Is REDD Accounting Myopic?: Why Reducing Emissions from Deforestation and Forest Degradation Programs Should Recognize and Include Other Ecosystems and Services Beyond CO2 Sequestration

Author:Paulo A. Lopes
Position:J.D./M.P.P. Candidate, 2011, at American University, Washington College of Law and School of Public Affairs
“What is a cynic? A man who knows the price
of everything and the value of nothing.”1
Although uttered in Oscar Wilde’s 1892 com-
edy, Lady Windermere’s Fan, its reference could not have been
more foreboding.2 Wilde’s comedy foreshadowed what was to
come as the classical economics of the 18th and 19th century3
evolved into neoclassical economics in the 20th century,4 and
finally into mainstream economics5 built on the theory, and now
the practice, of free market economies.6
Unfortunately, over the years, free market economies have
long since forgotten Wilde’s definition of a “cynic” even though
remembrance of it today is paramount for environmentalists
as they try to mitigate climate change. Today, humans have
embarked on what may be the last frontier of mainstream eco-
nomics, the monetization of what was once thought incalculable,
Earth’s ecosystems,7 some of which remain largely unscathed
by mainstream economies.
Payment for ecosystem services (“PES”)8 is a type of
mainstream economic recognition of benefits provided by land.
However, this rebirth of economic land recognition is not a rein-
carnation of Adam Smith’s economics that consisted of labor,
land, and capital.9 Instead, PES programs, such as reducing emis-
sions from deforestation and forest degradation (“REDD”),10 try
to monetize aspects of nature, including carbon dioxide (“CO2”)
sequestration with REDD projects.11
The lack of recognition of the total value of land by main-
stream economics is in large part because of the continued clas-
sification of land as a subcategory of capital, which results in
undervaluation of the land.12 This undervaluation of land is an
externality of mainstream economics that discounts the ecosys-
tem services provided by the natural environment.13 Mitigation of
these externalities can occur when there is actual recognition of
the ecosystem services.14 Although mainstream economies advo-
cate that REDD programs will help “save” the planet from climate
change,15 current REDD programs fail to internalize many of the
ecosystem services provided by forests, thus perpetuating the
undervaluation of land recognition in mainstream economics.16
This article argues that the current design of REDD is a
myopic Partial PES at best.17 Forest ecosystems provide numer-
ous services beyond the sequestration of CO2, such as pro-
tecting upstream watersheds,18 conserving biodiversity19 and
gene pools,20 soil formation,21 nutrient recycling,22 and plant
pollination.23 Thus REDD programs should recognize and
include these and other ecosystem services.24 After reviewing
REDD in the international context and the accounting scheme,
recommendations and concerns are provided for why the expan-
sion of REDD to include other ecosystems and services would
result in not only a greater CO2 reduction, but also other impor-
tant environmental benefits.25 The article concludes by recog-
nizing that REDD’s accounting loopholes, by focusing solely on
CO2 reduction without recognition of the ensuing impact from
that reduction, will impose negative externalities on other eco-
system services, and that REDD needs to transition to a program
that internalizes these externalities.26
The Earth’s ecosystem provides benefits, sometimes
referred to as “services,” for all organisms on the planet.27 These
ecosystem services may or may not be directly recognized by
mainstream economics.28 PES is a financial valuation of Earth’s
ecosystem services.29 The primary purpose of a PES program
is to maintain a specific ecosystem “service,” such as clean
water,30 carbon sequestration,31 or biodiversity habitat,32 for
some type of economic value.33 However, the transfer of money
to maintain the ecosystem service is not the defining factor of a
PES program.34 Rather, it is the fact that the “payment causes
the benefit to occur where it would not have otherwise.”35 By
having the service be “additional,” a value for the service can be
determined, thus creating a PES program.36
As mentioned above, carbon sequestration is one of the eco-
system services provided by forests. The net forest loss between
1990 and 2000 was 13.1 million hectares (“ha”) per year and
12.9 million ha between 2000 and 2005,37 the equivalent of the
land area of Greece38 or New York39 every year, and according
to the Intergovernmental Panel on Climate Change (“IPCC”),
emissions from deforestation during the 1990s were estimated
at 5.8 gigatonnes (“Gt”) of CO2 per year.40 With emissions
by Paulo A. Lopes*
* Paulo A. Lopes is a J.D./M.P.P. Candidate, 2011, at American University,
Washington College of Law and School of Public Affairs.
WINTER 2011 26
from deforestation and forest degradation accounting for nearly
twenty percent of total greenhouse gas emissions,41 there is a
need to reduce emissions from forests.
