The World Bank Issue Brief: Forestry
- Forests cover between 25 and 30 percent of the earth’s land surface. They help to maintain the fertility of the soil, protect watersheds, and reduce the risk of natural disasters such as floods and landslides.
- About 350 million people worldwide depend on forest resources for their livelihood—of those, 50 million (especially indigenous communities) are wholly dependent on forests.
- About 65% of the total primary energy supply in Africa comes from biomass (30% in South Asia, 15% in Latin America and East Asia).
- Forests are home to at least 80 percent of the world’s remaining terrestrial biodiversity. Forests contain twice as much carbon as exists in the earth’s atmosphere, and absorb about 15% of the planet’s greenhouse gas emissions.
- Deforestation and forest degradation account for about 20 percent of global carbon emissions.
- Forests and the forest product industry are a source of economic growth and employment, with US$186 billion worth of global trade in primary wood products. In developing countries, forest based employment accounts for 32 million jobs.
Forestry lending from World Bank Group instruments in FY09, US$ millions:
- IBRD/IDA ⇒495.39
- IFC ⇒ 168.1
Other lending instruments
- Carbon Offset ⇒ 3.82
- GEF ⇒ 10.37
- Recipient Executed Activities ⇒ 0.26
- TOTAL ⇒ 677.94
Sustainable management of forests is critical to the World Bank Group’s mission because of forests’ contribution to the livelihoods of the poor, the potential they offer for economic development, and the essential global environmental services they provide. Since the World Bank Group adopted a more proactive engagement in forests, embodied in the 2002 Forest Strategy, the forest portfolio has grown steadily from just $53 million in FY04 to $678 million in FY09.
The World Bank Group and Forestry
The Bank Group’s Forest Strategy takes an integrated approach to the broad objectives of poverty alleviation, sustainable economic development, and environmental conservation. It balances three objectives:
(1) Using forests for poverty alleviation and broadly shared growth. The Bank Group takes advantage of emerging economic and environmental opportunities to foster sustainable forest management. This includes integrating forests into the design of agriculture, rural development, energy, and natural resource management projects to ensure sustainable economic growth and rural poverty alleviation. The Bank Group works towards greater inclusion of forest sector issues in Poverty Reduction Strategy Papers (PRSPs) and Country Assistance Strategies (CASs), and better alignment of GEF and IFC resources with the IDA/IBRD lending program, to address poverty and livelihood issues.
The World Bank Group promotes greater recognition of the rights of local and indigenous groups and greater attention to land tenure, ownership, and issues of rights of access to resources. It also provides guidance and tools for mainstreaming poverty issues into development approaches, such as the Forests Sourcebook and the Poverty-Forests Linkages Toolkit. This includes stakeholder participation in the formulation and implementation of policies (including financing the capacity to better participate) and programs to foster community ownership and long-term sustainability of forest resources.
(2) Integrating forests into sustainable economic development. The Bank Group fosters responsible corporate investments through its private sector arm, the International Finance Corporation (IFC). It also increases investments in environmentally and socially sustainable plantations (especially in tropical countries), expanding forest certification and overall forest management, including forest management in national energy strategies in
those countries where the majority of energy is still sourced through the use of wood-based fuels, and stimulating political processes to strengthen commitment to governance reforms at national and regional levels. All this will have an impact on improving forest governance and reducing illegal logging. Bank Group work in this area also includes strong application of safeguard policies and requirements.
(3) Protecting vital local and global environmental services and values. Through various partner mechanisms, the Bank Group helps client countries balance productive uses in all types of forests with protection of ecosystem services, e.g. climate change mitigation. Through its support to various trust funds, such as the BioCarbon Fund, the Bank Group is exploring opportunities in afforestation/reforestation, reducing emissions from deforestation and degradation, and soil carbon. The World Bank Group is also supporting a large portfolio of analytical work focused on forests, especially with regard to climate change mitigation and adaptation, poverty alleviation, and providing sustainable energy.
Forests and Climate Change
In the context of intensified international discussions on mitigating against climate change, and as acknowledged in the World Bank Group’s
Strategic Framework on Development and Climate Change adopted in 2008, forests offer a unique resource. To effectively use forests for this purpose, however, it is important to consider forests’ roles in reducing poverty and generating economic growth, in addition to protecting environmental services. An important recent study on bioenergy development also highlighted the sizeable mitigation opportunities that better forest and biomass management for energy generation can provide. Ensuring that forest resources are well governed is an important element in maximizing forests’ ability to contribute to development and climate change solutions simultaneously.
