REDD+ and International Climate Finance: A Brief Primer

International climate finance (or climate finance), which has become a central pillar of global efforts to address climate change, is generally defined as financial flows or mechanisms originating outside of a developing nation that support actions within these nations to reduce greenhouse gas emissions or adapt to climate change impacts.

Climate finance is typically divided into three categories based on the different mitigation and adaptation needs of developing countries: 

• reducing deforestation, by providing compensation slowing and reversing the conversion of forests to other land uses and the degradation of healthy forests; 
• deploying clean technology, primarily through research and development, technical assistance, and preferential financial incentives in the power, industrial, and transportation sectors; and
• adapting to climate change impacts by taking steps such as studying expected impacts, building disaster rapid-response capabilities, modifying infrastructure, encouraging ecosystem resilience to climate impacts, developing flood- and drought-resistant crops, and creating new climate-related insurance products.
  
  

Climate finance typically also includes cross-cutting needs, such as economic and policy analysis to inform national low-emissions development plans; technical capacity for measuring, monitoring, reporting, and verifying emissions reductions and financial flows; and institutions and policy reforms for ensuring that programs are managed and funding is delivered efficiently and effectively. These needs fit under the larger umbrella of “capacity building,” which also includes specific activities that prepare nations successfully govern and execute plans to reduce deforestation.

Essentially, international climate finance is an effort to (a) integrate climate change concerns into traditional development assistance in the energy, transportation, infrastructure, land-use, and other sectors and (b) help developing nations internalize the local and global externalities caused by their greenhouse gas emissions.

This paper focuses specifically on the role of international climate finance in reducing emissions from deforestation and forest degradation (REDD+)2 . First, it provides background on how climate finance could help reduce emissions from deforestation and estimates how much funding is needed. Next, it looks at long-term international climate finance pledges made by developed countries and how the sources mobilized to meet those pledges could be deployed for REDD+. It then considers how emerging international governance structures for climate finance will affect REDD+ financing, and concludes with recommendations for policymakers in the United States and other developed nations.