Forest climate finance must be more equitable to support Indigenous Peoples and local communities

This post was co-authored by Julia Paltseva, Senior Analyst at EDF, and Tuntiak Katan from the Coordinator of Indigenous Organizations of the Amazon River Basin (COICA). For more resources on high forest, low deforestation (HFLD) crediting, visit This post has also been translated into Spanish and French (leer en español, lire en français).

Tuntiak Katan of the Coordinator of Indigenous Organizations of the Amazon Basin (COICA). Photo by Leslie Von Pless, EDF

Forests are an essential part of the climate change solution, and their effective conservation requires the empowerment of Indigenous Peoples and local communities, or IPLCs. Around the world, IPLCs have stewarded forests for generations. However, in the face of growing economic pressures to cut forests down, current incentives designed to keep forests standing are largely inaccessible to communities living in areas of historically low forest loss, known as high forest, low deforestation regions, or HFLD.

An effective and equitable global REDD+ incentive-system for reducing deforestation should reward all relevant jurisdictions and actors, including both historical emitters and historical protectors of carbon stock, like IPLCs. We must eliminate forest loss in areas where it is already occurring. At the same time, we must also avoid future increases in deforestation in areas of historically low forest loss – HFLD regions.

Guardians of the forest
Indigenous Peoples and local communities are some of the best forest protectors, especially when equipped with strong tenure and land rights. In Mesoamerica, IPLCs steward half of forested areas. In the Amazon, Indigenous Peoples manage more than 30% of the rainforest, and satellite imagery shows deforestation rates in Indigenous territories are roughly half of what they are in similar surrounding lands. IPLCs typically practice sustainable forest management, through agroforestry and low-impact agriculture, allowing them to both provide for their needs and effectively conserve the forests.

Despite a successful track record of maintaining intact forests, forest communities have directly received less than one percent of international government aid for climate change mitigation and adaptation over the last decade.

The voluntary carbon market – which has grown to nearly $2 billion USD as of 2021, driven by the private sector – in addition to international aid, can provide this necessary financial support. Corporate demand for tropical forest credits is projected to exceed supply as early as 2030. This rapidly expanding pool of potential carbon credit finance must support on the ground forest actors, especially IPLCs, as they are often the people who are actively conserving the forest. It is critical that climate finance flows are accessible, inclusive, and equitable. However, the current situation for calculating carbon credits is unfavorable to IPLCs without a change of rules in HFLD territories for determining emission reduction progress, such as including a differentiated Forest Reference Emission Level (FREL).

More inclusive climate financing is needed
IPLCs must be actively included in the credit-generating process and given direct access to carbon finance available for REDD+ activities. The “plus” in REDD+ represents the conservation and enhancement of forest carbon stocks, along with the sustainable management of forests, which is exactly what HFLD crediting mechanisms encourage. HFLD regions are areas recently connected with markets and for this reason, the people who steward them have maintained low rates of forest loss and have thus foregone revenue from logging and potential gains from alternative use of land. At the same time, economic development and increased revenue to improve social outcomes is an imperative in many HFLD jurisdictions. Because of the forest conservation services Indigenous and forest communities have provided for generations, and continue to provide, they stand to benefit the most from methodologies that value and credit HFLD regions and the work required to maintain HFLD status.

The current carbon accounting framework, both for results-based payment and typical emission reduction crediting, uses FRELs based on recent historic measurements to gauge emissions reductions progress. This approach effectively means that areas with the highest historic emissions (i.e., from deforestation) are the ones that can reduce their emissions the most and thus generate the greatest results. Channeling climate finance this way can create a perverse incentive to deforest now in order to access finance in the future.

In addition, there are clear equity issues associated with only rewarding regions where deforestation has historically been allowed to increase. The current accounting systems favor emission reduction and removal results in areas of historically high emissions, which has the consequence of effectively penalizing successful historic actions to preserve standing forests. If HFLD jurisdictions are excluded from crediting, jurisdictions and landowners could become eligible to earn credits from emission reductions only after sufficient deforestation has occurred that the HFLD designation is withdrawn. This is a perverse climate outcome as well as highly inequitable. This is climate injustice.

Crediting HFLD regions using an accounting module that recognizes successful forest protection would appropriately reward the role of IPLCs as forest stewards. Alternative methodologies that capture the real threats faced by intact forests, and the ongoing actions required to keep these threats at bay, can and should be considered for HFLD jurisdictions. A high-quality standard for tropical forest carbon credits, with proper social and environmental safeguards, along with independent validation and verification, helps assure this. Otherwise, carbon markets risk causing the wholesale exclusion of the world’s most successful forest stewards and failing to recognize the clear additional effort that goes into conserving forests by the communities that live in them.

Those who live in and actively manage standing forests must benefit from financing mechanisms for emission reduction strategies while addressing their core livelihood needs. To save rainforests, the people who know them best – IPLCs – must be properly engaged in decision-making, including the development and implementation of forest conservation plans and benefit-sharing agreements. High-quality jurisdictional REDD+ credits that recognize the critical role of HFLD regions can unlock the finance urgently needed by tropical forest countries, Indigenous Peoples, and local communities to safeguard their forests. But this will only happen if IPLCs participate actively in the technical processes to design differentiated methodologies, such as FREL calculations, and conditions for HFLD jurisdictions, understanding that they are in a different stage of the forest transition curve than other high deforestation jurisdictions.

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