Over the years, varying countries have undertaken numer-
ous schemes, and institutions have proposed ways to reduce
emissions from deforestation.42 Some programs, listed in order
from narrowest to broadest include: reducing emissions from
deforestation (“RED”); reducing emissions from deforestation
and degradation (“REDD”); and reducing emissions from defor-
estation, degradation, and the enhancement of carbon stocks (the
“+” in “REDD+”) by means of carbon sequestration.43 These
schemes—coupled with needed financing—should result in
reducing emissions from deforestation.44
In 1997, the third Conference of the Parties (“COP-3”) of
the United Nations Framework Convention on Climate Change
(“UNFCCC” or “Convention”) adopted the Kyoto Protocol.45
Article 3(3) of the Kyoto Protocol limited Land-Use Change and
Forestry (“LUCF”) activities to afforestation, reforestation, and
deforestation,46 while Article 3(4) provided flexibility with the
inclusion of other activities as determined by the first session of
the Meeting of the Parties to the Kyoto Protocol.47
Noting the conclusions found by the Subsidiary Body for
Scientific and Technological Advice (“SBSTA”) at its eighth
session and the decision by the IPCC to prepare a report on
Land-Use, Land-Use Change and Forestry (“LULUCF”), the
fourth Conference of the Parties (“COP-4”) of the UNFCCC,
began to lay the legal groundwork for the recognition and inclu-
sion of LULUCF.48 This establishment of more specific legal
provisions for LULUCF continued with the sixth Conference of
the Parties (“COP-6”) in 2000, with the IPCC scientific report49
and the Food and Agriculture Organization (“FAO”) definition
for “forests.”50 At the 2001 seventh Conference of the Parties
(“COP-7”), the Parties agreed upon the inclusion of additional
activities, such as revegetation, forest management, cropland
management, and grazing land management, which were pro-
hibited from jointly implemented activities but included in
domestically conducted activities.51
In 2007 in Bali, Indonesia, the thirteenth Conference of the
Parties (“COP-13”) recognized “the urgent need to take further
meaningful action to reduce emissions from deforestation and
forest degradation in developing countries.”52 The Bali Action
Plan established a goal to complete the policy approaches and
incentives to reduce emissions from deforestation by 2009.53
While the fifteenth Conference of the Parties (“COP-15”), in
2009, concluded with the nonbinding54 Copenhagen Accord,
which “recogniz[ed] the crucial role of reducing emission[s]
from deforestation and forest degradation,”55 the goal set by the
Bali Action Plan was not met.56
At the sixteenth Conference of the Parties (“COP-16”), in
2010 in Cancun, Mexico, the COP concluded by adopting numer-
ous decisions, including one that recognized the need to reduce
emissions from forests.57 The outcome of the thirteenth ses-
sion of the Ad Hoc Working Group on Long-term Cooperative
Action (“AWG-LCA-13”) under the Convention resulted in
agreement by Parties for “policy approaches and positive incen-
tives on issues relating to [REDD] in developing countries; and
the role of conservation, sustainable management of forests and
enhancement of forest carbon stocks in developing countries.”58
It encouraged each country, as appropriate, to undertake the fol-
lowing actions: “(a) Reduc[e] emissions from deforestation; (b)
Reduc[e] emissions from forest degradation; (c) Conservation of
forest carbon stocks; (d) Sustainable management of forest; [and]
(e) Enhancement of forest carbon stocks.”59 Countries agreed to
develop a national strategy or action plan60 and a “robust and
transparent national forest monitoring system for the monitor-
ing and reporting of the activities” listed above.61 During the
development and implementation of their national strategies or
action plans, developing countries are asked, “to address, inter
alia, drivers of deforestation and forest degradation, land tenure
issues, forest governance issues, gender considerations and . . .
