Why we think the Founders Pledge report overrates CfRN

Exec summary

We be­lieve that the Founders Pledge Cli­mate Change re­port over­rates Coal­i­tion for Rain­for­est Na­tions (CfRN), both in terms of CfRN’s past record, and in terms of CfRN’s po­ten­tial for fu­ture suc­cess.

We have not rigor­ously as­sessed FP’s opinion on differ­ent in­ter­ven­tions, but have as­sumed for the pur­poses of this piece that forestry is a high-im­pact choice of in­ter­ven­tion to sup­port to tackle cli­mate change.

Our pri­mary con­cerns are:

- We think the FP re­port un­der­states the risks to the REDD+ scheme (we haven’t checked whether that’s just be­cause it’s eas­ier to see those risks now, and per­haps those risks were less ob­vi­ous at the time the FP re­port was writ­ten)

- We think that the op­por­tu­nity costs of fund­ing to REDD+ should be given more weight in the analysis

How­ever de­spite this, we still be­lieve that CfRN is a good choice of char­ity to sup­port. This is be­cause of the com­bi­na­tion of CfRN’s (a) choice of a pre­sum­ably promis­ing in­ter­ven­tion area (forestry) and (b) unique po­si­tion­ing to fill a valuable role.

After meet­ing with and re­view­ing the other FP recom­men­da­tion, which is CATF, we are more con­fi­dent in sec­ond­ing the FP recom­men­da­tion of CATF.

We also be­lieve that some ar­eas of CfRN’s work would be suit­able for im­pact in­vest­ment.

This re­port sets out SoGive’s cur­rent opinion, as well as high­light­ing ar­eas through­out the re­port where fur­ther anal­y­sis could im­prove the opinion. It is pos­si­ble that our opinion could evolve as new in­for­ma­tion comes to light.

Thanks go to John Halstead from Founders Pledge and SoGive vol­un­teer alexrjl for their re­view, and also to CfRN for re­view­ing this piece. Any er­rors re­main with SoGive.

CfRN strongly dis­agreed with this anal­y­sis; this piece will try to high­light the ar­eas of dis­agree­ment in each rele­vant sec­tion.

What is CfRN?

The Coal­i­tion for Rain­for­est Na­tions (aka CfRN) is an in­ter­gov­ern­men­tal or­gani­sa­tion of more than 50 rain­for­est na­tions which works to pro­mote en­vi­ron­men­tal sus­tain­abil­ity while cre­at­ing op­por­tu­ni­ties for eco­nomic ad­vance­ment within trop­i­cally forested de­vel­op­ing coun­tries. It was founded in 2004 by the Prime Minister of Pa­pua New Guinea and the Pres­i­dent of Costa Rica.

CfRN has played a pivotal role in es­tab­lish­ing a global agree­ment on de­foresta­tion in UN cli­mate change treaties. Begin­ning in 2005, CfRN launched and cham­pi­oned a mechanism known as Re­duc­ing Emis­sions from De­foresta­tion and For­est Degra­da­tion (REDD+) in the United Na­tions Frame­work Con­ven­tion on Cli­mate Change (UNFCCC). Un­der REDD+, de­vel­op­ing coun­tries are pro­vided with re­sults-based com­pen­sa­tion for pre­vent­ing de­foresta­tion and degra­da­tion, and for con­serv­ing and en­hanc­ing car­bon stocks.

Why has it been pri­ori­tised for a re­view by SoGive?

SoGive pro­vides a dona­tion plat­form (https://​​app.so­give.org) and char­ity anal­y­sis. We pri­ori­tised CfRN for re­view be­cause:

- We be­lieve that cli­mate change is a po­ten­tially high-im­pact cause area to donate to

- We have in­ves­ti­gated Cool Earth be­cause it had largely been con­sid­ered a top dona­tion op­por­tu­nity by the Effec­tive Altru­ism com­mu­nity. The re­view sug­gested that Cool Earth had been over-rated. While not prov­ing that Cool Earth is a bad choice, it cer­tainly opened the door to fur­ther in­ves­ti­ga­tion of high-im­pact cli­mate change char­i­ties.

- We are now pri­ori­tis­ing for re­view the char­i­ties recom­mended by Founders Pledge (FP) and Let’s Fund. CfRN is one of the char­i­ties recom­mended by FP.

Sum­mary of FP ra­tio­nale for recom­mend­ing CfRN

CfRN came to our at­ten­tion be­cause it was recom­mended by Founders Pledge (FP).

The ra­tio­nale for the FP recom­men­da­tion can be split into two el­e­ments:

1. FP con­sid­ers de­foresta­tion a high-im­pact area to tackle in or­der to ad­dress cli­mate change. Based on our high-level re­view, we agree.

