Carbon, community and governance: is Nepal getting ready for REDD+?

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Carbon, community and governance: isNepal getting ready for REDD+?Hemant R. Ojhaab, Dil Khatric, Krishna K. Shresthaa, BryanBushleyd & Naya Sharmac

a School of Social Sciences, University of New South Wales,Kensington, Australiab Southasia Institute of Advanced Studies (SIAS), Kathmandu,Nepalc ForestAction Nepal, PO Box: 12207, Satdobato, Lalitpur, Nepald University of Hawaii, Manoa, HI, USAPublished online: 22 Nov 2013.

To cite this article: Hemant R. Ojha, Dil Khatri, Krishna K. Shrestha, Bryan Bushley & Naya Sharma(2013) Carbon, community and governance: is Nepal getting ready for REDD+?, Forests, Trees andLivelihoods, 22:4, 216-229, DOI: 10.1080/14728028.2013.856166

To link to this article: http://dx.doi.org/10.1080/14728028.2013.856166

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Forests, Trees and Livelihoods, 2013 Vol. 22, No. 4, 216–229, http://dx.doi.org/10.1080/14728028.2013.856166

Carbon, community and governance: is Nepal getting ready for REDD 1 ?

Hemant R. Ojhaa,b*, Dil Khatric, Krishna K. Shresthaa, Bryan Bushleyd and Naya Sharmac

aSchool of Social Sciences, University of New South Wales, Kensington, Australia; bSouthasia Institute of Advanced Studies (SIAS), Kathmandu, Nepal; cForestAction Nepal, PO Box: 12207, Satdobato, Lalitpur, Nepal; dUniversity of Hawaii, Manoa, HI, USA

Using a multilevel governance lens, this paper analyzes ongoing reducing emissions from deforestation and forest degradation (REDD þ ) readiness initiatives in Nepal. We present the evidence of what is happening around these preparatory activities in relation to handling forest tenure issues, stakeholder engagement, developing monitoring and verification mechanisms, and creating benefit-sharing mechanisms. Our aim is to assess whether Nepal is on its way to being ready for full-fledged REDD þ implementation in the next few years. The paper concludes that, while the REDD þ readiness process mobilizes diverse and opposing stakeholders through interactive forums, it pays little attention to basic governance issues such as defining carbon rights and who is authorized to make what decisions about REDD þ rules and practices. Moreover, despite some well-intentioned participatory pilot experiences, fundamental aspects of participation, equity, and fairness remain unaddressed.

Keywords: carbon trade; REDD; community forestry; Nepal; governance

Introduction

Following the recognition of the role of deforestation and forest degradation in climate change (Stern 2006), a new policy agenda has emerged to enhance carbon sequestration through the introduction of a program called reducing emissions from deforestation and forest degradation and the enhancement of forest carbon stocks in developing countries (REDD þ ). Since the emergence of the REDD þ agenda at the Bali UNFCCC conference in 2007, Nepal has been one of the countries most actively engaged in the REDD þreadiness process. In countries like Nepal, where community-based forest management (CBFM) is well established and local communities rely heavily on forests, how REDD þwill reconcile presumed trade-offs between carbon sequestrations and promote sustainable livelihoods remains a key challenge. With a highly divided and exclusionary socioeconomic environment (Lawoti 2008), how REDD þ preparations can ensure the democratic and inclusive involvement of diverse stakeholders, and also achieve equitable sharing of expected REDD þ revenues, presents a formidable challenge in Nepal. In such context, several donors, including the World Bank and the Norwegian Agency for Development Cooperation (NORAD), have financed diverse readiness activities, and the government and various organizations – from local community networks to international NGOs – are actively piloting carbon stock measurement, developing standards, building capacity, and designing and testing payment and benefit-sharing options for REDD þ .

REDD þ has become a controversial issue worldwide. It cannot be assumed that it will be straightforward in Nepal’s case (Bushley & Khatri 2011). Some authors have claimed

*Corresponding author. Email: [email protected]

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http://dx.doi.org/10.1080/14728028.2013.856166

