Financing forests and sustainable forest management … · Financing forests and sustainable forest management in ... report in LFCCs ... for example, only 3 countries out

Financing forests and sustainable forest management in Low Forest Cover Countries (LFCCs) Second macro-level paper Prepared by Indufor for the United Nations Forum on Forests Helsinki 31 August 2010 The views presented in this document are those of the consultant and do not necessary reflect

the views of the United Nations.

DISCLAIMER

Indufor makes its best effort to provide accurate and complete information while executing the assignment. Indufor assumes no liability or responsibility for any outcome of the assignment.

Copyright © 2010 by Indufor Oy All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including, but not limited to, photocopying, recording or otherwise.

© INDUFOR: BACKGROUND TO FOREST FINANCING IN LFCCs. Second macro-level paper. 31 August 2010. i

TABLE OF CONTENTS

EXECUTIVE SUMMARY 1

1. INTRODUCTION 3

1.1 Background 3

1.2 Recent trends in policy processes relevant to financing of forests and trees 4

2. METHODOLOGY AND DATA GATHERING 6

3. PRESENT FINANCIAL FLOWS FOR FORESTS AND SFM IN LFCCS 7

3.1 Introduction 7

3.2 Public foreign financing: Forestry official development assistance 8

3.3 Public domestic financing: Budget and forest funds 11

3.4 Private financing – domestic and foreign direct investments 14

3.5 Innovative financing sources 15

4. DEMAND FOR FOREST AND SFM FINANCING 21

4.1 Forests and trees in poverty reduction and national development strategies 21

4.2 Forest policies in LFCCs 22

5. FINANCING GAPS AND OBSTACLES 23

6. CONDITIONS FOR INVESTMENT AND THE ENABLING ENVIRONMENT FOR FINANCING FORESTS AND SFM IN LFCCS 24

7. STRATEGIES FOR INCREASING FINANCING FLOWS FOR SFM, INCLUDING NEW AND INNOVATIVE SOLUTIONS 28

8. CONCLUSIONS 30

9. REFERENCES 31

List of annexes Annex 1 Value added by agriculture, hunting, forestry and fisheries (%)

in LFCCs Annex 2 ODA in LFCCs during 2002-2008 Annex 3 Forestry ODA percentage shares per donor in LFCCs from

2002 to 2008Annex Forests and trees in other sector´s strategies/policies in LFCCs

Annex 4 Forestry ODA by country in LFCCs from 2002 to 2008 Annex 5 Forestry ODA by category in LFCCs during 2002-2008 Annex 6 Forests and trees in national Millennium Development Goals (MGD)

report in LFCCs Annex 7 Forests and trees in national report on UNCCD implementation in

LFCCs Annex 8 Forests and trees in other sectors’ strategies/policies in LFCCs Annex 9 Forests and trees in national climate change strategies of LFCCs

© INDUFOR: BACKGROUND TO FOREST FINANCING IN LFCCs. Second macro-level paper. 31 August 2010. i

List of figures Figure 1 Forestry ODA in LFCCs from 2002 to 2008 8

Figure 2 Forestry ODA share of LFCCs 8

Figure 3 Forestry ODA percentage shares by donor in LFCCs during 2002-2008 9

Figure 4 Major forestry ODA recipients in LFCCs 10

Figure 5 Forestry ODA in LFCCs by category during 2002-2008 11

List of tables Table 1 Forest or nature funds in LFCCs 12

Table 2 Inward FDI aggregate for agriculture, forestry and fisheries in LFCCs 15

Table 3 Forest carbon projects in LFCCs 17

Table 4 CDM biomass projects relevant to forests and trees in LFCCs 18

Table 5 Payment for Ecosystems Services in LFCCs 18

Table 6 Debt-for-nature swaps in LFCCs 20

Table 7 Political turmoil in LFCCs since 1990 25

Table 8 Business environment indicators in LFFCs 26

List of boxes Box 1 Thematic areas of the PRSs and national development

strategies in LFCCs 21

© INDUFOR: BACKGROUND TO FOREST FINANCING IN LFCCs. Second macro-level paper. 31 August 2010. ii

ABBREVIATIONS AND ACRONYMS

A/R Afforestation/reforestation

CBD Convention on Biological Diversity

CBFF Congo Basin Forest Fund

CDM Clean development mechanism

CPI Corruption Perceptions Index

CRS Creditor Reporting System

DAC Development Assistance Committee

DDI Domestic Direct Investment

EU European Union

FAO Food and Agriculture Organization of the United Nations

FCPF Forest Carbon Partnership Facility

FDI Foreign direct investment

FIP Forest Investment Program

FMCF Forest Management and Conservation Fund

GBM Green Belt Movement

GBP British Pound

GEF Global Environment Facility

GM Global Mechanism

GoP Government of Pakistan

IADB Inter-American Development Bank

IDA IFF

International Development Association Intergovernmental Forum on Forests

IFS IPF

Integrated Financing Strategy Intergovernmental Panel on Forests

ITTO International Tropical Timber Organization

IUCN International Union for Conservation of Nature

JI Joint implementation

JNF Jewish National Fund (also KKL-JNF)

KFS Kenya Forest Service

LFCC Low Forest Cover Country

LDC Least developed countries

LFF Lesotho Forest Fund

MACP Mountain Areas Conservancy Project

MDG Millennium Development Goal

MUSD Million United States Dollar

n/a Not available

NAP National Action Plan

NAPA National Adaptation Programme of Action

NBSAP National Biodiversity Strategy and Action Plan

NES National Environmental Strategy

NFD National Forest Development Fund

NFP National Forest Programme

NFRA National Forest Recreation and Access Trust

NGO Non-governmental organization

NIFCI Norway’s International Forest and Climate Initiative

NOK Norwegian Crown

ODA Official Development Assistance

OECD Organization for Economic Cooperation and Development

© INDUFOR: BACKGROUND TO FOREST FINANCING IN LFCCs. Second macro-level paper. 31 August 2010. iii

PES Payment for Ecosystems Services

PRS Poverty Reduction Strategy

PRSP Poverty Reduction Strategy Paper

REDD Reducing Emissions from Deforestation and Forest Degradation

REDD+ Reducing Emissions from Deforestation and Forest Degradation+

SCDP Socotra Archipelago Conservation and Development Programme

SFM Sustainable Forest Management

SIDS Small Island Developing States

SLM Sustainable Land Management

TFCA Tropical Forest Conservation Act

UFF Uruguay Forest Fund

UNCCD United Nations Convention to Combat Desertification

UNCTAD United Nations Conference on Trade and Development

UNFCCC United Nations Framework Convention on Climate Change

UNFF United Nations Forum on Forests

UNDP United Nations Development Programme

UNECE United Nations Economic Commission for Europe

UNEP United Nations Environmental Programme

UN-REDD United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries

USD United States Dollar

© INDUFOR: BACKGROUND TO FOREST FINANCING IN LFCCs. Second macro-level paper. 31 August 2010. 1

EXECUTIVE SUMMARY

The forests in Low Forest Cover Countries (LFCCs) are, by definition, limited, and the forest sector in these countries may be characterized as marginal in most cases. However, forests and trees provide invaluable products and services for the residents of LFCCs. In many LFCCs, the rural population depends on such forest and tree -related products as fuel wood, and on such non-wood forest products (NFWPs) as fodder, windbreaks and shade. Although often not fully acknowledged, forests and trees play important, supportive roles in rural livelihoods, such as their role in agriculture and animal husbandry. The forests and trees also provide important watershed and other environmental services. At the same time, most of the LFCCs are facing challenges stemming from deforestation, forest degradation, desertification and soil degradation. Due to their aforementioned properties, forests and trees in LFCCs are inevitably across- and multi-sectoral issue; thus, financing for the provision of services and products from forests and trees in LFCCs cannot be limited to the forest sector (in its traditional production-oriented sense). A multi-sectoral approach to financing sustainable forest management (SFM) in LFCCs has the potential to allow the services provided by forests and trees to meet the demands of local and global populations. From 2002 to 2008, LFCCs have received forestry official development assistance (ODA) averaging USD 16.5 million per year. The trend of forestry ODA in LFCCs has been slightly decreasing. Also decreasing, but more pronouncedly, is the share of LFCC´s ODA out of all forestry ODA. Most (87 per cent) of the ODA to the LFCCs has originated from bilateral donors. Japan has accounted for almost 40 per cent of the total ODA distributed to the country group. The forestry ODA is unevenly distributed among the LFCCs, and the least developed countries (LDC) in the country group are particularly at a disadvantage. The global financial crisis has changed the foreign direct investment (FDI) landscape: investments to developing and transition economies surged, increasing their share in global FDI flows to 43 per cent in 2008. It can be assumed that investments in the agriculture sector are the most significant forest-relevant investments in LFCCs. However, there is no information available on linkages between investments into the agricultural sector and forests in LFCCs. A detailed study specific to the topic would be required to assess the positive and negative linkages. Innovative financing mechanisms for forests and trees have raised global interest in recent years, and these can present opportunities for the LFCCs. However, their use has thus far been modest in the LFC countries, and capacity development in the forest-relevant institutions would be needed in most countries. There are currently few carbon projects in the LFCCs. Most significant carbon activity in the group of countries is taking place under the Clean Development Mechanism (CDM), where there are eleven biomass energy projects relevant to forests and trees in LFCCs. In LFCCs, not many Payments for Ecosystems Services (PES) systems are in place. Of the 49 LFCCs, at least ten countries have currently or in the past had PES-related projects, and interest in these types of projects is growing. Although environmental services, such as carbon or water, could potentially provide opportunities for improved internal and external fund mobilization for trees and forests, none of the LFCCs with an existing forest policy explicitly recognizes this potential in the forest policy. Most PES projects have to date targeted watershed services. Use of other innovative financing mechanisms has been so far modest in LFCCs; for example, only 3 countries out of 49 had forest-relevant debt-for-nature swap or debt reduction arrangements. Less than half of the countries in the group have a Poverty Reduction Strategy (PRS). One positive finding was that the role of forests and trees appears to be fairly well recognized in the existing PRSs. The forest and tree relevant thematic areas present in the PRSs and other national development strategies clearly indicate the cross-sectoral emphasis of forests and trees in LFCCs. All strategies, PRSs and other national development strategy papers placed forests and trees in the wider context of providing multiple services such as biodiversity,


energy, watershed management, and supporting other rural livelihoods in an integrated manner. Main conclusions:

• Desertification is a significant thematic area in many LFCCs, as stated also in countries’ poverty strategies. Combating desertification requires multi- and cross-sectoral approaches, including in financing. Development of integrated financing frameworks or strategies, such as those developed by the Global Mechanism (GM), should be encouraged.

• Forests are not high on the list of government priorities in most of the LFCCs, as only less than half of the countries included in this study have an official forest policy document. Lack of a clear forest policy has a negative impact on ODA mobilization to the forest sector. On the other hand, most countries with PRSs have mentioned forests and trees in their Poverty Reduction Strategy Paper (PRSP) and have also received some forestry ODA. LFCCs that do not have a forest policy should be encouraged to prepare national forest policies and national forest programmes (NFPs) with strong multi- and cross-sectoral elements.

• There is significant need and potential in LFCCs for financing sustainable fuelwood and charcoal production. Presently fuelwood/charcoal receives a minor amount of forestry ODA (less than 1 per cent). A majority of the population in many LFCCs continues to depend on traditional biomass fuels, mainly charcoal and firewood, for their energy needs. Wood-based energy production appears to be a significant driver for deforestation, forest degradation and desertification in many LFCCs. Special efforts should be made to increase financing through climate change funding and/or ODA, for example, in order to achieve sustainable wood energy solutions in LFCCs.

