Environment

Analysis

Forest Investment Program (FIP)

CIFs Monitor 9

17 June 2014

Read a pdf version of CIFs Monitor 9

Options for potential new countries

In October 2013 the FIP sub-committee decided it will currently not be selecting new countries. It will review information prepared by the CIF administrative unit and the MDBs on how to assess new country requests based on potential additional funding at the June meeting. This includes agreement upon four options should further funding become available: selection of new FIP pilot countries (as of March a total of 39 additional countries had expressed interest), dedicated set-aside to address emerging issues related to REDD+, allocation of additional resources to existing FIP countries, and exploring synergies with PPCR and SREP projects.

Results monitoring and reporting

Following disagreement on the results framework, a final version of the core indicators was presented for approval at the FIP October sub-committee meeting (see CIF Monitor 8). The sub-committee agreed that FIP pilot countries will report annually on common themes (greenhouse gas emissions reductions/ enhancement of carbon stocks, and livelihoods co-benefits); other relevant co-benefit themes (biodiversity and other environmental services; governance; tenure, rights and access; capacity development); and a narrative report on common topics will be agreed.

Private sector set-aside

Following discussions in early 2013 on the procedures for how the $56 million fund can engage the private sector on reducing emissions from deforestation and forest degradation (REDD) and sustainable forest management, (see CIF Monitor 7), the FIP sub-committee endorsed the following project concepts in October 2013 for the FIP private sector set aside and requested the MDBs to prepare detailed project documents for approval:

  • Brazil: Macauba palm oil in silvicultural system (IDB)
  • Brazil: Commercial reforestation of modified lands in Cerrado (IFC)
  • Burkina Faso: Climate change mitigation and poverty reduction through the development of the cashew sector (AfDB)
  • Ghana: Public-private partnership for restoration of degraded forest reserve through certified plantations (AfDB)
  • Mexico: Guaranteed fund for financing low carbon forestry investments (IDB).

Following endorsement, financing was approved for the projects in Mexico and Ghana:

Project name MDB services and date approved Key project documents
Mexico: Guaranteed fund for financing low carbon forestry IDB

$200,000, first tranche (total of $400,000)

29 January 2014

Final decision

 

Project name MDB services and date approved Key project documents
Ghana: Public-private partnership for reforestation of degraded forest reserve through certified plantations AfDB

$175,000, first tranche (total of $350,000)

14 May 2014

Final decision

 

The FIP sub-committee also requested the MDBs revise the concept notes, taking into account comments from the set aside expert group and sub-committee members, and submit the following projects for review and endorsement by mail:

  • Burkina Faso: Powering climate-smart rural development in Burkina Faso (AfDB)
  • Democratic Republic of Congo (DRC): Community acacia and palm oil plantations on degraded lands to reduce deforestation in the Bandundu Province in DRC (AfDB)
  • DRC: Novacel Sud Kwamouth (IBRD)

Dedicated Grant Mechanism for indigenous peoples and local communities

The aim of the dedicated grant mechanism for indigenous peoples and local communities (DGM) is to “provide grants to indigenous peoples and local communities in country or regional pilots to support their participation in the development of the FIP investment strategies, programmes and projects”. The final framework operation guidelines setting out how to implement the DGM were endorsed and published in mid-September (see CIFs Monitor 8).

A competitive international selection process was concluded in December 2013 with US-based NGO Conservation International being selected as the global executing agency. Supervision costs were approved for Indonesia, Burkina Faso and Peru.

Country MDB Supervision services amount and date approved
Indonesia IBRD First tranche: $450,000 (Total: $750,000)20 December 2013
Burkina Faso  IBRD First tranche: $320,000 (Total: $640,000)20 December 2013
Peru   IBRD First tranche: $310,000 (Total: $620,000)20 December 2013

 

The funding will be used for the identification of priority areas for project intervention in several socio-cultural areas: identification of target indigenous and local communities; baseline data collection; sociocultural data; environmental; land ownership data; preparation of safeguards instruments; stakeholders assessment and mapping; development of implementation plan; including monitoring; consultation and participation and stakeholders engagement activities in seven regions.

