How REDD+ Results-based Payments can contribute to a greener, more equitable and inclusive future beyond Covid-19

24 November 2020

Forests are a core nature-based solution and are critical to addressing the climate emergency. If deforestation is stopped and degraded forests are restored, they can provide around a third of the carbon reduction needed to avoid the most severe impacts of climate change. As an accredited entity to the Green Climate Fund, UNDP has an emerging portfolio of 320 million USD related to reducing emissions from deforestation and forest degradation, conservation, sustainable management of forests, and enhancement of forest carbon stocks (REDD+). A third of this portfolio is dedicated to payments for ecosystem services (PES) and community forest management programs.

Payments for ecosystem services reward individuals or communities for undertaking actions that increase the provision of ecosystem services such as water purification, flood mitigation, or carbon sequestration. PES can be an important mechanism to transfer needed cash resources directly to impoverished groups. In addition to being widely used to cushion the economic damage from sudden shocks like this pandemic, cash transfers have long been recognized as an effective tool for poverty reduction around the world, yielding benefits to health, education, employment and overall well-being.

In the context of the creating a greener, more equitable and inclusive future, beyond COVID-19, cash transfers offer three important forms of relief: (1) a rapid and cost-effective way to provide basic needs; (2) a means to recover and invest after the crisis; and (3) protection from future shocks. Cash transfers accomplish all of this while giving individuals the autonomy to manage their own expenses and stimulating local economies.

Payments for ecosystem services are unlike any other cash transfer program because they are conditional upon performance—that is, in order to receive cash transfers, participants must achieve certain outcomes by doing (or refraining from doing) certain activities. In the COVID-19 recovery phase, PES schemes must be carefully targeted to achieve desired environmental and social outcomes, considering the goals of the program as well as synergies and trade-offs with other goals, programs, and sectors. UNDP is currently supporting four countries to deliver PES with resources from the Green Climate Fund:

Ecuador’s Socio Bosque Programme provides financial incentives to individual and community landowners who voluntarily commit to conserve native forests for a 20-year period. The GCF supports the Socio-Bosque Programme through the Priming Financial and Land-Use Planning Instruments to Reduce Emissions from Deforestation project, a USD 41M grant to support the implementation of Ecuador’s REDD+ Action Plan. As of June 2020, the GCF funding has allowed Socio-Bosque to enroll an additional 259,000ha into the programme, benefiting 175,000 people, the majority of which are indigenous peoples of the Amazon.

Brazil’s Floresta+ is a new and innovative program that aims to provide incentives for environmental services (IES) to family farmers, traditional communities, and indigenous peoples in the Amazon region. The pilot phase of Floresta+ is being funded by the first results-based payment proposal approved by the Green Climate Fund Board in February 2019 for 96M USD. USD 80 million from the payment for REDD+ results achieved by Brazil in the Amazon biome in 2014 and 2015 are committed in support of the Floresta+ initiative.

Indonesia’s Social Forestry Programme aims to alleviate poverty, halt deforestation, and end forestland conflicts by giving local communities the opportunity to manage forests themselves – and to develop sustainable livelihoods based in and around them.  The Social Forestry Programme is supported with approximately one half of Indonesia’s USD 103.8 million REDD+ results-based payment from the GCF for the emission reductions achieved from 2014 to 2016. It is expected that an estimated 200,000 households will benefit from the project’s support to the Social Forestry Programme. More than 74 per cent of Indonesia’s poor depend on ecosystem services for their livelihoods. Depletion of these services would have drastic impacts on the livelihoods of the poor while simultaneously widening the inequality gap.

Costa Rica’s Payment for Environmental Services Program, first established in 1995, is a system of voluntary contracts through which a well-defined land-use practice likely to secure an environmental service is paid for if, and only if, the participants conduct the agreed sustainable land-use practice. Roughly 90% of Costa Rica’s recently approved USD 54 million GCF REDD+ results-based payment for emission reductions achieved in 2014 and 2015 will be applied to Costa Rica’s PES Program benefiting, in particular, women and indigenous peoples. Over the last 5 years the PES program has been fully funded by a national fuel-tax and water fee but, in the current economic downturn caused by the pandemic, the GCF funding is essential to consolidating the gains of the last 25 years and sustaining the transfer of needed cash resources directly to impoverished groups in the COVID-19 recovery phase.

UNDP’s Climate & Forests Programme supports many more countries in their efforts to secure financing for the implementation of their REDD+ strategies through the negotiation and co-design of large-scale investment projects and results-based payments schemes. The main sources of funding under which this support is provided are the Green Climate Fund, bilateral agreements on REDD+ and, in the near future, carbon markets. When promoting climate and forest policies and investments in countries, now more than ever, we need to ensure an equitable and inclusive approach with social protection considerations at its core.