• Few LFCCs have thus far been able to benefit from climate change-related financing for forests and trees. Only 5 countries of the 49 LFCCs received or have a current commitment to receive carbon-related forest financing. LFCCs should be encouraged to prepare specific strategies for capturing climate change financing for forests and biomass.

• Forests and trees in LFCCs provide vital services, such as biodiversity, energy, wind break and forage that often go uncompensated or unrecorded either entirely or for their full value. There exists a need to encourage development of PES schemes. PES capacity development in the forest-relevant institutions is needed in most cases.

• Much of the forest land in LFCCs is in under public ownership. Various types of public- private partnerships tailored to the national conditions would combine the innovativeness and efficiency of the private sector with the government’s need to generate income from the resource base. Such arrangements are suitable for practically any type of forest service, and their application should be encouraged in LFCCs.


1. INTRODUCTION

1.1 Background

Support given to the process of “Facilitating Financing for Sustainable Forest Management (SFM) in Small Island Developing States (SIDS) and Low Forest Cover Countries (LFCCs)” continues the efforts of the United Nations Forum on Forests (UNFF) to systematically promote SFM, as stipulated in the Global Objectives on Forests. In October 2009, the Member States of the UNFF adopted a decision on means of implementation of SFM during a special session of the ninth session of UNFF. The decision launched two initiatives to catalyse funding for SFM. The Forum established an intergovernmental Ad Hoc Expert Group, which will analyse existing financing strategies for SFM and explore ways to improve access to funds, including the option of establishing a voluntary global forest fund. The second initiative is a “facilitative process” on forest financing to assist countries to mobilize funding from all sources. The facilitative process addresses the special needs of countries that have faced a decline in forest financing which include, among others, LFCCs. This study aims to understand the current level and sources of financing for forests and trees in LFCCs, the related gaps and obstacles, and opportunities present. It also provides recommendations for financing forests and trees in LFCCs. Globally there is strong political commitment to SFM, but current financial resources are insufficient to support SFM and halt deforestation. Globally, approximately 13 million hectares of forest disappear each year (FAO, 2010). Land use and forest management decisions are driven by social and economic considerations. According to many studies, the most common reason for the disappearance of trees and forests is the land use change from a less profitable option (forest/forestry) to more profitable use of the land, such as for agriculture or animal husbandry. The difference in profitability is real, at least in the short term, but agricultural subsidies or other policies that favour agricultural expansion often cause or exacerbate the income disparity. The forest cover in LFCCs does not represent an area with a magnitude of global significance. However, the forests and trees provide invaluable products and services for the residents of the LFCCs. In many of these countries, the rural population depends on forest- and tree- related products such as fuel wood and non-wood forest products (NFWPs), e.g., fodder, windbreaks and shade. Concerning NFWPs, although often not fully acknowledged, forests and trees have important, supporting roles in rural livelihoods, such as providing accommodation for agriculture and animal husbandry. Forests and trees also provide important watershed and other environmental services. Forests and trees in LFCCs are inevitably a cross- and a multi-sectoral focus, and financing the provision of services and products from forests and trees in LFCCs cannot be limited to the forest sector in a traditional production-oriented sense. A multi-sectoral approach to financing SFM in LFCCs has the potential to allow the necessary service provisions of forests and trees to meet the demands of local and global populations.

The Eliasch Review (2008) estimated that the opportunity cost of Reducing Emissions from Deforestation and Forest Degradation (REDD) and SFM could range from USD 15 billion to USD 33 billion per year, most of which would be needed in developing countries. According to Simula (2008), external public funding is approximately USD 1.91 billion per year. Further, according to the Organization for Economic Cooperation and Development (OECD 2008), the level of forest ODA from the Development Assistance Committee (DAC) countries has remained flat much of the past decade, while the proportion of aid to forestry (as defined by OECD) from the total ODA has declined even as total ODA has increased. The global forest ODA is unevenly distributed, and the LFCC share of the total is not significant and has been decreasing over the past decade.


1.2 Recent trends in policy processes relevant to financing of forests and trees

There is a clear need, identified by the UNFF and other global forest processes and stakeholders, to define and remunerate all services from forests and trees, including the traditional production-related ones and the more recently identified environmental services, to guarantee the necessary resources for SFM in LFCCs and elsewhere. In 2006, the International Tropical Timber Organization (ITTO) launched a process to encourage investment in natural tropical forests. The process has included one global, three regional and two national level forums. All these forums have concluded that the current investment levels in natural tropical forests are insufficient to ensure SFM or the avoidance of conversion of the forest to other land uses that are more profitable in the short term. The joint study process of the Food and Agriculture Organization of the United Nations (FAO) and other institutions, introduced in the FAO (2009) paper on national financing strategies for SFM, stresses that the broadening and diversifying of the financing basis for SFM is the key to increasing the competitiveness of forests with other land uses. the Intergovernmental Panel on Forests (IPF), the Intergovernmental Forum on Forests (IFF) and the subsequent UNFF have reached similar conclusions in studies. The FAO paper highlights obstacles to SFM financing such as undervaluation of the multi-functionality of forests, the (at least perceived) high risks in forest investments and the long-term nature of the forestry cycle. According to the study process, a comprehensive national financing strategy is needed on a country level as an integral part of a NFP, and integration with the national development strategy is considered crucial.

The GM of the United Nations Convention to Combat Desertification (UNCCD) is promoting the Integrated Financing Strategy (IFS), a process-oriented approach to guide resource mobilization efforts towards an investment framework that meets the specific, long-term needs of developing country Parties to the UNCCD. The IFS process aims at a more efficient use of existing Sustainable Land Management (SLM) financing sources and instruments, and at mobilization of new and additional resources (internal, external and innovative) through the creation of an enabling environment. The concept emphasizes cross-sectorality and aims at linking SLM to existing national or sectoral processes and frameworks. According to the GM (2008), SLM has close inter-linkages to the agriculture and environment sectors and to forests and trees; hence, if a country already has a comprehensive sector programme for forests or rural development, the concept recognizes the potential to mainstream SLM principles into this programme rather than to establish an SLM-specific framework. Currently the GM has an ongoing process to facilitate the development of IFS in various LFCCs. All these approaches show the trend in the thinking on forest and tree financing strategies, where:

• Cros

s-sectoral linkages owing to multi-functionality of forests and inter-sectoral impacts are

emphasized.

• Inte

gration with country level strategies and policy processes is considered necessary.

• The

role of the enabling environment is highlighted.

• Appr

opriate roles for both public and private financing are called for.

• The

potential of new and innovative financing sources and mechanisms are viewed as a

new opportunity to be tapped into.



2. METHODOLOGY AND DATA GATHERING

This paper was compiled through a desk study, four country case studies and a global survey on forest financing. The desk study focused on gathering existing background data on forest financing in LFCCs. Under Indufor’s supervision, local consultants conducted the country case studies in Jordan, Mali, Uruguay and Kyrgyzstan and incorporated various stakeholder interviews and expert consultation workshops. A global survey of LFCCs was carried out to gather quantitative and qualitative information on forest financing, policies and legislation in the respective countries. The survey yielded the data on domestic public funding for forests and trees used in this report.

Various hindrances to the collection of reliable data on forest financing in LFCCs were experienced during the study process (see also the first LFCC macro-level paper titled “Background to Forest Financing in LFCCs”):

• The survey on forest financing in LFCCs had a very low response rate. Out of the 49 LFC countries included in this study, only 8 responded; additional information was fortunately available in the four case studies. Three evident reasons for the low response rate were (a) lack of UNFF connections in the country, which led to difficulties in locating the contacts of forest-relevant institutions and consequently in locating representatives of those institutions within the time frame of the study; (b) lack of response once some of these representatives were eventually located; and (c) outdated contacts in the list of Country Focal Points. The countries had not informed the UNFF Secretariat on institutional staffing changes.

• Quantitative and qualitative information at a global level on financial flows other than ODA for forests and trees was limited, and previous studies focusing on forest financing in LFCCs were lacking.

• In the case study countries, the consultants were able to secure data mostly on traditional production-oriented forestry and forest sector. Data on forest-relevant funding flows in other sectors was in most cases difficult to access within the time frame of the process. Reasons for this were either lack of communication from the institutions and ministries in the respective sectors and/or difficulties in identifying/ quantifying the cross-sectoral fund flows. Also, in cross-sectoral activities and projects, it can be difficult to identify which funds are used for forest-relevant activities and which ones are used for other types of activities.

To overcome the issue of the low response rate of the global survey, various other information sources were employed in the compilation of the data presented in this report. These were, among others, the Creditor Reporting System (CRS) of the OECD

1 and the United Nations

Environmental Programme (UNEP) Risoe Clean Development Mechanism (CDM)/Joint implementation (JI) Pipeline Analysis and Database

2.

1 http://stats.oecd.org/Index.aspx?DataSetCode=CRSNEW

2 Updated 1 July 2010. http://cdmpipeline.org/


3. PRESENT FINANCIAL FLOWS FOR FORESTS AND SFM IN LFCCS

3.1 Introduction

Simula (2008) studied the global demand for forest financing and the supply of external financing for forests in the context of the Non-Legally Binding Instrument on All Types of Forests. The role of ODA was concluded to be catalytic, and in national forest financing strategies, ODA is considered complementary to the own revenue generation of the sector and to the creation of an enabling environment for private sector investment. According to the study, ODA was approximately USD 1.91 billion per year during 2005 - 2007. Financing flows to forests can be classified according to existing sources (domestic or foreign), institutions (public or private) and mechanisms (investments, loans, grants, etc.). The ODA data presented in this chapter is extracted from the OECD Creditor Reporting System (CRS)

3, and the ODA definition of forestry is as defined by the OECD. The scarce domestic

budget data comes from the global survey on forest financing carried out for this study through the UNFF Focal Points. FDI data is extracted from the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2009. The report only provides aggregate FDI data for agriculture, forestry and fisheries, and data for LFCCs is only available for a limited number of countries. There was no data available for this study on direct domestic investments or portfolio investments. As forests and trees are cross- and multi-sectoral concerns in LFCCs, financing generated through various multi-sectoral thematic areas, such as biodiversity, desertification and climate change, is important for forest and trees in LFCCs. In this respect, the Convention on Biological Diversity (CBD), UNCCD and the United Nations Framework Convention on Climate Change (UNFCCC) are agreements generating global policies and mobilizing financing for these same thematic areas. The exact ODA flows mobilized per LFCC by the organizations cannot be identified. However, in the cases of CBD and UNCCD, the Global Environment Facility (GEF) is one major source and is reported under the CRS of OECD. In addition, mobilized bilateral flows are visible in CRS and can be identified. The climate funding in the context of forests and trees, namely REDD+ relevant funding, is mainly generated through the United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD) and World Bank climate financing mechanisms, such as the Forest Carbon Partnership Facility (FCPF) and Forest Investment Program (FIP), as well as the Norway’s International Forest and Climate Initiative (NIFCI).

