World Rainforest Movement

The World Bank, Forests and Forest Peoples: Policies, Impacts and Implications

New policies, old problems. Ever since the 1970s, the World Bank has struggled to define an approach to forests, which reconciles its expressed commitment to poverty alleviation with its model of promoting ‘development’ through top-down growth and commercialisation. Free market models of development based on private property rights do not fit well with conventional forestry approaches. Since the 1700s, the dominant model of ‘scientific forestry’, developed in Europe, has opposed the free play of market forces by reserving forests for State-chosen strategic interests. This has entailed State control of forest reserves, as ‘public goods’, to the exclusion of both local communities and (at least in theory) destructive industries. Forestry ministries, which favour State control and public ownership, and agricultural ministries, which favour private property and free markets, have long been suspicious of each other.

This model of ‘scientific forestry’ was first imposed on developing countries by the British in Burma in the 1840s. Ever since, the political economy in tropical forests has been dominated by unhealthily close relations between those in State agencies, who control forests, and large-scale loggers, prepared to pay them back-handers to get access to the timber. ‘Scientific forestry’ has thus not only favoured collusive corruption but has led to the development of institutionalised graft, whereby substantial proportions of timber profits bank-roll politicians, their patrimonial networks and – in today’s so-called democracies – political parties. Corruption and social exclusion have penetrated the forestry sector so seriously that the goals of ‘scientific forestry’ – which aimed to reserve forests for producing timber for strategic industries and ensure environmental services – have been wholly defeated. Forests have been mined for the economic and political gains of business elites, with severe social and environmental consequences.

This kind of forestry has not only been riven with economic ‘inefficiencies’ – so distasteful to World Bank economists – but has imposed huge costs on local communities and indigenous peoples, whose rights were denied in setting up State forest reserves, to such an extent that the contradiction between forestry and the poor has been too harsh for even the World Bank to ignore. Since the 1980s, the World Bank’s favoured solution to these problems has thus been to promote market-based approaches to the concession system – through measures like competitive bidding, market transparency, undoing log export bans – on the one hand, while promoting ‘social forestry’, usually outside forest reserves, on the other. ‘Social forestry’, based on the Chinese model of mass plantings by State-directed peasantries, was meant to provide rural people with at least some forest products. However, in more capitalist countries it was quickly found that these plantations could be designed to benefit pulp mills and paper industries more than local farmers, whose labour was co-opted for planting and looking after seedlings and saplings but who got scant access to the trees once they matured.

It was only in the mid-1980s, that the World Bank’s approach to forests was seriously challenged by social justice and environment movements. Once it became clear that the World Bank was funding the mass destruction of tropical forests and indigenous peoples – through colonisation schemes, plantations, dams, mines, road building and agribusiness – the World Bank promised reforms. It set up a new environment department, adopted what came to be called ‘safeguard policies’ – required procedures designed to protect vulnerable social groups and environments from the worst impacts – and announced that its goal was to promote ‘sustainable development’, an oxymoron made popular by the Brundtland Commission.

NGO focus on the World Bank’s forestry policy, however, only really started in earnest with the unveiling in 1986 of the Tropical Forestry Action Plan (TFAP), a proposal from the World Bank, FAO, UNDP and World Resources Institute to slosh US$ 7 billion of aid money into tropical forestry. This was to be more of the same – more commercial logging, more plantations modelled on the Aracruz example in Brazil and more top-down social forestry of the kind that was dispossessing peasants and covering ill-named ‘wastelands’ in India with a sea of Eucalyptus. One response from NGOs was to set up the World Rainforest Movement, which was founded at an international conference in Malaysia in 1986 as a riposte to TFAP.

The outcry was so loud and the evidence uncovered by the NGOs so compelling that, in 1990, the G-7 summit called for the TFAP to be revamped – it soon fell apart. For a short period, the critical voice of NGOs was so strong that, when it became clear that there was barely a single example worldwide of sustainable forest management in the tropics, the Bank felt obliged , in 1991, to adopt a forest policy based on a precautionary approach to natural resource exploitation. In the absence of any good evidence that tropical forest logging could be sustainable, the new ‘Forestry policy’ proscribed World Bank funding of projects that would damage primary moist tropical forests.

The Return of the Market: divide and rule. Unfortunately, NGOs did not hold firm in their rejection of market models for forestry reform. True, some such as WRM did prioritise alternative approaches to forests, based on the restitution of the rights of indigenous peoples, land reform to bring justice for peasants and the landless rural poor, the promotion of local livelihoods, gender justice and self-governance. However, many others, including major conservation bodies like the WWF, were attracted by the potential of harnessing market forces to provide the private sector with incentives to manage forests ‘sustainably’, which they hoped would in turn drive forestry reforms. The immediate result was the Forest Stewardship Council, set up in 1993, which while its principles and criteria included strong protections of the rights of local communities, indigenous peoples and workers, led to the rehabilitation of the suspect concept of Sustainable Forest Management. In 1998, the WWF and the World Bank announced a new joint ‘Forest Alliance’ dedicated to promoting the certification of 200 million hectares of forests in World Bank target countries by 2005. The World Bank was back in the forestry game.