[to] ensure the full and effective participation of relevant stake-
holders, inter alia, indigenous peoples and local communities.”62
This agreement of the AWG-LCA-13 text at COP-16 in Cancun,
Mexico is a step forward for the recognition and implementation
of REDD at the international level.63
It is important to recognize that forestry accounting of CO2
emissions, although maturing, is in its infancy and thus still
imprecise.64 Accurate accounting allows for the determination
of whether the REDD program will have added benefit,65 which
requires that the benefit be accurately quantified and docu-
mented.66 For a carbon offset to actually result from a REDD
program, one must review the additionality, definition of a for-
est, leakage, measurement, verification, and permanence of the
offset.67 If a REDD program fails to meet any or all of these
requirements, then the offset is not actually realized since for-
estry CO2 emissions were not reduced.68 Recognition of this
failed emission reduction offset would allow countries to emit
more, since emissions were not offset by the REDD program
even though they were recognized as having occurred.69
Additionality refers to the quantity of emission reductions
that result from the implementation of the REDD program
when compared to business as usual.70 The difference between
the reference level and the emission reductions achieved is the
“additionality.”71 Although in theory this sounds possible, if not
straightforward, experts still differ on approaches for determin-
ing the additionality amount since “there is no correct technique
for determining additionality because it requires comparison of
expected reductions against a projected business-as-usual emis-
sions baseline . . . [, which] is inherently uncertain because, it
may not be possible to know what would have happened in the
future had the projects not been undertaken.”72 Fundamentally,
the test to determine additionality will always vary depending
on the balance between reduction of administrative costs versus
program rigor and environmental certainty.73
Article 3(3) of the Kyoto Protocol lists LULUCF activities
as afforestation, reforestation, and deforestation74 but does not
provide definitions for these activities.75 In 2000, the IPCC, in
a special report on LULUCF, recognized the importance of pro-
viding clear definitions of these activities to facilitate account-
ing for different land-use activities.76 The report also notes that
“[f]orest definitions based on legal, administrative, or cultural
considerations” may not be appropriate for carbon accounting
since these definitions do not always correlate to the quantity of
carbon stored on the site as illustrated by the following forest
definitions.77 The ninth session of the Conference of the Parties
(“COP-9”), in 2003 in Milan, Italy, provided the Parties with
flexibility on a forest definition with “(a) A single minimum tree
crown cover between 10 and 30 per cent; (b) A single minimum
land area value between 0.05 and 1 hectare; and (c) A single
minimum tree height value between 2 and 5 meters.”78 The
Food and Agriculture Organization (“FAO”), in a 2006 work-
ing paper, also noted the issue of selecting a forest definition for
accounting in Clean Development Mechanism (“CDM”) proj-
ects.79 Unlike COP-9’s three criterions, the FAO working paper
put forward a ten-step process to aid countries in selecting the
optimal parameters for a forest definition.80 As evident by these
different approaches, providing flexibility in defining forests is
necessary since ecosystems around the world vary greatly. This
variation prohibits creation of a uniform international definition
applicable to all countries, because it would result in winners
and losers amongst countries.81
While the emphasis and requirements under the Kyoto Pro-
tocol that CDM projects be additional82 is important, the risk
of leakage must also be recognized.83 Leakage “occurs when
economic activity is shifted as a result of the emission control
regulation and, as a result, emission abatement achieved in one
location that is subject to emission control regulation . . . is offset
by increased emissions in unregulated locations.”84 For example,
in the context of a REDD program, leakage occurs when site A’s
forest emissions, which are under a REDD program, are reduced
by two tonnes of CO2, yet CO2 emissions from site B, which is
not under a REDD program, increases CO2 emissions by two
tonnes.85 The achieved emission reductions of site A is negated
by the increased emissions from site B, resulting in a zero-sum
game of emission reductions.86 COP-9 recognized leakage if the
increase in emissions occurs outside of the project and is mea-
surable and attributable to the reduced emissions undertaken by
the project.87
Measurement and verification of deforestation is essential
to any REDD project with a goal of issuing emission reduction
credits.88 However, measurement and verification of carbon
sequestration is difficult since “rates vary by tree species, soil
type, regional climate, topography and management practice.”89
In the United States, carbon sequestration rates for tree species
are better understood than soil carbon sequestration rates, which
vary by cropping practice and soil type.90 Over time, the rate of
carbon sequestration absorption decreases in trees and stops as
it nears the saturation point, when no additional sequestration of
carbon is possible.91
Permanence is one of the major concerns with biological
carbon sequestration projects such as REDD,92 because it is key
when trying to achieve overall emission reductions.93 With bio-
logical sequestration programs—unlike emission reductions that
achieve results by reducing the release of carbon—if the seques-
tered carbon is released sometime in the future, the sequestra-
tion program is a failure.94 This concern over a potential release
also applies to avoided deforestation, since avoided deforesta-
tion today may turn into future deforestation.95 The release
of sequestered carbon may result from human causes, such as