FIP and REDD+

Following the October meetings the CTF sub-committee requested the CIF administrative unit, with support from the MDBs, to “prepare for review and approval at its next meeting, a paper providing guidance on the link between FIP investment funding and REDD+ performance-based mechanisms.” The report to be discussed at the June meetings will reflect on the “experiences of FIP pilot countries and the specific role of REDD+ readiness in progressing through the FIP programming process. The report explores the extent to which FIP funding has supported REDD+ readiness activities in pilot countries and the interplay between different funding initiatives in these countries.”

Updates on investment plans

Peru investment plan

Investment plan Amount and date approved Revised investment plan documents
Peru $50 million

30 October 2013

Peru’s Investment Plan

In the October 2013 meeting the FIP sub-committee endorsed $50 million for Peru and approved $1.5 million for preparation grants to support the following projects:

  • $370,000 for the “integrated forest landscape management along the main route between Tarapoto and Yurimaguas in the Regions of San Martín and Loreto” (IDB)
  • $400,000 for the “integrated landscape management in Atalaya, Ucayali Region” (WB)
  • $370,000 for the “integrated landscape management along the main route between Puerto Maldonado and Iñapari and in the Amarakaeri Communal Reserve” (IDB)
  • $360,000 for the “Strengthening of national forest governance and innovation” (IDB)

Indigenous organisations have criticised previous versions of the investment plan because they had not been consulted and agreed text had not been included (see CIFs Monitor 8). On the role of indigenous peoples the FIP sub-committee welcomed the joint commitment of the Peruvian government and indigenous organisations to work together, analyse and identify “issues that need to be discussed such as control and registry of early REDD+ initiatives, participation of indigenous technical staff in the formulation of the project proposals and the ways how communities will ensure their direct involvement in the implementation of project activities in the field.” The indigenous organisations AIDESEP and CONAP have now joined Peru’s FIP steering committee. Agreement was reached that $7 million will be used to address titling of indigenous communities, $4 million to drive forward community forest management, and $3.5 million to support indigenous governance.

Key donor questions and concerns prior to approval

The UK emphasised its “agreement with statements made by the government of Norway during the FIP sub-committee meeting; that the Peru investment plan needs to consider risk mitigation, specifically in relation to a possible breakdown between government and indigenous peoples.”

Indonesia investment plan

In September 2013 civil society groups protested against the Indonesian FIP, citing lack of consultation. Although controversial, the $70 million forest investment plan was endorsed at the November 2012 FIP sub-committee meeting (see CIFs Monitor 8). In a June letter civil society organisations, including over 50 Indonesian groups and international organisations, wrote to the IFC and World Bank to demand information on the investment plan, which they have been requesting for three years. The letter criticised “a lack of meaningful consultation or fulfilment of the principle of free, prior, informed consultation or consent”, in relation to a planned 700,000 hectares project. There has been a “violation of FIP safeguards which forbid FIP support for industrial logging”, and the role of the Indonesian army in FIP projects citing previous “documented cases of conflict and human rights violations in the forest sector which have had the involvement of armed forces.”

Selected project updates

Democratic Republic of Congo: will communities benefit from payments for emissions reductions?

Project name Amount and date approved MDB services Key project documents
Improved forest landscape management project $36.9 million (grant)

10 March 2014

IBRD

$1.2 million

Final decision

Project details

Aims to “support community-level natural resources management”…“address urban biomass energy needs” by promoting private sector participation, “promote the use of cleaner cookstoves” and “promote agroforestry and innovative production systems as an alternative to slash-and-burn agriculture and a source of sustainable woodfuel”.

World Bank safeguard policies triggered by the project include: Environmental Assessment, Natural Habitats, Forests, and Involuntary Resettlement.

Key donor questions and concerns prior to approval

The US: “We would appreciate more information on how financial support will be provided to villages or private sector participants. How will such financing be delivered, and what form will it take (payments for performance, concessional loans, grants, etc)? Who will make decisions on the provision and terms of such financing?”

The UK: “Are there any examples of activities that will proactively target women as primary beneficiaries?”

IBRD responded: “Emissions reductions payments agreements payments are mainly based on observed performance once avoided deforestation is verified on the ground. Upfront payments are limited. In this context, only project owners with strong financial capabilities (logging companies, cattle ranching companies, etc) or big international NGOs can stand to benefit from such carbon finance mechanisms. Because of financial barriers, remote rural poor communities will be excluded from such innovative financing schemes unless the donor community supports them in initiating the first series of investments through start-up financing.”

