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Bridging commitments and reality: Forestry Public Expenditure Review for policy coherence

Blog | Wed, 01 Nov, 2023 · 7 min read

Photo credit: Uganda's Ministry of Water and Environment. Collaborative Forest Management meeting in the southwestern forest reserves of Uganda 

For decades, the global community has actively collected efforts to reduce deforestation. While there is a growing momentum on the crucial collaborations between agriculture and forestry sectors, financing into nature, especially in the contexts of forests, remains inadequate and underreported. To meet global climate, biodiversity, and land degradation targets, financing for forest pathways needs to at least triple, reaching over USD 200 billion annually by 2030.

It’s noteworthy that the majority of these investments are fueled by government expenditures. Forests, crucial for climate and agriculture livelihoods, require action supported by strategic investments and innovative finance sources. However, significant gaps exist in data on forest-related government spending. The importance of supporting the development of methodologies for analyzing public and private forest-related domestic resource flows was stressed at the recently held FAO’s Latin American and Caribbean Forestry Commission.

Delving deeper into these numbers and evaluating how they align with cross-sectoral policies holds vast opportunities. What is profound is that expenditures for forestry investments takes place not only in the forestry sector but also in others including agriculture and energy, among others. Therefore, comparing expenditures with other cross-sectoral entities that influence or have an impact on forestry is paramount, especially in relation to the main drivers for deforestation and forest degradation.  

Conducting a Forestry Public Expenditure Review (PER) could provide information to improve cross-sectoral budget allocation and delivery of priority outcomes for the country’s Nationally Determined Contributions (NDCs). A systematic assessment of the level, composition, and coherence of public expenditures affecting forests is essential to support the governments to construct evidence informed decision making. The Food and Agriculture Organization of the United Nations (FAO), through joint efforts of the UN-REDD Programme, and the Monitoring and Analyzing Food and Agricultural Policies, is developing an analytical framework of public expenditures on forest conservation, restoration, and sustainable use. 

Three forest pathways can be a starting point, namely: halting deforestation and maintaining forests; restoring degraded lands and expanding agroforestry; and sustainably using forests and building green value chains. PER can play a key role in analyzing the spending among these pathways, evaluating financial effectiveness, and ensuring policy coherence. This analytical process is integral not solely for effective budget distribution but also for collecting empirical and quantitative evidence on establishing financial strategies for reducing deforestation. For example, redirecting even a small portion of the global agricultural subsidies towards sustainable agricultural production to reduce deforestation could significantly support efforts to meet climate targets.

In 2023, piloting of the Forestry PER was made in Uganda, performing a preliminary Forestry sector PER through a collaboration between Uganda’s Ministry of Water and Environment. The initial findings uncovered the gaps between climate commitments targeting the Agriculture, Forestry, and Other Land Use (AFOLU) sector and actual forestry expenditures. The government has shared their experience at the Africa Climate Week this September, garnering increasing global interest. A validation workshop is upcoming in November to verify these preliminary findings but also to catalyze knowledge exchange across various sectoral ministries to discuss policy processes that could benefit from the results of the study, including strengthening inputs to the government’s climate finance strategy identification.

Further, at the global level, the outputs of the Forestry PER will be expanded to include analytical work on policy coherence for fiscal incentives to halt deforestation. Analyzing sectoral performance on PER can help align expenditures with long-term goals, facilitating dialogues with the Ministries of Finance, Planning, and Economic Development, attracting potential evidence-based donor support.  A thorough policy coherence analysis between commitments and expenditures can further help pinpoint and rectify discrepancies and ensure fiscal policy consistency.

Undertaking a Forestry Public Expenditure Review results in a recommended approach but also an indispensable tool for countries striving for policy coherence, commitment observance, and the preservation of forests for future. FAO and the UN-REDD Programme remain dedicated to strengthening capacities and collaborating on Forestry PER if requested, supporting more countries in paving the way to reduce deforestation, enhance the transformative role of agriculture, and better identification of financing gaps to address climate change.