Alliances for forest landscapes

How an IKI project is cooperating with the private sector to promote forest landscape restoration in Paraguay.

All over the world, forests and forest landscape restoration (FLR) make key contributions to climate change mitigation, the conservation of biological diversity and sustainable development. Forests are carbon sinks and also provide a number of other essential ecosystem services, such as protecting soil from erosion. Sustainably produced timber is a versatile ecological resource, and its production and processing also create many local jobs and income opportunities.

This means that the forest and forest restoration land-use sector is a key sector for many developing and emerging countries as they work towards achieving their Nationally Determined Contributions (NDCs). Measures relating to these NDCs include agroforestry, afforestation, reforestation and forest conservation. The suitability of a particular measure depends on the requirements and priorities of landowners and local interest groups, as well as location, technical feasibility and financial viability, and the respective country’s national policies as applicable to this land-use sector.

Already threatened by deforestation and degradation, forest landscapes worldwide are now coming under increasing pressure from the Covid-19 pandemic and its economic impacts, which even now cannot be estimated in full. Like many regions, Latin America was especially hard hit by the pandemic, with Paraguay clearly showing the magnitude of its impact. An estimated 280,000 people are now expected to be living beneath the poverty line as a direct result of the pandemic. The pandemic is therefore also having an immediate impact on land use and the forestry sector. More forested areas are now being illegally cleared due to economic hardship, with the aim of creating new agricultural land or selling timber, for example. These pandemic effects are endangering the successes of the past few years, in which Paraguay has made efforts to restore forest landscapes and to improve forestry sector sustainability by introducing fixed standards.

Forest landscape restoration needs private investment

While public funding alone is not capable of fully utilising the global potential for forest protection and the restoration of degraded forest landscapes, it can nonetheless create favourable general conditions and lead by example. Public funds therefore have an essential role to play as a catalyst in the mobilisation of financial resources from the private sector. This work may involve the identification of viable business models, the removal of technical and financial barriers to investment, the development of green credit lines and loan products or the calibration of supply and demand.

Since 2019, a project funded by the International Climate Initiative (IKI), 'Upscaling Private FLR Investments in Latin America', has been active in El Salvador, Paraguay and Peru. As the implementing organisation for this project, UNIQUE forestry and land use GmbH has been working with the impact investor Finance in Motion to develop bankable FLR investments, promote improvements to FLR measures, and develop robust impact monitoring systems for financial institutions looking to offer green credit lines and loan tailored to FLR requirements.

FLR alliances for Paraguay

The IKI project is also working on specific FLR measures that focus on Paraguay. In this context, the project is forming alliances and partnerships with local actors from the private sector who are funding and implementing sustainable forest management. These alliances also extend to public bodies and research establishments, aiming to interlink project activities with research and development work, and to ensure appropriate knowledge transfer.

Two sub-projects have been implemented within these alliances to date. In cooperation with local tree nurseries and the University of Asunción, the IKI project produced seedlings from high-quality seeds that had been sourced from selected native seed trees growing in regional primary forests. The seedlings were handed over to local forestry businesses with the aim of establishing an initial afforestation of pilot and test plots with local tree species. This first step is intended to provide proof of technical feasibility, financial implications and their upscaling. The businesses have agreed to tend the pilot plots and ensure their upkeep over the long term. With their indigenous tree species, these plots constitute a vital step towards locating alternatives to eucalyptus monocultures in the context of forest landscape restoration. The goal is to ensure that commercial growers recognise the potential and significance of native tree species in the future, and are given incentives to diversify their business along more ecological lines. Successful pilot areas such as these plots are an essential and important initial step.

The IKI project is also helping forestry businesses to cooperate with smallholders as part of ‘out grower’ programmes, which involve these farmers planting trees on their land. Specifically targeting smaller-scale landowners, these programmes enable smallholders to reforest degraded, unproductive pastureland and diversify their income without high opportunity costs. Farmers are provided with high-quality seedlings, materials and technical assistance from companies in the programme, and proceeds from the timber sold are shared. These kinds of fair participatory models not only create economic synergy effects but also increase the potential for reforestation in countries like Paraguay.

FLR Centre of Excellence in San Pedro

As part of its Corona Response Package, the IKI provided the project in Paraguay with top-up funding of EUR 500,000 and extended the duration of the project until 2024 as a way of countering the various negative trends related to the pandemic as mentioned above. These additional funds will be used to set up a Centre of Excellence for Forestry in San Pedro, a department in eastern Paraguay whose economy traditionally focused on high-volume beef production. In recent years, a handful of professional, FSC-certified timber plantation businesses have set up shop here with the aim of producing high-quality wood. The expansion of sustainable forest management and forest restoration offers a wealth of opportunities for the region, working together to increase the volume of certified timber production and create local high-value jobs. At the same time, ecology-oriented land use helps to conserve biodiversity while working to mitigate greenhouse gas emissions.

The sector currently faces a number of challenges, however, resulting from the as-yet undeveloped state of the market for sustainable and certified timber, and a lack of professional service providers and skilled personnel. If this skills shortage persists, then the large-scale restoration of biodiverse, natural forests to the benefit of the climate and biodiversity conservation could fail.

With this in mind, the IKI project is helping to set up a broad-based network with the aim of developing targeted training courses, technical support and dialogue platforms for producers. These training courses range from technical modules focusing on forestry-based measures such as the upkeep, thinning out and harvesting of suitable tree species, to professional training for service providers, with support offered in relation to personnel management, business plan development and management, sustainable practices and certification.

At the same time, local and national authorities as well as research institutions are being included, to encourage extensive dialogue between the interest groups. This dialogue aims to establish points of contact for the funding of research and development projects as well as improvements in forest management.

Training modules and coaching

The training modules and coaching sessions, which are offered free of charge, are of great importance to forestry businesses, and are focused in particular on local service providers, so as to promote business development and job creation for the benefit of local communities. In particular, FLR measures are targeting young people in rural areas with the aim of offering them a set of attractive and secure employment prospects in a labour market that heavily impacted by the Covid-19 pandemic.

The measures increase the readiness of investors to invest in FLR projects while also establishing a necessary level of confidence in the fact that sustainable and successful land-use management beyond traditional land-use models is both possible and attractive. Accordingly, commercial businesses are likely to want to participate in the training programmes and provide training personnel, for example. With this project, the IKI is therefore promoting sustainable and certified forestry that will be maintained by a new generation of young foresters with the necessary skills. This will also work to promote a much-needed generational change and shift in perception that is essential in order to protect forests and to restore degraded forest landscapes.

This article is part of the IKI Annual Report 2020 - Active for International Climate Protection. For more information, please visit the special page on the IKI Annual Report 2020.