Financing REDD+: An Amazonian Task


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Experts and activists stress the need for a solid financing mechanism to keep the Amazon standing. Photo courtesy of the Rainforest Action Network

By Angela Dewan

The Amazon has long been called the lungs of the Earth. While that has become a known truth, it is also an understatement.

The Amazon is also a vast carbon sink, a depository of biodiversity and a natural water regulator. It is home to more than 20 million people, many of whom depend on the forest for a livelihood.

At an event on the Amazon, co-hosted by CIFOR, panellists agreed that going ahead with REDD+ was crucial for the Amazon’s longevity.

“We need to find a way to finance REDD+,” said Frances Seymour, CIFOR’s director general.

“That has been one of the most contentious issues since we started talking about REDD, and I suspect it will continue to be contentious.”Different opinions on how to finance forest conservation has been a major roadblock to progress on REDD+ negotiations. All options have drawbacks: The private sector is hesitant to invest before a solid market is established; a REDD+ fund could be inefficient and exclusive of the private sector; and philanthropy alone would be insufficient.

Ken Andrasko, a methodological specialist with the World Bank’s Forest Carbon Partnership Facility, said that delegates needed to be open to a multi-faceted finance mechanism.

“I’d like to tell them, don’t get trapped in thinking you have to make a decision between different financing methods. We must pursue every possible avenue.

“Each country’s settings are different. Laos and Vietnam, for example, are socialist systems, so private investment might not work there. So beware of false policy choice. We do not need to get in a big debate about which one method to choose.”

The panellists expressed frustration in getting money to the ground, particularly the $4 billion in REDD+ funds pledged by seven developed nations in Oslo earlier this year.

Marceo Macedo Costa, head of the environment department at the Brazilian Development Bank, assured that the financing tools for REDD+ already exist. The bank manages the Amazon Fund, which is used for conservation and sustainability projects. Last year the bank set rigorous lending standards for farmers, including transparency requirements and proof that projects involve no deforestation.

Last year the bank lent around $70 billion for such projects, more than the World Bank.

“The main challenge is how to connect new REDD+ instruments to these existing financing instruments,” Costa said.

“The Amazon Fund demands that we need more structured projects. The Amazonas Sustainable Foundation, for example, has struggled to have its projects approved under the Amazon Fund. We have to follow the law and are very strict in doing that.”

Virgilio Viana, director general of the Amazonas Sustainable Foundation,  Deforestation in the Amazon and all tropical rainforests must be tackled with economic incentives from top-level decision-makers to the people on the ground, panellists agreed.

“Our challenge is to understand the rationale of the forest-dweller and make forest conservation something that is valuable to them,”  Viana said.

“When a forest-dweller cuts down a tree, he is making an economic decision. We have to come up with an economic equation for everyone.”

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