USAID Lowering Emissions in Asia’s Forests (USAID LEAF): Financing emission reductions in the Agriculture, Forestry and Other Land Use (AFOLU) sector

To expand economically while contributing to global efforts to combat climate change, many developing countries are beginning to adopt Low-Emission Development Strategies (LEDS) and other similar initiatives. As a key area in the economies of many developing countries, the agriculture, forestry and land use (AFOLU) sector is for many a central focus of LEDS. Developing and implementing ambitious LEDS in the AFOLU sector will require substantial amounts of finance to be mobilized. International public donors are already providing some initial finance for these initiatives; however this funding is limited, and sustainably financing AFOLU LEDS in the long term will require a broad range of financing types and sources, both public and private.

This report aims to promote an understanding of the different types of financing for low-emissions 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. It concludes with the recommendation that to leverage sufficient long-term financing, LEDS proponents and policymakers should adopt a strategic and innovative approach by establishing favorable investment environments, using available resources to leverage additional finance and integrating financing considerations from the outset.