The starting point for RED is climate change mitigation, and policy makers are mainly concerned with resolving the types of issues outlined above. Nevertheless, the topic has met with great interest among organizations dealing with two other key global challenges: biodiversity loss and the situation of the rural poor. Tropical deforestation not only contributes to climate change but is also regarded as the single greatest threat to terrestrial biodiversity (Turner 1996
). Conservationists broadly support RED as they anticipate biodiversity benefits in line with the funding it attracts by mitigating climate change (Laurance 2007
). However, carbon markets value carbon not biodiversity and are designed to focus on the lowest cost options for generating emission reductions. They will thus favour areas with low land-use opportunity costs which may not coincide with areas of high conservation priorities. For example, global hot spots for biodiversity conservation have high land-use conversion rates (Myers et al. 2000
) and are consequently likely to have high opportunity costs for conservation. For such areas, carbon finance alone may not be able to outweigh benefits from alternative land uses.
To evaluate the scope for synergies between RED and biodiversity conservation on a country level, we plotted a biodiversity index (Esty et al. 2005
) for each country with net forest area loss from 1990 to 2005 against its relative income potential from RED. Countries with high index values, representing high levels of endemism and threatened species, among other things, did not have high-income potential from RED. Countries with high-income potential, such as the Democratic Republic of the Congo and Liberia, are not countries of high conservation priorities (see top right quadrant, ). Moreover, on a country level, all Amazonian states are of relatively low biodiversity conservation priority, presumably because there still remain many remote, intact forest areas. There are also biodiversity-rich countries with high levels of biodiversity threats, such as Guyana and Venezuela, which will probably gain little RED carbon finance (see bottom right quadrant, ). Moreover, countries in arid regions, which tend to have carbon-poor forests, are unlikely to draw significant benefits from a RED mechanism, although their forests could be of significant biodiversity value. It is important to note that there could still be significant conservation gains in particular regions within
countries that have high-income potential from RED but score low in national biodiversity threat indices, for example, the biodiversity hot spot in the tropical Andes in Bolivia.
Figure 4 Relationship between national income potential from RED (expressed as a percentage of GDP, log transformed) and biodiversity index (variable combining proportion of threatened species, proportion of countries' eco-regions under threat and overall levels (more ...)
There are also widespread hopes that RED will provide resources for human development and poverty relief. RED could create monetary value for natural resources which millions of the world's poor depend on for their livelihoods (White & Martin 2002
). However, similarly to biodiversity co-benefits, countries with the greatest human development needs may not be countries that have high-income potentials from RED. In an analysis analogous to the above, we plotted potential per capita
RED finance against a human development index (). The findings suggest that a pure market approach might produce few synergies between emission reductions through RED and development benefits on a national level.
Figure 5 Relationship between per capita income potential from RED and environmental health index (variable combining death rate from infectious intestinal disease, child death rate from respiratory disease and infant mortality; Esty et al. 2005). This graph shows (more ...)
In addition, the degree to which synergies between conservation and development can be realized through RED depends on how the mechanism is put into practice. Compensation payments from an international mechanism would in all likelihood accrue to national governments. Whether these payments are passed on to rural populations and communities can depend on (i) the mechanisms used to lower deforestation and (ii) the drivers of deforestation that are targeted. For example, if a country decided to rely primarily on strict law enforcement to curb deforestation, there would arguably be much fewer development benefits than if PES schemes were set up. Similarly, a government could focus its efforts on a few players, such as large agro-businesses, rather than hundreds of thousands of smallholders and forest communities. Such an approach would probably also entail lower transaction costs.
Carbon finance may be efficiently channelled towards areas and countries that are priorities for conservation and development by providing supplementary international funding for RED initiatives which specifically aim to enhance non-carbon benefits. For example, targeted conservation or development co-financing may be able to ‘tip the balance’ in favour of pro-biodiversity or pro-poor RED activities. Similarly, conservation organizations with particular experience in a site or region could provide logistical or advisory support to encourage RED activities in priority areas. In addition, some buyers in existing carbon markets are willing to preferentially buy or pay higher prices for carbon credits if these are associated with measurable conservation and development benefits (EcoSecurities 2008
; Hamilton et al. 2007
). Certification standards for verifying such impacts exist and could be effectively used to promote co-benefits through RED.