REDD plus measurement, reporting and verification - A cost trap? Implications for financing REDD plus MRV costs by result-based payments

The REDD+ initiative applies a market-based approach to reducing greenhouse gas emissions from deforestation and forest degradation. The difference between the carbon stock of forests under historical deforestation and forest degradation rates and the actual C-stock achieved by forest conservation measures will be compensated financially. The difference in C-stocks is provided by a system of measurement, reporting and verification (MRV). We investigated trade-offs between costs and revenue of a REDD+ MRV system by applying a simulation study focusing on varying forest degradation intensities in natural forests. We showed the decisive influence of cost on the efficiency of REDD+. Resulting payments could be too low or even negative, especially in high forest low deforestation countries. Under current carbon process countries implementing REDD+ activities need additional financial support for the development and implementation of MRV systems. We recommend that the optimization of the MRV design must meet accuracy and cost requirements. The optimization criterion for MRV systems should not be the highest possible accuracy, but the highest possible carbon credits. This contradicts the requirements for the greatest possible accuracy, as stipulated in the International Panel on Climate Change's (IPCC) and Forest Carbon Partnership Facility's (FCPF) recommendations for action.