Name of Fund

Forest Investment Program

Date created

Date fund proposed:  February 2008 as part of the Climate Investment Funds (CIFs).

On May 30, 2008, in Potsdam, Germany, the MDBs, developed and developing countries and other development partners reached an agreement on the design and establishment of the SCF.

Date fund made operational: Approved by Executive Directors of the World Bank on July 1, 2008, with a donors pledge meeting on September 26, 2008.

The FIP was approved in July, 2009. 

Administrating organisation

The World Bank

Objectives

The Forest Investment Program (FIP) is part of the Strategic Climate Fund (SCF) which is to provide financing to pilot new development approaches or to scale-up activities aimed at a specific climate change challenge or sectoral responses through targeted programs.

The main purpose of the FIP is to support developing countries’ REDD-efforts, providing up-front bridge financing for readiness reforms and investments identified through national REDD readiness strategy building efforts, while taking into account opportunities to help them adapt to the impacts of climate change on forests and to contribute to multiple benefits such as biodiversity conservation and rural livelihoods enhancements. The FIP will finance efforts to address the underlying causes of deforestation and forest degradation and to overcome barriers that have hindered past efforts to do so.

1. To initiate and facilitate steps towards transformational change in developing countries forest related policies and practices, through:
1. serving as a vehicle to finance investments and related capacity building necessary for the implementation of policies and measures that emerge from inclusive multi-stakeholder REDD planning processes at the national level;
2. strengthening cross-sectoral ownership to scale up implementation of REDD strategies at the national and local levels;
3. addressing key direct and underlying drivers of deforestation and forest degradation; 
4. supporting change of a nature and scope necessary to help significantly shift national forest and land use development paths;
5. linking the sustainable management of forests and low carbon development;
6. facilitating scaled-up private investment in alternative livelihoods for forest dependent communities that over time generate their own value;
7. reinforcing ongoing efforts towards conservation and sustainable use of forests; and
8. improving forest law enforcement and governance, including forest laws and policy, land tenure administration, monitoring and verification capability, and transparency and accountability.
2. To facilitate the leveraging of additional and sustained financial resources for REDD, through a possible UNFCCC forest mechanism, leading to an effective and sustained reduction of deforestation and forest degradation, thereby enhancing the sustainable management of forests.
3. To pilot replicable models to generate understanding and learning of the links between the implementation of forest-related investments, policies and measures and long-term emission reductions and conservation, sustainable management of forests and the enhancement of forest carbon stocks in developing countries. By committing to apply a priori and ex post impact assessment of programs and projects, the FIP will ensure that the outcomes and effectiveness of FIP-supported interventions in reducing deforestation and forest degradation can be measured; and
4. To provide valuable experience and feedback in the context of the UNFCCC deliberations on REDD. 

Donor contributions

Activities supported

1. Institutional capacity, forest governance and information such as: implementation of systems for forest monitoring, information management and inventory; support for legal, financial and institutional development including forest law enforcement, cadastral mapping and land tenure reform; removal of perverse incentives favoring deforestation and degradation; cross-sectoral and landscape based planning exercises; transfer of environmentally sound technology; and building capacities of indigenous peoples and local communities.
2. Investments in forest mitigation measures, including forest ecosystem services such as: forest conservation; promotion of payments for environmental services and other equitable benefit-sharing arrangements; restoration and sustainable management of degraded forests and landscapes; afforestation and reforestation on previously deforested land; restructuring of forest industries and promotion of company-community partnerships; forest protection measures; improved land management practices; and promotion of forest and chain of custody certification.
3. Investments outside the forest sector necessary to reduce the pressure on forests such as: rural development and social and economic infrastructure programs; alternative energy programs; alternative livelihood and poverty reduction opportunities; agricultural investments in the context of rationalized land-use planning; and agricultural intensification including agro-forestry.

Conditions and eligibility requirements

• Official Development Assistance (ODA)-eligibility (according to the Organization for Economic Co-operation and Development/Development Assistance Committee (OECD/DAC) guidelines);
• An active MDB country program. For this purpose, an active” program means where an MDB has a lending program and/or on-going policy dialogue with the country.

