The voluntary carbon market allows participants to go beyond regulatory carbon offsetting. Recent developments have improved the transparency and credibility of voluntary carbon trading, and forest carbon credit transactions constitute more than half of trade volume. Its workings, however, have not been sufficiently explored in the literature. This study analyses the characteristics of forest carbon credit transactions in the voluntary carbon market using frequency analysis and logistic regression analysis. The results reveal that the co-benefits of forest carbon projects are an important factor influencing carbon credit transactions. From the higher transaction ratio of credits from CCB Standards-labelled projects and projects using co-benefit-oriented standards, it can be inferred that credits with potential for co-benefits (e.g. fostered corporate social responsibility, social cohesion of local communities and voluntary leadership, and positive environmental impacts) are preferred to those focusing exclusively on emission reduction in the voluntary carbon market. The findings of this study suggest that developing co-benefits is important for strengthening the market competitiveness of forest carbon credits in the voluntary carbon market. Additionally, unlike the compliance carbon market, in the voluntary carbon market stringent carbon standards do not always guarantee credit transaction performance. POLICY RELEVANCE After UNFCCC COP-21, the global society agreed to acknowledge various forms of international carbon crediting mechanisms, and noted the significance of greenhouse gas emissions reduction for sustainable development and environmental integrity through the Paris Agreement. Moreover, the agreement encouraged both REDD+ activities in developing countries and supports from developed countries. Additionally, co-benefits of forest carbon projects are important for credit transaction in the global voluntary carbon market. Under the new climate regime, co-benefits of forest carbon projects are expected to gain attention in the carbon market. To promote the social, economic, and environmental co-benefits of forest carbon projects, the introduction of an objective co-benefit assessment and certification system should be reviewed at the national level.

The United Nations Framework Convention on Climate Change (UNFCCC) recognized the importance of forests in combating climate change and agreed upon financial support for REDD+ activities in developing countries through the Warsaw REDD+ Framework (WRF). The REDD+ activities for conserving carbon stored in forests to reduce GHG emissions and to enhance the carbon sink function of forests are expected to serve as an important means for achieving the climatic goal. In this study, a set of criteria was devised to assess the REDD+ Measuring, Reporting, and Verifying (MRV) implementation capabilities of developing countries, which was applied to analyze the REDD+ MRV levels in REDD+ countries. Based on the Forest Reference Emission Level/Forest Reference Level (FREL/FRL), National Strategy (NS), National Forest Monitoring System (NFMS) and Safeguard Information Summary (SIS) the countries submitted, 36 REDD+ countries submitted only the FREL/FRL (Group I), while 5 countries fulfilled the WRF requirements and registered REDD+ reduction results (Group II), and 6 received Results-Based Payments (RBP) (Group III). From longest to shortest, the periods for which the International Fund provided support were arranged in the order of Group III, II, and I, verifying the relative importance of international support. From highest to lowest, the overall MRV capability was also arranged in the order of Group III, II, and I, although Group I or Group II was at a higher level than the other groups in some elements. REDD+ countries in the Readiness Phase (Group I) would aim to have the MRV capabilities of Groups II and III to receive RBP, and international support for REDD+ MRV capacity building could enable them to do. However, in addition to the receipt of RBP, REDD+ should be reflected in the Nationally Determined Contribution (NDC) as consistent reduction results at the national GHG inventory level, and the advancement of REDD+ MRV is expected to be a necessary and sufficient condition for REDD+ cooperation under the Paris Agreement cooperative approach framework. For the following groups, international cooperation is essential. Countries in the Readiness Phase need to be supported with the establishment of an MRV framework, which will enable them to achieve REDD+ to receive RBP and be reflected in NDCs. For REDD+ countries that have thus far met the WRF requirements, the REDD+ scope needs to be upscaled to national levels, and the MRV system should be further advanced to establish a cooperative approach system that can achieve more ambitious reduction targets through forests.

With the institutionalization of reducing emissions from deforestation and forest degradation, and the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries (REDD+), the global REDD+ financial network has been formed to support the implementation of REDD+ in developing countries. Although the rapid expansion of the network made it decentralized, it is still a highly centralized network in terms of the distribution of financial resources, revolving around only a few major actors. While the source of financing was diversified due to an increase in influential donors, the majority of financing still came from a few constant major donors, and a few constant major developing countries received most of the financial support. Although increases in donor numbers and the amount of finance received can provide more chances to support developing countries, it may cause inefficiency due to overlaps and duplications. Also, over-centralization of financial resources can be ineffective in terms of achieving maximum greenhouse gas (GHG) reduction, and can broaden gaps between developing countries’ ability to cope with climate change and deforestation. Lack of coordination among donors and the differing capacity of developing countries may have caused centralization of financial resources in the global REDD+ financial network. To minimize this problem, a comprehensive monitoring system and platforms for information sharing are needed.

A cooperative approach for REDD+ between developing and developed countries can be a sound means to achieve national and global mitigation targets. To accomplish the Nationally Determined Contribution (NDC) of countries and the global 2 °C climate target more effectively, it is necessary to explore the coordination options, based on the understanding of bilateral REDD+ cooperation. This study explains the current status of bilateral REDD+ cooperation and investigates determinants affecting REDD+ recipient decisions of donor countries, by analyzing bilateral REDD+ arrangements, which has been promoted for 10 years under the the Kyoto Protocol regime from 2006 until 2015. The results show that Norway and Japan supported more than half of the total financial pledges for bilateral REDD+ projects for 10 years. Out of 87 REDD+ recipients, four countries—Brazil, India, Indonesia, and China—accounted for more than half of the 10-year financial pledges. Approximately 78% of total financing was found to be concentrated in the top 10 recipients. The aid darlings and orphans problem, the concentration of bilateral supports in a few developing countries and the exclusion of several developing countries from the recipient selection process, which has been discussed in ODA researches, was also observed. Applying a shared frailty model, recipient need, recipient merit, and donor interest was found to be the main determinants of donors’ REDD+ recipient decision. Donor interest and recipient merit were found to have more significant effects on the decision than recipient need. A balanced two-track approach is further required, in which, along with the bilateral REDD+ cooperation in the REDD+ darling countries, international organizations and multilateral funds for REDD+ need to increase financial accessibility, including the result-based compensation system for the REDD+ orphan countries.

Under the Kyoto Protocol regime, various forms of financial support have been committed to helping the implementation of reducing emissions from deforestation and forest degradation, as well as fostering conservation, the sustainable management of forests, and the enhancement of forest carbon stocks (REDD+) in developing countries. We analyzed the fragmentation of REDD+ finance and suggested methods for its coordination under the Paris Agreement regime. The fragmentation of REDD+ finance was observed, but it was lower than that of general official development assistance (ODA). However, we found that the trend of fragmentation in REDD+ financing is different from that of general ODA, with a few major donors occupying a large portion of the total size of committed REDD+ finance. Thus, it may not be appropriate to consider the fragmentation of REDD+ finance merely as an obstacle that needs to be decreased. Still, the total amount of REDD+ finance should be increased and adjusted for various donor–recipient relationships, in consideration of the REDD+ finance options in the Paris Agreement. Some REDD+ countries have made progress in national REDD+ and accomplished emission reductions. However, REDD+ finance needs to be stratified considering the progress of national REDD+. For such forms of cooperation, an information-sharing and monitoring system that collects information on ongoing REDD+ cooperation, the commitment and expenditure of REDD+ finance, and the support needs of REDD+ countries at a global level should be established. Multilateral organizations need to provide safeguarding functions for developing countries that are isolated from bilateral REDD+ finance.