Presentation by Jonah Busch, Conservation International Financing for forest and climate change, Forest Day 3 Sunday, 13 December 2009 Copenhagen, Denmark

1. Supplementing REDD+ with finance
for multiple forest services
Jonah Busch, Ph.D. (Conservation International)
Finance Learning Event -- Global Environment Facility
CIFOR Forest Day 3
UNFCCC COP 15
Copenhagen, Denmark, December 13, 2009
Based on:
•Busch, J., Strassburg, B., Cattaneo, A., Lubowski, R., Bruner, A., Rice, R., Creed, A.,
Ashton, R., Boltz, F. (2009). Comparing climate and cost impacts of reference levels for
reducing emissions from deforestation. Environmental Research Letters, 4:044006.
•Busch, J., Godoy, F., Turner, W., Rao, N., Harvey, C. (in review). Co-benefits of
REDD: Poverty alleviation, biodiversity conservation and clean water provision.
•Busch, J., Bruner, A. (2009). An investment strategy for the Tropical Forest Account in
Global Environment Facility – 5.

2. Multiple forest benefits
(canopy photo)
GLOBAL
CLIMATE
REGULATION

3. Multiple forest benefits
(canopy photo)
$
(REDD+)
GLOBAL
CLIMATE
REGULATION

4. slope
tourism
Multiple forest benefits stabilization
fuel
(canopy photo) water
clean
biodiversity
soil formation
$
(REDD+)
GLOBAL non-timber
CLIMATE forest
timber products
REGULATION
food
pollination livelihoods
local
climate
storm regulation
medicine
protection cultural values

5. slope
tourism
Multiple forest benefits stabilization
fuel
(canopy photo) water
clean
biodiversity
soil formation
$
(REDD+)
GLOBAL non-timber
CLIMATE forest
timber products
REGULATION
food
pollination livelihoods
local
climate
storm regulation
medicine
protection cultural values

6. slope
tourism
Multiple forest benefits stabilization
fuel
(canopy photo) water
clean
biodiversity
soil formation
$
(REDD+)
GLOBAL non-timber
CLIMATE forest
timber products
REGULATION
food
pollination livelihoods
local
To what extent would REDD+ enhance biodiversity conservation?
climate
storm regulation
medicine
protection cultural values

7. slope
tourism
Multiple forest benefits stabilization
fuel
(canopy photo) water
clean
biodiversity
soil formation $
(biodiversity)
$
(REDD+)
GLOBAL non-timber
CLIMATE forest
timber products
REGULATION
food
pollination livelihoods
local
To what extent would REDD+ enhance biodiversity conservation?
climate
How to pay for additional forest biodiversity in the context of REDD+?
storm regulation
medicine
protection cultural values

8. slope
tourism
Multiple forest benefits stabilization
fuel
(canopy photo) water
clean
biodiversity
soil formation $
(biodiversity)
$
(REDD+)
GLOBAL non-timber
CLIMATE forest
timber products
REGULATION
food
pollination livelihoods
local
To what extent would REDD+ enhance biodiversity conservation?
climate
How to pay for additional forest biodiversity in the context of REDD+?
storm
To what extent would paying for biodiversity enhance climate mitigation?
regulation
medicine
protection cultural values

9. Supplemental finance options for
biodiversity and other forest services
1. Buyers interested in biodiversity voluntarily purchase additional REDD+
2. Existing REDD+ buyers pay a premium for carbon from biodiverse forests
(e.g. CCBA/CARE Social and Environmental Standards for REDD+)
3. Bundling of payments for carbon by REDD+ buyers, payments for biodiversity
from biodiversity buyers (e.g. GEF)
i. fund pays for reductions in countries’ biodiverse forests; countries sell resulting
carbon abatement to the REDD+ mechanism
ii. fund buys carbon abatement from countries’ biodiverse forests above market price;
resells to REDD+ mechanism at market price
iii. REDD+ mechanism pays for countries’ carbon abatement; fund pays for countries’
contribution to biodiversity conservation

