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In many parts of the world, the remaining great naturalforests-

and the many natural Biodiversity treasures they harbor, are at risk,

from agricultural and grazing expansion, excessive exploitation,

uncontrolled wildfires, and a number of other well-known causes.

People who depend on theseforestsfor important elements of

their livelihood-and these include many of the poorest and most

marginalized communities in the world-arefacing a grimfuture,

if theseforests continue to degrade and disappear. Sustainable

national economic development, the viability of large natural land

and water systems, and the stability of the global climate itself are

also directly connected toforest outcomes.

The World Bank, along with other members of the international

community, is engaging comprehensively with partnersfrom

civil society, governments, the private sector and the donor and

scientWic communities to deal with this problem. We must

acknowledge that protection and sustainable production must go

hand-in-hand inforests, and that all legitimate interest groups

must have a voice and a role in the use and protection of these

forests, and in rebuilding and rehabilitating them. This booklet

constitutes a major step in rethinking our strategy and developing

an integrated and innovative approach to deal with the complex

political and institutional issues involved, as well as the technical

and investment priorities.

Maurice StTongChairman, Earth Council

SUSTAINING FORESTS

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Responding to New Challenges:A Balanced Approach

The stakes for survival of the world'sforests are dauntingly high. Millions ofpeople depend upon forest resources fortheir survival. Forest resources directlycontribute to the livelihoods of some gopercent of the 1.2 billion people living inextreme poverty; indirectly support thenatural environment that nourishes .-

agriculture and the food supplies ofnearly half the population of the devel-oping world; and constitute a majorsource of national wealth. In addition,they provide immensely important envi-ronmental services, such as maintainingsoil stability, protecting water flow andquality, regulating global climatethrough carbon sequestration, and serv-ing as the repository of the bulk of ter-restrial biodiversity. Yet, for the largepart, forests continue to be poorly man-aged and indiscriminately felled atunsustainable rates. A major problem isthat forests are consistently underval-ued in both economic and social terms,with much of the environmental valueof forest ecosystems falling outside of 3formal markets. These failings meanthat the value of forests is not fullyrealized in the countries where they are situated, and, as a result, has little or nobearing on the land use decisions that drive forest change.

The forest sector presents both unique opportunities and unique challenges. It is key topoverty reduction, sustainable development, and the maintenance of environmentalservices. Indeed, a forest strategy that can make an effective contribution to povertyreduction and environmental conservation is central to achieving the MillenniumDevelopment Goals set by the United Nations. Achieving a sustainable path of develop-ment is a global strategic priorityfor the survival ofour planet. Low income countries needto grow at per capita rates of 3.6 percent per year in order to meet the MillenniumDevelopment Goal to halve the number of people living on less than US$1 a day (from 29

A WORLD BANK STRATEGY

percent ofthe world population in 9ggo) by2015.Furthermore,the benefits ofthis growthmust be widely spread, and growth must be environmentally and socially sustainable.

The Plan of Implementation of the World Summit on Sustainable Development(WSSD) held in Johannesburg in 2002, reiterated this vision for responsible growthand recognized the vital role for the forest sector in realizing it:

"Sustainableforest management of both natural and plantedforests andfortimber and non-timber products is essential to achieving sustainable develop-ment and is a critical means to eradicate poverty, significantly reducedeforestation, halt the loss offorest biodiversity and land and resource degra-dation, and improve food security and access to safe drinking water andaffordable energy... The achievement of sustainable forest management,nationally and globally, including through partnerships among interestedGovernments and stakeholders, including the private sector, indigenous andlocal communities and non-governmental organizations, is an essential goal ofsustainable development..." (Paragraph 45, Plan of Implementation, Report ofthe World Summit onSustainable Development).

Yet engagement in the forest sector inevitably entails setting a balance between pro-duction and conservation; the distribution of the benefits and responsibilities of for-est use and protection among the various economic and social groups involved; andthe longer term issues of forest sustainability and environmental health. The task of

managing these trade-offs is not onlytechnically difficult, it is also politicallycomplex. Consequently, involvement inthe forest sector is often perceived asbeing high cost and risky

4Production and conservation in forests

3. ~can in fact be mutually supportive. Byre-engaging in the areas of forest out-side of protected areas, the new strategyseeks to improve the livelihoods of 500million people, most of whom are poor

- ' ~and dependent on forest and treeresources, primarily through communityforest management and agro-forestry

4 based on sustainable logging practices.These activities complement the contin-ued protection of critical forests withinprotected areas.

SUSTAINING FORESTS

Beginning with the 1991 Forestry Strategy and 1993 Operational Policy, the Bank'sactivities in the forest sector were guided by a "do-no-harm" principle that focusedlargely on environmental issues and on pure protection options. While the 1991

strategy recognized the role that forests could play in poverty reduction and theimportance of policy reforms in containing deforestation, its hallmark was a strongcommitment not to finance commercial logging in primary tropical moist forests.

The past decade has demonstrated thatthe Bank's 1991 Forestry Strategy and The Consultative and Review Process1993 Operational Policy constrained theBank from adequately engaging in the The two-year consultative process paved the way forsector, and to a large extent also pre- the new Forest Policy and Strategy. It gathered inputvented us from participating in the from development partners and stakeholders aroundinternational and national dialogues on the world, including governments, civil society inthis issue. Most importantly, the 1993 developing and developed countries, industry,forest-policy resulted in many missed opportu- dependent peoples, partner donor agencies andnities for the Bank to harness the poten- United Nations bodies. The consultations weretial of well managed forests, open supported by extensive analytical, technical, andwoodlands, and on-farm trees to make a economic studies, some commissioned by the Worldvery significant contribution to poverty Bank and others done by independent institutions andreduction and to the protection of envi- NGOsonawide rangeof subjects.ronmental services of global impor-tance. Meanwhile, the loss of forests In parallel, broad consultations were conducted inter-continued at historically high rates, and nallywithBanktaskmanagersandotherstaff.Internalsuccessful efforts to reduce destructive reviews of projects and of the former policy were con-and unsustainable logging and unwar- ducted by the Bank's independent Operationsranted forest clearing activities were Evaluation Department and Quality Assurance Group.few and far between. Together with staff feedback, these internal exercises

yielded lessons learned that also fed into the strategyAccordingly, in 1998, the Bank's Board of development process.Directors requested a review of theBank's role in the forest sector. The firstpart of this task-a retrospective review of the Bank's overall performance in forests-was almost immediately launched by the Bank's independent Operations EvaluationDepartment (OED). The second task-looking forward to what would be needed toimprove the Bank's performance in the forest sector-was launched in a Bank Group-wide program shortly thereafter.

The OED review was delivered to the Board's Committee on DevelopmentEffectiveness in 2000. The OED evaluation found the Bank's performance in the forest

A WORLD BAN< STRATEGY

sector over the last decade to be unsatisfactory, going so far as to conclude that wehad been "irrelevant" in slowing deforestation despite our commitment to this objec-tive. In addition, the review found that a "chilling effect" permeated forest-relatedoperations in the World Bank Group, including the International Finance Corporation(IFC) and the Multilateral Investment Guarantee Agency (MIGA). Managers and staff

viewed the political and reputationalrisks of investing in the sector-and thetransaction costs of mitigating them-

* too high.

o Thus, our engagement in the forest sec-1 v , tor as a whole declined significantly, and

in parallel, the Bank's knowledge of thesector and its contact with stakeholders

*-were also diminished.

In order to align the World Bank's actionswith the emerging consensus on the con-servation and use of forests, we neededto reexamine our policy and strategy, to

; applythem consistentlytoallforesttypesand all regions, and to focus our approach

v04 ' on poverty reduction, economic manage-ment, and good governance, in addition

6 . A 7 to environmental objectives.

It was equally clear that the key to thisre-evaluation would be consultation with all affected stakeholders. Thus began anextensive, two-year process of analysis and consultation to gather information andviewpoints from development partners and other stakeholders around the world.

A number of key findings can be distilled from this internal and external reviewprocess, with important implications for effective Bank reengagement in the sector.These underpin the thinking behind the new policy and strategy:

Focusinig exclusively on protection misses opportunities for poverty reduc-tion and improved management and conservation of production forests.

