Ly!.O R L D B A N K O P E R A T I O N S E V A L U A T I O N D E P A R T M E N T 21595 October 2000 The World Bank Forest Strategy Striking the Right Balance .,4 , , > _ $ r,, t S . S t * F aW - ~~~~~ !|~~4 j. s;t A. ,. ,> ,w' * .;!/ -td> F~~~~~~~~~~~~~~~~~~~~~~~~~ /~ :4> - ^' F7 OPERATIONS EVALUATION DEPARTMENT ENHANCING DEVELOPMENT EFFECTIVENESS THROUGH EXCELLENCE AND INDEPENDENCE IN EVALUATION The Operations Evaluation Department (OED) is an independent unit within the World Bank; it reports directly to the Bank's Board of Executive Directors. OED assesses what works, and what does not; how a borrower plans to run and maintain a project; and the lasting contribution of the Bank to a country's overall development. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank's work, and to provide accountability in the achievement of its objectives. It also improves Bank work by identifying and disseminating the lessons learned fronm experience and by framing recommendations drawn from evaluation findings. WO R LD BAN K O P E RAT I O N S EVALUAT I O N D E PA RT M E NT CJD The World Bank Forest Strategy Striking the Right Balance Uma Lele Nalini Kumar Syed Arif Husain Aaron Zazueta Lauren Kelly 2000 The World Bank www.worldbank.org/html/oed Washington, D.C. Copyright C) 2000 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First edition October 2000 The opinions expressed in this report do not necessarily represent the views of the World Bank or its member governments. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. 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SD393.W65 2000 333.75-dc2l 00-043862 4 Printed on recycled papen Contents ix Study Team xi Foreword, Prefacio, Preface xvii Acknowledgments xix Executive Summary, Resumen, Resume Analytique xxvii Glossary xxxi Abbreviations and Acronyms 1 ~~~~~~1. The Challenges of Forest Strategy 1 Experience with the 1991 Forest Strategy 6 Country Conditions and Forest Strategy 7 2. Bank Group Forest-Related Services and Lending 7 Nonlending Services 8 Forest Sector Lending 9 Consistency of Project Design with the 1991 Forest Strategy 10 Performance of Forest and Forest-Component Projects 12 Policy and Institutional Reform 13 Environmental Adjustment and Sustainable Development 14 Poverty and Participation 16 Gender 16 Safeguards 17 Links with the Private Sector 18 Biodiversity and Protected Areas 18 Bank Group Activities 20 GEF Activities 21 3. The Country as Unit of Account in the 1991 Forest Strategy 22 Forest-Rich, Forest-Poor, and Transitional Countries 26 Market Forces and Deforestation 27 Land Conversion and Agriculture 28 Forests and Poverty Alleviation 29 Institutional Issues 29 Land Tenure 30 Decentralization 30 The Bank's 1991 Forest Strategy and Forest-Poor Countries 31 The Bank's 1991 Forest Strategy and Forest-Rich Countries 6 Country Conditions and Forest Strategy~~~~~~~~~~~~~~~~~~~~~11 The World Ba nk Forest Strategy: Striking the Right Bala nce 33 4. Global Trends and Changes Affecting Forest Policy 33 Changes in the Forest Sector 36 Changes in the Global Economic Environment 36 Changes in the International Institutional Setting 38 New Thinking and Policy Experiments 38 Changes in Strategy Implementation 39 Three Perspectives on Forest Strategy 43 5. Conclusions 43 Strategy Implementation 44 Effectiveness 46 Reconsidering the Bank's Forest Strategy 46 Recommendations Annexes 51 Annex A: Expanded Executive Summary 59 Annex B: Methodology of the Review 71 Annex C: Portfolio Review Data 77 Annex D: Quality Assurance Group Risk Ratings for Active Bank Operations 85 Annex E: Operations Evaluation Department Project Evaluations 95 Annex F: Country Case Study Data 97 Annex G: The Surveys 121 Annex H: Study Staff and Consultation Contacts 127 Annex I: World Bank Operational Policy 4.36, Forestry 129 AnnexJ: World Bank Good Practices 4.36, Forestry 133 Annex K: Implementation of the 1991 Forest Strategy in the IFC's Projects 137 Annex L: Recent World Bank Reviews of Forest Strategy Implementation 139 Annex M: Report from Committee on Development Effectiveness 141 Endnotes 145 Bibliography Boxes 2 Box 1.1: Bank Forest Strategy: The 1991 Forest Paper and the 1993 Operational Policy Directive 4 Box 1.2: The World Bank's Forest Strategy at a Glance 24 Box 3.1: Brazil: A Case Study in Domestic Priorities versus International Objectives 35 Box 4.1: Three New World Bank Initiatives 37 Box 4.2: International Institutions and Agreements Relevant to Global Forests 66 Box B. 1: FAO Data on the State of the World's Forests Tables 9 Table 2.1: World Bank Forest Lending Before and After 1991, by Region 34 Table 4.1: Expected Increases in Industrial Wood Production and Consumption 62 Table B.1: World Bank Projects with Potential Impact on Forests 63 Table B.2: Analyzed Sample of World Bank Projects with Potential Impact on Forests iv Contents 64 Table B.3: Distribution of Scheduled Economic and Sector Work 65 Table B.4: Distribution of Unscheduled Economic and Sector Work 71 Table C.1: World Bank Economic and Sector Reports, Scheduled and Unscheduled, All Sectors 71 Table C.2: World Bank Lending Operations, by Region 72 Table C.3: World Bank Adjustment Lending Operations, by Region 72 Table C.4: Primary Program Objectives of Lending Operations 73 Table C.5: Environmental Assessment Categories, All World Bank Operations 73 Table C.6: World Bank Direct Forest Projects, by Region 74 Table C.7: World Bank Forest-Component Projects, by Region 74 Table C.8: World Bank Forest and Forest-Component Projects, by Region 75 Table C.9: Distribution of Forest-Component Projects, by Sector 75 Table C.10: World Bank Lending Operations in 20 Countries with Threatened Tropical Moist Forests 76 Table C.11: Intentions of Forest Sector and Forest-Component Projects 77 Table D.1: Relative Risk Ratings for Active Forest and Forest-Component Projects 79 Table D.2: QAG Indicators of Potential Problem Projects 79 Table D.3: Risk Ratings Active Agriculture Sector Projects, by Region 80 Table D.4: Risk Ratings for Active Environment Sector Projects, by Region 80 Table D.5: Risk Ratings for Active World Bank Projects, by Region 80 Table D.6: Risk Ratings for Active Forest-Component Projects, by Region 81 Table D.7: Risk Ratings for Active Forest Projects, by Region 81 Table D.8: Risk Indicators for Active Agriculture Sector Projects, by Region 82 Table D.9: Risk Indicators for Active Environment Sector Projects, by Region 82 Table D.10: Risk Indicators for Active Forest-Component Projects, by Region 83 Table D.11: Risk Indicators for Active Forest Projects, by Region 83 Table D.12: Risk Indicators for Active World Bank Projects, by Region 89 Table E.1: Overall Performace Ratings, Completed Forest Projects Relative to Projects in Other Sectors 89 Table E.2: Bank Performace Ratings, Completed Forest Projects Relative to Projects in Other Sectors 89 Table E.3: Borrower Performace Ratings, Completed Forest Projects Relative to Projects in Other Sectors 90 Table E.4: Overall Performance Ratings, Completed Agriculture Sector Projects, by Region 90 Table E.5: Overall Performance Ratings, Completed Environment Sector Projects, by Region 90 Table E.6: Overall Performance Ratings, Completed World Bank Projects, by Region 91 Table E.7: Overall Performance Ratings, Completed Forest-Component Projects, by Region 91 Table E.8: Overall Performance Ratings, Completed Forest Projects, by Region 91 Table E.9: Bank Performance Ratings, Completed Agriculture Sector Projects, by Region 92 Table E.10: Bank Performance Ratings, Completed Environment Sector Projects, by Region 92 Table E.11: Bank Performance Ratings, All World Bank Projects, by Region 92 Table E.12: Bank Performance Ratings, Completed Forest-Component Projects, by Region v The World Ba,,k Forest Strategy: Striking the Right Balanlce 93 Table E.13: Bank Performance Ratings, Completed Forest Projects, by Region 93 Table E.14: Borrower Performance Ratings, Completed Agriculture Sector Projects, by Region 93 Table E.15: Borrower Performance Ratings, Completed Environment Sector Projects, by Region 94 Table E.16: Borrower Performance Ratings, Completed World Bank Projects, by Region 94 Table E. 17: Borrower Performance Ratings, Completed Forest-Component Projects, by Region 94 Table E.18: Borrower Performance Ratings, Completed Forest Projects, by Region 95 Table F.1: World Bank Lending Operations in the Case Study Countries, 1984-91 95 Table F.2: World Bank Lending Operations in the Case Study Countries, 1992-99 96 Table F.3: Percentage Change in World Bank Lending Operations in Case Study Countries After 1991 Figures 8 Figure 2.1: World Bank Forest Lending Before and After 1991 9 Figure 2.2: Net Change in Bank Forest Commitments 10 Figure 2.3: Inclusion of Key Elements of Bank Strategy in Forest Projects and Projects with Forest Components 11 Figure 2.4: Percentage of Active Projects Not at Risk 11 Figure 2.5: Completed Projects: Overall Satisfactory OED Performance Ratings 23 Figure 3.1: Relative Forest Area in Forest-Rich and Forest-Poor Countries 59 Figure B. 1: Relationship of the Study's Parts 71 Figure C. 1: Net Change in Economic and Sector Work 71 Figure C.2: Net Change in Commitments After 1991, All Lending Operations vi C ontents 72 Figure C.3: Net Change in Commitments After 1991, Adjustment Lending Operations 72 Figure C.4: Net Change in Commitments After 1991, Primary Program Objectives 73 Figure C.5: Net Change in Commitments After 1991 by Environmental Assessment Category 73 Figure C.6: Net Change in Commitments, Bank Forest and Forest-Component Projects After 1991 74 Figure C.7: Net Change in Commitments After 1991, Operations in 20 Countries with Threatened Tropical Moist Forests 74 Figure C.8: Net Change in Commitments After 1991, Bank Forest and Forest-Component Projects, Including GEF 77 Figure D.: Percentage of Active Projects Not at Risk, in Selected Sectors 78 Figure D.2: Percentage of Active Forest Projects Not at Risk, by Region 78 Figure D.3: Percentage of Active Forest-Component Projects Not at Risk, by Region 86 Figure E.1: Satisfactory Overall Performance Ratings, Completed Projects 86 Figure E.2: Satisfactory Bank Performance Ratings, Completed Projects 86 Figure E.3: Satisfactory Borrower Performance Ratings, Completed Projects 87 Figure E.4: Satisfactory Overall Performance Ratings, Completed Forest Projects 87 Figure E.5: Satisfactory Bank Performance Ratings, Completed Forest Projects 87 Figure E.6: Satisfactory Borrower Performance Ratings, Completed Forest Projects 88 Figure E.7: Satisfactory Overall Performance Ratings, Completed Forest-Component Projects 88 Figure E.8: Satisfactory Bank Performance Ratings, Completed Forest-Component Projects 88 Figure E.9: Satisfactory Borrower Performance Ratings, Completed Forest-Component Projects vii Study Team- Core Team Cameroon Country Team IFC Team Uma Lele B. E-ssama-Nssah Afolabi Ojumu Nalini Kumar James J. Gockowski Rafael Dominguez Syed Arif Husain Cherian Samuel B. Essama Nssah China Country Team Dominique Zwinkels Aaron Zazueta Scott Rozelle John Gilliland Lauren Kelly Jikun Huang Maisha Hyman Syed Arif Husain GEE Team Aaron Zazueta J. Gabriel Campbell Additional Members Alejandra Martin Madhur Gautam Costa Rica Country Team Ridley Nelson Ronnie de Camino Velozo MIGA Team Olman Segura Harvey Van Veldhuizen Consultants Luis Guillermo Arias Arnoldo Contreras-Hermosilla Isaac P6rez Karin Perkins Saeed Rana India Country Team Carolyn Barnes Nalini Kumar Madelyn Blair Naresh Chandra Saxena Kavita Gandhi Yoginder K. Alagh Kinsuk Mitra Brazil Country Team Uma Lele Indonesia Country Team Virgilio M Viana Madhur Gautam Adalberto Verissimo Uma Lele Stephen Vosti Hariadi Kartodiharjo Karin Perkins Azis Khan, Ir. Erwinsyah Syed Arif Husain Saeed Rana ix Forex word FOREWORD PREFACIO PREFACE The changing dynamics of the Los cambios en la dinAmica del Les mutations en cours dans le forest sector and the global economy sector forestal y la economia global secteur forestier et dans 1'6conomie prompted World Bank President impulsaron al Presidente del Banco mondiale ont amen6 le pr6sident de la James Wolfensohn to launch the Mundial, James Wolfensohn, a iniciar Banque mondiale, James Wolfensohn, a CEO Forum and the World Bank! el CEO Forum y la Alianza enrne el lancer Ie Forum des DG et l'Alliance World Wide Fund for Nature Alli- Banco Mundial y el Fondo Mundial Banque mondiale/Fonds mondial pour ance. These initiatives offer the pros- para la Naturaleza. Esas iniciativas la nature. Ces initiatives permettent pect of a proactive Bank role that permiten vislumbrar un papel d'envisager pour la Banque un r6le would nor have been conceivable a proactivo para el Banco que hubiese dynamique qui n'aurait pas &6 few years ago. In parallel, Bank sido inimaginable hace algunos ai6os. concevable il y a quelques ann6es. management launched a Forest Al mismo tiempo, la adminisrraci6n del Paralkiement, la direction de la Banque Policy and Implementation Review Banco inici6o un proceso de examen de a entrepris un ', Bilan de la politique and Strategy process through the la ejecuci6n de la politica forestal y la foresti&re et strat6gie pour le secteur >,, Environmentally and Socially Sus- estrategia para el sector, a trav6s de la par le biais du R6seau du tainable Development (ESSD) Net- vicepresidencia de la Red sobre el d6veloppement &cologiquemenr et work Vice Presidency. The Desarrollo Social y Ecol6gicamente socialement durable. Le d6parremenr de Operations Evaluation Department Sostenible. Se solicit6 al Departamento 1'6valuation des op6rations (OED) s'est (OED) was asked to contribute an de Evaluaci6n de Operaciones (OED) vu confier la tache d'6tablir une independent evaluation of the Bank's que aportara una evaluacion evaluation independanre de la strare'gi'e 1991 Forest Strategy. Accordingly, independiente de la estrategia forestal foresti&re de la Banque de 1991. L'OED OED has evaluated implementation del Banco para 1991. Pot lo tanto, a done 6valu6 la mise en ceuvre de la of the strategy as outlined in The OED evalu6 la aplicaci6n de la strat6gie d6crite dans Le secteur Forest Sector: A World Bank Policy estrategia conforme se resefia en El forestier : Document de politique Paper (1991), Operational Policy sector forestal: un documiento de g6nfrale de la Banque mondiale (1991), 4.36, and Good Practice 4.36 (both politicas del Banco Mundial (1991), la Politique op6rationnelle 4.26 et la issued in 1993). Politica Operacional 4.36, y PrActicas Pratique recommand6e 4.36 (parues The evaluation reviewed lending Optimas 4.36 (ambos publicados en routes deux en 1993). and nonlending activities of the 1993). L'OED a exarnin6 les activit6s de World Bank Group (international La evaluaci6n examin6 las pr~t et les activit6s hors prkr du Bank for Reconstruction and Devel- actividades de financiamiento y no Grouipe de ]a Banque mondiale opment [IBRD], International vinculadas con el financiamiento del (Banque internationale pour la Development Association [IDA], In- Grupo del Banco Mundial (el Banco reconstruction et le d6veloppement ternational Finance Corporation Internacional de Reconstrucci6n y [BIRD], Association internationale de [IFC], and Multilateral Investment Fomento [BIRF], la Asociaci6n d6veloppernent [IDA], Sociit6 Guarantee Agency [MIGA]) and the Internacional de Fomento [AIF], la financi~re internarionale [SF1] et Global Environment Facility (GEF). Corporaci6n Financiera Internacional Agence mulrilatr&a]e de garantie des The OED team carried out six coun- [CFI], y el Organismo Multilateral de investissements [AMGI]) et celles du try studies (Brazil, Cameroon, China, Garantia de Inversiones [OMGI] y el Fonds pour l'environnement mondial Costa Rica, India, and Indonesia), a Fondo para el Medio Ambiente (FEM). L'6quipe de l'OED a effectu6 global review, and six regional port- Mundial). El equipo del OED realiz6 six 6tudes portant sur des pays (Br6sil, folio reviews (Sub-Saharan Africa, seis estudios sobre paises (Brasil, Cameroun, Chine, Costa Rica, Inde et East Asia and the Pacific, Europe and Camer6n, China, Costa Rica, India e Indon6sie), une analyse au niveau Central Asia, Latin America and the Indonesia), un examen mundial, y seis mondial et six analyses de portefeuilles xi The World Bank Forest Strategy: Striking the Right Balance Caribbean, the Middle East examenes de la cartera regional regionaux (Afrique and North Africa, and South n (Africa al sur del Sahara, Asia subsaharienne, Asie de l'Est et Asia). IFC, MIGA, and GEF oriental y el Pacifico, Europa y Pacifique, Europe et Asie findings are also incorporated - Asia central, America Latina y el centrale, Amerique latine et in this report. The OED studies Caribe, Oriente medio y Norte Caraibes, Moyen-Orient et analyzed the interactions de Africa y Asia meridional). Se Afrique du Nord et Asie du among the Bank's Country han incorporado a este informe, Sud). Les conclusions relatives a Assistance Strategies, economic and ademas, los resultados la SFI, I'AMGI et au FEM figurent sector work, policy dialogue, and obtenidos por la CFI, el OMGI y el aussi dans le rapport. L'OED s'est Bank lending. In addition to forest Fondo para el Medio Ambiente attache, dans ses etudes, a analyser les projects and projects with forest com- Mundial. OED analiz6, en sus interactions entre les Strategies d'aide- ponents, an attempt was made to estudios, las interacciones entre las pays, les analyses economiques et assess the impact of adjustment lend- Estrategias del Banco de asistencia a sectorielles, le dialogue de politique ing operations and the indirect los paises, los estudios econ6micos y g6nerale et les prets de la Banque. En consequences of Bank operations in sectoriales, el diMlogo de politica, y el dehors des projets forestiers et des agriculture, environment, infrastruc- financiamiento del Banco. Ademas de projets comprenant des composantes ture, mining, transportation, electric los proyectos forestales y los forestieres, l'OED s'est efforce power, energy, and oil and gas explo- proyectos con elementos forestales, se d'evaluer 6galement l'impact des ration. Over 700 operations were intent6 evaluar el efecto de las operations de pret a l'ajustement et les reviewed. operaciones de financiamiento para consequences indirectes des An extensive consultative pro- fines de ajuste y las consecuencias operations concernant l'agriculture, cess was carried out. Guidance was indirectas de las operaciones del Banco 1'environnement, les infrastructures, provided by an external Advisory en la agricultura, el medio ambiente, la les activites extractives, les transports, Committee. OED, in collaboration infraestructura, la minerfa, el I'6lectricite, 1'energie et l'exploration du with various in-country stakehold- transporte, la electricidad, la energia y petrole et du gaz. Il a passe en revue ers, held workshops in Brazil, la exploraci6n de petr6leo y gas. Se plus de 700 op6rations. China, and India in November 1999 examinaron mas de 700 operaciones. Ces travaux ont donne lieu a de and in Indonesia in April 2000. The Se realiz6 un amplio proceso de vastes consultations. Un comite workshops were designed to allow consulta. Un comite de asesoria consultatif externe a sugg&6 les governments and other country- externo tuvo a su cargo la orientaci6n. grandes orientations. En collaboration level stakeholders (NGOs, the pri- OED, en colaboraci6n con diversos avec diverses parties prenantes vate sector, academia, and the like) interesados pertenecientes a cada pais, nationales, l'OED a organis6 des an opportunity to comment on their realiz6 talleres en Brasil, China y la ateliers de travail au Bresil, en Chine et country's case studies before the India en noviembre de 1999 y en en Inde en novembre 1999 et en studies were offered to an interna- Indonesia en abril de 2000. Los talleres Indon6sie en avril 2000, pour donner tional audience for feedback. OED se disefiaron para permitir que los aux gouvernements et aux autres placed the country background pa- gobiernos y los interesados a nivel del parties prenantes nationales (ONG, pers and the Preliminary Report on pais (las ONG, el sector privado, el secteur prive, universites, etc.) la the Internet, after taking into ac- ambito universitario, y otros) tuviesen possibilite de presenter des count the comments of the Board's la oportunidad de analizar los estudios observations sur les etudes de cas Committee on Development Effec- de casos practicos de su pais antes de concernant leur pays avant qu'elles ne tiveness (CODE) at a meeting held que esos estudios fuesen presentados soient presentees a un auditoire on December 23, 1999. OED then para fines de informaci6n ante una international. L'OED a place les held a Review Workshop in January audiencia internacional. OED public6 documents de reference sur les pays et 2000. Forestry experts, environmen- en Internet los documentos de le rapport preliminaire sur l'Internet, tal activists, industry representa- antecedentes sobre los paises y el apres avoir pris en compte les tives, donors, and government Informe preliminar, despues de tomar observations formulees lors d'une policymakers met in Washington en cuenta los comentarios efectuados r6union du Comite pour l'efficacite du for two days to discuss the findings por el Comite del Directorio Ejecutivo developpement (CODE) du Conseil, le xii Foreword of the OED review. Com- sobre la eficacia en terminos de 23 decembre 1999. L'OED a ments were also received - desarrollo, en una reuni6n ensuite tenu un atelier de through the Internet from a celebrada el 23 de diciembre de synthese en janvier 2000, qui a variety of stakeholders. The 1999. Posteriormente, OED donne a des experts forestiers, OED team also briefed Presi- realiz6 un taller de examen en a des ecologistes, des dent Wolfensohn. OED's Pre- enero de 2000. Un grupo de representants des milieux liminary Report, country especialistas en silvicultura, industriels, des bailleurs de studies, and regional portfolio re- ecologistas, representantes de la fonds et des gouvernants, l'occasion views were then discussed in the industria, donantes y encargados de la de se reunir pendant deux jours a nine ESSD-organized regional and formulaci6n de politicas se reuni6 en Washington pour debattre des country-specific workshops in Washington, D.C. durante dos dias conclusions de l'examen de l'OED. which OED participated. This final para analizar los resultados del examen L'equipe de l'OED a egalement informe OED report was presented to CODE del OED. Ademas, varios interesados M. Wolfensohn du contenu de son in June 2000 (The "Green Sheet" hicieron Ilegar sus comentarios a traves rapport. Le rapport preliminaire de detailing CODE's comments is in- de Internet. El equipo del OED l'OED, les etudes par pays et les cluded in this volume as Annex M). inform6, ademas, al Presidente examens des portefeuilles regionaux The main conclusion is that the Wolfensohn. A continuaci6n, el ont ensuite et discutes au cours des Bank has implemented the 1991 Informe preliminar del OED, los neuf ateliers regionaux et nationaux Forest Strategy only partially, and estudios sobre paises y los examenes de organises par le Reseau du mainly through an increased num- las carteras regionales fueron developpement ecologiquement et ber of forest-related components in analizados en los nueve talleres socialement durable auxquels a its environmental lending. The regionales y especificos de cada pais participe l'OED. Le rapport final de strategy sent a strong signal about organizados por la Red sobre el l'OED a ete presente au CODE en changed objectives in the forest Desarrollo Social y Ecol6gicamente juin 2000 (la < feuille verte sector and included a new focus on Sostenible y en los cuales particip6 el enumerant les observations du CODE conservation. However, its ambi- mencionado departamento. El informe figure dans l'Annexe M au rapport). tious goals were not matched by final del OED fue presentado al Comite La principale conclusion est que la commensurate means to implement sobre la eficacia en terminos de Banque n'a que partiellement applique the strategy. The controversy sur- desarrollo en junio de 2000 (El "Green la Strategie forestiere de 1991, et cela rounding the policy formulation Sheet" detallando los comentarios del principalement dans le cadre de and implementation-including the Comite sobre la eficacia en terminos de composantes forestieres de pres ban on the use of Bank funds for all desarrollo se incluye en este volumen environnementaux. Elle a commercial logging in primary como Anexo M). communiqu6 un message clair sur le tropical moist forests-had a chill- La conclusi6n principal es que el recentrage des objectifs du secteur ing effect on innovation. The effec- Banco ha aplicado la Estrategia para el forestier en faveur de la preservation. tiveness of the strategy has been sector forestal 1991 en forma parcial, Cependant, les moyens mis a modest, and the sustainability of its y principalmente a trav6s de una disposition pour r6aliser la strategie impact remains uncertain. mayor cantidad de elementos n'etaient pas a la hauteur de ses The country studies and the vinculados con el sector forestal, en su ambitions. Les controverses qui ont regional portfolio reviews contrib- financiamiento para el medio entoure la formulation et la mise en uted to OED's assessment of Bank ambiente. La estrategia envi6 una clara ceuvre de la strategie, notamment operations through the lens of the sefial acerca de los cambios en los l'interdiction d'utiliser des fonds de la 1991 Forest Strategy, as well as the objetivos del sector forestal e incluy6 Banque pour les activites d'abattage perspectives of borrowers, Bank un nuevo enfoque de la conservaci6n. commercial dans les forets tropicales staff, the private sector, and some of Sin embargo, los medios para aplicar humides primaires, ont decourage the CEOs and nongovernmental la estrategia no guardaban relaci6n l'innovation. L'efficacite de la strategie organizations (NGOs) involved in a con sus metas ambiciosas. La est demeuree limitee et la viabilite de dialogue with the Bank. The ulti- controversia respecto de la son impact sur le long terme reste a mate purpose of the evaluation is to formulaci6n y la aplicaci6n de la demontrer. xiii The World Bank Forest Strategy: Striking the Right Balance help shape the Bank's role politica -que incluye la Les etudes par pays et les regarding the forests of its prohibici6n de utilizar los analyses des portefeuilles borrowers at the dawn of a fondos del Banco para todo regionaux ont permis a l'OED new millennium. tipo de explotaci6n forestal d'examiner les operations de la The report identifies seven comercial en los bosques Banque dans l'optique de la elements that would make the humedos tropicales primarios- Strategie forestiere de 1991, Bank forest strategy more rel- tuvo el efecto de desalentar la ainsi que du point de vue des evant to current circumstances and innovaci6n. La estrategia ha emprunteurs, du personnel de la strengthen the Bank's ability to tenido una eficacia modesta, y la Banque, du secteur prive et de certains achieve its strategic objectives in the sostenibilidad de su efecto es ain des DG et organisations non- forest sector: incierta. gouvernementales (ONG) qui ont Los estudios sobre paises y los participe au dialogue avec la Banque. 1. The Bank needs to use its examenes de la cartera regional Cette evaluation a pour but ultime de global reach to address both contribuyeron a la evaluaci6n de las contribuer a determiner le r6le qui mechanisms and finances for operaciones del Banco efectuada por revient a la Banque s'agissant des international resource mobili- OED a traves de la 6ptica de la forets des pays emprunteurs a l'aube zation on concessional terms Estrategia para el sector forestal 1991, du nouveau millenaire. outside its normal lending ac- como asi tambien las perspectivas de los Le rapport identifie sept elements tivities. prestatarios, los funcionarios del Banco, qui permettraient de mieux adapter la 2. The Bank needs to be proactive el sector privado, y algunos de los CEO strategie forestiere de la Banque aux in establishing partnerships y las organizaciones no circonstances actuelles et aideraient with all relevant stakeholders, gubernamentales (ONG) que celle-ci a realiser ses objectifs governments, the private sec- participaron en el dialogo con el Banco. strategiques dans le secteur forestier tor, and civil society to fulfill El fin ulterior de la evaluacion es ayudar both its country and global a definir el papel del Banco respecto de 1. La Banque doit mettre a profit roles. los bosques de sus prestatarios al ses moyens d'action mondiaux 3. The focus on primary tropical comienzo de un nuevo milenio. pour resoudre simultanement la moist forests needs to be broad- El informe identifica siete question des mecanismes et celle ened to encompass all types of elementos que harian que la estrategia des financements, s'agissant de la natural forests of national and del Banco para el sector forestal sea mobilisation de ressources global value. mis acorde a las circunstancias internationales de caractere 4. Forest issues need to receive actuales y que fortalecerian la concessionnel en dehors de ses due consideration in all of the capacidad del Banco para alcanzar sus activites de pret habituelles. Bank's relevant sector activi- objetivos estrategicos en el sector 2. La Banque doit adopter une ties and macroeconomic work. forestal: demarche dynamique pour 5. Illegal logging needs to be etablir des partenariats avec reduced through the active pro- 1. El Banco debe utilizar su campo toutes les parties prenantes motion of improved gover- de accion en el dmbito mundial pertinentes (gouvernements, nance and enforcement. para encarar tanto los secteur prive et societe civile) 6. The livelihood and employ- mecanismos como las finanzas pour remplir son role aussi bien ment needs of all the poor need para la movilizacion de los au niveau des pays qu'au niveau to be addressed, while continu- recursos internacionales en mondial. ing to safeguard the rights of condiciones concesionarias que 3. La Banque doit elargir son ac- indigenous people. no se encuentran dentro de la tion a tous les types de forets 7. The Bank needs to align its esfera de sus actividades naturelles ayant une valeur au organization and its resources normales de financiamiento. plan national et mondial. with its strategic objectives in 2. El Banco debe ser proactivo en 4. II convient de tenir dument the forest sector. la formaci6n de asociaciones con compte des considerations todos los interesados pertinentes, forestieres dans toutes les xiv Fore word los gobiernos, el sector privado, activites sectorielles et analyses y la sociedad civil para cumplir macroeconomiques pertinentes su papel a nivel de cada pais y a de la Banque. nivel mundial. S5. II importe de reduire les 3. Es necesario ampliar el coupes illegales en promouvant enfoque respecto de los bosques activement la gouvernance et le bhumedos tropicales primarios respect des lois et des con el objeto de abarcar a todos reglements. los tipos de bosques naturales 6. La Banque doit se pencher sur que tengan un valor nacional o les besoins de tous les pauvres en mundial. matiere de subsistance et 4. Todas las actividades sectoriales d'emploi, tout en continuant a y los estudios macroeconomicos garantir les droits des popula- pertinentes del Banco deben tions autochtones. tomar en cuenta los temas 7. La Banque doit harmoniser son forestales. organisation et ses ressources 5. Se debe reducir la explotaci6n avec ses objectifs strategiques forestal ilegal mediante la dans le secteur forestier. promoci6n activa de mejoras en la gesti6n de gobierno y la aplicaci6n de las leyes. 6. Es necesario encarar las necesidades de sustento y empleo de todos los pobres, al mismo tiempo que se protegen los derechos de los pueblos indigenas. 7. El Banco debe adaptar su organizaci6n y sus recursos a los objetivos estrategicos del sector forestal. Robert Picciotto Director-General, Operations Evaluation Department Director-General, Operations Evaluation Robert Picciotto Director, Operations Evaluation Department Gregory Ingram Task Manager Uma Lele xv Acknowledgnents The preparation of this report would not have been gan, Jessica Mott, Gobind Nankani, Ken Newcombe, possible without the support and valuable contributions Ilkka Juhani Niemi, Afolabi Ojumu, Keith Openshaw, of many individuals and organizations. The report Jan Cornelius Post, Idah Z. Pswarayi-Riddihough, V. benefited greatly from advice and intellectual guidance Rajagopalan, Francisco Reifschneider, Emil Salim, Jeff provided by an advisory committee of eminent experts: Sayer, Ethel Sennhauser, Ismail Serageldin, Robert Conor Boyd, Angela Cropper, Hans Gregersen, and Schneider, Richard Scobey, Frances Seymour, Emmy Hafild. Narendra Sharma, Susan Shen, Trayambkeshwar Colleagues both inside and outside the Bank Sinha, John Spears, William Stevenson, Susan Stout, challenged OED's work in progress, offered differing William Sunderlin, Wilfried Thalwitz, Guiseppe Topa, viewpoints and inputs, and made constructive sugges- Hans Verolme, Jeurgen Voegle, Steve Vosti, Thomas tions. They include: Bagher Asadi, Mark Baird, Tulio Walton, Andrew White, Thomas Wiens. Barbosa, Cornelis Baron van Tuyll van Serooskerken, Country authors served as sounding boards for the Christopher Barr, Christopher Bennet, Eduardo Bertao, exchange of ideas, to solicit input from professionals Hans Binswanger, Julian Blackwood, Juergen Blaser, and stakeholders, and to develop and test findings. Edward Bresnyan, Marjory-Anne Bromhead, Phillip The team is grateful to colleagues in the Bank Brylski, Bruce Cabarle, Mark Cackler, Gabriel Camp- country offices who helped make the country work- bell, Jeff Campbell, Kerstin Canby, Wilfred Candler, shops a success: John Garrison, Jin Liu, Neusa Anne Casson, Gonzalo Castro, Kenneth Chomitz, Queiroz, Elisa Romano, Ricardo L. B. Tarifa, Anis Kevin Cleaver, Luis Constantino, Arnoldo Contreras- Wan, Melanie Widjaja, and Datin Yudha. Special Hermosilla, Robert Crooks, Dennis de Tray, Peter thanks also go to the Brazilian Corporation for Agri- Dewees, Mohan Dharia, Chris Diewold, James Dou- cultural Research (EMBRAPA) and the Ministry of glas, Navroz Dubash, Hosny El-Lakany, Julia Fal- Environment in Brazil; the Ministry of Environment coner, Gershon Feder, Osvaldo Feinstein, Vincente and Forest in India; the Ministry of Finance, Badan Ferrer-Andreu, Douglas Forno, Rucha Ghate, Robert Pengurusan Asrama, the government planning agency Goodland, George Greene, Jarle Harstad, John Hay- (BAPENAS), and the Ministry of Forestry in Indonesia; ward, Peter Hazell, Ian Hill, Gese Horskotte-Weseler, and the Ministry of Forestry, the State Development Korinna Horta, William Hyde, Peter Jipp, Ian Johnson, and Planning Commission, and the Ministry of Finance Norman Jones, Lisa Jordan, David Kaimowitz, Chris in China. Keil, John Kelleberg, Irshad Khan, Robert Kirmse, This report benefited considerably from the diverse Nalin Kishor, Odin Knudsen, John Lambert, Edwin perspectives of a truly broad set of commentators. The Lim, Lennard Ljungmann, Tom Lovejoy, William consultation process was facilitated by funding from Magrath, Dennis Mahar, Jagmohan Maini, William the Swiss Agency for Development and Cooperation of Mankin, Michael Martin, Alex McCalla, Glenn Mor- the Royal Ministry of Foreign Affairs; the Department xvii T'he World Bank Forest Strategy: Strikin,g the Right Bala nce of Evaluation, Government of Norway; and the Minis- Kerstin Canby) was useful in ensuring the review's try of Foreign Affairs, Government of Netherlands. client orientation. OED also held a Forest Strategy Review Workshop in Finally, the review team would like to acknowl- January 2000, involving 60 stakeholders from govern- edge the contributions of Osvaldo Feinstein, Rema ments, the private sector, international and national Balasundaram, Elizabeth Campbell-Page, Jacintha nongovernmental organizations (NGOs), international Wijesinghe, William Hurlbut, and Bruce Ross-Larson. and bilateral organizations, the professional commu- This publication was prepared by the Dissemina- nity, and the Bank's senior management and staff. tion and Outreach team of the Partnerships and Detailed written and oral conmments from the workshop Knowledge Programs Group (OEDPK), under the guid- have been taken into account in this volume. Partici- ance of Elizabeth Campbell-Pag6 (task team leader), pants are listed and highlights of their comments are including Caroline McEuen (editor), Kathy Strauss presented in the Annexes. The comments in their (graphics and layout), and Juicy Qureishi-Huq (admin- entirety will be made available on the Internet. istrative assistant). Country workshops were held to discuss deaft country case studies in Brazil, China, India, and Indonesia. They involved particpation from stake- holder groups including government officials, NGOs, private sector, academics, and international agencies. In addition, OED participated in eight of the nine Uma Lele (Task Manager) regional consultations organized by the Bank's Envi- Nalini Kumar ronmentally and Socially Sustainable Development Syed Arif Husain Network (ESSD). The OED team's regular interaction Aaron Zazueta with the ESSD forest team (Odin Knudsen, James Lauren Kelly Douglas, Juergen Blaser, Mariam Sherman, and xviii Executive SuInnar EXECUTIVE RESUMEN RESUME SUMMARY ANALYTLQj,E The Forest Sector: A World En El sector forestal: un Le secteur forestier: Document Bank Policy Paper (1991) presented documento de politicas del Banco de politique generale de la Banque a comprehensive statement of the Mundial (1991) present6 una mondiale (1991) presentait de facon Bank Group's forest strategy. To- declaraci6n integral de la estrategia del detaillee la strategie forestiere du gether with the associated opera- Banco Mundial para el sector forestal. Groupe de la Banque mondiale. tional policy, it brought the Ese documento, junto con la politica Accompagne de la politique environmental agenda and partici- operacional vinculada con el mismo, operationnelle pertinente, il inscrivait patory approaches to policymaking incorpor6 el programa para el medio le programme de travail into the mainstream of the Bank's ambiente y los enfoques environnemental et l'approche activities. It also challenged the participatorios de la formulaci6n de concertee de la definition des grandes Bank Group to adopt a multisec- politicas a las actividades principales orientations en la matiere dans le toral approach that would conserve del Banco. Ademas, inst6 al Grupo del cadre des activit6s courantes de la tropical moist forests and expand Banco Mundial a adoptar un enfoque Banque. Il invitait en outre le Groupe forest cover. multisectorial tendiente a la de la Banque mondiale a adopter une d6marche multisectorielle en vue de pr6server les forfts tropicales humides et d'6tendre le couvert forestier. Or cette strat6gie n'a &6 appliqu6e que partiellement. Elle a certes communique un message clair sur le recentrage des objectifs du secteur forestier en faveur de la preservation, -p.. 5 , . - mais son efficacit6 est derneure limir6e et la viabilit6 de son impact sot le long terme reste A d6montrer. Les questions A ~~~~~~~~~~foresti~res ne sont pas bien int6gr&es A ~~~~~~~~~~~~~~aux Strat6gies d'aide aux pays ni aux g - l h analyses economiques et sectorielles de r -Iw la Banque. Enfin, la demarche ^- > '.' . ~ ^ F > 44 multisectorielle envisag6e n'a pas ete suivie. But the strategy has been only conservaci6n de los bosques humedos Les prets accordes au secteur partially implemented. Although it tropicales y a la ampliaci6n de la forestier ont augment6 de 78 %, mais sent a strong signal about changed cobertura forestal. ils representent moins de 2 % des objectives in the forest sector and Pero la estrategia fue aplicada en prets de la Banque. Les operations provided a new focus on conserva- forma parcial unicamente. Aunque purement foresdieres, qui concernent tion, the effectiveness of the strategy envio una clara sefial acerca de los traditionnellement des questions has been modest, and the sustain- cambios en los objetivos del sector majeures liees a la politique et a la ability of its impact is uncertain. forestal e incluy6 un nuevo enfoque de gestion forestieres, plafonnent. La Forest concerns have not been well la conservaci6n, la estrategia ha tenido Banque vient d'incorporer des integrated into Country Assistance una eficacia modesta, y la conditionalites forestieres a quelques Strategies, nor in the Bank's eco- sostenibilidad de su efecto es aun prets a l'ajustement et elle a commence xix The World Bank Forest Strategy: Striking the Right Balance nomic and sector work. The incierta. Los temas forestales no a s'attaquer aux probkmes de multisectoral approach envis- - se incorporaron en la debida la gouvernance et de la aged has not been followed. forma a las Estrategias de corruption. Mais il s'avere Although forest sector - asistencia a los paises, y a los beaucoup plus difficile lending has increased by 78 estudios econ6micos y d'assurer l'adhesion nationale percent, it remains less than 2 sectoriales del Banco. No se aux reformes. Une grande percent of overall Bank lend- sigui6 el enfoque multisectorial partie de l'augmentation des ing. Self-standing forest sector op- previsto. prets est due a l'inclusion de erations that traditionally deal with Aunque el financiamiento para el composantes forestieres dans des key forest policy and management sector forestal registr6 un aumento del projets agricoles ou issues have stagnated. The Bank 78%, a6n representa el 2% del environnementaux. Cependant, ces recently introduced forest sector financiamiento total otorgado por el operations sont generalement limitees conditionality in a few adjustment Banco. Las operaciones independientes au secteur des ressources naturelles et loans and has begun to address del sector forestal que se ocupan, ne concernent pas les menaces issues of governance and corrup- tradicionalmente, de los temas exterieures qui entrainent la perte de tion. But ensuring national owner- esenciales de la politica y la gesti6n del foret et de diversite biologique. De ship of reforms has been far more sector forestal estan estancadas. El plus, elles ont accru le risque associe difficult. Much of the increase in Banco introdujo recientemente la au portefeuille forestier. lending has been in the form of condicionalidad del sector forestal en Les pays aux ressources forest components in agricultural or algunos prestamos para fines de ajuste forestieres abondanres, sur lesquels est environmental projects. But these y ha comenzando a encarar los temas axee la strategie, cherchent a exploiter operations have typically been con- de la gesti6n de gobierno y la leurs forets a des fins l6gitimes de fined to the natural resource sector corrupci6n. Con todo, ha sido mucho developpement, mais aussi au profit and have not addressed threats ex- mas dificil asegurar la identificaci6n de groupes d'interet puissants. Aussi, ternal to the forest sector that bring nacional con las reformas. La mayor les deux objectifs principaux de la about forest and biodiversity loss. parte del aumento en el financiamiento strategie - ralentir le rythme du They have also increased the risk of se produjo en forma de elementos d6boisement et etendre le couvert the forest portfolio. forestales incluidos en los proyectos forestier - n'ont pas 6te atteints. Forest-rich countries, the focus agricolas o ambientales. Pero esas Certains pays oui les ressources of the strategy, have sought to ex- operaciones se limitaron, por lo forestieres sont rares, en revanche, ont ploit their forests for legitimate de- general, al sector de recursos naturales devance la Banque dans ce domaine: velopment purposes, as well as for y no se han ocupado de las amenazas ils se sont attaques aux problemes de the benefit of powerful interest externas al sector forestal que preservation et ont inclus les questions groups. As a result, the two central provocan perdidas de bosques y de forestieres dans la planification objectives of the strategy-slowing diversidad biol6gica. Ademas, han gen6rale du developpement. Dans ces down rates of deforestation and aumentado el riesgo de la cartera del pays, ia Banque a contribue a la increasing forest cover-have not sector forestal. realisation d'objectifs benefiques pour been achieved. Some of the forest- Los paises con gran riqueza de tous. Les pays en question ont pu poor countries, in contrast, have bosques, que son el centro de la reduire la pauvrete tout en inversant, been ahead of the Bank in address- estrategia, han procurado explotar ou du moins en minimisant, la perte ing problems of conservation and in sus bosques con fines legitimos de de couvert forestier et de biodiversite. incorporating forest concerns in desarrollo, como asi tambien para En Afrique, cependant, ou ]es pauvres overall development planning. In beneficiar a grupos de intereses sont le plus tributaires de la foret, tant these countries, the Bank has helped poderosos. En consecuencia, no se les activites economiques et sectorielles in the realization of win-win out- alcanzaron los dos objetivos que les prets au secteur forestier ont comes. The countries have been principales de la estrategia: la fortement diminue. able to alleviate poverty while im- disminucion del ritmo de la 11 ressort de l'examen effectue par proving, or at least minimizing, the deforestaci6n y el aumento de la l'OED que ces carences et ces resultats loss of forest cover and biodiversity. cobertura forestal. Por el contrario, s'expliquent par un certain nombre de xx Executive Summary At the same time, however, algunos de los paises que defauts de la strategie et de la in Africa-where dependence - carecen de bosques han politique operationnelle qui of the poor on forests is the encarado los problemas de iL'accompagne. greatest-both forest sector conservaci6n antes que el Banco En premier lieu, la strategie economic and sector work y han incorporado los temas n'aurait pas dfu se limiter aux and lending have declined forestales en la planificaci6n forets tropicales humides. Elle sharply. general del desarrollo. En esos neglige d'autres forets riches en The OED review concluded paises, el Banco colabor6 en el logro biodiversite, qui sont encore plus that these implementation failures de resultados ventajosos. Los paises menacees, plus importantes pour la and outcomes are rooted in a num- pudieron reducir la pobreza y, al planete et plus essentielles a la survie ber of limitations of the strategy and mismo tiempo, mejoraron o, por lo de quelque 300 millions de personnes the associated operational policy. menos, minimizaron, las perdidas de qui en tirent leur subsistance. First, the focus on tropical cobertura forestal y de diversidad En deuxieme lieu, si la strat6gie a moist forests was too narrow. Other biol6gica. Al mismo tiempo, sin bien diagnostique le problme des effets biodiversity-rich forests that are embargo, en Africa -donde los pobres externes, elle ne prevoyait pas de even more endangered, more impor- dependen en mayor medida de los mecanismes de financement permettant tant globally, and more critical to bosques- tanto los estudios de s'attaquer aux divergences entre les the survival of some 300 million econ6micos y sectoriales como el cofuts et avantages de la preservation au forest-dependent people were financiamiento del sector forestal, han niveau local et au niveau mondial. Aux neglected. disminuido pronunciadamente. echelons local et national, compte tenu Second, while the strategy diag- En su examen, OED lleg6 a la des autres imperatifs de developpement nosed the problem of externalities, it conclusi6n de que los errores y las et du manque de ressources financieres, did not provide financing mecha- consecuencias de la aplicaci6n estan les couts de la preservation rapportes a nisms to address the divergent costs enraizados en varias limitaciones de la ses avantages paraissent plus eleves aux and benefits of conservation at the estrategia y de la politica operacional collectivites et a l'aItat qu'a la local and global levels. At the local vinculada con la misma. communaute internationale. and national levels, communities and En primer lugar, el enfoque en los En troisieme lieu, la strategie governments, given other pressing bosques humedos tropicales tenia n'abordait pas les questions de development imperatives and their poca amplitud. No se tomaron en gouvernance, dont il apparait qu'elles limited ability to bear these costs, cuenta otros bosques con gran riqueza ont joue un r6le essentiel, se bornant a perceive the costs of conservation de diversidad biol6gica que corren traiter des aspects 6troits des relative to their benefits to be higher peligros a6n mayores, que son mas incitations economiques, tels que la than does the global community. importantes a nivel mundial, y que duree et le prix des concessions. Third, the strategy failed to son de vital importancia para En quatrieme lieu, les address governance issues, which alrededor de 300 millones de personas consultations ont ete trop restreintes. have proved to be central-instead, que dependen de los bosques para su Elles n'ont pas permis de prendre en confining itself to the narrow issues subsistencia. compte les positions de parties of economic incentive such as the En segundo lugar, aunque la prenantes importantes telles que les length and price of concessions. estrategia diagnostic6 el problema de gouvernements, le secteur prive et la Fourth, the consultative process los efectos externos, no estableci6 societ6 civile, positions qui expliquent was too narrow. It overlooked the mecanismos de financiamiento para en grande partie les r6sultats concrets perspectives of important stakehold- encarar los costos y beneficios obtenus sur le terrain. ers such as governments, the private divergentes de la conservaci6n en el En cinquieme lieu, la Banque sector, and the civil society, which ambito local y mundial. A nivel local y n'avait pas de strategie d'execution ni were essential in determining out- nacional, las comunidades y los de regime d'incitations, au plan des comes on the ground. gobiernos, debido a otras necesidades ressources en personnel et au niveau Fifth, the Bank lacked an internal acuciantes de desarrollo y a su de l'administration, pour faire face implementation strategy and an in- capacidad limitada para soportar aux couts de transaction eleves de la centive structure in terms of staff and dichos costos, consideran, a diferencia strategie forestiere. Au contraire, le xxi T he World Bank Forest Strategy: Striking the Right Balance administrative resources to de la comunidad mundial, que regime d'incitations en place support the high transaction - los costos de la conservaci6n etait de nature a d&courager les costs of the strategy. Instead, son superiores a sus beneficios. activites dans le secteur the incentive structure in place - En tercer lugar, la estrategia forestier. worked against involvement in no encar6 los temas de la - En sixieme lieu, la strategie forest operations. gesti6n de gobierno, cuya n' avait pas suffisamment prevu Sixth, there was insuffi- importancia ha quedado la montee des forces de la cient foresight regarding the power- demostrada, y, por el contrario, mondialisation et de la liberalisation ful forces of globalization and se limit6 a los temas puntuales de los economique, qui ont influe sur les economic liberalization that are af- incentivos econ6micos, como por resultats des operations du secteur fecting forest outcomes. ejemplo la duraci6n y el precio de las forestier. And, finally, the Bank adopted concesiones. Enfin, la Banque a fait montre an overly cautious approach in the En cuarto lugar, el proceso de d'une prudence excessive a la suite des wake of the controversy that sur- consulta fue excesivamente limitado. controverses qui ont entoure la rounded the formulation and imple- No tom6 en cuenta las perspectivas de formulation et la mise en ceuvre de la mentation of the policy. This los interesados importantes, como por politiquc forestiere, si bien que les discouraged risk-taking. Opera- ejempio los gobiernos, el sector services de la Banque ont evit6 de tional experience and the President's privado, y la sociedad civil, que eran prendre des risques. L'experience new initiatives already go beyond esenciales para determinar las operationnelle de la Banque et les the Bank's 1991 strategy. consecuencias sobre el terreno. nouvelles initiatives du president vont OED recommends that the En quinto lugar, el Banco carecia deja plus loin que la strategie de 1991. Bank adopt a dual strategy: de una estrategia interna de aplicaci6n L'OED recommande l'adoption y de una estructura de incentivos para d'une double strat6gie • In its global role, the Bank can el personal, y de los recursos capitalize on its convening administrativos necesarios para * Au niveau mondial, la Banque powers to facilitate partner- soportar el alto costo de transacci6n peut user de son influence pour ships that mobilize additional de la estrategia. Por el contrario, la faciliter des partenariats, afin de financial resources (over and estructura de incentivos vigente mobiliser des ressources above improved coordination desalentaba la participaci6n en las financieres additionnelles (qui of existing country-specific aid operaciones forestales. compl]teront l'amrlioration de la flows) for use in client coun- En sexto lugar, no se previ6 en coordination des apports tries, including new financing forma suficiente el poder de las fuerzas existants d'aide a des pays mechanisms of sufficient mag- de la globalizaci6n y de la donn6s) a l'intention des pays cli- nitude to achieve the global liberalizaci6n econ6mica que estan ents, en particulier a travers de goals of the revised strategy. afectando los resultados del sector nouveaux mecanismes de * In its country-level role, the forestal. financement suffisamment bien Bank can recognize and address Y, finalmente, el Banco adopt6 un dotes pour que soient atteints les the diverse realities in client enfoque extremadamente cauteloso objectifs internationaux de la countries, using all the instru- cuando surgi6 la controversia strategie revis6e. ments at its command and stress- alrededor de la formulaci6n y la * Au niveau des pays, la Banque ing long-term involvement, aplicaci6n de la politica, lo cual peut prendre en compte les partnerships with a range of desalent6 a las personas que estaban particularites des pays clients, en constituencies, learning by do- dispuestas a tomar riesgos. La recourant a tous les instruments ing, and the exchange of experi- experiencia operacional del Banco y dont elle dispose et en mettant ences across countries. This las nuev-: - ;.