Can sustainable tropical forestry be made profitable? The potential and limitations of innovative incentive mechanisms

This paper assesses the potential and limitations of a range of innovative incentive mechanisms (IIMs) to make forest management and conservation more profitable for forest users. It classifies IIMs into three approaches: the fiscal or transfer payments approach; market-based solutions involving public good values; and the property rights approach. An essential complement to any IIM is regulation or control; at the international level, regulation creates the necessary demand for IIMs which attempt to capture global externalities, while at the national level, effective regulation is a vital concomitant of fiscal market-based instruments. Efforts to encourage sustainable forestry should also be complemented by policies which make forest-degrading activities less attractive, particularly by tackling extra-sectoral causes of forest degradation and investing in social capital and labor-intensive agriculture. (C) 2000 Elsevier Science Ltd. All rights reserved.