ANNUAL REPORT for FISCAL YEAR 2011

THE FOREST CARBON
PARTNERSHIP FACILITY
Demonstrating activities
that reduce emissions fromdeforestation and forest
degradation

This report covers the Forest Carbon Partnership Facility for the period from July 1, 2010 through June 30, 2011, referred to as fiscal year 2011 or FY11.
An online version of the report is available at www.forestcarbonpartnership.org
Note: All dollar amounts are in U.S. dollars (US$) unless otherwise indicated.

FY11 ANNUAL REPORT

OP
PA
PC
REDD
REDD+
REL
R-PP
SBSTA
SESA
SFM
TAP
UNDP
UNFCCC
UN-REDD
WBI

Australian Agency for International Development
Ad Hoc Working Group on Long-term Cooperative Action (under UNFCCC)
Central African Republic
Carbon Fund
Conference of the Parties (to the UNFCCC)
Civil Society Organization
Delivery Partners
Democratic Republic of Congo
Emission Reduction
Emission Reductions Program Idea Note
Emission Reductions Payment Agreement
Environmental and Social Management Framework
Forest Carbon Partnership Facility
Forest Investment Program
Facility Management Team
Fiscal Year (World Bank fiscal year, July 1 through June 30)
Global Environment Facility
Inter-American Development BankIntergovernmental Panel on Climate Change
Indigenous Peoples and other Forest Dwellers Capacity Building Program
Lao People’s Democratic Republic
Measurement, Reporting, and Verification
Non-Governmental Organization
Organisation for Economic Co-operation and Development’s Development
Assistance Committee
Operational Policy (of the World Bank)
Participants Assembly
Participants Committee
Reducing Emissions from Deforestation and Forest Degradation
REDD plus conservation of forest carbon stocks, sustainable management of forests,
and enhancement of forest carbon stocks
Reference Emission Level
Readiness Preparation Proposal
Subsidiary Body for Scientific and Technological Advice (under UNFCCC)
Strategic Environmental and Social Assessment
Sustainable Forest Management
Technical Advisory Panel
United Nations Development Programme
United Nations Framework Convention on Climate Change
United Nations Collaborative Programme on Reducing Emissions from Deforestation
and Forest Degradation in Developing Countries
World Bank Institute

1

AusAidAWG-LCA
CAR
CF
COP
CSO
DPs
DRC
ER
ER-PIN
ERPA
ESMF
FCPF
FIP
FMT
FY
GEF
IDB
IPCC
IP Program
Lao PDR
MRVNGO
OECD/DACFOREST CARBON PARTNERSHIP FACILITY

Acronyms

FY11 ANNUAL REPORTContents

CONTENTSEXECUTIVE SUMMARY

5

1. TURNING POINT

7

1.1 Increased Momentum and Resources for REDD+

8

1.2 Increased Ownership

10

1.3 Leveraging Strengths of Partners

14

2. Strengthening REDD+, Accelerating Learning19

2.1 Fast-start Learning

19

2.2 Building on the International Framework for REDD+

27

2.3 Knowledge Sharing and Capacity Building29

3. The Carbon Fund33

3.1 From Readiness to Performance-Based Payments

33

3.2 Operationalizing the Carbon Fund34

4. FY11 Financial Report of the Facility

37

4.1 The FCPF Budget Process

37

4.2 The Readiness Fund37

4.3 The Carbon Fund

44

FOREST CARBON PARTNERSHIP FACILITY

FOREST CARBON PARTNERSHIP FACILITY
3

47

2

5. Conclusions and the Road Ahead

FY11 ANNUAL REPORT

Executive Summary

The Facility’s main weaknesses have been the slow
pace of financial commitments and disbursements fromthe FCPF Readiness Fund; the flat rate of FCPF grants
regardless of needs; the lack of in-country procurement
capacity; the need for more World Bank staff to work on the
FCPF at the country level; insufficient communications andoutreach about the FCPF; and the creation of unrealistic
expectations as to the scale and timing of REDD+ benefits.
These weaknesses are already being addressed ina variety of ways by the Facility Management Team—through the acceleration of due diligence on Readinessgrants where feasible; the opening of the Readiness
Fund to Delivery Partners other than the World Bank
(to enhance Readiness service coverage) combined withthe reinforcement of World Bank staff working on FCPF
operations; the possible varying of grant size in accordancewith needs; the support to in-country procurement experts;
and the recruitment of communications staff dedicatedto the FCPF.
The above measures should address the weaknesses
without compromising quality. In particular, theCommon Approach to safeguards approved by theParticipants Committee in June 2011 creates a levelplaying field among Delivery Partners. Once they enter into
Transfer Agreements with the World Bank—who acts astrustee of the FCPF Readiness Fund—they will be operating
under a framework that ensures substantial equivalencewith the World Bank’s social and environmental safeguards
policies and procedures applicable to the FCPF.
The next year will present new challenges and exciting
opportunities, among which the questions as to how to
optimize resources allocation within the FCPF, whether
to reopen the FCPF to more REDD Country Participants,
and how to measure country progress towards REDD+
Readiness will be paramount.

FOREST CARBON PARTNERSHIP FACILITY

The past year saw the FCPF achieve some key
milestones including the signing of the first
Readiness preparation grants for several forest
countries... the start of operations of the Carbon
Fund, and the completion of the first evaluationof the Facility.

The FCPF has become a central piece in the new
REDD+ institutional landscape. It has created a normative
framework for REDD+ Readiness centered on the robust
assessment of country-owned proposals, fostereddomestic thinking about and action for REDD+, andincentivized greater cooperation among national andinternational entities. The past year saw the FCPF achievesome key milestones including the signing of the first
Readiness preparation grants for several forest countries,
the adoption of the Common Approach to safeguards
among Multiple Delivery Partners under the Readiness
Fund, the start of operations of the Carbon Fund, and thecompletion of the first evaluation of the Facility.
The Carbon Fund has now entered its operational phaseand will provide performance-based payments to about
five programs from countries that have made significant
progress towards REDD+ Readiness. Emission Reductions
Payment Agreements will only be entered into under the
Carbon Fund for programs from REDD Country Participants
whose Readiness Package has been assessed by theParticipants Committee. The Carbon Fund will thus offer
additional incentives for countries to get ready for REDD+
and undertake the necessary investments as well as policy
and regulatory adjustments.
The first evaluation of the FCPF has now been completed, which reveals the main strengths and weaknesses of
the FCPF. The strengths of the initiative include the capacity that is being built for REDD+ in countries; the establishment of a common framework for Readiness; a transparent and effective governance structure; the recognition ofcountry ownership, the lead role of country governmentsin the context of REDD+; the facilitation of greater donor
coordination; and the creation of a space for Indigenous
Peoples, local communities and civil society to engage inforest sector reforms and other reforms relevant to REDD+.

5

4

FOREST CARBON PARTNERSHIP FACILITY

This report marks the third year of implementation of the FCPF. The first three
years have seen the development of the FCPF and REDD+ at the global and national
levels. Remarkable progress was achieved in the UNFCCC, an international REDD+
Partnership was established, and global initiatives such as the FCPF, the UN-REDD
Programme, the Forest Investment Programme and the GEF’s new SFM/REDD+
window were set up to assist forest countries in tackling the REDD+ challenge.
Under this new international framework, dozens of forest countries have started
formulating broad strategies and investing in activities on the ground.

FY11 ANNUAL REPORT

Turning Point
The Forest Carbon Partnership Facility (FCPF) is a global partnership focused on
reducing emissions from deforestation and forest degradation, forest carbon stock
conservation, the sustainable management of forests, and the enhancement offorest carbon stocks in developing countries (commonly referred to as REDD+). The
FCPF complements the UNFCCC negotiations on REDD+ by demonstrating how
REDD+ can be applied at the country level and by drawing lessons from this early
implementation phase.

6

FOREST CARBON PARTNERSHIP FACILITY(a) To assist countries in their REDD+ efforts byproviding them with financial and technicalassistance in building their capacity to benefit
from possible future systems of positive incentives
for REDD+;

The FCPF also continues to serve
as a forum for exchanging ideas,
information, and building capacity forthe global REDD+ community.

Highlights from FY11 include the following:>Three countries signed Readiness Preparation
grant agreements: the Democratic Republic ofCongo (DRC), Indonesia, and Nepal;>

Eight countries submitted R-PPs for formal
assessment and were allocated grant fundingby the Participants Committee (PC), with three
more countries presenting draft R-PPs. As of theend of FY11, a total of 24 countries had either
submitted R-PPs for formal assessment orpresented draft R-PPs, and almost US$65 million
had been allocated in Readiness Preparation grants
to 18 countries;1>

A Common Approach to Environmental andSocial Safeguards (the “Common Approach”) for
Multiple Delivery Partners was approved, allowing
the FCPF to leverage strengths of entities otherthan the World Bank, namely multilateraldevelopment banks and UN agencies, to enhance
the coverage of Readiness services to REDD+
countries;(b) To pilot a performance-based payment system
for REDD+ activities, with a view to ensuring
equitable benefit sharing and promoting future
large-scale positive incentives for REDD+;(c) Within the approach to REDD+, to test ways tosustain or enhance livelihoods of  local
communities and to conserve biodiversity; and(d) To disseminate broadly the knowledge gained in thedevelopment of the Facility and the implementationof Readiness Preparation Proposals (R-PPs) andEmission Reductions (ER) Programs.
To achieve these objectives, the FCPF Readiness Fundsupports participating countries in their preparation for
REDD+ as they develop the necessary policies and systems,
in particular by adopting national strategies; develop
reference emission levels (RELs); design Measurement,
Reporting, and Verification (MRV) systems; and set up
REDD+ national management arrangements, including

1

Tanzania is among the 19 countries having submitted its R-PP for
formal assessment but it did not request a grant allocation.

FOREST CARBON PARTNERSHIP FACILITY

The Facility pursues four strategic objectives:

the proper environmental and social safeguards. The
FCPF Carbon Fund, in turn, will provide performance-based
payments for verified Emission Reductions from REDD+
programs in countries that have made considerable
progress towards REDD+ Readiness.
The FCPF completed its third full year of operation
on June 30, 2011. This past year (FY11) was marked bysome important developments on the path from REDD+
Readiness to carbon finance.

7

The FCPF consists of two separate mechanisms, eachunderpinned by a multi-donor fund—the Readiness Fund andthe Carbon Fund. Governments and private or public entities
making the minimum financial contribution (US$5 million)
to the Readiness Fund are known as Donor Participants
while governments and private or public entities making
the minimum financial contribution (US$5 million) to the
Carbon Fund are known as Carbon Fund Participants. The
developing countries participating in the FCPF are known
as REDD+ Country Participants.

FY11 ANNUAL REPORT

1.1. Increased Momentum and Resources
for REDD+

The Carbon Fund became fully operational in May
2011, bringing to bear the second mechanism of
the Facility, which is essential in providing
incentives for valuing standing forests.

During FY11 the R-PP formulation grants continued to be
expended (see Figure 1) and the focus increased on theformulation and presentation of country R-PPs. These
R-PPs symbolized significant achievements for each of
the submitting REDD+ countries as they play a critical rolein creating a national dialogue on REDD+, bring together
national stakeholders, and provide a roadmap for going
forward.  Eight countries presented their R-PPs for formal
assessment (Cambodia, Ethiopia, Lao PDR, Liberia,
Peru, Tanzania, Uganda, and Vietnam). Of these eight, all
except Tanzania, which has alternative bilateral funding,were allocated Readiness grants.  Three more countries
presented draft R-PPs (Central African Republic (CAR),
Colombia, and Nicaragua).

1.1.1. Setting Sail: Eight New Allocations

These developments have brought the FCPF to a turning
point. While the first three years were mostly dedicatedto establishing the right frameworks and processes toensure that REDD+ was being tackled in a comprehensive
fashion, the attention is now turning to the implementationof national Readiness programs and the initiation of
performance-based incentive systems.
In addition, the FCPF mobilized more funding for
REDD+, bringing total committed and pledged funding  
for the two funds as of June 30, 2011 to US$444 million,
representing a significant portion of total multilateral
REDD+ funding.
Furthermore, the FCPF also continued to serve as aforum for exchanging ideas, information, and building
capacity for the global REDD+ community.
As in previous years, the FCPF also supported a numberof capacity-building activities among Indigenous Peoples
and deepened the understanding of the social dimension of
REDD+ through country R-PP submissions and exchanges
held with representatives of forest-dependent Indigenous
Peoples and local communities at the global, regional, andnational levels.

