by Graham Floater, Project Team Coordinator, Eliasch Review, Office of Climate Change

1. Climate Change: Financing Global Forests

3. Emissions from forests are significant Global GHG emissions by sector Sources: IPCC Fourth Assessment Report (2007), IPCC GHG inventory (2007) and IEA World Energy Outlook (2007)

4. What if the world does nothing? Effects of deforestation on climate change could lead to additional global damages of $1 trillion a year by 2100 Sources: Hope (2008) Unlikely that the world could avoid the worst effects of climate change without reducing deforestation Serious disruption to communities, destruction of biodiversity and damage to water systems

5. The lives and livelihoods of millions of people would be affected Sources: World Bank (2003) Sustaining Forests; World Bank (2006) At Loggerheads? Disappearance of homes Reduced farm- land fertility Livelihoods threatened Almost 70 million people, many indigenous, live in remote areas of closed tropical forests Forests directly contribute to the livelihoods of 90% of the 1.2 billion living in extreme poverty Half the developing world’s food supplies come from land nourished by forest ecosystem services

7. Delivering the vision How do we deliver this? The benefits A step change in how land is used and commodities produced Forests more valuable standing than cut Carbon finance Consumer awareness & regulation Policy incentives in forest nations Poverty reduction Protection of biodiversity & water systems Substantial emissions reductions Lower costs of tackling climate change

8. A new global deal for climate change The forest sector included fully within a new climate change agreement. Around 96% of deforestation emissions are in developing countries. They will gain most from full inclusion. Forests (mitigation) Technology Transfer (mitigation) Adaptation Developing world participation and support Effective global deal at Copenhagen Financing mechanisms

9. A global carbon market can deliver Global costs of abatement (%) Forestry excluded Forestry included Forestry excluded Forestry included Source: Modelling for the Eliasch Review Emissions reductions Forest sector carbon neutral: up to 3.5 GtCO 2 of forestry abatement by 2030 Lower costs of tackling climate change Costs of tackling climate change reduced by up to 50%

10. Four building blocks will be needed to access carbon finance Effective targets National baselines, inclusive of all countries Robust measuring Forest credits based on real reductions in forest emissions Linking to carbon finance Carbon markets and other funding initiatives Governance International standards and full participation of forest communities

11. The transition to a global carbon market Global cap and trade 2030 target: carbon market finance could fund a 75% cut in deforestation emissions and make the sector carbon neutral Funds from partial access to carbon markets Funding gap: $11-19 billion per year in 2020 2020 projection: carbon market finance could be $7 billion per year and fund a 22% cut in deforestation emissions Source: Modelling for the Eliasch Review Short term Medium term Long term Funding 2012

12. Governance: participation of forest communities Full participation of forest communities and indigenous peoples will make reforms more likely to succeed and benefit the poor Devolution of responsibilities and revenues Governments should devolve some responsibilities and rewards to local actors (authorities, companies, NGOs, communities) to support national-level action. Managing credit revenues Forest nations may choose to manage carbon revenues through a special fund with broad-based participation to help promote transparency, accountability and financial management UN Declaration on the Rights of indigenous Peoples Articles 18 and 19 require nations to consult indigenous peoples on matters affecting their rights. FLEGT and the National Forest Programme are good existing models.

13. Governance: international reporting and standards Emissions reductions and payments will need to occur under a transparent international framework Premium credits Forest credits could be generated against international standards designed to guarantee high levels of poverty reduction and biodiversity protection. There are likely to be forest credit purchasers who would pay a premium for such credits. CDM credits generated against the existing Gold Standard received a 15% premium in 2007. Reporting Annex I countries have to provide information on the policies and measures used to reduce emissions, which are peer reviewed. The same should be true for forest nations, who should also consider establishing a financial transparency mechanism similar to the Extractive Industries Transparency Initiative.