The World Bank is currently embarked in a process to review the implementation of its 1991 Forest Policy, while simultaneously trying to develop a new forest strategy. Within that process, the Bank has organized a series of consultations, among which eight regional and one country (Brazil) consultations, open to civil society organizations.

Much of the consultation will be based on the findings of the Bank's Operations Evaluation Department (OED), which carried out six country studies (Brazil, Cameroon, China, Costa Rica, India and Indonesia), all of which served as the basis for its main report. It is therefore crucial that participants at the consultations analyse critically those documents, in order to ensure their full and informed participation in the process. At the same time, there are many more people interested either on the Bank's activities or on forests, which will not be attending the consultations. In order to facilitate participation and input from participants and non-participants, the WRM decided to focus this bulletin entirely on the issue, providing both our viewpoint and summaries of all the OED findings. At the same time, we created a specific area within our web page, to facilitate access to further information (including the full texts of the OED studies) and opinion on the process: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html .

Whatever view one might have about the positive or negative role that the World Bank can have on people and the environment -particularly forests- one cannot ignore that the Bank is a major player within the current globalized scenario. In consequence, we decided to play a role in trying to positively influence this major actor, and this bulletin is aimed at that. We sincerely hope it may serve that purpose.

The World Bank in the forest

The current FPIRS process seems to be coming out with a number of ideas for the future Bank's approach to forests, some of which clearly expressed while others underlying though carrying an equally clear message. Most of these ideas are included in the OED report -whose reading we recommend- but we would like to concentrate on a few of them, which we consider to be more important.

Development is perceived as practically impossible without destroying the forests. This is the message, particularly for the so-called forest-rich countries (Cameroon, Indonesia, Brazil). The country is poor and therefore needs to use its resources unsustainably. We strongly disagree with this analysis, which sees conservation and development as opposites, which seems to forget that conservation is not equal to preservation, and which sends the concept of sustainable development into oblivion.

Linked to the above is another idea: that conservation is not an issue for Southern countries. Forest conservation is perceived as a global benefit for the rich countries and a cost for Southern ones. Therefore conservation (the OED report should have used the term preservation, which reflects what they mean) is only possible if the North channels substantial monies to the South for carbon sequestration, biodiversity conservation, global climate stability, etc. This is perhaps the message the Bank receives from governments, but in most cases it would receive the opposite message from indigenous and forest-dependent peoples, for whom that type of "development" implies the destruction of their livelihoods and cultures. Forest destruction is not a necessity: it is a political choice. Real conservation (sustainable use, not preservation) is possible and the Bank can strongly assist countries to achieve this purpose.

Another message -not present in the OED report, but which can be perceived when talking to Bank officials- is that the Bank's main mandate is poverty alleviation and not forest conservation. Again, this is a false dichotomy in most cases. On the contrary, in many situations forest destruction generates more poor. Surely it is the Bank's mission to avoid creating -and not only to alleviate- poverty. The OED report itself recognizes that the poor have not been a substantial cause of deforestation. In many other situations, forest destruction serves to enrich a small group of already rich people and transnationals and -in the best of cases- does not alleviate existing poverty. Finally, in those cases in which the poor effectively destroy the forest, the reason usually lies in governmental economic and social policies which the Bank could help modify and thereby contribute to both alleviate poverty and to protect the forest.

One of the main ideas coming out of this process -very much emphasized in the OED report- is that "forest plantations" should be strongly supported, as a way of relieving pressures from "conservation forests." This ignores the fact that tree plantations usually result in the destruction of forests -as highlighted in the Indonesian OED study- and that there's no proof regarding their usefulness in this respect. More importantly, the term "forest plantation" is used without describing its meaning and therefore includes socially and environmentally positive small-scale plantations aimed at satisfying local needs -which we totally support- and large scale tree monocrops having strong negative impacts on people and the environment. The Bank should therefore clarify which type of plantations it seeks to promote.

A further message is that the prohibition of the 1991 Forest Policy for the Bank to finance -under any circumstances- commercial logging in primary tropical moist forests should be eliminated, because it had a "chilling effect" on the Bank's involvement in any type of forest management projects in those types of forests. Given the current situation, where primary forests of all types are decreasing at an alarming rate, we believe that the Bank should -on the contrary- extend this provision to all types of primary forests, to include tropical dry, temperate and boreal forests. The Bank has sufficient experience to know which projects might be socially and environmentally positive and need not feel "chilled" because of possible criticisms. Structural adjustment has received far more criticism and no-one felt so "chilled" within the Bank that it led to a suspension of those loans.

