NationalgovernancestructuresforREDD+Arild Vatn*,Paul O. VedeldDepartmentofInternationalEnvironmentandDevelopmentStudies,NorwegianUniversityofLifeSciences,P.O.Box5003,1432Aas,Norway1.IntroductionA coreissueforthepost-Kyotoclimateregimeconcernshowtoobtainreduceddeforestationandforestdegradation(REDD+).Deforestationtakespresentlyplacemainlyinthetropicsandisanimportantsourceofcarbonemissions(IPCC,2007;vanderWerfetal.,2009).Moreover,REDDisseenbymanyasalowcostclimatemitigationoption(e.g.,Stern,2006).Hence,thereisinterestintheNorthforpayingtheSouthtoreducedeforestationtonextreduceownmitigationcosts.ThisdemandstheestablishmentofinstitutionsbothattheinternationalandnationalleveltogenerateandtransferthenecessarynancialresourcesinwaysrealizingREDD+activities.Thispaperfocusesatthenationalpartofsuchastructure.Morespecicallytheaimistoanalyzeofasetofpotentialnationalgovernancestructures,wherethedegreeofmarketandgovern-mentinvolvementvaries.Itisaresponsetotheacknowledgmentthatin-depthanalysesconcerninggovernanceissuesespeciallyatthenationallevelarelacking(Gregersenetal.,2010;CorberaandSchroeder,2011). Tocovertherangeofoptionsfrommarketstostate,wehaveselectedfourgenericgovernancestructurestobeevaluated:(a)amarket/projectbasedarchitecture;(b)asystemwithnationalREDD+fundsoutsidenationaladmin-istrations;(c)anationalREDD+fundorganizedunderthenationaladminis-tration;(d)conditionalbudgetsupport.Whiletheobligationsforreductionsofgreen-housegaseswillbesetininternationalnegotiations,thenationalgovernancestructuresforREDD+willinuencewhowillbeinvolvedindeningnationalresponsibilitiesandhowpoliciesonthegroundwillbeformedandimplemented.Reduceddeforestationwillnotonlyinuencegreen-housegasemissions,butalsolivelihoodsformillionsofpeople.IntheREDD+discourse,thereisemphasisonREDDasapotentialtriplewine.g.,Angelsen(2008)andUN-REDD(2012).Addedtoclimatemitigation,itmightalsoreducepovertyandthelossofbiodiversity.REDD+could,however,alsoresultinimpairedlivelihoodsforpeoplealreadyfacingdemandingconditions(e.g.,Ghazouletal.,2010;Vatnetal.,2009). Certainly,inthiscontext,thestructureofthedecision-makingprocessesincludingwhoisparticipatinganddeciding,willbeofgreatimportance.ThechoiceofgovernancestructureforREDD+ispoliticallydisputed.Acoreissueconcernstheroleofmarketsasopposedtostateadministrations.Thisdebatereectsageneraltrendonhowtodogovernancewhichatpresentemphasizesmoreuseofmarketsbothingeneral(e.g.,PierreandPeters,2000)andinthecaseofforests/REDD(e.g.,CorberaandBrown,2010;OkerekeandDooley,2010).Opportunitiesrelatetolesscentralcontrolandmorelocallygenerated,adaptiveandinnovativesolutions.Opposingviewstothisneo-liberaltrendemphasizethatacontractedstatereducesaccountability,resultsinlossesofGlobalEnvironmentalChange23(2013)422432ARTICLEINFOArticle history:Received5February2012Received in revised form 22 October 2012Accepted16November2012Keywords:REDD+GovernanceLegitimacyMarketsNationalfundsBudgetsupportTropicalforestsABSTRACTThis paper analyses a set of generic options for national REDD+ governance structures i.e., (a) a market/project based architecture; (b) a system with national REDD+ funds outside existing nationaladministrations; (c) a national REDD+ fund organized under the present administration; and (d)conditional budget support. The analysis is based on experiences fromdifferent, but similar governancestructures e.g., the Clean Development Mechanism, payments for ecosystem services, environmentaltrust funds and various forms of budget support. While a solution with a market/project based structurehas been favored by many, we conclude that this is the most problematic alternative. Concerning theother three, the national/local conditions will be of importance for their functioning. If REDD+ policiesinvolve a large part of a countys forested area, establishing a good link to the general forest and othersector policies will be necessary.2012 Elsevier Ltd. All rights reserved.*Correspondingauthor.Tel.:+4764965710/41517780;fax:+4764965201.E-mailaddresses:arild.vatn@umb.no(A.Vatn),pal.vedeld@umb.no(P.O.Vedeld).ContentslistsavailableatSciVerseScienceDirectGlobal Environmental Changej our nalhomepage:www. el sevi er . com/ l ocat e/ gl oenvcha0959-3780/$seefrontmatter2012ElsevierLtd.Allrightsreserved.http://dx.doi.org/10.1016/j.gloenvcha.2012.11.005communicationchannelsbetweenthestateanditscitizens,andleadstomorepatchyandunreliableservicedelivery.Morepowertolessaccountablelocalelitesismentioned.Issuesaroundmarketsandfairnessarealsoemphasized(PierreandPeters,2000;OkerekeandDooley,2010).ThechoiceofnationalREDD+structuresmustbeseenandunderstoodinthiswidercontext.AsREDD+isstillatthedrawingtable,ouranalysiswillbebasedonexperiencesfromsimilargovernancestructures.WeutilizeexperienceswiththeCleanDevelopmentMechanism(CDM),paymentsforenvironmentalservices(PES),ConservationTrustFunds(CTF),forestfunds,andgeneralbudgetsupport.TheanalysisalsocallsforadeepeningintospecicitiesofREDD+andhowtheexperiencesobtainedfromtheabovecasescouldtinaREDD+setting.Thepaperhasthefollowingstructure:First,weemphasizesometheoreticalaspectsconcerninggovernanceofreduceddeforestation.Second,wespecifytheoptionswehaveselectedforthenationalREDD+governancestructures.Nextwedenecriteriafortheanalysis.Themainsectionincludestheanalysisofthespeciedgovernancestructuresagainstthecriteriausingdatafromexistingpolicyareasasmentionedabove.Wethendiscusscorendingsandconclude.2.AnalyzinggovernancestructuresforREDD+2.1.GeneralperspectivesGovernanceencompassesboththestructuresandprocessesthatshapesocialpriorities,howconictsareacknowledgedandpossiblyresolved,andhowhumancoordinationisfacilitated.Governanceishencemorethangovernmentasitincludesalsoactorssuchascommunities,businessesandNGOs(seeLemosandAgrawal,2006).Theframingofhumanactionandinteractioniscore,emphasizingpower,involvementandlegitimacy.Gover-nancestructuresorarchitecturescanbeseenasconsistingoftwomaincomponents(Vatn,2011):-Thetypeofactorsinvolved,characterizedbytheircapacitiesandcompetencies,rightsandresponsibilities.-Theinstitutionalstructuresfacilitatingtheinteraction/coordinationbetweentheactors.Bothactortypesandsystemsofinteractionareinstitutionalizedfeatures.Hence,theyarestructuredbyasetofconventions,normsandformalrules(Scott,2008;Vatn,2005). Thetypeofactorsinvolved,theircapacities,interestsandspecicrolesintheactualgovernancestructureinuencetheoutcome.Thesamegoesforthekindofinteractionsthatisfacilitated.Concerningtheactors,onemaydistinguishbetweenprivate,publicandcommunityorganizations.Certainly,eachcategorycoversawidevarietyofstructures.Nevertheless,eachgroupcarriessomedistinctcharacteristicsregardingdecision-making.Concern-ingtheinteractionbetweentheseactors,wemaytypicallydistinguishbetweenmarketexchange,commandandvariouscooperative/reciprocalarrangements.Wemayfurtherencountersituationswithnorules.Weshouldalsonotethatonendsincreasingemphasisintheliteratureonhybrids,meaningmixedformsoftheaboveactorstructurese.g.,publicprivatepartner-shipsseeLemosandAgrawal(2006)andSikor(2008).Governancestructuresare differentnotleastconcerningthefollowingaspects:-Rightsandresponsibilities:Thesestructuresdenewhichinterestsareformedandprotected.Theyconcernboththerulesdenedforpolicyformulationandimplementation,andthosedeningaccesstoeconomicresourcese.g.,propertyrights.Theoveralllegitimacyofinstitutionalsystemsisverymuchrelatedtotheproceduresestablishedfordecision-makingandtheimplemen-tationatvariouslevelsofsociety.