“Activities will be defined in the course of project implementation. Since the women will have a significant role in the definition of the villages’ management plan, they will identify the kind of activities they can develop to reduce the drivers of deforestation themselves. The solutions will come from the communities and we do not want to influence with pre-packaged activities.”

Project name Amount and date approved MDB services Key project documents
Indigenous peoples and local communities: forest dependent communities support project $6 million

29 January 2014

IBRD

$400,000

Final decision

Project details

“The project objective is to (i) strengthen the capacity of the targeted indigenous peoples and local communities to engage in the FIP and REDD+ activities, and (ii) promote local development in favour of sustainable forest management.”

“The project will trigger environmental and social safeguard policies. Most of the areas where the investment may take place are remote areas, with critical ecosystem that in addition may play a sacred/cultural role for local communities and the indigenous people. Therefore, at concept stage (Environmental Assessment), (Forests), (Natural Habitats), and (Involuntary Resettlement) have been triggered with (Physical Cultural Resources) to be decided during preparation.”

Brazil: low carbon emissions agriculture

Project name Amount and date approved MDB services Key project  documents
Sustainable production in areas previously converted to agricultural use $10.6 million (grant)

29 April 2014

IDB Final decision

Project details

“Promote the adoption of selected sustainable low carbon emission agricultural technologies by mid-sized producers in the Cerrado. The project has three components: (i) producer training; (ii) field technical assistance; and (iii) project management, monitoring and evaluation.”

Key donor questions and concerns prior to approval

The UK: “In the Brazilian context, where approximately 75 per cent of GHG emissions derive from deforestation, largely driven by agriculture) tacking unsustainable land-use practices is one of the most effective ways of preserving forests.”

IDB responded: “As part of its impact evaluation, the project will also experiment with different methodologies to assess the degree to which the adoption of low carbon emission agriculture plan technologies has influenced producer intentions to convert additional forest land into agricultural use within the participating production units.”

Project name Amount and date approved MDB services Key project documents
Macauba plant oil with impact Total estimated budget $3 million

29 January 2014

IDB

$400,000

Final decision

Key donor questions and concerns prior to approval

The UK asked that issues raised regarding the original concept must be fully addressed in project development: “The risk is that the project may give rise to perverse incentives, through increasing the return on agricultural land, thus encouraging further conversion of forest land to agriculture.”

Burkina Faso: consultation of forest communities paramount

Project name Amount and date approved MDB services Key project documents
Decentralised forest and woodland management project $16.5 million (grant)

22 October 2013

IBRD Final decision

Project details

“The project aims to (i) support country climate change governance, in particular through the design of a national REDD+ strategy that is applied to institutional and legislative frameworks in different sectors and results in concrete investments in targeted zones; (ii) improve land use planning and economic activities around forest and woodland resources; and (iii) establish guidance, best practices and a structure of knowledge management around sustainable natural resource management”.

Key donor questions and concerns prior to approval

Donors queried what consultations had already been carried out with communities with the US stating: “communities must be involved in decisions on alternative livelihoods”. The UK requested more details on how the project would protect biodiversity and ecosystem services that are under threat because “there are no details provided on activities to do this, and no indicators in the logframe.”

Forest Investment Program (FIP) explained

The FIP is a financing instrument aimed at assisting countries to reach their goals under reducing emissions from deforestation and degradation (REDD+). It aspires to provide scaled up financing to developing countries to initiate reforms identified in national REDD+ strategies, which detail the policies, activities and other strategic options for achieving REDD+ objectives. It anticipates additional benefits in areas such as biodiversity conservation and protection of the rights of indigenous people.

The FIP covers eight pilot countries with investment plans endorsed for Brazil, Democratic Republic of Congo, Laos, Mexico, Burkina Faso, Ghana and Indonesia.

As of end 2013, $639 million had been pledged to FIP, and $8.5 million has been disbursed. Cumulative funding decisions by the FIP sub-committee total $34.6 million.

Donors: Australia, Denmark, Japan, Norway, Spain, Sweden, UK, US.