Forests in a Green Economy

8/3/2019 Forests in a Green Economy

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Forests in a

A Synthesis


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Contents

1.

Contributions by forests

and the current state of play

2. The role of forestsin a green economy

3.Investments

in the forest sector

4. Policy recommendationsfor forests in a green economy

5. Success stories

6. Conclusion

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This synthesis examines the critical role o orests in a green economy, and provides

policy recommendations to radically transorm the orest sector such that it can

lead to sustainable development and poverty eradication.1

1. Thissynthesis isbased on the ollowing documents:UNEP(2011): TowardaGreen Economy PathwaystoSustainable DevelopmentandPoverty Eradication. Available at:http://www.unep.

org/greeneconomy/UNEP(2011) REDDySet Grow, Abriefng orfnancialinstitutions, Part1. Opportunitiesand rolesor fnancialinstitutionsinorest carbon

markets. UnitedNations EnvironmentProgramme, FinancialInitiative,Geneva, Switzerland.

UNEP(2011). UNEP YearBook 2011: EmergingIssuesin ourGlobal Environment,UnitedNationsEnvironment Programme,Nairobi.PublishedFebruary 2011.Website:http://www.unep.org/yearbook/2011Project


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Forests are a critical link in the transition to a green economy one that

promotes sustainable development and poverty eradication as we move

towards a low-carbon and more equitable future.

Forests in a Green Economy: A Synthesis

FOREWORD

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Foreword

Biologically-rich orest ecosystems provide shelter,ood, jobs, water, medicine and security to more than1 billion people, as well as regulate our global climate. The benets o halving deorestation or climatechange alone is estimated to be in the trillions. Yetdespite these huge ecological, economical, social andhealth benets, orests are still being destroyed at analarming rate 13 million hectares annually otenor limited private and short-term gains. While wehave a suite o proven sustainable orestry practicesand policies that work, they must now be scaled upand enorced to saeguard these natural assets.

The International Year o Forests, 2011 is anunprecedented opportunity or governments, civilsociety and business to embrace and embed a rangeo mechanisms rom certied timber schemes tocommunity-based partnerships that harness the

benets o well-managed orests.

Drawing on the recently published Green EconomyReport, this UNEP brie illustrates that investingin orest maintenance and reorestation activitiescould make a signicant contribution to the greeneconomy transition. Not only would it catalyzeeconomic activity and generate new employment,but it would also reduce the vulnerability and riskposed by increasing climate change.

Forests in a Green Economy provides an evidence-based roadmap or policy makers, the privatesector, orest sector and orest dwellers alike, andunderscores why these ecosystems must be managedor their ull societal value i we are to successullybuild a low-carbon, resource ecient uture.

Achim Steiner

UNEP Executive DirectorUnited Nations Under-Secretary General


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Forests generate income and provide employmentThe Food and Agriculture Organization o the UnitedNations (FAO) estimated that the orest industry

contributed approximately US$ 468 billion or 1 percent o global gross value added to global GDP in2006.2 Pulp and paper represented about 40 per cento this contribution.3 A review o 54 case studies,over hal o which were rom Eastern and SouthernArica, estimated that the average annual incomerom orests amounted to 22 per cent o householdincome.4 (Also see Table 1).

Table 1: Estimates of the Value of ForestEcosystem Services

Service Estimates of value (US$/ha) Genetic material Less than 0.2 to 20.6a

0 to 9,175b

1.23c

Watershed services 200 to more than 1,000

(e.g. ow regulation, or a combination o several

ood protection, services in tropical areas.d

water purication) 0 to 50 or a single service.d

Climate regulation 650 to 3,500e

360 to 2,200in tropical orests

10 to more than 400d in temperate orestsRecreation/tourism Less than 1 to more than 2,000d

Cultural services 0.03 to 259 d in tropical orests

and existence values 12 to 116,182 d in temperate orests

a Lower estimate: Caliornia and Higher Estimate: Western Ecuador. Simpson, R.D., R.A. Sedjoand Reid, J.W. (1996). Valuing biodiversity or use in pharmaceutical research. Journal oPolitical Economy, Vol. 104, Issue 1, pp. 16 3-183.

b Rausser, G. and Small, A. (2000). Valuing research leads: Bioprospecting and theconservation o genetic resources. Journal o Political Economy, Vol. 108, Issue 1, pp. 173-206.

c Mean estimate or most biodiverse region. Costello, C. and Ward, M. (2006). Search,

bioprospecting and biodiversity conservation. Journal o Environmental Economics andManagement, Vol. 52, Issue 3, pp. 615-626.

d Mullan, K., and Kontoleon, A. (2008). Benets and costs o orest biodiversity: Economic

theory and case study evidence. Final report, June.e IIED (2003). Valuing orests: A review o methods and applications in developing countries.

Environmental Economics Programme, International Institute or Environment andDevelopment, London, United Kingdom.

Pearce, D.W. (2001). The economic value o orest ecosystems, Ecosystem Health, Vol.7,Issue 4, pp. 284-296.

Forests also provide an essential source o cashespecially during poor harvests. The Center orInternational Forestry Research (CIFOR) estimates

that amilies living in and around orests derive anaverage o one-th to one-ourth o their incomerom orest based resources.5

In many countries, non-timber orest products(NTFPs) contribute prominently to local economiesand livelihoods and are important exports. NTFPsinclude ood, plant products, medicine, aromaticproducts and exudates such as tannin extract andraw lacquer. FAO (2005) estimated that the value oNTFPs extracted rom orests worldwide amounted toUS$ 18.5 billion in 2005. It underscored these as lowerbound values because o incomplete data.

Forests also provide employment. Although thegures range widely, studies show that more thana billion people depend on orests or incomes andemployment (Table 2). Much o this may be in theinormal sector: a recent study by CIFOR on inormaltimber production in Cameroon, estimates that45,000 people earn their living rom such productionin the country.6

Forests provide nutrition, reduce vulnerability anddiminish energy scarcityGlobally, orested watersheds, wetlands andmangrove ecosystems provide nutrition to poorhouseholds. In addition to sustaining reshwater

and coastal isheries, ood sources including NTFPssuch as ruits, nuts, honey, and mushrooms arean important source o nutrition. 7 A 2008 reviewo bushmeat airmed that rural communities inCentral Arica obtained a critical portion o theirprotein and at rom orests.8

More than 2 billion people depend on woodenergy or cooking, heating and ood preservation.9


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2.FAO (2009). Stateo theworldsorest 2009,Food andAgriculture Organization o the UnitedNations,Rome.Italy.3.The orestindustryis denedas roundwoodproduction, woodprocessing,and pulpand paper.4.Vedeld,P., Angelsen,A. Sjaastad,E., andKobugabe Berg,G. (2004). Counting on the environmentorestincomes andthe ruralpoor. EnvironmentalEconomicsSeries,Paper No.98, WorldBank

EnvironmentDepartment, WorldBank, Washington D.C.,USA.5.http://blog.cior.org/2011/04/10/penelitian-sosial-penting-untuk-melestarikan-praktek-konservasi-masyarakat/6.http://www.cior.cgiar.org/nc/online-library/browse/view-publication/publication/3315.html

7.http://blog.cior.org/2011/04/20/orests-and-ood-security-what-we-know-and-need-to-know/8.Nasi, R.,Brown, D.,Wilkie,D., Bennett,E., Tutin,C., van Tol,G.,and Christophersen,T.(2008). Conservation anduse o wildlie-basedresources:the bushmeatcrisis.Secretariat o the Convention on

BiologicalDiversity,Montreal, andCenter orInternational Forestry Research (CIFOR),Bogor,Indonesia.9. UNDP(2000).WorldEnergy Assessment.Energy andthe challenge o sustainability.UnitedNations DevelopmentProgramme, UnitedNationsDepar tmento Economicsand SocialAfairs andWorld

Energy Council.New York.Available at:http://www.undp.org/energy/activities/wea/drats-rame.html.

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Contributionsbyforestsand

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hecurrentstateofplay

1.CONTRIBUTIONS

BY FORESTS

AND THE CURRENT

STATE OF PLAY

This synthesis is part o UNEPs contributions to the RIO+20 process and

the green economy discourse. It is directed at policy makers and presents a

menu o alternatives that can enable a transormation o the sector, one that

can better realize the myriad possibilities orests promise. It also examines

the conditions or signicantly increasing investments in orests and the

underlying goods and services orests provide.

Economic progress and human well being are dependent on healthy orests. Forests serveas carbon sinks and stabilize global climate, regulate water cycles and provide habitatsor biodiversity while hosting a wide variety o genetic resources. Economic valuationstudies conducted in dierent countries have demonstrated the important benets romorests, in particular or climate regulation services and existence values.


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Table 3: Trends in Forest Cover and Deforestation

1990 (Million hectares) 2010 (Million hectares)

Arica orest area 750 670

Arica planted orest area** 11.6 15.3

Asia orest area 580 590

Asia planted orest area** 70.8 120

Europe orest area 990 1000

Europe planted orest area** 58 69

Caribbean orest area 5.9 6.9Caribbean planted orest area** 0.4 0.55

North and Central America orest area 708 705

North and Central America planted orest area ** 19.6 38

South America orest area 950 860

South America planted orest area** 8 13.8

World orest area 4170 4030

World planted orest area** 178 264

1990-2000 2000-2010

(Million hectares/Year) (Million hectares/Year)

Annual net orest loss 8.3 5.2

Annual deorestation 16* 13

Annual increase in planted orest 3.6 4.9

Source:

Compiled rom data in FAO (2010). Key ndings global orest resources assessment 2010, Food and Agriculture Organization o the United Nations, Rome, Italy.Available at: www.ao.org/orestry/ra2010.

* In its latest Forest Resource Asse ssment 2010 FAO revised upwards its deorestation estimate or the 1990s. In the Forest Resource Assessment 2005 (FAO (2005a). Forest resourcesassessment 2005, Food and Agriculture Organization o the United Nations, Rome, Italy.), deorestation in the 1990s was estimated at 13 million hectares per year.

** Global and regional totals would not give a correct estimate because o incomplete data sets.

17.Mather, A.(1992). The oresttransition.Area, 24,pp. 367-379.

According to the International Energy Agency (IEA),in 2005, biomass energy accounted or an estimated10 per cent o energy use. 10 More than 83 percent o this is used in less developed countries. Inmany developing countries biomass accounts ormore than 50 per cent o total energy use. Haltingtropical deorestation and planting new orestscould represent the mitigation potential equivalento doubling current global nuclear energy capacityor constructing two million new wind turbines.11

Unortunately, the values and services that orestsrender are rarely captured in national accountingsystems.

Table 2: Forest-dependent Employmentand Livelihoods

Scope Estimates(number of people)

Formal employment in orestry,wood processing and pulp and paper 14 milliona

Formal employment in urniture industry 4 millionb

Inormal small orest enterprises 30-140 millionc

Indigenous people dependent on orests 60 milliond

500 million-1.2 billione

People dependent on agroorestry 71-588 million

Total 119 million-1.42 billiong

a FAO (2009). State o the worlds orest 2009, Food and Agriculture Organization o theUnited Nations, Roma. Italy.

b Nair, C.T.S., and Ruth, R. (2009). Creating orestry jobs to boost the economy and build agreen uture, Unasylva, Vol. 60, No. 233. pp. 3-10. Available at : tp://tp.ao.org/docrep/ao/012/i1025e/i1025e02.pd

c For low estimates (Poschen, P. (2003) Globalization and sustainability: The orestry andwood industries on the move- social and labour implications,European Tropical ForestResearch Network News, Autumn/Winter pp. 43-45) and or high estimates (Kozak, R, (2007)Small and medium orest enterprises: Instruments o change in the developing world rights

and resources initiative, Washington, D.C., USA).d World Bank (2004). Sustaining orests: A development strategy, Washington, DC, P. 16.e UNEP/ILO/IOE/ITUC (2008). Green jobs: Towards decent work in a sustainable, low- carbon

world. United Nations Environmental Programme (UNEP), Nairobi, Kenya.

Zomer, R., Trabucco, A., Coe, R. and Place, F. (2009). Trees on arm: Analysis o global extentand geographical patterns o agroorestry. ICRAF Working Paper no. 89. World AgroorestryCentre, Nairobi, Kenya. ( For agricultural land with 10 per cent tree cover up to 50 per cent)

g Lower bound assumes overlap between indigenous people dependence and agroorestry

Trends in deorestation, though showing signso decline, are still alarmingly high. Despitethe considerable value o orests, deorestationis rampant. The worlds orested area is decliningboth in absolute terms (deorestation) and in

net terms (taking account o orest planting andnatural expansion), although at a slower rate thanin previous decades (See Table 3). On average, 13million hectares o tropical orests (an area the size oGreece) are disappearing annually. This is equivalentto approximately six billion tonnes o carbon dioxidebeing released into the atmosphere, contributing upto one-th o global greenhouse gas emissions. 12

These global trends conceal important regional

variations. Over the past decade, orest coverstabilized in North and Central America and expandedin Europe. Forest cover expanded in Asia, mainly dueto large-scale aforestation in China, which ofsetcontinued deorestation in South-east Asia. Aricaand South America experienced the largest net losso orests during this period.

These gures also mask the loss o natural orests. The general global trend is that natural orests andmodied natural orests are decreasing while plantedorest area is increasing.13 Forty million hectares onatural orests have been lost since 2000. The loss onatural orests implies important and critical lossesin biodiversity and decreasing orest ecosystemresilience against climate change.

The current approach to management o orestsis a rontier approach. Today, investments inorests remain low and orest related activities arepredominantly extractive. Over the last two decades,agricultural expansion and timber extraction werethe main proximate causes o tropical deorestation.

This pressure is likely to worsen with increasingpopulation, rising incomes and a shit toward meatbased diets. Additionally, market ailures increase the

likelihood o exploitation without considering theull range o orests goods and services. The EliaschReview (2008) estimates that the net present valueo reduced climate change benets associated withemission reductions rom halving deorestationrom 2010 to 2100, is US$ 3.7 trillion on average.14,15

It also nds that the average benet rom halvingdeorestation exceeds average costs by a actor omore than three.16

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thecurrentstateofplay

10.http://www.cior.cgiar.org/nc/online-library/browse/view-publication/publication/3315.html11.Pacala, S.,Socolow,R. (2004).Stabilization wedges:Solving the climate problem orthe next50 yearswith currentt echnologies.Science 305:968-972.12.UNEP (2011),Towardsa Green Economy:Pathways to Sustainable Developmentand Poverty Eradication.Available at:http://hqweb.unep.org/greeneconomy/

13.FAO (2010).Key ndingsglobalorestresources assessment2010, Foodand Agriculture Organization o the UnitedNations, Rome,Italy. Available at:www.ao.org/orestry/ra2010.14.Eliasch, J.(2008). The Eliasch Review- climate change:Financing globalorests.UK Oce o Climate Change.15.With a90 per centcondence interval(CI) o US$ 0.6 to US$ 17 trillion.16.For the scenario where emissionsreduced by 50 percent, the returnsto costo investmentwas3.12. Forthe scenario,where deorestation causedemissionsreduced by 90 percent, the returnsto

investmentwere 2.86.

Contributionsbyforestsand

t

hecurrentstateofplay

Box 1: The Forest Transition TheoryMather (1992) presents a orest transition theory toexplain the growth o planted orests.17 The study usesVon Thunens rent theory to explain diferent stages oorest development. It states that as countries develop,orest land is converted to other land uses, agriculture

in particular. The process accelerates as inrastructureimprovements open up rontier orest areas andmake timber extraction and agriculture economicallyviable. Over time, as timber becomes scarce, of-armemployment opportunities become available. As theeconomy develops, a series o policy adjustments aremade in response to increased protability o orestmanagement and orest creation. Consequently, thearea o orest cover starts to increase again.

Such a transition has been observed in manydeveloped countries and some developing nations.For example, Vietnam saw its orest cover decline rom43 per cent in 1943 to 20 per cent in 1993 as a resulto agricultural expansion and migration into orested

areas. Considerable eforts to increase orest cover,including an ambitious reorestation programme wereresponsible or this reversal in trend. By 2009, orestcover had increased to 39 per cent o land area in thecountry.

The orest transition theory underscores the central rolethat inormed policy can play in ensuring that orestryservices are appropriately valued.


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Theroleofforestsina

green

economy

Specically in a green economy:

Public and private investments in orests arecatalyzed and supported by targeted policy reorms,regulation changes and capacity building. Thisdevelopment path maintains, enhances and, wherenecessary, rebuilds orest-based natural capital.Capital ormation in a green economy is dependenton healthy and sustainably managed orests. Forestsare viewed as a critical economic asset and a sourceo public and private benets, especially or poor andmarginalized groups.

Forests are managed and invested in as an asse t classand are important actors o production. Forestsserve as inputs in production, producing privatelow-carbon goods rom timber to ood. Forestsoperate as ecological inrastructure, producingpublic goods such as climate regulation and water-resource protection. Forests are also providers oinnovation and insurance services, providing low-carbon solutions and building resilience againstclimatic change.

Forests provide many services. These includeservices in the manuacturing and service sectorsincluding in traditional industries such as woodprocessing and paper manuacturing and, servicesectors such as tourism, energy, water management.Forest-based products such as second generation

biouels and other biosolutions ease scarcity. Forestsin a green economy also meet critical livelihoodneeds, o local and some o the most marginalizedcommunities in the world, by providing a stream oenergy, raw materials, ood, medicinal plants and acultural identity, amongst others.

International mechanisms can increase investmentsin orests. Good governance will present newopportunities or investments and income sourcesin and rom orests, e.g. through Access and Benet-sharing and new markets, such as payments orecosystem services (PES), ensuring greater economicincentives or sustainable management o orests atlocal, national and international levels. Incentivesor investments will emerge rom robust and airinternational and national systems that ensure orest-related public services, notably carbon regulation,water regulation and biodiversity conservation, aretranserred between communities, businesses andnations.

Forest management hinges critically on an eectiveand transparent accounting system that measuresorest related stocks and fows. Technologicaladvances and sophisticated tools will enablesocieties to track and account or the ull range omarketed and non-marketed goods and services,including the signicant contribution that orestsmake to the livelihoods o the poor and marginali zed.

2. THE ROLE

OF FORESTS

IN A GREEN ECONOMY

The multi-unctionality o orests places them at the oundation o the green

economy, sustaining a wide range o sectors and livelihoods. However, in the

prevailing economic paradigm orest assets are still liquidated or limited

private and short-term gains. A new paradigm is needed or orests in a green

economy.

Forests contribute optimally to a green economy when, in particular, their ull range

o private and societal benets are realized. In this vision o orests, growth in income

and employment is driven by public and private investments. These investments reduce

carbon emissions, enhance resource efciency, and prevent the loss o orest-based

biodiversity and ecosystem goods and services.


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Investmentsintheforestsect

or3. INvESTMENTS

IN THE FOREST

SECTOR

Investment at the scale suggested by the Green Economy Report is unlikely to

come rom governments alone. Active investment rom business is essential,

including that rom nancial institutions and intermediaries.20 This depends

on making orests an attractive investment opportunity.

Today, an approximate US$ 64 billion is investedannually in the orest sector (calculations as o 2006).18O this, approximately 28 per cent is spent on orestmanagement and the rest is invested in orest productprocessing and trade. The Green Economy Reportsuggests that an additional investment o 0.034 per cento global GDP each year (equivalent to US$ 40 billion inconstant 2010 dollars per year) could raise value addedin the orest industry by US$ 600 billion in 2050. This is20 per cent more than value added under the business

as usual (BAU) scenario which models growth underassumptions that mirror the current economic policyclimate. Under the green economy scenario (G2),

additional investment is undertaken in reorestationand orest conservation.19 More than hal (54 per centor US$ 22 billion o mostly private investment) o thisinvestment is directed to reorestation and 46 per cent(or US$ 18 billion o mostly public investment) peryear is spent on avoiding deorestation to pay orestlandholders to conserve orests. Under this scenario,concomitant increases in sustainable productivity-enhancing improvements in agriculture and careullytargeted tree planting ensure that poor armers arenot displaced and there are increased income earningopportunities in rural areas.

Table 4: Forest in 2050 under the green investment (G2)

and BAU scenarios

Key orest-sector indicators in 2050 BAU Green

Natural orest area (Billion hectares) 3.36 3.64

Deorestation rate (Million hectares/year) 14.9 6.66

Planted orest area (Million hectares) 347 850

Total orest area (Billion hectares) 3.71 4.49

Carbon storage in orests (Billion tonnes) 431 502

Gross value added (Trillion US$) 0.9 1.4

The BAU scenario or the orest sector replicates

historical trends rom 1970 until 2010 and assumesno undamental changes in policy or externalconditions till 2050. Under BAU, a steady decreasein orest cover is projected (Figures 1 and 2). Carbonstorage, together with other orestry related goodsand services are expected to decline.

In a green economy, increased and careully plannedinvestments, contribute to employment growth,rising rom 25 million to 30 million worldwide.

The green investment scenario also has positiveimplications or carbon storage which increases by28 per cent compared with BAU (See Table 4). Botho these results are consistent with other evidence inthe literature. A recent study estimates that targetedinvestments in orests could generate about 10 millionnew jobs around the world.21 Most o this increasein employment occurs via an increase in small andmedium sized enterprises. In the orest sector, 80-90per cent o enterprises are small and medium sized.

They currently provide more than 50 per cent oorest sector employment in many countries.22

18.Tomaselli,I. (2006). Briestudy onundingand fnanceororestry andorest-based sector,United NationsForum on Forests.19. The Green Economy Reportpresentsthe resultso diferentinvestment scenarios.Undert he G2 green investmentscenario,2 percent o globalGDPis allocatedto green transormation o arange o

key sectorsincluding the orestsector.

20.UNEP(2011) REDDySet Grow, Abriefng orfnancialinstitutions, Part1. Opportunitiesand rolesor fnancialinstitutionsinorest carbonmarkets. UnitedNations EnvironmentProgramme, FinancialInitiative,Geneva, Switzerland.

21.Ibid.22.Molnar, A.,Liddle, M.,Bracer, C.,Khare, A.,White, A.and Bull,J. (2007).Community-basedorest enterprisesin tropicalorest countries:status andpotential. InternationalTropicalTimber Organisation,

Rightsand ResourcesInitiative andForestTrends, Washington,DC,USA.

Figure 1: Deforestation reduction under the greeneconomy scenario (G2) and BAU

Figure 2: Employment under the green economyscenario (G2) and BAU

The Green Economy Report sugge sts that an average annual additional investment o US$ 40billion is required to halve global deorestation by 2030 and also increase reorestation and

aorestation by 140 per cent by 2050 relative to business as usual. Additional investmentis required or up-ront capacity building and preparatory work, continued implementationo mechanisms that compensate or opportunity costs, reorestation and to make paymentsor orest protection.


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4. POLICY

RECOMMENDATIONS

FOR FORESTS

IN A GREEN ECONOMY

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Policyrecommendationsforf

orestsina

greeneconomy

The UNEP strategy on orests outlines our inter-linked building blocks that can guide countries torealize contributions by orests to a green economy.

Knowledge: Generating and compiling knowledgeon multi-unctional orests, their use and theircross-sectoral linkages, is key or sustainablemanagement and inormed decision-making.Additionally, green accounting systems thatully value inventories and services o orests andorest related beneits are also required along

with monitoring, reporting and veriicationsystems that use contemporary inormationand communication technologies such asGeographic Inormation Systems and mobileapplications.

Vision: Engaging in dialogue to build a participatoryvision and agreement on orests, theirmanagement, protection and use is critical ormaximizing the inter-generational benets oorests.

Enabling conditions: Adopting scal and economicpolicies help align public and private incentivesor conserving, managing and using orestssustainably. These include smart subsidies andtaxes that discourage the liquidation o orestresources while encouraging the transition to aorest supported green economy.

Finance: Transitioning towards a green economyrequires mobilizing increased public and privateinvestments in orests. Opportunities includeagreements on international mechanisms such asPES and Reducing Emissions rom Deorestationand Forest Degradation (REDD/REDD+).

These building blocks together orm the oundationor realizing the ull potential o orests in a greeneconomy. To achieve these, a set o political andtechnical processes and tools are needed that otenreach beyond sectoral ministries and individualcountries.

Table 5: Examples of Green Investment Options for Various Forest Types

Forest Type Private Investment* Public Investment**

Ecotourism development Create new protected areas

Private nature reserves Improve enorcement o protected areas

Pay landowners to protect watershed Pay orest landholders to conserve orestsBuy out logging concessions

Reduced impact logging and other Incentives or improved orestorest management improvements management

Certication to sustainable orest Support establishmentmanagement standards o certication systems

Control illegal logging

Reorestation and aforestation Incentives or reorestation/aforestation

or productionIncentives to improve management

Improve management o planted orests Reorestation to protect ecologicalunctions

Extend the area with agroorestry systems Incentives to landholders

Improve management o agroorestry Incentives to improve management andsystems technical assistance

* Private investment could also include investments made by communities.** Some o the public investments listed here may also be made by the private sector.


Primary orest

Natural modied orest

Planted orest

Agroorestry


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The role o the international community The international community has a particularlyimportant role in strengthening orest relatedgovernance and creating transparent mechanismsor implementing sustainable orest related

agreements. Briely, the international communitycan help in the ollowing ways:

Agree on an international REDD+ scheme:Thismay be the best opportunity to both addressthe drivers o poor orest management and toraise adequate inancial resources to protectorests while ensuring their contribution to agreen economy. Stronger governance systemscan help governments design speciic REDD+interventions which help in achieving domesticdevelopment goals using multi-unctionalorests as a key tool. Thereore, identiying legalchanges, implementing regulatory rameworks,and appropriate transer and governancemechanisms will be critical.

Generate knowledge on orest ecosystemservices: The international community andagencies should invest in the development odatabases on orests, orest services and ecosystemsand their contributions to other sectors.

Stimulate engagement rom the commercialinancial sector: Lending, investment andinsurance are major channels o private inancingor a green economy. Private resources can bedirected through tried and tested economicmechanisms and markets which are replicableand scalable (Table 5).

Re-invest income rom royalties and taxesinto the orest sector: This can provideopportunities or income generation and createregular and valued jobs.23 International supportand advocacy can go a long way in promotingsuch re-investments.

The role o governmentNational governments can ensure that orest basedinvestments have the requisite pre-conditionsthat encourage entrepreneurship and provideopportunities or de-risking investments and

reducing uncertainty. Governments can providethe ollowing policy and technical support:

Guarantee adequate returns on risk-adjustedinvestment by principally two sets o actions:First, strengthen national accounting,monitoring, risk measurement and veriicationsystems. Speciically, national accountingsystems should measure baselines and additionsin carbon mitigation at project and nationallevels. Second, institute straightorward policiesthat provide guarantees against sovereign risk,support new insurance markets and provideearly warnings against price risks and deaults.Countries should also provide mechanismsthat hedge against large price volatility whileensuring that mitigation projects are sustainable.

Devise transparent and eicient proceduresor gaining international and national approvalor orest initiatives, projects and activities:Monitoring and veriication capacities as wellas ability to negotiate and design mechanismsthat assign independent risk measurement andcoverage to specialized intermediaries, likeinsurance companies, are required. Transparentand accessible governance and tax systems thatcan help administer REDD+ and other orestrelated investments are also key.

Agree on a national visionor ways and meansin which orests can contribute to developmentwhile elaborating elements and attributes o anational REDD+ regime: National dialogues thatidentiy areas that undermine a green economytransition and address spending constraints are

likely to provide a national roadmap or investingin orests. Clarity on land ownership, beneitsharing mechanisms, acquisition and transero orest carbon assets and rights will go a longway in ensuring this process is accessible and

acceptable. Employ market-based instrumentsto promote

green investment and innovation in orests andrelated sectors: Governments should encourageinancial opportunities that allow the provisiono credit, microinance, leases, concessionsand other securities in land and orests. Publicinvestment and spending in areas that stimulatethe greening o economic sectors should beprioritized. An important area that requiresattention is capacity building and training thatcan catalyze this transition to a green economy.

The role o business and nancial institutionsForest related opportunities, including marketsor orest based mitigation credits provide a richopportunity or businesses and nancial institutionsto prot rom orests, provided the right inc entives arein place. Opportunities or portolio diversication,national and corporate compliance, corporatesocial responsibility and political imperatives allimply that there is likely to be continued interestin orests. These also provide businesses, including

nancial institutions, an important role in mobilizinginvestment or protecting orests and realizingtheir contributions to a green economy andclimate change mitigation. Businesses and nancialinstitutions can play the ollowing role in realizing

orestscont ributions to a green economy: Investing in orest projects, orestry development

companies, orest unds and acting as nancialbrokers and intermediaries.

Providing independent, easily accessible andveriable risk assessments or orest projects andactivities.

Leveraging resources and providing debt nanceor orest related enterprises and individualprojects.

Guaranteeing investment by insuring the orestsector including price risks, natural events riskand sovereign risk within it. Business and nancialinstitutions can also devise creative ways todeal with specic orest-carbon risk such asmeasurement errors and, systemic and specicrisks associated with international agreementsand eligibility.

Applying otherwise conventional nancial instru-ments such as bonds and securities to the orestsector.

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Many large cities around the world managesurrounding orests or water services. In Tokyo,Japan, the Metropolitan Government Bureau oWaterworks manages orests in the upper reaches othe Tama River to increase recharge capacity.24 Thesame is true o New York City with its large system oreservoirs in the Catskill Mountains, and o variousother South American cities in the Andes.

Forest related interventions in Costa Ricahave ledto economic growth and a dramatic increase in orestcover. In 1995, orest cover in the country was 22 percent, but by 2010, it had recovered to 51 per cent othe countrys land area.25,26 Recovery o orest coverwas the result o targeted interventions and policiessuch as tax incentives and payment or ecosystemservices to land owners.27

India has recently approved a national missionor a Green India. This initiative aims to increaseorest/tree cover on ve million hectares o orestedand non-orested land and improve the quality oorest cover on another ve million hectares. GreenIndia ocuses on improving the delivery o ecosystemservices, including biodiversity, carbon sequestrationand hydrological services. It also aims to increaseorest-based incomes or three million orest-dependent amilies.28

Box 2. Community Forest Management in NepalCommunity Forest Management is the second largestorest management system in Nepal, where orests covermore than 40 per cent o the land. The Forest Act andForest Rules recognize Community Forest User Groupsas sel-governing autonomous corporate bodies ormanaging and using community orests, giving aprominent role to community orest management.Such an approach generates employment and income

rom orest protection, gains rom tree elling, logextraction, and non-timber orest products. Communityorestry has contributed to restoring orest resourcesin the country, turning an annual rate o decline inorest cover o 1.9 per cent during the 1990s, into anannual increase o 1.35 per cent over the period 2000to 2005. The plan includes development o physicalinrastructure, the efective use, management andconservation o orests by communities, expandingelectricity to rural populations through the use ohydropower, and planning efective transportation viagreen roadsor remote village communities.

The Loess Plateau in China provides an exampleo socio-economic returns rom ecosystemrestoration. This region, roughly an area the sizeo France and home to more than 50 million peoplewas deeply poverty stricken. The plateau washeavily degraded due to unsustainable armingpractices and over-exploited orest resources. A10-year restoration investment o over US$ 520million was able to rejuvenate the land, resultingin a doubling o income or people living within

the restoration area. As a result o the restorationproject, 2.5 million people were lited out o povertyand overall employment rates, notably or women,increased signiicantly. During the second projectperiod, annual per capita grain output increasedrom 365 to 591kg. Additionally, sediment loads tothe Yellow River decreased by 100 million tonnes/year, reducing the risk o looding and thereby thecost o dam maintenance and damage.29

The Dead Planet, Living Planet - Biodiversity andEcosystem Restoration for Sustainable Developmentreport presents internal rates o return on restorationo ecosystem services ranging rom 7-79 per cent,providing a good opportunity or public and privateinvestment. 30

Two project level examples provide goodevidence o socio-economic return oinvestments in restoration and conservationo orests. The restoration o natural mangroveorests in Vietnam or US$ 1.1 million resultedin annual savings o US$ 7.3 million in sea dykemaintenance. During a subsequent typhoon,the area also suered signiicantly less damagethan neighboring provinces. In Indonesia, avaluation study o the Leuser National Parkestimated that conservation and selective use oorests would provide a higher long-term return(US$ 9.1-9.5 billion) or the region, compared tomore consumptive usage, including continueddeorestation (US$ 7 billion).31

PES and REDD+ provide new avenues orleveraging political attention and private,public and bilateral inance. Due to the globalimportance and large inancial potential o REDD+in addressing climate change, it can particularlyact as a catalyst or a green transormation in

5. SUCCESS STORIES

Forest policy and nance ace competition rom other sectors and development

goals. It is thus important that decision-makers are provided practical examples

o implementation and socio-economic returns. While sustainable management

o orests has not taken o (less than 10 per cent o the worlds orests are

certied or sustainable management), there are many examples o successul

policy interventions that show encouraging signs o success.

