REVIEW OF IMPLEMENTATION OF THE FOREST
SECTOR POLICY
December 5, 1994

Natural Resources and Agricultural Policies Divisions
Agriculture and Natural Resources Department
Land Water and Natural Habitats and Social Policy and Resettlement Divisions
Environment Department
Environmentally Sustainable Development

TABLE OF CONTENTS

FOREWORD
EXECUTIVE SUMMARY

1. INTRODUCTION
The 1991 Forest Policy
A Multisectoral Approach
International Cooperation
Policy Reform and Institutional Strengthening
Resource Expansion and Intensification
Preservation of Intact Natural Forests
Developments Since the Forest Policy Paper
Continued Forest Destruction
Increased Investment
Growing and Diversifying Demands
Expanding Research Efforts
Heightened Global Debate
The Challenge to the Bank

2. IMPLEMENTATION OF THE FOREST POLICY
Forestry Sector Work
Forest Valuation
Social Issues
Macroeconomic and Trade Policy Influences on Forests
Changing Approaches to Sector Work
Assessment of Forestry Sector Work
Lending for Forestry Projects
Resource Expansion
Watershed Management
Alternative Livelihoods
Harvesting and Utilization
Parks and Protected Areas
Technology Development and Transfer
Policy Reform and Studies
Assessment of Lending for Forestry Projects
Quality Enhancement and Process Issues
Social Issues and Neglected Stakeholders
Technical Quality
Precautionary Approach
Complexity
Staffing
International Cooperation

3. THREE CRITICAL QUESTIONS: BALANCE, LINKAGES, AND PARTICIPATION
Balancing Poverty Reduction, Conservation, and Production
The Evolution of Bank Forestry Lending
Resources for Forest Development: The Bank's Roles
Financing Sectoral Development and Public Goods
Financing Reform
A Balanced Portfolio
Accounting for Intersectoral Linkages
The Effects of Operations in Other Sectors on Forests
Agricultural Operations
Energy Operations
Infrastructure Operations
Mining Operations
Macroeconomic Linkages
Institutional Reform and Participation
Problems of Forest Governance
Obstacles to Institutional Change and Conflict Resolution
Distributional Aspects of Public Ownership
Toward Deeper Reform and Participation
Assessment of the Critical Questions

4. FUTURE PRIORITIES
The Future of Forests
Priorities for the Bank
Target the Use of Forest Resources to Reduce Poverty
Reconcile Conservation and Utilization
Promote Increased Investment through Policy and Institutional Reform
Move Beyond Forestry
Next Steps

References and Bibliography

BOXES
Box 1. Forest Valuation in Madagascar
Box 2. From the Forest Sector Policy to a Regional Strategy: The Experience of the Africa Region
Box 3. IFC Investment in Forest-Based Industries
Box 4. The Global Environment Facility and Forests
Box 5. The Pilot Program to Conserve the Brazilian Rain Forest
Box 6. Environmental Assessment of Forestry Projects
Box 7. Forestry Advisory Group
Box 8. Promoting Fuelwood Efficiency: Lessons on Improved Wood Stoves

ABBREVIATIONS AND ACRONYMS

AFSP Africa Forest Strategy Paper
FY World Bank Fiscal Year, July 1 - June 30
ESMAP Energy Sector Management Assistance Program
GEF Global Environment Facility
IDA International Development Association
IFC International Finance Corporation
ITTA International Tropical Timber Association
NEAP National Environmental Action Plan
NGO Nongovernmental Organization
OED Operations Evaluation Department
TFAP Tropical Forestry Action Plan

