#1REDD+ in the State of Acre, Brazil: Rewarding a pioneer in forest protection and sustainable livelihood REDD Early Movers (REM) Programme provides results-based finance for reduced emissions from deforestation#2REDD+ in the State of Acre, Brazil: Rewarding a forest conservation and sustainable development pioneer. The Brazilian State of Acre: An Early Mover for forest protection THE Brazilian State of Acre is a global pioneer in forest protection. Situated in Brazil's Amazon re- gion, the State has shown high commitment and Leadership for low-deforestation development. Since 1998, Acre's State government has set up public institutions and adopted a comprehensi- ve set of policies that support forest protection, sustainable land use and incentives for sus-tai- nable development with a strong focus on forest dependent communities, including Indigenous Peoples and rubber tappers. In 2010, Acre's State government established the Incentive System for Environmental Services (SISA - Sistema Estadual de Incentivos a Serviços Am- bientais) to support the permanency, restoration and protection of environmental services. The first programme implemented in the frame of SISA is the Carbon Programme (ISA Carbono), which aims to provide a framework for reducing emis- sions from deforestation and forest degrada-tion (REDD+). Since 2005, Acre has already managed to reduce deforestation significantly.#3Foto: Acervo Secom AC 4 REDD+ in the State of Acre - Brazil REDD+ in the State of Acre - Brazil 5 Germany's support to the Brazilian State of Acre Recognizing Acre's environmental leadership and achievements in reduced deforestation, the German government supports Acre's State government in further strengthening forest and climate protection in alignment with national Brazilian policies. As a key component of this partnership, the two governments agreed to pilot a results-based REDD+ system in the context of Official Development Assistance (ODA): Germany provides funding for emission reductions that have been achieved as a result of reduced deforestation in the State of Acre. In 2012, the Federal Ministry for Economic Cooperation and Development (BMZ) committed REDD Early Movers (REM) Programme 16 Mio. EUR in results-based finance to be implemented through the German REDD Early Movers (REM) Programme from 2012-2017. In 2013, the Fed-eral Ministry for the Environment, Nature Conservation, Build-ing and Nuclear Safety (BMUB) strengthened the Programme with additional 9 Mio. EUR for results-based payments. This brief summarizes the main features of the first phase of the REM Programme in Acre, Brazil, setting the framework for results-based finance, fund management and investment as well as lessons learned from implementation. Launched at the Rio+20 Conference in June 2012, REM is an innovative initiative of German Offi- cial Development Assistance (ODA) that re-wards pioneers of forest protection and climate change mitigation. It targets countries or regions that have already taken initiative to pro-tect forests. The Programme provides performance-based payments for verified emission reductions from defo- restation, thereby piloting REDD+ in line with the decisions agreed under the United Nations Fra- mework Convention on Climate Change (UNFCCC). The Programme is implemented jointly by KfW Development Bank and German Agency for International Cooperation (GIZ), and commissioned by the German Federal Ministry for Economic Cooperation and Devel-opment (BMZ). In 2012, the Brazilian State of Acre was the first one to recei- ve results-based finance for verified emission reductions. In 2013 and 2014, agreements were deve- loped with Ecuador and Colombia, respectively. REM does not engage in the trading or offsetting of greenhouse gas emissions and does not support market mechanisms. It has entered partnerships with the German Ministry for the Environ-ment, Nature Conservation, Building and Nuclear Safety (BMUB) and with other international donors, namely Norway and the United King-dom, and wel- comes further cooperation. Objective The objective of the REM Programme in Acre is to support the reduction of emissions from deforestation in the Brazilian State of Acre. In this manner, the Programme pilots REDD+ perfor- mance-based finance in consistency with the United Nations Framework Convention on Climate Change (UNFCCC) and aims to contribute to climate and forest protection. By rewarding results, REDD+ funding supports What is rewarded? The Programme rewards emission reductions that derive from reduced gross deforestation at a value of five US Dollars per ton of carbon dioxide How are emission reductions calculated? Emission reductions are calculated from changes in forest cover in the reference region, Acre's state jurisdiction. As a benchmark, forest cover changes are measured against a reference level, estimated based on historical average deforesta-tion rates. In the case of the REM Programme in Acre, this means that deforestation that occurred during a "forest year" (August to July) in the period 2011-2015 is compared to the average deforestation that occurred during the Acre in consoli-dating and expanding its forest and climate protection policies and programmes. Funds are used to strengthen the Incentive System for Environmental Services (SISA) and to provide tangible benefits to local actors protecting forests and incentives to further reduce deforestation. equivalent. Payments under this agree-ment are based on emission reductions achieved between 2011 and 2015. reference period (2001-2010). The difference then constitutes the basis for emission reductions (ER). To ensure Acre's reference level's comparability with the na-tional level, REM Programme operates based on the same meth-odology and data (PRODES), used to establish the Amazon Fund's Reference Level.#46 REDD+ in the State of Acre - Brazil As a basis for payments, REM only considers ER below the historical average. To qualify for pay- ment, ER need to be: • • • Measured based on forest area and area change ("activity data") against the reference level in the reference region (the State of Acre), determined by satellite imagery and data on carbon stocks ("emissions factors") Reported, i.e. the information is compiled in a complete and trans-parent manner Validated by a scientific committee, consis- ting of national and international scientists, following an agreed protocol Registered in a registry system for tracking and avoiding double-counting Retired, meaning that emission reductions cannot be used as carbon offsets for trading or compliance. REM does not purchase carbon credits, nor is a transfer of title required. Brazil may report reward-ed ER to the UNFCCC as part of its voluntary national contribution towards climate change mitigation. REM does not reward the total amount of ER - only a propor-tion corresponding to funding allo- cations. As of December 2016, all of the committed funds (EUR 25 million) have been disbursed to Acre's State government. REM has rewarded ap-prox. 16.5% of Acre's total ER in the 2011-2015 period, with an ad- ditional 17.7% registered and retired as a risk mana- gement mechanism by Acre. REM encourages other actors to reward Acre's remaining ER. REDD+no Estado do Acre Brazil's forest monitoring Through PRODES (Satellite-Based Monitoring of Forest Clearing in the Amazon), Bra-zil's Na- tional Institute for Space Research (INPE) collects data on forest cover change and pro-duces, since 1988, yearly defor-estation rates in the Legal Ama-zon. These data are also used by the Government for the establishment and implementa-tion of public policies to combat deforestation. Key facts about the Brazilian Amazon The Amazon Biome, spanning 9 countries, covers an area of 6.7 million km² - roughly two times the size of India. Around 60% of the world's largest rainforest is found in Brazil - covering approx. 50% of the national territory. The Brazilian Amazon hosts a quarter of the world's terrestrial species, carries out 15% of terrestrial photosynthesis and con-tains an enormous carbon stock - all of which contri- bute signifi-cantly to global social and econo- mic benefits. Key facts about the State of Acre • Situated in the South-West of the Brazilian Amazon, Acre is one of Brazil's smaller states - with an area of 164.123,7 km² it occupies only around 2% of the Brazilian territory, but equals approximately the size of Nepal. Home to a diverse population of more than 830.000 people, of which 200.000 live in rural areas and approx. 23.000 are from in-dige- nous communities. The 14 million hectares of primary forest cover 87% of Acre's territory. Protected areas (97% forested) and territories of Indige-nous Peoples (98% forested) harbor more than half of Acre's for-ests. The remaining forests are located in private lands (78%), ru-ral settlements (58%) and not yet defined areas (87%). In these territo- rial categories deforestation pressures are par- ticularly high. Overall, 87% of Acre's forests are still standing, despite de-forestation pressure. While overall improvements in the living condi- tions are noted, social indicators are relatively Low and poverty rates high.#5REDD+ in the State of Acre - Brazil REDD+ in the State of Acre - Brazil 9 Photograph: KWF/ Bernhard Schurian • • Deforestation dynamics in the Amazon Deforestation was mainly driven by large-scale expansion of cattle ranching. Agriculture and road construction along with the establishment to deforestation and forest degradation. Through command-and-control measures, of agrarian reform settlements contribute further large-scale deforesta-tion has mostly been stopped. The tremendous challenge re- mains to address the still significant small- and medium-scale defor-estation. Acre State is one of Brazil's states with the greatest ethnic diversity. There are 15 Indigenous Peoples, speakers of Pano, Arawak and Arawa languages. The 36 indige-nous lands cover 14% of Acre's territory, a territorial extension of 2.4 million hec-tares. Three indigenous groups live in voluntary isolation with initial contact to other indigenous groups on the border of Acre with Peru. 1200 REM's contribution for general ER of Acre State between 2010-2017 Chico Mendes and the rubber tappers' defense of tropical forests The rubber tappers or 'seringueiros' greatly con- tributed to Brazil's leading role as rubber producer and exporter in the beginning of the 20th century until 1910, when Brazilian rubber extraction de- clined because of competition with Asian rubber. Se- ringueiros remained in the region and today cons- titute forest-dependent traditional commu-nities of the Amazon. In the 1980s rubber tappers successfully pro- tested against defor-estation in Acre, under the le- adership of Chico Mendes. Amid the conflicts over deforestation he was shot in 1988, at age 44, drawing global attention to the rubber tapper struggles. As a result of this social movement, a new type of pro- tected areas - "extractive re-serves" - was created in Acre, combining forest conservation with land-use rights, where rubber tappers could live their lives making use of the natural resources and practicing small-holder agriculture. Since then, extractive re- serves were created throughout the Amazon and in other regions of Brazil and have inspired people- -centered conservation approaches throughout the world. 1000 1078 800 60 600 0000 400 20 200 2000-2001 419 883 728 592 398 372 305 309 280 254 259 264 257 221 184 167 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 1999 1999 2000 Reduction of deforestation Annual deforestation rate 2001 Reference level 496 km²/year 2002 - 2006 2007 2004 - 2009 Acre: A Forest Protection Pioneer Beginning of the first "pro-forest government" (Governo da Floresta) Start of the incentive program for native rubber (State Law 1277/Chico-Mendes-Law) Ecological-economic zoning (first phase 1:1 million) Establishment of FEF (State Forest Fund, Law 1426) Policy for "forest citizenship" (Pro-Florestania) Ecological-economic zoning (second phase 1:250.000, State Law 1904) Participatory "Ethno Zoning", Development of Indigenous Territorial Management Plans PGTI Programme for Certification of Smallholder Properties (State Law 2025) 2008 2010 State Plan to Prevent and Control Deforestation in Acre, aligned with the Federal Government's Plan for the Amazon (PPCDAM) 2010 Establishment of SISA (State Law 2308/2010) 2011 Criação do Instituto de Mudanças Climáticas e Regulação de Serviços Ambientais (IMC), coordenando a implementação do SISA#610 REDD+ in the State of Acre - Brazil SISA - an innovative REDD+ framework REDD+ in the State of Acre - Brazil 11 Institutional basis for REM implementation Within the framework of SISA, REM is implemented by the State Department of Environment (SEMA) through the Institute of Climate Change and Environmental Services Regulation (IMC) and the State Forest Fund (FEF). The IMC, a line agency of the SEMA, is in charge of SISA's coordination. The FEF has been the financial mechanism administering REM funds. At the in- struction of the SISA-REM executive committee, the FEF signed cooperation agreements and contracts with implementing agen-cies in government, NGOs and smallholder organizations as a basis for the transfer of funds, linking different programmes and approaches. In some cases, calls for proposals have been organized. The fund distribution is undertaken on a program-matic basis, guided by the benefit-sharing scheme agreed between REM and Acre's State government (see p. 16-18) and approved by CEVA. The CEVA (State Commission for Validation and Monitoring), a participatory governance body, plays a pivotal role within the SISA. It has the authority to approve investment and operational plans, monitors the overall SISA implementation and provides a platform for the inputs from different working groups (Indige-nous Peoples' and Women's WG). Furthermore, the SISA also instituted a formal Grievance Mechanism (Ombudsman Office). CDSA (State Company for the Development of Environmental Services) develops new investment and fundraising strategies for the SISA in close collaboration with public and private insti-tutions. It is also in charge of Acre's registry of emission re-duction units. The overall implementation of SISA and REM has been supervised by an executive committee, composed of IMC, FEF, CDSA, the State Attorney's Office as well as the