Understanding the demand for REDD+ credits

Reducing emissions from deforestation and forestdegradation (REDD+) has emerged as a potentially important component of the global policy mix to mitigate climate change. Against a background of increasing engagement between private sector entities and conservation organizations, private sector investment has emerged in REDD+. Despite slow developments at the international scale, there continues to be private sector interest in REDD+and continued voluntary investments in REDD+ projects and initiatives. In order to better understand possible models for private sector engagement in REDD+, this study analysed the motivation of private sector stakeholders toengage in REDD+, the perception of the potential of REDD+, the critical obstacles to making REDD+ functional and how actors perceive themselves as part of future REDD+ scenarios. Based on interviews and a workshop with private sector actors, this study found that few expect a regulatory market for REDD+ to emerge and that credits from the voluntary market have to be tailored to specific needs. As a carbon offset, REDD+ provides insufficient motivation for investment, particularly if cheaper alternatives exist. Co-benefits such as biodiversity conservation and community development are more important when traditional corporate social responsibility motivations play a role. Project scale remains important not only for the fact that smaller projects are viewed as offering more visible benefits to stakeholders but also as a means of having more control over risks on the ground, posing a challenge for the design of jurisdictional REDD+. Moving towards supply chains that are free from deforestation offers an opportunity to tackle commodity-driven deforestation. While questions remain about how such an approach might be integrated into REDD+, it could help address a perceived gap between private sector understanding of the values of REDD+ and the risks associated with these values not arising - termed here as a ‘missingmiddle'.