COSTA RICA

PROGRESS AGAINST THE WARSAW FRAMEWORK

Costa Rica has completed all the Warsaw Pillars and reported its first REDD+ results to the UNFCCC in its BUR REDD+ Technical Annex (link here) in 2019.

NS/AP: Building upon decades of experience implementing a pioneer system for Payments for Environmental Services (PES), Costa Rica’s National REDD+ Strategy (ENREDD) and its corresponding implementation plan were developed during the readiness phase. This, in turn, was built on the policies and measures (PAMs) that the government has been implementing since the 1990s. The institutional framework comprises the Ministry of Environment and Energy and the following ascribed institutions: the National Fund for Forest Financing (FONAFIFO), the National System for Conservation Areas (SINAC), the National Forestry Office (ONF) and the Executive Decree No 37352 which details provisions for the implementation of the REDD+ mechanism in Costa Rica. FONAFIFO, with its REDD+ Secretariat, is the national institution in charge of coordinating the implementation of the ENAREDD.

FREL/FRL: Costa Rica presented its FREL to the UNFCCC in January, 2016, with a modified submission responding to the comments of the technical assessment team presented in May, 2016 (link here). The technical assessment report was produced by the UNFCCC in April, 2017 (link here).

NFMS: Costa Rica’s National Forest Monitoring System is part of a broader land, land-use change and ecosystems monitoring system called Sistema Nacional de Monitoreo de la Cobertura y Uso de la Tierra y Ecosistemas (SIMOCUTE). It was created to track land use change and compile the activity data needed for MRV, followi a stepwise approach to monitor the implementation of forest and land-use policies and measures and tracking if results are actually achieved. The system aims to provide periodic information on forest resources for official reports on forest emissions to be submitted to REDD+ Result-based Payments programs, including the REDD+ Annex of the BUR and monitoring reports of Emission Reduction Programs such as the FCPF Carbon Fund, ART/TREES and VCS JNR.

SIS: Costa Rica has submitted its first summary of information (SOI) to the UNFCCC, which includes a complete analysis of the national circumstances for REDD+ in the country, the safeguards processes developed with the FCPF support (described in the section above), the national approach and national interpretation for safeguards, the proposal for operationalizing the SIS and a description on how Cancun safeguards were applied in the results period. The SOI describes how Costa Rica’s specific legal and policy framework has been applied throughout the preparation phase and early efforts related to the National REDD + Strategy, constituting evidence of how the country has respected safeguards to date.

Costa Rica’s safeguards information system (SIS), described in the SOI, was designed based on a stepwise approach and building heavily upon the strong environmental and social framework developed for the FCPF Carbon Fund and the GCF RBPs. It is based on continuous learning and improvement, and progress in implementation will be reported in the next summaries of safeguards information.

REDD+ IMPLEMENTATION

Progress and results achieved in relation to the major deliverables of the UN-REDD Technical Assistance in 2021 are presented below.

Forest solutions realized: UN-REDD provided inputs according to the requirements of the specific MRV of Costa Rica for the Collect Earth Desktop tool. Also, UN-REDD provided outstanding support in the development and implementation of methodologies for the monitoring of non-carbon benefits for the 2018-2019 period in the context of the first monitoring report of the Emission Reduction Payment Agreement (ERPA) with the World Bank’s Forest Carbon Partnership Facility (FCPF) which was submitted in June, 2021. Costa Rica’s ground-breaking report on the non-carbon benefits of the implementation of the FCPF ER Programme has now become the global standard for reporting on non-carbon benefits at a jurisdictional scale.

Forest solutions rewarded: In July, 2021, Costa Rica submitted a proposal to the LEAF Coalition. This initiative aims to kick-off what is expected to become one of the largest ever public-private efforts to help protect tropical forests by purchasing high-quality carbon credits from tropical country national or sub-national governments. Those credits will be certified under the The REDD+ Environmental Excellency Standard (TREES) and registered under the Architecture for REDD+ Transactions (ART), programs created with the support of the Norwegian Government’s International Climate and Forest Initiative (NICFI).

Costa Rica’s proposal successfully completed an initial technical screening process, led by a panel of technical experts. Costa Rica recently signed a Letter of Intent at COP26 and will be in the first wave of jurisdictions entering purchase agreement discussions with LEAF Coalition corporate participants.

Furthermore, Costa Rica has engaged in discussion for the sale of TREES credits to buyers outside of the LEAF coalition for earlier vintages from 2017 and has signed another LOI with Emergent for this purpose. Costa Rica is now seeking buyers for remaining REDD+ which are expected to be generated in 2022.

Finally, following the approval of the Costa Rica TREES Concept Note in late 2021, work advanced on the preparation of the TREES registration document and the first monitoring report which was submitted to the ART Secretariat in January, 2022. These reports will undergo independent third-party validation and verification in 2022, positioning Costa Rica as one of the leaders in the process of generating TREES units.

Forest solutions enhanced: For the GCF REDD+ Results-based Payment project, which started in 2021, nearly $24 million was successfully channeled to support the National Payment for Environmental Services Programme and the National Forest Fire Prevention and Management Programme. From September to November, 2021, these two programmes have undergone an independent technical audit to assess their effectiveness. This detailed technical verification process, which included an extensive desk review and field visit using robust statistical methods, concluded that the PES and Forest Fires management programmes achieved the following results in 2021:

The UN-REDD TA also helped foster knowledge management and SouthSouth cooperation on REDD+ performance finance through a Latin American virtual exchange held in 2021.

