Investment guide to ‘triple win’ from locally controlled forestry

News, 24 September 2012
Discussions between investors and forest rights-holders have resulted in new guidance for investments that can create a ‘triple win’ of returns for investors, livelihood security for local communities and protection for forests.
A man waters seedlings at a nursery at the Rukinga Wildlife Sanctuary in Kenya managed by Wildlife Works Carbon.

A man waters seedlings at a nursery at the Rukinga Wildlife Sanctuary in Kenya managed by Wildlife Works Carbon. Photo: The Forests Dialogue

The advice on investment in locally-controlled forestry appears in a forthcoming guide by the Growing Forest Partnership (GFP) initiative, and will be presented today (24 September) at COFO21, the conference of the Committee on Forestry at the Food and Agriculture Organisation of the United Nations (FAO).

"We believe almost any individual or group with imagination, enthusiasm and access to expertise can build and manage a successful forest enterprise that yields sustainable returns," says Gary Dunning of The Forests Dialogue (TFD). "The guide shows how investors and forest-dependent communities can form mutually-beneficial partnerships that deliver social, environmental and economic gains."

The guide emerged from eleven meetings TFD organized on behalf of Growing Forest Partnerships initiative, itself catalysed by the International Institute for Environment and Development (IIED), the International Union for the Conservation of Nature, the Food and Agriculture Organization and the World Bank.

These meetings gathered indigenous people, family foresters, researchers, government representatives, investment bankers, donors and philanthropists to share views on the role of investment in the forest sector.

The new guide presents their insights along with 17 case studies from across the world, from new to long established businesses, in both developed and developing countries. It shows how investing in locally-controlled forestry offers investors secure access, a 'social licence to operate', reduced risks and better long term management opportunities, as well as evidence of social and environmental sustainability.

"Investment in locally controlled forestry not only leads to improved economic outcomes, it also improves the political economy in a manner that can help governments in developing countries shift onto a more sustainable, low-carbon development path," says the guide’s lead author, Dominic Elson. "Local controlled enterprises mean better asset protection and a higher sustainable income from forest resources in future."

The guide looks in detail at how to encourage a happy marriage between 'enabling investments' that prepare the ground for commercial success and ‘asset investments’ that seek a return, usually as profit or products.

"Strong businesses generate profits worthy of asset investment," says Chris Buss of IUCN, who led the team that produced the guide. "But growing those businesses may need enabling investments from NGOs, philanthropists or governments for infrastructure, capacity building or to secure and formalise commercial forest rights. Recognising these two investment roles offers a credible way to support enterprises that are too big for microfinance but too small to attract conventional investment or financial services."

Duncan Macqueen of IIED, who also contributed to the guide, adds: "About a quarter of the world’s forests are locally controlled, by members of three major alliances of indigenous peoples, forest communities and private family smallholders. These forests provide livelihoods for a billion people, and goods and services worth US$75—US$100 billion per year. What’s missing is the investment that can boost these benefits in a sustainable way and put local people in the driving seat."

The guide also includes a roadmap to successful investment in locally controlled forestry. This covers the business stages of: proposition, establishment, validation, preparation, negotiation and performance; with specific advice on challenges for both investors and enterprises.

To request a copy of A Guide to Investing in Locally Controlled Forestry, please email forestry@iied.org

The COFO21 side event “Investing in Locally Controlled Forests (private investment, small forest enterprise)” is on 24 September at 13.00-14.30 in the Iran Room (B-016).

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