The German Fast-Start Finance Contribution

By Sarah Parsons from WRI Publications Feed: All. Published on 2013-05-09.

Summary

Industrialized countries have repeatedly committed to provide new and additional finance to help developing countries transition to low-carbon and climate-resilient growth. This assessment addresses German efforts to provide “fast start finance” (FSF) as a contribution to the pledge by developed countries to provide USD 30 billion from 2010 to 2012 under the United Nations Framework Convention on Climate Change (UNFCCC). It is part of a series of studies scrutinizing how developed countries are defining, delivering, and reporting FSF.

Germany has increased climate finance in recent years and met its self-defined FSF pledge. According to the government’s FSF reporting, from 2010-2012 Germany provided a total of EUR 1.29 billion (approximately USD 1.7 billion) for climate action in developing countries that was counted towards FSF. Germany has therefore slightly exceeded its FSF pledge for the period 2010-2012. Even before the start of the FSF period, Germany was already providing significant funding for climate change-related activities in developing countries, particularly for renewable energy and energy efficiency. It therefore started from a relatively high climate finance baseline. Moreover, FSF is only a part of what the German government provides in climate-related finance for developing countries. Overall, Germany has increased delivery of international climate finance when compared to climate-related spending prior to the FSF period: In 2011, Germany committed about EUR 1.8 billion in total for climate finance, an increase from EUR 470 million in 2005.

Germany’s FSF is roughly evenly distributed be¬tween bilateral and multilateral cooperation. Out of the EUR 1.29 billion, EUR 585 million was channelled through multilateral funds. The largest single channel is the World Bank-administered Climate Technology Fund (CTF), which received EUR 375 million from Germany from 2010-2012. Substantial amounts of funding were also transferred to adaptation-related multilateral funds and the Forest Carbon Partnership Facility. Two federal ministries, the German Federal Ministry Economic Coop¬eration and Development (BMZ), and the German Federal Ministry Environment, Nature Conservation and Nuclear Safety (BMU), are responsible for the disbursement of FSF resources. Nearly half of this funding has been channelled through the German development cooperation agencies GIZ and KfW. Relatively few resources were delivered directly to developing country domestic institutions.

Germany FSF has primarily supported general mitigation (45 percent), and efforts to reduce emissions from deforestation and degradation (26 percent), while 28 percent supports adaptation. Germany aimed to provide 50 percent of its climate finance for mitigation, 33 percent for adaptation activities, and 27 percent (EUR 350 million) for REDD+. The Copenhagen Accord sought a balance between adap¬tation and mitigation (including REDD+) during the FSF period. Adaptation has received less finance than expected at the outset of the FSF period. Overall, most German FSF resources have been allocated to the regions of Africa (34 percent) and Asia (29 percent). Additionally, roughly 60 percent of all adaptation finance and 50 percent of bilateral adaptation finance has been allocated to Small Island Developing States, Least Developed Countries, and African countries.

The majority of Germany’s FSF is provided through grants. Loans are provided to the CTF, and account for about 29 percent of the overall FSF contribution. Germany is relatively transparent about its FSF. Through BMU and BMZ, the German government publishes lists of the FSF projects it supports, reporting on the recipient country, project name, project description, objective, amount, implementing agency, financial instrument, and expected project duration. It also reports to the European Commission (EC) on an annual basis. In addition, Germany has commissioned a study on lessons learned from FSF for long-term finance. However, official reporting would be strengthened through the inclusion of information on the actual disbursements and on project impact.

Germany is one of the few countries which has applied and published a specific definition of “new and additional” for its FSF. Germany only counts those funds towards FSF which were committed in addition to a 2009 baseline (as part of Official Development Assistance, or ODA, spending) and/or which are generated by new financing sources, namely the auctioning revenues under the EU ETS. Nonetheless, some of the financial resources counted as FSF were pledged before the FSF period: for example, Germany pledged finance to the CIFs in 2008, but only funding delivered from 2010 onwards was counted as FSF. All German FSF is counted towards ODA. However, Germany has yet to meet its commitment to provide 0.7 percent of its Gross National Income as ODA, and in fact its ODA contributions have recently declined. Also, Germany’s climate finance is committed in the context of a complementary commitment to scale up finance for biodiversity under the Convention on Biodiversity (CBD). It will be important to monitor reporting against both of these commitments in order to understand whether pledges have been duplicated or recycled.