-iciativas dei Presidente ya I'accent sur une actioti a long entails a long-term commitment han sujacrado la estrategia del Banco terme, sur des partenariats avec by the Bank, with enough re- de 1991. diverses entites, sur sources for research, economic OED recomend6 que el Banco I'apprentissage sur le tas et sur and sector work, and consulta- adoptara una estrategia doble: l'&hange de donnees d'experience xxii EMecutive Sunmmar) tive processes complementary * En su papel a nivel mundial, entre pays. Pour cela, la Banque to, but independent of, its lend- - el Banco puede aprovechar su doit s'engager sur le long terme ing operations. poder de convocatoria para et consacrer des ressources i facilitar las asociaciones que suffisantes a la recherche, aux OED has identified seven movilizan recursos financieros analyses economiques et elements that would make adicionales (ademas de mejorar sectorielles et aux processus the revised Bank forest strat- la coordinaci6n de los flujos de consultatifs completant de egy more relevant to current cir- ayuda especifica para cada pais, maniere independante ses cumstances and strengthen the ya existentes) para ser utilizados operations de pret. Bank's ability to achieve its strate- en los paises clientes, y que gic objectives in the forest sector: incluyen nuevos mecanismos de L'OED a formule sept financiamiento cuya magnitud es recommandations en vue de mieux 1. Use the Bank's global reach to suficiente para alcanzar los adapter la strategie forestiere revis6e address both mechanisms and objetivos mundiales de la de la Banque aux circonstances finances for international re- estrategia revisada. actuelles et d'aider la Banque a realiser source mobilization on * En su papel a nivel de cada pais, ses objectifs strategiques dans le concessional terms outside nor- el Banco puede reconocer y secteur forestier: mal Bank lending activities. encarar las diversas realidades de 1. Mettre a profit les moyens Pursue measures such as the los paises clientes, mediante el d'action mondiaux de la Banque Prototype Carbon Fund and uso de todos los instrumentos a pour resoudre simultan6ment la other concessional financing su alcance y el enfasis en la question des mecanismes et celle mechanisms to compensate participaci6n a largo plazo, en las des financements, s'agissant de la countries that are producing asociaciones con una gran mobilisation de ressources forest-based international pub- variedad de representados, internationales de caractere lic goods such as biodiversity aprendiendo mediante la concessionnel en dehors de ses preservation and carbon se- practica, y en el intercambio de activites de pre habituelles. questration. experiencias entre los paises. Esto Rechercher des dispositifs tels 2.Establish partnerships with all entrania un compromiso a largo que le Fonds prototype pour le relevant stakeholders to fulfill plazo por parte del Banco, con carbone et d'autres mecanismes both country and global roles. recursos suficientes para la de financement concessionnels At the same time, the Bank investigaci6n, los estudios pour dedommager les pays qui must recognize the resource economicos y sectoriales, y los produisent des biens publics implications of meeting global procesos de consulta internationaux fondes sur les objectives and using participa- complementarios de sus forets, tels que la preservation de tory approaches. operaciones de financiamiento la diversite biologique et la fixa- 3. Broaden the focus on primary pero independientes de las tion du carbone. tropical moist forests to encom- mismas. 2. Etablir des partenariats avec pass all types of natural forests, toutes les parties prenantes including temperate and boreal OED identific6 siete elementos pertinentes pour remplir son role forests and other highly endan- que harian que la estrategia del Banco aussi bien au niveau des pays gered, biologically rich forests in para el sector forestal sea mas acorde qu'au niveau mondial. the tropics: the cerrados and a las circunstancias actuales y que Parallelement, la Banque doit Atlantic forest of Brazil, tropical fortalecerian la capacidad del Banco tenir compte de ce qu'implique, dry forests, and the Western para alcanzar sus objetivos sur le plan des ressources, la Ghats of India. The revised strat- estrategicos en el sector forestal: realisation d'objectifs de caractere egy should recognize that natu- international selon des methodes ral forests alone need not serve 1. Debe utilizar el campo de acci6n participatives. all forest functions. Some impor- del Banco a nivel mundial para 3. E3largir son action a tous les types tant functions (including meet- encarar tanto los mecanismos de forets naturelles, y compris les xxiii The World Ba nk Forest Strategy: Striking the Right Balance ing export and urban demand, como las finanzas para la forets temper6es et bor6ales et providing environmental ser- - movilizaci6n de recursos aux autres forets tres menacees, vices, and meeting the employ- internacionales en condiciones riches en ressources ment and livelihood needs of - concesionarias que no se biologiques: les cerrados et la the poor) can be served by tree encuentran dentro de la esfera foret atlantique au Br6sil, les planting, and its expansion de sus actividades normales de forets tropicales seches et les could also relieve pressure on financiamiento. Debe establecer Ghats occidentaux en Inde. 11 natural forests. medidas tales como el Fondo convient d'affirmer, dans la 4. Give due consideration to for- tipo para reducir las emisiones de strategie revis6e, que les forets est issues in all relevant sector carbono y otros mecanismos de naturelles ne sauraient a elles activities and macroeconomic financiamiento en condiciones seules remplir la totalite des work, and support activities concesionarias a fin de fonctions forestieres. Certaines that will help protect natural compensar a los paises que d'entre elles (telles que satisfaire forests of national and global producen bienes basados en los la demande a l'exportation et la value. The Bank should bosques, suministrados por el demande urbaine, fournir des streamline efforts to promote sector p6blico a nivel mundial, services environnementaux et forest conservation and devel- como por ejemplo la repondre aux besoins des opment and align these efforts preservaci6n de la diversidad pauvres en matiere d'emploi et de with the overall development biol6gica y la fijaci6n de carbono. subsistance) peuvent etre goals and aspirations of its 2. Debe establecer asociaciones con remplies par des plantations client countries. The synergy todos los interesados pertinentes d'arbres, dont l'expansion peut between development and con- para cumplir su papel a nivel de egalement attenuer les pressions servation objectives needs to be cada pais y a nivel mundial. Al exercees sur les forets naturelles. recognized and actively pro- mismo tiempo, el Banco debe 4. Tenir dument compte des moted through tree planting on reconocer las consecuencias que considerations forestieres dans degraded forest and non-forest tendra el cumplimiento de los toutes les activites sectorielles et lands, energy substitution, end- objetivos a nivel mundial y el uso analyses macroeconomiques user efficiency, research, tech- de los enfoques participatorios, pertinentes, et soutenir des nology, and dissemination. para los recursos. activites qui contribueront a 5. Reduce illegal logging by ac- 3. Debe ampliar el enfoque respecto proteger les forets naturelles tively promoting improved gov- de los bosques humedos ayant une valeur au plan national ernance and enforcement of tropicales primarios con el objeto et mondial. 11 conviendrait que la laws and regulations. This will de abarcar a todos los tipos de Banque rationalise les efforts require helping Bank borrowers bosques naturales, inclusive a los men6s en vue de promouvoir la to improve and implement ex- bosques de zonas templadas y los protection et le developpement isting laws and regulations. The bosques boreales y a otros des forets et harmonise ces ef- mobilization of national stake- bosques tropicales con gran forts avec les aspirations et les holders (especially civil society riqueza biol6gica que se objectifs de developpement and the private sector) to de- encuentran en grave peligro: los generaux des pays clients. 11 mand, implement, and monitor cerrados y el bosque atlantico de importe de reconnaitre la improved governance practices Brasil, los bosques secos synergie entre les objectifs de will also be necessary. tropicales, y los Ghats d6veloppement et ceux de la 6.Address the livelihood and em- Occidentales de la India. La preservation, et de la promouvoir ployment needs of all poor estrategia modificada deberia activement par la plantation people, while continuing to reconocer que no es necesario d'arbres dans les forets degradees safeguard the rights of indig- que los bosques naturales sean et sur les terres non forestieres, enous people. More attention los unicos que cumplen todas las par les energies de substitution, needs to be given to the effects funciones forestales. La par l'am6lioration de l'efficacite of the forest strategy on all the forestaci6n puede cumplir au niveau des utilisateurs, par la xxiv Executive Summary poor, particularly to the con- algunas funciones importantes recherche, la technologie et la flicting needs of different user - (entre las que se incluye diffusion. groups. satisfacer la demanda de 5. Reduire les coupes illgales en 7. Realign Bank resources exportaci6n y la demanda ur- promouvant activement la with Bank objectives in the bana, suministrar servicios - gouvernance et le respect des forest sector. The Bank's in- ambientales, y satisfacer las lois et des reglements. A cet ternal incentives and skill necesidades de empleo y effet, il faudra aider les mix need to be enhanced so subsistencia de los pobres), y su emprunteurs de la Banque a that operational staff feel they expansi6n podria aliviar, ademas, am6liorer et a mettre en ceuvre les have the support and confi- la presi6n sobre los bosques lois et les reglements existants. IL dence of Bank management naturales. sera egalement necessaire de and country borrowers and ac- 4. Debe tomar en cuenta los temas mobiliser les parties prenantes cess to the human and financial forestales en todas las actividades nationales (tout particulierement resources needed to address the y estudios macroecon6micos la societe civile et le secteur prive) risky and controversial issues pertinentes, y prestar apoyo a las pour qu'ils exigent, appliquent et of the forest sector. The Bank actividades que ayuden a surveillent l'application de pra- must also diligently and rou- proteger los bosques naturales tiques de gouvernance tinely monitor compliance que son valiosos a nivel nacional ameliorees. with all safeguard policies in y mundial. El Banco deberia 6. Se pencher sur les besoins de tous its investment and adjustment racionalizar los esfuerzos por les pauvres en matiere de lending. promover la conservaci6n y el subsistance et d'emploi, tout en desarrollo de los bosques y continuant i garantir les droits adaptar esos esfuerzos a los des populations autochtones. 11 objetivos generales de desarrollo convient d'accorder une attention y a las aspiraciones de sus paises accrue aux effets de la strat6gie clientes. Se debe reconocer y forestiere sur tous les pauvres, et promover activamente la sinergia en particulier aux besoins entre los objetivos de desarrollo y contradictoires des differents de conservaci6n a traves de la groupes d'utilisateurs. forestaci6n de los bosques 7. Consacrer au secteur forestier des empobrecidos y las tierras sin ressources a la mesure des bosques, la sustituci6n de objectifs. IL importe d'ameliorer les energia, la eficacia de usuario fi- incitations internes et la gamme de nal, la investigaci6n, la tecnologia compeences au sein du personnel, y la difusi6n. afin que les services operationnels 5. Debe reducir la explotaci6n for- sachent qu'ils jouissent du soutien estal ilegal mediante la et de la confiance de la direction de promoci6n activa de mejoras en la Banque et des pays la gesti6n de gobierno y la emprunteurs, et qu'ils disposent aplicaci6n de las leyes y des ressources humaines et reglamentaciones. Con ese fin, se financieres dont ils ont besoin debera ayudar a los prestatarios pour s'attaquer aux problemes del Banco a mejorar y aplicar las difficiles et epineux du secteur leyes y reglamentaciones vigentes. forestier. La Banque doit aussi Tambien sera necesaria la s'assurer systematiquement et avec movilizaci6n de los interesados diligence de l'application de toutes nacionales (especialmente la ses politiques de protection dans sociedad civil y el sector privado) ses prets d'investissement et dans para exigir, aplicar y supervisar ses prets d'ajustement. xxv The World Banik Forest Strategy: Striki ng the Right Balance las prdcticas de buena gesti6n - de gobierno. 6. Debe encarar las necesidades de sustento y empleo de todos los pobres, y al mismo tiempo proteger los derechos de los pueblos indigenas. Se debe prestar mas atenci6n a los efectos de la estrategia del sector forestal en todos los pobres, en particular a las necesidades opuestas de los distintos grupos de usuarios. 7. Debe adaptar los recursos del Banco a sus objetivos en el sector forestal. Se deben reforzar los incentivos internos y la combinaci6n de especialidades del Banco para que el personal operativo sienta que cuenta con el apoyo y la confianza de la administraci6n del Banco y de los paises prestatarios y con el acceso a los recursos humanos y financieros que son necesarios para encarar los temas riesgosos y controvertidos del sector for- estal. Ademas, el Banco debe supervisar en forma diligente y rutinaria el cumplimiento de todas las politicas de salvaguardia en su financiamiento para fines de inversion y de ajuste. xxvi GLOSSARY Because this report evaluates the implementation of the emphasizes partnerships among governments, donors, World Bank's 1991 Forest Strategy and Policy, it retains civil society, the private sector, and other development most of the definitions used in the 1991 report The Forest actors. Perhaps most important, the country is in the lead, Sector: A World Bank Policy Paper [*]. The sources of both "owning" and directing the development agenda, other definitions are: Review of Implementation of Forest with the Bank and other partners each defining their Sector Policy (World Bank 1994a) [* ]; State of the support for the country's plans. World's Forests (FAO 1999c) [t]; and A Sustainable Forest Future? (Pearce, Putz, and Vanclay 1999) [tI; and CLEAN DEVELOPMENT MECHANISM (CDM): Ar- Sustaining Tropical Forests: Can We Do It, Is It Worth ticle 12 of the Kyoto Protocol calls for the establish- Doing? Report of the Discussion Meeting held at Graves ment of the CDM to promote investment in sustainable Mountain Lodge, Syria, VA, October 2-7, 1998 [S§. energy projects. CDM is intended to encourage invest- ment in sustainable energy projects in the developing tAFFORESTATION/REAFFORESTATION: Establish- world through investments in technology to reduce ment of a tree crop in an area from which it has always greenhouse gas emissions by an investor and a partner or long been absent. in a developing country. After certification require- ments have been met, reductions in emissions would *AGROFORESTRY: Land use system in which woody convert into "credits" for the environmental benefit perennials are used on the same land as agricultural produced by the investment, with the value of the credit crops or livestock in some form of spatial arrangement shared by the investor and the partner. or temporal sequence. *CLOSED FOREST: Forest with a stand density BIOPROSPECTING: Identifying commercially or greater than 20 percent of the area, and where tree medically useful chemicals in living organisms. crowns nearly contact one another. ""BOREAL FORESTS: Forests located in areas with '"COMMON PROPERTY: Tenure system whereby re- mean annual temperatures of less than -4°C, dominated sources are collectively owned and managed and non- by pine, fir, spruce, larch, and birch, and covering owners are excluded from access to the resource. large areas of Canada, Russia, and Scandinavia. *CONSERVATION: Rational and prudent manage- *CARBON FIXATION; CARBON SEQUESTRA- ment of natural resources to achieve the greatest TION: The conversion by plants, through photosynthe- benefit, while maintaining the potential of the resource sis of atmospheric carbon dioxide, into organic to meet future needs. compounds. Substantially changing forests by clearing, burning, and so on, increases the release of carbon- §CONSERVATION FORESTRY: The application of based gases into the atmosphere, thereby contributing verifiable good practices for the management of forest to the greenhouse effect. resources, including woodland and trees, in ways that are ecologically sound, economically viable, socially CERRADOS REGION: This plateau, covering 21 responsible, and environmentally acceptable and percent of the Brazil's land area, is the country's which do not reduce the potential of these resources to second-largest ecoregion after the Amazon. Its habitats deliver multiple benefits over time. (See also preserva- include savanna, scrub, grasslands, and dry forest. tion forestry) COMPREHENSIVE DEVELOPMENT FRAMEWORK tCONVENTIONAL LOGGING: Conventional log- (CDF): The CDF is a holistic approach to development ging has come to be viewed as less concerned with adopted by the World Bank. It seeks a better balance in forest regeneration through management-frequently policymaking by highlighting the interdependence of all lacking government control-and unsustainable, that elements of development-social, structural, human, gov- is, not focused on long-term timber supplies. ernance, environmental, economic, and financial. It xxvii The World Bank Forest Strategy: Striking the Right Balance *CONVERSION FOREST: Forest assigned for conver- (3) The third modification constitutes a global sion to agriculture or other non-forest use. analysis and would also include the gains and losses of people outside the country in which *COMMERCIAL LOGGING: Extraction of timber in the forest is located. large quantities for industrial use or export markets. ECONOMIC AND SECTOR WORK (ESW): ESW is COUNTRY ASSISTANCE STRATEGY (CAS): A broad analysis that underpins the Bank's lending operations, development framework produced by the Bank in informs policy dialogue, responds to country requests collaboration with the government and other stake- for specific advisory tasks, and provides policy advice holders and tailored to individual country needs. The to the development community. CAS is a central tool of the Bank's management and Board for guiding and reviewing the Bank Group's *EXTERNALITY: A cost (or a benefit) of an economic country programs and is an important benchmark for activity by one party that is unintentionally imposed on judging the impact of its work. (or received by) another party without compensation (or payment), and leads to inefficiencies in competitive *DEFORESTATION: Change of forest with depletion of markets. tree crown cover to less than 10 percent. The clearing of forests and the conversion of land to non-forest uses. 'FARM FORESTRY: People-oriented forestry that is carried out on private farmlands. *DEGRADATION: Biological, chemical, and physical processes that result in loss of the productive potential of tFOREST: Ecosystem with a minimum of 10 percent natural resources in areas that remain classified as crown cover of trees and/or bamboo, generally associ- forests. Degradation may be permanent, although some ated with wild flora and fauna and natural soil forests may recover naturally or with human assistance. conditions and not subject to agricultural practices. Forests are in two categories: *DEPLETION: Reduction in forest area or volume as a result of deforestation. * Natural forests: forests composed of tree species known to be indigenous to the area. *DESERTIFICATION: Degradation of the land that * Plantation forests: established artificially by ultimately leads to desert-like conditions. afforestation on lands previously non-forested within living memory, or established artifi- *DESIGNATED FOREST: Forest legally set aside for cially by reforestation on land that was preservation or production. forested, by replacement of the indigenous species with a new and essentially different 'ECOTOURISM: Nature tourism, species or genetic variety. tECONOMIC ASSESSMENT: Makes three potentially FOREST PROJECTS: Projects in the agriculture major adjustments to a financial analysis: sector of the World Bank that are classified as forest projects. (1) The first modification adjusts financial costs and benefits to reflect shadow prices. A shadow FOREST-COMPONENT PROJECTS: Projects in vari- price, for example, the price of labor or the ous sectors of the World Bank (including environment) exchange rate-differs from a financial price in that have specific activities or components directly that it reflects the true opportunity cost of the related to forests. resources in question. (2) The second modification adds in all environ- **JOUNT FOREST MANAGEMENT (JFM): The mental and social consequences that affect the transfer of a share of benefits from government to rural well-being of anyone within the nation. communities in exchange for implementing agreed forest management programs in state forests. xx-viii Glossary tLOGGING: The process of harvesting timber from a *REFORESTATION: The replacement or establish- forest, logging has come to be used in the context of ment of a tree crop on forestland. unsustainable cutting, which is cutting that is not focused on long-term timber supplies. *SECONDARY FOREST: Forest subject to a light cycle of shifting cultivation or to various intensities of logging, IMANAGEMENT: Relates to the management of but that still contains indigenous trees and shrubs. resources, inventorying, and yield calculation and to silvicultural practice (such as timber cutting). *SHIFTING CULTIVATION: Farming systems in which land is periodically cleared, farmed, and then *MARKET FAILURE: A deviation from the conditions returned to fallow; synonymous with slash-and-burn or required for the efficient allocation of resources by a swidden agriculture. purely competitive market. "*SOCIAL FORESTRY: A term used to describe a type **NON-TIMBER FOREST PRODUCTS (NTFP): For- of project that was first developed in the late 1970s. est products, other than timber, such as fruits, medi- Such projects included tree planting carried out as a cines, nuts, and bushmeat. community undertaking, and sometimes farm forestry as well, with a focus on production of fuelwood and *OPEN ACCESS: Absence of ownership claims over poles. More recently, the term has been used to refer to resources, permitting and leading to uncontrolled and any kind of forest activity in which poor people are the excessive attempts at appropriation and use. main beneficiaries. *OPEN FOREST: Forest in which the tree canopy layer tSOCIAL GAINS/LOSSES: Refers to the wider social is discontinuous but covers at least 10 percent of the perspective; the jurisdiction may be local, national, area and in which the grass layer is continuous. regional, or global. In theory, local, national, and global perspectives on "social" gains/losses may di- "PRESERVATION FOREST: Forest designated for total verge. National and global agencies should take the protection of representative forest ecosystems in which "social" standpoint, but it is well known that this is not all forms of extraction are prohibited. always the case. * PRIMARY FOREST: Relatively intact forest that has STAKEHOLDERS: Parties interested in and/or affected been essentially unmodified by human activity for the by an activity or policy. past 60 to 80 years. *STUMPAGE OR ROYALTY: Fee or price of standing tPRIVATE GAINS/LOSSES: Refers to the private inter- trees before logging. ests of the stakeholder; that is, what benefits him/her. SUSTAINABLE FOREST MANAGEMENT (SFM): "PRODUCTION FOREST: Forest designated for sus- Several definitions are in use: *'(i) The continuous flow tainable production of forest products. of timber products or other specific goods or services, many of which may be essential for sustaining the *PROTECTION FOREST: Forest designated for stabi- livelihood of indigenous forest dwellers. *(ii) The lization of mountain slopes, upland watersheds, fragile continued existence of the current ecosystem. *(iii) The lands, reservoirs, and catchment areas. Controlled long-term viability of alternative uses that might sustainable extraction of non-wood products could be replace the original ecosystem. (iv) Utilization of allowed. forests without undermining their use by present and future generations. Different systems of management IREDUCED-IMPACT LOGGING: Well-managed log- are required for each category of forests, depending on ging, usually supervised. the intended output. (v) A system of forest management xxix Thc World Bank Forest Strategy: Striking the Right Balance that aims for sustained yields of multiple products from *TROPICAL DRY FOREST: Open forest with continu- the forest over long periods. -*(vi) Management of ous grass cover; distinguished from other tropical forests to achieve a continuous flow of forest products forests by distinct seasonality and low rainfall. Includes and services of all kinds. woody savannas and shrublands. ::SUSTAINABLE TIMBER MANAGEMENT: A forest *TROPICAL MOIST FOREST: Forest situated in areas management system that aims for sustained timber receiving not less than 100 millimeters of rain in any yields over long periods. month for two out of three years, with a mean annual temperature of 240C or higher; mostly low-lying, *SUSTAINED YIELD: Production of forest products generally closed. with an approximate annual balance between net growth and harvest. WORLD BANK GROUP: For the purpose of this study, World Bank Group refers to the activities of the * *TEMPERATE FOREST: Forest located in areas with International Bank for Reconstruction and Develop- mean annual temperatures between -3°C and 5°C, ment (IBRD), International Development Association dominated by broad-leafed tree species. Temperate (IDA), International Finance Corporation (IFC), and forests are characterized by heavy human intervention Multilateral Investment Guarantee Agency (MIGA). or conversion into plantations. xxx ABBREVIATIONS AND ACRONYMS AFR - Africa Region AGR - Agriculture Department (World Bank) APL - Adaptable Program Loan ARPP - Annual Review of Portfolio Performance ATO - African Timber Association CAS - Country Assistance Strategy CBO - Community-based organization CDF - Comprehensive Development Framework CDM - Clean Development Mechanism CFI - Continuous forest inventory CGE - Computable general equilibrium CGIAR - Consultative Group on International Agricultural Research CIFOR - Center for International Forestry Research CODE - Committee on Development Effectiveness DEC - Development Economics Department (World Bank) DFID - Department for International Development EAP - East Asia and Pacific Region ECA - Europe and Central Asia Region EIA - Environmental impact assessment EMBRAPA - Brazilian Corporation for Agricultural Research (Empresa Brasileira de Pesqisa Agropecuaria) ENV - Environment Department (World Bank) ERR - Economic rate of return ESSD - Environmentally and Socially Sustainable Development (Network) ESW - Economic and sector work FAO - Food and Agriculture Organization Fl - Financial intermediary FRR - Financial rate of return FSC - Forest Stewardship Council GDP - Gross domestic product GEF - Global Environment Facility GNP - Gross national product IADB - Inter-American Development Bank IBRD - International Bank for Reconstruction and Development (World Bank) ICR - Implementation Completion Report ICRAP - International Center for Research in Agroforestry ID - Institutional development IDA - International Development Association IFC - International Finance Corporation IFF - Intergovernmental Forum on Forests IFIA - Intermountain Forest Association IFPRI - International Food Policy Research Institute IITA - International Institute of Tropical Agriculture IPF - Intergovernmental Panel on Forests IRR - Internal rate of return IUCN - International Union for the Conservation of Nature LCR - Latin America and the Caribbean Region LIL - Learning and Innovation Loan M&E - Monitoring and evaluation xxxi The World Bank Forest Strategy: Striking the Right Balance MNA - Middle East and North Africa Region MIGA - Multilateral Investment Guarantee Agency NFP - National Forest Program NGO - Nongovernmental organization NRM - Natural resource management OCS - Operational Core Services (World Bank) OED - Operations Evaluation Department OEG - Operations Evaluation Group (IFC) OP - Operational Policy PA - Protected area PAD - Project Appraisal Document PAR - Performance Audit Report PFE - Permanent forest estate PPG-7 - Rain Forest Trust/Pilot Program PREM - Poverty Reduction and Economic Management (Network) PSR - Project Status Report QAG - Quality Assurance Group RDV - Rural Development Department (World Bank) RUTA - Regional Unit for Technical Assistance (Costa Rica) SAR - South Asia Region SDC - Swiss Agency for Development and Cooperation SDV - Social Development Department (World Bank) SFM - Sustainable forest management SME - Small and medium-size enterprises ITAP - Tropical Forest Action Plans TMF - Tropical moist forest UNDP - United Nations Development Program WRI - World Resources Institute WTO - World Trade Organization WWF - World Wide Fund for Nature/World Wildlife Fund All dollar ($) figures are in U.S. dollars. xxxii The Challenges of Forest Strategy F l ormulation of the World Bank's 1991 Forest Strategy was prompted by alarming esti- mates that deforestation was affecting 17 to 20 million hectares a year in the developing world and that tropical moist forests were shrinking inexorably.1 There was also concern that the Bank's lending activities had contributed to these trends.2 With environmental awareness growing, the Bank crafted and endorsed a conservation-oriented forest strategy. The strategy explored the complex relationships between such global concerns as biodiversity and climate change, and such national issues as soil and water approach to forest issues, stressing that factors outside the conservation and the protection of indigenous peoples. forest sector may be more important in explaining The strategy broke new ground in several respects deforestation than those within the sector. It proscribed (box 1.1). It reoriented Bank forest operations toward Bank Group financing of commercial logging in primary environmental sustainability. It was the first compre- tropical moist forests because of uncertainties about the hensive sector strategy to bring the conservation valuation of forest environmental services, inadequate agenda into the mainstream of World Bank Group knowledge of sustainable forest management systems, activities. It emphasized the strong need to protect and and the irreversibilities associated with the loss of tropical conserve primary tropical moist forests, and identified moist forests. The financing of infrastructure projects 20 countries that were to be given particular attention (such as roads, dams, and mines) that might lead to loss of in the Bank's country assistance because their tropical forests was made subject to rigorous environmental moist forests were threatened. ' Eventually, the Opera- assessment. The ban on Bank financing of commercial tional Policy on forestry was classified as a safeguard logging and the independently developed requirement for policy (see Annex 1).4 This was also the first World environmental assessments of Bank projects sent a clear Bank strategy formulated with the active participation signal that the institution would not be involved in of stakeholders outside the Bank. The consultative activities associated with deforestation in primary tropi- process focused largely on nongovernmental organiza- cal moist forests. tions-it did not secure a broad-based consensus among developing countries, the private sector, and civil Experience with the 1991 Forest Strategy society-but it opened the door for multistakeholder The intent of the 1991 Forest Strategy (box 1.1) is now consultations in Bank policymaking. generally reflected in the Bank's forest investments. The strategy assessed the importance of tree planting The lessons of experience, and concurrent global to meet the fuelwood and other basic needs of the poor. It trends, reinforce its aims. Although some key borrow- also emphasized the importance of a multisectoral ers consulted during this OED review were unaware of 1 The World Ba nk Forest Strategy: Striking thc Right Balance BOX 1.1. BANK FOREST STRATEGY: THE 1991 FOREST PAPER AND THE 1993 OPERATIONAL POLICY DIRECTIVE BgB ' l ,he 99-page World Bank and specified the principles and general policy dialogue and Coun- publication The Forest conditions for Bank involvement try Assistance Strategy; and the Sector: A World Bank in the forest sectors of its client promotion of international coop- Policy Paper was published in countries. As the first instance of eration, policy and institutional September 1991. This paper significant outside stakeholder reform, resource expansion, and (henceforth the 1991 forest paper) participation in the formulation of forest preservation. The Board also represented the initial compre- a Bank sector strategy, this docu- endorsed the statement that "in hensive statement of a new direc- ment came to be viewed by the tropical moist forests the Bank will tion for the Bank's forest strategy. outside world and many Bank adopt, and will encourage govern- A two-page Operational Policy staff as embodying the new direc- ments to adopt, a precautionary directive (OP 4.36, produced in tion of the Bank's forest strategy. policy toward utilization ... Spe- 1993; see Annex I) reflected the Both the Bank's Board and civil cifically, the Bank Group will not policy content of the paper, and a society referred to this document, under any circumstance finance Good Practices summary (GP as well as OP 4.36, when they commercial logging in primary + 4.36; in Annex J) provided opera- asked OED for an independent tropical moist forests. Financing of tional direction to Bank staff. evaluation of the Bank's forest infrastructural projects .. . that The 1991 forest paper, the OP, policy. may lead to loss of tropical moist and the GP together are the sub- The foreword for the 1991 for- forests will be subject to rigorous ject of OED's evaluation. est paper was signed by then Bank environmental assessment as man- In today's Bank terminology, President Barber Conable, but the dated by the Bank for projects that the 1991 forest paper sets out a Board was not asked to-and did raise diverse and significant envi- Bank strategy and the OP defines not-comprehensively approve the ronmental and resettlement issues. Ithe policy, although some outsid- paper. It did discuss the paper, A careful assessment of the social ers consider this distinction con- however, and endorsed specific issues involved will also be fusing at best. The 1991 forest principles, including the ban on required" (p. 19). Finally, the paper gave guidance on policy financing commercial logging in Board also approved a specific Idirections, programmatic primary topical forests; the incor- section on conditions for Bank Vemphases, and good practices, poration of forestry issues into the involvement. the Bank's 1991 Forest Strategy, the environmental the neglect of forests that are at least as endangered as movement in developing countries is supportive of its the tropical moist forests-Brazil's Atlantic forests, conservation aims and has become far more active. forests in the Western Ghats of India, the biodiversity- Experience with the strategy indicates that some rich temperate and boreal forests of Eastern Europe, of its prescriptions were subject to many interpreta- and the tropical dry forests of Africa on which tions, so that results often differed from expectations. millions depend for their livelihoods. In the "new The effects of globalization and liberalization, the Bank," the central mission of poverty alleviation and unexpected diversity and complexity of forest circum- sustainable development makes it imperative that the stances, and the large number of competing interests Bank's forest strategy be eclectic, with a focus bal- produced more variation in outcomes, and fewer anced between conservation and development, consis- universally applicable principles, than the framers of tent with its mission and the knowledge base currently the strategy expected. The key to successful forest at its disposal. The need for a less constraining, more strategy has proved to be conflict resolution more proactive strategy is illustrated by the definition of often than simply avoiding harm or seeking to protect primary forests adopted in the 1991 Forest Strategy: the vulnerable. Important errors of omission included "relatively intact forest that has been essentially 2 The Challenges of Forest Strategy Both the 1991 forest paper and der controlled sustained-yield con- universally agreed-upon criteria the OP emphasize that the Bank ditions allows forest management and indicators. will not finance commercial log- under specific conditions (which Based on the 1991 strategy § ging in primary tropical moist for- the drafters of the OP thought gave statement, the OP also states ests. The 1993 OP adds that the the Bank some flexibility), the OP that "the Bank distinguishes Bank "does not ... finance the raised more questions than it investment projects that are purchase of logging equipment for answered. According to survey exclusively environmentally pro- g use in primary tropical moist for- results, Bank staff do not consider tective . . . or supportive of est" (para. la). The OP also makes the OP to be flexible on this point. small farmers . . . from all other a confusing statement that "in ar- (Outsiders who reviewed this forestry operations." It goes on eas where retaining the natural for- report during the consultation pro- to say that "projects in this lim- est cover and the associated soil, cess considered the shift from ited group may be pursued only water, biodiversity, and carbon "policy" to "strategy" confusing at where broad sectoral reforms sequestration values is the object, best.) The Bank will need a more are in hand, or where remaining the Bank may finance controlled focused forest strategy paper and a forest cover in the client country - sustained-yield forest manage- clear Operational Policy consistent is so limited that preserving it in ; ment" (para. lf). However, the with the strategy if its future lend- its entirety is the agreed course 1991 paper stressed a lack of ing and nonlending activities are to of action." This report recom- T' agreement on what constitutes sus- result in improved forest manage- mends that the Bank could more tainable forest management and ment practices. This report argues usefully and proactively work offered three different definitions that current practices tend to be with stakeholders sympathetic to for it. All three include the man- environmentally destructive and reform in borrowing countries, f agement of forests for multiple socially inequitable in many coun- rather than waiting for reforms uses, as distinct from timber pro- tries. What constitutes "sustain- to be put in place before becom- ¢ duction alone, to which logging able" forest management remains ing engaged in the sector. normally refers (see Glossary). unresolved and location-specific, I Although this provision in the OP although the debate on forest man- to finance forest management un- agement has moved on, using some unmodified by human activity for the past 60 to 80 strategy did not address the implications of these years." But most primary forests in developing coun- conflicting priorities or the implicit gap in global tries have some human activity. By using so restrictive public resources. It mentioned only the Global Environ- a definition, the strategy implied the preservation of ment Facility, which has limited resources and no primary tropical moist forests, rather than their mandate to compensate countries for the potential loss conservation. Extending this definition to boreal and of income from forest protection. The 1991 paper failed temperate forests would pose problems for the Bank's to recognize the scale of the public goods dilemma, conservation and production activities even in those which requires the global community to pay forest forests. owners to preserve natural forests. A rational solution The 1991 forest paper did identify a fundamental to payments for environmental services is required to problem: national governments (as well as individuals ensure the conservation of natural habitats of interna- and community groups) often want to realize the tional and national importance. Such payments would capital found in standing trees when a wider concern be connected to the negotiation of transparent agree- for the global environment dictates the conservation of ments based on broadly understood rules that are both forests and the protection of biodiversity.5 But the enforceable and enforced. 