November 2014: The World Bank Program on Forests (PROFOR) is launching two publications on trends, drivers and tools for private investment in forests.

‘Business Climate for Forest Investments: A Survey’ provides an overview of tools and methodologies to assess the investment climate for sustainable forest management (SFM) and wood processing. Noting that developing and systematically updating a new forest-sector-specific investment tool would be too costly, the publication proposes the development of an online portal for ‘Forest Business and Investment Climate Assessment’ that includes methodologies for measuring the investment climate in the forest sector; a conceptual framework for measuring this investment; and links to existing tools, indicators and case studies.

Domestic and foreign private financing and investments need to increase significantly to scale up sustainable forest management (SFM), protect forests from competing land uses and create value-added economic growth and employment, according to ‘Private Forest Financing for SFM and Forest Products in Developing Countries-Trends and Drivers.’ The publication reviews private, forest sector finance and presents a roadmap for improving access to finance. It identifies barriers to private investment finance in SFM in developing countries such as; higher real and perceived risks related to insecure land tenure as well as currency, environmental, political, and social risks; weak availability of domestic and foreign equity and loan financing; unfavorable financing terms, such as high interest rates and short loan payback periods; and higher up-front costs of preparing projects.

To address these challenges, the paper recommends, inter alia: strengthening data collection and the information base; recording and publishing information on domestic investments; improving access to private financing; strengthening land tenure systems; reducing investment risks through innovative financing, public-private partnerships and guarantees; and improving forest sector governance and transparency. The publication also presents case studies on industrial plantation investments in Argentina, Brazil, Cambodia, China, Indonesia, the Lao People’s Democratic Republic, Malaysia, Viet Nam and Africa.

The publication launch event will take place on 18 November 2014 at World Bank headquarters in Washington, DC, US. [PROFOR Press Release] [Publication: Business Climate for Forest Investments: A Survey] [Publication: Private Forest Financing for SFM and Forest Products in Developing Countries-Trends and Drivers]