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A new report from the Bretton Woods Project monitors the latest news about the Climate Investment Funds. The report notes several on-going concerns with the Forest Investment Program: about a proposed independent review of investment plans and the investment plans produced for Burkino Faso and the Democratic Republic of Congo (both of which have been approved).

The next meeting of the Forest Investment Program will take place on 31 October 2011 – details of the meeting are available on the Climate Investment Funds website. At this meeting, the investment plans for Laos and Mexico will be considered. The investment plans are available via the CIF website (the Lao request for US$30 million is 147 pages long and Mexico’s request for US$60 million – almost half of which would be in the form of a loan – is 107 pages long).

The Climate Investment Funds have generated their own mini-alphabet soup: CTF, SCF, PPCR, FIP and SREP. Just in case any of these abbreviations mean nothing to you, here’s an explanation from the Bretton Woods Project:

The Climate Investment Funds (CIFs) are financing instruments designed to pilot low-carbon and climate-resilient development through the multilateral development banks (MDBs). They are comprised of two trust funds – the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF). The SCF is an overarching fund aimed at piloting new development approaches. It consists of three targeted programmes: the Pilot Program for Climate Resilience (PPCR), the Forest Investment Program (FIP), and the Program for Scaling Up Renewable Energy in Low Income Countries (SREP). So far donors have pledged $4.3 billion to the CTF and $1.9 billion to the SCF.

 

Bretton Woods Project has produced a series of updates on the Climate Investment Funds: March 2010, July 2010 and February 2011.

Here’s the section about the Forest Investment Program from Bretton Wood Project’s most recent update on the Climate Investment Funds:

Forest Investment Program (FIP)

Background

The FIP is a financing instrument aimed at assisting countries to reach their goals under Reducing Emissions from Deforestation and Degradation (REDD+)[i]. 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.

Updates

Resources and investment plans

Status of contributions to the FIP.

The FIP has eight pilot countries. Of these Burkina Faso, Democratic Republic of Congo (DRC), Lao PDR and Mexico have all completed joint missions and programming processes and submitted investment plans for endorsement. At the June FIP sub-committee meetings the investment plans from Burkina Faso and DRC were endorsed. The sub-committee approved $1.6 million in FIP resources for preparatory grants in DRC, and $5 million for readiness activities in Burkina Faso. The investment plans from Lao PDR and Mexico will be reviewed at the November sub-committee meetings. Programming processes are continuing in the other four pilot countries, Brazil, Ghana, Indonesia and Peru.

Dedicated grant mechanism for indigenous peoples and local communities

At the June meetings Indonesian NGO AMAN and Congolese NGO REPALEAC, members of the working group tasked with designing the dedicated grant mechanism, presented a working draft of the projects implementation plan. The mechanism is supposed to facilitate the active participation of affected communities in FIP investment strategy planning. After reviewing the document, the sub-committee requested that representatives of indigenous peoples groups and local communities, alongside the MDB committee, prepare a final proposal for the mechanism at the November meeting.

Concerns

Quality review of investment plans

At the June 2011 meeting the sub-committee discussed a paper proposing different options for a quality review of FIP investment plans. The paper included two options for the review. The sub-committee noted its general support for the first option: an independent quality review conducted by a single reviewer, but with a significant role for the pilot country and implementing MDB, including the selection of the reviewer and developing the terms of reference for the review.

 

Norway objected to this option, and instead argued for the second option, which included a roster of expert reviewers more independent from pilot countries and MDBs. Civil society observer Greenpeace supported the Norwegian proposal and urged the establishment of an independent review process, where the quality review would be an impartial third party analysis to help the committee to take informed decisions, rather than the review being a service to the MDBs and the governments themselves.

 

No decision was taken, and the review is on the agenda for the November meetings. In late August NGOs Greenpeace, Forest Peoples Programme, Friends of the Earth USA, Bank Information Centre and Global Witness sent a letter to the CIF administrative unit stating that an “independent review process that would add value must in our view provide a robust independent assessment of whether proposed investment plans and projects meet the FIP objectives, principles and criteria in order to assist the Pilot Countries in designing high quality plans, but also to help inform the members of the sub-committee to determine whether the programmes and projects can achieve the desired transformational results”[18]. It asks the sub-committee to consider detailed changes to the proposed review process.

