Centre for Social and Economic Research on the Global Environment (CSERGE)

The proposal by CSERGE offers a compensation mechanism with “combined  incentives” to reduce emissions in developing countries. Strassburg et al.  highlight two issues with existing mechanisms. Firstly, project- or nationallevel  mechanisms have been unsuccessful in the past due to national or  international leakage respectively. Secondly, additional incentives should  be provided to countries that have been conserving their forests in the recent  past (quadrant IV countries from Table 1).

To address these issues, the “combined incentives” mechanism proposes  that each country receives two kinds of incentives simultaneously. The first  is based on the ‘‘compensated reduction’’ concept and is an incentive to  reduce its emissions in comparison with its historical emissions. The second  follows the ‘‘expected emissions’’ concept that connects the incentive to the  ecosystems carbon stock while maintaining global additionality. It is an  incentive to emit less than it would emit if it followed an average behaviour  given by the global baseline emission rate. These “combined incentives”  allow funds to be allocated to both previously high emitters and countries  with currently low deforestation rates. The proportion of funds going to each  of these activities is adjustable and could be decided by the COP. To avoid  national leakage, the core mechanism would operate at the national level  and, since incentives are allocated per avoided tonne of CO2, the mechanism  can accommodate any source of funding.