Market Forces

What can New Zealand’s forestry sector tell us about carbon pricing policy?

New Zealand is currently reconsidering how its forestry sector can contribute to meeting its long-term climate change targets, and what this means for its emissions trading scheme (NZ ETS). A recent paper from researchers at Motu Economic and Public Policy Research and the Environmental Defense Fund sheds light on New Zealand’s innovative treatment of forestry in the NZ ETS, its impacts so far, and questions about where to go from here.

To help inform future policy choices in New Zealand and other countries, the research team examined patterns of behavior in New Zealand’s forestry sector under emissions pricing. While the NZ ETS has mobilised new forest planting and cut deforestation, the outcomes have not always supported policymakers’ intentions. Further policy changes will be needed to help New Zealand meet its climate targets through 2050 and beyond.

What is the New Zealand Emissions Trading Scheme?

To achieve a low-emissions economy, New Zealand has both international and domestic emissions reduction targets:

  • Under the 2015 Paris Agreement, New Zealand’s net emissions (including forestry) must be reduced 50% below 2005 gross emissions (excluding forestry) by 2030. This can be met through domestic emissions reductions and forestry removals (sequestration) as well as purchasing offshore mitigation.
  • In domestic legislation, New Zealand’s emissions of methane from agriculture and waste must be reduced at least 10% below 2017 levels by 2030 and 24-47% by 2050. For all other greenhouse gases, the target is net zero by 2050 and beyond. Five-yearly emissions budgets, set 15 years in advance, create stepping-stones to the 2050 target and must be met primarily through domestic action.

New Zealand’s unique economy, however, creates challenges in reaching these ambitious commitments. In 2021, over 50% of gross emissions came from agriculture. Powered by over 80% renewable electricity, New Zealand’s biggest energy emitters were from transport and industry. At the same time, New Zealand’s growing forests created net emissions removals from land sector, which offset 21% of its gross emissions. From 2008 to 2020, New Zealand relied heavily on domestic forestry and offshore mitigation to meet its international targets and gross emissions remained relatively flat.

Since 2008, the NZ ETS has served as the government’s main climate change policy tool. By linking a regulatory limit on total emissions to an emissions price in the market, the NZ ETS incentivises companies, consumers and investors to reduce their climate impact. The NZ ETS remains the only system in the world designed to cover all sectors and greenhouse gases, although pricing has been deferred for agriculture.

What lessons can other countries learn from the NZ ETS’ inclusion of forestry? Our study revealed the following findings:

Emissions pricing has driven change in New Zealand’s forestry sector

Between 2008 to 2022, New Zealand’s ETS has proven the feasibility of including forestry in an ETS at a sectoral level.

A successful cross-sector carbon market has been established in New Zealand and a significant proportion of post-1989 afforestation (new forest planting and growth) has been registered in the NZ ETS (60% as of September 2022). With broad coverage and clear liability provisions for landowners, the system has overcome key challenges to project-based forest crediting: accounting for leakage (where emissions are simply displaced, instead of actually reduced—such as deforestation moving from a protected plot of land to an unprotected plot) and permanence (where credited sequestration is reversed, such as when a protected forest sheds its stored carbon due to forest fires or illegal logging).

The research found emissions pricing influences forestry outcomes. Deforestation has generally declined with increasing emissions prices and increased when emissions prices dropped. Similarly, rising emissions prices have incentivised afforestation. This effect has been most pronounced following NZ ETS reforms in 2020. As emissions prices rose from NZ$12.7 to NZ$23.9  between 2016 and 2020, levels of net annual afforestation leaped from 2,692 hectares to 40,145 hectares (see the figure; note prices are in 2006 NZ$).

Figure: Annual area of net afforestation of post-1989 forest land and deforestation of pre-1990 forest land in New Zealand. The NZU price is shown by the black line beginning once the NZ ETS was implemented. NZU data are from Jarden and afforestation data from the New Zealand Ministry for the Environment. Refer to the paper for references.

In sum, the NZ ETS has clearly boosted forestry’s contribution toward New Zealand’s climate change targets over 2008–2020 and set the stage for further afforestation to accelerate under current policy settings.