SUSTAINING FORESTS

A combination of logging, plus harvesting and marketing of hundreds of other

forest products such as forest fruits, fuelwood and medicinal products,

constitutes an enormous economic activity. There is an inherent difficulty in

protecting forests that are in high demand for a range of frequently exclusive

uses by competing groups within society. Consequently, a dual approach

covering both protection and productive use is needed.This is not to say that we

should scale down our efforts in protection and conservation-rather, we must

expand our efforts to help improve sustainable use and management in the

productive sector.

In spite of their substantial economic value. forests are one of developineg

countries' rnost mismanaged resources. This translates into enormous costs.

For example, the estimated losses from failure to collect appropriate royalties

and taxes from legal forest operations cost governments around US$5 billion

annually. Illegal logging results in additional losses of at least US$io billion to

US$iS billion per year of forest resources from public lands. To address these

problems, we need to grapple with the complex and p 1I -i1, difficult issue of

how to improve forest governance.

The spillover of poor policies in other sectors has also . i ., to the

rapid rates of deforestation seen in recent decades Pressures on forests from

poorly aligned agriculture, transportation, energy, and industry sector strate-

gies, as well as government macroeconomic policies, are a major cause of forest

- ~ - -

A 'A PlI D B Ai4'r .TkA)l. ' S

Whatisthedifferencebetween loss and degradation. Addressingthe Forests StTategy and the FoTests this will require a better under-Operational Policy? standing of cross-sector impacts

and the incorporation of specificmeasures for forest protection into

The Bank makes a clear distinction between the pur- other sectoral policies. Through itsposes ofa SectorStrategy and an Operational Policy.The analytical work, the Ban k-whichSector Strategy outlines intent, discusses options and supports activities across the spec-presentsargumentsforadoptingparticularapproaches. trum of sectors of the economy asIt provides nuanced guidance on the different actions well as broad policy and institution-that should be considered in different circumstances. al reforms-is well placed to influ-

ence the design of both non-forestAn Operational Policy is intended as a more concise sector and national macroeconomicstatement of the Bank's obligations to all Bank policies in ways that will benefitoperational activities covered by the policy. It provides forests, forest dependent people,formal and accountable safeguard policies that are and the environment.approved by the Board.The Operational Policy is accom-panied bya Definitions Annex, and a Bank Procedures Forests have significant commercialdocument, which elaborate upon some of the value, so the private sector willimplementation requirements raised by the policy. often be the principal financial

actor in forest production in mostThe new Operational Policy for Forests (OP 4.36), countries. Altogether, the level ofapproved in October 2002, replaces the previous 1993 activity a nd i nfl uence of the privateOperational Policy. All Bank-supported investments are sector in forests dwarfs that ofrequired to conform to the provisions and safeguards in the international community-andOP 4.36. In addition, such operations are also required sometimes of the national gover-to conform to other existing Bank Operational ment. Any strategy of reform orPolicies-includingthesafeguard policieson environ- change in the sector must dealmental assessment, indigenous people, natural habi- effectively with this fact. The Banktats, cultural property and involuntary resettlement. needs to proactively engage withThe Forests Policy clarifies how provisions in these the private sector and to use itsother current Bank Operational Policies apply in the potential to create an enablingspecific circumstances of forests, but in no way amends environment fo r both privatethose provisions in other policies. companies and other investors who

are committed to socially andThe full complement of Operational Policies provides environmentally sustainable forestthe basis for ensuring that forest operations meet the management.high standards demanded by many stakeholders inthe sector. There is a need for creative mech-

anisms to pay for the protection ofTo learn more, visit www.worldbank.org/opmanual forest environmental services of

SUSTAINING FORESTS

both local and global importance. It is highly unlikely that governments will beable to significantly scale down log extraction, unless the costs in terms of fore-gone revenue can be offset in some way. Moreover, very few countries would beprepared to borrow funds-from the World Bank or other sources-to financeforest protection as a substitute for forest production. We must therefore helpfoster new markets and payment systems for environmental services from for-est ecosystems, and to interest developing countries in activities that willimprove forest management and conservation.

