Monetary incentives to avoid deforestation under the Reducing emissions from deforestation and degradation (REDD)+ climate change mitigation scheme in Tanzania

Meley M. Araya, Ole Hofstad

The paper estimates and compares the level of Reducing Emissions from Deforestation and Degradation (REDD+) payments required to compensate for the opportunity costs (OCs) of stopping the conversion of montane forest and miombo woodlands into cropland in two agro-ecological zones in Morogoro Region in Tanzania. Data collected from 250 households were used for OC estimation. REDD+ payment was estimated as the net present value (NPV) of agricultural rent and forest rent during land clearing, minus net returns from sustainable wood harvest, divided by the corresponding reduction in carbon stock. The median compensation required to protect the current carbon stock in the two vegetation types ranged from USD 1 tCO2e-1 for the montane forest to USD 39 tCO2e-1 for the degraded miombo woodlands, of which up to 70 % and 16 %, respectively, were for compensating OCs from forest rent during land clearing. The figures were significantly higher when the cost of farmers' own labor was not taken into account in NPV calculations. The results also highlighted that incentives in the form of sustainable harvests could offset up to 55 % of the total median OC to protect the montane forest and up to 45 % to protect the miombo woodlands, depending on the wage rates. The findings suggest that given the possible factors that can potentially affect estimates of REDD+ payments, avoiding deforestation of the montane forest would be feasible under the REDD+ scheme. However, implementation of the policy in villages around the miombo area would require very high compensation levels.