THE REDD DIRECTION The potential for reduced carbon emissions, biodiversity protection and increased development A desk study with special focus on Uganda and Tanzania by Arild Vatn, Pål Vedeld, Jón Geir Pétursson and Ellen Stenslie

Overview 1.Background and some overall perspectives 2.General REDD challenges at national levels 1.Multifunctional policies 2.National decision-making and resource distribution 3.Legitimacy of policy 4.Local institutions and tenure 5.Transaction costs 6.Motivation and legitimazation 7.Additionality and leakage 3.REDD in Tanzania 1. Forest resource and degradation 2. Introducing REDD in Tanzania - policies - recommendations 4. A comparative glance at Uganda 5. Last words

1. 1 Background Almost 20% of all climate gas emissions from deforestation and degradation. Substantial potential for mitigation through reduced emissions Reducing emissions is challenging. Difficult to define and institute effective policy measures- and instruments (and establish delivery mechanisms, structures, polices), and it is demanding to measure and control these types of policies. And it is difficult to impement- it I the speed that kills! Competent implementors and facilitators at all levels. It will have high impact on livelihoods of poor people in the South. It will affect biodiversity. If done well, one could obtain reduced emissions, enhanced biodiversity preservation and development for the poor. The danger is that; effects on emissions are meager, biodiversity does not gain and the living conditions for the poor worsens. Hence, great care is demanded when formulating policies for climate mitigation in forests. Assess issues of policy legitimacy, efficiency and effectiveness. Motivation. REDD could potentially limit economic growth in the South. This because an avenue to economic growth often imply land clearing and expanding agricultural areas, large scale timber production and trade etc. This involves not only financial or economic issues, but also moral, rights and legitimacy of overall policies.

1.1 Background REDD brings in new dimensions to traditional deforestation policies; with new sets of actors, arenas, sectors and interests into already existing complex organisational and institutional settings. Can also learn from other experiences; like PAs and CBNRM and even PES now in Africa.. REDD presumes; – An international agreement concerning its role and format –An international governance structure (architecture) to distribute the resources involved and –National governance structures in countries where REDD activities are supposed to take place to secure that measures are instituted on the ground –Local governanace institutions for competent, coordination, implementation/facilitation and monitoring evaluation-

1.1 Backgound Forests are both sinks and sources of carbon. In the present climate change agreement – the Kyoto protocol – only sink measures are included. Both afforestation and reforestation can be carried out under the so-called Clean Development Mechanism (CDM). (Very few are) The present discussion concerns whether one in a post- Kyoto agreement should also include reduced emissions from forests – from reduced deforestation and forest degradation – the so-called REDD strategy. REDD plus opens for afforestation/reforestation and sustainable forest management activities

1.2 Report problem formulation 1. Evaluate a set of general national challenges concerning putting REDD projects into practice; policy goals, measures, instruments, design, efficiency, effectiveness and legitimacy.. Also based on PES experiences 2. Assess challenges for introducing REDD in Uganda and Tanzania and offer recommendations for a REDD architecture

1.3 What is governance? Environmental governance to refers to the set of regulatory processes, mechanisms, arenas and organizations through which political actors influence environmental actions and outcomes. Governance is not the same as government. It includes the actions of the state and, in addition, encompasses actors such as private businesses and civil society through communities, and partly NGOs (Lemos and Agrawal). Any regime implies a particular power and authority distribution- markets – and NGOS are socially constructed institutions- not Gods gift to man.. There is an emergence of new hybrid governance models; more markets, NGOs and ”civil society”- in addition comes the globalization inputs. The state under attack from above and from below. REDD debates feed into this.

1.3 Governance and REDD architecture The structure or design of policy planning and implementation and the different actors involved is in REDD terminology; the architecture; Actors have different sets of values, norms, competences, powers. Inclusion or exclusion impact policy outcomes. Private, state, civil society-act differently* Structures include trades, markets, negotiations, command. Influence actors strategies and behaviour, costs, and motivations. Choice of architecture crucial for policy goals, implementation and outcomes at all levels..