-Information/knowledge:Productionanddistributionofinforma-tionandknowledgeareessential.Quality,accessandtranspar-encyareimportantsystems-dependentdimensions.Equallyimportantiswhatkindofinformationandknowledgeisacceptedasbasisfordecisionsbythevariousactors.-Transactioncosts:Thisconcernscostsofinteractionsbetweenactorsi.e.,costsofinformationgathering,formulationofgoals,agreementsorcontracts,andcontrolofagreements.Transactioncostsvarybothduetothecharacteristicsofthegoodsinvolvedandthetypeofgovernancestructure(Williamson,1985).Someservicesmaybeeasilyhandledthroughthemarketwhilehighcontractingcostsmayfavorpublicsystems.-Motivation: Motivationsandinterestformationvaryacrosstypesofactorsandformsofinteractions.Theroleofsocialvs.individualinterestsisimportantaswellaswhatthecontente.g.,self-interestis(MarchandOlsen,1995;Vatn,2009). Willingnesstocooperateasopposedtoactingstrategicallyisthereforeexpectedtovaryacrossgovernancestructures.Takentogethertheseaspectsofagovernancestructureareexpectedtoinuencetheresults(outputs)thatareproduced,theircostsandhowthesearedistributed.Thesearecontentiousissuesandstudyinggovernancestructuresinvolveseveralimportantnormativeques-tions.2.2.ThespecicitiesofREDD+inagovernancecontextREDD+focusesforemostonforestscapacitytostorecarbon.Assuchtheyhavesomechallengingcharacteristics.Beingbiologicalsystems,forestsaresubjecttonaturalvariationsandperturba-tions.Thisimpliesuncertaintyinbothtimeandspace.AstheideaofREDD+istopayonlyforchangesincarbonstocksthatwouldnototherwisehavetakenplace(Angelsen,2008),issuesbothaboutdeningresponsibilityandadditionalityareraised.Finally,leakageisagreatchallengeasreduceddeforestationmaybeoffsetbyincreaseselsewhere(Wunder,2008).Forestsrepresentvasteconomicresources.Theyformlivelihoodsformillionsofpeopledeliveringrewood,timberandnon-timberforestproducts.Theyarealsoveryimportantaslandtoclearforagriculture.ThemainideaofREDD+istocompensateforreducedaccesstotheseresourcesfollowingfromprotectingthecarbon.Whatandwhomtocompensateare contingentonthe rightstoland,paymentsystems,transactioncostsandpowerrelations.Thepoorestpeopleinruralareasare thelandless.Theyoftendependheavilyonforestlivelihoods(Vedeldetal.,2007). Sincetheydonotowntheland,theymay,however,notreceiveanycompensationforlostlivelihoodoptions.RathertheymaybefurthermarginalizedbyREDD+ascompetitionoverlandincreases.Similarly,theconditionsforagriculture,includingexpansionsintonewlandtofeedagrowingpopulation,maybecomecompletelychanged.Therefore,onemayalsoneedtoestablishprogramstosupportchangesinfarmingpractices,makenewenergysourcesavailableetc.Thishighlightsthemulti-sectorialcharacteristicsofREDD+.ItisalsohopedthatREDD+willincreasebiodiversity.Tropicalforestsareveryrichinbiodiversity.Protectioncouldthereforebeanimportantwaytoreducebiodiversitylosses.However,itisnotgiventhatwherecarbonischeapesttostore,thereisalsomostbiodiversity.REDDwillbeestablishedinquitevaryingsocialandpoliticalcontextsdemandingsensitivitytoexistingnationalandlocalinstitutions.ResearchonPESprojectse.g.,Muradianetal.(2010)andCorberaetal.(2009)emphasizestheroleofexistingpowerrelationsandinstitutions/socialembeddednessforacceptabilityandeffectsofPESprojects.A.Vatn,P.O.Vedeld/GlobalEnvironmentalChange23(2013)422432423Finally,REDD+isexpectedtoattractmuchresources(MeridianInstitute,2009).Itcouldout-competepresentnationalforestryprogramsinmanycountries.Moreover,itmayattractpeoplewithothermotivationsthanreducingcarbonemissionsandensuringco-benets.Theforestsectorisalreadyhauntedbycorruptioninmanyregionse.g.,Smithetal.(2003)andMilledgeetal.(2007).AnanciallylargeREDD+willincreaseopportunitiesformisman-agement.3.OptionsfornationalREDD+governancestructuresAsemphasized,weevaluatefourtypesofnationalgovernancestructuresforREDD+tocoverwhatweenvisionasthemaintypeoptionsavailable(seeFig.1).Themarket/projectbasedsystemforREDD+nancingwillincludebuyersandsellersofcarbonstoredinforests.Buyersaredominantlyexpectedtobermswithemissionreductionresponsibilitiesaccordingtoapost-Kyotoagreement,whilesellersareownersofforests,maybealsoincludingactorswithuserightstoforestresources.Interactionbetweentheseactorswilltaketheformoftrades.ThissystemwouldbequitesimilartothatoftodaysCDM.Thesecondgovernancestructureimpliesestablishingofanationalfundasanintermediarybetweenforestowners/usersandpotentialnanciersofREDD+activities.Whilebeingindependentofthepresentstateadministration,weimaginethattheboardwouldtypicallyincluderepresentativesfromtheprivatesector,civilsocietyandpublicauthorities.Whilethemarketsolutionmayalsoincludeintermediaries,theideabehindthisfundistoestablishanon-commercialactorbeingnationallyresponsibleforREDD+activities.Moreover,resourcesmayinthiscasealsocomefromaninternationalfund.Finally,theindependentnationalfundsmaynotonlymaketradeswithlocalforestowners.Theymayalsohavethecapacitytosupport/runlargerprogramsincooperationwithlocalcommunities.Thelasttwooptionsinvolvethestateandstateadministrationdirectly.Theideabehindafundinthenationalstateadministra-tionistoutilizethecapacitiesandcompetenciesofpresentstateadministrations.Allocationofresourcesis,however,madebyaseparateboardwithREDD+responsibilitiesonly.ThisfundissetupasindependentofordinarybudgetaryprocesseswithaspeciedresponsibilitytoallocatefundstoREDD+.Itreportstothegovernment,butmayincluderepresentativesfromalsocivilsocietyandthebusinesssector.Concerninginteractionrules,thisstructurecouldbeinstitutionalizedtobothusethecapacitiesofstateadministrationstocommand,butalsobeinvolvedindirecttradeswithforestowners/users.Concerningnallybudgetsupport,theideaistoutilizetheexistingstatestructureswithitsparliamentsandministries.ResourcesowfromaninternationalfundtotherespectivestateconditionedonthefulllmentofREDD+activities.Resourcesarethenallocatedtovariousactivities/forestowners/usersrelyingforemostthecommandpowerofthestate.Fig.1alsoincludestheinternationallevel.ThechoiceofanationalREDD+structurewillbeinuencedbytheinternationalfundingsysteminplace.Whilestudyingthisissuewouldgobeyondtheaimofthispaper,wenotethatREDD+resourcesmaybemadeavailablethroughinternationalcarbon(compliance)marketslikethepresentCDMortheymaycomethroughdifferentformsofinternationalfunds.Compliancemarketsi.e.,asystemwhereagentswithreductionresponsibilitiesaccordingtoapost-Kyotoagreementreceivecertiedemissionreductions(CERs)forREDD+paymentsaretypicallythoughttooperatethroughamarket/projectbasedstructure.Itis,however,alsopossibletocombineacompliancebasedsystemwithaninternationalfund.ThisfundthenissuesCERstoactorswithreductioncommitmentsrelativetotheirpayments.Theresourcesofthefundaresubsequentlyusedtopayforreduceddeforestation.Inthisway,resourcesfromtheprivatesectorcanbetransferredeventostatebudgets.Notethatmostanalysese.g.,MeridianInstitute(2009)concludethattomakeREDD+becomenanciallysizeable,somekindofcompliancesystemwillbenecessary.4.EvaluationcriteriaConcerningtheevaluationofthefournationallevelREDD+architectures,wewillfocusontheirlegitimacy.Theliteratureonlegitimacyisquitecomplexemphasizingbothnormativeanddescriptiveelements,bothproceduralandconsequentialaspects.Inouranalysiswehavechosentodenecriteriabothconcerningprocessandexpectedresultsfollowingthenowquitestandarddistinctionintheliteraturebetweeninputandoutputlegitimacy(e.g.,Ba ckstrand,2006; seealsoScharpf,1999).AccordingtoBa ckstrand,theformerrelatestotheorganizationandcontentofthepolicyprocess,andsheemphasizesissueslikeresponsibility,participation,accountabilityandtransparency.Thesecondcon-cernsresults/effectiveness.Concerninginputorprocess,itisparticularlyimportanthowdifferentinterestsareincludedinpolicy-formulationandimplementationprocesses,andhowdecision-makersareaccountabletostakeholdersandthewidersociety.Concerningresults,wewillhereuseaversionofthe3Esframeworkeffectiveness,efciencyandequityaspresentedine.g.,Angelsen(2008).WhilegoingbeyondBa ckstrandatthispoint,wenotethatthisframeworkisfeaturinghighintheREDD+discourseandweuseittolinktheanalysistoasetofspecicissuesraisedinthatcontext.Morespecically,wewillusethefollowingcriteria:1. Market directed (financial) intermediariesProject basedNational fundsBudget supportLocal/private projects National programsInternational funding (international carbon markets, global fund(s))2. Separate national fund3. Fund in national state administration4. State budgetsSector policiesFig.1.OptionsfornationalREDD+fundingarchitecture.ReproducedfromVatnandAngelsen(2009).A.Vatn,P.O.Vedeld/GlobalEnvironmentalChange23(2013)422432 424-Process(input)legitimacy:ConcernstheappropriatenessandacceptabilityofREDD+policyprocessesbothonprincipalgroundsandw.r.t.theinterestsofvariousactorse.g.,nationalauthorities,civilsociety/localcommunities,businessanddonors.Thisconcernsmorespecicallyissueslikeresponsibility,participation/typeofinvolvementatdifferentstagesandlevelsoftheREDD+process,thetransparencyoftheprocessandtheaccountabilityofdecision-makerstowiderconstituencies.-OutputlegitimacyEffectiveness: Concernshowwellthepolicymeetsitsoverallgoals.Specicaspectsconcernthecapacitytoraisefunds,theabilitytoavoidleakage,andtoensureadditionalityandpermanence.Implicitintheaboveisthecapacitytocoordinateacrosssectorsandlevelsofgovernment.Implicitarealsoissuesconcerningcomplianceandmotivationalaspectse.g.,risksofcorruption.Efciency:Concernstheabilitytoreachgoalsatlowestcosts.Thisinvolvesboththedirectcostofe.g.,reduceddeforestationandthetransactioncostsrelatedtothesystemofdecisionmaking,contracting,paying,monitoring,reportingetc.Capacitytodeliveronco-benets: FollowingtheREDD+discourse,ouremphasisisonpovertyreduction/equityandbiodiversitypreservation.Rightsissues,transactioncostsandmotivationalissuesarecoreastheyinuencetheuseofREDD+resources.Traditionally,the literatureonlegitimacyhasfocusedondueprocessemphasizinglegality.Overthe yearsthe issuesare broadened,includingthe formofparticipation(e.g.,discursiveness)andfairnessindistributionofpowerandoutcomes(e.g.,Dryzek,2001;Backstrand,2006;PaavolaandAdger,2006;OkerekeandDooley,2010).We alsonotethatthere isalinkbetweenprocessandoutputlegitimacyastheprinciplesofandjusticationsforagovernancestructureifappropriate/resonatingwithsocialbeliefsaboutwhatisagoodordertendtoensurevoluntarycompliancedespitethe factthatresultsmaynegativelyinuencespecic interests(Scharpf,1999).Inthecaseofoutputlegitimacy,weusecapacitytodeliveronco-benetsinsteadofthestandardequityelementofthe3Es.Thisisbecauseco-benetshasbecomeastandardreferenceintheREDD+literature.Sinceequityconsiderations/povertyalleviationispartofco-benetstogetherwithbiodiversityprotection,wehavechosentousethelatterasourthirdelementofoutputlegitimacytoavoidoverlapintheanalyses.Certainly,onemayarguethattermingequityissuesaco-benetmayimplyarepudiationofthesebenets.ItclearlyshowsthatREDD+hasitsmainfocusoncarbon.Usingthestandardterminologydoes,however,notimplythatweputlessemphasisonthesebenetsinouranalyses.5.EvaluatingtheREDD+governanceoptionsOuranalysisisforemostgeneric.Strengthsandweaknessesofthedifferentoptionswilldependontheparticularsituationineachcountry.Wementionsomeofthemostimportantcontextspecicissues,whileadetailedanalysisofthesecanonlybecoveredincountry-wisestudies.5.1.Amarket/projectbasedarchitectureThemainempiricalbasisforevaluatingamarket/projectbasedarchitectureisdatafromCDMandtosomeextentPESprojects.Market/projectbasedsystemsdrawespeciallyonthecapacityofmarketstodelivercost-effectivesolutions.Aspartofacompliancemarket,itisthoughttoofferstrongmotivationtondlowcostcarbonmitigationsolutions.ItspotentialforattractinglargeresourcestoREDD+hasalsobeenemphasizede.g.,KarousakisandCorfee-Morlot(2007)andSaundersetal.(2008). ThiskindofprivatefundingisseenasnecessarytomakeREDD+successful.Finally,itisarguedthatusingmarketsmayreducetheproblemofcorruptionandmismanagementoftenobservedinpublicadmin-istrationsinmanydevelopingcountries.Whilethesearestrongarguments,therearealsochallenges.Letusstartwithlookingatprocessissues.Principally,amarketimpliestradesbetweenforestownersandbuyersofcarboncredits.Whilethecreditsthemselvesmustbeissuedbyanindependentparty,thetradeexcludesparticipationfromactorsotherthanthosetrading.Inthecaseofforeststhereareseveralissuesinvolved.First,rightstoforestsresourcesaretypicallypluralintimeandspaceandoftenhighlycontested.Whilethestatemayoftenowntheforests,localcommunitieshavevariousformsofuserights.Thiscreatesademandingsituationfortradesrequiringfurtherrightsspecica-tionsseeUnruh(2008)andCorberaandBrown(2010).Thesituationmaycreatetemptationstolandgrabstoexcludeespeciallyinformalrightsholdersfromaccesstoland(Nelson,2010;Mustalahtietal.,2012).Moreover,theremaybeinformationasymmetriesinvolvedputtinglocalrightsholdersintheweakerpositioninnegotiationovercompensations/payments.Theobser-vationsmadeaboutso-calledcarboncowboysisanindicationofthechallengesfacedhere.AsemphasizedbyOkerekeandDooley(2010)andThompsonetal.