In collaboration with the Bank Information Center, Environmental Defense and
World Rainforest Movement

Introduction:

The World Bank is currently circulating within the Bank itself a draft of its new ‘Forest Strategy’. This document is substantially different from the document posted on the web for public comment in January. [1] The Bank plans to submit this draft strategy to the Board for informal discussion on 28 May 2001 and then to Senior Management (CODE) for approval on 25 June. There is then expected to be a short opportunity for public comment, essentially pro forma, before it goes to the Board formally for approval in July. The opportunities for civil society comment on the strategy are thus extremely limited.

In Bank terms, a ‘Strategy’ is an aspirational document, which guides but does not bind Bank operations. The revised Forest Strategy is to be linked to a new binding, ‘Forest Policy’, which sets out the operational steps and safeguards that Bank staff are obliged to apply in dealing with forests.  To date, as far as we know, no draft of this revised policy has yet been circulated and very little is known of its proposed contents.

The extent to which the strategy and policy are being de-linked is a major source of concern to NGOs monitoring the World Bank, and we have written to the Bank to demand that the discussions of the draft strategy are delayed until the draft policy is also ready to be simultaneously circulated and discussed. [2] It is our view that it would be irresponsible for the Bank to try to get approval for the strategy from the Board without there first being an adequate opportunity for the Board and civil society to see and comment on the revised forest policy which will underpin it.

The new strategy  - if it is adopted  -  constitutes a break with the past. It is significantly different from the 1991 version that it replaces. After what the Bank admits was a ‘lost decade’ during which it failed to address forests pro-actively, the Bank is now seeking to position itself as one of the key international organizations addressing forests. The new strategy – and the new policy which we can infer from reading this draft – if approved would constitute yet another example of a substantial weakening of World Bank social and environmental safeguards. [3] Whereas the previous policy explicitly prohibited Bank financing of logging in primary moist tropical forests, the Bank is now seeking to fund commercial logging in all forest types, subject to ambiguous safeguards. 

This memo seeks to summarise the content of the new strategy (PART I), provides a preliminary analysis of its strengths and weaknesses (PART II) and makes suggestions on some of the key issues that civil society organizations now need to address (PART III). For additional information and all documents mentioned in the footnotes go to the Forest Peoples Programme website: www.forestpeoples.org , the Bank Information Center web site: www.bicusa.org, the WRM site: http://www.wrm.org.uy/actors/WB/index.html or contact us on info@forestpeoples.org . We also welcome your reactions and comments both on the strategy and this memo.

I. THE NEW STRATEGY IN A NUTSHELL:

According to the new strategy [4] , the World Bank would in future:

·         Give equal attention to all forest types, including boreal, temperate and tropical dry forests (the current (1991) policy focuses on moist tropical forests).

·         Focus on the potential impacts on forests of its cross-sectoral and macro-economic interventions in borrower countries

·         Provide money up front for the analytic work (what the Bank calls ‘economic and sector work’ – ESW) necessary to identify these probable impacts ahead of proposed interventions

·         Promote community and joint forest management in order to benefit the rural poor, indigenous groups and women, with an emphasis on participatory processes, securing tenurial rights and safeguarding the interests of marginal groups

·         Support community-based conservation efforts

·         Confront forest crime and corruption through improved regulation, monitoring and analysis of the problems.

·         Fund national forest programmes (NFPs) through adjustment credits and loans with the aim of rationalizing forest concession systems, promoting pro-poor policies and reducing pressure on forests

·         Invest in private sector operations aimed at ‘sustainable harvesting and forest management’, subject to independent certification

·         Promote forest conservation and protection by helping to build national and global markets in environmental services, biodiversity and carbon.

Funds and Implementation:

To achieve this the World Bank would:

·       set up an additional fund of US$600 million over five years, which it hopes will be matched by complementary funds of US$500 million in bilateral grants and US$500 million in private sector investments 

·       provide some US$ 9 million to pay for the additional operational costs implied by this new approach to forests.

·       of this, US$6 million will be made available for ‘Economic and Sector Work’ and for developing ‘Country Assistance Strategies’ that take account of forests.

·       the other US$3 million will be set aside to pay for the higher-than-normal costs of preparing loans and investments (so called ‘transaction costs’) which are related to forests to ensure that they are socially and environmentally prudent, adhere to the Bank’s ‘safeguard policies’ and take account of the views of affected groups.

·       build national partnerships by supporting National Forest Programs with the assistance of the FAO

·       provide leadership by heading up PROFOR (the bilaterally-funded ‘Program for Forests’ currently being administered by the UNDP, which aims at providing advice to developing country governments to reform their national forest policies and institutions)

·       strengthen its partnerships with international NGOs like WWF and Conservation International

·       build partnerships with those private sector companies prepared to submit their operations to independent certification and to develop ‘codes of conduct’

·       focus, initially, on six to eight key countries with substantial forest areas, where governments are receptive to the Bank’s new approach to forests.

New Policy:

The draft strategy stresses the importance of the World Bank continuing to adhere to its existing ‘safeguard policies’ on Environment Assessment, Natural Habitats, Indigenous Peoples, Cultural Property and Involuntary Resettlement. It also confirms that a new safeguard policy on forests is to be adopted.

In contrast to the previous forestry policy, which explicitly prohibited World Bank financing of logging in moist tropical forests, the new forest policy would:

·   permit the World Bank Group, principally through the IFC and MIGA,  to finance and guarantee private sector forest operations that are evaluated to be sustainable through independent certification in areas of permanent forest estate or ‘where [this] is impractical… on an open process of review by the main participants and interest groups’

·   allow the Bank to extend loans to borrower countries to reform their national forestry policies and institutions

·   give ‘attention to… agreeing upon and delineating forest areas of particular social and cultural significance’

·    ‘develop a general precautionary approach for the permanent forest estate’, which would exclude the Bank Group from participating in any commercial-scale logging in areas classified as protected areas (IUCN categories I-VI) and which would make its indirect support for timber harvesting in the permanent forest estate conditional on ‘agreed standards for improved forest use and management’ as already developed in international fora.

II. Critique:

Bank declares open season for loggers:

The fact that the World Bank plans to fund logging again comes as a slap in the face to many NGOs and indigenous peoples’ organizations who have made expressly clear through numerous resolutions, letters and interventions at regional meetings that they want the current proscription on Bank support for logging in primary moist tropical forests to be extended to include all old growth forests. Instead, the World Bank now wants to re-enter the forests, through direct support for logging while subjecting the projects its funds to independent certification, excluding only existing protected areas.

Much will therefore hinge on which standards of certification the Bank will use to assess potential logging projects? Here the draft strategy is not reassuring:

·         ‘the Bank will not endorse any one particular approach to certification’ (p. 5)[5]

·         the principles and criteria the Bank has adopted, apparently with the agreement of the WWF, as presented in the draft, are vague and include no express provisions to protect the rights of indigenous peoples or other  forest dependent groups (p. 29 fn. 2)

·         where certification is declared ‘impractical’ the Bank may substitute ‘an open process of review by the main participants and interest groups’ based on standards they agree at the outset (p. 32).

All this sounds most cavalier. NGOs will be particularly nervous because this change in policy is principally designed to allow the Bank’s private sector arms the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) to provide direct support to large-scale commercial logging ventures. Both these agencies were conspicuously absent from the public consultations about the revision of the policy, are not mandated to act to relieve poverty, have very poor records of dealing with forest peoples and have gained a reputation for supporting environmentally and socially destructive schemes: the Chad-Cameroon pipeline and the Omai gold mine in Guyana being two examples. 

Cross-sectoral uncertainties: no carrots and no sticks

The draft strategy rightly notes that ‘a narrow perspective on forestry is insufficient’ (p.3). It notes that ‘the Bank must have an appreciation of how its actions and investments in other sectors, or at the macro-economic level, will impact on forests and forest people, and it must then act on this information to incorporate measures to effectively offset or minimize the impacts’ (p. 30) The Bank is thus committed to limiting its impacts on forests through its structural adjustment and programmatic lending and cross-sectorally through its financing of roads, mines, oil and gas, agriculture and related schemes. All this is most welcome.

The doubts creep in when we seek clarification on how the Bank aims to achieve this. In the first place, to identify all these potential impacts, the Bank is setting up a relatively tiny fund of about US$1.2 million per year over five years for carrying out analyses of the forest-related dimensions of national economies and the likely consequences for forests of various Bank interventions. Having identified these possible impacts, the draft strategy offers very little guidance on how Bank staff are to use this information to modify their proposed loans and investments.

Importantly,  the draft strategy notes: ‘If the Bank is to implement a multi-sectoral approach to forest, it will have to address the policy, institutional and structural issues in broader non-forest sector programs…for this to be a real prospect, all such investment and sector adjustment leanding activities that impact on forest areas and / or that affect forest peoples would need to be subject to the application of the relevant Bank safeguards dealing with forests – including the proposed news safeguard for forests per se’ (pp. 18-19).

However, what little the draft strategy reveals about the new forest policy suggests that it will only provide guidance for forestry projects. The certification safeguard adopted to provide quality control on Bank support for logging is not applicable to the Bank’s macro-economic and cross-sectoral interventions. No alternative safeguards are mentioned. No sticks. [6]

Nor are any positive incentives mentioned which might encourage Bank staff overseeing structural adjustment loans, colonization schemes, or mining ventures to ensure these interventions do not lead to damage to forests. No carrots.

In sum, the renewed commitment to curb the impact of all Bank operations on forests sounds good, but the draft strategy does not  make clear how this will be effected.

