Nature and Biodiversity

How can we encourage private funding for forests?

Megan Rowling
Journalist, Thomson Reuters Foundation

This article is published in collaboration with Thomson Reuters Foundation.

A new global deal to curb climate change due in Paris next month must “switch on” forest protection schemes by allowing the carbon credits they produce to help meet country pledges to cut planet-warming emissions, forest experts said.

That would unlock funding from the private sector, which has so far contributed just one-tenth of the money provided to keep forests standing, said Gus Silva-Chávez of U.S.-based non-profit group Forest Trends which tracked finance flows in 13 countries.

Over the past 10 years climate negotiators, governments and development banks have put in place the technical standards for a U.N. programme aimed at Reducing Emissions from Deforestation and Forest Degradation (REDD+) in developing nations.

They have helped tropical forest nations prepare to generate verified carbon offsets from their forest conservation schemes which can be traded internationally. But the process has been slow.

“What we really need in Paris is recognition that REDD+ is a key mitigation component, and that you need many more billions of dollars to achieve the reductions (required) to avoid dangerous climate change,” Silva-Chávez told the Thomson Reuters Foundation.

When forests are degraded or destroyed, the carbon stored in the trees is released into the atmosphere, with deforestation accounting for 10 to 15 percent of carbon emissions worldwide.

Not all rainforest countries support the use of markets, including carbon credits, to finance forest protection. Bolivia, in particular, has been a vocal opponent at U.N. climate talks.

From 2009 to 2014, nearly $10 billion was pledged or committed to REDD+ programmes worldwide, mainly by donor governments and international development banks.

But that is “significantly short” of estimates indicating at least $20 billion per year is needed to reduce global deforestation by 50 percent, Forest Trends said in a new report on REDD+ finance.

“The pledges right now at the global level are insufficient,” said Silva-Chávez.

During the first decade of REDD+, governments realised the private sector would not pay for the groundwork, and gave millions to kickstart the forest carbon initiative.

Individual donor countries – mainly Norway, Germany, Japan, the United States, Britain, Australia and France – provided 60 percent of the $3.7 billion contractually committed to the 13 tropical forest countries covered by the Forest Trends data.

No Results, No Cash

Brazil and Indonesia – home to some of the world’s largest tropical forest cover – together received nearly two-thirds of the $6 billion in funding pledged or committed to that group of countries.

By the end of 2014, two-thirds of all committed funds had been paid out, most of the money going directly to government agencies in the recipient countries.

“Donor countries are increasingly requiring REDD+ countries to demonstrate the concrete progress they are making in tackling deforestation, and then transferring funding if and when positive results are achieved,” Brian Schaap, who works on the REDD+ finance programme at Forest Trends, said in a statement.

“If countries don’t reduce their deforestation, then they don’t get the donor money.”

Britain and Norway, for example, have decided to back out of the Congo Basin Forest Fund, a major fund launched in 2008 to protect forests in Central Africa, due to concerns over its performance, and have refused to release remaining pledged cash, according to the London-based Overseas Development Institute.

While more finance is needed to help tropical forest nations implement schemes that generate carbon credits from avoiding deforestation and the emissions it causes, the Paris climate summit is unlikely to see large-scale promises for this purpose, Silva-Chávez said.

“I think the only way to fill in the gap is through the private sector,” he said.

But businesses are unlikely to start investing much larger amounts unless a new global agreement specifies countries can buy forest carbon credits from other nations as one way of achieving the emissions cuts they are promising from 2020, he added.

“That’s going to be the switch that tells the private sector this is no longer a theoretical thing … it is a policy that global governments agreed to,” said Silva-Chávez.

Publication does not imply endorsement of views by the World Economic Forum.

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Author: Megan Rowling covers aid and climate change issues, with a focus on social, economic and environmental justice.

Image: An agent from Brazil’s environmental protection agency IBAMA looks at a dead Brazil nut tree in a field that was cleared illegally, during a raid on illegal deforestation of the Amazon rainforest, in Anapu. REUTERS/Lunae Parracho

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