Dear readers,

The development of new financing mechanisms to support sustainable forest management is gaining momentum. Income from ecotourism is reinvested into nature conservation, forest concessions are bought by international nature conservation agencies, and local communities receive payment for providing plant samples to pharmaceutical companies in search of medicinal substances. A few other examples are debt-for-nature swaps, trust funds for nature conservation, payment for watershed protection and carbon mitigation projects. These experiences represent the search for ways to modify market incentives in such a manner that sustainable forest management becomes more attractive than alternative land uses that are associated to forest conversion or degradation.

This issue of ETFRN News explores innovative financing mechanisms for conservation and sustainable forest management, whether in conceptual stage, under development, or operational. We define innovative forest financing mechanisms as new ways and institutional set-ups to transfer financial resources from actors who are willing to pay for the generation and maintenance of ecological services, to local actors willing to accept payment, in exchange for sustainable forest management, or for refraining from the use of forest resources. The overview presented here is not exhaustive, but it illustrates the large variety in mechanisms; the types of actors involved, the specific contexts for which they were designed and the types of benefits from environmental services they are capturing.

This newsletter is divided into seven thematic Sections. The subject of the introductory article in Section I is the role of economic valuation of forest environmental services in relation to the development of new mechanisms. Market mechanisms and measures enabling the increase of private investments and use of market-based instruments, are dealt with in Section II. Section III is dedicated to international transfer payments and the role of international (financial) institutions in facilitating the development and implementation of innovative financing mechanisms. The specific environmental services that seem to have the best potential for channelling financial resources towards sustainable forest management include carbon sequestration; biodiversity conservation; and hydrological services. Sections IV, V and VI present financing mechanisms based on these specific services. The corresponding articles often deal with market-based instruments promoting the development of new green markets. Finally, Section VII investigates the role of financing mechanisms supporting sustainable forest management with regard to sustainable livelihoods and poverty alleviation.

We hope you will find this issue a useful source of information on innovative financing mechanisms for sustainable forest management. The wide range of mechanisms and experiences presented gives an impression of the most urgent and promising issues being addressed today. Furthermore, we hope this information will be used to contribute to the further development and wider application of existing mechanisms, and that it will inspire researchers, politicians, resources managers and other actors to design new ones. If properly designed and put to work, including the crucial participation of local stakeholders, financing mechanisms are expected to play a key role in investing into nature's capital, while at the same time contributing to sustainable livelihoods from the local to the global level.

Pita Verweij, Copernicus Institute, University of Utrecht, The Netherlands

We are grateful to Pita Verweij for editing this issue of the ETFRN News. We also thank Tropenbos International for the idea to address this fascinating theme, and for the support which allowed Pita Verwij to edit this issue. Please note the themes and deadlines for the next issues.