changes in land use and management, or from natural causes,
such as a fire.96
The negotiations concerning biological carbon sequestra-
tion evolved over the years from COP-3 with the Kyoto Proto-
col’s recognition of LULUCF,97 to the COP-6 debate,98 and final
recognition by COP-7 of a more expansive program recognizing
additional activities.99 In 2007, the Bali Action Plan of COP-13
acknowledged the need to establish incentives to reduce emis-
sions from deforestation,100 which was reiterated in the Copen-
hagen Accord of COP-15.101 At COP-16, additional progress
occurred with the decision to adopt the AWG-LCA-13 policy
approaches and positive incentives on REDD.102 Although the
progression of the need to reduce emissions from biological
sources is evident, the unifying theme over the COPs has come
to focus on forests, as a result of the recognition of the need to
reduce emissions from deforestation and degradation.103
The progression is also apparent with the IPCC account-
ing of emissions recognized by the UNFCCC.104 The IPCC
has released numerous reports over the years on forestry and
carbon capture: in 1996, on Land-Use Change and Forestry
(“LUCF”), which identified major emissions from large prob-
able land use sources;105 LULUCF in 2003, which expanded
LUCF to include all carbon pools;106 and in 2006, a report that
transformed LULUCF into Agriculture, Forestry, and Other
Land Use (“AFOLU”), which integrated both the agriculture
and LULUCF sectors.107
While the IPCC accounting has evolved over the years to
include all carbon pools from all sectors, the UNFCCC’s deci-
sions and resolutions on RED, REDD, and REDD+ all focus on
forestry.108 Although emissions from forests are substantial and
WINTER 2011 28
the need to reduce forest emissions is necessary,109 the UNFCCC
should evolve negotiations on REDD+ to include all of the land
use sectors recognized under AFOLU.
Is There a Better Scheme than RED, REDD, or REDD+?
A scheme that would go beyond the confines of RED,
REDD, and REDD+ is Reducing Emission from All Land
Uses (“REALU”).110 By applying AFOLU accounting, some
of the emissions recognized by REALU would include for-
estland, grassland, cropland, settlements, wetlands, and other
lands; meanwhile this would also account for agriculture and
other land use emissions resulting from liming, urea, manure,
enteric fermentation, nitrous oxide, and others.111 REALU with
AFOLU accounting would “include all land use proportionate
to actual emissions and emission potential.”112 REALU, like
other proposals,113 is supported by many organizations and is
still evolving.114
One of the lingering issues pertaining to REDD is the defi-
nition of what is a forest115—or rather when does a tree become
classified as a forest? The Kyoto Protocol and COP-9 provided
a flexible definition based on tree crown cover, minimum land
area per hectare, and minimum tree height,116 a 2006 work-
ing paper by the FAO provided a ten-step process for selecting
the optimal parameters for a forest definition,117 and the IPCC
special report on LULUCF noted the importance of clarity.118
However, none of these definitions account for trees outside the
forest or wetlands, which also sequester large quantities of car-
bon.119 REALU with AFOLU accounting, since it covers all sec-
tors, would recognize the tree that is not yet considered a forest
under these other definitions, along with the vast expanses of
The definition of forests in the Kyoto Protocol also allows
for “areas normally forming part of the forest area which are
temporarily unstocked as a result of human intervention such
as harvesting or natural causes but which are expected to revert
to forest” to maintain their forest classification.121 The Kyoto
Protocol establishes no duration for “temporarily unstocked”
forest,122 yet still regards these areas as forested.123 Thus, the
Kyoto Protocol does not recognize the release of emissions from
clearcutting as long as there is an intention to replant the forest
since it is only a “temporary” release.124 Furthermore, the Kyoto
Protocol forest definition does not account for the emissions
from clearcutting of trees not classified as forest, regardless of
whether there was an intention to replant the trees.125 The Kyoto
Protocol forest definition creates this “in or out” distinction for a
tree,126 which would not be a concern under the more expansive
REALU with AFOLU accounting.127
Another issue created by distinguishing among trees is that
of leakage.128 To avoid leakage, forest B’s emissions should not
increase as a result of a REDD program decreasing forest A’s
emissions.129 However, by only counting forests, a REDD pro-
gram that decreases forest A’s emissions may result in an emis-
sions increase from the non-forest area C of woody vegetation
or wetlands.130 Technically, there is leakage, since the increase
in emissions from area C negated the decrease in emissions
from forest A.131 Yet under REDD, which only pertains to
forests, there is no leakage.132 REALU, by applying a more
expansive landscape accounting, AFOLU, would recognize
the leakage coming from area C, since AFOLU encompasses
sequestered carbon areas above and below ground, forested and
Reduction of forest emissions is necessary, as emissions
from deforestation and forest degradation account for nearly
twenty percent of total greenhouse gas emissions.134 But it is
also evident that the current attempts with RED, REDD, and
REDD+ still falter in many areas because of the forest defini-
tion.135 Emissions and leakages pertaining to wetlands, agri-
culture, and other land uses are not accounted for in forestry
schemes.136 Thus, the deficiency that stems from the definition
of forests impacts the other accounting elements of REDD, addi-
tionality and leakage, which subsequently impacts measurement
and verification.137
REALU with AFOLU captures all of the sectors, which is
more effective and efficient138 while also being more equitable
since AFOLU accounting standards would apply to all countries.
