Ensuring REDD+ finance delivers fair finance and benefits to meet climate goals

Claudio Schneider (L), senior director, Conservation International Peru, and Milagros Sandoval Diaz, Ministry of Environment, Peru, speak at UNFCCC side event, “Fair and equitable REDD+ finance and benefit-sharing mechanisms for climate goals and justice.” CIFOR-ICRAF/Julie Mollins

Establishing standards for measuring, monitoring and assigning financial value to forest-related greenhouse gas emissions is a challenging process due to the wide range of variables at play, said delegates attending the COP26 climate summit in Glasgow.

Each year, about a quarter of greenhouse gas emissions are released due to deforestation- or agriculture-related land degradation from burning biomass, practices such as conversion of land to livestock pastures and monocrop production.

REDD+ (Reducing Emissions caused by Deforestation and forest Degradation) – a policy initiative which was discussed at COP11 in 2005 and later was fully recognized in the 2015 Paris Agreement – was designed to provide incentives to curb the release of emissions through conservation of tropical forests.

Initially, the initiative was conceived as a way for developed countries to pay forest owners and users in developing countries for delivering results based on emissions reductions and contribute to efforts to meet global climate targets. However, available funding for REDD+ has not met original expectations or been fully implemented.

“Much of REDD+ finance comes from a small group of donors for activities to beef up forest monitoring systems and improve forest governance,” said Stibniati (Nia) Atmadja, a scientist with the Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF).

“Because REDD+ finance is channeled to a small number of countries and a small number of actors – mostly international entities – it creates limited incentives for the public sector, local communities and Indigenous organizations to take part in REDD+,” said Pham Thu Thuy, who leads the CIFOR-ICRAF Climate Change, Energy and Low-Carbon Development team.

Related discussions focus on how to increase financing for climate change policies, including REDD+, but less attention has been paid to whether funds have effectively reached targeted groups, how transparent and equitably they have been spent, or if they adequately address drivers of deforestation and degradation, she added.

Delegates participating in the “Fair and Equitable REDD+ Finance, and Benefit-Sharing Mechanisms for Climate Goals and Justice” side event at COP26 addressed some of the challenges surrounding equity and access and the need to develop more effective monitoring capacities.

Support for REDD+ has seen an uptick in recent years, but increasingly through indirect, rather than direct routes, Atmadja said. While public funding is generally transparent, it tends to flow consistently to the same recipient countries, whereas private funding was not transparently distributed, she added.

“REDD+ aid funding sources and recipients need to be spread more widely to reduce risks and burdens on particular countries,” Atmadja added.

Private sector contributions are a way to share the financial burden but must become much more transparent than they are now.

“There is still quite a challenge to provide a level playing field to all countries,” said Anke Herold, executive director of the Oeko Institute, who conducted a study on credit rating standards for financing REDD+ activities.

Although a lot of the standards try to ensure environmental integrity, what that looks like from the point of view of fairness and equity, has not yet been clearly defined, she added.

Her study focused on establishing credible baselines, addressing issues surrounding leakage and non-permanence to provide adequate, accurate and consistent monitoring.

Fair and equitable REDD+ requires inclusive development of standards and access to crediting in developing countries, it states.

Accurate measurement of forest emissions allows countries to better tailor efforts to meet their climate and development commitments and establish Nationally Determined Contributions (NDCs) under the U.N. Framework Convention on Climate Change (UNFCCC).

Many developing countries, such as Democratic Republic of Congo (DRC) and Peru, with supports from donors and international projects, have put significant efforts in improving their monitoring, reporting and verification system (MRV).

However, designing a fair and equitable benefit sharing mechanism is challenging.

DRC has so far submitted two NDCs — the first in 2017, and the second at COP26, said Blaise Pascal Ntirumenyerwa Mihigo, an associate professor of International Environmental Law at the University of Kinshasa, who works in partnership with CIFOR-ICRAF on the Global Comparative Study (GCS) on REDD+.

The second NDC is more ambitious than the first NDC. It promotes the reduction of 21 percent of greenhouse gas emissions, 4 percent more than the first NDC. It also integrates waste as a sector for reducing emission, which was not included in the first NDC.

Since 2005, DRC has tried to uphold a moratorium on forest concessions, but some have been illegally assigned, Blaise-Pascal said.

“This raises questions on who profits from this, what this means for the local population and for the competition for land,” he added, stating that conducting an analysis of distributional, procedural and recognition and contextual aspects of equity would be beneficial.

The equitable distribution of results-based finance – also known as benefit sharing — is ingrained into Peru’s approach to REDD+, said Milagros Sandoval Dias, director of Greenhouse Gas Mitigation at Ministry of the Environment of Peru. Working through a participatory process is central to the country’s approach to decision making, she added.

An environment conducive to collaboration — where Indigenous communities — or the beneficiaries of REDD+ — are at the forefront of discussions, the private sector feels it has the certainty to invest in REDD+ and where governments can meet commitments to the UNFCCC should be the goal, said Claudio Schneider, senior director, Conservation International Peru.

Challenges to equity exist in terms of transparency and accountability embodied as risks of leakage and permanence visible in current business-as-usual forest exploitation, which can undermine the quality of claimed credits and as a result fail in delivering for the global climate agreement and locally, said co-moderator Maria Brockhaus, professor of International Forest Policy at Finland’s University of Helsinki. In other words, no climate justice, just compensation with the same global business model of land use at the expense of forests and lands used for and by local people.

“We’re working with the imperfect – we also have to build in mechanisms that allow for iterative improvements along the way,” said Michael Huettner, advisor to the German Corporation for International Cooperation (GIZ), adding that REDD+ cannot resolve all equity issues. Standards alone will not suffice to resolve the issues for fair and equitable benefit-sharing – countries have a big role to play, he said.

“There is a need to have a more flexibility and for reducing complexity of standards – but strong tension with accountability and quality, and the ability to track and assess projects,” Brockhaus added.

“We have a lot to do in terms of design,” said Christopher Martius, managing director of CIFOR-ICRAF Germany. “Learning from experience is key.”