An inclusive approach to decision making is essential to resolvinggovernance issues and for balancing environmental, social arid economicobjectives. This will require proac-tive engagement with all relevantstakeholders, especially poorer and ., .disadvantaged forest dependent 'communities. It also requires theBank to establish strategic partner-ships with a wide range of private -

and public sector actors, as well asnational and international develop- *Smental agencies.

Many national governments, - ,non-governmental organizations I -

(NGOs), and private sector leaders - * - ; -

have expressed strong interest insecuring Bank reengagerment inthe forest sector. The consultation -.- eprocess exposed broad concern thatthe Bank's withdrawal from the sec- .tor during the 1990's greatly dimin-shed the potential for using theBank's analytical capability and .,policy influence, including lending, -

as instruments to bring aboutessential reforms. In addition, therewere many missed opportunities tochannel increased investment intonational forest-related povertyreduction and environmental pro-tection programs.

A WORLD BANK ST'RA'TlEGY

The New Forests Operational Policy

In October 2002, the Executive Board of Directors of the World Bank approved a newForests Operational Policy for the Bank and endorsed a new strategy that supports the

policy. The new Forests Operational Policy and Strategy charts a path for proactiveengagement to help attain the goal of poverty reduction without jeopardizing theenvironmental values that are so intrinsic to sustainability.

Revisions to the Bank's Operational Policy on Forests (OP 4.36) permit us to be moreproactive in both identifying and protecting critical forest conservation areas and insupporting improved forest management in production forests outside these areas, inline with the new Forests Strategy.These revisions will retain many ofthe strengths ofthe former OP 4.36. However, they expand its effectiveness by using new initiatives inthird-party certification and monitoring of progress towards sustainable forest man-agement that have been developed since the 1993 operational policy took effect.

Key features in the new Operational Policy include:A focus onforests instead offorestry. The new policy applies to all Bank invest-ment operations that potentially impact forests, whether or not they are specificforestry sector investments. It also explicitly encourages the incorporation of forestissues in Country Assistance Strategies,the World Bank's business plans for engage-ment with countries, and addresses cross-sectoral impacts on forests.

All forests are included. The newpolicy covers all forest types, in placeof the previous emphasis on tropicalmoist forests alone.

- WAll aspects of forest activity are. covered. The policy includes specific

requirements to address all aspectsof forest management, conservationand sustainable development, notjust forest conservation.

Replacing preconditions withanalysis. The policy replaces anexplicit list of preconditions for forestinvestments that, in practice, fewcountries could meet in full. Insteadthe Bank will analyze the status of acountry's forest policy and practices

SUSTAINING FORESTS

and then determine the actions and sequence necessary to bring about lastingimprovements in forest conservation and development outcomes.

Markets for the full range of goods and services. The policy provides explicitrecognition of the need to encourage the development of private sector marketsand marketing arrangements for the full range of environmental goods and servic-

es provided by forests.

Targeted conservation. Targeted and comprehensive provisions for conservation ofcritical natural habitats in all forest types replace the outright prohibition of Bankfinancing of commercial logging oper-ations in primary tropical moist forests.These provisions also protect these crit-ical forest areas from any investmentthat would lead to their significant Fdegradation or conversion, and explicit-ly prohibit Bank financing of any com- Smercial harvesting or plantation devel-opment in critical natural habitats.

Investment outside critical forest .areas. A provision for proactive invest- :ment support to improve forest man-agement outside critical forest areas,with explicit safe-guards to ensurethat such Bank financed operationscomply with independent certifica-tion standards acceptable to the Bank,or operations with an agreed upon, n .

time-bound action plan to establish Icompliance with these standards.

Distinction between large scale and small-scale activities. Small scale landhold-ers and communities will be held to the same high standards of forest manage-ment that is demanded of commercial systems. However, rather than monitoringthis through formal certification requirements, it will instead be monitored by theborrower with meaningful local stakeholder participation.

Monitoring by government bodies, independent third parties, and through theBank's own supervision will provide the necessary assurances that forest opera-tions benefit people most dependent on them while contributing to economicgrowth and poverty reduction.

