Forests

Forests have a central role to play as the world confronts the challenges of climate change, food shortages, and  improved livelihoods for a growing population. Forests absorb about 15% of the planet’s greenhouse gas emissions and provide essential services to the agricultural sector – from water and soil regulation, to fertilization and pollinator habitats. 

At the same time, many of the world’s remaining forests are under increasing threat because of human activities and climate change. Although the pace of deforestation has slowed in some regions, the world still loses about 14.5 million hectares of forests each year. In parts of the Amazon rainforest, rising temperatures and changing rainfall patterns are connected with the increased risk of catastrophic dieback with dangerous local, regional and global consequences. In the Congo Basin, a recent analysis of deforestation trends published by the World Bank, highlights the intense pressure that agricultural expansion, mineral exploitation, growing energy needs, and an improved transportation network will pose to the integrity of this vast rainforest area.

If the world is to confront the challenges of mitigating and adapting to climate change while meeting the demands of a rapidly-growing global population, it is vital that we find the balance between conserving and regenerating forest areas with economic growth for poverty reduction.

This is what the World Bank’s work on forests aims to achieve.

A little over 10 years ago, the World Bank shifted course on its forest strategy to better reflect the reality that a forest is not simply a physical asset that can be cleared, logged or protected. In fact, a forest influences – and is impacted by – linkages to an array of other activities and sectors, particularly agriculture and water, but also energy, mining and transportation at the local, national and even global level. In its 2002 Forest Strategy, the World Bank spelled out this understanding and pledged to support countries in their efforts to harness the potential of forests to reduce poverty, better integrate forestry into their economies, and protect and strengthen the environmental role forests play, locally and globally.

These three objectives underpin the World Bank’s work with governments, communities, and private enterprise across all the relevant sectors connected with forestry.

More resilient, integrated landscapes for poverty reduction

Many of the developing world’s poorest rural populations heavily depend on forests for their income and consumption. Sixty million people (especially indigenous communities) are wholly dependent on forests for their survival. By strengthening rights of use and access to forest areas, the World Bank works to protect the most vulnerable populations.

Healthy forests and trees are central to the World Bank’s vision for a more resilient, climate-smart and prosperous future. The World Bank emphasizes the benefits from integrating different farming approaches – including crop production, livestock, and tree farming – at the landscape level, to diversify livelihoods, increase resilience to economic and climate shocks, and capitalize on natural synergies, for example in the water, carbon and nutrient cycles.

Managing natural capital for economic growth

In forest-rich countries, forestry can be a source of economic growth and employment. If harvested responsibly, forests are also a renewable source of building material, fiber and fuel – tremendous assets as the world looks to reduce the carbon footprint of human activities. At the same time, forests are one of the most mismanaged resources in many countries, partly because they are undervalued and partly because poor governance has fuelled illegal activities.

Helping governments to improve economic policy and the management and governance of the forest sector is therefore an important priority. The World Bank’s starting point is to ask how can practices that have often led to significant forest degradation, tax evasion, and corruption, be reformed, so that forests contribute more revenue to the state, produce more and better jobs, and result in more sustainable development?

Valuing and preserving environmental services

Forests provide many essential environmental services, from absorbing and stocking carbon that would otherwise contribute to climate change, to regulating water cycles, hosting 80 percent of the world’s terrestrial biodiversity (including pollinators crucial to food security), maintaining soil quality, and reducing the risks of natural disasters such as floods at a time when many of these systems are coming under tremendous pressure. While these services have been difficult to quantify and value in the past, new research into natural capital accounting, innovative market approaches, and political awareness have contributed to a growing appreciation for the preservation of natural resources.

The challenge for policy makers is to bring these values into markets, into decisions that affect more than one sector, and into macroeconomic and development policy in general. Over the last decade, the World Bank has worked with partners to increase financing for forest conservation and protection, and has been engaged in the development of effective markets for the environmental services that forests provide, including biodiversity protection, carbon sequestration, and watershed management.

