Reflections on the conceptual model and strategy development process

Some provisional conclusions (1) zTo date, most existing financial instruments depend on the State and/or donors. zStronger promotion of new, innovative financial instruments is needed to capture the value of all functions of forests, while strengthening traditional mechanisms. zSustainable forest management (SFM) is accepted as a common target in the global, regional and national forest debates, but it implies costs that are not yet covered by the market or investments zNational forest programmes offer a framework to develop financing strategies and mechanisms

Some provisional conclusions(2) zMultiple use of forest ecosystems takes advantage of the multiple functions of forests. It enlarges the number of marketable forest goods and services. zBundling financing mechanism in a common financial strategy tends to provide a key element to support the implementation of the country forestry policy. zLacking knowledge about forests in the financing sector and lacking knowledge about financing in the forest sector is a bottleneck. zLittle integration of financing strategies for SFM in overarching strategies is another bottleneck.

The Past zComparing planning with available funds zIdentifying funding gaps zLook for ODA to fill the gaps

New tendencies zPrivate investments much more important than ODA zStable or decreasing ODA zDeclining public sector finance zRecognition of role of private sector, market based instruments zRole of enabling environment zLook at all relevant aspects of financing

New focus on e.g.: zIncreasing public sector revenue that can be used for self-financing of forest sector zDeveloping unified implementation mechanisms and financing delivery systems zImproving business environment zTapping new international mechanisms and instruments

Example: Guatemala (1) zPolitical framework of the forest sector zBasic concepts: ymulti-functionality, yinter-sectorality, ysustainable use and conservation, ycontribution of forest sector to poverty alleviation, yknowledge management yaccess to and distribution of benefits zExisting mechanisms: analysis, conventional sources and mechanisms of financing.

Example: Guatemala (2) zPotential mechanisms: yimprovement of existing mechanisms, yidentified new mechanisms in Guatemala: water fund, fund for support in reforestation, subsidy for assurance, municipal funds, payment for water and for ecosystem services by municipalities. yProposal for new mechanisms, inventory of interesting systems in Costa Rica, Colombia and Brazil zAnalysis of the legal, institutional, economical framework, contribution of forest sector to GNP, competitiveness of forest sector.

Example: Guatemala (3) zPriority actions and involved actors: yanalysis of scenario, yplantations, yknowledge management, yindustrial development, yperspectives for PES, yrequired financing.

Guatemala: Action Plan (for every action with involved actors) yPolitical framework yInternational commerce and international free trade yFormation of human capital yInvestment climate yIndustrial development and transference of technology yPES yExecution of the strategy yMonitoring, Control and Evaluation yNecessary conditions for implementation

Example: Ecuador zMulti-functionality of the forest and financial mechanisms zLegal and institutional context: national (including laws of other sectors: water, tourism, mining, electricity), regional and local level. zParticipation of the environmental and forest sector in national spending, investment and contribution to national economy. zExisting financial mechanisms for environmental services, environmental goods, and goods& services (combined).

Ecuador (2) zFinancial mechanisms for: yPromotion of SFM of native forest for providing goods and services. yConservation of protected areas and surroundings yDevelopment of productive forests

Ecuador (3) zTransversal and intersectoral mechanisms: yLegal framework and institutional aspects yNegotiation climate and juridical security (e.g. land ownership, land use planning) yLegal and institutional aspects of mechanisms for PES yNational plan for afforestation and reforestation yIntersectoral perspectives yFiscal measures

Process in Latin America: zFind a national institution interested to move ahead with the Financing Strategy. zSelect two national consultants: yforestry yeconomics/financing. zPrepare ToR and training of consultants: yvarious countries in a sub-regional workshop zPrepare draft strategy in about 3 months zValidation in a national workshop zFine-tuning of the documents zPresentation in second sub-regional workshops

Investments Goods and services Payment Sources Goal: Increment Revenues Types: Environmental Services Goods (timber, NTFP) Tax reduction Sources: Society, State, consumers, NGO etc. SFM by forest owner/ Manager (Communities, State, NGOs, private enterprise) Financing (distribution) mechanism State Bank Fund Project/ Programme (Bundling) Payment (revenue) mechanism Market Negotiated deals State Fund (Bundling) Plantations/Natural Forests/ National Parks /Agroforestry Enabling environment for financing strategy Guided by national forest programme (nfp) principles Financing Sources Goal: Reduce Costs Liquidity provision Risk Mitigation Types: Subsidies Tax reduction Credits Investments Funds Sources: State, Donors, Banks, institutional investors, pension funds, stock market Source of concept: Savenije & van Dijk, persComm National Forest Financing Strategy: a multi stakeholder process

Our model: zInput financing zOutput financing zEnabling environment zNfp as framework (nfp principles)