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Guest Author: Stella Gama, Ministry of Natural Resources, Energy and Mining, Malawi
In my view an effective REDD+ approach is linked to the engagement of all relevant stakeholders, regardless of gender, and to the promotion of equality and equity in terms of participation in decision-making and access to benefits. Specific attention to women’s needs and contributions is key to efficient REDD+ strategies and activities, and the UN-REDD Programme is helping to guide countries conceptually and methodologically in addressing the gender considerations of REDD+.
The UNFCCC ‘Cancun Agreements’ call for the integration of gender considerations within REDD+ national strategies, and this is reflected in the UN-REDD Programme Strategy 2011-2015, which makes numerous references to gender equality and equity. Moreover, integrating gender sensitive activities in REDD+ efforts can help improve the efficiency, efficacy and the long-term sustainability of forest management.
Malawi joined the UN-REDD Programme in 2013 – we wanted to be part of the global REDD+ network to benefit from the capacity development, and technical and financial support provided by the UN-REDD Programme to implement REDD+ activities. Thirty per cent of Malawi’s land area was once covered in forest. Since 1992, there has been a high deforestation rate, according to statistics 2.8 per cent annually, so we hope to increase forest cover through engaging with REDD+ activities and to enhance sustainable forest management strategies.
There are other advantages – working with the UN-REDD Programme also means having a wider platform. The Programme has created a platform for sharing lessons and best practices particularly for countries who have advanced, so we don’t have to reinvent the wheel, only to learn from other countries and from the mistakes which have already been made and giving us a pool of knowledge to draw on. Other advantages include support for REDD+ preparedness activities. Malawi has developed a REDD+ Roadmap through support from the US, and now through collaboration with the UN-REDD Programme we will get immediate support in order to implement some of the activities in the roadmap, and address governance and monitoring, reporting and verification. Ultimately we hope we are going to benefit from a national programme.
One of our challenges is that in the past we have had disjointed sector coordination. REDD+ is not just about the forestry sector. We can ensure that we embrace other sectors, and draw a wider range of stakeholders into REDD+, we are looking at the Green Economy approach and livelihoods, sustainable forest management agriculture, biodiversity conservation and other multiple core-benefits.
The opportunities presented by REDD+ can potentially create a fairer gender balance in forestry decision-making. In Malawi we have both matrilineal societies and patrilineal societies. REDD+ represents an opportunity to involve women and offer a greater participation in society, and also to enhance the benefits that women get from REDD+. With regard to benefits it is about the access and control of benefits, e.g. secure forest land tenure from REDD+ due to the need to consider women’s contributions in REDD+ implementation.
During discussions for developing the National REDD+ Strategies – Africa, gender mainstreaming was on the table. This will also help to enable even better gender balance. Specifically with the inclusion of gender-sensitive safeguards in the development of national REDD+ programmes in order to develop a gender-transformative strategy so that the new paradigm specifically contributes to the advancement of gender equality while safeguarding women’s rights, thereby contributing to climate change solutions. In addition, use of the affirmative action to ensure gender balance in REDD+ Academy. The tools designed for training delivery should integrate gender. We also need gender balance indicators for participation as well as impact of REDD+ activities — for both women and men.
Bio: Stella Gama is the REDD+ focal point for Malawi at the Ministry of Natural Resources, Energy and Mining. Ms. Gama discussed gender mainstreaming while participating in the UN-REDD Programme Workshop “Regional South-South Exchange – Africa: Developing National REDD+ Strategies” Workshop, being convened in Nairobi at UNEP, 14-17 October 2014. View workshop agenda.
Guest author: Stuart Clenaghan
In my view there is a critical missing link in REDD+ thinking, and that relates to the high cost of finance for small and medium-sized enterprises (SME) in developing countries. SMEs are widely acknowledged to be the real engines of economic growth, and account for between 80 per cent and 90 per cent of forest enterprises. Yet SMEs face strong headwinds when it comes to accessing funding. For many SMEs, the unsustainable exploitation of natural resources – or “natural capital” – is a substitute for financial capital.
This perspective draws upon insights gained as a co-founder of a private sector sustainable forestry company, striving to deliver strong financial, social and environmental results in Peru (a UN-REDD Programme partner country), as well as my experience of capital markets as a former investment banker.
The link between the high cost of capital for the private sector in developing economies and the unsustainable exploitation of the natural capital of forests has received little attention in the global debate on REDD+.
Yet the behaviour of the private sector is fundamentally influenced by the availability of finance – both equity investment and loans – and by how much it costs. This is as true for a farmer working a two-hectare plot as it is for a forestry company working two hundred thousand hectares. Where capital is expensive, or difficult to obtain, the only option for many is to turn to the exploitation of natural capital. Conversely, where cheap finance targets forest-friendly enterprise, business follows.
