©Brent Stirton/Getty Images for FAO, CIFOR, CIRAD and WCS

The state of the world's forests 2022

Chapter 3 Three interrelated forest pathways could contribute to green recovery and a transition to sustainable economies

Forests have the potential to provide solutions to several growing socio-economic and environmental challenges of planetary proportions. This chapter puts forward three forest- and tree-based pathways on the understanding that any solutions have economic, social and environmental implications that need to be addressed holistically. The three pathways are (1) halting deforestation and maintaining forests; (2) restoring degraded lands and expanding agroforestry; and (3) sustainably using forests and building green value chains. Each requires integrating and balancing environmental concerns with societal and economic needs, including for recovery and sustainable development; integrating solutions to take advantage of synergies; and reducing inefficiencies to build a better and more inclusive, resilient and sustainable future.

3.1 Halting deforestation and maintaining forest ecosystem services would benefit climate, biodiversity, health and long-term food security

  • Halting deforestation is potentially one of the most cost-effective actions for mitigating climate change if efforts ramp up. According to a recent estimate, halting deforestation could cost-effectively avoid emitting 3.6 +/- 2 GtCO2e per year between 2020 and 2050, including 14 percent of what is needed in 2030 to keep planetary warming below 1.5 °C. Taking advantage of REDD+ frameworks could facilitate the implementation and financing of these actions.
  • More efficient, productive and sustainable agrifood systems are key for meeting future needs for food while reducing demand for agricultural land, maintaining forests and securing the multiple benefits that forests provide to farming systems. The global population is projected to reach 9.7 billion people by 2050; taking dietary changes and other factors into account, this implies an increase in food demand of 35–56 percent, potentially increasing demand for land and pressure on forests.
  • The cost of global strategies to prevent pandemics based on reducing the illegal wildlife trade, avoiding land-use change and increasing surveillance is estimated at USD 22 billion to USD 31 billion. This is a small fraction of the cost caused by a pandemic.
  • Multistakeholder engagement is crucial for progress in halting deforestation. Joint public and private initiatives can deliver efficient solutions, and combinations of landscape approaches with supply-chain governance holds promise as a response to sustainable land-use challenges.

Nearly one-third of the planet’s land area has been transformed in the last 60 years, and nearly 90 percent of deforestation between 2000 and 2018 was related to agriculture

Understanding of the drivers of global land-use change continues to improve as better socio-economic and environmental data and tools, including high-resolution datasets, become available. There is considerable variation in the relative importance of drivers of deforestation over time and across geographies,97,98,99,100 with agriculture considered the most significant direct cause. FAO’s recent remote sensing survey found that, between 2000 and 2018, almost 90 percent of deforestation was related to agriculture (52.3 percent from expansion for cropland and 37.5 percent from expansion for livestock grazing).101 Cropland drove more than 75 percent of deforestation in Africa and Asia. The most significant driver in South America and Oceania was livestock grazing and, in Europe, it was infrastructure and urban expansion.102 Other recent reports have investigated the role of underlying factors: for example, Dummet and Blundell (2021) estimated that about 40 percent of all tropical deforestation between 2000 and 2012 was driven by the illegal conversion of forestlands for commercial agriculture,103 and Pacheco et al. (2021) highlighted the underlying role of landgrabbing on some deforestation fronts.104

It is also important to consider the dynamics of future drivers. For example, the global population is projected to reach 9.7 billion people by 2050;105 taking dietary changes and other factors into account, this implies an increase in food demand of 35–56 percent,106 potentially increasing demand for land and pressure on forests.

Certain trade practices involving agricuiltural and forest products could drive deforestation.107 Although forest area has expanded in several regions worldwide, the deforestation embodied in some of their imports has increased.108 FAO’s remote sensing survey found that as much as 7 percent of global deforestation between 2000 and 2018 was due to oil-palm plantations alone,109 of which some three-quarters of production enters international trade.110

Forests have a crucial role to play in enabling the world to meet the SDGs, including those related to biodiversity conservation, livelihoods, food security, mitigating natural risks, and climate-change mitigation and adaptation. Continued deforestation would have significant consequences that nevertheless are difficult to estimate due to a range of uncertainties and the potential for tipping points, thresholds and feedbacks. For example, models show that the Amazon biome could cross a tipping point if deforestation exceeds 40 percent of the original forest area, triggering a transition to savannah ecosystems, with consequences and costs that cannot readily be assessed.111