Most of the projects counted towards FSF seem to have a principal or at least significant climate objective. An independent application of the Organisation for Economic Development (OECD) climate markers to the FSF projects suggests that the vast majority of projects seems to have a clear climate element, based on limited project informaiton. However, a focus on only bilateral projects reveals that the share of principally climate-driven projects may be lower than bilateral projects committed to other climate objectives. Furthermore, an assessment of the incremental climate change costs that are covered through the projects is not available.

Germany is one of the few developed countries to have committed climate finance beyond the FSF period. At COP18, Germany pledged to deliver EUR 1.8 billion in climate finance in 2013, an increase from the EUR 1.4 billion delivered in 2012.1 These funds will come from the general budget and from the “Sondervermögen Energie und Klimafonds” (“Special Energy and Climate Fund”). This separate budget structure is financed by auctioning revenues from the EU Emission Trading Scheme (EU ETS). The current low prices of carbon, however, may reduce available climate finance beyond 2012.

With regard to reporting on international climate finance, we suggest the following actions to further in¬crease transparency:

• Continue to publish annual, project-level information after the close of the FSF period. Reporting systems could be updated to reflect the parameters of the new United Nations Framework Convention on Climate Change (UNFCCC) common reporting format (for example, by specifying the sectors to which funding is directed). It could also seek to improve reporting on the actual state of implementation of projects, and actual disbursement of committed funds. Therefore, Germany may explore practical options for providing some project-level information on the results of at least the larger programs funded in real time, e.g on the basis of the project reporting that is required of implementers (such as through annual or evaluation reports).

• Provide additional information on which projects are funded by which ministries.

• Provide more detailed financial information on projects that meet commitments to increase both climate and biodiversity finance to provide greater clarity on synergies, and assure that finance has not been double-counted. Such reporting can also be related to climate finance reporting under the OECD climate markers, in order to ensure consistency with FSF reporting.

• Further strengthen and harmonize reporting and transparency standards for implementing institutions, in particular dedicated multilateral climate funds. Ger¬many can support progress to this end as a member of the governing bodies of these funds.

With regard to Germany’s international climate finance approach as a whole, we offer the following recommendations:

• Continue to work to increase support for adaptation, with the goal of achieving a greater balance between adaptation and mitigation.

• Explore ways to work more closely with recipient country-based institutions through its delivery of climate finance. This may need to be accompanied by capacity building support in order to increase these countries’ capacity to access such funding and use it effectively.

• Explore options to ensure that increasing climate finance as part of efforts to deliver ODA does not reduce support available to help countries address development challenges as a whole. In the German case, the fact that ODA has been declining while climate finance increases at a relatively rapid rate presents a particular challenge.

• Consider options to find more reliable sources of climate finance. The German climate finance approach has been largely sourced through the revenues from emission-trading. Nevertheless, there is a need for all countries to further scale-up climate finance in order to meet agreed goals of mobilising USD 100 billion from a mix of public and private sources by 2020. Options might include multilateral efforts to strengthen the EU ETS through increased EU mitigation targets, as well as the deployment of other innovative sources, such as financial transaction taxes or revenues from international transport. A clear pathway for scaling up climate finance would help create greater predictability of finance, and help generate trust and ambition in developing countries.

Environmental and Social Policies in Overseas Investments: Progress and Challenges in China

By Sarah Parsons from WRI Publications Feed: All. Published on 2013-05-08.

Summary

Like other countries that invest overseas, China—through the projects it finances and executes—can bring great benefit to the countries and communities in which it invests (“host countries”). However, investments can pose challenges and risks to host and investor countries. Effectively tailored environmental and social policies can identify and mitigate not only unanticipated environmental and social harm, but also some of the investment risks that can undermine the long-term financial success of a project.

