NbS Triple Win Toolkit: Economics and Finance 95 Model B – Bond financing carbon credits Background The community surrounding the Kasigau Corridor region in East Kenya used to rely on deforestation for land use. Cattle had grazed the fields into dust and much of the dryland forest had been cut for firewood and farmland. In 1998, Wildlife Works—the world’s leading REDD project developer established the Rukinga Wildlife Sanctuary in the Kasigau Corridor. Today, wildlife and flora that had left the diminishing forest have returned. The sanctuary provides income to the local community for protecting the land, creating jobs in activities like wildlife monitoring and sustainable agriculture. The protected area covers over 200,000 hectares. The project is expected to offset 1.4 million tons of CO2 emissions each year for the next 30 years. The International Finance Corporation (IFC) Forests Bond will support the Kasigau Corridor Project. Description of model IFC issues a forest bond to private investors 1, investing proceeds in viable REDD ready projects 2 which generate verifiable carbon credits 3. Investors in the IFC Forests Bond choose between a cash or carbon credit coupon 4. If they elect the carbon credit coupon, they can choose to retire the credits to offset corporate greenhouse gas emissions, or sell them back onto the carbon market. A price support mechanism 5,6 ensures that the project can sell the necessary amount of verified carbon units until the bond matures. In this specific case, this is achieved by a commitment by a multinational organisation to purchase excess credits. Further reading: https://www.ifc.org/wps/wcm/connect/982eb7ef-1daa-49ca-b9c0-e6f3a2ddcd88/FINAL+Forests+Bond+Factsheet+10-5.pdf?MOD=AJPERES&CVID=lxS1w0E https://www.aces-org.co.uk/what-we-do/