Scaling the Communal Reserve Co-management Model to Reduce Emissions and Build Resilience of Indigenous People in the Peruvian Amazon

Peru | CI

11 October 2019

Please submit the completed form to fundingproposal@gcfund.org, using the following name convention in the subject line and file name: “CN-[Accredited Entity or Country]-YYYYMMDD”

Project/Programme Title: Scaling the Communal Reserve Co-management Model to Reduce Emissions and Build Resilience of Indigenous People in the Peruvian Amazon.

Country(ies): Peru

National Designated Authority(ies) (NDA):

Ministry of Economy and Finance

Mr. Pedro Herrera Catalán

General Director of International Economics, Competition and Productivity Affairs

Accredited Entity(ies) (AE): Conservation International - CI

Date of first submission/ version number:

[2019-10-10] [V.1]

Date of current submission/ version number

[2020-05-27] [V.3]

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2

Notes

• The maximum number of pages should not exceed 12 pages, excluding annexes. Proposals exceeding the prescribed length will not be assessed within the indicative service standard time of 30 days.

• As per the Information Disclosure Policy, the concept note, and additional documents provided to the Secretariat can be disclosed unless marked by the Accredited Entity(ies) (or NDAs) as confidential.

• The relevant National Designated Authority(ies) will be informed by the Secretariat of the concept note upon receipt.

• NDA can also submit the concept note directly with or without an identified accredited entity at this stage. In this case, they can leave blank the section related to the accredited entity. The Secretariat will inform the accredited entity(ies) nominated by the NDA, if any.

• Accredited Entities and/or NDAs are encouraged to submit a Concept Note before making a request for project preparation support from the Project Preparation Facility (PPF).

• Further information on GCF concept note preparation can be found on GCF website Funding Projects Fine Print.

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 2

1 Concept notes (or sections of) not marked as confidential may be published in accordance with the Information Disclosure Policy (Decision B.12/35) and the Review of the Initial Proposal Approval Process (Decision B.17/18). 2 See here for access to project preparation support request template and guidelines. 3 Refer to the Fund’s environmental and social safeguards (Decision B.07/02)).

A. Project/Programme Summary (max. 1 page)

A.1. Project or programme

☒ Project

☐ Programme

A.2. Public or private sector

☒ Public sector

☐ Private sector

A.3. Is the CN submitted in response to an RFP?

Yes ☐ No ☒ If yes, specify the RFP: ______________

A.4. Confidentiality1 ☐ Confidential

☒ Not confidential

A.5. Indicate the result areas for the project/programme

Mitigation: Reduced emissions from:

☐ Energy access and power generation

☐ Low emission transport

☐ Buildings, cities and industries and appliances

☒ Forestry and land use Adaptation: Increased resilience of:

☒ Most vulnerable people and communities

☒ Health and well-being, and food and water security

☐ Infrastructure and built environment

☒ Ecosystem and ecosystem services

A.6. Estimated mitigation impact (tCO2eq over lifespan)

4.8 MtCO2eq

A.7. Estimated adaptation impact (number of direct beneficiaries and % of population)

The direct beneficiaries are 42,000 indigenous people of the Peruvian Amazon (19 indigenous groups) equaling 10% of the Peruvian Amazonian Indigenous population. There will be 285,179 indirect beneficiaries, who live in populated centers and municipalities in the vicinity of the project area, which include the buffer zone and other areas around the reserves (i.e., Communal Reserve landscape).

A.8. Indicative total project cost (GCF + co-finance)

Amount: USD 50,000,000

A.9. Indicative GCF funding requested

Amount: USD 35,000,000

A.10. Mark the type of financial instrument requested for the GCF funding

☒ Grant ☐ Reimbursable grant ☐ Guarantees ☐ Equity

☐ Subordinated loan ☐ Senior Loan ☐ Other: specify___________________

A.11. Estimated duration of project/ programme:

a) disbursement period: 6 years

b) repayment period, if applicable: -

A.12. Estimated project/ Programme lifespan

The sustainable financial mechanism will continue to be operational for at least ten years after the project is completed.

A.13. Is funding from the Project Preparation Facility requested?2

Yes ☐ No ☒ Other support

received ☐ If so, by who:

A.14. ESS category3

☐ A or I-1

☒ B or I-2

☐ C or I-3

A.15. Is the CN aligned with your accreditation standard?

Yes ☒ No ☐

A.16. Has the CN been shared with the NDA?

Yes ☒ No ☐

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4 During the development of the full proposal, we will consider the inclusion of enhancement of forest carbon stocks through restoration activities and regrowth of secondary forests as part of the calculation of mitigation impact potential. 5 Garnett, S. T., Burgess, N. D., Fa, J. E., Fernández-Llamazares, Á., Molnár, Z., Robinson, C. J., ... & Collier, N. F. (2018). A spatial overview of the global importance of Indigenous lands for conservation. Nature Sustainability, 1(7), 369. 6 The CR Landscapes includes the CRs territories, the partner communities (for the purpose of this concept note we will call this stakeholder “Partner Communities”) and other communities that surround the CR (Associated Landscape). 7 An administration contract is signed between the communities organized (Partner Communities) represented by a non-profit legal entity - the Executor of the Communal Reserve Administration Contract (ECA), and the State represented by The Peruvian Natural Protected Areas Service (SERNANP for its acronym in Spanish). 8 Management plans for CRs will be linked with the national forest and climate strategy and the national climate change strategy and will be aligned to those strategies’ priorities through a participatory process. Also, the project will facilitate the participation of ECAs representatives to institutional meetings related with climate change and forestal issues. 9 Machiguenga CR, Chayu Nain CR, Yanesha CR, El Sira CR, Purus CR, Airo Pai CR, Amarakaeri CR, Ashaninka CR, Tuntanain CR, Huimeki CR. 10 There are 332, 975 indigenous people in the Peruvian amazon (https://pnudperu.exposure.co/la-travesia-de-los-pueblos-indigenas-en-el-peru).). 11 INEI (National Institute of Statistics and Informatics, Peru), 2007. First census of indigenous communities. 12 Since decisions of land ownership and other rights to use and access resources have not been inclusive and evenly distributed among the diversity of inhabitants, IPBES defines a co-management mechanism as an institutional arrangement attempting to accommodate the plurality of values and interests of indigenous and local populations. There is rich discussion in the literature, based both on empirical data and theoretical construction, proposing adaptive management, adaptive co-management and adaptive governance as systems more suitable to overcome contemporary socio-environmental problems (IPBES regional assessment report on biodiversity and ecosystem services for the Americas, 2018).

A.17. AMA signed (if submitted by AE)

Yes ☒ No ☐ If no, specify the status of AMA negotiations and expected date of signing:

A.18. Is the CN included in the Entity Work Programme?

Yes ☒ No ☐

A.19. Project/Programme rationale, objectives and approach of programme/ project (max 100 words)

Amazonian indigenous peoples are among the most vulnerable to the impacts of

climate change, particularly indigenous women. The proposed project aims to

empower indigenous people to adapt to increased temperatures, changing rainfall

patterns, and resultant negative impacts on food security and livelihoods while

protecting, restoring and sustainably managing 5 million ha of forests to reduce 4.8

MtCO2eq4 of emissions in the Peruvian Amazon. These goals will be achieved and

sustained through the establishment of a green business facility with the participation

of private and public stakeholders that will provide the financial and technical means

needed to effectively implement the Communal Reserve management model and

sustainable management of the surrounding areas.