(2011), protectinginterestsoflocalcommunities/indigenouspeoplethereforedemandsactionbeyondthemarket.Concerningprocesslegitimacy,theroleofferedtothirdpersonsisveryimportant.Forestresourceshavetypicallybothpublicandcommon-poolcharacteristics.Astradersareonlyaccountabletoeachother,thirdpersoninterestsareexcluded.Transparencyisalsoreducedtotheextentthatpartiestothetradecanclaimthatinformationmustbeprotectedforbusinessreasons.Atthesametime,governmentsmaybeinastrongpositioneveninthecaseofmarkettradesasstatesarethedominantformalownersofforestsinthetropics(e.g.,Siryetal.,2009;Lyster,2011).Itis,however,afundamentalquestionwhetherstateinvolvementshouldforemostbeasownerthroughtradingorasapolitical/democraticsystemwithresponsibilityforlanduseplanning.Tothe extentthatforestsareowned byprivateactors, theimplications for policyofthe marketmodelareevenmorechallenging. One may askifit is appropriate tolet internationaltrades over forest landdominatethe development of anationsforest sector.This questionbecomesmore serious the largerREDD+ grows.IfREDD+ dominates the forest sectornancially,the market/projectarchitecture can side-line state forest sectormanagement.This could inuencethe ability ofthe stateadministration toimprove transparency, accountabilityandparticipationin decision-making inways reducingwiderlegitimacy.Movingtoeffectiveness,itisnotgiventhatacompliancemarketwillattractlargeresourcestodeforestationprojects.TheCDMexperiencesoffersomeinsights.In2009,onlyabout1%ofCDMprojectsinthepipelinewereforestrelated(UNEP,RisoeCentre,2010). AccordingtoRobledoandMa(2008),thisascribesnotleasttocomplicatedrulesmakingforestprojectsexpensivetoinitiate.NotemoreoverthatCDMonlyincludesafforestationandreforestation.Deforestationwasexcludedduetoverydemandingcontrolandmeasurementproblems.SimilarobservationsaremadeconcerningPESforestcarbonprojects(Corberaetal.,2009).ToensuresufcientresourcestoREDD+throughaCDMlikesystem,onemightthereforehavetomakeREDD+investmentscompulsory,goingsomewhatagainstthelogicofthemarket/projectmodel.Anotherchallengefortheeffectivenessofmarket/projectsolutionconcernsleakage.TheexperiencewithCDMillustratesthis.Tobeviable,monitoringandcontrolschemes(MRV)mustbesetupoutsidetheprojectareasaswell.Ifleakageisobserved,theA.Vatn,P.O.Vedeld/GlobalEnvironmentalChange23(2013)422432425projectbasedsystemwill,however,havenopowerinitselftocorrectforthisasthereisnoarrangementcoordinatingactivitiesonthegroundexceptthepowerofinvolvedstatestodismissprojects.REDD+compliancemarketswilldirectactiontowardbuyingcarboninstandingforests.Curbingdeforestationmay,however,demandactioninothersectors,e.g.,energyandagriculture.TotheextentsuccessfulREDD+actionsdemandcross-sectorengage-ment,apuremarket/projectbasedsolutionhasahandicap.Asimportantisthefactthatmuchdeforestationistheresultofillegalloggingandpoorgovernance.Theseareissuesthatthemarket/projectapproachitselfwillnotbewellsuitedtohandle(e.g.,Saundersetal.,2008).Thislinkstotheissueofcorruption.Willamarket-basedREDD+havethecapacitytoavoid/reducethat?TheliteratureonCDMisnotveryencouraging.Oneproblemisthatbothsellersandbuyerswillgainfromctitioustradesi.e.,reductionsthatshowupmainlyonpaper.Therearethusissuesconcerningadditionalityofprojectsandtheproblemofoverestimatedeffectse.g.,Schneider(2007)andSovacoolandBrown(2009).Concerningefciency,theleveloftransactioncostsiscore.ThesecostsseemtoexplainthelowlevelofforestprojectsunderCDM.Moregenerally,statepaymentsheavilydominatemarkettransactionsinthecaseofPESseeMilderetal.(2010).Highlevelsoftransactioncostsinthecaseofmarketsseemtobeaveryimportantpartoftheexplanation(Vatnetal.,2011). InthecaseofPES,Wunderetal.(2008)indicatethattransactioncostsareintheorderof30100%comparedtopayments.Studyingagri-environ-mentalprograms,Rrstadetal.(2007)concludethatcomplexityofatransactionvastlyincreasestransactioncosts.Marketsworkwellforstandardizedcommodities.Assoonasonemovestomorespecictradeswithcomplexandoftenidiosyncraticgoodslikeecosystemservices,usingstatepayments/taxesasopposedtomarkettradesmaysimplifytheprocesssubstantiallyseeVatn(2010).Thefactthatpropertyrightsforforestsareoftencontestedstrengthensthisargument.Movingnallytoco-benets,theexperienceswithmarketbasedsolutionsarevaried.Reviewingtheliterature,wemakethefollowingcoreobservations:-CDMhasdeliveredratherweaklyonco-benets.Those buyingemission reductionsare lookingfor the cheapest carbonoptions.For co-benets todowellinamarket setting, thesemustthen bejointlyproducedwiththe cheapcarbon. Olsen(2007)andOlsen andFenhann (2008) show thatthisis oftennotthe case.-Inlinewiththis,CDMfundsdonottendtoowtothepoorestregions.Hence,AfricahasreceivedalowpercentageofCDMinvestments(UNFCCC,2009).Lackofsecurepropertyrights,andcostlytransactionscomparedtolowcarboneffectsgainedpertradeareimportantexplanations(e.g.,LipperandCavatassi,2004,Cosbeyetal.,2005).SimilarobservationsaremadeinthecaseofPES(e.g.,Grieg-Granetal.,2005;Corberaetal.,2007;Muradianetal.,2010).-Venteretal.(2009)pointtowardsimilarissuesforbiodiversityprotection.Therearetrade-offsbetweencheapcarbonandhighlevelsofbiodiversityprotection,whilethechallengesseemclearlysmallerthanforpovertyalleviation.-CDMhasattractedsubstantialresourcesandresearchersemphasizethatithascaughttheattentionofmanyintermediar-iesthatratherareafterthemoney,causingthewideraimsofCDMtobeside-linedtosomeextent(e.g.,LloydandSubbarao,2009)-Thetypeofmarketalsoinuencesmotivationsforcarbontraders.Neeffetal.(2009)documentwillingnesstopayforco-benetsinthevoluntarymarket.WhilebuyersofCDMcreditstendtolookforcheapcarbon,thoseoperatinginvoluntarymarketsaremoreafterconsumertrust.Thisillustrateshowthecomplianceinstitutionitselfmaynarrowthefocusoftraders.Oneshouldnallynotethatthekindofintermediariesinvolvedmaymakeadifferenceconcerningperformance.SomeNGOsgetinvolvedasintermediariesforwiderreasonsthanearningincomefromtrades.Whilewehavefoundnostudiesanalyzingdifferencesbetweentypesofintermediaries,wenotethattheGoldStandardforcarboncreditswasdevelopedbyNGOstostrengthentheemphasisonsustainabledevelopmentinthecaseofCDM(Stenslie,2010).5.2.FundsoutsideexistingnationaladministrationsConservationtrustfunds(CTFs)arethekindofexistingfundsthatcomeclosesttothisstructure.Suchfundshaveexistedsincetheearly1990s,andtherearepresentlyabout50ofthem(SpergelandTa eb,2008).WhilepredominantlyfoundinLatinAmericaandtheCaribbean,therearealsoCTFsinAfricaandAsia,andinsomeformerSovietUnionstates.CTFsaredominantlyorganizedtonancebiodiversityprotection.ItshouldbenotedthattheyoftenoperateasintermediariesinPESprojects.We