For REDD+ to succeed we must overcome the shortcomings of financial markets in countries where forests are at risk. And because the drivers of deforestation are rooted in the wider economy (think charcoal supply chains, or urban markets for agricultural produce), investment is needed not just in forests, but in other areas too. Anyone with experience in building businesses in developing economies will attest to the difficulties in raising money. Equity investment is often tightly controlled by wealthy elites, and there are few other sources of venture capital or private equity. Bank loans are expensive, frequently at rates of 15-20% or more, available only to those offering guarantees and collateral. Additionally, businesses in poorer countries face costs that peers in developed markets do not have. True, labour bills are generally lower, but poor infrastructure and lack of service providers force companies to invest in vertically integrating their operations. One company, a 5,000 hectare rice farm in east Africa, has had to build its own hydro and biomass power plants, construct rice drying polishing facilities, invest in packaging and marketing, and on top of that maintain a 100 kilometre stretch of road. This expenditure would be unnecessary had it been a potato farm in eastern England, where outsourced services are readily available.
It is hardly surprising, then, that some turn to the exploitation of natural capital. We can see examples across the globe, from East Africa’s charcoal trade (estimated to be worth US$ 350 million a year in Dar es Salaam alone and employing hundreds of thousands of people), to the destruction of mangroves in India for shrimp farming, and agricultural frontiers where forest is cleared for ranching or crops.
Historically, the transformation of natural capital to financial capital has underpinned the growth of some of today’s biggest economies. Waves of deforestation in England fed agricultural expansion, maritime trade and the early industrial revolution. The great Hanseatic port cities of Germany and the Baltic expanded on the back of trade of timber pulled from northern hinterlands. Indeed, the very foundations of monetary systems were built upon natural capital – the world’s first coins were forged in Lydia (in today’s western Turkey) from bronze and silver smelted with charcoal from deforested uplands.
To achieve lasting REDD+ results, access to financial capital must replace the exploitation of natural capital. We need more than investment in forests: we need to effect deep-rooted socio-economic changes across whole economies. If we ask forest nations to do a job in protecting forests and sinking carbon, then we must provide financial capital for sustainable growth.
By linking financial capital, economic development, and the goals of REDD+ we can gain insight into the type of mechanism required:
- First, countries that deliver reduced emissions – or even carbon sinks – need to be paid for results at agreed prices, and on a bilateral basis. Market-priced payments introduce too much uncertainty and income volatility. And, as we have seen with the much-criticised Clean Development Mechanism, project-based accreditation brings high transaction costs, uncertain financing and drains scarce management resources.
- Second, forest nations need national development banks that supply low-cost finance – equity and loans – to spur REDD+-friendly private sector enterprise from micro-scale to national-sized corporations. As a model, take a look at Brazil’s BNDES, or even Germany’s KfW (set up to support post-war reconstruction).
- Third, result-based payments must be ring-fenced for REDD+. The more successfully a country reduces emissions the more it earns, and the more capital it has to invest. REDD+ benefits will show up throughout the economy and that should be incentive for countries to adopt a holistic strategy. In fact, many governments have already started to identify where investment is needed in REDD+ Readiness plans produced with the UN-REDD Programme and Forest Carbon Partnership Facility.
Two interesting outcomes might result from such arrangements:
- The first is that REDD+ development banks could operate at a profit – REDD+ investment can make money.
- The second is that ring-fenced REDD+ payments could enable countries to enhance their creditworthiness and issue bonds. In other words, a lot more private investment capital could be leveraged into REDD+.
Deforestation is driven by economic factors. For sure we need better land rights, governance, enforcement and conservation. But at the heart of the matter is the challenge of achieving non-extractive sustainable growth in forest nations. That can only happen if REDD+ bridges the deficiencies of financial markets.
Bio: Stuart Clenaghan is an investor in environmental and sustainable forestry businesses. In 2008, he co-founded Green Gold Forestry, an FSC-certified sustainable forestry company operating in Peru, producing sawn hardwoods. Alongside its 154,000ha of forest concessions, GGF also sources logs through its programme of community forestry partnerships. His consultancy, Eco System Services Limited, specialises in developing financing models for large-scale land-use projects. He is also a senior fellow of the Climate Bonds Initiative and a trustee of Botanic Gardens Conservation International, and a former investment banker with Lehman Brothers and UBS.
(This post originally appeared on the UNFCCC blog).
At the New York Climate Summit on 23 September, the United Nations is expecting clear commitments in the area of forest climate action.
Countries that are home to tropical forests have the opportunity to present priority actions on deforestation and forest restoration in their summit statements, including actions that are conditional on international support.