24. Dudley, N. and S. Stolton (2005). The Role o orest protected areas in supplying water to the worlds biggest cities. The Urban Imperative. 2733. In Tryzna, T. (ed.). Caliornia Institute o Public

Afairs, Sacramento, CA, USA.25. Food and Agriculture Organization o the United Nations (1997). State o the worlds orests 1997, Rome, Italy: FAO.26. Food and Agriculture Organization o the United Nations (2011). State o the worlds orests 2011 . Rome, Italy: FAO.27. UNEP/GRID-Arendal (2008). Kick the habit: a UN guide to climate neutrality, Nairobi, Kenya: UNEP.

28. www.indiaenvironmentportal.org.in/les/2011-02-23PressBrie-GreenIndiaMissionapproval.pd29. World Bank (2003). China-Loess Plateau Watershed Rehabilitation Project. Implementation Completion Report. Washington, DC, USA.30. Nellemann, C.,E. Corcoran (eds). 2010. Dead Planet, Living Planet - Biodiversity and Ecosystem Restoration or Sustainable Development. A Rapid Response Assessment. United Nations Environment

Programme, GRID-Arendal. www.grida.no31. TEEB (2010). The Economics o Ecosystems and Biodiversity Report or Business Executive Summary. European Commission: Brussels, Belgium.


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orests and related sectors and bridge the transitionbetween business-as-usual and green economyoutcomes.

PES is a mechanism o voluntary transactionswhich compensate ecosystem service providers(or instance orest landowners) or providingwatershed protection, carbon storage, recreation,biodiversity or other ecosystem services.32 At thelocal level, in Ecuador the government in the

town o Pimampiro pays US $6-$12 per hectare peryear to a small group o armers to conserve orestand natural grassland in the area surrounding thetowns water source.33 The national scheme inCosta Rica, pays armers US$ 64 per hectare peryear in ive year contracts to conserve biodiverseorests. There are many examples o PES schemesthat also actor in social needs to engage poor andmarginalized groups. The Noel Kemp MercadoClimate Action project in Bolivia developedas a pilot project in 1997 under the ActivitiesImplemented Jointly (AIJ) programme o theUNFCCC was a consortium ormed o internationaland local NGOs, US energy companies and theBolivian Government. The consortium bought outlocal timber concession holders and implementeda community development programme in orderto extend the Noel Kemp Mercado Park. Throughavoided deorestation the project was expectedto reduce emissions o up to 3.6 million tonnes ocarbon over 30 years.

REDD+ Whereas REDD recognizes the role oorest degradation and deorestation in limitingGHG emissions and orests as an eective way osequestering carbon rom the atmosphere, REDD+adds conservation, sustainable management oorests and enhancement o orest carbon stocksto the list o eligible activities.34 REDD+ has beencompared to a multi-layer PES scheme that allows

inancial transers between industrialized countriesand developing countries, and also transersbetween national level agencies, orest landownersand communities.35

Prospects or REDD+ Unlike the project-basedapproach o international PES schemes to date,REDD+ may be implemented at both national andsub-national/project level. It is a mechanism thatallows inancial transers rom developed countries

(individually or as a bloc) in return or veriiednational-level commitments to reduce deorestationand emissions. This is illustrated by Norwayscontribution to the Amazon Fund in Brazil, whichis conditional on achieving deorestation reductiontargets. In 2010, Norway also announced a granto US$ 1 billion to Indonesia in return or agreedmeasures to tackle deorestation and degradation.Under the terms o the agreement, Indonesia hasannounced a two-year moratorium on new permitsto clear natural orests and peatlands.36

Similarly, the REDD+ strategy o the United Stateso America provides an example o pledged REDD+inance with the clear objective o adopting low-carbon development. The strategy supports hostcountries development o REDD+ schemes, inparticular those being developed as part o aneconomy-wide, low-emissions developmentstrategy. It will support developing countries intheir eorts to seek climate-riendly, cross-sectoraldevelopment opportunities.37

REDD+ represents a promising mechanism orleveraging opportunities and resources or lowemissions pathways. It is estimated that themechanism will be able to mobilize tens o billionso US dollars when ully unctional. Presently,inancial resources committed to preparation

activities and bilateral programmes or themechanism have greatly exceeded what has beenprovided or PES.

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32.See Wunder(2005), citedin TEEB The Economicso Ecosystemsand Biodiversity orNationaland InternationalPolicy Makers(2009),33.Wunder,S., andAlbn, M.(2008).Decentralized paymentsor environmentalservices:The caseso Pimampiro andPROFAFORin Ecuador,EcologicalEconomics,Vol.65, Issue 4,pp. 685-698.34.As denedby Angelsen (2009).Angelsen also notesthat REDD+ meansdiferentthingsto diferent people.The + sign capturesthe secondpart o UNFCCCDecision 2/CP.13-11 policy approachesand

positive incentiveson issuesrelating to reducing emissionsrom deorestation andorestdegradation in developing countries;and theirrole o conservation ,sustainable managemento orestsandenhancemento orestcarbon stocks in developing countries.Addition o aurther+ to give REDD++ isbeing promoted by ICRAFto include agroorestry.

35.Angelsen,A. andWertz-Kanounnikof,S. (2008)Whatare key design issuesorREDD andthe criteriaor assessing options?in A.Angelsen (ed.) Movingaheadwith REDD: Issues, optionsandImplications. Centeror InternationalForestry Research (CIFOR),Bogor,Indonesia.

