Estimating the opportunity costs of activities that cause degradation in tropical dry forest: Implications for REDD +

The viability of national REDD + programs will depend in part on whether funds generated from sales of carbon credits are sufficient to cover the opportunity costs (OC) of forgone uses of the forest. We present the results of a study in which OC were estimated in dry tropical forest, in western Mexico. We focus on OC of activities which result in forest degradation such as shifting cultivation, grazing of cows, gathering of firewood, and poles for construction. Our approach inventoried the net returns for each activity as OC, stratified by size of forest holding and ownership condition. Cattle provided the largest share of returns, together with the subsidy paid for cultivation. The main implications for the design of REDD + payments are (1) at minimum, payments for carbon would have to be higher than the government subsidy currently paid for clearance for maize/grazing; (2) the compensation payments, would be between US$160-800 per hectare/year. The social implications of making carbon conservation more profitable than the current uses should be considered as some of the most vulnerable groups may lose their livelihoods. Overall, the opportunity costs per ton of carbon appear to be high compared with the current price of carbon on the international market.