In this area, the World Bank is testing opportunities to mitigate climate change and protect standing forests through the BioCarbon Fund and the Forest Carbon Partnership Facility (FCPF). The BioCarbon Fund has used carbon finance to pilot various forestry and forest-related projects. The FCPF has provided grants for technical assistance to help developing countries prepare national plans to reduce emissions from deforestation and degradation (REDD)
Within the framework of the Climate Investment Funds and in collaboration with other multilateral development banks, the Bank Group has worked actively with donors and potential recipients to design a Forest Investment Program (FIP) to support investments needed to make avoided deforestation work and to support efforts in afforestation, reforestation and restoration of degraded forests (interventions that falls within “REDD plus”). As of March 2010, donors pledged $558 million to the FIP.
These two important climate change programs hosted by the World Bank, FCPF and FIP, have intensified cooperation with a third important initiative developed by the United Nations, UN-REDD. The methodology for designing national REDD plans (“Readiness Preparation Proposals”) developed by the FCPF is now recognized by UN-REDD. While international negotiations over the future REDD-plus mechanism continue in 2010, The World Bank is working with the UN-REDD and bilateral REDD+ initiatives to facilitate coordination of early initiatives.
World Bank Group Instruments that Contribute to Sustainable Forest Management
lending Investment, learning and development policy lending to public institutions in IBRD and IDA countries. $495 million in FY09 with an average of about $147 million over FY06-FY08.
Investment loans to support sustainable businesses along the entire forest product supply chain, from plantations to production of furniture, tissue, paper, and other goods. Cumulative investments of $2.97 billion by end of FY09
Comprised of two distinct funds, the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF), the CIFs utilize the skills and capabilities of the multilateral development banks (MDBs) to deliver financing at significant scale to unleash the potential of the public and private sectors to address climate change, and complement other multilateral financial mechanisms, such as the Global Environment Facility and the Adaptation Fund. Provide grants, concessional loans, and risk mitigation instruments, such as guarantees.
Donor Commitments: $6.3 billion
The main purpose of the FIP is to support developing countries’ REDD plus-efforts, providing up-front bridge financing for readiness reforms and public and private investments identified through national REDD-plus readiness strategy building efforts, while taking into account opportunities to help them adapt to the impacts of climate change on forests. In addition, the FIP will contribute to generating multiple benefits such as biodiversity conservation, protection of the rights of indigenous peoples and local communities, poverty reduction and rural livelihoods enhancements. An important element of the FIP is to promote transformational change by strengthening multi-stakeholder ownership at national and local levels, and providing scaled-up forest financing to catalyze shifts from business-as-usual policies and development paths. The FIP is particularly designed to help finance large-scale investments and leverage additional financial resources, including from the private sector.
$558 million as of March 2010
A public-private sector trust managed by the Bank that purchases emission reductions from forest and agro-ecosystems projects that sequester carbon in developing countries and in countries in transition. Learning lessons from the implementation of projects will provide insights into what works in harnessing forests to mitigate climate change.
$ 90.4 million
An initiative designed to facilitate local and international partnerships and investment to support stakeholders in their efforts to improve forest livelihoods and ecosystem services. Works through grants and voluntary, collaborative initiatives.
3-year grant to develop the partnerships totaling $10 million
Technical assistance grants (Readiness Fund) to help developing countries in their efforts to prepare national plans to reduce emissions from deforestation and forest degradation, and to provide performance-based incentives by building capacity and piloting emission-reduction payments for REDD.
$ 115.4 million (Readiness Fund), and $ 53.1 already pledged for the Carbon Fund.
Grants for analytical and advisory activities towards enhancing forests' contribution to poverty reduction, sustainable development and protection of environmental services through improved knowledge, and development of innovative tools and approaches for sustainable forest management.
Approx. $21.19 million cumulative commitments from Dec 2002-through 2015
Forest Law Enforcement and Governance (FLEG)
A specific program under PROFOR which provides technical assistance grants and knowledge generation to improve forest governance, reduce the level of illegal logging and other forest crime. This will curb the associated degradation of forests, loss of government revenue from uncollected fees taxes, and support the development of a more level playing field for legitimate forest sector enterprises and other operators.
Cumulative budget of $4.87 million for FY2004-2010
This program helps 7 EU neighborhood countries to implement the Saint Petersburg declaration on forest law enforcement and governance adopted in 2005 by 48 states of the northern hemisphere.
Cumulative budget of $8.8 million for FY07-11.
Grant financing for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants to addresses global environmental issues while supporting national sustainable development initiatives
Grants totaling about $350 million since FY02 have been associated or blended with IDA/IBRD financed capacity building
For more information, please see: www.worldbank.org/forests
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