Gover-nor's Office and is monitored by CEVA. So far, 121 implementation agreements have been signed, 52 with government agencies, 4 with NGOs and 65 with producer organizations/ cooperatives. SISA's simplified governance structure Social control and validation CEVA, Indigenous WG, Women's WG, Ombudsman Monitoring and regulation IMC, Scientific Committee Environmental Services (SISA - Sistema Estadu- Acre's particular distinction as an "early mo- government established the Incentive System for ver" lies in its long-term experience of integra- ting intersectoral policies and pro-grammes wi- thin a pro-forest land-use planning approach. In 2010, building on a policy framework focused on the respon-sible use of resources and incen- tives for sustainable develop-ment, Acre's State al de Incen-tivos a Serviços Ambientais) with the objective to conserve and recover a broad array of environmental services. The first pro-gramme to be operationalized is the "ISA-Carbon pro- gramme", directly linked to REDD+. Implementation and benefit sharing CDSA, FEF Legal guidance and policy design State Attoorney, Governor's Office#712. REDD+ in the State of Acte + Brazil + Ra dame REDD+ in the State of Acre - Brazil 13 Safeguarding social and environmental rights and promoting co-benefits To achieve its social and environmental goals, Acre's State Government is developing a safe- guards framework to consist-ently implement SISA in accordance with national and interna-tional sa- feguards, aiming at avoiding negative impacts for peo-ple and the environment as well as promoting co-benefits. Since 2010, Acre has been a pioneer in the REDD+ Social and Environmental Standards (REDD+ SES) Initiative. Following a multi-stakeholder process, Acre, in 2015, was the first juris-diction that develo- ped and applied REDD+ SES, in an effort to monitor safeguards implementation within SISA and align it with international REDD+ initiatives (full process documentation & reports are available here: http:// www.redd-standards.org/countries/latin-america/ state-of-acre-brazil). Furthermore, the State's sys- tem includes the following ele-ments:: • Several rights-based principles are contained in SISA State Law 2308, ensuring the respect and strengthening of cultural diversity, of the rights of Indigenous Peoples and traditional communities, sustainable resource use as well • • • as social justice and equity in ben-efit sharing. Grievance Mechanism: in 2014, an Ombudsman, related to the State Department of Environment and Attorney's office, was established with the objective to receive suggestions, complaints, de- nunciations as well as proposals of any individual or entity with regard to SISA. Moreover, the Om- budsman has the authority to mediate conflicts that may occur among SISA stakeholders. (Email address of the SI-SA Ombudsman: ouvidoria. [email protected]) Consultation and Participation: prior to the establishment of SISA, the proposed law was consulted broadly with civil society actors. With regard to SISA's design, implementation and monitoring, the governance structure ensures multi-stakeholder participation. Transparency is integrated in SISA's institutional structure, provid-ing roles and responsibilities of its different bodies (CDSA, IMC, CE-VA, FEF, ombudsman, scientific committee). Important decisions are made publicly available. As a REM requirement, financial audits are undertaken regularly. • Clarity on land rights: basic information on forest tenure is available for around 75% of the area. Gaps are being continuously addressed through existing efforts. Change Conference in Cancún (2010), seven sa- feguards were established, providing broad princi- ples for the implementation of REDD+ addressing transparency, stakeholder participation, protection of biodiversity and ecosystem services, respect of the rights of indigenous and local communities, leakage as well as other risks of environmental in- tegrity. Safeguards reporting: In 2015, Brazil was the first country to submit a Safeguards Summary to the UNFCCC detailing how the Cancún safeguards are being addressed and respected (http://redd. unfccc.int/files/brazil_safeguards_summary_fi- nal20150508.pdf). Updates will be submitted annually. Safeguards Information System (SIS): to further systematize the national safeguards reporting, Brazil is developing a Safeguards In-formation System, based on existing sys- tems and sources. In fu-ture, the Safeguards Summary will be generated from the infor-ma- tion contained in the SIS. From 2016 onwards, Acre's sub-national safe- guards processes and systems is being harmonized and linked up with the na-tional safeguards sys- tem. Managing risks and The partners agreed on a mechanism to manage risks and uncertainties: For each ton of rewarded emission reductions by REM, an additional ton is retired by the State of Acre, considered as Acre's own contribution to the partnership and a sign of political will towards reduced deforestation. This seeks to also address risks of shifting deforestation to areas outside of the accounting area ('leakage'); the reversal of emission reduc-tions ('non- permanence'); and uncertainties associated to the estimation of emission reductions, e.g. with respect to defor-estation data and emission factors.