Building a business model next challenge in forest restoration

Building a business model next challenge in forest restoration

At the United Nations Convention to Combat Desertification in Mongolia this month, the conversation shifted from how much land countries can pledge to how restoration can pay for itself.

Building a business model next challenge in forest restoration. Source:UNEP

For more than a decade, governments have competed to announce ever more ambitious forest and landscape restoration targets. The Bonn Challenge has attracted pledges covering 257 million hectares of degraded and deforested landscapes - an area larger than Algeria. Yet behind the headline numbers lies a more stubborn question, and one that featured prominently in Ulaanbaatar in August: how do countries finance and sustain restoration long after the donor projects end?

When the 197 parties to the UN Convention to Combat Desertification (UNCCD) gathered for COP17 from August 17 to 28 under the banner “Restoring Land, Restoring Hope,” they did so against a sobering financial backdrop. The UNCCD estimates the world needs roughly $355 billion a year for land restoration through 2030 - and is falling short by about $278 billion annually. Put another way, closing the gap requires close to $1 billion every day. Current global investment, which climbed from $37 billion in 2016 to $66 billion in 2022, is not even one-fifth of what is required.

The temptation is to read those figures as a fundraising problem. Increasingly, practitioners argue it is a design problem. Restoration has too often been financed in short, fragmented project cycles - three years of grant money, a ribbon-cutting, a final report - with little that endures once the funding stops. The trees may go into the ground; the system to keep them growing, monitored, and economically useful isn’t keeping pace with the ambition.

“Restoration succeeds when monitoring, communities, finance and institutions work together. It is not about planting trees. It is about building systems that outlast the project,” said Mirey Atallah, chief of the United Nations Environment Programme (UNEP) Adaptation and Resilience Branch, at the UNEP–Korea Forest Service event on the sidelines of the conference.

The event brought together policymakers, practitioners and financing specialists from across Asia. Their shared argument was that the next generation of restoration must be treated less like a planting campaign and more like a long-term economic system: one built around credible measurement, viable community enterprises and institutions capable of attracting patient finance.

Source: UNEP

Why carbon finance alone cannot close the gap

For several years, carbon markets were pitched as the answer. Forests absorb carbon; investors pay for the tonnes; restoration funds itself. The reality has proved far more complicated. Forest-based credits - projects under REDD+ (reducing emissions from deforestation and forest degradation) make up more than 40 per cent of the voluntary carbon market - have been dogged by integrity concerns, with independent studies finding some projects overstated their climate benefit by wide margins. Prices and volumes fell as buyers grew wary, and a recurring criticism is that too much value has flowed to intermediaries rather than the communities doing the work.

The lesson emerging from the Ulaanbaatar discussions was not that carbon finance has no role, but that it should be treated as a catalyst rather than a cure. It works best as one revenue stream inside a broader model - alongside blended finance, sustained public investment and, crucially, monitoring systems robust enough to give both governments and investors confidence that results are real and measurable.

“The gap was never ambition. It’s the connective tissue - the policies, the data, the enterprises, the coordination - that turns a pledge into a payment,” said Sunpil Jin, vice executive director of the Asian Forest Cooperation Organisation, at the event.

A test case

One attempt to build that broader model is the SAFE Initiative - Sustaining an Abundance of Forest Ecosystems - a partnership born from a 2023 agreement between the Korea Forest Service and UNEP. Rather than treating conservation, monitoring and enterprise as separate workstreams, SAFE deliberately stitches them together across four countries: Bhutan, Cambodia, Laos and Vietnam.

The early results are modest in scale but instructive in design. Working through eight community forest management plans, SAFE has restored more than 120 hectares of degraded forest and engaged over 2,000 households. It has trained more than 120 forest “ecopreneurs” across 5,500 hours of instruction, seeding small enterprises - from non-timber forest products to nurseries - that give communities a financial reason to keep forests standing. And it has published a Forest Restoration Impact Monitoring Framework, or FRIMF, designed not as a project deliverable but as a public good that countries can fold into their own national monitoring systems in 2026–2027.

“The strongest evidence of success is what continues after the project ends - the models that get scaled, the framework that becomes national policy, the enterprises that keep trading,” said Park Eun-sik, director general of the Korea Forest Service.

That monitoring backbone is what turns good intentions into something investable. Without credible data on whether forests are actually recovering, neither a finance ministry nor a private investor can justify long-term capital. With it, restoration begins to look less like charity and more like an asset class.

The country experiences presented at the event sharpened that argument. In Bhutan, SAFE has focused on restoration, a national monitoring framework and results that could underpin forest carbon finance, while linking small- and medium-sized enterprises to community forestry so that livelihoods and conservation reinforce one another.

In Laos, a restoration pilot with rigorous impact monitoring has helped connect forest enterprise development to REDD+ results-based payments - an example of carbon finance working precisely because it sits on top of credible measurement rather than standing in for it. Vietnam’s experience adds a third data point on what institutions need to make any of it durable.

Across the cases, three elements repeatedly reinforced one another: credible measurement, viable local enterprises and patient finance. When finance is pursued without the first two, restoration risks slipping back into the familiar boom-and-bust project cycle.

None of this makes the financing gap disappear. Restoring 350 million ha by 2030 - the Bonn Challenge’s global goal - could deliver an estimated $170 billion a year in net benefits, and every dollar invested in land restoration returns between $7 and $30. The economic logic is overwhelming. The bottleneck is architecture: the connective tissue between a pledge and a payment.

That may be one of the quieter but more important shifts to emerge from COP17. For years, the restoration movement measured progress mainly in hectares pledged. The more revealing measure is whether those hectares sit inside systems - monitored, locally supported, economically viable and institutionally anchored - that can survive the end of any single grant.

VIR