Carbon, community and governance 217

that it represents an opportunity to strengthen forest governance and bolster global conservation efforts (e.g., Springate-Baginski & Wollenberg 2010), while others have argued that it could work, provided there is a strong attention to governance issues, especially respect for local land tenure and resource rights (e.g., Cotula & Mayers 2009). Yet, others have asserted that REDD þ would destabilize forest governance to the detriment of community autonomy and well-being, thereby reversing recent trends toward the devolution of forest governance (e.g., Phelps et al. 2010). These three divergent views – REDD þ as an opportunity, challenge, and impediment to effective forest governance – are the subject of growing debate in both policy and academic circles in Nepal (Bushley & Khatri 2011). This paper adds to this debate by offering an in-depth case study of REDD þ readiness in Nepal, drawing on 4 years (2008–2012) of action research, direct observation of policy processes, and participation in various pilot experiments in collaboration with government and non-government stakeholders. Our focus is on analyzing the interactional processes among actors at different levels of REDD þgovernance in relation to four key aspects, namely (a) defining tenure, (b) the modality of stakeholder participation, (c) monitoring and verification system, and (d) benefit sharing. We do not intend to analyze the fit (or misfit) of community forestry with the REDD þsystem, but do offer an assessment of how the rules of the game around REDD þ are being framed, discussed, and piloted, and how different perspectives play out in the process.

Conceptualizing REDD 1 readiness processes

Understanding REDD þ readiness requires a multilevel and multifaceted analysis. The REDD þ readiness process is a global experiment (Corbera 2012). It involves the dispersion of authority across governmental and non-governmental institutions from the local to global levels (Biermann 2010), andalso entails governanceprocesses acrossmultiple levels (Hooghe & Marks 2003). The REDD þ readiness process is also about making decisions on more fundamental aspects of governance, involving a ‘constitutional’ choice; toborrowOstromand others’ concept (Kiser & Ostrom 2000), it is about how rules can be put in place to guide operational-level REDD þ practices (e.g., forestry operations and sharing benefits). The choice is about the rules involving governance framework, operatingprocedures, and the roles of different stakeholders. Indeed, every REDD þ country is framing such rules (Thompson et al. 2011), and Nepal’s case can offer some interesting insights.

At least four elements appear critical in relation to understanding the REDD þreadiness process. First, clarifying forest tenure, including who owns forest carbon, is crucial part of REDD þ readiness (Sikor et al. 2010; Larson 2011). Second, stakeholder engagement processes are critical to effective environmental governance in general (Reed 2008) and to the REDD þ readiness process in particular. The questions of who frames the agenda and how the voices and concerns of local communities and indigenous peoples (IPs) are incorporated into policies and governance processes have become important concerns worldwide (Thompson et al. 2011). Third, the task of measurement, reporting, and verification (MRV) of existing levels and changes in stocks of resources (i.e., carbon) is considered crucial to enable such payments (Wunder 2009; Bucki et al. 2012).

Finally, the question of benefit sharing and ensuring social safeguards (Chhatre et al. 2012), either through market-based or regulatory mechanisms, is also a fundamental aspect of REDD þ design (Costenbader 2011). This also involves the issues of vertical equity – how costs and benefits are shared among actors operating at local, meso- and national levels – especially since REDD þ is evolving as a performance-based payment system (Corbera 2012). The lessons around these elements are evolving globally, and there

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218 H.R. Ojha et al.

are no clear-cut principles that can be applied everywhere. In this paper, we use these elements as ‘orienting themes’ to assess the dynamics of REDD þ readiness in Nepal.

Situating REDD 1 in Nepal’s forest governance

The REDD þ agenda entered Nepal at a time when the country was in rapid political transition after the decade-long civil war. It has also found a strong institutional base of community forestry in the country. Indeed, with a strong legal framework for community forestry and over 18,000 functioning Community Forest User Groups (CFUGs) across the country, many consider Nepal to be having an institutional advantage for REDD þ (Kotru 2008; Acharya et al. 2009; Bushley & Khatri 2011). Yet, the issues related to rights, tenure, benefit sharing, and participation have never been settled in Nepal’s community forestry system. The arrival of REDD þ is likely to unsettle any consensus on forest governance that places community participation as an essential and normatively superior alternative to centralized management.

Nepal’s forests are governed under various regimes. As stipulated in the National Park and Wildlife Conservation Act 1973 (HMG/MoLJ 1973) and the Forest Act 1993 (GoN 1993), forest areas (about 30%) are owned by the state and managed under three broad management regimes – protected areas (about 25%), government-managed forests (approximately 50%), and diverse CBFM schemes (about 25%) (Ojha et al. 2008). The Forest Act 1993 empowers communities to access designated, non-protected forests. Along with the Forest Regulations 1995, this act allows them to access all types of forest products, manage the forests for conservation, carry out normal silvicultural practices, and sustainably harvest forest products to use within the group or sell in the market. However, the Act retains land rights with the government (GoN 1993, Article 22).

