Forests Sourcebook - HCV Resource Network

CHAPTER 6
Mainstreaming Forests into
Development Policy and Planning
One of the targets under the Millennium Development
Goals for ensuring environmental sustainability
requires that countries integrate the principles
of sustainable development into country policies and
programs and reverse the loss of environmental resources.
In line with this, macro policy reforms should give foremost
consideration to ensuring enabling conditions for sustainable
development, enhancing synergies and minimizing
negative impacts on natural resources. For forests, the combined
impacts of economic activities outside the forest sector
are often significantly greater than those produced by
economic activity within the sector itself.
Several policy areas can impact forests and forest development,
including macroeconomic policies (fiscal, monetary,
trade, privatization, and public expenditure policies);
population and social affairs; agriculture, fisheries, game
management, livestock; rural and regional development,
land use planning, land tenure; infrastructure; industry;
energy; environment 1 ; and tourism. Macro policy reforms
are central to strengthening an economy. Governments
reform fiscal, exchange rate, and monetary policies, and
make changes in trade policies, land reform, and privatization
policies as part of adjustment packages to address economic
imbalances, balance of payments, and structural
weaknesses in their economy. Measures such as these—
regardless of origin—can and do have significant impacts
on natural resources in general. For example, real exchange
rate depreciation (currency devaluation) favors the expansion
of tradables (many agricultural, forest, and mineral
products) over nontradables (services, construction, and
subsistence production). That generally encourages expansion
of agriculture, logging, and mining. In addition, it can
also boost sectors that use more land and labor and less
imported capital and might, therefore, encourage more
extensive agriculture. Conversely, exchange rate depreciation
sometimes induces farmers to shift to export crops or
production systems that require less land.
Fiscal policy directed at short-run stabilization, the
implementation of growth and other long-term objectives,
and decentralization policy (see note 5.1, Decentralized Forest
Management) as a major instrument of national economic
reform in many developing countries and countries
in transition, all can affect forests and other natural
resources. Such broadly based adjustments, which were
often part of stabilization and structural adjustment policies
recommended by the World Bank and, more often, the
International Monetary Fund (IMF), have in the past been
criticized for their negative impacts on the poor, on natural
resources, and on the environment (see box 6.1). In the
recent past, development policy decreased emphasis on
restoring balance of payment and exchange rates, and
focused on budget support geared toward domestic financing
needs. The World Bank’s development policy lending
(DPL) portfolio has included promoting competitive market
structures, correcting distortions in incentive regimes,
establishing appropriate monitoring and safeguards in the
financial sector, judicial reform, and adopting modern
investment codes to create an environment conducive to
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