Emissions from deforestation and land-use change activities comprise nearly one-quarter of global human-induced CO2 emissions. Most of these emissions come from tropical deforestation. Although previous research indicates that the cost of reducing such emissions is relatively small, there is no mechanism within international agreements that incorporates the opportunity to meet emission obligations by reducing emissions associated with deforestation. Many NGOs, Non-Annex 1 countries, the EU and World Bank have an interest in integrating country-level deforestation quotas within the global carbon market. Such integration would allow the financial resources of the carbon market to flow to tropical countries to finance activities designed to decrease rates of deforestation and degradation. Many of the technical issues involve the design of the credit, historical accounting, monitoring, comparability, permanence, leakage and financial risk. Policy and credit design decisions that enable the inclusion of credit for avoided deforestation will have significant impacts on would-be suppliers of and investors in deforestation credits as well as overall climate-related goals.
