National Forest Financing Fund (Costa Rica)

Summary

The National Forest Finance Fund is the Government institution that coordinates and implements the Payments for Ecosystem Services programme (PPSA) in Costa Rica and is responsible for the development of the REDD+ strategy. It was established by the 1996 Forestry Law (Arts. 46-51).

Executive Decree 37352 of 2012 established the institutional architecture for REDD+ within FONAFIFO. This includes the REDD+ Secretariat (Art. 1) and the REDD+ Executive Committee (Art. 3). The functions of the REDD+ Secratariat include strategic and technical development and acting as the liaison with counterparts including GIZ and the FCPF (Art. 2). The REDD+ Secretariat also chairs the REDD+ Interinstitutional Committee made up of the different State institutions active in REDD+. The REDD+ Executive Committee is the decision making body on REDD+ and is made up of a representative from each of: (i) small producers; (ii) timber industry; (iii) the National Banking System; (iv) indigenous peoples; (v) Ministry of Agriculture and Livestock (MAG); (vi) Ministry of Environment and Energy (MINAE); and (vii) Civil Society (Art. 3).

FONAFIFO and the National Conservation Areas System (SINAC) signed an interinstitutional agreement to found the Forest Inventory Committee. This Committee is funded by the REDD/CCAD/GIZ programme to prepare Costa Rica's first forest inventory.

Art. 48 of the Forestry Law sets the composition of FONAFIFO's board of directors. It is made up of: two private sector representatives selected by the National Forestry Office (ONF) (i) a representative of small and medium-size forestry producers; (ii) a representative of the industrial forestry sector; and a representative from each of; (iii) the Ministry of Environment and Energy (MINAE); (iv) the Ministry of Agriculture and Livestock (MAG); and (v) the National Banking System.

Art. 47 sets out the sources of funding for PPSA, including taxes (40% of timber taxes and 30% of the national fuel tax), funds from international cooperation and the proceeds from the sale of credits. The funding mix has changed over time, FONAFIFO now receives: (i) 50% of the water surcharge that large water users pay for the protection of the catchment area. FONAFIFO uses this to fund PPSA in the relevant catchment area (MINAE Decree 32868 of 2006, Art. 14); and (ii) 3.5% of the proceeds of the fuel tax (Tax simplification and efficiency law. Law 8114 of 2001, Art. 5).

FONAFIFO has nine regional offices. These will be active in the REDD+ complaints mechanism, receiving and channeling any complaints to the REDD+ Secretariat, which after an initial analysis will pass them on to the REDD+ Executive Committee for consideration and action.