Incentives for private re- and afforestation Experience of international cooperation

1. Incentives for private re- and afforestation Experience of international cooperation Dr. Stepan Uncovsky Astana, 21.05.2014

2. Content • Who are we • Situation worldwide • Investor perspectives and potential trade-offs • Examples • Role of international cooperation • Potential and success factors

3. GIZ – German federal enterprise for int. cooperation Our profile • Owned by the German Federal Government, acting as private-sector entity • Operations in Germany and in over 130 countries around the world • Around 17,000 employees, business volume of some 2 billion euros in 2011 • Commissioned by public and private sector bodies inside and outside Germany • Main focus of GIZ activities are in the field of capacity development:Dialogue & partnership between the state, the private sector and the civil society

4. EURECA 2009 • TheregionalEnvironmentProgrammeforCentralAsia (EURECA 2009) isthecenterpieceofcooperationbetweenthe EU andCentralAsia • EURECAencompasses 4 components: • Central Asia enhanced regional cooperation on Environment and Water: WECOOP • Forest and biodiversity governance, including environmental monitoring: FLERMONECA • Partnership of water management and basin organizations in Central Asia: WMBOCA • Environmental awareness raising: AWARE

5. World Trends • Demand for wood production is strongly correlated with the growth of world population. • Per capital wood consumption in emerging regions increasing • Wood becomes increasingly a source of renewable energy. • “ (Natural) forest resources are decreasing while demand for wood products is steadily increasing therefore creating a gap between demand and supply of forest products. Increasing wood consumption exceeds production of newly established forests

6. The potential of the private sector for forest finance • Estimated global private sector investments in forestry = USD 16 billion/year • For comparison: annual public ODA spending on forests = USD 1,7 billion • Investor preference for the global north and some emerging low risk economies

7. Investor perspective

8. Example: Reforestations-Government programs

9. Example Reforestation: Government programs Uruguay – laws for subsidies Chile – laws for subsidies Both countries initiated reforestation with laws subsidizing reforestation. Which can be observed in both charts.

10. Example: Short rotation forestry in Sweden – on farm Private investments on farm, small scale, sometimes with EU funding • Tree species: • Poplar, Willow, Robinia • Yield: (Soil, Climate, Clone have to be considered!) • Poor sites (dry): 4 - 6 t dry/a/ha • Medium sites: 7 - 11 t dry/a/ha • Good sites: 12 - 15 t dry/a/ha Pictures from an example in Sweden, willow, rotation 3 years

11. Example Reforestation: Reforestationwith international grants • Incentives for native forest management e.g. Chile – Paraguay with KfWand GIZ) • Incentive program for afforestation (saving account approach and green savings) in Vietnam (planned in Tajikistan) with KfW, 130,000 ha, 70 million EUR • Government reforestation program China, partially handed over to local people • Other investments within the new emerging markets REDD, NAMA, PES to maintain forest cover • Private small scale afforestation in Europe with the EU-funding

12. Success factors for private reforestation investments • Investors require political, social and legal stability • IRR > 10% (sensitive to inflation, wood and land price) • Ease of funds transfer • Subsidies encourage (Chile, Uruguay, Argentina, Guatemala etc.) • Title or lease security • Due diligence (financial, social and environmental required) • Social and ecological co-benefits (certification) • Good country infrastructure • Risks should be low (market, production, social, political and reputation) Tendency: stable, well governed and more developed countries

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14. Sevices of GIZ I Example of GIZ project: Vietnam taxes emissions and pollutants The project • As the first country in Asia Vietnam adapted a extensive legislation framework for reducing pollution (tax on energy and environmental pollutants). • Germany supported drafting the legislation by fact-finding trips and promoting inter-ministerial coordination Results anticipated/achieved • Pollution and emissions decrease • Public investment and compensation • Promotion of innovation Framework conditions for green economy • Strategy development and policy consultancy • Mainstreaming • Sustainable fiscal policy • Green finance

15. Sevices of GIZ II Example of GIZ project Green roadmap for business in the Black Sea and Caspian region The project • Objective is to develop a green business support strategy for private sector association Results anticipated/achieved • Trainings, information and exchange of experience • 3 pilot strategies on how private sector organizations can successfully support green business development developed (Ukraine, Azerbaijan and Georgia) • “Green Roadmap” was established to support the Caspian Confederations of Enterprises (UBCCE) member organizations as green business promoters Capacity Development • Institutional capacities • Human capacity development and green jobs • Innovation and technology

16. Sevices of GIZ III Example of GIZ project Microloans help to insulate houses - Tajikistan The project • Poor insulated buildings increase heating costs, produce unnecessarily high CO2 emissions and waste resources • Since 2008 German development cooperation has been supporting the Tajik microfinance institution MADINA to develop loan products through which private homeowners can finance better thermal insulation Results anticipated/achieved • Cutting the energy consumption of houses by an average of 30% • Reducing CO2 emissions • Decreasing of deforestation Key sectors of Green Economy • Sustainable economy development • Clean and resource-efficient production • Sustainable agriculture • Biodiversity and forestry • Sustainable energy and transportation systems • Water, sanitation, waste • „Green cities“

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18. Example of GIZ project:Sustainable Forest Management in India • The project • Promote cooperation between the Forest Department, the regional agency responsible for forest conservation, and local communities who live and work in the forest • Redefining the Forest Department´s role and assigning it a clear set of responsibilities while offering equitable and sustainable use of the forest for local communities • Results anticipated/achieved • Living condition of stakeholder communities improved • Protection of forest for the long term • Main focus of GIZs activities are in the field of capacity development • GIZ draws on a wide range of experience and focuses on the following methodological approaches: • Individual solutions • Multidisciplinary approach • Multi-level approach • Dialogue • Partnership with the private sector

19. Example of GIZ project:Ecotourism for local economic development in Laos • The project • Promotes local economic development through the building of value chains of community-based ecotourism product • Strengthening regional marketing of the LuangNamtha location in the Mekong region by trainings for tourist services and capacity building in the tourism industry • Results anticipated/achieved • Increased the income of the households • Growing awareness of the value of biodiversity • Preserving cultural heritage of ethnic minorities • Main focus of GIZs activities are in the field of capacity development • GIZ draws on a wide range of experience and focuses on the following methodological approaches: • Individual solutions • Multidisciplinary approach • Multi-level approach • Dialogue • Partnership with the private sector