Investment opportunity in deforestation-free supply chains
Increased productivity in seven supply chains and conservation support for four protected tropical forest areas contribute to the livelihood of three local communities … all thanks to investment in deforestation-free supply chains.
Sustainable landscape management is a global and local necessity. However, few tropical forests are managed effectively and, as a result, are unable to meet the competing demands of today, let alone those likely to emerge tomorrow. This leaves billions of people and many tropical economies at risk.
Forests play a significant role in meeting development and climate change mitigation targets, enshrined in the Paris Agreement and the Sustainable Development Goals. This highlights the urgent need for innovative, replicable and robust financial instruments to reduce, end and reverse deforestation in tropical nations, while increasing agricultural production in a sustainable manner.
In addition to nationally determined greenhouse gas emission reduction targets, some sub-national governments are starting to set jurisdictional climate and forest targets. According to Tropical Forest Alliance 2020 (TFA), a jurisdictional scale approach allows for a swifter transition from commitment to action compared to a national emissions and forest policy. Additionally, this method leads to a more integrated response to competing land-use claims than single-commodity sustainability initiatives.
The increasing importance of the latter approach is reflected in the growth of funds dedicated to jurisdictional policy-making, with over $1 billion now being invested in projects by a range of organizations. In the Democratic Republic of Congo, jurisdictional-scale management is being trialed in an area the size of Greece. “This will not only reduce the pressure on forest resources, but also and most importantly, improve the livelihoods of the population” in the region.
Public-private partnerships are crucial for the acceleration of climate-positive land use on the jurisdictional scale and developing this collaborative approach is a key topic of TFA 2020. Close relationships between the public and private sectors allow for superior stakeholder engagement, technical support and coordination and sharing of risk. It will also unlock private investment on a transformative scale.
The Global Canopy Programme’s Unlocking Forest Finance (UFF) Partnership project is part of the International Climate Initiative (IKI) and works with a wide range of global and local partners in the public and private sectors. The Partnership team has developed a replicable framework for three jurisdictions, namely San Martin in Peru and Acre and Mato Grosso in Brazil.
The main focus of the project is to facilitate a rapid transition to the sustainable production of a number of agricultural commodities, thereby reducing carbon emissions, conserving forests, their associated ecosystem services and improving the livelihoods of indigenous people and local communities. The business case for sustainable transitions in these jurisdictions is based on estimated future financial benefits of improved land use planning and options for increasing productivity.
The framework provides clear plans and actions for governments, risk mitigation and income potential for investors, in addition to improvements in productivity and social conditions for local communities. This underlines the mutually beneficial promise of the jurisdictional approach advocated by TFA 2020.
In San Martin, Peru, the project team is piloting this approach following comprehensive consultations with a wide range of local, regional and national organizations and discussions with international investors. The innovative financial structure outlined below provides credit guarantees and blends public and private investment, while leveraging climate finance and ensuring environmental, social and governance safeguards in a credit line of up to $88 million.
The aim of the investments is to sustainably increase productivity in seven supply chains, support conservation in four protected areas and contribute to a sustainable livelihood plan for three local communities.
The benefits are likely to be significant. In the cacao supply chain, for example, UFF will support 12,650 small farmers with training and management systems over 10 years. Productivity in San Martin is projected to increase from 750 kilograms per hectare to 2,200 kilograms per hectare through the implementation of agroforestry. This will generate over 6,500 new jobs and an additional income of $21 million from cacao. Agroforestry also provides benefits to local ecosystem services including reduced reliance on fertilisers and increased soil fertility.
From transforming supply chains in Peru to addressing issues around water and climate change in Lesotho and reducing forest loss in Brazil, jurisdictional scale approaches are increasingly occupying a central position in sustainable development and climate change mitigation. There are still steps to be taken, not least of which, the resolution of competing land-use demands, integration of sub-national objectives with national and international targets and coherent cross-sectoral agenda-setting.
The Climate Action and Sustainable Land Use in Forestry and Agriculture event at the NYC Climate Week offers a timely opportunity to take these steps together in replicating successful jurisdictional models to halt deforestation. Join the public forum event on 22 September by registering here.