Cultivating Capital: Unlocking Private Investment for Global Forest Restoration
Achieving ambitious global goals for forest restoration, such as restoring vast tracts of land by 2030, carries a substantial estimated cost. With public finances stretched thin and international aid often insufficient, the private sector is increasingly seen as a crucial player in bridging this funding gap. This need is particularly acute in lower- and middle-income countries (LMICs), where extensive degraded forestlands often coincide with limited financial resources.
Despite growing interest, private investment in forest restoration (FR) has yet to reach the necessary scale. A key reason is that investors are not merely seeking locations where trees can flourish; they require opportunities that offer profitability, security, and long-term sustainability. While previous research has focused on identifying areas with biophysical potential for restoration, fewer studies have examined whether these areas are also attractive to private capital.
Mapping Investable Opportunities: Beyond Biophysical Potential
Recent research systematically assesses the overlap between biophysical restoration potential and the conditions necessary for viable private-sector investment. This study focused on two primary types of private investors:
Wood market investors: Those seeking returns from timber, fuelwood, and other wood products.
Carbon market investors: Those pursuing returns through carbon credits generated from afforestation, reforestation, and natural climate solutions.
To determine the true investable portion of the world's restoration potential, the study evaluated six to seven critical conditions influencing revenues, costs, and risks. Crucially, it also explored whether high-investment-potential areas align with broader restoration priorities like biodiversity conservation and climate mitigation.
Analysing 115 LMICs using spatial datasets, the research identified degraded forestlands and assessed their "investment readiness" across key conditions, including:
Tree growth rates (for wood)
Potential carbon sequestration (for carbon markets)
Market access
Restoration costs
Parcel size (for economies of scale)
Security of property rights
Country risk factors
Areas unlikely to attract private investment, such as high-value agricultural lands and protected areas, were excluded, focusing instead on landscapes where private actors might realistically engage.
The analysis employed an existing spatial planning tool that integrates diverse geospatial datasets related to restoration potential. For each roughly 1 km square of land, investment conditions were ranked, and the number of favourable conditions tallied. The study also compared national restoration commitments against realistically investable areas and examined co-benefits like biodiversity conservation and local livelihood enhancement.
The Investment Gap: A Sobering Reality
The headline finding is stark: only a small fraction of restorable forestland in LMICs is genuinely attractive to private investors under current conditions. In a "base scenario", approximately 53% of restorable land met at least four favourable investment conditions, with less than 1% meeting all seven. For a "natural climate solutions scenario", only 33% of restorable areas met at least four favourable conditions, again with less than 1% meeting all six. This reveals a sobering reality: the potential for restoration far outweighs the current potential for private investment, suggesting that more than half of the world’s degraded forestlands are unlikely to attract the necessary private capital.
Investment hotspots are concentrated in upper-middle-income countries, while low-income countries, often with the greatest restoration needs, lag significantly. An encouraging insight, however, is that areas with strong investment potential also tended to offer substantial local livelihood benefits, such as increased employment in the forestry sector. Conversely, potential global environmental benefits like carbon sequestration and biodiversity gains were not consistently aligned with these investment hotspots, particularly in wood-driven scenarios. This creates a paradox: nations with the highest need for restoration finance are often the least equipped to attract private investors.
The Enduring Role of Policy
This analysis strongly suggests that many national restoration commitments are unlikely to be met through private investment alone. More than half of the LMICs studied have made commitments that exceed the land area realistically appealing to private investors. This underscores a critical point: private investment must complement, not replace, public policy and funding.
Governments have a vital role in enhancing the underlying investment environment by:
Improving market access (e.g., investing in roads and infrastructure)
Reducing investment costs (e.g., offering tax incentives or restoration subsidies)
Strengthening land tenure and property rights to provide investors with security
Fostering demand (e.g., promoting wood use in public procurement)
While private finance is often geared towards profitable ventures like timber production, public or blended finance solutions remain essential for ensuring that restoration also delivers global public goods, such as biodiversity conservation and climate change mitigation.
An Integrated Approach for the Future
This study represents a starting point for more tailored, investor-specific analyses. Future research priorities include refining how investment attractiveness is measured by weighting factors based on investor surveys, segmenting results by investor type, and improving data quality, particularly concerning restoration costs and benefits at finer scales.
The study highlights a crucial reality: scaling private investment in forest restoration demands more than simply identifying degraded lands. Investors require a robust enabling environment, clear land rights, adequate infrastructure, market incentives, and manageable risks. Currently, these conditions are met in only a limited number of countries and regions. The path to widespread forest restoration is a collaborative one, requiring private finance, public policy, and local community leadership to converge, transforming fragmented prospects into a coordinated restoration economy that benefits both people and the planet.
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