Developed countries can in turn outline their financial contributions to sustainably manage forests.
A new declaration – the New York Declaration of Forests – is expected to catalyze action from public and private sector as well as civil society organizations to combat deforestation and to ensure that new forests are planted.
The Declaration is likely to be accompanied by the announcement of a number of significant, concrete and tangible commitments to take action on forests by multilateral institutions, subnational jurisdictions, companies, financial institutions, and civil society organizations.
Why action on forests is important for the overall fight against climate change
According to the Intergovernmental Panel on Climate Change (IPCC), action in the area of forests is essential to stay below the two-degree warming limit.
More than a million hectares of forests are still lost globally every year. The release of carbon dioxide through the burning and cutting of trees and other biomass is responsible for around 20% of global greenhouse gas emissions.
In New York, key commitments are expected to be made specifically to REDD+, which is Reducing Emissions from Deforestation and Forest Degradation, conservation of forest carbon stocks, sustainable management of forests and enhancement of forest carbon stocks in developing countries.
What commitments at the UN Summit mean for the UN climate process
Long-term commitments made in New York towards action taken after 2020, when a new universal climate change agreement is to take effect, can have a positive influence on raising immediate climate ambition.
Last year, governments completed the methodological guidance for REDD+, paving the way for its implementation.
Raising immediate climate ambition has been one key focus of work under the UN Framework Convention on Climate Change this year through so-called Technical Expert Meetings held in 2014, also through action on forests.
For example, at a meeting in Bonn in June, China and Brazil presented what they are doing in this field.
China said it had committed to increase its forest cover by 2020, and had already achieved more than half of this. China also plans to integrate forest carbon into its national pilot emissions trading scheme.
Brazil, home to the largest part of the Amazon rainforest, said it had achieved a decrease in deforestation during recent years, and would be able to do more with international support.
Read about highlights of the UNFCCC Technical Expert Meeting on land use
Extensive information on REDD can be found on the UNFCCC REDD Web Platform
Read more about the action area of forests on the UN Climate Summit website
The 20-member Policy Board of the UN-REDD Programme approved US$ 35,481,763 in REDD+ readiness funds at their 12th policy board meeting, held in Lima, 8-9 July, which was attended by more than 100 participants from 25 countries.
The meeting was marked by a collaborative and forward-looking atmosphere that included much knowledge sharing both on current and planned REDD+ initiatives. A full day was dedicated to “information sharing” on 7 July in advance of the official policy board meeting. H.E. Pak Heru Prasetyo, Head of the Indonesia National REDD+ Agency and H. E. Manuel Pulgar-Vidal Peru Environment Minister both attended the information day and highlighted the importance of REDD+ to climate change mitigation and the importance of the support delivered through the UN-REDD Programme to advance national REDD+ efforts. The ministers also emphasized the role of forests at the upcoming climate summit and UNFCCC COP20 in Lima.
Another highlight of the meeting was the launch of three new national programmes — Argentina, Cote d’Ivoire and Mongolia. Mongolia’s is the first boreal forest National Programme to be funded by the UN-REDD Programme.
The meeting was also an opportunity for UN-REDD Programme partner countries to discuss the future of the Programme post-2015. The policy board members approved a roadmap to develop the Programme’s 2016-2020 strategy by May 2015, which will include a strong participatory process.
Several REDD+ knowledge tools were also launched at the meeting including the REDD+ Academy, with the first regional sessions announced to take place in Indonesia, Nigeria and Argentina; and the REDD+ Radar, a new tool for tracking progress of National Programmes that can be used by country partners, donors and others.
The next UN-REDD Policy Board will take place in November 2014 in Tanzania.
For more information about the UN-REDD Programme’s Policy Board, or to access documents from the meeting, visit here.
Guest Author: Dr. Fiona McKenzie
Imagine you were throwing a rock. Where the rock ends up will pretty much depend on you – your strength, aim and coordination. You could easily predict where the rock will go and the trajectory could be accurately modelled. Now imagine throwing a live bird (this isn’t encouraged in practice). Even though the bird is subject to the same laws of physics as the rock, there is no way for you to know for sure where it will end up. Its trajectory is not something that can be easily predicted. You could try weighting the bird down to control its path, but this destroys the capability of the bird.
Why does the difference between birds and rocks matter? It matters because the way one would think about and work with a rock is different from the way one would (hopefully) interact with a bird. Too often we apply the wrong approach to the right idea. REDD+ is like the bird. While there were many expectations, fears and predictions when it was officially incorporated into the Bali Action Plan in 2007, it has since behaved in ways we didn’t expect.