2. FP con­sid­ers CfRN speci­fi­cally to be a high-im­pact char­ity to donate to. We are some­what more scep­ti­cal than the FP re­port is, on the ba­sis of a num­ber of meet­ings with CfRN and the in­de­pen­dent anal­y­sis we have done. On bal­ance we are still some­what pos­i­tive about CfRN.

1. Re­view of de­foresta­tion as an in­ter­ven­tion area

First, FP con­sid­ered a num­ber of differ­ent types of in­ter­ven­tion and scored them as set out in the table be­low:

(table comes from p48 of the FP re­port)

Un­der their as­sess­ment FP con­sid­ers that there is a roughly 6 point mar­gin of er­ror, and groups the top four items to­gether as wor­thy of con­sid­er­a­tion.

Our re­view of this area of FP’s work has been only cur­sory, how­ever we have no rea­son to dis­agree with FP’s claim that forestry is a po­ten­tially high-im­pact area to sup­port.

One fac­tor not (we think) already cap­tured in the FP write-up is timing. I.e. avoid­ing de­foresta­tion acts im­me­di­ately, whereas other in­ter­ven­tions (such as plant­ing trees or low car­bon in­no­va­tion) may take many years to have an im­pact on the lev­els of green­house gases in the at­mo­sphere.

This is (pre­sum­ably) an ar­gu­ment in favour of tack­ling de­foresta­tion. Im­plicit in this is the claim that avert­ing a tonne of CO2eq ear­lier is bet­ter than avert­ing a tonne of CO2eq later. This may be cor­rect, e.g. vi­cious cir­cle/​tip­ping point effects (such as re­lease of green­house gases from the melt­ing of per­mafrost) could mean that avert­ing a tonne of CO2eq a few decades from now might be too late. We have not ex­plored this line of thought thor­oughly.

2. Re­view of CfRN specifically

FP sets out the fol­low­ing ra­tio­nale for recom­mend­ing CfRN:

· It works on one of the top four areas

· It has a good track record

· The fu­ture work is cost-effective

· It is a strong organisation

· It has room for more funding

In this piece, we ar­gue that CfRN is a bit less good than the FP recom­men­da­tion sug­gests, but still good. In par­tic­u­lar we will challenge the fol­low­ing ar­eas:

· His­toric de­foresta­tion achieved: The his­toric track record around re­duc­ing de­foresta­tion is good but less good than FP gives credit for in their CEA.

· Cost-effec­tive­ness anal­y­sis ex­cludes op­por­tu­nity costs: The FP cost-effec­tive­ness anal­y­sis shows sub­stan­tial lev­er­age (i.e. a small amount of money into CfRN leads to lots of money raised). How­ever it doesn’t take into ac­count the pos­si­bil­ity that the money raised might any­way have been used for some­thing worth­while.

· In­suffi­cient in­cen­tive funds: The track record around rais­ing in­cen­tive funds – an in­te­gral part of the REDD+ sys­tem – is in­suffi­cient: only 4% of the amount that should have been paid has been. The failure to raise in­cen­tive funds casts doubt on the fu­ture suc­cess of the REDD+ sys­tem.

· Plans for fund­ing from the pri­vate sec­tor ap­pear op­ti­mistic: The abil­ity to gen­er­ate fu­ture funds is based on plans to reach in­di­vi­d­u­als and cor­po­rates. Th­ese plans ap­pear op­ti­mistic.

How the REDD+ sys­tem works

In a nut­shell, the REDD+ sys­tem works by pro­vid­ing de­vel­op­ing world coun­tries (or rain­for­est na­tions) with a fi­nan­cial in­cen­tive in re­turn for stop­ping de­foresta­tion.

In par­tic­u­lar, the sys­tem in­volves rain­for­est na­tions re­ceiv­ing the fol­low­ing amount:

(refer­ence rate of de­foresta­tion [T CO2e] minus ac­tual rate of de­foresta­tion[T CO2e]) × $5

  • The refer­ence rate is de­ter­mined based on his­toric rates of de­foresta­tion. It rep­re­sents how much de­foresta­tion is ex­pected to hap­pen if there were no REDD+ in­cen­tive. It’s mea­sured in tonnes of CO2eq.

  • The ac­tual rate is mea­sured and then ver­ified by the UN. The UN takes some care in do­ing this, in­clud­ing the use of satel­lite imagery. It’s mea­sured in tonnes of CO2eq.

  • The $5 figure is a figure which cap­tures the cost per tonne of CO2 equiv­a­lent. This is thought to un­der­state the cost. CfRN cited a McKinsey study which sug­gested that the $5 cost cov­ers 25% of the op­por­tu­nity cost if the re­cip­i­ent coun­try had de­cided to let the rain­for­est land be used com­mer­cially. This means that the REDD+ sys­tem is helping to rec­om­pense the rain­for­est na­tion for not de­forest­ing, but the rain­for­est na­tion is shoulder­ing most of the bur­den it­self.

