Forest Peoples Programme: Forest Memo # 12 - World Bank's FPIRS

This briefing has been produced at the request of the Bank Information Center for both the WRM and BIC networks. Since BIC’s last forest memo, there have been a number of significant developments with the World Bank’s Forest Policy Implementation Review and Strategy Development (FPIRS).

q The report of the meetings held by the Operations Evaluations Department to discuss its review of the implementation of the 1991 Forest Policy has been issued;

q The series of eight Regional Consultations have been completed and reports of these meetings published on the web. A document summarising the main issues brought up in these regional meetings has also been produced by the Bank;

q The Operations Evaluations Group has submitted a (generally disappointing) report on the IFC’s compliance with the Forest Policy. A very hasty and defective consultation on this document was held in Washington;

q The Bank circulated an ‘Issues’ paper, drawing out some of the lessons from the OED and Regional Consultations. It has also now started discussion of a preliminary draft of a new forest strategy and policy, in ‘bullet point’ format, based on the findings of all these reviews;

q A Technical Advisory Group, including governments, private sector,IGOs and NGOs has been ‘elected’ and has met once to discuss this draft strategy and policy;

q The outline of the final stages of the review and procedures to be adopted in the final revisions of the new forest policy have been announced.

The Bank continues to place all the documents being generated by the FPIRS on the web:

(not yet including the preliminary draft strategy and policy). For NGO view points and commentaries throughout the process see:

The minutes of the OED consultation on the January workshop were circulated to all participants for comments. A revised OED report has not yet been issued and it is not clear when it will be. In the regional consultations, it was discernible that OED have somewhat softened their position on a number of issues:

q they seem to accept that the internal obstacles within the Bank to policy compliance require stressing as much as the external ones;

q they now feel that there is greater potential for reforming the forest sectors of developing countries using conditioned structural lending;

They seem unrepentant on the notion that, when it comes to forests, developing countries want ‘development’ while northern countries want ‘conservation’, even though they have repeatedly been informed by participant southern NGOs and governments in the regional meetings that people in the South, and in transition countries, also value forests and also want to protect them and use them sustainably.

The organisers of all the regional consultations circulated minutes of all the regional consultations to the participants for their comments and all these have now been posted on the web. The main messages the Bank thinks it heard at the meeting are:

q it should improve civil society engagement, participation, constituency building and fight corruption in the forest sector

q it should address forests cross-sectorally, above all in its own operations: this will require greater resources for elaborating country plans (CAS and ESW)

q there are conflicting views about the current proscription on Bank financing of logging (views ranged from extending it to all old growth forests to getting rid of this ‘ban’)

q plantations should be screened for their negative impacts on indigenous peoples, the poor and the environment

q conservationists accept the need for poverty alleviation but want more funds for conservation

q debt-strapped countries need help with debt relief and forests could benefit from debt-for-nature swaps

q deep institutional changes are needed within the Bank to ensure policy implementation – staff incentives need to be changed and extra funds for the high transaction costs of implementing safeguard policies need to made available. Additional funds for cross-sectoral analysis are especially needed.[1]

The Operations Evaluation Group (a part of the OED that is located within the International Finance Corporation but which reports independently to the OED and Bank’s board not to the IFC) tardily issued its report on the IFC’s implementation of the 1991 policy. Just before this report was released, the WRM wrote to the Executive Directors objecting to the limited, tardy and unparticipatory nature of this review and the inadequate consultation process that was planned following the report’s release. Shortly after the report came out US NGOs also wrote the the US ED complaining about the defective quality of the review. Some US NGOs were able to get to an outstandingly badly organised meeting with the OEG & IFC, at which the report was discussed. IFC rules about commercial confidentiality meant that the review did not identify the projects (or even the countries) which it had supported. This made detailed commentary on the OEG paper impossible.

The OEG review of IFC performance found that the adoption of the 1991 policy had effectively terminated IFC investment in logging in the tropics (although some financing of logging trucks had continued). The OEG considered the IFC’s withdrawal from logging to be a negative result (more evidence of the ‘chilling effect’) but provided no evidence that the investments it had withdrawn from or avoided were likely to have been beneficial or sustainable if it had been involved. IFC staff complained that the 1991 policy had provided no guidance on how to deal with other forest types. The IFC had continued to invest in forestry projects in Eastern Europe. The policy was not taken into account cross-sectorally and social issues were not given prominence. The Bank’s 1993 Operational Policy on ‘Forestry’ (OP 4.36) was only adopted into IFC procedures in 1998 (!). Even after this, very few operational staff had any awareness of the policy requirements. Few of the clients were made aware of the forest policy. The problem was generic: safeguard policies in general were not formally referred to in IFC project documents until January 2000 (!!).[2]

NGOs at the TAG meeting made two detailed interventions in plenary and then in writing pointing out the defective and disappointing nature of the OEG report. It was notable that Bank staff made no effort to defend the OEG/IFC’s poor performance.