3 The World Bank Forest Strategy: Striking the Right Balance BOX 1.2. THE WORLD BANK'S FOREST STRATEGY AT A GLANCE I he goal of the Bank's forest sector strategy was to address the twin challenges of rapid deforestation, I especially of tropical moist forests, and the inadequate planting of new trees to meet the rapidly grow- J _ ing demand for wood products. These challenges were viewed as being connected to five key factors: * Externalities that prevented market forces from achieving socially desired outcomes * Strong incentives, particularly for the poor, to cut trees * Weak property rights in many forests and wooded areas * High private discount rates among those encroaching on the forests * Inappropriate government policies, particularly concession arrangements. Five principles were proposed for Bank involvement in the forest sector: * A multisectoral approach * International cooperation • Policy reform and institutional strengthening : Resource expansion • Land use controls (including zoning, demarcation, and controls associated with tenure issues) to preserve intact forests. I Bank-financed activities were expected to comply with seven conditions: * No Bank Group financing for commercial logging in primary tropical moist forests * The adoption of policies and an institutional framework consistent with sustainability * A participatory approach to the management of natural forests * The adoption of comprehensive and environmentally sound conservation and development plans, with the roles and rights of key stakeholders, including local people, clearly defined * Basing commercial use of forests on adequate social, environmental, and economic assessments * Making adequate provisions to maintain biodiversity and safeguard the interests of local people, includ- ing forest dwellers and indigenous peoples * Establishing adequate enforcement mechanisms. tit itkiti iiereittiarnw tItreiltie -eteurie -e it_, i a ts~tits*euritttietuti eeu e U Uncertain valuations and weak cause-and-effect than assumed in the 1991 Forest Strategy. The consulta- relationships make assessing the costs and benefits of tive process for this OED study found that many forest conservation contentious. The benefits are difficult developed country nationals and some international to measure, value, or capture; occur in the long run; and nongovernmental organizations tend to consider all the are global, national, and local. The costs, however, tend benefits of conservation to be national or local and to be local and immediate.6 The Bank's economic and question the need for grant financing. Others, however, sector work in Costa Rica, for example, found more than acknowledge that the Bank cannot achieve global 60 percent of the benefits of conservation in that country objectives without such financing. to be global. Conservation activities are increasingly Deforestation and degradation of natural forests being stressed in developing countries and where such continued in many countries throughout the 1990s. activities are of national importance. In China, Colom- Countries with tropical moist forests have continued to bia, and Costa Rica, the governments-on their own log their forests on a massive scale, often illegally and initiative and within their limited means-have already unsustainably, because of the higher returns to alterna- begun to undertake investments in watersheds of tive land uses made possible by a synergy among national importance. However, the international agricultural technologies, trade liberalization, and community's willingness to pay for conservation activi- infrastructure investments (see Brazil, Indonesia, and ties in developing countries remains low (Pearce and Cameroon country studies). The Bank's decision not to others 1999, Annex 2)-and appears to be even lower finance commercial logging in tropical moist forests 4 The Challenges of Forest Strategy does not appear to have made any difference in the An important issue being debated globally is how extent of logging. In many countries there is as much to achieve a balance between the developmental and (or more) illegal logging as legal production. In forests environmental roles of forests. The principles of sus- already being exploited in an environmentally and tainable forest management range from the most basic socially unsustainable manner, the Bank has therefore (focusing only on the continuous flow of forest prod- often lost the opportunity to improve forest manage- ucts) to the more complex (including the "application ment. Little progress can be made until the valuation of of verifiable best practices for the management of forest standing trees-and the associated biodiversity, prod- resources, including woodland and trees, in ways that ucts, and services they provide-reflects the "real" are ecologically sound, economically viable, socially value of forests to society, and until institutions of responsible, and environmentally acceptable and that governance are strong enough to control illegal log- do not reduce the potential of these resources to deliver ging and to enforce forest management using well- multiple benefits").' The problem is applying these defined criteria and indicators. In many forest-rich principles when it is difficult to measure and attribute countries demand for timber, a major cause of defores- costs and benefits. Different stakeholders value forests tation, is far more attributable to the processes of differently. Increasingly, for example, people recognize industrialization, urbanization, and the demand for that real gains could be achieved by the application of exports than to fuelwood consumption by the poor. The reduced-impact logging techniques, and there is grow- 1991 forest paper did not anticipate these domestic and ing consensus in the international forest community international demand trends and assumed that develop- about parameters to be considered in defining sustain- ing countries would meet their urban needs through able forest management (partly because of such initia- imports from temperate countries. tives as the Intergovernmental Panel on Forests and the In addition to analytic and political challenges, Intergovernmental Forum on Forests). Many interna- implementation of the strategy depends on the incen- tional and national organizations are in the process of tives affecting various actors. Governments often developing criteria and indicators for such manage- derive revenues from forests because, in most develop- ment. There is considerable disagreement, however, ing countries, forests are owned by the state. In some about the nature and extent of differences in the private cases, such as China and India, government-mandated and social costs and benefits between conventional and arrangements for marketing and processing forest low-impact logging. Broad agreement has yet to be products work against improved forest management. achieved on either the financial viability and the long- When individuals connected with governments benefit term fiscal implications of promoting reduced-impact financially from such arrangements, as in Indonesia, logging or on the incentives needed to promote re- the outcomes can be at odds with broader socioeco- duced-impact logging. These must be worked out nomic and environmental goals. Decentralization of country by country. power from central or provincial governments, without Given so much close scrutiny and the high per- payments for environmental services, leads to defores- ceived risk to the Bank's reputation, the Bank has been tation when local objectives conflict with national or reluctant to get involved, not only in the management international policy goals. of timber production in primary tropical moist forests, Policy and institutional design is therefore crucial which the 1993 Operational Policy restricted, but even for forest strategy implementation. If forest sector in the management of secondary tropical forests, which strategies are to be effective, they must suit the specific the policy did not restrict. But the Bank could signifi- geographic, biophysical, demographic, sociocultural, cantly help control deforestation and degradation by and economic circumstances for which forest interven- helping borrowing countries improve their forest man- tions are designed. The coordination and relative agement practices-through improved policies, tech- balance among considerations of forest management, nologies, and enforcement of regulations-instead of poverty alleviation, indigenous rights, and economic waiting for a consensus on sustainable forest manage- development depend on agro-ecological circumstances, ment to develop, especially in the secondary natural population densities, levels of development, and politi- forests. The pertinent question is how and how much cal will. Bank strategy should be flexible enough to will a forest be exploited, rather than if it will be, and adapt to diverse circumstances. who will gain or lose in the process. 5 Tl e World Ba nk Forest Strategy: Striking the Right Bualance Country Conditions and Forest Strategy developing countries, and public opinion about the In the past, forests were viewed as resources to be environment is changing-even in countries with low exploited to facilitate growth, but even some of the levels of median per capita income. Many countries earliest analyses of forest use-based on the historical have begun applying their own environmental protec- analysis of market forces and ignoring externalities- tion policies. The governments of the two largest low- predicted that forest exploitation would go through income developing countries, China and India, adopted several phases, leading to managed forests and tree a policy of no logging in natural forests on their own plantations, as economic conditions improved.8 Coun- initiative, India in 1988 and China in 1998, and in tries in various phases of development are likely to Brazil the debate about environmental management have different incentives to manage forests (Hyde has become more active.9 1999), a conclusion implicit in the Kuznets environ- Analysis has also focused on differences between mental curve (Panayotou 1995). The Kuznets curve the private and social costs and benefits of forests predicts that at low income levels, economic growth (Shogren and Tschirhart 1999). Because of externali- will put pressure on forests and increase deforestation, ties, without public action, including proactive govern- but as income grows, deforestation will stop and forest ment policies, market forces would not bring about coverage will increase because of improved govern- socially desired outcomes and would therefore encour- ment institutions and reduced dependence on agricul- age deforestation and the loss of biodiversiry. And how tural and forest production. Higher incomes lead to does one value the irreversible loss of biodiversity, such increased demand for environmental and other ecologi- as the extinction of species? International and national cal services that place value on maintaining forest policies, including compensation for cross-boundary cover. This has been the experience of several indus- benefits, are required if deforestation and loss of trial economies. Some observers challenge this obser- biodiversity are to be reduced nationally, and thus vation, arguing that the income increases said to be globally. needed for such transitions are far too high (Stern, Several questions frame the analysis that follows in Common, and Barbier 1996). The same observers also this report. How well has the Bank implemented the note that there is considerable variability around the 1991 strategy? Have forest-rich and forest-poor coun- mean and that it is the median income-which is tries adapted their forest practices to the Bank's 1991 considerably lower than the mean-that matters for Forest Strategy? What have we learned that makes deforestation rates in most developing countries. In any changes in the strategy desirable or necessary? How do case, environmental awareness is already growing in various stakeholders view the strategy? 6 t JILL Bank Group Forest-Related Services and Lending T 1 he World Bank Group and the Global Environment Facility (GEF) together committed $37 billion in 745 approved operations in all sectors during the 1999 fiscal year. Shares of the total commitments to all activities vary greatly among Bank institutions. The World Bank share is nearly four-fifths; International Bank for Reconstruction and Development (IBRD) loans constitute 60 percent of the total, followed by International Development Association (IDA) credits (18 percent); International Finance Corpo- to reflect their priorities. Some governments' national ration (IFC) financing approvals (18 percent); and GEF objectives in the forest sector are different from those of grants and Multilateral Investment Guarantee Agency the Bank, leaving little room for Bank involvement in (MIGA) guarantees (4 percent each). (World Bank their forest sectors. But there are exceptions. Forest sector 2000a, b) issues are addressed in the CAS for Nicaragua, for example, and linked to project design that emphasizes Nonlending Services extensive stakeholder participation in project prepara- A Country Assistance Strategy (CAS) is a broad develop- tion. Treatment of the forest sector in the CAS has also ment framework produced by the Bank in collaboration been relatively better in Cambodia, Indonesia, and Papua with the country government and other stakeholders and New Guinea, where forest sector issues have been a part tailored to individual country needs. The main tool used of conditionality in recent stabilization and adjustment by the Bank's management and Board for reviewing and lending by the International Monetary Fund (IMF) and guiding the Bank Group's country programs, it is also an the Bank, partly because governments had not been keen important benchmark for judging the impact of the Bank's to get the Bank involved in their forest sectors. work. Since the mid-1990s, the Bank's emphasis on the Economic and sector work (ESW) underpins the "greening of the CAS" has resulted in improved treatment Bank's lending operations, informs policy dialogue, of environmental issues, but the forest sector has not responds to country requests for specific advisory tasks, received much attention. Country teams often fail to view and provides analytical research for the development sectoral issues, including forests, strategically in country community. Yet forest-related ESW has declined strategies, even in countries where forest sectors are sharply, particularly since 1995 (Annex C), the 1991 important to the macroeconomy. Even when CASs say the forest paper and GP 4.36 notwithstanding. Sector work right things about the forest sector, their integration with on the environment and on natural resource manage- operational activities has fallen short, except in a few ment has increased significantly, but has not addressed countries. Moreover, the CASs are increasingly developed forest-specific policy issues. And the quality of the very in close collaboration with the countries and are supposed limited forest sector work has been variable. The Latin 7 The World Banlk Fo rest Strategy: Striking the Right Balance America and Caribbean Region (LCR) has produced by community lands and all forest products and services far the best ESW (see Brazil and Costa Rica country emanating from them-in other words, both natural and studies and the LCR portfolio review) (Contreras planted forests, large or small, monoculture or mixed, Hermosilla and others 2000). Good-quality ESW has public, private, or community-owned. Viewed this com- also been produced in the Europe and Central Asia prehensively, the 1991 strategy has had a chilling effect (ECA) Region (particularly in Russia) and, more on forest sector activities of the World Bank Group, for recently, in the East Asia and Pacific Region (see the several reasons. Despite the ambitious objectives of the EAP portfolio review) (Lele and others 2000b). But forest strategy, forest sector issues have been inad- intersectoral links crucial to the forest sector have equately addressed in the CASs and ESW, and the level generally not received much attention. Although Bank and composition of forest sector lending-which is often research and lending experience document the effects of critical for forest generation and new plantings in forest- agriculture, transportation, and infrastructure projects poor countries-has been stagnant. Direct forest lending, on rates of deforestation (including their net economic, which has traditionally dealt with forest sector activities, social, and environmental effects on forest-dwelling has stagnated. And although forest-component projects people), ESW has not adequately addressed these have nearly tripled since 1991, they typically address effects. The Bank can draw on strong ESW in only a issues associated with the conservation and preservation few countries if it is called upon to quickly advise of natural resources, including forests; they have paid governments on forest issues.' Strengthening the Bank's little attention to forest management issues or to external analytic base on forests requires much more explicit threats to the forest sector. And by themselves, these integration of forest sector issues into the Bank's ESW component activities are not enough to leverage changes and more resources need to be devoted to analytically in government policies and institutions and to achieve sound forest sector work. Currently, resources tend to the wider objectives of the 1991 Forest Strategy. be tied to specific investment operations; resources Even though lending for forests (both forest projects independent of investment operations need to be allo- and forest components of other projects) has increased 78 cated for ESW about forests. percent-from $1.97 billion before 1991 to $3.51 billion after 1991 in nominal terms-forest lending as a share of Forest Sector Lending all lending has remained below 2 percent (figure 2.1). This report considered Bank forest-related activities on Furthermore, the new mix of forest and forest-component all public forestlands, including protected areas, and on projects may have increased the overall risk of the forest nonforest lands, including trees on private farms and portfolio (see "Performance of forest and forest-compo- FIGURE 2.1. WORLD BANK FOREST LENDING BEFORE AND AFTER 1991 Number of projects Commitments ($ million) 140 - 4,000 - 120 -3,500- 100 3,000- 80 ~~~~~~~~~~~~~~~~~2,500- 60 - 2,000- 291 60 - ~~~~~~~~~~~~~1,500- 40 1,000 20 500 0 0 Before 1991 After 1991 Before 1991 After 1991 * Forest projects El Forest components Source: World Bank databases. 8 Bank Group Fore,'-Related Services and Lending TABLE 2.1. WORLD BANK FOREST LENDING BEFORE ECA by 614 percent as the former Eastern bloc AND AFTER 1991, BY REGION countries started to become Bank members after the fall -i 99 of the Berlin Wall in 1989 (figure 2.2). The Bank's EAP Il tries) Region had the largest share of lending after 1991.2 Regionia lion) Consistency of Project Design with AFR l i 11 b v | l F 272 the 1991 Forest Strategy 729 1, 196 Project design at entry for both forest proj'ects and ECA 10 Wr 44j | l |t45319 projects with forest components has largely reflected LCRA | t 254 7 633 the intent of the 1991 Forest Strategy, although some MNAR ! |t 369 333l i 736 aspects of the strategy have received more attention All Regions 1,973 3,512 than others (see figure 2.3). At least 70 percent of all Note: Includes forest projects and forest-components of projects were designed to address one or more of the projects. following objectives: poverty alleviation, institution Source: World Bank darabases. building, participation, and adoption of new technolo- gies. Roughly half of the projects included significant nent projects," below). Total forest lending to the 20 activities in policy reform, forest protection, and forest countries with threatened tropical moist forests-the expansion and intensification. Increasing community focus of the strategy-increased by 36 percent in participation in forest resource management was espe- nominal terms after 1991 (to a total of $1.3 billion), but cially emphasized in the South Asia Region (SAR) and the projects and components generally avoided working LCR. International cooperation was addressed in only in the tropical moist forests (Annex C). 32 percent of the projects. Cofinancing activities IFC lending for forest operations declined after included donor consultation groups, donor coordina- 1991, despite an increase in lending to the ECA Region, tion activities, and the incorporation of lessons learned suggesting that the drop in other Regions that contain by donors (see the SAR, AFR, and EAP portfolio tropical moist forests has been even larger. The IFC, in reviews). The country case studies provide insights into analysis done for this review, was unable to establish if interactions between the Bank and other donors in the the investments it turned down because of Bank policy forest sector at the country level (see the next chapter). in tropical moist forests were financed by others Links within the natural resources management sector (possibly with less environmental scrutiny than in the were more frequent than those outside the sector in IFC). OED and Environmental and Socially Sustain- able Development Network (ESSD) consultations for FIGURE 2.2. NET CHANGE IN BANK FOREST this review suggest that the Bank sent a less than COMMITMENTS encouraging signal to international organizations and lending institutions about its own involvement in the Percent forest sector; the consultations themselves created new 800 - expectations for a more proactive stance by the Bank. 614 That forest lending in the Africa Region (AFR) also 600 - declined (by 47 percent) from its pre-1991 level should 3 3 be of particular concern, because, next to Asia, Africa 400 - has the greatest concentration of poor people, and the forest-dependence of its poor is by far the greatest. At 200 - 6 149 0 78 the same time, net lending for forests (figure 2.2) increased greatly for the ECA Region. The 1991 forest 0 paper did not focus on forest issues in the ECA Region, _ 47 although that Region has by far the world's largest 200AFR EAP ECA LCR MNA SAR All forest area. Nevertheless, uninhibited by the contro- Regions versy surrounding formulation and implementation of Note: Includes forest projects and forest components of projects. the 1991 Forest Strategy, forest lending increased in Source: World Bank databases. 9 Tlie World Banik Forest Strategy: Strikitig the Right Balance FIGURE 2.3. INCLUSION OF KEY ELEMENTS OF BANK size "getting the policy and institutional framework STRATEGY IN FOREST PROJECTS AND PROJECTS WITH right" for conservation in project areas. Forest compo- FOREST COMPONENTS nents address such issues as zoning; the clarification of Key element of tenure rights (especially of indigenous populations); the 1991 Forest Strategy identification, demarcation, and improvement of pro- tected areas; and the enhancement of environmental develutopmntl impact assessment systems in borrowing countries. development Forest dwellers often participate in activities related to Participation forest protection and conservation. Conservation issues are often linked to tenure rights of forest dwellers and Introduction of _ indigenous peoples. Neither forest projects nor projects new technologies with forest components deal adequately with external threats to forest cover or quality or with such main- Poverty alleviation stream forest sector management issues as concession and royalty policies, public forest enterprises, and the Treatment of activities of forest ministries and departments. Not country policies enough attention has been paid to improving the capacity of the forest ministries and departments to Forest protection manage public forests, to setting transparent rules within which forest organizations and individuals Forest expansion/ (including public servants) can operate, and to building intensification information systems to assess changes in outcomes. International Also, the synergy between forest production and cooperation conservation is critical to the design and implementa- tion of an effective forest strategy. Increased emphasis Intersectoral links on tree planting for production and productivity growth (including investment in research and extension Projects in humid on public forestlands, watersheds, community lands, tropical forest and private farms) in the Bank's agricultural and forest 0 20 40 60 80 100 sector investments will increase supplies to meet the Percent of projects burgeoning local, urban, and international demand Note: Intersectoral links refer to projects with links outside the and will meet many of the environmental objectives natural resource management sector. forests serve. With the notable exception of China, Source: Annex C. however, tree planting has received little support in Bank lending (see the AFR portfolio review) (Kumar project investments. President Wolfensohn's recent ini- and others 2000c). The Bank has also not done very tiatives have given additional impetus to efforts to much to support the enforcement of current forestry improve the Bank's role in international cooperation laws or to strengthen forest laws and regulations when (see "Global trends and changes affecting forest needed, so little progress has been made in reducing policy," below). illegal logging or setting up the processes to do so. The character of forest projects and that of projects with forest components differ considerably. Forest Performance of Forest and projects, usually prepared by the Bank's agriculture Forest-Component Projects specialists, tend to support production-related activities The shift in the project mix may have increased the such as agroforestry research and extension, improved risks of the forest portfolio. The risk ratings of the land cadastres, tree planting on degraded and private Quality Assurance Group (QAG) indicate that active lands, watershed and forest management, and plan- forest projects perform better than projects in the ning. Forest components, typically prepared by the agriculture or environment sector, or the Bank as a Bank's environment sector specialists, tend to empha- whole, in terms of risk (see Annex D for details of risk I ( Banik GroLIp Forest-Related Sers vces and Lending FIGURE 2.4. PERCENTAGE OF ACTIVE PROJECTS FIGURE 2.5. COMPLETED PROJECTS: OVERALL NOT AT RISK SATISFACTORY OED PERFORMANCE RATINGS Percent U Outcome, satisfactory 120 - D Sustainability, likely * Institutional development 100 97 Percent impact, substantial 83 80 80 7577 77 67 68 64 60 6 50 46 40 40 40 32 3 20 272 0 z>0/ 5'' e,.- ' s . ..r~ H .'4. p@' ./so f sgif'WI'F/S*.eZ ass euJ. th ,r ernment, and the Bank. The PPG-7 development and environmental biodiversity, as the 1991 forest ; has also helped to stimulate an expenditures. Implementation of paper articulated? And will Bra- t active interest in certification and the alliance pledge has since been zil demonstrate the political will biodiversity issues. reinvigorated with a $35 million to make long-term investments The World Bank/WWF Alli- GEF grant for preparation efforts in conservation on the grounds ± ance (box 4.1) has also been driven on a larger policy- and strategy- of international externalities, by two external institutions. The oriented program (under discussion when the private sector and president of Brazil pledged to set between the World Bank and Brazil some municipal and state gov- aside an additional 25 million as this report is being completed). ernments have strong incentives hectares of forest for protection, But the government's fiscal auster- to deforest and the national gov- 2 but progress on doing so has been ity program, agreed to with the ernment has a strong incentive slow. The president's pledge gener- IMF, considerably limits its desire to bring the macro-economy ated widespread internal debate to undertake new investments. back on track? If so, how? (See g and criticism from several nongov- Several questions remain: will Lele and others 2000c for ernmental organizations. The the international community help details.) financial crisis and budget cuts of Brazil preserve the rainforest for 1999 raised additional questions the global benefits of preventing about relative priorities for climate change and conserving for their livelihood. And yet, combined, the two coun- Costa Rica, a small, middle-income country-with tries have only about 6 percent of the world's forestland 3.5 million people and a per capita GNP of $2,680- (0.1 hectares in China and a meager 0.007 hectares in has a total forest cover of 1.2 million hectares. It also India per capita). China has 30 million hectares of has one of the most progressive forest policies among plantations that help compensate for the loss of natural developing countries. Legislation has supported such forests. The Bank is helping to establish another 3.9 important initiatives as the "polluters-pay principle," million hectares of forest plantations on collective, financed by a 5 percent tax on fuels, part of which is community, and individual farmers' plots through its used as payments for environmental services to those forest and forest-component projects. It has also sup- who plant trees or support other forest activities. Costa ported the establishment of horticultural trees on a Rican laws require certification of good forest manage- significant scale. Carbon sequestration from the Bank- ment. Carbon Tradable Offset Certificates, which were financed tree and forest plantations is estimated to developed for trading carbon internationally, serve as a represent roughly 25 percent of China's annual carbon model for trading other environmental services. Costa emissions. India has one of the world's largest livestock Rica has also been active in protecting biodiversity and populations, which depends heavily on forestlands for in bioprospecting (identifying commercially or medi- grazing. India also has the largest program of participa- cally useful chemicals in living organisms). Fortu- tory forest management for forest regeneration the Bank nately Costa Rica has well-established property rights, has ever supported. In the 1990s the Bank did not follow and government policy has favored incentives for through on the social forestry program of the 1980s, private owners to increase forest cover. Costa Rican which promoted substantial tree planting on community forest owners have strong organizations that give them and private lands, but agricultural intensification has technical support for reforestation, forest management, helped relieve pressure on forestlands in both China and and conservation. Costa Rica's progressive forest poli- India. The Bank has contributed substantially to agricul- cies would not have been possible without a strong tural intensification through investments in irrigation, network of governmental, nongovernmental, and pri- fertilizer, research, and extension, reducing the rate of vate sector organizations capable of adapting to policy forest conversion.5 innovations. 25 [he World B ank Forest Strategy: Striking the Right Balance The Bank has achieved its greatest impact in Costa The challenges to the Bank's involvement in the Rica through its ESW, which influenced Costa Rican forest sectors of both China and India have increased. forest policy, even though the Bank did not finance any This is partly because controversies surrounding the investment operations in the sector, and even though treatment of ethnic minorities in both countries have Costa Rica was unable to mobilize many international increased the transaction costs of the Bank's continued transfers for environmental services. What happened in involvement in the sector, while returns are in question. Costa Rica's forest sector shows that if a country is In India, both the Bank's country department and the committed to conservation activities, the Bank's ESW finance ministry have sought more convincing evidence can have considerable impact in a relatively short time. of the impact of forest projects and the fiscal sustain- Costa Rica was unwilling to borrow from the Bank for ability of forest sector investments before proceeding several years, wanting to avoid further indebtedness, but with further Bank support in the sector. The future of a new project was recently approved by the Bank's the Bank's forest programs is even less certain in China, Board (in June 2000). Perhaps the Bank's new instru- which has one of the most successful Bank-financed ments-the Learning and Innovation Loans and Adapt- programs-even in production forestry, which yields able Programming Loans-will fill an important new higher financial returns to producers and greater niche, helping fill a need for countries reluctant to take economic returns to the country than does the conserva- on a large debt burden (see Velozo and others 2000). tion of protected areas. China's unique form of fiscal Costa Rica's experience in developing successful policies decentralization requires that all provinces, including and institutions for improved forest management needs those where there are forests, be fiscally responsible for to be disseminated to the Bank's other member countries. the loan repayments to the Bank. In China, perfor- None of the three forest-rich countries studied mance on all forest projects has exceeded appraisal received any direct Bank assistance to the forest sector estimates for tree plantings and yield growth. Re- after 1991, although Brazil and Indonesia rank among estimated rates of return on completed production the Bank's top seven borrowers. The Bank has applied forestry projects, for example, are 20 to 25 percent (see forest sector conditionality to adjustment lending in Rozelle and others 2000). The government of China Indonesia and Cameroon. China and India, by con- questions the Bank's estimates, however, and estimates trast, have been the two largest Bank borrowers, both rates of return to be 10 to 13 percent, because of the overall and for direct loans for forest projects- high risks and variable performance associated with together China and India have received 59 percent of long-term forest investments and different species' the Bank's direct forest lending since 1991-but both varied performance in differing conditions.6 Now that overall and forest sector Bank lending to these China has "graduated" from concessional IDA lending, countries is small relative to the countries' own its ability to borrow on IBRD terms for investments in overall investments. The Bank's experience in forest the forest sector is in question. China's recent logging sector development in these two countries shows that ban, which has affected many forested provinces, has it is possible to design programs that produce win-win reduced provincial incomes. The higher interest rate of outcomes, in both poverty alleviation and environ- IBRD loans to China has compounded the difficultly for mental management. Each country has a strong sense poor provinces-and the poorest farm households of ownership of its programs, although both lack the within them-to mobilize the resources to undertake institutional and financial capacity to accelerate the risky investments and to repay the Bank. This has implementation of their own programs. The Bank has drastically reduced the demand from China's poor had a relatively positive impact on the forest covers of provinces for Bank loans. both countries through a long-term partnership and mutual learning by doing. The economies of China Market Forces and Deforestation and India have been more stable than those of forest- The 1991 Forest Strategy did not fully envisage how much rich countries, and their reforms have been more the explosive growth in demand for forest and agricul- gradual. Forest policy and institutional reforms have tural products in both domestic and international markets been brought about through the countries' own initia- would exacerbate forest degradation, deforestation, and tives, which the Bank supported mainly through long- land conversion. Globalization, international trade liber- term project assistance. alization, and lower tariffs have made forest-product 26 The C ountry as Unit of Accountt In the 1991 Forest Strategy imports from forest-rich countries cheaper in forest-poor countries, which has made domestic investment in trees less profitable. China (at $5.6 billion) and India (at $764 million) are among the largest importers of wood products, and growth in income, population, and urban- ization has increased demand for forest products. Accord- ing to government estimates, China's 1998 decision to ban logging in natural forests resulted in a decline in China's domestic timber supply of 16 million cubic meters a year. Imports-which were slight in the 1980s-have grown - moderately in the past two decades, while exports have fallen. This trend is of regional and even global impor- tance. Without countervailing investments in production Educating community forestry user group on how to collect forestry and tree plantations, China's rising demand for fuelwood. Herauda, Nepal. Photo courtesy of Still Pictures. wood products could lead to defiance of the logging ban at home and continued exploitation of natural forests by local communities, or a surge in imports that exacerbates foreign-owned timber companies have expanded exports deforestation of natural forests in exporting countries, to Europe, making Cameroon the largest exporter of particularly in the East Asia Region. In India, although tropical forest products in Africa. These domestic and estimates vary, demand for industrial wood is expected to global market considerations must become an integral triple or quadruple from current levels in the next 25 part of the Bank's forest strategy. years. Increased imports could also accelerate deforesta- tion in countries that sell to India. Land Conversion and Agriculture By increasing exports of both forest and agricultural Contrary to assumptions implicit in the Bank's 1991 products, forest-rich countries have increased pressure on Forest Strategy, no universal principles govern the forestlands. Sources of demand have varied. Indonesia influence of land conversion and agriculture on forest- has emerged as the largest exporter of tropical timber in lands. How much agricultural intensification can the world. By contrast, nearly 86 percent of Brazil's vast reduce pressure on forests is highly location-specific timber is consumed internally, placing Brazil's per capita and depends on such factor proportions as the rate and domestic consumption ahead of that of Western Europe. nature of technical change and transportation costs. The development of plantations and of alternative sources The impact of agricultural productivity growth in land of energy (such as natural gas piped through the recently surplus countries such as Brazil has been to increase opened Brazil-Bolivia pipeline) have been important in incentives for land conversion, a phenomenon rein- reducing the impact of Brazil's domestic consumption of forced by globalization and the liberalization of mar- wood products on its natural forests. But the environmen- kets. But in densely populated countries such as China tal impacts of the substitution of gas for woodfuel are and India, agricultural intensification has helped re- complex, and not necessarily benign. Cameroon's mostly lieve pressure on forestland. Land conversion to ex- Deforestation: Using a computable general equilibrium (CGE) model to determine how the magnitude and impact of deforestation in the Brazilian Amazon are affected by changes in policy regimes and technology, Cattaneo (1999) shows that devaluation shifts agricultural production in favor of exportable products. How devaluation affects agricultural incentives in different regions depends on migration flows. If migration occurs only between rural areas, a 30 percent devaluation increases deforestation rates 5 percent. If urban labor is willing to migrate to the Amazon and farm, the deforestation rate increases 35 percent. San and others (1998) analyzed the short- and medium-term impacts of structural adjustment through devaluation on regional production, deforestation, factor markets, income distribution, and trade for the Sumatra region of Indonesia. The study found that devaluation encourages deforestation; exports of forest products as both final products and intermediate inputs for the wood processing industries increase. (See also Lele and others 2000c and Gautam and others 2000.) A recent piece of environmental sector work on Brazil argues that rainfall determines agricultural production's potential and may mute some of the effects of improved incentives from globalization (see Schneider and others 2000). Technical change, on the other hand, may expand agricultural options even in high-rainfall areas. These examples merely demonstrate the complexity and location-specificity of outcomes. 27 The World Bank Forest Strategy: Striking the Right Balaiice pand exports has become a particularly important issue people is estimated to be between 1.5 million and 65 in the three forest-rich countries-Brazil, Cameroon, million, and in India between 1 million and 50 million. It and Indonesia-that have experienced irregular macro- is difficult to provide meaningful estimates because, economic performance, huge pressures on the domestic unlike estimates of the incidence of poverty, reliable data budget, and trade imbalances. In the Amazon, land are not available and definitions of forest dependency conversion for soybean production and livestock graz- vary. It is important to distinguish between those who ing is common. Returns to agricultural conversion are depend on forest products and services for survival and sizeable, partly because the forest sector is more those whose livelihoods are improved by forest outputs. heavily regulated than agriculture. Regulations with- There is growing evidence that forest-based subsistence out transparency and accountability, however, increase activities (low input/low output) do little to help people the potential for corruption and the cost of managing climb out of poverty and are rapidly abandoned once forestlands. Devaluation in the three forest-rich coun- incomes begin to grow and better alternatives become tries has increased incentives for all exports, but the available. And demand-driven forest activities that can be agricultural exports have increased more than exports part of strategies of forest-dependent people for income of forest products. The little evidence available on growth and livelihood usually require certain levels of financial returns to managed forests suggests that skill and capital, which not everyone has. Such issues, without enforcement (evident in extensive illegal log- which have implications for the forests' role in poverty ging) and with virtually unrestricted agricultural sec- reduction strategies, and for program designs that focus tors, there is little financial incentive for improved or on forest management, are not addressed adequately in low-impact logging to replace alternative uses of the Bank's projects or ESW resources available to entrepreneurs. Moreover, improving the conditions for the poor Cameroon is atypical among the case study coun- generally and improving the conditions for indigenous tries, but typical of the 80 Bank member countries that communities can be conflicting goals. China and (until have experienced a decline in per capita income. the East Asian economic crisis of 1997) Indonesia, for Cameroon has regressed from being an IBRD borrower example, achieved impressively rapid economic to being an IDA borrower, which makes economic growth and substantially decreased the percentage of growth an urgent necessity. Without improved forest people living below the poverty line. The records of management, Cameroon's rate of deforestation might both Brazil and India are less impressive on poverty well have been greater if its economy and exports had reduction and improvements in social indicators. But in grown rapidly. China the forested areas lie in mountainous regions that contain the majority of the officially designated Forests and Poverty Alleviation poor provinces, including substantial minority popula- Our understanding of how forests and poverty interact tions. It appears, however, that China's recent gradua- would have been greater if the Bank's investments and tion from IDA, the result of its economic growth, is ESW had characterized the forest-dependence of the poor likely to considerably reduce borrowing from the Bank with rigorous quantitative information.7 Population pres- for forest development in these poor provinces. India sure on the land, the incidence of poverty, and the role of has a less impressive record on poverty reduction and forests in people's livelihoods vary in the six case study improvements in social indicators than China. More countries. In Indonesia the number of forest-dependent than 300 million people live below the poverty line in Returns to Low-impact Logging: An extensive literature review on relative returns to conventional and low-impact logging (Pearce and others 1999) supports the findings of the low relative returns noted by the OED studies of Brazil, Cameroon, and Indonesia. According to Lele and others (2000c): "Protection of Brazil's Amazon forests beyond the short term requires an increase in the value of standing forest, an increase in the costs associated with unsustainable logging practices, and an increase in incentives for and profitability of sustainable (or improved) forest management. It must pay to keep trees and other forest products in the forest and improve management practices, and predatory exploitation of the timber must become unprofitable. In evaluating measures that might address these challenges, it is useful to distinguish between the processes taking place at and beyond the forest-agriculture frontier. At the frontier, agriculture, logging, and road-building create a mutually reinforcing system of forest conversion. Beyond the frontier, deeper in the forest, illegal logging of higher-value tree species threatens protected areas and the livelihoods of indigenous communities and extractivists." 