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Financing Mechanisms

In the past decade, concern over significant forest loss has placed conservation and sustainable use of forests on center stage among environmental issues. As a result, the private sector and national governments have come under increased international political and market pressures to promote and utilize sustainable forest management best practices. However, financial constraints and short-term economic development priorities often hinder an ability to finance sustainable forestry development, a long-term investment.

Many experts and practitioners in the field recognize the lack of sufficient financing for sustainable forest management. Multilateral organizations, such as United Nations Development Programme (UNDP), Global Environment Facility (GEF), Food and Agriculture Organization (FAO), and the International Tropical Timber Organization (ITTO) still play important and vital roles in providing funds and technical expertise in promoting sustainable forestry practices. However, it is increasingly apparent that new partnerships and innovative financing mechanisms are necessary to fill the financial resource gap to enable the viability of sustainable forest management in the long term.

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New ideas being tried to facilitate increased funding for sustainable forest management include tools, such as:

  • Conservation easements
  • Debt-for-Nature swaps
  • Conservation trust funds
  • Tradeable development rights
  • Public/private partnerships

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Background and Resource Sites
For an overview of the issues and financial mechanisms involved in financing sustainable forestry, these websites provide helpful articles:

Resource links to organizations involved in traditional and new approaches to financing sustainable forest management:

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Practitioner's Tips and Case Studies
Listed below are several websites that provide tools and case studies for understanding a few key innovative financing mechanisms that are still evolving, but are progressively financing a fair share of sustainable forestry. These links are not meant to be a comprehensive list of resources, only a starting point in providing a good understanding of the innovative mechanisms currently being utilized.

a) Debt for Nature Swaps

b) Environmental Funds

c) Conservation Easements

d) Carbon Sequestration payments, including the Clean Development Mechanisms (CDM)

e) Venture Capital Funds

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