ABSTRACT

The question of the funding necessary for mitigation and adaptation, including that in the forest sector, to drastically reduce greenhouse gas (GHG) emissions is important to both domestic governments and to international agencies. This chapter begins with an exposition of the economic principles associated with reducing GHG emissions and the mechanisms used to achieve that objective through various forms of carbon pricing. Then, it proceeds to describing the roles that the public and private sectors can play and have played in financing emission reduction and removal. This is important background for examining current states and relative costs of different initiatives for supporting forest sector actions. The existing evidence suggests that only about 25% of global GHG emissions are subject to any price whatsoever, and 75% of the emissions that are subject to a price are charged at less than $10 per tCO2e. REDD+ and market-based forest finance have accounted for a tiny fraction of the total finance spent on climate change mitigation. The economic rewards and penalties for incentivizing polluters to abate their emissions continue to be very weak.