The World Bank lends an average of $356 million dollars each year for forestry loans and administers an additional $23 million dollars in donations for biodiversity projects through the Global Environmental Facility (GEF). Many Bank loans for structural adjustment programs, roads and dams, and agricultural projects have major impacts on forests and forest dependent people. Thus, when the Bank decides to rethink its entire policy and strategy towards forest issues it is worthy of note.

The current World Bank forestry policy became official in 1991. At that time, the Bank announced it would review the policy in 1994. The Bank’s Quality Assurance Group carried out that initial review, but decided it was too premature to assess the policy’s impact.

Late last year, the Bank decided that recent changes related to tropical forests merited a more thorough review of the Bank’s forest policies, strategies, and projects. According to Bank officials, these changes include growing interest in forest certification, carbon sequestration, and reduced impact logging, and new Bank initiatives such as the alliance with the World Wildlife Fund (WWF), the Bank’s Forest Market Transformation Initiative (FMTI), and the Global Carbon Initiative. The coordinator of the World Bank forestry review is Odin Knudson, who was formally in the World Bank’s agricultural division.

The central controversy surrounding the current review, as in the previous forestry policy, is the issue of Bank support for logging activities in primary tropical moist forests. The 1991 World Bank forestry policy prohibits such support, but many Bank officials believe that the only way to preserve tropical forests outside protected areas is to use them for timber production. Meanwhile, some prominent environmental NGOs see logging itself as the largest threat to the world’s forests and are opposed to changing the current policy. These NGOs support a World Bank forestry policy review, but they believe that such a review should focus on evaluating the Bank’s experience with implementing its own forestry projects.

The debate’s emphasis on the tropical logging prohibition is ironic, since even without the prohibition the World Bank would probably not directly finance logging activities, since these are profitable private activities that don’t require Bank funding. Thus, the issue is more symbolic than practical. Meanwhile, there has been little discussion of World Bank policies and projects that promote conversion of forests to agricultural uses or of the underlying causes of forest degradation.

The Bank has expressed a strong interest in getting input and feedback regarding the forest policy review and CIFOR believes that it is important that as wide a spectrum as possible of the international forestry community participate in these discussions.