B. Project/Programme Information (max. 8 pages)

B.1. Context and baseline (max. 2 pages)

Indigenous peoples are among the most vulnerable to climate change and yet are also among the most important

stakeholders for managing forests in a way that reduces emissions and harnesses ecosystems for climate

resilience.5 Through close collaboration with the Government of Peru, and the establishment of a green business

facility with the participation of private and public stakeholders, this project aims to promote indigenous peoples’

leadership in climate change adaptation and mitigation in 10 Peruvian Communal Reserves (CR), where 194

indigenous communities are located (see Appendix 1). The Reserves cover an area of 2,168,300 ha and the

surrounding areas that are home to indigenous communities and other local people include an additional 2,797,700

ha, for a total of 4,966,000 ha - the project target area, hereafter referred to as the Communal Reserves

Landscapes6 (CRL) (PNCBMCC, 2018). The CRL represent approximately 8% of the Peruvian Amazon (Appendix

2).

CR are a category of Natural Protected Area (NPA) where both the Peruvian government and indigenous

communities are responsible for the territory’s management7. They were created as a participatory instrument under

the NPA legislative framework, whose purpose is to involve and empower local indigenous populations in the

management of these NPA. The CR instrument considers the unique context of each area to conserve nature and

culture for the benefit of the communities. As in other NPA, use and commercialization of natural resources must

be conducted in accordance with management plans8 that are approved and supervised by the NPA National

Authority (SERNANP) and executed by the local communities. This category of NPA was created at the request of

Amazonian indigenous communities and was recognized by the Peruvian Government to both support the

conservation of the important biodiversity that exists in these territories and empower indigenous peoples’

governance. To date, 10 CR have been created9 that host 19 of the 51 indigenous groups that inhabit the Peruvian

Amazon10, with a population of 42,000 people (DRIS, 2019), equivalent to approximately 10% of the Amazonian

indigenous population, of which 52% are men and 48% are women11. For more than 10 years, this innovative co-

management12 mechanism has generated positive outcomes in terms of indigenous people’s engagement and

partnership with Peruvian government. One of the most relevant examples of this success occurred in the

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13 The Communal Reserves Management Contracts Executors (ECA) can receive payments for Emissions Reductions reached through avoided deforestation and forest degradation; ECAs-RCCR expect to receive financial resources obtained through carbon offsets to administer their territories under the guidelines of Indigenous Amazon REDD (RIA) which are: Indigenous organizations manage their resources, communities life plans and CRs master plans are implemented, the historical debt and the conservation efforts of the forests led by the indigenous peoples are recognized. 14 The Executors of the Communal Reserves Administration Contracts (ECA) of the 10 CRs targets of this project, are the social base technical and administrative units that represent the indigenous communities benefiting from the areas. They administer the CRs, by ensuring the biological diversity conservation and the benefit for its members, through an effective and responsible participation of the beneficiaries in the administration and management of the communal reserves. The sustainable management of natural resources, the indigenous people’s cultural identity maintenance and strengthening are others important elements of ECAs role. The management is shared with SERNANP, so that the Head of the protected area is the responsible for enforcing the regulations, sanctions, and supervision of the NPA. 15 Blended finance is the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries (OECD). 16 Climate scenario projections of Third National Communications of Peru to the UNFCCC. 17 The study titled “Análisis de Vulnerabilidad de las Áreas Naturales Protegidas frente al Cambio Climático” developed an index by considering climate and no climate exposure variables: the Regional Climate Change Index (IRCC) for climate variable and the no climate exposure index measured through (i) index of effects (according to the SERNANP monitoring matrices), (ii) index of accessibility to each NPA, and (iii) local population growth rate. The adaptive capacity comprised two variables: the technical capabilities available to the staff of each NPANPA and the ratio of local actors to each NPA. 18 Airo Pai CR, Huimeki CR, Purus CR, Allpahuayo Mishana CR. 19 Ashaninka CR, Airo Pai CR, Huimeki CR, Machiguenga CR, Purus CR, Allpahuayo Mishana CR. 20 http://geobosques.minam.gob.pe/geobosque/view/perdida.php. 21 Assuming 110 tC/ha (PNCB).

Amarakaeri CR, where the Indigenous Amazon REDD (RIA)13 approach was created and put into practice,

obtaining access to climate funds, including the Forest Investment Program (FIP) and others. The Amarakaeri CR

also setup a successful Brazil nut production system by implementing best practices and developing community

concession agreements around the NPA. Other success stories include the international recognition obtained by

the Yanesha CR for its high-quality cacao production, and the Tuntanain CR’s sustainable production and marketing

of natural rubber latex, as well as the commitment of 107 communities associated to 9 ECA14 to conserve 1 million

ha as part of an agreement between the National Association of Communal Reserves Administrators of Peru

(ANECAP) and the National Forest Conservation Program. These CR will serve as models that will be used in other

CR to replicate and scale up their successes. To consolidate and amplify these successes within and beyond the

CR, it is necessary to generate the enabling conditions to facilitate access to much needed financial and technical

resources. This can be accomplished through the establishment of a green business facility, that can leverage

public and private funds under a blended finance approach15, reduce the risks and provide incentives for investors,

provide financial and technical advice to communities and investors, prepare communities to engage the private

sector in a fair and equitable manner and facilitate access to markets.

The climate-related problems the project will address are on the one hand, the unsustainable use of natural

resources that results in deforestation, forest and ecosystems degradation that affect community livelihoods and

increase global warming through GHG emissions, and on the other hand, the impacts that climate change has on

these vulnerable communities. Providing the ECA and surrounding communities with the financial and technical

means to make sustainable use of natural ecosystems, limit deforestation and forest degradation, restore degraded

ecosystems, improve their livelihoods through the development of green businesses in partnership with private

sector, will allow them to adapt and become more resilient to climate change.

The traditional livelihoods of the indigenous people who live within the CRL is under threat by rapid changes to

climate. Under business as usual projections, by 2030 temperatures are predicted to rise by 1.6 °C on average

(0.53 °C/decade) in Peru while rainfall is predicted to decrease by 30%16. Changes in rainfall pattern, such as less

frequent and larger rainfall events, are also expected to increase the populations’ exposure to droughts and floods

resulting in loss of lives and increased food insecurity, particularly for indigenous peoples who rely on fishing,

hunting and agriculture. These climate change impacts are acutely felt by indigenous women because they are

responsible for household food supply and preparation. Fish reproduction cycles, the main source of protein, and

fruits and forest products maturation cycles are both negatively impacted by increased temperatures and changing

rainfall patterns. An analysis of climate change scenarios in the Amarakaeri CR predicts variations of +/- 10% in

annual rainfall and an increase of 1.75 to 2°C of the minimum and maximum temperature by 2030 under a moderate

emission scenario according to the Peruvian National Weather Service (SENAMHI) and the Amarakaeri CR study

supported by the EBA-Amazon Project. These impacts will have dramatic effects on ecosystems and on the spatial

distribution of a variety of species that provide ecosystem services and agricultural products such as Brazil nuts,

rubber latex, aguaje fruit, and others. A study developed by WWF and SERNANP identified the NPAs most

vulnerable to climate change17 and categorizes the majority of the 10 CR as high risk: 4 CR18 for the 2050 evaluation

period and 6 CR19 for 2080 evaluation period.

