REDD+ Financing – Some Contradictory and Some Emerging Assumptions

REDD+ Financing – Some Contradictory and Some Emerging Assumptions

As covered in the Global Climate Talks article in this bulletin, it seems that State Parties to the UN Climate Convention, meeting in Durban 28 November to 9 December 2011, are unlikely to reach a decision on the use of public and private finance for REDD+ and that this will seemingly be left to the discretion of governments[i].

However, while that may be the official ‘non-position’ that is strengthened at Durban, there are four key factors regarding REDD+ financing that need to be borne in mind. These were discussed extensively and very usefully at the recent Rights and Resources Initiative (RRI) 11th Dialogue on Forests, Governance and Climate Change[ii] held in London on 12 October 2011. To differing degrees, these four issues are influencing the emerging REDD+ negotiations and preparations at international, national and project level. The four issues can be summarised as follows:

1. Securing the rights of forest peoples is absolutely central to the sustainability of REDD+. In terms of legality, rights need to be respected in all forest policies in order to meet a country’s legal obligations. Securing forest peoples’ rights is also essential for the effectiveness of REDD+ as it is proven to be the best way to protect natural forests. Carbon project proponents require clarity on rights issues, in particular property rights and Free, Prior and Informed Consent (FPIC) in order to process investments and reduce risk.

2. When assessing the results upon which to base payments for REDD+, values other than carbon will have to be taken into account, including livelihoods, biodiversity, and poverty alleviation.

3. The prospect of a global carbon market is rapidly receding for a variety of reasons.[iii]

4. Despite (3.) above and even though REDD+ preparations are largely financed through public money, some major players still expect that REDD+ itself will be overwhelmingly financed through offsets, via carbon trading.

If the first two points are confirmed in Durban, they would represent a significant and very positive shift which may have profound implications for how REDD+ needs to be financed.

Broadening the basis on which payments for REDD+ would be assessed

If the results upon which to base payments for REDD+ are broadened from the earlier focus in REDD+ on carbon that has characterized the debate so far, then this could open crucial space for further intergovernmental consideration of social, environmental and rights-related aspects of REDD+.

Securing the rights of forest peoples as central to REDD+

With mounting scientific evidence[iv] that forest peoples are the best placed to protect their forests, UNFCCC COP17 offers possibilities for further recognition of the positive role of indigenous peoples and forest dependent communities and the need to fully uphold their rights in line with international human rights law[v].

Recognising that forest peoples are the people best placed to protect their forests, also involves recognising that the drivers of deforestation are not the poor but are industrial logging, plantations and other practices driven by large-scale economic actors. In much of the public rationale given for REDD+ (and in many countries R-PP’s) the issue is still framed as how to control poor peoples’ behaviour, how to police and/ or compensate them to ensure they don’t use forest lands, rather than how to support them to further develop livelihoods that sustain the forests, and to defend their forests.

For example, Cameroon’s R-PIN (submitted to the World Bank’s Forest Carbon Partnership Facility in 2008) states that slash and burn agriculture “is certainly responsible for the greatest loss of forest cover”, yet the only reference supporting this claim is to a World Bank (2000) report that suggests that the main drivers of deforestation are the industrial logging and large-scale plantations that create a degraded landscape in which small scale agriculture and fuel wood demands become unsustainable.[vi]

The evidence shows that people with strong relationships to land, particularly indigenous peoples, best protect the ecosystems in which they live and depend on, and that securing and protecting their rights is fundamental to sustainable management and development. The question then becomes how best to protect forests through securing forest peoples´ rights? One answer to this emerged from the recent land tenure conference in Douala where the focus was on the need to ensure that state legal systems recognise and secure indigenous peoples’ and local community's customary rights rather than subordinate or otherwise compromise them[vii]. More specifically in relation to REDD+ finance, clear recommendations emerged from the 11th RRI Dialogue, held in London in October, that Governments such as that of the UK would do best to direct the REDD+ funding they have already earmarked towards a targeted land tenure fund to help forest peoples to map, demarcate and secure legal recognition of their forest lands. Which brings us back to the last two issues above.

Will REDD+ be financed through trading offsets on the carbon market?

As question marks loom over the viability of a global forest carbon market, governments, companies, UN agencies and the World Bank continue to push for this finance approach for REDD+.

