The World Bank is conducting a review of its 1991 Forest Policy and at the same time developing a new strategy to guide its future investments in forestry.

Why should you care?

• Tropical forests will be all but gone in 50 years if current trend continues.
• The World Bank is the single largest source of “development” finance and of investments in the forest sector globally.
• The World Bank policy serves as a model for other agencies.
• The WB Forest Policy covers all types of World Bank Group activities and all (economic reform, sectoral reform, infrastructure, forestry, natural resource management and transport)

Highlights of the 1991 Policy:
Bank staff are to:

• assess the likely impacts on forests of macro-economic and non-forest sector loans: SAPs, agricultural projects, dams, mines, etc.
• take into account the interests of communities in the establishing plantations
• involve forest-dwelling people in establishing protected areas
• avoid funding logging in primary moist tropical forests
• condition other lending for forest operations on the inclusion of measures to safeguard the interests of forest dwellers
• experiment with new projects with forest-dwellers including in the promotion of non-wood products

What has the Bank done since the 1991 Policy?
As part of the Forest Policy Review, the Operations and Evaluation Department just released a report on the implementation of the policy with the following findings:

• The Bank has had a negligible if any effect on meeting the main goal of curbing deforestation.
• Bank staff did not incorporate the policy into Country Assistance Strategies and Economic Sector work, despite noting that liberalization and globalization have been major pressures on forests.
• Forest related lending largely failed to promote poverty alleviation.
• Gender considerations were inadequately addressed in 99.5 % of forest-related projects.
• Governance issues weak and institution-building neglected even when forestry conditionality part of Sectoral Adjustment Loans and Structural Adjustment Programs.
• For lack of reporting and monitoring, OED is unable to ascertain the extent to which adjustment, agriculture, infrastructure and transportation lending contributed to deforestation.
• Although safeguard policies were observed at an entry level, they were often not adhered to in the implementation phase of projects.
• Staff lack the expertise, time, resources, incentives and reporting tools to observe the policy.

Overall conclusion: the policy has not been implemented.
At what stage is the Forest Policy Implementation Review (FPIR)?
The Bank has just published the OED report.
Regional Consultations are taking place March/April 2000.
Country case studies are underway.
At what stage is Forest Policy Strategy Development
15 analytic papers to stimulate discussion have been commissioned.
The IUCN has been contracted “to support the Bank in developing and implementing a review process that remains transparent and open to all interested parties”.
The Bank is making alliances with

• WWF alliance to promote the certification of logging and Bank has adopted WWF targets for setting up protected areas to cover 10% of the major forest types in all borrower countries.
• The Bank is also engaged in series of meetings with the CEOs of major forest industry companies to discuss best practice and to see how industry can move towards this. Meetings avoid social and political concerns and is not open enough.
  There are problems with the Forest Policy Implementation Review Strategy
• participatory field studies of actual projects will not be carried out
• procedure for selecting NGOs for regional meetings is not transparent
• Strategy Development process carried out simultaneously to review.
• The Strategy Development process and the level of openness and transparency is not clear – there is no stated commitment to put policies out in draft.

What’s New Now that should affect the World Bank Forests Policy?

• The Bank is now active in CEIT countries and is starting forestry projects there - the 1991 policy focused essentially on tropical forests in only twenty key areas.
• Bank lending is increasingly programme lending and is less project linked.
• Greater emphasis on private sector development through IFC and MIGA.
• The Bank is seeking to become the financial channel for forestry funding linked to the Clean Development Mechanism, which might result in massive substitution of natural forests by monoculture tree plantations.
• Global Forests Convention discussions emphasizing “sustainable forest management”, “promotion of trade in forest products”, “voluntary self-regulation” – not indigenous people’s rights, participatory agrarian reform, community control of forests, regulations of transnational investments, halt in illegally produced forest products, and the primacy of international environment and human right agreements over trade.
• Staff in developing country forestry departments are becoming less not more adequately trained.
• Curbing forest piracy is essential.
• Rates of return on sustainable forest management are not competitive with the return on capital expected by private investors today, especially, if the costs of protection and provision of ecological services are included.

What’s Not New that has got to Change?

• Bank continues to believe that forestry can be socially and environmentally sustainable and is good for national development. Critical facts such as the lack of evidence that large-scale timber extraction can be sustainable, meet local people’s needs, contribute meaningfully to poverty alleviation or avoid concentrating power in the hands of often corrupt elite are continually ignored by the Bank.
• Bank staff want the prohibition on bank funding of logging in primary moist tropical forests to be lifted.
• Bank staff do not attribute forest loss to logging.
• Bank values forests for timber, biodiversity conservation, watershed protection and recreation. The importance of forests for local communities is not a priority.
• Economic growth based on “managed resource extraction/expansion” remains the model for poverty alleviation.
  Concerns with Possible Policy Directions
• Plantations: 1994 review advocated more lending for plantations under the guise of “resource expansion”. Recent SAL lending in SE Asia, for example, resulted in expansion of oil palm plantations. Increasingly tree crop estates are being developed by private sector, creating resource conflicts with local communities and increasing deforestation.
• Removal of prohibition: NGOs want prohibition extended to other forest types – old growth, tropical dry, boreal and temperate and Bank want ban on primary moist tropical lifted.
• Bank treat forestry as strategic sector to climate change, biodiversity and national development. Sector to address poverty, local and social issues take second place.
• Community Forestry: Bank does not emphasize the importance of land tenure reforms, concerns of women and indigenous peoples. Bank may argue that it should fund community-based forest mgmt as a justification for lifting the ban.
• Cross-sectoral – Bank focuses on forestry but other sectors need reform to address deforestation and forest degradation.

Possible Policy Recommendations

• Create internal institutional mechanisms and oversight (incentives and penalties) to ensure staff compliance in all lending activities as well as non-lending activities (CAS, TAP) and a permanent mechanism to monitor and evaluate the World Bank’s forest
• Develop Bank’s capacity for informed and effective participation by NGOs and CBOs in forest related projects and policy debates
• Address underlying causes of deforestation by addressing questions of indigenous rights, land security, agricultural stabilization, alternative IGAs, impacts of other sectors – transport, energy, mining
• Expand the ban on direct financing of logging in moist primary tropical forests to dry tropical, temperate and boreal forests
• Ban funding of any projects that damage or destroy any of the world’s remaining primary forests including logging operations, roads, mines, pipelines, tree plantations…
• Suspend all loans to large-scale tree plantations until a specific and participatory assessment of the impacts of such plantations on forests, people and the environment is carried out. All types of plantations must be subject – pulpwood, timber, palm oil and carbon sinks.
• Place greater priority on Non-Timber Forests products

Key Areas for Further Policy Development

• compliance, monitoring and evaluation
• plantations: measuring the extent to which plantation establishment contributes to the conservation of natural forest; determining whether plantations pose problems to local customary rights holders or contribute to local people’s welfare and whether or how local, subsistence and outside commercial interests can be reconciled, what are the criteria for conversion of either natural or degraded forests or other lands.
• Bank’s use of market mechanisms to ensure prudent forest management
• Social issues – land reform, women, indigenous people’s, poverty alleviation.
• Borrower support for Bank’s policy – lack of financial tools for borrower countries
• Debt, adjustment lending, GEF criteria, concessional funds for economic and sector work, tech asst and project prep.
• Clean Development Mechanism and the Prototype Carbon Fund