Exploring current & potential revenue streams for forest managers in the tropics

Andries Polinder, Gryanne Hamming, Eli Prins, juli 2025

This report investigates the current and potential income sources available to managers of natural tropical forests, with a focus on enhancing sustainable forest management. While timber remains the dominant and most reliable source of revenue, the report emphasizes the importance of diversifying income streams to improve economic resilience and sustainability. It explores four main categories of forest-based revenues: timber and wood products, fuelwood and charcoal, non-timber forest products (NTFPs), and payments for ecosystem services (PES), including carbon credits.

Timber continues to be the backbone of forest income, especially for commercial concessions, due to established markets and relatively high value. Certified sustainable forest management can offer price premiums and access to niche markets, although these benefits often fall short of expectations. Informal timber markets also play a significant role, particularly for local communities, but pose challenges for legality and sustainability.

Fuelwood and charcoal are widely used in tropical regions, especially in Africa, Asia, and South America, but their low market value limits their potential as a primary income source. However, utilizing timber processing residues for fuel could enhance local economic benefits and reduce waste.

NTFPs, such as fruits, nuts, and medicinal plants, are vital for local livelihoods and have significant domestic use, though they are rarely integrated into formal forest management plans. Their economic contribution is often underreported due to informal trade, but they hold potential for community-managed forests if better marketed and formalized.

PES, particularly carbon credits, offer a promising but currently limited revenue stream. The voluntary carbon market is growing, yet the income it generates is generally insufficient to replace timber revenues unless carbon prices rise significantly. Access to PES is often restricted by legal, institutional, and technical barriers, especially for community forests lacking formal land rights or market access. Other ecosystem services, such as biodiversity conservation, watershed protection, and ecotourism, present additional opportunities but are highly context-dependent and face similar challenges in monetization.

While diversification of income is desirable and can support sustainable forest management, timber is likely to remain the primary source of revenue in the foreseeable future. Although complementary income from payments for environmental services (PES), non-timber forest products (NTFPs) and fuelwood can enhance financial sustainability, particularly for certified and community-managed forests, these are not yet considered viable alternatives on their own at a larger scale. To unlock the full potential of these alternative revenue streams, policy support, market development and capacity building are essential.