Interview: Financing land and forest conservation

Andrew Mitchell, Founder and Executive Director of the think tank Global Canopy Program (GCP), reports about his experiences with the mobilization of finance for land and forest conservation.

Andrew Mitchell At the climate conference in Bonn in May, international experts discussed among other subjects about how to finance climate and nature conservation. In context of the official conference several side events took place, dealing with specific topics such as how low-emission land use is possible, including the private sector. Since 2013, an IKI project of the German Ministry for the Environment (BMUB), implemented by the Global Canopy Programme (GCP), supports the mobilization of public and private capital for sustainable land and forest use in Peru and Brazil.
In an interview with IKI, Andrew Mitchell, Founder and Executive Director of the think tank Global Canopy Programme (GCP) talks about his experiences with the project.

During the climate summit in Paris last year, some countries – like Brazil and Germany – recognized in a joint statement the essential role forests play for the health of the planet. (How) Do statements like this have an influence on GCPs work?

High profile statements such as the one issued by Brazil and Germany at the Paris climate summit play a significant role in supporting the work of GCP, as they help focus the world’s attention on the urgent need to find scalable solutions to reduce and ultimately end global deforestation through the implementation of sustainable landscape approaches in tropical forest jurisdictions. These statements show the increasing awareness of this link and reinforce commitments to reduce deforestation. This links directly to the opportunity to influence governments and private sector’s behaviour to reduce impacts on forests and point out the urgency of this call for action.

Rainforest in Peru

The Global Canopy Programme carries out the IKI-project “Unlocking Forest Finance (UFF)” since 2013. What would you consider as the main overall achievements of the project?

The main achievement of GCP’s Unlocking Forest Finance work is the development and implementation of a replicable ‘roadmap’ through which 3 tropical forest jurisdictions - San Martin, Peru and Acre and Mato Grosso, Brazil can finance a rapid transition to the sustainable production of a number of agricultural commodities - whilst reducing carbon emissions, conserving forests and improving livelihoods. More specifically, achievements can be divided into 3 key areas: 
a) Building and demonstrating the business case for sustainable transitions in supply chains. In general, reducing deforestation and sustainable agriculture are seen as costly and inefficient compared to business as usual. This is not the case, as improvements in productivity coupled with improved land use planning can pay for themselves and generate profits. This is the main take home message from UFF to both policy makers and investors.
b) Influencing sub-national jurisdictions to commit for sustainable supply chains and lower deforestation rates. Even though improvements in supply chains are necessarily implemented by farmers, governance and policy frameworks and targets can positively influence this by institutionalizing objectives and creating incentives for shifts to sustainable improvements. Examples of this are the PCI (Produce, Conserve, Include) Strategy of Mato Grosso, whose targets were constructed using some of UFF’s numbers and Acre’s government’s decision to use the UFF portfolio of investment as the state’s portfolio for seeking investors and donors for sustainable activities.
c) Working with investors to explain on the ground needs and opportunities, discussing financial instruments and possibilities of innovative designs to increase sustainability of their land use investment portfolio.

Tree nursery

The global demand for agricultural commodities is putting tropical forests under pressure. The IKI project aims to stop the conversion of forests to produce commodities. What alternatives can you offer stakeholders?

At UFF we have developed business cases that showcase how sustainable land use and commodity production without deforestation has social, environmental and economic benefits both for landowners, investors and society in general. In San Martin (Peru), for example, we are working with cacao and coffee farmers to implement better land management and farming practices so that they can produce these agricultural commodities more sustainably and thereby reduce the pressure on forests. We are also working with smaller supply chains there such as sacha inchi, rice and aquaculture that will benefit smallholders and generate environmental benefits without impacting forests.

The project aims to invest in forest friendly production practices. Could you please give an example of how these practices look like in the three pilot regions San Martin/Peru, Acre and Mato Grosso/Brazil?

In San Martin one of the supply chains we work with is cocoa, where UFF will target 12,650 small producers, providing training and improved management systems over a ten-year period. This will increase yields from 750 kg per hectare to 2,200 kg per hectare through the implementation of agroforestry systems. The transition will provide social benefits by generating nearly 6,500 new jobs and generate additional income of more than USD $ 21 million. Improved management systems will also positively impact surrounding environmental services, as agroforestry systems increase carbon sequestration rates, improve soil fertility and reduce the accumulation of pesticides.
Soy is the largest agricultural activity in Mato Grosso, occupying 8.3 million hectares. The PCI strategy proposes that crop area will expand into areas of degraded pasture (3 million ha) while complying with the Forest Code, and crop production will increase from 50 to 92 million tons by 2030. The UFF project will support this through implementing training programmes to improve management systems for half of the existing medium sized producers (occupying half of the total soy area), reducing pesticide use, increasing productivity and promoting forest code compliance. UFF has provided Mato Grosso with its estimates that the capital requirements for these interventions for medium sized producers which totals USD $31 million¹ over 15 years. This number includes an estimated USD $7 million¹ for technical assistance /extension services.

Cocoa farm

How does GCP include forest-dependent communities in Peru and Brazil in its conservation plans?

The portfolio of investments being designed by UFF includes commodity supply chains, livelihoods for forest-dependent communities and conservation activities. Forest dependent communities are a central piece to the puzzle of GCP’s UFF conservation plans. Specifically in Mato Grosso, GCP has developed a sustainable landscape transition plan that supports the implementation of the region’s Plan for Financial Sustainability of Indigenous Territories (PNGATI) covering a population of 35,369 indigenous people across 20,487,666 hectares. In addition robust environmental and social safeguards have been adopted as part of this work, including the requirement for a detailed stakeholder consultation which would include forest people and indigenous communities before the commencement of any activity.

From your experiences, what does the private sector motivate to reduce emissions?

Based on GCP’s experience of working with the private sector, they are typically motivated to reduce carbon emissions for the following reasons:

• To future proof their business model or reduce cost within their operations
• There is a business or economic opportunity e.g. trading of carbon credits
• There is a reputational risk to their brand if they don’t act

¹ Numbers are an undiscounted estimate and are subject to change