Dalberg Advisors

Land Restoration That Works

Across Africa, a climate solution known as Forest Landscape Restoration (FLR) is gaining traction through an ambitious goal to restore 100 million hectares of degraded landscape by 2030. But more philanthropic capital is needed to help FLR achieve its potential for adaptation and the building of resilient and sustainable food systems and livelihoods.

In Uganda, Kijani Forestry plants trees to help break the cycle of climate-induced poverty by helping farmers increase productivity of their existing cultivated lands. It works like this: funders pay Kijani by issuing tree-planting contracts, which are then implemented through local staff who have the knowledge and language skills to work directly with farmers. They provide training and inputs to equip farmers for planting a variety of trees that suit the ecosystem. Some trees have short turnaround times of 2-3 years until the first revenue of charcoal or fruit, while others only produce revenue after 6-9 years, as in the case of timber, avocado or nuts. Kijani guarantees a market for the timber from smallholder farmers, and sells sustainable charcoal from smallholder wood to the local market. They also offer access to capital to cover pre-harvest operating costs.

Under the banner of Forest Landscape Restoration (FLR), Kijani Forestry and implementers like them – including One Acre FundTree AidHommes et TerreKomaza, and Eden Reforestation Projects – support small-scale growers through financing, technical assistance, and connection to carbon and agroforestry markets. Results are positive – but if restoration targets are to be met, activities and funding will need to be significantly scaled, and more implementers will need to come on board.

The goal to restore 100 hectares of degraded landscape is being driven by AFR100, a Pan-African platform for advancing forest landscape restoration on the continent. The initiative brings together countries – each pledging to restore land through the initiative – and a number of stakeholders and technical partners including the World Resources Institute (WRI).

Because forest landscape restoration sits at the intersection of a range of economic, social, political, and environmental issues, a wide diversity of systems and associated actors need to be recognized in its planning and implementation. Through AFR100, restoration efforts across Africa can be centrally planned, coordinated, managed and monitored. Technical assistance can also be provided, and mechanisms are available to allow finances to be disbursed.

The benefits of Forest Landscape Restoration in Africa

FLR encourages the protection and management of land in ways that allow natural vegetation to recover – for example through protective, sustainable practices in farming and herding, or planting the right trees for ecosystems to flourish in places where the land is too degraded. FLR enhances human well-being across deforested land, and over time restores a whole landscape to meet present and future needs across multiple benefits and land uses. FLR provides food, jobs, and homes for people, preserves livelihoods and cultures that are dependent on the land, and creates climate co-benefits such as watershed protection and erosion control.

Another welcome byproduct of returning natural landscapes to health and profitability is the reduction and sequestration of greenhouse gas emissions. By entering carbon markets, low income countries can monetize the carbon sequestered in the landscapes they restore. This allows them to advance their socio-economic development while transitioning to a low-carbon economy in a cost-effective way that puts a price on carbon, allows for carbon trading, and stimulates new market opportunities.

In the case of AFR100, restoring 100 hectares of land is expected to sequester as much as 5.9-billion tons of carbon by 2040, which will draw buyers from the rapidly growing carbon market. The value of the voluntary carbon market (VCM) in 2021 nearly quadrupled over 2020, growing 280% to a total market value close to $2 billion. Africa has the potential to sell a high-quality service in this rapidly growing market.

A few carbon-offsets providers around the world have been able to sell premium-priced carbon credit but none of them is in Africa, presenting a potential opportunity for AFR100 affiliated projects. And there are other benefits, including enhancement of biodiversity and continuous improvement of livelihoods through support to agribusinesses and smallholder farmers. These activities qualify offsets for consideration as premium carbon offsets, which can fetch as much as US$50 per tCO2e, which is five to ten times the value of generic offsets today.

In Africa, 100-million restored hectares of forest could sequester as much as 5.9-billion tons of carbon by 2040

Clearing the hurdle of high upfront costs

While the upside is significant, land restoration has high upfront costs and can take time to generate revenues. Achieving restoration targets will come at a hefty cost in the short and medium term – more than can be funded through traditional development and public capital. Because funding will need to be scaled significantly if AFR100 is to deliver on its potential benefits, the need for private funding and other financing mechanisms is significant.

Several different pools of capital prioritizing landscape restoration exist, but this capital will result in less than US$3 billion in additional funds, falling significantly short of Phase 2 AFR100 funding targets where costs are estimated at between $23-$75 billion. Part of this funding gap can be closed by leveraging investments from economic sectors that are also reliant on landscape restoration objectives, for example fruit, timber and carbon.

This is where philanthropic finance can play a critical enabling role – taking on risk to build the tools that will enable more restoration organizations to tap available funding, particularly since the vast majority of restoration projects will likely be driven by smaller, community-based organizations.

A framework for the future of FLR in Africa

A new AFR100 financing facility is centered around the inclusion of different types of local African implementers, and is designed to help scale up AFR100 activities by better linking investors to various investees through a single platform.

Dalberg has had the opportunity to support WRI in the conceptualization of the financing facility, and designed practical solution concepts that will help unlock restoration capital flows to better reach local initiatives, catalyze AFR100 implementation, and achieve the long-term sustainability of forest landscape restoration initiatives in the region.

The implementation of AFR100 between 2016-2021 led to insights that went on to guide the conceptualization of the financing facility. Among these insights is that local ownership is critical, particularly since landscape restoration is a long-term process and land is typically community-owned. Further, local implementers need tailored finance and support as they cannot absorb large investments, and they need technical guidance on restoration approaches, particularly in the early stage of the project.

The funding that’s needed for land restoration to flourish

The land restoration work of 32 African governments is underway through the AFR100 initiative, which emerged from the UN Climate Change Conference (COP27) with a $2 billion fund – doubling a $1 billion fundraising goal for that time period. This is a welcome outcome for thousands of community-based organizations and entrepreneurs who will need billions of dollars to restore more land, more quickly, and more effectively. Estimates show that every dollar invested in land restoration can yield between US$7- $30 in economic benefits.

Even though restoration targets will be challenging to reach, the urgency to attain them is even greater. As such, WRI continues to refine the modalities of the AFR100 financing facility, opening opportunities for private financing that could bring new life to degraded and deforested African land, as well as the people whose livelihoods and survival depend on building resilience and adaptation to climate change.