Even in the midst of the 2008–09 global financial crisis, China’s outward foreign direct investment (OFDI) continued to grow.1 Between 2008 and 2009, China’s OFDI flows grew nearly 8 percent, while total world OFDI flows during the same period decreased nearly 40 percent (Unctad Stat 2012). In both 2009 and 2010, the Export-Import Bank of China and the China Development Bank together lent more than the World Bank did to developing countries (Dyer, Anderlini and Sender 2011).

Environmental and Social Policies in Overseas Investments: Progress and Challenges for China examines trends in China’s overseas investments and considers how social and environmental policies can reduce investment risks and enhance the positive impacts of China’s OFDI. We focus on three major forces in China’s OFDI: the central government, financial institutions, and centrally owned state-owned enterprises (SOEs). Although a variety of institutions are involved in overseas investments, the majority of Chinese OFDI originates from centrally owned SOEs, and its OFDI growth is fueled largely by the strong lending capacity of its financial institutions, especially the China Development Bank and the Export Import Bank of China. Aid, trade, and other types of financial interest that may be associated with overseas economic interests are not addressed here, nor are overseas investments by collectively or privately owned companies.

As China continues to expand overseas investments, understanding and managing the environmental and social impact of these investments in host countries can help it build mutually beneficial relation-ships with host countries. Already, methods to address environmental and social issues in overseas investments are emerging in China. Chinese regulatory authorities are creating guidelines in their areas of jurisdiction, and individual financial institutions are developing and refining their own policies. International experience with environmental and social risk mitigation offers a useful context for Chinese investors and policymakers to consider as they continue to develop these overseas investment policies.

Moving forward, China faces several challenges, not the least of which is a lack of understanding of the regulatory and legal environment in host countries. Attention to host countries’ regulatory and legal environments must be ratcheted up if investment risks are to be reduced. Supervisory challenges and coordination among ministries should also be prioritized. Finally, even though governments, financial institutions, and corporations have produced multiple guidelines and policies to guide more sustainable overseas investments, implementation remains a major challenge. Sufficient resources should be directed toward implementation to overcome barriers such as cost, coordination of resources, and time.

While these challenges are real, China’s rapid economic growth and global presence also create opportunities that offer insight for a global audience. China can shape the direction and return of its OFDI to maximize positive impact and achieve “win-win” relationships with host countries. As an experienced recipient of OFDI, China can now apply those lessons as it invests abroad. In addition, China can step into facilitator and leadership roles in the international agenda of promoting sustainable cross-border investment, especially in developing countries.

This issue brief is the first in a series of WRI publications by the International Financial Flows and the Environment (IFFE) project that examine the role of environmental and social policies in overseas investments. Future publications will look at the “business case” for adopting stronger environmental and social policies, and will include case studies of overseas investments from China and other countries.

A Tale of Two Elephants: celebrating the lives and mourning the deaths of Cirrocumulus and Ngampit

By Jeremy Hance from featured news from mongabay.com. Published on 2013-05-08.

On March 21st, the organization Save the Elephants posted on their Facebook page that two African elephants had been poached inside a nearby reserve: "Sad news from the north of Kenya. Usually the national reserves are safe havens for elephants, and they know it. But in the last two weeks two of our study animals have been shot inside the Buffalo Springs reserve. First an 18 year-old bull called Ngampit and then, yesterday, 23 year-old female called Cirrocumulus (from the Clouds family)."

All the world's rarest birds in one book: photo contest enlivens new guide

By Jeremy Hance from featured news from mongabay.com. Published on 2013-05-06.

The World's Rarest Birds is an extraordinary bird book. 590 different bird species are classified as Endangered or Critically Endangered, with many species only existing in captivity. A new book, The World's Rarest Birds, catalogs all of these species. Each species is shown with remarkable color-photography and illustrations. Threats to species habitat are described, population estimates per species are given, and each species has a quick response (QR) code that takes the reader to a species-specific BirdLife International webpage. The book also covers 60 Data Deficient species. Data Deficient means that there exists little to no information on the relative abundance and distribution of the species.

IUFRO Spotlight #13

From IUFRO Publications. Published on 2013-05-06.

An evidence-based report, 'Benefits of Urban Parks: A systematic review', offers a comprehensive and critical assessment that evaluates the evidence supporting a series of park benefits.