#8Rio Cruzeiro do Sul. Big Jun-vim Preto Rio Ouro P Rio das Mig Peru Hum Rio T Juruh Rso Porus BR-317 Amazonas State PA MA AM AC TO RO BA MT GODF MG e Appians age Riotino Wach Andu 1:3.000.000 20 40 80 120 Km 160 Rio Branco MS PH PES Rio Agin Bolivia Rio Mad de Dios RO REDD+ in the State of Acre - Brazil 15 "REM sets a new example through results-based financing because it allows us to go beyond the small-scale financing of individual initiatives toward catalyzing support to central action plans. This in turn can consolidate our efforts to reduce deforestation and improve livelihoods. Strict protection and prohibitions alone would not be feasible in poor rural areas. The incentives come at the right time." Magaly Medeiros - Director, Institute of Climate Change and Environmental Services Regulation (IMC), Acre State government Legend Main Roads Hidrography Deforestation Until 2015 Municipal Boundary Indigenous Communities Conservation Units Settlement Projects Rio 2 DAN "REM Programme is a life change for communi- ties,for river rank populations, for rubber tapper, for indigenous and for civil society in general". Adelaide Fátima Oliveira - Coordinator of the State Commission for Validation and Monitoring of SISA (CEVA) Benefit sharing and investments REM's results-based payments are invested ac- cording to a benefit-sharing scheme that was agre- ed upon between Acre's State government and the REM Programme and validated by the SISA's civil society body CEVA (State Committee for Validation and Monitoring). ithin the benefit-sharing mechanism, a large proportion of funds is designated to directly benefit actors at the local level: 70% of BMZ and 90% of BMUB funds. The remaining 30% (BMZ) and 10% (BMUB) are used for institutional strengthen-ing. The allocation takes into account additional consi- dera-tions, such as other funding sources and re- cent deforestation trends. In the State of Acre, Indigenous Peoples, rubber tappers and communities in protected areas tradi- tionally play a key role in protecting forest carbon stocks. Groups that actively reduce deforestation along the agrarian frontier include farmers and cattle ranchers. Hence, REM's approach to benefit- -sharing seeks to balance incentives between: . Protecting and conserving standing forests and carbon stocks, while not necessarily under immediate threat. This approach is referred to as "stock" and rewards forest protectors; Addressing drivers of deforestation and redu- cing deforestation and the flow of emissions even further. This approach is referred to as "flow" and provides incentives to actors along the agrarian frontier that strive to reduce defo- restation. The SISA provides the programmatic framework for the distri-bution of funds across different pro- grammes, initiatives and institutions. Instead of channelling incentives and attributing contribu- tions of the individual land owner or territorial unit, incentives are disbursed through sub-programmes that target different beneficiary groups. Most of the supported measures were already in place before the creation of SISA. REM funds catalyze and speed up their implementation and help to in-crease the scale and impact of the sub-programmes. "The REM money really makes it all the way to communities in the furthest corners of Acre, deep into the forest. This has a direct impact on the incomes of rubber tappers, on their sustainable production and on avoiding deforestation". José Rodrigues de Araújo Coordinator of National Rubber Tapper Council (CNS), Acre SHA Weede#916 REDD+ in the State of Acre - Brazil What sub-programmes and measures have been financed through REM? Sustainable Smallholder Agriculture / Value Chains REM supports farmers, cooperatives and farmer associations with the following measures: • • • Agreements with producers to refrain from additional deforestation in exchange for targeted sustainable production support Implementation of production systems such as agroforestry sys-tems, agriculture without fire and low impact mechanization Processing, value adding and commercializa- tion of agricultural prod-ucts Indicator/Target*: 6509 smallholder families have benefitted (Baseline: 1250, Target: 6000) Indigenous Communities REM supports indigenous communities with the following measures: Stipends for 149 indigenous agroforestry