28 The Country as Unit of Account in the 199 1 Forest Strategy India. Two-thirds of India's forest cover lies in tribal strong and active role to its provincial, county, and districts. The incidence of poverty among tribal people township governments. And community participation is high, and efforts to improve conditions have gener- became more active in the 1980s when China intro- ated considerable conflict between tribal people and duced its "responsibility system," based on the devolu- other poor people. tion of land rights to households. The community forest Development of the forest sector has helped the management programs of China and India differ poor in China and India by: greatly from each other, partly because rights to forestland or its fruits devolved to communities less * Creating wage employment in the planting and extensively in India than in China. China's recent regenerating of forest areas.8 centrally imposed logging ban, however, appears de * Upgrading the skills needed to operate nurseries, facto to have taken away some of the property rights graft fruit trees, and manage tree crops. given to local communities. Cameroon and Indonesia * Creating assets by either giving the poor rights to have been slower to decentralize and encourage com- the trees on public lands or the rights to the munity participation. When the Indonesian government public land itself to help meet subsistence needs nationalized community lands (de facto) in 1967, for fuel, food, fiber, and other non-timber forest concessions were awarded to the politically well- products. When villagers in China were allowed connected to maintain their political support (Gautam to plant the trees of their choice on previously and others 2000). Devolution is now being introduced owned public lands, the number of tree species in Indonesia as part of political reforms. increased from 4 to 16 and the emphasis shifted States in the six countries differ greatly in governance from timber to fruit trees, on which there are capabilities and in capacity to manage the forest sector. fewer harvesting and marketing restrictions Devolution, decentralization, the diverging interests of (Rozelle and others 2000). multiple stakeholders, and the likelihood of conflicts * Reducing overall risks and diversifying incomes among them, all have implications for governance. There for the poor by promoting tree planting as part of are also major differences in the forest sector administra- agricultural cropping systems. tions of the six countries. Costa Rica enjoys a highly * Creating social capital by increasing the collec- diversified set of public institutions and committed NGOs tive ability of forest-dependent communities to and private associations that interact to address the many plan, manage, grow, and equitably share com- multisectoral functions and equally diffuse costs and mon property resources. China is clearly far benefits of the forest sector. Cameroon is the weakest in ahead of India in the development of local institutional capacity, followed by Indonesia and several social capital for planning and implementation, states in the Brazilian Amazon. Even the forest producing mainly because China's "responsibility system" states in western China are institutionally weak in several has virtually decentralized control of public respects. In Brazil rents from forest exploitation are lands to villages, communes, and individuals. decentralized and broadly distributed at the local, munici- But the recently imposed logging ban is intro- pal, state, and national levels and among different actors. ducing new restrictions on the rights of village In Indonesia such rents have been concentrated in the communities. hands of a few who are close to political power, although * Many kinds of policy and institutional reform that situation is changing rapidly. Because Brazil is also contribute to poverty alleviation. Production far richer than Indonesia in its forest resources, and its activities have received more attention than economy is less dependent on forests, unsustainable forest tenure arrangements, pricing, and markets for management poses fewer costs and huge benefits from timber and non-timber forest products. Brazil's national perspective-although it entails huge costs from the global perspective. Institutional Issues Institutionally the six countries vary from the decen- Land Tenure tralized democracies of Brazil, Costa Rica, and India, The 1991 forest paper stressed secure land tenure as a way to the more state-controlled China. But China is more to increase incentives to invest in trees and to reduce decentralized than it appears to be, having given a incentives for resource mining. But again, how much this 29 The World [Blank Forest Strategy: Striki ng the Right Balancc proved true varied from place to place. How much tenure launched in an effort to improve forest investments. security affects land conversion to agriculture, and hence The academic and policymaking communities dis- rates of deforestation, is a controversial issue in Brazil agree about the success of this movement in terms of (Lele and others 2000c). Some argue that securing land forest sector outcomes in deciding the impact of the title increases smallholders' access to credit, information, recent logging ban, but China's more equitable and extension services, thereby facilitating the clearing of initial distribution of land and local power has land for agriculture. Others argue that farmers with no ensured more socioeconomically equitable outcomes access to credit cut trees to finance their agricultural (Rozelle and others 2000). operations. Either way, the net effect in the short run tends to be deforestation. The merits of secure land rights for Decentralization indigenous populations are more generally accepted. The Experience in Brazil, China, and India shows that, government of Brazil has considerably accelerated the contrary to popular belief and some positive experi- demarcation of indigenous reserves-some of it through ence, decentralization does not always improve envi- Bank support-although many external threats lead to the ronmental management. It may even worsen it in the de facto loss of land rights and forest cover.9 short and medium term, when local institutions are in The issue in Cameroon and Indonesia is timber their infancy and checks and balances are limited. concessions. Until the mid-1980s the Bank considered Even if local capacity for environmental management customary tenure rights in Cameroon an impediment to increases substantially, it may not be an adequate the development of "unused" forest resources. It recom- substitute for the functions previously performed by the mended overhauling land tenure legislation so that central government. The precarious finances of many land expropriation in support of state and private states and municipalities is an increasing concern as development of industrial plantations could become countries decentralize. Logging and forest industries operational (Nssah and Gockowski 1999). Now, how- generate revenue and employment at several levels, ever, Bank strategy favors improving Cameroon's legal making it possible for local governments to accept and regulatory framework, although both the forest forest concessions. Politically powerful loggers and law and the implementation decree have failed to ranchers in Brazil (typically supported by municipal provide an adequate legal framework for planning land and even state assemblies) compete with small agents use and integrating forest conservation and production and indigenous people for control of forestland. Na- activities with agriculture. The prevailing land tenure tional governments may be more concerned about regime assigned usufruct rights to anybody who cleared national environmental objectives than their local and cultivated land in the state-owned forests, which counterparts and may pursue policies of conservation- make up most of Cameroon's dense forest. This has such as China's introduction of a logging ban-which probably encouraged deforestation. In Indonesia, how- are seen as costly at the local level. But national ever, the Bank recommended revenue-sharing with economic and political interests may also be aligned communities, but the government was uninterested in with the state and local elite (as in Brazil, Cameroon, devolving rights to communities until democratization and Indonesia). Forest sector reform should address in 1999. issues of interest to key stakeholders, such as employ- In China, the question of how land tenure has ment, income generation, and government revenues. affected investment in forests and the protection of Most responses will involve investing in increased forest resources is part of a debate about whether the productivity for all forest products and services- reforms of the 1980s that gave control of forestlands investing, for example, in research, extension, and to farm households helped or hurt forest manage- markets, areas the Bank has given less attention than it ment. After successful reform to decollectivize in the has to conservation issues. agricultural sector in the early 1980s, leaders in the forest sector sought to further devolve control and The Bank's 1991 Forest Strategy and Forest-Poor increase incentives to households and forest users. Countries The reforms did not go as far as those in agriculture Forest policies in China, Costa Rica, and India were in the early stages of implementation, but in the past developed independently of the Bank's strategy, but decade several innovative programs have been are consistent with it. India's 1988 forest policy has 30 The Coutntry as Unit of Account In the 1991 Forest Steatcgv several elements in common with the Bank's strategy. The Bank's 1991 Forest Strategy and Forest-Rich Both emphasize the environmental role of forests and Countries the subsistence requirements of forest-dependent popu- The Bank's services have been less in demand in forest- lations. The Chinese government's logging ban brings rich countries than in forest-poor countries. The rea- China's policy more in line with the Bank's forest sons for the Bank's small role and negligible impact strategy. But the immense challenge faced by India have been different in each case. In Brazil the govern- and China in implementing their progressive policies ment has viewed the Bank's focus on saving forest can be better appreciated by looking at the case of cover in the Amazon as an unnecessary interference in smaller and richer Costa Rica. Brazil's domestic affairs, although this attitude may be The small amount of ESW the Bank has done in changing as Brazil's domestic environmental lobby Costa Rica has had a positive impact on government gains voice.10 In Indonesia the domestic plywood policies. In its 1993 forest sector review, the Bank industry, working closely with the forest department, estimated that nearly two-thirds of the benefits of has resisted reform. In Cameroon the powerful foreign- Costa Rica's forests are enjoyed globally, so the owned industry working with the parliamentarians has global community should compensate Costa Rica for resisted reform. But the Bank has continued trying to conserving, managing, and planting forests. Few affect forest outcomes in Cameroon and Indonesia transfers have materialized, however, and the coun- through adjustment-related policy conditionality and try is bearing the cost of its environmental policies with increasingly active donor coordination and con- largely on its own. To enable the Costa Rican sultations with stakeholders. government to finance such environmental activities The Bank's failure to have an impact in the three as the protection of biodiversity, the review sug- forest-rich countries seems to be the result of its gested improving the financial management of na- "precautionary" strategy (focused on conservation, with tional parks. It also recommended deregulating no instruments to enable research and experimentation harvesting in forest plantations and the import and to improve forest management or deal with illegal export of forest products. Some believe that the activity) combined with weak implementation and the Bank's policy advice to acquire private land for Bank's limited effort to nurture a national consensus for conservation instead of allowing private landowners policy reform through country dialogue.1' In addition, to make a living from conservation activities may forest-rich countries-with their forest "surplus," low have been counterproductive. Critics also argue that levels of royalties, and heavy (legal and illegal) log- the Bank's policy advice neglected the plantation ging-have had little incentive to use forests efficiently. sector, the development of small private forests, and It is important to increase the value of forests through post-harvest aspects of forest production-including stronger enforcement, to create new markets for environ- helping Costa Rica attract more private investments. mental services, or to identify measures to fill the gap The governments of Brazil and China also stressed between the globally and nationally perceived optimal Bank Group financing for tree planting and post- quantities of forest resources through measures such as harvest activities, but the Bank's financial sector transfer payments for environmental services. Without policies since 1991 have brought about a sharp additional resources, budget-strapped governments find decline in the Bank's lending for such specific it difficult to afford stronger enforcement or payments activities (World Bank 1998c). for environmental services. China's logging policy: The logging ban also has tremendous short- and medium-term social and economic costs. It has already reduced the timber supply and will probably affect the jobs and income of nearly 1.2 million people directly and another 1.2 million indirectly. In addition to a loss of revenues, the government is anticipating fiscal transfers of about $20 billion over 13 years from the center to the suffering provinces, and perhaps an increase in imports. This is happening at a time when the Bank's focus in China's forests is shifting from production to conservation and biodiversity and when China is shifting from IDA lending to more costly IBRD lending. Clearly, the forest lending program in China is coming under pressure. 31 T ie World Boanok Forest Strategy: Strikinlg the Right Balatice The impact of the ban on Bank financing for economic benefit they see in exploiting the forests for commercial logging in tropical moist forests has been their countries' industrialization and modernization, mixed. It discouraged the Bank from supporting experi- and because of the close connection between resource ments to address "improved and conservation-oriented exploitation and governance issues. In Brazil, as in forest sector management," but it also reduced the risk Indonesia, economic crises and large-scale projects of Bank association with illegal, large-scale, and (such as Brazil's Rondonia Natural Resource Manage- unsustainable logging. The ban has had strategic and ment Project) have brought these issues to the fore. symbolic value, but did not discourage wasteful prac- It is unclear how the Bank alone can stimulate the tices in forest-rich countries, so it was largely irrelevant development of internal capacity, transfer skills, and in containing rates of deforestation-a view shared by mobilize the financial resources needed for sound forest key borrowers and Bank staff (discussed in the next policy without a broadly shared, cohesive, and consis- chapter). More important, the ecological risk aversion tent diagnosis of the problems by the international associated with the 1991 strategy had unintended donor community and a broad range of national effects: It discouraged the Bank from promoting stakeholders. International objectives can differ from changed attitudes and helping countries build internal borrower-felt needs and priorities, as they have in capacity and, paradoxically, because the Bank was a Brazil. Until Mr. Wolfensohn's recent initiatives in the nonplayer, it hindered Bank efforts to give conserva- forest sector, the Bank and the donor community had tion-oriented forest constituencies a voice in their not made enough effort to develop a common vision country's internal decisionmaking. If the current ban on and understanding of borrower needs. The forest sector Bank financing of commercial logging in primary is well suited to the Comprehensive Development tropical moist forests is extended to the forests of Framework (CDF), a "holistic" approach to develop- Eastern Europe, where forests are already managed for ment that emphasizes client ownership, the Bank's multiple uses, it could jeopardize promising Bank partnership with other development actors, better pro- efforts currently under way and could have a similarly gram design through Bank interaction with all stake- chilling effect on the Bank Group's future ability to holders, and concrete results. Notwithstanding past mobilize the private funding needed for continued and current differences between the Bank and some responsible forest management. governments, especially in forest-rich countries, the In many forest-rich countries, local rent-seeking question is, given the current strategy's ambitious goals objectives in the forest sector may have restricted Bank and meager resources, can the Bank harness such involvement. The 1991 strategy also may have affected emerging opportunities as presented by increased envi- the demand for Bank services in an increasingly ronmental awareness, active domestic stakeholders, demand-driven Bank. Without substantial support to and active environmental institutions (especially compensate for the fiscal and economic costs of NGOs) to improve forest management. This question conservation, governments have been reluctant to will be addressed in the next chapter. internationalize the forest issue, both because of the 32 Global Trends and Changes Affecting Forest Policy H r I r ow current is the World Bank's forest strategy? Some of the technological, institu- tional, economic, and policy changes that have affected forests since 1991 must be considered when the Bank's forest strategy is updated. But some trends are difficult to document because definitions used for forest data often differ across countries and many national and international statistics on forest cover are unreliable. Production data are suspect because of substantial illegal logging. Data inconsistencies within countries over time impede understanding of the extent, sources, and causes of loss and degrada- ways resemble NFPs, but with a broader scope and tion of forest cover, and efforts must be made to often variable treatment of issues in the forest sector. improve the quality of forest data (Annex B). The Bank, FAO, and the donor community have not The formulators of the updated strategy will streamlined or coordinated their activities to bring certainly emphasize the building of partnerships, but about essential policy and institutional reforms that they will also have to take into account that past efforts reflect the concerns of all stakeholders, especially the at coordination, including Food and Agriculture Orga- poor. What is clearly needed is a better-coordinated nization (FAO) supported National Forest Programs country- and client-driven approach. The collective (NFPs) and Bank-encouraged Environmental Action international effort being undertaken in Cambodia, led Plans, have often not worked. The NFPs, which by the Bank with the active participation of the FAO, succeeded the Tropical Forest Action Plans in 1985, U.N. Development Program, and other donors is an were supported by the FAO, the World Resources example of successful coordination, albeit at an early Institute (WRI), and the Bank. In due course, however, stage. the Bank and WRI dropped their support for these programs because they were "top-down" and narrow in Changes in the Forest Sector scope. The NFPs continued as FAO initiatives carried Global wood production and consumption is likely to out by developing country governments with the increase about 26 percent between 1996 and 2010 support of several bilateral donors and the European (Whiteman 1999), with increases throughout the devel- Union. The Bank, meanwhile, encouraged countries to oping world, but especially in the Europe and Central develop Environmental Action Plans, which in many Asia and East Asia and Pacific Regions (table 4.1). 33 The WorId Barik Fore st Strategy: Striking the Right Bala nce Production and consumption are in close balance benefits, reducing soil erosion, protecting watersheds, within Regions, but there is substantial intraregional conserving biodiversity, and sequestering carbon. trade. Demand from China, India, and Japan, for Large or small tree planting operations, if conducted in example, has been met largely by Southeast Asian an economically, environmentally, and socially respon- countries (Dauvergne 1997). More than a fifth of the sible manner, could provide the poor with tremendous global consumption of industrial wood is expected to employment opportunities, either as tree owners or as be concentrated in Brazil, China, Indonesia, and the workers on plantations and in post-harvest operations. Russian Federation. They can also reduce pressure on natural forests. To contain deforestation and the degradation of Only a decade ago, intensively managed forests forest resources, countries need substitutes for products supplied only 7 percent of industrial wood; now they originating from natural forests. Investments in alterna- supply about 26 percent and are expected to supply tive sources of wood-ranging from small-scale tree about 40 percent by the year 2040. More than half of planting to forest plantations on degraded lands-are wood production in industrial countries is now from becoming important. Plantation forests now offer great managed forests and plantations. Productivity is promise for wood production.' Improved genotypes already high in plantation forestry in Brazil, which has and recent advances in silvicultural technologies have a progressive private sector and a strong research led to spectacular yields. Annual growth rates of 20 to system that is funded partly by the private sector. But 30 cubic meters per hectare a year are common on this is not typical in other developing countries, and research stations in tropical areas and are being small-scale planters need investment help in all devel- realized on many private lands. Industrial wood from oping countries. Real interest rates tend to be high, one hectare of a plantation can easily substitute for 5 to making it next to impossible for small farmers to 20 hectares of natural forests (Binkley 1999). Planta- obtain credit. In Brazil and China private companies tions not only relieve pressures on natural forests but have made surprisingly similar suggestions: Give also offer reliable supply, uniformity of product, and Bank/IFC loans to processing enterprises that enter into competitive economics. They could potentially satisfy partnership with small farmers for plantation forestry, most of the global demand for forest products (LEEC while government provides research and extension 1993). Moreover, plantations provide environmental services with appropriate environmental and social impact assessments in place.2 TABLE 4.1. EXPECTED INCREASES IN INDUSTRIAL Investments are being made in industrial plantations WOOD PRODUCTION AND CONSUMPTION in countries as diverse as Argentina, Brazil, Chile, (1996-2010, MILLION CUBIC METERS PER YEAR) Indonesia, New Zealand, South Africa, and Uruguay. Discussions of the CEO Forum (box 4.1) suggest that ctionl| ; n prospects for potential investments in developing coun- Region l | i) lll on) tries are strong if a favorable investment climate is AFR 11 . | l ., .7 l li | l 1 g'i81ensured (Annex G). The Bank Group institutions-IBRD, 2) ilS00 1 lIFC, and MIGA-need to work together to encourage EAP o421 more private capital-on a scale appropriate to the Ni _*9 specific country circumstances-to invest in socially and ECA ; : environmentally responsible plantation forestry. The LCR t ; ; Bank's experience in Brazil and China offers some 43) ~~important lessons about undertaking socially and env'- MNA 'g 7 ronmentally sustainable plantation forestry. The govern- a im i(1) ment of the state of Minas Gerais in Brazil is so SAR 1111 7 convinced of the merit of the credit extended under a Other ! t; 0 0 previous World Bank loan to help small farmers under- Other $74) ~~take forest plantations that it has converted it into a World 172 commercially operated revolving fund. In several devel- liI; _1 )(00 oping countries, particularly in the tropics, millions of Source: Whiteman, Brown, and Bull 1999. hectares of degraded lands are suitable for tree planting. 34 Global Trends and Change, Affecting Forest Policy Investments in plantation forestry in these countries- environmentally competitive tree planting operations, combined with an increased commitment to bringing it is also necessary to provide clear and secure property natural forestland under protection, while ensuring rights, access to financing, and payment for environ- productive livelihoods for forest-dependent communi- mental services. In countries such as Costa Rica, where ties-can meet urban and export demand, create liveli- legislation has supported such initiatives, tree planting hoods, and substantially reduce continued pressures on has successfully changed the extent of forest cover; in the world's natural forests. countries without such incentives, tree planting and Tree planting operations will succeed in replacing investment in plantations have plummeted. wood from poorly managed and unsustainable opera- Developing countries have greatly expanded their tions in natural forests only if tree planting is economi- protected areas in recent years but have not improved cally competitive with products originating from management in existing or new protected areas. Envi- natural forests. It is crucial to improve governance and ronmentalists welcome the extension of protected areas to eliminate the perverse incentives, market distortions, as an indication of the countries' commitment to and constraints on valuation currently associated with conservation. Both the Bank and GEF have supported natural forest operations. To develop economically and such expansion through project assistance, even before BOX 4.1. THREE NEW WORLD BANK INITIATIVES T he World Bank has three The CEO Forum. This ad hoc whether to allow payments for new initiatives to group-which includes 31 repre- carbon offsets involving forest improve the conservation sentatives from the World Bank creation and conservation, so and sustainable management of Group, the private sector, civil so- the Fund is currently designed to the world's forests. ciety, and governments-was as- operate only in the transition The World BankIWWF Alli- sembled in 1997 to consider and economies of Eastern Europe. ance (formally the Alliance for discuss global forest-related Learning from that experience Forest Conservation and Sustain- issues, especially options for reduc- can be put into practice in devel- able Use). In April 1998, the ing barriers to sustainable forest oping countries if an agreement World Bank and WWF entered management by promoting respon- on payment for carbon offsets is into an alliance to work with sible investments in forest produc- reached. The Fund's objective is governments, the private sector, tion and management. Participants to explore how market-based and civil society to reduce the have agreed that the discussions mechanisms could help reduce loss and degradation of all types should continue as long as they the global concentrations of of forest worldwide. The alliance contribute to an understanding of greenhouse gases and contribute partners propose to work the issues and to practical initia- to the sustainable development together to support countries to tives associated with the preserva- of the Bank's borrowers. A achieve the following targets by tion and better use of the world's major emphasis would be placed the year 2005: forests. on renewable energy technology. * Establish an additional 50 Prototype Carbon Fund. This The Fund will support project- million hectares of protected initiative is a response to opportu- based activities that reduce forest area, and bring a com- nities offered by the mechanisms of greenhouse gas emissions and parable area of existing, but the Kyoto Protocol for mobilizing enhance carbon sequestration, poorly managed, reserves new and additional public and pri- but the Fund will not be under effective protection. vate resources and technology involved in "emissions trading" - Bring 200 million hectares of flows to member countries. Gov- activities. the world's production forests ernments that signed the Interna- under independently certified tional Convention on Climate sustainable management. Change have still not decided 35 The World Bank Forest Strategy: S.triking the Right Balance the World Bank/WFF Alliance. However, the assistance tors (based on income, education, and life expect- did not involve analysis of the threats to protected areas ancy), 29 are in Africa (UN 1999a). from economywide and global policies, did not support Slow or declining growth in developing countries the enforcement of existing laws and regulations, did not stems in part from the slow growth in demand for help build local institutional human and financial commodities. Real commodity prices are the lowest capacity, and did not generate the sustained domestic they have been in several decades. Many low-income and international financial resources needed to support countries that rely on exports of natural-resource- better management of existing protected areas, including based products to earn foreign exchange must ship even better treatment of the people living in them. Besides, a greater quantities of forest, agricultural, and mining highly restrictive definition of primary forests adopted in products to earn the same revenue. After accounting for the 1991 strategy essentially banishes human presence or the rapid loss of natural capital, adjustments to activity and is not conducive to conservation. It would economic crises by developing countries undermine the require new definitions of primary and secondary forests sustainability of their long-term export and growth more attuned to the realities in developing countries on performance. But increased export growth is crucial to the ground, improved fiscal policies, with transfers from macroeconomic stabilization in the short and medium polluting to greening industries across sectors, the term and critical for a return to a sustained growth path introduction of fees for parks, greater revenue-sharing for countries in economic crisis. These issues are with local communities to increase their stake in seldom addressed in adjustment programs or by the protection, more mobilization of private capital, stron- global community, which has higher expectations for ger links with local NGOs and research institutions, and natural forest maintenance in developing countries the exchange of information about successful experi- than the development needs of those countries dictate. ences within and across Regions. A wealth of experience Increasing population growth in developing coun- exists in the Bank and GEF portfolios, especially in the tries raises demand for agricultural production and Latin America Region. Tapping that experience calls for exacerbates pressures on forests. Currently about 1.4 the multisectoral approach the 1991 Forest Strategy billion hectares of cropland meet global food require- envisaged. The World Bank/WFF Alliance could address ments. The FAO estimates that another 1 billion hectares such fundamental issues as incentives and financial of grasslands and 800 million hectares of the world's resources in its quest to increase protected and remaining forests and open woodlands could potentially sustainably managed forest areas. The World Bank be converted to crop production. The extent of forest Institute's link with operations should be strengthened to conversion will depend on the level of continued realize this potential. agricultural productivity growth, although its effects on forest cover will be different among countries. Changes in the Global Economic Environment Patterns of global economic growth and income Changes in the International Institutional Setting distribution are far different today than when the Many international agreements reached in recent years Bank's forest strategy was published. Per capita have profound implications for forest policies and incomes in more than 80 countries are lower today programs in developing countries (box 4.2). There is than they were a decade ago. Only 40 countries have increasing international cooperation on forest issues, been able to maintain an average per capita income but no global legal instrument deals specifically with growth rate of 3 percent or more during the 1990s. the protection and management of forests. And except The richest 20 percent of the 174 nations reviewed by for the GEF, no new funding mechanism has been the U.N. Development Program for its 1999 Human initiated to implement international initiatives. The Development Report have enjoyed much of the recent "Rio forest principles" adopted at the United Nations global boom. Those countries produce 86 percent of Convention on Environment and Development in 1992 global gross domestic product, whereas the poorest 20 are a significant step in that direction, but a shared percent produce 1 percent. Global exports are simi- operational vision of sustainable development still larly distributed even though total exports are sub- needs to be developed. The Rio forest principles, based stantially larger today than 15 years ago. Of the 34 on concepts supported by a broad international consen- countries with the lowest human development indica- sus, cover issues ranging from sustainable development 36 Global Trends and Changes Affecting Forest Policy and biodiversity to trade in forest products and interna- tions and individuals, forest dwellers, and women. But tional cooperation. These principles recognize that OED country studies have noted a major gap between countries have sovereign rights over their forest principle and practice in countries that are signatories resources and urges countries to incorporate the prin- to the agreements. What should be the Bank's role, if ciples in their national forest policy and legal frame- any, in ensuing adherence to international conventions works. The principles encourage governments to through its operational mechanisms? This question has promote the development, implementation, and plan- received little attention in Bank operations (Gautam ning of national forest policies and to provide opportu- and others 2000), but given the Bank's unique profes- nities for the participation in that process of interested sional and financial resources and its economywide parties, including local communities and indigenous experience in borrowing countries, it could play a peoples, industries, labor, nongovernmental organiza- major role in translating a global vision into action. 7 BOX 4.2. INTERNATIONAL INSTITUTIONS AND AGREEMENTS RELEVANT TO GLOBAL FORESTS he Intergovernmental countries would have complex issue that is also germane to dis- i Panel on Forests (IPF) effects on forest conversion. cussions of the Bank's 1991 For- i,L. was established by the The Convention on Biological est Strategy. f U.N. Commission on Sustainable Diversity promotes the establish- The Framework Development (CSD) to continue ment of national strategies for the Convention on Climate Change the intergovernmental dialogue sustainable conservation of biologi- (the Kyoto Convention) offers on forest policy at its third ses- cal diversity and their integration promise for forests in their role sion in April 1995; to implement into sectoral and cross-sectoral as carbon sinks. Carbon trading 2 forest-related decisions of the plans and policies. Countries agree may raise financial resources for X U.N. Conference on Environment to undertake programs to identify investment in reforestation, X and Development, nationally and and monitor biodiversity (including afforestation, forest manage- internationally; and to promote important ecosystems and habi- ment, and conservation. Some international cooperation in tats), to establish a system of pro- people are concerned that too financial assistance and scientific tected areas, and to develop guide- much attention to carbon trad- ) and trade issues, among other lines for the selection of protected ing will divert attention from i concerns. areas. other forest functions, such as t The Intergovernmental The Global Environment Facil- supporting biodiversity and Forum on Forests (IFF) was estab- ity (GEF) is a mechanism for indigenous populations. lished in July 1997 as an ad hoc, financing actions to address the The Agreement on Trade- g open-ended forum under the loss of biodiversity, climate Related Aspects of Intellectual 4 CSD. IFF has a mandate to pro- change, the degradation of interna- Property Rights may affect mote and facilitate the imple- tional waters, and ozone depletion. research in forest-related bio- mentation of IPF proposals. GEF-sponsored biodiversity technology and could have a S The World Trade Organiza- programs in developing countries profound impact on the rights to tion agreement on trade liberaliza- have been restricted largely to con- forest genetic material, competi- tion has been at the center of the servation in protected areas. The tiveness in international mar- Bank's structural adjustment pro- GEF is only now looking into kets, and the livelihoods of grams (now nearly one-third of issues related to the sustainable use forest-dwelling people. i Bank lending). Removing agricul- of forest ecosystems. Some have The Convention on Combat- t tural subsidies in industrial coun- argued that biodiversity is directly ing Desertification is relevant to Z tries and continued liberalization at odds with improved forest man- forest-poor countries, principally ; of agricultural trade in developing agement in production forests, an in Africa and the Middle East. m I+MV _ __M__ __> _ s_Q f a§, . E 3 v . F b3 37 The World Batik Forest Strategy: Striking the Right 13alantce New Thinking and Policy Experiments rapidly, with the help of organized buyer groups, The idea behind the relatively new practice of forest NGOs, and other institutions. National and regional certification is to establish a market-based incentive certification systems are also emerging in forest-rich framework for improving forest management practices countries such as Brazil, Canada, Finland, Ghana, and to provide markets for products generated from Indonesia, Malaysia, Norway, and the countries of the sustainably managed areas. European Union. The World Bank/WWF Alliance promotes im- The debate on sustainable forest management has proved management of 200 million hectares through advanced considerably since the Bank's strategy was certification. Certification activities are dominated by published, but there is no global consensus on how to large firms located mainly in industrial countries with define "sustainably managed forests," partly because well-established forest policies and institutional frame- of the tremendous diversity of conditions in which works. Demand for certified forest products and their forests exist. Each certification scheme has its own supply are concentrated in Europe and North America. criteria and indicators. Recently the Center for Interna- Certification could be a powerful instrument for im- tional Forest Research sent teams of local and interna- proving forest management in developing countries, tional experts to eight countries (Austria, Brazil, Cam- diversifying the sources of accreditation of forest eroon, Cote d'Ivoire, Gabon, Germany, Indonesia, and management (currently monopolized by governments), the United States) to evaluate the validity and useful- improving forest management technologies and prac- ness of the criteria and indicators used by various tices, stimulating capacity building for sound environ- groups. The teams found general agreement on the mental management among consumers and producers main components of sustainability, including 6 basic of forest products, and generally increasing environ- principles and about 25 criteria related to policy, mental awareness. To succeed, however, certification ecology, production, and social factors. Indicators and must operate in countries that use market-based instru- criteria tend to be site-specific, so that evaluators will ments to internalize environmental and social exter- probably need to adapt them to specific site character- nalities. For certification to be effective, it must have istics. The Bank should-without associating itself with government support and countries must have growing any particular certification scheme-support work to demand for certified products, national standards for establish criteria and indicators around a common set improved forest management (standards that are com- of principles and to develop broad institutional capac- patible with international standards where exports are ity and human capital in borrowing countries.3 involved), and an enforcement mechanism to ensure The Bank's recently approved Prototype Carbon that the standards are met and the results relayed to Fund is an example of the type of experimentation the major stakeholders in a transparent, credible manner. Bank should be promoting to remain at the forefront on The certification process must also be set up in a way environmental issues (see box 4.1). This program, that enables rural communities to participate actively. which currently operates in transition economies, could In countries with weak institutions, certification could make a positive contribution to the global environment encourage corruption. Although it has a better prospect (once international agreements are in place) without in channeling export demand to certified products attracting the controversy that has threatened other through value addition than to influence internal similar initiatives. The Fund's target size would be demand in developing countries, the practice could $100-120 million, with required contributions of $10 also become a nontariff barrier for exports of products million for public sector participants and $5 million for from developing and Eastern European countries, if not private sector participants. applied across the board to timber produced in all countries. But the certification issue is leading to far Changes in Strategy Implementation greater debate in forest-rich developing countries about Since the 1991 strategy was formulated, the Bank improving forest management than the 1991 strategy has changed in ways that could have implications for could have envisaged (Lele and others 2000). the way it participates in global forums and the Several international forest product certification operational support of the forest sectors of developing schemes-including the Forest Stewardship Council countries. With staff levels declining, the Bank's par- and Pan European Forest Certification-are developing ticipation in forest-related global forums has been 38 Global Trends and Chaniges Affecting Forest Policv open, consultative stance toward stakeholders in policy dialogue, in the preparation of CASs, and in some lending operations. These developments may not have been consistent with the expectations of containing deforestation to meet global objectives as espoused by I g the 1991 Forest Strategy. The Bank's new emphasis on knowledge is a .IA, --- tw response to technological change and the information > .; : revolution. Networks of technical specialists in the * , e y Bank are now expected to facilitate knowledge dissemi- il. ~ ' nation; enhance product quality; and provide faster, more effective responses to constraints identified during project operations. The electronic revolution has -'~ enabled the Bank to communicate with professionals J and clients throughout the world, particularly in borrowing countries, in a way that was not possible only a few years ago. This new orientation is critical to the CDF and should enhance the Bank's work on forests, which is often multisectoral and depends heavily on the transparency and accountability associ- ated with improved governance.4 However, the tre- mendouis decline in the number of forest sector professionals may limit the Bank's effectiveness at seeing forest conservation in the context of broader global, technological, and market considerations. Three Perspectives on Forest Strategy This review, in addition to drawing on extensive Clearcut. Washington State, U.S.A. Photo courtesy of Still informal consultations with stakeholders, profession- Pictures. als, and the NGO community in borrowing countries, haphazard. The Bank has participated in activities surveyed several groups through interviews, focus related to the Kyoto Protocol and some important new groups, and formal surveys, including Bank staff who initiatives related to climate change, but its participa- work on forest issues, participants in the CEO Forum, tion in the Intergovernmental Panel on Forests and and members of the World Bank/WWF Alliance. The Intergovernmental Forum on Forests, for example, was formal survey results support many of the conclusions limited and unpredictable until two years ago. If the OED reached through its Regional portfolio analysis, Bank is to be proactive in mobilizing enough country case studies, and focus group discussions about concessional or grant resources to make a difference to the Bank's unrealized potential to play a more active global forest outcomes, it will need to follow a coherent global role. approach to involvement in global processes that affect Bank staff survey. The Bank staff surveyed agree the forest sector. It will also need to support objective with the overall thrust of the 1991 strategy but do not professional analysis of the extent and causes of believe the Bank has effectively helped reduce rates of deforestation in developing countries, with the active deforestation. They think forest issues are not well participation of stakeholders in those countries. integrated with the Bank's broader mission of poverty Many Bank operations staff, including department alleviation and economically and socially sustainable heads, have been relocated from headquarters to their development, that more attention should be paid to the client countries to strengthen Bank-client relationships forest sector in CASs and ESW. The staff believe the and to respond to client-driven demand. The Bank's policy of banning Bank financing of commercial own decentralization has led to the adoption of a more logging in primary tropical moist forests is irrelevant 39 The Wo rid Bank Forest Strategy: Striking the Right Balance and has not affected the rate of deforestation in client CEO Forum survey. The CEO Forum has in- countries. Many believe that making the Bank policy creased awareness of the Bank's 1991 Forest Strategy more flexible than OP 4.36 would better address key (and its safeguard policy content), especially in the forest management issues associated with logging in private sector. The open discussion of forest issues primary tropical moist forests. They also believe Bank between private sector and NGO representatives has performance in the forest sector should be strengthened revealed many areas in which their views are similar, to promote greater protection of natural forests, institu- and some participants believe that a number of their tional reforms, multisectoral approaches to forest views have converged. Several private sector partici- development, and the planting of new trees. pants have asked for a broader-based approach to Staff say that forest-related work within ESSD promoting improved forest management and reforms would be more effective if forest sector leadership, and more attention to the economic aspects of sustain- operational support, and resource flows were consoli- able development. Others think favoring conservation dated. They believe that to convert ideas into activi- over sustainable forestry will erode the Bank's credibil- ties, the innovative strengths of the Environment ity. Most agreed that the policy focus should be Department needs to be combined with greater opera- broadened to include all forest types, not just tropical tional support than the Rural Development Depart- moist forests. Members of the forum acknowledged the ment has traditionally provided. ESSD has recently benefits from certification, but like the IFC voiced reorganized the forest sector team, first with two concern about its costs and benefits, end-users' willing- co-managers-one each from the Rural Development ness to pay a premium for certified products, the need and Environment departments-but many challenges to agree on guidelines, problems of third-party monitor- remain. Every vice-president of ESSD has stressed the ing, and the possibility that certification could become management challenges of ensuring central leadership a barrier to trade. Some forum members believe the in the forest sector, because the sector straddles many Bank is well-positioned to address issues of climate disciplines and Bank Networks. Staff believe country change, biodiversity conservation, and resource man- managers are more likely than staff in other sectors to agement, although some NGOs disagree. A majority of consider involvement in the forest sector as entailing forum members felt that the role of the GEF and the IFC higher transaction costs and lower payoffs than other should either increase or stay the same, but almost half activities, wvhich inhibits responsiveness to the chal- of the private sector respondents did not know enough lenges of improving forest management. Reasons about the GEF's activities to respond. given for these perceptions include internal con- World Bank/WWF Alliance survey. Respondents straints such as inadequate resources for ESW and believe that the World Bank/WWF Alliance strengthens project preparation and supervision; the complexity of the environmental expertise, and uses the comparative project design (which for forest activities is inherently advantages, of both the Bank and the WW.E The multidisciplinary and multisectoral); flaws in the alliance's main potential benefits are increased funding management structure of the Bank; an inadequate for conservation activities and increased attention to skill mix; and internal technical and budgetary con- good practices in improved forest management. Its straints. External constraints include corruption in drawbacks include the "top-down" approach it takes, implementing agencies, inadequate appreciation of its limited financial resources, and the time of Bank key issues by policymakers in borrowing countries, staff for alliance activities without commensurate insufficient implementation capacity, less-than-influ- budget support.5 Most WWF staff believe the target of ential forest and environment ministries, and the establishing 50 million hectares of new forest-protected controversial nature of forest-related policies. Staff areas to be realistic; they are much less certain about believe the Bank could become a global leader in such whether 200 million hectares can be placed under forest-related issues as climate change, biodiversity independently certified management by 2005. conservation, natural resource management, carbon Bank staff consider both goals to be unrealistic sequestration, and the Clean Development Mecha- under current internal and external constraints. Alli- nism. With a clear strategy and the right internal ance members believe fuller integration of the alliance incentives and resources, the work of both the GEF agenda with the Bank's agenda to be essential. They and the IFC could increase. stress the importance of developing a longer-term 40) Global Trends and Changes Affecting Forest Policy vision with clearer regional targets and better commu- nication and reporting. Either more resources should be allocated to the alliance or its clients should be fully informed about budget constraints within the Bank and fiscal constraints in the countries, so that expectations become more realistic. Both WWF and Bank staff consider decentralization, realistic targets, and increased stakeholder participation important ways to make the alliance more effective. 