Does international climate finance contribute to the adoption of zero deforestation policies? Insights from Brazil and Indonesia

Abstract

International climate finance (ICF) is a critical mechanism for reducing deforestation and supporting global climate cooperation, yet its effectiveness is often questioned on account of scale and implementation challenges. This paper addresses the question whether ICF, implemented through Official Development Assistance (ODA), is catalysing policy adoption in the land use, land use change, and forestry (LULUCF) sectors of Brazil and Indonesia and henceforth contributes to global climate cooperation. We deploy a novel analytical framework, which assesses the role of ICF in transnational policy processes, and analyse how international and domestic factors influence its effectiveness in supporting LULUCF policy adoption. We find that ICF actors are caught in a dilemma between stated objectives of policy reform and ambitious transformational change while at the same time have their legitimacy questioned as participants in domestic policy processes. Ultimately, political access to decision making spheres on policy adoption for climate and land use are denied to them. In Brazil, competing coalitions debate the implementation of the national forest law, while in Indonesia, ICF is confined to technocratic policy spheres, leaving critical decisions to the political economy sphere. Our findings suggest that for ICF to be effective in catalysing policy adoption and global cooperation, it must address legitimacy concerns through political dialogue and shift from ODA approaches towards equitable cooperation, which involves donors' policy efforts as well. To be politically attractive, better alignment of ICF with national development objectives is also crucial, which could take the form of just transition for climate and land use.