World Bank clears forest preservation plans

The World Bank has approved the readiness plans (R-Plans) for Guyana and Panama, opening the way for both countries to tap grants of up to US$3.6 million for preserving their forests.

The decision was made after “significant debate” around weaknesses in the plans but political pressure to move the process forward won the day, according to a report from the Bank Information Centre (BIC).

With the approval of the R-Plans for the two countries, the World Bank moves its Forest Carbon Partnership Facility (FCPF) forward despite civil society protests, said the BIC, an NGO that advocates for the protection of rights, participation, transparency, and public accountability in the governance and operations of the World Bank, regional development banks, and International Monetary Fund. The decision was made at the third meeting of the Participants Committee (PC) of the World Bank’s FCPF, which was held in Montreaux, Switzerland from June 15 to 18.

The FCPF was created in 2007 as a mechanism to support country readiness for “reducing greenhouse gas emissions from deforestation and forest degradation” (REDD), a topic currently under negotiation at the United Nations Framework Climate Change Convention (UNFCCC). If REDD schemes are approved at the climate change negotiations in Copenhagen in December, REDD countries would theoretically be eligible for payments from the industrialised countries to support forest conservation. “REDD readiness”, in World Bank lingo, entails developing a reference scenario of the country’s historical and projected deforestation patterns, a strategy to reduce deforestation and conserve standing natural forest (a “REDD strategy”); and developing a system for monitoring, reporting and verification (MRV) of emissions reductions, all of which will need to be in compliance with evolving international standards to make the country eligible for REDD payments..

The FCPF is made up of two funds, a readiness fund and a carbon fund, the former to support country readiness efforts, and the latter to buy certified emissions reductions for trading on the carbon markets. The carbon fund is not yet operational. The PC is the governing body of the FCPF and is made up of both donor and developing country representatives.

On the agenda of the Switzerland meeting were the R-Plans from Guyana, Panama and Indonesia as well as other points regarding the template countries use to develop their R-Plans, the application of World Bank safeguards to FCPF projects, and the FCPF budget. “With regard to the three countries, while there was significant debate within the PC around weaknesses in all three R-plans, the political pressure to move the process forward won the day, with approval of the Guyana and Panama plans, and approval pending for Indonesia,” the BIC said. R-Plan grants amount to a maximum of US$3.6 million, which includes a $200,000 grant which can be provided up front to support R-Plan development.

Little progress
Both donor and REDD country representatives on the PC expressed concern that if the PC didn’t approve the plans immediately, there would be little progress to show in Copenhagen in December, undercutting the ability of nations advocating UNFCCC adoption of REDD to point to real on the ground advances, the BIC article noted.

It said that the World Bank is positioning itself to be the main financial intermediary for climate change aid flows, despite civil society protest. The bank similarly has strong institutional pressures to move the FCPF process forward and demonstrate capacity and achievements in piloting REDD, and is now essentially competing with other institutions which could play a similar role, such as the UNREDD and the Amazon Fund in Brazil, it added.

Unfortunately, according to the BIC, the issue of setting precedents cuts both ways: if the FCPF is seen to support poorly designed REDD projects in countries with significant governance problems in the forest sector, it will not only undermine public confidence in the FCPF, but could undercut the rationale for REDD in the first place. In order to help the PC make a decision on whether to approve an R-Plan, the World Bank has assembled a Technical Advisory Panel (TAP) of experts on forest issues, the recipient country, and at least one expert on indigenous issues for each R-Plan.

The TAP members for each produce an analysis of the strengths and weaknesses of the country’s R-Plan, and then develop a synthesis TAP report which is then sent to the country, and later to the PC. They base that analysis on a set of standards and criteria for R-Plans that were proposed by the bank staff who run the FCPF.

“The TAP reports for Guyana, Panama and Indonesia all noted significant weaknesses in the R-Plans, one of the main complaints being that their analysis of the drivers of deforestation was incomplete and poorly aligned with their proposed strategies. This is one of the biggest issues in the FCPF and perhaps REDD generally—many of the real drivers of deforestation come from outside the forest sector—mining, oil and gas projects, road construction, infrastructure and tourism development, expansion of agriculture and cattle ranching and the like. Said drivers are representative of the powerful economic interests that extend beyond the capacity of Forestry or Environment Ministers in charge of REDD planning to contain or even bring to the table to negotiate on future developments that will affect forests,” the article said.

It pointed out that another big issue is the weak governance of forests in the majority of REDD countries. However, Guyana and Panama are among those with relatively strong institutional frameworks. “Achieving sustained reductions in deforestation entails changing the economic incentives for a wide range of actors, creating an enabling policy framework, and significant improvements in law enforcement in areas where states often have little or no real presence. It also requires clarity of ownership of land and natural resources (including, but not limited to, carbon).  Because many of the last remaining areas of forest in the world are home to indigenous peoples who are, in many cases, responsible for their preservation, states must finally recognise the land and natural resource rights of their indigenous peoples. Such recognition must be accompanied by demarcation, land titling and effective protections against encroachment by miners, loggers and settlers. This requires political will at the top level of government, and entails some degree of confrontation with powerful economic interests who are currently profiting from deforestation,” the BIC declared.

Concerns
Meantime, the BIC also said that with the approval of the R-plans for Guyana and Panama, and the presumed approval of Indonesia’s R-plan in the next month, the focus shifts away from the PC and back onto the Facility Management Team (FMT) as it conducts due diligence prior to drafting grant agreements with the countries. A series of issues, or concerns arising from TAP reviews, civil society critiques and bank internal reviews, regarding areas of the R-Plan that need strengthening were documented in the PC meeting, and it is hoped that the FMT will work with countries to incorporate changes to the R-Plans prior to grant agreements, it stated.

The final version of the document summarizing these concerns will be circulated to the PC in July as part of the resolutions approving the R-Plans, and there may be some room for civil society to pressure governments to ensure that the summary is as complete as possible. Apart from that, there are few additional mechanisms for civil society to formally input or even access information during the bank’s due diligence process, although the FMT has demonstrated that they are receptive to hearing from civil society in-country, and groups working on REDD issues nationally should communicate their concerns directly, according to the article.

It went on to say that the World Bank’s due diligence with respect to FCPF projects is currently being treated as an investment project, as per the FCPF charter, and R-Plans need to be screened for the full range of potential social and environmental impacts under the bank’s operational policies for environmental assessment, natural habitats, forests, relocation and indigenous peoples.  An integrated safeguard data sheet will be made public at the time a grant agreement is signed.  There is, however, significant discussion within the FMT and the bank more broadly on how to apply the social and environmental safeguards to REDD readiness projects, as there are no (or very few) real investments in the classic sense at this point of the process, and the R-Plans consist mostly of terms of reference for further study, planning, consultation, strategy design and policy reform.

The BIC said given that the readiness processes being supported involve mostly planning and consultation, the FMT made a proposal in the Montreaux PC meeting to incorporate the use of strategic environmental and social assessments into the readiness processes, essentially carrying out SEA’s of the forest sector as a way of generating the information necessary to identify potential direct, indirect and cumulative social and environmental impacts down the road. “This proposal was met with opposition from developing country representatives on the PC, who complained of additional burdensome procedures and the delays they would cause, and who also criticized the bank for changing the procedures mid-stream. The bank responded by reminding members that everyone had committed to and was aware of the need to conduct safeguard review established in the FCPF Charter, and that this being a new process, the bank has had to come up with a proposal on how exactly, safeguards could be effectively and efficiently applied to FCPF projects,” it said.

Safeguards review of R-Plans will be a critical area for civil society to remain engaged. Many lingering concerns remain, ranging from adverse effects on forests and biodiversity due to conversion of natural forests to plantations or continuance of large scale industrial logging under the guise of sustainable forest management and social impacts due to land grabs, dislocation of indigenous peoples and other forest dwelling communities with unclear land tenure and the channelling of benefits to those who have been deforesting rather than those who have been conserving the forest. Perhaps these difficulties can be avoided with careful planning and analysis by participatory multi-stakeholder processes feeding into national REDD strategies, it stated.

The approval of the R-Plans also places the spotlight on the governments of Guyana, Panama and Indonesia, who, as the first countries to formally begin REDD readiness under the auspices of the World Bank, will be carefully scrutinized.  The experiences of these pilot countries will be used to assess whether the FCPF process is capable of facilitating sustained and effective engagement with civil society and indigenous peoples, and of producing high quality plans for reducing deforestation that are credible both nationally and internationally. “There is clearly also widespread international interest in determining whether the FCPF process will be able to support country generation of plausible reference scenarios and monitoring, reporting and verification systems that can meet international standards which may emerge after a global climate deal,” the BIC noted.

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