Design of 3E REDD+ Benefit Sharing Mechanisms: Learning

from Other Experiences

Maria Brockhaus, Grace Wong, Cecilia Luttrell, Lasse Loft, Anastasia Yang and Shintia Arwida

COP 20Lima, Peru, 9 December 2014

CIFOR’s Global Comparative Study (GCS-

REDD+)

• To support REDD+ policy arenas

and practitioner communities with

- information

- analysis

- tools

• so as to ensure 3E+ outcomes:

- effectiveness

- efficiency

- equity and co-benefits

EC-funded: Opportunities and challenges to developing REDD+ benefit sharing mechanisms in developing countries

To provide REDD+ policymakers and practitioners with policy options and guidance to improve the design, development and implementation of REDD+ benefit sharing mechanisms.

- Review of existing performance-based distribution and benefit-sharing mechanisms

- Estimating the costs and benefits of REDD+ Policies and Measures, and of REDD+ projects

- Understanding multi-level forest governance as the context for REDD+ and assessing rights to REDD+ benefits

- Comparative options assessments to guide the development of REDD+ benefit sharing mechanisms

What do we mean by benefit sharing?

Benefit sharing is the distribution of direct and indirect net gains from the implementation of REDD+

Two types of direct benefits:

• Monetary gains and cash incentives from international and national finance related to REDD+

• Benefits associated with the increased availability of forest products and ecosystem services

Indirect benefits, e.g. improved institutional and governance processes

Benefit sharing mechanisms (BSM): Range of institutional means: governance structures and instruments that distribute finance and other net benefits from REDD+

Assessing 3Es in BSM: incentives, institutions, outcomes

A 3E BSM design for REDD+ needs to address:

the distribution of incentives

creation of enabling institutional conditions

change in LU practices to realize carbon and non-carbon outcomes

Effectiveness: relates to the environmental, social and economic impacts or performance of the instrument

Efficiency: the level of administrative and social costs associated with the instrument to achieve the policy objectives

Equity: 1) procedural refers to participation in decision making and inclusion and negotiation of competing views; 2) distributive refers to the allocation of outcomes and their impacts on different stakeholders

5Luttrell et al. 2013; McDermott et al. 2013

Why a review of other sectors and experiences for REDD+ benefit sharing?

1. How to operationalize equity, identifying target groups, setting up eligibility criteria?

2. Should incentives be provided for inputs or outcomes to change behavior?

3. What is the process of participation and decision-making (institutions) at multiple levels?

4. How is accountability and outcomesmeasured/ monitored?

Lesson from …

Lessons derived from current BSMs:Payment for Ecosystem Services (PES), Community Forestry systems (CF), Conditional Cash Transfers (CCT), Indigenous People’s trust funds in Brazil (IPTF), and European Rural Development Policy (RDP)

Lessons from governance practices: Anti-

corruption measures in Indonesia (ACM), standards and certification (S&C); VPAs under FLEGT

Loft et al. 2014; Wong 2014; Gebara et al. 2014; Forthcoming: Nawir et al., Yang; Arwida et al.; Tjajadi et al.

Lessons from ….

PES Review of lessons from PES of relevance to BS

CF Review of BS issues in various community forestry models in Indonesia and Nepal

CCT Review of cash transfers regarding the use of conditionality , the impact of cash transfers and targeting

IPTF Lessons from the Pater Surui and Kayopo funds as examples of trust fund mechanisms

RDP Lessons from a voluntary output based incentive for land management across Europe

ACM Selection of oversight and transparency mechanisms in Indonesia including EITI, state audits, anti-corruption agency, multi-stakeholder approaches cross ministry and enforcement agencies, online permit application system and budget monitoring

S& C Review or various certification standard schemes and how they operationalise equity (Fairtrade, FSC, CCB, Plan Vivo etc)

VPAs Review of relevant aspects from experience of VPAs for BS (MRV and multistakeholder processes

1. Operationalizing equity

a) Techniques for assessing and recognizing the level of costs and to whom they are accruing

