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Ringing the changes with a new approach to forest investment

Duncan Macqueen

Briefing, 4 pages

Three trends lie behind renewed investor interest in forestry: tightening supply, increasing demand, and its role as a hedge against financial uncertainty. But people with local rights invariably live in forests, however sparsely, and forests are crucial ecosystems for everyone. So quality investments must balance acceptable returns, social justice and environmental sustainability. Investing in Locally Controlled Forestry (ILCF) is a negotiated framework for striking this balance. It promotes innovative partnerships to mix enabling investments (that put in capital to build sustainable and investable businesses) with asset investments (that expect a return on capital). In other words, quality investment in forestry comes when development donors offer targeted enabling investments that can in turn attract the right sort of asset investments. Case studies from Asia, Africa and Latin America illustrate how this balance can be achieved.

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