alsonotethatinanalyzingexperienceswithCTFs,thereareratherfewespeciallyresearchbasedassessmentstorelyon.CTFsoperateatnationallevelsandmanyhavebeenestablishedbyspecialnationallegislation(SpergelandWells,2009).Theyarepublicprivatepartnershipswithboardstypicallyincludingrepresentativesfromcivilsociety,business,academicorganiza-tions,donorsandgovernmentofcials.Non-governmentalrepre-sentativesnormallyhavemajority(GEF,1998).TheliteratureonCTFsindicateshighoverallprocesslegitimacy.Eveniftherehasbeencriticismofdonordominanceespeciallyinnewlyestablishedfunds,CTFsaretypicallyestablishedinratherclosecollaborationbetweendonorsandthehostingstate(Moye,2002).Thewiderepresentationinmostboardshasfurtherstrengthenedlegitimacy.Thesystembuiltforthesefundsemphasizehighleveloftransparency.InmanyCTFstheboardmembersareappointedasindividualstoavoidclosetiestospecicinterests.Thismayprovokeissuesofaccountability,though.Theliteraturedoesnotmentionanysuchcritique,whilewenotethatalsointhecaseofCTFs,environmentaldecision-makingispushedoutofthestandardpoliticalprocess.SpergelandTa eb(2008)emphasizethatthebusinesssectorissupportiveofCTFswhilethesomewhatlowervisibilityofferedtodonorscomparedtothemarket/projectbasedsystemisnotedasanissue.Concerningeffectiveness,CTFsweresetuptoattractprivatefundstonationalenvironmentalprotectionactivities.AccordingtoSpergelandWells(2009)manynanceministriesinitiallyopposedtheirestablishment,butwerepersuadedtoacceptthesolutionduetoitsabilitytoaccessotherwiseinaccessibleprivatefunds.Despitethis,themainsourceofCTFnancesisstillpublic.AccordingtoSpergelandTa eb(2008)theycoveralmost75percentofatotalfundingofabout1.5billionUS$forCTFsworldwide(SpergelandWells,2009).TheliteratureemphasizesgreatuncertaintyconcerningtheimpactofCTFactivities.Thefocushasbeenmoreonprocessthanimpact.Baselinedataareoftenlackingandmonitoringofresultsonthegroundisweak(GEF,1998;SpergelandTa eb,2008).Thisisamajorweakness,butnotanargumentspecicallyagainstCTFs.Thisisaproblemforallsystemsreviewedinthispaper.Moreover,itshouldbepossibletoremediatethisbyincreaseddemandsfromdonors.CTFsfacesomeofthesamerestrictionsasmarket/projectbasedsystemsconcerningcoordinationacrosssectors.SpergelandTa eb(2008)refertoexceptionsliketheMexicanNatureConservationFundanditscoordinationofactivitieswithofcialMexicanpolicies.Nevertheless,CTFsoperatetoalargeextentthroughA.Vatn,P.O.Vedeld/GlobalEnvironmentalChange23(2013)422432 426fundingprojects.Hence,someoftheproblemsmentionedinrelationtothisissueraisedinSection5.1wouldalsoapplyhere.AreasonforestablishingCTFshasbeentoreducecorruptionandensureindependencefromgovernmentsincreasingdonorcondencethatfundswillbespentefcientlyandavoidredirectionofresourcestoothergovernmentuses(Starke,1995).WhiletheliteratureonCTFsdoesnotmentioncorruptionproblems,weshouldnotethattheemphasisoncorruptionintheCDMliteraturemayfollowfromdifferentgoals,notdifferentsystems.MostCTFsareorientedatfundingbiodiversityprotectionespeciallythroughnationalparks.Nocomplianceissuesareinvolved,nocreditsissued.Hence,therearefewermotivestowardmanipulatingdata.Turningtoefciency,ithasbeenarguedthatCTFsincreasecostsbyestablishinganextramanagementlevelbetweenbuyersandsellersseeBayonetal.(1999).Thisargumentisnotwellsubstantiated.Makingthiskindoftransactionisdemanding,andusingintermediariesseemshardtoavoid.Rather,professionalintermediariescouldreducetransactioncosts(Bayonetal.,1999).HowefcientCTFsareatdoingthatjobisdifculttoassessgivenpresentdata.GEF(1998)documentsthatfundshaveoperatingcostsintherangeof2530%ofthetotalbudget.SpergelandTa eb(2008)recordsomewhatloweradministrativecostsintheorderof1020%.ThetransactioncostgurespresentedearlierforPESmoregenerallywereabithigher(1550%ifrecalculatedtotheaboveformat).Thedifferencemaybeexplainedbysomeeconomiesofscale.Asimportantisthefactthatthelatteralsoincludestransactioncostsforthelocalorganizationrunningtheprojects.NotemoreoverthatthereisoverlapinthedataasmanyPESprojectsarechanneledthroughCTFs.ArgumentsinfavorofCTFsalsoconcerntheircapacitytoavoidtherigidityofmanystateandlocaladministrations.Inlinewiththis,SpergelandTa eb (2008)offerexamplesofverybureaucraticmanagementsystemsife.g.,theCTFiscontrolledbyaministry.Certainly,thepotentialgainofCTFsdependsonthekindofpublicmanagementsysteminthehostcountry.Addedtothatistheissueofpoliticalaccountabilitymentionedabove.Aspreviouslyemphasized,paymentsforenvironmentalser-vicesmaynothaveawell-denedreceiver.Hence,Bayonetal.(1999)emphasizethateffectiveCTFstendtoexpandbeyondtheroleofapurenancialmechanism,engagingininstitutionalcapacitybuildingatthelocallevel.So,creatingnewlocalgovernancestructuresisoftenneededtomakepaymentswork.Turningnallytoco-benets,thereisnotmuchdocumentedexperience.AsCTFsarepredominantlyorientedtowardprotectingbiodiversity,onecouldexpectthemtobebothpositivetoandcapableoftakingbiodiversityissueswellintoaccount.Note,however,thatthedynamicsmaybedifferentwithfocusturningtowardcarbon.Concerningpovertyissues,therehasgenerallybeenconictsbetweenbiodiversityconservationandlivelihoodprotection.Thisconcernsnotleastprotectedareamanagement(e.g.,Vedeld,2002;Huttonetal.,2005).AsCTFsdominantlysupportthenancingofsuchareas(GEF,1998;SpergelandTaeb,2008),theissueislikelyalsoaproblemforthem.SpergelandWells(2009,p.81)pointtowardaspecicaspectofthisstatingthatCTFssometimesstrugglewithgovernmentsthatwanttouseCTFsforpovertyalleviationprojectswhicharenotrelatedtoconservation.Weshouldalsonotethatinmanycases,theCTFshaveamanagementculturewithquitestrongconservationvaluesandcompetences,beinglittleinvolvedincommunitybasedmanage-mentactivities.5.3.ConditionalbudgetsupportAsREDD+maygrowlargeincludingsubstantialforestareasinacountryinvolvingthegovernmentdirectlymayseembothunavoidableandwarranted.Analyzingthisoption,wehavelookedintotheliteratureonbudgetsupportandconditionality.Develop-mentaidintheformofbudgetsupporthasincreasedsubstantiallysincethelate1990s(IDDandAssociates,2006).Itimplieschannelingdonorfundstoapartnercountryusingitsownallocation,procurementandaccountingsystem(KoeberleandStavreski,2006,p.7).Onereasonforthismovewasratherweakresultswithstandardprojectandevenprogramaidsinceitwasfragmentedandweaklycoordinatedwithnationalpoliciesresultinginweaksenseofownership,rentseekingbehaviorandpooroutcomes.Italsorepresentedashiftinthinkingtowardestablishingapartnershipbetweendonor(s)andtherecipientcountry,respond-ingtoacritiqueofoldstyleconditionalityasinthelendingpracticesoftheIMFandtheWorldBank.ItwasrealizedthatgoodpoliciescannotbeboughtasemphasizedbyJosephStiglitz(TheEconomist,1999).Severalargumentsareemphasizedconcerningstrongconditionality(e.g.,Checkel,2000;Killick,1997).First,usingconditionalitywhengoalsofdonorsandtherecipientgovernmentareinconictisnotveryeffective.Second,paymentsareneverthelessoftenmadedespiteconditionsnotbeingfullledasdonorrepresentativeswanttodisbursemoneyalreadyallocated.Thisinuenceswillingnesstocomply.Third,conditionalitytendstoreducetheengagementofthehostcountry.Anownershipproblemiscreated.Finally,conditionalityfaresbadlyinnationalcontextsmarkedbypoororfragmentedpolicyenvironments(Checkel,2000,p.3).Theinterpretationoftheabovendingsvariessubstantiallyacrosstheliterature.WhileauthorslikeKillick(1997)andSvensson(2003)emphasizethatconditionalityisnormallynotformulatedinawaythatisconsistentinincentiveterms,Checkel(2001,p.560)underlinesthattheissueisnotjustaboutincentives,butalsoaboutdevelopingachangedagendawheremutuallearningandthediscoveryofnewpreferencesreplaceunilateralcalculation.Asimplicitintheabove,channelingresourcesthroughthestatebudgetwouldscorehighonprocesslegitimacytotheextentthatthepoliticalsystemisdemocraticallycontrolled,accountableandtransparent.Acoreissueconcernsthecapacityofthepoliticalsystemtoinvolvevariousstakeholders.Therearemanyexamplesofweakinvolvementoflocalcommunities.ThemarginalizationofindigenousgroupshasbeenespeciallyemphasizedinthediscussionoverREDD+e.g.,Lyster(2011). Thereare,moreover,reasonstofearthatREDD+mayturntherecenttrendtowarddecentralizationofforestmanagement;e.g.,Phelpsetal.