The FCCF pioneers a business model for timber production of secondary and degraded forests primarily for local markets. The model is based on existing market demand, leveraging local and regional value chains. At the core of the business model lie sustainable forestry and a bottom-up approach.
Climate finance often emphasises the challenge to mobilise the substantial financial resources needed to transform the global economy and land use practices to a low-carbon environment. The mobilisation of investments also depends on the availability of attractive investment propositions.
The challenge of changing land use traditions and the absence of established sustainable business models have led to the development of a step-by-step approach.
In the preparatory phase, promising areas are identified and partnerships with smallholder organisations, community forestry entities and other land owners are built. Further, business plans for the selected areas are developed and local development objectives are identified. This phase is grant funded and executed through a special Technical Assistance Programme.
In a second phase, the Fund conducts its first investments over a period of 5 years, followed by a holding period of 10 years. The selected projects will stand as a proof of concept.
The third phase consists of scaling of successful projects and geographic expansion through an enlarged investor pool possibly including private individuals and institutional investors.
(1) Community led management of SDF;
(2) Financing of management systems for smaller land-owners within a mosaic of SDFs and agriculture;
(3) Investment in larger entities and land owners where such investments represent a strategic interest in establishing forestry for SDFs.