Publications

Good Business Making Private Investments Work for Tropical Forests

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.

Moving Forward with Forest Governance

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: supplier to local markets

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.