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.

INTRODUCTION

Reducing Emissions from Deforestation and Forest Degradation (REDD+) is an incentive-based mechanism that offers results-based payments for results-based actions for conserving and managing forests sustainably and enhancing forest carbon stocks [1]. REDD+ creates a financial value for the carbon stored in forests, which will benefit communities’ efforts to conserve forest resources and prevent deforestation.

After REDD+ revenues are generated, there is a question about how the benefits should be distributed. Further, there is no international rules and regulation on how to share benefits in the nation. The national government needs to develop own benefit-sharing mechanisms [2, 3]. Most of the research of REDD+ focus on its technical requirements, although it is essential to investigate what kind of benefit-sharing mechanism should be developed [4]. Further, research suggests that any options for developing benefit-sharing mechanisms should be assessed against the 3Es (effectiveness, efficiency, and equity) framework. This case study adopted the 3Es framework to identify important criteria for sharing REDD+ benefits.

Skutsch [5] suggests that efficiency and effectiveness in REDD+ can be achieved with better management of forests, but equity is complicated and can be interpreted in many ways. Further, research comments that equity is getting attention worldwide but there are many controversies on equity while sharing the REDD+ benefits. Also, it is unclear on how equity can be achieved at the national level.

Many REDD+ projects are being undertaken in community forests of Nepal. Although the community forestry programme is worldwide recognized for its great achievement in forest management [6], there are inequity in local distribution of benefits [7]. Further, communities fear that implementing REDD+ in community forests would capture their existing rights to manage and use forest products [8]. With these outstanding issues, there is a question if communities should participate in REDD+ and whether the 3Es could be achieved in distributing the benefits of REDD+ among local communities.

This article highlights the impact of REDD+ activities on benefit sharing, and provides insight into following questions by assessing the outcomes of a REDD+ pilot project in Nepal which was implemented from 2009 to 2013:

  • How do REDD+ participants in Nepal perceive equity in sharing the benefits of REDD+?

  • What kind of benefit-sharing mechanisms should be set up to bring equitable outcome?

This article provides more insights into (i) the relative importance of different aspects of distributive equity in benefit sharing of REDD+ and (ii) the options on developing benefit-sharing mechanisms that brings equitable outcomes. The finding of importance of equity over efficiency and effectiveness in REDD+ is also applicable in developing other environmental policies.

CASE EXAMINATION

Data and Methods

This is a case study of pilot project “Design and Setting up of a Governance and Payment System for Nepal’s Community Forest Management under REDD+.” The project was implemented by the International Centre for Integrated Mountain Development (ICIMOD) in partnership with the Federation of Community Forest Users Nepal (FECOFUN), and the Asia Network for Sustainable Agriculture and Bio resources (ANSAB) from 2009 to 2013. The project was the first of its kind that disbursed payment to local communities for their efforts to undertake REDD+ activities in community forests.

Data were collected from Ludikhola watershed of Gorkha District. Out of 31, 6 community forest user groups (CFUGs) were selected on the basis of the fund they received (highest, medium, and lowest) in 2010 and 2011. Semi-structured questions were developed on the basis of key concepts in benefit-sharing mechanisms. The interviews were taken in Gorkha from 29 May to 3 June 2013 and in Kathmandu from 11 to 31 June 2013. Participants were selected on the basis of knowledge of sample and the purpose of the study. Interviewees were categorized into four groups: (i) experts from Nepal REDD+ projects (9 participants); (ii) members of CFUGs (15), (iii) central and local government officials (4); and (iv) independent researchers (3). All interviews were recorded, translated, and transcribed. Transcribed documents were examined using NVivo-10 to analyze non-numerical data.

The project developed payment mechanism on the basis of following criteria:

  • REDD payment = f (forest carbon enhancement and forest carbon conservation + ethnic diversity (households) + population of men/women + number of poor households)1 

Different weightings were given for financial benefit allocation to each of the basic elements and their sub-elements of REDD payment (Box 1).

BOX 1.

Weighting for financial benefit allocation

  • Forest carbon enhancement: Annual quantity of carbon sequestered as a result of community forest management—40%

  • Ethnic diversity: Number of households of Indigenous people and Dalits (so called untouchable groups in Nepal)—25%

  • Sex ratio: Number of women population in CFUG and in the watershed—15%

  • Poverty: Number of poorest households categorized by participatory wellbeing ranking with a set of indicators in CFUGs and in watersheds—20%

Effectiveness, Efficiency, and Equity in Sharing the Benefits of REDD+

Effective and efficient benefit-sharing mechanisms should enforce clear rules and processes to distribute the benefits under performance-based system ensuring that REDD+ activities are completed timely by minimizing inputs and maximizing outputs. And equitable benefit-sharing mechanism should ensure that the sharing of costs and benefits is inclusive and fair among stakeholders involved by REDD+ programme [4].

