Operationalising Carbon Finance in Ghana. Roundtable Meeting November 2008 The Role of Governance and Institutions in REDD Operationalising Carbon Finance in Ghana. Roundtable Meeting November 2008 Robert Bamfo, Forestry Commission and Michael Richards, FRR/Forest Trends

Carbon finance depends on good governance  Institutional & governance constraints increase risks & transaction costs – so the cost effectiveness depends on it  REDD depends on clarification and protection of carbon property rights (including community rights)  Credit buyers conduct country risk assessments, e.g., compliance capacity? will local property rights be protected? etc.  Targeted REDD incentives must reach forest managers or communities cost effectively  Institutional coordination is vital for the success of policies to reduce deforestation

REDD should stimulate better governance REDD is a market or results based incentive for better governance & policies R-Plan calls for multiple stakeholder participation in developing the REDD strategy Accountability, transparency, compliance, conflict resolution procedures, etc. are necessary International pressures for good governance in REDD – could result in a premium? Links to VPA …

REDD – VPA synergies They have similar aims - reduce deforestation and social/ecological benefits Legal definitions are key Role of civil society Clear standards vital Monitoring and verification Transparency & accountability Both have to tackle the informal sector issues, e.g. how to formalise it? VPA measures can pave the way for REDD – which could help pay for VPA

Some national institutional issues How to channel benefits effectively to forest managers – action research via REDD ‘demonstration activities’ (NB existing beneficiary mechanism for plantation development) How to improve coordination between sectors especially since the main causes of deforestation are outside the forest sector National land use policy? How much decentralisation is good? (should favour transparency) Is a new specialised institution for carbon finance needed? (Costa Rica model - FONAFIFO)

Some institutional roles (from R-Pin)

Local Institutions Strong local institutions vital to reduce transaction costs Collaborative Resource Management Programme, inc. CREMAs Local government, DAs will play vital role – capacity building Communities should maintain flexibility in their land use options in REDD contracts Admin. & technical capacity building is vital, inc. M&E Action research on benefit- sharing mechanisms

Some conclusions REDD should be as a major incentive for improved governance The cost-effectiveness of REDD depends on good governance, e.g., keeping transaction costs to a minimum, institutional coordination to reduce deforestation Clarification of carbon rights and tenure is fundamental There are clear opportunities for REDD to build on the VPA governance and policy platform Broad stakeholder consultation and participation in the formulation & implementation of national REDD strategy Action research (via REDD demonstration activities) is needed on the appropriate institutional arrangements for channeling targeted REDD incentives, and for community level benefit sharing mechanisms Major capacity building of national and local institutions will be an essential part of Readiness Plan