(2010).Theywarnagainstre-centralizationbecauseofeconomiesofscaleinMRV,coordinationneedsandstandardizationissues.Involve-mentofcommunitiesandmarginalizedpeopleisbothimportantforREDD+legitimacyandagreatchallengeforstateadministra-tionsinmanydevelopingcountries(e.g.,Colfer,2011).Transparencymaybeanissueasmoneyisnowpaidthroughnationalbudgetsanditwillnotbeeasytofollowitsspecicuse.Ifthemoneyispaidconditionallyonthebasisofperformancei.e.,levelofreduceddeforestationonecouldarguethatthereisnoproblem.Itistheamountofcarbonstored,nothowitisaccomplishedthatmatters.Thisassumesthatdonorsignoretheprocessofestablishingreductionsandwhogetscompensatede.g.,co-benets.Astheconditionalityliteratureshows,theseissuescouldbefraughtwithproblems.Thequestionofaccount-abilityisequallyimportant.Thegovernmentmaycomeinakindofsqueeze.Itsbasicaccountabilityistowarditsconstituencies.Ontheotherhand,inthecaseofREDD+,accountabilityiswiththebuyersofstoredcarbon.Movingtoeffectiveness,weobserveseveralissues.Concerningraisingfunds,onemayarguethatbudgetsupportworkswellonlywhenforeignstatesarebuyers.Thisconclusionis,however,A.Vatn,P.O.Vedeld/GlobalEnvironmentalChange23(2013)422432427dependentontheinternationalarchitecturechosen.Ifprivatebusinessesreceivecertiedemissionreductions(CERs)whenpayingintoaninternationalfund,thereshouldbenodifferencecomparedtoamarket/projectsystem.Concerningleakage,asolutionwithbudgetsupporthas,atleastintheory,thecapacitytooutperformthetwopreviouslydiscussedsystems.Thestateshouldhavethebestcapacitytoestablishnationallevelmonitoringaswellasthepowertoensurethatactioninonelocalityisnotcounteredbyincreaseddeforestationatotherlocations.Onemustnotethatthecapacityofstatestoensurenecessarycontrolvariesconsiderably.Itcannotbetakenforgrantedthattheadministrationiscapableorevenwillingtoestablishandrunthenecessaryprogramswell.Ensuringadditionalityisstronglylinkedtotransparencyandaccountability.AnargumentbehindusingCTFswasnotleasttoavoidmoneybeingdivertedtootherissues(SpergelandTa eb,2008).Hence,forbudgetsupporttoperformwell,itmightbenecessarytodenequitestrictperformancebasedconditionalities.Asstrongconditionalitymightreducethecooperativewillofthehostcountry,theremightbeanunavoidabletrade-offhere.Concerningsectorcoordination,wenotethatbudgetarysupporthasthecapacitytooutperformproject-basedandCTF-basedsystems.Certainly,mostgovernmentsstrugglewithsectorcoordination.Despitethis,beingpartofthesameadministrationopensupopportunitiesthatclearlygobeyondthatofthepuremarket/projectsolutionorseparatefunds.Concerningefciency,budgetarysupporthastheadvantageofusingexistingsystems.NonewstructuresneedtobeestablishedseealsoKoeberleandStavreski(2006)andLawsonetal.(2005).ThefactthatpublicagentsstronglydominateasintermediariesinPESprogramsisanindirectsupporttotheconclusionthatusingpublicsystemshelpskeepingtransactioncostsdowncf.earlierdiscussion.However,inmanycountries,thelocaladministrationsareweaklydeveloped,andREDD+woulddemandfurtherimprovements.Wealsonotethatbureaucraticrulesmayhampertheefciencyofpublicadministrations.Certainly,thelevelofrigidityvariesacrossadministrationsandacrosscountries.Hence,theimportanceofthisargumentiscontextual.InmanycountrieswhereREDD+maybeinstituted,stateadministrationsareoftenplaguedwithcorruptionandpoormanagement.ItmaystillbearguedthatREDD+shouldbeusedtostrengthenpublicadministrationatvariouslevelssimplybecauseforestrymanagementisapublicresponsibility.Thishasbothtodowiththenecessaryaccountabilitytothepublicandthefactthatstrengtheningthenationalsystemscanhavelongrunpositiveeffectsonthepoliticalsystem.Turningnallytoco-benets,theargumentinfavorofbudgetsupportconcernsthepossibilitytomakestronglinkstopresentpoliciesonpovertyalleviationandbiodiversitypreservation.BothissuesareimportantforgovernmentsinmanypotentialREDD+hostingcountries.Oneshouldneverthelessobservethatthereisnoguaranteethatsuchawidersetofgoalswillbetakenintoaccount.Nationalbiodiversityprogramsareoftenaccusedfornottakingtheinterestsofruralpoorseriously(e.g.,Huttonetal.,2005).Theinterestsofindigenouspeoplesareoftenleftunaccounted,sometimesevenopposed.Policiestoreducepovertyhaveoftenbeencriticizedforbeingineffectivee.g.,Hulme(2010)andChronicPovertyResearchCentre(n.y.).Certainly,intheseareas,successwilldependheavilyontheengagementandwillofthegovernmentinthespeciccountries.Itisespeciallyheretheissueofconditionalityisparticularlysensitive.5.4.FundsinsidethenationaladministrationOurinterestinthisalternativeconcernswhetherafundinsidethenationaladministrationcouldcounteractweaknesseswithstandardbudgetsupportwhilestillmaintainimportantgains?Heretheliteratureonso-calledforestfundsprovidesthemostrelevantinsights.Thesefundshaveahistorygoingbacktothe1920s(Fontaine,1961).Theyareofvaryingformatsspanningfromquiteautonomousfunds,viafundsthatarerunbyaspecicpublicagency,tofundsbeingjustaseparateaccountinthebudgetofaministry.Inourcontext,forestfundsthatarerunbyseparateboardsoragenciesareofgreatestinterest.Theyarestillpublickeptwithinthenationaladministrationbuthavevariousdegreesofautonomy.AccordingtoRosenbaumandLindsay(2001)eventhisclassofforestfundsmayhaveverydifferentgovernancestructures.Somearerunbyaspecialagencyplacedwithinaministrye.g.,theBolivianFONOBOSQUElocalizedasaseparateentityundertheMinistryofSustainableDevelopmentandEnvironment.Othershavegreaterlegalautonomylikeapublicagency,trustorgovernmentownedcorporation.TheCostaRicanFONAFIFOtsthisdescriptionbeingatrustfundgrantedrelativeautonomywithaboardofdirectorsconstitutedbythreerepresentativesfromthepublicsectorandtwofromtheprivate(FONAFIFO,2011). Inthesecases,thegovernmentappointstheboard/administration,formulatesstatutesandsecuresitsnances,butdoesnotengageindecisionsconcerningtheuseofthemoney.AsFONAFIFOillustrates,boardsmayincludenon-governmentalrepresentatives.Separateauditingisnormallyused,whilethestandardstateauditingauthoritiesmaysometimesbeinvolved.AnexampleofthelatteristheSouthAfricanNationalForestRecreationandAccessTrust.Adominantobjectiveofforestfundsisreforestationandafforestationbothonprivateandpubliclands(RosenbaumandLindsay,2001).Thefundsmaysupportadministrativeactivities.Therearealsoseveralcaseswherethefundsareusedtonanceordinarypublicforestadministrations.Purchaseoflandforpublicobjectivesisalsoobservedasanaimforforestfunds.Therearelittlesystematicevaluationsofthefunctioningofforestfunds.SomeelementsarefoundinRosenbaumandLindsay(2001)andinLandell-Mills(1999).ButasRosenbaumandLindsayemphasize,theirevaluationsaremainlytobeseenashypotheses.Basedonthesesourcesandonourownmoregeneralassessments,wemaystilloffersomeinsights.Inthecaseofprocesslegitimacy,thepotentialinvolvementofactorsoutsidethepublicadministratione.g.,representativesofNGOsmaybeseenasacrucialfactorensuringwiderparticipationindecision-makingandaccesstoinformation.Theuseofseparateaccountsalsoincreasestransparency.Atthesametime,thelevelofindependenceestablishedmayreduceaccountability.Thisargu-mentcarriesweightconcerningtherelationtothestandardpoliticalsystemministriesandtheparliament.Ontheotherhand,totheextentthattheboardincludescivilsocietyrepresentatives,anewchanneltothewidersocietyisopened.Hence,theliteratureemphasizesthatthepotentialforincreasedaccountabilityandtransparencydependontherulesgoverningtheoperationofthefundsandtowhatextentcivilsocietyisincludedintheboard.Lookingateffectiveness,theliteratureemphasizesthepositiveeffectofforestfundsonlong-termplanning.Theforestsectorpresupposessuchmanagementperspectivesandthefundsolutionrespondstothisbymovingdecisionsawayfromannualbudgetaryprocesses(Fontaine,1961;Landell-Mills,1999;RosenbaumandLindsay,2001).Certainly,thisispositiveforREDD+notleastfortheissueofpermanence.Itisalsoarguedthatanautonomousorsemi-autonomousfundensuresreducedlevelsofcorruptionbyincreasingtransparency.Theliteratureis,however,somewhatcontradictoryonthispoint.Afteremphasizingwaysseparatefundsmaycounteractcorruption,RosenbaumandLindsay(2001,p.17)mentionthatinanenvironmenttoleratingcorruptionkeepingA.Vatn,P.O.Vedeld/GlobalEnvironmentalChange23(2013)422432 428moneyoutsidethenormal. .. governmentbudgetingprocessmayincreasetheopportunitiesforcorruption.Undoubtedly,localconditions,thesystemforadministeringandauditingfundsallplaycrucialrolesindeterminingtheeffectivenessofthisgovernancestructure.Concerningleakageandtosomeextentcross-sectorcoordina-tion,thefundsolutionshouldhavemanycapacitiessimilartothesystemwithbudgetarysupport.We donothavedatatoassessthis,anditcouldaswellbearguedthatanationalfundwouldbeinabetterpositiontoforcecooperationthroughitsautonomyandcapacitytospecifythisasaconditionforawardingresourcestosectorministries.Regardingefciency,thereareagainsomesimilaritiestobudgetsupport.Ifthefundisorganizedinsuchawaythatitcanutilizealreadyexistingpublicadministrationstoputactionsinplace,nonewsystemsneedtobesetup.Nevertheless,problemsmayappearinthenecessaryprocessofcoordination,makingthissolutionweakerthanthatofbudgetarysupport.Ontheotherhand,thesystemwithnationalfundscouldmakeiteasiertoshort-cutseverallevelsofpublicadministrationsthroughestablishingdirectrelationstothelocallevelwhereREDD+actionstakeplace.Finally,nationalfundscanalsobeinstitutedinawayfreeingtheadministrationfromrigidbureaucraticrulesseealsoRosenbaumandLindsay(2001).Concerninglastlyco-benets,thecapacityofnationalfundscomesclosetothatofbudgetsupport.Itcouldbearguedthatthefundmodelmakesiteasiertoinstitutespecicliabilityfortakingonwiderresponsibilitiesi.e.,responsibilityforbiodiversityprotectionandpovertyalleviation.Participationfromcivilsocietycouldmoreoverbeusedtocountertendenciestooverridecommunityinterest/interestsofindigenouspeoples.Certainly,thisdependsonthepoliticalwilloftheauthoritiessettingupthisstructure.Theinternationalcommunitymayconsiderdeningconditionsonthisimportantpointasabasisforofferingpayments.Beforeweclosethissection,wealsowanttomentiontheresultsofanin-depthassessmentoftheIndonesianreforestationfund(Barretal.,2010).Whiletheaboveanalysisofthefundssolutionisratherpositive,theiranalysisisquitecritical,especiallyoftheSuhartoperiod,showinghowasubstantialpartofthemoneyavailablewasdivertedawayfromthepurposeofreforestation.Largesumsevenendedupinprivateaccountsbelongingtopublicofcials.TheIndonesiancaseillustratessomeimportantcautionsabouthowtoorganizeREDD+.RosenbaumandLindsay(2001)classifytheIndonesianfundasanaccountingdeviceonly.Itwasnotadministeredbyaseparateboard,butbyaministry.Hence,theIndonesiancasesayslessaboutthepotentialoffundsandmoreaboutthekindofcautionsnecessaryincorruptenvironments.6.DiscussionandconclusionREDD+maybecomeanimportantinitiativeforfutureclimatepolicy.Thechallengesare,however,great.EspeciallythebeliefthatREDD+istobecomeatriplewinisdemandingtorealize.Thewayitwillbeorganizedwillhavedecisiveimpactsonitscapacitytodeliverreducedcarbonemissions,improvedlocallivelihoodsandbiodiversityprotection.Amongthealternativegovernancestructuresanalyzedinthispaper,noonecomesforwardasclearlybestseealsosummaryinTable1.WhatstandoutarethemanychallengesthatorganizingREDD+atthenationallevelwillface.Itshouldalsobenotedthatthechoiceofsolutionwillhavetodependonthelocalcontextsineachcaseespeciallythepoliticalculture,whichpresentinstitutionsareinplace,andtherelativeimportanceofREDD+intheactualcountry.Somemoregeneralconclusionsmaystillbeemphasized.Accordingtoouranalysisthemarket/projectbasedsystemseemstobetheweakestalternativeforanationalREDD+architecture.Itsmainappealliesinitscapacitytoattractprivatefunding.Asemphasized,creatingREDD+resourcesthroughaninternationalfundofferingCERs,willmaketheothersolutionsequallystronginthisrespect.Thepotentialtondcost-effectiveREDD+optionsisalsoanargumentforthissolution.Itdoes,however,notTable1ComparingREDD+governancestructures.SystemCriteriaProjects/marketbasedsystemSeparatenationalfundsFundsinstateadministrationsBudgetarysupportProcesslegitimacyVoluntaryparticipation.Informationasymmetries.Democraticdecit;thirdpersonexclusion.Issuesconcerningtransparencyandaccountability.Potentialforparticipationfromawidesetofactors.IssuesconcerningaccountabilityespeciallyifREDD+growslarge.Goodontransparency.Potentialforparticipationfromawidesetofactorswhilesomewhatlowerthanforseparatefunds.Goodontransparency.Someaccountabilityissues.Goodonaccountabilityhowever,regimedependent.Challengesconcerninglocalparticipation.Issuesconcerningtransparency.Outputlegitimacy:EffectivenessStrongattractionofprivatefunding,butREDD+mayhaveproblemswithcompetingforthesefunds.Weakonleakage,additionality,permanenceandcoordinationacrosssectors.VulnerabletocorruptionGoodattractionoffundingbestfrompublic.Mediumstrongonleakage.Fairlygoodonpermanence.Issuesonadditionality.Ratherweakonsectorcoordination.SomewhatvulnerabletocorruptionAttractionofprivatefundingdependsoninternationalregime.Ratherstrongonleakageandpermanence.Issuesonadditionality.Fairlygoodonsectorcoordination.SomewhatvulnerabletocorruptionAttractionofprivatefundingdependsoninternationalregime.Ratherstrongonleakage.Issuesonadditionality.Issuesconcerningpermanence.Ratherstrongonsectorcoordination.Vulnerableto