Across the globe, demand for wood products is increasing and expected to quadruple by 2050. This trend is exacerbating deforestation and forest degradation. But it also presents an opportunity for a better approach to farming and managing forests.
While it’s well known that trees and forests provide an important carbon sink, the carbon stored in forest products is often overlooked. Forest products and materials such as those used for construction and furniture store carbon for decades and even centuries.
Choosing wood products over other non-renewable materials, such as concrete and steel for construction materials, also offers climate benefits. Concrete and steel require fossil fuel to produce, making these alternatives much more carbon intensive. For example, producing a concrete wall puts 15 times more carbon dioxide into the atmosphere than making a wooden one.
The new report, funded by the Climate Investment Funds (CIF) and the Program on Forests (PROFOR), examined the economies of six countries - Ethiopia, Colombia, Mexico, Mozambique, Peru and Vietnam - to estimate the potential climate mitigation benefits from forest-based supply chains. Together, the six countries could sequester more than 150 million tons of CO2e (see table below) by 2030 with adequate investments in forest restoration and the increased production and use of wood products. Such an approach could help countries meet their climate commitments under the Paris Climate Agreement.
Investing in wood supply to meet demand through landscape restoration and other means also brings benefits, especially by creating new forest industry jobs in rural areas. Potential employment benefits in the six countries studied are depicted in the table below. In addition, projected demand for wood products could encourage the private sector to make long-term investments in productive forests, plantations, and wood processing.
Moving forward on sustainably harvesting forests is a delicate balance between production and conservation. If promoting forest products leads to deforestation, then climate mitigation is lost. To get the balance right, governments must create an enabling environment through better law enforcement and governance. That would help to protect and more sustainability use forests, improve land tenure, and provide the incentive mechanisms to attract private sector investments. Plantations will be key for renewable energy - sustainable charcoal and wood chips - in the future. Private investors, rural communities and forest owners also need technical assistance to help with forest management and production, as well as easier and quicker access to market information.
“Investing in sustainably managing and using forests offers longer-term benefits over the frequently under-productive and disorganized use of many forests today,” says Gerhard Dieterle, program manager for the World Bank’s Forest Investment Program. “As found in this study, doing so would unquestionably benefit people and the planet.”
With support from the African Development Bank (AfDB), Burkina Faso has been awarded a US $4-million loan from the Climate Investment Funds’ Forest Investment Program (CIF FIP) to revive its cashew sector and mitigate climate change.
Ghana received approval on Thursday, September 22, 2016 from the African Development Bank (AfDB) for a project to restore degraded forest reserves and double a sustainable forest plantation through a first-of-its-kind Public-Private Partnership (PPP) in its forest sector. The project is backed by a US $10-million concessional loan from the Climate Investment Funds’ Forest Investment Program (CIF FIP) approved on July 1, and supplemented by US $14 million in co-financing from the AfDB.
Washington, D.C. (June 21, 2016) – The governing body of the $8.3 billion Climate Investment Funds (CIF) last week gave an important signal by asking the CIF to develop options for a financing vehicle to attract private capital investors for renewable energy and clean technology projects in developing economies.
The steering committee of the CIF's $5.6 billion Clean Technology Fund (CTF), consisting of donor and recipient countries, gathered in Mexico to discuss new financing modalities which could make CTF's assets attractive for institutional investors.
The CIF's Manager Mafalda Duarte welcomed the decision, which comes at a time when research from Brookings shows investments in sustainable infrastructure of $90 trillion USD are required over the next 15 years:
"This work breaks new ground for climate finance and such innovation is needed if we are to move from billions to trillions and deliver on the ambitious agenda of the Sustainable Development Goals. Scaling-up investments can be particularly transformational in areas that have lacked funding or for technologies on the threshold of becoming economically viable. These will be crucial to delivering a low-carbon future."
This potential avenue to tap into new and much needed private sector financing would support climate-smart investments in areas such as energy storage, distributed generation, sustainable transport and industrial and residential efficiency.
