Getting More `Carbon Bang' for Your `Buck' in Acre State, Brazil
30 Pages Posted: 31 Oct 2016
Date Written: October 31, 2016
Acre State in Brazil is at the forefront of efforts to institutionalize jurisdictional-scale policies that aim to reduce emissions from deforestation and forest degradation (REDD ). Given limited REDD funds and uncertain returns from alternative land uses, this paper estimates the minimum incentive payment Acre’s government would have to pay forest landowners in each of its 22 municipalities to ensure forest conservation. Despite low profits but with relatively low conversion costs and stable returns over time, pasture generates the highest returns in 19 municipalities. Municipalities are ranked according to their relative policy costs, a ranking which is compared to the distribution of forest carbon stocks across Acre. Finally, the relative cost per ton of carbon is derived, which enables the identification of a group of 13 municipalities with the greatest potential for ‘carbon bang’ for a given ‘buck’.
Keywords: Cost-effectiveness, Forest Conservation, Option Value, Payments for Environmental Services, Reducing Emissions from Deforestation and Degradation (REDD ), Uncertainty
JEL Classification: Q23, Q24
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