From Readiness to Full Implementation: Financial Support
Considerations from a Multilateral Perspective
Maria Jose Sanz-Sanchez (UN-REDD/FAO)

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From Readiness to Full Implementation: Financial Support Considerations from a Multilateral
Perspective
Maria Jose Sanz-Sanchez (UN-REDD/FAO)
I am not a finance expert, so do not hope that I will give you answers on finance.

However, when I

am thinking finance, these are the sorts of thoughts I have and I want to share those with you.

Questions?

Form readiness to full
implementation, financial supportconsiderations from a multilateralperspective
M. J. Sanz
FAO

• Complex and uncertain Climate Change finance.
Is REDD+ different?
• REDD+ carbon credits supply likely to be bigger
than demand?
• Where we stand?
• How to match demand of finance to achievesustainable results?
• Is there a single solution? Only one sequence?
• What we learnt while supporting REDD+? Did welearnt something?

The sorts of questions I usually get to myself are that complex and uncertain climate change financeis there. We all know.

Is REDD different?

REDD carbon credits supply is likely to be bigger than the

demand. That was already an issue in Marrakesh.

That was why avoiding deforestation was not included in

CDM.
Where do we stand today? Do we have a clear understanding of where we stand today? How we
can match the demand of finance to achieve sustainable results? We can try to finance today in the shortterm, but is this going to be sustainable?
countries?

Is this action going to happen and then increase in developing

Is there is a single solution for everyone?

What have we learned? Did we learn something?

Those are the sorts of questions I ask myself every time that I think about how to finance and what developing
countries are doing in financing mitigation in developing countries in the forest sector.

1. Complex and Uncertain Climate Change Finance: Is REDD+ Different?

Questions?
• Complex and uncertain Climate Change finance.
Is REDD+ different?
• REDD+ carbon credits supply likely to be bigger
than demand?
• Where we stand?
• How to match demand of finance to achievesustainable results?
• Is there a single solution? Only one sequence?
• What we learnt while supporting REDD+? Did welearnt something?

Climate Change
Global FinanceComplex…
Uncertain?

REDD+
short term
versuslong term
Biennial Assessment and Overview of Climate Finance Flows 2014

If we go to the first question, we see this picture. This is the biennial assessment and overview ofDAY1
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climate finance flows.
hopes.

You see that more or less certain financial flows are tiny while you have some bigger

What you can see is REDD on the short term versus long term on my view.

If we want to make

REDD possible, we have finance today. It was a short-term finance but how we are going to scale up thefinance to reach the sustainability.

In a way, much as with this picture of reducing uncertainty on climatechange finance as a whole and the idea that REDD is not a sector in isolation.

2. Is the REDD+ Carbon Credits Supply Likely to be Bigger than Demand?

Questions?
• Complex and uncertain Climate Change finance. Is
REDD+ different?
• REDD+ carbon credits supply likely to be bigger
than demand?
• Where we stand?
• How to match demand of finance to achievesustainable results?
• Is there a single solution? Only one sequence?
• What we learnt while supporting REDD+? Did welearnt something?

REDD+
Supply bigger thandemand?

Assumptions…

A report of the Interim Forest Finance (IFF) Project, January 2014

The second question is that REDD carbon credits supply is likely to be bigger than demand.
not an expert on that, but some experts are saying things like that.
This is the report by the FI1 group in the UNEP2.
supply of 9.9 billion is quite small.

I am

Of course, this is related to assumptions.

You see that the demand compared to the potential

Of course, this is only we think in terms of markets.

…. assumptions

Stimulating Interim Demand for REDD+ Emission Reductions: The Need for a Strategic Intervention from 2015 to 2020. A report of the Interim Forest
Finance (IFF) Project, January 2014

Indeed, if you look at the assumptions they made, it is very clear that they said not all forest and land
use emission reductions will be paid through an international REDD+ trading mechanism. They see clearly
that trading is not the only financial support needed. They assume that, for every four units of emission
reductions generated by a tropical forest, at least one is sold on the international market.

All the three are not,so you see. If you go to another assessment they will have another sort of assumptions.
uncertain, but not only the climate finance but also the analysis that we are doing.
1
2

UNEP Finance Initiative: http://www.unepfi.org/
United Nations Environment Programme: http://www.unep.org/

climate finance is

We have to live with this

From Readiness to Full Implementation: Financial Support
Considerations from a Multilateral Perspective
Maria Jose Sanz-Sanchez (UN-REDD/FAO)

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uncertainty.