This is because REDD+ has the properties of a complex adaptive system. A simple system is relatively stable and has straightforward cause-and-effect relationships (a bit like a rock). In simple systems, it is possible to analyse the parts of the whole at their most reduced or basic level in order to learn about the sum. A complex adaptive system is more like the bird. It exists within other interdependent systems and is driven by interactions between system components and governed by feedback. Its complexity comes from these patterns of interactions. It is constantly adapting. Results can be counterintuitive. You can make the changes you want, but you might not end up in the place you would expect. The whole truly is more than the sum of its parts.
Such complexity doesn’t have to be a liability. It can be an advantage, so long as we realise that we need to think and work differently in such contexts. What does this mean? It means that we need to be more aware of the patterns of interactions that characterise the whole and how these patterns create points of leverage or influence, often in unexpected places. We need leaders who can draw upon the emergent and self-organising nature of complex adaptive systems through facilitation, empowerment, evaluation and continuous re-calibration.
We need organizations (not just leaders) that can keep up with the dynamic nature of complex adaptive systems by being able to learn from and adapt to feedback. Learning requires experimentation, evaluation and reflection. Learning also requires taking risks and acknowledging failures. We need organizations (and individuals) that are willing to do both. This might require admitting uncertainty and taking on a portfolio of experiments. It may mean strategy becomes about setting a common vision or destination, but still creating room for a diversity of approaches in how to best get there. It definitely means creating organizations that can learn for themselves, based on real time feedback, continuously. In nature, if you don’t adapt you eventually become extinct.
There is no doubt that it will take time and commitment to develop the organizational skills and cultures needed. The good news is that there is a strong appetite for new ways of thinking and working. This was clearly evident at a retreat on collaborative cross-sectoral action (Smithsonian-Mason School of Conservation, Front Royal, USA), sponsored by UNEP and the UN-REDD Programme in December 2013. This is a start. The challenge is to ensure that this translates into action through ongoing high-level support for adaptive approaches that don’t fit the usual templates for planning and administration. Surely if anything were worth the effort, if would be REDD+.
This post is derived from a policy brief, Complex Adaptive Systems: Implications for Leaders, Organisations, Government, and Citizens.
Dr. Fiona McKenzie is an advisor and researcher with a background in agricultural and environmental policy and a PhD on farmer-driven innovation. She is an Honorary Associate in the Faculty of Humanities and Social Sciences, La Trobe University, Australia and a Strategy Advisor for the Australian Futures Project. She recently led a project with EcoAgriculture Partners and the United Nations Environment Programme (UNEP), funded by the UN-REDD Programme, on enabling cross-sectoral collaboration in the global food system. Previously, Fiona was part of the team that established the Terrestrial Carbon Group. Contact: email@example.com
Guest author: Zoë Cullen, Senior Programme Manager at Fauna & Flora International
Every good solution starts with a problem.
At the Forests Asia Summit last week, a wealth of intellectual capital came together to discuss the pressing global problem of tropical deforestation and the need to develop holistic solutions to reduce forest loss while enabling equitable and sustainable economic growth. In essence, how to transition to a Green Economy, or “Enterprise Earth” as aptly described by H.E. Heru Prasetyo, Head of the Indonesia National REDD+ Agency.
My personal experience of this challenge stems from working with Fauna & Flora International’s team in western Jambi Province, Indonesia. Here many adat (customary) communities have a strong desire to sustainably manage these carbon and biodiversity-rich forests as “village forest”. But support is needed to do this and to increase the productivity, value and sustainability of their agriculture-based economy to help ensure that rural economic development is not tied to forest loss.
This theme is replicated across Indonesia and globally. Beyond smallholder agriculture, such evolutions of practice are needed by agricultural producers at all scales and across sectors. How do we stimulate and finance this transition? What are the sources of finance and in what smart ways can they be deployed to drive results?
The UNEP Finance Initiative and the UNDP Green Commodities Programme convened a workshop in Jakarta, with the support of UNORCID, on behalf of the UN-REDD Programme to discuss the use of results-based finance for REDD+. Essentially this is finance that rewards achievement of certain desired impacts, such as forest conservation, and there are many potential variations of results-based payments.
There has been much talk of green bonds that generate capital to invest in commercially viable green investments. They offer enormous potential to drive sustainable investments in commodity supply chains, for example. Recent work by ForestTrends highlights the potential for jurisdictional REDD+ bonds to support forest conservation and development of sustainable agricultural supply chains across an administrative landscape, such as a state or province.
Thinking back to my community forest example, I’m particularly inspired by the potential of the “development impact bond” model that repays bond investors using long-term donor commitments. Applied to forests, a “rainforest impact bond” could be used to make significant funding available up-front to support diverse REDD+ activities such as clarification of forest tenure, investment in more sustainable and productive agriculture practices, and forest protection.
