Edited by Christina Voigt
The delivery of REDD+ finance to governments with weak institutions carries fiduciary risk. As noted by a report by the OECD on risk management in the delivery of aid in post-conflict and transitional states, “[e]xposure to corruption and fiduciary risk is an inevitable part of engagement in fragile states – but that does not mean that it has to be tolerated or that it cannot be managed.” The purpose of this chapter is to discuss why fiduciary risk is a major factor in the delivery of public REDD+ finance, explore how fiduciary risk has been managed to date with reference to a number of bilateral and multilateral REDD+ funds, and analyse the implications of fiduciary risk management choices for aid effectiveness in the REDD+ context. The Paris Declaration on Aid Effectiveness acknowledges that using a recipient country’s own systems of financial management, accounting, auditing and procurement will strengthen country capacity and increase aid effectiveness. As part of the Accra Agenda for Action, donors have aimed to channel more than half of government-to-government assistance through domestic fiduciary systems. However, as this note illustrates, few REDD+ funds are currently designed according to this approach.
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