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Forestree Futures

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Presentation by Robert Nasi and Tony Simons on the CIFOR/ICRAF merger, presented at Stockholm Environment Institute on May 7th

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Forestree Futures

  1. 1. Robert Nasi, CIFOR & Tony Simons, ICRAF 7 May 2019, SEI, KSLA, SIDA, Stockholm Forestree Futures
  2. 2. Forestree Futures 1. Why Forests and Trees? 2. Global and National Tree/Forest Cover 3. Deforestation 4. CIFOR-ICRAF Merger 5. Innovative Finance 6. Impact Examples of CIFOR-ICRAF work
  3. 3. 1. Why Forests and Trees?
  4. 4. Ron Blakey, Northern Arizona University – www2.nau.edu/rcb7 Earth 385 million years ago – first trees evolved Stockholm Trees and Forest Timelines
  5. 5. Archaeopteris http://www.arcadiastreet.com/cgvistas/earth/02_paleozoic/earth_02_paleozoic_4600.htm Atmospheric CO2 was ten times (4000 ppm) what it is today (400 ppm) Average global temperature was ten degrees hotter (24oC) than today (14oC)
  6. 6. Concepts of what is a forest vary around the world
  7. 7. Credit: Lars Laestidius Is this a forest?
  8. 8. http://blog.worldagroforestry.org/wp- content/uploads/2015/09/alleycropping-in-france.jpg Is this agriculture or a forest? or agroforestry?
  9. 9. Why trees in landscapes? Nothing is better than a tree at: Changing microclimate Fixing Nitrogen from the air Bringing up water from depth Sequestering carbon from the atmosphere Providing framework for biodiversity to flourish Adding oxygen to the biosphere Diversifying farming enterprises 75% of on-farm biomass is associated with trees
  10. 10. 2. Global and National Tree/Forest Cover
  11. 11. 2. Global and National Forest/Tree Cover Imagine we had evidence to support the claim that 40% forest/tree cover globally was optimal in terms of benefits and tradeoffs. One Country = World No tree cover Tree cover Scenario 1
  12. 12. Scenario 2 Country CCountry A Country B Country Tree cover area (%) A 40% B 40% C 40% Global 40% ParaguayLiberia Slovak Rep.
  13. 13. Scenario 3 Country C Country A Country B Country Tree cover area (%) A 0% B 60% C 60% Global 40% Nauru Rep of KoreaBrazil
  14. 14. Scenario 4 Country C Country A Country B Country Tree cover area (%) A 0% B 0% C 100% Global 40% Surinam Egypt Kazakhstan
  15. 15. Scenario 5 Country C Country A Country B Country Tree cover area (%) A 0% B 0% C 50% Global 20% Surinam hypothetical Egypt Kazakhstan
  16. 16. Natural Forest 4.1 billion ha Crop Land 1.5 billion ha Tree Plantations 0.3 billion ha Pasture & Rangelands 3.4 billion ha Wetlands 1.3 billion ha Deserts 1.9 billion ha Natural Forest 4.1 billion ha Crop Land 1.5 billion ha Pasture & Rangelands 3.4 billion ha Wetlands 1.3 billion ha Deserts 1.9 billion ha Global Land Use Urban Areas
  17. 17. Natural Forest 4.1 billion ha Crop Land 1.5 billion ha Pasture & Rangelands 3.4 billion ha Wetlands 1.3 billion ha Deserts 1.9 billion ha Global Land Area - proportional
  18. 18. 3. Deforestation and Degradation
  19. 19. 69% of carbon loss due to degradation, 31% to forest cover loss Asia had highest loss per hectare (25 t C per ha) Thus forest quality is as important as forest quantity, but often neglected
  20. 20. The real price of carbon Carbon is the most variable commodity there is. The same element has a huge range in price. Firewood Carbon =$60 per tonne Diamond Carbon =$100 billion per tonne Atmospheric Carbon = $2-5 per tonne
  21. 21. Avoided Deforestation Let’s measure the carbon stocks and compensate for avoided emissions
  22. 22. Tropical timber Varies in price from $100 to $3500 per m3 Why would you settle for $2 per m3