As concluded in the macro-level paper on Background to Forest Financing in LFCCs, the contribution of forests and trees to the national economy is not readily available in the national accounts of the LFCCs. However, in a number of LFCCs, the contribution of forests and trees to national economies can be indirectly significant; e.g., watershed protection, tourism, windbreak and other services such as fodder and shade in cattle production all contribute to the national economy in some form. The value added from agriculture, hunting, forestry and fisheries is listed in annex 1. Generally the aggregate is high in LFCCs; in 15 out of 59 countries, these sectors contribute to over 20 per cent of the national economy, but it is very likely that the agriculture sector accounts for most of the value added in the national economies in the LFCCs.

3 http://stats.oecd.org/Index.aspx?DataSetCode=CRSNEW


3.2 Public foreign financing: Forestry official development assistance

Official development assistance (ODA) is a significant funding source for forests and trees in LFCCs. Between 2002 and 2008, LFCCs received on average USD 16.5 million in ODA per year for forestry as defined by the OECD (see Figure 1). The trend of forestry ODA in LFCCs from 2002 to 2008 reflected a slight decrease: from 2002 to 2004 LFCCs received on average USD 16.9 million, and from 2006 to 2008 they received on average USD 15 million. Figure 1 Forestry ODA in LFCCs from 2002 to 2008

During the same period, this was on average 4.5 per cent of total forestry ODA reported by the OECD. The share has been decreasing: in 2002 the LFC countries received almost 7 per cent of the total forestry aid, whereas in 2008 they received approximately 2 per cent (see Figure 2). Most of the ODA to the LFCCs has originated from bilateral donors. On average, from 2002 to 2008, bilateral donors accounted for almost 87 per cent of the ODA received by the country group (see Annex 2). Figure 2 Forestry ODA share of LFCCs


The major donor to the LFCCs from 2002 to 2008 was Japan, which accounted for almost 40 per cent of the total ODA for the country group (see Figure 3 and Annex 3). Other significant donors were Switzerland (13 per cent), Germany (8 per cent), Finland (6 per cent), France (5 per cent), Netherlands (4 per cent) and the United Kingdom (4 per cent). Of the multilateral donors, the International Development Association (IDA) had the largest share (5 per cent) of forestry aid to the country group. Japan´s high contribution is not surprising, as the country accounted for approximately half of all bilateral forest ODA from 2005 to 2007 (Simula 2008). Figure 3 Forestry ODA percentage shares by donor in LFCCs during 2002-2008

From 2002 to 2008, forestry ODA was unevenly distributed among the LFCCs. The largest recipients among the country group were Tunisia (28 per cent), Pakistan (12 per cent) and Kenya (10 per cent). In addition, Namibia (8 per cent) Kyrgyzstan (7 per cent), Morocco (6 per cent), Mali (4 per cent) and Bangladesh (4 per cent) received significant shares of forestry ODA directed to LFCCs. These countries account for almost 80 per cent of the forestry ODA of the LFCCs. These same countries

4 have in general much higher than average forest cover

within the group of LFCCs.

4 Except Pakistan (2.5 per cent), which is below the average of 3.8 per cent, and Kyrgyzstan (4.5

percent), which is slightly above the average


Figure 4 Major forestry ODA recipients in LFCCs

Forestry ODA does not reach the least developed countries very well in the LFCC group, because only Bangladesh and Mali are LDCs among the major recipient countries (see Annex 4). LDCs receive 16 per cent of the forestry ODA in the country group. Approximately half, or 23 out of the 49 LFCCs, are from the Asian continent. During 2002-2008 these countries accounted on average for one third (32 per cent) of forestry ODA directed to LFCCs. The largest donors to the Asian LFCC countries were Switzerland (37 per cent), the IDA (12 per cent), the Netherlands (12 per cent) and Japan (9 per cent). Another large geographical group

5 was African countries (17 countries), which accounted for two thirds

of the forestry ODA of LFCCs. The major donors to the African LFCC group comprised Japan (49 per cent), France (12 per cent), Germany (8 per cent) and Finland (8 per cent). European Union institutions were the most significant (4 per cent) of the multilateral donors. Countries from other regions, namely Haiti, Uruguay and Tonga, received a fragment (2.3 per cent) of forestry aid during 2002-2008.

In terms of focus, well over half (59 per cent) of forestry ODA to LFCCs was directed to forestry development (see Figure 5 and Annex 5). Forest policy and administration management covered one third (35 per cent). Other thematic areas had minor shares. Forestry research (1 per cent) and forestry education/training (less than 1 per cent) had constant but small ODA flows. Forestry services (4 per cent) and fuelwood/charcoal (less than 1 per cent) were not continuously supported in LFCCs.

5 Other groups consist of limited number of countries, hence analysis of these geographical regions is

not possible.


Figure 5 Forestry ODA in LFCCs by category during 2002-2008

In two major geographic regions, Asia and Africa, within the LFCCs there were no notable differences in the relative forestry ODA flows to forestry development or forest policy and administration management. However, forestry services accounted for 10 per cent of ODA in Asian LFCCs, whereas in African LFCCs, the same category accounted for only 1 per cent. Of the total forestry ODA that the LFCCs received, over one quarter (28 per cent) was earmarked for biodiversity, climate change and desertification.

3.3 Public domestic financing: Budget and forest funds

The financing of and investments in forest and tree-related activities by domestic public institutions vary depending on a number of factors, including government policies and priorities and funding capacity. For example, Simula (2008) and Tomaselli (2006) have concluded that there is no readily available data on public domestic financing of forests and trees, and this applies also to LFCCs. Of the 49 LFCCs, 8 responded to the forest financing survey, and 7

6

provided information on the domestic budget of forest-relevant ministries and departments. Based on this information, on average 3.4 per cent of the relevant ministry´s budget is dedicated to forest activities. The allocations varied from less than 1 per cent to approximately 10 per cent.

Approximately one quarter (13 out of 49 LFCCs) have a specific fund earmarked for forests and trees. The LFCCs are a heterogeneous group and hence the funds have a variety of objectives. Most aim to restore and/or enhance the forest cover, while some (e.g., Kenya and Lesotho) provide funds for basic service provisions related to forests and trees. However, the Tunisian fund, for example, is geared towards encouraging wood and forage production, which highlights the importance of forests and trees in cattle and energy production in LFCCs. In Uruguay, the forest fund provides loans for forest owners and light scale industry. In the Maldives, a climate change trust fund aims to conserve terrestrial biodiversity. Notable is that

6 Iceland, Namibia, Mauritania, Iran, Lesotho, Niger, Yemen


in two countries (Israel and South Africa), the funds also recognize the recreational and spiritual values of forests. Table 1 Forest or nature funds in LFCCs

Country Name Description

Bangladesh

The Arannyak Foundation (the Bangladesh Tropical Forest Conservation Foundation)

The Arannyak Foundation (the Bangladesh Tropical Forest Conservation Foundation) was established in 2003. It is a joint initiative of the Bangladesh and the United States Governments. Its mission is to facilitate the conservation, protection, restoration and sustainable use of tropical forests in

Bangladesh. It will receive USD 8.5 million from the United States Government under the Tropical Forest Conservation Act (TFCA) over next 18 years for undertaking projects fulfilling its mission.

Burundi The Congo Basin Forest Fund (CBFF)

The CBFF was launched on 16 June 2008 with an initial contribution of GBP 50 million from the United Kingdom Government and NOK 520 million from the Norwegian Government. The fund aims to support projects addressing climate change by slowing the rate of deforestation and alleviating poverty

within the estimated 50 million people living in the Congo Basin. Burundi, as one of the ten Congo Basin countries, is a beneficiary of this fund.

Chad The Congo Basin Forest Fund

As one of the Congo Basin countries, Chad is a beneficiary of the CBFF.

Israel The Jewish National Fund (KKL-JNF)

The fund has planted more than 240 million trees,

creating greenery of more than 100 000 ha all over Israel since established in 1901. The fund, through its national forest development work, creates “green lungs” around congested towns and cities, and provides recreation and respite for all Israelis.

Kenya Forest Management and Conservation Fund (FMCF)

The Kenya Forest, under Section 18 of Forest Act 2005, is currently in the process of setting up a fund called the FMCF. The key purpose of the Fund will be to promote the development, maintenance and conservation of forests; promotion of commercial forest plantations; provision of forest extension services; promotion of community based forest projects; facilitation of education and research activities; and establishment of arboreta and botanical gardens. The fund is expected to be raised with

monies appropriated by the parliament, forest sector revenue and grants, donations, bequests or other gifts.

Lesotho The Lesotho Forest Fund (LFF)

The LFF was set up under Section 7 of the Forestry Act 1998. The money for the fund comes from forest sector revenues and allocation from the government treasury. The aim of the fund is to provide support to forest management and research, including assistance to private and community forests.

Under the fund, the community forest holders could be paid for their afforestation and reforestation activities.



Maldives Maldives Climate Change Trust Fund

The Trust Fund is administered by the World Bank and has already received USD 8.8 million from the EU. The goal of the fund includes the conservation of terrestrial biodiversity in the Maldives.

Mauritania The National Forest Development Fund (NFD)

The NFD was set up under Act No 97-007 (1997). The fund receives income from taxes and fees. It aims to support reforestation, regeneration and protection of forests in Mauritania.

Pakistan Mountain Areas Conservancy Project (MACP)

The MACP is a long-term project funded by the GEF, the UNDP and the Government of Pakistan (GoP). The total budget of the project for the next seven years is USD 10.35 million. The project is preceded by a successful four-year pilot phase called Maintaining Biodiversity in Pakistan with Rural Community Development. The MACP aims to protect the rich biological heritage of the Karakurm, Hindukush and the Western Himalayan Mountain Ranges through a community – based conservation approach.

South Africa

The National Forest Recreation and Access Trust (NFRA)

The NFRA was set up under the National Forests Act 1998 of South Africa. It aims to promote access to and the use of forests for recreation, education, culture or spiritual fulfilment. It receives donations

or government funding. Funding is also raised by charging fees for goods and services provided by the forests.

Tunisia Fund for sylvo-pastoral development

The fund targets forests and pasture lands that are not under the direct control of the state. It is designed to encourage the participation of general public, collectivities and entities in wood and forage production, and in the amelioration of economic

and social conditions of people living in and around the forests.

Uruguay The Uruguay Forest Fund (UFF)

The funding of the UFF mainly comes from forest sector revenues and various donations. It provides loans to forest land owners and light industry. It

also spends money on forest land purchase and public forest management. The spending follows a long-term plan.

Yemen

The Socotra Archipelago Conservation and Development Programme (SCDP)

The SCDP is an effort of the Republic of Yemen to conserve and sustainably develop the island of Socotra and its neighbouring smaller islands. The SCDP was supported by the UNDP and the Governments of the Netherlands, Italy and Poland, in partnership with a pool of International Donors and NGOs. The main aim of the SCDP is to coordinate all government and donor efforts towards sustainable human development for the people of the Socotra Archipelago, while conserving the globally significant biodiversity of these unique

islands.


