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.

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.

The contents of these webpages. 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.