Consultancy Service for REDD+ Investment Opportunity Identification

Terms of Reference

USAID Green Annamites

Quang Nam REDD+ investment opportunity identification for
USAID Green Annamites

1.  Project Overview

Forests play a critical role in Vietnam by protecting watersheds, preventing soil erosion, mitigating climate change, and building resilience for communities. They are also home to rare and endemic species found nowhere else in the world. Unfortunately, Vietnam’s forests, and the species that live in them, are depleting at an alarming rate due to conversion into other economic uses, as well as from activities of surrounding forest-dependent populations who lack alternative economic means. 

The USAID Green Annamites project supports Vietnam’s transition to climate-smart, low-emission, and resilient development that protects people, landscapes, and biodiversity in Quang Nam and Thua Thien Hue provinces with three main tasks:

1. Increased application of low emission land use: conserve the existing carbon sink; stop emission from small scale deforestation and degradation, and unsustainable agricultural practices; and increase carbon sequestration from restoration of degraded landscapes.
2. Strengthen biodiversity conservation: mitigate threats to the globally significant biodiversity in central Vietnam, including poaching and activities that destroy habitats for wildlife and cause habitat fragmentation (e.g., deforestation, forest degradation, and conversion of natural forest into plantation)
3. Increase resilience for vulnerable communities: ensure that results of activities supported under the two other components are not affected by climate change impacts. Build resilience for vulnerable communities particularly in regards to their livelihoods.

A central component of the Green Annamites’ intervention strategy is that of livelihood improvement and value chains, aiming at generating sustainable revenue streams for communities living in forested areas and in or around protected areas, reduce the pressure on natural ecosystems. With adequate level of support, forest communities can reduce their impact on forested ecosystems when other income-generating alternatives to deforestation and forest degradation are available.

Some of the key program results include improving the livelihoods of 20,000 forest dependent people; improving biodiversity in over 400,000 hectares of natural forest; mobilizing at least $20 million in public and private resources for sustainable livelihoods and forest conservation; and avoiding and/or removing the equivalent of at least 7 million metric tons of carbon dioxide from the atmosphere.

II. Background

Vietnam experienced significant deforestation between the 1950s and 1990s with forest cover declining from 45-28% over the period. Due to government policies and programs that have provided massive investment in forest restoration since the 1990s, forest cover is now back to 42%. In spite of this incredible overall recovery, Vietnam continues to experience ongoing conversion of natural forests and a dramatic loss of natural ecosystems and its spectacular biodiversity. The government recognizes the vital role that forests play and needs to maintain sustainable investment in its forests to prevent ongoing deforestation and forest degradation, as well as maintain forest restoration efforts. For these reasons, Vietnam is a key REDD+ country in the Southeast Asia region and one of the most advanced countries in terms of domestically getting ready for REDD+. The government has specifically identified REDD+ as a means towards achieving the country’s Nationally Determined Contribution (NDC) to climate change – Vietnam’s commitment to the Paris Agreement.

Vietnam was one of the first countries in Asia to develop a National REDD+ Action Program/Strategy (2012, revised in 2017) and has a Forest Reference Emission Level approved by the UNFCCC (2017). The government has also made a number of important policy commitments which enable the achievement of low emissions land use and REDD+ goals, including various recent directives and resolutions and a new forestry law (2017) prohibiting the conversion of natural forests, a new integrated planning law (2017), and a new National Target Program on Sustainable Forest Development. Vietnam is a regional leader in terms of Payments for Forest Environmental Services (PFES) policies and regulations approved in 2010 and which now mean that hydropower and other users of forest environmental services make a substantial contribution (>30%) towards capital investment in forest protection.

At sub-national levels, 20 provinces have now developed REDD+ Action Plans which provide guidance for the implementation of REDD+ actions on the ground. A major Emissions Reduction Project covering six provinces of the North Central Coast region has also been approved for results- based funding by the World Bank’s Forest Carbon Partnership Facility (FCPF) Carbon Fund. The Quang Nam province is not currently part of the FCPF-supported provinces.

REDD+ in Quang Nam

Quang Nam is a key jurisdiction province for REDD+ in Vietnam. It is a relatively large province with more than 1 million Has and its located in the South Central Coast region of the country. The province is comprised of a thin strip of lowland along the east coast which is intensively settled and used for agricultural production and increasingly, tourism and industrial development. The midland belt of hills is suitable for agriculture and forestry and is the area that has experienced the most dynamic change in recent years with deforestation hotspots for rubber and expanding annual crop land. Acacia plantations and reforestation have also been drivers of land transformation. Additionally, more than 1,400 Ha of native forests have been cleared to build and operate 11 hydropower plants and four more plants are currently under construction.  The western mountainous region is comprised of forested uplands, including large areas of natural forests of high conservation value. This region is also home to several upland ethnic minority groups. 

Forest cover overall has increased since 2005 while the area of natural forests has declined mainly due to the establishment of acacia plantations. The key drivers of deforestation and forest degradation are the conversion of forests to i) annual cropland; ii) infrastructure (including hydropower and roads); and iii) acacia and rubber plantations.

In line with recent national policy developments, Quang Nam is implementing a number of reforms to strengthen forest protection and law enforcement and promote sustainable development and green growth. With support from the USAID Green Annamites Project, Quang Nam has recently developed a Provincial REDD+ Action Plan (PRAP) through a participatory multi-stakeholder process. The overall vision of the Quang Nam PRAP is threefold:

1. Reduce deforestation and forest degradation particularly in the carbon and biodiversity-rich forests in mountainous areas;
2. Enhance forest carbon stocks through reforestation and forest enrichment in key watersheds and coastal areas that provide critical environmental services for the sustainable socio- economic development of the province; and
3. Promote the sustainable management of production forests (especially in the midland hills).