The nature and extent of deforestation varies across regions (Terai, middle hills, and high mountains), and the rates calculated by different studies vary significantly (Acharya et al. 2012). A 1999 study by the Department of Forest Research and Survey in Nepal calculated the rate of deforestation for the country as 1.7%. The FAO found that forests disappeared at 1.63% during 1990–2005. In the Terai, the rate is higher than the national average (2.7%). Community forestry has clearly offset deforestation, as is evident in a 1998 study in the Koshi hills, albeit only in proportion of forest under community management. Besides, there has been a gradual and consistent increase in shrubland area over the past three decades – the forest land is converted into degraded land or shrubland at a rate of 5.6% per annum (Dangi 2012). This means that ‘degradation’ component of REDD þ is also crucial in Nepal’s case.

Yet, Nepal’s REDD þ initiative has focused on its community forestry ‘advantage’, as is evident in the recent forest carbon development policy called Readiness Plan Proposal (RPP) as well as the recent piloting activities. Whether Nepal can benefit from such community forestry-focused REDD þ depends on two key factors. First, given the political transition spurred by concerns for inclusive and equitable governance, REDD þ readiness process are being controlled by political elites at all levels of governance. The questions of who dominates the scene when rules of the game are being framed are thus crucial. This is particularly critical as the REDD þ readiness process is usually framed within a techno-bureaucratic system. There is considerable debate about whether REDD þ will help strengthen decentralized and participatory approach underpinning the community-based forest governance in Nepal (Bushley & Khatri 2011). Second, many have argued that Nepal cannot compete in the forest carbon market dominated by forest-rich countries such as Indonesia. In this paper, we are

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interested more in how REDD þ is being framed inside the country, rather than Nepal’s position in the global REDD þ market.

Nepal has made considerable progress in setting up a basic institutional framework for REDD þ readiness. Following Nepal’s selection by the World Bank’s Forest Carbon Partnership Facility (FCPF) for financial support, the Ministry of Forest and Soil Conservation (MFSC) moved quickly to create an institutional infrastructure for REDD þreadiness. It formed a three-tiered institutional framework consisting of the REDD Forestry andClimate Change (REDD)Cell; amulti-stakeholder REDDWorkingGroup (RWG)with representation from government, experts, donors, and civil society organizations (CSOs); and a high-level, inter-ministerial REDD Apex Body. The RWG and Apex Body are the official forums for REDD þ policy development and approval. In addition to these official efforts, several international organizations and local CSOs have also taken various REDD þ readiness initiatives, including piloting activities to explore the social and technical viability of REDD þ at the national and subnational levels.1

Carbon ownership issues

Forest tenure has always remained a contentious issue in Nepal, and the debate has multiple manifestations. First, there is continued confusion and unresolved conflict over tenure and suitable forest management modalities in the Terai (Ghimire 1992; Shrestha & Conway 1996; Ojha 2007; Sinha 2011). The Terai region of Nepal represents the plains in the subtropical region bordering India, averaging 20 km wide and stretching east to west (covering about one-fifth of the country’s area), and hosts about half of the population. As this region hosts communities of diverse origins (indigenous, migrants), and also contains bigger tracts of natural forests than in the hills, developing forest management modalities that are fully appreciated and supported by stakeholders has remained a key challenge (Satyal Pravat & Humphreys 2012). Second, continued expansion of protected areas by the government has compromised traditional access rights to forest resources, leading to a more top-down management of forests (Paudel et al. 2012). Nepal increased the area of forest under protected regime even after the advent of the REDD þ agenda in 2008. Third, there is a persistent struggle and negotiation surrounding the bundle of rights transferred to communities under various CBFM regimes (Paudel et al. 2009). For instance, while communities claim that they can sell forest products and earn revenue, the MFSC requires CFUGs to share the income earned from the market with the government.

Since the arrival of the REDD þ agenda in Nepal, a new debate has emerged over forest carbon rights in the context of CBFM. Forest carbon exists both within plants and within the soil; thus, ownership rights to forest is contentious in community forests where ownership of the forest biomass and the underlying land rests with two separate entities (MFSC 2010, p. 48). REDD þ initiatives in Nepal have opened up a debate on the relationship of carbon rights to forest tenure, highlighting the lack of clarity over carbon rights and forest tenure in the policy framework. Until the REDD þ agenda surfaced in Nepal, community groups were by and large content with the rights offered by the Forest Act 1993 on the overland forest resource. Over the past few years, the demand for collective rights over forestlands has increased along with the increased importance of carbon rights and the prospects of significant financial benefits, especially since claims over REDD þ benefits are linked with the stock of carbon preserved or produced in a given area.