There seems to be an unproven conviction that the 1991 Forest Policy has been "superseded" and that it needs to be changed to adapt to the new situation. However, what the country studies clearly show is that the 1991 policy was not adequately implemented, and that major Bank activities -such as structural adjustment lending- completely ignored the possible impacts on forests. The policy may need some adaptations, but the basic conclusion stemming from the OED studies is that it was never fully implemented. We cannot understand the reason for this sudden urge for change.

Finally, it is important to stress -to be fair- that the OED has carried out a major, serious, and very valuable evaluation of the implementation of the Bank's Forest Policy. The fact that we don't agree with some of its conclusions does not mean that we don't appreciate the work which the different country teams carried out. It is equally important to stress that the Bank has opened up for scrutiny and that it has organized a number of consultations to receive input from all interested parties. We welcome this initiative and will try to contribute positively to the process.

What follows are summaries of the OED main report and of the six country studies which the OED carried out as part of the FPIRS process. In the summaries, we have aimed at highlighting those aspects which we believe to be more relevant, trying not to include our own opinions, some of which we add at the end of each summary. We strongly urge, however, all those intending to participate directly or indirectly in the FPIRS process to also read the full studies, given that neither our summary nor the official OED studies' summaries reflect the rich information contained in the full texts.

OED Main Report

The report contains two main messages: firstly, that the Bank implemented only partially the 1991 forest policy and secondly, that the 1991 policy has been superseded and there is therefore a need for a new strategy.

The report highlights as positive that the Bank's forest policy sent a strong signal of changed objectives in the forest sector, with a new focus on conservation. In consequence, it helped to shift operations away from projects that had in the past contributed to deforestation. But on the other hand, it emphasizes a number of drawbacks, some of which resulting from poor implementation while others attributed to the limitations of the policy itself. In general terms, the OED considers that the Bank has basically failed in containing rates of deforestation in moist tropical forests, which was one of the main objectives pursued by the 1991 policy.

Regarding implementation, the report points out at the lack of sufficient synergy between conservation and development, area in which the Bank could have played a major role. The multisectoral approach -emphasized in the forest policy as essential- was "not pursued actively." Integration of the forest policy with country assistance strategies, macroeconomic and sectoral analysis, or with lending to adjustment, infrastructure or agriculture, "was also limited." Although the report stresses the existence of a "widespread perception that the 1991 strategy had a chilling effect on Bank forest lending", the fact -also stated in the report- is that Bank lending for forests (both direct forest projects and forest-related components of other projects) increased, from 1992-99 in 78 percent, compared to the 1984-91 period. So while direct forest lending stagnated, forest components were incorporated into other non-forest sector projects. Such integration of forest sector lending into the natural resource sector has been -according to the OED- a positive development.

Another failure in implementation highlighted by the report, is that the Bank generated no momentum for the design of a strategy to establish adequate mechanisms for international transfers from North to South to ensure conservation of forests of global value. In the view for the OED team, unless "losers" (forest-rich countries) are compensated by "gainers" (rich countries), forests will continue to diminish and goes on to say that "the Bank should resist pressures to exhort governments to achieve global objectives that cannot be justified on the basis of country benefits alone." The general approach is that there is a contradiction between development and conservation: "Developing countries need increased incomes, employment and exports to meet their development objectives." Those countries need to use their natural capital to finance development. In this case, to exploit their forest resources, thus producing "a conflict between national interests and global environmental objectives." If forests are not exploited, the cost will be paid locally and immediately -lesser economic benefits today- while the environmental benefits will be national/global and long term. However, the way in which such exploitation is being carried out is described as wasteful and within a context of illegal logging, poor governance, corruption and lack of enforcement capacity, all leading to environmentally damaging and socioeconomically inequitable exploitation of the forest.

Regarding the ban on the financing of commercial logging in primary moist tropical forests, the report considers it to have been "strategically and symbolically important." However, the consequences on the ground are considered to have been "largely irrelevant to the rates of deforestation", partly due to market pressures for forest production and land conversion stemming from economic liberalization, globalization and devaluation. Additionally, the report blames the strategy for having made the Bank wary of getting involved in experiments to improve forest management, to address illegal logging or to modernize forest industries. On the other hand, it recommends the broadening of the current focus on primary moist tropical forests to encompass conservation of all forest types with rich biological diversity and carbon sequestration potential, including other tropical forests, as well as temperate and boreal forests.

