forest reforms, of which $863 million was directly designated for forest lending.
Grant finance for sustainable forest management has also been made available by the Global Environment Facility (GEF), of which the World Bank is an implementing agency. GEF has an important role to play in helping to support the implementation of the 2002 Forest Strategy, specifically in relation to the third pillar of the Strategy: protecting vital local and global forest environmental services and values.
Regional and country-led forest related ESW and TA averaged about $2.9 million annually over FY02–11. A major source of analytical support has been provided by the Program on Forests (PROFOR), a global partnership program housed in the World Bank, which finances analytical work in four key thematic areas: forests’ contributions to livelihoods of the rural poor, forest governance, innovative financing for SFM, and mitigating adverse cross-sectoral impacts on forests.
As flagged in the 2002 Strategy, World Bank Group support to forests has also come from global, regional, national and local level partnerships. These include: The Forest Law Enforcement and Governance process (FLEG), The Forests Dialogue, the
Collaborative Partnership on Forests, the World Bank-WWF Alliance, the Dedicated Grant Mechanism for Indigenous People and Forest Dependent People, the Growing Forests Partnership, and the Critical Ecosystems Partnership Fund. The WBG has also
developed partnerships with MDBs, multilateral and bilateral agencies and institutions as well as with NGOs and civil society.
In line with the increasing prominence that REDD+ has afforded forests, the World Bank has helped to raise significant new forest finance through the development and support for carbon funds. The Forest Carbon Partnership Facility (FCPF), a global partnership housed in the World Bank which became operational in June 2008, is designed to set the stage for a large-scale system of incentives for reducing emissions from deforestation and forest degradation. A Readiness Fund, currently valued at $218 million, is helping participating countries prepare themselves for REDD+.22
The FCPF builds on the Bank’s experience with the BioCarbon Fund (BioCF) – a public/private initiative mobilized and administered by the World Bank that is designed to demonstrate projects that sequester or conserve carbon in forest and agro-ecosystems while promoting biodiversity conservation and poverty alleviation. The BioCF is composed of two tranches that, combined, have been capitalized at $90.4 million.
The World Bank and IFC are active members of the Forest Investment Program (FIP), a global partnership program that aims to mobilize significantly increased funds to reduce deforestation and forest degradation and to promote sustainable forest management. As of May 2011, FIP had received total pledges of US$578 million. Of this total, US$ 405 million has been pledged as grant resources and $173 million as concessional finance.
Between FY03 and FY10, IFC invested a total of $1.7 billion in 67 projects related to forest use. Investment lending related to forests peaked in FY05 at $500 million in 11 projects, but then declined to $100 million in seven projects in FY10.Most of the projects were in the wood processing industries (pulp, paper and board, sawn
and engineered wood), with only a small number of plantation investments, including through investment funds (e.g., the Lignum Fund). In addition, IFC’s portfolio also includes pilot transactions in carbon finance (BioCF) and small and medium enterprises
(SMEs).
IFC’s leverage with respect to the promotion of Sustainable Forest
Management, poverty reduction and economic growth varies by project type and depends on the extent to which IFC clients have control over the resources. While IFC requires all its clients to comply with its Performance Standards, its ability to do so
depends on the nature of the client’s control over the forests. Thus, where IFC clients own the forests or have forest concessions with harvesting, IFC can directly affect how the clients’ silviculture and harvesting practices comply with the Performance Standards.
But where IFC clients purchase wood from the open market, IFC’s reach is more limited, e.g., to request that all purchased wood is certified.
IFC’s promotion of the sustainability of forests can also work in indirect ways.
Thus, while investments in forest plantations support low-biodiversity monocultures, they can also have positive impacts as carbon sinks and, where plantations are established on degraded and abandoned agriculture lands; their supply of wood can meet
increasing global demand of wood products and reduce pressures to log high biodiversity natural forests. IFC’s investments are targeted mostly to the downstream of forest value chain with positive impacts on forest industries and economic growth, but they can also
contribute to direct poverty reduction by promoting large upstream small holder forestry operations that supply wood to processing industries.
IFC’s Advisory Services (AS) for the forest products sector have grown. As of FY09 the AS portfolio, in the Sustainable Business Advisory (SBA) department, included 21 active projects, worth $16 million, in the forests sector, covering ecostandards, sustainable supply chains, cleaner production assessments, local sourcing,
strategic community investments, and sustainable roundtables. Eight of these AS operations are linked to IFC investment projects.25 In FY10 and FY11, IFC Advisory Services invested in new capacity on forestry aiming for more active involvement of IFC
in sustainable forestry. This trend is likely to continue in FY12.
MIGA had one forest-related guarantee operation, which it supported jointly with the IFC. Given this, its main impact on forests has been through the implementation of its 2002 Interim Policy on Forests and, since 2007, its Performance Standard on Biodiversity Conservation and Sustainable Natural Resource Management (same as IFC).