A G R I C U LT U R E A N D R U R A L D E V E L O P M E N T44640 Forests Sourcebook PRACTICAL GUIDANCE FOR SUSTAINING FORESTS IN DEVELOPMENT COOPERATION Forests SOURCEBOOK AG R I C U LT U R E A N D RU R A L D E V E L O P M E N T Seventy-five percent of the world's poor live in rural areas and most are involved in farming. In the 21st century, agriculture remains fundamental to economic growth, poverty alleviation, and environmental sustainability. The World Bank's Agriculture and Rural Development publication series presents recent analyses of issues that affect agriculture's role as a source of economic development, rural livelihoods, and environmental services. The series is intended for practical application, and we hope that it will serve to inform public discussion, policy formulation, and development planning. Other titles in this series: Changing the Face of the Waters: The Promise and Challenge of Sustainable Aquaculture Enhancing Agricultural Innovation: How to Go Beyond the Strengthening of Research Systems Reforming Agricultural Trade for Developing Countries, Volume 1: Key Issues for a Pro-Development Outcome of the Doha Round Reforming Agricultural Trade for Developing Countries, Volume 2: Quantifying the Impact of Multilateral Trade Reform Sustainable Land Management: Challenges, Opportunities, and Trade-Offs Shaping the Future of Water for Agriculture: A Sourcebook for Investment in Agricultural Water Management Agriculture Investment Sourcebook Sustaining Forests: A Development Strategy Forests Sourcebook PRACTICAL GUIDANCE FOR SUSTAINING FORESTS IN DEVELOPMENT COOPERATION Collaborative Partnership on Forests World Bank­WWF Alliance for Forest Conservation and Sustainable Use © 2008 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail feedback@worldbank.org All rights reserved. 1 2 3 4 :: 11 10 09 08 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomina- tions, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permis- sion may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750- 4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Cover photo: Heriberto Rodriguez/World Bank. ISBN: 978-0-8213-7163-3 e-ISBN 13: 978-0-8213-7164-0 DOI: 10.1596/978-0-8213-7163-3 Library of Congress Cataloging-in-Publication Data Forests sourcebook : practical guidance for sustaining forests in development cooperation / World Bank. p. cm. -- (Agriculture and rural development) ISBN 978-0-8213-7163-3 -- ISBN 978-0-8213-7164-0 (electronic) 1. Forestry projects--Handbooks, manuals, etc. 2. Sustainable forestry--Handbooks, manuals, etc. 3. Forest management--Handbooks, manuals, etc. 4. Forest policy--Handbooks, manuals, etc. I. World Bank. II. Title: Prac- tical guidance for sustaining forests in development cooperation. III. Series: Agriculture and rural development series. SD387.P74F67 2008 333.75--dc22 2008001296 C O N T E N T S Acknowledgments xvii Abbreviations xix A User's Guide to the Forests Sourcebook xxv Introduction Opportunities and Challenges in the Forest Sector 1 Why the Potential of Forests Has Not Been Fully Harnessed 1 Unlocking Forests' Potential 2 The World Bank's Approach to the Forest Sector 4 The World Bank's Lending to the Sector 6 Progress to Date 9 The Challenge Ahead 10 Purpose of the Forests Sourcebook 11 Notes 11 References Cited 12 PART I PRIORITYTHEMES AND OPERATIONAL ASPECTS Chapter 1 Forests for Poverty Reduction 15 Past Activities 18 Key Issues 18 Future Priorities and Scaling-Up Activities 22 Selected Readings 23 References Cited 23 Cross-Referenced Chapters and Notes 24 Note 1.1 Mainstreaming the Role of Forests in Poverty Alleviation: Measuring Poverty-Forest Linkages 25 Operational Aspects 25 Lessons Learned and Recommendations for Practitioners 27 Selected Readings 29 References Cited 29 Cross-Referenced Chapters and Notes 29 Note 1.2 Community-Based Forest Management 30 Operational Aspects 31 Lessons Learned and Recommendations for Practitioners 35 Selected Readings 37 v References Cited 37 Cross-Referenced Chapters and Notes 38 Note 1.3 Indigenous Peoples and Forests 39 Operational Aspects 40 Lessons Learned and Recommendations got Practitioners 46 Note 47 Selected Readings 47 References Cited 48 Cross-Referenced Chapters and Notes 48 Note 1.4 Property and Access Rights 49 Operational Aspects 50 Lessons Learned and Recommendations for Practitioners 52 Selected Readings 55 References Cited 55 Cross-Referenced Chapters and Notes 55 Note 1.5 Making Markets Work for the Forest-Dependent Poor 56 Operational Aspects 57 Lessons Learned and Recommendations for Practitioners 60 Note 60 Selected Readings 61 References Cited 61 Cross-Referenced Chapters and Notes 61 Chapter 2 Engaging the Private Sector in Forest Sector Development 63 Past Activities 64 Key Issues 65 Future Priorities for Activities 67 Notes 68 Selected Readings 68 References Cited 68 Cross-Referenced Chapters and Notes 69 Annex 2A: World Bank Analytical and Advisory Activities and Economic and Sector Work Related to Governance Reform 70 Note 2.1 Company-Community Partnerships 71 Operational Aspects 73 Lessons Learned and Recommendations for Practitioners 74 Note 75 Selected Readings: Reviews 75 Selected Readings: Country Cases 76 References Cited 76 Cross-Referenced Chapters and Notes 76 Note 2.2 Small and Medium Enterprises 77 Operational Aspects 78 Lessons Learned and Recommendations for Practitioners 80 Notes 81 Selected Readings 81 References Cited 82 Cross-Referenced Chapters and Notes 83 Annex 2.2A:Checklist of Key Issues to Determine SME Program Direction and Feasibility 84 Note 2.3 Innovative Marketing Arrangements: Payments for Environmental Services 85 Operational Aspects 86 Lessons Learned and Recommendations for Practitioners 90 vi CONTENTS Selected Readings 90 References Cited 91 Chapter 3 Meeting the Growing Demand for Forest Products: Plantation Forestry and Harvesting Operations in Natural Forests 93 Past Activities 97 Key Issues 98 Future Priorities and Scaling-Up Activities 100 Notes 102 Selected Resources 103 Selected Readings 103 References Cited 103 Cross-Referenced Chapters and Notes 103 Note 3.1 Mainstreaming Conservation Considerations into Productive Landscapes: Applying High-Conservation-ValueTools 104 The HCV Concept--Why It Is Useful for Integrating Conservation and Production 104 Operational Aspects 106 Lessons Learned and Recommendations for Practitioners 111 Notes 111 Selected Readings 112 References Cited 112 Cross-Referenced Chapters and Notes 112 Note 3.2 Forest Certification Systems 113 Overview and Considerations of Interest for World Bank Activities 113 Operational Aspects 113 Lessons Learned and Recommendations for Practitioners 114 Note 116 Selected Readings 116 References Cited 116 Cross-Referenced Chapters and Notes 116 Note 3.3 Forest Plantations in World Bank Operations 117 Overview and Considerations of Interest for World Bank Activities 117 Operational Aspects 117 Lessons Learned and Recommendations for Practitioners 120 Recommended Reading 121 References Cited 121 Cross-Referenced Chapters and Notes 121 Chapter 4 Optimizing Forest Functions in a Landscape 123 Past Activities 125 Key Issues 125 Future Priorities and Scaling-Up Activities 128 Notes 130 Selected Readings 130 References Cited 130 Cross-Referenced Chapters and Notes 131 Note 4.1 Integrated Forest Landscape Land-Use Planning 132 Operational Aspects 132 Lessons Learned and Recommendations for Practitioners 136 Notes 137 Selected Readings 138 References Cited 138 Cross-Referenced Chapters and Notes 138 CONTENTS vii Note 4.2 Assessing Outcomes of Landscape Interventions 139 Operational Aspects 139 Lessons Learned and Recommendations for Practitioners 141 Selected Readings 142 References Cited 142 Cross-Referenced Chapters and Notes 142 Note 4.3 Using Adaptive Management to Improve Project Implementation 143 Overview and Considerations of Interest for World Bank Activities 143 Operational Aspects 143 Lessons Learned and Recommendations for Practitioners 148 Notes 149 Selected Readings 149 References Cited 149 Chapter 5 Improving Forest Governance 151 Past Activities 153 Key Issues 155 Future Priorities and Scaling Up Activities 156 Notes 157 Selected Readings 158 References Cited 158 Cross-Referenced Chapters and Notes 158 Note 5.1 Decentralized Forest Management 159 Operational Aspects 160 Lessons Learned and Recommendations for Practitioners 163 Selected Readings 164 References Cited 165 Cross-Referenced Chapters and Notes 165 Note 5.2 Reforming Forest Institutions 166 Operational Aspects 167 Lessons Learned and Recommendations for Practitioners 171 References Cited 172 Cross-Referenced Chapters and Notes 172 Note 5.3 Strengthening Legal Frameworks in the Forest Sector 173 Operational Aspects 173 Lessons Learned and Recommendations for Practitioners 176 Selected Readings 177 References Cited 177 Cross-Referenced Chapters and Notes 177 Annex 5.3A: A Checklist of Potential Issues for the Forest Law Adviser 178 Annex 5.3B: Six Drafting Principles for Creating Better Forest Laws 179 Note 5.4 Strengthening Fiscal Systems in the Forestry Sector 180 Operational Aspects 181 Lessons Learned and Recommendations for Practitioners 185 Selected Readings 186 References Cited 186 Cross-Referenced Chapters and Notes 186 Annex 5.4A: A Summary of the Different Types of Charges Used in Fiscal Systems in the Forestry Sector 187 Note 5.5 Addressing Illegal Logging and Other Forest Crime 189 Operational Aspects 190 Lessons Learned and Recommendations for Practitioners 195 Notes 197 Selected Readings 197 viii CONTENTS References Cited 197 Cross-Referenced Chapters and Notes 197 Annex 5.5A: Drivers of Illegal Logging and Other Forest Crime: Motive, Means, and Opportunity 198 Annex 5.5B: Typical Contexts of Illegal Logging: Drivers and Potential Responses 199 Chapter 6 Mainstreaming Forests into Development Policy and Planning 203 Past Activities 204 Key Issues 205 Future Priorities and Scaling-Up Activities 208 Notes 210 Selected Readings 211 References Cited 211 Cross-Referenced Chapters and Notes 212 Annex 6A:Timescale of Impacts of Energy Sector Reform on Forests and Forest Industries 213 Note 6.1 Using National Forest Programs to Mainstream Forest Issues 214 Operational Aspects 216 Lessons Learned and Recommendations for Practitioners 219 Notes 220 Selected Readings 220 References Cited 220 Cross-Referenced Chapters and Notes 220 Note 6.2 Prospects for Using Policy Lending to Proactively Enable Forest Sector Reforms 221 Operational Aspects 221 Lessons Learned and Recommendations for Practitioners 226 Notes 227 Selected Readings 227 References Cited 228 Cross-Referenced Chapters and Notes 228 Note 6.3 Identifying the Need for Analysis on Forests in Development Policy Reforms 229 Operational Aspects 230 Lessons Learned and Recommendations for Practitioners 234 Notes 235 Selected Readings 235 References Cited 235 Cross-Referenced Chapters and Notes 235 Annex 6.3A:Select Tools to Assist Scoping of Cross-Sectoral Impacts 236 Annex 6.3B:Tools for Rapid Assessment of Cross-Sectoral Impacts 237 Note 6.4 Assessing Cross-Sector Impacts: Use of CEAs and SEAs 238 Operational Aspects 238 Lessons Learned and Recommendations for Practitioners 242 Notes 245 Selected Readings 245 References Cited 246 Cross-Referenced Chapters and Notes 246 Chapter 7 Monitoring and Information Systems for Forest Management 247 Past Activities 249 Key Issues 249 Future Priorities and Scaling Up 255 Notes 255 Selected Readings 255 References Cited 255 Cross-Referenced Chapters and Notes 256 Note 7.1 National Forest Inventories 257 CONTENTS ix Operational Aspects 258 Lessons Learned and Recommendations for Practitioners 260 Note 261 Selected Readings 261 References Cited 262 Cross-Referenced Chapters and Notes 262 Note 7.2 Establishing Forest Management Information Systems 263 Operational Aspects 263 Lessons Learned and Recommendations for Practitioners 267 Notes 268 Sources of Help 269 Selected Readings 269 Terms of Reference: Developing a National FMIS 270 Annex 7.2A:Model Terms of Reference 270 Note 7.3 Spatial Monitoring of Forests 274 Operational Aspects 276 Lessons Learned and Recommendations for Practitioners 279 Notes 281 Recommended Reading 281 References Cited 282 Cross-Referenced Chapters and Notes 282 Annex 7.3A:Elements for Terms of Reference for Developing a National System for Forest Monitoring and Information 283 PART II GUIDANCE ON IMPLEMENTING FORESTS POLICY OP 4.36 Chapter 8 Introduction to the World Bank Forests Policy 287 History of the World Bank's Forests Policies 287 Scope of the Forests and Natural Habitats Policies 288 Other Relevant Safeguard Policies 289 Notes 290 Reference Cited 290 Chapter 9 Applying Forests Policy OP 4.36 291 Objective of the Forests Policy 291 Main Requirements of the Forests Policy 293 When Is the Forests Policy Triggered? 294 Environmental Classification of Projects Involving Forests 294 Guidelines on Implementing OP 4.36 295 Definitions 296 Guidance on Development of Terms of Reference Related To OP 4.36 298 Social Assessment 299 Identifying Critical Forests and Critical Natural Habitats through Environmental Assessment 310 Protecting Forests through Conservation Offsets 314 Notes 316 Selected Readings 316 References Cited 317 Chapter 10 Consultation and Communication in Forest Sector Activities 319 Consultation 319 Communication 323 Annex 10A: Checklist for Task Managers 332 Note 334 References Cited 334 x CONTENTS Chapter 11 Forest Certification Assessment Guide: Summary on Use 335 The World Bank­World Wildlife Fund Forest Certification Assessment Guide (FCAG): Purpose and Concept 335 Using the Guide for World Bank Assessments of Certification Systems 336 Assessing Certification Systems 338 Providing Support Before Certification Using Time-Bound Action Plans 339 Notes 340 Selected Readings 340 References Cited 340 Annex 11A: Model Terms of Reference for Assessment of Certification Systems 341 Annex 11B: Procedures and Terms of Reference for the Development and Assessment of a Time-Bound Action Plan for Certification 343 Chapter 12 Applying OP 4.10 on Indigenous Peoples 347 Identification of Indigenous Peoples 348 Objectives of the Policy 348 Key Policy Requirements 348 Project Implementation 354 References Cited 357 Annex 12A: Elements of an Indigenous Peoples Plan and Planning Framework 357 Index 359 BOXES 1.1 What Do We Mean by Poverty? 15 1.2 The Role of Forests in Benefiting the Rural Poor:An Example from the World Bank's China Loess Plateau Watershed Rehabilitation Project 18 1.3 Forests for Poverty Alleviation:World Bank Albania Forestry Project 19 1.4 Poverty-Forest Linkages Toolkit 26 1.5 Entry Points for Reassessing Poverty-Forest Linkages:The Example of Indonesia 27 1.6 An Overview of the Tools for Gathering Information at the Village or Community Level 28 1.7 Livelihood Analysis in Busongo,Tanzania 28 1.8 Identifying Opportunities for Getting Poverty-Forest Linkages into Data-Collection Systems: Example from Tanzania 29 1.9 Community Forestry Models around the World 31 1.10 Different Degrees of Devolution of Forest Management to Communities 32 1.11 Improving Equity and Governance and Addressing Elite Capture in Nepal 33 1.12 Andhra Pradesh Community Forestry Management Project 34 1.13 The Forest Sector in Cameroon 35 1.14 Community Forestry in Mexico 36 1.15 Brazil Santa Catarina Natural Resource Management and Rural Poverty Reduction Project 42 1.16 India Andhra Pradesh Community Forestry Management Project 45 1.17 Mexico First and Second Community Forestry Projects 47 1.18 Typology of Property Rights 51 1.19 Characteristics of Secure Community Tenure 53 1.20 Examples of Potentially Pro-Poor Approaches to Tenure Reform in Forests 53 1.21 Opportunities to Advance Community Tenure Security:A Summary 54 1.22 Overcoming Barriers to Pro-Poor Forestry in Honduras 58 1.23 Market Analysis and Development in Community Forests of The Gambia 59 1.24 Strategic Partnerships in Southern Africa 59 1.25 Medicinal Plants as NTFPs in India and Nepal 60 2.1 IFC Projects in the Forest Products Sector 64 2.2 The Prevalence of SMFEs 67 2.3 Outgrower Contract for Wood Production: Xylo Indah Pratama, Indonesia 71 2.4 Social Responsibility Contract for Timber Production (with Lease of Use Rights and an NTFP Agreement): Bibiani Lumber Company and the Stool (Chief) of the Omanhene, Ghana 72 CONTENTS xi 2.5 Purchase Agreement for Nontimber Forest Products:Vegext Limited, Kenya 72 2.6 Multiple Land Use on Company Land: Beekeeping and Mondi, South Africa 72 2.7 Joint Venture for Ecosystem Services: Posada Amazonas Ecotourism, Peru 72 2.8 Local Sovereignty, Markets, and SMFEs in India and Guyana 78 2.9 Building SMFE Negotiating Capacity 79 2.10 Supporting Forest Enterprise Associations in Brazil 80 2.11 South African SMFEs and the Burden of Bureaucracy 81 2.12 Supporting Local Activists Who Support SMFEs in Guyana 81 2.13 Water Services Provided by Forests: Claims and Reality 88 2.14 Avoiding Perverse Incentives in PES 90 3.1 Technical Definitions 94 3.2 Factors Influencing Future Demand for Wood 95 3.3 Global Forest and Trade Network 101 3.4 The Forestry Sector Development Project for Vietnam 101 3.5 The Six Types of High Conservation Value Areas 105 3.6 Identifying HCVFs in State Forests and Taking It to Scale:The Case of China 107 3.7 Applying HCVF in Papua New Guinea 108 3.8 Mainstreaming HCVF Work in Bulgaria 108 3.9 National Interpretation of HCV Guidelines 109 3.10 Key Information Sources for HCV Identification 109 4.1 What Is a Landscape Approach? 124 4.2 Moving Beyond Optimization Models in Tri National de la Sangha 126 4.3 Incentives for Sustainable Forest Management in Fragmented Forest Landscape 126 4.4 Importance of Challenging Existing Institutional Arrangements that Discriminate Against Vulnerable Groups 128 4.5 Tradeoffs Framework Used in the Alternatives to Slash-and-Burn Initiative 129 4.6 Commonly Required Skills in a Planning Team 133 4.7 Who Are the Landscape Stakeholders? 133 4.8 Participating in the Management of the Tongass National Forest 133 4.9 Baseline Data Needed on Aspects of the Forest Landscape 134 4.10 Participatory Mapping for Identifying the Landscape Value 135 4.11 Tools for Integrating Various Viewpoints 136 4.12 Potential Indicators to Monitor 140 4.13 Possible Indicators for Assessing Conservation of Biodiversity and Ecosystem Services in Landscapes that Integrate Production and Conservation 141 4.14 Outcome Assessment Tracking 142 4.15 Conceptual Models:A Tool for Portraying a Site's Context and Determining Strategies 145 4.16 Tools for Clarifying and Testing Assumptions: Results Chains 146 4.17 Adaptive Management Applied: Sustainable Agriculture in Guatemala and Mexico 148 5.1 Examples of Bank Support for Prevention and Detection Activities in Project Lending 154 5.2 Finding Synergies Between the World Bank Group's Efforts in FLEG and Its Broader Governance Reforms for Greater Impact 155 5.3 REDD and Forest Governance 157 5.4 Legal Uncertainty in Indonesia 161 5.5 Nicaragua:Asymmetries Between Responsibilities and Resources and Resistance to Relinquishing Power 163 5.6 Participation and Transparency in Bolivia 164 5.7 Functions of Forest Organizations 166 5.8 The Liberian Forest Initiative: Institutional Reform in a Postconflict Country 167 5.9 Reducing Conflict of Interest in Forest Management:An Example from Countries in Transition 169 5.10 Measures for Transparent Budget Procedures 170 5.11 Citizen Report Cards: Benchmarking Public Service Delivery 171 5.12 Reforming Forest Law in Postconflict Countries 174 5.13 Working on the Law with Lawyers 175 5.14 Common Problems with Fiscal Systems in the Forestry Sector 180 xii CONTENTS 5.15 Informal Competition for Harvesting Rights in Fiji 181 5.16 Solutions to Problems with Fiscal Systems in the Forestry Sector 182 5.17 Measures Specific to Combating Corruption in the Forest Sector 191 6.1 Indonesian Structural Adjustment and Forests 204 6.2 Upstream Analyses on Energy Reform and Fuelwood Use:An Example from Azerbaijan 206 6.3 Positive Impact of Agrarian Reform on Community Forestry in Mexico 208 6.4 Use of the Rapid CEA Approach in Bosnia and Herzegovina 210 6.5 NFP in Uganda 215 6.6 Basic Principles of NFP Preparation and Implementation 216 6.7 Recurring Key Issues in Forest Sector Reviews 217 6.8 Vietnam's 5MHRP:An Example of Success 218 6.9 Mexico Environmental SAL: Making It Work 221 6.10 Typology of Conditionality 222 6.11 Conditions in Development Policy Loans on Forestry:An Example from Ghana 223 6.12 The Use of DPLs to Support Natural Resources Management in Gabon and Cameroon 224 6.13 Using DPLs in Lao PDR for Advancing the Forest Sector Agenda 226 6.14 Transparency and Predictability:An Example from Armenia 226 6.15 Themes Associated with World Bank Policy Lending Operations in FY05 and FY06 Relevant to the Forest Sector 232 6.16 The Forests Component in the Ghana CEA 240 6.17 SEA Definition 240 6.18 The Sector Study of Social and Environmental Impacts of Forest & Environment Sector Program in Cameroon 242 6.19 Implementation of the Kenya Forests Act:An Institution-Centered SEA 243 7.1 Monitoring Promotes Changes in Armenian Forest Policy 248 7.2 Using Spatial Monitoring to Assess Links Between Energy Reform and Forests 248 7.3 Forest Assessments in India 250 7.4 Monitoring Efforts in Brazil 251 7.5 The Forest Resource Assessment Program of FAO 253 7.6 Motivation for Forest Inventory in Bosnia and Herzegovina 257 7.7 Forest Inventory in Tanzania 258 7.8 Example of Defining the Sample of Interest 259 7.9 Plot Stratification 259 7.10 Map-Based Estimation Methods 259 7.11 Estimating Costs 260 7.12 A Data Collection Model 261 7.13 System Architecture of a Standard FMIS 264 7.14 FMIS in Bosnia and Herzegovina 266 7.15 Private Consulting or Software Firms That Have Developed Turn-Key FMIS or Major FMIS Components for Customization to User Needs 268 7.16 Forest Monitoring in Cameroon 275 7.17 Forest Monitoring in Indonesia 275 7.18 Using Geospatial Tools for LULUCF Projects 276 7.19 Selecting the Appropriate Approach and Tools 277 7.20 Using Remote Sensing for Real-Time Monitoring 279 9.1 Methodology of Social Assessment 301 9.2 Participation Strategy 302 9.3 Participation Framework 302 9.4 Social Impact Report 302 9.5 Process Framework for Involuntary Access Restrictions 303 9.6 Cost-Benefit Analysis 305 9.7 Total Economic Valuation 305 9.8 Market Analysis 306 9.9 Cost Estimates 306 CONTENTS xiii 9.10 Incentive Framework 306 9.11 Poverty Impact Analysis 307 9.12 Economic Monitoring 307 9.13 Fiscal Impact Analysis 307 9.14 Quantitative Analysis and Baseline Monitoring 308 9.15 Environmental Management Framework 309 9.16 Environmental Management Plan 310 9.17 Assessment of Environmental Impacts and Proposed Mitigation Measures 310 9.18 Environmental and Social Management Framework 311 9.19 Typical Procedures for Establishing New Protected Areas 315 10.1 Liberia Forest Initiative:A Strategic Partnership that Enables Consultation 320 10.2 What is the Necessary Level of Consultation? 321 10.3 Consultation in Cambodia: Lessons Learned 322 10.4 Consultation in the Democratic Republic of Congo: Using Analytical Work to Start the Process 323 10.5 Guidance for Addressing Concerns of Indigenous Peoples and Preempting Local Conflicts 324 10.6 Elements of Communication and Collaboration 325 10.7 Budgetary Issues: Cost Elements of Consultation 325 10.8 Managing Risks through Strategic Communication:The Case of Cambodia 331 10.9 Communications Implementation Plan 331 12.1 OP 4.10 on Social Assessment 350 12.2 OP 4.10 on Free, Prior, and Informed Consultation 351 FIGURES 1 Main Causes of Deforestation, by World Region, 1990­2000 2 2 Community Ownership and Administration of Forests 3 3 Commitment from the World Bank, GEF, and the IFC for Forests, FY01 to FY07 7 4 IBRD/IDA and GEF Forestry-Related Lending, Including Forest Components in Nonforest Projects, 1997­2006 8 5 Amount of IBRD/IDA Forestry Lending by Region, FY01­FY05 8 6 Regional Distribution of IBRD/IDA Lending, 2001­05 9 1.1 Toward Tenure Security:Actors and Actions 52 1.2 Forest Market Development Strategy for Low-Income Producers 57 2.1 IFC Forest Sector Investments 64 2.2 IFC Forest Investments Regional Distribution, 2003­06 64 2.3 The Simple Economics of Payments for Environmental Service 85 2.4 Institutional Elements of a PES Mechanism 90 3.1 Pathways of Deforestation and Land Cover Conversion 94 3.2 A Possible Global Forest Scenario for 2050 97 3.3 HCVF Identification and Follow-up:The Ideal Picture 107 4.1 Necessary Ingredients for Project Success 144 4.2 General Project Management Cycle 144 4.3 Timing of Outcomes and Impacts 147 5.1 Identifying "Entry Points" and a Sustainable Reform Process to Improve Forest Governance 152 5.2 Illegal Forest Activity and Its Link with Corruption 190 5.3 National Action and International Cooperation for Controlling Forest Crime 191 6.1 Indirect Impact of Fiscal Reform on Forests 229 6.2 Key Building Blocks of CEAs 239 TABLES 1.1 Changing Linkages between Forests and Poverty 17 2.1 Company-Community Partnership Models for Different Forest Goods and Services 71 2.2 World Bank Projects with Explicit PES Components 87 3.1 Estimated Number of Years Left of Economically Accessible Timber, by Country 95 xiv CONTENTS 3.2 Wood Fuel Data for Selected World Bank Client Countries, 2005 96 5.1 FLEG Components in the World Bank Forestry Portfolio, by Region 154 5.2 Forest Decentralization: Potential Advantages and Dangers 160 6.1 Typical Reforms in Policy-Based Operations, and Potential Forest Linkages 231 6.2 The Requirements, Significance, and Costs of Select Analytical Tools 233 6.3 Sample Checklist for Devaluation 236 6.4 Sample Qualitative Matrix for Devaluation 236 7.1 Areas Where New Methodologies and Technologies are Expected to Benefit NFIs 249 7.2 Example of Number of Images and Estimated Costs for a Remote-Sensing Survey with Different Resolution and Sampling Options 254 7.3 An Example of the Number and Cost of Field Plots in a Global Survey Using Field Data Only 255 7.4 Existing Satellite Remote Sensors, their Applications, and Limitations for Forest Monitoring 280 7.5 Global Forest Maps 281 10.1 Consultation at Various Stages of an Environmental Assessment Project 326 10.2 Listening to the Public 327 10.3 Involving the Public in Decision Making 328 10.4 Techniques for Conveying Information 330 12.1 General Consultation Process 352 CONTENTS xv AC K N OW L E D G M E N T S The preparation of the Forests Sourcebook involved many baum (Sylvan Environmental Consultants), Jade Saunders people from within and outside the World Bank working on (European Forest Institute), Jeff Sayers (WWF), Cornelia forests issues. Sepp (Eco-Consult), Caroline Stem (Foundations of Success), Many individuals made written contributions and/or Fred Stolle (WRI), Sonja Vermeulen (IIED), Horst Wagner provided material for use in the Forests Sourcebook. Contrib- (Consultant), Martin Walter (University of Applied Sciences utors of material for chapters and notes from within the Weihenstephan), and Adrian Whiteman (FAO). Bank included Kulsum Ahmed (ENV), Mario Boccucci Technical editing, final editing, and assistance with (EASRE), Diji Chandrasekharan Behr (ARD), Robert R. developing the online version was done by Iskandarsyah A. Davis (LCSAR), Gerhard Dieterle (ARD), Erick Fernandes Bakri (SDNIS), Dora N. Cudjoe (ENV), Elizabeth Cushion (ARD), Melissa Fossberg (EXTCN), Laura A. Ivers (CGIAR), (ARD), Anne M. Davis Gillet (ARD), Reem Hajjar (IISD), Peter Jipp (EASRE), Emile Jurgens (EASRE), Richard Marketa Jonasova (ARD), Gunnar Larson (ARD), Elizabeth Kaguamba (IFC), Robert Kirmse (ECSSD), Nalin M. Kishor B. Rice (Consultant), Paul R. Turner (Consultant), and Peter (ARD), George Ledec (LCSEN), Fernando Loayza (ENV), Wood (IISD). Muthukumara S. Mani (ENV), Grant Milne (SASDA), Jes- The day-to-day coordination of the Forests Sourcebook sica Mott (ECSSD), Christian A. Peter (AFTEN), Stefano was carried out by Diji Chandrasekharan Behr (ARD). Edi- Pagiola (ENV), Klas Sander (ENV), and John Spears (ARD). torial production of the book was handled by Mark Inge- Contributors of material for chapters and notes from out- bretsen (EXTOP). Input from FAO was coordinated by side the Bank included Jon Anderson (MCC), Jill Blockhur Michael Martin. The overall task was managed by Gerhard (TNC, formerly ARD, World Bank), H. Carolyn Brown (Uni- Dieterle (Forests Advisor, ARD) and Diji Chandrasekharan versity of Guelph), David Cassells (TNC, formerly ENV, Behr (Natural Resource Economist, ARD), who collectively World Bank), Mike Chaveas (US Forest Service International assume responsibility for remaining errors and omissions. Programs), Arnoldo Contreras-Hermosilla (Consultant), Jim We are also grateful for comments received on the various Douglas (Consultant), Kailash Govil (FAO), Marilyn Hoskins chapters and drafts from our colleagues, including Paola Agos- (Consultant),Viju Ipe (Consultant), Dirk Jäger (University of tini (AFTEN),Peter Dewees (ECSSD),Erick Fernandes (ARD), New Brunswick), Svend E. Jensby (Consultant), David Robert Kirmse (ECSSD), Nalin M. Kishor (ARD), Andrey Kaimowitz (Ford Foundation, formerly CIFOR), Arvind Kushlin (ECSSD), Peter Neame (IFC), Tapani Oksanen (Indu- Khare (Rights and Resources Initiative), Duncan Macqueen for, formerly ARD, World Bank), Klas Sander (ENV), Gerardo (IIED), Augusta Molnar (Rights and Resources Initiative), Segura (LCSAR), John Spears (ARD), Hosny El Lakany, David Uwe Muuss (Center for Tropical and Subtropical Agriculture Kaimowitz (Ford Foundation,formerly CIFOR),Markku Sim- and Forestry, University Goettingen), Ruth Nogueron (WRI), ula, Peter Neame (IFC), Charles Di Leva (LEGEN), Harvey Ruth Nussbaum (ProForest), Tapani Oksanen (Indufor, for- Himberg (QPCQC), Alexandra Bezeredi (QPCQC), Louise merly ARD, World Bank), Esa Puustjarvi (Indufor), Ted Buck (Cornell University and Ecoagriculture Partners), Grant Robak (University of New Brunswick ), Kenneth L. Rosen- Milne (SASDA), and Mohammed Bakarr (ICRAF). xvii A B B R E V I AT I O N S 5MHRP Five Million Hectares Reforestation AAA Analytical and Advisory Services ADB Asian Development Bank AFH Honduran Forest Agenda AFR Sub-Saharan Africa Region AOP annual operating plan ASB Partnership for the Tropical Forest Margins AVHRR Advance Very High Resolution Radiometer AWF African Wildlife Foundation AZE Alliance for Zero Extinction BCPCPS Beneficiary-Centered Problem Census Problem Solving BiCF BioCarbon Fund BIMS Business Information Management System BP Bank Policy CAPE Cape Action Plan for the Environment CARPE Central African Regional Program for the Environment CAS Country Assistance Strategies CATIE Tropical Agricultural Research and Higher Education Center, Costa Rica CBD Convention on Biological Diversity CBERS China Brazil Earth Resources Satellite CBFM Community-based Forest Management CBNRM Community Based Natural Resource Management CCD UN Convention to Combat Desertification CD compact disc CDM Clean Development Mechanism CEA country environmental analysis CENESTA Centre for Sustainable Development & Environment CFCs Community Forest Committees CFE Community Forest Enterprises CFMCs Cantonal Forest Management Companies CI Conservation International CIFOR Centre for International Forestry Research xix CIPAMEX Sección Mexicana del Consejo Internacional para la Preservación de las Aves CIRAD Centre International de Recherche Agronomique pour le Développement CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora CMP Conservation Measures Partnership CMS Convention on the Conservation of Migratory Species of Wild Animals CNONGD Conseil National des ONG de Développement du Congo COFO Committee on Forestry CRC Citizen Report Card CSD United Nations Commission on Sustainable Development DPL Development Policy Lending DPLs Development Policy Loans EAP East Asia and Pacific EASRD Rural Development and Natural Resources Sector Unit, East Asia and Pacific Region, the World Bank ECA Europe and Central Asia EFTRN European Tropical Forest Research Network EIA environmental impact assessment EITI Extractive Industries Transparency Initiative EMF Environmental Management Framework EMP Environmental Management Plan ENA Europe and North Asia ENVSAL Environmental Structural Adjustment Loan ERS-1 European Remote Sensing Satellite ERZ Extractive Resource ESMF Environmental and Social Management Framework EU European Union EXTCN External Affairs and Communication Network (World Bank) FAO Food and Agriculture Organization FBD Forest and Bee Keeping Department FCAG Forest Certification Assessment Guide FCPF Forest Carbon Partnership Facility FDA Forest Development Authority FDCP Forest Development and Conservation Project FEMA/MT The State Environment Foundation of Mato Grosso (Brazil) FESP Forest & Environment Sector Program FLEG Forest Law Enforcement and Governance FLEGT Forest Law Enforcement, Governance and Trade FMIS Forest Management Information System FMIS-WG Forest Management Information System Working Group FMU forest management unit FOMAS Forest Sector Monitoring and Assessment Process FRA Forest Resources Assessment FRSCS Forestry Sector Coordination Secretariat FSC Forest Stewardship Council FSI Forest Survey of India FSSP Forest Sector Support Program FUG Forest User Group FUNAI National Indian Foundation (Brazil) GAB good average bad GDP gross domestic product xx ABBREVIATIONS GEF Global Environment Fund GEF Global Environment Facility GEMA Grupo Economia do Meio Ambiente e Desenvolvimento Sustentável GFC Guyana Forestry Commission GFTN Global Forest and Trade Network GIS Geographic Information System GNIFC Guyana National Initiative for Forest Certification GP Good Practices GPRS Growth and Poverty Reduction Strategy GPRS II Ghana Growth and Poverty Reduction Strategy GPS Global Positioning System GTA Amazon Working Group GTF Groupe de Travail Forêts ha hectares HCV High Conservation Value HCVFs High Conservation Value Forests IAF International Accreditation Forum IBA Important Bird Areas IBRD International Bank for Reconstruction and Development ICRAF World Agroforestry Centre ICSID International Centre for Settlement of Investment Disputes IDA International Development Association IEC International Electrotechnical Commission IEG Independent Evaluation Group IFC International Finance Corporation IFF Intergovernmental Forum on Forests IFRI International Forest Resources and Institutions IGBP International Geosphere-Biosphere Program IIED International Institute for Environment and Development ILO International Labour Organization IMF International Monetary Fund INR Institute of Natural Resources IPAM Instituto de Pesquisa Ambiental da Amazônia IPCC Intergovernmental Panel on Climate Change IPF/IFF Intergovernmental Panel on Forests and Intergovernmental Forum on Forests IPFP Indigenous Peoples Planning Framework IPP Indigenous Peoples Plan IRR internal rates of return ISDS Integrated Safeguards Data Sheet ISEAL International Social and Environmental Accreditation and Integrated Safeguards Data Sheet Labelling ISO International Organization for Standardization IT information technology ITTA International Tropical Timber Agreement ITTO International Tropical Timber Organization IUCN International Union for Conservation of Nature a.k.a. World Conservation Union IUFRO International Union of Forest Research Organizations IWGIA International Working Group for Indigenous Affairs JFM Joint Forest Management KABP knowledge, attitudes, beliefs, and practices ABBREVIATIONS xxi KAPSLM Kenya Agricultural Productivity and Sustainable Land Management LAC Latin America and the Caribbean LAO PDR Lao Peoples Democratic Republic LATIN Lembaga Alam Tropika Indonesia LFI Liberia Forest Initiative LINAPYCO Ligue Nationale des Pygmées du Congo LSMS Living Standards Measurement Surveys LULUCF land-use and land-use change and forestry M&E monitoring and evaluation MA&D Market Analysis & Development MC Micro-catchment MCFPE Ministerial Conference on the Protection of Forests in Europe MDGs Millennium Development Goals MENA Middle East and North Africa MIGA Multilateral Investment Guarantee Agency MINEF Ministry of the Environment and Forests (Cameroon) MM means of measure MOF Ministry of Forestry of Indonesia MWLE Ministry of Water, Lands & Environment NDVI Normalized Difference Vegetation Index NFIs national forest inventories NFO National Forest Program NFP National Forests Policy NGO nongovernmental organization NOAA National Oceanic and Atmospheric Agency NRM natural resource management NTFP Nontimber Forest Products OD Operational Directive OD Operational Directive ODI Overseas Development Institute OECD Organisation for Economic Co-operation and Development OECS Organization of Eastern Caribbean States OED Operations Evaluation Department OP Operational Policy OPCS Operations Policy and Country PA Protected Area PEFC Operations Policy and Country Services PES Payments for Environmental Services PF Process Framework PIU project implementation unit PNG Papua New Guinea POVCAL Poverty Calculator PPPs plans, policies, and programs PROCYMAF Project for Conservation and Sustainable Management of Forest Resources PRODES Brazilian Space Agency project PROFOR Program on Forests PRS Poverty Reduction Strategy PRSC poverty reduction support credit PRSL Policy Reform Support Loans xxii ABBREVIATIONS PRSP Poverty Reduction Strategy Paper PSA Pago por Servicios Ambientales PSAH Pago por Servicios Ambientales Hidrológicos PSIA poverty and social impact analysis RCEA rapid CEA RCEEE Research Center of Ecological and Environmental Economics REDD Reduced Emissions from Deforestation and Degradation REPEC Réseau des Partenaires pour l'Environnement au Congo RS/GIS Remote Sensing/Geographic Information System RSPO Round Table on Sustainable Palm Oil SA Social Assessment SAR South Asia Region SEA strategic environmental assessments SFM Sustainable forest management SFR State of Forest Report SIL Sector Investment Loan SIPAM Amazon Protection System SIVAM-SIPAM Amazon Surveillance System SME small and medium enterprise SMFE small and medium forest enterprise SNV Netherlands Development Organization SPOT Satellite Pour l'Observation de la Terre TEV total economic valuation TFAP Tropical Forestry Action Plan TFD The Forests Dialogue TM Thematic Mapper TOR terms of reference TREES Tropical Ecosystem Environment Observation by Satellite TRF timber right fees TTL task team leader TUC Timber Utilization Contracts UMD University of Maryland UN United Nations UN-CSD United Nations Commission on Sustainable Development UNCED United Nations Conference on Environment and Development UNDP United Nations Development Programme UNECE Economic Commission for Europe UNEP United Nations Environment Programme UNFCCC UN Framework Convention on Climate Change UNFF UN Forum on Forests USAID U.S. Agency for International Development USDA United States Department of Agriculture USFS United States Department of Agriculture Forest Service VPA Voluntary Partnership Agreement WATCH Women Acting Together for Chang WBCFU World Bank Carbon Finance Unit WBCSD World Business Council for Sustainable Development WBI World Bank Institute WBSCD World Business Council for Sustainable Development ABBREVIATIONS xxiii WCS Wildlife Conservation Society WHC World Heritage Convention WHRC Woods Hole Research Center WII Winrock International India World Bank-WWF World Bank-World Wildlife Fund WRI World Resources Institute WWF World Wide Fund for Nature (known in the U.S. as World Wildlife Fund) xxiv ABBREVIATIONS A U S E R ' S G U I D E TO T H E F O R E S T S S O U R C E B O O K I n using the chapters and notes in the Forests Sourcebook, annexes that contain checklists or content for terms of ref- the reader should keep in mind that the basic country erence for specific activities or relevant frameworks and def- context and conditions must be taken into account and initions. Like the chapter, information presented in notes is that close coordination with government and other key stake- often closely related to issues presented in other chapters holders is essential before any approach is implemented. and notes. Again, cross-references are provided. The Forests Sourcebook is divided into two parts. The first The second part provides guidance for implementing the contains an introduction to the book plus seven chapters World Bank's safeguard on forests. This section of the covering topics associated with enhancing the contribution Forests Sourcebook has five chapters. Chapter 8 provides a of forests to poverty reduction, engaging the private sector, brief introduction to the World Bank's Forests Policy (OP meeting the growing demand for forest products, optimizing 4.36). Chapter 9 is on applying OP 4.36. This chapter forest functions at the landscape level, improving forest gov- includes a discussion of the main requirements of OP 4.36, ernance, mainstreaming forest considerations into macro- guidelines for implementation (including preparation, policy dialogue, and monitoring forest sector activities. appraisal, and supervision requirements), definitions, and Each chapter provides relevant background and context guidance on identifying critical forests and critical natural with a general overview of the fundamental issues, con- habitats through environmental assessment, which includes straints, policies, and institutional requirements that need a discussion on protecting forests through conservation off- to be considered for specific topics. Each also provides the sets. Chapter 10 is on consultation and communication in rationale for engagement and a brief discussion of past forest projects. Chapters 11 and 12 discuss the Forest Certi- World Bank activities in the particular area. Most impor- fication Assessment Guide and the World Bank's Indigenous tant, chapters specify future priorities and areas for scaling Peoples policy, respectively. up activities. Each chapter also provides a list of key read- It should be noted that the guidance on applying the ings or sources of information. Often the topics presented in World Bank's OP 4.36 pertains only to World Bank invest- a chapter are closely related to issues presented in other ment projects. Development Policy Loans must abide by the chapters and notes. Cross-references are provided. requirements of OP 8.60 (discussed in chapter 6, Main- Associated with each chapter is a series of notes that dis- streaming Forests into Development Policy and Planning: cuss various tools or approaches for tackling specific issues Assessing Cross-Sectoral Impacts). highlighted in the chapter. The notes provide an overview and considerations of interest regarding a specific issue, dis- WHAT IS NOT COVERED cuss operational aspects, have recommendations for practi- BYTHE FORESTS SOURCEBOOK tioners that include lessons learned, and list selected read- ing. Some notes have boxes that contain innovative activity The Forests Sourcebook draws on bodies of completed and profiles and good practices. Where relevant, a note has ongoing work that provide innovative and operationally rel- xxv evant tools for implementing the World Bank's Forests Strat- projects and activities are economically, financially, socially egy. These tools often require an understanding of several and environmentally sound. The World Bank's Operational other key processes and programs, some of which are not Manual spells out the policies and provides procedures and covered by the Forests Sourcebook, including the following: other forms of guidance on how to comply with the policies. See http://go.worldbank.org/2G5SSZAET0. Poverty Reduction Strategy Paper and Country Assistance Strategy preparation processes. Poverty Detailed discussion on due diligence as per OP 8.60. Reduction Strategy Papers (PRSP) (see http://go.world The key issues surrounding forest due diligence as per OP bank.org/FXXJK3VEW0) describe a country's macroeco- 8.60 are covered in chapter 6. Additional information rele- nomic, structural, and social policies and programs to pro- vant to environment, forests, and natural resources is avail- mote growth and reduce poverty, as well as associated exter- able at http://siteresources.worldbank.org/PROJECTS/ nal financing needs. PRSPs are prepared by governments Resources/GPNChapter4Environment.pdf. through a participatory process involving civil society and development partners, including the World Bank and the IFC Environmental and Social Standards. The Interna- International Monetary Fund (IMF). Country Assistance tional Finance Corporation (IFC), a member of the World Strategies (CAS) (see http://go.worldbank.org/4M75 Bank Group, has its own set of environmental and social BI76J0) are business plans prepared by the World Bank for standards, including Performance Standards and Environ- active borrowers from the International Development Asso- mental, Health, and Safety Guidelines, that are applicable to ciation (IDA) and the International Bank for Reconstruc- all projects the IFC finances. Available at http://www tion and Development (IBRD). The CAS takes as its starting .ifc.org/ifcext/enviro.nsf/Content/EnvSocStandards. point the country's own vision for its development, as defined in a PRSP or other country-owned process. THE QUICK REFERENCE MATRIX Other World Bank Operational Policies. This book The matrix on the following page shows how the contents of focuses on Operational Policies on Forests (OP 4.36) and the book is organized in terms of priority themes, the tools Indigenous Peoples (OP 4.10) and refers to others. All World and approaches used to address those themes, and how Bank investment operations are governed by the Bank's themes, tools, and approaches relate to the three overarch- Operational Policies, which are designed to ensure that all ing objectives of the World Bank's Forests Strategy. xxvi A USER'S GUIDE TO THE FORESTS SOURCEBOOK Forests Sourcebook: Quick Reference and Guide to Contents World Bank Forests Strategy: Three Overarching Objectives Harnessing forests for poverty alleviation Integrating forests into sustainable economic development Protecting vital local and global environmental services Forests Sourcebook PART I: PRIORITYTHEMES PART II: GUIDANCE ON AND IMPLEMENTING OPERATIONAL ASPECTS FORESTS POLICY OP 4.36 PriorityThemes Tools and approaches INTRODUCTION Opportunities and Challenges in the Forest Sector CHAPTER 1 Note 1.1: Mainstreaming the Role of Forests in Poverty Alleviation CHAPTER 8: Forests for Poverty Reduction Note 1.2: Community-Based Forest Management. Introduction to World Bank Note 1.3: Indigenous Peoples and Forests Forests Policy Note 1.4: Property and Access Rights Note 1.5: Making Markets Work for the Forest-Dependent Poor CHAPTER 2 Note 2.1 Company-Community Partnerships Engaging the Private Sector in Note 2.2 Small and Medium Enterprises CHAPTER 9: Forest Sector Development Note 2.3 Innovative Marketing Arrangements: Payments for Applying Forests Policy OP 4.36 Environmental Services CHAPTER 3 Note 3.1: Mainstreaming Conservation Considerations into Meeting the Growing Demand Productive Landscapes for Forest Products Note 3.2: Forest Certification Systems CHAPTER 10: Note 3.3: Forest Plantations in World Bank Operations Consultation and Communication in Forest Sector Activities CHAPTER 4 Note 4.1: Integrated Forest Landscape Land Use Planning Optimizing Forest Functions in a Note 4.2: Assessing Outcomes of Landscape Interventions Landscape Note 4.3: Using Adaptive Management to Improve Project CHAPTER 11: Implementation Forest Certification Assessment Guide: Summary on Use CHAPTER 5 Note 5.1: Decentralized Forest Management Improving Forest Governance Note 5.2: Reforming Forest Institutions Note 5.3: Strengthening Legal Frameworks in the Forest Sector Note 5.4: Strengthening Fiscal Systems in the Forest Sector Note 5.5: Addressing Illegal Logging and Other Forest Crime CHAPTER 12: Applying OP 4.10 on Indigenous CHAPTER 6 Note 6.1: Using National Forest Programs to Mainstream Forest Peoples Mainstreaming Forests into Issues Development Policy and Planning Note 6.2: Prospects for Using Policy Lending to Proactively Enable Forest Sector Reforms Note 6.3: Identifying the Need for Analysis on Forests in Development Policy Reforms Note 6.4: Assessing Cross- Sector Impacts: Use of CEAs and SEAs CHAPTER 7 Note 7.1: National Forest Inventories Monitoring and Information Note 7.2: Establishing Forest Management Information Management Systems for Forest Management Systems Note 7.3: Spatial Monitoring of Forests A USER'S GUIDE TO THE FORESTS SOURCEBOOK xxvii I N T R O D U C T I O N OPPORTUNITIES AND CHALLENGES INTHE FOREST SECTOR F orests contribute to the livelihoods of more than 1.6 In 2005, removals of roundwood were valued at about billion people. Forests and the forest products indus- US$64 billion, an increase of about 11 percent over try are a source of economic growth and employ- removals in 1990. The demand for nonwood forest products ment, with the value of global forest products traded inter- has also increased since 1990, with removals estimated at nationally reaching US$270 billion, of which developing US$4.7 billion in 2005. countries account for more than 20 percent. Worldwide, The contribution of forests to the maintenance of vital forest industries provide employment (both formal and ecosystem functions and societal well-being is increasingly a informal) for approximately 50 million people. matter of public concern. People are realizing that water sup- Forests are home to at least 80 percent of the world's ply and quality, flood protection, soil conservation, local cli- remaining terrestrial biodiversity and are a major carbon mate, and conservation of biodiversity all rely on the existence sink regulating global climate. Forests also help to maintain of functioning forest ecosystems. Most developed-country the fertility of the soil, protect watersheds, and reduce the governments have now committed to increased funding for risk of natural disasters, such as floods and landslides. carbon sequestration and effective protection of forest biodi- Global deforestation and degradation threaten biodiversity, versity, and these commitments are likely to be extended to forest-related ecological services, and rural livelihoods. reducing emissions from forest land conversion. Covering 26 percent of the Earth's land surface, forests play a significant role in realizing the Millennium Develop- WHYTHE POTENTIAL OF FORESTS ment Goal (MDG) of halving the number of people living HAS NOT BEEN FULLY HARNESSED in absolute poverty by 2015. Unfortunately, rural develop- ment strategies often neglect forests because forests have Forests house global public goods, which, to be maintained, been mistakenly viewed as being outside the mainstream of must be both protected and managed sustainably. At pres- agricultural development. In addition to the lumber and ent, however, less than 5 percent of tropical forests are being wood products industry, the gathering and marketing of managed sustainably. Despite their great economic value, hundreds of forest products, such as forest fruits, fuelwood, forests are one of developing countries' most mismanaged and medicinal products, constitute an economic activity of resources. Many countries with substantial forest resources enormous scale. have been subject to corruption and serious inadequacies in As human populations grow and countries around the forest allocation, administration, and monitoring. Illegal world become more affluent, the demand for wood prod- logging and associated trade and corruption at high levels ucts, both solid wood and pulp and paper, will increase, too. flourish because timber rights can be extremely valuable. 1 Besides channeling potential timber revenue away from market-based methods to reduce loss of forests' environ- national development efforts--particularly from the people mental services. living in and near the forests--the low prices at which these Safeguarding global public goods is not a national prior- concessions are often granted encourage waste, unsustain- ity in countries struggling with problems of poverty reduc- able management, plundering for short-term gain, and tion. As a result, forests' potential is unexploited in develop- replacement by less valuable and less sustainable activities. ing countries because the forest sector has to compete for Strengthening of governance usually touches upon sensitive development investment and governments have limited local and national interests, which are benefiting from the interest in investing in the sector through loans when the status quo. benefits are often global rather than national or local. These Furthermore, growing populations lead to an increase in investments must compete for resources against such high the conversion of forests for other land uses (for example, priority sectors as health, education, and infrastructure. clearing of forests for agriculture; see figure 1). The Food Weak governance in the forest sector is pervasive and leads and Agriculture Organization (FAO) estimates that each to ineffective use of funds. Forest authorities often lack the year 13 million hectares of forest are permanently converted capacity to implement policy reforms and programs effec- to agriculture, mostly in the tropics. Spillovers from poor tively and have limited capacity to access, and make use of, policies in other sectors can also contribute to rapid rates of extra-budgetary financing. Furthermore, incentives for the deforestation. This has been particularly evident in recent private sector to implement sustainable forest management decades, for example, in the conversion of forest areas to oil are either absent or limited. palm plantations in Indonesia. The forest sector represents one of the most challenging Although some forest products, primarily lumber and areas in the development of community and global public fuelwood, are delivered through markets, the economic policy. Despite significant resource flows, international con- value of many of the other forests goods and services (for cern, and political pressure, a combination of market and example, environmental services, biodiversity, and carbon institutional failures has led to forests failing to realize their sequestration) go unrecognized by the market. Creative new potential to reduce poverty, promote economic growth, and mechanisms are needed to compensate those preserving be valued for their contributions to the local and global environmental services and to provide incentives through environment. Figure 1 Main Causes of Deforestation, by UNLOCKING FORESTS' POTENTIAL World Region, 1990­2000 The problem of sustainable forest management (SFM) is highly complex and can only be addressed by a range of 60,000 Conversion of forest area to small-scale actions targeted at (i) the policy framework, (ii) strength- shifting agriculture ening of governance, (iii) removal of market distortions Conversion of forest area to small-scale and engaging market actors, (iv) full valuation and sharing 50,000 permanent agriculture and other land uses of forest benefits through market and other mechanisms, Conversion of forest area to large-scale permanent agriculture or other land uses (v) capacity building, and (vi) mobilization of adequate 40,000 Conversion to agricultural and forest financial resources. plantations Countering the drivers of deforestation and forest degra- dation to enable sustainable forest management will require, 30,000 among other factors, greater innovation and better coordina- tion in global forestry dialogue, national sectoral planning, and technical analysis that addresses these forces and factors. 20,000 Capturing the potential of forests to advance poverty reduc- tion, support economic growth, and deliver local and global 10,000 environmental services will require donors to work in close coordination with governments, the private sector, and other key stakeholders in the forest sector, and to link forest sector activities with national strategies. This can involve working Africa Latin Asia Pan- with emerging external constraints and opportunities. America Tropical 2 INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR Forest law enforcement and governance. Loss and Figure 2 Community Ownership and Administration degradation resulting from weak forest law enforcement and of Forests governance have occurred at the expense not only of 600 national economies, but also of the rural people who depend on forest resources for their livelihoods. This 500 mismanagement translates into enormous national costs. 400 For example, failure to collect appropriate royalties and taxes from legal forest operations has a global cost to governments hectares 300 of about US$5 billion annually. Illegal logging results in 200 Million additional losses of forest resources from public lands of at 100 least US$10 billion to US$15 billion a year. Improvements in forest law enforcement and governance are critical to 0 capturing the full economic potential of forests in a 1985 2001 2015 1985 2001 2015 sustainable manner. In response, a stronger global focus has Community owned Community administered been placed on forest sector governance, accountability, and Source: White and Martin 2002. transparency (see chapter 5, Improving Forest Governance). making and implementation is considered essential for Private sector engagement. Because of forests' significant good governance, equitable distribution of benefits, and commercial value, the private sector is the principal source of sustainable resource management. Additionally, it is finance in forest production in most countries. Indeed, the important for creating accountability and transparency. level of activity and influence of the private sector in forests Using forests for poverty reduction requires a strong dwarfs that of the international community--and institutional framework and an effective legal and regula- sometimes of the national government. Private investment tory environment, in which the rights of specific groups in the forestry sector in developing countries and countries among the poor are recognized and protected (see note 1.3, in transition is close to US$15 billion per year, or up to nine Indigenous Peoples and Forests, and note 1.4, Property and times more than the current official development assistance Access Rights). Additionally, opportunities to develop sus- flows.1 Official development assistance accounted for only a tainable forest businesses must be provided to the forest- fraction of the funds available for forestry in the mid-1990s, dependent poor and other groups (see note 2.2, Small and and has declined sharply since then. Medium Enterprises). Therefore, development organiza- Private sector investment--from both domestic and for- tions, in collaboration with government and other relevant eign sources--has been on the upswing. Given this trend of stakeholders, need an approach that focuses on participa- increased private engagement in forest production and pro- tion and conflict resolution, and not just on the technical cessing, legal and regulatory frameworks that support sus- and economic aspects of forestry. tainable forest practices must be developed to promote responsible private sector investment and corporate social Coexistence of conservation and production. responsibility as well as to eliminate corruption. To enhance Conservation and production must coexist for the full the role of private sector investment in poverty alleviation, potential of forests for poverty reduction to be realized. effective and efficient community-company partnerships Although large areas of the world's forests must be preserved and greater support to small and medium forest enterprises intact for their ecological and cultural values, much of what will be critical. remains will inevitably be used for productive purposes. Consequently, a dual approach covering both protection and Increased community engagement in forest productive use is needed. management. Local communities, including indigenous Greater investment in the development of plantations and traditional groups, play an increasingly important role contributes to economic growth and poverty reduction in forest management. Studies of the ownership and while reducing pressure on natural forests and protecting administration of forests anticipate that forest areas under some ecosystem services. Integration of forest conservation recognized community ownership and reserved for into productive landscapes can help achieve conservation community administration will nearly double between 2001 objectives, enhance the benefits of conservation, and and 2015 (figure 2). Community participation in decision broaden the ownership of conservation initiatives (see note INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR 3 3.1, Mainstreaming Conservation Considerations into Pro- operationalizing this concept, an enabling environment ductive Landscapes). Plantations, when coupled with pro- must be created to facilitate this approach. motion of environmentally and socially responsible trade in timber and forest products, have the potential to meet the Cross-sectoral impact. Deforestation is a complex rapidly growing demand of countries like China and India phenomenon: While there is general agreement that it is without sacrificing protected forest areas. strongly influenced by economic change arising from outside the forest sector itself, its specific causes (and, Improved forest management practices. Although equally important, its economic and social effects) vary biodiversity and key environmental services have widely between--and even within--countries. Large-scale traditionally been sustained through the establishment of economic change in any country, whether induced in protected areas, the wide range of competing uses for forests specific reform programs or inflicted through exogenous by diverse groups imposes constraints on how much can be forces beyond the control of that country, has the potential achieved by protection alone. Improving forest management to bring about major changes in the condition of natural practices in production forests (forests where productive use resources and the environment, especially in developing is permitted) is an essential component of any strategy to countries, where natural capital plays a significant role in protect vital local environmental services, in addition to economic growth and development and is crucial to the efforts aimed at bolstering the effectiveness of management sustainability of these processes. within protected areas. Pressures on forests from poorly aligned strategies in agriculture, transportation, energy, and industry, as well as Innovative financing. It is highly unlikely that governments from unsound macroeconomic policies, are major causes of will be able to significantly scale down lumber extraction to forest loss and degradation. Cross-sectoral cooperation to preserve forests for their environmental services unless the coordinate policies is essential to avoid forest degradation, costs of forgone revenue can be offset in some way. Moreover, to ensure that forests are managed in a sustainable manner, very few countries would be prepared to borrow funds--from and to harness opportunities created by ever-rising fossil the World Bank or other sources--to finance forest protection fuel prices and improved biofuel technologies. as a substitute for forest production. Innovative financing options and markets for forests' environmental services, such THE WORLD BANK'S APPROACH as ecotourism, carbon offsets, reduced emissions from TOTHE FOREST SECTOR deforestation and degradation (REDD), and watershed management, will all have important roles to play. As carbon Forests are important to the World Bank's mission because credits grow in value under emerging global carbon trading of their contribution to the livelihoods of the poor, the systems, incentives to invest in the establishment of new potential they offer for sustainable economic development, forested areas for their carbon benefits, and in reduced and the essential global environmental services they provide. deforestation for reduced carbon emissions, will increase. The World Bank's 2002 Forests Strategy and Avoided deforestation. Though the Kyoto Protocol has Operational Policy no mechanism for providing compensation for reduced deforestation, the Stern Review highlights "avoided In 2002 the World Bank adopted a revised Forests Strategy deforestation" as a cost-effective mechanism to limit (World Bank 2004) and Operational Policy on Forests (OP greenhouse gas emissions (Stern 2007). Present concerns 4.36) that allow the World Bank to engage more proactively about climate change have opened a window of opportunity in the forest sector to help attain the goal of poverty reduc- for the framework of avoided deforestation. The Forest tion without jeopardizing forests environmental and eco- Carbon Partnership Facility of the World Bank is developing nomic values intrinsic to sustainability. The strategy was a financing mechanism for avoided deforestation and founded on three equally important and interrelated pillars: preparing countries to participate in this scheme. Preparations include, among other things, developing Harnessing the potential of forests to reduce poverty in a technical tools for monitoring and measuring avoided sustainable manner deforestation, assessing opportunity costs, and making the Integrating forests more effectively into sustainable necessary financial transfers. Beyond the technical aspects of development 4 INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR Protecting vital local and global environmental services Efforts to bring about credible systems for socially, ecologi- and values cally, and economically sound management of production forests should, however, also be coupled with systems for Addressing these three pillars together makes the Forests independent certification and monitoring. Identification Strategy complex and multifaceted. It not only concerns and promotion of local, regional, and global markets for growing or protecting trees but also involves a complex forest products is a matching priority. interaction of policy, institutions, and incentives. The strat- egy embodies a multisectoral approach that addresses cross- Protecting global forest values. More than 600 sectoral issues and takes into account the impacts of activi- million hectares of protected areas have been established in ties, policies, and practices outside the sector on forests and developing countries. While many of these areas are people who depend on forests for their livelihoods. economically inaccessible, other areas are under increasing The 2002 Forests Strategy and operational policy marked pressure from development and illegal activities, including a shift from outright prohibition of World Bank financing logging and poaching. Many governments do not have the of commercial logging operations in primary tropical moist resources to effectively administer and protect these areas. forests to an approach of improved forest management with In addition, other forests, ecologically sensitive and rich in targeted conservation of critical natural habitats in all types biodiversity but outside protected areas, are under of forests. The new approach embodies explicit safeguards increasing threat. that require World Bank­financed investment operations to Invasive pressures are likely to worsen unless significant comply with independent certification standards acceptable additional funds can be made available from multiple to the World Bank. sources, at highly concessional or grant terms, for protection, or unless effective markets for the ecosystem values of forests Harnessing the potential of forests to reduce can be developed. The creation of new markets for the envi- poverty. Forest outcomes are crucial for poverty reduction ronmental services of forests, such as biodiversity, carbon in many of the World Bank's client countries. For both sequestration, and watershed protection, are essential. countries with large forest endowments, and for others with limited forests, if forest issues are not fully incorporated into The Forests Strategy course for implementation broad national government and assistance strategies, the overarching goals of poverty reduction will not be met. The World Bank's Forests Strategy charts a course for imple- To harness the potential of forests to reduce poverty, con- mentation based on engaging in key countries, creating ditions must be created to ensure that the rural poor are partnerships, increasing analytical work, and improving able to manage their natural resources, especially the forests, coordination across the World Bank Group.2 In line with for their own benefit. Capacity must be built to support and this, the World Bank is pursuing the following: regulate community use of forests and plantations. Forest assets under various forms of community management, Selectively engaging with forest priority countries. possibly supported by the private sector, could become Developing partnerships, such as the Global Forest Part- major sources for global environmental services, such as nership, that bring together existing and emerging part- biodiversity and carbon sequestration. nership arrangements--such as the World Bank-World Wildlife Fund (WWF) Alliance, the Program on Forests Integrating forests into sustainable economic (PROFOR), and Forest Law Enforcement and Gover- development. Forests are one of the most mismanaged nance (FLEG) initiatives--and that enhance coordination resources in many countries. Forests are seriously among client countries, donors, international nongovern- undervalued, many of their environmental benefits do not mental organizations, research institutions, and civil soci- enter markets, and poor governance has fueled illegal ety to achieve the goals of the Forests Strategy. In the activities. The rapid rates of deforestation in the last decades future, the strategy will continue to rely on successful are largely a result of the spillover from poor policies in other efforts and enter into new partnerships as dictated by the sectors and lack of governance in the forest sector itself. strategy and the changing development context. A main task, therefore, is to help governments improve Focusing on emerging opportunities for innovative policy, economic management, and governance in the forest financing of forest sector activities and continuing to sector, including forest concessions policies and allocations. facilitate concessional financing by blending Interna- INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR 5 tional Bank for Reconstruction and Development World Bank applies to its investment lending. Development (IBRD) and International Development Association policy loans (DPLs) were originally designed to provide sup- (IDA) loans with grants. port for macroeconomic policy reforms, such as in trade pol- Building a solid analytical foundation to support and icy and agriculture. Over time, DPLs have evolved to focus facilitate engagement in the forest sector. more on structural, financial sector, and social policy Coordinating across the World Bank Group, with a par- reforms, and on improving public sector resource manage- ticular emphasis on the International Finance Corpora- ment. Development policy operations now generally aim to tion (IFC), whose operations in the sector are significant promote competitive market structures, correct distortions in many forest-important countries. in incentive regimes, establish appropriate financial moni- toring and safeguards, create an environment conducive to private sector investment, encourage private sector activity, Operational policies for World Bank­supported promote good governance, and mitigate short-term adverse investment projects effects of development policy. While the sorts of activities, The World Bank's suite of operational policies ensures that institutional changes, and policy developments that result Bank operations with potential impact on forests take forest can certainly have impacts on forests, it is no simple task to outcomes into consideration. In line with the current Forests assess what these effects will be in any given situation, as the Strategy, OP 4.36 is proactive both in identifying and pro- connections with outcomes at the field level are diffuse and tecting critical forest conservation areas and in supporting indirect--and thus quite inaccessible to the precise and spe- improved forest management in production forests outside cific requirements of the safeguard policies that apply to these areas. OP 4.36 applies to all World Bank investment investment lending. The World Bank recognized this diffi- operations that potentially affect forests, regardless of culty, and until recently did not subject its structural adjust- whether they are specific forest sector investments. It also ment lending to compliance with the safeguard policies. An encourages the incorporation of forest issues in Country operational directive (OD 8.60) provided some guidance on Assistance Strategies (CAS) and addresses cross-sectoral environmental issues for this form of lending until it was impacts on forests. OP 4.36 provides for conservation of crit- replaced by a more detailed operational policy on DPLs (OP ical natural habitats and prohibits World Bank financing of 8.60).3 This policy makes explicit mention of forests and is any commercial harvesting or plantation development in highly relevant to the forest sector because it guides the due critical natural habitats. It also allows for proactive invest- diligence needed to ensure that the potential for this form of ment support to improve forest management outside critical lending to cause damage to natural resources, forests, and the forest areas, with explicit safeguards to ensure that such environment is minimized in the design and approach used. World Bank­financed operations comply with independent Such operations are of special concern where large numbers certification standards acceptable to the World Bank, or of poor people rely on forests to some extent for their liveli- operations with an agreed upon, time-bound action plan to hoods. Where rapid economic change is occurring, perverse establish compliance with these standards. incentives and misallocation of resources leading to forest Beyond OP 4.36, relevant operational policies comprise removal or changes in the status of use and ownership of the provisions for environmental assessment embodied in OP forests will be risk factors to poverty alleviation. 4.01, which require that impacts of any proposed activity on the natural environment, human health and safety, and social aspects be taken into account under OPs 4.10 (Indigenous THE WORLD BANK'S LENDINGTOTHE SECTOR Peoples), 4.11 (Physical Cultural Resources), 4.12 (Involun- The portfolio of the World Bank's investments in forests tary Resettlement), and 4.04 (Natural Habitats). OP 4.04 in indicates an upward trend, after having fallen in the early particular requires that the World Bank not support projects 2000s to historically low levels.4 The total commitment in that, in its opinion, involve the significant conversion or 2001 was US$141 million, reflecting lending from the World degradation of critical natural habitats, and OP 4.10 requires Bank, the Global Environment Facility (GEF), and the IFC that the World Bank only support projects in which affected (figure 3). Lending has remained relatively steady in fiscal Indigenous Peoples provide broad community support to the 2007 (July 1, 2006 to June 30, 2007).5 Between October 2002 project based on prior, free, and informed consultations. and June 2007, the World Bank approved 12 stand-alone Broadly based development policy lending, by its nature, forestry projects, as well as 39 others that include forestry is not dealt with under safeguard policies of the type the components. There are 13 more forestry-related projects in 6 INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR Figure 3 Commitment from the World Bank, GEF, and the IFC for Forests, FY01 to FY07 600 World Bank Global Environment Facility 518 500 International Finance Corporation Total 443 436 400 ion 302 300 mill 300 274 US$ 217 208 200 166 162 143 128 131 134 111 100 82 63 45 45 35 25 29 28 11 17 6 12 0 2 2001 2002 2003 2004 2005 2006 2007 Fiscal year the pipeline, four of which are stand-alone forestry projects. all types of forests, not just tropical forests: Nearly 40 per- A more proactive approach to World Bank engagement in cent of lending between fiscal 02 and fiscal 06 (US$204 mil- forests, which is embodied in the Forests Strategy, and lion) has been in nontropical countries, predominantly in strong support for this approach from the Board of Execu- Eastern Europe and the Mediterranean. tive Directors and senior management have been significant factors in creating the increase in activities. Regional lending profile The regional profile of lending has changed since 2001 (figure Overall lending profile 5). The inclusion of temperate forests in the Forests Strategy The volume of lending for the five years preceding the has increased lending in the Europe and Central Asia region. Forests Strategy is nearly equivalent to the five years after In the region, the World Bank has been concentrating on an introduction of the Forests Strategy: US$568 million increasing demand for policy dialogue and advisory technical between fiscal 1997 and fiscal 2001, compared with US$517 assistance. Projects in Armenia, Bosnia and Herzegovina, million from fiscal 2002 through fiscal 2006. After adoption Georgia, Kazakhstan, Romania, and the Russian Federation of the Forests Strategy, lending slowed and has only recently are working to strengthen fire management, reforestation, regained the levels preceding the adoption. When forestry and development of protected areas. Focus within the proj- investments in projects associated with other sectors are ects has been on training, institutional reforms, forest infor- included (that is, World Bank projects that do not have a mation, the role of the private sector, and devolution of man- forest sector coding), aggregate IBRD and IDA investment agement to local and subnational levels. in the forest sector is much larger (figure 4). By this mea- In the Sub-Saharan Africa region (AFR) since the new sure, total investment in forests by the World Bank was strategy there have been three active projects with a focus on US$770 million after adoption (fiscal 2002 to fiscal 2006). governance in the Congo Basin (Cameroon, Democratic Though lending in the forestry sector has not expanded Republic of Congo, and Gabon). It is anticipated that over since approval of the Forests Strategy in 2002, forest lending the next few years, forest activities will focus on governance- has been integrated into natural resource management, related issues, sector reform, and institution strengthening. agriculture, environment, and rural development projects. In general, the World Bank has had limited forestry Furthermore, World Bank lending has expanded to include engagement in the Middle East and North Africa region INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR 7 Figure 4 IBRD/IDA and GEF Forestry-Related Lending, Including Forest Components in Nonforest Projects, 1997­2006 450 422 400 IBRD/IDA 350 GEF 300 286 249 ion 250 mill 200 165 148 US$ 150 130 128 110 105 100 84 61 56 67 54 45 50 21 34 32 20 19 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Year (MENA) because of its low forest cover. In Morocco, a Republic are working to address governance and policy nation with relatively extensive forests, the World Bank is reforms. involved in preparing an Integrated Forest Development In the South Asia region (SAR), India accounts for the bulk Project. In the Islamic Republic of Iran, a land and water of lending. Lending commitments have been declining since management project has a community-based forest man- 2003 as one generation of projects has ended (figure 5). Since agement component. then, lending awaits the results of an Analytical and Advisory In the East Asia and the Pacific region (EAP), the World Services (AAA) initiative designed to guide future lending and Bank's lending has focused on plantation development in to reengage dialogue with the government about policy.7 countries, such as China, that are major consumers of forest In the Latin America and the Caribbean region (LAC), raw materials.6 Additional focus has been on policy dialogue projects have concentrated on community forestry, refor- for development of certification schemes. Also, successful estation, forest land restoration, forest certification, forest projects in Vietnam and the Lao People's Democratic concessions, policy, and legal reforms.8 Additional projects Figure 5 Amount of IBRD/IDA Forestry Lending by Region, FY01­FY05 120 100 80 60 millions US$ 40 20 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 SSA EAP ECA LAC MENA SAR Region and years 8 INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR Figure 6 Regional Distribution of IBRD/IDA Lending, poverty, contribute to economic development, and preserve 2001­05 environmental values. Governments do not always make forestry a policy priority or seek Bank support, and in some instances analytical work that might have provided a SSA SAR framework for integrating forest issues into planning and 19% 20% policy making has been lacking or insufficient. The related analytical work has been highly variable and offers opportunity for improvement. MENA Successful extension to nontropical forests has 9% extended its engagement to nontropical forests, including those in China, Georgia, Romania, the Russian Federation, EAP 26% and Turkey. It has also supported timber production LAC activities in tropical moist forests in countries such as 15% Cambodia, Cameroon, and Mexico. The integration of ECA forest components into natural-resource and rural 11% development programs has intensified in countries like Albania, Gabon, and Guatemala. The World Bank has also in Belize, Brazil, Colombia, Costa Rica, Ecuador, El Sal- broadened its focus on forestry with new instruments, such vador, Honduras, Nicaragua, and Peru concern the creation as independent certification. It has also expanded the scope and management of protected areas with an emphasis on of its interventions to account for the impacts on forests of indigenous and local community participation and forest policies in other sectors, such as trade. management. Despite these accomplishments, the World Bank's overall See figure 6 for a regional breakdown of lending over level of engagement has thus far remained insufficient for 2001­05. achieving the targets set in the Forests Strategy. IBRD and IDA lending volumes increased only slowly, regaining and then stabilizing at levels comparable to volumes before the PROGRESSTO DATE adoption of the strategy. Overall World Bank involvement In 2006 the World Bank commissioned an independent in natural tropical forests operations remains modest and is midterm review of the Forests Strategy implementation often surrounded by intense controversy. In many cases the (Contreras-Hermosilla and Simula 2007). The review found relative dearth of self-standing forest projects reflects the that the World Bank has made substantial progress on all lack of priority that clients assign to investing in forests or fronts outlined in the strategy.Yet the strategy has been only to introducing forest sector reforms. partially implemented in the four years since its adoption. Some of its main achievements follow. Poverty reduction. Poverty reduction objectives, a pillar of the strategy as well as fundamental to the World Bank's Mainstreaming of the strategy. The World Bank has overall mission, have been appropriately included in forest sought to manage the effects of macroeconomic policy and investments in a number of countries, including Albania, sector programs on forest resources. Some countries have Gabon, and Nicaragua. In many other countries, however, incorporated forest sector reforms into their Poverty poverty and the effects of forest interventions on forest- Reduction Strategy Papers (PRSP). The Bank has supported dependent people have not received adequate attention, these within the framework of CAS in countries like either in the World Bank's analytical work or in its lending Cameroon, and through forest investment projects in such program. countries as Albania, Croatia, Romania, and Russia. The World Bank has also supported policy changes through DPLs, Other key achievements include the following: again for example, in Cameroon. In many other countries, however, forests have not been properly considered in the Strengthening forest sector governance and transparency. CAS or DPL, even in cases where doing so was clearly World Bank activities have created a political climate for warranted by the size of the sector or its potential to alleviate high-level regional discussions on improvement in gov- INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR 9 ernance and increased transparency and accountability Key global challenges in the sector. They have also made improving forest sec- Address poverty and forest governance by promoting tor governance and institutional reform a central focus forest ownership and access rights. Promote greater in many countries, including Cambodia, Cameroon, recognition of the rights of local and indigenous groups and Democratic Republic of Congo, Gabon, Honduras, give greater attention to land tenure, ownership, and rights- Indonesia, and Russia, and initiated the process of sector to-resource and access issues. Emphasize and enable reform in some of these countries (Democratic Republic stakeholder participation in the formulation and of Congo, Gabon, and Tanzania). implementation of policies, strategies, and programs to foster Conserving local and global ecosystem services. The World ownership and long-term sustainability of the resource. Bank has supported and spearheaded the development of conservation through payments for environmental Enhance the role of forests as an engine of services schemes and improved management of pro- economic growth and development. Increase tected areas through Bank projects. The World Bank also investments in plantations (especially in tropical countries), recently launched the Forest Carbon Partnership Facility expand forest certification and overall forest management, (FCPF) to enable payments for REDD. and encourage responsible private sector investments, Facilitating responsible private investment. Most World including for community-company partnerships for on-site Bank client country governments are working to attract forest enterprise development, and for market access. responsible domestic and foreign private sector invest- ments to achieve effective conservation and sustainable Protect vital local and global environmental management of forest resources. services and values. Create markets for local ecosystem Building strategic partnerships. Through strategic part- services, such as water and soil erosion. Seize the potentially nerships and programs, such as the World Bank­WWF enormous financing opportunities emerging in the context Alliance, PROFOR, and FLEG initiatives, the World of global climate change to increase investments for carbon Bank has been leveraging resources, aligning stakeholder sequestration and avoided deforestation to reduce interests, enabling innovation, improving outreach, and emissions from deforestation and forest degradation. scaling up impacts. The World Bank has been actively supporting strategic partnerships at regional (for exam- Assist countries to integrate the global forest agenda ple, Congo Basin Forest Partnership) and national lev- into their own national strategies and policies and to els. The World Bank is currently facilitating the develop- harness the development opportunities available. Use ment of a Global Forest Partnership to galvanize the World Bank's leadership position in the global forest synergies among forest partnerships and programs and dialogue and take advantage of emerging economic and to scale up the availability of grants for the development environmental opportunities (such as the attractiveness of of the sector. biofuels, for example) to foster sustainable forest management. Integrate forest interdependencies into the design of THE CHALLENGE AHEAD agriculture, rural development, and natural resource management projects to ensure sustainable economic growth The 2002 Forests Strategy emphasized a path of "cautious and rural poverty alleviation. reengagement." Since fiscal 2002, this has included the World Bank selectively reengaging in key countries, building a solid analytical foundation for World Bank lending and Key regional challenges grants, using partnerships to initiate and implement national and international processes for strengthening gov- Sub-Saharan Africa. Continue promoting fundamental ernance, enhancing poverty considerations in forest activi- sector reforms and capacity building around the challenges of ties, and advancing forest conservation and sustainable for- governance, environmental protection, and forest livelihoods. est management. Progress made in these areas since the start Expand market mechanisms to secure environmental of the new strategy is described above. Still, significant gaps services, and improve dry forests management. and challenges remain, not only across countries and regions, but also in implementation of the World Bank's East Asia and the Pacific. Invest in plantation area priority areas. These challenges are as follows. expansion, expand instruments for natural forest 10 INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR management and biodiversity conservation, provide PURPOSE OFTHE FORESTS SOURCEBOOK support to forest law enforcement and governance The purpose of the Forests Sourcebook is to be a resource for initiatives, and maintain well-managed environmental and World Bank clients, task managers, and other stakeholders social safeguard reviews. in the design and implementation of projects in line with the Forests Strategy as they tackle the challenges ahead. The Europe and Central Asia. Support transformation of sourcebook draws on experiences from within and outside forest management organizations into efficient service the World Bank in implementing innovative approaches for delivery institutions capable of meeting the challenges of integrating the three pillars of the strategy. The sourcebook multifunctional, landscape-level forest management; distills key points from frontier guidance material sup- support decentralization of management to subnational ported or published in specific subject areas, either by the entities through adequate public financing mechanisms and World Bank or other partner organizations. increased responsibilities for the private sector and local The sourcebook offers guidance to program and project communities. managers by (i) highlighting the key issues in each chapter, (ii) suggesting approaches for implementing projects and Latin America and the Caribbean. Support improved analytical work in line with the strategy, (iii) providing links forest governance and institutions, sustainable harvesting to more in-depth sources of information, and, where possible and forest management, forest landscape restoration, and and relevant, (iv) describing tools for addressing these issues. development of industrial plantations. Middle East and North Africa. Enhance policy and NOTES institutional reforms to position forests in a wider context 1. In 2002, the World Bank estimated that total forest sector of sustainable natural resource management. private investment in developing countries and countries in transition was in the range of US$8 billion to US$10 billion South Asia. Support the rural poor through greater access per year. In the opinion of the review team for the World to forest resources and stronger property rights, and foster Bank's independent midterm review of the Forests Strategy greater participation of the private sector in productive implementation, the 2007 figure is substantially higher enterprises in rural areas, for local value addition and (Contreras-Hermosilla and Simula (2007)).According to the employment. FAO (2006), the plantation area in developing countries is increasing at about 1.8 million hectares per year. This repre- sents investments of US$3 billion to US$4 billion per year. Key challenges for the World Bank Improvements in existing forest management should be added to this, but reliable estimates do not exist. In planta- Mainstream forests. Strengthen forests' role in the World tion-based projects, industrial investments represent 80­90 Bank's agenda through greater inclusion of forest sector percent of the total. Applying this coefficient--with planta- issues in PRSPs and CASs and better alignment of Poverty tion investments being 20 percent of the total--total forest Reduction Support Credits and GEF and IFC resources with investment in developing countries should be at least US$15 the overall lending program to address poverty and billion. livelihood issues. 2. Successful implementation requires (i) being selective in World Bank activities in forests with country ownership and Implement safeguards and due diligence. Ensure commitment, as broad criteria for engagement; (ii) devel- efficacious application of the World Bank's safeguards oping partnerships (with other donors, nongovernmental organizations, and the private sector) to enable the World policies (especially on the social side) in traditional forest Bank to address forest issues through a broad spectrum of lending projects, and strengthening due diligence for forest policies and in collaboration with national governments; concerns in DPL, through increased participation, better (iii) financing the strategy by encouraging blended financ- knowledge management and communication, and focused ing arrangements through multiple sources, including the staff training. development of markets and financial payments for envi- ronmental services from forests; (iv) increasing economic Strengthen forest governance. Integrate forest and sector work to initiate the process of building analysis, governance into World Bank policy dialogue and projects to awareness, and then demand for forest investments (and for achieve concrete outcomes in client countries. incorporation of forestry issues) into CASs and PRSPs; and INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR 11 (v) coordinating across the Bank, including with Interna- future World Bank lending in forestry. It is the basis for dis- tional Finance Corporation (IFC), Multilateral Investment cussions with the government of India on possible reforms Guarantee Agency (MIGA), and World Bank Institute at the national and state levels. Important outcomes have (WBI) for better implementation of a unified strategy. been the formation of a forestry donor's forum, and high- 3. This policy was approved by the World Bank's Board of level policy meetings with the Prime Minister's Office and Executive Directors in 2003. the National Planning Commission. 4. The World Bank Group includes the International 8. These subjects have been the focus of Bank projects in Development Association (IDA), International Bank for Bolivia, Colombia, Guatemala, Honduras, Mexico, Reconstruction and Development (IBRD), International Nicaragua, Paraguay, and Peru. Centre for Settlement of Investment Disputes (ICSID), IFC, and MIGA. Aggregate investment in the forest sector tends REFERENCES CITED to fluctuate from year to year because it can be heavily Contreras-Hermosilla, A., and M. Simula. 2007."The World skewed by one or two large projects. Such fluctuations Bank Forest Strategy: Review of Implementation."World would be less if aggregate disbursements were tracked. Bank, Washington, DC. 5. This sourcebook does not go into details, but the Global FAO. 2006. Global Forest Resources Assessment 2005. Rome: Environment Facility (GEF) is an important partner in the FAO. implementation of the Forests Strategy. In 2003­05, the Stern, N. 2007. The Economics of Climate Change: The Stern GEF provided US$186.1 million for 38 forest-related proj- Review. Cambridge: Cambridge University Press. ects implemented by the World Bank. The total value of these projects was US$951.8 million. The number of World White, A., and A. Martin. 2002. Who Owns the World's Bank­implemented GEF projects has averaged 13 per year Forests? Forest Tenure and Public Forests in Transition. since 2000. The average size of these projects has doubled Washington, DC: Forest Trends. during the same period, from US$16.1 million to US$34.4 World Bank. 2004. Sustaining Forests: A Development Strat- million. egy. Washington, DC: World Bank. 6. For more details, please see the regional strategy (World ------. 2006. Unlocking Opportunities for Forest-Dependent Bank 2007). People--India. Delhi, India: Oxford University Press. 7. See Unlocking Opportunities for Forest-Dependent People ------. 2007. East Asia Region Forestry Strategy. EASRD (World Bank 2006). It includes a policy report, policy dia- (Rural Development and Natural Resources. East Asia & logue, and comprehensive dissemination that will guide Pacific Region), World Bank, Washington, DC. 12 INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR PA RT I PriorityThemes and Operational Aspects C H A P T E R 1 Forests for Poverty Reduction he majority of the world's poor are concentrated in T and Eyebe 1999). Studies of income from indigenous natu- rural areas and, consequently, depend on natural ral resource management and small-scale local forest enter- resources, over which they exercise little control, prises in a number of countries in Africa, and joint forest for their livelihoods. It is estimated that 60 million Indige- management in Madhya Pradesh state in India, are but a few nous Peoples are totally dependent on forests, 350 million of the studies showing the significant impacts of these activ- people are highly forest dependent, and 1.2 billion are ities on the income of poor people (see Monela et al. 2004; dependent on agroforestry. The scale and significance of poverty issues on forest lands demand that poverty allevia- tion efforts give special attention to forest areas and the peo- Box 1.1 What Do We Mean by Poverty? ple living in them. Poor rural families depend heavily on "wild" resources; in both forest-poor and forest-rich contexts, forest products Poverty is a multidimensional concept, the mea- surement of which continues to be debated. A are used for fuel, food, medicines, construction materials, detailed overview of poverty concepts is provided fertilizers, and cash. Reliance on these resources often in the World Bank's World Development Report on increases in times of personal, family, or social hardship, Attacking Poverty (World Bank 2001). This report with these wild resources being especially important for states that poverty is not solely about material dep- women, children, and ethnic minorities. In many cases, as rivation, but is also related to broader notions of people get richer, they use and sell fewer of the forest prod- risk, vulnerability, social inclusion, and opportuni- ucts that are considered inferior goods. However, most peo- ties. Poverty encompasses all forms of deprivation ple in Sub-Saharan Africa have not gotten richer, resulting that prevent a person from achieving his or her in growing markets for all forest products as populations aspirations. and urbanization increase. A similar situation is found in This broader definition of poverty has policy the poorer regions of Asia. (See box 1.1.) implications because it underscores the positive Smallholders living in forest margins in diverse parts of interactions of interventions in a broad set of wel- fare dimensions. In practice, it implies that the the world earn 10­25 percent of their household incomes nature of the problem must influence selection of from nontimber forest products, many of which are either the appropriate welfare measure. undervalued or omitted completely from conventional eco- nomic income statistics (see Note 1.1, Mainstreaming the Source: Authors' compilation from World Bank 2001. Role of Forests in Poverty Alleviation; Ndoye, Ruiz Pérez, 15 Angelsen and Wunder 2003; and Mallik 2000 as cited in The growing importance of nonfarm rural activities as a Scherr, White, and Kaimowitz 2004). A meta-review of 54 source of rural household income, and the significant share case studies that examined income from forest products in of the nonfarm total accounted for by forest product activi- rural areas of developing countries found that forest income ties, make this one of the most important vehicles through (ranging from US$0 to US$3,458 and averaging US$678 per which the forest sector can contribute to poverty alleviation. year, once adjusted for purchasing power parity) made up As sources of income, commercial forest product activities one-fifth of household income of the population sampled have, in principle, the potential to help households move out for the report (Vedeld and others 2004). Wild food, fodder of poverty. However, as labor costs increase, many of these for animals, and fuelwood were the most important prod- low-value, labor-intensive activities are abandoned. Other ucts and accounted for approximately 70 percent of forest commercial products cease to be used as incomes increase income. Household forest income increased with increased because they are "inferior goods" for which there are ready distance from markets, suggesting that forests are important substitutes, lowering their overall marketability. This gener- for communities with limited alternative income opportu- ally shifts forest use to more valuable forest products and nities. In some cases, forest environmental income had a activities that gradually require more and more skill and cap- strong and significant equalizing effect on local income dis- ital inputs. Thus, dependence on different forest products tribution (Vedeld and others 2004). will likely vary with socioeconomic levels: a dependence on It is also estimated that globally 17.4 million people (full- low-valued activities will decrease as poverty is lessened and time equivalents) earn their livings from formal sector forest- households move out of poverty, in favor of higher-valued based employment (that is, enterprises with more than 20 activities with greater returns. employees) in forestry, wood industries, furniture, and pulp and paper (Poschen and Lougren 2001, as cited in Scherr, Forests in rural poor's asset portfolio. Natural assets, White, and Kaimowitz 2004). Poschen and Lougren estimate such as forests, are of particular importance to the poor, that an additional 30­35 million are employed--most of partly because of their lack of access to financial and physical them in Brazil, China, India, Indonesia, and Malaysia--in the capital and formal forms of human capital, such as informal and subsistence forest-based sectors. education. As portfolio managers, the poor draw down some forms of capital to convert to other forms; commonly, for Types of reliance on forests. Forest uses by local example, the poor temporarily draw down stocks of natural populations change through the transition from hunting capital (for example, harvesting fuelwood for sale) to invest and gathering to sedentary agriculture, and vary with in their portfolio, recognizing the fungibility of assets. households' socioeconomic levels. Across this spectrum, Insistence on an unchanging "steady state" forest reserve forests tend to become less dense and forest cover decreases underplays forest dynamics and can limit the options open in association with growing population densities and higher to the poor. A flexible, comprehensive, and dynamic view of market demands, and in association with changing types of natural assets and the whole portfolio is needed. Forest forest use. There are, of course, exceptions to this trend. products and outputs fulfill different functions for people at Often, the proportion of overall household income from different socioeconomic levels, and multiple goals and certain forest products tends to decline as households move strategies may be needed to reach different groups, even from hunting and gathering to sedentary cultivation. This is those depending on the same forest. a reflection of more than just increased income opportuni- ties in agriculture and other domains; it is also indicative of Linkages between forest-based poverty alleviation and the decreased availability of types of forest resources that rurallivelihoods.Forest-basedpovertyalleviationcannotbe were previously abundant. In other cases, the proportion of isolated from other aspects of livelihoods.The majority of those a household's income from the forest can continue to be who can benefit from forest products live outside forests; they substantial when combined with agricultural activities, even live in predominantly agricultural landscapes, and for many of despite a decrease in high-value timber stocks in the region: them the forest products they use come as much from the farm a seven-year study in the Brazilian state of Amapá showed as the forest. Reflecting this, forest-based poverty alleviation has that when sawtimber, poles, and firewood are produced in a to be linked to other land uses, such as agriculture, grazing, and management system that combines forestry and agriculture, agroforestry systems. On-farm tree-growing schemes have had they can provide significant additional income for Amazon- limited success so far; thus, new strategies of integrating ian smallholders (Pinedo-Vasquez et al. 2001). multiple land uses must be explored. 16 CHAPTER 1: FORESTS FOR POVERTY REDUCTION A summary of the salient features of linkages between characterized by unusually high levels of environmental, forests and livelihoods and how they have been changing are agricultural, epidemiological, and market uncertainty. provided in table 1.1. Moreover, the remote location of most forest dwellers Forests provide a tremendous source of natural capital implies limited access to more conventional forms of insur- that can be used to alleviate poverty in two ways. The first is ance, including formal credit and insurance programs. poverty avoidance or mitigation, in which forest resources The second is poverty elimination, in which forest serve as a safety net or fill gaps by providing a source of resources help to lift the household out of poverty by func- petty cash. For example, the Tawahka of Krausirpi in Hon- tioning as a source of savings, investment, accumulation, duras cope with short-term and personal shocks (for exam- asset building, and permanent increases in income and wel- ple, a poor bean harvest or a sick child) through the sale of fare. As a source of income, forests can provide a decent liv- forest products. The same community uses forest product ing when markets are accessible, especially if a household is sales (for example, bushmeat) to cope with covariate shocks, involved in the planting, harvesting, processing, transport- such as the rapid decline in cocoa markets following a drop ing, and trading of forest products. These households are in cocoa prices. The use of forests as natural insurance is usually involved in varying degrees of forest management important for forest dwellers because their livelihoods are because such income from forests is seldom obtained by Table 1.1 Changing Linkages between Forests and Poverty Characteristics of livelihood inputs from forests Impacts of change on forest livelihood inputs Subsistence and cultural importance Forests form an integral part of the social and cultural Likely to weaken, but persists widely in some aspects (e.g., medicinal). framework for forest dwellers. Can become more important where farm output and/or nonfarm Forest products supplement and complement inputs of fuel, food, income declines. Likely to decline in importance as government relief medicinal plant products, etc., from the farm system; often important programs or new agricultural crops make it less necessary to fall back in filling seasonal and other food gaps, particularly in hard times; on forest resources, as incomes rise and supplies come increasingly forest foods enhance palatability of staple diets and provide vitamins from purchased inputs, or as increasing labor shortages or labor costs and proteins. militate against gathering activities or divert subsistence supplies to income-generating outlets. Agricultural inputs Forests provide a starting point for rotational agriculture and Trees can become increasingly important as a low-capital means of protection; on-farm trees also provide shade, windbreaks, and combating declining site productivity and a low-labor means of contour vegetation; trees and forests also provide low-cost soil keeping land in productive use (e.g., home gardens). But increased nutrient recycling and mulch. Arboreal forests provide arboreal capital availability, and access to purchased products, is likely to lead fodder and forage, and fiber baskets for storing agricultural products, to substitution by other materials (e.g., by pasture crops, fertilizer, or and wooden plows and other farm implements. plastic packaging). Commercial outputs Forests help diversify the farm household economy, provide With increasing commercialization of rural use patterns, some low- counter-seasonal sources of income, and are a source of income input, low-return activities can grow; however, most are inferior in hard times. goods and decline. Some are displaced by factory-made alternatives, and others become unprofitable and are abandoned as labor costs Many products are characterized by easy or open access to the rise. Gathered industrial raw materials tend to be displaced by resource, and by low capital and skill entry thresholds; overwhelmingly domesticated supplies or synthetic substituted. small, usually household-based, activities; mainly low-return, producing for local markets, engaged in part-time by rural households, often to Higher-return activities serving growing, specialized demand are more fill particular income gaps or needs; limited growth potential, but very likely to prosper, particularly those serving urban as well as rural important in coping strategies of the poor. Forest products are often markets; an increasing proportion of the processing and trading particularly important for women (as entrepreneurs as well as activity is likely to become centered in small rural centers and urban employees). locations. Some forest products provide the basis for full-time and high-return activities; usually associated with high skill and capital entry thresholds and urban as well as rural markets. Source: Arnold 2001. CHAPTER 1: FORESTS FOR POVERTY REDUCTION 17 harvesting forest products that are open access or common that were examined for the "World Bank Forest Strategy: property resources from unmanaged natural forests. Review of Implementation" (Contreras-Hermosilla and Another rationale for prioritizing poverty reduction Simula 2007), it was found that 16 contained activities that through forests is the Millennium Development Goals were highly relevant to poverty alleviation, while 12 had (MDGs). Countries that have adopted these goals have set a activities that were substantially relevant. Eight other proj- target of halving global poverty by 2015, and for institutions ects were moderately relevant in their consideration of such as the World Bank, reducing global poverty is the main forests and poverty alleviation; in three projects the consid- challenge. While economic growth appears to be the means eration was negligible. to lift the poor out of extreme poverty in the developing world, the capacity of the poor to participate in economic KEY ISSUES growth must be enhanced if they are to share in its benefits. Donor engagement in forestry with a direct or indirect aim of alleviating poverty concentrates mainly in three areas: PAST ACTIVITIES Between 2002 and 2005, 28 World Bank forestry projects Increasing local users' participation in forest manage- had components focused on poverty reduction. Poverty ment to make management more responsive to their alleviation activities included in the project portfolio varied needs, and to increase benefits flowing to them from strengthening of land tenure rights, reform of policies Supporting management strategies that include growing and discrimination against the poor and Indigenous Peo- trees on farms ples, development of community fuelwood plantations, Exploiting income-generating opportunities from pro- increased productivity of pastures and forest lands, erosion duction and trade in forest products in the nonfarm control, and training in ecotourism, to promotion of fuel- rural economy efficient technologies for households. Investments in these projects were approximately US$130 million. See boxes 1.2 Activities in these areas have had mixed results. Much and 1.3 for successful examples. donor attention has been placed on local participation-- The design of poverty reduction activities in forest proj- often resulting in false perceptions of participation rather ects tends to be difficult, and mixed results ensue because of than true participation. Tree-growing schemes have resulted the complexity of the issues involved. Of a set of 40 projects in little additional planting taking place, in some cases Box 1.2 The Role of Forests in Benefiting the Rural Poor: An Example from the World Bank's China Loess Plateau Watershed Rehabilitation Project This watershed rehabilitation project included activi- production to reduce variability in income. For exam- ties in the forest sector among its several project com- ple, trees were used to provide an income buffer during ponents. More than 1 million farmers in the project difficult times. area directly benefited from the project, with annual Large tracts of land in the project area were severely grain output raised from 427,000 tons to 698,600 tons degraded and past agricultural practices were clearly and fruit production from 80,000 tons to 345,000 unsustainable as a result of uncontrolled grazing, fuel- tons. Farmers' annual incomes per capita also wood gathering, and cropping on slopes that were too increased from 360 Chinese yuan to 1,263 Chinese steep for sustainable farming. The project succeeded in yuan (about US$43 to US$152). taking a large proportion of these areas entirely out of The various project components contributed to the production for natural regeneration and in planting significant reduction of poverty and tripling of net trees and shrubs on unstable slopes to protect soils and incomes by addressing a range of short-, medium-, and provide sustainable returns. This practice secured long-term income-generating and income-stabilizing long-term productivity of those areas and raised measures. The project supported diversification of incomes for the local people. Source: World Bank Loess Plateau Watershed Rehabilitation Project (P003540). Board approval: May 26, 1994; closed: Decem- ber 31, 2002. 18 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Box 1.3 Forests for Poverty Alleviation:World Bank Albania Forestry Project Direct short-term poverty alleviation impacts were and family investments in resource management (for substantial in this project, which financed approxi- example, active protection of areas from grazing, fenc- mately 5,000 person-years of local villager employ- ing, tree planting, and erosion control intervention) ment to implement many field interventions. The continued even after project support ceased, indicat- budgets of households participating in project activi- ing that the shift to improved land-use practice ties increased by an estimated 30 percent annually. brought about by the project is likely to be sustainable. The quality and productivity of forest and pasture This unexpected level of success led to identification land managed under the new plans by the newly cre- of the need for the Albanian government to further ated resource user associations improved to such an develop its skills and capacity to provide communes extent that commune families quickly began deriving with silvicultural and other technical guidance that income from forest and pastures (including fuelwood, will be necessary as their forests mature, and to fodder, nontimber forest products, some grazing, and approach the World Bank with a request for a follow- the like) that had been seriously degraded bush before up project that would scale up and expand the cover- project-supported investments. age of communal forest and pasture management Of significance is evidence that some commune throughout the country. Source: World Bank Albania Forestry Project (P008271). Board approval: April 16, 1996; closed: June 30, 2004. because communities have their own strategies for coping important. This harmonization requires recognizing and with wood shortages. Activities focused on processing and considering the implications of broader changes, such as trade often proved to be susceptible to changes in market market liberalization and structural adjustment for rural requirements, to domination by intermediaries, and to shifts development (additional discussion on this is found in to domesticated or synthetic sources of supply, and few chapter 6, Mainstreaming Forests into Development Policy proved to be sustainable. Considerable room remains for and Planning: Assessing Cross-Sectoral Impacts). improving the contribution of forests to poverty alleviation. Transparency and accountability in governance. Improved performance framework for forest Transparent and accountable governance is critical to interventions. An improved performance framework is fostering pro-poor growth and essential to ensuring that necessary to enhance pro-poor benefits. A clear understanding this natural resource wealth is managed wisely (see chapter of what forestry can and cannot do to alleviate poverty is 5, Improving Forest Governance). A pro-poor growth essential to enhancing effectiveness of poverty-related strategy for rural areas must build on natural resources and interventions at all levels within the forest sector.To give greater facilitate management of these resources for the long term emphasis to poverty alleviation within forestry, it is necessary to provide the fuel for economic development to relieve to acknowledge that the greater part of the rural populations poverty. It also must grant secure and equitable access to that benefit from forest products are located outside forests as assets--which requires development of property rights (see normally defined. Thus, forestry interventions need to note 1.4, Property and Access Rights) and efficient land encompass all tree stocks and activities based on them to administration. contribute significantly to poverty alleviation, rather than be confined to forests and forest-dwelling households. Forest Property rights and land administration. Allocation sector interventions also need to recognize the different wealth of property rights and efficient land administration are levels among rural poor households and need to be critical to pro-poor growth in rural areas. The process of appropriately structured to target the population of concern developing statutory property rights influences the pro-poor (see note 1.3, Indigenous Peoples and Forests). potential of forest activities (see note 1.4, Property and Access Rights, and note 1.3, Indigenous Peoples and Forests). Harmonization of activities with other sectors. Customary rights over forest resources often exist, and where Harmonizing poverty alleviation activities in the forest these are codified and made statutory, they are seldom causes sector with what is happening in other sectors is equally for conflict. However, in areas where customary systems of CHAPTER 1: FORESTS FOR POVERTY REDUCTION 19 forest management and ownership have been disregarded or Engagement of the private sector. Private sector overruled, many local communities, poor households, and engagement in forest activities is increasing (see chapter 2, women have lost access to forest resources. In these cases, Engaging the Private Sector in Forest Sector Development). government policies have awarded favored groups Communities need to link with the private sector in forest concessions, licenses, and permits, limiting (or in some cases activities to further enhance forests' contribution to poverty denying) the rights of poor local inhabitants. This is evident reduction. The growing demand for timber for processing in places where creation of government forest reserves and into pulp and paper as well as for fuelwood (for example, protected areas have reduced households' access to common from tea companies in Kenya) creates opportunities for property resources. The need of the poor for continued communities to benefit from these private investments. access to a common pool biomass resource to sustain Community-company partnerships can take various forms, predominantly subsistence-based coping strategies can also including outgrower schemes or arrangements for increasingly conflict with the interests of better-off community provision of management services (such as households and outsiders (Arnold 2001). thinning, pruning, fire maintenance, and the like). The transition to pro-poor forest tenure and property Community-company partnerships are distinct from rights occurs through a combination of strategies--both arrangements in which private entities (normally reforms fostered by political elites and reforms demanded concessionaires) compensate communities for the use of by civil society and community organizations. These efforts forests. In partnerships, communities enter into legal should, to the extent possible, move beyond transferring contracts with companies and provide specific services. limited rights to forest resources to communities. For exam- ple, in India participatory forestry is restricted to degraded Potential for forest-based small and medium or poorer areas of forests, and there are widespread restric- enterprises. Small and medium forest enterprises (SMFEs) tions regarding rights over timber and other commercially make up a large percentage of forest enterprises, with far- valuable forest products. reaching poverty-alleviation potential. In many forest countries, forest-based SMFEs account for 80­90 percent of Potential of community-based forest management. all national forest enterprises. Approximately 20 million Community-Based Forest Management (CBFM) offers a people worldwide are employed in SMFEs. These enterprises vehicle for reducing poverty among forest-dependent generate a gross value added of about US$130 billion per households (see note 1.2, Community-Based Forest year (Macqueen, Armitage and Jaecky, 2006). In countries Management, and note 1.3, Indigenous Peoples and Forests). with SMFEs, often more than 50 percent of total forest- Commonly, forest-dependent people who live in or near related employment is in these enterprises. Numerous forests tend to be politically weak or powerless. Formally factors influence the feasibility, appropriate structure, and recognized forms of CBFM can empower these households suitable direction of an SMFE program (see note 2.2, Small and individuals through recognition of their rights to and Medium Forest Enterprises). Moreover, in many sustainably manage, control, use, and benefit from forest countries policies need to be developed to create an enabling resources. CBFM can also offer a competitive advantage for framework for SMFEs. Nevertheless, where there is demand unorganized producers through economies of scale. and potential, these enterprises offer room for managing Community engagement in forest management has been forests and alleviating poverty. increasing as forest sector policy reforms give greater weight to participation of communities in forest management. Access to microfinance schemes. Access to microfinance Examples of CBFM are found in joint forest management, schemes can help small-scale forest enterprises build participatory forest management, community forestry, and material goods, increase income, and reduce vulnerability to other similar schemes in numerous Bank client countries. economic stresses and external shocks. Microfinance can The performance of CBFM initiatives has been mixed, assist in covering capital costs to improve productivity and revealing the importance of the political, institutional, quality as well as working capital to purchase equipment governance, and capacity elements in such initiatives. There and materials. Access to credit and other microenterprise are, however, several successful examples of communities supporting services are often limited for poor, forest- that organized and thus gained financially and politically dependent households. Commercial financiers seldom lend (for example, Mexico and Nepal; see boxes 1.11 and 1.13 in money to the rural poor because of the associated note 1.2, Community-Based Forest Management). transaction costs, and the limited collateral, especially when 20 CHAPTER 1: FORESTS FOR POVERTY REDUCTION rural poor households do not have secure tenure and access including carbon sequestration (see the World Bank's Car- rights. Often poor households borrow from private lenders bon Finance Unit Operations Handbook at http://carbon at unreasonably high interest rates to obtain money they finance.org/Router.cfm?Page=DocLib&ht=34&dl=1). urgently need. This often results in households having to These markets need to be accessible to forest-dependent exploit resources unsustainably to pay interest charges. The households if they are to serve the purpose of engendering high interest rates often result in households either never sustainable resource use and land-use practices. Creating repaying or slowly paying back the capital. the enabling conditions will require, among other things, clear and secure rights over forests and woodlands. Access to technical and marketing services. Small-scale enterprises also need access to technical and marketing Importance of forest and tree components in services. Given the low incomes of households involved and agroforestry. Forest and tree components will often the low unit value of fuelwood and nontimber products, become more important where there is greater reliance on provision of conventional technical services may not be agroforestry. This can happen in the following instances: feasible. In such cases, facilitating the exchange of information among villagers through various channels can be beneficial. where changes in the availability of land, labor, and cap- ital favor tree crops as low-input land uses where labor is Greater market access for forest products. the limiting factor (for example, in multistory "home Increasing market access for forest products can enhance gardens" that increase land productivity), or as low-cost forests' contribution to alleviating poverty. Small timber inputs into farm systems (for example, in place of pur- producers need to be more competitive with large timber chased fertilizer) companies, both in niche and domestic markets. This where growth in agricultural incomes can lead to requires small timber producers to address challenges, such increasing local commercialization of subsistence goods, as lack of economies of scale. Creating arrangements that such as fuelwood and other forest products would facilitate smallholder marketing of timber would where improved rural infrastructure gives farmers enhance that sector's contribution to income generation. greater access to markets for forest fruits and other prod- Some simple changes include reversing the existing forestry ucts of trees that can be grown as part of farm systems regulations that tend to discriminate against small farmers and microenterprises by having fewer and simpler Reversing existing top-down approaches. The regulations and less paper work (see note 1.5, Making contribution forests could make to rural development, Markets Work for the Forest-Dependent Poor). forest conservation, and economic growth has been In some countries and regions, aggregate demand for undermined by conventional top-down approaches to fuelwood, wood for charcoal, and for commercially valu- forestry. Transparent and accountable governance is critical able nontimber forest products (for example, bushmeat) is to fostering pro-poor growth and essential to ensuring that growing. These are often peri-urban markets that can be this natural resource wealth is managed wisely. There is also profitable, making it economically attractive for farmers to a need to remove or relax regulatory provisions that plant trees and produce or harvest the needed commodi- reinforce the structural and scale advantages that the state ties. There are also growing markets for furniture and possesses as producer of many forest products. The housing materials, including construction timber and relationship between the forest department and small local poles. Support for producing and marketing better quality producers would also benefit from separation of the products as well as improved infrastructure for accessing regulatory function of the former from involvement in these markets could provide more employment and better forest management and delivery of support services (see remuneration, particularly if domestic per capita income note 5.2, Reforming Forest Institutions). grows. Such support can be provided through microenter- prise development activities that provide attention to the Importance of local leadership,institutional capacity, associated natural resource issues and ensure a sustainable and human resources. Activities oriented toward poverty supply of raw material. reduction call for exceptional local leadership, institutional Another rapidly expanding market is that of environ- capacity, and adequate human resources in implementing mental services provided by forests (see note 2.3, Innovative agencies. These are not always available on the sustained basis Marketing Arrangements for Environmental Services), required for operations that typically span several years. CHAPTER 1: FORESTS FOR POVERTY REDUCTION 21 Institutional development of capacity takes time. Thus, long- assist with poverty alleviation while conserving forests. term technical assistance appears to be an indispensable part of Forest and tree components will be more important where future poverty-oriented interventions. Experiences in Brazil changes in agriculture result in greater reliance on agro- and Mexico suggest that options for the delivery of technical forestry; this could occur as a result of the availability of assistance should include consideration of training of rural land, labor, or capital favoring tree crops; agricultural producers and careful exploration of the tradeoffs involved in income increasing local commercialization of subsistence privatizing technical assistance because the latter can reduce goods such as fuelwood; or improved rural infrastructure the possibility of building up institutional capacity of providing farmers with greater access to markets. government agencies. Exploiting opportunities that rural development inter- Often, investments by national governments in rural ventions create for forest-based activities. The growing areas are low. This is partly due to an inadequate under- importance of nonfarm rural activities as a source of standing of poverty rates and poverty density in forest areas. rural household income and the share of nonfarm total Poverty Reduction Strategy Papers (PRSPs) have become income accounted for by forest product activities make the main mechanism for governments in developing coun- this an important avenue by which forests can contribute tries and some middle-income countries to define their to poverty alleviation. budget and policy priorities and discuss those priorities Understanding and taking into account information on with the international community. Unfortunately, however, cross-sectoral impacts of forest-based poverty situations. in the initial PRSPs, interim PRSPs, and National Forest Programs (NFPs), the pivotal role of forests in sustaining For forest activities to have pro-poor impacts and reduce rural livelihoods, especially those of the poor and marginal- poverty, future activities must focus on better distribution ized, has been neglected. There has been relatively little of resource rights, both property and procedural. Control analysis of the contribution of forests to rural livelihoods, over and access to resources critical to growth and liveli- nor of the measures required to capture or expand the hoods is the main governance issue for rural people, includ- potential. Forest and tree products, particularly nontimber ing Indigenous Peoples and other communities with cus- forest products, often fall between sectors with neither tomary rights. There is a need for greater commitment to forestry nor agricultural agencies collecting data on house- ensure that the rights of communities and forest-dependent hold collection, use, and sales (see note 1.1, Mainstreaming households are entrenched in appropriate legislation and the Role of Forests in Poverty Alleviation: Measuring regulations, that mechanisms exist to implement them, and Poverty-Forest Linkages). that these mechanisms are functioning properly. This includes establishing ownership and precisely defining rights, which will provide incentives for the poor to invest in FUTURE PRIORITIES AND SCALING-UP forest management. Equally important is the need for forms ACTIVITIES of governance for common pool resources that can address In many regions the issues of natural resource management, the weaknesses in many existing comanagement systems poverty reduction, and local empowerment are loosely (see note 1.3, Indigenous Peoples and Forests, and note 1.4, intertwined and cannot be tackled in isolation. Most of the Property and Access Rights). linkages between forestry and rural poverty are also closely Timber harvesting must become more pro-poor. Local associated with what is happening in agriculture and the access to and management of natural forests, smallholder rural economy. For example, conversion of forests to either tree growing, and small-scale enterprise development as temporary or permanent agriculture can contribute to strategies to avoid capture by local elites in CBFM are cen- poverty alleviation. Forestry and agriculture activities need tral to a more pro-poor use of timber (see note 1.2, Com- to be closely aligned with components of rural development munity-Based Forest Management). There is a need to strategies and programs. remove regulatory barriers and excessive state regulation to This could be done through the following: facilitate CBFM in areas other than degraded forests and enable management of forests for multiple purposes. From Adapting forestry and agriculture interventions to changes an analytical standpoint, there is a need for more research being introduced in forestry, agriculture, and rural into pluralistic systems of comanagement that really do economies. For example, agroforestry, tree crop planta- function effectively and equitably and for pilot testing of tions, and scattered trees on farmland can potentially those models that show promise. 22 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Frameworks, regulations, and encouragement are which the very large numbers of poor people living in or needed to make natural resource markets work for the poor. near forests depend upon those forests for their liveli- This requires responding to market failures and imperfect hood--a matter of significance to poverty alleviation out- competition and identifying new opportunities that allow comes in general in some countries (see note 1.1, Main- the poor to take advantage of their available assets. The col- streaming the Role of Forests in Poverty Alleviation: lection and sale of timber and nontimber forest products Measuring Poverty-Forest Linkages). It is important to are important for the poor. There is a need to look into their gather information on whether the depletion of forest value-added potential and improved marketing strategies. resources has had a negative impact on poor people, and Additionally, strategies need to ensure that the poor are not whether the poor have been able to find alternatives to for- negatively affected by increasing commercialization (see est safety nets and gap fillers (see also note 1.3 on the par- note 1.5, Making Forests Work for the Forest-Dependent ticular risks and impacts to Indigenous Peoples). Equally Poor). Studies should also be undertaken to determine important is a comprehensive examination of how existing whether growing urban domestic markets for forest prod- World Bank data systems and records could be used to ucts have significantly benefited the poor. improve knowledge about the forest dependency of people Similarly, payment for environmental services, such as dwelling in or near large natural forest resources in World carbon sequestration, biodiversity conservation, hydrologi- Bank client countries. This needs to be developed through cal benefits, and forest-based tourism, is a potentially impor- the appropriate networks of the World Bank in collabora- tant source of revenue. It is important for the structure of tion with Country Departments. such payments to allow for benefits to flow to the poor as well as for maintenance of services (see note 2.3, Innovative SELECTED READINGS Marketing Arrangements for Environmental Services). There is a need to create and enhance the role of forest- Angelsen, A., and S. Wunder. 2003. "Exploring the Forest- dependent communities and households in SMFEs and to Poverty Link: Key Concepts, Issues and Research Impli- foster forest partnerships between communities and the pri- cations." CIFOR Occasional Paper No. 40. Center for vate sector. This will require incentives, regulations, and International Forestry Research, Bogor, Indonesia. actions at the national level that facilitate these arrange- Chomitz, K. M., P. Buys, G. De Luca, T. S. Thomas, and S. ments. Technical support must be provided to communi- Wertz-Kanounnikoff. 2006. At Loggerheads? Agricultural Expansion, Poverty Reduction and Environment in the ties, and private entities must be required to look beyond Tropical Forests. Washington, DC: World Bank. logging and the timber processing industry to the long-term Sunderlin, W. D., A. Angelsen, B. Belcher, P. Burgers, R. Nasi, sustainability of forest resources (see chapter 2, Engaging L. Santoso, and S. Wunder. 2005. "Livelihoods, Forests, the Private Sector in Forest Sector Development). and Conservation in Developing Countries: An To promote forest uses for poverty alleviation, forest Overview." World Development 33 (9): 1383­1402. activities that primarily address biodiversity conservation Sunderlin, W. D., S. Dewi, and A. Puntodewo. 2006."Forests, need to be refocused to take a balanced approach that Poverty, and Poverty Alleviation Policies." Background includes poverty alleviation. Conservation objectives for paper. World Bank, Washington, DC. forests of value to local people will need to be revised from World Resources Institute (WRI) in collaboration with being predominantly protection oriented to encouraging United Nations Development Programme, UNEP, and sustainable systems that produce livelihood benefits. The World Bank. 2005. World Resources 2005: The Wealth of increased recognition of Indigenous Peoples rights to their the Poor--Managing Ecosystems to Fight Poverty. Wash- land and natural resources should also be further enhanced ington, DC: WRI. in biodiversity conservation activities (see note 1.3, Indige- nous Peoples and Forests). National forest programs can provide a broad platform REFERENCES CITED with which to engage in a poverty reduction agenda by Angelsen, A., and S. Wunder. 2003. "Exploring the Forest- working toward coherent sector policies--and forests need Poverty Link: Key Concepts, Issues and Research Impli- to be integrated into a comprehensive rural development cations." CIFOR Occasional Paper No. 40, CIFOR, strategy (see note 6.4, Assessing Cross-Sectoral Impacts: Use Bogor, Indonesia. of CEAs and SEAs). Such integration will be facilitated by Arnold, J. E. M. 2001. "Forestry, Poverty and Aid." CIFOR improved knowledge and understanding of the extent to Occasional Paper No. 33. CIFOR, Bogor, Indonesia. CHAPTER 1: FORESTS FOR POVERTY REDUCTION 23 Contreras-Hermosilla, A., and M. Simula. 2007."The World Poschen, P., and M. Lougren. 2001. Globalization and Sus- Bank Forest Strategy: Review of Implementation." World tainability: The Forestry and Wood Industries on the Move. Bank, Washington, DC. Report for discussion at the Tripartite Meeting, "Social Macqueen, D., N. Armitage, and M. Jaecky. 2006. Report of and Labour Dimensions of the Forestry and Wood a meeting of participants of the UK Tropical Forest Industries on the Move," Geneva, Switzerland, Interna- Forum on small enterprise development and forests. tional Labour Organization, September 17­21. Royal Botanic Gardens, Kew 26 September 2006. IIED, World Bank. 2001. World Development Report: Attacking London. Poverty. World Bank, Washington, DC. Mallik, R. M. 2000. "Sustainable Management of Nontim- World Bank Carbon Finance Unit. n.d. Operations Hand- ber Forest Products in Orissa: Some Issues and book. http://carbonfinance.org/Router.cfm?Page=Doc Options." Indian Journal of Agricultural Economics 55 Lib&ht=34&dl=1. World Bank, Washington, DC. (3):383­97. Vedeld, P., P. Angehen, E. Sjaastad, and G. K. Berg. 2004. Monela, G., S. Chamshama, R. Mwaipopo, and D. Gamassa. "Counting on the Environment: Forest Incomes and the 2004. A Study on the Social, Economic and Environmental Rural Poor." Environmental Economics Series, Paper No. Impacts of Forest Landscape Restoration in Shinyanga 98, World Bank, Washington, DC. Region, Tanzania. Draft. Dar-es-Salaam: The United Republic of Tanzania Ministry of Natural Resources and Tourism, Forestry and Beekeeping Division, and the CROSS-REFERENCED CHAPTERS AND NOTES World Conservation Union, Eastern Africa Regional All notes in Chapter 1: Forests for Poverty Reduction Office. Chapter 2: Engaging the Private Sector in Forest Sector Ndoye, O., M. Ruiz Pérez, and A. Eyebe. 1999. "Non-wood Development Forest Products Markets and Potential Forest Resource Note 2.2: Small- and Medium-Scale Enterprises Degradation in Central Africa." In Current Research Issues and Prospects for Conservation, ed. T. C. H. Sunder- Note 2.3: Innovative Marketing Arrangements for Environ- land, L. E. Clark, and P. Vantomme, 183­206. Rome: mental Services FAO. Note 5.2: Reforming Forest Institutions Pinedo-Vasquez, M., D. J. Zarin, K. Coffey, C. Padoch, and F. Note 6.4: Assessing Cross-Sectoral Impacts: Use of CEAs Rabelo. 2001. "Post-Boom Logging in Amazonia." and SEAs Human Ecology 29 (2):219­39. 24 CHAPTER 1: FORESTS FOR POVERTY REDUCTION N OT E 1 . 1 Mainstreaming the Role of Forests in Poverty Alleviation: Measuring Poverty-Forest Linkages F orests provide a significant portion of forest rarely presented in ways that are meaningful to those dwellers' subsistence goods and services, and designing PRSPs and NFPs. Forest specialists are more income. Yet the contribution of forests to income familiar with reporting forest information about physical and the level of forest dependence are seldom systematically resources (trees planted, forest cover improved, or timber documented. Income streams from forests and the role of sold) than livelihoods, with the exception of quantifying the forests as safety nets are underestimated and the potential of number of people employed in the forest sector. Poverty forests to alleviate poverty is often unexploited. The lack of experts and macroeconomists are unfamiliar with the use of quantitative and readily available information on the role of forests and NFPs and tend to underestimate the contribu- forests in contributing to poverty reduction is a major con- tion of forests and off-farm natural resources to livelihoods. straint to mainstreaming the use of forests in poverty allevi- ation. A consequence is that the role of forests in poverty OPERATIONAL ASPECTS reduction is not reflected in any significant way in national- level strategies, such as the Poverty Reduction Strategy There is little knowledge about how rural households (PRS) process. In the same way, those countries that have depend on forest and tree resources to meet their daily been developing NFPs (NFPs; see note 6.1, Using National needs--and even less about the potential of these resources Forest Programs to Mainstream Forest Issues) have not to reduce poverty. This failure stems in part from the fact tended to explicitly link forest issues to poverty reduction or that forest products, especially nontimber forest products, to the achievement of the MDGs. If PRSPs fail to incorpo- fall through the cracks of sector-specific data collection, rate forestry, national efforts to reduce poverty and vulner- with neither forestry nor agricultural agencies collecting ability will undercount the critical role that forest resources data on household collection, use, and sale of forest prod- currently play--and the potentially greater role they could ucts. A simple methodology is needed to capture this con- play--in the livelihoods of the poor. tribution and to demonstrate its ultimate relevance to many There are two constraints to improving measurement of the MDGs. This is what the Poverty-Forest Linkages and mainstreaming of linkages between forests and poverty. Toolkit offers (box 1.4). This section provides a summary of First, most countries have little data available to illustrate key steps for measuring poverty-forest linkages and main- how forests contribute to the livelihoods of poor house- streaming this information, based on the approach detailed holds. The Living Standards Measurement Surveys (LSMS; in the toolkit. www.worldbank.org/lsms) have a variable on fuelwood Only at the national level can current country processes consumption, but owing to the logistical and cultural chal- for poverty data gathering be identified and understood and lenges of surveying forest-dwelling and forest-reliant house- effort invested in enabling these to take forest data into holds in remote areas, the data associated with this variable account. And only through local enquiry can a picture be are limited. It also is difficult to accurately measure and developed of the two key ways in which forests have an attribute the cash value of extracted forest products to impact on the lives of the poor--positively through liveli- households residing in high-population-density areas and hood support, and negatively if use of forests is formally forest-agriculture mosaics (Chomitz et al. 2006). illegal. To this end, the toolkit lays out a step-by-step process The second challenge is that the data that do exist are to gather and analyze the necessary information, detailing 25 Box 1.4 Poverty-Forest Linkages Toolkit The Poverty-Forest Linkages Toolkita is designed to reduction is to be effectively addressed by forestry meet two objectives. First, it aims to increase knowl- officials edge about how rural households depend on forest and tree resources to meet their daily need, and the poten- The toolkit provides a complete set of tools, meth- tial of this resource to reduce poverty. Second, the ods, examples, and case studies for the task, including Toolkit assists in engaging in a process of mainstream- the following: ing this information into national planning processes, including PRSPs. The Toolkit provides a framework for An explanation of the PRSP process and identifica- gathering and analyzing information to provide a clear tion of the strategies needed for influencing it understanding of the current and potential role of for- (including potential entry points for forestry) est and tree products for poverty reduction. It includes A set of rapid appraisal methods to gather informa- social, institutional, and environmental concerns, in tion on cash and subsistence contributions from the context of local and national planning processes. forests to households, particularly the poor An integral part is the identification of the most forest- Methods for analyzing field data for the potential dependent communities, and the impact of current role of forests in reducing poverty and vulnerability, and potential policies and programs. and policy options for improving the contribution The Poverty-Forest Linkages Toolkit may be used by of forests to rural livelihoods forestry departments, local governments, and non- Suggestions for how to frame the results, so as to be governmental organization (NGO) facilitators to relevant to the planners, government agencies, and deliver the following: other institutions and organizations at both local and national levels Local-level "snapshot data" on forest reliance and A series of case studies that illustrate the contribu- the livelihood and poverty reduction contribution tion of forest resources to households and an analy- of forests sis of the impact of forestry policies and programs A documented case for the contribution of forests to the livelihoods of the poor Included are annexes on the tools, with instruction Analyses of how forestry regulations promote or for their use; a series of examples of all the tools, illus- hinder the livelihoods of the rural poor trating the data they generate; an explanation of how to Strengthened agency and institutional capacity to analyze documents collected; and an example of a identify opportunities and constraints short document that might be written for distribution An assessment of issues (for example, inappropriate to government officials when explaining the purpose of regulations) that need to be resolved if poverty the toolkit. Source: Authors' compilation using PROFOR forthcoming a. a. In May 2004, with PROFOR support, the World Conservation Union (IUCN), Overseas Development Institute, Centre for International Forestry Research (CIFOR), PROFOR, and Winrock International formed a working group partnership with the intent of consolidating and building upon the growing knowledge base from fieldwork and research efforts on the different ways in which forests can benefit the poor. The result was the draft Poverty-Forest Linkages Toolkit, which was piloted in four countries prior to finalization. activities to be undertaken at the national, district, and local account in forest sector processes. If they are, the aim is to levels. understand how, and if not, to identify country-specific pathways by which they could be. Undertaking a national-level analysis. The purpose of The toolkit explains how the relevant natural resources a national-level analysis is to find out whether the ministries need to be involved and how to find out what the contribution of forests to poverty reduction is already being relevant entry points might be for more focus on the con- mainstreamed into current national policies, programs, and tribution of forests to the livelihoods of the poor (box 1.5). laws, and whether poverty issues are being taken into Tasks include identifying the main ministry hosting the PRS 26 CHAPTER 1: FORESTS FOR POVERTY REDUCTION accurately represent what is occurring at the local level, Box 1.5 Entry Points for Reassessing Poverty-Forest highlight essential livelihood information and critical Linkages: The Example of Indonesia factors (such as access and tenure, markets, and status of resources), and satisfy the needs of users of the data. The In testing the toolkit in Indonesia, key informant information should be debated at the district level and interviews conducted in the capital revealed that reframed, with the assistance of local officials, to fit with the entry points offered by the Ministry of Forests district-to-national reporting requirements. District and other national-level institutions were limited officials' views on the incorporation of forest contributions for reassessing the relationship between forests and the poor. Instead, other pathways were found. to incomes into data-gathering systems should be written Work was undertaken in one province at the dis- up and submitted to the national-level body responsible for trict and provincial levels, and a series of mini for- collecting poverty data or to the forest ministry, or to both. est-focused participatory poverty assessments At the national level, this information is further streamlined made their mark at lower levels. Commitment and to fit with the formats needed for the PRSP process, the NFP enthusiasm were generated, and, in due course, process, and others as relevant (see box 1.8). Furthermore, provincial-level actors began to be able to drive many countries have found that disseminating a simple national-level change from below. guide to the results of the assessment makes a large difference to the extent to which ideas are understood and Source: PROFOR forthcoming b. acted upon. The progress a country has already made in drafting its PRS and developing data-gathering and monitoring instru- process, the main donors to the process, other important ments should inform the planning of analysis and data players (civil society groups, NGOs, and so forth), and the gathering of poverty-forest linkages. If a country already has key documents that have been produced. These might data-gathering systems in place at the local level and collates include household, rural, or living standard surveys; a the data at the national level, the focus of the exercise will be national census; or the drafting of an NFP. National-level on linking forest and poverty data by, among other analysis makes it clear whether the efforts to measure processes, learning whether forest product contribution is poverty-forest linkages can proceed with the support of the recorded and integrated into income and livelihood assess- forest ministry or those responsible for the PRS. ments and, subsequently, discussing with the appropriate bodies ways of inserting forest data into national poverty Gathering information at the village or community data collection systems and poverty data into national forest level. After the national-level analysis has been completed, data collection systems. If, however, no such national data- the next step is to collect data to identify forest­household gathering systems exist, the Toolkit outlines forest-focused use linkages at the local level. The results generated will be participatory poverty assessments to generate a national- used at both the district and field levels and at higher level picture of the contribution of forests to poverty (provincial and national) levels to underline the through "snapshots" from different forest contexts around contribution of forests and trees to the livelihoods of the the country. The Toolkit further describes how to collate poor, and sometimes to highlight ways in which the collected data for discussion and planning purposes within presence of anachronistic, anti-poor forest policies or laws the PRS process. are an impediment to poverty reduction. The toolkit details several tools for identifying users (and nonusers) of forest resources, the level of dependency on and contribution of LESSONS LEARNED AND RECOMMENDATIONS forest and tree products, existing resources and products, FOR PRACTITIONERS and key constraints of the existing system (see boxes 1.6 A participatory approach to measuring poverty could pro- and 1.7). vide more detailed information on the informal and formal uses of forest resources. Informal uses are often overlooked Preparing and presenting data for different because they are not easily valued--but these uses reflect the audiences. Data gathered need to be analyzed and important role of forests as safety nets. prepared in different formats for presentation to district Without a comprehensive understanding of forest and higher levels. Information should be presented in user- dependency, policies and investments may discriminate friendly forms (for example, diagrams and charts) that NOTE 1.1: MAINSTREAMING THE ROLE OF FORESTS IN POVERTY ALLEVIATION: MEASURING POVERTY-FOREST LINKAGES 27 Box 1.6 An Overview of the Tools for Gathering Information at the Village or Community Level 1. Wealth Ranking (village leadership). gained by the use of this tool can be deduced from Aim: to select participants who are representative tool 4. of the local population for the Toolkit exercises 6. Users, User Rights, User Responsibilities, and User 2. Local Landscape Situation Analysis (toolkit team Benefits (in groups selected by gender and wealth plus selected villagers) category) Aim: to understand the way in which local Aim: to have local people list all forest stakehold- resources are used by members of the village. ers, the benefits they derive from the forest, and the 3. Timeline and Trends (village plenary) rights and responsibilities they exercise. Aim: to record a short history of the community 7. Forest Problem and Solution Matrix (in groups against which to project a picture of changes in for- selected by gender and wealth category) est resources, in agriculture, in local livelihood Aim: to identify and rank the main forest prob- strategies and sources of income. This tool can also lems, and suggest potential solutions. Problems be used at the district and national levels. include those related to policy, rules and regula- 4. Livelihood Analysis (in groups selected by gender tions, tenure, and access. This tool can also be used and wealth category) at the district and national levels to focus on higher- Aim: to discover the extent of cash and subsis- level issues. tence reliance on forest resources and the propor- 8. Final Plenary tion of the total annual livelihood (from all sources) Aim: to present the main findings from the sub- from forest resources. This tool can also be used at groups in plenary so that key emerging issues can be the district and national levels. summarized. 5. Tree and Forest Product Importance (in groups selected by gender and wealth category) Aim: to rank forest products by importance for cash and subsistence uses. This tool can also be used at the national level. If time is limited, information Source: PROFOR forthcoming a. Note: People from whom information is sought are listed in parentheses. Box 1.7 Livelihood Analysis in Busongo,Tanzania Livelihood analysis can be used to discover the extent sources. Participants are then asked to list sources of of reliance on forest resources and the proportion of cash for different kinds of expenditures and identify their contribution to annual cash and noncash whether the forest is used for investment. This exercise incomes. In groups selected by gender and wealth cat- can show forest contributions to the achievement of egory, participants are asked to distribute beans or the MDGs. For example, in eradicating extreme stones across a list of forest products (for example, poverty and hunger (goal 1), villagers in Busongo cite gum, charcoal, timber), allocating more where cash 20­29 percent of livelihoods comes from forest contri- income sources are more important. The exercise is butions and that charcoal, fuelwood, ghee and milk, repeated for farm produce (crops and livestock), other livestock, gum, thatch, and fodder grass contribute sources, such as petty trade, and for noncash income directly and indirectly to the meeting of these goals. Source: PROFOR forthcoming b. 28 CHAPTER 1: FORESTS FOR POVERTY REDUCTION To effectively integrate forest-poverty information into Box 1.8 Identifying Opportunities for Getting PRSPs, it is useful to be familiar with the poverty analysis Poverty-Forest Linkages into Data-Collection Systems: Example fromTanzania process used in PRSPs (available in the Poverty Reduction Strategies Sourcebook). A variety of opportunities for including the con- tribution of forests to livelihoods in current data SELECTED READINGS gathering may present themselves. In Tanzania, the CIFOR. Poverty Environment Network. http://www.cifor staff of the Ministry of Planning and Empower- .cgiar.org/pen/. ment were convinced by the toolkit-produced data Hudson, J. 2005."Forestry's Contribution to Poverty Reduc- that forestry should be included in the Household tion and Trends in Development Assistance. Interna- Budget Survey. tional Forestry Review 7 (2):156­60. Source: PROFOR forthcoming b. Klugman, J. 2002. "Overview." In J. Klugman, ed. A Source- book for Poverty Reduction Strategies. Washington, DC: World Bank. http://go.worldbank.org/TL225F9JC0. against the forest-dependent rural poor. A lack of under- Vedeld, P., A. Angelsen, E. Sjaastad, and G. K. Berg. 2004. standing of the scale and scope of forest dependence can "Counting on the Environment. Forest Incomes and the result in governments giving private companies and large Rural Poor." Environmental Economics Series Paper No. 98, World Bank, Washington, DC. farmers preferential access to publicly owned forest resources, conservation policies that deprive poor families access to forest resources, or governments expropriating REFERENCES CITED villagers' rights over local forests. Chomitz, K. M., P. Buys, G. De Luca, T. S. Thomas, and S. Communities often invest the income generated from Wertz-Kanounnikoff. 2006. At Loggerheads? Agricultural formal and informal uses of forest resources. Detailed Expansion, Poverty Reduction and Environment in the information on forest resource use and how it is invested Tropical Forests. World Bank: Washington, DC. can provide insight into community priorities (for exam- Klugman, J., ed. 2002. A Sourcebook for Poverty Reduction ple, in Busongo, Tanzania, communities used cash revenue Strategies. Washington, DC: World Bank. http://go from forest resources, including gum and charcoal, to help .worldbank.org/3I8LYLXO80. primary-age children access schools, and village forests PROFOR. Forthcoming a. "Poverty-Forest Linkages were used to construct staff housing and extra classrooms Toolkit." PROFOR, World Bank, Washington, DC. for primary schools). ------. Forthcoming b."Poverty Forest Linkages: Synthesis When proposing a forest-related action in a PRSP, it is Report and Case Studies." PROFOR, World Bank, Wash- important to have a clear rationale for selecting the action ington, DC. as a priority. Integration of forest issues into PRSPs will require a quantitative causal link between forests and poverty. It is therefore crucial to include important forest CROSS-REFERENCED CHAPTERS AND NOTES environmental income sources in poverty assessments and Note 6.1: Using National Forest Programs to Mainstream PRSPs. Forest Issues NOTE 1.1: MAINSTREAMING THE ROLE OF FORESTS IN POVERTY ALLEVIATION: MEASURING POVERTY-FOREST LINKAGES 29 N OT E 1 . 2 Community-Based Forest Management n often overlooked trend in the world is a dou- A CBFM includes the empowerment of, or in some cases, bling of community tenure in the past 15 years. the recognition of the rights of, local communities to sus- During this time, the area under private but col- tainably manage, control, use, and benefit from local forest lective ownership has increased from 143.3 million to 246.3 resources (see boxes 1.9 and 1.10). It implies a legal, politi- million hectares of forests. Similarly, the estimated area cal, and economic framework that puts local people at the under public but collective administration has increased center of forestry. Community objectives for managing for- from 18.5 million to 131.4 million hectares. In sum, est land can include conservation, sustainable use, local community-owned and administered forest totals at least control, economic development, and mixes of these objec- 377 million hectares, or at least 22 percent of all forests in tives. While the state and large private operators have a role developing countries and three times as much forest as is to play in the management of forests, in many instances, owned by industry or individuals (White and Martin 2002). improved effectiveness, equity, and efficiency are outcomes Poverty alleviation strategies in the forestry sector have of community-based approaches. emphasized local participation to make forest management Community management of forests and other lands is more responsive to local needs and to increase benefits larger in scale and more intensely linked to other sectors flowing to forest users. As more of the world's forests come than is commonly acknowledged. From a management and under community tenure, community-based forest man- use perspective, essentially all forests, however remote and agement (CBFM) practices are continually being promoted seemingly physically unoccupied, have traditional owners as playing an important role in poverty alleviation, good and users. The assumption should not be a need to impose governance, and sustainable use of the environment. outside management over"unmanaged"or vacant lands but Involving communities in sustainable forest resource use a need to carefully assess traditional systems, owners, and is not a new concept. In 1977, the World Bank Forestry Sec- users of forests. Recent work in Gabon, a highly forested tor Review (World Bank 1977) noted that many forestry and lightly populated country, shows that even there tradi- projects failed without the collaboration of local residents tional use zones abut one another and there is no and that their collaboration improved environmental out- "unclaimed" forest land. Frequently, the issue is recognition comes. It stressed the need to learn more about how to sup- of existing or traditional local rights rather than transfer of port policies that successfully give management and bene- new rights to the local level, as is illustrated in the India case fits to smallholders and the need to better understand local study (see box 1.12; also note 1.3, Indigenous Peoples and use, forestry-related practices, and traditional institutions. Forests). Learning from these lessons and the growing evidence of A variety of outside interventions can be used to support positive outcomes of CBFM, the current World Bank strat- CBFM, including grants and loans, policy support pro- egy focuses on, among other goals, using forests for poverty grams and projects, global environment funds, and biodi- alleviation and strengthening local governance and trans- versity conservation activities. However, CBFM is not the parency to address corruption. CBFM can be an important use of communities to achieve the objectives of outsiders, entry point for achieving these goals. It can also be an out- no matter how laudable these objectives may be. CBFM is come of good policy related to poverty, governance, and the the empowerment of communities to use and manage environment. forests to achieve their own objectives. 30 Box 1.9 Community Forestry Models around the World Many types of community forestry have been imple- local communities to manage and benefit from forests. mented in different parts of the world. In Latin Amer- Revenues from commercial forestry activities are ica, there have been three main types: shared with the government. In Southeast Asia and the Pacific, partnerships are Communities with clear rights given by their developed between communities and logging compa- national governments to participate in commercial nies to ensure that the communities share in the bene- timber harvesting, such as in Bolivia, Guatemala, fits and that logging companies do not damage the Honduras, and Mexico. resources the communities would like to protect. Communities that manage extractive reserves, such Several models exist in Africa: as in Brazil, where the government gives them clear rights over the land and forests, while limiting the Community forest programs that protect wildlife for amount of forest to be cleared for agriculture and tourism and sport hunting in return for a share of the prohibiting commercial logging. Communities earn fees paid by the tourists and hunters.Examples of this money by selling nontimber forest products. model can be found in Zimbabwe and Botswana. Countries where the territorial rights of Indigenous Projects focused on increasing villagers' incomes Peoples over the areas that they have traditionally through sale of their fuelwood and charcoal, as in managed have been recognized. Mali and Niger. Programs designed to recognize the rights of com- In China, villagers are being given more control munities over their forests, as in Tanzania and over heavily degraded lands if they agree with local Mozambique. forestry officials on how to rehabilitate the forests Programs designed to allow communities to sell tim- while also using them for their own subsistence. In ber commercially, if supported by a logging com- India and Nepal, limited rights to what are still offi- pany or donor project. In Cameroon, this has greatly cially considered public lands have been devolved to limited the number of communities involved. Source: Kaimowitz 2005. OPERATIONAL ASPECTS investment and integration of natural resources across the board in agricultural and poverty reduction pro- The role of natural resources in economic growth grams, in national and donor budgets, in decentraliza- and good governance. Natural resources play a tion programs, and in other initiatives, at the policy, fundamental role in the economic growth of poor countries national planning, and forestry project levels. and poor populations and in the development of Develop pathways for more transparent information and democracies and good governance. Some specific steps for communication that are locally accepted and that are consideration include the following: adaptable for community through national political and Understand the different perspectives that government, donor levels. communities, private operators, and other stakeholders Create a baseline of biophysical and socioeconomic fac- have of devolution and its mode of implementation. A tors. There are several methodologies, including those shared framework, more accountable to local livelihood detailed in the Poverty-Forest Linkages Toolkit (see note needs and peoples' rights to self-determination, is 1.1, Mainstreaming the Role of Forests in Poverty Allevi- required. Redefining issues of wider "public interest" ation: Measuring Poverty-Forest Linkages) and through forms part of this process, as does a careful analysis of the CIFOR's Poverty Environment Network (http://www motivations and the negative incentives. .cifor.cgiar.org/pen/). In addition, the International For- Consider and support, if appropriate, the shift of priori- est Resources and Institutions (IFRI) Research Program ties in programs, budgets, and plans toward greater describes a comprehensive methodology for measuring NOTE 1.2: COMMUNITY-BASED FOREST MANAGEMENT 31 the biophysical resource through forest plots and overall Box 1.10 Different Degrees of Devolution of forest condition, as well as for developing data on local Forest Management to Communities use, economic and market value, rules of use, and all lev- els of relevant institutional arrangements (for more information, see Clay, Alcorn, and Butler 2000). Some countries, including India and Nepal, have devolved limited rights to local communities to manage and benefit from forests that are still offi- Distribution of resource rights. Better distribution of cially considered public land. This process is also resource rights, both property and procedural, is needed. under way in most of the African continent, with Common attempts at decentralization of forest resources more complete transfer of rights present in (see note 5.1, Decentralized Forest Management) are often Cameroon, The Gambia, and Tanzania. These compromised; they often do not go far enough in the arrangements, known by such terms as "joint for- recognition of the rights of, or transfer of rights to, local est management" and "comanagement" do not people, or if appropriate policy exists, it often is not alter state ownership and can be revoked by the implemented or implementation is skewed toward specific state at any time, making them a much weaker groups (see boxes 1.10 and 1.14). Furthermore, in many form of property rights than the rights provided cases, effective handover has been either limited to badly by private community-based ownership. In Brazil, degraded forests or under institutional arrangements that for example, where some 75 million hectares of state-owned lands have been set aside for indige- are impractical or conflict with local organization. nous communities, the communities have no right Organizational models that devolve authority directly to to harvest their timber, even under sustainable disadvantaged resource users are more embracing of local management regimes. Some other countries are interests and priorities than those that allocate control to beginning to adjust traditional industrial logging higher levels of political or social organization. An equally concession arrangements to include indigenous important outcome is the decreased inequality and and other local communities. In British Columbia, improved political and social articulation of local people. Canada, the provincial government recently Potential specific steps to enhance devolution of resource agreed to allow Weyerhaeuser Limited to transfer rights include the following: its concession rights to a new business venture with a coalition of indigenous groups as the lead partner. The coalition now has majority owner- Understand motives for participation by identifying incentives and constraints in CBFM at community and ship of use rights to a portion of its ancestral homelands--but not to the land itself. The national levels. Many more forestry projects fail as a Guatemalan government has granted timber con- result of negative incentives for community members cessions to local communities rather than to large than as a result of lack of education on how to manage industries, and the early experience is positive. In forest resources (see box 1.12). It is important to under- the Lao People's Democratic Republic (Lao PDR), stand who will foster and who will block an initiative and the government has launched a similar participa- how to create a supportive environment for the required tory management pilot program involving 60 vil- changes. lages under 50-year management contracts. Support strong local organizational capacity and enhance political capital outcomes for local people by Source: IUCN and World Wildlife Fund 2004. enabling them to mobilize resources and negotiate for better benefits. NGOs, donors, federations, and other external actors have a key role in moving devolution pol- Consider the need for a special good governance pro- icy and practice toward local interests. gram at the community level to address such issues as Identify traditional institutions and rules influencing elite capture and increased transparency (see box 1.11). property and use of resources and endogenous pathways for resolving conflicts and their effects on formal land Framework and regulation for natural resource rights. Allow communities to handle these issues and to markets to benefit the poor. Natural resource markets propose mechanisms accepted by all key stakeholders will work for the poor only with the development of that foster sustainable management and conflict frameworks, regulations, and enforcement. If commodity resolution. chains are biased against the poor (and remain so), increasing 32 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Box 1.11 Improving Equity and Governance and Addressing Elite Capture in Nepal Nepal has a great deal of experience to offer in under- assessments, and workshops in which the leaders and standing the benefits and concerns of locally managed members identified what good governance would forests. It was the first country to have a national mean in their group and identified very specific goals forestry policy allowing communities to form forest with clear indicators that they designed into posters to user groups (FUGs) that, after they elect leaders and monitor progress. An evaluation of this project found develop a constitution and management plan, can be that many groups rewrote their constitutions and man- assigned control of and benefits from specific forest agement plans giving special advantages to poorer plots. To strengthen their groups against potential members, and established open group audits. They challenges as forest productivity and value increase elected lower caste and women members to some of through management, the groups have formed a the leadership positions, often for the first time, and federation. identified totally new goals. Elite capture is a key issue to be addressed during At the Fourth National Community Forestry Work- decentralization, as was the case in some situations in shop in Nepal (2004), regional directors and Nepal. How local control impacts equity in asset distri- researchers noted that at that time leadership in the bution, and whether local groups can develop the FUGs and their federation were the only democrati- transparency and other mechanisms necessary to avoid cally elected bodies in the country, forming a basis for corruption, are important considerations. future democracy. An NGO, Women Acting Together for Change, Lessons from this example include that in a country worked closely with the FUGs on equity, democracy, with very stratified social traditions, even when there is and transparency through a process that included positive legal support, it takes skilled facilitators and household visits to FUG members to discuss good gov- group analysis with democratic approaches to mitigate ernance of forest resources. The community then car- elite capture and lack of transparency and to create ried out community resource, social, and economic positive outcomes for the poor. Source: Women Acting Together for Change 2004. the poor's market integration may increase poverty, not Use of science and technology to support and reduce it (see box 1.13). This issue is further discussed in note empower local forest management initiatives and 1.5, Making Markets Work for the Forest-Dependent Poor. objectives. Too often, an unintended consequence of using Some specific steps for consideration include the complex scientific and technical plans and institutions has following: been the exclusion of local people from planning and managing, or marginalization of local technical, social, and Facilitate the organization and legal recognition of local institutional knowledge. This is evident in the common groups for collecting, processing, transporting, and mar- practice of demanding complex, costly, and sophisticated keting natural resources. forest management plans from local communities. Such Analyze commodity chains and market weakness and misuse of science and technology should be reversed. develop strategies that benefit the poor. Some specific steps that can be taken include the Support market studies and locally managed market following: information systems so that the full range of forest prod- ucts and outputs are considered. Develop minimum management standards directly Create simple management plans in which local users related to forest and poverty outcomes rather than make at least some of their own rules related to use of abstract management procedures. forest products. Develop locally adapted tools that are understood and Support systems of regular user monitoring, and sanc- manageable by local actors themselves regarding evalua- tion rule conformance of other users backed by the tion and quantification of natural resources and shared government. use by communities. NOTE 1.2: COMMUNITY-BASED FOREST MANAGEMENT 33 Box 1.12 Andhra Pradesh Community Forestry Management Project India is a leader in involving communities in tree The project has made good progress on technical planting and forest improvement on state-owned for- matters and needs to further advance institutional est land through a strategy called Joint Forest Manage- improvements. Additional training is needed for ser- ment (JFM), with a portion of the benefits from com- vice providers, including NGOs, support agencies, and munity collaboration going back to participating front-line staff to enhance their ability to work effec- communities. JFM has taken different forms and has tively with local groups in a participatory manner. had contrasting outcomes in the 27 states of India Community user groups need to strengthen and form where it has been applied. Its methods and biophysical federations and partnerships to gain power. and social impacts have interested policy makers from A number of nontimber forest products (NTFPs) around the world. The World Bank has encouraged provided small increases in incomes to some commu- expanding JFM and moving it toward community nities, and where past plantings were ready for harvest- forestry. ing, some communities reinvested in the resource. In 2001, the World Bank supported taking a step fur- However, the government has yet to make the required ther toward community forestry to better address the legal amendments to the Forest Code; liberalize trade Bank's antipoverty, anticorruption, and improved gov- regulations for NTFP harvesting, processing, and mar- ernance goals. The Community Forestry Management keting; simplify procedures; require more transparent Project in Andhra Pradesh stressed that the primary audits; or make conflict resolution procedures more focus would be on improving the livelihoods and the balanced. The government of Andhra Pradesh with- physical, social, and financial assets of rural communi- drew resources previously allocated to the project. The ties through sustainable tree and forest management. World Bank reviews stressed the need to address the Increased benefits from the improved resource were to above issues and to continue to focus on livelihoods go to strengthening communities in a pro-poor strat- and pro-poor approaches. egy. Local community groups were to be legally sup- The World Bank Report on India (World Bank ported to take over control, their institutions were to be 2005) noted the handicap to improving local incomes strengthened, and the processes made more transpar- when forest resource rights are held by the government ent. It was recognized that success could be reached in spite of proposed legislation to return land that had only with changes in forestry institutions, laws, and reg- been taken from tribal groups. The legislation has since ulations and the recognition of tribal land rights. In been approved in Parliament, opening opportunities early discussions, the government and other partners for increasing the contribution of forests to local indicated their willingness to support such changes. incomes. Source: Authors' compilation from World Bank 2002a. Elaborate appropriate tools for continual follow-up on Successful CBFM is a slow process and needs to be based how the management system works and the effects of on informed participation, capacity building, and trust. management by communities. Enhancement of land and resource tenure of Indigenous Identify different user groups in each area and their Peoples tends to improve CBFM and sustainable man- interactions under the participatory development agement of forests (see note 1.4, Property and Access framework. Rights). Use simpler management plans in which local users Without addressing overt as well as hidden power rela- make at least some of their own rules related to use of tions and vested interests through clear roles and respon- forest products and control over encroachment. sibilities, availability of information, transparent and equitable decision-making processes, and monitoring, CBFM is complex, can be costly, and involves many Indigenous Peoples and other forest-dependent commu- stakeholders and vested interests that may support or nities may be worse off as a result of project activities (for oppose CBFM activities. (See, for example, Clay,Alcorn, and example, access to natural resources in their areas may Butler 2000; Borrini-Feyerabend and others 2004.) The fol- have been opened up to other stakeholders, but they do lowing should be noted: not share in the benefits). 34 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Box 1.13 The Forest Sector in Cameroon The World Bank has been involved in the forest sector mined by the structure of the industry, ownership pat- in Cameroon since 1982, and has helped put forest sec- terns, industry investment, employment, and linkages tor issues at the center of policy debates and encour- with the rest of the economy. The structural underpin- aged a multisectoral approach. A review of the World nings of the sector have been little affected and local Bank's engagement between 1982 and 1999 found that communities have been left out of the reform process interventions have appropriately focused on policy and despite a declared objective to include them. The institutional issues, and some forest product marketing World Bank recommended that communities be has been liberalized. However, overall the results of the actively involved in forest management and in 1994 a interventions have not been up to expectations. At the law was passed to this effect. However, because rights time, the establishment of a transparent, efficient, and and responsibilities have not been specified, there are equitable forest management system was compromised no clear mechanisms for limiting elite capture and the by lack of government commitment and capacity, the sharing of taxes has not been fully implemented. resistance of key actors in the sector (including logging Results, therefore, have been mixed. companies and parliament), implementation strategies Some lessons learned include (i) the need for that were not compatible with the underlying political broadly based government support and avoiding rely- and socioeconomic dynamics, and lack of policy ing solely on the executive branch to deliver on reforms implementation. In addition, forestry interventions because other powerful individuals or institutions may were isolated from broader rural development con- have motivation to block changes; (ii) knowledge and cerns (agriculture, for example), and permanent mech- information are essential for policy making and imple- anisms for local participation in decision making were mentation, as are clarity and specificity of terms and not developed. mechanisms for implementing laws and regulations; In Cameroon, tropical timber wealth is concen- (iii) local institutions are needed for success and sus- trated in a small group of economic agents. The sus- tainability; and (iv) overdependence on technical assis- tainability and equity of the sector is largely deter- tance does not always overcome institutional weakness. Source: World Bank OED 2000. Methods to enhance communities' ownership and active Control over and access to forests not only facilitate eco- collaboration should be assessed for the given project nomic growth and poverty reduction but also empower context. Participatory mapping exercises, using mapping local people to articulate themselves socially and politically. tools appropriate for the local communities, should be The spillover effects of local control over forests, as in India, included. Mexico, and Nepal, can be quite large and impact a range of Capacity building is needed for local communities, gov- sectors and decision-making arenas. Because forests can be ernment staff, and other involved stakeholders. such an important share of a poor community's asset port- Efforts to combine local practices (bottom-up) and gov- folio, control over and access to forests is not a trivial gover- ernment or private approaches (top-down) are essential. nance concern. At the same time, it should be noted that not all com- munity management results in positive outcomes. There are LESSONS LEARNED AND RECOMMENDATIONS areas with strong migration where transfer of rights to com- FOR PRACTITIONERS munities has not resulted in sustainable management of for- Task managers need to keep in mind not only the technical est resources (for example, Ghana and Côte d'Ivoire). In aspects of forest management but the dangers and limita- other countries there is a need to revisit the definition of tions of a top-down technical approach, the complexity of community and distinguish between traditional communi- forest dynamics, as well as local use and rights (both formal ties managing forests and management of forests by more and informal). In all cases, an understanding of the motiva- recently formed communities. tions of the different actors to support or block the desired In many developing countries, significant attempts at changes is helpful in knowing if the donor-facilitated decentralization have taken place, which, in theory, could changes will actually take place. greatly facilitate CBFM, local benefits, and empowerment NOTE 1.2: COMMUNITY-BASED FOREST MANAGEMENT 35 Box 1.14 Community Forestry in Mexico Mexican community forestry has perhaps reached a community-driven development project. PROCYMAF scale and level of maturity unmatched anywhere else in II retained the environmental and economic aims but the world. It has demonstrated that where there has focused on (i) strengthening local capacity and man- been greater community power over forest manage- agement; (ii) strengthening capacity of the local pri- ment there has been greater transparency and less cor- vate sector to provide forestry services; (iii) promoting ruption, better forest use and protection, and timber, nontimber, and nontraditional products; and improved livelihoods for local people. Regions of (iv) strengthening federal and state institutions work- greatest deforestation are where traditional social ing in forestry conservation and development. structures have been seriously weakened (Bray, A more diverse and multisectoral staff supported Merino-Perez, and Barry 2005). existing or new community management groups to An estimated three-fourths of Mexican forests are expand social capital and helped form federations to be communally owned either by ejidos (agrarian reform able to carry more weight in addressing local issues, communities) or indigenous communities. Mexican including increased transparency and fair returns. Com- forest management is rich in indigenous forms of com- munity members as well as professional foresters were mon property management overlaid by massive agri- trained so that technical issues could become under- cultural reforms from the violent Mexican revolution stood locally, putting communities in a better position in the second decade of the 20th century. However, to negotiate and understand what to require of special- across the country there is great contrast in resource ists and, in some cases, become specialists themselves. quality; indigenous groups and their approaches to The project initiated community-to-community exten- organization, equity, and resource use; as well as in sion and, because there are areas in which there are state and local leadership. Efforts to support local man- either inter- or intra-community conflicts, promoters agement have met with mixed results. The World Bank were trained in conflict management. The projects did has worked to improve forest management for envi- studies on expanding the options and markets for eco- ronmental protection and quality of life for local peo- nomic use of forest products, including such items as ple, starting with pilot activities in 1990 and then mushrooms, bottled water, and resin as well as timber. redesigning a project expanding to other regions, many Communities selected activities they found promising. of which have needed specially crafted approaches. Devolution of public and private forestlands to local The Project for Conservation and Sustainable Man- communities with common pool resource regimes and agement of Forest Resources (PROCYMAF) aimed to clear tenure status can create economic equality, social support community forest development, with a pri- peace, and democratization of power, addressing cor- mary focus on Oaxaca but with some program work in ruption and at the same time improving the forest Guerrero and Michoacan. PROCYMAF was a ecosystem (Bray, Merino-Perez, and Barry 2005). Source: Authors' compilation using World Bank 2003. (see note 1.4, Property and Access Rights). However, the be accompanied by appropriate incentives to forest staff and ways in which local people realize the benefits of devolution adequate budget. differ widely, and the negative tradeoffs are most commonly In many cases, CBFM can be a lever for wider pro-poor borne by the poor. Community control and management change and reform; in others, basic conditions must be over natural resources is often limited by continual govern- present for it to flourish. The following elements should be ment intervention and the government's insistence on com- considered in community forestry programs: plex management plans. It is extremely important to facilitate a change in para- Bureaucracy and paper work necessary for communities digm among forest officials and extension service providers. to have the right to manage their forests should be lim- This can help in transforming the forest department culture ited. Communities often do not have the money or the and can be brought about by providing capacity building in skills required to produce professional management participatory and community forest management and for plans, resulting in overdependence on donors and log- provision of formal services. Such paradigm changes should ging companies. 36 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Community forestry programs should make rich forest SELECTED READINGS resources available to communities for their use, not just Agrawal, A., and C. Gibson, eds. 2001. Communities and the heavily degraded forests (see box 1.14). Environment: Ethnicity, Gender, and the State in Transparency in payments to communities is critical. Community-Based Conservation. Piscataway, NJ: Rutgers Governments or companies should make sure that vil- University Press. lagers are informed of payments made to traditional vil- Gibson, C. C., J. T. Williams, and E. Ostrom. 2005. "Local lage leaders, of amounts paid, and of the intended use for Enforcement and Better Forests." World Development 33 the payments, to limit corruption. (2): 273­84. Both communities and government should benefit from Ostrom, E. 1999. "Self Governance and Forest Resources." community forestry projects. Community benefits are CIFOR Occasional Paper No. 29. Bogor, Indonesia. more likely to accrue in situations where commercially Ribot, J. 2002. Democratic Decentralization of Natural viable forest resources, including NTFPs, are available. Resources: Institutionalizing Popular Participation. Wash- Governments benefit from expanded collection of taxes ington, DC: World Resources Institute. and forest fees and from cost savings resulting from a USAID (U.S. Agency for International Development), with reduction in enforcement. CIFOR, Winrock International, WRI, and International Solid feasibility studies and business plans need to be in Research Group on Wood Protection (IRG). 2004. place, and communities should be familiar with market Nature, Wealth, and Power: Emerging Best Practice for conditions. While financial returns should be quick to Revitalizing Rural Africa. Washington, DC: USAID. materialize, this should be balanced with longer-term needs of investing in infrastructure, natural resource REFERENCES CITED conservation, and at times primary and secondary pro- Borrini-Feyerabend, G., M. Pimbert, M. T. Farvar, A. cessing of wood and marketing of end products. Local Kothari, and Y. Renard. 2004. "Sharing Power. Learning knowledge, science, and institutions are often ignored or by Doing in Co-management of Natural Resources treated with derision by outsiders, making it difficult to Throughout the World." CENESTA, Tehran: IIED and incorporate local knowledge into activity design. IUCN/CEESP/CMWG. It is essential that markets be made to work for the poor Bray, D. B., L. Merino-Perez, and D. Barry, eds. 2005. The and that market failures, such as monopolies, collusion, Community Forests of Mexico: Managing for Sustainable segmentation, asymmetrical information, and power, are Landscapes. Austin, TX: University of Texas Press. overcome. This means responding to market failures and Clay, J. W., J. B. Alcorn, and J. R. Butler. 2000. "Indigenous imperfect competition and identifying new opportuni- Peoples, Forestry Management and Biodiversity Conser- ties that take advantage of the assets of the poor, such as vation." Report to the World Bank, prepared by WWF- labor and natural resources. US, Washington, DC. Project support should include management capacity IFRI. 2000. International Forestry Resources and Institu- building for the community administration. In addition tions Research Program. Indiana University, Blooming- to technical skills, training should cover participatory ton, IN. http://www.indiana.edu/~ifri/. planning, monitoring, and periodic updating of commu- IUCN and WWF. 2004. "Who Owns, Who Conserves, and nity development plans. Why It Matters." Arborvitae: The IUCN/WWF Conserva- tion Newsletter, Vol. 26, September. Individual families should be supported. Collective activities are not always the best approach for commu- Kaimowitz, D. 2005. "The International Experience with Community Forestry." In Proceedings of the First Interna- nity forestry, especially tree planting activities-- tional Workshop on Community Forestry in Liberia, Mon- smallholder farmers should be supported in this process. rovia, 12-15 December 2005, 17­19. Bogor: CIFOR. In addition to traditional management of highly stocked OED (Operations Evaluation Department). 2000. forests, secondary forests and low-density woodlands Cameroon: Forest Sector Development in a Difficult Politi- offer good opportunities for community management, cal Economy. Washington, DC: World Bank. because they offer multiple agroforestry services and WATCH (Women Acting Together for Change). 2004. higher flexibility for forest management. Homepage http://www.watch.org.np/. Customary claims and particular rights of Indigenous White, A., and A. Martin. 2002. Who Owns the World's Peoples and other forest-dependent communities should Forests? Forest Tenure and Public Forests in Transition. be addressed. Washington, DC: Forest Trends. NOTE 1.2: COMMUNITY-BASED FOREST MANAGEMENT 37 World Bank, 1978. Forestry. Sector Policy Paper. Report No. CROSS-REFERENCED CHAPTERS AND NOTES 11021. Washington, DC. Note 1.1: Mainstreaming the Role of Forests in Poverty Alle- ------. 2002. Project Appraisal Document, Andhra Pradesh viation: Measuring Poverty-Forest Linkages Community Forest Management Project (P073094). Note 1.3: Indigenous Peoples and Forests Report No. 24184. World Bank, Washington, DC. Note 1.4: Property and Access Rights ------. 2005. "Unlocking Opportunities for Forest- Note 1.5: Making Markets Work for the Forest-Dependent Dependent People in India." Sector Report No. 34481, Poor World Bank, Washington, DC. Note 5.1: Decentralized Forest Management World Bank OED (Operations Evaluation Department). 2000. Cameroon: Forest Sector Development in a Difficult Political Economy. Washington, DC: World Bank. 38 CHAPTER 1: FORESTS FOR POVERTY REDUCTION N OT E 1 . 3 Indigenous Peoples and Forests I t is estimated that worldwide 60 million Indigenous Specifically concerning biodiversity and sustainable nat- Peoples are highly dependent on forest resources for ural resource management, Agenda 21, adopted by the their livelihoods. Forests and other natural resources are United Nations Conference on Environment and Develop- the foundation for most Indigenous Peoples' livelihoods, ment (UNCED) in 1992, as well as the Rio Declaration, rec- social organization, identities, and cultural survival, which ognize the actual and potential contributions of indigenous are based on a strong and deeply rooted historic relation- and tribal peoples to sustainable development. The 1992 ship with their ancestral lands and natural resources. This Convention on Biological Diversity (CBD) calls on con- relationship has cultural, socioeconomic, and spiritual tracting parties to respect traditional indigenous knowledge dimensions and has influenced customary institutions and with regard to the preservation of biodiversity and its sus- practices for managing land and resources. tainable use. The CBD has been a key vehicle for enhancing The identities and cultures of Indigenous Peoples are Indigenous Peoples' rights to their resources and their par- inextricably linked to the lands on which they live and the ticipation in biodiversity conservation and management. natural resources on which they depend. This deeply rooted Indigenous Peoples are represented in the Conference of link informs their livelihoods, social organization, identi- Parties of the CBD, which recognizes traditional knowledge ties, and cultural survival. It also informs their perceptions and cultural heritage as conservation values. of poverty, well-being, and "the good life," which often dif- In October 2007, the United Nations' General Assembly fer from those of mainstream society as well as of other adopted the UN Declaration on the Rights of Indigenous rural communities. Their patterns of land use and relation- Peoples. The declaration, while nonbinding, sets interna- ship with land and resources may also translate into differ- tional standards for the protection and promotion of the ent goals and models for development--for example, devel- individual and collective rights of Indigenous Peoples, opers may want to extract natural resources for economic including their rights to land and natural resources, and gain, while indigenous communities may want to leave the advocates a human rights­based approach to development environment and resources intact, providing them with as it applies to Indigenous Peoples. their livelihoods and spiritual links to their ancestors. These and other international conventions and agree- Indigenous Peoples have specific rights relevant for ments, along with the World Bank's Indigenous Peoples pol- forest-based projects. The rights and concerns of Indige- icy (OP 4.10), provide an important context for World nous Peoples have been internationally recognized, fore- Bank­assisted, forest-related projects affecting Indigenous most through International Labour Organization (ILO) Peoples. Through OP 4.10, the World Bank recognizes the Convention 169. The convention affirms the way of life of rights of Indigenous Peoples as addressed in international indigenous and tribal peoples, recognizes the need to safe- and national law and agreements. The policy acknowledges guard their customary rights to land and natural resources, the vital role that Indigenous Peoples play in sustainable and stresses that they should benefit equally from economic development, and calls for special considerations when and social development and that they and their traditional projects affect the close ties that they have to land, forests, organizations should be closely involved in the planning water, wildlife, and other natural resources. Specifically for and implementation of development projects that affect projects supporting parks and protected areas, the policy them. states that the World Bank "recognizes the significance of 39 [Indigenous Peoples'] rights of ownership, occupation, or from those on other rural communities. Indigenous Peoples usage, as well as the need for long-term sustainable man- historically have experienced unequal and inequitable agement of critical ecosystems" (OP 4.10 paragraph 21). OP development and have frequently been economically, 4.12 on Involuntary Resettlement also includes provisions politically, and socially marginalized. They often lack for participatory natural resource management as well as entitlements in national legislation and development mitigation measures for impacts from involuntary restric- processes as well as respect for their cultures, lifestyles, tions of access to legally designated parks and protected livelihood models, and natural resource management areas. (See section II of this sourcebook for more guidance practices. on application of the World Bank's safeguard policies.) Moreover, Indigenous Peoples are often present in, and Forestry projects, including policy-based lending, invest- claim ownership of, areas with rich forest and other natural ment projects, and other types of projects affecting forest resources, leading to potential conflicts over such resources. areas where Indigenous Peoples live, are particularly sensi- They may endure proportionally high impacts from tive given the special relationship between Indigenous Peo- increased pressures on the land and resources as a result of ples and their lands and natural resources. Forests can play development interventions as well as from general trends of a vital role in relation to livelihoods, sustainability of cul- agricultural expansion and resource extraction. In addition tures, and development of Indigenous Peoples. In turn, to the risk of losing land and access to natural resources, the Indigenous Peoples represent important stakeholders in the languages, world views, social organization, cultures, and sustainable management of forest areas, and their involve- values of Indigenous Peoples are in danger of further ero- ment entails a range of challenges and opportunities that sion or disappearance when development interventions fail need careful assessment, often in a site-specific context. to recognize the close link between Indigenous Peoples and Finally, forest projects, if not properly designed and imple- their lands and natural resources. mented, can have a variety of adverse impacts on the liveli- Forest-based projects and programs should be planned hoods and cultures of Indigenous Peoples. It is thus essen- with these opportunities, differences, and risks in mind. tial that any forest-related project in areas with Indigenous They require special attention and measures to ensure that Peoples thoroughly assess and address any issues pertaining the unique ties between Indigenous Peoples and their lands to them and involve consultation with these communities. are given full weight in the design of projects and programs. This may result in specific activities to support and protect Indigenous Peoples' rights and well-being, developed in OPERATIONAL ASPECTS consultation with the affected communities. A key aspect of forest activities involving Indigenous Peo- ples is to acknowledge that development practitioners Use of policy analysis in investment and policy should not assume that indigenous world views about land lending. World Bank operations, both investment and policy and natural resources, as well as development priorities, are lending, involving forests and Indigenous Peoples require the same as those that may be commonly held by govern- careful policy analysis. This analysis frequently identifies ment and development agencies. The analysis of and reform initiatives that would improve the overall policy approach to development in indigenous contexts must, framework. Key policy issues for Indigenous Peoples include therefore, take into consideration the specific understand- tenure, harvest and marketing policies, governance issues, ing of the natural world among Indigenous Peoples and be fiscal policies, decentralization, attitudes of the dominant based on meaningful consultation with, and participation culture toward forest uses, environmental and social policies, of, local communities. and technical guidelines. Some of these are discussed below (see also chapter 6, Mainstreaming Forests into Development Indigenous Peoples' Relationship to Land and Policy and Planning: Assessing Cross-Sectoral Impacts). Natural Resources. Indigenous Peoples' special relationship with their lands and natural resources often Tenure not only of forest land but also of rights to the use of makes them vulnerable to development efforts. The special forest products. Indigenous Peoples' cultural attitudes relationship that Indigenous Peoples have with their land toward claims of natural resource ownership and associ- and natural resources, along with their historical ated stewardship responsibilities are important, as are marginalization, may also result in significant impacts from considerations involving individual versus community development activities, which, again, may vary substantially forms of tenure, and existence of and requirements for 40 CHAPTER 1: FORESTS FOR POVERTY REDUCTION tenure adjudication and documentation. Policy analysis Values and attitudes of mainstream culture. Some coun- of tenure issues also needs to take into consideration the tries regulate forest use based on the attitudes and values broader political economy and phasing of policies or of the mainstream culture in ways that do not accom- institutions affecting the sector (see further discussion modate traditional uses by Indigenous Peoples. Typical on tenure below). issues of contention include communal ownership, Harvesting and marketing of forest products. Where com- recognition or nonrecognition of sacred sites in forest munities in forest areas are interested in economic use of areas, regulation or prohibition of hunting, and prohibi- forest products, the objective of harvest and marketing tion of shifting cultivation. Policy reforms may be policies should be to maximize returns from forest prod- needed to recognize, and improve the level of under- ucts to Indigenous Peoples and other forest-dependent standing by the majority culture of, Indigenous Peoples' communities on an environmentally and fiscally sustain- resource use and management practices. Improvements able basis (see note 1.5, Making Markets Work for the in traditional practices that enhance sustainability and Forest-Dependent Poor, for points on what policy natural resources while still recognizing Indigenous Peo- reform should address). ples' rights and cultures may be contemplated. Governance. Governance policies on transparency, accountability, grievance mechanisms, and independent Use of sector analysis in investment and policy review modalities are important to forest operations lending. Sector analysis on Indigenous Peoples and forests involving Indigenous Peoples. Forest-rich countries, may provide useful information and dialogue opportunities where forest resources are being "mined" or exploited to inform investment and policy lending. The interactions of extensively and exported, often involve significant rent- Indigenous Peoples and forests have been increasingly taken seeking and revenue leakage. Efforts to address these into consideration as part of broader country economic and challenging governance issues and associated vested sector analysis and the development of country assistance interests can be especially beneficial to most Indigenous strategies. The Independent Evaluation Group (IEG, Peoples in forest areas, and inattention to these issues can formerly the Operations Evaluation Department) has be especially harmful (see chapter 5, Improving Forest included Indigenous Peoples issues in forest sector country Governance). case studies for Brazil (Uma and others 2000), India (Kumar Fiscal policies. Government services and programs target- and others 2000), and Indonesia (Gautam and others 2000), ing Indigenous Peoples in remote forest areas are often all noting the importance of access to land and natural poorly funded. In addition, the unit cost of service pro- resources for Indigenous Peoples. More recently, analytical vision is frequently higher, and there is limited availabil- efforts have also been associated with poverty reduction ity of expertise tailored for Indigenous Peoples contexts. strategies, as well as World Bank­wide reviews and Public expenditure review and reform should address formulations of strategies on forests, rural development, these problems caused by market and policy distortions, environment, and Indigenous Peoples. The degree of focus streamlining fund flow mechanisms, adjusting budget on forests and Indigenous Peoples has varied considerably parameters, providing incentive payments, and correct- across countries, depending on their relative extent and ing incentive distortions where necessary (see note 5.4, importance, the receptivity of governments to policy Strengthening Fiscal Systems in the Forest Sector). dialogue on these issues, World Bank staff expertise and Community institutions and decentralization. Policies on capacity, and the concern and commitment of regional Bank indigenous community institutions are important to management relative to other development issues. However, CBFM. Where indigenous communities are culturally given the important role that Indigenous Peoples can play in homogeneous with strong social cohesion, key issues the forest sector, and the risks to which they may be exposed, usually involve the extent to which the official structure it is essential that forest sector analysis include analysis of reflects and acknowledges traditional decision-making Indigenous Peoples for countries where they are present. systems and the extent of delegated authority and auton- omy. Where they involve heterogeneous groups and Informed participation of Indigenous Peoples. Informed interests, institutional systems and decentralization consultation with and participation of Indigenous Peoples are efforts also need to include effective modalities to nego- essential for successful forest-based activities. Their particular tiate the differing perspectives and relative levels of rights, circumstances, and needs often render standard empowerment. development approaches and assumptions inadequate or NOTE 1.3: INDIGENOUS PEOPLES AND FORESTS 41 inappropriate. Thus, development projects affecting Box 1.15 Brazil Santa Catarina Natural Resource Indigenous Peoples need to be prepared in full consultation Management and Rural Poverty Reduction with affected communities and their informed participation Project should be ensured during project implementation (see OP 4.10, paragraph 1, and chapter 12, Applying OP 4.10 on This project, aiming to empower local communi- Indigenous Peoples, in section II of this sourcebook). ties to better manage their natural resources, used IEG evaluations of community participation in World innovative methods to consult with affected Bank­assisted projects have found that when primary Indigenous Peoples during project preparation. stakeholders--individuals and community-based Initially, an interinstitutional committee, includ- organizations--participate in World Bank activities, devel- ing representatives from government, NGOs, and opment relevance and outcomes improve. Project- academia began working on project design with Indigenous Peoples. A two-phased approach was supported activities tend to be more sustainable, and there developed to carry out consultations in a way that is less corruption because processes are more transparent facilitated the communities' informed participa- and government officials are held accountable to the people tion in designing the project. For the first phase, they serve (World Bank OED 2001, 2005). Specific benefits expert facilitators already familiar with the specific concerning Indigenous Peoples include the following: indigenous groups were contracted to develop dis- semination materials together with indigenous Project development recognizes Indigenous Peoples' students and to visit villages to present the project rights to be consulted on, and participate in, develop- and the ideas for working with Indigenous Peo- ment efforts that affect them, whether positively or ples. This laid a solid foundation for understand- adversely. ing the proposed project and activities specifically Participation increases the likelihood of active engage- for Indigenous Peoples. ment by affected communities and community owner- The second phase of the consultations was a series of larger formal meetings between representa- ship of project activities. tives selected by the Indigenous Peoples, in the loca- Indigenous Peoples are enabled to make informed deci- tion of their choice, with representatives of the proj- sions on projects that will affect them. ect staff. Thanks to the initial field work that Project design and implementation are based on the real- disseminated project information using culturally ities of particular communities and their involvement appropriate methods, including indigenous lan- with forest-related project activities, and the project is guages and specially designed graphics, the formal more likely to provide culturally appropriate benefits. meetings were very productive. The Indigenous Peo- ples' representatives had had information and time Consulting with Indigenous Peoples can be demanding needed to better understand the project, to form and time consuming. The consultation process should include their opinions, and to make suggestions and recom- participatory methodologies to ensure participation and voice mendations for project design. As a result, the of marginalized social groups within affected communities, to Indigenous Peoples felt their voices had been heard, and project staff received detailed feedback on how build community consensus, to enhance transparency, and to best to reflect Indigenous Peoples' concerns in the ensure local ownership of the process (see box 1.15). Use of project design and Indigenous Peoples Development traditional decision-making processes that are familiar to local Plan (the project was prepared under OD 4.20). communities, along with skilled facilitation and capacity- building activities, will usually enhance the process and out- Source: Authors' compilation using World Bank 2002a. come (see chapter 10, Consultation and Communications in Forest Activities, in section II of this sourcebook). Mechanisms for ongoing participation of Indigenous and responsibilities of various stakeholders (see chapter 12, Peoples. Detailed arrangements for ongoing participation of Applying OP 4.10 on Indigenous Peoples, in section II of this Indigenous Peoples and OP 4.10 complaint mechanisms sourcebook). Activities to build the capacity of local should be included in project design. Local communities' communities to participate may be necessary. In projects participation must be clearly spelled out in project involving Indigenous Peoples and forests,communication and preparation and implementation plans, describing the roles conflict management measures help to build understanding, 42 CHAPTER 1: FORESTS FOR POVERTY REDUCTION manage expectations, and address grievances. Given the range communities and through field-based biological and social and variation of stakeholders, this frequently involves the assessments. development and implementation of a communication The social issues concerning Indigenous Peoples and strategy that takes into account various audiences, culturally forests are extensive and complex. Key issues include rights to, appropriate forms of communication, and provisions for two- and conflicts over, forest resources, local livelihoods and nat- way communication flows. Conflict management involves ural resource management practices, social organization and capacity and skill development. Grievance procedures sociocultural diversity, indigenous knowledge, gender and frequently build on existing mechanisms and consideration of intergenerational issues, social and political risks, and vulner- informal customary mechanisms is particularly important. abilities of local communities. (See World Bank 1997, World Indigenous Peoples' organizations, NGOs, academics, and Bank 2005, and section II of this Sourcebook for more details others with appropriate experience and skills may play an on social analysis in natural resource management projects.) important facilitation role in developing participatory processes and addressing social and environmental concerns Institutional and stakeholder analysis. Institutional related to Indigenous Peoples. If appropriate Indigenous Peo- and stakeholder analysis helps identify opponents and ples' organizations or local NGOs cannot be identified, it may proponents of project activities. It also identifies norms, be necessary to consider arranging for services from national rules, and behavior that may enhance or hinder successful or international Indigenous Peoples' organizations or NGOs, project implementation. Forest management involves building the capacity of existing local Indigenous Peoples' multiple stakeholder interests. In most countries, balancing organizations and NGOs, or hiring consultants with compa- competing interests and objectives is and will remain a rable skills. It is important to be aware of external organiza- constant challenge in forest management. While often one tions that may claim to represent Indigenous Peoples and to can find "win-win" solutions, at other times addressing confirm their legitimacy and acceptance by the affected com- these various interests involves inherent tradeoffs and munities. Irrespective of the entity contracted, it is important significant risks to project outcomes. that it is acceptable to the affected communities, and is able to The interests, values, capacities, and dependency on for- facilitate trust and cooperation. Good communication, coor- est resources of Indigenous Peoples' communities vary. dination arrangements, and strategies that encourage ongo- There can be a variety of indigenous groups or subgroups ing learning and evolution in relationships will be key to suc- that have different experiences and capabilities in forest cessful partnerships with Indigenous Peoples' organizations, management. Levels of cultural homogeneity, social cohe- NGOs, and other civil society institutions. sion, social inclusion, familiarity with and management skills in a cash economy, ability to defend interests in forests, Social assessments in project design for Indigenous and forest management practices may vary. All these differ- Peoples and forests. Detailed social assessment of issues ences lead to different priorities regarding forest manage- pertaining to Indigenous Peoples and forests is needed to ment that have to be negotiated and addressed in project inform project design. Forest projects provide opportunities design and implementation. Adding to this complexity, as well as risks for Indigenous Peoples. These should be many Indigenous Peoples today live in mixed communities assessed thoroughly during project preparation, as part of the together with, or in close proximity to, other social groups. social assessment and as part of free, prior, and informed consultation processes, and addressed in project design and Recognizing customary tenure systems. Community the design and implementation instruments used to address resource management mechanisms under customary tenure Indigenous Peoples' concerns. The specific relationship systems are recognized as having great potential in helping between Indigenous Peoples and the environment in the mitigate negative social and environmental impacts of project area should be investigated, including aspects of development. Customary tenure is supported through natural resource use practices that may enhance or diminish growing recognition of legitimate rights to land and natural biodiversity and natural resources, keeping in mind that resources of Indigenous Peoples and other forest-dependent sometimes assumptions about such practices can be communities (see also note 1.4, Property and Access Rights). misguided, politically motivated, or based on values of the Indigenous customary tenure structures are generally dominant cultural model rather than the reality in specific communal, indigenous rights are usually collective rights, situations. It is important that interventions be based on and Indigenous Peoples more often than not claim some reliable facts obtained with the participation of local form of collective tenure. Separating indigenous commu- NOTE 1.3: INDIGENOUS PEOPLES AND FORESTS 43 nity territory into individual plots, which may be attempted Peoples. Such a combination could help to protect Indigenous through forest and land use planning exercises, runs the risk Peoples'interests as well as prevent conversion of forest land to of adversely affecting the livelihoods and social cohesion of nonforest uses in the short term. As needed, legal reforms indigenous communities. (See, for example, the Asian should also be supported to enhance the recognition of land Development Bank-financed poverty assessment for Lao and resource use rights of Indigenous Peoples. PDR [State Planning Committee 2000].) Individual tenure arrangements should be developed with care and only with Historical and political context to addressing rights. the informed participation of the local communities. To address the land and resource use rights of Indigenous Peoples, it is important to understand the historical and Importance of land and long-term resource use political context in the country and local area. Indigenous rights. Most Indigenous Peoples see resource use tenure as Peoples have varying cultural values regarding tenure over essential for their livelihoods and cultural survival. Land forest land and forest products that need to be understood and tenure and long-term access to natural resources are addressed in project design. The belief system of some essential for forest-related projects that affect Indigenous Indigenous Peoples does not encompass the concept of natural Peoples. Lack of, or insecure, tenure or short-term tenure or resource "ownership" at all, which can affect the way they use rights arrangements are likely to prevent positive project address customary tenure claims and rights as well as daily outcomes and intensify degradation of forests. In contrast, management of resources. Views on individual and collective secure land tenure and long-term tenure arrangements are tenure also vary. The extent to which tenure rights are linked to likely to empower local communities to manage forests in stewardship responsibilities also varies from group to group. sustainable ways. Historical, cultural, and socioeconomic studies combined While international law recognizes Indigenous Peoples' with participatory methods and community mapping exer- rights to ancestral land and natural resources, and some cises can help build a good understanding of local communi- countries have begun to recognize these rights in national ties, their cultures, resource use, and customary land and law, the situation is far from uniform. Many countries in resource tenure arrangements. They may also help to build Latin America (for example, Bolivia, Brazil, Colombia, Mex- trust and avoid conflicts over land and resource use, provided ico, and Nicaragua) and the Philippines have assigned that findings are incorporated into project design, including Indigenous Peoples large territories or enacted legislation measures that recognize Indigenous Peoples' customary recognizing their rights. Most other countries do not legally rights and continued access to sustainable resource use. recognize indigenous land and resource use rights, and those that do, do not always protect such rights in practice. The sit- Use of partnerships for enhancing protection and uation is compounded by the fact that most indigenous areas sustainability. In the context of CBFM, work with have never been demarcated or titled, or lack documentation Indigenous Peoples to enhance efforts to manage forest of such official conventions. Accordingly, ancestral lands as resources. Building efforts on current relationships between well as areas of current occupation and resource use (if these the environment and Indigenous Peoples can lead to win- differ) are often without legal recognition or protection. win situations that enhance the protection of biodiversity Forest-based projects should support land and long-term and natural resources and at the same time support the resource use rights of Indigenous Peoples where relevant. In cultures and sustainable livelihoods of local communities countries with legislation supporting Indigenous Peoples'land (see chapter 9, Applying Forests Policy OP 4.36, and chapter and resource use rights, projects should incorporate activities 12, Applying OP 4.10 on Indigenous Peoples, in section II of that formalize and regularize them. Where the customary this sourcebook, and note 1.2, Community-Based Forest lands of Indigenous Peoples are legally under the domain of Management). the state, or where it is otherwise inappropriate to convert tra- Experience has shown that true partnerships are difficult ditional rights into those of legal ownership, alternative to attain for various reasons, such as continued focus on arrangements should be implemented to grant long-term, top-down approaches, conflicting interests, corruption, and renewable rights of custodianship and use of forest areas to limited capacity. Despite such difficulties, however, collabo- Indigenous Peoples (see OP 4.10 for more details). Where rative arrangements are gaining ground quickly because Indigenous Peoples are weak relative to private commercial they can help resolve conflicts, foster learning during imple- interests, it may be useful to combine government ownership mentation, enhance management of forest resources and of forests with use rights to forest products for Indigenous biodiversity, and support the livelihoods and cultures of 44 CHAPTER 1: FORESTS FOR POVERTY REDUCTION local communities. They require time, resources, and a flex- Box 1.16 India Andhra Pradesh Community ible approach that recognizes that while consensus is a use- Forestry Management Project ful goal, conflicts are likely to occur and management arrangements and grievance procedures should be enabled to address such conflicts. Collaborative arrangements and This project aims to reduce rural poverty through improved forest management,with specific commu- enhanced participation of local communities require capac- nity participation by tribal forest-dependent com- ity building as well as arrangements that institutionalize munities to assume full responsibility for the devel- participation and representation of local communities in opment of forest areas. One of the three main decision-making processes and bodies. components is community development to improve village infrastructure and livelihoods, through for- Indigenous knowledge as a basis for CBFM. est- and nonforest-based income-generation activi- Indigenous knowledge and management practices should ties. A tribal development plan is an integral sub- be the starting point for CBFM where appropriate. component in preparing investment proposals. The Indigenous Peoples' forest and natural resource tribal development plan includes activities to narrow management approaches vary in methods, complexity, and the gap in the levels of tribal and nontribal develop- quality. Most often, though, Indigenous Peoples have ment through deliberate actions for tribal socioeco- managed natural resources soundly, providing their nomic development. This includes community investments (for example, community halls, wells) communities with food and other products without and creation of wage labor, both for work within the depleting the resource base. Their knowledge and practices protected area (fire management, habitat restora- should be the starting point for project activities, in tion) and other conservation activities. At several combination with modern approaches appropriate for the other protected areas in the country, specific pro- local context. (See box 1.16.) grams target tribal and special-needs groups: a tribal trekkers program at Periyar, ropemaking skills at Human rights in forest certification. Certification Pench, and community agriculture at Gir. schemes should include, in addition to sustainability principles, the rights of Indigenous Peoples. The voluntary Source: World Bank 2002. forest certification system should cover human rights, including rights of Indigenous Peoples to land, resources, and cultural sites as well as their free, prior, and informed based products, through employment in conservation activ- consent. This often goes beyond national forest regulations. ities and through ecotourism. (See chapter 11, Forest Certification Assessment Guide: Improving forest-based livelihoods through better Summary on Use, in section II of this sourcebook.) multicropping in swidden cultivation fields and sustainable use of nontimber forest products are useful approaches to Importance of short-term and equitable benefits. providing benefits to Indigenous Peoples. Experiments in Indigenous Peoples and other forest-dependent communities markets for environmental services are under way and are likely to benefit from forest-related projects that address should be extended to include Indigenous Peoples. The the issues discussed in this note. However, these benefits may World Bank's BioCarbon Fund (BiCF) may support forest- materialize only in the long term if forestry production or dependent communities in earning revenues through car- improved natural resource management practices are bon credits for planting and managing forests. implemented. In many cases, activities are needed to improve Work is ongoing to extend the benefits to Indigenous Peo- the livelihoods of local communities and ensure equitable ples of the newly established Forest Carbon Partnership Facil- benefits in the short term. ity (FCPF), which will support policy approaches and pro- These activities commonly consist of culturally appro- grams with positive incentives for reducing emissions from priate assistance in improving agricultural production, sus- deforestation and degradation. The facility will also develop tainable harvesting and processing (including organization concrete activities to reach out to poor people who depend on and legal recognition), market access, and the value of for- forests to improve their livelihoods. Ongoing efforts and con- est products (for example, market studies, strategy develop- sultations with Indigenous Peoples and forest-dependent ment, and organization); and support to small businesses communities are developing appropriate mechanisms to and to joint ventures selling cultural products or forest- ensure that these communities benefit from the FCPF. NOTE 1.3: INDIGENOUS PEOPLES AND FORESTS 45 LESSONS LEARNED AND RECOMMENDATIONS affect them; (ii) identify early on any potential impacts on,and FOR PRACTITIONERS benefits to, Indigenous Peoples, including any special needs and targeted poverty reduction activities; (iii) ensure a well- The following summarizes lessons learned to date:1 developed plan for consultation and participation of affected Indigenous Peoples and other forest-dependent communities; Tenure over land and resources is the most important (iv) address adverse impacts from forest activities (for exam- element of Indigenous Peoples' survival and needs to be ple, restrictions of access to, or logging in, areas of indigenous assessed and addressed in forest projects. Indigenous resource use and cultural sites), which may result equally from Peoples' rights to land and resources should be recog- investment and policy lending activities; (v) undertake nized and, if needed, appropriate legal frameworks capacity-building activities in traditional and other sectors should be developed to guarantee such rights. that are relevant to and that engage Indigenous Peoples. Effective management of forest resources is best accom- A number of Bank-assisted projects have supported forest- plished through local participation. It should be built on based activities with Indigenous Peoples' communities. The finding common ground, allowing sufficient time for Brazil Indigenous Lands Project supported the conservation mutual understanding and acceptance of goals and of natural resources in indigenous areas and the well-being of strategies, creating and maintaining transparency Indigenous Peoples through regularization of indigenous throughout the process, and recognizing that goals will lands in the Legal Amazon, and improved protection of change and that collaboration does not mean consensus. Indigenous Peoples and their land. It has been innovative in For Indigenous Peoples, survival is cultural survival. improving technical quality and Indigenous Peoples' partici- Forestry activities are a means toward that end, not an pation in and control of the processes of regularizing, protect- end in themselves. For example, the survival of local lan- ing, and managing their lands. A methodology for ethno- guages is key to the maintenance of local ecological ecological assessments of indigenous lands was developed to knowledge and values. Indigenous Peoples should partic- combine traditional knowledge with scientific information ipate in activities supporting their intellectual property and provide a practical and flexible tool for investigating rights and bioprospecting. human-environment interactions. Some of the challenges the Too often, Indigenous Peoples have been seen only as project confronted included securing involvement of the right laborers, park guards, or gatherers or producers of raw experts; difficulties of organizing work in remote locations materials. Small businesses and joint ventures in which and timing it with seasonal conditions; and institutional weak- Indigenous Peoples retain an equity share in products as nesses of Brazil's National Indian Foundation (FUNAI), the they move through the market chain should be supported. agency responsible for Indigenous Peoples. Involvement of Efforts should be focused on sustainable timber manage- multiple agencies,uncertainties concerning the legal aspects of ment because ecotourism, nontimber forest products, natural resource use in Indigenous Peoples'areas,and conflicts bioprospecting, the sale of intellectual property, or even between Indigenous Peoples and local and national stakehold- the sale of carbon rights will not generate the same levels ers (for example, neighboring ranchers and conservation of income for Indigenous Peoples in the short to organizations) hampered progress on protecting Indigenous medium term as logging. Peoples' lands and limited sustainable development efforts to Alternative development efforts need to be designed to enhance Indigenous Peoples'well-being (see World Bank 2007 match or complement local skills. These efforts need to and Lisansky 2004). place equal emphasis on income generation and sustain- Lessons from the Colombia Natural Resource Management able resource use in addition to addressing the steep (NRM) Program, supporting improved natural resource man- learning curves of groups that are often only now enter- agement through CBFM and land titling activities, include ing the market economy. local participation in NRM activities takes time, often requir- ing changes in the overall climate between different groups; Lessons have also been learned from Inspection Panel cases Indigenous Peoples' organizations can play a significant role in involving forest activities affecting Indigenous Peoples in monitoring the actions of government agencies; and collective Cambodia and Democratic Republic of Congo. These include land titling often faces resistance from government and other the need to (i) analyze the current situation of Indigenous stakeholders (see Clay, Alcorn, and Butler 2000). Peoples, not only in project areas, but in the country as a The Mexico Community Forestry Projects are excellent whole, to assess ongoing support and outreach efforts, as well examples of the benefits that supporting CBFM activities as to undertake dialogue on any policy or legal reforms that 46 CHAPTER 1: FORESTS FOR POVERTY REDUCTION with Indigenous Peoples can offer. Sophisticated forest Support CBFM, emphasizing community ownership and management, product processing, and marketing have collaborative arrangements (see note 1.2, Community- enhanced participating communities' livelihoods and Based Forest Management). improved natural resource management (box 1.17). Support livelihood activities and ensure equitable bene- fits to affected Indigenous Peoples. Recommendations for future activities. This note has Pay attention to the requirements of the Bank's Indigenous discussed some of the operational aspects and lessons learned Peoples policy (OP 4.10) early on in project preparation, concerning forest-based projects affecting Indigenous and make clear agreements with the borrower well before Peoples. These can be summarized into the following key project appraisal. recommendations for future forestry activities involving Indigenous Peoples: NOTE Recognize Indigenous Peoples' rights to their land and 1. To inform the World Bank's Forest Policy Implementa- natural resources, and to benefits from development tion Review and Strategy Development Framework, an inde- activities, as well as the need for consultation and partic- pendent study was undertaken to assess how the Bank has ipation throughout the planning, implementation, mon- addressed the issue of Indigenous Peoples in selected World Bank and GEF-funded forestry and biodiversity conservation itoring, and evaluation processes. projects in Colombia, Indonesia, Mexico, Papua New Guinea, Base project preparation and implementation on well- and Siberia (Clay, Alcorn, and Butler 2000). The lessons prepared and well-executed consultations with Indige- learned and recommendations are drawn from that study. nous Peoples and sound social and institutional analysis providing a thorough understanding of the local context and affected communities. SELECTED READINGS Ensure that project activities affecting Indigenous Peo- Beltran, J. ed. 2000. "Indigenous and Traditional Peoples ples are based on a sound process of free, prior, and and Protected Areas: Principles, Guidelines and Case informed consultations with affected communities lead- Studies." IUCN and Cardiff University, Cardiff, Wales. ing to broad community support. Box 1.17 Mexico First and Second Community Forestry Projects The objectives of these two Community Forestry Projects ities on diagnostics and participatory planning aimed at (also titled PROCYMAF I and II) are to assist Indigenous self-management, including the financing of Participa- Peoples' communities and ejidos (communal land own- tory Rural Appraisals, enabling indigenous communities ing units) in different priority regions of Mexico to to take a more active role in natural resource manage- improve the management and conservation of their for- ment decisions based on an improved understanding of est resources and to generate alternative sources of their needs, capabilities, and interests. In this way the income in a sustainable manner.Lessons from these proj- project was successful in empowering local communities ects suggest that community forestry is an effective to improve management of their forest resources and instrument for sustainable rural development, building expanding their options for income generation. on existing local economic,social,and biophysical condi- While the first project helped increase the competi- tions and encompassing the development of social capi- tiveness of community forest enterprises and opened tal (based on traditional forms of governance), a mini- up new markets for certified forest products from Mex- mum base of natural capital (forest resources with ico, a key lesson learned was the need to include signif- commercial value), and the development of technical icant funding for productive activities, particularly for and administrative capacity (human capital) at the com- processes that add market value to forest products and munity level to enhance decision-making powers. achieve economies of scale through community associ- The first project focused its community forestry activ- ations and strategic partnerships with the private sector. Source: World Bank 2004. See also box 1.13 for discussion of the Community Forestry Project in Mexico (Project for Conser- vation and Sustainable Management of Forest Resources). NOTE 1.3: INDIGENOUS PEOPLES AND FORESTS 47 Borrini-Feyerabend, G., M. Pimbert, M. T. Farvar, A. Conservation with Development. OED Evaluation Coun- Kothari, and Y. Renard. 2004. Sharing Power: Learning by try Case Study Series. Washington, DC: World Bank. Doing in Co-management of Natural Resources Through- Lisansky, J. 2004. "Fostering Change for Brazilian Indige- out the World. CENESTA, Tehran: IIED and nous People during the Past Decade: The Pilot Program's IUCN/CEESP/CMWG. Indigenous Lands Project."In S. H. Davis, J. Uquillas, and Clay, J. W., J. B. Alcorn, and J. R. Butler. 2000. "Indigenous M. Eltz, "Lessons of Indigenous Development in Latin Peoples, Forestry Management and Biodiversity Conser- America," 31­43. World Bank, Washington, DC. vation." World Bank, Washington, DC. State Planning Committee and National Statistical Centre. Collier, R., B. Parfitt, and D. Woollard. 2002."A Voice on the 2000. "Poverty in the Lao PDR: Participatory Poverty Land: An Indigenous Peoples' Guide to Forest Certifica- Assessment." Vientiane: State Planning Committee. tion in Canada." National Aboriginal Forestry Associa- World Bank. 1997. "Introduction to Environmental and tion, Ottawa, and Ecotrust Canada, Vancouver. Social Assessment Requirements and Procedures for Cruz, M. C. J., and S. H. Davis. 1997. "Social Assessment in World Bank-Financed Projects." Environment Depart- World Bank and GEF-Funded Biodiversity Conservation ment Report No. 26115. World Bank, Washington, DC. Projects: Cases Studies from India, Ecuador, and Ghana." ------. 2002a. Project Appraisal Document, Natural Working Paper No. 18176, World Bank, Washington, DC. Resource Management and Rural Poverty Reduction Davis, S. H., J. Uquillas, and M. Eltz. 2004. "Lessons of Project--Santa Catarina (P043869). Report No. 23299. Indigenous Development in Latin America: The Pro- World Bank, Washington, DC. ceedings of a World Bank Workshop on Indigenous Peo- ------. 2002b. Project Appraisal Document, Andhra ples Development." Sustainable Development Working Pradesh Community Forest Management Project Paper No. 20, World Bank, Washington, DC. (P073094). Report No. 24184-IN. World Bank, Washing- International Working Group for Indigenous Affairs. Not ton, DC. dated. "Indigenous Peoples, Forest, and Biodiversity." ------. 2004. Implementation Completion Report for Mex- International Alliance of Indigenous-Tribal Peoples of ico Community Forestry Project. Report No. 29582. the Tropical Forest, and International Work Group for World Bank, Washington, DC. Indigenous Affairs, Copenhagen. ------. 2005. "Social Analysis Guidelines in Natural Ortega, R. 2004. "Models for Recognizing Indigenous Land Resource Management: Incorporating Social Dimen- Rights in Latin America." Environment Department sions into Bank-Supported Projects." Social Develop- Working Paper No. 99, World Bank, Washington, DC. ment Department, World Bank, Washington, DC. Reichel-Dolmatoff, G. 1996. The Forest Within: The World- ------. 2007. Brazil Indigenous Lands Project. view of the Tukano Amazonian Indians. Dartington, U.K.: ICR0000338. World Bank, Washington, DC. Themis Books. World Bank OED. 2001. "Participation in Development Stevens, S. ed. 1997. Conservation Through Cultural Survival: Assistance."Precis No. 209, World Bank, Washington, DC. Indigenous Peoples and Protected Areas. Washington, DC: ------. 2005. The Effectiveness of World Bank Support for Island Press. Community-Based and -Driven Development: An OED Evaluation. Washington, DC: World Bank. REFERENCES CITED Clay, J. W., J. B. Alcorn, and J. R. Butler. 2000. "Indigenous CROSS-REFERENCED CHAPTERS AND NOTES Peoples, Forestry Management and Biodiversity Conser- Note 1.2: Community-Based Forest Management vation." World Bank, Washington, DC. Note 1.4: Property and Access Rights Gautam, M., U. Lele, H. Kartodihardjo, A. Khan, I. Erwin- Note 1.5: Making Markets Work for the Forest-Dependent syah, S. Rana. 2000. Indonesia. The Challenges of World Poor Bank Involvement in Forests. OED Evaluation Country Case Study Series. Washington, DC: World Bank. Chapter 5: Improving Forest Governance Kumar, N., N. Saxena,Y. Alagh, K. Mitra. 2000. India. Alleviat- Note 5.4: Strengthening Fiscal Systems in the Forest Sector ing Poverty Through Forest Development. OED Evaluation Chapter 6: Mainstreaming Forests into Development Policy: Country Case Study Series. Washington, DC: World Bank. Assessing Cross-Sectoral Impacts Lele, U., V. Viana, A. Verissimo, S. Vosti, K. Perkins, S. Arif Section II: Guide to Implementing Forests Policy OP 4.36 Husain. 2000. Brazil. Forests in the Balance: Challenges of 48 CHAPTER 1: FORESTS FOR POVERTY REDUCTION N OT E 1 . 4 Property and Access Rights I n many countries, most of the forest estate remains nities to enhance forest rights in a pilot watershed credits or publicly owned and managed, despite legitimate local a carbon credits scheme and provide complementary tech- claims to the forests, extensive occupation by agrarian nical support, as well as providing additional returns to people, and the limited ability of governments to protect poor producers managing forests on the margin. If not done these vast resources. Legal frameworks and rural land-use sensitively, they can, however, also set dangerous precedents policies often discourage or deny local people's rights to by introducing new uncertainties--deeming shifting culti- own, use, and trade their forest products and services. A vation or other traditional practices unacceptable, establish- current dilemma is the complementarity between these ing long-term contracts in regions where forest tenure is frameworks and policies and environmental laws and regu- contested, extinguishing traditional use and access, and rais- lations, which may evolve with limited attention to tenure ing the price of forests beyond the reach of local people. and rights implications. Clearly defined rights are essential if the forest- Development projects promoting agriculture expansion, dependent poor are to improve their income and well- large-scale irrigation, and industrial (and mining) develop- being. If individuals, communities, and businesses are to ment have often impinged on forest areas and forest inhab- invest in forest resources, take responsibility for their con- itants. Often, indigenous and forest-dependent communi- servation, and participate regularly and openly in the mar- ties do not directly benefit from these activities. Similarly, ketplace, they need to be confident of their property rights. forestry projects that deal with industrial and logging con- Growing evidence from around the world demonstrates cessions, government-controlled logging quotas, protected that recognizing local rights and improving local gover- area enlargements, and plantation developments can, if not nance is politically feasible. It is also a cost-effective strategy appropriately designed and planned, affect tenure and cus- for rural poverty alleviation. tomary rights of indigenous and other forest communities. Emerging trends show that more countries are now Most of these forestry projects affect traditional forest users, actively engaged in reforming their forest land and manage- those with ancestral forest rights, shifting cultivators, and ment practices. Many communities and Indigenous Peoples NTFP gatherers (such as in Cambodia, Lao PDR, and Viet- are asserting their rights to manage their forests, and some nam). Operationally, it is difficult to avoid these undesirable governments are introducing substantive changes to forest impacts in absence of clarity on tenure and property rights tenure and to policies and rules governing markets, and link- (see note 1.3, Indigenous Peoples and Forests). ing these to agrarian and related sector policies. The forest Emerging payment schemes and markets for ecosystem sector is now undergoing important reforms, arguably the services, such as water flow and biodiversity conservation, most important set of policy and market shifts since the end present both similar and special sets of issues for forest of the colonial era, and these present historic opportunities tenure and property rights. Unless done properly, poor peo- for, and sometimes threats to, the well-being--livelihoods, ple are less likely to participate in these markets because of rights, freedom and choices, and culture--of the 1.6 billion their inability to assume risk, the lack of organization to cre- poor people who live in and around forests. These reforms ate economies of scale, limited land and investment capital, affect the way in which forest people manage and conserve and often unclear property and use rights. These emerging forests and affect the provisioning of forest environmental markets can be a means for government and local commu- goods and services that benefit society as a whole. 49 In what are considered public forest lands, there has been Devolution of rights. Devolution of rights to forest recognition of community or collective and individual land and resources is severely impeded in many places by property rights in some forests, including special rights of the remnants of colonial legal frameworks and by a system Indigenous Peoples, and elaboration of comanagement of subsidies and incentives; these need serious reform if arrangements for other public forests. Complementary to tenure rights are to become meaningful to poor forest introducing reforms in forest and land tenure, governments communities. Some operational steps to consider in across the world are now beginning to reassess legal and reg- cooperation with client governments include the ulatory frameworks and the way in which they allocate sub- following: sidies, provide privileged access to publicly owned forests, and monitor the resulting impacts. Many countries are also reforming models of forest conservation to genuinely engaged in a process of decentralization. include populations living in and around protected areas In Canada, India, Indonesia, Malaysia, Nicaragua, and considering and recognizing grazing rights and other the Philippines, recognition of indigenous and community agropastoral systems in forested landscapes rights has at times been the subject of major national debate reforming adverse systems of direct and indirect subsi- and conflict, though each country has also had examples of dies to plantations, industry, and intermediate marketing notable progress in dealing with these issues. Similar issues agents, which have adversely affected local producers and have occurred in Bolivia, Brazil, Chile, Ecuador, Guatemala, community enterprises Honduras, and Peru. In many of these countries significant reconsidering regulations that impede forest smallhold- forest areas have been recognized as indigenous territories ers' entry into markets and that impose costly procedures or reserves, and increasing areas of public forest are consid- (see note 1.5, Making Markets Work for the Forest- ered for community concessions. One of the most recent Dependent Poor) notable advances can be found in Guatemala. Designation of public forests as community forest is Multiple Characteristics of Tenure Security. Tenure expanding in Africa--as in Burkina Faso, Cameroon, The security has multiple characteristics, especially in the case of Gambia, Mozambique, Rwanda, Senegal, Tanzania, common property (see box 1.19). Institutional gaps can Uganda, and Zimbabwe--but effective handover has been undo otherwise positive tenure reform (as was seen in extremely limited, either by severely degraded forests or Cameroon and Ghana) if permitted legal forms of under institutional arrangements that are impractical or community forests are complex, and customary or informal conflict with local organization. Even in countries with the arrangements are seldom recognized, resulting in few most extensive forest areas in public concessions--Canada, communities effectively taking over management. Cambodia, Democratic Republic of Congo, Republic of Congo, Lao PDR, and the Russian Federation--tenure Analysis of tenure status, access rights, and use shifts are under discussion. China's allocation of more than rights. Tenure is in transition in many developing 100 million hectares of collective forests, and plantation countries. Particularly where land administration reform success in these forests, supports deepening of collective and land reform are ongoing, a gap can develop between rights and extending favorable policies to local the forest tenure dialogue and the overall land communities. administration dialogue. Effective projects in such situations must be based on analysis of tenure status, access rights, and use rights. Such an analysis must be sensitive to OPERATIONAL ASPECTS the variety of tenure arrangements that exist between the There are multiple dimensions to tenure security, which go two extremes of pure public property and pure private beyond the simple recognition of property rights. Policies property. For example, a number of indigenous use have failed to differentiate between tenure to recognize the arrangements and rights regimes coexist with the total state nuances of private, public, collective, and common prop- ownership of forest resources on paper. In a number of erty, and open access (see box 1.18). Often, government sta- places the state has devolved partial to substantial use rights tistics on land ownership mask or distort reality, leading to to communities without changing the status of property disregard for important property and use rights and tenure ownership, while in others communities exercise patterns, or poorly designed regulatory frameworks and substantial control of the resource without state permit controls. recognition. Each of these variations in tenure offers a 50 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Box 1.18 Typology of Property Rights Property rights can be viewed as reflective of social rela- leadership. Customary tenure systems typically possess tions. Property rights are rules that govern relations both collective and individual dimensions. In part, the between individuals with respect to property and they collective aspect relates to the community as compared should therefore be defined by the community or the with outsiders. Internally, the collective element relates state to which such individuals belong. Property rights to community land and resources, while the individual need to be clearly defined, well understood, and dimension concerns transactions, successions, and accepted by those who have to abide by them--and exchanges of family plots between community mem- strictly enforced. Property rights need not always confer bers. While it is reasonable to consider that both col- full "ownership" and be individual; depending on the lective and individual tenure have their place in forest circumstances it may be best if they are bestowed on the activities, introducing individual tenure from outside individual, in common, or to the general public. Most includes risks. important for sustainable development is that property There are cases where customary rights have been rights are deemed secure (van den Brink et al. 2006). legitimized but are still identified as customary rights. No single typology of tenure or property rights is In such cases, the term "customary" helps identify the universally accepted. Some typologies distinguish origin of the right. De jure rights are given lawful between legal tenure and customary tenure, others recognition by formal, legal instrumentalities, while de between de facto and de jure rights, while others distin- facto rights are rights that resource users continuously guish among property regimes. Property rights are also work cooperatively to design and enforce. often seen as a bundle of rights that include the right to A common typology of property rights distin- access and withdraw, manage, exclude, and alienate guishes among private, common, and public or state (Schlager and Ostrom 1992). property rights: Legal tenure is recognized as legitimate under the policies and laws of the state, while customary tenure is Private property rights recognized as legitimate by the traditions and customs ­ individual or "legal individual" holds most if not of a society but has not been formally codified in the all the rights law. Customary tenure systems exist in many countries ­ property can be leased under a contract to a third with significant populations of rural poor, where land party allocation and use are determined through long- Common property rights standing "customary" methods that, in many coun- ­ group (for example, community) holds rights tries, operate outside the formal legal system. Such cus- ­ group can manage property and exclude others tomary tenure systems are dominant in many ­ rules are important to manage and distribute indigenous areas where traditional social structures are resource largely intact. Customary systems are associated with Public property or state property rights traditional land administration institutions and cus- State holds the bundle of rights tomary laws that define how rights are governed, allo- cated, and preserved. The systems are effective because Open access results from the ineffective exclusion of they respond to a community's social, cultural, and nonowners by the entity assigned formal rights of economic needs and because they are enforced by local ownership. Source: Authors' compilation using Molnar and Khare (2006) and Jensby (2007). different set of opportunities for communities to use and Importance of pilots. Pilot activities can be important to protect their resources with varying outcomes (figure 1.1). expanding the range of possibilities, demonstrating the While government statistics and information available viability of rights-based forestry approaches to improve from land administrations are usually a good starting point, livelihoods, generate income, or advance conservation. The greater insights concerning evidence of historical use and objective is to build on a multisectoral analysis of forest dependence, as well as customary laws and rights, are often tenure and access without limiting the recognition or gathered through participatory mapping. devolution of rights where reform is ongoing. NOTE 1.4: PROPERTY AND ACCESS RIGHTS 51 Figure 1.1 Toward Tenure Security:Actors and Actions Public law groups Activists and NGOs Legal cases Mobilizing Training locals Demarcating Dispute resolution Planning Tenure security Researcher Policy groups Mapping Inform decision making Information dissemination Public education Lobbying Judiciary Political or arbitrator constituency institutions Legal Regulatory recognition Internal mechanisms Property rights Community development Government agencies and training organizations Legal framework Organizational skills Implementing Conflict resolution Dispute resolution Business management Source: Ellsworth and White 2004, Ellsworth 2004. Participation in commercial markets. The ability of essential. Mexican ejidos and communities have faced strong forest rights holders to manage and make use of their market competition from imports and subsidies to private resources is linked to their level of, and opportunities for, plantations, requiring stronger enterprises and more flexible participation in commercial markets (see note 1.5, Making forest regulations to survive. Assistance in meeting these Markets Work for the Forest-Dependent Poor). Forest tenure challenges will determine whether development and forest cannot be analyzed in isolation from world market trends, investments have pro-poor outcomes (box 1.20). which both drive demand and create pressures on existing forest regimes. Newly created market opportunities for poor LESSONS LEARNED AND RECOMMENDATIONS forest producers and forest owners can only be realized if the FOR PRACTITIONERS blend of tenure and other policies and regulations create the enabling environment. Changing long-established patterns The transition to greater forest tenure and property rights of governance and industrial behavior inevitably entails a occurs through a varied combination of strategies--both degree of political, economic, and environmental risk and reforms fostered by political elites and bottom-up reforms adjustments in forest product supply and demand. Clear and demanded by civil society and community organizations. secure tenure rights are necessary but not sufficient to Development organizations have enabled reform processes engender these changes. Experience in Papua New Guinea through PRSP dialogue, but unless well linked to organic shows that local landowners failed to manage enterprises for processes of civil society and empowered decentralization, the long term when short-term returns were not high these usually fail to make timely changes. Lessons from a enough to encourage a change in behavior. Furthermore, variety of countries on successful strategies for change are technical and organizational support in early stages is listed in box 1.21. 52 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Box 1.19 Characteristics of Secure Community Tenure Security of community tenure encompasses a number state (including local government institutions)-- of characteristics: that is, the legal system has to recognize an obliga- tion of the state to respect those rights. 1. Requires that there is clarity as to what the rights are. 5. Requires that the rights be exclusive. The holders of Confusion about one's rights can significantly rights need to be able to exclude outsiders or control undermine the effectiveness and enthusiasm with the access of outsiders to the resource over which which rights are exercised. they have "rights." A corollary to exclusivity is that 2. Requires certainty that rights cannot be taken away or there must be certainty both about the boundaries changed unilaterally and unfairly. In almost any sit- of the resources to which rights apply and about uation, of course, there are circumstances where it who is entitled to claim group membership. A sec- may be appropriate for rights to be taken away or ond corollary to exclusivity where comanagement diminished, but conditions for doing so need to be concerns government land is that the government fair and clearly spelled out, the procedures fair and entity entering into the agreement must have clear transparent, and compensation addressed. authority to do so, authority that the responsible 3. Is enhanced if the duration of rights is either in perpe- entity is empowered to fulfill. tuity or for a clearly spelled-out period that is long 6. Requires that the law recognizes the holder of the enough for the benefits of participation to be fully rights. The law should provide a way for the holder realized. If rights are to be in force only of the rights to acquire a legal personality, with the temporarily--as in some comanagement arrange- capacity to apply for credits and subsidies, enter ments or community forestry leases--care should into contracts with outsiders, collect fees, and so be taken to ensure that agreements are at least as forth. long as is realistically required to reap the appropri- 7. Requires accessible, affordable, and fair avenues for ate degree of benefits. seeking protection of the rights, for solving disputes, 4. Means that rights need to be enforceable against the and for appealing decisions of government officials. Source: Lindsay 1998. Box 1.20 Examples of Potentially Pro-Poor Approaches to Tenure Reform in Forests Overarching forest sector reform programs over degraded resources, with the purpose of reha- (Uganda, Ghana, Guyana, and South Africa) bilitating the resource (Cambodia, India, and Titling of indigenous territories in Latin America Nepal) and the Philippines Decentralization of some decision making over Collectively managed community forests in Latin forests (Indonesia) opening political spaces for local America--from extractive reserves to social communities forestry, to ejidos (Brazil, Guatemala, and Mexico) Some ethnic minority control over forests through Recognition of community rights in Africa (The peace negotiations (Myanmar, the Philippines, and Gambia and Tanzania) Northeast India) Devolution of state and collectively owned forests to Outgrower schemes where large-scale plantations individual households (China and Vietnam) have become politically untenable (Indonesia and Joint forest management and collaborative manage- South Africa) ment, where communities are given greater control Comanagement in protected areas Source: D. Kaimowitz, personal communication, in Hobley 2005. NOTE 1.4: PROPERTY AND ACCESS RIGHTS 53 Box 1.21 Opportunities to Advance Community Tenure Security:A Summary Support anticorruption and justice reform activities Build successful field models, recognizing these at national levels, through local and national legal require time and patience. Avoid promoting pilot groups. models that represent the lowest common denomi- Nurture local organizations to help them act more nator acceptable to government and undermine effectively as advocates, while helping them to efforts at more meaningful reform. develop legal and mapping tools to better stake their Mobilize civil society through effective activist and claims. grassroots organizations with the capacity and will Support workshops on tenure where ideas are to champion a cause. exchanged, and where lessons learned from the field Create linkages between local leaders at the global can be translated into ministerial priorities. level, helping to sharpen their advocacy strategies. Strengthen emerging leaders and organizations who Support federations and associations in communi- represent communities or indigenous peoples by ties that are attempting to exercise their tenure fostering learning and opportunities to discuss their rights, and support NGOs to build informed grass- issues directly with the government. roots organizations. Source: Ellsworth and White 2004. The following topics should be considered in PRSPs and by outsiders or extractive activities. They can hamper rights in project identification and design: if overly restrictive or if they cause overlapping claims. Overall land tenure, zoning, and land use arrangements Industrial and infrastructure subsidies, and indirect sub- have an impact on sound forest management and forest sidies, to processing industries, plantations, and transport access for the poor. Particular attention should be paid to create an unequal playing field for small and medium enter- overlapping areas for private land adjudication and public prises that do not qualify for such subsidies. Tax and tariff or communal forests in frontier regions, and overlapping policies that affect domestic industry, imports, and exports rights to Indigenous Peoples' lands and territories for can also be key drivers of distortions. These and other mar- above-soil and subsoil resources. Patterns of ownership ket and trade trends should be analyzed, with special con- should be mapped before project implementation, and sideration for the overlap of informal markets and trade and instruments for resolving conflicts extra-legally or legally conflicted forest resources claims, as well as the impacts of should be considered. commercial-scale plantations on land ownership patterns. Tenure and policy frameworks create incentives or disin- Ecosystem service payments or market schemes can offer centives for forestry management, and control forest and opportunities to secure tenure for low-income producers as a forest market access for low-income producers. To mini- reward for sustainable resource management. However, pay- mize the harmful consequences of these frameworks on the ment schemes must be carefully reviewed to ensure that exist- forest-dependent poor, interventions should avoid regula- ing local tenure and resource use rights are not threatened. tory frameworks that inadvertently place high burdens on There are multiple mechanisms to monitor progress and the poor; tax and tariff polices that distort market partici- influence the pace and quality of implementation of tenure pation; environmental regulations that low-income produc- reforms. These range from participatory monitoring to ers cannot afford to comply with, and therefore become independent outside review, and should assist in adjusting "criminals" by ignoring; and barriers to low-income pro- processes (through changes either in projects or in project ducers from outside the sector, such as small business regu- designs) to changing conditions over time. lations and lack of access to technical training or financial With devolution of responsibility to communities and support. Existing and proposed protected-area regimes can low-income producers, dependency on outside profession- support local rights and livelihoods by zoning for co- als must be reduced and local institutions and capacity for management and protecting local residents from incursions forest management must be strengthened. 54 CHAPTER 1: FORESTS FOR POVERTY REDUCTION SELECTED READINGS Jensby, S.E. 2007. "Indigenous Peoples and Forests." Note submitted to World Bank as input to Forests Sourcebook. Alden Wily, L. 2004."Can We Really Own the Forest? A Crit- Unpublished. World Bank. Washington, DC. ical Examination of Tenure Development in Community Forestry in Africa." Presented at "The Commons in an Lindsay, J. M. 1998. "Creating Legal Space for Community- Age of Global Transition: Challenges, Risks and Oppor- Based Management: Principles and Dilemmas." Paper tunities," the 10th Conference of the International Asso- presented at the International Workshop on ciation for the Study of Common Property, Oaxaca, Community-Based Natural Resource Management, Mexico, August 9­13. World Bank, Washington, DC, May 10­14. Clay, J. W., J. B. Alcorn, and J. R. Butler. 2000. "Indigenous Macqueen, D., N. Armitage, and M. Jaecky. 2006. Report Peoples, Forestry Management and Biodiversity Conser- of a meeting of participants of the U.K. Tropical Forest vation." Report to the World Bank, prepared by WWF- Forum on small enterprise development and forests. US, Washington, DC. Royal Botanic Gardens, Kew 26 September 2006. IIED, London. Ortega, R. 2004. "Models for Recognizing Indigenous Land Rights in Latin America." Environment Department Molnar, A. and A. Khare. 2006. "Note on Property and Working Paper No. 99, World Bank, Washington, DC. Access Rights." Note submitted to World Bank as input to Forests Sourcebook. Unpublished. World Bank, White, A., and A. Martin. 2002. Who Owns the World's Washington, DC. Forests? Forest Tenure and Public Forests in Transition. Washington, DC: Forest Trends. Schlager, E. C., and E. Ostrom. 1992. "Common Property and Natural Resources: A Conceptual Analysis." Land Economics 68 (3): 249­52. REFERENCES CITED van den Brink, R., G. Thomas, H. Binswanger, J. Bruce, and F. Byamugisha. 2006. "Consensus, Confusion, and Con- Ellsworth, L. 2004. A Place in the World: A Review of the troversy: Selected Land Reform Issues in Sub-Saharan Global Debate on Tenure Security. Washington, DC: Ford Africa."Working Paper No. 71, World Bank, Washington, Foundation. DC. Ellsworth, L., and A. White. 2004. "Deeper Roots: Strength- ening Community Tenure Security and Community Livelihoods." Ford Foundation, New York. CROSS-REFERENCED CHAPTERS AND NOTES Hobley, M. 2005."Where in the World Is There Opportunity Note 1.3: Indigenous Peoples and Forests for Tenure Reform?" Rights and Resources Initiative, Note 1.5: Making Markets Work for the Forest-Dependent Washington, DC. Poor NOTE 1.4: PROPERTY AND ACCESS RIGHTS 55 N OT E 1 . 5 Making Markets Work for the Forest-Dependent Poor mproving market access of forest-dependent commu- I more, community forest owners with high-quality, accessi- nities could enhance the contribution of forests to rural ble timber, strong community organization, and good mar- livelihoods. With 25 percent of the world's forests cur- keting and management skills can profitably sell tropical rently under community control, the expansion of agro- hardwoods as well, such as that sold from community forestry, and the development of community forest planta- forests in certain regions of Mexico. High-value timber can tions, indigenous and other small communities own more also be profitably sold by farmers from agroforestry sys- than three times as much forest in developing countries as tems. Benefits can also be gained from certified wood mar- do private firms and individuals (see chapter 3, Meeting the kets if there are established contracts or agreements with Growing Demand for Forest Products). This creates new certified wood users or market intermediaries. For example, opportunities in commercial forestry that could serve a in Brazil a pulp and paper company assists small-scale broader vision of meeting demand for forest products and farmer producer groups to obtain certification and to sup- forest conservation in ways that also address the livelihood ply the local furniture company demand (Scherr, White, needs of rural poor low-income producers (see note 1.2, and Kaimowitz 2003, 2004). Community-Based Forest Management, and note 1.3, Many local producers will benefit from preprocessing of Indigenous Peoples and Forests). Furthermore, changes in forest products to reduce waste, increase quality, or reduce market structure, new market instruments, and forest com- transportation costs, as well as from production of furni- panies' new interests in business partnerships with local ture and commodities for poor consumers in growing rural people are opening market niches for which local producers or urban markets. Small-scale sawmilling will also be viable have or could develop a competitive advantage. Environ- in markets where there is no competition with high- mental sustainability concerns are also creating new mar- efficiency, industrial mills. Additionally, in densely settled, kets for certified forest products and environmental forest-scarce countries with large markets for pulp, farmers services. or communities near mills could supply industrial pulp- Low-income forest producers1 have potential competi- wood, especially on lower quality lands. Mondi Ltd. pulp tive advantages for important segments of commercial for- and paper company in South Africa's Eastern Cape provides est markets. Forest dwellers located near population centers technical assistance and start-up capital to communities have lower transport costs, are more familiar with local organized in common property associations. preferences, and have the flexibility to supply small quanti- NTFPs represent economic potential for those low- ties of forest products as needed by local traders. Further- income producers or collectors of products with inelastic more, they have an advantage in branding for specialty demand. In Cameroon, the demand for some NTFPs has markets, enabling them to target socially responsible mar- grown dramatically in the past two decades as a result of ket niches. For example, the Rainforest Alliance supports increasing urbanization and a growing international mar- Brazil nut-product organizations to enable them to access ket. Innovative marketing arrangements for environmental such market niches. services also offer a market niche for those forest dwellers in Community forest owners, comanagers of public forests, areas with high levels of biodiversity or other values such as and farmers in forest-scarce locations near rapidly growing watershed protection or carbon sequestration (Scherr, inland population centers can be competitive suppliers of White, and Kaimowitz 2003, 2004; also see note 2.3, Inno- commodity wood for construction and fuelwood. Further- 56 vative Marketing Arrangements for Environmental Ser- Potential measures for removing policy barriers include vices). the following (based on Scherr, White, and Kaimowitz 2003, Historically, low-income producers have been at a disad- 2004; Sunderlin, Dewi, and Puntodewo 2006): vantage in accessing markets, leading to a need to address this issue by jointly building on local human and natural Secure forest access and tenure rights of local people (see capital assets, and building the institutional framework for note 1.4, Property and Access Rights). good governance and distributive aspects of growth over Remove state monopolies and other controls on harvest time (see figure 1.2; Dürr 2002; Scherr, White, and and marketing that are common in several Bank client Kaimowitz 2003, 2004; Sunderlin, Dewi, and Puntodewo countries. However, decisions on the extent and phasing 2006). of deregulation need to carefully consider potential impacts on Indigenous Peoples and other forest- dependent communities and provide for capacity- OPERATIONAL ASPECTS building initiatives to avoid adverse effects and enhance There are many opportunities for forest management mod- their benefits from deregulation. els to scale up the benefits they deliver for forest conserva- Remove or revise regulatory barriers and excessive regu- tion and the rural poor or low-income producers. However, lation that limits local forest producers from using their large gaps exist in information and experience and there are own or public forests. For example, in some regions of major challenges in finding the right market niches, sup- India, 10 separate permits are required for community porting local forest businesses, and reforming policies to forest producers to complete a timber sale. In other enable profitable market participation by local people. countries, indigenous communities have long-term Addressing these challenges will require coordinated action rights to extensive tracts of natural forest, but they do not by governments, international institutions, conservation have the right to commercially exploit them. and development organizations, and community producer Revoke policies that discriminate against small produc- organizations. Such action is necessary to level the playing ers (see box 1.22). For example, in Bolivia forest policy field for low- income producers and give them a real chance reforms have included formal recognition of indigenous to succeed. groups' forest rights, lowered concession fees for small- Two areas that would benefit from interventions in col- scale forest producers, and simplified the process for laboration with client governments are removal of policy accessing municipal forests. barriers and development of forest businesses. Facilitate the creation of forest user associations or pro- ducer groups to create economies of scale and to increase Figure 1.2 Forest Market Development Strategy for Low-Income Producers Develop forest business · Improve market position Local people Commercial Local · Strengthen producers Outcomes · Forest communities market comparative · Forge business partnerships Reduce · Public forest users opportunities advantages · Pursue new financing poverty · Small-scale farmers · Low-grade timber · Control of forest · Encourage business · Landless workers · High-value timber resources service providers Increase · Industrial pulpwood · Lower costs · Establish enterprise market · Certified wood structure development programs supply · Nontimber forest · Forest management · Target education and products capacity research Conserve, · Processed products · Lower supply risks restore · Payments for · Attractive to socially ecosystem services responsible markets forest Remove policy barriers resources · Secure local rights · Reduce regulatory burden · "Level playing field" · Involve producers in policy negotiations · Protect the poorest Source: Scherr, White, and Kaimowitz 2004. NOTE 1.5: MAKING MARKETS WORK FOR THE FOREST-DEPENDENT POOR 57 bargaining power (see note 2.2, Small and Medium fruits to improve product quality or chemically treating Enterprises). rattan to prevent fungal damage and staining. Actively involve local producers in forest policy negotia- Strengthen producer organizations through technical tions with private industry, government agencies, and support and capacity building so that they can make cap- environmental groups to produce more practical, realis- ital investments, pursue new sources of financing, engage tic, and lower cost laws, market regulations, and develop- in value-added processing, negotiate deals, and establish ment plans. product-quality or conservation controls. Create mechanisms that protect the poorest by, for Increase the contribution of commercially valuable example, ensuring that local forests retain their diverse NTFPs by enhancing community organization to cultural roles and their safety net functions without sac- increase the market power of NTFP producers and rificing others' potential income gains from commercial- processors and decrease their vulnerability to external ization of public forests. shocks (see box 1.23); build capacity in the areas of tech- nical knowledge and organizational skills to ensure Potential measures for developing forest enterprises resource management and harvesting, domestication include the following (based on Scherr, White, and where appropriate, and improved product processing; Kaimowitz 2003, 2004; Sunderlin, Dewi, and Puntodewo and build business capacity of potential entrepreneurs 2006; USAID 2004): and develop links between producer communities and fair trade organizations to improve marketing and add Improve the market position of small producers by value to the products. enabling them to respond to consumer preferences and Promote strategic partnerships between communities to develop market strategies. This may mean improving and businesses (see box 1.24 and note 2.1, Community- production and marketing technology, product quality. Private Partnerships). or reliability of supply. Examples include drying forest Box 1.22 Overcoming Barriers to Pro-Poor Forestry in Honduras In Honduras, a number of factors, including excessive There is, however, growing political recognition of regulation, disadvantage small-scale forest producers, the role of forests in rural poverty alleviation and of forcing many into illegality. An estimated 80 percent of the need to provide equal opportunities for the timber trade in Honduras is illicit. Securing man- community-based forest producers. In 2000, Honduras agement plans, harvesting permits, and commercial launched a review of its forest sector through the Hon- licenses is costly. In addition to formal charges, appli- duran Forest Agenda (AFH). The AFH is a forum cants may need to make informal payments for offi- established by the government and NGOs in 1996 for cials to facilitate the process. These, plus the costs of dialogue and coordination among a broad range of production and transportation, mean that local pro- stakeholders, including producer groups, industry rep- ducers might make a profit of only 15 percent on the resentatives, and indigenous peoples. The AFH review factory gate price for raw mahogany. Some of this process secured a new national forest policy and law. At profit may go toward debt repayments to local inter- the time of drafting this note, the law was still being mediaries, given the lack of liquidity to meet up-front finalized for submission to Congress, but one of its production costs. But even discounting the costs of main objectives was to secure a more equitable basis compliance, the returns to small-scale forest producers for community participation in forest management, are limited by the small volumes they are permitted to including support for small enterprise development. In harvest. And, because of insufficient capacity to pro- addition, the AFH is framing a new National Forest duce high-quality timber and the lack of alternative Plan, which will include a Community Development marketing channels, many are locked into the domes- Program. The PRSP, which was jointly formulated with tic market--already saturated with cheap, illegal civil society, also makes provisions for participatory timber. forest management. Source: Brown and others 2002. 58 CHAPTER 1: FORESTS FOR POVERTY REDUCTION Box 1.23 Market Analysis and Development in Community Forests of The Gambia The Gambia has 264 Community Forest Committees have used MA&D methodology to develop 72 com- (CFCs), 22 of which are developing their markets munity enterprises. and managing their forests using the Market Analysis Some of the communities now involved in success- and Development (MA&D) methodology through a ful enterprises have been entitled to commercialize joint project of the Gambian government and the community forest products since 1992 but, before the Food and Agriculture Organization. The MA&D pro- MA&D training, were hesitant to do anything other gram is a three-phase program that trains and than protect their forests, or were repeatedly cheated by empowers community members to identify and middlemen or Forestry Department staff. develop successful forest enterprises and learn to The communities produce 11 different products manage them independently. MA&D enables com- from their forests, including fuelwood, logs and timber, munities to link forest management and conserva- honey, palm handicrafts, Netto fruits, oil palm fruits, tion activities directly to income-generating oppor- and tree nurseries. Through program-sponsored arti- tunities, and in the Gambian case it has also san workshops, community members have learned encouraged substantial diversification of marketable skills to craft new products from their forests, espe- forest products. The program emphasizes sustainable cially beds, sofas, and chairs that are then sold to local institutional development for the community enter- ecotourism lodges and hotels in the coastal tourism prises and extensive networking between businesses area. Profits from beekeeping are expected to account and local organizations. In The Gambia, 22 CFCs for 15 percent of their total yearly profits. Source: Molnar and others 2006. Adapt certification of forest products for small-scale and management services, organizational support, and tech- indigenous forestry (see note 1.3, Indigenous Peoples nical assistance, to link conservation of forest resources and Forests, and note 3.2, Forest Certification Systems). with processing of forest products (see box 1.23), market Establish business services through NGOs or govern- information, insurance, and marketing and financial ment extension for low-income producers that include assistance (see box 1.25). Box 1.24 Strategic Partnerships in Southern Africa In the remote district of Rushinga in northeastern Zim- natural plant oils for sale as cosmetic ingredients. The babwe, an individual runs a company called Creative French company purchases baobab oil from Creative Oils that produces oil from the seeds of the baobab. Oils, which it then processes and sells to the multina- Creative Oils currently purchases six tons of seed per tional company Bergasol, for incorporation into a new month from 60 rural producers. Rural producers can sunscreen for sale in Europe. earn as much as $180 in a season, which is double their There are many products like baobab oil, derived income from cotton, the staple cash crop. The owner of from indigenous plant species in rural Africa and hav- Creative Oils earns nearly $9,000 a season from the 360 ing significant commercial potential. For small-scale liters of oil the company produces a month. producers, however, the barriers to developing markets This success is due largely to an involvement with for these products are formidable. The owner of Cre- PhytoTrade Africa, the Southern African Natural Prod- ative Oils has successfully overcome these barriers by ucts Trade Association. In 2003, PhytoTrade Africa pooling resources with producers from across southern signed a joint venture agreement with a French com- Africa and helping create a powerful trade association pany specializing in the production of derivatives from to represent their interests. Source: Campbell and others 2004. NOTE 1.5: MAKING MARKETS WORK FOR THE FOREST-DEPENDENT POOR 59 to protect their interests against trade rules and initia- Box 1.25 Medicinal Plants as NTFPs in India and tives that would create unfair competition against them. Nepal Develop new financial mechanisms to promote forestry investment for low-income producers, using domestic The Pangi Valley is a remote, high-altitude area in investment protocols and export guarantee systems to the Chamba district, in northwest Himachal favor forest businesses that adopt business models sup- Pradesh. Most of the residents in the region subsist portive of low-income producers. Develop global norms on single-season cash cropping, animal herding, of behavior for international companies who partner road building, and most recently, collection and sale of medicinal plants and herbs from the with local communities. region's forests. Generate the research and information needed to under- More than 86 percent of residents surveyed in stand present levels of market participation by different the Pangi Valley collected some medicinal plants groups of low-income producers, incomes generated, and herbs from the forest during the collecting sea- business profitability, and actual competitive advantages. son of mid-June to mid-October. In most villages, Also develop partnerships with others who will enable income from medicinal herbs is between 10 and 20 the development of institutions to achieve these goals percent of total cash income per household. Gener- (Scherr, White, and Kaimowitz 2004). ally, those who engage in the most medicinal herb collection are individuals with fewer opportunities Improved commercial markets may not improve the liveli- for income, less land available for cultivation, and hoods of rural communities and farmers with low-quality fewer local labor opportunities. forest resources and poorly developed market infrastructure. This case contrasts with the situation in far western Nepal, also in the Himalayas, where mul- In these situations it remains important to focus on the sub- tidonor support to a market and technical network sistence and environmental values of forestry development. organization, Asia Network for Sustainable Agri- Small-scale producers must be able to compete with low- culture and Bioresources, and Nepali forest user cost industrial producers, as well as with producers who clear groups led to better markets for essential oils and land or illegally extract forest products. The marketing strat- medicinals, investment in a NTFP paper- egy should complement the comparative advantages of the processing enterprise, and better resource extrac- different forest"zones."(For example, people in remote areas tion and management. may be able to make money from harvesting high-value tim- ber. which compensates for high transportation costs. Closer Source: Molnar and others 2006. to urban areas where forests are scarce, low-income produc- ers who plant trees in agroforestry systems can benefit from Conduct research, education, and training so that com- the proximity to urban markets when selling their timber.) munity forestry enterprises can better adapt to new Many attempts at NTFP commercialization from natural trends in production, processing, and management. forests and agroforestry systems have failed to deliver the Improve government support and extension services for expected benefits because marketing and trading strategies forest smallholders. for NTFPs have been neglected. It is essential that opportunities are provided for women to be more involved in strategies to improve the successful LESSONS LEARNED AND RECOMMENDATIONS commercialization of NTFPs because women often depend FOR PRACTITIONERS on NTFP sales as a source of household income. A study in Potential actions that can be taken by international institu- West Bengal, India, reported that three times as many tions, such as the World Bank, in partnership with govern- women as men were involved in gathering NTFPs, which ment and other stakeholders, include the following: accounted for 20 percent of household income (Scherr, White, and Kaimowitz 2004). Organize global and national initiatives to promote mar- ket and institutional reforms to enable greater participa- NOTE tion of low-income producers in international trade and 60 CHAPTER 1: FORESTS FOR POVERTY REDUCTION 1. Low-income forest producers include indigenous and REFERENCES CITED other community groups who manage collectively owned Brown, D., K. Schreckenberg, G. Shepherd, and A. Wells. forest resources; local individuals or groups who comanage 2002. "Forestry as an Entry Point for Governance or harvest products from the forest; smallholder farmers Reform."ODI Forestry Briefing No. 1, Overseas Develop- who manage remnant natural forests or plant trees in or ment Institute, London. around their crop fields and pastures; individuals or groups Campbell, B., P. Frost, G. Kokwe, G. le Breton, S. Shackleton, who engage in small-scale forest product processing; and and D. Tiveau. 2004. "Making Dry Forests Work for the employees of forest production and processing enterprises Poor in Africa: Building on Success." Forest Livelihood (Scherr, White, and Kaimowitz 2003). This note focuses on Briefs, Number 3, CIFOR, Bogor, Indonesia. markets for low-income producers. Dürr, C. 2002 "The Contribution of Forests and Trees to Poverty Alleviation." Series IC No. 3, Intercooperation, SELECTED READINGS Bern, Switzerland. Molnar, A., M. Liddle, C. Bracer, A. Khare, A. White, and J. Angelsen, A., and S. Wunder. 2003. "Exploring the Forest- Bull. 2006. "Community-Based Forest Enterprises in Poverty Link: Key Concepts, Issues and Research Impli- Tropical Forest Countries: Status and Potential." Report cations." CIFOR Occasional Paper No. 40, CIFOR, to the ITTO. Forest Trends/Rights and Resources Group, Bogor, Indonesia. Washington, DC. FAO. 2006. Microfinance and Forest-Based Small-Scale Enter- Scherr, S., A. White, and D. Kaimowitz. 2003."Making Mar- prise. FAO: Rome. kets Work for Forest Communities." International Pfund, J.-L., and P. Robinson, eds. 2006. "Non-Timber For- Forestry Review 5 (1):67­73. est Products between Poverty Alleviation and Market ------. 2004. "A New Agenda for Forest Conservation and Forces." Intercooperation, Bern, Switzerland. Poverty Reduction: Making Markets Work for Low- Scherr, S., A. White, and D. Kaimowitz. 2004. "A New Income Producers." Forest Trends, Washington, DC. Agenda for Forest Conservation and Poverty Reduction: Sunderlin, W. D., S. Dewi, and A. Puntodewo. 2006."Forests, Making Markets Work for Low-Income Producers." For- Poverty, and Poverty Alleviation Policies." Background est Trends, Washington, DC. paper. World Bank, Washington, DC. Schreckenberg, K., E. Marshall, A. Newton, W. D. te Velde, J. USAID, with CIFOR, Winrock International, WRI, and IRG. Rushton, and E. Fabrice. 2006. "Commercialisation of 2004. Nature, Wealth, and Power: Emerging Best Practice Non-Timber Forest Products: What Determines Suc- for Revitalizing Rural Africa. Washington, DC: USAID. cess?" ODI Forestry Briefing, Number 10, Overseas Development Institute, London. Shanley, P., A. Pierce, and S. A. Laird. 2005."Beyond Timber: CROSS-REFERENCED CHAPTERS AND NOTES Certification of Non-Timber Forest Products." Forest Trends, Washington, DC. Note 1.2: Community-Based Forest Management Sunderlin, W. D., A. Angelsen, and S. Wunder. 2003."Forests Note 1.3: Indigenous Peoples and Forests and Poverty Alleviation." In State of the World's Forests Note 1.4: Property and Access Rights 2003, 61­73. Rome: Food and Agricultural Organization Note 2.1: Community-Private Partnerships of the United Nations. Note 2.2: Small and Medium Enterprises World Bank, Carbon Finance Unit. n.d. Operations Hand- Note 2.3: Innovative Marketing Arrangements for Environ- book (online). http://carbonfinance.org/Router.cfm? mental Services Page=DocLib&ht=34&dl=1. Chapter 3: Meeting the Growing Demand for Forest Products Note 3.2: Forest Certification Systems NOTE 1.5: MAKING MARKETS WORK FOR THE FOREST-DEPENDENT POOR 61 C H A P T E R 2 Engaging the Private Sector in Forest Sector Development S ustainable forest management (SFM) requires sub- and log exports from West and Central Africa account for stantial financial resources. Developing countries only 20 percent of the 25 million cubic meters harvested per need to explore and encourage all sources and mech- year. Although developed countries now consume approxi- anisms of funding for the forest sector to achieve SFM. The mately 70 percent of industrial roundwood, consumption private sector is expected to play the lead role in global eco- growth in developing countries is narrowing the gap: The nomic and production activities. Private investment in the consumption of industrial roundwood in developing coun- forestry sector in developing countries and countries in tries grew by 3.2 percent per year in 1996­97, in contrast to transition is estimated at US$15 billion per year, or up to developed countries, where it grew by only 0.6 percent per nine times more than current official development assis- year (Victor and Ausubel 2000). In the forest sector, it would tance flows.1 be logical for much of the new global private investment to To date, private investment in SFM has been concen- try to capture the financial gains from these rising domestic trated in developed countries. Although this trend is chang- markets in developing countries, where the majority of the ing, the need remains to motivate similar investment in world's natural tropical forests are located. This aligns with developing countries to maximize the full potential of SFM, global trends that show that while foreign direct investment because investments required for harvesting and processing remains important in developing countries for foreign can be large (for example, establishing a modern pulp mill exchange earnings and skills and technology transfer, the can cost the better part of US$1 billion). Investments on this bulk of private investment remains domestic across all sec- scale can only come from global corporations or joint ven- tors (ITTO 2006). tures involving local partners and development banks will- The forest products industry supplies a wide range of ing to cover the risk. Furthermore, ensuring that these large essential products--from construction materials, paper, investments are made in a socially and environmentally sanitary products, and specialty chemicals to watershed and responsible manner is essential to preventing destructive soil conservation--from a renewable resource. It provides use of forest resources. millions of jobs and supports thousands of local communi- When discussing the need to attract investment to the ties with an annual production of about US$750 billion forest sector in developing countries, many organizations (WBCSD 2006). and governments tend to focus on large-scale international Considerable potential exists in these investments to investors. However, the majority of the markets are domes- deliver benefits to farmers, small forest owners, local com- tic: For example, as much as 86 percent of the wood har- munities, and Indigenous Peoples. Forest investment can vested in the Brazilian Amazon is consumed within Brazil, involve small- and large-scale investments and can bring 63 together communities and companies through partnership Figure 2.1 IFC Forest Sector Investments arrangements, build small and medium enterprises (SMEs), or enable socially responsible corporate investments. SMEs 500 443 are a major potential source for off-farm employment in 400 348 300 rural areas (Molnar et al. 2006). million 205 200 111 US$100 45 41 0 PAST ACTIVITIES 2001 2002 2003 2004 2005 2006 The International Finance Corporation (IFC), the private Fiscal year sector arm of the World Bank Group, promotes sustainable private sector investment to foster economic development projects included an integrated forestry component. IFC tech- and reduce poverty. The IFC finances investments with its nical assistance was mostly targeted at specific projects but own resources and by mobilizing capital in the international some sector work was also carried out.3 financial markets. In addition to equity and loan financing, Geographically, Europe and Central Asia (ECA) attracted IFC also provides technical assistance to its clients, either most IFC financing during the 2003­06 period followed by funded by grants or by the clients themselves. East Asia and the Pacific (EAP), Latin America and the Between fiscal2 2003 and fiscal 2006, the IFC invested more Caribbean (LAC), South Asia (SAR), and the Middle East than US$1 billion to help finance 25 forestry sector projects and North Africa (MENA) (figure 2.2). Only one African with a total cost of about US$4 billion (figure 2.1). The size of country appears in the IFC portfolio during the period.4 projects fluctuated between US$3 million (a packaging project IFC projects concentrated in 16 countries, and the Bank had in the Kyrgyz Republic) and US$500 million (a paper mill forestry lending activities in 10 of them, indicating a con- project in China). The pulp and paper industry accounted for siderable geographic overlap.5 56 percent of the total, while 33 percent was directed at the The relatively high proportion of IFC investment chan- wood-based panel and engineered-wood products industries, neled to the ECA region reflects the importance of the Russ- with some small investments made in sawmilling and furni- ian Federation's forest industries and the emerging forest ture production. The share of forestry projects in private sec- industrial investment opportunities in Eastern European tor financing was 11 percent and on the increase. The IFC has transition countries. In both EAP and LAC, the IFC's main not invested in projects requiring raw material from natural investments have been in rapidly expanding pulp and paper tropical moist forests. During this period, about half of IFC industries in China, India, and Brazil. Although the link to poverty alleviation may not be direct in most IFC investments, the project companies often Box 2.1 IFC Projects in the Forest Products generate significant employment, ranging from a few hun- Sector The IFC has a Global Manufacturing and Services Figure 2.2 IFC Forest Investments Regional Distribution, Department, within which there is a Forest Prod- 2003­06 ucts Sector. The portfolio of projects from this sec- tor spans a diverse group of pulp, paper, and con- SAR verted products, ranging from linter and straw 13% pulp to tissue, sacks, and various kinds of packag- MENA ing. The sector involves dealing with sensitive 4% ECA political, social, and environmental issues. Among 37% the greatest risks are severe environmental and human health impacts associated with antiquated LAC technology and poor forest practices. 21% Subsector categories in this sector include plan- tations, wood fiber, and woodworking. Source: http://www.ifc.org/ifcext/gms.nsf/Content/Forest EAP _Products_Overview. 25% 64 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT dred to tens of thousands of new jobs. Indirect employment Africa in 2006) that have focused on the development of the impacts can be many times higher than direct employment, SME sector in forest-based activities within the framework in particular when considering the forestry component. of poverty reduction. While almost all the investments to date relate to large industrial projects, the IFC has a particular interest in sup- KEY ISSUES porting the expansion and sustainable management of upstream fiber sources. Greater IFC involvement in forestry Numerous private sector actors. A variety of private can enhance the positive impacts of industrial development sector actors, all with different interests, capabilities, and in environmental conservation, economic development, constraints, influence the forest sector, including and poverty alleviation while possible negative impacts can be better mitigated.6 large multinational companies, The International Development Association and Inter- local companies of varying sizes, national Bank for Reconstruction and Development arms of individual private investors (for example, conservation the World Bank Group have invested in enabling private investments by philanthropists), sector engagement in the forest sector in different ways. In community or cooperative enterprises applying SFM, FY05, the Bank financed the Cameroon Forest and Environ- and ment development policy loan to help consolidate and scale small-scale forest owners. up recent successful forest sector policy reforms, support capacity building, and strengthen forest and environment Primary manufacturers might include chainsaw opera- institutions. In this loan, a prior action for release of the sec- tors or small sawmills, in addition to large corporations ond tranche included signed contracts with companies whose annual sales might be larger than the gross domestic meeting requirements and implementation of appropriate product (GDP) of many developing countries. All have the measures, including the withdrawal of concession, if appro- potential to invest productively, create jobs, and expand-- priate, for companies failing to meet requirements. Simi- thereby contributing to economic growth and poverty larly, in the Lao People's Democratic Republic poverty sup- reduction. Each type of business (or investment opportu- port reduction credit, there were prior actions that included nity) can be affected differently by changes in international completing requirements for independent certification of and domestic markets, as well as by changes in governmen- sustainable forest management and establishing a forest sec- tal policies and the general in-country business and invest- tor monitoring system. The World Bank has also been ment environments (ITTO 2006). investing in activities enabling payments for environment services (see details in note 2.3, Innovative Marketing Factors influencing private sector investment.Factors Arrangements for Environmental Services). that influence private sector decisions about forest-related In addition to lending, since 2004, the World Wildlife investments include the following: Fund (WWF) Global Forest and Trade Network (GFTN) has been involved in World Bank­WWF Global Forest Returns. Sufficient returns are a prerequisite; therefore, Alliance activities by building up enterprise-level capacity any factors that reduce the returns or profits from the for certification and linking responsible suppliers with buy- investment can act as a deterrent. ers (for example in Ghana, Indonesia, Nicaragua, Peru, Rus- Risks. Weighing returns against risks, private investors sia, and Vietnam). In Nicaragua, the cooperation of the generally demand much higher returns (typically 15 per- GFTN resulted in IFC support for local companies to cent to 30 percent) from developing countries where achieve certification. A financing mechanism for forest con- risks are (or can be perceived as being) high. cessionaires was developed in Peru. Development of timber Transaction costs. High transaction costs can make tracking systems has been supported in Cambodia, investments less attractive. For example, evidence indi- Nicaragua, Peru, and in the Congo Basin countries. To pro- cates that small investors in particular find it difficult to mote responsible investment in forest management, PRO- meet the additional costs associated with SFM (see note FOR (Program on Forests) and the World Bank­WWF 3.2, Forest Certification Systems). Alliance for Forest Conservation and Sustainable Use have organized three investment forums (a global forum in 2004, Elements of an enabling environment. To encourage and regional forums in East Africa in 2004 and in South the private sector to invest in SFM with full confidence and CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT 65 commitment, an enabling environment has several Helping to expand the profit base of SFM investments dimensions, both national and international. Some of the through environmental services (see note 2.3, Small and factors may be outside the forest sector's control, yet they Medium Enterprises). need to be addressed to promote investment in SFM. Key enabling actions include the following: Potential for relationships between companies and communities in the forest sector. With time and effort, Reducing domestic policy and institutional problems some of the existing relationships between companies and that restrain or discourage private sector engagement in communities could mature from superficial deals into real SFM--for example, avoiding excessive and inappropriate partnerships (Mayers andVermeulen 2002; Howard et al.2005; regulations and bureaucracy that contribute to unduly Nawir and Santoso 2005; Vermeulen and Walubengo 2006). high costs of registering companies and undertaking These cover the full range of forest goods and services and a management. wide variety of partnership models, including the following: Seeking ministerial commitment for legislative and other policy reforms that will help to contain illegal logging In outgrower schemes and sales or purchase contracts, and create a level playing field for responsible companies small-scale farmers grow trees or NTFPs on their own that are willing to invest in SFM (see chapter 5, Improv- plots with support from the company (such as technical ing Forest Governance, and associated notes). The will- advice, seed stock, fertilizers, pesticides, tools, harvest- ingness of high-level political leaders and more responsi- ing) and with guaranteed purchase, sometimes at guar- ble companies to engage in supporting such initiatives as anteed prices. the European Union­ and World Bank-supported Forest In joint ventures, companies and communities make Law Enforcement and Governance Program has been capital coinvestments in goods or service projects, possi- encouraging. bly sharing management. Often the community's capital Facilitating political stability necessary to assure in- investment is land or labor. In simpler lease models, the vestors. company pays a fee for use rights on community land Assisting governments to engage private sector compa- over a fixed period and the community plays no part in nies and local communities in dialogue regarding management. reforming timber allocation processes, achieving equi- In multiple land-use arrangements on land under com- table revenue sharing, taxation and revenue collection pany freehold or leasehold, communities are granted systems, encouraging value added processing, and ensur- access rights and management rights to noncore goods ing a secure supply of raw material. and services, typically NTFPs in forest areas managed Assisting governments to develop transparent timber primarily for timber production. allocation procedures and concession policies that will In social responsibility contracts, the forestry company help to ensure a secure supply of raw material for poten- negotiates a social license to operate within environmen- tial client companies, thus reducing the perception of tal and cultural limits set by the community; in return, risk for investors. Lack of security threatens the continu- the company receives the benefit of local investments, ity of manufacturing operations. usually infrastructural. Globally, SMEs represent one of Ensuring stable and clear policies, institutions, and oper- the faster growing industrial sectors in the world. Forest- ating environments, including those related to tenure based SMEs (SMFEs) account for 80­90 percent of all the and concessions. forest enterprises in many countries (box 2.2). For many Developing instruments or drawing upon existing countries, more than 50 percent of total forest-related instruments to hedge against excessive market fluctua- employment is in SMFEs, with approximately 20 million tions and seek mechanisms for better prices in interna- people employed worldwide. SMFEs generate a gross tional markets, and seeking ways to deter major markets value added of about US$130 billion per year (Macqueen from buying low-priced supplies from unsustainable and others 2006). Greater awareness of the potential of sources that unfairly undermine responsible suppliers SMFEs to contribute to essential subsistence needs and to seeking to achieve SFM (see note 3.2, Forest Certification poverty alleviation and economic growth is needed (see Systems). note 2.2, Small and Medium Enterprises). Such awareness Ensuring relevant training and skills development and should inform both forest policies and policies regarding research for the forestry sector. market access, credit, and other relevant macro policies. 66 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT India, and Russia. To ensure that the growing private invest- Box 2.2 The Prevalence of SMFEs ment generates benefits for a wide range of forest users and forest-dependent households, some priority actions must Since 1995, Brazilian small and medium enter- be taken: prises have grown annually by 2.8 percent and 4.7 percent, respectively--much faster than larger Increase availability of and access to financing for enterprises--despite having a higher failure rate small-scale forestry and wood processing. than larger companies, with 39 percent failing in Opportunities that would provide funding for small-scale Brazil within the first year (a reasonably average enterprises and mechanisms that would strengthen the failure rate globally for small and medium enter- supply chain for SMEs should be explored. prises (May, Da Vinha, and Macqueen 2003)). Log- ging by SMFEs in Guyana contributes almost as Provide incentives for the private sector to manage much to the revenue of the Guyana Forestry Com- (rather than solely log) natural forests, to adopt a longer- mission as do large enterprises (Thomas et al. term and broader view of forests (even for plantation 2003). In China, more than 90 percent of the total value of wood products is generated by SMFEs forestry and the timber processing industry), take on (Sun and Chen 2003). emerging opportunities, and reduce perceptions of risk. Source: ITTO 2006. Remove constraints related to investments in sustainable management of natural tropical MARKETS FOR FOREST ENVIRONMENTAL SERVICES. Markets forests. This should be done by the international for environmental services need further development and community (the Bank and the IFC in cooperation with may require the creation of an enabling environment for other donors and intergovernmental organizations [such as private sector investment in this area. This could be facilitated ITTO], nongovernmental organizations [NGOs], and the by providing greater clarity on the potential financial benefits private sector) in collaboration with governments. The of environmental services and greater certainty regarding the objective should be to enable policy reform to improve the associated markets (see note 2.3, Innovative Marketing investment environment and strengthen the policy and Arrangements for Environmental Services). regulatory frameworks for responsible investment. Consensus is growing that investment in the sector has to occur within a credible framework of safeguards and envi- Continue providing support to the establishment, and ronmental assessment procedures. These have to motivate on-the-ground implementation, of environmentally responsible investment and deter unsustainable and sound legal and regulatory standards and capacity, destructive activities. There is a need to address such issues which are essential to creating the necessary preconditions for as the identification and protection of forests that are a high the sustainable operation of the predominantly downstream priority for biodiversity conservation, protection of rights private operators. Because forest-based investments are and resource interests of Indigenous Peoples and other usually made with a long-term time horizon, all means to forest-dependent people, certification and other systems of mitigate risks are particularly important for private investors. independent verification of forest management perfor- Risk mitigation through enabling conditions is key in the mance, and establishment and management of forest and decision making of responsible private investors. agricultural tree-crop plantations (see note 1.3, Indigenous Peoples and Forests, and section II, Guide to Implementing, Build capacity at all levels to address the lack of Forests Policy OP 4.36). The various safeguard initiatives capacity in many developing countries to adequately also need to be harmonized and extended to a broader range implement environmental assessment procedures and of investing groups. safeguards. This increased capacity would develop multistakeholder institutional mechanisms for monitoring forest harvesting and management, especially where these FUTURE PRIORITIES FOR ACTIVITIES are weak. The presence of visible and strong institutional Increasing demand for forest products, especially in devel- mechanisms to implement monitoring of environmental oping countries, indicates that investment in the forest sec- procedures and safeguards can substantially contribute to tor will likely expand. Major prospects are in Brazil, China, project risk mitigation and would both encourage and CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT 67 support socially and environmentally responsible Bank's forest lending, there are practically no production companies. forests. 6. The upstream forestry activities have significant poten- Continue further collaboration between the Bank tial for rural poverty reduction. As an example, IFC projects and the IFC. IFC investments in an environmentally in India have engaged 135,000 farmers or families in coop- sustainable private company can demonstrate profitability erative arrangements with pulp and paper companies, cov- within the framework of a Bank-supported regulatory ering a total area of 128,000 hectares. Each family typically allocates 1 to 2 hectares to forest plantation to increase their structure (supply response), and it is at this intersection that income, demonstrating that primarily poor households are the benefits of collaboration are strongest. Areas where the involved in these schemes. Similar arrangements are also Bank and the IFC should increase collaboration include the being supported by IFC-financed projects in Brazil. IFC has following: also provided technical assistance to small-scale, forest- based operations in Central America through the LAC Proj- promotion of investment in forest-based, small-scale ect Development Facility in collaboration with the GFTN. enterprises; The future impact of these investments can be significant increased exchange of information at the country, for employment and local income, if such efforts move regional, global, and research levels; beyond technical assistance. further cooperation in areas where engagement has 7. Several economic and sector work and analytical and already been demonstrated to be beneficial (for example, advisory activity products developed under the World the IFC could enhance the use of the GFTN of the World Bank's forest partnerships are directly related to this issue Bank­WWF Alliance in linking its investments with (see annex 2A to this chapter for a list of some products). responsible buyers); and additional Bank economic and sector work and analyti- SELECTED READINGS cal and advisory activities, especially those related to gov- ernance reform, that can help create enabling conditions FAO (Food and Agriculture Organization of the United for IFC investment projects.7 Nations). 2005. "Global Forest Resources Assessment 2005: Progress Towards Sustainable Forest Manage- ment." FAO Forestry Paper 147, FAO, Rome. NOTES Mayers, James. 2006. "Poverty Reduction Through Com- 1. In 2002 the World Bank estimated that total forest sector mercial Forestry. What Evidence? What Prospects?" TFD private investment in developing countries and countries in Publication No. 2, School of Forestry and Environmental transition was about US$8 billion to US$10 billion per year. Studies, Yale University, New Haven, CT. This may underestimate actual private sector investment. Mayers, J., and A. Vermeulen. 2002. Company-Community According to the FAO (2005), the plantation area in develop- Partnerships in Forestry: From Raw Deals to Mutual ing countries is increasing at about 1.8 million hectares per Gains? Instruments for Sustainable Private Sector year. This represents investments of US$3 billion to US$4 bil- Forestry series. London: International Institute for Envi- lion per year. Improvements in existing forest management ronment and Development. should be added to this, but reliable estimates do not exist. In Pagiola, S., and G. Platais. 2007. Payments for Environmental plantation-based projects, industrial investments represent Services: From Theory to Practice. Washington, DC: World 80­90 percent of the total. Applying this coefficient--with Bank. plantation investments being 20 percent of the total--total forest investment in developing countries should be at least US$15 billion. REFERENCES CITED 2. The World Bank operates according to a fiscal year that ITTO (International Tropical Timber Organization). 2006. begins July 1 and ends June 30. Tropical Forest Update 16 (2). 3. As an example, there is ongoing work to prepare a Howard, M., P. Matikinca, D. Mitchell, F. Brown, F. Lewis, I. strategic plan for the pulp and paper industry in Ukraine. Mahlangu, A. Msimang, P. Nixon, and T. Radebe. 2005. 4. This appears to be due to the scarcity of companies that Small-Scale Timber Production in South Africa: What Role can meet IFC criteria for support. in Reducing Poverty? Small and Medium Forest Enter- 5. The regional analysis is based on the projects with a total prise Series 9. London: International Institute for Envi- value of US$800 million. In two countries without the ronment and Development. 68 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT Macqueen, D., N. Armitage, M. Jaecky, 2006. Report of a Thomas, R., D. J. Macqueen, Y. Hawker, and T. DeMen- meeting of participants of the UK Tropical Forest Forum donca. 2003. "Small and Medium Forest Enterprises in on small enterprise development and forests Royal Guyana." Guyana Forestry Commission (GFC) and IIED, Botanic Gardens, Kew 26 September 2006. IIED, London. London. May, P. H., V. G. Da Vinha, and D. J. Macqueen. 2003."Small Vermeulen, S., and D. Walubengo. 2006. "Developing Part- and Medium Forest Enterprise in Brazil." Grupo Econo- nerships for Sustainable Management of Forests in mia do Meio Ambiente e Desenvolvimento Sustentável Kenya: Review of Existing Models and Set of Options for (GEMA) and International Institute for Environment Further Support." Report prepared for the Forestry and Development (IIED), London. Department, Government of Kenya, and PROFOR (Pro- Mayers, J., and A. Vermeulen. 2002. Company-Community gram on Forests), World Bank. International Institute for Partnerships in Forestry: From Raw Deals to Mutual Environment and Development, London. Gains? Instruments for Sustainable Private Sector Victor, D.G., and Jesse H. Ausubel 2000. "Restoring the Forestry series. London: International Institute for Envi- Forests." Foreign Affairs 79(6):127-144, November/ ronment and Development. December 2000. Molnar, A., M. Liddle, C. Bracer, A. Khare, A. White, and J. WBCSD (World Business Council for Sustainable Develop- Bull. 2006. "Community-Based Forest Enterprises in ment). 2006. "Forest Products Industry." http:// Tropical Forest Countries: Status and Potential." Report tinyurl.com/36fcrw. to the ITTO. Forest Trends/Rights and Resources Group, Washington, DC. Nawir, A. A., and L. Santoso. 2005. "Mutually Beneficial CROSS-REFERENCED CHAPTERS AND NOTES Company-Community Partnerships in Plantation Note 1.3: Indigenous Peoples and Forests Development: Emerging Lessons from Indonesia." Inter- Notes following chapter 2: Engaging the Private Sector in national Forestry Review 7 (3): 177­92. Forest Sector Development Sun, C., and X. Chen. 2003. "Small and Medium Forestry Note 3.2: Forest Certification Systems Enterprises in China: An Initial Review of Sustainability Chapter 5: Improving Forest Governmance, and associated and Livelihood Issues." Research Center of Ecological and notes Environmental Economics (RCEEE) and IIED, London. CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT 69 ANNEX 2A WORLD BANK ANALYTICAL AND ADVISORY ACTIVITIES AND ECONOMIC AND SECTOR WORK RELATEDTO GOVERNANCE REFORM Blaser, J., A. Contreras, T. Oksanen, E. Puustjarvi, and F. Magrath, W. B., R. Grandalski, J. Stuckey, G. Vikanes, and G. Schmithusen. 2005. "Forest Law Enforcement and Gov- Wilkinson. Forthcoming. Timber Theft Prevention and ernance (FLEG) in Europe and North Asia (ENA)." Ref- Forest Resource Security. Washington, DC: World Bank. erence paper prepared for the Ministerial Conference, St. PAF. 2004. Benchmarking Public Services Delivery at the Petersburg Russia, Nov. 22­25, 2005. Forest Fringes in Jharkhand, India. Public Affairs Foun- Chen, H. K. 2006. The Role of CITES in Combating Illegal dation, Bangalore, India, October 2004. Logging: Current and Potential. Cambridge: TRAFFIC Puustjarvi, E. 2006a. "Proposal for Typology of Illegal Log- International. ging." Draft. Savcor Indufor Oy, Helsinki China National Forestry Economic Development Center. ------. 2006b. "Guidelines for Formulating and Imple- 2006. "A Background Paper on Forest Law Enforcement menting National Action Plans to Combat Illegal Log- and Governance in China." Draft. ging and Other Forest Crime." Draft. Savcor Indufor Oy, Colchester, M. 2006. Justice in the Forest: Rural Livelihoods Helsinki. and Forest Law Enforcement. CIFOR Forest Perspectives Rosenbaum, K. L. 2005.Tools for civil society action to 3. Bogor, Indonesia: CIFOR. reduce forest corruption: Drawing lessons from Trans- Contreras-Hermosilla, A. 2002. Law Compliance in the parency International. PROFOR/FIN, The World Bank, Forestry Sector: An Overview. WBI Working Papers. Washington, DC, 2005 World Bank Institute, The World Bank 2002. Also avail- Savcor Indufor Oy. 2005a. "Ensuring Sustainability of able at: http://lnweb18.worldbank.org/eap/eap.nsf/2500 Forests and Livelihoods Through Improved Governance ec5f1a2d9bad852568a3006f557d/c19065b26241f0b2472 and Control of Illegal Logging for Economies in Transi- 56ac30010e5ff?OpenDocument. tion: World Bank Discussion Paper." Helsinki. Dykstra, D. P., G. Kuru, R. Taylor, R. Nussbaum, W. B. ------. 2005b. "Action Plan to Combat Illegal Activities in Magrath, and J. Story. 2003. "Technologies for Wood Forest and Wood Processing Sectors in Bosnia and Tracking: Verifying and Monitoring the Chain of Cus- Herzegovina." Draft. Savcor Indufor Oy, Helsinki. tody and Legal Compliance in the Timber Industry." World Bank. 2003. Reforming Forest Fiscal Systems: An Environment and Social Development East Asia and the Overview of Country Approaches and Experiences. Pacific Region Discussion Paper, The World Bank, Wash- PROFOR, The World Bank, Washington, February 2003. ington, DC, 2003. ------. 2005a. "Going, Going, Gone: The Illegal Trade in ECSSD/PROFOR. 2005. Forest Institutions in Transition: Wildlife in East and Southeast Asia." Discussion Paper. Experiences and Lessons from Eastern Europe. The Environment and Social Development, East Asia and World Bank, Washington, DC, February 2005. Pacific Region, World Bank, Washington, DC. Gray, J. 2002. Forest Concession Policies and Revenue Sys- ------. 2005b. East Asia Region Forestry Strategy. Washing- tems: Country Experience and Policy Changes for Sus- ton, DC: World Bank. tainable Tropical Forestry, World Bank Technical Paper ------. 2006a. Strengthening Forest Law Enforcement and No. 522, The World Bank, Washington, DC, 2002. Governance: Strengthening a Systemic Constraint to International Union for the Conservation of Nature and Sustainable Development. Report No. 36638-GLB, World Natural Resources (IUCN). 2006. Illegal Logging: A Com- Bank, Washington, DC. mitment to Change Through Tripartite Action. Gland, ------. 2006b. Forest Law: Manual for Sustainable Develop- Switzerland: IUCN. ment. Washington, DC: World Bank. Kishor, N. 2004. Review of Formal and Informal Costs and Revenues Related to Timber Harvesting, Transporting and Trading in Indonesia. World Bank informal note. 2004. 70 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT N OT E 2 . 1 COMPANY-COMMUNITY PARTNERSHIPS ompany-community partnerships in forestry are C Box 2.3 Outgrower Contract for Wood Production: active agreements for the production of forest Xylo Indah Pratama, Indonesia goods and services in which the parties share ben- efits, costs, and risks with the expectation of a mutually The company Xylo Indah Pratama manufactures beneficial outcome. Companies are formal entities organ- pencils for sale through Faber Castell, Germany. ized for making a profit, and range from large multinational Because of wood supply shortages and the need to corporations to small-scale local businesses. Communities access wood from certified sources, the company include local farmers, households, and community-level set up an outgrower scheme in 1995 with local units of social organization, such as producer groups or vil- farmers, using low-value uncultivated land to lage councils. grow Alstonia scholaris. Grower contracts over 11 Most partnerships to date have formed around produc- years are based on a 50:50 profit-sharing ratio, with the company providing most inputs, but tion of industrial pulpwood (outgrower, joint venture, and land-owning farmers free to sell to other buyers if lease schemes) and high-quality timber (mainly lease the company is unable to absorb the harvest at schemes). NTFP-based partnerships are most important in current market prices. Farmers have benefited the case of high-value NTFPs (such as certain resins and from early revenues through trimming, and at full medicinal plants). A niche is now growing for partnerships harvest (from 2005 onward) returns are about around forest ecosystem services, including carbon seques- US$450 per hectare to both company and tration, watershed management, biodiversity, and eco- community. tourism (see note 2.3, Innovative Marketing Arrangements for Environmental Services). The variety of partnership Sources: LATIN 2000; Nawir and Santoso 2005. models are covered in table 2.1. Both company and community partners have a variety of motives for entering into agreements. Immediate eco- nomic motives include access to niche markets, access to Table 2.1 Company-Community Partnership Models for Different Forest Goods and Services Partnership model Joint venture Multiple land Outgrower or or lease on use on Social responsibility Forest good or service sales contract community land company land contract Timber and wood fiber (see box 2.3) -- (see box 2.4) Nontimber forest products (see box 2.5) -- (see box 2.6) Ecosystem services -- (see box 2.7) Source: Vermeulen 2006. Note: = Such partnerships are feasible. -- = Not applicable. 71 Box 2.4 Social Responsibility Contract for Timber Box 2.6 Multiple Land Use on Company Land: Production (with Lease of Use Rights and Beekeeping and Mondi, South Africa an NTFP Agreement): Bibiani Lumber Company and the Stool (Chief) of the Mondi Fine Paper SA has an arrangement whereby Omanhene, Ghana 40 beekeepers from local communities are allowed to keep hives in Mondi-operated forests in the Port Ghanaian legislation requires logging companies Dunford, Umfolozi, and Melmoth areas. Mondi to negotiate social responsibility agreements with has paid for each beekeeper to receive technical communities as a condition for granting conces- and business training. One beekeeper running 20 sions. The agreement between Bibiani Lumber hives realizes about 12,000 South African rand Company and the Stool of the Omanhene, Ghana, (US$1,700) per season (February­July) through signed in 2000, requires the company to construct the sale of honey to local buyers. Mondi runs this boreholes, latrines, and roads; to avoid all cultur- scheme partially via the consortium SiyaQhubeka ally significant sites and taboo days; to consult the Forests, which is the first Black Economic Empow- community over planned logging routes and sid- erment company to acquire significant shares in ings; and to restore any accidental damage. The South African forestry, having successfully bid for agreement also spells out terms for payment of 26,450 hectares of privatized forest land in Kwa- stumpage fees and royalties to the community, for Zulu Natal. continued NTFP access and sale by the commu- nity and for dispute settlement. Sources: www.siyaqhubeka.co.za; www.mondi.co.za. Source: Yeboah 2001. Box 2.5 Purchase Agreement for Nontimber Forest Box 2.7 Joint Venture for Ecosystem Services: Products: Vegext Limited, Kenya Posada Amazonas Ecotourism, Peru Vegext processes and exports wattle tannin, but its In 1996 the company Rainforest Expeditions factory is currently working far below capacity as a signed a 20-year joint venture agreement with the result of short supplies of wattle bark (Acacia Ese'eja community of Tambopata in southeastern mearnsii). Hence, the company, in partnership Peru. The company and community agreed to with a forestry NGO, has developed purchase jointly manage 9,600 hectares of land (to which agreements with wattle farmers. Vegext agrees to the community has legal title) and a tourist lodge, collect bark from any farm within 70 km of its col- sharing profits 60:40 between the community and lection yard at Eldoret and to pay a higher price the company, to reflect relative investments of than competitors; indeed, one of the company's land, labor, and finance. The company agreed to objectives is to raise wattle prices so that farmers hand over all assets to the community at the end of consider wattle an attractive alternative to other the joint venture. The agreement came to an early tree crops and seasonal crops. The NGO connects close, satisfactory to both sides, when the commu- farmers with traders who will buy the debarked nity bought out the company's share using an logs for charcoal production, further raising international grant. The community has since returns to wattle production. built on its strengths, opening a research center at the site and winning the Conservation Interna- Sources: Vermeulen and Walubengo 2006. tional ecotourism award in 2000. Sources: Stronza 2000; Landell-Mills and Porras 2002; http://www.wildland.com. 72 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT inputs (communities), and cost savings (companies), while Policy and governance longer-term motives include social responsibility and secur- ­ Land tenure. Changes in land and resource tenure ing land tenure or long-term use rights. (such as the privatization of state forests or securing Company-community forestry partnerships have the of collective land title) often precipitate partnerships potential to contribute to Bank objectives of SFM and rural because partners need new deals to access forest development. A recent international review (Vermeulen and production. Walubengo, 2006) concluded that these partnerships can ­ Forest sector incentives. In some countries, specific pol- help communities reduce risk, achieve better returns on icy statements encourage partnerships (such as the land use, diversify income sources, access paid employment, comanagement requirements for state forest land). develop new skills, upgrade infrastructure, and enhance ­ Extra-sectoral incentives. Some policies are generally pro- ecosystem management. They are also a mechanism for partnership, such as those that encourage decentraliza- companies to practice SFM on their own land (Brody et al. tion (see note 5.1, Decentralized Forest Management) or 2006). However, company-community partnerships have provide incentives to indigenous or small-scale business, not yet proved sufficient to lift people out of poverty and while particular policies encourage different types of remain supplementary rather than central to income partnership (for example, environmental tax breaks generation. favoring ecosystem service partnerships). ­ Governance. Implementation and survival of partner- ships require considerable backstopping, including OPERATIONAL ASPECTS functional courts and efficient systems for legal recog- Context and conditions for partnerships. Experience nition of representative bodies (see note 5.4, Strength- shows that company-community forestry partnerships can ening Fiscal Systems in the Forest Sector).1 emerge under a wide range of political and economic ­ Private-sector policy. Multinational corporate policies conditions. In considering whether partnerships may be can precipitate transfer of partnership models appropriate--and what kinds of partnerships are likely to internationally. work--some important conditions to consider include the following: Contractual arrangements. Partnership models may be based on successful arrangements elsewhere--and initial Production and markets negotiations often depend on an external moderator. Typical ­ Sound business. Artificial promotion of partnerships agreements, verbal or written, include terms for financial for social gains will not work--an internationally and technical inputs, loan repayments, and benefit-sharing. competitive ratio of benefits to costs and risks must Partners involved can benefit from advice and oversight on be demonstrated for specific forest products at the site contractual terms (see Mayers and Vermeulen [2002] for level. guidance), and options for making the most of external ­ Integrated land use. Trees for fiber and fuel compete incentive schemes should be explored, including carbon with food crops and grazing land and may or may not credits, certification, or business compacts. provide differential environmental services-- partnerships will only work where a locally appropri- Time requirement for forming partnerships. It takes ate balance is achieved. continual investment over long periods to build ­ Multiple use. Opportunities for multiple land use at partnerships. Experience to date reveals three broad one site favor the use of partnerships (such as com- scenarios for the development of company-community bining timber production, NTFP production, and forestry relationships: (i) little constitutive change over long ecosystem functions). periods, with the company partner taking the lead in ­ Market maturity. New production systems and new directing the partnership; (ii) strengthening of the markets favor tight contractual partnerships while community partner's position, such as renegotiation of developed, open markets favor looser arrangements. benefit sharing or the community forming a company; and ­ Access to technology and information. Insufficient tech- (iii) dissolution of the partnership (see "Ending a nical and market knowledge among communities is a Partnership" below). A move toward tighter partnerships is major disincentive to formation of partnerships. not always desirable--in buoyant, competitive forest NOTE 2.1: COMPANY-COMMUNITY PARTNERSHIPS 73 product markets, looser arrangements that are sensitive to crucial role in enabling and supporting company- demand and price trends will be much more sustainable. community partnerships for the benefit of local livelihoods and SFM. Importance of Risk and operational flexibility. Partnerships are a means to share risks, particularly those Existing local organizations are an important route to associated with production and markets. Adaptability has building deal-brokering capacity in communities. These proved to be key to the success of company-community local organizations often have the institutional flexibility partnerships. Best practices include allowance in contracts to service community needs independent of external for flexible technical features (for example, partial early influences and the potential to provide equitable repre- harvesting of timber, annual reassessments of NTFP offtake, sentation and a forum for equitable negotiation. variable levies for tourism or other ecosystem services), Empowerment must be an explicit objective of partner- flexible loan repayment terms, provisions for alternative ship schemes. Often the poorest people are only partici- avenues for marketing in the event of over- or under- pants as contractors to those with land. To enable com- harvest, well-defined terms for managing any disputes, and munity empowerment, arrangements for revenue renegotiating the contract on a regular basis. sharing, sharing ownership in downstream processing, and other broader joint ventures are important. Empow- Transaction costs and power sharing. Dealing with a erment must be an objective if partnerships are to sub- large number of scattered farmers or groups is a major stantively raise people out of poverty. challenge, not only for technical reasons (extension, Greater attention must be given to forming enterprise harvesting, transport) but also for collective decision making. partnerships with entities other than limited liability Power sharing is critical for both equity and resilience of companies. Partnership structures, such as cooperatives, partnerships (Ashman 2001). For communities, the solution should also be explored. is to create economies of scale and raise bargaining power by The details of benefit sharing and cost and risk sharing joining or forming farmers' groups, cooperatives, and other should be examined closely to ensure that the term"part- coalitions. Even small associations have been successful in nership" describes arrangements that are equitable for all saving costs and improving marketing--but so far there are parties. few examples of communities improving partnership terms Local communities may often need legal assistance to through collective bargaining. clarify their land ownership rights and in negotiating such rights. Ending a partnership. Some partnerships have There is a risk that benefits may only accrue to a small disintegrated amid bad faith and litigation. However, section of the community (for example, outgrower termination does not necessarily mean failure, and households) while the community at large may suffer conversely, close partnerships may outlive their utility. As loss of land rights and resource access (livestock house- priorities and market opportunities shift, partners may holds, for instance), leading to a need to examine both make strategic choices away from formal collaboration business projection and local tenure arrangements (legal toward looser working relations. For the community, the and customary) to ensure such outcomes are avoided. partnership may be a steppingstone to developing viable independent enterprises, while for the company, the Explore current options and future scenarios for increased business acumen within the community provides partnerships. This includes supporting work toward reliable new opportunities (to develop and supply high- increasing understanding of practical arrangements for quality products and services, for instance). efficient and equitable community-company partnerships. It is important to build understanding in the community of practice of the impacts of corporate social responsibility LESSONS LEARNED AND RECOMMENDATIONS and the cooperative movement. Equally important is to FOR PRACTITIONERS exploit the willingness of companies to network on Company-community partnerships take a long time to company-community partnerships (for example, in establish--they are built on trust gained through experi- Indonesia and South Africa). Leading companies can ence. The World Bank and other third parties can play a continue to exchange experiences and to experiment with 74 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT innovative tools that promote equitable company- and services. Few company-community partnerships go community arrangements, such as ethical supply chain beyond production or site management. Community management and transparent corporate reporting. These partners can reap far greater benefits if they are able to companies lead the way by going beyond legislative capture a share of value added operations, such as timber requirements to explore pioneering partnership models. sawmills, downstream processing of NTFPs, or add-ons to ecosystem management (tailored tourism facilities, for Promote access to insurance, credit, and legal and instance; see box 2.5 and box 2.7 for examples). Supporters business services. Community partners would gain much could also facilitate new business links that help from mechanisms to mitigate risk independently, outside communities secure a larger share of the value chain (for the partnership. Such mechanisms can be developed by example, Fair Trade). New initiatives that include multiple investing in insurance schemes that explore alternative roles for the community can help to bring benefits to the policies for small-scale producers and strengthening safety poorest members of the community who are otherwise nets for community members who may lose if a partnership excluded (by providing employment to landless people, for ends. Communities involved in partnerships would also instance). benefit from independent arbitration and assistance with legal aid in the event of legal actions. There have been Support community networks and their advancements in small-scale finance schemes, yet more representation. Associations and coalitions continue to support is needed. Business information and advisory be the most effective routes for communities to raise services for partners also still need support. bargaining power. Support to networks and associations of community interests and emerging small businesses will Support capacity building for business skill help, as will efforts to increase meaningful representation by development. The performance of community partners small-scale providers of forest goods and services in existing would improve further through support to capacity- platforms for the forestry industry. Existing bodies that building in business (for example, understanding represent community interests are both legitimate and organizational and contractual models, market niches and dynamic and may be forest specific or formed around market standing, technology and innovation, management agriculture. of costs, and future trends). The capacity of community institutions and individuals needs to be strengthened in NOTE negotiation skills, negotiation of contractual terms, and business development. Greater support for development of 1. An ongoing IIED-supported program currently opera- community entrepreneurship is also important. tional in 10 countries is supporting strengthening of bar- gaining power of local communities that are in the course of Ensure policy coherence and accessibility. Partnerships negotiating fair prices and legally enforced safe working conditions. are influenced by government policy and service provision across several sectors (for example, land, tax, trade, agriculture, forestry). Companies, communities, and their SELECTED READINGS: REVIEWS supporters repeatedly raise the need for national and local Mayers, J., and A. Vermeulen. 2002. Company-Community governments to coordinate and clarify relevant incentives, Partnerships in Forestry: From Raw Deals to Mutual regulations, and agencies (Howard et al. 2005; Vidal 2005a, Gains? Instruments for Sustainable Private Sector 2005b). While industry standards can help, governments and Forestry series. London: International Institute for Envi- international bodies need to guard against stringency that ronment and Development. favors the largest players in the industry at the expense of Nussbaum, R. 2002. "Group Certification for Forests: A smaller, locally owned companies. To ensure this, members of Practical Guide." ProForest, Oxford. representative community bodies should be included in Scherr, S., A. White, and D. Kaimowitz. 2003."Making Mar- policy dialogue at the national level.Governments would gain kets Work for Forest Communities." International from support in development of complementary or Forestry Review 5 (1): 67­73. alternative partnership facilitation services. Vermeulen, S., A. A. Nawir, and J. Mayers. Forthcoming. "Rural Poverty Reduction Through Business Partner- Support the development of value added products NOTE 2.1: COMPANY-COMMUNITY PARTNERSHIPS 75 ships? Examples of Experience from the Forestry Sector." Landell-Mills, N., and I. T. Porras. 2002. Silver Bullet or Environment, Development and Sustainability. Fools' Gold? A Global Review of Markets for Forest Envi- Wunder, S. 2005. "Payments for Environmental Services: ronmental Services and Their Impacts on the Poor. Instru- Some Nuts and Bolts." CIFOR Occasional Paper No. 42, ments for Sustainable Private Sector Forestry series. Lon- Center for International Forestry Research, Indonesia. don: International Institute for Environment and Development. LATIN (Lembaga Alam Tropika Indonesia). 2000. "Corpo- SELECTED READINGS: COUNTRY CASES rate Community Partnership Between PT Xylo Indah Ashley, C., and Z. Ntshona. 2003. "Transforming Roles but Pratama and the Local Community in Musi Rawas Dis- not Reality? Private Sector and Community Involvement trict, South Sumatera, Indonesia." LATIN, Bogor, in Tourism and Forestry Development on the Wild Indonesia, and International Institute for Environment Coast." Overseas Development Institute, U.K., and Uni- and Development, London. versity of Western Cape, South Africa. Mayers, J., and A. Vermeulen. 2002. Company-Community Howard, M., P. Matikinca, D. Mitchell, F. Brown, F. Lewis, I. Partnerships in Forestry: From Raw Deals to Mutual Mahlangu, A. Msimang, P. Nixon, and T. Radebe. 2005. Gains? Instruments for Sustainable Private Sector "Small-Scale Timber Production in South Africa: What Forestry series. London: International Institute for Envi- Role in Reducing Poverty?" Small and Medium Forest ronment and Development. Enterprise Series, Discussion Paper No. 9. London: Inter- Nawir, A. A., and L. Santoso. 2005. "Mutually Beneficial national Institute for Environment and Development. Company-Community Partnerships in Plantation Mayers, J. 2006. "Poverty Reduction Through Commercial Development: Emerging Lessons from Indonesia." Inter- Forestry.What Evidence? What Prospects?"TFD Publica- national Forestry Review 7 (3): 177­92. tion No. 2, School of Forestry and Environmental Stud- Stronza, A. 2000. "`Because It is Ours': Community-Based ies, Yale University, New Haven, CT. Ecotourism in the Peruvian Amazon." Unpublished the- Vermeulen, S., and D. Walubengo. 2006. "Developing Part- sis, University of Florida at Gainesville. nerships for Sustainable Management of Forests in Vermeulen, S. 2006. "Company-Community Partnerships." Kenya: Review of Existing Models and Set of Options for Note submitted to World Bank as input to Forests Source- Further Support."Report prepared for the Forest Depart- book. Unpublished. World Bank, Washington, DC. ment Kenya and PROFOR (Program on Forests), World Vermeulen, S., and D. Walubengo. 2006. "Developing Part- Bank. International Institute for Environment and nerships for Sustainable Management of Forests in Development, London. Kenya: Review of Existing Models and Set of Options for Vidal, N. 2005. "Forest Company-Community Agreements Further Support."Report prepared for the Forest Depart- in Mexico: Identifying Successful Models." Forest Trends, ment Kenya and PROFOR (Program on Forests), World Washington, DC. Bank. International Institute for Environment and Development, London. Vidal, N. 2005a."Forest Company-Community Agreements REFERENCES CITED in Brazil: Current Status and Opportunities for Action." Ashman, D. 2001. "Civil Society Collaboration with Busi- Forest Trends, Washington, DC. ness: Bringing Empowerment Back." World Develop- ------. 2005b. "Forest Company-Community Agreements ment 29: 1097­1113. in Mexico: Identifying Successful Models." Forest Trends, Brody, S. D., S. B. Cash, J. Dyke, and S. Thornton. 2006. Washington, DC. "Motivations for the Forestry Industry to Participate in Yeboah, R. 2001. "Short Report on Social Responsibility Collaborative Ecosystem Management Initiatives." Forest Agreements in Ghana." International Institute for Envi- Policy and Economics 8: 123­34. ronment and Development, London. Howard, M., P. Matikinca, D. Mitchell, F. Brown, F. Lewis, I. Mahlangu, A. Msimang, P. Nixon, and T. Radebe. 2005. CROSS-REFERENCED CHAPTERS AND NOTES "Small-Scale Timber Production in South Africa: What Role in Reducing Poverty?" Small and Medium Forest Note 2.3: Innovative Marketing Arrangements for Environ- Enterprise Series Discussion Paper No. 9. London: Inter- mental Services national Institute for Environment and Development. Note 5.1: Decentralized Forest Management Note 5.4: Strengthening Fiscal Systems in the Forest Sector 76 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT N OT E 2 . 2 Small and Medium Enterprises S MFEs are business operations aimed at making profit the complexity of linking with diverse SMFEs in multi- from forest-based activity. They are commonly ple locations--even when they are grouped into associa- defined by employment (between 10 and 99 full-time tions (there are 2,000­3,000 forest-based associations in employees),by annual turnover (US$10,000­US$30,000,000), Uganda; Kazoora et al. 2006) or by annual roundwood consumption (3,000­20,000 cubic the constitutional diversity of these enterprises, which meters) (Macqueen and Mayers 2006). diminishes the likelihood of common agendas, lesson SMFEs can offer a trajectory out of poverty. SMFEs play learning, and diffusion of relevant solutions (Saigal et al. a critical role in securing poor people's basic needs, spread- 2006) ing wealth locally, enabling local innovation, and preserving the small individual scale of each enterprise, which cultural identity and practices (Macqueen 2005; Macqueen reduces both per unit impact (that is, the perceived ben- and Mayers 2006). SMFEs grouped together in clusters or efit to the development agency) and comparative human associations can reduce transaction costs for the poor, and financial costs of compliance (that is, the perceived develop strategic alliances, and shape the policy environ- benefits to the enterprise) ment through lobbying on behalf of the poor (Macqueen, The lack of formal incorporation and collateral through Figueiredo et al. 2005; Macqueen, Vermeulen et al. 2005). which SMFEs become visible to public bodies and private SMFEs are diverse and complicated to deal with. SMFE sector investors. For example, the informal economy makes diversity is linked to a number of factors, including that up 41 percent of gross national income in developing coun- they span both timber and NTFPs, and include rural pro- tries (Schneider 2002) and is highest where incomes and ducers, suppliers to large firms, primary and secondary assets are not evenly distributed (Becker 2004) processors, and forest service providers. It is difficult to make generalizations regarding SMFEs; thus, it is important Despite their potential, it can be challenging to make to consider the following: SMFEs sustainable. Exploitative SMFEs can easily go unchecked. Informality, insecure tenure, low investment, how supportive the policy and institutional environ- and low profitability may reduce scope for social or envi- ments are toward SMFEs (Macqueen 2005) ronmental benefits. Lack of management capacity in whether the market structure offers real opportunity or SMFEs may lead to resource depletion. Risks are highest merely options of last resort in "distress diversification," where SMFEs seek refuge in whether the business structures adopted by SMFEs are low-skill activities and seasonal migration for products those of profit-driven companies, democratically without long-term prospects. High risks often lead policy accountable social cooperatives, or something in makers and decision makers to marginalize SMFEs, but between (Macqueen 2006) perhaps because of this, many self-help solutions have whether SMFEs are isolated entities or an integral part of evolved around local enterprise associations and net- a broader network works. Responsive support to these local institutions in areas such as market information, secure resource access, SMFEs tend to be underrepresented in policy initiatives sustainable management, design and technology, and and development programs. This could be on account of financial and business administration can make all the the following: difference. 77 Due consideration should be given to the different values Strengthen transparent access to land and recognized by different types of SMFEs. The diversity of resources for SMFEs. There are no cure-alls that will SMFEs is paralleled by a diversity of values. For example, ensure transparent access to land and resources, and profit-driven SMFEs may place economic values above neither individual title, nor, conversely, community forest social or environmental concerns (Macqueen 2006), while management, strengthens SMFEs in all cases. In some local or indigenous forest groups attribute up to 13 different cases, clear land titling helps. In others, it is the democratic values to forests (Brown and Reed 2000), of which "com- involvement of marginalized groups in decisions over mercial values" used by economists in cost-benefit analysis common land that is critical. A priority is to identify and or internal rate of return calculations represent only 6 per- address, jointly with SMFEs, ill-developed or poorly cent of the sum of scaled forest values (Rowcroft, Studley, understood codes and institutions that govern these rights and Ward 2006). (see note 1.4, Property and Access Rights). Many forest SMFEs have variable social impacts. Depending on products or services with SMFE potential come from enterprise type, management disposition, and circum- common property resources, which cannot be privatized, stances, SMFEs may differ in their social impact. Distress thus collective rather than individual decisions are diversification or "SMFEs of last resort" often fail to deliver required. increasing social welfare. Particular care is required where outsourcing to SMFEs is prevalent (Clarke and Isaacs 2005), Support local sovereignty and orient SMFEs and greater benefits are evident in "upwardly mobile" primarily to local product or service markets. SMFEs (Arnold and Townson 1998; Belcher, Ruiz-Perez, SMFEs can flourish in situations where they respond to civil and Achdiawan 2005). For some products and services, society concerns about where products are originating, how market opportunities expand with the SMFE's increasing they are produced, and who is profiting.1 With regard to income, and the economic distance between SMFEs and wider applicability, it is worthwhile to support SMFEs in large enterprise technologies, and employment standards, identifying demand in local markets that are not yet highly start to fall. Identifying which is which--whether the SMFE competitive, local skills that can be used, options for is of last resort or upwardly mobile--is a critical first step specialization over time, and nonperishable products, for appropriate intervention. unless excellent infrastructure exists. See box 2.8 for SMFEs have variable environmental impacts; enterprise examples from India and Guyana. type, management disposition, and the policy environment largely determine environmental impacts. SMFEs may cut Identify "superior" products or services for which environmental corners in the search for economic competi- demand rises with increasing income. Products that are tiveness, especially if the underlying legal and regulatory only useful as subsistence safety nets or seasonal gap fillers framework and government capacity for implementation are weak. Informality of operations, insecure tenure, inade- Box 2.8 Local Sovereignty, Markets, and SMFEs in quate investment, and low profitability may reduce environ- India and Guyana mental benefits. For example, SMFEs face great difficulty with third-party certification (Higmann and Nussbaum In India, the Madhya Pradesh Minor Forest Pro- 2002) despite group schemes designed to accommodate duce Cooperative has successfully developed a task them (Forest Stewardship Council 2004). For many SMFEs, force on ayurvedic herbal medicines with a retail local accountability for environmental impacts can enhance outlet and consultations to support primary NTFP environmental quality, especially at the landscape level medicinal plant collection and processing societies (Clay, Alcorn, and Butler 2000; Scherr, White, and (Saigal and others 2006). In Guyana, the Surama Kaimowitz 2004; Durst and others 2005). Eco-tourism Enterprise has developed a tourism package to showcase Makushi cultural identity and natural resources--a win-win combination for OPERATIONAL ASPECTS culturally sensitive development and the environ- ment (Ousman and others 2006). An important Annex 2.2A to this note provides a checklist of key issues to lesson is that, unless ethical market niches or a consider to determine SMFE program direction and feasi- unique world-class resource exists, it can be bility. This section discusses some of these issues in more unwise to target export markets. detail. 78 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT must be distinguished from products and services that can Seeking support through local institutions deserves wider be critical steppingstones out of poverty. application. Also, risk assessments should better reflect forest timeframes, seasonality, returns, and constraints so Improve information flows. SMFEs generally suffer that banks are better able to do business with SMFEs. from poor market information, and global communication technology and market access favor large multinationals, Build capacity in product or service design. often to the detriment of SMFEs. Timely market Specialization is often critical to ongoing success. information, through local radio networks or electronic Information about what customers want can be obtained media, can shift the balance back in their favor. For some through training courses in design, trade fairs, pooled market products, local cultural tastes and the origin of production research within an association, benign middlemen, or still count, which gives SMFEs local competitive specialized information services, such as market chain advantages. workshops. Consumer concerns for fairer trade and more sustainable forest management drive networks that Help break up market monopolies. Market monopolies specifically target SMFEs and build their entrepreneurial tend to exclude SMFEs--especially where large enterprises capacity--even if all of the final product or service is not and government officials collude. In India, for example, the distributed through such channels. negative impact on small-scale producers of government marketing corporations has been well documented. Develop economic incentives or grants to support Systematic attempts to break up monopolies (and the needs of forest enterprise associations. Forest associated collusion and corruption) require action at many enterprise associations can help shape the policy levels. Mobilizing local legal support groups or independent environment, reduce transaction costs, and invest in forest monitoring can be useful tactics. adaptive strategies to take advantage of new opportunities. Specific administrative, financial, and technical training Support appropriate economic incentives or can be extremely useful if properly targeted through campaigns against unreasonable subsidies and trade existing associations (see box 2.10 for an example from barriers--depending on circumstances. Free trade can Brazil). be biased toward larger enterprises because of inequities in power and scale efficiencies. Depending on the context, it Devolve control over forest management to local may be necessary to ensure that trade reforms and SMFEs to reduce the risk of forest conflicts, which economic incentives do not result in accumulation of are endemic to many forested areas.2 Insecure rights and power in the hands of a few, marginalizing small-scale inequitable resource use in remote forest areas breed producers. Box 2.9 Building SMFE Negotiating Capacity Strengthen the capacity of SMFEs to attract investment. Building capacity for accurate risk assessments, installing policy interventions to underwrite In Guatemala, community forest enterprises in the collateral, and developing financial administration all can heavily forested Petén region managed to obtain serve to attract investment. Transaction costs hamper the credit from two banks, Banrural and Bancafé. This attempts of financial institutions to reach SMFEs--who achievement was based heavily on (i) support for often rely on their own savings (Spantigati and Springfors clear tenure rights, such as the legal establishment 2005). In some cases, group forest certification has been a of a community concession system; (ii) technical useful tool for unlocking credit (see note 3.2, Forest support from business development providers; Certification Systems). (iii) strong partnerships (including advance pay- ments) with the timber industry and a dedicated joint marketing company (Forescom); and (iv) an Strengthen the capacity to negotiate financial association, Forest Communities of Petén, that deals with investment agencies and big business. The provided bridging loans. potential often exists to combine financial capacity development, group lending schemes, and market Source: Macqueen 2006. development (see box 2.9 for an example from Guatemala). NOTE 2.2: SMALL AND MEDIUM ENTERPRISES 79 roles, social priorities, and misconceptions or mistrust of the Box 2.10 Supporting Forest Enterprise Associations language of economic development can affect outcomes. in Brazil Tools to get to know entrepreneurs are essential (Mangal and In Brazil, the National Institute for Colonisation Forte 2005). Smaller trial interventions with a long time and Land Reform requires settlers to register an frame may be necessary for initial implementation. association to access government titles to land, housing, and infrastructure. Many of these associ- Ensure that interventions are based on demand-driven ations became dormant after this obligation approaches rather than approaches to supplying passed, but some, such as the Association of the capacity. Trying to make what sells is invariably better than Settlement Project California, have gone on to trying to sell what can be made. Too often the focus of SMFE consolidate their associations and pursue mem- programs is supply driven--for example, trying to create bers' interests, and having a representative body employment or raise income levels (Artur and Kanji 2005). has allowed potential partners to engage. For example, the NGO GTA (Amazon Working Partnerships between large firms and SMFEs can help Group) has built milk and pork agro-industry facil- ities and fruit and honey processing units. Electric- to overcome some of the capacity deficits that constrain ity was supplied through a government program vertical adaptation and specialization. Fair deals that balance called "Light in the Countryside." Adult education resource supply with technological exchange from the large was supplied through a government education pro- firm is a model that has worked in instances where it is in the gram. Association members experimented with interest of both sides. However, it must be assumed that outgrowing soybeans, but are now looking for gov- negotiations are stacked in favor of large firms; thus, specific ernment support for biofuel production. tools and processes should be used to equip SMFEs for negotiating (Joaquim, Norfolk, and Macqueen 2005). Source: Figueiredo and others 2006. Work with existing enterprise associations. The vast grievances--in more extreme cases providing the motive majority of SMFEs link themselves in some way to and means for financing conflict (Kaimowitz 2005). In associations that help to shape the policy environment, certain circumstances, putting local resources into local reduce transaction costs, and invest in adaptive strategies to hands may be most appropriate. Local SMFEs generally take advantage of new opportunities. Good information can have a greater understanding of local social and political be found about what makes associations work well (for contexts, stronger links with local civil society, and a greater example,Agrawal 2001).Working with trusted intermediaries commitment to operating in a specific area than do large- to support the specific training needs identified by scale enterprises. Inappropriate forest land allocation to associations is fundamental to SMFE support (Macqueen, large players (even if justified by more sustainable forest Figueiredo et al. 2006; Macqueen, Vermeulen et al. 2005). management) may undermine local control and its "silent social responsibility" and generate conflict (Ozinga 2004). Give preferential support to forms of enterprise that are designed to achieve progressive social and environmental objectives. For some enterprises, such as LESSONS LEARNED AND RECOMMENDATIONS associations, cooperatives, and nonprofit companies linked to FOR PRACTITIONERS marginalized groups, these objectives are as important as profit, and it is worth providing preferential support to or Invest in understanding SMFEs and, if appropriate, procurement policies for such aims (Macqueen 2006). Tools initially work with pilots. Information on SMFEs in such as Fair Trade already exist that favor cooperative forms developing countries is often inadequate, especially for of enterprise or particular marginalized groups (for example, NTFPs (Thomas and others 2003), and it takes time to collect black economic empowerment procurement policies in information and assess the impact of policies on SMFEs in South Africa or equivalents for First Nations in Canada). the field (Johnstone, Cau, and Norfolk 2004; Johnstone and others 2004). SMFE staff are also usually heavily time- Establish cross-agency coordination to simplify, constrained and risk averse. Hidden constraints can prevent stabilize, and implement pro-SMFE policies and expansion of forest product activities. Available time, cultural support programs. In many countries, the burden of 80 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT overregulation falls most heavily on smaller enterprises (see best when they arise independently without political box 2.11 on South Africa). Experience has shown that SMFEs patronage; this should be supported rather than creating new require a range of policy and support services and that institutions (Agrawal 2001). external intervention can help to ensure that there is some degree of dialogue between such services, both to optimize Track and support extension networks of local what exists and to identify gaps. activists who support SMFEs. Experience has shown that SMFE support programs run by local groups and Institutionalize mechanisms to coordinate SMFE activists with long track records of community engagement activities across multiple government authorities. can be successful and overcome the problems of centralized Multiple overlapping authorities with varying responsibilities extension and support services that often bypass SMFEs can often tie up the SMFE sector in red tape.Developing strong (see box 2.12). Local networks can build administrative and and clear advocacy messages within broad coalitions can shift technical capacity. It is vital that such local institutions, and policies and institutions. For example, depending on the the SMFEs they support, are known and understood; thus, context, it may be useful to establish a cross-ministerial SME data on SMFEs and their supporting institutions need to be development council or administrative body to coordinate collected. Such data could inform the option of catalyzing policies. This might be linked with sector-specific SME centers, and rolling out programs area by area. including forestry. In turn, these might interact with SME investment companies and banks or technical and business NOTES support companies, including cooperatives and credit unions. 