2022 – 2023
Ecuador articulates national efforts to reduce deforestation and forest degradation through its REDD+ Action Plan: Forests for Good Living (2016-2025). Understanding the current landscape of land-use financing and how different public and private financing flows positively or negatively impact forests is an opportunity for national and international actors to increase REDD+-aligned investment flows. Together with ProAmazonía, the EU REDD Facility carried out a mapping of public and private land-use finance flows in Ecuador, using its Land-use Finance Tool.
The main objective of the mapping is to identify and measure the impact of public and private finance for the implementation of REDD+ actions on progress in meeting national forest and climate objectives. Specific objectives are to:
A basic element for the development of the database was the categorisation of the activities collected in the typology according to the three flows: green, grey or brown. The diagram below was developed the with Ministry of Environment, Water and Ecological Transition (MAATE). It shows the decision tree that allows the identification of the sub-sectors and activities directed towards the different flows.
Once the typology of activities was defined, the data collection instrument was developed in accordance with the Land-use Finance Tool methodology. This data collection instrument was developed based on surveys using the Kobo Toolbox tool, which allowed for the simultaneous online collection of information. This tool was used to collect information from international cooperation, non-governmental organisations, civil society organisations, decentralised autonomous governments, public institutions and the financial sector.
Interviews were conducted with the identified stakeholders to: present the Land-use Finance Tool methodology and its purpose; the scope of the study and the collection instrument; and collect information to feed into the database. However, several stakeholders did not send all the information despite reminders.
Together with the MAATE Forestry Directorate, the EU REDD Facility sent letters to the identified institutions to request information related to amounts invested from 2018 to 2021 and geographic location, as well as other information related to the typology and sectors identified for the study. A variety of important information was received, which populated the database with robust information from public and private sources. In addition, the information was corroborated by the review of information and reports found online and in documents received.
This process and the awareness raising workshops were supported by PROAmazonía. The project team visited all the Amazonian provinces to gather information from the associative sectors of agricultural and livestock producers to gather their perspectives and actions related to the REDD+ policy.
The Land-use Finance Tool methodology enabled the collection of information at primary and secondary levels on both the origin and destination of funding. It also showed the distribution of the flows collected for the period 2018-2021 at the provincial level. In total, it was possible to account for USD 12.64 billion. Of this figure, barely 1% corresponds to green flows. In part, this is due to the fact that it was not possible to collect comprehensive information on government cooperation and programmes.
Grey and brown flows represent 39% and 60% respectively. The main sources of information correspond to credits (agricultural, livestock, forestry, aquaculture and fishing activities) from public financial institutions, private banks and the solidarity-based financial sector. The distribution of flows is mostly concentrated in the country’s financial epicentres such as Guayas, Manabí and Pichincha. The provinces of the coast and the north-central Sierra are the main destinations of financial flows, mainly grey and brown, for activities aimed at expanding the agricultural frontier.
The green flows show the distribution mainly towards the Amazonian provinces, the hypothesis being that financial resources are mostly directed towards forest conservation in this area of the country, and this is where relevant projects such as PROAmazonía are found. Although the Galapagos province receives significant funding from cooperation, the study did not collect information for this province in great details and focused on the mainland where there are high rates of deforestation
This analysis shows the need for reversing the trend so that grey flows do not turn into actions that encourage deforestation. To this end, the financial sector and credit policies must be directed towards commercial sectors that promote sustainability, framed under national and global goals to fight desertification, climate change and biodiversity loss.