Halting deforestation could be one of the most cost-effective actions for mitigating and adapting to climate change and reducing biodiversity loss

Climate change. The Sixth Assessment Report of the Intergovernmental Panel on Climate Change made it clear that climate change is widespread, rapid and intensifying and that only rapid and drastic reductions in GHGs in this decade can prevent climate breakdown.112 All pathways developed by the Intergovernmental Panel on Climate Change consistent with limiting the mean temperature rise to less than 1.5 ºC compared with the preindustrial period require human activity to become carbon-neutral by 2050. Analysis shows that, in addition to rapid decarbonization across economies, significant mitigation will be required from land-based options.113 Halting deforestation, which will involve actions to protect, sustainably manage and restore natural and modified ecosystems, provides significant climate and other benefits, including adaptation and resilience. Halting deforestation would avoid direct emissions from the lost biomass as well as maintain the capacity of forests to absorb carbon and support resilience and sustainable livelihoods.

Forests are both a source and a sink of GHG emissions. Net anthropogenic emissions from forests and land use (mostly, in practice, the conversion of forests and peatlands) between 2007 and 2016 were 5.8 +/- 2.6 GtCO2e, which was about 11 percent of global CO2e emissions.114 On the other hand, forests have delayed climate change by absorbing a significant portion of CO2 emissions from human activities115 – some 11.2 +/- 2.6 GtCO2 per year between 2007 and 2016.116 This buffering capacity is threatened by deforestation and forest degradation (including that caused by climate change). In the absence (at present) of other proven technologies for capturing carbon at scale, forest maintenance and restoration are the only ways to remove significant volumes of CO2 from the atmosphere.

In some cases, deforestation is irreversible (and, in others, recovery might be very slow), which is an additional source of concern and reinforces the need to halt deforestation as a means for addressing climate change. Globally, ecosystems at risk of deforestation or degradation contain at least 260 Gt of irrecoverable or difficult-to-recover carbon, particularly in peatlands, mangroves, old-growth forests and marshes.117 Unless additional actions are taken, an estimated 289 million ha of forests would be deforested between 2016 and 2050 in the tropics alone, resulting in the emission of 169 GtCO2e.118 Thus, halting deforestation and preventing forest degradation is one of the most important actions for reducing GHG emissions and removing CO2 from the atmosphere.

A recent assessment of multiple studies identified a technical potential for reduced deforestation of 3.1–8.9 GtCO2 per year and a cost-effective climate-change mitigation potential of 1.6–5.6 GtCO2 (average 3.6 GtCO2) per year (Table 4).119 Technical potential refers to what is possible with current technology, regardless of cost, and cost-effective potential is the estimated potential with a cost of up to USD 100 per tCO2e, which is considered within the range of what is needed to meet Paris Agreement goals; cost-effective potential is more relevant for policymaking and national planning. Thus, halting deforestation could have significant cost-effective potential relative to mitigation options in other sectors.120 Of the forest options (reducing tropical deforestation, improving forest management globally, and afforestation/reforestation globally), reducing tropical deforestation could account for two-thirds of the cost-effective potential.121 It has also been suggested that investing in the comparatively lower cost of forest-based mitigation would result in an overall lower cost for meeting climate targets globally and potentially release funds that could be used for further mitigation actions.122

Table 4Annual technical and cost-effective mitigation potential of the main forest climate-change mitigation options globally, 2020–2050

SOURCES: FAO calculations based on Roe et al. (2021) and also drawing on Austin et al. (2020) and Busch et al. (2019).
SOURCES: FAO calculations based on Roe et al. (2021) and also drawing on Austin et al. (2020) and Busch et al. (2019).
Roe, S., Streck, C., Beach, R., Busch, J., Chapman, M., Daioglou, V., Deppermann, A. et al. 2021. Land-based measures to mitigate climate change: potential and feasibility by country. Global Change Biology, 27(23): 6025–6058.
Austin, K.G., Baker, J.S., Sohngen, B.L., Wade, C.M., Daigneault, A., Ohrel, S.B., Ragnauth, S. et al. 2020. The economic costs of planting, preserving, and managing the world’s forests to mitigate climate change. Nature Communications, 11(1): 5946.
Busch, J., Engelmann, J., Cook-Patton, S.C., Griscom, B.W., Kroeger, T., Possingham, H. & Shyamsundar, P. 2019. Potential for low-cost carbon dioxide removal through tropical reforestation. Nature Climate Change, 9(6): 463–466.

