Fragmentation and Coordination of REDD+ Finance under the Paris Agreement Regime

Round 1

Reviewer 1 Report

This paper has improved considerably, and I am pleased to report that the authors have convincingly and fully addressed my initial concerns.
Some other minor points:
- There are some minor errors in the text, such as one too many “b” in the abstract (line24).
- For the sake of reader-friendliness and accessibility, I strongly recommend that a list of abbreviations be provided. Some paragraphs are difficult to understand without knowing this multitude of abbreviations. Examples include p. 5, Discussion section.
- What is "Fdonmultilateral?"

Author Response

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Author Response File: Author Response.pdf

Reviewer 2 Report

This is a well-written manuscript based on good sized material which reports results that will be of interest to readers. The manuscript is placed well to the wider landscape of relevant literature. The data and analytical approach are explained well and sound results are emerging.

I have but two rather small requests for revisions. First, the introduction suggests that two research questions are addressed. Yet most of the manuscript focuses on answering the RQ1, and the second one really only gets minor attention in concluding section. In this light, it might be best to drop the second research question entirely from the introduction. This does not mean ways to coordinate finance to reduce fragmentation of REDD+ finance cannot be addressed - it still can remain a focus in conclusions.

Second, whilst the manuscript is generally well written and presented it would benefit from editorial changes to streamline the language which in places is wordy.

Author Response

Please see the attachment

Author Response File: Author Response.pdf

This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.

Round 1

Reviewer 1 Report

Thank you for the opportunity to review this manuscript applying a quantitative methodology to assess the degree of fragmentation in REDD+ finance.

To this reviewer's knowledge, the approach is novel and offers insights on a question that - while previously discussed in the context of traditional development assistance - has not yet been addressed in the context of climate finance.

Aside from its originality, it is generally well structured, with clearly identified research questions, and offers some interesting insights (e.g. the differences in fragmentation observed between REDD+ finance and traditional ODA). The overall results are intuitive, and perhaps not surprising: with the majority of REDD+ finance from bi- and multilateral sources accruing to a small number of nations that jointly account for a vast share of tropical rainforest (Brazil, DRC, etc.), the methodology employed will by necessity infer that a large fraction of donor-recipient relationships have "low significance" at least for one side of the relationship, that of the recipient. Still, the chosen approach still serves to highlight an existing challenge, that of lacking coordination and potentially inefficient allocation of resources under too many different funding arrangements. This conclusion alone is worthy of being introduced into the academic debate.

In its current form, the manuscript still suffers from a number of - correctable - shortcomings, which are listed below in sequence from broader to more specific concerns:

1. Additional language review will be needed; the abstract alone contains around a dozen grammatical mistakes (plural where singular should apply; wrong tense; article where none is needed etc.)
2. The manuscript employs a large number of acronyms, including some uncommon ones that are not generally used (e.g. "IMM" for "international market mechanism" in l. 215 and elsewhere). Spelling out terms that are used less than 3-5 times could help reduce confusion for readers unfamiliar with the topic.
3. The article appears to be premised on an assumption that current or pre-2020 REDD+ finance has occurred under the Kyoto Protocol, but now has to transition to the "new" Paris Agreement regime. The Warsaw REDD+ Framework is, however, based on a decision of the Parties to the UNFCCC, not the Kyoto Protocol, and thus remains fully valid beyond the Kyoto Protocol's 2nd Commitment Period. The authors should be clearer that what they mean when referring to the Paris Agreement and the need to align REDD+ finance with cooperative approaches (plural!) and ITMOs under Art. 6 of the Paris Agreement (e.g. in l. 145-147; 379-381) is the possibility of carbon finance for REDD+: that is, having investments in reduced emissions from deforestation etc. result in transferable mitigation outcomes that donor nations (or even potentially private entities) can use towards meeting their NDCs (or other compliance obligations, e.g. under domestic emissions trading systems), and can potentially trade. The kind of bi- and multilateral REDD+ finance that has occurred so far, without an ITMO transfer and application towards the donor's NDCs, can and will continue irrespective of whether, when and how operational rules on Article 6 of the Paris Agreement are decided. This distinction is important, because cooperative approaches under the Paris Agreement - once operationalized - may not only incentivize new carbon finance flows into REDD+ activities, but will also introduce new restrictions due to the implications for NDC accounting and achievement: recipient nations will, for instance, likely have to apply a corresponding adjustment to their own NDC for ITMOs transferred to other countries based on REDD+ activities within their territory, a tradeoff they have not faced in traditional REDD+ finance, where they "merely" have had to adhere to the terms of the funding arrangement required by the donor country, but the donor country did not claim emission reductions towards its emissions limitation or reduction objective under the Kyoto Protocol or any other domestic or regional (e.g. EU effort sharing) mitigation targets. So, in short: be careful to distinguish traditional REDD+ finance under the UNFCCC WRF from cooperative approaches and ITMO transfers under Art. 6 of the Paris Agreement, and also to avoid the impression that all REDD+ finance will in future necessarily have to adhere to the rules of cooperative approaches, which is not the case (it will only be the case where parties desire transfer of ITMOs towards NDC compliance or some other purpose, e.g. selling them in the carbon market). 
4.   Ch. 2.1: l. 128-129 describes REDD+ finance as a type of ODA, yet in l. 69-70 you clarify that REDD+ finance has to be "new, additional" - which presumably also means: new and additional to existing ODA. This seems contradictory: if it is to be distinct from, and additional to, existing ODA, can it itself be ODA? (I bring up this point precisely because developing countries have often been emphatic about ensuring that climate finance is NOT simply 'repackaged' ODA, but something "new and additional"). That said, I'm not sure Ch. 2.1 is important: does it really matter for the purposes of the analysis whether or not REDD+ finance is classified as ODA? If not, you could easily avoid this fraught question by omitting the classification.
5. l. 171: "needs to be improved" - this seems a bit overly generalized, and could have unforeseen consequences. If e.g. a donor country such as Norway decide to invest (as it has) a large amount of funding in REDD+ activities in the Amazon, and were (hypothetically) to allocate the funding to the Amazon rainforest nations in accordance to these countries' respective share of the Amazon rainforest, some countries such as Brazil and Colombia would automatically receive the largest share of funds, and other countries, especially the Guianas, would each receive only a small share of the funding,. From Norway's perspective, the relationship with the Guianas would be "not significant", yet there is a justifiable reason, seen purely from the absolute amount of rainforest contained in these countries' territories. Is such an approach automatically negative and to be avoided? Would categoric avoidance of too many "not significant" relationships force Norway to focus all investment on one or two nations, e.g. on Brazil and Colombia, at the expense of the smaller neighbors, or instead to channel all funds on a small country such as Guyana or Suriname, at the expense of neighboring countries that actually contain much more rainforest in absolute terms?  
6. l. 203: "centeris paribus" should read "ceteris paribus"
7. l. 318-319: the use of "profit" here is unclear. Under the WRF donor nations have not really received a return consideration (beyond the contribution to addressing a global commons problem). This could change in the context of cooperative approaches under Art. 6 of the Paris Agreement in the event of ITMO transfers, which donor nations could use towards meeting their NDCs (thereby avoiding potentially costlier domestic mitigation activities).
8. l. 330 et sqq.: The proposed information sharing system sounds like a reasonable, zero-regrets proposition. I am assuming that no such facility already exists? (Which would be surprising, given the benefits and non-existing downside)
9. l. 367 et sqq.: Given the questions around the notion of "profit" (see 7 above), is it reasonable to assume that the interests/motivations of multilateral donors differ so significantly from those of developed country donors?
10. References 12, 15: the authors are institutions, hence the "first name" ("Entwicklungsdienst", "UNFCCC") must not be abbreviated like that of human authors.

