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Sharing monetory benefits from REDD+ at local levels

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Introduction and background.
REDD+ is intended as a results-based mechanism compensating forest and land-owners, such as communities and individuals, for their efforts to reduce deforestation and forest degradation. In general, benefit sharing systems work best when carbon benefits flow to those engaged in forest management in an effective and efficient manner to produce the intended emission reductions. Benefit sharing has to be equitable so that those incurring the costs of forest management benefit in a fair way. If carbon markets are to be sustainable in the long term, a share of the benefits must go to  project developers and mplementers – such as district councils, private sector developers or non-governmental organisations.

The issue of effectiveness, efficiency and equity (“3E”) is at the centre of the discourse on REDD+ benefit sharing. When designing benefit sharing systems, some of the key considerations include:
• who should decide about benefit sharing at different levels?
• who are the main stakeholders that are entitled to receive REDD+ revenue shares?
• how can costs and benefits be shared so that the efforts are compensated to the stakeholders at key positions to make changes happen?

The Norwegian-funded REDD+ pilot projects in Tanzania tested mechanisms for sharing monetary benefits at different levels, mostly as incentives and only in one project as a benefit stemming from reduction of emissions. The projects produced considerable co-benefits in addition to these monetary benefits, including more secure land and forest tenure rights, improved natural resource governance, better watershed management and slowing biodiversity losses. All pilot projects were concerned about the price of carbon, which  is currently too low to compensate transaction and institutional costs of project developers or opportunity costs of communities. There is also wide-spread frustration regarding the slow progress in concluding a binding international agreement on REDD+.

Key policy messages.
• The low price of carbon and the lack of clear and committed financing undermine the profitability and up-scaling of REDD+ as well as its investment potential.
• Local level benefit sharing arrangements work best when those being paid (rural communities responsible for management of natural resources) have the right to choose how benefits are received and used.
• Making direct financial transfers to the individuals and households as well as paying for actual measured reduction of emissions as early as possible increases effectiveness and efficiency of REDD+.
• Upscaling joint forest management agreements and other collaborative arrangements to share benefits that favor local communities can improve the management of government Forest Reserves. The agreements need to be long-term to build trust between beneficiaries.
• Given the low levels of forest carbon across much of Tanzania and low prices of carbon internationally, total revenue generated from carbon sales will probably be rather low. Therefore, other forestry income streams should be developed to benefit rural communities  for their efforts.

Tanzanian REDD+ Pilot Projects: Policy Brief 3.