Non Forest Sector Policies, Global Environmental Markets, and the Deforestation Process

Environmental conservation is intimately tied to both economic development and sustainable management of natural resources. Convergence and complementarities of environmental and developmental functions of forest management and their sustainable utilization is a challenge for both developing and industrialized countries. While each nation may see forests as a consumable commodity, at an international level forests are scarce resources and their non-commodity values matter particularly with respect to climate change mitigation and bio-diversity conservation. This chapter therefore reviews and discusses the issue of non-forest sector (external) policies that affect forestry sector and the environment. The analysis highlights the importance and complexity of policy linkages between the forestry sector and other socio-economic sectors on sustainable forest development. Policy interaction seems particularly important for macroeconomic and land-use policies. The chapter also analyses the efforts taken by the international community for the conservation and management of forests with respect to markets for CO2 emission and the debt-for-nature swap. It appears that the incentives for these markets are still at the infant stage because of the high transaction costs involved. Lastly, an analysis of policy options and the instruments used for the conservation of bio-diversity resources in developing countries are reviewed. Creation of Global Environmental Facility (GEF) seems to be a significant effort in conserving (forest-based) biodiversity, and it could provide cost-effective benefits to the global environment.