REDD+ finance: More than a numbers game

Finance has been a key theme of COP17. Even Ban Ki Moon  has seized every opportunity to focus attention on the urgent need for progress on finance in the next 24 hours. And, as in many of the other negotiation tracks, finance has also become a key issue in the REDD+ negotiations in Durban.

Clarity on REDD+ finance is crucial for three reasons.

  1. REDD+ countries are investing in REDD+ readiness processes that require significant investment, human resources and political support. Why? REDD+ countries want to make sure that they are ready to participate in a REDD+ mechanism, where they are paid to reduce emissions from the forest sector and land use change. Without certainty that they will be paid, momentum towards this goal could evaporate.
  2. Private sector investment in REDD+ has been hailed as an essential source of the investment needed to generate the finance required to achieve emissions reductions at scale. This private sector investment relies on policy and legal certainty that does not exist in most REDD+ countries at present, but has to date been provided by developments under the international policy framework for REDD+. Lack of continued progress may reduce private sector appetite to invest.
  3. In negotiations where developed countries have shown extremely weak commitment to reduce domestic emissions, strong financial commitments to REDD+ may help restore to the faith of developing countries in the process. Many recognise that REDD+ has multiple benefits for climate change mitigation, biodiversity, poverty alleviation and even adaptation efforts, so moving this along will make progress towards a number of global goals.

The current draft text from the AWG-LCA for adoption by the COP identifies a range of options for REDD+ financing. This is a useful outline of the range of sources of finance that countries might pursue, but it provides little certainty for REDD+ countries that any of them will materialise. Another stumbling block to the much-needed certainty for REDD+ countries is the commissioning of a ‘technical report’ on finance sources. This is to be considered at the meeting of the SBSTA in Bonn in June 2012, for report back at COP18.

It is too early to tell what this report will cover or what detailed financing options it might explore, but one thing is certain: it is likely to be a general, global level report, and is extremely unlikely to provide relevant information on the specific sources of finance appropriate for particular country circumstances and goals.

So, given that the issue of REDD+ finance is a crucial one, how can it progress in the absence of solid progress in Durban? Finance needs will be diverse, and depend on how a country is going to implement REDD+, what other goals they are also pursuing through REDD+(such as poverty alleviation), how ‘ready’ they are, and their existing multilateral and bilateral relationships with development partners.

One thing that has been agreed in Durban is that national ownership of REDD+ is essential for it to be effective and sustainable in the long term. There has also been agreement that, in the medium term anyway, REDD+ finance will need to come from a range of disparate sources. So, with the support of contributor countries, REDD+ countries should start thinking more strongly about what types of finance they want to attract to achieve their national REDD+ strategy, and how to go about doing that.

Brazil has been very effective at this, retaining strong national ownership over how it achieves emissions reductions and obtaining finance to support that effort. Encouragingly, Mexico also seems to be going in the same direction. At an event the other day I heard that Mexico is developing its national REDD+ strategy, and will then decide which sources of finance are most appropriate to achieve its strategic objectives, and will only then decide how to leverage the right type of finance.

Complete certainty over international REDD+ frameworks, and long term finance for REDD+ will not be found in Durban. But, there is hope that the operational structure of the Green Climate Fund will be endorsed, which will include REDD+ funding under the mitigation window and is expected to include a private sector window (under which REDD+ may also be eligible).

There is also hope that, with recognition of the broad range of sources of finance for REDD+ under the UNFCCC, countries can get on with the more important job of working out which sources are best for them. Once this is done, policy and legal frameworks can be put in place to leverage this finance. In the absence of an international agreement on emissions reductions for developed countries, this will go a long way towards providing the certainty to leverage the much needed private sector finance. This demonstrates that REDD+ finance is, truly, more than just the money on the table.

 Written by Kristy Graham, ODI


About REDD-net

REDD-net is a network to share the information and experience among organisations working for REDD . The power of interests surrounding climate change and REDD , means that, even where governments are well-disposed, pursuing a pro-poor agenda will largely depend on the capacity of southern NGOs to assimilate the new knowledge and use it to champion the interests of the poor.
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