Scaling Up: Challenges of Large-scale REDD+
Ms. Donna Lee (Independent Consultant)

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Session 2

Scaling Up: Challenges of Large-scale REDD+
Ms. Donna Lee (Independent Consultant)

I noticed amongst all the speakers there are these doctors and professors, people who haveNobel prizes because they have contributed to the IPCC, so I feel a little bit intimidated by all of this.
I feel that I should not be up here. I am very thankful to FFPRI and FAO for inviting me. I feel I
can learn so many things by being here, but I am just a former government bureaucrat, so quite low on
the respect scale. Even worse, I am a climate change negotiator. I will do my best today to provide
just some insights on things that I have seen working on REDD+ over the last seven years in terms ofthe trends to go from what has been a project scale in the forest carbon market space up to a higher
scale of doing national and subnational programs.

I have a two-part presentation and the presentation is not about Marilyn Monroe, butyesterday Mr. Mansur started with a very good comment and it made me think of this movie The SevenYear Itch. His comment was that it has been about seven years since REDD+ was introduced into theinternational community at COP 13 in Bali. This was my first climate change negotiation, so that is1

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also the amount of time that I have been involved. He said after these seven years, it is a really goodtime to assess the progress that we have made and see how we are doing. To see whether we have madeprogress as well as what improvements we can make as a community working on conserving forests.
There is a very famous movie called The Seven Year Itch. It starred Marilyn Monroe. It has avery famous picture of her with this dress. The reason why the movie is called The Seven Year Itch is
because there is this concept amongst psychologists about marriages. They say when a man andwoman are married for about seven years, that is when they start to wonder about their marriage; how
are things going? This is the typical period of time when people start to think about whether or notthey have made a good choice.
I think in REDD+, it is similar. It is a very good time for us to sit back and think how weare doing. I think REDD+ is very much like a marriage in some ways that requires a commitment.
What we are asking developing countries to do is quite a serious commitment, similar to a marriage.
There are two parts in my presentation. The first is some of these perspectives on thechallenges to scaling up. The second, as Dr. Sanz-Sanchez mentioned, I do some work with the WorldBank now. I have been involved the Forest Carbon Partnership Facility since the very inception, firstas a donor, because the United States provided some funding, and now as a consultant. I do someprojects with them. I thought I would talk a little bit about the Carbon Fund.

In part one, challenges to scaling up, there are five questions I am hoping to answer very
quickly. The first one is why are projects ahead of large of scale programs?

The second is whatchallenges do this present? The third is what is the role for projects in scaling up? The fourth, what
are the responsibilities of national governments? And finally, I will present some remaining challenges.
Conclusions are really just a few points I want to make that did not fit into any other questions.

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Ms. Donna Lee (Independent Consultant)

DAY2Session 2

What does scaling up mean? There is no formal definition of this, but let us look at thetypical size of what we have seen in terms of forest carbon projects. The Bio Carbon Fund has done a
project on assisted natural regeneration in Ethiopia. It is about 2800 hectares. The first REDD+
project to be validated under the VCS was Kasigau I in Kenya and that was about 30,000 hectares.
They have a second phase of this project and that is about 170,000 hectares.
One of the largest projects in terms of emissions reductions to date is Rimba Raya inIndonesia. They expect on an annual basis to reduce over two million tons of carbon per year. Thisis one of the largest in terms of emissions reductions, but it is about 64,000 hectares. If you comparethat with what we consider large scale programs, you see quite a difference.
Guyana, as you know, is a national scale program. They have a memorandum of agreementwith Norway who is paying them on an annual basis for their emissions reductions over 21 million
hectares. The Amazon Fund is based on an eco-region. It is not a national program. It covers theAmazon Biome and this is kind of the mother of all programs. It covers 420 million hectares.
As you know, there are a number of countries who feel that starting at the national level isactually quite difficult, it is challenging, so they want to pilot at a subnational level. We are seeing thismore commonly. This is a direction, but even at the subnational level, if you take Mai Ndombe in theDemocratic Republic of Congo, this is their first pilot region; it is still over 12 million hectares.
Even, for example, in Indonesia, a district like Berau in East Kalimantan, which might also bea pilot area, two levels down from the government, it is not a province, but a district, that is over 2
million hectares.
The scale is much larger, and what we are talking about is not just that it is a big piece of land,
but that multiple things are happening on that piece of land. We are not talking about five privately
owned ranches in Kenya. We are talking about a jurisdiction where you have palm oil plantations, youhave logging and a timber industry, urban settlements, infrastructure, as well as some naturally protectedareas. These are lands that are of a sufficient size, but also have multiple uses happening on that land.