The OED team also points out at the Bank's failure in incorporating forest concerns into its country assistance strategies, although adding that -due to the conservation-oriented forest policy- borrowers from forest-rich countries have been reluctant to incorporate forest concerns in their own priorities for Bank support. Similarly, forest use has not been an important element in the Bank's assistance strategy for poverty alleviation, in spite of the fact that a large share of the population that lives in and around forests is poor and often consists of indigenous peoples and minorities.

In spite of all the above failures in implementation, the OED team arrives at the conclusion that the 1991 policy "has already been superseded, that its effectiveness has been modest and the sustainability of its impact uncertain", highlighting five inherent limitations (which we quote and comment below). It then goes on to describe the characteristics that a modified forest strategy should have in order to meet the aspirations of developing countries.

From our viewpoint, the conclusion reached by the OED team regarding the need to change the policy is not well substantiated. What is clear from the report is that the main problem has been a lack of implementation, coupled with a lack of leadership from the Bank's higher hierarchies to assist country-based staff in the implementation of the policy. The "inherent limitations" of the policy described by the OED team -which we comment- are:

1) The strategy "was narrowly focused on 20 moist tropical 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." The fact is that even in those 20 countries, the Bank was not successful in the implementation of the policy, which shows that the problem was not the policy itself but proper implementation. We agree, however, on the need to include all types of primary forests.

2) "While it diagnosed the problem of externalities, it did not stimulate a mechanism for mobilizing grant or concessional funding for gainers to compensate losers for conserving forests of global value, implicitly assuming that governments will borrow Bank funds to achieve global conservation objectives." Again, this is a lack of implementation issue and not an inherent problem of the policy. On the other hand, we disagree with the loser-gainer approach, given that the true gainer in forest conservation is usually composed of local communities which are struggling to protect their forest against national and transnational "development" forces.

3) "The strategy failed to address governance issues beyond economic solutions such as the length and price of concessions as incentives for conservation." Governance issues are certainly a day-to-day issue in most Southern countries and are therefore not an inherent component of any specific policy, but of the Bank's strategy to deal with the issue at the country level.

4) "Its 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 message is unclear. Should the Bank remove its prohibition of financing logging in primary moist tropical forests? Apparently not, since the OED team recommends the inclusion of other forest types in the future strategy. In such case: will this not mean an increased "chilling effect" on even more Bank staff?

5) "The strategy's diagnosis was insufficient in determining the impact of domestic and international market forces on rates of deforestation." The fact that the Bank itself is one of the major promoters of market deregulation should have surely been discussed in the OED report. However, the fact that the diagnosis was insufficient does not entail the need to change the policy.

In sum, we believe that the policy would benefit from some adaptations, but that there is insufficient evidence to show that the policy has been "superseded", while there is more than ample proof of a lack of implementation. Perhaps the underlying issue is the Bank's wish to change a "policy" into a "strategy", given that the latter would be seen as less mandatory by Bank staff and more of a "good practice" tool than something which they are clearly mandated to adhere to.

The full OED study is available at: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html  

AFRICA

Cameroon: Forest sector development in a difficult political economy

The OED report considers that even if the Bank influenced the ongoing process of forest policy reform in Cameroon, it "made no provisions for implementation or enforcement of those provisions". The document states that the Bank did not attempt all the right and relevant things prescribed by the 1991 policy, and made several mistakes from a strategic point of view. As a result there is a gap between the stated policies and their implementation.

On the implementation of the Forest Policy on the ground, the OED report concludes that the capital failure in the case of Cameroon has not been the policy in itself or the coherence between the intervention of the Bank inside and outside the forest sector and its forest policy objectives, but the ineffective and inefficient way in which things were done.

The failure in promoting local communities' participation in the process -despite the declared objective- is underscored. The exclusive reliance on technical assistance and the lack of incentives to develop local institutions is underlined as a mistake of the Bank. According to the report, the Bank had good intentions in trying to promote the interest of local communities, but it did little to gather their views and to design mechanisms that would ensure that those views were taken into consideration. This was clear during the process that ended in the 1994 Forest Law. As stated in the report, "ordinary people whose livelihoods directly depend on forest resources were left out of the decision making". Additionally the programme did not include activities to enhance the capacity of the civil society or to promote rural development, and the strategy also lacked a proper information policy.

The report admits that the foreign logging companies that dominate the sector continue to have a free hand in the development and use of the forest resources in Cameroon, and are very influential actors trying that no reforms in the forest sector are applied, which can go against their privileges. According to the report, logging is one of the four dynamic mechanism of forest resource degradation and deforestation described by the 1991 Forest Policy. Additionally, logging is responsible for a larger overall share of deforestation than is usually reported. The OED report clearly identifies the existence of an environmental conflict between public interests represented by the government and civil society, and private interests defended by the companies.