A WORLD BANK STRATEGY

A New Forests Strategy

The new Forests Strategy is built onthree equally important and interde-

pendent pillars:

Ha rnessi ng the potentia I of forests toreduce povertyIntegrating forests into sustainableeconomic developmentProtecting vital local and global

_ <environmental services and values

Forest outcomes are crucial for povertyreduction in many of the Bank's clientcountries. For both countries with largeforest endowments, and for others that

Forests and the fight against poverty have limited forests, if forest issues arenot fully incorporated into broadnational government and assistance

About 60 million people (mainly indigenous and tribal strategies then the overarching goalsgroups) are almost wholly dependent on forests, and of poverty red uction wi ll not be met. Assome 350 million people who live within oradjacentto such, implementation of the reviseddense forests depend on them to a high degree for Forests Strategy will make a significantsubsistenceand incomeAndeveloping countries,about contribution to meeting the broad1.2 billion people rely on open woodlands or goals of the Bank's Rural Development

agro-forestry farming systems that help to sustain Strategy, which was adopted inagricultural productivity and generate income. Some October 2002.

1 billion people worldwide depend on drugs derivedfrom forest plants for their medicinal needs. There are attendant risks to addressing

the poverty issues related to forests,however, which must not be ignored.

Experience has shown that remedial strategies can themselves generate internalconflicts. For instance, developing markets for forest products can lead to increasedcompetition between more affluent and poorer members of a community, orbetween different communities, sometimes resulting in restricted access by thepoorest of the poor to essential forest products. Similarly, a market-based systemcan disrupt communal systems of management by groups that have traditionally

SUSTAINING FORESTS

relied on common property forest resources for meeting essential fuel wood,grazing and other needs.

Accordingly, within this framework, our strategy will focus on creating economicopportunity, empowerment, and security for rural people, especiadly poor andindigenous groups. The main instrument will be through policy and institutionalstrengthening to ensure that the rural poor have sufficient access to, and areable to manage, forest resources for their own benefit. We will also help buildthe capacity of governments to support and regulate community use of forests,open woodlands, plantations, and on-farm woodlots. We will need to rely onour partners-particularly civil society-and on pilot operations supportedby others, to demonstrate feasible approaches that can then be scaled up tomake a significant contribution to social, environmental, and economic objectives.In collaboration with client countries and partners, our primary objectiveswill be to:

work with client countries to strengthen policy, institutional, and legalframeworks to ensure the rights of people and communities living in andnear forest areas;ensure that women, the poor, and other marginalized groups in society areable to take a more active role in formulating and implementing forestpolicies and programs;

1 3

A WORLD BANK STRATEGY

support the scaling up of collaborative and community forest management sothat local people can manage their own resources,freely market forest products,and benefit from security of tenure;

^ work with local groups, NGOs, and other partners to integrate forestry,agroforestry, and small enterprise activities in rural development strategies.

Forests and sustainable economicdevelopment

At a global level, the potential that forest resourcesoffer for development is clear. Production of wood Forests continue to be seriouslyand manufactured forest products contribute more undervalued for the social, economicthan US$450 billion to the world market economy. and environmental benefits theyThe annual value of internationally traded forest provide. This contributes to wide-products has been running between US$150 and spread mismanagement and poorUS$200billion. governance leading to billions of

dollars of lost revenue. The spillover ofILO estimates global forest-based employment poor policies in other sectors has also(including both industrial and non industrial forest contributed to the rapid rate ofharvesting and industrialized forest products manu- deforestation seen in recent decades.facture) to be approximately 47 million, and forest The second pillar of the strategybased employment in developing countriesaccounts seeks to address these failings byfor about 32 million:that is, more than 60 percent of integrating forests in sustainablethe total. economic development.

FAO estimates that out of roughly 3.8 billion hectares To achieve this, we will focus on helpingof global forest area, 1.2 billion hectares are available govern ments improve pol icy, economicfor industrial wood supply.Well over one half of this management, and governance in thetotal is located in Bank borrower countries. forest sector, including forest conces-

sions and other allocation policies, aswell as addressing the potential impacts

of economy-wide adjustment operations upon forests. We will also support govern-ment efforts to bring about ecologically, economically, and socially sound manage-ment of production forests.To this end, in addition to the Bank's standard implemen-tation and safeguard procedures, we will encourage independent monitoring and cer-tification of forest operations. Such formal market-based certification systems verifycompliance with nationally or internationally agreed standards for forest manage-ment by an independent third party Certification is most useful in environmentallydiscriminating domestic or international markets, but less relevant in situationswhere the bulk of production will go to non-environmentally discriminating domesticmarkets. In these situations, we will work with borrowers to ensure independent

SUSTAINING FORESTS

assessment of forest operations through an open process of review by the main par-ticipants and interest groups.

