Supplementing REDD+ with finance for multiple forest services

Jonah Busch, Ph.D. (Conservation International)Finance Learning Event -- Global Environment Facility

CIFOR Forest Day 3UNFCCC COP 15

Copenhagen, Denmark, December 13, 2009

Based on:

•Busch, J., Strassburg, B., Cattaneo, A., Lubowski, R., Bruner, A., Rice, R., Creed, A., Ashton, R., Boltz, F. (2009). Comparing climate and cost impacts of reference levels for reducing emissions from deforestation. Environmental Research Letters, 4:044006.

•Busch, J., Godoy, F., Turner, W., Rao, N., Harvey, C. (in review). Co-benefits of REDD: Poverty alleviation, biodiversity conservation and clean water provision.

•Busch, J., Bruner, A. (2009). An investment strategy for the Tropical Forest Account in Global Environment Facility – 5.

Supplementing REDD+ with finance for multiple forest services

Multiple forest benefits(canopy photo)

GLOBALCLIMATE

REGULATION


GLOBALCLIMATE

REGULATION

$(REDD+)

Multiple forest benefits(canopy photo) biodiversity

localclimate

regulation

non-timberforest

products

clean water

food

soil formation

pollination

tourism

timber

fuel

cultural valuesmedicine

stormprotection

slopestabilization

livelihoods

GLOBALCLIMATE

REGULATION

$(REDD+)


GLOBALCLIMATE

REGULATION

biodiversity

localclimate

regulation

non-timberforest

products

clean water

soil formation

pollination

tourismfuel


stormprotection

slopestabilization

foodtimber

livelihoods

$(REDD+)


GLOBALCLIMATE

REGULATION

biodiversity

localclimate

regulation

non-timberforest

products

clean water

soil formation

pollination

tourismfuel


stormprotection

slopestabilization

foodtimber

livelihoods

$(REDD+)

To what extent would REDD+ enhance biodiversity conservation?


GLOBALCLIMATE

REGULATION

biodiversity

localclimate

regulation

non-timberforest

products

clean water

soil formation

pollination

tourismfuel


stormprotection

slopestabilization

foodtimber

livelihoods

$(REDD+)

$(biodiversity)

To what extent would REDD+ enhance biodiversity conservation?How to pay for additional forest biodiversity in the context of REDD+?


GLOBALCLIMATE

REGULATION

biodiversity

localclimate

regulation

non-timberforest

products

clean water

soil formation

pollination

tourismfuel


stormprotection

slopestabilization

foodtimber

livelihoods

$(REDD+)

$(biodiversity)

To what extent would REDD+ enhance biodiversity conservation?How to pay for additional forest biodiversity in the context of REDD+?

To what extent would paying for biodiversity enhance climate mitigation?

Supplemental finance options forbiodiversity and other forest services

1. Buyers interested in biodiversity voluntarily purchase additional REDD+

2. Existing REDD+ buyers pay a premium for carbon from biodiverse forests (e.g. CCBA/CARE Social and Environmental Standards for REDD+)

3. Bundling of payments for carbon by REDD+ buyers, payments for biodiversity from biodiversity buyers (e.g. GEF)

i. fund pays for reductions in countries’ biodiverse forests; countries sell resulting carbon abatement to the REDD+ mechanism

ii. fund buys carbon abatement from countries’ biodiverse forests above market price; resells to REDD+ mechanism at market price

iii. REDD+ mechanism pays for countries’ carbon abatement; fund pays for countries’contribution to biodiversity conservation

Modeling REDD with OSIRIS(Busch et al, Env Res Letters, 2009)

• 84-country partial equilibrium model• National incentives based on reference

levels• Leakage • Country-by-country outputs:

-deforestation (Ha/yr)-emissions (ton CO2e/yr)-revenue ($/yr)

• Caveat: Designed to compare climate and cost impacts across REDD policy designs, rather than to predict absolute magnitudeof impacts

• New output: Estimated rate of extinction of endemic forest-dwelling mammal and amphibian species, as predicted by species-area relationship

www.conservation.org/osiris

REDD+ reduces emissions from deforestationand extinction rate of forest species

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Total Annual Finance

REDD+ MECHANISM

1. ADDITIONAL REDD+ PURCHASES

2. PREMIUM FOR BIODIVERSITY = 5%

3. BUNDLED PAYMENTS FOR BIODIVERSITYEMISSIONS

EXTINCTIONS

Purchasing additional REDD+ slightlyreduces extinction rate of forest species

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REDD+ MECHANISM




EXTINCTIONS

Premium for biodiversity substantiallyreduces extinction rate of forest species

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REDD+ MECHANISM




EXTINCTIONS

Bundled payments for biodiversity substantially reduce extinction rate of forest species

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REDD+ MECHANISM




EXTINCTIONS

Biodiversity payments attract additional carbon payments

Biodiversity value (endemic species/ha)Relative to opportunity cost ($/ha)

