REDD and the World Bank

Climate & Policy Vrije Universiteit Amsterdam

24.1.2010 Elina Mattero (2123738) Teemu Meronen (2113015)

..... Strengths and Weaknesses of the World Bank in implementing REDD 9 6...............................................13 1.....2 1. World Bank’s current interest in REDD.......................... Research Questions and Methodology.................................8 5........ Track Record of World Bank in Forest Related Challenges............. Conclusions and Recommendations.....................................................3 4....................................................................................Table of contents REDD and the World Bank..................................................... Introduction Deforestation and forest degradation accounts for about 20% of worldwide global anthropogenic carbon emissions (Mollicone et al..................................2 2............. Thus in 2 .12 References.. Introduction...............1 Table of contents.......................................... 2007)...............................3 3..........................................................

2009). sustainable management of forest and enhancement of forest carbon stocks (Lang/REDD-Monitor. but this paper focuses on the role of the World Bank in REDD and other forest related challenges.2007. We tackle this issue by focusing on the following research questions: 1) What is the track record of the World Bank (excluding GEF) in dealing with forest related challenges? 2) What is the World Bank’s current interests in REDD? 3) What are the strengths and weaknesses of the World Bank in implementing REDD? As a methodology for answering these questions we use a literature review of scientific articles. information given by the World Bank and organizations that have a critical view towards the institution. 2010). 3. REDD refers to reducing emissions from deforestation and forest degradation whereas the “plus” part of REDD+ refers to conservation of forest carbon stocks. Research Questions and Methodology The objective of this essay is to look at the role of the World Bank in REDD and other forest related challenges. framework. or REDD. 2. This became known as the Reducing Emissions from Deforestation and Degradation. Track Record of World Bank in Forest Related Challenges 3 . Multiple actors and institutions at the global and local level are involved in this framework. the 13th Conference of the Parties to the UN Convention on Climate Change in Bali called for greater action on avoided deforestation to provide new opportunities for rewarding nations and communities for improved forest protection and management (World Bank. REDD and REDD+ are distinguished from each other with REDD+ having more content.

the World Bank along with the International Monetary Fund (IMF) began emphasizing structural adjustment loans to developing countries from the 1980’s onwards. liberalizing trade and privatizing government assets (Shandra et al. Hajjar & Innes (2009) outline that in the 2000’s the World Bank has taken yet another approach in emphasizing sustainable management and the role of forests in poverty alleviation. After a 2000 Operations Evaluation Department review found the Bank’s performance in the forest sector to be unsatisfactory. the Bank has pushed the forest agenda more actively. and related World Bank and IMF policy reforms included devaluing currency. early World Bank projects up to the 1980’s financed industrial operations that were later deemed damaging to tropical forests. it has recently taken a more leading position in forestry policies. This development was brought on by the “debt crisis” of the 1980’s when the world awoke to the realization that many poor nations would be utterly unable to pay back their foreign debts (Shandra et al. Since its new 2002 Forestry Strategy and Operational Policy.The World Bank has approached forestry investments in different ways during its history. This approach was however increasingly criticized by environmental nongovernmental organizations (ENGOs) and their campaign against a 4 . As a respond to wide criticism. 2003). According to Hajjar & Innes (2009). 1996). the World Bank emphasized the importance of examining deforestation also from the perspective of prices and responses to resource scarcity (Hyde et al. 2011). 2009). the World Bank engagement in the sector as a whole declined significantly (World Bank. Structural adjustment aims to generate hard currency for debt repayment by boosting exports and cutting government spending. 2011). According to Bryant & Bailey (1997). the Bank’s 1991 Forestry Strategy along with the 1993 Forests Operational Policy prioritized forest preservation. They continue that although the World Bank has been slow to respond to prevailing attitudes and pressures in the past. In the mid-1990s. taking the lead in issues such as illegal logging and forest carbon financing (Hajjar & Innes.

