1. CARBON FINANCE, DEFORESTATION AND SUSTAINABLE DEVELOPMENT: ISSUES AND CHALLENGES By Kwadwo Tutu FSSDD, UNECA WEST AFRICAN CARBON FINANCE INVESTMENT FORUM FOR FINANCIAL INSTITUTIONS Dakar, Senegal 12 - 14 February 2008

2. Deforestation a major Problem Deforestation is both a local and global issue Local - forests are important for the SD (economic, social, environment) of African countries Global – deforestation and land use change accounts for 20% of GHG Emissions Africa’s forest most depleted, 30% left Addressing deforestation addresses both SD of Africa and Global Climate Change Problem

3. Africa’s Forests key to SD 25% of world’s remaining tropical forests in Africa 400 m out of Africa’s 600 rely on Forests 80% of energy is wood biomass Forests important for recharge of water bodies for health, agric and electricity 20% of world’s biodiversity hotspots in Africa

4. Carbon Finance in Forestry Carbon Finance used in ff: areas  Avoided Deforestation  Afforestation  Land use Practices

5. Issues and Challenges in Carbon Finance Complexity of Causes of Deforestation Permanence Leakages Baseline Data  Estimates of deforestation, carbon, emissions Land administration and influx of giant firms, benefits

6. Addressing Challenges Awareness Creation of CC for Policy Makers, Stakeholders, Financial Institutions by DNAs, etc Integrating CC into Development Strategies (PRS incorporating SD issues, NSDS, SD Issues being considered) Address Deforestation as a SD issue Lobby and Defend the case for Carbon Finance in Forestry (concept defn., competitive carbon payments etc)

7. Addressing Challenges Cont’d Carbon credits to assist build Forestry Assessment and Monitoring Systems (FAM) FAM includes  produce latest forest change maps by collect, digitize, archive, update spatial data  Undertake multi-stakeholder consultation FAM will address Leakages, Baseline data, estimates and benefits

8. Specific Actions for Financial Institutions Assist consumers use solar will reduce demand for electricity from hydro-dams that cause deforestation Initial high fixed cost of solar for consumers is cause for non-use and FI’s can help finance this initial cost. The IRR of project (even not including deforestation cost) is high. Finance initial fixed cost of gas cooking stoves will significantly increase demand and reduce deforestation. The IRR of project (even not including deforestation cost) is high. Demand from The West Africa Gas Pipeline from Nigeria to some WA countries will increase when stoves are financed and will reduce GHG emission through gas flaring

9. ECA’s Activities in CC ECA new in CC activities. Current activities include a)Developing Climate for Development (ClimDev) b)Planning to Establish African Centre for Climate Policy Studies at ECA following Bali These Activities will  Provide Climate information for SD of Africa  Build capacity and Awareness in Africa by coordinating activities under the NF with partner Agencies and DNAs  Build networking among CC Practitioners