3.4 Private financing – domestic and foreign direct investments

The major type of investment in forestry and in the forest-based sector is direct investment, which is concentrated on the more developed countries as well as on forest plantations and related downstream industrial processing and trade projects. Direct investment can be classified into domestic and foreign (FDI) categories. In LFCCs, information on domestic direct investments (DDIs) was not available for this report. The information available on FDI in LFCCs is presented in Table 2. The available FDI information is an aggregate of investments in agriculture, forestry and fisheries. The forestry investment proportion cannot be separated out, but it can be assumed that in most countries, investments into agriculture account for a major portion of the aggregate figure. Potentially significant levels of FDI can be assumed to be directed to forest-relevant investments in Bangladesh, Egypt, Iran, South Africa, Pakistan

7 and Uruguay

8, as these

countries have large-scale downstream forest processing activities, e.g., pulp, paper and paperboards processing (See Background to Forest Financing in LFCCs, macro-level paper, annex 1). In South Africa and Uruguay, it can be assumed that forest plantations also attract FDI and DDI, as both countries have a strongly positive trade balance of industrial roundwood (See Background to Forest Financing in LFCCs, macro-level paper, Annex 2). In addition to the lack of information on forest relevant FDI, no information is available on investment directed to SFM. However, in South Africa and Uruguay, the certified forest area is high: 17 per cent and 74 per cent respectively. Hence, it can be assumed that part of the investment into forestry in these countries is directed to SFM. According to the Inter-American Development Bank (IADB) (2004, in Tomaselli 2006), FDI in the forest industry has also been influenced by the process of privatization of state forests (native and planted) that happened particularly in the 1990s in some countries, such as South Africa. It could be assumed that forest-related FDI would occur also in the tourism sector in some of the LFCCs, for example. However, the present study could not identify any source of information from which such data could be extracted. According to UNCTAD 2010 (World Investment Report 2009), the global financial crisis has changed the FDI landscape: investments to developing and transition economies surged, increasing their share in global FDI flows to 43 per cent in 2008. This was partly due to a concurrent large decline in FDI flows to developed countries (29 per cent). In Africa, inflows rose to a record level, with the fastest increase in West Africa (a 63 per cent rise over 2007); inflows to South, East and South-East Asia witnessed a 17 per cent expansion to hit a new high; FDI to West Asia continued to rise for the sixth consecutive year; inflows to Latin America and the Caribbean rose by 13 per cent; and the expansion of FDI inflows to South-East Europe and the CIS rose for the eighth year running. UNCTAD 2010 further states that the agriculture and extractive industries have survived the crisis relatively well, and that there is a good outlook for FDI in agribusiness. FDI flows in agricultural production tripled to USD 3 billion annually between 1990 and 2007, driven by the food import needs of populous emerging markets, growing demand for biofuel production and land and water shortages in some developing home countries. Contract farming activities by transnational corporations (TNCs) are spread worldwide, covering over 110 developing and transition economies, spanning a wide range of commodities and, in some cases, accounting for a high share of output. Developed-country TNCs are dominant in the upstream (suppliers) and downstream (processors, retailers, traders) ends of the agribusiness value chain. In agricultural production, FDI from the South (including South-South flows) is equally significant as FDI from the North.

7 FDI information not available

8 FDI information not available


It can be assumed that investments in the agriculture sector are the most significant forest-relevant investments in LFCCs. However, there is no information available on linkages between investments into the agricultural sector and forests in LFCCs. A specific detailed study would be required to assess the positive and negative linkages. Expansion of agricultural and cattle grazing areas prompted by such investments is likely to lead to deforestation. On the other hand, investments in intensification of agriculture may reduce pressure on forests and woodlands. Foreign and domestic investors’ land grabbing has emerged as a potential problem in some countries. For example, the press coverage of large-scale Chinese agricultural investments in Africa could give such an impression. Detailed studies would be needed to verify the claims, and particularly to shed light on possible impacts on forests.

Table 2 Inward FDI aggregate for agriculture, forestry and fisheries in LFCCs

Flow Stock

2002-2004 2005-2007 2002 a 2007

b

Country

million USD

% million USD

% million USD

% million USD

%

Bangladesh 2.5 0.6 1.6 0.2 28.4 1.2 27.5 0.8 Egypt 22.2 5.4 29.5 0.2 -- -- -- -- Iceland 0.0 0.0 0.0 0.0 0.7 0.1 0.0 0.0 Iran 0.0 0.0 2.8 1.5 -- -- -- -- Israel -- -- -- -- 4.6 0.0 42.2 0.1 Jordan 3.0 0.7 2.5 1.0 -- -- -- -- Kazakhstan 0.1 0.0 3.1 0.0 16.6 0.1 22.1 0.0 Kyrgyzstan -- -- 0.0 0 -- -- -- -- Mongolia 0.2

c 0.2 0.7

c 0.3 4.1 1.4 6.9 0.5

Morocco 8.1 0.6 2.8 0.1 119.7 1.0 179.0 0.5 Namibia -- -- -- -- 59.0 3.2 90.3 3.2 Saudi Arabia

-- -- 10.7 0.1 -- -- 8.0 0.0

South Africa

-- -- -- -- 75.8 0.3 126.0 0.1

Syria -- -- -- -- 26.9 0.4 -- -- Tunisia 6.2 0.9 7.4 0.4 -- -- -- --

Source: UNCTAD 2009 a Or closest year available

b Or latest year available

c Based on Approval data

3.5 Innovative financing sources

Innovative mechanisms and sources (e.g., climate financing, payment for ecosystem services, forest-backed securities, and debt-for-nature swaps) have received increasing attention during recent years because they are considered to have the potential to create markets and to compensate some of the previously unremunerated services generated by forests and trees. Comprehensive information on financing generated for forests and trees in LFCCs through innovative financing mechanisms is not readily available. This chapter provides examples of innovative financing mechanisms currently in use in some of the LFCCs included in this study. As forest and trees in LFCCs provide multiple vital services for local people, there is a need to support the development and adoption of the innovative mechanisms that can convert the previously unremunerated service provisions of forests and trees into monetary flows that will benefit the local people.


There are currently few carbon projects in the LFCCs: only 2 out of 49 LFCCs have carbon projects (see Table 3). In Kenya, there are various activities to sequester carbon and sell related carbon credits and to build REDD+ readiness. In Uruguay, one project of planted forests for carbon sequestration covers over nine thousand hectares. However, under CDM there are eleven biomass energy projects that are relevant to forests and trees in LFCCs (see Table 4).


Table 3 Forest carbon projects in LFCCs


Tree Flights Kenya Planting Project

This is a voluntary over-the-counter market9 project

located in Bore in Kenya’s Coast Province. The project was started in 2008. In this project, seedlings of tree species such as cashew-nut are distributed among local farmers to be planted on their land. The farmers look after the seedlings, ensure that they grow into trees and earn income from crop yield and carbon sequestration. This income acts as an alternative to cutting down the forests to make charcoal.

Kasigau Corridor REDD Project

This is a voluntary over-the-counter market project located

in Taita Taveta district of the Coast Province of Kenya. It was started in 2006 and has a project life of 20 years. It is developed by Wildlife Works Carbon LLC. The project area is primarily low density forestland, shrubland and grassland savannah. The major activities of the project include the protection of carbon stocks, wildlife corridor and habitat, growing trees for absorbing greenhouse gases,

agricultural outreach, employment and school construction.

REDD+ readiness activity

Kenya currently has a national REDD+ readiness plan, which is supported by the Forest Carbon Partnership Facility (FCPF) of the World Bank. The time scale of the plan is 2008 – 2012. The objectives of the plan are to build necessary institutions and capacities for monitoring, reporting and verification of REDD+ activities and to prepare a national REDD+ strategy for Kenya.

Kenya

Aberdare Range / Mt. Kenya Small Scale Reforestation Initiative

The Aberdare Range / Mt. Kenya Small Scale Reforestation Initiative is a CDM project. It aims to generate carbon credits

by reforesting 1763 hectares of degraded forest lands using a mix of fast, medium-and slow-growing indigenous species in the Aberdare Range and Mt. Kenya regions. The project is operated by the Green Belt Movement (GBM) on behalf of Community Forest Associations (CFAs) in association with the Ministry of Environment and Natural Resources of Kenya, and Kenya Forest Service (KFS). The credit buyer of the project is the Canadian government. The project is made up of seven small-scale afforestation/reforestation (A/R) sub-projects located in seven different sites, viz. Karuri (388.94 ha), Kibaranyeki (206.68 ha), Kabaru-Thigu-Mugunda (236.44 ha), Kirimara-Kithithina (163.32 ha), Kamae-Kipipiri (227.1 ha), Gathiuru-Kiamathege site (350.72 ha) and Kirimara-Kiriti (190.51 ha).

Uruguay The Notary Pension Fund Forestry Project

This is a forest plantation carbon sequestration project. The carbon credit buyer is the Rainforest Alliance, and the carbon credits are sold through the Chicago Climate Exchange. The plantation area of the project is 9,103 ha. The other objectives of the projects are to produce high quality timber, ensure the sustainable management of natural resources and protect all native forests within the project area.

9 The voluntary Over The Counter Market refers to all voluntary sales and purchases of carbon credits

(mostly project-based emissions reductions credits) outside of the Chicago Climate Exchange.


Table 4 CDM biomass projects relevant to forests and trees in LFCCs

Country Number of projects Project type

Egypt 1 Forest biomass Israel 2 Other forest residues

2 Other forest residues South Africa 2 Sawmill waste

Uruguay 3 Sawmill waste

Payment for environmental/ecosystem services is a growing area of interest both globally and within the LFCCs. In the LFCCs, many systems are not yet in place, but there are various current and recent projects looking into the potential of these. Of the 49 LFCCs, at least 10 countries have or have had Payment for Ecosystems Services (PES) relevant projects (see Table 5). The majority (seven) of these projects target watershed services.

Table 5 Payment for Ecosystems Services in LFCCs


Bangladesh Pro-poor financing for water-based ecosystem conservation in South and Southeast Asia

This is an International Union for Conservation of Nature (IUCN) - the World Conservation Union

project from 2004 to 2007. The project had three other participating countries: Pakistan, Nepal and Sri Lanka. The objective of the project was to build capacity in and demonstrate concrete examples of the use of innovative and pro-poor financing mechanisms for the conservation of water-based ecosystems in these countries.

Iran* PES is one of the main components of the MENARID Institutional Strengthening and Coherence for Integrated Natural Resource management project jointly formulated with UNDP/GEF in 2010.

Israel Levy on water extraction from all natural resources

The country has a water usage levy imposed on the extraction of water from all natural sources since 2000. The imposition of the levy reflects a pricing approach, which aims to bring about a PES.

Kazakhstan Payment for Ecosystem Services in the Issyk-Kul oblast

The key component of the project is the payment for watershed services of the forests. The

project is implemented by the Regional Environmental Centre of Central Asia with the support of the State Agency on Environmental Protection and Forestry, the Issyk-Kul oblast state administration and the Secretariat of the United Nations Economic Commission for Europe (UNECE) Convention on Protection and Use of Trans-boundary Watercourses and International Lakes. Financial support of the project was provided by the Swiss Federal Office for the Environment, the Small Grant Programme of GEF and the European Commission.

Kenya * Kenya has altogether 13 PES projects. Four of them are focused on forest carbon services, eight on biodiversity conservation and one on water services. All projects, except four biodiversity

projects, are in the planning stage at present.



Lesotho The Maloti-Drakensberg Transfrontier project

This is a project with Lesotho and South Africa, which includes a payment for water services

component.

Namibia The Kunene Region Torra Conservancy

It is a community-initiated conservation and rural economic development project. It addresses the social and environmental problems with PES in

Namibia.

Pakistan Pro-poor financing for water-based ecosystem conservation in South and Southeast Asia

This is an IUCN - the World Conservation Union project during 2004 - 2007. The project had three other participating countries: Bangladesh, Nepal and Sri Lanka. The objective of the project was to build capacity in and demonstrate concrete examples of the use of innovative and pro-poor financing mechanisms for the conservation of water-based ecosystems in these countries.

