Description: 

A $15 million program to finance sustainable forest management projects in Early Action REDD+ Areas, intended to bring both economic and climate benefits.

Background:

Mexico is among the top greenhouse gas emitters in the Latin and South America region. Mitigation and adaptation measures within the Agriculture, Forestry and Other Land Use (AFOLU) sector, particularly those that promote productive activities that lead to reduced forest pressure, are critical in Mexico’s climate change policy.

The three principle underlying causes of deforestation and degradation in Mexico are lack of knowledge of the economic and social of the benefits of low-carbon activities, lack of institutional coordination among sectors, and a general lack of technical and management skills in the local forest communities.

The program will attend to one of these underlying economic causes of deforestation and degradation by removing the obstacles that limit access to credit by offering the financial terms and conditions required for sustainable landscape projects. Additionally, the program will attend to one of the social causes of these challenges through an intensive technical assistance program for Ejidos and communities to repair the deficit in technical, financial and management skills.

Objectives and Outputs:

The program objective is to contribute to climate change mitigation in Mexico by reducing deforestation and degradation in forest landscapes for Ejidos and communities through utilizing financial instruments.

The Program is a pilot project that will provide a model for its replication in Early Action REDD+ Areas (EARA) and possibly on a national scale. It is intended to demonstrate a viable business models that promote reduction of deforestation and degradation while increasing economic returns. The program also works toward institutional change to lubricate interfacing with the corresponding financial structures. It covers approximately 18 percent of potential demand in EARA.

The program has two components. Component 1 is a $10 million dedicated financing line, accessible by communities and ejidos or their members (the end borrowers), for identified low carbon projects in forest landscapes. The projects financed through sub-loans must reconcile: (i) economic profit for the communities and (ii) generate environmental benefits through reducing the pressure on forests and promoting enhancement of carbon stocks. Component 2 provides $5 million of financial and technical assistance support for the viability of each project.

The estimated direct impact of the program is a reduction of GHG of 397,000 tCO2e, equivalent to the capture of 108,000 tons of carbon, under a 10-year time span. If successful and replicated to reach full potential demand, and considering a 50-year time span for carbon stock accumulation, the indirect impact potential of the program is of 10.2 million tC just in EARA.

This project summary is drawn from draft project proposals [such as the PAD, PID, SAR, and country investment plan] and may not contain the most up-to-date information.

IDB Project Portal

Press Release - "Mexico gets $15 million from IDB to support climate change mitigation"

Project Details
Project Information | MDB Project Implementation Services (MPIS) | Proposed Decision
Approved on September 4, 2012 (Approved Decision)
Approved amount(s):
USD 5.0 million (grant funding)
USD 10.0 million (credits)
USD 250,000 (MPIS)

Comments and Responses:
Japan (August 22, 2012)
United States (August 23, 2012)
United Kingdom (August 31, 2012)

IDB to United States (August 30, 2012)
IDB to Japan (August 30, 2012)
IDB to United Kingdom (September 17, 2012)