Unveiling information on opportunity costs in REDD: Who obtains the surplus when policy objectives differ?

Improving information about individual opportunity costs of defor-estation agents has the potential to increase the efficiency of REDDwhen it takes the form of a payment for environmental servicesscheme. However, objectives pursued in REDD projects may varyacross policy makers. Within a theoretical framework, this paperexplores the impacts of different policy objectives under two oppor-tunity cost settings: asymmetric and full information. For a policymaker aiming to maximize net income from REDD, having full infor-mation may not increase the amount of forest conserved but couldlead to a redistribution of rents away from agents. By contrast, foran environmental policy maker focused on maximizing the amountof forest conserved under REDD having full information increasesthe amount of forest conserved while reducing the rents receivedby agents. For a policy maker pursuing poverty alleviation objec-tives in REDD-affected communities, having full information makesno difference to overall welfare as rents remain with agents. Theamount of deforestation avoided will at least be as high as under asymmetric information. These results are illustrated with data col-lected on opportunity costs in Amazonas State, Brazil.