Up-front certainty of multi-year funding would enable implementing agencies to offer results-based contracts at the field level that could be much longer than traditional grant cycles permit. This, in turn, would provide greater certainty to the beneficiaries of those contracts and sufficient time to support development of green economic activities designed to deliver sustained benefits to communities beyond the lifetime of the bond.
While this approach to results-based finance is still dependent on donor funds, it introduces the private sector as key part of the story.
For every potential advantage of these approaches, I recognise the challenges and as yet unanswered questions: the distribution and management of risk, defining the size, form and timing of results-based payments, ensuring equity and trust, and measuring impact, to mention but a few.
Yet, as Nelson Mandela once said, “It always seems impossible until it’s done”. Similar methods have already been used to great effect by the International Finance Facility for Immunisations (IFFIm) to scale up vaccine delivery in the world’s poorest countries.
Last week’s workshop advanced an important discussion about the role and use of results-based finance mechanisms in the context of REDD+. There is much work to do to turn these approaches into real and appropriate solutions, at a scale in keeping with the size of the problem. Like other elements of REDD+ it will require true cross-sector collaboration and design of mechanisms that are carefully tailored to the local context where results-based finance will be deployed. But if there was one over-riding message I took from the group it was – when it comes to designing these mechanisms…keep it simple stupid!
The rewards of success will be great, as we strive towards what Pavan Sukhdev (UNEP Goodwill Ambassador) described as the “Holy Grail of REDD+”, a green economy in which sustainable management of forest, crop and grazing lands sustains all the major ecosystem services on which we all depend.
Bio: Zoë Cullen is a Senior Programme Manager at Fauna & Flora International. She oversees the Innovative Conservation Finance programme within the Environmental Markets team, which seeks to identify and develop sustainable finance mechanisms for biodiversity conservation. Much of her recent work has focused on REDD+, particularly in Indonesia.
Author: Will McFarland, in Jakarta
The headline news in the Jakarta Globe earlier this week was that Indonesia’s economy has risen to 10th in the ranking of global economies. BUT, the analysis and commentary went on to say, the country’s growth is unequal, doesn’t benefit the poorest and is vulnerable. The next president faces the task of improving the quality of growth.
On Tuesday the same paper was filled with headlines from the Forests Asia Summit, which was one of the reasons I was in Jakarta for the week. In his keynote speech, Indonesian President Susilo Bambang Yudhoyono (SBY) made a plea for his successor to continue his commitments to reduce deforestation in the country and ensure that Indonesia finds a way to reduce its rapid deforestation rates.
So, what’s the link?
Indonesia’s economy and forests are inseparable. As the world’s biggest producer of palm oil, a US$ 40 billion industry globally, much of Indonesia’s economic activity centres on clearing forest. Palm oil is Indonesia’s second-largest export and generates huge tax revenue for the government. The domestic palm oil industry is a large part of the recent economic growth and it effectively contributes to ensuring that Indonesia’s 240 million citizens have better lives. However, Indonesia has made international commitments to reduce the rate of deforestation and knows that action is vital to tackle its serious contribution to global as well as local environmental and social issues.
Assuming that in the short to medium term that Indonesia’s economy will continue to rely heavily on palm, timber and other agricultural products, a delicate balance is needed between growth and environmental impact. SBY said this himself on Tuesday, “it’s about striking a balance…the central tenet of the strategy is about creating prosperity for everyone, in a way that does not harm the natural environment”.
There are many parallel issues that need addressing in order to achieve this, linking Indonesia’s forest reforms with a wide range of social and economic challenges. Conflict with local communities, dealing with fire and haze, and regulation of the private companies that dominate the industrial landscape in Indonesia are just a few of them. No single policy or action will manage to achieve this, and no single actor is responsible. Instead a multi-stakeholder approach is required, and this week a UN-REDD Programme, UNEP Finance Initiative, UNORCID and UNDP’s Green Commodities Programme convened workshop brought many of these stakeholders together in the first of three regional workshops to try and identify a coherent package.
Reducing forest loss while maintaining a strong economy can be delivered in two ways: firstly making more of the land available and creating more value in Indonesia (leaving remaining forest to be protected); or if deforestation is needed, ensuring that it is as low-impact as possible. Making more from the existing land could be achieved by attaining price premiums for certified products, or increasing yields form better practices and agro-technology. Creating “added-value” in the supply chains is also a key challenge for Indonesia as much of the palm oil it exports is unprocessed. Reducing the impact of deforestation can be done by avoiding high-conservation value areas, and peat draining and burning, perhaps by prioritising conversion of land that is already deforested and used for other purposes.
None of these are brand new ideas. And they are complex and difficult to achieve. But where innovation and investment of time, minds and capital is needed is in identifying how to promote, encourage, or force the shift of business practice to the types activities outlined above.
