One of the main challenges many countries face in reversing forest degradation and deforestation is to increase the competitiveness of good forest management and its attractiveness for investment. To face this challenge, answers are sought to the question of how to broaden and diversify the financial basis for sustainable forest management (SFM). In many countries, financing often remains confined to selected activities, ad-hoc, and limited to a small number of traditional financing instruments such as credits and subsidies. Furthermore, reliance on government and bi- and multilateral aid as main funding sources for SFM remains high.

At the same time, the multiple values of forests are increasingly recognized and several innovative and promising financing mechanisms are emerging and put into practice. They are generating additional and new revenues to forest management and helping to make investments in SFM more attractive and feasible.

In an effort to better understand the variety and effectiveness of forest financing mechanisms in Latin America, a leading region in the development of innovative financing mechanisms, FAO and its partners (list), with the support of (list) carried out two projects with the following purposes:

• To compile a comprehensive assessment of the Latin America experience with financing mechanisms, and
• To help increase the capacity of national forest programs for the participatory development of national strategies of forest financing.