World Bank Admits to Failure of Forest Policy

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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

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1/28/00

OVERVIEW & COMMENTARY

A recent damning internal World Bank report states that the Bank has

failed to implement its own policies to protect forests. It says

that the poor were not a major source of deforestation and illegal

logging, as the bank previously contended, but that demand for

fuelwood for industry, timber for housing and international demand for

hardwood were the main factors destroying forests. The study

concludes that the bank's forest policy was largely ignored when

lending for economic policy reforms. "Even in countries where forest

lending is large, forests and their development are currently not an

important element of the bank's assistance strategy for poverty

alleviation." This self-examination emerges from the context of the

Bank attempting to amend its forest policy to allow more lending to

the forest sector, and presumably greater attention to the problem of

deforestation and forest decline.

g.b.

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ITEM #1

Title: World Bank admits to failure of forest policy

Source: Reuters

Date: January 27, 2000

Byline: Mark Egan

WASHINGTON, Jan 27 (Reuters) - In a damning self-indictment of its

decade-old forest strategy, the World Bank has admitted it has failed

to implement its own policies at the expense of the things it was

supposed to protect - forests and the poor.

In an unusually frank internal evaluation report, the bank admitted

its lending was flawed, failed to protect forests, failed to help the

poor and admitted that the bank's abilities to monitor the effects of

its lending was limited.

In 1991, the bank adopted a forest strategy aimed at deflecting long-

standing criticisms that the bank's activities had contributed to the

alarming pace of global deforestation.

The nearly decade-old policy charged the bank with conserving tropical

moist forests and planting trees to meet the needs of the poor. The

bank also promised to monitor the impacts of its overall lending on

forests.

The report admitted that the 1991 policy was, ``narrowly focused on 20

moist tropical forest countries and neglected other biodiversity-rich

forest types that are even more endangered, more important globally,

or more in need of conservation to meet the needs of the poor.''

Critics inferred from the report that the bank, through its structural

adjustment loans, had vicariously contributed to deforestation.

``They have been lending massively for the same economic policies that

have been identified in the report as driving deforestation, without

paying attention to the impact they were having on forests,'' Korinna

Horta, an environment economist at the Environmental Defense told

Reuters.

But, World Bank spokeswoman Caroline Anstey said the report should be

seen in a positive light since it was commissioned by President James

Wolfensohn to help him draw up a new forest strategy more in tune with

the current situation.

``The important thing is the report was called for by (Wolfensohn,)

who recognized there needed to be a change from the 1991 policy,''

Anstey said. ``The report concludes that the time has come for a new

bank forest policy, better attuned to the needs of developing

countries and the changing dynamic of the forest sector.''

The report said that the poor were not a major source of deforestation

and illegal logging, as the bank believed in 1991, but that demand for

fuelwood for industry, timber for housing and international demand for

hardwood were the main factors destroying forests.

The World Bank has often been criticized for lending for projects such

as building dams which destroy the environment. In recent years the

bank, led by Wolfensohn, has attempted to shake off that image through

a series of alliances with environmental groups.

But despite efforts to shake its tarnished image, the bank is still

under fire. Critics have asked the bank not to fund part of the

proposed oil pipeline between Chad and Cameroon because, they claim,

the project will destroy rain forests and harm the livelihoods of

people living along its route.

Horta said that while the bank appeared to be squarely facing up to

its past failings, she remained skeptical that the bank's burgeoning

bureaucracy can improve itself.

The report also admits that the policy was only partially implemented

and that the bank failed to properly help the poor, one in four of

which live in forest areas.

``Even in countries where forest lending is large, forests and their

development are currently not an important element of the bank's

assistance strategy for poverty alleviation,'' the report notes.

In a particularly damning assessment, the report said that the bank's

policy's actually hampered lending which the bank should have

encouraged. The bank's "cautious approach had a chilling effect on

bank involvement in improving forest management in forest-rich

countries that wished to use their forests for economic development.

The report was written by the bank's Operations Evaluation Department,

an autonomous group which reports directly to the bank's board.

ITEM #2

Title: A Decade Lost: World Bank Study Admits Failure To Curb

Deforestation

Institution Says Globalization Has Led To Forest

Destruction

Source: Environmental Defense Fund,

Date: January 27, 2000

An historic World Bank study has found Bank projects continue to harm

the world's forests, despite a protective policy adopted 10 years ago

and a 78 percent increase in forest-related lending over the past 8

years. The study also points to trade liberalization and globalization

as the major drivers of deforestation. World Bank President James

Wolfensohn is scheduled tomorrow to address a Bank meeting in

Washington to discuss the study's findings. The report can be found on

the on the internet at:

http://wbln0018.worldbank.org/oed/oedevent.nsf/htmlmedia/announcements

.html

"This is one of the most important documents on forest policy the Bank

has issued in a decade. It shows the Bank has failed to comply with

its own 1991 Forest Policy to protect the world's forests and

alleviate poverty," said Korinna Horta, Environmental Defense senior

economist. "As a result, the world's leading development institution

has lost an entire decade in which it could have been working to curb

deforestation and address the needs of the poor."

"The recognition that globalization and corruption are causing

deforestation presents a welcome and fundamental shift away from the

World Bank's previous thinking, which pointed to poor people in

developing countries as the main culprits," said Horta.

"Unfortunately, the majority of the World Bank's own lending consists

of structural adjustment loans that promote the very economic policies

that are accelerating deforestation."

The World Bank adopted a Forest Policy in 1991 that committed the

institution to pay close attention to the impacts on forests of its

multi-billion dollar annual investment portfolio. The new World Bank

study shows that the promised approach to forests was ignored when

lending for economic policy reforms, and the impacts on forests of

Bank-financed projects have not been monitored. Contrary to the 1991

Forest Policy, the new World Bank study also documents how the Bank

has largely failed to promote poverty alleviation through its forest-

related loans and estimates that only one quarter of the projects

financed are likely to be sustainable.

While social justice and environmental advocates praise the study's

findings, they strongly disagree with the conclusions the World Bank

has drawn from them: that the 1991 Forest Policy's precautionary

approach is to blame for the failure in the forest sector.

"The real failure is in the World Bank staff's lack of compliance with

the 1991 policy," said Marcus Colchester, director of Forest Peoples

Programme, a UK-based organization. "This study proves yet again that

the Bank must end its culture of emphasis on simply getting money out

the door, and instead implement projects that truly address poverty

and don't harm the environment. That means a bold revision of staff

incentives so that staff are encouraged to adhere to policy and

penalized when they don't."

Environmental Defense, a leading national, NY-based nonprofit

organization, represents 300,000 members. Environmental Defense links

science, economics, and law to create innovative, equitable and

economically viable solutions to today's environmental problems.

Environmental Defense, Park Avenue South, New York, NY 10010

Forest Peoples Programme, 1c Fosseway Business Centre, Stratford Road,

Moreton-in-Marsh, GL56 9NQ, England. Tel: 010608 652893 Fax: +44 1608

652878

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