41 Conclusions 1 his review of Bank activities and changing Bank and international trends supports two main findings. First, the Bank has implemented its 1991 Forest Strategy but with ja , significant shortcomings. Second, that implementation has had only a modest impact on the strategy's two central objectives: slowing deforestation in tropical moist forests and planting new trees. The 1991 strategy made Bank activities more conservation-oriented, but it did not provide for an effective means of implementation. Despite the Bank's limited presence in the forest people living in and on the margins of forests. The sector-less than 2 percent of its total lending-it could projects' diverse approaches are consistent with the be a highly influential global actor. But the task is strategy's focus on policy and institutional reform, challenging: the Bank's goals are ambitious, yet it has improvements in forest inventories, forest management allocated very limited resources to the sector. Further- and regeneration plans, and participatory approaches. more, stakeholders' expectations are diverse. For With the notable exception of China, however, tree example, neither the high conservation expectations of planting and non-timber forest products and services some NGOs nor the contrasting perspectives of the have received much less support in Bank lending. In private sector are necessarily shared by the Bank's China the Bank has successfully supported the expansion borrowing governments. This review concludes that the of tree cover by nearly 3.9 million hectares through tree Bank needs to adopt a broad-based strategy that planting on different scales and under a wide array of includes the views of all stakeholders, more proactively tenurial arrangements-from involving poor minority pursuing the twin objectives of conservation and households on individual, community, and public lands, development in a financially and fiscally sustainable watersheds, and shelterbelts to large-scale public planta- and socially equitable manner that stimulates genuine tions-with significant national and global environmen- borrower demand and simultaneously achieves the tal benefits. However, marketing of timber and Bank's central mission of poverty alleviation. non-timber forest products are issues even there. Outside the confines of the forest sector, Bank Strategy Implementation activities have not paid enough attention to certain The Bank has only partially implemented the 1991 critical factors-often external to the forest sector- Forest Strategy, mainly by increasing the number of that affect implementation of the policy's central forest components in its environmental lending-in objectives. Integration of the principles of the forest projects that aim to conserve forests, enhance forest- strategy into the Bank's CASs, macroeconomic policy related services, and improve the livelihoods of the advice, and adjustment lending has been limited, and 43 The World Bank Forest Strategy: Striking the Right Balance adjustment lending has increased substantially since design in the Eastern Europe and Central Asia Region. 1991. Even where those principles have been inte- These are important new pilot approaches to imple- grated, the link between these macro efforts and Bank mentation, but it is too early to assess outcomes, operations has been weak, a characterization that is effectiveness, and sustainability. The Bank's challenge not unique to the forest sector. The 1991 strategy did will be to integrate the substance of forest sector issues not anticipate the powerful effect of macroeconomic into CASs, to better link the CASs to operations, and to policies and globalization. And the multisectoral provide the right incentives for scaling up the experi- approach and international cooperation emphasized in ments with positive outcomes to achieve more impact. the strategy have not been adequately pursued. In addition to its regular operations, since 1991 the The strategy, along with independently evolving Bank has launched new initiatives in response to changing Bank internal policies and processes, such as environ- global circumstances and increasing concerns about mental impact assessments and other safeguards, has deforestation. Initiatives such as the World Bank/WWF prevented operations in sectors such as infrastructure Alliance and the CEO Forum seek to increase the dialogue from contributing to deforestation. This is a substantial among stakeholders, to develop a consensus on such achievement. But sectoral analyses have been spotty in contentious issues as the role of certification and how to addressing the impact on forests of non-forest-sector define "protected areas" and "sustainable forest manage- policies. And although safeguards have been applied at ment." However, the new initiatives have not been fully appraisal in non-forest-sector lending operations, moni- integrated into the country or forest sector strategies and toring and evaluation of the impacts of those safe- their sustainability is not assured (see Annex G). guards has been inadequate. Direct forest lending (for mainstream activities of Effectiveness forest ministries and departments) has stagnated. The effectiveness of the 1991 strategy has been modest Nearly two-thirds of it is concentrated in China and with respect to achieving its two main objectives, and India, where it is at risk of decline-in China, because the sustainability of its impact is uncertain. The rate at of the shift in the Bank's lending terms; in India because which tropical moist forests are disappearing has not of competing demands for borrowed resources. Forest been reduced through Bank efforts, and tree planting lending has plunged in Africa, where the need for forest with Bank financing has occurred on too small a scale assistance is greatest and where the poor are over- to make a significant impact on global forest cover. whelmingly dependent on forest products and services. The strategy has kept the Bank from getting involved in Forest sector lending also has not been sufficiently policies and operations that harm forests, thereby integrated into the Bank's agricultural, rural develop- absolving it of "guilt by association." But the world's ment, or poverty alleviation strategies, although some forests, especially the tropical forests, continue to of the world's poorest people rely on forest products deteriorate and the strategy overlooked temperate, and services for their livelihood. Prominent among the boreal, and tropical dry forests, which are also socially forest-dependent poor are women, but gender consider- and environmentally important. ations have also received too little attention in the There are three related reasons for this mixed Bank's policy implementation. Given the complex performance; they have to do with how the strategy and cultural challenges of getting women involved in subsequent policy were conceived. First, because the poverty-oriented forest projects, the Bank should make rapidly changing forces that were reducing forest cover extra efforts to consult and engage nationals from and forest quality were not correctly diagnosed, the borrowing countries knowledgeable in these issues. remedies suggested were either inadequate or misdi- These criticisms notwithstanding, some notewor- rected. OP 4.36, the unclear "do no harm" policy, tried thy changes are under way in sectoral analyses and to give Bank staff more flexibility in addressing the adjustment lending in the East Asia and Pacific Region, challenges of forest management, but responses to staff and in increasingly sophisticated participatory surveys indicate that it did not succeed. Second, the approaches being used in the East Asia, South Asia, consultative process used to develop the strategy was and Latin America and Caribbean Regions. More not inclusive enough. It left out key borrowing country participatory and phased approaches, including learn- and private sector perspectives, as well as those of ing by doing, are being incorporated into project Bank staff and managers, many of whom developed no 44 Conclusions sense of ownership of either the strategy or the policy. primary tropical moist forests, and the requirement Some Bank client countries were unaware of the forest that projects may be pursued only where there has strategy until this OED review. Moreover, the strategy already been broad sectoral reform. Even though the led to a significant loss of the Bank's internal capacity, ban was confined to primary tropical moist forests, the as a number of forest specialists left the Bank in the controversy surrounding any logging in any natural years after the strategy was announced. Finally, the forest has led to the perception of reputational risk for rapid changes since 1991, both globally and in the Bank involvement in other forests, including secondary Bank, have made the strategy less relevant. natural forests in the tropics. Even in client countries The strategy's limitations. The strategy's focus was heavily committed to conservation, the costs of dealing too narrow-20 countries with tropical moist forests- with the Bank in the forest sector are widely viewed as and neglected other biodiversity-rich types of forest. And disproportionate to the potential benefits. in assuming that poor people were the main cause of Decreasing relevance. The Bank's client countries deforestation in those tropical moist forests, it failed to have viewed the Bank's limited funds as being better consider the role of other actors. The strategy overlooked suited to competing uses with quicker payoffs, even for fundamental governance issues that affect forest sector the objective of poverty alleviation (girls' primary development and did not consider forests integral to the education, rural electricity, drinking water supply). Bank's poverty alleviation mission. It focused largely on The returns on long-gestating forest investments are economic solutions, such as the length and price of often not high or quick enough, but the risks tend to be concessions (as incentives for conservation), and on too high, relative to other possible uses of those funds, private property rights. In reality, a wide range of often to stimulate borrower demand for Bank involvement or complex property arrangements are encountered in forest investments. This has been true not only for tree sector development. The strategy diagnosed the problem planting involving poor households in China-where of externalities (the divergence of global, national, and demand for Bank funds has plummeted as interest rates local costs and benefits) as a factor in deforestation but, have increased-but also for medium- and large-scale except for the small GEF grant program, it did not call for plantations in Brazil's private sector. The 1991 strategy mobilizing enough resources to meet the resource gap for did not adequately acknowledge either the long-term conserving forests of global value. It assumed that nature (and the short-term costs) of forest-related governments would borrow funds on IBRD or IDA terms benefits or their implications for financing. Whether as to achieve global (or even national) objectives for forest part of forest strategy or of financial sector policy, conservation, although they had other, more pressing, access to finance for tree planting on any scale has priorities. diminished. Similarly, in retrospect, the strategy under- Disincentives to implementation. Within the Bank, stated the power of domestic and international market insufficient staff ownership of the strategy, shortcom- forces to strengthen the incentives to cut trees or to ings in human and financial resources, and a lack of place land under alternative uses, increasing deforesta- incentives have been obstacles to the strategy's full tion. With or without Bank-financed structural adjust- implementation. Country and task managers and client ment, borrowing countries have often liberalized their governments perceive Bank involvement in the forest economies in the context of globalization to take sector as entailing higher transaction costs and advantage of market opportunities that would help reputational risks than involvement in other poverty- them maintain or resume growth and alleviate poverty. alleviating sectors. Contributing to this perception are Liberalization has increased incentives for deforesta- the ambiguous nature of OP 4.36's conditions for Bank tion in many of the Bank's client countries, often with involvement in sustained-yield logging, the associated adverse impacts on forests and the people who depend ban on Bank financing of commercial logging in on them. Drawing criticism: The strategy's definition of "primary forest" and the application of Bank safeguards, particularly those on indigenous people and resettlement, have added to external criticism, including the threat of inspection panels. These controversies have been significant in forest-rich countries, which have wished to use their substantial natural forests for financing economic development, but they have also extended to other types of forests and projects. 45 Thc World Ba nk Forcst Strategy: Striking the Right 13alance Reconsidering the Bank's Forest Strategy Bank clients would be willing to borrow funds to meet Efforts to promote forest sector objectives, especially those objectives. But in the 80 countries with declining the conservation and sustainable use of forest per capita incomes, competition is intense for Bank resources, must be viewed in the context of current resources for activities with more immediate benefits. It global realities, country circumstances, and the overall was unrealistic to assume that global environmental development goals and aspirations of developing coun- objectives could be achieved through the Bank's lend- tries. The Bank's strategy needs to be cognizant of, and ing function alone, even though environmental con- responsive to, the inevitable forces of globalization and sciousness in the Bank's borrowing countries has their impact on forests and forest-dependent peoples. It increased and conservation would produce some long- needs to be flexible enough to accommodate local term national and local benefits. Many of the Bank's circumstances. It must also recognize the importance of largest borrowers, including the most forest-poor and the participation of constituencies within specific bor- environmentally conscious countries, have indicated rowing countries in discussions of activities such as the that they have higher priorities for the use of Bank demarcation of forest types by function, or tree plant- resources than conservation investments. The 1991 ing to supplement natural forest resources and services, strategy produced no momentum toward designing a and of such issues as social justice. global collaborative effort, nor did it provide mecha- Revising the Bank's forest strategy and policy- nisms for mobilizing adequate financial resources for and supporting implementation strategies-should such an effort. The GEF, while important, is too small enable the Bank to play two synergistic roles. in scale, providing limited, term grants for biodiversity conservation. It has no mandate to offer payments for • In its global role, the Bank would capitalize on the maintenance of forest cover and related environ- its convening powers to facilitate partnerships mental services. that mobilize additional financial resources (over and above improved coordination of exist- Recommendation: The Bank should use its global ing country-specific aid flows) for use in client reach to address mechanisms for and mobilization of countries, including new financing mechanisms concessional international resources outside its lending on a scale large enough to achieve any global activities. These resources should be substantial goals that may be set out in the revised strategy. enough, and on attractive enough terms, to interest I In its country-level role, the Bank would address developing countries. Support for Bank leadership in the diverse realities in client countries, using all developing carbon and other markets (certification, the instruments at its command and stressing ecotourism, water) is not universal, and international long-term involvement, partnerships with a willingness to pay for these services is questionable. broad range of constituencies, learning by doing, Given the Bank's increasing decentralization, the Bank and the exchange of experience across countries. will need to revisit the matrix management arrange- This would require a long-term commitment, ment governing forest operations if it is to play a global with enough resources for ESW and with consul- role in advancing or implementing international agree- tative processes complementary to, but indepen- ments or piloting new approaches. dent of, lending operations. Forge international partnerships. Implementation expe- Recommendations rience suggests that the Bank cannot achieve results in OED has identified seven elements that would make the the forest sector alone, even at the national level. It is Bank forest strategy more relevant to current circum- nearly impossible to do so globally without forging stances and strengthen the Bank's ability to achieve its partnerships with donors, foundations, the private strategic objectives in the forest sector. sector, civil society, and NGOs. The initiatives intro- duced by the World Bank since 1991 represent a clear Mobilize financing for global forest services. The 1991 break from the past, but the Bank needs to widen the Forest Strategy acknowledged the divergence between scope of its activities-not just at the international level the global and national (including local) costs and to successfully scale up, but also at the national and benefits of conservation. It assumed, however, that local levels to scale down. 46 Con cIlislo n s Recommendation: The Bank needs to proactively address the challenges of endangered, biodiversity-rich establish partnerships with all relevant stakeholders to forests in a variety of ecosystems and should promote achieve its country- and global-level goals. The Bank tree planting. and other development partners must increasingly work together at both international and country levels, Foster sustainable development objectives. The pow- in a participatory manner, to improve forest manage- erful forces of globalization and economic liberaliza- ment in all kinds of forests, aiming to reach a balance tion have intensified pressures for forest production among environmental, economic, and social objec- and land conversion, challenging the goal of "sus- tives. This may lead to new agreements and new ways tainable development." Rapidly growing domestic of mobilizing resources, with the Bank as one of many and international demand for forest and agricultural partners. products has a synergistic relationship with poor governance. Managed-production forests, tree plant- Broaden the types of forest covered. The boreal and ing, and tree plantations can reduce pressure on temperate forests of the Europe and Central Asia natural forests set aside for preservation. Together Region are a major source of timber, biodiversity, they offer the potential for "win-win" outcomes, with and other forest products and services, including better yields and more conservation. The debate on recreation and carbon sequestration. Since 1991, this prudent forest management to maintain the Region has seen the greatest growth in Bank forest resource's potential into the future has advanced lending, as countries from the Region with extensive considerably since 1991. The improved, or low- forests have joined the Bank. Committed to protect- impact, management of natural forests is recognized ing old growth forests, the Bank is already support- as holding the potential to increase the efficiency of ing production and conservation activities in many forests' multiple functions and services. Certification of these national forests, which have a strong is an important instrument for encouraging better tradition of responsible forest management for mul- practices. A number of experiments are currently tiple uses. Such efforts to improve production effi- under way on certification (including some associ- ciency in all types of forests should continue, except ated with the World Bank/WWF Alliance), but in forests designated for protection by national developing countries have little experience with this governments. It is also important to note that instrument. Moreover, although it may be possible to extending the current ban on Bank financing for agree on uniform international criteria for all pro- commercial logging in tropical moist forests to the cesses and types of forest, uniform indicators are forests of Europe and Central Asia would jeopardize unlikely because of the diversity of forest types, current operations and could have a chilling effect on values, and functions. So it would be unwise for the the Bank Group's ability to mobilize much-needed Bank to endorse a specific certification standard. The funding for continued responsible forest management Bank must actively entertain alternative methods of in this Region. Tropical dry forests are also impor- certification, provided they meet generally accepted tant, especially for meeting the fuelwood and liveli- criteria and indicators and are adapted to circum- hood needs of the poor, particularly in Africa, which stances in specific developing countries. Little is needs increased Bank support. Global thinking about known about the economic and financial returns to the functions of forests has reached the point where it improved or low-impact forest management. What may now be possible to assign specific functions to evidence there is suggests that current returns to individual forests in a way that both national and conventional logging-legal or illegal-are so high international goals can be met. that investments in improved management cannot be justified without substantial additional research and Recommendation: Bank strategy should have a more experimentation to demonstrate its feasibility under eclectic and inclusive approach with a global reach, highly diverse tropical forest conditions. In any case, rather than narrowly focusing on tropical moist forests. widespread illegal extraction makes it pointless for Tailoring forest strategy to specific forest types, func- entrepreneurs to invest in improved logging or tree tions, and services would increase the Bank's global planting. This is a classic case of concurrent govern- impact in the forest sector. A revised strategy should ment and market failure. 47 1 he World Banik Forest Strate gy: Striking the Right Balan ce Recommendation: The Bank Group should ensure that ity, and diversifying sources of monitoring to actively forest concerns receive due consideration in its macro- include civil society. Improved governance cannot be economic work and all relevant sectors and should achieved by the forest sector alone, but the forest sector support activities that will help protect natural forests can take the lead in bringing it about. of national and global value. The Bank should explic- itly cover approaches to these issues in its CASs and Apply a more inclusive definition of "the forest- structural adjustment lending. It should increase sup- dependent poor." Depending on how "dependence" is port for quality ESW by providing resources (indepen- defined, as much as a quarter of the world's poor may dent of lending operations), it should support research depend on forests for their livelihoods. Many, but not and extension, and it should establish guidelines, all, of the forest-dependent poor are indigenous people, criteria, and indicators for improved forest manage- a group to whom the Bank's forest strategy and related ment. Through partnerships, the Bank should also help safeguards paid special attention. The 1991 strategy create public and private capacity for widespread stressed the importance of reducing poverty to relieve application of improved forest management and tree pressure on forests, and promoting tree planting as a planting (through small, medium-size, and large com- way to meet the fuelwood needs of the poor, but did munity, private, and public plantation forests as appro- not recognize the importance of developing the forest priate in particular circumstances and with due envi- sector as a means of alleviating poverty among all ronmental and social impact assessments in place). forest-dependent people. Bank-financed projects in China, India, and Mexico demonstrate the substantial Curtail illegal logging through improved governance. potential that forest development-through community The pervasiveness of illegal logging is a joint outcome of participation-holds for generating employment, in- high economic returns and poor enforcement of laws and comes, and social capital. Forest development and regulations. Poor governance, corruption, weak enforce- forest policy should become more prominent elements ment capacity, and political alliances between the ruling in the Bank's poverty alleviation strategy. elite and some parts of the private sector all play a part in deforestation by permitting illegal logging and the Recommendation: Given the Bank Group's poverty environmentally destructive and socioeconomically in- alleviation mission, a revised forest strategy should equitable exploitation of natural capital. Successful include elements that directly address the livelihood conservation, preservation of biodiversity, and improved and employment needs of all poor people, while forest management all require reducing and controlling continuing to safeguard the rights of indigenous people. illegal logging. Increasing forest productivity and pro- A revised strategy should also acknowledge the fre- viding alternative sources of timber and other forest quent conflicts between the interests of the indigenous products will also reduce the returns to illegal logging. poor and those of the non-indigenous poor. To better Institutions that improve governance, productivity address the needs of the forest-dependent poor, the growth, and tree production are classic and global Bank should encourage grassroots investigations into public goods and merit public investments. Each re- complex land rights and other rights. It also needs to quires long gestation periods and entails the risk that monitor the impacts of macroeconomic and other results might not be achieved or might be reversed. changes, and develop safety nets for those likely to be Fortunately, the movement toward democratization and harmed by Bank-supported activities. the emergence of active civil societies are paving the way for greater transparency and accountability. Adjust internal Bank incentives and reporting systems. The forest strategy's emphasis on "doing no harm" Recommendation: A revised and strengthened forest increased public accountability, made the challenges of strategy should aim to reduce illegal logging by involvement in the forest sector more complex, raised actively promoting improved governance and enforce- transaction costs (without raising the resources to deal ment of laws and regulations. This would entail with them), and was seen as increasing the reputational helping governments improve implementation of exist- risks for Bank Group involvement in the forest sector. All ing laws and regulations and, where necessary, chang- these costs, plus the costs entailed in a more country- ing them, improving government enforcement capac- driven orientation, were higher than the 1991 Forest 48 Conclusions Strategy envisaged. Against this reality, the framework need to be enhanced through a more evenly balanced of internal Bank incentives is currently tilted against matrix management structure so that operational staff forest operations, and the Bank's capacity in the forest feel that they have management's support and confi- sector has declined. Some skills, such as for assessing the dence. Staff should also have access to the necessary impact of global, macroeconomic, and technological quality human and financial resources-if necessary, changes on forests, were always in short supply and independent of lending operations-to address risky remain so. These and other factors discussed in this and controversial issues in the forest sectors of their report have made Bank managers risk-averse. Country client countries. If the revised strategy includes specific managers also tend not to be motivated to incur the risks international forest goals, it should provide for the and transaction costs associated with complex, contro- specific financing mechanisms and arrangements versial forest operations. The Bank has not provided the needed to achieve those goals. The Bank must dili- resources needed to track the progress of forest opera- gently and routinely monitor compliance with all tions (locally or globally) and is weak on monitoring safeguard policies in its investment and adjustment compliance with safeguard policies. lending, adhere strictly to the requirement for environ- mental impact assessments in its sectoral adjustment Recommendation: To be credible, the Bank must either operations (introduced in May 1999), and consider align its resources with its objectives in the forest sector introducing a requirement for environmental impact or scale down its objectives. The Bank's internal assessments in adjustment operations where such im- incentives and skill mix for forest sector operations pacts are likely to be significant. 49 ANNEXES ANNEX A: EXPANDED EXECUTIVE SUMMARY In 1991 the World Bank published The Forest Sector: A President James Wolfensohn, such as the CEO Forum World Bank Policy Paper, a comprehensive statement and the World Bank/World Wide Fund for Nature of the World Bank Group's forest strategy.' This paper (WWF) Alliance, went beyond the prescriptions of brought the environmental agenda into the mainstream the 1991 strategy. of the Bank's activities and challenged the Bank Group The effectiveness of the 1991 strategy has been to adopt a multisectoral approach that would conserve modest, and the sustainability of its impact is uncer- tropical moist forests and expand forest cover. It also tain. The strategy had several inherent limitations. initiated participatory and consultative processes in First, it focused narrowly on 20 tropical moist strategy formulation. Parts of the strategy outlined in forest countries and neglected other biodiversity-rich the 1991 paper became the basis for Operational Policy types of forest that are even more endangered, more 4.36 and Good Practices 4.36, both issued in 1993. Two important globally, or more in need of conservation. previous evaluations of the forest strategy-the 1994 Second, while it diagnosed the problem of externalities, Review of the Implementation of the Forest Sector it did not encourage development of a mechanism for Policy by the (then) Agriculture Department and the mobilizing grant or concessional funding to compen- 1996 Forestry Portfolio Review by the Agriculture sate those who conserve forests of global value, Department and the Quality Assurance Group-con- implicitly assuming that governments would borrow cluded that it was too early to assess the impact of the Bank funds to achieve global conservation objectives. forest strategy. So this report is the first comprehensive Third, the strategy failed to address governance issues evaluation of the Bank's forest strategy. beyond economic solutions such as the length and price The Bank has implemented its 1991 Forest Strategy of concessions as incentives for conservation. Fourth, only partially, and mainly through an increased num- its consultative process was not broad enough to elicit ber of forest-related components, especially in environ- ownership among key stakeholders and government ment sector lending. Although the strategy sent a strong officials in borrowing countries. Moreover, the Bank signal about changed objectives in the forest sector and had no implementation strategy and devoted too few included a new focus on conservation, its implementa- resources to deal with the high transaction costs of tion has fallen short. Bank involvement in the sector. Fifth, the strategy Direct lending for the forest sector was not well- insufficiently diagnosed the powerful impacts of glo- enough incorporated into the Bank's rural develop- balization and economic liberalization-factors exter- ment or poverty alleviation strategies, even though nal to the forest sector-on rates of deforestation and many poor people and minorities in borrowing on forest-dependent people. These limitations, com- countries rely greatly on forest products and services bined with the Bank's cautious approach, had a chilling for their livelihoods. The strategy and safeguard effect on Bank involvement in improving forest man- policies helped shift Bank-financed investments agement, particularly in forest-rich countries, and even away from the kinds of projects that had previously in those regions of forest-poor countries that use their contributed to deforestation, but they also inhibited forests for economic development. risk-taking. Furthermore, the multisectoral approach A revised Bank forest strategy and policy-and a and international cooperation that the forest strategy Bank implementation strategy-should enable the emphasized were not actively pursued. There was Bank Group to play two synergistic roles: only limited integration of the forest strategy into Country Assistance Strategies (CASs), macroeco- * In its global role, the Bank would capitalize on nomic and sectoral analyses, and adjustment, infra- its convening powers to facilitate partnerships structure, and agriculture lending. In addition, rapid that mobilize additional financial resources globalization, technological changes, and gover- (over and above improved coordination of exist- nance issues in the forest sector, as well as changes in ing country-specific aid flows) for use in client the Bank itself over the past decade, have rendered countries, including new financing mechanisms the 1991 strategy only partially relevant. At the on a scale large enough to achieve the global same time, initiatives introduced by World Bank goals set out in the revised strategy. 51 The World Bank Forest Strategy: Striking the Right Balance * In its country-level role, the Bank would recog- 4. Forest issues need to receive due consideration in nize and address the diverse realities in client all of the Bank's relevant sector activities and countries using all the instruments at its com- macroeconomic work, and the Bank should mand and stressing long-term involvement, part- support activities that will help protect natural nerships with a range of constituencies, learning forests of national and global value. Efforts to by doing, and the exchange of experiences across promote forest conservation and development countries. This would require a long-term com- should be streamlined and aligned with the mitment by the Bank, with enough resources for overall development goals and aspirations of the research, economic and sector work, and consul- Bank's client countries. The synergy between tative processes complementary to, but indepen- development and conservation objectives needs dent of, its lending operations. to be recognized and actively promoted through tree planting on degraded forest and OED has identified seven elements that would make nonforestlands, energy substitution, end-user effi- the Bank forest strategy more relevant to current circum- ciency, research, technology, and dissemination. stances and strengthen the Bank's ability to achieve its 5. Illegal logging needs to be reduced by actively strategic objectives in the forest sector: promoting improved governance and enforce- ment of laws and regulations. This will require 1. The Bank needs to use its global reach to helping Bank borrowers improve, implement, address mechanisms for and mobilization of and enforce existing laws and regulations. It concessional international resources outside its will also require that national stakeholders lending activities. Measures such as the Proto- (especially civil society and the private sector) type Carbon Fund and other concessional fi- demand, implement, and monitor improved nancing mechanisms should be pursued to governance practices. compensate countries that are producing forest- 6. The livelihood and employment needs of all based international public goods such as biodi- poor people should be addressed, while continu- versity preservation and carbon sequestration. ing to safeguard the rights of indigenous people. 2. The Bank needs to be proactive in establishing More attention needs to be paid to how the partnerships with all relevant stakeholders to forest strategy affects all poor people, and fulfill both its country and global roles. At the particular attention should be paid to the same time, it must recognize the implications, conflicting needs of different user groups. in terms of additional resources, of meeting 7. The Bank needs to align its resources with its global objectives and of using participatory objectives in the forest sector. The Bank's approaches. internal incentives and skill mix need to be 3. The focus on primary tropical moist forests enhanced so that operational staff feel they have needs to be broadened to encompass all types of the support and confidence of Bank manage- natural forests, including temperate and boreal ment and country borrowers and access to the forests and other highly endangered, biologi- human and financial resources needed to cally-rich types of forest: the Cerrados region address the risky and controversial issues of the and Atlantic forest of Brazil, the tropical dry forest sector. The Bank must also diligently and forests of Africa, and the Western Ghats of routinely monitor compliance with all safe- India. The revised strategy should recognize guard policies in its investment and adjustment that natural forests alone need not serve all lending. forest functions. Some important functions (such as meeting export and urban demand, provid- Key Findings ing environmental services, and meeting the Patterns of forest sector lending employment and livelihood needs of the poor) At $3.51 billion in the 1992-99 period, overall forest can as easily be served by tree planting, the sector lending was 78 percent higher in nominal expansion of which could also relieve pressure terms than in 1984-91. As before 1991, it was just on natural forests. below 2 percent of total Bank lending for the period. 