1.3 International governance This report does not deal much with this but we briefly discuss; Fund or/versus compliance market (generate funds through selling carbon credits) Policy, programme or project based

International fund (national/state) Individual landowner and or communities Payment (negotiated) Receiving state Voluntary agreement (negotiated) Command (internal Subsidy/auctions (redistr. /market) Legal regulation (external command) Individual landowner and or communities Individual landowner and or communities (Local) forest authority International (national) fund donation regime Interaction forms Actors

- Indviduals - Firms - States Payment (market/ negotiated) Intermediary NGO or firm Voluntary agreement (negotiated) payment (negotiated/ market) Project at Individual landowner and or communities level Compliance market regime with intermediary Interaction forms Structure Project at Individual landowner and or communities level

1.3 International governance We believe that a fund based system with a program orientation is the better solution. Some argue that compliance* markets will be most efficient and be able to raise the most resources. We doubt this. Using markets to transact over environmental goods (public goods) is costly as it is very demanding to define the good – e.g., carbon sequestered in forests – and secure that what is paid for is delivered. Market flooding can become a problem with offset market. Moreover, to the extent other goals are involved – i.e., biodiversity protection and poverty alleviation – a pure carbon market will not deliver as demonstrated in the experiences with CDM. Efficiency here does not imply to find the cheapest carbon mitigation options, but finding solutions that gives the wanted results along all dimensions involved. This also implies to include a series of other instruments than market trades. This is difficult to do with compliance markets. The two systems have very different steering or governance options NB: Easier with fund based system if raising funds kept apart from distributing them - can be an advantage in countries with weak governance structures

1.3 International governance Finally, there is no reason why an international REDD fund could not be part of a compliance system making a fund and a market solution equally effective in attracting money if that becomes a problem. However, the arguments we find the most persuasive may not be the ones winning in the ‘power game’ of international negotiations. We have framed our analysis by assuming that there will be an international REDD fund established distributing money to national programs. While some of the analyses in this report are relevant independent of the chosen international architecture, some would not be of special interest if a compliance market solution focused on projects is chosen.

2. REDD challenges at national levels Overview 2.1 Is it possible to create a situation where REDD both results in reduced climate gas emissions, increased biodiversity protection and reduced poverty – a win-win-win solution? Multigoal 2.2 What seems to be promising national structures to a) decide about the allocation of REDD resources and b) distribute these to measures on the ground? 2.3 What do various property rights institutions imply for the formulation of REDD strategies and how can the interests of people whose access to natural resources that are weakly protected be secured? 2.4 What are the costs of setting up and running different governance systems for environmental resources – transaction costs? 2.5 What factors are important to secure systems that are legitimate and motivate actors at different levels to fulfill the goals set? 2.6 What are the challenges faced when trying to secure that REDD policies are additional and that leakage can be avoided?

2.1 Multiple goals Political goalsIssues Carbon sequestered - Halting deforestation and degradation pos.for biodiversity - Not always same geog. areas cheapest for cons. and sequestration - Depends on species used - If afforestation allowed (REDD plus) with (plantations and or) non-native species; threat biodiversity, but reduce pressure on native forests - Maximize carbon may not optimize biodiversity Biodiversity - Increased forest protection by halting deforestation and degradation is positive for biodiversity; - But can restrain especially poor people, most dependent on forest resources and lead to poverty. Rich biodiversity also rich agr.lands, for NTFPs etc. and high population densities- high opp. costs Poverty - In general; payments may secure increased incomes for local people- - Increased forest protection by halting deforestation and degradation prevents ongoing economic activities - However, challenge to address the poorest people; often larger owner receive. Poor people excluded- REDD contribute to increased poverty. - REDD can increase land demand, land prices and lead to more poor people without land or resource access Secure winwinwin - Pro-poor, country and context dependent policy in REDD - Transfers be larger than present opportunity costs to generate development

2.2 Distribution and decision-making Should incoming funds be part of general national budget or kept separate? If separate, how and by whom? Seems wise with a separate transparent national ”REDD fund” managed by existing administration!? REDD needs to be coordinated between sectors; espec. forest, agriculture, energy  cross-sectorial program with forestry as focal sector Political pressures between market and state here; role of state? but one does need national authority involvement due to the rather complex policy context, multi-goal, cross-sectorial..prevent leakage among others Properties of environmental goods demand participation; command; difficult with only markets; but markets may be involved at lower levels Governance systems becomes a focal challenge; efficiency, transparancy, legitimacy; building new systems is costly Need a legitmate and independent control system for each country with both national and international representation- and an indepenent technical control and monitoring unit.

