REDD improve well-being in forest communities?


Introduction
Initiatives to reduce emissions from deforestation and degradation (REDD) will directly affect the 1 to 1.6 billion people who depend on forests and who are among the world's poorest.REDD mechanisms are more likely to succeed if they build on (rather than conflict with) the interests of local communities and indigenous groups.REDD also offers a critical opportunity to enhance forest communities' wellbeing, a principle upheld by several international agreements and widely accepted voluntary standards related to REDD (box 1).
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CIFOR
No. 21, December 2009 www.cifor.cgiar.orgThis Infobrief discusses how REDD can be designed to benefit local people while also reducing emissions.Lessons are drawn from incentive-based approaches to forest conservation and recent experiences in six countries (Brazil, Indonesia, Madagascar, Mexico, Tanzania and Nepal). 3The findings suggest that the success of REDD and its impacts on communities will depend on the linkages between incentives and long-term development opportunities, resource rights and political participation for marginalised forest communities, as well as their distribution across different levels (community, district, nation) and entities (communities, timber industry, local government).

Incentive strategies
Providing compensation for lost livelihood opportunities will at best only reproduce poverty.Hence REDD should give priority to incentives that enable win-win approaches to reducing deforestation while also alleviating poverty wherever possible (See Peskett et al. 2008).Ample experience with these approaches exists in programmes that have used payments for environmental services (PES) (Engel et al. 2008;Grieg-Gran et al. 2005), voluntary carbon markets or 'carbon forestry' (Corbera and Brown 2008), the clean development mechanism (CDM) (Paulsson 2009), integrated conservation and development programmes (Wells and Shane 2004), and community forestry.Incentives should directly link outcomes associated with well-being to forest conservation (Salafsky and Wollenberg 2000).They should also support alternatives that are lower in emissions to avoid 'sectoral leakage' (a shift of emissions from forestry to another sector) and support a structural transition to a low-carbon economy.

No. 21 December 2009
The benefits associated with incentives take diverse forms.Key strategies include: By spreading the pressure for reducing deforestation across multiple parties, local people will bear less of the burden and will have more options to meet their needs.This approach also spreads the risk of failure of any one incentive.A group of incentives in Indonesia might include, for example: • Incentives for timber harvesters to practice reducedimpact logging; Box 1. Excerpts from international standards and principles that protect the well-being of forest communities The peoples concerned shall have the right to decide their own priorities for the process of development.
- Brazil has adopted other models for distributing benefits at the local level.In the Bolsa Floresta programme, for example, local benefit schemes include monthly payments to families as well as regular income to the community and grants to various social organisations (Box 2).
Indonesia has developed a model for distributing REDD benefits based on forest permits (Table 1) in their REDD policy produced in 2009 (Ministry of Forestry Regulation 36 on the implementation procedures for REDD).By sharing benefits, government, community groups and project developers can each receive payments.Yet many communities are unaware of these permits, and some have not applied for customary status.
Box 2. Bolsa Floresta Program, State of Amazonas, Brazil The Amazonas Sustainable Foundation (Fundação Amazonas Sustantável) is responsible for implementing the Bolsa Floresta Program, which values and compensates traditional populations and indigenous people -the forest guardians -for their roles in conservation.It is the first Brazilian programme to pay for environmental efforts performed by Amazonian communities.It aims to reduce greenhouse gas emissions caused by deforestation and improve human subsistence.The challenge is to make forests more valuable standing than cut.In June 2009, the programme had reached 14 protected areas, and 6050 families were registered in it.There are four types of association with the programme: Family.Each family receives a monthly payment of R$50, about US$29.This income aims to supplement the families' expenses in the form of an environmental service payment.
Association.All communities living in areas under conservation are represented by family associations.These are eligible for grants amounting to 10% of the total payment made to individual associated families.The payments are made directly to the association or through local commercial credit.

Social.
A small grant is provided to fund local social activities or community projects.These grants complement state and local government programmes.Families are eligible for small projects (R$4000 per community or about US$2300, with an average of 11.4 families per community).Activities funded by the grant must be in line with the sustainable practices monitored in the other types of Bolsa Floresta.
Income.All communities are eligible for a grant of about R$4000 to support local income-earning activities that do not produce smoke and fit legal requirements.
The process for allocating customary rights has been slow and uneven.For this initiative to be successful awareness building and institutional support are needed.
Mexico is using spatial analysis to assist in implementing REDD (Corbera and Estrada 2009).
Maps will be produced that show areas threatened by imminent deforestation; overlays will show the incentives required (based on opportunity costs), levels of social marginalisation and community organisation.The analysis will be useful for determining how to distribute incentives geographically.Granting entitlements to some may also affect the incentives for REDD implementation for others (Cotula and Mayers 2009).The question is what types of resource rights related to land, forest, forest products and carbon provide sufficient clarity and security for REDD implementation (and benefit distribution) to be effective and equitable, and which rights are politically possible to secure.Carbon rights are only beginning to be defined; how they are linked to existing resource rights remains unclear.

