Funding for sustainable forest management

Many development agencies and financing mechanisms provide funding for forestry through loans, grants, equity investment, co-funding etc. 

Financial institutions that focus on the developing world provide financial assistance for development projects which fit their strategic goals and can demonstrate tangible financial and economic returns.

The funding policies and priorities of development agencies to the forestry sector are increasingly oriented towards fulfilling the objectives of sustainable forest management as laid down in the "Forest Principles" adopted at the UN Conference on Environment and Development (UNCED) in 1992, and the proposals for action by the Intergovernmental Panel on Forests (IPF) and Intergovernmental Forum on Forests (IFF).

While agencies ideally want to achieve a balance between conservation and development, in practice the emphasis is placed on promoting conservation and environmental protection. In addition, many agencies promote the participation of the private sector and non-governmental organizations (NGOs) in forestry activities alongside a requirement to strengthen institutional capacity within official and non-governmental bodies.

Major development agencies have permanent representatives or visiting officers in developing countries. They maintain close contacts with governments, private sector, NGOs and other civil society organizations. Their work is to evaluate country economic potentials and constraints and they can assist institutions in identifying and preparing development strategies and projects.

International financing institutions

International financing institutions were established by developing and developed countries to promote social progress and economic development. They are a major catalyst in mobilizing resources for the development of member countries.   

  • They finance the development of projects in member countries through loans and equity investments.
  • They promote investment of public and private capital in development projects and supplement private investment when private capital is not available on reasonable terms and conditions.
  • They provide technical assistance for the preparation, financing, and implementation of development plans and projects; for reforming economic and sectoral policies of developing member countries; and for coordinating development policies of its member countries.
  • They foster and support economic reform and adjustment and social progress.

Lending terms vary from one institution to another but usually follow recommendations of an assistance committee. Decisions depend on how an institution intends to mobilize its financial resources. Most financing institutions also have a specific fund for lending on concessional terms to countries classified as economically less developed. In any case, policies for lending to governments are based on a country's special situation - its economy, access to other funds, needs, priorities, national development plans, creditworthiness etc.

The information on this and the following pages in this section is derived from the following sources:

Blanchez, J.L. & Fantinet, M. 1997. Funding for forestry development. Rome, FAO.

Anheier, H.K. (ed.). 1999. Private funds, public purpose: philanthropic foundations in international perspective. Kluwer Academic / Plenum Publishers.