Findings and Recommendations

Findings:

• There is no universally accepted definition of ‘Green Finance’, but it can broadly be conceptualised as ‘environmentally-targeted sustainable finance’.
• Green finance mechanisms and Payments for Ecosystem Services (PES) are neither synonyms nor completely separate concepts. To the extent that PES involve project-focused funding or provide a revenue stream for investors, they can be viewed as a subset of Green Finance, though they also cover wider non-financial elements.
• The application of innovative green finance mechanisms to TWFs in the UK is currently relatively under-developed, although the number of projects seeking to channel more private investment is growing (e.g. the Wyre Natural Flood Management Project, Mersey Forest, and Trees for Life).
• Financial mechanisms that have potential to be applied to UK’s trees, woods, and forests include Timberland Investment Management Organisations (TIMOs), Environmental Impact Bonds (EIBs), and Community-funded Forestry.
• Evidence on the critical factors underpinning the successes of mechanisms being applied in the UK is currently sparse. General factors from the broader literature include the need for more investment-ready projects, robust governance and regulation, as well as consultation of all stakeholders throughout a project.

Recommendations:

• Investigate further (e.g. using interviews) factors underpinning the success of innovative TWF-related green finance mechanisms applied in the UK (as projects continue to develop).
• Conduct more detailed research on mechanisms like TIMOs and EIBs, which are more commonplace in other countries, to assess better their potential applicability in the UK context.