32 Direct lending for the forest sector has stagnated. The impacts of economic liberalization, globalization, tech- growth in total forest lending is explained almost nological change, and devaluation have all been key exclusively by the increase in forest components of non- factors. Moreover, the do-no-harm approach has made forest-sector projects. The integration of forest sector the Bank Group wary of getting involved in experiments lending into the environment and natural resource to improve forest management, to address illegal log- management sector has been a positive development. ging, or to improve the interface with forest industries, These projects are largely responsive to the intent of the even though borrowers are strongly urging the Bank 1991 Forest Strategy and support protected areas and Group to help them modernize their antiquated forest biodiversity conservation, zoning, indigenous people's sectors. Hence, the Bank has often lost the opportunity to rights, and community participation. But investments improve the management of forests that are already that directly address mainstream issues in the forest being exploited in an environmentally and socially sector (involving long-term policy and institutional unsustainable manner. changes needed to improve the management of forest production or regeneration on public lands) have been Containing deforestation in tropical moist forests hobbled by low borrower demand, high transaction The 1991 strategy had the dual objectives of conserv- costs, and the fear of public controversy through "guilt ing tropical moist forests and planting trees, but Bank by association" with poor forest practices of public influence on containing rates of deforestation in tropi- forests in borrowing countries. cal moist forests has been negligible in the 20 countries identified for Bank focus. Mixed results from Bank policies The 1991 strategy underrated the "developmental" The Bank strategy's cautious approach to forest man- function natural forests serve in forest-rich countries. agement and its ban on Bank financing of commercial Developing countries need to increase incomes, logging in primary tropical moist forests has been employment, and exports to meet their development strategically and symbolically important. The Bank objectives. Countries rich in forests but poor in capital has not been associated with (or criticized for) wasteful and budget resources have tended to use their natural and illegal deforestation and degradation, as it was capital to create and sustain livelihoods and to finance before 1991. The Bank has also been more cautious in development, thereby producing a conflict between financing major infrastructure investments that are national interests and global environmental objectives. likely to harm forests. Devolution of power to the local level has in- Environmental impact assessments have improved creased pressure on forests in situations where power projects at entry. The implementation of safeguard relationships are unequal and where the income, policies, while imperfect, has increased Bank account- employment, and revenue needs of local governments ability to a civil society that increasingly participates and their politically powerful constituents increase that in environmental and social monitoring. This process pressure. Sustainable development and devolution may has also increased the sensitivity of developing country be necessary or desirable in the long run, but many of governments to environmental concerns. Indeed, a the costs of forgoing the financial and economic growing number of stakeholders in borrowing countries benefits of forest exploitation are local and immediate, now look to the Bank for assistance in improving their while the environmental benefits of forest conservation domestic capacity to ensure implementation of their are national and global-and even where they are own safeguard policies. These are all important process local, are either long-term or accrue to groups with achievements and developments. only a limited voice in local governance. The situation It is essential to apply "do no harm" policies to can improve only if countries develop broad-based Bank lending. But implementing these policies has been participatory institutions that offer equal voice to local largely irrelevant to the rates of deforestation. Relative constituencies, especially the vulnerable, and only if returns to conventional logging and alternative land uses they can find the resources to forgo the short-term have been high. The synergistic relationship of the exploitation of forests. countries' own infrastructure investments, developments Forest-rich countries have tended to exploit their in agricultural technology, and market pressures to resources inefficiently. In many countries illegal log- convert land to other uses, stemming from the powerful ging in natural forests accounts for at least half of the 53 I he World Ban k Forest Strategy: Strikinrg the Right Balance total timber supply, and wastage through conventional and could help relieve pressure on natural forests. The logging, processing, and transport is reported to be as long time needed for tree growth (when there is no cash high as 70 percent of the total harvest. flow and when risks are high), combined with tight The Bank strategy adopted the ban on financing for credit, high domestic interest rates, and the continued commercial logging on the defensible grounds of uncer- supply of timber from natural forests, has thwarted tain valuations of forest environmental services, inad- demand for investments either in small-scale tree equate forest management systems, and irreversibilities planting or in plantation forests. Whether the cause has associated with forest loss. But poor governance, corrup- been resistance to plantations on environmental and tion, and political alliances between various segments of social grounds or financial policy reform restricting the private sector and ruling elites, combined with directed credit to specific activities, tree planting has minimal local and regional enforcement capacity, have been neglected. Grant resources provided by the Global played a part in environmentally damaging and socio- Environment Facility are too small relative to the need. economically inequitable exploitation of natural capital. Difficulties in measuring and valuation persist, but Bank strategy should address these issues through enough is now known for the global community to increased and improved partnerships with local govern- move ahead with tree planting and with measures to ments, civil society, and the progressive private sector, provide financial support for the conservation of forests rather than assuming that the absence of Bank Group of global and national value. Unless adequate compen- financing for commercial logging in primary tropical sation is provided for those involved in forest conserva- moist forests will somehow reduce deforestation. tion, forests will continue to shrink until scarcities The poor have been less a source of deforestation become acute enough to elicit policy and market and forest degradation in the forest-rich countries than responses. Until adequate resources are available to the 1991 strategy assumed. A much stronger factor provide such compensation, the Bank should resist appears to have been the growing domestic demand for pressures to exhort governments to achieve global wood energy in industry, for timber in construction, objectives that cannot be justified solely on the basis of and for tropical forest products for export to interna- country benefits and borrower demand. tional markets. To contain deforestation and degrada- tion, countries need substitutes. For example, Changing country policies investments in environmentally friendly alternative Bank leverage through policy conditionality is more sources of energy, and tree planting could help reduce limited than popularly believed, even though environ- demand for wood energy from natural forests. Without mental awareness among borrowers has increased. A such investments, and without adequate finances to few of the new International Monetary Fund (IMF) compensate countries that incur costs to achieve global stabilization and Bank adjustment packages have environmental objectives, deforestation and forest deg- incorporated forest sector conditionalities, but at the radation will continue. same time, stabilization and adjustment policies have placed caps on government spending, including spend- Financing mechanisms ing for enforcement. Proponents argue that IMF and The 1991 strategy recognized the need for international Bank conditionality helps bring forest policy to the transfers to underwrite conservation of global value, attention of high-level policymakers. Indeed, useful but failed to generate the momentum needed to estab- "stroke-of-the-pen" reforms have been achieved in a lish adequate mechanisms or finances for that purpose. few countries facing financial crisis. But externally There is little borrower demand for Bank funds to induced reforms without domestic commitment and finance pure conservation, through protection of exist- strong domestic champions tend not be sustainable. ing natural forests, primarily because short-term External pressure to achieve policy reform during a domestic economic or social returns to conservation period of government weakness lacks legitimacy and, are limited, even in countries where environmental over time, may even solidify resistance. What is needed consciousness and awareness of environmental ser- is a long-term, comprehensive political-economy vices-such as ecotourism-have increased. Demand approach based on nurturing domestic ownership of has also declined for the expansion of forest cover by reforms and using all the instruments at the Bank's tree planting, which could serve many forest functions disposal, including lending, Country Assistance Strate- 54 An n ex es gies (CASs), and economic and sector work (ESW). In a Central Europe, the Bank Region with the world's largest long-term strategy that combines analysis, constitu- forest cover. The boreal and temperate forests in that ency building, and resource monitoring, adjustment Region represent a major source of timber, biodiversity, lending with specific forest conditions can have a forest products, and forest services, including recreation legitimate place in specific countries-but it is not a and carbon sequestration. Committed to protecting old panacea. growth forests and uninhibited by the 1991 Forest The treatment of environmental and social impacts Strategy's restriction on financing commercial logging in the Bank's rapidly expanding adjustment lending is a in primary tropical moist forests, the Bank is supporting more disconcerting matter. Macroeconomic adjustment production and conservation activities in many of these is often essential to sustain economic growth and multiple-use forests. Such efforts to improve the produc- alleviate poverty, but its short- and medium-term tion efficiency of all types of forests should continue, impacts on forest cover and quality-and on the lives except in forests national governments designate as of forest-dependent people-can be devastating. The protected. Boreal and temperate forests and other forest Bank needs to better understand the potential impacts types in the Bank's borrowing countries have their own of its adjustment lending-by encouraging and support- management, conservation, and biodiversity issues that ing research-and to consistently apply safeguard need to be addressed. But the treatment of these issues policies to all its lending. has been eclipsed by the 1991 strategy's focus on tropical To develop a framework of mutual responsibility moist forests. The Bank and the Global Environment and accountability for improved forest management, Facility support them only through small operations. the Bank needs high-quality research and ESW at the The Bank's forest strategy must proactively learn country level. During project preparation and imple- from the experience of its borrowers, rather than mentation, the Bank should build borrowing countries' remaining top-down and externally driven. Some forest- capacity for forest management and forge long-term poor developing countries are ahead of the Bank in their links with domestic constituencies that can conduct forest policies and innovative approaches. Some of them analysis, stimulate reform, and ensure its sustainabil- are developing national sources of financing for environ- ity. This "constituency-building" approach contrasts mental actions of national interest. The spread of sharply with the "conditionality" approach set forth in democratization and increasing demands for transpar- OP 4.36 and calls for a truly multisectoral, long-term ency and accountability, as well as vibrant nongovern- effort, as is intended in the Bank's Comprehensive mental organization (NGO) movements in the Bank's Development Framework (CDF). It also requires more borrowing countries, have collectively increased oppor- resources. Internally, the Bank has often failed to tunities for impact. The Bank's convening power, its incorporate forest concerns into its CASs or to effec- .-: policy advice, its lending, and the prestige of its tively link CAS pronouncements with its operations. association are important in countries beginning to Under the current conservation-oriented forest strategy, commit to improving forest sector management. Forest in an increasingly country-driven and decentralized cover is stabilizing in China and India, for example, Bank, borrowers in forest-rich countries have been where the Bank is helping to operationalize participa- reluctant to include forest concerns in their own tory approaches to forest management. In Costa Rica, a priorities for Bank support (which is part of the reason multisectoral approach to policy advice facilitated the the sector gets little attention in CASs). With a few implementation of far-reaching reforms and national recent exceptions, forest issues have not been empha- financing mechanisms. In Brazil, Cameroon, and Indo- sized in ESW, even in countries where forest sectors are nesia, where the Bank has had difficult relations in the economically important. forest sector, dialogue has now opened up both within the countries and between the countries and the donor Improving tree cover, sequestering carbon, and community. This opening-up has increased the likeli- protecting biodiversity in other forests hood that reforms generated by constituencies within Although the 1991 forest paper focused on tropical moist these countries will have broad ownership. In contrast forests, Bank operations have rightly outpaced that despite a long-term Bank presence, in Kenya, many strategy. The greatest growth in forest lending has been domestic and donor accomplishments have been lost for in the management of public forests in Eastern and lack of government commitment. 55 Thc World Ba nk Forest Strategy: Striking the Right Balance Need for a poverty focus CASs and to provide the right incentives for piloting Most of the population that lives in and around forests new approaches, and then scaling up those with is among the poorest and often includes indigenous positive outcomes. minorities. Estimates vary widely, depending on the The success of large programs in forest-poor China concept of forest dependence used, but this population and India (representing 60 percent of the Bank's direct may include as much as a quarter of all poor. Nearly forest sector lending) suggests that through a combina- four-fifths of the forest-dependent poor are in Africa, tion of policy and institutional reforms and investments East Asia, and South Asia. How the loss of forest cover, it is possible to achieve win-win outcomes-greater forest degradation, and tree planting affect these people poverty reduction and an improved environment. Yet depends on the nature of their forest dependence. such investments are rarely made in Africa, where Knowledge about the nature of their dependence is millions of poor people are forest-dependent. The crucial to the judicious design of interventions. Some of investments in China and India show that forest the poorest forest-dependent people are women, for regeneration and tree planting through community example, but gender considerations have not received participation can offer substantial economic benefits to much attention in the implementation of the Bank's millions of poor households in forest-poor countries, strategy. Given the complex cultural challenges of while increasing forest cover, sequestering carbon, and getting women involved in poverty-oriented forest reducing pressure on natural forests. But it takes a long projects, the Bank should make extra efforts to consult time to develop and nurture community organizational with and engage nationals of borrowing countries who structures, establish new rules of the game, and attain are knowledgeable in these issues. Bank-financed legal, environmental, organizational, and financial projects should involve the entire spectrum of forest- sustainability. Moreover, the risks to those investments dependent people. are high given the conservative attitudes of most forest While many of the forest-related poor are indig- departments and the extreme poverty and remoteness enous, even larger groups of non-indigenous people typical of forested regions. have benefited from government land policies that have Can other donors provide the much-needed invest- sometimes arbitrarily withdrawn land rights from one ments in forest-poor countries while the Bank contributes group and assigned them to others. The Bank's 1991 through ESW and policy dialogue? Some environmental strategy underestimated the complexities of local cir- NGOs strongly oppose any Bank investment operations in cumstances and the need for location-specific solutions the forest sector, either because they increase the suited to the political, cultural, legal, and economic borrower's indebtedness or because they benefit forest context. Bank projects have often tried to tailor the ministries and departments uncommitted to reform.2 Bank's universal forest and safeguard policies to spe- Good ESW is necessary and adjustment lending can play cific country conditions, but frequently the net effect a role in specific cases, but only in exceptional cases are has been increased transaction costs and criticism from both sufficient to achieve impacts on forest cover and both borrowers and outside observers. Even in coun- quality on the ground. The Bank's presence-including its tries with large amounts of forest lending, forests have investments-is crucial to its convening power and its not been an important element of the Bank's strategy ability to view forest development in a macroeconomic for poverty alleviation. and multisectoral context. Besides, ESW is increasingly Fortunately, noteworthy changes are under way in tied to lending activities, and few donors or governments sectoral analyses and adjustment lending in the East can scale up approaches to participatory forest develop- Asia and Pacific Region, and in increasingly sophisti- ment to the level the Bank can. Through a hands-on cated participatory approaches in East Asia, South approach, the Bank learns from and gains the trust and Asia, Latin America, and Eastern Europe. Project confidence of local stakeholders, enabling it to be a design has improved through the use of phased and credible partner in local and national problem solving. more participatory approaches, including learning by Yet demand from finance ministries for International doing. These important new pilot approaches need to Bank for Reconstruction and Development (IBRD) or even be promoted, but it is too early to assess their outcomes International Development Association (IDA) financing is or sustainability. The Bank's challenge will be to slackening-even in countries with successful forest sector integrate forest sector issues more substantively into operations-because of competing demands on Bank 56 Annexes funds from other poverty-reducing sectors that attract less Toward an effective forest strategy controversy and criticism and have lower transaction The Bank needs to articulate its future role in global costs than the forest sector, such as health and primary forest partnerships and support that role with resources education. Moreover, fiscally strapped developing coun- commensurate with the challenge. The Bank's internal tries with declining per capita incomes are rarely in a incentives currently tilt against forest operations. The position to borrow resources for participatory forest loss of forest staff after adoption of the 1991 Forest management; they have other, more urgent development Strategy sent a negative signal to operational staff. priorities. What incentives do country managers have to incur the Without additional grant or concessional assistance, risks and transaction costs associated with complex governments are unlikely to be interested in long-term and controversial forest operations? The Bank lacks the Bank involvement in the risky forest sector. And interna- instruments and, increasingly, the skills to implement a tional willingness to provide grant funds appears to be forward-looking forest sector strategy. Resources to weaker today than when the forest strategy was formu- track the progress of forest operations (globally or lated in 1991, despite growing environmental awareness locally) are lacking, and arrangements for monitoring in developing countries. To mobilize concessional re- safeguard policy compliance are weak. Should budget- sources, the Bank needs to work effectively with donors, ary resources for the forest sector be made available- with U.N. agencies, with the private sector, and with even with low borrower demand-to meet global NGOs. The Bank has become more active in forging objectives? Without a clear operational policy consis- partnerships in the past few years, but the record on tent with the intentions of the revised strategy-and an international cooperation has not been as strong, either implementation strategy to meet the policy goals-the because donor and Bank agendas differed, or because the Bank would be unwise to promise global results that Bank chose to go it alone. exceed the sum of its country operations. 57 ANNEX B: METHODOLOGY OF THE REVIEW The OED Review of the World Bank's 1991 Forest This was done to discern whether there has been any Strategy and its Implementation consists of two compo- significant change in the pattern of Bank lending since nents: First, a review of all lending and non-lending the forest strategy became effective. activities of the World Bank Group (IBRD, IDA, IFC, and MIGA) and the Global Environment Facility (GEF) Investment Lending Operations that are pertinent to the implementation of the forest The examination of the Bank's forest sector lending strategy; second, six in-depth country case studies activities had three major components: (Brazil, Cameroon, China, Costa Rica, India, and Indonesia). The relationships of the study's various * Direct Forest Projects: Projects listed in the parts are shown in figure B.1. The Portfolio Review of Bank's databases under the "forestry" subsector Bank and GEF activity was done by OED. The IFC whose parent sector is agriculture. review was done by the Operations Evaluation Group * Forest-Component Projects: Projects listed in (OEG) of the IFC, and the MIGA review was done by subsectors other than "forestry" that also con- the Office of Guarantees of MIGA. duct forest-sector-related activities. Forest-com- ponent projects are generally listed in other subsectors of agriculture and environment, FIGURE B.1. RELATIONSHIP OF THE STUDY'S PARTS including natural resource management. * Forest-Impact Projects: All lending operations in various sectors and subsectors that have potential indirect (positive or negative) impacts on forests. WlorldBn Countr Potfolio Review < Case Studies Projects with Impacts on Forests The major sectors with forest-impact projects are agri- culture, including agriculture sector adjustment lending; transportation; mining; oil and gas; and electric power and energy. Application of safeguards in these sectors was examined both for their content relative to the intentions of the 1991 Forest Strategy and their applica- Sequence of the Review tion during project preparation, approval, and imple- All Bank activities in the forest sector were addressed in a mentation. The specific safeguards examined for compli- multisectoral context. For analytical purposes the review ance were OP 4.36 (Forestry), OP 4.04 (Natural concentrated on the following groups of countries: Habitats), and OP 4.01 (Environmental Assessment). All impact projects in the case study countries were identi- * Six case study countries fied and analyzed for the application of forest-sector- * Twenty tropical moist forest countries related safeguards. Because of the sheer number of such * Countries with Bank forest projects after 1991 projects Bank-wide, however, the portfolio analysis * Countries with forest-component projects after considered only a sample of impact projects. 1991 The method used to identify impact projects was * Countries with GEF forest projects twofold. First, all Bank Group projects in subsectors with * Countries with forest projects before 1991 a potential impact on forests were identified. In the * Countries with forest-component projects before agriculture sector, for example, all projects involving 1991. agricultural extension, agricultural adjustment, agricul- tural credit, agro-industries and markets, annual crops, The Bank's lending activities in the forest sector irrigation and drainage, livestock, other agriculture, were examined in two eight-year periods, the period perennial crops, and agricultural research were identified. before implementation of the forest strategy (1984-91) In the electric power and energy sector, projects in the and the period after implementation began (1992-99). distribution and transportation and the hydroelectric 59 The World Bank Forest Strategy: Striking the Right Balance power subsectors were considered. Projects were also sectoral and macroeconomic lending. Safeguards were identified in the oil and gas sector, in subsectors such as oil examined for two categories of Bank operations: (1) and gas transportation and exploration. In the transporta- projects whose activities could have an impact on tion sector, projects were identified in such subsectors as forests and (2) projects or project components that highways, railways, other transportation, and rural directly target forest management or tree planting. roads. Finally, all projects in the mining sector were Projects in the first category were examined to assess considered. A total of 389 projects were identified, with their compliance with safeguards addressing forest and total commitments of $30.6 billion (table B.1). In the next environmental issues (OP 4.36, Forestry; OP 4.04, step, 20 percent of these projects were randomly selected Natural Habitats; and OP 4.01, Environmental Assess- to ascertain their impact on forests. The distribution of ment). Projects in the second category, because they these 78 projects by sector, subsector, and Region is had explicit forest-related goals, were examined for presented in table B.2. application of the four safeguards concerning forests and local dwellers (OP 4.36, Forestry; OP 4.04, Adjustment Lending Natural Habitats; OP 4.01, Environmental Assess- In its review, OED addressed forests and adjustment in ment; and OD 4.30, Indigenous Peoples). two ways: Participation Issues * It reviewed a sample of 34 structural and agricul- The OED team developed a two-category evaluative tural adjustment loans and credits in an effort to framework to determine the extent of participation in evaluate whether and how forest issues were Bank projects after 1991. Projects were rated for level addressed. Specifically, the review ensured that it of participation and breadth of participation. A five- had covered macroeconomic and agriculture sector scale ranking was used to determine the level of adjustment loans and credits in the post-1991 participation: period, in (1) the six case study countries, (2) the 20 countries the 1991 Forest Strategy identified as 0 = No participation containing threatened moist tropical forests, and 1 = Information sharing (one-way (3) the 19 countries to which the Bank has made communication) direct forestry project loans and therefore has 2 = Consultation (two-way communication) knowledge of their forest sectors.' 3 = Collaboration (shared control over decisions * It reviewed in depth the three countries and resources) (Cameroon, Indonesia, and Papua New Guinea) 4 = Empowerment (transfer of control over for which the IMF and Bank adjustment loans decisions and resources). included specific forest-related conditionality. For breadth of participation, projects were rated In reviewing the adjustment lending, OED asked using a 5-scale ranking system: four questions: 1 = Extremely limited participation * Were forests mentioned at all in the loan/credit 2 = Limited participation document? 3 = Moderate participation * Was there a discussion of the links between 4 = High participation. adjustment reforms and forests? * Was there a forestry component in the loan/credit? Each forest project during the two periods (1984- * Was there loan/credit conditionality related to 91 and 1992-99) was examined for the following forests? attributes: Safeguard Policies * Participation in project stages: Inclusion in The Bank's safeguard policies were examined, particu- stated project objectives; use during project larly in investments in sectors with a potential impact design; and (where it is possible to examine) use on forests-such as irrigation, power, transport-and in during implementation and evaluation. 60 Annexes * Indicators: Inclusion of participatory indicators level outputs and processes that were germane to in monitoring and in supervision missions. achieving the project objective. The review also consid- * Methods: Social assessments; beneficiary assess- ered whether the document contained clearly specified ments; needs assessments; surveys; participatory progress indicators-that is, a series of lower-level rural appraisals; advisory groups; informal inter- actions completed in a chain of linked events to permit views; focus groups; workshops. key stakeholders to monitor progress. Based on these * Stakeholders: Communities/local rural resource criteria, appraisal documents (Staff Appraisal Reports users; community-based organizations/coopera- or Project Appraisal Documents) were rated as follows: tives/local institutions/associations; local NGOs; international NGOs/research institutions; indig- 1 = Highly satisfactory enous peoples; women's groups; local/district/ 2 = Satisfactory state/government representatives; commercial 3 = Marginally satisfactory private sector. 4 = Unsatisfactory. Monitoring and Evaluation Country Assistance Strategies and economic and The quality of monitoring and evaluation (M&E) plans at sector work were reviewed in different degrees of depth. project entry was evaluated for all forest projects and for a sample of forest-component projects approved between Non-lending Services 1992 and 1999. The review of M&E during implementa- OED's review of the Bank's non-lending services in- tion was based on a desk study of a random sample of cluded an analysis of multisectoral policy and dialogue, eight projects (four forest and four forest-component Country Assistance strategies (CASs), and economic and projects). Projects were chosen using a stratified random sector work (ESW). Table B.3 and table B.4 show the sample to cover each of the Bank's Regions and to ensure breakdown, by Region, of CASs, economic reports, and the inclusion of projects that had received performance sector reports for sectors relevant to forestry (agriculture, ratings of "unsatisfactory" in the Project Status Reports forestry, energy and mining, environment, natural (PSRs). PSRs were included to better understand how resource management, infrastructure and urban devel- effective M&E was at identifying project problems. opment, and transportation). A significant component of The M&E review focused on the following: this review was to analyze these documents in terms of the way they directly or indirectly (for example, through * Clearly stated objectives, specific to project policy reforms in their sectors) related to the treatment of interventions, with well-defined and appropriate the forest sector. The ESW, both scheduled and unsched- indicators uled, was also analyzed. * Clearly stated mid-level outputs and/or indicators of outputs, and lower-level progress indicators Country Assistance Strategies * M&E arrangements, including specific office The relevant "population" for this review consisted of 274 responsible for various activities potential CAS reports when all forest, forest-component, * Information, frequency of project M&E reports, and GEF projects (both before and after 1991) were and use of the information considered. But the review concentrated on strategies for * Institutional strengthening focused on establish- the case-study countries (30), for tropical moist forest ing information systems or databases or expand- countries (another 48 CASs), for countries with direct ing research findings for the forest sector. forest lending (another 61), and for countries with lending for forest-component projects (another 80) after 1991 for a The rating done for this review was based on key total of 219 strategies in 65 countries. promises in the appraisal documents. The review It is important to note that this was a review of the looked for clear statements of what the project expected CAS documents as opposed to a review of the to achieve by the time it was completed and for effectiveness of assistance to the countries, which is unambiguous and appropriate indicators for those addressed in the country case studies and the portfolio achievements. Statements about outputs and/or their review. The evaluative framework specified the fol- indicators were expected to specify outcomes of lower- lowing elements: 61 TABLE BA. WORLD BANK PROJECTS WITH POTENTIAL IMPACT ON FORESTS (1992-99) mmit- Commit- Cmmit- Commit- Commnit Cmit- Cmmit- Sector Subsector $ ;0:$ $M $M- t-M^ $amet Ag. cre it ~ 149 272 1363412 Agro-industry &fmarketing 58 380 15 65 1 Annual crops 3S 5 5 Irrigation & drainage 304 3310 293 9 713 1,033 530 3 Livestock 8 29 Other agriculture 1 107 232 3371 Tota1,4978 935 ;j2,279 7 1,868 686 1,465 power and transmission 2920 844 451 54 d30a2 energy Hydro 177 101 419 ~ ~~~~~~~~~~~~~~~ 411142 Total 377 4~~~~~~,021 1,263 763 54 945 4,o423 Grland toasOl 4,8ga,259s0760 ,4 2883,2 Source: WorlBankpodatabases. 1 6 11 0 TABLE B.2. ANALYZED SAMPLE OF WORLD BANK PROJECTS WITH POTENTIAL IMPACT ON FORESTS (1992-99) Sectof Subsec or $M- sm Dl CM li $M['I -it Ag. credit i 1 Agro-industry &marketing 6 15 Irrigatioin &drainage 27 58 13 90 295 285 768 Livestock 2 23 Other agriculture 12 5 21 23 42 11 114 Source: World Bank databases. 283 367 296~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. Total 235 113 163 1,4S8~ ~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Electric Distribution~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~ ~~ ~~ ~~ ~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The World Ba3nk Forcst Strategy: Strikin)g the Right Balance TABLE B.3. DISTRIBUTION OF SCHEDULED ECONOMIC AND SECTOR WORK Europe Eanand ndtal ArsiWa 8 107 0 0 4 2 8 2 19 5 Noheruthd corts 5 1 7 4 2 4 26 50 2 forest countries ' 69 125 7 6 6 4 1 31 10 Cou ntries withi BankE t [ 41 7 R East Asat and Pacific 3 5 34| foroest preojets ) 2 4 4 t2 W 9 Wt (after191)h 154 40 5 6 7 Counripes wihn an aInldsBnanGEfoetadforest-component poetcutis aesuycutis n 0mittoia oetcutis proectsa (safe 191)0929 71 102 8 197 3 fordes projects (afterA1991) 1221 ~ S1 28 J 02 (befoaribea191 1020 8 5 6 it 614 .2 Countries with Bank forest-component projects (bfefre 1991) 98 4 295 4 4 27 (after 1991) 23971 15 2 1 9603 a.ouncludes Bank andrest oetadfrs-opnn rjc onre,cs tuycutis n 0mittoiaoetcutis but each report is counted only once. 64 Annexes TABLE B.4. DISTRIBUTION OF UNSCHEDULED ECONOMIC AND SECTOR WORK | | t- | l ~~~~~~~~ : | k~~~ra- . l l E ~~~~~~Natural l cure tnoic Agri- . Energy & irn- manage- lop Tranpor l ott culture 11testry mining ent ment n t t tation Total reports ( # 0 Oi 277 I l24 120 65 9 l 8 B 97 Unscheduled reports 524 137 7 51 9 41 5 161 44 Africa 209 61 2 28 W 18 1 17 East Asia and Pacific I 53 10 4 6 1 20 4 South Asia S5 3 L 1 8 21 6 Europe and Central Asia 78 24 1 9 4 1 2 7 9 Middle East and North Africa 13 2 20 4 Latin America and Caribbean 99 20 jE 4 5 12 2 [13 4 Case study countries 49 8 1 7 > 1 18 4 Tropical moist forest countries 96 15 23 4 Countries with Bank I forest projects (after 1991) t 140 24 I 7 r 6 42 9 Countries with Bank forest-component projects (after 1991) s 2 87 Countries with GEE forest projects (after 1991) 216 47 1 23 '12 74 19 Countries with forest and forest-component GEF (after 1991) 308 69 2 28 14 >06 26 Countries with Bank -> forest projects | 1 (before 1991) 180( 47 1 2 17 - 13 53 15 All countries wvith Bank t projects (before 1991) 140 27 2 15 4 41 12 All countries wvith forest ti l and forest-component Ew projects (before 1991) 250 59 3 21 15 69 17 Total reports, without g 1 double-counting (before t F and after 1991)' 387 88 - 4 37 19 24 32 a. Includes Bank and GEF forest and forest-component project countries, case study countries, and 20 moist tropical forest countries, but each report is counted only once. 65 The World 1Bank Forest Strategy: Striking the Right Balaiice * The valuable aspects of the object of evaluation ered in the context of the Bank's overall approach to * The range of values that could be assigned to the forest sector in a country context and not in those aspects isolation. The ratings were established as follows. For * An aggregation formula issues No. 2, 3, and 4: * A decision rule for determining an overall judgment. 0 = the issue was not mentioned. 1 = the issue was mentioned but not elaborated The CAS review focused on the treatment of six upon. issues: 2 = there was an elaborated discussion of the issue or it was considered a priority. (1) Environmental issues in general 3 = goals or instruments were set for dealing with (2) Specific forest sector or biodiversity issues the issue. (3) Institutional development (4) Stakeholder involvement For environmental issues in general, there were (5) Mechanisms for monitoring and evaluation only two possible values: 0 if not mentioned and 1 if (6) The multisectoral approach. mentioned. Similarly, for M&E, 0 means there was no system to monitor outcomes in the sector and 1 means The OED team saw the way these issues are there was such a system. For the multisectoral discussed in a CAS as a reflection of the degree to approach, 0 means a multisectoral approach for the which the country team viewed forest sector issues forest sector was not explicitly advocated in the docu- strategically. Therefore the ratings should be consid- ment and 1 means such an approach was advocated. BOX 81. FAO DATA ON THE STATE OF THE WORLD'S FORESTS A ^ ccording to the Food and wood production; the rest is contributes substantially to the Agriculture Organization legally protected or harvesting is fuelwood supply. The FAO esti- (FAO), forests cover a not economically viable (for lack mates that 75 to 80 percent of the ,V quarter of the world's land of transportation links, markets, roundwood harvested in the East area-about 3.5 billion hect- or other infrastructure or because Asia and Pacific Region and as ares-and forested area dimin- of regulations or physical inac- much as 91 percent of that har- ished 0.3 percent a year between cessibility). Some of the land may vested in the Africa Region is 1990 and 1995. The FAO esti- be unavailable because of low used for fuelwood, although the mates that nearly 97 percent of productivity, but the FAO consid- production and consumption of this forested area is in a natural ers as much as 82 percent of the fuelwood are poorly tracked, state, but natural forests are rap- natural forest in South America because they occur largely in the idly being changed into semi- unavailable because of physical informal sector. natural forests and plantations. inaccessibility. The OED country FAO estimates of removals This transition has already studies challenge these estimates, from natural forests are also very occurred in Europe, where 85 because there is so much illegal large. Official concessions or pro- percent of the forests are now logging and because governments duction statistics account for half semi-natural. The shift is occur- have increased their investments or less of total (including export- E ring rapidly in many developing in infrastructure. import) consumption. But planta- countries. The FAO says that in addi- tion forestry, which represenrs only The FAO states that only tion to forested area, there are 3 percent of the world's forested 17 half of the natural forested area another 1.7 billion hectares cov- area, provides most of the wood in the world is available for ered with woody vegetation that sold to industry. 66 Annexes Simple summing of the ratings was adopted for at which forest cover, policies, and institutional overall ratings, which range from 0 to 12. The decision arrangements have changed. rule was that treatment was considered: Each country study was a collaborative effort between in-country authors, who have considerable Unsatisfactory for any rating less than or equal to 6 field research experience in the case study countries. Satisfactory if greater than 6 and less than or The OED team benefited from field visits and from equal to 9 wide-ranging discussions with government officials, Highly satisfactory if higher than 9. Bank staff, and numerous other stakeholders in the country. Detailed draft terms of reference were devel- Overview of the Country Case Studies oped to explore certain issues common across coun- The country case studies were intended to complement tries and others specific to certain countries. The the desk portfolio reviews. Their purpose was to bring country case studies tried to address some issues an in-depth understanding of developing countries' common to many countries as much as possible by forest sectors and to provide the OED study with using similar databases and methodologies. They also national perspectives from a range of stakeholders. Six addressed issues specific to those countries and ex- countries were selected for in-depth study, three forest- plored the Bank's interface with countries on those rich, and three forest-poor. The vast differences in the issues. The point was to explore the extent to which six countries selected for the case studies, and the extent the Bank's 1991 Forest Strategy could provide the of the Bank's presence, are apparent from the resource flexibility needed to deal with quite divergent country endowments, the size and the pressure of population on realities. the land, country policies and institutions, and the rates The country studies asked two key questions: The OED study findings cast cover estimates with a "Global However, this will require a considerable doubt on the reliabil- Forest Resources Assessment 2000" huge long-term commitment and ; ity of these estimates. First, the (FRA 2000) initiative, currently in developing countries are diversity of forest sector concepts, progress. unlikely to buy in to such an definitions, classifications, and The OED review found major inventory until the international a measurements is bewildering. differences between authenticated stance on the extent, sources, Second, most developing countries national estimates and FAO esti- and causes of changes in the for- t face financial and technological mates of forest cover and loss- est cover-and their implications f constraints that do not allow them both levels and trends-in for resource planning and imple- e to measure forest sector perfor- countries as important as Brazil mentation-become less combat- mance adequately. So national and Indonesia. To ensure analyti- ive and more inclusive of issues K assessments of changes in forest cal rigor, the country studies drew the developing countries face. g cover and forest quality may not almost exclusively on national Without a mutually shared vi- be reliable enough for sound cross- data and on the literature that sion and a strategy that demon- ; country comparisons. The FAO assesses the validity of such data. strates greater political acumen combines national forest, demo- If the international community and a fuller understanding of 2 graphic, and income data to is serious about addressing issues practical realities, including the g project current and future rates of of forest degradation, it must pro- international resource transfers deforestation, so the reliability of vide financial support to help bud- required to achieve global objec- the FAO projections is question- get-strapped developing countries tives, the global community will able. However, the organization is conduct forest inventories, as sug- achieve few useful results. improving and updating its forest gested in the 1991 Forest Strategy. 67 The World Banlk Forest Strategy: Striking the Right Balance * What do we know about the sources and causes Workshops of deforestation in each country? Entry workshop. An entry workshop on the OED * How did the Bank Group (World Bank, IFC, and review was held on December 18, 1998, at World Bank MIGA) and GEF interact with each other and- headquarters in Washington, D.C. The purpose of the considering the full gamut of instruments avail- workshop was to solicit comments on the substance of able to the Bank Group-with the factors affect- the issues the OED team proposed to address and on the ing processes of change in the forest cover? methodology proposed to ensure that the review's output would be as relevant as possible to the ongoing Data Sources ESSD Forest Policy Review and Implementation Pro- The overall portfolio review for the Bank was a desk cess. Participants in the workshop included the co-chair review, based on the Bank's information systems and staff and executive secretary of the Intergovernmental Fo- interviews. A variety of in-house data sources were used, rum on Forests, bilateral donors, members of OED's such as the Quality Assurance Group's "Projects at Risk" advisory committee, authors of country case studies, database, OED's project evaluation database, the Annual and World Bank Group staff and managers. Review of Portfolio Performance (ARPP) database, the Internal reviews. OED's preliminary report was Planning and Budgeting Department's (PBD) database, discussed with Bank staff and management at a Project Appraisal Documents (PADs), Staff Appraisal workshop on December 15, 1999, and at a meeting of Reports, Project Status Reports (PSRs), Project Comple- the World Bank Executive Board Committee on Devel- tion Reports (PCRs), Implementation Completion Reports opment Effectiveness (CODE) on December 23, 1999. (ICRs), and Project Performance Audit Reports (PPARs). Country workshops. OED held four multi-stake- For data on the state of the forests in the case study holder country workshops between November 1999 and counties, OED relied almost entirely on national data and April 2000. The India Country Workshop was hosted by the literature. FAO data, the accuracy of which is India's Ministry of Environment and Forests with active debatable, were used only when nothing else was avail- input from the World Bank's country department (No- able (see box B.1). vember 1, 1999). The China Country Workshop, hosted by the State Forestry Administration (SFA) and World Process of the Study Bank country office, was held on November 5, 1999. The highly participatory process used in the study was OED held a workshop in Brazil in collaboration with the important for reaching conclusions and presenting differ- government of Brazil, the Brazilian Corporation for ent viewpoints. The review consulted widely with Agricultural Research (EMBRAPA), and the World Bank governments, development agencies, NGOs, and the country office on November 18-19,1999. The Indonesia private sector. The OED design paper was translated Workshop, co-hosted by the International Center for into Portuguese, French, Mandarin, Spanish, and Forestry Research (CIFOR) and the U.K. Department for Bahasa (languages of five of the six case study countries: International Development (DFID), was held on April Brazil, Cameroon, China, Costa Rica, and Indonesia). 25, 2000. The workshops were designed to allow The country studies and the main report were translated governments and other country-level stakeholders (such before the OED and ESSD regional workshops. as representatives from NGOs, the private sector, and Process-related components of the review are academia) an opportunity to comment on their country's described next. case study before the studies were offered to an interna- tional audience for feedback. The workshop participants Advisory Committee discussed both the Bank's involvement in the forest sector An advisory committee of four counseled OED on its and the underlying diagnosis and implementation of the review from the beginning. The committee met three country's forest strategy and its relation to the Bank's times, offering comments and advice on the design 1991 strategy. paper, on the selection of countries for the case studies, The Cameroon case study (translated into French) on preliminary findings from the portfolio review, on and the Costa Rica study (translated into Spanish) were the overall consultation plan for the study, and on the sent for comments to a wide range of stakeholders. final report. Committee members were in regular Comments about these case studies have been published contact with the OED team. together with the final case study reports. 68 Annexes OED Forest Strategy Review Workshop. Forestry of Peleri, Inc. Five focus group sessions were held experts, environmental activists, industry representa- between January and March 1999. Preliminary find- tives, and government policymakers met in Washing- ings of the focus group sessions, which were attended ton, D.C., on January 27 and 28, 2000, to discuss the by a small number of staff, were statistically validated findings of the preliminary OED review and to contrib- through a staff survey. ute ideas to a new strategy being prepared by the World Bank's Environmentally and Socially Sustainable Staff Survey Development (ESSD) Network. The workshop trig- Questionnaires were sent to 100 World Bank Group gered a discussion among participants, who explored staff associated with the Bank's Forestry Community of how to bridge competing perspectives and how to Practice. The focus of discussions included, but was not facilitate partnerships to support conservation and the limited to, the development of Country Assistance sustainable and equitable use of forest resources. Strategies as well as other sector work and lending to Summary proceedings of the workshop are being issued sectors that could have an impact on forests. Opinions as a supplement to the main OED report. Where expressed are reflected in the context of affiliations appropriate, OED reflected comments made or submit- with particular Regions and Networks, but individual ted at the workshop in its final report. responses were kept anonymous. Web-Based Consultations and Information Sharing CEO Forum Qluestionnaire OED's design paper was posted on an OED website in As part of its review, OED also issued a survey January 1999 to elicit comments from a wider interna- questionnaire to all members of the CEO Forum. The tional audience. Also posted on the web were the survey, which sought to gauge awareness of the Bank's proceedings of the entry workshop held in December forest strategy at the company level, asked if members 1998, a matrix summarizing comments made at that were familiar with the 1991 Forest Strategy before the workshop and OED's responses, and a summary of CEO Forum was formed. At the time the survey was meetings with NGOs and a matrix with OED's issued (April 1999), the official Forum membership was responses. 31. Membership in the CEO Forum was designed to The draft synthesis report and draft country case include "various stakeholder groups whose activities, studies were placed on the web in January 2000. one way or another, are critical to the present and OED has also issued updates on the forestry study on future management of the world's forests." These the Internet every two months, to inform interested stakeholder groups include leading industrialists, heads stakeholders. of NGOs, and members of government ministries and international organizations. The Forum was created to NGO Consultations promote the discussion of the options for reducing OED's first briefing/consultation with NGOs was barriers to sustainable management in forests, mainly held on January 29, 1999, to discuss the study design by promoting responsible investors' participation in paper. Subsequently several meetings were held with production and management of these forests. NGOs, and OED also participated in meetings organized by ESSD. World Bank/WWF Alliance Questionnaire On May 3, 1999, the WB/WWF Alliance questionnaire Focus Group Sessions was sent to 47 World Bank and 46 World Wide Fund for Bank staff and managers working in the forest sector Nature staff members. Staff members from both organi- were invited to a series of focus group sessions in the zations were identified through the Alliance Country late winter/early spring of 1999. The sessions were held Team List, which designates the coordination of coun- to gather insights on specific issues from country and try and regional contact staff members. Members of the sector managers, lead macro- and sector economists, Alliance steering committee-all but a few of whom forestry and forest-related task managers, and special- were also assigned country or regional coordinating ists involved in addressing issues related to the forest responsibilities-were also sent the questionnaire and sector. The sessions were facilitated by Madelyn Blair included in these totals. 