Qatar Voluntary biodiversity offset Numerous private companies have started to set up voluntary biodiversity offsets in Qatar.

South Africa The Maloti-Drakensberg Transfrontier project

South Africa is a participating country of this project, which includes a payment for watershed services component.

* Information extracted from Iran´s forest financing survey response ** Mwangi et al. 2008.

Only 3 countries of the 49 LFCCs have used debt-for-nature swaps in a forest-relevant context. Both Bangladesh and Kenya have current arrangements. Uruguay had a debt-reduction agreement with the United States from 1993 to 2008 (see Table 6). Under the agreement, Uruguay was able to reduce its debt to the United States by about USD 4 million. Moreover, during the agreement period, a total of USD 5.8 million was awarded in grants and over USD 4.2 million was leveraged in counterpart funding in Uruguay.


Table 6 Debt-for-nature swaps in LFCCs


Bangladesh Debt reduction for-nature agreement with the United States under the Tropical Forest Conservation Act (TFCA)

Bangladesh entered into an 18-year debt reduction for nature agreement with the United States under TFCA in 2000. This is an agreement to conserve about 1.5 million hectares of tropical forests in Bangladesh. Under this agreement, the government of Bangladesh will save over USD 10 million in reduced debt to the United States. In addition, the United States will give about USD 8.5 million to the Arannyak Foundation (the Bangladesh Tropical Forest Conservation Foundation) for conserving forest biodiversity in Bangladesh.

Kenya Debt-for-nature-swap agreement with Germany

Germany cleared Kenya of a debt of USD 400 million for passing legislation favouring the conservation of forests and management of protected areas.

Uruguay Debt reduction agreement

Uruguay had during 1993 and 2008 a debt reduction agreement with the United States under the Fund of the Americas-Uruguay. One of the objectives of the agreement was to conserve biological resources.

Source: Forest Carbon Portal. 2010.


4. DEMAND FOR FOREST AND SFM FINANCING

4.1 Forests and trees in poverty reduction and national development strategies

In a global forest financing study, Simula (2008) found that country demand for forest ODA is relatively weak and influenced by donor policies and priorities. Two thirds of the surveyed 43 countries mentioned forests in their Poverty Reduction Strategies (PRSs), and only 28 per cent included a coherent national strategy for forests. As analysed in the Background to Forest Financing in LFCCs, the first macro-level paper, 20 out of 49 LFCCs included in this study have a PRS. Of these 20 countries, 18 have included forests and trees in their PRS. Of those 18 countries, 15 have included elements concerning the role of forests and trees in the PRS. However, three of these countries give low importance to forests. Two countries do not mention forests at all in their PRS. Although less than half (41 per cent) of the countries in the group have a PRS, the role of forests and trees appears to be fairly well recognized in the existing strategies. From the countries that did not have a PRS, a national development strategy document was used to observe the role and priority given to forests and trees in the context of development in the respective countries (see annex 9 in the Background to Forest Financing in LFCCs, first macro level paper). Of the 16 other development strategies available, only 3 specify a role of forests and trees. The forest and tree relevant thematic areas present in the PRS and other national development strategies clearly indicate the cross-sectoral emphasis of forests and trees in LFCCs (see Box 1). The most common theme was soil degradation and desertification, mentioned in over a third of the strategies. Common inclusions were biodiversity conservation, energy, watershed management and afforestation/reforestation, which were mentioned in approximately a quarter of the strategies. Other forest-related themes included in the strategies were the supporting role of forests and trees in agriculture and animal husbandry, agroforestry, non-wood forest products and fire prevention. Based on the strategy papers, none of the LFCCs had a production-oriented “traditional forestry” approach, and all strategies placed forests and trees in the wider context of providing multiple services, such as biodiversity, energy, watershed management and support of other rural livelihoods, in an integrated manner. In total, half of the countries (21 of the 42 LFCCs with a development strategy available) have identified forests and trees in their development strategies. This clearly indicates the countries´ demand for financing for increased services provision from forests and trees, especially in the context of the above-mentioned thematic areas. Box 1 Thematic areas of the PRSs and national development strategies in

LFCCs

The following forest-relevant thematic areas were included in the PRSs and other national development strategies assessed for this report. The thematic areas are listed according to order of appearance.

• Desertification/soil management

• Biodiversity

• Energy/biofuel

• Watershed management

• Afforestation/reforestation

• Agroforestry

• Non-wood forest products

• Fire prevention


24 out of the 4910 LFCCs mention forests and trees in their Millennium Development Goal

(MDG) strategy or report, (see Annex 6). This is almost half (47 per cent) of the countries, which indicates that forests and trees are fairly well included in the countries’ strategies to meet the MDG objectives. The role of forests and trees is emphasized in the context of Goal 7: “Ensure Environmental Sustainability”. Many LFCCs included in this report suffer from desertification and soil degradation and are supported by the UNCCD. Out of the 49

11 countries, 37, i.e. most countries, provide a role for

forests and trees in their national implementation report to the UNCCD (see Annex 7). Twenty-two of the countries mention forests and trees generally, and many specifically emphasize afforestation as a means to combat desertification, or see forests as a means to meet the UNCCD objectives. Forests and trees are also mentioned in most National Biodiversity Strategy and Action Plans (NBSAP) (see Annex 8). However, they are mentioned in most cases only on a general level, while a couple of the documents highlight conservation. Of the 49 LFCCs, 22 have a National Adaptation Programme of Action (NAPA) or another climate change strategy (see Annex 9). A majority of these strategies mention forests, but on a general level only.

4.2 Forest policies in LFCCs

Currently, the forest policies do not generally include a financing strategy or an investment programme; hence, analysis cannot be made in monetary terms on the demand for forest financing. However, according to FAO (2009), the development of national financing strategies embedded into national forest policies and programmes would be highly necessary in order to diversify the financial basis of SFM, to guarantee SFM practices and to reduce deforestation and forest degradation. Generally, of the LFCCs included in this report, almost two thirds (61 per cent) have at least one of the following four forest sector policies in place: NFP

12, forest policy, forest strategy

and/or forest legislation. As described in the Background to Forest Financing in LFCCs, the first macro-level paper, a little less than half (45 per cent) of the LFCCs have an official forest policy document, and an additional four countries have a draft under preparation or in consultation process. Although the environmental services, such as carbon or water, could potentially provide opportunities for improved internal and external fund mobilization for trees and forests, none of the LFCCs with an available forest policy explicitly recognizes this potential in a forest context.

10 14 countries did not have an MDG strategy or report available.

11 4 countries did not have a national report available.

12 15 out of 49 LFCCs are partner countries of the NFP Facility. These countries are Burundi, Kenya, Kyrgyzstan, Lesotho, Mali, Mongolia, Morocco, Namibia, Niger, Pakistan, South Africa, Togo, Tunisia, Uzbekistan and Yemen.


5. FINANCING GAPS AND OBSTACLES

According to the OECD (2008), the aid provided during 2005-2006 to forestry by thematic area, as defined by the OECD, was apportioned as follows: forestry development (63 per cent), policy and administration management (33 per cent), research (2 per cent), education and training (1 per cent), services (1 per cent) and fuel wood and charcoal (less than 1 per cent). More than 80 per cent of aid commitments in 2005-2006 to forestry targeted desertification, biodiversity and climate change issues. In LFCCs, the thematic allocation pattern of ODA during 2002-2008 was approximately similar to that of global thematic allocation. The ODA allocation for fuelwood and charcoal-related activities is likely to be highly inadequate in many LFCCs. A high proportion of the population in many LFCCs continues to depend on traditional biomass fuels, mainly charcoal and firewood, for their energy needs. There is a significant need and potential in the domestic markets of these countries for sustainable fuelwood and charcoal production.

According to the OECD’s CRS, approximately one quarter (28 per cent) of forestry ODA to LFCCs targeted biodiversity, climate change and/or desertification. If looking only at desertification, which is a significant thematic area in many LFCCs, the share is approximately one fifth (18 per cent), whereas according to OECD (2008), in global forestry ODA during 2005-2006, over 60 per cent of ODA had desertification as the main objective. This is especially surprising, as the aforementioned thematic areas and multiple services of forests are emphasized in the context of forests and trees in LFCCs. Also, the vast majority of LFCCs mention forests in their national implementation report of the UNCCD. Almost all of those LFCCs with a PRS had included forests and trees in their PRSs (18 out of 20), which sends out a strong signal that the countries acknowledge the role of forests and trees and require an increased level of financing for the related service generation. However, only a minor share (3 out of 16) of the LFCCs having no PRS but having another development strategy mentioned forests and trees. As concluded in Simula (2008), this reflects a weak understanding and/or low political priority given to the forests and trees. Generally the countries that had mentioned forests and trees in their PRS or other development strategy did also receive some forestry ODA. Of the eight major ODA recipient countries, five mentioned forests and trees in their PRS, and all

13 had a national forest policy,

strategy and programme. These countries also had in most cases much higher forest cover than the LFCCs on average. The significance of the forest resource, the related political awareness, and hence the inclusion of forests and trees in the donor liaison have likely facilitated the mobilization of donor financing in these countries. Forests are not high on the list of government priorities in most LFCCs, as only less than half of the countries included in this study have an official forest policy document. However, almost two thirds do have at least forest legislation and/or some other forest policy in place (NFP, forest policy or strategy). In many LFCCs, forest agencies have limited financial and human resources to implement the policies and laws and to monitor their effectiveness; i.e., the existence of a forest policy and legislation does not guarantee implementation thereof on the ground. Few LFCCs have thus far been able to benefit from climate change-related financing for forests and trees. Only 5 of the 49 LFCCs received or have a current commitment to receive forest carbon financing.

13 Bangladesh does not have a national forest programme.


6. CONDITIONS FOR INVESTMENT AND THE ENABLING ENVIRONMENT FOR FINANCING FORESTS AND SFM IN LFCCS

FAO (2009) defines the enabling environment for forest financing as the political, legal and institutional environment with stability, transparency and long-term security. Direct investments, both domestic and foreign, are highly dependent on the investment climate of countries. Because SFM is a long-term activity with a long maturity period, both domestic investments and FDIs are sensitive to the investment climate of a country.

One key issue concerning the enabling environment for forest financing is the clarity of the ownership of the forest resource and forest land. The majority of the LFCCs have data on forest ownership available; only 9 countries out of 49 (18 per cent) do not have this information. However, in half of the LFCCs, the state owns all (97-100 per cent) of the forest resource, although in many countries a customary system might be simultaneously in place but without formal recognition. Additionally, local people may inhabit and use the state-owned forests used for various purposes, such as for subsistence agriculture and cattle herding, collection of fuel wood, etc. Generally, the lack of formally recognized ownership and clear tenure arrangements or multiple claims on the resource hinder long-term investment, resulting in land owners’ being more likely to invest in land use systems that generate short-term income, such as agricultural activities. Also, lack of formal recognition of resource tenure, or unclear tenure situation and disputes on resource ownership, can lead to over-use and degradation of forest and trees.

