Proposed World Bank Policy Threatens Forests and Local Economies

(28 October 2002 — Washington, DC)  Citing inadequate protections for biologically and socially important forest areas, leading environmental and sustainable development organizations today called upon World Bank head James Wolfensohn to withdraw the Bank’s Forest Policy from Board consideration. 

“There is no evidence that large-scale commercial logging of tropical or old-growth forests can be done in an environmentally sustainable manner and deliver development benefits to local communities,” said Robert Goodland, formerly the Bank’s chief environmental adviser.  “Removing the World Bank’s current ban on financing these projects and exempting the Bank’s private-sector arms from these safeguards would potentially open the floodgates for logging operations that could devastate some of the world’s most biologically diverse forests.” 

Under the existing 1993 forest policy, the World Bank is prohibited from directly financing commercial logging activities in primary tropical moist forests.  However, pressure from inside the Bank has led to efforts to pass a revised version that would lift the logging ban and offer no new protections for forests or forest peoples.  Critics are calling on Wolfensohn to withdraw the new draft Policy, which fails to include recommendations from local stakeholders and NGOs interested in preserving forest ecosystems and promoting sustainable development.      

“The draft Forest Policy ignores the important effects of debt, trade, and fiscal and monetary policies on forests in countries where the World Bank operates.  This massive gap in the policy calls into question the World Bank’s stated commitment to sustainable development,” said Korinna Horta, a senior economist at Environmental Defense.

Despite evidence from the Bank’s own evaluations department and other research organizations showing that macroeconomic policies are a major cause of deforestation, the Bank is seeking to exempt its economic policy reform lending from the proposed draft Forest Policy.  This lending, known as structural adjustment, accounts for nearly 50% of the World Bank’s portfolio. 

“The Bank should focus its efforts on providing support for community forestry and small-scale pilot projects to demonstrate how logging can be conducted in an environmentally sustainable, socially responsible manner,” Horta said.  “Any meaningful policy must also include mechanisms to ensure local stakeholder participation and secure land rights for those who call these forests home.”