69022 SDN ESW Results Story July 2008 Russia Forest Policy Dialogue TA Program The World Bank provided on-demand, just-in-time international input into deliberations by Russian policy makers as they carried out an overarching reform of the country's forestry sector to respond to the challenges of illegal logging and weak governance. Technical assistance activities under the Forestry Policy Dialogue in 2003-7 included policy analyses, stakeholder consultations, workshops, conferences, and publications. The reforms led to a new Forest Code, the decentralization of forest management functions, and implementation of a plan of action to strengthen forest law enforcement and governance. 1. Challenge may account for 10 percent of total annual wood harvest in Russia. Capacity for oversight is weak, and few resources are available to familiarize With some 870 million wooded hectares, Russia forest staff, companies, and civil society with new is the steward of 23 percent of the world's tools for forest management. forestland. Consisting mainly of slow-growing boreal forest, the Russian taiga has more than In response to interest by the national government, half the world's stock of conifers and is home to the World Bank developed the Russia Forest hundreds of plant and animal species. This Policy Dialogue Technical Assistance program in immense natural resource plays a major role in 2003. What began as an ad-hoc conversation preserving planetary biodiversity and in stabilizing became a popular series of targeted, on-demand the global climate through carbon sequestration. workshops and publications jointly sponsored by the Bank and the Ministry of Natural Resources. At the same time, Russian timber is a resource The objective was to support the policy and for the country's economic development. The institutional reform of the Russian forest sector, private sector is struggling for secure, long-term favoring a transition to more sustainable and access to raw materials, a key factor in investment transparent forest management. decisions. The policy, legal, and institutional framework for forestry needs to balance the demands of Russia's growing private sector with the imperative for sustainable management of 2. Findings and Dissemination forest resources. The technical assistance (TA) program responded A range of problems have complicated this task. to a climate of reform that required quick action Governance is poor and corruption thrives, poverty and the development of models for policy, legal, puts pressure on forests for fuelwood and and institutional change. Based on participatory farmland, and land tenure systems are flawed. principles and involving multiple stakeholders, the Illegal logging destroys the forest cover and program provided guidance on several challenges deprives the state of revenues. Moreover, illegal for development of the Russian forestry sector. harvesting depresses timber prices, thus discouraging private investment. Illegal timber First was the improvement of the investment climate through a more enabling policy, legal, and forest management; and (d) developing financial, institutional framework and more efficient economic, and environmental guidelines for financing mechanisms. This involved (a) forestry sector investment projects. separating government policy/regulation, oversight, and management functions to improve accountability and governance; (b) decentralizing forest management; (c) developing long-term, 4. Key Results competitively awarded leases; and (d) improving information flow between agencies regarding The Bank's Forest Policy Dialogue program forest inventory and use, turnover of forest had both direct and indirect influence on resources and wood products, price and tax several essential aspects of Russia's national monitoring, and legal infractions. forest policy: Second was the development of political and Enabling policy and institutional framework. The policy actions by the federal forestry agency to program helped establish consensus on issues strengthen law enforcement and fight illegal of forestry policy reform. The new Forest Code, logging. Since 2004, the Russian government effective since January 2007, incorporates many and the World Bank have worked closely to ideas from the public discussions supported by launch the Europe and North Asia Forest Law the program. Key provisions of the Forest Code Enforcement and Governance (ENA-FLEG) were translated into government regulations and Ministerial Process, supported by a separate have now been implemented across Russia. TA task. These include delegation of forest management functions to the regions and allocation of long- A third challenge was to implement changes in term forest leases with increasing transparency forest management. Voluntary instruments, and competitiveness. especially forest certification, were promoted as an alternative to state enforcement of compulsory Independent forest certification. Independent standards. Expansion of certified forests should certification of sustainable forest management more widely confirm the legality of timber and help doubled to 20 million in 2007 and now constitutes Russian forest products gain access to the 15 percent of the total area of forest leases. European Union market. Certification has become a mainstream trend supported by responsible forestry businesses and Finally, the program built human resource capacity the Russian regions. for sustainable forest management. Education and training needs were assessed, more modular Increased stakeholder participation. Over the last training programs promoted, and regional training two to three years, Public Consultative Councils projects implemented. have regularly brought together legislators, government officials, companies, NGOs, and academicians to discuss forest sector issues. The prime minister established a similar consultative 3. Subsequent Role for the Bank body on forest sector development at the end of 2007. The TA activities helped strengthen the government's technical capacity to implement an Increased measures to combat illegal logging. By ongoing Sustainable Forestry Pilot Project. The fostering an environment of political commitment chief of the Federal Forestry Agency affirmed that and trust, the dialogue contributed to a successful the TA program had provided "timely and effective launch of the ENA-FLEG Ministerial Process in impetus" at an initial, difficult stage of loan 2005. It also encouraged implementation of a implementation and had "improved the efficiency national action plan to combat illegal logging with and substantive content" of the dialogue. The explicit endorsement by the Russian president agency requested the Bank to provide a follow- and prime minister. Coordination between forestry, on TA program in 2007-8 to help in (a) police, customs, and tax authorities has improved. implementing a national action plan to combat The private sector is introducing tools to prove illegal logging; (b) strengthening information the legality of origin of wood products; together systems for strategic planning and monitoring of with forest harvest monitoring by the government forest resource management; (c) improving long- and civil society, this has increased incentives for term performance-based budgeting for public legal compliance while pushing out illegal actors. 2 From 2005 to 2007, the area covered under experience may be of interest to others involved remote sensing to monitor forest utilization in policy dialogue. doubled to 100 million hectares. This led to an increase in the volume of illegal logging detected First of all, the team found it was important to from 775,000 cubic meters in 2005 to more than be accessible to the client at all times. A flexible 1 million cubic meters in 2007. approach to planning the program's activities allowed a prompt response to the changing Increased investment. Investments in wood-based priorities of the client. A steady stream of industry doubled to $2.5 billion between 2003 and translations of strategically selected documents 2007. While improvement in Russia's overall helped to keep the client interested in new ideas. investment climate has driven this process, sector-specific policy changes also played an Second, the timing of implementation is important role. important. Many of the policy changes in Russian forestry were introduced in a somewhat Enhanced bilateral cooperation. The program rushed manner, before supporting regulations strengthened the Russian government's and adequate capacity on the ground were in cooperation with international partners in place. For example, significant tightening of sustainable forestry management. Reentry into rules and regulations for forest harvesting was the Food and Agriculture Organization in 2006 not accompanied by a revision of the rules for provides the Russian government a platform to subsistence wood collection by local set forth its views on international forestry issues. communities, which made compliance difficult. This is being addressed by a second wave of Increased awareness of best practices. a m e n d m e n ts t o t h e F o r e s t C o d e a n d Managerial cadre in the Russian forest sector are associated regulations, as well as by public increasingly exposed to the latest international practices in forest management. The program's education campaigns. publications on forest management reform in transition economies are in high demand. 6. Learn More 5. Lessons Learned "Russia Forest Policy Reform: Key Challenges," World Bank, 2004 Several aspects of the Russian forestry TA http://go.worldbank.org/39GZTD4M60 Key Contact Andrey V. Kushlin, Team Task Leader, Russia Forest Policy Dialogue TA Program, akushlin@worldbank.org 3