**3. The concept of REDD**

The concept of REDD comes from the broader ecosystems services concept developed by ecological economist Robert Costanza et al. (1987) in their pioneering work titled, *The value of the world's ecosystem services and natural capital*. Costanza et al. argue that ecosystems have economic value which must be factored into the market economy if we are to slow down or halt the global destruction of the world's natural environments. Services derived from the natural environment such as "regulating services (climate or water), provisioning services (food, fresh water), supporting services (soil conservation, nutrient cycling) and cultural services (aesthetic or traditional values)" (Alvarado & Wertz-Kanounnikoff, 2008), can be accounted for, by evaluating the direct economic value of their provision. For example, how much will it cost the U.S. state of Florida to build a water purification system that can replace the natural purification functions of the Everglades wetlands system in the coast of Florida? Although some will argued that an estimate cannot be made given that the wetlands functions of the Everglades cannot be replaced by any man-made machine, the system of 'payments for environmental services' (PES) would at least in economic terms, allow for an estimate which can then be used as incentive to protect the wetlands of the Everglades. The same principle is applied with REDD whereby through direct financial incentives and financial flows from carbon markets, developing countries (mainly in the tropical forests regions) are encouraged to reduce carbon emissions by adopting strategies that would improve their capacity to reduce deforestation and forest degradation. Although financial flows from carbon markets have the potential to motivate emissions reduction from deforestation and forest degradation in developing countries, the greatest potential is in direct financial incentives from the global community. According to the UN-REDD strategy program, direct financial incentives of US\$22-38 billion between 2010 and 2015 would lead to an estimated 25 percent reduction in annual global deforestation rates by 2015 (United Nations- Reducing Emissions from Deforestation and forests Degradation [UN-REDD], 2010). Although the financial incentives approach is more likely to be favored for a post-Kyoto implementation, "the majority of country proposals to the UNFCCC are in favor of a mixed [market mechanisms and financial incentives mechanisms] approach" (Parker et al., 2008).
