in Brazil, Guyana, Indonesia, Norway

Almost half of Norway’s climate and forest aid remains unspent

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In 2007, at the UN climate negotiations in Bali, Norway’s Prime Minister Jens Stoltenberg announced his ambitious plans to save tropical forests. Six years later, Norway has disbursed more than US$1.4 billion but almost half of that remains unspent.

The magazine Development Today has produced an overview of Norway’s climate forest portfolio. Rather than paying the money upfront, Norway’s forest aid is results-based. Payments are made when countries can prove that they have reduced deforestation. Development Today reports that,

Billions of crowns allocated for Brazil and Guyana remain on bank accounts in Washington and Oslo. Another billion crowns that Norway has paid into a World Bank fund – the Forest Carbon Partnership Facility – has yet to commence payments because countries are not yet able to verify reduced deforestation. Of NOK 6 billion promised to Indonesia, disbursements have not yet begun.

When Norway agreed to fund the Congo Basin Forest Fund in 2008, Stoltenberg told the Guardian, “We know the technology. Everyone knows how not to cut down a tree.” But as Development Today acerbically points out, “not cutting down trees is about as easy to bring about as not extracting oil from the North Sea”.

In 2010, Stoltenberg wrote that “REDD+ is the most important and cost-effective short-and medium-term climate change mitigation opportunity at our disposal.”

But REDD hasn’t proved to be cheap either. In August 2012, the World Bank’s Independent Evaluation Group published a review of the Bank’s Forest Carbon Partnership Facility (FCPF). “REDD+ is a more expensive, complex, and protracted undertaking than was anticipated at the time of the FCPF’s launch [in 2007],” the IEG wrote.

Earlier this month, Norway elected its first Conservative prime minister since 1990, Erna Solberg. It remains to be seen whether Solberg will be as willing to hand out REDD payments as Stoltenberg. Guyana’s Shadow Finance Minister Carl Greenidge has already speculated that “there is the very real possibility that the money that has not yet been disbursed to Guyana could be withheld.”

Here’s a summary of Development Today‘s analysis of Norway’s climate and forest aid record so far:

Brazil

Norway has allocated US$600 million to Brazil, but Brazil has failed to come up with projects on which this money can be spent. As a result only US$135 million has been disbursed. The good news is that Brazil’s deforestation continues to drop. But it seems to be doing so regardless of Norway’s REDD money.

Indonesia

Development Today reports that the US$1 billion REDD deal with Indonesia has so far resulted in “No Norwegian forest climate funds [being] paid to the Indonesian government.” Norway has paid about US$35 million through UN agencies in Indonesia.

Guyana

“The climate forest deal between Norway and Guyana is in disarray,” Development Today writes. Norway has promised US$250 million, but of this, US$67 million has been transferred to the Guyana REDD Investment Fund (GRIF). And only US$14 million has actually been disbursed to Guyana.

In August 2013, Per Fredrik Pharo, Director of the Norway’s International Climate and Forest Initiative said that,

“Given the uncertainty to the further funding mechanism of the partnership, we have made a consensual decision to delay the pay-out while working on improving the financial mechanisms.”

Meanwhile, Sithe Global, the developer of Guyana’s proposed Amaila Falls dam, has pulled out, leaving the future of the project in doubt.

World Bank

Norway is one of the biggest donors to the World Bank’s Forest Carbon Partnership Facility, which consists of two funds: the Readiness Fund; and the Forest Carbon Fund. Of the US$258 million in the Readiness Fund, only US$11 million has been disbursed. Of the US$390 million in the Forest Carbon Fund, no disbursements have been made, because no countries in the FCPF can demonstrate that they have reduced deforestation.

NGOs

NGOs have received almost US$120 million from Norway since 2009. CIFOR, Rainforest Foundation Norway, WWF International, World Agrofrestry Centre, Rights and Resources Initiative, Woods Hole Research Center, Clinton Foundation and Tebtebba were the biggest recipients.

In the two year period up to 2015, Norway plans to hand over a further US$135 million to NGOs.


Full Disclosure: REDD-Monitor has so far (indirectly) received 0.0003% of Norway’s climate forest aid. Click here for all of REDD-Monitor’s funding sources.
 

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  1. Perhaps we should be celebrating the fact that Norway has not wasted quite as much money as it could have done! What needs to happen is for there to be a thorough and (unlike the previous attempt), HONEST evaluation of where the programme has gone wrong, and then the whole thing redirected.

    By the way, Chris, have you heard back from Lord Stern yet as to whether he still thinks that REDD is the cheapest and easiest way to prevent climate change??

  2. I totally agree! It’s a good thing that the money has NOT been spent, if the conditions attached to it have not been met. Yes, it maybe hard for developing countries to meet the necessary criteria, but there is absolutely nothing wrong with going back and having a through, honest look at what has gone wrong in programme implementation.

  3. It seems to me that Forest conservation programs such as REDD+ need an economic way to consistently monitor the global forests for significant change. Recent strides in earth observation technology correlating multiple sensors can cost effectively provide this type of management tool.

    Access to these tools is also moving from scientists and professionals to individuals. Wouldn’t it be interesting to see individuals able to take on the monitoring of small areas of the global forests to track significant change using high resolution imagery. A 100 km2 plot could be annually monitored for less than the cost of a morning coffee.

  4. Nancy Birdsall at the Center for Global Development responded to Development Today’s article, and Bjørn H Amland Editor in Chief of Development provided interesting reply. Here’s an excerpt from Birdsall’s piece:

    Meanwhile, despite the fuss over accounting, the billion dollars Norway has committed to Brazil for forest protection has already had a triple impact. It has strengthened the political will of the Brazilians to tackle deforestation; it has helped institutionalize a process at Brazil’s development bank that is raising project standards; and it has funded projects on the ground.

    The seeming “problem” of money not yet spent is not a problem in the real world, but in the world of bureaucracy and definitions. This so-called “problem” or risk of donor money not being disbursed during the intended year also plagues other new ideas for results-oriented development finance: Advanced Market Commitments, Development Impact Bonds, potentially the World Bank’s Program for Results instrument, and COD [cash on delivery] Aid in general – because of donors’ budgeting systems and bureaucracy.