Understanding Forest Bonds

New release: Understanding Forest Bonds Report

Various estimates put the annual needs for tropical forest finance in the order of tens of billions of dollars by 2020. As part of its work on Proactive Investment in Natural Capital, GCP helped lead a collaborative initiative to better understand the potential use of bonds to fill that short-term gap in forest finance.

The first part of this initiative was Unlocking Forest Bonds, a high-level workshop on tropical forest finance held in London in February 2011. Bonds are a familiar financing mechanism in some sectors, such as health and energy, and are seeing increased use to finance mitigation of and adaptation to climate change. Bonds may be useful for financing forests too.

Unlocking Forest Bonds brought together a broad range of experts on tropical forest policy and finance to highlight the specific challenges of using a bond for the conservation and sustainable use of forests, and how those challenges may be overcome. The workshop was co-hosted by GCP, WWF’s Forest and Climate Initiative and the Climate Bonds Initiative, and supported by Goldman Sachs and Fondation 1796 (Lombard Odier).

Building on outcomes from the workshop and further engagement with key experts, GCP also produced Understanding Forest Bonds. This paper provides a clear introduction to forest bonds and discusses some of the key policy and financing considerations in their use.

Materials
Understanding Forest Bonds
Unlocking Forest Bonds: Workshop Report

Further Reading
Forest Investment Review, Forum for the Future, 2009
An Emergency Package for Tropical Forests, Prince's Rainforests Project, 2009
Forest-backed Bonds Proof of Concept Study, Forum for the Future & EnviroMarket, 2007

Press
Environmental Finance (Sept 2011): WWF calls for forest bond market to finance conservation Investment and Pensions Europe (Dec 2011): Forests into fixed income (requires free registration)

Useful Links
WWF’s Forest and Climate Initiative
Climate Bonds Initiative
Canopy Capital
World Bank Green Bonds
International Finance Facility for Immunisation