Policy uncertainty, price, and the system’s shortcomings have dampened its impact

Despite this effect, over the first decade of operation, many factors likely limited the effectiveness of the NZ ETS in changing forestry outcomes. And recently the scheme has driven forestry removals but the focus on forests may have weakened the effect on gross emissions reductions in other sectors.

According to landowner surveys, extended periods of policy uncertainty impacted afforestation and deforestation decisions. This included reviews of the NZ ETS (in 2009 and 2011) along with international negotiations on post-2012 forestry rules. Moreover, weak emissions price signals (particularly over 2011–2016), along with an expectation that emissions prices would not recover, may have discouraged some landowners from investing in new forests. The NZ ETS had an unlimited linkage to the international Kyoto market from 2008 to mid-2015 and this markedly depressed emissions prices. For example, millions of seedlings established while emissions prices were high were mulched in 2014, when it became uneconomic to plant them after emissions prices fell due to linkage. When prices began to rise after the ETS was delinked from the international market it took several years for investors to begin to plant trees in response. And a hard price ceiling in place from 2010 through 2018 continued to constrain emissions prices after delinking occurred.

Through 2020, the NZ ETS resulted in increased afforestation but not costly emissions reductions in other sectors. Over 2008 to 2020, national gross emissions (excluding land use, land-use change and forestry) declined only 2.6%; however, this was during a period of growth in population, income and dairy production.  In part, the past failure to invest in significant emissions reductions in other sectors enough to much more than offset those growth pressures is likely to be due to the same forces – weak price incentives and policy uncertainty – that affected forest investments.  The option to rely heavily on forestry to help meet emissions reduction targets has also likely reduced political pressure to act in other sectors.

Forestry investment involves long time horizons, so market confidence and policy stability are crucial for harnessing the sector’s mitigation potential. Relying on blunt emissions price signals alone will not necessarily deliver desirable mitigation outcomes across all sectors.

EDF’s Chief Economist Suzi Kerr and Sandra Cortes Acosta planting trees.

Trees planted by EDF Chief Economist Suzi Kerr, three years later.

Emissions pricing for forestry has not always supported broader environmental outcomes  

NZ ETS incentives have favoured exotic over indigenous forest species, because of significant difference in mitigation costs driven by planting costs and growth rates, and driven land-use changes that impact landowners and communities in both positive and negative ways. Many Māori, New Zealand’s indigenous people, have strong interests in the system because of their large land holdings, their involvement in forestry businesses and their commitment to kaitiakitanga (guardianship).

As of September 2022, 89% of the forest registered in the NZ ETS was exotic. Although all forests provide co-benefits, indigenous and mixed-species forests can support higher levels of biodiversity and may offer improved resilience to pests, natural disasters, and climate change impacts. Many stakeholders have raised concerns about the environmental, economic and cultural implications of extensive exotic afforestation, both plantation and permanent, while others emphasise that exotics produce faster climate benefits and can help supply the bioeconomy. Some see the potential for exotic forests to transition to indigenous over time.

In February 2023, Cyclone Gabrielle sent forestry slash and other woody debris across northern communities on the North Island, contributing to further devastation that prompted a ministerial inquiry. The panel reported that “forestry has lost its social licence because of its activities.” Its recommendations included restrictions on land use and forestry practices in the region as well as NZ ETS reforms.

Further reforms are needed to both the NZ ETS and other policies to shape forestry’s contribution to climate change mitigation and broader environmental outcomes.


The NZ ETS will not remain fit for purpose in coming decades. Under current cap and price settings, high levels of afforestation will depress emissions prices, slowing decarbonisation in non-forestry sectors unless they are also regulated in other ways. As key sectors like stationary energy and transport approach zero emissions, the demand for forestry credits in the ETS will diminish. However, forestry removals will still be required in the long term to offset unavoidable emissions outside the ETS. New Zealand’s Climate Change Commission called for changes to the treatment of forestry in the NZ ETS in its 2023 draft advice report on New Zealand’s second emissions reduction plan.  In June 2023, the government initiated a policy review of the NZ ETS to consider both relative incentives for emissions reductions and forestry removals and policy settings for permanent forestry,

In Aotearoa New Zealand, emissions pricing has proven to be a powerful tool in driving afforestation and discouraging deforestation at a national scale. Enabling the NZ ETS to deliver an environmentally desirable and socially acceptable balance between gross versus net emissions reductions, plantation versus permanent forests, and exotic versus indigenous species in the longer term will require further reforms to the NZ ETS as well as land-use policy and regulation.