Deforestation rates are also increasing in the project areas. The change in land use according to a multi-temporal

analysis conducted by CI shows that between 2001 and 2016, 128,483 ha were lost in the CRLs, with an annual

average of 8,565 ha of forest cleared (Appendix 3). This represents approximately 6% of the country's

deforestation20 and approximately 3.4 MtCO2eq per year.21 If this trend continues under a “business as usual”

scenario, in a period of five years approximately 18 MtCO2eq will be emitted. It should be noted that 91% (116,746

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22 Life plan is an instrument of collective, differential, and integral strategic planning of an indigenous or native community, people or organization, which starts from a reflection on their worldview and history to determine what is the vision of the future they wish to achieve, their conception of development and good living, and define strategies and actions to achieve it (Kuiru, 2014; Espinosa, 2014). 23 REDD + Indigenous Amazon is an initiative of the Amazonian indigenous peoples that seeks to integrate its vision into mitigation and adaptation policies to climate change and promotes holistic management of the territory. It’s an approach to the reduction of emissions of deforestation and forest degradation, that considers the indigenous world view, in which the conservation efforts by these groups are recognized and rewarded. 24 This group is made up of 13 Ministries: Ministry of Environment, Ministry of External Affairs, Ministry of Agriculture, Ministry of Economy and Finance, Ministry of Energy and Mines, Ministry of Transport and Communications, Ministry of Production, Ministry of Housing, Construction and Sanitation, Ministry of Health, Ministry of Education, Ministry of Development and Social Inclusion, Ministry of Culture, Ministry of Women and Vulnerable Populations.

ha) of this deforestation occurred in the landscape outside of the CR boundaries, demonstrating that the co-

management experience has been effective in terms of avoided deforestation in the areas where it has been

effectively implemented. The map in Appendix 4 shows that fires have occurred less frequently in CRs than in other

parts of Peru. Nevertheless, the land use change analysis conducted by CI between 2006 and 2016, shows an

increasing trend of deforestation in the project area, both inside of CRs, as well as in the surrounding areas

(Appendix 3).

While deforestation is a major source of greenhouse gases, it is also a threat to the resilience of indigenous peoples

to climate change. The indigenous people in the project area depend heavily on forests because their economic

activity is based mostly on timber and non-timber forest products such as Brazil nut, rubber latex, and native wild

cocoa. Biodiversity and ecosystem services help them to adapt to and mitigate climate change; by conserving

nature and restoring ecosystems the project will reduce vulnerability and increase resilience. Providing the means

to generate viable businesses from these ecosystem services and products is essential for the sustainability of

forest conservation efforts inside and outside of the CR. These means will be provided by the green business facility

described in Section B2 and the Figure in Appendix 8.

According to the National Forest and Climate Change Strategy, and analysis by the Ministry of the Environment

within the framework of the Nationally Determined Contributions (NDC), the drivers of deforestation in the Peruvian

Amazon that can be best addressed in the project area are the expansion of subsistence agriculture, inefficient

systems of agricultural production, and the low value of the forest. Underlying drivers to be addressed include weak

governance systems including poor institutional coordination, the absence of monitoring and surveillance strategies,

and the loss of ancestral knowledge. The main institutional and economic/productive drivers that the project will

target are: (1) Insufficient capacities of the National Association of Communal Reserves Administrators of Peru

(ANECAP), the ten ECA, other relevant Indigenous Organizations, and Regional and Local Governments that has

led to little or no institutional coordination or communication between key actors. Poor alignment between the

management instruments such as community life plans22, regional or local development plans, and master plans of

NPA often result in gaps as well as in counterproductive and redundant activities on the ground; (2) the low value

of forests accompanied by low productivity of current production systems, impacting both deforestation rates and

indigenous communities’ resilience to climate change. While improving the local economies is possible through

alternative business models and better agricultural practices, these have not been widely adopted; and (3) lack or

very limited access to finance to better manage the CRL in the context of climate change.

Based on this analysis, the project aims to improve the adaptive capacity of indigenous people living in the CR and

surrounding areas, reflecting the priorities identified in the various planning documents at national and regional

levels, including the NDC, proposals for Land Use, Land Use Change and Forestry (LULUCF), the National Strategy

of Climate Change, the National Forest and Climate Change Strategy, regional strategies on climate change and

related implementation plans, as well as the RIA23. The project’s adaptation and mitigation measures are based on

the NDC priorities established in the final report of the Multisectoral Working Group24 since the proposal for LULUCF

sector includes 4 priorities: conservation, forest management, reforestation, agroforestry and rights allocation

measures. In all those climate change decision spaces, indigenous people represent a key stakeholder since they

live in important areas where large carbon stocks are stored, they are vulnerable to the current and future impacts

of climate change and can support mitigation and adaptation actions through application of their traditional

knowledge.

B.2. Project/Programme description (max. 3 pages)

The Government of Peru, through this Project, seeks to achieve the financial sustainability of 10 CRs by promoting the sustainable use of natural ecosystems, limiting deforestation and forest degradation, restoring degraded ecosystems, and improving community livelihoods. The project will be designed through a participatory process with representatives of the affected indigenous communities, and indigenous groups will be responsible for implementation of many of the project activities. The GCF’s Indigenous People’s Policy and Peruvian legislation will be strictly applied throughout the project’s design and implementation. The sustainability of the project’s activities will be ensured through the establishment and operationalization of a green business facility that will use a blended finance approach in collaboration with public and private stakeholders to incentivize transformative economic activities that enable indigenous communities and others in these landscapes to increase productivity with sustainable techniques and access to supply chains that provide continuous demand for local production. An

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25 AJE Group is a multi-national beverage company based in Peru. 26 SDG number 5: Life on land. 27 The National Forest Conservation Programme of the Ministry of the Environment contributes to the conservation of the forests by reducing GHE emissions, deforestation, and forest degradation, while promoting welfare of local communities. The program objective is to conserve 54 million of hectares of tropical forest to contribute to the mitigation measures of climate change and promote sustainable development. This programme will have a second phase, as it is planned to end 2019-2020, so lessons learned from performance-based payments will serve as inputs for the benefit-sharing mechanism proposed under this project. 28 The Compensation Program for Competitiveness - AGROIDEAS, is the executing unit of the Ministry of Agriculture and Irrigation-MINAGRI, which acts as a strategic partner of sustainable businesses at national level, promoting associativity, improving management and adoption of technology of small and medium producers, through non-refundable financing of sustainable business plans. 29 At its most basic, Tax for Infrastructure (in Spanish “obras por impuestos”) seeks to encourage private investment in public works projects by offering private businesses tax rebates for the full amount of the investment, subject to various limitations. It allows private businesses to complete select public works projects in exchange for a commensurate reduction in their general tax obligation owed to the government. 30 As noted earlier, the project’s final design will be created together with the indigenous communities. The framework provided here is only indicative.

example of this transformative change is the experience of Yanesha CR, which is sustainably producing Eshpe and Koyanesha cacao without deforestation and has successfully sold this project nationally and internationally (currently being sold to a Belgian chocolate maker). The development of value-added products from the Amazon, such as beverages from camu-camu, cocoa, aguaje fruit, native vanilla, and teas with native ginger, in collaboration with industry leaders such as AJE Group25 represent viable alternatives for communities as well a non-timber forest product such as bamboo composites for new-build construction. These types of business opportunities could contribute to improve the livelihoods of communities, provide the necessary funding for conservation, and contribute to Peru’s NDC and Peru’s contributions to SDG26 achievement. In addition to this, the generation of income from emission reductions as part of the implementation of RIA will be developed, as well as improving access to public funding through government programs such as the National Forest Conservation Program27, Agroideas28, and others such as Tax for Infrastructure programs29. Business opportunities will be developed in a phased approach (see Appendix 9) in the CR during project implementation, taking into consideration the communities’ capacity and their readiness level, as well as feasibility studies and green business prospecting activities. The objective of the project is to empower indigenous people to adapt to increased temperatures, changing rainfall patterns, and resultant negative impacts on food security and livelihoods while protecting, restoring and sustainably managing 5 million ha of forests to reduce 4.8 MtCO2eq of emissions in the Peruvian Amazon by 2030. As envisioned at this Concept Note stage, the project will achieve its objective through the following components30:

1. Strengthened awareness, governance and institutional and regulatory systems for climate-responsive

development planning of the CRL. 2. Strengthened adaptive capacity and reduced exposure to climate risks of 194 indigenous communities (42,000

people). 3. Sustainable land use and forest management for 4.8 MtCO2eq of reduced emissions (30% of emissions from

deforestation) in 5 million hectares of the Peruvian Amazon (~6% of the area of the Peruvian Amazon, which is of 78,280,000 hectares).

