A global comparative review of REDD+ benefit sharing mechanisms
Grace Wong
Workshop on Context, Elements and Dynamics of REDD+ in Indonesia Jakarta, May 15, 2013
Presentation Outline
Definition of benefit sharing Review of benefit sharing mechanisms in 13 countries
Comparing for effectiveness, efficiency and equity Assessment of risks Concluding thoughts
What do we mean by ‘benefit sharing’ in REDD+?
• Benefit sharing = distribution of direct and indirect net gains from the implementation of REDD+
• Benefits come with costs:
• Direct financial outlays related to REDD+ (implementation and transaction costs)
• Foregone revenues from alternative forest land and resource use (opportunity costs)
• Benefit sharing mechanism = range of institutional means, governance structures and instruments that distribute the net benefits
Comparative review of benefit sharing mechanisms
• Reviewed existing benefit-sharing mechanisms (BSMs) in REDD+ and forest management
• Evaluated BSMs for their potential 3E (effectiveness, efficiency and equity) outcomes, and risks
• Comparative analysis of 13 countries based on country profiles developed in 2009-2012, political economy analyses, and other relevant literature reviews
• Bolivia, Brazil, Burkina Faso, Cameroon, Democratic Republic of the Congo, Indonesia, Lao PDR, Mozambique, Nepal, Papua New Guinea, Peru, Tanzania, Vietnam
Study approach
Pham, T.T. et al. (2013)
Effectiveness, Efficiency, Equity
Effectiveness and efficiency = priority is to achieve carbon emission reductions at least cost
Equity = examines who has the right to benefit and aspects of social inclusiveness
Trade-offs are involved between the 3Es depending on the BSM approaches, their design and how they are implemented
Prevalence of effectiveness, efficiency and equity debates in study countries
Countries Effectiveness vs.
efficiency: Benefits
should be used as an
incentive to bring
about reduction in
emissions and should
go to actors providing
these reductions
Equity discourse I:
Benefits should go
to those with legal
rights (statutory or
customary)
Equity discourse
II: Benefits
should reward
low-emitting
forest stewards
Equity discourse
III: Benefits
should
compensate
those incurring
costs
Equity discourse
IV: Benefits
should go to
effective
facilitators of
implementation
Brazil X X X X Bolivia X X X X Peru X X X X Indonesia X X X X
Vietnam X X X X X Nepal X X X X X Lao PDR X X X X PNG X X X X Tanzania X X X X Burkina Faso X X X X Cameroon X X X X DRC X X X X Mozambique X X X X
• Only four countries (Vietnam, Indonesia, Brazil and Tanzania) have national REDD+ programmes that regulate the distribution of REDD+ finance
• Benefit sharing approaches tend to build upon existing models or practices in-country
• Conflicts of interest and governance issues have delayed implementation of REDD+ policies, and benefit sharing is characterised by minimal interaction between sectors
• Many of the “enabling factors” identified as necessary for achieving 3E BSMs are lacking in all countries
Study findings (1)
• Market-based instruments: PES (national-level mechanisms in Brazil and Vietnam; projects implemented in almost all countries, most notably in Latin America), CDM/CERs
• Community forestry systems: Mixed success in most countries, Nepal and Tanzania are best known
• Fund-based approaches: • Independent: FUNBIO (Brazil), PROFONANPE (Peru) • Managed by State: Amazon Fund (Brazil), Reforestation Fund
(Indonesia), FONABOSQUE (Bolivia) • Within State budget: Donor aid (Nepal, Mozambique, Vietnam)
• Forest concessions: All countries, except Tanzania
Study findings (2): Common BSM approaches
Market-based
instruments (e.g. PES)
Collaborative forest
management
Fund-based models Forest concession
revenue-sharing
Effectiveness Well-defined legal framework and likely to be well enforced
Poor performance-based measurement
Weak monitoring of environmental and social impacts
Efficiency Better performance than traditional programmes
Potential for domestic financial sustainability
High transaction costs due to large number of buyers and financial management requirement
Equity National PES programmes also used to address poverty reduction goals, with mixed results
Elite capture problem Payments can be very low
Market-based
instruments (e.g. PES)
Collaborative forest
management
Fund-based models Forest concession
revenue-sharing
Effectiveness Well-defined legal framework and likely to be well enforced
Poor performance-based measurement
Weak monitoring of environmental and social impacts
Sustainable implementation with commitment and project ownership of communities and households
Efficiency Better performance than traditional programmes
Potential for domestic financial sustainability
High transaction costs due to large number of buyers and financial management requirement
Higher efficiency through increased community control and poverty reduction of people living near forests
High transaction costs due to large numbers of community members
Equity National PES programmes also used to address poverty reduction goals, with mixed results
Elite capture problem Payments can be very low
Difficult to achieve equitable distribution, State retains largest share of revenues
Legal framework does not recognize customary or community rights
Elite capture problem
Market-based
instruments (e.g. PES)
Collaborative forest
management
Fund-based models Forest concession
revenue-sharing
Effectiveness Well-defined legal framework and likely to be well enforced
Poor performance-based measurement
