Tropical forests are vital to global efforts to mitigate climate change, preserve biodiversity, and support the livelihoods of Indigenous Peoples and Local Communities (IPLCs) and smallholders. Over the past two decades, significant public and private investments have been made through initiatives like REDD+ (Reducing Emissions from Deforestation and Forest Degradation), yet the effectiveness and inclusivity of these schemes continue to be debated. As climate finance mechanisms evolve, the need to evaluate tangible outcomes and propose innovative improvements is more urgent than ever.
Indonesia’s experience offers critical lessons through its Ecological Fiscal Transfers (EFTs) and performance-based REDD+ payments. These tools have shown potential in delivering results, both in reducing deforestation and incentivizing subnational governments to protect forests while supporting livelihoods in buffer zones and Other Effective Area-Based Conservation Measures (OECMs). Such mechanisms underscore the importance of equitable benefit-sharing arrangements to ensure IPLCs and smallholders are not only compensated but also empowered.