With respect to the effects on forests of other policies implemented by the Bank, the report considers that although the Bank has undertaken little direct forest investment over the past decade, forest sector issues have been part of the Bank-financed Structural Adjustment Programme since 1989. According to the OED "the Bank has been trying to follow a multisectoral approach in Cameroon" and to involve local populations in forest management. Nevertheless the results in this regards can be considered poor. Moreover, it is the powerful logging companies operating in the country who have benefited from the opening of the economy that the Bank is promoting worldwide. In sum, while the OED report largely blames the government for its failure to pull Cameroon out of the economic crisis, it also clearly admits that ten years of Bank structural adjustment efforts failed to improve things and that its structural adjustment programs did not put poverty at the center stage of the reform agenda.

The support to road building and the case of the Chad-Cameroon pipeline are also mentioned. The 5^th Highway Project Loan of the WB determined the opening up and greater exploitation of the frontier forests of the East Province, which constitute a threat to the livelihoods of the indigenous Baka forest people, and has provoked a serious impact on the fauna of the region. The report admits that the Chad-Cameroon pipeline megaproject is a polemic issue and that the arguments of the NGOs against it in relation to corruption and human rights are very hard to dismiss. It also considers that the Bank is very sensitive to these concerns. Nevertheless, no explanation is provided on which steps have been taken in this regard.

Additionally, the report states that the results of the 1991 Forest Policy in relation to the Bank's mandate of reducing poverty were not satisfactory. The concentration of power in the hands of the logging industry is another problem not addressed by the Bank's policy, even if it is a factor of poverty generation in Cameroon. On the contrary smallholder agriculture, contributes directly to more that 2 million livelihoods. The OED insists in pointing out that, given the importance of this objective and the fact that a key determinant of poverty is inequality in the distribution of social decision power, the Bank should have insisted on this issue.

In its Summary Evaluation, the OED report concludes that with the 1991 Forest Policy Cameroon did not improve its forest cover. The improvement in the way the country addresses forest sector issues is negligible, as well as the impact of the Bank's strategy to overcome poverty.

To our view the most interesting points highlighted in the OED report are:

• the problem is not the policy in itself but its implementation;

• in spite of the Bank's stated intentions, participation of local communities and forest peoples has been neglected;

• logging companies constitute a powerful lobby which opposes the reform in the forest sector and benefits from the economic policy at the national level promoted by the Bank;

• other policies influenced by the Bank -e.g. structural adjustment, road building, fossil-fuel megaprojects- have had negative effects on forest sustainability;

• the Bank has not accomplished its mandate of reducing poverty, and the situation tends to worsen;

• the Bank was not influential in ameliorating the forest situation in Cameroon.

The full OED study is available at: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html  

ASIA

China: From afforestation to povery alleviation and natural forest management

Most of the Bank's loans in the forestry sector appear to have been directed to tree planting activities. Bank investments of more than US$ 1 billion "helped to add more than 3.3 million hectares of high-quality trees to the country's forest stock." Such plantations are said to have been focused on the poorer areas of the country and implemented in degraded agricultural lands, wastelands, eroded lands or slopes. Unfortunately, the report fails to distinguish between different types of plantations ("engineered plantations", commercial plantations, shelterbelts, orchards, etc.), the relative size of each, species composition, benefits to local peoples, etc. which makes it difficult to emit an opinion on them. It also fails to define terms which are highly controversial such as "degraded lands" or "wastelands". In fact, when the study found that in sample villages agricultural land had increased without a corresponding decline in the forest area, it discovered that "unused wasteland was used for most of the agricultural expansion."

The full OED study is available at: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html

India: Alleviating poverty through participatory development

The Report considers that since most of the post-1991 projects in India have not been completed, it is not possible to evaluate them. Nevertheless, it points out that implementation progress is considered satisfactory, but performance among different states varies. During the two decades in which the Bank has been involved in the forest sector in that country, the design and implementation of its projects have allegedly improved substantially. Additionally, according to the study, the Bank has contributed to the implementation of India's forest strategy -which is said to have considerable congruence with the Bank's 1991 Policy- by providing funds for the forest sector.

From 1992 onward the Bank has begun to concentrate lending in selected states more open to reforms, which the OED views as a positive step towards the implementation of the projects. It is stated that none of the seven ongoing forest projects in India is at actual or potential risk.