3. Where do we Stand?

Questions?
• Complex and uncertain Climate Change finance. Is
REDD+ different?
• REDD+ carbon credits supply likely to be bigger
than demand?
• Where we stand?
• How to match demand of finance to achievesustainable results?
• Is there a single solution? Only one sequence?
• What we learnt while supporting REDD+? Did welearnt something?

Where do we stand today?

REDD+
Interaction of Needs and Sources
Needs‐ Strategies, plans‐ Needs for building
capacities andarrangements‐ Resource needs for
implementation ofpolicies and actions‐ Needs for
performanceassessments

Financialagreements‐ Readiness‐Investments (PAMs)‐Result Base Payments

Sources‐ Bilateralarrangements‐ Multilaterals(Funds and programs):

‐
‐
‐
‐

Indirect
Domestic budgets
Other funds
NGOs support

Present (short term)
versusFuture (Long term)

If we try to look into the interactions between needs and sources indeveloping countries, usually what you see is that the needs are related how they have to sort of develop theso-called REDD strategies, which may be a so-called REDD strategy, or maybe something else.
plan.

Every country has a different approach.

It could be a

They have to build capacities and arrangements to be able toproduce the desired results.
The UNFCCC convention is giving them some guidance on what elements they have to be in place.
They have the need to put in place those elements sort of like national forest monitoring systems, reference
levels, the national strategies or action plans themselves, safeguards, information systems, and all sorts of otherthings.

They need support on that.
Then they need resources for implementation of those policies and actions that they decided are themost appropriate to achieve the results they want to achieve.
of systems to be able to assess the performance.

Finally, they need also to assess the performance

Usually they ask for resources for all these sorts of things.

Then, they just start to bridge through many types of financial arrangements.

Sources that are

there are bilateral, for example; or many bilaterals; multilaterals funds and programs; indirect finance; domestic
budgets, which is the most difficult to grasp; other funds; NGOs3 support in many cases at local andprovincial level or even jurisdictional level is also there. Again, if you try to frame these needs and thesesources, basically what you are doing is supporting readiness, supporting investments, and supporting throughresult-based payments.
These are the three main elements that are in the landscape of finance for REDD in those days. I
think we have to put this in the dimension of short-term versus long-term to maintain the sustainability.
not have an answer to that. I am just giving you this sort of reflection.
have to admit that I came here to learn more than to teach anyone.

3

Non-governmental Organization

I do

Maybe you can give me answers. I

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Donor country pledges for REDD+ for the period 2006‐2014

Most donors ….
Both (Multilateral and bilateral)
For what?
Scale, timing…?

Source: Compilation of public sector reported data from the REDD+ Partnership Voluntary REDD+ Database and ODI and HBF Climate
Funds Update covering REDD+ financial commitments for 2006 to 2014. From Norman and Nakhooda, 2014.

North‐South… South‐South… Multilateral… Bilateral…
International… domestic other?

If you look at landscape of donors we have, of course, all these resources are coming from donors
in one way or another through multilaterals, through bilaterals, through NGOs, but in the end it is mostly
coming from donors.

This is the landscape of donors that we have. They are investing both in multilaterals

and bilaterals.

The question is, for what, and what is the scale and timing?

I want you to keep this questionin your mind.

I would like in the question and answers for you to interact and tell me for what the finance isthere from donors, and what you think about the scale and time.
Then, of course, all this is happening north-south.

That is mostly this diagram but also

south-south and multilaterally, bilaterally, international, domestic. We have this sort of complexity there.

If

you get it right, you will probably get some sort of financial framework that will allow you to get sustainability
on what you want to achieve.

REDD+ Needs……
‐ Readiness‐Investments (PAMs)‐Result Base Payments

National
Strategy

NFMS

orAction Plan

SIS
(safeguards)

FREL/FRL

Those are the sorts of guidance or mandate that you get from the convention.
have these things in place.

There is some guidance on how to do it. In some cases, more or less like fornational strategies or action plans, there is not much guidance.
a bit.

At least you have to

For national forest monitoring system, there is

For reference levels, it is more guidance and for systems, for safeguards, there is some, and maybe will

be more.
Again, this has to be seen in this sort of three main areas of readiness, investments, and results based
payments.
linear.

I want to you to pay attention that I did not put a number on those because I do not think they are

I do not think they are necessarily independent in many cases. As we will see later, they overlap.

From Readiness to Full Implementation: Financial Support
Considerations from a Multilateral Perspective
Maria Jose Sanz-Sanchez (UN-REDD/FAO)

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REDD+……Sources‐ Readiness‐Investments (PAMs)
Sources‐Result Base Payments‐ Bilateral arrangements (mostly RBPs)‐ Multilaterals (Funds and programs), examples:
Readiness

Investments (PAMs)

RBPs

FCPF Readiness Fund

FIP

FCPF Carbon Fund

UNREDD Programme

GEF

GCF?

GCF?

GCF?

‐ NGOs projects (mostly readiness)‐ Domestic budgets (mostly investments)‐ Voluntary Markets (RBPs)‐ Others (Amazon Fund, CBFF, etc.)

If we go to the sources what we see it is bilateral arrangements which are in those days mostly forresult based payments.

You have multilateral funds and programs and here I just tried to put just the mainones you see FCPF Readiness Fund4 is for readiness.
Carbon Fund was designed for result-based payments.

The UN-REDD Program, which is a joint program of

the UN through a multi-donor trust fund, is for readiness.
for readiness.

Of course, there is a question mark.

FIP5 was designed for investments. The FCPF
You could use GEF for investments maybe also

Probably in the morning Mr. Tao was giving you somelight on that for the Green Climate Fund, which we can discuss. As far as I understood, it could be almost
everywhere. The magnitude is not clear.
Then, you have NGO projects or programs, which are mostly for readiness.

Some of them are

stepping into some demonstration, voluntary markets for result based payments, and others, which are, forexample, the Amazon Fund is a bilateral arrangement that became multilateral because you can have more than
one country accessing, but it was originally designed for Brazil.

The Congo Basin Forest Fund6 was originallydesigned for forests, but it got a lot of focus on REDD+. These are is the sorts of sources that we are facing
those days.

Multilateral isplaying a role….
6 Multilateralfunds: UNREDD,
FCPF (Readiness/
Carbon), Amazon Fund,
CBFF, Bio carbon Fund
Initiative for sustainable
forest Landscapes, FIP

I was trying to learn before I came, so I just read some papers on finance. What you see is that yes
multilaterals are playing a role.

You see 3.3 billion there.

https://www.forestcarbonpartnership.org/readiness-fundForest Investment Program
6 http://www.cbf-fund.org/
4
5

There are mainly six multilateral funds.

We saw

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before the UN-REDD, FCPF both funds, the Amazon Fund, the Congo Basin Forest Fund, the BioCarbon
Fund for sustainable forest landscapes, and FIP.
playing with.

Those are the landscapes of big multilaterals that we are

The amount is quite important but, there we go.

…. different aggregation
8.8

First of all if we disaggregate, we see that the preference of donor bodies among those funds
depending on their objective, how reliable they think they may be in terms of disbursements, and so on.
see that Norway is a major donor.

That is not a surprise.

less equitable in terms of where they are pledging.

I am not going to go into this.

You

They are more or

Overall, the latest estimation in this paper is 8.8 billion, but

I think the most important thing I wanted to highlight here is this graph here.
There is a lot being deposited. There are a lot of commitments.
very low delivery, which put a question in the mind of why?

There are a lot of pledges.

There is little bit approved and there is a

I do not have an answer either, but perhaps we

can discuss about the why, about how you perceive this why.
Here on the right you have a disaggregation.

You see that there is a lot of multilateral.

There arealso big bilaterals and so on, but of that the disbursement is still very, very low.

Where countries stand?
Long Term
Sustained Mitigation

Strategies andplans

Capacity
Building

Implementation

Investments
PAMs… more like acycle than linear…

RBPs
Contributions to
Mitigation

Monitoring,
reporting andverification

Short term
Readiness

Then it comes to the ground.
first of all, we find many people helping.

What we observed on the ground when we go to countries to help is,
Secondly, we learn that there is not a linear process.

cycle. You can enter into the cycle in different places.

It is more a

Usually, what you will think about is the way you start

thinking on what capacity you need and then design or think on your strategies and plans and then try to
implement.