69 A n nexes ANNEX C: PORTFOLIO REVIEW DATA TABLE C.1. WORLD BANK ECONOMIC AND SECTOR FIGURE C.1. NET CHANGE IN ECONOMIC AND REPORTS, SCHEDULED AND UNSCHEDULED, SECTOR WORK (1992-95 TO 1996-99) ALL SECTORS (NUMBER) Percent Nt 150 &age 125 Report type Z-95 6-99 1%) Country Assistance 100 Strategy 79 89 6 Economic report fi33 27 -1 50 Agriculture &18 04 l 0 Forestry 18 6 676 Energy & mining 69 251 -26 0 Environment ,.20 45 125 1 Natural resource 5 326 management 3 6 100 -40 Infrastructure & - 67 rural development 4158 130 ',-18 -100 Transportation 49 48 -2 A G. Source: World Bank databases. R Y TABLE C.2. WORLD BANK LENDING OPERATIONS, BY REGION Source: World Bank databases. FIGURE C.2. NET CHANGE IN COMMITMENTS AFTER 1991, ALL LENDING OPERATIONS Percent 140 ECA 160 33,425 1122 120 3 4 100 60 r -22 40 1 2 7 20 W B 22 -40- 40 --22 2 AFR EAP ECA LCR MNA SAR All Regions 71 The World Bank Forest Strategy: Striking the Right Balance TABLE C.3. WORLD BANK ADJUSTMENT LENDING OPERATIONS, BY REGION R egi a n li | ll Eitme~~tmnts tuitments AFR 8, |i|m 0$221 9t l 000,097 t l0;-2 Source: World Bank databases. FIGURE C.3. NET CHANGE IN COMMITMENTS FIGURE C.4. NET CHANGE IN COMMITMENTS AFTER 1991, ADJUSTMENT LENDING OPERATIONS AFTER 1991, PRIMARY PROGRAM OBJECTIVES Percent Percent 350 r 100 1280 300 287460087 250 0 244 40 F3 200 1 0 T 1 82 1 * MNAL 3,6 P IO _ 2_9 150 -201 100 16_5 -40 __ so 18~~~~~6 -60L -0 -2-2 -1200 -92 _o AFR EAP ECA LCR -21 SAR R All - Regions gion 1 *o7, 0 92 Source: World Bank databases. FIGURE7C23. NET CHANGE IN COMMITMENTS FIGURE T ATABER 191C.4 SMN.ENIGOERTOS AFE 91 PRIMARY PROGRAM OBJECTIVESOFLNIG PEAOS humaent resource socia objctve01,98-9 Gende analysis 52 67 Not stte -100 Tota 14,962893322 Source: World Bank databases. ~ ~ ~ 72 --2 Annexes TABLE C.5. ENVIRONMENTAL ASSESSMENT CATEGORIES, ALL BANK OPERATIONS 1111 | 11 F 7 bW _ | i | | | i .£S-osumitmnents Environmental assessment _lll Commitmentst category _ $M) r . . II|IIg Percent Fulenvironmentalprjc assessrnent iFt65||l;90 9 Pata environmental. 1 Totalionena Source: World Bank databases. FIGURE C.5. NET CHANGE IN COMMITMENTS FIGURE C.6. NET CHANGE IN COMMITMENTS, AFTER 1991 BY ENVIRONMENTAL ASSESSMENT BANK FOREST AND FOREST-COMPONENT CATEGORY PROJECTS AFTER 1991 Percent Percent 1,000r 909 800r Ttl _27 8000 | ~~~~ ~ ~~~~~600p 600 F ~~~~~ ~ ~~~~400-* 383 400 298 200 200 64 149 110 78 600 600 - 3838 -47 -200 -200 \ X \ S ~~~~~AFR EAP ECA LCR MNA SAR All tO ws tO R N ~~~~~~~~~~~~~~~~~~~~~~Regions 400 - 298 - ~4 -20 jK200°00 All Regions MNA~~~~~~~~~~~N All Regions h~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~aets pojc Source. World Bank databases. 73 The World Bantk Forest Strategy : Striking the Right Balance TABLE C.7. WORLD BANK FOREST-COMPONENT PROJECTS, BY REGION Source: World Bank databases. F IGURE C.7. NET CHANGE IN COMMITMENTS FIGURE C.8. NET CHANGE IN COMMITMENTS AFTER 1991, OPERATIONS IN 20 COUNTRIES WITH AFTER 1991. BANK FOREST AND FOREST- THREATENED TROPICAL MOIST FORESTS COMPONENT PROJECTS, INCLUDING GEF Percent Percent 400 37800 717 300 600 I~~~~~~~~~~~~~nn comt nen comt 200 181 400 *383 AR 90 AFR EAP ECA LCR MNA SAR All EAP 14P 6o 150 618 ,~ \O NN EA 1 8 0 15 74> All Rgion 477 291 3 408 Region 74~~ Source: World Bank databases. 7IUEC74E HNEI CMIMNSFGR ..NE HNEI OMTET Annexes TABLE C.9. DISTRIBUTION OF FOREST-COMPONENT PROJECTS, BY SECTOR Sorce: Wod Bk d .Forest Forest component OT component Sector I ! 11 I I~ ~~ ~~~ ~ comitmnt cuts commitments Agriculture 75 n759s 887 Environment operat823 168 4 2952 863 Andjustmen lenin Public sector management 194 9 Soperatin 263348,3 -32 Total lei operations70,19s 291 633- 1,790 Source: World Bank databases. TABLE C.10. WORLD BANK LENDING OPERATIONS IN 20 COUNTRIES WITH THREATENED T ROPICAL MOIST FORESTS .4~~~49 1 _ X 99 _ 'commitments- Project ($M)iret_Xtimns. Percent Forest projects 774 512 -34 projects -174 779 9^347 Environment operations 824,6 2,316 ~t184 Adjustment lending operations 5 33S49 48,831 [ ;-13 Source: World Bank databases. 75 TABLE C.11. INTENTIONS OF FOREST SECTOR AND FOREST-COMPONENT PROJECTS (AFTER 1991) < i- | ! P o v e r ty t u~~~~epan Iner Humid sion/ Inter- ~~~~~~~~~~I national Note:Humi troicalforet: Pojecsth tadropsicaesrlae to ntropcasmistforsti th 20Povertrie idntfidcnthe19orest cooategy p~~~~~~~~~~ Regins fo forcst cn idvriycnevto htpoieifration for poiy allvitong.sato Gorand setota PeRcn200 74 20 32 Forest expansion/intensification activities: Refers to activities that enhance production, such as agroforestry, plantations for fuelwood, timber, crop trees (rubbe2 oil palm, and fruit trees), silvicultural treatments, preparation/implementation of forest management plans, and promoting natural regeneration. Forest protection: tnterventions intended to preserve intact natural forest areas or conserve biodiversity through the system of protected areas, Includes ecological zoning, biodiversity inventories, policy and regulation related to protected areas, and expansion and/or improvement of management of protected areas. Poverty alleviation: Covers activities such as granting/enforcing tenurial rights; income-generation projects; sharing benefits of the forests with local communities; social investments such as building roads, hospitals, or schools; building skills of villagers; or supporting local organizations. Participation: Refers to the involvement of stakeholders (national, regional, local) in appraisal and implementation. Includes information sharing, consultation, creation of advisory committees, and stakeholder collaboration in implementation. Intersectoral links: Projects that link forest management with other sectors such as energy, tourism, and infrastructure. Includes only projects with links outside the natural resource management sector. Institutional development: Includes institutional reforms, support to local community institutions, development of government agencies responsible for forest management through training, creation of new units, and establishing environmental information systems. International cooperation: Includes cofinancing projects with other donors, participation in consultative groups, coordination of activities with other donors, and incorporating lessons learned from other donor projects. New technologies: Includes introduction and adaptation of new or improved technologies to enhance production, planning, or information management. Annexes ANNEX D: QUALITY ASSURANCE GROUP RISK RATINGS FOR ACTIVE BANK OPERATIONS The Quality Assurance Group (QAG) maintains a FIGURE D.1. PERCENTAGE OF ACTIVE PROJECTS database of all active World Bank projects, that NOT AT RISK, SELECTED SECTORS identifies whether a project is at risk (that is, an actual Percent problem project or a potential problem project) or not 120 at risk. Project risk assessments are based on: 100 _ 98 * The extent to which development objectives are 83 8779 achieved through implementation performance, 80 as reported by Bank task managers during 60 - project supervision, typically every six months. * The extent to which conditions agreed to during 40 project design and negotiations are being met during implementation. 20 - * Whether any unanticipated domestic factors 0 (such as macroeconomic or political problems) Forest Forest All All All Bank or external shocks (such as climate or terms of component agriculture environment trade) are affecting project performance. Source: QAG, June 1999. The factors used to determine project performance The regional breakdown shows that only the ECA and risk status are effectiveness delays, compliance Region has any forest projects at risk, and only one of with legal covenants, management performance, avail- the five forest projects in the ECA Region is at risk ability of counterpart funds, procurement progress, (figure D.2). environment and resettlement, slow disbursements, a The regional distribution for forest-component history of past problems, risky country, risky subsector, projects, in contrast, shows that only 55 percent of the and economic management. projects in the LCR Region and 71 percent in the AFR QAG reported that of the Bank's 1,775 active lending Region are not at risk. But none of the forest- operations with total net commitments of $124.81 billion, component projects in the ECA and MNA Regions is at as of June 1999, 77 percent of the projects were rated not risk (figure D.3). at risk. Active operations include 30 forest projects with The OED ratings for closed forest projects tend to commitments of $1.68 billion and 80 active forest- be substantially lower than the QAG ratings for active component projects with total project commitments of forest projects. This disparity can be explained by the $5.3 billion (table D.1). The percentage of forest projects different methodologies used by QAG and OED. QAG not at risk is far higher, and the percentage of forest- combines self-assessment by project staff and potential component projects not at risk is lower than for projects in problem ratings by supervision staff. The potential the agriculture sector, environment sector, or the entire problem ratings are based on 12 "flags," 3 of which are Bank portfolio (figure D. 1). exogenous-that is, unrelated to the characteristics of TABLE 0.1. RELATIVE RISK RATINGS FOR ACTIVE FOREST AND FOREST-COMPONENT PROJECTS (JUNE 1999) Actually at risk at risk Not at risk NetNeNt | -- No. of commit- cmmit No. of commit projects ments ments projects ments Project type %M%M Forest 3 2 97 98 Forest component 16 1 9 75 83 All agriculture 1 03 83 87 All environment 14 11 10 77 79 All World Bank 15 16 6 77 78 Source: QAG. 77 The World lBanik Forest Strategy: Striking the Right Balance FIGURE D.2. ACTIVE FOREST PROJECTS NOT FIGURE D.3. ACTIVE FOREST-COMPONENT AT RISK, BY REGION PROJECTS NOT AT RISK, BY REGION Percent Percent 120 r 120 - 100 100 100 100 100 100 100 100 100 88 _0 - 80 8_ - 79 80 - _ _ _ _ _ _ 80 _ ___71 60 - 60 - 55 40 - 40 - 20 - 20 - 0 0 AFR EAP ECA LCR MNA SAR AFR EAP ECA LCR MNA SAR Source: QAG, June 1999. Source: QAG, June 1999. the operation. Several other measures are drawn from high risk of failure on completion based on leading sources other than the project task manager. OED, on indicators known to be precursors of future problems. the other hand, conducts an independent evaluation of This work is being closely coordinated with the Annual completed projects. The ongoing forest projects may Review of Portfolio Performance (ARPP). actually be performing better than past forest projects Actual Problem Projects: Projects with an unsatis- simply because they have incorporated lessons learned factory or a highly unsatisfactory rating for Summary and OED recommendations. Implementation Progress and/or Summary Develop- "Projects at risk" is an important criterion under- ment Objectives on the latest Project Status Report. pinning the Portfolio Improvement Program (PIP) Potential Problem Projects: Projects that are associ- launched by the Bank in 1996. The PIP aims to promote ated with at least 3 of 12 leading indicators of future substantial improvement in the Bank's portfolio perfor- problems (see table D.2). mance. It complements other Bank portfolio manage- A comparison of QAG ratings by Region for all ment instruments by targeting management attention to Bank projects, as well as for all projects in the the projects, sectors, and countries with the most severe agriculture and environment sectors and for all forest performance problems and where intensified attention projects, and forest-component projects is presented in can be expected to have a high payoff. The concept of tables D.3 through D.7. Significant risk factors associ- "projects at risk" was developed as a tool to target ated with these sectors are presented in tables D.8 management attention to projects considered to have a through D.12. 78 Ann e x es TABLE D.2. UIAG INDICATORS OF POTENTIAL PROBLEM PROJECTS Project flag Description 2. Poor compliance with legal covenants Compliance with legal covenants rated unsatisfactory or highly unsatisfactory in the last Project Status Report. 4. Shortage of counterpart funds Counterpart fund availability rated unsatisfactory or highly unsatisfactory in the last Project Status Report. 6. Poor financial performance Financial performance rated unsatisfactory or highly unsatisfactory in the last Project Status Report. 8. Significant disbursement delays Disbursement delays of 18 months or more for investment operations or 6 months or more for adjustrnent and emergency operations. 10. In a risky country In a country with a high "Sfailure' rate (in which the percentage of projects closed in the previous five years and rated unsatisfactory by OED is over 50 percent, or in which the share of commitments associated with these unsatisfactory projects is more than 33 percent). 12 In a risky subsector In a subsector with a historically high "failure" rate (in which the percentage of projects closed in the previous five years and rated unsatisfactory by OED is over 50 percent, or in which the share of commitments associated with these unsatisfactory projects is more than 33 percent). TABLE D.3. RISK RATINGS, ACTIVE AGRICULTURE SECTOR PROJECTS, BY REGION (JUNE 1999) projects Actually at risk at r;isk Not at risk l ll ll l - commit- No. of Commit- _Commit- No. of Commit- l I l II ll w ments projects ments I _ments projects ments Region l ( $M) M% M% ME M%?(% % AFR l 0. 1,565 12 13 E13 74 74 ECA 1,413 13 35 87 65 LCR 3,053 9 6 1 993 MNA 1,473 18 24 8276 SAR 3,366 14 13 2 384 All Regions 18,061 12 10 87 83 7 Source: QAG. 79 I he World 13ank Forest Strategy: Striking the Right Balance TABLE D.4. RISK RATINGS FOR ACTIVE ENVIRONMENT SECTOR PROJECTS, BY REGION (JUNE 1999) _ _ t~ ~ ~~s Actually at risk Ai i 11l||a risk Not at risk - .vtxlen01mts Nro. o°f Commit- om | F No. of Commit- Region O;(M ) ( % ) Mlll i ig ( °)(/ / ECAPA 3 E < 1*8529 10 90l 11 1 l|l 078 91 ECA 347278770 LCR 1536 21 10 A 25 66 65 MNA 25 33 768 SAR 836 09 4 All Regions 5.S;094 14 11 10 77 79 Source: QAG. TABLE D.5. RISK RATINGS FOR ACTIVE WORLD BANK PROJECTS, BY REGION (JUNE 1999) _ c t~ ~ ~~s Actually at risk _-t 0 risk Not at risk Reg~~~~~~~~io t- No. of Commit- mriet o.o Coment- AFR 1 3 191 '15 8 636 688 ECA e 167 17 30 15 76 55 LCR 23311 10 4 84 86 MNA 696 16 18 T1 81 81 SAR S1 All Regions 809 15 16 6 77 78 Source: QAG. TABLE D.6. RISK RATINGS FOR ACTIVE FOREST-COMPONENT PROJECTS, BY REGION (JUNE 1999) edc,s Actually at risk tt;0ik Not at risk ReCAon 100 No ments projccts ments MNA ~169 100 100 SAR 779 6 894 All Regions 16 8 75 83 Source: QAG. 80 Annexes TABLE D.7. RISK RATINGS FOR ACTIVE FOREST PROJECTS, BY REGION (JUNE 1999) i l | Feprojects Actualty at risk ii lyat risk Not at risk I II l. I 9 Net I . l . l c L mit- No. of Commit- lillk Commit- No. of Commit- l ll ll l - ments projects ments _ ments projects ments RAegion ($M M Ml M M .s / EAP 783 100 100 ECA 202 20 20 80 80 LCR 60 100 100 MNA 96 100 100 SAR 489 100 100 All Regions 1,683 3 2 97 98 Source: QAG. TABLE D.8. RISK INDICATORS FOR ACTIVE AGRICULTURE SECTOR PROJECTS, BY REGION (JUNE 1999) Percentage of projects Risk indicator AFR EAP ECA LCR MNA SAR All Regions Number of prects 55 46 35 F Effectiveness delays 2 20 3 Compliance with legal coveniants 41 Management -- performance 13 2 9 Counterpart funds 11 13 'M, 11 Procurement progress 9 2 11 2, Financial performance - 11 4 6 Environment/resettlement A problems 3 ~ Slow disbursements 16 20 1 26 History of past l problems 1 7 7 14 Risky country 4 7 14 Risky subsector 5 ) 2 Economic management 29 13 11 Golden rule 2 Source: QAG. 81 The World Ba nk Forest Strategy: Striking the Right Balance TABLE 0.9. RISK INDICATORS FOR ACTIVE ENVIRONMENT SECTOR PROJECTS, BY REGION (JUNE 1999) Percentage of projects Risk indicator AFR EAP ECA LCR MNA SAR All Regions Compliance with legal covenants 3 10S Management performance 5 10 20 Counterpart funds 10 21 Procurement progress 3 Financial performance 15 Environment/resettlement problems 53JO 0 Slow disbursements 20 31 20 History of past problems 5NN ~ 1 Risky country 28 30 Risky subsector Economic management 30 21 Source: QAG. TABLE D.10. RISK INDICATORS FOR ACTIVE FOREST-COMPONENT PROJECTS, BY REGION (JUNE 1999) Percentage of projects Risk indicator AFR EAP ECA LCR, MNA SAR All Regions Ef*rsfetivenes deay 25g2/i Management performiance 21 15 13 Counterpart funds 17 2ola Procurement progress 21 13 Financial performance 13 Environment/resettlement problemsMMlwm n Slow disbursements 7 2 : 25 History of past problems 8 15 Risky country 4 30 m , 3 Risky subsector 4 Economic management 38 25 Goldenl rule 0 ;0 Si gt f0$ ;;y0;iSl ;S i 0 : 0 0 0;t;:0 r 0 0 $0t0 l Source: QAG. 82 Annexes TABLE D.11. RISK INDICATORS FOR ACTIVE FOREST PROJECTS, BY REGION (JUNE 1999) Percentage of projects Risk indicator AFR EAP ECA LCR MNA SAR All Regions Number of Projects {5 4 11N Effectiveness delays j 25 m Compliance with legal ~ ~ covenants Management4 performance 9 Counterpart funds 25 9 9 Procurement progress v-2i-- 25 Financial performance r 25 Environment/resettlement problems Slow disbursements i 40 K , 9 History of past problems 27 Risky country 9 Risky subsector nRi Economic K iv management 20 9,< 9 Golden rule ^1j .; Source: QAG. TABLE 0.12. RISK INDICATORS FOR ACTIVE WORLD BANK PROJECTS, BY REGION (JUNE 1999) Percentage of projects Risk indicator AFR EAP ECA LCR MNA SAR All Regions Number of projects 287 AME R Effectiveness delays 2874322 17t Compliance with legal covenants 4 _ 5 1 0 Management performance 8 l410 10 Counterpart funds 9 * 13 7 Procurement progress 11 4 15 Financial performance 11 M3-s ~ Environment/resettlement problems 2 W3 I nt~~ua_fi_de,t 11 6 211 Slow disbursements 21 25 30 History of past problems 3 7 ~1 Risky country 1 2 18 19 Risky subsector 10 12 9 Economic 16 Golden rule 3 1 1 kM» Source: QAG. 83 Annexes ANNEX E: OPERATIONS EVALUATION DEPARTMENT PROJECT EVALUATIONS Evaluation Criteria Institutional development impact The Operations Evaluation Department (OED) evaluates Institutional development impact is improvement in the the development effectiveness of completed operations by ability of a country to use its human, organizational, examining their technical, financial, economic, social, and financial resources effectively. Evaluators assess and environmental aspects and rating their outcome, the institutional development progress achieved, or sustainability, and effect on institutional development. expected, because of the operation. Not all operations OED also evaluates the performance of the Bank, the have institutional development goals, but many depend borrower, and the implementing agencies. The evaluation on institutional change to achieve a lasting impact on process is based on the same criteria and policies that are development. Examples of such change include used to judge new operations. strengthening, eliminating, or reforming specific agen- cies; supporting regulatory or legal reforms; and Outcome supporting education and training. A satisfactory outcome means that an operation has achieved most of its major goals efficiently. A project Performance with an unsatisfactory rating may still provide signifi- OED analyzes Bank performance at each stage of the cant benefits even though it failed to meet one or more project cycle. It also considers several other dimensions of its major objectives. To evaluate outcome, com- of performance: pleted operations are analyzed from three perspectives: Borrower performance is evaluated in terms of the Relevance: Evaluators determine whether the policy environment created for the project; the level of goals of the operation were consistent with country and commitment of the government and of key institutions sectoral assistance strategies and whether the design associated with the project; the provision and reliabil- was appropriate to one or more of the core World Bank ity of domestic funds for the operation; and the goals of reducing poverty, protecting the environment, administrative procedures used and the quality of developing human resources, or fostering growth in the decisionmaking. private sector. The performance of implementing agencies is Efficacy: Evaluators review the operation's effects rated on such elements as the quality of management and compare them with its goals, whether physical, and staff associated with the project; the use and financial, institutional, or policy related. effectiveness of technical assistance, including training, Efficiency: Evaluators assess outcomes in relation advisers, and contractual services; the adequacy of to inputs, looking at costs, implementation times, and monitoring and evaluation systems; and the extent and economic and financial results. Where practicable, the quality of intended beneficiaries' participation, includ- evaluators re-estimate the economic rate of return in ing their contribution to the project's outcome. relation to a minimum threshold of 10 percent. Exogenous factors include changes in prices and world market conditions; natural disasters; civil disor- Sustainability der and armed conflict; and actions of partners who Sustainability is based on the probability-at the are independent decisionmakers-for example, time of evaluation-that the achievements generated cofinanciers, NGOs, contractors, and suppliers. or expected to be generated in the operational plan will be sustained. To assess sustainability, evaluators OED Evaluations of Completed Bank Operations examine borrower commitment; the policy environ- OED evaluated a total of 1,590 Bank operations that ment; institutional/management effectiveness; and exited the portfolio between 1992 and 1998. These economic, social, technical, financial, institutional, projects had net commitments of $113.6 billion (1996 and environmental viability. Sustainability differs dollars). Figure E.1 shows that ratings on overall from economic justification in that it focuses on performance for the completed forest and forest-compo- features that contribute to the durability of the nent projects are poorer than those for projects in the operation relative to the project's expected useful life agriculture and environment sectors, and poorer than and its likely resilience to external shocks and those for aggregate Bank projects. Moreover, the changing circumstances. satisfactory ratings for outcome tend to be higher than 85 The World Banik Forest Strategy: Striking the Right Balance FIGURE E.1. SATISFACTORY OVERALL FIGURE E.2. SATISFACTORY BANK PERFORMANCE RATINGS, COMPLETED PROJECTS PERFORMANCE RATINGS, COMPLETED PROJECTS * Outcome, satisfactory M Identification, satisfactory [ Sustainability, likely C Appraisal, satisfactory * Institutional development * Supervision, satisfactory Percent impact, substantial Percent 80 - 90 84 82 83 82 67 68 78 74 72 59 ~~~~~64 E -* 6 72 509 68 60 59 55 62 6863 so 60 58 46 49 52 40 40 42 42 32333 27 27 30 20 1917 0 0 C; ~O Source: OED data, 1992-98. Source: OED data, 1992-98. the likely ratings for sustainability. The substantial FIGURE E.3. SATISFACTORY BORROWER rating for institutional development is the lowest rating PERFORMANCE RATINGS, COMPLETED PROJECTS across all sectors. U Preparation, satisfactory Satisfactory Bank performance ratings for com- 0 Implementation, satisfactory pleted forest and forest-component projects are com- n Compliance, satisfactory pared with those for projects in other relevant sectors in Percent figure E.2. Across all sectors, "satisfactory" ratings for 90 81 Bank performance at identification tend to be higher than the ratings during supervision. In contrast, 65 68 67 68 appraisal ratings are the lowest. The ratings for the 60 - 54 5 58 53 54 environment sector projects seem to be the lowest at 46 * 50 identification and appraisal. The Bank performance in forest and forest-component projects is comparable to 30 - performance in the agriculture sector. Borrower performance ratings tend to be lower than Bank performance ratings in all sectors. Interest- ingly, the ratings for completed forest-component 0 projects are the highest for all stages, while forest \oISc1 1' cl A project ratings are comparable to ratings for projects in 66 Forest-component projects 1209 67 All agriculture projects 20,671 90 58 71 All environment projects 364 39 - 39 89 All World Bank projects 113,592 684 69 7 Source: OED data, 1992-98 TABLE E.3. BORROWER PERFORMANCE RATINGS, COMPLETED FOREST PROJECTS RELATIVE TO PROJECTS IN OTHER SECTORS Forest-component projectst Comit Comit All agriculture projects 20,671 60 All environment projects 364 68 -t48 6j 70 All World Bank projects 113,592 74633 Source: OED data, 1992-98. 89 Thc World Bank Forest Strategy: Striking the Right Balance TABLE E.4. OVERALL PERFORMANCE RATINGS, COMPLETED AGRICULTURE SECTOR PROJECTS, BY REGION R egi on | ! l -imitt- o.mmit- i 0mt- ECA l tE>2,067 65- 863 -0 73 04 AllRe egions 29,671 Source: OED data, 1992-98 N'ote: ID = rnstrtutional development. TABLE E.5. OVERALL PERFORMANCE RATINGS, COMPLETED ENVIRONMENT SECTOR PROJECTS, BY REGION MNA- -Blmt 1;739 65 4> 3 6i SAR~~ g t 10 63nt 31C 33-et efl l^xnns _ t-4; et Al Rezgions 72 5 39 b Source: OED data, 1992-98. Note: ID = institutional development. TABLE E.6. OVERALL PERFORMANCE RATINGS, COMPLETED WORLD BANK PROJECTS, BY REGION LCR 28,708 3.-^ 80 3m>1 ;63 g--0 AllRegions 113,592 S76 56 Source: GED data, 1992-98 Note: ID = institutional development. 9() Anncxcs TABLE E.7. OVERALL PERFORMANCE RATINGS, COMPLETED FOREST-COMPONENT PROJECTS, BY REGION | , t;s'tt. 111|1 ~icetry ial Region (SM FY96) 11 < r o m t omt AFR 2 l| 258 6 4 EAP l | +U- 272 100 1008 ECA 253 100 I0 1 6 LCR25 4906 MNA 50 too l SAR 0 All Regions 1,200 73 45 21 Source: OED data, 1992-98. Note: ID = institutional development. TABLE E.B. OVERALL PERFORMANCE RATINGS, COMPLETED FOREST PROJECTS, BY REGION ; Y ilittd ici ~~~~oimit- _ Cotnmit- Commnit- _ Commit- Region t .($M FY96) . °) ,met t FR = ~~~~~~39:1 55 _|--9 _>*38 ECAP 09 79 3 7 3 ECA- LCR 82 48 48 MNA407 SAR 277 92 49 is All Regions 1,000 69 25 30 Source: OED data, 1992-98. Note: ID = institutional development. TABLE E.9. BANK PERFORMANCE RATINGS, COMPLETED AGRICULTURE SECTOR PROJECTS, BY REGION ions ] [ 2ec s 7 EAP ~~~~4,032 96 64K 64 ECA 20797191 LCR 4,712 6 169 MNA 1796 96 SAR 41286269 All Regions ~~20,671 80 58 71 Source: OED data, 1992-98. 91 The World Bank Forest Strategy: Striking the Right Balance TABLE E.10. BANK PERFORMANCE RATINGS, COMPLETED ENVIRONMENT SECTOR PROJECTS, BY REGION Source: OED data, 1992-98. TABLE E.11. BANK PERFORMANCE RATINGS, ALL WORLD BANK PROJECTS, BY REGION Region 96) I t t Source: OED data, 1992-98. TABLE E.12. BANK PERFORMANCE RATINGS, COMPLETED FOREST-COMPONENT PROJECTS, BY REGION Source: OED data, 1992-98. 92 A n n e x e s TABLE E.13. BANK PERFORMANCE RATINGS, COMPLETED FOREST PROJECTS, BY REGION Region AFR 52 EAP 8 ECA LCR MNA 0 SAR 9 -All Regions 66 Source: OED data, 1992-98. TABLE E.14. BORROWER PERFORMANCE RATINGS, COMPLETED AGRICULTURE SECTOR PROJECTS, BY REGION m-~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~omt Commiit- Regions EAP I17 ECA 9 LCR 6 MNA 97 SAR 4,12 636 5 Alt Regions 20,6716636 Source: OED data, 1992-98. TABLE E.15. BORROWER PERFORMANCE RATINGS, COMPLETED ENVIRONMENT SECTOR PROJECTS, BY REGION R~~~~~~~~~~~~~~~~~~egin ts- ments RegionEzzE:7 ~;S Source: QED data, 1992398 93 I h Q W -or I d Bo , k Fo St r r g . St, i k i, 1 g th, R r i gh TABLE E.16. BORROWER PERFORMANCE RATINGS, COMPLETED WORLD BANK PROJECTS, BY REGION e d~~~ae 12iaito N'6ph aio lianc :~~~~~~~~~~~~~ atory Regi on M FY6 M mNt AFR 7 ' 10 '7 23 EAI) 23,847 97 E(CA 137875 72 69 LCR 2707162 68 MNA 92965665 SAR 203279718 All Regions -l11,592 746363 .Source: OEI) data, 1992-98. TABLE EA.T BORROWER PERFORMANCE RATINGS, COMPLETED FOREST-COMPONENT PROJECTS, Source: ()ED data, 1992-98. BY REGION Source: ~ ~ 41te OFD atdiI9 9 94~ ~ ~ ~ ~~~~~~~~~o TABLE F.1. WORLD BANK LENDING OPERATIONS IN THE CASE STUDY COUNTRIES, 1984-91 z Forest- 2 Investment Agricultural Environment Forestry component x Total lending lending lending lending lending lending comit- CommitC - Commit- Commit- Commit- Commit- o Country/ No. of mets j s No. of meats No. of ments No. of ments No. of ments No. of ments category projects ($M) &o pro s (W) projects ($M) projects ($M) projects ($M) projects ($M) World BaTnk lending 1,919 148,946 2 .1,4S4 114,336 464 29,282 15 889 41 1,682 32 291 Brazil 72 10,S99 1,55 -69 9,444 28 3,540 4 263 1 49 2 125 Cameroon 14 733 0 13- 583 7 232 - - - - 1 1 China 85 9,913 | 84 9,613 25 3,024 - - 3 404 2 6 Costa Rica 5 270 & 3 90 1 26 - - - - - India 97 20,242 . .97 20,242 29 4,544 4 459 3 224 3 17 Indonesia 79 10,42 '75 9,82 20 1,642 - - 2 54 - -_ Total country X;-i> -: lending 352 52,239 $ 41 49,254 110 13,008 8 722 9 718 14 Percent,:, --5 overall Bank X. .- lending 18 35 9 21 43 24 44 53 81 22 43 25 51 Souirce: World Bank databases. TABLE F.2. WORLD BANK LENDING OPERATIONS IN THE CASE STUDY COUNTRIES, 1992-99 Cameroon 18 817 v~2 192 2 38 - - - Forest- + s t~~~~nvestment Agricultural Environment Forestry component Total lending -leading lending lending lending lending Cimmit- n 2 1t- Commit- Commit- Commit- Country/ No. of ments ? 1*.>No.-of -ments No. of mnents No. of ments No. of ments No. of ments category projects ($M) p l . Zcits ($M) pojects ($M) projects ($M) projects ($M) projects ($M) World Bank -, lending 2,175 189,336 -1,797 132,243 336 22,912 106 5,899 34 1,722 94 1,790 BArazil 66 9,349 pX-63 7,589 I S 978 8 936 - - 4 231 Camerooil 18 817 ,> .2 .8 192 -2 38 - Chinia 125 22,066 t 125 22,066 28 5,404 13 1,707 3 550 15 305 Costa Rica 5 212 1 4 112 1 41 India 80 15,202 - 76 13,752 21 2,661 3 360 8 460 3 179 Indonesia 84 10,742 m - 8,342 14 1,208 4 198 - - 7 88 Total country lending 378 58,389 :56 52,053 81 10,330 28 3,201 11 1,010 29 803 Percent, a overall Bank lending 17 31 NA 20 39 24 45 26 54 32 59 31 45 Sozurce: World Bank databases. TABLE F.3. PERCENTAGE CHANGE IN WORLD BANK LENDING OPERATIONS IN CASE STUDY COUNTRIES AFTER 1991 Uta len1jding ledn lendin,, (g len,ding Caoutry/ No.o mns ; W2t^ O440ff ments NoX o p t rj s( Suc:World Bank drhss Annexes ANNEX G: THE SURVEYS As part of the consultative process for this review, OED The CEO Forum Questionnaire sought input from members of the World Bank's Of the 31 industry, NGO, and government ministry Forestry Community of Practice as well as from representatives who belong to the CEO Forum (see box participants in two of the Bank's new initiatives-the 4.1 in the main report), to all of whom survey CEO Forum and the WB/WWF Alliance-designed to questionnaires were sent, OED received 15 responses- enhance the conservation and sustainable management for a 48 percent response rate. of the world's forests. A summary of conclusions from the survey results is incorporated in Chapter 4 of this The WB/WWF Alliance Questionnaire report. This annex provides background information A WB/WWF Alliance questionnaire was sent to 47 and aggregate findings from the three independently World Bank and 46 WWF staff members; OED re- conducted surveys. ceived 20 responses from Bank staff (for a 43 percent response rate) and 14 from WWF staff (for a 30 percent The Staff Survey response rate). The overall response rate was 37 OED held a series of focus group sessions in late percent. winter/early spring 1999 to gain insights into specific In many cases, Bank staff working on WB/WWF issues as seen by country and sector managers, lead Alliance issues are located within the Forestry Commu- macro and sector economists, and task managers and nity of Practice, so the Bank Staff Survey and WB/ specialists involved in addressing issues related to the WWF Alliance responses reflect some overlap of forest sector. When the sessions ended, results of the opinion, (seven Bank staff responded to both the WB/ meetings were compiled and prepared by the facilita- WWF Alliance Survey and the Staff Survey). Staff tor, Madelyn Blair of Peleri, Inc. The ideas expressed members who were gracious enough to return both sets by some participants in the sessions required statistical of questions gave OED feedback on policy questions validation. So in July 1999 OED sent a questionnaire and also gave their opinion about the objectives and based on the preliminary focus group findings to 100 progress of the alliance. All respondents surveyed were Bank staff who belong to the Bank's Forestry Commu- assured anonymity. nity of Practice. OED received 40 responses, or a 40 Survey results follow. percent response rate. 97 The World Bank Forest Strategy: Striking the R ight Balance THE OED STAFF SURVEY Family affiliation Sample Size: 100 Primary Responses: 40 Environment Department 45% (18) Response Rate: 40% Rural Development Department 25% (10) Date Sent: July 1999 Social Development Department 10% (4) Received: July-September 1999 Blank 20% (8) 1. General Information Secondary (Some staff provided more than one response per Environment Department 17.5% (7) question.) Rural Development Department 25% (10) Social Development Department 7.5% (3) Environment Department/ Social Region(s) of expertise Development Department 2.5% (1) AFR 12 Energy, Mining, and Telecommunications EAP 12 Department 2.5% (1) ECA 10 Blank 45% (18) LCR 1 3 MNA 10 Do you have any experience working outside the SAR 3 Bank Group in the past 10 years? Blank 4 Yes 77.5% (31) No 20% (8) Title Blank 2.5% (1) Environment (specialist, economist, adviser) 9 Natural resources management What is your disciplinary background? (economist, specialist) 8 Economics (business, natural resources Forestry (specialist, adviser, officer) 6 management, forest, and political economist) 15 Manager (sector, knowledge, task) 7 Forestry (technical specialist, ecologist, Biodiversity specialist 2 policy and science) 12 Operations analyst 2poiyadsen) COmmunications analyspecia1 NRM (economist, socio-economist) 4 Consultant - economics and financial analysis 1 Ecology (ecologist, tropical ecologist) 3 Ecologist 1 Agriculture (agriculturist, agricultural engineer) 3 Eocioleonomist 1 Anthropologist 3 Environment (environmental scientist, Swiss Secondment 1 environmental technical specialist) 2 Energy (renewable energy engineer, scientist) 2 Biodiversity (technical specialist) 2 Network affiliation Communication 1 Primary Veterinarian 1 Environmentally and Socially Sustainable Development Network 92.5% (37) Please indicate the type of forestry-related Bank Blank 7.5% (3) experience you have. Secondary Project preparation 31 Poverty Reduction and Economic Project supervision 28 Management Network 5% (2) Economic and sector work 18 Operational Core Services Network 25% (1) Participation in CAS preparation 15 Blank 92.5% (37) Policy dialogue with borrower(s) 21 Othera 15 a. Regional forest policy development, environmental assess- ment review, environmental action plan, BAP, training portfolio analysis, knowledge management and research, NRM strategy, donor coordination, GEF work, WB/WWF Alliance. 98 Annexes For the country or countries you currently work Do you think adequate analytical work-for example, on, are forestry-related issues adequately reflected economic and sector work-underpins the Bank's forest in the CAS? policy dialogue? Yes 25% (10) Yes 27.5% (11) No 42.5% (17) No 42.5% (17) Partially 7.5% (3) Varies by country 7.5% (3) Blank 25% (10) Blank 22.5% (9) Do you think adequate analytical work-for example, economic and sector work-underpins the Bank's operations? Yes 50% (20) No 22.5% (9) Varies by country 5% (2) Blank 22.5% (9) II. The Bank's 1991 Forest Strategy (a) the prevention of excessive rates of deforestation by expanding efforts toward the conservation, protection, and management of the world's remaining forests and woodlands, especially tropical moist forests and (b) to ensure adequate planting of new trees to meet the rapidly growing demand for fuelwood, fodder, building poles, and other products and to ensure that adequate tree cover remains in rural areas for protection of soil and water resources. Do you agree or disagree with the two most crucial challenges facing the forest sector as stated in the World Bank's 1991 Forest Strategy? i. The thrust of statement i|i l8 l ; 01 4 1 0 1 3 ii. The thrust of statementllllll . lll ___ - (b) quoted above li l4(8) l (t23) (1 6) 0 6 (3) of tropical moist forests ll N1) llli( 8 1)_ 1 > (3) iv. The Bank has contributed toward slowing down the rates of deforestation ll ' 0 (8) % 20) (6) h(6) SA: Strongly Agree; A: Agree; D: Disagree; SD: Strongly Disagree; NA: Not Available. How do you rate the Bank's performance with respect to following? v. Multisec toral approach to forest I dlevelopmntre (1)20 (3) vi. Borrowet capacity building (1) () ( (3) vii.Consideration of forestry-poverty ()(5 8 5 interactions ()(1 (5 s 5 HS: Highly Satisfactory; S: Satisfactory; U: Unsatisfactory; HU: Highly Unsatisfactory; NA: Not Available. 99 The World Balnk Forest Strategy: Striking the Right Bala nce Ill. Bank Financing of Commercial Logging The Bank does not finance commercial logging operations or the purchase of logging equipment for use in primary tropical moist forest. In borrowing countries where logging is being done in such forests, the Bank seeks the government's commitment to move toward sustainable management of those forests and to retain as much effective forest cover as possible. Where the government has made this commitment, the Bank may finance improvements in the planning, monitoring, and field control of forestry operations to maximize the capability of responsible agencies to carry out the sustainable management of the resource. Do you agree or disagree with the following issues regarding OP 4.36, which were raised by some of you during the focus group discussions? telogging of prrimearya itropicalt moist foutriess. () ( (23) ( % 4a) I.Ithernlo Costrin ts on prmay troialeyIpeetto iii. The OP has contributed to meeting the Bank's objective of sustainable forest management. y 0()(26) -() ~ 7 iv. Bank operations and policy dialogue since 1991 have helped reduce logging activities in client countries. (4) (18) 13) - ( SA: Strongly Agree; A: Agree; D: Disagree; SD: Strongly Disagree; NA: Not Available. IV. Internal Constraints on Strategy Implementation Please indicate if you agree or disagree with the following statements about constraints within the Bank. op erations thao ol other wiseors haver managT e rsprent v forest policy ch s t contributigedrt "thenseacetions. co7"bu div. bunternlbdentar raesourtces. are82)7 economisecepaind hsleto work. e R v opnerainal thuan capaciotyerisinufentav toecarry outadequate economic and vii. Past puroects haves perormed poryh3as)(0)0(2 vi.Tcomplbuexityof thes derestigns oflendin oprainsufceto givndteiuiheet mih-ualti- dicoipnr and mectisewora. nature. (3) (4 vi.the taskyou manaersuare ecnot icadeuteyd quacilified thandmltieforest-reatred 3 19 6 viA:Th Strongl magr gee;sA agree D:t Diagreqae;lDytogyiare ANtAalbe qulfedt0adl0oet-eae Annexes V. External Constraints to Strategy Implementation Please indicate if you agree or disagree with the following constraints that are external to the Bank. i. Corruption in imptementing agencies l 14)A ll (16) (17 _ 0OS (3) ii. Inadequate appreciation of key issues |||g ()l S(3 1 8 1IS l 2 iii. Insufficient implementation capaciry l llli (13) (22) | l> (2) l lW (2) ( 1) iv. Insufficient voice of forestry ministry 11 1*I|RiIiI1 : _E vis-a-vis finance ministries (8) 20) (6) 1 (4) % (2) v. Availability of cheaper and more flexible sources of funds ()1)(6 1 7 vi. Controversial nature of the forest- related policies resulting in high levels of scrutiny by nongovernmental organizations (6) % (21) (8) %(1) a(4) SA: Strongly agree; A: Agree; D: Disagree; SD: Strongly Disagree; Not Available. VI. Network Leadership Based on your implementation experience of the 1991 Forest Strategy, where does the leadership on the following aspects of forest sector operations come from? ment nment[ gr [ in novtvleta iedeashi (1) (8) (80) (8) %(151) ii. Operational support/cross support (10 (l 6) (4 10 10) v. Quality control (4) (5) (13) (6) (12) Please rate the following with respect to the Network leadership. i. The division of Forest Sector Management between ENV and RDV 0 (4) (13) (12) (11) ii. Intellectual leadership on Forest Sector Issues 0 (12) v (10) iii. Knowledge management/dissemination of best practices 0 (15) (15) (3) | 7) iv. Operational support/cross support % (1) % (10) % (12) % (1) (16) v. Leadership for operationalizing innovative ideas 0 6(1)3 12 vi. Resources for operationalizing innovative ideas 0 % (5) (18) (6) (1 1) vii. Peer review process ()1) 5 2 (12) HS: Highly Satisfactory; S: Satisfactory; U: Unsatisfactory; HU: Highly Unsatisfactory; NA: Not Available. Which Family do you think should have primary responsibility for the forest sector? RDV 32.5% (13) Cross-cutting matrix 7.5% (3) ENV 10% (4) Create a separate family to govern NRM 2.5% (1) SDV 2.5% (1) Doesn't matter 5% (2) RDV/ENV 12.5% (5) No answer 17.5% (7) RDV/ENV/SDV 10% (4) 101 The World Bank Forest Strategy: Striking the Right Balance VIl. Bank Leadership in Forests Do you consider the Bank to be a global leader in Should the Bank be a global leader in forest-related matters? forest-related matters? Yes 27.5% (11) Yes 45% (18) No 60% (24) No 25% (10) Blank 12.5% (5) Depends on issues 2.5% (1) Blank 17.5% (7) Based on your implementation experience, please indicate if you agree or disagree that the Bank is well positioned to provide leadership on the following global strategic issues in a policy and operational context. ClFoean Deeltopmn Mehnsm()(14) (8)3(1 SA: Strongly Agree; A: Agree; D: Disagree; SD: Strongly Disagree; NA: Not Available. Viii. Other Issues In general, do you think that the Bank's safeguard Do you think there is sufficient integration of forest policies help or hinder forestry projects? sector issues in the Bank's work on poverty reduction? Help 40% (16) Yes 7.5% (3) Hinder 22.5% (9) No 75% (30) Both 7.5% (3) Blank 17.5% (7) Blank 30% (12) Do you believe that the GEF's role in the forest sector Based on your experience, how do you rate the should... compliance with forest-related safeguard policies in Increase 57.5% (23) the Bank's operations that impact on forest? Stay the same 25% (10) Highly satisfactory 2.5% (1) Decrease 2.5% (1) Satisfactory 50% (20) Blank 15% (6) Unsatisfactory 12.5% (5) Highly unsatisfactory 0 Do you believe that the IFC's role in the forest sector Blank 35% (14) should... Increase 57.5% (23) Do you think forest-related issues are sufficiently Stay the same 25% (10) integrated in the Bank's agriculture sector ESW Decrease 2.5% (1) and strategy? Yes 22.5% (9) No 57.5% (23) Blank 17.5% (7) Depends on country 2.5% (1) 102 Annexes THE OED SURVEY OF THE CEO FORUM tion. Plantations are very important, but up to now Sample size: 31 it seems unclear if plantations should be cultivated Responses: 16 in tropical moist forests or only in secondary forests Response rate: 52% Date Sent: April 20, 1999 or savannas. Received: May 3, 1999-October 5, 1999 Should the Bank's focus be directed toward the Were you familiar with the World Bank's forest conservation of tropical moist forests? strategy before the CEO Forum was formed? Yes 50% Yes 69% No 44% No 31% No response 6% - 42% of the private sector respondents said "no." - However, the majority (75% NGOs and 55% of the -400% of the NG o respondents said "yes." private sector) noted that all forest types should be covered. How would you describe your current familiarity with Private Sector Comments: the 1991 strategy? * While tropical moist forests are essentially impor- Very familiar 25% tant, the conservation of forests worldwide is nec- Somewhat familiar 75% Not familiar 0% essary. The issue should be addressed globally. - 75% of the NGOs said "somewhat familiar." NGO Comments: Do you believe the conservation focus of the forest * Tropical moist forests may be the most critical, but strategy should continue? is isn't useful to suggest that conserving one kind of Yes 69% forest addresses the need to conserve other kinds. No 31% Although most tropical moist forests are in poor - 100% of the NGOs said that the conservation focus countries, which is the Bank's main target, other should continue.conns hc steBn'matrg,ohr -sb ofuthelprvatedsetorresondentssaid the focus forest types exist which also need conserving in - 58% of the private sector respondents Bankdlienecounries should continue. Bank client countries. * It would be useful to address conservation needs in Private Sector Comments: other threatened forest ecosystems, and the Bank *More broad-based approach to promoting sustain- should consider broadening its strategy to cover all able forest management and sector reforms. forest types. * The 1991 strategy did not sufficiently include the * The strength of the Bank's commitment to direct economic aspects of sustainable development. conservation efforts should increase relative to Emphasizing conservation as opposed to sustain- related activities. able forestry will exacerbate the problem and continue to cause problems for the Bank with What are your views of the commercial logging ban respect to credibility. in Operational Policy 4.36? * Sustainable logging on a commercial scale is - The OP was criticized both for making too many essential in development and good conservation exceptions to the policy and for not making enough in and should not be ignored. light of the assessed need for Bank involvement nThe strategy should be made clear by dividing the promoting sustainable forest management. - Half of the private sector responses specifically advised forests into three parts: the Bank to retain a presence in tropical moist forests. Conservation Forests - The Bank must help the Yet this presence should be encouraged only if a high states to define the areas and to protect them with a standard of sustainable forest management can be long-term view. achieved. Also, to meet local and national stakeholders' Production Forests - The Bank must finance the needs, clearer definitions are needed to determine exactly Peeroctond Foests-The Bpeanmst finssainc let what "as much forest cover as possible" means. research and help the operators in sustainable management. Private Sector Comments: Conversion Forests - In agriculture, the Bank must * The policy handicaps the Bank in its efforts. A lot of finance research and aid to reduce shifting cultiva- emerging and developing countries need the cash 103 The 'orld Bank Forest Strategy: Striking the Right Balance that comes from developing resources whereas they chance of this being achieved and 2) for commu- have very little other sources. The Bank had no nity-based operations operating on a small scale. clout to moderate conditions under which these * Financing commercial logging that is consistent areas are logged. The Bank can help countries with maintenance of high levels of ecological move toward sustainable forest management if it is integrity may be good policy unless the blanket involved. This is a limiting factor in the Bank. prohibition is needed because the bank is unable to * We think every country has the right and obligation exercise good judgment or penalize bad manage- to use its resources in a reasonable manner to ment and policy. provide for the well-being of its population. That obligation includes the preservation, conservation, Do you see different roles for the small-, medium-, and and utilization of the forest resources under an large-scale timber producing countries? effective national forest policy that is itself part of Yes 81% the country's land resource allocation and develop- No 0 ment programs. The Bank's policy of banning Don't know 19% participation in commercial logging activities merely shifts funding to other, often less respon- Different sale opportunities/product line opportuni- sible, sources. It removes the Bank and its direct influence from areas that most need its assistance to ties in different countries. Also, optimum resource achieve complete and sustainable development allocation. programs. It is inconceivable to actually expect that *Programs must be differentiated to take care of all of a poor country's primary forests can or will be all these categories. Out-grower programs are preserved. However, the most important aspect of important. maintaining appropriate forest ecosystems is to * Small companies manufacture specialty items bet- provide ecological, social, and economic alterna- ter than large. They can handle smaller scales. In tives to deforestation that address underlying causes terms of tree planting, large companies tend to have of the phenomenon. economies of scale which tend to give them advan- * Most of the tropical countries have land-use- tage. Where you can generate scale economies, planning of the tropical contparis ofathe landtsare there is some advantage to size. planning in the sense that parts of the forests are Small timber producers usually are nationals of the completely protected (national parks) and other concerned tropical country. Their main role cannot be parts are earmarked for production. Part of these idsraiainaddwsra rcsigdet production forests are primary tropical moist for- industrialization and downstream processing due to ests. Especially in these forests where timber har- lack of funds and expertise. A small timber producer vesting takes place in connection with or without can supply his production to the local industry. A vesting takes specin attetion small timber producer cannot establish a manage- the timber industry special attention.I ment plan. He will not be able to manage his forest NGO Comments: sustainably in the sense of a 30-40 year rotation. * The Bank should seek the governments' commit- Small producers cannot give a guarantee for long- ments to the conservation of biodiversity by creat- term employment. Due to lack of education, they are ing a functioning protected-area network before usually unable to train employees. The population seeking a commitment to manage timber supply does not find a permanent "home" and has to look for sustainably. The protection of biological diversity a new place (including shifting cultivation) when the must be in itself an objective. Attempts to improve suitable trees in a small concession have been the planning, monitoring, and field growth of even harvested. Small producers: especially when they secondary forests should proceed, but should not be have bought the rights of using the forest on auction the primary means of protecting biodiversity. tend to "cut out and get out" method, which is exactly * Exceptions to the policy should only be allowed 1) contrary to what is necessary. for operations which have made a clear commit- Large-scale companies have good possibilities for ment to seek Forest Stewardship Council (FSC)- socially and environmentally more demanding and based certification and where there is a reasonable long-lasting development projects. 