Contending with the Financial Risks of REDD+
31 January 2011
"With prudent planning, REDD+ can contribute not only to reducing emissions, but also to protecting biodiversity. However, it remains highly uncertain if REDD+ funding will fuel long-term biodiversity conservation. We need to acknowledge the related risks to better prepare governments, conservationists and landowners to deal with the incoming, but by no means reliable or permanent, investments in forests."
PhD student Mr Jacob Phelps, NUS Department of Biological Sciences
REFORMING GLOBAL CONSERVATION FINANCE: NUS researchers Mr Jacob Phelps (left) and Dr Edward Webb
REDD+ (short for “Reducing Emissions from Deforestation and Forest Degradation”), a key strategic initiative of the United Nations (UN) to reform global conservation finance, could be more effective with wiser planning. Believing so, PhD student Mr Jacob Phelps and Asst Prof Edward Webb from the NUS Department of Biological Sciences, together with Dr Koh Lian Pin from ETH Zurich, set forth to outline the financial risks and ways to improve the financial resilience of forest conservation projects linked to REDD+, in a paper published in Conservation Letters on 21 December 2010.
Said Mr Phelps, first author of the study: “With prudent planning, REDD+ can contribute not only to reducing emissions, but also to protecting biodiversity. However, it remains highly uncertain if REDD+ funding will fuel long-term biodiversity conservation. We need to acknowledge the related risks to better prepare governments, conservationists and landowners to deal with the incoming, but by no means reliable or permanent, investments in forests.”
REDD+ involves the use of market or financial incentives to reduce the emissions of greenhouse gases from forested lands. Beyond that, it also encompasses conservation, sustainable management of forests and enhancement of forest carbon stocks.
In contrast to high expectations for funding of REDD+ projects, the study highlighted the risk of relying on voluntary public funding, which remain uncertain and potentially unsustainable in the long-term. It also raised concern over insufficient private investments in REDD+ projects, and the mismatch between the investment horizon for REDD+ projects versus the need for long-term funding to protect endangered species.
To improve risk management for biodiversity conservation, the researchers proposed several mitigating strategies such as diversifying conservation finance, stipulating minimum contributions from top carbon-emitting countries, managing REDD+ funding through conservation trust funds, and restraining the scale of REDD+ projects to what is achievable in the long-term.