4. Establishment and operationalization of a green business facility.

These components are based on the following outputs and activities: 1.1. Indigenous Communities are well informed of climate change and the risks they face. Indicative activities to

achieve this output include the design and implementation of a communication and outreach strategy by indigenous people to indigenous and other audiences with ANECAP and the ten ECAs, and with the dissemination of project results and objectives locally, nationally, and internationally.

1.2. The indigenous governance and institutions are improved. Activities related with this output are governance trainings to Indigenous communities and revision of governance structure for communities, with additional institutional infrastructure designed and implemented if needed, based on their traditional structures.

2.1. Communities are participating in new, sustainable, climate-smart livelihood work. This output will consist of the establishment of strategic alliances with key public entities (SERNANP, Servicio Nacional Forestal y de Fauna Silvestre - SERFOR, - PNCB, Regional Governments (GORES), and Local Governments (GOLOS)), the implementation of agroforestry systems, and the interconnection of the monitoring and surveillance system of the ten ECAs with the Forest Coverage Monitoring Module (Módulo de Monitoreo de la Cobertura de Bosques in Spanish) and other national systems. Additionally, the evolution from subsistence crops to more advanced agriculture production systems will be supported through a combination of modern techniques and traditional knowledge.

2.2 Communities have adopted climate risk abatement practices. Indicative activities to achieve this output include the creation of mechanisms to ensure that traditional knowledge will be recovered, valued, protected, and mainstreamed into sustainable forest management and conservation programs. Also, the use of government tools and policies by CRs will be facilitated to help address climate change adaptation needs.

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3.1. Development of Payment for Ecosystem Services systems on CR Landscapes. This output will consist of a feasibility review to ensure RIA is viable in the each of the ten CR, implementation of the Rights-based Approach, approval from the REDD+ national authority, payments for ecosystem services support, including RIA initiatives. It is expected that ECA and associated communities will receive payments for ERs achieved by reducing deforestation and forest degradation.

3.2. CR master plans are developed and implemented. Indicative activities to achieve this output include improvement of coordination between SERNANP, the ten ECA, and ANECAP among other indigenous community organizations and the establishment of Management Committees through ANECAP and the ten ECA. Additionally, the project will link the design and implementation of CR master plans, community Life Plans, the development plans of other beneficiary populations and other management instruments with development plans of local and regional governments, and management plans of other key entities. Also, the project will enhance and support the ECA participatory processes to ensure involved community members in decision making, and develop joint actions for conservation and natural ecosystems restoration based on agroforestry systems. Finally, the project will develop and implement ecosystem conservation and restoration plans in areas prioritized by the ECA, native communities, and other stakeholders and implement a comprehensive monitoring and surveillance system of the ten ECAs.

4.1 Investment in conservation businesses is increased through the development and implementation of

innovative financing mechanisms. Activities related with this output are related to the establishment a green business facility to coordinate blended finance of the CR Landscape, including a board of directors that includes indigenous representatives; establishment of strategic alliances with private sector companies such as AJE and Ecotierra for training and development of technical, administrative, and managerial capacities; development and consolidation of value chains of prioritized products such as Brazil nut, rubber, native fruit and cocoa varieties, that provide durable incentives for quality, efficiency, productivity and sustainability; improvement of the Conditional Direct Transfers initiative of the National Forest Conservation Program (NFCP).

The Conditional Direct Transfers program is an existing government-funded means of supporting indigenous peoples’ conservation initiatives, that does not currently meet its potential but that can contribute to the outcomes and goals of the project. The program is looking for partnerships to expand the scope and effectiveness of the transfers. The project will work with the beneficiary communities to help them access the program funds (through assisting with the participatory design of the required investment plans) and by brokering partnerships with private sector actors to make those plans more impactful and sustainable. In other words, the project will turn the CDTs into green business investments. This tripartite (communities, government/NGO) cooperation has great potential to scale up the impact of the NFCP and is already being implemented in the Awajun communities of Alto Mayo, were CI is helping the NFCP meet conservation goals while helping communities develop green businesses opportunities for products such as teas from medicinal plants, as well as tourism enterprises.

Note that all activities will be refined and described in detail during the development of the full Funding Proposal

and will be designed to scale-up successful experiences with reducing deforestation in the Alto Mayo basin of Peru’s

San Martin Province. Tools that are already developed and have proven successful in this landscape will be utilized,

such as conservation agreements and stakeholder mapping tools. The project will be developed by indigenous

peoples that share their territories with other social groups, such as migrant farmers; it is possible the identified

strategies might not be accepted by all parties. The project will work to address potential conflicts, paying special

attention to the modification of production systems that must be gradual, agreed to, and adequately monitored

under the framework of a rights-based approach, including Free, Prior and Informed Consent (FPIC).

In the Alto Mayo, CI is currently working with Awajun indigenous communities to develop a long-term financial

mechanism that incentivizes forest conservation. For this purpose, CI and its partners are in the process of creating

an economic development alliance committed to green growth in Peru that will align individual sustainability

investments and the support conditions necessary to catalyze green investment in the Amazon. The primary goal

of the Alliance is to work with leading project developers, investors, and corporate partners to unlock public and

private funding for conservation businesses, such as Brazil nut, rubber, native fruits and wild cocoa, through

targeted technical assistance, business development services, market linkages, and knowledge sharing.

Building on this alliance, to ensure the sustainability of the project outcomes in the CRL, a key aspect of the Project

will be the establishment of a multi-purpose, green business facility with two desired results: (1) financial support

for CR management costs; and (2) ensured ongoing compliance with conservation and restoration commitments of

the ECA and associated communities. The role of the grant finance will be to strengthen and catalyze enabling

conditions necessary for long-term conservation and sustainable development of the CRL. The conceptual diagram

presented in Appendix 8 depicts the main elements of the sustainable financing strategy to ensure long-term

outcomes. This conceptual diagram for the financing strategy is still in development and will be adjusted during the

preparation of the Funding Proposal; the proposed green business facility will have a governance board that

includes representatives of the National Association of Communal Reserves Administrators of Peru - ANECAP,

the NPA National Authority - SERNANP, the Peruvian Trust Fund for National Parks and Protected Areas -

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31 National System of Multiannual Programming and Investment Management whose Governing Body is the General Directorate of Public Investment of the Ministry of Economy and Finance of Peru.

PROFONANPE, the Peruvian Ministry of Environment - MINAM, GCF, and CI Peru, as well as financial institutions.

This board will have oversight over the facility´s investment decisions and operations.

The green business facility will finance key activities, such as the feasibility studies of business opportunities with

the greatest impact for the CR’s conservation and the associated communities’ resilience; this will ensure that the

sustainable landscape management will continue long after the project duration. The green business facility will

also strategically use grant funds provided by GCF and other donors to mobilize public and private capital flows to

sustainable community-led enterprises by financing the enabling conditions required for making these businesses

“investment ready.” This blended finance approach will 1) help to build viable business models that support local

economies; 2) scale-up commercial financing for revenue generating activities with climate benefits and economic

development impacts; and, 3) align private investments with public sector investments of different subnational and

national government entities and programs (e.g., SERNANP, PNCB, Agroideas, INVIERTE.PE 31 , Tax for

Infrastructure, etc.) based on the integration of planning instruments and strategies (community life plans, master

plans, concerted development plans, national forest and climate change strategies, NDC, and SDGs, etc.). An

example of private investment that could be leveraged for this project is the potential involvement of the multinational

beverage company AJE, which sources natural products for its beverages from indigenous communities and NPA

in Peru. Support for these activities may come in the form of small grants or technical assistance to support small

agricultural businesses or community enterprises, as feasible and appropriate, non-grant financial instruments

which mitigate investment risk, such as transferrable guarantees and first-loss capital. These instruments would be

deployed to build the capacity of sustainable enterprises and leverage commercial investment— and would have

the additional benefit of preserving fund resources when compared to traditional grants. While technical assistance

and small grants/incentives will provide important support for small sustainable enterprises, ultimately many of them

will need enhanced access to credit to grow their operations and achieve greater economic success. For example,

the green business facility plans to partner with CI-Ventures, a new impact investment fund developed by CI that

deploys philanthropic capital as loans from US $30,000 - $500,000 to enable the growth of sustainable enterprises

that operate in key conservation areas. These enterprises, such as cooperatives that are currently supported in the

Alto Mayo landscape, can use this financial support to upgrade their infrastructure, purchase equipment, improve

their operational capacity, obtain certifications or take other necessary steps to enhance their business model and

unlock larger pools of capital.

