Forest economics and finance

Financial and economic forces are major factors affecting the way that forests are managed. FAO's work on forest finance examines the way that forest policies and institutions can use these forces to improve forest management.



FAO conference on the economics of climate change mitigation highlights the role of forests 27 February 2015 How best to mitigate climate change and curtail global warming is now an established debate. With a new climate change regime expected to emerge from the upcoming UNFCCC's Climate Change Conference in Paris in November, forestry may gain the limelight in climate mitigation discussions. The significant mitigation potential forests have to offer has been highlighted by a recent UN FAO-led international conference on the economics of mitigation options in the forest sector. [more]
Forests, money and jobs: new FAO study on forestry sector in national economies 10 December 2014 FAO has released a new study on the socioeconomic importance of the forestry sector, Contribution of the forestry sector to national economies, 1990-2011 , that provides figures for employment, value-added and export earnings as well as trends in productivity at the global, regional and country level. The publication shows how the forestry sector’s importance varies between regions and examines how forestry has coped with the challenges of the global economic crisis. Among its findings, the study demonstrates how the forestry sector declined in Europe, Northern America and Oceania, but nearly doubled in Eastern Asia and grew moderately in Africa and Latin America over the decade. It also shows how global exports of forest products rose by 10 percent between 2000 and 2011 to US$421 billion, and that tropical Asia and China now account for 20 percent of total exports, compared to 10 percent ten years ago. [more]

Why is forest finance important?
Many of the world's forests are still managed primarily for the commercial production of goods and services. Yet, increased awareness, international conventions and globalization of markets are highlighting the importance of sustainable forest management to achieve broader development goals. Forest finance is important as it affects the feasibility of shifting from unsustainable to sustainable practices, the distribution of costs and benefits amongst different stakeholders, and consideration of the non-market costs and benefits of forests. Furthermore, the financial and economic implications of managing forests in different ways are important factors that influence the implementation of sustainable forest management.


Work on forest finance at FAO
FAO works on the topic of forest finance at a number of levels. At the national level, FAO provides technical guidance, tools and analyses on a wide range of issues, such as: financing mechanisms; forest valuation; economic analysis of forest policies; trends in costs and prices; and forest revenue systems. At the local level, this work includes: development of innovative financing instruments; cost-benefit analysis of forestry projects and policies; training and guidelines for economic appraisal; and the valuation of non-market goods and services from forests. This work is implemented as part of FAO's regular programme of activities as well as through field projects at the regional and country level.

These webpages present the results of two recent projects:

  1. An assessment of the Latin America experience with financing mechanisms in support of sustainable forest management;
  2. An examination of fiscal policies within the context of sustainable forest management and the implementation of national forest programmes in Africa.

They also present some tools, models, other studies and relevant links on the subject of forest economics and finance that may assist countries in the financial and economic analysis of the forest sector and in the development of financing strategies.

last updated:  Friday, February 27, 2015