By Chris Lang
The World Bank and Nicaragua have agreed to cancel the Emission Reductions Programme under the Bank’s Carbon Fund. In a recent note, the Forest Carbon Partnership Facility Management Team (FMT) wrote that because of COVID-19 and recent hurricanes in the country it was impossible “to put in place the necessary systems for environmental and social management, monitoring and evaluation, and independent certification of outcomes”. Under the programme, Nicaragua could have received US$55 million between 2020 and 2025.
In July 2019, Carbon Fund participants agreed to include Nicaragua’s Emissions Reductions Programme in the Carbon Fund.
In December 2019, the Alliance of Indigenous and Afro-descendant Peoples of Nicaragua (APIAN) put out a statement expressing its concerns with the Nicaraguan government’s promotion of agricultural and cattle ranching expansion in the forests of Indigenous and Afro-descendant communities’ traditional territories. APIAN called on the World Bank “to conduct an exhaustive investigation” into the way the government was imposing REDD on Indigenous and Afro-Descendant communities.
“Deforestation is the main environmental problem in Nicaragua”
In August 2020, the COCIBOLCA Group, a network of Nicaraguan environmental organisations, wrote to the World Bank asking it not to approve Nicaragua’s Emissions Reductions Programme. The COCIBOLCA Group wrote that,
[D]eforestation is the main environmental problem in Nicaragua, affecting protected areas, biodiversity, the territories of indigenous and Afro-descendant peoples, increasing their already high vulnerability.
They pointed out that the reasons for this were the “lack of application of the legal framework in order to benefit companies owned by the State-Party-Family currently in the Government, which present high levels of corruption in Nicaragua today”.
Kinnon Scott, Resident Representative of the World Bank in Nicaragua, replied. In his letter, he agreed that “deforestation is one of Nicaragua’s main adverse environmental issues”. He wrote that Nicaragua’s proposed Emission Reductions Programme “aims to help tackle the challenges that Nicaragua faces in reducing deforestation, improving silviculture, and promoting sustainable farming practices”.
He made no mention of corruption or the failure of President Ortega’s government to uphold the law. He wrote that,
World Bank approval of the ER Program will be based on an assessment of the technical design of the ER Program, including from the financial, environmental, and social perspectives. Specifically, the World Bank requires that adequate measures for managing the potential environmental and social risks and impacts of the activities to be carried out under the ER Program in line with the principles and requirements of the Bank’s Environmental and Social Framework.
Amaru Ruiz, a biologist and director of the environmental organisation Fundación del Río told La Prensa that the Carbon Fund’s decision shows that the Nicaraguan government is not capable of complying with the requirements for environmental and social monitoring, or benefit sharing with Indigenous communities. “The regime has shown negligence in environmental management,” Ruiz said.
“It can be read between the lines that this situation has led to a failure to comply with those requirements and therefore the Nicaraguan Carbon Fund programme is not approved.”
On 23 February 2021, the Facility Management Team released the following statement:
At the CF22 meeting in November 2020 the FMT informed Carbon Fund Participants (CFPs) that agreement of the Nicaragua benefit sharing plan remained outstanding and that the Nicaragua ERPA was expected to be signed by 31 January 2021.
The World Bank team in close collaboration with MARENA and the Government of Nicaragua have been hard working, proactive, and focused on finding solutions to challenges related to the preparation of the ERPA, including through the advent of the global pandemic.
Notwithstanding this excellent work, we are unfortunately unable to move forward with the ERPA at this stage.
- ERPAs are complex projects that require very robust systems in place upfront, particularly to ensure full benefit sharing with indigenous communities.
- They also require frequent on the ground monitoring and evaluation, ongoing supervision and third-party certification of outcomes.
- While the government has worked very hard – including with support from the World Bank – to put in place the necessary systems for environmental and social management, monitoring and evaluation, and independent certification of outcomes, the advent of COVID-19 and the recent terrible hurricanes have made it impossible to complete these systems. This is especially the case for the robust environmental and social monitoring system and benefit sharing plan that would need to be monitored, supervised and certified and are a vital part of all FCPF ERPAs.
For these reasons the World Bank and the Government of Nicaragua have mutually agreed to cancel the ER Program. The Nicaragua ER Program will therefore be officially dropped from the FCPF Carbon Fund portfolio in the near future.