Source: Bloomberg, Copyright 2000
Date: August 17, 2000
Washington, Aug. 15 (Bloomberg) -- An internal World Bank study found that its economic advice often increases logging in virgin forests, so the bank may soon attach pro-forest conditions to its policy loans for
the first time.
The study, to be released later this month, says that the World Bank's advice to governments to cut spending, end subsidies and reduce tariffs often pushes low-income residents and forestry companies to increase
logging in ecologically ``critical'' woodlands, said Uma Lele, who wrote the bank report.
That problem has been overlooked by a decade of bank policy, which forbade bank participation in most logging, Lele said. ``Forests don't receive any treatment in our economic debates,'' she told Bloomberg News.
Bank staff will soon recommend including conditions to preserve forests in all economic policy loans, said James Douglas, a bank staff member who is writing a new forest policy. If approved by the bank's board, the new prescription could go into effect by the end of the year,
he said.
Adding the first environmental condition to its loans would answer a long-standing demand of activists, just as the bank faces increased criticism on its environmental record. That criticism recently intensified after the bank approved a $60 million forest management loan to Russia just days after the country eliminated its forest protection
agency.
``The forest issue is a Rorschach test of the role of the bank,'' said Frances Seymour, of the World Resources Institute, an environmental think tank. ``It encompasses all sorts of environmental, social, and economic issues.''
Forest Policy
For many countries, particularly those with large forests such as Indonesia or Cameroon, the new environmental policies could add a hoop they must jump through to get so-called structural adjustment loans, which are meant to be approved quickly in cases of economic emergency.
The policy of the World Bank, also becomes the standard for other donors, said Bruce Cabarle, director of World Wildlife Fund's Global Forest Program.
This is the second go-around for the World Bank's forest policy. After enduring years of criticism for its role in paving Brazilian roads in the Amazon and resettling Indonesians on previously unpopulated islands -- the bank in 1991 adopted a policy of rejecting projects that would
directly lead to logging virgin tropical forests. Broadly, that strategy shifted ``priorities away from projects that had in the past contributed to deforestation,'' according to a draft of internal report released earlier this year.
Still, nine years later, the policy has had three main drawbacks, the report found. First, the prohibition on some forestry projects had a ``chilling effect,'' on bank staff, scaring them off involvement in any forest-related projects that the bank could help.
Second, the policy focused on just 20 forests worldwide, ignoring all others. Last, the loan focused on not participating in logging, while not addressing the role economic policies play in encouraging logging.
`Chilling Effect'
Environmental advocates outside the bank say they worry most that the bank will use the ``chilling effect'' argument to reverse its prohibition against involvement in logging.
While the prohibition won't be eliminated, it must be eased, Douglas said.
Environmentalists ``think they can just protect all these forests without any logging at all,'' Douglas said. ``That's just a bizarre argument. There's not enough money in the world to do that.'' The most fundamental change would be expanding the scope to examine forest policy. It makes more sense for bank staff members to plug forest
conservation pledges into a country's overall economic policy, than it does to fund a small conservation project here or there, Douglas said.
The bank's experience in applying these measures in countries such as Indonesia has been mixed, according to a study by Seymour of World Resources Institute.
``The bank is really good at pushing the stroke-of-the-pen kind of reforms,'' Seymour said. ``It's much less adept at pushing the day-to-day implementation of those changes.'' It's those deeper changes that are necessary, the bank's own report will show.
``Poor governance, corruption, and political alliances between parts of the private sector and ruling elites, combined with minimal enforcement capacity at local and regional levels, all played a part in deforestation,'' the report concluded.