2.3 Legitimacy of policy Policy trade-offs between economic efficiency, ecological effectiveness and political and social legitimacy as criteria for successful policies Transferring funds to local communities can obviously improve state/community relations; but –Easy for funds to disappear also on the way down.. –Easy to transgress or override existing social institutions, values,norms and rights both in protecting areas and in establishing monetary payment systems; will be conflict ridden and costly –Can alter relative land prices, land rent and land availability; –Poor and landless people may lose on this. But REDD can also create employment; but often sporadic, ill distributed and erratic trickle-down (PES experiences) The REDD policy has to deliver both on goals and in relation to efficiency, effectiveness and distribution to be legitimate- or?

2.4 Local institutions and tenure Rights, both to and of resources are embodied in tenure arrangements. Each REDD regime must analyse and understand thoroughly the country specific land tenure structure of the forest estate. Rights also involve issues around command/duty versus compensation or a mix (polluter pays versus provider gets principle). Subsidy or tax..Is deforestation an accepted right and present levels always the reference point? Only if poor people? Wasungu? The more formal rights, compensate!?! Different policy instruments are found to demand different rights structures. The rights structure in respective country and region will therefore significantly impact selection of policy instruments for the national REDD regime. Recognizing/formalizing (informal) land rights is a complicated process that many developing countries have struggled/struggle to implement. It will hardly be within reach of the REDD regime to intervene in those processes. But lack of title increases uncertainty and may restrain buyers..

2.4 Rights issues and future REDD structures Although local communities may not have formalized property rights to and tenure of resources, policies to protect ecosystem services can be crafted with multiple instruments that secure equal distribution of benefits. Implementing REDD can include strong negative effects on local people’s rights to land and related resources, especially for poor people. Land grabbing and exclusion by the more powerful (including gov.) are both processes of concern that need to be accounted for in any REDD strategy. REDD presumes well-functioning governance structures at local levels. Equitable distribution of benefits from PES projects can be achieved where resources are under customary tenure, recognizing the traditional userights There are examples of well-functioning PES systems in situations of community resource control- can be important- seem to function easier, better where the buyer is public- WB now move towards PES in broader policy contexts- not standalone (Pagiola et al, 2007) There is a risk that privatisation of resources might facilitate conflict and inequity. That has been noted with carbon plantation projects.

2.5 Securing low (transaction) costs Costs of a policy measure consists of production costs, transaction costs and opportunity costs PC= fixed/var.costs of producing the goods TC= costs of gathering information, managing, controling and policing the system; setting up and running the system (Arrow) OC= costs of income foregone by alternative use of the land in question (Stern-report only this) - Not much research yet on TC and provision of environmental goods services

2.5 Transaction costs cont. Transaction costs a core consideration in a REDD regime TCs may be quite substantial, both concerning setting up and running payment systems. TCs vary with the - character of the service involved - type of governance system - number of participants - size of payment -Data are scant, but in the case of PES similar to those of REDD, TCs seem to lie in the range of % compared to the level of payments -A set of institutional structures must be in place to make the transactions involved putting REDD into practice. Independent of whether one plans to use markets or more state based systems, REDD will demand some state engagement like in defining rights and clarifying standards for what is to be traded or regulated – e.g., land practices, thickness of the forest, carbon stocks etc.

2.5 Transaction costs cont. The choice of channel for support, the selection of participant actors and the emphasis on type of REDD (degradation, deforestation, afforestation) will all have a crucial impact on the level of TC. When setting up systems, one should look for existing well functioning organizations/NGOs/public bodies to be involved Creating trust between the involved actors/choose actors with high level of trust to reduce costs of making agreements, necessary level of monitoring and avoid conflict/secure an overall good level of cooperation. Participatory monitoring. The balance between detailed information about the delivery of the good and the costs of obtaining these should be emphasized – i.e., develop proxies or indicators that are both information rich and low cost to observe. The higher the trust and the local knowledge and involvement are, the less necessary it is to use very specific or detailed indicators There might be conflicts between reducing transaction costs to the lowest level possible and supporting systems that also have a good social profile – i.e., poverty alleviation.