1. While this is the starting point for most communities Support for SMFEs can be channeled through leaders and for many this is the market focus that remains, some of local enterprise associations and cooperatives. communities and some products could have export oppor- Dynamic individuals (often necessary to the establishment of tunities, especially for some commercially valuable NTFPs. an enterprise association) can serve as useful contact points 2. Reduction of forest conflicts through devolution of con- about how to channel support to SMFEs. Associations work trol is partly contingent on efficient land and forest tenure. SELECTED READINGS Box 2.11 South African SMFEs and the Burden Auren, R., and K. Krassowska. 2003. "Small and Medium of Bureaucracy Forestry Enterprises in Uganda: How Can They be Prof- itable, Sustainable and Poverty Reducing?" Uganda In many countries the burden of overregulation Forestry Sector Coordination Secretariat (FRSCS) and falls most heavily on smaller enterprises. For International Institute for Environment and Develop- example, in South Africa the paperwork involved ment (IIED), London. with value-added tax management, contributions to the Unemployment Insurance Fund, district municipality levies, and training levies can stretch Box 2.12 Supporting Local Activists Who Support small firms. Many useful support programs exist. SMFEs in Guyana For example, the Centre for Small Business Pro- motion (policy), the Ntsika Enterprise Promotion In Guyana the North Rupununi District Develop- Agency (nonfinancial services), Khula Enterprise ment Board has successfully supported a range of Finance Limited (financial services), and the For- local initiatives, including a logging cooperative, est Industry Education and Training Association an agricultural producers association, a revolving (training) all provide useful services. However, development fund, a women's revolving loan overall leadership and coordination is lacking and scheme, a credit and development trust, commu- might be provided by some cross-ministerial SME nity natural resources management projects, and development council or brokering bodies that the Bina Hill Training Institute (Ousman, Roberts, could coordinate policies, interact with investment and Macqueen 2006). Local development of these sources, and provide business support. initiatives followed methods documented else- where (Tilakarnata 1980; Albee and Boyd 1997). Source: Lewis and others 2003. NOTE 2.2: SMALL AND MEDIUM ENTERPRISES 81 Boyd, G. 2001. "Guidelines for a Poverty Focused Commu- Schreckenberg, K., E. Marshall, A. Newton, J. Rushton, and D. nity Assistance Service." Caledonia, Edinburgh, Scotland. W. te Velde. 2006. "Commercialization of Non-Timber Carter, J.. and J. Gronow. 2005. "Recent Experience in Col- Forest Products: Factors Influencing Success." UNEP laborative Forest Management: A Review Paper." CIFOR World Conservation Monitoring Centre, Cambridge, U.K. Occasional Paper No. 43, CIFOR, Bogor, Indonesia. Sun, C., and X. Chen. 2003. "Small and Medium Forestry FAO. 2005. State of the World's Forests 2005. Rome: FAO. Enterprises in China:An Initial Review of Sustainability and Global Witness. 2005. "Independent Forest Monitoring: A Livelihood Issues." Research Center of Ecological and Envi- Tool for Social Justice?" Power Tools Series, Global Wit- ronmental Economics (RCEEE) and IIED, London. ness, London, and International Institute for Environ- Vantomme, P. 2004. "Extraction of Nonwood Forest Prod- ment and Development, London. ucts." In Challenges in Managing Forest Genetic Fisseha,Y. 1987."Basic Features of Rural Small-Scale Forest- Resources for Livelihoods: Examples from Argentina and Based Processing Enterprises in Developing Countries." Brazil, ed. B. Vinceti, W. Amaral, and B. Meilleur, 51­69. In Small-Scale Forest-Based Processing Enterprises, ed. Rome: International Plant Genetic Resources Institute. FAO. Rome: FAO. IIED (International Institute for Environment and Devel- REFERENCES CITED opment). 2004. Making Land Rights More Secure: Pro- ceedings of an International Workshop. Ouagadougou, Agrawal, A. 2001. "Common Property Institutions and Sus- March 19­21, 2002. London: IIED. tainable Governance of Resources." World Development 29 (10):1649­72. ILO (International Labour Organisation). 2001. Globaliza- tion and Sustainability: The Forestry and Wood Industries Albee, A. and Boyd, G. 1997."Doing it differently - networks on the Move. Geneva: ILO. of community development agents." Caledonia, Edin- burgh, Scotland. Lecup, I., and K. Nicholson. 2000. "Community-Based Tree and Forest Product Enterprises: Market Analysis and Arnold, J. E. M., and I. Townson. 1998."Assessing the Poten- Development." FAO and RECOFT, Rome. tial of Forest Product Activities to Contribute to Rural Incomes in Africa."Natural Resource Perspectives No. 37, Macqueen, D. J., S. Bose, S. Bukula, C. Kazoora, S. Ousman, Overseas Development Institute, London. N. Porro, and H. Weyerhaueser. 2006. "Working Together: Forest-Linked Small and Medium Enterprise Artur, L., and N. Kanji. 2005. "Satellites and Subsidies: Associations and Collective Action." 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Typology for Use in National Forest Planning."Forest Sci- Power tools series, Non-timber Forest Products Research ence 46 (2):240­7. Centre, Hanoi, Vietnam, and IIED, London. Clarke, J., and M. Isaacs. 2005. "Forestry Contractors in Redfern, A., and P. Snedker. 2002. "Creating Market Oppor- South Africa: What Role in Reducing Poverty?" IIED, tunities for Small Enterprises: Experiences of the Fair London. Trade Movement." SEED Working Paper No. 30, Interna- Clay, J. W., J. Alcorn, and J. Butler. 2000. "Indigenous Peo- tional Labour Office, Geneva, Switzerland. ples, Forest Management and Biodiversity Conserva- Salafsky, N., B. Cordes, J. Parks, and C. Hochman. 1999. tion." World Bank, Washington, DC. "Evaluating Linkages Between Business, the Environ- Durst, P. B., C. Brown, H. D. Tacio, and M. Ishikawa, eds. ment, and Local Communities: Final Analytical Results 2005. In Search of Excellence: Exemplary Forest Manage- from the Biodiversity Conservation Network." Biodiver- ment in Asia and the Pacific. FAO and RECOFT, Bangkok, sity Support Program, Washington, DC. Thailand. Scherr, S. J., A. White, and D. Kaimowitz. 2004. "A New Figueiredo, L.D., Porro, N. and Pereira, L.S. 2006. "Associa- Agenda for Forest Conservation and Poverty Reduction." tions in Emergent Communities at the Amazon Forest Forest Trends, Washington, DC. Frontier, Mato Grosso." Instituto de Pesquisa Ambiental 82 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT da Amazônia (IPAM) and the International Institute for port for Associations of Small and Medium Forest Environment and Development (IIED), London. Enterprises." In How to Make Poverty History--The FSC (Forest Stewardship Council). 2004. "SLIMF Stream- Central Role of Local Organisations in Meeting the lined Certification Procedures: Summary." FSC-POL-20- MDGs, ed. T. Bigg and D. Satterthwaite, 79­98. London, 101. http://www.fsc.org/slimf/docs/FSC-POL-20-101% IIED. 20SLIMF%20streamlined%20certification%20pro Mangal, S., and J. Forte. 2005. "Community Tradeoffs cedures.PDF. Assessment: For Culture-Sensitive Planning and Evalua- Higman, S., and R. Nussbaum. 2002. "How Standards Con- tion." Power Tools Series, IIED, London. strain the Certification of Small Forest Enterprises." Pro- Ousman, S., G. Roberts, and D. Macqueen. 2006. "Develop- Forest, Oxford. http://www.proforest.net/ index3.htm. ment from Diversity: Lessons from Guyana's Forest Joaquim, E., S. Norfolk. and D. Macqueen. 2005. "Avante Based Associations." Guyana National Initiative for For- consulta! Effective consultation." Power Tools Series, est Certification and IIED, London. Terra Firma, Maputo, Mozambique, and IIED, London. Ozinga, S. 2004."Time to Measure the Impacts of Certifica- Johnstone, R., B. Cau, and S. Norfolk. 2004. "Forest Legisla- tion on Sustainable Forest Management." Unasylva 55 tion in Mozambique: Compliance and the Impacts on (219): 33­8. Forest Communities." Terra Firma, Maputo, Mozam- Rowcroft, P., J. Studley, and K. Ward. 2006. "Eliciting Forest bique, and IIED, London. Values for Community Plantations and Nature Conser- Johnstone, R., B. Cau, S. Norfolk, and D. J. Macqueen. 2004. vation." Forests, Trees and Livelihoods 16 (4): 329­58. "The Good Average Bad (GAB) Framework for Scrutin- Saigal, S., and S. Bose. 2003. "Small-Scale Forestry Enter- ising and Improving Legislation." Terra Firma, Maputo, prises in India: Overview and Key Issues."Winrock Inter- Mozambique. national India and IIED, London. Kaimowitz, D. 2005. "Forests and Armed Conflict." EFTRN Saigal, S., S. Bose, P. Lal, M. Verma, and P. S. Pareek. 2006. [European Tropical Forest Research Network] News "Small and Medium Forest Enterprise Associations in 43­44: 5­7. India: A Brief Overview." IIED, London. Kazoora, C., J. Acworth, C. Tondo, and B. Kazunga. 2006. Scherr, S. J., A. White, and D. Kaimowitz. 2004. "A New Forest-Based Associations as Drivers for Sustainable Devel- Agenda for Forest Conservation and Poverty Reduction." opment in Uganda. London: Sustainable Development Forest Trends, Washington, DC. Centre and IIED. Schneider, F. 2002. "Size and Measurement of the Informal Lewis, F., J. Horn, M. Howard, and S. Ngubane. 2003."Small Economy in 110 Countries around theWorld."Presented at and Medium Enterprises in the Forestry Sector in South a workshop of the Australian National Tax Centre, 17 July Africa: An Analysis of Key Issues." Institute of Natural 2002, Australian National University, Canberra, Australia. Resources, Forestry South Africa and Fractal Forests, and Spantigati, P., and A. Springfors. 2006. Microfinance and IIED, London. Forest-Based Small-Scale Enterprises. FAO Forestry Paper Macqueen, D. J. 2005. "Small Scale Enterprise and Sustain- No. 146. Rome: FAO. able Development: Key Issues and Policy Opportunities Thomas, R., D. J. Macqueen, Y. Hawker, and T. DeMen- to Improve Impact." IIED, Edinburgh, U.K. donca. 2003. "Small and Medium Forest Enterprises in ------. 2006. "Governance Towards Responsible Forest Guyana." Guyana Forestry Commission (GFC) and IIED, Business: Guidance on Different Types of Forest Business London. and the Ethics to Which They Gravitate." IIED, Edin- Tilakarnata, S. 1980. "Organisation of the Poor. Lessons burgh, U.K. from Sri Lanka." http://www.caledonia.org.uk/ Macqueen, D. J., L. Figueiredo, F. Merry, and N. Porro. 2005. siritila.htm. "Stronger by Association: Small and Medium Scale For- est Enterprise in the Brazilian Amazon." Participatory CROSS-REFERENCED CHAPTERS AND NOTES Learning and Action 53: 31­36. Macqueen, D. J., and J. Mayers. 2006."Forestry's Messy Mid- Note 1.4: Property and Access Rights dle: A Review of Sustainability Issues for Small and Note 3.2: Forest Certification System Medium Forest Enterprises." Unpublished, IIED, Edin- burgh, U.K. Macqueen, D. J., S. Vermeulen, C. Kazoora, F. Merry, S. Ousman, S. Saigal, S. Wen, and H. Weyerhaeuser. 2005. "Advancement Through Association: Appropriate Sup- NOTE 2.2: SMALL AND MEDIUM ENTERPRISES 83 ANNEX 2.2A CHECKLIST OF KEY ISSUESTO DETERMINE SME PROGRAM DIRECTION AND FEASIBILITY Checklist of Key Issues Key issue Possible intervention Resource and infrastructure 1. Natural forest resources are insufficient to support Consider alternative investment programs or options linked to enterprise development. cultivation. 2. Natural forest resource ownership and access rights are not Consider support for land and natural resource reform programs, secure, nor accessible to SMFEs. including education and awareness raising of current land tenure 3. Basic business infrastructure does not exist (telecommunications, anomalies and potential for remedial reforms. energy, transport). Consider infrastructure development (bearing in mind potential environmental consequences). Market structure issues 4. Baseline diagnostics of SMFEs have not been carried out in-country. Start by commissioning an adequate baseline survey. 5. An entrepreneurial target group has yet to be selected for Conduct a selection process, drawing on criteria from Poverty further assistance. Reduction Strategy Papers, national strategic plans, and so forth. 6. Specific market surveys for potential products or services have Identify specialized products and services whose demand rises yet to be carried out. with increasing income. 7. No overseas ethical market niches or unique world-class products Focus on developing products and services tailored to the local suited to export have been identified. market. Social and environmental safeguard issues 8. There is a lack of information about the sustainable management Consider investing in baseline biological and ecological research of the natural resource in question. and in associated education and awareness raising. 9. Target groups are not using business forms that guarantee Actively support such enterprises--or strengthen local governance distribution of benefits (for example, cooperatives). enforcement. Business structure issues 10. Products or services are not specialized (beyond subsistence or Start by short-listing possible products or services for seasonal gap-filler activities). specialization (for example, using FAO's MA&D). 11. There is a lack of business capacity within the target group. Ensure that capacity is developed and disseminated over a specified period. Financial and technological issues 12. Target groups are unaware of market trends, design, technology, Catalyse an information system that meets these needs (for and the like. example, buy trade magazines). 13. Target groups have inadequate financial services and lack Organize a mutual loan facility or develop forest-aware bank credit collateral to take out loans. guarantee systems. Networking issues 14. Target groups lack the organization needed to collectively reduce Introduce the idea of creating an association, based around costs, adapt strategically, and lobby. principles of group success. 15. There are no small enterprise support networks that connect Develop a communication platform to link SMFEs with support SMFEs with service providers. services and customers. 16. Specific product-based market support networks for the Consider support networks, such as Fair Trade, or push for entrepreneurial targets do not exist. government procurement contracts. Policy and institutional issues 17. SMFEs are not formally constituted (or evidence regarding Analyze the major bureaucratic and cost implications of formality, this is inadequate). and simplify legislation. 18. Surveys of policy and institutional constraints for SMFEs have Invest in an analysis of the main policy constraints. yet to be carried out. 19. Subsidies to small and large enterprises are inequitable. Lobby for judicious subsidies or a level playing field. 20. Laws are not developed and/or enforced in a transparent Bring in independent monitors to expose corrupt practices and and equitable manner. strengthen judicial capacity. 84 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT N OT E 2 . 3 Innovative Marketing Arrangements: Payments for Environmental Services F orests can provide a wide variety of benefits outside forests, forest managers--whether local communities or their boundaries. The main categories of such benefits logging companies--have no external financial incentive to are as follows: take them into account in forest management decisions. Forest loss or degradation can cause adverse impacts on Watershed protection. Forests play an important role in reg- those who benefit from these forest services--creating ulating hydrological flows and reducing sedimentation. scope for arrangements in which the users of the services Changes in forest cover can affect the quantity and quality compensate forest managers for managing forests in ways of water flows downstream, as well as their timing, in both that generate the desired services. This is the basis of the positive and negative ways. A clear understanding of these Payments for Environmental Services (PES) approach. impacts is crucial for ecologically sound forest land use The PES approach is a market-based approach to conser- planning. vation financing based on the twin principles that those who Biodiversity conservation. Forests harbor an important benefit from environmental services (such as users of clean part of the world's biodiversity. Loss of habitat (such as water) should pay for them, and that those who contribute forests) is a leading cause of species loss. to generating these services should be compensated for pro- Carbon sequestration. Forests and forest soils contain viding them. The approach thus seeks to create mechanisms large stocks of carbon, sequestering it from the atmo- to arrange for transactions between service users and service sphere and playing a vital role in climate regulation. providers that are in both parties' interests, thus internaliz- ing what would otherwise be an externality. The basic logic Because these are benefits enjoyed by people outside the of the approach is illustrated in figure 2.3. Figure 2.3 The Simple Economics of Payments for Environmental Service Conversion to pasture Conservation Conservation with service payment $/ha Benefits to forest managers Costs to downstream Payment for service populations Source: Pagiola and Platais (2007). 85 The PES approach is attractive in that understanding service provision in individual cases because efforts can focus on the specific dimensions of interest. it generates new financing, which would not otherwise be available for conservation; Biodiversity conservation. The potential for PES for it is likely to be sustainable because it depends on the biodiversity conservation is limited because of the difficulty of mutual self-interest of service users and providers and identifying service users and of charging them. Nevertheless, not on government or donor funding; and biodiversity conservation has been a major theme of many PES it is likely to be efficient, in that it conserves services projects, usually with support from the Global Environment whose benefits exceed the cost of providing them and Facility (GEF). This has usually taken the form of helping does not conserve services when the opposite is true. finance the up-front costs of establishing PES mechanisms that will then depend on payments by water users, as such PES programs are not limited to forests and can be used, mechanisms are also likely to generate biodiversity benefits. in principle, to help induce the adoption of any land use Although GEF cannot provide the long-term funding stream that generates external benefits. The majority of PES pro- that is necessary for PES, in some cases it has supported the grams to date have focused on forests or agroforestry, establishment of trust funds that can generate such funding. however. There has been considerable experimentation with PES Carbon sequestration. Carbon sequestration has limited and other market-based approaches in recent years. Latin potential, because of the restrictions imposed on land-use America has been a particularly fertile ground for such and land-use change (LULUCF) projects under the current experimentation. Costa Rica established an elaborate, rules of the Clean Development Mechanism (CDM). The nationwide PES program, the Pago por Servicios Ambientales Bank's BioCarbon Fund has been working to develop CDM- (PSA) Program, in 1997. Mexico created a similar program, compliant LULUCF projects, as well as emerging and new the Pago por Servicios Ambientales Hidrológicos (PSAH) Pro- approaches. Carbon sequestration projects will not be gram, in 2003. Both of these programs focus on forests. discussed further in this note, but are addressed thoroughly There have also been a wide range of subnational initiatives, in a separate sourcebook on the topic (World Bank Carbon with municipal water supply systems, hydropower produc- Finance Unit, n.d.). ers, irrigation water user associations, bottlers, and other water users paying for the services they receive, either Scenic beauty. Payments for scenic beauty may potentially through national programs, such as Costa Rica's PSA or be generated from "users," such as the tourism industry, but through self-standing PES mechanisms. Pilot efforts are also this has not been done to date. This potential is being emerging in other regions. explored in the Mexico PES project. The World Bank has been active in supporting PES pro- grams. In fiscal 2007, several projects had explicit PES com- OPERATIONAL ASPECTS ponents under implementation or preparation (table 2.2). The prospect for implementation of PES projects varies The process of designing a PES mechanism for forests can across the main services generated by forests: be broken into several steps: Hydrological services. Water services are often the most identifying and quantifying environmental services promising for actually generating payment streams. The charging service users users of water services are typically easy to identify, receive paying service providers well-defined benefits, and stand to suffer substantially if creating an appropriate organizational and institutional water services were to be curtailed. However, water services structure are very site specific, meaning that some areas will have substantial potential for payments, and others almost none. Identifying and quantifying environmental services Water users do not use generic "water services"; they are interested in very specific ones. Depending on the nature of Implementing PES approaches requires that the services the user, some will be primarily concerned about water that are desired are clearly identified and that the effect of quality, others about dry-season flow, and others about different land uses on these services be understood and flood risk or sediment loads. This often eases the task of quantified to the extent possible. 86 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT Table 2.2 World Bank Projects with Explicit PES Components Total cost World Bank loan GEF grant Country, project (US$ million) Main features Completed projects Costa Rica: Ecomarkets 49.2 32.6 8.0 Effective 2001­05. Supported the country's PSA program. Projects under implementation Colombia/Costa Rica/Nicaragua: 8.45 -- 4.5 Effective 2002. Piloting the use of PES to Regional Integrated Silvopastoral encourage adoption of silvopastoral Ecosystem Management practices. South Africa/Lesotho: Maloti-Drakensberg 33.1 -- 15.2 Effective 2003 (separate but coordinated Transfrontier Conservation and Development projects). Includes a PES pilot. South Africa: Cape Action Plan for the 49.6 -- 9.0 Effective 2004. Uses PES to encourage Environment (CAPE) conservation in the Cape Floristic Region. Mexico: Environmental Services 156.6 45.0 10.0 Effective 2006.Will consolidate and ensure long-term financial sustainability of country's PES program. Costa Rica: Mainstreaming Market-based 90.3 30.0 10.0 Approved 2006.Will consolidate and ensure Instruments for Environmental Management long-term financial sustainability of country's PES program. Kenya: Natural Resources Management 78.0 68.5 -- Approved 2007.Will explore the potential for PES mechanisms to contribute to improved water and forest resource management. Projects under preparation Brazil: Espirito Santo Biodiversity and 12.5 -- 4.2 Will use PES as part of package of Watershed Conservation and Restoration Project measures to improve watershed management. Kenya: Agricultural Productivity and Sustainable 12.4 -- 10.0 Will pilot use of PES for watershed Land Management protection. Panama: Rural Poverty and Natural Resource 50.0 36.4 6.0 Will include pilot PES program for local Management II communities and specific watersheds. República Bolivariana de Venezuela: 24.5 -- 6.0 Will develop PES mechanism with Canaima National Park hydropower producer to protect Río Caroni watershed. Sources: Pagiola 2006. Note: -- = Not available. Projects noted as under preparation if PCN has been approved; other projects are in identification. Amounts shown for projects under preparation are preliminary and subject to change; for projects with PES components, amounts reflect overall project costs, not PES-specific costs. Hydrological services. While forests are widely believed to biodiversity may be different from either.Moreover,even if the provide a variety of hydrological services, the evidence is often kind of benefit that a forest generates is known, one must also far from clear (see box 2.13). This partly reflects the diversity know how much of that benefit is being generated. of conditions encountered: hydrological services, for example, Maintaining or regenerating forest cover imposes opportunity depend on the rainfall regime, on the type of soil, and on costs from the forgone land use and may also impose direct topography. Deforestation and afforestation can have costs (for example, for reforestation).Without estimates of the multiple, often contradictory impacts, making the net impact amounts of benefits that would be generated, determining on water services hard to determine. For example, infiltration whether these costs are worth bearing is difficult. can be reduced, but water use can also be reduced through evapotranspiration. The net impact of these changes (both in Biodiversity conservation. Although in some ways total and within a year) depends on the balance between these biodiversity is much harder to measure than water services, effects. Moreover, much depends on post-logging land use. adequate indicators can be developed relatively easily in The objectives also influence the analysis: Efforts to regulate practice. These can include, for example, counts of the waterflows to avoid flooding and dry season deficits may number of species of conservation interest, or of species require different interventions than efforts to maximize total that are particularly sensitive to ecosystem conditions, and water volume, and the measures required to conserve of the number of individuals within these species. NOTE 2.3: INNOVATIVE MARKETING ARRANGEMENTS: PAYMENTS FOR ENVIRONMENTAL SERVICES 87 Box 2.13 Water Services Provided by Forests: Claims and Reality Claim Reality Forests slow runoff True Forests increase total annual water flow Because of increased evapotranspiration, forests usually reduce total annual water flow Exception: Cloud forests Forests increase dry season water flow Unclear Forests increase precipitation Minor effect, except at continental scale Forests reduce flooding True at small scales, not at large scales Forests reduce erosion Depends on use that is made of deforested areas Sources: Bruijnzeel 2004; Calder 1999; Chomitz and Kumari 1998. Charging service users users (for example, from the GEF) is short term, limiting its It is sometimes asserted that water users will never pay for use to paying for the up-front costs of PES mechanism services. This assertion is manifestly false. In Costa Rica, a establishment or to capitalization of a trust fund. variety of water users (hydroelectric producers, bottlers, municipal water supply systems, agribusinesses, hotels) Paying service providers are paying to conserve the watersheds from which they draw their water, generating about US$500,000 annually For PES to have the desired effect, the payments must reach in payments. Other examples exist throughout Central the land users and do so in a way that motivates them to and South America, and in South Africa. In Kenya, the change their land use decisions. This is not easy. The histor- Nairobi Water Company has indicated its willingness in ical record is replete with examples of efforts to induce land principle to pay for watershed protection. The principal users to adopt particular land use practices, for a variety of challenge is to demonstrate to users that they will, in fact, reasons and using a variety of payment mechanisms. Most benefit from making such payments, by reducing or have very little to show for their efforts. avoiding costs from reduced water services. Nairobi In general, several principles are clear: Water, for example, is currently spending about US$150,000 a year in additional water treatment and Payments need to be ongoing. The benefits being sought desilting costs at its Sasumua treatment plant as a result of are generally ongoing benefits, which will be enjoyed year upstream degradation. after year as long as appropriate land uses are maintained. In general, the primary interlocutors in such discus- For this to occur, land users must receive payments as long sions are not the ultimate consumers of the water services as they maintain the land use. All too often, payments have but the companies and public agencies that generate been frontloaded into a few years. Predictably, however, hydropower, provide domestic water services, or distribute when payments cease, any leverage over land users' behavior irrigation water. In many cases, funding for payments also ceases. comes from the existing budgets of these agencies. Thus, Nairobi Water would finance payments for upstream con- Payments need to be targeted. Environmental services servation from the savings resulting from reduced costs at depend on both the kind of land use and its location. An its treatment plant. Only in rare instances is it necessary to undifferentiated payment system that pays everyone the increase fees to consumers to pay for PES. In those same will be much more expensive than a targeted scheme. instances, experience has shown that this can be achieved It will also make it difficult to tailor interventions to the with public support if the need for and use of the revenue particular requirements of given situations. are clearly explained. As noted above, charging biodiversity users is difficult if Perverse incentives need to be avoided. Particular care not impossible. Most available funding from biodiversity needs to be taken to avoid perverse incentives. For example, 88 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT payments for reforestation can encourage land users to cut have a field presence, but sometimes it may be necessary to down standing trees so as to qualify. establish new organizations to undertake this task. Creating the institutional framework Ensuring the poor benefit Scale of project. A critical initial question concerns the PES programs are not poverty-reduction instruments, but scale of the PES mechanism. There are, in principle, three given the often high spatial correlation between areas that broad scales at which PES could be implemented: (1) provide environmental services and areas of high poverty, nationwide, (2) at the scale of a river basin, and (3) locally, PES programs may contribute to poverty reduction, at least usually at the scale of a microwatershed. In practice, locally. Guidelines are available on how to design PES pro- although there are some high-profile national systems (in grams to maximize their positive impact on the poor and Costa Rica and Mexico), almost all existing mechanisms are minimize any potential negative impacts. For example, in at the local scale. There are no river basin­scale programs. some countries, even within a community, benefits may be Nationwide systems may appear attractive because they can captured by local elites at the expense of the poor. To cover large areas quickly and can have relatively low costs address this issue, capacity needs to be built to empower the because of economies of scale. Experience has shown that poor and vulnerable groups in the community. such systems tend to be very inefficient, however. They are Because some participants may be indigenous groups, it easily distorted by political considerations and exhibit low may be necessary to prepare an Indigenous Peoples Plan transaction costs mainly because they sidestep the difficult (IPP) or an Indigenous Peoples Planning Framework questions. Local initiatives are more likely to be efficient (IPFP). However, because PES programs are largely volun- because they tend to be closely tailored to local needs and tary, these safeguards are triggered mainly in cases with col- conditions. However, they often are constrained by limited lective decision making on land use and the use of PES rev- local capacity. The El Salvador Environmental Services enues (see chapter 12, Applying OP 4.10 on Indigenous Project is exploring an intermediate approach, in which Peoples, in section II of this sourcebook). local mechanisms are being developed under a nationwide umbrella. Other operational considerations Legal framework. PES programs are often thought to Project type. PES projects can generally take two forms: require a specific legal framework. They only do so if they are to be based on public financing, in which case a legal Projects entirely dedicated to PES, which typically work framework is desirable so that the payment program is not on a nationwide basis (as in Costa Rica and Mexico). wholly at the mercy of annual budgetary decisions. Relying PES components within a broader project. Such PES on public financing is, however, generally an undesirable components could be part of a variety of projects. Obvi- approach to PES. PES programs that are based on payments ous examples include watershed management and sus- from service users do not require any specific law, other tainable land management projects (as in the Kenya than general contract law. There may be a need for legal KAPSLM (Kenya Agricultural Productivity and Sustain- reform to remove obstacles, however. For example, public able Land Management), but there is also significant utilities may be restricted in their ability to charge potential to undertake PES as part of institutional reform consumers for the costs of conservation, or in their ability to projects or water infrastructure projects (the Brazil use available funding in PES mechanisms. Espirito Santo Project is partially blended with a domes- tic water supply project in the town of Vitoria). Functions to be accomplished. Systems of payments for environmental services require a supporting institutional Avoiding perverse incentives. PES projects do not infrastructure.This can take many forms,but several common support any clearing or degradation of forests or other functions must be accomplished (see figure 2.4). natural habitats. On the contrary, they are intended to Organizationally, the most complex task to be undertaken is promote the conservation and restoration of forests and paying service providers because agents must be sent into the other natural habitats. PES projects, therefore, are usually field, with all the logistical issues that entails. This task can fully compatible with both the World Bank's Natural often be subcontracted to NGOs or other agencies that already Habitats OP/BP 4.04 and the Forests OP/BP 4.36. NOTE 2.3: INNOVATIVE MARKETING ARRANGEMENTS: PAYMENTS FOR ENVIRONMENTAL SERVICES 89 Figure 2.4 Institutional Elements of a PES Mechanism Governance structure Beneficiary Land user Beneficiary Land user Beneficiary Land user Financing Payment Beneficiary mechanism mechanism Land user Beneficiary Land user Beneficiary Land user Beneficiary Land user Environmental services The main risk is of unintended, perverse consequences, tially from case to case, in light of local technical, economic, such as land users clearing forest to qualify for reforestation and institutional conditions. payments or moving into previously intact ecosystems to Identifying the services sought is critical, and most claim payments for managing them correctly. These prob- effectively done by focusing on the demand for services lems can generally be avoided by instituting appropriate eli- and asking how best to meet it, rather than on the supply. gibility criteria for participation, setting appropriate condi- Beginning from the supply side carries the risk of devel- tions for payments, and instituting effective monitoring oping mechanisms that supply the wrong services, in the systems (see box 2.14). wrong places, or at prices that buyers are unwilling to pay. The land uses that can generate the services sought must LESSONS LEARNED AND RECOMMENDATIONS then be identified and their impact quantified to the extent FOR PRACTITIONERS possible. PES programs are not a universal answer to all forest con- Monitoring effectiveness is essential to documenting to servation problems. Even when PES approaches are war- buyers that they are getting what they are paying for and to ranted, the details of their application will differ substan- adjusting the functioning of the mechanism should prob- lems arise. At the same time, excessively burdensome moni- toring requirements can discourage potential suppliers Box 2.14 Avoiding Perverse Incentives without necessarily further reassuring buyers. Finding the in PES right balance between information and compliance costs is an ongoing concern, as seen in the case of markets for certi- Contracts under the Regional Silvopastoral Project fied timber and agricultural products. specify that land users who switch any of their land PES mechanisms must also be sufficiently flexible to to less environmentally desirable uses (as meas- respond to changing demand and supply conditions and ured using the project's environmental services improvements in knowledge about how forests generate index) will not receive payment. Induced perverse services. incentives outside project areas may be more sub- tle. The Regional Silvopastoral Project had intended to only pay for improvements over base- SELECTED READINGS line conditions, but ultimately decided to make Pagiola, S., A. Arcenas, and G. Platais. 2005. "Can Payments nominal payments for preexisting baseline services for Environmental Services Help Reduce Poverty? An to encourage current nonparticipants to under- Exploration of the Issues and the Evidence to Date from take such improvements even before they were for- Latin America." World Development 33: 237­53. mally in the PES program. Pagiola, S., and G. Platais. 2007. Payments for Environmental Source: Pagiola 2006. Services: From Theory to Practice. Washington, DC: World Bank. 90 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT Wunder, S. 2005. "Payments for Environmental Services: ITTO. 2006. Guidebook for the Formulation of Afforestation Some Nuts and Bolts." CIFOR Occasional Paper No. 42, and Reforestation Projects Under the Clean Development CIFOR, Bogor, Indonesia. Mechanism. ITTO technical series No. 25. Yokohama: International Tropical Timber Organization. Pagiola, S. 2006. "Innovative Marketing Arrangements for REFERENCES CITED Environmental Services." Note submitted to World Bank Bruijnzeel, L. A. 2004. "Hydrological Functions of Tropical as input to Forests Sourcebook. Unpublished. World Bank, Forests: Not Seeing the Soil for the Trees?" Agriculture, Washington, DC. Ecosystems and Environments 104 (1): 185­228. Pearson, T., S. Walker, and S. Brown. 2005. Sourcebook for Calder Ian R., 1999. The Blue Revolution: Land Use and Inte- Land Use, Land-Use Change and Forestry Projects. Wash- grated Water Resource Management. London: Earthscan. ington, DC: Winrock International. Chomitz, K. M., and K. Kumari. 1998. "The Domestic Ben- WBCFU (World Bank Carbon Finance Unit). n.d. "Opera- efits of Tropical Forests: A Critical Review Emphasizing tions Handbook." http://carbonfinance.org/Router.cfm? Hydrological Functions." World Bank Research Observer Page =DocLib&ht=34&dl=1.World Bank,Washington,DC. 13 (1): 13­35. NOTE 2.3: INNOVATIVE MARKETING ARRANGEMENTS: PAYMENTS FOR ENVIRONMENTAL SERVICES 91 C H A P T E R 3 Meeting the Growing Demand for Forest Products: Plantation Forestry and Harvesting Operations in Natural Forests s a result of significant increases in demand for A intervention. See box 3.1 for definitions of several commer- wood, the global wood market is undergoing cial wood products. rapid changes, putting considerable and increas- Even though managing forests has become more com- ing pressure on the world's remaining natural forests. plex over the past decades because of a wider range of man- Without significant investment in promoting sustainable agement objectives than just wood production (for exam- forest management (SFM) efforts and in plantation man- ple, biodiversity conservation, carbon sequestration, agement, it must be expected that, especially in many recreation, and tourism), the core problems and challenges World Bank client countries, increasing demand for wood often remain similar. The exploitation of wood for subsis- will lead to further degradation and fragmentation of tence use and commercialization at nonsustainable levels forests and permanent deforestation. To successfully leads to forest degradation and destruction, which fre- change this situation, international wood demand must be quently constitutes the first step toward conversion of met through sustainable wood production from natural forests to other land uses and, thus, permanent deforesta- forests and plantation management. To facilitate such a tion dynamics (see figure 3.1). process, markets must increasingly adopt mechanisms that This sequence of events has become a major concern to not only ensure sustainable forestry and conservation, but resource managers in recent years because the constantly also provide satisfactory livelihood opportunities for for- growing demand for wood, particularly by emerging est-dependent communities, and promote sustainable eco- economies like Brazil, China, India, and South Africa, is nomic development for all nations, including countries strongly affecting forests and forest-dependent people in with low forest cover. Therefore, the sustainable production producer countries. For example, in China total forest- of wood to meet increasing demand will continue to play a product imports rose from 40 million cubic meters (m3) to predominant role in the discussion of how to achieve almost 150 million m3 between 1997 and 2005. It is global targets for forest management. expected that demand, both domestic and from outside the Economic processes have always relied on wood, and country, will continue to rise, and forest-product imports to access to and exploitation of it have shaped economic struc- China are likely to double within the next 10 years.1 This tures. The exploitation of wood for subsistence uses for development has strong impacts on markets in other coun- energy or construction material, or for commercial use in tries in which forest management standards often are not local, regional, and global markets, were among the first yet as stringent as generally required by consumer coun- objectives of managing forest resources through human tries.2 Many of these countries are World Bank client coun- 93 Box 3.1 Technical Definitions Wood includes roundwood, wood fuel, industrial and veneer logs (production of sawnwood or railway roundwood, sawnwood, veneer sheets, and plywood. sleepers and veneer sheets, respectively); pulpwood, Roundwood is wood obtained from removal, har- round and split (pulp, particleboard, or fiberboard); vesting, and felling from forests and trees outside for- and other industrial roundwood (for tanning, distilla- est. It includes roundwood generally classified as wood tion, poles, and so forth). fuel (fuelwood and charcoal) and industrial round- Sawnwood is wood that has been produced from wood (sawlogs and veneer logs; pulpwood, round and domestic and imported roundwood, either by sawing split; and other industrial roundwood). lengthways or by a profile-chipping process. Wood fuel is roundwood used for fuel consumption Veneer sheets are thin sheets of wood of uniform such as cooking, heating, or power production. thickness, peeled, sliced, or sawn. Industrial roundwood is roundwood used for indus- Plywood is a panel consisting of an assembly of trial production of other goods and services except as a veneer sheets bonded together with the direction of the source of energy. It includes several products: sawlogs grain in alternate plies, generally at right angles. Source: FAO 2005b. tries, and supporting these countries in meeting interna- as biodiversity conservation, carbon sequestration, and tional standards for responsible forest management and poverty alleviation are equally threatened. The increase in good governance constitutes one of the biggest challenges demand for wood and the resulting policy uncertainties and for World Bank operations in the forestry sector. For exam- other sensitivities, paired with an increase in market prices, ple, forests in eastern Siberia in the Russian Federation are triggers another important factor contributing to these neg- the primary suppliers of wood to meet China's rapidly ative trends: illegal logging (see note 5.5, Addressing Illegal growing demand. Because many of the traditional supply Logging, for further discussion), which is a serious threat to markets are starting to experience resource shortages, the sustainable management of forest resources and, hence, to growing demand for wood currently focuses on the sustainable development in general. Between 1997 and exploitation of the last remaining natural reserves, for 2002, estimates of illegally harvested timber in Southeast example, in the Congo Basin and the Amazon. It is therefore Asia alone amounted to more than 80 million m3. Based on very likely that roundwood production in tropical countries the factors presented in box 3.2, the global demand for will still increase in regions with natural forests. wood is expected to continue to grow in the years to come. If demand for wood cannot be met through sustainable While there has been little or no recent change in Europe supplies, forest degradation and deforestation will continue and North America, deforestation is of great concern in or even accelerate; thus, other management objectives, such many other parts of the world, especially in many African countries. According to the Food and Agriculture Organiza- Figure 3.1 Pathways of Deforestation and Land Cover tion (FAO) of the United Nations, the annual global defor- Conversion estation rate is presently estimated to be about 0.2 percent (FAO 2006). In the period 1990­2000, this translated into a net loss of 95 million hectares (ha) of forests--an area larger than the República Bolivariana de Venezuela. The loss of 161 million ha of natural forests to deforestation was some- Primary Secondary Agricultural Degraded what offset by 15 million ha of afforestation (the deliberate forest forest land land creation of forests where none existed), 36 million ha of nat- ural expansion of forests, and 15 million ha of reforestation. These trends are critical because they lead to a decreasing supply of wood from natural forests, especially considering that productivity rates of natural forests are declining, too, because of overexploitation and insufficient management 94 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS Box 3.2 Factors Influencing Future Demand for Wood Subsistence use of wood (wood fuel, construction Pulp and paper and industrial wood products material) population increase population increase economic development in emerging-market and increase of absolute number of people living in developing economies poverty, especially in rural areas increased role of forests as safety nets in emergency High-value timber products situations (for example, harvest failures caused by increasing economic development, particularly in effects related to climate change dynamics) emerging-market economies (for example, Brazil, China, India, and South Africa) Domestic wood use (charcoal, especially in Africa, but decrease of production forest area (natural forests), also South Asia and Eastern Europe) resulting in traditional net exporters turning into population increase net importers of timber and timber products (for continued urbanization example, Malaysia, the Philippines, Thailand) macroeconomic reforms, for example, tariff population increase increases in the electricity sector Niche products (for example, nontimber forest prod- ucts [NTFPs], such as medicinal plants) population increase Source: Sander 2007. interventions. Without further investments in improving pulpwood production is partly due both to their greater the productivity of natural forests and establishing planta- economic competitiveness and to environmental concern tion forestry to meet future demands, it can be expected that over declining natural forest cover. supplies are only available for a limited number of years. Another significant contributor to the increase in round- Table 3.1 presents such estimations for selected countries. wood consumption emerges from local and regional use of The projected impact of the increase in the global wood fuels, that is, fuelwood and charcoal. This aspect demand for wood--especially from emerging economies3 deserves particular attention because of its strong poverty as major new processing and consumption markets--is, link in many World Bank client countries (see table 3.2). however, only one factor causing forest degradation and At the global level, the number of people living on less deforestation. At present, the conversion of forest land to than $1/day is about the same as the number of those lack- other land uses, such as agriculture and urbanization, is by ing access to commercial energy: 2 billion people (FAO far the biggest factor for the continued degradation, frag- COFO 2005). According to the World Bank (2004), about mentation, and destruction of natural forest area in World 575 million people depend on wood fuels as a source of Bank client countries and has a strong impact on the reduc- energy in Sub-Saharan Africa. The use of wood fuels is pre- tion in wood supply (illustrated in figure 3.1). While such dynamics are generally discussed with regard to their impacts on global forest market developments, their Table 3.1 Estimated Number of Years Left of impacts on local and regional markets are equally impor- Economically Accessible Timber, by Country tant, with strong negative effects on local livelihoods and provision of local and global environmental services. Country of origin Years The global demand for wood fibers has complemented Russia (far eastern region) > 20 the increase in the demand for roundwood and timber Papua New Guinea 13­16 products, with industry alone expected to need 1.9 billion Myanmar 10­15 m3 per year by 2015. Fast-growing plantations will be relied Indonesia 10 upon as a key element in meeting future demand for fiber. Cambodia 4­9 This shift of focus from natural forests to plantations for Source: Forest Trends 2006. CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS 95 15 to 20 years. It is also important to acknowledge that the Table 3.2 Wood Fuel Data for Selected World wood fuel challenge generally exists in countries that are Bank Client Countries, 2005 commonly not regarded as important forest countries for Total Wood fuel World Bank operations, but countries with low forest cover forest area Population consumption (thousand ha) (thousand) (thousand m3) or low forest resource stocks and productivity rates (for example, savannah woodlands, Miombo forest ecosystems). Chad 11,921 8,823 4,088 As a result of the increase in demand for wood, market Ethiopia 13,000 69,961 108,879 Kenya 3,522 32,447 24,256 pressure has been increasingly directed toward plantation Madagascar 13,023 17,332 6,433 forestry. Countries such as Argentina, Brazil, Chile, China, Malawi 3,402 11,182 5,617 Indonesia, and South Africa are expected to become Mozambique 19,512 19,129 20,297 Sudan 70,491 34,356 19,514 increasingly important world producers of pulpwood and Tanzania 35,257 36,571 25,200 industrial softwood for mass consumption through planta- Uganda 3,627 25,920 42,041 tion forestry with exotic, fast-growing tree species. Zambia 42,452 10,547 8,798 Zimbabwe 17,450 13,151 10,381 In addition, wood fuel production in particular, but also Total 301,358 1,359,140 278,976 larger-scale industrial production of wood, can be achieved Sources: FAO 2006; FAO 2007. through bottom-up approaches such as community wood- lots, agroforestry, outgrower schemes, and company- community partnerships instigating economic opportunities dominant in both rural and urban locations, accounting for at the household level (see notes 2.1, Community- Private approximately 70 percent of total and 90 percent of house- Partnerships, and 2.2, Small and Medium Enterprises). Many hold energy use. On average, women carry 20 kilograms of of these interventions can also help regain degraded lands for fuelwood five kilometers every day. Commonly, a large economic productivity with positive effects reaching beyond number of traders are involved in buying, transporting, and sustainable wood production, for example, provision of envi- reselling wood fuels; this is often where most of the value ronmental services. However, at this moment, certain wood, added is obtained in this mainly informal sector. especially high-value timber species, can only be produced As a consequence, with one of the primary causes of from natural forests; plantation forestry cannot yet be substi- deforestation being exploitation of forests for wood fuels, the tuted for these sources of supply. Given the long production use of wood fuels constitutes one of the most pressing chal- process wood requires, it is obvious that the stage has to be lenges for achieving SFM in almost all Sub-Saharan African prepared right now for addressing--and meeting--future and other World Bank client countries (including in South supply shortages from natural forests through plantation Asia, East Asia, and Central America). The most important forestry. Another management intervention for increasing factor that will cause this challenge to persist for years to the wood supply in the future is to increase the production come is the considerable population growth in these coun- level of secondary and primary forests, providing the possi- tries (see box 3.2 for other factors). For example, Sub-Saha- bility for secondary forests to redevelop into primary for- ran Africa has one of the world's fastest growing populations est­like ecosystems (see figure 3.1). (increasing by about 2.2 percent a year) and is expected to be Last, a newly emerging factor is anticipated to have an home to more than a billion people by 2025 (compare with impact on wood supply in the future: climate change. numbers in table 3.2). It is estimated that if current trends Changing climate regimes are expected to shift the current continue, many areas, especially the Sudano-Sahelian belt, allocation of forest areas, leading not only to changes to and will experience a severe shortage of fuelwood by 2025. Again, potential decline of natural forest areas, but also changing it must be emphasized that while the wood fuel challenge is regimes for plantation establishment. Under climate most apparent and urgent in Sub-Saharan Africa, it applies change, production from plantations that have been estab- equally to other regions where forest resource management is lished to date could decrease significantly, for example, an important component in the World Bank's investment through increasing climate variability and a higher proba- portfolio for achieving rural development and poverty allevi- bility of extreme climate events, such as droughts, initiating ation. Even though some of these trends may be compensated forest fires and increasing the vulnerability of trees to for through the adoption of alternative energy sources, such insects and disease. These effects are largely theoretical, but as natural gas and biofuels, it is expected that the overall trend need to be explored and closely monitored in coming years will lead to increases in wood fuel consumption over the next to develop appropriate adaptation strategies. 96 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS In summary, the global market for wood is characterized These developments will have a significant impact on by considerable and increasing pressure on the world's how the World Bank--together with its development part- remaining natural forests. Without significant investment in ners--can engage in forest management to develop feasible promoting sustainable management of natural forests and solutions to address these challenges. In a broad sense, this in plantation management, especially in many World Bank engagement can be put into practice in two ways: (i) client countries, further degradation, fragmentation, and through operational work directly supporting governments destruction of natural forests can be expected. To success- and industry in their efforts to use the potential of sustain- fully change this situation, the wood market must be trans- able wood production from natural forests and plantations formed into one that ensures sustainable forestry and con- to foster economic development and achieve poverty allevi- servation, provides satisfactory livelihood opportunities for ation, and (ii) through analytical work, ensuring up-to-date forest-dependent communities, and promotes sustainable knowledge management and dissemination. economic development. The Global Vision for Forest 2050 Project, which brought PAST ACTIVITIES together leading experts, nongovernmental organizations (NGOs), industry representatives, and donor institutions, The initial rationale for the World Bank to engage in the yielded the scenario depicted in figure 3.2 for a global forestry sector in the 1970s was based on addressing world- closed-forest area of 3 billion ha in 2050. This would result wide declining wood supplies and the dependence of the in an increase in community-owned and -managed forests rural poor on wood energy. To meet these objectives, early and a significant increase in protected areas as defined by projects promoted industrial-scale forest plantations with the World Conservation Union (more formally known as an emphasis on forest engineering components (plant the International Union for the Conservation of Nature and breeding, fast-growing species, plantation establishment, Natural Resources, or IUCN). The area of state and private and the like). One common feature during this period was production forests under intensive management would that the forest service was assigned a policing and control- remain roughly the same as at present, and industrial plan- ling role, enforcing forest laws with the main objective of tation forests would increase slightly, from 95 million to 100 keeping people out of state-owned forest reserves and plan- million hectares. tations. The involvement of rural people in forestry was limited to being a source of labor. The early 1980s began with a shift toward greater partic- Figure 3.2 A Possible Global Forest Scenario for 2050 ipation by stakeholders and community involvement. The World Bank started to promote the importance of commu- 100 million hectares nity mobilization in stabilizing forest resources and improv- ing the incomes of forest-dependent communities. The 500 million main objective of this change was to link investment in hectares forestry with poverty alleviation and environmental protec- tion efforts. 1,200 million Following a period of strong criticism from civil society hectares organizations, especially environmental NGOs, who regarded World Bank investments as strong contributors to global deforestation dynamics, the Bank's engagement in productive forest management decreased significantly. As a 1,200 million hectares consequence, in the 1990s the World Bank's forest policy and Bank operational activities focused mainly on projects Protected areas (IUCN categories I­IV) aimed at the conservation of biodiversity. In 2002 the World Bank adopted its current forest policy, Multiple use forests under community-based forest management which provides the opportunity to reengage in industrial- scale forest management when such investments are certi- State forests and private woodlands managed primarily for timber production fied under an independent forest certification system that is Plantation forest management primarily for acceptable to the World Bank.4 This development resulted fiber and timber production from the intervention of environmental NGOs that consid- CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS 97 ered it important to have the World Bank as an active stake- from decisions regarding alternative land uses, not from a holder and partner promoting responsible forest manage- lack of technical knowledge about SFM (for example, in the ment, especially given the scale of World Bank investments agricultural sector and in infrastructure, such as building of and the potential for addressing cross-sectoral issues of for- roads and dams). Such cross-sectoral policy impacts must est management and sustainable wood production. be further analyzed and increasingly brought to the atten- Between 2002 and 2005, the World Bank ran approxi- tion of policy makers and relevant stakeholders so they can mately 29 projects with components that focused on meet- design and strengthen policy interventions at the macro ing the growing demand for wood.5 Total lending associated level that address these issues (for example, agricultural with these projects was approximately US$282 million, policies, road building, and the like). In this context, proj- which constituted about 40 percent of the lending on forests ects primarily designed for improving forest management during this period. Of this amount, a large portion was in World Bank client countries must increasingly have their invested in projects involving community participation in cross-sectoral effects taken into consideration (see detailed plantation and commercial harvesting, approximately discussion in chapter 6, Mainstreaming Forests into Devel- US$55 million was invested in projects involving main- opment Policy and Planning: Assessing Cross-Sectoral streaming biodiversity considerations, and approximately Impacts), thus making cooperation with other sectors nec- US$10 million was allocated to forest certification systems. essary. The World Bank concurrently should further improve the way in which forest considerations are inte- grated into projects developed in nonforest sectors (for KEY ISSUES example, the infrastructure and energy sectors). Last, the World Bank could enhance its engagement in international Meet the increasing demand for wood. Plantation policy efforts that address these cross-sectoral impacts, per- forestry will become more important in meeting the grow- haps by engaging proactively in international initiatives, ing demand for wood (see note 3.3). From 1995 to 2000, such as the Roundtable on Sustainable Palm Oil and others. global forest plantation area increased from 120 million ha Another example in which policies have negatively to about 170 million ha (116 million of which are located in affected forest management in World Bank client countries Asia).6 In Brazil alone, forest plantation area increased from is the tropical timber import ban executed by several West- 500,000 ha in 1966 to 3.7 million ha in 1979, to 10.5 million ern countries in the 1980s and 1990s. The import ban exac- ha in 2005 (Del Lungo, Ball, and Carle 2006). Over the past erbated the problem it was trying to address by shifting the 15 years, the share of industrial fiber from plantations has terms of trade away from products derived from natural grown from 5 percent to 30 percent compared to native forests, thus further reducing the incentive to avoid conver- forests, but in some countries the share is much higher sion to other land uses. Since then, innovative tools, such as (FAO 1995a). independent forest certification, have been developed to Today, plantation forestry plays a significant role for permit access of wood and timber products to high-price wood production, especially in tropical countries, because consumer markets in Western Europe and North America if of several important characteristics including high yield, they are proven to be in compliance with internationally short rotations, and accessibility. Although some planta- accepted management standards. The high prices gained tions are for protection purposes, most are for production from these markets make management interventions in nat- (FAO 2006), and plantations' share in providing roundwood ural and plantation forests requiring additional invest- to industry is growing. Plantation forestry is also increas- ments--such as reduced-impact logging or the rehabilita- ingly changing from large-scale investments in monocul- tion of degraded forests--economically feasible and tures to small-scale investments in which local households contribute to achieving sustainable wood production in the and communities are the principle owners of the means of future. In light of these developments, future activities need production, not just employed as laborers (see chapter 2, to focus on reducing transaction costs for forest certifica- Engaging the Private Sector in Forest Development, and its tion, especially for smallholder producers, and to support- associated notes, and note 3.3, Forest Plantations). ing their efforts to increase the marketing potential for their products and their access to high-price markets. Independ- Avoid cross-sector policy impacts on sustainable ent certification may also lead, in some cases, to a reevalua- management of forests. Threats to the long-term sus- tion of export ban policies in producer countries for high- tainable management of natural forests have generally come value certified roundwood if domestic prices cannot 98 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS compete with prices that could be obtained in international promote investment in forest industries to create employ- markets. In this context, innovative marketing systems, auc- ment. This overcapacity has resulted in pressure to keep tioning of logs, for instance, need to be further developed feeding the mills to make back the capital investment. Many and should include improvements in transparency and of these facilities, however, are now being closed down. accountability. Use secondary forests for increasing wood produc- Develop incentives for sustainable management of tion. The management of secondary forests presents both a natural forests and forest plantations. In contrast to challenge and an opportunity. Tropical countries have seen policies negatively affecting sustainable management of nat- an increase in wood production from secondary forests ural forests, policies can also be designed to provide eco- because these areas are increasing dramatically, and in some nomic incentives to invest in responsible forest manage- countries now exceed the area covered by primary forests. ment. For example, land tenure reform can play a significant Reliance on secondary forests is expected to increase as role in improving the security of returns on investment in larger primary forest areas are designated as protected SFM, thus augmenting incentives to participate. This is forests. Secondary forests are a good source of wood fibers, especially important for motivating small-scale farmers and NTFPs, social and environmental services, and other goods. communities to make investments in forestry (see note 1.4, The potential of lesser-known species has to be further Property and Access Rights). Another example of such pos- explored,7 and forest management should start to focus on itive policy interventions are tax incentives for forestry these forests, steering wood production to shift gradually operators that undergo independent forest certification, from primary to secondary forests. Secondary forests, there- which may cause higher transaction costs for forest man- fore, have great potential to contribute to global wood agement. Providing a framework that facilitates secure con- demand (see figure 3.2). tractual arrangements between various stakeholders in for- est management can equally encourage investments in Independent certification of forest management. responsible forest management. Complementary invest- Independent certification provides proof that forest man- ments in research and development also often provide the agers are using good management practices, adhering to platform upon which improvements in the field can be real- internationally agreed principles and criteria (see note, 3.2, ized (for example, silvicultural techniques, nursery Forest Certification Systems). The development of forest improvements, species variations, knowledge generation on certification systems and schemes emerged from strident lesser-known species, and the like). Often, these costs are attempts to ban imports of tropical timber, brought forward not taken over by private investors, but have to be taken up in the 1980s and 1990s by advocacy groups in North Amer- through public expenditures instigating improved and ica and Western Europe. Certification was conceived as a increased investments in forestry. market-based instrument, aimed at rewarding good forest management by improving or maintaining access to high- Balance wood production with demands for biodi- price consumption markets.8 The final destinations for versity conservation. Various benefits can be realized these products have, in the past, mainly been Western from integrating conservation and production (see note 3.1, Europe, Japan, and North America, but increasingly, the Mainstreaming Biodiversity Considerations into Productive emerging economies of Brazil, China, India, and Russia Landscapes). Three key benefits are (i) improving the feasi- serve as destinations. Many of the emerging economies bility of achieving conservation goals by using production often only harbor the main processing and transformation and protected areas, (ii) increasing the benefits from con- facilities and export the final consumer products to high- servation by conserving parts of forests adjacent to pro- value markets that increasingly demand certification as tected areas, and (iii) improving the overall ownership and proof of good management practices. This is made possible understanding of conservation. by chain-of-custody certification, which, in most systems, complements forest management certification and provides Reduce wood processing overcapacity. In some areas, a tool for tracking certified timber throughout the supply processing capacity has been created that exceeds the sus- chain. tainable wood production of the region. This problem One of the key issues to address is the development of occurs mainly in southern countries, where raw material is mechanisms to make certification economically attractive often provided at subsidized, below-market prices to further for small-scale forest management and timber processing CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS 99 operations (such as community-based forest management) in Africa have also taken steps toward private and commu- that mainly produce for local and regional markets and do nity engagement. Company-community partnerships are a not necessarily have the ability to capture the benefits of promising approach and are expanding in the forest sector. high-value markets. Larger scale forest operations that do Such partnerships can help to reduce risk, achieve better not produce for high-value market segments are another returns to land, diversify income sources, and much more-- target. and therefore have the potential to contribute to the objec- tives of SFM and to economic development in rural areas Ensure that production forests provide environmen- (see note 2.1, Community-Private Partnerships). tal services while supporting local livelihoods. With Channeling economic potential to the local level can the amendment of the Kyoto Protocol in 2005, plantations contribute significantly to poverty alleviation, especially are expected to increasingly act as carbon sinks in many car- when these benefits emerge not only as labor opportunities, bon credit projects, so that in addition to improving markets but also as access to all means of production. Economic for forest products, developing countries will benefit from incentives should be created for smallholders to engage in the Clean Development Mechanism (CDM) under the forest management and make investments in sustainable United Nations Framework Convention on Climate Change forestry. Both traditional and innovative9 economic mecha- (see note 2.3, Innovative Marketing Arrangements for Envi- nisms should be applied to capture the financial benefits ronmental Services, and note 3.1, Mainstreaming Conserva- and make them available at the local level. The growing tion Considerations into Productive Landscapes). Brazilian worldwide demand for timber also presents an opportunity eucalypts plantations provide a good example of an attempt for the establishment of sustainably managed plantations to maintain biodiversity: High-yielding cloned stands are with the participation of smallholders, taking environmen- separated by strips and blocks of protected conservation tal, ecological, and social requirements into consideration. areas along sensitive regions, such as creeks and rivers. Lessons learned from plantation forestry indicate that access NTFPs, of great importance to local people, also may be inte- to such land for poor rural households must be managed in grated into plantation forestry operations. NTFPs including a socially acceptable way to prevent the risk that the rural medicinal plants, rattan and bamboo production, rubber poor will not benefit. The same holds true for natural forest tapping, resins, and beekeeping are often a significant com- management. Approaches must be designed that make eco- ponent of the forestry operation. Again, facilitating inde- nomic sense to the rural poor, given their constraints and pendent forest certification, especially for smallholder preferences. In this context, future engagement by the World forestry, for natural forest and plantation management will Bank is needed to establish participatory land use and land contribute to achievement of this goal, ensuring that multi- tenure systems as a precondition for sustainable plantation dimensional management objectives are simultaneously forestry (see boxes 3.3 and 3.4). achieved (see note 3.2, Forest Certification Systems). FUTURE PRIORITIES AND SCALING-UP Embed Forest Law Enforcement and Governance ini- ACTIVITIES tiatives into productive forest management and tim- ber and wood product trade. Illegal activities, enabled and fueled by the absence of effective legislation and man- Continue support for community-based forest man- agement or their enforcement, are a leading factor in the agement systems. Pilot projects supported by others are loss of forests and the degradation of the resources and thus important for the World Bank's operations, and demon- seriously endanger sustainable development. (See chapter 5, strate feasible approaches that can be scaled up to make a Improving Forest Governance, and note 5.5, Addressing significant contribution to social, environmental, and eco- Illegal Logging.) nomic objectives. The World Bank's support to community- based forest management systems is promising, with the Design appropriate contractual arrangements to aim of enabling local communities to manage their own facilitate partnerships between different stake- resources, rehabilitate and protect forests, market forest holders. Reallocation of land ownership to smaller owners products, and benefit from security of tenure. One of the is expected to prevent large-scale wood clearing. However, positive projects in line with this strategy is the Forestry Sec- in some countries, such as New Zealand and South Africa, tor Development Project for Vietnam, which involves small- planted forests have been privatized; several other countries scale farmers (see box 3.4). 100 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS Box 3.3 Global Forest and Trade Network Box 3.4 The Forestry Sector Development Project for Vietnam The Global Forest and Trade Network (GFTN), an This project, financed by the International Devel- initiative of the World Wildlife Fund (WWF), has opment Association with cofinancing from the supported the development of community-based Global Environment Facility, the Netherlands, Fin- forest management in Latin America (see also note land, and the European Commission, was 1.2, Community-Based Forest Management). Ini- approved in 2004, and emphasizes the participa- tiatives have included capacity building for chain- tion of smallholders in the establishment of plan- of-custody tracking in the lowland tropical hard- tations, aiming to ensure the sustainable manage- wood forests of Peru, and the Nicaraguan Forest ment of plantation forests and the conservation of Finance Fund, a novel financial mechanism aimed biodiversity in special-use forests. To this end, the at creating incentives for producers and processors project's scope includes the following aspects: (i) dedicated to responsible forest management and improvement of the environment for sustainable trade. In Bolivia, the GFTN has been involved in forestry development and biodiversity conserva- developing a strategy for increasing the demand tion; (ii) provision of attractive incentive packages for responsibly produced wood products, primar- to mainly poor farming households to plant trees ily from indigenous communities, via responsible on a sustainable basis to generate additional purchase policies and related market links to man- income and employment; (iii) making small, com- ufacturers and other members of the GFTN (for petitive grants available for effectively managing example, retailers in consumer countries). priority special-use forests of international impor- tance; (iv) establishment of a credit line for partic- Source: Authors' compilation using Sander 2007. ipating farmers; (v) enhancement of capacity and capability at regional, provincial, and district lev- els; and (vi) establishment of support services to Encourage expansion of wood supply by private and monitor and evaluate impact and outcomes. community forest owners. Global fiber supply is shifting Implementation of the project started in 2005. toward the southern hemisphere and China. Possibilities Source: World Bank 2004b. need to be explored for World Bank forestry projects and investment policies to support International Finance Cor- poration (IFC) private sector forest plantation investment in Argentina, Brazil, Chile, China, Ecuador, India, Indone- ficult challenge to forestry in most World Bank client coun- sia, Mozambique, South Africa, Tanzania, Thailand, tries. Achieving sustainable management of natural forests Uruguay, and Vietnam (see also chapter 2, Engaging the Pri- requires significant reinvestment of revenues received from vate Sector in Forest Sector Development). Developing the extraction of wood. Meaningful stakeholder consulta- innovative approaches that facilitate certification of small- tions also need to be maintained to ensure that socially holder forest management, and improving access to high- endorsed goals and objectives are achieved (see also chapter price markets for certified small-scale producers, are 10, Consultation and Communications in Forest Activities, regarded as important components. and chapter 12, Applying OP 4.10 on Indigenous Peoples). Facilitating sustainable management of natural Enhance technical capacity for natural forest man- forests. Improving and extending responsible forest man- agement and plantation development. The technical agement according to the principles and criteria demanded capacity in many World Bank client countries is not suffi- by the World Bank's Operational Policy on Forests (OP cient to meet internationally acceptable standards for SFM. 4.36) is the principal entry point and vehicle by which the This is often evident even in the lack of timely collection World Bank can improve forestry outcomes.To meet future and management of relevant and accurate data needed for wood demand, the productivity of natural forests that serve forest management, such as forest area, forest types, production purposes must be improved. Securing appropri- resource stock inventories, growth and yield tables, biodi- ate structure, balance, and composition of the flows of versity mapping, and so forth. Research on lesser-known resources into and out of the forestry sector is the most dif- species to increase management efficiency and productivity CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS 101 also needs to be extended in many countries. In addition, forest management. Without this ability, producers may be silvicultural knowledge as the basis for improving produc- excluded from key segments of the market. Related to this is tivity of natural forest management is weak in many World the need to address"leakages"within the wood trade, such as Bank client countries and constitutes a key area for future through customs and other controls (see note 3.2, Forest intervention. Effective dissemination mechanisms need to Certification Systems, note 5.5, Addressing Illegal Logging, be established, particularly when wood production is sup- and chapter 2, Engaging the Private Sector in Forest Sector posed to be increasingly channeled to smallholders. Development, and its associated notes). Improve cooperation with the conservation commu- NOTES nity. Given the trend toward greater reliance on forest plan- tations, an agreement is needed between the conservation 1. Different scenarios estimate that China's forest product community and industry as to where and how plantation imports will reach far higher levels, up to 600 million m3, forests can be developed such that potentially negative social should imports continue to rise as they did from 1997 and environmental impacts are minimized. One way to through 2005. Eventually the point may be reached when limited supply, coupled with rising prices for raw materials, achieve this cooperation may be by promoting the mapping will stem further increases in wood imports. of critical forest areas (for example, high conservation value 2. An increasing number of consumer countries--espe- forest [see note 3.1, Mainstreaming Conservation Consider- cially in Europe--are currently developing procurement ations into Productive Landscapes] and related approaches) standards for the import of wood and forest products that and independent forest certification of plantation manage- often demand independent management and chain-of- ment (see note 3.2, Forest Certification Systems). custody certification according to internationally recog- nized principles and criteria (see also note 3.2, Forest Certi- Design plantations to provide multiple functions. fication Systems). Plantations will need to be designed so that they are able to 3. Emerging economies of particular interest in the con- provide the multiple functions expected of SFM, in addition text of this chapter include Brazil, China, India, Indonesia, to supplying raw material to pulp and paper mills and other Malaysia, South Africa, Thailand, and Vietnam. industrial processing. To achieve this objective, further 4. For further information, please refer to the World Bank research will be needed to improve knowledge on silvicul- Forests Strategy (World Bank 2004a) and World Bank's tural techniques, especially on growth performance of Operational Policy on Forests (OP 4.36). indigenous tree species and approaches for creating mixed- 5. This included projects emphasizing biodiversity consid- species or uneven-aged plantation forestry that resembles erations in forest plantations and productive landscapes, near-natural forest ecosystems and, hence, has a higher project components that develop forest certification sys- degree of provision of environmental service functions, tems, and certification to prevent illegal trade of timber and such as biodiversity conservation. forest products, arrangements for plantations, and so forth. 6. Successful (net) plantation area must be distinguished Improve procurement policies of World Bank client from total planted area. The failure rate is often in the range country governments. Governments should be encour- of 20­30 percent, or even higher; plantations in the Philip- pines have had a success rate of only 26 percent (FAO 2003). aged to increase the proportion of their forest product pur- chases that come from sources certified by systems and 7. Especially in Latin America and Southeast Asia, the knowledge about lesser-known species has improved signif- schemes that comply with internationally accepted criteria icantly. In Africa, research and knowledge dissemination and indicators for SFM (see note 3.2, Forest Certification regarding these species needs to be further supported. Systems). 8. Many consumer countries have developed, or are cur- rently developing, procurement guidelines that require cer- Support up-to-date systems for independent forest tification of wood products. certification, including chain-of-custody certifica- 9. In this context, "traditional" refers to technical support, tion. Producers of tropical timber are under increasing provision of material, and the like, while "innovative" refers to pressure to be able to document the origin of their products, payments for environmental services. See note 2.3, Innovative whether to demonstrate legality or achieve sustainability of Marketing Arrangements for Environmental Services. 102 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS SELECTED RESOURCES REFERENCES CITED FAO Forest Products & Services (Trade). http://www Del Lungo, A., J. Ball, and J. Carle. 2006. "Global Planted .fao.org/forestry/site/trade/en/ Forests Thematic Study: Results and Analysis." Working FAO Forest Products & Services (Wood Energy). Paper FP/38, FAO, Rome. http://www.fao.org/forestry/site/energy/en/ FAO. 1995a. "Forest Resources Assessment 1990: Tropical FAO Forests (Facts and Figures). http://www.fao Forest Plantation Resources." Forestry Paper No. 128, .org/forestry/site/28679/en/ FAO, Rome. International Tropical Timber Organization (ITTO). http:// ------. 2005a. State of the World's Forests 2005. Rome: FAO. www.itto.or.jp ------. 2005b. Yearbook of Forest Products 2005. Rome: FAO. ITTO--Market Information Service. http://www.itto.or.jp/ ------. 2006. Global Forest Resources Assessment 2005. live/PageDisplayHandler?pageId=235 Rome: FAO. ITTO--Tropical Forest Update. http://www.itto.or.jp/ ------. 2007. State of the World's Forests 2007. Rome: FAO. live/PageDisplayHandler?pageId=243 FAO COFO (Committee on Forestry). 2005. Seventeenth Ses- GFTN (WWF)­Global Forest and Trade Network, World sion on Forests and Bioenergy, Rome, Italy, March 15­19. Wildlife Fund. http://gfta.panda.org. FAOSTAT. 2005. http://faostat.fao.org/faostat/collections? The Forest Dialogue. http://research.yale.edu/gisf/tfd/ version=ext&hasbulk=0&subset= forestry [last updated Forest Trends. http://www.forest-trends.org September 2005]. World Resource Institute--Forest Management. http:// Forest Trends. 2006. China and the Global Market for Forest www.wri.org/biodiv/about.cfm#ForestManagement Products: Transforming Trade to Benefit Forests and Liveli- High Conservation Value Resource Network. http://hcvnet hoods. Washington, DC: Forest Trends. work.org/ Sander, K. 2007. "Meeting the Growing Demand for Wood. Forest Stewardship Council (FSC). http://www.fsc.org/en/ Sustainable Plantations and Commercial Harvesting Oper- ations." Note submitted to World Bank as input to Forests Programme for the Endorsement of Forest Certification Sourcebook. Unpublished. World Bank, Washington, DC. schemes (PEFC). http://www.pefc.org/internet/html/ World Bank. 2004a. Sustaining Forests: A Development Strat- Forest Certification Assessment Guide (FCAG). http:// egy. Washington, DC: World Bank. www.worldwildlife.org/alliance/2006jul-fca.cfm ------. 2004b. Project Appraisal Document for Vietnam World Business Council for Sustainable Development Forestry Sector Development Project for Vietnam (WBCSD). http://www.wbcsd.ch/ (click on "Forest Prod- (P066051). Report No. 26767-VN. Rural Development ucts") and Natural Resources Sector Unit, East Asia and Pacific Region, World Bank, Washington, DC. SELECTED READINGS ------. 2005. East Asia Region Forestry Strategy. Washing- ton, DC: World Bank. Del Lungo, A., J. Ball, and J. Carle. 2006. "Global Planted Forests Thematic Study: Results and Analysis." Working Paper FP/38, FAO, Rome. CROSS-REFERENCED CHAPTERS AND NOTES Evans, J. 1996. Plantation Forestry in the Tropics. Oxford, Note 1.4: Property and Access Rights U.K.: Clarendon Press. Chapter 2: Engaging the Private Sector in Forest Sector Kangas, K., and A. Baudin. 2003. "Modelling and Projec- Development, and associated notes tions of Forest Products Demand, Supply and Trade in Europe." New York and Geneva, UN/FAO European For- All notes in Chapter 3: Meeting the Growing Demand for est Sector Outlook Studies. Forest Products Whiteman, A., C. Brown, and G. Bull. 1999."Forest Product Note 5.5: Addressing Illegal Logging and Other Forest Crime Market Developments: The Outlook for Forest Product Chapter 6: Mainstreaming Forests into Development Policy Markets to 2010 and the Implications for Improving and Planning Management of the Global Forest Estate."Working Paper Chapter 10: Consultation and Communications in Forest FAO/FPIRS/02, FAO, Rome. Activities Chapter 12: Applying OP 4.10 on Indigenous Peoples CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS 103 N OT E 3 . 1 Mainstreaming Conservation Considerations into Productive Landscapes: Applying High-Conservation-ValueTools onservation has often been treated as a separate C equate to safeguard biodiversity for two reasons. First, the activity from production--protected areas were area assigned to protection is small. The total area set aside identified and set aside for conservation while for conservation purposes is less than 12 percent of the production areas were largely ignored by those with a con- earth's land surface (Brooks and others 2004). Second, pro- servation agenda.1 It is now widely recognized that a num- tected areas are often created in areas where no other pro- ber of benefits can be achieved by integrating conservation ductive land uses are possible, meaning that protected and production. areas tend to over-represent infertile, inaccessible, and First, conservation goals cannot always be fully achieved often low-biodiversity areas, and under-represent highly by using only protected areas. Critical biodiversity values diverse, productive ecosystems. They also often fail to take and ecosystem services are also supported by many produc- account of areas that provide irreplaceable livelihoods to tion forests. Many forests also have social and cultural val- forest-dependent peoples and are critical to the identity of ues that may not be appropriately dealt with through exclu- unique human cultures. sionary protection but can often be taken into account in Although these problems are recognized, pressures on production forest management. Forest-dependent commu- land are already high, and in many places there are few nities are likely to have links to nearby forest areas so that opportunities to expand protected areas or increase the rep- the creation of a conservation area in another location resentation of protected habitats.3 brings few or no benefits. Recently, the focus has shifted to improving the conser- Second, promoting conservation friendly practices in vation of biological, social, and cultural values within a production forests surrounding protected areas can greatly combination of protected and productive landscapes. The enhance the benefits to conservation through a combination addition of production areas dramatically increases the area of reducing the threats to the protected areas and increasing of land and the range of habitats in which some form of the effective area covered. For example, threatened species conservation can be practiced, providing more opportuni- within protected areas may be able to use adjacent land to ties to address conservation priorities that are poorly repre- supply some of their needs (such as food or shelter), thus sented in protected areas. increasing the overall population the area can sustain. Third, addressing conservation within production areas THE HCV CONCEPT--WHY IT IS USEFUL makes conservation much more widely owned and under- FOR INTEGRATING CONSERVATION AND stood. People involved in productive land uses begin to PRODUCTION understand conservation and develop their own approaches to implementing it. In mainstreaming conservation, the The High Conservation Value (HCV) concept provides a separation between conservation and production is framework for identifying forest areas with special attrib- removed. Land users are mandated to consider how their utes that make them particularly valuable for biodiversity or actions can benefit conservation, both in their own land to local people (that is, High Conservation Value Forests, and in the broader context--a crucial extension. HCVF). The main objective of applying this framework is Although there are major differences among countries to design and implement appropriate management options in percentage of forests declared protected, existing cover- for the area of concern. Strengths of the concept include the age of protected areas globally2 is widely regarded as inad- following: 104 The concept is designed to integrate production and pro- a forest may contain or maintain were identified (see box tection. Therefore, it does not preclude productive use of 3.5) and the identification and protection of HCVFs some or even all of the HCVF identified. Management became a requirement for FSC certification. It quickly prescriptions are developed based on the best way to pro- became apparent that the concept could be useful not only tect the values identified. within forest certification, but also in a wider land-use con- The methodology is not prescriptive, but provides a text and it is now used for a range of situations. framework for systematic identification of values and The HCV approach is applicable to a wide range of nat- planning for their protection. The HCV approach uses ural resource management scenarios. It is used both within and builds on the findings of whatever conservation or the certification context and more widely, to guide both land-use planning activities are already in place rather SFM within production forests, and land-use planning for than replacing them. This makes it both more cost effi- responsible production of natural resources. HCV is rou- cient and less threatening. tinely applied for developing management prescriptions to The HCV framework places equal emphasis on environ- support conservation goals in production forests under the mental and social values and requires a consultative FSC and Malaysian Timber Certification Council certifica- approach to identify critical values and areas and to reach tion schemes. Outside of certification, it is mainly being management decisions. used for land-use planning purposes, including identifica- The concept is widely accepted and already integrated tion of set-aside areas for total protection and plantation into the land-use planning frameworks of several nations design. or regions and within sustainable natural resource man- For SFM in natural forests, the HCV approach has agement standards and certification schemes. proved to be a robust tool for undertaking forest land-use planning that integrates conservation and production The HCVF concept was initially developed for use in for- requirements. The output generally indicates areas needing est certification by the FSC in 1999.4 Six generic HCVs that total protection, areas needing specific management, and Box 3.5 The Six Types of High Conservation Value Areas High Conservation Value areas are critical areas in a HCV3: "Areas that are in or contain rare, threatened, landscape that need to be appropriately managed to or endangered ecosystems." For example, patches of a maintain or enhance HCVs. There are six main types regionally rare type of freshwater swamp in an Aus- of HCV areas: tralian coastal district. HCV1: "Areas containing globally, regionally, or HCV4:"Areas that provide basic ecosystem services in nationally significant concentrations of biodiversity critical situations (for example, watershed protection, values (e.g., endemism, endangered species, refu- erosion control)." For example, forest on steep slopes gia)." For example, the presence of several globally with avalanche risk above a town in the European Alps. threatened bird species within a Kenyan montane for- est. HCV5:"Areas fundamental to meeting basic needs of local communities (for example, subsistence, HCV2:"Globally, regionally, or nationally significant health)." For example, key hunting or foraging areas large landscape-level areas where viable populations for communities living at subsistence level in a Cam- of most if not all naturally occurring species exist in bodian lowland forest mosaic. natural patterns of distribution and abundance." For example, a large tract of Mesoamerican flooded grass- HCV6: "Areas critical to local communities' tradi- lands and gallery forests with healthy populations of tional cultural identity (areas of cultural, ecological, Hyacinth Macaw, Jaguar, Maned Wolf, and Giant Otter, economic, or religious significance identified in as well as most smaller species. cooperation with such local communities)." For example, sacred burial grounds within a forest man- HCV Resource Network Charter (2006, pp. 2­3), adapted from the FSC. NOTE 3.1: MAINSTREAMING CONSERVATION CONSIDERATIONS INTO PRODUCTIVE LANDSCAPES 105 areas that can be used more intensively without threatening izations, particularly banks and screened pension funds, are maintenance of conservation values. For example, in the making commitments to avoid investing in poorly managed Russian Komi Republic, the HCV approach has been used HCVF. to guide forest land planning exercises at the regional level, including rezoning concession areas based on public con- OPERATIONAL ASPECTS sultation and identification of social and biological HCVs. At the management unit level, the HCV approach can be The HCV approach provides a systematic process for iden- used to guide ongoing management of natural forests. The tifying critical conservation values--both environmental presence or absence of each HCV is determined based on an and social--within a forest tract or production unit, and for analysis of existing information and the collection of addi- planning forest or land-use management to ensure that tional information where necessary to fill gaps. The existing these values are maintained or enhanced (see examples in protection of, and threats to, the values, and the potential boxes 3.6, 3.7, and 3.8).6 HCV forest is the area of forest that future threats (including those arising from the proposed needs to be managed to protect its conservation values. The activities) need to be identified to determine management HCV approach is based on a three-step process: prescriptions. In areas zoned for conversion to agricultural or industrial 1. Identify the critical conservation values that are present forest plantations (for example, palm oil and pulp), HCV is (the HCVs), and the areas where they occur. also being widely used to identify areas that are low risk for 2. Manage the HCVs by addressing the threats to the values, conversion and those that must be maintained and managed both now and in the future (including the threats posed as natural vegetation to preserve critical conservation values. by any planned activities). It can also provide guidance on plantation planning and 3. Monitor the HCVs to ensure that management prescrip- management to optimize conservation goals (see note 3.3, tions are effective in maintaining or enhancing the val- Forest Plantations). For example, the main industry standard ues, and adapt the management regime to take account for palm oil (the RSPO [Roundtable on Sustainable Palm of any changes. Oil] Principles and Criteria)5 includes a prohibition on con- version of HCV areas to oil palm plantations and a require- An ideal HCV process would follow the sequence illus- ment to maintain HCVs within areas affected by oil palm trated in figure 3.3. The strength of the HCV approach is plantations and mills. Also, outside of forest certification, at that it recognizes variations in countries and situations least one pulp company in Indonesia has made public com- where it is applied (see box 3.9). Where existing protection mitments not to convert HCV forests to pulp plantations. In is good and threats limited, the requirements will differ a conversion scenario, the HCV approach needs to be incor- from those in a similar area where existing protection is porated into an adequate safeguards framework, notably to poor and threats extensive. Although the HCV approach ensure legal compliance, protect land use and tenure rights, was originally developed for use at the scale of forest man- address consent procedures, and ensure that the concept is agement units, it has increasingly been applied at various not inappropriately used to justify conversion based on scales up to the landscape level. incomplete information. Where the HCV approach is used for forest land-use HCV process: Implementing HCV assessment and planning involving conversion, identifying which areas of defining management prescriptions forest cannot be converted to plantations is a core part of this process, but management recommendations for other Identification of the presence and location of areas of forest are also extremely important. HCVs. For each of the six HCVs, a systematic process is Finally, the HCV concept has been invoked in the for- required to establish whether it is present in the area of mulation of procurement and investment policies. A grow- interest and, if present, the approximate extent. ing number of companies and governments are introducing A national interpretation of the HCVF toolkit, if it exists, purchasing policies that preclude the purchase of wood or is the first point of reference as the HCVs are defined for the wood products from forest areas where HCVF are not man- national context and relevant data resources are listed. In aged for their values. For example, members of the WWF's the absence of a national interpretation, relevant informa- GFTN are committed to excluding material from HCVF, tion can be obtained from other regional interpretations. unless certified by the FSC. A number of investment organ- The HCVF toolkit provides generic guidance. The HCV 106 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS Figure 3.3 HCVF Identification and Follow-up: The Ideal Picture Global toolkit · What are the potential HCVs in this region Identify or country? · Which values occur in the forest area? · Where are these values located? · Available data · Existing classifications · What are existing threats to these values? · Expert opinion and · What forest area is needed to maintain interpretation Manage individual expertise this value? · Working group · How should this forest area be managed? Revision with balanced National representation · What needs to be monitored? · What measurable parameters and thresholds for action can be identified? Monitor · How will monitoring be done? · How will the results off monitoring be used? HCVF Resource Network process draws on sources of data that are already available national mapping processes give further useful details on (box 3.10), which may take many forms. habitats, soil type, and current or planned land use. Obtaining reliable maps is an important component Existing data and maps can be combined with specifically of the process. The maps may include data on recent for- commissioned surveys to build a picture of the location est cover, hydrology, elevation, and slope, but many of the values. Box 3.6 Identifying HCVFs in State Forests and Taking It to Scale: The Case of China The WWF and IKEA Co-operation on Forest Projects five-year provincial forestry development plan, and in selected two local forestry bureaus in northeast China Heilongjiang province, the HCVF concept will be inte- as pilot sites for implementing SFM techniques. grated into the provincial standard for identifying HCVFs were identified and assessed in the 420,000 forests that provide key ecological benefits. Alongside hectares of forests managed by these two bureaus. The this HCVF work, the projects also led to the identifica- detailed work mapped out HCVFs as areas that should tion of potential HCVFs at the landscape and regional be set aside as nature reserves, areas where logging levels within northeast China and Inner Mongolia. In should be banned, and areas with important stands of 2006, China's State Forestry Administration incorpo- Korean pine. It also led to these two forestry bureaus rated the HCVF concept into the national guidelines achieving the first FSC certification of state-owned on SFM planning. Thus, areas identified as HCVFs will forests in China. After their participation in this work, be designated priority areas for sustainable manage- the two involved provincial governments firmly ment or protection. These guidelines are to be distrib- embraced the HCVF concept. The Jilin Forestry uted to all provinces in China for implementation by Department introduced HCVF identification into its local government or forest management units. Source: WWF 2007. NOTE 3.1: MAINSTREAMING CONSERVATION CONSIDERATIONS INTO PRODUCTIVE LANDSCAPES 107 Box 3.7 Applying HCVF in Papua New Guinea In support of meeting the Global Forest Target of PNG's ecological diversity posed a challenge to cre- improving the management of 300 million hectares of ating a national-level HCVF interpretation. At the production forests through forest certification by 2010 time of preparing the technical progress report, large- [http://www.worldwildlife.org/alliance/targets.cfm], scale industrial field testing had yet to be conducted, WWF has developed a first draft of an HCVF toolkit but testing had been conducted in smaller operations, for Papua New Guinea (PNG). By facilitating the iden- and additional field trials were to be used to test tification of HCVFs, companies will be able to manage whether monsoon forests, considered "fragile forests," these according to FSC principles while maintaining should be excluded from logging and conversion their high conservation attributes, and pursue certifi- activities altogether. cation under this system. Other outputs of the project included the creation The process of developing the HCVF national of coarse-scale HCVF maps and an effort to lobby the toolkit brought together government, NGOs, private government to recognize HCVFs in provincial and industry, and land owners to develop consensus on the national forest plans. At the time of drafting the tech- meaning of HCVF in PNG. After a first draft was cir- nical progress report, it was indicated that the com- culated to stakeholders, comments were incorporated pleted PNG HCVF national toolkit was to be adopted and a final version was made available online in Febru- by the PNG FSC National Standards for compliance ary 2006 (see http://www.wwfpacific.org.fj/publica with the FSC's Principle 9. tions/png/HCVF_Toolkit_First_Ed.pdf). Source: PNG FSC 2006. Managing the HCVs. The aim of HCV management is to agreed standard and monitored for any negative effects), ensure that the HCVFs identified are maintained or and areas that do not require specific precautions. enhanced. The activities to achieve this aim can start with This begins with knowing the area of forest that is delineating areas that need total protection, areas requiring required to maintain each relevant value. For example, to special management (for example, production activities that maintain or enhance an HCV1 area (containing a specified are consistent with conservation aims, managed to an set of rare, threatened, or endemic species; see box 3.5), the area of forest required to support viable populations of those species needs to be defined. Thus, some knowledge of the Box 3.8 Mainstreaming HCVF Work in Bulgaria biology of the species in question is required to define areas that are critical habitats or resources for breeding and forag- ing, areas that permit movement of individuals between these The government of Bulgaria formally endorsed the resources, or areas that protect these resources. A similar national HCVF toolkit and adopted it as a process needs to be applied to each HCV in turn, with equal methodology for biodiversity inventories. The consideration given to social, cultural, and ecological values. toolkit will be included in the national standards In addition, management of HCVs requires understand- for forest management planning in Bulgaria. This ing the present and future threats to the values, including will ensure that more valuable forests will benefit those posed by any planned activities. Threats may be from from its stipulations and will be managed recog- proposed management activities, such as logging operations nizing the HCVs. The toolkit is also being used by or plantation establishment, or from external activities, such the United Nations Development Fund and a number of NGOs in Bulgaria for their biodiver- as hunting of wildlife, encroachment for agriculture, sity-related work and by the 10 nature parks in the planned conversion of land, or illegal logging. Examples of country. the type of methodologies for threat assessment that can be used in HCV management include the 5-S Framework for Source: WWF 2007. Conservation Project Management and the Participatory Conservation Planning tools developed by The Nature Con- servancy. 108 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS Box 3.9 National Interpretation of HCV Guidelines An important element of the HCV process is the The objective of national interpretation is to define national-level interpretation. Although it is possible to HCVs and establish guidelines on management for use the generic guidelines of the Global HCVF Toolkit, specific cases. This includes deciding the relevant forest it is much more convenient for forest managers if the values, such as forest types, species assemblages, and global HCV definitions are adapted for use in their the like, and specifying parameters to measure them. It particular country, region, or forest type. This step can also involves, for each forest value and parameter, be done by a specific HCV working group, drawing on defining thresholds for deciding when to designate a existing groups working on related issues or groups HCV (that is, a value that is significant at the global, working on defining or mapping forest values. This regional, or national level). Thresholds can include working group can interpret the HCV definitions to actual locations, levels, numbers, or types. develop a national standard. Two types of processes A national interpretation serves two purposes: can be used for creating national or regional standards: It facilitates on-the-ground application of the HCV A multi-stakeholder process that is consensus based. concept by producing HCVs that are clearly Though more time intensive, this provides a defini- defined, detailed, and straightforward in a manner tive interpretation with wide-ranging support as the that can be understood by nonspecialists and national or regional standard for HCV. unambiguously assessed at forest levels. This A technical adaptation process involving a technical ensures greater consistency in the way it is used. working group or team. This is often a practical way The process itself is useful because it brings together forward for projects in countries with no national a range of interests and stakeholders and con- standard. However, it must be made explicit that the tributes to the development of a shared understand- objective is not national standard setting and that ing of the best way to protect environmental and the outcome is not a definitive one. social values. Source: ProForest 2003. Box 3.10 Key Information Sources for HCV Identification Specific guidance (all HCVs) Ecosystem service information (HCV4) Existing national or regional HCV interpretations Soil maps, topographic maps (see www.hcvnetwork.org for a full list) Watershed and catchment boundaries Case studies Fire incidence Landscape-level HCV maps Social and cultural information (HCVs 5 and 6) Habitatandbiodiversityinformation(HCVs1,2,and3) Maps of human settlement and community data Maps of known habitats Social studies conducted by industry, NGOs, or Lists of threatened or endangered species and distri- research institutions bution maps NGO projects and current campaigns on the com- Protected areas--location, status, threats, reasons munities or in the region for gazettement Conservation NGO information sources Forest inventories Source: ProForest 2007. NOTE 3.1: MAINSTREAMING CONSERVATION CONSIDERATIONS INTO PRODUCTIVE LANDSCAPES 109 Finally, any existing protections, such as functioning pro- Assessment, Management & Monitoring of High Con- tected areas or nature reserves can be considered. servation Values: A practical guide for forest managers The outcome of this process should be a documented (ProForest 2008a) is available from www.ProForest.net plan, integrated into the operational management plan, that and www.hcvnetwork.org. Good Practice Guidelines for sets out management prescriptions, taking into account High Conservation Value Assessments: A Methodological each HCV and the relevant threat assessments. Plans devel- Approach for Practitioners and Auditors (ProForest oped in this way for the protection of the same value in two 2008b) is available from Proforest and www.hcvnet different locations may be very different depending on the work.org. levels of threat and existing protections. Good practice in HCV assessment and management Monitoring the HCVs. After management plans have been defined, a monitoring program needs to be in place to To ensure that an HCVF assessment is useful, some impor- provide managers with up-to-date information on the tant elements should be considered.8 HCVs for which they bear responsibility, as a basis for man- agement intervention or ongoing adjustment of operational Data requirements. Appropriate use of data is at the heart plans. Monitoring plans should be derived from manage- of the HCV assessment process. Identifying HCVs and plan- ment objectives and written into the management plan. ning appropriate management requires data to allow the Data gathered during the HCV assessment should be used assessor to know the values that are likely to be present and to determine the generic and specific objectives of the mon- the potential impacts of different management scenarios. itoring program. The aim should be to develop a set of sim- Preparation is therefore critical to ensure that the full range ple, measurable indicators for each key value. Monitoring of applicable information is available. The impact and scale activities can include social and biological surveys and of planned operations, and the likely conservation impor- direct and indirect observation of indicators, and are likely tance of the assessed area, can only be properly understood to involve detailed data collection over the long term. with a solid knowledge base. These also help determine the There are a number of tools available to support the use team and stakeholder consultation requirements. of the HCV approach, all of which are available at the HCV Resource Network Web site (http://www.hcvnetwork.org): Team requirements. HCV assessments are typically car- ried out by small teams with practical conservation experi- The HCV Resource Network. The network was formed by ence. Technical expertise (ideally, local expertise) in a rele- key organizations with an interest in the HCV concept to vant topic such as ecology, social issues, or environmental support and promote the consistent use of this concept management is very important, but an HCVF assessment is across its range of uses.7 The network's Web site provides also much more likely to be carried out successfully if it is a range of services, including general information on the undertaken by a team with a thorough understanding of the HCV concept, information on HCVF projects and case whole HCV process and experience in implementing it. studies, country-specific briefings, guidance and support material, contact details for HCV practitioners, details of Consultation requirements. Consultation is an essen- conferences and training events, and links to relevant tial part of the HCV process. Appropriate stakeholders, resources. including industry representatives, conservation NGOs, The Global HCVF Toolkit. The toolkit (ProForest 2003) local government, and local community representatives, provides globally applicable information, but also con- have an important role to play in ensuring a successful tains sections that describe the process of defining HCVs outcome, both in identifying values and determining man- at the national level and guidance for forest managers on agement options. Consultation serves a number of impor- how to identify and manage HCVs. The toolkit has been tant purposes: interpreted for several national contexts; it is available from the Web site. To gather information on the social and environmental Good practice guidelines for HCV identification manage- situation in the assessment area, to contribute to the ment and monitoring. Two documents (ProForest 2008a HCV identification and decision making process and ProForest 2008b) set out the process steps that are To provide information on potential negative impacts of important to a credible HCV assessment process. The operations on HCVs 110 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS To identify possible approaches for avoiding, mitigating, understanding of the concept itself, as well as technical or compensating for negative impacts of operations competence from practitioners, to be useful and to ensure To eliminate gaps in data, where information is held by that all the different interests and values are balanced. stakeholders To avoid or significantly reduce conflicts arising from Prediction of costs. The cost of an HCVF assessment is operations closely related to the number of people involved and the time To ensure the transparency of the assessment process and required, which, in turn, depend on the size and complexity the credibility of the decisions made of the forest area, the number of HCVs potentially present, the types of land use proposed for the area, the availability of Use of the precautionary principle. Where data are data, and the complexity of the local situation. There are lacking, it can be difficult to make management decisions. excellent examples of HCVF assessments carried out in a few In the case of low- or medium-impact operations, if there is days with a small team, or even internally by a company, and insufficient information for specific management of a given costing relatively little. At the other end of the scale, large HCV, managers should aim to implement best operational assessments in complex situations, particularly involving practice and develop a monitoring plan that will detect forest conversion, can cost tens of thousands of dollars. Sim- changes in the status of an HCV and allow prompt action. ilarly, national interpretation processes can be relatively The higher the potential concentration of values and the straightforward and cost only a few thousand dollars or be impact of the operation, the further the management plan complex and involve significant costs. should go toward protection and restoration. In the context of conversion, the land manager must try to reduce uncer- Follow-up of HCVF implementation. Active stewardship tainty, if necessary by commissioning surveys and field work of HCVFs is necessary for implementation. In Indonesia, in to determine the limits and thresholds of HCVs, and secure response to external pressure to protect the HCVFs in its these areas before any conversion. Stakeholder engagement concessions, the pulp and paper company APP committed is critical to a credible outcome; for example, the full range to protecting the HCVF found in one of its concessions. In of stakeholders should be involved in defining what a suffi- 2005, APP commissioned Smartwood to map HCVFs in cient area represents. three of its other forest management units in the area. On the basis of this mapping, APP announced that it would Reporting and transparency. The end product of an protect the HCVFs identified and signed an agreement with HCVF assessment should be management recommenda- Smartwood to track how well it is managing its HCVFs over tions about forest that must be protected and forest that the next five years. However, recent monitoring reports must be managed in a specific way. HCVF assessment showed that APP failed to protect these areas from fires and reports should contain sufficient information for an expert illegal logging, despite its earlier pledges. This case high- third party to be able to judge whether the identification lights the need for active stewardship of HCVFs if company process and consultation were adequate to justify manage- commitments are to make a real difference in practice ment decisions. This assessment should be done in a clear (WWF 2007). and consistent way, and include a final peer review and con- sultation process to guarantee quality control. A systematic framework for analysis. HCVF is not a panacea and cannot resolve every intractable land-use debate involving forests. However, it provides a systematic LESSONS LEARNED AND RECOMMENDATIONS framework for analysis, gives consideration to a wide range FOR PRACTITIONERS of conservation values in an integrated process, and incor- Although the HCVF concept was only developed in 1999, it porates consultation and involvement of stakeholders in has already been widely used and some key issues have finding an appropriate solution, all of which combine to emerged: make it a very useful tool. Good understanding of the concept and technical NOTES competence are important for proper application. The framework is relatively sophisticated and has multiple 1. It should be noted that in most countries regulations elements, as discussed earlier in this note. It requires a good and silvicultural guidelines include conservation aspects. NOTE 3.1: MAINSTREAMING CONSERVATION CONSIDERATIONS INTO PRODUCTIVE LANDSCAPES 111 However, these general rules are seldom sufficient to guide ProForest. 2003. The High Conservation Value Forest Toolkit. actions in particular sites. 1st ed. Oxford: ProForest. http://www.proforest.net/ 2. IUCN World Commission on Protected Areas, publication/pubcat.2007-01-19.4709481979. http://iucn.org/themes/wcpa/. ------. 2008a. Assessment, Management, and Monitoring of 3. The need to increase area under protection should be High Conservation Values: A Practical Guide for Forest defined by each country and its particular conditions Managers. ProForest, Oxford. because in some World Bank client countries large shares of ------. 2008b: Good Practice Guidelines for High Conserva- forests are already protected while in most others more is tion Value assessments: A Methodological Approach for needed. Practitioners and Auditors. Proforest, Oxford. 4. FSC Principles and Criteria: Principle 9: Maintenance of High Conservation Value Forests. According to Principle 9 of FSC, "management activities in HCVF should maintain REFERENCES CITED or enhance the attributes which define such forests. Deci- Brooks, T. M., M. I. Bakarr, T. Boucher, G. A. B. da Fon- sions regarding high conservation value forests shall always seca, C. Hilton-Taylor, J. M. Hoekstra, T. Moritz, S. be considered in the context of a precautionary approach" Olivieri. 2004. "Coverage Provided by the Global Pro- (http://www.fsc.org/en/about/policy_standards/princ_crit tected-Area System: Is It Enough?" BioScience 54 (12): eria/11). 1081­91. 5. The Round Table on Sustainable Palm Oil (RSPO) Prin- HCV Resource Network.2006.Welcome to the HCV Resource ciples and Criteria are available at http://www.rspo.org. Network (Web site). http://www.hcvnetwork.org. 6. This section draws heavily from the HCVF toolkit. All PNG FSC (Papua New Guinea Forest Stweardship Council). users of this note are encouraged to consult the detailed 2006. "HCV Forest Toolkit for Papua New Guinea." HCVF toolkit because it contains helpful checklists and http://www.wwfpacific.org.fj/publications/png/HCVF_ concrete examples. The toolkit is available at Toolkit_First_Ed.pdf] http://www.hcvf.org. ProForest. 2003. The High Conservation Value Forest Toolkit. 7. The organizations making up the founding Advisory 1st ed. (parts 1-3). Oxford: ProForest. http://www.pro Group included the World Bank, World Wildlife Fund forest.net/publication/pubcat.2007-01-19.4709481979. (WWF), IUCN, International Tropical Timber Organiza- ------. 2007. "Mainstreaming Conservation Considera- tion (ITTO), WBCSD, Greenpeace, Forest Ethics, The tions into Productive Landscapes: Applying High Con- Nature Conservancy, The Forest Peoples' Movement, Tetra- servation Value (HCV) Tools." Note submitted to World Pak, Mondi, and the FSC (HCV Resource Network 2006). Bank as input to Forests Sourcebook. Unpublished. World 8. This section draws on ProForest 2003. Bank, Washington, DC. ------. 2008a. Assessment, Management, and Monitoring of High Conservation Values: A Practical Guide for Forest SELECTED READINGS Managers. Proforest, Oxford. Dinerstein, E., G. Powell, D. Olson, E. Wikramanayake, R. ------. 2008b: Good Practice Guidelines for High Conserva- Abell, C. Loucks, E. Underwood, T. Allnutt, W. Wettengel, tion Value assessments: A Methodological Approach for T. Ricketts, H. Strand, S. O'Connor, and N. Burgess. 2000. Practitioners and Auditors. Proforest, Oxford. "A Workbook for Conducting Biological Assessments WWF (World Wildlife Fund). 2007. "High Conservation and Developing Biodiversity Visions for Ecoregion- Value Forests: The Concept in Theory and Practice." Based Conservation." Conservation Science Program, Forests for Life Programme, WWF International, Gland, WWF, Washington, DC. Switzerland. http://assets.panda.org/downloads/hcvf_ HCV Resource Network.2007.Welcome to the HCV Resource brochure_012007.pdf. Network (Web site). http://www.hcvnetwork.org. Knight, A., R. Cowling, and B. Campbell. 2006. "An Opera- tional Model for Implementing Conservation Action." CROSS-REFERENCED CHAPTERS AND NOTES Conservation Biology 20 (2): 408­19. Note 3.3: Forest Plantations Nasi, R., and A. Fabing. 2001. "Integration of Biodiversity into National Forestry Planning: Synthesis Report." CIFOR Biodiversity Planning Support Programme, Bogor, Indonesia. 112 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS N OT E 3 . 2 Forest Certification Systems F orest certification has become of increasing conse- chasing decisions. Certification was conceived in the early quence to forest management and policy in recent 1990s as a market-based mechanism aimed at rewarding years, as consumers have become increasingly good management of forests with better market access and scrupulous about the source of their forest products. This possibly price premiums--particularly to high-priced and note discusses the potential for certification not only to act as environmentally sensitive markets in developed countries-- an investment safeguard and supplement traditional World for products from certified forests. Since then, the area under Bank project monitoring, but also to provide a range of certified forest management increased considerably, from 30 other benefits, such as market access and improved gover- million hectares in 2002 to approximately 250 million nance and stakeholder relations. The overarching goal of hectares worldwide today. The number of products bearing supporting the development and adoption of forest certifi- certification labels and the number of different certification cation is to harness its potential while avoiding associated systems in the marketplace have also proliferated. risks. This note describes how, in addition to providing an investment safeguard, certification can achieve less tangible OPERATIONAL ASPECTS benefits, such as resolving stakeholder conflict, providing forest surveillance where government capacity is inadequate, Generally, the first step of the certification process consists and enabling market access. This subject is interconnected of a conformity assessment in which the quality of a pro- with many of the notes within this sourcebook, including duction process (for example, its environmental impacts, those on forest governance (chapter 5), illegal logging (note social performance, technical aspects, efficiency) or special 5.5), and small and medium enterprises (note 2.2). features of products or services are assessed against require- ments specified in a standard. In the case of forest manage- ment certification, independent assessment provides an OVERVIEW AND CONSIDERATIONS analysis of the applied management practices in relation to OF INTEREST FORWORLD BANK ACTIVITIES the standard requirements. If successful, a certificate is Reliable information on social and environmental impacts issued that can be used as assurance that the operation is in of production processes becomes increasingly important for compliance with the provisions set forth in the applied stan- developing and maintaining business relations as markets dard. Continual conformance monitoring of the certified become increasingly integrated at the global scale. Demand operation is carried out through repeated surveillance visits for such information originates from consumers, including during the validity period of the certificate. In general, cer- governments, who are concerned about the negative conse- tificate holders are allowed to use a label and to make claims quences of their purchasing decisions as well as from a about their adherence to the standard requirements. growing number of businesses that are interested in avoid- In addition, most certification systems developed rules ing damage to their images, potentially triggered when for the handling of certified timber in downstream process- engaging in socially and environmentally harmful activities. ing facilities, such as saw mills, paper mills, or furniture pro- Against this background, forest certification emerged as an duction, that allow certified timber to be traced throughout instrument to provide information on forest management the supply chain to the end consumer. Application of these performance and thus assist consumers and businesses, pre- rules and the subsequent certification of the implemented dominantly in the timber products sector, with their pur- processes in the timber industry are the basis for claims on 113 the origin of products from a certified forest. This chain-of- according to a standard that at a minimum meets, and fre- custody certification is therefore an indispensable tool to quently exceeds, a country's legal requirements for forest link supplies from certified forests to consumer demand for management. Certification could therefore be used to sup- certified products. It should be noted, however, that the plement or in some instances even replace governmental scope of chain-of-custody certification is limited to the surveillance mechanisms in the sector and thus contribute processes for control of certified and uncertified material to more efficient use of scarce public resources. flows and does not include the social or environmental quality of timber processing.1 Providing a role model. To achieve certification under The World Bank introduced certification as an important internationally acceptable standards, companies must have element of its safeguard policy on forests (World Bank adequate management systems in place. In comparison with 2004), making use of the control and surveillance mecha- competing businesses, these companies often demonstrate nisms provided by certification systems to supplement the better economic performance and can serve as a benchmark World Bank's own monitoring efforts. Certification under a for SFM. system acceptable to the World Bank is required for enabling investments into commercial forest harvesting operations at Market access. Maintaining or expanding access to export an industrial scale. Alternatively, operations can adhere to a markets is critical to the economic viability of the forest sec- time-bound action plan accepted by the World Bank that is tor in many countries. Particularly for timber from devel- adequate to achieve certification under such a system within oping countries, market access can be hampered by con- a defined time frame. The World Bank's policy more clearly sumer concerns about the negative impacts of forest defines the forest management standards a certification sys- harvesting. It is increasingly important for companies to be tem should require (paragraph 10, OP 4.36) and the neces- able to demonstrate the sustainability of their products and sary minimum thresholds for the rules governing the opera- to be able to trace the source materials through the supply tions of certification systems (paragraph 11, OP 4.36) for chain (chain of custody). Many certification systems can them to be acceptable to the World Bank. help provide this assurance. Beyond this more narrowly focused perspective of certi- fication as a safeguard tool are a number of reasons to use LESSONS LEARNED AND RECOMMENDATIONS this instrument and related processes and institutions more FOR PRACTITIONERS proactively, including the following: Barriers to certification Conflict mitigation and stakeholder dialogue. Given the great potential of forests to deliver multiple products In the past, a number of barriers particularly prevalent in and services, interests diverge widely and conflicts over the developing countries became apparent, considerably ham- use of forest resources are extensive in many forest regions. pering the development of certification schemes and their If properly designed, certification systems provide mecha- widespread application. The gap between then-current for- nisms for the involvement of stakeholders at the national est management practices and the performance level level in the process of setting standards for forest manage- required by many standards resulted in high compliance ment. In addition, local communities and other stakehold- costs and deterred many companies from pursuing certifi- ers are normally consulted during the certification audit cation. Furthermore, the kinds of institutions required for and their concerns and opinions are considered in the certi- developing and conducting the processes for reliable certifi- fication decision. In the course of such processes, the avail- cation are often not available or lack the capacity to perform able information is improved not only about forest man- the complex tasks involved. Experience has also shown that agement practices but also about the varying and conflicting it is considerably more difficult for small-scale operations to interests of stakeholders. This increases transparency con- achieve certification and access markets for certified prod- siderably and may contribute to better understanding ucts because of economies of scale that substantially between the different actors in the sector, and thus bears the decrease per-unit costs of certification for bigger enter- potential to mitigate conflicts. prises. So far, only a limited number of timber processing companies in many developing countries have chain-of- Supplementing government forest surveillance. The custody certification, a situation that adds to the difficulties certification process consists of an assessment of operations for primary producers to access certified supply chains. 114 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS The development of acceptable certification systems to conduct the tasks involved in managing participatory should form a key element of the World Bank's forest sector processes. The World Bank's provisions for standard setting, projects to overcome these barriers. This activity should which clearly require locally adapted forest management receive increased support, for several reasons: standards developed with the participation of a wide range of stakeholders, provides further justification for support- In the absence of acceptable certification systems, the ing these processes. World Bank is not in a position to support a wide range Consensus-based decision making regarding contentious of commercial activities involving key players and deci- issues is often a lengthy process with a number of uncer- sion makers in the forest sector. This situation may con- tainties. Progress may therefore not follow strict World tribute to unduly limiting the World Bank's influence to Bank project deadlines or adhere to narrowly defined proj- marginal fields and negatively impact the World Bank's ect targets. Furthermore, care should be taken to not unduly potential role in improving performance in the sector. influence the process so that results not accepted by a num- Integrating forests into sustainable economic develop- ber of the involved and affected stakeholders can be ment is an overarching goal for World Bank interven- avoided. Eligibility of standard-setting initiatives for poten- tions and is greatly facilitated by the existence of appro- tial World Bank funding may best be based on the criteria priate forest certification systems. defined in OP 4.36 and on the interpretation of these provi- Small-scale operations potentially risk becoming further sions outlined in chapter 9, Applying Forest Policy OP 4.36, marginalized through certification activities because and chapter 11, Forest Certification Assessment Guide: achieving certified status has proved to be particularly Summary on Use, in section II of this sourcebook. difficult for landholders with small areas and for com- Today, two certification systems are operating at the munity forest enterprises. Certification could therefore international level--FSC (http://www.fsc.org) and the negatively affect the World Bank's overall goal of poverty PEFC (http://www.pefc.org). These umbrella organizations reduction and the declared strategy to make use of forest provide international framework standards for further elab- benefits for the poor. More proactive World Bank sup- oration through standard-setting initiatives at the national port to the development of appropriate systems could level. To maintain flexibility and to provide a basis for certi- help avoid these potentially adverse impacts of certifica- fication that can later be used by companies interested in tion on the World Bank's overall goals (see also note 1.3, either of the international systems, standard-setting Indigenous Peoples and Forests, for particular issues processes should strive to adhere to the rules and regula- concerning Indigenous Peoples). tions of both the FSC and PEFC. This approach could reduce conflicts that may arise from an early and potentially Harnessing the potential of certification for improving for- contentious selection of the system to which a national cer- est sector performance and avoiding the risks to World Bank tification system may want to adhere to. activities from a lack of adequate systems requires targeted activities to overcome the bottlenecks that are still wide- Build local certification capacity. The skills to imple- spread in many World Bank client countries. ment and manage certification systems, particularly in the field of forest management, are underdeveloped in many Support to certification system development World Bank client countries. Although international certifi- The activities outlined below should be considered when cation systems and certifying bodies provide services in providing support to the development of certification sys- these countries, the employment of expatriate personnel tems through World Bank­financed projects. adds to the high costs for certification in developing coun- tries. Establishment of local expertise for the tasks of certi- Assist standards development processes. Currently, fication assessment and possibly accreditation of certifying the lack of appropriate standards presents one of the most bodies would often reduce costs and, most of all, add to the important formal obstacles for the widespread application maintenance of national ownership over certification and of forest certification. While international and national thus contribute to more widespread acceptance of the tool. organizations may be available to implement other elements of certification (such as certification assessments), stan- Assist small, individual operations in pursuing cer- dards development has to be carried out by local initiatives tification. Within its projects, the World Bank may that, in many countries, lack the funding, capacity, and staff finance investments directed at the improvement of forest NOTE 3.2: FOREST CERTIFICATION SYSTEMS 115 management practices in selected enterprises. Given the SELECTED READINGS decreased competitiveness that results from their structural Burger, D., J. Hess, and B. Lang, eds. 2005. "Forest Certifica- disadvantages, small operations and community forestry are tion: An Innovative Instrument in the Service of Sustain- in special need of adequate funding. In this context, the able Development?" Deutsche Gesellschaft für Technis- time-bound action plan for certification foreseen in OP 4.36 che Zusammenarbeit, Eschborn, Germany. and further outlined as a safeguard instrument in chapter Nussbaum, R., and M. Simula. 2005. The Forest Certification 11, Forest Certification Assessment Guide: Summary on Handbook. London: Earthscan. Use, can provide the conceptual basis for planning and Richards, M. 2004. "Certification in Complex Socio- monitoring assistance to individual companies. Political Settings: Looking Forward to the Next Decade." Capacity-building efforts should be extended to down- Forest Trends, Washington, DC. stream processing facilities to improve technical knowledge related to development and implementation of appropriate chain-of-custody systems. Again, these activities should REFERENCES CITED focus on small and medium enterprises, which are impor- World Bank. 2004. "The World Bank Operational Manual, tant partners for smaller forest operations but in many cases Operational Policies OP 4.36 Forests." World Bank, lack the capacity to achieve certification of their processes Washington, DC. for the control of material flows. CROSS-REFERENCED CHAPTERS AND NOTES NOTE Note 1.3: Indigenous Peoples and Forests 1. The widely applied quality and environmental manage- Note 2.2: Small- and Medium-Scale Enterprises ment systems set forth in ISO 9002 or ISO 14001 standards Chapter 5: Improving Forest Governance can provide the basis for chain-of-custody systems but, in Note 5.5: Addressing Illegal Logging and Other Forest general, require adaptation to the specific requirements of Crime certification systems before products can be labeled as com- pliant with those systems. Chapter 9: Applying Forests Policy OP 4.36 Chapter 11: Forest Certification Assessment Guide: Sum- mary on Use 116 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS N OT E 3 . 3 Forest Plantations inWorld Bank Operations F orest plantations can be highly effective for the pro- OPERATIONAL ASPECTS duction of fiber for wood and paper products, and In general, most productive plantations are characterized by may help in meeting the growing demand for wood uniform species composition and age-class distribution identified in chapter 3. Managed properly, they may also be within stands, regular spacing between tree stems, and sim- effective in the protection and conservation of soil and ple geometric configurations (blocks)--characteristics that water resources, revegetation of degraded landscapes, reha- enhance their utility and cost effectiveness. However, these bilitation of habitats, and for carbon sequestration. How- same qualities, along with the use of mechanical and chem- ever, they have also been associated with conversion of nat- ical treatments and occasional replacement of native vegeta- ural forests, the destruction of habitat, and the tion, have led to concerns about plantations' impacts on the marginalization of local and Indigenous Peoples. This note environment and biodiversity. Social issues can also emerge examines the potential for plantations to deliver a variety of when large operations fail to address impacts on local pop- goods and services and identifies the precautions necessary ulations or fail to include landowners' and other stakehold- to avoid causing negative environmental and social impacts. ers' concerns in their operations. For these reasons, World Bank­financed operations need to ensure that both envi- OVERVIEW AND CONSIDERATIONS ronmental and social concerns are considered early in the OF INTEREST FORWORLD BANK ACTIVITIES project design. In the end, productive plantations do not have to compromise the environment or biodiversity, or Because of their efficiency in wood production, along with lead to social exclusion--in fact, they can favorably affect increasing restrictions on the use of native forests, wood each of them, or at a minimum their impacts can be miti- supply from plantations has grown from 5 percent to 30 gated, and it is the World Bank's job to ensure that this hap- percent of the total share of industrial fiber over the past 15 pens within its investments. years, and projections are that this will increase to 50 per- cent by 2040 (World Bank 2005). Today, most of the world's Scale of activity. World Bank operations involving plan- 140 million ha of plantations are established for productive tations may be carried out at both national and local levels. purposes, with another 31 million ha established for protec- Striking the balance between these very different tion (FAO 2006). approaches, or choosing one over the other, during project Trees have an excellent capacity to capture and hold, or design requires a solid understanding of the country's needs "fix," atmospheric carbon and are now being employed for and goals for the sector, as well as of local conditions in carbon sequestration to mitigate greenhouse gas effects and areas targeted for interventions. Conversely, most countries climate change. Carbon content in trees is a function of lack a strategic vision for forestry, and World Bank projects their density and volume. The faster the trees are able to must frequently incorporate elements of strategic planning grow, the more rapidly they fix carbon. The paradox is that with more tangible activities that promote sustainable many of the same exotic trees that grow rapidly and are development, such as research, extension, and the promo- most useful for sequestering carbon also pose increased tion of best management practices. Stakeholder processes risks for local environmental impacts because of their such as National Forestry Programs (see note 6.3, Identify- aggressive characteristics. ing the Need for Analysis on Forests in Development Policy 117 Reforms) provide the framework for participatory develop- production, optimal stocking, and lower land and labor val- ment of national strategies and, where available, project ues in developing countries. Industrial plantations also ben- preparation should draw on their work. Because forestry is efit from site preparation techniques, the use of improved a long-term endeavor, a correct focus and vision for the seeds, pest management, and higher levels of stocking over intervention is critical at the onset--it is a template for the natural forests. Natural forests may not need these initial future. investments. If natural forests are managed as going con- cerns, they can be and often are economically viable. Species selection. Productive plantations are usually established for one of two purposes, sawtimber or pulp, and Use of native species. Because many species of trees grow to a lesser extent for NTFPs, such as rubber, or in multiple- much faster outside their native ranges, they provide use agroforesty and silvopastoral systems. Plantations estab- improved opportunities for increased financial returns. This lished for pulp usually emphasize high volumes of fast- has given rise to an extensive use of eucalypts (from Aus- growing trees with good pulping characteristics, particularly tralia) and southern yellow pines and Monterrey pine (from high specific gravity and long fibers (hardwoods) or tra- the United States) in industrial plantations and develop- cheid (softwoods). Such plantations in developing countries ment programs. In the developing world, about 44 million are frequently established using exotic pines from the Amer- ha of plantations are found in Asia, the bulk of which are icas, eucalypts from Australia, or acacias. Trees selected for located in China; 11 million in South America, mostly in sawtimber plantations must produce wood appropriate for Argentina, Brazil, and Chile; and another 10 million in the intended end use, which can be highly variable and Africa, in Côte d'Ivoire, Nigeria, Rwanda, and others. includes wood for structural framing and construction, fur- Smaller areas of exotic plantations are common throughout niture, veneers, or crates and pallets, among others. the rest of the developing world. While the use of exotics is In all cases, species needs to be carefully selected to popular from an economic perspective, concerns about ensure that the desired end products (or services) are even- their environmental impacts have been growing. A recent tually obtained. At the same time, market demands and CIFOR study concluded that there are situations where trends should be taken into account to ensure that the trees plantations have affected critical habitats, but it also con- will be marketable at maturity. Planting programs that fail cluded that such claims may be exaggerated (World Bank to take market factors into account can, and have, resulted 2003; Cossalter and Pye-Smith 2003). Still, the widespread in large areas of plantations with limited or negligible finan- use of exotics has led to an increasingly polarized debate cial viability and consequent loss of investors in the sector. concerning their use and potential impact on the environ- For many countries, this poses a paradox because they are ment. For World Bank projects, this means potential repu- unable to attract or develop wood industries until an ade- tational risks, and the need for good public outreach and quate resource base is developed or assured. In such cases, consensus building during project preparation and imple- planting programs with productive aims should carefully mentation, as well as safeguards monitoring. analyze projections of needs at local, national, and interna- While World Bank­financed projects should endeavor to tional levels during formulation to ensure their program use native species whenever possible, in reality, client coun- gets off to the right start. tries and producers are more likely to favor the use of exotics over native species because financial returns on Management practice. Plantation productivity is nor- investments are frequently much higher. In such cases, find- mally much greater than that of natural forests. Well- ing a middle ground and ensuring that any impacts from managed plantations in some developing countries have the use of exotics is mitigated or avoided is essential. To annual growth rates in excess of 40 m3/ha. The most pro- achieve this, specific measures must usually be employed to ductive native forests (those of the southeastern United integrate biodiversity conservation into exotic plantations. States) show internal rates of return (IRRs) of around 4­8 Examples of such techniques include maintaining biological percent, whereas, P. taeda plantations in Brazil have achieved corridors and integrating native species into plantations; IRRs of 17 percent, and plantations of Eucalyptus grandis in establishing set asides for wildlife and biodiversity conserva- Brazil have recorded IRRs of 24 percent (Cubbage et al., tion; favoring smaller patches of plantations rather than 2007). The large differences in returns between plantations large contiguous blocks of monocultures; avoiding invasive and natural forests are attributable to the application of exotics; and generally following standard best management management practices, the selection of the best species for practices, which emphasize the control of nonpoint pollu- 118 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS tion from silvicultural activities, including site preparation, grandella when planted in monocultures. Despite the les- road building, and harvesting (Davis 2005). Research pro- sons learned from such experiences, monocultures are eas- grams to promote knowledge building for the use and man- ier and more cost effective than mixed plantations--that is, agement of native species can also be helpful. With these until problems occur, causing devastating loss. tools at the disposal of the project team, World Bank opera- tions stand to do a much better job of guaranteeing envi- Establishment costs and technical capacity. Two ronmental sustainability than could be done under current essential factors must be taken into consideration in the industry standards, thereby ensuring that new programs get development of a plantation project--establishment costs, off to the right start. and the technical capacity required for planting and stand management. Initial investment capital for plantation estab- Community involvement in plantations. Planting trees lishment generally comes from three sources--land owners, to establish woodlots and agroforestry or other multiple-use loans, and government subsidies. With average establish- systems can be important elements of community and local ment costs ranging from US$500 to US$2,000 per hectare, development. So can plantations for wood production, par- most small- and medium-scale producers are not able to ticularly those using short rotation systems. Such efforts finance their own plantations, nor do they have sufficient generally focus on overcoming local population needs for access to credit to guarantee loans. building materials and fuelwood, increasing incomes (for Large areas of plantations may be required to guarantee example, through the sale of timber), and encouraging envi- sufficient raw material for major forest industries. For ronmental sustainability of land holdings. The principles of example, a large pulp mill with a capacity of 1 million tons working at the local level are similar to those outlined for per year will typically require a resource base of larger-scale operations in technical terms--species and site 100,000­200,000 ha of plantations to sustain its production selection; market, cost, and needs analyses; capacity build- over time (depending on growth rates and pulping charac- ing; and management practices. At the same time, because teristics of trees). In contrast, the resource base for sawtim- the rural poor are often challenged with day-to-day sur- ber plantations rarely exceeds 20,000 ha, and could be sub- vival, it is critical that risks to their livelihoods are mitigated. stantially less for smaller operations. Programs should be designed from the bottom up, and Subsidies can play an important role in stimulating implemented in full cooperation and consensus with partic- planting to encourage the development of an adequate ipants, in consideration of their particular situations. Fre- resource base for industry (see note 5.4, Strengthening Fis- quently this means employing social foresters or other cal Systems in the Forest Sector). To foster social inclusion development specialists who work closely with the commu- within the sector, some World Bank projects either directly nities involved in a project (see also note 1.3, Indigenous subsidize plantations through grants (usually for small Peoples and Forests, and chapter 12, Applying OP 4.10 on farmers) or work with the government in the design and Indigenous Peoples, for particular risks and issues concern- execution of subsidy programs for a wider range of produc- ing Indigenous Peoples). ers. In theory, once the cycle of planting and harvesting has Pests and fires pose common threats to plantations; pro- been completed, subsidies should be reduced or removed visions for fire breaks and training and equipping fire crews because producers will have the means to reforest with in fire suppression can be important elements of World income derived from timber sales--and the economic Bank­financed projects. Monoculture plantations, whether incentive to do so. native or exotic, pose increased risks to investments because While subsidies can sometimes be useful to mainstream they may be more susceptible to pests and disease. Massive small producers into the sector, and help to expand the loss and near eradication of some tree species has occurred resource base necessary to promote economic growth for in the last 100 years. For example, one of the most impor- other producers, they have to be approached with caution. tant production trees in North America, the American Poorly designed or implemented subsidy programs can Chestnut (Castanea dentata), was virtually eliminated in a result in unintended environmental impacts when produc- matter of a few years by an introduced fungus, Cryphonec- ers plant trees in environmentally sensitive areas, or cause tria parasitica. Thousands of hectares of exotic P. radiata habitat destruction and deforestation, as can happen when plantations were infected and succumbed to infections of farmers convert native forests to plantations. They may also Dothystroma pini in the 1980s and Cedrela odorata, even in encourage planting without sufficient attention to end uses its native range, suffers from infections from Hypsiphyla and markets. The management of subsidies also poses chal- NOTE 3.3: FOREST PLANTATIONS IN WORLD BANK OPERATIONS 119 lenges to weak institutions, which may provide opportuni- services (see chapter 2, Engaging the Private Sector in For- ties for corruption--for example, when planting subsidies est Sector Development, and associated notes). For example, are paid without sufficient field verification. Each case and Chile, which lacks a government extension service, has a country situation has to be reviewed carefully when enter- booming forest industry, and exports US$2.3 billion in for- ing into discussions on subsidies and considering their est products annually. Here, a strong private sector devel- inclusion in the project design. oped, encouraged by a hands-off approach from the gov- Outgrower schemes can also encourage plantation devel- ernment and a supportive institutional system that enabled opment. This approach involves mill owners providing sub- it to react quickly to market demand and to access the latest sidies and technical assistance to local land owners to ensure technologies. Numerous independent organizations also the availability of growing stock for the mill owners' pro- provide well-targeted advice and support to the sector. The duction lines. In general, the World Bank would have a lim- result of this combination is an efficient, modern forestry ited role in such cases because of the private-sector nature sector that produces low-cost, high-quality timber products of these schemes, except in cases of IFC involvement. Still, and is competitive in world markets. Bank staff should be aware of the option and possibilities to interact with such schemes within the context of their proj- LESSONS LEARNED AND RECOMMENDATIONS ect planning and implementation. FOR PRACTITIONERS Carbon financing can provide about US$4 per ton of carbon sequestered. This is generally paid out in increments Planted forests allow intensive production of industrial over an extended period, such as 20 years. However, funding wood at a reasonable cost, which is important in countries available from carbon, may in some cases only be sufficient with high population densities. Planted forests also offer to pay a portion of the plantation establishment costs and, economic opportunities for countries with natural compet- over the lifetime of the project, usually comprises only itive advantages and lands available for planting, such as about 15­25 percent of the total costs of management. Con- Argentina, Brazil, Chile, China, Indonesia, Mexico, South sequently, carbon finance projects are building productive Africa, Uruguay, and Vietnam. activities, including timber sales, into their projects. Thus, In countries and zones where public land ownership is carbon financing can provide important subsidies for stim- dominant, it is important to place plantation development ulating plantation development and carbon sequestration, within the framework of a transparent, accountable, and but they are not viable economic endeavors in themselves. consultative land-use plan that specifies the extent of the Despite these drawbacks, World Bank carbon projects are permanent forest estate and locates land available for producing valuable lessons for future efforts, which may planted forests. Good governance and an enabling policy become vital as the climate continues to change and global environment are necessary to ensure private investment in warming continues. plantation development, which can be initially motivated by the World Bank's initial support. Technical know-how. Technical know-how is essential in To make plantation forestry economically viable, techni- plantation development--for site and species selection, cal management standards frequently need to be raised. As plantation establishment, and carrying out management happened in Chile and Brazil, the adoption of new innova- and harvesting activities. Technology transfer frequently tive technologies relying on high-performance species, involves the need for extension programs and training of high-quality seedlings, and efficient planting practices can agents to ensure that the required knowledge is transferred substantially improve productivity and economic prof- to producers and land owners. Existing extension programs itability. Also, production technologies that depend on nat- may be strengthened through a World Bank intervention. ural regeneration can offer cost-effective ways to conduct However, client governments have been increasingly reluc- production forestry or to rehabilitate degraded lands. Fur- tant to finance the start up of new forestry extension pro- thermore, it has been observed (for example, in India and grams through loan financing, World Bank projects may Vietnam) that plantations linked to industry tend to have encounter problems with sustainability of such programs at higher levels of productivity. closure, and government extension services can easily Site and species matching must receive due attention to become encumbered by weak institutions. avoid adverse environmental and social impacts. In addi- One alternative to government-funded extension pro- tion, because policy and market failures can create more grams is to help countries establish private-sector extension formidable obstacles to viability than technical considera- 120 CHAPTER 3: MEETING THE GROWING DEMAND FOR FOREST PRODUCTS tions, projects must be solidly based on sound policy and best management practices library and database. Multi- market organizational analyses. In particular, security of ple links to state best management practices guidelines. land tenure is key in fostering investments in plantation International Union of Forest Research Organizations. forestry. 2005. Proceedings from the First International Union of In smallholder forestry, extension programs need to Forest Research Organizations Conference on Biodiver- introduce improved technologies compatible with the sity and Conservation Biology in Plantation Forests, Bor- maintenance of environmental and social values in planta- deaux, France, 26­29 April 2005. Summary: http:// www.pierroton.inra.fr/IEFC/manifestations/ 2005 tion areas. These programs should be considered long-term BPF/BPF2005.pdf. Presentations: http://www.pierroton undertakings and should not be limited to the plantation .inra.fr/IEFC/affiche_page.php?page=manif_2005_bpf& establishment phase. Effective linkages between silvicultural langue=en. research and extension institutions are critical to successful technology transfer. REFERENCES CITED RECOMMENDED READING Cossalter, C., and C. Pye-Smith. 2003. Fast-Wood Forestry: Myths and Realities. Bogor, Indonesia: CIFOR. Planted Forest Code. http://www.fao.org/forestry. The Cubbage, F. and others. 2007. "Timber Investment Returns Planted Forest Code provides an excellent framework for Selected Plantations and Native Forests in South and concise synopsis of the major issues to consider in America and the Southern United States." New Forests 33 plantation projects. Recommended for anyone in the (3): 237­255. World Bank working with plantations. Davis, Robert. 2005. Argentina--GEF Sustainable Forestry Forest Stewardship Council. http://www.fsc.org. See the Development Project. Project Brief. Washington, DC: links concerning plantations to learn about the FSC stan- GEF. dards and revision process under way for plantation cer- tification. Subscribe to the plantations forum by e-mail FAO (Food and Agriculture Organization). 2006. Global at Plantationsforum_fsc.org to get a glimpse of the Forest Resources Assessment 2005. Rome: FAO. debate on plantation certification. World Bank. 2003. The Forest Investment Forum. Washing- Marrakech Accord. http://www.unfccc.int/cop7/. The Mar- ton, DC, October 22­23. rakech Accord outlines the agreements and guidelines for ------. 2005. "Report of the Forest Investment Forum." eligibility of reforestation and afforestation activities for Washington, DC, World Bank. carbon financing. Flinta, Carlos. 1960. Practicas de Plantaciones Forestales en America Latina. FAO Forestry Development Paper no 15. CROSS-REFERENCED CHAPTERS AND NOTES Rome: Food and Agriculture Organization of the United Note 1.3: Indigenous Peoples and Forests Nations. Though quite dated, this book contains a wealth Chapter 2: Engaging the Private Sector in Forest Sector of information on hundreds of species of trees, and Development, and associated notes detailed information required for their use and manage- Note 5.4: Strengthening Fiscal Systems in the Forest Sector ment in plantations. Chapter 12: Applying OP 4.10 on Indigenous Peoples Best management practices. http://www.stateforesters.org. State Foresters Association Web site for their silvicultural NOTE 3.3: FOREST PLANTATIONS IN WORLD BANK OPERATIONS 121 C H A P T E R 4 Optimizing Forest Functions in a Landscape he term "landscape" has permeated discussions T of any major investment or intervention in the rural sector2 regarding forest resource management during the (see box 4.1). It describes interventions at spatial scales that past few decades. A landscape is often defined as a attempt to optimize the spatial relations and interactions geographical construct that includes not only biophysical among a range of land cover types, institutions, and human features of an area but also its cultural and institutional activities in an area of interest. attributes (adapted from Farina [2006]). A landscape is not Forest landscape restoration, landscape planning, and necessarily defined by its size; rather, it is defined by an ecoagriculture all build on landscape approaches and prin- interacting mosaic of land cover and land-use types relevant ciples. Common among these landscape approaches is that to the processes or services being considered or managed. they Examples of forest landscapes can range from large tracts of forests used for multiple purposes (production; cultural, aim to restore a balance of environmental, social, and recreational, or environmental services; and the like) to economic benefits from forests and trees within a mosaics of forests, home gardens, rice terraces, and villages broader pattern of land use; that enable people to exploit mountain slopes in several use a landscape-level view, whether for site restoration or countries in southeast Asia in ways that yield a diversity of for activities involving a mosaic of land uses (accord- crops, maintain soil fertility and watershed functions, and ingly, site-level activities accommodate, or are nested in, retain indigenous biodiversity. landscape-level objectives); Another definition of landscape is a dynamic, complex consider people as central elements of the landscape; and patchwork of overlapping political, economic, social, and recognize that the dynamic nature of ecosystems and ecological systems (Scoones 1999; Zimmerer 2000). The socioeconomic systems makes gathering complete landscape is a heterogeneous area within which there can information regarding any system unachievable be a mosaic of land uses that are individually relatively (accordingly, explicit efforts are made to integrate and homogeneous. adapt plans, programs, and projects that are active in a Recently the "landscape approach" has been incorpo- landscape, including the sharing of new knowledge and rated in the conceptualization of geographical spaces of information). interest when defining a landscape.1 A landscape approach is applied to a geographical space of interest. A landscape The World Bank's Forests Strategy aims to make the most approach is a conceptual framework that allows for a struc- of the multiple uses and values of forests. Forests are part of tured way of viewing the broader impacts and implications a diverse livelihood portfolio for a large number of rural 123 Box 4.1 What Is a Landscape Approach? The landscape approach should incorporate the fol- Identifies key leverage points that can be used to get lowing elements: the ecosystem or landscape to change in desirable ways Builds understanding and a shared vision of desir- Establishes a flexible monitoring and evaluation sys- able future landscapes tem to monitor and measure impacts on the landscape Determines the factors that will shape the landscape in to allow for changes to be made in implementation the future so that they can be mitigated or influenced Builds multidisciplinary teams to tackle these com- Several approaches exist for implementing strate- plex, intersectoral landscape-scale problems gies that integrate management of land, water, and liv- Explores possible future scenarios for the geograph- ing resources and promote conservation and sustain- ical areas in question and their peoples able use in an equitable manner (for example, an Provides a framework for negotiations between ecosystem approach). The elements listed above are stakeholders who have different views of desirable generic to several of these approaches and provide landscape-scale outcomes practical operational entry points. Makes the knowledge, assumptions, and desires of different stakeholders more apparent and easily understood by other stakeholders Source: Authors' compilation using Sayers 2006. poor. In addition, the productive use of forests can signifi- internalizing positive externalities and minimizing negative cantly contribute to economic development, while the man- externalities from individual land uses. agement of biological and ecological services from forests While the global rate of deforestation has fallen from can provide numerous local as well as global environmental 0.22 percent in the 1990s to 0.18 percent in the 2000s, the benefits. As noted in the strategy, forests (and their users development and conservation communities continue to and beneficiaries) both have an impact on and are affected bemoan the imminent loss of forests, biodiversity, and asso- by policies and actions in other sectors, as well as by bio- ciated economic and environmental services. However, not physical changes in adjoining or biologically linked areas (as all deforestation is inevitable and not all deforestation is examples, forest fires can result from land-use practices in necessarily bad because many countries are replanting native agricultural lands, or macroeconomic reforms can affect the and/or exotic forests on former forest lands and in natural opportunity cost of land) (see chapter 6: Mainstreaming grasslands. These new forests are having landscape-, Forests into Development Policy and Planning). In this con- regional-, and global-level impacts although they do not text, optimizing forest functions3 in a landscape can unlock provide significant biodiversity conservation and are not a the full potential of forests. substitute for natural forests. The landscape approach can A landscape-focused program can facilitate the assess- aid in better understanding the tradeoffs and potential syn- ment of broader, wide-ranging trends, influences, and man- ergies among competing land claims and uses in forest agement impacts to more adequately assess economic and zones. Thus, a balance would be attempted among pressures ecological sustainability and identify the appropriate man- to increase protected areas; expand the area of independ- agement strategies to maintain these resources for the ben- ently certified and sustainably managed natural forest; and efit of all. In certain World Bank client countries where land convert forests to sustainable agroforestry-based farming conversion is a major threat to forests, a landscape approach systems, timber plantations, commercial-scale agribusiness can minimize site-specific activities negatively affecting or estates (such as soybean farming or cattle ranching), or conflicting with each other. It can also enhance any syner- crop-based biofuels manufactured from sugar or oil palm. gies that otherwise may be overlooked. Similarly, in client All of the multilateral environmental agreements now countries where landscapes are a mosaic of land uses, an seek to achieve their objectives through the integrated man- approach that takes the landscape into account can assist in agement of natural resource systems at large spatial scales. 124 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE People and human societies are seen as being part of these graphical area, the landscape approach would be applied systems. The words "landscape" and "ecosystem" are widely differently for interventions concerned with the preserva- used in these agreements and in the general environmental tion of rare plants and animals, the management of hydro- policy discourse to convey the concept of integrated man- logical functions, the optimization of infrastructure invest- agement of resources and human activities at the landscape ments, or the maintenance of scenic beauty. Not only would scale. The World Bank's clients will or should be moving the area of interest be different for these different interven- toward landscape and ecosystem approaches, and Bank tions, the methods used to address landscape issues would lending should be designed in ways that encourage and nur- also be different. ture this process and facilitate the move in this direction. This chapter (and associated notes) presents some of the Define the landscape. The essential first step for most key issues underlying implementation of the landscape natural resource managers is to define the landscape so that approach and tools to assist with its application. (i) landscape patterns and management responses can be assessed and management adjusted according to anticipated tradeoffs and synergies, (ii) relevant institutional players PAST ACTIVITIES can be identified and involved, and (iii) the approach can be The study by Sayer and Maginnis (2005) showed that much suitably adapted. Linked to defining the landscape is explic- contemporary forest management already uses many ele- itly delineating the boundaries of the landscape before ments of the landscape or ecosystem approaches even undertaking activities at the landscape level. Boundaries though it may not be using those terms.4 The World Bank need to be established through a clear definition of the pur- has been involved in a number of watershed management pose of operating at the landscape level, and should be projects, as well as sector projects with watershed manage- agreed on by all main actors. To implement the landscape ment components. Boerma (2000) provides a review of the approach, it is useful to also spatially demarcate micro areas, Bank's portfolio in this field between 1990 and 1999. or specific areas within the larger landscape. These units According to a review of the World Bank's activities based should be tractable, improve the understanding of interac- on project appraisal documents, 24 watershed management tions among different land uses, and assist in optimizing projects and 29 projects with watershed management com- forest functions in the landscape. The objectives for these ponents were reported on in the period 1990­2004. The macro and micro areas should be harmonized and nested to project rationale and objectives for more than 80 percent of the extent possible. the watershed management projects were based on sustain- able management of natural resources as a basis for agricul- Move beyond spatial planning and establishing cor- tural production increase, which would lead to poverty ridors. The rhetoric supporting large-scale approaches to reduction by increasing incomes. Simultaneously, institu- forest conservation and management (including planta- tional development and capacity building were addressed by tions) is ubiquitous in project and program descriptions. more than 90 percent of the projects. In many projects, for- However, most systematic conservation planning est management was part of the spatial watershed manage- approaches appear to be based mainly on spatial planning ment approach, with the twin objectives of maintaining or techniques. These approaches range from those that increasing forest cover and creating incentives for sustainable attempt to maximize the extent and connectivity of natural management by local people.5 Investments were in both nat- habitat and confine measures to improve local livelihoods to ural forest management and reforestation and afforestation. the residual land, to those that are highly technical and framed by mathematical optimization modeling that finds the landscape configuration that achieves specific environ- KEY ISSUES mental goals at minimum cost (see box 4.2). The premise There is no single"landscape approach."There are, however, underlying this chapter is that the planning associated with a number of underlying concepts that deserve to be more landscape approaches must incorporate the management of widely known and a number of useful techniques for devel- landscapes to provide flows of conservation and develop- oping a shared understanding of landscape-scale functions, ment benefits to stakeholders (see note 4.1, Integrated For- for exploring landscape-scale scenarios, and for measuring est Landscape Land-Use Planning). There can be a need to landscape-scale outcomes (see note 4.2,Assessing Outcomes stimulate demand for such planning and to ensure that the of Landscape Interventions). Thus, within the same geo- planning process responds to community needs. CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE 125 Take into consideration the dynamic nature of eco- Box 4.3 Incentives for Sustainable Forest logical processes and livelihood strategies. The time lag Management in Fragmented Forest between when an action is undertaken and when its impact Landscape on the forest resource and its users is manifested must be recognized. A temporally explicit framework is required to The conservation project for sustainable develop- accommodate these important considerations. ment in Central America, implemented during the 1990s by CATIE (Tropical Agricultural Research Recognize that economic forces are not set up for and Higher Education Center, Costa Rica) and sev- landscape considerations. Economic forces have a pro- eral local partners, demonstrated the feasibility of found impact on both the long-term and short-term behavior applying sustainable forest management to forest of forest stakeholders and ultimately determine the balance areas under 50 ha as an integrated component of between competing management objectives (see box 4.3).Such diversified farming systems based on agriculture or factors as location, accessibility, vegetation type, and manage- livestock production. Communities in the Maya ment determine the value of forests for timber production ver- Biosphere Reserve in El Petén, Guatemala, could sus environmental services. The adoption of ecosystem act as forest conservation agents but for them to do so required more sustainable and profitable agri- approaches currently provides limited financial rewards. cultural systems and guaranteed legal access to for- est resources. The project pioneered community Box 4.2 Moving Beyond Optimization Models in forest concessions and was reinforced by subse- Tri National de la Sangha quent initiatives. The community groups obtained legal access to forests by means of concessions that allowed them to protect and use the resource. In In the Tri National de la Sangha area of the Congo the process, the communities improved their orga- Basin, a World Wildlife Fund (WWF) initiative nizational and management capacities, their silvi- focused on determining the sort of landscape con- cultural ability, and their environmental awareness. figuration that would be optimal for achieving two contrasting objectives--improving livelihoods Source: Campos Arce, Villalobos, and Louman 2005. and conserving biodiversity. The project used sim- ulation models to determine the relative utility of different mixes of protected areas, logging conces- Innovative payments for environmental services (see sions, and community lands. Models were devel- note 2.3, Innovative Marketing Arrangements: Payments for oped in a participatory manner so that the model Environmental Services) and other compensation arrange- provided a framework for discussion and negotia- ments can provide economic incentives for a more land- tion. Economic benefits to different stakeholder scape-based approach to optimizing forest functions. groups and employment created by different types of land management were quantified. Similarly, Work across political and agency boundaries. A the costs of protection and the benefits from hunt- landscape of interest often crosses multiple political (local ing safaris, bushmeat harvesters, and taxes paid to or national) and agency boundaries, with government and the government and local communities from these community capacity and presence varying widely. Because different activities were calculated. Modeling exercises can result in counterintu- legal governance authority is seldom available at the land- itive conclusions. In this case, modeling showed scape level, consensus must be achieved among all relevant that if the proportion of land under well-managed stakeholders and government agencies for implementation concessions increased, the funds allocated to con- of natural resource and forest management plans on the servation could be used to increase the intensity of landscape. Collaboration among these entities may be weak conservation efforts in national parks. Overall bio- and might need to be strengthened to cost effectively sup- diversity outcome in landscapes with high propor- plement and complement landscape efforts. This can tions of well-managed concessions might there- require convening and facilitating interaction among rele- fore be better than in landscapes with a high vant stakeholder groups, working closely with these groups proportion of totally protected area. over time, and clarifying, or in some cases providing, the incentives for each of them to accept restrictions on the use Source: Sayer and others 2005. of resources that would otherwise be unregulated. 