Additionally, the project team is currently exploring opportunities with Wawasana, a Peruvian tea company. and

engaging major private sector partners such as Starbucks and Mars. There are also early stage explorations with

MiBanco to deploy microcredit financial products in the project areas. Through Conservation International Ventures

the team has held several meetings with investment partners (mostly impact investors) to gauge their interest in

providing investment to projects that become “investment-grade” through the support of the project. All the

conversations have been positive, and the partners are eager to get involved. CI currently has signed MoUs with

an objective of co-investment with:

• &Green Fund: Fund manager is Sail Ventures based in Netherlands, which manages $125M, providing

first loss, long-term debt to companies.

• Althelia / Mirova : Fund manager based in London, currently managing a $50M mandate from AXA

insurance looking for investments in low emissions land use.

• NESsT: Manages a $10M investment fund alongside other incubator services focused on supporting

environmentally friendly businesses.

• Root Capital: Focuses on providing trade finance to coffee and cocoa cooperatives, having an annual

outlay of over $3M in Peru.

• Alpha Mundi: Fund manager based out of Switzerland with offices in the United States and Colombia, with

$20M under management focused on cooperatives and other small medium enterprises.

• Peru Opportunity Fund/ Hampshire Foundation: A foundation providing impact investments to agricultural

enterprises and cooperatives.

• Beneficial Returns: Fixed assets lender based in the United States looking for investments in social

enterprises which provide environmental returns.

• Acumen Fund: $50M Investment Fund based out of the United States with offices in Colombia, focused

on social investments.

In addition, we are currently in discussion for MoUs with:

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 9

32 During the full proposal elaboration, other local partners will be identified in order to complement the role of DRIS.

1,2 Tree Fund: A $250M investment fund based in Germany with operations in Colombia. They have been

looking for investment opportunities in the Peruvian Real Assets sector particularly around cocoa.

Ecotierra/ Urapi Fund: A $12M investment fund financed by the Landscape Degradation Neutrality Fund,

looking for investments in sustainable agroforestry.

EcoEnterprises Fund III: An equity investment fund managing $50+M for investment in environmentally

friendly businesses.

• Grass Roots Business Fund: A fund manager based in the United States and offices in Peru, which has

over $20M assets under management that provides affordable finance to social enterprises.

GCF will finance the green business facility in alliance with CI-Ventures. Potentially financial products that will be

provided by the Facility include repayable grants, convertible grants, and revenue share agreements. In accordance

with CI’s accreditation, finance for non-grant instruments will not be requested from the GCF.

To address ongoing investment barriers, catalyze the growth of green business, and scale up private sector finance

in conservation and sustainable development, the green business facility will convene, facilitate, and collaborate

with multiple stakeholders to provide this support. This non-financial support will be characterized by:

Sectoral Approach: Entrepreneurs and small businesses often find incubators to be of limited utility due to a one-

size-fits-all approach to enterprise development. By focusing only on projects operating within the sustainable

production/conservation sector, the Facility will be able to provide solutions tailored to this unique market and be

able to be more inclusive and effective.

Value Added Technical Assistance: Companies will provide support to address performance gaps associated with

their business model, leveraging the Facility’s specialized network of business, technical, and climate change

experts in priority sectors and geographies.

Science and Innovation: Investor companies and communities will also receive support in scientific and

environmental aspects of their business to address sustainability issues such as reducing impact and accounting

for the dependencies of businesses and investments in biodiversity and ecosystem services. Companies investing

in or conducting restoration work will also be provided with a decision-support tool for evaluating the costs and

benefits of different types of interventions.

Project Preparation: Companies can apply to the Facility to access funding for project preparation or investment

opportunity analysis. These funds will be reimbursable and include a small fee on the total investment if projects

move to execution.

Global Market Linkages: The Facility will link portfolio businesses to a network of companies and sector-wide

initiatives designed to source sustainable commodities. Portfolio companies will have access to buyers and

technical assistance needed to navigate market certification and other requirements.

Demand Driven: Traditional incubators or similar platforms typically mature deals and then shop them around to

potential investors. The Facility will work with partner investors to mature deals that have already been identified

and are investment ready. ‘Reverse pitch’ competitions will be developed, where local corporations, governments,

and organizations can outline and frame existing problems, and entrepreneurs can work to develop commercialized

solutions and compete for the best finance solution.

The organizations that will execute the project (institutional arrangements are illustrated in Appendix) 8 include: (1)

SERNANP (government agency that is co-manager of the CR and responsible for the administration of NPA in

Peru) will receive funds as a sub-grantee from PROFONANPE to cover the gap that exists to effectively implement

their monitoring and surveillance role in the CR; (2) PROFONANPE – the Peruvian Trust Fund for National Parks

and Protected Areas, also a GCF Direct Access Entity, will receive funding from the Executing Entity (CI Peru) that

will transfer to SERNANP; (3) the ECAs that represent indigenous groups for the co-management of the CR, will

receive financial resources as sub-grantees to update and implement community life plans as well as for activities

under the framework of master plans of CR; (4) Desarrollo Rural Sustentable (DRIS)32, a Peruvian NGO, will provide

technical assistance to ECAs and ANECAP in order to strengthen them in their work as representatives of local

communities; (5) ANECAP, the organization that represents the 10 CR, will support capacity building and

governance of CRL with funding through the Executing Entity (CI Peru) and DRIS; (6) CI Peru, the Executing Entity

(EE), will lead the project and implement the general strategy; (7) CI-GCF, as Accredited Entity (AE) is responsible

for project oversight and reporting to the GCF. The Peruvian Ministry of Environment, SERNANP, PROFONANPE,

ANECAP and CI Peru will be part of the green business facility board in order to decide over its design and

operation. Furthermore, other private actors and public institutions will be involved through the Green Business

Facility: Viridis Terra that will showcase and provide expertise in green business models for restoring land; Aje that

will also showcase, and provide their expertise, to innovate in the design of sustainably sourcing and valuing of

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 10

33 The final implementation arrangements will be determined during the full proposal development.

forest natural products; finally the National Forest Conservation Program, Agroideas and INVIERTE.PE are some

examples of public funding vehicles the project will access through the green business facility as part of the blended

finance approach (see Appendix 10).

This group of organizations is well positioned to address the diversity of indigenous groups’ needs and priorities,

strengthen the governance of these groups and of the project, build indigenous peoples’ ownership of the project,

and ensure compliance with the GCF´s Indigenous Peoples Policy.

The institutional structure and the flow of funds are presented in the Figure in Appendix 833. In order to ensure the

correct management of the funds, capacity of local partners will be strengthened.

In March 2018, CI signed a Funded Activity Agreement (FAA) for the GCF Sustainable Landscapes in Eastern

Madagascar Project. CI is investing $18.5 million of GCF grant resources to implement sustainable landscape

measures to enhance smallholder’s resilience to climate change and reduce GHG emissions in two key

Madagascar landscapes. This effort will mobilize both the public and private sectors and prepare smallholders to

ultimately access private sector capital, providing a pathway to exit from the existing extreme vulnerability. The

project will also bridge the gap between public and private financing for forest conservation and community

development. These activities include many similarities to those proposed for this project in Peru, and GCF project

management experience will be shared with CI Peru to apply lessons learned and replicate its successes in the

Peruvian context.

