1. INVESTING IN FORESTED ECOSYSTEMS: REDD+ & THE PRIVATE SECTOR The Kasigau Corridor REDD project, SE Kenya

2. Outline  The big picture & background  Forests, Climate change & REDD  The REDD concept – Voluntary markets  Wildlife Works  Philosophy, REDD history  WW REDD model  Barriers and Enablers: policy-related  Closing thoughts

3. Forests and global climate change  Five million ha deforested annually  Relevance for climate change  Sink; Reservoir; Source  Forest sector: 15-20% of total anthropogenic GHG emissions  Climate change cannot be tackled without addressing deforestation & forest degradation

4. REDD-plus: Genesis - UNFCCC RED  CoP-11 in Montreal 2005: Compensated Reduction in deforestation – RED REDD  SBSTA workshops added degradation – REDD REDD+  2007: Compensated Conservation suggested – REDD+  Bali meeting (CoP-13) in 2007  “the urgent need to take further meaningful action to reduce emissions from deforestation and forest degradation”  “and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks…”

5. REDD: Basic idea  REDD: Use market/financial incentives to reduce GHGs emissions  Financial compensation: opportunity costs or value of carbon market prices  Carbon offsetting thru carbon credits  Compensate for polluters’ emissions  Primary aims  Reduce GHG emissions  Deliver Co- or Core benefits: biodiversity & social

6. REDD: From tree to credit Carbon sampling (above & below ground; soil) Project Design Document - Standards Third-party validation of PDD Project registration & VCU issuance Monitoring, Reporting & Verification VCU = 1 tonne GHG emission

7. Carbon Credits and Markets  Carbon credit: a freely tradable, fungible commodity  Represents the right to emit one tonne of CO ₂e  Main markets  Compliance Market: Certified Emission Reductions (CERs)  Verified Market: Verified Emission Reductions (VERs)

8. Voluntary carbon market  Driven by entities choosing to voluntarily minimise climate impact  Philanthropy  Commodity  Involves organisations from all sectors – private, public, and non-profit  NGOs pioneered but now outnumbered by private firms  Strengths of the voluntary market  Wide scope: potential to outstrip the compliance regime  Private sector led growth, not public sector

9. VER Market: Historic transaction volumes State of the Voluntary Carbon Markets 2011 – Ecosystem Marketplace & Bloomberg

10. Carbon markets & REDD: not all rosy… CO 2 lonialism & Green capitalism

11. REDD opportunities  Financial flows predicted from GHG emission reductions from REDD+ could amount to USD 30billion a year  Carbon markets and/or multi-lateral funds  Conservation finance: achieving multiple benefits in addition to Carbon  Conservation of biodiversity and ecosystem services  Social benefits: income and governance  REDD+ readiness programmes  Capacity development: technical, institutional  Forest governance  Engagement/empowerment of Indigenous Peoples

12.  Wildlife Works: founded in 1997  If you want to protect the endangered wildlife, you need to balance the needs of wildlife with the need for work for rural communities who share the same environment  Mission: is to bring market-based solutions to conservation of biodiversity by providing benefits – jobs – to rural communities  Test Site: Rural community in the Kasigau wildlife corridor between Tsavo East & West National Parks Wildlife Works

13. Wildlife Works and REDD: I  1998: Conservation rights to Rukinga Ranch – 75,000 acres  Land management; Economic alternatives; Community support  2008: VCS announced support for REDD  2009: Project validated under CCB–Gold Level for exceptional community & biodiversity benefits  Feb 2011: Rukinga Project became first VCS & CCB validated & verified REDD project in the world!  Phase II of project was 2 nd : 520,000 acres

14. Wildlife Works and REDD: II  Wildlife Works’ REDD ethos  Sequester carbon by protecting threatened forests  Save endangered wildlife & habitats  Improve the quality of life for local communities  Internationally: a leading REDD project development & management company  Most REDD credits sold in global voluntary market  Rio +20: CODE REDD initiative  Nationally: engaging national REDD efforts  Working closely with KFS, KWS & the REDD taskforce

15. Kasigau Corridor REDD project area

18. Key REDD implementation challenges  Simple concept: BUT! Requires control over drivers i. Additionality : How do you ensure that REDD emissions reductions & co-benefits that are real and additional? ii. Leakage : How do you know that reducing deforestation in one place will not cause increased deforestation in another? iii. Permanence : How do you know that REDD will not just be a temporary fix, but will protect forests permanently? iv. Equity : How do you ensure REDD will not adversely impact rights and livelihoods of people living in or around forests? v. MRV : How do you measure, report and verify emission reductions from forests, including co-benefits?

