Carbon payments to communities from Nepal’s pilot REDD+ Forest Carbon Trust Fund


During a REDD+ Seed Grant Distribution Ceremony in Kathmandu, Nepal, 18 July 2012, Mr Resham Bahadur Dangi, Joint Secretary of Nepal’s Ministry of Forests and Soil Conservation Nepal, handed out checks worth US$ 44,188, US$ 26,122, and US$ 24,691 to REDD networks in the Chanarwati watershed (Dolakha), Ludhikhola watershed (Gorkha), and Kayerkhola watershed (Chitwan) respectively. These seed grants, which will end up in the hands of 105 community forest user groups (CFUGs) from the three watersheds, are carbon payments for contributions to sustainable conservation and management of forests as part of a Norwegian Agency for Development Cooperation (NORAD) funded pilot REDD+ project which began in 2010.

REDD+, which is gaining recognition as a simple and cost-effective tool for climate change mitigation, is a mechanism that countries with a good track record for community forest management and governance, like Nepal, can benefit from. One objective of the project – which is being jointly implemented by ICIMOD, the Asia Network for Sustainable Agriculture and Bioresources (ANSAB), and the Federation of Community Forest Users, Nepal (FECOFUN) – is the development of an institutional mechanism to ensure equitable benefit sharing and forest carbon payments to local communities. Toward this end, a pilot Forest Carbon Trust Fund (FCTF) has been established, to which NORAD has committed US$ 100,000 per year from 2011 to 2013 as seed money.

There are currently only 105 CFUGs from the three watersheds that can access NORAD seed grants through the FCTF, a process that involves a number of steps as outlined below:

  • CFUGs fill in claim forms as indicated in FCTF Operational Guidelines. 
  • Each watershed’s REDD network collects claim forms for submission to the District Advisory Committee (DAC).
  • The DAC reviews submissions and forwards them to the Central Advisory Committee (CAC), which has the right to accept or reject the compiled claims or call for more data or field verifications conducted by an independent agency, if necessary.
  • After claim forms are reviewed and accepted, the CAC determines the amount to be disbursed in each of the watersheds as seed grants based on criteria outlined in FCTF Guidelines like annual forest carbon stock growth and the number of right holders in each CFUG, including the number of members from indigenous, Dalit, women, and marginalized groups.
  • As per the decisions of the CAC, the Project Management Unit (PMU) disburses seed grants to each watershed’s REDD Network, which distributes the grant money to CFUGs.

CFUGs may use seed grants to fund community forest management activities, livelihood improvement activities, or group-strengthening activities such as capacity building, awareness raising, and carbon monitoring. It may also decide, through consensus, to give a portion of the seed grant money to the poorest households in their community.

This project has shown the capability of local communities to monitor carbon in their forests, make verifiable claims for REDD+ carbon payments, and manage a benefit sharing mechanism in a fair, equitable, and transparent manner. This can serve as a model REDD+ project that ensures climate finance reaches local communities while simultaneously reducing carbon emissions.