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Innovations in sustainable financing for project development and scaling
 

Innovations in sustainable financing for project development and scaling

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Linking communities in Southeast Asia to forestry-related voluntary carbon markets 1st Regional Workshop: Setting the Foundation - 10-09-2010

Linking communities in Southeast Asia to forestry-related voluntary carbon markets 1st Regional Workshop: Setting the Foundation - 10-09-2010

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  • Our generation is suffering from numerous challenges that previously have seen funds thrown at the problem and it hasn't gone away. Live Aid in 1985 raised $283.6 million yet people are still starving in Africa. What we are seeing is that people in poverty don't necessarily need handouts – they need a HAND UP. A classic Chinese proverb - Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. Our aim is to build on an already proven concept and tap into the carbon market to add additional financial sustainability
  • have to differentiate the projects and the benefits Go into cartoons from eric
  • Accreditation costs generally make it prohibitive for developers to consider an accreditation body however buyers are not requesting this but virtually demanding it; how can you make your project more attractive otherwise it just get compared to a hydro or renewable energy project – both good but there are so many other facets to forestry project and I need to show you how and why we have structured some of our work to make it more attractive to buyersAdded social element increases interest (CSR reasons)
  • PATT has initiated under its own funding a number of pilot projects with our partners
  • Transitionfrom OTC sales that are diminishing to a market based scenariothat can - no real financial benefit for the addition of CCBAConcept can create financial sustainability in more ways than one - No more cap in hand Oliver Twist scenario – please sir can I have some more
  • PATT has developed its concept and was the proud recipient of the UN SEED award last year – however still seeking that elusive project initiation funding
  • The project will be implemented by Plant a Tree Today Foundation, Forest Restoration Research Unit and Population and Community Development Association PATT will provide such groups with training and education on key environmental issues. The multiple benefits generated from this project will make the carbon credits stand out from the rest.
  • Underlining the innovative aspect of this project the revenue available from the emerging carbon market will be made available for further socialdevelopment within the community, for the management of the environmental resource (community forest) and for the establishment of further village development projects.The Carbon Bank is an initiative that encourages, supports and enhances community-based indigenous forestry through emission reduction trading to enable successful climate change adaptation and socio-economic development for local communities and biodiversity conservation. Eradicate Poverty Create Sustainability Tackle Gender Equality Prevent Urban Migration  Combat Climate Change Help the environment through reforestation
  • The project will be implemented by Plant a Tree Today Foundation, Forest Restoration Research Unit and Population and Community Development Association PATT will provide such groups with training and education on key environmental issues. The multiple benefits generated from this project will make the carbon credits stand out from the rest.
  • Creating Sustainability – initial seed capital allows us to create a commodity that once under a program of activities will enable us to create additional projects via the carbon market
  • Villagers protect the forest as it gave them access to the funds – Also villagers comments – re birds etc, temperatures. The benefits go beyond simply carbon & the environment and that’s they key to selling your commodity at a premium in the voluntary market 50% of the profits of the Village Development Bank is reserved for healthcare and education (for children and the elderly)
  • PLANTING TREES generates funds for Micro Financeand delivers people from POVERTYFunds stay in the village bank to develop increase the capital available (not controlled or charged by an outside agency)
  • Life and Community Needs Assessment (Business skill training) (Health care training)Traditional rice farmers for example arenow adopting new skills
  • 1,821 million, 71% of the world poor (2,564 million) Under $2 (PPP) a day – for less than 2 months earnings ($60) per person we can start to get people on the right path to economic freedom and help the environment – a win win situation
  • Elected not because of the social standing in the community – dedicated, driven highly motivated individuals that want to see this work
  • Youth Council Elected at district level bring in a new breed of individual not tainted by the old guard
  • Elders don’t always have a voice – knowledge experience & history of the village Community empowerment at all levels from the youth to the elderly
  • Banks wish they could have this default rate - Individuals from 3 separate families needed to apply for a loan – peer pressure
  • The Village Development Partnership will have the result of improving both the economic and social lives of the people of the selected village by enabling them to implement activities that the community themselves have identified as most needed. Important community institutions will have been established in the form of the Village Development Committee and its components: the Village Development Bank Committee, the Youth Council and the Elders Council.
  • 50% female committees, Youth Council (non corrupt) & Elders – (know the history and needs of the village) Funding in 3 stages: 1 Set up, 2 Tree planting, 3 Audit