1.1.2. Grants for ReadinessAs a major step forward in the Readiness process,Readiness Preparation grant agreements were signed with
the DRC, Indonesia, and Nepal. This was made possibleby the approval of World Bank management and Board
of Executive Directors of the safeguards approach to befollowed under the FCPF Readiness Fund, consisting of aStrategic Environmental and Social Assessment (SESA)
and an Environmental and Social Management Framework(ESMF).
In addition, PC7 decided to smooth the disbursement
process of Readiness Preparation grants by no longer

8

FOREST CARBON PARTNERSHIP FACILITY

Figure 1: Formulation Grant Disbursement by REDD Country Participant (US$, thousands)
Uganda40

Republic of Congo

140
108

87

91

Nepal

200

107

50

182

123

200

100

100

Ethiopia

200

177

DRC
Costa Rica

139

Colombia

134
55

55

n  Actual Cash
Disbursement
FY11

169

200

Ghana

n  Actual Cash
Disbursement
FY10

173

169

Kenya

Cameroon

195

109

75

Liberia
Lao PDR

180

14
22
134

191

161

Disbursed FY10
Disbursed FY11
TOTAL Disbursed to end of FY11

$959
$1,082$2,041

dividing the grants into two installments, where thelatter installment was only released after submission ofa progress report on utilization of the first US$2 million
disbursement. These developments are expected to
expedite the grant delivery process.
The due diligence proceeded for countries whose R-PPs
were assessed by the PC and steps were taken to address
the requirements included in the PC resolutions.

1.1.3. Additional Funding for Readiness
FY11 also saw the increased capitalization of the Readiness
Fund, with new commitments from Canada (US$41.4
million), Germany (US$26.0 million), and Italy (US$5
million). These three countries thus became Donor
Participants.  In addition, Agence Française de Développement
and Finland increased their contributions to the Readiness
Fund by US$5.8 million each. Germany and the European
Commission also made public pledges during FY11, of
US$14.5 million and US$5.8 million respectively, bringing
the total amount committed and pledged to the Readiness
Fund as of 30 June, 2011 to US$232 million.

1.1.4. Moving towards Results-Based Payments
FY11 was a watershed year for the FCPF as the Carbon
Fund became fully operational. Two conditions had been
set for the operationalization of the Carbon Fund. First,
a minimum capitalization of US$40 million was required
under the FCPF Charter. Second, the early Carbon Fund
Participants chose to wait until at least two additional
private entities had signed Participation Agreements toensure that the Fund started operations as a public-private
partnership. The first condition was met in September
2010 and the second in May 2011, with CDC Climat andBP Technology Ventures joining the Carbon Fund, signaling the growing confidence of the private sector in REDD+.
This development allowed the organizational meeting of
the Carbon Fund to take place before the end of FY11. The
meeting agreed on the goals of the Fund at the three-year,
one-year and six-month horizons, approved the FY12 budget, and discussed draft Rules of Procedure for the Fund.  
This concluded a two-year long process of updating andadjusting the contents of the FCPF Information Memorandum chapter on the Carbon Fund. The resulting operational
modalities of the Carbon Fund were consigned to an Issues
Note, finalized in December 2010, and an amendment to
the FCPF Charter’s Article 12 on the Carbon Fund.
The availability of Carbon Fund resources to be allocatedto future Emission Reductions Payment Agreements(ERPAs) is expected to provide further incentives tocountries to progress significantly and speedily towards
REDD+ Readiness.

1.1.5. Country Implementation Support and Advisory
Services
The Readiness Mechanism offers technical assistance to
REDD+ countries in the form of two closely linked sets ofactivities: (1) Country Implementation Support, consisting of assistance with R-PP preparation, and fiduciary andsafeguard support from World Bank country teams; and (2)Country Advisory Services, comprised of the coordination
by and feedback from the Facility Management Team (FMT)and World Bank staff on aspects of Readiness work. Visits
by World Bank and FMT staff, in some REDD Country
Participants jointly with UN-REDD representatives, haveprovided direct onsite technical input as countries advance towards preparation of the Readiness Preparation

FOREST CARBON PARTNERSHIP FACILITY>

The FCPF completed its first program evaluation
which yielded an assessment of progress made so
far and guidance on how to strengthen the FCPF;
and

9

>

FY11 ANNUAL REPORT

1.2.1. A Country-Driven Partnership
The FCPF was among the first global partnerships to adopt
an innovative governance structure in which developing
countries have the same voice as financial contributors,
with a decision-making process that includes a wide
spectrum of observers, including forest-dependent
Indigenous Peoples and other forest dwellers and civilsociety and non-governmental organizations from northand south. This open platform has generated trust and acooperative spirit to advance the work of the FCPF and theglobal REDD+ agenda, more generally.
A key signal of this willingness to work together
has been the active participation by REDD+ Country
Participants and financial contributors in the PC meetings.

10

FOREST CARBON PARTNERSHIP FACILITY

Table 1: Composition of the FCPF Participants Committee as of June 30, 2011

REDD Countries

Donor and Carbon Fund Participants

Observers to the PC

Argentina

Agence Française de Développement

Forest-Dependent Indigenous
Peoples and Forest Dwellers

Cambodia

Australia

International Organizations

Colombia

Canadaa

Non-Governmental Organizations

Costa Rica

European Commission

Private Sector

Democratic Republic of Congo

Finland

UNFCCC Secretariat

Ethiopia

Germany

UN-REDD Programme

Gabon

Japan

Nepal

Netherlands

Guatemala

Norway

Kenya

Spain

MexicoSwitzerland

Paraguay

The Nature Conservancy

Thailand

United Kingdom

UgandaUnited States of America

a. Denmark was elected to the PC in November 2010 but volunteered to resign as a member of the PC in June 2011 in order that Canada could
replace them as a member.

The IP Program enables the development of inclusive andaccountable national strategies and programs by enhancing
understanding of REDD+ and climate change and enabling
active engagement in national and international dialogues.
1.2.2. Engaging Observers and Indigenous Peoples
Some non-governmental actors may be uniquely positioned
to contribute to the Readiness process. They continue
to bring in views and insights that add value to country
preparation efforts and help shape the discourse on
how to achieve REDD+ Readiness. Though observers do
not have formal voting rights in the FCPF’s governancestructure, the norm of reaching decisions throughconsensus has empowered them to play a constructiverole in the FCPF. The FCPF continues to recognize theimportant role that stakeholders play and supports their
participation by financial and technical means. Forestdependent Indigenous Peoples and other forest dweller
representatives conducted a self-selection process
in which Africa chose two representatives (one from
Francophone Africa and one from Anglophone Africa); Asia
nominated one representative for the region; and Latin
America nominated two representatives (one from SouthAmerica and one from Central America). The results were
presented to PC9. The approved budget for FY12 thus
includes resources to support the participation of five
regional forest-dependent Indigenous Peoples and otherforest dwellers’ representatives.
The Indigenous Peoples and Forest Dwellers Capacity
Building Program continues to strengthen forestdependent peoples’ participation in national Readinessprocesses. The program enables the development of
inclusive and accountable national strategies and programs
by enhancing understanding of REDD+ and climate change
and enabling their active engagement in national andinternational dialogues. In FY09, the PC allocated a total of
US$1 million (US$200,000 per year for FY09–FY13) to theprogram. In FY11, the program provided support to a wide
range of activities, as outlined below.

High-level dialogues on REDD+ with Indigenous Peoples(Washington, DC)
The World Bank Vice President for Sustainable
Development hosted two high-level dialogues with
Indigenous Peoples leaders. The first session took placein Washington, DC, on November 15, 2010. The second one
was held under the auspices of the UN Permanent Forumon Indigenous Issues in New York, on May 20, 2011.
The Indigenous Peoples  participants who attended theTable 2: Composition of the PC Bureau
as of June 30, 2011

PC Bureau
Argentina
Australia
Cambodia
Democratic Republic of Congo
Germany
GuatemalaKenya
United States of America

Table 3: Financial Contributors to the
FCPF (Donor Participants and Carbon
Fund Participants) as of June 30, 2011

FCPF Financial Contributors
Agence Française de Développement
Australia
BP Technology Ventures
Canada
CDC Climat
Denmark
European Commission
FinlandGermany
Italy
Japan
Netherlands
NorwaySpain
Switzerland
The Nature Conservancy
United Kingdom
United States of America

FOREST CARBON PARTNERSHIP FACILITY

1.2. Increased Ownership

By co-chairing the PC meetings and forming contact
groups to discuss issues in greater detail, REDD+ Country
Participants have taken greater responsibility for theprocess. For example, the PC formed contact groups todiscuss individual R-PPs and working groups to provide
guidance on implementing recommendations of the FCPF
program evaluation.
Similarly, to make the PC Bureau geographicallybalanced, Mexico introduced a proposal to increase thenumber of REDD Country Participants. After discussion,
the PC decided to have a total of up to eight members, five
representatives from REDD Country Participants and three
from financial contributors (either Donor Participants or
Carbon Fund Participants).
The entry of CDC Climat and BP Technology Ventures
allowed the Carbon Fund to become fully operationaland reach a capitalization level at the close of FY11 of
approximately US$174 million, with additional pledges from
Germany and Switzerland bringing the total committed andpledged to the Carbon Fund as of June 30, 2011 to US$212
million. In light of other pledges to the Carbon Fund andthe aim of attracting further private sector funding, thePC also approved the FMT’s proposal to request the WorldBank Board of Executive Directors for an increase in theauthorized capitalization of both the Readiness Fund andCarbon Fund.

11

proposals and achieving REDD+ Readiness. The FMT staff
participated and provided feedback in national workshops
organized by governments in REDD Country Participants.
Thematic workshops have also been organized by the FMT
in collaboration with the World Bank Institute (WBI), suchas several workshops on opportunity costs of REDD, a
SESA workshop in Latin America, knowledge-sharing sessions via webinars organized by other organizations, andvideo conference sessions with REDD+ teams in countries.

FY11 ANNUAL REPORTFor the first time, governments and IP
organizations came together to have an honest
and open dialogue on climate change, thenegotiations process, and the role of IPs as wellas their positioning in the climate negotiations.

meetings represented four socio-cultural regions as
identified by the UN system—Africa, Asia, Central andSouth America, and the Russian Federation. The direct
dialogue format of the meetings allowed the Indigenous
Peoples  participants to articulate their needs andaspirations directly to World Bank senior management. The
impacts of climate change on Indigenous Peoples  as wellas the Indigenous Peoples’ active participation in REDD+
was noted along with the need to continue discussions on
free, prior, and informed consent (FPIC), particularly as theWorld Bank is updating and consolidating its environmental
and social safeguards. There was agreement on the needto continue this dialogue by holding two sessions eachyear with Indigenous Peoples representatives nominatedthrough a self-selection process.
The Indigenous Peoples representatives also called
for the World Bank to organize a Global Consultationof Indigenous Peoples on the FCPF. World Bank senior
management recognized the importance of social inclusionand participation of Indigenous Peoples and other forest
communities in REDD+ and endorsed the Indigenous
Peoples’ request, which was subsequently presented at the
FCPF PC9 meeting in Oslo, in June 2011. The PC endorsed
this request and the Global Consultation was to take placefrom September 27-29, 2011 in Panama. This event will bereported on at PC10 and in the FY12 Annual Report.

workshop revealed the diverse positions of Indigenous
Peoples regarding REDD+ and issued conditions for REDD+
to succeed from the points of views of Indigenous Peoples
organizations from the Amazon.

