SFM for economic development

In many countries, the current level of wood removals falls short of the annual increment (i.e. tree growth) and could therefore potentially be increased with appropriate management measures and safeguards. 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. Opportunities also exist to generate more income from the harvesting of non-wood forest products (NWFPs) and the marketing of forest ecosystem services. The large opportunity cost of forests compared to some other land uses is due partly to inadequate market opportunities for the wide range of forest products and services beyond the well-known commercial timber species, insufficient capacity to implement SFM, and lack of forest-based investments. Nevertheless, various schemes of payments for environmental services (PES) are emerging and have been successfully trialled and implemented in some cases.

Major investments are needed to meet future demand for industrial roundwood and forest-based biofuels (which are a potential substitute for fossil fuels, and could thereby help 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 purposes. For land to remain forest, the net present value of forest management should be higher compared to other potential land uses. The time horizon in forestry is generally over a longer period than for other land uses, which complicates decision-making particularly when considering the risks associated with the longer timeframe (e.g., uncertainties over future tenure, regulations and markets, natural disasters, pests and disease).


Products manufactured with legally-harvested timber. ©FAO/Roberto Faidutti

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.

Increasing trade in forest products has supported economic growth and eradication of poverty in a number of emerging countries. However, some cases of forest product trade are characterized by monopsonies (in which a single buyer substantially controls the market) and exploitive market chains that have led to further marginalization of disadvantaged people in some countries. Safeguards must be firmly put in place to ensure that trade is based on legal and sustainable forest use, fair working conditions and equitable sharing of rights, responsibilities and benefits. Good governance is essential in enabling sustainable and equitable production and trade.


Related SFM Toolbox modules:

Forest finance 

Forest certification 

Management of non wood forest products 

Wood harvesting 

Forest law enforcement 

Wood energy

last updated:  Tuesday, November 3, 2020