An international mechanism to reduce emissions from deforestation using carbon payments (REDD) can be leveraged to make payments for forests' biodiversity as well. Paradoxically, under conditions consistent with emerging REDD programs, money spent on a mixture of carbon payments and biodiversity payments has the potential to incentivize the provision of greater climate benefits than an equal amount of money spent only on carbon payments. This paradoxical result arises when diversifying payments across multiple services allows a funding agency to spend less on additional rents to existing suppliers of avoided deforestation and more on incentivizing the participation of new suppliers.

Where benefits and costs accrue at different scales, financial intermediaries are needed to facilitate relations between global-scale buyers and local-scale providers of carbon sequestration and storage. These intermediaries can help to collect and distribute payments and to promote the scheme to potential beneficiaries. The benefits distributed should compensate for the transaction, opportunity and implementation costs incurred by stakeholders for providing ecosystem services. Therefore, calculating the costs and understanding who incurs them are essential for benefit sharing. Targeting benefits according to a set of criteria that match the objectives of the specific mechanism increases the mechanism’s efficiency. As the level of performance-based payments may not be able to compete with the opportunity costs of highly profitable land uses, performance-related benefit-sharing mechanisms should be focused on areas with moderate opportunity costs. Benefits should be divided into upfront payments to cover startup costs and to give an initial incentive for participation, and payments upon delivery of ecosystem services to ensure adherence to conditionality.

Drawing on the literature concerning effective Payment for Ecosystem Services (PES) programmes and on more than 30 case studies, this book aims to identify good practice in the design and implementation of PES programmes so as to enhance their environmental and cost effectiveness.

Reducing Emissions from Deforestation and forest Degradation (REDD) attempts to address climate change from one angle – by paying developing countries to slow or stop deforestation and forest degradation. Trumpeted as a way to both mitigate climate change and assist countries with development, REDD was presented as a win-win solution. However, there have been few attempts to understand and analyse the overall framework. Why REDD Will Fail argues that the important goals will not be met under the existing REDD regime unless the actual drivers of deforestation and forest degradation are diminished. The book delves into the problematic details of the regime, ranging from; national capacity to monitor results, the funding mechanism, the definition of a forest, leakage, and the impetus behind the drivers of deforestation and forest degradation. As the international community rallies around REDD and developed countries and companies are willing to commit substantial amounts to implement the scheme, this books seeks to address whether REDD has the potential to achieve its purported goals. This is an important resource for academics and students interested in the policy and management aspects of mitigating climate change, environmental policy, international relations and development studies as well as policy makers involved in the REDD process.