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Financing emission reductions in the AFOLU sector

29 May 2015

To ensure economic expansion while also contributing to global efforts to combat climate change, many developing countries are adopting Low Emission Development Strategies (LEDS) among other initiatives. Because the agriculture, forestry and land use (AFOLU) sectors are key economic areas in many developing countries, they are a central focus of LEDS. Developing and implementing ambitious LEDS in the AFOLU sector requires a substantial amount of finance to be mobilized. International donors are already providing some initial finance for these initiatives; however, this funding is limited, and sustainably financing AFOLU LEDS in the long term requires a broad range of financing types and sources, both public and private.

This report aims to promote understanding of the different types of financing for low emission development in the AFOLU sector and guide development of sustainable financing strategies. It discusses the relevance of different financing sources and mechanisms to various types of LEDS investments and concludes with the recommendation that to leverage sufficient long-term financing, LEDS proponents and policymakers should adopt a strategic and innovative approach by establishing a favorable investment environment, using available resources to leverage additional finance and integrating financing considerations from the outset.