understanding of the full economic benefit forests can bring, so they barely appear on the political agenda. Introduction

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1 Introduction The UNFF Facilitative Process was born out of the Resolution on the Means of Implementation for Sustainable Forest Management, adopted at the Special Session of UNFF9. It is one of the two main components of the UNFF strategic work on financing sustainable forest management, and primarily aims to assist developing countries mobilize funds for sustainable forest management. The Facilitative Process was launched with a project on identifying gaps, obstacles and opportunities in financing SFM in Small Island Developing States (SIDS) and Low Forest Cover Countries (LFCCs). A report on forest financing commissioned by the Advisory Group on Finance of the Collaborative Partnership on Forests (CPF) showed that the two categories to have suffered the most from the drop in donor forest financing in the past two decades were SIDS and LFCCs. Small Island Developing States (SIDS) & Low Forest Cover Countries (LFCCs) Out of the 78 countries analysed in this project, 49 are Low Forest Cover Countries and 38 are Small Island Developing States (with an overlap of 9 countries, which fall into both categories). Together they represent 40% of the world s countries, but are home to a little less than 4% of the world s forest cover. Most LFCCs are located in Africa, the Middle East and Central Asia, where naturally arid or semi-arid conditions and low rainfall inhibit forests from growing into a natural vegetation cover. Forested areas of LFCCs are often badly degraded, yet rehabilitation offers low incentive for private sector investment, making public financing necessary. Still there has been little cohesion in accessing funds at the international level. As for SIDS, they fall into three categories: Caribbean, Pacific, and AIMS (which refers to Africa, Indian Ocean, Mediterranean and South China Sea ). With SIDS, land use pressures are high mostly due to the small size of these countries and high density populations. Too often in SIDS and LFCCs there is a poor understanding of the full economic benefit forests can bring, so they barely appear on the political agenda. The Importance of Forests in SIDS and LFCCs It is tempting to argue that the resources to manage 4% of the world s forests located in SIDS and LFCCs would be better spent in high forest cover countries where most of the planet s forests are concentrated. However, both SIDS and LFCCs are home to crucial forest ecosystems for a number of reasons. Forests have historically been highly fragmented in both categories of countries, which means that they are often home to many endemic species. This is particularly the case in SIDS. Moreover, they perform a range of vital ecological functions: they provide clean water a rare and valuable asset both on small islands and in arid countries; they prevent erosion (which in turn protects coastal fisheries) and landslides (a major threat in mountainous SIDS); and mangrove forests protect coastal areas against sea-level rise. Finally, in both SIDS and LFCCs, they are often home to a rich variety of fruit and nuts, and thus complement the diets and often the household incomes of many local communities. Overview and Structure The SIDS/LFCC Project has three main components, the first two focusing on data collection and validation through 11 papers and four inter-regional workshops on forest financing. The third component revolves around two pillars: (i) elaborating a common forest financing strategy for both SIDS and LFCCs (as well as Africa and LDCs, part of a sister project funded by the German Government), and (ii) implementing a communication strategy to disseminate these findings to stakeholders, that is mindful to advocate a cross-sectoral perspective. It is well recognized that many causes of deforestation lie outside the forest sector, such as in agriculture or infrastructure development. Likewise, forests can have a profound economic impact on connected sectors, most notably via