Weak monitoring of environmental and social impacts
Sustainable implementation with commitment and project ownership of communities and households
Independent funds: easy to attract funding, leakage depends on mandate, weak in sector coordination
Funds within state: require strict conditions for additionality, strong for sector coordination and controlling leakage
Efficiency Better performance than traditional programmes
Potential for domestic financial sustainability
High transaction costs due to large number of buyers and financial management requirement
Higher efficiency through increased community control and poverty reduction of people living near forests
High transaction costs due to large numbers of community members
Independent funds: lower transaction costs
Funds within state: low costs only if there is well-functioning administrative structure
Competitiveness increases as REDD+ grows in volume
Equity National PES programmes also used to address poverty reduction goals, with mixed results
Elite capture problem Payments can be very low
Difficult to achieve equitable distribution, State retains largest share of revenues
Legal framework does not recognize customary or community rights
Elite capture problem
Independent funds: can provide direct local compensation, transparent, potential to capture co-benefits
Funds within state: risk of being used to balance state budgets
Elite capture problem
Market-based
instruments (e.g. PES)
Collaborative forest
management
Fund-based models Forest concession
revenue-sharing
Effectiveness Well-defined legal framework and likely to be well enforced
Poor performance-based measurement
Weak monitoring of environmental and social impacts
Sustainable implementation with commitment and project ownership of communities and households
Independent funds: easy to attract funding, leakage depends on mandate, weak in sector coordination
Funds within state: require strict conditions for additionality, strong for sector coordination and controlling leakage
‘Easy’ option to distribute benefits from state-owned forest land
Simple forestry fee and fixed revenue sharing arrangements
Potential over- of under-payments, given differences in opportunity costs
Efficiency Better performance than traditional programmes
Potential for domestic financial sustainability
High transaction costs due to large number of buyers and financial management requirement
Higher efficiency through increased community control and poverty reduction of people living near forests
High transaction costs due to large numbers of community members
Independent funds: lower transaction costs
Funds within state: low costs only if there is well-functioning administrative structure
Competitiveness increases as REDD+ grows in volume
If land tenure is not an issue, transaction costs can be low and large amounts of carbon sequestered efficiently
Quick scale-up potential
Equity National PES programmes also used to address poverty reduction goals, with mixed results
Elite capture problem Payments can be very low
Difficult to achieve equitable distribution, State retains largest share of revenues
Legal framework does not recognize customary or community rights
Elite capture problem
Independent funds: can provide direct local compensation, transparent, potential to capture co-benefits
Funds within state: risk of being used to balance state budgets
Elite capture problem
Favours large-scale commercial actors
Disadvantages local-level Excludes local and
marginalized people in decision-making process, leading to poor compliance by communities
Elite capture problem
Study findings (3): Equity implications
• All countries lean towards allocating benefits to those with legal rights and to compensating those who incur costs • Conflicts between customary and formal rights
over land are evident in almost all countries studied
• Carbon rights are in infancy with no legal framework
• Allocation of REDD+ benefits to reward low emitting stewards is not a priority, potentially marginalising sustainable forest users
• Unclear and insecure land tenure creates injustice
• Under-representation of certain actors in decision-making reduces the legitimacy of REDD+ policies
• Lessons on the enabling conditions for REDD+ are disconnected from national decision-making
• Decentralisation can be meaningful only if it is coupled with adequate capacity building for local government
• The scale and scope of the definition of ‘forest’ and land tenure systems can lead to differences in the design and implementation of REDD+ activities
Assessment of risks
• Study has found that there is progress … reviews to clarify land tenure and rights over carbon; investments in monitoring, reporting and verification systems; new agency around the value of standing forests
• Risks can be mitigated through … improved coordination, better enforcement; clear guidance for and monitoring of financial flows; improved information exchange; stronger involvement and capacity of all actors
• Can REDD+ catalyse these changes? Depends … on how costs and benefits of REDD+ are shared, if benefits are large enough to incentivize change of behavior and policies, and on an inclusive process
Concluding thoughts
Terima Kasih!
For further information: Pham, T.T., Brockhaus, M., Wong, G., Dung, L.N., Tjajadi, J.S., Loft, L., Luttrell C. and Assembe Mvondo, S. (2013) Approaches to benefit sharing: A preliminary comparative analysis of 13 REDD+ countries. Working Paper 108. CIFOR, Bogor, Indonesia . http://www.cifor.org/online-library/browse/view-publication/publication/4102.html