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Honduras, Nordic Fund sign 6 million euro loan for “pro-bosque” forestry program

LIMA, Peru – Honduras and the Nordic Development Fund (NDF) today signed a 6 million-euro loan to support Pro-Bosque, a multiphase sustainable development program aimed at increasing the economic, social and environmental benefits generated by the Honduran forestry sector.

Honduran Finance Minister Jose Arturo Alvarado signed the document with NDF President James Lund Sorensen and Regional Director Jesper Andersen in a ceremony held during the annual meeting of the Inter-American Development Bank’s Board of Governors, which is taking place in Lima March 29-31.

This program reflects the cooperation among international organizations and bilateral aid agencies that support the sustainable development of Honduras’ forestry. The IDB has approved a $17.5 million soft loan for Pro-Bosque, while NDF and a Swedish fund financed studies used in preparing the program. The IDB project team also coordinated with World Bank teams working on projects concerning land tenure regularization and forest management in Honduras.

Honduras is the country with the biggest potential for forestry in Central America. Nearly 87 percent of its land is apt for forestation. Its natural forests cover around 54,000 square kilometers, or almost half its territory. The Honduran forestry sector’ productivity levels have an ample margin for improvement.

Forestry contributes significantly to Honduras’ national income, reaching a peak of 10 percent of GDP late in the 1990s. Nevertheless, its potential is constrained by such factors as the uncertainty of land tenure, high transaction costs, a lack of knowledge about modern forestry practices, a scarcity of public support and specialized services and economic distortions that depress the prices primary producers receive for their timber.

The Pro-Bosque program will address the constraining factors to help Honduras develop its forest resources in a sustainable manner and to benefit small and medium-size forestry enterprises, timber and lumber producers’ associations, municipalities, rural communities and individual producers in poor areas with high potential for forestry.

The program is expected to generate environmental benefits, such as a decrease in the rate of deforestation and an improvement in conditions in the country’s river basins, by promoting best practices in forest management at the national and local levels. The program will also put forward a proposal to strengthen monitoring and control of illegal logging and timber sales.

One of Pro-Bosque’s components will provide support to national and local authorities to regularize land tenure in forest areas. In the past, land disputes have triggered clashes between rural communities and forestry businesses.

Among other activities, the program will finance the establishment of land tenure regularization boards with the participation of municipalities, training for municipal cadastre units and conflict resolution mechanisms.

This component is expected to help cover around 625,000 hectares in four priority areas where most of the program’s local activities will be carried out during the four-year initial phase. These areas include three pine-growing regions (Francisco Morazan, Olancho and Teupasenti Danli) and a broadleaf forest region in Altantida-Colon.

Pro-Bosque will also provide resources to finance productive projects capable of yielding high social and economic returns on investments. Proposed projects should also promote the use of environmentally sounder methods and foster vertical and horizontal integration in the forestry sector to ensure a more equitable distribution of the benefits generated by the forests.

The program will also support the modernization of the agencies and policies that govern the forestry sector at the national and local levels. Among other goals, this component will support the reorganization of the National Forestry Administration to help it carry out its role as a regulating agency.

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