Catherine Leining contributed to this post in her capacity as a Policy Fellow at Motu Economic and Public Policy Research and not as a New Zealand Climate Change Commissioner.

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To make nature financing more equitable, we must understand how NCS credits are used

This blog was authored by Julia Ilhardt, former High Meadows Fellow, Global Climate Cooperation. It was originally published on EDF’s Climate411 blog channel. Read the full post here

At the end of last year, 196 nations agreed to the historic Global Biodiversity Framework, which includes the goal to protect 30% of land and sea area by 2030. Still, nature is woefully underfinanced, with investments in nature-based solutions needing to double to USD 384 billion per year by 2025, according to UNEP. 

Using crediting to incorporate natural climate solutions (NCS) into carbon markets is one way to generate significant finance for nature while cutting emissions, and it’s gaining public and private sector attention. However, both producing and using credits raises important equity considerations. A new paper from EDF focuses on the issues around use, including how credits may impact the communities surrounding polluting facilities. This blog lays out the framing, key issues, and potential solutions, with more detailed analysis available in the paper. 

To understand equity, ask the right questions 

Achieving environmental equity means ensuring that both the processes and outcomes associated with policy decisions are fair and just. Environmental benefits and burdens must be balanced. Everyone is entitled to a healthy ecosystem. 

Across academic and civil society literature, environmental equity is often framed along three dimensions: recognitional, procedural, and distributional equity. The graphic below defines these dimensions of equity and provides examples of questions that carbon market stakeholders should ask when designing and implementing crediting programs. 

In the context of NCS crediting, equity questions arise on both the demand and supply side. On supply, issues include the rights and priorities of communities generating credits, benefit sharing arrangements, and stakeholder consultation processes. On demand, these include the impacts of credit use on local co-pollutants, disparities in environmental burdens, and the distribution of benefits.  

In some cases, supply and demand considerations may come into tension, for instance when credit usage could exacerbate a community’s air pollution on the demand side but support local livelihoods on the supply side. 

Though equity should ultimately be considered holistically, this paper focuses specifically on demand, digging into the details and evidence around the use of NCS credits. EDF’s forthcoming NCS Crediting Handbook will include a chapter on supply side issues, including a section on safeguards for people and the environment. 

Read the full post here.

The NCS Crediting Handbook will explore other components of equity and integrity, including questions around the generation and transaction of credits. Visit our NCS Crediting Handbook and Briefing Series page for upcoming briefs, and to get the latest on our work in the NCS crediting space. This and other research are also part of EDF’s Economics Discussion Paper Series.

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Fueling Research, Advocacy, and Community: Economic Internships at the Environmental Defense Fund

The climate crisis requires not only urgent action, underpinned by a robust framework of proven economic-driven solutions to effectively address its multifaceted challenges. Given the increasing urgency, we need economists at the forefront, conducting rigorous research and informing policy decisions. Recognizing this critical need, the Economics team at EDF is dedicated to nurturing economists who are eager to contribute to the climate fight. 

The Economics team at EDF hosts exceptional interns who make significant contributions to our work. Through internships, we aim to create lasting partnerships with talented individuals who will continue to make a positive impact in the field of economics.  

One notable past example is Dr. Christopher Holt, who focused his internship on addressing how wholesale electricity market design can facilitate the transition to a decarbonized energy system. His pre-doctoral fellow work was published in our Economics Discussion Paper Series in September 2020 and set a high precedent for future papers. Dr. Holt is still actively engaged in environmental economics and is working for the Institute for Policy Integrity at NYU School of Law, a close collaborator of EDF. 

As we forge ahead, we are dedicated to fostering an inclusive and collaborative environment where emerging economists can flourish. This summer, we are thrilled to welcome our talented economic interns and contractors joining us to support our mission. 

Meet the Summer 2023 Economics interns below!


