Ian GrayNatural Resources

Forest Financing in Small Island Developing StatesNadi, Fiji

July 23 – 27, 2012

Opportunities for Forest Finance in GEF-5

• The GEF has been funding forest projects since its inception in 1991– 330 forest-related projects in 100+ countries– $1.7 billion GEF funding with $7.4 billion co-

finance• GEF-5 target of $1 billion invested in forests• Multi-functions of forests are at core of

investment strategy

GEF’s Investment In Forests

SFM/REDD+ Results Framework

Achieve multiple environmental benefits from improved management of all types of forests

1. Reduce pressures on forest resources and generate sustainable flows of forest ecosystem services

1.1 Enhanced enabling environment within the forest sector and across sectors

Effectiveness of policies that integrate SFM principles

1.2 Good management practices applied in existing forests

a) Forest area under FSC certification measured in hectaresb) Enhanced carbon sinks from reduced forest degradation

1.3 Good management practices adopted by relevant economic actors

a) Services generated in forestsb) Services generated in the wider landscape

2. Strengthen the enabling environment to reduce GHG emissions from deforestation and forest degradation and enhance carbon sinks from LULUCF activities

2.1 Enhanced institutional capacity to account for GHG emission reduction and increase in carbon stocks

Capacity to certify forest derived carbon credits

2.2 New revenue for SFM created through engaging in the carbon market

Total revenue from carbon market

Goal

Objectives

Outcomes

Indicators

Payments for ecosystem services systems establishedForest area under sustainable management , separated by forest typeTypes and quantity of services generated through SFM

National institutions certifying carbon creditsNational forest carbon monitoring systems in placeInnovative financing mechanisms establishedCarbon credits generated

Outputs

How The Incentive Mechanism Works

Investments from 2+ FAs seeking multiple benefits from managing forests sustainably

Incentive funds released in ratio

of 3:1 of FA investment

STAR Resources

BD

CC

LD

e.g. BD $1,500,000

LD $1,500,000+ SFM $1,000,000

Total Project $4,000,000

SFM/REDD+ Projects 2010-12

• 31 projects and 3 programs

• $401 million GEF funding

• 36% of $250 million incentive allocated

• Mainly mixed landscape interventions

35%

18%18%

20%

5% 4%

BDLDCCMSFMCCAIW

38%

15%7%

40%

Africa Asia ECA LAC

Exten

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Biological d

iversi

ty

Health

and vi

tality

Producti

ve fu

nction

Protec

tive fu

nction

Socio

-economic

function

Enablin

g fram

ework

0

20000000

40000000

60000000

80000000

100000000

120000000

Supporting the 7 SFM Themes

GEF-5 SFM/REDD+ Projects

From FAO FRA 2006

• Pressures of food security, population growth, climate change, resources

• Many products and services co-dependent• Individual forest functions are small enough to be

overlooked but collectively potential driver of rural development

• Societal recognition of forests’ importance• Prioritize long-term benefits over short-term gains

Managing for Multiple Functions – A Necessity

Lessons From GEF-5 Projects

• Wide range of forest situations applicable• Landscape level approach• Synergies – maybe a trade-off also?• Forest communities & livelihoods• Importance of on-the-ground presence in field

activities• Inter-agency coordination• Payment for ecosystem services