Another important component of the investment environment is the political stability of a country. In LFCCs, since 1990, 12 countries have experienced turmoil, e.g., a military coup or civil war (see Table 7). In many cases, such conflicts have led to further marginalization of the forest sector in political decision-making and in receiving budget allocations. Furthermore, political conflicts can reduce donor support to forests and trees, primarily because of security concerns but also for political reasons. In post-conflict situations, the forest sector is not commonly among the top priority sectors either in receiving national budget allocations or in receiving post-conflict donor support (e.g., for reconstruction of damaged infrastructure). In a political conflict, forest resources can also be seen as a quick income earner, so timber, along with other natural resources, has been used to fund conflicts. LFCC-specific information on forest and conflict interaction was not found in the present study. Elsewhere there is documented evidence on negative impacts of conflicts on forests. For example, in Cambodia during the Khmer regime, the Khmer Rouge felled and sold large stands of tropical forest to acquire arms to continue their struggle with the government. In Burma, both government and rebels have authorized logging to finance their ongoing armed conflict with each other. The Chinese have reportedly bartered small arms and other weaponry with the regime of Liberian President Charles Taylor in exchange for Liberian logs (Jarvie et. al.). Further, conflicts have negative impacts on direct investment, as the investors do not have the confidence to make a long-term investment in an unstable political environment with risks of, for example, potential state appropriation. Conflicts can also increase internal migration and can lead to the unsustainable use of forest resources. On the other hand, there are also cases where armed conflict has led to the reduction of deforestation and even to regrowth of forests, for instance in Mozambique, mainly due to the reduced level of rural economic activity and the exodus of population from the conflict zones.


Table 7 Political turmoil in LFCCs since 1990

Country Year Description

Afghanistan There was a civil war punctuated by foreign occupations in the

form of invasion by the former Soviet Union in 1979. The war ended in Taliban’s seizing power in 1996. The Taliban government was over thrown by the US-led invasion in

October 2001. Since then, there have been heavy infightings in the country despite the operations of the NATO-led forces.

Algeria 1991 - 2002 A civil war broke out in Algeria following the cancellation of the

second round of the 1991 election. The civil war saw about 160,000 people dead between 1992 and 2002.

Burundi 1992 A civil war sprang up from Burundi's core in 1992. An

estimated 300,000 were killed in a following genocide as a response to this war.

Chad 2006 Armed groups opposing the government invaded the capital

of the country on 13 April 2006. However, they were ultimately repelled by the Chadian army.

Iran 2009 Civil unrest took place after the controversial election.

Iraq 1990

2003 - present

In August 1990, Iraq invaded Kuwait, which led to the Gulf war.

On 20 March 2003, a United States-led coalition invaded Iraq. Since then there have been serious insurgency and infightings in the country.

Kenya 2007 Following the controversial presidential election, serious clashes broke out in the country

Kuwait 1990 Kuwait was invaded by Iraq, which was followed by the Gulf

War.

Kyrgyzstan 2010 A riot broke out in the country following the protest of the

country’s opposition leaders against government corruption and increased living expenses.

Mauritania 2005 Military coup

Niger 2009 Constitutional crisis

Pakistan A serious islamist insurgency has been taking place in recent years.

The World Bank rates countries yearly according to the ease of doing business

14, from 1 to

183, with first place being the best. A high ranking in the Ease of Doing Business index (aggregated from various indicators) means that the regulatory environment is conducive to the operation of business (see Table 8). Of the 49 LFCCs, 5 are included in the top 20 of this index; Singapore is ranked first in the world, Ireland seventh, Saudi Arabia thirteenth, Iceland fourteenth, and Bahrain twentieth. However, all of these countries are high-income countries. Over half of the LFCCs rank in the bottom half, indicating a business environment that is not conducive to investments. Also in the individual indicators that together form the aggregate “ease of doing business” indicator, the LFCCs do not rank high (apart from the few above-mentioned countries). Only in “paying taxes”

15 do eight other countries

16 (other than the aforementioned) make the top 20.

14 The reader should note that according to World Bank, the ease of doing business index is limited in scope. It does not account for an economy’s proximity to large markets, the quality of its infrastructure services (other than services related to trading across borders), the strength of the financial system, the security of property from theft and looting, macroeconomic conditions or the strength of underlying institutions.

15 Number of tax payments, time to prepare and file tax returns and to pay taxes, total taxes as a share of profit before all taxes borne.

16 Maldives, Qatar, United Arab Emirates, Saudi Arabia, Oman, Kiribati, Kuwait, Bahrain.


Also in the “getting credit”17 and in “protecting investors”

18 indicators, five other LFCCs make

the top 20 (these five are shown in bold font in Table 8). Table 8 Business environment indicators in LFFCs

Ease of doing business rankings19

2009 Country

Position

Afghanistan 160 Algeria 136 Bangladesh 119 Bahrain 20 Barbados n/a Burundi 176 Chad 178 Comoros 162 Djibouti 163 Egypt 106 Haiti 151 Iceland 14 Iran (Islamic Republic of) 137 Iraq 153 Ireland 7 Israel 29 Jordan 100 Kazakhstan 63 Kenya 95 Kiribati 79 Kuwait 61 Kyrgyzstan 41 Lesotho 130 Libya n/a Maldives 87 Mali 156 Malta n/a Mauritania 166 Mongolia 60 Morocco 128 Namibia 66 Nauru n/a Niger 174 Oman 65 Pakistan 85 Qatar 39 Saudi Arabia 13 Singapore 1 South Africa 34 Syrian Arab Republic 143 Tajikistan 152 Togo 165

17 Strength of legal rights index, depth of credit information index.

18 Strength of investor protection index: extent of disclosure index, extent of director liability index and ease of shareholder suits index

19 The ease of doing business index ranks economies from 1 to 183, with first place being the best. For each economy, the index is calculated as the ranking on the simple average of its percentile rankings on each of the 10 topics covered in Doing Business 2010 covering the period June 2008 through May 2009. http://www.doingbusiness.org/economyrankings/


Ease of doing business rankings19

2009 Country

Position

Tonga 52 Tunisia 69 Turkmenistan n/a United Arab Emirates 33 Uruguay 114 Uzbekistan 150 Yemen 99

The negative impact of subsidies of other sectors on forests is relatively well known. However, in the case study countries of the present study, such subsidies did not surface as major problems. This does not mean that these subsidies would not be a serious problem in other countries covered in the study. It is not possible to present statistical evidence without a specific detailed study on the linkage between, for example, agricultural subsidies and forests. Nevertheless, available literature (from other countries) emphasizes that subsidies of other sectors do not always have a negative impact on forests. It is important to differentiate between subsidies that provide an incentive for expansion of agricultural production area (extensive agriculture) and subsidies that provide an incentive to specifically increase the productivity per unit area (intensive agriculture). Agricultural and grazing land expansion subsidies of Brazil (now mainly abandoned) are a classical example of the former, with a result of fast deforestation and forest degradation. On the other hand, agricultural subsidies for hybrid maize seed combined with chemical fertilizers (for example, in Malawi) have been studied and shown to lead to reduction of deforestation (see Fisher and Shively 2007).


7. STRATEGIES FOR INCREASING FINANCING FLOWS FOR SFM, INCLUDING NEW AND INNOVATIVE SOLUTIONS

Some LFCCs, such as South Africa and Uruguay, have both significant forest resources and downstream processing activities. However, most of the LFCCs have rather limited resources in terms of forests and trees and are challenged by deforestation, forest degradation, desertification and soil degradation. Forests and trees in these countries provide vital services, such as biodiversity, energy, wind break, and forage, which often go uncompensated or unrecorded. There is a need to acknowledge these services and give higher political priority to forests and trees at the national level in LFCCs. One opportunity for this could be integrated approaches to natural resource management that also include the country-level activities on desertification, climate change mitigation and adaptation and biodiversity conservation. One already ongoing activity towards integrated approaches is the UNCCD GM-facilitated IFS process. The role of forests and trees in provision of services can be acknowledged in this process as well as the necessary financing generated for enhanced provision of forest and tree services. Agriculture especially is an important sector in many LFCC economies. The supporting services provided by trees and forests should be identified and remunerated, especially in this context.

In some LFCCs, governments have developed different financing mechanisms for forests, including fiscal incentives and subsidies to support forest industry development. A typical example is the tax incentives developed to expand forest plantations in Uruguay. Other examples of domestic public investments include direct investments made by governments in forest plantations, such as in South Africa. In the case of Uruguay, the process included classification of land by Forest Law according to suitability, e.g., land classified for agriculture and cattle breeding or for forestry and afforestation. However, in Uruguay, several favourable factors have been present that are absent in many other LFCCs. These are, for example, favourable climatic conditions, low population density and pressure, a stable political environment, clear and well-organized land ownership and availability of a qualified labour force. Jordan presents an interesting example of successful outsourcing of the management of a large part of national parks or nature reserves to a non-governmental organization (NGO). The Jordanian Government provides core financing from the national budget and the NGO accesses additional financing from various sources. In this manner, the Government of Jordan has succeeded in leveraging financing for forest-related biodiversity conservation, recreational services and watershed management. In Kyrgyzstan, the chronic scarcity of budget financing has led to an innovation whereby the forest management units lease State forest land to families, private individuals and companies. The lease agreements specify the rules for the management and use of the forest areas. It is likely that such an outsourcing arrangement has resulted in a better management of the resource base. Based on the above successful examples, new and innovative management arrangements of the state forest property could be considered in LFCCs. Various types of public-private partnerships, as described above, when tailored to the national conditions, would combine the innovativeness and efficiency of the private sector with the government’s need to generate income from the resource base. Such arrangements are suitable for virtually any type of forest service, as indicated by the examples. Simula (2008) classified the REDD and A/R investment potential in LFCCs into three groups according to the deforestation rate: countries with high deforestation, countries with low deforestation and countries with zero deforestation or increasing forest area. The study assumes that the countries with a high deforestation rate have high or medium potential for REDD, whereas countries with low or no deforestation have low potential. For A/R, the study


concluded that all LFCCs have at least medium potential. The LFCC country case studies in the context of this report indicate that the potential for climate change financing for forests is not very high or promising in this group of countries. This sceptical perception applies to both A/R CDM and REDD/REDD+. However, the situation and true potential vary from country to country. Some countries like Kenya and Uruguay have successfully initiated climate change and forests projects. In many other countries, the forest biomass/renewable energy projects could offer real potential, such as has already materialized in Egypt, Israel, Republic of South Africa and Uruguay.


