Stimulating Interim Demand for REDD+ Emission Reductions: The Need for a Strategic Intervention from 2015 to 2020

Summary

Immediate action is needed to stimulate demand for REDD+ emission reductions. There is currently no source of demand that will pay for medium to long-term emission reductions from REDD+ in the period between 2015 and 20201 (‘the interim period’), and do so at the scale needed to meet REDD+ emissions reduction targets in tropical forest countries. This problem seriously threatens the successful implementation of REDD+, because without interim demand, there will be little or no incentive for forest countries to participate and redirect resources towards REDD+, or for the private sector to invest. In order to stimulate demand for REDD+ emission reductions, the right incentives need to be in place for tropical forest country governments and the private sector, who can then commit the necessary financial, human and political capital. The Interim Forest Finance (IFF) project advocates a strategic intervention by donor country and tropical forest country governments, and public financial institutions, to scale up demand for REDD+ emission reductions in the interim period. It would achieve this by using public sector funding to leverage considerably more private sector investment.

This report highlights the following key points:

1. There is a huge gap between supply and demand
2. Early movers could exhaust current funding
3. Funding needs to be scaled up at least to the magnitude of the Fast Start Finance pledges
4. Funding must be scaled up rapidly
5. Financial incentives need to be clear and long-term
6. The strategic intervention could build on existing institutions and examples
7. A strategic intervention would help maintain political momentum in REDD+