On the potential for strategic behavior in jurisdictional REDD

Given well-known credibility issues in project-based avoided-deforestation credits and over $3 billion in committed credit purchases under ART TREES, the voluntary carbon market is increasingly moving toward jurisdictional approaches to Reducing Emissions from Deforestation and Forest Degradation (REDD+) as a source of credits. We test whether existing approaches to jurisdictional REDD+ create new incentives for strategic behavior that could undermine the additionality of these credits. Using global remotely sensed forest change data from all jurisdictions eligible for jurisdictional REDD+ programs in the voluntary carbon market, we examine existing jurisdictional baseline approaches. We find that jurisdictional approaches create predictable opportunities for jurisdictions to generate credits without requiring new policy action, while discouraging the enrollment of jurisdictions with increasing rates of deforestation. We show that two simple metrics predict over 30% of baseline errors and that if jurisdictions condition their enrollment on such metrics, they could generate millions of nonadditional credits. Despite this, we do not find systematic evidence that jurisdictions have exploited this information thus far. However, approximately half of enrolled jurisdictions exhibit significant temporary increases in deforestation immediately before crediting begins. This suggests anticipatory forest clearing by private landowners expecting future restrictions with Jurisdictional REDD+ enrollment. As jurisdictional REDD+ credits account for a growing share of voluntary carbon markets, these findings reveal both reassuring governance outcomes and critical vulnerabilities requiring methodological reform.