Biodiversity. As detailed by FAO (2019), biodiversity is indispensable for food security, sustainable development and the supply of ecosystem services.123 An estimated 75 percent of the 115 leading food crops globally – together representing 35 percent of global food production – benefit from pollination by animals,124 many of which live in forests. Biodiversity continues to decline worldwide, however, and current actions are inadequate for ensuring its conservation and sustainable use and for achieving sustainable development.125 To reverse the trend of biodiversity loss, a transformative change is needed to tackle its root causes – that is, the interconnected economic, sociocultural, demographic, political, institutional and technological indirect drivers behind the direct drivers.126 Deforestation poses a serious threat to biodiversity because it leads to a disproportionate loss of species’ distributions, increasing the risk of extinctions.127

Enhancing measures to conserve and sustainably use biodiversity requires significant investment. In addition to managing forests more sustainably, protecting them is part of a mix of solutions. For example, an analysis by Waldron et al. (2020) suggested that the cost of protecting forests and mangroves on 30 percent of the Earth’s surface would require an annual investment of USD 140 billion;128 although considerable, this would be only about one-quarter of the global government subsidies currently channelled to activities that are harmful for forests (and therefore biodiversity) (see Chapter 4). However, no conclusions have been made in intergovernmental debates on whether any increase in forest protected areas at the global level would be feasible or desirable due to the complex trade-offs involved.

Hydrologic services. Sustainably managed forest ecosystems help regulate hydrologic cycles and can reduce the likelihood of agricultural losses from drought, soil erosion, landslides and floods.129 The ability of forests to provide services related to water quality, quantity and timing is closely linked to changes in land use and management as well as to the spatial and temporal scales at which forest–water interactions happen. In an analysis of 230 of the world’s major watersheds, those that had lost more than 50 percent of their original tree cover (as of 2015) were assessed to have a medium to high risk of erosion (88 percent risk), forest fire (68 percent) and water stress (48 percent).130 Forests in upper watersheds regulate waterflows and contribute to groundwater recharge as well as soil conservation. Forested watersheds provide three-quarters of accessible freshwater,131 including resources for many irrigated areas. Forest conservation can help reduce the cost of water treatment.132

Investment in forests could be a cost-effective measure for water management.133,134 In Mumbai, India, for example, water turbidity increased by 8.4 percent for every 1 percent of forest-cover loss, resulting in an increase of around 1.6 percent in the cost of treating drinking water.135 In Zambia, the saving obtained from forest management to reduce sedimentation in reservoirs has been estimated at USD 123 million to USD 247 million per year (USD 1.2 to USD 2.9 per ha per year), depending on the type of dam.136 Reducing sedimentation in reservoirs also increases the lifespan, usefulness and sustainability of the infrastructure, which could mean that fewer dams need be built.137,138,139

Disasters. Forests can cost-effectively mitigate disasters. For example, mangroves protect an estimated USD 65 billion in property values and about 15 million people against extreme weather events.140 The loss of existing mangrove cover could increase the number of affected people by 28 percent, the area of land flooded by 29 percent and the value of property damaged by 9 percent; the benefits of mangroves for risk reduction tends to increase with the intensity of flooding events.141

Emerging infectious diseases. Analysis of the spatial patterns of the origins of EIDs suggests that both deforestation and reforestation are correlated with a heightened risk of disease emergence globally. Notably, hotspots of concern are tropical forest regions experiencing rapid land-use change and population growth and where mammalian biodiversity is high (Figure 8);142 such hotspots could be targeted for prevention at source and for preparedness efforts. Forest ecosystem alteration is a major landscape-level contributor to disease emergence.143 In general, disease risk increases when transitions between forest contexts occur, such as the conversion of forest to agriculture, road opening, mining, and other industrial activities. A study in Senegal found that high levels of antibodies against the mosquito-borne virus Chikungunya in humans were significantly associated with residence near forest areas and gold-mining activities (which often involve increased human presence at mining sites, along with ecological changes).144

Figure 8“Hotspots” map showing the predicted distribution of zoonotic disease emergence risk from wildlife

SOURCE: Allen, T., Murray, K.A., Zambrana-Torrelio, C., Morse, S.S., Rondinini, C., Di Marco, M., Breit, N. et al. 2017. Global hotspots and correlates of emerging zoonotic diseases. Nature Communications, 8(1): 1124.
NOTE: Yellow indicates areas of highest relative risk and purple indicates lowest risk. Adjusted for reporting bias.
SOURCE: Allen, T., Murray, K.A., Zambrana-Torrelio, C., Morse, S.S., Rondinini, C., Di Marco, M., Breit, N. et al. 2017. Global hotspots and correlates of emerging zoonotic diseases. Nature Communications, 8(1): 1124.

