Key Details
The ADB brief From Roots to Returns: Financing a Nature-Positive Future for Asia’s Forests examines why forests remain financially undervalued and how conservation could generate more dependable economic returns for governments, investors and communities.
Indicator | Finding |
|---|---|
Forest area in Asia and the Pacific | Approximately 9 million sq km |
Forest per person | Around one-third of the global average |
Forest lost, 2000–2020 | 682,000 sq km, or 11.4% |
Share of global forest loss | 16.6% over the period |
Formal forest-sector employment | 22.3 million people in the region |
Formal economic contribution | Approximately US$800 billion |
India’s forest-linked livelihoods | About 275 million people depend on non-timber forest products |
India’s estimated forest area | 578,292.6 sq km in 1990 and 573,035.3 sq km in 2020 |
Forests Create Value That Rarely Appears on a Balance Sheet
The region’s forests support timber and manufacturing, but their larger contribution includes carbon storage, watershed protection, flood control, soil conservation, cooling and biodiversity. These services often carry no market price and are consequently underrepresented in public budgets and investment appraisals.
The formal forest economy contributes approximately US$800 billion across Asia and the Pacific. Its full importance is larger because nearly 80% of forestry employment is informal, while subsistence use and locally traded forest products are poorly captured in conventional economic statistics.
This creates an incentive problem: clearing forests for agriculture, timber or infrastructure can produce an immediate financial return, while the economic benefits of keeping them intact are dispersed across communities, sectors and future generations.
The brief presents nature finance as a way to address this imbalance. The term covers financial mechanisms that convert services such as carbon storage, watershed protection and biodiversity conservation into revenue or investible projects, making forest protection more economically viable.
More Trees Do Not Necessarily Replace the Forests Lost
Asia and the Pacific lost 682,000 sq km of forest between 2000 and 2020, although almost 200,000 sq km also regrew through afforestation, plantations and secondary-forest recovery.
The brief stresses that these gains are not ecologically equivalent. Mature natural forests generally store more carbon and sustain richer biodiversity than plantations or agroforestry systems. Aggregate tree-cover figures can therefore improve even as natural-forest quality continues to decline.
Agricultural expansion is identified as the leading direct cause of deforestation, while logging, fuelwood collection and charcoal production contribute heavily to forest degradation. Commodity demand, insecure tenure and weak enforcement reinforce these pressures.
India’s Forest Economy Is Primarily a Livelihood Story
In India, non-timber forest products such as bamboo, fibres, medicinal plants, fruits, resins and other materials support an estimated 275 million livelihoods. Indigenous Peoples and local communities may derive up to 40% of their income from these products.
India is placed in the brief’s “late-transition” category: forest loss has slowed but has not yet shifted into net expansion. Its estimated forest area declined by approximately 5,257 sq km between 1990 and 2020, leaving it at 99.09% of the 1990 level.
These estimates combine data from Our World in Data and Global Forest Watch. The classification is an analytical comparison used by the authors, rather than an official assessment under India’s forest-monitoring system.
Nature Finance Is Expanding, but Results Remain Modest
The brief maps several instruments that can convert ecological services into financial returns:
Payments for ecosystem services compensate communities or landowners for protecting resources such as forests and watersheds.
Carbon markets create revenue from verified reductions in deforestation-related emissions.
Blended finance uses public or philanthropic capital to absorb part of a project’s risk and attract private investors.
Green bonds, debt-for-nature swaps and guarantees can mobilise larger or longer-term pools of capital for conservation.
Viet Nam’s Payment for Forest Environmental Services programme illustrates what scale can look like: it generated approximately US$360 million between 2011 and 2017 and helped protect around 5.8 million hectares.
Experience with REDD+, which rewards reductions in emissions from deforestation and forest degradation, is less conclusive. Its 377 projects cover 53 million hectares across 56 countries but account for only around 1% of avoided annual forest-based emissions. South Asia has among the lowest implementation densities, while community benefits and recognition of Indigenous rights remain uneven.
Five Steps Proposed for Moving Beyond Isolated Projects
The brief organises its recommendations around five priorities:
Make forests economically visible: Translate ecological benefits into indicators that public agencies, lenders and investors can use.
Put communities into the financial model: Simplify access to finance, strengthen negotiating capacity and mandate equitable benefit-sharing.
Standardise measurement: Develop common methods and digital systems for monitoring carbon and biodiversity outcomes.
Build trustworthy markets: Clarify ownership of environmental credits, maintain public registries and enforce verification standards.
Use public money to unlock investment: Support early project development, provide guarantees and combine small community projects into investible portfolios.
Policy Relevance
India already channels public resources into afforestation and restoration through the Compensatory Afforestation Fund framework, while the Green Credit Programme creates credits for specified environmental activities. The ADB brief points to a broader test: whether such mechanisms reward ecological quality and durable community benefits, rather than primarily counting plantations or credits. India’s Green Credit Programme is administered by the Indian Council of Forestry Research and Education, while CAMPA funds are intended to support compensatory afforestation, degraded-forest restoration and biodiversity improvement.
The livelihood evidence also connects nature finance with the Forest Rights Act, 2006 and government support for marketing minor forest produce. Projects involving forests and environmental credits will need clear treatment of tenure, community consent and revenue-sharing if forest-dependent households are to participate as beneficiaries rather than simply project subjects.
For policymakers, the immediate task is to connect forest monitoring, community rights and financial regulation. Reliable baselines, transparent registries and independent verification can protect market integrity; accessible contracts and enforceable benefit-sharing determine whether that integrity extends to communities.
Follow the Full Brief Here: From Roots to Returns: Financing a Nature-Positive Future for Asia’s Forests