climate investment fund forest investment program de... · 2019. 11. 16. · 4.04, op/bp 4.36,...

1

Climate Investment Fund

Forest Investment Program

_____________________________________________________

INVESTMENT PLAN MEXICO

Revised version on September 13th of 2011

Project 1. Generation, management and dissemination of information and knowledge for the replication of transformative actions that reduce deforestation and forest degradation, generating social and economic benefits in communities. Budget: US $6 million (grant) BMD: IBRD

1) Development of monitoring systems, and impact assessment of the Investment Plan including the measurement of environmental, social and economic impacts.

2) Project management and implementation of mechanisms for dissemination of knowledge of the projects included in the Investment Plan or actions related to the national REDD+ strategy and the implementation of workshops and participatory feedback processes.

Project 2 Integration of policies, creation of financial mechanisms and investment in communities Budget: US $19.66 million (grant) US $16.34 million (loan) MDB: IBRD

1) Strengthening of the institutional and technical capacity;

2) capacity building of local partners; 3) policy innovations in some of the initial

investment areas of REDD+. 4) investments to communities and ejidos through

new and existing mechanisms.

Project 3.a Financing to strengthen sustainable forest management and sustainable management of forest landscapes, including the promotion of investment and economic integration projects, with an emphasis on communities and ejidos. Budget: US $ 5 million (grant) US $10 million (loan) MDB: IDB

1) Design and preparation of financial products, including the financing strategy

2) Increased capacity to financial promotion and project development and evaluation

3) Investments in forests, forest landscapes and value chains

Project 3.b Technical assistance and capacity building for the benefit of community enterprises in the design of financing proposals and strengthening of business skills in line with REDD+ activities Budget: US $1.5 millones (grant) US $1.5 millones (loan)

1) Identify and assess investment projects related to REDD+ with financing needs

2) Design community projects of economic integration of productive chains

3) Design, implement and promote microfinance novel instruments including monitoring mechanisms and financial evaluation and mitigation of greenhouse gases

4) Strengthen strategies, structures and existing finance instruments seeking for financial

ANNEX 1. Proposed investment projects

MDB: IDB

inclusion of vulnerable groups 5) Promote the creation of financial

intermediaries and strengthen institutional capacities from the existing ones

6) Monitoring and evaluation

The projects developed under this Investment Plan are designed in three basic times: enabling investments, investments in early action zones, and zones of initial replication. While there will be some direct investments from year 1, these will be scaling as all institutional arrangements are implemented and the financial mechanisms are designed. It is expected that this initial period will also serve to assess the baselines, not only of carbon, but of other social and environmental aspects that allow the detailed evaluation of the Investment Plan.

Year 1. Enabling actions

(including capacity building, institutional arrangements, initial investment,

Year 2. Investments begin in early action areas

(including loans and Conafor investments)

Year 3. Investments begin in initial replication areas

(including loans and Conafor investments)

Year 5. Final evaluation, documentation of lessons learned and actions to scale and replicate in other areas

Project 1: Generation, Management and Dissemination of Information for the Replication of Transformative Actions to Reduce Deforestation & Forest Degradation and Generate Environmental, Social and Economic Benefits to Communities

a) Multilateral Development Bank and Leader Government Agency

Multilateral Development Bank: International Bank for Reconstruction and Development (IBRD)

Government Agency: National Forest Commission (CONAFOR)

b) Statement of the Problem

The innovative orientation of the projects included in the Investment Plan pose a challenge on the short, medium and long term to ensure the proper design, implementation and evaluation, including the improvement of monitoring systems –including mechanisms for measuring and developing social and environmental baselines– that allow the transparent evaluation of impacts, dissemination of knowledge and communication to ensure replication in other areas with high potential for reducing deforestation and forest degradation.

c) Transforming Impact and Proposed Joint Benefits

The objective of this project is to improve the capacity to gather and manage relevant information by CONAFOR, in collaboration with other agencies, in order to analyze the social, economic and environmental impacts of the projects included in the Investment Plan and being able to share the knowledge to replicate the transforming actions that reduce deforestation and forest degradation, and that generate benefits in the communities and ejidos. The priority regions considered for support could include some of the areas considered as high priority because of their environmental importance, their potential for reducing emissions from deforestation and forest degradation and their feasibility to be replicated.

The main activities included in the project are: (a) development, implementation and/or improvement of monitoring systems and impact assessment of the Investment Plan, including the measurement of environmental, social and economic impacts in areas of initial REDD+ investment and replication regions. The above using different approaches which also include the use of geographic information systems (GIS); and (b) project management and implementation of mechanisms for dissemination of knowledge of the projects included in the Investment Plan actions related to the national REDD+ strategy and the execution of workshops and participatory feedback processes.

The main benefit of this project is to enhance the replication of mechanisms for the reduction of deforestation and forest degradation through the generation, distribution of benefits based on results and the dissemination of transparent and verifiable information based on the results of the initial investment areas of REDD+. The main benefit of this project is the potential replicability of these mechanisms to reduce deforestation and forest degradation by generating and distributing demonstrable data based on results.

d) Preparation for Execution

In order to assure an adequate execution of the Investment Plan, collaboration agreements will be developed among agencies involved in this project, whether local, regional, federal or international. In addition, the coordination with other projects of the Investment Plan will be assured.

There is an important experience in Mexico both in the development of information systems and in the mechanisms for monitoring and evaluation of policies. These include monitoring works at national scale by the National Forest and Soil Inventory, management mechanisms and monitoring programs, as well as periodic evaluation by the National Council of Social Policy Evaluation (CONEVAL). It is expected that this base allows a rapid development of the methodological platform and institutional arrangements to implement the monitoring and evaluation of the Investment Plan.

e) Possible national and international partners, including their financial backup for REDD+

The potential partners for this project include government institutions of all levels (federal, regional, municipal, local) from a large variety of sectors. The possible partners also include institutions with mandatory agenda to monitoring the public policy impact, which will join in the process (including as a potential partner CONEVAL) and other public or private organizations that may collaborate in the creation, management and dissemination of information about the impact of the initial investment on REDD+ areas. The relationship with bilateral and multilateral development agencies is crucial to assure coordination between donors, resource leverage and an international scale diffusion of the results.

Project Key participants of the project

Generation, Management and Dissemination of Information for the Replication of Early Transformer Actions to Reduce Deforestation & Forest Degradation and Generate Environmental, Social and Economic Benefits to Communities

• Communal lands and communities in some of the Polygon initial investment areas REDD+

• Public or private organizations that collaborate in the generation, management and dissemination of information

• Foundations

• Cooperatives and producer associations in some of the polygons form the initial investment REDD+ areas

• Civil Society Organizations

• Federal Government (including, SAGARPA, CDI, SEMARNAT CONABIO, CONANP, CONAGUA, PROFEPA, SRA y CONEVAL)

• State Government

f) Justification for FIP funding

The Investment Plan has been developed comprehensively as a fundamental part towards the design of the National REDD+ strategy, based on the Mexico’s Vision for REDD+: Towards a National Strategy presented by the end of 2010 by the Inter-ministerial Commission for Climate Change. This document highlights the importance to follow-up the performance of REDD+ implemented measurements. Mexico is therefore required to operate and maintain a verifiable measurement and reporting system..

The FIP funding is consistent and complementary with official dedicated resources related to Forests and Climate Change, including the Forest Carbon Partnership Facility (FCPF), the BIRF’s Specific Investment Loan (see BMDs section), and the Norwegian donation, managed through the Food and Agriculture Organization of the United Nations. The components of this project concur with the principles established in the Governance Framework of the Climate Investment Funds (CIL) on the promotion and support of measurable outcomes based on results.

g) Safeguards

The project will comply with the current safeguards for the Government of Mexico, as well as IBRD safeguards, including preliminary environmental and social safeguards OP/BP 4.01, OP/BP 4.04, OP/BP 4.36, OP/BP 4.10, OP/BP 4.11, OP/BP 4.12 y OP 4.09. During the design (August and September 2011), the project was presented in some REDD+ initial investment areas by the means of 6 participative workshops, in order to receive some feedback from members of the communities and community lands that could potentially obtain a benefit from this project. The recommendations were integrated in the present version of the Investment Plan.

h) Financing Plan

Project FIP Budget Donations Credit

Generation, Management and Dissemination of Information for the Replication of Early Transformer Actions that Reduce Deforestation & Forest Degradation and Generate Environmental, Social and Economic Benefits to Communities

6 millon dollars (md) 6 md 0

• Donors (mainly the Norwegian project/FAO/PNUD on MRV)

• Inter-American Development Bank/FOMIN

• Financiera Rural

• Among others

This project will also be co-financed with Specific Investment Loan (SIL) resources of Forests and Climate Change that the Government of Mexico will execute along with the International Bank of Reconstruction and Development.

i) Timetable for the Project Preparation

The key preliminary dates for the Project preparation include:

• Revision for improving BIRF: October 5th, 2011

• BIRF Board Meeting: October 31st, 2011

• Evaluation mission: November 1st-3rd, 2011

• Legal Agreements Negotiation: November 2011

• BIRF Board: December 2011/January 2012

• Signing of the agreement: February 2012

• Launch: March 2012

Project 2: Integration o policies, creation of financial and investment mechanisms in communities


Multilateral Development Bank: International Bank for Reconstruction and Development (IBRD)

Government Agency: National Forest Commission (CONAFOR)

b) Statement of the Problem

Cross-sector policy alignment is essential to promote a social and environmentally sound balance with the objectives of agricultural productivity and conservation of forests and their environmental services1. The evidence in Mexico indicates that the coordination of cross-sector public policies towards the promotion of sustainable forest management and the recognition of the value of forest environmental services can contribute to increase forest areas under management and reduce pressures to transform forest ecosystems, resulting in benefits in the mitigation of GHG emissions, conservation of biodiversity, major resilience to climate change while improving the quality of life of rural communities2.

The creation and strengthening of institutional arrangements and financing schemes adapted to the local level is crucial for building a long term REDD+ strategy in Mexico, harmonizing institutional actors involved in forest management and in rural development, such as SEMARNAT, SAGARPA, SEDESOL, CDI, CONABIO, CONANP, CONAGUA, SRA y PROFEPA, as well as other agencies members of CICC and CIDRS. Through the strengthening of Local Technical Agents3 (LTAs), including innovative figures such as decentralized public bodies and biological corridors, and Local Technical Agents (LTAs)4 accompaniment will be ensured in the investments made in communities and ejidos in areas of initial REDD+ investment.

c) Transforming impact and proposed joint benefits

The project’s objective is to contribute to the reduction of Greenhouse Gas Effect emissions, as well as to provide living and environmental benefits to rural communities by promoting new sustainable and replicable forest management approaches. This includes community investment transference and regional policy alignment. Priority will be given to areas of environmental

1 Bray, D, D. Barry, S. Madrid, L. Merino, I. Zúñiga (2010) El manejo forestal sostenible como estrategia de combate al cambio climático: las comunidades nos muestran el camino. Consejo Civil Mexicano Para La Silvicultura Sostenible (CCMSS), México. 2 Bray, D., E. Medina, L. Merino, J. M. Torres Rojo, y A. Velázquez (2007). Nueva evidencia: los bosques comunitarios de méxico protegen el ambiente, disminuyen la pobreza y promueven paz social. Consejo Civil Mexicano para la Silvicultura Sostenible (CCMSS), México. 3 A Local Technical Agent (LTA) is a government agency that has public funcions and is concetrated, by mandate, in implementing a rural development strategy. It is a legal entity with its own assets. It could be an Intermunicipal Agency constituted as a Descentralized Public Entity. 4 Local Development Agency (ADL) or Rural Development Agency (ADR) or Forest Development Agency (FDA) are private agencies, submit specific projects for government support on issues related to rural development. They are legally constituted as a non‐for profit entity, such as CSOs.

importance and with potential to reduce greenhouse gas emissions from deforestation and forest degradation and their viability to be replicated.

The project has four main components: (i)strengthening of the institutional and technical capacity; (ii) capacity building of local partners; (iii) policy innovations in some of the initial REDD+ investment areas; and (iv) investments in communities and ejidos through new and existing mechanisms

The first component will support the management and institutional multiscale arrangements (Intersecretarial Commissions, mechanisms of intergovernmental implementation CIDRS y and their wok group) to enable mitigation measures, technical and institutional strengthening of CONAFOR at national and regional level through training and technical equipment. There will also be support for a training and certification system of technical service providers, who will accompany communities and ejidos in the areas of initial REDD+ investment. The component will enhance the positive synergies and facilitate the integration of policies at different levels of government and mainly, at local level in the areas of initial REDD+ investment.

The second component will increase the capacity of Local Technical Agents (LTAs), entities established by public figures such as decentralized intermunicipal and intersecretarial commissions (for example the CONABIO) that have features that ensure that they can be replicable at national level. In the areas of initial REDD+ investment, the LTAs, will also be key to collaborate with the CONAFOR in the design of guidelines, support and monitoring to beneficiaries. The creation and strengthening of the technical capacities of LTAs will be promoted, so that they accompany and support the implementation of projects. Support for both LTAs and Forest/Local Development Agents (FDAs/LDAs) could include the development of studies, technical consultations, training workshops and equipment.

The third component will support the design of programs adapted to the needs of the areas of initial REDD+ investment. In some or all the areas of initial REDD+ investment, the CONAFOR will carry out efforts to adapt and innovate policies and program design to the local needs and in a harmonized way with other sector such as the agricultural sector. The incentive programs from different sectors will be analyzed (for example, the Sustainable Livestock Production and Beekeeping Ordering Programme (Programa de Producción Pecuaria Sustentable y Ordenamiento Ganadero y Apícola, PROGAN) and the Direct Support Program of Land (Programa de Apoyos Directos al Campo, PROCAMPO), among others areas of initial REDD+ investment, adjustments will be designed to harmonize rural development policies at local level to increase the mitigation potential. New investment programs will be designed focused in some areas of initial REDD+ investment, focused on local needs and implemented in collaboration with the LTAs and/or supported by LTAs. In these regions, the project would support the design of integrated incentives combining forest management, soil restoration, protection of watershed and rangeland management and agricultural practices at the municipal or forest landscape level. The design of special guidelines for areas of initial REDD+ investment will be based on innovation, the potential for reducing emissions from deforestation and forest degradation and the social, economic and environmental benefits for communities.

The fourth component will develop or increase financial mechanisms to build and strengthen the capacities in ejidos and communities, with the aim to promote sustainable forest management in some or all areas of initial REDD+ investment and in possible areas for replication. The investments in ejidos and communities could be done in three ways:

a. CONAFOR will directly support ejidos and communities through its already established programs with special guidelines operating in the areas of initial REDD+

investment, including the use of matching funds of Payment for Environmental Services;

b. based on the design of new special guidelines focused in the needs of some of the areas of initial REDD+ investment, the CONAFOR will directly carry out investments in communities and ejidos focused on local needs; and

c. based on the design of new special guidelines, the CONAFOR will support LTAs to provide joint investments to ejidos and communities within some of the areas of initial REDD+ investment. Through this component new systems of payment for environmental services will be implemented in communities and ejidos, contributing to reduce GHG emissions and obtaining benefits on biodiversity and on local communities. This component will also promote, through incentives to communities and ejidos the certification of forest resources and, in the future, agricultural and agroforestry services including the eventual certification of forest landscapes. There will also be an investment in the development and technical assistance to community forest enterprises (CFE) for the commercialization of forest products and non-timber products with added value and services

d) Preparation for Execution

In order to ensure an adequate execution for Investment Plan, necessary collaboration agreements will be made between the different instances that are involved in this project (mainly SEMARNAT and SAGARPA). Incentive programs from different sectors will be analyzed (for example the agricultural and silvopastoral) in REDD+ initial investment areas, and there will be arrangements in order to increase emission reduction potential. Instruments will be exploited for the right design and financing mechanism implementation operated by local agents. Moreover, coordination with other projects included in this Investment Plan will be assured.

The basic elements for the project’s viability already exist under CIDRS working groups and the experience gained in CONAFOR’ special programs.

d) Possible national and international partners, including their financial backup for REDD+

The potential partners for this project include government institutions of all levels (federal, state, municipal, local) from a large variety of sectors. The possible partners also include local platforms and civil society. The main partners of this project will be inside REDD+ initial investment area communities and ejidos, who will also be the foremost beneficiaries. The relationship with bilateral and multilateral development agencies is crucial for assuring coordination between donors and resource leverage


Integration of Inter-Agency Policy and Creation of Financing

• Communal lands and communities in some of the Polygon initial investment areas REDD+

• Public or private organizations that collaborate in the generation,

Mechanisms in Communities

management and dissemination of information

• Foundations

• Cooperatives and producer associations in some of the polygons of the initial investment areas REDD+


• Local Technical Agencies (Inter-municipal meetings)

• Federal Government (including, SAGARPA, CDI, SEMARNAT CONABIO, CONANP, CONAGUA, PROFEPA, SRA y CONEVAL)


• Donations ( mainly the Norwegian project/FAO/PNUD on MRV)

• Inter-American Development Bank/FOMIN

• Financiera Rural

• Among others

e) Justification for FIP funding

The Investment Plan has been developed comprehensively as a fundamental part of the National Strategic design REDD+, having as a base the document Visión de México sobre REDD+: Hacia una estrategia nacional (Mexico’s vision on REDD+: Towards a National Strategy) presented by the end of 2010 by the Interministerial Commission on Climate Change. This document highlights the importance on transversality to multiple levels as an integral strategy, coordination and complementarity, as well as the importance of defining, adjusting and/or creating financing schemes for assuring success to tending initiatives to reduce or avoid deforestation and forest degradation.

The FIP financing is consistent and complementary with assistance resources related to forests and Climate Change, including the Cooperative Fund for the Forest Carbon (FCCF), BIRF Specific Investment Loan (see BMDs section). The project components are transforming actions that can be replicated and have a direct impact on mitigation. In Mexico, the mitigation potential under the low carbon rural development promotion is very significant. The forest sector and soil use change (mainly deforestation) is the third source of carbon emission in Mexico and the forest sector the second – only after the energetic sector- in its potential to reduce carbon emissions5. By promoting community management and preservation of forests base in a sustainable rural development vision, the tendency of stores decrease in forest ecosystems will be reverted.

5 Johnson, T, C. Alatorre, Z. Romo, y F. Liu (2010) México: estrategias de Disminución de Emisiones de Carbono (MEDEC). Banco Mundial, USA.

f) Safeguards

The project will comply with the active safeguards for the Government of Mexico, as well as IBRD safeguards, including preliminary environmental and social safeguards OP/BP 4.01, OP/BP 4.04, OP/BP 4.36, OP/BP 4.10, OP/BP 4.11, OP/BP 4.12 y OP 4.09. During the design (August and September 2011), the project was presented in some REDD+ initial investment areas in 6 participative workshops, in order to receive some feedback from members of the communities and community lands that could potentially obtain a benefit by this project. The recommendations were integrated in the present version of the Investment Plan.

g) Financing Plan

Project FIP Budget Donations Credits

Inter-institutional policies integration and creation of financing mechanisms

36.4 million dollars (md) 19.66 md 16.74

md

73.5% of FIP resources will be directly destined to communities and ejidos. The rest will be used for the local partners’ strengthening and capacity building, as well as for public policy innovations in order to adapt special rules and alignment to the local needs, harmonizing this effort with other sectors. This project will also be co financed with SIL resources in Forest and Climate Change. The Government of Mexico will execute it with International Bank for Reconstruction and Development, which has, as a component, the institutional strengthening.

h) Timetable for the Project Preparation

The key preliminary dates for the Project preparation include:

• Revision for improving BIRF: October 5th, 2011

• BIRF Board Meeting: October 31st, 2011

• Evaluation mission: November 1st-3rd, 2011

• Legal Agreements Negotiation: November 2011

• BIRF Board: December 2011/January 2012

• Signing of the agreement: February 2012

• Launch: March 2012

Project 3.a: Financing to strengthen sustainable forest management and sustainable management of forest landscapes, including the promotion of investment and economic integration projects, with an emphasis on communities and ejidos


Multilateral Development Bank: Inter-American Bank of Development.

