Forest Declaration Assessment Special Report: Emerging Forest Finance Instruments

In the last few years, emerging forest finance instruments from both public and private initiatives have hit the scene, with the potential to contribute to global forest objectives. The Glasgow Leaders’ Declaration on Forests and Land Use set the ambitious goal of ending and reversing forest loss by 2030. Delivering on these goals requires, among other things, increasing the commitment and disbursement of new green finance for forests, using innovative approaches to increase private sector engagement and create new forest funding streams.

Innovative financial instruments are being designed to blend financing from different sources, reduce risks for investors, crowd in private finance, and improve access to financing for Indigenous Peoples and local communities (IP and LCs). At the same time, a number of forest country governments have developed dedicated finance mechanisms.

This Forest Declaration Assessment Special Report provides a summary of several emerging forest finance instruments, highlighting the financing barriers they can help to tackle, and lessons learned from real-world use cases. Instruments covered include:

• Bonds
• Forest funds
• Debt reduction instruments
• New market mechanisms
• Indigenous Peoples and community-led funds

The paper concludes with six core principles for forest financing. Under each, recommendations are made for how emerging forest finance instruments can and should be linked to broader economic, policy, and regulatory levers. Achieving the 2030 forest goals requires an all-hands-on-deck approach, with deeper collaboration and coordination between public and private funders at global and local levels, and financial instruments that are better tailored to their target landscape.

The Forest Declaration Assessment is a collaborative process carried out by civil society organizations and researchers, known as the Forest Declaration Assessment Partners. Previously the NYDF Progress Assessment, the Forest Declaration Assessment has since 2015 published annual updates on progress toward global forest goals. All assessment findings undergo a rigorous peer review process conducted by experts across the globe.