To support the second pillar, the Bank will:analyze and coordinate policies and projects to ensure a cross-sectoral approachto planning and implementation of sustainable forest management, conserva-tion and development;support improved governance by reforming inappropriate policies on timberconcessions and subsidies, and by encouraging multi-stakeholder involvementin the development and implementation of forest policy and practice;help governments contain corruption and other illegal activities throughimproved forest laws, regulations,and enforcement, and through con-sumer-driven demand for forestproducts from lega I sources;address finance, fiscal, and tradeissues related to the forest sector andforest products to enable govern-ments to capture a higher portion offorest revenues for sustainable socialand economic development; andpromote catalytic investments in thefull range of goods and environmen-tal services available from well-man-aged forests-including sustainabletimber harvesting and management,but only in areas outside critical for-est conservation areas in situationsthat can be independently moni- 15tored through a system of verifica-tion or certification that meetsnationally agreed and internationallyacceptable standards.

Though biodiversity and key environ-mental services have traditionallybeen protected through the establish-

A WORLD BANK STRATEGY

ment of protected areas, the wide range of competing uses of forests by diversegroups poses constraints on how much can be achieved by pure protection activ-ities alone. As such, improving forest management practices in production forestsoutside strict protected areas is an essential component of any strategy to pro-tect vital local environmental services and values, in addition to efforts aimed atbolstering the effectiveness of management within protected areas.

Recognizing this, the more inclusive, twin approach of protection and productiveuse, in all forest types, is embedded in the revised Forests Strategy.This is a major

reason why the previous ban on Bankparticipation in forest operations

Forests and global enviTonmental involving logging (in primary tropicalvalues moist forest) has been replaced in the

new policy with a focus on managingproduction sustainably, and with due

Forestscoverabout25-30 percentofthe Earth's land attention to protection. This shiftsurface;an area between 3.3 and 3.9 billion hectares allows the Bank to proactively engage(depending on the definitions and figures used).They with clients and partners to manageare the repository of the great bulk of terrestrial forests effectively for all uses. Our pri-biodiversity, with all the implications that carries for mary objectives in implementing thegene pools, pharmaceuticals and other unique and third pillar will be to:valuable goods and services. Forests also containlarge amounts of sequestered carbon, and their a help governments to proactivelydestruction or degradation (especially by burning) is identify and conserve critical forestestimated to contribute between 10 and 30 percent conservation areas in all forest typesof allcarbongasemissionsintotheatmosphere,mak- in all client countries;ingforestsamajorfactorintheglobalwarmingissue. * help governments promote the wide-In addition, forests help maintain the fertility of scale adoption of responsible forestagricultural land, protect water sources, and reduce management practices in productionthe risks of natural disasters such as landslides forests outside critical forest conser-and flooding. vation areas;

a develop options to build markets and

Mismanagement of woodlands in humid tropical finance for international publicand sub-tropical countries significantly contributes goods such as biodiversity and car-to soil losses equivalent to 10 percent of agricultural bon sequestration;GDP per year. In some countries in the Asia-Pacific m help governments develop measuresregion,forest destruction is responsible for2 percent to mitigate and adapt to the antici-to 5 percent per decade of global biodiversity losses, pated impacts of climate change andwith inestimable losses to ecosystem stability and reduce the vulnerability of thehuman well-being. poorest people to its effects;

SUSTAINING FORESTS

help governments design, imple-tsment and finance national marketsfor local environmental services pro-vided by forests; \ zshelp governments to strengthen _ Mforest investments, policies, and a

institutions, to ensure that anyadverse indirect and cross-sectoralimpacts of policy and investmentson high conservation and protectedareas are minimized; and kfensure that Bank investments andprograms in both the forest sector r

and in other sectors that couldpotentially harm protected forestsand natural habitats are imple-mented according to the Bank'soperational policies and safeguards. e,