Government Agency: Financiera Rural (The National Rural Financing Bank)

b) Problem Statement

The causes of unrealized timber production potential of forests and the low number of projects with potential to generate a reduction in the GHG emissions in ejidos and communities has its origins in different factors: lack of technical capacity or tradition of forest use management, commercially inaccessible forest stands, lack of financial resources and lack of access to formal credit. In Mexico, timber harvesting has virtually no access to financing, whether public or private. Of the loans granted to the primary sector, the portfolio of borrowers from the forest sector represented in the month of July of this year less than 0.51%. It is worth mentioning that funding in the primary sector only represents 2%, with all funding targeted to the private sector6.

There are three aspects that have failed to be adequately addressed by the country’s financial supply, whether public of private:

1. The characteristics of social property, because by its nature is not possible to mortgage a portion or its totality and therefore, it cannot be offered as collateral.

2. Long periods of maturation. The forest cycles – that are relatively long, increase the risk level of the activity.

3. The scale of production. The atomization of forest exploitation impedes the generation of scale economies that could increase the profitability of forestry projects7.

While there are important limitations on a financial coverage level linked to specific national problems, it is also true that in some countries of Latin-America it goes hand in hand with a low use of the formal financing system. The reason as to why the low use consists of various reasons, two of which are of great significance:

1. The formal credit, such as it is described in its mechanisms and requirements, is an unfamiliar option to the poor rural sectors, due to the fact that its logic does adapt to their needs. In rural population sectors where acquiring a formal credit implies a high risk, resulting in limited use of formal credit channels.

6 Financiamiento e información financiera de intermediarios financieros. Información Estadística. Banco de México. Accesado en agosto de 2011. 7 Valero, A. y Musik, G.A., 2010. El sector forestal en México; Diagnóstico, Prospectiva y Estrategia. Centro de Estudios de Competitividad‐ITAM. México, D.F.

2. The technical assistance does not appear to be proportional to the financial component of the credit supply. Creating an enabling environment to promote access to credit requires combining it with assistance on a number of aspects. These include the creation of alternative mechanisms of access to formal credit, an important harnessing of capacity building with an orientation to the rural population on the use of formal credit as part of business strengthening8.

For this reason, it is fundamental to have a strong training support as a means of fortifying the rural financial market, as well as an innovative design for products and financial instruments that can ascend the financial barriers.

c) Transforming impact and proposed joint benefits

One of the main objectives in the thematic area 3 is to increase the capacity to generate income for the communities with moderate and extreme poverty, by means of diversifying their productive activities that will reduce pressure on forests or will promote their sustainable use.

This area is divided into two projects. The objective of project 3.a is to contribute to the reduction of Greenhouse Gases, as well as to increment carbon sinks through initiatives that aim to reduce deforestation and forest degradation, and/or promote natural or assisted regeneration, agroforestry, sustainable use of lands and reforestation throughout the mobilization of financing for investment projects.

Such activities shall promote a sustainable forest use, take the pressure off natural resources and further specify benefits in terms of Greenhouse Gases, environmental and social issues. The project will promote the implementation of innovative mechanisms of financing that will allow the transformation of credit markets for investment projects and will generate economies that will be appeal other participants in the financial sector to join these initiatives, thus building a strong and sustainable financing environments.

In addition, the project expects to eventually attract resources from other local or foreign financing sources that will boost the investments in the sector.

e) Preparation for execution

The activities that will be performed contain the baselines of the project. These activities include:

1. Analyze the loan portfolio of Financiera Rural.

2. Consultancy for the market analysis (offer and credit demand), and an inventory of potential projects.

8 Karremans,J., Petry, P. 2003. Oferta y Demanda de Microcréditos: Los Casos de Costa Rica y Nicaragua. Informe Final de Consultoría para el IICA y el BID. San José, Costa Rica, Agosto 2003. Consultado en: http://www.ruralfinance.org/fileadmin/templates/rflc/documents/1144256124055_Mujeres_rurales_y_el_microcredito.pdf

3. Dissemination workshops for successful projects.

4. Sensitization on investment projects to final beneficiaries.

5. Strengthening of capacities to final beneficiaries.

The activities of thematic area 3 will be linked to the activities of the other FIP areas.

f) Possible national and international partners, including their financial backup for REDD+

Financiera Rural will seek the participation and collaboration with organizations, companies and institutions that promote a sustainable rural development. The potential partners for this project may be public, private or a combination of both. They may be national or international, but are required to have experience in community forestry, financial services supplies or economic and business development, aimed for people with scarce resources in ejidos and rural & indigenous communities, primarily.


A program meant to direct financing towards strengthening forest use and landscapes as well as the promotion of investment and economic integration projects, with an emphasis on communities and ejidos.

• Private companies

• Foundations

• Cooperatives and associations of producers


• National Forest Commission

• Development Bank

• Regional Funds including the ones promoted by CDI (National Commission for the Development of Indigenous People)

• Federal Government


• Inter-municipal Meetings

• International Bank of Reconstruction and Promotion

• MIF

• Others

g) Justification for FIP funding

32.8% of Mexico’s forests have the potential to produce timber9. However, only a third of that area is actually used for that purpose and produces approximately 6 million cubic meters of wood in template forests, and 600,000 cubic meters in high forests and medium evergreen. In contrast, the demand for wood products exceeds by 22 million cubic meters. By being net importers of forest products, there is great potential for developing the forestry industry in a sustainable manner through an adequate credit channeling. Additionally, there are opportunities in non-timber products or associated with provisional services (nature tourism, inter alia) in the country’s forests.

By expanding and diversifying the credit offer to the rural sector, it will be possible to detonate a sustainable forest management that will diversify the owners’ source of income. This will consequently have a positive effect on the mitigation of climate change, since there will be a reduction of emissions from deforestation and forest degradation. In addition, it will favor the augmentation of carbon acervos in the forest.

The activities hereby proposed will be directed to places where the objective is to diminish the pressure on forests, through the promotion of initiatives that provide added value to the whole forestry sector. By diminishing the pressure on the forest it will be possible to avoid emissions caused by deforestation.

Considering these benefits, with the goal of assuming part of the risk when financing the projects hereby mentioned, as well as the achievement of fortifying the Financiera Rural’s capacities and community enterprises in the credit use for the forest sector, grant resources must be allocated through FIP including a donation for capacity building.

With relation to the potential of implementation, Financiera Rural was the first institution to create financial instruments directed specifically for responding to the needs of the forest sector. It has authorized credits for 89.7 million pesos for the establishment and/or maintenance of 7,717 hectares of commercial forest plantations of teak, melina and other forest species.

In addition to the wood production potential in the country, forests and rainforests of Mexico have many other socio-economical values. Such include the vast biodiversity, the hydrological services and numerous non-timber forest products. Moreover, the project will have a positive impact on a social level, particularly in the indigenous people, since out for the 10% of the rainforests that survive in the Mexican territory, 84% are in indigenous territories10. Because the forests are property of the communities, the FIP will directly contribute to improve their living standards, build social capital and improve community

9 CONAFOR. Programa institucional 2007‐2012. 2008. 10 El patrimonio biocultural de los pueblos indígenas de México/Eckart Boege; colaboradores Georgina Vidrales Chan... [et al.]. México: Instituto Nacional de Antropología e Historia: Comisión Nacional para el Desarrollo de los Pueblos Indígenas, 2008.

resilience to economic disaster and/or natural climate-related, thus participating in the adaptation agenda.

h) Safeguards

The aim of following up the fulfillment of environmental and social safeguards will be for the projects to be consistent with national norms and the Policy Environment and Safeguards Compliance GN-2208-20 y OP 703) of BID. These safeguards will be identified from the initial design phase of projects.

i) Financing Plan

Project Budget FIP Donations Credits

A program meant to direct financing towards strengthening forest use and landscapes as well as the promotion of investment and economic integration projects, with an emphasis on communities and ejidos.

15 million dollars (md) 5 md 10 md

FIP resources will be enhanced with a credit line by the Inter-American Development Bank that will start with Financiera Rural, which is focused to promote the agricultural, livestock and forestry sectors, among other objectives. This operation seeks to promote sustainable rural development within the traditional private sector and will allow Financiera rural to acquire the necessary tools to identify relevant REDD+ projects.

j) Timetable for the Project Preparation

Expected date for Board/MDB Management approval: I/2012

Expected date for midterm evaluation: I/2014

Expected date for the project/program closure: I/2016

Project 3.b: Technical assistance and capacity building to benefit community management enterprises, designing financing proposals and strengthening business skills in line with REDD + activities

c) Multilateral Development Bank and leader government agency

Multilateral Development Bank: Inter-American Development Bank

Government agency: National Forest Commission/ Financiera Rural

d) Problem statement

As mentioned in project 3.a, the lack of use of forest and forest resources has many origins. For certain sectors of the population, the access to productive assets for the rural development is part of institutional strengthening processes, promoting equity, social and human capital that need to be tackled from different perspectives, with the appropriate tools for the current conditions.

Rural communities and indigenous peoples increasingly play a role of greater importance by demanding to be stewards of their resources and their own development. This can be achieved through successful implementation of productive projects. Correspondingly, the provision of efficient financial services is essential for long-term sustainable development in communities; however, a suitable environment for the participation of the private financial sector must be secured first.

While there are important limitations on a financial coverage level linked to specific national problems, it is also true that in some countries of Latin-American it goes hand in hand with a low use of the formal financing offer. The reason as to why the low use consists of various reasons, two of which are of great significance:

1. The formal credit, such as it is described in its mechanisms and requirements, is an unfamiliar option to the poor rural sectors, due to the fact that its logic does adapt to their needs. In rural population sectors where acquiring a formal credit implies a high risk, resulting in limited use of formal credit channels.

2. The technical assistance does not appear to be proportional to the financial component of the credit supply. Creating an enabling environment to promote access to credit requires combining it with assistance on a number of aspects. These include the creation of alternative mechanisms of access to formal credit, an important harnessing of capacity building with an orientation to the rural population on the use of formal credit as part of business strengthening11.

11 Karremans,J., Petry, P. 2003. Oferta y Demanda de Microcréditos: Los Casos de Costa Rica y Nicaragua. Informe Final de Consultoría para el IICA y el BID. San José, Costa Rica, Agosto 2003. Consultado en: http://www.ruralfinance.org/fileadmin/templates/rflc/documents/1144256124055_Mujeres_rurales_y_el_microcredito.pdf

For this reason, it is fundamental to have a strong training support as a means of fortifying the rural financial market, as well as an innovative design for products and financial instruments that can ascend the financial barriers.

Taking this into account, it is evident that the capacity building in the ejidos and communities is a fundamental axis for the microcredit management in this sector.

e) Transforming impact and proposed joint benefits

The project’s objective is to contribute to the reduction of GHG emissions, as well as to increase carbon sinks through initiatives that aim to reduce deforestation and forest degradation. Promotion of natural or assisted regeneration, agroforestry, sustainable use of lands and reforestation throughout the mobilization of financing for investment projects is equally important.

One of the main objectives in the thematic area 3.b is to increase the capacity to generate income for high level of marginalization communities, by means of diversifying their productive activities. The expected outcome is the sustainable management of forests, taking off pressure on forest lands, and other social and environmental benefits as well as in terms of greenhouse gases.

Project 3.b will complement the implementation of innovative financing mechanisms that enable the transformation in the credit markets for investment projects and generate market economies that will appeal to other financial sector participants to join these initiatives, thus building a strong and sustainable financing environment.

Furthermore, the project expects to attract resources from other local or foreign financing sources that will boost the investments in the sector. The peculiarity of this project is its micro scale approach to vulnerable communities, since they could represent a high risk investment to conventional financial mechanisms.

f) Preparation for execution

The funds will support the creation of a training mechanism and technical assistance to communities and ejidos. These programs will be developed through consultancy and will be managed by a local partner with technical and financial capacity. who will work in coordination with Financiera Rural and CONAFOR.

First it is important to design operating guidelines and coordination among the agencies involved to ensure proper implementation of the Forest Investment Plan as a whole. The activities in this thematic area seek to be linked to the activities of other thematic areas of the FIP.

k) Possible national and international partners, including their financial backup for REDD+

Financiera Rural will seek the participation and collaboration with organizations, companies and institutions that promote a sustainable rural development. The potential partners for this project may be public, private or a combination of both. They may be national or international, but are required to have experience in community forestry, financial services supplies or economic and

business development, aimed for people with scarce resources in ejidos and rural & indigenous communities, primarily.


Technical assistance and capacity building for the benefit of communitarian companies to design proposals for funding and strengthening of business skills in line with REDD +

• Private companies

• Foundations

• Cooperatives and associations of producers


• National Forest Commission

• Development Bank

• Regional Funds including the ones promoted by CDI (National Commission for the Development of Indigenous People)

• Federal Government


• Inter-municipal Meetings

• International Bank of Reconstruction and Promotion

• Among others

d) Justification for FIP funding

Only 4.24% of the agricultural and/or forestry production units have access to credits and/or insurance. Of the credits given to the primary sector, less than 0.51% represents the credits given to the forestry sector on July 2011, as opposed to 44% given to the agriculture sector and 50% allocated to livestock. Only 2% of the private sector financing goes to the primary sector. Taking this into account, the agricultural sector’s portfolio of borrowers represents less than 0.0091% of the entire credits given to the private sector.

By expanding and diversifying the rural sector credit offer, it will be possible to promote a sustainable forest management that will diversify the owners’ source of income. This will consequently have a positive effect on climate change mitigation, since there will be a reduction of greenhouse gas emissions from deforestation and forest degradation, with an additional increase of forest carbon stocks. This would also provide at the same time equal work opportunities for both men and women.

Considering these benefits, aiming to assume part of the risk when financing the projects hereby mentioned, as well as the achievement of fortifying the Financiera Rural’s capacities and community enterprises in the credit use for the forest sector, grant resources must be allocated through FIP including a donation for capacity building.

In addition to the country’s timber production potential, Mexico’s forests and rainforests have many other socio-economic values. These include the vast biodiversity, the hydrological services and numerous non-timber forest products. Moreover, the project will have a positive impact on a social level, particularly in the indigenous peoples, since out for the 10% of the rainforests that survive in the Mexican territory, 84% are in indigenous territories1. Because the forests are property of the communities, the FIP will directly contribute to improve their living standards, to build social capital and to improve community resilience to economic disaster and/or natural climate-related, thus participating in the adaptation agenda.

g) Safeguards

The aim of following up the fulfillment of environmental and social safeguards will be for the projects to be consistent with national norms and the Policy for Environment and Safeguards Compliance (GN-2208-20 y OP 703) of BID. These safeguards will be identified from the initial design phase of projects.

h) Financing Plan

Project FIP Budget Donations Credits

Technical assistance and capacity building for the benefit of communitarian companies to design proposals for funding and strengthening of business skills in line with REDD +

3 million dollars (md)

1.5 md 1.5 md

The scope and impact of FIP resources will be significantly enhanced, since MIF will allocate similar amounts of resources to finance this project.

i) Timetable for the project preparation

Expected date for Board/MDB Management approval: I/2012

Expected date for midterm evaluation: I/2014

Expected date for the project/program closure: I/2016

2

FOREST INVESTMENT PROGRAM (FIP)

Summary of the Forest Investment Plan 1. Country/Region: Mexico / Latin America

2. Funding request of the FIP (in US$ million dollars):

Donation: US$ 32.16 million Loan: US$ 27.84 million

3. Focal FIP Coordinator Nationwide:

National Forest Commission (CONAFOR), Mexico

4. Naciotal Agenda for the Implementation (Coordination of the Investment Plan):

CONAFOR, Mexico

5. BMDs involved International Bank for Reconstruction and Development (IBRD) Interamerican Development Bank Interamericano de Desarrollo (IDB)

6. BMD FIP Focal Point and Team Leader (TTL):

Headquarters – FIP Focal Point: Gerhard Dieterle Banco Internacional de Reconstrucción y Fomento [email protected] Gloria Visconti Banco Interamericano de Desarrollo [email protected]

Team Leader (TTL): Laurent Debroux Banco Internacional de Reconstrucción y Fomento [email protected] Fernando de Olloqui Banco Interamericano de Desarrollo [email protected] Guillermo Aguilar Rios Banco Interamericano de Desarrollo [email protected]

3

7. Description of the Investment plan:

(a) Main challenges related to the implementation of REDD+

Mexico is one of the countries in the world with the greatest biological and cultural diversity. The biological diversity, also present in the country’s forests, represents a great development opportunity and it also creates significant challenges for its management. Forests are mostly owned by indigenous and rural communities, who have been endowed with great control over the management of their resources. In fact, Mexico’s community forest management is an important and successful worldwide model to promote the development of rural communities proven capable of stopping deforestation and degradation of forests while it generating economic alternatives. In spite this potential, tropical and temperate forests present several demographic and economic pressures as well as policy and institutional failures that are expressed in a very diverse ways over the territory and have promoted the loss of forests and forest carbon. The last decade has seen a significant increase in sector support which has help reduce the deforestation rate. Even so, there is a loss of about 155,000 has of forests and degradation proceeds at a much higher rate, of between 250,000 y 300,000 has per year. The resultant Greenhouse Gas emissions represent almost 10% of the total emissions in Mexico. The Vision of Mexico, published in December 2011, set an aspirational goal to halt deforestation by the year 2020. This goal raises the level of ambition previously set out in the Special Climate Change Program, which already contained a wide range of forestry mitigation initiatives. A national mitigation potential in the forest sector has been identified and estimated at 58 million tons of CO2e for the year 2020. However, in addition to increasing the budget to promote these actions and meet the target, it is necessary to resolve various barriers that limit the effectiveness and efficiency of the current forest policy instruments. These barriers are manifested in varying degrees in the country: (i) limited and targeted promotion of incentive programs, (ii) limited adaptation of programs and policies to local contexts, (iii) limited technical capacity at various levels, including technical, management and business aspects, (iv) lack of investment in the sector, including formal credit, (v) lack of markets for sustainable products and environmental services including carbon, (vi) weak organizational structure in many ejidos and communities, (vii) little integration of productive chains associated with the sustainable use and conservation of forests. It is proposed to direct funds from the FIP to promote models and strategies to remove these barriers in selected areas of the country. In particular, the innovative character and its emphasis in the generation of lessons learned for replication and scaling of actions, make the FIP particularly suitable for this approach. The basic characteristics of the model have as a focal element, the application of more focused and integrated investments to indigenous ejidos and communities to strengthen land management and sustainable forest management of their forests to stop and reverse the loss of forests and forest carbon. This will be done on priority forest landscapes, such as watershed hydrology and biological corridors. In order to accomplish this, the Plan proposes to,

i. promote and strengthen of the planning and technical (technical and development agents) mechanisms and instances, that will promote investments in an integrated manner within and outside the forest sector;

ii. design and target incentives inside and outside the forest sector and related value chains to halt and

4

reverse forest loss and forest carbon through the conservation and sustainable management of forests;

iii. adapt and integrate forest programs at territorial level, and creation of coordination mechanisms with other sectoral programs, in particular agricultural programs;

iv. promote and support recognition of environmental services through various local and market mechanisms;

v. create sustainable financial mechanisms and provide technical assistance and training community enterprises, including on Project design and management to assist them in using financial products that will be created. Financial products will allow for investments outside the forest sector but linked to reduction of pressures on forests;

vi. the monitoring, reporting and assessment capacities will be strengthened, both in terms of carbon and in other environmental and social dimensions.

Some land management and policy integration models are being tested in some parts of the country. It is expected that the FIP will help to test this models at scale, so as to have a transformational impact and to generate mitigation results. The FIP investments will seek to promote greater gender equity and policy instruments and assessments will be take into consideration the gender perspective

(b) Areas of Intervention – sectors and themes It is proposed that the FIP concentrates its activity at sub-national scale, in areas identified by the Government of Mexico that offer high potential as platforms for construction and implementation of REDD+ actions that can be scaled and replicated elsewhere in the country. These early action areas contain a mix of conditions that will provide important lessons in the design, implementation and assessment of the projects included in the Investment Plan. The projects of the present Investment Plan focus on three thematic areas:

1) Information management, replication and monitoring

2) Integration of policies, creation of financial investment mechanisms in communities

3) Innovative financial schemes for funding investment projects that reduce pressure on forests The projects will be implemented in three phases, starting with enabling investments during the first year (institutional strengthening, training, definition of baselines), followed with direct investments in some areas of initial investment starting from the second year, and finally, expansión of FIP investments in areas of replication from the third year onward. There may be some direct investments to communities from the first year, but they will be phased in as the institutional arrangements are in place and financial mechanisms are designed. Year 1 will also serve to produce the baselines for impact assessment of the FIP, not only in terms of carbon, but also in terms of other social and environmental aspects.

(c) Expected Results derived from the Implementation of the Investment Plan Avoided emissions and improvement of carbon stocks with important environmental co-benefits. One of the most important expected results is to contribute to reducing emissions from deforestation and forest degradation. It will also contribute to reduce the country’s vulnerability to climate change. The strategic location of investments with high biological and hydrological value will contribute to these

5

results. Social co-benefits. Benefits will also be generated in the livelihoods of forest communities through innovative, replicable approaches to promote sustainable forest management, including investments in ejidos and communities, the strengthening of capacities at diverse scales and the alignment of policies, adapted to local contitions. Feedback and replication. It is also expected to improve the capacity for information management in order to analyze de social, economic and environmental impacts of the projects included in the Investment Plan, to share the knowledge and to replicate actions to reduce deforestation and forest degradation and that generate benefits in the communities and ejidos, promoting the desired transformational change. This will contrubute towards attaining the mitigation potential already identified in the country and to advance towards the goal expressed in the Vision of México on REDD+. Enhance the funding mobilization. It is expected to mobilize the rural forest financing with innovative instruments, addressing its structural barriers, expanding and diversifying the formal credit supply to the rural sector which will support sustainable forest management, contributing to the income source of its owners, providing added value to natural forests and reducing pressure on forests. 8. Expected Results derived from the Implementation of the Investment Plan (consistent with the FIP results framework): Result Success indicator (a) Reduced pressure on forest ecosystems • Change in deforested hectares within the

project/program area • Change in degraded hectares within the

project/program • tCO2 sequestered by the project • Investments in the non-forest sector identified to

offset the agents of deforestation and degradation of forests

(b) Strengthening the capacity to counteract direct and indirect agents of deforestation and forest degradation

• Income of communities for activities of sustainable rural development

• Diversification of sources of business of communities

• Number of sustainable rural development projects that receive funding

(c) New and additional resources in appropriate terms and conditions for forestry or forest related projects.

• Funding leverage factor of the FIP • Funding from other sources (including Financiera

Rural)

6

(d) Increase in the capacity to address the direct and underlying drivers of deforestation and degradation (In accordance with those identified in the Vision of Mexico on REDD+)

• Number of Agents with Local Technical Capacity according to the needs of the area of initial REDD+ investment

• Number of Local Development Agencies or Rural Development Agencies with capacity according to the needs of the area of initial REDD+ investment

• Number of local governance structures created and currently running within some of the defined early action áreas for REDD+ (including capacity for enforcement and surveillance, development of reference and monitoring levels, planning and zoning, as well as operation of regional programs of forest management and sustainable agricultural production.

• Number of special programs of CONAFOR specific for each region with guidelines and funding

(e) Integration of lessons learned by development active actors in REDD+

• Number of knowledge assets generated and shared by type (publications, studies, knowledge sharing platforms, learning briefs, community practices manuals, among others)

9. Concepts of the Projects and Programs within the Investment Plan: Name of the Concept of the Project/Program

BMD Amount Requested from FIP ($)1 Expected Co-Financing ($)

Donation of Preparation requested ($)

TOTAL Donation Loan

Project 1: Generation, management and dissemination of information for the replication of early actions to reduce deforestation processing for the replication of early actions that reduce deforestation and forest degradation y that generate environmental, social and economic benefits in the communities.

IBRD US$ 6 million

US$ 6 million

- US$ 20.27 million

-

Project 2: Integration of interinstitucional policies and the creation of finance mechanisms in communities.

IBRD US$ 36 million

US$ 19.66 million

US$ 16.34 million

US$ 175.1 – 325.1 million (*)

-

1 Includes amount of de preparation donation

7

Project 3.a: Program to channel funding to strengthen the management of forests and forest landscapes as well as the promotion of investment and economic integration Projects, with emphasis in communities and ejidos.

IDB US$ 15 million

US$ 5 million

US$ 10 million

US$ 20 million

-

Project 3.b: Technical assistance and creation of capacities in benefit of community enterprises for the design of proposals of financing and strengthening of business skill in line with REDD+ activities.

IDB US$ 3 million

US$ 1.5 million

US$ 1.5 million

US$ 3 million

-

TOTAL US$ 60 million

US$ 32.16 million

US$ 27.84 million

US$ 218.34 – 368.37 million

(*) Indicative figure to be negotiated between the Government of Mexico and the World Bank. See section 15. 10. Schedule (tentative) – Approval2 Milestones Project 1: Approval by the IBRD Board: January 2012 Project 2: Approval by the IBRD Board: January 2012 Project 3.a: Approval by the Administration / IBRD Board: First trimester of 2012 Project 3.b: Approval by the Administration / IBRD Board: First trimester of 2012

2 Fecha esperada de la firma de acuerdo de donativo/préstamo entre el gobierno y los BMDs.

8

11. Linking activities with the UNREDD Program and the Forest Carbon Partnership Facility:

Given the prominent role of the forest sector in mitigation strategies, Mexico has taken concrete steps toward the definition of its national strategy for REDD+. One milestone towards this was the publication of the Vision of Mexico on REDD+, presented during the COP 16 of the UNFCCC. The Vision of Mexico on REDD+ is the result of a collective effort between government and civil society that is expressed in the creation of the Technical Advisory Committee for REDD+ as an open platform for participation and dialog between actors such as representatives of various government entities, civil society organizations, representatives from ejidos, communities and associations of indigenous peoples, academics, representatives of the private sector, etc. In these sense Mexico seeks to progress rapidly in the transition from phase 1 of REDD+ (the preparation phase) to phase 2 (development and adjustment of policies and measures). The Investment Plan of the Forest Investment Program represents a key part of the national agenda, since it will allow Mexico to make innovative investments in order to explore new approaches difficult to implement through conventional channels and transition into phase 2 of REDD+. The preparation of the proposal for REDD+ of Mexico (R-PP) presented to the Forest Carbon Partnership Facility (FCPF), was design in stages with the purpose of beginning the preparation process of Mexico to access funding mechanisms related to the reduction of emissions from deforestation and forest degradation (REDD+); including the design of a National Strategy for REDD+, the definition of a reference level of emission, the identification of the most favorable actions to develop with the purpose of achieving the set goals, the development of a monitoring system required to assess the achievement of these goals, and the establishment of a national system for carbon accounting that allows both national and sub-national activities. The REDD+ agenda of the country is very active and it is becoming more and more important, this is why all the initiatives are aligned according to a strategic vision of medium term that will allow the implementation of the REDD+ National of Mexico.

9

12. Other partners associated with the design and implementation of the Investment Plan: Facilitating access to the financial services is one of the objectives declared by the CONAFOR through the Mexican Forest Fund. However, it does not have the capacity to offer specific financial products, therefore to achieve the overall objectives of the Investment Plan, it has a key partner, Financiera Rural, which is a development public-finance institution addressed to the rural sector (localities of up to 50 thousand inhabitants) with the purpose of promoting rural development in Mexico through the granting of credit and by facilitating financial services. Among the intersectoral partners, SAGARPA plays a prominent role in the forest territories because it has several programs and components specifically focused to rural development. In the present administration and in the framework of the Special Program of Climate Change, SAGARPA has instrumented some measures that seek to reduce the pressure on forests and its greater involvement will be crucial in the alignment of public policies in the early action areas. The possible partners also include institutions with the mandate to monitor the impact of public policies who will accompany the process. Likewise, they will join the efforts made by the CONAFOR and other public or private organizations that can collaborate in the creation, management and dissemination of information of the impact in the areas of initial investment REDD+. Another relevant partner are the Civil Society Organizations (CSOs), which have an important role in the support of the communities and are also important in the dissemination of information and in structuring capacities for the community management of forest. Also, the collaboration and coordination with bilateral and multilateral development agencies will be crucial to ensure the coordination among donors, the leveraging of resources, and the dissemination of results at international level.

10

13. Consultations with local communities and indigenous population: The preparation of the Investment Plan of Mexico is the result of a participatory process in which actors from different sectors were involved, such as: representatives of indigenous population, social civil society, producer organizations, representatives of ejidos, communities and associations, federal, state and municipal government agencies, and the academic, professional and private sectors. At the national level, the main platform of participation involved in the design of the Investment Plan was the Technical Advisory Committee for REDD+ (CTC-REDD+). Some representatives from civil society also participated within the framework of the missions for the Forest Investment Program with the Multilateral Development Banks. In addition, three workshops were organized in the state of Jalisco and three workshops in the Yucatan Peninsula to obtain feedback on the activities of the Investment Plan in ejidos y communities. The participatory process will continue in the detailed formulation of each one of the three thematic areas of the Investment Plan. The CTC REDD+ will remain the main platform for involvement of all the relevant actors, and the project drafts will be sent to their members to receive comments and feedback. Likewise, the REDD+ Work Group of the CICC, consisting of ten secretaries of the federal government, will be the forum to promote the FIP at intersecretarial level and to seek coordination and synergies in the different areas that have an impact on the rural environment with a view to integrate policies that contribute to reducing deforestation and degradation in the areas of initial investment REDD+.

14. Private Sector Participation: Rural communities and indigenous peoples increasingly play a role of greater importance by demanding to be stewards of their resources and their own development. This can be achieved through successful implementation of productive projects. Correspondingly, the provision of efficient financial services is essential for long-term sustainable development in communities; however, a suitable environment for the participation of the private financial sector must be secured first. The three projects of the thematic area will seek to gradually create the conditions suitable for Financiera Rural to take the first steps to detonate the credit for investment projects that reduce the pressure on forests and promote sustainable forest management, by creating experiences that allow in the future, greater private sector investments promoting a financially sustainable business environment.

15. Other relevant information: The IBRD has been involved in climate change in Mexico with different instruments and is currently committed to the development of broader schemes for Mexico through the effective coordination and integration of various financial and nonfinancial instruments. The Investment Plan aims to complement this scheme, as well as the Development Policy Loan, by facilitating some outreach activities. The Specific Investment Loan will strengthen and consolidate existing programs, while the Investment Plan will serve as a way to innovate various policy approaches that will inform the future development of forest policy. The Investment Plan will be addes to the package of financial instruments under negotiation with the IBRD, which is expected to be approved in November of 2011.

12

TABLE OF CONTENTS

PRESENTATION 13

ACRONYMS 16

UNITS 17

1. DESCRIPTION OF THE COUNTRY AND CONTEXT OF THE SECTOR 18

2. IDENTIFICATION OF OPPORTUNITIES TO MITIGATE GREEN HOUSE GASES 27

3. POLICY AND INSTITUTIONAL FRAMEWORK 32

4. EXPECTED CO-BENEFITS FROM THE INVESTMENT OF FIP 35

5. COLLABORATION BETWEEN MULTILATERAL DEVELOPMENT BANKS (MDBs) AND OTHER PARTNERS 36

6. IDENTIFICATION AND RATIONALE FOR PROJECTS AND PROGRAMS CO-FINANCED BY THE FIP 40

7. POTENTIAL IMPLEMENTATION WITH RISK ASSESSMENT 52

8. FINANCING PLAN AND INSTRUMENTS 54

9. RESULTS FRAMEWORK FOR INVESTMENT PLAN 54

Investment Plan/Forest Investment Program

13

PRESENTATION The Strategic Climate Fund (SCF) was established to provide financing to pilot new development approaches or to scale-up activities aimed at a specific climate change challenge or sectoral response through targeted programs. A Forest Investment Program (FIP) has been established as a targeted program under the SCF to catalyze policies and measures and mobilize significantly increased funds to facilitate the reduction of deforestation and of forest degradation and promote improved sustainable management of forests, leading to emissions reductions and the protection of forest carbon stocks. The program does not supply the necessary incentives to considerably reduce the greenhouse gas emissions derived from forests. However, it will allow pilot countries to multiply those incentives by means of the eventual mechanism, REDD+ in the framework of the United Nations Framework Convention on Climate Change (UNFCCC). The main purpose of the FIP is to support developing countries’ REDD-efforts, providing up-front bridge financing for readiness reforms and public and private investments identified through national REDD readiness strategy building efforts, while taking into account opportunities to help them adapt to the impacts of climate change on forests and to contribute to multiple benefits such as biodiversity conservation, protection of the rights of indigenous peoples and local communities, poverty reduction and rural livelihoods enhancements. The FIP will finance efforts to address the underlying causes of deforestation and forest degradation and to overcome barriers that have hindered past efforts to do so. The FIP is designed to achieve four specific objectives: a) to initiate and facilitate steps towards transformational change in developing countries forest related policies and practices, through:

i. serving as a vehicle to finance investments and related capacity building necessary for the implementation of policies and measures that emerge from inclusive multi-stakeholder REDD4 planning processes at the national level;

ii. strengthening cross-sectoral ownership to scale up implementation of REDD strategies at the national and local levels;

iii. addressing key direct and underlying drivers of deforestation and forest degradation; iv. supporting change of a nature and scope necessary to help significantly shift national forest

and land use development paths; v. linking the sustainable management of forests and low carbon development;

vi. facilitating scaled-up private investment in alternative livelihoods for forest �dependent communities that over time generate their own value;

vii. reinforcing ongoing efforts towards conservation and sustainable use of forests; �and viii. improving forest law enforcement and governance, including forest laws and �policy, land

tenure administration, monitoring and verification capability, and transparency and accountability.


14

b) to pilot replicable models to generate understanding and learning of the links between the implementation of forest-related investments, policies and measures and long-term emission reductions and conservation, sustainable management of forests and the enhancement of forest carbon stocks in developing countries. By committing to apply a priori and ex post impact assessment of programs and projects, the FIP will ensure that the outcomes and effectiveness of FIP-supported interventions in reducing deforestation and forest degradation can be measured; c) to facilitate the leveraging of additional financial resources for REDD leading to an effective and sustained reduction of deforestation and forest degradation, thereby enhancing the sustainable management of forests; and d) to provide valuable experience and feedback in the context of the UNFCCC deliberations on REDD. In order to try to achieve the enunciated objectives, the Forest Investment Program will support and promote, among other things, investments in the following areas:

a) Institutional capacity, forest management and related information. For example, implementation of follow-up systems, management of information and forest inventories; backing for the legal, financial and institutional development, including the application of forest legislation, property plans and land possession reform; elimination of pernicious incentives that favor deforestation and degradation; intersectoral and landscape planning activities; transference of ecologically sound technology, and strengthening of indigenous peoples and local communities’ capacity;

b) Mitigation measures related to forests, including forest ecosystem services such as: forest conservation; promotion of payments for environmental services and other mechanisms of fair distribution of benefits; recovery and sustainable management of forests and degraded landscapes; forestation and reforestation of previously deforested areas; restructuring of forest industries and promotion of relations of collaboration between companies and communities; forest protection measures; improvement of land management practices, and promotion of forests and certification of the chain of custody;

c) Areas foreign to the forest sector necessary to reduce the pressure on forests, such as: alternative livelihoods and opportunities for poverty reduction; alternative energy programs; agricultural investment within the context of rational planning of land use; and agricultural intensification including agroforestry.

The FIP subcommittee created a Group of Experts to formulate recommendations for the selection of national or regional pilot programs that met the criteria and other considerations agreed by the Subcommittee. Mexico was selected within the group of 8 pilot countries that were invited to participate in the Program. Mexico responded favorably to this invitation, formalizing the beginning of the preparation process of the Forest Investment Plan with the exploratory mission that took place in March of 2011. This document is the Forest Investment Plan proposed by the Mexican Government, to finance with Forest Investment Program funds, and that takes into consideration the comments and recommendations of the public who could consult the first draft of the Plan through the National Forest Commission (CONAFOR) web page. This version was also submitted for consideration of two external reviewers, whose revision is included in the annexes of this document.


15

Being consistent with the design of the FIP program, the Investment Plan will be subjected to the Subcommittee for consideration to seek its endorsement. Once obtained, the specific programs and projects will be prepared. These projects and programs will be subjected again to the subcommittee for a final decision on financing. Once approved, the projects must be processed according to the specific procedures of each Multilateral Development Bank (MDB), including their final approval. Thus, the Forest Investment Plan represents an important intermediate stage, although not a definitive one for the implementation of the FIP in Mexico.


16

ACRONYMS CDI CFE CICC CIDRS CIF COINBIO CONABIO CONAFOR CONANP CSO CTC-REDD DPL FCPF FIP FSC GDP GHG IBRD LGDFS LULUCF MDB MRV NOR NTFP PEC PECC PES PROCYMAF PROFEPA REDD REDD+ R-PP SAGARPA

National Commission for the Development of Indigenous Peoples Community Forest Enterprise Comisión Intersecretarial de Cambio Climático, Interministerial commission on Climate Change Comisión Intersecretarial de Desarrollo Rural Sustentable, Interministerial Commission on Sustainable Rural Development Climate Investment Funds Project for the Conservation of Biodiversity for communities and indigenous peoples from the states of Oaxaca, Michoacán y Guerrero Comisión Nacional para el Conocimiento y Uso de la Biodiversidad. National Commission for the Knowledge and Use of Biodiversity. National Forest Commission Comisión Nacional de Áreas Naturales Protegidas. Civil Society Organization Technical Advisory Committee on REDD+ Development Policy Loan, budgetary support loan, with no additionality for sectoral budgets Forest Carbon Partnership Facility Forest Investment Program Forest Stewardship Council Gross Domestic Product Greenhouse Gases International Bank for Reconstruction and Development Ley General de Desarrollo Forestal Sustentable Land Use, Land Use Change and Forestry Multilateral Development Banks Monitoring Reporting and Verification, typically of emissions under REDD+ Cooperation initiative on MRV with Norway and channeled through FAO/UNDP Non-timber Forest Products Programa Especial Concurrente. Special Concurrent Program Special Program on Climate Change Payment for Environmental Services Program for the development of community forestry Procuraduría Federal de Protección al Ambiente. Federal Attorney for Environmental Protection Reducing Emissions for Deforestation and Forest Degradation Reducing Emissions for Deforestation and Forest Degradation, as well as the sustainable forest management role, conservation and improvement of carbon stocks. REDD Readiness Preparation Plan, under the FCPF Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y


17

SEDESOL SFM SIL UMAS UNFCCC

Alimentación. Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food Ministry of Social Development Sustainable Forest Management Specific Investment Loan – financial instrument of the IBRD Unidades de Manejo de la Vida Silvestre, Wildlife Management Units United Nations Framework Convention on Climate Change

UNITS CO2 Carbon Dioxide CO2e Equivalent Carbon Dioxide Gg Giga grams, equivalent to thousands of tons Mt Mega tons


18

1. DESCRIPTION OF THE COUNTRY AND CONTEXT OF THE SECTOR 1. Mexico is an important economy with significant social development challenges.

With a population of 112 million inhabitants, Mexico is the second most populated country of Latin America, with one of every five Mexicans living in rural areas. Mexico has the 13th highest GDP worldwide. The productive sectors and most important sources of income include: manufacturers, industry, petroleum, tourism, agriculture, and international remittances. Although its indicators have consistently improved in the last decade, poverty still prevails, particularly in rural areas. It is estimated that 10 million people live in the forest areas of Mexico, with more than half of them living in poverty conditions.

2. It is one of the countries with higher biological and cultural diversity, this represents both important opportunities for development, and a major complexity for the management of its resources, as well as a great global responsibility. Mexico is within the five countries with the highest diversity of vertebrates and vascular plants. A great share of this biological diversity is unique to Mexico. This great ecological variability also has important implications for the use and management of biodiversity, including forest ecosystems. The biological diversity of Mexico is accompanied by a great cultural diversity and very close and important relations exist between both. An expression of this important cultural wealth is that Mexico is one of 10 countries with the highest linguistic diversity in the world. The cultures that exist and have existed in our territory have developed a close relation with the biological diversity of their environment, both in their cosmovision and in the way in which they have used the available natural resources. Today a large and dynamic knowledge base survives and develops in rural communities of the country.

3. Approximately 70% of the country is covered by forest ecosystems. Of the total area of the national territory (196.4 million hectares including islands), a little more than 138 million hectares are covered by forest vegetation, and the remaining 29.74% corresponds to agricultural, livestock, and urban areas, among others. From the forest vegetation, 41% corresponds to arid lands, 24% to temperate forests and 23% to tropical forests. The rest corresponds to other biomes (see Table 1).


19

Table 1. Forest area in Mexico 2007

Ecosystem Type of vegetation

Forest area 2007 (ha) Total %

Primary vegetation

Secondary vegetation

Forests

Pine forest 5,497,355.17 2,286,129.17 7,783,484.34 5.64

Pine-oak forest 8,840,641.69 4,034,283.29 12,874,924.98 9.33 Oak forest 7,799,967.07 5,021,429.27 12,821,396.34 9.29

Tropical forests

Ever-semi evergreen tropical rain forests 3,557,920.89 10,504,285.69 14,062,206.57 10.19 Deciduous seasonal forest 7,254,473.14 8,615,268.66 15,869,741.80 11.5 Other assemblages 1,368,646.19 65,981.41 1,434,627.60 1.04

Subtotal tree cover 34,319,004.14 30,527,377.48 64,846,381.63 46.99

Arid lands Semiarid areas 18,181,222.37 2,475,086.78 20,656,309.15 14.97 Arid areas 33,555,528.31 2,717,418.86 36,272,947.17 26.28

Other forest areas 12,118,719.86 4,113,873.25 16,232,593.12 11.76

Total forestry 98,174,474.69 39,833,756.37 138,008,231.06 100 Source: Elaborated from INEGI’s land cover and land use map IVth Series of INEGI, 2007.

CHANGE PROCESSESS IN FOREST ECOSYSTEMS

4. Forest ecosystems have been subject of profound modification as a result of human activity, although deforestation rates have been declining. Deforestation rates between the years 1976 and 2000 had been relatively low, with an estimate of 0.76% for tropical forests and 0.25% for forests3. These rates have declined in the last decade with an average rate of 0.24% for all forests between the years 2005-2010. This represents about 155,000 hectares per year4. However, this drop in rates conceals the great spatial heterogeneity of the phenomenon, with regions of the country experiencing significantly higher rates. In addition to deforestation, degradation also remains an important process, with an estimated 250,000 y 300,000 hectares per year being degraded between 2005 y 20105. In addition to the important cost of loss of economic opportunities, loss in ecosystem functioning and GHG emissions, the loss, degradation and fragmentation of the ecosystems that shelter biodiversity, are the main cause of a marked increase of extinction rates, which is especially critical in the case of endemic species. To the present day, it is known with certainty that 127

3 Mas, JF et. al. (2009) La evaluación de los cambios de cobertura/uso de suelo en la República Mexicana, Investigación Ambiental, 1(1):23-39 4

FAO (2010). Informe del país 2010 sobre la evaluación global de recursos forestales: México (disponible en http://www.fao.org/forestación/fra/67090/en/) 5 FAO(2010) Ibid.


20

species have been lost in the country from which 74 (58.2%) were endemic. This means that these species have become extinct from the planet67.

5. The causes of deforestation and forest degradation are very diverse. Within the underlying factors of these important transformations are8 (i) demographic factors, in particular the growth rate and the population density where, in the period of 1950 to 2010, the population rose from 25.7 million inhabitants to more than 112 million, being an important pressure for the expansion of agriculture and pasture, (ii) economic factors, with a context of poverty and social needs in rural populations and limited means to provide them, limited incentives to maintain environmental services, low competitiveness of the forest activity, limited access to financing, low investment in technology, and poor quality of technical services9; (iii) governance and social policy factors where, despite the efforts, there is still limited planning and land management capacities inside and outside communities, including deficiencies in the law enforcement, (iv) rural development policy, with limited coordination of agricultural, forest and social development policies, and no alignment of incentives that recognize the value of the environmental services and that promote sustainable production patterns. This is in addition of high regulatory costs for forest management activities.

6. The proximate causes of land use change have been differentiated by ecosystem. Illegal logging, forest fires, the grazing on forests, forest diseases and pests, timber harvest for fuel, demographic pressure and crop rotation, are the main direct causes of deforestation and degradation of forests. However, the spatial expression of these factors varies widely across the country.

7. This has resulted in important emissions of greenhouse gasses (GHG). In the period between 1990-2006 the Land Use, Land Use Change and Forestry (LULUCF) contributed with a total of 69,674 and 86,188 Gg CO2 emissions, with an average of 80,162 Gg CO2

10 per year. The estimated emissions in 2006 represented the 9.9% of the total emissions in Mexico. While the change in land use was the main factor beind GHG emissions, degradation of forests was also an important contributor.

6 Sarukhán, J., et al. 2009. Capital natural de México. Síntesis: conocimiento actual, evaluación y perspectivas de sustentabilidad. Comisión Nacional para el Conocimiento y Uso de la Biodiversidad, México. 7 Sarukhán, J., et al. 2009. Capital natural de México. Síntesis: conocimiento actual, evaluación y perspectivas de sustentabilidad. Comisión Nacional para el Conocimiento y Uso de la Biodiversidad, México. 8 Adaptado de Challenger, A., R. Dirzo et al. 2009. Factores de cambio y estado de la biodiversidad, en Capital natural de México, vol. II: Estado de conservación y tendencias de cambio. Conabio, México, pp. 37-73 y de Conafor (2001) Plan Estratégico Forestal 2025, Mèxico. 9 Centro de Estudios de Competitividad (2010) El sector forestal en México: diagnóstico, prospectiva y estrategia, ITAM, México. 10 Cuarta Comunicación Nacional al UNFCCC, www.ine.gob.mx


21

Table 2. Underlying and proximate factors for forest degradation and deforestation. Factors Description Proximate cause Demographic The growth rate and the population density, where,

in the period of 1950 to 2010, the population rose from 25.7 million inhabitants to more than 112 million, being an important pressure for the expansion of agriculture and livestock;

(i) land conversion to grazing and agricultural uses (ii) illegal logging (iii) fires and pests (iv) development of agricultural and livestock activities in forest areas (v) limited management of forest areas, that is to say, limited exploitation of economic opportunities that forests offer. (vi) overexploitation of wood extraction.

Economic - important deficiencies in rural populations - limited economic opportunities based on forests - few incentives to maintain environmental services of forests - low competitiveness of the forest activity - almost no access to financing, - low investment in technology - insufficient advice and low quality of technical services11 - insufficient productive infrastructure - lack of promotion of NTFPs

Governance and social policy

- despite the efforts of past times, there is still a limited planning and limited capacity for the management of the territory, inside and outside communities, - deficiencies in surveillance systems and in the administration of justice, - weak community organization, - deficient administration and capacities in ejidos and communities

Policy failures - limited coordination of agricultural, forest and social policies, - no alignment of incentives that recognize the value of the environmental services and that promote sustainable production patterns, - high regulatory costs

SOCIAL AND ECONOMIC IMPORTANCE OF THE FOREST SECTOR AND OF THE SECTORS THAT AFFECT FORESTS 8. There is unrealised timber production potential. It is estimated that the third of the

temperate and tropical forests (approximately 22 million ha.) in México have the potential to produce wood commercially12. However, the total area under technical management in 2007 was of only 6.1 million hectares13, with this figure expected to increase by more than 3 million hectares by 201214. Because most forests are communal or private property, the implementation of sustainable forest management requires extensive and continuous engagement with landowners. There is evidence

11 Centro de Estudios de Competitividad (2010) El sector forestal en México: diagnóstico, prospectiva y estrategia, ITAM, México. 12 Conafor (2007) Programa Institucional 2007-2012, México. Pag 17. 13 Semarnat, 2007. Programa Nacional de Medio Ambiente y Recursos Naturales 2007-2012. Secretaría de Medio Ambiente y Recursos Naturales. México. 14 Anexo estadístico del Quinto Informe de Gobierno, Presidencia de la República, página 378.


22

that the remaining forests, inspite of not having management plans, are under different levels of protection through internal rules from the ejido or community15.

9. Wood production has contracted, while demand has risen. The low competitiveness of the sector with all its factors (low investment, technical capacity, high costs, particularly transport costs, etc), have reduced the growth capacity of the sector despite a growing demand. From 9 million cubic meters produced in 1980, less than 6 million were produced in 2009. Instead, the apparent domestic consumption increased from 7 to more than 21 million cubic meters of roundwood in the same period16. In addition to legal production, there is evidence of illegal industrial logging.

10. Firewood consumption remains important. Firewood and charcoal satisfy 11% of the total national energetic demand, and an 80% of the rural sector demand. The volume of plant biomass that is used as fuel is 3 to 4 times superior to the volume of extraction of commercial wood and represents about 19 millions tons (on a wet basis)

17. 11. Despite the drop in production in the last two decades, community forest

management remains an important model for the development of rural communities and to stop deforestation. After a period of industrial forest concessions, in the year 1970, a greater authority was given to the communities manage their forests. Subsequent legislation has continued to strengthen the rights of communities and community-based enterprises on their resources. Being a promising source of economic benefits and an alternative to land use change, evidence has been accumulated about the power that community forest management possesses as an engine of sustainable development. Several studies have found that areas under community management are associated with a better conservation of forests. For example, one study found a lower rate of deforestation and an increase in the recovery rates of cloud forests. While others, found that both in the tropic and in temperate areas, community forest management is equivalent to Natural Protected Areas (NPAs) in terms of conservation results18. This constitutes an efficient strategy to reduce deforestation and degradation of forests, with the additional advantage on NPAs from their sustainable economic potential, and the mechanisms of distribution of benefits19. Mexico ranks first in community management of forests certified as sustainable, with about 31 forest communities that have certified 717,424 hectares under the Forest Stewarship Council (FSC), which generate 15% of the national production and cover 10% of the forest area under technical management.

12. Community forest management and community-based forest enterprises still face important challenges. The achievements of the direct management of communities still require of greater support to extend to other regions of the country and they also require economic consolidation. Of the 3,014 ejidos and communities

15 Bray, D. (2010) Toward ‘post-REDD+ landscapes’Mexico’s community forest enterprises provide a proven pathway to reduce emissions from deforestation and forest degradation, InfoBRIEF November 2010, CIFOR, www.cifor.cgiar.org 16 Anexo estadístico del Quinto Informe de Gobierno, Presidencia de la República, página 372. 17 Sarukhán, J., et al. 2009. Capital natural de México. Síntesis: conocimiento actual, evaluación y perspectivas de sustentabilidad. Comisión Nacional para el Conocimiento y Uso de la Biodiversidad, México, página 64. 18 Durán, E., Mas, J-F. and Velázquez, A. 2005 Land use/cover change in community-based forest management regions and protected areas in Mexico. In: Bray, D.B., Merino-Pérez, L. and Barry, D. (eds) The community forests of Mexico: managing for sustainable landscapes, 215–238. University of Texas Press, Austin, Texas, USA; y Ellis, E.A. and Porter-Bolland, L. 2008 Is community-based forest management more effective than protected areas? A comparison of land use/land cover change in two neighboring study areas of the Central Yucatan Peninsula, Mexico. Forest Ecology and Management 256: 1971–1983. 19 Durán Medina, E. et. al. (2007) Capítulo 10: Cambios en las coberturas de vegetación y usos de suelo en regiones con manejo forestal comunitario y áreas naturales protegidas de México, en Bray, D. et al. Los bosques comunitarios de México: Manejo sustentable de paisajes forestales.


23

with forests with commercial timber potential, little more than the third are exploited regularly and 20% have the capacity of at least, produce sawnwood (see Table below). Despite the progress in forest certification, there is still a lack of consolidated markets for their products. Evidently, an essential input to ensure the benefits of community forest management is to have a good level of social organization. For more than a decade, programs to strengthen the social capital of forest communities have been established, such as PROCYMAF and more recently, the supports to strengthen productive chains. Limited access to investment is also problem identified by more than a third of the ejidos in the country20.

13. Non-timber forest products play an important economic role. An additional route of income generation for the forest communities, are non-timber forest products (NTFPs). More than 1,000 species are used in Mexico, from which 70 are subjected to some form of control21. Besides the important self-consumption value, some species such as natural gum from the tree Manilkara zapota, have become in recent years, an importance niche of export products. These uses also ensure important livelihoods for rural communities, and represent a specific and strategic offer of unique and competitive market niches, making them key to ensure biodiversity conservation and forest ecosystems in the long run22.

Table 3. Typology of forest producers in Mexico

Type of Producers Ejidos and

communities Average forest

area Type IV. With capacity of transformation or commerce

163 3,503 ha.

Type III. Producers of forest raw materials

436 1553 ha.

Type II. Sell standing timber 640 922 ha. Type I. With potential but without extraction activity

2,300 with permits

Source: Based on data from Bray, D. (2010) Toward ‘post-REDD+ landscapes’Mexico’s community forest enterprises provide a proven pathway to reduce emissions from deforestation and forest degradation, InfoBRIEF November 2010, CIFOR, www.cifor.cgiar.org (2010).

14. Environmental services from forests represent an economic potential of growing

importance. From pollination services, hydrological and climate regulation and erosion control, forests provide important services that are worth recognizing. For nearly 10 years, the Mexican Government has promoted the conservation of watersheds by means of the conservation of forests through a system of Payment for Environmental Services (PES). The program is aimed at critical areas that are eligible to payments for hydrological services. More recently, local mechanisms of payment

20 INEGI. Estados Unidos Mexicanos (2009) Censo Agropecuario 2007, VIII Censo Agrícola, Ganadero y Forestal. Aguascalientes, Ags. 21 Torres Rojo, J. 2004. Informe Nacional México. Estudio de tendencias y perspectivas del sector forestal en América Latina al año 2020. SEMARNAT, Mexico City, Mexico/ FAO, Rome, Italy. 22 Sarukhán, J., et al. 2009. Capital natural de México. Síntesis: conocimiento actual, evaluación y perspectivas de sustentabilidad. Comisión Nacional para el Conocimiento y Uso de la Biodiversidad, México.


24

of environmental services have begun to emerge, adding greater value and stability to federal PES program.

15. Sustainable food production before the future demand is a major challenge that may place more pressure to forest ecosystems. It is estimated that Mexico can be one of the countries with greater vulnerability before the climate volatility in terms of the impacts on poverty. This as a consequence of the impacts in agricultural productivity and prices23. In particular, the vulnerability of rainfed agriculture can increase24, with its consequent impact on rural populations. Agricultural and livestock activities can be performed so that they minimize the associated impacts with forest ecosystems, but a major coordination and integration of policies is required in order or this to result in sustainable management of landscapes. MEXICO’S VISION OF REDD+ AND READINESS ACTIVITIES

16. Mexico has developed a REDD+ Vision. Since 2008, Mexico has been conducting activities of specific preparation specific to REDD+. In late 2010, the Interministerial Commission on Climate Change (CICC) published the Vision of Mexico on REDD+: Towards a national strategy25. The document was prepared through a process of participation that involved the academic community, the civil society and several government agencies from different orders of government, which complemented the traditional channels of feedback. This process is currently extending in order to develop the National Strategy that will be submitted for consultation in 2012.

17. The Vision establishes that to impulse to rural sustainable development, including an active management of the forests, is the best way to effectively address drivers of deforestation and forest degradation. It also recognizes that the drivers of these change processes are frequently outside the forest sector, so adjustment and harmonization of activities and polices is required, that are developed in several areas including non-forest sectors, and also the coordination with several levels of the government is required. In this respect, Mexico will promote REDD+ with a view towards a deeper decentralization and the strengthening of regional and local forest governance structures. In the REDD+ context, this means that Mexico will seek to promote a nested approach where the national REDD+ framework will coordinate actions in more bounded territories.

18. The Vision also establishes a global goal of achieving zero net deforestation by the year 2020, as well as an important reduction in forest degradation. These ambitious targets are added to the existing national goals. Mexico will also seek to generate multiple co-benefits of the REDD+ actions, including the conservation of biodiversity and poverty alleviation. Likewise, it has committed to maintain and strengthen the support to community management of resources, the existing structure on property rights.

19. Mexico strategically combines, various readiness funds and support for REDD+. Using the Vision as the basis of the policy, Mexico is progressing in the readiness phase for REDD+ through the Forest Carbon Partnership Facility (FCPF). Its

23 Ahmed, S. et al (2009) Climate variability deepens poverty vulnerability in developing countries, Environmental Research Letters 4:1-8. doi:10.1088/1748-9326/4/3/034004 24 Conde, C. et al (2004)Impactos del cambio climático en la agricultura de México, en Martínez, J. et al. coord. Cambio climático: una visión desde México, Semarnat/INE, México. 25 Available at http://www.conafor.gob.mx/portal/index.php/cambio-climatico-y-bosques/1-proceso-de-redd-en-mexico/a-fcpf


25

Readiness Preparation Proposal for REDD+ (R-PP)26 has been approved by the FCPF’s Participants Committe. The R-PP will primarily help Mexico to deepen in the diagnostic and analysis of policies at a finer scale, as well as to develop feedback and consultation mechanisms for the National Strategy. This R-PP will be combined with various efforts of bilateral cooperation, some of them already operational. This includes, among others, the support for the development of the reference level and the multiscale and multipurpose Monitoring, Reporting and Verification (MRV) system, provided by the Norwegian government, as well as the testing and dissemination of governance models for REDD+ at the sub-national level with the support of a collective project with resources from France, Spain and the European Union.

20. Mexico is actively involved in various multilateral forums for REDD+. Besides its participation within the Forest Carbon Partnership Facility (FCPF), and the Forest Investment Program (FIP) as one of the eight the pilot countries, Mexico also participates as an observer of the UN-REDD Programme. Additionally, Mexico is actively involved in the REDD+ Partnership, an alliance of countries that seeks to escalate the shares and financing for REDD+27.

21. The implementation of REDD+ is an iterative process, with a mix of actions in different stages of REDD+. The move from the development of readiness actions (Stage I of REDD+), to carry out implementation investments at scale (Stage II) towards a later stage of results (Stage III), is not a linear process. Mexico proposes that the most effective way towards REDD+ implementation is rather an iterative process where planning and design actions coexist with implementation investments at scale that allow (i) to test models of implementation and to generate early lessons, (ii) take advantage of opportunities to address deforestation and degradation drivers allowing a continuous evolution of the existing policies, (iv) respond to the importance of the problem – including the highest level of ambitious targets expressed by Mexico at the UNFCCC – (v) take advantage of the great interest for climate action in forests by different actors and regions of the country and (vi) generate results of mitigation, and other environmental and social co-benefits.

22. Mexico is consolidating policies that work, actively testing new management models and planning for the long term. In many ways, this process of preparation for REDD+ more dynamic and integrated, is the result of three factors: (i) the need to consolidate and strengthen policies that support the forest sector, (ii) the need to identify and promote a “second generation” of policies that respond to the challenges still pending and (iii) the need to make adjustments to respond to the specificities of the eventual REDD+ mechanism. In this sense, the Forest Investment Plan constitutes an important bridge between the planning and consolidation actions, allowing a systematic testing of new policy instruments and new management mechanisms prior to its nationwide scaling.

23. There are relevant experiences of incorporation of pilot programs in national programs. Several programs have begun as pilot models and have been scaled in response to favorable evaluations of their impact. Such is the case of community forestry and payment for environmental services projects and programs. These processes are an important precedent to anticipate the assimilative capacity of the

26 Available at http://www.conafor.gob.mx/portal/index.php/acerca-de-conafor/185 27 See www.reddpluspartnership.org.


26

national policy of successful models and therefore, the scale benefits derivative from the investment of FIP in Mexico.

24. The REDD+ preparations are linked to sectoral and national planning processes for Climate Change. REDD+ is not a single or detached process from other sectoral or national initiatives. In particular, Mexico is in the process of reviewing and updating its Strategic Forest Plan 2025, for the purpose of carrying it to a later period (tentatively 2030-35). Additionally, Mexico is developing a National Low Carbon Development Strategy that will create the foundations to provide viability to the mitigation commitments in the long term, and has recently produced its framework of Adaptation Policies. Finally, it also produced National Strategy for Sustainable Land Management. All these planning initiatives and instruments have a substantive and operative relation that Mexico is seeking to coordinate as a way to generate synergies.

Figure 1. Building process for REDD+ implementation. The several investments and actions combine the three phases of REDD+ and create useful feedbacks across them.


27

2. IDENTIFICATION OF OPPORTUNITIES TO MITIGATE GREEN HOUSE GASES 25. Mexico has addressed the causes of deforestation through various policy

instruments, particularly through forestry policy. In recent years, this agenda has expanded with the mitigation efforts in the sector. The Special Program of Climate Change (PECC) has identified several viable interventions that the federal government has implemented to encourage the conservation and sustainable management of forests and at the same time, prevent loss and promote the increase of forest carbon. The PECC has various aims that agree on the rural habitat and cover a wide range of relevant strategies for the FIP including:

a. Actions within the forest sector, looking to increase profitability of forests for their owners and promoting the increase in the carbon stocks both in biomass and in land

b. Actions to reduce the incidence of negatives interactions in the agricultural frontier, mainly regarding forest fires

c. Actions to reduce the pressure on forests through the rehabilitation of agricultural and livestock land and through the installation of wood efficient stoves

d. Converting agricultural landscapes by reforesting or afforesting e. Converting rural technological packages to other more sustainable

26. This package of measures coincides with the range of strategies produced by several studies of mitigation potential in the forest sector28. The identified proposals correspond to programs that have budget from the federal government to be performed. The following table shows the breakdown of measures included in the PECC.

Table 4. Selected Measures of Mitigation contained in the Special Climate Change Program29

Sector Mitigation measure Goal 2008-2012

(MtCO2e)

Forests Mitigate the emissions from the forest sector and the emissions originated by land use change through protection, conservation and sustainable

Incorporate 2.95 million hectares to Sustainable Forest Management.

11.88

Incorporate 2.5 million hectares of land ecosystems to the system of Wildlife Management Units (UMAS)

4.19

Incorporate 2.175 million hectares to the Program of Payment for Environmental Services

6.27

Incorporate 750 thousand hectares of forest ecosystems to 3.36

28 See, for example, Johnson, T et al (2009) Low-Carbon Development for Mexico, World Bank, Washington; De Jong, B. et al (2007) Opciones de captura de carbono en el sector forestal, en Martínez, J. et al. coord. Cambio climático: una visión desde México, Semarnat/INE, México; Galindo, L.M. coord. (2009) La economía del Cambio Climático en México, Semarnat,Secretaría de Hacienda y Crédito Público, México. 29 CICC (2009) Programa Especial de 2009-2012, publicado en el Diario Oficial de la Federación el 28 de agosto de 2009.


28

management programs of forest ecosystems and their land

the network of Natural Protected Areas Conservation and restoration of forest soil/land in 200 thousand ha

1.07

Carry out phytosanitary treatment in 200,000 ha of forest areas

0.71

Increase the potential for forest carbon sinks through forestation and reforestation actions

Establish 170,000 ha of commercial forest plantations 1.48 Carry out a simple reforestation of an area of 1.117 million hectares

1.01

Carry out a reforestation with soil restoration of an area of 418,130 ha, during the period of 2008-2012

0.23

Place in international carbon markets, at least 0.50 MtCO2e from the forest sector30.

0.5

Agricultural Forest Frontier Stabilize the agricultural-forest frontier to reduce the greenhouse gas emissions from the conversion of forest areas to agricultural uses.

Design and implement an incentive scheme of fires to reduce emissions from deforestation and forest degradation (REDD)

8.97

Reduce the incidence of forest fires caused by agricultural and forest fires.

Reduce the average area affected by forest fires to ensure that it does not exceed 30 ha per event

2.63

Agriculture Convert agricultural degraded areas with low productive potential and recurrent crop loss in sustainable systems

Convert 298,200 ha of degraded areas with crops of low productive potential and recurrent crop loss, into areas with perennial and diversified crops

0.65

Convert 125,000 ha of corn for self-consumption into forest production in coordination with the ProArbol program

0.23

Incorporate 125,000 ha in areas that integrate the Mesoamerican Biological Corridor to sustainable land management practices

0.23

Implement ecological use projects in lands registered on the Procampo pardon (61,995 ha)

0.09

Reduce N2O emissions from fertilizers

Produce bio-fertilizers for their application in an area of 2 million hectares in 2012, with a savings of 15% of fertilizer use

0.29

Promote sustainable agricultural practices, such as conservation tillage to maintain carbon stocks and

Introduce tillage practices of soil conservation in 250,000 ha of agricultural areas, through support for the acquisition of machinery for conservation tillage (5,000 machines in the period, considering an area of 50 ha/machine) and sustainable practices in another 199,012

0.6

30 Condicionado a la negociación multilateral en materia de Reducción de Emisiones por Deforestación y Degradación (REDD)


29

increase their capture capacities

ha.

Livestock Recovery or improvement of vegetation cover through rehabilitation of pastures

Reforestation in pastures (shade trees, succulents, shrubs, herbaceous plants, etc.) with the support of the ProArbol Program (30 plants per Animal Unit, approximately 353 million plants)

0.09

Implement planned grazing in 5 million hectares of pasture, from the year 2009

2.05

Energy Promote the use of technologies to take advantage of biomass in a sustainable way.

Install 600 thousand31 fuelwood efficient stoves, under the project framework for the replacement of open fires by ecological stoves

1.62

27. In 2010, the National Institute of Ecology has identified the mitigation potential

in the sector to be of 58 million tons of CO2e for the year 2020 and of 96 million for the year 2030; the FIP will strategically contribute to give this potential viability32. These projections estimate that the forest sector in Mexico could be a net sink in the year 2022. The project portfolio resulting from this analysis included:

a. Avoided deforestation for grassland conversion b. Reduced deforestation by conversion of slash and burn agriculture c. Reduction by converstion of intensive agriculture d. Afforestation in grasslands e. Reforestation in degrades forests f. Sustainable forest management g. Afforestation on farmland

These actions are partially induced through CONAFOR programs and some of them are contained in the PECC. To implement them will require, first, an increase in the intended budget for the sector through existing programs and then, undertake efforts to remove barriers for the effective implementation of these actions. As explained in the Vision of Mexico on REDD+: towards a national strategy, there are barriers that limit the effectiveness and the efficiency of the current policy instruments such as the ones identified above as opportunities for intervention for the FIP.

28. However, the expansion of the budgets under current policies is not sufficient to achieve the mitigation potential. There are several enabling and structural measures that have great potential to enhance efficiency of existing programs and that are not included in the PECC. Although Mexico is progressing toward meeting the goal set by federal programs, this package of alternatives does not represent the best way to use FIP resources in Mexico, for various reasons:

a. The vast majority of programs included in the PECC by the federal government are voluntary; this limits the potential to expand them indefinitely without a proper promotion of the programs at the local level;

31 The total target of 600,000 stoves for firewood comprises 500,000 financed by Sedesol and100,000 by SAGARPA. 32 Semarnat/INE (2010) Potencial de mitigación de gases de efecto invernadero en México al 2020 en el contexto de la cooperación internacional;


30

b. The programs not only have to be attractive, but they also have to be competitive in relation to other programs which may create disincentives for conservation of forests.

c. Important scale and synergistic effects are realized through the parallel, not integrated offer of support programs. Coordination of financial and technical support is needed at the territorial level. This could help prevent and reverse the problems of fragmentation and the consistency of land management actions in strategic regions such as watershed and biological corridors.

d. The high fragmentation of rural property represents a major management challenge to cover the relevant universe of producers and owners of natural resources and land.

e. In addition to the challenge of encouraging landowners to apply for support from specific programs, there are other barriers that may limit their effective implementation, such as high investment requirements for sustainable forest management, where subsidies will not be enough and it will be necessary to complement the resources with investments. Prevailing problems of access to credit for forest producers must also be addressed for effective SFM.

f. Other barriers such as lack of technical capacity are also structural and are not resolved by the individual programs. The targeted strengthening of the technical capacity can overcome this limitation.

g. Although the potential of market incentives is mentioned or implied in the promotion use of non-timber products, carbon markets or the payment for environmental services requires specific promotion and investment actions along the value chain.

h. The need to create social and human capital in the communities is also an unfinished agenda that is necessary to attend in order to habilitate the major impact of these measures.

i. Most forest communities in Mexico also have other economic activities. Comprehensive multisectoral support would lead to reduced contradictions among programs and sectoral goals.

Many of these limitations have already been identified as problems and as deforestation and degradation factors, or as lack of investments in improving the carbon stocks.

29. Some limitations of the PECC are already covered by existing programs, but not all. The list above shows a series of complementary interventions, some of which are already partly covered by other programs of CONAFOR, but there are others that represent new areas and strategic interventions of the FIP portfolio.


31

Table 5. Portfolio of possible interventions in the FIP and Complementary to those identified in the PECC

Problem Possible intervention Limited promotion, poorly focused and not integrated

Support the strategic and integrated promotion of the programs and projects

Limited flexibility of programs to adapt to local conditions

Creation of mechanisms for program integration adapted to various regions and territorial scales

Poor technical capacity Support training at various levels as well as the certification of technical services

Competition with other programs

Promote mechanisms to align programs, maximizing synergies and avoiding contradictions, increasing their efficiency

Lack of coherent management at larger geographical scales beyond individual plots

Creation and strengthening of agencies and structures of territorial planning with incentive mechanisms

Lack of investment in the sector Design mechanisms and financial products to overcome existing barriers and to be competitive in relation to other options not linked to forest conservation and forest carbon

Limited capacity of technical support to integrate programs

Create and strengthen development agents with technical capacity to design and manage integrated projects

Lack of markets for sustainable products and environmental services

Promote market mechanisms, for example, mechanisms of payment for environmental services and for certified products

Non-integrated value chains Support and provide access to credit along the value chain associated with sustainable forest management

Weak organizational structure in ejidos and communities

Reinforce measures to strengthen community organization, forest management and community enterprises

30. These transversal interventions will increase the effectiveness of the program

package, involve other new and will generate results in mitigation and others. These interventions will enhance the impact of the PECC and of the forest programs, generating greater and more efficient results in mitigation by increasing the number of actions taken in strategic regions. In particular, it is considered that these interventions are necessary to give viability to the package of measures that will complement the PECC as a result of an increase in the national ambition of voluntary reduction of greenhouse gases GHGs.

31. Some of these models are already being tested in various parts of the country. The territorial management models such as the Junta Intermunicipal del Río Ayuquila (Intermunicipal assotiation of the Ayuquila River), as well as the integrated experience of planning and promotion from the Mesoamerican Biological Corridor or the multisectoral mix of technical assistance for both forests and agricultural programs offered by the Consejo Civil Mexicano para la Silvicultura Sustentable represent some of the viable models that can be used to ensure short-term results. In fact, some of


32

these models are being supported by REDD+ funds. In addition, there is the accumulated experience in community management of natural resources33.

32. To assess its impact, very robust monitoring and evaluation mechanisms will be required. Being investments that will be aimed at addressing structural causes of the origin of degradation and deforestation, as well as underlying barriers to the increase of forest carbon stocks. The evaluation of these investments represents methodological challenges that must be addressed specifically. Therefore, this approach would require specific monitoring mechanisms to evaluate forest carbon and other attributes that are not linked to payment mechanisms for results.

3. POLICY AND INSTITUTIONAL FRAMEWORK 33. Mexico has a policy and a regulatory environment suitable to support REDD+

efforts. This will allow Mexico to quickly address the scale implementation challenges of REDD+. Some specific features of this envionment include:

a. well-defined property rights that recognize the collective property and institutional frameworks for conflict resolution;

b. forest sector as a national priority, with institutions and strengthened instruments of forest policy, which includes both the very creation of the National Forest Commission (CONAFOR), the Mexican Forest Fund, the Strategic Forest Plan of 2025, an extensive battery of promotion programs in ProArbol with a budget increase of more than 16 times in the last decade, reaching more than 520 million dollars in 2011;

c. coordination platforms at the highest political level, with two interministerial committees that are relevant to REDD+: Climate Change and Sustainable Rural Development;

d. multiple spaces for social participation, that include various Advisory Councils– sustainable development, forest, for the natural protected areas – , various Technical Committees for specific programs, including National and State Technical Advisory Committees REDD (CTC-REDD), as well as others that are not exclusively environmental like the National Council of the CDI, among others.

e. commitment and global leadership in climate action, reflected in international strategies, programs and commitments, including the National Strategy of Climate Change and the Special Program of Climate Change, with aspirational goals in the reduction of 20% of greenhouse gas emissions to the year 2020, and 50% to the year 2050. Mexico is the only developing country with 4 national communications before the UNFCCC. After Copenhagen, the aspirational goal of Mexico accelerated with a commitment of 30% to the year 2030;

f. relevant experience in the implementation of innovative programs relevant to REDD+, this includes the Program of Payments for Environmental Services (PES) and the Community Forest Development

33 See, for example, Carabias, Julia, et al. (coords.), 2010. Patrimonio natural de México. Cien casos de éxito. México, Comisión Nacional para el Conocimiento y Uso de la Biodiversidad.


33

Program (PROCYMAF), as well as the Community Conservation Project for Biodiversity (COINBIO).

g. important experiences and capabilities for forest monitoring and for evaluation of policies, on the monitoring side, with instruments such as a National Forest Inventory based on a network of more than 24,000 permanent sampling sites and multiple monitoring community experiences, including carbon monitoring for various initiatives of voluntary carbon markets and the evaluation of policies with periodic studies for the evaluation of programs, including the one carried out by the National Council of Social Policy Evaluation (CONEVAL)34.

34. There are specific mandates for the coordination of forest policies and rural development. At federal level, the Ministry of Environment and Natural Resources of Mexico (SEMARNAT), is the government agency responsible for natural resources including forests. The General Law for Sustainable Forestry Development (LGDSF) states that the SEMARNAT is responsible of “formulating and implementing the national policy for the sustainable forest development, and to ensure its consistency with the national natural and environmental resources, as well as with the policies for rural development”. The SEMARNAT is also responsible of the sectoral plan and maintains control over the formulation of forest management plans.

35. The creation of the National Forest Commission favored the significant growth of support to the sector joining other agencies with responsibilities in the forestry sector. In 2001 the National Forest Commission (CONAFOR) was established and is responsible for, among other things, the implementation of the 2025 Strategic Forest Plan. The mandate of the CONAFOR is to develop, promote and carry out activities related to the production, conservation and restoration of forests. The Federal Attorney for Environmental Protection (PROFEPA) is a decentralized body of the SEMARNAT, and is in charge of the inspection, surveillance and sanctions in the areas of forest production and natural protected areas. CONAFOR coordinates efforts with SEMARNAT through policy instruments that include relevant elements for REDD+ such as: the Forest Development Plan; the Information System and the Forest Registry; the National Inventory of Forests and Land; the forest zoning; and the Annual Satellite Assessment of Forest Changes. In addition, the Act created the Mexican Forest Fund as a financing mechanism in order to support the sustainable forest administration and to recognize the environmental forest services. In the design and implementation of REDD+, all these policy instruments will be embraced.

36. The Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA), also plays an important role in the forest territories through various programs and components specifically focused on rural development. In the present administration and in the framework of the Special Climate Change Program, the SAGARPA has implemented measures aimed at reducing pressure on forests, such as the installation of wood efficient stoves and the promotion of planned grazing and reforestation in marginal corn-fed production areas. However, there are important coordination areas yet to be consolidated.

37. There are interdepartamental coordination platforms. The need of coordination between sectors in order to confront climate change and the interest of the nation to address, in sustainably rural development, two interdepartamental commissions were

34 For more information, see www.coneval.gob.mx


34

created: the interdepartamental Commission for Climate Change (CICC)35 and the interdepartamental Commision for the Sustainable Rural Development (CIDRS)36 Both are in the strengthening and consolidation process to fulfill the purposes for which they were created. Among the advances made in this context are the design of a National Strategy for Climate Change, the Special Climate Change Program 2009-2012, and the Special Concurrent Program (PEC) for Sustainable Rural Development, looking to achieve horizontal integration of public policies to combat climate change on one side, and on the other to achieve sustainability in the rural area.

38. Producer organizations and civil society have an important role, in some cases as technical support to communities and they are also relevant in disseminating information and in structuring capabilities for collaborative forest management.

39. There are several platforms for social participation. In terms of formal participation, various participation processes and consultation mechanisms have been created for environmental issues and related topics. These include the National Forest Council, the National Sustainable Development Council, the Technical Committees for Protected Areas, the Technical Advisory Committee for REDD+ and the National Indigenous Council. Many of them also have sub-national bodies. In relation to the consultation instruments, CDI has developed a robust consultative process for everything related to indigenous peoples, including everything concerning natural resources.

REGULATORY GAPS AND GOVERNANCE CHALLENGES 40. Despite the progress in the global policy framework, there are still challenges,

including the need to improve and intensify interinstitutional coordination efforts applying such instruments; achieve a proper alignment with the REDD+ strategy that is being developed, and when necessary, improve or deploy new tools. This means providing greater consistency in policies, both in its design and implementation. In particular, create synergies between agricultural and forest financing programs. This not only requires coordination between CONAFOR and SAGARPA, but also with other federal and state agencies that provide support to agricultural and livestock production. For this, the adoption of the document Vision of Mexico on REDD+ by the Interministerial Commission on Climate Change and the Sustainable Rural Development Program, open a great opportunity to analyze the problem from both angles.

41. In addition, there is the need to consolidate and strengthen the law enforcement institutions. This includes expanding the capabilities of the Federal Attorney for Environmental Protection (PROFEPA), in particular through improvements to the methods and inspection and surveillance techniques of the forest sector, setting up and deploying new technologies for surveillance and monitoring. The latter, encouraging community cooperation and involvement.

42. A greater capacity for planning the effective use of land and of incentives at sub-national level is required. This is especially critical in the case of municipalities,

35 Integrated by the Secretaria de Relaciones Exteriores; Desarrollo Social; Recursos Naturales y Medio Ambiente; Energía; Economía; Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación; Comunicaciones y Transporte; y, como invitados, las Secretarias de Salud; Finanzas y Crédito Público; y de Gobernación (Publicado en el Diario Oficial de la Federación, 2005). 36 Integrated by the Secretaria de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación; Economía; Medio Ambiente y Recursos Naturales; Finanzas y Crédito Público; Comunicaciones y Transporte; Salud; Desarrollo Social; Reforma Agraria; Educación Pública; y Energía (Diario Oficial Federación, 2001).


35

because they have important responsibilities in land use, but have limited resources and capacity to effectively promote their planning.

43. Improving the quality of technical assistance and forest technical capacity for communities is another significant challenge. While the technical assistance services have been assumed by entities and there are plans to develop a certification system for technical assistance.

44. Finally, another important challenge is to achieve lower transaction costs in the regulatory process for the sustainable forest management. The complex permitting process for forest management plans has been identified as a barrier to SFM.

4. EXPECTED CO-BENEFITS FROM THE INVESTMENT OF FIP 45. There are multiple anticipated co-benefits from investments of FIP that range from the

institutional and social co-benefits to the environmental benefits as explained below: 46. ENVIRONMENTAL: By building and being consistent with current policies in

support of the recognition of hydrological services of forests, as well as the conservation of biodiversity, FIP investments and its activities will be addressed to strengthen these objectives. The selection of sites for early action for the implementation of FIP that contain priority coastal watershed, as well as biological corridors ensure these co-benefits clarify the Government’s commitment so that the FIP investments effectively complement the scope of the conservation policy of natural resource in the country.

47. SOCIAL: By focusing on the investments of sustainable productive activities, in order to provide both services and goods, the FIP will encourage local economies by diversifying their income. The proposed investments under the FIP outside of the forest sector, together with forest investments, will allow for a more integrated portfolio of economic alternatives for the inhabitants of the areas of initial investment. Since the majority of forests are owned by ejidos and communities, the FIP will directly contribute to improve their standard of living, to build a social capital and to improve community resilience to economic and/or natural disasters related to climate, and therefore, contribute to the adaptation agenda37. FIP investments will seek to promote greater gender equity in their implementation, opening up greater opportunities for women.

