Simple REDD+: a new compensation mechanism without reference levels based on net carbon sequestration services

Deforestation in tropical regions causes 15% of global anthropogenic carbon emissions. REDD+ – United Nations program for reduction of emissions from deforestation and forest degradation – is intended to curb emissions due to deforestation by offering compensation for reductions with respect to historical or future deforestation reference levels. Compensation based on reference levels of deforestation has been shown to be politically controversial and unfair to countries with low historical deforestation rates. New mechanisms able to incentivise countries in all phases of the forest transition are necessary. We propose a reference-free, assumption-free and international leakage-immune mechanism based on balancing compensations for carbon sequestration services with capped penalizations for annual deforestation emissions. Using the new mechanism, we estimate that countries with high deforestation rates like Brazil and Indonesia would forgo respectively $7.5 and $1.4 billion annually in terms of compensation for carbon sequestration. Countries with low deforestation rates and high forest stocks like Angola and Colombia would receive net annual payments of $860 and $740 million respectively. Because of its simplicity and transparency the mechanism could contribute to reach international consensus over the implementation of REDD+ compensation mechanisms.