Reports & Analysis
New Report on Economics of Forest Carbon Projects
With support from the UN-REDD Programme, the UNEP Risø Centre recently released a report looking at the economics of forest carbon projects and private sector involvement in REDD+.
The new publication entitled, “Economics of forests and forest carbon projects – Translating lessons learned into national REDD+ implementation,” funded by the UN-REDD Programme, tackles the issue of the economics of forest carbon projects and the perspectives of private sector REDD+ investors. It strives to provide advice to policymakers and project developers on how to attract private and/or public investments for their forest and REDD+ initiatives.
The publication recognizes the need to find ways to overcome the barriers which carbon forest projects face when seeking finance. Making it easier for these types of projects to attract finance will have a large impact on the development and stabilization of carbon markets or crediting schemes for forest projects alike. In addition, it will contribute to guide the financial aspects of national REDD+ policies and initiatives.
The report uses a case study approach to extract lessons learned from eight carbon forest projects from Africa, Asia and Latin America. The analysis and comparison of the selected carbon forest projects investigate what characteristics make a project successful, especially focusing on the capacity of attracting finance – public, private or a combination of both. The business models and involvement of stakeholders also provide insight into success factors in terms of the set-up of forest and forest carbon projects.
The report provides advice on actions that countries, governments and project developers can take to increase the attractiveness of their projects. Based on the report findings, the largest barrier to finance is the perceived high risk of forest and carbon projects. The report suggest the development of national REDD+ strategies combined with a mix of public and private financing to reduce the risk exposure of the private sector and thereby incentivize the participation of the sector.