48. INSTITUCIONAL: FIP investment will help improve the governance structure, which will allow new actors who have had limited activity in the past, such as municipalities to improve their skills. Also, the existing capacity will be improved at other levels of government. The governance structures to be promoted will lead to enhanced capacity beyond the forest sector and it is expected that they will expand their activity into other areas. Examples of this potential are the intermunicipal associations that are currently involved in the management of water and solid residues. Furthermore, under the principles of respect for the rights of indigenous and local communities, by improving the opportunities for them to participate in the formulation of public policies, significant improvements in the transparency and in the policy dialog on policies of the FIP areas will be made (see section 6)

37 See CICC (2010) Marco de Políticas de Adaptación de Mediano Plazo, Semarnat, México.


36

5. COLLABORATION BETWEEN MULTILATERAL DEVELOPMENT BANKS (MDBs) AND OTHER PARTNERS

49. The French Development Agency (AFD) and the Spanish Agency for International

Cooperation for Development (AECID) in collaboration with CONAFOR, are implementing a project to build technical and institutional capacities at local level, for the implementation of REDD+ Early Actions. More specifically, the project is assisting in the construction of governance mechanisms and documenting lessons learned. More recently, this project has been complemented with support from the European Union`s Life Program to disseminate lessons into the Yucatán peninsula. The implementation of the sub-national strategy proposed in this Investment Plan will depart from these existing collaborations.

50. For the future development of Reference levels as well as the measuring, monitoring, reporting and verification (MRV) system, Mexico has developed an alliance with Norwegian. This collaboration will provide support to test MRV approaches in the FIP areas. As a result, the Government of Mexico, and CONAFOR in particular, will be able to implement measures to ensure that the initiatives that are being developed complement each other and do not duplicate existing work, and seek to maximize synergies.

51. Another bilateral collaboration has emerged with the launching of the USAID REDD Program. While the specific areas and actions of this program are yet to be defined, the Mexican Government will seek that these resources contribute to the goal of the Investment Plan through a scaling, and replicate the activities and experiences obtained in the initial REDD+ investment.

52. At national scale, various federal government agencies that have political incidence in the rural area are important partners to provide political, technical and financial support to carry out the Investment Plan. In particular, the SAGARPA is a key entity with which the CONAFOR will seek to develop schemes to mobilize a coordinated federal support. Likewise, the Rural Financial is the public development bank that will operate the various innovative financial products that will be developed in conjunction with the IDB and that will be tested in the areas of initial investment of the FIP. Meanwhile, state governments will provide political and finance support for the creation of intermunicipal associations in several early action areas for REDD+.

53. The Mesoamerican Biological Corridor of the CONABIO will be a key partner whose contribution will be to provide technical assistance to ensure that the related activities within the Investment Plan are adequately promoted and implemented. Finally, the National Commission of Protected Areas (CONANP) will support the efforts of the Investment Plan through efforts of its network of protected areas in the regions where the Investment Plan will be implemented.

54. In addition to these resources and partners, financing agencies and Civil Society Organizations (CSO), will complement the national efforts of REDD+ during the life span of the FIP. CSOs have an important role in the support of communities and they are also relevant to the dissemination of information and in the structuring capabilities for collaborative forest management.


37

LINKING WIDER OPERATIONS WITH THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD) 55. The collaborative proposal of the FIP is central to the involvement of cooperation of

the International Bank for Reconstruction and Development (IBRD) with Mexico in forests and climate change, since by its innovative and transformational nature will allow the generation of lessons on the design, implementation and evaluation of public transversal policies that contribute to reducing emissions from deforestation and degradation of forests.

Table 6. List of instruments included in the current collaboration of Forests and

Climate Change between the IBRD and the CONAFOR

INSTRUMENT DESCRIPTION SIL for Forests andClimate Change

The SIL will support the Mexican Government in two main areas orcomponents: (i) the institutional strengthening at multiscale, including the municipalities, the providers of technical service and communities and (ii) the incentive programs (especially in community forestry and payments for environmental services) and the technical assistance tocommunities. The tentative amount is of US$300 million. The Evaluation Mission by the IBRD is scheduled for October 2011. FIP resources under the responsibility of the CONAFOR will be mergedwith this SIL from IBRD, and will constitute the third component of the project. This component will focus in the innovative interventions in thepriority regions proposed for an “immediate action”.

DPL on ClimateChange and SocialResilience

Community forestry is one of the three pillars in the DPL for the social resilience and Climate Change (an amount of US$300 million, to be confirmed). Community forestry is the pillar that supports three policy actions: (i) the launch of a new partnership between the CONAFOR, SAGARPA and SEMARNAT aimed at sharing information and have alignment procedures and incentive programs; (ii) the creation of four REDD+ Technical Advisory Councils, one at the national level and three at state level (CTC – REDD) formed by civil society organizations academy, private sector and indigenous representatives; and (iii) the inclusion of adaptation and mitigation programs of climate change in the first intermunicipal initiative that will start to design the emissionsreduction programs at local level. The Evaluation Mission is scheduledfor Ocober 2011. The forestry pillar will also be supported by additional funding from the French Agency for Development (estimated in US$300 million).

Forest CarbonPartnership Facility

The Mission of Due Diligence from the World Bank was completed inJune 2011. The CONAFOR will now receive and implement a donation of US$3.6 million from the FCPF in order to be prepared for REDD+(studies and consultations). The preparatory activities will culminate ina Preparation package consisting of four basic elements: (i) a REDD+ National Strategy, (ii) a reference level of national forestry (iii) a verification and forest monitoring system, and (iv) a system to address social and environmental safeguards. The FCCF will also operate a


38

56. The IBRD has been involved in climate change in Mexico with various instruments

and is currently committed to the development of wider schemes for Mexico through the coordination and effective integration of various finance and non-finance instruments. The aim of the FIP is to complement the scheme, as the Development Policy Loan (DPL), facilitating some outreach activities. The Specific Investment Loan (SIL) with which existing programs are strengthened and consolidated, the FIP will provide an element of innovation that will inform future national policy. The list of instruments in which the collaboration of Forests and Climate Change between the IBRD and the CONAFOR, is presented in Table 6.

SPECIFIC ROLE OF THE MDBs IN THE INVESTMENT PLAN 57. Mexico identifies the experience, strengths and comparative advantages of the IBRD,

of the International Finance Corporation (IFC) and the Interamerican Bank of Development (IBD) in the knowledge of the Mexican finance sector. When considering the potential role of these Multilateral Development Banks (MDBs) in the design and implementation of the Investment Plan, Mexico sought to combine the strengths of each one with finance instruments and useful roles in order to maximize the effectiveness of the Plan. Mexico appreciates the opportunities to engage and receive feedback from all the MDBs in the construction of this Investment Plan.

58. As established during the Scoping Mission and reflected in the Aide Memoire, the Government of Mexico wishes to merge some aspects of its Plan with the wider set of operations being developed with IBRD through CONAFOR. This will not only help to reduce transaction costs, but will also contribute to the integration and creation of synergies with the broadest set of actions supported through the IBRD.

59. Nevertheless, Mexico considers that the funding from the FIP distributed through other national partners, such as the Financiera Rural, will provide an ideal opportunity to take advantage of the strengths of the IBD. In seeking ways to engage the private sector, the experience of the IBD and the IFC with the private sector was particularly relevant. In the design process of the Investment Plan, Mexico engage both the IBD and the IFC, seeking to identify potential roles in the finance instruments for the rural sector being proposed.

60. In the process of refining the specific products that the IBD and the IFC would contribute to the Investment Plan, several interest areas were identified for each one of the banks. Their collaboration could particularly contribute with actions that in addition of providing carbon benefits, will ensure that the promotion of sustainable forest management be done so as to increase the competitiveness of the forest sector of Mexico and improve in several areas, including the operations area (inventory tracking, chain of custody, transportation), finance planning, environmental performance and third party partnerships. With this, the FIP will contribute to the generation of greater social and economic benefits, and will provide greater resilience to forestry community.

Carbon Fund in order to pay pilot countries for demonstrable results in REDD+. Mexico is a candidate country to participate, in which the fund can make payments in the future, starting with a sub-national program for the reduction of greenhouse gases.


39

61. In spite of these many opportunities, closer consideration of legal and operational restrictions of the International Finance Corporation, prevented their inclusion in the final Investment Plan. However, Mexico remains open to identifying future opportunities for collaboration.

62. The Interamerican Bank of Development has extensive experience with the Mexican finance sector, reflected in the existing operations with diverse institutions in the sector38. Likewise, with the regulations and operations of the Financiera Rural by bringing support or the creation of the institution through the Consolidation of the Rural Finance System Program (2003). Recently, the IBD engaged with Financiera Rural to negotiate a line of credit of US$20 million to increase the finance offer for a larger number of economic actors, diversifying the portfolio toward investment projects in high impact sectors in the generation of environmental and social services.

63. In parallel with this operation, IDB is preparing a technical cooperation package to support Financiera Rural, including: i) assistance for the improvement of the environmental and social portforlio management of the institution, which includes the design and implementation of a environmental and social risk management system for its operations. In case of second-tier credits, the revision of credit regulation of such institutions will be included as part of its methodology of rating financial intermediaries, addressing the environmental risk present in some activities seeking financing; and ii) portfolio analysis of Financiera Rural in the area of LULUCF and assessment of emission reduction or removal potentials.

64. Financiera Rural was established in 2002 as part of a comprehensive strategy of the Mexican Government to expand the offer of finance services in the rural sector. The main objective of Financiera Rural is to promote the development of economic activities linked to rural environment, in order to increase productivity and improve the living standards of its population. To do so, it seeks to generate innovative financing tools and schemes and technical assistance, especially for productive units with little access to funding and that represent a high productive potential for Mexico. In this sense, the Multilateral Investment Fund and Financiera Rural carried out the project “Support for Rural Financial Intermediaries (ME-M1004)”, which had as a general objective to strengthen and support the consolidation of a rural financial system with emphasis in the successful management of the agricultural credit. The specific aim was to develop and implement in a group of Credit Institution Pullers, a technical financial model capable of channeling in a sustainable and replicable way, financial services for small and medium rural enterprises.

65. Founded in 1993, as part of the Group of the Interamerican Bank for Development, the FOMIN was created to define new ways to increase private investment, promote the private sector development, and improve the business environment by supporting micro and small enterprises, to support economic growth and the reduction of poverty in the region. The MIF is the largest provider of technical assistance39 for the development of the private sector en Latin America and in the Caribbean, and has played a unique role in the IBD Group, seeking for innovative ways to create economic opportunities and reduce poverty40.

38 Loan operations with public banks including, NAFIN, Bancomext, Sociedad Hipotecaria y Banobras, in addition to diverse technical assistance programs to other financial sector entities. 39 Approximately US$ 120 million per year, with an average grant US$1.5 million. 40 Mobilizes approximately 1.60 dollars for each dollar invested.


40

6. IDENTIFICATION AND RATIONALE FOR PROJECTS AND PROGRAMS CO-FINANCED BY THE FIP

66. In section 2 a broad portfolio of interventions capable of generating mitigation results and other

benefits was identified, including recent estimations that have identified that the mitigation potential in the sector is of 58 million tons of CO2e for the year 2020 and 96 million tons for the year 2030. Mexico proposes to use the FIP to test models that allow for viability to this potential at the scale and speed needed41. Projections estimates that the forest sector of Mexico could be a net sink for the year 2022, in accordance with the goal set in the Vision of Mexico on REDD+.

67. In the strategy outlined below, it is anticipated that the FIP coexists with the regular budget of the CONAFOR; this will contribute to scale the impacts. However, the FIP approach is oriented at addressing barriers that limit the effectiveness and efficiency of the policy instruments, as well as to carry out specific innovative investments.

68. Given the relative size of the FIP and the desire to seek transformational impacts at scale, FIP activities will concentrate in areas designated as early action.

69. It is expected that the innovative nature of the FIP will facilitate the testing of enabling models of broader mitigation measures, taking into account scalability and replication in other sub-national areas. The carbon potential in this type of enabling interventions is harder to measure and to evaluate, but sound methodologies will be sought for this. FIP intervention is essential in order to achieve the national objectives to halt deforestation for the year 2020.

FIP OBJECTIVE IN MEXICO 70. The Investment Plan will seek to reduce the pressure on forests and their ecosystems

through a better capability to face the direct and underlying causes of deforestation and forest degradation. In accordance with the modalities of the FIP, this will be achieved through support to policy design, through the creation capacity and through investments that would maximize mitigation results. The FIP investment will contribute to scale and adapt models that are being tested in other parts of the country, particularly with regard to governance structures. The FIP, far from being an isolated effort, is designed to operate in parallel with national mitigation efforts in the forest sector and in the existing programs. In many ways, the FIP will allow the identification and testing of potential improvements to national policies on a relevant scale. Likewise, the FIP builds on the tradition of community use of natural resources and in particular of forest community management.

71. The transformational goal of the FIP is to reduce the GHG emissions from deforestation and forest degradation as well as to improve the carbon stocks in forests; while improving the quality of life of indigenous and local communities with forests, which contributes to biodiversity conservation and to the increase of resilience of forest ecosystems to climate variability and climate change.

72. Following the Logical and Results Framework suggested by the FIP, it is proposed to structure the specific interventions around these general objectives and 4 areas of results are identified.

41 Semarnat/INE (2010) Potencial de mitigación de gases de efecto invernadero en México al 2020 en el contexto de la cooperación internacional;


41

Table 7. Logical Framework for Mexico

Transformational aim (of the country): Reduce the GHG emissions from deforestation and forest degradation as well as improve the carbon stocks in forests; at the same time;

while improving the quality of life of indigenous and local communities with forests, which contributes to biodiversity conservation and to the increase of resilience of forest ecosystems

to climate variability and climate change. Objective of the Forest Investment Plan: Reduce the pressure on forests and their ecosystems through a better capacity to deal with the direct underlying causes of deforestation and forest degradation. Specific objectives:

Ensure sustainable management of

forests and forest landscapes to

confront the forces of deforestation and forest degradation

Having an institutional and regulatory framework that

supports sustainable forest management,

including mechanisms for land management

Empower indigenous and local communities and protect their land

rights

Integrate knowledge

between active players in

REDD+ to scale and replicate in

other areas Expected results: Greater investments and support within

and outside the forest sector

Better technical and institutional capacity,

coordination and alignment of

regulatory framework and incentives

Greater opportunities for participation, greater capacity to manage forests and forest

landscapes

Comprehensive assessment of the

impacts of the investment Plan

73. The projects of this Investment Plan focus on three thematic areas:

1. Information management, replication and monitoring 2. Integration of policies, creation of financial and investment mechanisms in communities 3. Innovative financial schemes for funding investment projects that reduce pressure on

forests42

42 This thematic area was subdivided in two components.


42

4. 74. The themes and priority actions for Mexico are:

Table 8. Themes and activities included in the Investment Plan of Mexico Area Theme Priority actions

1 Information management, replication and monitoring

1) Development, implementation and/or improvement of monitoring systems, and impact assessment of the Investment Plan including the measurement of environmental, social and economic impacts in the areas of initial REDD+ investment and replication regions. The above using different approaches which also include the use of geographic information systems (GIS).

2) Project management and implementation of mechanisms for dissemination of knowledge of the projects included in the Investment Plan or actions related to the national REDD+ strategy and the implementation of workshops and participatory feedback processes. The main benefit of this project is to enhance the replication of mechanisms for the reduction of deforestation and forest degradation through the generation, distribution of benefits based on results and the dissemination of transparent and verifiable information based on the results of the initial investment areas of REDD+.

2 Integration of policies, creation of financial mechanisms and investment in communities

1) Strengthening of the institutional and technical capacity; 2) capacity building of local partners; 3) policy innovations in some of the initial investment areas of REDD+. 4) investments to communities and ejidos through new and existing

mechanisms.

3 Innovative financing schemes for funding of investment projects that reduce pressure on forests

1) Design and preparation of financial products, including the financing strategy

2) Increased capacity to financial promotion and project development and evaluation

3) Investments in forests, forest landscapes and value chains 4) Identify and assess investment projects related to REDD+ with

financing needs 5) Design community projects of economic integration of productive

chains 6) Design, implement and promote microfinance novel instruments

including monitoring mechanisms and financial evaluation and mitigation of greenhouse gases

7) Strengthen strategies, structures and existing finance instruments seeking for financial inclusion of vulnerable groups

8) Promote the creation of financial intermediaries and strengthen institutional capacities from the existing ones

9) Monitoring and evaluation


43

75. Gender equity will be promoted in the design, implementation and evaluation of the actions of the Investment Plan. Women have a very limited participation in decision spaces in ejidos and communities, for example, less than 20% of the ejidatarios and comuneros are women, and less than 3% are municipal president43. There are some incentives to promote greater gender equity in forest policy44. Nevertheless, the projects and actions of the FIP will seek to reinforce and extend these incentives to promote greater gender equity.

76. The projects developed under this Investment Plan are designed in three basic times: enabling investments, investments in early action zones, and zones of initial replication. While there will be some direct investments from year 1, these will be scaling as all institutional arrangements are implemented and the financial mechanisms are designed. It is expected that this initial period will also serve to assess the baselines, not only of carbon, but of other social and environmental aspects that allow the detailed evaluation of the Investment Plan.

Figure 2. Implementation sequence of Investment Plan Activities.

43 INEGI (2009) Censo agrupecuario 2007, Censo ejidal. Aguascalientes, Ags. 44 See ProArbol Operational Guidelines, 2011. www.conafor.gob.mx

Year 1. Enabling actions (including capacity building, institutional arrangements, initial investment,

guideline design, baselines and monitoring systems)

Year 2. Investments begin in early action areas (including loans and Conafor investments)

Year 3. Investments begin in initial replication areas (including loans and Conafor investments)

Year 5. Final evaluation, documentation of lessons learned and actions to scale and replicate in other areas


44

Figure 3. Logic Framework for Investment Plan for Mexico

THEMATIC AREAS FOR INVESTMENT PLAN THEME 1. Information management, replication and monitoring 77. The innovative orientation of the projects included in the Investment Plan pose a challenge on

the short, medium and long term to ensure the proper design, implementation and evaluation, including the improvement of monitoring systems –including mechanisms for measuring and developing social and environmental baselines– that allow the transparent evaluation of impacts, dissemination of knowledge and communication to ensure replication in other areas with high potential for reducing deforestation and forest degradation.

78. The objective of this project is to improve the capacity to gather and manage relevant information by CONAFOR, in collaboration with other agencies, in order to analyze the social, economic and environmental impacts of the projects included in the Investment Plan and being able to share the knowledge to replicate the transforming actions that reduce deforestation and forest degradation, and that generate benefits in the communities and ejidos. The priority regions considered for support could include some of the areas considered as high


45

priority because of their environmental importance, their potential for reducing emissions from deforestation and forest degradation and their feasibility to be replicated.

79. The main activities included in the project are: a. development, implementation and/or improvement of monitoring systems and impact

assessment of the Investment Plan, including the measurement of environmental, social and economic impacts in areas of initial REDD+ investment and replication regions. The above using different approaches which also include the use of geographic information systems (GIS).

b. project management and implementation of mechanisms for dissemination of knowledge of the projects included in the Investment Plan actions related to the national REDD+ strategy and the execution of workshops and participatory feedback processes. The main benefit of this project is to enhance the replication of mechanisms for the reduction of deforestation and forest degradation through the generation, distribution of benefits based on results and the dissemination of transparent and verifiable information based on the results of the initial investment areas of REDD+.

80. There is an important experience in Mexico both in the development of information systems and in the mechanisms for monitoring and evaluation of policies. These include monitoring works at national scale by the National Forest and Soil Inventory, management mechanisms and monitoring programs, as well as periodic evaluation by the National Council of Social Policy Evaluation (CONEVAL). It is expected that this base allows a rapid development of the methodological platform and institutional arrangements to implement the monitoring and evaluation of the Investment Plan.

81. This component will receive important feedback with the work towards the development of the Monitoring and Verification Report, as well as the development of reference levels supported by the Norwegian Government.

THEME 2. Integration o policies, creation of financial and investment mechanisms in communities 82. Cross-sector policy alignment is essential to promote a social and environmentally sound

balance with the objectives of agricultural productivity and conservation of forests and their environmental services45. The evidence in Mexico indicates that the coordination of cross-sector public policies towards the promotion of sustainable forest management and the recognition of the value of forest environmental services can contribute to increase forest areas under management and reduce pressures to transform forest ecosystems, resulting in benefits in the mitigation of GHG emissions, conservation of biodiversity, major resilience to climate change while improving the quality of life of rural communities46.

83. The creation and strengthening of institutional arrangements and financing schemes adapted to the local level is crucial for building a long term REDD+ strategy in Mexico, harmonizing institutional actors involved in forest management and in rural development, such as SEMARNAT, SAGARPA, SEDESOL, CDI, CONABIO, CONANP, CONAGUA, SRA y PROFEPA, as well as other agencies members of CICC and CIDRS. Through the strengthening

45 Bray, D, D. Barry, S. Madrid, L. Merino, I. Zúñiga (2010) El manejo forestal sostenible como estrategia de combate al cambio climático: las comunidades nos muestran el camino. Consejo Civil Mexicano Para La Silvicultura Sostenible (CCMSS), México. 46 Bray, D., E. Medina, L. Merino, J. M. Torres Rojo, y A. Velázquez (2007). Nueva evidencia: los bosques comunitarios de méxico protegen el ambiente, disminuyen la pobreza y promueven paz social. Consejo Civil Mexicano para la Silvicultura Sostenible (CCMSS), México.


46

of Local Technical Agents47 (LTAs), including innovative figures such as decentralized public bodies and biological corridors, and Local Technical Agents (LTAs)48 accompaniment will be ensured in the investments made in communities and ejidos in areas of initial REDD+ investment.

84. This project will promote new approaches replicable for the sustainable forest management, including the transfer of investments to communities and the alignment of policies at regional level.

85. The project has four main components: a. strengthening of the institutional and technical capacity; b. capacity building of local partners; c. policy innovations in some of the initial REDD+ investment areas; and d. investments in communities and ejidos through new and existing mechanisms.

86. The first component will support the management and institutional multiscale arrangements (Intersecretarial Commissions, mechanisms of intergovernmental implementation CIDRS y and their wok group) to enable mitigation measures, technical and institutional strengthening of CONAFOR at national and regional level through training and technical equipment. There will also be support for a training and certification system of technical service providers, who will accompany communities and ejidos in the areas of initial REDD+ investment. The component will enhance the positive synergies and facilitate the integration of policies at different levels of government and mainly, at local level in the areas of initial REDD+ investment.

87. The second component will increase the capacity of Local Technical Agents (LTAs), entities established by public figures such as decentralized intermunicipal and intersecretarial commissions (for example the CONABIO) that have features that ensure that they can be replicable at national level. In the areas of initial REDD+ investment, the LTAs, will also be key to collaborate with the CONAFOR in the design of guidelines, support and monitoring to beneficiaries. The creation and strengthening of the technical capacities of LTAs will be promoted, so that they accompany and support the implementation of projects. Support for both LTAs and Forest/Local Development Agents (FDAs/LDAs) could include the development of studies, technical consultations, training workshops and equipment.

88. The third component will support the design of programs adapted to the needs of the areas of initial REDD+ investment. In some or all the areas of initial REDD+ investment, the CONAFOR will carry out efforts to adapt and innovate policies and program design to the local needs and in a harmonized way with other sector such as the agricultural sector. The incentive programs from different sectors will be analyzed (for example, the Sustainable Livestock Production and Beekeeping Ordering Programme (Programa de Producción Pecuaria Sustentable y Ordenamiento Ganadero y Apícola, PROGAN) and the Direct Support Program of Land (Programa de Apoyos Directos al Campo, PROCAMPO), among others areas of initial REDD+ investment, adjustments will be designed to harmonize rural development policies at local level to increase the mitigation potential. New investment programs will be designed focused in some areas of initial REDD+ investment, focused on local needs and implemented in collaboration with the LTAs and/or supported by LTAs. In these regions, the project would support the design of integrated incentives combining forest management, soil

47 A Local Technical Agent (LTA) is a government agency that has public funcions and is concetrated, by mandate, in implementing a rural development strategy. It is a legal entity with its own assets. It could be an Intermunicipal Agency constituted as a Descentralized Public Entity. 48 Local Development Agency (ADL) or Rural Development Agency (ADR) or Forest Development Agency (FDA) are private agencies, submit specific projects for government support on issues related to rural development. They are legally constituted as a non-for profit entity, such as CSOs.


47

restoration, protection of watershed and rangeland management and agricultural practices at the municipal or forest landscape level. The design of special guidelines for areas of initial REDD+ investment will be based on innovation, the potential for reducing emissions from deforestation and forest degradation and the social, economic and environmental benefits for communities.

89. The fourth component will develop or increase financial mechanisms to build and strengthen the capacities in ejidos and communities, with the aim to promote sustainable forest management in some or all areas of initial REDD+ investment and in possible areas for replication. The investments in ejidos and communities could be done in three ways:

a. CONAFOR will directly support ejidos and communities through its already established programs with special guidelines operating in the areas of initial REDD+ investment, including the use of matching funds of Payment for Environmental Services;

b. based on the design of new special guidelines focused in the needs of some of the areas of initial REDD+ investment, the CONAFOR will directly carry out investments in communities and ejidos focused on local needs; and

c. based on the design of new special guidelines, the CONAFOR will support LTAs to provide joint investments to ejidos and communities within some of the areas of initial REDD+ investment. Through this component new systems of payment for environmental services will be implemented in communities and ejidos, contributing to reduce GHG emissions and obtaining benefits on biodiversity and on local communities. This component will also promote, through incentives to communities and ejidos the certification of forest resources and, in the future, agricultural and agroforestry services including the eventual certification of forest landscapes. There will also be an investment in the development and technical assistance to community forest enterprises (CFE) for the commercialization of forest products and non-timber products with added value and services

THEME 3. Innovative financing schemes for funding of investment projects that reduce pressure on forests 90. The causes of unrealized timber production potential of forests and the low number of projects

with potential to generate a reduction in the GHG emissions in ejidos and communities has its origins in different factors: lack of technical capacity or tradition of forest use management, commercially inaccessible forest stands, lack of financial resources and lack of access to formal credit. In Mexico, timber harvesting has virtually no access to financing, whether public or private. Of the loans granted to the primary sector, the portfolio of borrowers from the forest sector represented in the month of July of this year less than 0.51%. It is worth mentioning that funding in the primary sector only represents 2%, with all funding targeted to the private sector49.

91. There are three aspects that have failed to be adequately addressed by the country’s financial supply, whether public of private:

a. The characteristics of social property, because by its nature is not possible to mortgage a portion or its totality and therefore, it cannot be offered as collateral.

b. Long periods of maturation. The forest cycles – that are relatively long, increase the risk level of the activity.

49 Financiamiento e información financiera de intermediarios financieros. Información Estadística. Banco de México. Accesado en agosto de 2011.


48

c. The scale of production. The atomization of forest exploitation impedes the generation of scale economies that could increase the profitability of forestry projects50.

92. Likewise, the financial intermediaries lack the knowledge, experience and skills to provide funding through appropriate schemes and therefore are not involved in this sector. Added to this there is a very limited number of financial intermediaries focused on the forest sector.

93. On the other hand, rural communities and indigenous peoples increasingly play a role of greater importance by demanding to be stewards of their resources and their own development. This can be achieved through successful implementation of productive projects. Correspondingly, the provision of efficient financial services is essential for long-term sustainable development in communities; however, a suitable environment for the participation of the private financial sector must be secured first.

94. One of the main objectives of the theme area 3 is to increase the capacity to generate income in the communities with high degree of marginalization, through the diversification of their production activities that reduce the pressure on forests and promote their sustainable management.

95. This area is divided in 2 projects that will be administered by the IDB. The objective of the first project (3.a) is to contribute to the reduction of GHG emissions as well as to increase the carbon sinks through the mobilization of financing for investment projects. The project will promote the implementation of innovative finance mechanisms that allow the transformation of credit markets for investment projects.

96. Likewise, the project hopes to attract resources from other local or foreign funding that promote investment in the sector.

97. The activities under project 3.b are to promote a sustainable management of the forest, the reduction of pressure towards natural resources, reduction of GHG emissions, environmental and social benefits. The project will seek all this though the implementation of innovative finance mechanisms that allow the transformation in the credit market for investment projects and that generate market economies that make it attractive to other financial sector participants to integrate these initiatives, laying the groundwork for a financially sustainable.

98. Also, the component will seek to attract resources from other local or foreign funding that promote investment in the sector. The peculiarity of this project is its focus on a micro scale with vulnerable populations that may represent more risky investments for conventional financing mechanisms.

50 Valero, A. y Musik, G.A., 2010. El sector forestal en México; Diagnóstico, Prospectiva y Estrategia. Centro de Estudios de Competitividad-ITAM. México, D.F.


49

Figure 4. Rationale for interventions included in the Investment Plan. Underlying factors contributing to drivers of deforestation and forest degradation to be addressed by FIP.

Ejidos & Communities & small private forest land owners


50

Figure 5. Operation diagram for the Investment Plan. Colors denote the corresponding thematic areas.

EARLY ACTION REDD+ AREAS 99. The size and relative reach of the FIP are well adapted to the sub-national scale that

Mexico wants to use as a platform for building and implementing actions for REDD+. In the case of the FIP, these areas have been identified around three main regions which are indicated in the map below.

100. The areas for initial investment for support include those considered as high priority by their environmental importance, their potential for reduction of emissions from deforestation and forest degradation and their viability to be replicable models.

Ejidos & Communities & small private forest land owners


51

Figure 6. Early action REDD+ Areas

101. Early actions pursue REDD+ goals, but have sub-national character at regional or Federal State level. However, to ensure rapid and replicable learning, early actions will focus mainly in sub-state areas of priority attention that have a minimum area to ensure monitoring, control on the displacement of emissions and the permanence of their emissions and where development in governance issues, forest monitoring and political will already exist (watersheds, biological corridors, etc.).

102. The actions of the Investment Plan will be implemented in priority areas in two stages: the first one with some of the areas and the second to incorporate the rest. This stepped design will allow, among other things, to generate enough attention capacity and to generate the basis for a stronger assessment of FIP impacts in these areas.

103. States will play an important role in the implementation of the FIP activities and are one o the key players to promote replication in other areas. The specific zones include: ● Coastal watershed in the State of Jalisco, in the west of the country. ● The biological corridor/ring in Chiapas, that starts in Marqués de Comillas, in the Lacandon

Region, in an arch towards the Special Reserve of El Ocote, then to the south and east on La Sepultura and La Encrucijada Reserves.

● The most important forest reserves of the Yucatan Peninsula along with the three biological corridors that interconnect them.

● Huatulco zones, Sierra norte and Chimalapas in Oaxaca ● The watershed of Cutzamala, between the State of Mexico and Michoacan.


52

7. POTENTIAL IMPLEMENTATION WITH RISK ASSESSMENT CAPACITY OF THE EXECUTING AGENCIES 104. CONAFOR, as the main executing agency has a great organizational and technical

capacity. The Commission is also leading the design of the REDD+ strategy that intensively promotes the coordination and synergies between different actions at national and sub-national levels. The CONAFOR also has experience in managing grants/international loans, including two World Bank operations related to Payments for Ecosystem and Forestry Community Services and. It is also managing a project (Global Environmental Facility, GEF) related to the forest administration in the south of the country. The Mexican Forest Fund, also administered by the CONAFOR with the assistance of Nacional Financiera (NAFIN) a public financial agent, has demonstrated its capacity to increase the level of operations without compromising the transparency and efficiency of various programs. The annual budget of the Commission reached almost US$500 million dollars in 2011. Many of the elements proposed in the Forest Investment Plan are compatible with the experience of the CONAFOR, particularly with those related to capacity building at local level.

105. In relation to the compliance of the environmental and social safeguard, the CONAFOR has experience of past projects and from its own practices. It successfully participates in local and indigenous communities through the management of its programs. It has successfully met the requirements of the IBRD in the past. It has also launched a Social and Environmental Strategic Assessment for REDD+ as part of its participation in the Preparation Plan for REDD from FCPF, with two workshops where players from different sectors participated.

106. Financiera Rural. Facilitating access to financial services is one of the objectives declared by the CONAFOR through the Mexican Forest Fund. However, it does not have the capacity to offer specific loan products. This is why it must rely on key partners. One of them has been Financiera Rural. Created in 2002 as part of the efforts to restructure the old structures of the rural development banks that have very high operating costs. Financiera Rural was created as a decentralized agency of the Federal Government, with its own legal powers and responsibilities51.

107. Its mission is to promote agriculture, forestry and fishing as well as other economic activities related to the rural sector with the purpose of improving productivity, improve the living standards of rural populations through loans and manage its resources efficiently and transparently. All this in order to consolidate a financial system that can provide financial resources, technical assistance, building capacity and consultancy services for the rural sector.

IDENTIFICATION OF POSSIBLE RISKS 108. Capacity risk at national and sub-national level. Given the complexity of the country,

national mobilization of local actors to participate in the program would be a major risk. Fortunately, Cancun Conventions allow the sub-national implementation of REDD+ actions. The proposal to focus on some regions of the country allows more control of implementation capacity and mitigates this risk. The overall risk of the lack of capacity to perform the planned work in the proposed areas is considered relatively low.

51 see www.financierarural.gob.mx


53

109. Risk of inconsistency in the approaches. While each proposed area will develop its own processes, including the determination of reference levels, assessment and intervention schemes, the role of the CONAFOR as the coordinating agency and additional support of funds in preparation for REDD+ of the FCPF will help ensure national consistency. Obviously, other actors and initiatives in the country may appear and possibly overlap with the FIP.

110. The various forums for participation and the leadership role of federal agencies will induce even more the coordination, minimizing the risk of inconsistency in the schemes.

111. Risk of the lack of alignment of policy from the non-forest sectors. The alignment of policies in all sectors and government levels is not easy, with a number of legal, technical and political aspects involved in the process. This creates a risk for the FIP because the time frame available to develop the necessary coordination models is not enough. It is worth noting that the Vision of Mexico on REDD+ was supported by the Intersecretarial Commissions on Climate Change and for the Sustainable Rural Development. In fact, the Vision was presented by the President of Mexico in Cancun, with the participation of both the Secretary of the Environment (SEMARNAT) and the Secretary of Agriculture (SAGARPA).

112. Social and governance risks. Mexico has a strong record of execution initiatives with the indigenous peoples and with other communities dependent on forests, prominently the PROCYMAF and PSA programs demonstrate the ability in several areas relevant to REDD+, including the recognition of the rights of the Indigenous Peoples. However, the Government of Mexico recognizes that there are concerns – in Mexico and internationally. Mexico has shown its commitment and that is prepared to promote the full participation of civil society and other key actors.

113. Community involvement and profit-sharing risks. Some of the rights over carbon and other environmental services could be linked to land tenure and to the implementation of better practices while others related to avoided emissions may be more diffuse and associated with the performance of larger territories. Mexico recognizes the need to ensure that the REDD+ benefits are effective in providing incentives to local landowners to protect and sustainably manage forest resources, while receiving direct or indirect benefits. In this sense, it will continue to build on the approaches of PSA and PROCYMAF, CONAFOR will establish a mechanism for the equitable distribution of benefits based on consultations held with key stakeholders, including Indigenous Peoples and other forest-dependent communities.

114. Risks associated with land rights and resources. The rights of land and resources are an area of international concern in relation to REDD+. With respect to various countries, Mexico has established secure community land rights, so the risks relating to the infringement of these rights are minimal. The Land Law provides the legal framework for the ejidos and communities and clearly outlines their internal structures and procedures. The assembly of the ejido or community, serves as a decision making body on matters of land use on communal lands. The internal rules of the ejido or communities regulate land use in more detail. The specific rights on the land refer to the common use and to the internal level of the ejido and are certified and registered in the National Agrarian Registry. The PROCEDE issued certificates for parcels and for common use in most of the ejidos and communities.

115. The conflicts on land such as disputes of demarcation boundaries between ejidos and internal conflicts among ejidatarios are limited. Such disputes can be settled agreeably or before agrarian courts that have the task of resolving such disputes including the ones that arise within and between ejidos. The land allocation decisions by the ejido assembly can also be taken into the agrarian courts, directly or through the Agrarian Agency. Land courts are specialized courts in regular administrative matters. In practice, many conflicts are also resolved out of court with ad hoc solutions. Conflicts over land extension vary significantly between states and it is difficult to give exact figures of these land-related disputes nationwide. Most of the conflicts appear to affect only a portion of the land and many seem to find a resolution through a process


54

outside agricultural courts. However, as part of the preparatory phase, is important to pay attention in how a REDD+ mechanism will address the disputed areas in the future, to promote the inclusion and prevention of conflict situations that might prevail.

116. Risks associated with technical complexity. The design of REDD+ strategies, the MRV and the Reference Level can be technically complex. REDD+ is a new and untested instrument and will be operated in a broad national scale. The preparation and implementation will necessarily involve a wide range of governmental and nongovernmental actors, which will be added to the complexity of its coordination.

8. FINANCING PLAN AND INSTRUMENTS 117. The total funding to be requested from the FIP will be of US$60 million dollars. However,

the total funding available to support and leverage the investments will be much higher.

Table 9. Budget allocation between related projects and investments (million dollars)

Project MDB FIP FCPF IBRD

(SIL) IDB ADF-

AECID-EU**

Norway ***

GEF TOTAL (l)

TOTAL

1 IBRD 6 0.27 15 21.27 2 IBRD 19.66

16.34 (l) 3.6 150-

300 (l) *

2.86 13.64 5 (l)

171.34 – 321.34

39.76

3a IDB 5 10 (l)

20 (l) 30 5

3b IDB 1.5 1.5 (l)

3 1.5 4.5

Total 202.84 – 352.84

70.53

Notes: (l) loan, otherwise, is a donation * Indicative range pending final negotiations between the World Bank and the Government of Mexico ** estimated in Euros *** 90 million Norwegian krone

9. RESULTS FRAMEWORK FOR INVESTMENT PLAN 118. Below are the indicators corresponding to the expected results framework obtained from the

implementation of the Investment Plan, both the ones included in the proposed Logical Framework of the FIP, and other complementary results. It is worth mentioning that these indicators, during the implementation Plan, will be complemented with a gender analysis so that these are performed with a gender perspective52.

52 In particular, the proposed indicators by the National Institute for Women will be considered to include gender perspective to the results framework: INMUJERES. 2003. Manual para el desarrollo de indicadores de evaluación con perspectiva de género. http://cedoc.inmujeres.gob.mx/documentos_download/100525.pdf


55

Expected results obtained from the implementation of the Investment Plan (consistent with the FIP results framework): Result Indicator Baseline Goal Source of

information

Reduced pressure on forest ecosystems

• Change in deforested hectares within the project/program area

• Change in degraded hectares within the project/program

• tCO2 sequestered by the project • Investments in the non-forest sector

identified to offset the agents of deforestation and degradation of forests

National Strategy REDD+ Norwegian Project

To be determined during the design phase of projects

National systems for Monitoring and Evaluation

Strengthening of the capacity to counteract the direct and indirect agents of deforestation and forest degradation

• Income of communities for activities of sustainable rural development

• Diversification of sources of business of communities

• Number of sustainable rural development projects that receive funding

National Strategy REDD+


National Systems for Monitoring and Evaluation

New and additional resources in appropriate terms and conditions of forestry projects or projects related to forests

• Funding leverage factor of the FIP • Funding from other sources

(including Financiera Rural)

Current situation


Funding received in areas of initial REDD+ investment

Increase in the capacity to combat the direct and underlying drivers of deforestation and degradation (In accordance with those identified in the Vision of Mexico on REDD+)

• Number of Agents with Local Technical Building Capacity according to the needs of the area of initial REDD+ investment

• Number of Local Development Agencies or Rural Development Agencies with capacity building according to the needs of the area of initial REDD+ investment

• Number of local governance structures created and currently running within some of the polygons of the initial investment area REDD+ (with capacity in: law enforcement and surveillance, development of reference and monitoring levels, planning and zoning, as well as operation of regional programs of forest management and sustainable agricultural production.

• Number of special programs of

Current situation


Program monitoring system


56

CONAFOR specific for each region with guidelines and funding

Integration of lessons learned by development active actors in REDD+

• Number of knowledge assets generated and shared by type (publications, studies, knowledge sharing platforms, learning briefs, community practices , among others)

To be determined during the design phase of projects.

To be determined during the design phase of projects.

National Forest Commission Webpage

Expected results obtained from the implementation of the Investment Plan (consistent with the FIP results framework): Result Indicator Baseline Goal Source of

information Different areas involved of the CONAFOR are trained in the subject and have the capacity and equipment for implementation of various programs

• Number of workshops or trainings to those attended.

• Number of people that attend the workshops.

Design phase of the Investment Plan


Minutes of workshops and meetings

Local technical agents with capacity to implement special programs.

• Number of local technical agents with capacity to implement special programs of CONAFOR in coordination with programs from other agencies.

Current situation



The CONAFOR has the capacity to participate in different multiscale and intersecretarial institutional arrangements where CC mitigation issues are discussed.

• Number of institutional arrangements in which CONAFOR participates

• Number of agreements with other agencies or institutions for coordination signed by the CONAFOR

Current situation



Mexico’s Investment Plan as part of the FIP is part of the Government of Mexico’s efforts to prepare a REDD+ mechanism implementation in the country. The preparation work started with the Readiness Preparation Proposal for Mexico (R-PP), part of the FCPF process, and continued with the development of Mexico’s Vision on REDD+: Towards a National Strategy. The consultation process for the REDD+ National Strategy is scheduled to begin by December 2011. These preparation efforts, which would be considered phase 1 of REDD+, have been combined with implementation steps and model testing, such as the governance models on biological corridors or priority watershed . At the same time, various approaches on measurement and monitoring of forests are being tested before implementing them at the national level. The Investment Plan seeks to take these efforts to a significant scale that will not only improve knowledge, but will also generate mitigating mitigation results and other social and environmental benefits. Mexico’s Investment Plan is the result of a participatory process involving different stakeholders and sector such as: civil society organizations, producer organizations, ejidos representatives, communities and associations, indigenous peoples, federal, state and municipal government agencies as well as academic, professional and private sectors. The public and non-public (private) sector’s ample participation is in line with the strategy, program and Forest Investment Program’s project criteria. Indigenous peoples and local communities, in some of the REDD+ initial investment areas—where the Investment Plan projects will be conducted—will have priority access to culturally-appropiate information on the matter, the design and project proposals. A summary of the stakeholders’ involvement in the process as follows:

1. National FIP Investment Plan Discussion CTC REDD+ role On a National level, the main participatory platform involved in the Investment Plan design, was the REDD+ Technical Advisory Committee (CTC REDD as per the acronym in Spanish). This committee represents a national dialogue platform among stakeholders and representatives of various government institutions, non-governmental organizations, ejidos and community representatives, indigenous peoples, academia and private sectors. The CTC REDD is an open platform that began assemblies on July 2008, when CONAFOR organized a REDD+ workshop for the discussion of Preparation Proposal for Mexico (R-PP) and its components, as well as defining tasks for the constitutive document preparation. On May 13th, 2010, the proposal was formally instituted and is composed of social organizations, land owner representatives, government institutions and academia, among other relevant stakeholders. These are the specific objectives of CTC REDD+:

• To support the Government of Mexico in the REDD+ policy elaboration in an open and participatory manner.

• To provide and diffuse information on REDD+ to the civil society and the decision makers in the government sector.

• To provide feedback regarding the REDD+ National Strategy implementation and design. • To establish methods and mechanisms to guarantee the participation of ejidos and indigenous

communities in the public consultations.

CTC REDD+ Workshop Date: March 4th, 2011 Participation: 29 participants

ANNEX 2. Stakeholder Involvement Plan

Objective: To present the Forest Investment Program and how the FIP initiative is integrated to Mexico’s Vision on REDD+. To present a summary of the FIP Scoping Mission discussions. Discussed themes: CTC REDD+ will be the main information and participation vehicle for civil society during the Investment Plan formulation process.

Third CTC REDD+ Ordinary Session Date: August 9th, 2011 Participation: 58 participants Objective: To present the general structure for the Investment Plan design and inviting the CTC participants to review the Investment Plan draft once it is published in the CONAFOR website. Discussed themes: The CTC REDD+ working group and representatives will participate in the Investment Plan follow-up. Fourth CTC REDD+ Ordinary Session Date: August 29th, 2011 Participation: 49 participants Objective: To receive feedback on the Investment Plan’s draft ideas and structure prepared by the Investment Plan follow-up group as well as general participants. Discussed themes:

• The participants expressed their opinion related to concerns, omissions, further clarification, precisions approaches, etc.

• In order to enrich the document, the period for receiving written feedback will be prolonged to August 31st and there will be a meeting afterwards on September 5th as an opportunity to express their experience on how these were handled.

CTC REDD+ Extraordinary Reunion Date: September 5th, 2011 Participation: 13 participants Objective: To present and review the arrangements made on the Investment Plan in light of comments received by the CTC REDD+ members and other specialists. Discussed themes:

• CONAFOR explained the plan’s general scheme, the institutional arrangements that seek promotion and strengthening, design steps and its objectives.

• There was a round of questions and interventions with the goal of clarifying o proposing some conditions with potential to strengthen the Investment Plan proposal.

• CONAFOR carefully presented how each comment received was attended in each of the Investment Plan thematic areas.

2. Civil Society Participation during the Forest Investment Program missions with the

Multilateral Development Banks

Scoping Mission for the Forest Investment Program During this first mission there were two significant moments where civil society had a part:

Experts’ workshops on the Forest Investment Program Date: March 3rd, 2011 Participation: 37 participants Objective: To identify the possible FIP investment areas. Discussed themes: Priorities and investment criteria for enhancing and designing of FIP financial schemes.. CTC REDD+ workshop Date: March 4rth, 2011

Objective: CONAFOR demonstrated how the Forest Investment Program initiative interacts with Mexico’s vision on REDD+ and carried out a summary of the discussions that took place during the mission. Discussed themes:

• It came to an agreement that CTC REDD+ would be the main information and participation vehicle during the formulation process.

• FIP Scoping Mission presented an overview of discussions and responded to questions concerning CTC.

Joint Mission for the Forest Investment Program (FIP)

Date: August 30th, 2011 • A CTC REDD+ financing workgroup representative met with the mission team and

presented feedback to the Investment Plan • The mission got together with civil society organizations and received feedback on the

Investment Plan and some participation and communication strategies.

3. Regional FIP Discussion A series of workshops were carried out at the regional levele (3 workshops in the state of Jalisco and 3 workshops in the Yucatan Peninsula) in order to receive feedback about the Investment Plan activities. Methodology: CONAFOR hired a professional facilitator to develop the workshop methodology. This includes presentations, exercise and games that allow participants to express their point of view. In order to obtain feedback on the Investment Plan, an explication was given on the general and specific objectives, and on the thematic areas. Afterwards, the participants were divided into groups per sector. They were asked to analyze each and every activity proposed in the Investment Plan and to give their understanding on each activity. They were also asked to come up with ways to implement them locally. Duration: Two days Agenda: The workshop includes different themes, such as: the forest role on climate change, an analysis on deforestation causes, REDD+ strategic vision lines, as well as FIP’s Investment Plan activities. Participation: Participants came from rural zones, relatively close to where the workshop took place. They were mainly members of ejidos and regional communities, state and local government representatives, as well as civil society organizations and regional universities. These are some of the key conclusions: • Capacity building of local actors is fundamental in all areas (technical, financial supervision, among others). • Communities play a role, not only in the execution, but also in monitoring Investment Plan activities. • In terms of technical support and financial mechanisms, it would be best to limit the number of intermediaries and to try to directly canalize resources and support to the beneficiaries. • There was an emphasis on creating market opportunities for promoting timber products and services is fundamental, as well as a financing access for investment projects. Places, dates, and number of participants per sector involved in each workshop, are as follows:

Feedback workshop on REDD+ mechanism and FIP Investment Plan activities Place: Mascota, Jalisco Date: August 22nd and 23rd, 2011 Participation: A total of 102 people assisted, 54 ejidos and community representatives, 31 University representatives, civil organizations and Technical Services Providers, as well as 17 Government representatives. Feedback workshop on REDD+ mechanism and FIP Investment Plan activities

Place: Ciudad Guzman, Jalisco Date: August 25th and 26th, 2011 Participation: A total of 81 people attended, 39 ejidos and community representatives, 22 University representatives, Civil Organizations and Technical Services Providers, as well as 20 Government representatives. Feedback workshop on REDD+ mechanism and FIP Investment Plan activities Place: Autlan, Jalisco Date: August 29th and 30th, 2011 Participation: A total of 74 people attended 37 ejidos and community representatives, 21 Civil Organizations representatives and Technical Services Providers, as well as 16 Government representatives.

Feedback workshop on REDD+ mechanism and FIP Investment Plan activities Place: Chetumal, Quintana Roo Date: September 1st and 2nd, 2011 Participation: 91 people attended, 47 ejidos and community representatives, 7 Civil Organizations representatives and Technical Services Providers, as well as 37 Government representatives. Feedback workshop on REDD+ mechanism and FIP Investment Plan activities Place: Campeche, Campeche Date: September 5th and 6th, 2011 Participation: 71 people attended, 42 ejidos and community representatives, 4 Civil Organizations representatives and Technical Services Providers, as well as 25 Government representatives. Feedback workshop on REDD+ mechanism and FIP Investment Plan activities Place: Merida, Yucatán Date: September 8th and 9th, 2011 Participation: 55 people attended, 32 ejidos and community representatives, 7 Civil Organizations representatives and Technical Services Providers, as well as 16 Government representatives.

The participatory process with all stakeholderes mentioned above will continue throughout the detailed project formulation in each of the three Investment Plan thematic areas. CTC REDD+ will continue to be the main platform for the involvement of all relevant actors. The projects’ drafts will be sent to their members with the purpose of receiving comments and feedback. Likewise, CICC REDD+ working group, composed by 10 federal government secretaries, will be the forum for promoting FIP on an inter-secretarial level and will seek coordination and policy synergies that will contribute to reducing deforestation and forest degradation in REDD+ initial investment areas. Monitoring Mechanisms for the Investment Plan implementation Governments of pilot countries must create or design a national monitoring committee with a multi-sector character and integrated by different interested parties. The objective of having such a platform is to help planning, executing, monitoring and evaluating the programs; the committee must include provincial, local and state authorities representatives, as well as representatives of indigenous peoples and local community, ONG, private sector and other civil society members. The Government of Mexico recommends that the FIP Steering Committee is composed by representatives of the following federal government dependencies: CONAFOR, SEMARNAT, SHCP, SAGARPA, Procuraduría Agraria, CONEVAL, a board member of CID (indigenous representation), two CTC REDD+ representatives (civil society), and one from the private sector. State CTC REDD+ role

Mexico is strengthening the participating spaces by promoting and supporting the conception of state CTC that favor a more local dialogue. Currently, in some of the early action states, there already is a state CTC or is the making. CONAFOR seeks to promote the creation of more regional or state CTC in the country, in order to strengthen the communication and participation channels. Once created, they will participate in the follow-up mechanisms for the regional action of Investment Plan projects.

This Annex contains information on how the funds under the Dedicated Grant Mechanism For Indigenous Peoples and Local Communities can contribute in a complementary manner to the proposals of Mexico’s Investment Plan.

Background

The FIP has allocated around 50 million dollars to deliver direct grants in support of indigenous and local communities within the FIP pilot countries. The overarching objective of this Dedicated Grant Mechanism is to ensure the full and effective, continuous participation of indigenous peoples and local communities in the design and implementation of FIP investment plans. This participation will be highly dependent on strengthening the capacity of these groups to play an informed and active role in national REDD processes in general and FIP processes in particular, as well as on recognizing and supporting their tenure rights, forest stewardship roles, and traditional forest management systems.

Extensive consultations were held with representatives of indigenous and local communities during the design of the FIP, with four regional meetings in Africa, Asia, Pacific and Latin America, in addition, a global meeting was held to design the Dedicated Grant Mechanism. The result of this meetings was a Working Draft of a Proposal for the Design of the Dedicated Grant Mechanism For Indigenous Peoples and Local Communities under the Forest Investment Program. All FIP resources are channeled through Multilateral Development Banks (MDBs) and the funds under the Dedicated Grant Mechanism will be channeled in a similar fashion. The details on the financing modalities are still being defined and will be discussed with the indigenous peoples and local communities. Once an agreement is reached, the document on financing modalities, as well as the Working Draft of a Proposal for the Design of the Dedicated Grant Mechanism For Indigenous Peoples and Local Communities under the Forest Investment Program will be presented to the FIP Sub-committee, in November 2011.

Potential role of the Dedicated Grant Mechanism in Mexico

In the case of Mexico, the following elements will be considered to articulate the Investment Plan with the eventual Dedicated Grant Mechanism:

1. Mexico is unique given the community ownership of the majority of its forests, in contrast with private or private property which is dominant in most of the world. Many ejidos and communities depend on the forests as a major source of income1, and many others depend on forests as a major source of domestic use products.

2. Agrarian Law provides the legal framework both for ejidos and communities and defines its structure and the rights of its members. Both types of community property are ruled by a similar structure, with an Assembly of all ejidatarios or comuneros, a Comisariado Ejidal or a Comisariado de Bienes Comunales and, a Consejo de Vigilancia2.

3. Mexico has significant experience with the implementation of initiatives and projects with indigenous groups and other forest dependent communities, including the recognition of the rights of indigenous groups, which demonstrate its capacity in a relevant area for REDD+. It will be critical that REDD+ activities are prepared with the full participation of key stakeholders,

1INEGI, 2008, IX Censo Ejidal 2007. 2 INEGI, 2011, Características metodológicas de los núcleos agrarios. http://mapserver.inegi.org.mx/geografia/espanol/cartcat/metant.cfm?s=geo&c=1072

ANNEX 3. Dedicated Grant Mechanism For Indigenous Peoples and Local Communities under the Forest Investment Program

including grassroots organizations, to ensure the benefits to the local communities, the strengthening of land tenure and resource rights as well as the respect of traditional socio-political structures.

4. The Federal Government recognises the delicate nature of REDD+, particularly with respect to the participation of the communities, tenure rights, multisectoral coordination, and actions are being taken to address these issues in the context of REDD+. One of the five pillars of Mexico’s Vision on REDD+ is “participation and communication”.

5. CONAFOR has promoted actively the establishment of a Consultative Technical Committee on REDD+ which has sought the broadest participation from CSOs in the planning and implementation of REDD+. The CTC will also coordinate closely with other federal agencies (such as CDI), that has the mandate to work with local communities. While the organizations at national level are key to coordinate and facilitate dialogue and discussions, a group of indigenous groups and local communities must have the space to influence decisions directly and advise in the preparation of policy. Besides, the FIP and other financing mechanisms, including the FCPF, will support the development of regional and State-level CTC’s

Attending to the international concerns of the mitigation strategies regarding the forest and their key role, Mexico has taken concrete action towards defining Mexico’s National REDD+ strategy. Such is the case of the publication presented at UNFCCC COP16: Mexico’s Vision for REDD+. This document is the result of a non-precedent collective effort of the government and the civil society expressed by the creation of a Consultative Technical Committee for REDD+ (CTC-REDD+). This will be a platform for participation and dialogue among representatives from government institutions, non-governmental organizations, ejidos, communities & associations, indigenous peoples, academia, private sector representatives, etc.

Mexico’s Vision for REDD+ affirms that the institutional experience and structure of the environmental sector along with the other sectors, represent a solid platform that requires reinforcement at all government levels and promotion for a better coordination of instruments. Therefore, Mexico looks forward to a rapid transition from REDD+ phase 1 (Readiness) to phase 2 (Development and adjustment of policies and measurements), in which early actions play a fundamental role proving new innovative approaches that would reduce emissions from deforestation and forest degradation, as well as to promote the plus of the REDD+ mechanism.

The reasons for deforestation and degradation are complex and often they are not originated within the forest sector. Consequently, Mexico pursues the development of an inter-sectorial strategy that will integrate efforts altogether and promote synergies.

For this purpose, a collaborative process among CONAFOR and SAGARPA has been implemented. This will eventually result in a better institutional coordination, aligning public policies on both sectors and reducing pressure on Mexican forests. This joint effort came to fruition, when the Inter-secretarial Commission for Climate Change (presided by the Environment and Natural Resources Ministry) and the Inter-secretarial Commission for Sustainable Rural Development (presided by SAGARPA), adopted Mexico’s Vision for REDD+. Both Commissions add up to 20 public agencies in different sectors including State Ministries such as Economy, Social Development, Communications, Transportation, etc. as well as other public organizations like the National Institute of Ecology; the National Institute of Statistics, Geography and Information, the National Commission of Protected Natural Areas, the National Commission of Indigenous Peoples’ Rights, among others.

On the other hand, Readiness Preparation Proposal (R-PP) presented by Mexico to the Forest Carbon Partnership Facility, was developed in stages in order to start Mexico’s readiness process that would allow access to the financial mechanisms related to Reducing Emissions from Deforestation and Forest Degradation (REDD+). This would include the National Strategy for REDD+, defining reference emission levels, identifying advantageous actions to be developed to achieve the objectives, the development of a monitoring system required to assess the

ANNEX 4. Mexico’s Readiness Proposal FCPF/UNREDD (R-PP) and National REDD+ Strategy

accomplishment of these objectives and establishing a national system for carbon assets accounting for activities at a national and subnational level.

Bearing in mind the dynamic characteristic of the REDD+ Readiness Process, we consider that the R-PP is a living document under continuous changes trying to reflect in a precise and possible way, the actual situation of the REDD+ readiness process in Mexico. Nevertheless, due to advancement in such a big number of fronts covered, the effort to bring up to date this document simultaneously has proven to be challenging.

The approved R-PP during the mission on May, 2011, contains the original elements of the preparation plan, now incorporates fresh elements and adjusts new ideas and the most up to date available data. For instance, Mexico’s Vision for REDD+ is included as complementary information in R-PP’s section 2. Annexes were also adjusted since the budget for Reference Levels and MRV components changed, due to a Norway government funding for the development of these components; and the project document associated to this represents the actual Road Map.

The process to obtain the FCPF funding has taken longer than expected. Therefore, Mexico has been forced to finance some of the readiness activities with its own resources and seeking synergies with other donors. Presently, Mexico is finalizing the Legal Donation Agreement to receive the 3.6 million dollars from the FCPF and expects to be able to use the funds by 2012. Although Mexico has not received the FCPF funds, the process to develop the R-PP served as a dialog catalyzer among civil society and stakeholders, as well as for the development of the Mexico’s Vision for REDD+ document. The R-PP resources will allow Mexico to advance in a more solid manner towards the implementation of the REDD+ National Strategy.

In addition to the R-PP efforts and the development of the Mexico’s Vision for REDD+, in 2011 Mexico has intensively worked developing a comprehensive package of incentives for forest and climate change that include: a Development Policy Loan (DPL) to strengthen social resiliency to climate change; a Specific Investment Loan (SIL) for forests and climate change as well as other initiatives with other donors, as in the case of the collaboration with the Norwegian Government.

The investment plan of the Forest Investment Program (FIP) is key for the National agenda. This will allow Mexico to explore new approaches, which would be difficult to start through conventional channels and to transit towards the second phase of REDD+.

Presently, Mexico is pursuing to strengthen local capacities in order to be ready to implement a REDD+ strategy at a national level. An effort has been carried to widen capacities of the local governments, supporting the creation of institutional arrangements and governance schemes that would allow the establishment of inter-municipal associations or some other local partnerships to improve the sustainable management of their land. A concrete example of local governance reinforcement is that through the support that Conafor has granted to the Inter-municipal Committee of the Ayuquila River, REDD+ has been included as one of their strategic axes, resulting in obtaining additional funding from the French Development Agency and from the European Union. At this moment Conafor is working on replicating these successful models in other national basins.

The national REDD+ agenda is very active and relevant. For that reason, all initiatives are aligned with a mid-term strategic vision that will allow the implementation of the Mexico’s Vision for REDD+.

Mexico’s Readiness Proposal for REDD+ (R-PP, available only in spanish):

http://www.conafor.gob.mx:8080/documentos/ver.aspx?grupo=35&articulo=2373

Mexico’s Vision for REDD+ (available in English and Spanish):

http://www.conafor.gob.mx/portal/index.php/cambio-climatico-y-bosques/1-proceso-de-redd-en-mexico/a-fcpf

Comments by the external experts will be included once they are received.

ANNEX 5. External expert review

climate investment fund forest investment program de... · 2019. 11. 16. · 4.04, op/bp 4.36,...

Documents