There is growing evidence that pathogen spillover, amplification and spread is driven largely by consumption patterns set up by globalized production and trade, which drive encroachment into tropical ecosystems, particularly forested regions (e.g. for crop and livestock production, timber, mining, and the manufacture of goods).145 The cost of global strategies to prevent pandemics based on reducing land-use change and the illegal wildlife trade and increasing surveillance is estimated at USD 22 billion to USD 31 billion, but it could be lower (USD 17.7 billion to USD 26.9 billion) if the benefits of reduced deforestation for carbon sequestration are considered.146 These cost estimates are two orders of magnitude less than the cost caused by a pandemic, providing a strong economic incentive for transformative change to reduce the risk of pandemics.147 Among other things, the forest ecosystem dimension of the One Health approach needs strengthening to address underlying drivers of disease emergence (Box 6).

Box 6One Health

The human-health benefits of forests, and people’s needs, vary by context, particularly between rural and urban areas. One Health is an integrated approach recognizing that the health of people is closely connected to the health of animals and our shared environment; it aims to ensure that experts, policymakers and stakeholders in multiple sectors work together to tackle health threats to animals, humans, plants and the environment. The One Health approach has the potential to reduce disease transmission risks and improve the health and well-being of all people, wildlife, livestock and ecosystems. To date, most One Health efforts have invested primarily in public health sectors, followed by the veterinary sector; it has become apparent, however, that addressing the ecosystem-health dimension through responsible land-use planning and the greater involvement of the forest and wildlife sectors and natural-resource managers is equally important.148 Continuous monitoring and surveillance, data-sharing and evidence-based decision-making are essential for minimizing impacts and adjusting policies over time and as conditions change.

Multiple benefits are to be gained from halting deforestation and maintaining forests, locally and globally as well as in the short and long terms, including the potential to contribute to a green recovery from the COVID-19 pandemic. A significant part of this goal can be achieved cost-effectively. The joint prioritization of the objectives of sequestering carbon and protecting biodiversity, water and other values would likely identify significant overlaps between these objectives and thus opportunities to increase cost-efficiency. For example, one joint prioritization exercise estimated that the top 30 percent of priority areas globally would conserve about two-thirds of existing carbon stock, clean water and species.149

Policy responses for halting deforestation typically involve creating incentives for forest conservation, addressing the potential conflicts with development pathways, food security and economic needs, and investing in enabling conditions for more efficient land-use decisions. Here, we highlight some of the policy responses available to advance the halting-deforestation pathway.

REDD+. REDD+ is a framework created under the United Nations Framework Convention on Climate Change (UNFCCC) to guide and reward results from policies and actions that reduce emissions from deforestation and forest degradation and encourage the sustainable management of forests and the conservation and enhancement of forest carbon stocks in developing countries; it could be a key mechanism for halting deforestation and meeting climate goals and for countries to receive results-based payments (RBPs). Building on the REDD+ framework, countries can meet and enhance their nationally determined contributions (NDCs) to climate-change mitigation under the Paris Agreement, with many countries recognizing the mitigation potential of forests in their recent NDCs. REDD+ actions can also be linked to carbon-financing opportunities provided by Article 6 of the Paris Agreement (see Chapter 4) and complement country efforts to implement their national adaptation plans.

The participative processes and capacity development inherent in REDD+ preparation and implementation have created the conditions for action, but implementation is still needed at scale. At the national level, greater articulation between REDD+ strategies and agricultural policies could be crucial for addressing deforestation drivers, many of which relate to commodity production. Where REDD+ RBPs for emission reductions have been obtained, they can be invested in more forest-positive agrifood systems, feeding a virtuous circle between sustainable rural development and climate achievements.