• Program potential to contribute to FIP objectives described above under “Section II. Objectives and Purpose of FIP”, and adherence to the principles described under “Section III. FIP Principles”;
• Country preparedness and ability – institutional and otherwise – to undertake REDD initiatives, taking into account government efforts to date and government willingness to move to a strategic approach to REDD and to integrate the role of forests into development. The selection of pilot programs would also be made on the basis of a REDD investment note, demonstrating that a REDD strategy and investment portfolio is at an advanced stage of development;
• Country distribution across regions and biomes, ensuring that pilot programs generate lessons on how to go to scale with respect to immediate action to curb high rates of deforestation, maintenance of existing carbon stocks within pristine forests, enhancement of carbon stocks on degraded forest lands and building effective capacities for sustainable forest management.

1. National ownership and national strategies
2. Contribution to sustainable development
3. Promotion of measurable outcomes and results-based support
4. Coordination with other REDD efforts
5. Cooperation with other actors and processes
6. Early, integrated and consistent learning efforts

1. Climate change mitigation potential
2. Consistency with FIP objectives and principles
3. Drivers of deforestation and forest degradation
4. Inclusive processes and participation of all important stakeholders, including indigenous peoples and local communities
5. Demonstration impact
6. Forest-related governance
7. Safeguarding the integrity of natural forests
8. Partnership with private sector
9. Economic and financial viability
10. Capacity building

Funds disbursed to date

None as of yet.

The cumulative funding decisions made by the SCF Trust Fund Committee amount to USD 2 million for the FIP for the Country Programming Budget

Uptake and projects supported

None as of yet.

Proposed life of fund

Unknown.

Further information

Decision-making structure for fund disbursement

FIP SUB-COMMITTEE

Consistent with the SCF Governance Framework, the SCF Trust Fund Committee will establish a Sub-Committee for the FIP to oversee the operations and activities of the Pilot Program. It is proposed that the FIP-SC consist of:

• up to six representatives from contributor countries to the FIP, identified through a consultation among such contributors, and at least one of which should be a member of the SCF Trust Fund Committee; 
• a matching number of representatives from eligible recipient countries to the FIP, selected on a regional basis and identified through consultations among such countries, at least one of which should be a Member of the SCF Trust Fund Committee. For this purpose, an eligible recipient country means any country, which is eligible under paragraph 15 above; provided, however, to the extent that any country is selected as pilot country for the FIP at the time of the selection of the representatives, any such country on the list of pilot countries shall be given priority to represent eligible recipient countries under this paragraph; 
• [Two representatives each from indigenous peoples, NGOs, and the private sector, identified through an open and inclusive self-selection process.]

All pilot countries under the program, members of the MDB Committee and the Trustee may attend the FIP-SC as observers. To ensure good linkages and effective cooperation with key partners so as to promote the efficient use of resources and complementarity with other sources of financing, the FIP-SC should seek advice from, and invite as observers, representatives of other organizations with a mandate to promote forest and climate change investments, including the FAO, FCPF secretariat, the Global Environment Facility, ITTO, UNDP, UNEP, UNFCCC, UNFF, and UN-REDD technical secretariat. Civil society should also be invited to identify observers, including representatives from the North and from the South through an open and inclusive self-selection process.

The FIP-SC will be responsible for:

• appointing the expert group and approving criteria and guidance to be followed by the group based on objectives and purpose of FIP (section II), principles of FIP (section III), country eligibility criteria (section V), criteria for selection of pilot programs (section VI), and programming processes (section IX).
• selecting pilot programs based on specified country eligibility criteria and program selection criteria, and recommendations of the expert group;
• approving programming priorities, operational criteria and financing terms and modalities for the FIP, including modalities for private sector activities;
• approving FIP financing for programs and projects;
• ensuring complementarity between activities foreseen for the FIP and activities of developing countries, other development partners active in the field of climate change and forests, including the FCPF and other MDB efforts, UN-REDD and other UN efforts, and GEF;
• ensuring that FIP program design builds in provisions for evaluating the performance and effectiveness of FIP investments;
• ensuring that lessons learned are transmitted through the SCF Trust Fund Committee to the UNFCCC and to other stakeholders; and
• exercising such other functions as they may deem appropriate to fulfill the purposes of the FIP.

