Forests Sourcebook - HCV Resource Network
Forests Sourcebook - HCV Resource Network
Forests Sourcebook - HCV Resource Network
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tional Bank for Reconstruction and Development<br />
(IBRD) and International Development Association<br />
(IDA) loans with grants.<br />
Building a solid analytical foundation to support and<br />
facilitate engagement in the forest sector.<br />
Coordinating across the World Bank Group, with a particular<br />
emphasis on the International Finance Corporation<br />
(IFC), whose operations in the sector are significant<br />
in many forest-important countries.<br />
Operational policies for World Bank–supported<br />
investment projects<br />
The World Bank’s suite of operational policies ensures that<br />
Bank operations with potential impact on forests take forest<br />
outcomes into consideration. In line with the current <strong>Forests</strong><br />
Strategy, OP 4.36 is proactive both in identifying and protecting<br />
critical forest conservation areas and in supporting<br />
improved forest management in production forests outside<br />
these areas. OP 4.36 applies to all World Bank investment<br />
operations that potentially affect forests, regardless of<br />
whether they are specific forest sector investments. It also<br />
encourages the incorporation of forest issues in Country<br />
Assistance Strategies (CAS) and addresses cross-sectoral<br />
impacts on forests. OP 4.36 provides for conservation of critical<br />
natural habitats and prohibits World Bank financing of<br />
any commercial harvesting or plantation development in<br />
critical natural habitats. It also allows for proactive investment<br />
support to improve forest management outside critical<br />
forest areas, with explicit safeguards to ensure that such<br />
World Bank–financed operations comply with independent<br />
certification standards acceptable to the World Bank, or<br />
operations with an agreed upon, time-bound action plan to<br />
establish compliance with these standards.<br />
Beyond OP 4.36, relevant operational policies comprise<br />
the provisions for environmental assessment embodied in OP<br />
4.01, which require that impacts of any proposed activity on<br />
the natural environment, human health and safety, and social<br />
aspects be taken into account under OPs 4.10 (Indigenous<br />
Peoples), 4.11 (Physical Cultural <strong>Resource</strong>s), 4.12 (Involuntary<br />
Resettlement), and 4.04 (Natural Habitats). OP 4.04 in<br />
particular requires that the World Bank not support projects<br />
that, in its opinion, involve the significant conversion or<br />
degradation of critical natural habitats, and OP 4.10 requires<br />
that the World Bank only support projects in which affected<br />
Indigenous Peoples provide broad community support to the<br />
project based on prior, free, and informed consultations.<br />
Broadly based development policy lending, by its nature,<br />
is not dealt with under safeguard policies of the type the<br />
World Bank applies to its investment lending. Development<br />
policy loans (DPLs) were originally designed to provide support<br />
for macroeconomic policy reforms, such as in trade policy<br />
and agriculture. Over time, DPLs have evolved to focus<br />
more on structural, financial sector, and social policy<br />
reforms, and on improving public sector resource management.<br />
Development policy operations now generally aim to<br />
promote competitive market structures, correct distortions<br />
in incentive regimes, establish appropriate financial monitoring<br />
and safeguards, create an environment conducive to<br />
private sector investment, encourage private sector activity,<br />
promote good governance, and mitigate short-term adverse<br />
effects of development policy. While the sorts of activities,<br />
institutional changes, and policy developments that result<br />
can certainly have impacts on forests, it is no simple task to<br />
assess what these effects will be in any given situation, as the<br />
connections with outcomes at the field level are diffuse and<br />
indirect—and thus quite inaccessible to the precise and specific<br />
requirements of the safeguard policies that apply to<br />
investment lending. The World Bank recognized this difficulty,<br />
and until recently did not subject its structural adjustment<br />
lending to compliance with the safeguard policies. An<br />
operational directive (OD 8.60) provided some guidance on<br />
environmental issues for this form of lending until it was<br />
replaced by a more detailed operational policy on DPLs (OP<br />
8.60). 3 This policy makes explicit mention of forests and is<br />
highly relevant to the forest sector because it guides the due<br />
diligence needed to ensure that the potential for this form of<br />
lending to cause damage to natural resources, forests, and the<br />
environment is minimized in the design and approach used.<br />
Such operations are of special concern where large numbers<br />
of poor people rely on forests to some extent for their livelihoods.<br />
Where rapid economic change is occurring, perverse<br />
incentives and misallocation of resources leading to forest<br />
removal or changes in the status of use and ownership of<br />
forests will be risk factors to poverty alleviation.<br />
THE WORLD BANK’S LENDING TO THE SECTOR<br />
The portfolio of the World Bank’s investments in forests<br />
indicates an upward trend, after having fallen in the early<br />
2000s to historically low levels. 4 The total commitment in<br />
2001 was US$141 million, reflecting lending from the World<br />
Bank, the Global Environment Facility (GEF), and the IFC<br />
(figure 3). Lending has remained relatively steady in fiscal<br />
2007 (July 1, 2006 to June 30, 2007). 5 Between October 2002<br />
and June 2007, the World Bank approved 12 stand-alone<br />
forestry projects, as well as 39 others that include forestry<br />
components. There are 13 more forestry-related projects in<br />
6 INTRODUCTION: OPPORTUNITIES AND CHALLENGES IN THE FOREST SECTOR