European Tropical Forest Research Network

Private finance is currently the most significant source of investment for forestry. Estimated to total around US $ 15 billion per year in developing countries and countries in transition, private-sector investment in the forestry sector far outstrips the combined investments of governments and development agencies. Although broad sectoral investment parameters are generally well understood, the exact shape and weight of domestic and international flows remain to a large extent unclear. The United Nations Forum on Forests, among others, has called for better mapping of the forest finance landscape to create a clearer understanding of the types and potential impacts of complementary public and private investment on future forests. With growing needs for forest products, there is increasing agreement that there is a significant gap between the levels of financing which are available from both public and private sources and the funding required to meet expected future demands.

 

The private sector is well positioned to help fill this gap, and private flows are expected to continue to grow as investors explore new investment frontiers. The challenge for entrepreneurs will be to manage both the impact and long-term viability of their supply chains as competition over forest land for food, fibre and fuel production becomes increasingly critical. While the availability of private money is good news, particularly when official development assistance is coming under increasing pressure, there is also cause for concern. Private-sector interests are often misaligned with local and global public interests, and social and environmental concerns are sometimes far less important to investors than their primary interest in profitability. A crucial challenge for policymakers will be to somehow reorient, increase and incentivize private finance to make it flow in adequate amounts towards sustainable, environmentally sound, and competitive forest management practices that can support responsible and profitable forest entrepreneurship. Partnerships between public and private actors, various types of investors, communities and intermediaries can make a big difference by creating synergies that build on shared interests.

This issue of ETFRN News brings together 23 articles that present and analyze concrete examples of various private actors along the tropical forest-finance chain (small, medium and large forest entrepreneurs and intermediary and advisory organizations). The experience of these frontrunners presents a compelling case for revisiting business as usual. As policy-makers and private actors refine their strategy for seizing opportunities and managing the risks associated with emerging forest-related markets, these articles demonstrate that overall economic, social and environmental benefits can be reaped if investments are targeted correctly.

It is widely acknowledged that improving forest governance is an important prerequisite for sustainable forest management and reducing deforestation and forest degradation. Making governance work better for people and forests is not an easy task. Divergent interests, imbalanced power relations and unequal access to information, decision-making, resources and benefits all contribute to this challenge. The 29 articles in this issue of ETFRN News showcase a rich diversity of examples of how forest governance has been addressed in various settings. The issue brings together experiences from a wide range of forest governance reform initiatives. Some relate to new lessons from well-established approaches to forest governance reform, such as community forestry; others relate to more recently developed initiatives, such as FLEGT. The articles show that international instruments — such as Voluntary Partnership Agreements, forest certification and more recently, REDD+ — are important drivers to address governance in the forest sector. Experiences described in the articles demonstrate that forest governance challenges do not have "one-size-fits-all" solutions. They also show that regardless of the entry point to initiate forest governance reform, there is always a set of underlying inter-related governance issues. Therefore, an integrated process approach is essential to successfully address forest governance reform. The participatory processes of "good" forest governance create the capacity for continuous learning and enhance the ability to adapt to lessons learned. The articles reveal that transparency, communication and access to information, and multi-stakeholder engagement in deliberative processes, particularly the meaningful participation of disadvantaged groups, are essential ingredients in moving forward with forest governance.

Chainsaw milling, the on-site conversion of logs into lumber using chainsaws, is supplying a large proportion of local timber markets with cheap lumber. While it offers socioeconomic opportunities to local people, it is very often associated with corruption and illegalities. Regulating and controlling the practice is a challenge due to the mobility of these chainsaw milling operations. Domestic timber production and trade are to a large extent unrecorded. Information in this issue of ETFRN News shows that in some countries it represents a high percentage of total timber production, ranging from 30–40% (in Guyana, Republic of Congo, Democratic Republic of Congo/DRC and Uganda), to more than 50% (in Ghana, Cameroon and Peru), and almost 100% in Liberia. Governments of tropical countries around the world have failed to address the domestic timber demand and struggled to deal with the CSM subsector, which is often informal. International negotiations and agreements on tropical timber production also tend to disregard local timber consumption, although the local timber trade might be affected by these international agreements and vice versa. The European Union (EU) Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT) and the (future) climate change agreements (through Reducing Emissions from Deforestation and Forest Degradation, or REDD+) might be able to provide incentives to regulate local timber trade. The 28 articles in this issue of ETFRN News cover 20 countries: seven in South America and the Caribbean (section 2); four in Asia (section 3); and nine in Africa (section 4), providing a good overview of the opportunities and challenges of chainsaw milling as a supplier to domestic and regional timber markets. This issue aims to establish the scale and impact of chainsaw milling in the domestic timber trade, and flag it as an important issue to be addressed by national and international forest policies.

