Cambodia: Improving Management of Forests is Critical to Better Livelihoods, Economic Growth in Cambodia

June 29, 2006

WASHINGTON, June 29, 2006 — World Bank President Paul Wolfowitz said, “Improving the management of forests, land, and other natural resources is essential for the well-being of the Cambodian people and its economy, and the Bank should try to stay engaged to promote further dialogue and information disclosure to help build consensus for the future.”

The President welcomed a Report of the Inspection Panel involving a Bank-funded project in Cambodia, and Management’s Response to this Report, as important contributions to promoting sustainable development, and noted that it is important to learn the lessons from this experience and work hard to apply them in the future. It is particularly important, he said, that information on all aspects of forestry management be disseminated widely at both local and national levels so that parliamentarians, civil society groups, the media and the affected populations can exert a greater and much-needed scrutiny of these activities.

Mr. Wolfowitz was speaking today at a meeting of the World Bank’s Board of Executive Directors and the institution’s independent Inspection Panel. The Board gathered to discuss the thorough Report of the Inspection Panel and its findings regarding problems that arose in the planning and implementation of the World Bank-supported Cambodia Forest Concession Management and Control Pilot Project. The meeting also heard how the Bank’s Management plans to use the lessons learned from the Panel Report and the project in its future work in forestry and natural resources management in Cambodia.

When the Bank project was approved in 2000, over-exploitation of timber resources and illegal logging were threatening to exhaust Cambodia’s forest resources in as little as five years. The Forest Concession Management and Control Pilot Project, a US$5 million Learning and Innovation Loan, focused on addressing the critical but difficult issue of concession management and control, and forest crime monitoring and prevention. The project complemented efforts by the Bank and other donors, including a Bank-financed Structural Adjustment Credit, and a Biodiversity and Protected Areas Project which was jointly financed by the World Bank and the Global Environment Facility.

The Chairperson of the Inspection Panel, Edith Brown Weiss, said, “Forests in Cambodia are extensive, and they have high economic, ecological and cultural value for large numbers of rural communities, including Indigenous Peoples. The Panel found that the Bank did not comply with key provisions of its policies designed to protect people and the environment, including on Environmental Assessment, Indigenous Peoples, Forests and others. The Panel is pleased that Management is taking on board the findings of the Report. The Panel recognizes the importance of taking risks in the forest sector in countries such as Cambodia, and is glad that the Bank will incorporate the insights from the Panel’s Report into its future forest work in Cambodia and elsewhere.”

The Inspection Panel issued its Report in response to a Request for Investigation submitted by the NGO Forum on Cambodia, acting on its own behalf and on behalf of affected forest-dependent communities, which included some indigenous communities. These communities depend on the forests for their livelihoods, tapping resin and collecting forest products to sell. The Request said that the Bank promoted the interests of forest concessionaires and contributed to a set of outcomes that the communities said could harm them in the future.
In its Report, the Panel noted the challenging context for work in the forestry sector in Cambodia, and commended the Bank’s willingness to become involved in this work. It recognized the dedication of staff and the difficulties they encountered.
The Panel found that by focusing so strongly on reforming forestry concessions and taking a view that this could be done effectively on a technical basis, the Bank missed opportunities to engage more broadly. The Panel also questioned the choice of a Learning and Innovation Loan, which was not well suited for this type of operation. The Panel noted, at the same time, that no project could have produced perfect outcomes in the extremely difficult operating environment in Cambodia.
The Panel noted the alternative approaches suggested by the Bank in a November 2005 letter to the Government as being consistent with their findings. These include support to community forestry, enhanced information disclosure, and improved law enforcement and monitoring.
In response to the Inspection Panel report, the World Bank’s Management recognized that the project was not in full compliance with a number of safeguard policies, that project preparation could have more effectively documented and drawn on available environmental and social information, and that the project would have benefited from broader consultation with local communities and other stakeholders, including Indigenous Peoples. Management agreed with the Panel on the deficiencies of the management plans prepared by the forest concessionaries, and acknowledged that the project overestimated the willingness and the capacity of the concessionaires and the Government to carry out their responsibilities in an effective manner. But it acknowledged the Panel’s finding that the project did not finance logging or directly cause the damages from unsustainable logging in the country. According to Management, since the late 1990s, illegal logging has dropped dramatically and the total area under forest concessions decreased during the life of the project.
Given that the project has closed, the Board discussion centered on the way forward for the Bank in the forestry sector in Cambodia as outlined in a proposed Action Plan, which forms part of the Bank’s Management response to the Inspection Panel’s report. In developing its Action Plan, Management pointed to a number of key lessons, including the importance of a shared vision with government and other partners; improved governance to ensure transparency, accountability and equitable access to forest resources; continuous assessment of Government commitment; and finally, early and sustained involvement of local communities in project design and implementation.
As part of the Action Plan, the Bank’s Management agreed to provide additional support to staff in addressing environmental and social issues in technical assistance projects related to natural resources management; to promote the use of Strategic Environmental Assessments and other methods to provide information on environmental and social trends and conditions in natural resources management projects; and to promote the use of innovative practices in future projects of this type.
The Action Plan for Cambodia highlights the need for continued dialogue with the Government and other stakeholders in the context of a general governance framework consistent with the Country Assistance Strategy aimed at:

  • increasing transparency, improving access to information and greater public participation in decision making;
  • directing the bulk of Bank support to sub-national levels to expand community and commune level planning and management of natural resources; and
  • developing partnerships to support programmatic approaches and integrating forest management decisions into broader natural resources planning and implementation efforts. 

The Bank’s Board endorsed the Action Plan and agreed that continued engagement in the forestry sector is important for long-term sustainable development in Cambodia. Management will report back to the Board in six months on progress on implementation of the Action Plan.
“Natural resources management is at the heart of governance in Cambodia,” said Ian Porter, Country Director for Cambodia. “Many poor communities depend on access to forest products for their livelihoods. This is too critical an issue for the World Bank to simply walk away. At the same time, we recognize that we have to work harder to build consensus with donors, civil society and Government on a range of reforms to ensure community access to forests, land, and other natural resources, more transparent allocation of these assets, and a larger share for local communities of the commercial benefits of natural resources.”

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