Technical Background Note: Verra's New REDD Methodology

After pioneering project-based REDD+ and publishing the first jurisdictional REDD+ rules and requirements in the Jurisdictional and Nested REDD+ (JNR) framework, Verra is now publishing its new REDD project methodology and module for AUD. International policy on REDD+ has evolved significantly over the last decade, including advancements made in the Warsaw Framework and Paris Agreement that emphasize national-scale accounting and reporting. Verra has shifted to setting baselines using a top-down, risk-based allocation approach to align with the jurisdictional approach adopted in international policy.

The early approaches to baseline setting at the project level were based on “reference regions”—forest areas that share a range of characteristics with the project area, such as the presence of drivers of deforestation, distance to transportation networks, ecology, and policy regimes. These approaches were developed by the world’s leading forest carbon experts and academics. They underwent extensive public consultation and review by auditors and were consistent with prevailing science at the time. These approaches were based on the idea that patterns in deforestation seen in the historical period in the reference area would provide a representative baseline land use scenario for the project area. However, in watching project proponents apply, and validation/verification bodies audit, the use of these methodologies, Verra noted that:

• Reference regions can be difficult to match appropriately, especially for long periods over the life of a project. Various methodologies also included different provisions for setting reference areas.
• As governments developed national and subnational approaches, there could be discrepancies in estimates of climate impact due to different methodological approaches.

In 2018, Verra first proposed adjusting the reference area selection approaches in the existing VCS REDD methodologies. Feedback from stakeholders (PDF) strongly encouraged Verra to instead develop a more centralized approach to baseline setting in alignment with emerging jurisdictional programs and associated nesting systems, such as Verra’s Jurisdictional and Nested REDD+ approach, the Forest Carbon Partnership Facility, and the UN-REDD Programme. After initial scoping of consolidation options in 2019, Verra began, in 2020, to develop a new REDD methodology (now called VM0048 Reducing Emissions from Deforestation and Forest Degradation) and a module for Avoided Unplanned Deforestation (now called VMD0055 Estimation of Emission Reductions from Avoiding Unplanned Deforestation) using a top-down approach to align with national and jurisdictional-scale accounting.

As a first step, VMD0055 requires the development of activity data (i.e., the average number of hectares expected to be deforested over the subsequent six years¹) across an entire jurisdiction in alignment with jurisdictional approaches to REDD+. The VMD0055 approach assumes that the average historical rate of deforestation within the jurisdiction over the previous 10 years² will continue over the subsequent six years, with no allowance for upward or downward trends.

Predicted deforestation activity data is then spatially allocated throughout the jurisdiction based on the relative risk of deforestation in each pixel, determined largely by the distance to the edge of the forest and localized deforestation rates within subnational administrative units. More complex risk mapping models may also be used where they are demonstrably more accurate.

This top-down allocation approach will assist in consistent baseline setting across the jurisdiction and between Verra AUD projects, and will reduce the potential for any perceived or actual conflicts of interest at the project proponent level. The allocation approach also improves accuracy and conservativeness at the national and global level. Furthermore, the approach is consistent with UNFCCC national-level accounting for REDD+ and Nationally Determined Contributions under the Paris Agreement by aiming to harmonize accounting across scales.

This new approach is further enhanced through centralized activity data collection and the mapping of deforestation risk using globally consistent accuracy standards. Technological improvements—particularly in remote sensing—that have occurred since the original REDD methodologies were released have made it feasible for Verra, using contracted data service providers, to take the innovative approach of allocating activity data to project proponents for their use. While Verra encourages governments and other carbon market stakeholders to submit high-quality datasets to support this effort, the development of the activity data and risk maps and the allocation of activity data will be completed by third parties. Verra and independent experts will provide final approval of the data.

An alternative approach that has been advocated in this context is the comparison of project areas against synthetic control points. While this may be a useful method (if appropriately designed) for assessing some impacts of project activities, it faces challenges if used as a baselining approach:

• Finding sufficiently matched synthetic control points, both in terms of characteristics and numbers, is a challenging exercise for AUD projects, which are subject to many varying parameters and may comprise most of a specific ecosystem in a jurisdiction. Depending on the parameterization of controls, highly variable results can be expected.
• Synthetic controls also do not address the issue of national alignment. Using a top-down approach that allocates the total historical deforestation over a reference period ensures, as noted above, that the expected deforestation for all project (and non-project) areas in the jurisdiction does not amount to a baseline that is higher than the expected deforestation in the entire jurisdiction. Synthetic controls do not have this protection and depending on the selection of controls and the number of projects in a jurisdiction, it is very likely that these activities would still not be aligned with national accounting and results.

Verra is currently assessing whether the synthetic control approach may be viable to use as a periodic true-up mechanism in relation to portfolio performance. Verra is also considering whether a synthetic control or other dynamic performance approach may be appropriate for other REDD activities, such as Avoiding Unplanned Degradation and Avoiding Planned Deforestation.

Footnotes:

(1) Six years is the current standard for baseline duration for Avoiding Unplanned Deforestation projects in the VCS Program.

(2) Ten years is the current standard historical reference period for Avoiding Unplanned Deforestation projects in the VCS Program.