Linking Reduced Deforestation and a Global Carbon Market: Impacts on Costs, Financial Flows, and Technological Innovation

The paper finds that integrating REDD into global carbon markets significantly reduces tropical deforestation emissions and lowers overall climate policy costs by 10-25%. While it slightly decreases investments in some renewable energy and nuclear R&D (by 1-10%), it may marginally increase investments in carbon capture and storage (CCS) and integrated gasification combined cycle (IGCC) technologies. The study highlights that 'banking' credits enhances these cost savings and provides policy flexibility for future more stringent targets.

• Integrating REDD into a global carbon market significantly reduces tropical deforestation emissions by 2050, with reductions estimated at 20-22% in a Brazil-only scenario and 64-88% in global REDD scenarios.
• The inclusion of REDD lowers the total costs of global climate policy by an estimated 10-25%, depending on the participating tropical countries and whether the banking of excess credits for future use is permitted.
• REDD could allow for additional greenhouse gas concentration reductions of at least 20 ppmv of CO2-equivalent without increasing costs compared to policies focusing solely on the energy sector.
• The availability of REDD is estimated to decrease carbon prices in 2050 by 8-23% when banking is allowed, and by 11-26% when banking is not allowed.
• REDD generally leads to a 1-10% reduction in the total portfolio of investments and research and development (R&D) for new energy technologies, specifically affecting wind, solar, and nuclear energy.
• Contrary to the general decline in energy R&D, REDD has a slight positive effect on investments in coal-related technologies, specifically integrated gasification combined cycle (IGCC) and carbon capture and storage (CCS).
• While carbon market volumes increase with REDD, the overall value of international carbon market flows remains relatively stable because the increase in volume is offset by lower carbon prices.
• Latin America is projected to receive the largest share of the financial value from REDD opportunities; in global scenarios with banking, annual values for deforestation reductions reach $183-$216 billion/year over 2010-49.

APA

Bosetti, V., Lubowski, R., Golub, A., & Markandya, A. (2009). Linking Reduced Deforestation and a Global Carbon Market: Impacts on Costs, Financial Flows, and Technological Innovation. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200203051594044028.pdf

Chicago

Bosetti, Valentina, Ruben Lubowski, Alexander Golub, and Anil Markandya. Linking Reduced Deforestation and a Global Carbon Market: Impacts on Costs, Financial Flows, and Technological Innovation. Basque Centre for Climate Change, 2009. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200203051594044028.pdf.

Wikipedia

{{cite report |last1=Bosetti |first1=Valentina |last2=Lubowski |first2=Ruben |last3=Golub |first3=Alexander |last4=Markandya |first4=Anil |title=Linking Reduced Deforestation and a Global Carbon Market: Impacts on Costs, Financial Flows, and Technological Innovation |publisher=Basque Centre for Climate Change |date=June 2009 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200203051594044028.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bosetti2009linking, author = {Bosetti, Valentina and Lubowski, Ruben and Golub, Alexander and Markandya, Anil}, title = {{Linking Reduced Deforestation and a Global Carbon Market: Impacts on Costs, Financial Flows, and Technological Innovation}}, institution = {Basque Centre for Climate Change}, year = {2009}, month = jun, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/200910200203051594044028.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }