Financing sustainable forest management
One of the main challenges countries face in their efforts to reduce forest degradation and deforestation is the need to make forests economically attractive and good forest management commercially competitive.
The causes of inadequate financing of forest management are complex. Chief among them are the focus on timber as the sole source of income, inequity in the distribution of costs and benefits along the production chain, the long management time-frames, low cost-effectiveness and the high perceived risks of forestry.
The difficult access to existing financing mechanisms under reasonable conditions, and a generally inadequate and unstable political, legal and institutional forest sector environment, create an unfavourable climate for forest investment and business.
However, innovative market arrangements are being developed. Promising new financing sources, instruments and mechanisms (especially regarding payment for environmental forest services) and capital market instruments can help to generate additional financial resources. There is increasing awareness that stand-alone financing mechanisms are less effective and sustainable than those set within a broader and more reliable institutional, policy and political framework.
Towards financing mechanisms that pay for sustainabilityTBI aims to support the development of broad forest financing policies and mechanisms both internationally and nationally, recognising the multifunctional nature of forests.
Specifically, TBI contributes to the emergence of an international financing architecture for Sustainable Forest Management that facilitates secure and long-term forest financing from a diversity of public, private and corporate sources. Priorities include
- Development of national forest financing strategies, addressing the disconnect between forest, financing and other sectors related to land use.
- The development of responsible business cases for Sustainable Forest Management.
In the country programmes, TBI aims at developing sustainable financing and compensation mechanisms related to REDD+ and other PES mechanisms, with a special emphasis on the role of local, traditional and/or informal financing mechanisms for small holder forest management.
- Development of locally relevant specific financing instruments and enabling conditions that are beneficial for the development of small scale forestry enterprises.
- Developing locally relevant mechanisms for REDD+ payments.