COICA Workshop on Climate Change and REDD+ (Bolivia)

FCPF information sharing at FIP IP Regional and Global
Caucus Meetings (Ghana, Lao PDR, and Peru)

In August 2010, the FCPF funded a workshop of the
COICA, the coordinating entity of Indigenous Peoples
organizations of the Amazon basin, designed to build thecapacity of COICA and its member organizations to engage
in international negotiations on climate change and REDD+
and seek to achieve outcomes that recognize traditional
knowledge and the rights of Indigenous Peoples. The

International Technical Workshop of Indigenous Peoples
towards COP16 (Mexico)
For the first time, governments and Indigenous Peoples
organizations came together for an honest and open
dialogue on climate change, the negotiations process,and the role of Indigenous Peoples as well as theirpositioning in the climate negotiations. Indigenous Peoples
representatives put forward a proposal on the inclusion ofIndigenous Peoples in the UNFCCC agreement and also
tabled a resolution to garner support for the Indigenous
Peoples’  formal and effective participation in the UNFCCC
process and in REDD+, in preparation for COP16. There
was fundamental agreement on the indispensability ofIndigenous Peoples  in the UNFCCC process and theinclusion and participation of Indigenous Peoples  in
REDD+ design and implementation, and the participants
were able to find entry points where the role of Indigenous
Peoples could be strengthened. This meeting was viewed
as a historic one and certainly helped to create space for asustained dialogue on Indigenous Peoples in the UNFCCC
process.

The FMT took advantage of three regional caucus meetingsorganized by the Forest Investment Program (FIP) in thecontext of the design of a Dedicated Grant Mechanism
for Indigenous Peoples under the FIP to solicit the viewsof Indigenous Peoples on a range of topics related to
the FCPF, in particular the Multiple Delivery Partner

12

2

Location

High-Level SDN Direct Dialogue with
Indigenous Peoples

Washington, DC

COICA Workshop on Climate Change
and REDD+

Santa Cruz, Bolivia

International Technical Workshop of
Indigenous Peoples towards COP16

Xcaret, Mexico

FIP Regional/Global Caucuses

Accra, Ghana; Vientiane, Lao PDR;
Pachacamac, Peru

FIPAC International Forum  through
REPALEAC

Republic of Congo

Reports from the activities funded by the program are available on the FCPF website
at http://www.forestcarbonpartnership.org/fcp/node/248.

FOREST CARBON PARTNERSHIP FACILITY

Activity

13

FOREST CARBON PARTNERSHIP FACILITY

Table 4: Activities Supported through the Indigenous Peoples Capacity Building
Program in FY112

FY11 ANNUAL REPORT

arrangement and the workings of the Carbon Fund as it
geared towards operationalization. The FCPF FMT has
been working with the Administrative Unit of the Climate
Investment Funds, which serves as secretariat for the FIP,
to ensure complementarities between the two programs, ofwhich the engagement with Indigenous Peoples  is but one
aspect.

14

FOREST CARBON PARTNERSHIP FACILITY

International Forum of Indigenous Peoples of theCongo Basin (FIPAC)
The Indigenous Peoples  program funded, throughthe Réseau des Populations Autochtones et Locales pour lagestion durable de forêts denses et humides d’Afrique centrale(REPALEAC), the preparation of Indigenous Peoples groups
from six Congo Basin countries with a view to engaging
in a meaningful debate during the Second International
Forum of Indigenous Peoples of the Congo Basin (FIPAC2), organized by the Republic of Congo. By funding aseries of regional caucuses, the FCPF funding has allowed
these groups to convene before the Forum to take stockof the situation concerning climate change and REDD+.
As a result, Indigenous Peoples in their home countries
prepared their position for the Forum and elaborated theirmain requests to the governments. This has led to a muchBringing Together National Level Stakeholders
and Rightsholders
A sustainable REDD+ strategy will require a careful balancing of the interests of diverse stakeholders. Bringing stakeholders into the REDD+ process will not only allow countries to tap into their wealth of knowledge on the drivers ofdeforestation and forest degradation, and how to effectively
address them, but will also add credibility and legitimacy tothe process as a whole. Most countries have incorporated
forest-dependent Indigenous Peoples and forest dwellers
into the process early. For example, Cambodia, Liberia, andUganda have prepared consultation plans as a commitment
to engaging with stakeholders. Peru set up an early dialogue process by identifying key stakeholders and preparedground for more extensive consultations as the preparation
towards REDD+ moved forward.

The FCPF, FIP, and UN-REDD Programme share thecommon objective of helping developing countries reduce
deforestation and forest degradation. The governing
bodies of all three programs have called for a streamlined
approach and enhanced coordination with bodies likethe GEF, UNFCCC, and bilateral and non-governmental
agencies. Together, the FCPF, FIP and UN-REDD
Programme are working closely to develop short-term andlong-term options to improve coherence and cooperation
across the different phases of REDD+, since each of these
programs bears distinct strengths for different phases.
During FY11, progress was made on responding to thesecalls. Meetings of the FCPF Participants Assembly,
FCPF Participants Committee, and UN-REDD Policy
Board were held jointly to create a common platform forsharing country experiences and lessons learned. Other
achievements also included:

1.3. Leveraging Strengths of Partners

Guidance on Stakeholder Engagement

1.3.1. Expanding to Other Delivery Partners
An important milestone was reached to enhance thedelivery of REDD+ services. At its ninth meeting, the PC
adopted the Common Approach to Environmental andSocial Safeguards for Multiple Delivery Partners (the“Common Approach”). This innovative framework paves
the way for multilateral development banks and UN
agencies to act as Delivery Partners (DPs) that will provide
Readiness support to REDD+ countries under the FCPF
Readiness Fund by achieving substantial equivalencewith the World Bank’s applicable policies and procedureson environmental and social safeguards, disclosure of
information, and grievance and accountability mechanisms.
The Common Approach document was developed throughintensive, seven-month discussions among the Task Forcethat comprised five pilot countries,3  six potential DPs,4  five
Donor and Carbon Fund Participants, Indigenous Peoples
representatives, and CSOs.  Based on the Task Forcerecommendation, PC9 also approved the United Nations
Development Programme (UNDP) and the Inter-American
Development Bank (IDB) as the first two DPs, in line withthe preferences of the five pilot countries.5

3

The five pilot countries are: Cambodia, Guyana, Panama, Paraguay,
and Peru.

4

The African Development Bank, the Asian Development Bank, theInter-American Development Bank, the United Nations Development
Programme, the United Nations Environment Programme, and the
Food and Agriculture Organization.

5

Guyana and Peru selected the IDB and Cambodia, Panama, andParaguay selected UNDP from the candidate list of six potential
delivery partners.

The FCPF and UN-REDD Programme have jointly preparedguidelines on stakeholder engagement with a particularfocus on the participation of Indigenous Peoples and otherforest-dependent communities. The guidelines provide
a robust and comprehensive set of principles as well as
steps for the active inclusion and participation of forestdependent Indigenous Peoples and other forest dwellers
in REDD+ processes. The guidelines further reflect thecommon understanding between the FCPF and UN-REDD
Programme on the full and effective participation ofIndigenous Peoples and forest-dependent communities,
in accordance with the 1/CP.16 Decision on REDD+, andpresent a framework that allows consistency across
REDD+ activities.

Joint Papers
The FCPF and UN-REDD Programme jointly commissioned
three papers on multi-stakeholder participation, benefit
sharing, and safeguards initiatives for REDD+, the drafts ofwhich were originally presented at the REDD+ Partnership
Workshop “Enhancing Coordinated Delivery of REDD+:
Emerging Lessons, Best Practices and Challenges,” held
on November 26, 2010 in Cancún, in conjunction with
UNFCCC COP16.6
Draft Framework for Sharing Approaches for Better MultiStakeholder Participation Practices seeks to support theeffectiveness of REDD+ decision-making processes
by identifying emerging lessons from stakeholder
participation practices. It provides insights on sharing
6

  The papers can be accessed at https://www.forestcarbonpartnership.
org/fcp/node/321.

information and experiences, a framework for categorizing
and describing different types of stakeholder engagement
processes, and a set of common terms relating tostakeholder participation.
REDD+ Benefit Sharing: A Comparative Assessment of Three
National Policy Approaches outlines national benefit-sharing
approaches from three areas of forest management policy
with respect to REDD+, including: payments for ecosystemservices (PES), participatory forest management (PFM),
and forest concession revenue-sharing arrangements.
Challenges, suggestions, and possible future directions ofbenefit sharing are described.
A Review of Three Safeguard Initiatives seeks to contributeto the discussion on practical experiences regarding
safeguards by outlining current approaches to theapplication of social and environmental standards andprinciples, complementing the AWG-LCA COP 16 decision
on safeguards.

Country-level cooperation
The FCPF also continued to collaborate with the UN-REDD
Programme as well as new DPs, to enhance the common
R-PP template that countries use to develop REDD+
Readiness proposals. This has helped to align processes
and ensure that partners are providing complementary
support to a single set of activities proposed by the country.
In addition, the FCPF is collaborating with the UNREDD Programme and other partners at the country level,to provide coherent support to the wide range of REDD+
activities in country. In the DRC, the FCPF and UN-REDD
Programme are working together in various analytical andcapacity-building activities. One of those is an assessmentof governance-related elements of the REDD+ process,including a comprehensive analysis of the political
economy of REDD+ in the country and an investigationof corruption risks for a national REDD+ mechanism. In
addition, the FCPF and UN-REDD are supporting the DRC
in the preparation for the investment phase of REDD+.
Both programs have contributed to the preparation of an
Investment Plan for the FIP, which will provide DRC with
US$60 million for the implementation of activities aimed
to address the main drivers of deforestation and forest
degradation in the country.

1.3.3. Services to the REDD+ Partnership
During COP15 in Copenhagen in December 2009 and soonafter, donor countries pledged an initial US$4 billion in“fast-start financing” to support developing countries intheir REDD+ efforts in 2010-2012, while also expressing
their willingness to scale up future financing for REDD+. In
the immediate aftermath of Copenhagen, both France andNorway pledged to host follow-up meetings to maintain thepolitical momentum, and at the Oslo Climate and Forest

FOREST CARBON PARTNERSHIP FACILITY

The REDD+ Roundtable of approximately
70 public and private stakeholders,
including IP representatives, constitutes
the main forum for dialogue and sharingof experiences between governmentand civil society. The Roundtable hasaccess to the National Climate Change
Commission (CNCC), through the National
REDD Working Group. Regional REDD+
Roundtables play an advisory role for
Regional REDD Strategies and influence
the National REDD+ Strategy through theregional committees that are represented
in the CNCC. The R-PP further proposesan active role for communities in MRV, andsuggests joint activities in the monitoring offorests and carbon stocks, thus combining
IPCC methodologies and traditional
knowledge into an effective
MRV system.

1.3.2. Coordinating REDD+ Support with FIP and
UN-REDD Programme15

Box 1. Peru’s REDD+ Roundtablebetter informed participation in the Forum and empowered
the Indigenous Peoples of Central Africa.

FY11 ANNUAL REPORT

16

7

More information may be found at http://www.oslocfc2010.no/
partnershipdocument.cfm.

In agreement with the FCPF PC, the World Bank—
through the FMT of the FCPF—and the United Nations—through the Programme Team of the UN-REDD
Programme—provide secretariat services to the REDD+
Partnership and work closely with the co-chairs. The joint
provision of services builds on the extensive cooperation
between the FCPF and the UN-REDD Programme withrespect to REDD+. The two organizations share theworkload by component, with the World Bank focusing on,
for example, analysis of gaps and overlaps in financing andassessment of the effectiveness of existing multilateral
initiatives on REDD+, whilst the UN focuses on the design
and maintenance of a voluntary database of REDD+
financial support and actions.
The Partnership aims to take immediate action tofacilitate, among other things, knowledge transfer,
capacity enhancement, mitigation actions, and technology
development and transfer. It offers a platform for open
discussion of innovative ideas and lessons learned fromon-the-ground experience, and the Partnership’s work
program stresses near-term, practical deliverables.
The 2010 and the 2011-2012 work programs launched anumber of actions whose results are available at http://
reddpluspartnership.org.

