World Bank: More donors supporting REDD+ but contraints ahead

Financial support for REDD+ projects to safeguard forests in developing countries is increasing with new countries pledging to get involved and existing donors stepping up their commitments, a World Bank official said.

“The past two years have seen considerable donor contributions to multilateral REDD+ initiatives,” said Kenneth Andrasko of the Bank’s Carbon Finance Unit. There has been continued progress, albeit slow, towards a system for performance-based system for forest carbon, he said recently on the sidelines of the UN climate summit in Durban. “The concept is gaining hold more broadly.”

Several international Reducing Emissions from Deforestation and forest Degradation (REDD+) programs have emerged since the scheme gained traction in the 13^th Conference of Parties (COP) in Bali four years ago. The biggest of these are the ones administered by the World Bank, namely the Forest Investment Program (FIP), which has received pledges amounting to US$577 million, and Forest Carbon Partnership Facility (FCPF), with pledges reaching US$436 million.

However, the global financial crisis is likely to affect climate finance, Andrasko said. “We’re beginning to see some early signals that some of the traditional donors have constraints,” he said, adding that the exact extent and timeframe of the impacts are still unclear.

Documents from the FCPF website show that since November 2010, the facility comprising the Readiness Fund and the Carbon Fund, has welcomed new donors, namely Canada, with a contribution of CAD 40 million (USD 41.4 million) and Italy, which pledged USD 5 million. BP and CDC Climat also joined the FCPF with a USD 5 million pledge each. Norway substantially increased its pledge to USD 90 million, Germany added EUR 30 million (USD 40 million), while Switzerland and Australia also raised their contributions to FCPF.

Direct bilateral financing also abounds, outstripping multilateral funding, with Norway committing as much as $1 billion each to Indonesia and Brazil to reduce deforestation. Bilateral arrangements dominate financial support for forested nations to build capacity, develop pilot projects, and provide “support for deployment at scale,” according to a report published in November 2011 by the Overseas Development Institute (ODI) and Heinrich Boll Stiftung.

Each bilateral and multilateral engagement, however, “tends to pursue its own objectives in accordance with its own standards, procedures, and safeguards,” said the authors of the report entitled REDD+ finance delivery: lessons from early experience. An evaluation of FCPF from mid this year also echoed the same sentiment, saying that differences in operational guidelines and safeguards requirements of FCPF and UN-REDD “are creating a degree of confusion in those countries where both programs operate”. Both reports recommend the harmonization of rules across funds to lighten the load for applicant countries. A document called the Common Approach to Environmental and Social Safeguards for Multiple Delivery Partners adopted in June 2011, which includes FCPF/UN-REDD joint guidelines on stakeholder engagement, go a long way to address these concerns.

Experience from the ground also highlights the difficulty to balance the funds’ objectives, the ODI report said. “For example, speedy disbursement through streamlined processes can conflict with the need for rigorous due diligence and comprehensive application of safeguards. Similarly, there are tensions between national ownership, sovereignty, and contributor country input,” it concluded in its summary.