environment agents who implement actions to protect their Peoples' territories and foster sustainable management activities inside and outside their territories Training of 50 new indigenous agroforestry agents Grants to indigenous organizations for the implementation of indige-nous management plans & cultural heritage activities Specific call for proposals geared towards indi- genous organizations Participatory development of an indigenous SISA sub-programme Overall support to 25 of the 36 indigenous territories in Acre Indicator/Target*: 6997 indigenous people have benefitted (Baseline: 500, Target: 2000) Extractive Reserves REM supports extractive reserves (RESEX) and forest-dependent commu-nities with the following measures: • • . • Processing and commercialization by smal- lholder cooperatives that organize the produc- tion of rubber, Brazil nuts and other non-tim- ber forest products (honey, fruits, oils and nuts) Price mark-up for native rubber production (see box next page) Planting of rubber-based agroforestry system on already deforested areas Support to the logistics and transportation of native rubber latex production for the state preservatives factory Community forestry activities Small-scale wood processing entrepreneurs that use community forestry timber Indicator/Target*: More than 3000 forest ex- tractivist and rubber tapper families have benefit- ted (Baseline: 500; Target: 1400) TELOR ΟΔΟ ВКУЗГ TUDE REDD+ in the State of Acre - Brazil 17 Sustainable and Diversified Animal REM supports cooperatives, farmer associations and individual entities with the following measures: Agreements with producers to refrain from addi- tional deforestation in exchange for targeted sustainable production support • Sustainable pasture management and mecha- nization • Recovery of degraded pastures Piloting agropastoral and agrosilvopastoral methods Development of fish farming in already de- forested areas with a focus on smallholder production Indicator/Target*: 4502 farmer families have benefitted (Baseline: 46, Target: 600) ROXOX#1018 REDD+ in the State of Acre - Brazil Institutional strenghtening of the SISA system REM supports Acre's State government in the strengthening and further development of SISA • ° • . • • • • • Targeted environmental monitoring and con- trol in priority areas, including the interinstitu- tional deforestation control task force Update of the state deforestation prevention and control plan Targeted land tenure regularization in priority areas Improvement of biomass estimates and degra- dation monitoring Publication of the first State-level greenhouse gas inventory in the Brazilian Amazon Structuring and development of SISA (inclu- ding carbon account-ing and registry) Governance / participation mechanisms: CEVA, Indigenous Peoples working group Development of new benefit-sharing compo- nents and SISA sub-programmes Monitoring of safeguards implementation Knowledge management and exchange Communication on SISA Programme monitoring, financial audits and technical evalua-tions Examples of benefits to local stakeholders Price difference for forest products: Rewarding environmental services In 1999, the "Chico Mendes Law" was passed in Acre, allowing for payments for envi-ron- mental services via a price mark-up for forest products. Primarily geared towards rubber, the intention was to provide an incentive for rubber tappers, who were increas-ingly under pressure to deforest or leave forest areas with the decline of the rubber economy. While the impact of a price mark-up for ru- bber alone would have been insignificant due to declining market trends, investments were made into the whole value chain of rub-ber, linked to new collecting, storing and processing methods as well as the strengthen-ing of co- operatives. Furthermore, new business models were developed: a latex and preservative factory was constructed and contracts concluded with the Ministry of Health to procure "Acre natural rubber preservatives" for national health cam- paigns and marketing channels to the fashion industry were opened up. This integrated effort contributed to more constant levels of rubber production and income generation, especially in some rubber tapper areas that are threate- ned by deforestation. REM contributes in several ways: i) providing funds for the lion's share of the current envi- ronmental price mark-up; ii) supporting the lo- gistics and transport of collected rubber out of the forest; and iii) funding the planting of small- -scale rubber plantations in already deforested areas. Overall, this supports the increase of pre- servative produc-tion in the factory and reduces labor costs by rubber tappers (in comparison to tapping rubber from dispersed trees in the forest). Especially younger rubber tappers are more interested