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Concept Note detail | ITTO | The International Tropical Timber Organization

PENDING FINANCE

1. General Description:
ID:CN-24032
Project resulting from this CN: N/A
Note: CNs are developed into project proposals following consultation with donor(s).
1.1 Project Title:
Strengthening the forestry sector value chain through sustainable forest
management and utilization in Costa Rica

1.2 Submitting Country/ies:
Costa Rica

1.3 Specific Location & Country/ies/regions/areas benefitting from the project:
All forested areas in Costa Rica

1.4 Endorsement from ITTO Focal Point:
3170_06.pdf
1.5 Intended Project Duration (in months):24
1.6 Indicative Budget (in US$):
ITTO

512,960

Counterpart

130,000

Total

642,960

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1.7 Programme Line Focus
Legal and Sustainable Supply Chains (LSSC)
1.8 Project TypeCapacity Building/Training
Project Type - Other (please explain):
Policy development/implementation Market/product development

1.9 Proposal Summary:
Costa Rica has a forest cover, including mature forests, secondary forests, andforest plantations, of 3,110,285 hectares, of which approximately one million, could
be used for industrial purposes, both for wood-based products and non-timber forest
products. This use will increase carbon fixation in wood products, thus contributing tocommitments and goals related to climate change mitigation. Various factors havecontributed to the fact that the value chain, which covers all stages frommanagement and production to the commercialization of forest products, hasexperienced a notable deterioration. Consequently, forest degradation and illegal
logging could become a real threat to these ecosystems, to the detriment of theenormous efforts made by forest owners and state institutions, which have allowed
the extraordinary increase in forest cover, recognized both nationally andinternationally. Over the last four decades, Costa Rica has managed to stop
deforestation and reach the point where, since 2014, its forests have become a net
sink of greenhouse gases. Efforts have been implemented to conserve forest areas,
both in the public and private sectors, through incentives, Forest Promotion
Programs (PFE) and private reserves. Despite the important achievements made,the value chain has experienced a worrying deterioration, putting at risk the valuable
resources that have been recovered with great effort. The growing threat of illegal
logging and forest degradation represents an emerging challenge that requires
urgent attention and concerted actions to address effectively. There is partial
knowledge of the potential of the Costa Rican Forest, including its floristic
composition, volumes and areas. In 2015, it was determined that there were 915,000
hectares of unrestricted forests suitable for sustainable forest management. Throughrecent studies, the Chamber of Forestry, Wood and Industry (CFMI) identified thefloristic composition and availability.

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2. Proponent Information:
2.1 Executing Agency Information:
Name of Agency/Organization/Institution:
Forestry and Wood Industry Chamber of Costa Rica (Camara Foresta! de Madera elndustria de Costa Rica)

Name of main Contact Person:
Natalia Chacon Cid, Executive Director

Email:
info@camaraforestal.org
Other E-mail address:
olman@carbonrevenuecr.com

Phone:
506 84851212

Fax:
no aplica

URL:
https://www.camaraforestal.org

2.2 Type of Organization:
Private Sector/Industry Association

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Type of Organization- other case:
Private Sector/Industry Association

2.3 Collaborating Agency/ies:
Name of Agency/Organization/Institution:
Carbon Revenue Services S.A.

Name of main Contact Person:
Olman Serrano

Email Address:
olman@carbonrevenuecr.com

Phone:
506 22895369

Fax:
No aplica

URL:
https://carbonrevenuecr.com

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2.4 Relevant experience of EA:
The Forestry and Wood Industry Chamber of Costa Rica was founded in 1994 tolead and integrate value chain. There are 23 associated companies and the supportof 7 honorary members. Main activities include: (a) Promotion of the development
and integration of the forestry and wood industry sectors (b) Encouraging the use oflegal wood from sustainable sources identifying Newmarket opportunities (c)Promotion change of perception on forest harvesting and use of wood.

3. Relevance:
3.1 Conformity with ITTO objectives (ITTA, 2006) and priorities (current SAP):The proposed project is in conformity with all ITTO objectives, as set out in the ITTA,
2006. In particular, the project will: • Improve the knowledge of national forest
resources, particularly the availability of sustainable wood volumes suitable for theindustry. • Contribute to the process of sustainable development; based on national
policies and strategies. • Enhance the capacity of the private sector to develop andproduce high-quality and innovative wood and non-wood forest products for thenational and international markets, coming from sustainably managed tropicalforests. • Promote the expansion and diversification of national and international
trade in tropical wood and non-wood forest products from sustainable and legal
sources, by developing a range of high-quality products targeted to niche markets. •Promote and support research and development in the design of innovative
products, definition of production processes and quality control and thus, enhancing
the value of tropical forests. • Promote increased and further processing of tropicalwood from sustainably managed forests, with a view to promoting industrializationand thereby increasing their employment in rural areas, creating new decent job
opportunities for local and export markets. • Support natural forest restauration andrehabilitation of degraded forest land, involving local communities, in particular
women and youth, for future industrial use in high value wood products. • Improve
marketing and distribution, for local and export markets, of high value wood and non­wood forest products.