126 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE Encourage stakeholder participation. By transcending better understanding of interactions among the various political boundaries, landscapes encompass diverse users, land uses and their impacts (see note 4.2, Assessing Out- managers, and decision makers. Stakeholder participation comes of Landscape Interventions). in the landscape approach is important to plan effectively across the landscape; understand landscape trends; integrate Devolve management to the appropriate levels. A key national, regional, and local perspectives in zoning deci- principle of the landscape approach for forests is that man- sions; promote the implementation of landscape activities; agement must be devolved to the appropriate level. Decen- seek adoption of plans; and, finally, lay the groundwork for tralization of decision making and support from national building in-country resource-management capacity. agencies and institutions is also important for a landscape approach. Devolution of management and decentralization Ensure research and management work in concert. of decision making, however, require ensuring accountabil- Not all the desired data on the landscape and its resources ity is built into the system and that the system complements will be available in sufficient detail. This is the case around the local context and, where possible, is based on existing the world, independent of financial and human resources and effective institutional arrangements and structures. available to the management authority. Management In landscapes where local institutions are characterized actions for landscape activities should be designed using by elite capture, discrimination, or marginalization of vul- existing data but within a learning context such that future nerable groups, the institutional arrangement adopted in management direction can be improved over time and the landscape approach must challenge these constraints updated as new information becomes available. It is benefi- and create a more equitable and participatory system, as cial to invest in prioritizing information and tracking these described in box 4.4. New institutional arrangements, variables. Building an information base of these critical however, can also create new societal problems that may variables over time will facilitate addressing specific issues actually lead to further degradation of natural resources. and questions that arise. Social cohesiveness and cultural norms are critical to fos- tering participatory approaches and must be understood Use an iterative approach to monitor impacts and before making assumptions about existing institutional update the process. The approach adopted at the land- arrangements. scape level needs to be flexible and able to accommodate new information and changing contexts. This can require Strengthen local and government capacity to oper- the use of approaches, such as adaptive management (see ate at a landscape level. Working within a landscape note 4.3, Using Adaptive Management to Improve Project approach requires skills in facilitation, conflict management Implementation), that link research and management. and mediation, consensus development, linking qualitative Management plans should be considered living documents, and quantitative information, listening, synthesizing, and able to evolve with changing information, environmental adapting ideas. This skill set is neither readily available nor conditions, and monitoring results. Conventionally system- easily acquired at conventional technical training programs. atic plan revisions happen on a periodic basis, usually after These skills also are not readily found in communities that the current plan has been in effect for 5­10 years. During a are hierarchical or have traditionally suppressed the voice of plan revision, the entire plan is revisited, allowing for major minorities. revisions and changes to its content and objectives. Adaptive Building government and community capacity to engage management, conversely, allows individual components of in a landscape approach will be important to make the the plan to be amended or altered at any time because of process effective, with long-term impacts. Developing the changing resource conditions, social values, improved data, necessary capacity requires both broadening the skill set and or in response to monitoring. developing an innovative and feasible method for imple- As part of the overall process, identifying suitable indica- menting the landscape-scale approach. tors and monitoring these interactions (using technological advances that facilitate continuous and periodic data collec- Develop necessary methods and management sys- tion) will help to fill data gaps during the course of the ini- tems. Adaptive and flexible management systems are cru- tiative. These data will need to be processed and presented cial to the effective implementation of the landscape in a manner accessible to stakeholders for updating the approach. Existing methods must be adapted, or new ones planning and implementation processes and for providing a developed, to, among other things CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE 127 Box 4.4 Importance of Challenging Existing Institutional Arrangements that Discriminate Against Vulnerable Groups The Turkey Eastern Anatolia Watershed Rehabilitation of the effort to improve community involvement, the Project aimed to"help to restore sustainable range, for- project used the existing system with the village muktar est and farming activities in the upper watersheds of as the leader. While elected by the village and supported the three project provinces, reducing soil degradation, by elected (unpaid) elders, the muktar is paid a salary as erosion and sedimentation in reservoirs as well as a government servant. There are, therefore, inevitable increasing productivity and incomes in this impover- loyalty tensions. He (it is invariably a man, although ished region of Turkey" (World Bank 2004: 1). The there have been a few women muktars) is very much a project exceeded its target on forestlands and the insti- local politician. Many vote for him because he seems tutional sustainability of the project was substantial; the most likely to pull in public funds. Indeed, in several however, the extent to which local institutions really community meetings with the mission, it was clear that changed is less evident. government funding support, whether through a World A review of the project stated that the project could Bank project or from other sources, was seen by rural have "challenged the system" more in the areas of households as a right and the muktar was expected to women's and poorer households' involvement. As part deliver on such entitled central support. Source: World Bank 2004. incorporate spatial analysis to link objectives at differing appropriately scaling up the model. Incentives, constraints, scales into planning and decision making; and lessons learned will have to be documented, and integrate planning and management across site, land- processes streamlined, to facilitate such scaling up.6 scape, region, and (perhaps) continental levels; predict responses of ecosystems to management activities; Facilitate the application of landscape approaches examine relationships and interdependencies of manage- in different contexts. Landscape approaches to optimiz- ment actions taken on one spatial, temporal, and biolog- ing forest functions have boundless potential. Identifying ical scale upon actions at another scale; and effective applications of a landscape approach can benefit assess tradeoffs among multiple objectives and goals for from a typology that distinguishes three forest landscapes: the landscape (see box 4.5). (i) forests beyond the forest-agriculture frontier,7 (ii) fron- tier and disputed forest areas,8 and (iii) forest-agriculture Sustainability of landscape approaches. Projects mosaics. In forests beyond the frontier, a landscape focus building on a landscape approach can draw significant les- can help maintain large-scale environmental processes. For sons from several generations of watershed projects. An forests at the frontier, it is important to maintain landscape important issue is that high subsidies and other induce- connectivity and to avoid irreversible degradation and neg- ments should not be used to lower the real costs of partici- ative externalities. In mosaic landscapes, a landscape focus pation for communities, distorting the true nature of can facilitate managing the forest for production, environ- demand. In many instances, this is a result of a mistaken mental services, and biodiversity. assumption that what might be socially optimal for overall environmental improvements to a community will be pri- Analyze the policy context and enabling condi- vately optimal to the resource user. Such subsidization tions. It is often stated that lack of ideal political and pol- masks the sustainability of these initiatives (Boerma 2000). icy contexts should not constrain the use of a landscape approach. At the same time, improved government and community capacity and willingness to engage in a land- FUTURE PRIORITIES AND SCALING-UP scape approach and an enabling context would facilitate ACTIVITIES implementation of such approaches. Currently, additional Several successful projects in watershed management analytical work would help to enable the policy context and encompass the basics of a landscape approach. Successes in institutional conditions necessary for implementing land- a few pilot microcatchment areas can generate demand for scape approaches. 128 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE Box 4.5 Tradeoffs Framework Used in the Alternatives to Slash-and-Burn Initiative Successful employment of initiatives at the landscape groups. To enable results to be compared across loca- level requires a clear understanding and identification tions, the systems specific to each are grouped accord- of potential tradeoffs and opportunities for synergies. ing to broad categories, ranging from agroforests to An improved understanding should lead to reduced grasslands and pastures. The criteria may be fine-tuned power differentials among stakeholders, increased for specific locations, but the matrix always comprises equity in outcomes, and minimization of losses suffered indicators for the following: by specific stakeholder groups. Developing and adopt- ing a suitable framework for identifying and assessing two major global environmental concerns: carbon the various ecological, economic, and social tradeoffs storage and biodiversity would facilitate such understanding and decision mak- agronomic sustainability, assessed according to a ing regarding which tradeoffs are acceptable. range of soil characteristics, including trends in ASB­Partnership for the Tropical Forest Margins nutrients and organic matter over time (ASB) is a global partnership of research institutes, policy objectives: economic growth and employ- nongovernmental organizations, universities, commu- ment opportunities nity organizations, farmers' groups, and other local, smallholders' concerns: their workloads, returns to national, and international organizations. ASB works their labor, food security for their families, and at the nexus of two important problems: tropical start-up costs of new systems or techniques deforestation and human poverty. ASB focuses on policy and institutional barriers to adoption by landscape mosaics (comprising both forests and agri- smallholders, including the availability of credit, culture) where global environmental problems and markets, and improved technology poverty coincide at the margins of remaining tropical forests. ASB applies an integrated natural resource Below is an illustrative example of an ASB Summary management approach to analysis and action through Matrix for the Forest Margins of Sumatra. This matrix long-term engagement with local communities and provides information on benefits at different scales policy makers at various levels. (based on rigorous analytical work). The matrix allows In the ASB matrix, natural forest and the land-use researchers, policy makers, environmentalists, and oth- systems that replace it are scored against different cri- ers to identify and discuss tradeoffs among the various teria reflecting the objectives of different interest objectives of different interest groups. ASB Summary Matrix: Forest Margins of Sumatra Adoptability Global Agronomic National policymakers' by Land-use environment sustainability concerns smallholders Production Plot-level Potential incentives Carbon production profitability (at (at private sequestration Biodiversity sustainability social prices) Employment prices) Aboveground, Aboveground, Overall Returns Average Returns time-averaged plant species/ rating to land labor input to labor Description (tons/ha) standard plot (US$/ha) (days/ha/yr) (US$/day) Natural forest 306 120 1 0 0 0 Community-based forest management 136 100 1 11 0.2 4.77 Commercial logging 93 90 0.5 1080 31 0.78 Rubber agroforest 89 90 0.5 506 111 2.86 Oil palm monoculture 54 25 0.5 1653 108 4.74 Upland rice/bush tallow rotation 7 45 0.5 (117) 25 1.23 Continuous cassava degrading to imperata 2 15 0 28 98 1.78 Source: Alternatives to Slash-and-Burn, Policy Brief 05, http://www.asb.cgiar.org/PDFwebdocs/PolicyBrief5.pdf. CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE 129 Build government and community capacity to adopt Heathcote, I. W. 1998. Integrated Watershed Management: a landscape approach and implement adaptive man- Principles and Practices. New York: John Wiley & Sons, agement. Capacity needs to be built to undertake interin- Inc. stitutional and interagency planning and coordination. Kerr, J. 2001. "Watershed Project Performance in India: Conservation, Productivity, and Equity." American Jour- nal of Agricultural Economics 83 (5): 1223­30. NOTES Rhoades, R. E. 1999. Participatory Watershed Research and 1. The principles underlying a landscape approach are Management: Where the Shadow Falls. Gatekeeper Series similar to those associated with an ecosystem approach. It No. 81. London: IIED. recognizes that humans, with their cultural diversity, are an Salafsky, N., R. Margoluis, and K. Redford. 2001. "Adaptive integral component of ecosystems. It is based on 12 princi- Management: A Tool for Conservation Practitioners." ples endorsed by the Parties to the Convention on Biologi- Publication No. 112, Biodiversity Support Program, cal Diversity (UNEP/CBD/COP/5/23 (see http://www Washington, DC. http://www.fosonline.org/Site_Docs/ .iucn.org/themes/CEM/documents/ecosapproach/cbd_ecos AdaptiveManagementTool.pdf. ystem_approach_engl.pdf). U.S. Forest Service. 2006. "Guide to Integrated Landscape 2. Many "production landscapes" link rural, urban, and Land Use Planning in Central Africa." http://carpe coastal domains. .umd.edu/resources/Documents/USFS%20Land- 3. Forest functions are processes performed by a forest scape%20Guide%20Dec2006.pdf ecosystem, including photosynthesis, nutrient cycling, pro- WWF. "Guidance for Steps in the WWF Standards for Proj- viding animal habitat, and so forth. ect and Programme Management." http://www.foson 4. A landscape commonly refers to a heterogeneous land line .org/Site_Page.cfm?PageID=156. area composed of a cluster of interacting ecosystems. Understanding, quantifying, and managing the interactions among the component ecosystems is key in landscape-level REFERENCES CITED approaches. Boerma, P. 2000. "Watershed Management: A Review of the 5. Although the watershed approach has elements of a World Bank Portfolio (1990­1999)." Rural Development landscape approach, inadequate attention to landscape- Department, World Bank, Washington, DC. level tradeoffs can result in negative hydrological implica- Campos A., J. Joaquín, R. Villalobos, and B. Louman. 2005. tions for downstream stakeholders outside the watershed "Poor Farmers and Fragmented Forests in Central Amer- but within the landscape. In addition, a long-term approach ica." In Forests in Landscapes: Ecosystem Approaches to is needed to determine the system's sustainability. Sustainability, ed. J. A. Sayer and S. Maginnis, 129­46. 6. The landscape approach seeks to assess optimal paths London: Earthscan. for achieving objectives and the limits that exist in scaling Farina, A. 2006. Principles and Methods in Landscape Ecol- up as not all advantages can be derived through scaling up ogy. Berlin: Springer. across ecosystems. Sayer, J. A., and S. Maginnis. 2005. Forests in Landscapes: 7. Forest areas beyond the frontier are those that have most Ecosystem Approaches to Sustainability. London: Earthscan. of the world's forest area, few inhabitants, and no land Sayer, J. A., C. Ndikumagenge, B. Campbell, and L. Usongo. scarcity. 2005. "Wildlife, Loggers and Livelihoods in the Congo 8. Frontier and disputed forest areas are where agriculture Basin." In Forests in Landscapes: Ecosystem Approaches to is expanding and there are conflicts over forest use in "open Sustainability, ed. J. A. Sayer and S. Maginnis, 115­27. access" areas. London: Earthscan. Sayers, J. 2006. "Optimising Forest Functions at the Land- scape Level." Note submitted to World Bank as input to SELECTED READINGS Forests Sourcebook. Unpublished. World Bank. Washing- Bonell, M., and L. A. Bruijnzeel. 2004. Forests, Water and ton, DC. People in the Humid Tropics: Past, Present and Future Scoones, I. 1999."The New Ecology and the Social Sciences: Hydrological Research for Integrated Land and Water What Prospects for a Fruitful Engagement?" Annual Management. Cambridge: Cambridge University Press. Review of Anthropology 28: 479­507. Calder, I. R. 2005. Blue Revolution, Integrated Land and World Bank. 2004. Project Performance Assessment Report, Water Resource Management. Second ed. London and Turkey Eastern Anatolia Watershed Rehabilitation Proj- Sterling, U.K.: Earthscan. ect (Loan 3567-TR). Report No. 28274. March 19, 2004. 130 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE Sector and Thematic Evaluation, Operations and Evalu- CROSS-REFERENCED CHAPTERS AND NOTES ation Department, Washington, DC. All notes associated with chapter 4: Optimizing Forest Zimmerer, K. 2000."The Reworking of Conservation Geog- Functions at the Landscape Scale raphies: Nonequilibrium Landscapes and Nature-Society Note 2.3: Innovative Marketing Arrangements for Environ- Hybrids." Annals of the Association of American Geogra- mental Services phers 90 (2): 356­69. CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE 131 N OT E 4 . 1 Integrated Forest Landscape Land-Use Planning F orest landscape planning differs from other plan- planning for National Forest lands, outlines overall goals and ning in that it plans at a larger spatial scale and can objectives for the landscape, as well as more specific objectives assess broader, more wide-ranging trends, influ- within each macro-zone, to guide all future management ences, and impacts.1 decisions. Planning is the process in which stakeholders (commu- Through the setting of objectives, the desired condition nity members, scientists, government representatives, pri- planning model describes the compositional and structural vate businesses, traditional authorities, and others) come characteristics of the biological and physical features together to debate and discuss how to manage lands for the desired across the landscape. It also accounts for the social benefit of current and future generations and to ensure eco- and economic needs of stakeholders that depend on land- logical sustainability of lands and resources. The purpose of scape resources and the social and economic elements planning is to develop management and governance strate- needed to achieve the plan's long-term vision. In the desired gies that respond to scientific understanding of natural and condition approach, barriers or threats that may limit social systems as well as changing societal conditions and resource management ability to achieve or move toward the values. The simple objective of any planning process is to desired condition are specifically addressed in guidelines, promote decisions that are informed, understood, accepted, regulations, and zoning concepts. Such an approach is flex- and able to be implemented. ible and adaptable and thus able to address not only exist- Planning can be complex depending upon the number ing threats, but also unforeseen future ones and nonthreat of issues internal and external to the planning area. Plan- management targets. ning requires risk assessments and forecasts about antici- The following section outlines important operational pated and uncertain future events and conditions. Conse- components of the landscape planning process and the land- quently, even the best plan will need to be altered to adjust scape plan itself. These steps draw heavily from guidelines to improving data and information; changing social, eco- prepared by the USFS as part of the U.S. Agency for Interna- nomic, or other conditions; evolving threats; or feedback tional Development (USAID) Central African Regional Pro- from monitoring efforts (see note 4.3, Using Adaptive Man- gram for the Environment (CARPE) initiative for guidance agement to Improve Project Implementation). Therefore, to implementing nongovernmental organizations (NGOs). plans are adaptive in nature, and amendments or entire These guidelines offer some key steps to be undertaken to revisions will be an outcome of monitoring and other fac- effectively implement a landscape plan. tors discussed in the plan. Two predominant approaches to planning are the "threat- OPERATIONAL ASPECTS based" approach, and the "desired condition and zoning" model. The threat-based model addresses only current threats Sometimes simpler plans are more effective, especially plans or those future threats that can be predicted by managers in based on a participatory process. The likelihood that the designing management direction. It is limited in its ability to plan will be more widely read and understood by local react to and consider unforeseen future threats that may stakeholders, as well as the likelihood of their engagement evolve and does not account for nonthreat-based targets and in the process, will increase if the plan is relatively concise, objectives. The desired condition and zoning model, which is focuses on what is important for the resource condition, used by the U.S. Forestry Service (USFS) for its multiple-use and is light on scientific and legal jargon. 132 Identify planning team members and define individu- Box 4.7 Who Are the Landscape Stakeholders? als' specific roles. The composition (see box 4.6) and size of the team should be based on a rapid needs assessment for Landscape planning is broader in scope than site- successful landscape plan development. The roles and specific planning and therefore requires a wide range responsibilities of the planning team must be defined early to of stakeholder perspectives to assess and develop pri- reduce confusion, focus staff time, avoid duplication of effort, ority strategies. Stakeholders can include: and ensure that all aspects of the planning process are addressed. If any necessary skills are missing, it will be impor- government representatives at the national, tant to mention how these gaps will be filled and when. regional, and local levels The team may be distinct from or overlap with the team government ministry representatives that have working on macro-zone plans. Any alteration in roles when authority over lands in the landscape working on the various plans should be expressed. traditional leaders extractive industry representatives operating in Develop a public participation strategy. The planning or near the landscape team needs to develop a strategy for effective stakeholder local and international NGO representatives operating on the landscape participation for the plan and the landscape concept to be marginalized groups that may not have a voice successful (box 4.7). Sound strategies for landscape plan- as part of the above groups ning will incorporate multiple opportunities for involve- military leaders ment and concurrence by local communities, government, individuals claiming ancestral rights to lands relevant industry, and other stakeholders. Creating a sense community members that are able to represent of ownership among local community members and a resource users wider audience of stakeholders by involving them in plan- local hunters and fishermen ning discussions and decision making improves the likeli- others to be determined hood that the plan will be supported and its implementa- tion will be successful (box 4.8). An important part of the Source: USFS 2006. strategy is stakeholder identification. Box 4.8 Participating in the Management of the Tongass National Forest Box 4.6 Commonly Required Skills in a Planning Team The Tongass National Forest, covering most of southeast Alaska in the United States, is managed team leader or program manager under the guidance of the Tongass Land and biologist(s) Resource Management Plan, first completed in hydrologist(s) 1979, revised in 1997, and clarified and amended social scientist(s) since then. Projects are planned with help from economist(s) interested citizens: Proposed projects are listed forester(s) quarterly in the district in which they will take mineral or mining specialist(s) (if mining activ- place; contact people are provided to help citizens ities impact the landscape) participate; and in some districts, draft documents are posted for review. All decisions are later posted It may not be necessary to have all of these spe- for public viewing. All projects aim to foster the cialists on the planning team throughout the continued health of the forest and to provide com- entire process; rather, some could be brought in as modities and experiences to people who depend needed to advise on certain issues. on or visit the forest. Tongass employees work to Responsibilities and tasks must be assigned to balance multiple uses of the forest resources: fish each planning team member and new staff or con- and wildlife populations, clean water, trees to sup- sultants hired to fill voids. port local industry, and recreation opportunities. Source: USFS 2006. Source: USFS 2007. NOTE 4.1: INTEGRATED FOREST LANDSCAPE LAND-USE PLANNING 133 Identify existing and needed information about the landscape that could affect the important values of the land- landscape. Information should enable analysis of the scape, identify and evaluate applicable laws within the land- demographic, political, and governance situation of the scape, and identify key information gaps. This information landscape, as well as its physical, biological, and ecological will assist the planning team to define landscape vision and conditions, to determine the current condition and future objectives, help inform zoning decisions and management trends. However, a lack of perfect information should not strategies, and identify any knowledge gaps (see box 4.9). indefinitely delay progress with planning processes. Data gathering should be viewed as an ongoing process and new Box 4.9 Baseline Data Needed on Aspects of the information should feed back into the adaptive manage- Forest Landscape ment aspect of the landscape plan. Processes for data gathering should include asking stake- The following information is helpful in character- holders to identify their existing resource use and interests on izing landscapes: the landscape; threats, opportunities, or conflicts related to a. Physical the landscape; and why and how the landscape is important i. Boundaries of landscapes to them. In addition to information within the landscape, ii. Topography, water courses, and other planning teams should look at influences outside the land- unique physical features scape. Examine what is occurring outside the landscape that iii. Maps and satellite imagery could affect the important values of the landscape. For exam- iv. Maps of boundaries of existing protected ple, are there plans to develop any infrastructure (roads, areas, community-based natural resource management areas and extractive resource dams, and the like) that could affect values within the land- use zones, and information on current status scape? Is there potential for immigrants settling in the land- b. Ecological--identify landscape features in scape because of displacement from another area? regard to An important step in the landscape planning process is i. key wildlife resources identifying and evaluating existing applicable laws or any ii. wildlife migration corridors existing management plans associated with the landscape. iii. rare and under-represented plant communities Understanding legislation applied to any land unit in the iv. other floral and faunal resources that are of landscape will help guide management decisions. It is impor- key importance to the landscape and its tant to monitor legislative changes throughout the landscape population planning process so that adjustments to the planning process v. forest standing stock can be made if necessary. For example in the Democratic vi. species composition within forests Republic of Congo, landscape planning teams need to moni- c. Socioeconomic i. Identify villages, foot paths, transport tor the forest concession conversion process because it can routes, key economic centers within and affect both the landscape land-use plan and the subsequent around the landscape, agricultural activi- macro-zone management plans. ties, hunting and fishing areas, areas of sub- sistence-level timber extraction Define why the particular landscape was delineated, ii. Identify all stakeholders of the landscape and what features make it a priority. The objective of (including populations outside the landscape) this description is to provide a focus for the planning iii. Identify those resources and regions of the process. This description should remain brief and focus on landscape used for subsistence purposes ver- the key features that contributed to its designation as a pri- sus commercial trade ority landscape. iv. Map locations of economically desirable timber species or mineral deposits not cur- Characterize the landscape, including the existing uses rently in any concessions d. Assess government management authority of the landscape and the different groups involved in those presence on the landscape and capacity to play uses; the legal boundaries delineated within the landscape; a role in the planning process and a general inventory of the resources and any informa- e. Outline budget and timeline tion regarding their condition. This characterization should describe the physical, ecological, and socioeconomic condi- Source: USFS 2006. tions in a simple manner and identify influences outside the 134 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE Involve relevant stakeholders in defining desired over an extended period. Objectives are important conditions for the landscape. The desired conditions because they support and describe the desired conditions will help provide context and direction for the rest of the for a given element or attribute of the landscape. The objec- planning process and should aim to maintain the land- tives should be unambiguous, measurable, and have a time scape's unique features and significance, improve resource line. It is essential to involve stakeholders in the develop- conditions on the landscape, and promote livelihood ment of objectives because different stakeholders may dis- opportunities for those dependent on landscape resources agree about which objectives are or are not compatible with (see box 4.10). The desired condition sets an idealized goal the shared view of the desired conditions. Objectives should of what the landscape should be, what it should protect, and be listed in order of priority, where possible. whom it should benefit. Landscape objectives can be explored through simple discussions, but the process is much more instructive if Develop landscape objectives that describe the tools are used to enhance understanding (see box 4.11). focus of management activities on the landscape Visualization can be very valuable, with participants being encouraged to draw desirable and undesirable outcomes. If Box 4.10 Participatory Mapping for Identifying the the resources are available, simple simulation models can be Landscape Value developed; these can be instructive in helping participants understand the full ramifications of landscape change (Eco- agriculture Partners and International Union for Conserva- Different people have very different understand- tion of Nature 2007). ings of the concept of a landscape and often have trouble articulating their differences. Getting stakeholders to draw the landscape on a large sheet Implement an iterative zoning process.Zoning decisions of paper or white board as a facilitated group exer- are often considered the heart of a land-use plan and can be cise helps to generate a valuable discussion of what contentious. Zoning decisions should be based on all quanti- people value in the landscape. This enables every- tative and qualitative information gathered. The planning one to participate in planning and assessing con- process should include a validation step to confirm that the servation and development and is a valuable way proposed location for each macro-zone reflects on-the- of tapping into local knowledge. This approach ground reality. The zoning process often has to follow an iter- can be valuable at the initiation of a project or dur- ative approach because as data are gathered and stakeholder ing implementation. It is especially valuable in sit- interests identified, the planning team refines zone bound- uations where there are upstream and downstream aries to come up with a configuration that best responds to links that need to be made explicit or where con- the vision, objectives, and priorities of the landscape.3 nectivity of habitats is an issue. To enable this process, a facilitator with artistic skills can encourage stakeholders to represent their Develop guidelines (similar to a set of rules or regu- perspectives of the landscape onto a map or sketch lations) that describe permissible or prohibited activ- of the visible landscape. People will rapidly begin ities across a landscape or zones within a landscape. to argue and discuss the significance of different Guidelines ensure that certain aspects of a landscape maintain landscape features. The picture can then be their integrity and that various activities occur, or are prohib- improved by the facilitator, and eventually it ited, so as not to harm valued attributes. Guidelines should should be possible to work toward a graphic repre- prohibit or permit specific activities or actions. If any excep- sentation of a desirable future landscape. The tions to a guideline are to be granted, the guideline should process is more effective if the images are edited explicitly describe the circumstances under which such an digitally, which requires that the facilitator be able exemption would be granted and who has the authority to to use appropriate graphic software, such as Pho- grant it. Existing laws in the country where the landscape is toshop, Illustrator, or Paintbrush. Useful progress located may address issues or activities outlined in a guideline. can be made in less than a day with a small group of stakeholders. Associated costs include the time Where appropriate, these laws should be referenced in the of the participants and a facilitator. guidelines; however, the guidelines may be more stringent than the existing regulations. Guidelines are more often used Source: Sayer 2006. at the macro- and microzone levels, but in some situations, it may make sense to establish landscape-wide guidelines. NOTE 4.1: INTEGRATED FOREST LANDSCAPE LAND-USE PLANNING 135 Box 4.11 Tools for Integrating Various Viewpoints The Bank's project in Natural Resource Management setting in which the BCPCPS approach can be con- in Albania used a Participatory Microcatchment (MC) ducted. The team does not take part in the discussion Planning Approach to collect information and data to nor make promises. Project staff has to ensure that fully understand the physical and socioeconomic con- women and children are not marginalized in the ditions of the MC. This included collection of existing BCPCPS process. information (data and maps), data verification and A "priority list of village problems" is developed by updating, and supplementation of available informa- the team and the problems that are outside the man- tion with further simple surveys. MC plans build on date of the project are eliminated as the list is finalized. forest and pasture management plans for communal This list is used as the basis of a joint discussion of the forestry and pasture activities and refer to the key solutions to the problems identified by the villagers. actions they identify (if these plans have already been During this discussion, a suggested"menu of activities" prepared). prepared in advance by the team, is shared with the vil- To integrate various viewpoints in each village, the lage community to contribute to solving the problems project conducted an exercise called Beneficiary- identified. The menu of activities often consists of Centered Problem Census Problem Solving (BCPCPS). rehabilitation activities and income-generation activi- BCPCPS is a nonthreatening, focused discussion that ties (or income-supporting activities). uses small group dynamics to elicit (i) a complete and Based on discussions, the villagers choose activities ranked census of the real and perceived problems of that meet their priorities. Often farmers make addi- individual households, villages, and the commune as a tional demands, particularly for income-generating whole; and (ii) the commune's proposed solutions to activities. However, it was made clear to the villagers these problems. This approach provides a setting in that the resources (money and time) available under which all members of the commune can contribute. the project were limited and that the project would No problem is rejected and all solutions are consid- support those activities and measures that focus most ered. The final ranking of problems and preferred solu- of the benefits at the level of the MC, that are cost tions is performed by the villagers. The contribution of effective, and that can be replicated in other parts of the team is limited to facilitating the creation of the Albania. Source: Cestti 2005. a. This menu of activities is a basic tool in the planning process. The team determines on technical, economic, and institutional grounds which treatments are applicable in a particular MC and prepares the menu. The menu may vary in accordance with the agroecological and socioeconomic conditions of each village as well as the villagers' resources and needs. During the life of the project, it would be revised based on the experience with project implementation. Develop a work plan reflecting the implementation it are effectively contributing to the achievement of the land- schedule. This work plan will provide prioritized action scape's desired condition and objectives. Monitoring will items with a timeline and a budget to accomplish the work. provide the feedback loop for evaluating and updating the It is appropriate to include a description of how stakehold- plan (see note 4.2, Assessing Outcomes of Landscape Inter- ers will be involved. Most actions will be concentrated ventions). Landscape-wide monitoring is typically con- within the macro-zone management plans; however, impor- ducted to evaluate conditions and trends of specific tant cross-zone issues and current conditions and future resources on the landscape. The monitoring protocol should trends are better identified at the landscape scale. All imple- indicate the type and frequency of monitoring, as well as mentation activities should be linked back to one or more of who is responsible for carrying it out and reporting on it. the landscape objectives. The schedule should specify what action items will be accomplished, by whom, and when, and LESSONS LEARNED AND RECOMMENDATIONS the associated cost. FOR PRACTITIONERS Develop a monitoring protocol. This protocol will help This note's guidance on planning needs to be tailored to determine if the landscape plan and associated plans under the specific context of the region in question and to the 136 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE needs of implementing partners and involved government implementation, concentrating CARPE activities in 12 agencies. landscapes across the region. These landscapes were chosen Overall, the planning approach adopted at the landscape for their biodiversity and conservation importance and level needs to be flexible and able to accommodate new established as foundations of regional conservation and sus- information, monitoring results, changing contexts, and tainable natural resource use. resource conditions. An adaptive management approach CARPE focuses on the larger landscape unit to maximize may be adopted to allow for individual components of the impact, to promote improved natural resource management over larger areas, and to broaden stakeholder involvement in plan to be amended or altered (see note 4.3, Using Adaptive land management activities. In light of this need for multiple- Management to Improve Project Implementation). use management expertise of large landscapes, CARPE lead- While it is ideal to put a great deal of effort into each step ership has requested that the USFS take on a more strategic of the planning process, implementation and monitoring approach within the program to better benefit from USFS activities and limited financial and human resources will land management expertise gained from 100 years of experi- prevent planning teams and authorities from meeting ideal ence in the United States. To that end, the USFS has been levels of action. Therefore, it is important that the planning asked to develop planning guidelines for comprehensive team prioritize. Honest assessments of available funds and landscape-level planning and the different use zones (as costs of specific activities must be carried out by the plan- defined by CARPE) within those landscapes: protected areas, ning team, in conjunction with stakeholders, to determine community use, and extractive use. The objectives of this what can truly be accomplished with limited resources and landscape planning process are to (i) provide planning tools which activities should be prioritized. The planners must and standards to support the promotion of sustainable natu- ral resource management in the landscapes by CARPE part- also evaluate what other stakeholders are, or could be, doing ners, host-country governments, and other stakeholders; (ii) to complement actions taken by the team and implement- highlight processes to encourage stakeholder involvement in ing partners. land-use planning; and (iii) provide useful standards for Participatory processes succeed where there are common CARPE management to monitor program progress. purposes that could interest all or most of the population, CARPE landscape land-use planning prioritizes three where the participatory process is flexible and provides for types of zones to be delineated within the landscapes: Pro- capacity building and genuine empowerment, and where tected Area (PA), Community Based Natural Resource there are income and livelihood incentives. The planning Management (CBNRM), and Extractive Resource (ERZ) process has to allow for the inclusion of both community use zones. These are referred to as macrozones. Each of interests at the micro-zone level and the larger-scale objec- these macro-zones will, in turn, also be zoned for differing tives. Furthermore, while adopting a genuinely bottom-up uses and levels of resource protection. Additional USFS approach to institutional development is essential, govern- planning guides are available to assist in the development of ment commitment to landscape planning is critical to its management plans for these macrozones. success. 2. In the context of CARPE, landscape planning will define the CARPE implementing partner activities on each indi- vidual landscape that are needed to improve land manage- NOTES ment conditions across the landscape. The activities out- 1. This note was adapted from a guide developed by the lined in the landscape plans and the subsequent macro-zone USFS for the Congo Basin Forests of Central Africa as part plans will contribute to the long-term management and of USAID's CARPE initiative. CARPE is a 20-year initiative sustainability of forest resources in the region and thereby with the objective of reducing the rate of deforestation and contribute to the development of livelihood strategies and the loss of biodiversity in the Congo Basin Region of Cen- economic development activities for those dependent upon tral Africa. While the approach used in the USAID CARPE these resources. initiative is still under development, and thus cannot be 3. The advantage of this focused approach is that it invests pointed to as a success story just yet, it is hoped that the the limited planning time and money on the areas consid- experience there can guide future successful planning ered critical within the landscape. As information is gath- efforts. ered and new trends or needs emerge, additional zones can The first phase of CARPE (1995­2002) focused on be designated. To add a new zone, an abbreviated approach research and capacity building in the region. CARPE's sec- to the landscape planning process, focusing on stakeholder ond phase introduced a more focused approach to program involvement, should be used. NOTE 4.1: INTEGRATED FOREST LANDSCAPE LAND-USE PLANNING 137 SELECTED READINGS Stakeholders in Negotiating and Measuring Landscape- Level Outcomes." Draft, Ecoagriculture Working Group, Ashby, J. A., E. B. Knapp, and H. Munk Ravnborg. 1998. Cornell University, Ithaca, NY. http://ecoag.cals.cornell "Involving Local Organizations in Watershed Manage- .edu/documents.html. ment." In Agriculture and the Environment: Perspectives on Sustainable Rural Development, ed. E. Lutz, 118­29. Jinapala, K., J. D. Brewer, and R. Sakthivadivel. 1996. Multi- Washington, DC: World Bank. Level Participatory Planning for Water Resources Develop- ment in Sri Lanka. Gatekeeper Series No. 62. London: Farrington, J., C. Turton, and A. J. James. 1999. Participatory IIED. Watershed Development: Challenges for the Twenty-First Century. New Delhi: Oxford University Press. Sayer, J. 2006. "Optimising Forest Functions at the Land- scape Level." Note submitted to World Bank as input to Kerr, J., G. Pangare, and V. L. Pangare. 2002. Watershed Forests Sourcebook. Unpublished. World Bank. Washing- Development Projects in India: An Evaluation. Research ton, DC. Report 127. Washington, DC: International Food Policy Resource Institute. USFS (United States Department of Agriculture Forest Ser- vice). 2006. "Guide to Integrated Landscape Land Use Perez, C., and H. Tschinkel. 2003. "Improving Watershed Planning in Central Africa." http://carpe.umd.edu/ Management in Developing Countries: A Framework for resources/Documents/USFS%20Landscape%20Guide% Prioritizing Sites and Practices." Network Paper No. 129, 20Dec2006.pdf. Agricultural Research and Extension Network, Depart- ment for International Development, London. ------. 2007."Tongass National Forest: Projects and Plans." http://www.fs.fed.us/r10/tongass/projects/projects Turton, C., M. Warner, and B. Groom. 1998. "Scaling Up .shtml. Participatory Watershed Development in India: A Review of the Literature." Network Paper No. 86, Agri- World Bank. Forthcoming. "Watershed Management culture Research and Extension Network, Department Approaches, Policies, and Operations: Lessons for Scal- for International Development, London. ing-up." Agriculture and Rural Development Depart- ment Economic and Sector Work, World Bank, Washing- ton, DC. REFERENCES CITED Cestti, Rita E. 2005. Albania Natural Resources Develop- CROSS-REFERENCED CHAPTERS AND NOTES ment Project. Aide-Memoire, Supervision Mission, November 7-11, 2005. Unpublished. World Bank. Wash- Note 4.2: Assessing Outcomes of Landscape Interventions ington, DC. Note 4.3: Using Adaptive Management to Improve Project Ecoagriculture Partners and IUCN (International Conser- Implementation vation Union). 2007. "Principles of Engagement with 138 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE N OT E 4 . 2 Assessing Outcomes of Landscape Interventions M onitoring and evaluation systems are impor- OPERATIONAL ASPECTS tant for tracking performance against objec- The development of a monitoring framework ideally should tives and providing information to help man- be initiated at the beginning of the landscape tracking agers with implementation (see chapter 7, Monitoring process. The framework should be closely linked to the forest and Information Systems for Forest Management). For landscape land-use plan and should clearly identify how the forest interventions, this can mean assessing externali- monitoring information will be used to inform the decision- ties and measuring delayed impacts of the intervention. making process and implementation of the intervention. Monitoring and evaluation methods typically emphasize either the state of species (or ecosystems) or simply the Use a hierarchical framework for monitoring. In the effectiveness of providing project deliverables and out- context of landscape activities, a hierarchical framework is puts (Stem and others 2005). The approaches used often often needed for relevance at different spatial scales and to have limited ability to address where the balance be able to capture the impact of the activity, as well as to between the different objectives from the forest land- identify changes occurring over time. scape should lie. The real challenge for landscape approaches is to assess Clearly articulate goals and desired outcomes. Well- the multiple functions of forests at the local and land- defined objectives for the forest landscape are important for scape levels. These are the levels at which management monitoring performance (see note 4.1, Integrated Forest decisions are made and for which information on status Landscape Land-Use Planning). and trends is required. The problems of assessment are further complicated where management is seeking to Define criteria. In the hierarchical monitoring frame- achieve multiple functions across a mosaic of forest and work, the broad goals are considered to be universally appli- nonforest lands (Sayer and Maginnis 2005). Assessment cable. It is useful, then, to have subsidiary goals from the plan and monitoring schemes in which tradeoffs are inherent that serve as landscape performance criteria and that identify in management require multidimensional tools, and the desirable outcomes for the landscape (Buck and others progress must be measured across multiple axes (Sayer 2006). There can be several performance criteria (subsidiary and Maginnis 2005). The methods should also provide goals) associated with each goal. These specify the direction platforms for negotiating tradeoffs. Tough questions need in which a healthy forest landscape ideally should be moving. to be tackled, including the following: In areas of land shortage, how much natural forest might be sacrificed to Use the landscape objectives. The landscape objectives provide additional agricultural options for local people; agreed on among stakeholders as part of the planning process and, in areas with global environmental values, is placing should indicate the desirable future state of a landscape. This restrictions on the development options of the poor justi- information is key to tracking changes in a landscape. fied? Forest agencies have often made unwarranted assumptions about what is desired by, or good for, local Identify appropriate indicators. Indicators are often people. It is clear that more objective and equitable landscape specific. A participatory process of indicator processes are needed. 139 identification can be useful for strategically selecting cost- just the physical indicators should be measured; local liveli- effective indicators that can provide accurate information. hood outcomes also should be assessed (see box 4.12). Indicators can range from very broad to very specific. Fur- There may be multiple indicators associated with a spe- thermore, indicators may be layered such that an analysis cific criterion--some amenable to measurement at the begins with broad indicators and then adds increasingly landscape scale and others suitable for the site level. Simi- specific indicators until the information needs are met larly, indicators may vary by whether they are used to mea- (Buck and others 2006). sure the state of a landscape or the impact of particular The selected indicators should be relevant, precise, sensi- interventions on landscape performance (see box 4.13). tive, easy to understand, and measurable. Measurement indi- At the landscape level it is realistic for performance to be cators must be able to recognize tradeoffs (short-term versus measured not by whether a desirable end condition has long-term, at different scales, for different stakeholders) that been achieved, but by assessing whether the combination of need to be addressed in the landscape for the indicators to be influences affecting change is moving the landscape in the credible. When employing a landscape approach, more than right direction relative to stated performance criteria. Box 4.12 Potential Indicators to Monitor Biophysical indicators. Specific indicators will depend Natural capital can include measures of: on the objectives that have been identified for the land- deforestation rates scape, and may include, but are not limited to: frequency and size of fires species of concern extent of certified forests human disturbances quality of land available for agricultural wildlife corridors production infrastructure impacts external threats to the landscape Human capital can include measures of: ecological function and condition quality of clinics and health care These measures should give a sense of deforestation, quality of education drivers for change in the landscape, level of fragmenta- number of qualified people tion, the condition of the forests, and the population of infant mortality species of concern. level and use of traditional knowledge Livelihood indicators. Livelihood indicators can be Physical capital can include measures of: based on the capital assets framework. These indicators household quality can be applied to a sample of communities and then number of kiosks selling basic products aggregated to a landscape scale. The capital assets sources of drinking water framework has five types of capital: (i) financial, (ii) village accessibility social, (iii) natural, (iv) human, and (v) physical. Specific monitoring activities will depend on the Financial capital can include measures of: objectives that have been identified for the landscape, formal sector employment and may include, but are not limited to: household income development of local communities price changes in basic products species of concern number of local credit associations human disturbances wildlife corridors Social capital can include measures of: infrastructure impacts community-based initiatives external threats to the landscape traditional governance effectiveness ecological function and condition perceptions of levels of corruption state agency effectiveness Source: Authors' compilation using USFS 2006 and Buck and others 2006. 140 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE Box 4.13 Possible Indicators for Assessing Conservation of Biodiversity and Ecosystem Services in Landscapes that Integrate Production and Conservation Sample indicators for Sample indicators for project-level Sample indicators landscape-scale status effectiveness assessment for site-scale staus assessment (threat/opportunity measures) assessment Criterion C1: Land-use patterns across the landscape optimize habitat value and landscape connectivity for native species. · Land cover: portion of landscape in · Deforestation: increase or decrease · Contribution to large-scale natural habitat, moderate use, and in the rate of deforestation at the conservation networks: intense use. MM: remote sensing with agricultural frontier. MM: remote connectivity of on-site natural ground truthing. sensing. areas to adjacent and nearby · Fragmentation and connectivity: size, · Fragmentation: gain or loss of natural areas and reserves. shape, and functional connectivity of functional connectivity among MM: various indices presented patches of natural and semi-natural patches of natural and semi-natural in the literature. habitat. MM: various indices presented land. MM: various indices presented in the literature; analysis with Fragstats in the literature; analysis with Fragstats Note that indicator species could be or other spatial analysis software. or other spatial analysis software. a problematic indicator at the site · Indicator species: presence and · Management of agricultural land for scale because an organism could be abundance of wide-ranging and/or biodiversity: presence and quality of observed at a site even though the multi-habitat integrate over many native habitats within agricultural site plays little or no role in landscape variables. MM: observation systems. MM: remote sensing and sustaining that organism. or censusing by experts and/or local habitat quality measures. laypersons. Source: Buck and others 2006. Note: Geographic Information System. Means of measure (MM) are given in italics. Identify approach for monitoring. Multiple approaches toring, as well as who is responsible for carrying it out and are available for monitoring and evaluating interventions, reporting on the monitoring. and data can come from various sources (primary data; data from local laypersons, local experts, or outside technical LESSONS LEARNED AND RECOMMENDATIONS experts using advanced technological tools and analytical FOR PRACTITIONERS methods). Identifying the most appropriate approach will require a clear understanding of the context, working within Monitoring and assessment systems must be flexible to be parameters such as available resources, and identifying able to function in a highly dynamic social and economic approaches that will draw on readily available qualitative and environment (see note 4.3, Using Adaptive Management to quantitative information. (See box 4.14 for one approach.) Improve Project Implementation). Consistent monitoring over time allows for changes to be tracked continuously. The Use technological tools to enrich the debate about indicators and means of measurement to be used must be future landscape scenarios. These same tools can also chosen and used consistently over time; data sets are often be used by special interest groups to excessively influence rendered useless if they are too flexible. activities or processes. It is therefore important that tech- Stakeholder perceptions of desirable outcomes will nology not dominate or drive the process but be put at the change with time, and the need for interventions to achieve service of stakeholders in an equitable and transparent fash- desirable landscape conditions may also change. While flex- ion (Ecoagriculture Partners and IUCN 2007). ibility is important, consistency over time is critical to track- ing change meaningfully--the indicators and means of Specify who is responsible for monitoring and the measurement must be enduring. appropriate frequency and format. The monitoring Monitoring should be continual and not simply consist protocol should indicate the type and frequency of moni- of an update to the baseline information at the very end of NOTE 4.2: ASSESSING OUTCOMES OF LANDSCAPE INTERVENTIONS 141 Box 4.14 Outcome Assessment Tracking It is difficult to reach agreement among all stakeholders should thus be used early in project formulation to about what is wanted and what is likely to happen. The ensure clarity of desired project effects on landscape outcome assessment approach is based upon negotia- outcomes and establish the basis for measuring them. tions among all stakeholders on what they want the The indicator sets can be developed in a few days landscape to look like and what it is to deliver, that is, during a multistakeholder meeting. A technical person, how they want the landscape to perform. Indicators or small team, will then need to conduct the first, base- then have to be selected that will measure change in the line assessment. This may require extensive field sur- landscape and how that will correspond to the desired veys and, depending upon the complexity of the situa- performance criteria. Indicators of changes in different tion and the availability of data, may take several categories of landscape values (natural, built, human, months. The process will have to be repeated every year and social value categories) provide a basis for assessing to track progress, so an annual meeting will be needed the impact of interventions from a holistic perspective. to review progress and adapt management as needed. This approach is particularly useful in situations The costs associated with this approach include where an intervention is anticipated to impact a land- those of the facilitator for the first meeting and techni- scape mosaic, for instance, in determining and then cal staff hired for several months to assemble data. assessing an appropriate balance between the amount Landscape-scale outcome assessment approaches of forest needed for conservation and the amount that capture the broader impacts of any intervention--a might be converted to agriculture or other uses. Out- policy change, financial incentive, new projects, and so come assessment methodologies are consistent with forth--on the landscape. They could complement commonly employed participatory techniques for rates of return studies in negotiating possible external- planning and evaluating interventions; the techniques ities of an intervention and then measuring them. Source: Sayer 2006. the intervention. It should be an ongoing process through Buck, L. E., J. C. Milder, T. A. Gavin, and I. Mukherjee. 2006. which periodic monitoring is used to modify, as necessary, "Understanding Ecoagriculture: A Framework for Mea- the implementation of the project (see chapter 7, Monitor- suring Landscape Performance." Discussion Paper No. 2, ing and Information Systems for Forest Management). Ecoagriculture Partners, Washington, DC. http://www .ecoagriculturepartners.org/documents/reports/discus- sionPapers/DiscussionPaperV2.pdf. SELECTED READINGS Ecoagriculture Partners and IUCN (International Conser- Forthcoming. Landscape Measures Resource Center. vation Union). 2007. "Principles of Engagement with www.ecoagriculturepartners.org. Stakeholders in Negotiating and Measuring Landscape- Level Outcomes." Draft, Ecoagriculture Working Group, Buck, L. E., J. C. Milder, T. A. Gavin, and I. Mukherjee. 2006. Cornell University, Ithaca, NY. http://ecoag.cals.cornell "Understanding Ecoagriculture: A Framework for Mea- .edu/documents.html. suring Landscape Performance." Discussion Paper No. 2, Ecoagriculture Partners, Washington, DC. http://www Sayer, J. A., and S. Maginnis, eds. 2006. Forests in Landscapes: .ecoagriculturepartners.org/documents/reports/discus Ecosystem Approaches to Sustainability. London: Earthscan. sionPapers/DiscussionPaperV2.pdf. CROSS-REFERENCED CHAPTERS AND NOTES REFERENCES CITED Note 4.1: Integrated Forest Landscape Land-Use Planning Stem, C., R. Margoluis, N. Salafsky, and M. Brown. 2005. Note 4.3: Using Adaptive Management to Improve Project "Monitoring and Evaluation in Conservation: A Review Implementation of Trends and Approaches." Conservation Biology 19(2): Chapter 7: Information and Monitoring Systems for Forest 295­309. Management, and associated notes 142 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE N OT E 4 . 3 Using Adaptive Management to Improve Project Implementation C onservation and development interventions take gically select project actions.The outcomes of the activities place in complex systems influenced by biological, are monitored to compare the actual to the predicted out- political, social, economic, and cultural factors.1 come. This enables the project team to understand what Project managers and practitioners operating within these worked, but more important, why it was effective. complex systems must make important decisions, yet they Adaptation. Several reasons may underlie the unexpected often have limited information and are operating in the face outcome of a project activity (for example, the project of uncertainty. This complexity is compounded at the land- assumptions were wrong, the actions were poorly exe- scape scale, where a larger geographical space, including all cuted, the conditions at the project site changed, the functions and processes and additional institutions monitoring was faulty--or some combination of these involved, needs to be considered. The approach adopted at problems). Adaptation involves reviewing and, where the landscape level needs to be flexible and able to accom- relevant, changing assumptions and interventions to modate new information and changing contexts (see chap- respond to the new information obtained through mon- ter 4, Optimizing Forest Functions in a Landscape). This itoring efforts. note addresses the use of an adaptive management Learning. Learning involves systematically documenting approach to project implementation, a method for making a project team's process and results. The aim is to avoid more informed decisions about strategies, testing the effec- making similar mistakes in the future and to share les- tiveness of strategies used, and learning and adapting to sons learned with the broader community of practice. improve the strategies (Lee 1993; Gunderson, Holling, and Light 1995). The explicit and systematic testing of assumptions is the key facet of adaptive management that helps project teams uncover why a project was successful or faced setbacks and OVERVIEW AND CONSIDERATIONS whether it was due to poor theory and underlying assump- OF INTEREST FOR WORLD BANK ACTIVITIES tions, poor implementation, or a combination of the two Adaptive management stands in contrast to traditional (see figure 4.1). project and program management by requiring an explicitly There are at least two levels at which program managers experimental--or scientific--approach. Specifically, adap- could apply adaptive management: (i) at a high programmatic tive management is the integration of design, management, level, to help them determine the strategies and types of proj- and monitoring to systematically test assumptions to adapt ects they should support and how well their portfolio of proj- and learn (Salafsky, Margoluis, and Redford 2001). There ects is doing; and (ii) at the project level, to help the initiatives are three main components to adaptive management: they support go through an adaptive management process. This note focuses on the second of these levels, although the Testing assumptions. Assumption testing involves system- adaptive management process is important for both. atically trying different activities to achieve a desired out- come and is distinct from a random trial-and-error OPERATIONAL ASPECTS process. It requires clearly and explicitly articulating assumptions underlying the way in which proposed activ- For the purposes of explaining the adaptive management ities will help achieve project goals and objectives to strate- process, we use a cycle adapted from the Conservation Mea- 143 Figure 4.1 Necessary Ingredients for Project Success Success! Well- Accurate Used to Leads to Desired implemented assumptions design results project Theory failure Well- Inaccurate Used to Does not Desired implemented assumptions design lead to results project Program failure Poorly Accurate Used to Does not Desired implemented assumptions design lead to results project Total failure! Poorly Inaccurate Used to Does not Desired implemented assumptions design lead to results project sures Partnership (CMP) (2004) that has several of the same There are six major steps in the adaptive management elements of other project management cycles. Adaptive process before the process may be repeated: management is an integral part of each step in a project cycle. The main steps in adaptive management in a project Clarify group's mission. management cycle are outlined in figure 4.2. Design a conceptual model based on local site conditions. Figure 4.2 General Project Management Cycle 1. Conceptualize · Define team · Define purpose · Understand context · Model situation 5. Learn 2. Plan · Develop goals and objectives · Document what you learn · Select activities · Share what you learn · Focus on needs · Create learning environment Project management · Develop formal M&E plan cycle 4. Analyze/Adapt 3. Implement · Analyze data · Develop short-term plans · Analyze interventions · Implement plans · Communicate results to team · Refine · Adapt action and M&E plans 144 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE Develop a project plan that includes goals, objectives, site (see box 4.15). This information lays the groundwork for and activities. developing good goals and objectives, choosing the right Develop a monitoring plan. strategies, and developing a sound monitoring and evalua- Implement project and monitoring plans. tion plan. Adaptive management requires that teams imple- Analyze data and communicate results. ment their action plans and monitoring plans, analyze the extent to which they are achieving their goals and objectives, Project teams that want to use adaptive management need and adapt based on what they learn. Thus, adaptive manage- to be explicit about who is on their team, where or on what ment is a continuous process that involves going through the they intend to work, and what is happening at their project project management cycle (or parts of it) multiple times. Box 4.15 Conceptual Models: A Tool for Portraying a Site's Context and Determining Strategies A conceptual model is a visual tool for depicting the con- help the teams determine what actions are needed to text within which a project is operating and, in particu- influence the factors at their site and what factors they lar, the major forces that are influencing what the proj- should be monitoring to determine if those factors are ect is trying to achieve.A conceptual model is a diagram changing with project implementation [Margoluis and that uses a series of boxes and arrows to succinctly rep- Salafsky 1998; Morgan and Foundations of Success resent a set of causal relationships among factors that 2005 (see note in reference section)]. are believed to impact one or more targets (what one is The following conceptual model schematic is ultimately trying to affect). Conceptual models are use- adapted from a real-world conservation project at a ful planning tools for project teams because they can watershed site: Objective Scope: Traditions and Demand for Objective Blue River Media campaign consumer caviar watershed preferences Harvesting for caviar Goal High price for caviar Objective Sturgeon Need to generate Pollution from income Objective domestic sewage Improve Goal Inadequate zoning land-use Blue River and planning regulations tributaries Global warming Limited gov't capacity for land use planning Dams Need for Riparian Rapid electricity forest urbanization Objective Objective Gov't policies Clearing for new favorable to Goal urban development home construction Forest Demand for corridors Lobby gov't on Population second homes development policies growth Reforestation with native species Failure of rural Cheap land economy Indirect threat or Key: Strategy Direct threat Target opportunity In this example, the team chose the strategy of model helped the team be strategic about the activities "Improve land-use planning" because it would influ- they chose and those they omitted. ence multiple factors at their site. The conceptual Source: Foundations of Success 2005. NOTE 4.3: USING ADAPTIVE MANAGEMENT TO IMPROVE PROJECT IMPLEMENTATION 145 Use tools to test assumptions underlying projects. The tools used to test assumptions should provide a suc- Tools can include the conceptual model (see box 4.15), cinct and powerful representation of what is happening at threat rating, and results chains (see box 4.16).2 Often proj- the project site. Thus, they can serve as excellent communi- ect teams will develop a project without fully understanding cations tools and important planning tools for the project or describing the context within which they are trying to team. Through the process of building the model together, work. The selection of the project approach may be driven the team should come to consensus on key forces influenc- by factors other than ground realities, and may not be the ing the objectives of the project and identify some high optimal approach from a strategic point of view. Further- leverage points for intervention. The modeling process and more, when assumptions are not explicit, the project team model should also help teams determine where to set goals cannot test them and learn over time whether the assump- and objectives and what causal links they need to be testing tions are valid. (see Box. 4.17). Box 4.16 Tools for Clarifying and Testing Assumptions: Results Chains The results chain is a tool that clarifies assumptions that link factors in an "if...then" fashion (Founda- about the way in which specific strategies are believed tions of Success 2005). The basis for a results chain to lead to achieving a desired impact. In the conser- comes from a conceptual model, but, as illustrated in vation context, results chains show how strategies the example below, results chains build on that model contribute to reducing threats and achieving the con- to make the logic more specific and to change the servation of biodiversity or thematic targets. They are boxes from neutral factors to results the team wants diagrams that map out a series of causal statements to see. Extracted Lobby Gov't policies Clearing for from the Rapid Forest government on favorable to new home conceptual urbanization corridors development policies urban development construction model Converted Lobby Gov't officials Gov't policies Decrease in Pace of Forest to a results government on knowledgeable of discourage clearing for urbanization corridors chain development policies problems with urban rapid urban new home slowed maintained development development construction Potential Number of Number of Presence of new Annual rate of Number of sq km Number of forest indicators government officials government officials policies discouraging urbanization cleared for new patches connected reached able to cite at least rapid urban homes by corridors three negative side development Average width of effects of rapid urban Presence of new corridors development policies encouraging Number of key "smart" growth species using corridors Source: Foundations of Success 2005. Results chains are important tools for making ment. If they are more knowledgeable, they will develop assumptions explicit and facilitating their testing. In policies that discourage rapid urban development. If this example, one of the strategies this project team is they develop these policies, the pace of urbanization undertaking is lobbying government to discourage will slow...." The results chain lays out the logic step- policies favorable to urban development that have led by-step and provides a basis for developing indicators to clearing of forest corridors for new home construc- that will help the project team determine if the logic tion. The results chain shows the team's assumptions: holds. If it does not, they will be able to quickly deter- "If we lobby government officials on development poli- mine where in the chain their logic is faulty. Or, as illus- cies, then government officials will be more knowledge- trated in figure 4.1, they should investigate whether the able of the problems associated with urban develop- project failure was due to poor implementation. 146 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE Another important and useful process for determining ects. To encourage these projects to follow an adaptive man- where to intervene and what action to take is a threat rating agement approach, program managers must be engaged as process (examples of threat rating processes are available in early as possible. Operationally, adaptive management sup- Conservation Measures Partnership 2007; Margoluis and port to projects might involve any of the following: Salafsky 1998; The Nature Conservancy 2006). This process involves rating the direct threats identified in a model to Help partners and stakeholders understand the value of the help teams determine which threats are the most important adaptive management process, which might require that to address. This prioritization is particularly important in managers engage in awareness-raising about adaptive light of the fact that project resources are often limited and management. teams must make strategic choices. Help project teams do adaptive management. Specifically, help them use a systematic process to develop sound Derive monitoring indicators from models that strategic plans that will allow them to monitor their pro- make project assumptions explicit. By explicitly specify- ject's progress and make adjustments during the course ing the most important factors affecting project sites and of the project. This might be done through laying out the logic behind project activities, it is possible to ­ one-on-one technical assistance from the program man- narrow down a vast universe of data to the most important ager, another staff person, or a contracted consultant; factors. In box 4.16, the example indicates that the main fac- ­ facilitated planning workshops in which one or mul- tor affecting forest corridors is clearing for new home con- tiple project teams participate; or struction. If this is the case, the project team should not be ­ a formal training course in strategic planning (in a collecting data related to clearing for other purposes, such classroom setting or online).3 as agriculture or timber harvesting--unless, in going View failures and challenges as learning opportunities. through the adaptive management process, the team learns This requires not penalizing project teams for poor per- that these are important threats. Likewise, the diagram in formance, especially when they have been reflective and box 4.16 provides a concrete example of how a results chain identified important lessons for current and future would help a team identify indicators to test whether the actions. strategies they chose are having an impact. Allow projects to change as they proceed. Adaptive man- agement involves constant adjustments as teams expand Explicitly define the time frame and chronology of their understanding of their sites and test their assump- events necessary for achieving desired impacts. tions. Managers need to recognize the need for change Results chains and other tools can help teams specify the and even encourage projects to change, as needed, when chronology of changes that must occur to achieve their project teams make a good case for changing course. desired effect. As figure 4.3 illustrates, results take longer to Require that impact evaluations be based on the planning materialize as one goes further down the chain. A results work project teams have done through the adaptive man- chain can help the team be very clear about when it is real- agement process. If an external consultant undertakes an istic to see changes as a result of their intervention and help evaluation of a project that has gone through a good them communicate this information to key stakeholders. adaptive management process, the consultant should use For example, the project team for the watershed site should the assumptions teams originally documented (through not commit that stakeholders will see any changes in clear- tools such as conceptual models and results chains) and ing for new home construction as a result of their lobbying the goals and objectives they developed as the primary efforts until 2013. framework for the evaluation. However, there should be Program managers often have their own project cycles flexibility for situations in which project teams have not for identifying, assisting, supervising, and evaluating proj- done a thorough job formulating their plans. Figure 4.3 Timing of Outcomes and Impacts Lobby Government Government Decrease in Pace of Forest government on officials knowledgeable policies discourage clearing for urbanization corridors development of problems with rapid urban new home slowed maintained policies urban development development construction Occurs 2007 Occurs 2008 Occurs 2010 Occurs 2013 Occurs 2013 Occurs 2015 NOTE 4.3: USING ADAPTIVE MANAGEMENT TO IMPROVE PROJECT IMPLEMENTATION 147 Box 4.17 Adaptive Management Applied: Sustainable Agriculture in Guatemala and Mexico In the 1990s two organizations, Defensores de la Natu- tion. To explore this question, Defensores de la Natu- raleza in Guatemala and Línea Biósfera in Mexico, raleza and Línea Biósfera partnered with the Biodiver- wanted to understand how effectively sustainable agri- sity Support Program to implement a learning process culture was reducing deforestation and the conditions to determine the utility of sustainable agriculture as a under which it was effective. Like many conservation conservation tool. or development organizations, these two groups had As a first step, the organizations had to make been using sustainable agriculture under the assump- explicit the assumptions they were using in promoting tion that it would reduce forest clearing for agriculture, sustainable agriculture techniques. One of the main yet they had no concrete evidence that the use of sus- assumptions is articulated in the results chain in the tainable agriculture actually led to reduced deforesta- figure: Promotion of Farmers Increase in Farmers Reduction in Forest sustainable adopt yield/unit reduce area clearing for habitat agriculture techniques labor planted agriculture maintained techniques The groups in both countries collected data related In addition, access to land was an important factor to each of the factors in the results chain and came up affecting area planted and, thus, deforestation. In with some surprising conclusions. The assumptions in Guatemala, where land is relatively available, farmers the first two rectangular boxes in the chain held, but lacked incentives to be efficient in their land use, so there were differences regarding the third rectangular increased their maize production by increasing area box, "Farmers reduce area planted." In Guatemala, planted. In Mexico, where land access is restricted, farmers who used the sustainable agriculture tech- farmers were much more efficient in their use of land niques promoted by the project planted more area to and increased maize production by increasing yield. maize than farmers who did not use sustainable agri- As a result of this work, the organizations concluded culture. In Mexico, farmers who used the same sus- that sustainable agriculture programs that promote the tainable agriculture techniques planted less area (thus, same techniques used in these sites are unlikely to con- the assumptions in the results chain held true in Mex- tribute to decreased rates of deforestation if access to ico). Through more analysis, the groups were able to land is not restricted. This is an important lesson--not determine that, in Guatemala, sustainable agriculture just for the organizations carrying out this research, led to decreased investments in labor per hectare, and but for any organization working under similar condi- the farmers used the saved labor to increase the tions and using the same sustainable agriculture tech- amount of area planted or to establish cash crops in niques to discourage deforestation. Adaptive manage- forested areas. ment is about testing assumptions, learning, and adapting. When project teams can identify these types Source: Margoluis and others 2001. LESSONS LEARNED AND RECOMMENDATIONS management practices, managers should be able to readily FOR PRACTITIONERS assess if a project is on track and, ultimately, how well the project performed. Obviously, there is an upfront invest- Adaptive management should involve all team members, to ment in helping teams do adaptive management, but that the extent possible.4 Plans developed by higher level man- investment can make overall portfolio management easier agers or offices and handed down to field staff do not have and more reliable for program managers. buy-in from the field staff and do not represent the assump- Ideally, teams should integrate adaptive management tions held by project teams familiar with the site. into their projects from the beginning--as soon as they Encouraging an adaptive management approach will begin to conceptualize their project and think about who help program managers overseeing multiple projects. If the will be involved and where or on what they want to work. projects they are supervising have followed good adaptive This helps them be explicit and systematic early on. Never- 148 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE theless, it is never too late to start doing adaptive manage- 2. For further information on these tools, review the ment. Because of its iterative nature, adaptive management Selected Reading and References and cited lists and also visit means teams are constantly revisiting steps in the project www.Miradi.org for updates on the piloting of Miradi cycle. If a team decides to take an adaptive management Adaptive Management Software, which includes a compo- approach midway through a project, the team should revisit nent to help build conceptual models and rank threats. each step and modify its action and monitoring plans, if 3. Adaptive management requires that project team mem- necessary. Typically, teams find it enlightening to use tools bers execute the design, management, implementation, and adaptation. like threat ratings to determine if they are addressing prior- ity threats, conceptual models to determine what they 4. The Open Standards for the Practice of Conservation (Conservation Measures Partnership 2004) provides an should be doing, and results chains to determine if the logic extensive list of guidance and principles for doing adaptive for what they are currently doing makes sense. Together, management. these tools help teams evaluate whether they are currently taking the "right" actions or if they need to change course SELECTED READINGS and undertake other, more strategic actions. Although it may seem time-consuming, the process of Conservation Measures Partnership. 2004. "Open Stan- identifying, agreeing upon, testing, and revisiting project dards for the Practice of Conservation." Conservation assumptions is extremely important. Sometimes, members Measures Partnership, Washington, DC. http://www. from the same project team will hold different assumptions conservationmeasures.org/CMP/Library/CMP_Open_ about their project site and why they are doing a particular Standards_v1.0.pdf. activity. It is only when they sit down together to specify Margoluis, R., and N. Salafsky. 1998. Measures of Success: their assumptions that the differences emerge. Designing, Managing, and Monitoring Conservation and Development Projects. Washington, DC: Island Press. To truly practice adaptive management, an open learning culture needs to be in place to encourage project teams to Salafsky, N., R. Margoluis, and K. Redford. 2001. "Adaptive Management: A Tool for Conservation Practitioners." question their actions, share both successes and failures, and Publication No. 112, Biodiversity Support Program, learn from their actions. Teams should not be afraid to Washington, DC. http://www.fosonline.org/Site_Docs/ admit mistakes, but at the same time, they should seek ways AdaptiveManagementTool.pdf. to remedy them and improve the project. The Nature Conservancy. "Conservation Action Planning It is important to share lessons with the team and Resources." http://conserveonline.org/workspaces/ beyond. Lessons learned through adaptive management can cbdgateway/cap/resources. improve not only the project under consideration but other World Wildlife Fund (WWF). Guides for Implementing the projects operating under similar conditions and with simi- WWF Standards of Conservation Project and Programme lar goals. Management. http://www.panda.org/standards. Finally, adaptive management is not a trial-and-error process or a license to try whatever the team wants. Adaptive REFERENCES CITED management requires a systematic and explicitly experi- mental--or scientific--approach to project management. Conservation Measures Partnership. 2004. "Open Stan- dards for the Practice of Conservation." Conservation Measures Partnership, Washington, DC. http://www NOTES .conservationmeasures.org/CMP/Library/CMP_Open_S tandards_v1.0.pdf. 1. This note focuses primarily on a couple of useful tools for testing assumptions--a key feature of an adaptive man- ------. 2007. Miradi Adaptive Management Software. agement approach. Those readers who are looking for more www.Miradi.org in-depth guidance on adaptive management or other tools Foundations of Success. 2005. "Basic Guidance for Tools: should review Margoluis and Salafsky (1998) and visit the Results Chains." Resources for Implementing the WWF Web sites of Foundations of Success (http://www.foson- Standards, Worldwide Fund for Nature (WWF), Gland, line.org/) and the CMP (http://www.conservation Switzerland. measures.org/). The CMP is a partnership of conservation Gunderson, L. H., C. S. Holling, and S. S. Light, eds. 1995. NGOs that seek better ways to design, manage, and measure Barriers and Bridges to the Renewal of Ecosystems and the impacts of their conservation actions. Institutions. New York: Columbia University Press. NOTE 4.3: USING ADAPTIVE MANAGEMENT TO IMPROVE PROJECT IMPLEMENTATION 149 Lee, K. N. 1993. Compass and Gyroscope: Integrating Science Morgan, A., and Foundations of Success. 2005."Basic Guid- and Politics for the Environment. Washington, DC: Island ance for Cross-Cutting Tools: Conceptual Models." Press. Worldwide Fund for Nature, Gland, Switzerland. Margoluis, R., V. Russell, M. Gonzalez, O. Rojas, J. Mag- The Nature Conservancy. "Conservation Action Planning daleno, G. Madrid, and D. Kaimowitz. 2001. "Maximum Resources." http://conserveonline.org/workspaces. Yield? Sustainable Agriculture as a Tool for Conserva- Salafsky, N., R. Margoluis, and K. Redford. 2001. "Adaptive tion." Biodiversity Support Program, Washington, DC. Management: A Tool for Conservation Practitioners." Margoluis, R., and N. Salafsky. 1998. Measures of Success: Publication No. 112, Biodiversity Support Program, Designing, Managing, and Monitoring Conservation and Washington, DC. http://www.fosonline.org/Site_Docs/ Development Projects. Washington, DC: Island Press. AdaptiveManagementTool.pdf. 150 CHAPTER 4: OPTIMIZING FOREST FUNCTIONS IN A LANDSCAPE C H A P T E R 5 IMPROVING FOREST GOVERNANCE orest sector governance refers to the ways in which F evasion of legal taxes and royalties, indicate weaknesses in officials and institutions (both formal and informal) forest sector governance that need to be addressed. In devel- acquire and exercise authority in the management of oping countries, illegal logging in public lands alone causes the resources of the sector to sustain and improve the wel- estimated losses in assets and revenue in excess of US$10 fare and quality of life for those whose livelihoods depend billion annually, more than six times the total official devel- on the sector.1 Good governance is fundamental to achiev- opment assistance dedicated to the sustainable management ing positive and sustained development outcomes in the of forests. In addition, about US$5 billion per year is esti- sector, including efficiency of resource management, mated to be lost to uncollected taxes and royalties on legally increased contribution to economic growth and to environ- sanctioned timber harvests, as a result of corruption (World mental services, and equitable distribution of benefits. Bank 2004). The global magnitude of the problem as esti- Good forest governance is characterized by predictable, mated by its direct monetary impacts is staggering.2 open, and informed policy making based on transparent The associated physical, environmental, and social processes, a bureaucracy imbued with a professional ethos, an impacts resulting from poor governance are even more exten- executive arm of government accountable for its actions, and sive and serious. They are characterized by the following: a strong civil society participating in decisions related to sec- tor management and in other public affairs--and all behav- Violation of protected area boundaries threatens the ing under the rule of law. Thus, key features of good gover- conservation of forest resources and biodiversity. nance include adherence to the rule of law, transparency and More than 350 million rural poor rely heavily on forests low levels of corruption, inputs of all stakeholders in decision for their livelihoods, while more than 60 million depend making, accountability of all officials, low regulatory burden, almost exclusively on them for subsistence. Strong forest and political stability (see also World Bank 2000). governance (including vesting tenurial rights with such The rationale for the World Bank to engage in improving communities) is essential for protecting their livelihoods forest governance in client countries is twofold. On one and improving their well-being, and for protecting them hand, broader governance reform processes, such as decen- from the consequences of illegal logging and unautho- tralization and devolution, and public sector reforms pres- rized removals from the forest (World Bank 2006). ent direct opportunities to which the forest sector needs to Legitimate forest enterprises are subjected to unfair com- respond. On the other hand, illegal logging, corruption, and petition through price undercutting and discouraged other forest sector crimes, such as arson, poaching, land from making socially and environmentally responsible encroachment, trade in endangered fauna and flora, and investments in the sector. 151 Forests are a global public good, and their degradation Some of the complexities of these relationships and the imposes global costs, such as climate change, environ- magnitude of the task to improve forest governance are cap- mental degradation, and species loss. Improving gover- tured in figure 5.1. nance will help contain the negative environmental, eco- The box in the center of the figure lists "entry points," or nomic, and social consequences at the global level. opportunities within the forest sector itself, directed toward There are less visible--though highly insidious--costs reducing the means, motives, and opportunities for crimes resulting from the erosion of institutions, the spread of and misdemeanors in the forest sector (see note 5.5, Address- corruption across the economy, and lower growth. These ing Illegal Logging and Forest Crime).The surrounding boxes spillover effects are the most far-reaching and significant indicate the "embedded" nature of the problem in the econ- aspects of the problem of poor sectoral governance. The omy and of the need for other sectors, institutions, and actors problem originates in the forest sector but the impacts to support and complement the within-sector efforts at are transmitted through the economy, weakening gover- improving governance and law enforcement. They elaborate nance and the rule of law, impeding investments in legit- on the roles of the overall political structure; of national and imate commerce, and undermining the overall gover- international checks and balances; and the contributions of nance structure. civil society, media, the private sector, and local communities. Figure 5.1 Identifying "Entry Points" and a Sustainable Reform Process to Improve Forest Governance Political accountability · Political competition, broad-based political parties · Transparency and regulation of party financing · Asset declaration by legislators and parliamentarians · Disclosure of parliamentary votes Building blocks for effective Civil society and media forest sector management · Freedom of press and Checks and balances information · Independent, · Adequate legislative frameworks and · Civil society watchdogs · Participatory country effective judiciary law enforcement capacity diagnostic surveys · Independent · Robust institutions with a service- · Report cards, client surveys oversight institutions delivery orientation · Global initiatives: · Competent leadership based on meritocracy and technical skills UN, OECD Private sector interface Convention, anti-money · Institutional oversight including an · Streamlined regulation laundering and asset independent forests monitor · Public-private partnerships forfeiture · Transparent forest fiscal systems · Corporate social responsibility based on easy-to-track revenue flows · Sound sector policy conducive to competitive domestic markets and international trade Ownership and decentralization · Property and access rights · Decentralization with accountability · Community driven development · Oversight by user groups and citizens organizations · Beneficiary participation in projects 152 CHAPTER 5: IMPROVING FOREST GOVERNANCE Improving forest governance and legislative compliance Strategy (Lele et al. 2000) pointed to the failure to address has been the focus of international attention for a number of governance issues as a serious gap in the World Bank's work years. For maximum effectiveness, the World Bank's efforts in forestry and recommended that the World Bank help in this area need to be closely aligned with those of other reduce illegal logging by actively promoting improved gover- partners, both in client countries and at the regional and nance and enforcement of laws and regulations because poor international levels. This is especially important because laws and legislation and poor enforcement are fundamental effective action in this area requires collaboration among failings in the sector. As a result, the World Bank placed for- governments in producer and consumer countries, private est governance and illegal logging high on the agenda in its sector operators, and civil society. Since 2001, regional Forest 2002 Forests Strategy. Indeed, the World Bank committed Law Enforcement and Governance (FLEG) ministerial con- itself to collaborate with borrower countries and partners to ferences have been conducted in East Asia (2001), Africa reduce by half the estimated annual financial losses from ille- (2003), and Europe and Northern Asia (2005). The resulting gal logging by 2013. Likewise, the World Bank's 2001 envi- ministerial declarations are important tools that can be used ronment strategy emphasizes the comparative advantage of in the dialogue with client governments, as well as in build- the World Bank in supporting better governance, increased ing alliances with the private sector and civil society actors. transparency, access to environmental information, and The World Bank has had a key role in facilitating these con- public participation in client countries (World Bank 2001). ferences and supporting their follow-up. Several multilateral, The earliest explicit attention to forest crimes in Bank bilateral, civil society, and private sector initiatives have also project design was in the Philippines in 1983 in the context originated from these efforts, which can provide traction for of the Multisectoral Forest Protection Committees. These the World Bank's work in this area. issues started to appear in a more systematic way in project An independent and especially relevant initiative is the design in the 1990s. Adjustment operations in Papua New European Union (EU) Regulation and Action Plan on Forest Guinea in the 1990s supported the introduction of private Law Enforcement, Governance and Trade (FLEGT).An essen- sector administration of log export taxation. Work in Cam- tial part of the EU FLEGT is the negotiation of Voluntary Part- bodia in the late 1990s involved the first use by the World nership Agreements (VPAs) between the EU and interested Bank of forest law enforcement professionals in policy timber-producing countries. VPAs aim to develop an agree- analysis and project design. Experiments in third-party ment between producing and importing EU countries that independent monitoring of forest crime reporting, support only timber originating legally will be exported and allowed to for case tracking systems, and recommendations for timber be imported. If successful, the implementation of the VPAs theft prevention planning were among the innovations. In will result in increasing demand for country-level financing in Africa, similar work, including independent forest moni- such areas as strengthening and reforming laws, regulations, tors, was developed in Cameroon, and timber and postcon- and institutions in the forest sector; strengthening the capac- flict issues are now being addressed in Liberia (see box 5.7). ity of indigenous and rural communities to manage forests sustainably; independent certification of sustainable forest Country Assistance Strategies. To examine the extent to management; implementation of timber tracking systems; which FLEG and related issues are taken into account in forest products and trade-related information and statistics; Bank Country Assistance Strategies (CASs) today, a review and monitoring of forest cover changes to detect illegal activi- of the most recent CASs for 18 forest-rich countries was car- ties. This will provide both the need and opportunities for ried out in 2006 (World Bank 2006). These 18 countries improved collaboration between bilateral and multilateral represent 75 percent of all forests in developing countries. financing institutions, including the World Bank. Of these 18 CASs, 17 mention forestry, with 11 containing The FLEG initiative enables the World Bank's project explicit forestry components. Nine CASs mention FLEG managers and task team leaders to incorporate FLEG into issues specifically, with at least seven outlining FLEG activi- their projects using the political momentum and stake- ties (both lending and nonlending) to be undertaken. Five holder coalitions it creates. CASs link deforestation to governance issues, and six describe links between poverty and deforestation. PAST ACTIVITIES Lending operations. A review in 2006 (World Bank 2006) A review by the World Bank's Operations Evaluation Depart- found there are currently more than 50 active forestry proj- ment of the performance of the World Bank's 1991 Forests ects in the World Bank's lending portfolio, with a total cost of CHAPTER 5: IMPROVING FOREST GOVERNANCE 153 US$2.7 billion and total Bank commitment of US$1.6 billion. capacity development for public agencies to better A recent assessment of these projects showed that some 35 address forest crimes; projects have clearly identified FLEG components, totaling an support for public awareness activities; estimated US$310.8 million. Thus, FLEG activities account support for natural resource inventories, transparency in for 11 percent of total project costs across all 51 forestry proj- concession allocation, forest certification, and chain-of- ects and 22 percent of total project costs for the 35 projects custody verification; and with forest governance components (also see table 5.1). development of forest law enforcement reporting and With regard to specific FLEG activities, some of the areas monitoring systems and provision of equipment and of forest governance addressed in World Bank projects include capacity development for staff responsible for manage- the following (see box 5.1 for country-specific examples): ment of protected areas. development of national-level forestry policies and man- Analytical and advisory activities and other non- agement plans; lending activities. An essential and increasingly impor- Table 5.1 FLEG Components in the World Bank Forestry Portfolio, by Region Cost as % FLEG as Total Number of total Bank FLEG % of total FLEG as number of FLEG Total cost forestry commitment amount forestry % of Region of projects projects (US$ million) portfolio (US$ million) (US$ million) portfolio total FLEG EAP 8 7 772.9 29 431.1 40.3 5 13 ECA 11 9 396.5 15 265.6 32.7 8 11 LAC 19 13 691.9 26 328.8 123.1 18 40 MENA 3 0 203.5 8 139.5 0 0 0 SA 1 1 127.1 5 108.2 5.8 5 2 SSA 9 5 515.1 19 289.7 108.9 21 35 Total 51 35 2,707.0 102 1,562.9 310.8 57 101 Source: World Bank 2006. Note: EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; SA = South Asia; SSA = Sub-Saharan Africa. Box 5.1 Examples of Bank Support for Prevention and Detection Activities in Project Lending Examples of FLEG prevention activities in the World Examples of FLEG detection activities in the World Bank's portfolio: Bank's portfolio: Legal and regulatory reform in forest sector Forest management information systems (Bosnia (Argentina, Bolivia, Bosnia and Herzegovina, Croa- and Herzegovina, Georgia, Ghana, India, Lao PDR, tia, Georgia, Madagascar, Mexico, Romania) Romania, Russia) Improving revenue collection and concession sys- Certification systems (Armenia, Mexico, Russia) tems (Cambodia, Republic of Congo, Georgia, Monitoring in the field (Peru, Uganda) Ghana, the Russian Federation, Tanzania) Guard houses, field inspection units, equipment for National-level forest management plans and pro- patrols (Bosnia and Herzegovina, Ecuador, Georgia, tected-area plans (Bolivia, Cambodia, Ghana) Lao PDR, Mexico) Demarcation of protected areas (Argentina, Brazil, Honduras, Ghana, the Lao Peoples' Democratic Republic [Lao PDR], Uganda, Vietnam) Formalization of land tenure rights (Honduras, Vietnam) Public awareness activities (Cambodia, Romania) 154 CHAPTER 5: IMPROVING FOREST GOVERNANCE tant part of the World Bank's contribution to development is related to investments in other sectors also involves issues of the analytical and advisory activities3 carried out for client illegal logging and forest governance. countries. These activities provide a foundation for defining strategic priorities and informing policy dialogue and deci- KEY ISSUES sions on projects and programs and comprise economic and sector work, nonlending technical assistance, and knowledge Finding ways to improve forest governance is a challenging management, as well as training and research services. task.In addition,poor governance in the sector is often symp- The World Bank also has prepared country-level forest tomatic of poor governance in the overall economy, com- sector reviews in several countries with a focus on FLEG. pounding the problem. For example, illegal money generated Furthermore, as part of its analytical and advisory work and from forest crimes often fuels "slush funds" for corruption in as an integral part of its strategic approach to forest gover- other sectors, including campaign financing, speculation, nance, the World Bank has actively supported international gambling, and human and drug trafficking, all of which have and regional initiatives on forest governance (see box 5.2), deep negative impacts on the economy at large. This access to including the three regional ministerial FLEG conferences. illegal money also creates powerful vested interests, both At the country level, the World Bank has supported the within and outside the sector, which tend to benefit from the development of national-level action plans related to con- status quo and therefore strongly oppose any reforms. trolling illegal logging and improving forest sector trans- Approaches to addressing forest governance and law parency for Albania, Armenia, Bosnia and Herzegovina, enforcement must deal with, among other things, issues con- Indonesia, and Russia. In some cases, World Bank work nected to land tenure arrangements,access rights (see note 1.4, Box 5.2 Finding Synergies Between the World Bank Group's Efforts in FLEG and Its Broader Governance Reforms for Greater Impact The forestry portfolio is nested within the World with corporate social responsibility and social and Bank's overall approach to governance and anticorrup- environmental issues in the operations of the Interna- tion and is consistent with a wide range of governance tional Finance Corporation (IFC) (for example, invest- work being led by other sectors in the World Bank. ment safeguard policies) is extremely relevant to FLEG Some of the more relevant work of other parts of issues (see note 3.2, Forest Certification Systems). the World Bank Group on governance includes sup- The forestry work of the World Bank Group needs port to Poverty Reduction Strategy Paper processes to be more consciously informed by and aligned with and the alignment of the World Bank's CAS with these these initiatives. The expertise accumulated in these processes, work on governance diagnostics and inte- specialized fields is only now being brought to bear on gration of governance and anticorruption elements in the problems of forestry. Where it has been applied, for the CASs, and the design of specific capacity-building example, in anti-money laundering, it is clear that programs based on the diagnostic surveys (Poverty there is enormous potential to address problems in the Reduction and Economic Management Network and sector. There are also potential advantages for these the World Bank Institute). Other relevant areas of the specialized initiatives to work with forestry because World Bank's work focus on anti-money laundering this can provide an important sectoral entry point on and financial investigation, the Extractive Industries which to ground the specialized efforts. Transparency Initiative, Justice for the Poor, and cus- Joint analytic work needs to be strengthened across toms modernization. The World Bank's legal depart- the World Bank's organizational boundaries, specialists ment has carried out important work in developing a from other areas need to be familiarized with the spe- benchmark study for assessing the quality of legal and cial circumstances of forestry, and understanding regulatory frameworks. The Department of Institu- among external stakeholders of the relevance of these tional Integrity's investigative approaches to allega- tools needs to be improved. Transaction costs involved tions of corruption in Bank-funded projects provide in working across sectoral lines can be significant and potentially powerful instruments to combat illegal log- internal incentives need to be aligned to encourage ging and forest crimes. Similarly, some of the work cross-sectoral collaboration. Source: World Bank 2006. CHAPTER 5: IMPROVING FOREST GOVERNANCE 155 Property and Access Rights), overly complex laws and regula- devolution based on the principle of subsidiarity, are means tions biased against the poor (see note 5.3, "Strengthening to promote more democratic and equitable management of Legal Frameworks in the Forest Sector), and transparency and forest resources and increase the contribution of the sector stakeholder participation in decisions directly affecting their to poverty reduction. Decentralization and devolution livelihoods. However, an increasing trend toward decentraliza- processes can create imbalances and unforeseen negative tion (both administrative and fiscal), coupled with increased consequences if they are not carefully managed and accom- willingness of governments to allow operation of multistake- panied by sufficient capacity building, allocation of finan- holder processes, has created unique demands as well as cial resources, and creation of mechanisms for downward opportunities for better and different forms of governance accountability at the decentralized levels. Bureaucratic resis- (see note 5.1, Decentralized Forest Management, and 5.2, tance to change at the central level, as well as powerful Reforming Forest Institutions). These considerations have vested interests, can often swing the policy pendulum from been complemented by the universal commitment to the Mil- decentralization and devolution back to re-centralization, lennium Development Goals dealing especially with issues of reversing progress and resulting in incoherent policies and equity and the rights of poor and indigenous forest commu- regulations. nities. Thus, decentralization and participation are crucial issues that are extensively discussed in this sourcebook (see Protect the rights of and empower indigenous and note 5.1, Decentralized Forest Management). local communities through governance reform A forest fiscal system is needed that, in its broadest terms, processes. Specific attention should be given to using influences revenue flows in and out of the sector as well as governance reform processes to protect the rights of and income distribution across various stakeholder groups empower indigenous and local communities. This can pre- within the sector. A well-designed and well-functioning fis- vent unintended and potentially adverse impacts on forest- cal system is an important instrument with which to address dependent livelihoods and traditional rights (see also note sustainable resource utilization and equity and rural devel- 1.3, Indigenous Peoples and Forests, and chapter 12, Apply- opment issues, and to minimize the risks of corruption (see ing OP 4.10 on Indigenous Peoples). note 5.4, Strengthening Fiscal Systems in the Forest Sector). In addition, combating large-scale criminal activities Continue to engage in institutional and legal sys- requires targeted action to directly improve forest law tem reforms in the forest sector. The World Bank, with enforcement so that criminals are apprehended and pun- its engagement in diverse sectors, helps governments tailor ished. Combating large-scale criminal activities would also forest sector reform processes to the country context and include more fundamental changes to improve the broader effectively implement them. A model that works for a post- governance environment in the forest sector and in society conflict country (for example, Liberia or the Democratic at large to help strengthen law enforcement efforts (see note Republic of Congo) may be very different from what is pos- 5.5, Addressing Illegal Logging and Other Forest Crimes). sible in a country in transition from a centralized, one-party In many countries, law enforcement capacity and expert- governance structure to a democratic model (for example, ise exists in other sectors and needs to be marshaled in new the experience of the former communist countries of East- ways to support forest development. In others, specialized ern Europe). (See note 5.2, Reforming Forest Institutions, capacity needs to be developed within forestry agencies. for discussion on key principles and structures.) Exploitation of new enforcement innovations and opportu- nities, made possible, for example, by the introduction of Assist in enabling and designing fiscal system anti-money-laundering legislation, the adoption of the UN reforms that are economically and administratively Conventions against Transnational Organized Crime and efficient. Fiscal system reforms that are economically and Corruption, and by other new legal and judicial innova- administratively efficient allow for appropriate rent capture. tions, will require new skills and capacity. As part of this process, the World Bank should assist gov- ernments in assessing the appropriateness of structuring forest fiscal systems to achieve secondary objectives, such as FUTURE PRIORITIES AND SCALING-UP equity and sustainable rural development. ACTIVITIES Support decentralization and devolution of forest Center FLEG activities at the country level around management responsibilities. Decentralization and more effective integration of the work in the forest 156 CHAPTER 5: IMPROVING FOREST GOVERNANCE sector with broader governance and anticorrup- sector reform, see note 6.2, Prospects for Using Policy Lend- tion efforts. Such instruments as anti-money-laundering ing to Proactively Enable Forest Sector Reforms.) and asset forfeiture laws, crime monitoring techniques, cus- toms modernization, and governance diagnostics need to be Identify necessary FLEG measures for enabling brought into the picture to combat illegal logging and other reduced emissions from avoided deforestation and degra- forest crime. This will require both helping client countries dation (REDD) while also exploring opportunities to main- to establish effective mechanisms for intersectoral coordina- stream FLEG considerations into country dialogue on tion and collaboration and joint action (such as dedicated REDD (see box 5.3). forest crime task forces) and joint work by the respective Bank departments and units. NOTES Work to move actions against forest crime forward. 1. Officials and institutions may be either public or pri- Given the importance of international demand as a driver of vate, the first of which may be termed public sector forest illegal logging and other forest crime, the regional FLEG governance and the latter corporate forest governance. This processes should continue to play an important role in cre- distinction is useful in developing a typology of reform measures. ating political commitment and joint action by producer and consumer countries to address these issues. This work 2. How might a policy maker assess the state of forest gov- ernance in his or her own country? Systematic and objective increasingly needs to become part of the agenda of existing quantitative and qualitative estimates of such activities can international, regional, and subregional organizations and help benchmark the state of governance in the sector and agreements to increase both its sustainability and impact. identify critical areas for reform and can contribute to mon- Significant work needs to be done to deepen the technical itoring the progress of efforts to improve governance. content of these processes and help them move from politi- 3. Analytical and advisory activities refer to activities that cal declarations, to effective support, to action at the coun- involve analytical effort with the intent of influencing client try level. countries' policies and programs and comprise formal and informal studies of critical issues, either at the country level Explore and enhance the use of policy lending to or for specific sectors (for example, economic and sector enable forest sector governance reforms as discussed work, policy notes, and the like). This work has traditionally in this chapter and associated notes. (For more information underpinned lending and investment operations. Nonlend- on the application of development policy lending for forest ing technical assistance is the transfer of skills and knowl- Box 5.3 REDD and Forest Governance In response to growing awareness that deforestation and uncontrolled. Tackling this latter element of defor- and forest degradation are major sources of green- estation and establishing basic rule of law in the sector house gas emissions, many countries have expressed an will be a critical prerequisite for governments hoping interest in implementing payments for forest protec- to achieve reduced deforestation or attract private sec- tion that achieves carbon storage. A UN Framework tor investment in REDD projects, particularly in the Convention on Climate Change (UNFCCC) mecha- early stages of the market. nism to establish this is under discussion. The initiative Previous to the REDD concept, establishing legality is known as REDD, for Reduced Emissions from in the sector has long been a priority for those working Avoided Deforestation and Degradation. in forests, and it is important that synergies are recog- Proponents of REDD see it as a low-cost option for nized, continuity is emphasized, and political processes reducing global emissions that could also alleviate and tools designed to support improved legality in pro- poverty and protect biodiversity. However, while much duction forests are also used in support of REDD deforestation is a rational response to global and local strategies where relevant. Beyond the need to establish economics and is the result of government planning, a legal control of the forest resource, it will also be nec- significant proportion has been, and remains, illegal essary to tackle systemic issues. Source: Saunders and Nussbaum 2008. CHAPTER 5: IMPROVING FOREST GOVERNANCE 157 edge for development purposes and a key instrument for REFERENCES CITED improving policies and project design, enhancing skills, and Saunders, J., and R. Nussbaum. 2008. "Forest Governance strengthening implementation capacity. and Reduced Emissions from Deforestation and Degra- dation (REDD)."Chatham House (The Royal Institute of International Affairs), London, England. SELECTED READINGS World Bank. 2000. Reforming Public Institutions and Kishor, N., and R. Damania. 2006."Crime and Justice in the Strengthening Governance: A World Bank Strategy. Public Garden of Eden: Improving Governance and Reducing Sector Group PREM Network. Washington, DC: World Corruption in the Forestry Sector." In The Many Faces of Bank. Corruption: Tracking Vulnerabilities at the Sector Level, ed. ------. 2001. Making Sustainable Commitments: An Envi- J. Edgardo Campos and Sanjay Pradhan. Washington, ronment Strategy for the World Bank. Washington, DC: DC: World Bank. World Bank. Lele, U., N. Kumar, S.A. Husain, A. Zazueta, and L. Kelly. ------. 2004. Sustaining Forests: A Development Strategy. 2000. The World Bank Forest Strategy: Striking the Right Washington, DC: World Bank. Balance. Washington, DC: World Bank. ------. 2006. "Strengthening Forest Law Enforcement and Magrath, W. B., R. Grandalski, J. Stuckey, G. Vikanes, and G. Governance: Addressing a Systemic Constraint to Sus- Wilkinson. Forthcoming. Timber Theft Prevention and tainable Development." Report #36638-GLB, Sustainable Forest Resource Security. Washington, DC: World Bank. Development Network, World Bank, Washington, DC. World Bank. 2000. Anticorruption in Transition: A Contribu- tion to the Policy Debate. Washington, DC: World Bank. ------. 2000b. Reforming Public Institutions and Strengthen- CROSS-REFERENCED CHAPTERS AND NOTES ing Governance: A World Bank Strategy. Washington, DC: Note 1.3: Indigenous Peoples and Forests World Bank. Note 1.4: Property and Access Rights ------. 2002."A Revised Forest Strategy for the World Bank Note 3.2: Forest Certification Systems Group." Draft April 2002. Washington, DC. Note 5.1: Decentralized Forest Management ------. 2007. "Strengthening World Bank Group Engage- Note 5.2: Reforming Forest Institutions ment on Governance and Anticorruption." Washington, DC. http://www.worldbank.org/html/extdr/comments/ Note 5.3: Strengthening Legal Frameworks in the Forest governancefeedback/gacpaper-03212007.pdf. Sector Chapter 12: Applying OP 4.10 on Indigenous Peoples 158 CHAPTER 5: IMPROVING FOREST GOVERNANCE N OT E 5 . 1 Decentralized Forest Management D issatisfied with centralized approaches to gover- involving multiple levels of government, agencies with nance, many developing countries and countries different functions, and stakeholders with diverse, some- in transition--it is estimated that 80 percent of times incompatible, interests. Authority, responsibility, them have embarked on some form of decentralization, and financial and human resources as well as a variety of transferring authority and responsibility for government administrative functions can be decentralized to different functions from the central government to subnational gov- degrees, thus creating countless possible pathways to ernments or civil society and private sector institutions. decentralized forest administration. Decentralized forest Given the right conditions, decentralization of forest man- institutions often cannot function adequately if they are agement can lead to superior outcomes, improving the effec- not endowed with sufficient resources and authority. tiveness of public forest institutions by matching the demand Imbalances in the allocation of authority and responsi- for public forest services with their supply by local govern- bility to the various levels of government, possibly ments. Decentralized local institutions of the public forest because the process is still incomplete, also make efficient administration can be closer to local people, their demands, public forest service delivery difficult. Regardless of the and priorities, and thereby offer opportunities for govern- path to decentralization, inadequate subnational capacity ment to become more relevant to local conditions.By empha- is almost always a limiting factor. sizing subnational governmental autonomy, forest decentral- Some obstacles to effective forest decentralization have ization can promote democratic decision-making processes their origins in the drastic changes in power structures and free top executives of the public forest administration within the government apparatus that are associated with, from many routine decisions. If decentralization leads to and required for, effective decentralization, and that occur greater local voice and participation, it can contribute to during the redistribution of authority and resources from greater accountability and to reducing forest-related corrup- the central government to subnational governments. Gov- tion and government misuse of forest resources. Local partic- ernment officials at the center often resist these realloca- ipation can also induce design of and experimentation with tions of power. Furthermore, when powers are redistrib- creative and innovative programs that make use of local uted to subnational levels, decentralization often also knowledge and that are tailored to local settings, moving increases the possibility of regulatory capture by local away from the application of standardized actions designed interests. Local government officers and politicians can be by the central government. Furthermore, forest decentraliza- even more subject to corruption than those of the central tion can help improve equity through greater capture and government. local retention, as well as democratic distribution, of forest In addition, unless some key functions of government management benefits.Because of this,decentralization can be remain at the center, such as defining national forest pol- instrumental in reducing local conflicts over the use of forest icy parameters, overall policy coherence in the sector may resources and the allocation of resulting benefits and costs be lost. The challenge for forest sector planners is to shape among institutions and local people. Thus, decentralization and manage decentralization processes in a way that can lead to better governance and improved efficiency, equity, secures its potential benefits while avoiding associated and environmental management outcomes. pitfalls. Some of the main promises of decentralization However, there are potential risks associated with and the corresponding limitations it faces are listed in decentralization. It is an extremely complex undertaking table 5.2. 159 Table 5.2 Forest Decentralization: Potential Advantages and Dangers Potential advantages Potential dangers There may be reduced bureaucracy and decision-making congestion Coordination, implementation, and monitoring of national policies may at the center. be more difficult. Central government may be excessively weakened by the transfer of resources to subnational governments. Unclear division of powers may lead to increased conflicts between tiers of government. There may be faster decision making, particularly in the case of Economies of scale in implementing certain actions (for example, routine decisions. procurement) may be lost. Subnational government decision-making capacity may be inadequate. Institution building at the local level may increase. The "bigger picture" of national forest management and development There may be better understanding of local conditions, needs, may be lost. Decisions may be conditioned by local objectives that and constraints. may not coincide with national objectives. Information flows between tiers of government and between Decentralization may result in the allocation of central resources to civil society, private sector, and governmental institutions regions, ethnic groups, or political associates, which may threaten may be enriched.There may be a better scope for social coherence. establishing partnerships with organizations outside the Decentralized organizations may have limited technical and managerial government. Local knowledge can be exploited more fully. knowledge and lack institutional capacity to manage forest programs. If decentralization leads to increased reliance on subnational Decisions that are heavily influenced by financial considerations may sources of financing, subnational forest institutions will have a not coincide with national or even local objectives, and financial greater incentive to function as separate profit centers with incentives for accelerated forest exploitation may increase.These decisions increasingly being subject to the discipline of the decisions may be socially or environmentally undesirable or market. Subsidized operations will tend to be eliminated. unsustainable. Noncommercial national policy objectives may be lost. It is easier to involve local populations, particularly if actions Local elites may control and use decentralized institutions for their requested from them are linked to benefit sharing. own benefit. Decision making may be less transparent and less responsive. If local governments do not produce a substantial economic surplus, net transfers from the central government may be lost. There may be a greater sense of local ownership. Local ownership may be lost if benefit sharing becomes less equitable. Decentralized forestry offices may be controlled by special interests. Decentralization may increase arbitrariness and corruption. Decentralization can lead to larger share of benefits remaining Central government may lose essential revenues and manpower. in localities and communities that generate them. Local elites may gain control of benefits and create greater inequality and increase poverty. There may be overwhelming pressure to "mine" the forest for immediate local benefit. There is potential for harmonizing local traditions and rights If formal norms were previously ineffective and de facto informal with formal governmental norms. norms prevailed, decentralization may increase conflict between formal and informal norms. Political meddling by central powers may be more difficult. Local government officials with greater responsibility and power may use decentralized institutions for their own political and personal purposes. Political meddling by the central government may simply be replaced by local political interference and government capture by organized elites. Decentralization may be a vehicle for central political parties to penetrate the rural and forest economy. Corruption may decrease if the discretionary power of central If centralized monitoring and control are loosened, particularly if government officials is reduced.Those actions and powers of decentralization is not accompanied by citizen participation, there local officials can be more closely scrutinized, and downward may be more opportunities for corruption of local government accountability and transparency will tend to increase. officials by local elites. Source: Contreras-Hermosilla. 2006. OPERATIONAL ASPECTS the central government may choose to retain a large or lim- With decentralization being such a multifaceted process, ited share of responsibility and authority. The potential there is no single "model" for forest decentralization. Differ- benefits and disadvantages mentioned above will emerge ent degrees of responsibility and authority can be trans- depending on the functions being decentralized and on the ferred to one or more subnational units of government, and local governance and institutional context. 160 CHAPTER 5: IMPROVING FOREST GOVERNANCE Assess the overall decentralization context. Forest Bank intervention observed that the Forest Administration decentralization will generally be part of broader decentral- was unable to control illegal logging except in selected areas ization initiatives involving the whole government, which where it was able to establish operational links with other will largely shape what can be done in the forest sector. decentralized agencies. In this case, an interministerial task Government-wide characteristics may impose limits as well force of various stakeholders at the national level was com- as offer opportunities to decentralization in the forest sec- plemented by the creation at the prefecture and district lev- tor. For example, some decentralized governments, such as els of intersectoral task forces to organize collaboration that of Switzerland, have strong locally elected bodies that (World Bank 2004). make local participation and downward accountability of local public forest administration to local populations and Get the legal framework right. A critical operational electorates easier to achieve. Other governments are not consideration to making forest decentralization work is the inclined to go this far and their levels of local participation existence of a clear and consistent legal framework guiding and accountability may be lower. Project designers must the distribution of responsibilities, resources, and authority evaluate the relative strengths and weaknesses of public and at the different levels of government and the relationships private sector organizations and their capacity to perform between government and local communities and the private the forest management functions before drawing plans for sector (see note 5.3, Strengthening Legal Frameworks in the forest decentralization interventions (see chapter 2, Engag- Forest Sector). While this appears to be a self-evident aspect ing the Private Sector in Forest Sector Development, and of good governance, experience shows that, in practice, for- note 2.1, Community-Private Partnerships). est decentralization often takes place in an environment of Forest decentralization must be adequately linked to considerable legal uncertainty (see box 5.3). This legal overall decentralization processes because of the multidisci- uncertainty is a sure recipe for conflicts between tiers of plinary characteristics of forest administration and the government and government institutions as well as between numerous cross-sectoral influences that shape forest gover- public and private entities that defeat the potential gover- nance (see chapter 6, Mainstreaming Forests into Develop- nance benefits of decentralization. Legal regimes should ment Policy and Planning: Assessing Cross-Sectoral provide local people and the private sector with enforceable Impacts, and associated notes). For example, in Albania, a rights to resources and enable them to play a meaningful Box 5.4 Legal Uncertainty in Indonesia In 1999 the Indonesian government approved legislation decree issued a year later sought to clarify matters, lim- to decentralize government authority, resources, and iting forest sector decentralization to marginal func- responsibilities to provinces (second tier government) tions, and was resisted by some districts. Legal uncer- and districts (third tier). Districts, considered closer to tainty surrounding the division of powers and the people and therefore more apt to promote democra- responsibilities created a de facto movement toward tization, were assigned primary responsibility for admin- forest decentralization and intense conflicts between istrative and regulatory functions. However, drafted in the district governments and the center. haste, the decentralization laws were inconsistent or even In these circumstances, and fearing appropriation contradictory with other laws. And in the midst of the or interference by other levels of government, forest instability that dominated the political scene after the fall resource­rich districts had a powerful incentive to of Suharto, corresponding operational regulations to the accelerate resource exploitation, giving only secondary decentralization laws were slow to come, leaving much to consideration to the long-term consequences of unsus- interpretation and to the discretion of local public offi- tainable practices. In some cases, legal uncertainty cials who were often inadequately prepared. favored the creation of local alliances between power- In the same year, the Basic Forestry Law was ful groups and government officials. To a great extent, enacted. This law and its regulations contradicted sig- the poor have yet to reap the benefits expected from nificant parts of the decentralization legislation. A forest decentralization. Source: Contreras-Hermosilla and Fay 2005; Boccucci and Jurgens 2006. NOTE 5.1: DECENTRALIZED FOREST MANAGEMENT 161 role in decision making related to the management of forest mandatory disclosure of forest administration records. resources. In most countries, the strength of legal frame- Local citizen group participation, as observed in Bolivia, works is becoming more important as forest resources India, and Nepal, has contributed to ensuring that measures become increasingly scarce and thus the focus of conflicts imposed by higher levels of government take local condi- between different stakeholders (Lindsay 2000). tions and traditions into consideration. General decentralization laws will provide most of the Participation by communities and local populations in legal framework for the forest institutions of government, local government decisions and implementation of forest which must become aligned with those broader laws. An programs works better when there are clear and tangible assessment of the legal frame of reference needed to make benefits associated with such participation for all stakehold- forest decentralization effective may be required. In most ers. The flow of information between local governments cases, the forest administration alone may be able to handle and local groups must therefore be adequate to enable par- many of the desired regulatory changes without resorting to ticipatory decision making. parliamentary sanctioning. Adequate balance of responsibilities, powers, and Participation, empowerment, and poverty allevia- resources at each level of government. To function tion. An important requirement for decentralization effectively and efficiently, each level of government and cor- processes to succeed and ensure transparency is the ability responding agencies must possess sufficient authority to of local governments to work with local communities and fulfill the responsibilities allocated to them. While this bal- other private sector and civil society stakeholders. The gov- ance is hard to determine with precision in practice, author- ernment's underlying political philosophy must allow local ity without a corresponding measure of responsibility fos- participation in the formulation of local plans and policies ters mismanagement and creates opportunities for and the local forest administration must have capacity to corruption. In the same vein, responsibility without a mea- manage these interactions. Government should be fully sure of power to command resources and implement committed to involving local communities and other stake- actions cannot be adequately discharged. holders in decisions related to implementation of forest At the same time, power and responsibility are meaning- programs. Adequate management of the interactions less unless each level of government and each agency can between local governments, communities, and private sec- count on adequate financial and human resources. There is tor entities that may participate in joint schemes for the no real local autonomy if higher levels of government have management of forest resources requires, in addition to exclusive control over what programs and projects will capacity to handle technical matters, substantial changes to receive financial support (see box 5.5). Transfers of financial attitudes and institutional incentives. When these capabili- resources to lower levels of government are normally ties are not available, technical assistance to support inten- needed to empower local levels of the public forest admin- sive training of government officers, communities, and istration to carry out management activities. In some cases, enterprises will be needed. local autonomy may require retention of forest revenues Participation mechanisms are likely to work better when captured by local governments. government institutions and bureaucracy are exposed to incentives that reward participation; this often means Apply the principle of subsidiarity. Although there is no accountability to local institutions and populations rather formula for deciding what degree of decentralization is opti- than exclusively to higher levels of government. In those mal to ensure good forest governance, certain functions are cases where decentralization is based on local governments best left at the central level and others can best be carried out run by officials democratically elected by local constituen- locally. Subsidiarity, a fundamental concept behind decen- cies, participation and bottom-up approaches to forest tralization, establishes that government functions should be management are easier to integrate. But there are other carried out at the lowest possible level of government where complementary mechanisms as well, including joint proj- capacity exists or can be readily created. The proper applica- ects (for example, comanagement schemes), planning advi- tion of this principle requires an assessment of capacities at sory groups, monitored self-regulation of forest-related different levels of government and of institutions of civil activities (particularly relevant for the private commercial society and the private sector that could assume responsibil- sector), citizen appeals processes for government decisions, ity for various forest management­related functions. Such forest forums involving government and civil society, and assessment is a useful tool for judging the relative desirabil- 162 CHAPTER 5: IMPROVING FOREST GOVERNANCE Box 5.5 Nicaragua: Asymmetries Between Responsibilities and Resources and Resistance to Relinquishing Power The 1997 Law of Municipalities assigned considerably before central government approval of resource expanded responsibilities to municipalities, together exploitation authorizations in both national and pri- with greater administrative and political autonomy. vate lands. Also, municipal governments were to cap- However, municipal governments' capacity to dis- ture at least 25 percent of the revenues originating in charge responsibilities was limited by an imbalance these contracts. between the new obligations and the financial Despite these formidable responsibilities, munici- resources allocated to them by the central government. palities complained that they did not receive the tax Municipalities were entrusted with developing, con- revenues to which they were entitled. The central gov- serving, and controlling the "rational use of the envi- ernment on many occasions failed to consult with ronment and natural resources...promoting local ini- municipalities in awarding exploitation contracts or tiatives in these areas and contributing to their simply ignored them. In any case, the central govern- monitoring, vigilance and control..." (Larson 2001: ment kept exclusive power to make key decisions over 20). In addition, municipalities were to be consulted all natural resources. Source: Larson 2001. ity of decentralization options and for helping determine the nous and traditional rights. In certain circumstances, trans- responsibilities and powers of the various levels of govern- ferring additional powers to local governments enhances ment, including the central government (Anderson 1999). the reach of government in areas where government pres- ence was previously absent or weak. If government policy Ensure transparency and accountability,particularly ignores ancestral rights, local community institutions, and downward accountability. Closely linked to effective local community property, enhanced local government power is participation in decision making and implementation of for- likely to lead to or exacerbate social inequality. Forest decen- est programs is the need to ensure that the actions of local tralization projects should therefore contain adequate mea- government officers are transparent and that the officers sures to avoid potentially adverse effects on Indigenous Peo- themselves remain accountable to local populations for their ples and other vulnerable communities (see also note 1.3, actions (see box 5.6). The transfer of powers to local institu- Indigenous Peoples and Forests, and chapter 12, Applying tions may have worse outcomes than centralized manage- OP 4.10 on Indigenous Peoples). ment if accountability mechanisms to local populations are weak. When accountability has been mainly or exclusively to Forest and environmental values. Forest decentraliza- higher levels of government, local groups have no avenue to tion may generate incentives for accelerated depletion of have their views heard and no power to influence policy forest resources and loss of environmental values. These design and program implementation. Local forest institu- incentives are particularly intense if local governments are tions are at risk of becoming simple extensions of the central asked to raise a large proportion of their own financial government, which naturally tends to use them for promot- resources to fund their operations and if rights of access to ing central agendas, thus defeating many of the opportunities and control over forest resources by local governments, civil of decentralization (Ribot 1998). Inadequate or nonexistent society, or the private sector are uncertain (see note 5.4, downward accountability facilitates control by local elites, Strengthening Fiscal Systems in the Forest Sector). often operating in association with local government institu- tions. This is a real danger,particularly when electoral account- LESSONS LEARNED AND RECOMMENDATIONS ability is weak and where there is a lack of nongovernmental FOR PRACTITIONERS watchdog organizations that can mobilize public opinion. Indigenous Peoples and local communities. Forest Clarity of division of responsibilities and author- decentralization should include adequate measures to ity. Experience acquired in supporting forest decentraliza- improve community participation and to respect indige- tion programs indicates that clarity in the distribution of NOTE 5.1: DECENTRALIZED FOREST MANAGEMENT 163 interest groups that require financial backing. This resis- Box 5.6 Participation and Transparency tance to sharing power is one of the most critical threats to in Bolivia effective forest decentralization. In most cases, tackling this To ensure increased transparency in government obstacle entails twin efforts aimed at (i) raising awareness of decisions, the Public Forest Administration is government officials based on clear and sound intellectual empowered to consult with various groups of civil discourse and (ii) identification and support of key agents society. After decentralization and the reorganiza- of change, as in Indonesia. Systems of institutional incen- tion of the forest sector administration, forest tives must be geared toward rewarding progress in decen- resources decisions are no longer at the exclusive tralization processes. This can be facilitated by democratic discretion of bureaucrats, but are instead subject decision making schemes that enhance downward account- to public scrutiny and made with public participa- ability of local government officials to local populations. tion. Thus, open auctions govern the allocation of (Resistance to change is also addressed in note 5.2, Reform- all new concession contracts. Open auctions also ing Forest Institutions). rule the sale of confiscated forest products and equipment. Regulations allow the cancellation of Capacity building. Another lesson of experience is that lack previously granted rights only with due process, guaranteeing people's rights and fostering a bal- of local capacity is often used as an excuse for reducing the pace ance between regulators and the regulated. More- of forest decentralization or for recentralizing. However, local over, the forest administration must submit capacity is unlikely to ever be created unless decentralization reports to the government twice a year, hold pub- takes place. Thus, implementation of forest decentralization lic hearings once a year to explain work carried programs may require education and training programs for out, and provide an opportunity for the public to local governments and civil society institutions expected to raise questions about performance. Any citizen play a role in the decentralized management of forest resources can freely request copies of official documents. (World Bank 2004). If significant responsibility for forest resource management is transferred to local institutions, as in Source: Contreras-Hermosilla and Vargas Rios 2002. Indonesia, technical assistance will be required. Planning such assistance will require an institutional analysis of demands and responsibilities and commensurate resources and authority capacities of the various levels of government and a coherent are essential for quality decentralized governance. The prob- plan to fill in gaps. Improving the knowledge base and mana- lems faced by the rapid forest decentralization processes in gerial capacity are long-term undertakings that may require Indonesia illustrate the importance of achieving a clear dis- sustained support for extended periods. As emphasized by a tribution of authority and responsibilities for various forest project in Nicaragua, World Bank interventions should pilot management functions (licensing, forest concessions, classi- decentralization initiatives and be designed as a series of se- fication of forests) between the levels of government and quential building blocks as institutional and managerial capac- between governments and civil society and private sector ity gradually develops over long periods (World Bank 1998). institutions (Boccucci and Jurgens 2006. SELECTED READINGS Bureaucratic resistance to change. Decentralization in Manor, J. 1999. The Political Economy of Democratic Decen- India (Madhya Pradesh and Andhra Pradesh), Guatemala tralization. Washington, DC: World Bank. (Elias and Wittman 2004), Nicaragua (Larson 2001), and Kaimowitz, D., C. Vallejos, P. Pacheco, and R. Lopez. 1998. other countries shows that government executives are gen- "Municipal Governments and Forest Management in erally opposed to sharing power and resources with lower Lowland Bolivia." Journal of Environment and Develop- levels of government. Even when transfer of certain powers ment 7 (1): 45­59. is mandated by law, in practice this has meant granting Larson, A., P. Pacheco, F. Toni, and M. Vallejo. 2006. autonomy to manage only the least significant resources, Exclusión e Inclusión en la Forestería Latinoamericana. keeping decisions about the use of the most valuable ones at ¿Hacia Dónde va la Decentralización? La Paz, Bolivia: higher levels. Furthermore, higher levels of government CIFOR/IDRC. commonly have a tendency to maintain control over finan- Ribot, J. C. 2002. "Democratic Decentralization of Natural cial resources, thus effectively shaping the actions of lower Resources. Institutionalising Popular Participation." levels of government or of local communities and other World Resources Institute, Washington, DC. 164 CHAPTER 5: IMPROVING FOREST GOVERNANCE Parker, A. 1995. "Decentralization: The Way Forward for Larson, A. M. 2001. "Natural Resources and Decentraliza- Rural Development?" Policy Research Working Paper tion in Nicaragua: Are Local Governments Up to the No. 475, World Bank, Washington, DC. Job?" World Development 30 (1): 17­31. Pierce Colfer, C., and D. Capistrano. 2005. The Politics of Lindsay, J. M. 1999. "Creating Legal Space for Community- Decentralization: Forests, Power and People. London: Based Management: Principles and Dilemmas." Food Earthscan. and Agriculture Organization of the United Nations, Rome, Italy. Ribot, J. C. 1998. "Decentralization, Participation and REFERENCES CITED Accountability in Sahelian Forestry: Legal Instruments of Anderson, J. 1999. "Four Considerations for Decentralized Political-Administrative Control." Center for Population Forest Management: Subsidiarity, Empowerment, Plu- and Development Studies, Harvard University, Boston, ralism and Social Capital." Food and Agriculture Organi- MA. zation of the United Nations, Rome, Italy. World Bank. 1998."Project Appraisal Document. Nicaragua. Binswanger, H. 1994. "Agriculture and Rural Development: Sustainable Forestry Investment Promotion Project." Painful Lessons." In International Agricultural Develop- Report No. 18653-NI, World Bank, Washington, DC. ment, ed. C. K. Eicher and J. M. Staatz, 287­99. Balti- ------. 2004. "Implementation Completion and Results more, MD: Johns Hopkins University Press. Report." Albania Forestry Project. Report No. 28783, Boccucci, M., and E. Jurgens. 2006. "Reflections on Indone- Washington, DC. sia's Experience on Decentralization of Forest Manage- ------. 2006. Sustaining Economic Growth, Rural Liveli- ment." Unpublished. Jakarta, Indonesia. hoods, and Environmental Benefits: Strategic Options for Contreras-Hermosilla, A., and C. Fay. 2005. Strengthening Forest Assistance in Indonesia. Jakarta, Indonesia: World Forest Management in Indonesia Through Land Tenure Bank. Reform: Issues and Framework for Action. Washington, DC: Forest Trends and the World Agroforestry Center. CROSS-REFERENCED CHAPTERS AND NOTES Contreras-Hermosilla, A., and M. T. Vargas Rios. 2002. Social, Environmental and Economic Dimensions of Forest Note 1.3: Indigenous Peoples and Forests Policy Reforms in Bolivia. Washington, DC: Forest Chapter 2: Engaging the Private Sector in Forest Sector Trends. Development Contreras-Hermosilla, A. 2006. "Decentralized Forest Man- Note 2.1: Community-Private Partnerships agement." Note submitted to World Bank as input to Note 5.2: Reforming Forest Institutions Forests Sourcebook. Unpublished. World Bank, Washing- Note 5.3: Strengthening Legal Frameworks in the Forest ton, DC. Sector Elías, S. and Wittman, H. 2004. "State, Forest and Commu- Note 5.4: Strengthen Fiscal Systems in the Forest Sector nity: Reconfiguring Power Relations and Challenges for Forest Sector Decentralization in Guatemala." Paper pre- Chapter 6: Mainstreaming Forests into Development Policy, sented at Interlaken Workshop on Decentralization in and associated notes Forestry. Interlaken, Switzerland, 27­30 April 2004. Note 7.2: Establishing Forest Information Management Manor, J. 1999. The Political Economy of Democratic Decen- Systems tralization. Washington, DC: World Bank. Chapter 12: Applying OP 4.10 on Indigenous Peoples NOTE 5.1: DECENTRALIZED FOREST MANAGEMENT 165 N OT E 5 . 2 Reforming Forest Institutions he World Bank has increased its attention to the T duced within the context of revisions of forest policy, processes of building and rebuilding sound strategies, and legislation. The latter may be catalyzed by public institutions. With respect to forest man- factors outside the sector, including macroeconomic and agement, institutional reforms supported by the Bank structural reforms, and should occur in a transparent and have sought to take a broad view of the value of forests participatory manner. The second phase of reform focuses for the production of timber and nontimber products, on institutional issues. Considerations in the second phase as well as for biological diversity conservation and water- include the capacity and functions of forest institutions. At shed management. this stage, as was done in many countries in western Every country has a different scope, pace, and outcome Europe, the roles of forest administration and management associated with its reform. Reform takes time and is often may be separated. implemented in a step-wise manner to minimize risks and Reform processes have covered all the key functions in frictions among parties. In most cases, reforms are intro- the forest sector (see box 5.7), including the following: Box 5.7 Functions of Forest Organizations When policy makers mandate that forest organizations Other services are to deliver on certain tasks, and when multifunctional sale of timber and timber products forest management is an explicit objective of policy, for- sale of nontimber products est organizations (broadly defined) can be expected to marketing services (both timber and nontimber have clear functions specific to the following areas: forest products) socioeconomic services to local communities, Policy and legislation derived from state-owned forests (fuelwood, non- policy setting timber forest products, grazing resources, and so legislation and regulation forth) enforcement of the legal framework forest extension services to private owners and users Forest management services forest management and planning These functions can be provided by multiple fire and pest management organizations, both within the public sector (forest forest inventory departments, commissions, agencies, and state forest forest regeneration enterprises) as well as outside it, by the private sector management for recreational uses and by civil society organizations. In most countries, management for conservation harvesting, transport, and processing services are pro- management for the provision of environmental vided by the private sector, though often with mixed services, such as watershed protection results. Source: World Bank 2005. 166 Management of forests (state and nonstate forests) guidance for the main actors to determine their objectives ­ Forest management operations (silviculture, regener- and operational methods for using the resource in a sus- ation, harvesting, planning, and control) tainable and cooperative way. The main actors are ­ Sales of timber and nonwood forest products Processing and marketing of timber and nonwood products national and local governments; Public forest administration commercial private sector; ­ Formulation of policy and legislation communities (including Indigenous Peoples) and small- ­ Control and enforcement holders, including cottage industries; ­ Development of forest information systems civil society; and ­ Education and research technical and financial assistance institutions, including ­ Extension research facilities. Post conflict contexts require attention to capac- OPERATIONAL ASPECTS ity issues. In postconflict countries, the capacity of differ- ent groups to engage in dialogue may need to be strength- Reform processes vary. Specific steps in a reform process ened. This dialogue may need to be facilitated to ensure that will vary, depending on initial conditions. To initiate all stakeholders start on a level playing field; thus, the reform, all actors need to cooperatively create a basic under- process may need to be adapted accordingly (see box 5.8). standing of targets and strategy for forest sector manage- The major implementation challenges in reforming for- ment. This policy should focus on equity, sustainability, bio- est institutions include organizing a temporary minimal diversity, and economics, and should include strategic authority structure to deal with short-term necessities, Box 5.8 The Liberia Forest Initiative: Institutional Reform in a Postconflict Country In April 2004, the U.S. government sent a team to and nongovernmental organizations,a and has come to Liberia to initiate discussions with the provisional gov- encapsulate a broad mandate. From the outset, the LFI ernment and civil society representatives, and came to recognized that thorough and effective reforms would the conclusion that Liberia's forest sector was "utterly require cross-cutting attention to the "3 C's" of forestry dysfunctional" (McAlpine, O'Donohue, and Pierson in Liberia: the commercial sector, conservation, and 2006) and that the Forest Development Authority community forestry. As a priority focus, however, the (FDA) required a complete overhaul and adequate LFI identified a few major components as critical to capacity and resources. The unique feature of the mul- bringing the commercial sector back on line and tidonor effort that followed was that although donor addressing essential concerns of the UN Security roles were coordinated to avoid duplication and ensure Council: a strategic approach, each donor maintained a high degree of sovereignty over the allocation of its funds. Financial management and accountability. There was The Liberia Forest Initiative (LFI) was designed to a critical need to restore transparent financial man- promote and assist reforms in Liberia's forestry sector agement policies and practices as well as accounta- to create management transparency and ensure that bility in the forest sector (in particular, to timber forest resources are managed in an economically, envi- products) and to implement transparent and equi- ronmentally, and socially sustainable way, to the maxi- table allocation of resources generated by the forest mum benefit of all Liberians, in accordance with sector. Liberia's national policies and laws, and consistent with Institution building. An FDA with the staff, skills, its international legal commitments. Although it was and means (financial and physical) to carry out its initiated by the U.S. Department of Agriculture in 2004 mandate needed to be established. in response to concerns that proceeds from unsustain- Forest allocation policy and practice. There was a need able logging were fueling the ongoing civil war, the LFI to plan and initiate formal forest use in a balanced, quickly came to involve a wide range of governmental (Box continues on the following page) NOTE 5.2: REFORMING FOREST INSTITUTIONS 167 Box 5.8 The Liberia Forest Initiative: Institutional Reform in a Postconflict Country (continued) transparent manner consistent with official Liberian of foreign expertise; designing the structure of commu- policy and laws as well as with international obliga- nity forests; implementing conservation activities; and tions, including conservation and extractive uses, setting up the long-term reform process for the FDA, that is, sustainable forest management. beginning with providing crucial analytical and organi- Legitimacy. Legitimate Liberian authorities needed zational know-how for strategic planning. In addition, to be helped to establish control over forest financial and technical services required as supporting resources. elements for the reform needed to be identified and quantified. To initiate these activities and raise knowl- The institutional reforms were part of a broader for- edge and consciousness, three workshops were held on est sector reform process under way in Liberia. Recent community forestry, forest policy, and institutional achievements of this process include the cancellation of reform. all concessions, preparation of a Forest Policy, prepara- tion and ratification of a completely revised Forest Law, a vision for a long-term governance structure, and the ORGANIZATIONAL SCHEME creation of the Forest Reform Monitoring Committee. Think tank Board of directors The World Conservation Union (IUCN) took the functions (strategic lead in consulting civil society organizations in develop- functions) Managing director ing a public communications strategy, involving work- shops and various media, which proved effective in con- Strategic planning Strategic services veying the importance of the work of the LFI and Advisory garnering support for measures taken. Meanwhile, the committee UN Security Council renewed sanctions and passed a Central operations resolution that the LFI reform recommendations be Administration, human adopted. This gave impetus to reform of the concession resources, and finance system, and triggered a multistakeholder review com- Regional subject mittee involving civil society. Similarly, a Forest Reform matter operations Service and Monitoring Committee was also established, with a wide monitoring spectrum of stakeholders. However, this progress was stymied by the unwillingness of the provisional govern- Community Commercial forests, smallholders, Parks and ment to implement the committee's recommendations, forestry and cottage industry wildlife and in response the donor community developed a Gov- ernance and Economic Management Assistance Plan for state-owned enterprises, including the FDA, that would The activities in Liberia are a work in progress faced impose outside controls and transparency. with enormous political and human resource obsta- The election of Ellen Johnson Sirleaf as president cles. The future concept and structure of the FDA, pro- was a pivotal event. On February 6, 2006, soon after her posed in October 2006 (see figure in this box) is gener- inauguration, she adopted the recommendations and ally accepted, but has yet to be finalized. reforms proposed by the LFI, including the cancella- There are many aspects of the LFI model that could tion of existing concession permits. be used to create similar change in other countries, With support from the LFI, the FDA started to reduce including the integration of forest sector reforms into staff and select key personnel for carrying out high pri- broader governance and cross-sectoral reforms, the use ority tasks, such as organizing and implementing a new of a diverse but coordinated partnership of donors, concession and forest management system with the help and provision for a strong role for civil society. Source: Authors' compilation using material from http://www.fao.org/forestry/site/lfi/en/. a. Organizations involved included the US Forest Service, the US Agency for International Development, and the US Treasury Department, as well as such NGOs as Conservation International and the Environmental Law Institute. Several multilateral organizations subsequently joined, including the World Bank, the European Commission, the Food and Agriculture Organiza- tion, the International Monetary Fund, IUCN, Centre for International Forestry Research (CIFOR), and World Agroforestry Centre (ICRAF) (LFI Web site). 168 CHAPTER 5: IMPROVING FOREST GOVERNANCE such as designing a transparent concession system; estab- as professionals with qualifications in forestry, environmen- lishing an accounting system; defining the role of each tal conservation, and corporate management. stakeholder in the sector; and setting up a strategic plan- Accountability also requires transparent budget proce- ning process to provide guidance for a future forest dures and accounting systems that match corporate stan- resource management system that is transparent, participa- dards (see box 5.10). These procedures, however, should be tory, and analytical. achievable and realistic. Separating administrative and management func- Change management. A good strategy and structure are not tions. Efforts should be made to eliminate potential con- sufficient to guarantee successful reform; it also requires peo- flicts of interest and to ensure independence, transparency, ple to align with the new direction, to bring life into the new and neutrality of the public forest administration. This can structures, and to commit to strive for new goals. A strategic be done by removing direct administrative and financial change-management approach can be a valuable investment links between entities responsible for public functions and for the future of an organization. Change management is a state forest management (see box 5.9). systematic approach to dealing with change from the very beginning of a change program and during all planning and Accountability of forest institutions. A mechanism implementation stages. Change management links the per- for ensuring accountability of forest institutions should be spective of the organization with the perspective of the indi- created, perhaps through the creation of a management vidual employee. Change management can increase the speed board that supervises the activities of the entity managing of implementation of a change project and decrease the costs. state forests. The board should include representatives from Effective change management requires that different relevant government agencies or ministries, as well Box 5.9 Reducing Conflict of Interest in Forest Management: An Example from Countries in Transition In several countries in transition in Europe and Cen- and controls how forests are managed, whether owned tral Asia, earlier institutional arrangements in the by the state (and managed by the state forest enter- forests sector suffered from conflicts of interest prise) or by private forest owners (see box figure). A because the same body was both supervising and con- separate control activity for financial flows should also trolling its own operations. To remove this conflict, be maintained or set up, either through an independ- the proposed institutional structure separated these ent government body or accredited private auditors, two functions. With this arrangement, forest adminis- which typically are used in many Western European tration, as part of its enforcement function, supervises countries. Separation of Supervision and Control Ministry of Agriculture, Environment, or Natural Resources Board Control of Financial forest control management Forest State Forest Auditor Administration Enterprise Source: World Bank 2005. NOTE 5.2: REFORMING FOREST INSTITUTIONS 169 the transformation process has leadership, top-level versity conservation). Implicit in the idea of forest organi- management commitment, and broadly based stake- zations as service delivery institutions is that their services holder participation; are provided to meet the demands of both private and com- implementation is carried out through an independent munity forest users. Some forest institutions may have the and influential change team or steering committee; necessary capacity and simply require redeployment of structure follows strategy: careful planning should set the these capacities. In most cases, however, the requisite capac- foundation, but determination and speed are necessary ity is not available, underscoring the importance of appro- for success during implementation; priate training. "quick win" achievable subtargets are set to help create and maintain momentum; Assessing success. Measures should be in place to assess people are actively engaged to build ownership from the the success of institutional reforms. Measurement of success very beginning of the change journey; could be based on overall sectoral performance, including second- and third-level management, key to success, ade- improved forest management, greater investment and job quately buy in; and creation in the industry, stronger financial performance of communication and information, essential for both inter- both private and public institutions, better environmental nal and external audiences, are professionally prepared. protection, improved protected area management, and greater benefit for civil society. However, even in the best- Capacity considerations. Reforms of forest institutions run forest management organizations, these parameters are must be linked to building necessary capacity. The manage- seldom assessed in any systematic way. Thus, innovative ment objectives for service delivery organizations are to approaches to assessing performance must be introduced provide forest goods and services for forest industries and that enable policy makers to determine whether public for households while maintaining the forest's ability to pro- expenditures are achieving desired outcomes (see box 5.11). vide public goods (such as watershed protection and biodi- Box 5.10 Measures for Transparent Budget Procedures Measures proposed for countries in transition in revenue (allowing efficiency gains to remain in the Europe and Central Asia to increase transparent organization as an incentive for improved perfor- budget procedures and enhance accounting systems mance). include the following: Financial auditing through accredited third-party auditors should be arranged. To assign the responsibility for controlling forest An independent budget for the entity managing harvesting and management to state forest adminis- state forests should be established (to assist in tration. increasing productivity and efficiency in state forest To determine appropriate funding for state forest management). The budget should be associated management, physical targets for forest manage- with well-defined obligations toward the state ment and environmental conservation should be budget, and development of salary schemes should defined, and necessary investment requirements and be based on staff performance to reduce incentives operational costs assessed. Funding requirements for corruption. may include ensuring cost efficiency of forest oper- Marketing of timber and nonwood forest products ations by using subcontractors from the private sec- based on competitive bidding should be arranged to tor when possible; carrying out independent establish fair, market-based prices; ensure open and research on efficiency factors; establishing the trans- equal access to timber and nonwood resources for fer to the state budget based on a residual amount potential beneficiaries at equitable conditions; and determined by deducting estimated costs from total limit monopolistic features in resource supply. Source: PROFOR 2003. 170 CHAPTER 5: IMPROVING FOREST GOVERNANCE Box 5.11 Citizen Report Cards: Benchmarking Public Service Delivery The Citizen Report Card (CRC) is a simple but power- perspective of other elements of service design and ful tool used to provide public agencies with systematic delivery, as well as in comparison with other services, feedback from users of public services through sample so that a strategic set of actions can be initiated. surveys on service quality to enable public agencies to Suggest that dissatisfaction has causes that may be identify strengths and weaknesses in their work. related to the quality of service (such as reliability of CRCs provide an empirical, bottom-up assessment water supply), the type of difficulty encountered of the reach and benefit of specific reform measures. while dealing with the agency to solve service prob- CRCs identify the key constraints that citizens (espe- lems (such as complaints of water supply break- cially the poor and the underserved) face in accessing down), and hidden costs in making use of the pub- public services and benchmark the quality and ade- lic service (such as investments in filters to purify quacy of those services as well as the effectiveness of drinking water). Therefore, CRCs delve into differ- the staff. CRCs aid in generating recommendations on ent aspects of performance to provide indicators of sector policies, program strategy, and management of problem areas in public services. service delivery. Test out different options that citizens wish to exer- Citizen report cards can accomplish the following: cise, individually or collectively, to tackle current problems (for example, whether citizens are willing Help to convert individual problems facing the var- to pay more, or be part of a group that has the ious programs into common sector issues. responsibility for managing public water sources). Facilitate prioritization of reforms and corrective Hence, CRCs are also a means for exploring alterna- actions by drawing attention to the worst problems, tives for improvements in public services. and facilitate cross-fertilization of ideas and approaches by identifying good practices. CRCs have gained credibility because the methodol- Provide a benchmark on quality of public services as ogy involves systematic sampling across all subsections experienced by the users of those services. Hence, or segments--including those who are satisfied as well CRCs go beyond the specific problems that individ- as the aggrieved--and presents a picture that includes ual citizens may face and view each issue from the all opinions. Source: Public Affairs Foundation 2004. LESSONS LEARNED AND RECOMMENDATIONS Sustainable forest management provides an appropriate FOR PRACTITIONERS framework for the assessment of policy options. Impacts There are a number of lessons learned that merit attention should be quantified and properly evaluated before in the implementation of institutional reforms: selecting the most desirable option. Stakeholder participation and transparency are essential The context should define the process of reform. Accord- in assessing policy options and implementing institu- ingly, it is important to distinguish between situations in tional reforms. countries in economic transition (for example, the Experience in large countries like the United States and Europe and Central Asia region, and China and other Canada shows that decentralization in forest administra- parts of Asia); countries recovering from crises (the tion is an appropriate strategy within an adequate Democratic Republic of Congo, Liberia), and countries national legal and institutional framework, and that responding to recent developments and having forests forestry development is best addressed at the local level serve multiple functions (Kenya, Tanzania). (see note 5.1, Decentralized Forest Management). National forest policy and strategy should be the basis of Decentralization reforms have to be coupled with strong institutional reforms--not vice versa. organizations at the regional level and effective monitor- Markets can be the best drivers toward sustainable forest ing and control systems to prevent short-term political management, but reliance on markets can be devastating and economic interests from making uncontrolled use of if not coupled with necessary safeguards. forests and to reduce the potential for elite capture. NOTE 5.2: REFORMING FOREST INSTITUTIONS 171 Where forests are large and diverse, a combination of LFI. 2007. The Liberia Forest Initiative Web site. http://www. institutional arrangements for forest management may fao.org/forestry/site/ lfi/en/. be required, including, among others, lease rights, con- PROFOR (World Bank Program on Forests). 2003."Institu- cessions, and privatization of forest land. tional Changes in Forest Management: Experiences of Transaction costs tend to be high in countries where mar- Countries with Transition Economies, Problems and kets do not yet work effectively, corruption is common, Solutions." Workshop proceedings. World Bank, Wash- risks and business protection costs are high, and other ington, DC. structural issues (uncertainties and frequent changes in Public Affairs Foundation. 2004."Benchmarking Public Ser- taxation and other rules) increase costs to economic oper- vice Delivery at the Forest Fringes in Jharkhand, India."A pilot citizen report card. Unpublished. PROFOR, World ators. High transaction costs significantly reduce the inter- Bank, Washington, DC. national competitiveness of the forestry sector and impede World Bank. 2005. "Forest Institutions in Transition: Expe- private investment.Institutional reforms should pay atten- riences and Lessons from Eastern Europe." Working tion to the potential for reducing transaction costs. paper no. 35153. ECSSD/PROFOR, World Bank, Wash- ington, DC. REFERENCES CITED McAlpine, J. L., P. A. O'Donohue, and O. Pierson. 2006. CROSS-REFERENCED CHAPTERS AND NOTES "Liberia: Forests as a Challenge and an Opportunity." International Forestry Review Vol. 8 (1): 83­92. Note 5.1: Decentralized Forest Management 172 CHAPTER 5: IMPROVING FOREST GOVERNANCE N OT E 5 . 