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Potential for result-based payments in the forestry sector

Photo by Chelsea Bock on Unsplash

Background and Objective

The forestry sector contributes to high emissions worldwide through the loss of historically established carbon stocks, mainly as a result of deforestation and forest degradation. To counteract this trend, the REDD+ mechanism developed at international level is intended to compensate developing countries for efforts which lead to a reduction in emissions from deforestation and forest degradation, as well as efforts to maintain and increase carbon stocks in forests or to manage forests sustainably. Up to now, a major share of REDD+ activities have been dependent on payments made by donor countries in the form of grants or loans under the provisions of official development assistance (ODA). This funding is, however, extremely limited and is not enough to guarantee the necessary level of protection for forest areas. As a result, transfer-based approaches – and especially international carbon markets – are often considered when financing REDD+ activities. As part of this UBA research project, Öko-Institut and CIFOR are looking at how and under what circumstances different forms of financing are suited to transfer-based approaches.


Implementation

In a first step, researchers examine current REDD+ financing models and discuss their relevance in the potential use of REDD+ carbon credits under the Paris Agreement. Building on these results, the different requirements for REDD+ financing are then examined using five sample countries. The conditions in respect of as many different countries as possible are taken into account and the requirements for effective climate financing for REDD+ are examined based on these different backgrounds.


Milestones and Outlook

The analysis of REDD+ financing models and their potential suitability for emission credits under the Paris Agreement is currently underway. Once the results are available, the project team will start examining the requirements for REDD+ financing in the sample countries. The research results will be compiled in the project’s final report. The report will also address the suitability of REDD+ financing approaches relative to the requirements of REDD+ countries and explore the question of whether an ideal financing mechanism can be created on the basis of existing instruments and whether it should be subject to the provisions of Article 6.

 

Potential for result-based payments in the forestry sector under the Paris Agreement

Role of BMWK: Research funding

Project lifecycle: 2020-2021

Implementation: Öko-Institut

Other participants: CIFOR

Contact: Hannes Böttcher, h.boettcher@oeko.de

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