Financing options for forests and climate change
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During my participation in the COP-16 (Mexico, 2010) I found the publication "The Little Climate Finance Book", that has been produced by the Global Canopy Programme (GCP), in collaboration with: Overseas Development Institute (ODI), Oxford Institute for Energy Studies (OIES) and Australian National University (ANU).
The first time I read it, I found it very interesting because the managing of all information in relation with financing options for forests and climate change worldwide, is very well oriented to some studies analysis in developed and developing countries.
In this article, I want to share some reflections about forests and climate change and almost of all, options for REDD+.
According to the Prime Minister of Papua New Guinea, Sir Michael Somare, "the impact of climate change is already being felt in many developing countries, yet these countries have not been the primary cause of it. The necessary actions to halt climate change and the ways in which nations, such as my own, can be a part of the overall solution are becoming clearer. What requires further clarification is how these actions should be financed, who should shoulder the responsibility and who should receive the benefits".
Emissions from deforestation account for around 17% of global GHG emissions, more than the entire transport sector (IPCC, 2007). An agreement is currently being negotiated under the UN Framework Convention on Climate Change (UNFCCC), to include reducing emissions from deforestation and forest degradation (REDD+) in a future climate change regime.
Forests are therefore acknowledged as both a source and a sink of carbon emissions. This potential of forests to act as both a source and a sink means that activities under REDD+ account for around 22% of global mitigation potential. Forests play a crucial role in developing countries' ability to adapt to the impacts of climate change. Forests provide vital ecosystem services such as rainfall, recycling that are especially important from a climate change adaptation perspective. "Climate finance will give urgent support needed by the developing world to take immediate steps to move on to a low-carbon development pathway. It can also enable the most vulnerable countries including the least developed countries and small islands, developing states adapt to the effects of climate change" (Sir Michael Somare).
The impacts of climate change are felt the most strongly in developing countries and it's the poorest countries that are least equipped to adapt to the effects of climate change.
Financing REDD+ will be an essential part of the Bali Action Plan, since forests account for nearly 40% of developing country mitigation potential and can play a crucial role in developing countries ability to adapt to climate change.
Forests therefore are an essential component of developing countries efforts to combat climate change. Tropical rainforests also directly support the livelihoods of 90% of the 1.4. Billion people living in extreme poverty (World Bank, 2004). The loss of forests therefore jeopardises the livelihoods of the poor and the ability of the world’s poorest to adapt to climate change.
Climate finance is currently delivered through an array of public and private financial instruments including grants, concessional loans, equity and the project-based delivery mechanism under the Clean Development Mechanism (CDM). Under the UNFCCC mandate, finance is delivered through the Global Environment Facility (GEF), Adaptation Fund and CDM. Public and private sector finance can use grants, debt, equity and market-based mechanisms (such as the purchase of emission reduction credits) to deliver financial resources; the choice of these instruments will depend on who and why the revenue is being generated.
According to Andrew Mitchell (Founder and Director of Global Canopy Programme), "forests offer a onetime opportunity to mitigate and adapt to climate change. Approximately 20% of the emissions reductions needed by 2020 to present global temperatures rising above 2 Celsius can be achieved by reducing emissions from deforestation and degradation, conserving forests carbon stocks and enhancing forests carbon stock through afforestation and reforestation".