Breaking stereotypes of REDD+ finance, or ‘Where is the money?’


Since the Bali Conference of the Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC) in 2007, much of the focus has been on the ‘big money’ that will be needed to make the REDD+ operational. However, as Brana-Varela and Lee pointed out, “Developing countries tend to perceive REDD+ as a financing mechanism, while developed countries see it as a mitigation tool.”[1] After eight years of REDD+ capacity building activities, this difference in perception appears to be more ingrained than ever, as REDD+ countries begin to think about implementing their REDD+ strategies. The question that keeps coming up again is “Where is the money for REDD+?”

And so, it isn’t surprising that REDD+ Finance has been the most-requested topic for support from the UN-REDD Programme in Asia and the Pacific. In May 2016, the Programme’s regional team therefore organized an Asia/Pacific knowledge exchange on REDD+ Finance, in partnership with the Forest Carbon Partnership Facility (FCPF), and supported by funding from the REDD+ Partnership.[2]

Representatives from 12 countries in the region attended the event along with resource persons from the Latin America and Caribbean region as well as the private sector. The discussions focused on processes and options to secure financing for REDD+, not only under the UNFCCC (through the Green Climate Fund), but also various other sources.

Two lessons stood out for their potential to challenge conventional perceptions of REDD+ Finance.

REDD+ Finance is not limited to results-based payments

REDD+ by definition requires results (emissions reduction or enhanced removals) for payments (hence called “results-based payments or finance”) and this will remain a unique feature of REDD+. In order to achieve the results, countries need to develop and implement policies and measures, and fulfill various requirements. There will be costs for this implementation phase before the results are produced. The finance used to cover these costs is often called “investment finance” to distinguish it from the later results-based finance, and is also part of REDD+ Finance. Developing countries will notice initiatives to address drivers of deforestation and forest degradation, or to bring about more generally sustainable forest management, have been funded for decades, at least in part, by international sources. Integrating and enhancing existing projects and initiatives as investment finance for REDD+ is thus a necessary, practical and efficient way forward for achieving results.

Domestic finance for implementing REDD+ is as important as international finance

Investment finance for REDD+ can come from a variety of sources, and no single source may be sufficient. While REDD+ results-based payments may be sourced internationally, investment finance does not have to be. Does your country have budgets allocated for activities related to forest boundaries survey and demarcation? How about mangrove restoration? Outside of the forest sector, is there any policy that happens to encourage forest conversion, like agricultural subsidies, or current land-use plans?[3]

In order to attract international results-based finance, identifying domestic investments and aligning them towards REDD+ objectives will help countries send a strong political signal and show their commitment to REDD+. This in turn gives confidence to potential donors and the international REDD+ community as a whole. Of course, developing countries can still tap into international finance. At the workshop, we learned that Ecuador submitted a phase-2 (REDD+ implementation) proposal to the Green Climate Fund. International finance is available but won’t be sufficient. It is therefore important to remember that domestic finance can be used for REDD+ implementation. One example of utilizing domestic finance to increase forest cover is India’s intergovernmental fiscal transfer system (see a previous blog post by Gabrielle Kissinger).

Why is this good news? Uncertainties still remain when it comes to international financing mechanisms for REDD+ results (results-based finance). But it takes time to produce results. You can start the implementation and secure investment finance for REDD+ before the results come into the picture. In order to do that, the perception of REDD+ Finance being international only has to change. More can be done, and more financing can be secured for REDD+ at this crucial stage of implementation.

About the Authors:

Keiko Nomura: UNEP REDD+ Programme Officer for the Asia and Pacific region, with focus on Myanmar, Nepal, and Sri Lanka. Her experience is in environmental commodities and energy.

Thomas Enters: UNEP REDD+ Regional Technical Advisor for the Asia and Pacific Region. He ccoordinates UNEP’s UN-REDD activities in the region and provides technical input into UNEP portfolio of National Programmes and Targeted Support (TS), with a focus on Bhutan, Mongolia, Papua New Guinea, and Viet Nam Phase II Programme.

thomas.enters@unep.org

Notes

[1] Brana-Varela, J., & Lee, D. (2016). Early Reflections on the Implications of the Paris Agreement for REDD+. Retrieved July 11, 2016, from http://merid.org/~/media/Files/Projects/ImplicationsofParis/20160527%20-%20The%20PA%20and%20REDD%20-%20copy%20edited%20and%20cleaned.pdf.

[2] For more information about the event, please see http://www.unredd.net/index.php?view=list&slug=asia-pacific-un-redd-regional-exchange-event-on-redd-financing-september-2015&option=com_docman&Itemid=134

[3] For more information on agricultural subsidies and REDD+, please see “Towards compatibility between agricultural fiscal incentives and REDD+”.


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This resource is made possible through support from Denmark, Japan, Luxembourg, Norway, Spain, Switzerland and the European Union.

 

© 2019 UN-REDD Programme.  All images used courtesy of license holder or through Creative Commons license.

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