According to the Report, the Joint Forest Management (JFM) strategy adopted by the Bank in India since 1992 is aimed at increasing the stake of local communities in the management and utilization of forests, and at creating alternative sources of employment to reduce the pressure on forests. In JFM villagers cooperate to protect forests in exchange for share in the usufruct and final harvest. Even if the overview of JFN is positive, the study admits the existence of conflicts and constraints in its implementation, that vary according to the specific project. Some state projects have also been criticized for inadequately addressing social, ethnic and gender issues. The post-1991 projects provide allegedly for greater NGO participation, especially to assist the Forest Departments.

India is the country with the highest poverty rate in the world, and a high ethnic and cultural diversity. A large percentage of Indian tribal poor people live in and around the forests. The study underscores "the high degradation pressure the poor excert on forests". It considers that the Bank's forest strategy has the potential to contribute substantially to poverty alleviation. One of the main contributions of the Bank to India's forest sector has been to help change the attitude of the Forest Department towards working with the poor in forest protection and regeneration and collaborating to build consensus for a new strategy to this regard, although it admits that "the reluctance to delegate decision-making power to the communities remain". The Review says that "the Bank has only very recently considered articulating forest development as a part of its rural development and poverty reduction strategy", but that the Bank has neither expressed nor monitored the potential role of sustainable forestry for poverty reduction.

The Report considers that the impact on forests of projects in other sectors supported by the Bank have been positive. It admits, however, that forest sector projects have not been included in a wider agricultural and poverty alleviation strategy. The impact of agricultural lending on the forest sector has generally been positive. For example, support for agricultural intensification have facilitated the production of large quantities of food crops from a stable land area, thus reducing pressures on forests. Non-lending services have also made important contributions. For instance sector work on the best use of water resources could lead to more efficient irrigation and further increase agricultural output, thus also decreasing pressures from forest lands.

The OED team considers that current Bank projects supporting plantations of eucalyptus and other fast-growing species on forest lands, are a mistake. What the team suggests is that "popular species for farm forestry, such as poplar and eucalyptus, should not be grown on forest lands, which should give more priority to multi-purpose and usufruct-based trees." On the issue of plantations in general, the report points out at the advantages and drawbacks of different types of plantations in diverse situations and environments and annexes a separate contribution of one of the country team members (Saxena, N.C.), highlighting the reasons for considering that the World Bank's recommendation that industry grow trees on degraded forest lands would in fact exacerbate problems (Annex F).

Although the intention of increasing women's participation is present in the Bank's projects, gender issues have continued to receive little attention and even lesser implementation. In many cases their usual tasks become more difficult having, for instance, to walk further distances to gather fuelwood. Their participation is hampered by a number of issues such as, for example, that meetings are scheduled in the evening to suit men, but at times when women tend to be cooking. The report stresses that the problem is not attributable to the Bank itself, because the gender issue is deeply entrenched in Indian society and that "a gender revolution through forest projects in India, however desirable, would be too ambitious."

The report emphasizes the importance of non timber forest products (NTFPs) for the poor. The regenerating forest areas have increased the physical output of NTFPs. In spite of that, marketing issues have not been adequately tackled and the benefit from increased production has not as yet trickled down sufficiently to the poor. In spite of their potential for poverty alleviation being enormous, Bank projects have insufficiently dealt with the issue of how to make NTFPs more useful for poverty alleviation.

In its summary, the OED report concludes that "the Bank has largely lived up to its 1991 Forest Strategy in India."

From our viewpoint, the main conclusions from the India study are:

• that the Bank's 1991 policy is seen as correct, and in line with India's current forestry strategy;

• that forest conservation -even in a highly populated and poor country as India- is not antagonistic with integrating the needs of the poor to sustainable forest management;

• that the issue of how and where to promote tree plantations needs to be analysed under the specific circumstances of each locality;

• that participation and "ownership" are essential for sound and equitable forest use;

• that the Bank's forest strategy has the potential to contribute substantially to poverty alleviation in India;

• that Forest Departments need to change their attitudes away from the view that their mission is to protect forests against people and in the direction of working in partnership with people;

• that the Bank can positively contribute in promoting the rights of women;

The full OED study is available at: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html

Indonesia: The challenges of World Bank involvement in forests

The OED Report starts by highlighting that the so called "Indonesian miracle" was the result of an export-led strategy in which forest resources were viewed "as an asset to be liquidated to support (its) growth strategy, establishing Indonesia as a world leader in the export of tropical forest products". At present the rate of deforestation reaches 1.5 million hectares per year, being commercial logging its main cause. This unsustainable use of forests has been accompanied by a highly inequitable distribution of benefits.