10. Modeling REDD with OSIRIS
(Busch et al, Env Res Letters, 2009)
• 84-country partial equilibrium model
• National incentives based on reference
levels
• Leakage
• Country-by-country outputs:
-deforestation (Ha/yr)
-emissions (ton CO2e/yr)
-revenue ($/yr)
• Caveat: Designed to compare climate and
cost impacts across REDD policy designs,
rather than to predict absolute magnitude
of impacts
• New output: Estimated rate of extinction of
endemic forest-dwelling mammal and
amphibian species, as predicted by
species-area relationship
www.conservation.org/osiris

11. REDD+ reduces emissions from deforestation
and extinction rate of forest species
100%
REDD+ MECHANISM
90% 1. ADDITIONAL REDD+ PURCHASES
Rate with REDD as % of
80% 2. PREMIUM FOR BIODIVERSITY = 5%
EMISSIONS
rate without REDD
70% 3. BUNDLED PAYMENTS FOR BIODIVERSITY
60%
50%
40%
30%
EXTINCTIONS
20%
10%
0%
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

12. Purchasing additional REDD+ slightly
reduces extinction rate of forest species
100%
REDD+ MECHANISM
90% 1. ADDITIONAL REDD+ PURCHASES
Rate with REDD as % of
80% 2. PREMIUM FOR BIODIVERSITY = 5%
EMISSIONS
rate without REDD
70% 3. BUNDLED PAYMENTS FOR BIODIVERSITY
60%
50%
40%
30%
EXTINCTIONS
20%
10%
0%
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

13. Premium for biodiversity substantially
reduces extinction rate of forest species
100%
REDD+ MECHANISM
90% 1. ADDITIONAL REDD+ PURCHASES
Rate with REDD as % of
80% 2. PREMIUM FOR BIODIVERSITY = 5%
EMISSIONS
rate without REDD
70% 3. BUNDLED PAYMENTS FOR BIODIVERSITY
60%
50%
40%
30%
EXTINCTIONS
20%
10%
0%
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

14. Bundled payments for biodiversity substantially
reduce extinction rate of forest species
100%
REDD+ MECHANISM
90% 1. ADDITIONAL REDD+ PURCHASES
Rate with REDD as % of
80% 2. PREMIUM FOR BIODIVERSITY = 5%
EMISSIONS
rate without REDD
70% 3. BUNDLED PAYMENTS FOR BIODIVERSITY
60%
50%
40%
30%
EXTINCTIONS
20%
10%
0%
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

15. Biodiversity payments attract
additional carbon payments
Relative to opportunity cost ($/ha)
A
REDD payments sufficient to
Carbon value (Gt CO2e/ha)
conserve forest
C combined REDD B
and biodiversity biodiversity
payments sufficient
payments
to conserve
forest sufficient
to
conserve
forest
Biodiversity value (endemic species/ha)
Relative to opportunity cost ($/ha)

16. Biodiversity payments catalyze
additional carbon payments
100%
REDD+ MECHANISM
90% 1. ADDITIONAL REDD+ PURCHASES
Rate with REDD as % of
80% 2. PREMIUM FOR BIODIVERSITY = 5%
EMISSIONS
rate without REDD
70% 3. BUNDLED PAYMENTS FOR BIODIVERSITY
60%
50%
40%
30%
EXTINCTIONS
20%
10%
Finance for biodiversity: $0.2B $0.5B $1.0B $1.4B
0%
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

17. Example of bundled payment:
Forest Incentive Mechanism in GEF-5
•Formerly Tropical Forest Account (TFA) in GEF-4
•Attends to three international conventions (FCCC, CBD, CCD)
•Objective: achieve multiple global environmental benefits from the
management of all types of forests and strengthen sustainable livelihoods
for people dependent on forest resources.
•~$180-400 million in GEF-5
•Expected to leverage further $700-1000 million from GEF STAR balances,
plus additional leveraging
•Design under development
•For more information: Gustavo da Fonseca or Dirk Gaul

18. Concluding Messages
REDD+ expected to reduce emissions from deforestation and reduce
extinction rate of forest species
Either premiums (e.g. CCBA/CARE SES) or bundled payments
(e.g. GEF) could substantially reduce extinction rates further
Either premiums or bundling for multiple forest services would:
- lower price paid by REDD+ buyers
- increase price paid to REDD+ sellers
- attract additional carbon payments
- lead to additional reductions in emissions from deforestation