Conservation without supervision: Peruvian community group creates and patrols its own protected area

By Jeremy Hance from featured news from mongabay.com. Published on 2013-05-01.

When we think of conservation areas, many of us think of iconic National Parks overseen by uniformed government employees or wilderness areas purchased and run from afar by big-donor organizations like The Nature Conservancy, Wildlife Conservation Society, WWF, or Conservation International. But what happens to ecosystems and wildlife in areas where there's a total lack of government presence and no money coming in for its protection? This is the story of one rural Peruvian community that took conservation matters into their own hands, with a little help from a dedicated pair of primate researchers, in order to protect a high biodiversity cloud forest.

What if companies actually had to compensate society for environmental destruction?

By Jeremy Hance from featured news from mongabay.com. Published on 2013-04-29.

The environment is a public good. We all share and depend on clean water, a stable atmosphere, and abundant biodiversity for survival, not to mention health and societal well-being. But under our current global economy, industries can often destroy and pollute the environment—degrading public health and communities—without paying adequate compensation to the public good. Economists call this process "externalizing costs," i.e. the cost of environmental degradation in many cases is borne by society, instead of the companies that cause it. A new report from TEEB (The Economics of Ecosystems and Biodiversity), conducted by Trucost, highlights the scale of the problem: unpriced natural capital (i.e. that which is not taken into account by the global market) was worth $7.3 trillion in 2009, equal to 13 percent of that year's global economic output.

IUFRO News Vol. 42, Issue 4, April 2013

From IUFRO Publications. Published on 2013-04-29.

The World Teak Conference in Bangkok, the Morioka 2013 symposium on the role of the forest sector in a green economy, and IUFRO's activities at UNFF10 in Turkey are among the highlights of this issue.

The U.S. Contribution to Fast-Start Finance: FY12 Update

By Sarah Parsons from WRI Publications Feed: All. Published on 2013-04-23.

Summary

As part of the international climate negotiations, developed country governments committed to provide developing countries with “new and additional resources, including forestry and investments through international institutions, approaching $30 billion in the period 2010-2012 with balanced allocation between adaptation and mitigation.” This fact sheet considers U.S. efforts to provide “fast-start finance” (FSF) over the full three-year period, drawing primarily from program data presented in the State Department’s report series, “Meeting the Fast Start Commitment.” The fact sheet is part of a series of analyses on FSF contributions, and updates a May 2012 working paper quantifying total U.S. contributions to the global FSF commitment.

Over the FSF period, the United States has reported roughly $7.5 billion, or about 20% of the global self-reported total flows of FSF. Notable attributes of the U.S. FSF contribution include:

• The levels of finance fluctuated over the three-year period, with the largest volume in FY11. This is related to variations in spending on the part of key agencies such as the Overseas Private Investment Corporation (OPIC) and the Millennium Challenge Corporation (MCC).

• Over the three-year period, a significant share of the U.S. portfolio supported clean energy in Asia. OPIC and the U.S. Agency for International Development (USAID) played key roles in administering finance, and finance was channeled via a combination of grants and loans, guarantees, and insurance.

Transparency has improved in FY12 reporting, but there is room for further improvement. In addition to implementing the new international reporting requirements adopted at Doha, the following actions would help support verification of aggregate figures, as well as coordination and accountability:

• Publishing a detailed, disaggregated, annual list of projects and programs;

• Using the Foreign Assistance Dashboard as a platform for sharing information;

• Aligning reporting under the United Nations Framework Convention on Climate Change (UNFCCC) with reporting to the Organisation for Economic Co-operation and Development (OECD); and

• Continuing to work with other countries and multilateral institutions to strengthen and harmonize reporting systems.

The river of plenty: uncovering the secrets of the amazing Mekong

By Jeremy Hance from featured news from mongabay.com. Published on 2013-04-23.

Home to giant catfish and stingrays, feeding over 60 million people, and with the largest abundance of freshwater fish in the world, the Mekong River, and its numerous tributaries, brings food, culture, and life to much of Southeast Asia. Despite this, little is known about the biodiversity and ecosystems of the Mekong, which is second only to the Amazon in terms of freshwater biodiversity. Meanwhile, the river is facing an existential crisis in the form of 77 proposed dams, while population growth, pollution, and development further imperil this understudied, but vast, ecosystem.

Letting nature do the talking this Earth Day (pictures)

By Rhett Butler from featured news from mongabay.com. Published on 2013-04-22.

Instead of writing a special article for this Earth Day, we are instead letting nature's beauty do the talking. The photos below were taken by the Mongabay.com team — Rhett Butler, Jeremy Hance, and Tiffany Roufs — in the twelve months since Earth Day 2012. Countries in this set include the United States (California and Hawaii), Dominican Republic, Brazil, Malaysia (Sabah), and Indonesia (Kalimantan and Sumatra).

Putting the Pieces Together for Good Governance of REDD+: An Analysis of 32 REDD+ Country Readiness Proposals

By Sarah Parsons from WRI Publications Feed: All. Published on 2013-04-17.

Executive Summary

Developing countries are receiving new financial and technical support to design and implement programs that reduce emissions from deforestation and forest degrada¬tion (referred to as REDD+). Reducing emissions from forest cover change requires transparent, accountable, inclusive, and coordinated systems and institutions to govern REDD+ programs. Two multilateral initiatives— the World Bank-administered Forest Carbon Partnership Facility (FCPF) and the United Nations Collaborative Pro¬gramme on Reducing Emissions from Deforestation and Forest Degradation in developing countries (UN-REDD Programme)—are supporting REDD+ countries to become “ready” for REDD+ by preparing initial strategy proposals, developing institutions to manage REDD+ programs, and building capacity to implement REDD+ activities.

This paper reviews 32 REDD+ readiness proposals sub¬mitted to these initiatives to understand overall trends in how eight elements of readiness (referred to in this paper as readiness needs) are being understood and prioritized globally. Specifically, we assess whether the readiness proposals (i) identify the eight readiness needs as relevant for REDD+, (ii) discuss challenges and options for addressing each need, and (iii) identify next steps to be implemented in relation to each need. Our analysis found that the readiness proposals make important commit¬ments to developing effective, equitable, and well-governed REDD+ programs. However, in many of the proposals these general statements have not yet been translated into clear next steps.

Key Findings:

• Discussions of stakeholder participation, non-carbon monitoring, and cross-sectoral coordination are the strongest in terms of the number of readiness proposals that identify issues as relevant for REDD+, discuss key challenges and options, and propose clear next steps (e.g., studies, processes, institutional support costs).

• Few REDD+ countries consider specific design op¬tions or challenges related to REDD+ benefit sharing, conflict resolution, or revenue management systems, although most include plans to address these issues as readiness activities move forward.

• Relatively few readiness proposals identify specific next steps to address land tenure challenges or estab¬lish mechanisms to coordinate with local institutions during REDD+ planning and implementation.

• Cross-cutting issues such as vertical coordination of REDD+ programs and coherence of proposed new REDD+ bodies with existing forest sector institutions have not been explicitly considered in most readiness proposals to date.

Delivering on the commitments made in the readiness proposals will be crucial to building stakeholder confidence and scaling up financial support for REDD+ programs. We make three recommendations that can help countries make short-term progress on REDD+ objectives and ultimately develop effective and equitable REDD+ programs:

• REDD+ countries, donors, and civil society stakehold¬ers should consider gaps identified by our analysis and work to ensure that readiness activities promote comprehensive and integrated approaches to designing REDD+ strategies, systems, and institutions.

• REDD+ countries should improve efforts to prioritize and sequence readiness activities to enhance transpar¬ency on how readiness financing is allocated to differ¬ent readiness needs.

• REDD+ countries should develop transparent and ac¬countable domestic systems for tracking progress on readiness activities to ensure that readiness proposal commitments to well-governed REDD+ programs are carried out in practice.

Striking the Balance: Ownership and Accountability in Social and Environmental Safeguards

By Sarah Parsons from WRI Publications Feed: All. Published on 2013-04-11.

