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Speeches & Transcripts

New Pathways for Forests

April 18, 2016

World Bank Group Managing Director Sri Mulyani Indrawati World Bank-IMF 2016 Spring Meetings Washington, DC, United States

As Prepared for Delivery

Thank you, Andrew. [I would also like to thank Paula Caballero and John Roome, as well as their teams, for organizing this event.] 

I’m very pleased to see so many people here today. We are all here because we care deeply about the world’s forests, what is happening to them and how we can ensure their sustainable future. 

There are many reasons why forests matter both for people and for the planet. 

Around one fifth of the global population—some 1.3 billion people—relies on forests for jobs, forest products, and other contributions to their incomes.

About 350 million people who live within or close to dense forests depend on them for their subsistence and incomes. And of those, nearly 60 million people —especially indigenous communities—are completely dependent on forests.  

Forests are an important source of energy. Some 65 percent of Africa’s primary energy supply still comes from solid biomass such as firewood and charcoal.  

Forests are also critically important to the stability of our planet’s vital systems. They help regulate our water supplies, sustain agricultural production and protect infrastructure. And they help the planet tackle the impacts of climate change by absorbing CO2 from the atmosphere and enhancing the resilience of natural systems to climate shocks. 

Globally, there is growing recognition of the critical role that forests play in supporting sustainable development and lifting people out of poverty. This is why forests were included in the Sustainable Development Goals. 

In Paris at COP21, more than 90 countries included forest and land-use actions in their national pledges to support global climate change targets. 

Major corporations—including industry giants like Cargill, Unilever, and MacDonald’s— have also announced ambitious commitments to move toward zero deforestation in the supply chain of key commodities to reduce their effect on forest landscapes. 

All of this progress is remarkable but our forests still face significant threats. Every year, the world loses about 5.6 million hectar of forest cover, an area roughly the size of Costa Rica.

In my own country, Indonesia, an estimated 2.6 million hectares of forest and peatland (or an area about 4.5 times the size of Bali) were burned last year to clear land for production of oil palm. Fires have long been a tool for agriculture and, more recently, for informal land acquisition in Indonesia. 

Clearing of peatlands can bring quick returns: $3,000 per hectare three years after planting oil palm. But at what cost to local people, the economy and the global environment?  

A World Bank analysis found that last year’s fires cost Indonesia $16.1 billion, equivalent to 1.9% of GDP. That is more than the value of palm oil production in Indonesia in 2014, and twice the cost of rebuilding Aceh province after the 2004 tsunami.

The cost of fires affects many sectors of the economy. But, ironically, it was the agriculture sector that suffered the most with around $4.8 billion in losses in agricultural production. The dense haze from the fires even affected trade because cargo shipping was interrupted due to limited visibility.

Environmentally, fires like those of 2015 are disastrous. On several days during last year’s burning season, greenhouse gas emissions from Indonesian forest fires exceeded average daily emissions from the total US economy. The haze also caused deaths and about 500,000 cases of acute respiratory illness. 

The challenge is complex and I am happy to see that the Indonesian Government has shown strong commitment to tackling this issue. The moratorium on any new peatland concessions has sent a very strong signal from President Joko Widodo. This needs to be followed by reforms that will tackle the underlying drivers of forest and land conversion. Such reforms will need a coordinated and an inter-agency approach to make the country’s target of restoring two million hectares of degraded peatlands by 2020 a reality. 

So, what are we, as the World Bank Group, doing to invest in the sustainable future of our forests? 

For a start, we are the largest multilateral financier of the forest agenda in the world and a strong promoter of sustainable forest management, and forest landscape restoration. Between 2002 and 2015, we supported over 300 forest or forest-related operations for a cumulative commitment of $15.7 billion. $12.4 billion of this came from IDA, IBRD, and trust funds, and $3.3 billion from investments by our private sector arm, the International Finance Corporation. 

In addition, we recently finalized our new Forest Action Plan, which seeks to make sustainable management of forests an integral part of the global development agenda. 

The Action Plan focuses on two  areas : 

First, it supports countries in their efforts to sustainably manage their forests and value chains; and

Second, it promotes forest-smart-interventions to ensure that work in other sectors (such as agriculture, energy or transport) does not come at the expense of the natural capital of forests. 

Forests are also a key pillar of our new Climate Change Action Plan which lays out specific targets for this agenda, including supporting REDD+ strategies in more than 50 countries and mobilizing financing for sustainable forest management in at least 10 countries by 2020.

We recognize that we are just one of many important players in support of the sustainable forests agenda. In partnership with others, we can significantly increase our impact.  I hope that today’s discussion will contribute to the momentum we are seeing for new and better pathways for forests. 

Thank you.