Results-Based Forest Conservation Funding: Amazon Fund 10 Years Later, Lessons from the World's Largest REDD+ Program

Abstract

Results-Based Funding (RBF) for Reducing Emissions from Deforestation and Forest Degradation (REDD+) has become an important instrument for channeling financial resources to forest conservation activities. At the same time, much literature on conservation funding is ambiguous about the effectiveness of existing RBF schemes. Many effectiveness evaluations follow a simplified version of the principal-agent model, although in practice the relation between aid providers and funding recipients is much more complex. As a consequence, intermediary steps of conservation funding are often not accounted for effectiveness studies. This research paper aims to provide a nuanced understanding of conservation funding by analyzing the allocation of financial resources for one of the largest RBF schemes for REDD+ in the world: the Brazilian Amazon Fund. As part of this analysis, this study has built a dataset of information on Amazon Fund projects at unprecedented detail in order to accurately reconstruct the allocation of financial resources across different stakeholders (i.e. governments, NGOs, research institutions), geographies and activities. The results show that stakeholders seem to hold preferences with respect to the type of activities that they support, thereby suggesting that project owners exert much influence on how deforestation reduction is to be attained. There are evidences that governmental organizations lack financial additionality of their projects, which renders the growing share of funding to this type of stakeholder particularly worrisome. By contrast, the geographical distribution of financial resources seemed to follow a more focused rationale as financial support tends to concentrate in areas where deforestation threats are highest. Overall, the allocation of the financial resources from the Amazon Fund reflects an arbitrary support of different projects that adopt very diverging theories of change that are not primarily concerned with attaining further deforestation reductions. As projects owners exert influence on funding effectiveness to some extent, the Amazon Fund may either seek to regulate the allocation of financial resources more actively or adopt funding effectiveness evaluations that account for this influence more comprehensively.