The EU REDD Facility and Climate Policy Initiative have developed a tool to help countries/jurisdictions and their partners to better understand investments affecting forests at national and sub-national levels.
Why analysing land-use finance can help countries meet their climate and forest goals
Protecting and regenerating forests, combined with sustainable agricultural practices and efficient land-use planning, could deliver up to 37% of emission reductions needed by 2030 to comply cost-effectively with the Paris Agreement on climate change.
The private sector and domestic budgets will have to provide most of the investment required for countries to achieve their climate and forest goals.
International public finance sources have provided an estimated USD 20 billion to support these goals since 2010. However, while these sources can be a key support, they cannot meet the scale of investment required.
In addition, investments from international public finance have made major contributions to activities that could be driving deforestation and increasing emissions.
Tropical forest countries can struggle to mainstream climate objectives within sectoral policies and balance competing development priorities. When this is the case, investments that impact forests and land use are often uncoordinated or incoherent. This is a barrier to the implementation of climate and sustainability objectives.
Countries can help attract private finance and make the case for more international support by presenting a transparent analysis of land-use investments, as well as plans to increase the coherence of spending.
Our Land-use Finance Tool can help!
What is the Land-use Finance Tool?
In short: The Land-use Finance Tool is a diagnostic tool that enables a quantitative and qualitative analysis of the alignment of public and private spending with climate and forest objectives.
In detail: Finance mapping derives from traditional budget review approaches but seeks to offer additional insights to inform policy development. The approach is a quantitative and qualitative analysis of the life cycle of financial flows related to land use in selected sectors. The Tool is a set of guidelines, templates and training materials to assist the analysis of the life cycle of financial flows, as illustrated in the diagram below:
The Tool can help answer questions such as:
What is the volume and nature of past and current investments supporting forest and climate objectives?
What is the volume and nature of investments driving deforestation and forest degradation? In which sectors?
Who are the main actors involved in financing land-use sectors?
What are the main funding gaps and barriers to investment in sustainable land use?
What are the key financial opportunities and priorities to support sustainable land use?
How could investments be better aligned to climate and forest objectives?
How has spending for REDD+ evolved over time?
Do current levels of climate finance meet the country’s climate and forest ambitions?
The Tool builds on several years of work conducted by Climate Policy Initiative on mapping financial flows at global level. Côte d’Ivoire, Papua New Guinea and Vietnam have recently tested this approach with a specific land-use focus.
How does the Tool help unlock finance for sustainable land-use?
The Tool builds the capacity of national stakeholders to analyse land-use finance and develop investment strategies, funding proposals and public-private partnerships.
It can support resource mobilisation for forest and climate objectives by analysing spending, clarifying sources of finance and identifying gaps and barriers.
It can help ensure that land-use spending is coherent with forest and climate objectives.
It can be used to generate baseline information, monitor mobilisation or redirection of resources, and increase transparency and accountability.
The analytical steps involved in tracking land-use finance are broadly summarised in the figure below. These steps might vary according to the specific objectives and scope of the analysis. The Tool offers detailed guidance on framing the study.