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Introduction-Opportunities
and Challenges in the Forest Sector
 Covering 26 percent of the Earth’s land
surface, forests play a significant role in realizing the Millennium
Development Goal of halving the number of people living in absolute
poverty by 2015. Unfortunately, rural development strategies often
neglect forests because forests have been mistakenly viewed as being
outside the mainstream of agricultural development. In addition to the
lumber and wood products industry, the gathering and marketing of
hundreds of forest products, such as forest fruits, fuelwood, and
medicinal products, constitutes an economic activity of enormous scale.
As human populations grow and countries around the world become
more affluent, the demand for wood forest products, both solid wood and
pulp and paper, will increase too. In 2005, removals of roundwood were
valued at about US$64 billion, an increase of about 11 percent over
removals in 1990. The demand for nonwood forest products has also
increased slightly since 1990, with removals estimated at US$4.7 billion
in 2005.
Forests constitute global public goods, which, to be
maintained, must be both protected and managed sustainably. At present,
however, less than 5 percent of tropical forests are being managed
sustainably...
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Forests for Poverty
Reduction
 The majority of the world’s poor
are concentrated in rural areas and depend on natural resources for
their livelihoods. It is estimated that 60 million Indigenous Peoples
are totally dependent on forests, 350 million people are highly forest
dependent, and 1.2 billion are dependent on agroforestry. The scale and
significance of poverty issues on forest lands demand that poverty
alleviation efforts give special attention to forest areas and the
people living in them.
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Engaging the Private Sector
in Forest Sector Development
 Sustainable forest management
(SFM) requires substantial financial resources. Developing countries
need to explore and encourage all sources and mechanisms of funding for
the forest sector to achieve SFM. The private sector is expected to play
the lead role in global economic and production activities. Private
investment in the forestry sector in developing countries and countries
in transition is estimated at US$15 billion per year, or up to nine
times more than current official development assistance flows.
To date, private investment in SFM has been concentrated in
developed countries. Although this trend is changing, the need remains
to motivate similar investment in developing countries to maximize the
full potential of SFM, because investments required for harvesting and
processing can be large. The investments on this scale can only come
from global corporations or joint ventures involving local partners and
development banks willing to cover the risk. Furthermore, ensuring that
these large investments are made in a socially and environmentally
responsible manner is essential to preventing destructive use of forest
resources.
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Meeting the Growing Demand
for Forest Products: Plantation Forestry and Harvesting Operations
in Natural Forests
 As a result of significant increases in
demand for wood, the global wood market is undergoing rapid changes,
putting considerable and increasing pressure on the world’s remaining
natural forests. Without significant investment in promoting sustainable
forest management (SFM) efforts and in plantation management, it must be
expected that increasing demand for wood will lead to further
degradation and fragmentation of forests and permanent deforestation. To
successfully change this situation, international wood demand must be
met through sustainable wood production from natural forests and
plantation management. To facilitate such a process, markets must
increasingly adopt mechanisms that not only ensure sustainable forestry
and conservation, but also provide satisfactory livelihood opportunities
for forest-dependent communities, and promote sustainable economic
development for all nations, including countries with low forest cover.
Therefore, the sustainable production of wood to meet increasing demand
will continue to play a predominant role in the discussion of how to
achieve global targets for forest management...
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Optimizing Forest Functions
in Landscapes
 The landscape approach (defined as
a geographical construct that includes not only biophysical features of
an area but also its cultural and institutional attributes) has recently
begun to be incorporated in the conceptualization of geographical spaces
for forestry management. A landscape approach is a conceptual framework
that allows for a structured way of viewing the broader impacts and
implications of any major investment or intervention in the rural
sector. It describes interventions at spatial scales that attempt to
optimize the spatial relations and interactions among the range of land
cover types, institutions, and human activities in an area of interest.
Forests are part of a diverse livelihood portfolio for a large
number of rural poor. In addition, the productive use of forests can
significantly contribute to economic development, while the management
of biological and ecological services from forests can provide numerous
local as well as global environmental benefits. As noted in the
strategy, forests (and their users and beneficiaries) both impact and
are affected by policies and actions in other sectors, as well as by
biophysical changes in adjoining or biologically linked areas. In this
context, optimizing forest functions in a landscape can unlock the full
potential of forests.
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Improving Forest Governance
 Forest sector governance refers to
the ways in which officials and institutions (both formal and informal)
acquire and exercise authority in the management of the resources of the
sector to sustain and improve the welfare and quality of life for those
whose livelihoods depend on the sector. Good governance is fundamental
to achieving positive and sustained development outcomes in the sector,
including efficiency of resource management, increased contribution to
economic growth and to environmental services, and equitable
distribution of benefits.
