Financing sustainable forest management: How to finance sustainable forest management to avoid deforestation and forest degradation

Despite the adoption of many international agreements over the last decades, degradation of forests and deforestation has continued. Since this is largely due to the market's failure to account for forests' multifunctionality, this issue argues that a new, holistic approach is necessary to ensure sustainable forest management (SFM) is adequately supported and financed.

Against this background, 35 articles explore the role of:

• multilateral conventions, agreements and organisations (such as UNFF, UNCCD, UNFCCC, and ITTO);
• international non-government organisations such as WWF, CIFOR and the Global Forest Coalition;
• governance, institutions and financing in making SFM a viable alternative to other forest uses;
• capital markets in enhancing forest investment;
• payment for ecosystem/environmental services (PES) schemes in bridging the gap between payment and the unrecognised demand for environmental goods;
• forests in climate change mitigation and energy generation (as underlined by the Reducing Emissions from Deforestation and Forest Degradation programme).

It is argued that forest financing should support three objectives:

• forest conservation and sustainable use;
• maintenance of ecosystem services;
• fair and equitable sharing of benefits.

The articles discuss that to stop deforestation and forest degradation it will be important to take a number of actions. Recommendations include:

• keep SFM initiatives coherent despite the recent mushrooming of international mechanisms;
• support capacity-building rather than simply generating more money for SFM;
• rapidly identify and expand opportunities not only to maintain the remaining forest resources, but to increase forest cover worldwide;
• develop holistic financing strategies for forest sector development and underpin them by sectoral policies;
• ensure good governance, i.e. the rule of law, transparency, democracy, participation and accountability;
• ensure forest-land tenure is secure and well-defined;
• prevent unplanned and uncoordinated changes in land use driven by factors outside of the forest sector;
• make sure payment for ecosystem services (PES) schemes are pro-poor and keep transaction costs low.

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