The Voluntary REDD+ Database on financing, actions,and results is continuously updated by Partners andstakeholders of the REDD+ Partnership. They reporton individual agreements to undertake REDD+ related
actions, involving funders and recipients. Data may beviewed for individual countries or institutions as wellas in an overview.8  As of September 2011, a total of 498
arrangements had been reported by 36 countries. Funders
reported that country-to-country funding amounted to
US$3.51 billion, country-to-institution funding reached
US$3.41 billion, and institution-to-country funding reachedUS$0.65 billion.
The analysis of financing gaps and overlaps revealed
a significant gap between the reported amount received
by recipients and the amount provided by funders. The
Partnership is to identify the top five to ten most significant
gaps in order to clarify information provided between
recipients and funders.  In further development of thedatabase of REDD+ finance, this result on financing gaps
and overlaps will become an integral part of the key
information source of the REDD+ Partnership to continue

identifying gaps and eventually fill these gaps.
In addition the results of the study on the effectivenessof the multilateral REDD+ initiatives will be used to discuss
how the application and implementation of projects/
financial support could be improved and disbursements beaccelerated.
A number of workshops were held in FY11 to share lessons from REDD+ initiatives and best practices to promoteand facilitate cooperation among Partners, e.g., in Tianjin(REDD+ Database, gap analysis, and effectiveness), Cancún(multi-stakeholder consultations, applying safeguards, andbenefit-sharing mechanisms), Bangkok (demonstration activities), and Cologne (scaling up REDD+ finance). Presentations, papers, and reports of these meetings are available
on the REDD+ Partnership website.9  In order to help thePartners prepare for the negotiations, the Partnership issharing lessons in the margins and ahead of the UNFCCC
official meetings. This approach enables the Partnershipdialogue to contribute to the UNFCCC negotiations andallows cost-efficiency. The openness and easy and straightforward nature of the discussions are recognized whencompared with the official negotiations.

89  The data are available at http://reddplusdatabase.org.

  The documents may be downloaded from http://reddplusdatabase.org/
entities/filter_by_type/countries.

FOREST CARBON PARTNERSHIP FACILITY

Conference in 2010, 58 countries launched a new Interim
REDD+ Partnership.7   
The Partnership currently includes 72 Parties—18
donor countries and 54 forest countries—and is avoluntary grouping of countries, demonstrating countries’commitments to making progress and taking action
on REDD+. The Parties aim to enhance the efficiency,
effectiveness, transparency, and coordination of faststart financing for REDD+. The work of the Partnership
does not prejudge but supports the UNFCCC process,and would be replaced by a future UNFCCC mechanism
including REDD+. For that purpose, Partners intend tohelp establish such a mechanism, enable the mobilizationof financial and technical resources needed to scale up
REDD+ implementation, and underline the importanceof the ongoing UNFCCC negotiations, as well as existing
multilateral and bilateral initiatives.
Every six months the Partners select two co-chairs toorganize its work. Papua New Guinea and Japan, and Brazil
and France respectively have served during the first two
periods up to June 2011. Guyana and Germany took over as
co-chairs in July 2011.

17

FOREST CARBON PARTNERSHIP FACILITY

Though observers do not have formal voting rights in
the FCPF’s governance structure, the norm of reachingdecisions through consensus has empowered them toplay a constructive role in the FCPF.

FY11 ANNUAL REPORTStrengthening REDD+,
Accelerating Learning
2.1. Fast-start Learning
2.1.1. FCPF Evaluation: Two Years in Reviewo•

The FCPF has established processes, procedures,and standards of REDD+ Readiness that are
increasingly being accepted as the norm and have
served to inform the REDD+ negotiations under the
UNFCCC.  

•The governance structure of the FCPF is a modelthat is considered democratic, transparent, andinclusive. The partnership model that gives equal
representation to REDD Country Participants andDonor Participants, and active engagement ofobservers, is seen as highly effective by members
and observers alike.  This has fostered openness
and transparency in the decision-making processes
and has been widely appreciated.

•

The REDD+ Readiness process has created anenabling environment for stakeholder engagement
at the national and global level. The FCPF has
encouraged dialogue among diverse stakeholders
at the national level in a manner that ensures
stakeholders who had not been involved in national
processes were included, in some countries forthe first time to this extent.

The major achievements of the FCPF highlighted by theevaluation include the following:

FOREST CARBON PARTNERSHIP FACILITY•

The pioneering and leadership role of the FCPF
in providing a common framework, foundation, andplatform for REDD+ Readiness, which has served
as the basis for evolving the thinking on REDD+ in
participant countries is recognized, notably byoproviding a forum for exchange of lessons
learned and knowledge sharing among
participants;omaking available practical tools andguidance for moving forward with REDD+
planning;ofostering cross-sectoral and crossinstitutional engagement; andgiving fresh impetus to addressing pervasive
governance challenges.

FOREST CARBON PARTNERSHIP FACILITY

This evaluation provided an opportunity to assess theachievements and challenges of the FCPF as a global
partnership for piloting REDD+ in the early years of theoperation of the Facility. The evaluation was carried out
by an independent consultant firm, on the basis of termsof reference endorsed by the PC focusing on the OECD/
DAC criteria of relevance, effectiveness, and efficiency.
Results from the evaluation report were presented at PC8
in Vietnam.

18

2
19

The partnership model that gives equal
representation to REDD Country Participantsand Donor Participants, and active engagementof observers is seen as highly effective bymembers and observers alike.

As the FCPF completed two years of operations, the PC commissioned an evaluationof the FCPF, in accordance with the provisions of the Charter. The evaluationassessed the contribution of FCPF at both country and global levels. At the global
level, the evaluation reviewed the structure, functions, processes, and impact driversof the FCPF program as a whole, as well as the governance arrangements anddelivery mechanisms. At the country level, the evaluation reviewed the formulationof R-PPs and the country context of the R-PPs (though not the R-PPs themselves),
which include the structure, functions, and processes of each country’s forestrelevant system, the existing capacity, and resources to formulate the R-PP.

FY11 ANNUAL REPORTStrengthening coordination among various actors
at the national and international level for effective
REDD+ implementation, including the safeguards
approach to REDD+. The cross-sectoral natureof REDD+ and the fact that FCPF financial support isinsufficient to meet the total budgetary requirements
for Readiness point to the need for the national
government to have a strong coordinating role inrelation to  its international partners and the Bank’s
project portfolio in several FCPF countries. It will be
important for REDD+ to be mainstreamed with ongoingdevelopment programs as the work being undertaken
is highly relevant to issues identified in the R-PPs of
REDD+ countries.

•

Lack of capacity support to REDD+ participant
countries, including at the national level. Several
recommendations relate to ways of enhancing the
support provided by FCPF and other development
partners.

•

Lack of a strong communication strategy to convey
the key outcomes of FCPF. The report
recommended the FCPF develop a communicationand outreach strategy to disseminate FCPF
outcomes more widely for use at country level,
within the World Bank, and to external audiences.

The World Bank management appreciated the usefulobservations and lessons provided by the report, andconcurred with its main findings and suggested remedialactions.10
Since the finalization of the report, the PC set up a PC
Working Group to facilitate discussions on the report’s
recommendations at the PC9 meeting in Oslo, in June 2011.
A draft action plan has been prepared by the FMT proposing
follow-up action on the recommendations. Action on some of
the recommendations has already been taken. Subsequent
PC meetings, beginning with PC10 in Berlin, will take stock,discuss, and make decisions on recommendations pertaining
to the strategic direction of the Readiness Fund.  
10

  The full text of the management’s response is available at http://www.
forestcarbonpartnership.org/fcp/sites/forestcarbonpartnership.org/
files/Documents/PDF/Jun2011/5.Management%20Response_June%
2016_0.pdf. Translations in French and Spanish are also available.

FOREST CARBON PARTNERSHIP FACILITY

•

21

20

FOREST CARBON PARTNERSHIP FACILITY

Key gaps that have been identified for the FCPF to workon are:• On the operational side, the need to finalize financial
commitments to FCPF countries and provide flexibility
in funding support to REDD+ countries has beenhighlighted. The report recognizes that finalizationof the approach to safeguards has resulted in delayin the signing of grant agreements with REDD+
countries and urges that steps be taken to enhance
this.

crop

crop

FY11 ANNUAL REPORTFCPF REDD+ COUNTRY PARTICIPANTS

REDD+ Country Participants.
37 REDD+ Country Participants have been selected into
the FCPF. The map illustrates the progress within the
FCPF of each of the 37 countries as of June 30, 2011.
NEPAL

MEXICO

SELECTED INTO FACILITY [2]
PA SIGNED [8]
FORMULATION GRANT SIGNED [3]R-PP INFORMAL PRESENTATION [5]LAO
P.D.R.
HONDURASNICARAGUAPANAMACOSTA RICATHAILAND VIETNAM
CAMBODIAGUATEMALA

EL SALVADORGUYANA

COLOMBIASURINAME

R-PP ASSESSED/FINAL R-PP SUBMITTED [16]READINESS PREPARATION GRANT SIGNED [3]ETHIOPIACENTRALCAMEROON AFR. REPUBLIC
EQ. GUINEAUGANDA
REP. OFKENYAGABON CONGO
DEM. REP. OF
CONGOTANZANIAGHANA
LIBERIAINDONESIAPAPUANEW GUINEAPERUBOLIVIAPARAGUAYVANUATU
MOZAMBIQUE
MADAGASCARCHILEFOREST CARBON PARTNERSHIP FACILITY

This map was produced by the
Map Design Unit of The World Bank.
The boundaries, colors, denominations
and any other information shown on
this map do not imply, on the part of
The World Bank Group, any judgmenton the legal status of any territory, or
any endorsement or acceptance ofsuch boundaries.

ARGENTINA

23

22

FOREST CARBON PARTNERSHIP FACILITY

IBRD 36759R2
SEPTEMBER 2011

FY11 ANNUAL REPORTBox 2: Early lessons from the FCPF: Updated with examples from FY11

Lesson 1: Partnership lessons from the FCPF
A partnership among often contentious stakeholders in tropical land use can find ways to communicate and explore
highly policy-sensitive topics, if it builds trust and willingness to share new ideas.
Example from FY11: FCPF’s PC8 meeting in Vietnam considered new R-PPs from Peru and Cambodia in a process that brought together
government officials who drafted the R-PPs and key civil society representatives and forest dwellers, who engaged in protracted
negotiations over some critical points of contention in the R-PPs. The urgency of seeking a decision on the R-PP within the context ofthe forum of the PC meeting contributed substantially to the difficult task of reconciling conflicting viewpoints on fundamental issues inboth countries, including in-country negotiations just prior to the PC meeting. For Peru, issues included debate about the rights of forest
dwellers, land tenure, and on how participation in the R-PP development process can be operationalized via the evolving Mesa REDD
stakeholder roundtables at the regional level.

Lesson 2: Lessons in sectoral coordination
The cross-cutting nature of REDD+ presents new challenges in sectoral coordination that may be solved by embedding the
REDD+ strategy in overarching policy frameworks and by mobilizing decisive political will.
Example from FY11: One of the key issues debated at PC8, as noted under Lesson 1 above, regarding Cambodia’s R-PP, was how thegovernment can work to reconcile its continual granting of new economic concessions for mining, hydro development, etc., on lands thatare both already being used by local communities, and under consideration for inclusion in another ministry’s REDD+ strategy options.

Lesson 3: Stakeholder participation
Countries are now grappling with how to operationalize the inclusion of stakeholders in REDD+ policy andimplementation, raising new issues of control over resource management and the respective decision making
processes.

Overall lessons learned are:• REDD+ is about financial incentives and governance.
There are two deep-seated failures behind unplanned
deforestation. The first one is that other forms of land
use are more valuable in the near and medium
term than forests. The second is the inability of existinglegislations and regulations to halt deforestation. The
FCPF offers a chance to REDD+ countries to addressthese two failures simultaneously.
• We have many solid building blocks, but we need tostart building.

• Poverty matters.
Poverty is the dominant human condition in tropicalcountries and the lack of alternative forms of utilization
has perpetuated the cycle. While REDD+ creates
incentives that address poverty-related drivers at theindividual and institutional levels, it cannot be expected
to be the primary tool for poverty reduction.
• National scope with sub-national and local
implementation works.
REDD+ offers magnitude and scope that were notpossible under project-based approaches. A nationallevel accounting framework would overcome problems
associated with project-level implementation likeleakage and additionality, while also allowing a rangeof sub-national activities to take place.
• Timing and sequencing are important to piloting
REDD+.
REDD+ requires financial resources, skilled staff, andinstitutional capacity to come together in a timely
manner. Political timing is also key to sustain progress
made.

Example from FY11: The consultation and participation aspects are well developed in Colombia’s R-PP. This document has benefited
from 37 ‘early dialogue’ events during which concepts related to climate change, REDD+, the FCPF and the R-PP itself were discussedwith a wide range of representatives of civil society, indigenous peoples and farmer communities. Even so, the R-PP recognizes that
information gathering and dissemination will have to continue into the R-PP implementation.

Lesson 4: Lessons from country R-PP formulation process
Political will is required to create highly qualified teams capable of resolving competing interests into a coherent national
Plan for REDD+.
Example from FY11: The development of both the Liberia and the Uganda R-PPs evolved from the coalescence of a dedicated bandof government, local and international NGO, and other experts to actively draft the complex documents. The model emerged since
government resources and staff were stretched too thin to address the full range of issues required to be included in an R-PP.

Lesson 5: New techniques and tools
Promising results are emerging where countries are combining traditional evaluation of potential REDD+ strategy options
with newer analytic tools that facilitate making choices among competing options.
Example from FY11: Ethiopia tasked a technical institute to develop a cost curve of climate mitigation options in the forest and land use
sector that was a central feature of its R-PP section on the REDD+ strategy.

Lesson 6: Implementation of REDD+
On the ground: A REDD+ bridge has not yet been built between the wealth of experiences at the local level in managing
forest resources and land-use change, and ideas on REDD+ policy frameworks and incentive programs at the national
level.
Example from FY11: Indonesia, with assistance from World Bank/FCPF FMT staff, has actively been reviewing its experiences with a wide
range of fund types and financial mechanisms used to date to support natural resource management programs, in order to offer insights
to the government as it considers how best to develop the institutional arrangements for its projected large-scale REDD+ program with
Norwegian support.

Lesson 7: Governance aspects of REDD+
Early cooperative development of a first set of rules of the game for REDD+ transactions and benefit-sharing is an
essential prerequisite for the broad legitimacy and support for REDD+ programs.
Example from FY11: DRC is designing a comprehensive accreditation system for REDD+, including a prototype REDD+ registry to track
REDD+ financing and activities. Once operational, it could serve as a transparent platform to aide in the development of required
national infrastructure to undertake REDD+ at a significant scale.
continued on page 26

FOREST CARBON PARTNERSHIP FACILITY

The FMT prepared and presented a short report on early
lessons learned in November 2010, at the PA3 meeting inWashington, entitled FCPF Harvesting Knowledge on REDDplus: Early Lessons from the FCPF Initiative and Beyond. The
report’s major overall lessons are reproduced below,
together with the set of ten specific lessons presented in
the report updated with some examples of REDD Country
Participant activities in FY11:
The FCPF, through the REDD Country Participants, hasbeen breaking new ground in conceptualizing how to create
incentives and institutions to make REDD+ work. As the
FCPF evolves, it is generating experience that is essential
to understand the progress made thus far and challenges
down the road.

While REDD+ may be a new concept, its success will
depend on how it can integrate existing instruments andlessons learned to form new policy approaches thatallow effective management of natural resources andsharing of benefits and burdens.

25

24

FOREST CARBON PARTNERSHIP FACILITY

2.1.2. FCPF Harvesting Knowledge on REDD+: Early
Lessons from the FCPF Initiative and Beyond - Overall
Lessons Learned

FY11 ANNUAL REPORT

Addressing methodological issues such as reference level and measurement, reporting and verification (MRV) is a key
entry requirement for REDD+ programs. In the absence of clear policy guidance from the international level and pricesignals for REDD+, countries could embark on a no-regrets stepwise approach to begin building capacity.
Example from FY11: Ethiopia and Cambodia both included detailed flow diagrams of the steps necessary for building a reference level andan MRV system, converting very early ideas about two technical topics into a draft workplan of ordered, implementable steps. Guyana
tendered several contracts via competitive bidding to begin rapid development of its MRV system, beginning with system design andspecification, training and data management for improved forest cover change detection, and establishment of carbon density plots.

Lesson 9: REDD+ financing
Early initiatives to finance REDD+ have illuminated a paradox: In spite of the high level of international commitments
to REDD+ funding, the mechanics of multilateral programs to move resources to REDD+ partner countries require due
diligence and safeguards that have slowed the flow of funds to countries.
Example from FY11: The Task Force on the Common Approach eventually led the PC to approve a unified approach founded on common
standards for safeguards that opens up Readiness Preparation Grants to many countries for whom the World Bank could not be theDelivery Partner.

Lesson 10: REDD+ cannot be cast as a potential solution to every problem
If REDD+ is to evolve and achieve its promise to mitigate global climate change, these lessons suggest it needs some time,some space, and some flexibility to be fairly experimented with over the next few years.
Example from FY11: This year marked the evolution within the FCPF from a focus on submission of country R-PP proposals and how tobuild capacity for REDD+, into an international initiative of countries that are now actively beginning to produce early studies, experimentwith participatory approaches, and assess governance needs for undertaking REDD+ activities in specific land types and land ownershipframeworks.

2.2.1. Cancún: A Landmark Summit for REDD+
Cancún (COP16) was a historic summit for REDD+. For the
first time, the importance of stemming the loss of forests indeveloping countries to mitigate global climate change withfinancial support from the industrialized world was enshrined in an international agreement (the Kyoto Protocol
only allows incentive payments to be made for afforestation
and reforestation projects in developing countries).
Parties carried forward the momentum provided by the
Copenhagen climate talks in 2009 (COP15) and other highlevel meetings on REDD+, such as the Oslo Conferenceof May 2010, by deciding on the general principles of
REDD+, the scope of activities, a phased approach, and thecentrality of national strategy plans.
Under REDD+, the following developing country activities
are eligible for support:•

reducing emissions from deforestation;•

reducing emissions from forest degradation;•conservation of forest carbon stocks;•

sustainable management of forests; and•enhancement of forest carbon stocks.

26

FOREST CARBON PARTNERSHIP FACILITYThe COP16 decision encouraged developing countries, inaccordance with national circumstances and respective
capabilities, to develop the core elements of REDD+.
These include:•a REDD+ strategy or action plan;•

forest reference emission level (their baseline offorest cover and change over time);•

a forest monitoring system for robust andtransparent monitoring and reporting of activities;
and•a system for providing information on how
safeguards will be addressed and respected
throughout the implementation of REDD+ activities.
Safeguards identified include ensuring full andeffective participation of relevant stakeholders,notably Indigenous Peoples and local communities,
whose knowledge and rights must be respected
and who must be able to participate fully andeffectively.  

While no quantified global deforestation target wasagreed, the striking accomplishment of Cancún was thescaling up of mitigation vision and activities to a national
approach (vs. the project approach of the CDM), whileallowing sub-national piloting on an interim basis as a

Cancún (COP16) was a historic summit
for REDD+. For the first time, theimportance of stemming the lossof forests in developing countries
to mitigate global climate changewith financial support from theindustrialized world was enshrined in
an international agreement.
vehicle to commence early action.   A phased approach
to REDD+ was confirmed in the COP decision, specifying
a first phase of national strategies and capacity buildingin each country, a second phase of implementation of acarefully developed REDD+ strategy, and a third phase of
results-based activities that are fully measured, reported,and verified. Bilateral and multilateral assistance fundingis anticipated for the first two phases, while further
discussion is called for by COP17 in Durban, South Africa,
on how the third phase would be funded, with potential
public and/or private funding to be determined.
Parties in Cancún thus endorsed principles for REDD+
under a future regulatory emissions regime, but left manyof the practical details and rules to be finalized. At COP17
the Parties will seek to agree on the following:•

Modalities. The Subsidiary Body for Scientific andTechnological Advice (SBSTA) is tasked withproducing (binding) modalities on how developing
countries should: (i) set Reference Emission Levels(REL); and (ii) design Measurement, Reporting, andVerification (MRV) systems.

•

Guidance on safeguards. SBSTA is also tasked
with developing (non-binding) guidance on theestablishment of information systems by developing
countries on how to implement and respect thesafeguards for REDD+ adopted in Cancún.

•

Financial options. The Ad Hoc Working Group on
Long-term Cooperation Action (AWG-LCA) is to
produce options for financing ‘phase 3’ (resultsbased) activities. The role of the private sector iscurrently a key policy uncertainty.

Building in the REDD+ Space
The policy space pioneered by the invention of REDD+ has
widened and deepened over the past year.  A transition has
occurred from REDD+ as a creative international policy
concept five years ago, to the early stages of coalescing thenecessary country-driven national institutional architectureand stakeholder participation to effect REDD+ activities
on the ground.  The governing bodies of the FCPF, FIP and
UN-REDD Programme have mandated their secretariats to

FOREST CARBON PARTNERSHIP FACILITY

Lesson 8: REDD+ methodological issues

2.2. Building on the International Framework
for REDD+

27

Box 2: Early lessons from the FCPF: Updated with examples from FY11 (continued)

FY11 ANNUAL REPORT28

The R-PP template has continued to improve, driven
by country experience, the PC’s guidance, stakeholder
views and recommendations, and the Cancún decision
on REDD+. The FCPF’s safeguards approach, consistingof the Strategic Environmental and Social Assessment(SESA) and an associated Environmental and Social
Management Framework (ESMF), has been wholly
mainstreamed into the latest version of the template. The
strength of a SESA for REDD+ is that it combines analyticalwork and consultation in an iterative fashion to informthe preparation of the country’s REDD+ strategy. The
SESA helps to ensure compliance with the World Bank’s
safeguard policies (and now the Common Approach) byintegrating key environmental and social considerations

11

Draft Version 5 of the template (dated December 22, 2010) is available
at http://www.forestcarbonpartnership.org/fcp.

2.3. Knowledge Sharing and Capacity Building
2.3.1. Defining What It Means to Be Ready
The FCPF has been able to generate and build capacityof experts and practitioners on Readiness plans,

2.3.2. Increasing South-South Knowledge Sharing
South-South knowledge sharing is an effective mechanism
to ensure cross-fertilization across REDD+ countries andis encouraged by the FCPF. At PC meetings, the FCPF
organizes knowledge-sharing sessions where REDD+
countries are invited to present on some relevant REDD+
topics. As an example, at PC9 in Oslo, Liberia, Mexico,and The Nature Conservancy shared their experiences on
benefit-sharing mechanisms relevant to REDD+ (see Box 3
below).
In cooperation with the World Bank regional
departments and country offices, and with funding from the
GEF, the FCPF organized a large South-South knowledgesharing event between 6 countries in the Congo Basin (plus
Madagascar) and Brazil through a ten-site visit to Brazil.
The activity aimed to contribute to the design of the national

Box 3: Country Experiences on Options for Benefit Sharing

Benefit-sharing mechanisms are an essential part of a national REDD+ structure, as it ensuresthat incentives are delivered to those that have a stake in the forests and can contribute toits good (or bad) management, which in turn builds support and legitimacy for REDD+. Thus,
benefit-sharing mechanisms will play a pivotal role in REDD+ implementation. At PC9, Liberia,
Mexico, and The Nature Conservancy presented early lessons for benefit-sharing mechanisms
from experience with different forest management options. The experiences demonstratelessons in building capacity at the community level, developing participatory decision-making
processes, and improving the targeting and effectiveness of the delivery of benefits. Theselessons will help to guide the design of results-based payment approaches as well as monitoringand evaluation systems, and ensure equity and fairness in the process. Based on this discussion,
the FMT will continue the dialogue on benefit sharing in FY12, through workshops or activities
that will discuss country experiences and design of potential mechanisms.

FOREST CARBON PARTNERSHIP FACILITY

FOREST CARBON PARTNERSHIP FACILITY

2.2.2. Safeguards for People and the Environment
in REDD+

relevant to REDD+, including all those covered by thesafeguard policies, into the Readiness Preparation processfrom its earliest stages, while also extending to policies,
regulations, and investments that are supported as part of
REDD+ strategy implementation.
The SESA/ESMF approach was approved by the Bank’s
Board of Executive Directors following a thorough designphase and reviews at several levels of management.
Moreover, Bank management clarified the Bank’s
Operational Policy (OP) 4.01 on Environmental Assessment,
which now includes an explicit recognition of SESAs and
ESMFs as safeguards instruments.
The guidelines of the R-PP template were modified
in FY11 to clarify the requirements for stakeholder
consultations at the R-PP formulation stage. The
R-PP guidelines now distinguish between Section 1b
on “Information Sharing and Early Dialogue with Key
Stakeholder Groups,” in which the submitting country
provides information on exchanges with Indigenous
Peoples and other groups up to the point of submission of
the R-PP to the PC, and Section 1c on “Consultation andParticipation Process,” in which the country proposes how
the full range of stakeholder groups will be engaged in the
REDD+ process going forward.
Enhanced guidance has been provided for challenging
components of the R-PP, along with emerging goodpractices and standards to be met for each component.
Similarly, efforts are under way to develop a common
template with the UN-REDD Programme. The latest
version of the R-PP template reflects this attempt; thetemplate is being revised further to include any final
adjustments needed in this regard, as well as to reflect
improvements and clarifications requested by a range ofstakeholders.11

national strategies, and institutional arrangements for
implementing REDD+. This has resulted in much greater
clarity on how countries should design the process.
TAPs are assembled to review and provide technicalguidance for country R-PP submissions. The FCPF
maintains a roster of experts—nominated by FCPF
Participants, Observers, and the FMT—to create
multidisciplinary teams of scientific and technical experts.
TAPs continue to play a major role in supporting thedevelopment of REDD+ methodologies, providing expert
guidance on R-PP formulation, and strengthening thetechnical rigor of R-PPs in general.  
In FY11, eight REDD+ countries submitted their final
R-PPs for review by the TAP and nine REDD+ countries
submitted draft R-PPs. The final R-PPs were also reviewed
by working groups of PC representatives—a practice thatwas started in FY10.

