Sustainable Forest Finance Toolkit - PwC

Small scale and community forestenterprises briefing note1 of 1New Application HOMEWhat is the issue?There is growing recognition of the importance of small andcommunity-based forest enterprises as key players inmeeting the challenges of the forestry sector.These enterprises are owned and managed by individualfarmers, local community groups or forest-dependentpeople, and involve a range of forest products and services.Local community and forest dwellers’ access to greatereconomic and social benefit is a growing discussion withinthe topic of sustainable forest management. Small scale andcommunity forest enterprises have the potential to reducepoverty while enhancing environmental accountability andpromoting sustainable resource management. They alsosupport the preservation of local and indigenous cultures,and promote entrepreneurship.Key ChallengesForest areas controlled or managed by local communitieshave grown significantly, and there are many initiatives andprogrammes designed to promote community forests.However, these small enterprises face many difficulties.According to organisations involved in promoting communityforestry initiatives, key challenges facing small scale andcommunity forest enterprises include:• Insecure land rights• Difficult policy environment (e.g. too much bureaucracy)• Lack of bargaining power• Lack of access to legal knowledge• Insufficient business knowledge and managementcapabilities• Difficulties accessing credit• Lack of access to technologyThese challenges make it difficult for small and communitybased forestry enterprises to access credit from the privatesector. Successful financing efforts provide for investmentsin human and infrastructure resources to address thesechallenges. Integrating secure land ownership and userights, developing management capabilities and gainingaccess to legal support can improve the likelihood of asuccessful financing partnership.Fairtrade TimberObtaining a fair price for wood is vital to small andcommunity based forestry enterprises. Currentcertification schemes do not differentiate or provide afair price for such initiatives.A new initiative has been introduced by FSC andFairtrade to explore this possibility. FSC and Fairtradelaunched a pilot project in 2009 to create a FSC-Fairtrade dual certification system for community basedforest products in the marketplace. The aim of this newinitiative is to generate greater economic benefits forlocal communities.Page 28pwc