About Forest Carbon Partnership Facility (FCPF)

Despite decades of international financial assistance for forest protection, tropical forests continue to disappear at an alarming rate. Failing urgent action, the majority of remaining tropical forests of the world will vanish in this century. This dire situation calls for stronger global partnerships and the development of new sustainable financing mechanisms to support country-led forest sector reform programs.

The proposed Forest Carbon Partnership Facility (FCPF) would assist developing countries in their efforts to reduce emissions from deforestation and land degradation (REDD). It would have the dual objectives of building capacity for REDD in developing countries, and testing a program of performance-based incentive payments in some pilot countries, on a relatively small scale, in order to set the stage for a much larger system of positive incentives and financing flows in the future.

Two separate mechanisms would be set up to support FCPF objectives:

1. Readiness Mechanism: the Facility would help about 20 interested developing countries to arrive at a credible estimate of their national forest carbon stocks and sources of forest emissions, as well as assist the country in defining their reference scenario based on past emission rates for future emissions estimates. The Readiness Mechanism would offer these countries technical assistance in calculating opportunity costs of possible REDD interventions, and designing an adapted REDD strategy that takes into account country priorities and constraints.
2. Carbon Finance Mechanism: few countries would be selected to participate in this mechanism through which the Facility would implement and evaluate pilot incentive programs for REDD based on a system of compensated reductions. The selected countries, having: (a.) demonstrated ownership on REDD and adequate monitoring capacity; and (b.) established a credible reference scenario and options for reducing emissions; would receive payments for reducing emissions below the reference scenario. The structure of these incentive payments would build on the options for REDD that are currently being discussed within the United Nations Framework Convention on Climate Change (UNFCCC) process, with payments made to help address the causes of deforestation and degradation. Within the Carbon Finance Mechanism, payments would only be made to countries that achieve measurable and verifiable emission reductions.

Together, these two mechanisms would seek to help to learn lessons from first-of-a kind operations and develop a realistic and cost-effective large new instrument for tackling deforestation, to help safeguard the Earth's climate, reduce poverty, manage freshwater resources, and protect biodiversity. However, it is important to note that the Facility itself would not be a panacea to "save the world's forests." Rather, it seeks to create an enabling environment and garner a body of knowledge and experiences that can facilitate development of a much larger global program of incentives for REDD over the medium term (5-10 years). The targeted volume of the facility would be approximately US$ 250 million.