29collaboratively develop options to enhance cooperation andcoherence among REDD+ institutions in support of countrylevel REDD+ efforts and financing.  The FCPF FMT and
UN-REDD Programme Secretariat have jointly developed
guidelines for stakeholder engagement, and a common
draft template for country R-PPs.
The experience gained through the Readiness process
in the FCPF has helped Parties further develop the REDD+
process through the UNFCCC. For example, the Cancún
decision on REDD+ recognized environmental and social
risks and provided that REDD+ should promote and support
safeguards. While there is an indicative list of safeguards
in the Cancún decision, a work program is expected todevelop them further, together with a system that provides
information on their application and implementation.
The Common Approach developed as part of the FCPF’s
Multiple Delivery Partner arrangement represents a
convergence of views among very diverse institutions on
the application of safeguards and could assist with thefurther development of REDD+ safeguards.

Strong country ownership and mobilization of
stakeholder support have provided the momentum for
R-PP development. Continued exchange of information
among REDD+ Country Participants, the TAP, and the FMT
has allowed the quality of R-PPs to greatly improve. Afterall, R-PPs are a collaborative exercise among different
government agencies and stakeholders, and early crosssectoral coordination can go a long way in addressing
deforestation and forest degradation. Recently submitted
R-PPs demonstrate that the broad sharing of goodpractices among countries will be essential for achieving
REDD+ Readiness. Countries have also started to place
R-PPs in broader development contexts through betterinter-institutional coordination. For example, Ethiopia
has made the R-PP a tool through which to achieve its
overarching climate goals.
In a stocktaking exercise in November 2010, TAP
experts noted that Indigenous Peoples rights were better
acknowledged in recent R-PPs, a number of which referredto the need for FPIC of Indigenous Peoples, and that
proposals were emerging for including community-based
monitoring, together with related capacity-building actions,in national REDD+ monitoring proposals. For example,
Madagascar’s R-PP insists on “participatory monitoring” asa key aspect of a national MRV system, building on existing
experience with ecological monitoring, and expanding into
carbon monitoring through a program of targeted capacity
building for local communities.

Readiness Package
At PC9, Costa Rica, the DRC, and Nepal discussed progress
made on REDD+ Readiness as a knowledge-sharing
exercise. The cross-cutting theme across the presentations
was the need to have a set of fundamental Readinessactivities in place, as outlined in their R-PPs, to set thestage for Emission Reduction Programs (ER Programs).
They also reflected on principles, indicators, and criteriathat could be used to define key milestones for future
R-Package submissions. How to define Readiness, setting
minimum standards, and ensuring these standards are
consistent with guidance from the UNFCCC are all themesof an ongoing dialogue among the Participants, observers,
and the FMT.

30

FOREST CARBON PARTNERSHIP FACILITY

Collaboration with the World Bank InstituteTo enhance knowledge management, information
dissemination, and training, a joint staff position was
created with 75 percent financed through the Carbon
Finance Assist multi-donor trust fund. Through thisposition many activities were boosted, culminating inresults like the FCPF Harvesting Knowledge on REDD+, thepublication of the Manual on Opportunity Costs of REDD
(English and Spanish), the organization of three regional
workshops on Opportunity Costs and Implementation Costs
of REDD, and the participation in the knowledge-sharing
platform of the Alliance for Global REDD Capacity.

tackle REDD+. In collaboration with WBI’s Carbon Finance
Assist trust fund, the FCPF developed a manual on theopportunity costs of REDD+, with the goal of helping
countries generate economic information to assess
potential national REDD+ strategies.
The manual provides a hands-on approach for awide audience on the methods and tools to estimate theopportunity cost of different land use changes in forest
landscapes. It is available in English and Spanish andcontains presentations, a calculation tool, and interviews.12
The manual was launched at a regional workshop in
Arusha, Tanzania, in November 2010, with participants
attending from eight different countries, followed by aworkshop in Bangkok, Thailand, in April 2011, and in Cali,
Colombia, in May 2011. These workshops were carried out
in close partnership with other organizations such as the
UN-REDD Programme, the Center for People and Forests(RECOFTC), the Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ), the IDB and the International Center
for Tropical Agriculture (CIAT), leveraging each other’s
resources and experiences in REDD+ in the participating
countries.  
The FCPF has started to elaborate on this work,by going beyond the opportunity costs and developing
guidance on the implementation and transaction costsof REDD+.  Analysis of all these related costs will givecountries a fuller picture of just how much it costs them totackle REDD+.

2.3.3. The Costs of Getting Ready for REDD+
A key question that REDD+ countries are facing is how
to estimate the costs of REDD+. Knowing how much it“costs” to participate in which REDD+ activities is criticalto defining a country’s strategy on whether and how to

12

  The manual may be downloaded from http://wbi.worldbank.org/wbi/
learning-product/estimating-opportunity-costs-redd).

31

A transition has occurred from REDD+ asa creative international policy concept five
years ago, to the early stages of coalescing thenecessary country-driven national institutionalarchitecture and stakeholder participation toeffect REDD+ activities on the ground.

REDD+ strategy, by demonstrating to the participants therole that community management of forests can play as aneffective and efficient tool for reducing deforestation, alongwith the main challenges to making this type of forest
management work. Participants to the activity included key
decision-makers in the African countries actively involvedin the R-PP preparation or implementation in their homecountries. In Brazil, participants visited federal- and statelevel initiatives, such as the Amazon Fund, an innovative
performance-based fund that is currently providing support
to various activities across the Brazilian Amazon, andthe Bolsa Floresta program, a payment for environmental
services scheme in the Amazonas state in Brazil thatseeks to compensate those households that contribute to
the sustainable management of forests. Participants also
visited the Tapajós state forests, to see how communities
are adding value to timber and non-timber forest products.
As a result of the activity, participants started discussions
at the country level, on how REDD+ could foster community
management of forests in their own countries.

FOREST CARBON PARTNERSHIP FACILITY

FY11 ANNUAL REPORTFY11 ANNUAL REPORTThe Carbon Fund3.1. From Readiness to Performance-Based Payments

FOREST CARBON PARTNERSHIP FACILITYThe Carbon Fund will particularly target high-quality ERs
generated by REDD+ programs that:•Are consistent with emerging compliance standards
under the UNFCCC and other regimes;•

Are sufficiently diverse to generate learning value;•

Use clear and transparent benefit-sharing
mechanisms with broad community support so that
REDD+ incentives are used in an effective andequitable manner;•

Are based on transparent stakeholder
consultations; and•Produce additional environmental and social
benefits.

The following criteria will apply to the selection of ER
Programs into the portfolio of the Carbon Fund. The
ER Program will need to demonstrate the following
characteristics:•

Be submitted by the governments or governmentapproved entities of countries that are FCPF REDDCountry Participants, that is, countries that wereselected into the Readiness Mechanism of the
FCPF;•

Be based on performance, that is, payments for ERs
relative to an agreed REL. Although the Carbon
Fund might provide some advance payments for
future ERs, it will not provide finance forinvestments;•

Generate high-quality and sustainable ERs(including environmental and social benefits, andminimization of the risk of non-permanence);•

Be consistent with emerging compliance standards
under the UNFCCC and other regimes, asapplicable;•

Be based on transparent stakeholder consultations;•Use clear and transparent benefit-sharing
mechanisms with broad community support, sothat REDD+ incentives are used in an effective andequitable manner, with the objective to further
tackle deforestation and forest degradation. In somecases, the national government can be the best
actor to enact and implement the necessary policychanges and regulations. But many changes will
also require the involvement of Indigenous Peoples,
local communities, and the private sector, in whichcase these stakeholders or rights-holders would
expect to partake in the REDD+ activities and thecorresponding carbon revenues (or alternative
financing or support), in recognition of theircontributions. In other cases, Indigenous Peoples,
local communities, and the private sector would
be the primary actors implementing the ER
Programs and thus expect to be the principal
beneficiaries of ERPA payments. Thesearrangements will have to reflect the assessment

FOREST CARBON PARTNERSHIP FACILITY

Under the Carbon Fund, about five forest countries
participating in the FCPF whose Readiness Package has
been endorsed by the Participants Committee, will enter
into an Emission Reductions Payment Agreement (ERPA)
for an average amount of between US$30 and US$40
million each. It is anticipated that ERPAs will cover a period
of about five years, to be confirmed depending on thevolumes on offer from specific ER Programs. The programs
selected by the Carbon Fund Participants are expected to
be undertaken at a significant scale, for example, at thelevel of an administrative jurisdiction within a country or at
the national level, align with the proposed national REDD+
strategy and management framework, and be consistent
with the emerging national REDD+ MRV system andnational REL.

32

3

The operationalization of the Carbon Fund marks an important step in piloting
performance-based payments for REDD+ at scale and in line with emerging policy
guidance under the UNFCCC. The Carbon Fund will provide performance-based
payments for Emission Reductions generated from REDD+ activities, with a viewto ensuring equitable benefit sharing and promoting future large-scale positive
incentives for REDD+. The Carbon Fund will also seek to disseminate broadly theknowledge gained in the development and implementation of ER Programs.

33

The programs selected by the Carbon
Fund are expected to be undertaken at asignificant scale, for example, at the levelof an administrative jurisdiction within acountry or at the national level...

FY11 ANNUAL REPORTGenerate learning value by testing anddemonstrating different approaches that areproposed by REDD+ countries, and learn from themin order to inform the international community on
their feasibility.

For sub-national ER Programs, these should also:••

Demonstrate capacity to measure and reporton ERs. The system should be consistent with the(emerging) national REDD+ MRV system;•

Be consistent with the national REL, or with thenational approach establishing the REL;•

Be integrated in a national institutional frameworkthat will manage and coordinate sub-national
programs; and  

3.2.

FOREST CARBON PARTNERSHIP FACILITY

Be consistent with the (emerging) national REDD+
strategy and recognized as such by the appropriate
national authority;

•

•

34

Be undertaken at a significant scale, for example,
at the level of an administrative jurisdiction withina country or at the national level, in line with theproposed national REDD+ management
framework;

Provide for an assessment of and measures
to minimize the risk of displacement of emissions(leakage), reversals (non-permanence) and otherrelevant risks.

Operationalizing the Carbon Fund

The FCPF Carbon Fund became fully operational at theend of May 2011, when the condition that at least two
private entities should have become Fund Participants was
fulfilled.
The Carbon Fund brings together key governments
and private sector entities and will help to refine
methodological frameworks, demonstrate the firsttransactions at a large scale, and thus pave the way forlarger financial flows in the future.
The Carbon Fund welcomed Australia (AusAid), BP
Technology Ventures, CDC Climat, the United Kingdom andthe United States of America as Carbon Fund Participants
during FY11. Supplemental contributions were also madeby Germany and Norway, bringing total committed andpledged funding to the Carbon Fund as of 30 June, 2011 to
US$212 million.

