Originally presented by Christopher Martius at "Does money go to trees?: Assessing finance flows to maximize the impact of REDD+", an official SBSTA48 side event, presented by CIFOR, ICRAF and Wageningen University.

1. Assessing REDD+ readiness to
maximize climate finance impact
Christopher Martius, Stibniati Atmadja, Anne Siemons, Hannes Boettcher, Asger Olesen
Side event, Bonn
3 May2018

3. Phases and elements of REDD+
Sourceofgraphic:http://www.fao.org/redd/overview/en/

4. Financing mechanisms for REDD+
› ODA
› Global REDD+ programs
managed by multilateral
institutions (e.g. FCPF,
UNREDD)
› Recipient governments and
CSOs, directly or through trust
funds
› Domestic (ODA + national
budget)
› on or off budget
› Private sector
› investment in REDD+ activities,
carbon credit purchases
REDDFIT
A study of how REDD+ readiness benchmarks can be linked to REDD+ finance, to improve
the impacts of available funding
2016-2017

5. Financing sustainable development through REDD+
› Million Euro
› Donors:
› EU Institutions and Member
States (MS)
› Non-EU donor countries
› Other public donors
› Aggregate 2008-2015
› Direct = REDD+
› Indirect = Deforestation
› Classification based on
algorithms using keywords
› Based on OECD-DAC
Donor Commitments Disbursements
Direct Indirect Total Direct Indirect Total
Total EU 824.8 6,275.3 7,100.1 736.7 5,213.2 5,949.9
EU
institutions
59.1 1,319.3 1,378.5 42.8 1,169.1 1,211.9
28 MS 765.7 4,955.9 5,721.6 693.8 4,044.2 4,738.0
Total non-
EU
(countries)
1,803.1 4,910.4 6,713.6 1,337.8 4,790.9 6,128.7
Other
public
donors
78.3 5,495.2 5,573.4 23.2 5,131.0 5,154.2
Total
public
funding
2,706.2 16,680.9 19,387.1 2,097.7 15,136.8 17,234.4
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2008 2009 2010 2011 2012 2013 2014 2015
disbursementinEURmillion
Direct REDD+
Indirect REDD+
Annual disbursement

6. Modes of finance
Million Euro EU MS and Institutions Non-EU countries
Committed Disbursed Committed Disbursed
ODA Grants 5,526.9 4,830.5 5,947.6 5,164.7
ODA Loans 1,374.9 969.4 738.1 936.5
Equity Investment 176.4 148.2 9.9 9.6
Other Official Flows 21.7 1.8 18.0 18.0
Total 7,100.1 5,949.9 6,713.6 6,128.8
• Direct REDD+ still overwhelmingly funded in the context of development aid
• Almost all (99%) funds are provided as ODA grants
• Thus, REDD+ has not yet developed a strong business case
• Indirect REDD+ activities receive a mix of grants (62%), loans (15%), equity
investments (1%) and other official flows (22%)
• Loans go into indirect REDD+
• Top donor countries whose total REDD+ funding portfolio is dominated by loans
(France: 70%; Japan: 60%) also provide less than 3% of their total REDD+ funding
to direct REDD+ activities

7. REDD+ funding for Indonesia: Overview
Indonesia's foreign funding profile (2008-
2015, EUR, committed, all sources)
Equity
Investment
0%
ODA Grants
20%
ODA Loans
19%
Other
Official
Flows
61%
Total: EUR 43.5 billion
Other official flows
• official direct export
credits
• subsidies (grants) to
the private sector to
soften its credits to
developing countries
• funds in support of
private investment
Data source: OECD’s Creditor Reporting System; values are in constant EUR millions (2014)

8. Climate change mitigation funding for Indonesia
2008-2015*
EU Non-EU
Multilate
rals
Others
Mitigation 19,182.2 10,146.6 7,117.4
Not mitigation 1,390.2 6,826.7 17.1 -
Not marked 630.3 7,270.1 21,315.7 41.9
-
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
EURMillion,Committed
* Based on Rio markers for climate change mitigation actions used by OECD

9. REDD+* funding for Indonesia, 2008-2015
EU Non EU
Multilater
als
Other
REDD+ 180.4 380.6 131.1 -
Non-REDD+ 3,758.3 16,712.8 22,303.0 41.9
-
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
EURMillion,Committed
* Identification of funding for REDD+ is based on a keyword-based algorithm

10. Committed REDD+ funding for Indonesia
from ODA across the years
0
20
40
60
80
100
120
140
160
180
2008 2009 2010 2011 2012 2013 2014 2015
EURMillion,committed
Year
Indirect REDD+
Direct REDD+
Total REDD+
* Identification of funding for REDD+ is based on a keyword-based algorithm
Data source: OECD CRS

11. Direct REDD+ funding for Indonesia from ODA across the years
Disbursement vs. commitment
0
10
20
30
40
50
60
2008 2009 2010 2011 2012 2013 2014 2015
EURMillion
Year
Direct REDD+
Disbursed
Commited
* Identification of funding for REDD+ is based on keyword-based algorithm
Data source: OECD CRS

