Contents lists available at ScienceDirect Forest Policy and Economics journal homepage: www.elsevier.com/locate/forpol Using markets to leverage investment in forest and landscape restoration in the tropics Pedro H.S. Brancalion a,⁎ , David Lamb b,c , Eliane Ceccon d , Doug Boucher e , John Herbohn c , Bernardo Strassburg f,g , David P. Edwards h,⁎ a Department of Forest Sciences, “Luiz de Queiroz” College of Agriculture, University of São Paulo, Av. Pádua Dias 11, Piracicaba, SP, 13418-260, Brazil b School of Agriculture and Food Sciences, Centre for Mined Land Rehabilitation, University of Queensland, Queensland, Australia c Tropical Forest and People Research Centre, University of the Sunshine Coast, Maroochydore, Queensland, Australia d Regional Center of Multidisciplinary Research, National Autonomous University of Mexico, Mexico City, Mexico e Climate and Energy Program, Union of Concerned Scientists, 1825 K Street NW, Washington, DC 20006, USA f International Institute for Sustainability, Estrada Dona Castorina 124, 22460-320, Rio de Janeiro, Brazil g Rio Conservation and Sustainability Science Centre, Department of Geography and the Environment, Pontificia Universidade Catolica, 22453-900, Rio de Janeiro, Brazil h Department of Animal and Plant Sciences, University of Sheffield, Sheffield S10 2TN, United Kingdom ARTICLE INFO Keywords: Ecological economics Ecosystem services Forest governance Large-scale restoration Tropical forest restoration Tropical reforestation Wood production ABSTRACT Governments and international organizations are promoting or drafting programs to undertake Forest and Landscape Restoration (FLR) of hundreds of millions of hectares of degraded tropical landscapes to support the provision of ecosystem goods and services. But the challenge to recover economic and ecological functionality could be far beyond their financial capacity. Here, we explore the potential of markets and their interaction with policies to leverage investment for FLR in the tropics. We first review the challenges and opportunities of ex- ploiting market forces for FLR, which can be essential for kick-starting the implementation of programs globally. We identify four key opportunities for regulating markets to promote FLR: economic mechanisms; technological, educational or infrastructural investment; legal and enforcement mechanisms; and market-led standards and certification schemes. Finally, we present five pitfalls that may arise when relying on markets to promote FLR. Governments will need to play a critical role in establishing appropriate policy frameworks and institutional arrangements to leverage investments when market signals are not strong enough to initiate changes in tradi- tional land use or farming practices, or to regulate reforestation activities when market signals become so strong that they overwhelm all other land-use activities, leading to a transformed and homogenized landscape. 1. The scale of restoration potential in the tropics The extent of degraded land around the world poses a growing concern. Although degradation is used to describe a range of contexts (Ghazoul et al., 2015; Gibbs and Salmon, 2015; Hobbs, 2016), wide consensus holds that anthropogenic impacts have remarkably changed Earth's natural processes and compromised the capacity of ecosystems to supply benefits to humanity (Lewis et al., 2015). The short-term profits of unsustainable exploitation of natural resources are largely uncompensated by the negative economic consequences of longer-term restrictions on the capacity of ecosystems to provide goods and services to people (Costanza et al., 1997; Balmford et al., 2002). Reducing perverse incentives for degrading activities and instead promoting those that support ecosystem recovery are thus key issues to be ad- dressed by the global economy to provide a better future to all (Hoekstra and Wiedmann, 2014; Diaz et al., 2015; Newbold et al., 2016). Throughout human history, population densities have normally been sufficiently low to ensure that environmental resources are available and accessible to people, and that the future provision of natural benefits was safeguarded. However, the large expansion of in- tensive agriculture, urbanization, and global population in the 20th century means that ecosystem goods and services (EGS) are no longer freely available for a large share of humans. Harvesting forest products from natural ecosystems is no longer an option for supplying the high and still growing demand. Land scarcity and concentration of popula- tion in large urban centers mean that migration is unable to improve access to EGS essential for human wellbeing. Today, large regions of the globe face water security risks (Vorosmarty et al., 2010), are threatened by climate change (Heltberg et al., 2009), and/or have agricultural http://dx.doi.org/10.1016/j.forpol.2017.08.009 Received 30 November 2016; Received in revised form 24 July 2017; Accepted 19 August 2017 ⁎ Corresponding authors. E-mail addresses: pedrob@usp.br (P.H.S. Brancalion), david.edwards@sheffield.ac.uk (D.P. Edwards). Forest Policy and Economics 85 (2017) 103–113 1389-9341/ © 2017 Elsevier B.V. All rights reserved. MARK