Local Financing Mechanisms for Forest and Landscape Restoration
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21 Local financing mechanisms for forest and landscape restoration - A review of local-level investment mechanisms Local financing mechanisms for forest and landscape restoration A review of local-level investment mechanisms For more information, please contact: Forestry Division– Natural Resources and Sustainable Production [email protected] www.fao.org/forestry/en ISBN 978-92-5-134102-5ISSN 2664-1062 Food and Agriculture Organization of the United Nations Rome, Italy FORESTRY WORKING 9 789251 341025 FAO PAPER CB3760EN/1/03.21 21 ISSN 2708-1206 Local financing mechanisms for forest and landscape restoration A review of local-level investment mechanisms FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS Rome, 2021 Required citation: Besacier, C., Garrett, L., Iweins, M. and Shames, S. 2021. Local financing mechanisms for forest and landscape restoration – A review of local level investment mechanisms. Forestry Working Paper No. 21. 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FAO information products are available on the FAO website (www.fao.org/ publications) and can be purchased through [email protected]. Requests for commercial use should be submitted via: www.fao.org/contact-us/licence-request. Queries regarding rights and licensing should be submitted to: [email protected]. Cover photograph: A woman plants some seeds while taking part in a Sahelian plants growth testing and reforestation project in Malamawa village, Zinder Region, Niger on July 30, 2019. ©FAO/Luis Tato III Contents Acknowledgements ............................................................................................ vii Abbreviations and acronyms ........................................................................... viii Definitions ............................................................................................................ix Executive summary .............................................................................................xi 1. Introduction: The financing of forest and landscape restoration needs ... 1 1.1. Purpose of this document .....................................................................3 2. Overview of mechanisms for financing forest and landscape restoration 5 2.1. Forest and landscape restoration investment needs ..........................5 2.2. Mechanisms for financing forest and landscape restoration .............9 2.3. How each mechanism is described: overview, an example and conducive conditions for success ...................................................... 11 3. Financial mechanisms.................................................................................... 13 3.1. For-profit financial mechanisms ......................................................... 13 3.2. Not-for-profit financial mechanisms .................................................. 21 4. Market mechanisms for financing forest and landscape restoration ...... 27 4.1. Payments for ecosystem services ........................................................ 27 4.2. Market development for timber and non-timber forest products and value chains .................................................................. 31 4.3. Sustainability standards and certification ........................................34 4.4. Ecotourism .......................................................................................... 37 5. The coordination of finance for forest and landscape restoration ......... 41 5.1. The need for coordination .................................................................. 41 5.2. Mechanisms to coordinate finance ....................................................43 5.3. Timing of forest and landscape restoration investments .................46 5.4. Pathways to financing restoration at the landscape scale ...............48 6. Conclusions and way forward ..................................................................... 57 7. References and further reading ................................................................... 61 IV Case Studies ....................................................................................................... 65 1. Short-term loans: The ‘Imdodi Rushd’ microloan foundation, Tajikistan .............................................................................67 2.Medium- and long-term loans: Specialized credit line providing loans to community forest enterprises, Maya Biosphere Reserve, Guatemala ................................................................ 72 3. Equity mechanism: Moringa and Cafetalera Nica-France Out-growers, Nicaragua ......................................................77 4a. Guarantee mechanism: The Multilateral Investment Guarantee Agency and EcoPlanet Bamboo ............................................ 81 4b. Guarantee mechanism: The Swiss Lumber Company out-grower scheme, Ghana ....................................................85 5. Public finance instrument: The Brazilian ‘Ecological ICMS’, a fiscal transfer to enhance ecosystem protection ................................89 6. Grants: The GEF Small Grants Programme, Peru ....................................95 7. Payments for ecosystem services: Pagos por servicios ambientales in Costa Rica .....................................100 8. Market development for secondary tree and non-timber forest products: Acacia and agroforestry through the Mampu project, the Democratic Republic of the Congo ...........................................................................106 9. Certification scheme: Rainforest Alliance CertificationTM of banana farms – Global .............................................. 112 10. Ecotourism: The Olare Orok Conservancy, Kenya .............................. 117 V Boxes The Economics of Ecosystem Restoration .....................................................7 The ‘Imdodi Rushd’ microloan foundation, Tajikistan .............................. 14 Specialized credit line providing loans to community forest enterprises, Guatemala................................................................................ 16 Moringa’s equity investment in the Cafetalera Nica-France Out-growers programme, Nicaragua ......................................................... 18 The Multilateral Investment Guarantee Agency and EcoPlanet Bamboo, Central America and Southern and West Africa ........................20 The Swiss Lumber Company out-grower scheme, Ghana .........................20 The Brazilian ‘Ecological-ICMS’: A fiscal transfer between states and the municipalities enhancing the protection of ecosystems .............23 The GEF Small Grants Programme – Cultivating tara trees to reforest degraded riverbanks in El Agustino, Peru ............................... 25 Payments for ecosystem services, Costa Rica ............................................