1. © 2007 theIDLgroup Ltd Will the Rural Poor Benefit from REDD? OPERATIONALISING CARBON FINANCE IN GHANA OPERATIONALISING CARBON FINANCE IN GHANA Roundtable Meeting, 27-28 November 2008 Michael Richards, FRR (a division of theIDLgroup Ltd, UK), in association with Forest Trends

2. © 2007 theIDLgroup Ltd POTENTIAL SOCIAL/EQUITY BENEFITS Property Rights & Governance Opportunity to strengthen property rights REDD is an incentive for improved governance & policies Capacity Building Community empowerment leading to creation of new opportunities Human and social capital development Participatory carbon monitoring Economic/financial opportunities Carbon cash & in-kind payments Employment Community forest management, eco- tourism, alternative livelihoods and farming can be compatible with REDD Environmental co-benefits Erosion control, pollinisation, water quality, biodiversity, etc.

3. © 2007 theIDLgroup Ltd Equity risk 1: Carbon property rights Land in Ghana is owned by the communities (TAs) but trees belong to state (except if planted) Does tree ownership = carbon rights? On and off-reserve differences? NB Potential of CREMAs Increasing international policy discussions on how to safeguard community rights National recognition of rights and tenure based on UN 2007 Declaration of Rights of Indigenous Peoples?

4. © 2007 theIDLgroup Ltd Equity risk 2: “Paying the Bad Guys” The ‘additionality’ principle of baseline & credit REDD favours developers REDD policy options:  Tackle deforestation agents via tougher laws, stronger compliance? AND/OR  Pay deforestation agents for not breaking a weakly applied law? Problem of perverse incentives – both at the national and community levels NB Fund-based approach - easier to reward community conservation and avoid perverse incentives, but low ‘additionality’

5. © 2007 theIDLgroup Ltd Will carbon benefits outweigh the foregone benefits or livelihoods? (opportunity costs) Will carbon payments be high enough to dissuade chainsaw operators? ¢ Will the transaction costs be too high? Premium if high social and biodiversity benefits? ‘Back-end’ carbon payments but ‘up-front’ incentives Role for ODA to support/subsidise community REDD? Equity risk 3. Community conservation economics

6. © 2007 theIDLgroup Ltd Equity risk 4: National REDD Strategies Policing/exclusionary policies v. CFM and community conservation Balance between compensating the developers & law enforcement? How to define and target ‘equity’ - ‘do no harm’ or ‘maximise social benefits’? (need to define pro-poor criteria in REDD strategy) Community REDD Investment Fund proposed Multiple Stakeholder Consultation and Outreach to be basic part of World Bank FCPF R-Plan

7. © 2007 theIDLgroup Ltd Equity risk 5. Institutional failure Institutional/governance problems (national or local) increase risk & transaction costs Transparency & accountability in financial management is critical Conflict resolution and judiciary process Effective channelling of targeted REDD incentives Intra-community distribution: benefit sharing & accountability in stool-based tenure systems

8. © 2007 theIDLgroup Ltd Influence of post Kyoto REDD deal Market based system + Fund-based system? Perverse incentive for communities? ‘Degradation’ – will it be included? Should favour communities, but higher measurement costs Nested approach? Communities could gain even if national policy failures Accounting mechanism? ‘Partial accounting’ or ‘full accounting’? (e.g., agro-forestry) Include soil carbon? Africa should try and negotiate REDD + Over-regulation of REDD carbon? Will REDD be any simpler than CDM? International standards and premiums? Voluntary adoption by governments – also linked to funding?

9. © 2007 theIDLgroup Ltd Potential effect on food, land (& timber) prices – less land for farming, more competition Less ODA for pro-poor development? – donors may prefer REDD Forest users/farmers are marginalised in the current forest management regime Will the international community properly fund climate change adaptation? Wider equity concerns

10. © 2007 theIDLgroup Ltd Legal, Property Rights and Governance Clear legal definitions & protection Flexible and equitable long-term contracts Community mapping using GPS Appropriate state enforcement mechanisms Equitable judiciary and conflict resolution procedures Community access to legal advice MAKING REDD WORK FOR THE POOR – POVERTY ENVIRONMENT PARTNERSHIP (PEP) REPORT

11. © 2007 theIDLgroup Ltd Information/popular education – ‘voice and choice’ Participatory design - REDD strategy, policies and projects Demonstration projects - participatory carbon measurement Governments – develop & incorporate pro-poor criteria; recognise & adopt international social standards, poverty impact assessment Strengthen local institutions – reduce transaction costs Partnerships and networking - support capacity building process ‘Global Support Platform for Pro-Poor REDD’ - international initiative with regional and national focus MAKING REDD WORK FOR THE POOR cont. (PEP)

12. © 2007 theIDLgroup Ltd Some conclusions There are equity risks – but these can be countered by appropriate government action supported & rewarded by the international community Carbon property rights and governance will be the main determinants of equity impacts Tensions in market-based approach – international focus on how to make REDD pro-poor, e.g., market regulation + Fund-based approach to compensate carbon stocks ODA support - community conservation & adaptation finance Local institutional capacity building, information, networking Future – soil carbon would be more pro-poor than REDD