Sep 21, 2024
Forests are major carbon sinks, absorbing about 14.5 Gt CO2e of greenhouse gas (GHG) emissions per year since 2001, while forest loss and disturbances are major sources of emissions, averaging 9 Gt CO2e per year. Forests are also crucial for adaptation due to the many ecosystem services they provide: from water storage, to biodiversity, to erosion control.
This is why the world’s four largest multilateral climate funds – the Adaptation Fund (AF), Climate Investment Funds (CIF), Global Environment Facility (GEF), and Green Climate Fund (GCF) – have invested extensively in forest protection, management, and restoration.
But how well have interventions worked? And how can lessons from forest investments, help climate funders, project managers, and policymakers achieve more robust, inclusive, and long-lasting climate and development benefits in the forestry sector?
On September 5, 2024, during a virtual session on “Lessons on Financing Forest Management,” evaluators from each of the four climate funds shared evidence and insights gained from studies conducted on their forestry portfolios. This event was the first in a new “Climate Finance Evidence Series” cohosted by the evaluation units of the funds as part of a broader effort to strengthen collaboration and knowledge-sharing among the multilateral climate funds.
Moderator David McCauley, a seasoned climate and natural resources management advisor to CIF and the GEF, highlighted three key themes that emerged from the discussion:
- The tricky balance between inclusive, community-driven actions and systemic, sector-level interventions, and the need to integrate the two;
- The need for more effective approaches to engaging the private sector; and
- The challenge of sustaining the outcomes achieved and finding opportunities to scale them up.
‘Significant’ development benefits
In his presentation, Vladislav Arnaoudov, Senior Evaluation Officer for the AF’s Technical Evaluation Reference Group (AF-TERG), said only two out of 176 projects in the fund’s portfolio focus specifically on forestry, but more than 60 projects have a “very significant” forest component in enhancing resilience in watersheds, coastal areas, and agriculture, among others.
“Overall, integration of forestry-based solutions into broader adaptation strategies can significantly enhance ecosystem resilience and support sustainable livelihoods,” Arnaoudov said. There is “strong evidence” that successes in agroforestry and ecosystems-based adaptation can be replicated and scaled up, he noted, but more data is still needed, and there is little experience engaging with the private sector. Short project timelines also make it difficult to ensure that results can be sustained.
Jessica Kyle, a director at ICF who co-led an independent midterm evaluation of CIF’s Forest Investment Program (FIP) published in July, said CIF has proven to be a key source of forest finance for developing countries, totaling 18% of the US$9.5 billion in public international climate mitigation finance for forests from 2010-2022. The initiatives of the program generated “significant successes” in strengthening forest governance, unlocking REDD+ payments, and supporting communities to protect and sustainably manage millions of hectares of forests. She also highlighted the benefits of the Dedicated Grant Mechanism (DGM) within the FIP, which channels direct finance to Indigenous Peoples and local communities.
Yet the FIP’s private sector objective “wasn’t fully met,” Kyle added, in part because governments prioritized public-sector initiatives. The FIP’s strong focus on local action brought real benefits to poor, rural communities, but there were some trade-offs between the need to achieve results fast, and inclusion of the most vulnerable populations. Most concerning, she said “…we found many forest and livelihood gains were at risk of not being sustained,” due to governance capacity gaps, insufficient access to markets, and the fact that REDD+ payments “have not materialized at the scale or pace that had been anticipated.”
How to sustain project impacts?
Of the four funds, the GEF has the greatest experience in forestry finance with about $4 billion invested in 640 projects to date, with about $23 billion in co-financing, noted Anupam Anand, Senior Evaluation Officer at the GEF's Independent Evaluation Office (IEO). An evaluation of GEF's support to sustainable forest management found that GEF investments have helped protect almost 78 million hectares of forest, restored 1.9 million more, created almost 140,000 jobs, and achieved multiple social and economic benefits. Yet while the vast majority of projects evaluated to date were rated in the “satisfactory” range, Anand said, about 58 percent were deemed likely to be able to sustain their outcomes.
“Sustainability remains a challenge,” Anand said, adding that projects that helped strengthen national institutions and policy frameworks and built knowledge were likeliest to sustain their benefits, while those that neglected stakeholder empowerment and capacity-building did worse.
Martin Prowse, Evaluation Specialist at GCF’s Independent Evaluation Unit (IEU), said forests and land use are one of the fund’s eight “results areas,” with $1.66 billion invested to date, through a range of mechanisms, including grants, results-based payments, and loans. Although no independent evaluations have been conducted on the GCF forest portfolio as of yet, the IEU has also reviewed the available research and evidence on forest conservation interventions and found significant knowledge gaps. There was “surprisingly limited” evidence on payments for ecosystem services for instance. A more recent study of market-based approaches also found challenges with uptake. Like the evidence the GEF presented, the GCF study found stakeholder and community participation were key, and so was strengthening governance and institutional capacity, along with good monitoring, reporting, and verification systems.
Looking at the big picture
In closing, Paul Hartman, lead for CIF’s new Nature, People, and Climate Investment Program highlighted the “cross-cutting nature” of forest interventions, with benefits across sectors and environmental objectives. He also noted that through the FIP, CIF’s key implementing partners, the 6 multilateral development banks, gained expertise that now informs their own investments.
Still, he added, “we need to understand the systemic drivers of forest loss and whether we’re contributing to systemic change through these programs. There is always a balance to be struck between addressing key drivers with the need for sustainability, inclusion, and scale.”
This event and the new Climate Finance Evidence Series is an example of the commitment by the world’s four leading multilateral climate funds to collectively work to accelerate access to climate finance and harmonize procedures for developing countries. Last year at COP 28 in Dubai, the four funds signed a declaration to cement this commitment and outlined three key areas of collaboration including “exploring synergies in programming, monitoring, evaluation and learning, and communication and outreach.”
Watch a recording of full discussion:
