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H OW NATIONAL GOVERNANCE FAILINGS ARE COMPROMISING M ADAGASCAR S REDD+ POTENTIAL Andre Aquino Robert Griffin March, 2014 Disclaimer: The views expressed in this presentation are those of the authors and not of the World Bank

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2 REDD+ is a financial mechanism that gives land value 1.Carbon Benefits: payments for emissions reductions 2.Non-Carbon Benefits: Biodiversity, wildlife, training & education, opportunities for women, opportunities for indigenous peoples, governance improvement REDD+ is a good opportunity to clarify national-level policies that address land use and deforestation (Ex. land tenure insecurity or uncoordinated or even conflicting policies over land use) Who holds claim to the value that REDD+ adds? In most cases, REDD+ is designed to share benefits with local populations in developing countries Through REDD+ benefit sharing mechanisms local populations and community groups receive funds that sponsor income generating activities Therefore REDD+ is both a catalyst for improving land governance and for alleviating poverty R ELATIONSHIP BETWEEN REDD+ AND L AND & P OVERTY I SSUES ?

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3 But when it comes to developing REDD+ nationally, is REDD+ still the catalyst to governance, or is it the other way around? Vertical Interplay chicken or the egg dilemma with REDD+ development under debate Architecture component of REDD+ governance organizations, principles, norms, mechanisms, and decision making procedures Difficult for researchers to answer question of vertical interplay because most countries have followed the top down approach The exception is Madagascar, where REDD+ evolved much differently Q UESTION OF A PPROACH TO REDD+ D EVELOPMENT REDD+ Pilot Projects National Governance Framework Scale-up influence Pass down influence NGOs argue Multilaterals argue Nested / Bottom Up Approach Top Down Approach ?

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4 Quick Facts Amongst the 22 million inhabitants over 92% live on less than 2$ a day (World Bank, 2013), with the most impoverished in rural regions Madagascar has had a long history of political and economic hardship dating back to the 1960s In March of 2009 there was coup dtat and the economy has been more or less in recession since The Importance of Conservation 80% of the fauna and 90% of the flora are endemic Forestland estimated to cover 15.88% of the surface area of the country in 2009, is diminished every year. Drivers of deforestation: slash-and-burn agriculture wood collection from natural forests to provide firewood and charcoal Madagascar considered good candidate For REDD+ Madagascar was originally considered a good candidate for REDD+ (High poverty, deforestation, co- benefits associated with biodiversity protection) The threats facing this small island has attracted attention from conservation organizations since the mid-1980s drew in substantial amounts of funding for conservation B ACKGROUND ON M ADAGASCAR

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5 Project level Early 2000s: 4 large sub-national projects Most targeted the voluntary market and were implemented in the forest corridors in the eastern humid forest ecosystems in Madagascar Signed Emissions Reductions Purchase Agreements based on strong transparency conditions Pilots Model- namely reduction of emissions through the creation of large protected areas by the government made up of a core protected area, user controlled areas and buffer area, support for community management of forest resources, and implementation of alternative activities to deforestation, including agricultural intensification, agro- forestry and bushfire control Projects were fairly sophisticated and contributed greatly to how REDD+ can be achieved in the country This diverse array of experience initially allowed Madagascar to become a leading global REDD+ laboratory Example: Ankeniheny Zahamena Corridor (CAZ) project CI/BioCF/DGF - 430,000 ERs over four years Established local governance: Regional Directorates of Forests and Environment (DREFTs) VOIs (Local Community Groups) E VOLUTION OF REDD+ IN M ADAGASCAR

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6 CAZ P ROJECT B ENEFIT S HARING M ECHANISM

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7 National Level 2008 REDD+ readiness with the World Banks FCPF carbon fund CT- REDD: a large multi-sector, multi-agency committee that gives technical assistance to the national Ministry of Environment and Forests Involved Government Players: key players were established to handle carbon transactions 1.General Director for Forests. 2.National Environment Office 3.General Director of Environment Because of the high financial stakes from active NGO pilots there was a jockeying of power for control of the carbon funds these groups did not work or collaborate together well E VOLUTION OF REDD+

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8 2009 political Crisis The political instability in the country stalled R-PP development R-PP preparation was a necessary step to obtain financing from the World Banks Forest Carbon Partnership Facility (FCPF The CT-REDD, lost formal recognition because it lacked high-level political support and strong internal leadership The effects were devastating for pilot projects in Madagascar Nearly all donors pulled out of their purchase agreements citing lack of clarity over national regulations governing the transactions Example: BioCarbon Fund Matinda Park BioCF terminated a forest carbon purchase to acquire CDM credits from a reforestation project This was significant as it was the single most advanced CDM project in the country at this time Main reason BioCF pulled out was the Government failed to appoint an entity to manage the carbon credits of the project and lead communication with the CDM board (which made it impossible for credits to be created according to CDM rules) G OVERNANCE F AILINGS

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9 Madagascar missed out on key income generating opportunity from REDD+ It is likely that Madagascar will continue to lose out on forest carbon market opportunities as along as it has a poor national governance framework What does this example show us? Shows how sensitive investors are to weaknesses governance frameworks Shows our hypothesis that ultimately investors prefer projects in countries with stronger governance capabilities and lower carbon values over projects in countries with high carbon values and low governance Shows us that not only do governance failures affect relations with external stakeholders, but internally REDD+ also suffers Weak governance structures make it difficult to pass on benefits to local communities who support conservation initiatives L OST O PPORTUNITY

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10 Thank you! Andre Aquino Email: adeaquino@worldbank.orgadeaquino@worldbank.org Robert Griffin Email: rgriffin@worldbank.orgrgriffin@worldbank.org