Many thanks to FAO and the Korean Forestry Service for the invitation to participate in this high-level dialogue.
Deforestation and forest degradation are a cause and a consequence of climate change while forest protection, forest restoration and sustainable forest management are powerful solutions to climate change.
Deforestation together with agriculture, forests and land use account for almost a fifth of global GHG emissions. Deforestation and ecosystem degradation also erode resilience to climate change, threatening the global food security.
But forests could also pull 11 billion metric tons of carbon from the atmosphere. This is about one-third of the mitigation efforts needed to achieve the Paris Agreement. Forests can also reduce the likelihood and impact of droughts and floods, protecting people, livelihoods, and assets.
Forest restoration and sustainable forest management can also rapidly create employment opportunities, stimulate the economy, and support a green, climate resilient recovery from the Covid-19 pandemic.
Despite their central role, forest protection, forest restoration and sustainable forest management are critically underfinanced. From 2010-2017, USD billion in finance for forests was mobilized while the annual financing needs to fully deploy forest-based solutions to advert catastrophic climate change and achieve the SDGs are estimated at USD 200 billion.
GCF has approved close to $1.4 billion worth of projects in forest protection, forest restoration and sustainable forest management. We seek to use of resources in a catalytic manner to mobilize much larger financial flows through four workstreams:
First, GCF support transformational planning and programming. Through its grant-based readiness programme, GCF supports Government’s efforts to incorporate the value of forest in all strategy, policy and financial decision-making processes and instruments. GCF is currently supporting the preparation of 74 National Adaptation Plans. These plans provide a unique opportunity to integrate grey and green infrastructure solutions to strengthen the resilience of nations and communities to climate change.
Second, GCF supports the acceleration of climate innovation through investments in new and innovative technologies, business models, financial instruments and practices. For example, the $600m Amazon Bioeconomy Fund led by IDB and co-financed by GCF will support new eco-business models in six key areas of the bioeconomy: sustainable agroforestry, native palm cultivation, non-timber natural forest products, growing native species timber, aquaculture, and community-led nature tourism. Working with local actors, the Fund recognizes that local knowledge of communities and indigenous populations is critical to designing effective and inclusive new climate solutions and that upholding the rights of indigenous peoples and local communities is a precondition for the sustainable stewardship of forests.
Third GCF de-risks investment in forest protection, forest restoration and sustainable forest management to establish a commercial track record for new forest-based solutions and crowd-in private finance.
For example, GCF has launched with MUFG Bank, the Arbaro Fund. This sustainable forestry fund invests in sustainable plantation projects in the emerging forestry markets of Latin America and Sub-Saharan Africa, while also bringing adaptation co-benefits to local communities. Through providing an alternative for timber and new livelihoods opportunities, it also aims to protect natural forests, and reduce illegal logging. GCF is making a USD 25 million equity investment into this fund, which is expected to mobilize a further USD 175 million, including USD 100 million from private investors.
The fourth GCF workstream is to strengthen the capacity of domestic institutions to appraise and finance reforestation, sustainable forest management, agro-forestry, regenerative agriculture, and sustainable food systems.
Here, I would highlight our new Inclusive Green Financing Initiative (IGREENFIN I) which is contributing to the Great Green Wall initiative in the Sahel. This USD 192 million programme with a GCF co-financing of USD 114 million will provide credit lines to local agricultural banks to support agro-forestry across 5 Sahelian countries.
All these areas show huge potential – but the window of opportunity to simultaneously address three of the main crises of our time- climate change, forest and ecosystem destruction and COVID-19 is rapidly closing. The time to act is now.