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SFRLF_Final.pdf

Encouraging the sustainable management of forests is one of our most promising strategies for
conserving ecosystem services in the Chesapeake Bay watershed. Forest management can provide income to landowners while conserving their forest‐provided ecological services like water filtration.
However, forest management often operates at thin financial margins and is easily influenced
by external forces like global wood markets.

The loss of forestland or the occurrence of unsustainable harvests often happen when family
forestland owners have a sudden need for cash (e.g. medical expenses). This need is often
exacerbated when forestland changes ownership due to outstanding debts, tax liabilities,
competing interests of heirs, etc. This is important to the Chesapeake as nearly a third of all
family owned forestland is expected to be sold, converted to another land use, or passed on to
heirs in the next five years.

The substantial amount of funding that would be needed to protect these forest provided
ecosystem services with traditional conservation tools like easements is not available, so other
financing options will be needed. This prospectus assesses a financing mechanism to promote
sustainable forests in light of these threats, a sustainable forests revolving loan fund.

A revolving loan fund (RLF) is a self‐replenishing pool of money. The interest and principal
payments on old loans are used to issue new loans. Revolving loan funds have been primarily
used for bridge financing to enable the expansion of small businesses. The financing mechanism
has recently become a valuable tool for implementing environmental objectives like land
conservation and non‐point source pollution control. Examples include the U.S. EPA's Clean
Water State Revolving Loan Fund and The Conservation Fund's Great Lakes Revolving Loan
Fund.

A Sustainable Forests Revolving Loan Fund can provide low‐interest loans with flexible terms to
woodland owners. The loans would allow woodland owners to address short‐ to mid‐term financial needs thereby alleviating the pressure to proceed with an unsustainable timber harvest or to sell their property. A revolving loan fund targeted towards woodland owners will provide a critical source of financing because these landowners face unique circumstances that are not adequately addressed from traditional private lenders and government programs.

http://www.pinchot.org/gp/SFRLF