What other factors are important?
Incentives are not a panacea.They must be weighed against other influences on people's behaviour.In Mexico and Uganda, for example, people participated in PES even when benefits were low, probably due to non-income benefits and incidental environmental services (Martin 2009;Kosoy, Corbera and Brown 2008).
In Madagascar, a local nongovernmental organisation and policing may have influenced forest conservation more than payments did (Ferguson 2009).Incentives may also create perverse effects by encouraging expansion of agriculture or attracting higher local populations that increase pressure on forests (Campbell 2009).Although national scale programmes are currently favoured for REDD, a nested approach that relies on linking local governments with national frameworks will be needed to enable representation of local interests in political processes (Angelsen 2008).Local governments will need to respond to local interests and coordinate with upper levels of administration.

Links to meaningful participation in REDD decisions by local people
Nested approaches can integrate national efforts that address leakage within a country and large-scale forces for deforestation with subnational efforts that reflect locally relevant drivers of deforestation and institutional conditions.Yet local institutions have had their own challenges under PES schemes.Studies have shown they often have had higher transaction costs and more limited capacities (Corbera and Estrada 2009;Martin 2009).Under PES, outside entities did not always find it easy to observe local institutions and ensure their accountability.

A framework for analysing REDD incentives
As this discussion indicates, to make REDD work for forest communities, incentives will need to be clearly linked to drivers and benefits at multiple scales, development opportunities and participation of local communities in REDD decisions.Table 2 shows one way to analyse incentives across these multiple requirements.
The matrix is constructed by identifying relevant interest groups at different levels and scales.The incentive strategies can be analysed by looking at the extent to which they 1) share the burden for forest management beyond forest communities; 2) provide pro-poor, locally adapted incentives linked to longterm development opportunities; and 3) create safety nets and livelihood options for communities across No. 21 December 2009 multiple levels and link those levels.The table can also be used to assess equity, e.g., across different kinds of forests, including high deforestation threat areas and conserved forests; and the mix of private and public benefits, or other distributional attributes of interest.

Recommendations
Three actions are important to support local communities' livelihoods and governance: 1. Build on existing international instruments and voluntary standards and processes to establish principles for local people's involvement and wellbeing, and allocate resources in REDD to implement them.Reinforcing these principles is necessary because they remain unevenly implemented, and not all parties have signed prior agreements or adhere to voluntary standards.The key principles include: • Free prior and informed consent (FPIC) to inform forest communities about REDD policies and rights.

Research priorities
To achieve these actions requires further research.
Priorities include: 1.The role of incentives and their links to forest communities' well-being with respect to REDD+ efficiency, effectiveness and equity (Angelsen 2008).
• What are the tradeoffs and synergies between cost-effective reduction of emissions and improvements in local well-being?Which projects have the greatest potential to provide co-benefits for local people?How are short-term and long-term goals being traded off?• How do incentives at different levels and those targeted at different interest groups affect emissions and social equity?

• Performance -based exchange payments or
The opportunity cost related to deforestation reduction, as calculated by Instituto de Pesquisa Ambiental na Amazônia (IPAM) and Woods Hole Research Center (Nepstad et al. 2007).2. Compensation for forest conservation based on an estimated cost for the management of protected areas in the Amazon.3. Compensation to states that demonstrate achievement of deforestation reduction targets.
Indigenous peoples have the right to own, use, develop and control the lands, territories and resources that they possess by reason of traditional ownership or other traditional occupation or use.-Article 26, United Nations Declaration on the Rights of Indigenous Peoples 1.

Table 1 .
Distribution of benefits by permits inIndonesia, 2009

Table 2 .
Sample matrix for analysing incentive strategies, benefit sharing and political participation What are the REDD hotspots and how do they overlap with communities and indigenous people's values on the landscape?Human, governance and structural dimensions in hotspots need to be analysed to understand threats, alternatives and capacities.Hot spots need to be compared with current REDD demonstration sites.2.How REDD incentives can be used to address the deeper changes required to achieve a stable future climate and economy.•How can REDD funds be invested locally to optimise carbon landscapes?How do these landscapes address needs for energy?How will they affect forest economies?• How can REDD funds be used to create the structural changes necessary to achieve a lowcarbon future.Can REDD include the costs of the transition to the low-carbon economy?3. The underlying power structures and social processes affecting how REDD is designed and implemented.These may explain why benefits are not reaching the poor and support debate and reform of REDD architecture.Priority areas include: • What factors determine what kinds of REDD projects will be established (e.g. policy processes, corporate behaviour, donors)?• What is the political economy underlying how baselines have been set and how forests and degradation have been defined.Notes 1. University of Vermont, Lini.wollenberg@uvm.edu 2. University of East Anglia, Oliver.Springate@uea.ac.uk 3. Workshop held 6-8 April 2009 by the University of East Anglia and CIFOR on the Effects of REDD on Local Livelihoods and Governance.This Infobrief is a synthesis of the presentations and discussion at the workshop.4. For example, a smallholder project in Pará, Brazil, offers transition funds for agriculture near the transAmazon highway to help the area build a new regional economy.5. Including the United Nations Declaration on the Rights of Indigenous Peoples; International Labour Organisation Convention 169 on Indigenous and Tribal Peoples; Forest Law Enforcement and Governance; Climate, Community and Biodiversity Alliance standards; and forest certification standards of the Forest Stewardship Council.