Enabling and implementing integrated sustainable land management. Integrated landscape governance approaches are inherently cross-sectoral. They seek to coalesce partners, provide directionality and facilitate action within a specific jurisdiction or landscape at the subnational level.150 Such approaches are complex and can take many forms based on the local context. Five key components are emerging as minimum requirements to enable the localized reduction of deforestation from agricultural expansion: (1) multistakeholder partnerships built around a common agenda; (2) consistent neutral technical support and capacity development; (3) integrated land-use planning; (4) shared monitoring and information systems; and (5) funding the transformation to forest-positive landscapes.151,152

In addition, collaboration among public bodies and the active engagement of stakeholders, including women and marginalized communities, are needed so that the plans are informed by the interests and needs of these different groups; clear, secure land tenure is another necessary foundation for long-term sustainable investment and coordination (see Chapter 5). Governments can play a significant role by providing the legal and technical conditions necessary for enabling Indigenous Peoples, local communities, smallholders, women, youth and other vulnerable groups and their local social organizations to manage larger territories.

Strengthening governance. Legal economic activity, including forest and agricultural production, is vital for realizing sustainable land management, and strengthening land-use planning and governance and supporting law enforcement and accountability processes can be key for reducing negative trade-offs between agriculture and forests. This includes fostering innovative approaches for traceability, accountability and capacity development in the context of agricultural and wood (and NWFP) value chains.

Box 7The Global Environment Facility’s Food Systems, Land Use and Restoration Program

The aim of the Global Environment Facility’s Impact Program on Food Systems Land Use and Restoration, launched in November 2021, is to reduce the negative impacts of food production systems in 27 country-level projects and across eight production and value chains covering beef, cocoa, corn, coffee, palm oil, rice, soy and wheat. The anticipated results will be achieved by establishing sustainable land-use and agrifood-supply systems that avoid or reduce deforestation at scale. All projects follow a programmatic approach comprising three key components: (1) the development of integrated landscape management systems; (2) the promotion of sustainable food production practices and responsible commodity value chains; and (3) the restoration of natural habitats.

SOURCE: World Bank. 2021. Home page | Folur. In: FOLUR - food, land use, restoration [online]. [Cited 31 March 2022].

Adaptation to climate change. There is increasing evidence that the loss and degradation of ecosystems, including forests, increases the vulnerability of people to climate change, especially Indigenous Peoples and local communities.153 Forest ecosystem services enhance the adaptive capacity and resilience of people and ecosystems through (for example) water and temperature regulation, flood-risk reduction, nutrient cycling, pollination, resource provision and cultural services. Ecosystem-based adaptation approaches can reduce climate-change risks for people, biodiversity and ecosystem services, but their effectiveness declines with increased global warming, underscoring the importance of pursuing mitigation–adaptation synergies in climate action. The role of forests and trees in enabling people to adapt to climate change and enhancing the resilience of farming systems, other economic sectors and human infrastructure is increasingly recognized and included in national adaptation plans.154

Increasing agricultural productivity on existing land, especially for smallholder farming, is essential for halting deforestation

Competition for land between agriculture (croplands and pasturelands) and forests and other natural ecosystems has a close relationship with the technical features of agrifood systems, including yields and markets. Agricultural production more than tripled between 1960 and 2015,155 whereas the area of agricultural land increased by only about 27 percent over the same period.156 Globally, only 30 percent of the arable land area was needed in 2014 to produce the same quantity of crops produced in 1961,157 showing the significant impact of productivity gains in limiting demand for additional land.

Productivity-enhancing technologies have helped partially decouple increases in agricultural production from agricultural expansion but can also have unintended environmental impacts (e.g. soil degradation, biodiversity loss, water pollution, pest outbreaks and GHG emissions) due to excessive reliance on monocropping, fertilizers and pesticides.158 Nevertheless, Byerlee et al. (2014) found that intensification can help minimize cropland expansion and slow deforestation at the local level, especially if it occurs away from the forest frontier, is knowledge- and technology-driven rather than market-driven, and is locally adapted, as appropriate.e,159 An increase in yields may also act as an incentive for future deforestation by increasing the potential revenue from deforested land in the absence of additional measures aimed at limiting forest change.

