Information for G02489
The costs of avoiding deforestation. Update of the Report prepared for the Stern Review of the Economics of Climate Change
This report updates the estimates of opportunity costs produced for the Stern Review in October 2006 to take account of recent upward trends in commodity prices. The objective of the original report was to support the work of the Stern Review on avoided deforestation by producing a global estimate of the cost of cutting the rate of deforestation in half within a decade. This work would include confirming or otherwise the costs of avoided deforestation per hectare by country available so far and providing further country numbers where possible. The Terms of Reference set out three elements that payment to avoid deforestation at country level would need to cover: 1. Value of the economic activity per hectare that leads to deforestation i.e. usually agriculture – this will of course vary between countries reflecting different alternative land uses. For example, coffee, cattle farming, soya etc. 2. Administration, monitoring and enforcement costs for the government. 3. An incentive element to undertake this effectively. Key countries highlighted in the Terms of Reference to included in this estimate were Brazil, Indonesia, Papua New Guinea, Cameroon, and Congo for the first element. This was because these countries all have large areas of tropical forest and are experiencing relatively high rates of deforestation. Countries like Costa Rica and China, which have taken action to address forest loss, were also identified in the TOR because of their potential importance for the second element of administration, monitoring and enforcement of reduced deforestation. This report sets out the approach to calculation and results for the first two elements and provides details of the updates that have been made to the original estimates for opportunity cost. Some changes to the estimates of transactions costs for payments for environmental services schemes are also presented.