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Forest governance

An economic cost-benefit analysis of forest conservation and restoration in Nicaragua

Program Summary

This PROFOR activity aims to provide evidence to the Government of Nicaragua on the economic benefits of forest landscape restoration activities. The knowledge generated from this activity will be disseminated to policy makers who will improve their decision-making on investments going towards rural livelihoods and incomes, reduced GHG emissions, and greater climate risk resilience.


Based on climate change projections, water availability is likely to decline in most of Nicaragua's watersheds. A three-year drought, coupled with massive deforestation in the past few decades, has depleted most of Nicaragua’s water sources which is threatening the country’s future water supply. In fact, the country has lost up to 60 percent of its surface water sources and up to 50 percent of its underground sources, which have either dried up or have been polluted. Such diminished water availability will severely impact human health, agricultural productivity, hydropower generation, and a suite of other economic activities.

The government of Nicaragua recognizes that restoring forest cover is indispensable to safeguarding agricultural production and minimizing the impacts of climate variability on economic and human well-being. Under the National Reforestation Plan, the government is not only addressing the reduction of carbon emissions, but also aiming to increase awareness of the importance of reversing deforestation, increasing forest coverage, and improving the production of environmental services provided by forests.

To assist the government’s efforts, PROFOR will provide analysis on the ecosystem service and economic benefits of forest landscape restoration activities, including disseminating information to decision makers on the trade-offs of different restoration scenarios. The results can guide the Nicaraguan government on implementing potential forest landscape restoration programs by providing potential prices for payment for ecosystem services and identifying the low-cost/high-benefit alternatives in watershed conservation, forest protection, and carbon sequestration. PROFOR will generate various restoration and investment scenarios that could open restoration and reforestation opportunities for farmers, local communities, and the private sector, including agribusiness and ecotourism.  


This PROFOR activity consists of the following tasks:

  • Analysis of the costs of environmental degradation. This task will estimate the costs of environmental degradation resulting from land degradation and deforestation, droughts, soil degradation, fire, flooding, and other natural disasters. In addition, the analysis will estimate the costs to Nicaragua associated with climate change. This task will provide the analytical underpinnings to target interventions for climate change adaptation and mitigation.

  • Benefit analysis of a potential program for watershed conservation and landscape restoration in Nicaragua. This analysis will estimate the benefits of forest and landscape restoration on the value of multiple ecosystem services across the country by estimating the net value of ecosystem service benefits (such as ecotourism, carbon sequestration, water quality, agriculture, soil protection, etc.) under different reforestation scenarios. It will also explore the economic potential of changing land use (such as degraded agricultural land) to restore native forest, or for agroforestry.

  • Recommendations on policies, regulations, incentives and plans to improve forest and land conservation. Different system dynamic modelling tools will be used to analyze various scenarios where investments and policies could improve Nicaragua’s forest landscape restoration.  

By accomplishing these tasks, the program will inform and improve the Nicaraguan Government’s knowledge on how to promote policies and regulations that increase forest conservation, support a nature-based economy, and increase watershed conservation and landscape restoration in the country.   



This activity is on-going. Results will be reported as the implementation of this project progresses over time.



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Last Updated : 10-05-2017

Programmatic Approach on Forest Management in South Asia


Countries in South Asia are increasingly committed to the improved management of the region’s forests, including for the purpose of making progress towards individual Intended Nationally Determined Contributions (INDCs) for mitigating and adapting to climate change. 

However, South Asia faces significant challenges in managing its forest sector. For example, decades of conflict in Afghanistan have led to substantial forest loss, while in India, forest cover has stabilized but forest quality is deteriorating. In other countries, development pressures from expanding settlements and agriculture are driving the conversion of forestlands.

As the pressures on forests continue to grow, it is imperative to better understand and measure the current economic contribution of forests, including the costs of forest degradation. It is equally important to assess the efficacy of current regulations and policies around forests, accompanied by an assessment of institutions and technical capacity, where needed. Lack of policies on payments for ecosystem services, for instance, can hinder beneficial forest management activities for reducing sediment in the upper catchments of hydropower plants, or prevent communities from benefitting from such payment mechanisms. At the same time, weak institutions and lack of technical capacity can prevent even the most progressive forest policies from supporting inclusive and sustainable economic growth. 


