The EU REDD Facility has been a vital supporter of tropical forest countries, aiding them in understanding and tracking investments related to climate and forest objectives. In close partnership with both country and international partners, the European Forest Institute (EFI) has developed the Land-use Finance Tool, an approach that helps countries and jurisdictions gain a better understanding of investments affecting forests, both positively and potentially negatively. While initially focusing on public domestic and international investments, recently, EFI’s approach has also explored private finance tracking.
In October 2023, the EU REDD Facility organised a webinar to provide insights into the evolving field of climate finance mapping and tracking. The event was moderated by Adeline Dontenville, EFI. Panellists introduced the Land-use Finance Tool, shared insights into how various countries worldwide have undertaken land-use finance mapping at national and subnational scales, and discussed the results and lessons learnt from these case studies.
You can now watch the webinar on experiences in mapping land-use investments.
Adeline Dontenville, EFI, noted that the main challenges faced by tropical forest countries include mobilising new finance and aligning existing public and private finance with climate and forest objectives. She introduced the Land-use Finance Tool, a collaborative effort by EFI and Climate Policy Initiative. This tool was designed to assist tropical forest countries in mapping land-use finance flows. It aims to provide an analytical basis for better planning, alignment and resource mobilisation in land-use finance. It includes eight modules to guide countries in conducting land-use finance analysis. The mapping process uses visual tools like the Sankey Diagram to break down actors, sources of funding, instruments, beneficiaries, and disbursement channels for public and private financial flows. It helps identify financial flows supporting sustainability and climate objectives and from those potentially driving deforestation or forest degradation.
Dr. Andrianina Rakotosoa, Fauna Flora & Man presented a case study mapping public financial flows related to REDD+ in the Democratic Republic of the Congo. The study found that almost USD 6.8 billion of public funding was disbursed between 2009 and 2019, among which approximately 28% was aligned to REDD+ objectives (green). Public expenditure execution is very low, but domestic financing in land-use planning, land tenure and governance improvements has significantly improved. As for international financing, energy, agriculture and forestry represented 98% of the support, and 46% of the funding was classified as green. The analysis of financial flows by province reveals inconsistencies between funding received and the loss of forest cover, with the seven provinces with the highest forest cover losses only receiving 15% of financing.
Gabriela Arellano Caicedo, Independent Consultant, presented a case study mapping private land-use investments in Ecuador, which aimed to identify financial flows contributing to forest conservation and reducing deforestation risk. Financial institutions are where the greatest resources are channelled, mainly through credit, with a small portion going to green flows. These funds primarily came from cooperation agencies, NGOs, climate funds and government budgets. She called for a public policy measure to promote financial products that increase the agricultural frontier in line of REDD+ objectives.
Dr. Ha Thi Thu Tran, Independent Consultant, presented the results of a mapping of public and private land-use investments in the provinces of Lam Dong and Dak Nong, Central Highlands, Vietnam. This project focused on the coffee cultivation, which was identified as a key driver of deforestation and forest degradation in the region during the 80’s and 90’s. The findings revealed that only 21% of the total investment was classified as green financial flows and 79% was classified as indirectly related to land-use emissions and possibly contributing to reducing deforestation, but only under certain conditions (grey). This is mainly because significant agricultural investment goes to monoculture coffee models, which were identified as significant deforestation drivers during the coffee boom period of Vietnam.
Challenges encountered in the mapping exercise
Arellano Caicedo and Rakotosoa underscored the considerable challenges they encountered in the information-gathering process. These challenges were primarily attributed to the heterogeneous nature of the data, which often necessitated labour-intensive manual processing. To standardise the data, a series of calculations and assumptions were employed before progressing to the analytical phase. In DRC, there were complexities involved in collecting information from diverse institutions and stakeholders. Arellano Caicedo further highlighted the need to address issues related to responsiveness when gathering information from institutions.
In Vietnam, there was a lack of detailed information on public projects and classifying certain land-use investments as either green or grey finance flows was challenging. Ha Thi Thu Tran underlined that estimates of private land-use investments would have been more comprehensive if the sample size or the number of interviewed actors had been larger.
Rakotosoa highlighted the intricate process of constructing the database, which was further complicated by the diverse array of financial flows involved. Additionally, in Ecuador the Land-use Finance Tool methodology posed difficulties in comprehension to some stakeholders. Despite recognising the critical importance of developing a typology, she also stressed the inherent challenges, given its dependency on a multitude of stakeholders.
Rakotosoa underscored the significance of improving data availability to enhance the precision of analyses. Arellano Caicedo noted the complex nature of grey flows, noting that they cannot always be reclassified as either green or brown, as they do not exclusively pertain to forest conservation or deforestation. To address this challenge, she proposed the introduction of a novel ‘blue flows’ category to better address specific financial issues.
In Ecuador, socialisation and feedback sessions with stakeholders were essential. They enabled uncovering missing information and enriching the depth of analysis. Ha Thi Thu Tran also emphasised the importance of stakeholder engagement, and further stressed the need for flexible data collection and analysis.