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Design of Fairventures Social Forestry Fund

__Overview: __ Convergence awards a feasibility study grant to Fairventures Social Forestry Gmbh (FSF) through the Asia Natural Capital Design Funding Window, funded by the RS Group. The funding will help FSF design the Fairventures Social Forestry Fund, a blended fund for financing sustainable forest landscape restoration and conservation of existing forests in Indonesia. The Fund intends to showcase a viable social forestry model for emerging markets by partnering with local communities to restore degraded land and conserve existing forests, ultimately leading to improved local biodiversity and carbon sequestration.

Since the 1960s, Indonesia has lost half of its forest cover to deforestation, with key drivers being extensive mining, logging, and conversion of forest land to agricultural plantations. Through this Fund, FSF is aiming to sustainably manage 50,000 hectares of forest land by financing projects involving – sustainable agroforestry on restored degraded land through intercropping of timber with cash crops; and conservation of existing forests leading to generation of carbon credits. In the long-term, the Fund has the potential to extend and sustainably manage 100,000 hectares of forest land, which could result in more than 6 million tons of carbon emissions avoided, sustainable income for around 4,000 households, livelihood impact for more than 20,000 residents, and development of over 100 local communities.

In this model, FSF would undertake the responsibility for managing the fund as well as developing the sustainable forestry projects. Following this approach, FSF has already launched an ongoing 3,000-hectare pilot in Central Kalimantan, Indonesia and this pilot would form the basis of designing the Fairventures Social Forestry Fund.

Design question and learning potential for the market: How can a scalable model be developed in dual-purpose sustainable forest land restoration and conservation projects while integrating local communities in the project design and implementation?

FSF is considering designing the fund to enable financing and developing of scalable sustainable forestry projects that adopt the social forestry model. Under the social forestry model, the Government provides long term usage rights of forest land to a local community organization, who usually have limited technical expertise for operating agroforestry projects. FSF will endeavour to partner with such community organizations for developing and implementing projects which would involve the participation of the local community members. In turn, the community members would benefit from increase in employment opportunities and will also get a share of the profits from the projects.

During the feasibility study, FSF will focus on designing a comprehensive model with details on financial flows to relevant stakeholders and identifying the appropriate legal structure of the fund. The grant will enable FSF to build upon the existing stakeholder engagements and develop a pipeline of investable projects.