The REDD+ sys­tem is en­shrined in the Paris agree­ment. The Paris agree­ment re­quires that emis­sion re­duc­tions are re­viewed and eval­u­ated, and that cli­mate fi­nance is re­viewed and eval­u­ated. It does not place an ex­plicit le­gal obli­ga­tion on de­vel­oped world coun­tries to fund the REDD+ in­cen­tives.

Note that as an in­ter­me­di­ary, CfRN is work­ing to keep both sides of the trans­ac­tion happy. I.e. the fun­ders (e.g. cor­po­rates or gov­ern­ments from the de­vel­oped world) should be satis­fied that rain­for­est na­tions can de­liver on re­duc­tions in de­foresta­tion and the rain­for­est na­tions need to trust that they will re­ceive their in­cen­tive.

His­toric de­foresta­tion achieved

Thus far (i.e. up to 2017), the REDD+ sys­tem has achieved 6.3 billion tonnes of CO2eq averted (ap­proved by the UNFCCC) + a fur­ther 2.4 billion (un­der re­view by UNFCCC). So 8.7bn tonnes in to­tal. This refers to the refer­ence rate minus the ac­tual rate, as set out in the pre­vi­ous sec­tion. In terms of $, this would be $31.5bn or $43.5bn in­clud­ing the re­sults un­der re­view.

We un­der­stand from the FP re­port that around $10bn has been pledged, i.e. sig­nifi­cantly less than the amount needed.

Ac­cord­ing to the UNFCCC’s REDD+ In­for­ma­tion Hub, pay­ments have been made for around 255 mil­lion t CO2eq. This is just un­der 4% of the achieved re­sults, which is far be­hind the amount pledged, let alone the amount needed; this seems to in­di­cate that c $30bn is yet to be found (or even more if we in­clude the re­sults un­der re­view).

The FP CEA in­cludes a pes­simistic set of figures. Un­der this pes­simistic sce­nario, the amount of fund­ing raised was $5bn. How­ever 255 tonnes × $5 per tonne = c $1.3bn, which is sub­stan­tially less than the pes­simistic figure in the model. Ar­guably this was just an in­ter­me­di­ate step in the calcu­la­tion – i.e. it’s maybe harsh to hold FP to ac­count for be­ing too op­ti­mistic on the amount of fund­ing raised; FP pre­sum­ably cre­ated the model with a view to mod­el­ling the im­pact on CO2, not $. How­ever this does seem to sug­gest that the FP anal­y­sis did not fully an­ti­ci­pate the short­fall in fund­ing that CfRN is cur­rently fac­ing.

It is how­ever that pledgers may yet pay up, how­ever at this stage it must con­sid­ered whether rain­for­est na­tions will start to doubt the REDD+ scheme (more on this later)

CfRN strongly dis­agreed with the find­ings of this sec­tion. In par­tic­u­lar, they pointed out that there is fund­ing go­ing to REDD+ out­side of the REDD+ In­for­ma­tion Hub, and when asked for more in­for­ma­tion about this, they said “just this UNGA, Boris John­son pledged an­other $1 billion for rain­forests, Pres­i­dent Macron an­other $80 mil­lion, and An­gela Merkel $200 mil­lion with goal to mo­bi­lize an­other $800 mil­lion. This is in ad­di­tion to Nor­way’s $330 mil­lion per year.”

Due to con­straints of time/​pro­cess the ap­par­ent gap be­tween the c. $2.4bn men­tioned in this quote from CfRN and the c.$30bn re­quired has not been ex­plored at this stage.

Cost-effec­tive­ness anal­y­sis ex­cludes op­por­tu­nity costs

While CfRN hopes to raise sub­stan­tial funds for REDD+, we should con­sider what would have hap­pened with those funds oth­er­wise.

To be clear, this sec­tion is *not* con­sid­er­ing the op­por­tu­nity cost of your (the donor’s) money go­ing to CfRN. Rather, CfRN en­ables other funds to be raised and donated to REDD+ – this sec­tion is con­sid­er­ing the op­por­tu­nity cost on those funds.

Assess­ing CfRN’s im­pact with­out con­sid­er­ing the op­por­tu­nity costs of the funds used on REDD+ over­states the im­pact of CfRN. E.g. imag­ine a Cost-Effec­tive­ness Anal­y­sis which mod­els CfRN as $3m of CfRN → $500m of REDD+ fund­ing → some large amount of CO2 eq averted. This would mean CfRN is as im­pact­ful as a body which can achieve an eye-wa­ter­ing 10,000% re­turn on in­vest­ment, and which in­vests your money and then donates to REDD+. And in­deed if REDD+ were the only way to achieve cli­mate out­comes at scale (e.g. in the event of a car­bon tax) then this may be le­gi­t­i­mate. How­ever REDD+ is not the only op­tion (al­though it is a good op­tion). Other op­tions in­clude sim­ply plant­ing trees.