In the study, the majority of interviewees linked effectiveness and efficiency of REDD+ with carbon increment and maximum output with the least cost. Likewise, most respondents connected equity with sharing of benefits through either performance or needs of the communities. REDD+ experts stated that efficiency and effectiveness could be achieved with better forest management. The project gave more priority to equity to resolve concerns rose by stakeholders but the project also received criticism for paying more attention to socioeconomic condition of the communities. Nonetheless, many respondents revealed that local communities should participate in REDD+ only after addressing the issues of equity.

There are trade-offs among 3Es in benefit sharing [4, 9]. Authors suggest that efficiency and effectiveness could be achieved if benefits are distributed according to the contributions of communities that bring reductions in emissions by change in their behavior. However, equity focuses on which actors have the rights to benefits from REDD+. It is also found in the study that it is difficult to achieve 3Es simultaneously. One of the REDD+ experts mentioned that equity should be given priority to connect with local communities, although achieving efficiency and effectiveness are important at the international level.2 Further, interviewees feared that use of forest products might be restricted after participating in REDD+ programme. Thus, interviewees desired for equitable distribution of compensation for their forgone use of forest products.

The 3Es framework revealed that equity is important for developing benefit-sharing mechanisms under REDD+ scheme in Nepal. Also, the study found that equity is more important than efficiency and effectiveness for local communities. However, equity is also difficult to achieve, as there are controversies.3 Communities strongly stated that equity is important to achieve the effective outcomes of REDD+. However, experts in Nepal argued that effectiveness and efficiency should be prioritized in REDD+ as international negotiations are mostly focused on cost efficiency and effective outcome of REDD+. Nonetheless, Gebara [10] recommended that equity is crucial to achieve efficiency and effectiveness of REDD+. This study suggests that equity should be given priority at the community level to achieve the main objective of REDD+.

Understanding Equity in the Allocation and Distribution of Benefits

There are many discourses and definitions associated with equity; the research adopts three inter-related dimensions of equity: distributive, procedural, and contextual [11]. Distributive equity focuses on the basis of allocations of benefits; procedural equity is fairness in the political process that allocates benefits; and contextual equity states that pre-existing conditions of communities affect their capacity to access the received benefits. In the study, I found distributive equity to be the most important among three dimensions of equity.

Further, interviewees interpreted distributive equity in three different forms, based on rights, needs, and performance. Communities preferred need-based equity in the allocation and distribution of benefits. It is found that addressing poverty was a main priority for them. Although the project attempted to satisfy the needs of the communities to some extent, there were disagreements in sharing benefits due to lack of particular method of finding the poorest households. There was a moment when everyone was saying that they are the poorest one in that community. The project focused on socioeconomic condition of households, but all CFUGs allocated the received funds to the poorest households. Hence, the “real” needs of communities should be identified before developing any criteria for sharing the benefits [10]. Although communities aspire for needs-based equity, experts believe that benefits should be shared according to the contribution or performance by forest managers in conservation and sustainable management of forest would bring equitable outcomes.

This study found that performance and contribution based equity are connected to the ownership of carbon. Rights-based equity, ownership of carbon, is the most debating issue of REDD+ participating countries as there is no explicit laws on carbon rights [5]. In case of Nepal, the majority of interviewees stated that local government and communities should have rights to carbon. Communities shared the view that carbon should be taken as forest products and they should have rights to carbon. However, who gets what percentage of the ownership of carbon is unclear. Further, the debate on carbon rights might bring conflicts among communities practicing different models of forest management in Nepal such as Collaborative Forest Management and Leasehold Forestry4 because each forest management regimes has different systems of property rights and benefit sharing. Although communities shared the view of sharing carbon rights with local government, they clearly stated that their existing rights5 should not be compromised. Currently, carbon right is the most debating issue among REDD+ participants and who gets how much is also questionable.

The different meaning of equity among communities and experts are connected to the pre-existing contextual factors of community, society, and the nation. Different socioeconomic, political, and institutional conditions are the main differences and roots of inequity in the country [12]. The study found differences on what equity means to communities and REDD+ experts. Although international negotiations support performance-based equity, communities’ genuine needs should not be overlooked to make real impact of REDD+ on the ground.

