It is now widely accepted that past regulatory policies and instruments have not been effective in reducing global deforestation rates. There is a growing interest in economic incentive mechanisms to reward good management and conservation of forest resources. Reducing Emissions from Deforestation and Forest Degradation (REDD) is an incentive mechanism of this kind evolving under the United Nations Framework Convention on Climate Change (UNFCCC) in an effort to reduce the concentration of carbon dioxide in the atmosphere. In recent UNFCCC discussions, REDD has been expanded to REDD+ with the inclusion of a wider range of forest-related activities than previously proposed, which allows REDD+ to recognise the roles of participatory forest management regimes (e.g. community forestry, joint forest management, etc.) –  enabling local communities to derive benefit from international efforts to mitigate climate change.

This paper will be based on the pioneering REDD+ work by ICIMOD and partners in Nepal – the Federation of Community Forestry Users, Nepal (FECOFUN) and the Asia Network for Sustainable Agriculture and Bioresources (ANSAB) – which has resulted in the establishment of the first Forest Carbon Trust Fund, designed to promote a new paradigm in forest management vis-a-vis performance based forest management policy. This will entail providing a performance-based financial incentive to local communities in recognition of their efforts to conserve forest and prevent deforestation.

The paper will analyse how governance systems can be adapted to implement performance-based REDD+ at the local level within a community forestry setting and what social and environmental safeguards are essential to address equity and sustainability. The aim of this research paper is to draw lessons and experiences on REDD governance and share learning that can be applied by policy decision makers and practitioners, and to develop capacity-building systems that can be used to implement REDD+ at the national level based on the sub-national pilot project learning outcomes.
The paper will shed light on how to craft and ensure payment mechanisms are equitable, respect the rights of indigenous peoples and local communities, and are sustainable in the long run by working with a Forest Carbon Trust Fund mechanism. It will also analyse how the REDD+ payments are utilised at local level to show whether the communities feel the additionality of the incentive created by REDD+ payments. The paper will finally assess how payment can stimulate forest conservation practices of local communities.