To con­sider op­por­tu­nity costs we’re go­ing to con­sider three sce­nar­ios:

A “high” op­por­tu­nity cost is meant to cap­ture the idea that the coun­ter­fac­tual use of the funds is roughly as good as the ac­tual use of the funds (in terms of a very rough bal­l­park es­ti­mate). In­deed there may con­ceiv­ably be other in­ter­ven­tions with bet­ter cost-effec­tive­ness than REDD+.

There is some un­cer­tainty about the High/​Med/​Low as­sess­ments in the “Op­por­tu­nity Cost” column, es­pe­cially in the case of the in­ter­na­tional de­vel­op­ment coun­ter­fac­tual. The claim that most of the fund­ing is likely to come from high-to-medium-op­por­tu­nity-cost sources is even more un­cer­tain (coun­ter­fac­tu­als are hard).

Con­sid­er­ing op­por­tu­nity costs of REDD+ funds in more detail

We con­sider a pub­lic sec­tor /​ pri­vate sec­tor split. Thus far most of the fund­ing has come from the pub­lic sec­tor, and this may re­main the case in the fu­ture, de­pend­ing on how CfRN’s efforts to raise more funds from cor­po­rates go.

Public sector

Coun­ter­fac­tual = other cli­mate change: For pub­lic sec­tor sources (i.e. fund­ing from gov­ern­ments) fund­ing can come from bud­gets which are already al­lo­cated to cli­mate change. While some in the cli­mate change arena con­sider REDD+ a cost-effec­tive way to achieve pos­i­tive cli­mate change out­comes, once the full cost is taken into ac­count (not just the $5 per tonne that the fun­der pays), it’s not clear that this is ma­te­ri­ally more cost-effec­tive than, say, just plant­ing trees. When we re­fer to the “full cost” here, we’re refer­ring to the fact that the $5 is thought to be just 25% of the cost of achiev­ing the re­duc­tion in de­foresta­tion (i.e. the de­vel­oped world coun­try is pay­ing $5 per tonne and the rain­for­est na­tion is pay­ing c $15 per tonne). In this case it’s not clear that this is achiev­ing a ma­te­ri­ally bet­ter out­come from a cli­mate change per­spec­tive.

A more care­ful anal­y­sis of how gov­ern­ments and other fun­ders ac­tu­ally al­lo­cate their re­sources may shift this opinion. For ex­am­ple, al­though there are other scal­able ways to avert green­house emis­sions for a cost of c.$20 per tonne of CO2eq, by as­sess­ing the op­por­tu­nity cost as high, we are im­plic­itly as­sum­ing that gov­ern­ments and other fun­ders make cost-effec­tive re­source al­lo­ca­tion de­ci­sions. If in fact gov­ern­ments al­lo­cate funds to less cost-effec­tive solu­tions, or in­deed to poor in­ter­ven­tions which are ac­tu­ally net harm­ful for the en­vi­ron­ment, this opinion on the op­por­tu­nity cost could be re­assessed.

Coun­ter­fac­tual = in­ter­na­tional de­vel­op­ment: The gov­ern­ments with the great­est propen­sity to sup­port REDD+ have some cor­re­la­tion with those most prone to meet the 0.7% of gross na­tional in­come on over­seas de­vel­op­ment aid (ODA). E.g. un­til now this has been largely Nor­way, which funds an out­sized amount of ODA for a small coun­try, and the other coun­tries CfRN have men­tioned have largely also mostly been ma­te­rial ODA con­trib­u­tors. So an­other pos­si­bil­ity is that the funds may be re­al­lo­cated from ODA to REDD+, es­pe­cially since there’s a clear de­vel­op­ment nar­ra­tive that can be used (i.e. de­vel­oped na­tions be­came rich by burn­ing fos­sil fuels, REDD+ al­lows de­vel­op­ing world na­tions to re­ceive a fi­nan­cial in­cen­tive to not do the same thing).