8. CONCLUSIONS

Only less than a fifth (18 per cent) of forestry ODA in LFCCs was allocated to desertification- related activities. However, in the PRSs of the LFCCs, this was the most common theme (in over a third of the strategies). In addition, other national macro strategies in many LFC countries emphasize trees and forests in the combat against desertification. Multi- and cross-sectoral approaches are needed, including in financing. Development of integrated financing frameworks or strategies, such as those done by the GM, should be encouraged. Forestry ODA is distributed among LFCCs very unevenly. Only eight countries account for almost 80 per cent of forestry ODA allocated. The least developed countries are particularly disadvantaged, as their share is only 16 per cent of the forestry ODA distributed to the country group. Poverty puts pressure on forest resources, and the LDCs should be made a priority when developing strategies to increase fund generation for forests and trees. Political awareness on forests and trees appears to have also attracted forestry ODA. Countries that had mentioned forests and trees in their PRSP or other development strategy had also received at least some forestry ODA. Of the eight major ODA recipient countries, five mentioned forests and trees in their PRS, and all

20 had a national forest policy, strategy and

programme. These countries also had in most cases much higher forest cover than the LFCCs on average. The significance of the forest resource, the related political awareness, and hence the inclusion of the issue of forests and trees in the donor liaison have apparently facilitated the mobilization of donor financing in these countries. Only a minor portion (less than 1 per cent) of the forestry ODA allocated to the LFCCs targets fuelwood and charcoal-related activities. However, these are significant activities in terms of livelihoods and energy supply in many LFCCs. A high share of population in many LFCCs continues to depend on traditional biomass fuels, consisting mainly of charcoal and firewood, for their energy needs. Population growth and inaccessibility of other reliable and affordable commercial energy forms by most households indicate the continued and probably growing dependence on the already dwindling biomass resource for energy. There is significant need and potential in LFCCs for financing sustainable fuelwood and charcoal production as well as more safe and efficient production and consumption practices to meet the household energy demand. However, only sustainable production and consumption practices should be supported, as currently unsustainable production is a major cause of deforestation. Considering the estimated funding requirements for REDD and SFM and the current level of forestry ODA, it is clear that there is a need to tap various sources of funding. The Eliasch review estimated in 2008 that USD 15-33 billion per year is required for REDD, and according to Simula (2008), approximately USD 1.9 billion public financing from bi- and multilateral sources is available yearly. Much of the forest land in LFCCs is under state ownership; therefore, ODA is likely to continue to be a significant funding source for the forests and trees. However, various types of public-private partnerships should be further studied. Such arrangements are tailored to the national conditions and combine the innovativeness and efficiency of the private sector with the government’s need to generate income from the resource base. Such arrangements are suitable for practically any type of forest service. In this context, new and innovative management arrangements of state forest property could be considered in LFCCs, for example by following the successful examples of Jordan and Kyrgyzstan.

20 Bangladesh does not have a national forest programme.


9. REFERENCES

Doing Business 2010. http://www.doingbusiness.org/economyrankings/

Ecosystem Marketplace 2010. “Voluntary Over-the-Counter (OTC) Offset Market”. http://www.ecosystemmarketplace.com/pages/dynamic/web.page.php?section=carbon_ma

rket&page_name=otc_market (last sighted 27 July 2010)

FAO 2009. An Overview of National Forest Funds: Current Approaches and Future Opportunities.

FAO 2010. Global Forest Assessment 2010, Key Findings.

Fisher, M. & Shively, G. E. 2007. Agricultural Subsidies and Forest Pressure in Malawi´s Miombo Woodlands.

Forest Carbon Portal. 2010. http://www.forestcarbonportal.com/projects (last sighted 27 July 2010)

Global Mechanism. 2008. Integrated Financing Strategies for Sustainable Land Management. http://global-mechanism.org/dynamic/documents/document_file/ifs_eweb.pdf

Global Mechanism undated. Asia and Pacific Programme. http://global-mechanism.org/dynamic/documents/document_file/asia.pdf

Global Mechanism undated. Compensation for Ecosystems Services Programme. http://global-mechanism.org/dynamic/documents/document_file/ces.pdf

Global Mechanism undated. Latin America and Caribbean Programme. http://global-mechanism.org/dynamic/documents/document_file/lac.pdf

IADB 2004. Estudio Sobre Inversión Directa en Negocios Forestales Sostenibles: Documento Conceptual. Project ATN/NP-8323-RS; STCP: Curitiba, 2004.

ITTO undated. Tropical Forest Update. Volume 18 Number 4. ISSN 1022-5439.

Jarvie, J., Kanaan, R., Malley, M., Roule, T. & Thomson, J. undated. Conflict Timber: Dimensions of the Problem in Asia and Africa.

Lebedys, A. 2004. Trends and Current Status of the Contribution of the Forestry Sector to National Economies.

Mwangi, S. & Mutunga, C. 2008. Overview of PES in Kenya.

www.docstoc.com/docs/2387922/Overview-of-PES-in-Kenya (last sighted on 28 July 2010)

OECD CRS 2010. http://stats.oecd.org/Index.aspx

OECD-DAC. 2008. Measuring Aid to Forestry.

Simula, M. 2008. Financing Flows and Needs to Implement the Non-Legally Binding Instrument on All Types of Forests.

Tomaselli, I. 2006. Brief Study on Funding and Finance for Forestry and Forest-Based Sector.

Transparency International 2010. http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table

UNEP 2010. http://cdmpipeline.org/ (Updated July 1st 2010)


United Nations Conference on Trade and Development (UNCTAD). 2009. World Investment Report: Transitional Corporations, Agricultural Production and Development. United Nations, New York and Geneva.

UN Stats 2010. http://unstats.un.org/unsd/default.htm

Annex 1


Annex 1 Value added21 by agriculture, hunting, forestry and fisheries (%) in

LFCCs

Country Value added by agriculture, hunting, forestry, and

fisheries in 2008 (%)

Afghanistan 40 Algeria 8 Bangladesh 19 Burundi 37 Chad 20 Djibouti 4 Egypt 15 Iceland 6 Iran 10 Iraq 6 Ireland 2 Israel 2 Jordan 3 Kazakhstan 5 Kenya 26 Kuwait 0 Kyrgyzstan 29 Lesotho 8 Libya 2 Mali 38 Malta 18 Mauritania 3 Mongolia 22 Morocco 14 Namibia 46 Niger 1 Oman 20 Pakistan 0 Qatar 2 Saudi Arabia 3 South Africa 20 Syria 23 Tajikistan 42 Togo 11 Tunisia 23 Turkmenistan 1 United Arab Emirates 11 Uruguay 26 Uzbekistan 9 Yemen 22 Source: UNSTATS 2010

21 Gross value added is the value of output less the value of intermediate consumption; it is a measure of the contribution to GDP made by an individual producer, industry or sector.

Annex 2


Annex 2 ODA in LFCCs during 2002-2008

2002 2003 2004 2005 2006 2007 2008 Average

2002-2008

LFCC bilateral ODA - MUSD 14.6 17.8 13.1 17.1 12.0 16.5 9.7 14.4

LFCC multilateral ODA - MUSD 2.4 0.7 2.0 2.8 2.3 1.8 2.6 2.1

Proportion of bilateral ODA - % 85.6 96.2 86.8 85.9 84.0 90.2 78.9 86.8

Proportion of multilateral ODA - %

14.4 3.8 13.2 14.1 16.0 9.8 21.1 13.2

LFCC share from total forestry ODA - %

6.8 6.3 4.0 4.9 3.2 3.7 2.2 4.5

Annex 3


Annex 3 Forestry ODA percentage shares per donor in LFCCs from 2002 to 2008

Donor 2002

2003

2004

2005

2006

2007

2008

Average of total

2002-2008

Australia 0.3 2.1 1.4 1.5 0.7 0.2 0.3 1.00

Austria 0.1 0.1 - - - - - 0.02

Belgium 2.5 7.6 0.7 1.5 0.7 0.5 - 2.10

Canada 0.2 0.0 0.0 - - 0.3 0.5 0.10

Denmark - 1.1 0.7 - - - - 0.30

Finland 9.8 10.7 0.0 0.0 0.8 3.3 16.5 5.60

France 0.6 1.7 2.7 5.1 7.4 10.9 8.1 5.20

Germany - 3.3 11.3 10.9 9.7 6.6 14.9 7.80

Greece 0.6 - - - - - - 0.10

Ireland - 0.6 - 0.0 1.9 9.6 3.2 2.20

Italy - - - - - - 31.5 0.10

Japan 24.1 46.4 51.4 46.8 51.5 37.0 9.4 38.80

Korea - - - - 0.4 2.7 9.7 1.60

Luxembourg - - - - - 0.5 - 0.10

Netherlands 18.8 5.8 - - - - - 3.70

New Zealand 0.2 1.7 - - - - - 0.30

Norway 0.1 1.2 1.5 3.6 1.5 3.8 - 1.80

Spain 0.1 - 3.6 2.7 2.3 1.5 3.2 1.80

Switzerland 13.3 15.2 14.3 11.8 11.9 12.0 10.0 12.70

Sweden - - - - - 0.1 0.6 0.10

United Kingdom 17.2 2.4 1.4 - 0.8 1.1 1.6 3.50

United States - 0.2 0.7 3.6 - - - 0.80

Multilateral donors

European Union (EU) institutions

- - - - - 5.8 8.1 1.8

IDA 12.1 - 2.0 1.0 6.7 3.8 13.0 5.1

United Nations Development Programme (UNDP)

- - 8.2 4.6 3.7 0.2 0.0 2.3

AfDF - - - 6.7 - - - 1.2

Annex 4


Annex 4 Forestry ODA by country in LFCCs from 2002 to 2008

2002 2003 2004 2005 2006 2007 2008 Country

Geographic region

LDC %

Afghanistan Asia Yes - 0.20 0.30 0.30 0.20 1.10 - Algeria Africa - - 0.01 - 0.20 0.30 - Bangladesh Asia 1.90 0.02 1.20 0.90 0.50 0.03 0.50 Bahrain Asia Yes n/a

22 n/a n/a n/a n/a n/a n/a

Barbados Caribbean n/a n/a n/a n/a n/a n/a n/a

Burundi Africa Yes 0.04 0.01 0.01 1.30 0.00 0.01 - Chad Africa Yes 0.01 0.04 - - 0.60 - 0.04 Comoros Africa Yes n/a n/a n/a n/a n/a n/a n/a

Djibouti Africa Yes - 0.00 0.04 0.05 - 0.02 0.10 Egypt Africa - - - - 0.03 0.04 0.10 Haiti Caribbean Yes 0.01 0.04 - -0.40 1.10 0.30 0.40 Iceland Europe n/a n/a n/a n/a n/a n/a n/a

Iran (Islamic Republic of) Asia - - 0.01 - 0.03 0.00 - Iraq Asia n/a n/a n/a n/a n/a n/a n/a

Ireland Europe n/a n/a n/a n/a n/a n/a n/a

Israel Asia n/a n/a n/a n/a n/a n/a n/a Jordan Asia - 0.10 - 0.03 0.10 0.03 0.10 Kazakhstan Asia - - - - 0.03 - - Kenya Africa 0.50 1.70 1.50 1.50 1.30 2.00 3.80 Kiribati Oceania Yes n/a n/a n/a n/a n/a n/a n/a

Kuwait Asia n/a n/a n/a n/a n/a n/a n/a Kyrgyzstan Asia 0.50 1.10 1.20 1.90 1.30 1.60 1.60 Lesotho Africa Yes 0.04 0.02 0.30 0.10 0.10 0.10 0.10 Libya Africa n/a n/a n/a n/a n/a n/a n/a Maldives Asia Yes 0.01 - - - - - - Mali Africa Yes 0.60 0.70 1.30 1.80 0.40 0.40 0.40 Malta Europe n/a n/a n/a n/a n/a n/a n/a

Mauritania Africa Yes 0.00 - 0.02 - 0.00 0.03 - Mongolia Asia - 0.02 0.30 0.30 1.00 0.60 2.00 Morocco Africa 0.10 0.30 0.40 1.50 1.30 2.30 1.40 Namibia Africa 1.60 1.80 1.30 1.40 1.20 1.70 1.20 Nauru Pacific n/a n/a n/a n/a n/a n/a n/a

Niger Africa Yes 0.10 0.40 0.30 0.10 0.10 0.30 0.20 Oman Asia - 1.20 0.60 0.20 0.02 0.03 - Pakistan Asia 4.80 2.70 1.20 1.80 1.70 1.50 1.30 Qatar Asia n/a n/a n/a n/a n/a n/a n/a

Saudi Arabia Asia - 0.01 0.40 0.40 0.20 - - Singapore Asia n/a n/a n/a n/a n/a n/a n/a

