Forest Investment Program Lao PDR

Initiative

Summary

Laos is a pilot country of the Forest Investment Program (FIP), a targeted programme of the Strategic Climate Fund (SCF), which is one of two funds within the framework of the World Bank group’s Climate Investment Funds (CIF). The FIP supports developing countries in their REDD+ efforts.

As a pilot country of the FIP, Laos aims to address the underlying drivers of deforestation and forest degradation. The FIP seeks to assist Laos in overcoming historical barriers that hindered the achievement of the sustainable management and protection of its forests. FIP resources are used to support REDD+ initiatives such as by strengthening legal and regulatory frameworks and by supporting actions at the national, provincial and district levels.

Investments from the FIP are channelled through the multilateral development banks (MDBs): World Bank (WB), Asian Development Bank (ADB) and the International Finance Corporation (IFC).

The programme themes of the FIP Laos Investment Plan have been developed to dovetail with the Forest Strategy to the Year 2020 (FS2020) target to attain a 70% forest cover in the country and the relevance of this target to REDD+. Four thematic components deal with establishing all forest land and resources under participatory and sustained protection, development, and management, in aims to eliminate the various drivers of deforestation and forest degradation. These four components are: 1) ‘Protecting Forests for Ecosystem Services’, under the implementation of ADB; 2) ‘Smallholder Forestry’, under the implementation of IFC; 3) ‘Scaling-up Participatory Sustainable Forest Management’, under the implementation of WB; and 4)Creating an enabling environment, a cross-cutting theme between the other three components that provide the impetus for the participation of villages and stakeholders by providing benefits such as through legal or regulatory reform, law enforcement, capacity building, development of payments for ecosystem service or REDD+ schemes, MRV and knowledge management.

The underlying idea is that grassroots forest managers operating in forest areas will be vigilant in protecting the forests in their areas from the various agents of deforestation and degradation, and will rehabilitate degraded lands using land management systems that will provide them with benefits, while also enhancing carbon stocks. 
The FIP Lao Investment Plan 2011 (see attached) estimated the expected financing of the FIP. Total financing for FIP implementation is estimated at about USD 150 million, including grant financing requested from FIP, existing budgets of partners in the forestry sector aligning their programmes and activities with REDD+, and new grant financing under consideration of the Ministry of Foreign Affairs of Finland, a contribution from the Government of Laos, further grants from WB, ADB, and bilateral donors. A significant proportion of these funds were projected to be applied through existing projects and programmes, where financial management and procurement capacity has already been established and will be strengthened through FIP implementation.

On 31 October 2011, Laos gained approval from the FIP Sub-Committee for the proposed USD 30 million investment plan from the FIP. The Lao FIP Investment Plan allocation excludes the funds to be provided under the Dedicated Grant Mechanism (DGM) which has a total funding of $50 m approved by the FIP SC (Personal communication, Khamlar Phonsavat, World Bank, Laos).

Planning for the FIP is underway, with specific projects (at the time of planning) expected to become active in 2013. Although the FIP itself is a national level programme, individual projects apply subnationally. 

Stakeholder engagement and participation

In formulation of the FIP plan consultation meetings and interviews with all stakeholder groups were carried out at the national level and in selected provinces over 2011. These included meetings and interviews with local communities and indigenous groups, the private sector, government agencies and development partners.

Safeguards

Related to safeguards, the FIP acknowledged in its investment plan that the general environmental and social risks and potential impacts associated with REDD+ in PFAs, and the mitigation measures against them, have already been identified and developed under the related Sustainable Forestry for Rural Development (SUFORD) project. It recalls the SUFORD Environmental and Social Impact Assessment (ESIA), which identified a number of environmental and social risks associated with REDD+ in PFAs, including the importance of: controlling the harvest of timber and non-timber forest products; the equitable benefit sharing of timber royalties; the participation and need for training to achieve effective participation with ethnic groups; and, enhancing women’s participation. It states that a separate ESIA is to be conducted in preparation of specific investments, using lessons learned from SUFORD. Relevant safeguard instruments are then to be developed, in line with, amongst others, the laws and regulation of Laos, the safeguard policies and procedures of the MDBs and other financing agencies; and the REDD+ safeguards under the UNFCCC as agreed in Cancum (COP 16, LCA Decision, Annex 1, Paragraph 2).

With regards to environmental safeguards: the FIP is clear that no forest lands are to be converted to other uses, except where natural forest cover has decreased to below 20%. With regards to social safeguards, throughout preparation and implementation, community participation and consultation is to be emphasised to as to avoid any negative impacts on the livelihood of the local population. The FIP identifies mechanisms for conflict resolution and grievance and states that appeals are to be established and disseminated to all relevant stakeholders, including indigenous peoples who may be affected by the project.