It may be that in­ter­na­tional de­vel­op­ment work is a higher im­pact use of funds than cli­mate change (see https://​​fo­rum.effec­tivealtru­ism.org/​​posts/​​GEM7iJnLeMkTMRAaf/​​up­dated-global-de­vel­op­ment-in­ter­ven­tions-are-gen­er­ally-more, here­after “Hauke’s ar­ti­cle”). It is pos­si­ble to dis­agree with Hauke’s ar­ti­cle, in­deed if you are con­sid­er­ing donat­ing to a cli­mate change char­ity you may well dis­agree. A sim­plis­tic ap­pli­ca­tion of the find­ing of Hauke’s ar­ti­cle would lead to a con­clu­sion that the op­por­tu­nity cost noted in the table above should be “high”. Below we set out two rea­sons why a sim­plis­tic ap­pli­ca­tion of Hauke’s find­ing might be too sim­plis­tic:

(a) To perform this com­par­i­son, the au­thor, Hauke Hille­brandt, eval­u­ated the benefits of fund­ing cli­mate change work us­ing a So­cial Cost of Car­bon (SCC) calcu­la­tion from a pa­per in Na­ture Cli­mate Change: https://​​www.na­ture.com/​​ar­ti­cles/​​s41558-018-0282-y. You may dis­agree with this calcu­la­tion of the SCC. We con­sider this be­low and re­main un­clear whether this SCC calcu­la­tion is too op­ti­mistic or too pes­simistic.

(b) Hauke’s calcu­la­tion con­sid­ered a dona­tion to GiveDirectly to be the rep­re­sen­ta­tive of dona­tions to Global Devel­op­ment. You may think that ODA funded by a gov­ern­ment or multi­na­tional body differs from the effec­tive­ness of a dona­tion to GiveDirectly. We con­sider this be­low and lean to­wards the view that ODA prob­a­bly un­der­performs GiveDirectly.

To briefly ex­pand on these points:

(a) If you open the Na­ture pa­per and look at the meth­ods sec­tion (at the end) you’ll see that So­cial Cost is calcu­lated with refer­ence to eco­nomic cost (i.e. GDP). There are a num­ber of rea­sons why GDP is gen­er­ally con­sid­ered an in­ad­e­quate mea­sure of so­cial value. In this par­tic­u­lar con­text, this also doesn’t cap­ture the risk that cli­mate change may make con­flict more likely, which may sug­gest that the benefits of tack­ling cli­mate change are un­der­val­ued. Con­versely Hauke notes in his ar­ti­cle that the SCC has been crit­i­cised for be­ing too high for var­i­ous method­olog­i­cal rea­sons.

(b) It may be rea­son­able to be­lieve that ODA fund­ing achieves out­comes com­pa­rable to a dona­tion to GiveDirectly, for ex­am­ple you may be­lieve that ODA fun­ders are “good” (im­pact fo­cused and cost-effec­tive­ness fo­cused); in­deed my (limited) un­der­stand­ing sug­gests that the UK gov­ern­ment’s ap­proach (i.e. DfID’s ap­proach) re­ally is good, al­though this may not ap­ply equally to other fun­ders. You may also be­lieve that in­ter­na­tional de­vel­op­ment work in­cludes enough low-hang­ing fruit that it is rel­a­tively easy to find effec­tive work (al­though this ar­ti­cle https://​​80000hours.org/​​ar­ti­cles/​​effec­tive-so­cial-pro­gram/​​#es­ti­mates-within-in­ter­na­tional-de­vel­op­ment-and-meta-analy­ses-vs-rcts con­sid­ers this and sug­gests that while this is true, it’s not enough to ma­te­ri­ally change the bot­tom line – i.e. most in­ter­na­tional de­vel­op­ment in­ter­ven­tions don’t work). Beyond the con­cerns already noted, aid agen­cies have large bud­gets, and it may be hard for them to find enough high qual­ity pro­jects to fund; and even if they have found enough high qual­ity pro­jects for their av­er­age im­pact to be good, the best they can do at the mar­gin may still un­der­perform GiveDirectly. On bal­ance, this (in­com­plete) anal­y­sis seems to lean in the di­rec­tion that ODA prob­a­bly un­der­performs GiveDirectly

The ten­ta­tive con­clu­sion is that this op­por­tu­nity cost should be treated as medium. It’s en­tirely pos­si­ble that a more rigor­ous anal­y­sis of this could change the as­sess­ment to high or low.

Coun­ter­fac­tual = mis­cel­la­neous: From our dis­cus­sions with CfRN, it seems that gov­ern­ments do also “cre­ate” new bud­gets for REDD+, which means that the money would have oth­er­wise been spent on “nor­mal” gov­ern­ment spend: roads, hos­pi­tals, mil­i­tary, etc. To a large ex­tent, it seems rea­son­able to be­lieve that REDD+ is a sub­stan­tially bet­ter use of funds than a new road or hos­pi­tal in a coun­try which is already well de­vel­oped and has plenty of roads and hos­pi­tals.