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3.2 Relevance to the ITTO Programme Lines:
The project is mainly relevant to the Programmatic Line #1: Legal & Sustainable
Supply Chains (LSSC), contributing to achieve the following objectives under thisprogramme line: • Promoting and strengthening networks to increase the
manufacture and legal trade of wood products from sustainably managed forests. •Improving market intelligence on the national and international wood products
markets, including the development of forest legality requirements, particularly tomarkets with established regulations for the import of legally sourced products. •Enhancing the capacity to produce legal and sustainable wood products, facilitatingproducts traceability, and enabling the due diligence process, whenever necessary. •Raising awareness within the government, private sector, and civil society of thecritical role that sustainably managed tropical forests play in contributing to the threepillars of sustainability (economic, social, and environmental), including theachievement of the SDGs and other global forest related goals and commitments.
That includes the contribution of sustainably manufacture wood products to climatechange mitigation, generation of rural employment involving women and youth.
Relevance to the Sustainable Development Goals (SDGs) and the Global Forest
Goals (GFGs) and other forest related global agenda. This project proposal isrelevant to the following SDGs: Goal 13 Climate Action: Costa Rica is in one of thegeographical areas most vulnerable to climate change. Forests contribute to both
mitigation as GHG sinks, and adaptation to climate change. A main outcome is to
give value to the forests and therefore promote its conservation and sustainable use.
Goal 5 Gender Equality: The Costa Rican Gender Action Plan REDD+ Strategy has
made visible the important role of women in conservation and sustainable forest
management.

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3.3 Relevance to the Sustainable Development Goals (SDGs) and the Global
Forest Goals (GFGs) and other forest related global agenda:
This project proposal is relevant to the following SDGs: Goal 13 Climate Action:
Costa Rica is in one of the geographical areas most vulnerable to climate change.
Forests contribute to both mitigation as GHG sinks, and adaptation to climatechange. A main outcome is to give value to the forests and therefore promote its
conservation and sustainable use. Goal 5 Gender Equality: The Costa Rican Gender
Action Plan REDD+ Strategy has made visible the important role of women inconservation and sustainable forest management. The project aims at generating
new employment opportunities for women and youth at various levels in the forest
and in the industry. Furthermore, the project and its subsequent actions will beframed within the Gender Equality Award in Productive Units (GIGUP), so that the
products derived from it will be differentiated from others by guaranteeing genderequality and recognition of the role of women. Goal 15 Life on Land: the project will
benefit the conservation and sustainable management of forest ecosystems. Goal 9
Industry, Innovation, and Infrastructure: This project will promote the manufacture ofwood products from an ecosystem that has been underutilized. This will requireinnovation in both processing and final products. Other goals relevant: Many of thepoorest and disadvantaged populations are in or near forested areas. This projectwill give value to an underutilized ecosystem, generating new employment
opportunities and welfare in an equitable manner, and thus, it will contribute toachieving additional Sustainable Development Goals: Goal 2 Zero Hunger; Goal 3
Good Health and Welfare; Goal 8. Decent work and economic growth; Goal 10:
Reduced inequalities.

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3.4 Relevance to submitting country’s policies:
The most important instrument of National Planning is the National Development
Plan. The following objective has been included in the Strategic Area: Infrastructure,
Mobility and Land Use Planning, to which the project will directly contribute,advancing towards carbon neutrality with the contribution of the forestry sector andkey sectors such as public transportation, agriculture and livestock and encouraging
the participation of local governments to mitigate climate change. Likewise, theactivities of the project are framed within the National Decarbonization Strategy, inaxis 10 objective 10.1, which states: 10.1. implement the REDD+ Strategy topromote the reduction of emissions from deforestation, avoided degradation andconservation of forests and ecosystems in both rural and urban areas. At the level ofobjectives that can be impacted by REDD+, it is proposed to stop deforestation andregenerate degraded lands through forest restoration and reforestation. In addition,
Costa Rica's NOC proposes the need to maintain and increase forest cover as anelement to mitigate and adapt to climate change. The country also has a National
REDD+ Strategy that states, among others, that one of the drivers of deforestation is
the lack of an efficient and successful forestry sector in the production,industrialization, and marketing of wood products. The Strategy also has two relevant
policies which are considered by the project activities: Policy 3: Incentives forconservation and Sustainable Forest Management. Policy 4: Restoration of forest
landscapes and ecosystems. More specifically, the project will contribute to on-the­ground implementation of the following measures: Measure 3.3.1. Promotion
throughout the wood and forest products value chain. Action 4.1.1. Restoration of
degraded watersheds. Costa Rica is also part of the recently formed Greening
Construction with Sustainable Wood initiative, recognizing that wood fromsustainably managed forests provides climate