Developing Equitable Benefit-Sharing Mechanism

A well-functioning benefit-sharing mechanism should clarify the rules and processes on making decisions on the allocation and distribution of benefits between stakeholders [3, 9]. The hybrid approach that integrates sub-national projects into national accounting framework is the most appropriate for REDD+ implementations [13]. Therefore, Nepal has proposed a hybrid approach to coordinate international financial inflows and channel the REDD+ benefits to communities. The vertical benefit distribution allocates funds derived from international sources or markets to the level of CFUGs through central and local government. In horizontal benefit distribution, benefits are distributed among communities. The research found that there is a debate on the basis of allocating and distributing benefits. REDD+ experts support that vertical benefit distribution should be based on performance/contribution of communities in achieving REDD+ objectives. However, one interviewee from government mentioned that payment criteria developed in international negotiations would determine the basis of benefit distribution. Nevertheless, central government and concerned stakeholders are likely to decide on developing and implementing guidelines on sharing the received benefits. These guidelines will affect the sharing of benefits at the local level.

In terms of horizontal benefit distribution, communities are looking for simple and clear guidelines to share benefits according to their needs. The pilot project developed single payment criteria for all CFUGs and was allowed to decide on how to distribute the received funds in the community. A majority of CFUGs distributed the benefits to the poorest household in their community. However, the study found that there was an attempt of misuse of distributed funds by elites of CFUGs instead of strict monitoring of the project. Also, distributing money based on the poorest households was not suitable in case of Chepang (nomads). All recipients used received fund on installing biogas or improved cooking stove and animal farming. However, Chepang (nomads) use traditional heating system from a natural plant named Chiuri. Also, granting them seed money for animal farming was not appropriate, as they do not have any grazing lands. Hence, interests and traditional culture of communities that affect utilizing the benefits should be considered in payment criteria.

The study found that horizontal benefit distribution is critical. If benefits are not shared equitably, it will bring conflicts within and among communities. Thus, many interviewees expressed their interest in continuing the existing CF guideline for REDD+ benefit sharing. If a new guideline is developed, communities want it to be simple and their needs should be taken into account at the early stage.

CONCLUSIONS

This study found that equity is important to achieve the main objective of REDD+. In other words, if the benefits are not distributed equitably, REDD+ will not meet its goals. Further, there are several types of equity and different people prefer different types. Distributive equity is found to be the most important equity in Nepal. The research found that the communities wanted need-based equity while experts supported performance and contribution-based equity. The issue of needs-based equity vs. performance-based equity should be understood clearly to form equitable benefit-sharing mechanism. The study suggests that there should be two layers of guidelines to allocate and distribute the benefits in Nepal. First, the vertical benefit distribution should be coordinated by government and concerned stakeholders on the basis of performance and contribution. Second, the horizontal benefit distribution should be managed by the communities themselves on the basis of their genuine needs considering the pre-existing social factor that affects communities’ to capture and benefit from the received benefits. These two layers of guidelines would help in resolving the different views of communities and experts on what equity is for them.

The finding that equity is important over efficiency and effectiveness in REDD+ has broader implications. Although the study is conducted in Nepal, the finding is important for other countries practicing community-based forest management and other incentive-based mechanisms such as payment for ecosystem services.

CASE STUDY QUESTIONS

  1. 1.

    How are the 3Es related to each other in the case of distributing benefits of REDD+?

  2. 2.

    Do you think equity will be equally important in other types of environmental policies that we could examine using the 3Es?

  3. 3.

    Let’s think of another example whether the other Es rely on the robustness of equity.

  4. 4.

    Can you think of an example where equity is NOT the most important?

  5. 5.

    If you’ve studied REDD+, how does the Nepal experience compared with those of other countries?

  6. 6.

    Do you think communities will benefit from REDD+?

I thank Ann Brower, Associate Professor, Faculty of Environment, Society and Design, Lincoln University, for her continuous support and guidance.

COMPETING INTERESTS

The author declared that no competing interests exist.

Notes

Notes
1.
Adapted from Operational guideline of the pilot project.
2.
B. Karky, personal communication, May 13, 2013.
3.
D. Khanal, personal communication, July 2, 2013.
4.
Different models of forest management in Nepal: Community Forests, Collaborative Forest Management, Leasehold Forests, Religious Forests, and Buffer zone community forests.
5.
In community forestry, 25% of the benefits are spent on conservation, management, and development of forests; 35% on poverty reduction, empowerment of women, indigenous people; and, rest of the 60% on social developmental activities.

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