Forests and trees contribute to economic growth, employment, food security, and energy generation, and are key to help countries respond to climate change.

Forests support rural economies in many countries, providing jobs for populations with few alternative off-farm employment options, producing more than 5,000 types of wood-based products, and generating annually a gross value added of just over US$ 600 billion, about 1% of global GDP (in some countries that contribution is much higher, reaching for example 6% of GDP in Cameroon). Forest goods also represent an important “hidden harvest” for rural populations, keeping many out of extreme poverty. About 350 million people who live within or close to dense forests depend on them for their subsistence and income. Of those, about 60 million people (especially indigenous communities) are wholly dependent on forests. They are key custodians of the world’s remaining intact natural forests.

Forests are an important source of energy for many countries; 65% of the total primary energy supply in Africa comes from solid biomass such as firewood and charcoal. Wood-based fuel will continue to represent a principle source of energy in low-income countries and is increasingly viewed as a "green" alternative to fossil fuels in developed countries.

Forests generate essential services to sustain key sectors (agricultural, energy, water, mining, transport and urban sectors), by helping to maintain the fertility of the soil, protect watersheds, provide habitat for a variety of species, and reduce the risk of natural disasters, including floods and landslides.

One of forests’ most crucial services is their capacity to slow climate change by absorbing CO2 released from the burning of fossil fuels through photosynthesis. At the same time, deforestation, forest degradation and land use change contribute about 12% of the world’s greenhouse gases, eroding a critical carbon sink. Many of the world’s remaining forests are under increasing threat due to agriculture expansion, timber extraction, fuelwood collection and other activities. Although the pace of global deforestation has slowed since the 1990s, it remains high with about 13 million hectares (gross) lost each year. This is partially offset by reforestation, making the total annual net forest cover loss 5.6 million hectares—an area larger than Costa Rica.

Some 2 billion hectares of lost or degraded forests and landscapes could be restored and rehabilitated to functional and productive ecosystems. This would help generate economic opportunities in rural areas, deliver improved rural livelihoods and food security, greater climate resilience and mitigate greenhouse gas emissions while taking pressure off pristine forests.

Last Updated: Apr 07,2016

To meet the wood product, energy and food demands of a rapidly-growing global population, and meet climate adaptation and mitigation goals, forests must be managed sustainably to provide multiple benefits for economic development and ecosystem services. As such, the World Bank’s Forests Strategy supports countries in their efforts to harness the potential of forests to reduce poverty, better integrate forests into their economies, and protect and strengthen the environmental role forests play—locally and globally.

Between Fiscal Year 2002 and 2015, the World Bank Group (WBG) committed a total of $15.7 billion to projects that include forestry components, of which about $3.2 billion were specifically dedicated to forests from IDA/IBRD and Trust Funds, and $3.3 billion were invested by the International Finance Corporation (IFC), the Bank’s private lending arm, in forest product companies.

The WBG’s Forest Action Plan for Fiscal Years 2016-2020 focuses on two priority areas: investments in the sustainable forest management; and “forest-smart” interventions in which the WBG will aim to take a holistic look at forest landscapes, so that its work in sectors like agriculture, transport and energy does not erode forest capital and generates instead positive forest outcomes.

The Plan is underpinned by three cross-cutting themes that are key for progress on forests: climate change and resilience, rights and participation, and institutions and governance. Good forest governance and strong institutions are core conditions for sustainably managed forests. Clear ownership, access, and management rights over forests are also vital to build forest-dependent communities’ assets, create jobs and manage forest resources more sustainably.

Increasingly, the World Bank Group strives to combine public and private financing, as well as resources from innovative forest-related funds  such as the Forest Carbon Partnership Facility, the Forest Investment Program ,  the BioCarbon Fund Initiative for Sustainable Forest Landscapes, and the Global Environment Facility, in a coherent programmatic approach. In Mexico for example, the Forest and Climate Change project taps about $500 million from multiple sources of forest finance to advance sustainable forest management and climate action by reducing deforestation and forest degradation in pilot areas.

Private sector commitment and action around deforestation free commodity supply chains will be critical to conserve forest resources and reduce risks for businesses who rely on commodity supplies. In Ghana, for example, the Bank is working with the IFC in the cocoa sector to promote private sector practices that reduce deforestation and degradation in the high forest zone. Other public-private compacts on reducing deforestation from supply chains are underway in Zambia around cotton production, in Ethiopia around coffee production, and in Liberia around rubber production.

Last Updated: Apr 07,2016

In Mexico, where some 80% of forests are owned by indigenous and other communities, the World Bank has been supporting the Government with a series of projects that have increased sustainable forest management, forest-related jobs and the net value of forest goods and services. Since 2012 this support has been extended to all 32 states in Mexico, bringing an additional 2 million hectares of forests under sustainable management.

By late 2012, similar support in Lao PDR resulted in over 400,000 people benefiting from improved management of 1.3 million hectares of forests.

In Vietnam, more than 43,000 households have received access to micro finance and technical support to establish over 76,500 hectares of forest under a World Bank-supported project from 2005-2015.

In Belarus, activities against illegal logging and the associated forest-product sales and corruption, yielded an in increase in forested areas from 35 percent of the country’s territory in 1994 to over 39 percent in 2013. The World Bank provided support for the formulation of policies and strategic planning underpinning the development of the country’s afforestation capacity.

In Brazil, World Bank budget support for sustainable environmental management contributed to a 40% decrease in annual average deforestation rate during 2008–2010 compared to the rate in 2005–2007. In addition, World Bank co-financing of the Amazon Region Protected Areas Project resulted in the protection of about 60 million hectares.

In the Congo Basin, which is home to the world’s second largest moist tropical forest, dialogue and engagement with client countries has led to progress in the way forest rights are allocated. For example, in Cameroon, legal and regulatory reforms that were part of a wider concession reform effort resulted in the first legal recognition of community forests in any part of Central Africa. In the Democratic Republic of Congo, a legal review of concessions led to a significant reduction in the area under concession management, to 9.7 million ha in 2008, from 43.5 million ha in 2002. The conclusion of 75 social responsibility contracts between forest concession holders and local communities has laid the ground work for increasing the flow of benefits from industrial logging activities to local communities. And in Gabon, around 4.7 million ha in non-compliant forest concessions were cancelled, creating the opportunity to develop new approaches to sustainable forest management.

In Liberia, the World Bank, through the Program on Forests, stepped in to co-finance the roll out of a "chain of custody" system that tracks timber from extracted from the largest remaining blocks of Upper Guinea forests to the point of export through barcodes and data forms. That system assisted in securing more than $27 million in net tax revenue for the state in 2008–2012.

Last Updated: Apr 07,2016

Over the last decade, the World Bank, the European Union and other partners have made significant strides in opening the space for dialogue and reform by backing Forest Law Enforcement and Governance (FLEG) processes in different parts of the world. The Program on Forests (PROFOR), hosted by the World Bank, has also made forest governance one of its priority issues, providing technical assistance to improve the monitoring of forest activities and helping create consensus and political will around priority reforms.

Through its private sector arm, the International Finance Corporation, the Bank Group also encourages responsible corporate investments across the forest products supply chain and works to create a more level playing field for legitimate forest-sector enterprises that adopt sustainable forest management practices.

The Bank has also explored a wide range of opportunities to help countries reduce greenhouse gas emissions from deforestation and forest degradation, and to conserve, sustainably manage and enhance forest carbon stocks. This approach, known as REDD+, will likely rest on a complex mix of multilateral and bilateral assistance, civil society efforts, private sector initiatives and carbon markets.

The Bank serves as the Trustee and the Secretariat of the Forest Carbon Partnership Facility (FCPF), a global partnership that is helping countries draft REDD+ readiness plans and will provide carbon payments to countries that meet certain targets. The Bank is also the implementing organization, together with other multilateral development banks, of the Forest Investment Program (FIP) which supports the efforts of developing country to reduce deforestation and forest degradation and promote sustainable forest management that leads to REDD+. The Bank also finances pilot investments for reforestation and soil carbon through the BioCarbon Fund, a public-private initiative that mobilizes resources for pioneering projects that deliver emission reductions, while promoting biodiversity conservation and poverty alleviation.

Last Updated: Apr 07,2016

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