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3.5 Linkages to previous/ongoing ITTO and other projects/activities (if any):
Rica is currently implementing two ITTO projects, namely: (1) PD849/17 Rev.2 (F) Increasing Commercial Reforestation Competitiveness in Costa Rica. Executing
Agency: Costa Rican Institute of Technology, School of Forestry/Research Centre for
Forestry Innovation (CIF) and (2) PD931/23 (F) - Promoting SFM and Local Wood
Consumption through Capacity Building and Improving Regulation in the North Zone,
Costa Rica. Executing Agency: CODEFORSA - Forest Development Commission
Association of San Carlos. Another project has been concluded in March 2024,
which was about “Increasing the value of secondary natural forest through its
sustainable use, generating rural employment, in a post-Covid context”, implemented
by the Chamber of Forestry, Timber and Industry. The three projects demonstratethat there is an important area of forest with the potential to be managed sustainably.
However, there is a gap between these forests and the forest industry, in otherwords, the forest value chain is weak and does not allow an equitable distribution of
the benefits generated. If the current situation persists, there is a risk that in the shortterm there will be an increase in the levels of degradation and in the medium andlong term there will be a return to significant levels of deforestation.

4. Project synopsis:

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4.1 Objectives (reflecting reference to elements within all ITTO Guidelines asapplicable):
Effective mechanisms are established for the sustainable harvesting, processing,and marketing of forest products, creating economic incentives for conservation,
improving the livelihoods of forest dependent communities, and contributing toclimate change mitigation and adaptation. Specific objective Sustainable
management and valuation of forest resources are strengthened to safeguard theirlong-term availability and the ecosystem services they provide. The project
objectives reflect reference to ITTO Guidelines, in particular to the Voluntary
Guidelines for the sustainable management of natural tropical forests. It is expected
that, thanks to the project, forest resources, coming from both mature forests,
secondary forests, and forest plantations, can be valued, and managed in asustainable manner, guaranteeing their long-term availability for future generations.
Another important aspect is the creating of new employment opportunities in rural
areas, especially for women and youth, thus strengthening the local economy andpromoting social inclusion. Increased use of local wood can significantly contribute toclimate change mitigation by promoting the manufacture of wood products fromsustainably managed sources, increasing carbon sequestration, and reducing
pressure on dedicated forests for preservation. Furthermore, it is known that wood
replaces products with a high carbon footprint. Beneficiaries are expected to use theresources and services generated by the project in an efficient and sustainable
manner. For example, it is anticipated that local communities will participate inmultiple activities, both those related to the use of wood, as well as the use andtransformation of non-timber forest products, thus promoting the local economy andimproving their quality of life.

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4.2 Key problem(s) to be addressed:
The forestry industry in Costa Rica faces several critical challenges. Firstly, the entire
forestry value chain, covering management, production, and marketing, hassignificantly deteriorated over the last three decades, leading to a disconnect
between producers and the market. Secondly, there's a shortage of specialized
forestry technicians to lead management plans, attributed to various factors such as
diminishing knowledge among professionals, closure of sawmills, and decline in
logging activities. Moreover, timber usage in construction is minimal, primarily for
low-value products, affecting value addition. Additionally, inadequate research on
wood harvesting, industrialization, and marketing techniques hampers sector
development and sustainable practices. The consequences of these challenges are
significant. Firstly, there's a decrease in the commercial value of forests, negatively
impacting the economy and leading to an erosion of intellectual capital in forestry
issues. Moreover, an imbalance in trade due to timber imports, coupled withextensive use of wood substitutes, worsens forest degradation and illegal logging,posing risks of deforestation Additionally, non­compliance with international
commitments, such as NDCs and agreements with ISFC, may tarnish the country's
reputation and environmental compliance. Furthermore, insufficient sustainable
management fails to promote rural development and long-term sustainability,
aggravated by an unprofitable value chain. To address these challenges, Costa Rica
must prioritize knowledge enhancement, sustainable practices, and value chain
strengthening while fulfilling international commitments for environmental
sustainability and economic growth. Additionally, Costa Rican companies' interest in
joining ISFC reflects a positive step towards responsible forest management.

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4.3 Main stakeholders and beneficiaries:
The main stakeholders and beneficiaries involved in the project include: 1. The
Forestry Industry, including the Forestry and Wood Industry Chamber of Costa Rica,
and the National Forestry Office (ONF). This sector benefits from improved
availability of wood and knowledge about timber and non-timber species, facilitating
sustainable management practices. 2. Local Communities and forest small holders:Access to wood and non-wood products is facilitated, creating economic
opportunities, and promoting sustainable resource utilization. 3. Environmental
Organizations: These organizations benefit from the promotion of sustainable forest
management practices and the conservation of forest resources. 4. Government
Agencies, such as the National Forest Financing Fund (FONAFIFO), the Ministry ofEnvironment and Energy: They play a crucial role in implementing policies andproviding support for the training of technicians and the creation of a favorable
environment for investment in the forestry sector.

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4.4 Key activities:
Product 1: The availability of wood for the industry is known. The volumes ofcommercial species that can be extracted legally and sustainably are evaluated, befrom mature natural forests, secondary forests, or from forest plantations. Activity 1.1
Carry out an evaluation of the forest resources of mature natural forests, secondary
forests, and forest plantations, based on existing information. Activity 1.2 Identify thecommercial species present in each type of forest, considering their volume andgeographical distribution. Activity 1.3 Evaluate the natural regeneration capacity of
species and their growth rate in different forest areas. Activity 1.4 Review and if
necessary, modify the legal regulations and environmental restrictions related to theuse of wood in each type of forest. Activity 1.5 Review and, if necessary, modify thesustainability criteria for wood extraction, considering the regeneration capacity ofthe species, the conservation of the ecosystem and the financial aspects related toforest management. Activity 1.6 Propose continuous monitoring systems toperiodically update information on wood availability and ensure its long-termsustainable management. Product 2: The main non-timber forest products are
identified. In addition to wood, other products and services offered by forests must be
evaluated, which can be used sustainably and marketed, both in national andinternational markets. Activity 2.1: Carry out an exhaustive study of forest
ecosystems to identify and catalog the non-timber products and services they offer,such as fruits, oils, resins, medicinal plants, fibers, among others. Activity 2.2:
Evaluate the demand and commercial value of a selection of non-timber products
identified in national and international markets. Activity 2.3: Analyze the technical andeconomic feasibility of the production and marketing of each non-timber product,considering aspects such as the availability of resources, production costs.

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4.5 Expected outcomes and impacts, including innovation/transformation:
The following outcomes and impacts collectively contribute to the transformation offorestry practices towards sustainability, innovation, and economic growth: 1.
Increased Knowledge and Awareness: Through evaluations and studies,
stakeholders will have a comprehensive understanding of available wood resources,
non-timber forest products, and their sustainable extraction methods, enhancing
awareness of forest management practices. 2. Enhanced Sustainability: Proposed
modifications to legal regulations and sustainability criteria will ensure the long-term
viability of wood and non-wood extraction, promoting ecosystem conservation andfinancial viability. 3. Improved Accessibility: Streamlined administrative procedures
and electronic management systems will facilitate legal and sustainable access toforest resources, reducing bureaucracy and preventing illegal logging. 4. Knowledge
Dissemination: Research findings on timber species qualities and workability will bedisseminated through various channels, fostering innovation in wood utilization, andenhancing the efficiency of forestry practices. 5. Investment and Market Growth:
Proposed programs, tax incentives, and marketing strategies will attract investments,
stimulate demand, and improve market access for forest products, fostering
economic growth in the forestry industry. 6. Capacity Building: Collaboration witheducational institutions and training programs will develop skilled technicians,
promoting sustainable forest management and innovation in wood processing
techniques.

4.6 Existing funding for (related) initiative(s)/established contacts to potential
donors:No potential donors have been contacted so far. Co-funding from the private sector
has been secured.

4.7 Any other information deemed necessary/important:
N/A

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4.8 Risk mitigation measures:
These following measures aim to enhance project effectiveness, foster collaboration,and leverage expertise, thereby reducing risks and maximizing positive impacts onforest ecosystems, climate resilience, and rural livelihoods. The proposed projects
must align with established policies and initiatives for forest conservation, climatechange mitigation, and rural livelihood improvement. To ensure this alignment andmitigate associated risks, the following measures will be implemented: 1.
Collaboration with national and international institutions and organizations that shareproject goals and objectives. 2. Engagement with forestry companies, forestry
communities and small holders to actively contribute to project development andimplementation, fostering partnerships for sustainable outcomes. 3. Establishingconnections with national forest research centers to leverage expertise, access data,and incorporate scientific insights into project strategies.

Donor:[]

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Indicative Budget (in US$):Description

ITTO

Counterpart

Total

Personnel

60,00030,00090,000Sub-contracts

135,000

15,000150,000

Travel and DSA

55,00020,00075,000Capital Items

65,00010,00075,000Consumables

30,00035,00065,000Publication /35,0005,000

40,000Miscellaneous

40,00015,00055,000Total

420,000

130,000

550,000

ITTO Project Monitoring

20,000-20,000

Annual/Final Audit

8,000

-

8,000

ITTO Programme

54,960-54,960ITTO Ex-post Evaluation

10,000-10,000

GRAND TOTAL

512,960

130,000

642,960

Dissemination& Review

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