The European Commission has published on the 17 october a Communication Addressing the challenges of deforestation and forest degradation to tackle climate change and biodiversity loss SEC(2008) 2618  - 17.10.2008 where it is analyised the sources of funding.

The Global Climate Change Alliance

The Global Climate Change Alliance, launched by the Commission in 2007, is intended to be a platform for enhanced dialogue and increased cooperation between the EU and the poor developing countries most vulnerable to climate change, in particular the Least Developed Countries and Small Island Developing States. It is aimed primarily at supporting and integrating climate adaptation into poverty reduction strategies. The sum of €50 million has been earmarked by the Commission for the period 2008-2010. The reduction of emissions from deforestation is one of its priorities.

Pooling efforts at EU level on Official Development Aid (ODA)  allocated to forestry

EU forest aid continues to be insufficiently coordinated. With about €40 million/year of ODA devoted to forestry, the efforts made by the Commission and many Member States can only make a difference if there is close coordination between the EU donors and other donors. The current fragmented approach is an impediment to effectiveness. Efforts should also better reflect the particular forest challenges in the countries concerned. Enhanced donor coordination would leverage additional assistance from other actors, including the private sector.

EU contributions to bilateral and multilateral initiatives

The EU should remain at the forefront of the development of innovative funding mechanisms. Importantly the EU (European Commission and Member States) is the major contributor to the World Bank's Forest Carbon Partnership Facility (aunched in June 2008), with more than 80% of the total. The Facility is an advanced multilateral initiative to address deforestation in the context of climate change. It tests designs for performance-based systems to reduce deforestation in developing countries and ways to generate funding for the protection of tropical forests.