This paper shows that the usual multiplicative synthesis of alternative priorities for benefits, opportunities, costs and risks, obtained from separate Analytic Hierarchy or Network models, can be ambiguous. The ratio of benefit and opportunity priorities to cost and risk priorities can be misleading when assessing the profitability of a project. The same holds for their additive synthesis. Both types of synthesis have been advocated in AHP/ANP literature. A quotient of these priorities with weights as coefficients, not powers, will however produce sound results, provided that the four separate models are properly related to each other by weights that make the priorities on the four factors commensurate and are obtained from magnitude comparisons. Similarly, additive synthesis with properly weighted factor priorities based on relative magnitudes will produce sound results, although use of reciprocal values of costs and risks, as often advocated in the literature, is not recommended; negative costs and risks priorities should be used instead.
The United Nations Office for REDD+ Coordination in Indonesia (UNORCID) has recently published a research study titled “The Funding Instrument for REDD+ in Indonesia (FREDDI): Making the Case for Financial Innovation”.
The estimated financial need for implementing REDD+ until 2020 is USD10 billion. Institutions and mechanisms to mobilize and manage REDD+ finance are a key priority of Indonesia’s REDD+ programme at this stage, and this study - undertaken by UNORCID with funding from the UN-REDD Programme- aims to support the process this process through analysis and recommendations.
The study reviews the early stages of the development of the Fund for REDD+ in Indonesia (FREDDI) and, to the extent to which FREDDI developed before the duties and functions of BP REDD+ were incorporated within the Ministry of Environment and Forestry, considers its ability to achieve its mandated objectives with regards to fund management and mobilization.
Specifically, the study reviews the early stages of the development of FREDDI which was housed with the National REDD+ Agency (BP REDD+), and - to the extent to which FREDDI developed before the duties and functions of BP REDD+ were incorporated within the Ministry of Environment and Forestry - considers its ability to achieve its mandated objectives with regards to fund management and mobilization. Further, the study provides an overview of the potential role of financial innovation – such as debt and market mechanisms – in enhancing the role that a Fund for REDD+ in Indonesia could play in the scope of Indonesia’s REDD+ programme. Ultimately, the report affirms the notion that such a Fund should evolve beyond a passive disbursement mechanism to mobilize further investment from both private and public sectors.
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