REDD+ Financial Architecture, Safeguards and -s Asian Countries

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1 REDD+ Financial Architecture, Safeguards and -s Asian Countries Arvind Khare, Rights and Resources Initiative August 12, 2010 Asia Dialogue on Community Forests & Property Rights in the context of Climate Change Kathmandu, Nepal

2 Structure of Presentation Why REDD-Plus, Scale and reality of funds; Emerging new structure of REDD finance, impact on safeguards; Who wins and who loses implications for Asian countries

3 Why REDD/REDD+ REDD-Plus mechanisms are attractive to developed countries for offsets; Integrating avoided deforestation into international emissions trading could reduce the international carbon permit price by half due to the low-cost credit supply from tropical rainforest regions; Total compliance costs for industrialized countries will be more than a third lower. Centre for European Economic Research (Anger and Sathaye 2008)

4 Required Scale of REDD Funding Cost of halving emissions from the forestry sector by 2030 at $17-33 billion annually Full linkage with the carbon market can only provide around $7 billion annually by 2020 The shortfall in funding has to be met from other private and public sources, and current pledges are far short of the needed funding (The Eliasch Review 2008)

5 REDD Finance Scale & Reality The global forest carbon market is still in its infancy - as of 2009, 20.8 MtCO 2 valued at US$149.2 million, mostly from voluntary markets (Hamilton, Chokkalingam and Bendana 2010) As of now - no international REDD architecture no international Funding Mechanism Readiness mechanisms FCPF, UN- REDD, FIP tiny (<1/2b$) compared to requirement And now the REDD+ Partnership

6 REDD+ Partnership changes the game Partnership commitments worth $4b, but Partnership not a new pool of financial resources for REDD-Plus activities; Partnership - merely a new avenue for bilateral and multilateral discussions towards the transfer of finances between participants and the Partnership s donors More bilateral deals?is it a new resource? What is the relationship with UNFCCC?

7 Agreement in UNFCCC Negotiations (Draft Decision) 1. Affirms: d) Be undertaken in accordance to national conditions, sovereignty; e) Be consistent with national sustainable development goals; f) Facilitate sustainable development, reduce poverty; g) Promote broad country participation; o) Be results-based; p) Promote sustainable management of forests;

8 Agreement in UNFCCC Negotiations (Draft Decision) 2. Further affirms the following safeguards should be [promoted] [and] [supported]: a) Actions consistent with national programs, international conventions and agreements; b) Transparent and effective governance structures; c) Respect for knowledge and rights of IP and members of local communities; international obligations, note UNDRIP; d) Full and effective participation of stakeholders, in particular IP and local communities; e) Consistent with conservation of natural forests ; f) Address risks of reversal; g) Reduce displacement of emissions.

9 What is different in the new Financial Architecture 1. Legitimacy Partnership of Governments vs full and effective participation of stakeholders and rightholders; 2. Secrecy Closed door meetings (no IP, CS, or community representation) why? 3. Ambivalent Architecture No new institution what does it do that FCPF/UN-REDD could not; 4. Makes Bilateral agreement (real money) more important no safeguards mandated; 5. Multilateral mechanisms FCPF (CS, IP, Comm. Observers) and UN-REDD (CS, IP, Comm. In decision making body) less money less important but do have safeguards

10 Safeguards in FCPF and UN-REDD 1. FCPF: World Bank Policies and Procedures 4.01 Environmental Assessment 4.04 Natural Habitats 4.12 Involuntary Resettlement 4.15 Poverty Reduction 4.20 Indigenous People 4.36 Forests 7.60 Projects in Disputed Areas Cultural Property Project Supervision 2. UN-REDD adopts a rights-based approach to its activities. Applies UNDRIP Applies FPIC Applies UNDG Guidelines on Indigenous Peoples International obligations apply at different levels: International: human rights and other obligations National: human rights, UN-REDD guidance Sub-national: States and private actors still have international obligations

11 Why It Matters? No Institutional policy/procedure to ensure sustainable development Direct and indirect impacts to communities and ecosystems will not be addressed No mechanism to evaluate, minimize, and mitigate adverse social and environmental impacts In absence of safeguards it will be a race to bottom

12 Who Wins and Who Loses? Winners - High forest high deforestation countries opportunity for large carbon credits ripe for bilateral deals (real money) Brazil, Indonesia, PNG? Losers - Small countries high transaction costs for small gains in carbon credit assuaged by small flow of funds through multilateral mechanisms Nepal, Panama,

13 What Lessons From History? 1. No large-scale restoration, anywhere, achieved with ODA projects 2. Strong government action providing tenure security has restored forests, e.g. Korea, China, Vietnam OR 3. Strong community action has restored forests as in Nepal 4. Many governments not as strong as Chinese/ Koreans/Vietnamese and many community organizations not as powerful as in Nepal

14 REDD Flags: for Asian Countries Funds-flow could be big (for some) and a trickle for others but unsustainable in both cases Adoption of exclusionary policies (banning slash and burn, expanding protected areas etc.) to attract these funds would be self-defeating in the long run Poverty, human rights violations, dispossession still a major problem in forests of majority of Asian countries carbon is not The only choice - Deal with the real drivers of deforestation don t blame the poor

15 Considerations Need to decide the objective of reform: a social/ political discussion Recognize rights gained through historic occupation? Realign production systems? Reflect reality? Change reality? Tenure security for the poor? What are necessary elements of tenure security? Most, or all, of the following: Effective internal institutions Legal recognition and support of rights Presence of independent judicial arbitration systems Effective regulatory mechanisms and institutions Supporting political constituency

16 Upcoming Debates/Decisions at the National Level 1. What are the drivers? Hotly contested, important to get right. 2. What are the accepted/acceptable drivers? Indigenous peoples and uses of the forest what will be defined as acceptable practice Slash and burn? Adaptive pasture systems? Will logging be accepted/supported? Will agriculture clearing/land grab be confronted or accepted? 3. Establishing standards - REDD cannot be only development intervention with high standards: Unless the overall development interventions address drivers and standards, REDD will not be successful/have an impact 4. Deciding what to do about tenure 5. Establishing the institutional framework for governing REDD: Representation of IP and CS Independent monitoring and verification Recourse mechanisms Final thought: we can t let REDD become a project. We need to advance the forest protection AND restoration and need serious policy reform to do so.

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