The PRAP outlines key REDD+ activities to address the key drivers of deforestation and forest degradation, as well as support sustainable forest management and forest landscape restoration.

III. Activity Purpose

The Quang Nam provincial government and USAID Green Annamites consider that REDD+ could potentially provide a source of finance that would contribute to reverse existing incentives for deforestation and forest degradation. It is expected that REDD+ finance will channel funds to local communities thanks to the commercialization of the emission reductions from the REDD+ activities in the province.

Before moving any further, the Project wants to develop a business case for REDD+ in Quang Nam that is attractive to investors and/or carbon buyers. As such, the program is looking for a consultant that will unlock the REDD+ potential and identify the investment opportunity for Quang Nam. The consultant is expected to put together an attractive investment package to be shared with investors from different sectors and with different motivations.

The GA will provide as much information as possible (see annex I for list) as well as contacts and introductions to local partners. The consultant is expected to use existing and available public information and to gather data during meetings with the GA’s local partners.

IV. Duties and Responsibilities

The successful candidate is expected to perform the following activities:

1.    Trip to Quang Nam, Vietnam: In order to ensure a comprehensive data gathering exercise, the consultant is expected to travel to Vietnam for 5 working days at the beginning of the consultancy in July.

2.    Unlocking REDD+ potential:

The consultant will review existing information to determine emission reduction estimates and their compatibility with Forest Reference Emission Levels (FREL)/VCS). This includes the following:

• Carbon Assessment:
  
  • Reviewing FREL methodology and maps
  • Determine compatibility of FREL (if adopted) with VCS requirements and applicability on a spatially explicit basis
  • Establish which VCS standards and methods could be used (JNR, AFOLU grouped project, hybrid) that will leverage FREL. Recommend the most appropriate option for the Vietnamese context and justify such recommendation.
  • Review all available additional carbon data and information from the province (See annex)   
  • Create high quality feasibility level projections and schedule for Emission Reductions for the program over the next 15 years
  • Review the current provincial forest monitoring system and determine how it can be leveraged for on-going monitoring of enforcement and Emission Reductions

• Development and Implementation cost budgets     
  
  • Review current government’s annual spending and allocations to specific REDD+ related program activities
  • Define incremental REDD+ activities to be financed on the ground. Explain how these activities will achieve the proposed reduction in deforestation/degradation
  • Assess potential risks of the REDD+ activities
  • Prepare an implementation workplan for REDD+ program over the next 15 years
  • Elaborate a budget for the program that includes:

             - Budget for the REDD+ activities, not already funded by the government or other sources (private sector and donors among others)
             - Year by year expected cash flow based on the established business plan for carbon and non-carbon activities
             - Budget for development costs including development, validation, and verification of Emission Reductions under the VCS/CCB (or REDD+ SES)

3.    Investment Case

• Review the existing institutional arrangements on Payments for Forest Environmental Services (PFES) and recommend an attractive institutional framework for REDD+ that builds upon the existing PFES structure. The framework will facilitate investments and includes but is not limited to: proponent, counterpart (implementation partner), financial management, benefit sharing mechanism and reporting.
• Explain the government’s position on carbon rights title and the feasibility of selling them in the voluntary market.

4. Investment Package   

Create an attractive investment package consisting of a 2 pager teaser a presentation and an excel file with the year by year cashflow based on the business plan for carbon and non-carbon activities. Moreover, the GA has anticipated some technical questions that are relevant to buyers and investors when making an investment decision and that will come up during feasibility or due diligence. As such the consultant will provide answers to the questions* listed in annex II separately. The 2 pager and presentation must include:

• Background
  
  • REDD+ in Vietnam and potential in Quang Nam   
  • Government’s position on land tenure and carbon title transferability
• REDD+ Program or project
  
  • Institutional framework
  • Size and methodology
  • Emission reductions and schedule
  • Co-benefits

             - Ecosystems and biodiversity
             - Social aspects

• REDD+ Budget
  
  • Cash flow over 15 years
  • Required finance

*If this information is not available, the consultant should produce it from the secondary data available, if possible.

V. Reports, Deliverables, and timeline

The level of effort is expected to be 30 days from June to August 2019 based on the break-down in the table below. All progress reports must contain as annexes all information collected or generated during implementation of the relevant activities. All reports are required in English.

VI. Required Qualifications

The successful candidate must comply with the following requirements:

• Demonstrated experience designing REDD+ projects/programs including thorough technical understanding of different standards and methodologies.
• Experience elaborating financial structures and solutions for REDD+ projects and programs
• Demonstrated experience and understanding of REDD+ markets and capacity to prepare an attractive investment pitch
• Able to travel to Vietnam and work in close cooperation with the Green Annamites Program team
• Hold Masters or higher degree on economics, business, finance or other discipline relevant to the objectives of this consultancy.
• Network of investors and carbon credit buyers
• Excellent communication skills in English and able to work in multicultural environments.

VII. Interested candidates should send an application including:

• A cover letter
• Latest CV, and
• Three references.

By July 10th, 2019 to the following address: [email protected] [1]

No phone contact please. Only shortlisted candidates will be contacted for interview.

Annexes [2]