SFM for economic development

Often, there is a considerable gap between the income that can be earned from SFM compared with some agricultural land uses, such as oil-palm plantations or the production of soybeans or pineapples; this gap is known as the opportunity cost. The economic potential of a large part of the global forest area is under-realized because of a lack of SFM. Tapping this potential would help reduce the opportunity cost of forests and contribute to national and local economies by generating income, employment and fiscal revenue and stimulating infrastructure development. In numerous countries, the current level of wood removals falls short of the annual increment (i.e. tree growth) and could therefore be increased with appropriate management measures. Opportunities also exist to generate more income from the harvesting of non-wood forest products (NWFPs) and the marketing of forest environmental services. The large opportunity cost of forests compared with some other land uses is due partly to a lack of local market opportunities, inadequate capacity to implement SFM, and a lack of financing for forest-based investment and the provision of environmental services. Nevertheless, schemes are emerging to increase payments for environmental services (PES) through market or other mechanisms to ensure the maintenance and enhancement of such services. Examples of such schemes are REDD+, biodiversity offsets, conservation easements, and watershed protection payments. SFM has an essential role to play in green economic development, and it is possible there will be greater recognition of this role in the future, including through increased remuneration for forest owners and managers.

Major investments are needed to meet future demand for industrial roundwood and forest-based biofuels (which are a potential substitute for fossil fuels, thereby helping reduce greenhouse gas emissions). Such investments in planted and other forests as well as in downstream processing, if implemented in line with SFM principles, would yield multiple economic benefits through income and employment, improved livelihoods, strengthened safety nets, and greater environmental conservation.

Forest owners and managers have differing time horizons that influence their decision-making on how forest lands are used for growing trees or other uses. The net financial benefits over time between land-use options can be measured by rate of return. For land to remain forest the rate of return should be positive and preferably higher than that derived from putting forest into other land use (provided that the legislation allows it). Products elaborated with legally-harvested timber.The time horizon in forestry is always over a long period while in other land uses decisions are often made over short periods, which complicates decision-making.

Continuously improving efficiency and outcomes in SFM implementation are also important for the forest-based industry to ensure the availability of cost-competitive raw materials and for nations to ensure a continuous contribution to economic growth. Monitoring the costs and benefits is therefore necessary for SFM.

In addition to the formal economy, SFM strategies need to consider the integration of the informal sector. Small-scale forest users operating outside the regulatory system play important roles in developing countries by generating local employment in the small-scale harvesting and processing of non-wood and wood products, as well as in ecotourism and the provision of environmental services.

last updated:  Monday, August 22, 2016