At the TAG meeting at the end of June (for more on this see below), the Bank made a power-point presentation of its new proposed strategy and policy in broad outline. Many of the key messages that the Bank has heard at the regional consultations are reflected in this draft strategy.

As presently conceived, the new strategy would be poverty focused, promote sustainable development and protect the global values of forests. It would also be developed as an Operational Policy and would conform with other safeguard policies (eg. on Indigenous Peoples, Resettlement, Natural Habitats and Environmental Assessment). It would safeguard ‘High Conservation Value Forests’ (instead of banning Bank funding of logging in old growth forests). The policy would be cross-sectoral and apply to the whole Bank Group and the full range of operations. It would mandate the Bank to be involved in global forest policy debates as well as national forest policy. It would apply to all forest types (not just focused on tropical moist forests). It would stress partnerships with other institutions and country ownership, participation and constituency building. Forestry operations would be integrated into rural development programmes with an emphasis on collaborative, joint and community forestry. Forest sector reforms would be integrated into overall economic development to take account of cross-sectoral impacts, infrastructural developments, and macro-economic plans. Governance reform and institution-building would be key. The policy would seek to build in the real values of forests, including using the Clean Development Mechanism if appropriate. National level reforms will be addressed through ‘national forest programmes’ (as per the IPF), which would be participatory and provide a blend of funding (grants and loans) from a variety of donors. Putting such a strategy into effect would require: more funds for ESW and CAS; country oriented and ‘issue-based’ lending; improved monitoring procedures.[3]

The Bank opened up to nominations for membership of the Technical Advisory Group (TAG) in late April 2000. Bank staff then chose who should be on the TAG. Criteria used included: regional representation; balance of government, private sector, IGOs and NGOs; prior involvement in regional consultations; ability to use English. NGO representatives included: North America – Bruce Cabarle/ Frances Seymour, Africa - Monir Bu Ghanem, Europe - Marcus Colchester, Latin America – Max Ooft, South Asia – Narayan Shrestha, South East Asia – Niel Makinuddin (did not attend). At the meeting it was emphasised that participants did so as technical experts and not as representatives of their organisations. Their participation did not imply endorsement but neither was TAG a negotiating forum.

q The general outline of the forest strategy and policy was presented and discussed (see above).

q The policy will be an ‘Operational Policy’, which will be a ‘safeguard policy’. The policy will be of general application and will be applied ‘literally’.

q In addition there will be an implementation strategy, which will include a call for additional resources, new partnerships and increasing civil society engagement.

q The implementation strategy will include a proposal for clear reforms to the Bank's internal incentive structure to aid compliance and effective implementation.

q Concretely, at the recommendation of the TAG, the Bank's Forest Team has been tasked to carry out an assessment of structural and Bank-cultural obstacles to effective implementation and come up with clear proposals for structural and incentive reforms, to be discussed at the next TAG meeting.

q Despite quite a lot of pressure from TAG members, there is still reluctance to include special safeguard provisions on social issues, forest-dwellers and tenure. Bank staff argued that the Indigenous Peoples policy is adequate for dealing with tenure.

q There is broad but not unconditional acceptance of the concept of ‘High Conservation Value Forests’ – which would include social, ecological and biodiversity considerations. Doubts were however raised about how the concept might be applied. Only one NGO representative (me) continued to insist on the need for a proscription on Bank-funding of logging in old growth forests. In the end it was agreed to establish a sub-group to examine the issue of safeguards and definitions more closely. This sub-group is only now becoming active. (For a briefing paper examining the social safeguards and problems with the HCVF concept please contact tom@fppwrm.gn.apc.org and ask for the “marcus’ forests safeguard note”).

The following bullets outline the next steps in the process by which the Bank will finalise its new forest policy:

q Bank staff presented the outline of the new forest strategy and policy to the Board of Executive Directors on 10 July (we lack and need feedback on how this went).

q Bank staff will then draft up a more coherent strategy, policy and implementation strategy (hopefully including proposed incentives and safeguard reforms).

q Coherence between the new policy and the targets of the Global Alliance (WWF/WB) will be discussed within Alliance in August.

q If staff get clearance for their draft, this will go out for general comment in September. All who participated in the regional consultations will be informed.

q All reactions will be web-posted and the way comments are incorporated or not will be explained in some kind of table.

q A revised strategy and policy will be presented to the Board of Executive Directors by the end of the year.

Be ready to start advocacy work with your Executive Directors in September. All feedback on this memo and the issues raised is welcomed.

[1] This is my attempt to summarise World Bank, 2000, Synthesis of Issues Raised in the Regional Consultations for further details refer to the original.

[2] IFC, 2000, OEG Review - Implementation of the 1991 Forest Strategy in IFC’s Projects. Volume 1. International Finance Corporation, Washington DC.

[3] World Bank, 2000c, Proposed Framework for a Forest Policy and Strategy. Powerpoint presentation made by Odin Knudsen to Technical Advisors Group Meeting, June 2000.