33. Significant resources have been made available through existing, new and emerging mechanisms to issues that are closely connected to forests, across and within different countries and regions in recent years.
34. The Rio Conventions have relevant forest activities and financing initiatives, limited to the objectives and activities within those conventions. A large part of new financing initiatives that have some relation with forest-related projects, outside the private sector, are linked mainly to climate change, and then to biodiversity.
35. Forest carbon and forests’ contribution to climate change mitigation and adaptation has been one of the main driving forces behind financing climate change forest-based activities during recent years. The potential for REDD+ to contribute to forest financing is large, estimated at as much as USD 6.2 billion in 2020, and has led to unprecedented attention to the carbon potential of forests, in particular through REDD+ schemes. Around USD 4 billion were pledged for the period 2010–2012 for measures to reduce greenhouse gas emissions from deforestation and forest degradation in developing countries. At the global level, institutions such as GEF, World Bank, UN-REDD, and REDD+ Partnership are active in this field.
36. Apart from REDD+, whose focus is on the carbon content of forests, many of the national, regional and international carbon initiatives have no or negligible activities related to forests, although activities related to efficiency and electrification within these initiatives might have positive impacts on forests.
37. Forest-based carbon markets and trading schemes are still relatively new and are not yet well established. There is however broad optimism regarding the potential for carbon trading schemes to provide a new revenue source for forest landowners and rights-holders, and employment opportunities for those involved in carbon market related projects. REDD+ related initiatives are credited with much of the voluntary carbon market growth in 2009 and 2010. The majority of suppliers in voluntary carbon markets are from the private sector, followed by non-profit organizations and the public sector.
38. The contribution of forests to combating land degradation and desertification also offers an important financing opportunity for many countries. The investment in these areas is attractive to national governments due to the support of sustainable production systems that in turn benefit a large number of land users. These efforts are often at the nexus of current land use decisions where forests are vulnerable to loss and degradation but have the potential to enhance sustainability and resilience of ecosystem service flows.
39. New developments within the three Rio Conventions have undoubtedly created new resources for forests, with much of the additional funding directed to or in support of meeting the overall objectives of the these Conventions, namely: UNFCCC, CBD and UNCCD. These resources are of direct or significant relevance to forests and address the range of services and benefits derived from forests. This increases overall recognition of the significance of forests for tackling a number of global challenges, and for the success of other sectoral and cross-sectoral policies and actions at the national and global levels.
40. However, this has also led to an unintended situation in which mostly carbon, biodiversity and land services of forests are taken into account while other aspects of sustainable forest management receive limited or no funding. There is still a lack of recognition of the significance of the multiple functions and dimensions of sustainable forest management as a standalone issue at the global level as well as national levels. The significant flow of finance that targets the carbon content of forests has led to a focus on predominantly high forest cover countries with high rates of deforestation, leaving out those high forest cover countries with lower rates of deforestation, low forest cover countries and SIDS, trees outside forests, and plantations from receiving proper funding under the relevant schemes.
41. New and innovative market-based sources of finance are being developed in many countries, including for example PES schemes, bioprospecting, eco-tourism, greening commodities and complementary biodiversity payments in REDD+. Many of the innovative financing mechanisms require policies that recognize and valuate the vital environmental services forests provide. These financing mechanisms also require broader enabling frameworks that ensure reinvestment of monetary benefits back into the forest sector. Socio-economic valuation of forests is also needed make it possible to determine economic returns and to include them in the investment agreements and political decision-making.
42. Reviews caution against the assumption of the global applicability of PES mechanisms. The most important source of payments for services is still international governmental and non-governmental support. Due to various national legislative frameworks and laws, the way PES is approached and executed varies from one country to another. Moreover, further analyses are necessary to explore the wide range of potential services and consumers of PES for forests.
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