2.6 Behaviour- motivation and legitimation From an institutional perspective- motivations can change betweeen different institutional structures- contrary to standard economic theory that behavior is similarly motivated under all situations- structure does impact motivations- and behaviour Need to craft local regimes that are both legitimate and effective A lot of power with intermediaries - can potential extract a lot of the funds; need strong systems to counter this REDD should be more than payment, also develop attitudes, values, norms - REDD as a meaningful activity to be involved in.. In one sense REDD is a pure economic incentive; but it can also be ”sold” as a compensation mechanism based on reciprocity and responsibility- in communities fi. The introduction of pure payments can lead to more strategic and instrumental responses- and may even become a curse for REDD if actors start to degrade forests to become eligible for payments- this is real ! If people are treated instrumentally- they tend to respond instrumentally- the budget model scourge! Control costs may also increase Payments routed through individuals, communities and public bodies; matters for how people receive and respond to the policy If states choose to expand PAs through legal means, much depends on the willingness to compensate users with or without rights- set clauses for this

2.7 Additonality, permanence and leakage Core aspects of REDD, more than in CBNRM, PES, Leakage -To address national leakage, establishing national REDD structures seems to be the most promising solution, overseeing the whole forest estate -International leakage easier to handle the more countries that adopt REDD -Landlocked countries need to address specially the forest products imported and traded, both for domestic use and export and separate from their own harvesting accountancy -Inclusion of afforestation/reforestation and sustainable forest management activities in REDD will help countries to deal with national leakage and comply with national mitigation goals

2.7 Additonality, permanence and leakage Permanence –When payment schemes are applied, permanence should be an important aspect of contracts. Both to forests that are established to sequester carbon and to forests protected from deforestation. –Compliance with REDD and permanence of the forest related activities has therefore to be established differently in areas where customary and traditional rights prevail, most likely institutionalized without any formal contract –The national REDD regime has to develop a risk strategy, both accounting for possible natural and political risks. Additionality –The national baselines will be seminal for generating carbon credits that can demonstrate clear additionality of the REDD actions. –Although countries have significant proportion of their forests under protected area regime, such areas might be degraded to various levels. Therefore, area calculation will not be sufficient as they do not include the actual carbon volume within those areas. REDD has to scrutinize what is actually forested when the baselines are calculated.

3. REDD in Tanzania 3.1. Forest resource and degradation - Establishing REDD in Africa is a demanding task. -There are no CDM projects focused on forests in Africa. -An important cause seems to be weak institutional structures for establishing such types of projects. -Interest is growing; a lot of carbon mitigation potential, and possiblities for win- win policies

3. 1. Forest resource and degradation Forests and woodland cover about 33.5 mill. ha in Tanzania. This is approximately 40 % of total land area. There is a significant deforestation in Tanzania with a rate in the range – ha/year Forest degradation is widespread in Tanzania, both in reserved forests and on general land. The rate is estimated around ha/year. Prime drivers for deforestation/forest degradation are agricultural expansion, needs for timber, fuel wood and charcoal production, fodder and livestock grazing. Land conversion is also influenced by e.g., removing subsidies on agricultural inputs, that lowered pr/ha productivity and motivated farmers to expand their agricultural areas According the official statistics, around 95 % of the ca. 40 million m3 of wood consumed annually in Tanzania is for fuel, the rest to different industries/construction. The level of illegal logging is substantial. Carbon stocks estimates rests heavily on measurements of land use, biomass assessment and conversion factors to carbon stock assessment There are substantial net emissions of carbon from Tanzanian forests indicating emissions in the range of MtC02. There is significant climate mitigation potential in Tanzania’s forest estate

3. 2. Introducing REDD in Tanzania Forest land and resources constitute a key element in Tanzania and the general development process. All land ultimately owned by the state. Local communities have user rights to land. The Tanzanian village organization should also be noted. Various reforms have been undertaken in the Tanzanian forest sector over the last 10 years. The National Forest Program ( ) is a core element in this. The forestry sector in Tanzania is administered under two ministries, the Ministry for Natural Resources and Tourism and Ministry of Regional Administration and Local Government under the prime minister’s office. The Forestry and Beekeeping Division of the Ministry for Natural Resources and Tourism has the overall responsibility to coordinate all aspects of forestry development. The land/forest areas are divided in two main groups – reserved land and general land. The latter is de facto under open access.

