Options Market and Risk-Reduction Tools for
REDD+ (NORAD OMRRT REDD+)

The NORAD OMRRT REDD+ project contributes to rapidly scaling up demand and supply for REDD+ credits and builds momentum and opportunity for the creation of positive incentives for global forest protection in future carbon markets and other climate policies.

Photo of a tree, isolated on white background.

Photo of a tree, isolated on white background.

Overview

During the transition period to a new global climate regime, this project will help design, catalyze and launch pilot options transactions for REDD+ credits, attracting private companies and investors to finance high quality results-based REDD+ programs over near and medium terms. The project will also design complementary instruments (e.g., price floors, buffer funds, and other risk guarantee and insurance approaches) and contract structures (e.g., public-private partnerships) that can: (a) reduce risks for both buyers and sellers of jurisdiction-scale REDD+ credits, and (b) make most effective use of limited public funds to leverage private financing and supply development. By providing REDD+ jurisdictions (countries, states/provinces) and actors on the ground with capital, a price signal and tools to reduce risk, this project will build their confidence and ability to sustain and increase REDD+ efforts, even before the finalization of carbon market regulations allowing the compliance use of REDD+ credits. Private sector demand and greater REDD+ supplies that meet high quality standards will also help build consensus and momentum for policy-makers and regulators to codify the use of these credits and associated standards in existing and emerging carbon market systems.

IIASA Research

Researchers at  IIASA’s Ecosystems Services and Management Program are working to quantify carbon price risks facing potentially regulated entities in particular jurisdictions and the benefits and role of options on REDD+ within a portfolio of strategies for investing in REDD+ and other alternatives, develop estimates of (risk-adjusted) macro-level REDD supply for modeling global, national, and jurisdictional policies, and analyze role of complementary risk-hedging instruments.




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Last edited: 16 June 2016

CONTACT DETAILS

Nikolay Khabarov

Research Scholar
MEDU Group Leader

Ecosystems Services and Management

T +43(0) 2236 807 346

Timeframe

2013 - 2015

International Institute for Applied Systems Analysis (IIASA)
Schlossplatz 1, A-2361 Laxenburg, Austria
Phone: (+43 2236) 807 0 Fax:(+43 2236) 71 313