3 Strengthening Legal Frameworks in the Forest Sector he law is a powerful tool for shaping forest sector T ing with the public, and gives stakeholders practical experi- governance. Laws can create institutions and ence in policy making. define institutional powers and responsibilities. Strengthening forest legal frameworks typically requires Laws can set the bounds of acceptable behavior and set the legal advisers, but the task calls for skills that go beyond punishment for crossing those bounds. Laws can change knowledge of the law. Lawyers working in concert with the allocation of money among government programs, foresters, economists, policy experts, government officials, and shift control over forest resources between central and and stakeholders can build frameworks that promote both local government and between government and other sustainable development and the rule of law. actors. Laws can define and strengthen property interests. Law can be part of the healing process that follows years of OPERATIONAL ASPECTS conflict (see box 5.12). In short, law plays a role in every forest governance issue (see chapter 5 for a definition of The ultimate goal of designing legal frameworks is to governance). ensure the creation of responsive structures that are The legal framework applicable to forests has at least two capable of adapting to changing needs and conditions. areas that the World Bank may help to strengthen. The first, Writing a law that works is no easy task, and the stakes and most obvious, is the law itself--usually statutes and reg- are high. A really bad effort can leave the country with a ulations--and the instruments created to operate under the law that looks impressive but is of little practical use and law, for example, contracts. The second is the technical may promote cynicism about government and dampen capacity to work within the legal system. This includes the commitment to the rule of law. A really good effort can legal knowledge of forest officers and the forest-related set the stage for more effective forest administration. knowledge of legislators, prosecutors, judges, and others More important, it can improve the transparency of for- who help shape and implement forest laws. It also includes est governance, motivate under-represented stakeholders the capacity of citizens to understand and work under the to get involved in forest policy, and encourage respect for law. Making communities, enterprises, and civil society the law. effective users of law and active participants in its develop- ment boosts the rule of law and amplifies the benefits of Working with the law improving the laws. The usual focus of World Bank and donor legal frame- Writing forest laws. A good way to start is to consult two work projects is on the first of these areas, aiming to reform recent references on writing forest law. One, from the World and strengthen the law. In the process, however, the projects Bank in collaboration with the Food and Agriculture Orga- also can strengthen capacity. For example, compiling an nization (FAO), is Forest Law and Sustainable Development: accurate set of the existing forest law is a first step toward Addressing Contemporary Challenges Through Legal Reform writing new law, but the compilation process itself can also (Christy, Di Leva, and Lindsay 2007). It is a comprehensive strengthen implementation of the present law. Public vet- monograph on drafting forest law, with practical knowledge ting of drafts of new laws is a way to improve the substance from experienced forest law drafters. Annex 5.3A to this of reforms. It also gives officials hands-on training in deal- note contains an outline of the monograph's contents that 173 Box 5.12 Reforming Forest Law in Postconflict Countries The World Bank has supported modernization of for- Part of the healing process involves reviving the est law frameworks in several postconflict countries, roles of rights and interests. This means promoting the including Cambodia, the Democratic Republic of rule of law, to allow people to appeal to the govern- Congo, Liberia, and Sierra Leone. ment to defend their rights, and it means promoting The task is sensitive because armed factions can, transparent and participatory government, to allow and do, divert forest income to support conflict. For people to freely and fairly advocate their interests. example, in Cambodia during the early 1990s, the In Liberia, for example, the World Bank continues to Khmer Rouge financed themselves through timber be part of the LFI, which is assisting the government in exports. In Liberia, the sale of timber and diamonds to forest sector reform. LFI supported the government's fuel war was so notorious that the United Nations Gen- open review and resulting cancellation of existing forest eral Assembly placed sanctions on exports until the concessions. Now the LFI is supporting government government could put appropriate financial controls efforts to establish a chain-of-custody system for forest in place (see box 5.8 in particular). products. The system will track timber from harvest to The task is challenging because it involves social as export dock, to ensure the government collects all well as legal change. People who have known war and appropriate revenues. The LFI is also supporting devel- authoritarianism must embrace new ways to settle opment of a transparent planning system to allocate conflicts over resource use. public forests among conservation, commercial, and There are three broad avenues for settling conflicts: community uses. A multistakeholder Forest Reform resort to power, as is typified in war; resort to rights, as Monitoring Committee is vetting all reforms. The legal is typified in litigation; and resort to interests, as is typ- work includes drafting an amendment to the national ified in voluntary negotiation. In most conflicts, power, forest law and regulations to support the chain-of-cus- rights, and interests all play some role. But in war-torn tody and land-use allocation systems, a new model for- countries, rights and interests have taken a backseat to est concessions contract, and a model contract for com- power. munity benefit sharing. Source: Rosenbaum 2006. can serve as a checklist of topics for the drafter to consider. increased transparency, so that the press and public opin- The other reference, from the Development Law Office of ion can have a stronger influence on forest management; FAO, is a paper listing six basic principles for forest law watchdog institutional structures, such as advisory assistance projects (Lindsay, Mekouar, and Christy 2002). boards, ombudsmen, or inspectors general; Annex 5.3B to this note contains a list from that paper of six allowing citizen or community access to the courts to principles for effective forest law. The ideas offered here enforce rules or collect payments due the government; largely come from those two sources. procedural steps, such as environmental impact assess- Another important first step is to consider the dynamics ments, that require the government to make a reasoned of working with the lawyers and within a legal paradigm review of alternatives before taking action; and (see box 5.13). substantive standards in the laws to limit agency discretion. Another challenge is to eliminate unnecessary regulation and circumscribe the discretion of forest officials. The motive Practical reforms. Finally, the legal adviser routinely goes both to improving governance and to reducing con- faces the problem of making reforms practical. A system straints on forest use.Layers of regulation and large amounts of that is too elaborate risks overtaxing the technical capacity official discretion create opportunities for waste and corrup- of a country and tying the forests down in lengthy proce- tion. The ideal level of regulation conserves the resource while dures. The results may be frequent government shortcutting allowing people broad opportunities to enjoy resource benefits. of the laws and resulting loss of the rule of law. Alternatively, the government could try to live by the letter of the law and Limiting power exertions. A further step toward good end up mired in process, leading people to seek access to the governance is to create checks on power exertion. These may forest through illegal means (see note 5.5, Addressing Illegal include Logging). Practicality may demand simpler requirements or 174 CHAPTER 5: IMPROVING FOREST GOVERNANCE Box 5.13 Working on the Law with Lawyers Team leaders unaccustomed to working on laws with or one who needs to follow old, complex phrasing to lawyers may wonder what to expect. Here are a few notes ensure that the local courts will interpret the new words based on project experience. like the old, may fall short of the ideal. Lawyers can be par- Legal projects often require more than one lawyer ticular about language--words are their stock and trade. because projects cross legal disciplines. A national consult- During training and practice, a lawyer encounters dozens ant typically supplies essential knowledge of the existing or even hundreds of examples of inadvisably chosen words national legal framework, while an international consult- leading to legal disputes. Do not be surprised if a lawyer ant brings knowledge of other areas, such as international heavily edits any nonlawyer's attempts at legal drafting or standards, approaches to forest law reform, or legislative if the lawyer suggests to others that they simply explain the drafting. policy more fully and leave the legal drafting to the Plan to give the lawyers some time to build working rela- lawyers. tionships with each other and with the team. The interna- Finally, some scientifically trained advisers are taken tional consultant will need to learn about the existing aback by the way lawyers think: national legal framework.The national consultant may need to learn about forest law. Both will need to gain a full grasp A scientist is trained to look for truth, derived from of the local forest context and the policy that the team is objective facts. A lawyer is trained to advocate for what advocating that the government adopt. is good, often influenced by subjective values. Any Some team leaders worry whether lawyers will work practical adviser knows that good policy requires con- well with technical advisers. Usually this is not a problem. sideration of both facts and values. But the lawyer's The lawyer's role in society is to bridge people and the law, focus on what is good can sometimes make the lawyer and to do that, the lawyer must be able to work with oth- seem callous to the facts, just as a scientist's focus on ers on their own terms. what is true can sometimes make the scientist seem Still, technical advisers may find the process of legal callous to human values. reform to be novel and challenging. Just as writing a tech- A scientist is taught to see the world through a lens of nical paper requires the writer to come to terms with the logic: induction and deduction. A lawyer is taught exact ideas that the writer wants to convey, writing a law logic but also learns that law grows out of history: requires the policy maker to come to terms with exactly from precedent, politics, and practical experience. In what the policy means. Writing a law demands detailed fact, to the law, sometimes "a page of history is worth consideration of practicalities and processes that might be a volume of logic."a glossed over in discussing the broader outlines of a policy. A scientist is taught to look for the mean: the average Also, the law may require technical advisers to learn or expected. A lawyer is taught to think about the out- new terms and use old terms in new ways. A common liers: the criminal in society, the loophole in the law, example is the word "forest." To the forester, this may the rare contingency that the law must anticipate, a mean land bearing or capable of bearing tree cover. precedent that might be set. Strangely, the scientific definition may have little utility in A scientist sees proof as a matter of statistics. That the law, which might define forests in terms of land that which, 19 times out of 20, cannot be the result of the government has reserved or has placed in a particular chance alone is considered a significant event. A lawyer class in a cadastral survey. In the end, these definitions are sees proof as a function of legal context. Some things just tools for the accomplishment of particular tasks, and may be presumed true before knowing any facts; some each task calls for the appropriate tool. The task of scien- may be taken as true if they are more likely than not; tific forest management calls for the science-based defini- some may only be considered true if they cannot rea- tion, whereas efficient governance calls for the adminis- sonably be considered false. tratively derived definition. Technical advisers may find legal language complex or These disciplinary differences are usually not as daunting awkward. At times, a legal drafter will sacrifice clarity in as the cultural differences that project teams must bridge.As pursuit of precision. A good lawyer, with enough time, can with cultural differences, the key is to be aware of your own be simple, clear, and precise. A lawyer faced with deadlines, practices and to be open to the practices of others. Source: Rosenbaum 2006. a. United States Supreme Court Justice Oliver Wendell Holmes, Jr., writing the opinion of the Court in New York Trust Co. v. Eisner, 256 U.S. 345, 345 (1921). NOTE 5.3: STRENGTHENING LEGAL FRAMEWORKS IN THE FOREST SECTOR 175 requirements that phase in over time, so that the govern- est are slowly but constantly changing, and no one can pos- ment and forest users have the opportunity to adapt to the sibly anticipate all the situations that will come before the new regulatory system. law. It follows that for the legal framework to function, it must have flexibility. Improving capacity and law through good process Incentives and feedback mechanisms. Experience has The process of reforming the law often gives the World Bank demonstrated that the best legal systems achieve their goals opportunities to address the other avenue of strengthening through structures that contain incentive and feedback legal frameworks: increasing the legal capacity of govern- mechanisms. The hallmarks of those systems are trans- ment and stakeholders. These activities can be synergistic. parency, accountability, and public participation. The true art of legal reform is to create a framework that is consistent Compiling existing forest laws. A first step in legal with social change but that also drives institutions to reform is to compile the texts of the existing forest laws and, change, striving for better governance of the forest. often, also property, administrative, criminal, and other general laws that affect forest management. In some coun- Reflecting current values is important. Forest law tries, no one will have seen such a collection before. The for- reform efforts typically share some common challenges. est laws may have been amended many times over the years, One is incorporating modern values into forest laws. but no one may have published a version with all the Forestry as a profession has long embraced sustainability, amendments. The government may have produced many but notions of what resources the forester must conserve forest regulations but never have organized them into a sin- have changed as society's knowledge and interests have gle collection. The officials in the field charged with imple- changed. Now society may be as interested in biodiversity menting and enforcing the law may have little idea what it conservation and carbon sequestration as in fuel and fiber looks like, and the forest-dependent people affected by the production, and ideally governments want their laws to law may have no easy way to know what the law is. reflect current values. Values determine not only what resources the forester Understand legal context and legal practice linked should conserve but who should have access to those to forests. A second step is to investigate the legal context resources. The present trend is greater recognition of of the country and the legal practices associated with the indigenous, aboriginal, traditional, and community uses, forests. This may expose any number of legal capacity which centralized forest management agencies have often issues, directly or indirectly linked to reform of the law. For marginalized. Writing modern standards that can coexist example, forest officers may lack an understanding of basic with uncodified traditional rights and expectations can be policing skills and may not be properly preserving evidence difficult. The drafter is often tempted to focus on commer- of unlawful activities. Prosecutors and judges may lack a cial, large-scale forest use, but slighting traditional uses can basic understanding of forest issues and may not be giving promote conflict and disrupt forest-dependent communi- proper weight to the suppression of forest crimes. Land ties. A project that hopes to combat poverty and promote records may be incomplete or nonexistent, making it diffi- the welfare of rural forest communities must consider their cult to determine tenure rights. A law reform project is sel- expectations and rights, including the particular rights of dom tasked with addressing problems like these, but it can Indigenous Peoples (see note 1.3, Indigenous Peoples and flag them for other projects and donors to address. Forests). The most important capacity-building effort of a law reform project is typically also the most important step in Involve stakeholders. Involving the public almost always improving the substance of the law: vetting proposals for the strengthens the legal framework. Reviewers with multiple new law with government officials and local stakeholders. interests and perspectives shed new light on problems, exposing issues that a drafter listening only to government foresters might miss. Involvement also gives the public a LESSONS LEARNED AND RECOMMENDATIONS sense of ownership of the law. A group that participates in FOR PRACTITIONERS the democratic process of lawmaking is more likely to The forest legal framework must be responsive to respect the law than a group that has the law imposed upon change. History teaches that the social demands on the for- them without consultation. 176 CHAPTER 5: IMPROVING FOREST GOVERNANCE In addition, the process of public vetting builds capac- Lindsay, J., A. Mekouar, and L. Christy. 2002. "Why Law ity, both in the government and among stakeholders. Leg- Matters: Design Principles for Strengthening the Role of islators and other elected officials bolster their knowledge Forestry Legislation in Reducing Illegal Activities and of forest policy. Forest administrators, who often carry Corrupt Practices." FAO Legal Papers Online #27, FAO, responsibility within the government for producing the Rome, Italy. http://www.fao.org/legal/prs-ol/lpo27.pdf. first formal drafts of the law, learn how to tap stakeholder input. Being able to conduct a meeting where citizens feel REFERENCES CITED respected and heard is a surprisingly rare skill. The techni- cal skills of foresters often outweigh their social skills, but Christy, L., C. Di Leva, and J. Lindsay. 2007. Forest Law and forest administrators have to master the social and politi- Sustainable Development: Addressing Contemporary Challenges Through Legal Reform. Washington, DC: cal demands of public outreach. For their part, citizens, World Bank, in collaboration with the FAO. businesses, and civil society organizations must learn how Lindsay, J., A. Mekouar, and L. Christy. 2002. "Why Law to be effective participants, and like the government offi- Matters: Design Principles for Strengthening the Role of cials, they must learn to listen and not just make speeches. Forestry Legislation in Reducing Illegal Activities and In the best of circumstances, all sides build trust, forge Corrupt Practices." FAO Legal Papers Online #27, FAO, lines of communication, and learn patterns of dispute res- Rome, Italy. http://www.fao.org/legal/prs-ol/lpo27.pdf. olution that will continue to serve them for years after the Rosenbaum, K. 2006. "Strengthening Legal Frameworks in new law is enacted, while the government implements the the Forest Sector." Note submitted to World Bank as law (see box 5.12 for more about conflict and legal input to Forests Sourcebook. Unpublished. World Bank, reform). Washington, DC. SELECTED READINGS CROSS-REFERENCED CHAPTERS AND NOTES Christy, L., C. Di Leva, and J. Lindsay. 2007. Forest Law and Note 1.3: Indigenous Peoples and Forests Sustainable Development: Addressing Contemporary Chapter 5: Improving Forest Governance Challenges Through Legal Reform. Washington, DC: World Bank, in collaboration with the Food and Agricul- Note 5.1: Decentralized Forest Management ture Organization of the United Nations. Note 5.5: Addressing Illegal Logging NOTE 5.3: STRENGTHENING LEGAL FRAMEWORKS IN THE FOREST SECTOR 177 ANNEX 5.3A A CHECKLIST OF POTENTIAL ISSUES FORTHE FOREST LAW ADVISER Note that in a given project,not every issue will rise to the point Sustainability and environmental protection of demanding legal reform. This annex is based on Christy, Promoting noncommercial uses and values, such as Di Leva, and Lindsay (2007). environmental services Creating reserves and parks Tenure Creating standards or incentives for private forest Recognizing traditional and customary rights stewardship Providing for rapid adjudication of disputed boundaries and claims Commerce and trade Delineating private property rights Regulating domestic transport and sales Regulating mills and other processing of forest products Public forest management Regulating international trade associated with forests Setting primary management goals beyond production of economic goods Finance and taxation Establishing inventory and planning requirements, with Setting taxes and fees environmental impact assessments Providing for collection of taxes and fees Controlling concessions Establishing dedicated uses of forest income, such as forest funds Private forest management Simplifying commercial regulation Institutional reform Setting environmental standards Establishing roles of ministerand forest agency Assigning roles among competing ministries Decentralization and devolution of authority Enhancing the public's role (See note 5.1, Decentralized Forest Management) Establishing commissions and advisory bodies Setting rules for community forestry Defining the role of state forest corporations Delineating powers of local governments over forests Public participation and transparency Offenses and enforcement Requiring public access to agency plans, rules, and Delineating the enforcement powers of officers guidance Defining criminal offenses and determining associated Allowing public participation in agency planning, penalties rule-making, and enforcement Defining civil wrongs and setting the associated Creating efficient conflict resolution mechanisms measures of damages Requiring public officials to disclose financial Setting the process for prosecuting or compounding interests offenses Setting rules of evidence and proof 178 CHAPTER 5: IMPROVING FOREST GOVERNANCE ANNEX 5.3B SIX DRAFTING PRINCIPLES FOR CREATING BETTER FOREST LAWS From Lindsay, Mekouar, and Christy (2002). Principle 1: Avoid legislative overreach Principle 4: Enhance the stake of local nongovernment actors in the sustainable The new law should match the capacity, needs, and social management of forests context of the country. The trend around the world is toward more local control of forest resources. The law can guarantee local actors secure Principle 2: Avoid unnecessary, superfluous, or rights while also granting them some flexibility in how they cumbersome licensing and approval requirements exercise those rights. These can stifle private sector forest use. Do not create these without good cause. Principle 5: The drafting of law needs to be a broadly participatory process Principle 3: Include provisions that enhance the Public participation improves the substance of law, and the transparency and accountability of forest decision- process helps build support for law. making processes A broad range of mechanisms are available to accomplish Principle 6: Increase the effectiveness of direct law transparency and accountability, including specific limits enforcement mechanisms set forth in forestry on the exercise of government discretion, requirements to legislation seek public comment on plans and decisions, access to information rules, oversight bodies, and citizen access to Reformers should pay attention to both the penalties and the courts. the processes of law enforcement. NOTE 5.3: STRENGTHENING LEGAL FRAMEWORKS IN THE FOREST SECTOR 179 N OT E 5 . 4 Strengthening Fiscal Systems in the Forestry Sector F iscal instruments encompass a wide range of mech- weaknesses (see box 5.14) and deciding on the right mix of anisms by which money flows between public and instruments depends on the objectives that the forestry pol- private sector institutions involved in the forestry icy maker wishes to achieve. sector. Flows from the private sector to the public sector The main objectives of fiscal instruments in the forestry (forest charges) can be broadly categorized as taxes, royal- sector are the same as in other parts of government. The ties, fees, and fines. Financial flows in the other direction two most important are to raise money for the state and to (incentives) include tax incentives, grants, subsidies, and cover the costs of forest administration. In addition, a dis- subsidized loans. Other fiscal instruments include tempo- tinction should be made between raising revenue from the rary measures (such as performance bonds) and direct use of the forest resource (royalties) and general revenue intervention by the state (for example, joint ventures, pub- collection (taxes). lic shareholding, state marketing boards, and price restric- Fiscal instruments (charges and incentives) can also be tions). All of these instruments have different strengths and used as tools for policy implementation, either to promote Box 5.14 Common Problems with Fiscal Systems in the Forestry Sector Fiscal systems in the forestry sector generally suffer use of detailed schedules of charges according to prod- from three similar problems: uct type, tree species, forest location, and total area of Inadequate rent capture. Charges for the harvesting production. The main consequence is that such sys- of publicly owned forest resources often do not capture tems are often expensive to administer and administra- the full commercial value of the harvested products. tion costs can account for a high proportion of total Charges are often set administratively and are not revenue collected. Complexity may also present more updated frequently, so they rarely reflect true market opportunities for corruption. values. The main consequence is that these artificially Perverse or unintended effects. Fiscal systems also low prices distort markets, discourage efficient use of often have unintended effects, particularly with the resource, and result in lost revenues to the state. respect to environmental and social aspects of forest Inadequate charges may also encourage corruption, if management. Incorrect pricing often leads to poor government officials can capture some of the uncol- harvesting practices (for example, selective harvesting lected rent for themselves during the process of moni- rather than harvesting of all commercial trees, thus toring, controlling, and approving forestry activities. leaving large amounts of roundwood as waste in the Complexity. Fiscal systems in the forestry sector are forest). Fiscal systems are also sometimes inequitable, often complicated, as a result of administrative especially where harvesting activities impose costs on processes (setting and collecting forest charges, for people living in and around forests but provide them instance) that attempt to replicate market forces by the few benefits. Source: Whiteman 2006. 180 forestry policy or to promote other government policies. OPERATIONAL ASPECTS Forestry policy objectives largely center on sustainable for- est management (that is, the promotion of good forest prac- Technical and policy considerations can shape fis- tices and deterrence of bad practices). Broader policy objec- cal instruments. Fiscal instruments employed in the tives can include income redistribution, correction of forestry sector encompass a wide range of different types of externalities (nonmarket costs and benefits), strengthening forest charges (see annex 5.4A to this note) and incentives. of legal compliance, and encouragement of economic devel- Operational aspects of the design of fiscal systems in the opment (for example, through the creation of income, forestry sector fall into two broad categories. The first employment, and value added). includes technical considerations, such as setting the correct Three other issues should also be considered in the level of charges and incentives and designing a system that design of any system of fiscal instruments: is efficient and equitable. The second includes policy-related considerations: Does the system promote good forest man- Economic efficiency. Fiscal instruments often result in agement, good governance, and poverty alleviation? Box market distortions (they alter the costs and prices of 5.16 presents a brief summary of some of these issues, inputs and outputs in the sector). These should be mini- which are further elaborated upon in this note. mized wherever possible, unless introduction of such distortions is a specific policy objective. Setting forest charges correctly. To ensure that forest Administrative efficiency. The public costs of enforcement charges are economically efficient and do not introduce unin- and the private costs of compliance with the fiscal policy tended distortions in the markets for forest products, the cor- should be appraised and minimized wherever possible. rect levels of forest charges must be established. Because Equity. The impact of fiscal instruments on different charges for services and materials (fees) should reflect their income groups should be considered. All groups should costs, and general taxes are largely outside the control of face the same set of charges and incentives, unless income forestry administrations, the main concern of forestry redistribution is an objective of the fiscal policy (to assist administrations is usually to establish the correct level of roy- with poverty reduction, for instance) (see box 5.15). alty payments (that is, payments for the use of the resource). Box 5.15 Informal Competition for Harvesting Rights in Fiji Most natural forest resources in Fiji are owned by local royalty rates, these additional payments can be almost communities (native landowners), but monitoring and as much as the revenue collected through the royalty control of forest harvesting is performed by the system. Forestry Department. The Forestry Department, along Analysis of the total amount of revenue collection with the Native Land Trust Board, assesses and collects has shown that almost all the rent from forest opera- a variety of royalties and fees. Some of this revenue is tions is collected and that about 85 percent of this is retained by the two organizations to cover their admin- paid to local communities (with the remainder istrative costs, but the majority of the revenue collected retained equally between the Forestry Department, the is distributed to individuals in local communities Native Land Trust Board, and the forest operator). This where harvesting has occurred. high level of rent collection is no doubt due to the pres- To gain access to forest resources, forest operators ence of the informal market mechanism on top of the have to obtain a license from the Forestry Department official forest revenue system. and (at least informal) approval from local communi- The success of this system is due to the following ties where they wish to harvest. As part of the negotia- factors: a high level of competition for the resource; tions with local communities, it has become common well-informed communities with a long tradition of practice for potential license holders to offer additional community rights; a strong legal framework and insti- benefits (monetary or in kind, known as "commis- tutions to support local communities; and the creation sions" or "goodwill") to communities where the har- of an established norm to make informal payments on vesting will occur. Because of the infrequent revision of top of official royalties and fees. Source: Whiteman 2005. NOTE 5.4: STRENGTHENING FISCAL SYSTEMS IN THE FORESTRY SECTOR 181 Box 5.16 Solutions to Problems with Fiscal Systems in the Forestry Sector A brief, simple summary of some remedies to the of both technical and policy-related issues and should problems raised in box 5.14 include the following: examine who gains and who loses from existing and Market mechanisms. Greater use of market mecha- proposed arrangements. Reforms of fiscal systems in nisms (competitive tendering and bidding) can reduce the forestry sector are frequently opposed by vested some of the problems of complexity and inadequate interests and their influence may be reduced with rent capture in fiscal systems by using the market to greater consultation and open discussion and debate establish the true value of the resource. about who will lose and who will benefit from reform. Improved data and information. Increasing the relia- Decentralization. Forestry activities are often criti- bility of and access to information about the forest cized for imposing costs on local people without pro- resource and markets supports the greater use of mar- viding them any benefits. If carefully designed--taking ket mechanisms. Public reporting of production, rev- into account the capacity of local institutions--fiscal enue collection, and the results of monitoring and con- systems can share the benefits of forestry with local trol activities can also reduce the scope for corruption. people, compensating them for any costs they may Greater consultation. Providing opportunities for all incur and encouraging them to participate in the man- stakeholders to comment on fiscal policies should lead agement and protection of forests (see note 5.1, Decen- to better outcomes. Public input can include discussion tralized Forest Management). Source: Whiteman 2006. In theory, the royalty payment for roundwood harvested Traditionally, competitive mechanisms have mostly been from the forest should equal the price that would be paid for used to establish royalties for relatively small, short-term standing trees (stumpage value) if they were sold in a com- sales of standing trees (especially from forest plantations). petitive market. This price can be calculated as the value of Royalties on production from longer, large-scale forest con- the roundwood at the port or processing plant (determined cessions have more commonly been established using by species, quality, product prices, and the efficiency of pro- administrative means. However, it is possible to combine cessing plants), less the costs of harvesting, extraction, and both methods for forest concessions by, for example, setting transport (determined by the efficiency of the producer and volume- and area-based charges according to a predeter- location-specific factors, such as terrain, forest stocking, and mined formula and using a bidding process to set a license transport distance). charge (World Bank 2003). Royalty payments can be established through competi- tive means, such as competitive bidding in auctions or ten- Fiscal incentives. Fiscal incentives are a subset of a broad ders, or they can be set by the forestry administration. In the range of measures that encourage others to act (FAO 2004). latter case, consultation, negotiation, or calculation of the Incentives are most commonly used to promote activities stumpage value (as described above), can be used to set the that result in net nonmarket benefits (that is, production of payment. goods and services, usually social and environmental, that Because of the effort involved, infrequent revaluation of have no value in the marketplace and are not, therefore, a royalties is a major problem in many countries, although source of revenue for the forest owner). In many countries, some countries regularly alter royalties according to prede- incentives are used to promote tree planting and afforesta- termined formulae (for example, taking into account price tion in general, with a broad assumption that these actions indexes for the main operational costs and forest product will usually lead to net nonmarket benefits. However, with prices). Another difficulty with setting royalties administra- the development of payments for environmental services tively is obtaining reliable information about costs and (PES) and funding mechanisms to support international prices for the calculation of stumpage values. In addition, conventions, incentives are gradually becoming more accu- information about forest stocking is sometimes needed to rately targeted toward specific activities that result in specific calculate appropriate royalties (especially where royalties nonmarket benefits (for further details, see note 2.3, Innova- will be collected using area-based charges). tive Marketing Arrangements for Environmental Services). 182 CHAPTER 5: IMPROVING FOREST GOVERNANCE The most common fiscal incentives in the forestry sector location of tree planting but little increase in total tree are reductions in forest charges (for example, provision of planting. materials or services by the forestry administration at low cost or reductions in taxes and forest charges if operators The issues just mentioned are starting to gain the atten- build processing facilities). Other incentives include direct tion of policy makers (for example, in the rules and proce- transfers from the public to the private sector if operators dures for investments for credits under the Kyoto Protocol) undertake certain activities (grants or subsidized loans for and again, direct transfers (as opposed to forest charge afforestation, training, or forest industry development, for reductions) are likely to offer a better opportunity to instance). As with forest charges, effectiveness, efficiency, improve targeting and efficiency. and equity are important issues that should be addressed as part of the design of any forestry incentive scheme. Political considerations. Fiscal policies in the forestry sector have a huge impact on the success of forestry policy. Targeting incentive schemes. With respect to effective- In addition, the administration of fiscal instruments often ness, incentive schemes should be properly targeted toward accounts for a significant proportion of the forestry admin- both the objectives that it sets out to achieve and the indi- istration's functions. Consequently, it is essential that fiscal viduals or institutions that it aims to influence. In this policies support policy objectives and are administratively respect, it is generally better to offer direct transfers to sup- feasible. port specific activities in the forestry sector rather than to Political consensus and broad stakeholder support must reduce forest charges as an incentive. be built for fiscal policies in the forestry sector to be suc- Targeting and establishing the correct level of incentives cessfully reformed. An approach to revenue collection based are also important to achieving economic efficiency. Incen- on a social contract between government and the public, tives should only be offered to support activities that result rather than coercion, is likely to be more sustainable in the in net nonmarket benefits and the efficient level of incen- long run. Consultation, transparency, and public disclosure tives will be that which reflects the level of those benefits (as of information during the establishment and collection of opposed to the cost of the relevant activities). Common forest charges is likely to build support for the process and problems in this area include the following: reduce the possibility for vested interests to block reforms. Coordination with policy makers in other parts of govern- Overpayment of incentives. Overpayment occurs where a ment should also assist in this respect. flat-rate subsidy or grant payment is used to encourage an activity. Inevitably, some recipients of such payments Administrative considerations. Administration of fiscal will receive more than would be necessary to make them instruments should be based on a stable framework, sup- undertake these activities. The difference between what is ported by legislation, that establishes the basic principles paid and what would be required is sometimes referred and procedures for forest charges and incentives but, at the to as the deadweight of the incentive. This can be mini- same time, allows the forestry administration the flexibility mized by using competitive tendering for specific activi- to revise the instruments when required (in response to ties rather than flat-rate grant schemes. changing market conditions, for instance). The infrequency Non-additionality. This is an extreme form of dead- of revisions to forest charges is often a result of the require- weight, where recipients are paid to do something that ment that the changes only happen through legislation. they would have done anyway (without any incentive). Thus, it is better to use primary legislation to establish the This often occurs where an incentive is given to do some- mechanisms and procedures that will be used to set forest thing that is already required by law (for example, fiscal charges, with appropriate mechanisms for regular reviews, incentives to promote industry development where con- oversight, and consultation. cessionaires are already required to build processing In practical terms, fiscal instruments should be simple to facilities as part of their concession agreements). administer and easy to enforce, and should minimize the Displacement. Displacement occurs when an incentive need for discretion or judgment by forestry administration results in a change in behavior but little or no increase staff. A simple forest revenue system that can be easily in the total amount of the desired activity. It is often enforced will be better than a more complicated system that associated with location-specific incentives, such as is easy to evade. Where evasion is high, the partial enforce- grants for tree planting that result in changes in the ment of revenue collection can have a significantly detri- NOTE 5.4: STRENGTHENING FISCAL SYSTEMS IN THE FORESTRY SECTOR 183 mental impact on the equity of the forest revenue system Revenue sharing. A recent trend in many countries is the and is likely to result in little public support for the forestry development of revenue sharing or revenue retention mech- administration. anisms, or both. Revenue sharing occurs when part or all of the public revenue from forest operations is shared with Poverty alleviation considerations. Because poverty individuals or local levels of government (usually in loca- alleviation is a major national priority in most developing tions where production occurs). Revenue retention occurs countries, forestry policy (including fiscal systems in the where the forestry administration keeps some or all of the forestry sector) should be designed with this in mind (see revenue collected and uses it to fund their operations. chapter 1, Forests for Poverty Reduction, and associated The earmarking or hypothecation of government rev- notes). Subsidies and other fiscal policies for nonforest enue is generally not recommended because it goes against activities can distort the incentive structure for community- the principle of good public financing that public revenue based forest management. Government policies regarding should be collected according to ability to pay and disbursed revenue from taxes and fees on forest products and conces- according to need. However, revenue sharing is often pro- sions can also undermine indigenous communities' inter- posed as a mechanism to generate local support for forest ests in and claims on forest resources. protection and use. Revenue sharing and revenue retention To make fiscal systems more advantageous to poor peo- are also suggested in situations where disbursement of pub- ple, decision makers should gather and analyze information lic funds is slow and unpredictable. on the impacts of various policy and management options Although the use of revenue sharing should generally be on the livelihoods of people living in and around the forest, minimized, the above arguments may sometimes be valid. If for example, so, the following should be considered: the ways in which commercial forest harvesting affects Governance and administrative capability. Any decision to the availability of wildlife, nonwood forest products, and automatically share revenue with lower levels of govern- other forest services used by local people; ment (or communities) should consider whether the the effect of protected areas or bans on hunting and col- scheme will result in the desired effect. Lower levels of lection of nonwood forest products on local livelihoods; government are likely to have less capability to manage the value of fuelwood and nonwood forest products lost funds and, in particular, may be less qualified to properly if a degraded forest area were to be converted to planted assess and collect forest charges. In addition, it should forest; or not be automatically assumed that lower levels of gov- the beneficiaries of financial incentives with regard to ernment are more responsive to local people's needs (see planted forest development. note 5.1, Decentralized Forest Management). Property rights. In some countries, forest resources are Nonfinancial considerations: In addition to the finan- managed by the government on behalf of local people cial costs and benefits to forest owners and other stakehold- (for example, where local communities own the land ers, nonfinancial aspects must also be considered. Many of under forests or own the forests entirely). In such cases, these are local and can be detrimental to poor people, revenue sharing is appropriate and the amount of rev- including degradation of soil and water resources, loss of enue shared with local people should be determined on access, and degradation or loss of forests that have cultural the basis of the value of their property rights. or spiritual value. Community forest management. In some countries, com- Fiscal systems that appear to be fair to stakeholders at plete (or nearly complete) control over forest manage- the national level may have negative effects on poor com- ment has been delegated to local communities. In such munities if those communities bear the burden of some circumstances, the role of the forestry administration costs, but do not share the benefits of forest management. should be as a facilitator, to ensure that best practices in Thus, fiscal systems can attempt to compensate for some of revenue collection are followed and to build capacity in these effects through revenue- or benefit-sharing arrange- local governance and administrative capability (see note ments (see below) or can be combined with incentives to 1.2, Community-Based Forest Management). support local participation in forest management or regu- Forest administrations as service providers. If the forestry lations to minimize the negative impacts of forest manage- administration is providing a good or service, it is per- ment on communities. forming the function of a state-owned enterprise and it 184 CHAPTER 5: IMPROVING FOREST GOVERNANCE is reasonable to allow the administration to retain the When charges and incentives are set administratively, they revenue from charges it collects from such activities. should be based on a rigorous and objective calculation of Similarly, it is acceptable for forestry administrations to costs and benefits. In particular, forest charges should be retain some revenue to cover the costs of administering based on independent or aggregate information about the forest revenue system, when the costs of doing so can forest product prices, and charges levied on individual be clearly identified and quantified. operators should not be based on stated prices. Incentives should be based on the benefits of activities that are being Revenue sharing is not a panacea for problems of weak encouraged rather than their cost. governance and administration in the forestry sector at the Incentives should be used to achieve clearly defined national level. As with other aspects of fiscal policy in the policy objectives; they should be properly targeted and forestry sector, any decision to implement revenue sharing regularly evaluated. Incentives in the form of direct should be based on a robust appraisal of what the problems transfers will generally be more successful than reduc- are and how revenue sharing might address these problems. tions in forest charges. Incentives should also be struc- tured to maximize net benefit and minimize deadweight, nonadditionality, and displacement. LESSONS LEARNED AND RECOMMENDATIONS There is a tradeoff between administrative efficiency and FOR PRACTITIONERS economic efficiency in fiscal instruments. More compli- Based on the lessons learned from countries' experiences cated instruments tend to be more economically efficient with fiscal instruments, the following are recommendations but more expensive to administer. Numerous charges for best practice in this area. should be avoided (especially where they are levied on the same item). However, in general, a mixture of differ- ent types of charges may be optimal. Thus, countries Policy and administration should not rely on volume-based charges alone, but Fiscal policies in the forestry sector should support should consider greater use of area-based charges and forestry policy objectives and the broader objectives of license charges. government. Negative impacts on efficiency and equity should be minimized. Revenue sharing Fiscal policy reform requires political support and some degree of consensus and should not be viewed as a purely In general, hypothecation of forest revenue is not good technical issue. Open debate and transparency in the practice in public finance and should be avoided. How- procedures for revising and implementing fiscal policy ever, under some specific circumstances it can be justi- are necessary to build this support. fied. The first is where local people or communities have Administration of fiscal instruments should be as simple clearly defined property rights over some or part of the as possible and calculation of forest charges should be forest resource. The second is where the forestry admin- based on objective criteria. The need for discretion or istration is collecting charges to recoup costs for the pro- judgment by field staff responsible for assessing and col- vision of a good or service (which can include the cost of lecting charges should be minimized. administering the forest revenue system). In such cases, The general framework for fiscal policies should be estab- revenue sharing should be based on an objective lished in primary legislation, but forestry administrations appraisal of the amount of revenue that should be shared should be empowered to revise the details of implementa- or retained. tion. Automatic and regular reviews of fiscal instruments Little evidence supports the hypothesis that revenue should be implemented according to clearly defined, rig- sharing alone will result in improved forest protection by orous, and objective processes and procedures. local communities. In situations where conflict with local communities is an issue, it may be preferable to devolve complete responsibility for forest management (includ- Defining the mixture and level of fiscal instruments ing revenue collection) to local communities. In such Wherever possible, market mechanisms should be used cases, the forestry administration's role becomes that of a to establish the levels of charges and incentives rather service provider, to ensure that best practices in revenue than administrative means. collection and administration are followed. NOTE 5.4: STRENGTHENING FISCAL SYSTEMS IN THE FORESTRY SECTOR 185 Any proposal to implement revenue sharing should con- Gray, J. A. 1983. Forest Revenue Systems in Developing Coun- sider local governance and the administrative capability tries: Their Role in Income Generation and Forest Manage- of local communities or lower levels of government to ment Strategies. Forestry Paper No. 43. Rome: FAO. implement such systems. Where governance and admin- Whiteman, A. 2005."A Review of the Forest Revenue System istration at the national level are weak, the situation is and Taxation of the Forestry Sector in Fiji." Forest likely to be even worse at lower levels of government. Finance Working Paper FSFM/MISC/10. FAO, Rome. ------. 2006. "Strengthening Fiscal Systems in the Forestry Sector." Note submitted to World Bank as input to Forests SELECTED READINGS Sourcebook. Unpublished. World Bank. Washington, DC. Gray, J. A. 1983. Forest Revenue Systems in Developing Coun- World Bank. 2003. "Proceedings of the International Work- tries: Their Role in Income Generation and Forest Manage- shop `Reforming Forest Fiscal Systems to Promote ment Strategies. Forestry Paper No. 43. Rome: Food and Poverty Reduction, and Sustainable Forest Manage- Agriculture Organization of the United Nations. ment.'" Washington, DC, October 19­21. PROFOR at IUCN. 2000. Financing Protected Areas: Guidelines for Pro- the World Bank, Washington, DC. tected Area Managers. Best Practice Protected Area Guidelines Series No, 5. Gland, Switzerland: IUCN. CROSS-REFERENCED CHAPTERS AND NOTES World Bank. 2003. "Proceedings of the International Work- shop `Reforming Forest Fiscal Systems to Promote Chapter 1: Forests for Poverty Reduction, and associated Poverty Reduction, and Sustainable Forest Manage- notes ment.'" Washington, DC, October 19­21. PROFOR at Note 2.3: Innovative Marketing Arrangements for Environ- the World Bank, Washington, DC. mental Services Note 5.1: Decentralized Forest Management REFERENCES CITED FAO (Food and Agriculture Organization). 2004. What Does it Take? The Role of Incentives in Forest Plantation Devel- opment in Asia and the Pacific. RAP Publication 2004/27. Bangkok: FAO. 186 CHAPTER 5: IMPROVING FOREST GOVERNANCE ANNEX 5.4A A SUMMARY OFTHE DIFFERENTTYPES OF CHARGES USED IN FISCAL SYSTEMS INTHE FORESTRY SECTOR Gray (1983) lists different types of forest charges commonly Charges based on the area logged. These charges are very used in the forestry sector. In addition to these, fines can similar to annual area charges, but are based on the area also be considered a type of forest charge. A summary of the logged rather than the total license area. The main dif- main features of 12 different types of forest charges is given ference is that it is sometimes difficult to determine the below: area that has been logged. These charges are not com- monly used. License charges. License charges are a type of royalty or Volume-based charges. Volume-based charges are the fee to cover the administrative cost of issuing licenses. most common type of royalty and are calculated by mul- They are usually lump-sum payments that may vary by tiplying the volume harvested by a price. The prices used the license area or duration and can be collected at the in this calculation can be derived in a variety of ways. A start of a license or annually. To be economically effi- simpler version of this is per tree charges (where the cient, license charges should reflect the value of the secu- number of trees is multiplied by a price). These charges rity of wood supply conferred to the license holder or can be economically efficient if the price reflects the true should cover the cost of administering the license (or a value of the wood produced, which is often not the case. combination of the two). They may also be used to cap- The administrative efficiency of volume-based charges is ture some of the value of production (that is, they may be often low because considerable effort (and cost) is part of the royalty on production) if this is not fully required to monitor the level of production and to estab- reflected in other charges. The costs of collection and lish the correct price levels to use. Volume-based charges administration are low and these charges are difficult to can be inequitable because they are often the same for all evade, so they are administratively efficient. License producers and do not account for location-specific dif- charges tend to have little impact on equity, but they can ferences in production costs (such as terrain or distance be used to redistribute income (by setting lower license to market). However, they can be used as a policy tool, by charges for smaller operators, for instance). License adjusting charges to reflect policy objectives (for exam- charges are quite common in the forestry sector. ple, by deliberately lowering charges on lesser known Annual area charges. These charges are usually a type of species to encourage their use). royalty and are calculated as a fixed amount multiplied Charges on production of forest products. These charges are by the whole license area. Annual area charges are gener- similar to volume-based charges but are charged on the ally easy to administer and have little impact on equity. output of processed forest products and nonwood forest They can be economically efficient (that is, they can products. They are common and can be collected in addi- reflect the value of wood production), but it is often dif- tion to or in place of volume-based charges on round- ficult to assess the correct level of charges because of the wood. They can be used to support policy objectives (by need for detailed information about forest stocking. deliberately setting low charges for nonwood forest prod- Consequently, area charges are often used in combina- ucts to promote rural income generation, for instance). tion with volume-based charges to collect royalties. Charges on exports. Charges on exports can be collected Charges based on standing volume, allowable cut, or prop- from exports of roundwood or processed forest products erty values. These charges can be a type of royalty or can and are used in many countries. They have similar be used for general tax collection, or both. They are usu- strengths and weaknesses to the charges on production ally calculated as a fixed amount multiplied by standing of forest products but are generally more administra- volume or allowable cut or are related to property values. tively efficient (because monitoring is usually easier and They are generally administratively efficient and have lit- costs less). The purpose of such charges can be to collect tle impact on equity, but economic efficiency suffers additional royalties or general tax collection. A combina- from the same problems noted with annual area charges. tion of low volume-based charges and export charges on The use of such charges as a component of royalty col- roundwood is frequently used to promote domestic pro- lection is not common, but these charges are sometimes cessing of roundwood by deliberately distorting the mar- used as a form of income tax on forest owners (mostly in ket (that is, reducing the domestic roundwood price to developed countries). less than the international trade price). NOTE 5.4: STRENGTHENING FISCAL SYSTEMS IN THE FORESTRY SECTOR 187 Fees for services or materials provided. These charges are value-added taxes, and so forth). Their purpose is to col- common and are payments for services or materials pro- lect government revenue, and responsibility for such vided by the forestry administration. They may or may taxes is usually outside the control of the forestry admin- not be voluntary, depending on whether the operator istration. However, in some countries, tax incentives are has a choice to request the service or materials. Their used to encourage certain forestry activities (afforesta- purpose should be to cover the costs of providing these tion, for example). services or materials, but they are sometimes used to Profit-based royalties. These types of charges (sometimes collect additional revenue. They are generally adminis- called "resource rents") are usually calculated as a pro- tratively efficient and have little impact on equity portion of the profits earned by companies working in (unless a significant proportion of these charges are paid the sector. They are common in other extractive indus- by small, low-income producers). They can be econom- tries (mining, for instance) but have rarely been used in ically efficient if they reflect the true value or cost of the the forestry sector. services or materials provided, which is often not the Fines. The main purpose of fines is to deter illegal activ- case. They can also be used to promote other policy ities in the forestry sector. Fines are usually fixed in legis- objectives. lation or regulations and are usually not based on any Charges on equipment or workers. Specific charges on economic criteria, although they are sometimes based on equipment or workers are uncommon, but a number of a multiple of the value of illegal products seized or iden- countries collect charges for registration or permits to tified by the forest administration (called "compound- trade in forest products or to operate processing plants. ing"). The administrative and economic efficiency of General taxes. Companies operating in the forestry sector fines is generally low and could be improved in many are also usually required to pay the same taxes as other countries. Similarly, if law enforcement is weak, the industries (corporate taxes, income taxes, sales taxes, imposition of fines can be inequitable. 188 CHAPTER 5: IMPROVING FOREST GOVERNANCE N OT E 5 . 5 ADDRESSING ILLEGAL LOGGING AND OTHER FOREST CRIME F orest crime--including illegal logging--and cor- Trade has been identified as an important driver of ille- ruption are present throughout the world.1 It is gal logging and other forest crime. The value of suspicious particularly troubling in developing countries, wood products worldwide may be as high as US$23 billion. where illegal logging in public lands alone causes esti- Out of the total of illegal timber, it is estimated that about mated losses in assets and revenue in excess of US$10 bil- US$5 billion enters world trade, representing as much as 10 lion annually, more than six times the total official devel- percent of the value of global trade in primary wood prod- opment assistance dedicated to the sustainable ucts. Trade in timber products is often routed through third management of forests (World Bank 2004). Governments countries, adding another trade-related dimension to the lose as much as US$5 billion annually from evaded taxes problem (China, for example, reexports about 70 percent of and royalties on legally sanctioned logging. 1.6 billion peo- its timber imports). An economic analysis based on simula- ple depend upon forests for part of their livelihoods, and tions from the Global Forest Products Model suggests that as many as 350 million people living in and around forests this illegal material depresses world prices by 7­16 percent are heavily dependent on forests for their livelihoods and on average (Seneca Creek Associates and Wood Resources security (see chapter 1, Forests and Poverty Reduction, and International 2004). associated notes). These vulnerable groups are at risk from Forest crime ultimately results from a failure of the illegal logging and removal of timber and nontimber rule of law. Two types of failure in the legal system lead to products from the forests. Moreover, violations of pro- criminal behavior: failures of law and failures of imple- tected area boundaries threaten the conservation of forest mentation (see note 5.3, Strengthening Legal Frameworks resources and biodiversity. in the Forest Sector). When laws themselves are flawed or Illegal logging also subjects legitimate forest enterprises contradictory, the focus of combating illegal logging and to unfair competition through price undercutting and dis- other forest crime should be on legal reform, whereas courages them from making socially and environmentally when the "right" laws are in place the focus should be on responsible investments in the sector. There are less visi- enforcement. ble--though highly insidious--costs resulting from the ero- Fuelwood accounts for the largest single use of wood (by sion of institutions, the spread of corruption across the volume) around the world. In developing countries, most economy, and reduced growth. Finally, forest crime creates fuelwood is consumed for domestic and small-scale indus- negative environmental, economic, and social consequences trial uses and comes from family labor or informal supply at the global level as well. Forests are a global public good, systems that are often based on sources of supply outside and their degradation imposes global costs, such as climate officially recognized forest areas, such as farmland, brush change and species loss. and scrubland, and other scattered trees. A substantial por- While illegal logging and other forest crime can, from a tion of fuelwood collection takes place outside formal forest national point of view, be important in both small and large management and in some, perhaps in many, circumstances, and high-forest and low-forest countries, from a global per- is in violation of the law. spective it is possible to indicate where these impacts are Other illicit activities are also associated with timber likely to be most harmful. It is also possible to establish that harvesting and trade, beyond cutting trees where and the problems in the forest sector are closely linked to when it is proscribed. Such activities include irregular broader issues of governance (figure 5.2). timber sales; corruption in the award of concessions and 189 Figure 5.2 Illegal Forest Activity and Its Link with Corruption More than 20% More than 50% 0 Russia Oth Asia W/C Africa Brazil Indonesia (TI) Acceding China EU 5 corruption Japan Oth L Am High USA Malaysia Canada EU-15 10 ­10 0 10 20 30 40 50 60 70 80 High % suspicious log supply service contracting; evasion of taxes, royalties, and other OPERATIONAL ASPECTS fees by enterprises or by communities or private forest owners; circumvention of labor laws; and unauthorized Understanding causes of illegal logging and other forest crime wood processing. Although no reliable estimates are avail- able, anecdotal evidence and stakeholder interviews sug- Reducing illegal logging and other forest crimes through gest that in state-owned forests, financial losses from cor- Bank operations requires understanding the underlying ruption can be as high as or even higher than those from causes and implementing actions that address these causes stolen timber (Savcor Indufor Oy 2005). In practice, the and complement national and local contexts. The ways that distinctions between illegal logging and other timber- drivers behind illegal logging and forest crime operate are related crime become blurred. The same perpetrators may highly country and location specific, and depend on eco- be responsible for outright theft or corruption-related nomic, social, and cultural factors as well as the type of for- illegal logging. est resource and its ownership or tenure arrangements. An Corruption and other financial crimes often involve appropriate set of responses can only be defined at the money laundering, adding another dimension to the country level in processes involving the key stakeholders constellation of what should be considered forest crime. who interact with the forest resources. In addition to the timber-related crimes, forest crime also includes such illegal activities as wildlife poaching, Means, motive, and opportunity construct. The arson, and unlawful conversion of forest lands for other "means, motive, and opportunity construct" (see annex 5.5A uses. to this note) is useful to analyze the causes of crime. In this Despite the magnitude of the problem and existing mea- framework, persons motivated by greed, need, or other sures to combat corruption (see box 5.17), there are few desires employ the tools (means) available to them to exploit instances of prosecution and punishment. In fact, if there the existing vulnerabilities (opportunities). Illegal logging are prosecutions, it is the poor, looking to supplement their and other types of forest crime take place when these three meager livelihoods, who are victimized and sent to jail, factors are in place simultaneously (that is, when there is a while large-scale operators continue with impunity. motive to act illegally, the potential illegal operators have the Arguably, this is the worst form of violation of equity and means to do so, and the context in which they operate pro- justice, arising from a clear failure of governance, and it vides an opportunity for illegal action) (figure 5.3). The needs to be addressed. responses to illegal logging and other forest crime then need 190 CHAPTER 5: IMPROVING FOREST GOVERNANCE Box 5.17 Measures Specific to Combating Corruption in the Forest Sector Several types of tools can be used to combat forest sec- ing law enforcers and judges on technical issues related tor corruption in addition to the more standard insti- to forest corruption. tutional and administrative safeguards (for example, Public institutional and business ethics, such as those related to procurement and institutional struc- (i) establishment and implementation of model forest tures). Some of the more promising of these follow: integrity pacts related to public contracting; (ii) defin- Diagnostics, such as (i) creating a forest sector cor- ing and agreeing to codes of conduct through business ruption perception index; (ii) creating a forest corrup- associations; (iii) promoting forest certification; (iv) tion risk map; (iii) producing a forest sector citizens' implementing whistleblower encouragement and pro- report card; (iv) documenting government perfor- tection programs; (v) establishing a safe channel for mance on forest-related tasks; and (v) creating a score- citizens' complaints and producing a public report on card on forest law enforcement including arrests, pros- complaints received; (vi) developing a professional ecutions, convictions, and sentencing. ethics pledge and encouraging public officials to sign Awareness raising and access to information, such as it; and (vii) rewarding outstanding public service, per- (i) developing an internet-based clearinghouse for haps through an awards program. information on forest sector corruption; (ii) briefing Structures and events for stakeholder participation and educating journalists on forest-related corruption; and dialogue, such as (i) representative local and (iii) anti-forest-corruption advertisements and other national stakeholder committees; (ii) specific confer- media campaigns; (iv) creating a Web site on forest ences and workshops on professional responsibility concessions and related information; (v) compiling a and ethics; and (iii) best practices to combat forest sec- forest law and regulation reference book and making it tor corruption or any other key issues emerging from available on paper and on the internet; and (vi) train- the above. Source: Adapted from Rosenbaum (2005). to focus on reducing the motivation for unlawful action, fore- across potential partners in improving forest law enforce- closing the opportunities, and eliminating the means avail- ment and governance. For example, consumer countries able to those operating outside the boundaries of the law. and industry occupy particular niches in helping to reduce The means, motive, and opportunity construct is of par- the motive for illegal logging by reforming markets and ticular value in suggesting areas of comparative advantage public procurement policies that discriminate against stolen Figure 5.3 National Action and International Cooperation for Controlling Forest Crime Eliminating means Foreclosing opportunity National International National International · Financial due · Mutual legal · Improve forest · Customs diligence assistance management cooperation · Anti-money · Financial due · Legal and judicial · Voluntary laundering diligence and anti- reform partnership · Asset forfeiture money laundering · Anticorruption agreements · Asset forfeiture Crime Reducing motive National International · Rural · Export market development reform · Penalties · Public · Enforcement procurement policies NOTE 5.5:ADDRESSING ILLEGAL LOGGING AND OTHER FOREST CRIME 191 material. Governments and financial institutions can help Ensuring that proper due diligence on the availability of limit the development of excess wood-processing plants and legal timber is carried out before authorizing or financ- equipment by requiring and exercising due diligence in ing forest industry capacity expansion (see note 5.4, assessing wood supply and land availability in consideration Strengthening Fiscal Systems in the Forest Sector) of wood-based and agro-industrial investments. Producer Restructuring industry and downscaling excess capacity countries have obvious priority with respect to improving forest management and control as an approach to reducing Quality of legal and regulatory frameworks within and out- the opportunities available for illegal activities. side the forest sector Securing forest land tenure and access rights of the local Need-based versus greed-based causes. Differentiating or indigenous communities to timber and wildlife (see between illegal activities motivated by poverty (such as fuel- note 1.4, Property and Access Rights) wood and fodder collection needs, for example) and those Ensuring recognition of the legitimate needs of different resulting from outright greed and that often involve organ- stakeholders in forest concession agreements ized criminal activity (such as commercial logging in pro- Simplifying overly complex laws and regulations that tected areas) is also helpful in formulating effective and are not in line with the capacity of the different groups equitable responses to address these complex problems. of forest users to comply with the legal requirements (especially for community and small-scale private forest owners) Framework to combat illegal logging and other Identifying and resolving conflicting legislation and reg- forest crime ulations (central vs. decentralized levels, different sec- An effective strategy to combat illegal logging and other for- tors) (see note 5.1, Decentralized Forest Management) est crime combines elements of prevention, detection, and Reducing unreasonably high costs of compliance for legal suppression in a way that helps to achieve both short-term operators (by streamlining administrative procedures and gains (such as increases in forest revenue, or the apprehen- reducing processing time of contracts and permits) sion and conviction of the most flagrant violators of laws) Increasing costs of illegal operators through adjustments to maintain the momentum of the process, and longer-term in penal codes to ensure that these constitute effective systemic changes (legal and institutional reforms and reduc- deterrents to forest crime tion of possibilities for corrupt behavior). Including appropriate means to prevent crime in forest management plans in commercial concessions (for Prevention. Prevention combines the promotion of good example, by closing roads after harvesting, employing governance in and outside the forest sector in general with routine patrols, and determining what sort of tree mark- more specific actions focused directly on forest crime. Links ing and log labeling systems are used) to broader development (poverty reduction, land use, indus- trial development, rural development, institutional reform, Institutional structures and incentives and the like) and forest sector policies, strategies, and pro- Addressing broader governance failures, such as lack of grams (such as national forest programs) are evident, as are transparency and accountability, and corruption (for links to legislation in other sectors. These links require coor- example, by reorganization of the public forest adminis- dination to avoid overlaps and missed opportunities. tration, improvements in procedures for concession Effective prevention of forest crime may need to address award and timber sales, improvements to financial audit the following issues: systems and staff incentive systems) Promoting independent forest certification schemes and Supply-demand imbalances other demand-side measures related to corporate social Improving the availability of legal wood (fuelwood, char- responsibility (for example, third-party audited systems coal, and building materials) or substitutes (kerosene, for verification of legal wood origin), especially in cases solar energy, gas) to meet basic needs of rural and urban where demand for timber and other forest products is populations driven by export markets (see note 3.2, Forest Certifica- Improving the availability and reducing the cost of legal tion Systems) industrial roundwood (for instance, through industrial Creating positive incentives for those complying with plantations; see note 3.3, Forest Plantations) legal requirements, especially in situations where they 192 CHAPTER 5: IMPROVING FOREST GOVERNANCE initially have to compete with illegal operators (for trade with the objective of identifying illegal activities and example, reduced concession fees for producers certified facilitating the design of improved policies. Detection can by an independent third-party) entail the following: Promoting partnerships with civil society, such as con- sultative groups and joint government­civil society Monitoring and surveillance to determine if and where structures for monitoring forest activities crime is occurring, to set priorities, and to evaluate other Creating and strengthening high-level, intersectoral elements of the enforcement program. The kinds of infor- coordination mechanisms to harmonize policies, mini- mation that are needed include the geographic incidence mize negative cross-sectoral impacts (for example, with of different crimes, the types of crimes that are occurring, agricultural policies), and ensure that broader reforms the types of perpetrators, and the apparent levels of crime. have important and positive law enforcement benefits in Using systems that include satellites, aircraft, and ground the forest sector monitoring and surveillance personnel to document the Collaborating with financial institutions to establish location, type, volume, and if possible, the identity of means to foreclose opportunities to launder profits from violators involved in illegal logging activities. The proce- illegal forest operations dures used to draw inferences for use with the rest of the law enforcement program are just as important as the Forest monitoring and information sophistication of the data collection processes. Improving information on forest resources and legal Employing indirect methods to assess the prevalence of harvest at the forest management unit level (for example, illegal activity (for example, comparisons of data on pro- forest inventories and management plans that are of duction, consumption, and trade in forest products often appropriate technical quality and detail, and log-tracking show significant disparities between trading partners' and chain-of-custody systems) (see note 7.2, Establishing recorded exports and imports. These differences can Forest Information Management Systems) indicate the potential magnitude of timber theft, smug- Publicly disclosing information on forest cover change, gling, and transfer pricing). forest concessions, management plans and harvesting Establishing a process to determine if any institutional quotas, logging and timber transport, and forest rev- weaknesses exist that can create opportunities for timber enues; and making such information accessible (for theft (such as opportunities created by inadequate example, by posting it on the internet) to minimize boundary marking, product marking, product measur- manipulation, self-censorship, and physical risk to those ing, product tracking, or an inadequate process of check- involved in law enforcement ing for revenue payments). Collecting evidence and documentation on a specific Capacity building and awareness incident as the basis for arrests, judicial proceedings, Improving capacity of both forest and judicial authori- fines, or other action. Specialized expertise is needed to ties to enforce forest legislation from detection to con- employ techniques that are appropriate to the suspected viction, thus establishing an effective deterrent crime and the national legal system. Conducting campaigns that inform the public about the Establishing crime monitoring systems that collect data provisions of forest law in local languages, thereby ensur- for evaluating the enforcement program's impact and effi- ing that users are at least aware of rights, restrictions, and ciency, and for providing feedback to program planners. prohibitions Increasing forest transparency and crime detection Indicating actions that the public can take to support law through independent forest monitoring, especially in enforcement efforts (for example, ways to report illegal countries with weak government systems prone to cor- activity) ruption. Because preventive measures target the fundamental Suppression. Suppression of illegal activity should be the problems underlying illegal logging, many of them can be last recourse in a forest law enforcement program, because expected to take effect only in the medium and long term. it almost inevitably involves the use of force. Suppression measures pose risks to agency personnel, the public, and the Detection. Detection refers to various methods of collect- lawbreaker. The indiscriminate use of force also poses risks ing and processing information on forest crime and related to the public at large. Because the people involved in crimi- NOTE 5.5:ADDRESSING ILLEGAL LOGGING AND OTHER FOREST CRIME 193 nal activity at the field level are often simply laborers (and pression. Issues of cost, risk, capacity, and commitment usually poor people with few alternatives) working at the need to be addressed in the design of these programs. direction of others, genuine ethical reasons exist to question Annex 5.5B to this note brings the drivers of forest crime the use of force. In any responsible suppression program, (motive, means, and opportunity) together with the preven- these risks need to be systematically considered in light of tion-detection-suppression framework in several typical the probability of success, the accountability and trans- typologies of forest crime, and can be used as a tool to facil- parency of the suppression effort, and the skills and training itate discussion in country contexts (for example, in the available to law enforcers. In addition, suppression is an area context of national-level action plans as discussed below). for which the World Bank has strict guidelines based on its mandate that define its level of involvement. National-level processes to combat illegal logging Effective suppression may require the following: and other forest crime Developing risk-success matrices to make appropriate National and local level forest law enforcement preparations for safe conduct of suppression operations, program. Forest law enforcement programs need to be for- or to determine when safe operations are a practical mulated at the national and local levels, building on estab- impossibility. Such matrices should be developed by law lished laws, institutional arrangements, and the interests enforcement practitioners. and capabilities of different stakeholders, and need to Tailoring institutional arrangements for major suppres- address the specific crime problems being encountered. sion efforts or crackdowns to local circumstances (see As a consequence of the FLEG processes (see chapter 5), note 5.2, Reforming Forest Institutions). However, these some countries are beginning to address forest crime arrangements also clearly need to incorporate adequate through concerted, coordinated, multistakeholder, national- provisions for accountability and transparency commen- level FLEG processes, resulting in national-level FLEG surate with the likely use of force and the need for secu- action plans. Experience with these processes has demon- rity and confidentiality. strated that combating illegal logging and other forest crime Developing interagency arrangements in which the is as much a political process as it is technical, and involves police, military, customs, and other law enforcement reconciliation of the various stakeholder interests in a man- agencies frequently and effectively work together with ner that enables change. Where the economic stakes in ille- natural resource agencies. These arrangements require gal activities are high, powerful interest groups can force- resources, budgets, planning, and reporting provisions to fully protect the status quo even if the outcome is clearly be in place. negative from society's point of view. Training staff members at all levels where extraordinary suppression efforts are needed, for example, in special- Stakeholder coalitions. Rarely is one stakeholder group ized skills such as investigating criminal activities, docu- able to push through a major change in the established menting crimes, handling evidence, and preparing judi- power balance. Instead, successful change processes rely on cial proceedings. In highly dangerous or specialized coalitions of several interest groups with different capaci- investigations, training appropriate for undercover oper- ties. Local and international NGOs have often managed to ations, firearms safety, and other special expertise may be bring the problem of illegal logging out in the open and needed. raise awareness among politicians and the general public of the need to act. Representatives from interest groups The complexity and risk of suppression efforts under- directly involved in timber production can wield consider- score the value of measures to avoid the emergence of a seri- able influence among their peers and colleagues. High-level ous law enforcement problem through sound prevention political champions are also required who are able to fend and detection efforts. Where such efforts fail, or are not off efforts to slow down the implementation of the pro- made, the problems of suppression can rapidly become posed measures through behind-the-scenes maneuvering. nearly insurmountable. Partners willing to support FLEG can be found among Many of the specific interventions and tools discussed many stakeholder groups. Ministries of finance and local above can simultaneously contribute to more than one of municipalities are interested in the increased tax revenue the enforcement functions of prevention, detection, or sup- that reduction of illegal activities could bring about. Forest 194 CHAPTER 5: IMPROVING FOREST GOVERNANCE enterprises may be motivated to join the effort because of no other motivation than the pursuit of fairness and justice. market pressure or ethical reasons. Local people whose External partners can reinforce and support these progres- rights are trampled by illegal loggers are potential partners, sive groups and, within the boundaries of their mandates, as are NGOs concerned about protection of the environ- facilitate their work at political and technical levels. ment, human rights, and democracy. In addition, there are always individuals in all stakeholder groups and institu- Where the economic stakes in illegal activities are high, tions, including public forest administration, who need no powerful interest groups can forcefully protect the status other motivation than pursuit of fairness and justice. Exter- quo even if the outcome is clearly negative from society's nal partners can reinforce and support these progressive point of view. groups and, within the boundaries of their mandates, facil- itate their work at the political and technical levels. Country-level lessons FLEG processes should bring partners together. The Address key drivers both within and outside the aim of a national FLEG process should be to bring all these forest sector. Some governance issues relating to forest partners together to enable them to reinforce each other. crime lie entirely within the forest sector while others affect- Although it is evident that there will not and should not be ing forests and forest-dependent people extend beyond this any standard model for such processes, some common ele- sector. Some of the governance work of other parts of the ments seem to characterize the more promising initiatives World Bank Group may help address these nonforest-sector currently under way: issues, including support to Poverty Reduction Strategy Paper processes and the alignment of the World Bank's Establishment of a mechanism for interministerial coor- CASs with these processes, work on governance diagnostics dination, and a forum for stakeholder participation and integration of governance and anticorruption elements Use of an analytical process for assessing the magnitude, in the CASs, and the design of specific capacity-building scope, and dimension of the problems related to law programs based on the diagnostic surveys (Poverty Reduc- enforcement and governance tion and Economic Management Network and the World Creation of awareness, information sharing, and if nec- Bank Institute). Other relevant areas of the World Bank essary, whistle blowing, to "name and shame" the worst focus on anti-money laundering and financial investigation perpetrators of forest crimes (Financial Market Integrity group, Extractive Industries Use of a consultative and consensus-building process to Transparency Initiative, Justice for the Poor, and customs define the scope of actions and priorities modernization). The World Bank's legal department is car- Detailed definitions of the actions, responsible stake- rying out important work in assessing the quality of legal holders, mechanisms of implementation, and financing and regulatory frameworks. Similarly, some of the work on (both internal and possible external sources) corporate social responsibility and social and environmen- Obtaining political endorsement and support for the tal issues in the operations of the International Finance Cor- FLEG actions poration (for example, investment safeguard policies) is extremely relevant to FLEG issues. LESSONS LEARNED AND RECOMMENDATIONS Combine actions with both short- and long-term FOR PRACTITIONERS implications in a realistic, step-wise plan. Visible short- term impacts are often needed to create and maintain momen- General lessons tum, whereas long-term work on the structural drivers is nec- Successful change processes rely on coalitions of essary to ensure that these efforts are sustainable over time. several interest groups with different capacities. Early"wins"(for example, significant increases in forest rev- Partners willing to support FLEG can be found among many enue) are important to motivating continued efforts. stakeholder groups, such as ministries of finance and local municipalities, forest enterprises, local people, and NGOs. In Address both failures of law and failures of imple- addition, all stakeholder groups and institutions, including mentation. First, ensure that the correct laws and policies public forest administrations, house individuals who need are in place. Second, work to enforce the law. This two- NOTE 5.5:ADDRESSING ILLEGAL LOGGING AND OTHER FOREST CRIME 195 pronged approach to legal compliance is the only way to Address critical gaps in the understanding of the nature ensure that the full range of motivations, opportunities, and of the governance challenge. An illustrative list of impor- means for illegal behavior are addressed. tant areas for focus follows: ­ Development of diagnostics to benchmark forest crime Strengthen supply-side measures with measures to and the state of forest governance in high-priority control imports of illegal timber and wood prod- countries, and identification of indicators to monitor ucts. This is especially important in countries where export the progress of proposed interventions demand is a significant driver of illegal activities in the for- ­ Advancements in the role of independent monitors in est sector. It should be noted that--at least in principle-- making forest operations more transparent and in these measures could also be extended to other products providing legal operators with positive incentives (for example, wildlife or products derived from illegal con- ­ Institutional (and incentive-compatible) reforms of version of forest lands). forestry agencies in Bank client countries that include gaining a better understanding of the role of incen- Integrate anti-money-laundering and asset forfei- tives (including salary structure and so on) for civil ture laws into the fight against forest crime and servants related corruption. These tools, along with the UN Con- ­ Development approaches to forest industry restruc- ventions Against Corruption and Transnational Organized turing and retrenchment that will efficiently and Crime, provide strong and effective regimes that govern- effectively help address imbalances in wood supply ments can use to fight forest crime and related corruption. and demand ­ Establishment of information management systems and use of geographic information systems for overall Risks monitoring of the forest resource Focusing more directly on illegal logging and other forest Deepen the technical content of FLEG processes at the crimes will not always be a natural or comfortable role for international and national levels, mobilize opportunities development agencies, including the World Bank. for multilateral enforcement action, and integrate the Inevitably, development agencies will become involved in regional FLEG processes into existing structures for complex and controversial issues regarding the quality of regional cooperation laws, and at times these institutions will be put at odds with Promote collaboration between the progressive elements powerful interest groups, including high-level government of the industry, international financing institutions, and officials, defending the status quo for personal gain. Conse- international NGOs involved in the FLEG process to quently, there are two potential areas of risk for the devel- develop, improve, and harmonize safeguards and due opment community: diligence on forest investments (see note 5.4, Strengthen- ing Fiscal Systems in the Forest Sector). The aim should As with any complex and controversial issue involving be both to ensure the legality of the timber used and to different interests and actors, there are reputational risks mitigate the risk for other forest crimes, such as poach- related to work with FLEG. The World Bank and its part- ing, arson, and encroachment of forest areas, resulting ners need to be especially sensitive to issues related to from forest industry investments. human rights and equity in their work. Transparency and Ensure effective coordination between the implementa- advocacy and support for participatory approaches are tion of the FLEGT Regulation and Action Plan and other important means to avoid these types of risks. FLEG efforts. The aim should be to strengthen the links A more vigorous engagement with FLEG will also between the voluntary partnership agreements envi- inevitably involve difficult issues related to national sov- sioned in the FLEGT action plan and the lending and ereignty in the management of natural resources. This advisory operations of the international financing insti- political risk needs to be carefully managed. tutions, especially the World Bank. Explore the potential for initiatives similar to the Extrac- tive Industries Transparency Initiative (EITI)2 to increase Opportunities transparency of forest sector financial flows in some key Specific opportunities for action by the international com- forest countries, especially where a relatively small num- munity include the following: ber of companies operate large forest concessions. 196 CHAPTER 5: IMPROVING FOREST GOVERNANCE NOTES Savcor, I. O. 2005. "Ensuring Sustainability of Forests and Livelihoods Through Improved Governance and Control 1. This note is based on World Bank (2006). of Illegal Logging for Economies in Transition: World 2. See EITI's Web site for more information: http:// Bank Discussion Paper." Helsinki, Finland. www.eitransparency.org/. Seneca Creek Associates and Wood Resources International. 2004. "`Illegal' Logging and Global Wood Markets: The Competitive Impacts on the U.S. Wood Products Indus- SELECTED READINGS try." Report prepared for the American Forest & Paper Kishor, N., and R. Damania. 2006."Crime and Justice in the Association by Seneca Creek Associates, Poolesville, MD, Garden of Eden: Improving Governance and Reducing and Wood Resources International, University Place, Corruption in the Forestry Sector." In The Many Faces of WA. Corruption: Tracking Vulnerabilities at the Sector Level, ed. World Bank. 2004. Sustaining Forests: A Development Strat- J. Edgardo Campos and Sanjay Pradhan. Washington, egy. Washington, DC: World Bank. DC: World Bank. ------. 2006. "Strengthening Forest Law Enforcement and Magrath, W. B., R. Grandalski, J. Stuckey, G. Vikanes, and Governance: Addressing a Systemic Constraint to Sus- G. Wilkinson. 2007. Timber Theft Prevention and Forest tainable Development." Report No. 36638-GLB, Wash- Resource Security. Washington, DC: World Bank. ington, DC. REFERENCES CITED CROSS-REFERENCED CHAPTERS AND NOTES Magrath, W. B., R. Grandalski, J. Stuckey, G. Vikanes, and G. Chapter 1: Forests for Poverty Reduction, and associated Wilkinson. 2007. Timber Theft Prevention and Forest notes Resource Security. Washington, DC: World Bank. Note 3.2: Forest Certification Systems Puustjarvi, E. 2006a. "Guidelines for Formulating and Note 3.3: Forest Plantations in World Bank Operations Implementing National Action Plans to Combat Illegal Logging and Other Forest Crime." Draft. Indufor, Chapter 5: Improving Forest Governance Helsinki, Finland. Note 5.1: Decentralized Forest Management ------. 2006b. "Proposal for Typology of Illegal Logging." Note 5.2: Reforming Forest Institutions Draft. Indufor, Helsinki, Finland. Note 5.3: Strengthening Legal Frameworks in the Forest Rosenbaum, K. L. 2005. "Tools for Civil Society Action to Sector Reduce Forest Corruption: Drawing Lessons from Trans- Note 5.4: Strengthening Fiscal Systems in the Forest Sector parency International." PROFOR at the World Bank, Note 7.2: Establishing Forest Information Management Washington, DC. Systems NOTE 5.5:ADDRESSING ILLEGAL LOGGING AND OTHER FOREST CRIME 197 ANNEX 5.5A DRIVERS OF ILLEGAL LOGGING AND OTHER FOREST CRIME: MOTIVE, MEANS, AND OPPORTUNITY Using the motive, means, and opportunity elements to ana- Equipment for logging and transport of timber and lyze illegal logging and other forest crimes illuminates fun- wood products damental drivers of the problem (Magrath et al. 2007). This Opportunities for money laundering to hide financial annex presents an overview of some of these drivers derived proceeds from a set of country-level studies and assessments. Opportunity Motive Weak governance in parts or all of the country (includ- Overriding need to generate foreign exchange ing areas affected by conflict and war) Imperative to finance military operations Breakdown of institutional controls and lack of account- Poverty and lack of alternative income ability of public officials Lack of affordable fuel alternatives Rapid and disorganized decentralization and lack of Denial of access by local people to resources they need institutional capacity at decentralized levels (see note 5.1, for subsistence or livelihoods Decentralized Forest Management) Indiscriminate (regarding legality of origin) demand for Ambiguous forest land tenure (that is, lack of legal defi- timber in neighboring countries nition, overlapping uses, conflicting laws, and so on) (see Indiscriminate international demand for timber note 1.4, Property and Access Rights) Economic factors and policies favoring forest conversion Inadequate or inappropriate legal framework (not based Low cost of illegal timber (that is, ineffective sanctions) on a social contract with key forest users) (see note 5.3, and rent-seeking business culture in the forest sector Strengthening Legal Frameworks in the Forest Sector) companies Lack of or weak recognition of customary rights (of local Overcapacity in the wood processing industry and indigenous communities) Difficulty complying with legal regulations (especially by Weak internal organization of these communities small-scale producers, concession holders, communities, Inadequate or inappropriate prescriptions for forest and private forest owners) management and use (regulations) Bureaucratic laws related to forest management (cost of Lack of reliable and up-to-date information on forest complying with laws is too high) resources and their use Weak, poorly managed, or corrupt forest administration Means Ineffective or corrupt law enforcement Roads, navigable rivers, harbors, and other transport Ineffective or corrupt judiciary infrastructure Weak governance or contradictory policies in sectors Labor in forest areas (often without alternative sources of related to forestry livelihoods) Weak control of illegal exports in producing countries or Capital to finance illegal logging and other forest crime imports in purchasing countries Source: Modified from Puustjarvi (2006b). 198 CHAPTER 5: IMPROVING FOREST GOVERNANCE ANNEX 5.5B TYPICAL CONTEXTS OF ILLEGAL LOGGING: DRIVERS AND POTENTIAL RESPONSES Typical contexts Potential drivers Potential responses Type (motive, means, opportunity) Illegal logging Illegal logging · People unable to meet their basic needs · Legalize illegal use or simplify regulations P for securing subsistence concerning access to public forest or wildlife resources · Create opportunities for income generation P · Lack or high cost of alternative energy · Offer alternatives to fuelwood as source of energy P Small-scale illegal · Poverty · Create opportunities for income generation P logging to enhance · Complex legal procedures related to · Reduce bureaucracy and fees associated with P livelihoods by harvesting and access to forest resources legal timber harvesting · people without legal · Disputes over land tenure rights · Clarify land tenure, consider establishing local P access to forest land tenure of forest land · managers or owners · Poorly organized, under-resourced, and · Strengthen forest law enforcement D+S of community forests corrupt forest law enforcement · Improve internal control on law enforcement staff D+S · private forest owners · Corrupt community leaders · Improve internal control in communities D+S · Criminal groups organizing illegal logging by · Strengthen cooperation with police force and D+S recruiting rural poor judiciary and target the organizers or financiers behind these activities · Inefficient legal procedures · Amend forest-related legislation and penal code P · Use money laundering and asset forfeiture laws Large-scale commercial · Poorly motivated staff in public forest · Reorganize public forest administration to P illegal logging administration or enterprises increase staff motivation · High cost of legal timber · Reduce bureaucracy and fees associated with P legal timber harvesting · Capacity of wood processing industries · Embark on phased program of capacity reduction P exceeding legal supply in wood-processing industries · Increase supply by establishing plantations or P adjusting forest management regulations · Export demand insensitive to legality · Collaborate with governments and private sector P of timber in importing countries to increase demand for legal timber and deter imports of illegal timber · Poorly organized and corrupt forest law · Increase resources and enhance independence D+S enforcement and auditing system of forest law enforcement · Enhance effectiveness of financial audits on D public forest administration or enterprises · Provide support to patrolling networks among D private forest owners · Use anti-money-laundering laws · Inadequate monitoring data on timber flows · Promote independent forest monitoring D and origin of timber · Improve data management and transparency P in public forest administration or enterprises · Promote responsible business practices (chain-of- custody systems, certification) in private industries · Inefficient legal procedures · Strengthen cooperation with police force and S judiciary · Provide owners or managers of community and S private forests with legal services · Amend forest-related legislation and penal code P Conflict timber · High cost of armed conflict · Focus on conflict resolution and management P · Poor control of timber imports in recipient · Improve controls on origin of timber D countries · Promote international collaboration in sanctioning S · Ineffective international sanctions conflict timber (continues on the following page) NOTE 5.5:ADDRESSING ILLEGAL LOGGING AND OTHER FOREST CRIME 199 Typical contexts Potential drivers Potential responses Type (motive, means, opportunity) Other forest crime Irregular timber sales, · Low risk of sanctions · Improve procedures for timber sales and awarding P award of concessions concessions to increase transparency and and service contracting accountability · Increase proportion of timber sold or concessions P awarded through competitive bidding · Poorly motivated staff in public forest · Reorganize public forest administration to P administration and enterprises increase staff motivation · Poorly organized and corrupt financial · Enhance effectiveness of financial audits on D audit system public forest administration or enterprises · Improve data management and transparency in D public forest administration and enterprises · Inefficient legal procedures · Strengthen cooperation with police force S and judiciary · Amend penal code P Evasion of taxes, · Unreasonably high tax burden in relation to · Adjust taxes as appropriate P royalties, and other timber price and general tax level · Impose sanctions on enterprises found guilty S fees by enterprises of tax evasion · Poorly organized and corrupt financial · Enhance effectiveness of financial audits on D audit system enterprises · Inadequate accounting systems in private · Oblige enterprises to provide required information D enterprises in an easily accessible form · Inefficient legal procedures · Strengthen cooperation with police force and S judiciary to achieve minimum acceptable level of compliance · Amend penal code P Evasion of taxes, · Low risk of sanctions · Adjust taxes, royalties, and other fees to levels at P royalties, and other which most communities or private forest owners fees by communities would make the payments voluntarily P or private forest owners · Inadequate accounting systems in private · Promote sound accounting practices in community D enterprises or communities forestry · Enhance effectiveness of external financial audits D+S on community forests and private woodlots within the limits of available resources · Inefficient legal procedures · Strengthen cooperation with police force and S judiciary to achieve minimum acceptable level of compliance · Amend penal code P Circumvention of · Indifferent attitude in enterprises toward · Impose sanctions on enterprises found guilty P labor laws labor laws of circumventing labor laws · Poorly organized and corrupt oversight · Impose sanctions or disciplinary actions on D companies proven to circumvent regulations · Inefficient legal procedures · Strengthen cooperation with police force and S judiciary to achieve minimum acceptable level of compliance · Amend penal code P Unauthorized wood · Strong domestic and export demand · Enable an increase in authorized processing P processing encouraging unauthorized wood processing capacity by increasing legal timber supply and illegal logging · Excessive bureaucracy related to licensing · Simplify licensing procedure P · Poorly organized and corrupt oversight · Impose sanctions or disciplinary actions D on companies proven to circumvent regulations · Inefficient legal procedures · Strengthen cooperation with police force S and judiciary · Amend penal code P Wildlife poaching Wildlife poaching for · People unable to meet their basic needs · Legalize illegal use or simplify regulations P subsistence needs · Lack of or high cost of alternative sources concerning access to wildlife resources of food · Create opportunities for income generation P · Offer alternative sources of food P 200 CHAPTER 5: IMPROVING FOREST GOVERNANCE Typical contexts Potential drivers Potential responses Type (motive, means, opportunity) Wildlife poaching to · Poverty · Create opportunities for income generation, P engage in trade in · Complex legal procedures for reduce bureaucracy and fees associated with animals and animal hunting of wildlife legal timber harvesting parts · Disputes over hunting rights · Clarify hunting rights with focus on rural poor P · Poorly organized, under-resourced, and · Strengthen wildlife law enforcement D+S corrupt wildlife law enforcement · Improve internal control of law enforcement staff D+S · Corrupt community leaders · Improve internal control in communities D+S · Criminal groups organizing illegal hunting · Strengthen cooperation with police force and D+S by recruiting rural poor judiciary and target the organizers or financiers · Inefficient legal procedures behind these activities · Amend forest-related legislation and penal code D+S · Use anti-money-laundering and asset forfeiture laws D+S Arson Arson associated with · Poverty · Land tenure reform P subsistence-level slash- · Lack of viable alternative agricultural · Agricultural intensification P and-burn agriculture systems · Legal reform to decriminalize slash-and-burn P · Marginalization and disempowerment of agriculture Indigenous Peoples Arson associated with · Biased policies and incentives · Policy reform based on strategic environmental P large-scale land clearing · Weak regulatory controls of assessment for commercial agriculture land development · Regulatory reforms to monitor and control land P+D development Encroachment Conversion of forest · Poverty · Land tenure reform P land associated with · Cyclical unemployment · Agricultural development P subsistence-level slash- · Stabilization policies P and-burn agriculture Conversion of forest · Distorted policies · Policy reform P land associated with · Corrupt land access arrangements · Anti-money-laundering and asset forfeiture laws S large-scale land clearing for commercial agriculture Source: Adapted from Puustjarvi (2006a). Note: P = prevention; D = detection; S = suppression. NOTE 5.5:ADDRESSING ILLEGAL LOGGING AND OTHER FOREST CRIME 201 C H A P T E R 6 Mainstreaming Forests into Development Policy and Planning O ne of the targets under the Millennium Develop- products) over nontradables (services, construction, and ment Goals for ensuring environmental sustain- subsistence production). That generally encourages expan- ability requires that countries integrate the prin- sion of agriculture, logging, and mining. In addition, it can ciples of sustainable development into country policies and also boost sectors that use more land and labor and less programs and reverse the loss of environmental resources. imported capital and might, therefore, encourage more In line with this, macro policy reforms should give foremost extensive agriculture. Conversely, exchange rate deprecia- consideration to ensuring enabling conditions for sustain- tion sometimes induces farmers to shift to export crops or able development, enhancing synergies and minimizing production systems that require less land. negative impacts on natural resources. For forests, the com- Fiscal policy directed at short-run stabilization, the bined impacts of economic activities outside the forest sec- implementation of growth and other long-term objectives, tor are often significantly greater than those produced by and decentralization policy (see note 5.1, Decentralized For- economic activity within the sector itself. est Management) as a major instrument of national eco- Several policy areas can impact forests and forest devel- nomic reform in many developing countries and countries opment, including macroeconomic policies (fiscal, mone- in transition, all can affect forests and other natural tary, trade, privatization, and public expenditure policies); resources. Such broadly based adjustments, which were population and social affairs; agriculture, fisheries, game often part of stabilization and structural adjustment policies management, livestock; rural and regional development, recommended by the World Bank and, more often, the land use planning, land tenure; infrastructure; industry; International Monetary Fund (IMF), have in the past been energy; environment1; and tourism. Macro policy reforms criticized for their negative impacts on the poor, on natural are central to strengthening an economy. Governments resources, and on the environment (see box 6.1). In the reform fiscal, exchange rate, and monetary policies, and recent past, development policy decreased emphasis on make changes in trade policies, land reform, and privatiza- restoring balance of payment and exchange rates, and tion policies as part of adjustment packages to address eco- focused on budget support geared toward domestic financ- nomic imbalances, balance of payments, and structural ing needs. The World Bank's development policy lending weaknesses in their economy. Measures such as these-- (DPL) portfolio has included promoting competitive mar- regardless of origin--can and do have significant impacts ket structures, correcting distortions in incentive regimes, on natural resources in general. For example, real exchange establishing appropriate monitoring and safeguards in the rate depreciation (currency devaluation) favors the expan- financial sector, judicial reform, and adopting modern sion of tradables (many agricultural, forest, and mineral investment codes to create an environment conducive to 203 Box 6.1 Indonesian Structural Adjustment and Forests In 1997 the IMF and the World Bank provided an In April 1998, the World Bank followed up on the adjustment loan to Indonesia following the financial IMF package with the first of two Policy Reform Sup- sector crisis in that country. The IMF began its negoti- port Loans (PRSLs), with a loan value of US$1 billion, ations with the government of Indonesia on an assis- which was followed by a second PRSL in the following tance package in October 1997. The original letter of year. The PRSL loans added detailed provisions calling intent focused on banking sector reform and other for reform of regulations and legislation governing the financial sector issues, and initially did not include award and management of concessions; an interim environmental provisions. Information that forestry moratorium on any further conversion of forested was the second largest contributor to Indonesian export lands to other uses; and moves toward stronger partic- income and was probably a sector that may survive the ipation of local communities in the management and economic crisis better than others resulted in the IMF protection of forests, and ultimately recognition of tra- and the Bank incorporating specific forest sector condi- ditional title to forest. tions into the frameworks of these instruments. Lessons drawn from the Indonesian experiences are By January 1998, the loan had become a US$43 bil- that (i) good, up-to-date analysis will allow for effective lion assistance package, which included a set of envi- links between reforms introduced and outcomes for ronmental and forest sector reforms aimed at disman- forests and forest-dependent people to be assessed, and tling the forest product marketing monopolies that (ii) careful monitoring of actual outcomes and follow- had dominated the sector and committed the govern- up with more focused and longer term operations (as ment to implementation of a series of forest concession was proposed but not pursued in the Indonesia case) management reforms that the World Bank and other are essential to good results. development agencies had been promoting in Indone- sia for a considerable time. Source: Douglas and Chandrasekharan Bher 2006. private sector investment, thus promoting good gover- prospects for development and maintenance of economic nance, encouraging private sector activity, and mitigating growth at the national scale. short-term adverse effects of adjustment. Independent of this evolution in DPL, some of the pol- PAST ACTIVITIES icy reforms can have unintended negative effects on forests or create opportunities for enhancing the forest sector. The World Bank's main engagement in macroeconomic Where forests are a significant part of the economic and reforms is through DPL. DPL is rapidly disbursing, policy- social resource base of a country, therefore, it will be neces- based financing that the Bank provides in the form of loans sary to mainstream forest considerations into development or grants to help a borrower address actual or anticipated policies and planning processes, and to consider exogenous development financing requirements that have domestic or impacts. external origins. These operations are large in scope and in Forests are part of the national capital base in most their objectives. They support the policy and institutional developing countries, and have important links to other changes needed to create an environment conducive to sus- natural resources, especially water, soil, and, in some cases, tained and equitable growth. Typically, they will include coastal marine assets. In developing countries, natural capi- improving the investment climate, diversification of the tal generally has a larger role to play in overall economic economy, employment creation, and support for meeting development than in wealthier countries. Therefore, alter- international commitments. native sources of capital for investment are scarcer, and the DPL was originally designed to provide support for focus tends to be more heavily oriented toward natural macroeconomic policy reforms, such as in trade policy and resource utilization, through mining, forestry, agriculture, agriculture. Over time it has evolved to focus more on struc- rural industries, and so on. The condition and sustainability tural, financial sector, and social policy reform and on of those resources is therefore of critical importance to the improving public sector resource management. Develop- 204 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING ment policy operations now generally aim to promote com- for identifying impacts and developing methods to amelio- petitive market structures (legal and regulatory reform), rate or eliminate them are available (see annexes to note 6.3 correct distortions in incentive regimes (taxation and trade and suggested readings). A potential exception is the ques- reform), establish appropriate monitoring and safeguards tion of impacts on the forest-dependent poor because of the (financial sector reform), create an environment conducive lack of knowledge on the numbers of poor in forests and the to private sector investment (judicial reform, adoption of a nature and extent of their dependence on forests. Macro- modern investment code), encourage private sector activity economic policy changes can create shifts in the national (privatization and public-private partnerships), promote exchange rate, in trade outcomes (and policies), and other good governance (civil service reform), and mitigate short- major economic areas. The impacts on forests and other term adverse effects of development policy (establishment natural resources of large-scale economic changes and of social protection funds). reforms will manifest themselves through a complex web of Between fiscal years 2004 and 2006, the World Bank second- and third-round activities and associated approved 258 development policy loans. Of those, 11 had responses. Identifying the nature of their eventual impacts forestry components with IBRD/IDA commitments totaling on forests--or even whether there will be significant some US$94 million or 9 percent of the total IBRD/IDA impacts--in specific cases is not straightforward. commitment for those 11 projects. DPL has been most fre- quently employed in Africa. There were 50 additional DPLs Understanding what impacts forest sustainability. with activities not formally classified as forest components The definition of forest sustainability and how best to but that included forest-related actions under a broader achieve it have been widely debated in the forest community agriculture-forestry-fisheries classification. The other DPLs for more than two decades. The issue of the importance of might have had effects on forests, but this information was exogenous influences on forests is critical to determining not available in the program documents. Efforts are being how to achieve forest sustainability. Practitioners concerned made to use the policy lending instrument to generate pos- with mainstreaming forest considerations into policy dia- itive outcomes for the forest sector. Examples include Brazil, logue, cross-sectoral impacts, and assessing impact of Cameroon, the Democratic Republic of Congo, Gabon, macro policy reform on forests will need to be kept Ghana and the Lao People's Democratic Republic (see boxes informed of the status of this debate because the view taken 6.12 through 6.14 in note 6.2). on cause-and-effect in this area has direct relevance to the The World Bank's experience in analyzing cross-sectoral role that large-scale economic reform will have and, accord- outcomes in forests (or natural resources more generally) ingly, potential entry points for introducing forest issues. from lending activities, including the newer programmatic There are two distinct interpretations for the failure of approach of DPL, is growing. Upstream analytical work, sustainable forest management (SFM). The first interpreta- including country environmental analyses (CEAs) and tion focuses on problems of unbalanced vested interests and strategic environmental assessments (SEAs) conducted related inadequacies of sector governance, including the before DPLs has increased. The Bank has also institutional- poor performance of public forest agencies and the private ized a system whereby policy loans are reviewed by environ- sector in many countries, and the lack of adequate title and mental, natural resource, and forest specialists at the concept access rights to forests by local communities. This interpre- stage to ensure that likely significant effects of the loan on tation assumes that if the highlighted problems are ade- the environment, forests, and natural resources are identified quately addressed, the agencies and groups in society and measures are taken to enhance positive outcomes and responsible for managing forests will have an appropriate minimize unintended negative impacts. policy basis, and adequate capacity, to address problems that may develop under broader economic change. The second interpretation holds that many of the eco- KEY ISSUES nomic and social forces influencing forests and forest- Distinguishing between cross-sectoral and macro- dependent people are initiated a long way from the forest economic impacts.2 Cross-sectoral impacts on forests can sector itself and can only effectively be manipulated by emerge from specific activities and investments in related agents that operate well outside the sector; thus, attempting sectors: rural development, infrastructure and transport, to deal with the resulting problems in forests through incen- specific resource extraction projects, and so on. By and tives and institutional issues within the sector may be nec- large, these are straightforward situations, and approaches essary but will be insufficient to address the problems. In CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING 205 Box 6.2 Upstream Analyses on Energy Reform and Fuelwood Use: An Example from Azerbaijan Since fiscal 2002, several lending operations in the This analytical work justified the poverty and social Europe and Central Asia (ECA) region have focused impact analysis (PSIA) undertaken prior to an energy on energy sector reforms to improve the efficiency reform operation in Azerbaijan (World Bank 2004). and effectiveness of service delivery in the region. In The PSIA used spatial information to assess the envi- 2004 the World Bank reviewed the fiscal, efficiency, ronmental impact of energy reform. The methodology social, and environmental dimensions of reforms in enabled the identification of areas where households the energy sector in seven countries in the ECA (because of poverty) might switch to dirty fuels. Over- region (Armenia, Azerbaijan, Georgia, Hungary, laying this information with data on forest cover Kazakhstan, Moldova, and Poland) (Lampietti 2004). revealed where the risk of increased residential wood This study provided food for thought regarding use is greatest. With this information it was possible to potential environmental impacts, including those consider promoting access to alternative energy associated with human health benefits resulting from sources and more efficient wood stoves in high-risk reduced pollution from the electricity sector. The areas, and preparing and implementing spatially study also discussed the possibility that reforms have explicit forest management plans and encouraging damaged health because households switched to dirty participatory forest management to reduce this risk. fuels (such as wood, coal, or kerosene). Because of The data for this study were collected with extensive inadequate data, the study could not evaluate the in-country collaboration. Local stakeholders partici- impact of reforms on fuel switching, energy use, sub- pated in two consultative workshops and various dis- stitution effects, and health and social impacts. Nev- cussions to help guide the research and included repre- ertheless, such facts as "in Armenia 80 percent of sentatives from the Ministry of Economic households and 95 percent of poor households Development, the Ministry of Fuel and Energy, the reported using alternative fuel sources to reduce Ministry of Labor and Social Assistance, and the Par- reliance on electricity (primarily wood (60 percent) liamentary Committee on Energy. There was also close and/or gas (24 percent))" (Lampietti 2004:44) and the collaboration and support from the Ministry of Agri- possibility that fuelwood use may cause deforestation culture, the State Statistical Committee, and the State raised concern. Amelioration and Water Management Committee. Source: Authors' compilation using Lampietti 2004 and World Bank 2004. line with this thinking, many of the decisions on large-scale on the national economy) and forest-poverty links (see note economic and social changes that are having an impact on 1.1, Mainstreaming the Role of Forests in Poverty Allevia- forests are made by people with little or no involvement in tion and note 1.4, Property and Access Rights) could create the forest sector, and seldom contacted by forest sector spe- entry points for incorporating forest considerations in cialists. Under this interpretation, the options for sustain- macroeconomic and sectoral policy dialogues. The process ability available to forest stakeholders are constrained. An for informing relevant sector and finance ministries should avenue is for the donor agencies, in their dialogue with eco- be tailored to the country context to ensure credibility. Rel- nomic and social policy ministries on policy loans, to agree evant analytical findings should be available at key inter- on supportive measures for the forest sector, such as train- vention points in national policy processes. ing and education programs and consultative activities. Indirect effects. Changes in tree cover or access to forest Creating entry points for introducing forest issues resources are often the result of direct causes, such as log- and timing. Raising the profile and relevance of forest ging and pressures to increase agricultural and pasture issues among ministers of finance and social programs will areas. Logging and forest conversion themselves, however, require rigorous analytical work to translate forest issues are the result of various economic factors. Angelsen and into economic issues.Analysis of the economic contribution Kaimowitz (1999) provide a framework for understanding of forests (or the impact of forest conversion or degradation the indirect causes of deforestation. One step examines the 206 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING immediate causes of deforestation and includes the param- experience, and other studies and articles, that forests are eters that influence an agent's decisions, such as prices, tech- extremely valuable to the livelihoods of large numbers of nology, institutions, new information, and access to services poor people. and infrastructure. The next level addresses the underlying The forests most subject to competition for the various causes of deforestation. These are the broader forces that forms of use and conversion that can arise from macroeco- determine the decision parameters and include the macro- nomic and other exogenous developments are often those of economic variables and policy instruments. importance to significant numbers of rural poor. These will be forests located at the margins of current agricultural and The temporal factor. In the case of large-scale policy other land-using developments, where the poor have tended lending, the temporal factor also comes into play: The to congregate because they have reduced access to other impact of large economic and other changes that affect rural areas and production assets. forests may take a considerable number of years to become More systematic analysis and knowledge on the nature evident at the field level in forests--long after disburse- and level of dependence of these people on the forests for ments under a policy loan or policy intervention that may subsistence and income generation needs to be developed. have been a factor in the changes have been completed. Annex 6A to this chapter illustrates the temporal dimension Positive impacts on forests from macroeconomic of the potential impact of energy sector reform on forests. reforms. Discussions of cross-sectoral impacts tend to focus, as this one has, on the avoidance of inadvertent harm Country context. Recent efforts to assess cross-sectoral because of the reputational risks and transaction costs impacts have not been able to demonstrate an empirical involved. However, the literature is inconclusive regarding connection between macroeconomic structural adjustment the directionality of the relationship. Some studies have programs and deforestation (Pandey and Wheeler 2001). found that structural adjustment can have negative out- Because of the complexity of the issues, the indirect nature comes and create pressure on the environment and forests of many of the causal relations, and the wide diversity of sit- (Angelsen and Kaimowitz, 1999; Sunderlin et al. 2000). uations, any attempt to generalize is inherently difficult. The Other studies have found ambiguous results, or in some study by Pandey and Wheeler (2001) suggests that the cases, positive outcomes for income and environmental impacts of structural adjustment on forests could vary by benefits (Gueorgieva and Bolt 2003; Munasinghe 2001). country and may be related to the nature of their forest Elements could potentially be identified to be included in resource. Sedjo (2005) suggests that a country with a com- policy lending and large cross-sectoral programs that could parative advantage in forestry (usually a forest-rich coun- bring about positive outcomes for forests and forest- try) that is already exporting forest products could see dependent people (Wunder 2003; box 6.3). For example, increased forest products exports in response to structural macro policy changes can be oriented toward creating an adjustment. In contrast, the forest sector in a country with- environment conducive to private sector engagement. If out a comparative advantage in timber production may face linked with community initiatives, such changes could limited changes in response to structural adjustment. The enable community-company partnerships and create World Bank publication on DPL and Forest Outcomes employment for forest-dependent households. (2005) suggests that other country characteristics may also shape how macroeconomic reforms influence forest Irreversibility. The well-known asymmetry in the forest- resource use and management. loss dynamic adds urgency to the need to address cross- sectoral impacts. In agriculture, or more generally, for eco- Importance of poverty. Poverty issues must also be nomic development and social programs, poor outcomes directly considered when assessing cross-sectoral impacts from a given set of policy changes can be identified through (see also chapter 1, Forests for Poverty Reduction, and asso- monitoring and, in most cases, corrected within a reason- ciated notes). In addition to their role in underpinning envi- able time. In forests, however, impacts causing loss of forests ronmental stability, forests play a direct role in poverty or woodlands, and watersheds that depend on this form of alleviation--the primary objective of World Bank involve- vegetation, usually cannot be ameliorated so easily. ment. It is evident from the World Bank's own assessment of this situation, as laid out in the revised Forests Strategy Evolving policy instruments. Policy instruments are (World Bank 2004a), and from anecdotal evidence, field beginning to change, putting more emphasis on financial CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING 207 and instruments concentrated too narrowly on the forestry Box 6.3 Positive Impact of Agrarian Reform on sector (Humphreys 1996). Community Forestry in Mexico Need for additional data. Data on the degree and nature Community Forest Enterprises (CFE) in Mexico of forest dependency of large numbers of people (many of are widely known to be a product of institutional whom will be among the poorest in a given country) are arrangements that decentralized forest manage- limited, imprecise, and often unclear in their implications ment to ejidos (agrarian reform communities) and for national policy. Moreover, the physical impacts on indigenous communities and enabled these groups to improve economic well-being through forests that most impinge upon the livelihoods of people sustainable commercial use of forests. Recent work living in or near them are not particularly well-identified by suggests that the transfer of natural assets to com- the broad and presently available parameters such as munities through an agrarian reform process laid changes in forest cover and forest trade and market data. the territorial and governance foundation for the As a result, the poverty implications of impacts upon establishment of a large community forest sector forests are likely to be undervalued in broad national pro- (Bray et al. 2005). It is argued that in Mexico the grams and objectives. Perverse incentives and misallocation agrarian reform laws have been crucial in creating of resources leading to forest removal or changes in the sta- a larger number of CFEs than did specific forest tus of use and ownership of forests will be a risk factor from legislation. Agrarian reform distributed forest the poverty-alleviation viewpoint, and could be exacerbated lands to communities and provided a template for by broader policy measures in a development policy loan community governance that could later serve as an designed without the necessary knowledge in this area. institutional platform for the development of CFEs (Bray et al. 2005). Monitoring cross-sectoral impacts. The temporal Source: Authors' compilation. dimension and indirect nature of cross-sectoral impacts underscores the importance of effective systems for moni- toring forest cover and changes in forests' contribution to incentives, persuasion, and procedures than on regulation. forest-dependent households and the national economy. Timber labeling, for example, aims to influence the behav- Macro policy reforms can change access to and use of for- ior of timber customers by making the external costs of est resources, affecting their economic contribution and products more transparent (see note 3.2, Forest Certifica- the quality and quantity of forests. A cost-effective moni- tion Systems). Another trend is to seek the voluntary agree- toring system may have to combine spatial monitoring of ment of forest owners for the establishment of nature pro- the biophysical resource with periodic reviews of statistical tection zones by compensating them contractually for information. income losses. As measures become more effective because they are implemented by stakeholders that understand and FUTURE PRIORITIES AND SCALING-UP agree on them, procedural and persuasive instruments are ACTIVITIES more widely used. Regional planning, Local Agenda 213, and other participatory and coordination mechanisms are Developing good practice for identifying cross-sectoral important policy steering instruments in this context. impacts will revolve primarily around two subjects: (i) rec- National forest programs (NFPs), promoted as planning ognizing that many situations involving macroeconomic instruments at the national and subnational levels to reach reform are not win-win and that there is a need to analyze the goal of sustainable forest development, use a holistic tradeoffs and engage in a process that involves all stakehold- approach that is much different from previous sector plan- ers in determining the appropriate balance between con- ning procedures. Within NFPs, intersectoral approaches are flicting objectives; and (ii) determining what might be done seen as a necessary core element (UN-CSD 1997). This to improve knowledge about interactions between specific reflects lessons learned from previous policy and planning types of macroeconomic and cross-sectoral activities. instruments, in particular the Tropical Forestry Action Plan Important to both is the need to further strengthen collab- (TFAP). Experience with the preparation and implementa- oration among sectors and between forest sector specialists tion of the TFAP at the country level showed that many and macroeconomists, both within countries and in devel- actions failed to halt deforestation because the objectives opment institutions. 208 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING Immediate measures them to effectively identify situations where policy interven- tions have significant potential to have an impact on forests Identify priority countries based on anticipated and forest people and then for implementation of the nec- policy interventions. Donor agencies and concerned essary upstream analyses (see note 6.4, Assessing Cross-Sec- stakeholders should identify countries, lending situations, toral Impacts). and prior conditions that suggest forests may be vulnerable "Rapid CEAs"are already evolving in some areas of oper- to policy reforms and related activities. For institutions such ations in the World Bank, and have value as a means for due as the World Bank, the results of this analysis can be helpful diligence for forests, natural resources, and the environ- during preparation of country assistance strategies, forest ment. The Rapid CEA in Bosnia and Herzegovina (see box sector investments, and specific policy loans, to prioritize 6.4) proposes to use both historical data on the performance the specific programs and country situations where eco- of previous structural adjustment operations in the area of nomic and sector work on potential impacts will be needed environmental impacts, and recent environmental plans, to most. For example, if there are regional trends in macro pol- quickly identify which policies and sectors supported by the icy reform (such as the trade agreement in Central Amer- development policy credits pose significant risks to the ica), it would be important to focus the analytical work on environment, forests, and natural resources. This would this change. An indexing system based on relevant data and appear to be precisely the objective of due diligence in these the DPL pipeline can be used to identify the countries and circumstances. situations where more needs to be known about prior con- ditions surrounding forests and forest people (see note 6.3, Design analytical studies to inform policy processes, Identifying the Need for Analysis on Forests in Develop- such as Poverty Reduction Strategy Papers, NFPs, ment Policy Reforms). This information would then be con- Country Assistance Strategy Development, Policy veyed to appropriate departments and other networks in Lending, and Poverty Reduction Strategy Credits. development organization involved in preparing the policy Development practitioners need a detailed understanding intervention, and further activities planned accordingly. of national policy processes before designing analytical studies on cross-sectoral impacts or impacts of macroeco- Medium-term measures nomic reform on forests. The studies should, in addition to Conduct necessary analytical work on cross-sectoral using rigorous analytical tools and reliable data, involve key and macroeconomic impacts. Analytical work should stakeholders (see box 6.2) in an effort to enhance acceptance focus on identifying opportunities for policy loans to bring of the findings. about significant improvements in the benefits flowing from forests for poverty alleviation, sustainable economic Summarizing an approach for the World Bank. Main- growth, and the global public goods aspects of forests, and streaming forest considerations requires due diligence on minimize unintended negative consequences. forests with regard to cross-sectoral impacts, given the mul- The World Bank's DPL policy paper (World Bank 2005) tiple objectives of the forest strategy, and the potential outlines a five-year program of implementation of environ- importance of forest outcomes for larger economic devel- mental analytical work to support DPL operations. This opment and poverty alleviation objectives embodied in includes CEAs and SEAs or other appropriate analytical World Bank DPL and related lending. A sequence of activi- work in countries where (i) DPL volume is large, (ii) adjust- ties should be followed to develop the capacity of World ment lending makes up a large share of country GDP, or (iii) Bank staff to identify and deal with situations in which sig- reforms are proposed in environmentally sensitive sectors nificant forest impacts from broad economic reform lend- such as forests, agriculture, natural resources, energy, min- ing are possible: ing, transport, and water supply and sanitation (OPCS 2004; Mani 2004). 1. The Poverty Reduction and Economic Management Net- work, the Sustainable Development Network, and the Adapt analytical tools for due diligence for Development Research Group should undertake an initial forests. CEAs and SEAs are seen as appropriate instru- evaluation of forest significance in countries where DPLs ments for assessing the effects of development policy oper- or large-scale, cross-sectoral activities are ongoing or ations on the environment. However, some variations in planned, using the methodology outlined in note 6.3, their design and resource allocation may be required for Identifying the Need for Analysis on Forests in Develop- CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING 209 Box 6.4 Use of the Rapid CEA Approach in Bosnia and Herzegovina A World Bank workshop on CEA and SEA in January means that considerable investment in both the tech- 2005 recognized that a rapid form of CEA should be nology for pollution control and institutions for mon- examined as one option for meeting the new provi- itoring and compliance will be required. The United sions of Operational Policy 8.60 in Bosnia and Herze- Nations Economic Commission for Europe (UNECE) govina. The core of the rapid CEA (RCEA) would be performed an Environmental Performance Review for (i) prioritization of policies and sectors to be sup- Bosnia and Herzegovina (UNECE 2004), which out- ported by the Programmatic Development Policy Cred- lined deficiencies and needs for improvements in the its regarding environmental implications and risks; policy, legal, and institutional framework; public par- (ii) an assessment of state, government entity, and local ticipation and access to information; water resources capabilities to mitigate negative effects; (iii) recom- management (including drinking water quality); land mendations to fill key gaps; and (iv) a small set of rec- use; agriculture and biodiversity; management of waste ommended key indicators to track progress. The RCEA sites; and environmental aspects of tourism and energy would be carried out in parallel with the final stages of development. fiscal 2005 Programmatic Policy Structural Adjustment The RCEA will first "look back" to frame how past Credit preparation, and would be amenable to updating adjustment operations examined environmental as needed in subsequent fiscal years. implications. It will then"look forward"by building on Background information: According to the National the National Environment Action Plan, the Environ- Environmental Action Plan, freshwater and air quality mental Performance Review, and other studies to in rural areas are in fairly good condition, but because quickly identify which policies and sectors supported wastewater management, waste disposal, and industrial by the Programmatic Development Policy Credits pose controls are generally below international norms, envi- the more significant risks to the environment, forests, ronmental risks are increasing. Bosnia and Herzegov- and natural resources. New data will be collected by ina's goal of meeting the requirements of the environ- Bank staff and consultants on specific privatizations, mental acquis communautaire of the European Union new government permit programs, and the like. Source: World Bank 2005. ment Policy Reforms. This will provide an initial "watch fied in step 1, DPL task managers should work with the list" of countries for which further exploration of the networks on an initial assessment of whether the specific potential impacts of programmatic lending on forests is macroeconomic or broad cross-sectoral reforms necessary. This list should be updated using information intended under the DPL are likely to have flow-through and methodologies outlined in note 6.4, Assessing Cross- impacts on forests, and, if so, the likely scale and nature Sectoral Impacts, as these become available; for example, of these impacts. Initially, it may be necessary to use better information on the numbers of poor people living qualitative and approximation approaches, as discussed in or near forests, and their level of dependency on those in note 6.2, Prospects for Using Policy Lending to Proac- forests, will be highly relevant. tively Enable Forest Sector Reforms, until more precise 2. As countries and situations are identified as being of means of estimating impacts are available. interest in this regard, country teams and managers, in cooperation with the Sustainable Development Network and the Development Research Group, should examine NOTES the scheduling and content of forthcoming Country 1. Environment includes policies on environmental pro- Assistance Strategy (CAS), CEA, and SEA activities to tection, soil conservation, water resources management, determine whether these can and should be rationalized nature and landscape protection, and protected areas and to allow focused forest impact analysis to be carried out national parks under their auspices. 2. The line between these two broad groups of impact 3. Even if this adaptation of policy instruments is not sources can sometimes blur in project cases, creating the immediately possible, in countries and situations identi- phenomenon labeled "Dutch Disease," in which exploitation 210 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING of or reforms in one sector provides the government with Gueorguieva, A., and K. Bolt. 2003. "A CriticalReview of the "easy money" and causes the government to lose control of Literature on Structural Adjustment and the Environ- fiscal expenditure. Elements of the safeguard and analytical ment." Environment Department Papers No. 90. World approaches for World Bank investment lending projects Bank, Washington, DC. may apply to aspects of these cases. These situations, how- Humphreys, D. 1996."The Global Politics of Forest Conser- ever, will also have large secondary and tertiary impacts vation Since the UNCED." Environmental Politics 5(2): throughout the economy that parallel those associated with 231­57 macroeconomic policy reforms. Kaimowitz, D., C. Vallejos, P. Pacheco and R. Lopez. 1998. 3. Local Agenda 21 is a local-government-led, community- "Municipal Governments and Forest Management in wide, and participatory effort to establish a comprehensive Lowland Bolivia." Journal of Environment and Develop- action strategy for environmental protection, economic ment 7(1). prosperity and community well-being in the local jurisdic- Lampietti, J. 2004. "Power's Promise: Electricity Reforms in tion or area. This requires the integration of planning and Eastern Europe and Central Asia."Working Paper No. 40. action across economic, social, and environmental spheres. World Bank, Washington, DC. Key elements are full community participation, assessment Mani, M. 2004. "An Overview of Environmental and Natu- of current conditions, target setting for achieving specific ral Resource Aspects of IBRD Financed Development goals, monitoring, and reporting. Source: http://www.gdrc Policy Lending Operations in FY05."ENV-ESSD, internal .org/uem/la21/la21.html. note. World Bank, Washington, DC. Munasinghe, M. 2001. "Special Topic I: Structural Adjust- SELECTED READINGS ment Policies and the Environment." Environment and Development Economics 4(1): 9­18. Schmithüsen, F., K. Bisang, and W. Zimmermann. 2001. OPCS (Operations Policy and Country Services). 2004. "Cross-Sector Linkages in Forestry: Review of Available "Good Practice Notes Relating to the Development Pol- Information and Consideration on Future Research." icy Lending OP/BP 8.60: Environmental and Natural Forest Policy and Forest Economics, Department of For- Resource Aspects." World Bank, Washington, DC. est Sciences--ETH, Zurich. http://www.fao.org/docrep/ Pandey, K., and D. Wheeler. 2001. "Structural Adjustment 003/AA002E/Aa002e03.htm#6018. and Forest Resources: The Impact of World Bank Oper- World Bank. 2004. "Good Practice Note on Environmental ations." Policy Research Working Paper 2584. World and Natural Resource Aspects of Development Policy Bank, Washington, DC. Lending." World Bank, Washington, DC. Sedjo, R. A. 2005."Macroeconomics and Forest Sustainabil- ------. 2005a. "Azerbaijan: Issues and Options Associated ity in the DevelopingWorld: Resources for the Future."Dis- with Energy Sector Reform." Report No. 32371-AZ, cussion Paper DP 05-47. World Bank, Washington, DC. World Bank, Washington, DC. Sunderlin, W.D., O. Ndoye, H. Bikié, N. Laporte, B. ------. 2005b. "Development Policy Lending and Forest Mertens, and J. Pokam. 2000."Economic Crisis, Small- Outcomes: Influences, Interactions, and Due Diligence." Scale Agriculture, and Forest Cover Change in Southern Report No. 32724-GLB, Agriculture and Rural Develop- Cameroon." Environmental Conservation 27(3): 284­90. ment Department, World Bank, Washington, DC. UN-CSD (United Nations Commission on Sustainable Development). 1997. Report of the Ad Hoc Intergovern- mental Panel on Forests. E/CN.17/1997/12. United REFERENCES CITED Nations, New York. Angelsen, A., and D. Kaimowitz. 1999. "Rethinking the UNECE (Economic Commission for Europe) 2004. Environ- Causes of Deforestation: Lessons from Economic Mod- mental Performance Reviews, Bosnia and Herzegovina. els." World Bank Research Observer 14(1): 73­98. New York and Geneva: United Nations. http://www.unece. Bray, D. B., L. Merino-Perez, and D. Barry, eds. 2005. The org/env/epr/epr_studies/bosnia_and_herzegovina.pdf Community Forests of Mexico: Managing for Sustainable World Bank. 2004a. Sustaining Forests: A Development Strat- Landscapes. Austin, TX: University of Texas Press. egy. Washington, DC: World Bank. Douglas, J., and D. Chandrasekharan Behr. 2006. "Note #1: ------. 2004b. "Azerbaijan Raising Rates: Short-Term Prioritizing Where Cross Sector Impacts Matter." Note Implications of Residential Electricity Tariff Rebalanc- submitted to World Bank as input to Forests Sourcebook. ing." Report No. 30749-AZ. Europe and Central Asia Unpublished. World Bank. Washington, DC. Region. Environmentally and Socially Sustainable Devel- opment. World Bank, Washington DC. CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING 211 ------. 2005. "Development Policy Lending and Forest CROSS-REFERENCED CHAPTERS AND NOTES Outcomes: Influences, Interactions, and Due Diligence." Chapter 1: Forests for Poverty Reduction, and associated Report No. 32724-GLB. World Bank, Washington, DC. notes Wunder, S. 2003. Oil Wealth and the Fate of the Forest: A Note 3.2: Forest Certification Systems Comparative Study of Eight Tropical Countries. London: Note 5.1: Decentralized Forest Management Routledge. 212 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING ANNEX 6A. TIMESCALE OF IMPACTS OF ENERGY SECTOR REFORM ON FORESTS AND FOREST INDUSTRIES The table below illustrates different timescales of the ing these outcomes and monitoring them. A point that does impacts of energy sector reform on forests and forest indus- not appear in the table is that any matrix of this kind would tries. Although numerous policy objectives have short-term need criteria for weighting the importance of the links to impacts, an equal number have medium-term impacts. This provide comparable information. underscores the need to have an effective model for predict- Policy Area C: Energy Impact on the forest and forest industries sector Policy instrument/ (particularly on the supply Scale of impacta Policy objective linkage and demand of wood) Timescaleb Supply Demand 1. Diversify energy Taxes on use of fossil fuels; 1 (a) increased afforestation as energy *** M sources (away from subsidies and grants for plantations fossil fuel and toward research and develop- (b) increased harvesting of thinnings, **** S alternatives) ment of alternative fuels small-sized, and low-quality wood, including forest and logging residues, for use as energy (c) increased use of urban waste, *** S notably waste paper, for heat and power (d) increased use of industry and ** S post-consumption residues for heat and power (e) development of wood-based ** L liquid and gas fuels for transport and other uses (f) fuller integration of electricity * M generated by wood-processing industries into national grids 2. Raise energy Subsidies and grants for 2 (a) as 1 above, esp. (a), (b), and (c) **** **** M self-sufficiency and research and development (b) develop wood use for local ** M security and use of domestically (community, institution, hospital, available resources farm, military, and so on) heat and power generation 3. Improve energy Subsidies and grants for 3 (a) increased demand and production ** ** M conservation research, development, and of sawnwood as low energy use of energy-saving cost product technology, equipment, (b) greater use of wood-based ** M buildings, and so on products, especially sawnwood, for insulation of buildings ... ... ... (up to 5) ... (up to 5.c) Source: Peck and Descargues 1997: 79. a. On a scale of * (= little impact) to ***** (= very significant impact). This is intended to show the possible extent of impact on wood supply and demand should policy be changed from its present direction. b. This column is intended to show how soon after a policy change has been initiated an impact might begin to take effect: S = within 5 years; M = within 15 years; L = not before 15 years. CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING 213 N OT E 6 . 1 Using National Forest Programs to Mainstream Forest Issues he NFP concept aims to promote forest sector T of objectives in the sector. In many countries this frame- reform and development as contributors to sus- work will be provided by enhanced NFPs" (World Bank tainable development and poverty alleviation (see 2004: 9). This applies particularly to the World Bank's stated box 6.5). It responds to global concerns about unsustain- objective to build its forest sector interventions on blended able exploitation of forests and deforestation and wide- financing arrangements. spread discontent with the outcomes of earlier concerted The main objectives of the NFP are to efforts by the international community1 to halt the destruc- tion of predominantly tropical forests. The NFP expands introduce intersectoral planning approaches, involving the focus beyond the tropics, reflecting the principle of all relevant partners, to resolve conflicts and generate shared responsibility for the success of sustainable develop- effective policies and programs to address problems; ment, as defined during the United Nations Conference on raise awareness and mobilize commitments at all levels Environment and Development (UNCED) in 1992. to address the issues related to sustainable forestry devel- The NFP refers to a process rather than a tangible pro- opment; gram and operates on a set of procedural principles2 that increase the efficiency and effectiveness of both public define how the exercise needs to be conducted. Its elements,3 and private actions for sustainable forestry development; in turn, outline the scope of individual outputs--that is, foster local, national, regional, and international part- what is to be accomplished. The NFP principles determine nerships; the concept's most characteristic features and underpin mobilize and organize national and (if necessary) inter- each country's sovereign entitlement to use its natural national resources and catalyze action to implement pro- resources in a sustainable manner. While advocating donor grams and plans in a coordinated manner; and coordination in support of sustainable forest sector devel- plan and implement how forests and the forestry sector opment, the concept nevertheless emphasizes country lead- could contribute to national and global initiatives, for ership in NFP implementation. This sets the NFP apart example, the Environmental Action Plans and the from previous initiatives, which had been widely criticized actions agreed upon to implement the Forest Principles, for being donor driven, unnecessarily top heavy, and lacking Chapter 11 of Agenda 21, and the Conventions on Bio- in country ownership. diversity, on Climate Change, and on Desertification. The World Bank's 2002 Forests Strategy calls expressly for a "multisectoral approach that addresses cross-sectoral The NFP, by definition, aims for cross-sectoral main- issues and takes into account the impacts of activities, poli- streaming of forest issues. Such issues as livelihoods of cies, and practices outside the sector on forests and people forest-dependent people and their rights (particularly who depend on forests for their livelihoods"(World Bank rights of access and resource tenure and equitable benefit 2004: 2). This programmatic requirement fits seamlessly sharing) call for broad stakeholder participation in forest with the NFP concept. Reflecting upon the specific useful- policy formulation and legal as well as institutional reform ness of the NFP concept for these ends, the Forests Strategy (see note 5.3, Strengthening Legal Frameworks in the Forest concludes "...the motivation and coordinating framework Sector). The NFP specifically addresses these issues and will be based on a shared agenda for forests, so that all promotes nonconfrontational and synergetic implementa- groups are able to focus their inputs on the same basic set tion. The development (or, rather, the adaptation) of 214 national standards based upon international and regional national implementation. In a similar way, the World Bank's processes,4 and the establishment and operation of inde- need for baseline information and impact assessments of pendent certification systems on a national scale, provide various kinds coincides with the need for systematic, struc- practical examples of how the NFP can serve as a transmis- tured information management as part of the NFP forest sion belt between the international policy dialogue and sector review. Box 6.5 NFP in Uganda NFPs can help raise the national profile of forest issues awareness among policy makers and the public about and mainstream forests within the larger policy context, the importance of forestry to the wider economy. The as seen in Uganda. In 1997, Uganda was the first coun- current PEAP notes that forests provide an annual eco- try to develop a poverty reduction strategy. During the nomic value of US$360 million (6 percent of GDP), of NFP process, considerable effort was put into influenc- which only US$112 million is captured in official statis- ing the Poverty Eradication Action Plan (PEAP) and tics. It explains how trees (through fuelwood and char- aligning the strategies for forest sector development coal) provide 90 percent of energy demands and are with its pillars. As a result, the current PEAP document expected to still contribute 75 percent in 2015. The outlines in some detail the sector's contributions to the PEAP also describes the ecological services of forests: economy, the problems it faces, its potential to help alle- biodiversity, climate regulation, soil and water conser- viate poverty, and external influencing factors, such as vation, and nutrient recycling. land ownership, energy consumption, decentralization, PEAP forest-related priorities regarding enhanced and urbanization. It also makes reference to the NFP implementation of the NFP include the following: strategic framework and is consistent with the forest sector's new institutional setting. increased support to the Forestry Inspection Divi- In outlining forestry-poverty linkages, the NFP sion for sector oversight; process analyzed significant amounts of data and com- promotion of private sector investment in private missioned studies to show that: forests through information and technical advice on forest management; permits to grow trees in central forests provide an estimated 850,000 jobs, mostly in forest reserves with secure land and tree tenure; the informal sector related to the collection of review of tax and other disincentives; continued domestic fuelwood; operation of the Sawlog Grant Scheme and the incomes from the sale of nonwood forest products establishment of a Tree Fund in accordance with the are estimated at US$38 million per year, with poor National Forestry and Tree Planting Act; households in forested areas earning up to US$75 to increased support to District Forestry Services to fill gaps in other income sources, such as labor and provide forestry advisory services for private and farm produce; community forestry to establish woodlots and more than 92 percent of Ugandans use fuelwood as planted forests and manage natural forests; their main or only source of energy, consuming 16 development of the National Tree Seed Centre and million tons of firewood and 4 million tons of char- decentralized seed production; and coal each year; identification of potential markets for ecological forests provide free goods that poor households rely services, such as carbon trading. upon for shelter, food, and medicines and that act as safety nets in times of emergency and sudden eco- As in any iterative process, priorities for the sector nomic shocks; and have changed since forestry was included in PEAP, as a forests can provide a source of income and develop- result of a review undertaken in 2002. After three years ment for many communities through ecotourism of persistent lobbying, PEAP now regards forestry not (MWLE 2002). only as a sector, but as an "urgent short-term priority" for funding, which suggests that forestry could qualify Using such findings in PEAP and NFP has raised for increased allocations. Source: Adata et al. 2006; Geller and McConnell 2006. NOTE 6.1: USING NATIONAL FOREST PROGRAMS TO MAINSTREAM FOREST ISSUES 215 Box 6.6 Basic Principles of NFP Preparation and Implementation Sustainability of forest development. The main pur- tions and other key actors with a view to decreasing pose of the NFP is to ensure the conservation and dependence on external assistance when necessary. sustainable development of forest resources. Policy and institutional reforms. A priority of the National sovereignty and country leadership. NFPs NFP is to ensure that the policy and institutional are national initiatives for which the country must framework is conducive to sustainable forestry assume full leadership and responsibility. development. Reforms must address policy and Partnership. NFPs aim to bring together all stake- institutional issues in a comprehensive manner holders in a process to which they feel committed. that recognizes the interdependencies between The strength of this partnership will depend on its sectors. ability to draw upon the specific capacities of indi- Consistency with the national policy framework and vidual partners. global initiatives. The NFP must link with national Participation. In the NFP, issues, options, and the development plans and with regional and local resulting policies, strategies, and programs are agreed strategies. They should be integrated in the land-use upon through participatory decision making and planning exercises at national and local levels and consensus building among all interested partners. into broader programs, such as Environmental Holistic and intersectoral approach. NFP approaches Action Plans and the actions to implement forests as diverse ecosystems with interdependent UNCED's Agenda 21 and related conventions and elements in dynamic equilibrium producing a vari- initiatives. ety of goods and services; forestry includes trees in Raising awareness. The NFP must raise the visibility rural areas; forestry is practiced within the context of the forestry sector and its priority in national of sustainable land management, environmental agendas. The full value of forests and trees must be stability, and social and economic development. recognized as should their contribution to social, Forest dwellers are also part of this ecosystem. economic, and environmental issues. A long-term iterative process. The NFP is a cyclic National policy commitment. The national forest process that includes planning as well as implemen- program must be backed by the long-term commit- tation, and monitoring and evaluation activities. It ment of all national actors, particularly at political is also an iterative process that continually reflects and decision-making levels. changes in the environment and the acquisition of International commitment. The long-term commit- new knowledge even during implementation. ment of the international community and its insti- Capacity building. Capacity building is an essential tutions is essential. These bodies should respect the element of the NFP. Throughout the process, policies, strategies, and programs approved by the actions are taken to develop the planning and countries and adapt their own priorities to the implementation capacity of the national institu- country priorities. Source: FAO (http://www.nfp-facility.org/forestry/site/31811/en/). The NFP approach is flexible and can be adapted to a forestry, and enhance the use of human and financial wide range of situations: resources in an effective and efficient way. Subregional and regional organizations of different National governments may use this framework for the countries with the same interests can use this method- formulation of their forestry sector plans. ological framework to formulate and implement actions Decentralized government authorities, as well as other together. national partners such as community-based organiza- tions, nongovernmental organizations (NGOs), and the OPERATIONAL ASPECTS private sector, may use it to plan and implement their activities in line with the national framework. The preparation and implementation of the national forest Concerned international institutions may use it to har- program is guided by a series of basic principles, as listed in monize their actions, strengthen their cooperation in box 6.6. The application of these basic principles should be 216 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING adapted to the specific national context (political, social, establishing sectoral goals and objectives, the long-term economic, environmental) of the country concerned. development strategy (20­25 years), and the overall pro- There is no blueprint for launching an NFP--the process gram structure in the short term (5­10 years); and may embark from various entry points, depending on improving national capacity in policy formulation and which problem or development goals are perceived as the sectoral planning. highest priority. Designing and conducting an NFP involves four main phases: (i) organization of the process, (ii) strate- Strategic planning choices should be a combination of gic sector planning, (iii) program implementation, and (iv) professional analytical work and the result of public consul- revision and updating. NFP implementation is character- tations through seminars, workshops, and other mecha- ized by a sequence of management and learning cycles. nisms that foster the involvement of all stakeholders. To ensure compatibility, strategic planning must be carried out Organization of the process. This first phase includes within the broader context of the national planning frame- identification of all stakeholders in the forestry and related work and ongoing global initiatives. sectors, organization of coordination mechanisms, and development of a communication strategy to ensure trans- parency of the process and full participation by all actors. Partners in the process should include national partners and, Box 6.7 Recurring Key Issues in Forest Sector Reviews where relevant, international partners. The national partners may include national- and subnational-level governmental institutions from the forestry sector and other sectors; train- Some recurring issues in forest sector reviews ing and research institutions; NGOs involved in develop- include the following: ment and conservation; community-based organizations; private interests; and user groups (including rural commu- the need for policy, legislative, and institutional nities, farmers, settlers and Indigenous Peoples and other reforms; the assessment of the forestry resource and its forest dwellers, private enterprises, and associations). Inter- economic potential (wood products, fuelwood national partners may include intergovernmental agencies and energy, nonwood products, and nonmone- and development banks, bilateral agencies, and interna- tary benefits) including such issues as demand tional NGOs. and supply, trade, market prices and fluctua- The coordination mechanism helps stimulate, lead, and tions, substitutes, and various other external monitor the NFP. Existing coordination mechanisms should factors; be used. If necessary, existing mechanisms could be conservation needs and potential, including improved and strengthened through a capacity-building such issues as the need to develop a network of program. A communication strategy should be developed as conservation areas, the protection of endan- early as possible to ensure that all stakeholders are informed gered species, biodiversity management in pro- about the process and its results and can participate in all duction forests, watershed restoration and pro- phases. tection, and soil conservation; the social functions of the forests, including such issues as employment generation, contri- Strategic planning. The second phase includes an evalu- bution to the local subsistence economy, cul- ation of the current situation in the sector, identification of tural functions, special needs of indigenous major problems, and possible immediate actions (see box groups, and benefit sharing; and 6.7). It also includes an in-depth sector analysis, strategic the assessment of the environmental impact of analyses, and formulation of the NFP. The strategic plan- forest management, wood production, indus- ning is aimed at the following: trial operations and trade, wildlife management and forest clearing, shifting cultivation, fuel- making the case for public investment in the forestry wood collection, and extraction of other forest sector; products. identifying constraints, problems, and opportunities for Source: FAO (http://www.nfp-facility.org/forestry/site/ forestry development in a cross-sectoral context; 31811/en/). identifying and assessing development options; NOTE 6.1: USING NATIONAL FOREST PROGRAMS TO MAINSTREAM FOREST ISSUES 217 Implementation. The implementation of specific pro- fundamental problems, such as deforestation, wood and grams, activities, and projects is the responsibility of the nonwood product supply, and reforestation, and gener- national implementing actors with the support of external ated forestry sector contributions to social and economic agencies when needed in the third phase of the NFP process. development at various levels; Implementation should be coordinated and closely moni- assess the level of integration of the program with tored. The coordinating entity should also monitor. This national development plans and its contribution to phase may involve policy, legal, and institutional reforms meeting national development goals; and the implementation of financing strategies (including assess changes in policy, policy instruments, and the enhanced revenue collection). It will also involve provision impact of institutional strengthening; of support to stakeholder organizations and the facilitation assess environmental impact and the contribution of of partnerships for joint implementation. This phase is NFP-generated activities to global environmental issues; expected to increase stakeholder capacity and produce part- assess the contribution of the program to sustainable nership agreements (such as sector-wide approaches; see development; box 6.8 on the use of this tool in Vietnam) and increase quantify the changes in activity in the forestry sector and transparency and commitment. their contribution to the national economy; appraise the involvement and performance of all part- Revision and update. The fourth phase of the NFP ners, national and international, with regard to original involves revising and updating. This requires selecting issues commitments; and for monitoring and evaluation (M&E) and defining M&E assess the efficiency and effectiveness of communications criteria and indicators, followed by participatory monitor- and information between all partners (national and ing and assessment of M&E results. The evaluation of NFP international) (FAO http://www.nfp-facility.org/ implementation should: forestry/site/31811/en/). review the relevance of the program targets and objec- Before updating the NFP, changes in country context tives in relation to changing conditions; should also be noted. The new NFP should follow the same provide information on its impact, for example, the process as the original program--the NFP is a cyclic extent to which program implementation has resolved process. Box 6.8 Vietnam's 5MHRP:An Example of Success Various developed countries promoted NFP processes seeks to actively involve all major stakeholders (includ- in cooperation with developing countries (the Six- ing rural communities), addresses access and manage- Country Initiative in support of the Intergovernmental ment rights and benefit sharing, and promotes sustain- Panel on Forests/Intergovernmental Forum on Forests able forest management. Its operation is based upon a (IPF/IFF) process, for instance) to gain first-hand common work plan (which defines nine fields of experience, emphasize the concept's relevance beyond action and applies agreed upon standards, set forth in tropical forests and developing countries, and under- a forest sector manual) as well as a multidonor forest line their commitment to shared responsibility in pro- fund. With a view to ensuring efficiency, effectiveness, tecting the world's forest resources through sustainable complementarity, and poverty-orientation of the management. In Vietnam, forest sector development is donors' activities, a joint M&E system was established, guided by the Five Million Hectares Reforestation Pro- and common supervisory bodies (FSSP Partnership gram (5MHRP), which runs until 2010. Aiming to Group, technical committee) installed. By launching facilitate implementation, the international commu- the FSSP, the original preoccupation of the 5MHRP nity has provided support through the Forest Sector with large-scale afforestation was reoriented toward Support Program (FSSP) since 2001. To this end, more sustainable forest management, poverty alleviation, than 20 donor agencies and NGOs pooled and coordi- and a more holistic approach to forest sector develop- nated their contributions with the Vietnamese govern- ment. A constructive multistakeholder dialogue was ment by way of a sector-wide approach. The FSSP successfully initiated and maintained. Source: Sepp 2006. 218 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING Learning and sharing. Another operational aspect that There needs to be clear understanding and agreement warrants close attention is commonly referred to as learning among all stakeholders about the priority issues to be and sharing. It includes progress reporting and systematic addressed in the course of the NFP. documentation and sharing of lessons learned in interna- To ensure lasting commitment, equitable access to infor- tional and regional contexts. mation and broad participation in discussion and deci- Countries implementing the NFP concept are expected to sion making and the establishment of a focal point or report regularly to international forums (such as the United secretariat as a clearinghouse structure and impartial Nations Forum on Forests (UNFF) or the Committee on moderator should be considered. Forestry (COFO) of the FAO, or to regional frameworks, such Equitable participation hinges on identification of as the Central African Forest Commission, the Amazon Coop- key stakeholder groups, support to stakeholder self- eration Treaty Organization, or the Association of Southeast organization, and capacity building; communication and Asian Nations). Likewise, various donor organizations-- participation must be kept transparent and noncon- including the World Bank and the FAO, among others--have frontational. undertaken to compile, assess, document, and share informa- Cross-sectoral environmental and social assessments tion about NFP implementation in various countries and set- must be included in the NFP's analysis stage; adequate tings, drawing on information furnished by individual partner tools and techniques for data collection and assessment countries. This process has recently been institutionalized of information need to be communicated and applied. through establishment of international and regional commu- From the outset, macro policies and issues related to nities of practice. structural adjustment (for example, PRSPs) need to be integrated in strategic planning and decision making. Donor coordination should be promoted through part- LESSONS LEARNED AND RECOMMENDATIONS nership approaches and agreements--this also helps to FOR PRACTITIONERS ensure that the partner country's domestic resources are Several attempts have been made recently to gauge the pooled and used in a transparent and efficient manner. progress made in NFP implementation. Such undertakings Financing strategies need to coordinate and combine have drawn on reports furnished by participating countries various types of financing instruments and sources of as well as upon feedback provided by numerous interna- funding (donors, public budget, private sector, civil soci- tional experts and national practitioners alike, mostly in con- ety) in the pursuit of sustainable forest sector develop- nection with high-level meetings of the UNFF or regional ment. Forest sector investment must be coordinated with conferences and workshops (such as a UNFF-4 side event on commonly agreed upon goals and priorities; hence con- achievement of the UNFF Plan of Action through NFPs). stituting a core area of discussion for overall strategy development and policy formulation. The NFP can raise profile of forest sector. Past experi- Science and research, professional education facilities, ence suggests that the NFP concept has been highly successful and public information services need to be included in in raising the forest sector's political status in many countries. the NFP with a view to ensuring systematic analysis and Awareness of the multiple functions and values of forests has rationalized decision making, building management improved markedly, as have participatory implementation capacity, and promoting public discussion and awareness and civil society and private sector involvement in forest sec- about the environmental and socioeconomic signifi- tor development. In numerous countries, policy, legal, and cance of forests and their sustainable use. institutional reforms (often including such cross-cutting NFP implementation needs to be monitored on a con- issues as decentralization and devolution of administrative tinuous basis. Because of the lengthy process, donor authority and land rights and resource tenure) have been suc- coordination should aim to ensure that assistance to for- cessfully initiated (see chapter 5, Improving Forest Gover- est sector development is provided on a continuous nance; note 5.1, Decentralized Forest Management; and note basis. 5.3, Strengthening Legal Frameworks in the Forest Sector). One additional, crucial lesson learned so far is the need Challenges and factors important for success. A for qualitative performance criteria, whereby the overall number of challenges and crucial success factors have been effectiveness and conformity of individual NFPs could be identified: gauged. Such criteria would have to be sufficiently broad to NOTE 6.1: USING NATIONAL FOREST PROGRAMS TO MAINSTREAM FOREST ISSUES 219 allow for each country's different environmental, economic, FAO National Forest Programme Facility: NFP Digests and and sociopolitical settings, while at the same time enabling Online Information Resource, available at http://www objective summary conclusions about the NFP concept's .nfp-facility.org. progress and impact. Geller, S., and R. McConnell. 2006."Linking National Forest Programs and Poverty Reduction Strategies." Unasylva 225 (57): 56­62. NOTES Geller, S., and F. Owino. 2002. "Qualitative Assessment of 1. Most notably, the TFAPs, as implemented throughout National Forest Programs." LTS International, Edin- the 1980s, and Forestry Master Plans. By the mid-1990s, burgh, Scotland. Available at http://www.fao.org/docrep/ TFAPs had been discontinued. 009/a0970e/a0970e13.htm. 2. National sovereignty and country leadership; consis- Online resources provided by the United Nations Forum on tency with the constitutional and legal frameworks of each Forests. Available at http://www.un.org/esa/forests/ country; consistency with international agreements and index.html. commitments; partnership and participation of all inter- Online resources provided by the Global Forest Information ested parties in the NFP process; holistic and intersectoral Service. Available at http://www.gfis.net. approach to forest development and conservation; long- term and iterative process of planning, implementation, and monitoring (Six-Country Initiative 1999). REFERENCES CITED 3. National forest statement; sector review; policy, legisla- Adata, M., S. Geller, R. McConnell, and G. Tumushabe. tive, and institutional reform; strategy development; action 2006."Linking National Forest Programmes and Poverty plan; investment program; capacity-building program; Reduction Strategies." Report of FAO mission to Uganda monitoring and evaluation system; coordination; and par- 3 March 2006, Forestry Policy and Institutions Services, ticipatory mechanisms, including conflict-resolution Forestry Department, FAO, Rome, Italy. schemes. Geller, S., and R. McConnell. 2006."Linking National Forest 4. For example, the Montreal Process, the Tarapoto Pro- Programs and Poverty Reduction Strategies." Unasylva posal, and the like. 225 (57): 56­62. MWLE (Ministry of Water, Lands & Environment), 2002. "National Forest Programme." Kampala, Uganda. SELECTED READINGS Sepp, C. 2006. "National Forest Programmes and Forest- In recent years, information about forest sector develop- related Multilateral Environmental Agreements." Note ment, strategic forest sector planning, sustainable forest submitted to World Bank as input to Forests Sourcebook. management, and the use of NFPs as implementation Unpublished. World Bank, Washington, DC. frameworks has multiplied at a startling rate. Concept Six-Country Initiative. 1999. "Practitioner's Guide to the papers, country reports, conference proceedings, and work- Implementation of the IPF Proposals for Action." Pre- shop presentations create a mind-numbing barrage of pared in Support of the UN ad-hoc Intergovernmental information. For quick reference and for keeping up with Forum on Forests (IFF). Second revised edition, Secre- the dynamic development of the international forest regime tariat of the Six-Country Initiative, GTZ/TWRP, Eschborn. as it continues to expand, online references may be the most convenient source of information. Here, the reader enjoys the benefit of regularly updated and selective reading. CROSS-REFERENCED CHAPTERS AND NOTES European Tropical Forest Research Network. 2004. ETFRN Chapter 5: Improving Forest Governance. News 41/42--National Forest Programs. Note 5.1, Decentralized Forest Management, and 5.3, Strengthening Legal Frameworks in the Forest Sector. 220 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING N OT E 6 . 