Reducing Emissions from Deforestation and Forest Degradation Forest Carbon Partnership Facility Participants Committee Meeting (FCPF PC 2) Gamboa, Panama, March 11-13, 2009 REDD Country Selection

Recap on Country Selection  PC 1 Resolution: Raise number of REDD Country Participants from 20 to 30  25 REDD Country Participants selected  14 in July 2008 (SC)  11 (6 + 5) in October 2008 (PC 1)  6: Access to full implementation grant  5: Access to $200k preparation grant

 PC 1 Resolution: Raise target size of Readiness Fund from $100 million to $150 million  Additional contributions received from  Norway: $25 million  Finland: €3.5 million  Switzerland: CHF1.1 million  Firm capital: $107 million  Sufficient for 21 REDD Countries assuming full implementation grant  Funding gap = up to $43 million Recap on Financial Contributions (1)

Recap on Financial Contributions (2)

Country Submissions  12 submissions  3 resubmissions  Central African Republic (3 rd time)  Equatorial Guinea (2 nd time)  Tanzania (2 nd time)  9 new submissions  Cambodia  Chile  El Salvador  Guatemala  Honduras  Indonesia  Mozambique  Suriname  Thailand  Overall quality of submissions has increased compared to previous rounds

Scenario 1  Status quo: 30 REDD Country Participants  5 more REDD Countries to be selected  No more REDD Country Participants accepted after that  Funding gap: up to $43 million (if all 30 need a full readiness grant of $3.6 million)  Pros:  Resolutions of PC 1 stand  Fund raising effort appears manageable  Cons:  Selection of the 5 is difficult  Turning down countries may not be in the spirit of the FCPF

Scenario 2  Expand beyond 30, but max 37  Selected at this PC, or  Selected at June PC, based on resubmission  Close FCPF Readiness Mechanism to new REDD Country Participants  Funding gap: $43 million + up to $5 million per additional REDD Country Participant, up to $78 million (assuming all need a full implementation grant)  Pros:  Countries with demonstrated interest in REDD participate in the partnership  Broadened FCPF support to REDD capacity building  Cons:  Increasing number of countries selected with no guarantee of financial support  Fund raising effort increases  Need to further strengthen implementation capacity of FMT and World Bank units

Selection vs. Funding (1)  Selection into Readiness Mechanism does not imply allocation of a grant from the Readiness Fund  REDD Country Participants selected can start working on their R-Plans with own resources and support from partners, without $200k preparation grant  First 3 countries to submit R-Plan did so  Money is not the only benefit of participation; REDD Country Participants can start learning from other countries’ early experiences

Selection vs. Funding (2)  Turning down REDD Countries based on lack of financing is not the best approach  Readiness grant of $3.6 million not needed until R- Plan approval  R-Plan preparation takes some time  But there are financial implications of selection, even without grants: Note from Approved FY09-13 Business Plan:  Secretariat & Meeting Attendance: approx. $62,500 per country during 5-yr business plan (i.e., 5 new REDD Countries = $312,500)  Country Advisory Services & REDD Methodology Support (includes TAP Reviews) of approx. $330k per country during 5-yr business plan (i.e., 5 new REDD countries = $1.65 million)  5 new countries add $2m in costs even without grants or direct implementation support from FCPF

 Regardless of the final number of REDD Countries in Readiness Mechanism, there is already a funding gap  At present (25 REDD Countries selected): $18 million shortfall  For 30 REDD Countries: $43 million shortfall  Beyond 30: $43 million + $5 million per additional Country (up to $78 million)  Funding gap assumes all REDD Countries will want to access implementation grant  Generally not enough information to assume otherwise Overcoming Funding Gap (1)

Overcoming Funding Gap (2)  Strategies for overcoming funding gap:  Encourage more contributions from Donor Participants to the Readiness Fund  Seek new Donor Participants to the Readiness Fund  No allocation of $200k preparation grants for new REDD Country Participants  Such allocation would compound financial difficulties  Evidence that $200k is not key to prepare R-Plan

Overcoming Funding Gap (3)  Additional considerations  Encourage REDD Countries receiving funding for R-Plan preparation from other donors to volunteer to reduce their requests from FCPF  Encourage Donors to support REDD Countries outside of the FCPF (and to let FMT know)

Overcoming Funding Gap (4)  Proposed R-Plan approval schedule (numbers are cumulative):  By October 2009: 5-10 R-Plans  By March 2010: R-Plans  By October 2010: R-Plans  Proposed grant eligibility: preference given to ‘first 20’, while encouraging progress:  Until March 2010: Priority for $3.6 million grants given to first 20 REDD Country Participants selected into Readiness Mechanism  After March 2010: first come first served  No guarantee of $3.6 million grants beyond first 20 R-Plans approved – will be subject to additional resources becoming available  First 25 REDD Country Participants have guaranteed access to $200k until March 2010.