104 Annexes * Training can be done at the appropriate scale for which give commercial advantages to large-scale large loggers using heavy equipment and small producers. Small-scale producers often benefit from family operations that still need to apply good a wide range of other goods/services. planning and management. * The often more visible role of the large manufactur- From the perspective of your organization, do you see ing company is in fact only part of the forest-based a benefit in pursuing certification? enterprise. Especially in solid wood products, there Yes 56% is an absolute need for small to medium- size No 31% Depends ~6% producers who can adapt to local scale and circum- Depends Don't know 6% stances, and these often are the most entrepreneur- ial business units. In a world in which the tendency Is certification an effective tool for assessing specific is toward outsourcing of many services and parts of standards of forest management? the manufacturing process, it is becoming common- Yes - given certain criteria 63% place for third party businesses to provide the road No 13% construction, harvesting and transportation and Yes and no, depends 25% many of the silvicultural services related to forest business. A high level of quality practices and Is certification feasible given the current knowledge of programs are necessary to provide benefits to all forest management? intended groups, to instill a feeling of responsibility Yes 44% for the forest in all who benefit from it, to account No 13% .. . . ~Yes and no, sometimes .31% for concerns about equity, and to minimize distor- Nesponsoe s % tions caused by those few who, inevitably, don't comply with the rules. These are all necessary Is certification likely to be more successful in components of building credibility for the projects. temperate than tropical forests? - We are having industry provide materials for Yes 63% logging operations being done by subcontractors No 32% (smaller companies). The timber industry is a Don't know 6% global market and on a global scale; one must discuss export. There are not enough local markets Is certification likely to promote "sustainable forest to sustain this (export) industry. First-grade export management?" Please clarify your perception of quality goes toward international export. One sustainable forest management. needs to understand regional sources and politics on Yes 38% a global level. Smaller companies can concentrate No 31% Depends on definition on logging operations under contracts of bigger of sustainable forest companies or if they are industrial then they need management 19% good relations with three or four steady clients. Too early to tell 6% No answer 6% NGO Comments: - Most members of the CEO Forum noted some benefits * Although roles vary from place to place, in general from certification but had a number of concerns about the costs and benefits and the willingness of end-users to small- and medium-scale producers focus on sup- pay significantly more for certified products, about plying local markets with products involving little certification becoming a barrier to trade, about problems capital investment, such as rough-sawn boards. of third-party monitoring, and about establishing a Large-scale producers generally focus on export general agreement on guidelines. markets and more capital-intensive production Private Sector Comments: (e.g., plywood, veneer, furniture, etc.) * Large-scale producers are able to engage in land- * As a tool, certification can serve as a motivator of scape-based planning and management. Smaller- excellence by identifying and recognizing those who scale producers need to group together to do this. excel in meeting standards of excellence ... . In our Also, there are various other economies of scale experience, forestry certification schemes have not 105 The World Bank Forest Strategy: Striking the Right Balance been the principal driver of improved forestry prac- financial advantage and starkly differing perceptions tice. It is effective in providing motivation and as a of what problems it is intended to solve and whether it model, but it is too complicated a concept to reach the can solve them. On the technical level, verification of majority of forest owners in societies where the forest practices to a particular standard is eminently majority of forestland is owned by private individu- feasible, if the standard is generally agreed upon. In als. Existing schemes are similar in terms of actual the developed countries, where there is a well- requirements; they differ in ideological agendas... In developed framework of forest technology, laws and countries where there is little statutory or regulatory regulations, land use history, etc., it is entirely control and less general agreement about acceptable possible to define "generally accepted forest prac- management practices, forest certification may be tices" that serve as a basis for certification. Much of able to identify those forest enterprises that are this is potentially useful for forests in temperate and properly meeting their responsibility for managing boreal developing countries. Some of it is equally the forest resource. There is controversy about certifi- useful in the plantation forests of the Southern cation in the temperate regions (evidence that the Hemisphere. However, tropical rainforest forestry is process is not yet mature enough). Many forests that in its infancy, it is largely confined to extraction of have been certified in many regions come nowhere furniture-grade hardwoods, there is little silviculture close to our corporate standards. and forest management as such, and there is little • Certification does not touch on the real factors of basis to establish agreed standards that have any deforestation in the tropics. Insensitive markets practical technical basis. represent more than 95 percent of tropical wood * Certification can only influence those forests that production. Certification doesn't concern govern- produce products into a market that requires it. It ments and cultivators, but only exporters to a few will have no impact where the reasons for defores- countries. Good management by all stakeholders- tation or degradation of an area are related to foresters, farmers, hunters-under the control of a population expansion and agricultural or fuel strong administration has a greater effect on tropi- needs. It is easy to certify temperate forests in cal forests than the good management of a few countries with more than 200 years of forest European companies who are already working in research and sustainably managed forests. Forests certifiable conditions. in Northern Europe, for instance, have been man- * The FSC's criteria and indicators for certifying aged sustainably for two centuries. Forestry in tropical natural forests are unrealistic and discrimi- temperate zones (meaning rich industrial countries) nating to tropical countries. There is not a single cannot be compared with forestry in tropical zones hectare of certified natural forests in West and (poor developing countries). Central Africa for the time being. If there are realisric criteria and indicators which leave the NGO Comments: tropical country and its governments the sover- * (Not in tropical forests)-Sustainable forest man- eignty to accredit certifiers and use their own agement is presumably targeted (at a minimum) at criteria and indicators (ATO - African Timber sustained timber yields. Association, CIFOR - Center for International For- * Sustainable forest management is a long-term goal estry Research), certification is feasible. The level with ecological social and eco-dimensions. Its of a sort of minimum criteria should be compara- precise formulation will depend on what forest tively easy to reach by concession holders and goods and services society wishes to "sustain." timber industry. Criteria and indicators should Certification can be a tool to promote this goal allow a step-by-step process and set realistic targets under appropriate circumstances. which can be reached in a certain period of time. * Sustainable forest management = ecologically com- The monopoly of FSC and unrealistic criteria/ patible forestry-pursuit of management that pro- indicators are a handicap in the certification pro- tects biodiversity while permitting economic devel- cess of tropical countries. opment. This could involve well-managed timber * The controversy about forest certification is primarily production and/or activities such as ecotourism or political in that it involves issues of ideology, control, others. 106 Annexes Do you believe carbon markets can help in forest Do you believe the climate change negotiations will conservation? result in clear guidelines for formulation of carbon Yes 75% trading markets? No 13% Yes 19% Depends 13% No 25% - The NGO community unanimously believes that carbon Don't know/unclear markets can help in forest conservation. so far/not anytime soon 50% No response 6% Privat e Sector Comments: Private Kyotor Prommento tote nte aiosFrm- Should the World Bank play a role in the development * The Kyoto Protocol to the United Nations Frame- o abnmres work Convention on Climate Change has so of carbon markets? much uncertainty associated with it that the form Yes 81% a carbon market can take is strictly speculative. Not sure 6% It is difficult to see how a carbon sequestrat ion reserve of existing forest will provide the In what ways can the World Bank and the private benefits needed to sustain a population that is sector work together.. using the area to meet their basic needs. This is . . . to meet the demand for forest products? especially true if the expectation is for "perma- * The World Bank can support educational efforts, nent" storage. information exchange, designed to spread sustain- * The current concept of a base date and the able forest management practices more broadly on limitations of the "Kyoto Forest" provide such a national and international basis. Also, research significant disadvantages to the developed coun- on trends in forest product markets. tries that it is difficult to see how they can ratify * For all objectives, develop programs to demon- the treaty as currently conceived. At a recent strate sustainable forest management/low impact meeting jointly sponsored by the Subsidiary Body logging. Also, develop forest plantations in for Scientific and Technological Advice (SBSTA) "logged-over" areas. and the Intergovernmental Panel on Climate * Lending of good projects in non-OECD countries. Change (IPCC), it was evident that several coun- * IFC could finance projects. The World Bank could tries are just beginning to analyze the impacts of improve the inventory climate and can play a the current understanding on their own econo- positive role to motivate companies to follow mies. However, regardless of the governmental sustainable forest management methods. context or political mechanism, forest planta- * By helping to establish the right environment for tions are an ideal way to increase the forest area private sector investment in forest plantations (e.g., for greater carbon sequestration. A study in by providing concessional loans or by restricting Brazil, for example, indicated that significant non-plantation wood supplies by placing old- reforestation with tree plantations of areas ear- growth forests off-limits in protected areas). lier converted to pasture and low-grade farmland would make a significant contribution to carbon . . . to help conserve primary forests? sequestration while providing a long-term base * Education is critical here. These are public lands for industrial wood. Similar opportunities exist and the support of the public and the local commu- through the Southern Hemisphere. A massive nity is vital to their preservation. Efforts at building reforestation effort in India, parts of China, in coalitions that are broad in scope and purpose Sub-Saharan Africa and Madagascar, would should be encouraged. have enormous implications for carbon seques- * Countries should set aside conservation areas; the tration as well as for soil stability, local fuel and rest of a country's area should be used economi- construction, and social improvement. cally without destroying it. Identify and protect * It depends on whether funds created by carbon private protected areas and collaboratively markets can be invested in tools of improved forest encourage governments to protect forests on pub- management which neither developing countries lic lands. Increase funding for protected area nor the private sector can finance. creation and management. 107 The World Bank Forest Strategy: Striking the Right Balance . . .to maintain biodiversity? What contributions, in your opinion, has the CEO * Fund studies that promote sustainable forest manage- Forum made in the areas mentioned in this ment with the focus of maximizing biodiversity and questionnaire? make sure this information is widely available to - The majority (60%) note a positive contribution. industry so the principles can be broadly adopted. - The rest believe that the Forum's contributions are * By understanding that sustainable management of unclear (27%) or limited (13%). primary forests is also possible, in connection with ful cosevtin Private Sector Comments: * Increase funding for protected area creation and * Essential discussion and information exchange maIncreageme fundint. for protected areacreationandforum, but a more active role is needed. management. * There is some indication of convergence between the views of the NGOs and the CEOs, which is very . . to sequester carbon? * Bring the players together and define the terms of positive. We have to go further by replacing the this market. Forum with working groups that combine NGO/ CEO/Private Sector/Bank, and the like. * The World Bank could possibly help to develop CEO/ Frumais the firstm e ofteW carbon trading rules.~ ~ ~ ~ The CEO Forum is the first move of the World Bank carbon tring rules. toward better understanding between the Bank and * P romote timber products and housing schemes,tepiaescoas"tr"frdvlmntn * Fund studies to gain a complete and accurate the private sector as "motor" for development in understanding of carbon sequestration and develop industrialgzation, education, creation of jobs, fight incentives to accomplish this. against poverty, etc. . . .to achieve other objectives? It has made a small group of industry CEOs more aware and better informed about the objectives of * Work wilth governments to assure progressve, but the World Bank and the "mindset" of its leader- impracicl,ad fesnforceab ship. It has provided the foundation for a small Improved forest management. * Drive governments to good governance through group of companies and NGOs to initiate a cooperation with private industry. Where IFC is limited (and somewhat superficial to date) dia- finpeanciong wt rvt industry,.hordBn Whase aItoo to logue on certain aspects of sustainable forestry. financing industry, the World Bank has a tool to However, those actions have helped to foster a promote discussion between governments, industry framewr in whichabe h dilouer a and the Bank. It seems as if the World Bank is ignoring the timber Sector. continue among the industrial, private forest owner and N.GO communities, and that is a * Identify ways to develop and maintain standards of owhe accom ment. sustainable forest management through indepen- oRelatively little, so far. dent certification and other ways of verification. * yet, it s ar. * The World Bank (or IFC) could finance the improve- * None yet, it is a talking shop. ment of state agencies, but also finance and work together with professional organizations that have ncr C ets: pedagogic functions, like IFIA. The development of better methods in reduced-impact logging; communi- pBrought together different sectors for exchange of cations and awareness of the private sector to improve these methods and pilot projects such as: forest views/made some progress through the working management plans, environmental impact studies, groups. low-impact logging, local processing with higher * Brought key parties together for important discussion impact value, taxation and forest policy, and role of and awareness raising of each others' perspectives. the forest industry in rural development. * Sector reforms/investment climate, institutional development, HRD, financing, etc. 108 Annexes Do you believe that the IFC's role in the forest sector - The other respondents noted that while some areas of should ... GEF involvement could be heightened, its work should be "confined to projects whose conservation and Decrease 56% environmental benefits are beyond question, such as Stay the same 6% funding protected areas through a trust fund." Don't know 2S% Private Sector Comments: Depends on focus 13% - The NGO community felt that IFC's role should "stay * GEF should increase its financial involvement in the same" or should be increased in situations where it natural resource management projects, changes in uses good ecological judgment. operational practices, and (especially) financing agri- culture and animal breeding, which have to be Private Sector Comments: integrated into forest management, industrial devel- * IFC's role should increase in non-OECD countries opment with fast-growing population in connected and in some newly established members of OECD. villages. This issue has been completely neglected up * IFC knows the forest sector and understands invest- to now, at least in West and Central Africa. It is ment climate in emerging markets. absolutely necessary to combine logging operations, * The IFC should support commercial plantations. timber industry (result = fast growth of villages) with * It is my impression and experience that the IFC has agriculture and animal breeding projects. more or less pulled out of investments in the forest * GEF should become more involved in programs to sector. IFC and also MIGA could play a better and demonstrate and teach sustainable forest manage- more constructive role for developing the forest sector ment/low-impact logging. and timber industry in a sustainable way in the future. * GEF should increase activity in non-OECD coun- * IFC could finance some special cooperation like: tries or newly established members of OECD. professional training to promote specialists in forest inventory, sustainable management, logging, Based on your knowledge of the Bank, do you believe sawmilling, etc. Or, the financing of equipment of the Bank is well positioned to address global strategic national interest like main roads (e.g., Central issues such as the role of forests in climate change, Africa-Douala) and railways (Congo, RD Congo, desertification, biodiversity conservation, and Cameroon, etc.) resource management? NGO Comments: - Overall, 73% of all respondents felt that the World Bank The IFC should not be involved in forestry projects is well positioned to address the issues of climate change, in The humdIF ropics should nottbehey be lrending foro biodiversity conservation, and resource management. in the humid tropics, nor should they be lending for - 60% of all respondents felt that the Bank is well projects such as roads and pipelines having signifi- positioned to address desertification. cant negative impacts on tropical forests. Rather, - The NGO community was critical of the World Bank's the IFC should increase lending for plantation role in addressing these global issues. development on degraded land and to conservation- friendly commercial development activities.NG Comns * The Bank should primarily play a "facilitator's" role Do you believe that the GEFs role in the forest sector in issues related to forests and climate change and for should ... biodiversity concentrate more on providing grants to Increase 44% private sector partners and in helping to fund imple- Decrease 0 menting agencies in developing countries. Don't know 38% * The Bank has difficulty with multi-country pro- Stay the same 6% grams and is therefore not well positioned to Depends on focus 6% address any of these issues. No response 6% * While the Bank could address biodiversity con- - 50% of the private sector respondents were not able to servation and resource management, it is not answer the question, usually for lack of knowledge about the organization. well equipped to address climate change and - 66% of the NGO community supported an increase in desertification. GEF activity. 109 The World Bank Forest Strazegy: Striking the Right Balance THE OED SURVEY OF THE WB/WWF ALLIANCE Sample Size: 93 Responses: 34 Response Rate: 37% Date Sent: May 3, 1999 Received: May - September 1999 In what capacity and in what countries are you involved in the WWF-World Bank alliance? On average, how many hours a month do you dedicate to the Alliance? Bank reinlmngrConrF emmme Region coordinator Regional point person Resden misio in Chinaow: Taskuc manager en Bidvriyspecialist Drco Task1 team leader/forests L Program officer Senior1environment(econFetfc Resident mission in ChioretnffieraRusia Biodiversity specialist Forest ordiao Senior economist C~~~onesevtofion (C direcogram Senior forest specialist ~~~Forest officer TSkno mngreconomist Tonehn tical director Regional manager Country team member Senior natural resource management specialist Sector leader 11(1as aaerPorm fie An nc x es From your perspective, what are the reasons for the partnership between the World Bank and the WWF? Bank rltoWWF for E Bank PartnerShip affors Wc b the WWF ensures that environmental and organizations (to utilize the comparative desired importance by key actors, X advantage of both institutions). players, and decisionmakers. An association with an environmental An opportunity for WWF to influence t : NGO, given the controversial nature of 7gWB agenda and programs related toE f X forest management, is good public fiprotected areas and the forest sector. fiXSm; relations for the Bank. gf Partnership affords WWIF the Additional funding for WWF.E Bank's forestry portfolio in that it realizes that the Bank's management does not- give it enough attention. WWF will benefit from increased funding An exploratory attempt to conciliate possibilities and that the institution will two frequently opposed view: gain more clout through association. development and conservation. What are the benefits of the Alliance? Bank WWF '' , W Responses Responses _: Stynergy, shared goals, and blending Ianccreatse in funding for conservation No benefits 4~Increased attention to conservation and sustainable forestry issues and the promotion of constructive uses of resources Provide most funds, money from the Synergy and the establishment of a center for forestry activities, an increase common framework in resources 0 t Increase representation of key A sWW moredit Bacss to stakeholders in Bank operations World Bank staff Promote forest conservation and best The chance for the World Bank to have practices in forest management more influence over the private sectorld ~7and to have more non-typical World ~iBank activities Political clout The Alliance targets now to be "attacked" from both directions Raise awareness on social, economic aLnd '~No benefits environmental benefits of management and conservation forests Provide a medium for governments to In practice, hard to say at this point, assume their responsibility of forest > except that governments may be taking management more notice of forest conservation issues if the Bank's name is associated Propaganda More visibility to forestry with Bank managers No answer 111 The World Banik Forest Strategy: Striking the Right Balance What are its drawbacks? Bank WVWF The AUiiance is toopdo".: 0 00; 0:0 i(0 l 00t;ee0AWnation and0: ; ;0004 :0: : ::: t: f:00 ::~~~~~~~~~~~s 1 ! taff to mke; The cultures and objectives of WWF and WWF is givin crdbliyt the Banik WB are not perfecty maed, e oacion on te prt f te Bak. or WF,close ~~~~~~~~~~~~~~soito wit th 'WB if nt well0_ prjcsworldie No drawbacks. Overloading an already stretched system Modest funds are too small to Be cost- Lack of "buy-in" by other partners. effective for Bank staff. IN False expectations. Turf Matters-coordination difficulties. * Differences in financing mechanisms. Instituitional cultures, roles, and physical * Differences in sectoral interests. distribution of siaff are very different. * New alliances are next to useless unless they come with new funding an that was the problem with the WBIWWF Alliance. * Not enough attention given to:interests of indigenous people. * ~No "buy in' amongst clients or wkithi the Bank. Seen as Bank giving in to FSC agenda and WWF agenda. Insufficient emphasis on addressing "paper parks" relevanit to the target of creating new protected areas_ Do you believe the goal of establishing 50 million hectares (125 million acres) of new forest protected areas is a realistic target? Bank WWF No No Don't know Don't know No answer No answer Is progress toward the realization of this target likely to be made in temperate forests? Bank k_ B WWF Highlylikely Unlikely Unlikely Highly unlikely Hlighy unlikely No answer N answeri 112 Annexes Is progress toward the realization of this target likely to be made in tropical forests? Bank | 1E|i|.|WWF ROME Responses lIlllill l ll Responses il ffighly likely l ll Highly likely |ll1 Likely Likely _ Unlikely Unikely unlikel Highly unlikely Highly unlikely o m n No answer No answer Do you believe the goal of bringing an additional 200 million hectares (500 million acres) of the world's forests under independent certification by the year 2005 is a realistic target? Bank WWF Responses _Responsesg Yes Yes is_o No No ' No answer No answer Is progress toward the realization of this target likely to be made in temperate forests? Rtesponses Responses Likely Likely gg Unlikely Unlikely Highly unlikely Highly unlikely No answer No answer Is progress toward the realization of this target likely to be made in tropical forests? Bank moam WWF Responses _ l70 Responses Highly lkely - g Highly likelyg Likely i Likely Unlikely Unlikely Highly unlikely Highly unlikely _ No answer No answer From your perspective, how do your next-in-line managers view the Alliance? 0 0 0 Responses Respesonses Desirable Desirable Somewhat desirable Somewhat desirable Undesirable Undesirabe_ No answer _ No answer Managers don't have an opinion/ uninterested 113 The World Ba i k Fore t Strategy: Striki ng the R ight BalIatce Who, in your view, are currently the stakeholders of the Alliance within the Bank? EBank | l g _ WWF Responses X |l 1| Responses @ Env anchor/staff l o. l s ml Env and Social Policy Division RDV Family (Forestry) Wolfensohn _ g Wolfensohn Forestry Division _ Ken Newcombe _Country management units l m m Select TTLs GEF coordinating staff A few naive TMs ie~ Regional point people External affairs ICR staff None Which additional key stakeholders within the Bank, in your opinion, need to be involved in the Alliance to ensure its successful implementation? ==Res.ponses Repne (.ountry directors g _ Country directors/desks ENV and RD)V sector managers _Regional offices/desks _ Vice presidents Bank operational staff _ i All TMs working on GEF Vice presidents Middle-level managers Task managers Environment department Biodiversity Thematic Group The Regions Environment Regional management Regional directors Social Development Family Resident representatives Operational VPs RDV Natural resource task team External relations managers Technical managers Private sector groups Fundraisers In the EAP Region: the RVP and the sector manager responsible for "regional initiative Biodiversity Park Project and Forestry Project IFC 114 Ann excs Who, in your view, are the current stakeholders outside the Bank and WWF? Bank an W . n to be iv n te Responses g M | S | 2 eoc International donm commuity SorneDF o r e s t r A Daencis Invrtmernationl NGOs(R,ICN)Wmns orgaizaion Danid au zv tuMdgsa MNstherlans Reseonses MiaNisnetwrks, ofFnatince National forestnaminitrao NainlGovernments Mincisers rsonsbefo Financomntes Tedignu TrupPrnvaer Smcordall uingwt oess PltcasLocal govrnmentes8idieos rus Burernauats The EU M_ Sman Socioal grovemetspMnstrsfiac TednTuronmenta NGSaluins Afriacrats Caero an Madagascar>I SA |_ ~~FUDECOR, CODEFORSA _ Inienou comuniie Doic youithionktat there istcurentlyer ausdequthe ianvolemnt oWF keydtob in-cutySveolvder in the Alliance?t nur t No _N No answer _ _ _leNo answoer -- 115 Ih,. W *,, Idt 1 B.,,1k r.r tr3tvgy ,,k * g t h, R 1 , I ght 31< - In what ways is the Alliance contributing to the Bank's institutional mission: "poverty alleviation and sustainable development"? Bank WWF Responses * ;&41Ie11ceY Responses Too early in the game to tell. 4 . Alliance targets are conducive to both mission goals. People are mainly lost in Alliance debates. The certification target is relevant to sustainable development. Only marginally contributing to the i Biodiversity conservation is a long-term Bank's mission. requirement for sustainable developmen It is unclear if it contributing to it. Certified forests should contribute to more competitive forest products iindustries, improve labor practices, and address human rights issues. Alliance is not contributing to the Bank's No tangible ways yet. overall mission. No appreciable contribution of the Where the Alliance helps realize Alliance in South Asia. sustainable forest use, local people should benefit and their standards of living should be improved. The benefits are less direct with regard to forest protected areas, but effects such as watershed protection and biodiversitv cnservation are significant. Developing more inclusive partnerships 1 Protected areas are a key to biodiversity with those concerned with sustainable conservation and a key component of management of natural resources. DIV sustainable development. Certification is contributing to the WB Sustainable natural resource mission because it should ensure management is a prerequisite for sustainability and higher income for creating the enabling environment for the poor. the Bank mission. To the extent that certification is broadly t In the Mediterranean region, the fight defined, can increase transparency and against desertification and the accountability on the part of the resource conservation of water resources are managers we are contributing to both of both related to forest conservation and these goals. are fundamental for poverty alleviation. In what ways is the Alliance contributing to the WWF's institutional mission? Bank - * F Responses ,ei4US Political clout Fundraising A way to add value to WWF's Forest for Life Campaign and other global initiatives In some countries, WWF is being taken off-task when asked to address poverty alleviation and sustainable forestry tIi instead of protected area management. No answer or "don't know" (50%) - - - - - - 1 16 Annexes Given the diverse conditions among regions and countries, do you believe that sufficient conditions and incentives can be created to achieve a certification standard which will be compatible with globally applicable principles? Bankc moma WWF Responses R_^lesponses _ Noe__s Yes g NoNomos Not relevant Not relevant Undecided Which type of timber producer is more likely to be more receptive to certification? Responses .Responses Small ,. 9l Small on m Medium Medium _ Large Large No answer No answer Small and large Small and large Can certification be applied as an instrument of Bank forest strategy (that is, as a term of conditionality and as a tool for risk management)? Bsank WWF Responses Responses 4 Yes Yes i u m No E Maybe Maybe No answer No answer Is certification likely to be more successful in temperate than tropical moist forests? Bank bm WWFX Responses Responses a m Yes Yes msmm No N aoo Depends (Depends entirely on markets Depends and whether temperate wood markets are demanding such a system.) No answer No answer Is certification likely to promote "sustainable forest management"? Please briefly identify what you understand by "sustainable forest management." 7 ~~~~~~Bank =WWF Responses _Responses Yes i g Yes No _No_ Maybe Too early to tell No answer No answer 117 f h,c Wo rlId B i n k F , et St rate gy : St,riking tlhe Rki ght B a Iancc What three key constraints are you facing in the implementation of the Alliance? Responses; Funding/high transaction costs for Xsmall WB/WWF Limited human resources/expertise to WVWF and Bank. __ Lack of team building/absence of country-based activities and partnedrship/ lack of in-country demand and Insufficient involvement of regional management and CD's. __ _ WWFT's own priorities/ lack of WWF interest locally/ WFM _ __ national agency not agreeing with proposaL.; issues/highly centralized decisionmaking. Lack of information.__ Lack of other stakeholders to assist with targets.; Overcoming other NGO resistance. __w No consensus on "independent certification."_8_d No cla rcdrso o o aeapoetcniee -a A la c roet"... ... . . - A ti e x es What key lessons have you learned since the Alliance was started? Bank 45 I must better prioritize tty time and avoid Don't try to stretch money-money doesn't stretch. New initiatives require an initial investment of faith, tirne and resources that the Bank is not always ready to make. Managing expectations can be difficult as managing outputs and outcomes. The WWF has its own agenda, it is not interested in Bank's agenda except to influence it. "Partners" seem to be lob- hunting in the Bank. - __ _ None. Need to bring local forest dwellers and those that surround forests into the discussions as key participants. More education for the Alliance will help government agencies to better understand the Alliance. Bring other NGOs into an Alliance project. Need to enhance impact by creating partnerships. WWF is not one partner but several (country offices, Washington and Gland). Tfhe Alliance is hampered by its construction around two partners who are largely external where forest conservation is concerned. Too top- down. Get an assistant or else never get involved in an initiative that came from top-down and lacks strong admin back- stopping. Bank management is not always ready for the implementation policies and initiatives decided upon by the president. Focus on smaller number of (larger) initiatives. 119 I h , W o lI B k F r r a t S t t S i k g th l ir i t 1, t I L Do you have suggestions to modify, adapt or strengthen this initiative? Bank ^'E Responses Streamline access to funds/commitment of adequate Qi resources/ or advise clients that there is not any significant funding available, false expectations lead to dispointed clients and overworked task managers. Decentralization with individual country focus. gf f g gA1d i3 i Need long-term planning. Task managers in both organizations need to share a felt - need for the Alliance. Hold more workshops to introduce the Atlliance. Focus on the goal of forest and other natural resource development.$ p id iih>h Regionalize 97 percent of contact between the parties and h2s get rid of the big ambitious targets. Give some thought to Miombo woodlands and other Ifpe- forest types in S. Africa region. It is vital to reinforce SADC forestry and biodiversitv institutions and form wider 4-~~hh t~~t~ partnerships (IUCN, SASUG, etc.). aru M s$ Place greater responsibility on our client countries. Open it up to other national and international organizations. 4 ru 4s -gtttnmnx ; We should not conitinue to spend any more effort until a ~ l~ t~1~lii~~~ review of value-added of such partnership to both WB and WWF country programs addressing sustainable forest iii&t~~ E 20 ' ;- 1 2u! Annexes ANNEX H: STUDY STAFF AND CONSULTATION CONTACTS Study Staff CHINA: From Afforestation to Poverty Alleviation Core Team and Natural Forest Management Uma Lele, Task Manager Evaluation Country Case Study Series Syed Arif Husain Maisha Hyman Scott Rozelle, Associate Professor, Economics, Lauren Kelly University of California, Davis Nalini Kumar Jikun Huang, Chinese Academy of Agricultural B. Essama Nssah Sciences Aaron Zazueta Syed Arif Husain, Consultant, OED Aaron Zazueta, Consultant, OED Additional Members Madhur Gautam COSTA RICA: Forest Policy and the Evolution of Ridley Nelson Land Use Evaluation Country Case Study Series Consultants Caroline Barnes Ronnie de Camino, President, Tropical Natural Madelyn Blair Resources, Inc. (RNT) Arnoldo Contreras Olman Segura, Professor, Universidad Nacional Kavita Gandhi Luis Guillermo Arias Karin Perkins Isaac Perez, consultant with lDB Saeed Rana INDIA: Alleviating Poverty Through Forest Authors of Supporting Studies Development BRAZIL: "Forests in the Balance: Challenges of Evaluation Country Case Study Series Conservation with Development" Evaluation Country Caise Study Series Nalini Kumar, OED N. C. Saxena, Secretary to Government of India, Uma Lele, OED Rural Development Department, New Delhi Virgilio Viana, Professor of Forestry, Universidade de Y. K. Alagh, Member of Parliament (Upper House), Sao Paulo India Adalberto Verrisimo, EMBRAPA, Amazon Kinsuk Mitra, Natural Resources Management Stephen Vosti, Visiting Scholar, Department of Coordinator, Winrock, Inc. Agriculture and Resource Economics, University of California, Davis INDONESIA: The Challenges of World Bank Karin Perkins, Consultant, OED Involvement in Forests Syed Arif Husain, Consultant, OED Evaluation Country Case Study Series CAMEROON: Forest Sector Development in a Madhur Gautam, OED Difficult Political Economy: An Evaluation of Uma Lele, OED Cameroon's Forest Development and World Bank Hariadi Kartodiharjo, Faculty of Forestry, Assistance Bogor Agricultural University, Institut Pertanian Bogor, Darmaga, Indonesia Boniface Essama Nssah, OED Azis Khan, Researcher, Agency for Research Jim Gockowski, scientist (agricultural economist), Development, Indonesian Ministry of Forestry International Institute of Tropical Agriculture, Ir. Erwinsyah, Associate, Industrial Based Forestry Cameroon Management, NRM Program, USAID Saeed Rana, Consultant, OED 121 r he World B anrk Forest Strategy: Striki ng the Right 13Balac e GEF Report: Financing the Global Benefits of List of Nongovernmental Organizations (NGOs) Forests: The Bank's GEF Portfolio and the 1991 Briefed Forest Strategy Africa Resources Trust AGIR ICI, France J. Gabriel Campbell, Consultant Bank Information Center Alejandra Martin, Consultant Biodiversity Action Network Bionet IFC Report: "OEG Review - Implementation of the Campagna per al Reforma della Banca Modiale, Italy 1991 Forest Strategy in IFC's Projects" Center for International Environmental Law Center for Tropical Forest Science/Smithsonian Afolabi Ojumu, CEXOE Tropical Research Institute Rafael Dominguez, CEXOE Centre pour l'Environnement et le Developpement, Cherian Samuel, CEXOE Cameroon Dominique Zwinkels, Consultant, CEXOE Conservation International John Gilliland, Consultant, CEXOE Consumers Choice Council Cousteau Society Advisory Committee Members Environmental Defense Fund Conor Boyd Evergreen Indonesia President, Weyerhaeuser Forestland International Fern, Belgium Angela Cropper Forest Peoples Programme, UK Chair, Editorial Committee, World Commission on Forest Stewardship Council Forests & Sustainable Development Greenpeace International Emmy Hafild Global Forest Policy Project Director, WAHLI Indian Institute of Bio Social Research and Chair, Indonesian Working Forum (NGO/community Development organization) Indonesian Ecolabeling Institute Hans Gregersen Indonesian Forum for Environment/Friends of the Chair, CGIAR Impact Assessment and Earth Indonesia Evaluation Group Institute for Global Environment Strategies Professor, College of Natural Resources, University International Institute for Energy Conservation of Minnesota International Union for Conservation of Nature and Natural Resources IUCN-Netherlands IUCN-Washington Japan Center for a Sustainable Environment and Society Political Economy Research Center Rainforest Action Network Rainforest Foundation, UK Ramkrishna Mission Lokashiksha The Knowledge Initiative Union of Concerned Scientists W. Alton Jones Foundation World Economy, Ecology and Development, Germany World Rainforest Movement, Uruguay World Resources Institute World Wide Fund for Nature/World Wildlife Fund 122 LIST OF BILATERALIMULTILATERAL INSTITUTIONS AND CONTACTS Bilawalm/nultilateral institution Contact Ceier for International Forestry Research (CIFOR) Jeff Sayer (j.sayer@acgiar.org) David Kaimowitz (d.kaimowitz@cgiar.org) Reider Persson (r.persson@cgiar.org) Ravi Prabhu (cgiar@worldhank.org) Enresa Brasiekira de Pesquisa Agropecuzria (EMBRAPA) Francisco Reifschneider (sci@sede.embrapa.hr) Food and Agriculture Organization (FAO) Michael Martin (Michael Martin@affao.org) Lennart Ljungmen (Lennart.Ljungnenmnfao.org) Arnoldo Contreras (Arnoldo.Contreras(" fao.org) Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) Cornelis Baron van Tuyll van Scrooskerken (Cornelis.Tuyll@gtz.De) International Union of Forest Research Organizations (IUFOR) Jeff Burley (jburley@plant-sciences.oxford.ac.uk) International Center for Research in Agroforestry (ICRAF) Pedro Sanchez (icraf@cgiar.org) Tom Tomich (t.tomich@cgnet.com) Erick C. M. Fernandes (icraf9acgiar.org) Intergovernmental Forum on Forests (IFF) Ilkka Ristimaki (ilkka.ristimaki(4formin.rnailnet.fi) Jagmohan Maini (maini@un.org) ntrational Food Policy Research Institute (IFPRI) Steve Vosti (s.vosti@cgnet.com) International Institute of Tropical Agriculture (ITA) Lukas Brader (iita@cgiar.org) Regional Unit for Technical Assistance (RUTA, Costa Rica) James Smyle (jsmyle@ruta.org) Swiss Agency for Development and Cooperation (SDC) Theo Weiderkehr (t.weiderkehr(t-deza.admiin.eh) MAJOR MEETINGS/WORKSHOPS/REVIEWS Decemlbcr 18, 1998 s ntry Workshop - OED Review of the World Bank Group's 1991 Forest Strategy and Its Implementation (First Meeting of the Advisory Committee) Jauiarv )9, 1999 NCO Workshop April 26-7, 1 999 Secon Meeing of the Advisory Committee for the OED Review of the World Bank Group's 1991 Forest Strategy and Its Implementation June 29, 1 999 OQ-Stop Review - Costa Rica Case Study Draft uly 27-2s, 1999 Two-Day Forestry Retreat * One-Stop Review meetings for Brazil, Cameroon, China, and India reports * Presentations on the Portfolio Reviews for ECA and LCR regions *Progrcss Report on Indonesia country study * Edings of the IFC and GEF reviews and the WWF questionnaires * ICA contribution to the OED Review .J4dtec on the OED Review oudine Novembiher I-), 1999 ,.id "ntry Workshop - New Delhi, India Nov ember .5, 1999 . Jh1n-.Cuntry Workshop - Beijing, China November 18, 1999 - u Workshop- Brasilia, Brazil Novenmber 22-23 TtrMeeip ng of the Advisory Committee for the OED Review of the World Bank Group's -4991 Forta Strategy and its Implementation December 15, 1999 Bank Staf December 23, 1999 . FE Sehtar J forg v EMn James Wolfensohn Janiuary 27-78 2()()() R2ev0w Workshop April 25, 2000 Country Workshop - Jakarta, Indonesia Februarv-."vay 2000 tCnsuharions - ESSD Julne 2000 7)()$ft tC Efor Final Review 123 The Wo\ r Id B3tk F,rest Str,tegt: Strik ing the Rlight Ull ni c INDICATORS FOR ENVIRONMENTAL MANAGEMENT Assessment of CIFOR criteria and indicators Goal Intervention point Sustain- Principle, criterion, indicator Efficiency Equity ability Stand Institution Policy Policy, Planning and Institutional Framework Are Conducive to Sustainable Forest Management There is sustained and adequate funding for the X X X X management of forests. Policy and planning are based on recent and accurate X X information. Effective instruments for intersectoral coordination on X X X land use and land management exist. There is a permanent forest estate (PFE) adequately X X X X protected by law, which is the basis for sustainable management, including both protection and production forest. There is a regional land use plan or PFE which reflects X X X X X the different forested land uses, including attention to such matters as population, agricultural uses, conservation, environmental, economic and cultural values. CCC t~hC~~ hEe4g i~C%C ~~~~~~~~~~~~~~~~~~~~~~~~~mfZ 02 BRS ~~~~~~~~~ *CCC Ci CCfi CtCCR 4' ' C .......- ,,p',2m m : 20CC CCCChC4'CCCC CC~~~~~~~~~~~~~~~~~~et~~~t~~§3 R ERB A CEMC ,C~4C; etch C C C C X~~~~~~~~M E gis-gg ~ ~ ~ ~ ~ ~ ~ 7 CC ~~ V~~~~*,,~~~~~C--C~~~~llC CC E If C MAM CC-C ~~~CC CCetCi, a OF M 9W jC- ' C 1 MI, X11 ,IM -C14C,3C 1~ C'CC'CCCC 4 C C~C~CC' - C'M' m1w etCgC ~~~~~~ C~ggg ML. CnEN-M-" -7'CM` C C~~CC eCC C ~~~~4" C> ~~~C~C"~~>~~C>4 CC C~UW CCCCCC4'C C ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ C- CC~~~~~~~~~~~~~~~~~~~ CCC~~~~~~~~~i C'CC,C>CC~~~~~~~~~~~~~~~~~~~~W CC-HC a C,C C C C~~~~~~~~< C '~~~~~~ 7"- f CCt,C, C,Ch~~~~~~~~~~~~~~~~~~~~~~~~i 2C~C,C C -