Various Innovative Funding Mechanisms

Various Innovative Funding Mechanisms employed by developing countries

Tradable Carbon Dioxide Permits: For setting aside forest for the purpose of atmospheric carbon mitigation, developing countries receive economic benefit like debt cancellation and direct payment from industrialized countries. Malaysia, Indonesia, Belize, Costa Rica, Guatemala, Ecuador.

Bio-prospecting Fees: Only Costa Rica has taken advantage of this innovative plan for generating capital by entering into a contract with the American pharmaceutical company, Merck, though Bristol-Myers-Squibb is said to be negotiating a similar deal in Suriname. This funding mechanism has excellent potential in light of the increasing interest in secondary forest products, especially medicinal agents.

Deforestation Charges: Increasingly used as a way to both raise revenue and protect forest ecosystems. Deforestation charges are levied against firms whose activities cause deforestation. Brazil, Central African Republic.
Ecotourism Charges: Ecotourism charges through park entrance fees, hotel taxes, and service charges is becoming a major source of funding for parks around the world. Funds collected from eco-tourists are used to improve reserve management, to hire guides and park rangers, and expand park boundaries.

Scientific Permits: Like ecotourism charges, scientific fees are customary in many parts of the world and are often used to finance reserves.

Watershed Charges: Charges imposed on urban dwellers by the government for the protection and reforestation of hillside forests which ensure the regular flow of clean fresh water into cities. Costa Rica, Brazil, Indonesia, Malaysia.

Tradable reforestation/conservation credits: Financial credits issued by industrialized countries to forest countries in exchange for environmental protection.

Compensation for conservation: Some governments grant monetary compensation to farmers land-holders who allow their lands to revert back to forest.