Yield increases have differed between crop and livestock systems and among countries. Less progress in increasing agricultural productivity in many sub-Saharan African countries (due in part to a lack of capacity among smallholders arising from, for example, a lack of access to resources and technologies) has led to larger areas of land used for cereal production,160 among other key crops. In such countries, increasing yields of widely cultivated crops and staple foods161,162 could be a way to reduce pressure on forests. Mosnier et al. (2015) tested the impact on deforestation of increasing yields in the main crops in Cameroon and the Democratic Republic of the Congo and found a reduction in deforestation (compared with the baseline) of 33 percent in the former and 27 percent in the latter.163,164

Some global scenarios derived from partial equilibrium models project reductions of cropland expansion in 2030 and 2050 due to yield increases, including: a net-zero expansion at the global level in 2030 where per-hectare crop yields increase twice as fast as the historical average in emerging and developing countries (2 percent per year and 2.3 percent per year, respectively);165 and a reduction of 21 percent in the expansion of cropland in 2050 where yields increase by 20 percent above the baseline scenario with improved adaptation to climate change.166 Several studies have shown that increases in the productivity of croplands and cattle ranching, combined with appropriate market and public policies, could help stabilize the forest frontier in the Brazilian Amazon.167,168 Garcia et al. (2017) assessed the economic and environmental feasibility of sustainable livestock intensificationf on a deforestation frontier in the Brazilian Amazon; they found that conversion was economically viable on medium-to-large farms in that municipality.169 The cost of reaching the yields that could limit encroachment on forests is difficult to assess at the global level; Krause et al. (2013) modelled the economic impacts of prioritized forest conservation on agriculture and found that production costs would increase by a maximum of 4 percent, driven predominantly by increased investment in agricultural productivity.170

The scientific evidence for agricultural intensificationg as a means for limiting future deforestation is still limited, however.171 Positive synergies or negative trade-offs might be observed, depending on the nature of the intensification, including the target market for produced commodities, the distance of the place of implementation from deforestation fronts,172 and the effectiveness of land governance.

Thus, although improved technology in agricultural production cannot be a stand-alone solution, investment in research and development and technical assistance is needed to increase agricultural productivity as an essential cost-effective contribution to reducing deforestation.173 To be transformative, technical progress must be embedded in integrated approaches, including strong land and forest governance, an appropriate legal framework and related law enforcement, and complementary measures such as strongly supported protected-area systems and value chains that distribute benefits fairly and ensure that producers earn a sufficient living income.174

Companies are increasingly committing to zero deforestation in value chains, but more action is needed

A growing number of companies are signing up to deforestation commitments, but progress in achieving results is slower than needed. An increasing number of datasets and studies have highlighted the link between agricultural land expansion and deforestation, and public and private awareness and commitment to address this negative trade-off have grown concomitantly. In recent years, countries, subnational governments, civil society and the private sector have broadly adopted the objective of reducing, halting and reversing forest loss, including through initiatives such as the New York Declaration on Forests, the Consumer Goods Forum, the Amsterdam Declarations, the UN Secretary General’s initiative on turning the tide on deforestation and, more recently, the Glasgow Leaders’ Declaration on Forests and Land Use. Most of these instruments define specific goals for decoupling agricultural production from deforestation.

Many companies have adopted measures aimed at ensuring sustainability in their supply chains,175 such as codes of conduct, due diligence, certification schemes, the exclusion of specific providers or areas of supply, spatial monitoring systems and traceability instruments.176,177 Some initiatives have been undertaken for specific commodities, like the Amazon Soy Moratorium signed in 2006, in which 90 percent of companies in the Brazilian soy market committed to avoiding the purchase of soy grown on recently deforested areas in the Brazilian Amazon. Around 500 major food retailers, traders and processors now have guidelines or commitments on reducing the risk of deforestation or forest degradation in their value chains.178 The market share of companies with some form of deforestation-free commitments varies across products, ranging from about 12 percent for soy, livestock and pulp and paper to 65 percent for palm oil.179

Hundreds of companies have identified business risks associated with deforestation and consequently adopted measures to reduce these. Among them, 151 companies assessed the financial impact of such risks at USD 53.1 billion and the cost of responding to those risks at just over USD 6.6 billion. Some 131 companies considered that ensuring that their value chains are not associated with deforestation represents a business opportunity that could be valued to USD 35.6 billion.180

Initiatives to assess deforestation risk are also emerging. For example, in 2019 the CDP181 requested on behalf of its investors that more than 1 400 companies report on five forest-risk commodities – timber, palm oil, cattle, rubber and soy – and 21 percent (300 companies) complied. Through its supply-chain initiative, the CDP also requested disclosure on climate impacts from companies in the supply chains of high-forest-risk companies on behalf of the purchasing companies, and about 60 percent (399 suppliers) complied.

