NIDA
The Forest Bond Initiative for Thailand.
The Forest Bond Initiative is committed to increasing forest coverage in Thailand from the current 16.2 million hectares to the national target of 20.5 million hectares or 40 percent of the total land area in Thailand. This involves reforestation in an area as large as 4.2 million hectares. Conventional methods of relying only on government budget and resources for reforestation in an area as large as 4.2 million hectares would take Thailand up to 150 years to reach this 40 percent target.
The Forest Bond Initiative offers an innovative solution that can efficiently mobilize resources through bond issuance and investment in commercial forest plantations. The profits generated from these plantations will be shared among forest keepers, loggers, wood industry workers, and all the investors and savers in the forest bond, hence making this mechanism inclusive.
The Forest Bond Initiative thus demonstrates how profitability can be harnessed to achieve sustainability goals.
Why Forest Bond?
Thailand’s forest management is in desperate need of a paradigm shift. The overwhelming pressure from illegal logging, mono-crop plantations, and human settlement in highland areas has hindered the government’s reforestation efforts. It is crucial to implement a powerful mechanism that can effectively counter these challenges and restore Thailand’s forest coverage.
Read MoreHow Does the Forest Bond Work?
The Forest Bond Initiative operates as a system where the flows of ecosystem services are matched by economic flows. The flow chart illustrates how the initial issuance of forest bonds mobilizes capital from savers and investors who, in return, will receive interest payments from their investment in forest bonds. The capital mobilized through the issuance of forest bonds is then used for forest plantations.
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The Four Economic Guiding Principles
The Forest Bond Initiative is guided by the four economic principles:
- Profitability
- Inclusiveness
- Cost-effectiveness
- Rights and Freedom
Economic and Financial Feasibility
The Forest Bond Initiative shows how business profitability can help achieve sustainability. One reason government control over forest reserves has not been successful is the lack of resources for forest protection. Therefore, if forests can be managed in a way that generates profits, jobs, and income for various stakeholders, these beneficiaries will be motivated to protect the forests because the forests are sources of their income and well-being.
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Teak Zoning Area
A successful forest replantation depends on selecting the right forest location and managing forest logistics effectively. The suitability of the forest areas will determine the quality of the wood and its growth rate. Effective logistic management will help reduce operational costs.
Read MoreCollaboration with Government Agencies
The Forest Bond Initiative is a combination of four research projects conducted by Adis Israngkura at The School of Development Economics, NIDA. After the publication of the book “Forest Bond Initiative for Thailand,” the Forest Economics Office of the Royal Forest Department (RFD) in Thailand took an interest in the forest bond initiative as an economic solution for reforestation.
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Carbon Neutrality and Net Zero Greenhouse Gas Emission
During the Conference of the Parties (COP26) of the UNFCCC, Prime Minister of Thailand, General Prayut Chan-ocha, pledged that Thailand will achieve Carbon Neutrality by 2050 and Net Zero Greenhouse Gas Emissions by 2065. To meet these targets, Thailand will need to reduce fossil fuel consumption (yellow bars) and maintain a significant carbon sink (green bars) through LULUCF (Land Use, Land-Use Change, and Forestry).
Read MoreSustainable Development Goals (SDGs)
The Forest Bond Initiative integrates economic, financial, ecological, and legal factors into a plan designed to address deforestation. The initiative is designed to promote sustainability across economic, financial, and ecological aspects. This section explains how the Forest Bond Initiative can contribute to nine Sustainable Development Goals (SDGs).
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About the Project Leader
ASSOC. PROF. DR.ADIS ISRANGKURA
Adis Israngkura is an Associate Professor of Economics at the Graduate School of Development Economics, National Institute of Development Administration (NIDA) in Bangkok, Thailand. Adis Israngkura received a BA and an MA in economics from the University of Canterbury, NZ, and a Ph.D. in economics from North Carolina State University. His research areas include environmental economics, climate change economic policy, and land economics. Adis Israngkura has also served as a member on important government committees in Thailand, such as:
- The National Environment Board
- The National Land Policy Board
- The Environment Fund Committee
- The Pollution Control Committee
His recent publications include Marine Resources Recovery in Thailand, Green Economic Policy for Thailand, Economic Analysis of Land Tax Act, and the book on the Forest Bond Initiative for Thailand.