As from 1991, the Bank's strategy aimed at wide ranging reforms in the forest sector. However, until the financial crisis in 1997, forest sector issues were ignored because Bank staff were reluctant to jeopardise their relations with the government by pursuing the sensitive issues of policy and institutional reform in the forest sector. As the Report states, "Between the risk of irritating a large borrower and the relevance of the small proportion of forestry operations in the overall lending portfolio, the Bank was willing to sacrifice the latter."

The Bank's direct assistance in the forest sector after 1991 consisted almost entirely of policy dialogue rather than lending. However, the Bank's reform agenda -which according to the OED appears to have been in the right direction- failed through the lack of political will from the government coupled with the fact that the Bank worked in isolation from Indonesian civil society. Additionally, the "impact of good policy advice was diluted by ambivalence at the higher levels of Bank management", resulting in mixed signals to the government regarding the seriousness of its concern over environmental sustainability.

The issue of the linkages between the Bank's Country Assistance Strategy and its overall macro-policy dialogue with the issue of the poor was inadequately addressed. The impacts of forest sector issues on forest dwellers and others dependent on forests for their livelihoods -considered by the OED as being among the poorest groups- were not adequately taken on board in that dialogue, nor did the Bank include the forest-dependent poor into its poverty reduction strategy.

During the adjustment lending phase (post 1997), the Bank engaged again directly in forest issues. With an increase in its leverage -as a result of the country's financial crisis- the Bank included in its lending some conditionalities regarding changes in forest sector policies. Although such conditionality was in part intended to increase the government's revenues and to increase exports, it also aimed at addressing issues of governance, competitiveness and environmental impacts in the forest sector. However, the implementation of the reforms is considered to have been poor, mainly as a result of the lack of political will on the part of the government. Additionally, adjustment lending raised significant criticism from civil society, which the OED attributes to the lack of consultations and inadequate awareness-building to gain support from key stakeholders.

According to the OED, the Bank has not adequately taken into account cross-sectoral impacts, such as those of agricultural incentives on natural resource sustainability, in particular in relation to forests. Nor has it emphasized the linkages between economic growth, poverty alleviation and the unsustainable exploitation of natural resources. "As a result, the quality of growth has rarely been questioned in terms of its impact on forests or forest dwelling people." Resource exploitation has therefore not only been inequitable, but has also compromised the long-term sustainability of the economic growth based on the depletion of the natural resources. The Bank is said to have failed in adopting a real multisectoral approach, and largely ignored the indirect impacts on forests of policies outside the forest sector, especially the macroeconomic and pricing policies.

The Bank's involvement in the sector is considered relevant to the 1991 strategy regarding the Bank's objective of sustainable forest management and environmental sustainability. However, the efficacy of the Bank is qualified as negligible, since it was unable to diminish deforestation and forest degradation in the country. Important threats to forests -as commercial logging, plantations and infrastructure developments- were not addressed. The efficiency of the Bank's activities is considered negligible as well, since little has been achieved in terms of concrete results. "Overall outcome, a combination of the above three aspects in OED methodology, is judged highly unsatisfactory." The evaluation made by the Report of other aspects regarding the Bank's activities in Indonesia is also negative: the impact on institutional development is considered negligible; the persistence of the reforms is doubtful.

In sum, the OED Report considers that the 1991 policy was partially implemented by the Bank, but highlights the existence of important gaps in its approach. It emphasizes the Bank's failure to apply a truly multisectoral approach, resulting in its lack of analysis regarding the full impacts -among others- of macroeconomic and trade policy reform.

From our viewpoint, the following points are to be underscored in the OED Report:

• it admits that the Indonesian "miracle" -of which the Bank was an indirect agent- was based on the depletion of the country's natural resources, among them its forests;

• the 1991 Policy was only partially implemented;

• the Bank failed to implement a truly multisectoral approach;

• participation of relevant stakeholders -particularly forest and forest-dependent peoples- has been negligible;

• the Bank did not adequately integrate the forest dwelling poor fully into its poverty reduction strategy and Country Assistance Strategy;

• Bank staff were more concerned in lending money than in ensuring that its lending would serve to protect the forests -with the possible risk of "irritating a large borrower."

The full OED study is available at: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html

Brazil: Forests in the balance: Challenges of conservation and development

The importance of a review on the implementation of the Bank's 1991 Forest Policy in Brazil hardly needs to be stressed, given that the country contains almost 27 percent of the remaining moist tropical forests in the world. The OED study states that the average annual forest loss in the Amazon (some 13,000 sq.km/year in the post 1991 period) has slowed down compared to the pre-1991 period, but adding that the precise extent of forest loss remains ambiguous. At the same time, Brazil has been one of the Bank's largest borrowers.

