How private investment money can help the landscape

What does it mean to invest in trees and landscapes, where in Africa can this be done and how do you invest sustainably and profitably in trees and landscapes? The recently released proceedings of the Investment Forum on Mobilizing Private Investments in Trees and Landscape Restoration 2011, answers all these questions.

The World Agroforestry Centre’s Head of Impact Assessment, Frank Place along with other authors define landscapes as “clusters of local ecosystems with a particular configuration of topography, vegetation, land use, and settlement.” Viewing landscapes in this way shows that investors are an intimate part of the landscape because they make investments which significantly affect land use, whether through direct production investment or investment in trade and processing, suggest the authors.

Local ecosystems within landscapes include agricultural systems, biodiversity, agroforestry and other components that make up local economies. These cannot be managed by simply focusing on interventions at the farm level. Since all these components are linked at a landscape level, private investors are being asked to consider all the elements of a landscape as a whole. In so doing, they will be positive contributors to landscape health and restoration. If the ecological health of landscapes is invested in, the report says private investors stand to profit in partnership with the rural poor who mostly depend on landscape resources for their livelihoods.

The authors report that “many sustainable environmental initiatives such as agroforestry practices are demonstrating their promise to commercialize tree products. The challenge that remains is to find ways to scale up promising investments in a way that will have a clear impact at the landscape level.” Clearly, private investors have a large part to play in realizing the potentials trapped in trees and landscapes.

The report suggests that market trends indicate that Africa is dotted with landscapes where production of trees on farms and in managed forests has grown dramatically to meet market and subsistence needs. Some examples cited include sustainable agricultural practices like the parkland systems of the Sahel, watershed restoration such as the national efforts in Ethiopia and the protection of critical biodiversity and water systems such as the transboundary programme to protect the Kagera River basin.  

Frank and the team are convinced that for these dots to become a canvas, all the societal demands for multiple benefits must converge with private sector investment opportunities that promote landscape restoration.

The conclusions from the forum suggest that little convergence has occurred because private sector investors and land managers are focused on realizing profitable opportunities while public and civil society actors are focused on restoring forest cover and ecosystem services. There needs to be real and sustained dialogue between these two major groups for convergence to be accomplished.

Sadly, there are factors that are slowing down the private sector from participating fully. Some key factors outlined in the proceedings include varying patterns of land and forest tenure, hesitant international investment, weak governance and armed conflict. On the other hand, forum participants strongly warned that encouraging investments without broader landscape goals would have a negative impact as well as reduce profit margins. The authors reason that there is a way to satisfy both the needs of “investors who are seeking an attractive rate of return and the needs of sustainable and socially responsible impact.”

These needs can be satisfied by investing in small and medium size enterprises that are supported by soft and hard funds. Soft investments are those made to improve capacity and institutions which then raise returns to ‘hard’ private sector investments. In light of their proximity to landscapes, Frank et al. suggest that these enterprises should have the potential to manage and restore landscapes in ways that can achieve social, environmental and economic objectives.

Thus a way of achieving the end goal of restoring forests and landscapes while also stimulating grassroots economic and social development through climate-smart investments is for donors, multilaterals and governments to combine their soft funds with private sector hard funds. Examples of soft funds include “supporting institutional reform and financing intermediaries that are often crucial in helping SMEs overcome their isolation from markets, investors, and political influence.” Soft and hard funding may also promote institutional reform via policy reforms.

Without policy reforms, authors say even though there is momentum towards decentralization of landscape management, investments in trees and landscape restoration are at risk of being left out of the policy agenda. As an example, the report states that, “A simplified regulatory regime that favours the capacity of producers to manage trees could contribute to expanding markets.”

A large part of the battle towards converging investments with landscape restoration could be won if policy reforms can succeed in revitalizing forest organizations. “Forest organizations are generally underfunded and not aligned with the major thrusts of rural development efforts.” “The skill set that characterizes forest organizations in much of Africa and the budget processes that allocate public resources for forest management are largely irrelevant for meeting the challenges of managing trees in farming systems.”

As the document outlines, although there will always be challenges such as Payment for Ecosystem Services (PES) and quality improvement processes that require constant monitoring and evaluation, private investments within landscapes need to continue to be a multi-stakeholder effort supported by soft and hard funding in combination with policy reforms.

INVESTING IN TREES AND LANDSCAPE RESTORATION IN AFRICA was written by a team of authors from the World Bank, Program on Forests, World Agroforestry Centre, EcoAgriculture Partners, the International Union for Conservation of Nature, the International Institute for Environment and Development and Trevaylor Consulting.

Download the forum proceedings here.

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