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Rainforest in Malaysia. (Photo by R. Butler)
Intergovernmental Institutions
Until recently the concept of sustainable development was foreign to the principal organizations funding development
projects, the World Bank and the International Monetary Fund (IMF). The World Bank, a multilateral development
bank that lends money to help countries develop economically through financing infrastructure and new industries, has
historically funded numerous projects that resulted in the destruction of rainforests. The IMF shares a similar record.
The bank has traditionally funded "mega-projects" because they are easier to administer than a number
of small projects. Because of the size of these projects, World Bank loans to developing countries are usually
substantial, sometimes in the billion-dollar range, adding further debt pressure. In 1987 the bank granted loans
exceeding US$15 billion to tropical countries. Some developing countries lack heavy-equipment industries, so a portion
of the loan is often returned to the contributing countries in the form of payments for industrialized products
and materials.
The influence of the World Bank is powerful, and other organizations follow its lead by sponsoring similarly destructive
projects. The bank primarily used economic rate of return as its means of selecting projects, and virtually ignored
the social and ecological costs. The result has been many socially and environmentally damaging projects like the
Brazilian Tucuri Dam, which displaced 25,000 people and submerged 900 square miles of rainforest; the Polonoroeste
road-building project, which promoted the colonization of the rainforests of Rondonia, Brazil, by one million peasant
farmers; and the Indonesian transmigration program.
However, in recent years, the World Bank and such organizations have designed a number of useful and successful projects
that are considerably more sustainable, while promoting economic returns as well. Today these institutions staff environmental
consultants to raise concerns over the impacts of new projects.
The Global Environmental Facility (GEF), established in 1990 by the World Bank, UN Environmental Program, and UN
Development program, has committed hundreds of millions of dollars to setting up national parks, promoting sustainable
forestry, and establishing conservation trust funds in developing countries. In August 1994, the World Bank inspection
panel was established as a independent body to create a legal mechanism for individuals and organizations
whose interests are adversely affected by bank-backed projects. Through it, investigation can be conducted to correct
mistakes and ensure that the bank enforces its own policies. The panel was put to the test in 1995, for the first time,
when Latin America challenged a World Bank project, Planafloro—a loan of US$167 million to Rondonia, Brazil.
The challengers cited mismanagement and social/environmental degradation from a previous loan as their reason for submitting
their claim. In 1996, the World Bank withheld a loan to Papua New Guinea after it failed to conform with its timber
regulations (although the bank has since granted the loan). In 1999 the World Bank weakened the panel.
The World Bank is currently wooing loggers to participate in sustainable forestry projects. The implementation
of these and future reforms may prevent the bank from sponsoring further Tucuri-scale projects. Environmental reform
of the World Bank lies in the hands of the developed nations since they control the majority of the votes. The
member nations vote on what projects to finance and therefore have control over World Bank activities.
In December 2005, the World Bank granted the Democratic Republic of Congo (DRC) $90 million to support the central African country's transition from instability and civil war. The grant addresses key areas in DRC's forestry sector including strengthening an existing moratorium on new logging concessions "until such a time when a strategy for the use of DRC's forest resources is elaborated, in consultation with all affected and potentially affected stakeholders, including indigenous people, and is duly adopted," according to a bank statement. Further, the grant requires an independent review of the legality of all existing concessions and the publication of all concessions awarded to date. The World Bank says these measures are expected "to help increase transparency and to promote the environmentally sustainable and socially responsible use of DRC's forests."
The World Bank is increasingly funding small community projects that more directly benefit the local economy and
are often less environmentally destructive. Because decisions are made on a local level, projects can be better
adapted to local conditions.
In June 1997, WWF and the World Bank announced a global alliance for forest conservation and sustainable use. The
plan called for the protection of 10 percent of each of the world's major forest types by the year 2000 by establishing large areas of
forests under "real" sustainable management. While the plan failed to meet its goal, it was a major commitment towards greener practices on the part of the World Bank. In 2005 the WWF-World Bank Forest Alliance announced an ambitious global program aimed at reducing global deforestation rates by 10 percent by 2010. The Forest Alliance continues to look promising because it forces countries to live up to their conservation commitments or risk their standing with international financial institutions. Such alliances between groups with different constituents are vital to future conservation efforts.
Investing to save rainforests
(4/2/2008) Last week London-based Canopy Capital, a private equity firm, announced a historic deal to preserve the rainforest of Iwokrama, a 371,000-hectare reserve in the South American country of Guyana. In exchange for funding a "significant" part of Iwokrama's $1.2 million research and conservation program on an ongoing basis, Canopy Capital secured the right to develop value for environmental services provided by the reserve. Essentially the financial firm has bet that the services generated by a living rainforest — including rainfall generation, climate regulation, biodiversity maintenance and carbon storage — will eventually be valuable in international markets. Hylton Murray-Philipson, director of Canopy Capital, says the agreement — which returns 80 percent of the proceeds to the people of Guyana — could set the stage for an era where forest conservation is driven by the pursuit of profit rather than overt altruistic concerns.
Private equity firm buys rights to ecosystem services of Guyana rainforest
(3/27/2008) A private equity firm has purchased the rights to environmental services generated by 371,000 hectare rainforest reserve in Guyana. Terms of the deal were not disclosed, but the agreement is precedent-setting in that a financial firm is betting that the services generated by a living rainforest — including rainfall generation, climate regulation, biodiversity maintenance and water storage — will eventually see compensation in international markets.
Norway puts $560m toward rainforest conservation
(12/9/2007) Norway will commit NOK 3 billion ($560m) to rainforest conservation efforts in an effort to slow climate change, reports Aftenposten, a Norwegian newspaper.
REDD will fail if needs of forest communities aren't addressed
(12/7/2007) Initiatives to reduce emissions by reducing tropical deforestation (REDD) will fail unless policymakers adequately address the underlying drivers of forest degradation and destruction, argues a new report published by the Center for International Forestry Research (CIFOR).
