Forestry can be a very profitable business in Latin America. This is evident in the increasing flows of international investments in the forestry sector of the region. In looking at the profit issue, the question of time horizon is of utmost importance in promoting sustainable forest management. The time frames for sustainable forest practices are often longer than for other types of investments, and affect their relative profitability compared with other land uses. Yet the returns on this type of investment accrue much more broadly than solely to the private investor°¦s pocket book. The returns also accumulate in the form of ecological and environmental benefits to local, regional and global societies. In some cases, business interests can coincide with conservation efforts, provided the appropriate regulatory framework is in place. An increasing number of business leaders now agree that the environment (and its problems) can be looked upon as one of the most important commercial opportunities of the coming decades. The past ten years have seen the creation of companies with missions that are both good for business and good for the environment. This suggests that new and innovative financial instruments can be developed which will encourage these developments and further this trend. This will be especially important when it relates to innovative small and medium-sized biodiversity-based enterprises operating in developing countries, because the collective impact of these enterprises on the economy ƒ{ and on the global environment ƒ{ is huge. While many types of investment strategies involve the public sector, the international community, and various public/private partnerships, this article focuses on three mechanisms: debt swaps used mostly at national level, conservation financing through user fees at regional or local level and private sector investment via venture capital funds by individual companies.

The forest sector's capability for self-financing is significant, but the potential is far from being reached due to the undervaluation of forest resources. Underlying policy and market failures should be corrected. Private sector operations can range from timber production to non-timber forest products, ecotourism, and producing various services (such as watershed protection and prevention of natural disasters). Emerging new financing instruments have unexplored potential. These instruments are aimed at making use of the opportunities created by increasing the trade of both global and local environmental services offered by forests. The funding role of businesses in the private sector should be enhanced through innovative financing instruments some of which have been presented in this article. New private sources and mechanisms are needed as public sector funding is falling short of the financing demands for forestry development and conservation.