World Rainforest Movement

ADB’s Draft Forest Policy: Putting Profits before People

Every time the Asian Development Bank lends money on a project it creates a problem for the government receiving the loan. The project must make money in order that the government can pay the Bank back. This sounds like straightforward economics, but when the Bank gives loans for forestry projects, this means that the forests must make a profit. The simplest way of converting forests to profits is to cut down the trees. The social and environmental impacts of doing this are often devastating. On the other hand, projects which guarantee the rights of communities to access, use, protect and live in or near the forests are likely to be less popular with governments as they are unlikely to contribute large sums of money to government coffers.

Given this fundamental problem with ADB lending to the forestry sector, a new forest policy might be welcomed, particularly if it set in place a regulatory system to ensure the protection of the region’s forests and its peoples’ livelihoods. A policy which was based on, for example, safeguards on Indigenous Peoples’ rights and mandatory environmental and social impact assessments for any project that has an impact on forests might at least be a start.

In June 2000, the ADB started a review of its 1995 policy on forests. Two years later, this review resulted in a “Draft Forest Policy”. The draft policy is not a policy at all. Rather it is a position paper on how the Bank views the forests of the region.

A forest policy might be expected, for example, to include an explanation of the policies, principles and standards the Bank will apply in its lending that will affect forests. It might explain how the ADB intends to ensure that Bank staff will comply with the policy. Instead, the June 2002 draft forest policy is little more than an opinion piece based on reports written by ADB-hired consultants.

While the ADB points out that the US$1 billion that it lent on forestry projects between 1980 and 1999 represents only 1.5% of all ADB lending, many other Bank-funded projects have an impact on forests. Bank funding for hydropower dams, irrigation schemes, roads and transport networks, electricity transmission, and projects which encourage cash crops and commercial agriculture have had a major impact on forests. The draft policy focuses on forestry projects and excludes any mention of the impact that Bank-funded infrastructure and other projects have on forests.

As suggested by the sub-title of the draft forest policy, “Forests for all and forever”, the Bank and its consultants present an optimistic view of the ADB’s involvement in the forestry sector. For example: “The policy area where ADB assistance has had the largest impact is community-based natural resource management. Involving communities in forest resource development and management is important in light of the strengthened poverty focus of ADB”. Yet, in Laos, an ADB-funded “Industrial Tree Plantations Project” has supported a private company which has replaced community managed forests, swiddens and fields with monoculture eucalyptus plantations. Local communities have effectively been excluded from the management of their resources by the ADB’s forestry project.

In Cambodia, the ADB has consistently supported private companies and logging concessions, which completely exclude local communities. In 2000, ADB published a concession review which described the “total system failure” of the concession system, yet the Bank failed to recommend that the concessions should be cancelled.

Walden Bello’s phrase “Goal Congestion” could well be used to describe the ADB’s June 2002 draft forestry policy. In a recent paper, Bello describes how Bank staff in the field are desperately trying to achieve the various conditions that shareholders have attached to lending in recent years: poverty reduction, social development, sustainable development, promoting women’s welfare, and good governance. The draft forest policy likewise emphasises these conditions, yet the projects to be implemented are the same old technocratic interventions. The project names may change, of course. For example, Phase II of the ADB’s “Industrial Tree Plantations Project” in Laos, which is due to start this year, will be called “Tree Plantations for Livelihood Improvement”. Both projects involve establishing around 10,000 hectares of fast-growing tree plantations primarily for the pulp and paper sector. Yet in phase I the plantations were “industrial”, while in phase II they are to be miraculously transformed to “livelihood improvement” plantations.

Bello quotes an anonymous senior staff member as saying “People are lost and bewildered, and most have no clue of how to even begin. . . . You have all these new goals, but the old baggage, the old goals, have not disappeared. You’ve somehow to get ‘women and development’ into the project design, and you get scolded if you don’t know how to sneak it in. The result is incoherence”.

The ADB’s draft forest policy highlights the dilemma faced by the Bank. While it talks about environmental sustainability and poverty alleviation, the reality is that its projects must make a profit. The draft forest policy discusses “parallel tracks” of economic growth and environmental sustainability:

“The overarching goal of the new forest policy is to support DMC [Developing Member Country] governments to realize the full conservation and development potential of their forests, and maximize the impact of their forest sector investments on the reduction of poverty. This requires approaches along parallel tracks. One track needs to support measures to achieve the greatest possible forest based economic growth and social development within the constraints imposed and opportunities provided by the second track promoting environmental sustainability.”

The Bank’s metaphor illustrates the distorted view of reality prevalent within the ADB. Bank staff and consultants appear blissfully unaware that “the greatest possible forest-based economic growth” (cutting down the forests and selling the timber) has little to do with either social development or environmental sustainability.

By: Chris Lang, email:

A critique of the ADB’s forest policy will soon be available at . Friends of the Earth International is coordinating a sign-on letter to the ADB – for further details, contact Rod Harbinson, e-mail: , before 28 May 2003.

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