LAUSR

Abstract The complexity and deeply spatial effects of incentives in REDD+ make it a good case study for the application of governmentality theory, as it provides a special perspective to observe how REDD+ incentives shape individual conduct. This paper describes political and economic arguments related to incentives associated with the REDD+ mechanism from the perspective of governmentality. This paper conducts a theoretical analysis of policymaker, landholder, and developer strategies under different market power structures. The goal is to explore the optimal incentives and efforts for REDD+ through two-stage game models. A numerical simulation is applied to examine the effects of changing the parameters associated with each stakeholder’s strategies. The results demonstrate the following. First, the conduct of landholders and developers in reducing carbon emissions is unrelated to the market power they own. Policymakers need to consider market power structures when designing REDD+ incentives. Second, policymakers need to consider multiple factors to design heterogeneous REDD+ incentives under different market power structures. These factors include the price of carbon emission credits, opportunity costs, output elasticity of effort, cost coefficients and total factor productivity. Third, variations in compensation payments do not affect landholder and developer efforts to reduce carbon emissions, but would affect the REDD+ incentive design. Finally, REDD+ incentives have become hybrid neoliberal governmentality; they are consistent with the characteristics of neoliberalism, but are also instruments for serving state policy goals. All these factors need to be considered in designing future REDD+ incentives that achieve an incentive-compatible REDD+ mechanism and realize appropriate governance in forest conservation.