EFI and Italy host high-level discussion on forest finance

EFI and the Government of Italy hosted a high-level discussion on forest financing, focusing on restoration and biodiversity conservation. 

The side event “Public and private financing for forest restoration and biodiversity conservation: Aligning expectations” took place at the 10th World Forest Week and the 28th Session of the FAO Committee on Forestry (COFO) in Rome, on 30 September.

Enrico Pompei, Director of National and International Forestry Policies at the Italian Ministry of Agriculture, Food Sovereignty and Forestry, opened the event by highlighting the strong cooperation between Italy and EFI. Establishing EFI’s Biocities in Rome in 2023 has been an important milestone in this partnership, made possible through the joint efforts of the Italian Ministry of Foreign Affairs and International Cooperation, the Directorate and EFI.

EFI Principal Scientist Sven Wunder and FAO Forestry Officer Marco Boscolo led the main discussion, which focused on the effectiveness of public finance, the potential of market-based incentives and private investments, and the implications of restoration finance for biodiversity and local communities.

“Restoration finance is a team sport, not an individual sport” stressed Boscolo, underlining the need for a broader finance ecosystem rather than simply making funding available to selected actors. Financial institutions, intermediaries, aggregators, and regulators also need support to effectively serve restoration businesses. The challenge is often not alignment of purpose, but connecting complementary roles across the financing chain. He also highlighted that private finance can accelerate restoration, but cannot replace public funding where restoration delivers primarily public benefits.

Wunder highlighted a challenge with regards to market-based instruments: unlike carbon, biodiversity has no single common metric, making biodiversity credits more complex to measure and compare across different ecological and regional contexts. Hence, a single global market is also unlikely to develop. He emphasised the need to raise willingness to pay for forest ecosystem services, but also to show that the money will be used efficiently.

Some take-home messages were flagged: (1) incentive design has a bearing on scheme effectiveness; (2) public financing can play a catalytic role to attract private finance; and (3) cooperation and dialogue are vital for scale impact at the local level.