Posted on
19 September 2011 London, UK - Forest bonds
could be key to scaling up finance to conserve
the world?s tropical forests, according
to WWF, the Global Canopy Programme (GCP)
and the Climate Bonds Initiative (CBI).
The organizations are calling on governments
to take action to close the gap between
current financial commitments and the resources
needed to protect the world's forests.
Upcoming United Nations
climate change talks, set to get underway
in Panama in early October and South Africa
in December, provide an opportunity to focus
on innovative options for financing forest
conservation. To end forest loss, forest
countries need support from industrialized
countries. While public financing is essential,
other sources of innovative financing, such
as credit support for forest bonds, could
be a way to leverage private-sector finance
so that the public sector is not alone in
efforts to scale up forest finance, according
to the groups.
“The alarming rate of
forest loss around the globe is releasing
billions of tonnes of CO2 and destroying
irreplaceable biodiversity. The world needs
to increase forest finance by tens of billions
of dollars in the current decade just to
halve this forest loss,” said Don Kanak,
Advisor to WWF's Forest and Climate Initiative,
who is also Chairman of Prudential Corporation
Asia.
Kanak added “We can't
wait until the last tree has fallen to find
this large-scale of finance. Forest bonds
may be a promising way to close that short-term
gap in financing so our forests don?t slip
away while we sort out how we?re going to
fund their long-term conservation.”
“Tropical forests are
critical natural capital that provide ecosystem
goods and services that underpin the world?s
wealth and human wellbeing, supporting climate,
water, energy, food, health and livelihood
securities at local to global scales,” said
Andrew Mitchell, Executive Director of Global
Canopy Programme. “The responsibility to
end forest loss and protect these services
has to be shared among governments and private
sector from industrialized and forested
countries. With carbon market negotiations
proceeding slowly, forest bonds offer a
way to compliment the public funds available
by leveraging large-scale private-sector
finance to help safeguard vital ecological
infrastructure.”
Bonds are a familiar
financing mechanism in sectors such as health
and energy, and are receiving increased
interest as a mechanism to finance mitigation
of and adaptation to climate change, including
for reducing emissions from deforestation
and forest degradation, and conserving,
sustainably managing and enhancing forest
carbon stocks (collectively referred to
as REDD+).
“Forest bonds are a
tool for countries, multi-lateral development
banks, and private financial institutions
to tap into the international bond market
that is worth nearly 100 trillion USD,”
said Sean Kidney, Chair of the Climate Bonds
Initiative, an investor-focused NGO.
Kidney added “Time is
short. While REDD+ is an opportunity, investor
demand is weak. We think the most fertile
ground is to use regional forest retention
programs that rely on diversified income
streams to support a 'forest' bond. We can
use such programs to create jobs and give
people better opportunities than felling
trees.”
Borrowing allows significant
up-front investment to be made in developing
the financially viable projects that will
enable forest retention. According to WWF,
GCP and CBI, under the right conditions,
forest bonds could become a useful large-scale
financing mechanism in the effort to reduce
global forest loss.
