REDD+ Project Scandals: What Does the Future Hold for the Fight Against Deforestation?

REDD+ carbon credits for avoiding deforestation have recently come under fire in the media^[1][2] for their alleged ineffectiveness in combating climate change. What does this mechanism entail? Why focus on preventing deforestation rather than simply planting trees? What role does the land sector play in climate change? How could the current system be improved?

The land sector plays a central role in emissions mitigation…

Global carbon neutrality—which Article 4 of the Paris Agreement sets as a goal to be achieved by mid-century—requires balancing human-caused emissions and removals. The land use, land-use change, and forestry (LULUCF) sector is therefore crucial, as it is the only sector capable of contributing to both dimensions of carbon neutrality, that is, it must both reduce its emissions and increase its removals. However, The land sector is now largely a net emitter, with a net balance estimated at +5.5 GtCO2/year for anthropogenic activities due to deforestation, accounting for more than 15% of human-caused emissions^[3].

In most pathways consistent with a 1.5°C temperature rise, net CO2 emissions from the AFOLU sector^[4] reach zero by mid-century and then become negative (IPCC SR15). Slowing and halting deforestation is therefore logically one of the priorities in the fight against climate change.

…as well as other key environmental factors

Furthermore, the socio-environmental benefits associated with forest conservation go far beyond the carbon that is sequestered or released. The biophysical processes involving tropical forests (albedo, evapotranspiration, interaction with wind, biological aerosols) have an effecton the global climate equivalent to 50% of the effects associated with carbon sequestration^[5]. Furthermore, according to IPBES, habitat loss is the leading driver of biodiversity loss, and the conservation of particularly rich forest ecosystems is therefore crucial to preventing a disproportionate loss of species ranges and mass extinctions. Finally, forest protection plays a key role in climate change adaptation and in maintaining numerous local ecosystem services vital to nearby communities, such as the water cycle, the microclimate, and soil protection. Forests, for example, are particularly important as “precipitation generators” not only for the forests themselves but also for downstream ecosystems that can span entire continents. Furthermore, the average temperature in tropical forests is 0.96°C cooler than in neighboring cleared areas, with more pronounced differences during the hottest periods and significant impacts on local living conditions and agricultural production.^[6].

Agriculture and livestock farming, the main causes of deforestation worldwide

Combating deforestation is therefore an essential part of the effort to limit the rise in temperatures to below 1.5°C. It has long been the subject of discussions, agreements, and commitments by institutional actors and the private sector. To that end, France published its French Strategy Against Imported Deforestation (SNDI) in 2018 to end the import of forest and agricultural products that contribute to deforestation by 2030^[7]. In addition, the latest guidelines from the Science-Based Targets Initiative for the land sector^[8] (FLAG) requires companies to make commitments to achieve “zero deforestation” by 2025. However, despite the emergence of these initiatives in recent years, and even though there are contrasting trends across countries and continents, No clear trend has emerged so far on a global scale. Only Europe—and, to a lesser extent, North America—have been net carbon sinks in recent decades for the UTCATF sector (Figure 2). Latin America, Africa, and Southeast Asia have seen very high levels of deforestation that have remained stable or increased over the past 30 years.

A remote-sensing analysis of the factors contributing to deforestation conducted by the FAO in 2020 showedthat deforestation between 2010 and 2018 was caused in nearly 90% of cases by the expansion of livestock farming or commercial and subsistence agriculture (Figure 3). And a recent study found that 60% of deforestation between 2013 and 2019 was the result of the expansion of commercial agriculture, which was illegal in two-thirds of the cases^[9]. However, implementing policies or projects capable of curbing deforestation in a sustainable manner is a long and complex process. And while combating deforestation requires regulation of the agri-food industries and appropriate public policies, addressing the challenges of deforestation demands an understanding of—and solutions to—local social and economic issues. Subsistence and commercial agriculture, access to energy, access to land, fair compensation for producers, and equitable governance are all factors that must be considered together to curb deforestation in a sustainable and large-scale manner.

REDD+, a UN mechanism dedicated to combating deforestation

One of the key initiatives to address local deforestation trends and reduce associated greenhouse gas emissions was the creation of the REDD+ mechanism in 2005 by the UNFCCC^[10]. The purpose of this mechanism is to issue and monetize emissions avoided through the reduction or halting of deforestation in the form of carbon credits. This mechanism first developed extensively within regulatory markets between countries, and then within most major “voluntary offset” standards (Verra, Plan Vivo, American Carbon Registry, etc.). REDD+ credits thus account for 25% of the credits issued on the voluntary offset market since its inception^[11], representing the second-largest volume of credits behind the renewable energy sector, and 60% of the credits issued by the land sector (ahead of forest management and reforestation projects^[12]).