GLOSSARY

Agroforestry. Land use system in which woody perennials are used on the same land as agricultural crops or livestock in some form of spatial arrangement or temporal sequence.
Boreal forest. Forest located in areas with mean annual temperature of less than –4^oC, dominated by pine, fir, spruce, larch and birch, and covering large areas of Canada, Russia and Scandinavia.
Carbon fixation; carbon sequestration. The conversion by plants, through photosynthesis, of atmospheric carbon dioxide into organic compounds. Substantially changing forests by clearing, burning, and so on increases the release of carbon based gases into the atmosphere, thereby contributing to the greenhouse effect.
Deforestation. The clearing of forests and the conversion of land to nonforest uses.
Degradation. Biological, chemical, and physical processes that result in loss of the productive potential of forests. Degradation may be permanent, although some forests may recover naturally or with human assistance.
Dry tropical forest. Open forest with continuous grass cover; distinguished from other tropical forests by distinct seasonality and lower rainfall. Includes woody savannas and shrubland
Farm forestry. Tree planting that is carried out on private farmlands.
Forest policy. The focus of the 1991 World Bank policy paper, and included in the title of that paper. Forest policy includes all policies, including macroeconomic as well as other sector policies, that may affect how forests are used. Many government departments contribute to formulation of forest policy.
Forestry policy. The focus of the 1978 World Bank policy paper, and included in the title of that paper. Forestry policy includes sector-specific policies such as stumpage fees, as well as aspects of agricultural policy such as land tenure. Only one (or very few) government departments contribute to formulation of forestry policy.
Joint forest management. The transfer of a share of benefits from government to rural communities in exchange for implementing agreed forest management programs in state forests.
Moist tropical forest. Forest situated in areas receiving not less than 100 millimeters of rain in any month for two out of three years, with a mean annual temperature of 24°C or higher; mostly low-lying, generally closed. Subdivided into tropical rain forest and tropical moist deciduous forest.
Nontimber forest products. Marketable forest products, other than timber, such as fruit, medicines, nuts, and bushmeat.
Primary forest.. Intact forest that has been essentially unmodified by human activity for the past sixty to eighty years.
Secondary forest. Forest that is subject to various intensities of logging, or to a long cycle of shifting cultivation, but that still contains indigenous trees and shrubs.
Shifting cultivation. Farming system in which land is periodically cleared, fanned, and then returned to fallow; synonymous with slash and burn or swidden agriculture.
Social forestry. A term used to describe a type of project that was first developed in the late 1970s. Such projects included tree planting carried out as a community undertaking, sometimes also including farm forestry, with the focus on production of fuelwood and poles. More recently, social forestry refers to any kind of forestry project in which poor people are the main
Stumpage; royalty. Fee or price of standing trees before logging.
Sustainable forest management. Management of forests to achieve a continuous flow of forest products and services of all kinds. While the general principles underlying sustainable management are agreed, their practical application is difficult, particularly in moist tropical forests.
Sustainable yield forest management.. A management practice developed more than a century ago for production of timber to achieve balance between net growth and harvest.
Temperate forest. Forest located in areas with mean annual temperature between -3° C and 5° C, dominated by broad leaf tree species. Temperate forests are characterized by heavy human intervention or conversion into plantations.

FOREWORD

This review, prepared by a team of staff from the Agriculture and Natural Resources and Environment departments, is based on extensive discussions with Bank task managers, forestry specialists, and other staff. The review also reflects the experiences gained and knowledge derived from the many cross-support activities of staff in the two central departments.

Since the adoption of its forest policy in 1991, the Bank has undertaken much sector work and has more than doubled forestry lending, but it is still too early to identify actual development impacts of the new policy. New projects have been effective for an average of less than a year, and several approved projects have yet to be declared effective. Thus this review concentrates on the intentions of work done since the issuance of the new forest policy.

In line with the open and participatory preparation of the policy paper, an initial draft of this review was discussed with borrowers, nongovernmental organizations, forest industry groups, donor agencies, forest managers, and researchers. Consultations were held in Libreville, London, and Washington¹. (¹The London consultations were sponsored in part by the United Kingdom Tropical Forest Forum, the Libreville consultations by the multidonor Forestry Advisers Group, and the Washington consultations by the Bank.) The views expressed in the consultations were quite diverse and often conflicting. While the Bank retains responsibility for the judgments expressed in this review, extensive revisions were made based on discussions at these consultations.

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