Forestlands under all existing CBFM regimes are owned by the government. However, pro-community activists demand that local communities should be entitled to and benefit

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from emerging forest ecosystem services such as carbon. The Federation of Community Forestry Users, Nepal (FECOFUN), and other CSOs, are the champions of this perspective on carbon tenure. Contrary to this view, some government forest officials argue that, interpreting some provisions of the Forest Act 1993, the government should retain control over forest carbon that remains below the ground. Their argument is that communities are entitled only to the above-ground forest biomass as per the law and approved management plans.2 Accordingly, the REDD þ policy document on REDD þ , known as RPP, asserts that carbon rights should be linked to prevailing legal arrangements related to land and forest tenure rights (MFSC 2010, p. 48).

Community rights activists counter this view, saying that soil carbon is the result of past forest conservation efforts of local communities. For this reason, they argue that local communities should be allowed to benefit from it when there is a market for this. This issue will most likely invite further debates as Nepal prepares to implement a national REDD þstrategy. In the case of state-managed forests, carbon rights remain more secure with the government, as local communities or local governments have yet to make claims over these resources that are under the control of the central government.

The issue of carbon tenure is indeed a fundamental aspect of REDD þ readiness. It is situated in the debate between decentralization and centralization, on the one hand, and complex landscape of existing forest governance in the country, on the other hand. Although tenure is probably the most central aspect of REDD þ design, as it subsequently defines who benefits from REDD þ , the current REDD þ readiness process has yet to arrive at any conclusion on this debate. Nevertheless, our close observations reveal that tenure and other important institutional issues are frequently ignored in stakeholder consultations, partly because the process is not adequately inclusive and deliberative, as shown in the next section.

Stakeholder engagement – whose views prevail?

Stakeholder engagement has been the cornerstone of CBFM and the REDD þ readiness process in Nepal. Several issues are identifiable in the process of stakeholder engagement. First, despite initial attempt to establishmulti-stakeholder forums, there is an increasing trend of government dominance in such forums. The RWG formed in 2009 had some balanced representation, with four government representatives, three civil society representatives, and two donor/INGO representatives. The group was reconfigured in 2010, which led to an increase in government representation and a decrease in CSO representation. The new RWG has 12 members, comprising eight government representatives, two CSO representatives (FECOFUN and NEFIN), one independent expert, and one donor representative (MFSC 2010). Clearly, this reconfiguration has increased bureaucratic domination in this multi-stakeholder forum (Bushley & Khatri 2011).

Second, the quality of deliberation in such multi-stakeholder forums is poor. Besides the RWG, the REDD þ Stakeholder Forum, coordinated by the REDD-Cell, aims to bring a wider range of stakeholders in REDD þ debates. However, both forums are often strategically controlled by dominant actors such as forest officials or donor agency staff. They do not provide adequate space for the CSOs to articulate their voices, as reported by one of the co-authors of this article, who participated in RWG meetings as a regular member before 2010 restructure and an invitee afterwards. Another reason for the poor quality of deliberation is linked to the language used. For example, the REDD-Cell called a consultation meeting to share the draft framework for the national REDD interim strategy and to seek comments from stakeholders. The draft document, which was 25

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pages in length and written in complicated English, was circulated to the stakeholders just a couple of days before the meeting. They were asked to read the document prior to participating in the meeting. At the meeting, the consultant presented the gist of the document (in English) and participants were asked to comment on it. The CSO representatives (FECOFUN and NEFIN) were completely lost because they could neither comprehend the draft document written in English nor fully understand the points presented by the consultant. Only a few experts made some comments and the meeting was concluded without input from the community representatives (personal observations by one of the co-authors).

Third, despite some prolific civic engagement in the past, there is weak internal representation of CSOs, who at times play conflicting roles by having both steering and implementation interests in the same REDD þ project. The FECOFUN and NEFIN, which are the key CSO actors in the forums, are involved in implementing REDD þactivities and consultancies (see Table 1), while also allegedly advocating for the rights of

Table 1. REDD þ projects and stakeholder engagement.

Project name Agency(ies) Key activities

Design and Setting up of a Governance and Payment System for Nepal’s CFM under REDD þ (2009–2013)

Grassroots Capacity Building for REDD þin Asia and Pacific (2009–2013)

Climate Change and Partnership Program

REDD þ Reducing Poverty in Nepal (2009–2010) Forest Resource Assessment Nepal

The Hariyo Ban project supported by the USAID

Multi-Stakeholder Forestry Programme

ICIMOD with FECOFUN and ANSAB

RECOFTC with FECOFUN, HIMAWANTI, and Forest Action Nepal

NEFIN

WWF with Winrock International

FRA

WWF with CARE Nepal, NTNC, and FECOFUN

MFSC and NGO partners

Forest carbon measurement, development of pilot FCTF structures, demonstration payments in three watersheds, capacity development of communities and partners, and developing a subnational REDD þ MRV Framework for community forestry Capacity building of facilitators for REDD þat the national and local levels, building awareness about REDD þ among local communities and district stakeholders, and development of a training manual and other outreach materials Piloting of climate change and REDD þ , enhanced awareness among IPs, advocacy, and lobbying on the issues of IPs in REDD þCarbon measurement and capacity development of partner organizations

Gather forest-related data, maintain forest information system, and develop institutional capacity of the Department of Forest Research and Survey (DFRS) mainly for MRV Pilot REDD þ at the landscape level, support government for REDD þ strategy development, and devise the benefit-sharing system at the subnational level Support REDD-Cell for a review of RPP progress, updating of the REDD þ training manual, and provision of annual budget for REDD-Cell

Note: ICIMOD, International Center for Integrated Mountain Development; DFID, Department for International Development, UK; FRA, Forest Resource Assessment Project funded by FINNIDA; NEFIN, Nepal Federation for Indigenous Nationalities; FECOFUN, Federation of Community Forestry Users, Nepal (FECOFUN); WWF, Worldwide Fund for Nature Conservation; NTNC, National Trust for Nature Conservation; SDC, Swiss Development Corporation; RECOFTC, International Center for People and Forest, Bangkok; MFSC, Ministry of Forest and Soil Conservation. Source: Khatri and Paudel (2013).

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local communities (Bushley & Khatri 2011). This potential conflict of interest arguably challenges both their organizational mandate and their capacity and credibility to represent the wider community.

Moreover, CSOs such as the FECOFUN and NEFIN are not able to adequately represent and articulate the range of civic voices beyond their membership boundaries. These CSOs have been criticized for representing only their own constituencies (CFUGs and indigenous communities), and neglecting the voices of other stakeholders such as Dalits (so-called untouchables) and women who are not formally represented in the RWG.3 There is also insufficient interaction among CSOs to consolidate their interests and to develop a unified voice (Bushley & Khatri 2011).

Fourth, much of the deliberative forums organized by government or non-government agencies are held in the capital city of Kathmandu, with limited opportunities for the local communities to participate. Many workshops and 105 individual expert consultations were carried out throughout the RPP process (MFSC 2010). Of these, 17 (approximately 30%) of the consultation workshops and events, and 91 (about 87%) of the individual expert consultations, were held in the capital city of Kathmandu, involving many of the same participants (Bushley & Khatri 2011). Clearly, location of the workshop and focus on experts mean that local voices were not given a fair opportunity to be heard during the process.

Fifth, there is also an increasing emphasis on the reliance of technical experts at the expense of inclusive stakeholder engagement. Recently, some CSOs complained that the MFSC relied on a few handpicked consultants, rather than on stakeholder task groups, to draft policy documents. In 2010, the MFSC attempted to introduce an interim REDD þstrategy, drafted by a team of consultants sponsored by the Worldwide Fund for Nature (WWF) Nepal. Although the MFSC claimed that the document was created through a participatory, multi-stakeholder process, CSOs strongly questioned that it was top-down and not owned by civil society. Eventually, the REDD-Cell withdrew the document and initiated a new interim strategy process (Khatri 2012).

‘MRV’ – is it workable?

REDD þ countries require a reliable and credible system of MRV to track forest carbon changes, which should meet the five reporting principles of the IPCC’s Good Practice Guidelines: consistency, comparability, transparency, accuracy, and completeness (UNFCCC 2009). It will be a daunting task for Nepal to meet evolving international standards for an MRV system for REDD þ , which requires sophisticated technology and expertise (Herold & Skutsch 2009). Few developing countries have the capacity (expertise, historical data, and funds to invest in sophisticated technologies) to meet the UNFCCC standards (Herold 2009; Herold & Skutsch 2009).

Clearly, Nepal faces a dual challenge: to develop an MRV system that is accepted by, and accessible to, participating stakeholders, including local communities; and to meet the standards for technical sophistication required by international certifying bodies. Nepal also lacks the historical baseline data and technical/institutional capacity to develop and implement an MRV system. Another challenge is to formulate and implement an MRV system for fragmented forestlands under diverse management regimes, which would entail high transaction costs. Since donor countries are driving the MRV debate, current MRV thinking relies too heavily on high-tech solutions (such as Light Detection And Ranging technology or LiDAR), and ignores field-based forest inventory methods that many local forest technicians and trained community members are capable of doing effectively.

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On the one hand, Nepal’s RPP recognizes the importance of stakeholder and community engagement in developing and executing an MRV system. On the other hand, the emphasis that was put on Forest Resources Assessment’s (FRA) work has privileged technological sophistication over stakeholder engagement. Researchers have suggested that it would be cost-effective to engage local communities and resource persons in carbon measurement, especially in community-managed forests (Skutsch et al. 2012). Through the widespread management of community forests, they have much experience in forest inventory (Acharya et al. 2012). However, measuring carbon and establishing a reporting and verification system is new in Nepal, and requires substantial investments in stakeholder capacity to build knowledge and skills among those with limited prior experience in this field, especially local communities and CSOs.

The RPP relies on the Finnish-supported FRA project for the necessary data and stakeholder capacity development for the REDD þ MRV system (MFSC 2010). However, CSOs like the FECOFUN have strongly objected to the FRA project for not including local communities in the governance of the project and ignoring the capacity development needs of CSOs and local communities.4 Some CSOs are disappointed by the fact that the FRA will not offer disaggregated data for community-based forest areas.

The RPP designates the DFRS as the key institution for generating carbon data and coordinating the task of developing and executing an MRV system (MFSC 2010). However, the DFRS has very limited institutional capacity in terms of both trained staff and committed leadership (Jha & Paudel 2010). This suggests that Nepal will face a lack of trained human resources for monitoring and reporting of forest carbon for REDD þ . More importantly, Nepal will not be able to follow the FRA strategy in the future, since it is hard to invest in the sophisticated technology and equipment needed (like LiDAR and other geo-based analysis) and to develop the technical capacity for their use. Such investment may not be financially viable given the small size and fragmented nature of forests.

Nepal also lacks robust historical forest data required to set are liable reference level for MRV. Past forest inventories were conducted using different assessment tools and methods – such as aerial photography, satellite imagery, field inventory, topographic maps – which are not all comparable and consistent (Shearman 2009; Jha & Paudel 2010). This poses a challenge for defining the reference level and generating the baseline for the REDD þ MRV, which requires additional tasks that build on past forest inventory data. Shearman (2009) suggested that the Land Resource Mapping Project (LRMP 1986) data can be taken as a reference for this. Furthermore, there is no discussion among REDD þpolicy actors on whether a national or subnational system should be adopted for REDD þ . In our view, applying a national average baseline is complicated in Nepal due to varying deforestation and degradation rates and distinct institutional contexts in the three distinct geographic regions – mid-hills, lowland plains (Terai), and high mountains.

The REDD þ readiness process, led by the REDD-Cell, has emphasized the technical aspects of MRV, with limited attention to how such a system would be governed, including who will collect, verify, interpret, and analyze the information; how it will be communicated to REDD þ actors; and how the system can become accountable to the wider public. Moreover, social and ecological safeguards have not been given adequate emphasis compared with carbon measurements. Finally, the measurement of carbon in fragmented forest patches under diverse regimes will involve high transaction costs, challenging the financial viability of a robust and disaggregated MRV system, especially considering the uncertainty surrounding REDD þ benefits.

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Benefit sharing: what do pilot experiments indicate?

Recent benefit-sharing piloting experiments of the International Center for Integrated Mountain Development (ICIMOD) and its partners have established some benchmarks in relation to procedures through which local forest management groups could access REDD þ funds (Bushley & Khatri 2011; ICIMOD et al. 2011). Started in 2009, this experiment provides an opportunity to learn how REDD þ benefit sharing could work, especially in a context where there is a limited history of payments for ecosystem services. The stated goal of this pilot project is to demonstrate a national governance and payment system for emissions reductions through sustainable forest management that benefits local communities. It tested benefit-sharing mechanisms with 105 community forestry groups in three districts within the middle hills of Nepal: Dolakha, Gorkha, and Chitwan. The project covers about 10,266 hectares, comprising three watersheds, and was implemented in partnership with the FECOFUN and the Asia Network for Sustainable Agriculture and Bioresources (ANSAB).