Initial Risk Assessment Summary

Financial risks: Indigenous communities have limited budgetary and administrative capacities; CI Peru as EA will

build these capacities and ensure the appropriate use of GCF funds by these communities. Corruption, due to lack

of community control and weak governance systems, will be a risk that could affect the project and the conservation

objectives. Conservation International Foundation, as AE, will oversee the project and ensure compliant financial

and technical management. Conservation International´s operational policies, controls and proven experience in

budget management, will ensure the proper and transparent administration of the funds to reduce financial risks.

The final project funds flow mechanism (see Appendix 8) will be determined during full proposal development.

Technical risks: The project is designed to empower and provide the means for indigenous people to implement

activities on the ground by recovering and maintaining their traditional knowledge. Consequently, the project will

implement training methodologies with a culturally appropriate and gender sensitive approach. Particular attention

will be given to women to promote their participation and leadership in the project activities. Risks exist that adoption

of new techniques will be slow or resisted by communities. To abate these risks the project will ensure that adequate

training is provided, and incentives are in place to ensure a smooth transition from a subsistence to a green

economy linked to markets. The project will use an approach designed to incorporate Indigenous and traditional

which is expected to increase a sense of ownership among participating communities and improve the efficacy of

the interventions. Investment in governance capacity (including planning, decision-making, and conflict resolution),

biodiversity-based livelihoods, and ecosystem integrity will empower indigenous communities and other

stakeholders to embark on a sustainable development trajectory that achieves low emissions and climate resilience

objectives and improves human well-being. Project activities will support indigenous people to steward and manage

their lands in the context of climate change. A basic premise of the Project is that current deforestation and soil

degradation processes are linked to the weakening of local indigenous institutions. The Project will aim to reverse

this trend, empowering indigenous people with the tools and skills to adequately manage their territories in

alignment with national and international policies, but sensitive to local and indigenous knowledge system and

institutions. This paradigm shift, from a paternalistic governmental approach to an empowerment mode, will allow

indigenous peoples to build their skills and restore their confidence in the management of the land. Finally, in order

to mitigate the potential risks related to land tenure, especially in regards to the production of forest commodities,

and commercialization through the Green Business Facility, it is important to clarify that most of the activities will

be implemented in areas where land tenure has been granted to indigenous groups. However, an assessment of

the land tenure situation in other areas where the project could intervene - especially in buffer zones of communal

reserves – will be conducted to identify if land tenure is clear or if there is a need to support granting of rights.The

majority of the areas where the project will be implemented have clear land tenure rights - most of them are

communal reserves or indigenous communities - where communal rights are granted.

Operational risks: the lack of competent and experienced partner staff (mainly ANECAP, ECA) to work with higher

productivity schemes, including value chains, will be a risk that must be faced with adequate training, close

monitoring, and strategic alliances with the private sector.

Social risks: The project will be developed by indigenous peoples that share (in most cases) their territories with

other social groups, the identified strategies might not be accepted by all parties. The project will work to address

potential conflicts, paying special attention to the modification of production systems that must be gradual, agreed

to, and adequately monitored under the framework of a Rights-based Approach. Other measures to mitigate

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 11

potential socio-environmental conflicts related to land rights and the use of resources in IPs’ territories, will be

identified in initial baseline studies for each CR, including stakeholder mapping through a participatory manner in

the Project area. The stakeholder mapping tool will analyze interactions between stakeholders and identify

opportunities to address relationships where conflict or tensions exist as well as opportunities to contribute to

peacebuilding. Empowerment of indigenous people is a prerequisite to strengthening their governance and the

Project will also work with the broader governance system to make sure that indigenous rights and management

systems are respected and not undermined in the future. Setting up enabling conditions at the broader district,

municipal and landscape scale will help the advances in community governance made by this Project endure. We

will work with local governments to make sure that we put in place policies for maintaining an open, intercultural

dialogue with indigenous communities beyond the Project lifetime. In addition to this, in the Amazonian context

women are at a social and economic disadvantage as they are at a higher risk of suffering from violence when they

pursue activities that promote their independence and empowerment. Even when they have some income, they

usually do not participate in the decision-making processes of their communities. Although they play a fundamental

role in environmental conservation, they lack the resources to feed their children appropriately or send them to

school. The project will implement a gender strategy to address this issue.

Environmental risks: There exists a lack of clarity in land tenure that has led to land grabbing and conflicts over

property boundaries that contribute to deforestation and forest degradation. Underdeveloped or null protocols on

control of fires, pests, and diseases, are other risks to consider and that will be explored in the project Environmental

and Social Management Plan and addressed through technical assistance and the strategy for strengthening

governance.

B.3. Expected project results aligned with the GCF investment criteria (max. 3 pages)

Regarding the impact potential, in terms of adaptation the project will improve livelihood and build resilience of

42,000 indigenous people (~10% of the Amazonian indigenous population of Peru) that face social, environmental,

and economic losses due to the impacts of climate change. Moreover, in terms of mitigation the project will reduce

4.8 MtCO2eq due to avoided deforestation in the 10 Peruvian CRLs covering 5 million ha of Amazon rainforest

(~6% of the area of the Peruvian Amazon). The following pictures shows how the phased approach for the CR’s

Landscapes Sustainable Development will work to scale communal reserves co-management model for

conservation of the Peruvian Amazon with other public and private sources.

The project paradigm can be described such as: the landscapes in which indigenous people in Peru are unsustainably managed, leading to increasing vulnerability of local populations to climate change and to increased greenhouse gas emissions from forest loss and land degradation. Paradigm shift: indigenous people have the technical capacities and finance needed to sustainably manage the CRL for food production, access to markets, and conservation, resulting in low emissions and climate change resilience. This initiative has been designed in collaboration with SERNANP and ANECAP to complement the

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 12

34 Summary of the following Communal Life Plans: Amarcy, Shiringamazú, Santa Rosa de Chuchurras, Santa Rosa de Pichanaz, Alto Lagarto, Alto Iscozacín, Buenos Aires, Siete de Junio

Peru’s Natural Heritage initiative led by MINAM and aimed at consolidating management and conservation of Peru’s Amazon NPAs. The complementarity consists of providing the necessary financial and technical means to empower the ECA to meet the commitments of their administration contracts under the co-management model, while improving the economy and livelihood of the indigenous people and surrounding communities that depend on them. The model of creating sustainable, productive landscapes with indigenous lands adjacent to protected areas can be replicated in Peru throughout the National System of Protected Areas of the country, which covers approximately 18 million ha., as well as through other indigenous community landscapes. In terms of sustainable development, the project will be explicitly designed to promote low emissions and climate-

resilient development pathways in the CRL that will be sustainable. Development benefits for target populations are

expected to be wide ranging and inclusive, especially among women that will be empowered to lead economic

activities based on ancestral knowledge. In the 10 CR, the men are generally responsible for the agricultural work

(this is their main and sometimes only task) while the women, in addition to taking care of the home and children,

contribute to the agricultural work, by planting, harvesting and cultivation in general34. Regarding co-benefits, it is

important to mention that most of the CRs contribute to the conservation of watersheds that guarantee water supply

for communities in the reserves and in the surrounding areas. Moreover, the CRs contribute at the local, regional,

national and global level to the ecosystem service of climate regulation thanks to the maintenance of their forests

that have carbon stocks and capture CO2, as well as in evapotranspiration that helps produce rains. Through the

conservation of CRL forests, the project will also sustain supply services (wildlife, fishing) that local populations

depend on for food security and community-based tourism. Finally, the Project will promote productivity

improvements in economic activities such as agriculture, fish production, farming, and ecotourism.

One of the hardest bottlenecks to overcome in promotion of a sustainable development pathway is the wide level

of informality in most value chains in the Amazon. As evidenced by the COVID-19 crisis, the government could not

effectively distribute relief funds to support the poorest people, especially indigenous communities, because they

are not part of the system or had no linkages to any formal institution or organization through which they could

receive these funds. As part of the enabling conditions and through work with enterprises the project will further

improve conditions and advance the formalization of local associations and their members. This will create more

resilient local organizations and increase the capacity of the government to reach these sectors. The project will

work closely with governments to improve their capacity to reach the poorest sectors of the value chain and will

work with and strengthen the capacity of indigenous communities to withstand external shocks. The project will also

promote green jobs by expanding and scaling proven businesses that encourage tree planting (agroforestry and

native tree plantations) and natural forest management, and the number of people that depend on and work in

these businesses. The COVID pandemic has increased illegal logging and poaching as people have lost their jobs

or have migrated back from the city to rural areas to avoid infection. This project will allow bio-businesses with good

practices to grow, and therefore attract people currently engaged in illegal activities and shift them into productive

and environmentally sustainable practices. As these businesses grow, they will also demand other services and

products and with that they will also demand that their personnel adopt greener and more equitable practices.

Needs of recipient: according to the National Climate Change Strategy (ENCC), Peru is highly vulnerable to

climate change, not only due to structural factors such as poverty and inequality, but also because of the expected

impacts on ecosystems of global importance such as the Amazon and glaciers. Vulnerable areas in the Amazon

are exposed to floods, droughts, and desertification. Projected climate change impacts will dramatically affect

indigenous people already living under extreme vulnerability due to their socioeconomic status and increasing

pressures such as the expansion of illegal and informal gold mining, illegal logging, road construction, and land

grabbing that represent a threat to their livelihoods. There is an urgent need for interventions that result in an

improvement of their adaptive capacity to face the impacts of climate change which will be compounded by these

additional pressures. The co-management of CRs between indigenous communities and the Peruvian government

represents a viable path to achieving this goal as it provides the community a legal pathway to counter these

additional pressures. Despite some successes with CRs and the potential to protect large forest areas while

changing the lives of many Amazon indigenous people, the CR approach has not yet reached maturity because of

the capacity gaps to adequately manage those reserves, a priority for the SERNANP.

These gaps exist in part because the CR model has only been implemented in some specific CRs, as described by

the “Co-management Amazonia Peru” project funded by the German Federal Ministry for the Environment (BMUB).

Consequently, expanding the CR model to CRLs requires both technical and financial resources to strengthen

indigenous governance, the creation of favorable conditions for sustainable economic development, culturally

appropriate implementation, and coordination of land management instruments by communities and government

entities at all levels. It is important to mention that among the measures identified in the multisectoral working group

for the NDCs report, the project will contribute to implement two adaptation measures and three mitigation measures

within the forest thematic area. Though Peru is considered a middle-income economy, enormous disparities already

exist among the different regions of the country. The unequal distribution of economic resources, in terms of public

investments, create a substantial disadvantage for the Amazonian regions. The most well-known public program

currently in place to support Indigenous peoples livelihoods is Juntos. This social program consists of promoting

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 13

35 In 2016, 7 meetings were held to define the details of the concept note (logical framework, road map, stakeholders, etc.) and a workshop was organized by the project proponents. MINAM, the ECAs, ANECAP and DRIS participated in all these activities. In 2017, the meetings continue to reach consensus on the scope of the proposal, and ANECAP asked CI for technical and financial support to move the proposal development forward. During 2018, the concept note was accepted at a meeting with the Deputy Minister of Environment, obtaining the full support MINAM. The complete schedule of meetings is attached in Appendix 6. From these meetings, the development of two complementary proposals was agreed, one focused on achieving effective management of NPA at a greater scale and improving climate adaptation of communities and ecosystems in 15 parks, and the one described in this concept note, which focuses on strengthening governance and technical capacities of ECAs-CR considering the resources, technical and financial gaps that these indigenous organizations have in order to fully implement a co-management approach.

children and teenagers that are in poverty or extreme poverty access to health and education with the goal of

building human capital through the granting of conditional monetary incentives. This program will be the foundation

through which the project will continue supporting livelihoods of indigenous peoples. With the GCF grant funding,

the project aims to unlock new private investment, and to make existing public funding flow more efficiently.

Country ownership: the project has been conceived jointly by ANECAP and the Ministry of the Environment

(MINAM), through their dependencies (1) the National Forest Conservation Program (PNCB) and (2) SERNANP.

Appendix 5 presents the records of meetings between the participants of the proposal and where the objectives,

action lines, results, and follow-up roles have been established35. The proposal is also aligned to current policies

and legislation in Peru including the NPA legislation, the National Climate Change Strategy, the Forest and

Climate Change Strategy, and subnational strategies on climate change and development. The proposal is also

fully aligned with the RIA, to support the implementation of this proposal conceived by indigenous peoples´, as

well as indigenous peoples' legislation. The proposal is aligned to Peru´s NDC, including measures related to

Land Use, Land Use Change and Forestry (LULUCF). These, as well as the proposed adaptation measures are

based on the Technical Report of the NDC Multisectoral Working Group.

In terms of efficiency and effectiveness, the project is economically and environmentally efficient by achieving a

reduction of 4.8 MtCO2eq of emissions from avoided deforestation across 5 million hectares. If this were only a

mitigation project, the the cost of the project activities is equivalent to $7.28/ton, assuming a GCF investment of

$35M. However, these investments will also result in resilience of indigenous communities. Since the indigenous

communities of the 10 CRs depend mostly on local agricultural commodities, it is expected that the well-being, food

security, and access to water of 42,000 direct beneficiaries from 194 indigenous communities will be improved by

this investment and the match funding from the private sector. The Project will employ more productive agricultural

practices and forest conservation systems through adaptive production methods and the use of more resilient

agricultural products in response to current and projected climate change impacts. Well managed CR will contribute

to the food security of the population that lives inside or around then. The economic value of these adaptation

interventions will be estimated during full proposal development.

B.4. Engagement among the NDA, AE, and/or other relevant stakeholders in the country (max ½ page)

The project described in this concept note was developed in close collaboration with the government of Peru and

is aligned with Peru’s Climate Change Strategy, the National Strategy on Forests and Climate Change and

indigenous people´s policies. It is important to mention that although the country does not have an adaptation plan,

the project is aligned with the country's NDC, both in mitigation and adaptation (see Appendix 6). The proposed

activities are also part of the actions established in National REDD+ planning documents (i.e., National Forest and

Climate Change Strategy) and the Amazon Indigenous REDD approach. As a result of extensive stakeholder

consultation, the proposed project is culturally appropriate, respects indigenous people’s rights, and focuses on

delivering equitable benefit sharing mechanisms while effectively engaging indigenous peoples in the design,

development, and implementation of this project.

C. Indicative Financing/Cost Information (max. 3 pages)

C.1. Financing by components (max ½ page

Component/Output

Indicative cost

GCF financing Co-financing

(USD Millions)

Amount Financial Instrument

Amount Financial Instrument

Name of Institutions (USD

Millions) (USD

Millions)

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 14

1. Strengthened awareness, governance and institutional and regulatory systems for climate-responsive development planning of the CRL.