According to the OED team, the "strategic victory for the Bank has been to avoid criticisms for doing the 'wrong' things" since the adoption of the 1991 policy. In spite of the fact that some of the best economic and sector work on the economic and political causes of tropical deforestation has been conducted by Bank staff working on Brazil, the Bank's presence in the forest sector was low. The report acknowledges the inexistence of a productive dialogue between the Bank and the national government on the future of the Amazon, and attributes such situation to two causes: 1) the Government's perception that the Bank's objective of conserving the Amazon forest without financial transfers is at odds with national economic and political development objectives and 2) the Bank's forest policy's prescription regarding the treatment of areas with moist tropical forests.

Within its lending activities, the Bank-financed poverty alleviation and land reform projects in the Northeast aimed at slowing migration to the Amazon, but only as pilot projects. The study adds that the Bank did not involve itself proactively in directly addressing the issues of poverty or land tenure in the Amazon and even more, that "the Bank has consciously avoided covering the Amazon region in its land tenure and rural development activities." Additionally -and contrary to previous Bank-thinking- the poverty of small farmers is said to be less important in deforestation than domestic urban demand for timber.

Regarding indigenous peoples, the report adheres to the concept that demarcation of and clear title for indigenous lands is generally beneficial to forest conservation and spells out a number of challenges associated with such demarcation. The process of demarcation of indigenous peoples' lands in the case of one Bank-implemented program (PPG-7) is highlighted as having received strong support from the Bank.

The Bank's openness to participation seems to have improved and specific mention is made on this issue in the analysis of two specific projects (PLANAFORO and PPG-7). In the former, early complaints from NGOs about the lack of community involvement in project design led the Bank to condition its financing on the participation of NGO representatives in project management. However, the OED team states that the project overlooked the importance of including other interest groups, as municipal governments, and private-sector actors (loggers and ranchers). The latter project is perceived as having been instrumental in building a constituency of Brazilian NGOs and professionals, that have become relevant actors in influencing the country's environmental policy. Nonetheless "slow coalition-building with Brazilian society and with the private sector has deprived PPG-7 of needed support."

With respect to indirect effects on forests of other policies supported or implemented by the Bank, the report states that transportation projects financed by the Bank were not implemented in forest-sensitive areas. However, it does mention that the Bank carried out some projects in the "cerrados" forest, which is considered to be a highly endangered biologically-rich forest ecosystem in the OED's main report. Analysis on possible impacts of adjustment lending to forests is not included because "the forest sector strategy is not applicable to forest sector lending or adjustment lending, as there have been no such loans involving macro-policy dialogue -except participation in the IMF package- since inception of the strategy." However, the report states that adjustment lending after 1991 rose to 19 percent of the portfolio.

The report highlights the importance of global economic forces in relation to deforestation in Brazil which "seem to dwarf even the mightiest of national policy instruments", such as liberalization of trade and decentralization. These forces are considered to offer powerful incentives to deforest in the short and medium term. Trade liberalization, coupled with a devalued currency, has been the driving force to increased exports of primary products -including soybeans, production of which is rapidly expanding into the Amazon and leading to deforestation.

Regarding tree plantations, the report finds it "puzzling" why the Bank has not financed the plantation sector, which is "showing impressive results" and is one of the "most dynamic among developing countries." One of the reasons mentioned is that plantations have brought about significant concentrations of landholdings. Moreover, plantations cannot match the biodiversity of forests. The report states that "some observers" are concerned about the use of large-scale, commercial reforestation (eucalyptus and pine plantations) because of its perceived negative social and environmental impacts. The solution put forward to overcome such issues is to limit reforestation to small-scale plantations or based on high-diversity agroforestry systems for which there is also substantial potential.

In its summary evaluation, the OED team concludes that the 1991 Forest Policy is not very relevant from Brazil's perspective. The reason for Bank's staff reluctance to carry out a number of possible actions aimed at curbing deforestation is that the Bank's policy discouraged the Bank from being too involved. As a consequence, the Bank "largely skirted the issues" and has not been very efficient in the approaches it has pursued. On the positive side, the Bank is said to have been instrumental in spawning an environmental movement, capable of influencing domestic policy and institutions.