REALU and AFOLU sectors include high forest cover and low
rates of deforestation (“HFLD”)139 and low forest cover and low
rates of deforestation (“LFLD”).140 A phased implementation
of biological sequestration starting with REDD that recognizes
indigenous peoples’ rights, as established in COP-16,141 and that
transitions to REALU with AFOLU accounting, would prevent
a delay in emission mitigation from the forestry sector while also
allowing the necessary time for the development and refinement
of REALU with AFOLU.142 A REALU scheme with AFOLU
may not address all of the biological sequestration issues, but it
would alleviate many of the problems with the current efforts to
mitigate forestry emissions under REDD.143
Wetlands: An Example of Biological Carbon
Sequestration Within REALU but Excluded by REDD
Type Schemes
Wetlands include freshwater mineral-soil wetlands, peat-
lands, and estuarine wetlands (i.e. salt marshes) and in North
America, they are the second largest natural carbon sink.144
Worldwide wetlands store about 223 billion tons of carbon.145
Although wetlands absorb about one-tenth of the amount of car-
bon as forests, wetlands absorb three times more than agricul-
tural soils.146
While one-tenth might appear to be a small amount, wet-
lands currently only comprise 5.5% of the U.S. landmass
because land use changes, such as agriculture, have led to the
destruction of over fifty percent of wetlands.147 In the United
States, wetlands sequester thirty-five percent of the nation’s total
terrestrial carbon and further loss of the wetlands would result in
the release of sequestered carbon, increasing the carbon concen-
tration in the atmosphere.148 The North American149 estuarine
wetland carbon sequestration is currently estimated at over ten
million tons per year.150 Collectively, North American wetlands
have the ability to sequester forty-nine million tons of carbon
per year.151 It is important to recognize that although wetlands
only comprise 5.5% of the total landmass,152 the total seques-
tered carbon stored in wetlands is sixty-four billion tons, only
slightly less than forests, which store sixty-seven billion tons153
in twenty-five percent more land.154
Wetlands are a much more effective natural carbon sink
than forests. As peatlands are drained and converted from wet-
lands to other land uses, the carbon oxidizes, which reduces the
carbon captured in wetlands by about fifteen million tons per
year in North America.155 The recognition of wetlands by the
UNFCCC and payment for the service of carbon sequestration
would help mitigate the destruction of wetlands through land use
In addition to storing carbon, forests provide multiple eco-
system services such as soil formation,157 water cycle storage
and release,158 biodiversity conservation,159 and nutrient recy-
cling.160 However, forests under a REDD scheme are only rec-
ognized for one ecosystem service, carbon sequestration.161
Although carbon sequestration is an important and neces-
sary ecosystem service provided by forests, the current REDD
scheme can and already has led to the deterioration of other for-
est ecosystem services.162
The other ecosystem services that are not internalized by
REDD are not only valuable but also necessary for native forests
to survive.163 Although REDD is a PES, in its current insular
form REDD should be viewed as a Partial PES.164 In contrast,
the recognition of and payment for CO2 sequestration, soil for-
mation, water cycle storage and release, biodiversity conserva-
tion, and nutrient recycling could be considered a Full PES.165
By recognizing these other economic benefits, mitigation of the
perverse incentives induced by REDD would be mitigated.166
The numerous ailments of the Partial PES REDD are reviewed
below and illustrate the need for the transition to a Full PES,
such as REALU with AFOLU accounting, to protect the forests
and other ecosystems.167
Soil Erosion: What Role Does Flora Coverage Play?
The first ecosystem service that REDD does not recognize
is that provided by soil in reducing or preventing erosion. Ero-
sion occurs when the energy from water or wind is transmitted
to the soil, and it increases after a forest is deforested or tempo-
rarily unstocked.168 When raindrops hit exposed soil, such as a
deforested area, the particles of soil and water are launched into
the air.169 When the land is covered by biomass, such as a for-
est, it protects the land area by dissipating the wind and water
energy, which results in reduced soil erosion.170
After erosion occurs, the quantity of water runoff on the
area of land increases, which reduces the availability of water
for plant vegetation to grow.171 The rate of erosion is often high
on lands with higher gradients, with sometimes half of the soil
within the splash eroding.172 Deforestation on higher gradient
land is regularly used to replace spent agricultural land damaged
by erosion.173
The eroded soil can end up in ecosystems such as streams
and lakes.174 The shape of the Araguaia River in Brazil has
changed, as sedimentation increased by twenty-eight percent,
and the river became straighter and deeper.175 According to the
U.S. Department of Agriculture, the final destination for sixty
percent of soil erosion is streams.176 The Huang He River in
China, often referred to as the Yellow River because of the color
of the silt, transports and deposits two billion tons of soil per
year into the Gulf of Bohai.177
For a forested area to prevent soil erosion, the forest must
cover a minimum of sixty percent of the land.178 Without the
flora that reduces the rain and wind energy,179 soil erosion results
in a decrease in plant nutrients, such as nitrogen, phosphorus,
potassium, and calcium.180 Without these vital nutrients, yields
in plant growth decrease.181 The eroded soil can contain as much
as three times the nutrient content as the soil that remains.182
Fertilizers and pesticides, derived from hydrocarbons, along
with irrigation, are often used to temporarily mitigate the natural
nutrient depletion from erosion on cropland.183 Once the appli-
cation of hydrocarbon-based fertilizers and pesticides become
futile against the barren soil, the cropland is abandoned.184 To
replace this wasted land, additional forests are cleared for agri-
cultural use and the cycle repeats.185
While at first glance it may appear that a REDD scheme
would mitigate many of the above soil erosion issues, since
people would be paid to reduce deforestation and forest degrada-
tion, if the scheme uses the term “temporarily unstocked” in the
definition of forests as the Kyoto Protocol does, it actually facil-
itates soil erosion.186 Since the Kyoto Protocol establishes no
duration for a “temporarily unstocked” forest, but still classifies
it as a forest, with enough time, the extent of soil erosion may
have degraded the soil to the point of not allowing the land to be
“restocked” with the forest that once existed.187 Since erosion
increases water runoff, the soil in the “temporarily unstocked”
region will have less moisture because less water has infiltrated
the land, resulting in a decrease in water-storage capacity of
the soil.188 Additionally, the erosion of the soil reduces organic
nutrients and soil depth, which are necessary to restock the for-
est.189 Restoration of the eroded soil is a slow process that can
take between “200 and 1,000 years to form 2.5 cm (1 inch) of
topsoil under cropland conditions, and even longer under pas-
ture and forest conditions.”190
Water Cycle: Does Variation in Root Depth Matter?
The second ecosystem service not recognized by REDD is
the water cycle storage and release provided by the deep roots of
forests. After a forest is removed as a result of deforestation, the
flora that replaces the forest typically has shallower root struc-
tures and fewer leaves, which results in the new flora requir-
ing less water than the forest.191 The evaporation from the new
flora is less than that from a forest because the new flora has
shallower roots.192 This decrease in evaporation reduces the
quantity of water vapor returned to the atmosphere, resulting in
more water runoff from the land and increasing stream flow.193
Thus the shallower roots result in less water availability and
WINTER 2011 30
evapotranspiration during the dry season along with less precipi-
tation during the wet season, all of which negatively impact the
water cycle.194
The degree of impact on the water cycle depends on not
only how the forested land is utilized after deforestation but
also how much of the forest remains.195 Deforestation of twenty
percent or less will have little effect on the water cycle while
deforestation of fifty to one hundred percent, which typically
results from modern agricultural and heavy equipment use, can
result in a large change in the quantity of water runoff.196 In Bra-
zil, the deforestation of about fifty percent of the Tocantins and
Araguaia watersheds over the past fifty years has resulted in a
twenty-five percent annual increase in river discharge.197
The decrease in evapotranspiration, because of the decrease
in root depth,198 impacts the heat flux, resulting in a decrease
in the cooling of the surface soil, equating to higher surface
temperatures, especially during the dry seasons.199 The dry sea-
son is vital for reforestation efforts, but because of the impacts
from deforestation, such as a decrease in evapotranspiration
and an increase in surface temperature, there may be a water