The rationale for the Bank to engage
in improving forest governance in client countries is twofold. On one
hand, broader governance reform processes, such as decentralization and
devolution, and public sector reforms present direct opportunities to
which the forest sector needs to respond. On the other hand, illegal
logging, corruption, and other forest sector crimes, such as arson,
poaching, land encroachment, trade in endangered fauna and flora, and
evasion of legal taxes and royalties, indicate weaknesses in forest
sector governance that need to be addressed. In developing countries,
illegal logging in public lands alone causes estimated losses in assets
and revenue in excess of US$10 billion annually, more than six times the
total official development assistance dedicated to the sustainable
management of forests. The global magnitude of the problem as estimated
by its direct monetary impacts is staggering. The associated physical,
environmental, and social impacts resulting from poor governance are
even more extensive and serious.
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Mainstreaming Forests into
Development Policy and Planning
 One of the targets under the Millennium
Development Goal 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 and tourism.
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Monitoring and Information
Systems for Forest Management
 Information and monitoring systems
for the forest sector are instrumental for effective policies and
planning, prioritizing interventions, valuation of forest resources,
efficient investments, and engendering accountability. Relevant forest
information that is systematically and periodically collected can enable
effective implementation of policies, inform decision making, and guide
management. Current and accurate information on forests can also help
raise the profile of the sector and increase awareness of forest
resources’ potential.
Emerging financing opportunities for
sustainable forest management under the climate change agenda will
require effective systems for monitoring forest cover and carbon
emissions, and additional information on the resource base and drivers
of change. More specifically, efforts to enhance the contribution of
forests to reducing carbon emissions (through reduced emissions from
avoided deforestation and degradation [REDD] initiatives) will require
participating countries to establish a credible reference scenario on
REDD based on methodological guidance from the UN Framework Commission
on Climate Change.
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Guidance on Implementing
Forests Policy Op 4:36
The World Bank has 10 key policies that
are critical to ensuring that potentially adverse environmental and
social consequences are identified, minimized, and mitigated, as well as
a policy on disclosure. In the context of forests, the Operational
Policy on Forests (OP 4.36) is proactive in both identifying and
protecting critical forest conservation areas and in supporting improved
forest management in production forests outside these areas.
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Applying Forest Policy OP
4.36
 The objective of OP 4.36 is to assist
clients to harness the potential of forests to reduce poverty in a
sustainable manner, effectively integrate forests into sustainable
economic development, and protect the vital local and global
environmental services and values of forests.
OP 4.36 applies to
all Bank investment operations that potentially impact forests,
regardless of whether they are specific forestry sector investments. It
also encourages the incorporation of forest issues in Country Assistance
Strategies (CASs), and addresses cross-sectoral impacts on forests. The
policy provides for conservation of critical natural habitats and
prohibits Bank financing of any commercial harvesting or plantation
development in critical natural habitats. It also allows for proactive
investment support to improve forest management outside critical forest
areas, with explicit safeguards to ensure that such Bank-financed
operations comply with independent certification standards acceptable to
the Bank, or operations with an agreed upon, time-bound action plan to
establish compliance with these standards.
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Consultation and
Communications in Forest Sector Activities
 Consultation and communication in forest
sector projects are important to build coalitions, manage risk, create
transparency, and formalize mechanisms for participation and responses
to stakeholder concerns. Consultation enables the involvement of
indigenous groups and other marginalized and vulnerable groups
(including women and youth). A well-designed communications strategy
facilitates transparency while contributing to the long-term
sustainability of a project. The two strategies are intertwined.
Consultation requires communication and communication enhances and is
reinforced by consultation.
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Forest Certification
Assessment Guide: Summary on Use
 Paralleling the growing demand for
wood products is the growing demand for the verification of the
sustainability of the forest management from which those products are
derived. With the introduction of the Bank’s Forests Policy in 2002
(Operational Policy 4.36), the Bank made its support for commercial
harvesting contingent on certification of operations under an acceptable
system, with the exception of small-scale landholders and operations
under community forest management and joint forest management. .
Alternatively, support can be provided under the condition of adherence
to a time-bound action plan to pursue certification under an acceptable
system within a certain time frame. Consequently, assessment of
certification systems against Bank requirements is a necessary step in
the project appraisal process for this kind of investment. Assessment of
certification systems for compliance with these Bank provisions requires
an in-depth analysis of the standards and applied procedures. In this
chapter, the available instruments for the assessment of certification
systems and the lessons learned so far are described, and the
application of time-bound action plans for certification are given
consideration.
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