10.90 10.40 Grant 0.50 Budget Grants

Peru Gov. Int. Donors

2. Strengthened adaptive capacity and reduced exposure to climate risks of 194 indigenous communities

3.84 1.34 Grant 2.50 Budget Grants

Peru Gov. Int. Donors

3. Sustainable land use and forest management for reduced emissions in 5 million hectares of the Peruvian Amazon

11.44 8.94 Grant 2.50 Budget Grants

Peru Gov. Int. Donors

4. Establishment and operationalization of a green business facility

21.37 11.87 Grant 9.50 Budget Grants

Peru Gov. Int. Donors

Sub-total 47.55 32.55 15.00

Project management (administration, operation costs, audits, communications)

2.45 2.45 Grant 0.00

Indicative total cost (USD) 50.00 35.00 15.00

The following paragraphs provide an indicative explanation of the budget estimate. A detailed budget justification

will be provided during the Full Proposal phase.

• In order to generate the enabling conditions for the effective management of the 10 CRs, this project will

ensure in its first and second components the following elements: 1. Each CR has a designated head and

optimal number of personnel (i.e. administrative staff, specialists and park rangers); 2. Each CR has

Management Committee trained and ready to operate; 3. Each CR has an Updated Master Plan; 4. Each

CR’s physical integrity is maintained through surveillance and control; 5. CRs have tenure security through

legal and physical delimitation of the land. The costs for these elements are based on a financial gap

analysis for NPA conducted by SERNANP.

• For the third component (Sustainable land use and forest management for reduced emissions in 5 million

hectares of the Peruvian Amazon) the costs of the Conservation Agreements have been estimated based

on CI Peru experience with commodities (coffee and cocoa), considering the implementation of

conservation agreements for communities around each CR that will be assisted for the installation of

restoration plots, equipment and post-harvest activity. These costs refer to the initial phase of the

restoration activity; it is estimated that costs for of ongoing maintenance of the plots will be covered by

communities as match contribution.

• In the fourth component, the costs for GCF will include (1) Design and promotion of green business facility

with private sector and government agencies ($0.5M), (2) Pre-feasibility assessments for green

businesses and investments in the 10 communal reserves and adjacent indigenous communities ($1 M),

(3) Facility management team and working groups establishment ($0.25), (4) Finance green startups and

early stage businesses ($5 M), (5) indigenous people and local governments capacity building in green

growth ($1 M), (6) Design, test and implement biodiversity and restoration decision tools ($1 M), (0.25),

(7) Forest management plans for indigenous communities ($0.5 M), (8) Communication campaigns ($1

M), (9) Marketing and branding ($0.25), (10) Green growth business promotion national events and

participation in external markets ($0.75 M), and (11) Indigenous-led participatory monitoring and impact

assessment ($0.75).

C.2. Justification of GCF funding request (max. 1 page)

There is an urgent need to identify and implement sufficient and efficient adaptation strategies that improve the

resiliency of male and female indigenous farmers and their ability to cope with climate change impacts, especially

those that can also provide mitigation benefits. Funding to the reserves from the Peruvian government covers only

basic government expenditures and not the direct costs of the indigenous managers and the activities required to

build resilience and conserve forest resource.

Indigenous people, who have the commitment to sustainably manage the CR and the opportunity to lead the

sustainable use of adjacent lands, have very few alternatives for the provision of financial resources. CR

management contracts expect that indigenous groups will capture revenues and yet they provide no bridge funding

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 15

36 Despite the threats of deforestation and degradation, they have maintained low rates of forests loss within CRs. 37 An assessment of the scope for productivity gains by agroforestry commodities (brazil nut, rubber latex, cocoa, other) in each CR will be realized during the project to assess how best to finance and monetize those gains.

that will identify, build, or develop financial mechanisms or the capacity needed for implementation. Without new

grant finance to design and develop sustainable financing mechanisms, along with the capacity required to make

these mechanisms successful, the forests in the CR will remain under increasing threat, resulting in significant GHG

emissions and increased vulnerability to climate change of people who depend on ecosystem services from forests

to buffer against the impacts of climate change.

External finance for CRs from the international community has been extremely limited in recent years. Only a small

number of projects promoted by MINAM-SERNANP have been implemented and few sources of international

support exist, such as UNDP and BOS+, a Belgian NGO dedicated to sustainable forestry and conservation. These

are pilots that provide models and lessons learned to be consolidated and replicated in the Project’s 10 CR and

their surrounding areas across the Peruvian Amazon.

For the GCF, this project is an innovative opportunity to support indigenous people who are critical to the low

emissions development of the Amazon, and simultaneously among the most vulnerable people to climate change.

C.3. Sustainability and replicability of the project (exit strategy) (max. 1 page)

The project’s exit strategy is focused on improved governance by the institutions responsible for the CRLs and on

the implementation of financial sustainability mechanisms. The Green Business Facility is envisioned as a

standalone enterprise which will be spun-off into an independent entity upon completion of the project. A feasibility

analysis for the Green Business Facility is being developed now which will provide several scenarios for achieving

the future legal structure of the green business platform. For each of these scenarios, a financial model and

business plan will be developed. Currently, 3 major revenue streams have been identified: 1) Membership dues,

2) Fees associated with financial services provision, 3) Offsetting of Technical assistance expenses through cost

sharing. These and other revenue generating activities will be evaluated during the start-up phase. RIA will be one

of the investment avenues promoted by the Green Business Facility.

The support to the institutional consolidation of ANECAP and the 10 CRs to implement climate resilient sustainable

production activities will ensure the continuation of the project’s impact in the following ways: (i) the project will be

implemented by indigenous and communal groups. Once the project concludes, the developed capacities will be

maintained, and knowledge transferred, as these indigenous and communal groups have cultural roots and an

intrinsic relationship with the conservation of the forest36; (ii) the administration contracts are indefinite providing

legal security regarding land tenure; iii) the Project will promote sustainable productive activities that ensure

increased income for project beneficiaries due to productivity improvements inside and outside the forest;37 iv) the

Project will design and implement a green business development facility that will be capitalized with public and

private funding and will explore several revenue generating models to ensure its longevity beyond the project cycle,

including charging an administration fee to investment partners and corporations based upon the size of investment

and/or the value of the purchase agreement brokered and companies involved will provide an equity stake based

on the value of the services provided; v) the co-management model (between government and indigenous

communities) can be replicated in other NPAs managed by indigenous people in the Amazon basin; and, vi) The

RIA approach will facilitate this replication in more than 18 million hectares of Amazon where indigenous

communities live. Indigenous Amazon REDD (RIA) has been identified as the optimal way to implement REDD+ in

indigenous people’s lands in Peru and other Amazonian countries. The RIA approach will be a conduit by which

the advances and results of the project can be shared and adapted to other regions of the country and the Amazon

basin.

D. Supporting documents submitted

☒ Map indicating the location of the project/programme (Appendix 1)

☒ Description of the CRs benefitting from the project (Appendix 2)

☒ Forest loss in the CRs and adjacent buffer zones, 2000-2016 (Appendix 3)

☒ The distribution of fires across Peru from 2001-2019, showing that fire frequency is lower within CRs

(Appendix 4)

☒ Timeline of the development and consultations related to this Concept note (Appendix 5)

☒ Synergies between activities proposed by the project and mitigation and adaptation measures proposed by

the

Government of Peru (Appendix 6)

☒ Diagram of the theory of change (Appendix 7)

☒ Economic and financial model with key assumptions and potential stress scenarios (Appendix 8)

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 16

☒ Phased Approach for CR Landscapes Sustainable Development (Appendix 9)

☒ Partners Role and Added Value (Appendix 10)

Self-awareness check boxes

Are you aware that the full Funding Proposal and Appendixes will require these documents? Yes ☒ No ☐

• Feasibility Study

• Environmental and social impact assessment or environmental and social management framework

• Stakeholder consultations at national and project level implementation including with indigenous people if

relevant

• Gender assessment and action plan

• Operations and maintenance plan if relevant

• Loan or grant operation manual as appropriate

• Co-financing commitment letters

Are you aware that a funding proposal from an accredited entity without a signed AMA will be reviewed but not

sent to the Board for consideration? Yes ☒ No ☐