Financing strategies for sustainable land and forest management: Sharing national experiences for the facilitative process in practice

Financing strategies for sustainable land and forest management: Sharing national experiences for the facilitative process in practice

the Netherlands - 01 March, 2011

During the ninth session of the United Nations Forum on Forests (UNFF), Tropenbos International participated in a side event on 26 January 2011 to showcase experiences and lessons in financing sustainable land and forest management as a contribution to the work at the country level and the Facilitative Process.

One key function of the Facilitative Process is to assist countries in developing national financing strategies for Sustainable forest management (SFM) within the framework of national forest programs. This assistance is based on the realities (including gaps, obstacles and opportunities) and aspirations of the countries. Over the past several years,the organizers of this side event (UNFF Secretariat, Global Mechanism, FAO-NFP Facility, ITTO, PROFOR, and Tropenbos International) have partnered with the countries to develop and operationalize such strategies. Limited access to finance is one of the reasons why economically, socially and environmentally attractive sustainable land and forest management activities in developing countries do not get carried out.

During the ninth session of the UNFF the six agencies and organizations showcased experiences and lessons accumulated in their country level activities.

UNFF-S presented current activities being carried out in Small Islands Developing Countries and Low Forest Cover Countries and emphasized the critical nature of a cross-sectoral approach.

This message was echoed by the Global Mechanism that emphasized the importance of an integrated approach to financing land and forest management and pointed out that financing instruments at the international and national level are very often organized around sectors while people affected by degradation of natural resources do not consider they options for improving their livelihoods by sector – they are looking at a combination of best options at the landscape level they are living in. The close relation between land degradation and forestry demonstrates the potential for optimizing synergies between the land and forestry processes by adopting a holistic approach within the framework of sustainable development and poverty alleviation.

FAO and the NFP Facility pointed out that, from the national experience, the biggest problem is often not the lack of money. Framework conditions such as governance conditions, tenure security and overall market development conditions are key to attract financing. The forest sector is also often exhibits low “absorptive” capacity of finance that is manifested through weak capacity for project formulation and for effective use of existing funds. As a result, many available or potential sources of funding remain untapped.

National experiences also highlighted the importance to build national capacity through a carefully designed process that builds on local leadership and motivation, is facilitated by agents highly credible with the finance community, capitalize on south-south knowledge and where development aid is most effective where used in a catalytic way. Capacity building is essential and along many dimensions.

Tropenbos International suggested that the Facilitative Process should take national processes as the point of departure and build on existing organizations, initiatives and experiences and recognize the diversity of organizations each with their specific mandates, roles, capacities and priorities and interests. It called for innovative thinking on international financing, and more active adoption of risk mitigation and guarantee mechanisms that are already being used effectively and efficiently in other sectors. It advocated for a mapping exercise of who is doing what on the various functions of the FP.

ITTO complemented the previous messages highlighting that, besides cross-sectoral integration, vertical integration is just as important; that an enabling environment is key to foster forest finance, and that this includes harnessing political will at highest level. It presented an interesting case where a guarantee fund was able to mobilize significant resources for small scale sustainable forestry. Start with simple financing schemes to build trust and understanding among forest and finance sectors.

The World Bank, reflecting on their forestry portfolio, noted that the near future will see greater attention to landscape level and land restoration activities and that the following policy areas deserve greater attention: (1) Devolution of rights and responsibilities for forests and trees, (2) further development of PES system for landscape restoration, (3) Enhancing markets for forest and tree products, (4) Revitalizing and strengthening different institutions to improve service delivery, and (5) improving the quality of public spending.

While the individual contributions emphasized different aspects of national level support, some common messages were delivered:

  •  Facilitating access to available and potential sources of finance is a promising venue to locate new and additional sources of finance
  • SLM and SFM finance needs to be seen in a broader landscape context to fit local realities and the cross sectoral nature of sustainable land and forest management
  • An integrated approach to finance needs to include improvements in the enabling environment, including resource rights and responsibilities, the policy and institutional framework, and market development conditions
  • There are many ways in which the international community can play an effective catalytic role, for example by supporting risk mitigation and guarantee mechanisms, facilitating participatory processes, coordinating inter-sectoral decision making, and as knowledge sharing clearinghouses
  • Capacity building remains a necessity.