This case demonstrates the utility of the 3Es (effectiveness, efficiency, and equity) in examining Reducing Emissions from Deforestation and Forest Degradation (REDD+) project in Nepal. REDD+ offers results-based payments for conserving and managing forests sustainably and enhancing forest carbon stocks. This will benefit communities’ efforts to conserve forest resources and prevent deforestation; conserving integrity of forests in turn benefits the global carbon budget. This case uses the 3Es to examine one case in Nepal of distributing the REDD+ funds among local participants. Of the 3Es, equity is getting attention worldwide but there is still debate on which principle of 3Es should be given priority to achieve overall effectiveness of REDD+. This case finds that equity is a fundamental requirement to achieve the other Es (efficiency and effectiveness) in REDD+ implementation. Further, I find that distributive equity is the most important and understood in three different ways in Nepal: rights, needs, and performance. There is an argument between communities and experts on which equity should be given priority. I recommend that the issue of needs based equity vs. performance-based equity should be solved by formation of guidelines of sharing benefits at two levels. First, the benefit distribution from international sources/markets to community forest user groups should be based on the ownership of carbon and performance of communities participating in REDD+. Second, at community level, communities should decide on the form of benefit distribution according to their needs. The primacy of equity in this case will likely find international echoes in other environmental policies and in other countries.

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