"We have seen time and time again that concessional or de-risking financing is essential to ramp up low carbon investments in emerging markets", Duarte added. "Institutional investors can be risk averse but they do want to build up a greener portfolio. The CTF offers a unique opportunity for them and will allow us to provide developing countries the financial support they need to pursue their low-carbon development plans."
The green-light came as recipient countries unanimously endorsed the CIF as a key vehicle to deliver on the ambition outlined in the Paris climate agreement. Members emphasized the importance of tested and proven financing options to support climate actions in developing countries and that those lessons should be shared with all main players in the climate finance architecture. “The appreciation and wide-spread support for the CIF by developing country members need to be acknowledged”, said Zaheer Fakir, Committee member for the South African Department of Environmental Affairs. “Developing countries within the CIF value it as an important instrument for financing, innovating and coordinating with all important actors around national climate investment plans.”
In this context, trust fund sub-committees decided to support the forest investment plans of Mozambique and Côte D’Ivoire with US$ 48 million in total which will allow the countries to address major drivers of deforestation as well as promoting rural development. Another decision supported the renewable energy investment plan of Cambodia with US$ 30 million enabling the country to develop a solar energy program, including rooftop solar systems and minigrids, as well as a biomass power project.
About the Climate Investment Funds: The US$ 8.3 billion Climate Investment Funds provides 72 emerging and developing economies with urgently needed resources to manage the challenges of climate change and reduce their greenhouse gas emissions. For more information: http://www-cif.climateinvestmentfunds.org/
Media contact: In Washington D.C – Angela Bekkers, Climate Investment Funds | Tel: +1 202 458 8831; mobile: +1 202 361 3459, Email: email@example.com
Cote d’Ivoire’s forests offer huge potential and rich biodiversity but the country has one of the highest rates of deforestation in Sub-Saharan Africa. FIP funding of $24 million (USD) will focus on restoring the country’s forest cover by working with small-scale farmers to introduce agroforestry techniques and improve agricultural productivity. It will also contribute to the protection of the vast forest area of Tai National Park - a world heritage site and one of the last major remnants of pristine forest in West Africa - conserving its biodiversity and carbon stocks.
In Mozambique FIP funding of $24 million (USD) will focus on reducing emissions from deforestation and forest degradation while promoting rural development by supporting legal and institutional reform, addressing major drivers of deforestation as well as supporting communities to engage with the private sector.
In Cambodia SREP funding of $30 million (USD) – leveraging another $135 million USD from other sources - will focus on a solar energy development program, covering approximately 70% of total investment, which includes solar home systems, minigrids, rooftop solar systems and utility-scale solar farms. The funding will also go towards a biomass power project as well as policy support and public awareness.
OAXACA - 12th June 2016 - This week Mexico is hosting the Climate Investment Funds’ governing body meetings as well as a knowledge exchange forum of the CIF’s forestry program. The meetings in Oaxaca bring together an audience of over 150 experts from about 50 countries, including representatives of developing and donor countries, international organizations and civil society.
The official opening took place today, June 12, and included a welcome address by Mafalda Duarte, Manager of the Climate Investment Funds. “Mexico is a very fitting stage for these very exciting knowledge sessions. We have many countries in this meeting that offer valuable experiences about the sustainable use of forestry resources”, Duarte said, thereby referring to the $775 million Forest Investment Program (FIP) which is a funding window of the CIF and provides direct investments to benefit forests, development and climate.
“With the Forest Investment Program’s resources, matched by other funding sources of, for example, the World Bank, Mexican forestry communities have benefited from training and technical studies for forest land-use and land management”, said Jorge Rescala Pérez, Director-General of Mexico’s National Forestry Commission of Mexico (CONAFOR), during the opening session.
During this week’s meetings, the governing body of the CIF will decide on the future strategy of the funds. Other key issues concerning CIF’s Clean Technology Fund, its climate resilience fund (PPCR) and renewable energy program in low-income countries (SREP) will be discussed later this week. For the CTF, innovative ways to mobilize capital of institutional investors will be discussed. This would open up new investments into frontier areas, such as energy storage, distributed generation, sustainable transport, and residential and industrial energy efficiency, where an additional push could accelerate market development. Investment plans of Mozambique and Bangladesh, including funding envelopes, will be featured in designated committee meetings on forestry management and renewable energy, respectively.
