Delacote, Philip2; Palmer, Charles3; Bakkegaard, Riyong Kim6; Thorsen, Bo Jellesmark7
1 Section for Environment and Natural Resources, Department of Food and Resource Economics, Faculty of Science, Københavns Universitet2 Institut National de la Recherche Agronomique3 London School of Economics4 Economics, politics and operational planning, Forest & Landscape Denmark, Faculty of Life Sciences, Københavns Universitet5 Administrative support, Department of Food and Resource Economics, Faculty of Science, Københavns Universitet6 Economics, politics and operational planning, Forest & Landscape Denmark, Faculty of Life Sciences, Københavns Universitet7 Administrative support, Department of Food and Resource Economics, Faculty of Science, Københavns Universitet
who obtains the surplus when policy objectives differ?
Improving information about individual opportunity costs of deforestation agents has the potential to increase the efficiency of REDD when it takes the form of a payment for environmental services scheme. However, objectives pursued in REDD projects may vary across policy makers. Within a theoretical framework, this paper explores the impacts of different policy objectives under two opportunity cost settings: asymmetric and full information. For a policy maker aiming to maximize net income from REDD, having full information may not increase the amount of forest conserved but could lead to a redistribution of rents away from agents. By contrast, for an environmental policy maker focused on maximizing the amount of forest conserved under REDD having full information increases the amount of forest conserved while reducing the rents received by agents. For a policy maker pursuing poverty alleviation objectives in REDD-affected communities, having full information makes no difference to overall welfare as rents remain with agents. The amount of deforestation avoided will at least be as high as under asymmetric information. These results are illustrated with data collected on opportunity costs in Amazonas State, Brazil.
Resource and Energy Economics, 2014, Vol 36, Issue 2, p. 508-527