Forest economics and finance
Nfps For All: Financial mechanisms for nfp
This training module builds on experiences generated in various countries around the world and aims to help national institutions to develop comprehensive national financing strategies as an element of their national forest programmes. Basically a national strategy for forest financing consists of an overall vision of all the financial needs and means to promote the sustainable use and conservation of forests in a given country according to its policy and development objectives. The strategy should provide guidance to policy-makers and forest stakeholders on how to finance, in the short and long term, planned activities for sustainable forest management, taking into consideration the multi-purpose management of forest resources and ecosystems.
This workshop can be seen as an initial step to bring together stakeholders that are relatively new and probably unfamiliar to each other. The traditional forest officer is often not familiar with colleagues from the Ministry of finance, and private banking managers often know little about forest apart from the occaisional tourist visit. This workshop should thus help establish new networks and assist in creating some common understanding about conventional and innovative ways to finance forest management, be it through plantations or conservation, with community involvement or through private enterprise.
This module seeks to help participants:
- understand the role of financing mechanisms in the context of the national forest programme development and develop a sense of urgency in developing a financing strategy;
- critically assess existing financing mechanisms in their strengths and weaknesses and role towards achieving nfp objectives and SFM at large;
- broaden their views on the attribution of economic values of forest functions and their relevance for developing a financing strategy under the nfp; and
- agree a plan of action to initiate the elaboration of the financing strategy with involvement of relevant stakeholders.
Part one: Visioning a financial strategy for SFM
In this first section, participants will familiarize themselves with the required elements of the the financial strategy and the financial mechanisms model will be introduced.
By the end of the session participants should:
- Be familiar with the workshop participants' stakes and interests in financing SFM
- Have an understanding of the role of a financing strategy for SFM as part of the country's nfp.
- Have a shared understanding of the analytical model on financing mechanisms
- Have a shared understanding of investment instruments and their potential role for improving Sustainable Forest Management in the country.
Tools and materials
- Workshop objectives (69kb) Presentation outlining the main aims of the exercise.
- Visioning a Financial Strategy for SFM: Conceptual Model & Required Elements (241 kb) Presentation introducing the main types of financial mechanism and their interelationships
- Valuation of Forest Functions (127kb) An overview of tools and methods for forest valuation.
- Exercise: valuation of Functions (64 kb) An exercise fo workshop participants to consider forest economic values.
- Investments: an introduction (93 kb) An overview of the nature and qualities of finacial investments.
- Assignment ‘financing through investments’ (46 kb) An excercise to analyse and brainstorm the existing types of forest investment in a country.
Part two: Country experience with financial mechanisms and enabling environment
This second part of the workshop focusses on the appraisal of existing financing mechanisms by applying the conceptual model in the country context. The analysis of responses from the questionnaire will provide a first impression on existing knowledge and experiences among the participants. The workshop materials offer the possibilities to make use of such experience but is equally suitable in cases where participants are relatively new to the idea of financing mechanisms. Facilitators should decide where to make use of participants case experiences.
The enabling environment for financial mechanisms is closely related to the institutional context in the country. This includes amongst other a conducive legal framework, appropriate technology and capacities, supportive power structures etc. Institutions or 'rules of the game' can assist in building trust among different stakeholders who, without which they would not be willing to deal with each other. Issues such as contractual arrangements, legal enforcement and conflict resolution mechanisms are examples.
By the end of the session participants will be able to:
- appraise and compare the existing financial mechanisms in the country
- find information on case studies and resources on innovative mechanisms and experiences gained with their use and introduction.
- Characterize the enabling environment for development of a strategy for financing sustaianble forest management
Tools and materials
- Plenary discussion investments (63kb) Questions to consider on investment opportunities.
- Markets for forest goods and services (155kb) Presentation covering key considerations in creating markets for forest goods and services
- Assignment: Markets for forest goods and services (30kb) Group exercise for considering country opportunities for different market innovations
- Financing Mechanisms: Plenary discussion (63kb) Key questions for consideration about investment and market opportunites
- Assignment: Exploring the enabling environment for existing and new financing mechanisms (33kb) Group exercise to consider the necessary preconditions for successful financing
Part three: Strategy development
By the end of this session participants will:
- have a broad understanding of enabling factors for Sustainabler Forest Management
- have a shared understanding of some of the priority areas for action in developing an enabling environment
- have agreed on the necessary steps to be taken for developing a country financing strategy for SFM
- have clarity on the follow up steps to be undertaken and the agreed roles among stakeholders
Tool and materials
- Reflections on the conceptual model and strategy development process (82kb) An overview of content so far, and some country examples of financial mechanisms from Latin America
- Questions to define the Steps (phases) in the strategy development process (63kb) Key questions when considering how to develop a strategy and take it fowards
- Financial strategies: how to start? (100kb) This document covers lessons learned from previous processes, provides a sample outline financing strategy and some country case studies.
For further information, please contact:
[email protected]; Tel. +39-06-5705-4424
Forestry Policy Service (FOEP)
Viale delle Terme di Caracalla, 00100 Rome, Italy