Why is Norway paying Guyana for REDD?

In December 2012, the Government of Norway approved a further US$45 million for Guyana’s Low Carbon Development Strategy, bringing the total so far to US$115 million. This suggests that Guyana is meeting its obligations under Joint Concept Note that the two countries agreed. But is this really the case?

The announcement of the most recent payment came five days after Rainforest Alliance released a report titled “Verification Of Progress Related To Indicators For The Guyana-Norway REDD+ Agreement” (pdf file, 821.1 kB). This is Rainforest Alliance’s second verification audit and covers the period 1 October 2010 to 30 June 2012.

Another consulting firm, Det Norske Veritas (DNV), carried out an audit to determine the rate of deforestation and forest degradation between 1 October 2010 and 31 December 2011. DNV found that gross deforestation in this period was 0.054%.

While Rainforest Alliance notes some progress, for example on independent forest monitoring, the report is generally critical of the progress so far. The report starts with a summary of the audit findings:

The dominant impression from this audit, based on inputs from all interested parties, is one of frustration and disappointment that more progress has not occurred on a number of the Joint Concept Note (JCN) enabling indicators. In particular, the Guyana REDD-Plus Investment Fund (GRIF) funding mechanism has, to date, moved so slowly that the delivery of sufficient funds to Guyana has been delayed, causing delayed implementation of important activities and a serious degree of skepticism among target beneficiaries and collaborating entities of all kinds.
[ . . . ]
[T]here has also been a noticeable reduction in the efforts by the Government of Guyana (GoG) to communicate and consult with stakeholders. Amerindian communities are particularly concerned about the lack of information available to them in regards to their many questions about the REDD+ activities, and the Low Carbon Development Strategy (LCDS) more generally. They are also concerned about the absence of a consistent, ongoing and robust approach or framework for interactions between the Government of Guyana (GoG) and Amerindian communities (whether for the purposes of information exchange, consultation on actions or decision-making).

After Rainforest Alliance’s first verification in 2010, a group of international NGOs wrote to Hans Brattskar, then-Director of the Norwegian International Climate and Forest Initiative (NICFI), and Tessie Whelan, Executive Director of Rainforest Alliance, highlighting their concerns about the audit process. Among these concerns was the “superficial assessment of fundamental problems relating to indigenous peoples’ rights and tenure”. This time around, Rainforest Alliance’s team met 264 Amerindian community members and 10 Amerindian organisation representatives.

Out of ten verification indicators that Rainforest Alliance’s team reviewed during its audit in July 2012, three were met, four were partially met, and three were not met:

1: Transparent and effective multi-stakeholder consultations continue and evolve	NOT MET
2: Participation of all affected and interested stakeholders at all stages of REDD+/LCDS process	PARTIALLY MET
3: Protection of the rights of indigenous peoples	NOT MET
4: Transparent and accountable oversight and governance of the financial support	PARTIALLY MET
5: Initial structure for the Independent Forest Monitoring (IFM)	MET
6: Continuing stakeholder consultation on the European Union Forest Law Enforcement, Government and Trade (EU-FLEGT) process	MET
7: Continuing development of a national inter-sectoral system for coordinated land use	PARTIALLY MET
8: Continuing stakeholder consultation on the Extractive Industries Transparency Initiative (EITI)	PARTIALLY MET
9: Measures by the GoG to work with forest dependent sectors to agree on specific measures to reduce forest degradation	NOT MET
10: Mapping of priority areas for biodiversity in Guyana forests	MET

This hardly seems sufficient to justify Norway’s release of a further US$45 million. In a joint statement, however, the Norwegian and Guyanese governments explain that,

The Governments of Guyana and Norway have recognized the potential for improvements in the areas identified in the verification report. In the period from July 1st 2012 to December 22nd, the Government of Guyana has taken a number of actions to strengthen and further develop the enabling indicators as the list of immediate actions and revised JCN shows.

The list of immediate actions is hardly reassuring. For example, under “Protection of the rights of indigenous peoples” the action is to sign the initiation plan for the Amerindian Development Fund project and to start the preparation phase. Starting a project which may benefit indigenous peoples is clearly not the same thing as protecting indigenous peoples’ rights.

There may be other reasons for Norway not to have paid the money. Norway pays the money into the Guyana REDD+ Investment Fund (GRIF), which is overseen by the World Bank. In December 2012, Per Fredrik Ilsaas Pharo, Director of NICFI, told the Starbroek News that,

“[A]ccording to general rules for disbursement of funds set by the parliament, money cannot be disbursed until a significant portion of the money in the GRIF is utilized. This is a technical aspect of the parliament’s general rules, and not special for Guyana.”

Before the payment in December 2012, Norway had paid US$69.8 million into the GRIF. Here’s an overview of the funding decisions so far, from the World Bank’s most recent GRIF Financial Report (dated 30 June 2012):

At the end of November 2012, the World Bank confirmed to the Starbroek News that there were no outstanding transfer requests. So, 13% of the money in the GRIF had been released. Hardly a “significant portion”, then, as would be required under Norwegian parliamentary rules before more payments can be made.

Pharo told Stabroek News that,

As with all aspects of this partnership, because we are leading the way, we have encountered challenges.

That goes for the GRIF as well. We are confident, however, that a workable solution is within reach, and that there is real opportunity – on this and on other aspects of the partnership – for significant progress in 2013.

There are currently seven GRIF projects according to a summary available on the GRIF website. By far the largest is the Amaila Falls Hydroelectric project. The project is Guyana’s most expensive infrastructure project with a price tag of at least US$840 million, of which US$80 million is to come from the GRIF.

At the end of November 2012, the International Monetary Fund raised concerns about the Amaila Falls project’s economic viability. The IMF recommended “careful consideration of the risks and contingent liabilities arising from that project”. Opposition parties in Guyana have called for a review of the project.

In January 2012, the government cancelled the contract with Synergy Holdings to build the road to the dam, after several delays and cost overruns. The government has this month filed a Motion in the High Court against the Hand-in-Hand Mutual Fire Insurance Company. Hand-in-Hand has so far declined to pay the US$1.54 million Security Performance Bond that became due when Synergy Holdings failed to complete the road building contract.

In justifying the payment to Guyana, Norway’s Minister of the Environment, Bård Vegar Solhjell, said,

“Guyana provides a valuable carbon storage service to the world, and can be a model to other countries with high forest cover and low deforestation rates.”

Rainforest Alliance points out that “mining is the primary driver of forest degradation, accountable for up to 97% of all forest degradation”. But Guyana’s “model” means doing little or nothing to address this. And Guyana’s failure to protect the rights of Indigenous Peoples is surely not what Solhjell is referring to. So what, exactly, does Solhjell mean when he refers to Guyana as a model to other countries?