ational forest funds publicly managed financing mechanisms intended to support sustainable forest management hold vast potential to catalyze greater investment in forestry, including investment aimed at addressing climate change.
The Food and Agriculture Organisation, FAO stated this in its new policy paper, launched at the 11th Session of the United Nations Forum on Forests, where financing for sustainable forest management is among the most prominent issues discussed.
The organisation, according to the publication, lamented that the vast potential of financing tool remains largely untapped.
It cited the example of the Vietnam’s National Forest Fund been able to collect payments from hydroelectric companies for environmental services provided by upstream forests.
FAO also stated that as a number of new national and international financing mechanisms have come into existence, like those related to climate change mitigation and adaptation, the magnitude of potential funding has increased.
It, however, acknowledged the complexity of accessing such resources.
According to the publication, properly designed and managed National Forest Funds, NFFs can act as coordinating mechanisms to channel investment streams from multiple sources towards implementation of important schemes.
It listed such schemes as payments for environmental services or national programmes aimed at reducing carbon emissions from deforestation and forest degradation, REDD+.
Director of FAO’s Division of Forest Economics, Policy and Products, Eva Muller, said “With growing recognition of the critical roles played by forests in addressing global challenges such as climate change, food security and poverty alleviation, supporting sustainable forest management remains key”.
“Through this publication and related support for capacity building, FAO hopes to contribute to the development of national forest funds that are able to translate forestry investments into effective national action, promoting sustainability.
“Despite the presence of NFFs in more than 50 countries, limited information is available on the way they work and a number of countries have yet to transform them into effective financing tools”, he stressed.
According to author of the publication, Rao Matta, one of the key requirements for such a transformation is having a strong policy and legal basis for their establishment and operation that ensures transparency and accountability.
This, he explained would enable the governments to mobilize funds from both domestic and international investors and donors.
“Mobilizing financial resources is particularly complex when it involves harnessing international funding, particularly sources related to climate change.
“Doing so requires national structures capable of absorbing, re-directing and using large amounts of money efficiently”, he noted.
The publication pointed out that having the necessary policy and institutional frameworks in place facilitates better access to international funding.
It cited the example of Costa Rica’s National Forest Fund, which was able to access funding from the World Bank Forest Carbon Partnership Facility to implement an emission reductions programme.


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