Anna Cheyette, Economics and Policy Intern

Joining us from UC Berkeley’s Master of Public Policy program, Anna is passionate about energy and environmental policy. With a background in economics and environmental studies, her experience at the University of Chicago’s Energy and Environment Lab greatly enriches our team. Anna is primarily supporting our Economics Team’s work on methane emissions from oil and gas, advancing analytical tools, and contributing to federal and state-level advocacy efforts in North American oil and gas methane work. 


Xian Hu, Contractor, Doctoral, Temp 

Xian, a PhD student in the School of Economics and Management at Tsinghua University and a visiting fellow at Harvard China Project, brings a wealth of expertise in environmental policies and global economic development. She has expertise in applying empirical approaches and developing general equilibrium models to evaluate the implications of China’s energy transition and global carbon price policies for various stakeholders. Together with EDF’s Doctoral Intern in Climate Finance, Xian is supporting EDF’s work on climate finance in China, including examining the role of both public and private sources of finance, with specific attention to China’s Emissions Trading Scheme (ETS). 


Emmanuella (Ella) Obeng, Doctoral Intern, Climate Finance 

Ella is currently pursuing her PhD in finance at CU Boulder, specializing in the mobilization of finance for climate mitigation in developing countries, including the potential role of carbon markets. Collaborating closely with Xian Hu, Ella is assisting EDF in crafting a dialogue with external participants on climate finance and helping EDF to identify open research questions that would benefit from deeper investigation. 


Max Snyder, Doctoral Economics Intern, Climate Resilience  

Max, currently pursuing a PhD in environmental economics at UC Berkeley ARE, is dedicated to exploring the potential of public policy in mitigating climate risk and promoting a clean energy transition. Drawing on his valuable expertise from his previous roles at the Energy Policy Institute and the Environmental Law and Policy Center, Max is supporting EDF’s research on the Risk Rating 2.0, a recent reform to the United States’ National Flood Insurance Program. He is analyzing the effects of this reform on climate adaptation investments and access to flood insurance across diverse socioeconomic groups. 


Margerie Snider, Federal Climate Innovation Graduate Intern 

Margerie is a Master of Science student in the School of Environment and Sustainability at the University of Michigan, specializing in environmental policy and justice. She brings a wealth of experience in data analysis and visualization from her previous role at the Department of Justice. Her current work with Detroit’s Office of Sustainability focuses on accelerating solar development in the city. At EDF, Margerie is supporting projects at the intersection of economics and climate innovation, including the development of a Climate Vulnerability Index. She conducts research to identify drivers of vulnerability across U.S. communities and analyzes the potential role of hydrogen in a clean and equitable energy transition. 


Helena Garcia, Doctoral Intern, Resilience 

Joining us from the Environment, Ecology, and Energy PhD Program at UNC-Chapel Hill, Helena specializes in using machine learning methods to investigate the impact of consecutive flood events in North Carolina on economic stability and probabilities of migrating for households of different socioeconomic backgrounds. At EDF, she is helping to explore flood insurance penetration and differential claims treatment using National Flood Insurance Program (NFIP) data. 


Brigitte Castañeda, Contractor, Doctoral, Temp 

Brigitte, a Ph.D. student in Economics at the Universidad de los Andes in Bogotá, Colombia, has a strong background in sustainable finance, the energy transition and climate policies. She is currently examining the green labor market in developing countries and analyzing the effects of a carbon tax. Brigitte is supporting EDF’s Just Transition work from the developing country perspective. Her role involves understanding lessons learned and developing policy options to protect workers, communities, and maximize employment benefits for disadvantaged individuals during transitions towards an inclusive and just transition. 


Minwoo Hyun, Doctoral Intern, Just Transition 

Minwoo, a Ph.D. student in Economics at the University of California, Santa Barbara, has a comprehensive background in chemical engineering, environmental policy, air pollution impacts, and power sector decarbonization. His current research explores the local fiscal conditions, labor reallocation costs of coal decline, crime and health impacts in coal-rich communities, and welfare consequences of pollution alerts. Minwoo supports EDF’s Just Transition work from the developed country perspective, focusing primarily on the United States, to analyze lessons learned from previous experiences of workers and communities during transitions. His goal is to identify policy options that promote an inclusive and just transition, maximizing employment benefits for disadvantaged workers. 


