Ian Gray Natural Resources Forest Financing in Small Island Developing States Nadi, Fiji July 23 – 27, 2012 Opportunities for Forest Finance in GEF-5

The GEF has been funding forest projects since its inception in 1991 – 330 forest-related projects in 100+ countries – $1.7 billion GEF funding with $7.4 billion co- finance GEF-5 target of $1 billion invested in forests Multi-functions of forests are at core of investment strategy GEF’s Investment In Forests

SFM/REDD+ Results Framework Achieve multiple environmental benefits from improved management of all types of forests 1. Reduce pressures on forest resources and generate sustainable flows of forest ecosystem services 1.1 Enhanced enabling environment within the forest sector and across sectors Effectiveness of policies that integrate SFM principles 1.2 Good management practices applied in existing forests a) Forest area under FSC certification measured in hectares b) Enhanced carbon sinks from reduced forest degradation 1.3 Good management practices adopted by relevant economic actors a) Services generated in forests b) Services generated in the wider landscape 2. Strengthen the enabling environment to reduce GHG emissions from deforestation and forest degradation and enhance carbon sinks from LULUCF activities 2.1 Enhanced institutional capacity to account for GHG emission reduction and increase in carbon stocks Capacity to certify forest derived carbon credits 2.2 New revenue for SFM created through engaging in the carbon market Total revenue from carbon market Goal Objectives Outcomes Indicators Payments for ecosystem services systems established Forest area under sustainable management, separated by forest type Types and quantity of services generated through SFM National institutions certifying carbon credits National forest carbon monitoring systems in place Innovative financing mechanisms established Carbon credits generated National institutions certifying carbon credits National forest carbon monitoring systems in place Innovative financing mechanisms established Carbon credits generated Outputs

How The Incentive Mechanism Works Investments from 2+ FAs seeking multiple benefits from managing forests sustainably Incentive funds released in ratio of 3:1 of FA investment STAR Resources BD CC LD e.g.BD $1,500,000 LD $1,500,000 +SFM $1,000,000 Total Project $4,000,000

SFM/REDD+ Projects projects and 3 programs $401 million GEF funding 36% of $250 million incentive allocated Mainly mixed landscape interventions

Supporting the 7 SFM Themes

GEF-5 SFM/REDD+ Projects From FAO FRA 2006

Pressures of food security, population growth, climate change, resources Many products and services co-dependent Individual forest functions are small enough to be overlooked but collectively potential driver of rural development Societal recognition of forests’ importance Prioritize long-term benefits over short-term gains Managing for Multiple Functions – A Necessity

Lessons From GEF-5 Projects Wide range of forest situations applicable Landscape level approach Synergies – maybe a trade-off also? Forest communities & livelihoods Importance of on-the-ground presence in field activities Inter-agency coordination Payment for ecosystem services