The project has proposed a pilot Forest Carbon Trust Fund (FCTF) at the national level, and has also experimented with a funding mechanism from the national to the community level. The FCTF is governed by a ‘FCTF Advisory Committee’ comprising members from project partners; representatives of CSOs, REDD-Cell, and communities (watershed REDD Network). A district-level advisory committee has also been formed to oversee and monitor fund disbursement at the district level. The FCTF governance includes arrangements such as strengthening the capacity of civil society actors in Nepal to actively engage in planning and preparation of national strategies related to REDD, drawing on the experiences from three pilot demonstration sites. The project has developed operational guidelines (ICIMOD et al. 2011) for governing the trust fund, including setting up criteria for REDD þ payments to the CFUGs considering carbon and the social parameters of the CFUGs.

The project made REDD þ demonstration payments in June 2011 using multiple criteria, with 40% of the payment given to the enhancement and conservation of carbon, while 60% was allocated based on the social parameters of the community as follows: 25% was given for ethnic diversity (based on the number of households of IPs and Dalits); 15% for the women population; and 20% for the incidence of poverty (number of poorest households identified by the CFUG) in each group. Of the total of $95,000 paid, $22,800 was accounted for CF carbon stock, $15,200 for carbon increment, $9,500 for IPs, $14,250 for Dalits, $14,250 for women, and $19,000 for the poor. The CFUGs have used the money in different forest management and community development activities as prescribed in the FCTF operational manual. The project record shows that the CFUGs have invested about one-third of money in different income-generating activities to support the livelihoods of poor households (Skutsch et al. 2012). Some CFUGs, especially those in Gorkha and Chitwan where they do not have past experience in identifying and supporting poor households, have faced challenges in channeling the money to poorer members (Khatri et al. 2012).

Our review of this experience exposed three fundamental questions of procedural and distributional equity. First, should community be offered full autonomy to allocate funds as per their own criteria, or should some social equity criteria be imposed through policies? On the one hand, CFUGs do not have well-developed mechanisms to channel benefits directly to households according to the FCTF criteria. On the other hand, some have argued that imposing standard guidelines for CFUG fund use will undermine their autonomy (Khatri et al. 2012). If any form of policy guidance is to be enforced, a related

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question is how carbon-benefit guidelines fit with other generic guidelines already in use, such as the Community Forestry Guidelines 2009. This also relates to the question of ensuring that diverse social groups within communities can negotiate a fairer system of sharing benefits and, more importantly, to recognition of local community efforts made for the conservation of forests.

Second, do the benefits accrued from small-scale and fragmented forest patches have the potential to contribute to local livelihoods in an equitable way? The use of CFUG funds shows that 31–35% of money is spent in livelihood improvement activities of poor and marginalized households (Skutsch et al. 2012). Moreover, some CFUGs received less than $100. This is too little to support the livelihoods of the poor and marginalized households (Khatri et al. 2012). Regardless of the amount, however, Nepal’s future REDD þ income could be significant enough to warrant issues of equity in sharing benefits (Karky & Skutsch 2010). So, the challenge is how to ensure an equitable benefit-sharing mechanism; otherwise, it can only lead to the elite capture common in Nepal’s forest governance (e.g., Iversen et al. 2006). It remains to be seen whether a more ethical basis for benefit distribution emerges, offering more to those whose needs and concerns are more severe than others in society, an approach known as priority view or positive discrimination in favor of the poor and disadvantaged groups (Raz 1986; Parfit 1991).

Third, the design and experience of benefit-sharing mechanisms funded by development aid projects only give ‘lip-service’ to heightened political awareness, and to demands for increased recognition of ethnic and identity politics and inclusive governance. It is unclear how such project-based actions can help people benefit in a fair way, when their claims to justice encompass more fundamental rights to identity, recognition, and equitable resource access in changing socio-political contexts. The success of REDD þ benefit sharing rests on how such claims are negotiated and settled both within the communities (i.e., horizontal equity) and among the communities, government agencies, and other relevant stakeholders at multiple scales (i.e., vertical equity). This is particularly critical given the centralized resource governance and diverse community-level dynamics in Nepal. Clearly, there are several equity issues in the REDD þ readiness process, on the one hand, and in the deeper political, economic, and technical complexities involved in the implementation of REDD þ , on the other hand. The critical challenge remains as to how the ethical dimensions are appropriately considered within increasing political and economic complexities so that the poor groups are not worse off due to the implementation of REDD þ .

