Sustainable forest finance

Vital goods and services with no price?

While the economic value of certain natural products such as timber is reflected through global trade, this often isn't the case for other important environmental goods and services provided by forests (e.g. preventing severe water run-off and regulating climate). Such environmental goods and services are largely perceived to be free of charge.

As a result, forest goods and services are often not responsibly managed, with devastating economic effects on societies in addition to the negative biodiversity consequences. What is more, the associated costs are often unequally borne by the poorest and most marginalized groups of these societies.

Payments for Ecosystem Services

Payment for Environmental Services, or PES, is a scheme to ensure that those who benefit from environmental goods and services pay those who provide these services.

This could mean, for example, that downstream users of water cleansed by an upstream forest, such as bottling companies or townfolk who extract drinking water from the river, pay those who manage these upstream forests to ensure a sustainable flow of this service into the future.

Paying to protect the forest
Charging for the benefits provided by forests and other natural ecosystems is a way to recognize their value and ensure that these benefits go well beyond present generations. This involves managing resources in a manner that ensures they continue to generate the environmental services.

Shared benefits
In addition to benefiting biodiversity, such schemes also have the potential to benefit poor landowners who manage these environmental services.

PES schemes require an assessment of the economic value of the forest benefits to the different stakeholders. Based on this value, a fair market fee is derived as payment by the beneficiaries to compensate those who help to protect. This way, forests can continue providing their environmental services.

Reducing forest-based greenhouse gas emissions

Reducing emissions from deforestation and forest degradation (REDD) is a way of paying poor forest countries to protect their forests and address climate change. These countries, such as Indonesia, Brazil or Papua New Guinea, could be paid "voluntarily", or payments could be linked to carbon markets.

More on reducing emissions from deforestation, and what WWF is doing

Offsetting carbon emissions

There is already a growing market providing economic and financial incentives for offsetting carbon emissions. WWF is working to ensure that forest carbon projects are well designed and do more than just reduce global warming.

There also needs to be social and environmental safeguards to ensure that biodiversity conservation, and the rights of poorer local communities and indigenous peoples are not compromised.

More on what WWF is doing about offsetting forest carbon emissions