South Africa Africa 2.80 0.80 0.20 0.30 0.10 0.20 0.03 Syrian Arab Republic Asia 0.04 - - - - - - Tajikistan Asia - - - 0.01 - 0.30 Togo Africa Yes 0.40 0.70 0.50 0.10 - - 0.10 Tonga Pacific - 0.30 0.01 0.10 0.04 0.02 - Tunisia Africa 4.10 7.40 5.80 8.10 4.90 5.40 0.10 Turkmenistan Asia - - - - - 0.60

22 n/a = no information available

Annex 4


2002 2003 2004 2005 2006 2007 2008 Country

Geographic region

LDC %

United Arab Emirates Asia

n/a n/a n/a n/a n/a n/a n/a

Uruguay South America - 0.70 0.03 0.10 0.10 0.10 0.01

Uzbekistan Asia - - - - 0.01 - - Yemen Asia Yes n/a n/a n/a n/a n/a n/a n/a

n/a = no information available

Annex 5


Annex 5 Forestry ODA by category in LFCCs during 2002-2008

2002 2003 2004 2005 2006 2007 2008 Average

02-08

Forestry policy & admin. management

32.5 25.3 41.3 41.2 35.0 25.0 47.1 35.3

Forestry development 46.4 64.3 54.4 57.4 62.8 74.0 52.4 58.8

Forestry research 1.4 1.5 1.8 0.9 1.5 0.7 0.3 1.1

Forestry services 16.9 8.6 - - - - - 3.7

Fuelwood/charcoal 1.2 0.2 - - - - 0.3 0.2

Forestry education/training

1.5 0.1 2.6 0.5 0.7 0.3 - 0.8

Annex 6


Annex 6 Forests and trees in national Millennium Development Goals (MGD) report in LFCCs

Country Forests/trees appear in

MDG report? Comments

Afghanistan Yes Afforestation is mentioned as a means to achieve environmental sustainability, i.e. Goal 7.

Algeria Yes generally

Bahrain No

Bangladesh Yes Reforestation is emphasized for achieving Goal 7.

Barbados Yes Priority is given to formulating a new forest policy and forest management plan to achieve Goal 7.

Burundi Yes generally

Chad No

Comoros No

Djibouti Yes generally

Egypt Yes Tree planting for carbon sequestration is mentioned.

Haiti No

Iceland n/a23

Iran Yes Iran is developing natural resource management

schemes (within the framework of forestry and rangeland programmes).

Iraq n/a

Ireland n/a

Israel n/a

Jordan n/a

Kazakhstan n/a

Kenya

Yes Kenya is achieving Goal 7 by putting in place an effective policy and legal framework for the conservation and management of the environment and natural resources such as forests.

Kiribati Yes generally

Kuwait Yes generally

Kyrgyzstan n/a

Lesotho n/a

Libya n/a

Maldives No

Mali Yes generally

Malta n/a

Mauritania No

Mongolia n/a

Morocco Yes generally

Namibia Yes generally

Nauru No

Niger Yes generally

Oman n/a

Pakistan Yes Pakistan is achieving Goal 7 by implementing the

forest sector master plan, national forest policy, biodiversity action plan and desertification combat

23 n/a = report not available

Annex 6


Country Forests/trees appear in

MDG report? Comments

action plan.

Qatar No

Saudi Arabia Yes generally

Singapore No

South Africa Yes generally

Syria No

Tajikistan Yes generally

Togo Yes generally

Tonga No

Tunisia Yes Reforestation is stressed.

Turkmenistan Yes generally

United Arab Emirates

n/a

Uruguay Yes generally

Uzbekistan n/a

Yemen Yes generally

n/a= report not available

Annex 7


Annex 7 Forests and trees in national report on UNCCD implementation in LFCCs

Country Forests/trees

appear? Comments

Afghanistan Yes Afghanistan incorporated forestry projects in the five-year Master Plan of the Ministry of Agriculture and Irrigation.

Algeria Yes generally

Bahrain Yes Afforestation is emphasized.

Bangladesh No

Barbados Yes generally

Burundi Yes generally

Chad Yes generally

Comoros Yes generally

Djibouti Yes generally

Egypt Yes Afforestation is emphasized.

Haiti Yes generally

Iceland n/a

Iran Yes generally

Iraq n/a

Ireland n/a

Israel Yes Afforestation is stressed.

Jordan

Yes Forests and trees appear in the context of ensuring a sustainable utilization of the forest and range resources through the design and implementation of rational management systems.

Kazakhstan Yes generally

Kenya Yes Forestry is viewed as one of the means to achieve UNCCD

goals.

Kiribati n/a

Kuwait No

Kyrgyzstan Yes generally

Lesotho Yes Forestry is viewed as one of the means to achieve UNCCD

goals.

Libya No

Maldives n/a

Mali No

Malta No

Mauritania Yes generally

Mongolia Yes Afforestation is stressed.

Morocco Yes generally

Namibia Yes generally

Nauru Yes Afforestation and reforestation are stressed.

Niger Yes generally

Oman Yes Forestation is emphasized.

Pakistan Yes Forestry is seen as a key means to achieve UNCCD and

NAP goals.

Qatar No

Saudi Arabia Yes afforestation is emphasized

Singapore Yes generally

South Africa Yes generally

Annex 7


Country Forests/trees

appear? Comments

Syria Yes generally

Tajikistan Yes generally

Togo Yes generally

Tonga Yes generally

Tunisia Yes generally

Turkmenistan Yes generally


Yes Afforestation is stressed.

Uruguay No

Uzbekistan Yes Forest reclamation is emphasized to combat

desertification.

Yemen Yes Afforestation is emphasized.

n/a= report not available

Annex 8


Annex 8 Forests and trees in other sectors’ strategies/policies in LFCCs

Country Name Forests/trees

considered? How?

Afghanistan USG Agriculture Strategy for Afghanistan NBSAP

No Yes

-- generally

Algeria NBSAP Yes generally

Bahrain National Environmental Strategy and Action Plan

No --

Bangladesh

NBSAP The Environmental Conservation Rules

Yes

Yes

Forest conservation is highly prioritized for achieving NBSAP goals. generally

Barbados NBSAP Yes generally

Burundi NBSAP National Environmental Strategy (NES)

Yes No

generally --

Chad NBSAP Yes generally

Comoros NBSAP Yes generally

Djibouti NBSAP Yes generally

Egypt NBSAP Yes generally

Haiti Haiti Environment Strategy NBSAP

Yes

Yes

generally generally

Iceland NES No --

Iran NBSAP NES

ICL No

-- --

Iraq n/a24 -- --

Ireland NBSAP National Plant Conservation Strategy

Yes Yes

generally generally

Israel NBSAP Yes Afforestation is mentioned as a

means to conserve biodiversity.

Jordan

NBSAP NES

Yes Yes

Generally Afforestation is prioritized for achieving environmental sustainability.

Kazakhstan NBSAP Environmental Financing Strategy

Yes No

generally --

Kenya

NBSAP Agricultural Sector Development Strategy

Yes

ICL25

Forest conservation is highly prioritized for achieving NBSAP goals. --

Kiribati National Environmental Management Strategy

Yes generally

Kuwait NBSAP No --

Kyrgyzstan NBSAP Yes generally

24 n/a =strategy/policy not available

25 ICL = information cannot be located

Annex 8


Country Name Forests/trees

considered? How?

Lesotho

NBSAP National Environmental Policy

No Yes

-- Tree planting is prioritized for achieving environmental sustainability.

Libya n/a -- --

Maldives

Maldives Environment Assessment NBSAP

Yes

Yes

Forests/trees are considered in the context of biodiversity loss. Forests/trees are considered in the context of biodiversity loss.

Mali NBSAP National Agricultural Development Strategy

Yes ICL

generally

Malta

National Biodiversity Framework National Environmental Health Action Plan

Yes

ICL

generally --

Mauritania NBSAP Yes generally

Mongolia NBSAP Yes generally

Morocco NBSAP Yes generally

Namibia NBSAP Yes generally

Nauru n/a -- --

Niger NBSAP Yes generally

Oman NBSAP ICL --

Pakistan

NBSAP National Conservation Strategy National Environmental Policy

Yes Yes

Yes

generally generally Forests and trees are considered in the context of achieving environmental policy goals through forestry.

Qatar NBSAP Yes Reforestation is prioritized to

conserve biodiversity.

Saudi Arabia NBSAP Yes generally

Singapore The Singapore Green Plan 2010

Yes Forests and trees are considered from a nature conservation point of view.

South Africa

NBSAP National Agricultural Development Strategy

Yes Yes

generally Afforestation and forest improvement for agricultural development are mentioned.

Syria NBSAP Yes generally

Tajikistan NBSAP Yes generally

Togo NBSAP ICL --

Tonga NBSAP Yes generally

Tunisia NBSAP ICL --

Turkmenistan NBSAP Yes generally


National Strategy for Environmental Health

No

Uruguay NBSAP Yes generally

Uzbekistan NBSAP Yes generally

Yemen NBSAP Yes generally

N.B. n/a =strategy/policy not available; ICL = information cannot be located

Annex 9


Annex 9 Forests and trees in national climate change strategies of LFCCs

Country Name Forests/trees considered?

How?

Afghanistan NAPA Yes generally

Algeria n/a -- --

Bahrain n/a -- --

Bangladesh

NAPA Climate Change Strategy and Action Plan 2008

Yes Yes

generally Importance of forests is highlighted in combating climate change.

Barbados n/a -- --

Burundi NAPA Yes Reforestation is seen as an

important strategy in climate change adaptation.

Chad n/a -- --

Comoros NAPA Yes generally

Djibouti NAPA Yes generally

Egypt Climate Change Action Plan

ICL --

Haiti NAPA Yes generally

Iceland Climate Strategy Yes generally

Iran n/a -- --

Iraq n/a -- --

Ireland National Climate Change Strategy 2007 – 2012

Yes generally

Israel n/a -- --

Jordan n/a -- --

Kazakhstan Climate Change Adaptation Strategy

ICL --

Kenya National Climate Change Response Strategy

No --

Kiribati NAPA Yes generally

Kuwait n/a -- --

Kyrgyzstan n/a -- --

Lesotho NAPA Yes Afforesting marginal land is

mentioned as one of the means to cope with climate change.

Libya n/a -- --

Maldives NAPA No --

Mali NAPA Yes generally

Malta n/a -- --

Mauritania NAPA yes The role of forests in combating

climate change is recognized.

Mongolia n/a -- --

Morocco National Mitigation Strategy

Yes generally

Namibia Strategy on Climate Change

ICL --

Nauru n/a -- --

Niger NAPA Yes generally

Oman n/a -- --

Pakistan n/a -- --

Qatar n/a -- --

Saudi Arabia n/a -- --

Annex 9


Country Name Forests/trees considered?

How?

Singapore National Climate Change Strategy

Yes Forests are recognized as important carbon sinks.

South Africa Climate Change Strategy ICL --

Syria n/a -- --

Tajikistan n/a -- --

Togo n/a -- --

Tonga n/a -- --

Tunisia n/a -- --

Turkmenistan n/a -- --


n/a -- --

Uruguay Climate Change Action Plan

Yes generally

Uzbekistan n/a -- --

Yemen NAPA Yes generally

n/a =strategy/policy not available; ICL = information cannot be located

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FI-00100 Helsinki [email protected]

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Financing forests and sustainable forest management … · Financing forests and sustainable forest management in ... report in LFCCs ... for example, only 3 countries out