Case study

DECC investments in Multilateral Forest Funds

How the International Climate Fund (ICF) is investing in multilateral forest funds.

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Background

Forests have a critical role as carbon stores and they influence water, climate and weather systems. They build countries’ resilience to extreme weather events and help people adapt to a changing climate. Deforestation generates almost a fifth of global greenhouse gas emissions, while forests are crucial to the livelihoods of 1.6 billion of the world’s poorest people. Forests are also home to an estimated 80% of terrestrial diversity.

Theme: Forests and Land Use/Mitigation

To meet the goal of keeping average global temperature increases to less than 2°C, we will need to reduce greenhouse gas emissions from deforestation and forest degradation, as well as conserve and enhance forest carbon stocks, and manage forests sustainably.

Context

13 million hectares of forests are lost to deforestation each year, an area the size of England. With the global population expected to grow by 1.2 billion by 2030, and the global middle class set to roughly double by 2030 from 2 billion today, pressures are increasing on food supplies and natural habitats. More than 840 million people went hungry regularly in 2012 and agriculture and land use change accounted for 24% of global greenhouse gas emissions. Forests are also an important carbon sink; the world’s forests absorbed an amount of CO2e equal to about half of the fossil fuel emissions in 2009. The main driver of global deforestation is land use change for agriculture, accounting for an estimated 55-80% of deforestation.

What is being done?

Through the ICF the UK is investing in multilateral forest funds which have strong potential to leverage other investment and to deliver at significant scale.

DECC has contributed capital finance to two multilateral forestry funds – the BioCarbon Fund Initiative for Sustainable Forest Landscape and the Forest Carbon Partnership Facility (FCPF) Carbon Fund. These funds will test a range of interventions to address the drivers of deforestation – they will provide a strong incentive for developing forested countries to move through the REDD+ process from the readiness stage, through implementation, to payments for results.

In 2013 DECC invested £50m in the BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL) - Administered by the World Bank, the fund aims to bring together a number of land-use projects across a larger area to achieve a bigger, landscape sized, transformation. The approach targets opportunities that sequester or conserve carbon in forest and agro-ecosystems while promoting biodiversity conservation and poverty alleviation. Defra has also invested £65.1m in the ISFL.

In 2014 DECC invested £45m FCPF Carbon Fund - The FCPF is a global partnership of governments, businesses, civil society, and Indigenous Peoples focused on REDD+. Administered by the World Bank, the Carbon Fund will pilot a payment for results mechanism that rewards countries for verifiably reducing emissions through their emission reduction programmes. The 2014 ICF investment complemented a £11.5m investment in 2011 from the Environmental Transformation Fund (the predecessor to the ICF) from both DECC and DFID. Total UK contribution to the Carbon Fund now stands at £56.5m.

Published 18 November 2015