REDD+ finances:
Current issues and questions
by William D. Sunderlin
Keynote presentation at international seminar on“REDD+ finance mechanism and its optimum use”
February 3-4, 2015 Ito Hall, University of Tokyo, Tokyo, Japan
THINKING beyond the canopy

Outline• Original aim of REDD+• Current status of financing andchallenges• CIFOR’s GCS REDD+• Challenges for REDD+ on the ground• Recent developments• Open questions• Further readingOriginal idea of REDD+• Make forest protection more
profitable than forestconversion• Pay for the opportunity costof forest conservation ($512.5B per year)• Create a performance-based
reward system throughwhich funding delivered on
conditional basis• MRV to assure sequestrationachieved in provable way

Source: Wikimedia Commons

Current status & challenges• Scant international funding($10B) compared toopportunity costs• 90% public sector and only
10% private sector• Decrease in contributions
since 2010 (Norman &Nakhooda 2014)• Weak forest carbon market• “Aidification” of REDD+(Angelsen & McNeill 2012)

Why financial difficulties?
• Competing priorities• Economic recession (Norman & Nakhooda2014)• Difficulties of REDD+ delivery => decreased
pledges• Slow disbursement of funds to pledged
countries• Failure to reach international agreement• Private financing requires conducive
regulatory environment

Why financial difficulties?
• Reasons for inadequate forest carbon
market: Low carbon prices (Norman &Nakhooda 2014)
ETS does not recognize REDD+ credits(Phelps et al. 2011)
Carbon market volatility
Preference for low-cost mitigation

Global Comparative Study on REDD+

Location of subnational initiatives included in the CIFOR GCS study

Main challenges experienced byREDD+ proponent organizations

Challenges for REDD+ on the ground• Only 4 of 23 initiatives are selling forest carbon credits• 14 still hoping to eventually sell credits• Only 10 have piloted conditional incentives• Only 9 view conditional incentives as key intervention• 6 have ceased operating• Same trends at global level (Simonet et al. 2014)• REDD+ on the ground “treading water”• Without adequate REDD+ financing, by default relying
mainly on ICDP approach
Sources: Sunderlin et al. (2014); Sills et al. (2014)

Recent developments• IFF proposes “strategic intervention” to fund REDD+ (IFF 2014)• Pledge of the Governors’ Climate and Forests Task force toreduce deforestation by 80% by 2020 if adequate funding• COP 20 finance outcomes (CDC Climat 2014):
 Green Climate Fund ready to deliver: capitalization;
investment guidelines; financial instruments
 GCF capitalization important for developing country
confidence
 GCF 50-50% balance between mitigation and adaptation
 Long-term finance (beyond 2020) remains unclear

Open questions
To what extent is a large amount of financing necessary to decrease tropical deforestation?
 Brazil has achieved a huge success in decreasing deforestation (Nepstad et al. 2014)
but it is not driven by REDD+ financing
 Rights and Resources Initiative: “Rights are key to reducing deforestation” (Stevenset al. 2014)
 What are the opportunity costs of REDD+ that should be compensated?

More questions

Source: Chrismadden• Can the Green Climate Fundgrow sufficiently and (partly)
substitute for the private
sector?
• Are we reaching the limits ofpolycentric governance inREDD+?
• Is a binding international
agreements an absolutenecessity for durableprogress?

Further reading
Angelsen Arild & Desmond McNeill. 2012. The evolution of REDD+. Chapter 3 in Arild Angelsen, MariaBrockhaus, William D. Sunderlin, & Louis Verchot (eds.) Analysing REDD+: Challenges and choices. Bogor,
Indonesia: Center for International Forestry Research.
CDC Climat. 2014. COP 20 in Lima: a tense rehearsal dinner where everyone ended up eating at the same table.
Climate Brief No. 37. CDC Climat.
IFF. 2014. Stimulating Interim Demand for REDD+ Emission Reductions: The Need for a Strategic Intervention
from 2015 to 2020. Oxford, UK: International Forest Finance Project.
Nepstad, Daniel, David McGrath, Claudia Stickler, Ane Alencar, Andrea Azevedo, Briana Swette, TathianaBezerra, Maria DiGiano, João Shimada, Ronaldo Seroa da Motta, Eric Armijo, Leandro Castello, Paulo
Brando, Matt C. Hansen, Max McGrath-Horn, Oswaldo Carvalho, and Laura Hess. 2014. Slowing
Amazon deforestation through public policy and interventions in beef and soy supply chains. Science344(6188):1118-1123.
Norman, Marigold and Smita Nakhooda. 2014. The State of REDD+ Finance. CGD Working Paper 378 .
Washington, DC: Center for Global Development.
Phelps, Jacob, Edward L. Webb, and Lian P. Koh. 2010. Risky business: an uncertain future for biodiversity
conservation finance through REDD+. Conservation Letters.

Further reading
Sills, Erin O., Stibniati S. Atmadja, Claudio de Sassi, Amy E. Duchelle, Demetrius L. Kweka, Ida Aju Pradjna
Resosudarmo, and William D. Sunderlin (eds.). 2014. REDD+ on the ground: A case book of subnational
initiatives across the globe. Bogor, Indonesia: Center for International Forestry Research.
Simonet, Gabriela, Alain Karsenty, Christian de Perthuis, Pete Newton, Brian Schaap. 2014. REDD+ projects in2014: an overview based on a new database and typology. Information and Debate Series No. 32. Paris,
France: Paris-Dauphine University, Climate Economics Chair.
Stevens, Caleb, Robert Winterbottom, Jenny Springer, and Katie Reytar. 2014. Securing Rights, Combating
Climate Change: How Strengthening Community Forest Rights Mitigates Climate Change. Washington
DC: World Resources Institute and Rights and Resources Initiative.
Sunderlin William D., Andini Desita Ekaputri, Erin O. Sills, Amy E. Duchelle, Demetrius Kweka , Rachael Diprose,Nike Doggart, Steve Ball, Rebeca Lima, Adrian Enright, JorgeTorres, Herlina Hartanto, andAngélicaToniolo. 2014. The challenge of establishing REDD+ on the ground: Insights from 23 subnational
initiatives in six countries. Occasional Paper 104. Bogor, Indonesia: Center for International ForestryResearch.

Analysing REDD+

www.cifor.org/redd-case-book

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