The problem remained for the World Bank, that its 1991 forest strategy was not really compatible with a market approach to forests. However, with the NGOs divided, the Bank embarked on a complex manoeuvre designed to legitimise its return to the promotion of tropical forest logging and market based reforms. It carried out a lengthy Forest Policy Implementation Review and Strategy Development, undertook extensive regional consultations, commissioned a series of papers examining worthy matters like poverty alleviation, indigenous peoples and community forestry and, then came to the unsurprising, though contested, conclusion that it was time to do forestry again just as it had in the 1970s and 1980s – promoting market-based reforms of forest industry, while doing ‘community forestry’ to show it still cared about poverty. The proscription on funding logging in primary moist tropical forests was lifted, the precautionary approach dropped.

The new Strategy and associated policy, adopted in 2002, however, has even more of a market emphasis than before. New markets in environmental services are to be promoted, alongside markets in ‘green’ timber, which the policy aims to achieve through voluntary certification. Carbon trading is also being promoted through the Bank’s new Biocarbon Fund.

As detailed in the April issue of the WRM Bulletin (No. 93), unleashed by the new policy, recent World Bank investments are causing serious problems – expansion of socially and environmentally harmful investments in plantations, agribusiness and phoney carbon sinks; top-down community forestry schemes which trample the rights of indigenous peoples, while best practice examples of Bank-funded certified sustainable forestry operations are nowhere to be seen.

Markets without rights. No one should be surprised that the World Bank favours a market approach to dealing with forests, but what is tragically inconsistent about the World Bank’s approach is its treatment of the property rights of the poor. Of course, NGOs tend to argue for the recognition of the land rights of indigenous peoples and local communities on the grounds of human rights and natural justice, but capitalist economists, such as De Soto, have also stressed that development cannot work in favour of the poor without a strong framework to protect property rights.

As the eighteenth century free market philosopher Adam Smith noted, for ‘free markets’ to work, the State must protect ‘as far as possible, every member of the society from the injustice or oppression of every other member of it…’ through the ‘establishment of an exact administration of justice’. The rule of law, Smith concluded, is required for the protection of private property, and this must be done fairly if it is not to ‘excite the indignation of the poor’, leading to the great risk that ‘civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor’ (Adam Smith, The Wealth of Nations).

Yet, the new market-based ‘Forests Policy’ of the World Bank falls into exactly this trap. The World Bank notes that some 1.2 billion poor people worldwide depend on forests for fuel-wood, water and other basic elements in their livelihoods. Of these, 350 million people are forest-dependent people, while only 60 million of these are classified by the Bank as ‘Indigenous Peoples’. Although, the new forests policy does require that Bank-funded logging projects ensure ‘recognition and respect for legally documented or customary land tenure and use rights’, no such protections are extended to peoples impacted by other Bank-funded projects that affect forests, like dams, mines, roads, colonisation schemes, agribusiness and plantations. Instead of addressing these concerns head on, the World Bank said it would deal with these broader concerns about tenure in its revised Indigenous Peoples policy, even though this policy is only aimed at some 5% of the 1.2 billion people that the World Bank estimates depend on forests. In effect, the World Bank is prepared to impose its market-based policy for the ‘development’ of forests and plantations without dealing with the tenure rights of some 1.1 billion people who depend on these forests for their well-being.

Moreover, even the Indigenous Peoples policy, which was finally adopted by the World Bank in May 2005, offers very uncertain protections. Although the policy is a slight improvement on discussion drafts issued over the previous four years, the new policy does not call for full recognition of land rights. It only requires borrower governments to set out an ‘action plan’ for either full legal recognition of existing customary land tenure systems, or a process for converting customary rights into ownership rights, or measures for legal recognition of long term use rights.

Indigenous peoples have not been happy with the new policy. A signed statement by many of the main indigenous peoples’ organisations attending the UN Permanent Forum on Indigenous Issues in May 2005 noted of the new World Bank policy that:

“The newly revised policy has made important improvements in several areas, such as requiring that the commercial development of affected indigenous peoples’ cultural resources and knowledge be conditioned upon their prior agreement to such development. Nevertheless, we continue to be extremely concerned about these Multilateral Development Banks lack of recognition of indigenous peoples’ customary rights to their lands, territories and natural resources and to their related right of free prior informed consent, and their derogation of international standards to national law.”

Indigenous peoples have in particular been concerned by the way their demand for recognition of the right of impacted communities to free, prior and informed consent to projects proposed on their customary lands, has been turned into a requirement for ‘free, prior and informed consultation’ leading to ‘broad community support’. According to the Bank’s new policy, such consultation and the assessment of ‘broad community support’ is to be carried out by the borrower government, does not entail the right of the community to veto the project, and is only verified by World Bank staff through their review of documents provided by the government.

All this allows far too much room for projects to be imposed without adequate respect for indigenous peoples’ rights to their lands and to self-determination. As Canadian indigenous rights activist Arthur Manuel noted:

“Consultation sounds good, but does nothing. It’s a mechanism to allow for the ultimate theft of our indigenous propriety interests free of charge. Prior informed consent is recognition of our land, culture, and way of life.”

By Marcus Colchester, Forest Peoples Programme, e-mail: Further details on the implications of the World Bank’s Forests Policy can be found on For additional background information see: