World Bank Signs Agreement to Support Mexico’s REDD+ Preparation

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In March 2010, Mexico presented its Readiness Plan Proposal (RPP) to the World Bank’s Forest Carbon Partnership Facility (FCPF) governance body—the Participants Committee—receiving a favorable response and triggering authorization of its Readiness Preparation Grant.  The federal government did not sign its grant agreement in the intervening four years, variously explaining that the source of the delay was the change in government administration, Hacienda’s review of the terms of the grant agreement, or reluctance to comply with FCPF policies and procedures for a relatively small grant. Although the federal government continued REDD+ preparation through various other initiatives and sources of bilateral finance, no effort was made to advance in the FCPF process or fulfill FCPF requirements.

On March 27^th, 2014, the World Bank signed a $3.8 million preparation grant agreement with the FCPF Readiness Fund which will support two primary components of Mexico’s REDD+ preparation, which is outlined in the Mexico-R-PP-Assessment-Note:

• Component 1: Organization and consultation (US $2,558,000)
  • Sub-component 1a: National readiness management arrangements ($950,000)
  • Sub-component 1b: Stakeholder consultation and participation (US $1,608,000)
• Component 2: Development of the REDD+ strategy (US $1,242,000)
  • Subcomponent 2a: Assessment of Land Use, Forest Policy, and Governance(US $288,000)
  • Subcomponent 2b: REDD+ strategy options (US $124,000)
  • Subcomponent 2c: REDD+ Feedback and Grievance Mechanism (US $300,000)
  • Subcomponent 2d: Social and Environmental Impact Assessments- SESA (US $530,000)

What caused the federal government’s change of heart? Mexico has set its sights on a coveted spot in the FCPF’s Carbon Fund (CF), thereby gaining access to the substantial financial resources available for payment for results from CF pilot projects. Given that the CF is limited to approximately 5 or 6 countries—compared to the 44 countries currently participating the FCPF Readiness Fund—the federal government appears to have felt sudden urgency to catch up on Readiness Fund requirements and enter the Carbon Fund pipeline. Although the Readiness Fund and the Carbon Fund are intended to be completed sequentially, with Readiness Fund activities preparing the country for the Carbon Fund’s performance-based projects, alignment between the two processes is only required at two discrete points. A signed Readiness Grant agreement is a precondition for presenting an Emission Reduction Project Idea Note (ER-PIN), which evidently proved a decisive motivator for Mexico. The second checkpoint is the Readiness Package: countries must have presented their completed Readiness Package to the FCPF Participants Committee (PC) and received the PC’s endorsement before they are eligible to sign an Emissions Reduction Payment Agreement (ERPA)— the contract for sale/purchase of emission reductions employed by the CF.

The push to align Readiness Fund and Carbon Fund requirements at this late date has forced CONAFOR to adopt a very ambitious timeline for readiness and to re-activate planning for a Strategic Environmental and Social Assessment (SESA),one of the FCPF requirements. The SESA process was previously initiated through draft SESA work plans and the creation of a now-defunct civil society advisory group under the Consejo Tecnico Consultivo (CTC), although activities halted during the last year or two. The SESA work plan  published by CONAFOR in February 2014  appears to be barely altered from the 2012 SESA work plan, and offers little detail regarding a timeline or specific themes of studies planned. The work plan also contains insufficient discussion of integration with the National REDD+ Strategy (ENAREDD+), ENAREDD+ consultation process, or other REDD+ initiatives such as the Forest Investment Program (FIP). In April, BIC submitted an analysis of the SESA Work Plan  to the World Bank and CONAFOR, noting concerns pertaining to coordination between initiatives, sequencing of processes, and carrying out a robust SESA process that meaningfully informs the REDD+ strategy.

As initial steps in pursuit of CF finance, CONAFOR presented its Early Idea during the 7^th Carbon Fund meeting in June, 2013, and officially presented its Emissions Reduction Program Idea Note (ER-PIN) during the 9^th Carbon Fund meeting in Brussels on April 10, 2013 . Gustavo Sánchez, President of Red MOCAF (la Red Mexicana de Organizaciones Campesinas), participated in the official presentation of Mexico’s ER-PIN as a representative of Mexican civil society, which allowed him to provide an additional perspective and raise some civil society concerns. Mexico was added to the Carbon Fund pipeline based on what was largely deemed a successful presentation of their ER-PIN. Although no conditions were attached to their inclusion in the pipeline, the participants, observers, and donors suggested attention to various issues in developing an ER program, including enhanced coordination with the Ministry of Agriculture; demonstrating how the reference level approach complies with the Carbon Fund Methodological Framework; providing information regarding how the Carbon Fund will generate additional emissions reductions beyond existing REDD+ initiatives; and providing additional information on non-carbon benefits, private sector engagement, and benefit sharing. Prior to the Carbon Fund meeting in Brussels, BIC submitted an analysis of the ER-PIN  that noted several of the same themes. In addition to the concerns also included in BIC’s analysis of the SESA work plan regarding complementarity and coordination of initiatives, the analysis also noted that the ER-PIN lacks sufficient information on numerous key aspects, among them a benefit sharing system; financial arrangements; incentivizing and monitoring non-carbon benefits; and guidance on free, prior and informed consent (FPIC).  The ENAREDD+ Working Group (GT-ENAREDD+) of the National Forestry Council (CONAF)  submitted comments to CONAFOR on the ER-PIN, which are included as an annex to the document. These concerns include CONAFOR’s omission of certain civil society stakeholders and forums in the ER-PIN including CONAF, information on advances in Early Action Areas, consultation protocol for FPIC, financial management arrangements, and benefit distribution. Mexico is also approaching a finalized ENAREDD+ document with the fourth version published in April. CONAFOR plans to consult on this draft of the ENAREDD+ beginning in mid 2014. The signing of Mexico’s Readiness Fund Grant Agreement also signals the World Bank’s formal re-engagement in the FCPF in Mexico as the country’s FCPF delivery partner. Consequently, the World Bank held a supervision mission May 10-16^th for the FCPF as well as the Forests and Climate Change loan and the FIP. At the request of civil society, the World Bank hosted a CSO meeting in Mexico City at the end of the mission to provide civil society organizations the opportunity to share their perspective with the Bank’s task team leader of the project and ask questions about the FCPF initiative in Mexico. In a final development on citizen engagement around REDD+, an Indigenous and Peasant Roundtable (Mesa Indígena y Campesina)  was created in the framework of CONAF. The roundtable will be comprised of members of the social and indigenous sectors of CONAF plus the government Commission on Indigenous Development (CDI), and was constituted with the goal of creating a strategy for culturally appropriate diffusion of information on the ENAREDD+ to local and indigenous communities, as well as creating and supervising a consultation strategy. The Roundtable constitutes the third national forum for civil society dialogue on REDD+ strategy development—alongside the CTCs (national and regional) and the GT-ENAREDD+ in CONAF—although the newly-created Roundtable seeks to provide specific input process on the consultation and incorporate a much-needed local perspective into the national REDD+ dialogue.