Financing options to support REDD+ activities : Based on a review of the literature

Halting the degradation and loss of tropical forests would go a long way towards mitigating climate change, preventing biodiversity loss, and securing the supply of vital goods and services, while underpinning long-term sustainable development. Deforestation results from numerous and complex interactions, driven from both within and outside the country where deforestation is occurring. REDD+ has been developed as a "positive incentive" to compensate countries for reducing emissions from deforestation and forest degradation, with a view to influencing development pathways towards sustainable land use. This literature review explores several questions related to the efficiency, effectiveness and equity of REDD+ and discusses the suitability of various funding options to create the enabling conditions for addressing the drivers to deforestation. The importance of sustained investments (in improving the design and implementation of policies addressing the drivers of deforestation and forest degradation and leading to reduced deforestation and forest degradation) as compared to ex-post results based payments emerged as a key framing distinction to identify approaches to reducing deforestation with greater potential to trigger the kind of structural change, policy reform and long-term strategic planning for sustainable use of the forest resource required to address the drivers to deforestation which emanate from within forested countries. The ability to demonstrate performance towards agreed objectives remains an important factor whatever the finance source for REDD+. The conceptual shift from paying for results ex-post to sustained investment, however, allows for a broader definition of performance related to national-level political commitment and implementation of policies, rather than the narrow definition of results as quantified emissions reductions. The origins of REDD+ · The inclusion of forests within the climate convention was debated and rejected during the establishment of the Clean Development Mechanism (CDM) under the Kyoto Protocol (KP) due to concerns of permanence, additionality (compensating actions that would have occurred anyway) and leakage (the displacement of deforestation inherent in a project-based approach). · In 2005, Papua New Guinea and Costa Rica reintroduced forests to the UNFCCC debate following a proposal for "compensated reductions" based on national-level accounting of emissions reductions designed to circumvent the drawbacks of project-based approaches to avoiding deforestation. - This led to the official adoption of reducing emissions from deforestation and forest degradation (REDD) in the Bali Action Plan in 2007. In Poznan in 2009 the scope was extended to include three further activities related to the management of carbon stocks, known as REDD+. _ The origins of the REDD+ debate show the need for a national approach to monitoring performance, which is confirmed in the lessons emerging from the suite of "demonstration projects" which have blossomed following the inclusion of REDD+ in the climate negotiations. Early research from these projects shows that the fundamental concerns of leakage, lack of additionality and high costs and uncertainties in quantifying emission reductions remain. The issue of architecture REDD+ is a positive incentive instrument by design, and not a cap-and-trade instrument, due to the voluntary nature (meaning developing countries choose to participate) and the "no-liability" design, meaning that there are no sanctions for participating countries that do not reduce, or even increase, emissions. The question of REDD+ architecture is therefore not bound to a cap-and-trade type system, but remains open, and should be determined by the most cost-efficient and effective method of reaching the objectives of REDD+. The thorny problem of the baseline · Whilst emissions from fossil fuels are relatively predictable based on trends in gross domestic product (GDP), deforestation