Forest Peoples Programme: Reforming the World Bank’s Forest Policy: A check-list for activists

The internal review was designed to assess the extent to which the World Bank has implemented its own Forest Policy adopted in 1991. Some key findings are:

q The Bank has had a negligible effect on meeting the main goal of curbing deforestation.

q Bank staff did not incorporate the 1991 policy into ‘Country Assistance Strategies’ and ‘Economic Sector Work’.

q The policy was largely ignored in structural and sectoral adjustment lending, even though the report finds that liberalization and globalization and adjustment have been major pressures on forests.

q Even where forestry conditionality was included in sectoral and structural adjustment packages, it was not backed up with long-term strategies for governance reform and institution building.

q Contrary to the policy, forest related lending largely failed to promote poverty alleviation.

q Participation of civil society was weak although it improved in Natural Resource Management Projects.

q Bank staff have inadequate training and resources to ensure effective participation.

q The importance of reforming land tenure regimes in favour of the poor and customary owners has been poorly appreciated by Bank staff.

q Although so-called ‘safeguard policies’ - to protect the environment and vulnerable social groups like indigenous peoples - were observed in project preparation, they were often not adhered to in the implementation phase of projects.

q For lack of reporting and monitoring, the Bank is unable to ascertain the extent to which adjustment, agriculture, infrastructure and transportation lending contributed to deforestation.

q Bank staff agree that there has been a lost decade in which it failed to combat deforestation and failed to address the needs of the poor and powerless through its forest-related work.

q Although most Bank staff still agree with the overall thrust of the 1991 policy, they admit that it was not well-integrated into the Bank’s operations, neither in projects nor adjustment lending, nor in country assistance strategies and economic and sector work.

q Both hard loans (IBRD) and soft loans (IDA) incur balance of payments burdens that forestry and conservation projects are unlikely to be able to repay. Borrower countries are reluctant to incur debt to deal with their forest problems.

q Adjustment lending is too hasty and top-down to allow effective engagement with borrowers on complex issues like forest policy and institutional reform.

q Concessional financing through the Global Environment Facility is limited to addressing only a few global concerns and is payable only for securing global benefits and not for national benefits.

q Technical funds for economic and sector work, technical assistance and project preparation are inadequate.

The Review has been widely welcomed for its frankness but it also contains some controversial findings. Key issues of contention include:

q The present policy was dominated by conservation concerns and had a ‘chilling effect’ on Bank staff who avoided forestry projects as a result. But did they really ? Actually forest- related lending went up 78% since the new policy was adopted.

q The ‘logging ban’ made staff ‘risk averse’ and shy away from addressing forests. In fact the policy only imposes a proscription on Bank financing of logging in primary moist tropical forests. It seems that Bank staff don’t even have time to read the policy carefully.

q The report says the policy was dominated by northern conservationist concerns, while the South would prioritize development. This false dichotomy of conservation and development was largely absent from the 1991 Forest Policy. Southern NGOs emphasized that protecting forests and sustainable use is crucial for the poor in the South.

q The report argues that concessional funds are needed as loans cannot be repaid without trashing forests due to market failures. But aren’t the main reforms needed political, regulatory and institutional?

q The report deals weakly with the issue of plantations and does not differentiate between community-based reforestation and large-scale plantations.

The World Bank is now engaged in eight regional consultations to help it decide how to revise its policies. Here are some key issues we think need to be raised:

q Can conventional logging alleviate poverty? The evidence is that large-scale forestry concentrates wealth and power in the hands of elites. Logging needs to be cut-back, regulated and controlled, not encouraged.

q Can large-scale plantations alleviate poverty? The evidence is that more rural employment is lost as land is taken over for tree crops than are replaced with (often poorly paid) jobs as plantation estate workers. Small-scale community forest restoration projects make more sense in social and poverty-alleviation terms.

q The Bank should extend the present proscription on funding logging in primary moist tropical forests, to all old growth forests including tropical dry, temperate and boreal forests.

q Under what circumstances can World Bank support for community forestry really bring benefits? The evidence is that top-down funding for community forestry only works when matched with prior and parallel funding for civil society mobilisation, capacity building and independent engagement in institutional reform and implementation.

q Will the Bank now give priority to securing Indigenous Peoples’ tenure rights and carrying out participatory agrarian reforms to relieve the land needs of the rural poor? How?

q How can the Bank learn to work in long term development with the full participation of vulnerable groups like Indigenous Peoples?

q Will staff be retrained to give importance to social, political and institutional issues?

q What internal reforms will the Bank undertake to ensure compliance with its own policies?

q How will the Bank reform its internal incentive structure so that staff feel rewarded (and have the time and resources) to really apply the ‘safeguard policies’ ?

q What kind of Monitoring and Evaluation system needs to be put in place to ensure that the impact of World Bank activities on forests can be monitoring and evaluated on a continuous and real time basis? Will systematic independent external monitoring be more likely to produce positive results?

q What can be done to integrate the forest policy into ‘Country Assistance Strategies’. ‘Economic Sector Work’ and adjustment lending to ensure that the Bank’s overall development programme doesn’t cause further deforestation? (Money, staff time, expertise and commitment are all presently lacking)

q In 1999, for the first time, Bank lending for structural adjustment exceeded lending for projects. Given that the report finds that many of the economic policies supported by structural adjustment are driving forces of deforestation, how will the Bank now reform its economic policy-making to prevent further deforestation?

q The Bank currently lacks enough socially-informed staff with expertise in forest-related issues. How will the Bank become the ‘Knowledge Bank’ it aspires to be with enough expertise to really engage in the forest sector in the future?

q What does the Bank suggest be done to address the prevalent market failures which currently encourage deforestation?

q What financial options will the Bank offer borrower countries in the future to help them curb deforestation and relieve the needs of the rural poor without incurring debt?

In 1991 the World Bank adopted a new policy towards forests with the objectives of encouraging:

q Attention to potential impacts on forests in macro-economic planning and lending.

q Much greater environmental impact assessment and mitigation for transportation and infrastructure projects that might affect forests.

q Special attention to the rights of forest dwellers and indigenous peoples, especially with respect to land tenure.

q Engagement with borrowers to encourage good governance, institutional strengthening and policy reform aimed at sustainable forest management.

Some World Bank staff argue that the 1991 policy was flawed and stressed conservation too much, which is why they were disinclined to apply it properly. Is this true? We think not, though it could be improved. Read the original policy yourself and make up your own mind.

Forest Peoples Programme, 1c Fosseway Business Centre, Stratford Road, Moreton-in-Marsh GL56 9NQ, England. Email: marcus@forestpeoples.org

World Rainforest Movement, Maldonado 1858 CP 11200, Montevideo, Uruguay. Email: rcarrrere@wrm.org.uy

[1] ‘ A Review of the World Bank’s 1991 Forest Strategy and its Implementation’: Volume 1: Main Report, 13 January 2000, Operations Evaluation Department, World Bank, Washington DC.

[i] ‘The Forest Sector: a World Bank Policy Paper’, 1991, World Bank, Washington DC.