19. Thank you!
Global Environment Facility
Center for International Forestry Research
Environmental Defense Fund
Woods Hole Research Center
University of East Anglia
Terrestrial Carbon Group
Private gift to Conservation International
Gordon and Betty Moore Foundation
Norwegian Agency for Development Cooperation
jbusch@conservation.org
http://www.conservation.org/osiris
Based on: Busch, J., Strassburg, B., Cattaneo, A., Lubowski, R., Bruner, A., Rice, R., Creed, A., Ashton, R.,
Boltz, F. (2009). Comparing climate and cost impacts of reference levels for reducing emissions from
deforestation. Environmental Research Letters, 4:044006.
Busch, J., Godoy, F., Turner, W., Rao, N., Harvey, C. (in review). Co-benefits of REDD: Poverty alleviation,
biodiversity conservation and clean water provision.
Busch, J., Bruner, A. (2009). An investment strategy for the Tropical Forest Account in Global Environment
Facility – 5.

20. Finer scale of biodiversity metric
reduces extinctions
100%
REDD+ MECHANISM
90%
Extinctions with REDD as % of
ADDITIONAL REDD+ PURCHASES
extinctions without REDD
80%
BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA
70% (Continental)
BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA
60% (Regional)
BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA
50% (National)
40%
30%
20%
10%
0%
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

21. More precise biodiversity metric
reduces extinctions
•Top 20% endemic species
100%
REDD+ MECHANISM
•Number of forest endemic species (Indonesia, Brazil,
90%
Extinctions with REDD as % of
Mexico, Madagascar, PNG…) ADDITIONAL REDD+ PURCHASES
extinctions without REDD
•Endemic species per hectare of forest (Haiti, Jamaica, Sri payment for 20%
80% BUNDLED PAYMENTS FOR BIODIVERSITY (bonus
most endemism)
Lanka, Cuba, Madagascar…)
70% BUNDLED PAYMENTS FOR BIODIVERSITY (bonus payment for 20%
most endemic/ha)
60% BUNDLED PAYMENTS FOR BIODIVERSITY (payment proportional to
endemism)
BUNDLED PAYMENTS FOR BIODIVERSITY (payment proportional to
50% endemics/ha)
40%
30%
20%
10%
0%
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

22. Supplemental finance options for
biodiversity and other forest services
Biodiversity
1. Additional voluntary purchases of REDD+ Forests REDD+ Fund
2. Premium from existing REDD+ buyers for
carbon from biodiverse forests (e.g.CCBA) Forests Biodiversity
REDD+ Premium
3. Bundling of payments for carbon,
biodiversity (e.g. GEF)
i. fund pays for reductions in countries’
biodiverse forests; countries sell resulting Biodiversity
carbon abatement to the REDD+ mechanism Fund Forests REDD+
ii. fund buys carbon abatement from countries’
biodiverse forests above market price; resells Biodiversity
to REDD+ mechanism at market price Forests Fund
REDD+
iii. REDD+ mechanism pays for countries’
carbon abatement; fund pays for countries’ REDD+
contribution to biodiversity conservation
Forests Biodiversity
Fund

23. Co-benefit of REDD: Paying for forests’ carbon
reduces extinction rate of forest species
(Busch et al, in review)
100%
90% Deforestation (ha)
Rate with REDD as % of
80% Emissions (GtCO2e/yr)
rate without REDD
70% Extinctions (species/yr)
60%
50%
40%
30%
20%
10%
0%
$- $5,000,000,000 $10,000,000,000
Total Annual Finance for REDD

24. Finer geographic scale for biodiversity metric
generates greater reduction in extinction rate
100%
REDD+ MARKET
90%
Extinctions with REDD as % of
ADDITIONAL REDD+ PURCHASES
extinctions without REDD
80%
BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA
70% (Continental)
BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA
60% (Regional)
BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA
50% (National)
BUNDLED PAYMENTS FOR ENDEMIC SPECIES/HA
40%
(Sub-national)?
30%
20%
10%
0% ?
$- $5,000,000,000 $10,000,000,000 $15,000,000,000
Total Annual Finance

25. Supplemental finance for biodiversity
subsidizes REDD+
S
p’s
p biodiversity subsidy
p’d
D
q q’