2 Prospects for Using Policy Lending to Proactively Enable Forest Sector Reforms A t first glance, policy lending instruments (for ability to identify the appropriate sectoral reforms (or pri- example, DPLs and poverty reduction support orities) and, where relevant, anticipate and address poten- credits [PRSCs]) seem well-suited to achieving tially adverse forest impacts resulting from key sectoral and basic reforms in forests. Forests, like all natural resources, are cross-sectoral macro policy reforms. This requires alloca- public goods and need to be managed in the interests of local tion of human and financial resources. In addition, it is people, the country, and the global environment. Effective important to integrate upstream analysis into ongoing work management of forest resources involves difficult choices for PRSPs, CASs, and other Bank activities. and reforms ranging from reshaping and enforcing taxation Development policy loans are usually issued in a single regimes (see note 5.4, Strengthening Fiscal Systems in the tranche, and consist of quick-disbursing assistance that can Forest Sector), curbing illegal logging (see note 5.5, Address- help restore balance of payments equilibria (and as such, are ing Illegal Logging and Other Forest Crime), restoring the traditional rights of local populations (see chapter 12,Apply- Box 6.9 Mexico Environmental SAL: Making It Work ing OP 4.10 on Indigenous Peoples), closing down paras- tatals, and reforming institutions (see note 5.2, Reforming Forest Institutions). In an environmental structural adjustment opera- Despite this, there are mixed opinions in the World Bank tion in Mexico (Mexico Environmental Structural on the effectiveness of using policy loans (versus investment Adjustment Loan [ENVSAL] fiscal 2004), the loans) to address sectoral reforms in forest sector. There is no objective was to mainstream environmental issues current consistent case evidence from Bank activities to sup- into key economic sectors. The policy loan was port an unambiguous conclusion on this matter. This note seen as effective in achieving its objective. It presents key principles to consider when addressing forest involved establishing a functioning intersectoral sector reform through Development Policy Lending (DPL). technical working group for each of the key sectors (water, energy, forestry, and tourism). The ENVSAL complemented investment loans that OPERATIONAL ASPECTS were focused on specific sectors. In the case of forestry, it was linked with the investment loan on Coordination between analytical and lending activ- community forestry and focused on complemen- ities. Independent of whether a policy lending instrument1 tary policy measures and fiscal instruments to is used to address forest sector reform, upstream analytical enhance sustainability and betterment of liveli- work, the development policy loan, and sectoral invest- hoods. A shortcoming of the Mexico ENVSAL is ments need to be coordinated so as to make the best use of that the number of conditionalities was high and the capacities of each of these instruments to bring about the triggers covered a broad range of developmen- needed changes (see box 6.9).2 Such coordination is espe- tal areas, which raised supervision and transaction cially critical where forests are both significant (important costs significantly. for economic revenue, poverty alleviation, and environmen- tal services) and vulnerable to cross-sectoral impacts. Source: Authors' compilation. Upstream analysis is a way to improve the World Bank's 221 limited in the coverage and duration they can devote to sec- measurable results. This can be an important incentive in toral reforms). They can also be designed as multiyear, mul- achieving sectoral reforms that might not come to fruition titranche operations that support sector-wide assistance under sector investment lending because of institutional iner- programs in response to government requests when appro- tia and unwillingness to venture into reform areas in the priate, and are associated with different types of condition- implementing agencies themselves (see boxes 6.11). ality (see box 6.10 and box 6.11). Separating reforms from the stakeholders responsible The good practice principles proposed by the World runs the risk of a disconnect between reform and imple- Bank 2005 Conditionality Review are relevant for strong mentation at the sector level, especially in cases where very policy operations aiming to achieve forest sector reforms. specific sectoral objectives have been included in the DPL These principles are reviewed in the following paragraphs: package. For example, in some countries energy sector reforms have been included in a series of DPLs over several Ownership.Success of sector policy reforms depends heavily years, with little impact on the sector program. When using on the ownership and institutional capacity of the agencies DPLs for sectoral reforms, it can also be unclear where the responsible for implementing the reforms. A realistic assess- funds required for costs of implementing triggers or prior ment of ownership must rely on the government's expressed actions for subsequent loans will be raised. policy intentions and its track record of reform. The nature of policy loans requires separating the reforms from the stake- Harmonization. Under the lead of country authorities, holders responsible for implementation. Perspectives diverge World Bank staff should reach an understanding with the on the implication of this for the utility of DPL for sectoral government and other partners on a single and internally reforms. With DPLs, sector reforms often must be initiated coherent framework for measuring progress under the gov- and owned by central economic and policy ministries, thus ernment's program. These accountability frameworks are set broadening the group of agencies responsible for reform. out as policy matrices showing policy actions and expected Furthermore, policy loans can be more effective because dis- results. These frameworks can serve to coordinate broader do- bursements are triggered by the delivery of tangible and nor support, including technical assistance. Accountability Box 6.10 Typology of Conditionality Policy based loans are made available when the bor- sustaining the results of the medium-term program. rower accomplishes critical policy and institutional Achievement of triggers normally indicates suffi- actions, or loan conditions. Actions to be met before an cient progress to move from one operation to the operation can be approved by the Board are referred to next. Triggers offer greater operational flexibility as prior actions and are listed in a schedule to the legal than using tranche-release conditions, because trig- agreement, and all conditions for single-tranche oper- gers can be adapted more easily to a changing pro- ations are prior actions. In an operation with more gram environment. Bank operations are expected to than one tranche, the borrower complies with certain describe how triggers are adapted and modified to conditions after Board approval and effectiveness (in support program objectives before being converted addition to any prior actions), termed tranche-release into the prior actions of a follow-on operation. conditions. Unless all tranche-release conditions are Benchmarks in program matrices describe the con- met, a tranche can be released only if the Board tents and results of the government's program in approves a waiver of the unmet conditions. areas supported by the World Bank. Benchmarks In addition to the critical policy and institutional are frequently used to describe steps in a reform actions that are recorded as prior actions or tranche- process that represent significant, though not neces- release conditions in legal agreements, the World Bank sarily critical, progress markers for the implementa- uses triggers and benchmarks to review and describe tion of the program. Although they help define an progress under a programmatic series of loans. area of the Bank's policy involvement, they are not intended to determine disbursement of Bank loans Triggers represent critical actions for achieving and or grants. Source: World Bank 2005. 222 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING Box 6.11 Conditions in Development Policy Loans on Forestry: An Example from Ghana The fifth Poverty Reduction Support Credit (PRSC-5) tive bid on plantation timber resources was conducted for Ghana is the second in a series of annual operations in April. supporting the implementation of the Ghana Growth The introduction of new policies for managing and Poverty Reduction Strategy (GPRS II) covering the forestry resources, such as the conversion from timber period 2006­09, in line with the 2004 CAS and the area leases to timber utilization contracts, has proven 2006 CAS Progress Report. This proposed operation to be much slower than expected. There have been will focus on three broad components of the new delays in carrying out the inventory of trees in areas poverty reduction agenda organized under (i) acceler- eligible for conversion, which are needed to calculate ated private sector­led growth, (ii) vigorous human the TRFs that will, in turn, be used to determine the resource development, and (iii) good governance and value of the TUCs. These inventories are time-con- civic responsibility. While the PRSC-5 support would suming and expensive, making them difficult to carry translate primarily into funding for the implementa- out, especially given the lower-than-expected revenues tion of the GPRS II, the PRSC-5 also focuses on cross- coming from internally generated funds. Most of the cutting issues related to private sector development internally generated funds for the Forestry Commis- and the strengthening of institutions related to gover- sion (around 50 percent) are derived from the export nance, public sector reform, decentralization, and pub- levy on timber, which was challenged in court by tim- lic financial management. ber exporting companies. The first component of the proposed PRSC-5 The inventory of plantation forests carried out in reflects the objectives of the first pillar of the GPRS II, early 2006 provided the required information for at least focusing on actions aimed at accelerating sustainable one TUC auction, completed in April that year. The private sector­led growth. This first component also inventory and auction implemented by the Forestry supports measures to improve the performance of the Commission should not detract from the fact that the rural sector through policy actions aimed at strength- budget execution rate of the Forestry Commission in ening government support to agriculture, and at 2006 was lower than in 2005, falling to 45 percent, down improving the management of natural resources with a from 69 percent. The forthcoming PRSC-6 operation, focus on forestry resources. therefore, has a trigger that supports the government's A forest condition was included as a prior action for program to have in place a cabinet-approved financial PRSC-5. The proposed prior action was "conducting framework Forestry Commission in 2007. This financial an inventory of plantation forests and providing the framework aims to ensure (i) that the forest revenues and needed information for two auctions of timber utiliza- the budget of the Forestry Commission are released in tion contracts in 2006." The inventory of plantation time to conduct its core functions; (ii) transparency and forests was carried out in early 2006, covering an area accountability in financial management, including of 2,000 sq km, and provided the information needed budget execution; and (iii) the collection and distribu- to calculate the timber right fees (TRF) that were used tion of revenue to stakeholders. In doing so, it expects to to determine the value of the Timber Utilization Con- help ensure predictability of financing and allow the tracts (TUCs). Based on this information, a competi- budget execution rate to increase. Source: Authors' compilation using World Bank 2007a. frameworks can be used flexibly to achieve different levels of hard choices about reform. The program measures are usu- coordination, responding to country circumstances. ally derived from a government-led process of reform and the reform measures should be linked to an important Customization. The accountability framework should be objective in the government strategy document. consistent with the government's expressed policy inten- tions and internal accountability mechanisms. The frame- Prioritization of critical actions. In establishing the work should not be used to add policy actions to the gov- conditions for lending, World Bank and country staff should ernment's agenda. Several programs support reforms that choose from the agreed accountability framework policy are politically sensitive and require the government to make and institutional actions that are critical for achieving the NOTE 6.2: PROSPECTS FOR USING POLICY LENDING TO PROACTIVELY ENABLE FOREST SECTOR REFORMS 223 Box 6.12 The Use of DPLs to Support Natural Resources Management in Gabon and Cameroon In November 2005, the World Bank approved a US$15 A number of considerations led the World Bank to million IBRD Natural Resources development policy select DPL as the instrument for the new Cameroon loan to help Gabon design and implement reforms in and Gabon operations: the forest, fisheries, biodiversity and environment, mining, and oil sectors. In February 2006, it approved DPLs directly involve central economic ministries, a US$35 million Forest and Environment development engaging high-level authorities to support funda- policy grant to help Cameroon consolidate and scale mental changes in policy and its implementation. up recent sector reforms. Both operations represent SILs, however, are often limited to sector ministries World Bank contributions to national sector programs in which narrower interests tend to guard the status supported by multiple donors--the Cameroon grant is quo, leaving necessary policy changes in the hands a joint IDA-Global Environment Fund (GEF) opera- of those most resistant to change. tion, while the Gabon development policy loan is an DPL disbursements are triggered by the delivery of IBRD loan to be complemented by a parallel GEF tangible and measurable results, whereas SIL pro- grant. ceeds are used to reimburse eligible expenditures Forests, biodiversity, and other natural resources are incurred by the client. SILs are based on the critical to rural livelihoods in both countries, where the assumption that a strong direct link exists between majority of people live in extreme poverty. They are expenditures and results, while DPLs focus more also central to economic development and stability, directly and uncompromisingly on results. DPL dis- and are the focus of a number of international part- bursements are far fewer in number and involve nerships. While adapted to fit their specific country much larger amounts than SIL disbursements, mak- contexts, both operations focus on reforming sector ing them significant to heads of state and central incentive frameworks, improving governance, enhanc- economic authorities who would otherwise likely ing participation, and enforcing laws and regulations overlook forest-related issues. in the field. Their design is based on several principles: DPL places a strong emphasis on defining results that natural resources are public goods to be managed clearly and measuring achievements objectively, in the interests of local people, the country, and the because these are at the core of legal agreements and global environment; that sustainable forest manage- key to World Bank loan and grant disbursements. ment and fiscal and environmental responsibility must This focus on results facilitates donor alignment be integrated into the business model of the forest and harmonization, joint donor supervision, public industry; and that government must assume full scrutiny, and independent monitoring. responsibility for the quality of management of the assets under its stewardship. For example, the joint adoption of the results matrix Well-designed, comprehensive forest operations negotiated in the course of the preparation of the tend to involve difficult choices and reforms ranging Cameroon Forest and Environment development pol- from reshaping and enforcing taxation regimes, curb- icy loan, encouraged Canada, Germany, France, the ing illegal logging, restoring the traditional rights of Netherlands, the United Kingdom, the European local populations, closing down parastatals, overcom- Union, the African Development Bank, the World ing inertia, and reforming institutions. Two decades of Bank, the FAO, the United Nations Development Pro- Bank experience in providing assistance to the forest gramme (UNDP), the World Wildlife Fund (WWF), sector in Cameroon and Gabon revealed clearly the and the Netherlands Development Organization limits of traditional projects (called Sector Investment (SNV), to sign a partnership agreement that provides a Loans, or SILs by the World Bank) in reforming forest clear framework for aligning their support to the forest sectors traditionally dominated by political patronage sector. and vested interests. It also indicated that more suc- cessful reform programs can be pursued through sec- DPLs sharpen the focus of Bank-government dia- tor-wide structural adjustments, if the programs are logue on the achievement of larger results and the sufficiently broad, and endowed with flexible time quality of processes. Dialogue surrounding SILs frames and adequate resources for supervision. tends to revolve around individual procurement 224 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING Box 6.12 The Use of DPLs to Support Natural Resources Management in Gabon and Cameroon (continued) and financial transactions, leaving less time and appropriately. While DPLs do not trigger World fewer supervision resources for the operation's Bank safeguard policies, OP8.60 requires that the larger objectives and the underlying structural con- Bank determine whether policies it supports have straints that may be hindering procurement and any likely significant effect on the environment, disbursement processes. By providing for intermin- natural resources, or forests, or any likely signifi- isterial review of the results that disbursements are cant poverty and social impact. If there are any directly contingent upon, and requiring periodic such likely significant effects, the World Bank needs audits of fiduciary processes, DPLs can more effec- to ascertain whether it has a clear understanding of tively and purposefully bring structural improve- how negative effects can be reduced or positive ments to procurement and disbursement. ones enhanced through the borrower's systems, While DPLs are usually used as single tranche, drawing on relevant country-level or sectoral envi- quick-disbursing operations that can help budget ronmental and social analysis. Carrying out due support geared toward domestic financing needs, diligence in the Cameroon and Gabon DPLs and they can also be designed as multiyear, multi- related GEF operations, the Bank teams advised tranche operations that support sector-wide assis- the governments to conduct full SEAs. In the view tance programs in response to government requests of World Bank staff, these assessments met the when appropriate. The timeframe for disbursement highest standards, including those set by Bank in the Cameroon and Gabon DPLs is comparable safeguard policies, and allowed staff to conclude to those of SILs. that likely significant effects of the supported poli- DPL components can be tailored according to Bank cies would be addressed appropriately during pro- fiduciary concerns in a specific country, and be used gram implementation. to monitor compliance with the enhanced procure- ment and financial practices that have been previ- Are forest development policy loans suitable to ously agreed to with the World Bank in the context all situations? of its major assessments of the country's financial accounting, administrative, and procurement pro- DPLs require particularly advanced policy dialogue on cedures. The Cameroon and Gabon DPLs include sector policy reforms and reform implementation. agreements that the government will use dedicated They can only be built upon strong collaboration accounts for monitoring relevant resource flows, between central economic and technical ministries, conduct external audits, and share the results with and in the presence of completed or unfolding national the World Bank, and use technical assistance as financial management, auditing, and procurement needed to improve procurement and financial man- reforms. In the cases of Cameroon and Gabon, these agement. conditions were created through long processes of DPLs afford adequate flexibility to address any intersectoral dialogue with the government and strong likely significant environmental and social issues collaboration within the country team. Source: Topa and Debroux 2006. results of the program. Managing the size of program processes. It is equally important to be explicit about condi- matrices is challenging, especially in harmonized donor set- tions, triggers, and expected results. In a programmatic tings, with different outcomes in different countries. series, it is possible to integrate a review of results into the next operation (see box 6.14). Aligning these reviews with Transparency and predictability. In the context of government budget cycles is preferable. medium-term World Bank support, progress should be reviewed regularly and in line with a country's M&E cycle, Monitoring impacts. An immediate challenge facing the drawing to the extent possible on internal accountability World Bank and other institutions engaged in operations at NOTE 6.2: PROSPECTS FOR USING POLICY LENDING TO PROACTIVELY ENABLE FOREST SECTOR REFORMS 225 Box 6.13 Using DPLs in Lao PDR for Advancing Box 6.14 Transparency and Predictability: the Forest Sector Agenda An Example from Armenia In the Lao People's Democratic Republic, a natural The Republic of Armenia PRSC III is the third in a resource management component under public proposed series of four annual single tranche sector reform was incorporated into a structural PRSCs intended to support policy and institu- adjustment operation (People's Democratic tional reforms in furtherance of the government's Republic of Lao Financial Management Adjust- PRSP. The PRSCs focus on four critical reform ment Credit [FMAC], FY02). The overall objective themes: (i) consolidating macroeconomic disci- of this component was to involve local communi- pline and strengthening governance, (ii) sharpen- ties in the management of forests and improve leg- ing competition and entrenching property rights, islation on conservation. The project was under the (iii) mitigating social and environmental risks, and control of the Minister of Finance, but the day-to- (iv) modernizing the rural economy. Under the day implementation and monitoring was done by a component on Reducing Risks in Natural high level interministerial coordination committee. Resource Management, the action taken under For release of the second tranche, Lao PDR had PRSCs I and II included adopting a national to accomplish two forest sector­related actions. A forestry policy and forest code, outlining the insti- quality-at-entry review suggested that the inclu- tutional restructuring plan for the sector, estab- sion of reforms in forestry regulations unnecessar- lishing a pilot system for monitoring illegal forest ily broadened the scope of the conditions. The exploitation, and promoting community forest objectives of the natural resource management management. The Policy and Institutional Reform subcomponent were partially achieved, but local Actions under PRSC III included controlling ille- participation was less than envisaged partly gal logging within agreed targets, and expanding because of capacity limitations and political resis- community forest management. The trigger in tance. The implementation completion report PRSC II (as approved by the Board) was control- states that the legal framework has established ling illegal logging and forest removal within tar- technically sound forest management with basic gets to be agreed with IDA by March 2006. As a provisions for planning, mapping, consultation, result of political factors, the proposals for the and control. structure, powers, and functioning of the illegal logging monitoring system were developed, but Source: Authors' compilation. have not yet been adopted. The condition was deferred to PRSC IV. Source: Authors' compilation using World Bank 2007. the macroeconomic and larger cross-sectoral level will be to mainstream effective monitoring of forest outcomes into these operations, where these are identified as being poten- for specific sectoral reforms, yet it may in fact have more tially significant. Successful and effective monitoring of for- potential to effect the sort of fundamental changes in forest est outcomes in policy lending operations will facilitate the sector policy and practices than is available under tradi- implementation of "no fault" and relatively inexpensive tional sector investment lending. Ministries of Finance are monitoring of forest outcomes during implementation of involved in implementing policy loans, and the inclusion of lending operations. One of the primary uses of monitoring forest sector reform considerations in a policy loan can information on forest outcomes under development policy facilitate mainstreaming forest considerations into national lending will be to develop more quantitative and analytical policy dialogue and raise the profile of governance and approaches to projection of likely forest outcomes. institutional issues of concern in this sector. Prior policy dialogue. Development policy loans require LESSONS LEARNED AND RECOMMENDATIONS particularly advanced policy dialogue on sector policy FOR PRACTITIONERS reforms and reform implementation. Such loans can only DPL can facilitate sector reform. DPL has not been be built upon strong collaboration between central eco- generally thought of within the World Bank as an instrument nomic and technical ministries, and in the presence of com- 226 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING pleted or unfolding national financial management, audit- are important. If a sector-specific condition has not been ing, and procurement reforms. achieved by a well-performing client, it is important to In the cases of Cameroon and Gabon outlined in box identify how to modify the condition rather than drop it. 6.12, these conditions were created through long processes Natural resource and forest outcomes are not trivial adjuncts of intersectoral dialogue with the government and strong to economic reform objectives, but may play a significant collaboration within the country team. The results were not role in the successful achievement of those objectives. uniformly successful, and at times proved difficult and con- tentious, but some measure of reform was enabled by the Analytical work should look at all influences on process. This, however, needs to be viewed in a context forests. The use of analytical work should be carefully con- where, in this region, two decades of World Bank experience sidered in the context of forests and DPLs. Essentially, what in providing assistance via sector investment lending to the is required here is a broad scoping exercise that examines forest sector clearly revealed the limits of traditional sector the status of DPLs, proposed forest sector or larger natural investment projects in reforming forest sectors traditionally resource project activities, and other cross-sectoral develop- dominated by political patronage and vested interests. ments that are indicated in CASs and business plans. Sector work should not be based simply on problems within the Good governance as an entry point. Good governance forests sector, as perceived by forest agencies in the country is a strong entry point for sector reforms (see chapter 5, For- and the World Bank sector staff, but on a broader apprecia- est Sector Governance, and associated notes). Linking forest tion of all influences and changes likely to affect forests, and sector governance reforms with a broader extractive indus- an analysis of what combination of macroeconomic, cross- tries transparency initiative, or positioning them as part of sectoral, and within-sector measures are likely to produce the overall good public sector management effort (for the best outcomes from national economic, environmental, example, an anticorruption, transparency, or improved gov- and social perspectives. ernance component) can strengthen its hold in a policy For forest outcome monitoring to be effective, the World loan. Done this way, forest sector reform could be included Bank needs to undertake continuing research on how as a trigger or prior action, making the reform component changes at the macroeconomic and broad cross-sectoral lev- binding and essential for release of a tranche. els flow through the economic and social systems to mani- fest as impacts on forests. Avoid mixed results and signals. When a client is per- forming well in general, and has achieved all the prior Ownership matters. Policy conditions in DPL, as in actions for a policy reform loan except those associated with investment lending, are more likely to result in sector policy forests, a decision needs to be made on whether to withhold reform when there is clear borrower ownership, commit- the release of the tranche of one unfulfilled prior action. In ment, and demand at the sector level, and when the appro- some cases, the World Bank has employed a floating priate central ministry (such as the Ministry of Finance) is tranche, disbursable when particular conditions are part of the dialogue and supports the agreements reached. expected in some way to be difficult, or more drawn-out than others in the policy matrix: the Cameroon structural NOTES operation is a case where this approach was applied to for- 1. For this note, a policy lending instrument will be called est outcomes. In other cases (see box 6.9), the nature of the a development policy loan. operation itself ensured that activities and measures under- 2. For further information on the points raised in this sec- taken complemented investment loans that were focused on tion, please refer to World Bank (2006). specific sectors. It is sometimes possible to transfer policy 3. There is some risk attached to this strategy, in that a gov- objectives related to a single sector or related group of sec- ernment may successfully implement the DPL that fore- tors into investment loans that are coordinated with DPLs, shadows further policy changes under investment lending and can follow policy developments that are foreshadowed but then decides not to proceed with those investment loans. and perhaps initiated under a DPL, but require longer time frames for implementation.3 The primary requirement is that the World Bank remain SELECTED READINGS internally consistent in its approach to dealing with forests Numerous relevant references are available at http:// and broader natural resource outcomes, in cases where these go.worldbank.org/4OJ07BWKQ0. NOTE 6.2: PROSPECTS FOR USING POLICY LENDING TO PROACTIVELY ENABLE FOREST SECTOR REFORMS 227 OPCS. 2004."Good Practice Notes Relating to the Develop- ------. 2006. "Good Practice Principles for the Application ment Policy Lending OP/BP 8.60: Designing Develop- of Conditionality: A Progress Report." Operations Policy ment Policy Operations." World Bank, Washington, DC. and Country Services, World Bank, Washington, DC. ------. 2007a. Program Document for Ghana--Fifth Poverty Reduction Support Credit Project (P099287). Poverty REFERENCES CITED Reduction and Economic Management, Africa Region. Topa, G., and L. Debroux. 2006. "The Use of DPLs to Sup- Report No. 39657-GH. World Bank, Washington, DC. port Natural Resources Management in Gabon and ------. 2007b. Program Information Document for Arme- Cameroon." Note for internal circulation, World Bank, nia--Third Poverty Reduction Strategy Credit Project Washington, DC. (P093460). Report No. 38358-AM. World Bank, Wash- World Bank. 2005. "Review of World Bank Conditionality: ington, DC. Issues Note." Operations Policy and Country Services, World Bank, Washington, DC. CROSS-REFERENCED CHAPTERS AND NOTES Chapter 5: Improving Forest Governance, and associated notes 228 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING N OT E 6 . 3 Identifying the Need for Analysis on Forests in Development Policy Reforms he combined impacts on forests of economic T Where forests are sufficiently important economically, or activities that originate outside the forest sector directly support the livelihoods of a large number of poor are, in most cases, significantly greater than those people, the impacts of broadly based growth could signifi- produced by economic activity within the sector itself. cantly compromise the broad goals of economic growth, Macroeconomic change will almost always be a major poverty alleviation, and environmental sustainability of component of these external forces. Therefore, if forests macro policy loans. Due diligence requires identification of are a significant part of the economic and social resource cases where this is a potential risk to the overall implemen- base of a country, it will be necessary to consider such tation of the policy loan and making the necessary adjust- impacts when DPL, broadly based poverty alleviation pro- ments to program design. grams, and related programmatic activities are being designed. A dearth of data. There are currently relatively few com- prehensive data sets on cross-sectoral impacts or impacts of Assessing causality is complicated. The impacts on macroeconomic reform; this imposes a significant opera- forests and other natural resources of large-scale economic tional constraint on development of good practice for man- policy changes and reforms will manifest themselves aging the World Bank's engagement in this area. Good prac- through a complex web of second- and third-round activi- tice will, therefore, initially largely be a matter of developing ties and responses that will be triggered as illustrated in fig- guidelines and approximation methodologies for identify- ure 6.1 (World Bank 2005). Identifying the nature of their ing cases where there is significant potential for important eventual impacts on forests--or even whether there will be impacts to occur, and then applying economic and sector significant impacts--will not be straightforward: Prior eco- work in a timely and focused manner to those situations. nomic, environmental, and social conditions will have a Linked to the latter, there is a need to develop acceptable major role in outcomes, and no general relationships or approaches and for the World Bank to adequately invest in models to predict impact outcomes are, or are likely to assessing the potential impacts of particular economic become, available.1 changes in which it is involved in specific countries. Figure 6.1 Indirect Impact of Fiscal Reform on Forests Economic reform Anticipated response Institutional linkages Environmental impact Fiscal reform Reduction in Reduction in resources for · Coverage of environmental goods environmental Deforestation and services issues Soil contamination · Enforcement capacity Biodiversity loss · Monitoring ability 229 OPERATIONAL ASPECTS Contribution of forests to the economy (using data on pro- duction of wood fuel and production of roundwood, Prioritizing those circumstances in which forest sector ana- both from the FAOSTAT online statistical services, 2004). lytical work is important requires that countries and lend- This measure picks up an element of forest output ing situations with significant forest interests be identified. beyond the conventional measure of commercial log- A potential approach would include ging, that is, the large amount of fuelwood that is used by local communities and frequently does not enter formal identifying countries where forests are important (for markets. economic development, poverty alleviation, ecosystem Forest-poverty linkage (using data on the annual rate of services); change between 1990 and 2001 in the percentage of poor identifying and screening the major macro policy living on less than a dollar a day, and the percentage of reforms being proposed in each country; poverty in 1996. Both of these measures use the Poverty analyzing and developing, in the cases where the impact Calculator (POVCAL) approach developed by the World of the macro policy reform are directly or indirectly an Bank. It should be noted that the variable is a weak proxy issue, mechanisms for handling the cross-sectoral for what is of interest here--some estimate of the preva- impacts; and lence of poor people who live in or near forests and depend identifying entry points for addressing the potential on them greatly--but few alternatives are readily available. cross-sectoral impact. Forest-conservation linkage (using data on percentage of threatened bird species in 2000, percentage of threatened This stepwise approach to prioritizing where detailed mammal species in 2000, and rate of change in forest analysis may be needed is necessary for two pragmatic rea- cover over the period 1990­2000). These variables pro- sons. First, the resources needed to implement field analyses vide some reflection of biodiversity loss, as well as a gross often will be limited; it is therefore unrealistic to propose a measure of forest loss.2 general application of analytical work to this task in all pos- sible cases. Second, because uncertainty will inevitably sur- A measure for forest-related governance was included in round the analytical process itself, at least in the early stages the index to assess where the prior conditions raise concerns of application, it will be necessary to learn from and refine about how cross-sectoral impacts are handled. This measure initial approaches along the way. used data on the Rule of Law (which is a measure from The actual approach can be applied at a regional or Kaufmann, Kraay, and Mastruzzi's [2004] corruption indi- global level, depending on the need. The approach can also cators) and presence of democratic institutions. These are be applied at the national level and, as discussed in the fol- well-known and documented measures of governance. lowing section, will require modifying the method. The Their limitation as a proxy in this context is that they do not main constraint to application of any approach is availabil- specifically reveal the state of governance in the forest sector ity of data. itself, nor do they shed any light on how that is influenced by broader trends in the economy. Identifying countries where forests are important. A Each of the measures used in the index were weighted preliminary approach to identifying the countries and situa- equally. The weighting can vary if the approach is to assist in tions where forests are important, from an economic and examining a specific cross-sectoral impact (for example, poverty point of view as well as an environmental one, impact of macro policy reform on the contribution of requires the development of appropriate indicator. A quanti- forests to poverty).3 tative approach for the development of good practice could be More sophisticated vulnerability indicators can be devel- initiated quickly following the approach in a recent study on oped to capture countries' performance in political and policy loans and forest outcomes (World Bank 2005). This resource risks, policy and institutional failures (particularly would allow task managers to compile a watch list of countries in the resource sectors), weak regulation and implementa- for which cross-sectoral impacts on forests from program- tion capacity, and lack of monitoring and enforcement. matic activities will need to be further examined in the field. There is some merit to considering broadening the coverage An index can be developed to identify where forests are of environmental policy and institutions in the existing important by characterizing forest significance. The forest Country Policy and Institutional Assessment index (used significance index can be created using readily available data currently for IDA fund allocations). This could serve as a on the following: 230 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING useful first cut in understanding country capacity in regu- There are certain sectoral macro policy reforms that lating the environment. immediately raise red flags. These include agricultural reforms, such as reforms in land markets and improved Identifying and screening macro policy reforms. The rural finance; reforms of government institutions, such as second part of the task of identifying and prioritizing situa- marketing boards, which can potentially strengthen resource tions where more intensive due diligence on forest outcomes management; energy price reforms; natural resource price is required involves examining the specific nature of those reforms; changes in exchange rate regimes; and trade policy policy operations. Development policy operations come in reforms. In contrast, closer assessment can be required for many flavors, from macro scale to specific sectoral reforms. reforms with less apparent impacts on the forest sector, such Moreover, they may mix reforms across different scales. as macroeconomic, public, and fiscal reforms that include Table 6.1 presents a list of typical reforms in World Bank tax policy reforms, reforms to promote foreign direct invest- development policy loans and potential forest linkages. How- ment, and the like. ever, this can only serve as a guide, and initial country condi- The sectors in which many World Bank policy operations tions, such as the nature of its environmental problems, its are concentrated (such as Central Government Administra- resource endowment, and the policy and institutional set- tion and the General Public Administration sector) do not ting, are critical in determining the direction and magnitude immediately suggest a direct or indirect link with forest of effects of individual reforms on the environment. outcomes. However, a closer examination of the thematic Table 6.1 Typical Reforms in Policy-Based Operations, and Potential Forest Linkages Potential implications Sector Reforms for forests Energy Typically encompass pricing, subsidies, ownership, and regulatory Fuel substitution could potentially push issues. people to use biomass. Agriculture Reforms may span land markets, product markets, subsidies, Extension of agriculture in forest-rich rural finance, input prices, trade taxes, irrigation institutions, and countries could potentially lead to reform of government institutions such as marketing boards and deforestation. stabilization funds. Financial Financial sector reforms cover privatization, writing down of bad Not much impact expected.a loans, recapitalization of the banking system, and regulatory issues (among many possibilities). Health, education Reforms typically cover financing, resource allocation, level of access, Not much impact expected. and effectiveness of expenditures. Potential to reduce or Macro Reforms manage any negative outcomes Public expenditures, Reform programs embrace expenditure frameworks, budget Could be detrimental if public expenditure public sector transparency, financial management, accountability, priority setting, for protecting forests is cut during major management service delivery efficiency, and the skills, professionalism, and fiscal consolidation. remuneration of the public service. Tax reform Reforms deal with tax incidence (income, assets, corporations, Will have an impact to the extent it involves consumption), tax rates, exemptions, deductions, and the taxation in forest or agriculture sectors. complexity of the tax system. Fiscal federalism and Decentralization reforms aim to increase the efficiency of service Provides opportunity for shifting forest decentralization delivery, accountability, effectiveness, capacity, and adequacy of governance to local levels. regulatory frameworks at the local level; they may also embrace fiscal decentralization. Private sector Reforms deal with business climate issues--business taxation; Will have an impact to the extent private development regulation of entry, operation, and exit; bankruptcy procedures; sector involvement is envisaged. protection of property rights; and operation of capital markets. Trade reform Typically includes elimination of non-tariff barriers, reduction Reforms undertaken in the presence of and simplification of tariff rates, reform of customs procedures, and preexisting market, policy, or institutional regulations relating to foreign direct investment. imperfections in the forest resource sector may lead to adverse effects. Source: Mani 2004. a. There are different schools of thought on this subject; note 5.4, Strengthening Fiscal Systems in the Forest Sector, suggests a different outcome. NOTE 6.3: IDENTIFYING THE NEED FOR ANALYSIS ON FORESTS IN DEVELOPMENT POLICY REFORMS 231 orientation of the DPL operations can reveal areas of inter- Selecting the appropriate approach for handling vention in these categories that could potentially benefit or cross-sectoral impacts. A clear understanding of the adversely affect forests. For example, 100 percent of a World relationship between policy reform and the forest sector is Bank DPL operation proposed for Guatemala (in fiscal needed to analyze and develop mechanisms for handling 2005) is allocated under the Central Government Adminis- the cross-sectoral impacts. Numerous analytical tools can tration sector. Thematically, this operation will focus on help in this understanding. The appropriate analytical macroeconomic management and tax policy and adminis- approach should be tailored to answer the questions as pre- tration--themes that could impact forest outcomes (see box cisely as possible, show a good cost-benefit ratio, and be 6.15 for other relevant themes). conducted with the available resources and accessible data. Reviewing the most relevant effects of the reform and The analysis should be able to provide necessary informa- preliminarily assessing the environmental and social tion on links between the proposed reform and its impact impacts are important to identifying where to focus a more on the forest sector. It should also provide options regard- detailed analysis. It is usually important to identify and con- ing measures to enhance positive impacts and mitigate neg- sult key interest groups, public representatives, government ative ones. The formulation of mechanisms for handling officials, and other stakeholders at this stage. Analytical cross-sectoral impacts should blend quantitative and qual- tools such as environmental balance sheets, checklists of itative information and bring in the outcomes of consulta- possible effects of a particular type of policy, and a qualita- tive processes. tive matrix can be helpful (see annex 6.3A to this note). To assess the key issues, the assessment team will have to The review should produce a conceptual map that the collect relevant data on economic, social, and political con- team can follow during the assessment process. The exercise ditions, as well as information about the environment, the can also help distinguish between those effects that are most natural resource base, and relevant institutions. This data likely to occur and those that are severe and irreversible. The will serve in the reevaluation of the outcome of the initial review only produces a strong indication of the eventual review. A central challenge will be to accurately understand effects of the policy reform, but not evidence regarding the and identify the economic, social, political, and environmen- actual connection. The latter strong indications are impor- tal factors because the downstream effects are often indirect. tant for informing the policy revision process. Approaches such as the CEA or SEAs can be useful for this purpose (see note 6.4, Assessing Cross-Sectoral Impacts). Box 6.15 Themes Associated with World Bank The fast-disbursing nature of DPL operations may not Policy Lending Operations in FY05 and allow for a detailed CEA or SEA analysis in tandem with the FY06 Relevant to the Forest Sector lending cycle. However, to ensure that required due dili- gence on determination of "likely significant" effects is car- Environmental policies and institutions, regu- ried out, a number of rapid assessment tools may have to be lation and competition policy, rural policies used. For example, simple analytical tools (and elasticity and institutions estimates) can be used to assess environmental implications Macroeconomic management of raising tariffs in the electricity and water sectors or for Environmental policies and institutions analyzing the impact of relative price changes (often trig- Rural policies and institutions gered by trade reforms) in agriculture and the implications Tax policy and administration thereof for forest depletion. Similarly, robust action-impact Poverty strategy, analysis and monitoring, matrices can be developed to capture economy-environ- decentralization ment linkages (such as fuel-switching implications of Public expenditure, financial management and energy price reforms).4 procurement, infrastructure services for private sector development If a rapid or preliminary assessment indicates that spe- cific policy reforms supported by DPL operations are going Regulation and competition policy Regulation and competition policy, small and to adversely impact forests or water resources, follow-up medium enterprise support, trade facilitation actions would need to be developed to help the borrower and market access strengthen its institutional capacity and policy framework Rural services and infrastructure for environmental and natural resource management in these areas and monitoring of applicable indicators. A CEA Source: World Bank 2005. or SEA would then be necessary. 232 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING Selecting the appropriate analytical tools. Appro- Some standard tools include analysis of price changes, priate analytical tools should be selected based on the objec- heuristic tools, such as checklists and action-effect matrices, tive, data availability, cost, and time constraints. Different and red flags (presented in annexes 6.3A and 6.3B to this analytical tools have different expertise requirements, and note) that can be applied to better understand the nature costs will depend on many factors and vary considerably. and direction of environmental impacts. Most of these tools Table 6.2 provides some guidance on the requirements, sig- can be applied to analysis of potential risks, including a set nificance, and costs of select analytical tools. As a general of red flags that indicate potential problems. However, in a rule, the costs of national resource accounts, econometric number of cases, policy reforms may also represent oppor- modeling, and indicator frameworks will be relatively high, tunities for better management of the forest resources. whereas impact and case studies or expert panels will be in the medium or lower range. In comparing the different Data requirements. Relevant data is generally unavailable. strengths and weaknesses of alternative designs, the team Conventional economic statistics and social data collected should try to combine some of their relative advantages and by governments and other interest groups frequently either informative value. Research could start with case studies underestimate, or completely ignore, natural resource and lead to quantitative impact analysis or to econometric issues. Adequate resource allocation to data collection will modeling at a later stage. Qualitative studies can provide be important. This will require gathering baseline data on the recommendations for quantitative monitoring over longer current state of natural resources, identifying trends in periods of critical effects that result from particularly rele- resource use and degradation, and obtaining data on the pro- vant policy linkages. posed reforms and on the actual effects from similar reforms. Table 6.2 The Requirements, Significance, and Costs of Select Analytical Tools Requirements Significance Costs National resource · Main linkages must be known. · Stronger for intrasectoral linkages, less High accounts · Main linkages are with institutionalized differentiated for cross-sectoral linkages. and documented sectors. · Impact of variables can be estimated. · Main linkages are quantifiable flows of resources, that is, high data quality needed. · Expertise in systems of national accounts. Econometric modeling · Main linkages must be known. · Complex linkages can be studied. High · Main linkages are with institutionalized. · Impact of variables can be estimated. and documented sectors. · Main linkages are quantifiable flows of resources, that is, high data quality needed. · Econometric expertise. Indicator framework · Main linkages must be known. · Strong for monitoring a few linkages High · Main linkages are quantifiable in single over time. indicators, that is, medium data quality. · Estimation of the impact of single · Expertise in measurement and statistics. variables less precise than using an impact study. Impact study · Main linkages must be known. · Strong for illustrating linkages. Medium · Both quantitative or qualitative approaches · Estimation of the impact of single are feasible, thus, flexible on data quality. variables less precise than use of · Expertise in quantitative data analysis and an indicator framework. policy evaluation. Case study · Main linkages do not have to be known. · Strong for illustrating complex and Medium · Linkages can but do not have to be indirect cause-and-effect relationships. quantifiable, thus, flexible on data quality. · Estimation of the impact of single · Expertise in qualitative social research. variables only rough. · Field experience recommended. Expert panel · Only experts as source of information · Less subjectivity through communicative Low needed. validation. · Expertise for selecting experts and staff · Estimation of the impact of single for administration of panel needed. variables only rough. Source: Schmithüsen, Bisang, and Zimmermann 2001. NOTE 6.3: IDENTIFYING THE NEED FOR ANALYSIS ON FORESTS IN DEVELOPMENT POLICY REFORMS 233 Indicators are helpful in these situations because they assist It is also evident that, where forests are determined to be in setting standards and thresholds, and enable comparison. significant for economic growth and poverty alleviation In collecting and working with data, the team must check at the national level, policy loans and large cross-sectoral for reliability, avoid double counting, and, where possible, operations that have the potential to impact forests indicate confidence limits or probabilities. Quantitative and (either positively or negatively) must take that potential qualitative data both have high value in these analyses and into account in their design and implementation. can complement each other. As more policy loans are prepared, an immediate chal- Identifying entry points for addressing cross- lenge facing donors, client governments, and other institu- sectoral impacts. Identifying the links between the policy tions engaged in operations at the macroeconomic and reform and potential cross-sector impacts is an important larger cross-sectoral levels, will be to mainstream effective part of this overall approach. Equally important, however, is monitoring of forest outcomes into these operations, where identifying entry points for addressing the potential cross- these are identified as being potentially significant with sector impacts. There are no specific good practices associ- respect to forests. ated with this. However, policy loans are also the entry point Researchers with country or regional experience should for mitigating any negative cross-sectoral impacts as well as be part of any team examining cross-sectoral impacts to enhancing positive impacts. This is partly because some of make a meaningful selection of relevant cross-sectoral the measures for mitigating or enhancing certain impacts linkages, to carry out consistent document analysis, to can involve strengthening environmental laws, institutions, organize expert interviews, and to collect and interpret the and enforcement mechanisms (see chapter 5, Forest Sector results. Governance, and note 5.5, Strengthening Legal Frameworks Research methods need to be improved. Equally in the Forest Sector). important is the need to launch specific case studies at national, subnational, and local levels to provide more empirical information on cross-sectoral successes as well LESSONS LEARNED AND RECOMMENDATIONS as on drawbacks in a given social, economic, and political FOR PRACTITIONERS context. Quantitative research is needed as much as qual- To date, there has been relatively little field analysis of actual itative analysis to provide more information on the forest or natural resource outcomes from specific structural nature, structure, and functioning of different policies adjustment or other programmatic forms of lending.5 Liter- and cross-sector links. Research should also examine the ature and analyses of the relationship between large-scale actors and stakeholders involved, the instruments and economic changes and outcomes for natural resources or procedures that influence their behavior, and the causal forests specifically do not allow consistent conclusions to be relationship between forest and other policy domains in drawn across the range of country and field situations. Nev- both directions. ertheless, some key inferences can be drawn with regard to Ways to manage cross-sectoral impacts need to be fur- understanding the relationship between macro policy ther examined. This will require understanding how differ- reforms and forest outcomes. ent agencies actually work together, what agencies have Economic and social forces originating outside forests which resources, and the possibility of contradictory or generally have more impact upon those forests than do overlapping competencies at the policy-setting and imple- developments within the forest sector itself. Two broad les- mentation levels. sons can be taken from this observation: New approaches in coordination mechanisms, as well as the likely limitations of coordination, need to be exam- It is evident that for forests to make their maximum ined. More research is needed on how coordinating mech- potential contribution to economic growth and poverty anisms, such as network management and interadminis- alleviation, major policies and incentives from outside trative coordination, can be improved to contribute to the sector that affect forests must be addressed--and reaching national forest policy goals. The current role of policy lending instruments are appropriate to that task forest administrations and their ability to operate with (see note 6.2, Prospects for Using Policy Lending to success in a given policy and administrative setting needs Proactively Enable Forest Sector Reforms). to be reconsidered. 234 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING NOTES REFERENCES CITED 1. In the World Bank assessment of cross-sectoral impacts Kaufmann, D., A. Kraay, and M. Mastruzzi. 2004. "Gover- of DPL is a due diligence requirement for DPLs as per Oper- nance Matters III: Governance Indicators for ational Policy 8.60. 1996­2002." World Bank, Washington, DC. Available at 2. The latter will have some relationship to the contribu- http://www.worldbank.org/wbi/governance/pdf/ tion of forests to the economy, in that it will provide a mea- govmatters3_wber.pdf. sure of whether the contribution, as currently constituted, is Hamilton, K., and M. Mani. 2005. "Toolkit for Analyzing sustainable. Eventually, a more rigorous approach to esti- Environmental and Natural Resource Aspects of Devel- mating the sustainability of ongoing forest operations opment Policy Lending." Environment Department, would be a useful ingredient in this overall measure, but it is World Bank, Washington, DC. not possible to implement this approach at present. Iannariello, M. P., P. Stedman-Edwards, D. Reed, and R. 3. To assess the significance of forests relative to other sec- Blair. 1999. "Environmental Impact Assessment of tors in a country, the variables used must compare the con- Macroeconomic Reform Programs." WWF Macroeco- tribution of forests to poverty alleviation, economic devel- nomics Program Office, Washington, DC. http://assets opment, and ecosystem services relative to other sectors .panda.org/downloads/eia.pdf. (rather than compare these relative to other countries). Mani, M. 2004. "An Overview of Environmental and Natu- 4. The Environment Department of the Social Development ral Resource Aspects of IBRD Financed Development Network in the World Bank is developing a rapid assessment Policy Lending Operations in FY05."ENV-ESSD, internal DPL toolkit that will assist task managers in identifying note. World Bank, Washington, DC. when a DPL operation could have likely significant impacts Schmithüsen, F., K. Bisang, and W. Zimmermann. 2001. on the environment, forests, and natural resources. A final "Cross-Sector Linkages in Forestry: Review of Available version of this toolkit will be available in FY08. Information and Consideration on Future Research." 5. The lessons learned and recommendations also draw Forest Policy and Forest Economics, Department of For- findings from Schmithüsen, Bisang, and Zimmermann est Sciences--ETH, Zurich. http://www.fao.org/docrep/ (2001). 003/AA002E/Aa002e03.htm#6018. World Bank. 2005."Development Policy Lending and Forest Outcomes: Influences, Interactions, and Due Diligence." SELECTED READINGS Report No. 32724-GLB, World Bank, Washington, DC. World Bank. 2005."Development Policy Lending and Forest Outcomes: Influences, Interactions, and Due Diligence." Report No. 32724-GLB, World Bank, Washington, DC. CROSS-REFERENCED CHAPTERS AND NOTES ------. Forthcoming. "Rapid Assessment Toolkit for Due Chapter 5: Improving Forest Governance Diligence on Environment, Forest, and Other Natural Note 5.5: Addressing Illegal Logging and Other Forest Resource Aspects of Development Policy Lending." Crime World Bank, Washington, DC. NOTE 6.3: IDENTIFYING THE NEED FOR ANALYSIS ON FORESTS IN DEVELOPMENT POLICY REFORMS 235 ANNEX 6.3A SELECTTOOLSTO ASSIST SCOPING OF CROSS-SECTORAL IMPACTS The information in this annex is based on prior work done matrix can be qualitative and descriptive or include quantita- by Iannariello et al. (1999). tive information. Quantitative matrices rely on scoring tech- niques or other standardized measures that assess various fac- tors such as the strength of environmental institutions. Checklists A checklist can assist in determining the effects that are Networks likely to apply (table 6.3). This tool can be particularly use- ful if the list is focused on the most common and significant Networks are diagrams that illustrate both the direct and effects. The assessment team should review the checklist and indirect relationships between policies and the environ- provide a description and analysis of the relevant items. ment. Networks can show the sequences of causes and effects moving through the economic, social, and political spheres, and thus provide a useful tool for selecting points Matrices of entry. Quantitative networks can be translated into math- A matrix can assist in providing a clear summary of a quali- ematical models for simulation purposes. Mathematical tative review or an assessment, and can be easily used for approaches can be useful when the assessment requires sim- comparing the various reforms and reform scenarios (table ple calculations with large data sets, when there are complex 6.4). The matrix can include such factors as direction of links among the elements, when processes are time depend- change, the severity or magnitude of the impact, reversibility, ent, or when the relationship can only be defined in terms probability, duration, and potential mitigation measures. A of statistical probabilities. Table 6.3 Sample Checklist for Devaluation Effect Probable Investigated Agricultural land (opening or abandonment) x x Land degradation (increase or decrease) Logging and extraction of natural resources (increase or decrease) x Industrial pollution (increase or decrease) x x Water use (increase or decrease) Energy use (increase or decrease) x x Encroachment on protected area (increase or decrease) x x Wildlands and forests (increase or decrease) Source: Iannariello et al 1999. Table 6.4 Sample Qualitative Matrix for Devaluation Effect Direction Time frame Reversible Probability Legal recourse Land use Negative Long-term No High Weak Water use Positive Medium-term Yes Medium Weak Greenhouse gas emissions Negative Long-term Yes High Medium Source: Iannariello et al 1999. 236 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING ANNEX 6.3B TOOLS FOR RAPID ASSESSMENT OF CROSS-SECTORAL IMPACTS This annex is based on Hamilton and Mani (2005). gram. This could be on the availability of adequate analyti- cal underpinnings, policy and regulatory frameworks cover- ing the forest sector, institutional issues, and issues relating Analysis of price changes to transparency and accountability (see Hamilton and Mani For reforms that will have a foreseeable effect on prices, it 2005). Depending on the answers to these questions, actions may be possible to carry out a partial equilibrium analysis of might be taken in the design of the operation, or within the the effects of price changes, assuming that sufficient data country program, to enhance positive and mitigate negative and time for analysis are available. The prices of interest will effects of the operation. typically be natural resource and energy prices because these will have the most direct effect on the environment Action-effect matrices. A more structured nonquantita- and natural resources. Three forms of analysis are possible: tive approach to analyzing effects can be achieved through the use of action-effect matrices. Using an action-effect Supply response. Will the price change affect the supply of matrix, a given policy reform may be analyzed according to a good (timber, for example)? Can supply elasticities, the likelihood of effects on the poor mediated by the envi- including cross-elasticities, be estimated? How rapid is ronment, forest, and natural resources, and the likelihood of the supply response likely to be? other effects on the environment (see Hamilton and Mani Demand response. Will the price change affect the 2005). Based on this more structured analysis of the indi- demand for an environmentally sensitive good? Can vidual components of a policy-based operation, it may be demand elasticities, including cross-elasticities, be esti- possible to suggest design changes, mitigating actions, or mated (for example, will raising natural gas prices make indicators that should be monitored over time. coal relatively more attractive to consumers)? von Thunen analysis. Will the price change affect the rel- Red flags ative price of goods in such a manner as to change the location of economic activity? For example, will it make Another nonquantitative approach to reviewing and analyz- conversion of forested land to agriculture more prof- ing policy-based operations is to look for "red flags"--issues itable? that raise the likelihood of significant effects on the environ- ment and natural resources. At the operational level these include energy price reforms, natural resource price reforms, Heuristic tools and changes in exchange rate regimes. At the country pro- Checklists. When time and data limitations preclude the gram level, they could include economic, political, and quantitative analysis of links between a policy-based opera- resource risks; policy and institutional failures (particularly tion and forests, one fallback is to pose a set of questions in the resource sectors); weak regulation and implementa- about the individual operation or the broader country pro- tion capacity; and lack of monitoring and enforcement. NOTE 6.3: IDENTIFYING THE NEED FOR ANALYSIS ON FORESTS IN DEVELOPMENT POLICY REFORMS 237 N OT E 6 . 4 Assessing Cross-Sectoral Impacts: Use of CEAs and SEAs ithin the World Bank's Analytic and Advisory W tal priorities. The aim of CEA is to provide the analytical Activities, CEA and SEA were identified as underpinning for sustainable development assistance. It has key tools for informing country dialogue and the potential to bring together the results of environmental, more systematically addressing environmental concerns economic, and sectoral work and facilitate dialogue, both early in sectoral decision-making and planning processes, within a country and among development partners. respectively. Specifically, CEAs have three main objectives: In August 2004, the World Bank approved and updated its policy on DPL. Operational Policy 8.60 (OP/BP 8.60) To facilitate mainstreaming by providing information emphasizes upstream analytical work--such as SEA, CEA, and analysis of key environment, development, and and other analyses done by the World Bank, the client coun- poverty links in the country policy dialogue try, or third parties--as a source of information for analyz- To guide environmental assistance and capacity building ing the likely significant effects of an operation on the bor- supported by the World Bank or other development rowing country's environment and natural resources, and partners through an assessment of capacity issues, espe- for assessing the country's institutional capacity for han- cially in relation to specific environmental priorities dling these effects. To facilitate a strategic approach to safeguard issues by Specifically, under OP/BP 8.60, the World Bank is providing analysis and information about environment- required to determine for each development policy loan development links at the earliest stages of decision mak- whether the specific country policies supported by the oper- ing, thus shaping key lending and programmatic deci- ation are likely to have significant effects on the country's sions at the country and sectoral levels and helping environment, forests, and natural resources. For policies manage risks at the project level with significant effects, an assessment is required by Bank staff of the country's systems for reducing adverse effects Building blocks of a CEA. CEAs consist of three main and enhancing positive effects, drawing on relevant country- building blocks (see figure 6.2): level or sectoral environmental analysis, a type of SEA. This note describes CEA, SEA, and rapid assessment Assessment of the state of the environment and forest devel- tools; the context of their use; the process of applying these opment priorities, involving systematic evaluation of key tools for assessing cross-sectoral impacts or for due dili- environment-development priorities (highlighting gence in policy operations1; and finally, some examples of trends, the links to poverty, and environmental indica- application in the forest sector. tors relevant for development policy and for the achieve- ment of the Millennium Development Goals) OPERATIONAL ASPECTS Policy analysis, to identify key development policies that have potential implications for the environment, in par- Country Environmental Analysis ticular, those linked to forests and environment-devel- CEA is a diagnostic analytical tool that can help to system- opment priorities atically evaluate the environmental priorities of client coun- Institutional capacity assessment, to evaluate the coun- tries, the environmental implications of key government try's institutional capacity to address key environmental policies, and the country's capacity to address environmen- priorities and respond to policy changes that have poten- 238 tial environmental implications, particularly those ment concerns. For example, the Orissa CEA is a state-level related to forests environmental analysis in India that focuses on the govern- ment's program to generate growth from the mining sector. Link with World Bank planning and lending. The However, most of Orissa's mineral deposits are in forests programming of CEA preparation should be closely linked that are inhabited by tribal populations and harbor with the World Bank's annual business planning and budg- numerous endangered and charismatic species. Mineral eting process, and be based to the extent possible on the extraction, therefore, has disproportionately affected the scheduling of PRSPs, CASs, integrative country diagnostic forest-dwelling population, the environment, and forest analyses (such as development policy reviews or country ecosystems. The impact of mines upon natural ecosystems, economic memoranda), or planned large DPL operations biodiversity, and tribal livelihoods has been one of the that may pose environmental issues. CEAs are most effective principal concerns in Orissa and is often a source of con- when carried out in advance of the preparation of these flict. Hence, a particular component within the Orissa processes to allow environmental considerations to be CEA is a study to assess the consequence of mining on introduced at the earliest stages of decision making. affected forest-dependent populations through a house- Examples of CEAs that have provided input to CASs and hold survey. PRSPs include the ones for Bangladesh. Nigeria, and Serbia In the near term, several CEAs with a focus on natural and Montenegro. CEAs carried out in the context of a DPL resource management issues are planned in the Sub- portfolio include those conducted for El Salvador, Ghana, Saharan Africa region; these are expected to focus in more and South Asia (Bangladesh, India, and Pakistan). CEAs can depth on forest issues. Full CEAs typically cost approxi- be a basis for designing development policy loans, as was the mately US$200,000, but this number varies with scope and Colombia CEA. methodology. Experience with rapid CEAs, which provide a To date, the only CEA that includes forests as a specific snapshot view in a stepwise approach to a CEA dialogue focus area is the Ghana CEA (see box 6.16). Forest issues do rather than a more detailed analysis, is limited, but these appear in some CEAs, broadly linked with other develop- tend to cost about US$60,000­$70, 000. Figure 6.2 Key Building Blocks of CEAs COUNTRY ENVIRONMENTAL ANALYSIS STATE OF THE POLICY ANALYSIS INSTITUTIONAL ENVIRONMENT AND CAPACITY PRIORITIES FOR ASSESSMENT DEVELOPMENT · Identification of key macro- · Assessment of policymaking, economic and sector policies administrative efficiency, and · Prioritization of environmental with potential environmental implementation capacity challenges (through available implications · Methodology and process for data, costs of degradation studies, · Lessons from SEAs, relevant priority setting and cross- stakeholder analysis, qualitative studies, and analytic work sectoral coordination methods) · Areas for new SEAs · EA capacity assessment · Environmental trends in priority · Public environmental areas expenditure reviews · Poverty-environment linkages · Indicators for measuring · Indicators public sector capacity · Data gaps · Areas for intervention BUSINESS PLAN · Stocktaking of and lessons from the World Bank's and development partner's past environmental assistance to client country · Review of the World Bank's planned lending and nonlending activities in key sectors and their links with environmental priorities · Review of development partners' ongoing and planned environmental support activities · Assessment of the World Bank's comparative advantage vis-à-vis development partners · Suggested World Bank assistance in the form of lending and nonlending assistance and partnerships NOTE 6.4:ASSESSING CROSS-SECTORAL IMPACTS: USE OF CEAS AND SEAS 239 Box 6.16 The Forests Component in the Ghana CEA The Ghana CEA specifically recognized the challenges attention to resolving the causes of forest degradation facing the forest and wildlife sector. Building on an ear- and habitat loss, and (ii) addressing underlying gover- lier study that focused on costs of degradation from the nance and institutional problems and insecure finan- forest sector, the CEA undertook an analysis of the pol- cial arrangements. icy, legal, and regulatory framework; institutions The CEA's principal recommendations were that (mandate, capacity, incentives); and a public expendi- (i) high priority should be given to an agreed on finan- ture review. cial arrangement that provides secure and sustainable The analysis found that Ghana's natural resources financing for the operations of all divisions of the are overexploited and continue to decline in both Forestry Commission, including provisions for the quantity and quality. Cocoa farming, gold mining, and costs of strengthened wildlife protected area manage- the wood industry are threatening high altitude forests. ment; (ii) government should demonstrate its support Ongoing soil erosion undermines food and agricul- and commitment to improved log and wood tracking tural production, human activities are degrading wet- systems; (iii) contracts and benefit-sharing arrange- lands, and silt accumulation and alien species threaten ments for all recently established plantations--how- goods and services provided by Lake Volta. Indeed, it is ever established--should be concluded and perfected; estimated that the degradation of agricultural soils, (iv) government should continue its policy commit- forests, coastal fisheries, wildlife resources, and Lake ments to competitive bidding and a better investment Volta's environment accounts for losses of at least climate for private sector investment (whether in plan- US$520 million annually (around 4.9 percent of tations, timber processing, or ecotourism), but it Ghana's annual GDP). should be matched by improved transparency of allo- The analysis also found the general policy and leg- cation, a level playing field for all, conversion of timber islative framework to be adequate, and that significant leases into Timber Utilization Contracts, and a credible progress had been made in recent years, but that enforcement regime for payments of fees, including severe challenges remained relating to the implemen- Timber Rights Fees, stumpage, and performance bonds; tation and enforcement of policies and laws on forests, and (v) an extended policy dialogue on scenarios for wildlife, protected areas, and habitat management. industry reform should be reinvigorated and include The CEA therefore stressed the need for (i) urgent the Ministry of Finance and Economic Planning. Source: Ahmed, Loayza, and Mani 2006. Strategic Environmental Assessment SEA uses diverse tools and approaches. SEA can include a wide range of approaches and make use of a Since the 1970s, environmental impact assessment (EIA) has variety of different tools. Some SEAs can be stand-alone been used to address environmental aspects of forest projects processes running parallel to core planning processes, while and activities. Strategic environmental assessment extends others can be integrated into the planning and policy- and the application of environmental assessment from projects to plans, policies, and programs (PPPs). Policies influence social behavior and changes in behavior may result in signif- Box 6.17 SEA Definition icant indirect environmental effects. Programs leading to the implementation of several projects in a particular region or Strategic Environmental Assessment describes ana- forest may have cumulative environmental impacts that are lytical and participatory approaches to integrate not accounted for in the individual EIA of each project. environmental considerations into policies, plans, Unlike projects, PPPs, particularly policies, may be heavily and programs (PPP) and evaluates the interlink- ages with economic and social considerations. influenced by political considerations. For these reasons, SEA has been developed as a specific approach different Source: OECD 2006. from, although related to, EIA (box 6.17). 240 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING decision-making processes. SEA may focus on environmen- plans for reforestation, extraction, and processing of wood tal impacts or its scope can be the integrated consideration and nonforest products, and watershed protection. Typi- of all three dimensions of sustainability: environmental, cally, an impact-centered SEA consists of the following four social, and economic. SEA may be applied to predetermined stages3: PPPs or be integrated into PPP formulation, and may engage a broad range of stakeholders or be limited to expert First is establishing the context for the SEA, in which analysts. SEA can be conducted in a short time frame or potential impacts are screened, the SEA's objective is set, over a long period. Some SEA may consist of a quick analy- and stakeholders are identified. sis while others require detailed analysis. Environmental Next is implementation of the SEA. It begins with estab- assessment can be the starting point of an SEA but SEA can lishing the scope of the SEA and the participatory also be fed into an existing process, such as policy analysis. approaches to bring in relevant stakeholders. Like EIA, in Furthermore, SEA could be a finite, output-based effort, or this stage baseline data is collected, alternatives are iden- a more continuous process that is integrated within institu- tified, and measures to mitigate adverse impacts and tional processes. enhance opportunities are proposed. This stage includes an assessment of the institutional conditions needed to SEA provide a flexible approach. From an operational effectively implement the SEA recommendations. These standpoint, SEA can provide a flexible approach that varies results are circulated publicly during a consultation according to the complexity of the decision-making process and a final report is prepared. process. At one extreme, it focuses on impact assessment The third stage is informing and influencing decision and, at the other extreme, it centers on institutions and making. It overlaps to some extent with the second phase governance (see chapter 5, Improving Forest Governance). because presentation of the draft and final reports are Along the continuum that lies between these two, the deci- key points to influence decision makers. In this stage, sion-making process is more significantly influenced by decision makers become aware of the options open to political bargaining and the interaction of different interest them, the likely effects of particular choices, and the con- groups and constituencies. Consequently, only a balanced sequences if they fail to reach a decision. institutional framework can capture and effectively take The last stage is monitoring and evaluation of the SEA. into account the rights and concerns of small communities, minorities, and stakeholders affected by environmental Institutions-centered SEA is mostly appropriate for degradation. Therefore, as PPPs move up in the decision- forestry policies, in general, and forestry reform, in particu- making hierarchy for contributing to sustainability in lar. Forestry reform induces changes in property rights, development processes, SEAs focus more on building insti- institutional reform, and adjustment in the incentives tutional capacity and strengthening governance than on regime to manage and use forests, and thus is likely to assessing impacts. engender significant environmental and social effects and opportunities (see note 5.2, Reforming Forest Institutions). Impact centered SEA and institution centered SEA. In this situation, SEA can only be successful if it influences When political economy factors and political bargaining are the reform and policy process, which requires SEA to be not important in defining a PPP, the SEA is rooted in EIA fully integrated into the decision-making process. The SEA experiences and methodologies involving technical team should work along with the forestry policy team processes. Some observers have called this the "impact-cen- responsible for the reform. It should provide inputs on the tered approach to SEA"2 because it focuses primarily on pre- potential environmental and social effects of the proposed dicting, preventing, and mitigating adverse environmental policies and be responsive to the requirements of policy and social impacts, similar to EIA of projects and activities. makers and planners when policies are being formulated Conversely, in PPPs significantly influenced by political and implemented. In box 6.18 a program SEA for the imple- economy and political factors, the SEA is rooted in policy, mentation of forestry policy in Cameroon presents key institutional, and governance analysis, involving multistage, components of an institutions-centered SEA in the context nonlinear, iterative processes. Because of this focus, it can be of an impact-centered SEA. In box 6.19, an institutions-cen- called an "institutions-centered approach to SEA." tered SEA on the Kenya Forest Act is described to illustrate Although both types of SEA can be used in forestry PPPs, how the SEA was integrated with the decision-making impact-centered SEAs are largely adequate in programs and process and World Bank activities. NOTE 6.4:ASSESSING CROSS-SECTORAL IMPACTS: USE OF CEAS AND SEAS 241 Considering the above issues, an institutions-centered Capacity building and governance strengthening for SEA comprises the following three stages4: environmental sustainability Identification of the potential significant environmental LESSONS LEARNED AND RECOMMENDATIONS and social effects and opportunities that may result from FOR PRACTITIONERS an operation Country Environmental Analyses Assessment of institutional capacity to manage the envi- ronmental and social effects and opportunities, and to There is considerable flexibility in CEA scope and design. take into account interests of affected stakeholders CEAs can focus on all key environmental issues linked with Box 6.18 The Sector Study of Social and Environmental Impacts of Forest & Environment Sector Program in Cameroon Between 1992 and 1996, Cameroon established a New Social level. (i) the risk of reducing access to some Forestry Policy, only partially implemented because of areas and resources as a result of the landscape limited capacity of national institutions. The Forest & approach used and the classification of forests and Environment Sector Program (FESP) was developed to protected areas; (ii) the risk of conflicts between address this gap and, therefore, focuses on strengthen- investors and the administration on one hand, and ing national institutions responsible for sustainable some social groups on the other hand, if the distri- management of forests. The Cameroon Ministry of bution of forest revenue does not materialize; (iii) Environment and Forests carried out a SEA of the FESP marginalization of Indigenous Peoples (Pygmies) with the double objective of optimizing the environ- resulting from lack of adaptation of compensation mental and social impacts of the program and verifying measures to their cultural specificities its conformity to the environmental and social policies of the World Bank. The SEA was undertaken by a mul- The SEA also identified extra-sectoral social and tidisciplinary team of national and international con- environmental risks that may affect the FESP, such as sultants, and included an integrated impact assessment, strong population growth combined with extensive general sector analysis work, and public consultation. agricultural production systems, or the malfunctioning About 10 consultations were held with the local of the judicial system. It recommended that the pro- populations in six provinces. Two national workshops gram develop links with policies and programs external and four joint multidonor missions with the participa- to the forestry sector, and act on the strategies of rural tion of NGOs were organized. Also, during the imple- development, promotion of the rule of law, poverty mentation of the FESP, a regular program of local con- reduction, and promotion of the private sector. sultation on the social and environmental impacts of The SEA proposed the following plans to accom- the program were to be implemented. pany program execution: The SEA shows that most of the negative impacts identified in the sector are not derived from forestry pol- A Master Plan of Access to Resources, to reduce the icy itself, but from the limited institutional capacity for risk of loss of access to resources. It includes neces- implementation. If the program attains its objective, it sary procedures for public consultation and the will have large positive environmental and social maintenance of users' rights in all circumstances. impacts. However, the SEA brought out some environ- A Development Plan for Pygmies, to ensure that the mental and social risks that will be associated with the pygmies could fully draw on the opportunities implementation of the forestry policy. The main ones offered by community forests, share charges and follow: employment opportunities, and be guaranteed that the quality of their mode of life would continue Environmental level. (i) the risk of increased poach- The Permanent Environment Secretariat, to execute ing activities following access to vast and previously a monitoring and management plan for social and inaccessible areas; (ii) the risk of overexploitation of environmental impacts. The development of the agricultural and pastoral territories and other Secretariat's capacity to implement this plan was to resources (firewood, water, and so forth) be supported by the PSFE. Source: Derived from Ministry of the Environment and Forestry (2003). 242 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING Box 6.19 Implementation of the Kenya Forests Act: An Institution-Centered SEA The government of Kenya ratified a new forest bill in ditions within two forest areas to assess priority issues September 2005, an outcome of the Kenya Forestry and consider the views of community forest associa- Master Plan finalized in 1991. It intends to unlock tions and other local stakeholders. opportunities for forest resources to contribute to eco- Important characteristics of the SEA in Kenya nomic development and poverty alleviation, and to include the following: enable socially and environmentally sustainable forest management and conservation. The bill embraces the Reliance on rapid assessment of the political econ- concept of participatory forest management, a radical omy and analysis of existing publications to estab- departure from the government's previous practice of lish the background to implementation of the act assuming full management responsibilities. The bill Strong emphasis on the role of stakeholder groups also encourages the formation of forest community to help identify priority areas of concern and key associations to be recognized as management partners. intersectoral environmental and social linkages Commercial plantations will be open to lease arrange- Use of a case study to help identify potential win- ments by interested groups to supplement government ners and losers arising from implementation and efforts, with the aim of improving their productivity the extent to which sustainable forest management and increase availability of timber and other products benefits are likely to be shared throughout society and services to the country and for export. Development of a policy-action matrix that incor- In April 2006, the World Bank supported a SEA of porates an accountability and transparency frame- the implementation of the Kenya Forests Act, focused work, to assist the government in charting out how on integrating environmental, social, economic, and to effectively implement the act institutional considerations of the act and strengthen- ing the processes for its implementation. The act con- The SEA analyzed social, environmental, and eco- tains many innovative improvements, including a nomic risks and assessed opportunities, and examined strong emphasis on partnerships, engagement of local potential weaknesses in institutional structure and communities, and promotion of private investment. governance. Through consultation and analysis, the The purpose of the SEA was to inform and influence SEA identified three priority areas for action: strategic the process of implementing the new Forests Act and management and planning of the Forest Service, indirectly inform the policy dialogue regarding sustain- enabling community participation and benefit sharing, able use of natural resources for national development. and enabling investment in the forest sector. The SEA examined current risks confronting both Strategic planning and management of the Kenya woodland and forest environments and the social well- Forest Service embraces a number of subsidiary themes, being of communities relying on these resources. Evi- the most important of which are: dence gathered through research and extensive consul- tation was used to identify the scope for improving enabling proper governance (including trans- institutional structures and governance processes under parency and accountability) of the Kenya Forest the planned forestry reforms; notably those relating to Service; the Kenya Forest Service and the participation of com- ensuring proper strategic planning of forest munities and the private sector in forest management. resources; The SEA recommends ways of enhancing the opportu- maximizing the economic value of these resources nities for environmental and social gain, which already for the nation; and form part of the overall goal of the Forests Act. achieving effective financial management and regu- A crucial element of the SEA has been its reliance on lation of the forest sector. the active participation of a wide range of stakeholders, which has been essential in identifying key issues and Community participation and benefit sharing com- priorities for action. The SEA has also examined con- bines the following interlinked objectives: (Box continues on the following page.) NOTE 6.4:ASSESSING CROSS-SECTORAL IMPACTS: USE OF CEAS AND SEAS 243 Box 6.19 Implementation of the Kenya Forests Act: An Institution-Centered SEA (continued) ensuring that all forest communities and those adja- note 2.1, Company-Community Partnerships). This cent to forest areas are involved in decision making involves: and implementation; equitably sharing associated costs and benefits creating an enabling environment for forest sector among communities, the private sector, and govern- private investment (both corporate and commu- ment; nity); protecting indigenous and customary access and enabling and strengthening partnerships; and use of forest resources by communities; and improving transparency and accountability of enabling equitable and fair partnerships. investment activities. Enhancing investment in the forest sector means The SEA proposed main adjustments that were pre- ensuring the right mix of public and private to ensure sented in a policy-action matrix that the government sustainable forest management so that the sector con- and other stakeholders could use to guide implementa- tributes to the national goal of poverty reduction (see tion of the act. Source: World Bank 2007. growth and poverty reduction or on a few priority issues. Is there an opportunity to review the organizational struc- CEAs can also analyze broad institutional issues linked with ture that supports environmental management? Is there a environmental management or focus on institutional analy- demand for capacity building? Are there new laws and leg- sis in key sectors of the economy. islation that call for strategic attention to the environment? CEAs are most effective when carried out in advance of Is there a demand from the environment or other min- the preparation of PRSPs, CASs, or development policy istries for strategic environmental analysis? Do large loans to allow environmental considerations to be intro- reform programs take place that may have environmen- duced at the earliest stages of decision making. tal implications? Are there transboundary issues that require cross-country coordinated environmental analy- Policy considerations at the country level will be ses? Is analytical support required to help the country key to the timing of the CEA. For instance, a change in meet the conditions of international agreements? government, or opportunities arising from government planning processes, may signal the need for a CEA. Institu- CEAs can strengthen country level dialogue. CEAs tional changes in the country--such as the restructuring of can also be prepared in a country to strengthen country- government agencies--may also call for a CEA. Issues to level dialogue on environmental development issues, to consider include the following: update existing work, or to reestablish dialogue with a client country in postconflict situations. Is there a planning and policy process that the national or state government is considering that requires analytical sup- Strategic Environmental Assessments port on the environment? Is there a routine development planning process that could be influenced by the CEA? SEAs can contribute to the analysis of development Is there a change in the government that could benefit alternatives. The SEA will not identify alternatives for from policy advice through CEA? Is the new government implementing PPPs, but it will provide key information and likely to take note of specific environmental concerns or suggestions that contribute, among other factors, to the is there a need for overarching guidance? Are there alternatives analysis and, therefore, to the decision-making champions of environmental sustainability in the new processes. Another SEA strength is that in a systematic and government who could use the CEA for their efforts? orderly way, it can bring into the alternatives analysis the Is there restructuring taking place in environmental or perspective of potentially affected groups and civil society, other ministries that would require institutional analyses? reinforcing the long-term feasibility of PPPs. 244 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING SEAs are useful for analyzing the cumulative and Forestry Sector), and private contracts and arrangements, indirectly induced effects of PPPs. Cumulative effects may have major implications in natural resource use, defor- are the combined effects of several projects or interventions estation, and environmental degradation. Therefore, the within a project and development trends in a region or sec- scope of the SEA's institutional analysis must also comprise tor. Indirectly induced effects (behavioral effects) are these institutions and their influence on environmental and adverse or beneficial environmental effects caused by social aspects of forest management. It is in this context that changes in people's behavior resulting from economic and governance issues like community organization, access to social processes induced or influenced by a specific PPP. the judiciary, transparency, access to resources, and accountability of decision makers for lost environmental For an SEA to influence policy making, it must focus services and environmental degradation also need to be on the "target audience." In order to influence policy considered in the SEA. making, an SEA target audience can often include policy Capabilities for carrying out SEA can be strengthened makers and policy constituencies or interest groups and and developed at the following levels: other affected groups. Ministries of finance, for example, will be more receptive to analysis providing quantified Enhancing the skills of SEA practitioners estimates of the environmental effects (positive or nega- Improving the quality of SEA review tive) of various policy options (for example, as a percentage Improving environmental management systems of GDP). Ministries and agencies mandated to reduce Promoting informed participation and dialogue within poverty will be receptive to analysis focusing the impacts of planning and policy processes to create opportunities for given policy choices on the most vulnerable groups, espe- incorporating environmental considerations in the for- cially if that analysis results from consultation with affected mulation and implementation of plans and policies groups. Elected officials, who tend to have short-term hori- zons, will be more receptive to information on the short- NOTES term impacts of given policy choices. The positive short- 1. CEAs and SEAs are not limited in their application to term impacts of proposed amendments to policy proposals cross-sectoral impacts or due diligence in policy operations. should also be highlighted and, if possible, quantified. 2. See, for example UNDP et al. (2005: 51). 3. For a detailed description of these stages see OECD Institution centered SEA should extend beyond (2006), chapter 4. identification environmental and social priorities. 4. A more detailed explanation of these stages, methods, In an institutions-centered SEA, stakeholder participation and techniques can be found on the World Bank's Web site goes beyond identification of environmental and social pri- in the section on Institutions-Centered SEA corresponding orities to inform the formulation and implementation of to the SEA toolkit: http://go.worldbank.org/XIVZ1WF880. PPPs. It also contributes to leveling the political playing field for stakeholders affected by or vulnerable to environmental degradation, and for their interests to be taken into account SELECTED READINGS in the policy process. Sometimes this requires involving Ahmed, K., J-R. Mercier, and R. Verheem. 2005. "Strategic stakeholders and considering other sectors, because forestry Environmental Assessment--Concept and Practice." reform may have environmental implications in other sec- Environment Strategy Note No. 14, Environment tors, such as tourism, agriculture, hydropower, transport, Department, World Bank, Washington, DC. mining, and so forth. Consequently, the apex of an SEA may Asian Development Bank Country Environmental Analysis: be an intersectoral committee. http://www.adb.org/environment/cea.asp. Likewise, in institutions-centered SEAs, the analysis of Hamilton, K., and M. Mani. 2005. "Toolkit for Analyzing the institutional forestry framework cannot be constrained Environmental and Natural Resource Aspects of Devel- to the environmental institutions related to the sector. opment Policy Lending." Environment Department, Other sector institutions, such as forestry concessions, taxes, World Bank, Washington, DC. community forestry rights (see note 1.3, Indigenous Peoples OECD Environmental Performance Country Reviews: and Forests, and note 1.2, Community-Based Forest Man- http://www.oecd.org/topic/0,2686,en_2649_34307_1_1_ agement, and note 5.4, Strengthening Fiscal Systems in the 1_1_37465,00.html. NOTE 6.4:ASSESSING CROSS-SECTORAL IMPACTS: USE OF CEAS AND SEAS 245 World Bank SEA Web resources: http://go.worldbank.org/ (United Nations Environment Program), IIED (Interna- AMVQSQV7G0. SEA Toolkit: http://go.worldbank.org/ tional Institute for Environment and Development), XIVZ1WF880. World Bank CEA Web resources: IUCN (The World Conservation Union), and the World http://go.worldbank.org/OJM2I7S3L0. CEA Toolkit: Resources Institute. 2005. "Assessing Environment's http://go.worldbank.org/Z3F3QDPEF0. Contribution to Poverty Reduction." UNDP, New York. World Bank. 2002. Making Sustainable Commitments. An Environmental Strategy for the World Bank. Washington, REFERENCES CITED DC: World Bank. Ahmed, K., F. Loayza, and M. Mani. 2006. "Tools for Due ------. 2007. "Strategic Environmental Assessment of the Diligence." Note submitted to World Bank as input to Kenya Forests Act 2005." Agriculture and Rural Develop- Forests Sourcebook. Unpublished. World Bank. Washing- ment Department. World Bank, Washington, DC. ton, DC. Ministry of the Environment and Forestry. 2003."Etude Sec- torielle des Impacts Sociaux et Environnement Aux du CROSS-REFERENCED CHAPTERS AND NOTES PSFE."Final Report, Republic of Cameroon, E937,April 1. Note 1.2: Community-Based Forest Management OECD (Organisation for Economic Co-operation and Note 1.3: Indigenous Peoples and Forests Development). 2006. Applying Strategic Environmental Note 1.4: Property and Access Rights Assessment: Good Practice Guidance For Development Co-Operation. DAC Guidelines and Reference Series. Note 2.1: Community-Private Partnerships http://www.oecd.org/dataoecd/4/21/37353858.pdf. Note 5.2: Reforming Forest Institutions UNDP (United Nations Development Programme), UNEP Note 5.4: Strengthening Fiscal Systems in the Forestry Sector 246 CHAPTER 6: MAINSTREAMING FORESTS INTO DEVELOPMENT POLICY AND PLANNING C H A P T E R 7 Monitoring and Information Systems for Forest Management I nformation and monitoring systems for the forest sector quantities and trends and establishment of a forest resource are instrumental for effective policies and planning, pri- database. The assessments of historical emissions and trends oritizing interventions, valuation of forest resources, can help identify a reference scenario. REDD pilot projects efficient investments, and engendering accountability. Rele- will be undertaken between 2008 and 2012 with the hope vant forest information that is systematically and periodi- that REDD will be endorsed in the post-Kyoto climate pro- cally collected can enable effective implementation of poli- tocol. Any country selected for the pilot initiative will have cies, inform decision making, and guide management (see to design and implement a system that effectively monitors box 7.1). Current and accurate information on forests also and verifies its REDD. can help raise the profile of the sector and increase awareness Payment for environmental services from forests of forest resources' potential. Abundant evidence points to requires that these services be properly valued, which, in how inadequate information on forests and weak monitor- turn, requires that the forest resource base and other ing capacity have resulted in poor forest policies, planning, resources (water, soil, and the like) be appropriately moni- and management; hampered efforts to reduce illegal and tored. Such forest information and monitoring can also unsustainable extraction of forest resources and improve improve knowledge about the relationship between forests transparency; and resulted in undervaluation of forest and other environmental services and facilitate opportuni- resources. Such conditions, in turn, contribute to continuous ties to generate multiple benefits from forest resources. For decline in area, health, stock, and flows of forest resources. example, ongoing discussions on the role of forests in cli- Emerging financing opportunities for sustainable forest mate change and the Convention on Biological Diversity management under the climate change agenda will require (CBD) have stimulated efforts to include biodiversity bene- effective systems for monitoring forest cover and carbon fits as a consideration when identifying forest sites for emissions and additional information on the resource base REDD. Information on forest cover and other relevant envi- and drivers of change. More specifically, efforts to enhance ronmental benefits would assist in identifying forest areas the contribution of forests to reducing carbon emissions with multiple benefits. (through reduced emissions from deforestation and degra- Better and more timely inventories and broader infor- dation [REDD] initiatives) will require participating coun- mation collection on forest resources enables planning and tries to establish a credible reference scenario on REDD implementing sustainable productive use of resources, based on methodological guidance from the UN Frame- including determining allowable cut and plantation and work Commission on Climate Change (UNFCCC). Most natural forest management. Information on forest use is likely this will require assessments of historical emission needed for monitoring changes in the resource base and 247 Box 7.1 Monitoring Promotes Changes in Armenian Forest Policy In 1998 in Armenia, the available forest inventory data in a sustainable manner. These inventory results, dated back to the former Soviet Union inventory results. shared with Armenia's policy makers at a seminar, A strategic objective inventory of the Armenian forests, became an incentive for change in national forest pol- financed by SIDA (the Swedish International Develop- icy. Further inventory was recommended to update the ment Agency), was carried out to obtain better decision forest policy. support for ongoing policy development in the country. In 2005 the government adopted a decree establish- The results got the attention of decision makers. ing the State Forest Monitoring System, which includes Measured growth was twice the previous official fig- establishing a monitoring center responsible for moni- ures per hectare per year, and cuttings totaled six times toring illegal logging and timber removal and prevent- the official annual maximum allowable cut per hectare. ing illegal activities in forests. Donor support for the It became apparent that illegal cuttings were a big work is being provided by the World Bank, the govern- problem and that cutting was not generally carried out ment of Japan, and others. Source: Thuresson 2002. causes for change and identifying ways to integrate forest efforts can be used to understand the influence of external development efforts with overall sustainable development factors on forest resources, monitor illegal logging (see note in the country. From a poverty standpoint, monitoring can 5.5, Addressing Illegal Logging), or assess carbon assimi- provide more accurate information on how changes in lated by forests. Innovative application of spatial and other resources and their uses are affecting the rural poor, and monitoring tools can facilitate such uses (see box 7.2). whether the pattern of resource use by the rural poor is sus- Periodic collection of, and public access to, relevant and tainable (see chapter 1, Forests for Poverty Reduction). robust forest information can enable better resource man- Robust information on changes in quality and quantity agement. Other contributions to a new environment for of forest resources and periodic monitoring can assist in decision making have included advances in understanding identifying factors driving forest change. Time series infor- complex interactions, both within ecosystems and among mation generated through spatial maps of forest cover, ecosystems, human activities, and human well-being; roads, poverty levels, and property rights can help in the improvements in information technologies and greater analysis of cross-sectoral relationships. Such monitoring access to information as a result of computers and data sys- Box 7.2 Using Spatial Monitoring to Assess Links Between Energy Reform and Forests Since fiscal 2002 several lending operations in Europe This study used spatial information to assess the and Central Asia have focused on sector reforms to environmental impact of energy reform. The method- improve the efficiency and effectiveness of energy ser- ology made it possible to identify where households vice delivery in the region. A review of the World Bank's (because of poverty levels) might switch to dirty fuels. activities with regard to the fiscal, efficiency, social, and Overlaying this information with data on forest cover environmental dimensions of energy sector reforms in revealed where the risk of increased residential wood the region considered human health benefits resulting use is greatest. With this information it was possible to from reduced pollution in the electricity sector (Lampi- consider promoting access to alternative energy etti 2004). However, the study also discussed the possi- sources and more efficient wood stoves in high-risk bility that the reforms have damaged health because areas, as well as to prepare and implement spatially households switched to dirty fuels (such as wood, coal, explicit forest management plans and encourage par- or kerosene). The study also highlighted the possibility ticipatory forest management to reduce this risk. that fuelwood use may cause deforestation, although Extensive in-country collaboration aided the data this could not be proven because of inadequate data. collection process for this study. Source: Lampietti 2004. 248 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT tems; the changing paradigm of poverty; and ongoing pol- the political will to integrate findings from forest informa- icy and institutional reform. Multiple users in governments, tion systems and to update management approaches and the private sector, and civil society need better scientific policies makes monitoring useful. An effective forest moni- information, such as that provided through technical assess- toring system is one that is tied to appropriate political ments. Furthermore, the general public can make use of processes that enable corrective actions. information found in assessments to hold decision makers accountable (Millennium Ecosystem Assessment 2003). National forest inventories. Continuous or repeated forest assessments (or forest inventories) are often neces- sary to enable resource use planning and management. PAST ACTIVITIES National forest inventories (NFIs) are an example of such The World Bank has monitoring components in various assessments. NFIs provide information relevant for investment projects, some of which are discussed in the national-level decision making, policy formulation, and notes associated with this chapter. It is estimated that monitoring for forestry and related sectors, as well as for approximately US$28 million has been invested in monitor- forestry planning in smaller geographical or political units ing components of forest sector projects over 2002­05. This at the subnational level (see note 7.1, National Forest Inven- investment is nearly evenly distributed between creation of tories). Because the results are an input to global forest forest management information systems (FMIS), forest assessments, there is also regional and global interest in inventories, and development of capacity and tools for spa- high-quality national forest information. Several new tial monitoring. This component of forest activities is methodologies and technologies can improve inventory, expected to increase as investments in governance increase planning, implementation, analysis, and reporting of forest (with monitoring of illegal logging activities) and as client inventories (see table 7.1). Selection of tools or approaches country interest in avoided deforestation matures. should be informed by the characteristics of the activity being monitored and the availability of required capacity, hardware, and other supports. KEY ISSUES Temporal aspects of monitoring. Forest monitoring is Building national capacity for gathering and using an assessment of the status of forests at different times, often information. Capacity to collect forest sector data and con- including assessment of changes within established features duct forest inventories has declined since the 1960s. Currently, (that is, changes within boundaries of protected areas, for- few national statistical organizations are strong enough to be est concessions, private properties, and so on). Forest mon- of value in policy processes. The challenge at the local level is itoring thus requires systematic periodic assessment. partly driven by poor links between information demand and supply (Holmgren and Persson 2002). In recent decades forest Monitoring should update forest management. An information seems to have been supply driven, partly because effective forest monitoring system is much more than a of the promotion of remote sensing rather than field work. technical set of data and techniques. A political process and The policy process, therefore, has been guided by what can be Table 7.1 Areas Where New Methodologies and Technologies are Expected to Benefit NFIs Main phases of a national forest inventory Data quality Analysis Methodology and data (including or technology Planning Implementation management modeling) Reporting Remote sensing X X X Satellite navigation systems X X Measurement devices X Mobile information and communication X X Software and algorithms X X X Sampling options X X Source: Kleinn 2002. CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT 249 collected via remote sensing rather than by a need for specific countries are doing in forest monitoring would be helpful information. Changing this trend will require a close exami- for designing interventions in monitoring, as well as deter- nation of how information is used in national and interna- mining how a global monitoring system, compatible across tional policy processes and will require building the capacity countries, may be created. For example, the Forest Survey of to gather and use this relevant information. India (FSI), an organization under the Ministry of Environ- In many countries, national statistical services are under- ment & Forests, was mandated in 1986 to monitor and map resourced and are unable to deliver reliable data in a timely the country's forest cover on a biennial basis. Consequently, fashion. Often, national statistical databases are filled with FSI has been carrying out assessments of the country's for- gaps or use imputed values that are prone to gross errors. est cover using satellite-based remote sensing data and has This creates a vicious circle, with users dismissing the ser- been publishing its findings in the State of Forest Report vices of the statistical organizations, reducing the funding (SFR) every two years (see box 7.3). for these organizations, and causing them to continually Similar institutional arrangements for spatial monitor- perform poorly. Despite this reality, several national govern- ing exist in several other countries (for an example in Brazil, ments report on forest data, and some carry out periodic see box 7.4). There is a need to understand how these mon- monitoring of forest resources. itoring arrangements are set up; what technologies and More recently, donor programs have also concentrated methodologies are used; the periodicity with which infor- on collecting information rather than building capacity, mation is collected; how the information is processed, ana- although this is slowly changing and investment in capacity lyzed, and reported; and who the end users are. is occurring. Recent donor initiatives include the Marrakech Action Plan for Statistics, which coordinates donor support REDD: Determining baselines (reference scenarios). for statistical capacity building and encourages countries to Discussions on the role of forests in climate change must merge their own priorities for statistical development distinguish between deforestation and degradation. This through the preparation and implementation of national distinction is important because the appropriate tools for strategies for development of statistics. There is still, how- detecting deforestation (for example, remote sensing to cap- ever, room for further investment in capacity and infra- ture clear-cuts) may not be as effective in detecting degra- structure for monitoring and reporting. dation. Furthermore, monitoring specific to REDD will need to satisfy UNFCCC and Intergovernmental Panel on Scope and status of national forest monitoring Climate Change (IPCC) criteria, which are slightly different efforts. More detailed information on what different from conventional forest needs. Box 7.3 Forest Assessments in India The Forest Survey of India assesses the forest cover of tree canopy density of at least 10 percent. The infor- the country on a two-year cycle using satellite data. The mation does not differentiate land use or ownership, main objective is to present information on the coun- and all perennial woody vegetation--including bam- try's forest resources at the state and district levels, and boos, palms, coconut, and apple trees--were treated as to prepare forest cover maps on a 1:50,000 scale. The trees; agroforestry plantations were also considered first forest cover assessment of the country was made forests. in 1987; eight more assessments have been made, with The findings of the assessments are published in the forest cover information at the district level being biennial State of Forest Report, which includes forest available beginning with the third assessment, in 1991. cover maps for the country, the states, and Union Terri- Before the fourth assessment, forest cover assessment tories. These maps,prepared with the use of remote sens- for the entire country was generated through visual ing technology, are also used for carrying out other spa- interpretation. After the eighth assessment in 2001, the tial studies, such as monitoring shifting cultivation, entire country was assessed digitally. assessment of forest density, mining leases, wildlife habi- The 2003 assessment, like the 2001, includes infor- tats, forest fragmentation, forest fire affected areas, mation on lands that are at least 1 hectare that have assessment of mangroves,and delineation of forest types. Source: Authors' compilation. 250 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Box 7.4 Monitoring Efforts in Brazil Three significant monitoring efforts are occurring in l'Observation de la Terre], CBERS [China Brazil Earth Brazil: the Brazilian Space Agency project PRODES, Resources Satellite], and ERS-1 [European Remote the Amazon Surveillance System (SIVAM-SIPAM), and Sensing Satellite]). This costly, state-of-the-art system the government of the state of Mato Grosso's Environ- offers a solid infrastructure and capacity for compre- mental Control System on Rural Properties. hensive monitoring; the data that can be acquired and processed could be applied to environmental monitor- PRODES ing, including vegetation cover, hydrology, human Since the 1980s, the PRODES project has been moni- occupation, and fire monitoring. With all its potential, toring the extent of gross and annual deforestation in nevertheless, it appears that social buy-in for SIVAM the Brazilian Amazon based on interpretation of high- has not consolidated completely. resolution satellite imagery (Landsat). Although highly automated, the deforestation mapping remains a Environmental Control System on Rural Properties labor-intensive process in which, each year, more than The State Environment Foundation of Mato Grosso 220 satellite scenes are scanned, selected for minimum (FEMA/MT)--the entity responsible for management cloud coverage, geo-referenced, and prepared to run a of the state's environmental policy--developed the predefined algorithm for analysis (for example, trans- Environmental Control System on Rural Properties. forming vegetation, shade, and light features). Features This system uses monitoring as one element to enforce are then classified and edited to derive deforestation existing legislation, mitigate environmental liabilities, and other maps by state (from a 1997 baseline). The and protect environmental assets. The system focuses thematic maps and Landsat imagery are made available on large land holdings (1,000 hectares or more) in to the Brazilian community. areas most affected by deforestation. FEMA uses The deforestation mapping has some limitations. Remote Sensing (RS)/Geographic Information System Besides being labor intensive, the analysis is also (GIS) technology to collect and manage land-use dependent on the availability of cloud-free imagery. information--particularly agriculture and livestock-- PRODES mapping also misses small plots of deforesta- in the state, using visual interpretation of land cover tion (3.0 to 6.5 hectares) caused by small disturbances and deforestation from detailed satellite images to pri- to the forest canopy, such as those caused by selective oritize field visits; identification of heat sources from logging, which is practiced extensively throughout the National Oceanic and Atmospheric Agency (NOAA) Brazilian Amazon. Enforcement of policy and regula- satellite data to identify areas of incidence of fire and tion at the federal level remains fragile, yet such defor- fire risk; GIS technology to generate maps, graphics, estation data can provoke significant public pressure, and tables to help field inspectors and planners to which often results in policy changes. locate, quantify, and categorize environmental damage; its comprehensive GIS reference library of properties SIVAM-SIPAM to pinpoint the precise location of licensed activities on The Amazon Surveillance System project (Sistema de properties; and a Global Positioning System (GPS) to Vigilância da Amazônia in Portuguese) is a multi-billion guide FEMA field inspectors to locations where non- dollar monitoring system that uses a sophisticated mix compliance is suspected. GPS is also useful to update of fixed and mobile ground radar and airborne sur- and complement RS/GIS data with information from veillance. SIVAM was conceived in the 1990s by the the ground. Office of the President, the Ministry of Justice, and the The system has proven to be efficient and the role of Brazilian Air Force, to defend the Legal Amazon and RS/GIS has helped target and prioritize areas for field monitor illegal activity (drug trafficking, illegal log- inspection. Over two months in 2000, for instance, 10 ging, or burning). The system, later renamed the Ama- field teams carried out inspection and enforcement zonian Protection System (SIPAM) came into force in campaigns on almost 3,000 rural properties. For the 1999. same year, 50 noncompliant landowners were arrested; SIVAM's infrastructure is able to acquire, process, the number of identified heat sources was lower in and disseminate a variety of spatial information from relation to the previous year; and the demand for envi- various sources (radar, Landsat, SPOT [Satellite Pour ronmental licenses increased. Source: Nuguerón and Stolle 2007. CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT 251 Discussions and proposals on how to set a reference level The concern regarding national reporting burdens has have centered around identifying rates of deforestation or been acknowledged in international forums for forest dia- land conversion (historical hectares per year deforested) by logue. Since 2000, various efforts have attempted to harmo- looking at several years of deforestation data (most likely nize national reporting on biological diversity (specifically interpreted from satellite images). The deforestation rates for CBD (Convention on Biological Diversity), CITES (Con- would then be translated into a greenhouse gas emissions vention on International Traded in Endangered Species), rate (a reference level). New annual "rates of deforestation" CMS (Convention on Migratory Species), the Ramsar Con- would be compared against the reference level. A reduction vention, and WHC (World Heritage Convention). In April in the rate of deforestation would, therefore, also translate 2002, CBD, by Decision VI/22, adopted the expanded work into a reduction in greenhouse gas emissions, which might program on forest biological diversity, which included as one then make the government or entity responsible for getting of its activities to "seek ways of streamlining reporting emissions reduced eligible for financial compensation. between the different forest-related processes, in order to Countries interested in REDD will need to, among other improve the understanding of forest quality change and things, identify a baseline for carbon emissions and a rate of improve consistency in reporting on sustainable forest man- forest-cover change. While specific guidance will become agement (SFM)"(Conference of the Parties [COP] Decision available on determining baselines for forest cover and car- VI/22). These efforts all require reaching a common under- bon emissions, a country will clearly need to be able to set a standing of forest-related concepts, terms, and definitions. target that is based on a reduction from a certain reference level and quantify how much reduction in deforestation Monitoring framework design. What is being moni- actually occurred if the government is to get credits. Histor- tored, how the information will be used and by whom, and ical data and projected deforestation rates will be important the sustainability of a monitoring system should all inform for determining baselines. Appropriately set baselines help its design. Monitoring systems should be designed to be ensure that REDD initiatives are capturing and covering the flexible and able to respond to a dynamic context, which can costs associated with reduced emissions but not creating change the scope and objective of monitoring. The moni- perverse incentives. toring system design must consider the end user and sus- tainability of the system. Engagement of end users in the National and international reporting obligations. design and implementation of the system increases their Countries are obliged to report information related to their confidence in the system and ensures its utility. forest sectors to a variety of international and regional con- ventions, agreements, and bodies (Braatz 2002). There are Measurement framework. A measurement framework is 10 international instruments in force relevant to forests.1 helpful in designing the monitoring system. A measurement Parties to each of these instruments are asked to report on framework should have goals, criteria (the desirable end- measures taken to implement their commitments under points), indicators for each criteria (how well each criteria is the instrument. In most cases, reporting consists of quali- being fulfilled), and approaches (qualitative or quantitative) tative information on activities and means of implementa- for measuring the indicators. The goals and desired out- tion (for example, policy, legislative, or institutional mea- comes should guide identification of specific indicators. In sures). In a few cases, reporting also includes quantitative systems that integrate conservation and production, a hier- biophysical and socioeconomic data on forest resources or archy of goals can be established. Some may be broad, uni- resource use. These reports, and associated efforts to monitor versal goals and others may be more specific (yet have some and assess status and trends in forest resources and progress universal applicability). in meeting international commitments, help orient national When choosing a framework, various alternatives that and international policy deliberations (Braatz 2002). have been tested and implemented should be considered, as Accurate and consistent forest information at the global should new ones. Ideally, preference should be given to the scale is still needed, specifically information on how much framework already in use in the country, for example, the forest is lost annually and from where. The lack of such Criteria and Indicators framework used by the nine regional information is partly because previous efforts depended on Criteria and Indicators processes (including the Ministerial inconsistent definitions of forest cover and used method- Conference on Protection of Forests in Europe), the Driver- ologies that could not readily be replicated or were very Pressure-State-Impact-Response model, or the Services expensive and time consuming (see box 7.5). Model framework implemented by Millennium Ecosystem 252 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Box 7.5 The Forest Resource Assessment Program of FAO The UN Food and Agriculture Organization (FAO) has Information from the FRA is accepted by interna- played a key role over the past 50 years in providing for- tional processes, conventions, and agencies, such as est sector information at the global level, having recog- CBD, IPCC, and the United Nations Environmental nized that reliable information and knowledge about for- Programme (UNEP), and by all countries. The FRA is est resources is essential for sound policy development, a collaborative and participative effort of experts forest resource management, and integration with over- within and outside the FAO, and includes national all sustainable development efforts in a country. Moni- experts in all countries (members and nonmembers of toring, assessment, and reporting on forests and forest FAO). More than 800 such experts contributed to FRA products are some of the main activities of the FAO. 2005, and more than 170 officially nominated national FAO's Forest Resources Assessment (FRA) program correspondents provided and validated its contents. uses the concept of sustainable forest management and The information compiled by FAO's FRA is the reports on six of the seven thematic elements common most comprehensive to date. It relies on aggregating among the nine regional Criteria and Indicators national-level forest inventory information, which is processes. These elements include extent of forest reported by countries to FAO, to provide a global pic- resources, growing stock, biomass stock, carbon stock, ture of forest cover and forest cover change every 10 forest health, forests under productive purposes, plan- years. Spatially explicit estimates of tree cover change tations, and removal of wood and nonwood forest based on repeated measurements would provide much products from forests (www.fao.org/forestry/fra). The needed information beyond what is readily available Forest Sector Outlook studies (www.fao.org/forestry/ from the FRA. Such a spatial assessment would be use- site/5606/en), State of the World's Forests (www.fao ful in that it would provide comprehensive informa- .org/forestry/site/21407/en), and other FAO publications tion that can be periodically updated, yield measures of serve the seven thematic areas in achieving the overall change at the global scale, and help identify areas that mission of enhancing human well-being (see box figure). need to be examined more closely. MISSION Human well-being Poverty reduction through GOAL sustainable management of the forests sector STRATEGIC OUTCOME FROM MONITORING Integrating forests more Harnessing the potential of effectively into forests to reduce poverty in sustainable development a sustainable manner Protecting vital local and global environmental services and values Extent Forest Productive Institutional Conservation Protective Socio- of health and function and policy of function of economic forest vitality of forest framework biodiversity forest functions resources resources resources Source: Govil 2006. CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT 253 Assessment (www.millenniumassessment.org). Another parameters that can be estimated using remote-sensing sur- good framework, although still being piloted and not yet veys often depend on the intensity of the field sampling. implemented at regional and global levels, is the "Manual Area of forests, other wooded land, and other land types, as for Environmental and Economic Accounts" (FAO 2004). well as their changes, can be adequately measured with available remote sensing­aided surveys. In contrast, tree Using existing and new methodologies. Advancements stem volume and biomass, which are critical variables in in methodology and technology are a constant phenome- determining the status of the world's forests, require thor- non in forest monitoring, as evidenced by the advancements ough field measurements for their estimation. Such limita- in remote sensing, a particularly useful tool for studying for- tions are constantly being dealt with. est change comprehensively and uniformly across time and space. Remote sensing multiplies the value of field-plot data Cost of monitoring. Cost is often an important driver in and permits complete, wall-to-wall analyses. Spatial images designing monitoring systems. A frequently asked question from Landsat have been a workhorse for scientists interested is when and whether satellite imagery­based forest cover in measuring changes in the distribution and condition of mapping can substitute for forest inventory. Mapping stud- forests. A number of satellites have come online since Land- ies cost less than field work (if the necessary hardware and sat, several of which are useful for monitoring forests software are available); need less planning, smaller teams, (USDA 2007). Other advancements in forest monitoring and less broad expertise; are partly independent of weather; approaches have been based on imaging radar data, which and provide maps as the major product, which are usually works in all weather conditions. Methodological advance- more easily accepted and "marketed" than statistics and ments, too, such as simplifying and automating mapping of tables with error specifications. forest disturbances (USDA 2007), have been important. The type of analysis required often influences the cost. Older technologies, such as mobile data loggers and High-resolution images are notably more expensive than mobile communication, could be more effectively used for coarse images. Tomppo and Czaplewski (2002) estimated monitoring forest activities. Mobile telephone communica- costs for remote sensing under different resolutions and tion can serve two purposes: It can increase the safety of sampling options for regional and global surveys using field crews by giving them access to communication in cases remote sensing and field data (see tables 7.2 and 7.3). The of emergency, while also enabling online data entry to a cen- costs have since changed significantly, but this information tral database. Advancements in software, such as GIS2, also provides an indication of the differences in costs. offer many possibilities for presentation of results and improved access to information. Selection of indicators. Assessing all benefits from The use of some of the newer technologies is not without forests over time is complicated, and only feasible if simpli- shortcomings. For example, the availability of reference data fications and approximations, such as indicators, are for digital image analysis or visual interpretation is one of accepted. Several international processes have developed the key problems in remote sensing­aided surveys. The criteria and indicators for sustainable forest management. Table 7.2 Example of Number of Images and Estimated Costs for a Remote-Sensing Survey with Different Resolution and Sampling Options Number of images needed Imaging cost (US$ thousand) MODIS Landsat Ikonos Ikonos Landsat Ikonos Ikonos full 10% 0.1% 1% 10% 0.1% 1% Region coverage coverage coverage coverage coverage coverage coverage Africa 6 97 331 3,309 58 951 8,992 Asia 6 100 343 3,428 60 986 9,315 Europe 4 73 251 2,511 44 722 6,824 North and Central America 4 69 237 2,374 42 683 6,453 Oceania 2 28 94 943 17 271 2,564 South America 3 57 195 1,950 34 561 5,299 Total 25 424 1,451 14,515 255 4,174 39,447 Source: Tomppo and Czaplewski 2002. Note: MODIS and Landsat are NASA satellite imaging programs; Ikonos is is a commercial Earth observation satellite. 254 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Table 7.3 An Example of the Number and Cost of Field Plots in a Global Survey Using Field Data Only Land area Forest area Field plot Number of Estimated costs Region (million ha) (million ha) area (ha) field plots (US$ thousand) Africa 2,978 650 13,692 69,221 30,457 Asia 3,085 548 28,540 30,010 13,205 Europe 2,260 1,039 28,268 44,751 19,690 North and Central America 2,137 549 27,814 27,421 12,065 Oceania 849 198 25,960 10,898 4,795 South America 1,755 886 21,648 49,035 21,575 Total 13,064 3,870 145,922 231,336 101,787 Source: Tomppo and Czaplewski 2002. The criteria express the objectives of forestry, as negotiated tural and Natural Heritage (World Heritage Convention), in political processes, but the identification of indicators for the UN Forum on Forests (UNFF), and the International national-level performance in meeting the criteria is more Tropical Timber Agreement (ITTA). difficult. 2. A GIS is a collection of computer hardware, software, Indicators are seldom optimal because they often need to and geographic data for capturing, managing, analyzing, be generated from a rapid process and, therefore, are identi- and displaying all forms of geographically referenced infor- fied based on the data that is available. Furthermore, indica- mation. See http://www.GIS.com. tors identified at an international level may not be consid- ered equally valid or important among participating SELECTED READINGS countries. This raises the need to agree on internationally FAO. 2005. "Global Forest Resources Assessment 2005: accepted criteria, but also develop national indicators. Progress Towards Sustainable Forest Management." FAO Forestry Paper 147, FAO, Rome. http://www.fao.org/ FUTURE PRIORITIES AND SCALING-UP forestry/site/fra/en/. ACTIVITIES Lange, G.-M. 2004. "Manual for Environmental and Eco- nomic Accounts for Forestry: A Tool for Cross-Sectoral The following activities should be given priority: Policy Analysis." Working Paper, FAO, Rome, Italy. http:// www.fao.org/docrep/007/j1972e/J1972E00.htm#TOC. building capacity and investing in technology for effec- International Tropical Timber Organization (ITTO). 2005. tively monitoring land-use change Revised ITTO Criteria and Indicators for the Sustainable assistance in effectively measuring forest cover and car- Management of Tropical Forests Including Reporting For- bon emissions at the project-intervention level and effec- mat. Yokohama, Japan: International Tropical Timber tive integration of this information into national Organization. http://www.itto.or.jp/live/Live_Server/ accounting systems on carbon emissions 963/ps15e.pdf. supporting research to develop improved and affordable Ministerial Conference on the Protection of Forests in methodologies and technologies for national forest Europe (MCPFE). 2002. "Improved Pan-European inventories Indicators for Sustainable Forest Management." supporting development and maintenance of national MCPFE, Vienna, Austria. http://www.forestry.gov.uk/ and regional networks of forest-related monitoring pdf/mcpfeindic03.pdf/$FILE/mcpfeindic03.pdf. The Montréal Process. "Criteria and Indicators." http:// www.mpci.org/criteria_e.html. NOTES 1. The United Nations Commission on Sustainable Devel- REFERENCES CITED opment (CSD), the UN Convention to Combat Desertifi- cation (CCD), the UNFCCC, the CBD, CITES, the CMS, Braatz, S. 2002."National Reporting to Forest-Related Inter- the Convention on Wetlands of International Importance national Instruments: Mandates, Mechanisms, Overlaps especially as Waterfowl Habitat (Ramsar Convention), the and Potential Synergies." Unasylva 53/No. 210 (Forest Convention Concerning the Protection of the World Cul- Assessment And Monitoring): 65­67. CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT 255 FAO. 2004. "Manual for Environmental and Economic Noguerón, R., and F. Stolle. 2007. "Spatial Monitoring of Accounts for Forestry: A Tool for Cross-Sectoral Policy Forests." Note submitted to the World Bank as input to Analysis." Working paper. FAO, Rome. Forests Sourcebook. World Bank, Washington, DC. Govil, K. 2006. "Monitoring Forest Sector Projects." Note Thuresson, T. 2002. "Value of Low-Intensity Field Sampling submitted to World Bank as input to Forests Sourcebook. in National Forest Inventories." Unasylva 210 (53):19­23. Unpublished. World Bank, Washington, DC. http://www.fao.org/DOCREP/005/Y4001e/Y4001E05 Holmgren, P., and R. Persson. 2002. "Evolution and .htm#P0_0 Prospects of Global Forest Assessments." Unasylva 210 Tomppo, E., and R. L. Czaplewski. 2002. "Potential for a (53):3­9. Remote-Sensing-Aided Forest Resource Survey for the Kleinn, C. 2002. "New Technologies and Methodologies for Whole Globe." Unasylva 210 (53):16­19. National Forest Inventories." Unasylva 210 (53):10­15. United States Department of Agriculture (USDA). 2007. http://www.fao.org/docrep/005/y4001e/Y4001E03.htm# "Monitoring Forests from Space: Quantifying Forest P0_0. Change by Using Satellite Data." PNW Science Findings Lampietti, J. 2004. "Power's Promise: Electricity Reforms in 89:1­6. Eastern Europe and Central Asia." Working Paper No. 40. World Bank, Washington, DC. CROSS-REFERENCED CHAPTERS AND NOTES Millennium Ecosystem Assessment. 2003. Ecosystems and Human Well-Being: A Framework For Assessment. Millen- Chapter 1: Forests for Poverty Reduction, and associated nium Ecosystem Assessment Series. Washington, DC: notes Island Press. http://www.ecodes.org/pages/areas/salud_ Note 5.5: Addressing Illegal Logging medioambiente/documentos/ecosystems_human_well Note 6.3: Identifying the Need for Analysis on Forests in being.pdf. Development Policy Reforms 256 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT N OT E 7 . 1 National Forest Inventories basic element of planning and efficient invest- A Box 7.6 Motivation for Forest Inventory in Bosnia ments in the forest sector is an inventory of forest and Herzegovina resources. In several countries, the basic country- wide information on the current state of forests and other ecosystems is inadequate, fragmentary, or outdated--or all A World Bank intervention in the forest sector of Bosnia and Herzegovina revisited the project's three. Often the existing data at the national level are spec- inventory component and requested approval for ulative and largely based on reconnaissance-type invento- allocating additional resources to this component ries and unrealistic assumptions about forest production because both the government and the World Bank and the impact of human activities on the resource base. appreciated the importance of this activity for In many countries, reliable estimates of forest and effective forest management. The initial efforts to ecosystem resources, consumption rate, and real economic undertake an inventory resulted in an increased potential are still lacking. In such contexts, the awareness of focus on management for nontimber forest prod- forest values is low. The rates by which forest ecosystems ucts (NTFPs), recreation, hunting, and tourism. change over time and the overall distribution of the lands These have the potential to significantly increase supporting them is not precisely known. Furthermore, revenues on state and private forest lands. Cur- institutions for ensuring continued monitoring are weak rently, for each cubic meter of wood extracted and can require capacity building and access to current (worth about US$50), forest enterprises earn only about US$1 on NTFPs, including recreation and technology to facilitate inventory. tourism. This 50:1 ratio compares unfavorably to a Implementation of national forest programs (see note 6.1, 50:50 ratio (timber to NTFP) in Austria. Hence, Using National Forest Programs to Mainstream Forest Issues) there is much room for improvement. and national forest assessments requires monitoring to con- Likewise, measures to reduce illegal activities in tribute to and guide the planning and implementation of the forests, to instill good management and plan- forestry and natural resources­related programs and projects. ning practices (that is, FMIS), and to certify forests An up-to-date national forest inventory provides numer- and promote log tracking schemes would help to ous benefits (see box 7.6), including the following: open the European Union market to Bosnian wood products, and thereby enable Bosnia and makes possible the calculation of the value of forest assets Herzegovina to obtain higher prices. Currently, and monitoring of degradation and restoration trends, Bosnian timber is locked out of portions of the thereby enabling (i) improved decision making on forest- export market because major buyers, such as IKEA, have adapted procurement policies that related public expenditure and revenue policies; (ii) require good management and SFM certification. improved understanding of the role of forests in past, cur- Forests inventories are a central component of rent, and future national income accounts; (iii) improved FMIS (see note 7.2, Establishing Forest Manage- environmental and governance management; and (iv) ment Information Systems). national reporting on important international conventions; improves the required planning and monitoring of the Source: World Bank 2003. forest estate; 257 enables implementation of action plans to combat illegal tory and the sample should help confirm the statistical activities in the sector; design and the required level of accuracy. The objectives increases knowledge on the extent and location of the also help determine how often inventory reports should be country's forest assets for potential private investors in updated (annually, or every 5 or 10 years) and the way in wood-processing industries; and which success will be measured. Success may not be solely a enables FMIS and state forest inventory use for decision function of precision, but also depend on transparency and making, monitoring, and planning, thereby helping to timeliness. support the benefits of these tools. If the objective is to estimate status and trends in the area of forest land; OPERATIONAL ASPECTS the volume, growth, and removal of forest resources; and Operationalizing forest inventories requires great attention the health and condition of the forest; to detail as well as to the big picture in the forest sector.1 Clarity of the objective of the inventory and an assessment of important elements in a forest inventory will include capacity to implement the inventory are central to designing a proper forest inventory and ensuring that all (or most) of sampling design--how to have a nationally consistent the important components are covered (see box 7.7). assessment; observations and measurements; Inventory design. Areas to be included in the inventory using remote sensing applications effectively, perhaps for must be clearly defined; for example, privately held forests, ­ initial plot observation, forests in areas that are considered nonforest, and tree ­ stratification (see box 7.9); resources on nonforest land (see box 7.8). It is equally conducting remote sensing and GIS research, including important to determine whether the inventory will be "wall ­ map-based estimation and internet (see box 7.10), to wall," or based on samples. The objectives of the inven- ­ map-based sustainability analyses. Box 7.7 Forest Inventory in Tanzania The World Bank's intervention in Tanzania has an Prepare a national map based on harmonized clas- inventory component that includes sification of forest and land uses and related defini- tions. setting up a specialized structure in the Forest and Undertake a national forestry resource assessment Bee Keeping Department (FBD) for data collection; and develop a national database. updating of information; training of inventory per- Design specific and management-oriented inven- sonnel; developing norms and methods of invento- tory in priority areas and formulate projects. ries and assessments; helping define government policy in the area of knowledge generation, man- Outputs: agement, dissemination, and the like; and creating a new baseline of information, complete in Harmonized forest and land use classification sys- scope and harmonized with existing information tem and maps of state and changes of state pro- required by international reporting requirements duced based on remote sensing data. (see box 7.12 for data collection model). New baseline information, encompassing a wide range of data for both local and international users, Objectives of the project: generated and disseminated. Specific and management-oriented inventory in Strengthen capability of FBD to collect, analyze, and priority areas designed and projects formulated. update the needed information on forests and trees for planning and sustainable management of the forestry resources. Source: FAO 2007. 258 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Box 7.8 Example of Defining the Sample of Interest Box 7.10 Map-Based Estimation Methods If "forests on the edge" are to be included in the Internet map-based estimation methods involve sample, a possible way of defining them would be to selecting a map of forest attribute, drawing polygon of any shape, and choose watersheds (approximately 1,000) with developing a selection estimation type that ­ at least 10 percent forest cover, and could be ­ at least 50 percent of forest in private owner- ­ sample-based estimate and standard error, or ship; and ­ pixel-based estimate and standard error (for rank watersheds small or user-defined areas). ­ by forest contributions, ­ by threats to forest contributions, and Within this process there are two relevant sets ­ by combination of contributions and threats. of images: (i) a"reference set," which is made up of satellite image pixels with associated plots, and (i) The inventory could be focused on watersheds a "target set," which is the satellite image pixels with a high rank. without associated plots. Source: USFS 2007. Source: USFS 2007. Practical considerations. Considerations to keep in how to link the national inventory with (where available mind when developing inventories include the following: and relevant) existing stand (management) inventory. difficulty of access to plots in large, remote areas; It is helpful to identify regions where different sampling continuity of estimates when transitioning from a state- and attribute intensities can be applied, such as remote or level inventory to a national level inventory; and reserved areas. The same level of precision is not required in such areas. If such an approach is adopted, it is important to Box 7.9 Plot Stratification decide whether aerial or ground sampling or both are to be used, by region; ensure that a core set of compatible results is available Initial plot observation and stratification can assist across all regions; and in identifying the areas that need to be measured clarify the responsibilities of all groups involved. and those that can be excluded. If initial plot observation indicates an area is obviously a non- Cost of inventory. Cost is an important consideration in forest area, it does not need to be observed in the inventories. It is important when promoting forest invento- field. This type of information can help classify ries to satellite imagery into homogeneous strata to increase the precision of estimates. When stratifying forests, stratification must be determine the most cost-effective data collection and distinguished from classification. It is possible to processing approaches; have large numbers of classifications and few strat- develop needed operational experience in the relevant ification, or vice versa. For example, there may be department or unit so that the inventory can be scaled up 21 classifications, stratified into forest and nonfor- on a cost-effective and timely basis; and est land; or the classification can be forest land and provide an estimate of the cost for implementing the nonforest land, with four stratifications: forest, inventory. forest edge, nonforest edge, nonforest. Use of new technologies can help with cost concerns. Source: USFS 2007. However, cost should not be the sole driving force for NOTE 7.1: NATIONAL FOREST INVENTORIES 259 selecting the technology. Technology selection should ing processes should shape the inventory process from the ensure that a balanced approach is taken with regard to use beginning. Often inventories feed into larger forest manage- of remote sensing. The extent to which remote sensing is ment information systems (see note 7.2, Establishing Forest used should be based on a clear understanding of what it is Information Management Systems). good for, what its strengths are, and the overall efficiency of the inventory. For example, remote sensing may be LESSONS LEARNED AND RECOMMENDATIONS effective in identifying change, but not in classifying it. FOR PRACTITIONERS Remote sensing may also assist with stratification to improve precision. Phased approach. Designing, coordinating, and conduct- ing national forest inventories can pose numerous chal- Data interpretation. Data interpretation is a critical part lenges. A phased approach, starting with inventories at a of inventories. If spatial data are being used, interpretation subnational scale, can help identify the most cost-effective is often preceded by field reconnaissance to develop an and timely way of conducting a national-scale inventory. interpretation key. Interpretation of data can require the use of available historical air photographs; available thematic Draw on good practice. Drawing from good practice in maps; photos taken during the field trips; and descriptions of countries where inventories are well-developed offers signif- the vegetation in selected representative sites and forest and icant assistance. For countries in the Europe and Central land use classes in selected, geo-referenced sites. Image inter- Asia region, lessons from the United States, Canada, Swe- pretation can be carried out digitally. Photo-interpretation den, and Finland could be used. The national inventories in and classification must be followed by validation by air, fol- the latter countries and other countries in the region pro- lowing selected transects all over the country. vide a good foundation. However, inventories from other countries will not provide "off-the-shelf" approaches Capacity to conduct inventory. Capacity for executing because of the details of the methods used. For example, an inventory is often lacking and can require additional sup- plot densities may differ, and what can realistically be port (see box 7.7). In cases where capacity needs to be afforded may be different. strengthened, a field manual and training program can assist in implementing the inventory. Use current and well-tested technology. It is impor- tant to draw on current and well-tested technologies, to the Linking Inventory to decision-making. Considerations extent possible. These technologies and the latest science in regarding integrating the inventory data into decision-mak- inventories can assist in designing a cost-effective system Box 7.11 Estimating Costs Project cost estimations often require numerous One person interprets one scene in three weeks, on assumptions. In Tanzania, the following assumptions average. This gives a total of 35 working months or were made for estimating the costs associated with up to 12 months work for 4 people. mapping: Field and air checking require two months of three people, or a total of six person-months. The country is covered by 50 Landsat scenes. Revision and finalization of the map requires about Procurement of the satellite images, training, and three months of three people or nine person- preparatory work for the mapping (equipment, months. manuals, interpretation key, preprocessing, and the Storage of the map in the database and reproduc- like) require four months. tion of the map in hard copies will take two months One month of field reconnaissance is required at for three people--or six person-months. the onset of the project by three people--thus, three The total person-months for mapping by techni- person-months of work. cians is 24 months 3 people = 72 person-months. Source: FAO 2007. 260 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Box 7.12 A Data Collection Model Data collection methods might combine multiple The data collection follows the model in the figure. approaches. In Tanzania, two complementary methods For each sample unit there were several levels of were used for data collection. The first was from a net- data collection, corresponding to different data sets. work of field samples distributed along a systematic Data sets included local populations; forest and tree grid. The second was from mapping using remote- products and services, and users, which were tied to the sensing techniques. The field sampling was arranged in land-use class; and land use­level data with informa- sample sites composed of clusters. Each cluster con- tion on protection status, vegetation coverage, environ- tained four plots of 5,000 m2. The plots were designed to mental problems, and tree characteristics (species, monitor the dynamic of changes of the land-use systems height, diameter, health) attached to the plot where the and of the forest and tree cover in the country. It was a trees were found. one-phase sampling for continuous forest inventory. Country Sample site (tract) · Population · Accessibility to services Plot Land-use class · Products and Land use section services · Resources users · Environmental problems (fires...) · Resource Trees · Species management · Tree heights · Protection status · DBH · Ownership · Health Source: FAO 2007. with a high probability of successful implementation. At the Country specific considerations. In some countries it beginning of the project, the project team should undertake will be important to develop a mechanism for handling the necessary consultations to find out the quality of the forests under land mines. available data (for example, cloud free, right season), and at what cost. In some countries, much is already known about NOTE technical options, but the organizational and financial aspects are lacking. In implementing national forest inven- 1. This section draws heavily on the United States Forest tories, it is important to clarify the objectives of inventories Service work on national inventories. For further informa- and articulate the responsibilities of the various groups tion, Ron McRoberts (rmcroberts@fs.fed.us) and Chip involved. Scott (ctscott@fs.fed.us) may be contacted. Ensure new and previous inventories can be linked. SELECTED READINGS The way national forest inventories are linked to previous inventories needs to be closely examined to ensure that the USFS (United States Forest Service) National Forest Inven- current inventories are seen as reliable and credible. tory and Analysis Web site: www.fia.fs.fed.us. NOTE 7.1: NATIONAL FOREST INVENTORIES 261 USFS Field Guides: www.fia.fs.fed.us/library/field-guides- USFS (United States Forest Service). 2007. Forest Inventory methods-proc/. and Analysis: National Core Field Guide, version 4.0 USFS analysis tools: http://fiatools.fs.fed.us/fido/index.htm. (October 2007). Washington, DC: USFS. REFERENCES CITED CROSS-REFERENCED CHAPTERS AND NOTES FAO. 2007. Trust Fund Agreement Between the Government Note 6.1: Using National Forest Programs to Mainstream of Tanzania and the Food And Agriculture Organization Forest Issues of the United Nations. Internal document. FAO, Rome. Note 7.2: Forest Management Information Systems World Bank. 2003. Bosnia-Herzegovina--Forest Develop- ment and Conservation Project, Project Appraisal Docu- ment. Report No. 25881. Washington, DC. 262 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT N OT E 7 . 2 Establishing Forest Management Information Systems M onitoring of projects, activities, and, more Private industry uses FMIS to better manage timberlands broadly, land-use practices has become more and the fiber supply chain from the forest management sophisticated, cost effective and, where relevant, unit (FMU) level onward. FMIS can also support multi- participatory. The application and use of monitoring objective forestry as required by forest certification approaches in the forestry sector have been expanded to schemes, laws, or policies. assess progress in projects and programs and to identify Government agencies use FMIS to plan the management aspects that need modification (see chapter 7, Monitoring of forest lands for multiple uses (fiber supply, tourism, and Information Systems for Forest Management). biodiversity conservation, watershed management, and other environmental services). Government uses for such What is an FMIS? An FMIS is an information technology systems (the focus of this note) will differ by institutional (IT) system used as an aid for planning and monitoring for- structure and land and forest ownership patterns.1 est management and conservation activities. The FMIS can potentially manage a wide range of spatial and alphanu- OPERATIONAL ASPECTS meric data. Potential applications include its use in forest classification and mapping, rangeland and wildlife manage- FMIS architecture. Establishing an FMIS is not just ment, timber inventory (including projections of growth "computerizing" existing hard copy systems of forest and yield), and for planning sustainable use and conserva- management. FMISs have a standard system architecture tion of forest products and biological goods and services. (see box 7.13), but the complexity and sophistication of Integrating management processes and appropriate this architecture can vary depending on whether the computer-based tools can greatly enhance the effectiveness FMIS serves specific projects or small operations or is of gathering and storing data and then transforming it part of wider corporate tools for large industry or gov- (using models and analytical processes) into useful infor- ernment use. The architecture of an FMIS should be com- mation for the sustainable management and conservation patible with organizational and management needs and, of forest resources. However, these tools also require great while recognizing the limitations of current management care and planning in their development because they are capability and data availability, should be flexible enough expensive and time consuming to develop and maintain. to allow for the incorporation of improved management Start-up costs include hardware and software acquisition, processes, new data, and new technologies. staff training, and data entry, the combination of which could consume about 80­90 percent of project budgets. Design and selection guidelines. The FMIS is essen- tially a computer system, requiring hardware and software, Who could use FMIS and how? Various users (private as well as data, to be useful. Selecting the right hardware and companies, state forestry agencies, ministries of agriculture software requires a good understanding of the system's or forestry, NGOs, scientists and academics, donor agencies, needs and applications, as well as the frequency of use of the and more) would have different needs for an FMIS, includ- various applications. Consequently, technology and appli- ing forest monitoring and research, as well as the more tra- cations specialists are needed to help with the design, ditional forest management planning. startup, and debugging of a system. 263 Box 7.13 System Architecture of a Standard FMIS The following are the interconnected modules that specific forest stand (or type, if on a national would comprise a standard FMIS: scale) as a result of some specific intervention (such as certain kinds of harvesting, stand estab- Forest Land Information Module. This module lishment, and stand tending actions). would contain information on the current status of ­ Forest monitoring systems. Although possibly in- the forest, as well as information encapsulating the cluded in the Forest Inventory System described best current knowledge of how the forest develops in note 7.1, additional forest resource and biodi- and reacts to management actions and stochastic versity monitoring systems that may be required events (such as fire, pests, and disease). The module for purposes of administrative oversight, quality would normally include the following: control, and compliance with the criteria and ­ Land-use database. Basic attributes for various indicators of a forest certification scheme. units of land, often including their location, area, Forest Resource Planning Module (also known as legal status, administrative unit, land use/cover, harvest scheduling module). Using much of the and so forth. This relational database containing information in the Forest Land Information Mod- the attributes data would normally be linked to a ule, the GIS and, in more sophisticated systems, the GIS (map) database where the spatial data, in the Operations Management module (described below), form of polygons, are stored. this module is used to forecast and plan the develop- ­ Physical infrastructure database. Information ment of the forest and the flow of products and ser- about the infrastructure (road network, bridges, vices (or forest values, including those related to dams) available for supporting forest manage- ecosystem conservation). The planning is generally ment on the land base in question (these would set up to cover a significant time horizon (often normally be viewed as layers in the GIS database). more than one rotation of the major tree species), ­ Forest inventory system. Information about each thus allowing the resulting plan to be labeled "sus- unit of land that is of concern. This information tainable." The kinds of planning systems available will include such data as forest cover type, tree range from simple forecasting models to simulation species and vegetation, basal area, volumes, site models through to optimization models. The model class, terrain conditions, and any other forest type appropriate to a particular situation depends information required for managing (analyzing, upon management goals (strategic or tactical) as planning, and monitoring) the forest. The infor- well as on the availability of good forest data. mation would be periodically updated through Operations Management Module. This is the mecha- interfaces with the growth and yield model, the nism for making changes to ongoing management operations tracking module, and the resource activities and is well developed in commercial forest monitoring systems. applications. This module is designed to facilitate ­ Growth and yield models. Models describing the stand-level planning, scheduling, and monitoring of natural development of forest types over time all major forestry activities, including stand estab- (growth) and the values (timber and nontimber lishment, tending and harvesting, product sales and forest products, revenues) that can be obtained transportation, forest protection, and road con- at the various stages of development (yield). struction. Costs, revenues, and production results There are many kinds of growth and yield mod- should be gathered and used for this planning, els, including stand-level models for a forest type although some or most of that information may in a specific geographic region, and single-tree come from an accounting or business information models specific to a particular species. Single- management system (described below). An opera- tree modeling tends to be more flexible, but tions management system should be capable of stand (or forest-type) models would usually be reporting on all relevant activities and operational more appropriate for national-, regional-, or results for purposes of management control, as well state-level forest management. as to verify compliance with any regulations, forest ­ Forest transition models (or ecological scenario certification, or quality control requirements that models). Models that describe the changes in a might apply. 264 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Box 7.13 System Architecture of a Standard FMIS (continued) Business Information Management System (BIMS) and forest analysts. Modules should be "co-designed" Module. This module would allow for the entry, and linked so that the management processes they sup- storage, and processing of all data and information port are integrated and duplication of data entry is related to the basic business processes of the organi- avoided. zation, such as accounting, invoicing, personnel Because some information may need to be consid- management, and scheduling activities (job orders). ered confidential, and to accommodate the range of user It would normally be closely linked to the Operations needs, different access levels may be built into the devel- Management module and may even provide much of oping system. Hence, while a system may be compre- the information needed for operational control. hensive and fully integrated, specific users would only Geographic Information System (GIS). This would have access to the information that they need to use for provide visual access to all of the cartographic infor- their own job. At the same time, it is critical that all the mation needed by the FMIS. GIS spatial analysis, data are entered in standardized form so as to be com- modeling, and presentation capabilities are essential patible across the system for all users at all levels. More- for good forest planning and management of large, over, if jurisdictions charged with the management or complex forests, such as those on a national scale. administration of forests (countries, regions, provinces, or states) were to adopt such compatible systems, this The overall system would have many types of would greatly help to standardize data and help make users--from those who simply enter data to managers comparisons across countries easier to accomplish. Source: Robak and Kirmse 2007. Many on-line resources are available for software design, system design are most often iterative processes, as gaps or development, and implementation, as well as for the constraints identified in the system design phase reinform improvement of management processes.2 Beyond these the needs analysis. well-developed process rules, the following is a suggested protocol for macro-level FMIS design, development, and Design document. The design document should do the implementation. (See box 7.14 for an example of applica- following: tion of FMIS in Bosnia and Herzegovina.) Articulate the vision, goals, and objectives (short- and Needs analysis. This step, led by a management team task long-term) of the system, as well as initial recommenda- force, is critical for ensuring that the proposed investment tions concerning development priorities and proposed will provide an integrated set of tools that meets the needs timelines for the development phases. of everyone involved in the analysis, planning, monitoring, Identify and address all of the infrastructure and and control of forest management strategies, tactics, and resources available and required to make the system use- operations. The task force should be educated about what ful and sustainable, including those related to data acqui- the new FMIS might do for them before they are able to sition, communication technology, operating costs, provide helpful input to the design process. training, and technical support. Articulate the physical, fiscal, and organizational con- System conceptual design. The system strategy and straints so that the IT specialists can design a system that vision would be developed by the forestry management can be implemented and supported. System designs team task force, working together with application, GIS, and should be based on structures, processes, and resources IT specialists. All direct and indirect users should be con- that are available beyond the life of the project (it would sulted, while IT specialists should provide advice concern- be appropriate to identify the compromises that have ing capabilities and modalities. The needs definition and been made and the reasons for these). NOTE 7.2: ESTABLISHING FOREST MANAGEMENT INFORMATION SYSTEMS 265 Box 7.14 FMIS in Bosnia and Herzegovina The following planning steps were employed in an e) Designate the institutional coordinator for the FMIS FMIS project in Bosnia and Herzegovina that involved development process and establish the institutional developing a unified network-based system: home for the central database. This is the responsi- bility of the ministry. All further development a) Conduct a gap analysis of the planning capacity of depends on this key step to designate and equip the the various enterprises and agencies. "FMIS coordinator." b) Organize workshops to agree on approach with the f) Prepare the tender package for designing the FMIS stakeholders. (international consultant, working with the FMIS- c) Organize an FMIS Working Group (FMIS-WG)-- WG). At a minimum, the terms of reference (TOR) comprising foresters, IT specialists, business man- should include (i) an analysis of the existing situa- agers, and inspection and planning officers--who tion and review of the data needs; (ii) a comparative would function as a process advisory group to analysis of international experience with similar define the basic data (including the minimum data systems to ensure the most cost-effective approach; needs for central planning and control functions) (iii) the final design of the data module, the data needed by the Cantonal Forest Management Com- format, and the presentational standards, taking panies (CFMCs). into account any relevant government IT policy; d) The FMIS-WG should organize a workshop to and (iv) the programming, communications, hard- demonstrate the power of a comprehensive FMIS ware, and software customization. Time required: and to agree on the basic data needs and on the over- five months contracting and preparation. Coordi- all development process. State-of-the-art software nated by the FMIS coordinator, with input from the providers (such as ESRI and Oracle), as well as users FMIS-WG. (for example, the Hungary forest enterprise associa- g) Organize a follow-up workshop to agree on the tion, the Polish State Forest Management Agency) FMIS tender package, and to seek funding sources. should be invited to give presentations. Key repre- Invite possible donors as well as government sentatives of the CFMCs and the ministerial and officials to agree on the TOR and to secure fund- cantonal administrations should be invited to par- ing. Coordinated by the FMIS coordinator, with ticipate and the conclusions and recommendations help from the international consultant and the should be recorded and disseminated. The main FMIS-WG. product of this workshop should be an agreed on h) Tender the development phase per the agreed TOR. concept of a centralized system as well as a process Time required: eight months. for developing that system. Agreement also needs to i) Design the database system. Time required: six be reached as to the overall coordination of the months. process and on the "home" for the central database. j) Tender the remaining hardware and software. Time required: three months planning and imple- k) Install the system, including training. mentation. Coordinated by the Forest Development and Conservation Project's (FDCP) project imple- In this case, the overall development process was mentation unit (PIU) with help from the FMIS-WG. estimated to take about two years. Source: Robak and Kirmse 2007. Technology specifications. The specific technologies3 to The programming language of the software should be be employed depend on the conceptual design and perfor- one that is most appropriate and ideally, widely used. mance specifications, which should, in turn, take into The databases and software should be able to handle the account the infrastructure and resources (human, technical, large number of transactions, ensure the security required and financial) that are available to the organization, inter- in some applications, have the necessary long-term techni- nally or from service organizations with a local (or, more cal support, and not become obsolete in the short-term.4 often these days, online) presence. Additional considera- The total cost of operation, rather than the initial start- tions include the following: up costs, should be the focus over the life of the project. 266 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT If the application specifications are more complex, the Constancy with respect to FMIS responsibility most cost-effective approach would normally be to con- within the bureaucracy. Given the frequency of person- sider an already developed application or integrated nel transfers in bureaucratic systems, it is helpful to develop multi-application system, where the provider is capable a cadre of specialists to provide long-term technical support of adapting that system to the special needs of the for FMIS implementation and operation. client.5 Developers or providers should not be forced to adopt Understanding and buy-in regarding modern forest one development environment. Instead, data interchange management and its requirements at critical levels and interoperability rules should be adopted and of the management hierarchy. It is important that man- enforced, allowing the replacement of old applications or agers realize that an FMIS should not simply "computerize" addition of new ones in a "plug-and-play"6 approach to the traditional management processes. system evolution. Reasonable goals for the initial development System detailed design and development. The applica- phases. While it is always necessary to keep in mind the tion of an iterative design and development process may be nature and capabilities of the FMIS that must be developed, more effective in producing an end product that finds wide- eventually, to support good forest management, the goals of spread acceptance in a large organization. Coupled with a the project must recognize the constraints and capabilities well-thought-out prototyping approach or the use of mock- of the organization. It is far better to set realistic near-term ups, the risk of large project failures is greatly reduced and goals within the context of a well-articulated, long-term the likelihood of end user buy-in is greatly increased. development plan than to attempt to turn around an entire bureaucracy in one go. System implementation and training. For implement- ing complex systems in large forestry organizations, the Vision or agreement as to what form such systems application of a pilot area approach, followed by phased should take. The focus should be on spatial decision mak- roll-outs of the tested system, seems to be an effective strat- ing and not on acquisition and maintenance of data, that is, egy. End users should be involved in the design and devel- let the process drive the system design. Time and effort must opment process to facilitate their understanding of and be spent on formulating a vision and strategy for the IT sys- sense of ownership in the software and reduce implementa- tem and the new management processes that it is intended tion problems and training time. Training of the end users to serve, and on defining very specific objectives. Only after (especially foresters and other professionals) should focus those have been defined can a TOR be formulated (see on the process that the system is supposed to support. If the annex 7.2B to this note) and the detailed design and devel- system (and user interface) is well designed, a good under- opment phase begin. standing of the processes that it is meant to support will ensure that the system will be used properly. Realistic, phased development for a large, complex system. This is necessary for a bureaucracy to have time to adapt to new management processes and gain confidence LESSONS LEARNED AND RECOMMENDATIONS from a series of "mini-successes." FOR PRACTITIONERS Given the rapid development of FMIS technology, the FMIS has recently become a popular component of World development process should include two critical considera- Bank projects (such as in Argentina, Bosnia and Herzegov- tions: (i) the contracting of an FMIS specialist to lead the ina, Kazakhstan, Russia, Romania), but the development overall decision making and design process; and (ii) a com- and implementation of these systems has been slow. Hence, parison of the cost effectiveness of developing a system from there is inadequate experience from which to build standard scratch or adapting an already designed system (that is, design, development, and implementation protocols or procuring a turnkey system, in which the company would compilations of lessons learned within the context of World install the system and provide training). The turnkey Bank projects. Previous FMIS projects in India (Madhya approach would probably cost a fraction of what it would Pradesh and Uttar Pradesh) have a longer track record, cost to develop a system from scratch and would take much although they were also plagued with missed milestones and less time, hence addressing some of the development prob- eventual loss of focus. Some key lessons follow: lems mentioned above (see box 7.15). The value of a tested NOTE 7.2: ESTABLISHING FOREST MANAGEMENT INFORMATION SYSTEMS 267 and client-rich system, which would also aid an organiza- companies because the governments own the forest and tion (especially one new to the technology) in thinking have their own enterprises (called Leskhozes in Russia, Kaza- "outside the box," cannot be overstated. khstan, and Belarus, and Forest Management Units in Bosnia and Herzegovina) for management and harvesting operations. Thus, they are responsible for tactical as well as NOTES strategic planning. In Argentina, Chile, or Brazil, for exam- 1. Some World Bank client countries (the Russian Federa- ple, where much of the productive forest is private, the pub- tion, Belarus, Bosnia and Herzegovina, Kazakhstan, Roma- lic sector would, in fact, have less of a tactical role and would nia, and most all other Commonwealth of Independent require mainly the strategic planning functions that a States and Eastern European countries) operate like private scaled-back FMIS would offer. Box 7.15 Private Consulting or Software Firms That Have Developed Turnkey FMIS or Major FMIS Components for Customization to User Needs Company Country Product Web Site American Forest U.S. Cypress, Harvest Scheduling Software http://www.americanforestmanagement.com Management Inc. Assisi Software U.S. Assisi Inventory,Assisi Compiler, http://www.assisisoft.com/ Assisi Forest,AI Object Library, AF Object Library Cengea Solutions Canada Woodlands - The System http://www.cengea.com Cuesta Systems Inc Canada TIMS http://www.cuestasys.com/ D.R. Systems Inc. Canada Phoenix, OPTIONS, SiLvIRR, http://www.drsystemsinc.com/ DRS INVENTORY System, Forest EcoSurvey Professional Force/Robak Canada IFMS, ForMAX, OperMAX, http://www.fra.nb.ca/ Associates Ltd. OP-Plan/CTS, FIS Geographic Dynamics Canada Volume Compilation System, http://www.gdc-online.com/index.htm Corp. SiteLogix, FloraLogix, CarbonLogix, Tactical Forest Planning Systems Indufor Oy Finland EnsoMOSAIC http://www.indufor.fi James W. Sewall Company U.S. WebFRIS http://www.jws.com LandMark Systems U.S. RTI http://www.landmarksystems.org/ Larson & McGowin, Inc. U.S. ForestPro Manager www.larsonmcgowin.com pcSKOG AB Sweden pcSKOG family of products http://www.pcskog.se/ Oy Arbonaut Ltd. Finland ARBNaut FDD www.arbonaut.com Remsoft Inc. Canada Woodstock, Spatial Woodstock, http://www.remsoft.com/ Stanley, Allocation Optimizer, Behave Savcor Group Ltd. Oy Finland MekaERP http://www.savcor.com/forest/ Silvics Solutions U.S. IFMS http://www.metsyssolutions.com/ Spatial Planning Systems Canada Patchworks http://www.spatial.ca/index.html WoodPlan Ltd. U.K. Amenity Tree, Forecasting and http://www.woodplan.co.uk/ Valuation, Operations Manager, Felled Timber, Prospect 3D For an alternate list of possible FMIS systems and components, see the Decision Support System Inventory developed by the U.S. National Commission on Science for Sustainable Forestry at http://ncseonline.org/NCSSF/ DSS/Documents/search/complete.cfm. Source: Robak and Kirmse 2007. 268 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT 2. For example, the Capability Maturity Model® for Soft- Center, College of Natural Resources, University of Min- ware (SW-CMM®) or its process-focused successor CMMI nesota. are used by many organizations in software and process FAO. 2003. "A Case Study On: Computerized Forest Man- improvement projects. Information concerning SW-CMM agement Control and Forest Information Management and CMMI can be found online at http://www.sei.cmu System in India: An Application to Criteria and Indica- .edu/cmm/, while other models and protocols can be found tors for Sustainable Forest Management." FAO-Forestry by searching online. Department Working Paper FM/23, Rome, Italy. 3. Programming language or "development environment," Gallis, C., and E. W. Robak. 1997."The Proposed Design for database technology, special purpose programs, such as GIS, an Integrated Forest Management System for Greek communication technology, and the hardware platforms. Forestry." Paper presented at the IUFRO 3.04 Conference 4. This limits the usefulness of free and pirated databases on Planning and Control of Forest Operations for Sus- and software. tainable Forest Management, Madrid, Spain, June 16­20. 5. Even if the initial cost of such a turnkey approach is Jamnick, M., and E. W. Robak. 1996."An Integrated Forestry higher, it may be more cost effective in the long term given Planning System."Proceedings of the Workshop on Hier- the difficulty of maintaining a self-developed system in a archical Approaches to Forest Management in Public and bureaucracy that is likely to see a high turnover of skilled Private Organizations. University of Toronto, Toronto, technical people. Ontario, Canada, May 25­29. Petawawa National 6. The "plug-n-play" principle in large system design is one Forestry Institute Information Report PI-X-124, Cana- that says that the system should be built (and documented) dian Forestry Service, 27­35. in such a way that, as new, better technology components Kilgour, B. 1991. "FRIYR: An Integrated and Computerized become available, the old component could be "unplugged" System for Forest Management and Yield Regulation." and the new one could be"plugged in"in a seamless manner. Proceedings of the Symposium on Integrated Forest For example, the FMIS should be designed so that when a Management Systems, Tsukuba, Japan, October 13­18. new forest inventory system becomes available, the develop- Robak, E. W. and R. Oborn. 2000. "Design of an Integrated ers of that new system would simply need to know the rules Forest Management System for Madhya Pradesh: for exchanging data with other components (planning pack- Towards Sustainable Forestry." Invited presentation at ages, GIS, and the like) and any other usage and security pro- the IUFRO XXXIII World Congress in Kuala Lumpur, tocols, and develop an interface and "plug it in" to the FMIS. Malaysia (unpublished, contact robak@unb.ca for an electronic copy). SOURCES OF HELP Robak, E. W., and B. Rama Murty. 1999. "Forest Manage- ment Information System (FMIS): An Integrated UN Food and Agriculture Organization. Mr. Magnus Approach for Forest Management." GIS Development 3 Grylle. Magnus.Grylle@fao.org. (5):44­5. USFS. Mr. Chuck Liff. cliff@fs.fed.us. Robak, E.W., and R. Kirmse, 2007. "Forest Management Forestry Tasmania. Dr. Martin Stone. Martin.Stone@ Information Systems." Note submitted to World Bank as forestrytas.com.au. input to Forests Sourcebook. Unpublished. World Bank, British Forestry Commission. Washington, DC. Rondeux, J. 1991. "Management Information Systems: Emerging Tools for Integrated Forest Management." Pro- SELECTED READINGS ceedings of the Symposium on Integrated Forest Man- Bauer, M., T. Burk, A. Ek, and P. Bolstad. 2003. "Integrating agement Systems, Tsukuba, Japan, October 13­18. Satellite Remote Sensing into Forest Inventory and Man- Tieying, S., Y. Zhengzhong, Z. Yuejun, Z. Wenchao, and F. agement." Environmental Resources Spatial Analysis Xiulan. 1991. "A Prototype Decision Support System for A Selection-Forest Management." Poster paper presented in the Symposium on Integrated Forest Management Systems, Tsukuba, Japan, October 13­18. NOTE 7.2: ESTABLISHING FOREST MANAGEMENT INFORMATION SYSTEMS 269 ANNEX 7.2A MODELTERMS OF REFERENCE The TOR for a specific FMIS project should be drawn up Objectives and Context--Phase I. The first contract only after the vision and strategy for the desired system have would manage the consultative process for developing the been developed. Nevertheless, the following may help form detailed objectives that the FMIS will support and clearly the basis of a TOR. defining the context of the system. The contextual informa- tion that should be provided would include TERMS OF REFERENCE a) a summary of the forest inventory, categorized and char- DEVELOPING A NATIONAL FMIS acterized in terms of uses, values, tenure, and manage- ment structures; Summary and Instructions b) the status of current forest policies, strategies, and plans at This section should provide an executive summary of the the national, regional, district, and individual forest areas; project, including a description of the broad objectives and c) the current state of knowledge concerning the status and scope of the FMIS project; the sources and timing of dynamics of the forest resources to be managed; financing; and the project management responsibilities and d) a summary of the major influences on and challenges to protocols. good management (including knowledge gaps, public policy trends, land use and tenure issues, public atti- tudes, and illegal activities); Background e) current uses and values (economic, environmental, and This section sets the broad context for the FMIS project and social) of the forest and an identification of the benefici- provides justification for the goals and scope of the FMIS aries and stakeholders; project and the development approach to be taken. In most f) the laws, regulations, and regulatory and management cases, an FMIS project is intended to do more than provide structures (including but not limited to the organization new IT support for existing forest management processes; it of the forest service) that influence and direct forest will require and support new management and decision management; processes. However, any intended "re-engineering" of man- g) the status of the communication and IT infrastructure agement processes should be made explicit, otherwise resis- (including data quantity and quality) in the country, tance to change will be difficult to overcome and FMIS classified by region and according to the forest service design will lack focus. hierarchy; h) internal and external technical support capabilities with respect to the IT and communication infrastructure; Specific Objectives of the Assignment i) human resources policies that may have an impact on An FMIS project should normally be divided into at least two developing an IT cadre in the forest service (even if much (and possibly three) phases and contracts that would involve of the work is outsourced, there needs to be a core of management that understands and directs IT develop- 1) the identification of the forest management decision ment over the long term); and processes that the FMIS is intended to support, with a j) the current level of knowledge and capacities regarding detailed description of the context that should inform forest management, business (or organizational) manage- the project management process and drive and constrain ment, and information technologies in the forest service the design and development phases, and a broad descrip- and other allied or support organizations that are involved tion of the functionalities of the proposed FMIS; in the analysis, planning, implementation, and control of 2) a system design process resulting in clear design specifi- forest resources and forest management activities. cations that are justified in terms of that context and project goals; and Based upon the above context, the FMIS design objectives 3) a system development and implementation process and project management modalities should be clearly based upon the design specifications and the project described and explicitly justified. This work should include a management process. description of functionalities, an identification of users 270 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT (direct and indirect) and usage patterns and processes, as followed (such as European numerical data standards); well as a description of the data requirements and data reports to be produced; spatial visualization and model- sources. If the FMIS development is to coincide with man- ing capabilities; data entry protocols; security and access; agement process changes, the links between the FMIS proj- description of users (including working language) and ect and process change initiative should be clearly delineated. usage patterns (including multiuser and web-enabled capabilities); integration among FMIS components; Detailed Design--Phase II. The main tasks of this phase interfaces and integration with existing or proposed of the work are to non-FMIS systems; minimum data auditing and data recovery; and back-up and archiving requirements. a) develop the detailed design specifications for the FMIS; Characteristics of software technologies to be employed, b) review and analyze existing FMIS and support technolo- including recommendations concerning which elements gies in relation to the specifications; should be built from scratch and which should be adapted c) review possible methods for the development of the from existing technologies. This should also address FMIS (adapting existing technologies, developing com- issues concerning the flexibility and resiliency of any sys- ponents "from scratch" using in-house or external tem being proposed, including its degree of adherence to expertise)1; "plug-n-play" principles and open source2 standards. d) recommend (with justification) the preferred develop- Hardware specifications (including those related to oper- ment method (which may well include a combination of ating environment, health, and ergonomics) and rules the above); and regulations that govern hardware acquisition. e) estimate the human resources requirements (including Description of data preparation work required, includ- commitment from client personnel), time, and cost of ing (as appropriate) data migration and conversion; the installed FMIS; and, preparation of base and thematic maps; forest and land f) consolidate the above information into a document that recharacterization; and acquisition, analysis, and incor- outlines the critical elements of the Development and poration of remote sensing imagery and data. Implementation TOR. Description of the current forest management and IT knowledge of proposed users and internal IT support In principle, it should not be the task of this consultant personnel, and the level that is desired. This means that, to recommend the specific development environment or where appropriate, the TOR must specify the education database and support technologies to be used because the and training required to use the system to maximize the design specifications and the context description (especially benefits, not simply train people about"which buttons to those related to local IT capabilities) should be clear enough push." that any inappropriate technologies would not be proposed Minimum requirements related to implementation and or, if proposed, would not be chosen. However, the design training, technical and user documentation, and system consultant should develop a draft Development and Imple- support. mentation TOR that recommends the software develop- Minimum software and project management quality ment, quality assurance, and project management standards assurance protocols to be employed. and protocols that should be used by the developer, includ- Description of the minimum level of long-term support ing those that facilitate future system evolution and com- that will be required to be provided by the development patibility with other national and international forestry and and implementation contractors. environmental systems. Description of the commitment from the clients with respect to the engagement of its people in the develop- Development and Implementation--Phase III. The fol- ment, testing, implementation, and training processes. lowing is a list of issues that would likely need to be addressed in the Development and Implementation TOR: Evaluation Criteria Software design specifications and performance criteria, Tender documents should be evaluated according to the including those related to specific functionalities; quality of the tender in relation to the requirements of the national and international data standards that must be TOR and then according to the following criteria: NOTE 7.2: ESTABLISHING FOREST MANAGEMENT INFORMATION SYSTEMS 271 expertise of the consultancy team for example) may maintain databases that could aug- experience and track record in similar FMIS projects ment the FMIS and vice versa. It is not efficient, from an proposed cost of development, implementation, and overall government perspective, to duplicate data-gath- training ering and storage efforts or, even worse, to have agencies estimated cost and requirements (especially those rela- develop incompatible systems. ted to human resources) for continued operation of the After a consensus on objectives and strategies has been system reached, present the conceptual design recommendations estimated ongoing maintenance and support costs to upper management (articulating the needs, functional- technologies, protocols, and standards proposed (includ- ities, and development strategy; estimating costs and time ing facilitation of future development and evolution of needed for the various development options and for the the system) various functionalities; reviewing and disseminating intellectual property ownership and rights information on the various turn-key options) for their realism of schedules approval. Upon receiving this approval, the conceptual realism and acceptability of commitment required of the design (with functionalities) should be presented to client intended users of the FMIS, to get their feedback and sug- ability to provide long-term support gestions for improvements. It is strongly recommended that a well-defined and stable user group sign off on the final design (and then monitor the development of the Specific tasks FMIS). An agreed on process of staged development and Besides the work described above, specific tasks and operat- implementation is necessary to avoid future conflicts ing methods are suggested as ways to increase the likelihood within the user group or between users and developers. of success in an FMIS project. Most of these are related to education, communication, and participation. Phase II. The design phase will require that interviews and workshops be held with all major user groups, first to help Phase I.Interview officials who are responsible for the strate- establish draft design specifications, then to gain acceptance of gic direction of the organization to gauge their clarity of pur- the final specifications and the major elements of the Devel- pose and understanding of modern forest management and opment and Implementation TOR (including acceptance of the capabilities of IT. Undertake a review of the context in their responsibilities in the development, testing, implementa- which the FMIS must fit. Based upon the results of these tion, and training processes). Successful implementation of an interviews and the evaluation of the context, design and hold FMIS will require, or will be undertaken in combination with, a workshop that fills knowledge gaps and leads to a consensus work process changes,which may necessitate a cultural change on the objectives and strategies of the FMIS on the part of in an organization. The human resources management issues upper management. To ensure the outcomes of the workshop must be considered, both in terms of the FMIS requirements are appropriate: and their impacts upon the FMIS project. The various user groups in an organization need to be Phase III. An important element that should not be forgot- educated about what the new FMIS might do for them. ten in the development,testing,implementation,and training Often they do not have a clear idea about how an FMIS phases is the ongoing communication and feedback processes might work and what it implies for their work processes. that must be developed and maintained to ensure the best It needs to be made clear that the FMIS is not just about possible final product, reduction in lost time due to misun- computerizing their existing manual processes. Existing derstandings, and eventual buy-in from the users. It should work processes may need careful review and redesign as be made clear to Phase III bidders that their proposals will be a prelude to the detailed design and development of the evaluated in part by how well they have responded to this FMIS, which adds to the size of the task. requirement. The FMIS project design should recognize that the requirements of an FMIS will change over time, as will Process and Reporting Arrangements the technologies employed. It should be recognized that other government agencies Specify the line agency to which the consultants would (related to land and water management and agriculture, report. That is, specify the agency that would be managing 272 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT the overall development phase of the FMIS and, if different, ment of large-scale IT projects. As is the case in the Phase I the agency that would operate the system. consultancy, the "FMIS forester" should have knowledge of Implementation of this assignment should aim to be the principles of modern, sustainable forest management inclusive and transparent and should specifically seek to and demonstrated experience in applying those principles in engage a broad range of stakeholders, including forest own- the design, development, and implementation of Manage- ers (public and private); forest managers (public and pri- ment Information Systems and Decision Support System vate); conservation and protected areas managers; the tools in a variety of contexts for forestry organizations. wood-using industries; the forestry consulting profession; In Phase III, the bidders (normally international FMIS researchers and academics; NGOs; regulators; relevant gov- consulting firms) should propose the mix of expertise and ernment ministries, such as finance and environment; and type and level of experience that they believe will best suit the international agencies supporting the forest sector. the achievement of the objectives. Duration NOTES Experience shows that the full development and installation 1. There is a tendency on the part of local and in-house IT (with training) takes much more time than planned. specialists to want to develop a system in-house. However, Although it would vary with the size and complexity of the World Bank experience shows that this is very time con- system being contemplated, in general an FMIS developed suming and costly; more costly than adapting an existing "from scratch," using no or few existing FMIS components, system. Most firms that develop and market systems provide would probably take five to seven years to full implementa- the implementation and training expertise needed to get tion, while the adaptation and installation of an already their systems up and running. developed system may take two to three years. A good, well- 2. Open source standards for software and data (including used FMIS may never be "completed," but rather will evolve spatial data) are being developed in Europe and North with a changing understanding of needs and with changes America to reduce the likelihood that users are "trapped" by in technologies and technological capabilities within user a specific manufacturer or technology. For example, for a long time ESRI used a proprietary data format that made it and support groups. difficult (if not impossible or illegal) for other GIS or GIS component suppliers to tap into the ARC/Info data. So even Expertise Required when someone came along with a better technology, the user could not upgrade technologies without a huge and The Phase I consultancy should be led by a forester who has expensive effort. In general, "open-source" does not mean a clear understanding of modern forest management princi- that developers cannot maintain their trade secrets--they ples, processes, and information requirements. The Phase II do not have to show their source code--it just means that consultancy should include a forester who has worked on the there is an agreement to adhere to codes and standards (for development of FMIS elsewhere, supported by an IT special- example, the use of metadata dictionaries) that ensure a ist with experience in developing standards for the manage- client is not trapped by a particular technology. NOTE 7.2: ESTABLISHING FOREST MANAGEMENT INFORMATION SYSTEMS 273 N OT E 7 . 3 Spatial Monitoring of Forests emote sensing (RS) has become part of most forest R forest resources throughout the world. Nevertheless, efforts management strategy implementations. While the at these different levels to systematically collect, examine, technology for RS has evolved, aerial photography and disseminate data about forest resources are done inde- has been in use for almost a century, and satellites have been pendently of one another, and use different definitions and recording forest change for more than 35 years. Landsat, measurements. Accordingly, comparison of results is diffi- launched in 1972, was one of the first satellites widely used cult, major knowledge gaps remain in large areas, and for remote sensing. Since then, Landsat has been a work- duplications exist in others. Only a few countries use spatial horse for scientists interested in measuring changes in the information for national forest inventories that are updated distribution and condition of forests. Remote sensing (aer- and suitable to address current environmental issues (see ial flights, aerial photography, optical and radar satellite boxes 7.16 and 7.17 for examples). imagery) and GIS have aided forest mapping and forest Spatial monitoring has become increasingly important inventories for many years. in the context of REDD. For REDD, even minimum Two trends have stimulated the rise of spatial monitor- requirements to develop national deforestation databases ing. First, technological advances in RS/GIS make these using typical and internationally agreed on methods will tools more accessible; human capacity to manipulate this require using RS data. The data would help assess gross data has also increased while information has become more deforestation, possibly develop a map of national forest accurate, less expensive, and more freely circulated. In addi- area, and present a visual representation of forest cover tion, there is a wider choice of satellites, prices of satellites change. Spatial monitoring, in some cases, is already part of have deceased significantly,1 the Internet is widely used to discussions for monitoring land use, land-use change and share data, and more affordable and more user-friendly forestry (LULUCF) (see box 7.18). RS/GIS software is now readily available. Independent of demand, there are challenges to effective Second, in addition to these technical advances, a variety spatial monitoring of forests: of needs are increasing demand for forest monitoring. The impetus to monitor comes from, among other things, the Availability of RS data. Detailed data (that is, certain need to assess national-level compliance with international satellite sensors and aerial photographs) must be conventions, and measure global public goods (for exam- ordered in advance and may not be available in the short ple, carbon sequestration, area under protection for conser- term. Clouds often hamper monitoring in the tropics vation purposes, and the like). RS/GIS technology provides and in mountainous areas, and can become a major the data and the tools needed for monitoring by enabling problem, especially for data acquired with less frequency precise overlays between different time periods within spe- (for example, it can take more than a year to get a cific boundaries, and by storing and analyzing the data. detailed resolution image with less than 30 percent cloud However, because inventories and mapping are frequently cover in Indonesia). Because higher temporal resolution time intensive and expensive, they are often carried out only satellites acquire data more often, they have better oppor- in specific regions or for specific purposes. To date, only six tunities to acquire imagery with fewer clouds. Another attempts to map forests worldwide exist. alternative is the use of radar satellites because radar sen- Various local, national, and international entities sys- sors "see" through clouds. Nevertheless, radar applica- tematically collect, examine, and disseminate data about tions for forest monitoring are still uncommon. 274 Box 7.16 Forest Monitoring in Cameroon Cameroon has made significant commitments and forest reserves (ecological reserves and forests allocated notable progress in monitoring forest-based activities. for production and research, as well as botanical gar- These commitments have launched initiatives to pro- dens, plant life sanctuaries, and forest plantations); (iii) duce and compile forest information and improve the council forests; (iii) communal forests; (iv) community quality and availability of relevant forest data, in part forests; and (v) private forests. to enable better decision making. The CD tool has been widely distributed and used. In 2005, a partnership that included the Cameroon Because it presents the data in graphic, user-friendly Ministry of the Environment and Forests (MINEF), formats, the tool has been used in various ways includ- Global Forest Watch, the Limbe Botanical Gardens, ing in prioritizing forest monitoring and enforcement and Cameroon Environmental Watch (the latter two of forest laws, and monitoring compliance by deter- are members of civil society) assembled the Interactive mining whether road construction is taking place Forestry Atlas of Cameroon. The decision-support tool within the boundaries of legally attributed logging is a compact disc (CD) atlas that compiles and inte- areas and in compliance with approved manage- grates GIS/RS data useful to forest monitoring. Key ment plans. MINEF and private companies use the tool data sets presented in the atlas include roads, hydro- to support land-use planning, assess impacts logical networks, logging concessions, vegetation, for- from forestry operations, and (because maps are est management unit statistics, and forested areas. unequivocal) inform dialogue and negotiation in con- Forested areas include boundaries of (i) state forests flict resolution. (protected areas such as game reserves, hunting areas, The Interactive Forestry Map is currently being game ranches, wildlife sanctuaries, and buffer zones, as updated; a new version is expected to be released in the well as zoological gardens belonging to the state); (ii) near future. Source: Noguerón and Stolle 2007. Box 7.17 Forest Monitoring in Indonesia In a 2004 forest sector paper, the Center for Interna- making relevant, reliable, accurate, and up-to-date tional Forestry Research (CIFOR) identified the lack of forest sector information available to decision mak- reliable and timely information on forests as the fore- ers inside the MoF on a continuous basis, as well as most origin of poor public and private forest policies. making key information accessible to the public; The Ministry of Forestry of Indonesia (MoF) also rec- and ognized this lack of information as a major obstacle for supporting better decision and policy making based sound decision making and development of appropri- on this information. ate policies; this recognition has paved the way toward better forest governance in Indonesia. A first and necessary step is to provide support and In 2005, the MoF established a National Forest Sec- inform forest management decisions with updated and tor Monitoring and Assessment Process (FOMAS). The reliable maps of forest use and forest cover. FOMAS is overall goal of FOMAS is to promote good forest gov- using mapping technology as a tool within a compre- ernance to ensure the optimal contribution of forest hensive decision-making and policy reform approach. resources to poverty reduction, economic growth, and Thus, FOMAS will help the MoF in better carrying out sustainable forest management and conservation. To its mandate of regulating and managing forest use and achieve this goal, FOMAS will enable transparency and establishing an appropriate framework for a profitable accountability, which are the essential foundations for forest sector in Indonesia that is socially and environ- effective forest governance. The specific objective of mentally sustainable. FOMAS is to establish the conditions for transparency in the forest sector by Source: Noguerón and Stolle 2007. NOTE 7.3: SPATIAL MONITORING OF FORESTS 275 Availability of reference data. Monitoring is effective bilities and specialized software for imagery and GIS when reference data (for example, type of forest, bound- analysis, interpretation, and manipulation. ary of parks, roads, or populations) are available. The use Human capital to generate, manipulate, apply, and inter- of reference data facilitates monitoring and thus deci- pret the data, as well as capability to translate data in sion-making and enforcement processes. However, refer- user-friendly format to end users. ence data often do not exist or are of insufficient quality. Human capital. Satellite imagery processing and inter- Effective and functional forest monitoring. Effective pretation can be time consuming and often requires an and functional forest monitoring involves the following: initial investment to set up the processing system. Costs. Costs depend on the satellite used and the accuracy An initial assessment of existing information and identi- needed. High-resolution imagery remains costly. Spatial fication of data gaps to reconcile data with features of accuracy and ground verification, at least in the initial interest: Forest change in a national park cannot be mon- stages to calibrate imagery interpretation, can add signif- itored if there is no information on the boundaries of the icant expenses. park. This assessment includes an evaluation of the qual- Limited information. Not everything can be detected with ity and accuracy of the data: Extraction of a valuable RS. Tree species cannot be determined unless data is col- species cannot be effectively monitored if the forest com- lected at a very detailed scale. Spatial monitoring with position data is inaccurate or outdated. RS/GIS can add to, and should not compete with, a Filling out data gaps by creating the data needed (that is, detailed ground inventory. digitizing features from satellite imagery; purchasing satellite imagery) or identifying and defining surrogate indicators to assess features data (for example, using OPERATIONAL ASPECTS incidence of fire as an indicator of human activities in RS/GIS requirements. Forest monitoring using RS/GIS certain forest types). requires the following: Establishing a baseline of (i) the spatial distribution of features of interest that are susceptible to change and (ii) Technological capability to generate, store, and update the boundaries against which change will be periodically the RS/GIS data; this often requires high computer capa- assessed. Box 7.18 Using Geospatial Tools for LULUCF Projects Geospatial tools can help shape LULUCF projects during ing land ownership, soil typology, drainage, elevation, the conceptual stages, and beyond, in the following ways: and vegetation cover percentage, can then be stored The tools can be used in demonstrating and justify- and managed in a GIS. ing the status of the land use before 31 December 1989 Because GPSs are affordable and portable in the field, (deadline for the first LULUCF commitment period). they can work in very remote areas and in difficult terrain. Imagery will provide information on current land cover, Locations can be georeferenced (x and y coordinates of and if past imagery is available then information about the latitude and longitude), and coordinates can be the past land cover can be derived. Land cover maps can directly stored in a computer system. then be drawn from these. Where digital information is Advancements in the technology now make it pos- not available (for example, when using only old aerial sible to integrate geospatial information into a deci- photographs), an old map can be digitized. sion-making tool. For instance, remotely sensed data They can assess the changes taking place in forest from an IKONOS spectral image can be analyzed canopy over time. Such change could be a result of for- through a GIS platform into different layers as needed. est restoration activity or tree removals (by logging, Such layers could include vegetation type, land with or fires, disease, and the like). without tree cover, water bodies, ownership patterns, They can demarcate and survey carbon asset roads, and so forth. This information then becomes a boundaries in a project area. Such information, includ- product that can help inform decision making. Source: Kaguamba 2004. 276 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Information obtained through RS sources can be less a well-thought-out, systematic approach to integrate all detailed than intensive fieldwork; ground verification is ingredients together in a methodic way.For example,between usually needed to verify and calibrate the RS data. A 1980 and 2000, four maps of forest resources in Indonesia combination of RS data and field work will produce the were produced (1988, 1993, 1996, and 2000); however, they most accurate information. do not use consistent legends, units, scales, and time frames, Conducting periodic assessments of the features of inter- and thus cannot be used effectively for monitoring. est or surrogate indicators. Periodicity depends on the characteristics being monitored. Compliance with Selecting the monitoring approach. There are many forestry law may only need yearly assessments of the different applications of forest monitoring and an equally extent and location of logging activity, while incidence of large number of approaches by which it can be done. For fires may need weekly or monthly monitoring. example, for measuring forest disturbance (selective log- Effective venues to channel the information to end users ging, for example) and deforestation some methods are in easy, user-friendly formats such as Web sites, paper highly manual and others are highly automated. Some maps, posters, or CDs. Critical information should be methods work at moderate resolution over large regions of channeled in a speedy manner to allow rapid response forests. Many tools were designed using dated ideas, tech- and action. nologies, and methods. Selecting the appropriate approach requires that the In many situations, one or several of these ingredients goals of the monitoring exercise be clearly articulated (see exist. Many countries have some type of periodic assess- box 7.19). Factors to consider include the size of area to ment, or produce maps of reference data (boundaries of monitor, the level of detail required, budget constraints, and national parks, for instance). However, monitoring requires season of the year (because of cloud cover).2 Box 7.19 Selecting the Appropriate Approach and Tools If the goal is to develop a country-scale monitoring scale disturbances. This automated system is the only program for deforestation, defined as clear-cuts of 20 one to deliver country-scale deforestation and logging hectares and larger, the rate-limiting step is not analyt- maps, such as the first-ever large-scale deforestation ical methodology or data availability. Terra-MODIS plus logging map at sub-30 m resolution (see box fig- satellite imagery is free and can perform the function, ure for the Amazon). The information from this sys- and the methods are simple and automated. The limi- tem can produce both extent and intensity of forest tation is in training, exercise, and operational demon- disturbance, where the latter is defined as the percent- stration of the capability. age of canopy opening and surface debris generation. If the goal is to develop a country-scale monitoring Remote monitoring of forest damage levels is now program for deforestation with clear-cuts of one hectare straightforward, if the challenges presented by clouds and above plus selective logging, the rate-limiting steps and terrain are resolved. are in both the analytical techniques and satellite data Other groups mostly use manual techniques, result- availability. With the loss of Landsat 7, the available ing in long delivery times. Most methods produce for- data are from a 22-year-old Landsat 5 or from more est and nonforest classes in their products. A few pro- expensive sources such as the French or Indian space duce more information, such as fractional cover of the agencies. This is workable if, and only if, such channels canopy. remain open. In the figure below, showing land cover change in The methods for fine-scale deforestation and log- the Amazon, the medium gray is what the other "state- ging monitoring are highly automated in some pro- of-the-art" technology shows as deforestation (forest grams, such as the one coordinated at the Carnegie cover change). The dark gray shows what the auto- Institution of Washington.a This automated system mated system reveals--selective logging completely currently works well but falls short in mountainous missed by other widely used RS systems. The dark gray terrain and with some of the more noisy high-resolu- currently shows a preview of what will be medium gray tion sensors, and is still being improved for very small- in two to four years. (Box continues on the following page.) NOTE 7.3: SPATIAL MONITORING OF FORESTS 277 Box 7.19 Selecting the Appropriate Approach and Tools (continued) Deforestation (1997­2000) Selective logging (1999­2000) Source: Asner and others 2006 (copyright 2006 National Academy of Sciences, U.S.A.). Note: This program is coordinated by Gregory P. Asner, Department of Global Ecology, Carnegie Institution of Washington, Stanford, CA, USA. This program required about US$2.5 million to develop the areas of signal processing, super-computing, canopy physics, and field ecology necessary to make such monitoring feasible. Spatial and temporal scale. Forest monitoring using Table 7.4 lists the existing satellite remote sensors, and their RS/GIS can be carried out on different spatial and temporal applications and limitations for specific purposes. Table 7.5 scales depending on the features of interest for monitoring lists currently available global forest maps. and the goal of the monitoring exercise. Forest monitoring An emerging RS/GIS application that merits special con- using RS/GIS can include clear cuts, intensive selective log- sideration is the MODIS-derived data set of percentage of ging, log yards, fires, road building, habitat fragmentation, tree coverage, produced by researchers at the University of biomass, and productivity. The monitoring of these features Maryland and South Dakota State University. The new maps, often requires different time steps and detail. A national based on the MODIS sensor operated by NASA, provide a overview of deforestation usually requires a one to five year consistent overview of the global distribution of percentage time frame, while monitoring of fires in national parks may of tree coverage in a continuous gradient (0 to 100 percent). need more frequent updates (several satellites can detect This allows flexibility so that the gradient can be adapted to fires in the forests, see box 7.20). different forest definitions. The MODIS satellite provides free global data coverage daily, allowing information to be com- Forest monitoring methods. A number of different piled and processed in a relatively speedy manner. The speed applications and methods for forest monitoring exist, and of data availability, the relative low cost, and the flexibility to the choice of which to use will depend on the purpose of the adapt to different forest definitions offer huge opportunities monitoring and the desired spatial and temporal scales. for international and global forest monitoring efforts. 278 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT Box 7.20 Using Remote Sensing for Real-Time Monitoring Annual, and even quarterly, large-scale assessments are degree, and so forth), can cover large areas (up to very possible using satellite data, if the imagery is being 250,000 ha per day), and are cheap in comparison collected. However, there is no guarantee that the nec- with launching a satellite. essary imagery is being collected. The spatial resolution of MODIS is not high enough to be of real value--too In general, satellites with a high temporal resolution much forest area needs to be cleared for it to be recog- (for example, daily over-pass) have low spatial resolu- nized by the free MODIS data. Landsat-like sensors, or tion (250­1,000 meters), and satellites with higher spa- better, are needed. Next-generation techniques and tial resolution (30 meters) have low temporal resolu- technologies are being developed. tion (20­30 days over-pass). Thus, from the beginning Weekly or monthly assessments require a very spe- the user has to choose between cialized satellite capability (Quickbird imagery) or air- craft. Both are viable options with different budgetary satellites with an overview scale (1 km to 250 meter implications: spatial resolution), which provide a wide view (often 1,000 km) and high frequency (once or twice Quickbird satellite data are for smaller areas of for- a day) (available from MODIS or NOAA); or est (<10,000 ha) and expensive, and the images more detailed data (5­50 meter spatial resolution) yield basic information, such as forest cover. with a much narrower view (50­100 km) but less Airborne platforms are extremely data rich (provid- frequency (20­40 days) (for example, TM, SPOT, ing forest cover, detailed structure, diversity to some ASTER). Source: Erick C. M. Fernandes, Senior Land Adviser, World Bank (personal communication); Noguerón and Stolle 2007. Parameters affecting cost and quality. Several remote the best combination of RS technologies (satellite, aircraft, sensing technology parameters determine the quality of ground GPS, GIS), with pockets of ground-truthing, and a results as well as the costs. They include, but are not limited resultant acceptable cost structure, should start operating to scale, resolution, and color (panchromatic or multispec- from project identification, especially for projects such as tral) and whether a GIS component is to be added. Ground- LULUCF projects. truthing of some features and aspects--legality of identified A cost-saving approach should be adopted for small- logging, taxonomic identification of some species, determi- scale projects, or for projects involving many but small com- nation of "forest" status (where it is not easy to differentiate, munity afforestation or reforestation projects. Such an for example, between a dense shrub thicket and a degraded approach would use a centralized RS data acquisition and poor quality forest)--will inevitably remain necessary. processing provider for the monitoring requirements. However, the cost of ground-truthing will be kept low An effective forest monitoring system using RS/GIS because it will be done selectively. should be technically sound, but it should also have social Depending on the objective, stratification approaches buy-in. Technological advances in the RS/GIS field are not can assist in reducing costs. A gross assessment can provide enough for effective forest monitoring; monitoring has to guidance on which relevant locations require a more be driven by societal and political demands. Forest moni- detailed assessment, providing guidance for stratifying the toring systems have to be collaborative and they have to be sample. Detailed mapping of more specific sites can reduce developed with the information end users want to ensure overall cost without compromising accuracy. that the information meets their needs and is appropriate for managing resources, policies, and practices. Monitoring systems must be firmly integrated into the LESSONS LEARNED AND RECOMMENDATIONS decision-making process and must be supported by civil FOR PRACTITIONERS society. Monitoring should go hand-in-hand with trans- A well-thought-through monitoring plan with a choice of parency and better and accurate forestry and reference data. NOTE 7.3: SPATIAL MONITORING OF FORESTS 279 280 Table 7.4 Existing Satellite Remote Sensors, their Applications, and Limitations for Forest Monitoring Principal Resolution Frequency/ Temporal Platform operator (meters) Scale cycle coverage Costs Applications Comments Overview satelllites NOAA-AVHRR USA 1,100, 4 km, Continental, Up to daily 1982 to date Freely available Indices used to recognize droughts, NOAA has launched 14 satellites and 8 km Regional state of vegetation, and others. into orbit since 1980. Satellites for older Most known is the Normalized 6­12 and 14 are still operational data Difference Vegetation Index (NDVI). with the Advanced Very High Resolution Radiometer (AVHRR) sensor. SPOT VEGETATION Europe 1,000 Regional 3 days 2002 to date Relative low cost State of vegetation. Large data storage requirements. EOS AM-1 USA 250­1,920 1­2 days Intended to measure canopy structure and state; photosynthesis and transpiration rates. MODIS USA 250, 500 Continental, Up to daily Up to twice Relative low cost Percentage of tree coverage. Promising tool for monitoring Regional daily deforestation. Detailed satellites IRS INDIA 2.5­180 Continental 24 days 1995 to date Vegetation and land use. Landsat 5 USA 30­120 National/ 8 days 1970s to date Forest types, land use changes, Aging. Global disturbances. Landsat 7 USA 15­120 National/ 8 days Late 1990s Relative low cost Forest types, land use changes, Crippled by aging sensor component Global disturbances. and failure in June 2003. Radarsat-1 Canada 10­100 3­100 16­24 days 1995 to date High power allows radar to peer Radarsat-2 through clouds and darkness. ASTER USA 15­90 Continental 16 1999 to date US$60 per Acquisition is on a task-by-task scene basis. CBERS China/ 20, 80, and National 3­4 days 1999 to date Vegetation mapping. Brazil 240 SPOT Commer- 2.5­5 Regional 3­26 days 2002 to date Pricey, from base Net primary productivity, Acquisition is on a task-by-task cial National US$2,300 per seasonality, disturbances, land-use, basis. (France) image disturbance. Super detail satellite Quickbird USA 0.60­3.2 m 1­3.5 days 2002 to date ~22.5 $ x sq km Landcover mapping, habitat mapping. Large data storage requirements. IKONOS USA 1­4 Local 1­3 days 2000 to date Pricey, depending Intended uses include forest fire Because of detail presented, spatial on resolution, detection, vegetation monitoring. extent is limited. Many images are bands, and scale. required for extended coverage. Source: Noguerón and Stolle 2007. Table 7.5 Global Forest Maps Title Author Domain Methods International Geosphere-Biosphere Loveland et al. 1999 Global 12 monthly vegetation indexes from April Program (IGBP) 1992 to March 1993 University of Maryland (UMD) Hansen et al. 2000 Global 41 multitemporal metrics from composites from April 1992 to March 1993 TREES Mayaux, Richards, and Janodet 1999 Humid tropics Mosaics of single date classifications of Eva et al. 1999 cloud-free images (1992­93) FRA-2000 FAO 2001 Global Updated from the IGBP-DIS cover data set MODIS-Land Cover Friedl et al. 2002 Global 12 monthly composites of 8 parameters from October 2000 to October 2001 Global Land Cover (GLC) 2000 Eva et al. 2004 Global 365 daily mosaics of 4 channels + 36 Mayaux et al. 2004 temporal vegetation indexes profiles for Stibig, Beuchle, and Achard 2003 2000 Source: Based on Mayaux et al. 2005. NOTES ­ Forest Resources Inventory and Monitoring. http://www.iufro.org/science/divisions/division- 1. The widely used Thematic Mapper (TM) scenes--each 4/40000/40200/. covering 12,000 km2--cost around US$5,000 per scene in the 1990s and now cost around US$500 per scene. ­ IUFRO Conference on Remote Sensing and Forest. Monitoring http://rogow99.sggw.waw.pl/. 2. The choice of best options will be severely limited if imagery is required within a very short time. The time it takes to deliver South Dakota State University, GIS Center of Excellence. an image will depend on the location of satellite sensors at the http://globalmonitoring.sdstate.edu/. time the image is needed, ability of the image provider to han- UNEP, Global Resource Information Database. dle the request,cloud cover,and ability to transmit the image via http://www.grid.unep.ch/activities/global_change/index. the Internet or by other quick delivery systems. php?act=5. University of Maryland ­ Global Landcover Facility. http://glcf.umiacs.umd RECOMMENDED READING (INTERNET SITES) .edu/index.shtml. Earthpace, LLC; Satellite Remote Sensing: Environmental ­ Deforestation Mapping Group. http://glcf.umiacs Applications, Forestry. http://earthpace.com/resources/ .umd.edu/research/. satellites_apps.html. ­ Landcover Change. http://glcf.umiacs.umd.edu/ser Environmental Analysis and Remote Sensing. http:// vices/landcoverchange/. www.ears.nl/EARShome/projects/txtfo.htm. ­ Monitoring Forest Dynamics in Northeastern China FAO in support of GOFC. http://www.geog.umd.edu/ ­ Remote Sensing for Decision Makers Series. research/projects/Sun_Forest.htm. http://www.fao.org/sd/EIdirect/EIre0072.htm USDA Forest Service (3/10/06). ­ Forest Inventory and Analysis National Program. ­ Africover Initiative. http://www.africover.org/africover http://fia.fs.fed.us/ and http://fia.fs.fed.us/program- _initiative.htm. features/. ­ Global Observation of Forest Covers. http://www ­ Inventory and Monitoring Institute. http://www.fs.fed .fao.org/gtos/gofc-gold/. .us/institute/index.shtml. ­ Global Terrestrial Observation System. http://www.fao ­ National Forest Health Monitoring Program. http:// .org/gtos/index.html. fhm.fs.fed.us/. International Union for Forest Research Organizations ­ Remote Sensing Application Center. http://www.fs.fed (IUFRO). http://www.iufro.org/. .us/eng/rsac/. ­ Division 4: Forest Assessment, Modelling, and Man- ­ International Programs Forest Monitoring, Remote agement. http://www.iufro.org/science/divisions/divi Sensing and GIS. http://www.fs.fed.us/global/topic/ sion-4/. welcome.htm#2. NOTE 7.3: SPATIAL MONITORING OF FORESTS 281 Tropical Ecosystem Environment Observation by Satellite km Spatial Resolution Using a Classification Tree (TREES). http://www.geo.ucl.ac.be/LUCC/research/en Approach." International Journal of Remote Sensing 21: dorsed/14-trees/TREES.HTML. 1331­64. Woods Hole Research Center Kaguamba, R. 2004. "Cost and Benefit of Remote Sensing ­ INFORMS, Integrated Forest Monitoring System for Methods for Monitoring LULUCF Carbon Assets."Unpub- Central Africa. http://www.whrc.org/africa/INFO lished internal paper, World Bank, Washington, DC. RMS/overview.htm. Loveland, T. R., Z. Zhu, D. O. Ohlen, J. F. Brown, B. C. Reed, ­ Satellite"Remote Sensing"Observations and Products. and L.Yang. 1999."An Analysis of the IGBP Global Land- http://www.whrc.org/borealnamerica/our_work/ Cover Characterization Process." Photogrammetric Engi- satellite_rs.htm. neering and Remote Sensing 65:1021­32. ­ Monitoring Landscape Properties. http://www.whrc Mayaux, P., T. Richards, and E. Janodet. 1999."A Vegetation .org/borealnamerica/our_work/monitor.htm. Map of Central Africa Derived from Satellite Imagery." Journal of Biogeography 26:353­66. Mayaux, P., E. Bartholomé, S. Fritz, and A. Belward. 2004."A REFERENCES CITED New Land-Cover Map of Africa for the Year 2000." Jour- nal of Biogeography 31:1­17. Asner, G. P., E. N. Broadbent, P. J. C. Oliveira, M. Keller, D. Knapp, and J. N. M. Silva. 2006. "Condition and Fate of Mayaux P., P. Holmgren, F. Achard, H. Eva, H.-J. Stibig, and Logged Forests in the Brazilian Amazon." PNAS 103 A. Branthomme. 2005. "Tropical Forest Cover Change in (34): 12947­50. the 1990s and Options for Future Monitoring." Philo- sophical Transactions of the Royal Society B: Biological Eva, H. D., A. Glinni, P. Janvier, and C. Blair-Myers. 1999. Transactions 360 (1454):373­84. "Vegetation Map of Tropical South America, Scale 1/5M." TREES Publications Series D, No. 2, EUR 18658 Noguerón, Ruth, and Fred Stolle. 2007. "Spatial Monitoring EN, European Commission, Luxembourg. of Forests." Note submitted to World Bank as input to Forests Sourcebook. Unpublished, World Bank, Washing- FAO. 2001."Global Forest Resources Assessment 2000 Main ton, DC. Report." FAO Forestry Paper No. 140. FAO, Rome. Stibig, H.-J., R. Beuchle, and F. Achard. 2003. "Mapping of Friedl, M. A., D. K. McIver, J. C. F. Hodges, X. Y. Zhang, D. the Tropical Forest Cover of Insular Southeast Asia from Muchoney, A. H. Strahler, C. E. Woodcock, S. Gopal, A. SPOT4-Vegetation Images." International Journal of Schneider, A. Cooper, A. Baccini, F. Gao, and C. Schaaf. Remote Sensing 24:3651­62. 2002. "Global Land Cover Mapping from MODIS: Algo- rithms and Early Results."Remote Sensing of Environment 83 (1­2):287­302. CROSS-REFERENCED CHAPTERS AND NOTES Hansen, M. C., R. S. Defries, J. R. G. Townshend, and R. Sohlberg. 2000. "Global Land Cover Classification at 1 Note 7.2: Forest Management Information Systems 282 CHAPTER 7: MONITORING AND INFORMATION SYSTEMS FOR FOREST MANAGEMENT ANNEX 7.3A ELEMENTS FORTERMS OF REFERENCE FOR DEVELOPING A NATIONAL SYSTEM FOR FOREST MONITORING AND INFORMATION Background. A national system for forest monitoring and research and related technical fields in nongovernment sec- information will enable a decision-making environment tors to increase effectiveness and reduce cost. To do this where reliable, accurate, and current information on forest effectively, it would be important to collect and compile and timber resources and related decisions are continuously existing forest-related data into a GIS database, to assess and publicly available, and where authorities can take the availability and quality of forest data, and to identify actions upon this information to combat illegal logging and data gaps. This should include a review of the new strengthen law enforcement. remote sensing­based forest cover change mapping approaches being developed by a number of organiza- Specific objectives. The specific objective of a national tions. With this information, a needs assessment can be system for forest monitoring and information is to establish carried out. the conditions for transparency in the forest sector by Focus on improving high-impact forest sector decision making to address the most critical issues and ensure making relevant, reliable, accurate, and up-to-date forest continued momentum for action. This will require priori- sector information continuously available to decision tizing information and decision support activities that makers as well as making key information publicly acces- are (i) most important for enabling policy change and sible; and (ii) most likely to rapidly result in successful outcomes. assisting decision makers in better decision and policy Enable public scrutiny and promote clean government. making based on daily use of better-managed information. This will require (i) developing a clear information dis- closure policy and operational information disclosure There are several steps to consider before such an activ- mechanism to ensure public access to relevant informa- ity can proceed. These include the following: tion, (ii) training civil society to use this information, and (iii) gathering NGO and industry feedback to Create and mobilize political support to generate continued improve the policy. incentives for action and establish a culture of trans- parency. This may involve stakeholder consultations to Upon completion of these steps, the terms of reference build a constituency and attain official recognition. for this activity can use elements of the sample TOR for Make use of the best available forest monitoring and com- FMIS (see Annex 7.2A to note 7.2, Forest Management munication technologies and existing capacity in forest Information Systems). NOTE 7.3: SPATIAL MONITORING OF FORESTS 283 PA RT I I Guidance on Implementing Forests Policy OP 4.36 C H A P T E R 8 Introduction to the World Bank Forests Policy he World Bank has 10 key policies that are critical T Guidance on handling the due diligence requirement in to ensuring that potentially adverse environmental OP 8.60 with regard to forests is discussed in chapter 6 of and social consequences are identified, minimized, the Forests Sourcebook, and its associated notes. and mitigated, as well as a policy on disclosure. In the con- text of forests, the Operational Policy on Forests (OP 4.36) HISTORY OFTHE WORLD BANK'S is proactive in both identifying and protecting critical forest FORESTS POLICIES conservation areas and in supporting improved forest man- agement in production forests outside these areas. The World Bank's original Operational Directive on The reader should note that this section covers only the Forestry (OD 4.36) was issued in 1993. It grew out of a con- policies relevant to World Bank investment projects. The cern (voiced by environmental nongovernmental organiza- World Bank also has an Operational Policy on Development tions [NGOs] and other outside stakeholders, as well as Policy Lending (OP 8.60) that is relevant to the forest sector within the World Bank) that World Bank­supported and Forests Strategy. Section 11 of OP 8.60 states: forestry operations need to be environmentally sustainable. As such, the policy was focused primarily on forestry activ- The World Bank determines whether specific country ities. This Forestry Policy was controversial, both within and policies supported by the operation are likely to cause outside the World Bank, because it prohibited World Bank significant effects on the country's environment, financing of commercial logging in primary tropical moist forests, and other natural resources. For country poli- forests. This provision did not prohibit technical assistance cies with likely significant effects, the World Bank and numerous indirect forms of support for such logging. assesses in the Program Document the borrower's sys- Nonetheless, it had a chilling effect upon World Bank man- tems for reducing such adverse effects and enhancing agement and project staff, who were reluctant to support positive effects, drawing on relevant country-level or activities that were in any way linked to any kind of tropical sectoral environmental analysis. If there are signifi- forest harvesting, even when the expected outcomes would cant gaps in the analysis or shortcomings in the bor- be highly positive from a conservation standpoint. Mean- rower's systems, the World Bank describes in the Pro- while, deforestation (driven more by agricultural expansion gram Document how such gaps or shortcomings than by logging) was continuing and even increasing in would be addressed before or during program imple- many World Bank member countries, resulting in the con- mentation, as appropriate. cern that the World Bank's relative disengagement from 287 forestry activities was counterproductive, from a poverty SCOPE OFTHE FORESTS AND NATURAL reduction as well as from a conservation perspective. HABITATS POLICIES To promote a more proactive World Bank role in forest Because the Forests Policy was rewritten in 2002 in a man- management and conservation activities in developing coun- ner that would ensure consistency with the Natural Habitats tries, the Board in 2002 approved a new Forests Policy (OP Policy, these two safeguard policies overlap extensively in (i) 4.36) and a revised Forests Strategy,following a long and exten- the types of ecosystems they cover, (ii) the types of projects sive consultation process with numerous stakeholders, includ- that are subject to their requirements, and (iii) the main ing environmental NGOs. The new OP 4.36 differs from the requirements that relevant projects need to follow. previous Policy on Forests in several key respects, including (i) a focus on all types of World Bank­supported investment Types of ecosystems or land-use systems. Forests OP operations that involve forests, not just forestry; (ii) emphasis 4.36 applies to projects involving all types of natural (pri- on all types of forests in developing countries (including tem- mary and secondary) forests (defined in OP 4.36, annex A, perate and boreal forests), rather than principally tropical to include a rather broad range of wooded ecosystems), as forests; and (iii) permitting World Bank support for commer- well as forest plantations. Natural Habitats OP 4.04 applies cial harvesting within tropical or other forests, provided that to projects involving all types of natural ecosystems, includ- the forests in question are not critical forests (or related critical ing natural forests as well as the full range of nonforest nat- natural habitats) and the harvesting is carried out according to ural ecosystems (terrestrial, freshwater, and marine). Thus, specific high standards, normally including independent certi- both of these safeguard policies apply to projects that some- fication (see below for further details). The new OP 4.36 has how involve natural forests (broadly defined). However, been rewritten to ensure consistency with the Natural Habitats only the Forests Policy would apply to projects with non- OP 4.04, although the Forests Policy is more detailed with native plantation forests, if these are planted on land that respect to forestry activities. does not (and did not recently) contain natural habitats. The following are three safeguard policies that apply to Conversely, only the Natural Habitats Policy would apply to almost every World Bank­financed investment project1 projects affecting exclusively nonforest natural habitats involving forests: (such as natural grasslands, freshwater lakes, beaches, or coral reefs). Environmental Assessment. The World Bank's Environ- mental Assessment Policy (OP/BP 4.01)2 governs the envi- Types of projects. The new Forests OP 4.36 covers all ronmental assessment process that all World Bank­supported forestry projects, as well as a broad range of other projects projects--that is, all investment operations, including those that may affect (positively or negatively, directly or indi- of the World Bank's debt financing (IBRD) and concessional rectly) the health and quality of forests of any type. These financing (IDA) arms, as well as those involving the Global projects can include, among others, investments in (i) Environment Facility (GEF)--must follow. Most projects transportation (highways, rural roads, large bridges, rail- involving forests are classified as either Category A (requir- ways, airports, ports, river navigation works); (ii) electric ing a full environmental impact assessment, EIA) or B power (hydroelectric dams, power transmission lines, wind (requiring an environmental analysis that is usually more farms on forested ridges, thermal power plants emitting air limited in scope than a full EIA), according to criteria that pollution harmful to forests); (iii) industry (mining, oil are discussed further below. and gas, manufacturing industries requiring fuelwood); (iv) agriculture (crop cultivation, agroforestry, cattle and Forests. The Forests Policy (OP/BP 4.36) covers all projects other livestock, fisheries involving mangrove or other that affect natural or planted forests, whether positively or forests, land administration and land reform involving negatively (see chapter 9, Applying Forests Policy OP 4.36). forested areas); (v) water supply (reservoirs, canals, abstraction of ground or surface water affecting forests); Natural Habitats. The Natural Habitats Policy (OP/BP (vi) urban development involving wooded areas; (vii) 4.04) covers projects that affect natural forests or other non- tourism (resort development, ecotourism in forested forest natural ecosystems, with special focus on those proj- areas); (viii) telecommunications (transmission towers and ects that might lead to significant loss or degradation of nat- access roads on mountaintops or other forested areas); (ix) ural habitats (details below). privatization of state-owned forested lands; and (x) natural 288 CHAPTER 8: INTRODUCTION TO THE WORLD BANK FORESTS POLICY resource management and conservation, including all types work in the case of involuntary land taking; and (ii) a Process of forestry, protected areas, and similar investments. The Framework in the case of involuntary restriction of access to Natural Habitats OP 4.04 applies as well to all these types the natural resources within parks and protected areas. The of investments, as long as they involve natural forests or policy does not cover restrictions of access to natural other kinds of natural habitats. resources outside of formal protected areas, such as commu- As a practical, quick summary, the largely overlapping nity-based natural resource management projects (OP 4.12, safeguards requirements of the Forests and Natural Habitats footnote 6), or the regulation of forests or other natural policies can be summarized as follows: resources at a national or regional level (OP 4.12, footnote 8). (See the World Bank's Involuntary Resettlement Source- If a nonforestry project complies with OP 4.04, it also book, and for more details on the preparation of a Process automatically complies with OP 4.36. Framework, see also"Guidance on Development of Terms of If a nonforestry project complies with OP 4.36, it also Reference Related To OP 4.36" in chapter 9.) complies with OP 4.04, except where nonforest natural habitats are involved (in which case OP 4.04 needs to be Pest Management. The Pest Management Policy (OP 4.09 specifically applied). and BP 4.01, annex C) applies to projects that (i) involve All forestry projects (involving natural forests as well as (through World Bank or counterpart funds) the procure- plantations) are subject to the additional requirements in ment of pesticides or pesticide application equipment; OP 4.36. (ii) would lead to substantially increased pesticide use; or (iii) would maintain or expand pest management practices that are unsustainable or risky from an environmental or OTHER RELEVANT SAFEGUARD POLICIES health standpoint. Some forestry projects involve significant The remaining eight safeguard policies can sometimes apply pest management issues (sometimes including pesticide to projects involving forests (for more information on each use) in natural or plantation forests as well as in tree nurs- of these policies, please refer to the World Bank Safeguards eries (for guidance on applying this OP, please refer to the Web site): Pest Management Guidebook). Indigenous Peoples. The Indigenous Peoples Policy Physical Cultural Resources. The Physical Cultural (OP/BP 4.10) specifies how Indigenous Peoples need to be Resources Policy (OP/BP 4.11) was issued in April 2006, consulted and involved in the design of projects that may replacing the substantially similar Management of Cultural affect them (positively or negatively). Many projects involv- Property in World Bank­Financed Projects OPN 11.03. This ing forests also involve Indigenous Peoples, who are impor- policy applies to projects that might affect sites and objects tant stakeholders in forest-based activities. Key require- of archaeological, paleontological, historical, architectural, ments of OP 4.10 are social assessment; free, prior, and religious, aesthetic, or other cultural significance. Projects informed consultations leading to broad community sup- involving forests that might also trigger this policy include, port to the project; and development and disclosure of an among others, those with (i) civil works (including forestry Indigenous Peoples Plan or Planning Framework (see chap- roads, small buildings, and manual tree planting) that might ter 12, Applying OP 4.10 on Indigenous Peoples). uncover previously unknown relics; and (ii) forested sites of special cultural significance (including sacred forests identi- Involuntary Resettlement. The Involuntary Resettle- fied by local communities). ment Policy (OP/BP 4.12) applies to projects involving either (i) the involuntary taking of (forested or any other) land for Projects in Disputed Areas. This policy (OP 7.60) pre- project purposes that leads to physical relocation, loss of scribes special consultation and due diligence procedures assets, or loss of income sources or livelihoods for the for any projects proposed in geographic areas that are dis- affected persons; or (ii) the involuntary restriction of access puted between two or more countries. Many such areas are to legally designated protected areas that leads to adverse remote and forested. impacts on the livelihoods of the affected persons. To address these impacts, the policy requires the preparation of (i) Projects on International Waterways. This policy (OP either a Resettlement Plan or Resettlement Policy Frame- 7.50) covers projects that could appreciably affect international CHAPTER 8: INTRODUCTION TO THE WORLD BANK FORESTS POLICY 289 waterways,or the quantity or quality of water in more than one a discussion on protecting forests through conservation off- country. Some of these projects could also affect forests (such sets. Chapter 10 is on consultation and communication in as through inundation by a reservoir or the loss of available forest projects. Chapter 11 discusses the Forest Certification water to riparian forests from upstream abstraction). Assessment Guide. The Indigenous Peoples policy is covered in chapter 12. Safety of Dams. This policy (OP 4.37) applies to projects that construct, rehabilitate, or substantially depend upon NOTES large or high-hazard dams, whether these dams are for 1. This may include technical assistance and grants, such as hydropower, water supply, or other functions (including the GEF. Technical assistance that affects forests can be cov- mine tailings containment). Some projects involving dams ered by safeguards. Development policy loans are not covered also affect forests--whether through permanent flooding, by safeguards. Development policy loans are subject to OP water diversion, induced land-use changes, or other 8.60, which is discussed in chapter 6 and associated notes. impacts. (For guidance on applying this OP, please refer to 2. OP means an Operational Policy, which is approved by the Regulatory Framework for Dam Safety.) the Board and regarded as a requirement for projects to fol- This section of the sourcebook has four chapters follow- low. BP means a World Bank Procedure, which is approved ing this introduction. Chapter 9 is on applying OP 4.36. by Bank management. When used in this sourcebook, OP Chapter 9 also includes a discussion of the main require- often refers as well to the accompanying BP for that safe- ments of the Forests Policy, guidelines for implementation guard policy. (including preparation requirements, appraisal require- ments, and supervision requirements), definitions, and REFERENCE CITED guidance on identifying critical forests and critical natural World Bank. "Pest Management Guidebook." Available at habitats through environmental assessment, which includes http://go.worldbank.org/RJPAKAND00. 290 CHAPTER 8: INTRODUCTION TO THE WORLD BANK FORESTS POLICY C H A P T E R 9 Applying Forests Policy OP 4.36 O perational Policy (OP) 4.36 applies to all World ate, socially beneficial, and economically viable forest plan- Bank investment operations that potentially have tations to help meet growing demands for forest goods and an impact on forests, regardless of whether they services. are specific forest sector investments. It also encourages the Specifically incorporation of forest issues in Country Assistance Strate- gies (CASs), and addresses cross-sectoral impacts on forests. The World Bank uses environmental assessments, The policy provides for conservation of critical natural poverty assessments, social analyses, public expenditure habitats and prohibits World Bank financing of any com- reviews, and other economic and sector work to identify mercial harvesting or plantation development in critical the economic, environmental, and social significance of natural habitats. It also allows for proactive investment sup- forests in borrowing countries. port to improve forest management outside critical forest The World Bank integrates strategies into its CASs to areas, with explicit safeguards to ensure that such World address any potential significant impacts of the CAS on Bank­financed operations comply with independent certifi- forests. cation standards acceptable to the World Bank, or opera- The World Bank does not finance projects that would tions with an agreed upon, time-bound action plan to involve significant conversion or degradation of critical establish compliance with these standards. forest areas or other natural habitats. The World Bank does not finance projects that contra- vene applicable international environmental laws. OBJECTIVE OFTHE FORESTS POLICY The World Bank does not finance plantations that involve The objective of OP 4.36 is to assist clients to harness the any conversion or degradation of critical natural habitats, potential of forests to reduce poverty in a sustainable man- including adjacent or downstream critical natural habitats. ner, to effectively integrate forests into sustainable economic The World Bank only finances commercial harvesting development, and to protect the vital local and global envi- operations or the purchase of logging equipment in areas ronmental services and values of forests. Where forest that it has determined are not critical forests or related restoration and plantation development are necessary to critical natural habitats. meet these objectives, the World Bank assists clients with The World Bank only finances industrial-scale commer- forest restoration activities that maintain or enhance biodi- cial harvesting operations in areas outside critical forest versity and ecosystem functionality. The World Bank assists areas, where such operations are either certified as meet- clients with the establishment of environmentally appropri- ing standards of responsible forest management under 291 an independent forest certification system acceptable to changes in the management, protection, or utilization of the World Bank, or adhere to a time-bound, phased natural forests or plantations. action plan acceptable to the World Bank for achieving certification to such standards. Mechanisms for achieving policy objectives. As noted In areas outside of critical forest areas, the World Bank above, the World Bank's objectives in forests are to assist may finance harvesting operations by small-scale land- clients to harness the potential of forests to reduce poverty, holders, local communities under community forest integrate forests into sustainable economic development, management, or entities under joint forest management. and protect vital local or global environmental services and Such financing can be provided where these operations values of forests. Mechanisms to achieve these objectives are have either achieved a standard of forest management described in the OP, and the World Bank procedures docu- developed with the meaningful participation of affected ment, and include local communities that is consistent with the principles and criteria of responsible forest management outlined use of appropriate economic, environmental, and social in paragraph 10 of OP 4.36, or adhere to a time-bound assessments to identify the economic and environmental action plan to achieve such a standard that has been significance of forests and any activities involved in the developed with the meaningful participation of affected World Bank-financed investment that may adversely local communities and acceptable to the World Bank. All affect the well-being of forests and the people who such operations must be monitored by the client, with the depend on them; meaningful participation of local people who are affected. assessment of the potential for activities proposed in a The World Bank uses environmental assessment to CAS that would significantly impact forests, and incor- address the impact of all World Bank­financed invest- poration of strategies to address these impacts; ment projects on forests and the rights and welfare of use of information required from the client on policy, local communities. legal, and institutional frameworks in sector or project The World Bank ensures that World Bank­financed design to address priority poverty, social, and environ- investment projects involving the management of forests mental issues needed to meet the economic, environ- incorporate measures to strengthen the fiscal, legal, and mental, and social objectives of World Bank­financed institutional framework in the borrowing country to investment projects; meet defined economic, environmental, and social use in project design of assessments of the adequacy of objectives that address, among other issues, the respec- land-use allocations for the management, conservation, tive roles and legal rights of the government, the private and sustainable development of forests, including identi- sector, and local people. fication of any additional allocations needed to protect The World Bank ensures that World Bank­financed critical forest areas; investment projects involving the management of forests use of clear standards of forest management certification give preference to small-scale, community-level manage- to guide any investment support for harvesting opera- ment approaches where they best harness the potential to tions, including time-bound action plans to achieve cer- reduce poverty in a sustainable manner. tification of acceptable standards of forest management; The World Bank ensures that the design of World and Bank­financed investment projects that use forest use of market assessments to determine the full range of resources evaluate the prospects for the development of goods and services available from well-managed forests new markets and marketing arrangements for nontim- to enhance returns from forest management and give ber forest products and related goods and services, taking preference to small-scale, community-level management into account the full range of goods and environmental approaches where they best harness the potential of services derived from well-managed forests. forests to reduce poverty in a sustainable manner. Triggers. The policy is triggered whenever any World Consultation and disclosure requirements (World Bank­financed investment project (i) has the potential to Bank Policy on Disclosure of Information). The World have impacts on the health and quality of forests or the Bank requires clients to identify and consult the groups in rights and welfare of people and their level of dependence forest areas likely to be affected by World Bank­financed upon or interaction with forests or (ii) aims to bring about investment projects in and beyond the forest sector. 292 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 The disclosure requirements set out in the Environmen- include, where appropriate, the establishment or strength- tal Assessment (EA) Policy (OP 4.01) apply to all projects ening of ecologically similar protected areas (see OP 4.04, affecting forests.Aside from the required EA documentation, paragraph 5; OP 4.04, annex A, item [e]; and OP 4.36, para- there is no freestanding document that is automatically graph 5 for the full legal language). required for all projects affecting forests. However, many for- est-related projects will generate freestanding reports (such Forest plantations. With respect to forest plantations, OP as Forest Management Plans), which should be made pub- 4.36 (paragraph 7) specifies the following: licly available as a matter of good practice. Experience has shown that transparent decision-making processes are The World Bank does not finance forest plantations that important for good forest governance and good development involve any conversion or degradation (whether "signifi- outcomes, and full disclosure of forest-related information cant" or not) of critical natural habitats. Such conversion should be encouraged wherever feasible. Additional require- would typically take place when a native forest or natural ments for consultations apply if the World Bank's Indige- grassland is replaced as part of plantation establishment. nous Peoples' or Involuntary Resettlement policies apply. Under OP 4.36, all World Bank­supported forestry plan- tations must be sited away from critical natural habitats. In the case of noncritical natural habitats, the World Bank MAIN REQUIREMENTS OFTHE FORESTS POLICY gives preference (as with other types of projects) to siting OP 4.36 requires that all relevant types of projects must forest plantations on lands that no longer contain natural ensure that they avoid causing significant, unmitigated habitats, provided that these lands were not converted in harm to natural forests or other natural habitats. These "do anticipation of the World Bank­supported project. no harm" requirements can be summarized as follows (see World Bank­supported forest plantation projects need the text of each policy for the full details): to prevent and mitigate threats to natural habitats and biodiversity, including the potential spread of invasive Avoiding significant damage to critical forests and species (such as the Pinus species in the natural grass- other critical natural habitats. OP 4.36, paragraph 5 lands of southern South America). prohibits World Bank support for projects that would involve the significant conversion or degradation of critical Harvesting of natural forests. With respect to the har- forests or other types of critical natural habitats (see the def- vesting of natural forests, the Forests Policy: initions section that follows). Prohibits World Bank financing for commercial or Minimizing and mitigating damage to other (non- community-based harvesting in any areas containing critical) forests and other natural habitats. For critical forests or related critical natural habitats (OP proposed projects that would adversely affect noncritical 4.36, paragraph 8), with the exception that community- forests and other natural habitats, the World Bank's Forests based harvesting (defined in OP 4.36, annex A, items [d] Policy has more flexible (but nonetheless rigorous) stan- and [e]) may take place within multiple-use Managed dards of compliance. Where feasible, the conversion (loss) Resource Protected Areas (Category VI in the standard- or degradation of any forests and other natural habitats ized World Conservation Union [IUCN] international should be avoided through careful project siting and design. classification scheme for different types of protected There is a strong presumption against any significant con- areas), where such harvesting is an integral part of the version or degradation of noncritical natural forests. How- management plan for the area. ever, the World Bank may still support a project that would Requires that industrial-scale commercial forest harvest- lead to significant conversion or degradation of noncritical ing can receive World Bank financing only if it is either forests or other noncritical natural habitats if (i) there are (i) certified under an independent forest certification no feasible alternatives for achieving a project's key objec- system acceptable to the World Bank as meeting stan- tives; (ii) comprehensive analysis demonstrates that the dards of good forest management or (ii) adhering to a overall benefits from the project substantially outweigh the time-bound action plan acceptable to the World Bank for environmental costs; and (iii) the project includes mitiga- achieving certification of such standards. (These stan- tion measures acceptable to the World Bank. These mitiga- dards of good forest management are specified in OP tion measures must be technically justified and should 4.36, paragraphs 10­11.) CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 293 In the case of forest harvesting by small-scale landholders or Document [PID], and Integrated Safeguards Data Sheet local communities (by themselves or under joint forest [ISDS]), it is necessary to indicate whether a proposed management arrangements), formal certification is not investment project triggers OP 4.36 or OP 4.04. In this required for World Bank financing. However, these produc- regard, it is recommended as good practice to take a broad ers, who are generally small scale, must either (i) achieve (and literal) interpretation of the full text of these policy standards of forest management consistent with the criteria statements, and thus to indicate that the project does trigger outlined in OP 4.36, paragraph 10; or (ii) adhere to a time- these policies if it would affect forests or other natural habi- bound action plan (developed with the meaningful partici- tats in any way, positively or negatively. However, at a mini- pation of affected local communities and acceptable to the mum, it is required to indicate that a project triggers World Bank) to achieve these standards. (i) OP 4.36 if it is either a forestry project of any kind, or a nonforestry project with the potential for significant loss or Small-scale landholders and local communities. degradation of any natural forests or related natural habitats; The forests policy does not require formal certification of and (ii) OP 4.04 if it has the potential for significant loss or the forest management practices of small-scale landholders degradation of any natural habitats (including natural and local communities, largely because of the typically high forests). For this particular reporting requirement, the transaction costs for these small-scale producers to obtain potential to cause significant loss or degradation of forests or such certification. other natural habitats should be assessed in the (at least the- oretical) absence of any planned project-specific screening or other measures that would serve to prevent or mitigate WHEN ISTHE FORESTS POLICYTRIGGERED? these adverse impacts. Strictly speaking, both policies (OP 4.36 and Natural Habi- tats OP 4.04) apply to any projects that affect forests or ENVIRONMENTAL CLASSIFICATION other natural habitats, whether positively or negatively. As OF PROJECTS INVOLVING FORESTS explicitly stated in OP 4.36 (paragraph 3), the Forests Policy applies to all investment projects that (i) may have some Under the EA policy, all World Bank­supported investment impact on the health and quality of forests; (ii) may affect projects are classified as Environmental Category A, the rights and well-being of forest-dependent people; or (requiring a full environmental impact assessment); Cate- (iii) seek to bring about changes in the management, pro- gory B (requiring a more limited environmental analysis); tection, or use of natural forests or plantations. Although Category C (requiring no environmental analysis after the the emphasis is on the "do no harm" safeguard provisions, initial screening); or Category FI (involving on-lending OP 4.36 also promotes "doing good" by pursuing opportu- through financial intermediaries). The Environmental nities for the conservation and sustainable use of forests and Assessment OP 4.01 (paragraph 8) provides the generic cri- other natural habitats within World Bank­supported proj- teria for environmental classification that should always be ects, analytical work, and policy dialogue. followed. The 1998 Good Practices Note (OP 4.01, annex B) Within the World Bank, the triggering of a particular suggests that Category A is normally the best classification safeguard policy is often understood to mean either (i) the for "forestry production projects," while Category B is gen- need for due diligence to verify whether adverse impacts are erally most appropriate for watershed management or reha- expected, to ensure compliance with the policy's specific bilitation, protected areas, and biodiversity conservation. requirements; or (ii) the need for designing and imple- OP 4.36, paragraph 3, specifies that "a project with the menting specific measures to prevent or mitigate adverse potential for conversion or degradation of natural forests or impacts. Under these rather narrow interpretations, both other natural habitats that is likely to have significant OP 4.36 and OP 4.04 would be triggered by those projects adverse environmental impacts that are sensitive, diverse, or that have the potential to convert or degrade forests or other unprecedented is classified as Category A; projects other- natural habitats, but not by those projects that are strictly wise involving forests or other natural habitats are classified conservation oriented and have no significant adverse envi- as Category B, C, or FI, depending on the type, location, ronmental impacts (except that forestry projects always trig- sensitivity, and scale of the project and the nature and mag- ger OP 4.36). nitude of its environmental impacts." The Natural Habitats In several World Bank project documents (including the Policy (OP 4.04, paragraph 2) provides a similar (but not Project Appraisal Document [PAD], Project Information quite identical) approach: "[i]f, as part of the environmen- 294 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 tal assessment process, environmental screening indicates Terms of Reference (TOR) are reviewed and agreed upon the potential for significant conversion or degradation of for any social, environmental, and economic assessments critical or other natural habitats, the project is classified as required in OP/BP 4.36 and other relevant World Bank Category A; projects otherwise involving natural forests are OPs/BPs; classified as Category A or B, depending on the degree of economic, environmental, and social analyses are under- their ecological impacts." taken to identify the economic, environmental, and Guidelines for the environmental classification of proj- social significance of forests and any activities involved in ects that involve forests include the following1: proposed CASs or World Bank­financed investments that may adversely affect the well-being of forests and the Category A is the appropriate category for (i) nonforestry people who depend on them; projects of any type with the potential to cause (directly inventories are undertaken at a spatial scale that is eco- or indirectly) the significant conversion or degradation logically, socially, and culturally appropriate for the for- of natural forests or adjacent natural habitats (such as est area in which the project or investment program is new roads through forests, large dams, mining, oil and located to identify critical forest areas and assess the ade- gas, large-scale irrigation or new land settlement, other quacy of land allocations to protect these areas; large-scale civil works in forested areas, and industries the linkages between any proposed forest sector activities dependent upon natural forests for raw materials); and the poverty reduction, macroeconomic, and conser- (ii) forest plantation projects that would lead to the sig- vation objectives of the World Bank's country assistance nificant conversion or degradation of noncritical natural program are clear; habitats; and (iii) commercial forest harvesting that there is evaluation of the potential for developing mar- (because of intensive or high-impact management prac- kets for the full range of forest goods and services, giving tices) would lead to significant ecological modification preference to small-scale, community-level management (with reduced native species diversity) of natural forests. approaches that best harness the use of forests for Category B is the appropriate category for (i) natural for- poverty reduction in a sustainable manner; and est management (including forest harvesting) that does local people, communities, and the private sector are not lead to significant ecological modification or degra- meaningfully involved in defining activities to be under- dation; (ii) forestry plantations that would not adversely taken in the management, conservation, and sustainable affect natural habitats; (iii) most other types of natural utilization of natural forests or plantations. resource management projects, including watershed management and protected area establishment or Appraisal requirements. The task team reviews project strengthening; and (iv) many types of nonforestry proj- preparation and any environmental or project management ects with some potential for adverse environmental or monitoring plans to ensure that impacts, but no significant loss or degradation of forests or other natural habitats. all necessary social, economic, and environmental stud- Category C is appropriate for some types of conserva- ies are satisfactorily completed; tion-oriented projects with no civil works and no evident government commitment is secured for any measures adverse environmental impacts, such as (i) environmen- that may be required to strengthen the fiscal, legal, and tal service payments to landowners to maintain their institutional frameworks needed to meet the project's existing natural forest cover; or (ii) the establishment of economic, environmental, and social objectives; conservation trust funds for the recurrent costs of pro- adequate land allocations have been made for the manage- tected area management. ment, conservation,and sustainable development of forests, Category FI is appropriate for certain projects in which including any additional allocations needed for the protec- financial intermediaries would invest in subprojects, tion of critical forest areas or other critical natural habitats; some of which might involve forests. procedures are in place to ensure that any harvesting operations or plantation development supported by World Bank financing are restricted to areas outside crit- GUIDELINES ON IMPLEMENTING OP 4.36 ical forest areas or other critical natural habitats; Preparation requirements. The task team leader and the certification systems or community-based forest man- client ensure that agement monitoring systems used to assess whether forest CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 295 harvesting supported by World Bank­financed investment cover of normally at least 10 percent and trees at least projects meet appropriate standards of forest management 2 meters tall (at maturity). This definition thus includes nat- and use conform with the standards for these systems (as ural (primary or secondary) forests, as well as forestry plan- defined in paragraphs 10 and 11 of OP 4.36); tations of native or nonnative species. The definition also projects with time-bound action plans to improve forest takes into account intended land uses (not just actual tree management include clearly defined performance bench- cover, or the lack thereof) by (i) including areas dedicated to marks and time frames for achieving appropriate forest forest production, protection, multiple uses, or conserva- management standards (in accord with OP 4.36, para- tion (whether formally recognized or not) and (ii) exclud- graphs 9­12), and that any time-bound action plans and ing areas where other land uses not dependent on tree cover their associated performance benchmarks are included in predominate, such as agriculture, grazing, or settlements. the PAD and made available to the public; and OP 4.04, annex A, defines "natural habitats" as land and PADs include clear performance indicators that will enable water areas where (i) the ecosystem is composed largely of the contribution of the project to the poverty reduction, native plant and animal species and (ii) human activity has macroeconomic, and conservation objectives of the World not fundamentally altered the area's primary ecological func- Bank's country assistance program to be assessed. tions. Natural habitats thus include natural forests of all types, as well as the full range of other kinds of natural ter- Supervision requirements. The task team ensures that restrial, freshwater, and marine ecosystems. Natural habitats during project implementation often are not "pristine" but have been modified by human activities, such as logging, collection of nontimber forest monitoring and evaluation procedures are informed by products, hunting, fishing, or livestock grazing (on natural the meaningful participation of locally affected commu- rangelands). However, areas that still maintain a majority of nities and other groups interested in forest areas affected their original native plant and animal species should be by World Bank­financed investment projects; regarded as natural habitats, notwithstanding some (light or the integrity of the boundaries of any critical forest areas moderate) degree of human modification. or other critical natural habitats in or near areas affected In accordance with these definitions (as well as those in by World Bank­financed investment projects is continu- normal professional usage outside the World Bank), natural ously monitored; forests are a type of natural habitat. Other types of natural the protection of the rights of access and use of forest ecosystems (such as shrub lands, native grasslands, non- areas by Indigenous Peoples and other local communi- wooded wetlands, beaches, and coral reefs) are natural habi- ties is monitored in accord with the requirements of OP tats, but not forests. Conversely, forestry plantations of non- 4.12 Involuntary Resettlement and OP 4.10 Indigenous native species are forests, but not natural habitats. Peoples, and that any necessary corrective actions are taken in accord with these policies; Critical forests and critical natural habitats. OP project performance is monitored against the indicators 4.36, annex A, defines "critical forest areas" as the forest for the contribution of the project to the poverty reduc- areas that qualify as "critical natural habitats" under the tion, macroeconomic, and conservation objectives of the Natural Habitats OP 4.04. In summary, the Natural Habitats World Bank's country assistance program defined in the Policy defines "critical natural habitats" as those natural PAD; and that habitats that are either (i) legally protected or officially pro- the client specifically makes available to the public the posed for protection; or (ii) unprotected but of known high results of all forest management assessments carried out conservation value. In practical terms, critical natural habi- under the independent certification systems and related tats (including critical forests) can be regarded as relatively time-bound action plans referred to in paragraphs 9­12 natural areas that are either legally protected or really of OP 4.36. should be, because of their conservation significance. In more specific and official terms, critical natural habitats comprise the following types of areas (see OP 4.04, annex A, DEFINITIONS for the full World Bank policy text): Forests and natural habitats. OP 4.36, annex A, defines "forests" rather broadly to include areas of at least 1 hectare, Existing and proposed protected areas. Critical natu- at any successional stage of tree growth, with tree crown ral habitats include (i) existing protected areas that meet the 296 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 standard IUCN criteria for Categories I­VI; (ii) areas offi- but as degradation from an ecological standpoint. For cially proposed by governments as protected areas; (iii) example, the systematic removal of dead or dying trees, or areas recognized (before the proposed project) as protected species of low economic value, might be considered a man- by traditional local communities (such as sacred groves); agement improvement by providing more space to the trees and (iv) sites that maintain conditions vital for the viability of higher economic value; however, it could reduce the for- of these protected areas. est's biodiversity and remove the habitat of birds and other wildlife that depend upon snags. Further complexity is Unprotected areas of high conservation value. Criti- involved in choosing between the different wild species that cal natural habitats include areas currently lacking status as benefit from different types of forest management interven- existing or proposed protected areas, provided that they are tions. While many species of conservation or other manage- recognized by authoritative sources as (i) areas with known ment interest depend upon primary or old-growth forests, high suitability for biodiversity conservation or (ii) sites that some can survive only in logged, burned, or otherwise dis- are critical for one or more rare, vulnerable, migratory, or turbed areas (such as young secondary forest, or grassy endangered species. Critical natural habitats typically appear clearings). Good judgment is needed in choosing the appro- on lists prepared by conservation experts outside (and some- priate, site-specific forest management techniques to opti- times within) the World Bank. This helps to distinguish the mize between economic, social, and a variety of different genuinely critical areas from the noncritical ones. A critical environmental objectives. The project team should seek to natural habitat site may appear on a list that existed before ensure that the management objectives for a forested area the preparation of the project proposed for World Bank sup- are explicit, transparent, and thoroughly discussed with the port. Alternatively, such a list might be developed during proj- full range of interested stakeholders. ect preparation, as part of the environmental assessment When is the scale of the proposed conversion or degra- process (discussed below). In other words, a site could be eval- dation of an area of forest (or other natural habitat) large uated and classified as a critical natural habitat for the first enough to qualify as significant? Neither OP. 4.36 nor 4.04 time during World Bank preparation of a proposed project. provide numerical threshold figures; there is thus some case-by-case flexibility, provided that decisions are well-jus- Significance of forest conversion and degradation. tified from a technical and scientific standpoint. When eval- For the Forests Policy, "significant conversion" and "degra- uating the significance of a proposed conversion or degra- dation" are defined in OP 4.04, annex A, paragraph 1 dation of forests or other natural habitats, it is important to (c)­(d). (OP 4.36 cross-references OP 4.04 for this pur- take into account the cumulative effects of (i) multiple sub- pose.) This definition states that "significant conversion is projects under the same project; (ii) World Bank­financed the elimination or severe diminution of the integrity of a repeater projects; and (iii) concurrent projects financed by critical or other natural habitat caused by a major, long- other sources. It is also necessary to consider the area of term change in land or water use. Significant conversion each specific forest (or other natural habitat) type to be may include, for example, land clearing; replacement of nat- affected, in relative terms and (for still very extensive ecosys- ural vegetation (e.g., by crops or tree plantations); perma- tems) in absolute terms as well. In relative terms, an infor- nent flooding (e.g., by a reservoir); drainage, dredging, fill- mal rule of thumb, used at times in the World Bank, is to ing, or channelization of wetlands; or surface mining. In consider the area of conversion or degradation to be signif- both terrestrial and aquatic systems, conversion of natural icant if it exceeds 1 percent of the remaining area of any spe- habitats can occur as the result of severe pollution." In sim- cific natural habitat type within the same country. One per- ple terms, conversion is essentially the loss of an area of nat- cent also happens to be the threshold for requiring natural ural habitat; determining the significance of a conversion habitat conservation offset measures in the European may be more complex (see below). Union's Habitats Directive, Article 6(4). OP 4.04 defines degradation as the "modification of a In absolute terms, the substantively very similar Wild- critical or other natural habitat that substantially reduces lands OPN 11.02 that preceded OP 4.04 (and was in effect the habitat's ability to maintain viable populations of its 1987­95) suggested 10,000 hectares as a threshold figure, native species." In this context, degradation is an environ- above which the conversion or degradation should be con- mental safeguards concept, rather than an economic one. sidered significant, even for a very extensive ecosystem type Some land management or silvicultural treatments may be within the same country (where the converted or degraded regarded as improvements from an economic perspective, area would be well under 1 percent of the remaining area). CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 297 However, some of the World Bank's environmental and bio- meet those requirements, several analytical studies may be diversity specialists now suggest a lower figure, such as 5,000 necessary. This section provides guidance on what should hectares. Although they provide no official threshold figure, be included in the terms of reference (TOR) for conducting both the Forests and Natural Habitats policies require the assessments necessary under OP 4.36. World Bank and clients to apply a precautionary approach In developing the TOR, it is important to consult other (OP 4.36, footnote 4 and OP 4.04, paragraph 1). Thus, in World Bank policies that are triggered or relevant, including borderline situations under scientific uncertainty, the pro- OP 4.04 Natural Habitats, OP 4.09 Pest Management, OP posed conversion or degradation should be considered sig- 4.10 Indigenous Peoples (see chapter 12 , Applying OP 4.10 nificant, and the relevant safeguard measures applied (pro- on Indigenous Peoples), OP 4.11 Physical Cultural Resources, ject redesign or inclusion of specific mitigation measures, as OP 4.12 Involuntary Resettlement, and Policy on Disclosure discussed above). The decision needs to be justified and of Information. documented in a scientifically credible manner (typically Consultation and communication with stakeholders are within the PAD and EA report). essential elements for the development and implementation It is important to remember that the significant conver- of forest-related projects. Indeed, under OP 4.01, EAs sion or degradation of forests or other natural habitats can require public consultations for review of draft plans by occur as a result of both (i) the direct impacts of a project stakeholder groups, and if Indigenous Peoples are affected (such as the civil works "footprint"); and (ii) the indirect (whether positively or negatively), OP 4.10 requires a impacts of project-induced human activities. As stated in process of free, prior, and informed consultation with OP 4.04, annex A, paragraph 1(c), "Conversion can result affected Indigenous Peoples communities leading to their directly from the action of a project or through an indirect broad support to the project. The information in chapter mechanism (e.g., through induced settlement along a 10, Consultation and Communications in Forest Sector road)." The induced impacts of a project frequently account Activities, about stakeholder consultation can help to shape for more forest loss or degradation than the direct ones. all of the analyses discussed in this section on TOR. The communication elements discussed in that chapter can Small-scale landholders and local communities. assist in disseminating analysis results, as well as generating OP 4.36, footnote 13, notes that "`small-scale is determined local interest in and commitment to the project. by the national context of a given country and is generally A TOR must have certain sections, including a summary relative to the average size of household forest landholdings. and background section, and a scope of work section. The In some situations, small-scale landholders may control less scope of work will be different for each project and will than a hectare of forests; in others they may control 50 reflect the characteristics of the project. Likewise, the per- hectares or more."Organized communities may own or oth- sonnel requirements and the balance of national and inter- erwise control much larger tracts of forest (for example, up national consultants will be unique. This section provides to several thousand hectares for some forest communities in an indicative list of items for consideration in TORs for the mountains of Mexico). However, forestry by local com- OP 4.36. A project would not necessarily require all the munities can normally be distinguished from industrial- items described here, nor is the list intended to be exhaus- scale commercial forestry operations by some combination tive. The emphasis on specific activities in a TOR will of (i) community land tenure; (ii) long-term residence in depend on the objective of the project, site context, prior the forest area; (iii) traditional forms of social organization; work done, and other project-specific factors. (iv) dependence upon nontimber forest products (not just Depending on the nature of the project and analyses cash from the sale of timber); (v) low levels of capitaliza- required, the necessary analyses can be done independently tion; (vi) relative poverty, or other relevant characteristics. or jointly. For simplicity, the key elements of each type of analysis are presented as distinct sections below. If questions should arise, please refer to OP 4.36. GUIDANCE ON DEVELOPMENT OFTERMS OF REFERENCE RELATEDTO OP 4.36 Summary and background. This section should provide OP 4.36 requires that appropriate analyses be undertaken to an executive summary of the project, including a descrip- identify the social, economic, and environmental signifi- tion of: the rationale for the project; the broad objectives cance of forests and any activities that may affect the well- and scope of the project; an overview, including a summary being of forests and the people who depend on them. To of the project and a brief discussion of timing; and the proj- 298 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 ect management responsibilities and protocols. Addition- tions and groups, as well as private sector actors, and ally, this section sets the broad context for the project and NGOs. What are their agendas, constituencies, and links provides justification for the goals and scope of the project with other institutions? and the development approach to be taken. Socioeconomic analysis Potential components. This section provides a list of possible elements of the three main types of analyses: (i) a Examine people's relationships to the forest from a spir- Social Assessment (which also includes assessment of insti- itual and social standpoint. tutional issues), (ii) an Economic and Financial Analysis, Examine people's degree of economic dependence on the and (iii) an Environmental Assessment. forest. Assess practices such as shifting cultivation, the sustainability of these practices, and livelihood alterna- tives for the affected forest-dependent communities. SOCIAL ASSESSMENT Examine how dependence upon forests creates conflicts The objective of the Social Assessment (SA) is to examine var- at intra- and inter-community levels. ious social and institutional factors influencing the livelihood Examine village-level land-use patterns, tenure, and cus- of all forest-dependent social groups, including Indigenous tomary rights of private and common properties, and Peoples, women and youth, and other vulnerable groups. As issues of indebtedness and land mortgage. mentioned in OP 4.36.paragraph 14,this information should Document and analyze needs, opportunities, and con- "address, among other issues, the respective roles and legal straints for marginalized, discriminated against, and most rights of the government, the private sector, and local people." vulnerable groups and individuals (Indigenous Peoples The stakeholder and socioeconomic analysis associated and women, for instance). Assess how to minimize risk with an SA should assess likely positive or adverse impacts and enhance benefits for these groups and individuals. on stakeholders, including head loaders, cultivators, people Explore how encroachments affect the study area with dependent on grazing lands, wage laborers, seasonal attention to socioeconomic status, traditional tenurial migrants, women-supported households, and other forest- rights, and other issues. dependent people. It should also recommend ways that Explore public attitudes toward conservation and the stakeholders can benefit from the project inputs. (For fur- environment, willingness to participate in resource man- ther information on consultation and stakeholder analysis, agement activities, perceptions of local people of legal please see chapter 10, Consultation and Communication in and illegal forest-related activities, remedial measures, Forest Sector Activities.) The institutional analysis should and mechanisms for resolving potential conflicts. ensure that key actors in the project have the necessary Identify ways to enhance access of forest-dependent per- capacity, commitment, and incentives to implement and sons (especially marginalized and vulnerable groups) to sustain the operation, and that the operation will have a forest resources and broader economic opportunities. positive impact on the country's public institutions. Develop and incorporate specific indicators related to The consultant should focus on the following key com- social impacts on marginalized and vulnerable groups ponents for this analysis: into monitoring and evaluation mechanisms. Provideguidance,if adverseimpactsonvulnerablegroupsor Stakeholder analysis individuals are unavoidable, in accordance with the World Bank's safeguard policies, in particular OP 4.10 (Indigenous Identify and describe key characteristics, and describe Peoples) and OP 4.12 (Involuntary Resettlement). the relationships among stakeholders. Assess formal and informal, codified and uncodified, and socially shared Institutional analysis (should be undertaken at relationships. national, regional, and local levels) Assess the stake or interest in the project for each stake- holder group. This may include an assessment of poten- Evaluate institutions for their organizational structures, tial support or opposition, openness to change, and capacities, track records, rules, budgets, interlinkages, potential benefit from the project. and levels of participation. Understand the underlying political economy by identi- Examine the relationship between government forestry fying and examining the relevant civil society organiza- institutions and local governments and local people. CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 299 Examine the formal and informal local-level institutions holders, and details the communication tools used to suc- and their characteristics, specifically principles of cessfully promote stakeholder participation (see box 9.2). recruitment, inclusion, stratification, authority struc- Participation framework describes the approach and ture, and links to other institutions. process used to consult with different stakeholder Conduct a legal analysis of issues related to encroach- groups. It explicitly includes measures to involve vulner- ments on forestland, and regularization of title, with a able people affected by the project in decision making, in view to resolving tenure disputes and resource access receiving a share of benefits, and associated monitoring within the existing policy framework of the relevant for- (see box 9.3). est-related legislation. Stakeholder consultation workshops will enable stakehold- Identify appropriate measures for transparent decision- ers to provide information and opinions regarding issues making process, fund flow mechanisms, and dissemina- of concerns in the assessment. The workshops use tion of information, and increased downward accounta- approaches and tools to elicit stakeholder inputs. bility of implementing agencies. Suggest modifications Social impact report details the main social issues and to existing institutional arrangements to facilitate good interventions and assesses likely positive and negative governance by providing voice, transparency, and free impacts, as well as mitigation measures (see box 9.4). flow of information. Poverty impact assessment analyzes the distributional Where relevant, assess forest-related contracts, including impact of policy reforms on the well-being or welfare of identifying those with whom communities enter into different stakeholder groups, with particular focus on the contract, and for what purpose. Assess performance, poor and vulnerable. social dynamics, decision-making processes, trans- Process framework for access restrictions to legally desig- parency, and sustainability of forest protection. nated parks or protected areas. According to World Bank Address issues of empowerment and voice with attention established practices (OP 4.12), the borrower prepares a to potential for leadership by marginalized and vulnera- Process Framework describing the participatory process ble groups, including women and indigenous groups. by which affected communities will participate in Develop and incorporate specific indicators related to designing the project or project component, determina- marginalized and vulnerable groups into monitoring tion of restrictions, eligibility criteria, mitigation mea- and evaluation mechanisms. sures to assist them maintain or improve their liveli- hoods, and conflict resolution mechanisms. The Potential methodologies (see box 9.1 for an example of framework is publicly disclosed and transmitted to the a Social Assessment methodology) World Bank for review before project approval. Indigenous Peoples plans. When Indigenous Peoples are consultations with key stakeholders (for example, affected, whether positively or negatively, OP 4.10 through workshops, focus groups, interviews) requires the development, in consultation with affected in-depth interviews communities, of a plan to address adverse impacts and focus groups provide culturally appropriate benefits (see chapter 12). rapid rural appraisals and other participatory rural Assessment of vulnerability and social risk. appraisal methods Operation manual provides guidelines for the design of review of secondary data sources surveys, methods of facilitating stakeholder participa- stakeholder analysis tion, conflict resolution techniques, collaboration with gender analysis technical specialists, and so forth. training needs assessment or human resources develop- Communications strategy with other groups and within ment needs assessment the program, to ensure public and political support, to initiate the planning of the project, and to initiate and Potential outputs pave the way for a potential long-term program. Policy, legal, and administrative framework discusses the Participation strategy identifies stakeholders who must be policy, legal, and administrative framework within which included in the process, links these stakeholders with the the project is carried out. activities, defines how and when the stakeholders will be Training or human resources development plan. involved,specifies the methods for working with these stake- Legal analysis. 300 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 Box 9.1 Methodology of Social Assessment Criteria for sampling in a survey assess the different groups overseeing, operating, or depending on the forests social composition, with particular attention to identify those groups that are central to the process, caste and tribe subgroup dimensions impact forest resources, or benefit from resources in degree of homogeneity and heterogeneity along forests other dimensions, such as known conflict and ten- consult with persons working in nonnatural sion, and the like resources­related fields that could contribute useful degree of legitimacy of tribal leaders versus other information or know of affected stakeholders (for patterns of leadership example, health care worker or teachers) who could poverty criteria, such as assets, land ownership, contribute to the process landlessness include stakeholder representatives from the vari- status of tenurial rights to forest lands, encroach- ous governmental, nongovernmental, religious, pri- ments, and so forth vate sector, and other interest groups. The stake- geographic isolation, proximity to roads and mar- holders invited should also represent the different kets, and other location dimensions levels of interest (national or ministerial, as well as presence of government departments other than the local) and the different activities planned in forests forest department, and availability of development or influenced by forest activities schemes and basic services given priorities and trends, decide which stakehold- presence of NGOs or other organizations ers are essential to addressing forest priorities and integration or coordination with other formal com- making decisions mittees human development indicators, such as female lit- Participatory rural appraisal methods eracy and maternal mortality rates vulnerability and risk, coping strategies, migration, participatory mapping and modeling of resource and the like maps of forests for water, soils, trees, pastures level of indebtedness and coping strategies local histories of people's accounts of the past; eco- logical histories; histories of cropping patterns; Mapping project. Create social maps by charting changes in trends of population, migration, fuels name, clan, tribe, village, degree of legitimacy or con- used, and causes of these flict among other tribal and caste groups. seasonal diagramming of rainfall; labor in agricul- ture, crops and harvests, food and fuel availability, Clusters matrix analysis using the following poten- marketing patterns; gender perceptions of labor, tial criteria: crops and harvests, food and fuel availability, mar- keting patterns social homogeneity or heterogeneity livelihood analysis relating to seasonality, crises and degree of social capital coping, credit and debt patterns of leadership and degree of legitimacy; matrix ranking for people identifying their priori- forest cover and degree of degradation ties and options for action market- and nonmarket-oriented approach Venn diagramming for conflict identification and resolution. Stakeholder identification. The following outlines some ideas to effectively identify those stakeholders All of the above may be selectively used in social and that should be involved: institutional assessments. Source: World Bank 2005a. CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 301 Box 9.2 Participation Strategy To make the task manageable for a public participation accommodation of the stakeholders' time constraints strategy, it is important to (i) identify the relevant stake- (and if key stakeholders are unable to attend meet- holders (for example,distinguish between those stakehold- ings, considering keeping them informed through ers who are directly affected or benefit from the process, personal communication); andthosewhoareindirectlyaffected);(ii)quicklyassessthe the manner by which information will be exchanged; political economy to ensure that the voices of commonly the purpose of such stakeholder communication marginalized groups are heard and the feasibility of collab- (information sharing, data gathering, decision mak- oration among various stakeholder groups is understood; ing, and so forth); and (iii) use tools for integrating the various viewpoints coordination between the landscape planning team thatunderpintheinitiative(forexample,rankingtools;GIS and stakeholder groups to ensure viewpoints are con- to overlay the different social, institutional, and biophysical veyed and received accurately; layers; or others such as those listed below). sharing of concepts and well-defined terminology Involving the stakeholders will require strategies with the stakeholder groups to minimize confusion in equally as enterprising as those used to identify them. the planning process; Some considerations for engaging different stakehold- use of an appropriate language and mode of commu- ers include nication; and ensuring all actors have an accurate picture of the the type of interaction (for example, individual or process and their roles in it. group meetings and location); Source: World Bank 2005b. Box 9.3 Participation Framework Box 9.4 Social Impact Report Based on the stakeholder analysis, a participation Identify the main social issues related to the framework with specific systems and procedures reforms supported by the project and, specifi- will be developed, which will describe the cally, by the set of interventions envisaged approach and process used to consult with differ- under each of the components. ent stakeholder groups to incorporate their views Assess the project's likely positive and negative into project design and implementation, and to impacts--in quantitative terms to the extent communicate with them about the project. The possible--on key stakeholders, particularly the framework should identify ways and procedures in poor and most vulnerable social groups that which the marginalized and the less vocal groups depend on forest resources. and individuals can best participate in the process Identify mitigation measures and any residual of group formation and micro-plan development. negative impacts that cannot be mitigated. A detailed communications strategy should also be Assess the key (formal and informal) institutions developed for the project, largely based on the in the forestry sector that will be involved in the stakeholder analysis. The consultation process delivery of the mitigation measures, evaluate their should be ongoing throughout the project's life; respective roles, capacity, and training needs. key stakeholders should continue to be consulted Spell out the mechanisms for participation of and involved. See note 1.4, Indigenous Peoples and all affected stakeholder groups in design, imple- Forests, and chapter 12, Applying OP 4.10 on mentation, and monitoring of the social aspects Indigenous Peoples, for particular issues concern- of the reform and the project's implementation. ing Indigenous Peoples. The report will also formulate recommenda- tions, taking into consideration the possibilities Source: World Bank 2005b. of participation of project beneficiaries in the monitoring and evaluation process. Source: World Bank 2005b. 302 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 Box 9.5 Process Framework for Involuntary Access Restrictions The World Bank Policy on Involuntary Resettlement resources and thereby affect the livelihoods of some (OP 4.12) is triggered when World Bank­assisted population groups. These may, for instance, include investment projects cause the involuntary restriction of measures to curtail illegal logging, poaching, and access to legally designated parks and protected areas. hunting; fishing; restrictions on collecting other forest For purposes of this policy, involuntary restrictions of products, such as herbal plants and mushrooms; or access cover restrictions on the use of resources using forest areas for grazing or farming. The PF will, imposed on people living outside the park or protected to the extent possible, estimate the magnitude of the area, or on those who continue living inside the park or impact caused by the particular activity, including, for protected area during and after project implementa- example, in the case of illegal logging, issues such as tion. In such projects, the nature of the restrictions, as what is considered illegal logging by the law; what is well as the type of measures necessary to mitigate the actual interpretation of this law by local officials; adverse impacts, is determined with the participation what is the enforcement record of their current inter- of the displaced persons during the design and imple- pretation; what are the chances for an effective elimi- mentation of the project. nation of illegal logging across the country; what Given the potential impact of project activities that would a clampdown on illegal logging really mean; could result in the involuntary restriction of access to what is the magnitude of the impact from the stake- resources and livelihood for inhabitants of some of the holders' point of view; who does illegal logging; are areas covered by the project, a "Process Framework" there any regional disparities, ethnic patterns, and so (PF) is a condition of project appraisal. Usually a con- forth; for what purpose do they do illegal logging sultant or other entity is contracted to assist the gov- (cooking, heating, subsistence, commercial); is it a ernment in preparing this document. seasonal or regular activity; what is the degree of The draft PF is to be endorsed by the government dependence on the acquired wood (financial or in and transmitted to the World Bank for review before kind); what are other sources of income and how sus- project appraisal. The final PF must be made available tainable are they; what is the likely coping mechanism in the borrowing country at a place accessible to, and in by those affected in the case of a successful or semi- a form, manner, and language understandable to, the successful clampdown on illegal logging; is a potential displaced or affected people and local NGOs. Impor- successful clampdown on illegal logging likely to force tant aspects of preparing the PF document are (i) the those affected to move to other areas, and if so, which awareness of the national government of the risk of areas; what other changes in regard to livelihood and impact on the livelihoods of certain population groups behavior are likely to be triggered by government and (ii) agreement with the national government on efforts to curtail illegal logging; and other pertinent how to address these risks. issues. The process framework describes the participatory Given the nature and magnitude of the impact, the process by which PF can also suggest the likely mitigation measures that will be put into place, and the implementation specific components of the project will be prepared process. But the thrust of the PF is the description of and implemented; the participatory process by which these decisions will the criteria for eligibility will be determined; be made rather than the decisions themselves. The measures to assist the displaced persons in their action and mitigation plans--their integration and efforts to improve their livelihoods, or at least to coordination with other project components--are an restore them in real terms while maintaining the iterative process and will evolve through the project. sustainability of the park of protected area, will be The PF also includes a description of the arrange- identified; and ments for implementation and monitoring the potential conflicts involving displaced persons will process and records of interagency and consultation be resolved. meetings, including consultations with affected people on their views. The PF describe the site and impact areas and the activities that are likely to restrict access to forest (Box continues on the following page.) CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 303 Box 9.5 Process Framework for Involuntary Access Restrictions (continued) It would be useful to keep in mind that the review Meaningful consultation and disclosure of the PF at the World Bank is based on five key crite- ­ documentation of consultation processes and ria: implications for project design and implementa- tion mechanisms Policy ­ public disclosure of relevant information in local ­ agreement on basic principles, entitlement languages framework, criteria, and so forth Action and mitigation plans ­ formal endorsement by the government ­ budget provision and clear responsibilities Analysis and documentation ­ supervision, monitoring, and evaluation mecha- ­ census, surveys as required nisms established ­ analysis of social groups, with special emphasis Institutional capacity and commitment on risk and vulnerability ­ evidence plans are realistic, can be implemented Sources: World Bank 2005b. Qualifications of consultants for social assessment. operational experience in analysis and design of commu- The consultant or team of consultants should have the fol- nication activities and dissemination materials lowing qualifications: extensive professional background in human resources development, including experience with training needs practical experience in designing and implementing par- assessment, building analytical and problem-solving skills, ticipatory natural resource management projects, in and participative and interactive approaches to training assessing and addressing interests of vulnerable people, and an ability to manage interdisciplinary teams Economic and financial analysis detailed local knowledge of social issues related to natu- ral resource management, including usage of forest and This analysis should examine the various economic and agriculture resources and community practices involving financial factors affecting a forest-related project to enhance natural resources the economic efficiency of the project and address distribu- familiarity with the legal framework for usufruct rights tional questions. An economic analysis compares economic and access and social benefits to the economy as a whole. The financial experience with local forest or forest-related social issues analysis compares revenue and expenses, like operations operational experience in social survey methods and maintenance costs. ability to engage with local people and keep an open It is important to understand the economic value of mind to new approaches forests that are affected by the project. In addition to forest ability to speak local languages products and services, this valuation should include non- market uses of forests, such as environmental services, social Additional qualifications might include the following: uses, and subsistence uses. In particular, the consultant should focus on the follow- extensive experience in microenterprise development; ing key components for this analysis: familiarity with microfinance and revolving fund options, marketing issues, and regulatory climate Economic importance experience with assessing structure, capacity, and inter- linkages of national and community-level organizations evaluate direct use of forests arising from consumptive and knowledge of national and local institutions nonconsumptive uses: timber, fruits, nuts, mushrooms, extensive experience in community development and medicinal plants, forage, hunting and fishing, tourism and participatory planning recreation, genetic resources, and educational uses 304 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 evaluate indirect use of forests: watershed and soil pro- conduct a financial analysis from the perspectives of var- tection, wind breaks, climate control, and nutrient ious stakeholders cycling undertake a cost-benefit analysis (see box 9.6) evaluate options values, including future direct and indi- base decisions, to the extent possible, on a total economic rect uses valuation of forest resources, that is, an estimate of the evaluate off-site and on-site economic effects; also evalu- value of all economic benefits that a society derives from ate private costs and benefits versus social costs and ben- its forests (see box 9.7) efits, with attention to market failures, policy-induced distortions, and externalities Potential methodology evaluate nontimber values like health, carbon sequestra- tion, and alternative livelihood strategies review of primary and secondary data sources assess the incremental or additional costs associated with rapid Rural Appraisal transforming a project with national benefits into one interviews, including stakeholder interviews, question- with global environmental benefits, for Global Environ- naires, village-based surveys for livelihood analysis ment Facility projects (including wealth ranking, group interviews, process analysis) Financial analysis Cost-benefit analysis Market analysis (see box 9.8) evaluate the financial viability of investments like refor- Contingent valuation estation, microenterprises, and so forth; also evaluate Quantitative measures, including TEV, internal rate of risk and market access return, net present value Box 9.6 Cost-Benefit Analysis Box 9.7 Total Economic Valuation A detailed cost-benefit analysis will be undertaken during project preparation, taking into account Total economic valuation (TEV) is a method the issues of economic importance and financial used to identify and estimate the value of all eco- analysis and using quantitative models. Incremen- nomic benefits that a society derives from its tal costs and benefits of project investments will be forests. As such, TEV extends well beyond the examined in detail, and economic and financial scope of financial analyses of forest values that rates of return calculated. Cost-effectiveness analy- concentrate almost exclusively on timber, to sis will be conducted on alternative plantation and account for the great variety of other products and protection techniques. The analysis will also services provided by a forest system. The TEV of a include the preparation of indicative economic forest is the sum its use and nonuse values. Use and financial models for participatory manage- values are, in turn, divided into direct, indirect, ment of forests by locals, including analysis of and option values; while nonuse values include alternative land uses. The economists will also bequest and existence values. Examples of the var- undertake sensitivity analysis on key risks and dis- ious use values include cuss implications for project design. The quantified cost-benefit analysis will be sup- Direct uses--timber, fruits, nuts, mushrooms, plemented by an analysis of other environmental medicinal plants, forage, hunting and fishing, benefits not as readily conducive to financial quan- tourism and recreation, genetic resources, and tification (for example, biodiversity, climatic educational uses changes), which, where appropriate, will take into Indirect uses--watershed and soil protection, account physical measurements and least-cost wind breaks, climate control, and nutrient analysis of any associated marginal costs of inter- cycling ventions specific to those benefits. Option--future direct and indirect uses Source: World Bank 2003a. Source: World Bank 2003a. CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 305 measurements and subsequent monitoring of project Box 9.8 Market Analysis and control results (see box 9.12). Fiscal impact analysis. Includes an assessment of the fiscal impacts of the project--both expenditure and revenue A market analysis will include a preliminary aspects--within the context of a public expenditure and assessment of current and potential market con- revenue review of the whole forestry sector (see box 9.13). ditions for forest and rangeland products and the associated policy reform ramifications. This will include such issues as the dynamics of fuelwood Box 9.9 Cost Estimates demand, taking into consideration access to coal and gas, processing facilities, and trade issues, including those related to World Trade Organiza- The consultant firm will assemble all cost esti- tion entry and the potential impacts of Dutch mates into appropriate software, such as Costab, disease. and prepare overall project cost estimates, includ- ing updates as the project design evolves, in collab- Source: World Bank 2003a. oration with client counterparts and World Bank staff and other preparation consultants. The national consultants may need to learn Costab Potential products. The economic and financial analysis through the built-in self-tutorial and advice from World Bank staff,and establish an appropriate struc- could include the following elements: ture and parameters for assembly of cost estimates. Cost estimate. A realistic, reliable estimate of all costs for Source: World Bank 2003a. proposed forestry investments (see box 9.9). Cost-benefit analysis. An examination of incremental costs and benefits of project investments. Calculates eco- Box 9.10 Incentive Framework nomic and financial rates of return. Includes indicative economic and financial models for participatory man- agement of forests by locals, analysis of alternative land Because many of the technical and expenditure uses, and undertakes sensitivity analysis on key risks. It choices will need to be made within a site-specific should be supplemented by analysis of less quantifiable context, the project will need to build in arrange- environmental benefits (for example, biodiversity, cli- ments and policy incentives to ensure economic matic changes). decision making on an ongoing basis. For example, Market analysis. An assessment of current and potential in the participatory forest management pilots that market conditions for forest and rangeland products and involve economic benefits to local communities, the associated policy reform ramifications. local selection of site-specific investments could be Local public goods assessment. An assessment of environ- made within a fixed budget constraint, with initial mental services and potential payment arrangements, investment funds and subsequent revenue chan- which may include special adjustments to ensure inclu- neled through community-managed accounts. The investments could also be made subject to a require- sion of women and vulnerable groups, and reward good ment that beneficiaries contribute their own performance. resources,at least in the form of labor.For these sorts Incentive framework. A description of arrangements and of investments, detailed formal cost-benefit analysis policy incentives to ensure ongoing economic decision of each investment would be prohibitively expensive making (see box 9.10). at the local level. Instead, working with the commu- Poverty impact analysis. An analysis of the project impact nity involvement consultant, an approach will be on poverty (opportunity, empowerment, and security) developed whereby a budget constraint, fund man- that addresses household income, stakeholder groups, agement, and contribution requirement would fos- loss of access to forest resources, and seasonal vulnera- ter cost-benefit analysis and marginal utility maxi- bility (see box 9.11). mizing decisions on an intuitive basis. Economic monitoring. An estimate of with- and without- Source: Mott 2003. project scenarios that provides the basis for full baseline 306 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 Box 9.11 Poverty Impact Analysis Box 9.13 Fiscal Impact Analysis The economic analysis will also include a special The fiscal impact analysis will include an assess- focus on the impact of the project on poverty, con- ment of the fiscal impacts of the project--both its sidering opportunity, empowerment, and security. expenditure and revenue aspects--within the con- This would include analysis of the size and timing text of a public expenditure and revenue review of of impacts (both benefits and costs) on household the whole forestry sector. Links with government income, and variations in impacts on different wide cross-sectoral fiscal analyses and reforms social groups (women-headed households, unem- would be considered. The financial analysis would ployed, herders, and so forth). Special attention also include an assessment of the financial sustain- would be paid to any impacts resulting from loss ability of the project interventions, taking into of access to forest resources. The models would account the proposed institutional (policy and also reflect the impact on seasonal and other fac- organizational) framework and arrangements, tors of vulnerability, and assess the likely asset including plans for the postproject period. Oppor- transfer as a factor in empowerment and in tunities for cost recovery, revolving funds includ- improving livelihoods. Potential project impacts ing postharvest reinvestment arrangements, role on both winners and losers will be quantified to realignment, and other mechanisms that would the extent feasible. facilitate self-financing would be identified. Source: Mott 2003. Source: Mott 2003. Box 9.12 Economic Monitoring experience in analysis of forestry or tree crop cost-benefit analysis, poverty impact analysis, market analysis, finan- cial expenditure trend analysis, project cost estimation Projectwide indicative estimates of with- and proven track record in effective teamwork without-project scenarios will be made, building experience in data collection and analysis, ability to access on preliminary assessments based on initial sur- local data sources, and ability to work as part of a team veys and secondary data. These estimates would ability to speak local languages provide the basis for full baseline measurements ability to work closely with local economists to build and subsequent monitoring of actual results in the local capacity for economic and financial analysis, and project areas and carefully selected control areas at develop a program for training project start-up, midterm, and closing. Prepara- knowledge and experience with capacity-building activi- tion work will include the design of this monitor- ing agenda. ties in economic analysis, forest product marketing, incentive frameworks, fiscal management, market Source: Mott 2003. opportunities, appropriate involvement of local people and the private sector, as well as an understanding of the resources, incentives, and accountability needed for decentralization of forest management Qualifications of consultants for economic and financial analysis. The consultant or team of consultants Environmental assessment should have the following qualifications: The EA (under OP 4.01) is the World Bank's officially rec- extensive operational experience with skills in cost-bene- ognized system for determining what areas constitute criti- fit analysis modeling, environmental economics, non- cal forests or natural habitats. An EA should examine the market valuation techniques, participatory rural positive and negative environmental impacts of the proj- appraisal, policy analysis, and reform ect; compare these with feasible alternatives (including a CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 307 "no-project" option); and recommend measures to prevent, interventions on the physical and biological environ- minimize, mitigate, or compensate for adverse impacts, and ments. In addition, the EA should include an analysis to improve the environmental conditions and impact man- and understanding of the issues related to wildlife habi- agement performance. The EA should focus special atten- tats and populations in the project areas, and the impli- tion on developing guidelines and procedures for identify- cations of shifting populations of wild animals on tribal ing and measuring conservation and sustainable-use communities and their access to forestry resources. objectives. Review legal, administrative, and institutional frameworks The document should be prepared according to World relevant to the proposed project. Bank guidelines, as set out in OP 4.01 (see World Bank, Involve communities in planning, implementing, and Environmental Assessment Sourcebook). assessing the results and impacts of the project. Stakehold- This information is not intended to supersede EA ers (including people affected by the project, NGOs, and guidelines presented elsewhere, but instead to supplement other relevant groups) should be incorporated through- those guidelines with information specific to forest-related out the project, both in planning and implementation. projects. Strengthen capacity at local, entity, and state levels for bio- In particular, the assessment could examine the follow- diversity conservation and sustainable management prac- ing key components: tices. The project could finance professional develop- ment, management training, ranger training, business Assess the key environmental concerns in the forestry sector. planning, and forest management planning at the ecosys- The assessment should focus on key environmental con- tem level, and capacity building for national ministries. cerns in the forest sector that are relevant to the proposed Where relevant, identify, establish, or expand sustainably project. managed protected areas (PA). For all PAs, the project Identify and describe critical forests or critical natural should establish a biodiversity monitoring system at the habitats. (See the section of this chapter titled Identifying site, entity, and state levels. Critical Forests and Critical Natural Habitats through Improve local benefits originating from protected areas. Environmental Assessment). Describe ecosystem type(s), Involve and provide incentives (possibly through small species of conservation concern, natural or cultural fea- grants) for stakeholders living in and around PAs to tures, existing or proposed legal protection, threats, and ensure long-term sustainability through the develop- other information relevant to decision making. ment of alternative, environmentally sensitive income- Assess critical ecosystems and recommend a program for generation based on sustainable resource use that would their conservation and management. This might also bring economic benefits to local people. include supporting community-driven conservation ini- tiatives, integrating conservation components into par- ticipatory forest management and forest development, Box 9.14 Quantitative Analysis and Baseline and supporting participatory biodiversity monitoring. Monitoring Develop quantitative indicators and a baseline for moni- toring changes. This is to monitor changes in the natural environment (both positive and negative) that may result Tools to develop quantitative indicators and a baseline for monitoring changes in the natural from project activities. Define a methodology for data environment (both positive and negative) that collection and assessment (see box 9.14). may result from project activities and define a Assess threats to cultural heritage (archaeological, reli- methodology for data collection and assessment gious, and cultural properties and resources). Evaluate should be implemented. Elements of the natural the potential to improve protection of such resources, environment that should be taken into considera- and monitoring and screening methods to be imple- tion include: flora and fauna, natural habitats and mented in project areas. ecosystems (including animal habitats), wetlands, Assess the impact of the project on the natural environ- soils, minerals, water resources, and hydrological ment. Evaluated impacts might include the benefits to patterns. soil and water regimes, species conservation and diver- Source: World Bank, Environmental Assessment Source- sity, and ecological stability. From a negative perspective, book and Updates. the EA should evaluate the potential impacts of project 308 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 Potential methodology tutional and capacity development, particularly at the village or microplanning level (see box 9.17). Impact analysis. Assesses potential positive and negative Monitoring and evaluation plan. Provides realistic proce- impacts of the proposed study. Impacts might involve dures for participatory monitoring involving the commu- changes to soil and water regimes, species conservation nities in assessing the results and impacts of the project. and diversity, and ecological stability (see box 9.15). Stakeholder workshops. Hold workshops to discuss findings Field visits. and implications with community members and other Background information from other publications and elec- interested stakeholders, including government officials. tronic databases. Documents provide lists, brief descrip- Policy, legal, and administrative framework. Reviews or tions, and map locations for critical natural habitat sites. describes the relevant national, regional, provincial, Consultation with experts. Consult experts knowledge- communal, or World Bank safeguard policies that per- able about the locations and significance of critical tain to environmental reviews and impact assessments. forests and other critical natural habitats within a coun- try or a proposed project area. Please note that some projects combine the environmen- Stakeholder workshops. Hold workshops to solicit stake- tal and social analyses and produce an Environmental and holder input and provide opportunities to incorporate Social Management Framework (ESMF) (see box 9.18). local knowledge. Inclusion of all stakeholder groups pro- motes transparency, builds coalitions, and ensures inclu- Box 9.15 Environmental Management sion of vulnerable groups, such as Indigenous Peoples. Framework Public consultations. Conduct two public consultations as required by the World Bank for a Category B Environ- The EMF should provide practical recommendations mental Assessment to review the draft environmental and guidance on minimizing and mitigating any management plan (EMP) document to the satisfaction of potential environmental impacts of project-related interventions, and measures for enhancement and affected local groups and NGOs. improvement of environmental conditions in the project area. The EMF will include guidelines for Potential products identifying conservation and sustainable-use objec- tives, incorporating them into the microplanning Environmental Management Framework (EMF). Serves as process, maximizing the intended environmental a tool to identify and manage potential environmental benefits of the project as a whole, and providing concerns; also provides practical operational procedures information and procedures for monitoring and and guidelines for environmental screening, for assess- evaluating the implementation of environmental ment and approval of subprojects or investments, and for actions and their impacts. The EMF will specifically the management of any potential impacts (see box 9.15). include (i) criteria and procedures for screening of project investments on the basis of their potential EMP. Details site-specific plans for mitigation, monitor- ing, capacity development, and implementation (as out- environmental impacts and benefits; (ii) a list of neg- ative activities (those that will not be financed under lined in annex C to OP 4.01) (see box 9.16). any circumstance) for the proposed project, and eco- Review of baseline conditions. Describes the physical, bio- logically sensitive areas where project investments logical, and socioeconomic environment, including should not be implemented; (iii) draft technical information on climate, human environment, health, guidelines that incorporate environmental concerns environmentally sensitive areas, critical natural habitats, for each of the major potential types of project and vegetation. investments; (iv) proposed institutional arrange- Assessment of environmental impact and proposed mitiga- ments for environmental oversight,review,and man- tion and enhancement measure guidelines. Assesses posi- agement at different levels; (v) proposed arrange- tive and negative environmental impacts of proposed ments for independent monitoring, audit, and project. Provides information and identifies processes for consultation in the implementation of the EMF; and monitoring and evaluation to maximize the project's (vi) identification of specific capacity-building and intended environmental benefits. The guidelines should training objectives for implementation of the EMF. encompass tangible natural resource benefits, environ- Source: World Bank 2005a. mental services, and ecological functions, as well as insti- CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 309 Box 9.16 Environmental Management Plan Develop an environmental management and monitor- of institutional needs to implement EA recommen- ing plan for project implementation that addresses all dations. Recommend any additional support that key environmental quality indicators and includes should be provided to the PA management institu- institutional roles, responsibilities, capacities, and tions, the project implementation units, the relevant training requirements, in accordance with annex C to ministries, and others, to strengthen or expand them OP 4.01. The EMP should include mitigation mea- so that the management and monitoring plans in the sures, institutional strengthening, training, and moni- EA can be implemented. The institutional needs toring, as follows: should be presented separately for the two entities. Monitoring. Prepare detailed arrangements for Mitigation of environmental impacts. Recommend monitoring implementation of mitigating measures feasible and cost-effective measures to prevent or and the impacts of the project during construction reduce significant negative impacts to acceptable and operation. Include in the plan an estimate of levels. Estimate the impacts and costs of those mea- capital and operating costs, and a description of sures. Consider compensation to affected parties for other inputs (such as training and institutional impacts that cannot be mitigated. The plan should strengthening) needed to carry it out. include proposed work programs, budget estimates, schedules, staffing, and training requirements, and It should be noted that the EMP must be incorpo- other necessary support services to implement the rated by reference in the legal agreement for the project. mitigating measures. As a result, the EMP must be clear and coherent to sup- Institutional strengthening and training. Identification port any efforts to determine compliance with the EMP. Source: World Bank 2003b. Qualifications of the consultant for the environ- mental assessment. The consultant or team of consultants should have the following qualifications: Box 9.17 Assessment of Environmental Impacts and Proposed Mitigation Measures extensive experience in the environmental field, prefer- ably at the international level, and in the preparation of Determine the potential positive and negative environmental management plans according to interna- environmental and social impacts of the project tional standards with respect to the proposed PAs, including practical experience in biological surveys and assessment already defined and proposed expansions. in the country in question or a similar country (Description of any social impacts should be based proven ability to write clear and concise reports on the results of the Social Assessment.) These impacts should include any future development of field experience in environmental assessment in the the villages and settlements within each PA, as well country in question or a similar country as impacts from construction of any PA infrastruc- extensive experience in the management of forest pests ture (visitor centers, headquarters facilities, basic understanding of cost-benefit analyses latrines, and the like), rehabilitation of access ability to speak local languages roads and hiking trails, and changes in land use or vegetative cover. Propose an environmental screening process for activities to be financed by IDENTIFYING CRITICAL FORESTS AND the small grants program during project imple- CRITICAL NATURAL HABITATSTHROUGH mentation. ENVIRONMENTAL ASSESSMENT Source: World Bank 2003b. The World Bank's officially recognized system for interpret- ing the definitions above and determining what areas con- 310 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 Box 9.18 Environmental and Social Management Framework The consultant is expected to develop an environmen- Developing a resettlement action plan that tal and social management framework (ESMF) that establishes establishes methodologies for environmental and ­ potential impacts of the project on people and social impact assessment within the project prepara- properties; tion, approval, and implementation processes, includ- ­ regulatory and institutional context for land ing the preparation of an environmental mitigation tenure; plan and a resettlement action plan. Specific activities ­ evaluation of assets and rate of compensation; include the following: ­ complaint system management; ­ identification, assistance, and provisions to be Providing the description of the environmental and included in the resettlement plan for vulnerable social characteristics of the PA and description of the groups; biophysical and socioeconomic environment. Identi- ­ consultation and diffusion of information, fying links between different types of livelihood and describing the consultation framework for sustainable environment management in the PA. preparation of the resettlement plan and the Outlining the provisions under national legislation, framework for its diffusion to stakeholders; policies, and regulations regarding the environmen- ­ responsibilities for implementation; specifically tal and social impacts that are relevant to the char- Describing the institutional setting for the imple- acteristics of the PA. Assessing the consistencies of mentation of the resettlement plan. these with the standards and procedures of the Proposing the composition and tasks of a joint World Bank regarding environmental and social committee for liaison between the affected commu- safeguard policies. nities and local structures in charge of implementa- Designing and clearly outlining methodology for tion of the resettlement plan. preparation, approval, and execution of subpro- Designing a clear communications strategy for jects. The consultant is expected to provide infor- information dissemination to all stakeholders. mation for project preparation from design process Developing a participatory monitoring and evalua- to approval. tion plan for the implementation of the pro- Assessing and documenting the implementation posed mitigation measures. The plan should clearly capacity of collaborating institutions at the local, indicate regional, and national levels; proposing ways of ­ the link between the impacts identified in the strengthening the capacity to manage and provide EMSF report, the indicators for measuring these training; and providing an estimate of the costs for impacts, data collection methods, and the time implementing the environmental and social control plan for monitoring and evaluating these plan. impacts; and Developing an elaborate ESMF, which would ­ institutional responsibilities for monitoring include recommending feasible measures for pre- indirect and direct impacts, as well as responsi- venting or reducing impacts, such as a resettlement bilities for supervision, the frequency of moni- action plan and other mitigation measures as iden- toring and reporting mechanisms, and the tified during the ESMF. budget for the monitoring and evaluation plan. Source: World Bank 2006. stitute critical forests or other critical natural habitats is the critical natural habitats, in accordance with the above-men- EA process under OP 4.01. The EA report required of all tioned criteria of OP 4.04 and 4.36. For any areas that Category A, B, and FI projects should be used to identify any appear to qualify as critical forests or other critical natural critical natural habitats within the proposed project's area of habitats, the EA report should indicate influence. It is thus essential for the EA TOR to direct the EA study team to identify those forests and other natural habi- the official and common names for the site; tats within the proposed project area that should qualify as ecosystem types; CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 311 map location(s); experts to be consulted, and useful publications and elec- approximate surface area; tronic databases. This type of complementary information size of the proposed project-affected area, relative to the should be backed up by up-to-date, project-specific field same ecosystem type(s) within the same country; studies (as needed) during the EA process. species of conservation concern or special management interest known (or suspected) to occur, and (if known) Experts to be consulted. As part of the EA process, and their estimated populations (in absolute terms and rela- also to obtain independent verification, it is essential to con- tive to the rest of the country or world); sult experts knowledgeable about the locations and signifi- special concentrations of migratory or other species; cance of critical forests and other critical natural habitats other natural or cultural features of special interest; within a country or a proposed project area. The types of land ownership; experts who should normally be consulted include the fol- existing or proposed legal protection (if any); lowing: on-the-ground protection and management (if any); who controls and influences land- and water-use deci- Regional Safeguards Unit within the World Bank should sions; be a useful first point of contact for advice about the pos- types and intensity of current or recent human uses; sible presence and significance of critical forests and existing and potential future threats to the natural habi- other critical natural habitats within a proposed project tats; and area. other information relevant to decision making. Government agencies (at the national or subnational level) responsible for protected areas, natural resource manage- In the course of project preparation (before appraisal), ment, or the environment in general, which usually have the World Bank interprets and evaluates the findings of the up-to-date lists of existing and officially proposed pro- EA report--along with any supplementary sources of rele- tected areas. Some also have authoritative information on vant information--and determines which project areas (if unprotected areas of high conservation value. any) indeed qualify as critical forests or other critical natu- Conservation NGOs (national or international), which ral habitats, in terms of applying the safeguards require- often have high-quality information about critical forests ments of the Forests and Natural Habitats policies. In cases and other natural habitats. They are frequently also proj- where the World Bank's judgment differs from the recom- ect stakeholders and sometimes partners. mendations of the EA report, the former overrides. It is thus Expert individuals with specialized knowledge about sites important that this decision be made with inputs from tech- of interest, who can often be found in universities and nically qualified World Bank staff and other specialists (as research institutions, at the national or international needed), in a manner that is credible and convincing from a level. scientific standpoint. Public consultation, which is primarily a vehicle to ensure stakeholder participation in the decision-making Complementary means of identifying critical process, but can provide information about critical nat- forests and critical natural habitats. Although the ural habitats not obtained from other sources. For exam- EA process is the official, World Bank­endorsed mechanism ple, the World Bank first learned that the site proposed for identifying critical forests and other critical natural for a solid waste landfill on the Caribbean island of habitats, there are complementary sources of information Grenada was the habitat of the critically endangered that project teams (World Bank staff as well as their govern- Grenada dove (Leptotila wellsi) as the result of a public ment or NGO counterparts) should use. These additional consultation held in 1994, even though the initial EA sources of information are important (i) for preliminary report for the Organization of Eastern Caribbean States assessment of the presence, nature, and extent of critical (OECS) Solid Waste Management Project failed to men- forests and other critical natural habitats before the EA tion this issue. report is available; (ii) to help verify the validity and com- pleteness of the EA report with respect to this issue; and (iii) Useful publications and electronic databases. A vari- to provide, as needed, supplementary information useful for ety of documents and Web sites provide lists, brief descrip- decision making regarding project design. Broadly speak- tions, and map locations for critical natural habitat sites-- ing, these complementary information sources comprise including many outside existing protected areas--in a large 312 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 number of countries. These information sources should be Important Bird Areas of the Tropical Andes, covers regarded as useful "first approximations" of the locations Venezuela, Colombia, Ecuador, Peru, and Bolivia (Boyla and characteristics of many, though not all, critical natural and Estrada 2005); habitats. Geographic sites that do not appear on any of these Important Bird Areas in Zambia (Leonard 2005); and lists might still qualify as critical forests or other critical nat- Key Sites for Conservation in Cambodia (2003). ural habitats, based on the above-mentioned criteria and the World Bank's review of the EA report and other relevant The list of IBAs by country can also be accessed elec- information during project preparation. The following is a tronically via www.birdlife.org. partial list of some useful publications and electronic data- bases (see the Selected Readings list for this chapter for full Alliance for Zero Extinction Sites. The Alliance for Zero Extinc- bibliographic information). tion (AZE) is an alliance of international NGOs, including the World Wildlife Fund, Conservation International, The Nature World Bank Publications Conservancy, Wildlife Conservation Society, BirdLife Interna- tional, American Bird Conservancy, and numerous national- Ecologically Sensitive Sites in Africa (World Bank 1993); level conservation NGOs. AZE sites are discrete areas where Protected Areas Systems Review of the Indo-Malayan most or all of the population of a critically endangered or Realm (with maps showing existing and proposed pro- endangered animal or plant species occurs (all or part of the tected areas in East and South Asian countries; MacKin- year).As such,AZE sites are among the most critical of endan- non 1997); gered natural habitats (including forests). Around 700 AZE Critical Natural Habitats in Latin America and the sites worldwide have been identified; they are listed by coun- Caribbean (World Bank n.d.); and try at www.zeroextinction.org. A link to Google Earth became for marine critical natural habitats proposed for protec- operational in October 2006, which enables users to view the tion, A Global Representative System of Marine Protected site in reasonable detail on their computers. Areas (four volumes covering the world's oceans and seas; Kelleher, Bleakley, and Wells 1995). Wetlands and Marine Habitats Directories. Wetlands that are likely to qualify as critical natural habitats (including Important Bird Areas. Important Bird Areas (IBAs) are sites wooded freshwater swamps and mangroves that would that are of global significance for bird conservation, partic- qualify as critical forests) are listed and described in several ularly of threatened species. They can be regarded as a very published wetlands directories, including the following significant subset of critical natural habitats, because sites important for bird conservation tend also to be important Directory of African Wetlands (Hughes and Hughes for the conservation of other biodiversity as well--although 1992); not all critical natural habitats also qualify as IBAs. BirdLife Directory of Asian Wetlands (Scott 1989); and International and its national partner organizations have Directory of Neotropical Wetlands, covers Latin America recently published a number of books (as hard copies and and the Caribbean (Scott and Carbonell 1986). sometimes also as compact discs) that list and briefly describe all the currently known IBAs at a national and Those wetlands that have been designated as Wetlands of regional level, including, among others, International Importance under the Ramsar Wetlands Con- vention are listed and mapped in the Ramsar Sites Directory Áreas Importantes para Aves en Panamá (Panama and Overview (Wetlands International 2005), available Audubon Society 2003); online at www.wetlands.org. Áreas Importantes para la Conservación de las Aves en Marine coral reefs (most of which would qualify as criti- Argentina (Aves Argentinas 2005); cal natural habitats) are covered in Coral Reefs of the World Áreas Importantes para la Conservación de las Aves en (Wells 1988). México (CIPAMEX 2000); Important Bird Areas in Africa and Associated Islands: Pri- National-Level Directories and Databases. Some countries ority Sites for Conservation (Fishpool and Evans 2001); have published lists and descriptions of their critical natural Important Bird Areas in Europe: Priority Sites for Conser- habitats, or broadly comparable areas. A good example is vation (Heath and Evans 2000); CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 313 the detailed Biodiversidade Brasileira book published by application of conservation offsets, many potentially con- Brazil's Environment Ministry (2002). troversial development projects can yield significant net environmental benefits and even turn some, though not all, High Conservation Value Forests. Note 3.1, Mainstreaming NGO project opponents into supporters. Conservation Considerations into Productive Landscapes, One recent example of a large-scale conservation offset discusses the (optional) planning methodology for desig- supported by the World Bank is the extensive and biologi- nating High Conservation Value Forests (HCVFs). Accord- cally valuable Nakai-Nam Theun National Protected Area in ing to the HCVF Toolkit (available online at www.hcvf.org), the Lao People's Democratic Republic, which is receiving HCVFs are those forests considered to be "of outstanding much needed on-the-ground support for its protection and significance or critical importance," according to six High management as an offset for the inundation of a much Conservation Value (HCV) criteria. Three of these six crite- smaller, and generally less ecologically valuable, forested area ria (HCV 1, 3, and 6) correspond very closely to the above- by the Nam Theun II hydroelectric dam. The protected area mentioned OP 4.36 criteria for critical forests. Thus, forests was set up after the World Bank worked with the government designated as HCVFs under the HCVF methodology are to develop a law that established a national protected areas likely to also qualify as critical forests under the Forests Pol- system and included the Nakai-Nam Theun National Pro- icy. Moreover, if their selection as HCVFs was made accord- tected Area by reference through government decree. ing to HCV criteria 1, 3, or 6, then they would almost cer- When protected areas are established or strengthened to tainly qualify as critical forests under OP 4.36. As noted in compensate for the loss or degradation of noncritical forests Note 3.1, while many HCVFs are likely to be placed under or other natural habitats, the funding for these compensa- strict protection, some HCVFs may be subject to limited tory areas should come from the same project causing the timber harvesting or other direct resource uses--so long as conversion or degradation. The Global Environment Facil- the particular HCVs that are characteristic of those forests ity (GEF) does not fund activities intended to mitigate or would be maintained or enhanced, and not degraded or compensate for the environmental damage from IBRD- or lost. This is consistent with OPs 4.36 and 4.04, which do not IDA-supported projects. However, the GEF will support prohibit natural resource utilization within critical forests biodiversity-related or other qualified environmental or other critical natural habitats--only their conversion or enhancement activities (including protected areas), if these degradation (as defined above). clearly go above and beyond the project mitigation required by national laws and World Bank safeguards policies. Under the Forests and Natural Habitats policies, compen- PROTECTING FORESTSTHROUGH satory protected areas should be ecologically similar to, and CONSERVATION OFFSETS ideally no smaller than,the forest or other natural habitat area The Forests and Natural Habitats policies require, under that is converted or degraded under the overall project. How- some circumstances, the establishment or strengthening of ever, it is acceptable (and desirable) to conserve as an offset an ecologically similar protected areas to compensate for, or area that is ecologically somewhat different, if it is of greater "offset," the project-related conversion or degradation of conservation value. For example, under Brazil's Ceara Inte- noncritical forests and other natural habitats. Conservation grated Water Resources Management Project, the flooding of offsets can be a valuable tool to leverage the funds from some relatively common dry forest with water supply reser- infrastructure or other large-scale development projects voirs was compensated for with support for improved con- (that convert noncritical forests or other natural habitats) to servation of several moist forest areas (of higher conservation achieve "win-win" outcomes that represent net gains from a priority) in the Sierra de Baturite and Chapada da Araripe. conservation standpoint. Compensatory protected areas See box 9.19 for an indicative list of the main steps provide an opportunity to turn a negative project feature involved in creating new protected areas (regardless of (natural habitat loss) into something environmentally posi- whether they serve as conservation offsets). Among the basic tive (new or strengthened protected areas). In response to issues to consider in the establishment or strengthening of this requirement of the Forests and Natural Habitats poli- protected areas as conservation offsets are the following: cies, some important forested areas are being effectively conserved--whereas, without the project, they would have Fundamentals of protected area components. If they are to remained unprotected and vulnerable to loss or damage be more than empty promises, components involving from other, often imminent, threats. Through the prudent compensatory protected areas (or virtually any other 314 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 environmental mitigation measures) all need, before areas component should be implemented as soon as pos- appraisal, (i) an implementation schedule; (ii) a clear sible in relation to the main civil works, to ensure that (i) division of institutional responsibilities; (iii) an itemized the conservation area is fully implemented within the life budget; (iv) an identified source of funds, for investment of the project and (ii) the main civil works do not dam- as well as recurrent costs; and (v) the legal framework to age (directly or indirectly) the conservation area before support the establishment and protected status of the key protection and management measures are in place. area. Multiple uses of protected areas. Most protected areas Interinstitutional coordination. In most infrastructure allow various kinds of direct human uses. Different cate- projects with natural habitats components, the institu- gories of protected areas allow different types of non- tion in charge of protected areas is different from the exe- consumptive, and sometimes consumptive, uses of natu- cuting agency for the main civil works. The protected ral resources.2 Protected areas should typically have a Box 9.19 Typical Procedures for Establishing New Protected Areas Phase I: Verifying the Feasibility of Establishing a should specify the precise boundaries and official Protected Area management category of the protected area. 1. Documenting the conservation value. This ecological evaluation (or similarly named) report should ver- Phase IV: On-the-Ground Implementation of the ify that the proposed protected area is (i) of high Protected Area conservation value for biodiversity or other envi- 5. Physical demarcation. The protected area boundaries ronmental criteria (fishery habitat, flood protec- are marked in the field, using signs, concrete monu- tion, or the like); and (ii) if a conservation offset ments, cleared paths, or fences (as appropriate). area, ecologically similar to, or of even greater con- 6. Basic infrastructure and equipment. Much of this servation value than, the area that would be lost or should be provided during the first year of pro- degraded under the overall project. tected area implementation and itemized in the first 2. Documenting land tenure, use, and occupation. This Annual Operating Plan (AOP), which should be land tenure and socioeconomic report should indi- finalized before the first year. cate (i) who owns all the land comprising the poten- 7. Protected area staff. The needed personnel (includ- tial protected area, (ii) who has any concessions or ing government employees, contracted local people, use rights, and (iii) who is currently occupying or NGO staff, volunteers, and other) should be speci- using the land (even if they lack legal rights). fied in each year's AOP, as well as in the manage- ment plan. Phase II: Choosing the Boundaries and Management 8. Management plan. Normally, the terms of reference Category of the Protected Area for producing the management plan should be pre- 3. The two reports produced during Phase I determines pared before the first year, and the plan itself should whether a protected area is feasible. If the protected be prepared during the first year (with ample stake- area is feasible, the ecological evaluation and land holder consultation) and implemented in subse- tenure and socioeconomic reports are used to decide, quent years. The management plan should ideally in consultation with local residents, conservation be viewed as a living document, subject to revision NGOs, and other key stakeholders, (i) the precise from time to time. boundaries (shown on a map) and (ii) the official 9. Recurrent cost funding. The commitment of a gov- management category of the new protected area. ernment agency or NGO to provide long-term funding for the recurrent costs of protected area Phase III: Legal Establishment of the Protected Area management (mostly salaries and fuel) should be 4. A decree (executive order) or law is approved to secured at the earliest possible date. establish the new protected area. The decree or law Source: Edec 2006. a. A law may be preferred because in many countries, while a law may take more time and expense to prepare, it may also be more difficult to reverse than a decree. CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 315 management plan--prepared in a participatory manner SELECTED READINGS with all major stakeholders--that specifies which activi- Angehr, G. 2003. Directory of Important Bird Areas in ties are allowed, in which zones. Panama/Áreas Importantes para Aves en Panamá. Land tenure. In general, new protected areas are easiest to Panama Audubon Society. establish on public (state-owned) lands. Under the right Aves Argentijas. 2005. Áreas Importantes para la Conser- conditions, protected areas can also be established on vación de las Aves en Argentina. Buenos Aires: Aves communally owned indigenous lands, or on large indi- Argentinas. vidual landholdings (with legal safeguards to ensure Boyla, K., and A. Estrada. 