The Funding Instrument for REDD+ in Indonesia: Making the Case for Financial Innovation

The estimated financial need for implementing REDD+ until 2020 is USD10 billion. Institutions and mechanisms to mobilize and manage REDD+ finance are a key priority of Indonesia’s REDD+ programme at this stage – and this study aims to support this process through analysis and recommendations. Specifically, the study reviews the early stages of the development of the Fund for REDD+ in Indonesia (FREDDI) which was housed with the National REDD+ Agency (BP REDD+), and – to the extent to which FREDDI developed before the duties and functions of BP REDD+ were incorporated within the Ministry of Environment and Forestry – considers its ability to achieve its mandated objectives with regards to fund management and mobilization. Further, the study provides an overview of the potential role of financial innovation – such as debt and market mechanisms – in enhancing the role that a Fund for REDD+ in Indonesia could play in the scope of Indonesia’s REDD+ programme. Ultimately, the report affirms the notion that such a Fund should evolve beyond a passive disbursement mechanism to mobilize further investment from both private and public sectors.