Extract

Following the assessment of REDD+ opportunity costs incurred by local governments from alternative land-use activities, this chapter considers the options for the specification of the formula to determine the size of IFTs for the distribution of REDD+ revenue to district governments. Two important aspects of the distribution formula that are explored are the grant size to be allocated to different levels of government; and the size of IFTs allocated for each eligible locality to pursue REDD+. The grant size, or distributable pool, is the vertical dimension of IFTs that determines the total size of grants or transfers distributed to different levels of government; whilst, the horizontal dimension decides the size of transfers allocated to each local government unit (Bird, 1999; Bahl, 2000). As discussed in previous chapters, IFTs for biodiversity conservation can help reconcile local costs with spillover benefits of conservation that reach beyond local boundaries. Brazil and Portugal use IFTs to support biodiversity conservation by transferring a portion of national or state governments’ taxes (e.g. in Brazil, state-level value added tax) to local levels on the basis of conservation and ecological indicators (Grieg-Gran, 2000; May et al., 2002; Ring, 2008c; Santos et al., 2012).