  23. 23. One barrel = 159 litres volume Specific gravity = 0.85 Carbon content = 83% to 87% Carbon and Oil Mr Putin, Saudi Princes and BP – have we got a deal for you. If you agree to lock up your oil in a warehouse for 100 years, we will pay you a staggering 84 cents per barrel. Well there might be some monitoring and verification costs also but we will keep them small One barrel contains = 160 * 0.85 * 85% = 115kg of carbon 115 kg carbon = 422 kg CO2 = US$0.84 per barrel
  24. 24. https://ycharts.com/indicators/timber_index_world_bank
  25. 25. https://ycharts.com/indicators/world_cocoa_price
  26. 26. https://www.indexmundi.com/commodities/?commodity=palm-oil&months=120
  27. 27. https://data.worldbank.org/indicator/
  28. 28. https://data.worldbank.org/indicator/
  29. 29. https://data.worldbank.org/indicator/
  30. 30. https://data.worldbank.org/indicator/
  31. 31. CIFOR ICRAF 1 2 Better Institutional Viability Continued Delivery of Results Higher Impact, Credibility More Value for Money Greater Recognition Bigger Scale Less Competition Better Institutional Viability Continued Delivery of Results Higher Impact, Credibility More Value for Money Greater Recognition Bigger Scale Less Competition 4. CIFOR-ICRAF Institutional Merger Our exercise was not about an Institutional Merger per se but rather about Institutional Engagement Had a common starting point of challenges and diagnoses
  32. 32. 1. Net amount of ODA being spent in developing countries is declining 2. Channeling of more Research ODA direct to national partners 3. Lower attention to Integrated Resource Management in allocations 4. Dwindling support to global research 5. Not tapping non-research funds well as co-investment in research 6. Inadequate priority given to agriculture and forestry (ODA, Global Agric Index = 0.21) 7. Historical institutional cost structures considered expensive 8. Time-bound nature of some privileges, benefits and immunities 9. Harder to cover full indirect costs, or to replenish reserves 10. Increased competition 11. Greater compliance and due diligence demands 12. Sub-optimal linkages with private sector and private investors 13. CIFOR-ICRAF agendas often deprioritized by those focused on annual crop productivity 14. W1W2 CGIAR funds are still more precarious 15. Staff are becoming more and more disenchanted, and harder to retain Challenges in our World
  33. 33. Land degradation and Climate Change
  34. 34. Deforestation and Agricultural Conversion
  35. 35. Social Inclusion and Cohesion
  36. 36. 3 % GDP OECD Target 9/34 countries 2 % GDP EU Target 10/28 countries 1% GDP AU Target 0/55 countries International Spend on Research (size bubble = total $$, x axis = research as % GDP, y axis = number scientists p.m.)
  37. 37. How is Environment/Land-use Changing ?
  38. 38. http://teebweb.org/agrifood/wp-content/uploads/2018/11/Foundations_Report_Final_October.pdf Mueller, AgriTEEB Report, Aug 2018 Nature and Agriculture -10 Chapters “An unbalanced Balance Sheet” “Agriculture is bankrupt” “No sustainable production without nature-based solutions”
  39. 39. https://www.wri.org/publication/creating-sustainable-food-future 1. Reduce growth in demand for food and other agricultural products 2. Increase food production without expanding agricultural land 3. Protect and restore natural eco- systems and limit agricultural land- shifting 4. Increase fish supply 5. Reduce GHG emissions from agricultural production WRI Report, Dec 2018
  40. 40. http://www.worldbank.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-version.pdf Now in its 16th edition Covers 190 countries
  41. 41. http://www.worldbank.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-version.pdf ESG is absent !