Executive Summary

Many governments around the world have put in place systems to help ensure that investments in changes such as infrastructure projects, government programs or new national laws do not bring undue harm to their citizens or environment. The effectiveness of these systems in successfully preventing negative impacts varies widely. Developing countries tend to have a particularly difficult time ensuring that investments within their borders meet minimum social and environmental standards. As a result, many financial institutions have established their own policies to help ensure that their investments do not result in harm to vulnerable communities or ecosystems. These policies are generally known as “safeguards.” Although safeguard policies provide vital protection against risks to people and the environment, properly designing and implementing these policies means navigating complex relationships between financial institutions, governments, and the citizens of recipient countries.

The World Bank (the Bank) has been at the forefront among multilateral development banks in developing safeguard policies. In recent decades, the Bank has experimented with different approaches to social and environmental protection. These approaches respond in part to variations in the way in which countries receive money from the Bank, such as investments in projects versus policies. They have also emerged in reaction to the changing global landscape. Some developing countries have become richer and created stronger systems to protect people and the environment. The global community has also realized the value of letting developing countries define their own development path. At the same time, the pressing need to protect our global common goods and most vulnerable communities has become more apparent.

This working paper seeks to help the Bank and other financial institutions take stock of experiences to date and distill lessons for the future. We look at four different approaches to protecting against social and environmental harm: the traditional safeguards approach, which applies to most project lending; the Use of Country Systems approach, which the Bank has applied to some project lending on a pilot basis; the approach used for Program for Results investments, which applies to the Bank’s results-based lending pilot; and the approach used for Development Policy Loans, which applies to loans that support changes to policies and institutions.

While all four of these approaches rely on the rules and institutions of the recipient country, they do so to different degrees. Through an analysis of the strengths and weaknesses of each of approach, we arrive at seven lessons for the World Bank and other financial institutions looking to balance ownership and accountabil¬ity in their social and environmental policies:

1. Building on country safeguard systems can enhance ownership and incentives for safeguard implementation.

2. Minimum standards and positive incentives can clarify requirements and encourage countries to strive toward more ambitious social and environmental goals.

3. Safeguard implementation requires anticipating risks, planning to deal with those risks, managing and monitoring implementation, and responding to harm.

4. Proper safeguard implementation requires people on the ground to engage, collaborate and problem solve.

5. Recipient country safeguard systems still need support.

6. Citizens play a key role in any effective safeguard system.

7. To successfully balance ownership and accountability, safeguard approaches need to recognize differences among countries, sectors, and projects.

Fighting deforestation—and corruption—in Indonesia

By Rhett Butler from featured news from mongabay.com. Published on 2013-04-12.

The basic premise of the Reducing Emissions from Deforestation and Degradation (REDD+) program seems simple: rich nations pay tropical countries for preserving their forests. Yet the program has made relatively limited progress on the ground since 2007, when the concept got tentative go-ahead during U.N. climate talks in Bali. The reasons for the stagnation are myriad, but despite the simplicity of the idea, implementing REDD+ is extraordinarily complex. Still the last few years have provided lessons for new pilot projects by testing what does and doesn't work. Today a number of countries have REDD+ projects, some of which are even generating carbon credits in voluntary markets. By supporting credibly certified projects, companies and individuals can claim to "offset" their emissions by keeping forests standing. However one of the countries expected to benefit most from REDD+ has been largely on the sidelines. Indonesia's REDD+ program has been held up by numerous factors, but perhaps the biggest challenge for REDD+ in Indonesia is corruption.

Saviors or villains: controversy erupts as New Zealand plans to drop poison over Critically Endangered frog habitat

By Jeremy Hance from featured news from mongabay.com. Published on 2013-04-12.

New Zealand's Department of Conservation (DOC) is facing a backlash over plans to aerially drop a controversial poison, known as 1080, over the habitat of two endangered, prehistoric, and truly bizarre frog species, Archey's and Hochsetter's frogs, on Mount Moehau. Used in New Zealand to kill populations of invasive mammals, such as rats and the Australian long-tailed possum, 1080 has become an increasingly emotive issue in New Zealand, not just splitting the government and environmentalists, but environmental groups among themselves. Critics allege that the poison, for which there is no antidote, decimates local animals as well as invasives, while proponents say the drops are the best way to control invasive mammals that kill endangered species like birds and frogs and may spread bovine tuberculosis (TB).