Indigenous Peoples are among the first to face the direct consequences of climate change. Their close relationship with the environment means more extreme weather is exacerbating the difficulties they face and in some countries even threatening their survival. They can also utilize their traditional knowledge to help tackle climate change. So for climate investments to work effectively and for this knowledge to drive innovative solutions, Indigenous Peoples must be part of the design and implementation of climate-smart interventions.
The Climate Investment Funds (CIF) recently spoke to many representatives from Indigenous Peoples Organizations and networks at a side event of the United Nations Permanent Forum on Indigenous Issues (UNPFII) hosted by the United States Permanent Mission to the UN. CIF Program Manager Mafalda Duarte shared CIF’s work in this area, the lessons we are learning and our forthcoming plans.
Duarte spoke about a number of areas, beginning with the Dedicated Grant Mechanism (DGM.) This is a unique program funded by the Climate Investment Funds through its Forest Investment Program and led by the World Bank in nearly 14 countries. This is the largest program of its kind that places funds directly to the Indigenous Peoples and Local Communities to address the climate mitigation and adaptation issues they prioritize.
The most unique aspect of the DGM is its governance. The governing bodies at the global and country level are led by self-selected Indigenous and local community members. So project design and funding decisions are in the hands of Indigenous Peoples and Local Communities, giving them the power to set priorities and implement programs aimed at conserving their natural environment.
As Duarte said: “It was the representatives of Indigenous Peoples globally who helped design this and decide on how it should be implemented and that’s what makes it innovative. It’s always satisfying to me when Indigenous Peoples speak so highly of the program and would like to see it replicated in even more countries. ”
As well as sharing our experiences of the DGM, the CIF also updated the audience on our progress with the newly initiated Stakeholder Advisory Network (SAN.) This builds on our experience in engaging stakeholders at all levels, which was complimented by Grace Balawag from Tebtebba (Indigenous Peoples’ International Centre for Policy Research and Education) who believes the CIF can offer a model which others can learn from: “The CIF platform for governance has defined guidelines on IP engagement and we would like this to be replicated in other climate investments, programs or mechanisms.”
Very practically, this Network will include partnership, networking, capacity building and information and experience sharing, provision of resources includes research and information materials, advocacy strengthening, coalition building, monitoring, evaluation, and engagement.
The CIF is also expanding its work on traditional knowledge and technology with a report that looks at how these assets can contribute to climate solutions As Mirna Cunningham, Center for Autonomy and Development of Indigenous Peoples (CADPI), said: “We have a lot of traditional knowledge systems that have been proven to maintain and conserve nature. And we have gained capacity to share this with other people. If this knowledge can really be included into policies related to climate change, I think we’d see good results.”
What do Leonardo DiCaprio and Prince Charles have in common? They have demanded a halt to deforestation and called on world leaders and businesses to play their part. Read on to learn more about forests:
Why do forests matter?
Forests comprise nearly a third of all land on earth, about 4 billion hectares. However we lose around 7 million hectares a year of natural forests – at that rate, New York’s Central Park would vanish in under 25 minutes. But forests are a crucial part of an equitable and sustainable world, tackling climate change and enabling millions of men and women in rural communities to secure greater prosperity.
Climate change cannot be slowed and neither the Paris climate agreement nor the Sustainable Development Goals will be delivered unless we pay attention to forests. Stopping deforestation can reduce as much as 19% of global greenhouse gas (GHG) emissions. Up to another 10% of emissions could be sucked out of the atmosphere by re-growing forests which have been cut down. That’s because forests act as a sink, soaking up carbon emissions which would otherwise pollute the atmosphere, and, left standing, avoid emitting carbon.