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Why are projects so far ahead of large-scale REDD+? Right now, I believe there are over
500 forest carbon projects. That is quite a lot. In 2012 alone, I believe there were 162 that wereoperational, and of those there were 62 brand new projects. We see project proliferation; there is quitea few. Of course, we know that they have had a head start. The first A/R CDM project wasregistered in 2006, so it is about that seven-year period.
Beyond just having a head start, I think it is important to recognize that the forces that drive
projects are really strong.

I come from a donor government and so I know what it is like to be a donor

responsible for taxpayer money that is going to official development assistance. You have to have aconcrete deliverable. It is very difficult to fund something where you do not have something that has adirect impact and something that you can show your taxpayer, “I have saved this national park that isprotecting this black rhino that you all care about.” That is one thing.
NGO’s have long experience at the local level. That is the level that which we have been
operating for a number of years. The private sector prefers the project scale because it is a scale atwhich they can manage risks; that they feel like they can have some oversight over. It is very difficult
for the private sector to feel like they have control and can manage risk at a jurisdictional scale. These
are the forces that continue to drive the project scale and make it attractive.
At the same time, we see a shift in demand and a shift in interest in terms of what theREDD+ Community is interested. Originally, we had the voluntary carbon market. That is partly
what drove the demand for the project scale, but seven years on what we are seeing is that there is new
demand for this jurisdictional scale.
California may allow REDD+ into its market, it still has not decided. The FCPF Carbon
Fund has around $400 million to pay for emissions reductions at scale, so they will not engage inprojects. As you know, the Germans have the REDD+ Early Movers, which Ms. Swickard mentioned,
which is a new program again looking for jurisdictional scale, and the Bio Carbon Fund just initiated a
new tranche with about $280 million, which is looking for purchasing of emissions reductions at scale.
Why is it that we see such slow development of National REDD+ even though it seems as4

Scaling Up: Challenges of Large-scale REDD+Ms. Donna Lee (Independent Consultant)

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though in the international negotiations and amongst donors, we have this real demand for REDD+ tobe at scale? My colleague now from Zambia put it really well. He said that, “National policies taketime.”

This is not something that can happen very quickly.

National scale REDD+ requires

institutional changes. It requires new legal frameworks, new policies and measures, and these arethings that cannot happen quickly in a country.

What we have is a mismatch between the pace of projects, which are moving very quickly, andthe pace at which National REDD+ is occurring and this poses challenges both at the project and thenational level. For projects, there is this risk associated with uncertainty. We have seen some people
pullback from investments at the project level because they are unsure whether the country is going tocreate a new program in which what they are creating has no value.
There are also limitations to performance at the project level if the national government isnot engaged. A lot of the authorities for certain things that you need to make a project successful areat the national level.
At the national level, we are hearing a lot of concerns as well with this mismatch between thepace of project and national-scale REDD+. First of all, an inconsistency across projects in thecountry; for example in Brazil, there are over 20 projects. In Indonesia, I think they have counted over36. Each of these is using their own methodologies and they are looking at different standards. It isvery difficult for a country to control.
A country will be responsible for management of aggregate performance. For example,countries have to report to the UNFCCC in their national greenhouse gas inventories how they areprogressing on emissions reductions in all the sectors.
Because of this mismatch, there is a real high level of interest in this idea of Nested REDD+,
about which both Ms. Swickard and Dr. Matsumoto talked. That said, there are no examples to dateof operational success. It is very difficult to do a nested program.

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What benefits are there? It is not just all problems and challenges. Pilots can be really
helpful to inform national policy. They know what legal/institutional changes are critical, and mostimportantly they know how to reduce emissions. I really like Dr. Robledo’s presentation yesterday thatlooked at how we reduce emissions, and what are the mitigation potential of different activities. This iswhere pilots can really provide some information to national governments.
Working in parallel, allowing projects to progress, as well as creating a national REDD+strategy, is very difficult, but it is probably the best approach. That said, it is really important for there
to be communication between levels. I have seen a lot of countries where pilots are occurring, butthey are not really communicating these lessons back up to the national level.
In that regard, it is really helpful when there is development of what we call ‘official pilots’ sothat you institutionalize that communication between local level programs and the national level strategy.
I think one of the panelists was talking about connections; institutional connections vertically, and I
think that is really important. There needs to be clarity on who is responsible for what.