shortage.200 This decrease in evapotranspiration can result in
extended drought periods, thus slowing the uptake of the refor-
estation efforts and possibly making the habitat more hospitable
for drought-resistant species.201
However, there is cause for concern if the project uses a
definition for forests that permits them to be “temporarily
unstocked.”202 Although the removal of the forest is not classi-
fied as deforestation, because there is an intention to restock the
forest, the deep roots from the forest are “temporarily” killed.203
Without deep roots, the evapotranspiration will decrease and
the water runoff will increase.204 This in turn makes reforesta-
tion efforts more difficult because the quantity of water stored
in the soil has decreased205 and the surface temperature has
increased.206 If schemes allow for forests to be temporarily
unstocked they assume the replanting of the forest and that the
restocking of the forest will negate the initial carbon release.207
Nevertheless, this reasoning is myopic since successful restock-
ing is dependent on the root growth, and reestablishment of deep
roots will likely be more difficult because of longer dry periods
that are “warmer, drier and more intense.”208
Biodiversity: Does REDD’s Focus on Carbon
Concentration Create Perverse Incentives for Other
The third ecosystem service that REDD does not internal-
ize is biodiversity of fauna and flora that have a symbiotic rela-
tionship with the forest. Forests cover roughly seven percent
of the Earth’s dry land, yet they may contain half of the spe-
cies on Earth.209 Some species are so particular to their forest
microhabitats that they live nowhere else, which increases the
chances of their extinction.210 After deforestation and loss of
these specialized species, the surrounding fauna and flora may
also face extinction as the biodiversity in the forest decreases
and the habitat becomes fragmented.211 In Riau, Indonesia, the
tiger population actually declined at a quicker rate than the rate
of deforestation because of habitat fragmentation.212
The fauna and flora also impact the soil composition.213
Before deforestation, the forest soil is teeming with organic mat-
ter, possibly supporting up to one thousand species of fauna per
square meter.214 The bacteria and fungi in the soil can add an
additional four to five thousand diverse species.215 However,
the lack of forest cover exposes the soil to erosion, washing the
nutrients from the deforested land and further diminishing bio-
diversity, and potentially causes the surrounding ecosystem to
Although initially it would appear as though REDD would
complement efforts to protect biodiversity, low-biomass and
high-diversity ecosystems, such as grasslands, savannas, wood-
lands, and transition forests, may be at a disadvantage for
protection when compared to high-biomass forests, such as
plantations.217 This is because REDD focuses on the quantity of
biological carbon sequestered and thus biomass that sequesters
more carbon, i.e. high-biomass ecosystems, are more advanta-
geous for REDD projects than ecosystems that store less carbon,
i.e. low-biomass ecosystems.218 This focus on carbon con-
centration in biomass results in a preference for high-biomass
ecosystems even if the low-biomass ecosystem has a higher
conservation value pertaining to biodiversity, soil, and water,
since the focus of REDD is on biomass concentration and not
biodiversity.219 Thus, REDD programs will be more apt to pro-
tect high-biomass ecosystems because of the higher return on
investment, which is based on carbon concentration, than that
of a low-biomass high-diversity ecosystem, with the latter likely
being more prone to conversion for agricultural use.220
Forests with high-diversity native ecosystems must also
counter the introduction of alien species that grow quickly, such
as monocrop eucalyptus plantations.221 With REDD’s focus on
high-biomass because of carbon credits, trees that grow quickly,
such as eucalyptus trees, are already encouraging some REDD
projects to introduce these alien monocrop species.222 In Brazil,
in an effort to earn carbon credits, eucalyptus plantations, which
are native to Australia, are replacing savannas and high-diversity
cerrado woodland ecosystems.223 However, these eucalyptus
plantations, since they are non-native, often require fertilizers
and pesticides, which increases the risk of chemical contami-
nation and soil degradation.224 Additionally, the definition of
forests under the Kyoto Protocol makes no requirement that a
temporarily unstocked forest be restocked with species native to
that ecosystem.225
Furthermore, genetically modifying the non-native species
to increase the chance of survival in the foreign habitat is another
risk since species with increased resilience may overtake the
native species.226 These practices currently occur under REDD
projects and is one of the perverse incentives induced by REDD
since the accounting does not recognize a distinction between
carbon stored in genetically modified species versus native spe-
cies.227 This deficiency in REDD is one of the reasons that orga-
nizations are proposing REALU with AFOLU accounting since
it does recognize the carbon sequestered in native species of the
savannas and woodlands.228
The exclusion of ecosystems from the Kyoto Protocol
separated biodiversity and ecosystems from carbon and climate
change, and has resulted in the UNFCCC ignoring these syn-