Which coun­ter­fac­tual is most likely? Our im­pres­sion is that it’s eas­ier to re­al­lo­cate funds to REDD+ from funds already al­lo­cated to cli­mate change or in­ter­na­tional de­vel­op­ment than it is to cre­ate new bud­gets for it. There­fore it seems more likely that funds would have a coun­ter­fac­tual of “other cli­mate change” or “in­ter­na­tional de­vel­op­ment” than “mis­cel­la­neous”. Coun­ter­fac­tu­als are hard, and it’s pos­si­ble that a more de­tailed anal­y­sis of this area could shed more light.

Pri­vate sector

For pri­vate sec­tor sources, the FP re­port ar­gues that REDD+ offsets from cor­po­rates are gen­uinely ad­di­tional, be­cause if the marginal cost of abate­ment is above $10 then pri­vate sec­tor will­ing­ness to miti­gate is for the most part re­duced to zero. If this is the case, the coun­ter­fac­tual means share­hold­ers (e.g. peo­ple with pen­sions or life in­surance poli­cies, or re­tail in­vestors or high net worth in­di­vi­d­u­als) get­ting a bit more money. Un­der the clas­sifi­ca­tion set out above, this would count as “Coun­ter­fac­tual = mis­cel­la­neous”. The im­plicit judge­ment is that us­ing the money on REDD+ in­stead of mak­ing share­hold­ers slightly richer is a much bet­ter out­come. This judge­ment seems likely to be cor­rect.

How­ever, if you be­lieve, as we do, (and as the FP re­port also sug­gests) that large-scale (e.g. $100m+) cor­po­rate fund­ing is likely to come with at least some gov­ern­ment en­courage­ment, if not com­pul­sion, then it seems likely that the true coun­ter­fac­tual is “other cli­mate change”.

In­suffi­cient in­cen­tive funds

As high­lighted in the “His­toric de­foresta­tion achieved” sec­tion above, only a very small amount of the in­cen­tives promised ap­pear to have ac­tu­ally been de­liv­ered. (note that the FP re­port does ac­knowl­edge this, e.g. it says “Th­ese funds have not yet been dis­bursed, so our es­ti­mate of their effect is based on the pro­jected im­pact of REDD+ money.”)

The risk with this is that rain­for­est na­tions may be­come scep­ti­cal of their re­ceiv­ing the in­cen­tives at all, and may with­draw from the scheme.

In­deed Brazil ap­pears to already be ex­press­ing these con­cerns. Un­der Jair Bol­sonaro, Brazil has in­di­cated that they be­lieve they need to find an­other way to de­velop in the ab­sence of REDD+ funds, and have re­duced their in­vest­ment in avoid­ing de­foresta­tion by 95% (i.e. a fac­tor of c.20).

Of the de­foresta­tion re­sults achieved so far, over 90% of it has come from Brazil. So for Brazil to with­draw from the scheme (or mostly with­draw from the scheme) is a body blow for REDD+. Hav­ing said that, an in­crease in in­volve­ment from other coun­tries (such as In­done­sia) may help.

This con­cern has been raised with CfRN who have ar­gued that we should be more san­guine. In par­tic­u­lar, they point out that at the out­set there were con­cerns among po­ten­tial fun­ders. Fun­ders were con­cerned that rain­for­est na­tions may not be able to find ways to effec­tively re­duce de­foresta­tion. So while some fun­ders (no­tably Nor­way and Petro­bras) have pro­vided fund­ing, this is re­ally just try­ing to make the case at this stage. In other words you could view this as the pi­lot stage com­ing to an end now. And now that it’s been demon­strated that rain­for­est na­tions *can* re­duce de­foresta­tion, the fo­cus is now on en­sur­ing that the fund­ing is available.

Given that Brazil is re­duc­ing its in­volve­ment how­ever, we are not san­guine about this risk.

One more thing to note: while the REDD+ scheme isn’t fully de­liv­er­ing what’s promised to rain­for­est na­tions, it would be overly harsh to char­ac­ter­ise an un­paid REDD+ pay­ment as hav­ing zero value for a rain­for­est na­tion. For ex­am­ple, a na­tion could use the money it is due through the REDD+ scheme as a bar­gain­ing chip in other ne­go­ti­a­tions.

On re­view of this write-up, CfRN re­sponded with “Brazil is still en­gaged and cor­rectly de­mand­ing ‘donors’ re­spect na­tional sovereignty around how funds are de­ployed.”

If you be­lieve, as we do, that risks to the fu­ture of the REDD+ scheme are now ele­vated, does this re­duce the value of donat­ing to CfRN, or is it all the more rea­son to try to push on and sup­port the scheme?

- Firstly this *does* re­duce the value of donat­ing to CfRN, as it in­creases the prob­a­bil­ity that the dona­tion will achieve noth­ing or a re­duced amount of im­pact.