Then you will have to monitor this implementation and you may get result-based payments, butFrom Readiness to Full Implementation: Financial Support
Considerations from a Multilateral Perspective
Maria Jose Sanz-Sanchez (UN-REDD/FAO)

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still you may need capacity building for something else because you want to improve. You may need to
improve your strategies on plans or scale up to different regions or new country and therefore yourimplementation gets bigger.

It is a cycle where you get in, and the cycle only can give you improvements andsustainability of your actions.

4. How Do We Match the Demand of Finance to Achieve Sustainable Results?

ExampleQuestions?
• Complex and uncertain Climate Change finance.
Is REDD+ different?
• REDD+ carbon credits supply likely to be bigger
than demand?
• Where we stand?
• How to match demand of finance to achievesustainable results? Is there a single solution?
Only one sequence?
• What we learnt while supporting REDD+? Did welearnt something?

to match demand of finance to achieve sustainable results….

How to match demand of finance to achieve sustainable results, is there a single solution?

It is only

one sequence. I could not find many examples because I did not have time, but I took an example from theWorld Bank, which is not big scale. It is not a national scale, but here you see how they tried to match allthese financial resources.

They use the readiness phase, they use the FCPF grant.

from the UN-REDD program now.

They are using also funds

Then, of course, they try to implement, and this is for the forests/cocoa

landscapes. They decided that this is an area where they can work together.

They got the FIP, so they could

use the FIP for investments, and then they will get payments through the FCPF Carbon Fund. This is how
one country is trying to match those demands.

Each country will have to find a way to match all thesesources we saw before in a way that gets sustainable.

5. What Have We Learned Supporting REDD+?

Ideal…. but…

Questions?

Amount of Finance• Complex and uncertain Climate Change finance.
Is REDD+ different?
• REDD+ carbon credits supply likely to be bigger
than demand?
• Where we stand?
• How to match demand of finance to achievesustainable results? Is there a single solution?
Only one sequence?
• What we learnt while supporting REDD+? Did welearnt something?

Not a single standard solution, need to adapt to country situations….

Cumulativeemission
reductions

Result based climate finance

Climate finance (investment)

General finance for sustainable
land use
General finance for activities
leading to
deforestation/degradationTA

to match demand of finance to achieve sustainable results….

What we learned is that you need all these sorts of finance and that this finance will evolve in time.
Probably you have seen this graph this morning in the presentation of Elly. This finance has different types
across your path.

This could be for one country.

For another country it may change a little bit proportionalDAY1
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on time. We have to respect that because, if we do not respect that and we try to standardize, we probably
will fail.

I think this is a lesson learned for myself because what do you want to achieve is sustainable

cumulative emission reductions or sustainable cumulative enhancement.

What we learnt?
• REDD+ not linear, more a cycle. Timing and scale offinance matters to country processes and differences.
• Many countries face barriers for implementing thenational REDD+ policies and measures and significant
funding is required to overcome some of these barriers.
• Long‐term, cumulative emission reductions only can becreated and maintained from a financing mix.
• Need to leverage existing finance and ensure this willcontribute to sustainable land use (amount often manytimes larger than climate finance) if long term
mitigations is aimed.

ありがとう

What I learned (this is more general message I want to give you not only related to finance) is that,first, REDD+ is not linear.
and differences.

It is more of a cycle.

Timing and scale of finance matter to country processes

Many countries face barriers for implementation of the national policies and measures.

Significant funding will be required, and I am not saying that the funding should be only international.

I amsaying significant funding is required. The question is how we are going to trigger that domestic funding will
step in substantially as well.
from a financing mix.

Long-term cumulative emission reductions only can be created and maintained

I think we all agree on that.

is on what financial mix we are talking about.

What we do not agree or where we have different views

Probably these will be different for different countries.

Finally,

and this is just sort of embarrassing statement, in my view, there will be a need to leverage existing finance andensure that this will contribute not only to forests and REDD+ but to sustainable land use. We cannot treat
forests in isolation.
Often these amounts in the countries of climate finance will be big, but if you want to achieve
long-term mitigation you need to aim for disintegrated approaches.
REDD and try to move to something else.
aims in a broader sector.

I am not saying we have to forget about

I think we have to consider REDD in the context of a broader

We can continue what we have been doing on REDD.

therefore we should not be lost.

It has no precedent andI hope that these considerations will help you to ask questions to yourselves.

Do not ask too many to me because probably I would not be able to answer.