Despite such efforts, progress among companies with forest-risk supply chains appears slow. A recent assessment of the world’s 350 most influential companies linked to deforestation in supply chains found that 252 (72 percent) did not have a deforestation commitment for all forest-risk commodities in their supply chains, 117 had no deforestation commitments at all, and, for many companies with commitments, evidence of implementation was lacking.182

The UN Food Systems Summit, held in September 2021, addressed the decoupling of agricultural commodities from deforestation. A range of announcements on deforestation were made at the 26th Conference of the Parties (COP) to the UNFCCC, including significant pledges of financial contributions (Box 8; see also Chapter 4).

Box 8The 2021 UN Food Systems Summit, and the Forest, Agriculture and Commodity Trade Dialogues

Decoupling agricultural commodities from deforestation has been addressed at the UN Food Systems Summit in September 2021 under Action Track 3 “Boost nature-positive production”,183 to be followed up by a coalition called Halting Deforestation & Conversion from Agricultural Commodities.

In the context of the 26th Conference of the Parties (COP 26) to the UN Framework Convention on Climate Change, 11 country and philanthropic donors pledged USD 1.5 billion to protect forests in the Congo Basin. Twenty-eight governments signed the Forest, Agriculture and Commodity Trade Statement to deliver sustainable trade and reduce pressure on forests, including by providing support for smallholder farmers and improving the transparency of supply chains. Ten of the largest private sector companies managing over half the global trade of key forest-risk commodities such as palm oil and soy announced that they would develop a roadmap for enhanced supply-chain action by COP 27.

To contribute to private sector momentum towards greater social responsibility, an increasing number of governments around the world are incorporating the Organisation for Economic Co-operation and Development–FAO Guidance for Responsible Agricultural Supply Chains – a global standard for addressing risk and development in the agriculture sector – into their corporate sustainability policies, linking investment, enterprise, agriculture and development.

Governments can play major roles in halting deforestation, including in public–private approaches

Public-sector involvement is important for increasing the positive impacts of business initiatives to limit deforestation and forest degradation in supply chains. Governments of producer countries can set enabling legal frameworks; steer land-use planning; establish protected areas;184,185 ensure the coherency of fiscal incentives and forest and agricultural policies; improve law enforcement and monitoring; clarify the collective rights of Indigenous Peoples and local communities, which have been associated with improved forest stewardship (see also Chapter 5);186,187,188 support capacity development, especially for small farmers and small and medium-sized enterprises; provide guidance on traceability and chain-of-custody tools; introduce specific requirements in public procurement for goods and services; develop reliable and accessible information systems; and put adequate mechanisms in place to avoid the risk that small and medium-sized enterprises will lose access to markets because of stringent requirements related to the risk of deforestation. Robust monitoring and information for decision-making are enabling factors for improving governance and informing land-use decisions – such as the use of near-real-time deforestation alerts.189

Initiatives involving integrated public–private approaches to addressing deforestation and forest degradation are increasing – for example, the zero-deforestation commitments made for five commodities in Colombia and the Cocoa & Forests Initiative in Côte d’Ivoire and Ghana (Box 9). In Brazil, the reduction in the rate of deforestation of more than 80 percent achieved between 2004 and 2014 has been attributed to a combination of government policies (e.g. stronger law enforcement), supply-chain interventions (including private commitments on soy and cattle), and changes in market conditions.190,191 Governments can also take legal action to prevent deforestation caused by specific commodities. For example, Indonesia adopted a temporary moratorium (in force from September 2019 to September 2021) on the expansion of oil-palm plantations and imposed (in 2019) a permanent ban on the clearing of primary forests and peatland – affecting both oil-palm and timber plantations – on 66.2 million ha of these strategic ecosystems.

Box 9Public–private collaboration on zero-deforestation value chains

Zero-deforestation agreements in Colombia. The Colombian Government included in its 2018–2022 national development plan the objective of setting up zero-deforestation agreements for five agricultural value chains – palm oil, cattle meat, dairy products, coffee and cocoa. The aim is to ensure zero gross deforestation by 2025 in these value chains. An already significant and growing share of the national market for the five commodities is covered by the agreements – including, for example, 15 coffee production companies commanding 90 percent of the national market and six companies representing 85 percent of the market for cocoa. Multistakeholder platforms are at the heart of the initiative, with all categories of player along the value chains – government and other public entities, companies of different sizes and roles, farmer organizations, commodity-based professional unions, research centres, non-governmental organizations and international initiatives – involved in the collective effort.

SOURCE: R. Rodriguez, Ministerio de Ambiente y Desarrollo Sostenible, Colombia, personal communication, 22 September 2021.