- S&C periodic review of producer costs (Fairtrade)

b) Setting fair and minimum payments

c)Establishing phased and upfront payments (but need to make sure financial incentives are maintained till end - Plan Vivo TGB)

d) Paying attention to the type of benefit

• A focus on development activities and in kind benefits

• The pros and cons of cash

• Securing of rights

2. Increasing efficiency as a key element in cost and benefit sharing

a) The use of input rather than output indicators

b) Addressing scale e.g. bundling smallholders into groups (Son La and Lam Dong)

c) Using targeting to increase effectiveness and efficiency

d) Clarifying tenure

3. Institutional design to enhance efficiency and effectiveness

a) Using existing governance systems to reduce costs

b) Role of local government

c) Role of intermediaries - collect and distribute payments and to promote the scheme to potential beneficiaries. Examples include the National Fund for Forest Financing (FONAFIFO) which manages the Costa Rica PES and the independent private nongovernmental institution (FAS) which manage the Bolsa Floresta program

d) Coordination

4. Accountability through MRV

a) Inclusion and participation in process

b) Transparency

- Lack of transparency in the land fee distribution process in Cameroon from the transparent distribution of money to the transfer to the local Governments accounts

c) Dispute resolution

Negotiating options – key lessons..

PES: - helps understanding risks (elite capture) and advantages (effective collection/ distribution) of the role of intermediaries in cross-scale transactions

CF: - indicates that allocation of rights is a more sustainable incentive than performance or input based incentives in a situation when difficult for theses incentives to reflect true transaction and opportunity costs

CCT: indicates that: a) cash may be more effective than in-kind transfers to ensure more flexible, efficient and effective incentives; b)conditionalitiesbring effectiveness but are costly;

and more … so much to learn –

IPTF : - creates awareness that heavy safeguards requirements of funds may restrict IP participation

RDP: - indicates that targeting to poorer areas helps to achieve equity objectives

ACMs – requires a (budgeted for) coordination mechanism and strong !! authority

C&S: - shows that integrate minimum price guarantee can lower risks

VPAs under FLEGT: - highlights a) need to plan for time and compromise involved in inclusive multi-stakeholder process (MSP); b) the value of dispute resolution mechanisms & transparency

This presentation draws from the following CIFOR research:

Assembe, S. et al. 2013. Assessment of the effectiveness, efficiency and equity of benefit sharing schemes under large-scale agriculture: Lessons from land fees in Cameroon, European Journal of Development Research

Arwida S. et al. (Forthcoming) Lessons from anti-corruption measures in Indonesia

Gebara MF. et al. 2014. Lessons from local environmental funds for REDD+ benefit sharing with indigenous people in Brazil. CIFOR InfoBrief 98. Bogor, Indonesia: CIFOR.

Kowler LF. et al. 2014. The legitimacy of multilevel governance structures for benefit sharing: REDD+ and other low emissions options in Peru. CIFOR InfoBrief 101. Bogor, Indonesia: CIFOR.

Loft L. et al. 2014. Lessons from payments for ecosystem services for REDD+ benefit-sharing mechanisms. CIFOR InfoBrief 68. Bogor, Indonesia: CIFOR.

Loft, L. et al. (Forthcoming) Taking stock of carbon rights in REDD+ candidate countries: Concept meets reality.

Luttrell et al. 2013. Who should benefit from REDD+? Rationales and realities. Ecology and Society 18(4): 52.

Myers, R. et al. (2014) Who holds power in land use decisions? Implications for REDD+ in Indonesia. CIFOR InfoBrief 100. Bogor, Indonesia: CIFOR.

Nawir A. et al. (Forthcoming) Lessons from community forestry in Nepal and Indonesia

Pham T.T. et al. 2013. Approaches to benefit sharing: A preliminary comparative analysis of 13 REDD+ countries. Working Paper 108. Bogor, Indonesia: CIFOR.

Pham T.T. et al. 2014. Local preferences and strategies for effective, efficient and equitable PES benefit distribution options in Vietnam: Lessons for REDD+. Human Ecology.

Tjajadi, J. et al. (Forthcoming) Lessons from environmental and social sustainability certification standards

Wong G. 2014. The experience of conditional cash transfers: Lessons for REDD+ benefit sharing. CIFOR InfoBrief 97. Bogor, Indonesia: CIFOR.

Yang, A. (Forthcoming) Lessons from Scotland’s Rural Development Policy.

Thank you!

http://www1.cifor.org/redd-benefit-sharing/home.html

With co-financing from:

The CIFOR REDD+ Benefit Sharing project is supported by: