Deforestation: An Overview of Global Programs and Agreements

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CONTENTS FOR THIS SECTION

THE WORLD BANK
OED Review
The New Forest Policy
-- Criticism of the Policy
International Cooperation
-- The Global Environment Facility
-- The Brazil Rainforest Pilot Program
Conclusion

CONCLUSION

APPENDIX A: STATUS OF TFAP EXERCISES

THE WORLD BANK

The World Bank is the major international organization focused on funding economic development. Its total lending was $22.7 billion in fiscal year 1991. As such, it has had a highly visible role in forest use and deforestation in developing countries.

Since its inception, the Bank has financed 94 projects in the forest sector, with total commitments of nearly $2.5 billion.(43) Lending for forestry has grown since the publication of the Bank's first policy paper on forestry in 1978, and has included greater emphasis on social forestry and, lately, on environmental issues. Before fiscal year 1978, total commitments had been only $199 million for 17 projects. Since then an additional $2.3 billion has been committed for 77 free-standing forestry projects.(44) However, lending for some projects, particularly for tree crops, agricultural settlements, and infrastructure such as roads, has caused or facilitated extensive deforestation and other undesirable impacts on forest resources.

In 1987-88, a major environmental policy review took place in the World Bank. As a result, the World Bank has a new set of environmental policies and declared priorities. International cooperation is an explicitly stated principle of Bank involvement in the forestry sector according to the new policy.

OED Review

In 1990, the Operations Evaluation Department (OED) of the World Bank undertook an assessment of Bank lending and policy in the forestry sector from 1949 to 1990. The study, "Forestry Development: A Review of Bank Experience," reviewed forestry projects and their components, analyzed development implementation issues, and evaluated sector work. The report sought to put the economic and social significance of forest development into perspective, to provide feedback to guide future policy, procedures, and practice, and to complement recent analyses of Bank involvement in pertinent sectors such as agriculture and rural development, energy, and land management. The report also recommended changes to be made in forest sector policies and new proposals for Bank forestry lending.

According to this recent review of World Bank experience, the Bank should strengthen its forest sector work and link it more strongly to other country economic and sector work, improve the technical performance of projects, and design social forestry projects with a better understanding of local social dynamics and the motivations of different social actors in tree planting and management.

In particular, the OED report highlights the following:

• -Forestry projects need to be more carefully prepared and processed, and longer time frames should be considered for some types of forestry projects;
• -Broader involvement of people in planting trees on and off farms is necessary and feasible, in innovative social ways;
• -If cooperation and coordination among many line agencies are required in the planning and implementation of a project, an effect mechanism for coordination is crucial;
• -Monitoring and evaluation need to be improved considerably to facilitate supervision and final evaluation;
• -Land tenure and potential land use conflicts should be thoroughly investigated during project formulation;
• -Market analysis and market programs should be an integral part of project preparation;
• -Pricing policies should adequately reflect the environmental benefits obtained from forests;
• -The development of buffer zones around remaining natural forests should be a national priority.

Based on its finding that the scope of forestry problems faced by developing countries has changed dramatically and that understanding of their causes and implications has improved, the OED report recommended that the Bank's forest policy be reformulated.

The New Forest Policy

In response to the OED recommendations, the Bank's new Forest Policy paper states that the Bank intends to move vigorously to promote the conservation of natural forests and the sustainable development of managed forestry resources.(45) Its objectives include support for international efforts and legal instruments to promote forest conservation; assistance to governments in policy reform and institutional strengthening; creation of additional forest resources; and support for initiatives that preserve intact forest areas.

According to the policy, the Bank will employ a multisectoral approach to its development assistance for forestry, as recommended by the OED review. In so doing, it will continue to support population policies, agricultural intensification, the alleviation of poverty, and the creation of employment opportunities in other land-using projects to relieve the fundamental pressures on forests for the long term. More specifically, the Bank plans to assist countries in implementing policy and institutional changes and investment strategies and to support the following:

• -conservation of forests through sustainable management for multiple uses;
• -expansion of protected areas for the preservation of diverse forest ecosystems through global efforts;
• -augmentation of forest resources through afforestation to meet demand for forest products and to provide environmental services and ecosystem protection;
• -establishment of preconditions -- including policy and institutional frameworks, research, and human capital development -- for sustainable use of forest resources;
• -development of programs for intensifying agriculture and promoting rural development, especially in densely populated areas adjacent to forests; and
• -promotion of international cooperation in support of a common mission for conservation and development of forest resources.

In its efforts directly related to the forest sector -- aid coordination, country dialogue, sector work, and lending -- the new policy stipulates that the Bank will focus on several priority areas.

• -International Cooperation. The Bank supports the adoption of international legal instruments conducive to sustainable forest development and conservation. The Bank will encourage international initiatives for the transfer of concessional resources to assist projects that protect globally important biological diversity. It will continue to explore the feasibility of using global financial assistance and transfers to protect forests for their carbon sequestration.
• -Policy Reform and Institutional Strengthening. The Bank will assist governments to identify and rectify market and policy failures that encourage deforestation and inhibit sustainable land use. The Bank will assist governments in completing resource inventories and establishing systems for continuous resource assessment. Efforts will be made to improve the technical performance of government forestry institutions. Pilot projects designed to gain insights into the merits of alternative approaches will be undertaken.
• -Resource Expansion and Intensification. The Bank will increase its efforts to finance the creation of additional forest resources and the expansion and intensification of management of areas suitable for sustainable production of forest products. In addition, the Bank will promote a continued reorientation of forestry toward participation by rural people in tree planting and conservation of indigenous woodlands. Greater emphasis will be given to farm family and farm group forestry, including women's groups. Where the scope for plantations outside areas of intact forests is sound from a social, environmental, and economic perspective, the Bank will assist in the establishment of plantations to reduce pressure on the existing forest resource base and to ease the transition to sustained-yield forest management. The primary target areas for new plantings will be potentially productive degraded forests, wastelands, forest fallows, shrublands, and abandoned farmlands. The interests of communities that depend on such areas will have to be considered in setting target areas.
• -Preservation of Intact Forest Areas. The Bank will support initiatives to expand forest areas designated as parks and reserves and to institute effective management and enforcement in new and existing areas. In tropical moist forests the Bank will adopt, and will encourage governments to adopt, a precautionary policy toward utilization. Specifically, the Bank Group will not under any circumstances finance commercial logging in primary tropical moist forests. Financing of infrastructural projects (such as roads, dams, and mines) that may lead to loss of tropical moist forests will be subject to rigorous environmental assessment as mandated by the Bank for projects that raise diverse and significant environmental and resettlement issues. A careful assessment of the social issues involved will also be required. The Bank will continue to place more emphasis on support to programs that involve institutional development, forest protection measures, and income-generating projects not dependent on forest resources and that have as their primary objective the preservation of tropical moist forests. In implementing this strategy, the Bank will pay special attention to the twenty countries (accounting for 85 percent of tropical moist forests) whose forests are seriously threatened by encroachment and destruction.(46) In these countries special efforts will be made to support economic development in poor, densely populated areas around the forests or in the origin areas of forest encroachers.

According to the new policy, in all countries, and for all types of forests, lending operations in the forestry sector will distinguish between projects that are clearly environmentally protective or which are oriented toward small farmers and all other forestry operations. The first two types will be considered on the basis of their own social, economic, and environmental merits. Other lending operations in the forest sector will be conditional on government commitment to sustainable, conservation-oriented forestry. As identified by the Bank, such a commitment entails:

• -adopting policies and an institutional framework to ensure conservation and sustainable use of existing forests and to promote more active participation of local people and the private sector (with proper incentives) in the long-term management of natural forests;
• -adopting a comprehensive and environmentally sound forestry conservation and development plan that contains a clear definition of the roles and rights of the government, the private sector, and local people (including forest dwellers);
• -undertaking social, economic, and environmental assessments of the forests being considered for commercial utilization;
• -setting aside adequate compensatory preservation forests to maintain biodiversity and safeguard the interests of forest dwellers, specifically their rights of access to designated forest areas; and
• -establishing the institutional capacity to implement and enforce the above commitments.

If these policies and conditions are present, projects will be judged on their individual merits, the new policy states. If they are absent, Bank support in the forest sector will be restricted to operations that directly help countries to achieve them. Such operations will be appropriately limited in scope, sequenced, and specifically targeted at helping countries meet the stated conditions.

Criticism of the Policy

The World Bank invited the views of a variety of NGO representatives, concerned individuals, and others regarding a draft of its new forest policy in April 1991. Critics of the Forest Policy paper acknowledged that the document contained many of the concepts required for satisfactory reform of forest sector and non-forest sector lending. There was a strong consensus, however, that it was unclear how the World Bank planned to translate these good intentions into effective operational guidelines. The document was also criticized for being vague and ambiguous. In addition, many interpreted the paper as being excessively oriented toward industrial concerns.

The section regarding Bank-funded logging in primary forests particularly generated discussion. The draft executive summary stated that "the Bank will avoid financing of commercial logging in primary tropical moist forests." Some NGO representatives worried that "primary forests" might be so narrowly defined that Bank-financed logging would not effectively be restricted. More importantly, many observers pointed out that the Bank might presumably finance logging indirectly by supporting the institutions responsible for forest utilization or through other means. As a result, this wording was substantially revised. In the final document, the World Bank has pledged that "it will not under any circumstances finance commercial logging in primary tropical moist forests."(47) The new Bank policy requires rigorous environmental assessments prior to financing any road, dam or other infrastructural development projects.

A more general concern, and an important recurring theme, articulated by various members of the NGO community, is a sense of skepticism about the viability of sustainable forest management for timber in the tropics. The efficacy of the concept of sustainable timber management is perhaps the most important philosophical underpinning of the Bank's reformed forest policy. While a range of opinion exists on this issue, a growing number of observers weigh on the side of skepticism, doubting whether timber management in the tropics could ever approach sustainability.

In addition, many environmentalists fear that Bank lending may actually accelerate deforestation rather than arrest it. Loans made to the forest sector with the expectation that they will be paid off from productive investments made within the sector (i.e. logging and processing) may lead to aggressive logging activities as countries labor to recoup investments, critics speculate. This could conceivably be a relatively benign process if all the necessary policy reforms are in place. However, corrupt or inefficient governments could fail to implement the necessary policy changes or renege on commitments to implement agreed upon reforms. In this case, World Bank loans would support destructive forestry practices.

Another major concern revolves around issues of social justice and participation. While the policy statement contains positive language regarding the participation of local peoples and consideration of indigenous peoples, some have questioned the Bank's institutional capacity to address these issues. They point out that the Bank's partners in development projects are usually government agencies that are often unconcerned with forest-dependent peoples' rights and needs.

In the context of reviewing the Bank's forest policy, representatives of various NGOs have repeated a frequent demand that the Bank's decision-making process should be as open, transparent, and participatory as possible. They acknowledge that consultation regarding the draft policy was a step in the right direction, but have complained that the process still left much to be desired. According to critics, NGO input should be solicited in a more timely fashion and NGO consultation should be a vital, institutionalized component of any future Bank policy reform initiatives.

International Cooperation

International cooperation is an explicitly stated principle of Bank involvement in the forestry sector, according to its new forest policy. Specifically, the new policy states that the emergence of an international treaty or legal agreement on the conservation and development of forests would clearly influence the role of the Bank in the forest sector. For this reason, the Bank plans for its forest program to evolve in ways that are complementary to and mutually supportive of parallel initiatives that currently exist or may emerge over time. To this end, the Bank intends to maintain and improve its regular consultations on forest issues with the regional development banks, as well as with the FAO, the United Nations Environment Programme (UNEP), the ITTO, and NGOs. In addition, the World Bank has been active in efforts to revise the TFAP and will continue to collaborate with other interested parties in reformulating national and international processes under the TFAP to make them a more effective means of addressing the problems of the use and conservation of forests. Through involvement in activities such as the GEF, according to the new policy, the Bank will encourage the transfer of confessional resources from developed countries to those developing countries that are taking effective measures to safeguard world biodiversity, particularly in tropical moist forests.

The Global Environment Facility

The GEF is a three-year pilot program, established in November 1990, to provide grants for investment projects, technical assistance, and -- to a lesser extent -- research aimed at protecting the global environment and transferring environmentally benign technologies. The Facility's work falls into four main areas: reducing global warming, protecting international waters, preserving biological diversity, and preventing further depletion of the stratospheric ozone layer. Projects to address deforestation may be supported by the GEF due to the role of forests in sequestering carbon and providing habitat for biodiversity.

Responsibility for implementing the GEF is shared between the UNDP, UNEP, and the World Bank. The World Bank administers the GEF, acts as the repository of the Trust Fund, and is responsible for investment projects. The UNDP is responsible for technical assistance activities. UNEP provides environmental guidance to the GEF process. GEF funds totalled about $1.3 billion at the end of 1991.

The aim of the GEF is to select an assortment of projects over its three-year-pilot phase which address the global environmental problems outlined above. All countries with a UNDP program in place and a per capita income of $4,000 or less are eligible for GEF funds. Projects are identified and selected by developing country governments and reviewed by the GEF's oversight group, made up of participating governments. The appraisal and approval of projects is left to the relevant implementing agency -- the World Bank or the UNDP.

Some 50 projects were reviewed by participating governments during 1991 and are currently part of the GEF work program. Proposals relating to forests include one to preserve tropical rainforests in the Congo and the Brazil Rainforest Pilot Program, described below.

The Brazil Rainforest Pilot Program

In December 1991, a number of industrial countries, led by the G-7, agreed to provide $250 million to finance the first phase of a pilot program to preserve the rainforest in Brazil. The World Bank has taken charge of the project under the auspices of the GEF.

The program is the product of two distinct developments. First, over the past few years the Brazilian government has embarked on extensive policy and institutional changes to improve environmental management. For the Amazon, this involves trying to improve the standard of living of local people while protecting the resources in the rainforest. Second, in July 1990, the G-7 requested the World Bank and the EC Commission to cooperate with the Brazilian government in drawing up a pilot program and to coordinate funding -- hopefully a quick and effective way to mobilize help for conservation.

The Brazil Rainforest Pilot Program is to be the start of a comprehensive effort to maximize the environmental benefits of Brazil's rainforests consistent with Brazil's development goals. The objectives of the pilot program are:

• -to conserve biological diversity and indigenous areas;
• -to consolidate policy changes and strengthen implementing institutions; and
• -to develop scientific knowledge and applied technologies for environmentally benign development in the Amazon and build support for their adoption.

Components of the project include preparing land-use plans to expand protected areas and extractive reserves and to set aside appropriate lands for forestry and conversion to agriculture and infrastructure development.

The Brazil Rainforest Pilot Program may be a good indicator of the future of international cooperation and of the political will of governments to support global forest issues. It could also be a model for other tropical forest regions. The formulation of the plan brought together several federal agencies, the nine state governments of the Amazon region, and numerous local and national NGOs.

Conclusion

On the one hand, a great strength of the Bank is that it has the political influence to leverage the policy reforms that are necessary to achieve conservation objectives. On the other hand, it is hampered in addressing environmental concerns by its nature as a lending institution. In the past, the World Bank has been harshly criticized for promoting development projects that have led to the destruction of tropical forests. But the Bank's influence on developing nations gives it the potential to be a major force in any international forestry efforts.

CONCLUSION

No single operating mechanism is sufficient to adequately address deforestation but each initiative described here has a role to play in the larger picture of confronting the challenge of deforestation. For this reason, it is useful to consider these activities as a whole.

The TFAP, for example, cannot address all concerns relating to tropical forest conservation alone. The FAO's Ullsten Review explicitly acknowledged that such issues as that of national sovereignty over resources of global value are beyond its scope. This concern may be better addressed by an international legal instrument such as a Forest Convention, or other international initiatives, like the Biodiversity Convention, the Global Climate Change Convention, or the GEF (e.g., the Global Climate Convention could deal with the role of tropical forests in sequestering carbon; the GEF, and eventually the Biodiversity Convention, could be used to generate international pressures and money for conservation to safeguard those tropical forest areas of universal significance for biological diversity.) However, a thoroughly revamped, country-based TFAP, that is open to broad political debate and that minimizes international bureaucracy, could be the best mechanism to stimulate quick action on the ground. For this reason, many observers assert that the main challenge facing the TFAP is to move the tropical forest debate out of the international conference circuit and into the tropical countries themselves, where misguided policies and weak forestry institutions are the real obstacles to halting forest loss.

On the other hand, many take the view that the ITTO should concentrate on its role as a forum for hammering out agreements on improving working practices in the tropical timber trade so that the trade causes less damage to the natural forest as timber is removed and wastes less in its industrial processing of the timber that is cut. In carrying out its mandate to cooperate with competent international organizations in the field of reforestation and forest management and tropical forest development generally, most people agree that the ITTO's work program should be fully coordinated with the activities of the TFAP; not only should the ITTO harmonize its activities with those under the TFAP, it should consider sponsoring some of the TFAP investment profiles that fall broadly within its objectives, in particular those relating to forest-based industrial development and the conservation of forest ecosystems, two out of the five priority areas identified by the TFAP. However, whether the ITTO should be used as a separate channel for funding tropical forestry projects is questionable. Its chronic lack of resources seems to indicate that tropical-timber-consuming country governments are not enthusiastic about this idea.

Critics have seriously questioned the ability of either the TFAP or the ITTO to deal effectively with the sharply deteriorating tropical forest situation of the past few years, let alone with the worsening prospects for the next decade. They point to the TFAP and the ITTO as examples of the international response to the threats facing the world's forest resources that are limited in scope to tropical forests and that have marginal prospects for slowing deforestation -- the result of mandates that neither clearly identified forest conservation as a central objective nor sought to address the root causes of forest loss outside the forestry sector. Such observers claim that there remains, therefore, an urgent need to go beyond existing initiatives, ideally to launch a comprehensive instrument on forests that will state a clear set of objectives for protection and restoration of the global forest estate; that will lead to fair and consistent policies across boreal and temperate as well as tropical forests; and that will act as a catalyst for addressing underlying equitable issues of international debt, land tenure, and other macroeconomic reforms.

Though the prospect of a global forest convention figured prominently on the agenda of UNCED, negotiators at the PrepComs quickly discovered that the issues of sovereignty and compensation require extremely careful examination. Discussions in Rio left the door open for the negotiation of a global forest convention in the future, yet this process may take several years to conclude. While some would like to expand the mandate of the ITTO, others are apprehensive about broadening the responsibilities of an organization they consider to be weak and ineffectual. At a minimum, the new ITTA will need to be consistent with decisions made at UNCED and to anticipate how it will fit into the framework of a global forest agreement, in case one evolves.

Meanwhile deforestation continues and the question remains as to whether the world can afford to wait for an international agreement that is unlikely to be operational before the end of the century. By placing hopes on a convention, efforts may be diverted from other initiatives which may have greater potential for achieving rapid results. The reality may be that most of the problems confronting global forest resources will have to be solved under existing mechanisms or they may not be solved at all.

APPENDIX A: STATUS OF TFAP EXERCISES(48),(49)
(as of August 31, 1992)

Endnotes

43. World Bank. The Forest Sector: A World Bank Policy Paper. International Bank for Reconstruction and Development. Washington, DC, 1991. p. 18.

44. Ibid., p. 59.

45. See: World Bank, The Forest Sector: A World Bank Policy Paper. International Bank for Reconstruction and Development. Washington, DC, 1991.

46. According to the Bank, the 20 countries, which collectively account for 85 percent of the remaining tropical moist forest, whose forest resources are seriously threatened are: Bolivia, Brazil, Burma (Myanmar), Cameroon, Central African Republic, Columbia, Congo, Cote d'Ivoire, Ecuador, Gabon, India, Indonesia, Madagascar, Malaysia, Mexico, Peru, Papua-New Guinea, Philippines, Venezuela, and Zaire.

47. World Bank. Op. Cit., p. 65.

48. See: TFAP Coordinating Unit, Forestry Department, FAO. Op. Cit., pp. 21-22.

49. Sub-regional exercises are indicated in italics and are counted separately from countries (except for the CARICOM, which is at the same time a subregional and multi-country exercise, where individual country issues are treated also at the national level). The international core support agency is indicated in parentheses.