To Finance or Not to Finance: A Large Scale Forest Restoration Problem

Abstract

The restoration of forest ecosystems is a pivotal strategy for addressing environmental challenges such as climate change, biodiversity loss, and land degradation while fostering socioeconomic development. This paper examines the financial and governance frameworks necessary to scale up restoration investments, emphasizing their role in achieving sustainable land use. By integrating a Post-Keynesian perspective, it highlights the challenges posed by uncertainties, high discount rates, and illiquidity in forest investments. The study explores mechanisms like blended finance to mobilize resources and overcome market failures, presenting a comprehensive analysis of financial instruments and policies. The findings underscore the importance of aligning ecological, economic, and social objectives to ensure the viability and scalability of forest restoration initiatives, with policy coordination emerging as a critical enabler.