One way to think about the role of finance in the forestry sector is through the program REDD+. This program, initiated by the United Nations, stands for Reducing Emissions from Deforestation and Forest Degradation. According to the UN, leading Climate Change research suggests that nearly 20% of global greenhouse gas emissions are related to forestry - including the effects of deforestation, forest degradation, conversion of forests into pastureland, agricultural expansion, destructive logging, fires, infrastructure development, etc. Therefore the aim of REDD+ is to create financial value for carbon sequestration - as a service provided by forests - in order to incentivize emission reductions in forest rich regions (e.g. primarily the developing world) and investments in sustainable management, conservation, and enhancement of forest stocks. However, there is criticism from both sides of the aisle - those who fear the social, economic, and environmental consequences of an expanded sphere for financial mechanisms; and those who fear the inability for financial mechanisms to be implemented given the inefficiencies and complexities of the market.
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