Just as this new approach to forests Poverty Reduction Strategies andwill contribute significantly to achiev- Country Assistance Strategiesing the goals of the Bank's RuralDevelopment Strategy, it will also Poverty Reduction Strategy Papers (PRSPs) aremake a significant contribution to analytical and planning documents that serve as themeeting the goals of the Bank's basisforthe Bankandotherdonorstoparticipate inEnvironment Strategy, which was financing agreed poverty reduction programs,adopted in July 2001. The three pillars through Poverty Reduction Support Credits. Theof the Forests Strategy correspond governments of client countries prepare PRSPsclosely to the main objectives of the through a participatory process involving civil society 1 7Environment Strategy-improving and development partners.quality of life, improving quality ofgrowth, and improving the quality of The Bank develops a Country Assistance Strategy (CAS)the global commons. Like the new foreach ofitsclientcountries.Based onanassessmentForests Strategy, the Environmental of the country's own priorities, past portfolio perform-Strategy stresses the importance of ance and credit worthiness, the CAS sets the level andcross-sectional issues, mainstreaming composition of financial and technical assistance thatpolicy dialogue, governance, and the Bank seeks to provide the country. While theselectively designing interventions country owns its development strategy as outlined inin close collaboration with develop- thePRSP,theBankusestheCASdocumentspecificallyment partners. to account to its shareholders for its diagnosis and the

programs it supports.

A WORLD BANK STRATEGY

Implementing the New Approach

By adopting the new policy and strategy as outlined above, both the Board ofExecutive Directors and Bank management have committed to several key changes

from past Bank forest-related operational practices.

Management is committed to the cross-sectoral approach and is moving beyond

stand-alone forest operations.This will integrate forest issues into the broad agenda

of country dialogues and economic support. It is especially important to incorporate

forest-related activities into both Poverty Reduction Strategies, the country's business

plan for poverty reduction, and Country Assistance Strategies (see box). The Bank is

investing in analytical work and engaging in proactive dialogue with client govern-

ments to catalyze opportunities in the forest sector.

It will be essential to rapidly develop and apply improved tools for both assessing andmonitoring the likely impact of Bank structural adjustment operations on forests and

on forest dependent communities.

.444 Also of fundamental importance will

* -be our ability to foster partnerships to- underpin our own efforts to raise

engagement in forests and contribute

18 ( to building coordination and consen-sus on priorities for investments andpolicy reform. We will build on existing

w- k relationships to strengthen partner-

ships in three areas in particular:

V'. with other donors and nationalstakeholderswith NGOswith the private sector

Pi rtnershi ps witf other donors andnationi,il stakeholders. At the global

.. U..... . FOE.S. T

SUSTAINING FORESTS

level, the Bank will continue to work inpartnership with other organizationsof global reach and within the frame-work of international agendas. The -

analytical work that will underlienational forest programs (nfps) is criti-cal to the implementation of the 'proposed strategy. The Bank will workclosely with the Program on Forests(PROFOR), a multi-donor partnershiphoused at the Bank, to enhance the - -

impact of its analytical work. PROFORprovides support to participatory ;processes and generates knowledge ie , - Y Ain four thematic areas: forest gover- .;

nance; forests' contribution to liveli-hoods of the rural poor; mitigation of .

adverse cross-sectoral impacts on .'forests; and innovative approaches .^

to financing sustainable forest : .

management.

Another important global partner isthe Global Environment Facility (CEF)which was launched in 1991 to provide -'a new financial mechanism to protectthe environment. Since then, the CEFhas invested more than US$1 billion inprotection of forest ecosystems in -A

some 6o projects, many of which havebeen jointly financed with the Bank.

Partnerships with NGOs. Forging strong partnerships with NCOs is also para-mount to building consensus and momentum for our agenda on forests.The WorldBank/WWF Alliance for Forest Conservation and Sustainable Use has alreadydemonstrated the merit of this approach, drawing on the strengths of eachinstitution to mainstream dialogue on important issues, including independentcertification and monitoring of forest operations.