Table 5: Financial Contributors to the FCPF Carbon Fund
as of June 30, 2011

FCPF Carbon Fund Participants
Tranche A (unrestricted use)
Australia
BP Technology Ventures
CDC Climat
The Nature Conservancy
United States of America

Trance B (restricted use)
European Commission
Germany
NorwayBox 4: Carbon Fund Action Plan

United Kingdom

Six-month goals (by the October 2011 PC)•

Agree on ER-PIN template•

Agree on Rules of Procedure•

Initiate a strategic discussion on the future of the
Carbon Fund•

Discuss draft policy guidance on Valuation/Pricing
approach•

FMT shares draft methodological framework with
the PC•FMT proposes Readiness Package outline to PC

One-year goals• Adopt draft Readiness Package guidelines andassessment process•

Agree policy guidance on Valuation/Pricing
approach•

Agree Methodological approach•

Agree ERPA General Conditions•

Sign Participation Agreements with at least 2
additional private  sector Participants•

Sign Letters of Intent for between one and three
ER Programs

Three-year goals• Sign at least 3 ERPAs, representing a value ofapproximately 60% of the available capital for
ER purchases from the capitalization target of
US$200 million•

Review and revise FCPF framework as necessary•

Capture and disseminate the lessons learned in
the first three years of Fund operations

Tree spiking warning to deter illegal logging in Indonesia.

FOREST CARBON PARTNERSHIP FACILITY•

Table 5 lists the Participants of the Carbon Fund as ofJune 30, 2011, distinguishing between the two tranches(Tranche A for unrestricted use of the ERs that will be
generated and Tranche B for restricted use, that is, noresale or use for compliance).
While the entry of new Participants signals growing
confidence in the Readiness process, the base ofparticipation needs to be further broadened to make
REDD+ financing sustainable. In particular, the current
Carbon Fund Participants have expressed strong interestin expanded participation from the private sector.
The Organizational Meeting held in Barcelona fromMay 31-June 1, 2011 agreed on an action plan consistingof a sequenced set of goals for the Carbon Fund, which
are reproduced in Box 4.

35of the drivers of deforestation and forest
degradation. Adequate governance and financial
management arrangements for transparent
benefit sharing will need to be in place prior to theeffectiveness of the ERPA; andFY11 ANNUAL REPORT

4.1. The FCPF Budget Process

Since its inception, the FCPF has experienced considerable financial growth at thesame time that its internal systems and processes were just being established.  
With the Carbon Fund becoming fully operational and the first Carbon Fund budget
approved in June 2011, the opportunity for more systematic financial planning andbudgeting is now in place for both funds. It is expected that further changes will be
required with the expansion to multiple delivery partners.
Such changes will likely have impacts on the internal
systems for the FCPF within the World Bank, as may thestrategic discussions requested by the PC early in FY12.
Hence, the financial planning for the Facility’s trust funds
will continue to need to evolve to match the evolving context
of the FCPF and REDD+ internationally.  
The basics, however, have remained the same.  Thebudgets for both main trust funds of the FCPF—the
Readiness Fund and the Carbon Fund—are based on
the World Bank fiscal year and are approved annuallyin accordance with the FCPF Charter.  Since both funds
are established through 2020 (with Carbon Fund ERPA
payments expected to dominate the latter years of financial
operations), the budgets need to make sense within along term framework for each fund, consistent with WorldBank policies for the financial management of trust funds.  
These policies generally require funds to be fully set aside
for commitments made by the Participants as well as
meeting the fiduciary obligations entered into by the WorldBank as Trustee.
The PC is responsible for approval of the Readiness
Fund budget, usually in June of the preceding fiscal
year.  To date, the PC (and its predecessor the Steering
Committee) has approved budgets for the Readiness
Fund for FY09-FY12, along with several amendments andrevisions to those budgets throughout the year.
The Participants of the Carbon Fund are responsible
for approval of their annual budgets and all activities
arising from the Carbon Fund as a separate trust fund.  
The first formal budget approval for the Carbon Fund has
been for FY12, with informal guidance sought by the FMT
for developmental expenditures prior to that time (before
the fund became fully operational). Unless otherwise
noted, the majority of this Financial Report focuses on theReadiness Fund.
However, as part of the approval of the Readiness
Fund budget, the FCPF Charter indicates that the PC
makes decisions on all ‘Shared Costs’ for activities thatcut across and benefit both the Readiness and Carbon

4

Funds.  In practice, the Shared Costs have included FCPF
Secretariat and REDD+ Methodology Support activities
such as the work of TAPs, the IP Capacity Building Programand development of the R-PP.  Pursuant to the Charter,
the Readiness Fund pays 65 percent and the Carbon Fund
pays 35 percent of Shared Costs over time, unless the PC
decides otherwise.
The PC has issued resolutions waiving such cost
sharing through FY11, to reflect the fact that the Carbon
Fund had not yet been made fully operational, and instead
paid 100 percent of the Shared Costs from the Readiness
Fund budget.  It is expected that cost sharing at the 65/35
level will commence from FY12 onward.  However, there is
an important caveat in Resolution PC/8/2011/8 approvedin March 2011, in that the PC has placed a lifetime ‘cap’
or limit of US$12 million on the Shared Costs that it will
charge to the Carbon Fund.  This resolution responded tothe concerns of several existing and potential Carbon Fund
Participants that an upward limit be placed on such costs,
given that the PC otherwise makes all decisions regarding
their composition and annual approvals.  Discussion andconsensus agreement on the resolution was but one of themany ways throughout the past year that the partners andstakeholders of the FCPF have found ways to convey theirdifferent viewpoints and find solutions to move forward—in
this case helping to bring in new partners to the Carbon
Fund along the way.  

4.2. The Readiness Fund4.2.1. Funding Sources
As noted, the Facility continues to grow in financial terms,
and the Readiness Fund received a large inflow of funding
over the past year.  Table 6 presents the contributions andpublic pledges for the Readiness Fund by the end of FY11.  
Although total signed Donor Participation Agreements
amounted to US$207.9 million, some of the agreements
included a phased contribution into the Readiness Fund
spread over a few years.

FOREST CARBON PARTNERSHIP FACILITY

FY11 Financial Report of the Facility

37

36

FOREST CARBON PARTNERSHIP FACILITY

Discussion and consensus agreement on the
resolution was but one of the many ways
throughout the past year that the partners andstakeholders of the FCPF have found ways
to convey their different viewpoints and findsolutions to move forward...

FY11 ANNUAL REPORTAs the FCPF has shifted from its startup to implementation
phase, the annual budgets of the Readiness Fund havealso increased.  The first two years of Readiness Fundoperations were characterized by relatively slow uptake
on the operational and administrative budget, while thebroad directions of the FCPF were being mapped out by
Participants and the staffing and expertise for REDD+
were put in place.  This included both staffing across key
stakeholders of the FCPF, as well as staff development
and formation of teams at the World Bank.  However,in FY11, the PC approved a somewhat larger budget for
operational and administrative support to REDD+, to reflect
the growing staffing capacity.  In June of 2011, the PC has
facilitated a broader work program and set of activities
through its FY12 budget approval, as indicated in Table 7.

38

FOREST CARBON PARTNERSHIP FACILITY

Table 6: Commitments and Pledges to the Readiness Fund as of June 30, 2011 (in US$ thousands)

Participant Name

FY09

FY10

  Agence Française de Développement

   4,612

592
    

FY11

  Australia

   9,565

  Canada      

  Denmark      

5,800

  Finland   8,956

      Germany      

    25,9565,000

  Italy      

      Japan   5,000

5,000

  Netherlands   5,000      Norway   5,000

16,398

  Spain   7,048

      Switzerland

   8,214      United Kingdom      

    

  United States of America

   5004,500

   53,895

32,290      

    

  Committed Funding
  European Commission
  Germany      

  Japan      

    

  53,895

32,290  Committed Funding plus Pledges

FY12-16

Total

5,800

11,004

7,997

17,562

41,36041,3605,800
5,750

14,70725,956

Table 7. FCPF Readiness Fund Annual Budgets FY10-12 (in US$ thousands)

FY09
RevisedBudget

FY09
ActualFY10
RevisedBudget

FY10
ActualFY11
RevisedBudgetFY11
ActualFY12BudgetServices to REDD Countries

3,732

2,037

4,226

3,719

4,473

4,369

5,660

Country Implementation Support

1,194

409

1,734

1,660

2,025

1,904

  2,493

Country Advisory Services

873

801

827

793

959

545

  1,543

REDD Methodology Support

1,665

827

1,665

1,266

1,489

1,920

  1,624

Activitiesof which est. Readiness Share  1,056of which est. Carbon Fund Share  568

FCPF Secretariat

1,335

988

1,443

1,321

15,2708,802

  2,588of which est. Readiness Share  1,682of which est. Carbon Fund Share  906

Readiness Trust Fund
Administration

306

471

484

362

472

366

  421

Total Readiness Fund

5,373

3,497

6,153

5,402

6,707

6,421

8,669

Table 8. FY11 Readiness Program Expenditures by Activity (in US$ thousands)

Activities

Original
BudgetRevisedBudgetActualExpense

Variance

ExpenseRate

Services to REDD Countries

4,473

4,473

4,369

104

98%

Country Implementation Support

2,025

2,025

1,904

121

94%

Country Advisory Services

959

959

545

414

57%

REDD Methodology Support

1,489

1,489

1,920

-431

129%

FCPF Secretariat*

1,735

1,762

1,685

77

96%

472

472

366

106

78%

6,680

6,707

6,421

286

96%

Readiness Trust Fund Administration
Total Readiness Fund*

FY11 Revised Budget included US$235,000 allocation for Task Force on Common Approach.

30,200
8,214

5,766

Figure 2. FY11 Budget Performance (in US$ thousands)

20,270
7,048
5,766

2,500
2,000

n Revised FY11 Budget
2,025

26,821

207,886

5,800

5,800

14,50014,500

4,000

4,000

51,121

232,186n FY11 Actuals
1,920

1,904
1,762 1,685

1,489

1,500

5,000

94,880

1,685

5,000
10,00094,880

1,762

959

1,000
472

500

545
366

0
Country
Implementation
Support

FCPF
Secretariat

Readiness Fund
Administration

Country
Advisory Services

REDD Methodology
SupportFOREST CARBON PARTNERSHIP FACILITY

4.2.2. Funding Uses

Table 8 reflects both the evolution of the FY11 budget
as well as expenditures by activity on a cash basis.  The PC
authorized specific new activities during the fiscal year,
including US$235,000 for the Task Force on a Common
Approach, which contributed to raising the approved
budget of the Readiness Fund marginally from the initial
FY11 budget.  The revised FY11 budget came to US$6.707
million, compared to total expenditures of US$6.421
million. The fiscal year closed with a variance (under run)of US$286,000 and spending at 96 percent of the revised
budget, with a share of this related to the special budgetary
request for the Task Force on a Common Approach.  
These numbers also do not include some contracts thatwere issued to support operations of the FCPF and not
yet fully expensed (e.g., some of the Indigenous Peoples
Program contracts), and funding commitments that weremade previously to World Bank country teams supporting
Readiness in specific countries but not yet expensed.
As per Table 8, Country Implementation Support costs
were US$1.904 million, or 94 percent of the planned
budget.  To date, this line item has reflected the direct
assistance of World Bank country teams to REDD Country
Participants, including technical assistance, grantsupervision and assessments provided to the PC.  

39

In FY11, US$94.9 million was received into theReadiness Fund in addition to the US$86.2 million in cash
received in the previous two fiscal years, bringing total cash
contributions to US$181.1 million. This leaves outstanding
commitments of about US$26.8 million from existing
signed agreements to be paid into the Readiness Fund in
the coming years.

accounting, legal and other services required by the
Readiness Fund Trustee.  Given that they have remained
relatively steady since the Fund’s inception in FY09, thebudget for these costs was reduced in the FY12 budget
proposal of the FMT.

4.2.3. End of Year Account Balance
In summary, per Table 9, at the close of FY11, the balanceof the Readiness Fund stood at US$165.8 million.  Total
new funds into the account were about US$95.6 million,
including the donor contributions of US$94.9 million and
US$0.7 million of investment income earned on the accountbalance.  Total disbursements on a cash basis were US$7.5
million, with cash expenditures of US$6.4 million, andexpenditures by REDD Country Participants against theirown-managed grants of approximately US$1.1 million.   