The National Forest Program presents a rather negative picture of the centralized forest management and a policy reform including participatory forest management (PFM) was initiated. This may offer promises for more effective and socially legitimate forest management.. Joint forest management is instituted to involve local communities in management of reserved forests. Community based forest management, also a measure of PFM, is an arrangement to clarify local community user rights and ownership of forest resources in general lands. Through PFM, so-called Village Forests are established, covering at present about 10 % of all forest land. The implementation of participatory forest management is, however, relatively slow and donor dependent There are substantial forest areas in Tanzania’s national parks and game reserves – administered by Tanzania National Parks (parastatal) and the Wildlife Division under the Ministry for Natural Resources and Tourism. These lands host about 6 % of all forests. There have recently been some quite severe critics of corruption in the Tanzanian forest sector related to illegal logging and management of donor funds. There is increased willingness to engage in solving these problems… Introducing REDD in Tanzania

3.3 Possible elements of a Tanzanian REDD structure Consider to establish a Tanzanian REDD fund responsible for receiving the financial flows from international/bilateral actors and distribute these resources to national REDD actors Consider to mandate the Ministry of Natural Resources and Tourism/the Forest and Bee­keeping Division (FDB) to coordinate the implementation of REDD in Tanzania Put strong emphasis on combating corruption when forming procedures and control routines The FBD seems together with the District authorities to be the most appropriate agents to perform REDD activities However, consider to move the present inventory and monitoring initiative to a unit that is separate from FBD to get the necessary autonomy and mandate to monitor, report and verify REDD activities Strengthen the capacity of the District authorities to handle regulations on general land. Develop further the co-operation between FBD and the District authorities (District Council to village level) Principles of good governance and anti-corruption should be explicitly formed in the national REDD regime and followed during the future implementation at all stages

3.4 Elements of potential Tanzanian REDD policy Develop participatory forest management further on reserved and general land. The aim should be to cover all land where villages use resources into such a system. Clarification of rights and responsibilities for village land Payments – monetary or in kind – to compensate for lost livelihoods following from regulations on general land and reserved land High emphasis should be on policies against illegal logging. Halting such logging should be considered a premise for supporting REDD activities in Tanzania Reduced deforestation, increased emphasis on sustainable fuel wood production. Develop substitutes in rural, but also urban areas

3.4 Elements of potential Tanzanian REDD policy Increased emphasis on conservation agriculture, increased fertilizer use – e.g., fertilizer subsidies. Information measures/extension service Measures and policy instruments in the livestock sector – specifically towards agro-pastoralist and pastoralist communities Expand the capacity to do replanting in degraded forests. Reduce costs through subsidies. Information measures Formats of participation, payments and contracts should be tested out in pilot and demonstration projects If afforestation and reforestation is allowed for, carefully consider small-scale plantations and secure that existing industrial plantation take livelihood and biodiversity concerns seriously Treating carbon mitigation, poverty alleviation and biodiversity protection simultaneously is again very important. We strongly emphasize the importance of establishing measures against land grabbing/potentially reduced access to land among especially the poorer segment of the Tanzanian people.

4.Similar issues for Uganda Forest resources - About same haa amount deforested /year ( haa) – but only 5 mill.ha forests in Uganda versus 33 million in Tanzania (a lot of Miombo) - Net emission estimates similar -about the same MMTCO2 -Substantial potentials for mitigation in both countries

4.2 Uganda context different Civil war history Northern Uganda New forest Policy- rebuilding the sector Still very weak DFS/FID also compared to Tanzania 70% of forest on private hands. UWA and NFA has 30%. Substantial forest resources on UWAs hands Less forest - more pressure on lands; especially southern uganda Extreme degree of degraded LFR but also a lot of degradation and encroachment still in CFR

4.3 Uganda policy different Can FID coordinate REDD? Cannot put all into NFA- can NFA both produce carbon- and verify, monitor, control ?? DFS is in shatters; what is needed at local levels for LFRs – as future REDD extension system? NAADS/and or Sawlog scheme as options? Will REDD accept reforesting LFRs or CFRs- clarify additionality? Participation is still very weak in Uganda..

5. Last words - The interests of the “South” There are many controversial issues around REDD. It does offer opportunities for a successful climate regime. It may, however, also go very wrong. A fundamental challenge is that it is a North initiative to be implemented in the South. North is the stronger and South is the weaker party. This raises the question about which role is offered to the South in crafting out the overall regime for REDD.”Poor people sell cheap”. Who sets the conditions? It also concerns how substantial the transfers will be. Certainly, if cost-efficiency is the overriding rule to be implied, few options for development will follow. Finally, while South is the weaker party, some groups in the South are especially at risk. Their interests needs to be specifically guarded when instituting both international and national REDD architectures.. Every solutions has problems!