OSLO — The biannual Oslo Tropical Forest Forum, one the largest conferences globally focused on the issue, kicked off Wednesday with the news that tropical forests lost 39 million acres last year, an area roughly the size of Bangladesh.
The invitation-only event, hosted by the Norwegian Agency for Development Cooperation, gathered 500 participants including high-level officials from tropical forest countries, NGOs, the private sector, indigenous peoples representatives, and academia. The aim was to take stock of the first 10 years of the inclusion of forests in climate negotiations; to shine a light on their role in achieving the Paris Agreement on climate change and the Sustainable Development Goals; and to put forward strategies to halt large-scale forest loss. Globally, some 1.3 billion people depend on forests for their livelihoods.
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The event also hoped to inform other major events taking place later this year, including the Global Climate Action Summit in September, in San Francisco, United States; the World Bank Annual Meeting in October, in Bali, Indonesia; and the United Nations Climate Change Conference in December, in Poland.
Here, Devex rounds up three key takeaways from the event on how to reverse the fate of tropical forests.
1. The importance of market-based incentives
“Forests are estimated to be about 30 percent of the solution to climate change in terms of mitigation potential, but we are only spending less than 2 percent of the climate finance on forests,” program committee chair Frances Seymour told Devex.
For this senior fellow at the World Resources Institute, even well-meaning bilateral cooperation in key tropical forest countries falls short of having the desired impact because it is up against a deforestation-based economy which is global in nature.
“We must put in place a whole set of financial incentives to turn that tide,” she said. According to experts at the forum, this means a shift in domestic subsidies and fiscal policies to reward forest conservation, as well as moving international public and private resources away from investments that cause deforestation.
Indonesia’s director-general for climate change at the Ministry of Environment and Forestry, Putera Parthama, noted the country put hard work into getting a license to export verified legal timber to the European Union, but demand has yet to match the supply.
Price premiums, demand-side policies in consumer countries, and reputational benefits all have a role to play in helping to mainstream deforestation-free supply chains, participants at various sessions agreed.
The $1 trillion Norwegian Sovereign Fund, which owns around 1.4 percent of the world’s listed stocks, has divested from 58 companies due to deforestation. “We think of deforestation as a climate change issue, and this is material for us [investors],” chief corporate governance officer, Carine Smith, said during the opening plenary.
2. An emerging trend of blended finance
Blending private and public funding to protect forests is one of the emerging trends that was discussed at the forum. Rabobank, the Dutch banking corporation, has recently teamed up with the U.N. Environment Programme to set up a fund worth $1 billion which is expected to start transactions later this year. The facility will provide grants, de-risking instruments, and loans to clients in the food and agriculture sector who adhere to strict provisions for forest protection and restoration.
“There are risks we cannot take on our balance sheet, so we need to work with public funders and partners,” said Director of Sustainability Bas Rüter. To this end, the fund will offer products for three types of organizations with different risk appetites: Public donors who are not interested in a return, but who want to use private money to reach impact faster; development banks that have a return profile but want to be able to provide long-term money at a lower rate; and impact investors or other banks who want to use the fund.
Meanwhile, another Netherlands-based group, &Green Fund, expects to raise $400 million by next year, which it will use to mobilize $1.6 billion for deforestation-free commodity production in tropical regions. It will focus on the soy, livestock, palm oil, and forestry sectors in jurisdictions with forest and peat protection policies.
Chairman of the Board of &Green Fund and of the European Development Finance Institutions Nanno Kleiterp said a key goal was to show the model works. “European development banks are very hesitant to step in because of financial and reputational risks, so we want to show them this can be done,” he said.
Blended finance is already being used in a number of sectors, but land use is a particularly tricky one, panelists noted. “It combines all the possible risks you can have in finance, and this makes it more difficult to find partners,” said Kleiterp.
Those risks include legality, rights, governance, and law enforcement issues in tropical forest countries. Given the overlap between indigenous people’s territories and highly biodiverse forest landscapes, violations of their rights and the right to land remain a concern to stakeholders across the board.
3. Shifts in the political climate
A shift in key donor countries such as the United States means the political climate is less favorable to international cooperation in general, and financial support for the climate agenda in particular, delegates said.
Yet, an increasing body of science is demonstrating the localized impacts of tree loss, noted climate change expert and senior fellow at WRI-Brazil Carlos Nobre. Deforested areas, for instance, may receive up to 20 percent less rain.
This means there is starting to be a movement in emphasis, from an exclusive focus on attracting international finance toward understanding the self-interest of tropical forest countries in taking leadership, pointed out Seymour.
“It is time for national governments to start thinking about fiscal transfers domestically to reward those jurisdictions that are conserving their forests and supporting the nationally-made commitments to the global climate agenda,” she said.
At the closing plenary, UNEP’s Executive Director Erik Solheim challenged the global forest community: “We must do with forests what we have done with plastics and solar energy,” he said. “We need to make this issue a kitchen table conversation, otherwise we are failing.”