resettlement and rural development project in Brazil in the early 1980’s marked a turning-point in World Bank operations (Bryant & Bailey. They suggest possible reasons to be structural adjustment leading nations to liberalize trade in extractive sectors. 1997). (2011) shows substantial evidence from cross-national models that structural adjustment loans from the World Bank are associated with higher rates of forest loss. but as probably favorable in most cases (Shandra et al. They created a central Environmental Department and different environmental units. The World Bank itself describes the effects of structural adjustment as hard to generalize. World Bank President Barber Conable admitted in 1987 to mistakes in previous bank environmental policy (Bryant & Bailey. and lose regulatory capacity to deal with the causes of forest loss. The main features of the new operational policy and strategy can be seen in Table 1 below. which eventually led to the Bank being persuaded by ENGO and Congressional pressure to halt the project in Brazil (Bryant & Bailey. This defeat led the World Bank to reconsider its position on environmental matters. increase exports of natural resources. The Forestry Strategy 5 . new research by Shandra et al. After growing criticism in the 1980’s. and aimed to fund projects geared specifically to tackling environmental problems such as deforestation (Bryant & Bailey. This project was the cause of extensive degradation and social conflict and dislocation. The table shows that the Forests Operational Policy has eight key features concentrating on developing a comprehensive approach towards the forest sector. In 2002. Also poverty may be exacerbated forcing people to clear forest land for agricultural uses. 1997). 1997). 1997). the World Bank published a new Forests Operational Policy and Forestry Strategy. Even though there is contradictory evidence and competing theoretical perspectives on the impact of structural adjustment on the environment. and ENGOs from several countries joined forces in a wellpublicized campaign in the United States Congress. 2011). The World Bank began a large transition in asserting itself as a world authority on environmental issues.

cc mitigation and adaptation.has three pillars concerning poverty alleviation. 2010). the Word Bank has attempted to take the lead in some forestry issues. development strategies and country policies Integrating forests into sustainable economic development: improved governance. 2003. 2009). Forests Operational Policy KEY FEATURES A focus on forests instead of forestry All forests are included All aspects of forest activity covered Replacing preconditions with analysis Markets for the full range of goods and services Targeted conservation Investment outside critical forest areas Distinction between large scale and smallscale activities Source: The World Bank. promoted investments. sustainable economic development and protecting environmental services and values. most notably in forest carbon financing (Hajjar & Innes. (World Bank. finance issues Protecting vital local and global environmental services and values: government conservation. national markets for local environmental services from forests . It is a global partnership aimed at assisting tropical and subtropical forest countries in developing systems and policies for REDD+ (FCPF. 2003) TABLE 1. In addition to 6 Forestry Strategy THREE PILLARS Harnessing the potential of forests to reduce poverty: participation. Sustaining Forests – A World Bank Strategy Since the 2002 Strategy. One of the most central initiatives of the World Bank regarding REDD(+) is the Forest Carbon Partnership Facility. The features of the 2002 Forests Operational Policy and the Forestry Strategy of the World Bank.

2009). Payments made only on the basis of measurable and verifiable emission reductions provide an incentive to achieve long-term sustainability in financing forest programs (FCPF. and 13 donors or contributors from public and private sectors were supporting the Facility financially (FCPF. thus complementing the related UNFCCC negotiations (FCPF. Asia-Pacific and Latin America were participating. 2009). the FCPF creates incentives through performancebased payments for emission reductions. Before REDD+ being applied consistently in the UN. 2010). The ultimate aim for the FCPF is to assist developing countries to reduce emissions by providing value to standing forests (FCPF. According to the World Bank (FCPF. The focus so far has been on the first mechanism. and became operational in June 2008. 2010). While 7 . Approximately five countries successfully participating in the Readiness Mechanism may be chosen to voluntarily participate in the second mechanism of the FCPF: the Carbon Finance Mechanism (FCPF. the FCPF demonstrates how REDD+ can be applied at the country level. The FCPF contains two mechanisms each with its own trust fund (FCPF. 2009). 2009). the process of developing the facility was very participative. The Readiness Mechanism assists the countries in preparing themselves for participation in a future. 2009). The FCPF was launched at the 13th session of the Conference of the Parties to the UNFCCC in Bali.providing assistance. but the Carbon Finance Mechanism is expected to become operational in the course of 2011 (FCPF. In less than a year 37 countries from Africa. This mechanism is designed to test some of the strategies envisaged in the REDD strategies. large-scale system of positive incentives for REDD. 2009). The countries in FCPF prepare a Readiness Plan which aims at achieving “REDD Readiness” and is the basis on which the allocation of FCPF grants to countries is decided (FCPF. The work on FCPF began in 2006 as a response to developed and developing country requests to the World Bank in developing a facility for demonstrating REDD activities. 2009).

