Financing sustainable forest management: A comprehensive approach to

resource mobilization at country level

Nadi, Fiji, 24 July 2012

Camilla Nordheim-Larsen

Global Mechanism of the UNCCD

The Global MechanismThe challenge: mobilizing resources for

SFMFinancing for SFM/ SLM: integrated

approach within the framework of sustainable development and poverty alleviation

Developing Integrated Financing Strategies (IFS): approach and lessons learned

Overview

The Global Mechanism

Financial mechanism of the UNCCD Tasked to mobilise resources for sustainable

land management (SLM) Promoting synergistic implementation of the

Rio Conventions Supports developing countries in designing

Integrated Financing Strategies (IFS) leading to multi-year investment frameworks

Similar challenges in financing SFM and SLM

• Increasing recognition of the multiple values and functions of forests (e.g. environmental services, NTFP)

• But: many of these services are not traded in markets or accounted for in national budgets, and forest owners and managers do not receive any returns for them

This creates conditions for exploiting forests unsustainably

The challenge: financing SFM

Demonstrating the benefits of SFM

People’s livelihood is not only dependent on forests in isolation, but on the availability of healthy soils, clean water, food production and the safeguarding of biodiversity

Sustainable forestry, land water management, climate change and biodiversity need to be addressed in an integrated manner.

The challenge: financing SFM

Adopting an integrated approach

• Deforestation• Illegal logging• Soil erosion• Agricultural

encroachment

• High water-use crops• Declining soil fertility

& salinity• Loss of arable land• Excessive chemical

use • Low farm income

• Water pollution - fertiliser & pesticides;

• Siltation• Decreasing water

availability

• Urban encroachment

• Increasing food & water needs

• Increasing pollution

• Mining• Dumping of waste• Excessive resource

extraction

• Loss of land cover • Landslides• Loss of soil fertility

• Rangeland degradation

• Conversion to agri lands

• Invasive species

National Development Plan, Sectoral Plans, National Action Plan, etc.

External Sources of Financing

Innovative Sources of Financing

Investment Framework

Internal Sources of Financing

Mainstreaming SLM

National Context

Integrated financing strategy

Socio-Economic Development and Poverty Alleviation

Integrated Financing Strategy

Financing sources, instruments and mechanisms

Analysis of the financing context

Internal resources

National budget

National funds (e.g. national forest funds)

Private investments (e.g. from farmers, companies, individuals, etc.)

Local budgets (e.g. municipalities)

External resources

Bilateral/ multilateral cooperation

Non-ODA Direct foreign

investments Remittances NGO and

foundations Decentralised

cooperation

Innovative resources

Market based instruments

Emissions trading Payment for environmental

services Certification schemes

Investment instruments Debt swaps Conservation concessions

Fiscal instruments Subsidies Differential taxation on land

use Deforestation taxes

Climate change funds REDD++, Green fund Adaptation fund

Opportunities and constraints for mobilising resources for SFM

Analysis of the financing context

OpportunitiesPolicy frameworks in place (international, regional, sub-regional, national)Multitude of existing ‘traditional’ financing sources, instruments and mechanismsEmerging innovative financing sources (e.g. climate change, market based mechanisms)

ConstraintsSFM not national priorityWeak inter-sectoral coordination and collaborationInadequate legal and institutional frameworkInsufficient capacities related to use of relevant financing sources and mechanisms financing

Entry points for mobilising resources for SFM

Analysis of the financing context

ConstraintsSFM not national priorityWeak coordination and collaborationInadequate legal and institutional frameworkInsufficient capacities related to use of relevant financing sources and mechanisms financing

Action pointsShow the contribution of forests to GDP and sustainable development (e.g. economic valuation)Identify and analyse traditional existing sources of fundingIdentify and analyse potential innovative sourcesStrengthen inter-sectoral coordination at all levelsStrengthen institutional and legal frameworksMainstream SFM as a national priority

National Sources

MoA; MoE; + Land-use

MoA; MoI; + research institutions

MoF; MoE; + Local

authorities + private inv.

MoE; MoF; Land-Use +

Local authorities

MoT; MoF + Local

Authorities

External Sources bilateral (EC, GIZ, DFID); GEF and multilateral (ADB, WB & IFAD) financing; FDI; Foundations etc.

Investment Framework

CC Resilience - Integrated

Watershed Mgt.

Alternative Income Generation

Biodiversity Conservation

Reduce Deforestation

Rehabilitation of degraded agricultural lands

External Sources

Innovative Mechanisms

Carbon financing, PES, conservation easements, debt-swaps; innovative taxation schemes

Lessons learned

Ensuring sustainable and predictable financing flows requires a holistic, comprehensive approach

Lack of financing not always the issue: enabling environment key for resource mobilisation

Challenge to develop projects and programmes that cuts across sectors

‘First door’ of finance: domestic budgets and national investments

Thank you!

Camilla Nordheim-LarsenProgramme Coordinator

The Global Mechanism of the UNCCDwww.global-mechanism.org