The role of logging in the loss and degradation of tropical forest has become an issue of popular concern and political debate across the world. Over the years, the insight has grown that responsible management of forests for timber production may also make a positive contribution to biodiversity conservation. The promotion of socially and ecologically sound forest management through forest certification is now widely embraced as a strategy to conserve the world’s forests and the biodiversity they contain. Approximately 8% of global forest area has been certified under a variety of schemes but in African, Asian and tropical American forests this is less than 2%. Increasing the extent of certification in the tropics remains a goal for many organizations – including some international conservation NGOs. So far, so good, but many details about certification’s effectiveness remain uncertain, including those on biodiversity. In this issue of ETFRN News on Biodiversity conservation in certified forests, a wide variety of authors involved in certification and/or the conservation of tropical forest biodiversity provide their views on the question whether certification is a good conservation strategy for tropical forests. The 33 articles report on practical experiences from concessions and community forests, on the challenges of monitoring biodiversity, high conservation value forests and a range of other subjects. The results of a dedicated on-line survey devised especially for this ETFRN News provide additional context to the views expressed in the articles. The general message that emerges is a positive one, but not without qualifications. Most authors and respondents agree that certification has helped to improve management practices and to conserve forest biodiversity within certified forests in the tropics. However, the true extent of conservation benefits remains unknown due to a lack of rigorous and independent information. Many agreed that certification is not equivalent to full conservation and point at the limitations of certification in reducing deforestation rates. This issue aims to inform and advance debates concerning the role of forest certification in biodiversity conservation, and to stimulate efforts to better demonstrate and explore these.

Climate change is generally recognized as one of the greatest challenges of this century. Forests contain a substantial part of the planet’s carbon; therefore, current rates of forest loss contribute to almost 20 percent of total emissions of carbon dioxide. Climate change and forests are intrinsically linked: climate change is a threat to forests, and protecting forests from conversion and degradation helps mitigate the impacts of climate change. To address climate change, the United Nations Framework Convention on Climate Change (UNFCCC) was established at the Earth Summit in Rio de Janeiro in 1992. It was followed in 1997 by the more powerful and legally binding Kyoto Protocol. The protocol recognizes that developed countries share the main responsibility for the current high levels of greenhouse gas emissions in the atmosphere, and places a heavier burden on them under the principle of “common but differentiated responsibilities.” Under this protocol industrialized countries are allowed to meet part of their emission reduction targets abroad through so-called ”market-based mechanisms,” such as the Clean Development Mechanism. The first Kyoto commitment period ends in 2012. At the UNFCCC Conference of the Parties in Copenhagen in December 2009 (COP 15) countries are expected to concur on a new agreement to replace the Kyoto Protocol in 2012. One of the challenges in Copenhagen will be to engage developing countries in reducing their emissions and adapting to the impacts of climate change. In 2007 an Action Plan was agreed to in Bali, including a mechanism for reducing emissions from avoided deforestation and forest degradation (REDD). In the run-up to Copenhagen the challenge is to guarantee that the new protocol will be effective and efficient in terms of carbon reduction, and at the same time equitable and non-detrimental to the Earth’s biodiversity. REDD could become a centrepiece for the financing of forestry reform after 2012. How to put this mechanism into practice after Copenhagen will be a challenge, however. Objectives for climate change mitigation and adaptation need to be integrated with sustainable forest management and biodiversity protection, and at the same time must allow for the improved welfare of rural people in developing countries. With this issue of ETFRN News, containing more than 20 wide-ranging articles on forests and climate change, we wish to contribute to the discussion on the potential role of forests and forest management in mitigating and adapting to climate change.

In recent years the question of broadening and diversifying the financial basis for forest management has emerged as a key theme in the international forest policy dialogue. Everywhere in the world, policy-makers, researchers and practitioners are taking steps to develop new ways of paying for the goods and services provided by forests. Most recently, within the context of the 7th meeting of the United Nations Forum on Forests (UNFF-7), the international community adopted a “Non-Legally Binding Instrument” for all types of forests. This instrument expresses a shared understanding that sustainable development policies must be supported by a broad array of financial resources from national, international, public and private sources, in the context of a strengthened enabling policy environment for forest-related governance and management. Like UNFF, other intergovernmental forest-related instruments — such as the Convention on Biodiversity, the Climate Change Convention, the Convention to Combat Desertification and the International Tropical Timber Organization — have marked sustainable financing of ecosystem management as a key topic. During the next meeting (UNFF-8, in April 2009), an international financing mechanism or framework will be proposed based on the so-called “Portfolio Approach” to support the national and international implementation of sustainable forest management. The “Paramaribo Dialogue: a Country-Led Initiative on Financing for Sustainable Forest Management, in Support of the United Nations Forum on Forests,” that will be held September 8–12, 2008 in Paramaribo, Suriname, will be an important milestone on the path to the elaboration of these proposed mechanisms. This issue of ETFRN News on Financing Sustainable Forest Management brings together more than 35 articles on a variety of current policy and implementation initiatives at the international, national and local levels in this field, as well as views and experiences from experts and case studies of financial mechanisms for sustainable forest management. This newsletter would not have been possible without the contributions of the authors. Jani Holopainen, Tapani Oksanen, Jyrki Salmi and Anna-Leena Simula from Indufor Oy are acknowledged for collecting and editing the articles. Moreover, I would like to extend my gratitude to Kees van Dijk (Tropenbos International) and Herman Savenije (Dutch Ministry of Agriculture, Nature and Food Quality) for taking the initiative for this ETFRN News. Their expertise in and dedication to the subject has brought the publication to fruition and guaranteed the quality of the articles. Adequate financing for sustainable forest management is directly linked to broader development objectives like poverty alleviation, access to safe drinking water, climate change mitigation and the protection and management of the natural resource base for economic and social development. With this publication we hope to take a step towards realising these goals.