Sustainable forest management has been on the political agenda since 1992’s Rio Earth Summit and there’s been a decade of dialogue at the United Nations Framework Convention on Climate (UNFCCC.) There has been lots of progress in the past two years. The New York Declaration on Forests – released at the UN Climate Summit in September 2014 – brought together a coalition of heads of governments, CEOs of companies and leaders of Indigenous Peoples (IPs) and civil society with the shared goal of ending natural forest loss by 2030. This helped build momentum towards the inclusion of REDD+ - which stands for Reducing Emissions from Deforestation and Forest Degradation – in the Paris agreement. Essentially this provides financial incentives for developing countries to better protect, manage and sustainably use their forest resources. In so doing, they help conserve biodiversity and tackle climate change.
Why are forests particularly important for development?
75% of the world’s poor are rural and depend on healthy landscapes for their livelihoods, food security and development opportunities. Forests can be engines of economic growth, energy generation and food security. Forests help to purify water and maintain water resources. 1.3 billion people – that’s one person in five – depend on forests in some way. The formal timber industry contributes $600 billion to the global economic, about 1% of GDP. In many developing countries, people depend heavily on wood for their household energy. And for farmers, forests provide feed for livestock and filter their water. In remote rural areas, forests are often the main resource on which to build an economy and can provide a safety net in times of extreme hardship, such as when droughts hit.
Forests are particularly crucial for Indigenous Peoples (IPs.) As the United Nations Forum on Indigenous Issues says: “IPs are vital to, and active in, the many ecosystems that inhabit their lands and territories.” So when we lose forests – whether through deforestation or degradation - we exacerbate climate change and damage biodiversity, IPs and rural communities lose their greatest source of livelihoods and the social and cultural fabric is torn.
What is the Climate Investment Funds doing on forests?
The CIF has a funding window dedicated to forests – the $771 million Forest Investment Program (FIP), which operates in 23 countries. It’s the world’s largest source of REDD+ finance.
The FIP supports countries to maximize their forests’ contribution to sustainable development and it brings together government departments, multilateral development banks, the private sector and indigenous peoples and local communities. This convening capacity is crucial because maximizing forests’ climate and development impacts requires all actors working together and champions at the highest levels of government – forests are complex ecosystems and sometimes their governance and management is complex too.
How does the FIP do this?
The FIP takes a ‘Total Forests’ approach. That means further developing initiatives such as the Dedicated Grant Mechanism, which puts Indigenous Peoples and local communities in charge of design and funding decisions for projects that fight forest loss. That means putting forests at the heart of rural development, delivering jobs and powering local economies.
The program’s concessional financing can be the key to unlock larger sums of public and private investments. And when these investments are driven by country needs and delivered through in a way that provides cohesion between all the elements of climate-smart development, real transformation can happen and innovation can flourish:
Managing land use in Ghana
Through coordinated actions by four ministries, the private sector, and local communities, $50 million USD from FIP aims to rehabilitate degraded natural forests and introduce sustainable agricultural practices, in particular cocoa production and plantation development. Over 12,000 people - half of them women - will benefit from capacity building support, provision of seeds and equipment, and financial incentives to develop forestry, agroforestry, and alternative livelihoods activities.
Empowering communities in Mexico
FIP is implementing a financing line accessible by communities and ejidos(a collective ownership system unique to Mexico) to finance low carbon activities and projects in forest landscapes, and will strengthen their financial inclusion through technical assistance and capacity building. Ejidos are the powerful guardians of Mexican forests and the FIP is on track to deliver significant benefits for ejidos and help them fight deforestation and forest degradation.
Innovative grant program: the DGM
Conceived and designed by Indigenous Peoples and Local Communities and funded by the global community through the Forest Investment Program (FIP), the Dedicated Grant Mechanism for Indigenous Peoples and Local Communities (DGM) provides the resources to Indigenous Peoples and Local Communities that will enable them to strengthen their participation in the FIP and other REDD+ processes. This innovative grant program for fighting forest loss is putting project design and funding decisions in the hands of indigenous peoples and local communities, giving them the power to set priorities and implement programs aimed at conserving their natural environment.
Forests provide opportunities for all – environmentally and economically – for this generation and the next. Keep checking this website, our YouTube channel and our Twitter feed for the latest on how the FIP is contributing to utilizing this opportunity.