EXPERT GROUP

An Expert Group should be established and provided with appropriate criteria and guidance by the FIP-SC to make recommendations on selection of pilot programs for the FIP.
The Expert Group should include up to eight individuals, acting in their personal capacities, chosen on the basis of their expertise, strategic and operational experience and diversity of perspectives, including knowledge of scientific, economic, environmental and social aspects of conservation and sustainable use of forest ecosystems and climate change, governance and institutional and development planning. The Expert Group members should be selected in accordance with criteria to be approved by the FIP-SC, taking into account professional qualifications of the experts. The group should include experts from both developed and developing countries, and should receive support required to fulfill their functions properly.

Consultations with non-government stakeholders

In designing the Climate Investment Funds, consultations took place with potential donors and recipients, the United Nations family, other multilateral development banks (MDBs), civil society organizations, and the private sector.  At a final design meeting, held in Potsdam, Germany, on May 21-22, 2008, representatives from some 40 developing and industrialized countries agreed to create the CIF.

This Forest Investment Program (FIP) “will be developed based on a broad and transparent consultative process.  That process will take into account country led priority strategies for the containment of deforestation and degradation and build upon complementarities between existing forest initiatives (FIP Issue Note, page 2).”

INDIGENOUS PEOPLES AND LOCAL COMMUNITIES DEDICATED INITIATIVE

The effective and continuous participation of indigenous peoples (IPs) and local communities in FIP pilot programs is crucial to the success of those programs, and will be highly dependent on increasing the capacity of these groups to become informed and active players in national REDD processes in general and FIP processes in particular. This need should be addressed by directly making indigenous peoples and local communities able to access specific grants for that purpose. The operation, funding modalities and governance of such a mechanism will be developed through a process involving appropriate stakeholders. A more detailed proposal will be presented to the final design meeting.

How fund disbursement is reported

Based on the monitoring results of the MDBs, the FIP-SC will report regularly to the SCF Trust Fund Committee, and an independent joint evaluation of the operations of the FIP and its activities will be carried out after three years of operations by the independent evaluation departments of the MDBs. Results achieved through the FIP should be published and made publicly available. Full reporting criteria, including results measurement at the programmatic, country and institutional levels, will be proposed by the FIP-SC and approved by the Trust Fund Committee of the SCF. The key performance criteria should pertain to emissions reductions achieved or emissions avoided.

Disclosure policy
In May 2009, the Trust Fund Committees approved a disclosure policy that calls for country-owned investment plans and strategies developed under each of the Trust Funds to be disclosed in-country prior to their submission to a CIF Committee for approval. Proposed plans are also posted on the CIF website no later than 3 weeks prior to review of the proposal by a Committee.  In the case of proposed programs and projects, an information document describing the proposal is to be made public at least two weeks prior to a decision on the funding of the proposal.  The policy recognizes that a country or a project proposer may have justifiable reasons for not publicly disclosing all information in an investment plan or project. In this case, certain information may be kept confidential. This is to be done only on an exceptional basis, and non-disclosure of information is to be justified to the Committee.

Issues raised by the public

The World Bank’s climate investment funds will create parallel structures for financing climate change adaptation and mitigation outside the ongoing multilateral framework for climate change negotiations and within a process dominated by G8 countries. Developing countries have long argued for greater commitments and increases in financial resources under the UNFCCC to enable them to fulfil their obligations under the Convention but have maintained that such resources should be placed under the guidance of the state parties to the Convention to ensure consistency with internationally agreed priorities and principles.

See: Celine Tan, Third World Network, ‘World Bank’s Climate Funds Will Undermine Global Climate Action’ 10 April 2008: www.twnside.org.sg/title2/finance/docs/Climate.Funds-Commentary.Revised.doc