The objective of this activity is to inform policy dialogue and strategic engagement on forests with South Asian countries as governments move towards sustainable and inclusive economic growth. This programmatic approach consists of the following activities:

  • Afghanistan Capacity Development for Natural Resource Management (NRM): In Afghanistan, conflict and the lack of adequate governance structures and management and institutional capacity have heavily damaged the natural resource base that the majority of the population relies on, particularly in rural areas. This activity aims to: (i) raise awareness about the NRM role in supporting livelihoods, enhancing resilience, and reducing vulnerability to climate change and disaster risks; and (ii) assess the capacity of key institutions to implement the newly adopted NRM Strategy.
  • Forests, Poverty and Resilience in Bangladesh: The World Bank is undertaking a Country Environmental Analysis focused on urban areas, to demonstrate cost-effective development pathways that tackle acute pollution levels and natural resource degradation in Dhaka, while at the same time controlling congestion and environmental externalities in newly growing cities. As part of this larger activity, PROFOR funding will support an investigation into natural infrastructure’s potential benefits for climate resilience in urban areas and peripheries. Outputs will include an analytical report on the cost of forest degradation in terms of lost revenues, incomes for local communities, and increased damage from extreme events; engagement workshops to consult key stakeholders and discuss the direction of the assessments, the preliminary findings and policy implications; and dissemination workshops.
  • India Forest Sector Assessment: To better understand current and emerging challenges in forest management, this activity will assess the demand and supply of forest and timber resources in India, as well as the economic costs of the timber trade and forest fires, and the scope for forest-related agribusinesses to generate jobs. In addition, the activity will identify options for restoring degraded forests, sustainably managing forests, and strengthening forest monitoring and evaluation.
  • Pakistan Forestry Sector Engagement Study: Pakistan’s diverse forest resources face rapid deterioration as a result of land conversion by large development projects, and overexploitation by poor communities who have few livelihood alternatives. In response, this activity aims to better understand the contribution of the forestry sector to achieving the country’s development priorities. PROFOR is supporting a review of forest sector policies and management practices through the collection and analysis of secondary information, as well as stakeholder consultations with federal and provincial government officials, development partners, civil society organizations and research institutions.
  • Nepal Forests, Poverty and Tourism: The aim of this project is to strengthen the Government of Nepal’s capacity to better manage its natural resources, to deliver on its national goal to reduce poverty through sustainable and inclusive growth. The activity outputs will include: (i) A policy assessment of current practices in management of natural resources, including for tourism purposes and current and potential linkages between conservation, hydropower development, and tourism; and (ii) an engagement note describing the potential contributions of forests to economic growth and jobs, sustainable water resources management, and hydropower development.
  • General Knowledge Management: To disseminate the knowledge generated from the various country activities, this component will share experiences and best practices among policy makers and technical experts from the region, including through workshops and study tours, and produce regional and cross-country policy briefs to inform forests investments and policy design.


  • In Afghanistan, this activity has supported stakeholder mapping of relevant actors’ capacity and influence in the NRM sector; engagement with government and partner organizations; a video conference on climate finance; a capacity assessment technical workshop for Afghanistan’s Natural Resources Management Strategy; and a final report.
  • In Bangladesh, a background paper on “Managing Urban Wetlands for Resilience” is being developed, laying out the case for protecting and restoring urban wetlands as an essential component of Bangladesh’s urban development agenda. A workshop was held to share preliminary findings with various government ministries, and also received significant media coverage.
  • In India, a report is being finalized on forest fire prevention and management practices in India. A workshop was held in New Delhi to identify relevant lessons from experiences in other countries, and build consensus for areas to improve and how to address these in a national action plan. In addition, work on non-timber forest products (NTFPs) is underway, and is already informing the design on the World Bank Himachal Pradesh Forest for Prosperity Project. This study aims to provide an overview of the potential and constraints affecting the market development of important NTFP products collected in state-owned forest lands by local communities and marketed through existing private and public channels.
  • In Nepal, a joint paper with T&C is being produced to inform the World Bank Nepal Tourism Project. In addition, case studies are underway looking at nature-based tourism that provide community benefits while managing environmental impacts.   
  • In Pakistan, a study is being finalized on the forest sector, its key economic and ecological contributions, and the relevant challenges. 

This activity is ongoing. Findings will be shared on this page when they become available.

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Last Updated : 12-13-2018

From Low-tech to High-tech: Practical Tools for Making Forest Operations Legal

It’s not clear what exactly constitutes Sustainable Forest Management (SFM); in fact, there isn’t wide consensus on how to define it.[i] What is evident is that healthy forests support a wide range of services for ecosystems and livelihoods – from food and firewood, to erosion control, pollution mitigation, and carbon storage – and that good governance is essential for ensuring that these benefits persist. Forests are also a valuable economic good, and their sustainable use creates jobs and brings revenue. Conversely, weak forest management is often associated with illegal logging, forest degradation or deforestation, the loss of ecosystem services, and the marginalization of people who depend on forests for their livelihoods. Precisely because forest governance is most apparent in terms of outcomes - whether positive or negative - tangible guidelines for forest governance as a process are needed.

The Toolkit of Forest Control and Supervision: Practical Field Guidance, supported by PROFOR[ii], meets this need by providing low-cost, hands-on tools for forest management. The Toolkit was primarily designed for the government officers of forest agencies, particularly in tropical countries seeking to implement timber legality verification systems.

Indeed, the demand for certified sustainable wood products has grown as governments and development organizations have recognized both the environmental damage associated with illegal forest activities, and the global economic loss: the World Bank estimates that governments lose as much as US$5 billion annually from evaded taxes and royalties on legally sanctioned logging alone.[iii]  However, in many cases timber-producing countries are not prepared to meet the verification requirements laid out by legislation (such as the amended US Lacey Act, the EU Timber Regulation, and the Australian Government’s Illegal Logging Prohibition Bill) or international agreements (including the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)).    

The Toolkit’s first component is a user’s field manual for verifying the legal origin of timber, with a focus on inspections in forests, sawmills and lumber yards – an important step towards verifying that the volume of timber actually harvested matches the volume planned, and complies with forest regulations. The modules provide details on how to organize an inspection team, how to determine if a particular tree is missing, and how to calculate the volume of standing trees and different timber products, among other procedures. The chapter also provides a list of lessons learned from forest-rich countries like Nicaragua and Costa Rica, emphasizing best practices such as avoiding conflicts of interest within forest monitoring systems, which might arise from receiving financing from logging companies, for example.

The second component in the Toolkit provides guidance for setting up logging contracts between the forest industry and indigenous peoples’ (IPs) communities. Some 60 million IPs are totally dependent on forests, and as demand for valuable timber continues to grow and IP land rights are increasingly recognized, contracts between IPs and loggers are becoming more frequent. The goal of this module is to improve logging contracts for the benefit of IPs, including by supporting community-run committees for forestry monitoring. Practitioners from Bolivia and Peru provided essential input to this component, as documented experiences related to commercial relationships between loggers and IP communities are practically non-existent.

One of the primary goals of the Toolkit was to strike a balance between providing the tools necessary for forest control and supervision, and keeping the them simple, practical and user-friendly.

"We often think that improving forest monitoring requires expensive technology,” says Tuukka Castrén, Senior Forestry Specialist and lead author. “This is only partially true. While modern ICT can help us tremendously to improve transparency and accountability, lots can be done with low-tech solutions as well. Having a systematic and well-structured approach to monitoring and community engagement takes us a long way, even if the methods we use are still manual. The good thing is that mobile devices and other technology can then be introduced gradually. This Toolkit describes a low-cost model for improving forest governance. More advanced systems can then be built on this once we have more resources and experience."

Besides supporting government officers in implementing national forest strategies, the authors anticipate that the Toolkit will also be helpful to national scientific and management authorities, World Bank Task Team Leaders (TTLs), the private sector, local communities, and NGOs and other civil society involved in sustainable forest management.


[i] The most widely inter-governmentally agreed-on language on SFM is represented in the non‒legally binding instrument (NLBI) on all types of forests of the United Nations Forum on Forests (UNFF): “Sustainable forest management as a dynamic and evolving concept aims to maintain and enhance the economic, social and environmental value of all types of forests, for the benefit of present and future generations.”

[ii] The toolkit incorporates lessons learned from field activities financed by the Forest Law Enforcement and Governance trust fund, which closed in 2013.

[iii] World Bank (2008). Forests Sourcebook. Washington, DC


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Last Updated : 12-16-2016