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ArticleReviewing tree collaterals – a key innovation to finance smallholder forestry?
XV World Forestry Congress, 2-6 May 2022
2022Also available in:
No results found.Smallholder forestry is continuously flagged as an integrated environmental approach and as a contribution to rural livelihoods. The individual forest smallholder does however face various constraints, especially of financial nature that limit business development or uptake of tree planting practices. Long rotation periods in forestry clash with more immediate financial needs. One potential remedy for this cash flow dilemma is the tree for loan collateral approach, where trees or the products derived from them serve as part of a security for loans. This innovative approach can ease access to financial services for land users that lack conventional collateral but requires specific lending and valuation procedures. While initial dissemination of tree collateral is ongoing, the understanding of different approaches and applications of the concept is limited. This study assesses the intricacies of tree collateral approaches through a global realist synthesis review of about 110 written sources that is complemented by eight key informant interviews. To achieve this, the study analyzes the contexts, mechanisms, and outcomes of the specific collateral approaches using a set of indicators. Key factors hindering up-scaling these approaches include insufficient policy for transparent valuation and registration of assets, lacking tenure, and the difficulty of exact risk calculation. Solutions to these obstacles include social aggregation of producers, improving the availability of processing sites, established markets and clear and enabling political regulations for the collateralization and registration of forest assets. Keywords: Financial mechanisms, Innovation, Value chain, Governance, Sustainable forest management ID: 3603280 -
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ArticleReviewing tree collaterals – a key innovation to finance smallholder forestry?
XV World Forestry Congress, 2-6 May 2022
2022Also available in:
No results found.Smallholder forestry is continuously flagged as an integrated environmental approach and as a contribution to rural livelihoods. The individual forest smallholder does however face various constraints, especially of financial nature that limit business development or uptake of tree planting practices. Long rotation periods in forestry clash with more immediate financial needs. One potential remedy for this cash flow dilemma is the tree for loan collateral approach, where trees or the products derived from them serve as part of a security for loans. This innovative approach can ease access to financial services for land users that lack conventional collateral but requires specific lending and valuation procedures. While initial dissemination of tree collateral is ongoing, the understanding of different approaches and applications of the concept is limited. This study assesses the intricacies of tree collateral approaches through a global realist synthesis review of about 110 written sources that is complemented by eight key informant interviews. To achieve this, the study analyzes the contexts, mechanisms, and outcomes of the specific collateral approaches using a set of indicators. Key factors hindering up-scaling these approaches include insufficient policy for transparent valuation and registration of assets, lacking tenure, and the difficulty of exact risk calculation. Solutions to these obstacles include social aggregation of producers, improving the availability of processing sites, established markets and clear and enabling political regulations for the collateralization and registration of forest assets. Keywords: Financial mechanisms, Innovation, Value chain, Governance, Sustainable forest management ID: 3603280 -
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ArticleReviewing tree collaterals – a key innovation to finance smallholder forestry?
XV World Forestry Congress, 2-6 May 2022
2022Also available in:
No results found.Smallholder forestry is continuously flagged as an integrated environmental approach and as a contribution to rural livelihoods. The individual forest smallholder does however face various constraints, especially of financial nature that limit business development or uptake of tree planting practices. Long rotation periods in forestry clash with more immediate financial needs. One potential remedy for this cash flow dilemma is the tree for loan collateral approach, where trees or the products derived from them serve as part of a security for loans. This innovative approach can ease access to financial services for land users that lack conventional collateral but requires specific lending and valuation procedures. While initial dissemination of tree collateral is ongoing, the understanding of different approaches and applications of the concept is limited. This study assesses the intricacies of tree collateral approaches through a global realist synthesis review of about 110 written sources that is complemented by eight key informant interviews. To achieve this, the study analyzes the contexts, mechanisms, and outcomes of the specific collateral approaches using a set of indicators. Key factors hindering up-scaling these approaches include insufficient policy for transparent valuation and registration of assets, lacking tenure, and the difficulty of exact risk calculation. Solutions to these obstacles include social aggregation of producers, improving the availability of processing sites, established markets and clear and enabling political regulations for the collateralization and registration of forest assets. Keywords: Financial mechanisms, Innovation, Value chain, Governance, Sustainable forest management ID: 3603280
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