Global Witness chapter for European Commission report: What are the risks for investing in REDD+ countries?

In recent years, new and significant amounts of money have been committed by the international community in an effort to reduce deforestation and forest degradation in developing countries (REDD+). While this new investment provides an unprecedented opportunity to bring about significant and long-lasting social and environmental benefits to the forest sector, it is accompanied by a commensurate level of risk. Some risks are financial in nature, including theft and corruption, that could see funds diverted from their intended target and into private hands. Poor and inefficient management of that money can also leave funds lingering in accounts due to inactivity, thereby increasing the risk of misappriopriation. Other risks concern possible human rights abuses and the inequitable distribution of benefits, including the marginalization of forest communities from their traditional lands. The effectiveness of REDD+ is also threatened by a lack of political will in forested countries. The sum total of all these risks suggests that under the worst case scenario, the outcome for the forest and its peoples could be worse as a result of increased investment in the forest sector than if no intervention had taken place at all.

This paper explores how REDD+ will work only if it is designed with these risks in mind and appropriate mitigation strategies are adopted. These include designing REDD+ with a good understanding of the underlying drivers of deforestation and forest degradation in mind (including pressures coming from outside the forest sector), and understanding the governance context. A comprehensive and independent assessment of the country's laws and governance should be undertaken at the earliest possible stage to identify the areas in need of governance reform. Certain prerequisites should also exist to ensure the REDD+ country has the political will to implement REDD+ effectively and address cross-sectoral pressures. Commitments to transparency in decision making and fiscal transparency are also necessary, including independent auditing of the REDD+ financial flows. The risks associated with implementing REDD+ are also reduced by increased stakeholder participation.