o Cuts in non-energy emissions, such as those resulting from deforestation and from
agricultural and industrial processes, are also essential.

o Action to reduce deforestation: The loss of natural forests around the world
contributes more to global emissions each year than the transport sector.
Curbing deforestation is a highly cost-effective way to reduce emissions; largescale
international pilot programmes to explore the best ways to do this could get
underway very quickly.

o Economists describe human-induced climate change as an 'externality' and the global climate as a 'public good'. Those who create greenhouse gas emissions as they generate electricity, power their factories, flare off gases, cut down forests, fly in planes, heat their homes or drive their cars do not have to pay for the costs of the climate change that results from their contribution to the accumulation of those gases in the atmosphere.

o A number of studies suggest that the Amazon rainforest could be vulnerable
to climate change, with models projecting significant drying in this region. One
model, for example, finds that the Amazon rainforest could be significantly,
and possibly irrevocably, damaged by a warming of 2 - 3°C.

Greenhouse-gas emissions can be cut in four ways. Costs will differ considerably
depending on which combination of these methods is used, and in which sector:
o Reducing demand for emissions-intensive goods and services
o Increased efficiency, which can save both money and emissions
o Action on non-energy emissions, such as avoiding deforestation
o Switching to lower-carbon technologies for power, heat and transport
Estimating the costs of these changes can be done in two ways. One is to look at the
resource costs of measures, including the introduction of low-carbon technologies
and changes in land use, compared with the costs of the BAU alternative. This
provides an upper bound on costs, as it does not take account of opportunities to
respond involving reductions in demand for high-carbon goods and services.

o Non-energy emissions make up one-third of total greenhouse-gas emissions; action
here will make an important contribution. A substantial body of evidence suggests
that action to prevent further deforestation would be relatively cheap compared with
other types of mitigation, if the right policies and institutional structures are put in

o Policies on climate change can also help to achieve other objectives. These cobenefits
can significantly reduce the overall cost to the economy of reducing
greenhouse-gas emissions. If climate policy is designed well, it can, for example,
contribute to reducing ill-health and mortality from air pollution, and to preserving
forests that contain a significant proportion of the world's biodiversity.


Curbing deforestation is a highly cost-effective way of reducing greenhouse
gas emissions.
Emissions from deforestation are very significant - they are estimated to represent
more than 18% of global emissions, a share greater than is produced by the global
transport sector.
Action to preserve the remaining areas of natural forest is needed urgently. Largescale
pilot schemes are required to explore effective approaches to combining
national action and international support.

Policies on deforestation should be shaped and led by the nation where the particular
forest stands. But those countries should receive strong help from the international
community, which benefits from their actions to reduce deforestation. At a national
level, defining property rights to forestland, and determining the rights and
responsibilities of landowners, communities and loggers, is key to effective forest
management. This should involve local communities, respect informal rights and
social structures, work with development goals and reinforce the process of
protecting the forests.

Research carried out for this report indicates that the opportunity cost of forest
protection in 8 countries responsible for 70 per cent of emissions from land use could
be around $5 billion per annum initially, although over time marginal costs would rise.
Compensation from the international community should take account of the
opportunity costs of alternative uses of the land, the costs of administering and
enforcing protection, and the challenges of managing the political transition as
established interests are displaced.

Carbon markets could play an important role in providing such incentives in the
longer term. But there are short-term risks of destabilising the crucial process of
strengthening existing strong carbon markets if deforestation is integrated without
agreements that strongly increase demand for emissions reductions. These
agreements must be based on an understanding of the scale of transfers likely to be