The Alliance works with a diverse group of partners to achieve three targets by2005: establishing 50 million hectares of new forest protected areas; securing 50

A WORLD BANK STRATfGGY

million hectares of existing but highly threatened protected areas under effectivemanagement; and establishing globally 200 million hectares of production forestsunder independently certified, sustainable management. Funds invested by theBank in Alliance activities leverage considerable additional resources in support ofinnovative forest conservation and sustainable use projects around the worldtoward these targets.

Another major NGO partnership is the Critical Ecosystems Partnership Fund(CEPF). This joint initiative in which the Bank works with ConservationInternational and other donors (the GEF, the Government of Japan and theMacArthur Foundation) finances the protection and management of particularlyimportant areas of biodiversity.Building on these encouraging experiences, we intend to proactively seekopportunities for partnership with other national and international NGO's.

Partnerships with the Private Sector. The Bank first initiated a dialogue withleading forest companies and NGOs through a CEOs Forum, chaired by the WorldBank President. This Forum debated major issues, such as managing forests sus-tainably and controlling illegal forest operations. The dialogue that began at thisForum continues and has expanded to include retailing and production firms, aswell as some southern NGOs. The Bank has also developed a working relationship

SS. F

,SUSANN FOREST

with the Sustainable Forest ProductsGroup of the World Business Councilfor Sustainable Development.

With the new Forests Strategy, we willbuild on these foundations tostrengthen and widen our engage-ment with responsible investors in the -

private sector to foster corporate - *4social responsibility. Both the IFC and . ,MIGA are crucial to this engagement, w-and improving coordination with IFCand MIGA will be an important part ofour effort to build a framework sup-portive of appropriate private sectorinvestment.

Transparent implementation will bean essential ingredient of success forthe overall strategy. This will involveexternal stakeholder and technicaladvisors working with both Bank staffand senior management. An ExternalAdvisory Group (EAG) will continue anapproach used during the preparationof the Strategy Paper, with stakeholderconsultation at every stage. The EAG 21will be formed from senior and emi-nent people in the forest sector, andwill provide advice to the Bank onimplementation matters related to theOperational Policy on Forests and theoverall goals of the strategy. In addi-tion, the EAG will advise the Bankregarding their view of the status ofthe forest program.

A WORLD BANK STRATEGY

Some major Bank-supported initiativeson forest law enforcement have beenunderway in recent years, with groxwingsupport from the international commu-nity and from governments in forestedcountries. Issues such as entitlement,rights, and participation, in the forestscontext, are nowvery much on the table.

We continue to believe that successhinges on garnering sufficient momen-tum to build a concerted and coordinat-ed effort between civil society stake-holders, NGOs, the private sector, clientcountry governments, and donors. If thiscan be realized though the collectiveeffort of the international communityand other major stakeholders, then inthe course of the next five to ten years

' , fsignificant gains for forests and thosethat depend on them will be achieved.With this new approach,the Bank is well

* 5 positioned to help chart this course to asustainable future.

SUSTAINING FORESTS

The tasks of responsible economic growth and poverty reduction go

hand-in-hand with the protection of local, national and global

environmental assets and values. Nowhere is this more important

than in the places where most poor people live, the rural space of the

developing world, where hundreds of millions of people depend

directly upon the environmental goods and services thatflowfrom

natural resources. Forests still occupy about a third of the total land

area of the planet. Great changes in the extent and nature of these

forests are occurring, and we must do our best to understand and

manage these towards the best outcomes possible. Whatever the

controversies inherent to the achievement of this goal, we have no

alternative but to address it in a responsible way: the risks of doing

nothing, or too little, arefar greater.

Ian JohnsonVice President, Sustainable Development, The World Bank

Sustainableforest management...is a critical means to

eradicate poverty, significantly reduce deforestation, halt

the loss offorest biodiversity and land and resource

degradation, and improvefood security and access to safe

drinking water and affordable energy...

Report of the World Summit on Sustainable Development

This booklet is based on A Revised Forest Strategy for the World Bank Group endorsedin 2002. The strategy contains references for any outside sources that are not citedseparately here. The entire document is available at: www.worldbank.org/forests.

The World Bank

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