The recent forest financing study by the Advisory Group on Finance (AGF) of the Collaborative Partnership on Forests (CPF) noted increased interest among countries to establish and effectively manage national forest funds to support sustainable forest management. National forest funds, in their most basic form, are designed to set aside a portion of national revenues for foresty purposes and exist for more than a single government budget cycle. While in some cases they were established as part of the national forest programmes, in others they were constituted as windows under national environment funds. Despite their existence in more than 50 countries, and their increased importance in recent years, currently, there is little information on their use or on potential ways and means of improving their functioning. This working paper endeavours to address this gap.
It is the outcome of a joint initiative by the Food and Agriculture Organization of the United Nations (FAO) and the Deutsche Gesellshaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) and aims to improve our understanding of this institutional mechanism and of the frameworks within which they are established. After describing the key elements of national forest funds, it discusses a set of elements that serve as a starting point for developing a fund performance assessment methodology. Drawing on some practical experiences of countries operating national forest funds, it illustrates how different funds can be compared and evaluated.
In times of tight public budgets, there is a growing need to ensure that public investments are of "good value for money" and that international finance is translated into national action in the best way. This requires not only efficient and effective resource allocation and usage, but also having in place appropriate monitoring and evaluation tools and ensuring an overall robust financial architecture and good governance mechanisms.
We hope this publication will serve as a useful analytical contribution to this goal and to the ongoing international dialogue on improving forest financing for sustainable forest management.