The workshop identified a suite of financial instruments and policy interventions that could drive private sector change. Potentially scalable and feasible ideas emerged, including:
• Wide ranging legal policy reform including removing perverse incentives and subsidies to the palm oil sector;
• Design of green bonds and development impact bonds to finance sustainable production;
• Building an economics evidence base that unpicks the implications of changing the sector’s practices.
Delivering these would require collaboration from the national and provincial governments, the financial sector, research and NGO partners, and early movers in the palm oil industry itself.
The front-page headline of today’s newspaper bemoans the lack of innovation in Indonesia’s economy – and the need for investment in skills and technologies in order to strengthen Indonesia’s economy, reduce its reliance on and exposure to other economies, and ultimately lead to improved quality of life in Indonesia. If we join the dots between this week’s headlines, and the evidence and discourse emerging from the research and thinking at this week’s summit and workshops, it appears that investing in changing practices to reduce deforestation is a no-brainer for solving Indonesia’s other prominent social and economic problems.
Bio: Will McFarland is a Research Officer at ODI in the Climate and Environment Programme. He works on green growth, natural resources and forests.
Green Bonds have been mentioned a number of times at the Forests Asia Summit taking place this week in Jakarta as a mechanism to finance sustainable land use and were described in excited terms at the Abu Dhabi UN Ascent in advance of this year’s UN Climate Summit. What is all the excitement about? Finance experts Iain Henderson and Johan Kieft, in Jakarta for the Forests Asia Summit; and Sean Kidney, at the Abu Dhabi UN Ascent, have not only asked a few questions, but tried to answer them too!
Q: There has been a lot of interest in bonds at the Forests Asia Summit in Jakarta this week. Are they a new financial mechanism?
A: The short answer is no. In fact, they have been around for hundreds of years and we know they were used in Renaissance Italy about 800 years ago. There are even claims that – like many things – the Romans invented them a couple of thousand years ago during the time of the Roman Republic.
Q: So why all the interest?
A: There are a few reasons. Although bonds aren’t a new mechanism, green bonds are relatively new and interest in them from the world’s largest investors is growing rapidly. We are also seeing the range of issuers expand and corporates are also now using green bonds to raise funds to drive sustainability down their supply chains. High quality or “investment grade” bonds are also the single largest pool of private sector capital. This is relevant as it is increasingly clear that we need to tap into the vast pools of private sector resources to plug the well-documented finance gap. Creating a financing mechanism that looks, smells and feels like something private investors buy and sell in large volumes every day makes a lot of sense.
Q: Fine, but why is this relevant to REDD+?
A: There is growing recognition that we need to move away from a “siloed” forest-centric approach to deforestation and forest degradation, towards a more holistic approach to development that is forest-friendly and has green growth at its heart. Beyond the forest frontier, we will also need to deal with the agricultural, infrastructure, urban and transport requirements that are essential to creating a green economy and this all costs money. However, this green economic transformation is vital to create the jobs and green growth that will in turn create the social and political space to allow REDD+ to be implemented at scale.
Q: So, how do bonds fit into this scenario?
A: To create the green economy described above, we will need a blueprint, and for this we need carefully planned green growth strategies that include REDD+. These blueprints will in turn require financing. This is where green bonds come in, as they are a mechanism for preferencing these sorts of green productive investments over alternative growth strategies in developing economies.
Q: How do the investors know what is “green”?
A: We need credible standards to differentiate what is green and what is not, especially in complicated areas like forestry and agriculture. These standards then need to be verified by reliable external third parties to make sure the funds raised from the bonds are helping, and not hindering, green development.
Q: Will this make a difference?
A: Yes. Robust standards that are externally validated can help reduce the risk and complexity of greener investing. They make product selection simple and standardised for investors and they outsource the social and environmental due diligence to credible third parties. There is huge demand for this. Twenty two trillion US dollars in assets represented by the Climate Bonds Initiative advisory panel is calling for this to help screen and preference green investment.
Q: Is this just about the private sector?
A: No. This is about repositioning the narrative in both policy and financial circles towards financing productive investments that will provide a much needed long-term economic stimulus. Uncovering the large-scale investor appetite we are seeing in the market will help to spur policy makers to develop green growth frameworks in the knowledge that cheap private sector capital is eager and available.
Q: So how do we scale up?
A: There are several key requirements such as issuing in large size to create the “liquidity” required by the biggest investors, strategic use of public balance sheets to buy down the cost of capital, using tax incentives and creating a compelling story. Have a look here for some more on this.
