JIKO Policy Paper 3/2010: REDD Crediting vs. REDD Funds – 
How Avoided Deforestation under the UNFCCC 
Should Be Financed

Since 2005, the parties to the United Nations Framework Convention on Cimate Change (UNFCCC) negotiate how the protection of rainforests could be integrated into the climate regime. This discussion paper primarily addresses the question of how this integration via the REDD (Reducing Emissions from Deforestation and Forest Degradation) mechanism should be financed. 
For this purpose, the authors first trace the negotiation process until the end of 2009. A short excursus then describes and analyses the integration of afforestation and reforestation activities into the Clean Development Mechanism. In the main part, the authors present the basic determinants for a possible REDD mechanism followed by a deeper look into financing options. Two main approaches can be identified: on the one hand, the introduction of a public fund, which acquires and manages financial means and distributes them to developing countries. On the other hand, financial resources could be raised via the international carbon market. The authors conclude that a combination of both financing approaches would not only raise the highest amount of financial means but also serve best to reduce several risk factors.

JIKO policy papers are written and published by the Wuppertal Institute on behalf of the German Environment Ministry (BMU). The positions expressed in this policy paper are strictly those of the authors and represent neither the opinion of the Wuppertal Institute nor of the BMU.