This program is designed to combat illegal logging by coordinating initiatives with both national and international institutions and partnering with the private sector and civil society (Hajjar & Innes. land-use change and forestry (such as the Prototype Carbon Fund PCF. promote sustainable forest management as a means to reducing emissions. 2009). Zoellick in December 2010 in. the Community Development Carbon Fund CDCF and the BioCarbon Fund BioCF). the World Bank is clearly pushing REDD+ forward and sees it as crucial that the 16 th Conference of the Parties in Cancun would adopt a decision about REDD (World Bank. and the FCPF. 2009). World Bank’s current interest in REDD According to the speech delivered by the World Bank Group President Robert B. but didn’t put any obligations on countries nor did it clearly describe the practice of carrying out the activities.seeking to produce ‘real life’ experience with REDD. COP16 in 2010 arrived at a statement (“the Cancun Agreements”) that also mentioned REDD+. The Forest Investment Program (FIP) is a targeted program of the Strategic Climate Fund (SCF). The World Bank initiated the Forest Law Enforcement and Governance (FLEG) Program in 2001. 2011). the FCPF is based on the principle of ‘regime neutrality’ where pre-empting the next climate regime in any way is avoided (FCPF. 2009). 2008). The World Bank has also developed many other initiatives apart from its operational policy. The FIP is intended to support efforts to reduce deforestation and forest degradation. and protect carbon reservoirs (Hajjar & Innes. strategy. The Facility has also been referred to as a possible way to encourage independent forest certification by providing compensation funding for governments reluctant to reduce forest taxation for certified concessions (Karsenty. 2010a). and is just getting started with eight pilot countries (CIF. The developing country Parties were merely encouraged to contribute to 8 . Some initiatives include the Forest Investment Program. the Forest Law Enforcement and Governance (FLEG) Program and a large number of carbon finance projects that focus on land use. 4.

In his speech (World Bank. Strengths and Weaknesses of the World Bank in implementing REDD According to the FCPF (2009) the World Bank plays a critical role in assisting developing countries in reducing deforestation and forest degradation and achieving sustainable development. Protecting these species would provide protection to other flora and fauna as well. 2010a). The key strengths of the World Bank in doing this include: Providing access to new funding. Zoellick emphasized that REDD+ achieves multiple goals as mitigating climate change also protects species. Emphasis is also put on the need for indigenous people and local communities to benefit from REDD+ in order for it to work (World Bank. 2010). Zoellick continued that linking REDD+ with biodiversity would provide stable financing for the conservation of tropical forests and its wildlife. The World Bank is developing business models that would create initial funding for the Wildlife Premium Market Initiative and seeking partners to join the initiative (World Bank. 5. 2010b). 2010a). Inger Andersen. 2010a). pointed to multiple benefits of improving livelihoods. 2010a). increasing food security and mitigating and adapting to climate change while pristine forests are protected (World Bank. the World Bank introduced a concept of Wildlife Premium Market Initiative together with WWF in October 2010 that could provide a stable financial stream to protect charismatic animal species that require large expanses of forests (World Bank. The World Bank has been eager to link REDD activities with other benefits.climate change mitigation actions in the forest sector through REDD+ activities (Lang/REDD-Monitor. restores ecosystems and improves local livelihoods. Also the Vice President for Sustainable Development of the World Bank. Concerning the co-benefits for biodiversity. including private capital 9 .