Conclusions

In this paper, we analyzed Nepal’s REDD þ readiness process by focusing on how and to what extent the core issues related to carbon tenure, stakeholder participation, MRV, and benefit sharing are being addressed. Overall, we found that, although the REDD þreadiness process in Nepal is more interactive than several other forest policy processes, it has not addressed some of the most fundamental aspects pertaining to the multilevel governance, such as formulating a clear tenure policy and fostering meaningful stakeholder engagement.

Four key conclusions are drawn here. First, REDD þ is driven by external actors, including donors and international organizations. External dominance is reflected in the way the REDD þ agenda was introduced and prioritized within the government, how pilot projects have been designed and implemented, and how (and which) organizations are represented in various REDD þ -related forums and mechanisms, funding, and

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deliberations. International actors can bring important lessons and insights from outside, but must remain context sensitive and allow local voices and knowledge to build up, without pre-emptying the debates with ready-made solutions.

Second, the policy process is dominated by technical discussions about measuring carbon or, at best, producing ‘strategy papers’ that avoid critical issues such as those surrounding carbon tenure and defining who has the power to make which rules. Even the seemingly participatory processes and mechanisms have failed to enhance the voices of local communities, IPs, and marginalized groups. There have been some attempts to involve representatives of civil society groups – including networks of local communities and IPs – in policy processes, but the current strategy of engagement does not adequately represent local voices. In essence, REDD þ stakeholders have been reduced to ‘REDD program’ stakeholders, whose primary interest is the early flow of funds in the readiness process. Even the CSOs are driven more by immediate strategic gains than by the long-term rights of communities.

Third, given the continuing political transition and the limited focus of national decision-makers on forestry and REDD þ issues, it is unlikely that pilot projects will really inform or promote the policy reforms needed to define and implement an effective REDD þ system in Nepal. Donor-led and project-based initiatives are not always well placed to engage the political actors responsible for policy change, without which REDD þ may not be owned by the political system. This is especially salient considering the current state of political transition in Nepal, where the possibility of political influence by REDD þ readiness activities remains dismally low. In the transitional political environment of Nepal, locally engaged policy actors, activists, and researchers are better placed to influence policy than the direct intervention of the donor-funded projects.

If REDD þ is to work successfully, it must confront basic forest governance issues, including clarifying carbon tenure, defining the structure and mechanisms for benefit sharing, and crafting reliable MRV mechanisms and methodologies that work for both carbon credit buyers and local communities. And more importantly, this must proceed, on the one hand, through more substantively deliberative processes and genuinely interactive communications, and, on the other hand, by capitalizing effectively on the successes and failures of the pilot experiments. To achieve this, REDD þ policy processes must rise above the current bureaucratic thinking and engage political stakeholders who can coordinate actions across sectors, since the drivers of deforestation themselves are multi

sectoral.

Funding

Part of the evidences for this paper is drawn from a research project called ‘Paying for Ecosystem Services: Consequences and Alternatives’ led by The Swedish University of Agriculture, SLU and funded by The Swedish Research Council.

Notes

1. Besides FCPF’s support of US$3.4 million to implement RPP, other donors/INGOs have also been implementing different projects. For example, the NORAD has funded several pilot projects implemented by international organizations. The UK’s Department for International Development (DFID) and the Swiss Development Corporation (SDC) have jointly committed US$1.5 million through the Multi-Stakeholder Forestry Programme (MSFP). Furthermore, the Finnish government and the US Agency for International Development (USAID) are each supporting the development of a reference scenario and capacity building for

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implementing REDD þ projects, through the FRA project and the Hariyo Ban programmes, respectively. The Japan International Cooperation Agency (JICA) is donating vehicles and equipment.

2. A class I forest official of the MFSC expressed this view in a REDD working group meeting in 2010.

3. Personal communication of the second author with Dalit leaders and representatives of The HimalayananGrassrootsWomen’sNatural ResourceManagement Association (HIMAWANTI).

4. Civil Society Position paper collectively signed by key forest sector CSOs and submitted to the MFSC and the Embassy of Finland in Nepal.

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Documents

Carbon, community and governance: is Nepal getting ready for REDD+?