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Innovative Financing for Sustainable Forest Management in the Southwest Balkans


In many countries—particularly in the Balkans—most of the environmental services provided by the sustainable management of forests and uplands are seldom quantified, often not valued, and even more rarely captured by the owners/managers of these resources. Capturing these benefits has the potential to enhance the environmental management of forest resources, protect landscapes from erosion and downstream water systems from siltation and flooding, increase carbon sequestration (with a possible decrease in consumption of fossil fuels), while at the same time helping to address rural poverty.

To increase the likelihood of payment for these environmental services, the value and scale of the benefits generated need to better understood.


With support from multiple partners including PROFOR, the World Bank’s Europe and Central Asia staff is undertaking two case studies to assess:

  • the benefits of sustainable upland forest and land management for downstream water users, and
  • the effectiveness of increasing the use and efficiency of firewood in reducing the use of fossil fuels and hence greenhouse gas emissions.

The first case study focuses primarily on the Ulza hydro-power dam and watershed in Albania. The second case study looks mainly at wood supply, stoves, and heating systems in Kosovo.
This research aims to define scientifically sound methodologies; establish key baseline data in some case studies; provide quantitative estimates of the value of specific targeted environmental services; propose mechanisms to start or increase payment for these services in the two countries; and then disseminate the results and experience both regionally and more broadly. The results will be particularly helpful for countries in the process of European Union accession, as they develop agro-environmental payments within the common agriculture policy.

All field work and data collection activities for the two case studies have concluded. Thirty-two project publications have been translated into Albanian and disseminated through the project website, the project blog, and the project Facebook page. The main publication Study and Analysis of Innovative Financing for Sustainable Forest Management in the Southwest Balkan: Innovative Financing for Sustainable Forest Management (September 2013) is also available on PROFOR website. A series of stakeholder workshops was held in Albania and Kosovo. The final results workshop for Albania took place in September 2013 in Tirana, and the final results workshop for Kosovo occurred on in Prishtina the same month.

The project generated numerous findings that are detailed in the project publications. Highlights include the following:

-At least 31.5% of the Ulza reservoir storage is filled with sediment.
-Erosion and sediment are correlated to land uses in a measurable way, with forested areas producing the lowest sediment load.
-Around 12% of stakeholders in the watershed are willing to pay for environmental services such as reduced erosion and reduced sedimentation.

-Total wood biomass production is about 1.25 million cubic meters, of which 0.17 million cubic meters is legally harvested forest.
-95% of wood harvested from forests is used for firewood.
-Improving existing agroforestry sites and introducing fast-growing species are good opportunities to increase wood biomass production.
-Wood biomass is an economically attractive energy option for individual household heating and public buildings.
-Carbon markets could support energy production from wood biomass.

This activity is ongoing. A website dedicated to sharing the results of this activity has been set up at the following address: findings and reports will also be shared on this page. You can also follow us on twitter ( or subscribe to our mailing list for regular updates.



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Author : World Bank [1], SNV Netherlands Development Organization [2], Natural Resources Solutions consultancy - Kosovo [3], REGEA Croatia [4], Diava Consulting - Albania [5], Faculty of Forestry - Macedonia [6], Wageningen University - The Netherlands [7] [1] [2] [3] [4] [5] [6] [7]
Last Updated : 03-10-2020