The Cocoa & Forests Initiative. Cocoa production is one of the most important sources of income in West Africa, involving around 2 million small producers whose livelihoods depend directly on this crop. Cameroon, Côte d’Ivoire and Ghana produce around 68 percent of cocoa worldwide, but the crop also caused the deforestation of around 2.3 million ha between 1998 and 2007. In these countries, public–private partnerships are being established to scale-up zero-deforestation production and increase traceability and responsible sourcing by taking advantage of REDD+ frameworks.192 Since 2017, the governments of Côte d’Ivoire and Ghana and 35 leading cocoa and chocolate companies have joined together to eliminate cocoa-related deforestation and restore forest areas, committing to aligning their actions in four areas of work, with shared responsibilities. Côte d’Ivoire has adopted a national satellite system to monitor deforestation for the Initiative. Cocoa and chocolate companies reached 82 percent (Ghana) and 74 percent (Côte d’Ivoire) traceability in direct sourcing in 2020. Some 620 000 farmers have been trained in good agricultural practices for “more cocoa on less land” and “climate-smart cocoa” and innovative financial models have been developed, including payments for ecosystem services to farmers in Côte d’Ivoire and collective mechanisms like village savings and loan associations.

SOURCE: Cocoa & Forests Initiative. Undated. Annual report Cocoa & Forests Initiative 2020. (also available at

The opportunity cost of halting deforestation on agricultural revenue is significant – one estimate puts it at nearly USD 800 per ha per year in the Brazilian Amazon

The opportunity cost of conserving forests on the agricultural revenue obtained from deforested lands is a key factor for assessing the potential of instruments designed to add value to forests. For example, using census and deforestation data for municipalities in the Brazilian Legal Amazon Region, de Figueiredo Silva et al. (2018) estimated the shadow price of reducing deforestation in terms of agricultural income foregone at minus USD 797 in annual agricultural GDP per ha of forest conserved.193 Increasing the economic value of forests for local actors can provide an incentive to halt deforestation, supported by sustainably increasing agricultural productivity; moreover, efforts are needed to address constraints on smallholders in accessing incentives and increasing productivity. Incentive measures to address opportunity costs might include payments for ecosystem services194,195 and subsidy reforms.196 Market incentives should be aligned with forest conservation and ensure support along supply chains.197,198 An analysis by Börner et al. (2020) suggests that, although the protection of indigenous lands and payment schemes for ecosystem services have shown relatively high effectiveness in conserving forests, the intervention context matters.199

There is patchy empirical evidence on the costs and benefits of halting deforestation. A literature review by Rakatama et al. (2017) estimated the mean opportunity cost at USD 11.13 per tCO2e; transaction and implementation costs at USD 3.39 per tCO2e; and total costs at USD 24.87 per tCO2e.200 The estimated direct monetary benefits were significant and thus an important element in the rationale for forest protection, at USD 17.37 per tCO2e. These estimates vary considerably with location and time and in relation to socio-economic conditions – for example, an increase in world demand for agricultural commodities would raise the opportunity cost of forest conservation.201 Generally, however, it is likely to be cheaper to halt deforestation than to restore degraded lands later.

Additional incentives may be needed. According to a recent report on progress towards achieving the goals established in the 2014 New York Declaration on Forests, “All assessment indicators show either insufficient progress towards ending forest loss and associated GHG emissions by 2030 or that we are moving further from the targets”.202 For example, according to the report, humid tropical primary forest loss is well above levels before the New York Declaration on Forests, “with an average of 41 percent more loss each year” after the declaration was signed than before.203 Although numerous companies are signing up to deforestation commitments, progress in achieving results needs to accelerate.

Incentive schemes for the provision of forest ecosystem services are emerging, mostly focused on carbon. The voluntary forest carbon market is potentially important, although, despite early enthusiasm, it has grown only slowly. With increasing global efforts to decarbonize economies, investment in climate finance is projected to grow to USD 60 trillion by 2050 (see Chapter 4). This is likely to create huge opportunities for forest-based carbon credits because demand and prices for offset credits are expected to rise. REDD+ mechanisms are also providing options for countries to receive results-based finance.

In some contexts, forest-based tourism can be important for generating economic and employment opportunities for women, youth and other vulnerable groups. Aligning incentives created by policies and providing other support to recognize the role of forests could contribute to halting deforestation; such measures are discussed in Chapter 4.

back to top TOP