Economic Development

Integrating Forests into Sustainable Economic Development

 

Forests are one of the most mismanaged resources in many countries. This is because forests are seriously undervalued, many of their environmental benefits do not enter markets and poor governance has fueled illegal activities. The rapid rates of deforestation in the last decades are largely a result of the spillover of poor policies in other sectors and lack of governance in the forest sector itself.

 

A main task is therefore to help governments improve policy, economic management and governance in the forest sector, including forest concessions policy and allocations. Efforts to bring about credible systems for socially, ecologically and economically sound management of production forests should however also be coupled with systems for independent certification and monitoring. Identification and promotion of markets for local, regional and global markets for forest products is a matching priority.

 

Engaging the Private Sector through Collaboration with the International Finance Corporation

 

Private sector investment in the forest sector in developing countries is seven times greater than the combined total overseas development assistance (about $US1.5 billion) for the forest sector. This fact makes engaging the private sector essential to the promotion of socially and environmentally sustainable forest sector development in Bank client countries.

 

Since publication of the Banks Revised Forestry Strategy and Policy in 2002 there has been a rapid escalation of IFC investment in forest based industries. Recognizing that private sector investment in forests will have a major impact on how global forests are managed, a Bank/IFC hosted Forest Investment Forum held in October of 2003 recommended that both the Bank and IFC should proactively seek opportunities to create an enabling environment for attracting investment by private sector forest companies that are committed to socially, environmentally and economically sustainable management of forest resources.

 

IFC is giving special emphasis to both large and smaller scale industries and to projects that will contribute towards achievement of the three pillars of the Bank’s Forests Strategy. A particular concern of Bank Management has been to ensure that  Bank Group supported investments in private sector forest industrial companies  meet the requirements of Bank Operational Policy  4.36 which sets out guidelines for mandatory independent certification of private company forest harvesting  and  management operations .

 

As a step towards ensuring achievement of that objective, the Bank and IFC agreed to launch a series of collaborative activities aimed at assisting both Bank client country governments and IFC financed companies to enable responsible private sector investment and to adopt independent certification standards acceptable to the Bank Group. These collaborative activities have been strongly supported by PROFOR and by the World Bank/WWF Alliance.