Shiv Goel, Project Management Intern 

Shiv, a sophomore at Cornell University studying Environment & Sustainability and Information Science, brings a strong interest in networks, organizational behavior, sustainable markets, and ocean conservation to his role at EDF. Shiv is helping to integrate best practices into our team’s work plans and optimize our process for the Econ Newsletter by conducting data analysis and collaborating closely with the communications team to provide actionable insights for improving engagement.

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Addressing Gaps in Disaster Recovery for South Carolina Households through Inclusive Insurance Models

This blog was authored by Environmental Defense Fund economists, Karina French and Carolyn Kousky. See their report here. 

South Carolina is no stranger to the devastating effects of extreme flooding, with hurricanes like Matthew and Florence leaving a trail of destruction in their wake. As the state faces escalating flood risk due to climate changes and continued building in vulnerable areas, it is crucial to address existing gaps and inequities in disaster recovery. In a new report, we provide a comprehensive review of the current resources available to households for post-disaster economic recovery in South Carolina and explore the extent to which innovative disaster insurance policy designs can fill these gaps and improve equity in recovery.  Read More »

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Understanding how communities are vulnerable to climate change is key to improving equity and justice

Hurricane Harvey dropped more than 60 inches of rain on the greater Houston region in 2017.

This blog was co-authored by Dr. Grace Tee Lewis, Senior Health Scientist, Climate and Health

Last month, Environmental Defense Fund and Texas A&M University published a new study that found all states in the U.S. are at risk from the effects of climate change, particularly neighborhoods experiencing disproportionate environmental harms and risks, health disparities and infrastructure problems. We published our research paper, Characterizing vulnerabilities to climate change across the United States, in response to a growing push to identify and address these climate injustices and inequities. This movement is exemplified by the Biden Administration’s executive order to ensure environmental and economic justice are key considerations in how the administration governs on the issue of climate change.  

With the Biden Administration’s recent legislation – including the Inflation Reduction Act, Bipartisan Infrastructure Bill and Creating Helpful Incentives to Produce Semiconductors and Science Act (IRA, BIF and CHIPS) – we have a historic opportunity to tackle decades of systemic neglect in low-income neighborhoods and communities of color. We can help level the playing field by directing resources to build resilience and adaptability in the right places across our country.

Read More »

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“Nothing about us without us: The case of JREDD+ in Colombia.” The importance of including all stakeholders, especially affected communities, at the decision-making table.

This blog was authored by Environmental Defense Fund economist Luis Fernández Intriago and Universidad de Los Andes professors Jorge García López and Julián Gómez Gil.

The saying “Nothing about us without us” is widely used among Indigenous Peoples and Local Communities to emphasize the importance of involving them in policies that govern their territories and communities. The expression serves as a call to action, highlighting that those affected by specific issues should be included in making policy decisions around them.

However, policymakers and researchers consistently decide on policy design and construct models without consulting and considering the opinion of the affected communities and key stakeholders. Efforts to stop deforestation are a clear example of this: new policies go into place without any input from communities that rely on forests for their livelihoods, cultures, or basic survival. These local and Indigenous communities are an untapped source of wisdom, leadership, and capacity to support efforts to conserve rainforests.

To remediate this, Environmental Defense Fund, Universidad de Los Andes, and the Centro de Estudios Manuel Ramírez, right since the beginning of the project, started an engagement process in Colombia to demonstrate how engaging key local and Indigenous stakeholders could lead to better policy design to protect forests in the country.

Why Colombia?

Colombia faces enormous challenges with deforestation: 184,000 hectares per year of natural forests were destroyed between 2017 and 2021. Deforestation accounts for 33% of the country’s total climate-warming greenhouse gas emissions. Thus, halting deforestation is critical for achieving the country’s Paris Agreement commitments (called “Nationally Determined Contribution” or NDC).

