Reducing Emissions from Deforestation (REDD) aims to curb carbon emissions from deforestation by financially compensating forest owners. However, compensation based on the opportunity costs of REDD might underestimate true costs by failing to account for downstream economic values of current land uses, including employment and wealth generated by processing and service industries. A comprehensive analysis of REDD impacts should also include sociopolitical impacts. REDD might exclude people from forest land, causing demographic shifts, and the declining tax revenues from commodity production and associated industries might be a disincentive to government investment in forested regions to the detriment of forest communities and regional development. We argue for the need to recognize and appropriately compensate the full range of economic, social and political net costs of REDD.