12. Approach to select “priority REDD+ geographies”
• Pre-selection of 41 countries out of 109 potential REDD+ countries
based on forest coverage and political relevance for REDD+
• Estimating the technical potential of emission reductions and
increased removals (ER)
• Estimating the effectiveness to realise emission reductions and
increased removals (“e” factor)
• Estimating the likelihood of emission reductions to be internationally
supported (“f” factor)
41 pre-selected countries comprising 80%
of total tropical REDD+ eligible forest
Estimated emission reductions
that can effectively be realized
and expect international support
in 41 countries
• Forest characteristics
• Drivers and risks
• MRV capacities of a country
• Policy and engagement
• History of international public
funding in REDD+
• National safeguard
circumstances
• Local safeguards circumstances
REDDFIT
A study of how REDD+ readiness benchmarks can be linked to REDD+ finance, to improve
the impacts of available funding
2016-2017
• Historic emissions and removals
• Reference levels emissions and
removals
• Projected emissions and
removals 2030

13. • Different ways to prioritize REDD+ funding are possible:
• Effectiveness to realize emission reductions
• Capacity to receive international financial support
• Highest amount of emission reductions that can be achieved and are likely to be
(internationally) funded
• Equity
• Or a mixture of those
• Established REDD+ countries score highly in this analysis (top of list)
• Several countries still lag behind to realize emission reductions, sometimes
basic capabilities missing  more readiness support needed before results-
based payments can be made
Priority REDD+ geographies: Conclusions

14. Benchmarking in the context of transformational change
What is transformational change?
‘a shift in discourse, attitudes, power relations, and deliberate policy and
protest action that leads policy formulation and implementation away from
business as usual policy approaches that directly or indirectly support
deforestation and forest degradation’ *)
*) Brockhaus, M., Korhonen-Kurki, K., Sehring, J., Di Gregorio, M., 2015.
Policy progress with REDD+ and the promise of performance-based
payments: A qualitative comparative analysis of 13 countries. Center for
International Forestry Research. https://doi.org/10.17528/cifor/005778
REDDiness
2. Policy design
&Implementation
3. Results-based
payments (RBP)
International public
funding
Domestic public
funding
Private funding
Potential sources of financing emission reduction across REDD+ phases

15. REDD+, climate finance and the global economy
Policy alignment across sectors of economy is important
https://www.odi.org/news/752-deforestation-palm-oil-soy-beef-timber-subsidies-brazil-indonesia
Million US$
41
Billion
US$
323
Million
US$

16. So: does money go to trees?
?

17. What did we learn about REDD+ funding?
• Some countries with strong potential to realize emission reduction from REDD+ are not high on donors’ lists
• Brazil, Indonesia, Colombia  Argentina, Chile, India, Malaysia (examples)
• Support for REDD+ across countries may need to balance effectiveness and equity
• Some countries with high emission reduction potential have low technical or financial capacity to realize
these emission reductions (Gabon, Ivory Coast)
• Support needs to be differential and recognize national circumstances
• Funding needs and gaps of the selected REDD+ countries vary: MRV, policy and engagement, governance,
access to funding, National and local safeguards circumstances
• Support for readiness is waning, but many countries still need it
• Two major readiness donors, UN-REDD and FCPF, are nearing the end of their terms, yet they provide
essential support for many countries with high ER potential, but low capacity
• Mechanisms to realize Results-Based Payments (RBPs) for REDD+ are being funded and tested
• Multilateral funding mechanisms (Forest Carbon Partnership Facility’s (FCPF) Carbon Fund, BioCarbon
Initiative for Sustainable Forest Landscapes (ISFL), Green Climate Fund (GCF)
• Still very little is known about scale and type of flows of private finance to REDD+ countries
• In spite of growing private sector responsibility, and recent commitments to reduce deforestation and
improve transparency
• There is market information on a limited number of REDD+ projects in the Voluntary Carbon Market, but
the scale of equity investments, lending and trade finance is unknown

18. How does this promote transformational change?
towards reduced emissions from deforestation and forest degradation
• A too narrow fixation on fund sizes and flows misses
the point of what is and what triggers transformational
change
• Countries continue to need readiness support
• Institutions for accountability, transparency etc.
• Assessment and policy learning: Support needed for better data,
better approaches, better capacity
• Mainstreaming climate objectives for finance across sectors is
essential
• Need to integrate equity/participation, development and
climate objectives for conflict-free, lasting results

19. Böttcher, H., Herrmann, L.M., Herold, M., Romijn, E., Román-
Cuesta, R.M., Avitabile, V., de Sy, V., Martius, C., Gaveau,
D.L.A., Fritz, S., Schepaschenko, D., Dunwoody, A. (2018):
Independent Monitoring: Building trust and consensus
around GHG data for increased accountability of mitigation
in the land use sector.
112 pp. Publications Office of the European Union,
Luxembourg. https://doi.org/10.2834/513344
FAO, FTA and CIFOR (2018):
Exploring guiding elements of transformational change in
integrated landscape management.
Joint policy brief. 2 pp.
Study on EU financing of REDD+ related activities, and results-based
payments pre and post 2020: sources, cost-effectiveness and fair allocation
of incentives. study report to be published by European Commission in 2018

20. With support from the CGIAR Fund Donors:
http://on.cgiar.org/CGIARFundDonors
Supported by: