Report of the Ad Hoc Intergovernmental Panel on Forests on its fourth session
New York, 11-21 February 1997

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II. INTERNATIONAL COOPERATION IN FINANCIAL ASSISTANCE AND TECHNOLOGY TRANSFER

A. Financial assistance

Conclusions

59. The Panel emphasized that the issues of financial assistance and
transfer of technology are cross-cutting, interlinked and essential
for the management, conservation and sustainable development of all
types of forests, particularly in developing countries and countries
with economies in transition. The Panel reiterated that those
cross-cutting issues are critical to progress in all the other
programme elements within its terms of reference.

60. In proposing measures to address those issues, the Panel
emphasized the need to take into account the Forest Principles and
relevant chapters of Agenda 21. The Panel recognized that existing
resources are insufficient to achieve the management, conservation and
sustainable development of all types of forests. The Panel further
recognized that there is a need for greater financial investment from
all sources, as well as a need to improve the absorptive capacity of
developing countries to use financial resources.

61. The Panel recognized that in developing countries, domestic
resources for financing the management, conservation and sustainable
development of all types of forest are scarce and international
financial sources remain vital. It reiterated the need for external
support through ODA and the provision of new and additional financial
resources, and emphasized the need to mobilize new, innovative and
additional forms of finance at the public, private, international,
domestic and local levels. However, while recognizing the important
potential in innovative financial packages and new types of
public-private partnerships, the Panel emphasized the continuing
importance of international public finance and of existing commitments
to it, and the need to promote the predictability and continuity of
flow of financial resources. The catalytic and leveraging roles of
international public funding remain essential for developing
countries. It recognized that more effective use of available finance
is conducive to attracting additional resources.

62. The financing needs for sustainable forest management at the
national level should, as far as possible, be met by the revenue
generated by the forest sector itself, be it the public or private
sector. Some countries, with valuable forest estates and stronger
economies, have much greater potential for generating private-sector
and domestic public investment than others. National forest
programmes and similar policy instruments can be an important policy
tool, and can serve as a means of promoting, prioritizing and
coordinating both public and private financial investments. Community
financing is also an important element in enhancing the sustained
productivity of forest resources. Experience suggests that despite
their low income level, many forest-dependent communities can mobilize
substantial labour, material and capital resources for forest
development, and appropriate policy changes can enhance that
potential.

63. The Panel noted that, in general, private capital flows are
growing and are increasingly greater than public funding, but are
distributed unevenly among developing countries. That trend is also
visible in the case of private investment in forests. The Panel
recognized, therefore, that it is critical for countries to take the
necessary measures to introduce appropriate policies and create an
enabling environment to attract such private-sector investment.
Policies that address long-term land tenure rights and encourage local
community investment in sustainable forest management could mobilize
significant financing. Investment in forests may be encouraged by
voluntary codes of conduct for sustainable forest management, stronger
national regulations and enforcement, full cost internalization in the
pricing of renewable resources and various incentives. Policies and
regulations should be carefully evaluated before implementation to
avoid negative social and environmental impacts and market
distortions, which would create disincentives.

64. The Panel underscored the need to fulfil the financial commitments
of Agenda 21, especially chapter 33, with the aim of achieving the
management, conservation and sustainable development of all types of
forest, including, where appropriate, the protection of representative
forest ecosystems. Efforts in developing countries to secure
additional financial resources and technology at domestic level need
to be strengthened, and should be supplemented from international
sources. ODA remains a main source of external public funding, and
has as a principal aim alleviating the poverty that is one of the main
causes of deforestation. It will continue to play an important role
in supporting forest-related activities in developing countries,
especially where it is difficult to attract financing from other
sources, for example, in developing countries, with low forest cover.
The Panel expressed its concern that funding levels, including ODA,
are insufficient and declining, and that sustainable forest management
is not given sufficient priority in ODA. While there is a continuing
challenge to ensure that ODA funds for forest sector are used as
efficiently as possible, that is independent from the issue of trends
in international public sector financing. Forest-related projects
that have global environmental benefits should also be supported
through GEF programmes, under the guidance provided by the conferences
of parties of the relevant international instruments.

65. The Panel emphasized the need to examine ways to enhance
international cooperation. It stressed the need for the international
community to find durable solutions to the debt problem of developing
countries in order to provide them with the needed means for
management, conservation and sustainable development of all types of
forests. Other forms of innovative financing should also be explored.
Market-based instruments, such as taxes, levies, user fees and
domestic public investments, could generate additional financial
resources to support activities for sustainable forest management and
conservation. A whole range of options relevant to specific national
conditions warrants further examination. Adequately valuing forest
resources and creating markets that reward sustainable forest
management would contribute to the management, conservation and
sustainable development of all types of forests, and would generate
needed public resources.

66. The Panel emphasized that in-country coordination and cooperation
among donors is crucial in view of the need to make the best use of
limited financial resources. National forest programmes provide a
good basis in many countries for national and international
cooperation, including setting priorities for financial assistance and
technology transfer between recipient countries and donors.

Proposals for action to strengthen financial assistance

67. The Panel:

(a) Recalled the Rio Declaration on Environment and Development
and relevant chapters of Agenda 21, as well as paragraph 10 of the
Forest Principles, which states that new and additional financial
resources should be provided to developing countries to enable them to
sustainably manage, conserve and develop their forest resources,
including through afforestation, reforestation and combating
deforestation and forest and land degradation;

(b) Urged recipient countries to prioritize forest activities or
national resources development strategies that would favour
sustainable forest management and related activities in programming
the ODA available to them, and also urged donor countries and
international organizations to increase the proportion and
availability of their ODA contribution to programmes supporting the
management, conservation and sustainable development of all types of
forests in order to respond to increased priorities for sustainable
forest management in recipient countries;

(c) Requested the relevant United Nations organizations,
international financial institutions, other international
organizations and the donor community to work with developing
countries, on the basis of national forest programmes, to identify
their needs for sustainable forest management, estimate the resources
required to finance such needs and identify the resources available to
them for such purposes, including ODA;

(d) Urged international organizations and international financial
institutions to use national forest programmes, as appropriate, as a
framework for the support and coordination of forest-related
activities;

(e) Encouraged countries, through appropriate channels, to
support increased and improved programmes promoting the management,
conservation and sustainable development of forests and related
activities in international organizations and international financial
institutions, whose programmes should consider further concessional
lending for the forest sector;

(f) Invited UNDP and the Bretton Woods institutions, together
with other relevant international organizations, to explore innovative
ways to both use existing financial mechanisms more effectively and
generate new and additional public and private financial resources at
the domestic and international levels in order to support activities
for the management, conservation and sustainable development of all
types of forests;

(g) Recognized the importance of increasing resources available
to developing countries for promoting the management, conservation,
and sustainable development of all types of forests, welcomed the
progress that has been made in devising and implementing debt relief
initiatives, and bearing in mind General Assembly resolution 50/92,
urged the international community, particularly the creditor countries
and international financial institutions, as well as commercial banks
and other lending institutions, to continue the implementation of
various measures aimed at effective, equitable, development-oriented
and durable solutions to the external debt and debt-servicing problems
of developing countries, particularly the poorest and heavily indebted
countries, including exploring the opportunities for innovative
mechanisms, such as debt-for-nature swaps related to forests and other
environmentally oriented debt reduction programmes.

68. The Panel also discussed the proposal that an international fund
be established to support activities for the management, conservation
and sustainable development of all types of forests, particularly in
developing countries. The following options for action were
discussed, without a consensus being reached on those or other
possible procedures:

(a) To urge the establishment of such a fund;

(b) To invite the international community to discuss the
proposal;

(c) To pursue action to enhance funding in other ways, inter
alia, as proposed in paragraph 67 (f) above.

Proposals for action to enhance private-sector investment

69. The Panel:

(a) Urged all countries, within their respective legal
frameworks, to encourage efforts by the private sector to formulate,
in consultation with interested parties, and implement voluntary codes
of conduct aimed at promoting sustainable forest management through
private-sector actions, including through management practices,
technology transfer, education and investment;

(b) Urged countries to explore mechanisms, within their
respective legal frameworks, to encourage their private sector to act
consistently with sustainable forest management and to invest
financial resources generated from forest-based activities in actions
that support sustainable forest management;

(c) Urged countries to explore mechanisms, within their
respective legal frameworks, to encourage the reinvestment of revenues
generated from forest goods and services back into the forests where
those revenues were generated;

(d) Invited developing countries to promote policies and
regulations aimed at creating a favourable environment to attract the
domestic and foreign private sectors, as well as local community
investment, for sustainable forest management, environmentally sound
forest-based industries, reforestation, afforestation, non-wood forest
product industries, and conservation and protection of forests;

(e) Urged developed countries to formulate and create incentives,
such as loan and investment guarantees, to encourage their private
sector to invest in sustainable forest management in developing
countries, as well as in countries with economies in transition.

Proposals for action to enhance national capacity and national
coordination

70. The Panel:

(a) Urged recipient countries to establish country-driven
national forest programmes that include priority needs and that serve
as an overall framework for forest-related policies and actions,
including the coordination of financing and international cooperation,
and urged donor countries and international organizations to support
national initiatives to create national forest programmes and policy
framework in developing countries;

(b) Encouraged countries in a position to do so to continue to
develop and employ appropriate market-based and other economic
instruments and incentives to increase rent capture and mobilize
domestic financial resources in support of sustainable forest
management, as well as to reduce social costs and negative
environmental impacts due to unsustainable forest and land management
practices;

(c) Encouraged countries, within their respective legal
frameworks, international organizations and financial institutions, to
enhance, subject to national legislation, community financing as an
important strategy to promote sustainable forest management, and to
establish policy and programmatic mechanisms and instruments that
facilitate local investments in sustainable forest management by,
inter alia, indigenous groups and forest owners;

(d) Suggested that recipient countries, where appropriate,
identify a national authority responsible for in-country coordination
in the deployment of financial resources, including ODA, and in
requests for external assistance;

(e) Urged developed countries, international organizations and
international financial institutions to support the efforts of
developing countries in capacity-building in the management,
conservation and sustainable development of their forests.

Proposals for action to enhance international cooperation

71. The Panel:

(a) Called for enhanced coordination, collaboration and
complementarity of activities among bilateral and multilateral donors
and among international instruments related to forests, notably the
Convention on Biological Diversity, the United Nations Framework
Convention on Climate Change, the Convention to Combat Desertification
and the International Tropical Timber Agreement;

(b) Urged recipient and donor countries to jointly explore, as a
priority activity, appropriate indicators for monitoring and
evaluating the adequacy and effectiveness of forest programmes and
projects at the national and local levels, supported by international
cooperation in financial assistance and technology transfer;

(c) Encouraged countries to explore the feasibility of innovative
financial initiatives to support the implementation of national forest
programmes.

B. Technology transfer and capacity-building and information

Conclusions

72. There is an unprecedented accumulation of technological capability
in the world today, including for forestry. However, much of it
remains largely unrecognized, underutilized and inadequately shared.
Dissemination of those technological innovations is critical. The
Panel emphasized that the transfer of environmentally sound technology
in the forest sector is an important part of strategies for enabling
countries to manage, conserve and sustainably develop their forests.
The potential of particular technologies for transfer needs to be
assessed in consultation with all interested parties, such as
Governments, non-governmental organizations, the private sector,
scientists and local communities.

73. The Panel noted that as new technologies are largely originated
from the North, in particular in private domain, there is a need for
strengthening North-South cooperation in technology transfer under
favourable terms, including on concessional and preferential terms,
for developing countries, as mutually agreed. However, owing to
similarities of forest types, institutions and culture, there is also
a considerable potential for South-South cooperation in conjunction
with and as a complement to North-South cooperation.

74. The Panel noted that developed countries bear a special
responsibility for facilitating the creation of conditions for the
conservation of forest biological diversity and sustainable use of
forest biological resources, inter alia, through constructive
approaches to the transfer of technologies to strengthen the
capabilities of indigenous people, forest dwellers, forest owners and
local communities for sustainable forest management.

75. The Panel agreed that established priority in technology transfer
and capacity-building should be continuously reviewed, and could
include: information dissemination to improve forest and land-use
planning and improvement of forest yields; technology and methods that
reduce environmental damages due to current forestry practices;
conservation and protection; native species research, including
biotechnology, for tree improvement; rehabilitation and restoration of
natural forest ecosystems; reforestation and nursery development;
technology and methods for retaining forest values, including
biological diversity; incorporation of indigenous knowledge in forest
management; utilization, rehabilitation, restoration and regeneration
of natural forest ecosystems; new and renewable sources of energy, in
particular fuelwood and its appropriate substitutes; environmentally
sound forest harvesting technologies; enhancement of technologies
regarding wood processing; the development of new non-wood and wood
forest products to promote techniques and design in order to add more
aggregate value for forest products; and the development and
implementation of national forest strategies.

76. The Panel emphasized the need to review and improve information
systems. Attention should be given to worldwide access to information
systems that would encourage effective implementation of national
forest programmes, increased private-sector investment, efficient
development and transfer of appropriate technologies, and improved
cooperation. Internet-based information systems should allow easy
access and information-sharing among multilateral agencies, countries'
institutions, non-governmental organizations and other interested
parties.

Proposals for action to enhance technology transfer and
capacity-building

77. The Panel:

(a) Urged developed countries to promote, facilitate and finance,
as appropriate, access to and the transfer of environmentally sound
technologies and corresponding know-how to developing countries on
favourable terms, including on concessional and preferential terms, as
mutually agreed, taking into account chapter 34 of Agenda 21 and
paragraph 11 of the Forest Principles;

(b) Encouraged countries, where needed, to assess and identify
their national technological requirements and capabilities in order to
achieve the management, conservation and sustainable development of
their forests. The assessment and identification of specific
technology needs should be consistent with priorities in national
forest programmes;

(c) Called for the strengthening of North-South cooperation and
the promotion of South-South as well as trilateral North-South-South
cooperation in forest-related technology transfer, through public and
private-sector investment and partnerships, joint ventures, exchange
of information and greater networking among forest-related
institutions, taking due note of related work being conducted in other
international forums, including the Convention on Biological Diversity
and the United Nations Framework Convention on Climate Change;

(d) Called upon countries to formulate policies and incentives
that encourage all concerned to develop and use environmentally sound
technologies;

(e) Called for greater emphasis on national and local
capacity-building in the development and implementation of national
forest programmes and in international cooperation programmes, as well
as in the development of mechanisms for the dissemination and
adaptation of technologies to national and local conditions;

(f) Invited Governments, within their respective legal
frameworks, and international organizations, in consultation with
countries, to consider supporting indigenous people, local
communities, other inhabitants of forests, small-scale forest owners
and forest-dependent communities by funding sustainable forest
management projects, capacity-building and information dissemination,
and by supporting direct participation of all interested parties in
forest policy discussions and planning;

(g) Urged United Nations organizations, with the support of the
international financial institutions, to prepare inventories of the
most appropriate forest-related technologies, as well as the most
effective methods of transfer of those technologies to developing
countries among Governments, between Governments and private sector,
and within the private sector.

Proposals for action to improve information systems

78. The Panel:

(a) Invited relevant international organizations and
international financial institutions to review and initiate the
development of improved forest information systems with a view to
enhancing coordination and data-sharing among interested parties
regarding the implementation of national forest programmes, ODA
programming, the provision of new and additional financial resources,
increased private-sector investment, efficient development and
transfer of technology;

(b) Urged developed countries and appropriate international
organizations to establish mechanisms to assist the interpretation and
dissemination of information relevant to the management, conservation
and sustainable development of all types of forests to countries and
interested parties who have difficulties in accessing internationally
available information, including dissemination through electronic
means;

(c) Invited members of the informal high-level Inter-Agency Task
Force on Forests, including FAO, the International Tropical Timber
Organization (ITTO), UNDP, the World Bank, the secretariat of the
Convention on Biological Diversity, the United Nations Environment
Programme (UNEP) and other relevant international bodies to facilitate
the provision of a better flow to both the policy and operational
levels of synthesized information on programme progress, policy
development, best management practices and financial strategies for
forest sector, for both the public and private sectors, including
through the establishment of specialized databases.

III. SCIENTIFIC RESEARCH, FOREST ASSESSMENT, AND THE
DEVELOPMENT OF CRITERIA AND INDICATORS FOR
SUSTAINABLE FOREST MANAGEMENT

A. Assessment of the multiple benefits of all types of forests

Conclusions

79. The Panel emphasized that national inventories are an important
basis for effective national forest programmes. Assessment of the
actual and potential conditions of all types of forests is central to
sustainable forest management and to a wide range of other
considerations related to forests and forest ecosystems at the local,
national, regional and global levels. Inadequate recognition of the
contribution of forests to national economies has in many cases led to
deforestation, forest degradation and underinvestment in forest
management.

80. The database on forest types in both developed and developing
countries is uneven. Much attention is still given to timber and
forest cover, whereas other goods and services provided by forests,
such as fuelwood, the sustainable use and conservation and the fair
and equitable sharing of benefits of biological diversity, soil and
water protection functions, and carbon sequestration and sinks, as
well as other social, cultural and economic aspects, are rarely
covered and need to be considered.

81. Forest assessments at the national level should adopt an
integrated and holistic multidisciplinary approach, and should be
user-oriented and demand-driven. Such assessments should be
transparent and accessible to all interested parties. Further study
is needed to define the levels of precision required and the specific
needs of different users, including forest managers. Assessments
should fully utilize the data already collected and analyses already
carried out by local, national, regional and international
institutions. Efforts should be made to harmonize approaches to data
collection and analysis in order to enhance comparability.

82. The Panel emphasized that assessment data already in the public
domain, including remote-sensing information, should be disseminated
effectively. The use of existing FAO data, in combination with other
data sets, offers a rich potential to address urgent questions in a
cost-effective manner. The Panel also recognized that data
interpretation in response to user needs is necessary. Consequently,
a study of uses and categories of users of forest resources and
related information at the international, regional, national and local
levels is required. This would be particularly important when
discussing new types of information to be included in the global
forest resources assessment.

83. International and national forest assessments should take account
of appropriate international, regional, subregional and national-level
criteria and indicators for sustainable forest management. The need
to include qualitative as well as quantitative information on forest
goods and services was stressed, and should be addressed in future
assessments. Site-specific field testing is also needed in order to
ensure the adaptation of reliable parameters in forest assessments.
Emphasis should be placed on the provision of reliable and
high-quality data.

84. The Panel further noted that capacity-building at the national and
local levels is important in many countries, and should involve all
interested parties, including forest owners, local communities,
indigenous people and other major groups. Forest assessments should
be multidisciplinary, and should involve data collection and analysis
by local, national and possibly regional as well as international
institutions. Enhanced national capacity is considered essential for
high-quality national inputs to the global forest resources assessment
for the year 2000 being organized by FAO.

85. The Panel expressed strong support for the global assessment and
for the arrangements being made following the recommendations of the
FAO Expert Consultation on Global Forest Assessment held in Finland in
June 1996, and urged FAO, in consultation with countries and
interested organizations, to prepare a strategic plan for assessing
global forest resources and a detailed plan for the implementation of
the global assessment for the year 2000, including detailed cost and
funding options and target dates. The Panel noted the importance of
eco-floristic zone and vegetation maps as tools for the assessment
process, together with appropriate qualitative parameters and criteria
and indicators defined through the Helsinki and Montreal processes,
the Dry Zone of Africa initiative, the Tarapoto Proposal and the ITTO
guidelines.

86. The Panel took note of the recommendation of the Expert
Consultation to maintain the current 10-year interval between global
forest resources assessments. However, the possibility of rolling
assessments by region could also be considered, together with the
possibility of updating of data at regular intervals, taking into
account the financial and resource implications for FAO, as well as
for developing and developed countries, in meeting such requirements.
The global assessment for the year 2000 should be a partnership
exercise facilitated by FAO but also involving United Nations
organizations, national institutions and other interested parties,
including relevant major groups. Cooperation at the national level
should involve all interested parties, both within and outside the
forest sector.

87. While recognizing the value of remote-sensing techniques and
geographical information systems for forest assessments, the Panel
noted the need for ground validation of some parameters. Assessments
impose a significant financial and technical burden on developing
countries, and should therefore be carried out in the most
cost-effective manner and should be assisted by developed countries
and international organizations. Coordination is needed between
forest information systems and other relevant systems, and required
both North-South and South-South cooperation.

88. Resources available for the global assessment for the year 2000 in
FAO's regular budget and at the national level are limited. The Panel
stressed the urgency of identifying existing or additional financial
resources that would ensure an effective assessment. Consideration
should be given to establishing methods by which users would provide
resources for data collection, and to more effective utilization of
existing resources and capabilities of organizations and institutions,
both in the public and private sectors, to assist FAO in executing the
assessment.

Proposals for action

89. The Panel:

(a) Encouraged countries to integrate national-level criteria and
indicators for sustainable forest management in national forest
assessments, including qualitative indicators, where appropriate;

(b) Encouraged all countries, where appropriate and on a step-by-
step basis, to improve national forest resources assessment, forest
statistics and the capacity to analyse and make proper use of forest
resources information, and encouraged donor countries and
international organizations to support those initiatives;

(c) Urged countries, universities and relevant organizations and
major groups to strengthen research on forest inventory and monitoring
techniques with a view to expanding the scope and improving the
quality of forest assessments;

(d) Requested FAO, in consultation with Governments and relevant
organizations, including UNEP, to prepare and distribute a detailed
plan for the implementation of the global forest resources assessment
for the year 2000. The plan should provide for the inclusion of a
broad range of forest values, including non-timber values, and should
include detailed cost and funding options associated with potential
new parameters, actions, targets and responsibilities for carrying out
the assessment consistent with the recommendations of the Expert
Consultation and with due regard to the requirements arising from
internationally or regionally agreed criteria and relevant indicators
for sustainable forest management;

(e) Requested FAO to implement the global forest resources
assessment 2000, in collaboration with international organizations,
countries and other organizations with competence in assessments, and
to share the results of the assessment effectively with the
international community;

(f) Requested FAO, in consultation with countries and relevant
international organizations and in an open and transparent manner, to
formulate an internationally acceptable set of definitions of key
terms used in the assessment of all types of forests and their
resources, and to promote their adoption;

(g) Urged FAO, in partnership with other international
organizations, the Intersecretariat Working Group on Forest
Statistics, national institutions and non-governmental organizations,
to address the need for better coordination and avoidance of overlap
between forest and other related information systems, and for clearer
prioritization in data collection;

(h) Encouraged countries to begin a consultation process with all
interested parties at the national, subnational and local levels to
identify the full range of benefits that a given society derives from
forests, taking the ecosystem approach fully into consideration.

B. Forest research

Conclusions

90. The Panel recognized the need to strengthen research, which was
relevant to all the programme elements of its programme of work.
There was need for a more comprehensive and focused approach,
including support to regional research networks. Enhanced
international efforts for more focused and effective funding and
coordination of forest-related research and development were also
required.

91. The Panel also took note of the recommendations on priorities for
scientific research on biological diversity and forests made by the
Conference of the Parties to the Convention on Biological Diversity.
The Panel also recognized the important role of the Convention to
Combat Desertification in addressing many of the forest-related
scientific issues and research needs as regards arid zones.

92. The Panel recognized that institutional needs include the
strengthening of existing national research institutions; subregional
and regional networks; joint research ventures; approaches to
enhancing and strengthening existing international, regional,
subregional and national forest research institutions' participation
in an international network dedicated to the conservation and
sustainable development, management and utilization of forests and
forest policy research; and the creation of appropriate mechanisms
that could enable research findings to reach policy and field levels
more effectively and could support concrete action.

93. The Panel recognized the importance of developing and identifying
research priorities at all levels: national, with the involvement of
local communities and other interested parties; regional; and
international. The Panel noted that research priorities relevant to
further understanding and implementation of chapter 11 of Agenda 21
and the Forest Principles that are in need of comprehensive
intergovernmental examination include the development of criteria and
indicators for sustainable forest management, including their testing
at the field level in pilot studies; integrated site-specific
socio-economic and biophysical studies to explore the relationship
between human development and forests; periodic forest assessment;
valuation of forests and forest resources; the use of forest valuation
in national resource accounts; community participation, including the
adoption of participatory appraisal and other participatory techniques
to determine research and technology development agendas; TFRK; forest
conservation, including human impact on protected forest areas;
consideration of the long-term impacts of pervasive external stresses,
such as climate change, ozone depletion and air pollution, on forest
health, productivity and biodiversity; examination of trends in the
supply of and demand for forest products; forest policy at the
national, regional and global levels; and environmentally sound
technologies for forest-based industries, including cost-effective
processing techniques.

Proposals for action

94. The Panel:

(a) Requested the Centre for International Forestry Research, in
collaboration with relevant organizations and in consultation with a
group of internationally recognized experts, as well as in conjunction
with national, regional, intergovernmental and non-governmental
bodies, to develop as soon as possible mechanisms to:

(i) Guide the identification and definition as well as
prioritization of global and eco-regional interdisciplinary
research problems, taking into account national priorities
and closely linked to practical and operational forest
management issues;

(ii) Promote consortia or networks to lead and organize global
forest research and ensure that results are made available to
all users;

(iii) Build global capacity for forest research and develop new and
innovative means for disseminating information and
technologies;

(iv) Mobilize resources to accomplish the above objectives;

(b) Called on the Conferences of the Parties to the Convention on
Biological Diversity, the United Nations Framework Convention on
Climate Change and the Convention to Combat Desertification, within
their areas of competence, to promote research and analysis undertaken
by those Conventions and to address gaps in existing knowledge where
relevant to their mandate;

(c) Urged the United Nations system, international financial
institutions and countries to examine the need to expand the capacity
of existing research institutions at the regional and subregional
levels, and where appropriate the establishment of new
regional/subregional centres for research, development and extension,
including for biological diversity and forest products and other
forest goods and services;

(d) Encouraged countries and regional and international research
organizations to extend on-site research and to enhance its
prioritization and the application of its results, with the
involvement of all interested parties, in the planning,
implementation, monitoring and evaluation of research so as to enhance
its relevance and impact.

C. Methodologies for the proper valuation of the multiple benefits of forests

Conclusions

95. The Panel stressed that forests provide a wide range of benefits,
not all of which are easy to quantify. The costs associated with
deforestation, forest degradation and changes in forest quality, in
terms of losses of biological diversity, impaired biological functions
and reduced social and environmental values are not adequately
measured by present methodologies. However, that shortcoming is due
as much to the inability to assess the nature and significance of
biophysical, ecological, economic and social impacts resulting from
forest change as to uncertainty about how to assess their costs.

96. The Panel recognized the importance of the services provided by
forests, including those relating to biological diversity and global
climate regulation, and the potential for developing mechanisms to
translate those values into monetary terms to encourage forest owners,
forest dwellers, indigenous populations and local communities to
conserve forests and manage them sustainably. Further discussion on
those issues should take place in the context of the Convention on
Biological Diversity and the United Nations Framework Convention on
Climate Change. The Panel took note of the input received from the
Conference of the Parties to the Convention on Biological Diversity
with respect to the development of methodologies for valuing forest
biodiversity.

97. Undervaluation of forest goods and services and of other forest
attributes, including non-market benefits, impedes sustainable forest
management. The Panel recognized the difference between value and
price, and noted that market mechanisms were not always appropriate or
available to give monetary expression to key forest values, leading to
the misconception that sustainable forest management is expensive and
not cost-effective.

98. The Panel emphasized that the economic value of forests depends on
the characteristics of particular forest areas and their locational
relationships with people and markets. Those characteristics vary
both spatially and in time, and as a result forest valuation estimates
are usually site-specific and time-specific. Nevertheless, there is
considerable benefit in different countries sharing experiences, with
the application of particular valuation techniques and instruments
designed to capture a higher share of benefits for forest owners and
forest-dwelling people.

99. A variety of methodologies has been developed to aid in the
valuation of forest benefits that were previously considered
intangible and not amenable to measurement. They can be used in all
types of forests to improve the description of a wide range of social,
cultural and environmental benefits, including those associated with
hydrological functions, soil conservation, biological diversity and
amenity. While those methodologies have many limitations, they could
help improve decision-making by more clearly defining the costs and
benefits associated with different patterns of forest use, and by
indicating the scope for applying various measures to internalize
environmental and social costs. The results of that valuation, when
applied as a neutral tool, are an important potential source of
information to all interested parties, and for increasing public
awareness, particularly about currently non-marketable forest goods
and services.

100. Although the Panel recognized the potential usefulness of
forest valuation methodologies, it felt that their complexity and the
costs involved may limit their widespread application. The Panel
emphasized that innovative and simple scientific valuation methods
were needed, especially those related to criteria and indicators and
national forest programmes. Expensive valuation exercises should not
be performed at the expense of more pressing basic needs, such as the
development and application of reliable data systems and the
development of strategies and mechanisms to achieve sustainable forest
management.

101. New forest valuation methodologies should take into account
the following criteria: neutrality and scientific validity, practical
applicability, simplicity and clarity, multidisciplinarity, cost-
effectiveness, and orientation towards currently non-marketable goods
and services.

102. The Panel noted the need for international cooperation in the
development of methodologies for the valuation of forest goods and
services and their inclusion in national accounts. That could include
training for staff as well as decision makers, and work on ways and
means to promote public awareness. The need to exchange experience
and establish pilot studies and schemes was emphasized.

103. The Panel expressed support for national forest-resource
accounting as a means of providing strategic information for forest
policy and management at the national and subnational levels, and of
creating awareness of the value of forest goods and services.

Proposals for action

104. The Panel:

(a) Encouraged countries, in collaboration with international
organizations, to make use of available methodologies to provide
improved estimates of the value of all forest goods and services and
allow for more informed decision-making about the implications of
alternative proposals for forest programmes and land-use plans, taking
into account that the wide range of benefits provided by forests are
not adequately covered by present valuation methodology, and that
economic valuation cannot become a substitute for the process of
political decision, which includes consideration of wide-ranging
environmental, socio-economic, ethical, cultural and religious
concerns;

(b) Requested international organizations and relevant
institutions to prepare comprehensive documents on the available
forest valuation methods and data-sets required for the evaluation of
forest goods and services, in particular those that are not traded in
the marketplace;

(c) Invited countries and relevant international organizations
and institutions to promote research to further develop forest
valuation methodologies, in particular those related to deforestation
and forest degradation, erosion, and criteria and indicators, taking
into account the particular circumstances of each country.

D. Criteria and indicators for sustainable forest management

Conclusions

105. The Panel noted the widespread international interest in and
support for the development and implementation of criteria and
indicators for sustainable forest management. It drew attention to
the dynamic nature of that process, and emphasized that the current
momentum of action must be sustained.

106. The Panel recognized that criteria and indicators provide a
conceptual framework for policy formulation and evaluation, and should
be considered as useful tools for assessing trends in forest
conditions, for reporting on the state of forests and for achieving
sustainable forest management. Criteria define the essential elements
of sustainable forest management, while indicators provide a basis for
assessing actual forest conditions. When combined with specific
national goals, criteria and indicators also provide a basis for
assessing progress towards sustainable forest management. Criteria
and indicators can therefore play an important role in defining the
goals of national forest programmes and policies, and evaluating the
effectiveness with which they are implemented. Because they reflect
components of sustainable forest management, they collectively
contribute to its development as a concept.

107. There is a need for a broad spectrum of quantitative,
qualitative and descriptive indicators covering social, cultural,
economic, ecological, institutional, legal and policy elements,
including land tenure. Aspects of forests and woodlands that are
essential in meeting the subsistence needs of indigenous people,
forest dwellers and other local communities, including forest owners,
require special attention in some countries. In many national,
regional and international initiatives, both quantitative, qualitative
and descriptive indicators have already been established.

108. While recognizing that national-level criteria and indicators
may play an important role in clarifying issues related to forest
certification and the labelling of forest products, the Panel
emphasized that the development of criteria and indicators is
primarily intended for promoting and monitoring sustainable forest
management, and not for imposing certification or labelling schemes
for forest products. Criteria and indicators are not performance
standards for certifying management at any level, and should not be
made a basis for restriction of trade. The Panel also emphasized that
criteria and indicators for sustainable forest management should not
be used as grounds for conditionality in the provision of ODA.

109. The Panel stressed the need for further efforts to reach a
common international understanding of key concepts, definitions and
terms used in formulating and developing criteria and indicators for
sustainable forest management, and methodologies for data collection.
Those terminologies and approaches must be compatible with
terminologies used in other related fields, such as inventory,
assessment and valuation, environmental assessment, national forest
programmes, land-use plans and trade-related forest issues.

110. The Panel welcomed the efforts made to clarify the links
between the criteria and indicators appropriate at the national level
and those applicable to the subnational and forest management
unit/operational levels, and emphasized that these should be
compatible. It recognized, however, that those links will vary from
country to country, and may require further examination. Criteria and
indicators should be formulated through a transparent process
involving all interested parties, including forest dwellers,
indigenous people and local communities, as well as forest owners and
other major groups, where applicable. Criteria and indicators for
application at all levels should be practical, scientifically based
and cost-effective, and should reflect, inter alia, economic, social
and ecological circumstances.

111. The Panel noted that a number of countries are participating
actively in international and regional initiatives for defining and
implementing national-level criteria and indicators for sustainable
forest management. That cooperation has enabled countries to benefit
from the experience of others and at the same time bring new
dimensions and ideas into international processes. While recognizing
that the countries currently involved are at different stages in the
process, the Panel stressed the need for further progress towards
consensus on concepts, terms and definitions. The Panel also urged
continuing efforts to involve countries and regions that are not yet
participating in such initiatives.

112. The Panel placed particular emphasis on the need to involve
regions and subregions with distinctive ecological and geographical
characteristics, and countries with low forest cover. It also agreed
that the development of appropriate criteria and indicators for
application at the regional levels, in particular for forests in
similar ecological zones, should be considered. The Panel also
emphasized the need for efforts to enhance comparability and
compatibility between various international and regional processes on
the development and implementation of criteria and indicators, and
stressed the importance of mutual recognition among sets of criteria
and indicators as tools for assessing trends in forest management and
conditions at the national level; and on transparent methods for the
measurement of indicators and for the collection, assembly, storage
and dissemination of data.

113. The Panel recognized that there needed to be consistency in
the methodology employed in global forest assessments. It supported
the promotion of ways and means to maximize the exchange of
information, experience and technical knowledge at the global level,
in particular the promotion of best forest practices for sustainable
forest management.

114. The Panel had divergent views on the merits of a core set of
criteria and indicators for use at the global level, while recognizing
that dialogue should continue.

Proposals for action

115. The Panel:

(a) Encouraged countries to proceed to prepare, through a
participatory approach, national-level criteria and indicators for
sustainable forest management, and, taking cognizance of specific
country conditions and on the basis of internationally and regionally
agreed initiatives, to initiate and to implement them, where
appropriate, while recognizing that further scientific and technical
examination, including field testing, will itself provide valuable
experience and assist in further refinement and development;

(b) Urged countries to promote, as appropriate, the use of
internationally, regionally, subregionally and nationally agreed
criteria and indicators as a framework for promoting best forest
practices and in facilitating sustainable forest management; to
encourage the formulation and implementation of criteria and
indicators on a cross-sectoral basis and with the full participation
of all interested parties; to include them in national forest
programmes; to establish and, where appropriate, clarify links between
criteria and indicators employed at the national level and at the
subnational or at the forest management unit/operational levels; and
to promote their compatibility at all levels;

(c) Encouraged countries not yet participating in any of the
ongoing international and regional initiatives on criteria and
indicators to become involved as soon as possible, thereby gaining
benefit from the experience of the existing processes as well as
contributing new insights; and urged donor countries and multilateral
and international organizations to provide adequate technical and
financial assistance to developing countries and economies in
transition to enable them to be involved and participate in the
further development, field testing and implementation of criteria and
indicators at the national, subnational and forest management
unit/operational levels;

(d) Urged countries and international organizations, in
particular FAO, UNEP and other participants in international and
regional initiatives, to undertake efforts to achieve a common
international understanding on concepts, essential terms and
definitions used in formulating and developing criteria and indicators
for sustainable forest management (and to promote their adoption); on
indicators for forests in similar ecological zones; on mutual
recognition among sets of criteria and indicators as tools for
assessing trends in forest management and conditions at the national
level; and on transparent methods for the measurement of indicators
and the collection, assembly, storage and dissemination of data;

(e) Recommended that FAO and participants in regional and
international initiatives draw on commonalities between criteria and
indicators developed in such initiatives, as well as on the Forest
Principles, and recommended that criteria and indicators be used by
FAO and other relevant organizations in order to improve consistency
in reporting on forest assessment and sustainable forest management;

(f) Requested that the Conference of the Parties to the
Convention on Biological Diversity take note of the work of the
various existing initiatives on criteria and indicators to ensure that
the work done by the Convention on Biological Diversity on developing
and implementing biodiversity indicators would be consistent with and
complementary to them.

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