Valuation and incentives
Forest conservation and sustainable forest management has to make tangible economic sense to all the groups whose activities have the potential to impact on forests. Being able to demonstrate the full range of ecosystem values and their economic benefits is one part of this equation. Another is to find ways of equitably capturing these values and benefits over the long term, so that they can put in place incentives for local communities, private sector actors and governments to promote sustainable forest management.
Economic instruments can be wielded either to benefit or undermine conservation and sustainable management of forests. In recent years significant advances have been made in the development and use of economic incentives and valuation tools to promote forest conservation and sustainable forest management. Despite this, both economic and forestry planners and policy makers have limited awareness of the availability and use of these tools and methods.
Forests typically receive little or no compensation for the services that they provide from the beneficiaries of these services. Recognition of this flaw has encouraged the development of 'payment for environmental services (PES)'. The PES approach suggests those who provide environmental services should be compensated for doing so and those who receive the services should pay for their provision. On the ground, this equates to downstream users such as urban water supply or hydropower companies paying upstream communities and institutions involved in forest conservation activities for watershed maintenance. Similarly, it can be viewed as forest protection communities or institutions being paid for the global carbon sequestration benefits that their forest protection results in. The success of such mechanisms will however depend on the accurate valuation of these services and on establishing incentive structures and institutions that are both practical and equitable. Payments for environmental services should be regarded as one of many tools in the toolbox for good forest management and protection. Valuation and incentives should be viewed as a means to an end, and not as ends in themselves.
To learn more about IUCN's work on Economics, Valuation and Incentives, click here.