Regional Forum on Developing and Financing Low Emission Development Strategies for the Agriculture, Forestry and Other Land Use Sector: Moving from Promise to PracticeBangkok• 7-9 July 2015

Financing Low Emission Development in the AFOLU SectorJeremy BroadheadSenior Forestry and Land Use Policy AdvisorUSAID LEAF

Climate change and AFOLU

In 2010 24% of global GHG emissions were from AFOLU In ASEAN the figure was 58%

Source: IPCC 5th Assessment Synthesis Report

Overview

1. Why the financing gap?

2. Financing considerations

3. Financing sources and challenges

4. The way ahead

Why the financing gap?

Insufficient finance and lack of demand for emissions reduction/green goods?

Lack of political will? Wrong mechanisms? Weak land tenure and law enforcement? Lack of clear institutional responsibilities? Lack of capacity/experience?

Financing considerations

What kinds of financing are available? What are the main sources of financing?

International public Domestic public Private

Who are the recipients? E.g. NGOs, government, large companies, SMEs

What type of activities require financing? Creating an enabling environment or Producing an asset e.g. emissions reductions or “green” goods

How well developed is the policy and institutional environment? Financial and monitoring framework in particular

At what stage of maturity is the initiative?

Grants

Debt finance (Loans and Bonds)

Equity

Subsidies and indirect finance

Purchase and sale payments

Key questions

1. Will the investment generate a financial return?

2. Do the activities have the potential to leverage private finance?

3. Is supporting infrastructure in place?

International Public Finance

International Public Finance

1. Technical support and institutional and capacity building

GCF, UN-REDD, FCPF-RF, NICFI

2. Non-results-based support to AFOLU mitigation GEF, FIP

3. Non-market results-based finance Bilateral assistance (Norway, Germany)

4. Carbon payments FCPF-CF, WB BioCarbon Fund

Key challenge: Low disbursement rates

Improve capacity to transparently implement and monitor activities on the ground

Clarify domestic institutional responsibilities (e.g., between environment and forestry ministries)

Resolve land tenure issues Improve effectiveness and coordination of multilateral

REDD+ institutions

Private Finance

Purchase and sale payments Carbon market finance Foundations Impact investors

Voluntary Sustainability Initiatives

Key challenge: Lack of reach

Find ways to increase positive off-farm impacts Increase market share and improve environmental

sensitivity of markets

Also: Provide regulatory support to help realize price premium Improve certification standards and implementation

Domestic Public Finance

Governments often the main investors in AFOLU through: Subsidies and indirect finance Concessional loans Equipment and training Financing sector governance

The way ahead

Begin by assessing and targeting financing Leverage private financing Implement domestic subsidy reforms and policy support Encourage collaborative action between domestic,

international and private actors Keep learning and moving forward!

Day 2 agenda

1. International Climate Change Financing for Land Use: Beyond a Paris Agreement

2. Private Financing for Land Use in Southeast Asia

3. Parallel sessions: Innovative financingi. Low Emissions Business Models

ii. Voluntary Sustainability Initiatives

iii. Financing Forest Conservation

4. Working groups: Addressing the financing gap i. Subnational

ii. National

iii. International

5. The roles of public and private financing in closing the financing gap and funding AFOLU LEDS (presentations and discussion)