As in many other countries, the AFOLU (Agriculture, Forestry, and Other Land-use) sector is not subject to regulations in Colombia. However, this presents an excellent opportunity for the Colombian government to leverage private finance from national sources—such as through the upcoming Colombian Emissions Trading System[1] , which must be implemented by 2030—and international sources —such as the LEAF Coalition— using jurisdictional REDD+ (JREDD+) crediting. JREDD+ programs extend the REDD+ framework for sustainable forest management and conservation by addressing deforestation at the regional or ‘jurisdictional’ level—protecting forests across wide regions instead of plot-by-plot and even resources.

Climate mitigation is now a top priority for many individuals, governments, and corporations, creating strong demand for ways to stop deforestation in tropical forest countries in high-integrity ways rapidly. Our research finds that government funding required to reduce deforestation levels consistent with Colombia’s NDC could drop from $900 to $75 million when national and international private finance is harnessed.

The Study

Our study aimed to identify inclusive, equitable ways to include JREDD+ in Colombia’s climate mitigation policies. We established three parallel and interconnected pillars: first, we focused on engagement with primary stakeholders. Second, we constructed a model to illustrate how JREDD+ may help Colombia meet its NDC target cost-effectively while benefiting local communities. Third, we prepared a policy design that government can use as a guideline to integrate these approaches.


At the beginning of the project, we knew we had to start by engaging with stakeholders to explain JREDD+. Our ultimate goal was to include the feedback and reflect relevant stakeholders’ needs—including the national government and public institutions, Indigenous groups, smallholder’s associations, NGOs, and educational institutions—in our results. We knew that communication between our research group and people who could be interested or potentially affected by the research project was crucial if we were to produce and share credible and legitimate knowledge. The knowledge acquired through these interactions can set the stage for an effective and equitable JREDD+ program in Colombia.

Source: Photos by Julián Gómez Gil.

In 2022, we hosted four engagement sessions in Tena (April 23 & 24, Cundinamarca), Florencia (May 5 & 6, Caquetá), Bogotá (October 14), and Mocoa (October 26 & 27, Putumayo). These sessions focused on the participation of representatives of the Amazon Indigenous peoples (OPIAC, OZIP, ACILAPP, etc.[2]),  other local communities and land users (farmers, cattle ranchers, and smallholders associations), NGOs (Amazon Conservation Team, WWF, Natura Foundation, Fondo Patrimonio Natural, etc.), private organizations (Emergent, Amazon Global, Permin Global, ALLCOT, Asocarbono, etc.) and national and subnational government institutions (Ministry of Environment and Sustainable Development, Sinchi Institute, Corpoamazonía, etc.). During these community meetings, we worked hard to improve participation but also set realistic expectations, and engaged in open-ended discussions where training was provided to the attendees regarding the formulation of projects of conservation, carbon markets, REDD+ projects, JREDD+ programs, guidelines of the ART-TREES standard and the operation of the LEAF call for proposals, through technical presentations and educational activities, and promoting the constant participation of the actors to create scenarios for debate and resolution of doubts.

In the same way, these spaces were used to formulate questions to the different actors, which were resolved both through open debate dynamics and through collaborative work activities, taking advantage of a closer and more direct dialogue with each one of them and a greater availability of time to delve into topics of interest. This form of participation was very well received by the Indigenous Peoples, who invited the work team to implement similar activities more frequently and in the most remote territories so that capacity building can be held and the local context is better perceived.

Given the scale of a JREDD+ program, the interaction and negotiation between local actors, institutions, intermediaries, and current individual REDD+ projects are essential. According to the discussion with stakeholders, a common problem associated with the participation of key actors and interested parties in individual REDD+ projects is that these actors tend to be treated as beneficiaries rather than partners. As a result, local communities and interested parties perceive that the design of incentives, local capacity, delivery mechanisms, transparency provisions, and distribution are only partially fair. This led us to consider fairness, representation, and transparency as critical components of policy design.


We modeled a mechanism to integrate the potential funds generated with a JREDD+ and a national emissions trading system (ETS) to accelerate the reduction of emissions from deforestation. Mainly, we considered a scenario under which Colombia applies the LEAF coalition model on a national scale of a JREDD+ at the national level. At the same time, to ensure representativeness, bargaining power, effective resource administration, and a fair distribution of benefits, we proposed an internal administrative division of Colombia into five jurisdictions: 1. Caribbean region; 2. Andean region; 3. Pacific region; 4, Orinoquía region; and 5. Amazon region.

