For Immediate Release
WASHINGTON, D.C. – The U.S. Agency for International Development (USAID) announced today its support for the Althelia Climate Fund to lend up to $133.8 million in commercial financing for forest conservation and sustainable land use, helping to remove 100 million tons of carbon—the equivalent of 18.5 million cars—from our atmosphere. The announcement was made by Secretary of State John Kerry via video message at the Carbon Expo in Cologne, Germany. Through its Development Credit Authority, USAID will offer a new risk-sharing loan guarantee that will enable Althelia, the first private sector fund dedicated to forest conservation at this scale, to finance hundreds of forest-based businesses in developing countries that rely on sustainably managed land use for their livelihoods.
“Over 1.5 billion people rely on forests to meet their day-to-day needs, and the majority of these are poor rural communities, including some 60 million indigenous people,” said USAID Administrator Rajiv Shah. “By creating incentives to better manage these forests, we provide a pathway out of extreme poverty for families who depend on forests while helping preserve critical ecosystems.”
Businesses involved in ecotourism and agroforestry, for example, will receive commercial loans under the program, allowing them to expand their operations. The income and employment generated from financed businesses will discourage further deforestation while encouraging forest maintenance and rehabilitation. Such businesses will earn income from their operations, and will be eligible to earn carbon credits that can be sold on the voluntary carbon credit market under Reducing Emissions from Deforestation and Forest Degradation (REDD+) methodologies. A variety of corporations and nonprofits buy the credits to compensate for their own carbon emissions, to support philanthropy, and/or to invest in greener supply chains.
“This guarantee provided by USAID allows private capital to flow at scale toward financing sustainable land use models that drive livelihood improvements, ecosystem conservation and climate change mitigation,” said Christian del Valle, Managing Partner from Althelia Climate Fund.
The Development Credit Authority (DCA) uses partial credit guarantees to mobilize local financing in developing countries. Guarantee agreements encourage private lenders to extend financing to underserved borrowers in new sectors and regions. By opening up local channels of financing, USAID is empowering entrepreneurs in developing countries at a minimal cost to the U.S. taxpayer. The cumulative default rate of all loans supported by USAID guarantees is only 1.85 percent. These same loans have cost-effectively mobilized up to $3.1 billion in private, local funds to finance development.
Last updated: July 24, 2014