- Considerable experience in designing pilot activities that pioneer carbon finance One of the 11 carbon funds. the World Bank has numerous carbon finance projects that focus on land use. 2009) However there is also strong criticism towards the World Bank in its REDD implementation. the BioCarbon Fund (BioCF). the World Bank has a track record of successful community and poverty reduction outcomes through the Community Development Carbon Fund (CDCF) in implementing carbon finance projects. land use change and forestry including the Forest Investment Program (FIP). FLEGT tries to control illegal logging. 2009). is critical towards current REDD practices and is against the World Bank in pushing it forward so strongly. are not based on participatory processes and strengthen international NGOs over local NGOs. the World Bank has provided funding with a lending program that has increased from US$53 million in 2004 to US$224 million in 2008 (FCPF. BioCarbon Fund (BioCF) has developed specific methodology for REDD that can be scaled to national level by the FCPF First. Thirdly. The PCF was operational already in 2000 with US$ 180 million and participation of multiple companies and governments. They are concerned that money offered by REDD could undermine achievements of the EU Forest Law Enforcement. includes baseline and monitoring methodologies for carbon sequestration calculations and works as a basis for the development of FCPF. an NGO keeping track of the European Union’s involvement in forests. FERN. Secondly. 2010) 10 . In addition. (FCPF. (FERN. a pioneer fund in afforestation and restoration under the Kyoto Protocol. but also improve forest governance by increasing transparency and strengthening participation and tenure rights of locals. they have long-term experience gained for example through the Prototype Carbon Fund (PCF). Furthermore. They say that REDD activities do not usually lead to improved forest governance. Governance and Trade (FLEGT) action plan. do not tackle the underlying causes of deforestation.

2001). 11 . Otherwise companies and governments have incentives to claim benefits of forest for themselves and might deny the rights of the local communities. even though their current views towards the democratic development of a receiving country is a matter of discussion (Marquette. They fear that without these kinds of changes corruption might increase and lead to land grabbing. 2003).According to FERN (2009) the problems of REDD are the tight timeframe preventing proper consultation. the REDD process could work” (FERN. the poor who suffer the most from the impacts of climate change are not fairly represented. (FERN. the World Bank has been criticized for lending money to nondemocratic regimes. FERN concludes that “if the customary and collective rights of the peoples who depend on forests are clear. 2001). 2009). 2010) formed by tens of international NGOs states that World Bank is a key institution in current unsustainable economic and development paradigm that has caused climate change in the first place. G-7 countries have nearly half of the voting power in the World Bank and any coalition building without the USA is very difficult. Furthermore. In addition they argue that good governance and community rights are a prerequisite for sustainable forest conservation. but rushing to REDD might undermine this progress.S. both the U. FLEGT processes take more time since they try to solve issues of illegality and land tenure. For example the World Bank Out of Climate Finance –campaign (World Bank Out of Climate Finance. 2009) On a larger scale there is criticism towards World Bank due to lack of transparency and accountability (Woods. missing criteria for good governance and not recognizing community rights. President and Congress have formidable unilateral authority over the World Bank (Nielson & Tierney. FERN suggests that REDD activities should involve consultation processes similar to FLEGT and support governance reforms. They continue that due to the World Bank’s undemocratic decisionmaking. In addition. comprehensive and secure.

created many funds related to forests and maybe most importantly launched the Forest Carbon Partnership Facility. it has the advantage of constant self-evaluation and reflection. Several studies (World Bank. This criticism is partly focused on actual problems with implementing REDD activities but there is also a larger movement against the World Bank’s undemocratic decision-making process that has begun since the formation of the World Bank. developing countries and the World Bank to persist also in forest 12 . 2009. This demonstrates the World Bank’s ability to change and adapt through critical self-evaluation. the only path to learning and developing further. Its preservationist approach led to the Bank being constrained from adequately engaging in the forest sector and didn’t even have any apparent impact on the rate of deforestation and forest degradation in the 1990’s (Hajjar & Innes. Although the World Bank possesses the money. This is what happened for example in the case of the Forestry Strategy and Operational Policy from the early 1990’s. 1997) refer to the way the Bank has changed its position towards forestry through realizing that the current approach is not working. It has been involved in forest related challenges for a long time. We expect conflicting views between NGOs. knowledge and capacity to confront forest related challenges. it has faced a lot of criticism in dealing with REDD. Conclusions and Recommendations The World Bank clearly plays an important role in developing REDD further and is pushing REDD forward. After evaluations the Bank changed its approach and created a new Forestry Strategy and Operational Policy more in line with the current situation of forest policy. but its interest towards them has increased strongly in past decade as it has renewed its Forest Operational Policy and Strategy. Hajjar & Innes.Although the World Bank has had questionable forest policies and funded programs that are actually harmful for the environment. 2009). Bryant & Bailey. 6. 2003. Thus we don’t see that improving individual causes for criticism in REDD implementation will reduce overall criticism towards the World Bank.

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