Car

bon

valu

e (G

tCO

2e/h

a)R

elat

ive

to o

ppor

tuni

ty c

ost (

$/ha

)

C combined REDDand biodiversity

payments sufficientto conserve

forest

Bbiodiversitypaymentssufficient

toconserve

forest

AREDD payments sufficient to

conserve forest

Biodiversity payments catalyzeadditional carbon payments

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REDD+ MECHANISM




EXTINCTIONS

$0.5B $1.0B $1.4BFinance for biodiversity: $0.2B

Example of bundled payment:Forest Incentive Mechanism in GEF-5•Formerly Tropical Forest Account (TFA) in GEF-4

•Attends to three international conventions (FCCC, CBD, CCD)

•Objective: achieve multiple global environmental benefits from the management of all types of forests and strengthen sustainable livelihoods for people dependent on forest resources.

•~$180-400 million in GEF-5

•Expected to leverage further $700-1000 million from GEF STAR balances, plus additional leveraging

•Design under development

•For more information: Gustavo da Fonseca or Dirk Gaul

Concluding MessagesREDD+ expected to reduce emissions from deforestation and reduceextinction rate of forest species

Either premiums (e.g. CCBA/CARE SES) or bundled payments(e.g. GEF) could substantially reduce extinction rates further

Either premiums or bundling for multiple forest services would:

- lower price paid by REDD+ buyers- increase price paid to REDD+ sellers - attract additional carbon payments- lead to additional reductions in emissions from deforestation

Thank you!

Based on: Busch, J., Strassburg, B., Cattaneo, A., Lubowski, R., Bruner, A., Rice, R., Creed, A., Ashton, R., Boltz, F. (2009). Comparing climate and cost impacts of reference levels for reducing emissions from

deforestation. Environmental Research Letters, 4:044006.

Busch, J., Godoy, F., Turner, W., Rao, N., Harvey, C. (in review). Co-benefits of REDD: Poverty alleviation, biodiversity conservation and clean water provision.

Busch, J., Bruner, A. (2009). An investment strategy for the Tropical Forest Account in Global Environment Facility – 5.

[email protected]://www.conservation.org/osiris

Global Environment FacilityCenter for International Forestry Research

Environmental Defense FundWoods Hole Research Center

University of East AngliaTerrestrial Carbon Group

Private gift to Conservation InternationalGordon and Betty Moore Foundation

Norwegian Agency for Development Cooperation

Finer scale of biodiversity metricreduces extinctions

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REDD+ MECHANISM

ADDITIONAL REDD+ PURCHASES

BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA (Continental)BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA (Regional)BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA (National)

More precise biodiversity metricreduces extinctions

•Top 20% endemic species•Number of forest endemic species (Indonesia, Brazil, Mexico, Madagascar, PNG…)•Endemic species per hectare of forest (Haiti, Jamaica, Sri Lanka, Cuba, Madagascar…)

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REDD+ MECHANISM


BUNDLED PAYMENTS FOR BIODIVERSITY (bonus payment for 20% most endemism)BUNDLED PAYMENTS FOR BIODIVERSITY (bonus payment for 20% most endemic/ha)BUNDLED PAYMENTS FOR BIODIVERSITY (payment proportional to endemism)BUNDLED PAYMENTS FOR BIODIVERSITY (payment proportional to endemics/ha)

Supplemental finance options forbiodiversity and other forest services

1. Additional voluntary purchases of REDD+

2. Premium from existing REDD+ buyers for carbon from biodiverse forests (e.g.CCBA)

3. Bundling of payments for carbon, biodiversity (e.g. GEF)

i. fund pays for reductions in countries’ biodiverse forests; countries sell resulting carbon abatement to the REDD+ mechanism

ii. fund buys carbon abatement from countries’ biodiverse forests above market price; resellsto REDD+ mechanism at market price

iii. REDD+ mechanism pays for countries’ carbon abatement; fund pays for countries’contribution to biodiversity conservation

REDD+ForestsBiodiversity

Fund

Forests

Forests REDD+Biodiversity

Fund

Forests BiodiversityFund REDD+

Forests

REDD+Biodiversity

Premium

REDD+Biodiversity

Fund

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Total Annual Finance for REDD

Deforestation (ha)

Emissions (GtCO2e/yr)

Extinctions (species/yr)

Co-benefit of REDD: Paying for forests’ carbon reduces extinction rate of forest species

(Busch et al, in review)

Finer geographic scale for biodiversity metric generates greater reduction in extinction rate

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REDD+ MARKET


BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA (Continental)BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA (Regional)BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA (National)

BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA(Sub-national)?

?

Supplemental finance for biodiversitysubsidizes REDD+

biodiversity subsidypp’d

p’s

q’q

S

D

Supplementing REDD+ with finance for multiple forest services

Education