To our view, the following points can be highlighted in the OED Report:

• The conclusion that the problem is the Bank's 1991 policy and not its implementation is unconvincing;

• The Bank has basically failed in implementing the policy, which is shown by the fact that its "strategic victory" was to avoid criticisms for doing the "wrong" things;

• There is insufficient analysis regarding multisectoral causes of deforestation and actions to address them;

• The fact that trade liberalization -highlighted as an important factor in deforestation- has continuously and consistently been promoted by the Bank, goes unmentioned;

• Blame for deforestation is finally removed from "the poor" and the positive role of indigenous peoples in forest conservation is recognized;

• The OED team seems to have been much influenced by the government's position regarding "sovereignty". The government itself has vowed -and passed laws- to protect the forest, while at the same time continuing to promote its destruction. So the real issue is not sovereignty but economic and political power;

• Given the Bank's in-depth knowledge about the direct and particularly the underlying causes of deforestation, it could have implemented many programmes -not directly linked to the "sovereign" Amazon- in areas which may ultimely result in relieving pressures from the forest. Land tenure issues outside the Amazon, for instance, are probably more relevant to deforestation than tenure issues within the region;

• The report's position regarding plantations is -to say the least- ambiguous. Parts of the text suggest that plantations are the solution to deforestation, while others have a more critical stance.

The full OED study is available at: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html

Costa Rica: Forest policy and the evolution of land use

The OED study on Costa Rica appears to be more focused in showing the achievements of the Costa Rican government and in supporting its policies than in evaluating the World Bank's implementation of its 1991 forest policy. However, the report contains interesting elements in this regard.

The World Bank is said to have influenced the country's policies, but mostly in conceptual and methodological areas and in the provision of seed money. The Bank carried out a Forest Sector Review in 1993, which "confirmed many ideas, concepts and policy proposals already under discussion." At the same time the paper introduced many important ideas that influenced Costa Rican policy. One of the aspects highlighted is that of the Bank's idea that the World should pay for the global environmental benefits generated by Costa Rica and that the paper came up with figures expressing that 66% of those benefit were global. The report also criticises some "biased opinions and misconceptions" reflected in the Forest Sector Review, particularly that "the Bank strongly emphasized environmental protection over development", and that "this alternative is economically inefficient and socially inequitable."

However, the Bank's main impact is said to have been in Structural Adjustment Programmes which supported policy changes in agriculture, in spite of the fact that natural resource and forest considerations were "notoriously absent." Structural Adjustment Lending (SALs) reduced profitability of agriculture and cattle ranching in marginal forest lands. The positive consequences were therefore indirect, leading to a decrease in deforestation until 1997, year in which rates of deforestation were compensated by secondary forest regrowth and tree plantations. However, deforestation continues and "the increased area of plantations and secondary forests has less environmental value than that of natural forests."

At the same time, the report points out at the impacts of Bank-promoted trade liberalization which, while reducing pressures for deforestation, at the same time pushes farmers to clear more lands to compensate for lower profits on annual crops. The report states that there is a need for further research into the environmental impacts of SALs and that environmental (and forest) considerations need to be explicitly included in future Bank loans. Likewise, bank loans for the agricultural sector also need to explicitly consider forest or environmental areas.

The 1991 forest policy is said to have been "largely irrelevant in Cost Rica" and there is no government "ownership" of such policy. The report concludes that "the Costa Rica experience shows that a comprehensive policy that discourages conversion of forests, encourages preservation where necessary, and promotes natural forest management can be successful" and that " a similar approach could improve the forest strategy of the Bank."

From our viewpoint, the report reflects too strongly the Costa Rican government's viewpoints, which not necessarily reflect those of Costa Rican society as a whole. The country is portrayed as being very different from other Southern countries, "is not mired in poverty and the government has the leisure to turn its thoughts to formulating policies that support sustainable development." We believe that sustainable development is not a question of "leisure", but a vital need for people living in all countries of the world.

Some conclusions from the report are:

• that the Bank's forest policy has been largely irrelevant for Costa Rica

• that the Bank's support for trading of global environmental benefits has been of great assistance in the formulation of the country's policies in that respect

• that Structural Adjustment Lending has not incorporated forest-related components and has resulted in both positive and negative impacts

• that the Bank's policy is preservationist and not focused on sustainable development

• that although Costa Rica has -in figures of forest cover- practically no deforestation, the fact is that destruction of primary forests continues

The full OED study is available at: http://www.wrm.org.uy/english/tropical_forests/WorldBank.html

The plantation issue in the OED report

OED Main Report

Cameroon

Costa Rica

Brazil

Indonesia

India

"The industry on such forests will raise short-term and quick-growing species in place of the multi-layer mixed forests that are obtained through regeneration. Its ecological and environmental implications need to be taken into consideration. Using forests for growing raw material for industry will be setting the clock back to the 1960s, showing that nothing has been learned from the mistakes of the past 30 years of trying to create plantation forests, which were ecological disasters, besides completely alienating the people and leading to faster degradation." (page 104 - 105)

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