Forest Economy and Sustainable Development in the Anthropocene: Indicators, Governance Pathways and Future Directions

ABSTRACT Forests are recognised as multifunctional socio‐ecological systems supporting biodiversity conservation, climate regulation, ecosystem services, livelihood security and sustainable development. However, forest economies remain shaped by competing pressures from conservation, resource extraction, climate governance and rural development. This review examines the evolution of forest economy concepts from timber‐centred paradigms to integrated frameworks encompassing ecosystem services, natural capital accounting, circular bioeconomy, climate finance, community forestry and nature‐based solutions. Using a PRISMA‐guided semi‐systematic review approach, we synthesise evidence on forest livelihoods, ecosystem valuation, climate resilience, governance transformations and sustainability assessment frameworks, with emphasis on tropical developing regions where forests function as both ecological infrastructure and livelihood safety nets. The review highlights the growing economic significance of ecosystem services, with global valuation estimates increasing from approximately US$33 trillion annually in 1997 to more than US$125 trillion in recent assessments. These values exceed global economic output, underscoring the contribution of natural capital to human well‐being and sustainable development. Emerging pathways, including REDD+, payments for ecosystem services, restoration economies, digital forest monitoring and ecosystem accounting, are evaluated for their potential to support sustainability transitions. Despite growing policy attention, the literature often treats forest conservation, climate finance and livelihood security in isolation, resulting in a fragmented understanding of socio‐ecological trade‐offs. To address this gap, this review develops a multidimensional indicator framework integrating ecological accounting, participatory institutions, climate‐resilient management and equitable financing mechanisms. The framework is designed to measure sustainability performance, reconcile market‐driven climate governance with local livelihood realities and guide adaptive forest management in tropical developing regions.