Analysis of Alternative REDD+ Financing Mechanisms in Indonesia

CHALLENGE
Since the Bali UNFCCC Conference of Parties (COP13), Indonesia has made climate change action a priority. In May 2010, Indonesia agreed with Norway on a path-breaking, performance-based initiative for action on REDD+. In January 2011, the Government of Indonesia identified two provinces that will pilot the REDD+ partnership agreement with Norway. However, much remains to be done to prepare sub-national financing instruments that transmit incentives from international REDD+ funding sources to regional and local levels. Financing mechanisms will need to be in place for programmatic activities as well as for project type approaches, and appropriate methodologies for disbursement of benefits and carbon accounting will need to be developed. Importantly, the design of financing mechanisms needs to fulfill requirements for efficiency, equity and effectiveness, and needs to fit into the national and sub-national institutional and legal framework.

APPROACH
This activity drew on the existing international body of knowledge regarding Payments for Ecosystem Services, REDD+ financing, transfers, and benefit sharing both internationally and in Indonesia. Combined with an analysis of current fiscal mechanisms in Indonesia and lessons from REDD+ demonstration activities, the synthesis provided lessons that are relevant for developing an Indonesian REDD+ financing architecture -- and for developing REDD+ financing mechanisms in other countries.

RESULTS
Policy briefs were developed in presentation format on issues related to financing mechanisms and shared with key REDD+ stakeholders and policy makers in Indonesia (some of the presentations are available on this page). Background papers were developed on PES as a Mechanism for REDD+ Benefit Sharing in Indonesia; Green PNPM as a REDD+ Benefit Sharing Mechanism in Indonesia; and The Role of Small Grants Programs in REDD+ Readiness and Implementation. These were consolidated into a single report that underwent World Bank peer and virtual review in September 2012 and is available as a working paper on this page: Integrating Communities into REDD+ in Indonesia.

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Author : World Bank Indonesia
Last Updated : 02-24-2017