Environment

Background

Forests & Climate Change: How Can Mainstreaming Forests Address Challenges of Climate Change and Development?

25 October 2019 | Minutes

This Civil Society Policy Forum was sponsored by Centro Mexicano de Derecho Ambiental (CEMDA) and Bank Information Center (BIC).

Panelists

Joshua Lichtenstein, Program Manager, Rainforest Foundation US (Moderator)
Juan Carlos Carrillo, Program Coordinator, Centro Mexicano de Derecho Ambiental (CEMDA)
Ladd Connell, Environment Director, Bank Information Center
Erick C.M. Fernandes, Advisor on Agriculture, Forestry & Climate Change, World Bank
Garo Batmanian, Lead Environmental Specialist, World Bank

Introductory remarks

Joshua Lichtenstein (moderator)

In his opening remarks, Lichtenstein noted that forests are both sink and producers of CO2 and that their function is essential to mitigate climate change. Most of the deforestation around the world is caused by no forest countries and their policies to push for mining sector, primarily. He also highlighted that Mexico is a champion for forest finance.

Session Summary

Ladd Connell’s (Bank Information Center) talk was based on several studies published by BIC since May, and addressed the question of Forests and climate change: How can mainstreaming forests address the challenges of climate change and sustainable development? What is the World Bank doing to achieve it?

Connell highlighted that forests do not get enough attention, perhaps a bit more since the IPCC land use report launched in August, which laid bare the importance of the Amazon and other forests in the fight against climate change – and in preserving vital natural ecosystems more generally.

Regarding the World Bank’s performance, Connell noted that forests are a small part of its portfolio. From 39 planned actions representing what are considered the global best practices or highest standards for forest management, 21 are from the World Bank. Most of the approved forest financing commitments (over 80 per cent) come from the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), the World Bank’s low-income country arm, but the IBRD/IDA share of proposed projects is much lower (34 per cent). Forests should be part of systematic country diagnostics (SCDs) but in most of them, they are not mentioned, nor are SCDs included as part of the World Bank’s Country Forest Notes.

Assessment of World Bank forest performance according to the analysis of global forest commitments and actions (“scorecard”– lessons to date):

Good news:

  • # commitments: Recognise importance of forests for sustainable development.
  • Overlaps: Widely aligned commitments to global frameworks.
  • By # and level of commitments: World Bank is a leader.

Bad news:

  • In performance: World Bank is lagging (especially on 2020 goals – as set out by the Consumer Goods Forum & Aichi Biodiversity Targets)
  • In measurement: World Bank is failing.

BIC’s country study looked at WBG portfolio in nine countries in South America, Africa, and South Asia that are primarily identified as forest countries, have WBG actively lending, and are diverse. The findings of WB project impacts were generally positive in terms of greater forest protection and reduced risks to forests in five countries: Mexico,  Colombia,  Mozambique,  Liberia,  and Peru. The bad news is that BIC found increased risks for forests from new WBG (notably IFC) projects in four countries: Nepal, DRC,  Indonesia, and Brazil.

Connell noted that the number of projects with negative expected forest impacts is down since 2016, but that projects with positive impacts are usually smaller in terms of loan amounts. The result is therefore a higher dollar amount for projects with negative expected impacts.

With regards to the World Bank’s “forest-smart” agriculture efforts, another BIC study highlighted that forest monitoring plans or tools are usually present in forest sector projects, but not outside this sector, even when projects triggered the World Bank’s forest safeguard. Moreover, only 1.2 per cent of World Bank funds go to the forest sector.

The World Bank has been successful in making 100 per cent of its agriculture projects as climate-smart agriculture (CSA) by 2019. However, this definition of CSA is only to ensure they are not maladaptive. It does not ensure that they offer climate mitigation benefits, increase resilience, or improve food security.

Lessons from BIC’s studies of the World Bank’s forest-related portfolio to date:

  • Limited data/no tracking, especially for Bank-wide actions.
  • Ambiguous data: Example of “agriculture” portfolio – it has been hard to see what the Bank considers agriculture in its project portfolio; many projects listed as “agriculture” seem focused on other sectors.
  • Partial follow-through: Example: Many CSA profiles (retrospective), but only one (of 10 promised) CSA investment plan (prospective)
  • No (deliberate integration in) planning: Ex: Only two in 10 Country Forest Notes mention SCD, 2 have no mention of Country Partnership Framework (CPF) and others only cursory mention of CPF.
  • Budget, staffing: Forest project pipeline is mostly from trust funds: only 1/3rd come from IBRD or IDA, so if trust funds aren’t renewed or replaced, forest programs could drop precipitously.

Recommendations (for EDs, Donors, Trust Funds)

  • Policies:
    • Primary forest exclusion: Join ADB, AIIB, EIB and IDB in excluding commercial logging in primary tropical or old growth forests from eligibility for financing.
    • Stop Banking-financed deforestation: End natural forests loss from Bank projects by 2030 (in line with NYDF, SDGs, etc.)
  • Funds:
    • Make REDD+ real: Scale up, then maintain, performance-based payments under REDD+ so that local communities serving as forest stewards benefit.
    • Have a champion (with a staff). Forests are a global public good; as such, they need voice with clout in global policy circles. To complement the Bank’s policy efforts, it should engage a senior official to advocate for more pro-forest policies and finance with client country Finance Ministers. This person should be supported by a staff that can produce and disseminate relevant data.

Juan Carlos Carrillo (CEMDA), on the specific case of Mexico, noted that since the adoption of the World Bank forest action plan in 2016, the actions and funding in forest projects have increased. Land use change decreased from 2.7 per cent between 1990-1000 to 0.9 percent 2005-2010. However, the size of land in Mexico has decreased and the level of deforestation has more than tripled.

Carrillo highlighted that only 37 per cent of the 750 community forests enterprises committed by the Bank have been created between 2012 and 2018. There is a loss of 155k hectares of forests each year due to sectors such as tourism infrastructure and power generation.

Mexico has also been very affected by the administration, with increasing levels of corruption and projects only implemented in places where elections were being held.

In addition, the number of potentially negative projects is growing, for instance, in regions such as the most important forest of the country, Campeche, due to transgenic soybeans production, which has also caused conflicts among communities.

Based on REDD+ main drivers of deforestation, Mexico is out of the forestry sector.

Recommendations:

  • Effectively mainstream forests into other sectors.
  • Systemic approach.
  • Acknowledge the interconnections among associated benefits.
  • Understand the forest as a tool for combating poverty (and climate change)
  • Provide financing to generate capacities.

Erick C.M. Fernandes and Garo Batmanian (World Bank).

In response to the points raised above, they pointed out that money is not a good indicator for measuring what is being achieved, as things have different costs (i.e. infrastructure is more expensive than forest conservation). Recognising nevertheless that the Bank is not doing enough to conserve and sustainably manage forests, the World Bank staffers observed that we need to be careful when using money as an indicator.

They highlighted that the World Bank should work on convincing clients to invest more in forests and that the Bank is moving to a new safeguard framework, replacing the old WB forest safeguard, OP4.36.  A new trust fund, PROGREEN,  aims at improving the forest component of landscape management, going beyond mitigation. One of the problems assessed by Connell and acknowledged by the Bank officials is the need to figure out how to measure impact, which is still in their to-do list.

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