Much of the drive for the development of REDD+ frameworks, programmes and projects has come from institutional and government players who see forest and climate programmes and projects as ultimately being financed through the selling of carbon offsets (generated by the supposed protection of forests in developing countries) to industries and governments who have obligations to reduce the carbon they are emitting which they are unwilling or unable to meet.[viii]

Carbon-trading is not only ineffective in terms of tackling climate change, it is also an approach which the general public is unlikely to accept. People in Europe and America have watched as their Governments have poured public money into the major financial institutions. These institutions were on the brink of collapse because they were trading in bundles of debt where no one could distinguish between debt that might be repayable and debt that could never be repaid.

To pour public money into setting up the infrastructure to enable financial institutions to trade in a similar commodity, carbon permits and credits, would seem very unwise to say the least. This is because the very existence of this commodity entirely depends on being able to make a convincing distinction between REDD+ schemes in terms of the degree to which forest loss is projected to be lesser than expected due to that scheme’s activities.

The focus on market financing of carbon-trading is also founded upon questionable assumptions about the global cost of forest protection that deems that vast amounts of money are needed for effective schemes, rather than strategically using funds to tackle deforestation drivers and secure forest peoples’ rights to their traditional forest lands.

The way REDD+ forest payments are constructed using historical baselines for deforestation may also create serious contradictions. In some cases this focus on deforestation rates (in contrast to a focus on protecting forests through securing forest peoples’ rights) risks driving deforestation rather than curbing it. As Global Witness points out:

“In 2011 Norway had to revise the baseline for its US$250 million REDD+ bilateral deal with Guyana, set only two years previously, by nearly 40%. This was due to difficulties in obtaining accurate data on annual deforestation rates in the country. 34 Original estimates of 0.1 to 0.4% were proven to be over-inflated after a specially commissioned report put annual deforestation between 1990-2009 at just 0.02%. The original baseline would have allowed Guyana to increase its annual deforestation rate nearly twenty-fold and still remain within the agreed limits for payment.” (2011: 14)[ix]

This means that with REDD+ payments, the worse you can portray yourself as being, the more payments you can get, and if you have been and intend to continue being a good custodian of your forest then you may get nothing or very little. The incentives in the system have perverse effects.

In booming economic times, schemes that appear to build on such a boom may be very acceptable, but in a time when the global economy is coming off the rails will public funding to secure a global market in such a ‘non-commodity’ (the absence of deforestation) be acceptable? Is the public in the Global North now much more likely to support approaches which seek to secure livelihoods for everyone – including forest peoples - rather than support approaches based on developing a system in which speculators chase profits based on a highly unstable commodity? Such questions may have a fast growing impact on how REDD+ is funded, in Durban and beyond.

Meanwhile, what forest people in Cameroon ask is: why don't you address the cause of these emissions - your industries in the Global North – and support us to protect our forests in the Global South? Such peoples point out that their way of life has not caused damage to the forest but has protected it, and that they will welcome ways of financing REDD+ that supports them to continue these activities but will not support forms of financing that promote the destruction of their forest and that perpetuate their marginalisation.[x]

[i] Report on the AWG-LCA contact group on REDD+ financing: See update 16 at - http://www.twnside.org.sg/title2/climate/panama01.htm

[iii] Designed to fail? The concepts, practices and controversies behind carbon trading, FERN: http://www.fern.org/designedtofail

REDD AND FOREST CARBON: Market-Based Critique and Recommendations, The Munden Project: http://www.mundenproject.com/forestcarbonreport2.pdf

CIFOR Blog: “3 sticking points to tackle on REDD+ in Durban, says facilitator”

http://blog.cifor.org/4861/3-sticking-points-to-tackle-on-redd-in-durban-says-facilitator/?utm_medium=twitter&utm_source=twitterfeed

[iv] Peer-reviewed CIFOR and World Bank studies find that community-managed forests are better for conservation than strict protected areas, FPP: http://www.forestpeoples.org/topics/environmental-governance/news/2011/10/peer-reviewed-cifor-and-world-bank-studies-find-communi

[viii] Trading carbon: how it works and why it is controversial, FERN: http://www.fern.org/tradingcarbon

[ix] Forest Carbon, Cash and Crime, Global Witness (2011): http://www.globalwitness.org/library/forest-carbon-cash-and-crime