- If donors to CfRN were strongly re­act­ing to this bad news by with­draw­ing their sup­port for CfRN, then this might make CfRN more ne­glected. How­ever based on my con­ver­sa­tions with CfRN we don’t un­der­stand this to be case (this is not an area which has been care­fully probed though).

Plans for fund­ing from the pri­vate sec­tor ap­pear optimistic

Part of CfRN’s fund­ing needs is for the reg­istry and ex­change pro­gramme, which will en­able the rais­ing of funds from cor­po­rates (and per­haps in­di­vi­d­u­als too). The reg­istry and ex­change has two com­po­nents:

- A reg­istry, which tracks each tonne of CO2eq averted through­out its life­cy­cle (i.e. from its origi­na­tion in a rain­for­est through to the fun­der, via each in­ter­me­di­ary). This is to avoid dou­ble count­ing, and al­lows for com­pli­ance grade offsets.

- An ex­change, which al­lows for the trade of car­bon offsets

The ad­di­tion of pri­vate sec­tor fund­ing would be im­por­tant (as­sum­ing a ma­te­rial amount of pri­vate sec­tor fund­ing is achieved). As noted in the FP re­port (p. 72), 10% of REDD+ fi­nance as at 2014 has come from the pri­vate sec­tor (note that the origi­nal source for this claim is refer­ring to pledges for REDD+ fi­nance, not ac­tual pay­ments). Fur­ther­more CfRN have sug­gested in our con­ver­sa­tions that the fund­ing for REDD+ was never ex­pected to be solely from gov­ern­ments, so this di­ver­sifi­ca­tion is nec­es­sary.

In the FP CEA, they fore­cast amounts of fund­ing that was well into the hun­dreds of mil­lions of dol­lars, even un­der the most pes­simistic sce­nar­ios.

The FP re­port’s ra­tio­nale for this is that car­bon offset trans­ac­tion val­ues have de­clined, and that CfRN be­lieves that this is be­cause of un­met de­mand for com­pli­ance grade offsets. The FP re­port refer­enced the be­low chart in jus­tify­ing this.



How­ever it is easy to imag­ine many other rea­sons for this, for ex­am­ple be­cause the fun­da­men­tal de­mand has changed for rea­sons to­tally un­re­lated to the de­mand for speci­fi­cally com­pli­ance grade offsets.

In par­tic­u­lar, note that most com­pa­nies do not have a reg­u­la­tory re­quire­ment for com­pli­ance grade offsets. (That said, the FP re­port does ar­gue that the scale of fu­ture de­mand may be large, e.g. it says: “To give an idea of the scale of fu­ture de­mand, ac­cord­ing to one anal­y­sis, the de­mand for for­est offsets from the avi­a­tion sec­tor alone could be more than $3bn per year in the 2020s”; fur­ther re­view of this anal­y­sis may make us slightly more san­guine on this.)

CfRN sug­gested in our con­ver­sa­tions that cor­po­rates may nonethe­less de­sire the ex­tra com­fort that comes from hav­ing more rigour in en­sur­ing that the cli­mate im­pact is ac­tu­ally achieved. We have re­quested and not re­ceived fur­ther in­for­ma­tion to help us bet­ter un­der­stand this claim, how­ever this is con­trary to SoGive’s ex­pe­rience of deal­ing with cor­po­rates, as we have in­di­cated to CfRN.

To ex­pand on this, let’s sep­a­rate out two ways in which com­pa­nies may con­tribute to the REDD+ scheme:

· As part of their Cor­po­rate So­cial Re­spon­si­bil­ity (CSR), the com­pany chooses to donate and/​or en­courage their staff to donate

· The com­pany has been en­couraged/​com­pel­led to make some sort of car­bon offset (e.g. be­cause of a gov­ern­ment re­quire­ment, such as a car­bon tax)

In our ex­pe­rience of deal­ing with cor­po­rates and their CSR schemes, we have found that cor­po­rates are more in­ter­ested in cor­po­rate goals (such as staff re­ten­tion) than im­pact goals (such as en­sur­ing that the dona­tions are definitely achiev­ing the best im­pact). Goals such as staff re­ten­tion are best achieved with emo­tive mar­ket­ing rather than rigour in track­ing im­pact, and CfRN’s edge is in the lat­ter, not the former.

In­de­pen­dently of this source of con­cern, we would gen­er­ally sug­gest that any small team spend­ing a few mil­lion dol­lars per an­num is un­likely to gen­er­ate hun­dreds of mil­lions of dol­lars from deal­ing with cor­po­rates (or from any­thing else). All the more so when the team is not ex­pe­rienced with that mar­ket. For refer­ence, a fundrais­ing spend which re­sults in 4 times as much fundraised rev­enue would be con­sid­ered rea­son­able.