2 climate change. While forests contribute significantly to the national economy, even help reduce poverty, these linkages are barely acknowledged by many decision-makers and rarely implemented in policy or practice. Gaps and Obstacles Data obtained during Components I and II revealed a number of constraints characteristic of SIDS and LFCCs. Over half of LFCCs do not have established forest policy strategy, and half of the LFCCs do not even mention forests in their Poverty Reduction Strategy Papers (PRSPs), which may explain the low level of forestry ODA allocated to this category of country. These factors indicate that in many LFCCs, forests are simply not on the political agenda. This problem is by no means new, and this lack of political attention has ramifications which can feed back in vicious cycles. Many LFCCs do not have specialised ministries or agencies devoted to forests, so those government bodies left responsible for forests have difficulty hiring qualified technical personnel, in the absence of appropriate training programmes or relevant research. This was even visible during the data collection phase of this project, as indicated by the limited level of participation in both the survey (Component I) and workshops (Component II) mentioned. Consequently, governments are unable to raise public awareness of the importance of forests to livelihoods and economic development, which might encourage investment. Even when funding is available, it is hard to justify increased expenditures when this complex technical experience is absent. This problem is shared with most SIDS, albeit for different reasons. Institutional weaknesses of LFCCs are often due to the perceived limited contribution of forests to GDP figures (which reveal only the limited profit value of timber). In SIDS these deficiencies are symptomatic of their relatively small populations, which rarely reach the critical mass necessary for developing the specialized coursework required for adequate forest-related institutions. In both categories of countries, the interviewed stakeholders emphasized the scarcity of data on SFM and forest financing in their countries, preventing them from fully evaluating their forests as dynamic resources in themselves and as contributions to local livelihoods, let alone GDP. While the cross-sectoral nature of SFM has been well understood amongst researchers for over a decade, it is only now starting to be recognised by decision-makers. It rarely gets mentioned in policy documents of SIDS and LFCCs, and remains difficult to find reflected in national statistics. As a consequence, the myriad connections between forests and other financial sectors go unreported, and therefore don t get translated into policy or practice. The need for cross-sectoral data is all the more important for LFCCs, whose forests, due to their limited profit value, are frequently not considered a sector per se, and instead get subsumed into other sectors like agriculture or primary industries. In order to make forests more visible both in statistics and political agendas recognising the cross-sectoral nature of SFM is vital. Recommendations Based on the observations from the workshops in Component II, the following recommendations emerged as potential solutions to secure forest financing and implement SFM more effectively: 1. Harness Opportunities Specific to SIDS and LFCCs. Each country should capitalise on its own unique strengths in order to tap opportunities specific to the cross-sectoral nature of SFM: - Harnessing the potential of non-timber forest products, including water, gum, nuts and fruit, both for subsistence and commercial purposes; - Recognising the value of forests to food security both locally and globally, especially in areas of high biodiversity; - Encouraging the implementation of payments for ecosystem services, an instrument that has yet to be fully deployed in SIDS and LFCCs; - Promoting the ridge-to-reef approach, especially in SIDS, to increase visibility of forests for potential financing;

3 - Including trees found outside of forests, to emphasise continuity between forests and other types of land use; - Promoting forest landscape restoration in areas of SIDS and LFCCs identified by the Global Partnership on Forest Landscape Restoration. 2. Strengthen Institutions at all Levels. Limited capacity and weak coordination were identified at national, regional and international levels, leading to the following recommendations: - Promoting capacity-building activities that enable national agencies and other stakeholders to secure forest financing more effectively, whether from national, international or innovative sources; - Setting up national processes composed of members of the Collaborative Partnership on Forests (CPF) with the aim of (i) inserting chapters on forests into the respective national instruments of the Rio Conventions and (ii) drawing up national forest financing strategies; - Strengthening the role of regional organisations, including (but not limited to) the Secretariat of the Pacific Community (SPC), the Secretariat of the Pacific Regional Environment Programme (SPREP), the Caribbean Community (CARICOM), the Association of Caribbean States (ACS), the Organisation of Eastern Caribbean States (OECS), the Economic Commission of West African States (ECOWAS), the Permanent Inter-State Commission to Combat Drought in the Sahel (CILSS), and the Economic Cooperation Organisation (ECO). - Encouraging cooperation with regional organisations by scaling up real-life examples of forest financing, carrying out audits of the needs of SIDS and LFCCs in terms of forest financing, and promoting South-South cooperation and exchange of experiences between SIDS and LFCCs. - Urging donors at the international level to streamline and simplify access to forest financing for SIDS and LFCCs, given the vulnerability of their economies and ecosystems. 3. Reveal the Potential of the Private Sector. Stakeholders highlighted that the role of private companies should be strengthened and enhanced in the following ways: - Encouraging governments and national agencies to implement an enabling environment, particularly in reducing the risks of investments in SFM, including non-timber forest products. This includes stable forest taxes and policies, as well as clear land tenure systems; - Encouraging private stakeholders to invest in non-wood forest products with commercial value such as gum Arabic and shea butter through information-sharing and partnerships; - Committing to ensuring that the actions of private actors in other sectors with impact on forests and trees outside of forests, including extractive industries (for example oil, gas and mining), are consistent with national sustainable forest management plans. On all three points above, public financing (whether domestic or official development assistance) could play a key catalytic role. 4. Promote Research and Data Management. The extent of the lack of knowledge on forests, their values and financing in SIDS and LFCCs was revealed by this project and should be addressed in the following ways: - Building on the list of workshop participants to develop a network of forest financing experts, with the aim of sharing knowledge and experiences at the national level; - Encouraging Member States to carry out a full valuation of forest goods and services, in particular with regard to connected sectors, revealing the importance of forests to local and national economies; - Establishing a communication/marketing strategy aimed at decision-makers outside of the forest sector, based on the results of forest valuation, underlining the importance of forests not only to the forest timber sector, but to all 7 billion of us; - Promoting research coordination on forest financing between academic and other institutions, and strengthening existing initiatives

4 such as the University Consortium of Small Island States (UCSIS); - Urging the Organisation for Economic Cooperation and Development (OECD) to take account of the cross-sectoral nature of forest financing in data on official development assistance. Conclusion The most glaring conclusion with both SIDS and LFCCs is that cross-sectoral data is simply unavailable, confirming not only that most forest financing stakeholders continue to work in silos, but that research entities responsible for data collection and statistics have largely failed to take into account linkages with other sectors when building databanks. This too often results in overlooking the contribution of forests to the broader economy, especially in terms of (i) food security for both subsistence and commercial means (notably through agroforestry), (ii) preventing soil erosion (thus acting as a natural barrier against desertification and siltation of nearby fisheries and coastal areas) and (iii) providing clean water (an extremely precious resource in many LFCCs). SIDS and LFCCs have largely been left out of the past two decades of international discussions on forest financing, and with a few exceptions have actually seen forest financing levels drop. This project s holistic cross-sectoral perspective is key to reversing this trend.

5 SIDS & LFCC Countries Country SIDS LFCC 1 Afghanistan 2 Algeria 3 Antigua and Barbuda 4 Bahamas 5 Bahrain 6 Bangladesh 7 Barbados 8 Belize 9 Burundi 10 Cape Verde 11 Chad 12 Comoros 13 Cuba 14 Djibouti 15 Dominica 16 Dominican Republic 17 Egypt 18 Fiji 19 Grenada 20 Guinea-Bissau 21 Guyana 22 Haiti 23 Iceland 24 Islamic Republic of Iran 25 Iraq 26 Ireland 27 Israel 28 Jamaica 29 Jordan 30 Kazakhstan 31 Kenya Country SIDS LFCC 32 Kiribati 33 Kuwait 34 Kyrgyzstan 35 Lesotho 36 Libya 37 Maldives 38 Mali 39 Malta 40 Marshall Islands 41 Mauritania 42 Mauritius 43 Federated States of Micronesia 44 Mongolia 45 Morocco 46 Namibia 47 Nauru 48 Niger 49 Oman 50 Pakistan 51 Palau 52 Papua New Guinea 53 Qatar 54 Saint Kitts and Nevis 55 Saint Lucia 56 Saint Vincent and the Grenadines 57 Samoa 58 Sao Tome and Principe 59 Saudi Arabia 60 Seychelles 61 Singapore

6 Country 62 Solomon Islands SIDS LFCC 63 South Africa 64 Suriname 65 Syrian Arab Republic 66 Tajikistan 67 Timor-Leste 68 Togo 69 Tonga 70 Trinidad and Tobago 71 Tunisia 72 Turkmenistan 73 Tuvalu 74 United Arab Emirates 75 Uruguay 76 Uzbekistan 77 Vanuatu 78 Yemen Total Overlap 9 Grand Total 78 Contact Us United Nations Forum on Forests Secretariat Department of Economic and Social Affairs DC2-2301, Two UN Plaza, New York, NY 10017, USA Phone: / Fax: facilitativeprocess@un.org

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