Innovations in sustainable financing for project development and scaling Innovations in sustainable financing for project development and scaling Presentation Transcript

  • LINKING COMMUNITIES IN SOUTHEAST ASIA TOFORESTRY-RELATED VOLUNTARY CARBON MARKETS 1ST REGIONAL WORKSHOP: SETTING THE FOUNDATION Innovations in sustainable financing for project development and scaling Chiang Mai, Thailand 20-22 September 2010
  • Innovations in sustainable financing for project development and scalingProject Developers Issues• Lack of funding to initiate projects• Accreditation• Ability of project to sustain its own growth
  • Accreditation – Catch 22 Carbon Offsets must be : • Real (have happened) • Additional (beyond business-as-usual activities) • Measurable • Permanent (not temporarily displace emissions) • Independently verified and unique (not used more than once to offset emissions)
  • Pilot Project - Ban Non Thong, Buriram, Thailand Originally, 12,000 trees were planted on the day of the Commemorative Tree Planting Ceremony. Villagers planted 1,000 more trees after discovering that 268 trees have died. As the reforestation effort continues, 1,000 seedlings were reserved in the tree nursery organized by the youth group for the next round of replanting.
  • Ban Non Thong, Buriram, Thailand In Ban Tat, 23 loans, worth $6000, were distributed since the establishment of the Village Development Bank. Borrowers set up various income generating projects. Interest rate for the loans is 12% (per annum).
  • Village Development Partnership: Carbon Sales - Over The Counter (OTC) Individual Online Sales - Donations Carbon Offsetting - Corporates (CSR) Current Price per tC02 = $5.20 Future Price with CFS/VCS = $7.50PATT already has parties interested in purchasing non accredited emission reductions for $5.41 tCO2e without the VDP component Equitech will facilitate accreditation under the Carbon Fix Standard (CFS)
  • Plant a Tree Today Foundation Carbon Bank & Village Development Partnerships Poverty Eradication through Sustainable Carbon Banks TREES: Project will plant1.15 million – removing approx 26,000 tCO2e per year and restore 500 Ha of degraded land. VILLAGES: 48 (Total of 12,000 people impacted by the project) VILLAGE BANKS: Allow infrastructure improvements and establishment of new business (estimated to be 576 NEW BUSINESSES) CARBON SALES: Will allow the project to expand with no extra funding UPSCALING: Carbon revenue will allow expansion into neighbouring countries 2009 winner of the United Nations SEED Award for Entrepreneurship in Sustainable Environmental and Social Development
  • Aims of the ProjectEstablish or strengthen village development committees.Increase forest cover and restore degraded community land.Increase forestry capacity and local education on climate change.Sequester CO2 and improve environmental land conditions.Support village micro-credit saving and loan schemes.Establish financial mechanisms for carbon credit payments.
  • How it works – revenue model and financial sustainability Over the next 2 years 48 village development programs will beinitiated and degraded land planted with indigenous trees. The credits from the carbon sequestered will be sold to businesses orindividuals through a recognised carbon exchange . This revenue will go back into the village development programs,supporting further rural and environmental development
  • Aims of the ProjectEstablish or strengthen village development committees.Increase forest cover and restore degraded community land.Increase forestry capacity and local education on climate change.Sequester CO2 and improve environmental land conditions.Support village micro-credit saving and loan schemes.Establish financial mechanisms for carbon credit payments.
  • Plant A Tree Today Foundation – Process Flow Analysis Portion goes to pay for further community development Set up VDP’s Carbon Revenue Initial available from VDP Funding community forests Set up community forests Portion goes to fund Initiate ongoing costs to manage Additiona community forests l VDP’sVDP = Village DevelopmentProgramme
  • Five Key Activities of the Village Development Partnership1. Environmental Protection ( Initiates Micro Credit Funds)2. Economic Development (To generate income)3. Institutional Development (To empower the community)4. Health Care5. Education
  • PLANTING TREESgenerates funds for Micro Finance and delivers people from POVERTY 50% of the profits of the Village Development Bank is reserved for healthcare and education (for children and the elderly)
  • Environmental Protection to create capital formation (Micro Credit) Funds for the Village Development Bank come from tree planting activities – each trees planted generates revenue into the BankVillagers are encouraged to buy shares in the village development bank: Loans cost 12% p.a. Dividend 7% p.a.
  • Economic Development to generate incomeVillage Development Bank Business Skills Training
  • Examples of Business ideas:From low income crop to high income trees 30 fold increase inincome… no more poverty Selling high value trees that are now exported to Taiwan, Singapore and Hong Kong
  • The entire community participatesInitial bank capital is equal to $100 per household 10,000 trees planted generates US$10,000 for the village development bank. Environmental protection to create capital formation
  • Institutional Development: Community Empowerment Individual and small group businesses are started with loans from the “Village Development Bank” Banking Committee (8 members) 50% women
  • Community Empowerment: Village Youth Council 8 youths (aged 14 – 24) in each village are elected to: Help prepare project proposals and seek funds Initiate business ventures for youth & the elderly Coordinate health education campaigns
  • Community Empowerment: Council of Elders (8 members) Promotes role and activities for the elderly in affairs of the village
  • After 3 years,91% of loans have been repaid on time
  • Village Development – Funding RequirementsThe project requires funding for the first 3 years for a total amount of US$ 1,516,893. After year 3 the project will generate a profit based on the increasing revenue from carbon credit sales.Best case funding scenario:This would be to secure funding for all 3 years of the project at the start of the project.This would remove the need to allocate time and effort to secure subsequent funds onan annual basis. The potential for lack of funding or delays in securing funding toimpede the progress of the project is not a factor in this scenario.
  • Village Development – Funding Requirements?Medium case scenario:Although not ideal we feel it is possible to initiate this project with partial funding, for examplefor year one with US$ 588,914.The outputs from year one are fairly significant, 24 VDPs are planned to be set up during thisperiod. Also the associated establishment of community forests will amount to around 500,000trees being planted.Such measurable outputs would put us in a solid position to apply for further funding requiredfor years 2 and 3 of the project.
  • OutcomesPoverty Eradication through Sustainable Carbon Banks 1.15 million trees planted on 500 Ha of degraded land. Rural Development - 48 Villages ……………………. 12,000 people 576 new businesses started Emission Reductions 26,000 tCO2e per year Carbon Sales: $180,000/Year Upscaling: Carbon revenue will allow expansion into neighbouring countries
  • Thank you for your time! Plant A Tree Today Saving the Planet One Tree at a Time UK | Corner House, Catbrook, Chepstow, NP16 6NQ, United Kingdom Thailand | BB Building, Office # 3705, Sukhumvit 21 Road, Bangkok 10110, Thailand Indonesia | Jalan Dewi Sartika, c/o Bali Garden Hotel, Tuban - Kuta, Bali 80361, Indonesia India | c/o SAGE Foundation, 5-a Court Chambers, 35 New Marine Lines, Mumbai 400 020, India+66 (0) 2 259 6255|Fax +66 (0) 2 259 6456 | andrew.steel@pattfoundation.org | www.pattfoundation.org | Registered Charity in England Number: 1117158
  • Process flow - Capacity Building and Planning Building a common understanding Electing the Village Development Bank Committee, the Youth Counciland the Council of Elders Establishing and training the Village Development Committee Community Needs Assessment and preliminary planning Village eye-opener trip Finalizing development plan & then Implementation
  • Social and environmental impact Adaptation to climate change via improved infrastructure and improvedenvironmental conditions such as soil retention because of increased vegetation cover Creation of additional revenue generating products and food sources through non-timber forest products (NTFPs) within the established forest Creates employment opportunities within the community, to work on the forestestablishment and also through businesses initiated through the microfinance system Focuses attention on two vulnerable groups : the poor and women.