In other words, ex­pect­ing CfRN to build the sys­tem *and* en­sure that large amounts of fund­ing go through the plat­form is un­re­al­is­tic.

More re­al­is­tic, how­ever, is the pos­si­bil­ity that large amounts of fund­ing go through the plat­form be­cause of, say, gov­ern­ment in­fluence on com­pa­nies. It is con­ceiv­able that CfRN could gen­er­ate hun­dreds of mil­lions of dol­lars of fund­ing from cor­po­rates through a com­bi­na­tion of sel­l­ing the REDD+ con­cept to them and gov­ern­ments gen­tly en­courag­ing the use of REDD+. Alter­na­tively if there were some sort of car­bon tax (es­pe­cially one which re­quired the use of REDD+, or at least re­quired com­pli­ance grade offsets) then this pro­jec­tion be­comes much more eas­ily achiev­able. (We un­der­stand that the car­bon tax sce­nario is also the sce­nario which the FP re­port thought most likely as well)

Note that it is overly gen­er­ous to as­sign all the of benefits of this solely to CfRN. Cred­it­ing the out­comes solely to CfRN would be cor­rect if, for ex­am­ple,

- CfRN were solely re­spon­si­ble for driv­ing REDD+ dona­tions

- The cause of the REDD+ fund­ing were some­thing else (e.g. a car­bon tax) but that sys­tem could not be im­ple­mented with­out REDD+

How­ever it is pos­si­ble to have a car­bon tax with­out REDD+ (al­though if there is a car­bon tax, hav­ing REDD+ in place is a great idea).

In sum there­fore, it seems that CfRN’s im­pact in the cor­po­rate space is un­likely to be as out­sized as you might think from the FP anal­y­sis. E.g. the <$10m of spend at CfRN be­ing solely re­spon­si­ble for >$100m of fund­ing is un­likely to be the case.

CfRN strongly dis­agreed with the claims in this sec­tion. They have said “we try to stay ’small’ and part­ner wher­ever some­one can do it bet­ter than us” and “Re­gard­ing set­ting up funds. We con­ceived and jointly es­tab­lished three (made the origi­nal re­quest, en­gaged in col­lab­o­ra­tive de­sign pro­cesses, and par­ti­ci­pated on found­ing boards) in part­ner­ship with the World Bank and UN Sys­tem — the For­est Car­bon Part­ner­ship Fa­cil­ity ($1.3 billion), the For­est In­vest­ment Pro­gram ($750 mil­lion) and the UN Multi-Donor Trust Fund’s UN-REDD Pro­gram ($320 mil­lion) = $2.4 billion in to­tal.”

How ma­te­rial are these con­cerns?

A big part of the driver for the FP recom­men­da­tion is the in­ter­ven­tion area – forestry – which has not been care­fully re­viewed in this piece. Un­der the FP anal­y­sis, there is a big gap be­tween forestry and the next best in­ter­ven­tion (en­ergy effi­ciency). Thus shav­ing off a few per­centage points of im­pact is un­likely to move the dial. If, how­ever, you thought that the op­por­tu­nity costs were high enough to take out the large ma­jor­ity of the im­pact, or if you thought that the REDD+ sys­tem were ac­tu­ally dis­plac­ing more cost-effec­tive work then you might re­vise your view of CfRN. Similarly if you thought there was a very high prob­a­bil­ity of REDD+ failing, or some com­bi­na­tion of those two con­cerns, then you might be more nega­tive on CfRN.

Conclusion

The tone of this re­port may ap­pear nega­tive about the FP anal­y­sis. It is worth stat­ing ex­plic­itly, there­fore, that we found the FP re­port to be in­sight­ful and use­ful, and that while there are some ar­eas of dis­agree­ment, we con­sider the FP re­port to be a valuable con­tri­bu­tion to the anal­y­sis of cli­mate change dona­tion op­por­tu­ni­ties. On a re­lated note, we have also met with the other char­ity recom­mended by the FP re­port (CATF) and find the case made here to be much more con­vinc­ing.

While this write-up sets out a num­ber of ar­eas in which we are less op­ti­mistic about CfRN than the FP re­port sug­gests, we still think that CfRN is a fairly good char­ity to sup­port, as­sum­ing that we sec­ond the FP view on the value of forestry.

We con­clude that there are risks to the REDD+ scheme, and we think that the op­por­tu­nity costs of the scheme may be sub­stan­tial.


Ap­pendix:

Some use­ful links:

FP re­port: https://​​founder­spledge.com/​​re­search/​​fp-cli­mate-change

FP’s CfRN CEA: https://​​docs.google.com/​​spread­sheets/​​d/​​12lwvxlWLjwuSuXi­ciFvnBF2bkfcCkrus­dqqT37_QWac/​​edit#gid=0