About the authors:
Iain Henderson joined the United Nations Environment Programme Finance Initiative (UNEP FI) in Geneva in 2012 to work on REDD+ and Sustainable Land Use. Prior to this, he spent two years in Hong Kong, where he grew up, with WWF’s Forest & Climate Initiative working on finance-related issues. For the first 12 years of his working life, Iain worked in investment banks in London in the Fixed Income, Currencies and Commodities divisions of UBS and Deutsche Bank.
Sean Kidney CEO and co-founder of Climate Bonds Initiative is also a member of the Board of the Network of Sustainable Financial Markets. He is also a member of the Commonwealth Expert Group on Climate Finance; the Finance Advisory Board of the European Wind Energy Association; Mercer’s Sustainability Opportunities Fund Advisory Panel; Palmetto’s renewal energy fund advisory board; and the Advisory Council for the Corporate Knights Capital Advisory Council.
Johan Kieft is currently working as the Head of the Green Economy Unit at the United Nations Office for REDD+ Coordination in Indonesia (UNORCID). During his career, Johan focused on climate change, green growing mainstreaming in development planning and sustainable development with a variety of development agencies and the United Nations. Some of his key achievements include his work on humanitarian assistance in Indonesia, facilitating the drafting process of the Viet Nam Green Growth Strategy and developing concept to mainstream REDD+ in a Green Economy in Indonesia.
Submitted by: Doug Cress
By the year 2030, experts predict that human development will have impacted over 90 per cent of great ape habitat in Equatorial Africa, and that less than one per cent of the orangutan’s undisturbed rainforest homes in Southeast Asia will remain.
That means the critically endangered Sumatran orangutan, whose population is already fragmented across northern Sumatra, will become even more isolated. Cross River gorillas in Cameroon and Nigeria will struggle to survive in the 11 pockets of forest they currently inhabit, mountain gorillas might lose the ability to roam freely across parts of the Albertine Rift, and the 24 chimpanzees that cling to the tiny Gishwati Forest in Rwanda – nicknamed the “Forest of Hope” – might cease to exist at all.
But finding a way to enhance the value of those forests and identify vital corridors that might expand the great apes’ range is at the heart of a new project undertaken by two United Nations’ initiatives – the UN-REDD Programme and the Great Apes Survival Partnership (GRASP). The UN-REDD – GRASP collaboration will develop a series of maps that overlay carbon data and great ape habitat and population data, to highlight the potential benefits of REDD+ and help determine the most vital conservation areas.
The UN-REDD-GRASP project will seek to demonstrate the value the UN-REDD Programme could add to the conservation of great apes – chimpanzees, gorillas, bonobos and orangutans – in terms of improved land-use planning, forest-ecosystem restoration and the connection of habitats through natural corridors that include both protected areas and non-protected areas. This connectivity is crucial to the long-term survival of great apes, which naturally switch social groups or travel vast distances to promote genetic diversity and establish new populations.
Increased knowledge and understanding of the benefits of the UN-REDD Programme for great ape conservation will also help decision-makers to prioritize geographic areas for REDD+ efforts.
The maps will draw upon publically available pantropical carbon data administered by the UNEP-World Conservation Monitoring Centre, and will be made available in both published format and on-line through the Ape Populations Environments Surveys portal database, a visualization tool that can help link the carbon and great ape layers with other context data. The UN-REDD–GRASP project will be launched in late 2014.
The UN-REDD Programme and GRASP had been seeking meaningful projects on which to collaborate, particularly as the natural overlap between forests and great apes already existed. The fact that the UN-REDD Programme currently works in a number of nations that host great apes – including the Democratic Republic of the Congo, Cote d’Ivoire, Tanzania, Indonesia and Nigeria, among others – made the partnership that much easier.
GRASP is a unique alliance of 95 nations, conservation organizations, research institutions and UN agencies that was established in 2001 and tasked with ensuring the long-term survival of great apes and their habitat. Among GRASP’s key priorities is the protection and expansion of great ape rangeland, and the UN-REDD Programme carbon data could be a valuable tool in speeding support to priority areas.
Doug Cress is the programme coordinator of the Great Apes Survival Partnership (GRASP). He previously served as the executive director of the Pan African Sanctuary Alliance (PASA), the vice-president of the Orangutan Conservancy, and the executive director of the Great Ape Project (GAP), and spent 20 years as an award-winning reporter for The Washington Post, the Los Angeles Daily News, Time and the Atlanta Constitution.
UNEP’s International Resource Panel (IRP) launch their report: Building Natural Capital: How REDD+ Can Support a Green Economy to coincide with key events taking place in Jakarta celebrating the International Day of Forests – 21March 2014.
Our planet is currently losing 13 million hectares of forest per year – equivalent to the surface of a football field being destroyed every three seconds! The most severe consequences of this loss include declining watersheds and the depletion of nutrition, loss of topsoil and valuable genetic resources upon which humanity is dependent. Forest loss and degradation also contributes significantly to climate change.
