Description: 

A $3 million climate and social development initiative to strengthen institutional capacity among Mexican financial institutions to lend to Community Forest Enterprises for creating sustainable forest management business.

Background:

Mexico’s forests represent an extremely valuable store of natural capital that provides significant economic dividends. Approximately 70 percent of this forest is found in communally owned ejidos and communities with high poverty rates and limited opportunities for entrepreneurial development.

Sustainable forest management is a means by which these communities can increase their incomes while managing their natural resources for long term productivity. However, without the technical and economic knowledge base necessary for this kind of management, detrimental use of the land results in biodiversity loss, agriculturally unproductive topsoil, and significant Greenhouse gas emissions.

This approximately $3 million project will provide technical and financial assistance, as well as loans to Community Forest Enterprises (CFEs) to help them create financially and environmentally-sustainable businesses in forest landscapes.

Objectives and Outputs:

The impact of the project is to improve profitability and social and financial sustainability of CFEs in ejidos and other forest communities while contributing to climate change mitigation. The results will be that Community Forest Enterprises (CFEs) increase their productivity while leveraging or preserving the natural capital of forest lands.

While this project is focused on micro and small enterprises, the operation is part of Mexico’s Investment Plan for the Forest Investment Program, a multi-project plan to holistically design an approach to the Mexican forest sector.

The actionable area for this program encompass some 1,768 ejidos and communities, which contain 4,277 municipalities of 2,500 inhabitants or less, and a total population of 556,624 (half of which are women). The municipalities are primarily poor, with average poverty rates of 75% and significant lags in health and education compared to national averages.

The Project beneficiaries will be 60 Community Forestry Enterprises that provide income to an estimated 4,900 women, men, and children from ejidos and other communities in the states of Oaxaca, Yucatán, Quintana Roo, Jalisco and Campeche, of whom approximately 40 percent are indigenous people. Indirect beneficiaries include 10,860 inhabitants of the ejidos which contain CFEs who will either benefit from increased return on their investment in the CFE or from community projects funded with proceeds from the CFE.

The Project´s potential success will demonstrate to other CFEs and to the financial sector that investing in sustainable forest management is profitable.

This project summary is drawn from draft project proposals [such as the PAD, PID, SAR, and country investment plan] and may not contain the most up-to-date information.

Project Details
Project Information | Proposed Decision
Approved on March 4, 2013 (Approved Decision)
Approved amount(s):
USD 2.88 million (grant funding)
USD 193,000 (MPIS First tranche)

Comments and Responses:
United Kingdom (March 4, 2013)
IDB | Market Study (Spanish) | FIP extra (March 11, 2013)