Letter to World Bank Re: Forests Policy - June 10, 2002

The World Bank has released its long awaited draft policy on forests. It severely weakens the existing Operational (OP) Policy on Forests of 1993. Environmental group pressure led to the current policy that bans Bank funding of logging in primary moist tropical forests. Over the past several years, the World Bank has sought to resume financing of "sustainable forest management" activities in the World's dwindling primary forests, particularly in the tropics.

Letter signed on by NGOs.

Mr. James D. Wolfensohn
The World Bank
1818 H Street, NW
Washington, D.C. 20433

Re: Draft Operational Policy on Forests

Dear Mr. Wolfensohn,

We are writing to you to express our dismay and rejection of the current draft OP on Forests which was placed on the World Bank's website on June 10, 2002.

The draft OP fails to represent a safeguard policy in any meaningful sense and therefore will be of little help to guide Bank staff in formulating lending operations to prevent potentially negative impacts on forests. The draft OP ignores the findings of the Bank's Operations Evaluation Department (OED) as well as inputs received from forest peoples' organizations, NGOs and technical advisors during the lengthy public consultation process which took place in all regions in the years 2000 and 2001.

The draft OP is a non-policy in the sense that it relies on other existing or future World Bank policies to address the most critical issues pertaining to the world's forests and the billion or so people worldwide whose livelihoods depend on healthy forest ecosystems.

Structural Adjustment

OED identified the powerful forces of globalization and economic liberalization as well as poor governance as the driving forces of deforestation. Yet the draft OP fails to address these critical issues. The consultation process led to broad consensus that a new World Bank Forest Policy should cover structural adjustment operations. However this unanimous recommendation has been swept aside by stating that a future revision of the Bank's OP 8.60 on structural adjustment lending will address the issue.

Protection of Forest Ecosystems

The draft OP does not pretend to protect forests. For this purpose, it states it relies on the Bank's Operational Policy on Natural Habitats (OP 4.04). Yet there has been no evaluation to date of the effectiveness of OP 4.04. The OED Forest Policy Implementation Review did not consider the OP on Natural Habitats, nor was the policy discussed in the context of the Forest Policy Implementation Review and Strategy consultation process.

The draft OP lifts the ban on direct investment in large-scale industrial logging which is a central feature of the 1993 Forest Policy. According to the draft OP, Bank investments in industrial forestry will halt destructive practices. There is, however, no evidence that large-scale logging can be conducted in an environmentally sustainable and socially beneficial manner. The reasonable alternative would be to begin with community-based and other smaller-scale forest management initiatives on a pilot basis before opening the floodgates to investments in this sensitive sector. Proceeding in this manner would not require a change of the 1993 Forest Policy.

Furthermore, the principal causes of deforestation lie outside the forest sector in poorly conceived economic policies and unaccountable governance practices. But these are ignored by the draft OP.

Forest-Dependent People

The draft OP refers to the Bank's Directive on Indigenous Peoples (OD 4.20), which is to be replaced by revised OP/ BP 4.10, and the Bank's Policy on Resettlement (OP 4.12) to provide central guidance on the inclusion of social issues in the forest sector. There are serious shortcomings with this approach. First, OP 4.10 does not secure the tenurial rights of indigenous peoples although land tenure problems have been identified as a leading cause of forest degradation and deforestation. Second, the vast majority of forest-dependent people are not identified as indigenous peoples. Yet the draft OP proposes no measures to ensure the protection of forests of high social value.

Applicability of OP to the World Bank Group

The draft OP only is meant to apply to IDA and IBRD operations. However, one of the central recommendations emerging out of the consultation process was that the Bank's new Forest Policy should ensure coherence across the entire spectrum of World Bank Group activities, i.e. be also applicable to IFC and MIGA operations.

Mr. Wolfensohn, given all these serious flaws in the Bank's proposed Forest Policy, we ask you to send the current draft OP back to the drawing board and request that your staff prepare a new draft safeguard policy on forests which better reflects the OED findings and the consultation process carried out by the World Bank itself.

We thank you for your attention,

For more information:

World Rainforest Movement

Halifax Initiative
153 Chapel Street, Suite 104
Ottawa, Ontario, K1N 1H5
telephone: 613-789-4447
fax: 613-241-5302
website: www.halifaxinitiative.org