The principle behind the generation of these credits is based on the calculation of avoided emissions, which are estimated as the difference between the project scenario—in which the forest is protected—and a standard “baseline” scenario that would have occurred in the absence of protection. Developing the baseline scenario is a complex process that requires field studies to understand the dynamics and local causes of deforestation. In fact, The objective of a REDD+ project is to demonstrate its ability to curb deforestation through on-the-ground actions tailored to the socioeconomic issues identified as driving this trend. These initiatives may cover a variety of areas, but must be grounded in local social and economic realities and developed in consultation with the relevant stakeholders: access to energy, changes in agricultural practices, income-generating activities, governance, access to land, etc.

Despite clear co-benefits, REDD+ projects suffer from inherent limitations

The development of a REDD+ project is part of a regional approach to the protection and sustainable use of natural resources. And the methodologies developed over the past several years by the standards support this consideration of territorial, governance, and socioeconomic development issues: jurisdictional approaches to coordinate the public sector, the private sector, and civil society; initiatives addressing governance and social impact; mitigation of the risks of shifting environmental pressures, etc. Thus, Well-managed REDD+ projects generate numerous environmental and socioeconomic co-benefits that go far beyond the mere carbon credits associated with them.

In fact, the conservation of forest areas primarily helps maintain associated ecosystem services such as biodiversity protection, water cycle regulation, and soil conservation. Furthermore, the implementation of conservation activities should, in theory, generate direct benefits for local populations through income-generating activities, education and capacity-building, or legal frameworks that support communities. Finally, REDD+ projects play a key role in developing and testing conservation approaches on the ground, and in advancing the tools at our disposal to address this extremely complex issue at the intersection of social, economic, legal, and demographic factors. Conversely, a poorly managed REDD+ project (failure to properly identify the causes of deforestation, governance failures, inequitable distribution of value, etc.) is likely to increase socio-economic and environmental risks in the area and create conflicts.

Nevertheless, despite advances in REDD+ methodologies, inherent limitations in these methods remain and will continue to exist, primarily because developing a reference scenario involves predicting the future—an exercise that is, by its very nature, unverifiable and based in part on subjective assumptions. Methodologies face epistemological limitations.

For example, developing trajectories generally requires identifying and selecting a “control” area that is similar to the project area in terms of deforestation dynamics and pressure factors. This control area then serves as a benchmark for monitoring the project, while by definition differing from the project area due to the uniqueness and complexity of each local situation. However, the baseline scenario is a key determinant of a carbon project’s potential—and thus its financial viability—since this potential is directly calculated as the difference between the baseline scenario and the project scenario. There is therefore considerable flexibility in estimating the number of credits generated;The more unfavorable the baseline scenario, the greater a project's "carbon potential".

This has two direct consequences. The first is that Relatively well-preserved forests are generally excluded from the REDD+ mechanism, despite the value of such projects: since the baseline reflects low deforestation, the carbon potential would in fact be insufficient to be monetized in the form of credits.

The second is that This mechanism structurally introduces a bias toward the development of unfavorable reference trajectories, Given that it is in the interest of all stakeholders to maximize the number of credits generated:

• For developers, because it increases the profitability of projects;
• For operators, because this increases their pay, which is proportional to the number of credits;
• For buyers, because it reduces the cost per metric ton purchased.

There is no need to assume any particular “malice” on the part of the actors: the system structurally incentivizes maximizing the amount of credits generated, and thus choosing unfavorable reference scenarios. In a sense, the market does not regulate itself.

Funding for the land sector must accelerate and evolve rapidly

The land sector is crucial overall for climate change mitigation, and halting deforestation could be the most cost-effective mitigation measure, with 3.6 (± 2) Gt CO2eq/year between 2020 and 2050^[13]. It is also essential for other key issues related to the ecological transition, such as biodiversity conservation, climate change adaptation, and water management. However, it will always be impossible to unequivocally quantify avoided deforestation—and thus the carbon benefits of conservation projects—because these quantifications will always rely on hypothetical scenarios, which are by their very nature unknowable and structurally leave significant room for interpretation in the assessment. REDD+ projects are thus ambivalent: they have the great merit of tackling a priority issue that is unavoidable and very difficult to address, but they run up against an insurmountable glass ceiling regarding the robustness of their assessment methods.

Beyond the specific question of whether to abandon or save the REDD+ mechanism, the challenge is to collectively arrive at the most appropriate and equitable financing model possible for combating deforestation. How can this be achieved? Probably through methodologies that give greater weight to non-carbon aspects (social impact, biodiversity, adaptation, etc.) and that, perhaps, are based on something other than a baseline scenario. Perhaps also through mechanisms that better align everyone’s interests toward making an effective contribution to conservation goals, rather than toward maximizing the number of carbon credits for avoided emissions. Finally, with instruments that ensure funding has the greatest possible impact on the ground, where 40% to 60% of funding is currently captured by intermediaries^[14]. Overall, continuing efforts to combat deforestation require a great deal of creativity—both in developing appropriate mechanisms and methodologies and in mobilizing greater funding—in order to fully address this urgent crisis.