Last year, FCPF realized that this was a problem, that it was important to start linking these
local experiences to national REDD strategies, so they held a workshop in Africa in Ethiopia to talk6Scaling Up: Challenges of Large-scale REDD+Ms. Donna Lee (Independent Consultant)about this.

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The insights about what role pilot should play and what responsibilities national

government should have that I am going to present really come from this workshop that I was lucky to
be able to help facilitate.

The role of projects: the first one that many of the REDD+ focal points in Africa felt wasimportant is to work with communities. At the national level, there is not the capacity to go down to
all the communities to help them to figure out how to create alternative livelihoods, to do the day-to-daymanagement of these programs, to help with communication, capacity building, compliance,
enforcement of rules, and monitoring. This is a role, specifically, that projects can play.

They can also help to inform national strategies. They can provide lessons on how to tackle
drivers of deforestation. They can build confidence and inform the sustainability of actions. I thinksomebody also in the panel said, “How often is it that we have programs that come in for three to five
years and then they disappear; then it is back to business as usual?”
They have knowledge of transaction costs. This has been a problem. In the beginningwith REDD+, we thought, “Opportunity costs!” You just compare a cattle ranch or an oil palm

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plantation to what a standing forest is valued at. What we have learned is the transaction costs are
actually much higher. You have to do capacity building, you have to create a new administration, andyou have to measure and monitor the emissions. Anyone who has done an A/R CDM project knowsthat these transaction costs are really quite high.
They can identify key capacity gaps, and importantly provide transparency on the delivery ofbenefits. There is a certain amount of trust that needs to be built at the local level that the nationalgovernment does not always have.

What is the role of national governments? These are reflections, again, from mostly Africancountries. The first is to design the REDD strategy to promote broad sectoral cooperation and toidentify drivers and provide solutions; to create these legal and policy frameworks necessary forimplementation; tenure reforms; spatial planning; to create the legal framework for carbon rights andprovide fiscal incentives.

Another role for the national government and I think, Mr. Kasaro from Zambia mentioned
this, is to great standards and norms for REDD+ activities to try to get that consistency across projects

8Scaling Up: Challenges of Large-scale REDD+Ms. Donna Lee (Independent Consultant)

DAY2
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A number of countries are creating these working groups that can provide a certain amountof guidance, but this is very difficult to know what level of detail a national government should provide
and how much flexibility it should provide. The national government should also help to enhanceknowledge and build technical capacity, protect the interests of the marginalized, ensure consistentcommunication, monitor REDD+ activities, help to promote vertical integration; those connections thatthe panel member had mentioned. They can also help to secure funding for REDD+ activities andparticipate in international negotiations where they should be ensuring that the interests of the country
are represented so that a future REDD+ mechanism is consistent with what their country needs.

What are some of the remaining challenges? We are operating right now in an extremely
uncertain environment. There is a lack of clarity on future REDD+ finance. I think this is one of
the most difficult things for countries pursuing REDD+ programs. We simply do not know whether
the new agreement will include a REDD+ mechanism. We do not know if the European trading
system will include forestry. We do not know if California will include REDD+ in its system.
What we are seeing is an increasingly fragmented system. We have the JCM creating its rules.
We have California; it has its own system; the VCS; the FCPF Carbon Fund; the UNFCCC; all of them
are creating this fragmented system.
There is also a challenge of attribution. As you go from a project scale to a jurisdiction, it isvery difficult to know why is it that emissions were reduced; this causal pathway to know because X
person did Y, we had an emissions reduction is easier at the project scale than at the jurisdictional scale.
Capacity remains a significant gap, especially at the jurisdictional scale, because it is more
complex that requires certain institutional connections and coordination. Finally we really do not see
knowledge being translated right now from the local to the national level.

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Just a few conclusions; and I see my time is up. We have this trend towards larger scale
REDD+ programs, but we are still very early in stages of experience. REDD+ at scale really involves
the coordination of a number of actors. That can be quite difficult and quite complex. I think oneof the most important takeaways is that this kind of transformation to do this large-scale REDD+ takes
time. This is measured in years, not in months. That is important to remember.
We were all a little bit naïve when REDD+ began thinking that we can just count the carbon,
create a reference level, and then create the system where we are paying for standing forest. I think it is
far more complex than that and it takes a lot more time than any of us had thought, at least in theclimate community. I know many of you in the forestry community probably knew that we were quitenaïve when we started.

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Scaling Up: Challenges of Large-scale REDD+Ms. Donna Lee (Independent Consultant)

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I am going to skip part 2, because I am out of time, but if anyone has questions about theCarbon Fund, which has just created a methodological framework, to talk about that during the question
and answers.

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