Our modeling revealed that integrating a JREDD+ program with a National ETS could be a cost-efficient mechanism to reduce the externality costs and disincentivize the overall GHG emissions of Colombia following the country’s regulatory framework, the emissions trajectory, and the mitigation objectives. These mechanisms could be used to generate and allocate economic resources to ensure efficient emissions mitigation, the incorporation of safeguards (such as environmental education), and the minimization and/or compensation of adverse socio-environmental interventions. In addition, the modeling results imply the generation of co-benefits (economic, social, and environmental) that contribute to the development of ethnic communities, local communities, and other private land users.

Policy Design (Results)

After receiving input from stakeholders and results from our model, we prepared a policy design that the government can use as a guideline to integrate JREDD+ inclusively and equitably. Here are our results:

  • Inclusive negotiating for benefits-sharing: To build a JREDD+ in Colombia, stakeholders demand a significant role in negotiating the benefit-sharing system. In this regard, national and subnational agreements should be established to achieve at least the following three main objectives: 1) provide effective monetary and non-monetary incentives; 2) contribute towards building legitimacy through a fair and equitable distribution of resources, responsibilities, and bargaining power; 3) include local actors in the decision-making process and recognize them as partners rather than beneficiaries.
  • Use vertical and horizontal benefit-sharing to equitably distribute benefits and negotiating power: A vertical benefit-sharing approach uses national voluntary and regulated market funds (ETS) to distribute benefits among national and subnational governments, non-governmental actors, intermediaries, NGOs, and facilitators. These transactions are carried out to ensure the operability of the program. On the other hand, horizontal benefit-sharing seeks to distribute the remaining benefits as incentive payments among and within communities, households, and local stakeholders. A fair design of benefit sharing must be vertical and horizontal to guarantee the bargaining power of the actors involved in deforestation and conservation activities.
  • Centralize decision-making, but include regional representation: Our main policy proposal is to centralize the decision-making with a single National Board of Directors. This board would be responsible for making central decisions and directly managing the resource flow. On the other hand, a Jurisdictional Board of Directors composed of representatives from each of the six jurisdictions must be created to guarantee the representativity and bargaining power of the different actors. This board will function as a participatory body overseeing operational decisions that a respective Jurisdictional Operating Unit should execute. With this management structure, it is possible to use the three sources of funding (JREDD+ results-based payments, the ETS, and the carbon tax) and to effectively distribute the benefits among implementing partners (NGOs, private sector, etc.) and land users (Indigenous Peoples, local communities, farmers & ranchers, etc.)
  • Leverage allowances from emissions trading system to support efforts to conserve forests: In our study, we assumed that much-needed finance for forest protection may come from two different sources: a nationally managed fund constructed using resources from the international voluntary market and from a locally regulated market (a national ETS), where regional and local public and private institutions intermediate implementation with local communities; and a project-based fund where national or international funding goes directly to projects, with resources from both the national general budget and payment by results or other international cooperation (JREDD+). To integrate both mechanisms and be consistent with Colombia’s climate law, we propose that 20% of the cap established by the ETS can be offset with forestry emissions reductions using a jurisdictional approach. In that way, the allowances allocated by the ETS to the forestry sector will generate an additional source of income to reduce deforestation.

You can read more about our study and policy design here. In general, our recommendations in this project were derived and enriched from the participatory processes we carried out. The participants’ comments helped us to refine, redefine, and validate these recommendations.

As Colombia works toward implementing its Emissions Trading System by 2030, we encourage them to consider these recommendations to inclusively and equitably incorporate JREDD+. We encourage them to consult with stakeholders such as Indigenous and locally affected communities to develop climate policy.


[1] The Colombian Emissions Trading System is scheduled to be implemented by 2030 according to the Law 1931 of 2018 and Law 2126 of 2021.

[2] OPIAC- National Organization of the Indigenous People of the Colombian Amazon, OZIP- Organization of Indigenous People of Putumayo Department, ACILAPP- Association of Traditional Authorities of the Indigenous Peoples of Leguizamo Municipality and Upper Predio Putumayo Territories




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