REDD stands for Reducing Emissions from Deforestation and forest Degradation.
The system works as follows:
Estimated carbon savings from standing trees are estimated.
Those carbon credits are then sold in international carbon markets.
This provides a monetary incentive to preserve standing forests, essentially by increasing the environmental rent to a point where it is higher than the rents from various forms of development.
Sounds good. We address the issues associated with the skewed intertemporal and international distribution of costs and benefits associated with deforestation, as developed countries buy carbon credits from developing nations and forests are preserved for future generations.
Problems and unintended consequences? Yep.
Read more here and here.