in planting rubber trees. REM also provides funds to test price mark-ups in other forest-based value chains (e.g. "Murmu- ru" palm nuts) as a way to diversify and bro- aden this form of payments for environmental services linked to forest goods and to support the viability of production by forest-dependent communities. TAKE ME O "Fish farming brought various opportunities for me and my family, apart from being our food, source of income and livelihood. It is much bet- ter than breeding cattle: the returns we had with pisciculture in one year were twice as high as the returns we had with 40 cattle in three years." Jaira Silva, President of the Cooperative "Coopergrãos"#11Lessons Learned The REM Programme has been operational in Acre since the end of 2012, when the first results- -based payment was made. With five years of im- plementation experience, a series of elements can be identified as decisive for the implementation of REM in Acre: • Political leadership: political will to pursue an agenda focused on sustainability, forest protec- tion and REDD+. Programmatic implementation: REM strongly builds on the robust policy framework and rela- ted implementation structures that were esta- blished in Acre, bringing several advantages: REM was not set up as a separate project that needs to be managed like a traditional develop- ment project by the State government. Instead it was fully integrated into the existing structu- res and programmes, enabling increased cove- rage and a fast and scaled-up implementation The implementation through an innovative envi- ronmental ser-vices system (SISA) that chan- nels REM resources to pro-grammes allows results-based finance to reach beneficiaries directly and efficiently. » Using programmes for benefit-sha- >>> ring is particularly appro-priate in the absence of monitoring and financial structures that can channel resources to individual land-holders (e.g. op-e- rational payment for environmental services programmes). Efficiency in benefit-sharing: within the REM Programme in Acre, 70% of BMZ funds and 90% of BMUB funds • benefit stakeholders at the local Level, contributing to high social and political sustainability. Stock-and-flow approach: By rewarding stakeholder groups who contribute to both protecting forests (stock) as well as to redu- cing deforestation (flow), an equitable, effi- cient and effective balance can be negotiated in the contentious dynamics of land manage- ment. This approach can increase socio-po- litical sustainability. This allows channelling more resources to Indigenous Peoples, for instance, compared to an approach that only distributes funds based on re-duced defores- tation contributions. Flexibility: although allocated for specific pro- grammes, REM funds remain relatively flexible and can be used strategically, for instance to address changes in deforestation patterns. As an example, REM supported a task force to address deforestation hotspots after de-forestation in- creased slightly in 2014. Participation: in the context of SISA and REM, the establishment of the CEVA has been funda- mental for institutionalizing consultations and active involvement by civil society actors. Even though its functioning can still be improved, participation in design, implemen-tation and monitoring of SISA has become part of the poli- tical land-scape and of SISA's routine. Elements that pose risks, need further consi- deration or can be im-proved in the future include the following:#1222 REDD+ in the State of Acre - Brazil REDD+ in the State of Acre - Brazil 23 23 • • • High complexity: despite high capacities wi- thin Acre's State gov-ernment, REDD+ imple- mentation remains demanding with regard to technical and operational requirements (e.g. MRV, carbon account-ing, REDD+ mechanism, and safeguards). Conceptual basis of results-based finance and benefit-sharing: in the operational reality of everyday implementation, it is difficult to maintain the focus on the conceptually chal- lenging elements of the programme design. Need for adaptive management as defores- tation is a moving target and the political and ecological environment is subject to change. The approach and measures on how to reduce • • deforestation and to conserve forests need to be constantly revisited and adapted. Targeting vs. pulverization of funds: given the risk that limited funds are used for a variety of purposes, there is a need to maintain a strate- gic focus in accordance with the sub-program- mes as well as with the stock-and-flow princi- ples. Addressing climate risks (e.g. droughts, floods) with limited funds poses additional challenges for maintaining a programmatic focus that benefits stakeholders at the local level. Operating in tropical forest regions: dis- tances that seem small on a map pose huge