2005. Important Bird Areas of the long-term management and recognition of Indigenous Tropical Andes. Cambridge: Birdlife International. Peoples and other community rights). The World Bank CIPAMEX (Sección Mexicana del Consejo Internacional Financing OP 6.00 (approved in April 2004) authorizes para la Preservación de las Aves. 2000. Áreas Importantes the use of IBRD and IDA funds for land acquisition for a para la Conservación de las Aves en México. Hidalgo, Mex- wide range of project purposes, including protected area ico: CIPAMEX. establishment and consolidation. For details, see the Environment Ministry of Brazil. 2002. Biodiversidade "Guidance Note on World Bank Financing of Land Brasileira. Brasília, Brazil. Acquisition for Protected Areas," an internal World Bank Fishpool, L. D. C., and M. I. Evans. 2001. Important Bird document available from the Operations Policy and Areas in Africa and Associated Islands: Priority Sites for Country Services intranet site http://opcs.worldbank Conservation. Newbury and Cambridge: Pisces Publica- .org/eligibility/1guide.html. tions and BirdLife International. Social safeguards. World Bank­supported protected areas Heath, M. F., M. I. Evans, and D. G. Hoccom. 2000. Impor- need to be established and strengthened in a manner tant Bird Areas in Europe: Priority Sites for Conservation. consistent with the Indigenous Peoples OP 4.10 and the Cambridge: BirdLife International. Involuntary Resettlement OP 4.12 (see chapters 8 and 12 Hughes, R. H., and J. S. Hughes. 1992. Directory of African for a brief summary of their requirements). Wetlands. Gland, Switzerland: IUCN. Kelleher, G., C. Bleakley, and S. Wells. 1995. A Global Repre- sentative System of Marine Protected Areas. Four volumes. NOTES Washington, DC: Great Barrier Reef Marine Park Authority, World Bank, and IUCN. 1. The environmental classification of any investment project should be justified and explained in the ISDS and Leonard, P. 2005. Important Bird Areas in Zambia. Lusaka, PAD. Zambia: Zambian Ornithological Society. 2. The World Conservation Network (IUCN) protected area MacKinnon, J. R. 1997. Protected Areas Systems Review of the categories are a standardized classification system for similar Indo-Malayan Realm. World Conservation Monitoring types of protected areas that may have very different names in Centre: Cambridge. different countries.For example,a"forest reserve"in one coun- Scott, D. A. 1989. Directory of Asian Wetlands. Gland, try may mean an area of strict preservation (Category I), while Switzerland: IUCN. in another it might mean a production forest suitable for com- Scott, D. A., and M. Carbonell. 1986. Directory of Neotropi- mercial logging (Category VI). The IUCN categories relevant cal Wetlands. Gland, Switzerland: IUCN. to the Natural Habitats OP 4.04 and Forests OP 4.36 are as fol- Wells, S. M. 1988. Coral Reefs of the World. Gland, Switzer- lows: I: Strict Nature Reserve/Wilderness Area (protected area land: IUCN. managed for science or wilderness protection); II: National Wetlands International. 2005. Ramsar Sites Directory and Park (protected area managed mainly for ecosystem protection Overview. Wageningen, The Netherlands: Wetlands and recreation); III: Natural Monument (protected area man- International. aged mainly for conservation of specific natural features); IV: World Bank. "Critical Natural Habitats in Latin America Habitat/Species Management Area (protected area managed and the Caribbean." Unpublished. Latin America and mainly for conservation through management intervention); Caribbean Environment Unit, World Bank, Washington, V: Protected Landscape/Seascape (protected area managed DC. mainly for landscape/seascape conservation and recreation); and VI: Managed Resource Protected Area (protected area World Conservation Monitoring Centre. 1993. Ecologically managed mainly for the sustainable use of natural ecosystems). Sensitive Sites in Africa. Seven volumes. Washington, DC: World Bank. 316 CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 REFERENCES CITED ------. 2005a. Jharkhand Participatory Forest Management Project (P077192 ). Draft TORs for Social Assessment. Edec, G. 2006. "Safeguards and Due Diligence in Forest Internal document. World Bank, Washington, DC. Activities." Note submitted to World Bank as input to Forests Sourcebook. Unpublished. World Bank, Washing- ------. 2005b. Bosnia and Herzogovina--Forest Develop- ton, DC. ment and Conservation Project (P079161). Develop- ment of Standard Procedures for a Comprehensive Con- World Bank. n.d. Environmental Sourcebook and Updates. sultation Process, Social Assessment, Process Framework, http://go.worldbank.org/LLF3CMS1I0. Participation Plan, and Operational Sourcebook. Draft ------. 2003a. Kazakhstan Forest Protection and Rehabili- Contract. Internal document. World Bank, Washington, tation Project (P078301). PHRD Grant, Suggested Draft DC. Terms of Reference, Component D: Economic and ------. 2006. Western Kenya Community­Criven Develop- Financial Analysis. Internal document. World Bank, ment & Flood Mitigation Project. (P074106). Consul- Washington, DC. tancy on Formulation of Environmental and Social Man- ------. 2003b. Bosnia and Herzogovina--Forest Develop- agement Framework Draft contract. Internal document. ment and Conservation Project (P079161). Environmen- World Bank, Washington, DC. tal Management Plan (EMP) Framework, Draft Con- tract. Internal document. World Bank, Washington, DC. CHAPTER 9:APPLYING FORESTS POLICY OP 4.36 317 C H A P T E R 1 0 Consultation and Communication in Forest Sector Activities F orests are the meeting point for the diverse interests communication may be stand-alone components of a proj- of a wide variety of stakeholders. For the private sec- ect, they are generally part of an integrated approach in tor, forests are a lucrative source of income and which safeguards play a critical role (see chapter 9, Applying opportunity for investment. For the state, forests are a Forests Policy OP 4.36). Furthermore, the terms of reference source of revenue and power. For forest-dependent house- (TOR) provided in chapter 9 may be helpful in developing holds, the resource base is an important element of the consultation and communication approaches. Chapter 12 household portfolio. For conservation entities, forests are describes the additional requirements when Indigenous repositories of biological diversity and critical habitat or Peoples are affected, including the need for free, prior, and ecosystems. This makes forest sector projects complex and informed consultations with affected communities leading multifaceted. The projects potentially have issues of con- to their broad support for the project. flicting vested interests, states unwilling to relinquish con- trol of the resource, livelihood issues involving local forest CONSULTATION uses and indigenous groups, as well as problems of illegal extraction and much more. In this chapter, consultation refers to the inclusion of all Consultation and communication in forest sector proj- representative groups of stakeholders. Another form of con- ects are important to build coalitions, manage risk, create sultation is consultation among donors--sharing informa- transparency, and formalize mechanisms for participation tion and harmonizing projects. Though consultation and responses to stakeholder concerns. Consultation among donors is an important part of a successful project, enables the involvement of indigenous groups and other it is not addressed here. marginalized and vulnerable groups (including women and Consultation with stakeholders in forest sector projects is youth). A well-designed communications strategy facilitates not just a requirement--it is a strategic tool. Consultation transparency while contributing to the long-term sustain- creates opportunities to identify key issues that, if left unde- ability of a project. The two strategies are intertwined. Con- tected, can threaten the long-term success of a project. Con- sultation requires communication and communication sultation helps project teams, donors, government agencies, enhances and is reinforced by consultation. and project beneficiaries elaborate on and understand real- The first section of this chapter addresses consultation in ities at the site. Consultations are opportunities for project forest sector projects. The second section addresses commu- designers to capture and build upon local knowledge by nication. Although there are times when consultation and involving stakeholders in the design of the project. Further- 319 more, consultation is a way to ensure that indigenous and tation process and the project design should be shaped by other vulnerable groups are involved in projects, and to and respond to stakeholder concerns, the consultation ensure that equity issues are addressed. process can and should be flexible. The benefits of consulta- The complex and multifaceted nature of forest sector tion far outweigh the costs, in spite of the additional plan- projects can make them risky. Forest sector projects often ning and accommodation that consultation requires. have to address such issues as local access to the resource, the rights of indigenous groups, and other related livelihood Consultation with whom? No successful consultation issues. In such cases, consultation offers a means to manage can take place without first identifying key stakeholders. these risks by creating transparency and clearly representing Stakeholders are individuals or groups directly affected, the approach and objectives of a project. Through proper indirectly affected, or with an interest in the project. consultation, stakeholders can be involved in project design, Though deceptively simple sounding, stakeholder identifi- generating local commitment to the process and project. cation is an essential step, and many long-term problems Stakeholders have a means to express concerns construc- can be averted by identifying and including all key groups. tively, and an opportunity to help design solutions (box Once stakeholders have been identified, the next step is 10.1). In short, consultation builds a coalition (see box 10.2). to undertake a stakeholder analysis (see chapter 9, Applying The benefits of consultation are not without costs, both Forests Policy OP 4.36). This process groups stakeholders human and monetary. Consultation requires trained per- into categories on the basis of their relationship to the proj- sonnel and takes time. The time and budgetary constraints ect (policy makers, potentially adversely affected people, can be managed with proper planning. Because the consul- Indigenous Peoples or tribal organizations, donor agencies, Box 10.1 Liberia Forest Initiative:A Strategic Partnership that Enables Consultation "Strategic communications and civil society consulta- The managing director of the FDA prepared a tions can help manage risks." response highlighting how the LFI has helped in mak- --Communications Officer, ing the process highly consultative. "We, too, are External Affairs, Communication, and Network extremely concerned about these issues, and as a result Anchor (EXTCN) we have been studying and debating them since the debut of this legal reform process in 2003... Currently, The Liberia Forest Initiative (LFI) is a partnership of all actors involved in the forest sector reform process government and international organizations and have been diligently working in a collaborative fashion NGOs to support the rehabilitation and reform of to achieve this objective, and we strongly believe that Liberia's forest sector and enhance cooperation and the content of the draft law provides a far greater coordination of activities in Liberia for the promotion recognition of community rights and many more for- of sustainable forest management. Liberia is a post- mal avenues for participation of communities in deci- conflict nation with many forest resources. These for- sion making about the use of Liberia's forest resources est resources are in high demand to serve the nation's than ever encountered in this nation's history." economic growth through a process that accounts for Having the structure of the LFI in place allowed the community rights and equitably addresses distribution international parties and the government to handle and environmental issues. this situation in a constructive manner that did not Actions in Liberia are under close scrutiny by escalate or paralyze the project. The framework for national and international groups because there is a consultation was already in place. The LFI provided a great deal at stake. In the recent past, an international place for outside parties to express concerns and a NGO wrote a letter to the Forest Development Author- venue for response--thus assuaging fears and creating ity (FDA) of Liberia, a member of the LFI, expressing transparency. Ultimately, the external party was offered concern that the draft National Forestry Reform Law of the opportunity of continued involvement and was 2006 failed "to adequately address the important issues folded into the project. of community rights and participation in decision making, forest management, and land tenure." Source: Adapted by author. 320 CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES and responsibilities agreed to by all institutions involved. Box 10.2 What Is the Necessary Level The sequence of consultation steps should be well-planned of Consultation? from the beginning; public consultation should begin-- where possible--before major decisions are made. Each Meaningful public consultation typically takes stage of the project may require different consultation mea- place at three different levels: conveying informa- sures (see table 10.1). The scope of the consultation should tion to the public, listening to the opinions and also be appropriate to the project. For example, long-term preferences of the public, and involving the public projects involving diverse stakeholders may require consul- in making decisions. The nature and size of the project, combined with both the nature and num- tation processes specific to each stakeholder group and ber of stakeholders and the status of national leg- repeated consultations during the course of the project. islation, will largely define when, where, and what Ultimately, a project's success depends on stakeholders level of public consultation is required for an Envi- understanding the project's purpose and committing to a ronmental Assessment (EA) and its Environmen- plan for its success. Appropriate goals will vary by project tal Management Plan. and by phase within a project. For example, during the site For instance, if the aim is to inform the public selection phase of a protected area establishment, the goal about a project or important issues, the initial might be to identify the concerns of local stakeholder number of people to contact will be large, but the groups regarding potential sites. During the implementa- interaction may be limited. If public preferences tion phase, consultation could contribute to identifying are being sought, closer contact and dialogue will potential mitigation approaches to the challenges associated be required, but with a smaller number of people. with implementation (see table 10.1 for a summary of con- If the public's direct input to decision making is being sought, ongoing discussions with a small sultation objectives at different project phases). group of representatives of stakeholder groups will To ensure positive outcomes, responsibilities must be likely be held. Site-specific factors, such as a his- clearly defined and agreed to by all implementing institu- tory of local opposition to similar projects in the tions--whether international, national, or local. The con- area, will also be important in determining the sultation plan should clearly delineate who is responsible level of consultations. for particular monitoring and evaluation exercises, as well as for specific outputs. Source: World Bank 1999. To produce effective results, good consultation requires the provision of adequate resources before embarking on a media, NGOs, other interest groups, and so forth) (see box project activity. Planning--skills required, scope, and level 10.3). For each category of stakeholders, three categories of of consultation--should fit the budget. Budget constraints information should be developed: can lead to the temptation to conduct insufficient or cur- sory consultation, but inattention to stakeholder concerns Defining characteristics, including social dimensions, can threaten the success of a project. organizational strength, formal or informal power and Furthermore, a successful project is sensitive to local authority, organizational capacity, and so forth. issues. It builds upon existing networks (for instance, donor Stake or interest in the project, and the stakeholders' coordination groups or forest user groups). It identifies latent potential support or opposition to the project. This may conflicts and deals with them proactively (see boxes 10.3 and include degree of commitment to the status quo, open- 10.4). The consultation process should be designed to ness to change, and an assessment of whether the pro- accommodate both national laws and international conven- posed project is aligned with the interests of the con- tions. It should also consider site-specific sensitivities; for cerned stakeholders. example, political and cultural issues like ethnic prejudice or Influence of each stakeholder group, and whether poten- restrictions on women, as well as geography, can have an tial opposition from each of them--and the groups col- impact on the process, so plans must be made accordingly. lectively--constitutes a high, substantial, medium, or Values, particularly those of minorities, such as Indigenous low risk to the project outcomes. Peoples, sometimes conflict with national ones (see box 10.5). For example, national desire for foreign exchange What is a good consultation process? A good consulta- from timber sales can be at odds with use of forest resources tion process is one that is carefully planned, with clear goals for equitable improvement of local livelihood or sociocultu- CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES 321 Box 10.3 Consultation in Cambodia: Lessons Learned "Listen to your critics and learn from them." with great care--ensuring expectations are clear, --Communications Officer, EXTCN materials are available early and in an appropriate format, neutral facilitators are employed if neces- Lessons can be drawn regarding the importance of con- sary, and existing mechanisms such as technical sultation and a clear communications strategy from the working groups are used for ongoing dialogue with World Bank project in Cambodia on forest concession a range of stakeholders. management that started in 2000. The project focused on (i) forest concession planning and inventory, (ii) for- Role of Local Communities, Including Consultations est concession control, (iii) forest crime monitoring and with Affected Communities prevention, and (iv) project management and institu- TheWorld Bank should play a proactive role in encou- tional strengthening. An inspection panel case on this raging early and sustained involvement of local com- project identified some shortcomings--including over- munities in project design and implementation. lapping claims on timber and resin trees, lack of effec- Many crucial issues can be more effectively tive concessionaire controls over subcontractors, and addressed at an earlier stage, thus lowering tensions restriction of access to livelihood resources--and pro- and apprehensions on all sides and speeding the vided some guidance on how these could have been process of reform. addressed. These lessons are useful for projects with When project implementation involves community complex natural resource management issues. consultation, the World Bank should work with the implementing agency to ensure appropriate identi- Shared Vision and Engagement with Other Stakeholders fication of affected communities, the associated area In projects that address national resource manage- of impact, and appropriate third parties (free from ment issues, it is important to map stakeholders' conflict of interest) to carry out environmental and varying and, at times, conflicting interests and social impact assessments. engage them early and throughout implementation. Mechanisms for monitoring compliance with Advisory groups could be useful for ongoing feed- planned consultation procedures should also be back and guidance. agreed upon in advance, and results of monitoring Interactions with stakeholders should be managed efforts should be made publicly available. Source: Adapted from IBRD and IDA 2006. ral purposes. Where values conflict, the objective of the con- tial. Who makes which decisions at what point in the sultation process is for stakeholders to exchange informa- project cycle? tion and perspectives and identify compromises. Determine the appropriate level of consultation. (See box 10.2.) Consultation can occur at three different levels: Planning tasks. Finally, there are some commonalities for conveying information to stakeholders, listening to successful consultation. Though every project will be stakeholder opinions, and involving stakeholders in deci- unique in its needs, many (if not all) of these planning tasks sion making. How much consultation and at which level will apply1: it should occur will depend on the scope and size of the project. Identify stakeholder groups (see above). Identify timing for consultation. Consultation before Identify the key consultation issues. One of the first criti- major decisions is essential. Consultation as part of cal steps is to identify the key issues around which the research, planning, and development of mitigation plans consultation will be oriented. Environmental and social is better. For the specific purposes of an EA, consultation issues, such as indigenous groups, resettlement, and spir- is required at a minimum after an EA category has been itual uses of forests, often prove important. assigned, and once a draft EA has been prepared. Understand the decision-making process. Next, under- Choose consultation techniques. In general, it is essential to standing how environmental decisions are made is essen- maintain good communication in consultations. Target 322 CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES Box 10.4 Consultation in the Democratic Republic of Congo: Using Analytical Work to Start the Process "Planning an effective consultation up front is easier A recent analysis assessing the soundness of the pri- than trying to `catch up' or fix situations later." ority reform agenda provided a vehicle for strengthen- --Lead Forestry Specialist, Africa Region. ing the relationship among groups that previously opposed one another. The study involved a consulta- Forests are ubiquitous in the Democratic Republic of tive process to sharpen the analysis and test consensus Congo; they touch the cultural and economic life of most on initial conclusions. The process also included con- of the population and have enormous global environ- sultations with government, national and international mental significance. After years of conflicts and misman- NGOs, industry, forest people, and donors. Field visits agement, reconstruction is critical to improving living and meetings with local groups took place in Septem- conditions and consolidating peace. At the same time, ber 2003 in Equateur province, in February 2004 in better roads and trade bring risks--threatening forests Eastern province, and in December 2005 in North and biodiversity by facilitating logging, land conversion, Kivu. This study also benefited from a number of the- and the seizure of forest rights by vested interests. Antici- matic workshops and from two International Forest pating these threats, in 2002, the transitional government Forums held in Kinshasa in November 2004 and Feb- started a priority reform agenda. This was a politically ruary 2006. The overall process improved the working charged agenda with supporting and opposing views. relationship among more than 10 partners. Source: Adapted from Debroux and others 2007. groups must be clearly notified about collaboration effective projects--consultation is one form of instigating opportunities. Extensive records of consultation events communication and communication is an important out- should be kept. Feedback should be provided to the pub- come of consultation. lic, clearly explaining project responses to their concerns Communication is a term that incorporates information (see box 10.6) The most effective consultation plan will dissemination, dialogue, transparency, feedback, responsive- likely use a range of listening techniques, a variety of ness, and engagement. Communication requirements can be methods for involving stakeholders in decision making, broadly classified into external and internal needs. External as well as several methods of conveying information (see needs involve engagement with the media, political leaders, tables 10.2 and 10.3). (For more information about tech- and civil society to build trust, credibility, reputation, and niques, see World Bank 1999). support for the program. Internal needs involve communi- Develop a budget. Consultation is not without costs, and cation directed at clients, stakeholders, or partners to gener- it is important that the consultation budget reflect the ate understanding, participation, or ownership of the pro- size and scope of the consultation plan (see box 10.7). gram (see box 10.6). Internal and external communication Define a communication methodology (see next section of needs are mutually reinforcing: transparent, clear, open com- this chapter). munication will help win political and civil society support, and a broad alliance will help to increase the effectiveness of a project and its ability to reach stakeholders. COMMUNICATION Development of a comprehensive communications strategy What is a good communications strategy? In the inter- is essential to the long-term success of a project. Clear com- est of cohesion and transparency, the entire project team munications are especially important in challenging gover- should discuss and eventually agree to the communication nance environments because they create transparency. Con- plan. The communications strategy should encompass and sistent, open communication is instrumental in developing maintain oversight of all aspects of communications con- the public and political support required for the long-term tained in the project--everything from speeches by govern- success of a project. Furthermore, communication is impor- ment officials, to the information given to local people by tant in every phase of a successful project: initiating, plan- local representatives of agencies responsible for investment ning, and presenting results. Communication and consulta- in, and operation of, the development program. If this com- tion are tools that work hand-in-hand to build strong, prehensive aspect fails, disconnected communications CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES 323 Box 10.5 Guidance for Addressing Concerns of Indigenous Peoples and Preempting Local Conflicts "The underlying issue was not actually the World Bank Indigenous Peoples often claim to occupy a higher policy, but rather a local conflict." moral ground as the primeval defenders of a pristine --Retired Senior Social Specialist environment against the depredations of developers. These claims are powerful in national and interna- All over the world, Indigenous Peoples and ethnic tional discourse on the use of forests, creating a strong minorities have historically been pushed out of fertile bias in favor of the stands taken by Indigenous Peoples. flood plains into mountains and interfluvial areas where To comprehensively address concerns of Indigenous forests remain intact. Here they developed balanced and Peoples and preempt any local conflicts that may be stable adaptations to forest environments, using manifested as a result of a forest project, it is important resources in a relatively conservative fashion. Today, to do the following: roads, globalized markets, and demand for timber, crop, and grazing land have pushed deep into forested areas Be aware of the geographic and political context of and threaten the lifestyles of forest dwellers. At the same Indigenous Peoples and minorities in areas affected time, ethnic minorities--such as the Montagnards of by a project. Pay attention to surrounding areas as Southeast Asia, the Pygmies of the Democratic Republic well. of Congo, many Indigenous Peoples of Brazil and the Be familiar with the legal framework, especially in eastern Andes, and the Mayans and other Indigenous regard to rights to land and resources and help Peoples of Mexico and Central America--are undergo- ensure compliance with these rights. ing economic and political awakening. International Identify the conflicts that exist in the project area, instruments such as the International Labour Organiza- being familiar with the actors and their political tion Convention 169, the United Nations Declaration on links. Upon becoming aware of a conflict or a the Rights of Indigenous Peoples, and the World Bank potential conflict, be proactive in addressing it, even Safeguard Policies, have helped strengthen the rights of if it is not directly related to the project. This is the Indigenous Peoples and have created tools they can use proverbial "ounce of prevention." to push the envelope with regard to their rights to land Consider how the project's interventions may create and resources. That said, local laws, regulations, and winners and losers especially with regard to entitle- political processes are still the preponderant influences ments. Does it shift the balance? on how well Indigenous Peoples and other minorities Try to ensure that all legitimate representatives of fare in the defense of territorial and other rights. Indigenous Peoples are included in consultations; lis- This picture changes somewhat when a multilateral ten for sometimes poorly articulated demands and actor like the World Bank comes on the scene as the complaints, even if they do not appear to be related financier of a development project. World Bank proj- to the project. Keep in mind that "legitimacy" is a ects in forested areas may have different objectives, but slippery concept and the task managers and their usually they are aimed at raising incomes, helping counterparts may not be the best judges of who secure land rights, and ensuring sustainable resource legitimately speaks for a given group or faction. use. World Bank intervention carries the relatively new Avoid consultants who give broad legal and historical international charter of indigenous and minority surveys and descriptive ethnographic tours but fail rights. Indigenous Peoples and the organizations that to describe the dynamics of what is happening on support them are aware of this and use the policies of the ground. multinational organizations as leverage in their strug- Read the consultant's report, question him or her gles for control over their land and resources. Often, closely, and insist on a full account of conflicts that however, the picture is more complex. Local conflict may be occurring or may be latent. may not be articulated simply in terms of "the devel- Seek the right balance between people-oriented and opers versus the natives." Other issues may underlie the ecosystem-oriented solutions. complaint, such as local political conflicts in the form Write it all down; capture the above points in the of electoral politics, and intercommunity, interethnic, Project Appraisal Document and safeguard compli- and even interpersonal rivalries and conflicts. ance documents. Source: Gross 2007 (Daniel), consultant and former World Bank social safeguards specialist. 324 CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES Box 10.6 Elements of Communication and Collaboration Communications methods should be transparent and summaries of views by type of stakeholder; open to review. Some general principles for achieving a summary of points of agreement, disagreement, transparency and openness include notification, record issues raised, and options discussed; keeping, and feedback. analysis of the validity of the concerns and issues raised by different stakeholders; Notification. The target groups must be notified recommended responses to valid comments; and how, when, and where they can participate. In general, discussion of the implications and options for deci- effective notification is highly visible to the target audi- sion makers. ence, delivered early, uses more than one medium to reach the target groups, and is repeated shortly before Feedback. Feedback should be provided to the public, major events. clearly explaining the responses to their concerns, describing the decisions made, why they were made, Record keeping. A record of the types of consultation and how the information they provided was used. Oth- activities held, the target groups and numbers reached, erwise, participants may feel that their input had no the information conveyed, and the stage at which the impact on the decision; some of the benefits of the information was provided should be kept and analyzed process may be lost, and effective consultation may to reveal become more difficult in the future. Source: World Bank 1999. activities will, at best, fail to be of the highest possible qual- Box 10.7 Budgetary Issues: Cost Elements of ity and, at worst, cause confusion or mixed messages, under- Consultation mining the effectiveness of the communications strategy (see World Bank 2005). Providing adequate resources for a successful con- A successful communications strategy is based on sultation depends on the complexity of the proj- research. As a first step, a team should undertake a compre- ect, the diversity of the stakeholders, and the hensive review of communications lessons learned from importance of the effects, as well as such con- other programs in the country, as well as from relevant nat- straints as the availability of skilled practitioners, ural resource management projects in other countries. availability of funds, and project deadlines. The Information about stakeholder knowledge, attitudes, and principal cost elements vary widely according to practices informs the formulation of an effective communi- the context of the project, but are likely to include cations plan. Further information about the link between some of the following: communications, political analysis, and operational deci- sions is important to ensure that communication is a two- consultants' fees way street. Furthermore, expertise of outside consultants hiring and outfitting of meeting venues may be required when communications needs extend Public opinion surveys beyond skills available in-house (for example, reaching preparation and distribution of materials staff time preparing, attending, and keeping international mass media outlets, or generating video records of public meetings footage). Finally, an ideal communications strategy is devel- maintenance of channels of communication oped in collaboration with stakeholders, perhaps through a (telephone hotline, radio announcements, or workshop in which researchers summarize findings and other means) stakeholders help to determine how to communicate them. travel expenses Though every project will be unique in its needs, a com- munications strategy and work plan comprises these plan- Source: World Bank 1999. ning tasks: CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES 325 Table 10.1 Consultation at Various Stages of an Environmental Assessment Project Stage in EA process Consultation goals Strategic consideration Validation of environmental procedures and Review national law and practice Is there a need? Are there opportunities for standards relating to consultation capacity building? Ensure compatibility with World Bank requirements Screening:Assign an EA category Identify stakeholder groups; secure Is there a commitment to consultation from proponent commitment to project proponents and the relevant consultation program authority? Agree on extent and mode of consultation Scoping: Agree on EA TOR and schedule Identify stakeholders What resources are needed and available? Who is responsible for implementation and monitoring and evaluation? Disclose relevant project information Are there potential conflicts between the needs of the developer and those of the public? Determine stakeholder concerns and include them in the TOR Environmental analysis and production of Disclose information on study methods What methods are appropriate for reaching draft EA reports (including social and findings different stakeholder groups? assessment and resettlement plan, Agree on proposed mitigation measures as appropriate) with stakeholders Let stakeholders determine whether their concerns are adequately addressed Production of final report Finalize mitigation plan and disclose to Are mechanisms in place to ensure ongoing stakeholders consultation and compliance with agreements? Implement the Environmental Management Inform the public about scheduling of What role can stakeholders play in monitoring? Plan (including environmental monitoring) potentially disruptive events Disclose results of environmental monitoring Maintain effective complaints procedures Final evaluation Assess effective consultation process Were any lessons learned that might be transferable to other projects? Consult stakeholders for their assessment Source: World Bank 1999: 2. Note: This table, extensively abridged, was adapted from the World Bank's The Public Participation Handbook (1996), which contains a full version of the table and extensive supporting text describing each tool. Identify goals. This component should detail issues to be Define roles and accountability. Clearly establish divisions addressed and desired outcomes, as well as the feasibility of responsibility for which tasks will be handled by which of those goals. Goals will vary with the scope, size, and agency (see annex 10A to this chapter for a checklist). phase of projects. This may entail an assessment of client capacity for com- Assess target audience. What motivates them? What are munications tasks and opportunities for capacity build- their needs? What are their stakes in the project? This ing. Specific areas of assessment might include commu- component has obvious overlap with consultation and nications planning and management, research, the results of stakeholder analysis (see consultation sec- communications material development and production, tion above). monitoring and evaluation, liaison work with mass Develop key messages. media, and liaison work with large-scale outreach net- ­ The content will be based on previously identified works. (See Cabañero-Verzosa 2003 for guide questions issues and desired outcomes. to assess institutional capacity [module 7] and for a ­ The scope and timing for the plan will depend on the model TOR [module 4].) scale and phase of the project (for worksheets helpful Identify allies, barriers, options, and possible risks. This for developing timelines for communication projects, identification could potentially be accomplished with see Module 9 of the World Bank's Strategic Communi- communications planning workshops with stakeholders, cation for Development Projects [Cabañero-Verzosa using participatory methods. 2003]). Outline initiatives and tactics for communications plan. 326 CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES Table 10.2 Listening to the Public Key Points Advantages Disadvantages Survey techniques · Interviews, formed surveys, polls, and · Show how groups want to be involved · Poor interviewing is counterproductive questionnaires can rapidly show who · Allow direct communication with the · High cost is interested and why. public · Requires specialists to deliver and analyze · May be structured (using a fixed · Help access the views of the majority · Tradeoff between openness and statistical validity questionnaire) or nonstructured. · Are less vulnerable to the influence of · Experienced interviewers or surveyors vocal groups familiar with the project should be used. · Identify concerns linked to social grouping · Pre-test the questions. · Give statistically representative results · Open-ended questions are best. · Can reach people who are not organized in groups Small meetings · Public seminars or focus groups create · Allow detailed and focused discussion · Complex to organize and run formal information exchanges between · Can exchange information and debate · Can be diverted by special interest groups the sponsor and the public; may consist · Provide a rapid, low-cost monitor of public mood · Not objective or statistically valid of randomly selected individuals or target · Provide a way to reach marginal groups · May be unduly influenced by moderators group members; experts may be invited to serve as a resource. Large meetings · Public meetings allow the public to · Are useful for medium audiences · Not suitable for detailed discussions respond directly to formal presentations · Allow immediate response and feedback · Not good for building consensus by project sponsors. · Acquaint different interest groups · Can be diverted by special interest groups · Effective meetings need a strong chairman, · Attendance is difficult to predict a clear agenda, and good presenters or resource people. Conferences · Technical experts and representatives of · Impart specialized technical information · Time and effort needed to prepare interest groups may be brought together. · Promote data sharing and compromise · Cost, if experts are hired · Resolve technical issues Community organizers · These work closely with a selected group · Mobilize difficult-to-reach groups · Potential conflicts between employers and clients or advocates to facilitate informal contacts, visit homes · Time needed to get feedback or work places, or simply be available to the public. Source: World Bank 1999: 6. Note: This table, extensively abridged, was adapted from the World Bank's The Public Participation Handbook (1996), which contains a full versios of the table and extensive supporting text describing each tool. 327 328 Table 10.3 Involving the Public in Decision Making Key Points Advantages Disadvantages Advisory groups · Task forces: Set up task groups to focus on · Can address highly technical problems · Rarely represents all interested parties a single technical issue Define the limit of · Help prioritize and reach consensus · May replace wider consultations the group's authority and lifetime; ensure · Often focuses too much on procedures that all interests are represented and that contact with the public is maintained. Problem-solving · Brainstorming: Designed to enhance · Help groups break out of the obvious · Difficult to include a full range of views techniques creativity and generate ideas quickly · Provide insights for decision making · May yield too many ideas to evaluate · Selection of the facilitator and participants is critical. Consensus-building · Unassisted negotiations, mediation: · Provide a forum for jointly identifying solutions · Not all parties will participate techniques Voluntary processes by which represen- · Puts responsibility on the disputants to · Parties may drop out before the end tatives of affected organizations make identify common ground · Requires good faith decisions by consensus, to be ratified · Can reach robust agreements with broad support · May take too long by parent organizations. · Can lead to quick resolution of contentious issues · Highly skilled mediators are scarce · Parties either agree on decision-making procedures at the outset or use an experienced mediator. Arbitration · A process by which conflicting parties · Provides impartiality from an uninvolved party · All parties must stand to gain seek a solution through an impartial · Is difficult to oppose the arbitrator's · Difficult to identify an acceptable neutral party mediator. recommendations · It can be binding, by prior agreement, or all sides may reserve judgment until the outcome. Source: World Bank 1999: 13. Note: This table, extensively abridged, was adapted from the World Bank's The Public Participation Handbook (1996), which contains a full version of the table and extensive supporting text describing each tool. ­ Preliminary research should include data on how peo- potentially a training scheme and capacity-building ple get their information (newspaper, radio, town component, as well as a budget and time line (see box caller, and others). 10.9). (For examples of communications plan budgets, ­ Tactics should identify appropriate methods for reach- see Module 10 of Cabañero-Verzosa (2003)). Plans should ing specific groups or specific locations. The most effec- include feedback mechanisms for monitoring effective- tive mode of information delivery may vary from ness of communications and adjusting as needed. (For place to place. For example, one project used different indicators, see Module 3 of Cabañero-Verzosa (2003)). strategies to reach male and female stakeholders in The proposed plan should be assessed to determine Mali. Another broadcast information from a speaker whether it is appropriate to the stated goals and whether on a moped in Bangladesh--a method that proved it is feasible, given staffing, funding, and time. more effective than conventional media (see table Supervision during implementation. Supervision should 10.4). assess effectiveness, ensure adequate monitoring of ­ In the interest of transparency and effective external inputs and outcomes, make corrective changes, and allow communication about the project, a plan should the plan to adapt to changing conditions. The supervi- include mechanisms, like press briefings, for proactive sion should involve experts and stakeholders. Key ques- disclosure of project details and policies to identify tions to be considered include the following: Are com- and correct misperceptions (see box 10.8). munications activities taking place? Are materials and ­ Assess availability of resources and other arrangements, messages reaching the target audience? Are they having including specialist advice and authority. the desired effect? Create a communications implementation plan. The Evaluation. An evaluation should address accomplish- implementation plan should detail specific events, mea- ments, lessons learned, future improvements, and should sures for monitoring and evaluation, indicators, and evaluate and monitor results. CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES 329 330 Table 10.4 Techniques for Conveying Information Key Points Advantages Disadvantages Printed materials · Information bulletins, brochures, reports: · Direct · Demand specialized skills and resources Text should be simple and nontechnical, · Can impart detailed information in the local language where possible, and · Cost effective relevant to the reader. · Yield a permanent record of communication · Provide clear instructions on how to obtain more information. Display and exhibits · Can serve both to inform and to · May reach previously unknown parties · Costs of preparation and staffing collect comments. · Minimal demands on the public · Insufficient without supporting techniques · Should be located where the target audience gathers or passes regularly. Print media · Newspapers, press releases, and press · Offers both national and local coverage · Loss of control of presentation conferences can all disseminate a large · Can reach most literate adults · Media relationships are demanding amount and wide variety of information. · Can provide detailed information · Exclude illiterates and the poor · Identify newspapers likely to be interested in the project and to reach the target audience. Electronic media · Television, radio and video: Determine the · May be considered authoritative · Time allocated may be limited coverage (national or local), the types of · Many people have access to radio · Costs can be high viewer, the perceived objectivity, and the type of broadcast offered. Advertising · Useful for announcing public meetings or · Retain control of presentation · May engender suspicion other activities. · Effectiveness depends on good preparation and targeting. Formal information · Targeted briefing: Can be arranged by · Useful for groups with specific concerns · May raise unrealistic expectations sessions project sponsor or by request, for a · Allow detailed discussion of specific issues particular community group, firm, or industry association. Informal information · Open house, site visits, field offices: · Provide detailed information · Attendance is difficult to predict, resulting in limited sessions A selected audience can obtain first-hand · Useful for comparing alternatives consensus-building value information or interact with project staff. · Immediate and direct · May demand considerable planning · Visits should be supported with more · Useful when the project is complex · Field offices can be costly to operate detailed written material or additional · Local concerns are communicated to staff · Only reach a small group of people briefings or consultations. · May help reach nonresident stakeholders Source: World Bank 1999: 10. Note: This table, extensively abridged, was adapted from the World Bank's The Public Participation Handbook (1996), which contains a full version of the table and extensive supporting text describing each tool. Box 10.8 Managing Risks through Strategic Communication: The Case of Cambodia "Transparency is essential." Clear, consistent communications are essential in --Communications Officer, EXTCN challenging governance environments. Teams should first clarify the formal links among Strategic communications can help to manage risks in communications, political analysis, and operational the forestry sector by making information about the decisions to ensure external information and ques- project approach, collaborators, decisions, scope, and tions are fed back into operational decision making. outcomes available in ways that are accessible and use- The communications strategy should be discussed ful to people. This accessible information facilitates and endorsed by the entire project team--and two-way communication and empowers local people, shared with the larger country team. the media, parliament, and civil society to be actively The strategy should include a proactive disclosure engaged in the process and to provide feedback. policy (including press briefings at agreed inter- To this end, it is essential that a project have a clear, vals), mechanisms to promptly identify and correct proactive communications strategy. Lessons learned in errors and misperceptions, and plans and resources the World Bank project in Cambodia on forest con- to translate information into local languages and cession management that started in 2000 (see box 10.3 disseminate it through a variety of media. for project details) provide important conclusions Involvement of communications specialists in proj- about development of a proactive communications ect design and implementation will help to ensure strategy: effective engagement. Source: Adapted from World Bank 2006. Box 10.9 Communications Implementation Plan The following are elements within a communications The capacity-building component is a plan to provide implementation plan: the infrastructure, staffing, and training on commu- nications strategy development and management. It A strategic approach defines (i) the goal(s) identified may investigate organizational systems, work perfor- as feasible and effective in supporting the project's mance indicators, and staff development opportuni- purpose, (ii) the type of response desired, (iii) the ties that affect the quality of communications work. target audiences, and (iv) methods (print, mass Budget line items for critical elements that affect the media, group encounters, interpersonal communi- success of communications activities are needed, cations) that will be used. including the funding of communications research A training scheme in skills needed to carry out com- during the planning phase, as well as adequate munications activities is critical to the strategy. funding for mass media dissemination costs and Monitoring and evaluation activities are designed for group communications activities. continuous monitoring of communications strat- Timelines that allow for a participatory process of egy and activities to provide timely information to planning, implementing, and monitoring commu- improve judgments about action. nications activities are necessary. Source: Cabañero-Verzosa 2003. CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES 331 ANNEX 10A CHECKLIST FORTASK MANAGERS Bank project cycle related to Communications tasks Group with primary responsibility the five-step process Identification: Determine if a communications component is needed Determine if the communications component is needed potentially on the basis of review of existing data, economic and sector work reports, demographic surveys, or discussions Client and the World Bank with key informants Select organizational locus for communications activities. Differentiate the communications Assessment strategy development to be done by the Client government from work that may involve outside groups Select project site Client may need specialist through preparation stage. World Hire communications specialist for the Bank may need specialist during project preparation preparation mission and either preappraisal or appraisal missions Preparation: Assess knowledge, attitiudes, beliefs, and practices (KABP), and organizational capacity Assessment Review secondary data on KABP Prepare the communications research plan Hire consultant for planning research Client Conduct planning research as part of social assessment Assess organizational capacity for communications work Planning Assess government's communications capacity- building proposal The World Bank Review criteria and process for selection of outside consultants Prepare a communications strategy Client Initiate work on the implementation plan (strategy, research plan, budget, timeline, capacity-building component 332 CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES Bank project cycle related to Communications tasks Group with primary responsibility the five-step process Preappraisal/appraisal: Reach agreement on a communications strategy and implementation plan Agree on purpose, content, methodoly for a communications component Client and the World Bank Agree on how decisions will be made about who is going to implement the communcations strategies Planning Finalize implementation plan Client Prepare documents, negotiate loan approval The World Bank Develop and pretest material Material development Client and planning Prepare for project launch Supervision: Monitor communication and inputs and outcomes Evaluate whether · Communications activities are taking place Material development · Communications materials are reaching target The World Bank and pretesting audiences · Communication activities are associated with desired outcomes Implementation Document lessons learned about audience response to communications activities Client and the World Bank Review results of monitoring research and Monitoring and evaluation modify activities as appropriate Submit annual work plan Client Annual midterm review Conduct communications planning sessions about every two years to update strategy Completion: Summarize lessons learned Final evaluation Describe next step of communication Client Source: Cabañero-Verzosa 2003: 19­20. CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES 333 NOTE sation (SNV), Réseau des Partenaires pour l'Environ- nement au Congo (REPEC), Wildlife Conservation Soci- 1. For an example specific to environmental assessment ety (WCS), Woods Hole Research Center (WHRC), that addresses the timing of these planning tasks, see World World Agroforestry Centre (ICRAF), and World Wide Bank (1999). Fund for Nature (WWF). Jakarta: CIFOR. Gross, D. 2007. Personal communication. REFERENCES CITED World Bank. 1996. World Bank Participation Sourcebook. Cabañero-Verzosa, C. 2003. "Strategic Communication for Washington, DC: World Bank. http://www.worldbank Development Projects: A Toolkit for Task Team Leaders." .org/wbi/sourcebook/sbhome.htm. World Bank, Washington, DC. ------. 1999. "Public Consultation in the EA Process: A Debroux, L., T. Hart, D. Kaimowitz, A. Karsenty, and G. Strategic Approach." Environmental Assessment Source- Topa, eds. 2007. Forests in Post-Conflict Democratic book Update 26. Environment Department, World Bank, Republic of Congo: Analysis of a Priority Agenda. A joint Washington, DC. report by teams of the World Bank, Center for Interna- ------. 2005. Jharkhand Participatory Forest Management tional Forestry Research (CIFOR), Centre International Project (P077192). Draft TORs for Social Assessment. de Recherche Agronomique pour le Développement Internal document. World Bank, Washington, DC. (CIRAD), African Wildlife Foundation (AWF), Conseil ------. 2006. "Management Report and Recommendation National des ONG de Développement du Congo in Response to the Inspection Panel Investigation (CNONGD), Conservation International (CI), Groupe Report." Report No. INSP/35556-KH. World Bank, de Travail Forêts (GTF), Ligue Nationale des Pygmées du Washington, DC. Congo (LINAPYCO), Netherlands Development Organi- 334 CHAPTER 10: CONSULTATION AND COMMUNICATION IN FOREST SECTOR ACTIVITIES C H A P T E R 1 1 Forest Certification Assessment Guide: Summary on Use P aralleling the growing demand for wood products is tions into Productive Landscapes), which, in some certifica- the growing demand for the verification of the sus- tion systems, forms part of forest certification assessments; tainability of the forest management from which and that on plantations (note 3.3, Forest Plantations), as for- those products are derived. With the introduction of the est certification continues to expand its work to include this World Bank's Operational Policy on Forests in 2002 (OP sector. 4.36), the World Bank made its support for commercial har- vesting contingent on certification of operations under an THEWORLD BANK­WORLDWILDLIFE FUND acceptable system, with the exception of small-scale land- (WWF) FOREST CERTIFICATION ASSESSMENT holders and operations under community forest manage- GUIDE (FCAG): PURPOSE AND CONCEPT ment and joint forest management. Alternatively, support can be provided under the condition of adherence to a time- Through an intensive process involving experts in this field bound action plan to pursue certification under an accept- and external stakeholders, and in close collaboration with able system within a certain time frame. Consequently, the WWF, the World Bank developed an assessment frame- assessment of certification systems against World Bank work for certification systems that includes elements requirements is a necessary step in the project appraisal deemed essential for reliable and independent certification process for this kind of investment. Assessment of certifica- of forest management. It allows for the evaluation of a sys- tion systems for compliance with these Bank provisions tem's compliance with the World Bank's principles, and can requires an in-depth analysis of the standards and applied contribute to decisions about whether the system is accept- procedures. able in the context of Bank investments. In this chapter the available instruments for the assess- This section will examine the purpose of this initiative. ment of certification systems and the lessons learned so far Additional information on the background and the reason- are described, and the application of time-bound action ing behind specific criteria may be obtained from the origi- plans for certification are given consideration. A description nal document (World Bank­WWF Alliance 2006). of the elements that should be included in the terms of ref- The World Bank­WWF guide for the assessment of for- erence (TOR) for the assessment of systems and in the design est certification systems was originally conceived to evaluate and evaluation of time-bound action plans are provided in progress toward achieving the World Bank­WWF Alliance the annexes. This chapter is relevant for other notes in this goal of having 200 million hectares of forests independently sourcebook on the identification of high conservation value certified under an acceptable system by 2005. In addition to forests (note 3.1, Mainstreaming Conservation Considera- this, other useful functions of the guide include 335 assisting WWF and the World Bank in providing guid- Facility (UNIAF)--they are subject to control for compli- ance for the development of national standards and ance with international norms and standards. In this case it advice to governments and companies; can be assumed, based on evaluation and monitoring carried serving as a diagnostic tool for WWF and the World out by these organizations, that compliance with ISO and Bank to identify and target capacity-building efforts to ISEAL standards is achieved and maintained over time. The strengthen certification systems; and assessment process should emphasize the actual scope of the assisting the World Bank in the assessment of forest har- monitoring procedures of international umbrella organiza- vesting operations receiving World Bank investment sup- tions, and whether the forest certification activities of stan- port under its forests policies. dard-setting and accreditation bodies are actually covered. The operations of certification bodies are monitored by their As a result of these different objectives and the different respective accreditation bodies. Again, evaluation and subse- processes chosen for the development of the underlying quent surveillance of certification bodies has to be carried principles, the elements of the guide are not entirely aligned out to determine the body's performance specifically within with the principles for acceptable certification systems as the field of assessing forest management. defined in the OP 4.36 (World Bank 2004). The conse- In the absence of appropriate surveillance mechanisms, quences of this for using the tool in the context of World the requirements defined in the guide have to be verified in Bank evaluations are further analyzed below. a stand-alone evaluation of the standard-setting and accred- In general, certification systems consist of three main itation bodies. components: standard setting, conformity assessment Although the above-mentioned international norms and (including certification), and accreditation.1 In most cases, standards provide a framework applicable to a wide range of they also encompass provisions for claims that can be made sectors, they are insufficient to address the more complex by certified operations. Specific rules guiding the work of social and environmental issues involved in forest manage- the related bodies are available from the International Orga- ment certification. Additional elements have been defined nization for Standardization (ISO) (ISO guides 62, 65, or 66 in the guide that deal with the content of standards and the for certification; ISO standard 17011 for accreditation; and standards-development process, as well as with guidance to ISO guide 59 for standardization) (ISO/IEC 1994, 1996a, assess, among other elements, the level of transparency and 1996b, 1996c, 2004). Further guidance is provided by the reliability achieved by each system's accreditation and certi- International Social and Environmental Accreditation and fication operations. Labelling (ISEAL; http://www.isealalliance.org) alliance for standard-setting processes in the field of social and environ- USINGTHE GUIDE FORWORLD BANK mental standards (ISEAL Alliance 2004). The latter also ASSESSMENTS OF CERTIFICATION SYSTEMS takes into account relevant World Trade Organization agreements for avoiding trade barriers through standardiza- This chapter describes how conformance with World Bank tion (WTO n.d.). The basic provisions set in these interna- principles can be analyzed using either guidance included in tional standards provide an internationally agreed upon international framework standards, such as ISO guides and framework for the main operations of a certification system. the ISEAL Alliance Code of Good Practice, or the additional They summarize the best available knowledge on the neces- requirements in the World Bank­WWF guide. The chapter sary procedures for conducting independent and reliable also presents elements that are not included in the World certification and standard setting. Hence, adherence to these Bank­WWF guide, but are relevant to assessing compliance rules is defined in the guide as a necessary prerequisite for of certification systems with the World Bank's policy. It is acceptable certification. understood that the guide developed by the World The conformity of operations to the rules defined in Bank­WWF Alliance is suitable as an interpretation of the international norms and standards is monitored in the case respective provisions in Bank policy, but should not be of standard-setting and accreditation bodies by international applied as a normative document because, for the purpose umbrella organizations through their membership require- of World Bank project preparation, the rules in the policy ments. If bodies for standard setting and accreditation oper- prevail. ating under the assessed certification systems are members of these organizations--ISEAL Alliance, International Accredi- Independence, avoidance of conflict of interests, and tation Forum, or the United Nations' Investment Advisory third-party certification. Independence of the operations 336 CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE carried out under a specific certification system is a key aspect normally through a publicly available list of the certificate of the World Bank approach to certification, and related holders or the accredited certification bodies, respectively. requirements appear repeatedly in the policy. Consequently, Proven compliance with these ISO and ISEAL rules there- personnel involved in audits and decision making have to be fore provides basic information about the conformance of a selected to avoid former or current relations with the candi- certification system with the World Bank's transparency date for certification or accreditation, which may influence requirement. judgment. It follows from these requirements that only third- In addition, transparency demands that stakeholders party certification can be accepted because self-certification or external to the process be able to understand the rationale certification among business partners cannot be considered for the decisions made by certification, accreditation, or independent. The same applies for the relationship between standard-setting bodies. The World Bank­WWF Alliance the certification body and the accreditation organization, Forest Certification Assessment Guide therefore includes which has to be designed to avoid undue influence on the out- rules concerning publication of reports on evaluations and come of the accreditation process. related decisions on certification and accreditation. Because independence is a fundamental principle com- prehensively dealt with in all ISO guides and standards, it is Fairness of certification decisions. World Bank policy not necessary to define additional criteria. According to ISO requires the decision-making procedures of a certification guidance, certification and accreditation bodies have to system to be fair. For standard-setting procedures, this can ensure that financial or commercial interests are not influ- be achieved through balanced voting procedures, further encing operations and decisions. To this end, the certifica- outlined below. The most frequent cause for an unfair deci- tion body and all personnel involved in auditing or certifi- sion in certification or accreditation is granting or main- cation decisions, as well as senior executive staff responsible taining certified or accredited status where the operation for finances, supervision, and policy implementation, must does not comply with the standard. This is unfair to other be free of any undue commercial or financial influence on certified or accredited operations that fully comply with the its decisions. This also includes proving financial stability of standard. However, all rules for independence, reliability, the operation. Furthermore, auditing personnel are not per- and credibility guiding certification were developed with mitted to be involved in certification decision making, and the intent to avoid such incidences. Certification systems certification or accreditation bodies are prohibited from that follow ISO rules and comply with additional require- providing consultancy services to assessed operations. At ments described in the World Bank­WWF guide can be the personnel level, conflicts of interest must be declared regarded as in conformity with the fairness requirement and bodies must exclude those with former or actual rela- included in the World Bank policy. tions with the operation under assessment. Although sub- contracting is generally permitted, it is limited to auditing Participation in standards development. Based on its tasks and subject to the same independence and impartial- overall principles on participation, the World Bank empha- ity requirements. sizes in its policy the need for involvement of a wide range of stakeholders and interest groups in the standards-devel- Transparency of certification decisions. According to opment process. According to the World Bank, the stan- World Bank policy, an acceptable certification system must dards should be "developed with the meaningful participa- have transparent decision-making procedures. Require- tion of local people and communities; indigenous peoples; ments in the ISO and ISEAL guidance documents make it non-governmental organizations representing consumer, mandatory to publish basic information on the applied pro- producer, and conservation interests; and other members of cedures, such as the processes applied for standard setting, civil society including the private sector" (World Bank certification or accreditation, the complaints and appeals 2004). Identification of relevant stakeholders and proactive mechanisms, and the evaluation and assessment proce- measures to engage interested parties in the process before dures. In addition, standard-setting bodies have to make commencement of standard-setting activities are basic their work plan publicly available, produce a written synop- requirements in the ISEAL code. The provisions also sis of the comments received during the standard-setting encompass other elements for broad stakeholder involve- process, and state how comments were addressed in the ment, including the publication of draft standards, specifi- standard. For certification and accreditation bodies, it is cation of an appropriate period for receiving comments, as obligatory to publish the results of the certification process, well as procedures for handling comments received. The CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE 337 ISEAL code also requires that an appropriate dispute reso- Cost-effectiveness. International norms and standards in lution mechanism be in place. the ISO or ISEAL frameworks for certification systems do While compliance with ISEAL ensures that basic provi- not include specific rules guiding the economic performance sions for stakeholder involvement are being followed, addi- of the operations and processes involved in the certification tional aspects should be evaluated to verify that the deci- process, as required in OP 4.36. On the other hand, it is a sion-making process allows for balanced participation of basic condition for certification operations that costs are economic, social, and environmental interests. The World covered at all levels by their economic activities; otherwise, Bank­WWF guide describes voting procedures that should the systems would not be economically viable. Furthermore, be applied when consensus cannot be reached so that a sin- it can be assumed that businesses in the sector will only par- gle interest group does not dominate the process. ticipate in a certification system when either their monetary In addition, the World Bank requires the meaningful or nonmonetary benefits from the system outweigh the costs participation of local people and communities. Because incurred to achieve certification or accreditation. most standard-setting processes in the forest sector have a It is important to ensure that certification systems do not national-level focus, it is difficult to adequately address the discriminate against operations according to their size, representation of often widely differing local interests. location, or forest type, particularly in terms of cost- Therefore, the system should have mechanisms that require, effectiveness--that is, a certification system should not be at a minimum, a standard be field tested in close consulta- so expensive that a small company automatically does not tion with adjacent people and communities before endorse- qualify. Most international systems extended their services ment. to provide a global reach and are indifferent to location or forest type. However, it has proven to be difficult to make Attributes of forest management standards. Stan- certification attractive to small landholders because of dards are a basic element of certification systems because excessive per-hectare costs. Given the current trend of they describe the performance level that certified operations rapidly increasing the forest area under management by have to achieve, and provide the basis for the communica- communities and smaller operations that are directly or tion of these achievements. OP 4.36 lists in paragraph 10 indirectly supported by the donor community (including the general principles that have to be covered by the stan- the World Bank), and the importance of these types of for- dard, and, in addition, requires "objective and measurable est owners as custodians of the forest in many countries, it performance standards that are defined at the national level is of particular concern when certification systems are not and are compatible with internationally accepted principles accessible to these groups because of the size of their opera- and criteria of sustainable forest management." The content tions. Although economic efficiency implies that costs are of a system's standards can be analyzed using provisions in covered by the beneficiaries of the system, it is particularly the World Bank­WWF guide because compliance with important for the World Bank that certification systems requirements in the guide encompasses conformance with have procedures to ensure cost-effectiveness for these the World Bank's principles for forest management. groups and facilitate their access to services. This can be The provisions for the content of standards are set at a achieved by reducing the intensity of evaluations for rather general level of overall principles of forest manage- these groups or by waiving certain cost-intensive require- ment. Therefore, the World Bank­WWF guide requires the ments, such as planning and documentation or landscape- development of more detailed indicators during their adap- level objectives mainly applicable to larger operations.2 tation to national or regional circumstances. These indica- Corresponding requirements are included in the World tors have to describe the performance level for each crite- Bank­WWF guide. rion, as highlighted in paragraph 11 of the World Bank's policy, and be measurable and objective. ASSESSING CERTIFICATION SYSTEMS To avoid trade distortions, national standards have to be based on a set of internationally applicable principles. The This section describes the limitations of the assessments car- World Bank­WWF guide therefore includes the need for ried out using the tools mentioned in the previous section national standard-setting bodies to seek harmonization of and the lessons learned during the process of developing the national standards with those of neighboring countries, and World Bank­WWF guide (see annex 11A to this chapter for to introduce an endorsement mechanism at the interna- guidance on TORs). The Bank has yet to initiate a project tional level for the approval of national standards. that has required assessment of certification systems, but 338 CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE once more practical experience has been achieved through ply with the Bank's provisions and be deemed acceptable in the application of the guide, it will be incorporated. the context of OP 4.36 (see annex 11B to this chapter for Certification systems are institutionally and organiza- guidance on TOR). It is therefore likely that the alternative tionally complex, and their assessment requires consider- provided by the policy--to support operations on the con- able professional knowledge of forest certification, coupled dition of adherence to an acceptable time-bound action with a profound understanding of international framework plan--will be used frequently. Measures included in this rules and insight into the specific roles of the different sys- plan should be adequate to achieve certification under a sys- tem elements and their interactions. tem acceptable to the World Bank. Thus, the first step in While the elements outlined above should be examined developing a plan for improvement is the selection of a cer- when considering certification systems, it is likely that at tification system accepted by both the World Bank and the present no system is in full conformity with all require- client. ments. Assessment of schemes as a first step will highlight Identification of areas of nonconformance with the stan- strengths and weaknesses and deliver general information dard is part of the assessment work carried out by certifica- on the performance of each. Nonetheless, decisions regard- tion bodies operating under the selected system. In situa- ing whether a certification system is consistent with World tions in which the operation is unlikely to achieve full Bank policies should consider the impacts of the identified compliance with the standard, the certification body should deficits in the particular country or project situation. carry out a preassessment of the operation and provide a list Although it is desirable to assess a system's actual perfor- of issues that need further improvement. Measures to over- mance, it is not always possible because internal procedures come these deficits can be derived from this information of bodies are, with certain exceptions, normally kept confi- either by the operation, the certification body, or through dential, and operations can deny access to auditors outside other external advice. In addition, the time frame set for the regular monitoring and surveillance structures. This achieving full certification should be realistic. The World makes analysis of the organizations difficult, and may pre- Bank should refrain from supporting the operation if it is clude methodologically consistent and reliable assessments unlikely that full certification can be reached within the of the system's performance. In many cases, assessments duration of the project. must therefore rely on existing mechanisms provided by To determine the feasibility of the action plan, the actual international organizations overseeing standard setting or available capacity to implement the measures proposed accreditation, such as the International Accreditation within the specified time frame needs to be assessed. To this Forum or the ISEAL Alliance. end, the World Bank should carry out an assessment of costs Elucidation of the World Bank principles for forest man- resulting from the implementation of measures in relation to agement standards through development of indicators may the overall financial situation of the applicant operation, tak- at least partly overlap with provisions for Bank investments ing into account, if available, information on potential ben- in the sector, which are included in other Bank policies (for efits through better market access or price premiums result- example, OP 4.04 Natural Habitats, OP 4.10 Indigenous ing from certified status. This analysis should also consider Peoples, or OP 4.09 Pest Management). However, the rules funds provided through the envisaged World Bank support. outlined in these policies are specifically tailored to the Human resources available to the operation--numbers needs of World Bank project preparation and surveillance, of staff and qualifications--are another critical aspect for its and, as such, are not necessarily part of standards and capacity to implement the measures defined in the action related monitoring procedures of certification systems. plan. Hence, evaluation of the overall capacity available to Decisions on the acceptability of certification systems the applicant, and its adequacy for implementation of the should therefore primarily be based on elements included in action plan, forms another important component of the paragraph 10 of OP 4.36. project planning phase. Experience has shown that the com- mitment of the owner and senior management to certifica- tion is an important success factor. Although this may be PROVIDING SUPPORT BEFORE CERTIFICATION difficult to evaluate, the interim steps taken by the company USINGTIME-BOUND ACTION PLANS to pursue certifiable forest management may indicate the So far, performance of many forest management operations sincerity of their intentions. in World Bank client countries lags behind the level speci- Depending on the nature and duration of implementa- fied by the standards of certification systems that can com- tion, it can be desirable not only to define the overall target, CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE 339 but also to consider intermediary phases using a step-wise able Development? Eschborn, Germany: Deutsche approach. Progress could then be monitored against previ- Gesellschaft für Technische Zusammenarbeit. ously agreed upon milestones. Nussbaum, R., and M. Simula. 2005. The Forest Certification Handbook. London: Earthscan. Richards, M. 2004. "Certification in Complex Socio- NOTES Political Settings: Looking Forward to the Next Decade." 1. Standard setting: The process by which a standard for Forest Trends, Washington, DC. forest management is developed. Conformity assessment and certification: Assessment of forest management against the standards. If successful, this REFERENCES CITED will result in a certificate being issued. World Bank. 2004. The World Bank Operational Manual, Accreditation: The procedure by which an authoritative Operational Policies OP 4.36, Forests. World Bank, body gives formal recognition that a body or person is com- Washington, DC. petent to perform conformity assessment and certification. World Bank­WWF Alliance. 2006. Forest Certification 2. The Forest Stewardship Council (FSC) has developed Assessment Guide--A Framework for Assessing Credible standards that give consideration to small and low-intensity Certification Systems/Schemes. Washington, DC: World managed forests, available online at http://www.fsc Bank­WWF Alliance. http://www.panda.org/about_wwf/ .org/slimf/. what_we_do/forests/publications/index.cfm?unewsID= 81080. SELECTED READINGS Burger, D., J. Hess, and B. Lang, eds. 2005. Forest Certifica- tion: An Innovative Instrument in the Service of Sustain- 340 CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE ANNEX 11A MODELTERMS OF REFERENCE FOR ASSESSMENT OF CERTIFICATION SYSTEMS Background. In its global strategy on forests, the World World Bank­WWF guide as a reference document. This Bank recognizes the integration of forests into sustainable should include direct consultations with certification economic development as one major pillar of its invest- systems personnel on draft findings. ments in the sector, including enabling or directly support- 2. On the basis of this assessment, compile a list of required ing commercial use of the forest. At the same time, the elements with which the system is not in compliance. World Bank must limit negative social or environmental 3. Compile a list of those elements for which an assessment impacts of forest use by setting preconditions for support- was not possible due to a lack of information or lack of ing commercial operations in the forest. The policy frame- access to procedures or operations of certification, work laid out in OP 4.36 stipulates that in order to receive accreditation, or standard-setting bodies working under Bank support, commercial harvesting of forests carried out the system. on an industrial scale must be certified by a system deemed 4. Analyze the identified deficits in the context of the over- acceptable by the World Bank. all project environment and conduct a risk assessment The forest management standards required by such on the potential negative impacts of the identified systems and their operational procedures must conform to deficits. This exercise can be supplemented by consulta- the elements further specified in paragraphs 10 and 11 of tions with relevant stakeholders in the World Bank client OP 4.36. The World Bank, in close collaboration with the country. WWF, developed an assessment guide that details the prin- 5. On the basis of the findings, produce a substantiated ciples of the policy (World Bank­WWF 2006) and provides judgment on whether the system meets OP 4.36 require- a framework to assess the quality of certifications systems. ments and can provide sufficient assurance that certifi- This instrument is recognized as the basis for the assessment cate holders fully comply with the World Bank's require- of certification systems according to World Bank require- ments for forest management certification listed in ments. paragraph 10 of OP 4.36. The TOR listed in this document summarize the key steps in assessments carried out according to the World Qualifications. The qualifications necessary for assessing Bank­WWF guide on assessing certification systems. The the elements of a certification system may, in many cases, assessment will provide information on the performance require the employment of an audit team rather than a sin- level achieved by certification systems in relation to World gle auditor. The assessor or the assessment team should have Bank principles and identify the gaps that may still exist in the following qualifications: the system's standard requirements of operational proce- dures. This analysis can support decisions regarding the practical experience and knowledge in forest certification acceptability of systems, but further judgment will need to profound understanding of the different elements of sys- be exercised when certification systems do not fully comply tems for accreditation, certification, and standard set- with all requirements, and consideration be given to the ting, and their various interactions potential impacts that may result from these deficits in a broad knowledge of ISO guides 62, 65, and 66; ISO stan- particular project environment. dard 17011; and practical experience in assessing bodies Tasks. Different tasks can be performed depending on the against the requirements set in these norms background of the assessment. The issues listed under the first advanced degree in forest resource management or three tasks can be carried out in a stand-alone assessment that related field does not require a decision on the acceptability of systems. no conflicts of interest with regard to the certification The fourth and fifth tasks are recommended if the assessment system under assessment is to provide the basis for investment decisions under OP 4.36 and in cases where the assessment showed deficits in the sys- For a judgment on the impacts of identified system tem's standards or procedures. deficits, the consultant(s) should have The consultant shall perform the following tasks: in-depth knowledge of the overall economic, ecological, 1. Analyze the respective certification system for its and social environment, and the country's legal and pol- conformance with the OP 4.36 requirements using the icy context; and CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE 341 the ability to analyze certification systems and their impact in a given environment. REFERENCES CITED World Bank­WWF Alliance. 2006. Forest Certification Assessment Guide--A Framework for Assessing Credible Certification Systems/Schemes. Washington, DC: World Bank­WWF Alliance. 342 CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE ANNEX 11B PROCEDURES ANDTERMS OF REFERENCE FORTHE DEVELOPMENT AND ASSESSMENT OF ATIME-BOUND ACTION PLAN FOR CERTIFICATION Background. The World Bank supports investments in the potentially emerge for the project because of the identi- forest sector under OP 4.36. To qualify for this support, fied system's deficiencies. operations involving commercial forest harvesting on an industrial scale must achieve certification under a system Assessment of the applicant operation. The assess- acceptable to the World Bank. Alternatively, operations can ment should highlight the strengths and weaknesses of the qualify by adhering to a time-bound action plan that is ade- applicant in relation to the forest management standard of quate to achieve certification within a specified time frame. the certification system. Because the tasks involved are sim- Preparation of investments in this area should therefore ilar to those performed during normal audits, the assess- include the following steps: ment should be conducted by a team that is familiar with the regular audit procedures of the system and be selected selection of a certification system according to the same criteria applied by the respective cer- assessment of the performance of the operation in rela- tification system. It is essential that team members have suf- tion to the forest management standard ficient competence and local knowledge to analyze the legal elaboration of a time-bound action plan framework, the ecological and social aspects of forest man- assessment of the plan's acceptability under World Bank agement, and its broader impact on the well-being of adja- terms cent communities. During such a preassessment for certifi- monitoring of the implementation of the plan cation, the consultant(s) will perform the following tasks: Each of these individual steps is associated with different Assess the applicant's forest management practices for responsibilities, tasks, issues to consider, qualifications compliance with each element of the selected certifica- required, and actors involved, which are outlined below. tion system's standards. Compile a list of issues where the company's perfor- Selection of a certification system. Selection of a cer- mance falls below the requirements of the standard. tification system that conforms with World Bank require- If applicable to the selected certification system, group ments and is operational in the country of the applicant is a the deficits into minor noncompliance issues that could precondition for assessing the performance of the opera- be resolved after certification has been awarded, and tion. Details describing the World Bank's approach to selec- major noncompliance issues that would prevent the tion of certification systems are given in this chapter of the operation from obtaining immediate certification. sourcebook. The decision has to be made by the applicant, Highlight the strengths and weaknesses of the operation. but preferably in close collaboration with the World Bank's Identify appropriate measures to improve forest manage- contact person for the project, normally the task team leader. ment to the level required for full certification. To prepare for the selection, the consultant will do the following: Development of the time-bound action plan. On the basis of the identified deficits, the company should develop Identify the forest management certification systems that a plan detailing actions envisaged for improvement. are operational in the country of the applicant. Although external consultants can assist in this step, senior Assess the systems against World Bank requirements in staff should play a leading role in this process to ensure a accordance with the World Bank's instruments for assess- close connection between the company and the action plan. ment of forest certification schemes (annex 11A). The Depending on the situation, it may be necessary to intro- consultant should draw upon the results of assessments duce a step-wise approach by defining interim performance conducted for similar projects in the country, or previous levels to be achieved. This approach may be necessary assessments commissioned by other bodies, if available. depending on, among other issues, the previous record of If the certification systems are not entirely in compliance the company applying for assistance, the commitment of with World Bank requirements, the consultant will pro- senior management or the owner to implementation of the vide the World Bank with a list of deficits, together with action plan, the time frame set for full compliance in rela- a substantiated judgment regarding risks that could tion to the duration of the project, as well as the gravity and CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE 343 number of identified instances of noncompliance with the ilar to the World Bank's normal mechanisms for project sur- standard. veillance. The preparation of the time-bound action plan In this step, the applicant will develop a time-bound already describes the necessary elements for monitoring, action plan with the following elements: such as the deadlines and achievements required, and the necessary resources. In addition, the monitoring schedule The list of deficits identified as being impediments to and intensity should reflect the level of risk involved with immediate certification (also referred to as precondi- the project. Risk factors may include, but are not limited to, tions). the potential impact on critical forests or critical natural The measures proposed by the company to overcome the habitats, the overall economic situation of the operation, deficits and to achieve certification in the specified time and the effects of the project on adjacent communities or frame. The measures should be suitable to address the Indigenous Peoples. When a risk analysis shows that the identified deficits and consider the overall legal, political, impacts of the project are considerable, sanctions for non- and economic situation of the company, and feasible conformance with the set deadlines should be incorporated given the means available to the operation. The descrip- into the loan agreement. tion should avoid the use of ambiguous terms. To comply with the standards of a certification system Each proposed action should be accompanied by an esti- deemed acceptable to the World Bank, the operation has to mate of the time required for implementation and the develop its own monitoring procedures, through which expected time for achieving the performance level pre- information on key forest parameters is collected and ana- scribed by the standard. The time frame should be real- lyzed (see also OP 4.36, paragraph 10[h]). In general, inter- istically set given the overall resources of the operation nal monitoring of certified operations provides information and the commitment expressed by the management or on the resource base (harvest rates, growth, and regenera- the owner (see below). tion), status and changes of flora and fauna, and economic The plan should include a summary of the resources avail- parameters, such as cost and efficiency. Consequently, an able to the company presented as the number and quali- assessment of these procedures has to be carried out against fications of personnel. In addition, the financial means the certification standard during the preassessment of the dedicated by the operation to the implementation of the operation. For tailoring its own monitoring program, the proposed actions should be described and analyzed. World Bank can take into account the results from the pre- The plan should be accompanied by a clear statement assessment under point 2 concerning the quality of the from the executive director of the operation or the owner company's monitoring program. The World Bank's own to accept and adhere to the measures defined. monitoring can be limited to aspects insufficiently covered If a step-wise approach is considered necessary, the plan by these mechanisms. should define individual steps, including the achieve- ments to be reached within a specified time frame. REFERENCES CITED Assessment of the plan for acceptability under World ISEAL Alliance. 2004. "ISEAL Code of Good Practice for Bank terms. According to OP 4.36, the action plan has to be Setting Social and Environmental Standards."Bonn, Ger- evaluated to determine its acceptability. Although the World many. Bank's policy does not provide further detail regarding what ISO/IEC (International Organization for Standardization/ should be covered by the action plan, the elements listed in International Electrotechnical Commission). 1994. the previous section can provide a framework to apply on a "ISO/IEC Guide 59: Code of Good Practice for Stan- dardization," Geneva, Switzerland. case-by-case basis. The assessment must consider the plan's suitability, adequacy, and feasibility for implementing the ------. 1996a. "ISO/IEC Guide 66 General Requirements for Bodies Operating Assessment and Certification/Reg- proposed measures within the set time frame. To ensure inde- istration of Environmental Management Systems." pendence and avoid conflicts of interest, the persons involved Geneva, Switzerland. in the previous steps should not take part in this evaluation. ------. 1996b. "ISO/IEC Guide 62: General Requirements for Bodies Operating Assessment and Certification/Reg- Monitoring of implementation. The monitoring proce- istration of Quality Systems." Geneva, Switzerland. dures applied to the implementation of the plan can be sim- 344 CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE ------. 1996c. "ISO/IEC Guide 65: General Requirements World Bank­WWF Alliance. 2006. Forest Certification Assess- for Bodies Operating Product Certification Systems." ment Guide--A Framework for Assessing Credible Certifica- Geneva, Switzerland. tion Systems/Schemes. Washington, DC: World Bank­WWF ------. 2004. "ISO/IEC 17011: Conformity Assessment-- Global Forest Alliance. General Requirements for Accreditation Bodies Accredit- WTO. 1995. "Agreement on Technical Barriers to Trade, ing Conformity Assessment Bodies." Geneva, Switzer- Annex 3, Code of Good Practice for the Preparation, land. Adoption, and Application of Standards." Geneva, World Bank. 2004. The World Bank Operational Manual, Switzerland. http://www.wto.org/english/tratop_e/tbt_e/ OP 4.36. World Bank, Washington, DC. tbtagr_e .htm#Annex%203. CHAPTER 11: FOREST CERTIFICATION ASSESSMENT GUIDE: SUMMARY ON USE 345 C H A P T E R 1 2 Applying OP 4.10 on Indigenous Peoples everal World Bank safeguard policies emphasize that S social development, and as integral parts of a people's cul- local sites may have special value, in particular for tural identity and practices" (paragraph 2). These resources those who depend on them for their livelihood or may include burial sites and spirit forests important to their social, spiritual and cultural well-being. Operational many forest communities, particularly Indigenous Peoples. Policy on Forests (OP 4.36) recognizes that many local com- The World Bank's policy on Involuntary Resettlement munities depend entirely or primarily on forests and forest (OP 4.12) applies to involuntary restrictions of access to products and that these communities are an essential factor legally designated parks and protected areas. The policy in forest conservation and management. The policy pro- requires that such restrictions be determined in participa- vides specific safeguards concerning Indigenous Peoples tion with affected communities and that adverse impacts be and other forest dwellers, specifically their rights of access to mitigated or compensated for. These arrangements are and use of designated forest areas. In World Bank­assisted described in a process framework prepared as a condition commercial forest activities, the policy calls for a forest cer- for project appraisal (guidance on the application of OP 4.36, tification system, which respects "any legally documented or OP 4.11, and OP 4.12 is included in chapter 9). customary land tenure and use rights as well as the rights of The World Bank's Indigenous Peoples Policy (OP 4.10) is Indigenous Peoples and workers,"and includes"measures to the key instrument to address Indigenous Peoples' issues for maintain or enhance sound and effective community rela- any type of World Bank­assisted investment project affect- tions" (paragraph 10). The policy also stresses the need to ing Indigenous Peoples, whether the impacts are anticipated develop the certification system "with the meaningful partic- to be positive or negative. The policy recognizes the rights of ipation of local people and communities; Indigenous Peoples; Indigenous Peoples, which are increasingly being addressed nongovernmental organizations [NGOs]" (paragraph 11). under international and national law. It notes that their OP 4.11 Physical Cultural Resources, is also relevant for identities and cultures are inextricably linked to the lands forest projects affecting Indigenous Peoples. The policy on which they live and the natural resources on which they aims to protect physical cultural resources, defined as "mov- depend, and that this combined with their frequent mar- able or immovable objects, sites, structures, groups of struc- ginalization and vulnerability often exposes them to partic- tures, and natural features and landscapes that have archae- ular risks and impacts from development projects. The pol- ological, paleontological, historical, architectural, religious, icy recognizes the vital role that Indigenous Peoples play in aesthetic, or other cultural significance" (paragraph 1). sustainable development, which is especially relevant for These resources "are important as sources of valuable scien- most forest-related projects (see note 1.3, Indigenous Peo- tific and historical information, as assets for economic and ples and Forests). 347 IDENTIFICATION OF INDIGENOUS PEOPLES a social assessment by the borrower to evaluate the pro- ject's potential positive and adverse effects on Indigenous Indigenous Peoples today reflect a great variety of histories Peoples, and to examine project alternatives where and circumstances that defy a single definition. Accepted or adverse effects may be significant preferred terms and definitions vary by usage among the an inclusive, transparent, and continuing process of free, groups concerned as well as by country and continent; prior, and informed consultation terms used include "aboriginal," "native," "autochthonous," the affected Indigenous Peoples communities' broad "tribal," "ethnic minority," and "first nations." Nevertheless, support to the proposed project an international consensus has been emerging regarding the preparation, and disclosure, of an appropriate planning general identifying characteristics of Indigenous Peoples, instrument: an Indigenous Peoples Plan (IPP) or Indige- consistent with those adopted in the World Bank's policy. nous Peoples Planning Framework (IPPF) OP 4.10 identifies (paragraph 4) Indigenous Peoples as "a distinct, vulnerable, social and cultural group possessing the The level of detail and complexity necessary to meet the following characteristics in varying degrees: requirements of the policy are proportional to the complex- ity of the proposed project and the nature and scale of the self-identification as members of a distinct indigenous potential effects on the Indigenous Peoples. The time cultural group and recognition of this identity by others; needed for project preparation comprising consultations collective attachment to geographically distinct habitats with affected Indigenous Peoples and the scope of social or ancestral territories in the project area and to the nat- analysis also depends on the circumstances and vulnerabil- ural resources in these habitats and territories; ity of affected communities. Technical judgment is essential customary cultural, economic, social, or political institu- in determining the appropriate approach. tions that are separate from those of the dominant soci- Most forest-related projects do entail potential risks for ety and culture; and Indigenous Peoples, and borrower and project teams an indigenous language, often different from the official preparing such projects should expect to pay significant language of the country or region." attention to Indigenous Peoples' issues and concerns during project preparation and implementation. They should keep OBJECTIVES OFTHE POLICY in mind that the particular rights, circumstances, and vul- nerabilities of Indigenous Peoples often result in impacts OP 4.10 aims to protect the rights of Indigenous Peoples and needed design features for Indigenous Peoples that are and supports the World Bank's mission of poverty reduc- different from those for other communities living in or near tion and sustainable development. The policy calls for the forest areas. World Bank to provide project financing only when affected indigenous communities have provided their broad com- Screening for Indigenous Peoples in the project munity support to the project through a process of free, area. Early in the identification phase the project team prior, and informed consultation. Projects affecting Indige- should assess, in coordination with the borrower, whether nous Peoples are designed to deliver culturally appropriate Indigenous Peoples are living in or have collective attach- social and economic benefits to Indigenous Peoples and ment to the project area. Often the advice or input from include measures to avoid, minimize, mitigate, or compen- qualified experts is needed during this screening process, sate for any adverse impacts. and consultations with affected communities also may be needed. KEY POLICY REQUIREMENTS Social assessment. The main purpose of the social assess- The World Bank's policy on Indigenous Peoples applies to ment is to evaluate the project's potential positive and all investment lending projects affecting, whether positively adverse impacts on the affected Indigenous Peoples (and or adversely, Indigenous Peoples. The key procedural other affected communities). Critical to the determination requirements of the policy follow: of potential adverse impacts is an analysis of the relative vul- nerability of, and risks to, the affected Indigenous Peoples' screening by the World Bank to determine whether communities according to their distinct circumstances, ties Indigenous Peoples are present in, or have collective to the land, and dependence on natural resources, as well as attachment to, the project area 348 CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES lack of opportunities relative to other social groups in their and forests, including livelihoods, culture, and social orga- respective communities, regions, or national societies. nization. Mapping of traditional and existing land and nat- Indigenous Peoples' vulnerability is multistranded. It is not ural resource use for livelihoods as well as for cultural and only economic, social, and political, but also demographic spiritual practices should be an integrated element of the (at risk of being numerically overwhelmed) and environ- assessment. Potential conflicts and disputed claims concern- mental (if access to natural resources is restricted and their ing access to land and natural resources should be identi- subsistence and livelihoods affected). They are often fied--and ways to address them should be recommended. excluded from political processes at all levels. They are often Assumptions held by project developers and other stake- also more exposed to external shocks that have an impact on holders as well as by Indigenous Peoples about traditional their lives, lacking the capacity to cope with such shocks or resource use practices and their environmental impacts or other external changes--including those realized through benefits may not hold true. If based on mainstream cultural development projects (see box 12.1 for the policy's language models rather than a full understanding of the local context, on social assessment). Indigenous Peoples' practices may be viewed with skepti- The assessment is also used to inform project design to cism or outright prejudice, rendering them unsustainable, ensure that activities are culturally appropriate, will enhance regardless of whether the assumption actually proves to be benefits to target groups, and are likely to succeed in the given true. It is therefore important that interventions be based on socioeconomic and cultural context. The social assessment reliable information obtained with the participation of local will usually include the establishment of a framework for con- communities. sultation with and participation of the affected people It is the borrower's responsibility to conduct the social throughout the project cycle. This usually includes the process assessment, which is usually done by contracting with a of free, prior, and informed consultation with affected Indige- research institute, university, consultant (firm or individ- nous Peoples, leading to their broad community support for ual), or NGO. The identified social assessment team must the project. However, this process may be conducted partly or have the required expertise, including knowledge of Indige- fully separate from the social assessment process, particularly nous Peoples, and have the trust of the affected communi- for more complex projects requiring several rounds of consul- ties. The project team provides assistance and also approves tations during project preparation that go beyond the time- the terms of reference and the composition of the team for frame of the social assessment. the assessment. A good social assessment will improve understanding of In addition to the World Bank's Indigenous Peoples Indigenous Peoples' culture, social structure, institutions, Guidebook (forthcoming), guidance on conducting social socioeconomic characteristics, and the specific environment assessments can be found on the World Bank's Web site on and social context in which they live. It will identify stake- social analysis (www.worldbank.org/socialanalysis), in the holders and analyze the local and national institutional con- World Bank's Social Analysis Sourcebook (World Bank 2003), text and legal framework relevant to the proposed project and the World Bank's Social Analysis Guidelines in Natural and affected Indigenous Peoples, including legislation con- Resource Management (World Bank 2005a). (See also sec- cerning customary rights, access rights to forests and natu- tions in this Forests Sourcebook on social assessment in chap- ral resources, and participation of Indigenous Peoples or ter 9, Applying Forests Policy OP 4.36, and note 1.3, Indige- other forest-dependent communities in forest and develop- nous Peoples and Forests). ment planning. It should also reveal any social risks and existing or potential conflicts. Combining analytical Free, prior, informed consultation. OP/BP 4.10 focuses processes with field-based knowledge, the social assessment on the importance of engaging Indigenous Peoples in a will aid efforts to design culturally appropriate and gen- process of free, prior, and informed consultation (see box der-inclusive projects that take into account affected 12.2). Such a process has to be inclusive, including women, Indigenous Peoples' views on the benefits that they can the poorest, and members of different generations. The con- derive from a project, the role they can play in its imple- sultation process should, in most projects, take place at each mentation, and how adverse impacts can be eliminated, step in the project cycle--project preparation, implementa- reduced, or mitigated. tion, and evaluation. This process includes the borrower, the The social assessment for forest-related projects, particu- affected communities, and Indigenous Peoples' organiza- larly those concerned with natural resource management, tions, if any, or other local civil society organizations iden- must assess the relationship between Indigenous Peoples tified by the Indigenous Peoples' communities. CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES 349 Box 12.1 OP 4.10 on Social Assessment OP 4.10 provides the following guidance on the ele- Peoples at each stage of project preparation and ments of the social assessment (OP 4.10, Annex A): implementation (see paragraph 9 of OP 4.10). An assessment, based on free, prior, and 1. The breadth, depth, and type of analysis required informed consultation, with the affected Indige- for the social assessment are proportional to the nous Peoples' communities, of the potential nature and scale of the proposed project's potential adverse and positive effects of the project. Criti- effects on the Indigenous Peoples. cal to the determination of potential adverse The social assessment includes the following ele- impacts is an analysis of the relative vulnerability ments, as needed: of, and risks to, the affected Indigenous Peoples' A review, on a scale appropriate to the project, of communities given their distinct circumstances the legal and institutional framework applicable and close ties to land and natural resources, as to Indigenous Peoples. well as their lack of access to opportunities rela- Gathering of baseline information on the demo- tive to other social groups in the communities, graphic, social, cultural, and political character- regions, or national societies in which they live. istics of the affected Indigenous Peoples' com- munities, the land and territories that they have The identification and evaluation, based on free, traditionally owned or customarily used or occu- prior, and informed consultation with the affected pied, and the natural resources on which they Indigenous Peoples' communities, of measures neces- depend. sary to avoid adverse effects, or if such measures are Taking the review and baseline information into not feasible, the identification of measures to mini- account, the identification of key project stake- mize, mitigate, or compensate for such effects, and to holders and the elaboration of a culturally appro- ensure that the Indigenous Peoples receive culturally priate process for consulting with the Indigenous appropriate benefits under the project. Source: World Bank 2005b. Key elements of the consultations during the preparation to build community consensus, to enhance transparency, phase follow: to ensure local ownership of the process, and to assess and ensure continued support for the project information about the proposed project and its intended benefits and possible adverse impacts While most of these elements can be encompassed achieving understanding of Indigenous Peoples' percep- within the social assessment process, keeping project- tions of possible project benefits and impacts, and possi- affected people informed should also be part of the bor- ble measures to enhance benefits and avoid or mitigate rower's ongoing communications with people in the pro- adverse impacts posed project area. The borrower and the project team incorporation of Indigenous Peoples' views, prefer- should keep in mind that free, prior, and informed consul- ences, and indigenous knowledge into project design tations with Indigenous Peoples will likely require more and the Indigenous Peoples instrument (Indigenous time than consultations with other affected communities Peoples Plan or Indigenous Peoples Planning Frame- and stakeholders. Consultations that may just require a few work) hours in an urban setting may take days with Indigenous facilitation and determination of affected communities' Peoples. Moreover, the consultation process for ascertaining broad support for the project the community's broad support for project activities will development of a culturally appropriate framework or require more time and may go beyond the time frame of the strategy for Indigenous Peoples' participation throughout social assessment process, particularly for more complex project preparation, implementation, and monitoring projects. Many, if not most, projects affecting forests in areas and evaluation, which may involve particular methodolo- with Indigenous Peoples would be considered complex (see gies to ensure participation of marginalized social groups, note 1.3, Indigenous Peoples and Forests). 350 CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES The use of independent entities that have the trust of the Box 12.2 OP 4.10 on Free, Prior, and Informed affected communities is often necessary to undertake free, Consultation prior, and informed consultations. Borrower involvement is needed to obtain the communities' broad support for the When a project affects Indigenous Peoples, the project because, in many cases, specific agreements will project team assists the borrower in carrying out need to be negotiated between the affected communities free, prior, and informed consultation with and the borrower. Having an independent entity facilitate affected communities about the proposed project this process is usually preferred. For consultations to be throughout the project cycle, taking into consider- ation the following: meaningful, their results need to be processed and used to inform project design and implementation. The results "Free, prior, and informed consultation" is con- should be described in the social assessment report, or in a sultation that occurs freely and voluntarily, with- separate report on the consultation process, and, as appro- out any external manipulation, interference, or priate, in the Indigenous Peoples instrument used for proj- coercion, for which the parties consulted have ect implementation. prior access to information on the intent and In addition to the free, prior, and informed consultations scope of the proposed project in a culturally with affected Indigenous Peoples, the borrower and the proj- appropriate manner, form, and language. ect team normally consult a number of other stakeholders. Consultation approaches recognize existing Table 12.1 provides a basic overview of a typical consultation Indigenous Peoples' organizations, including process and the key stakeholders involved. It should be used councils of elders, headmen, and tribal leaders, only as guidance to inform the planning of the consultation and pay special attention to women, youth, and the elderly. process for a given project--the principles of the Indigenous The consultation process starts early, because Peoples' policy should be invoked as a basic guideline for decision making among Indigenous Peoples eliciting practical solutions based on the sound judgment of may be an iterative process, and there is a need qualified experts. Many forest-based projects require more for adequate lead time to fully understand and than two rounds of consultations with affected Indigenous incorporate concerns and recommendations of Peoples during preparation. The World Bank's Environmental Indigenous Peoples into the project design. Assessment Sourcebook section titled "Public Consultation in A record of the consultation process is main- the EA Process: A Strategic Approach, 1999, Update 26" tained as part of the project files. (World Bank 1999) provides general guidance on conduct- ing public consultations. For more guidance on consulta- Source: World Bank 2005b. tions with Indigenous Peoples, see the World Bank's Indige- nous Peoples Guidebook (forthcoming) and "Participation and Indigenous Peoples" (Davis and Soeftestad 1995). (See A number of aspects of consulting with Indigenous Peo- also chapter 9, Applying Forests Policy OP 4.36, and note 1.3, ples should be recognized. Consulting in the local language Indigenous Peoples and Forests). is often needed, particularly to ensure that all community members are heard and feel comfortable raising their ideas Broad community support. OP 4.10 requires that affected and concerns. Efforts to build trust may be needed to reduce Indigenous Peoples' communities provide their broad sup- frequently encountered mistrust of government, project port for a project before the World Bank can support the developers, or outsiders in general, built up during years of project. It is the responsibility of the borrower to achieve exclusion. Other aspects that may affect the consultation broad community support through the free, prior, and process include traditional social structures and leadership informed consultation process. Evidence of such support patterns, representation of communities, decision-making should be provided in a detailed report (which could be the processes (for example, through consensus building), and social assessment report) documenting: "(a) the findings of traditions of oral transmission of knowledge and culture. It the social assessment; (b) the process of free, prior, and is important to ensure that the team conducting or facilitat- informed consultation with the affected Indigenous Peo- ing the consultations understands these aspects, has the ples' communities; (c) additional measures, including proj- required skills to conduct meaningful consultations with ect design modification, that may be required to address Indigenous Peoples and has their trust. adverse effects on the Indigenous Peoples and to provide CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES 351 Table 12.1 General Consultation Process When With whom Substance By whom Identification Borrower Possibility of Indigenous Peoples in the project area; World Bank policy requirements Project team Experts on Indigenous Identification and presence of Indigenous Peoples in the project area Project team/ Peoples Borrower Borrower If Indigenous Peoples are present, identify the process for addressing Project team Indigenous Peoples' issues and OP 4.10 requirements, including terms of reference for the social assessment and consultations Preparation Indigenous Peoples, Information about the proposed project (preliminary design), its anticipated SA team/ first phase benefits, and possible adverse impacts Borrower Other stakeholders Information about the project, its anticipated benefits, and possible SA team/ adverse impacts Borrower Indigenous Peoples, On the proposed project (detailed design) and possible measures to address SA team/ second phase particular issues concerning Indigenous Peoples Borrower Obtaining broad community support and input to the Indigenous Peoples instrument Other stakeholders Consultations on the proposed project (detailed design) SA team/ Borrower Appraisal Borrower Assessment of commitment and capacity of implementing agency Project team concerning Indigenous Peoples' activities Indigenous Peoples, Assessment of feasibility and appropriateness of Indigenous Peoples' measures Project team/ experts, and other Borrower stakeholders Indigenous Peoples Select field visits as needed to determine affected communities' broad Project team support to the project and the feasibility of proposed measures Implementation Borrower On the implementation and monitoring of Indigenous Peoples' instrument Project team Indigenous Peoples Ongoing consultation on implementation progress through borrower Borrower/ monitoring and World Bank supervision Project team Experts and other Consultation and feedback on implementation progress as appropriate Borrower/ stakeholders Project team Source: Jensby 2007. Note: SA = Social Assessment. them with culturally appropriate project benefits; (d) rec- the project, the finding that broad support exists would be ommendations for free, prior, and informed consultation reasonable. While a referendum may not be practical in most with and participation by Indigenous Peoples' communities situations, there is a need for broadly based validation and during project implementation, monitoring, and evalua- documentation of what has been said, by whom, and how tion; and (e) any formal agreements reached with Indige- any specific agreements were reached and what they contain. nous Peoples' communities and/or the IPOs [Indigenous Broad community support does not mean that everyone Peoples' Organizations]" (OP 4.10, paragraph 11). has to agree on a given project. Nevertheless, consensus It is the responsibility of the World Bank to review the building is an important form of decision making among process and the outcome of the consultations to satisfy itself many Indigenous Peoples. Thus, consensus building should that the affected Indigenous Peoples' communities have pro- often be an element of the free, prior, and informed consul- vided their broad support to the project. The World Bank tations that aim to facilitate broad community support for does not proceed with the project processing if it is unable to the project. A community's broad support may be based on ascertain that such support exists (OP 4.10, paragraph 11). A specific agreements for benefit-sharing measures or mitiga- mix of opinions, and sometimes disagreements, as to the tion of adverse impacts. As part of its due diligence in apply- overall desirability of the project should be anticipated. ing OP 4.10, the project team must ensure that such agree- When considering the level of broad support for the project ments are adequately reflected in project design and the and the strength of the consultation process itself, the proj- Indigenous Peoples' instrument. ect team should ensure that all relevant and appropriate sec- tors and subgroups of the communities have been given Indigenous Peoples' instrument. For projects affecting opportunities to express themselves. If they have, and the Indigenous Peoples, the borrower prepares an instrument broad majority is generally positive about the prospects of containing specific measures to ensure that Indigenous Peo- 352 CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES ples receive social and economic benefits from the project in levels should be considered to enhance project implementa- a manner that is culturally appropriate, and when potential tion as well as the affected communities' general ability to adverse effects are identified, those effects are avoided, min- participate in, and respond to, development efforts. The imized, mitigated, or compensated for. monitoring and evaluation plan, including timing and An Indigenous Peoples Plan (IPP) is required for a stan- methodology, should be designed to take into consideration dard World Bank­assisted project with interventions affect- any issues pertaining to Indigenous Peoples. It usually ing Indigenous Peoples identified at the time of appraisal. includes some form of independent or external monitoring. For projects with multiple subprojects or annual investment Complaint mechanisms should incorporate local and tradi- plans in which specific interventions are not known at the tional methods as appropriate (see also note 1.3, Indigenous time of appraisal, an Indigenous Peoples Planning Frame- Peoples and Forests). work (IPPF) is required. If the overwhelming majority of affected people are Indigenous Peoples, the project design Special considerations. The policy specifies particular itself (described in the Project Appraisal Document and areas, listed below, that merit special attention during subsequently in the Project Implementation Plan and/or preparation of projects affecting Indigenous Peoples. Each Operational Manual) may make up the instrument. It one of these is potentially a critical issue for forest-based should include the relevant elements of an IPP. projects, which the borrower and project team need to con- The instrument is intended to serve as a flexible and prag- sider carefully during project preparation and address in the matic implementation document; its activities are integrated Indigenous Peoples' instrument. into the design of the project and address the issues discussed in the social assessment and agreed to during the consulta- Lands and natural resources. Projects affecting the lands tions (see annex 12A to this chapter for more guidance on the and natural resources of Indigenous Peoples should elements of an IPP or IPPF). The contents of the instrument include measures to recognize land tenure and resource will vary with the nature of the project as well as with the use rights. This may include recognition and regulariza- characteristics of the country and the Indigenous Peoples tion of customary rights to land and natural resources. affected. Proportionality is crucial: The principle is to plan Commercial development of natural resources. Projects appropriately so as to include (and budget for) only those supporting commercial development of natural activities that are necessary to deal with the Indigenous Peo- resources should, in consultation with Indigenous Peo- ples' issues identified by the social assessment, with consulta- ples, identify the affected communities' rights to the tions proportional to the project impacts and benefits and the resources under statutory and customary law, the scope circumstances and vulnerabilities of affected communities. and nature of the proposed commercial development, For a project with no adverse impacts, it may suffice to and the potential impacts of such development on the include as the main part of the plan a strategy for targeting communities' livelihood, environments, and use of such Indigenous Peoples and a participation and consultation resources. The Indigenous Peoples should share equi- framework to continue the free, prior, and informed con- tably in the benefits. sultation and to ensure the input and continued support Commercial development of cultural resources and knowl- from Indigenous Peoples on specific project activities dur- edge. Projects supporting commercial development of ing implementation. The strategy also should aim to ensure cultural resources and knowledge should identify, in that the social and economic benefits of the project are cul- consultation with the Indigenous Peoples' communities, turally appropriate. Projects with adverse impacts would, in their rights to such resources under statutory and cus- addition, include measures to avoid, mitigate, or compen- tomary law, the scope and nature of the proposed com- sate for such adverse impacts. Specific institutional arrange- mercial development, and potential effects it may have ments and capacity-building activities may be necessary and on the Indigenous Peoples' livelihoods, environments, efforts should be made to work with local organizations and and use of such resources. World Bank assistance to proj- institutions as appropriate. ects supporting commercial development of cultural Forest-based projects should assess and incorporate, as resources and knowledge of Indigenous Peoples is condi- appropriate, indigenous knowledge and local resource man- tional on their prior agreement to such development. agement arrangements into the instrument and the general Access. Involuntary restrictions on Indigenous Peoples' design of the project. Capacity building and strengthening access to legally designated parks and protected areas of Indigenous Peoples' organizations at local and national should be avoided or minimized. If not feasible, a process CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES 353 framework should be prepared based on free, prior, and the feasibility and sustainability of the Indigenous Peo- informed consultation with the affected communities and ples' instrument, including participatory implementa- in accordance with OP 4.12 on Involuntary Resettlement tion processes, that is intended to provide culturally (see chapter 9 for guidance on development of terms of ref- appropriate benefits and to mitigate any adverse effects erence related to OP 4.36). This should only be done in a on Indigenous Peoples manner that ensures that affected Indigenous Peoples share if required, the feasibility of any proposals for regulariz- equitably in the benefits, and that prioritizes collaborative ing land and resource tenure arrangements. The process framework should be devel- the adequacy of the enabling legal and policy framework oped in parallel with the Indigenous Peoples' instrument. for implementation of proposed project measures the capacity of agencies charged with implementation of Disclosure, appraisal, and documentation. As soon as the Indigenous Peoples' instrument and adequacy and the draft Indigenous Peoples' instrument has been prepared, timeliness of any capacity-building exercises during it should be disclosed, together with the social assessment project implementation report, in a form, manner, and language culturally appro- the capacity of affected communities and others who will priate to the Indigenous Peoples affected by the project. participate in project implementation, including the ade- After the World Bank has reviewed the documents, and quacy of any capacity-building exercises during project before appraisal, the borrower shares the revised instrument implementation with the affected communities. If changes are made to the the adequacy of detailed budgetary and institutional instrument as a result of project appraisal, the final docu- arrangements for timely implementation of the Indige- ment to be used for implementation should be publicly dis- nous Peoples' instrument closed and shared with the affected communities. implementation schedules with measurable benchmarks The appropriate sections of the Project Appraisal Docu- for the Indigenous Peoples' instrument, coordinated as ment should include a careful description of the processes necessary with the overall project implementation schedule of social analysis and consultation undertaken during proj- the results of public disclosure of the Indigenous Peoples' ect preparation, including the broad community support instrument obtained, as well as the design features and special measures arrangements for project monitoring and complaint included to address particular issues concerning Indigenous mechanisms Peoples during implementation. The implementation mea- sures in the Indigenous Peoples instrument should be The legal document includes a covenant requiring the described in more detail in Annex 10 to the Project Appraisal borrower or the project entity to carry out in a satisfactory Document (Safeguard Policy Issues). The World Bank's Proj- manner the Indigenous Peoples' instrument. It is often ect Information Document and Integrated Safeguard Data important, depending on the project, to include additional Sheet are disclosed at the World Bank's InfoShop along with covenants concerning key actions or specific issues of the the Indigenous Peoples' instrument before appraisal. instrument. These can include, for example, actions required The appraisal mission should assess the project design before the instrument can be implemented (such as staffing with regard to policy requirements concerning Indigenous or other specific institutional arrangements, special studies, Peoples. The mission should usually include a social scien- or further consultations); contentious or complex aspects of tist familiar with Indigenous Peoples' issues and who has the instrument that should be highlighted to ensure they are operational experience sufficient to evaluate the measures fulfilled in a timely fashion (for example, regularization of planned regarding Indigenous Peoples. The appraisal evalu- land and resource tenure); or specific benchmarks, as part of ates measures to address OP 4.10 requirements and Indige- the monitoring indicators, for monitoring timely implemen- nous Peoples' issues as appropriate for the given project tation of the instrument. Disbursement may be made condi- context, including the following: tional on the implementation of such specific actions. the adequacy of the free, prior, and informed consulta- PROJECT IMPLEMENTATION tion process confirmation that affected Indigenous Peoples have pro- The importance of good monitoring and supervision of vided their broad support for the project based on free, project implementation cannot be emphasized enough. The prior, and informed consultations borrower's monitoring and evaluation team and the World 354 CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES Bank's supervision team must include appropriate expertise ability and transparency may be improved; acceptance is and skills in understanding how Indigenous Peoples view likely to be heightened; and beneficiaries' participation in, development and how development efforts may affect them. and ownership of, implementation is likely to be enhanced. Knowledge of the affected communities, local language It may also foster learning at the local level and contribute competency, and skills in participatory assessment tech- to organizational strengthening and empowerment of local niques should be valued. communities. Monitoring of measures for Indigenous Peoples should A key element of World Bank supervision is assessing be integrated into the project's overall monitoring and eval- whether the Indigenous Peoples' instrument is carried out uation system, but often with specific indicators and partic- as agreed. Implementation of the instrument is a critical ular monitoring and evaluation activities. Monitoring dimension in decisions on project performance ratings. The requirements vary for different types of projects depending project team also assesses implementation of the borrower's on their scope, interventions, the characteristics of the monitoring and evaluation system and ascertains the extent affected Indigenous Peoples, and the project's benefits to, to which monitoring information is used to strengthen and impacts on, them. For some simple projects with few project implementation and make needed adjustments-- Indigenous Peoples, and where project activities are primar- and whether it is able to include Indigenous Peoples' per- ily beneficial, the elements of the monitoring and evaluation ceptions, concerns, and evaluations in the project feedback system concerning Indigenous Peoples may be limited to system. Key questions to consider during supervision mis- disaggregating data by ethnicity or social groups. For proj- sions include the following: ects with significant impacts on indigenous communities, an elaborate monitoring and evaluation system conducted Are the Indigenous Peoples' instrument and legal by an independent entity focusing on measures for Indige- covenants being implemented? If not, what are the con- nous Peoples may be needed. straints? What should be done to rectify this? Is there a Forest-based projects should, in most cases, plan to pay need to change the agreed on activities or project design significant attention to Indigenous Peoples' issues during more generally? project preparation because of the particular vulnerabilities, Are the affected Indigenous Peoples participating in views, and circumstances of Indigenous Peoples in forest project implementation? If not, what should be done to areas. It is important to assess whether assumptions for enhance their participation? project success are correct, whether there are any unin- How are Indigenous Peoples benefiting from project tended impacts on affected Indigenous Peoples, and activities? How are their socioeconomic circumstances whether they are able to participate in project benefits or changing? whether exclusion or other factors inhibit their participa- What project impacts are there on Indigenous Peoples? tion. Finally, it is important to assess community satisfac- Are there any unanticipated impacts (given their charac- tion and whether the project continues to receive broad teristics and socioeconomic circumstances, unantici- community support. pated impacts are more likely for Indigenous Peoples Qualitative and participatory data collection methods to than for other population groups)? Are impacts being monitor and evaluate project impacts on Indigenous Peo- avoided or mitigated or should new or additional miti- ples are useful. Such methods may include workshops, focus gation measures be introduced? group discussions, informal interviews, mapping exercises, What are the risks concerning the affected Indigenous and other participatory assessment tools. Special studies Peoples? Have those risks changed since project prepara- assessing specific implementation issues concerning Indige- tion or have new risks surfaced? How should they be nous Peoples through qualitative methods and field work addressed or mitigated? may also be useful. Participatory monitoring and evaluation What are Indigenous Peoples' perceptions about the differs from more conventional approaches by engaging project, its benefits, and its impacts? Do the respective beneficiaries actively in assessing the progress and achieve- communities continue to provide their broad support to ments of the project; sharing control over the content, the project activities? If not, how can this be changed? process, and the results of the activity; and identifying cor- Does the project include new locations? Have they been rective actions. When the people who are affected most by a screened for Indigenous Peoples? project participate in its monitoring and evaluation, the Is the capacity of the implementing agency and other project receives valuable input for improvements; account- involved stakeholders increasing with project implemen- CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES 355 tation? Is there a need for (additional) capacity-building pation in the project cycle; (b) the impact of the project, activities? both positive and adverse, on the affected Indigenous Peo- Is the monitoring and evaluation system working? Are ples; (c) the achievement of the objectives of the relevant the findings informing project implementation? Are instrument(s), as relevant; and (d) lessons for future oper- Indigenous Peoples participating in the exercise? ations involving Indigenous Peoples. If the objectives of the relevant instrument(s) have not been realized, the At completion of a project, the project team should Implementation Completion Report may propose a future ensure that the Implementation Completion Report course of action, including, as appropriate, continued includes Indigenous Peoples' issues. The following should post-project supervision by the Bank" (World Bank Proce- be assessed: "(a) the degree of Indigenous Peoples' partici- dures 4.10, paragraph 13). 356 CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES ANNEX 12A ELEMENTS OF AN INDIGENOUS PEOPLES PLAN AND PLANNING FRAMEWORK Indigenous Peoples Plan. OP 4.10 provides the following "1. The Indigenous Peoples Planning Framework (IPPF) guidance on the elements of the IPP (OP 4.10, Annex B): sets out: (a) The types of programs and subprojects likely to be "1.The Indigenous Peoples Plan (IPP) is prepared in a flex- proposed for financing under the project. ible and pragmatic manner, and its level of detail varies (b) The potential positive and adverse effects of such depending on the specific project and the nature of programs or subprojects on Indigenous Peoples. effects to be addressed. (c) A plan for carrying out the social assessment (see The IPP includes the following elements, as needed: Annex A) for such programs or subprojects. (a) A summary of the information referred to in Annex (d) A framework for ensuring free, prior, and informed A, paragraph 2 (a) and (b). consultation with the affected Indigenous Peoples' (b) A summary of the social assessment. communities at each stage of project preparation (c) A summary of results of the free, prior, and and implementation (see paragraph 10 of this pol- informed consultation with the affected Indigenous icy). Peoples' communities that was carried out during (e) Institutional arrangements (including capacity project preparation (Annex A) and that led to broad building where necessary) for screening project- community support for the project. supported activities, evaluating their effects on (d) A framework for ensuring free, prior, and informed Indigenous Peoples, preparing IPPs, and addressing consultation with the affected Indigenous Peoples' any grievances. communities during project implementation (see (f) Monitoring and reporting arrangements, including paragraph 10 of this policy). mechanisms and benchmarks appropriate to the (e) An action plan of measures to ensure that the project. Indigenous Peoples receive social and economic (g) Disclosure arrangements for IPPs to be prepared benefits that are culturally appropriate, including, if under the IPPF." necessary, measures to enhance the capacity of the project implementing agencies. REFERENCES CITED (f) When potential adverse effects on Indigenous Peo- ples are identified, an appropriate action plan of Davis, S. H., and L. T. Soeftestad. 1995. "Participation and measures to avoid, minimize, mitigate, or compen- Indigenous Peoples." Environment Department Paper sate for these adverse effects. No. 021. World Bank, Washington, DC. (g) The cost estimates and financing plan for the IPP. Jensby, S. E. 2007. "Indigenous Peoples and Forests." Note (h) Accessible procedures appropriate to the project to submitted to World Bank as input to Forests Sourcebook. address grievances by the affected Indigenous Peo- Unpublished. World Bank, Washington DC. ples' communities arising from project implementa- World Bank. 1999. "Public Consultation in the EA Process: tion. When designing the grievance procedures, the A Strategic Approach." Environmental Assessment Sourcebook Update 26. Environment Department, borrower takes into account the availability of judi- World Bank, Washington, DC. cial recourse and customary dispute settlement ------. 2002. "Social Analysis Sourcebook: Incorporating mechanisms among the Indigenous Peoples. Social Dimensions into Bank-Supported Projects." Social (i) Mechanisms and benchmarks appropriate to the Development Department, World Bank, Washington, project for monitoring, evaluating, and reporting on DC. the implementation of the IPP. The monitoring and ------. 2005a. "Social Analysis Guidelines in Natural evaluation mechanisms should include arrange- Resource Management: Incorporating Social Dimen- ments for the free, prior, and informed consultation sions into Bank-Supported Projects." Social Develop- with the affected Indigenous Peoples' communities." ment Department, World Bank, Washington, DC. ------. 2005b. "World Bank Operations Manual; OP 4.10 Indigenous Peoples Planning Framework. On the ele- on Indigenous Peoples." World Bank, Washington, DC. ments of an IPPF, the policy provides the following guid- ance (OP 4.10, Annex C): CHAPTER 12: APPLYING OP 4.10 ON INDIGENOUS PEOPLES 357 INDEX 5MHRP. See Five Million Hectares Reforestation Project Asia Network for Sustainable Agriculture and Bioresources, 60b Asner, Gregory P., 278b A assessment tools, 232, 236, 237 access restrictions, involuntary, 303b, 353­354 Association of the Settlement Project California, 80b access rights, 50­51 assumption testing, 143, 146, 147, 149 accountability, 19, 163, 169 adaptive management application, 148b adaptive management, 143­145, 147, 149 Azerbaijan, 206b examples in Guatemala and Mexico, 148b project management cycle, 144f B advertising, 330t beekeeping, 72b advisory groups, 328t benchmarks, 222b afforestation, 94 Beneficiary-Centered Problem Census Problem Solving AFH. See Honduran Forest Agenda (BCPCPS), 136b Africa, 31b, 59b, 255t Bibiani Lumber Company, 72b Agenda 21, 39, 211n biodiversity, 4, 85, 99, 141b. See also conservation; protected areas agricultural inputs, 17b PES approach, 86, 87 agriculture sector reform, 231t biophysical indicators, 140b agroforestry, 21 Bolivia, 164b Albania, forestry project, 19b Bosnia and Herzegovina, 210b, 257b, 266b Alliance for Forest Conservation and Sustainable Use, 65 Brazil, 32b, 67b, 98, 314 Alliance for Zero Extinction, 313 forest enterprise associations, 80b Amazon, 251b Indigenous Lands Project, 46 Amazon Working Group (GTA), 80b Santa Catarina Natural Resource Management and Rural analysis, prioritizing where needed, 230 Poverty Reduction Project, 42b analysis, quantitative, 308b British Columbia, Canada, 32b analytical and advisory activities, 154­155, 157n­158n, 238 budget transparency, 170b consider all influences on forest, 227 Bulgaria, HCVF toolkit, 108b coordination with lending, 221­222 Business Information Management (BIMS) Module, 265b Analytical and Advisory Services (AAAs), 8 business plans, 37, 239 analytical tools, selecting, 233, 233t business services, 58­59, 75 Andhra Pradesh forestry projects, 34b, 45b business skill development, 75 annual area charges, 187 Busongo, Tanzania, 28b APP, 111 arbitration, 328t C Armenia, 226b, 248b Cambodia, 322b, 331b ASB­Partnership for the Tropical Forest margins (ASB), 129b Cameroon, 35b, 56, 227 Asia, 255t DPLs, 65, 224b­225b 359 forest monitoring, 275b and poverty reduction, 30 social and environmental impacts study, 242b elements of, 36­37 capacity building, 75, 176, 193 India, 45b environmental assessment, 67­68 indigenous knowledge, 45 for data collection, 249­250 Latin America, 101b forest certification systems, 115, 116 project examples, 46­47 SMFEs, 79, 79b community-company partnerships, 20, 71, 100 carbon financing, 120 bargaining power, 74 carbon sequestration, 85, 86, 117 important conditions, 73 Carnegie Institution of Washington, 277b models by goods and services, 71t CARPE, 137n competition, unfair due to illegal logging, 189 case studies, as analytical tool, 233t conceptual model, 145b CASs. See Country Assistance Strategies conditionality, 222b causality, 229 Conditionality Review, 222 CBD. See Convention on Biological Diversity conflict. See postconflict countries CBFM. See community-based forest management conflict of interest, 169b CEA. See Country Environmental Analysis conflict, resolving, 174b Ceara Integrated Water Resources Management Project, Brazil, Congo Basin Forests, 137n 314 Congo, Democratic Republic of, 323b Center for International Forestry Research (CIFOR), 275b consensus building, 328t CFEs. See Community Forest Enterprises conservation, 10, 23, 125 chain-of-custody certification, 102, 102n, 114, 116n, 174b and forest significance index, 230 change management, 169­170 coexistence with production, 3­4, 104 charges, 181­182, 187­188 community agreement with industry, 102 Chile, 120 conservation offsets, 314­316 China, 18b, 31b, 107b consultation, 319­320, 321b, 325b forest product imports, 93, 102n at various stages of EA project, 326b Citizen Report Card (CRC), 171 Cambodia example, 322b climate change, 96 Democratic Republic of Congo example, 323b clusters matrix analysis, 301b LFI example, 320b Colombia Natural Resource Management (NRM) planning tasks, 322­323 Program, 46 process, 321­322 commercial development and Indigenous Peoples, 353 with Indigenous Peoples, 349­351, 351b, 352t commercial outputs, 17b contracts, 66, 73, 100 common property rights, 51b Convention on Biological Diversity (CBD), 39 communication, 319, 325b conversion of forest, 2, 94f, 106. See also deforestation and strategy, 323, 325­326, 329 significance of, 297­298 Cambodia example, 322b, 331b corruption, 151, 154, 190, 191b checklist for managers, 332­333 and forest crime, 190f implementation plan, 329, 331b cost estimates, 306 community empowerment, 74 cost-benefit analysis, 305b, 306 Community Forest Enterprises (CFE), 208b Costa Rica, 86 community forestry models, 31b Country Assistance Strategies (CASs), 153 community forestry projects, PROCYMAF, 47b Country Environmental Analysis (CEA), 209, 238, 242, community forestry, distinguishing from industrial, 298 244 community networks, supporting, 75 building blocks, 239, 239f community ownership of forests, 3f, 56 Ghana, 240b community participation, 42, 97, 119 country identification of important forests, 230 and benefit sharing in Ghana, 243b­244b CRC. See Citizen Report Card control over access, 35 Creative Oils, 59b decentralization of forest management, 159, 162 Criteria and Indicators processes, 253b forest landscape planning, 133 cross-sectoral impacts, 98, 208, 209, 232 forest management, 3, 3f identifying links with policy, 234 OP on Forests, 298 tools for assessing, 232, 236, 237 community rights, 50 cross-sectoral mainstreaming of forest issues, 214­215 community tenure, 30, 53b, 54b cross-sectoral outcomes, 205 community-based forest management (CBFM), 20, 22, 34­35, cultural importance, 17b 100 customary rights, 51b 360 INDEX D Environmental and Social Management Framework (ESMF), dam safety, 290 311b data, 27, 111, 182b, 248 Environmental Assessment (EA), 307­310, 321b interpretation for forest inventories, 260 consultations, 298, 326b lack of, 208, 229, 233­234 identifying forests and habitats, 310­314 data collection, 28b, 261b, 355 Environmental Assessment Policy (EAP), 8f, 9f, 288, 293 de jure and de facto rights, 51b Forests Strategy, 10­11 decision-making environment, 248 Environmental Assessment Sourcebook, 351 deforestation, 2, 94f, 124, 157b. See also conversion of forests environmental classification of projects, 294­295 avoided, 4 Environmental Control System on Rural Properties, 251b causes of, 2f, 206­207 environmental impact assessment (EIA), 240 deforestation maps, 251b, 277b, 278b environmental impacts, assessing and mitigating, 310b deforestation rate, 94, 252 Environmental Management Framework (EMF), 309, 309b degradation, significance of, 297­298 Environmental Management Plan (EMP), 310b, 321b deregulation, 57 environmental protection, 178. See also protected areas design document, 265­266 environmental services, 67, 86­87, 88 development, 5, 39 environmental services payments, 10, 23. See also Payments for development policy loans (DPLs), 6, 65, 207 Environmental Services approach conditions, 222b, 223b, 227 estimation costs, 260b prioritization of actions, 223, 225 estimation methods, 259b country identification, 209 Europe, 255t cross-sectoral impacts, 232 Europe and Central Asia (ECA), 7, 8f, 9f, 11 dialogue requirement, 226­227 European Union (EU) Regulation and Action Plan on Forest Law flexibility and suitability, 225b Enforcement, Governance and Trade (FLEGT), 153 Gabon and Cameroon, 224b­225b evaluation. See monitoring impact on natural resources requirement, 238 exotics, 118 Lao PDR, 226b expert panel for analysis, 233t portfolio of, 203­204, 205 exports, charges on, 187 rapid assessment toolkit, 234n extension programs, 120 watch list, 210 development policy, integration with forest policy, 209­210 F development projects, 49 FAO. See United Nations Food and Agriculture Organization directories and databases of critical habitats, 313 FCAG. See Forest Certification Assessment Guide displacement, 183 FCPF. See Forest Carbon Partnership Facility donor engagement, 18­19 feasibility studies, 37 due diligence, 209 fees, 188 Dutch disease, 210n­211n FEMA/MT. See State Environment Foundation of Mato Grosso FESP. See Forest & Environment Sector Program E Fiji, harvesting rights, 181b EA. See Environmental Assessment financial access through partnerships, 75 EAP. See Environmental Assessment Policy financial capital, 140b East Asia and Pacific, 8 financial sector reform, impact on forests, 231t ECA. See Europe and Central Asia financing, 4, 67 econometric modeling, 233t fines, 188 economic activities, impact on forests, 229, 234 fiscal impact analysis, 306, 307b economic and financial analysis, 304­307 fiscal incentives, 182­183 economic development, forest integration, 5 fiscal instruments, 180, 181, 185 economic growth, role of natural resources, 31­32 administration of, 183­184 economic impacts on forest stakeholders, 126 fiscal policy, 183, 185, 203 economic monitoring, 307b fiscal reform, impact on forests, 229f economic reliance on wood, 93 fiscal systems, 156, 181, 181b economy, contribution of forests, 230 common problems, 180b, 182b ecosystem services, 54, 72b, 141b summary of charges for forest sector, 187­188 education reform, 231t Five Million Hectares Reforestation Project (5MHRP), 218b elite capture, 33b FLEG. See Forest Law Enforcement and Governance employment, forest-related, 16 FLEGT. See Forest Law Enforcement, Governance and Trade enabling environment, 65­66 floating tranche, 227 energy sector reform, 206b, 213, 231t, 248b FMIS. See Forest Monitoring and Information System INDEX 361 FOMAS. See National Forest Sector Monitoring and Assessment reflecting current values, 176 Process forest management, 4, 93. See also forest certification; sustainable Forest & Environment Sector Program (FESP), 242b forest management Forest Carbon Partnership Facility (FCPF), 4, 45 community participation, 3, 3f forest certification, 45, 99, 102, 113 conflict of interest, 169b assessment systems, 336­338 decentralization of, 156, 159, 171, 178 identification of noncomformance, 339 advantages and dangers, 160t TOR model, 341, 343 and CBFM, 35­36 barriers to, 114­115 and outcomes and risks, 159 by third party, 337 balance at each level, 162 components of, 336 bureaucratic resistance and lack of capacity, 164 conformity assessment, 113 context and legal framework, 161 development of, 115­116 depletion of resources incentives, 163 HCVF, 105 elite capture possibility, 33b independent, 99­100 fiscal systems, 182b reasons for using, 114 Indonesia, 161b transparency and fairness of decisions, 337 Mexico, 208b Forest Certification Assessment Guide (FCAG), 335­339 outcomes, risks, and obstacles, 159 forest charges, 181­182, 187­188 to communities, 32b, 36b forest communities, impact of development projects, 49 to SMFEs, 79­80 forest crime, 153, 157, 189. See also illegal logging incentives, 99 and corruption, 190f increasing wood supply, 96 and enforcement, 178 mismanagement, 3 causes of, 190­192, 198 models, 57 and responses, 199 performance information, 113 detection of, 193 public and private, 178 failures of law and implementation, 195­196 reform, 49 fighting, 192, 194­195 separating administrative and management functions, 169, institutional structures and incentives for prevention, 192­193 169b national and international actions to control, 191f services, 166b recommended actions for international community, 196 standards, 338 suppression of, 193­194 strategic planning, 243b forest degradation, 85, 157b technical capacity, 101­102 forest dependence, lack of data, 208 threats to sustainability, 98 forest enterprise associations, 79, 80, 80b use of complex plans, 33­34 forest enterprises, developing, 58­59 use of DPLs, 224b­225b forest functions, 130n forest margins, 129b forest governance, 10, 19, 73, 151­155, 157n forest monitoring, 250, 276­277, 278 and forest crime, 195 Cameroon and Indonesia, 275b and natural resources, 31­32 costs and indicators, 254­255 and REDD, 157b demand for, 274 entry points to reform process, 152f recommendations for, 279 FLEG and broader reforms, 155b satellites, 280t limiting power, 174 selection approach and tools, 277b­278b forest income, 16 forest monitoring information system (FMIS), 266b, 273 forest institutions, functions of, 166b architecture, 263, 264b­265b forest interventions, tenure, 54 consulting and software firms, 268b forest inventories, 249, 264b. See also national forest inventories implementation, 265­267, 271 forest investment, 65, 67 model TOR, 270­273 Forest Land Information Module, 264b plug-n-play principle, 269n Forest Law and Sustainable Development: Addressing process and reporting arrangements, 272­273 Contemporary Challenges Through Legal Reform, 173 technology, 266­267 Forest Law Enforcement and Governance (FLEG), 153, 154b, turnkey approach, 267, 268b, 269n 154t, 155b, 194­195 Working Group, 266b Forest Law Enforcement, Governance and Trade (FLEGT), 153 workshops and design phase, 271, 272 forest law enforcement, improving, 156 forest ownership, 30, 32b, 50. See also property rights; tenure forest laws, 173­174, 174b, 179. See also laws community, 3f, 56 potential issues for advisors, 178 forest producers, 56­58, 57f, 58b, 60, 67 362 INDEX forest products, 1, 21, 63, 75, 187 poverty reduction, 5, 22­23 China imports, 102n China project, 18b demand for, 93, 95b national-level analysis, 26­27 forest projects, 18, 37, 49, 320 protection through offsets, 314­316 Albania, 19b secondary, 99 CBFM, 46­47 timber estimated remaining by country, 95t China and HCVF, 107b tropical, removal of investment constraints, 67 environmental classification of, 294­295 water services provided, 88t FLEG components, 154t Forests Strategy, 4­6, 9­11, 123­124. See also Operational Policy IFC, 64, 64b, 64f on Forests implementation supervision, 296 multisectoral approach, 214 incorporating indigenous knowledge, 353 not addressing governance, 153 India, 34b, 45b, 68n review of implementation, 11n Indigenous Peoples, 40, 47, 348 Fourth National Community Forestry Workshop, 33b lending, 7­9, 153­154 FSC. See Forest Stewardship Council preparation and appraisal of, 295­296 FSI. See Forest Survey of India PROCYMAF, 47b FSSP. See Forest Sector Support Program short-term equitable benefits, 45 fuelwood, 96, 189, 206b Vietnam, 101b consumption, by country, 96t World Bank investment portfolio, 6­7, 7f FUGs. See forest user groups Forest Resource Assessment (FRA) Program, 253b fungi, 119 Forest Resource Planning Module, 264b forest sector investment climate, 244b G forest sector reviews, 217b Gabon, 224b­225b, 227 Forest Sector Support Program (FSSP), 218b Geographic Information System (GIS) technology, 251b, 255n, forest significance index, 230 265b, 276 Forest Stewardship Council (FSC), 340n Ghana, 223b, 240b Principles and Criteria, Principle 9, 112n Global Environment Facility (GEF), 12n, 314 forest stratification, 259b forest lending, 7f, 8f forest surveillance, 114 PES, 86, 87t Forest Survey of India (FSI), 250 Global Forest and Trade Network (GFTN), 65, 101b forest survey, example of, 255t Global Forest Partnership, 10 forest transition models, 264b Global Forest Target, 108b forest user groups (FUGs), 33b Global HCVF Toolkit, 110 forest values, global protection, 5 Global Positioning System (GPS), 251b, 276b Forestry Sector Review, 30 Global Vision for Forest 2050 Project, 97, 97f forestry, community models, 31b Good Practices Note, 294 forestry, pro-poor, 58b government commitment to reform, 66 forests, 28, 85, 296. See also harvesting; High Conservation Value government policy coherence, 75 Forests; poverty-forest linkages groundtruthing, 279 access and use rights, 50­51 growth and yield models, 264b access control, 35 GTA. See Amazon Working Group area by country, 96t Guatemala, 79b, 148b balancing production with environmental services, 100 Guyana, 78, 81b critical, 296, 310­314 cross-sectoral impacts, 4, 205, 214­215 H dependence on, 15, 16, 26b, 27 harmonization, 19, 222­223 different reforms, impacts of, 231t harvesting, 293, 335 economic contribution of, 230 harvesting schedule module, 264b energy sector reform impacts, 213 health reform, 231t fiscal reform impacts, 229f heuristic tools, 237 future scenario, 97, 97f High Conservation Value (HCV), 104­112, 297 government-owned operated as private, 268 country-level adaptations, 109b income supporting war, 174b identification information sources, 109b natural versus plantations, 118 identifying, 106­107, 107b, 107f not being used to potential, 1­4 types of, 105b outside influences, impact of, 205, 229, 234 High Conservation Value (HCV) Resource Network, 110 policy impacts, 203 High Conservation Value Forests (HCVF), 104­112, 314 INDEX 363 and forest certification, 335 institutional capacity, 21­22, 239 toolkit, 108b, 110 institutional reform, 166, 168b, 178 Honduran Forest Agenda (AFH), 58b implementation of, 169b, 171­172 household dependency on forests, 26b, 27 measuring success, 170 household income, 16, 17 Interactive Forestry Atlas of Cameroon, 275b human capital, 140b International Bank for Reconstruction and Development (IBRD), hydrological services. See water services 8f, 9f, 65 International Development Association (IDA), 8f, 9f, 65 I International Finance Corporation (IFC), 64, 64b, 64f IBRD. See International Bank for Reconstruction and collaboration with World Bank, 68 Development forest lending, 7f IDA. See International Development Association forest projects for poverty reduction, 68n IFC. See International Finance Corporation International Labour Organization (ILO) Convention 169, 39 IKEA, 107b International Organization for Standardization (ISO), 336, 337 IKONOS, 280t International Social and Environmental Accreditation and illegal logging, 94, 153, 189 Labelling (ISEAL), 336 causes of, 190­192, 198, 199 interventions, 19, 54 fighting against, 192, 194­195 investment climate, 244b process framework application, 303b investment forums, 65 recommended actions, 196 involuntary access restrictions, 303, 353­354 ILO. See International Labour Organization Involuntary Resettlement Policy (OP 4.12), 289, 303b­304b, 347 impact study, as analytical tool, 233t IUCN. See World Conservation Union Important Bird Areas (IBAs), 313 incentive framework, 306 J incentives, 99, 100, 126b. See also fiscal incentives Joint Forest Management (JFM), 34b India, 45b, 59b joint ventures, 66, 71t, 72b forest projects, 34b, 45b, 78b forest surveys, 250, 250b K indicator framework, 233t Kenya, 72b indicators for forest monitoring, 254­255 Kenya Forests Act, 243b Indigenous Peoples, 15, 39, 355. See also Operational Policy on Indigenous Peoples L application of OP on Forests, 347 land access, 78, 148b building partnerships, 44­45 land administration, 19­20 consultation with, 41­42, 42b, 352t land ownership, 50. See also forest ownership importance of, 349­351, 351b land use and land use change (LULUCF) projects, 276b forest decentralization, 163 land use, integrated, 73 forestry projects, 40 land-use arrangements, 66 guidelines and preempting local conflicts, 324b land-use database, 264b identification of, 348 Landsat, 254, 274, 280t institutional and stakeholder analysis, 43 landscape, 123, 125, 126 lessons learned and recommendations, 46­47 zone types, 137n policy, governance, and fiscal issues, 40­41 landscape approach, 123, 124, 124b, 130n project implementation considerations, 354­355 management systems, 127­128 protecting rights of, 156 use of models, 126b relationship to land, 40 various techniques for, 125 social assessment, 43, 348­349, 350b landscape interventions, monitoring and evaluation of, 139 Indigenous Peoples instrument, 352­356 landscape planning, 125, 133­137 Indigenous Peoples Plan (IPP), 353, 357 data required, 134, 134b Indigenous Peoples Planning Framework (IPPF), 353, 357 mapping, 135b Indonesia, 27b, 71b, 161b planning team, 133, 133b forest monitoring, 275b threat-based and desired condition and zoning, 132 structural adjustment loan, 204b landscape stakeholders, 133b information dissemination, techniques for, 330t Lao People's Democratic Republic, 65, 226b, 314 information systems, 247. See also forest monitoring information Latin America and Caribbean (LAC), 8, 8f, 9f, 11 system Project Development Facility, 68n Inspection Panel cases, 46 Latin America, forestry models, 31b institutional analysis, 43, 299, 304 law enforcement, 3 364 INDEX laws, 173. See also forest laws continuous and consistent, 141 lawyers, 175b economic, 307b learning, 143, 219 EMP, 310b learning culture, 149 indicators, 139­140, 140b, 141b legal framework, 161, 173, 176 lending outcomes, 225­226, 234 quality of and crime prevention, 189, 192 outcome assessment, 142b legal reform, 175b, 176 monitoring framework, development of, 139­141 lending, 40, 41, 153­154. See also development policy loans monitoring systems, 247, 249­250, 263. See also forest monitoring lending, regional distribution of, 9f information system Liberia Forest Initiative (LFI), 167b­168b, 174b, 320b Armenia, 248b Liberia, forest income supporting war, 174b measurement framework, 252 license charges, 187 recommendations for, 255 livelihood analysis, 28b monoculture plantations, 119 livelihood indicators, 140b multiple-use forests, 97f livelihoods, 1, 16, 17b multiple-use land arrangements, 66, 71t, 72b, 73 loan conditions, 222b, 223b, 227 Multisectoral Forest Protection Committees, 153 prioritization of critical actions, 223, 225 logging maps, 277b, 278b N Nakai-Nam Theun National Protected Area, Lao PDR, 314 M national forest inventories (NFIs), 249, 249t, 257­258 macroeconomic policy, 205, 206 design of, 258­260 macroeconomic reforms, 207, 231­232, 231t recommendations for, 260­261 Madhya Pradesh Minor Forest Produce Cooperative, 78b samples of interest, 259b map-based estimation methods, 259b Tanzania, 258b mapping project, 301b national forest programs (NFPs), 208, 214, 216­219 maps, 277b, 278b, 281t principles, preparation, and implementation, 216b CD tool for forest monitoring, 275b Uganda, 215b costs of, 260b National Forest Sector Monitoring and Assessment Process deforestation, 251b (FOMAS), Indonesia, 275b market analysis, 306 National Institute for Colonisation and Land Reform, Brazil, 80b market development strategy, low-income producers, 57f national resource accounts, 233t market mechanisms, 182b natural capital, 140b, 204 market monopolies, 79 Natural Habitats Policy, 288­289, 294­295 markets, 2, 23, 66, 73 natural habitats, and critical, 296, 310­314 access, 21, 56, 114 natural insurance, 17 environmental services, 67 natural resource management, 136b, 224b­225b for small producers, 58 natural resource markets, regulation of, 32­33 most are domestic, 63 natural resources, 16, 44, 78 participation in, 49, 52 role in economic growth, 31­32 recommendations for, 60 needs analysis, 265 matrices, as assessment tool, 236, 237 Nepal, 33b, 59b MC. See Participatory Microcatchment Planning Approach networks for assessment, 236 measurement framework for monitoring, 252 Nicaragua, 163b media use for information dissemination, 330t Nicaraguan Forest Finance Fund, 101b medicinal plants, 59b non-additionality, 183 methodologies, 254, 301, 305 nontimber forest products (NTFPs), 56, 58, 60 Mexico, 148b, 208b, 221b Bosnia and Herzegovina, 257b community forestry, 36b, 46­47, 208b medicinal plants, 59b PES, 86 purchase agreements, 72b PROCYMAF I and II, 47b North and Central America, 255t microfinance schemes, 20­21 North Rupununi District Development Board, Guyana, 81b Middle East and North Africa (MENA), 7­8, 8f, 9f, 11 NRM. See Colombia Natural Resource Management Program mining sector, 239 mobile communications, 254 O MODIS, 278, 279b, 280t Oceania, 255t Mondi Fine Paper SA, 72b open access, 51b monitoring, 139, 193, 248b. See also forest monitoring open source standards for software, 273n baseline for, 308b Operational Policy on Forests (OP 4.36), 287, 291­296 INDEX 365 applying to Indigenous Peoples, 347 plug-n-play principle, 269n TOR development, 298­299 plywood, 94b Operational Policy on Indigenous Peoples (OP 4.10), 289, 347 policy, 73, 99, 205, 206 consultation process, 352t evolution of instruments, 207­208 objectives and requirements, 348­354 integration, 203, 209­210 Operational Policy on Involuntary Resettlement (OP 4.12), 347 removal of barriers, 57, 57f Operational Policy on Physical Cultural Resources (OP 4.11), policy loans, 221, 234. See also development policy loans 289, 347 Policy Reform Support Loans (PRSLs), 204b Operations Management Module, 264b poor people, 15, 18b, 128b Orissa CEA, 239 benefiting from markets, 23, 32­33, 49 outcome assessment tracking, 142b population growth, 2, 96 outgrower contracts, 66, 71b, 71t, 120 population, by country, 96t ownership, 222, 227 Posada Amazonas Ecotourism, 72b postconflict countries, 167, 167b­168b P forest law reform, 174b Pangi Valley, 60b poverty, 15b, 27, 207 participation strategy, 300, 302b poverty and social impact analysis (PSIA), 206b Participatory Microcatchment (MC) Planning Approach, Poverty Eradication Action Plan (PEAP), 215b 136b poverty impact analysis, 306, 307b participatory rural appraisal, 301b poverty reduction, 3, 16­17, 18, 22­23, 26­27, 77 partnerships, 10, 73, 100. See also community-company and conservation, 23 partnerships CBFM, 30 future possibilities, 74­75 China project, 18b Indigenous Peoples, 44­45 fiscal policy impacts, 184 models, 66, 73 forestry project, 19b Southern Africa, 59b institutional capacity, 21­22 Payments for Environmental Services (PES), 85­86, 85f, 247 not in national-level strategies, 25 design steps, 86­89 performance framework, 19 identification of services and monitoring, 90 upstream forest activities' impact, 68n institutional framework, 89, 90f World Bank Forests Strategy, 4­5, 9 perverse incentives, 89, 90b Poverty Reduction Strategy Papers (PRSPs), 22, 28, 54 projects, 87t Poverty Reduction Support Credit (PRSC), 223b, 226b PEAP. See Poverty Eradication Action Plan poverty-forest linkages, 17b, 25, 27b, 215b performance framework, 19 data for forest significance index, 230 Peru, 72b Poverty-Forest Linkages Toolkit, 25­26, 26b, 27b Pest Management Policy, 289 power, curbing, 174 PF. See Process Framework PPPs. See plans, policies, and programs physical capital, 140b price change analysis, 237 Physical Cultural Resources Policy (OP 4.11), 289, 347 private property rights, 51b physical infrastructure database, 264b private sector, 20, 65, 66 PhytoTrade Africa, 59b investment, 3, 11n, 68n pilot projects, 51 SFM, 63 plans, policies, and programs (PPPs), 240, 241, 245 to generate benefits for forest users, 67­68 plantation forests, 3­4, 68n, 96, 97f problem solving, 328t costs and technical capacity, 119­120 Process Framework (PF), 303b­304b development, 101­102, 120 processing capacity, reducing, 99 environmental and social impacts, 117 procurement policy improvement, 102, 102n exotic, 118 PRODES, 251b failure and success rate, 102n producer organizations, 58 Ghana, 223b production, 3­4, 104 incentives, 99 Program on Forests (PROFOR), 65 investment, 11n Programmatic Development Policy Credits, 210b minimizing negative impacts, 102 Project Appraisal Document, 354 OP on Forests, 293 Project for Conservation and Sustainable Management of Forest species selection, 118, 120 Resources (PROCYMAF), 36b, 47b threats to, 119 project implementation, 354­355 to meet growing wood demands, 98 property rights, 49, 51b, 52. See also forest ownership; tenure versus natural forests, 118 devolution of, 32, 50 366 INDEX Indigenous Peoples, 44 S land administration, 19­20 sales contracts, 66, 71t protected areas, 4, 97f, 112n Santa Catarina Natural Resource Management and Rural Poverty categories of, 316n Reduction Project, 42b conservation offsets, 314­315 SAR. See South Asia Region establishing new area, 315b satellites for forest monitoring, 279b, 280t existing and proposed, 296­297 sawnwood, 94b identification of, 104 SEA. See Strategic Environmental Assessment multiple uses of, 315­316 sector analysis for investment and lending, 41 PRSC. See Poverty Reduction Support Credit service delivery, 171b PRSLs. See Policy Reform Support Loans Sirleaf, Ellen Johnson, 168b PRSPs. See Poverty Reduction Strategy Papers SIVAM-SIPAM, 251b PSIA. See poverty and social impact analysis small and medium forest enterprises (SMFEs), 20, 66, 77, 78, 81 public involvement, 328t attracting investment and negotiating deals, 79 public voice, listening to, 327t Brazil, 67b pulp and paper, 95b bureaucracy, 81b pulp mills, 119 extension networks, 81b purchase agreements, 72b importance of understanding context, 80 lack of information and market monopolies, 79 Q lack of management capacity, 77, 80 quantitative analysis, 308b negotiating capacity, 79b Quickbird, 279b, 280t program feasibility checklist, 84 supporting local sovereignty, 78, 78b R smallholders, 115, 116, 298 Rainforest Alliance, 56 extension programs, 121 Rainforest Expeditions, 72b incentives for, 100 rapid CEAs (RCEAs), 209, 210b, 239 OP on Forests, 294 real exchange rate depreciation, 203 Smartwood, 111 reduced emissions from deforestation and degradation (REDD), Social Assessment (SA), 299, 301, 304 4, 157b, 247, 274 for Indigenous Peoples, 348­349, 350b baseline determination, 250­251, 252 social capital, 140b reform, 49, 167, 174, 226 social impact report, 302b agrarian, 208b social inclusion, plantations, 119 entry points, 152f social responsibility contracts, 66, 71t, 72b harmonization, 222 social safeguards, 316 macroeconomic, 207, 231­232, 231t social welfare, SMFEs, 78 tenure, 52, 53b socioeconomic analysis, 299 Regional Silvopastoral Project, 90b South America, 255t regulator framework and crime prevention, 192 South Asia Region (SAR), 8, 8f, 9f, 11 Remote Sensing (RS) technology, 251b, 254, 274 Southeast Asia and the Pacific, forestry models, 31b cost and quality of, 279 Southern African Natural Products Trade Association, 59b data availability, 274 spatial monitoring, 274, 275, 276 real time monitoring, 279b specialization, 79 requirements, 276 SSA. See Sub-Saharan Africa rent capture, 180, 181b stakeholder analysis, 43, 299, 320­321 reporting requirements, nationally and internationally, 252 stakeholder consultation, 320­321 research methods, improvement of, 234 stakeholder participation, 97, 302b resource rights, distribution and devolution of, 32 legal reform, 176­177 resource user associations, 19b OP on Forests, 298 resources, wild, 15 to support FLEG, 194­195 results chains, 146b, 147, 147f, 148b State Environment Foundation of Mato Grosso (FEMA/MT), revenue sharing, 184­186 251b risk management, 331b Stool of the Omanhene, Ghana, 72b risk mitigation, 67, 74, 75 Strategic Environmental Assessment (SEA), 209, 240­242, 240b risks for development agencies, 196 and development alternatives, 244 roundwood, 1, 94b Cameroon, 242b royalties, 188, 189 institution-centered, 243b, 245 royalty payments, 182 and impact-centered, 241­242 INDEX 367 strategic partnership, LFI example, 320b Bolivia, 164b strategic planning, 243b forest management decentralization, 163 structural adjustment loans (SALs), 6, 204b, 207, 221b Tri National de la Sangha, Congo Basin, 126b Sub-Saharan Africa (SSA), 7, 8f, 9f, 10 triggers, 222b subsidiarity principle, 162­163 Tropical Forestry Action Plan (TFAP), 208 subsidies, 54, 119 tropical timber import ban, 98 subsistence, 17b, 95b Turkey Eastern Anatolia Watershed Rehabilitation Project, 128b Sumatra forest margins, 129b turnkey approach, 267, 268b, 269n supply-demand imbalances, 192 Surama Eco-tourism Enterprise, 78 U surveys, 301b, 327t Uganda, NFP, 215b sustainable development, 39 United Nations Declaration on the Rights of Indigenous Peoples, sustainable forest management (SFM), 1­4, 63, 73. See also forest 39 management United Nations Economic Commission for Europe (UNECE), certification as a benchmark, 114 210b facilitating, 101 United Nations Food and Agriculture Organization (FAO), 174, HCV approach, 105­106 253b incentives for, 126b United States Forest Service (USFS), 137n reasons for failure of, 205­206 Unlocking Opportunities for Forest-Dependent People, 12n unprotected areas, 297 T Tanzania, 28b, 258b, 261b V tariff policies, 54 value added products and services, development of, 75 task forces, 328t Vegext Limited, 72b taxation, 54, 178, 188, 189 veneer sheets, 94b technical capacity, 101­102 Vietnam, 101b, 218b technology transfer, extension programs, 120, 121 viewpoints, integrating, 136b technology, for NFIs, 249t Voluntary Partnership Agreements (VPAs), 153 tenure, 50­51, 178, 316. See also property rights von Thunen analysis, 237 actors and actions, 52f community, 30, 53b, 54b W customary systems, 43­44 watch list for DPLs, 210 Indigenous Peoples, 40­41 water policy, 289­290 legal vs. customary, 51b water services, 86, 87, 88t PRSPs, 54 watershed approach, 130n reform, 52, 53b watershed projects, 125, 128b terms of reference (TOR) watershed protection, 85 forest certification, 341, 343 wetlands directories, 313 forest monitoring system, 283 Weyerhaeuser Limited, 32b model for FMIS project, 270­273 wild resources, reliance on, 15 OP on Forests, 298­299 Wildlands OPN, 297 TFAP. See Tropical Forestry Action Plan Women Acting Together for Change, 33b Thematic Mapper (TM) scenes, 281n women, opportunities for, 60, 128b threat assessment, 108 wood, 94b, 189. See also fuelwood threat ratings, 147 wood demand, 1, 63, 93, 94 timber products, 95b influencing factors, 95b timber right fees (TRF), 223b response to price change, 237 Timber Utilization Contracts (TUCs), 223b World Bank lending to meet, 98 timber, years of supply remaining, 95t wood market, 93, 97 Tongass National Forest, 133b wood production from secondary forests, 99 top-down approaches, 21 wood supply, 101, 117, 237 total economic valuation (TEV), 305b World Bank, 10, 11, 98. See also development policy loans; tourism, 86 Operational Policies trade, 178, 189 Andhra Pradesh forestry project, 34b tradeoffs, 129b, 140 Cameroon forest sector, 35b tranche-release conditions, 222b CBFM support, 100 transaction costs, 74, 172 collaboration with IFC, 68 transparency, 9­10, 19, 37, 170b FLEG, 154t 368 INDEX forest certification, 114 monitoring system investments, 249 Forest Certification Assessment Guide (FCAG), 335­340 past and current objectives, 97­98 forest governance, 151, 154, 155b PES support, 86, 87t forest investment portfolio, 6­7, 7f policy lending themes and forest sector, 232b forest plantations, 117­118 project cycle and communication tasks, 332­333 forest policy history, 287­288 publications identifying critical habitats, 313 forests and development policy integration, 209­210 safeguard policies, 287, 288 Forests Strategy, 4­6, 123­124 watershed management projects, 125 lending profile, 7­9 World Bank Group, 12n harvesting support, 335 World Conservation Union (IUCN), 168b, 316n Indigenous Peoples, 39­40, 324b World Development Report on Attacking Poverty, 15b Indonesia PRSL, 204b World Wildlife Fund (WWF), 65, 107b, 335­336 Kenya SEA, 243b HCVF toolkit, 108b legal framework support, 173, 174b macroeconomic reforms, 204­205 X Mexico, 36b Xylo Indah Pratama, 71b INDEX 369 Eco-Audit Environmental Benefits Statement The World Bank is committed to preserving Saved: endangered forests and natural resources. The Office of the Publisher has chosen to print · 61 trees Forests Sourcebook: Practical Guidance for Sus- · 2,871 lbs. of solid waste taining Forests in Development Cooperation on · 22,357 gallons of water recycled paper including 30% post-consumer · 5,386 lbs. of net recycled fiber in accordance with the recom- greenhouse gases mended standards for paper usage set by the · 43 million BTUs of total Green Press Initiative, a nonprofit program energy supporting publishers in using fiber that is not sourced from endangered forests. For more information, visit www.greenpressinitiative.org. In 2002, the World Bank revised its Forests Strategy and related Operational Policies to give recognition to the role forests play in poverty reduction and the preservation of global environmental services. The revision also served to ramp up the World Bank's own engagement in the forest sector to reduce poverty without jeopardizing the environmental values intrinsic to sustainability. The strategy is founded on three equally important and interrelated pillars: · harnessing the potential of forests to reduce poverty in a sustainable manner; · integrating forests more effectively into sustainable development; and · protecting vital local and global environmental services and values. Addressing these three pillars together makes the Forests Strategy complex and multifaceted. The Strategy is not just about growing or protecting trees, but involves a web of complex interactions between policy, institutions, and incentives. The Forests Strategy embodies a multisector approach that takes into account activities, policies, and practices outside the forest sector that impact both forests and the people who depend on forests for their livelihoods. The Forests Sourcebook is a resource for World Bank clients, task managers, and other stakeholders to better design and implement projects in line with the Forests Strategy. It draws on the experiences of more than seventy experts, both within and outside the World Bank, who have applied innova- tive approaches to implementing the World Bank Forests Strategy. The Sourcebook is divided into two parts. The first part looks at issues that are priorities for the forest sector and addresses the operational aspects of those issues. It covers topics associated with using forests in ways that contribute to poverty reduction, improving forest governance, main- streaming forest considerations in macro policy dialogue, engaging the private sector, meeting the growing demand for wood, optimizing forest functions at the landscape level, and monitoring forest sector activities. The second part of the book offers guidance on implementing the World Bank's Operational Policy on Forests (OP 4.36). Giving insight into the complex interplay between different realms of development work that effect or are affected by forests, the Forests Sourcebook is a valuable tool for any stakeholder involved in development or business projects that could have an impact on forests. ISBN 978-0-8213-7163-3 SKU: 17163