Serious doubts about social safeguards:

The draft strategy demonstrates an intent on the part of the Bank to address the needs of the poor and vulnerable social groups like women and forest dwellers. Encouragingly, the draft strategy comes near to adopting a rights-based approach to poverty alleviation through promoting collaborative forms of forest management. The Bank notes the importance of ‘legal frameworks that ensure the rights of indigenous forest-dependent peoples and communities are protected’  and ensuring local communities have ‘security of tenure’ (p. 23).  Participation of poor and marginal groups is also strongly advised and the strategy stresses the need for adherence to safeguard policies to achieve these goals.

However, whereas NGOs have advocated that strong social safeguards should be included in the revised Forest Policy to achieve such aims, the draft strategy is not at all clear on this crucial issue. On page 24, the document notes that ‘specific measures’ through which the Bank will seek to implement the strategy will include: ‘safeguard measures aimed at minimizing the risk of more powerful members of the community or outside commercial interests’ appropriating resources essential to the livelihoods of the poorest (p. 24). The Bank will also support ‘policy dialogue aimed at legislative reforms that will protect forest land ownership and access rights of the poorest’ (p.24). However, where the draft strategy actually refers to the proposed Forest Policy, it makes no mention of any additional social safeguards at all. Instead the strategy apparently relies on the existing social safeguard policies. There are three major problems with this approach:

·     The strategy relies on the current policy on ‘Indigenous Peoples’ to ensure that the rights of those living in forests are recognized. How, then, will the strategy safeguard the rights of non-indigenous forest peoples, estimated by the Bank to number several hundred million?

·     Whereas the draft strategy asserts that ‘the Bank already requires that the rights and usage access of indigenous forest dwellers, and others traditionally dependent upon forests, are addressed’ (p. 31), in fact the new draft Indigenous Peoples policy (OP 4.10) no longer has this requirement – a matter of considerable concern to indigenous peoples.[7]

·     Whereas the draft strategy specifically mentions that it will be promoting the creation of protected areas, the March 2001 draft of the Involuntary Resettlement Policy explicitly would allow the Bank to restrict the livelihoods of residents in these areas and denies them the same rights of participation and compensation afforded to others involuntarily resettled by Bank projects.[8]

In sum the strategy admits the need for strong safeguards to protect the rights of forest peoples, but these safeguards are not being included in the proposed Forest Policy and they are being diluted or eliminated from the Bank’s other safeguard policies. What the right hand giveth, the left hand taketh away.

Mechanisms for Participation at the national level:

The draft strategy recognizes that for the Bank to be effective in dealing with forests it should link its activities much more closely to those of other international agencies, governments, international NGOs dealing with forests and be as participatory as possible.  Internationally the policy highlights Bank participation in the United Nations Forum on Forests and in the related Collaborative Partnership on Forests. It will collaborate more closely with the FAO in implementing ‘national forest programs’ as redefined by the CSD, where emphasis is given to participatory, country-driven processes which secure land tenure and recognize and respect the customary rights of forest peoples (p. 46). The Bank also expects to take over the management of PROFOR (the Program on Forests) from the UNDP. The draft strategy notes that ‘an oversight committee would be established to guide activities and monitor progress to ensure key stakeholder representation’ in PROFOR which is to be modelled on Bank’s Energy Sector Management Assistance Program (ESMAP (p.47).  This is not reassuring as ESMAP has functioned as a high level think-tank with little grassroots engagement.

However, to date, PROFOR activities at the national level have not been markedly participatory and they have not addressed land rights issues, although this is part of the PROFOR mandate. [9] The Bank will also work closely with the FAO’s proposed NFP ‘Implementation Facility’. The strategy document is mute on what mechanisms will be established to ensure genuine Major Group participation in these processes at the national level. Worryingly, the summary provided in the draft strategy of the new Forest Policy makes no mention of any mechanisms to ensure Major Group participation in the NFPs or other national level initiatives undertaken by the Bank.

III. Action:

This analysis and critique is partial and incomplete, in particular because the Bank is continuing to stall the release of a discussion draft of its proposed forest policy. The strategy and policy are integrally linked but we can only guess at the contents of the latter by what the draft strategy document says about it.

In our view the following key demands should now be made to the Bank and to the Executive Directors:

·         Discussions of the Forest Strategy should be delayed until a discussion draft of the revised Forest Policy is first made available so that the two can be assessed at the same time. It is dangerous and illogical that the two documents are being treated separately. 

·         Likewise the draft Forest Strategy should not be sent to CODE for approval until the linked Forest Policy is ready and has been publicly assessed.

·         The draft Forest Policy should contain clear safeguards that:

o        secure the rights of forest dwellers (including, but not only, indigenous peoples);

o        establish adequate participatory mechanisms for the involvement of Major Groups in national forest programs and PROFOR activities and other Bank interventions at the national level

o        provide clear operational guidance to Bank staff to ensure that non-forest sector lending does not damage forests or forest peoples

o        proscribe World Bank Group financing of logging in old growth forests.

Marcus Colchester
Forest Peoples Programme
24 May 2001