Forest conditionality explored

15 June 1999

A new paper from the World Resources Institute examines the World Bank’s use of adjustment lending to promote policy reform for favourable environmental outcomes. This “environmental adjustment” is assessed using case studies in Papua New Guinea, Indonesia and Cameroon, with a detailed reading of whether the Bank imposed a package on a weak borrower government or supported a domestic constituency pressing for reform.

PNG is an example of the latter. Strong constitutional land ownership rights and a judicial inquiry instituted by the government reflected and created a strong domestic desire for forest sector reforms. So when in 1995 the government, facing a balance of payments crisis, turned to the Bank for support, the forestry conditions imposed were supported by many in the PNG bureaucracy. The reforms included log export surveillance, making the forest bureaucracy more independent, and implementing a forestry “code of conduct”. Civil society response to the Bank’s actions was mixed: some complained about a clause on land registration and the Bank’s “ideological” refusal to consider demands for a ban on unprocessed log exports, while others supported its approach.

Once the adjustment loan was in place, the PNG Forest Minister soon contravened the forestry conditions, alleging that the Bank had infringed PNG sovereignty. The Bank, after external pressure and internal discussion, withheld the second loan tranche until the Minister backed down.

The Indonesia and Cameroon case studies are similarly interesting in their details about the political and economic factors which complicated the bargaining between the Bank, borrower government ministers and officials, and civil society. In Indonesia the Bank alienated many civil society groups by its approach to the Suharto regime and its failure to consult them before announcing a forestry reform package in January 1998. Since then, however, the Bank has more actively tried to reach out to civil society.

In Cameroon the Bank advocated forest law reforms in the early 1990s when the government faced political and economic threats. As the government was weak, the Bank saw no need to seek the views of other stakeholders and implementation was limited by lack of understanding and consent from parliamentarians and other key groups.

The paper concludes that the Bank must move beyond opportunistic arm-twisting of borrower governments and instead base its interventions on demands from domestic constituencies.

The full study will be available late in 1999. For further information on the study, contact: Navroz Dubash, WRI, 10 G Street, NE, Washington DC, 20002, USA,