Our Programmes



Sign up to our newsletter.

Follow ODI

Out of the woods? Deforestation, agriculture supply chains and the role of climate finance

Things have to change if we are to tackle deforestation. And tackle it we must.

With deforestation accounting for 10% of global greenhouse gas emissions, climate finance pledges include money to tackle this problem. And one of the questions being asked is how to spend that money most effectively.

There is a growing focus on the need to use these climate funds to address the drivers of deforestation. With commercial agriculture a major driver of forest loss, there is a great deal of attention on how to shift supply chains to support better practices that do not add to deforestation.

This needs action on both the supply and demand side of the supply chain, as demonstrated in a recent report by the European Commission, which estimated that products used or consumed in the EU – such as timber, palm oil or soy – were responsible for 7% to 10% of global deforestation.

However, demand-side measures are not an appropriate use of the $35 billion total climate finance pledged to date, as this money is meant to help developing countries mitigate and adapt to climate change, rather than altering consumer behaviour or corporate choices in developed countries – vital though this is.

And so, we also need efforts to shift the production of agricultural crops away from forests. One area that is grabbing attention is the use of public-private partnerships (PPPs) that use donor funds to change business practices.

I was sceptical at first. The obvious role for the public sector is to provide a policy and regulatory framework to steer markets towards better practices and away from practices that drive forest loss. But in practice that isn’t always in place. For example, recent analysis by WRI found that more than half of plans to tackle emissions from forests highlight land conflicts and overlapping claims to land, showing up clear gaps in the policy framework; while two-thirds identify the challenges arising from lack of coordination between ministries, which lead to policy conflicts.

Surely, the priority for the limited public-sector funding should be to put in place the necessary policy and regulatory framework?

I started to see a potential niche here for PPPs while working on a recent report for The Prince’s Charities’ International Sustainability Unit, which looked at four case studies of PPPs to address social and environmental concerns relating to the production of agricultural crops.

Reports discussing the role of PPPs assert that more can be achieved by working together in partnerships than include new players, including the private sector. Governance is no longer the remit of governments alone, and businesses need to be encouraged and supported to show leadership by improving practices in their supply chains, an area where PPPs have a role to play.

The four case studies found that the partners felt there were benefits from the PPPs that were reviewed, though it is always hard to be sure whether the partnerships actually achieved more than might have been done without them. There was a feeling that the PPPs enabled activities that might have been considered prohibitive from a commercial perspective. For example, outreach to large numbers of smallholders can be costly and time-consuming, running the risk that they will not be engaged and may even be cut out of global supply chains.

But the interviews for the case studies revealed, time and again, a role for PPPs that goes beyond the direct benefits of an individual partnership: helping to demonstrate that better practices are feasible and making the business case. And this could be used to build the political will needed for governments and businesses to clean up their acts. So, perhaps these PPPs might, indirectly, help to build the case for the stronger policy and regulatory framework that is so crucial to tackle forest loss at scale.

This might seem a roundabout route to get there – why not just use the public money to target those frameworks in the first place?

It seems to me that this ignores a basic fact: shifts in global power and politics mean that donor governments simply don’t have the influence to use this money to ‘buy’ policy changes in other countries. And the amount of money on the table is nowhere near enough to counter those with a vested interest in ‘business as usual’.

But maybe, by using strategic partnerships to show that something can work – and more importantly getting businesses on board and calling for policy changes to level the playing field – there might be the potential to focus on those all important policy changes.