Table 9. FY11 Financial Statement for the Readiness
Fund (in US$ thousands)

Item

AmountBeginning Balance

77,695

Donor Contributions

94,880Investment Income
Total Receipts732
  95,612

Cash Disbursements

6,421

Grant Disbursements

1,082

Total Disbursements

7,503

Fund Balance

FOREST CARBON PARTNERSHIP FACILITY

While spending and activities were generally on the levels
anticipated at the start of FY11, the under run that did
occur came from several REDD Country Participants
being unable to access grant funding and direct assistance
until arrangements for the Common Approach and new
Delivery Partners could be agreed.  That work progressedin FY11, and continues into FY12.  Once agreements areformalized with the new Delivery Partners, the costs ofCountry Implementation Support will also reflect as well
the costs incurred by partner institutions beyond theWorld Bank.
The related line item of Country Advisory Services
came to about US$545,000 or only 57 percent of theamount originally budgeted in FY11. The majority of thesecosts arise from FMT, forestry and social development
staff advice and guidance to REDD Country Participants on
their programs, including development of the R-PP, SESA
and consultation processes.  This relatively low level of
spending (compared to about US$793,000 in FY10) reflects
in great part the fact that FMT staff worked beyond
the FCPF during the year, to integrate across various
initiatives closely related to the FCPF, including the Forest
Investment Program, the REDD+ Partnership, and others,with appropriate allocations of costs to those initiatives.
Conversely, with the budget for REDD Methodology
Support activities set at US$1.489 million in FY11, andtotal expenditures at US$1.920 million, this line item
saw spending of 129 percent against FY11 plans.  Costs
reflected the expenses (consulting contracts, travel andmeeting costs) of the independent TAPs supporting the
FCPF, considerable work with other REDD+ institutions
to coordinate and develop joint tools, such as the R-PP
template and previously approved programs such as the
IP Capacity Building Program.  
FCPF Secretariat expenses were US$1.685 million
compared to the final revised budget of US$1.762 million,
or 96 percent of the revised budget.  Expenditures
included the standard costs for program management,
organization of the annual Participants Assembly and PC
meetings, and travel costs for REDD Country Participants
to those meetings, in accordance with the FCPF Charter.
Increasingly, knowledge and learning events on REDD+
as well as other key partner meetings (e.g., the UNREDD Programme or REDD+ Partnership) are organized
together with the FCPF Secretariat, to maximize theuse of Participant time as well as to keep costs as
low as possible.  Typical FCPF Secretariat costs also
include supporting the participation of the IP Observer,
hosting and maintaining the FCPF website and generalcommunications to FCPF stakeholders.  
Readiness Fund Administration costs were US$366,000
or about 78 percent of the US$472,000 budgeted in FY11.  
These costs reflect the work of all World Bank staff
involved in fund management, contributions management,

165,804
41

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FY11 ANNUAL REPORTFY11 ANNUAL REPORT

4.2.4. Accelerating Readiness Fund Disbursements

4.2.5. Financial Commitments over the Longer Term

An important aspect of the Readiness Fund from its
inception has been that it makes available grant funding
to countries—the grants of up to US$3.6 million per
REDD Country Participant—in support of country-led
Readiness work.  The REDD Country Participants manage
and utilize the grants for REDD+ activities and expenses,
which are ultimately reflected as disbursements in WorldBank financial statements only once the REDD Country
Participant completes reimbursement from the grant
resources. By the end of FY11, 17 R-PP formulation grant
agreements had been signed and eleven of the grants
were actively disbursing in 2011, with about US$1.1
million fully processed and expensed by REDD Country
Participants during the fiscal year (see Figure 1 in Section1).  However, associated with these grant disbursements
was a considerably higher level of grant commitments
made by the FCPF to REDD Country Participants, alongwith associated country services and operational support
that comes with FCPF participation. Table 10 provides amore complete picture of the level of these commitments
to REDD Country Participants.  
At the same time, it is still evident that the
disbursements to REDD+ countries need to be dramaticallyaccelerated, in order to ensure that the available funding
for Readiness is translated as quickly as possible tosupport for the ultimate FCPF goal of Readiness for
REDD+.  During the discussion of strategic issues
scheduled for the October 2011 PC meeting, the PC is
expected to consider a note with options for additional ways
to accelerate disbursements across the Readiness Fund.

The Readiness Fund was established to operate over thelong term, with a closing date in the FCPF Charter ofDecember 31, 2020.  In order to plan resources over thislonger time horizon, the PC issues resolutions from time
to time that establish funding priorities and commitments
for the coming years.  These commitments are considered‘notional’ when the PC has set aside or allocated financial
resources of the Readiness Fund that are not yet signed
into formal grant agreements or contracts. They areconverted to ‘full’ commitments once the grant agreements(or vendor contracts) are signed by recipients and/or by theWorld Bank as Trustee of the Readiness Fund.
At the close of FY10, the long term notional
commitments (use of funds) made by the PC were alignedwith the total committed funding (sources of funds).  
Importantly, the long term business plan includes reserves
for the operation of the secretariat by the FMT and theTrustee role of the World Bank over the full term of theFund—reflecting the fact that the Facility is expected to
be fully active through that time, when the Carbon Fund is
supporting programs in select REDD Country Participants
and making ERPA payments.
PC6 agreed to provide access to R-PP Formulation
Grants of US$200,000 and associated Country
Implementation Support to all REDD Country Participantsthat do not yet have access to such funding through the
FCPF or another donor, provided that the grant agreement
is signed by December 31, 2011 and an appropriate delivery
partner can be arranged (unless otherwise decided by thePC, for example, in the case of extenuating circumstances

Table 10: Readiness Funds Notionally Committed to Grants and Services for REDD Country Participants (as of June 30, 2011)

Amount per Country(US$ millions)

Number

Total(US$ millions)

3.6

36b

129.6

Full Support through Readiness Package
Preparation Grants (up to US$3.6m)
Associated Country Services

36

31.8

Total Notional Commitments to Grants and Country Services

36

161.4

a

a. Country Services are comprised of an average per country share of REDD Methodology Support and Country Advisory Services, plus direct
Country Implementation Support.
b. 36 REDD Countries, which may include all selected REDD Country Participants except for Tanzania, which is bilaterally funded.

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Grants and Country Services

43

42

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Notional Commitments

FY11 ANNUAL REPORT

Table 11: Commitments and Pledges to the Carbon Fund as of June 30, 2011 (in US$ thousands)

or a delay that is not the fault of the REDD Country
Participant). The PC also reiterated that all REDD Country
Participants were equally eligible to receive a ReadinessPreparation Grant of up to US$3.6 million.  The grants
depend on the PC’s decision regarding the R-PP, theavailability of sufficient committed funding, and regionalbalance among grant recipients.
Total committed and pledged funding to the Readiness
Fund as of 30 June, 2011 is approximately US$232 million.  
This increased level of funding is adequate to cover the
long-term fixed costs of the Facility and full ReadinessPreparation Grants of up to US$3.6 million to all 37
selected REDD+ Country Participants except for Tanzania,
which is bilaterally funded, together with the costs ofthe estimated associated country services for those 36
countries.
As shown in Table 10, as of the end of FY11, notional
commitments of full grants and the estimated associatedcountry services to 36 countries amount to approximately
US$161 million.
For the discussion of strategic issues scheduled for
the October 2011 PC meeting, the FMT will present for theconsideration of the PC an updated long term businessplan and options that aim to adjust these commitments,
consider the use of additional resources being pledged for
the Readiness Fund, and/or seek new ways to accelerate
disbursements of existing commitments.

adding to the critical early movers that have helped toshape the Fund from its inception.  Table 11 presents thecontributions and public pledges for the Carbon Fund by
the end of FY11, amounting to US$212 million overall, withfully committed funding (signed Participation Agreements)
of about US$174 million.  This level of funding is aconsiderable achievement given the original target volumeof US$200 million for the carbon fund’s capitalization.  

4.3.3. Financial Commitments over the Longer Term

Shared Costs (paid by the Readiness Fund)*4.3. The Carbon Fund

The Carbon Fund only became fully operational in May 2011
so the FMT intends to prepare a long-term business planfor the Carbon Fund meeting to be held in October 2011.

Shared Costs (paid by the Carbon Fund)**4.3.1. Funding Sources
As a major milestone of the Facility, the Carbon Fund’s
minimum threshold of US$40 million, established in the
FCPF Charter, was surpassed early in FY11, when thesigned Participation Agreement of the United States wasreceived in September 2011; since that time the Fundhas received a steady flow of new funding and partners

4.3.2. Funding Uses
Within the context of the Organizational Meeting of the
Carbon Fund in late May/early June 2011, the first budget
approval of the Carbon Fund Participants took place, alongwith initial planning for the future directions of the Fund.  
In practice, the Carbon Fund Participants have alreadybeen working closely with the many stakeholders of theReadiness Fund and the Facility overall, to ensure that
the FCPF works effectively to achieve its dual objectivesof preparing for REDD+ Readiness, as well as piloting
and testing performance-based payments.  Hence theCarbon Fund FY12 budget provides a snapshot of the work
underway across both funds, including the shared activitiesof the Readiness Fund and the Carbon Fund, comprising
the Shared Costs.  Table 12 details these costs as theyaffect the Carbon Fund pre-FY12 (before full operations) as
well as the budget plan going forward.

Participant Name

FY09

FY10

Australia

FY11

FY12-16

Total

12,735

12,735

BP Technology Ventures

    

5,000

5,000

CDC Climat

    

5,000

5,000

European Commission

6,347

362

Germany

4,009

3,819   Norway10,000   

The Nature Conservancy

5,000

    

6,709
21,125

17,40046,35355,00065,0005,000

United Kingdom

17,94017,940

United States of America

10,00010,000Committed Funding

25,356

Germany

71,800    

Switzerland
Committed Funding plus Pledges

4,181

72,400173,737

29,00029,000   
25,356

4,181

71,800

9,600

9,600

111,000

212,337

Table 12: FCPF Carbon Fund Annual Budgets (in US$ thousands)

Carbon Fund Administration

FY09
ActualFY10
ActualFY11
Actual

635

1,728

1,262

FY12
Budget

1,474
183

366

490

Marketing to Private Sector

45

Meeting Logistics

50

Program Development
Total Carbon Fund Costs

60
183

366

2,119

*
Per PC Resolutions: PC/3/2009/6, PC/6/2010/8, PC/9/2011/4 and not included in Total Carbon Fund Costs
figures.
**

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44

45

Per PC Resolutions: PC/9/2011/4.

FY11 ANNUAL REPORT

Conclusions and the Road Ahead

5

FY2011 was a crucial year for REDD+, culminating in the adoption by the
Conference of the Parties of Decision 1/CP.16 in Cancún, which included a strong
chapter on REDD+. Looking at Durban and beyond, a lot of work remains to bedone, ranging from the regulatory aspects, including the necessary guidelines on
MRV and reference levels, the guidance on information systems for safeguards, anddetermining sources of finance for the so-called “third phase” of REDD+.

FOREST CARBON PARTNERSHIP FACILITY

FOREST CARBON PARTNERSHIP FACILITY
47

the process a REDD Country Participant should have gone
before it can be considered ready, and how much progress
it should give evidence of before it can be deemed tohave made sufficient progress to access further funding,including performance-based payments, e.g., through the
Carbon Fund of the FCPF.
In the next few years the global community will assert
its understanding of what is necessary to significantly
expand from small but ingenious forest protection projectsof a few thousand hectares to the visionary infrastructureand delivery mechanisms at the country level that areneeded to impact global emissions. The work program on
REDD+ for the near future features daunting challenges.  
These include establishing national institutions capableof asserting influence over lands, and organizations andeconomic incentives that have been stubbornly intractablein many developing countries; fashioning technicalmethods to measure and monitor REDD+ activities relative
to reference levels without REDD+ policy interventions; andadvancing governance at the local and national levels.

46

With respect to the FCPF, FY11 was a very rich year, too.
REDD Country Participants have made major contributions
to the international thinking on REDD+ by laying out, in
their R-PPs, how they would go about getting ready for
REDD+.
The attention now shifts to disbursing FCPF Readiness
Fund proceeds to support the implementation of these
R-PPs. The work will be challenging as there are no
cookie-cutter approaches and each country has to work out
the right balance of activities and follow the right process
to become ready for REDD+. There is a multiplicity ofnational and international actors with different, sometimes
conflicting, views on what needs to be done first, how fast,
and with what level of financial and human resources.
In FY12 the FCPF will turn its attention to measuring
progress towards REDD+ Readiness through the design ofa Readiness Package and monitoring reports for Readinessgrants under implementation. This will prove challenging,as Readiness is as much a process as it is a state. The
crucial question for the PC therefore becomes how far in

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Acknowledgements
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Carbon Finance Unit
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