Logistical challenges in rainforest environ- • ments. As often only small distances can be covered during a long period of time (e.g. 100 km in five days by boat), operating in re- mote forested areas complicates the imple- mentation and monitoring of pro-grammes. Administration capacities at the local le- vel: Despite significant improvements over the last decade, the capacity to administer funds by producers' organizations and, es- pecially, indigenous organ-izations, remains limited. This results in slower disbursement to these groups than desired as well as the need for heightened admin-istrative support by the programme management to these organi-zations. • • Vertical integration of the REDD+ system: the REDD+ system at the national level is being built up and consolidated. Establishing co-herence across administrative levels needs constant attention. ER demand still slow: in a context where ER results exceed available funding the goal was that additional results-based finance by other sources would complement REM funding. This is materializing much slower than expected.#13Brazil's REDD+ leadership Brazil is internationally renowned for reducing deforestation in the Amazon in an unprecedented scale, largely due to the im-plementation of the in- tersectoral Action Plan to Prevent and Combat De- forestation in the Amazon (PPCDAM) and the ana- lo-gous state level plans. In 2008, Brazil created the first national REDD+ finance mechanism, the Amazon Fund, which is man-aged by the Brazilian Development Bank BNDES. In 2015, as the first country worldwide, Brazil achieved full compliance with the UNFCCC requi- rements to receive results-based payments within the REDD+ Warsaw framework. The country counts with an advanced forest monitoring system, has submitted a Forest Reference Emission Level (FREL) as well as a Safeguards Summary to the UNFCCC and has published a na-tional REDD+ strategy. In 2016 the national REDD+ committee CONAREDD+ was instituted, with participation from govern- -ment and civil society representatives. Significance and outlook Brazil is a forerunner in the international REDD+ process and has managed to significantly reduce deforestation in the last decade. The State of Acre is a global pioneer in forest protec-tion, with its in- novative framework of environmental policies and programmes geared to strengthen forest-based livelihoods. To sustain and broaden the achieve- ments towards low-deforestation development, Acre's State government and the Federal Republic of Germany forged a performance-based REDD+ agreement. At the time of its inception in 2012, this partnership was the first of its kind, rewarding a state jurisdic-tion for its results in reduced defores- tation in alignment with national policies. The me- chanism supports the institutional strengthening of the State's Incentive System for Environmental Services (SISA) as well as the implementation and expansion of sub-programmes to address the dri- vers of deforestation effec-tively and equitably. On the international level, Acre has emerged as an example that a number of countries and state jurisdictions observe and have visited as they are building up their own REDD+ systems. The challenge for Acre, as for other state juris- dictions in the Brazilian Amazon, will be to conso- lidate and further continue the downward trend in deforestation and to provide positive incentives for this process. This becomes increasingly difficult, as the remaining deforestation is more dispersed among a myriad of mid- to small-scale producers, which are more diffi-cult to monitor and to reach with supportive measures. In this context, result- s-based finance is a welcome additional tool for policy makers to balance agricultural development and income generation with the need to maintain and restore ecosystem services that forests provide to Acre, Brazil and the entire world, while fostering the traditional livelihoods of Indigenous Peoples. Reducing deforestation, while supporting live- lihoods and low carbon rural development, is an important element for reaching this balance, for both Acre and its international part-ners. Contacts: Magaly Medeiros Director-President, Institute of Climate Change and Environmental Ser-vices Regulation (IMC), Acre State Government: Email: [email protected] SISA webpage: http://www.imc.ac.gov.br Dr. Christiane Ehringhaus Coordinator, REDD Early Movers (REM) Programme, KfW Email: Christiane. [email protected]#14Published byt Institute of Climate Change and Regulation for Environmental Services - IMC Rua das Acácias, 279. Distrito Industrial CEP: 69929-175 Rio Branco-Acre, Brasil I#15Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety Federal Ministry for Economic Cooperation and Development KFW Novo Acre Governo parceiro, povo empreendedor.