REDD+ led by the United Nations Framework Convention on Climate Change (UNFCCC) provides a collaborative response on a scale that matches the severity of the issue, ensuring that forests are more highly valued in decision-making. REDD+ is a key catalyst in the transformation of development, “providing a foundation for the global transition to a Green Economy”. A Green Economy is defined by UNEP as “an economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.”
A groundbreaking report, produced by UNEP’s International Resource Panel (IRP) and the UN-REDD Programme, in collaboration with economists and experts worldwide, reaffirms that a Green Economy offers a new engine of growth, is a net generator of jobs, and is a vital strategy for the elimination of persistent poverty. The authors recommend measures to secure tropical forests across the world, thereby slowing the loss of natural capital and simultaneously reinforcing sustainable development. The report also seeks to motivate policy makers to create the enabling conditions for increased investments in Green Economy with a focus on building ‘natural capital.’
The primary conclusion of the report is that “many synergies between REDD+ and the ongoing transition to a Green Economy are currently under-utilized.” Enhancing “these synergies will accelerate the transition while maximizing the return on REDD+ investments.”
In addition, the authors of the IRP report conclude that:
- The Green Economy provides a useful framework within which REDD+ can prosper. Improved coordination among governments, international agencies, and the private sector dealing with these issues is essential;
- Equitable sharing of the benefits of REDD+ is likely to increase the sustainability of its impact by building support among a wider variety of stakeholders;
- To date, REDD+ activities have focused mostly on reducing carbon emissions from loss and degradation of forests but REDD+ needs to give significantly greater attention to the additional benefits that forests provide.
- The success of REDD+, therefore depends on the balance between conserving forest ecosystems and maximizing carbon sequestration; this balance needs to be informed by solid science.
Perhaps the largest challenge for REDD+ in coming years will be to generate the estimated USD 30 billion per year needed for the implementation of REDD+ from 2020 onwards. The report examines possible sources for these payments, insisting that developed countries play their part in raising the USD 30 billion per year required for future REDD funding. Additional funding could be leveraged from reassessing current incentives such as fossil fuel subsidies, estimated in the region of USD 500 billion per annum, to help meet these costs. “REDD+ would require less than seven per cent of these subsidies to be fully funded.”
Furthermore, stronger engagement of the private sector, and revised national incentive frameworks are recommended to meet these challenges. A Green Economy approach can support both. REDD+ is a ‘no regrets’ investment, and the USD 6.27 billion pledged so far is generating multiple benefits far beyond carbon sequestration.
Multiple Benefits of REDD+ in the Landscape quoted from the IRP Report:
“REDD+ is an effort to create a financial value for carbon stored in forests, incentivizing developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development. REDD+ goes beyond addressing deforestation and forest degradation and aims to make forest management and land use more sustainable within the landscape, and promote conservation and restoration of forests.
When REDD+ prevents the loss or degradation of forest, this will result in multiple benefits in addition to protecting or enhancing carbon stocks. These include ecosystem-based benefits such as conservation of forest biodiversity, water regulation, soil conservation, forest foods and other non-timber forest products. Higher productivity across the wider landscape will be essential to ensure food, water and energy security in an increasingly resource-constrained world, where soil fertility and availability is currently dropping fast.”
Such is the dynamic nature of the REDD+ narrative that it can lead to direct economic benefits, such as jobs, livelihoods, land tenure clarification, carbon payments, enhanced participation in decision-making and improved governance. In Kenya the Kasigau Corridor REDD+ Project provides a replicable model of how multiple benefits can be achieved through REDD+ activities.
Quite literally tropical forests are invaluable! Here are some food for thought: 60 million indigenous people depend on forests; trade in timber and forest products is estimated at USD 330 billion; tourism generates USD 77 billion in global annual revenue; 33 of the world’s 105 largest cities obtain their fresh water directly from protected areas; forest plants contribute to the development of at least 25 per cent of all prescription drugs; forest based wild pollinators (such as bees) are worth billions of dollars annually to farmers.
Read more about the UN-REDD Programme projects in the following countries:-
Panama (valuation of forest ecosystem services).
- Full report, low resolution (8 MB): http://we.tl/TK25KBMNKp
- Summary for Policy Makers (6 MB): http://we.tl/uPR7IdhLYt
Bio: Suzannah Goss has recently joined the UN-REDD team as a Programme Officer to coordinate Knowledge Management across UN-REDD+ units. Before joining UNEP, Suzannah drew both PES and REDD+ principles into the conclusions of her recent MSc, and since then has written numerous articles on REDD+s dynamic narrative.