corruptionOutputlegitimacy:EfciencyCost-efcientREDD+investments.Relativehightransactioncostlevels.FairlygoodcapacitytokeeptransactioncostsdownGoodpotentialtokeeptransactioncostsdown.IssuesconcerninglowcostREDD+optionsGoodpotentialtokeeptransactioncostsdown,butdependsonadministrativestructure.May notensuremostlowcostREDD+optionsOutputlegitimacy:Capacitytodeliverco-benetsExpectedtobeweakonpovertyalleviation.WeakalsoonbiodiversityprotectionifinconictwithcheapcarbonmitigationoptionsHascapacitytodeliverco-benets,butdemandsspecialcontrolandattentioninstatutes.Relativestrongcapacitytodeliveronco-benets,butdemandsspecialcontrolandattentioninstatutes.Relativestrongcapacitytodeliveronco-benets,butdemandsspecialcontrolandattentioninagreements.A. Vatn,P.O.Vedeld/GlobalEnvironmentalChange23(2013)422432429compensatefortheweaknessesfoundconcerningaccountability,leakage,permanence,co-ordinationacrosssectors,transactioncosts,andtheexpectedweakdeliveryofco-benets.Inrelationtothis,oneshouldnotethegeneraltrendtowardincreaseduseofmarketsinareasthatearlierwerethoughtofaspublicresponsibilitiescf.theneoliberalgovernancetrendmentionedearlier.Thisideologicalorientationhasinuencedmajordonors,likeIMF,theWorldBank,andmostUNorganiza-tions.We believethatitisespeciallyimportanttorethinkthecapacitiesofthissolutionnotleastinaREDD+context(seealsoBa ckstrandandLo vbrand,2006).Concerningtheotherthreeoptions,localconditionsareofgreatimportancewhenchoosing.Wendthattheargumentsforfundsinthestateadministrationandbudgetarysupportarequitestrongcomparedtothatofseparatenationalfundsregardingdimensionslikeaccountability/democraticprocesses,coordinationacrosssectors,capacitytoavoidleakage,co-benetsandmaybealsotransactioncosts.Wendtheissueofaccountability/democraticprocessesthemostimportant.IfREDD+becomeslargei.e.,muchlandisinvolveditseemsproblematictoestablishasystemforcombatingdeforestationandforestdegradationthatisseparatedfromstatedecision-makingandadministrativebodies.Notealsothatinmanyoftheactualcountries,forestsaredominantlyownedbythestate.Concerningleakage,noneoftheproposedsystemscanavoidleakageacrossnationalborders.Thisisanissuethathastobetreatedatinternationallevels.Themainargumentforfundsoutsidethestateadministrationcomparedtonationalfundsandbudgetsupportistheabilitytoattractvoluntaryprivatefunding,thecapacitytosetupsystemsthatdonotdependonrigidbureaucraticrulesofstateadminis-trations,andthepotentialtohandlecorruptionbetter.Certainly,incountrieswherecorruptionisverypronouncedinthestateadministration,thelatterisimportant.Similarly,inasituationwitharigidbureaucracy,usingthepresentadministrationmaynotresultinreducedtransactioncostscomparedtoseparatefundseventhoughaparalleldistributionsystemmustbedeveloped.Inrelationtoboththeabovearguments,awell-designedREDD+programoffersanopportunitytocombatcorruptionandtrimmingstatebureaucracy.Whichargumentisthestrongestwilldependonthespecicsituation,notleastthewillingnessofthepresentgovernmenttoengageinadministrativereforms.Turningtobudgetarysupportvs.fundsinthestateadminis-tration,theargumentsfortheformeraremainlyrelatedtoaccountability/democraticprocessesandcapacitytocoordinateacrosssectors.Thefundsolutionseemstoofferbetterpossibilitiestoincreasetransparency,ensurepermanenceandcombatcorrup-tionwhenimportant.Itmayalsolikeseparatefundsinvolverepresentativesfromcivilsocietyandbeorganizedtoavoidsomeofthe(necessary)rigiditiesforstandardstateadministrations.Finally,itmaybeeasierforexternaldonorstoformulatestrongerconditionsifthefundsolutionisusedcomparedtopayingviastatebudgets.REDD+isademandingpoliticalendeavor.Independentofthemainarchitecturechosen,therewillbesubstantialneedsforcapacityandcompetencebuilding.Thisconcernsparticipatorysystems,necessarylocalinstitutionsincludingtheclaricationofpropertyrights,establishingprinciplesfordistributionoffunds,andthedevelopmentofvarioustechnicalcompetenciesnotleastinMRV.Therearefurthergreatchallengesconcerningtheinvolvementoflocalcommunities.Whileforestsaredominantlystateowned,theyaretoalargeextentusedandmanagedbylocalcommunities.Overthelast23decennia,forestmanagementindevelopingcountrieshasfollowedatrendofdecentralization.ThereisarealisticdangerthatREDD+mayturnsthistide.Hence,strongfocusonthewaylocalstakeholdersareempoweredandincludedintheREDD+processisnecessary.InthisliesalsoafearthatREDD+canbecomedetrimentaltothepoorestruralpopulation.Noneofthediscussedsolutionsinthispaperwillautomaticallyguardagainstsuchoutcomes.Astrong,separateandenduringfocusonthisproblemiswarranted.Similarly,allthesystemsdiscussedabovearevulnerabletocorruption.REDD+maybringinvastamountsofmoneytodevelopingcountries.Thismayattractorganizationsandindivid-ualsthatareafterthemoneyratherthansupportingtheREDD+idea.Again,astrongfocusiswarranted.GiventheamountofresourcesinREDD+,itcould,however,beusedtohelpturnthetide.REDD+wouldrepresentresourcestoamagnitudethatactuallymightmakegovernancereformsine.g.,forestadminis-trationspossible.Atpresent,countriesareintheearlystagesofestablishingREDD+structures.ThemainamountofresourcesisgoingintonancingREDD+pilotsatthelocalleveloftenrunbyNGOsandinmanyinstancesquiteseparatedfromnationalREDD+processes.Ourresearchine.g.,Tanzaniaindicatesthatatthelocallevelactorstypicallyexpectfuturepaymentstocomefromthemarket.ThisseemstoreecttheinternationalREDD+discourseespeciallyintheearlierstages.Lookingatwhatisnowhappeningatthenationallevel,theroleofthestateismuchmorepronouncede.g.,developmentsinBrazil,IndonesiaandTanzania.ThisishighlyunderstandablegiventhepotentialscaleofREDDanditsseriousmacro-levelpoliticalimpactsonlanduse.Themainobservationis,however,thelackofafocusedandmoreprincipaldebateaboutstrengthsandweaknessesofdifferentnationalarchitecturesevenintheinternationalREDD+negotia-tions.Itisurgentthattheinternationalcommunitytakesonsuchadiscussion.Thisisnecessarybothfortheabilitytomakewisechoicesconcerningtheinternationalstructuresasframingthechoicesatnationallevelsandforsupportingcountriesintheirindividualdecisions.AcknowledgementsTheworkbehindthispaperispartlynancedtheprojectPovertyandsustainabledevelopmentimpactsofREDDarchitec-ture;Optionsforequity,growthandtheenvironment,fundedbytheNorwegianAgencyforDevelopmentCooperation.TheprojectisundertakenincooperationwiththeInternationalInstituteforEnvironmentandDevelopment.TheauthorswouldalsoliketothankArildAngelsenforcommentstoadraftofthepaper.Theusualdisclaimersapp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