36.Richardson, M.(2010).Indonesia moving to reduce orestloss,warming emissions.JapanTimes ,21 June. Available at:http:// search.japantimes.co.jp/cgi-bin/eo20100621mr.html37.www.usaid.gov

6. CONCLUSIONForests contribute substantially to local, national and global economies. They cancontribute to a low-carbon, high growth, socially inclusive and equitable, adaptiveand low scarcity green economy through their multiple unctions and improvedmanagement. Forests are also a source or low-carbon raw material and energy, and

oer a ull range o services or many sectors, human well-being, and climate changemitigation and adaptation.

Box 3. New generation plantationsIntensively managed planted orests are highlyproductive plantations primarily intended to producewood and bre. There are around 25 million hectareso intensively managed planted orests worldwide,representing one-quarter o plantation orestsand almost 0.2 per cent o global land area. Theygenerally comprise tropical astwoodplantations oacacia and eucalyptus, as well as temperate coniers.

The New Generation Plantations Project led byWWF collects inormation and experience rom treeplantations in a range o orest landscapes that arecompatible with biodiversity conservation and

human needs.38

This project is exploring how orestand plantation management can maintain andenhance ecosystem integrity and orest biodiversity.39

New approaches to plantation management canalso enhance biodiversity at the stand level.40 Duringthe 1960s and 1970s, Brazils Atlantic rainorest, MataAtlntica, was deorested at an accelerated rate dueto logging o valuable tree species or saw milling andsubsequently cleared or cattle grazing.

A local pulp mill and tree plantation enterprise whichowns around 210,000 hectares in the region, hasplanted close to 91,000 hectares on land previouslyused or cattle grazing. More than 100,000 hectareshave been set aside or conservation. Trees are plantedon plateaus, leaving valleys, river banks, steep slopes,and other areas with special characteristics reservedor environmental preservation. The area reservedor the rainorest is now regenerating naturally, andthe most degraded parts are being restored throughactive planting o some 400 hectares o native speciesper year. The creation o orest corridors has enhancedconnectivity between isolated remnants o the

rainorest.

At the end o 2009, over 3,500 hectares o rainorest inthe region had been restored.41 At the landscape level,the plantations have had positive efects by stabilizingland use and reversing gradual orest degradationcaused by cattle grazing. They have also made asignicant contribution to biodiversity conservation bycreating conditions or the protection and regenerationo the Atlantic rainorest.

To realize contributions rom orests in a greeneconomy, specic enabling conditions arerequired. Inormed policy-makers recognize thatorest management cannot be let entirely tomarkets, because these are oten imperect or absent.Consequently, to ully realize the benets o orestsin a green economy, governments will need to takean active role. Governments and the internationalcommunity need to undertake policy reorms tocreate incentives to maintain and invest in orests andintroduce disincentives to modiy market signals andassociated rent-seeking behavior. Examples o theseenabling conditions include national regulations, smartsubsidies and incentives, inormation management,

supportive international markets, legal inrastructure,and conducive trade and aid protocols.

Due to the simultaneous local and global natureo many orest goods and services, nations andentrepreneurs that act upon this paradigm shit inorest stewardship and products stand to gain both inaccess to initial unding or REDD+, and in procuring amarket advantage within the new orest value chainsassociated with certied sustainable timber. Movingorward, countries and companies that invest in themulti-dimensional goods and services provided byorests will reap benets both at home and abroad,and speed their transition to a greener economy.

38.NGPP (2010).Case study 8/ Conserving the AtlanticRainorestin Brazil.New Generation PlantationsProject.http://newgenerationplantations.com/showcase.html

39.Neves Silva,L. (2009).Ecosystem integrity andorest plantations.NGPP Ecosystem Integrity TechnicalPaper,WWFInternational.40.Paquette, A.and Messier,C.(2010) The role o plantationsin managing the worldsorestsin the Anthropocene.Frontiersin Ecology andthe Environment,8, 27-3441.NGPP (2010).Case study 8/ Conserving the AtlanticRainorestin Brazil.New Generation PlantationsProject.http://newgenerationplantations.com/showcase.html

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ACKNOWLEDGEMENTS

Forests in a Green Economy: A Synthesis is a collaboration between UNEPs Division

o Technology, Industry and Economics (DTIE) and Division o Environmental Policy

Implementation (DEPI).

Under the guidance o Steven Stone, Chie, Economics and Trade Branch (DTIE) and

Mario Boccucci, Chie, Terrestrial Ecosystems Unit (DEPI), the ollowing were the main

authors o this synthesis: Jyotsna Puri, Niklas Hagelberg and Nicolas Bertrand.

Comments and inputs were provided by Nick Nuttall, Pushpam Kumar, Ravi Prabhu,

Paul Clements-Hunt, Ivo Mulder, Kai Remco Fisher, Semhar Mebrahtu and Jennier

Boucher.

Production or the synthesis report was led by Leigh-Ann Hurt and Desiree Leon, with

assistance rom Megan Billings and Sofa Munoz.

The many authors o the ollowing documents, on which this synthesis is based, are

grateully acknowledged:

UNEP (2011): Toward a Green Economy Pathways to Sustainable Development and

Poverty Eradication. Available at: http://www.unep.org/greeneconomy/

UNEP (2011) REDDy Set Grow, A briefng or fnancial institutions, Part 1. Opportunities

and roles or fnancial institutions in orest carbon markets. United Nations Environment

Programme, Financial Initiative, Geneva, Switzerland.

UNEP (2011). UNEP Year Book 2011: Emerging Issues in our Global Environment,

United Nations Environment Programme, Nairobi. Published February 2011. Website:

http://www.unep.org/yearbook/2011Project


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www.unep.orgUnited Nations Environment Programme

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Tel: (254 20) 7621234

Fax: (254 20) 7623927

E-mail: [email protected]

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Forests in a Green Economy