19. Challenge Ia: Real and additional Deforestation Baseline & Reference area  Satellite images: rate of historical deforestation  Census data: population growth during that period  Deforestation model: project future deforestation in terms ha lost from landscape with time  Carbon loss: 100% for above- ground biomass & 1/3 for soil  Reference [control] areas

20. Challenge Ib: Real & additional Social and Biodiversity impact assessments  Additionality & Attribution  Baseline scenarios – counterfactuals & BACI  Causal model  Theory of change: a priori hypothesis or roadmap about how a project intends to achieve its intended objectives Starting conditions Without- project With- project Risks & NI Theory of change

21. Challenge II: Leakage  Community Engagement dealing with drivers  Organic tree nurseries  School infrastructure & bursaries  Eco-charcoal  Dryland cash crops e.g., Jojoba

22. Challenge III: Permanence  Conservation easements  Secure land tenure: responsibility  Policy support: Forest Act, Charcoal regulations, REDD-driven policy…  Community Rangers: daily monitoring  >100 employed: Local hiring  No Guns, but effective  Resolving human-wildlife conflicts  Conservation activities involving local communities: address primary drivers

23. Challenge IV: Equity  Sharing REDD finance: WW model – 1/3 each  WWCT & local structures  Conservation-compatible economic development thru job creation  EPZ & Eco-Factory: Direct to consumers in US and Europe  Ecotourism: Local employment  Bio-enterprises: Tsavo Soap Company & Aloe

24. Challenge V: MRV  Monitoring: annual verification  Carbon: Vegetation plots, soil  Biodiversity: Habitats & wildlife  Social: Inputs-to-impacts  Broad dissemination: all stakeholders  Land-owners & Community  Government: REDD taskforce  Publications & presentations  Verifiers  VCS and CCB Standards’ obligations: annual verification

25. Policy issues & Challenges

26. Barriers: What could go wrong?  REDD National Strategy  Carbon tax?  National accounting?  Demand for REDD credits  Compliance possibilities?  Offset: transaction costs & MRV  Governance: legal framework, land and resource ownership  Institutional: counter elite & external actors capture of benefits Lack of strong local organisation

27. Enablers: What could go right?  FLEG: Improved governance & Legislation support  The REDD Tide: Recognition and status  Certification – Investors generally seek forest investments that can be certified as sustainably managed 2010: VCS approved first methodology Alleviate buyers’ perceptions of forestry’s reputational and investment risks  The prospect of emerging protocols prompted voluntary buyers to inject investments into REDD projects  Risks of reversal: no liability to the project developer/ landowners/ communities: VCS risk insurance buffer  Jurisdictional and nested system: Scaling up…

28. Jurisdictional and Nested REDD+

29. VCS-JNRI: Scaling up REDD+  Individual REDD projects increasing but REDD will require robust accounting at the national scale  National accounting frameworks have potential to increase policymaker and investor confidence and engagement in REDD  Larger-scale accounting frameworks ensures  Emissions reductions “add-up” across jurisdictions  Environmental integrity and full leakage accounting  Expand VCS to allow baseline development and crediting for REDD+ at multiple “jurisdictions” in addition to project-level scales

30. REDD closing thoughts…  What you need: Show-stoppers  Land: Carbon – above-ground and below-ground  Secure tenure – carbon rights  Government and local community support  What it takes: Enablers  Money: Initial investment between $10-12 per ha  Research needs: Solid forest science, good baselines, credible MRV  Validation standards: VCS, CCB  What it furnishes: Opportunities  Conservation finance: $20-50 per ha/year in gross revenue  Carbon income: seed capital, research work, rural development  Confluence: Ecology-economics-conservation-development

31. REDD closing thoughts…  REDD is not just about money… it is about good governance – North & South  It is not just about carbon… it is about welfare of people & biodiversity through forest protection and ecosystem services We cannot fall into the trap of looking at forests through only one lens: carbon

32. Thanks!

33. REDD: Key issues & criticisms  Funding: offset emissions & meet emission reductions targets  Offset approach creates high transaction costs: MRV & accounting  Relying on ‘failing’ carbon markets: Large number of credits  Perverse incentives  Increase forest destruction and conversion  Cheap Carbon Credits: Vs commitment to real emissions reductions  Uncertain science: reference levels based on current emissions levels or historical deforestation rates, a business-as-usual scenario?  E.g., how to deal with countries with low historic deforestation rates…  Equity: benefits to and safeguards for local communities  Participation of indigenous and forest-dependent peoples  Neo-colonialism or CO 2 lonialism: new ways of expropriation  Green capitalism: market/money can fix the environment  Leakage & Permanence: spatial-temporal displacement of deforestation especially due to temporal nature of credits

34. Lessons learnt: Safeguards & REDD+  Benefit-sharing: clear, linked to carbon project (PES) with responsibilities attached  Bear in mind potential conflicts between social and biodiversity objectives: monitoring and adaptive mgt  Seek dual validation: e.g., VCS & CCB to entrench social and biodiversity co-(core) benefits  Mixed monitoring: levels: state-pressure-response and players: expert- & community-based indicators (IK)  Scale considerations: social or biodiversity benefits or ramifications attributable to the project  Government and community support: adequate systems & structures to support process e.g., policy

35. Liability  Legitimate REDD projects: there is no liability to the project developer/ landowners/ indigenous communities  VERs: for avoided emissions in previous verification period  Project developer ensures permanence of VERs sold  Risk of reversal: could mean that already issued VERs were not permanent  VCS: thru risk insurance buffer, buyers of VERs that are no longer valid can receive replacement VERs  Each VCS project has to set aside a proportion of the VERs issued every year using VCS Risk Buffer tool  Pre-sold VERs before issuance  Indigenous groups understand how they are protected in legitimate VCS REDD projects: contract development