CHALLENGE
The World Bank Group has been successful in reporting on the business and investment climate in developing countries through its Doing Business rankings which look at regulatory systems at the country and sub-national level. PROFOR and other partners have also devoted time and energy in trying to mobilize greater participation of businesses in meeting forest sector economic, social and environmental goals. A conducive investment and business climate would seem to be an essential element in this effort and would help increase the forest sector's contribution to "green growth".

However the regulatory requirements faced by large multinational and small local businesses vary widely; implementation of regulation is often inadequate; and investments in the forest sector may be driven by other factors such as adequate information on the resource base (inventories, land use maps, etc) and whether that resource is accessible (infrastructure, land rights, etc).

APPROACH
PROFOR created and tested a practical tool (methodology) for systematically assessing how administrative and regulatory requirements impact the business climate for investment in wood products and the forest sector more broadly. To develop the tool, PROFOR established a forest investor typology that reflects the needs of both domestic and international strategic investors and small and medium forest enterprises, and reviewed existing investment climate studies and tools and their applicability for forest sector investors.The applicable tools were then tested in Lao PDR and Tanzania to assess demand for such tool tailored to the forest sector, identify gaps in measuring forest investment climate, and understand the value add of a new instrument.

RESULTS
The publication Business Climate for Forest Investments: A Survey provides an overview of a diversity of tools to assess investment climate, their applicability in the forest sector and main gaps, and offers a menu of options for further development to improve methodologies and investment climate for sustainable forest management and wood processing.

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