Until plantation forestry became prominent several decades ago, the plentiful supply of forests around the world meant that the traditional model of producing timber was to clear cut old and secondary growth forest and utilize the land for tree plantations on a 15-30 year cycle.
In tropical regions, primarily in the Amazon and Southeast Asia, the forestry model consisted (and still does) of cutting primary forest and subsequent use of the land for palm, rubber or other cash crops.
The alarming pace of destruction of tropical forests has led to global concern at the loss of one of the world's most important natural elements.
As well as home to a huge amount of biodiversity, the tropical forests provide water crucial to regional agriculture.
Recently the Stern Review on Climate Change suggested that keeping the world's forests intact will result in more than 20% of greenhouse gases being abated, and further, this is the cheapest abatement option mankind has.
However, the tropical timber trade is estimated to be worth more than 40 billion USD per year and is of huge value to the developing nations in Southeast Asia, Africa and Amazonia, who are sensitive to being preached at by Western governments about forestry policy.
Practicing sustainable forestry generally requires a long-term investment horizon and increased initial investment, with lower returns in the short term.
Such practices contrast with the huge, short-term returns of 200% plus possible after two to three years from clear cutting tropical forests and planting palm oil.
So the dilemma remains how to provide incentives to developing countries to utilize their forest resources in a sustainable manner rather than for short-term profits.
The fact that forests provide a far higher long term value to users than simply the value of timber extraction has been shown in over 400 studies conducted in the last decade and collated now in a major review known as The Economics of Ecosystems and Biodiversity (TEEB), supported by the United Nations Environment Program's Finance Initiative.
These long-term benefits can outweigh timber by a factor of up to four times.
The main value streams are the water sheds the forests support and rainfall they supply to surrounding areas.
Should these vanish, billions of dollars in lost agricultural value would result.
Also of increasing importance is the value of the carbon credits held by intact forests acting as carbon sinks.
How much these credits are worth will be determined by the outcome of international negotiations on forests and carbon and also price of carbon credits on the open market.
However, all analysis shows that the value of leaving the tropical forests intact in terms of carbon is on par or greater than the timber value under even the most pessimistic scenario for the value of carbon credits.
Overall, this new approach to forestry is know as "forest plus" indicating that forest owners are becoming aware of this additional value of their asset.
All observers agree that a primary force in realizing the long- term value of forests rather than harvesting them for short-term gain will be the world's financial markets and companies.
These range from small, local cooperatives in the developing world to huge multinational banks that provide project financing to some of the world's largest agricultural companies.
This trend was evident at the recent (Nov 11-12 2009) gathering of leading banks and investment managers in Amsterdam for a conference entitled Boosting Investments in Biodiversity and Ecosystem Services.
The event was partly billed as a match-making opportunity for sustainable forestry funds and projects and interested investors.
Project sponsors included investment fund New Forests, a US based firm with over 250 million USD under management in sustainable forestry and biodiversity related projects.
CEO David Brand noted that markets for carbon credits from forests could reach over 1 trillion USD in the long term if their true value in abating climate change is understood and realized.
Sustainable Forest Management Africa meanwhile presented a project designed to protect Rwanda's mountain gorillas and surrounding forest areas while exploiting the region's ecotourism potential in a government backed scheme to sell "Silverback Bonds" to investors.
So who are the investors in these exotic and sometimes risky financial products and projects? Interested parties include pension funds from the US and Europe who have 30 year + horizons for their money and want to ensure an element of sustainability in their investments.
Also, numerous mainstream forestry sector funds are increasingly interested in companies who practice sustainable management of their assets.
Such funds are common in Sweden, Finland and other nations with strong forestry sectors.
Wealthy individuals and family offices are also interested in allocating a portion of their assets to such sustainable investments, especially if they can see their investment resulting in a specific improvement to a local forested area.
The role of standards and certification is key in this sector as few investors have the time or resources to conducted detailed due diligence on the actual forests.
They rely primarily on the Forest Stewardship Council's FSC certificate for forest owners.
FSC representatives were indeed in attendance at the meeting in an attempt to try to present a service to investors and the financial community.
Until now, the FSC standard has largely been used by direct purchasers of wood and timber products.
It is recognized that with the increased interest in the details of sustainable forestry by the financial community, FSC and other standards bodies need to present a standard more in tune with the language of investment and finance.