ergies and placing biodiversity at risk.229 This is unfortunate
and inward-looking by the international community because
only five years prior to the adoption of the Kyoto Protocol,
the United Nations Conference on Environment and Devel-
opment, more commonly known as the Earth Summit, in Rio
de Janeiro in 1992230 resulted in numerous important achieve-
ments, two of which were the Convention on Biological Diver-
sity (“CBD”)231 and the Framework Convention on Climate
Change (“UNFCCC”),232 the latter of which lead to the Kyoto
Some might view the link between these two documents as
only being intrinsic, but in 2001, the CBD’s Subsidiary Body
on Scientific, Technical and Technological Advice took “note
of the discussion of the interlinkages between biological diver-
sity and climate change.”234 Two years later, the Secretariat of
the CBD released a formal report235 and in 2008, COP-9 of the
CBD recognized the possible use of REDD pertaining to climate
change236 but also the need to monitor “the threats and likely
. . . impacts of climate change mitigation and adaptation activi-
ties on biodiversity.”237 In 2009, the Secretariat of the CBD
released a second formal report and a year later at COP-10, the
CBD recognized the need to “enhance the benefits for, and avoid
negative impacts on, biodiversity from [REDD].”238 Moreover
the CBD stressed the need to consider “converting only land of
low biodiversity value or ecosystems largely composed of non-
native species, and preferably degraded ones” while also “avoid-
ing [the use of] invasive alien species.”239
Although the CBD has been proactive in recognizing the
interlinkages between biological diversity and climate change,
the UNFCCC is focused almost exclusively on the objective
outlined in 1992—the adverse affect of anthropogenic climate
change on natural ecosystems and humankind.240 At COP-16, the
AWG-LCA under the Convention indicated that actions should be
“consistent with the conservation of natural forests and biological
diversity” and that they should not be “used for the conversion
of natural forests, but are instead used to incentivize the protec-
tion and conservation of natural forests and their ecosystem ser-
vices, and to enhance other social and environmental benefits.”241
While the AWG-LCA document does mention biodiversity, the
UNFCCC continues to be myopic in regards to biodiversity and
makes no reference or granular distinction like the CBD’s docu-
ment between low- and high-biodiversity ecosystems or the risk
of introducing alien species, such as eucalyptus trees.242
The accounting of REDD, which focuses on additional-
ity, definitions of forests, leakage, measurement, verification,
and permanence, while all important facets, is not actually the
difficult part of implementing a successful REDD program.243
These “difficult” facets are merely illusions that hide the true
difficulties of REDD, the loopholes that REDD accounting are
plagued with.244 The lack of protection of other ecosystems and
services beyond CO2 sequestration, which REDD accounting
externalizes instead of internalizes, facilitates the market’s abil-
ity to exploit these loopholes, without regard to the externalities
imposed on others.245
REDD accounting currently gives no regard and thus no
value to soil formation, water cycle storage and release, or bio-
diversity conservation and nutrient recycling.246 REDD simply
facilitates the market determination of the price of carbon stored
at the expense of these other ecosystems and services provided
by nature.247 Adam Smith’s recognition of labor, land, and capi-
tal resulted in a more accurate valuation and pricing of these
other ecosystems and services.248 However, REDD in its current
form classifies land as a subcategory of capital by disregarding
these other ecosystem services.249 Although a transition from
REDD to REALU with AFOLU accounting may not mitigate
all of REDD’s externalities, it would help to elevate and start
to recognize land as an equal with labor and capital.250 There-
fore, since REDD merely determines the price of carbon without
valuing the other ecosystem services provided by forests, envi-
ronmentalists, when sequestering and monetizing carbon, must
not forget Oscar Wilde’s definition of a cynic: “[a] man who
knows the price of everything and the value of nothing.”251
Endnotes: Is REDD Accounting Myopic?
ACT III (1892) (“LORD DARLINGTON. What cynics you fellows are! CECIL
GRAHAM. What is a cynic? [Sitting on the back of the sofa.] LORD DAR-
LINGTON. A man who knows the price of everything and the value of nothing.
CECIL GRAHAM. And a sentimentalist, my dear Darlington, is a man who
sees an absurd value in everything, and doesn’t know the market price of any
single thing.”).
CAUSES OF THE WEALTH OF NATIONS 70-75 (1822) (listing the “component parts
of price” — land, labor, and capital stock).
ducing the term “neoclassical economics”).
cover) (1948) (introducing the term “mainstream economics”).
ICS (2008),
(2006), (defining ecosystem
services as “the benefits of nature to households, communities, and econo-
Compare SMITH, supra note 3, at 70-75 (listing the “component parts of
price” – land, labor, and capital stock) with MERTON H. MILLER, MACROECONOM-
ICS: A NEOCLASSICAL INTRODUCTION 19 (1986) (“The neoclassical growth model
. . . take[s] human labor as one of two inputs . . . [t]he second factor of produc-
tion, however, is no longer land but capital . . . .”).
Endnotes: Is REDD Accounting Myopic? continued on page 78