CHALLENGES AND SOLUTIONS

The main challenge faced by Costa Rica in 2021 related to its ambitions to uphold the highest environmental integrity as it engaged in carbon markets.

Firstly, while Costa Rica is seeking support for implementing its NDCs and open to participating in carbon markets, it is clear that in order to have the privilege to be associated with a high integrity seller like Costa Rica, a buyer must display the same high level of environmental integrity. This implies that any transaction with Costa Rica must adhere to the San Jose Principles for High Ambition and Integrity in International Carbon Markets. Costa Rica considers that these principles should be applied to voluntary market transactions, making it very challenging to find buyers and leading Costa Rica to refuse to sell to certain buyers, particularly private companies involved in the oil & gas sector. Participation in the LEAF Coalition and commitments to purchase early vintage ERs made by the Emergent Forest Finance Accelerator are helping to solve this serious challenge for the time being.

Secondly, Costa Rica faces important challenges in terms of collecting clear proof of ownership of ERs. The country is undertaking an expensive and time-consuming processes through which rural landowners cede their rights to the government in exchange for payments. With payments received from the GCF for results achieved in 2014 and 2015, Costa Rica is working to fill these gaps to allow for its registration by the end of 2021. It is likely that by then, only about 55 percent of the total results will meet legal requirements. A key challenge for Costa Rica to generate TREES units is the demonstration of proof of ownership over emission reductions. No clear solution was identified to this problem which will require substantive work in 2022.

Finally, Costa Rica wants to provide evidence of the generation of the significant non-carbon benefits associated with the implementation of its National REDD+ Strategy. These are benefits for local communities, biodiversity and water resources. They must be carefully monitored and reported. The outstanding support provided by UN-REDD in this field has set a global benchmark for reporting on non-carbon benefits under the FCPF and provides a solid basis to support Costa Rica’s objectives.

GENDER AND SOCIAL INCLUSION

As part of its National REDD+ Strategy, Costa Rica has been implementing and continuously improving its PES Program through the National Forestry Financing Fund (FONAFIFO). This program recognizes four environmental services namely: mitigation of GHG, protection of water resources, protection of biodiversity and scenic beauty. The primary focus of the PES program is conservation, reforestation and sustainable forest management benefiting small and medium holders. The initial monitoring and reporting tended to focus predominantly on ensuring contract compliance with no alterations to the land uses in areas of conservation, reforestation or sustainable forest management (i.e. that land cover remained untouched).

Recently, in an effort to give more participation to marginalized groups, the PES program has undergone several modifications. In terms of gender, and as a result of the Gender Action Plan of the National REDD+ Strategy, in the qualification scoring matrix for entry into the PES, more points are given to women landowners in the selection of potential beneficiaries. This resulted in an increase in women’s participation in the program in 2021, with more than 1,102 women currently registered. In addition, Costa Rica’s LEAF proposal integrated gender elements into the use of proceeds, NDC alignment and safeguards discussions.

As part of the results of the consultations carried out in the framework of the National REDD+ Strategy, there were positive changes made to the Payment for Ecosystems Services in indigenous peoples’ territories. This served to further promote the active participation of indigenous peoples through:

These modifications will be further strengthened with the finalization and implementation of the indigenous peoples plan in the context of the GCF REDD+ RBPs project in 2022 which will introduce new and additional measures to promote the rights of indigenous peoples.

PARTNERSHIPS

Costa Rica is already engaged in REDD+ RBP initiatives from both market and non-market sources. First, in late 2020, the country signed an Emission Reduction Payment Agreement (ERPA) with the World Bank’s Forest Carbon Partnership Facility for up to 12MtCO2. A first monitoring report was submitted in June, 2021 and the issuance and transfer of the first FCPF ERs was expected by the end of 2021. Costa Rica also provided a groundbreaking report on the non-carbon benefits of the implementation of the FCPF ER Programme, with support from UN-REDD. This has now become the global standard for reporting on non-carbon benefits at a jurisdictional scale.

Second, in October, 2020, Costa Rica received approval from the Green Climate Fund for a $54 million REDD+ RBP proposal to the GCF for emission reductions achieved in 2014 and 2015. In the context of this GCF project, in February, 2021, the Government of Costa Rica and UNDP signed a Technical Support Services agreement to design and implement a diversified strategy to access REDD+ Results-based Payments from market and non-market sources. This support is fully integrated with the UNREDD Technical Assistance for LEAF and ART-TREES, as well as with the ongoing FCPF work under the umbrella of the National REDD+ Secretariat’s workplan for 2021.

LINKAGES TO SDGS

The implementation of the National REDD+ Strategy contributed, and will continue to contribute, to numerous Sustainable Development Goals beyond the obvious contribution to SDG 13.

SDG 1. By supporting PES in indigenous territories, the RBPs program makes an important contribution to the reduction of poverty. The 2011 census found that indigenous peoples living on their lands are the poorest population in the country. The PES is the only cash transfer programme of the Costa Rican government targeting indigenous peoples. In the context of the COVID-19 recovery phase, it offers a rapid and cost-effective way to provide basic needs like food and shelter, a means to recover and rebuild after the crisis and protection from future shocks.

SDG 5. The project will make a significant contribution to achieving gender equality by adopting a series of measures which include direct cash transfers to women through the PES, capacity building and engaging women in decision-making processes in a more robust manner. The Gender Action Plan provides a detailed description of these measures.

SDG 15. By supporting the national Payment for Ecosystem Services scheme, the project will make a large contribution to the protection, restoration and promotion of the sustainable use of terrestrial ecosystems and to the sustainable management of forests.