Reviewer 2 Report

This is a potentially interesting article that attempts to provide an overview of the fragmentation of international (both bilateral and multilateral) financial assistance under the REDD+ system. It also purports to suggest ways to overcome the proposed fragmentation, but this is not redeemed. While the motivation for this paper seems clear, other parts of the article need more explanation. It is not clear what kind of article it wants to be. At its current stage, it reads more like a data report than a full-fledged research paper. This is mainly because a proper analysis beyond the current data description would be needed.

The conceptual part is quite short. It lacks conceptual details on REDD+ financing motivations of OECD countries, the “REDD+ competence of developing countries” (p. 3, line 124), but also an introduction to the different phases 1, 2 and 3 of REDD+ financing. The paper would benefit greatly a) from such explanations, also with a view to the discussion of results, and b) from a better engagement with the literature to give more substance to the argued research gaps and to justify more convincingly the need for the presented research.

Section 3.1 Data collection: How many data points were excluded, and (how) did this affect the results?

Section 3.2.2: Why is this particular classification important in terms of achieving the NDC goals, both for the data analysis and for the discussion of results? More elaboration and preparation in the conceptual part of the paper would make the need for this classification clearer.

Section 4.2.2: “These may indicate that 260 the fragmentation of REDD+ finance has different characteristics from those of the typical 261 aid fragmentation” (line 261-2) seems an interesting result, but its interpretation is tenuous. Could there not be a link between the characteristics of REDD+ financial fragmentation (compared to ODA fragmentation) and the need for a central registry to improve coordination? If so, I would like to see this interpretation develop a more ambitious explanation beyond the description of the figures included in the tables. Which countries are behind the figures? What are the precise problems that require coordination? Increased transaction costs and low efficiency is a very general statement that also applies to ODA.

The discussion section is rather superficial. It remains vague in almost all aspects. One reason for this is that the results are simply too descriptive and one cannot really draw any conclusion other than that there is indeed fragmentation. As already indicated, the problem of fragmentation is not described in sufficient detail and the question of which data should be centralised and for what reason remains unclear.

Lines 293ff: A young, reforested rainforest is inefficient at absorbing carbon.

Lines 305-6: Are the authors suggesting that there are certain dependencies between donor and recipient countries? This can be an important reason for the demand for a central register for coordination, but it has to be prepared in the conceptual part.

Instead of in the discussion, lines 359-373 could be moved to the conceptual section. They highlight the difficulties and challenges and give the paper more legitimacy for the research conducted. In my view, the empirical findings of the paper are not discussed here. Perhaps my confusion with this part also suggests that the REDD+ system and its development under the Kyoto and Paris Agreements need to be better distinguished beforehand.

The paper’s central aim is to develop “ways for coordination under the new-coming Paris Agreement Regime” (abstract). But the reader is surprised to find no such recommendations. In general, it should be noted that the issue of fragmentation of REDD+ aid touches on many dimensions, e.g. a technical one (which is addressed in this paper), a political one (which is hugely important in an internationally sensitive context like aid and in thinking about possible recommendations) and others. The authors need to be clear about the positioning of their research from the outset.

The conclusions are not conclusions, but a brief summary.

Minor points:

• Formalities need check again, e.g. page 2, line 80, but there are many more.
• Page 3, line 110: not “materials” but “empirical data”?
• Centeris paribus à ceteris paribus
• “boreal” & “boreal”, line 232.