  42. 42. Work of Boards-led Joint Task Force A. Ascertain if there is a business case to merge (Gov, Fin, Ops, Prog) B. Held 17 joint meetings (Jan – Nov 2018) C. Sought legal advice in 5 jurisdictions (Indonesia, Kenya, Neth, UK, US) D. Discussed with our HQ and host countries E. Consulted with top 20 donors F. Consulted other organisations who have aligned/merged (RA/UTZ) G. Wrote a draft White Paper on new aligned/merged entity H. Reviewed costs, benefits (self and external adviser) I. Undertook due diligence reviews of each Centre
  43. 43. Ensure Thriving CIFOR Ensure Thriving ICRAF Common Board Integrated Leadership Staff Engagement in Merger New Value Propositions Shared Policies, Facilities Operational Synergies Trigger New Investments Stronger Together From 1st January 2019, we have an effective Merger …… Phase 1: CIFOR-ICRAF Merger (1 Organisation) (2 legal entities)
  44. 44. Ensure Thriving CIFOR Ensure Thriving ICRAF Create NEW.ORG Vehicle for Legal Merger Novel Value Propositions New Funding Opportunities New Partnerships, Champions Greater Enterprise Options Wider Accountability Common Board Integrated Leadership Staff Engagement Merger New Value Propositions Shared Policies, Facilities Operational Synergies Trigger Investment Stronger Together Phase 2: CIFOR-ICRAF-NEW.ORG MERGER (1 organization, 3 legal entities)
  45. 45. Ensure Thriving CIFOR Legacy Ensure Thriving ICRAF Legacy Thriving Single Entity Better Institutional Viability Continued Delivery of Results Higher Impact, Credibility More Value for Money Greater Recognition Bigger Scale Less Competition Vehicle for Legal Merger (also with others) New Funding Opportunities Novel Value Propositions New Partnerships, Champions Greater Enterprise Options Reduced Transaction Costs Wider Accountability Increased Merged Viability Improved Relevance Greater Legitimacy Operational Synergies Higher Profile Stronger together Phase 3: COMPLETE MERGER (1 organization, 1 legal entity)
  46. 46. Operating in over 30 countries Including: Brasil, Cameroon, Costa Rica, Cote d’Ivoire, Ghana, Indonesia, Kenya, Peru, Vietnam Over 700 staff with over 450 researchers and technical staff Over $105 million combined budget, using IFRS Accounting Standards, PWC Deloitte as auditors Over 340 refereed articles per year, 560 non-refereed science publications Prequalified grantee by DFID,EU, GATES, U.N. Compliant on: AML, GDPR, Safeguards Our Combined Strength
  47. 47. 3. Accelerated Outcomes and Impacts CIFOR-ICRAF Value Propositions 1. 2. Solutions – Policy, Technical, Social 1. Knowledge Products 2. Knowledge Services
  48. 48. 5. Innovative Finance http://www.worldbank.org/en/news/video/2018/04/10/maximizing-finance-for-development
  49. 49. https://developmentfinance.un.org/sites/developmentfinance.un.org/files/Report_IATF_2018.pdf Land Use
  50. 50. For every $1 of ODA (OECD) $3 Remittances $6 FDI $24 Domestic private sector spend $35 Developing Country Government spend $1000 Private capital
  51. 51. Innovative finance instruments
  52. 52. Innovation, Technology Finance Examples
  53. 53. Problem: Reservoir capacity and siltation  Upland erosion & degradation
  54. 54. ++ New products, new services, more investment  Water + Jobs + Health = Green Development
  55. 55. Tropical Landscape Finance Facility (US$ 1 billion) The Tropical Landscapes Finance Facility (“TLFF”) is a partnership between ADM Capital, ADM Capital Foundation, BNP Paribas, ICRAF and UN Environment ADM Capital BNP Paribas ADM Capital Foundation  Asia Debt Management Hong Kong Limited (“ADM Capital”) is a global investment manager. Currently with USD 2.5 bn assets under management, ADM Capital has been investing in Indonesia since 1998. ADM Capital is one of the most established players in the private debt space in Asia and manages open and evergreen funds to invest in private credit, including two funds with the IFC  ADM Capital Foundation (“ADMCF”) was established in 2006 as an impact-driven nonprofit initiative to provide funding and intellectual capital to help address specific forestry, water, air and marine environmental and social challenges. ADMCF is a leader in environmental philanthropy in Asia, with a focus on real impact based on solid research  BNP Paribas (“BNPP”) is an international financial institution with a presence in 75 countries and more than 185,000 employees. Being Europe’s second largest bank by assets, it is an established financial institution with a long history in Asia ICRAF UN Environment  The United Nations Environment (“UN Environment”) is the leading global authority that sets the agenda on environmental issues, promotes the coherent implementation of the environmental dimension of sustainable development within the United Nations system and serves as an authoritative advocate for the global environment  The International Centre for Research in Agroforestry (“ICRAF”), known as World Agroforestry Centre, is recognized as the global leader in agroforestry research and development with six regional offices located in Indonesia, India, Kenya, Malawi, Peru and Cameroon, and conducting research around the developing world
  56. 56. TLFF First Tranche Financing February 2018 • USD 95 million, 15-year loan for sustainable rubber in Indonesia managed to IFC Performance Standards and TLFF ESG policy • The Indonesian company receiving finance has concession rights over 90,000 ha of land, more than half of which will be set aside for conservation and community livelihoods • An inaugural bond issue (verified as a sustainability bond) is financing the first phase
  57. 57. Project Design, Risk Identification, Delivery Options
  58. 58. 6. Impact Examples of CIFOR-ICRAF R&D
  59. 59. FTA FTA is the world’s largest research for development program focused on the role of forests, trees and agroforestry in sustainable development, food security and addressing climate change.
