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Governance and Risk: National vs. Sub-national Approaches

Governance and Risk: National vs. Sub-national Approaches. Forest Governance, Carbon and Avoided Deforestation – Discussion Meeting 10 September Chatham House, London. National approach. Advantages Good central oversight may produce coordinated national efforts Economies of scale

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Governance and Risk: National vs. Sub-national Approaches

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  1. Governance and Risk: National vs. Sub-nationalApproaches Forest Governance, Carbon and Avoided Deforestation – Discussion Meeting 10 September Chatham House, London

  2. National approach • Advantages • Good central oversight may produce coordinated national efforts • Economies of scale • (Readily addresses domestic leakage)

  3. National approach • Disadvantages • More difficult for private sector participation: may reduce supply and demand (current carbon market built on private sector participation) • Poor governance (corruption, weak gov institutions, weak judiciary, limited capacity to design, implement, monitor and enforce national policy) will undermine effectiveness (grant funding may not help overcome all these?) • Government risk associated with spending $ with uncertain return (may be overcome with grant funding?)

  4. National approach • Disadvantages • Low effective participation will not address international leakage • Local community participation • Equitable distribution (reduced number of countries participating) • Reduced accuracy in estimating reductions • Hard to monitor degradation

  5. Selected governance indicators for the 8 countries representing 70% of total emissions from LULUCF identified by the Stern Review Percentile rank indicates the percentage of countries worldwide that rate below the selected country • Government effectiveness measures e.g., the quality of policy formulation and implementation • Regulatory quality measures e.g., the ability of the government to formulate and implement sound policies and regulations • Rule of law measures e.g., the quality of contract enforcement • Control of corruption • Source: WGI: Worldwide Governance Indicators Country Snapshot, World Bank

  6. Sub-national approach • Programmatic, project based approaches • Advantages • Allows private sector participation: • Improves supply and demand • Brings direct benefits to local stakeholders • Focus on hot spots • more accurate baseline/ER estimates • Help establish property rights over discrete areas of land • Allows more countries to participate immediately • Reduces international leakage • Increases total reductions globally

  7. Sub-national approach • Disadvantages • Economies of scale harder to achieve (but still possible?) • Issues: addressing national leakage • Only allow project where driver is local? • Minimum project size • Discount number of credits • IPCC Special Report LULUCF 2000 – possibility of leakage in LULUCF projects is the same as in other sectors

  8. Mechanism Design • Other issues: • How effectively each address permanence • Sovereignty over forests • Sovereign liability if failure • Ability to provide long term income stream

  9. Thank You

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