Special bonds proposed to fund reforestation

national June 30, 2012 00:00

By Janjira Pongrai
Pongphon Sarn

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Governmentissued "forest bonds" should be used to raise money from the private sector to fund the recovery of 30 million rai of degraded forest areas across the country, a leading thinktank has proposed.

The new bond would be issued to private firms looking to invest in forest restoration as part of corporate social responsibility programmes, while also turning a profit.

The proposal is the brainchild of Thailand Development Research Institute (TDRI) senior researcher Assoc Prof Adis Israngkura, who conducted a study to develop a new financial mechanism to fund the recovery of degraded forestland.

The results of his study were presented at a seminar titled “Method to Manage Thailand’s Forest Bond” organised by the Thailand Research Fund.

Adis said the new bond would be managed by a public organisation or forestry industry organisation. Its task would be to raise money via the sale of the bonds to the private sector, and to develop financial resources to support the bond.

Financial resources for bond management would come from three activities: selling carbon credits, selling timber and ecotourism.

These activities are expected to raise Bt200 billion to support the bond and return a profit to investors.

Bondholders are expected to see a return of at least 8 per cent a year on their investment, Adis said.

The new public organisation would hire local people to plant trees to recover degraded forest areas, Adis said.

The bond is expected to fund the restoration of degraded forests nationwide. About 30 million rai of degraded forest will be selected as pilot areas.

Of this amount, about 20 million rai comprise forest reserves that have been encroached upon and illegally occupied by local people. The other 10 million rai are overseen by the Agricultural Land Reform Office (ALRO) and cannot currently be used for agricultural purposes.

“[Conventional] government measures are not the only way to stop forest encroachment,” Adis said.

“I don’t think that every forestrelated agency will agree with my idea; I’ve just tried my best to find a new financial mechanism and an easy way to recover degraded forest areas. The forest bond is the fastest way to raise money from the private sector to speed up the forestrecovery process, but at the moment it is still just an idea,” he said.

ALRO deputy secretarygeneral Suthitpong Sudchookiat said he agreed with Adis’ proposal and would make available some landreform plots that can no longer be used for agricultural purposes to support the plan.


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