 

Burkina Faso investment plan

There was a long and substantive debate at the June 2011 sub-committee meetings over both the Burkina Faso and DRC investment plans. Concerns raised in the meetings reflect broader issues currently surrounding debates over REDD+ and FIP. Critical commentators have noted that it is unclear how FIP, which provides large-scale funds for national forest investment strategies under REDD+, relates to the World Bank’s Forest Carbon Partnership Facility, which provides grants for REDD+ readiness plans. As NGOs Forest Peoples Programme and FERN have noted, “the relationship between investment strategies under the FIP and REDD strategies developed under the FCPF or UNREDD is still unclear and appears to vary between countries.”[19]

At the sub-committee meeting Norway noted that it remained unclear how Burkina Faso’s investment plan builds on readiness activities, and affirmed that the FIP design document stipulates that readiness plans need to inform investment plans. The sub-committee chair noted that there is no obligation for FIP pilot countries to participate in UNREDD or the FCPF, and that it remains unclear exactly what is meant by readiness. The USA then argued that in terms of readiness there needs to be more analysis of what the drivers of deforestation are, and that investments should not be locked in before analytical work has been done. Civil society observer Network for the Environment and Sustainable Development in Central Africa noted that although the plan states that consultations with affected communities took place, there is no information on how concerns raised in consultations were taken into account.

The World Bank then argued that there has been sufficient work done by the government in Burkina Faso, and that the plan should be approved. Reflecting broader concerns around the role of the MDBs in governance arrangements at the CIFs[20], Norway questioned the role of MDBs on the committee as defenders of their own programmes. MDBs sit on the committee as non-voting members, but also act as implementing agencies of CIF programmes.

The sub-committee provisionally endorsed the investment plan, on the condition that in completing further readiness activities it take into account comments from the sub-committee, including on drivers of deforestation. It asked the Burkina Faso government and MDBs to submit a revised investment plan. Since then they have also agreed to submit a readiness plan developed using FCPF readiness guidelines.

Democratic Republic of Congo investment plan

The DRC investment plan provoked a similarly extensive and intense discussion amongst sub-committee members. There were a number of issues raised, including on the selection of three similar project sites near urban centres, how the private sector will be involved in the projects, and how indicators from the FIP results framework were included in the plan.ii Discussion also centred on three issues critical to both the DRC plan, and to REDD+ more generally: adequate studies and enabling activities undertaken before locking-in investments, clarity and formalisation of legal reform relating to the land and tenure rights of indigenous peoples and affected communities, and the design of a benefit-sharing mechanisms.

A delegation of Congolese civil society groups argued that there are serious outstanding legal issues concerning the rights of affected communities, and that the DRC readiness plan stipulates that these need to be analysed and reforms implemented before investments take place. They also noted that legal texts on the rights of forest communities in the DRC, developed after over a year of consultations, were still not signed. They also noted that studies on the drivers of deforestation and benefit sharing mechanisms were stipulated in readiness plans but were still not finalised. Greenpeace also raised these concerns, and in addition noted that enabling activities for investments, including those by the private sector, were not adequately developed, and should include adequate and clear legal frameworks, clear land and tenure rights and good governance and law enforcement. This was supported by Norway. Greenpeace requested that legal texts on forest communities were signed, that DRC provide additional information on enabling activities, and that all analysis stipulated in the readiness plans be completed. The UK backed this proposal.

Despite these contentious points the sub-committee endorsed the investment plan, and only included requirements that the DRC and MDBs provide analysis on the barriers to private sector engagement, and that “components of the plan are coordinated, both with each other and with other initiatives in the country, so as to promote synergies and the achievement of sustainable impacts contributing to the objectives of FIP.”

 


Endnotes:

[i] ^^ UN-REDD defines REDD+ as follows: “Reducing Emissions from Deforestation and Forest Degradation (REDD) is an effort to create a financial value for the carbon stored in forests, offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development. ‘REDD+’ goes beyond deforestation and forest degradation, and includes the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.”

[18] ^^ Comments on procedures for the preparation of independent technical reviews of FIP investment plans (2011), available at: http://bit.ly/t7tRqh.

[19] ^^ Smoke and mirrors: A critical assessment of the Forest Carbon Partnership Facility (2011) Forest Peoples Programme, available at: http://bit.ly/rpHdyA.

[20] ^^ See A faulty model? What the Green Climate Fund can learn from the Climate Investment Funds (2011) Bretton Woods Project pgs. 8-12, available at: http://bit.ly/tx0WSS.