  60. 60. Global Landscape Forum Milestones 2018 - 2019 -Global Secretariat in Bonn -Launch Landscape Academy (4,000+ registered) -GLF Charter Members (23 organizations) -GEF 7 -U.N. Decade on Ecosystem Restoration -UNEP, FAO, UNDP Biennium on Agroecology -50,000+ Youth in 115 countries -257 million reach on social media and 250 million+ reach on global media During its 7th operational phase (GEF-7), the GEF will develop key programs to help implement the landscape approach, building on the momentum brought about by international partnerships such as the GLF.
  61. 61. May 13 2019, “Climate, Landscapes and Lifestyle – It’s not too Late” Kyoto, Japan June 22 - 23, 2019, “Rights in the Landscape” Bonn, Germany GLF Bonn Global Conference September 28, 2019, “Roadmap for Decade of Ecological Restoration” GLF New York City at the UN Climate Summit October 31 2019, “Rights to African Landscapes and Supply Chains” Accra, Ghana GLF Regional Conference November 30, 2019, “The 4th GLF Luxembourg Investment Case Symposium” Luxembourg City, Luxembourg December 2019 – “Climate in the Landscape: GLF at COP26” Santiago, Chile 2019 GLF Events
  62. 62. Prevailing Logic • We generate PUBLIC GOODS using PUBLIC FUNDING • PUBLIC GOODS are mainly PUBLIC OUTPUTS (knowledge, germplasm, analyses) • We believe we can better link PUBLIC GOODS to PRIVATE INTERESTS (ToC) • Where PUBLIC GOODS include PUBLIC OUTPUTS/OUTCOMES/IMPACTS We want to disrupt this logic as: and • We want to use PRIVATE INTERESTS to generate PUBLIC GOODS • Where PUBLIC and PRIVATE GOODS/INTERESTS blend in a business case
  63. 63. - Installed 39 weather stations in cocoa growing region of CDI, now another 40 in cashew region - Review data and share with National Meteorological Service daily  Rainfall (mm)  Air temperature (°C)  Relative humidity (%)  Wind speed and direction  Solar radiation (Mj/m²)  Evapo-transpiraiton (mm)  Soil temperature
  64. 64. Soubre- hourly data
  65. 65. Soil-Plant Spectral Diagnostics Fourier Transformation Mid Infrared Reflectance Spectroscopy (FT-MIR) Basic soil properties / plant N / fertilizer feed manure quality / product quality FT-MIR PortableFT-MIR Robotic
  66. 66. Portable X-ray Fluorescence (pXRF) Total multi-element analysis in one measurement • Plant macro and micro nutrient analysis / soil total elements including heavy metals / fertilizer nutrient content / manure quality screening (macro & micro nutrients)
  67. 67. www.vegetationmap4africa.org Exploit Digital Technology
  68. 68. Big Data Analytics and Evidence to Change Decision Making Culture
  69. 69. Leverage social capital Northern Tigray, Ethiopia
  70. 70. Multi-lateral Agencies Multi-country Initiatives Multi-institutional Multi-Corporate Financing EC FAO IFAD UNCCD UN CDF UNDP UNEP UN Women World Bank 20x20 AFR100 DryDev GGW NEPAD New York Decl. CGIAR CPF CTN GACSA GAFF GLF GPFLR GRC/WRI IUFRO LPFN Satoyama UN REDD CGF TFA2020 WBCSD Althelia BNP Paribas CDC Convergence EIB GCF GEF L3F Moringa Fund OPIC Rabobank SIFF TLFF Need to defragment the disconnected actors and initiatives
  71. 71. https://www.researchgate.net/publication/40203553_The_Total_Value_of_the_World's_Ecosystem_Services_and_Natural_Capital/figures Global map of the value of ecosystem services If Nature was an Economy: It would be 25% bigger than Global Economy If Nature was a Bank: The annual dividend alone would be 30x larger than the assets of largest bank If we are to reform our broken food systems and not continue losing our natural capital – then, we all need to more deeply understand, invest at greater scale and better manage our landscapes …..

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