The Challenge of Low-Carbon Development - World Bank Internet ...

include the forest carbon projects of the BioCarbon Fund. Finally,the durability and acceptability of forest conservationmay depend on the sustainable intensification of agriculture,to provide the food, timber, and jobs that motivate deforestationin the first place. IFC has supported agribusiness at theforest frontier with the goal of encouraging sustainability.The Bank’s 1991 Forest Strategy mainlyfocused on environmental issues,particularly protecting tropical forests.The Bank’s forest strategy and portfolioThe Bank’s 1991 Forest Strategy recognized the role that forestscould play in poverty reduction and the importance ofpolicy reforms in containing deforestation. However, it mainlyfocused on environmental issues, particularly protectingtropical moist forests. It reflected rising international concernabout the rate of tropical deforestation through adoptinga “do no harm” approach of not financing commerciallogging in primary tropical moist forests. Yet as the revisedstrategy attests, this emphasis on safeguarding forests didlittle to help countries actively manage their natural forests,especially in the tropics, and left the Bank scant opportunityto harness the poverty-reduction potential of forests. Termeda “chilling effect” by the IEG (2000) forest strategy review, thestrategy and associated safeguards prevented Bank staff fromengaging the sector in proactive ways to improve economicand environmental management of tropical forests.The 2002 Strategy refocused aroundpoverty reduction, economic management,and environmental protection, expandingto all forest areas.The revised 2002 Strategy expanded the Bank’s forest policyto include all forest areas; it refocused the strategy aroundthree pillars of engagement aligned with the Bank’s mission:poverty reduction, economic management (including governance),and protection of environmental services and values.The revised strategy also recognized that the 1991 Strategydid not clearly define implementation mechanisms, butrather set out a menu of approaches that could be pursued.To harness the potential of forests to reduce poverty,the revised strategy recommended strengthening the rights offorest-dependent people—especially marginalized groups—by promoting community forest management and agroforestry.To achieve progress on the second pillar, the integrationof forests into sustainable economic development, the Bankwould help governments improve forest governance by assistingwith legal and institutional reforms and encouraginginvestments that catalyze production of forest products.The protection of local and global environmental servicesand values, the third pillar, would be achieved by continuingto support the creation and expansion of protected areas,improving forest management outside these areas, anddeveloping options to build markets and finance forinternational public goods such as biodiversity and carbonsequestration, that would include payments for forest ecosystemand environmental services.A forest portfolio review conducted for this study foundthat investment lending in forests has declined since theadoption of the 2002 Forest Strategy (see figure 4.1). Theportfolio composition has changed, with a shift frominvestment projects to Development Policy Loans 3 andincreased prominence of GEF-funded projects with globalenvironmental goals.Investment lending in forests has declinedsince adoption of the 2002 policy.Of the 124 forest-related projects in the 2002–08 portfolio,46 had objectives or components related to protected areas,and 10 had connections with payment for environmentalservices. Of the 17 projects for which forests were designatedas the leading sector, 11 contained components related tocommunity forest management.Payment for environmental servicesThe World Bank has supported roughly a dozen projectsover the past decade that have incorporated some form ofpayment for environmental services (PES) scheme, mainlyin Africa and Latin America and the Caribbean. PESschemes reward landholders for growing or conserving forests,which provide services such as watershed protectionand carbon storage. Payment is based on compliance withagreed conditions. Because the forest holder is typically notable to exclude particular beneficiaries, funds are typicallyraised through a levy on beneficiaries, or through taxation,though there are also voluntary payments and marketbasedschemes. PES schemes could be one model for implementationof REDD at the national level.PES schemes provide one model for implementationof REDD at the national level.Beyond Energy: Low-Carbon Paths in Cities and Forests | 53