The World Bank Group is the largest source of multilateral financing for forests.  IBRD and IDA assistance to the forest sector totaled about US$120 million in fiscal year 2013 (FY12). The International Finance Corporation (IFC), the Bank’s private sector arm, invested US$143 million in the forest products sector in the same period. Another US$30 million were provided through carbon offsets and other recipient executed activities. Jointly with other multilateral development banks, the World Bank also serves as an implementing agency for the Global Environment Facility (US$7.2 million for forests in FY12) and the Forest Investment Program (about US$640 million pledged).

In China, the World Bank was the biggest financier of an ambitious plan to increase forest cover after devastating floods along the Yangtze River. Between 1985 and 2007, the World Bank supported China's forestry sector through 8 projects covering 21 provinces, resulting in over 3.8 million ha of newly established forests (around 12 percent of the country's newly planted forests). Besides mitigating greenhouse gas emissions and reducing soil erosion, the increase in forest cover has had significant impacts on people’s livelihoods. One project specifically targeted poor areas in 12 provinces, training farmers to plant and care for a range of profitable trees. Economic trees like chestnut, gingko and bamboo helped boost average annual income by 150% between 1998 and 2004.

In Albania, the World Bank worked with the government on a forest project that showcased the benefits of this landscape approach. By integrating forest, pasture, and agriculture management, the Bank-backed initiative led to reduced carbon emissions, the protection of important watersheds, and an increase of 28 percent in incomes in some areas from forests and agriculture. The project was successful in bringing more than 775,000 ha of land under the management of local communities.

In Ethiopia’s Great Rift Valley, the World Bank partnered with World Vision to pilot an approach that was both integrated and inclusive and led to large-scale landscape restoration with significant livelihood and resilience outcomes. Forest cooperatives were created to oversee the reforestation of the Humbo mountain area by encouraging natural regeneration and limiting wood, charcoal and fodder extraction. Improved land management has stimulated grass growth, providing fodder for livestock that can be cut and sold as an additional source of income. The restored project area provides protection against dangerous landslides and improved water availability for more than 65,000 people. The project is expected to sequester over 880,000 metric tonnes of carbon dioxide-equivalent over 30 years, with the World Bank purchasing 165,000 metric tonnes worth of carbon credits through its BioCarbon Fund.

These projects point to the tremendous potential to boost people’s physical and financial security by restoring degraded forest land. Worldwide, an estimated 2 billion hectares of lost or degraded forest landscapes could be restored and rehabilitated. If those “landscapes of opportunity” were to be restored to functional and productive ecosystems, they could help deliver a triple win by improving rural livelihoods and food security, increasing climate resilience, and helping mitigate greenhouse gases - while taking pressure off pristine forests.

Dialogue and engagement with developing 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 West 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. At the same time, steps were taken to bring communities into decision-making processes in forest management, to clarify the rights of traditional forest users, and to develop new models for payments for environmental services. And in Gabon, around 4.7 million ha in forest concessions were cancelled, creating the opportunity to develop new approaches to sustainable forest management.

In Mexico, where some 80 percent of forests are owned by indigenous and other communities, the World Bank helped fund a project to strengthen community forestry by improving forest management plans. The support, which was rolled out in phases since 1997, helped increase the contribution of forests to local development. For example, a project evaluation found that between 2003 and 2008, jobs had increased by 27% in targeted communities and ejidos, while the net value of forest goods and services they produced increased by 36%. In 2011 the coverage of this support was extended to all 32 states in Mexico.

In Liberia, a forest-rich West African country where timber was once used to purchase weapons and fuel a devastating civil war, forest policy reform has slowly allowed the country to resume selective logging activities within an improved legal framework in which sustainable forest management principles, community rights and conservation needs are formally recognized. In 2010-2011, 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 the forest of origin 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. Although many implementation challenges remain, these reforms have benefited the country by creating greater transparency around logging revenue and a platform for stakeholders to demand more effective change.