TL: WORLD BANK, FINANCING FOREST DESTRUCTION TL: WORLD BANK, FINANCING FOREST DESTRUCTION SO: Greenpeace International (GP) DT: September 1994 Keywords: world bank policy failures forests terrec aid third world greenpeace factsheets gp / ----- World Bank factsheet #6 FINANCING FOREST DESTRUCTION World Bank Forest Policy In response to heightened global attention to rainforests and pressure brought to bear by non-governmental organizations from around the world, the World Bank adopted a new Forest Policy in 1991. The new policy looked good on paper, including the environmentally appropriate terms "participation,", "sustainability," and "conservation," and prohibited the Bank from directly financing logging in primary moist tropical forests. With this new policy, the World Bank attempted to wipe clean its past record of forestry debacles which have caused the destruction of an estimated 1,900,000 square kilometres of forest including: 1982 - Carajas Iron Ore Project in Brazil. The financing of a mine, a 780 km railway, and a deep water seaport, destroyed 150,000 square kilometers of Brazil's tropical rainforests. 1982 - Trans-Amazon highway project in Brazil. The loan unsuccessfully attempted to construct a highway across the Amazon, and ended up ended destroying 23.7% of forest in the state of Rondonia and forcibly relocating 250,000 people. The Bank then came up with a project, Planafloro, to repair the damage to forests and biodiversity in the region, But local NGOs catalogued repeated instances of ineffective policies and staff and lack of participation of affected communities. Even worse, in one case the Bank was discovered of having invented fake NGOs and rubber tapper unions in an attempt to cover up its lack of compliance with its own consultation policy. Global Environment Facility (GEF) and the Biodiversity Convention At the 1992 Earth Summit, where the Biodiversity Convention was signed, the World Bank was given the mandate to use the GEF to fund protection of forest biodiversity. But recent history has shown a considerable number of GEF biodiversity projects failing. One example among many: The Congo Wildlands Protection and Management Project. An independent report revealed the project was tied to a $20 million World Bank loan for logging in primary tropical forests - a breach of both the policies of the GEF as well as the World Bank's own ban on logging in tropical forests. During 1994, the World Bank reviewed its new Forest Policy, which is fatally flawed. The following examples show why: Failure to address cross sector effects (effects on forests from other, non-forestry sector loans eg deforestation due to a hydro electric project). - Arun Dam in Nepal. This World Bank project, scheduled for approval in October1994, will impact one of the last virgin rainforests in the Himalayas. Due to road building and current logging, local NGOs state that total deforestation will likely occur in 15 years or less. -1968-1973 - A series of land settlement loans for Malaysia financed the deforestation of 253,000 acres of rainforest on the Malaysian peninsula Failure to protect temperate and boreal forests -1994 - Belarus Forestry Development Project. This would increase exports of timber by 800%. 20% of Belarus' forests are fragile wetlands and another 20% of the forest cover is contaminated by fallout from the Chernobyl nuclear plant. Adequate environmental studies and community consultations were not conducted. In early 1994 the Bank came under attack for other forest sector loans -- one in Laos and the other in Ecuador. The Ecuador loan would fund a plantation project run by a rich family, and would dislocate the indigenous Chachi people. The bank was forced to withdraw funding. Flawed Approach To Plantations Plantations, rather than meeting the needs of local communities, are only aimed at guaranteeing supply of cheap pulp for industry and threaten the subsistence economies of local communities. The FAO has stated that planatation yields are often as much as 50 % below inital expectations. Single species plantations do not allow for biodiversity of flora or fauna. But in spite of the high degree of failure of forest plantations throughout the World, the World Bank has paid out USD 1,416 million to fund plantations in the past two years and in the past ten years has financed the establishment of over 2.9 million hectares of forest plantations. But the Bank still plans to fund the establishment of over 1 million hectares of plantations. Greenpeace Demands The World Bank must be held accountable for its responsibilities under the Biodiversity Convention. The current World Bank ban on funding logging in primary tropical rainforests must be reconfirmed and extended to all primary forests. The World Bank must implement a "precautionary principle" approach to all projects that may impact forests and biodiversity. Where there is a threat of reduction or loss of biological diversity or other irreversible environmental impacts, forest planning should err on the side of caution.