08/30/00 -- World Bank Report Finds Its Policies Harm Forests, Reforms Pledged

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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

World Bank Report Finds Its Policies Harm Forests, Reforms Pledged

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Forest Networking a Project of Forests.org

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http://forests.org/web/ -- Discuss Forest Conservation

08/30/00

OVERVIEW & COMMENTARY

In a damning reexamination of their role in forest loss, the World

Bank is considering reforming their forest policy to integrate forest

conservation pledges into a country's overall economic policy. I

have been involved in what I consider to be a successful effort to do

so in Papua New Guinea, where a moratorium on new logging was a

condition for structural adjustment lending, and has put on hold a

planned allocation of essentially all commercially accessible

remaining forests in the World's third largest tropical wilderness.

Whether this approach can be replicated elsewhere is uncertain, as is

the World Bank's ability to systematize this approach throughout

their bureaucracy. It is critical that any new forest policy, in

regard to investment projects in the sector, focus entirely on

conservation and small and medium scale certified production by local

peoples. Further, the examination of the Bank's impacts upon

deforestation and environmental decline, and drafting of a new forest

policy, must be comprehensive and address the link between Bank

prescribed economic austerity and increased deforestation caused by

social need. Given these and other protections, in my opinion making

forest conservation a condition for multi-national loans shows great

promise to reduce global deforestation. There is some merit to using

multiple approaches to achieve global forest sustainability, and

speaking softly while carrying a big (financial) stick may be the

only approach possible in some cases--particularly where the multi-

national timber mafia is firmly entrenched.

g.b.

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Title: World Bank Report Finds That Its Own Policies Harm Forests

Date: August 17, 2000

Washington, Aug. 15 (Bloomberg) -- An internal World Bank study found

that its economic advice often increases logging in virgin forests,

so the bank may soon attach pro-forest conditions to its policy loans

for the first time.

The study, to be released later this month, says that the World

Bank's advice to governments to cut spending, end subsidies and

reduce tariffs often pushes low-income residents and forestry

companies to increase logging in ecologically ``critical'' woodlands,

said Uma Lele, who wrote the bank report.

That problem has been overlooked by a decade of bank policy, which

forbade bank participation in most logging, Lele said.

``Forests don't receive any treatment in our economic debates,'' she

told Bloomberg News.

Bank staff will soon recommend including conditions to preserve

forests in all economic policy loans, said James Douglas, a bank

staff member who is writing a new forest policy. If approved by the

bank's board, the new prescription could go into effect by the end of

the year, he said.

Adding the first environmental condition to its loans would answer a

long-standing demand of activists, just as the bank faces increased

criticism on its environmental record. That criticism recently

intensified after the bank approved a $60 million forest management

loan to Russia just days after the country eliminated its forest

protection agency.

``The forest issue is a Rorschach test of the role of the bank,''

said Frances Seymour, of the World Resources Institute, an

environmental think tank. ``It encompasses all sorts of

environmental, social, and economic issues.''

Forest Policy

For many countries, particularly those with large forests such as

Indonesia or Cameroon, the new environmental policies could add a

hoop they must jump through to get so-called structural adjustment

loans, which are meant to be approved quickly in cases of economic

emergency.

The policy of the World Bank, also becomes the standard for other

donors, said Bruce Cabarle, director of World Wildlife Fund's Global

Forest Program.

This is the second go-around for the World Bank's forest policy.

After enduring years of criticism for its role in paving Brazilian

roads in the Amazon and resettling Indonesians on previously

unpopulated islands -- the bank in 1991 adopted a policy of rejecting

projects that would directly lead to logging virgin tropical forests.

Broadly, that strategy shifted ``priorities away from projects that

had in the past contributed to deforestation,'' according to a draft

of internal report released earlier this year.

Still, nine years later, the policy has had three main drawbacks, the

report found. First, the prohibition on some forestry projects had a

``chilling effect,'' on bank staff, scaring them off involvement in

any forest-related projects that the bank could help.

Second, the policy focused on just 20 forests worldwide, ignoring all

others. Last, the loan focused on not participating in logging, while

not addressing the role economic policies play in encouraging

logging.

`Chilling Effect'

Environmental advocates outside the bank say they worry most that the

bank will use the ``chilling effect'' argument to reverse its

prohibition against involvement in logging.

While the prohibition won't be eliminated, it must be eased, Douglas

said.

Environmentalists ``think they can just protect all these forests

without any logging at all,'' Douglas said. ``That's just a bizarre

argument. There's not enough money in the world to do that.'' The

most fundamental change would be expanding the scope to examine

forest policy. It makes more sense for bank staff members to plug

forest conservation pledges into a country's overall economic policy,

than it does to fund a small conservation project here or there,

Douglas said.

The bank's experience in applying these measures in countries such as

Indonesia has been mixed, according to a study by Seymour of World

Resources Institute.

``The bank is really good at pushing the stroke-of-the-pen kind of

reforms,'' Seymour said. ``It's much less adept at pushing the day-

to-day implementation of those changes.'' It's those deeper changes

that are necessary, the bank's own report will show.

``Poor governance, corruption, and political alliances between parts

of the private sector and ruling elites, combined with minimal

enforcement capacity at local and regional levels, all played a part

in deforestation,'' the report concluded.

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