The World Bank, Structural Adjustment, and Forest Policy Reform.

166 Pages·2000·1.72 MB·English

T H E R I G H T C O N D I T I O N S
THE WORLD BANK, STRUCTURAL ADJUSTMENT,
AND FOREST POLICY REFORM
FRANCES J. SEYMOUR
NAVROZ K. DUBASH
WITH:
JAKE BRUNNER
FRANÇOIS EKOKO
COLIN FILER
HARIADI KARTODIHARDJO
JOHN MUGABE
W O R L D R E S O U R C E S I N S T I T U T E
T H E R I G H T C O N D I T I O N S
T H E W O R L D B A N K , S T R U C T U R A L A D J U S T M E N T ,
A N D F O R E S T P O L I C Y R E F O R M
FRANCES J. SEYMOUR
NAVROZ K. DUBASH
WITH:
JAKE BRUNNER
FRANÇOIS EKOKO
COLIN FILER
HARIADI KARTODIHARDJO
JOHN MUGABE
WORLD RESOURCES INSTITUTE
W A S H I N G T O N , D C
CAROLLYNE HUTTER
EDITOR
HYACINTH BILLINGS
PRODUCTION MANAGER
FRANCES J. SEYMOUR
COVER PHOTO
Each World Resources Institute report represents a timely, scholarly treat- inquiry. It also solicits and responds to the guidance of advisory panels and
ment of a subject of public concern. WRI takes responsibility for choosing expert reviewers. Unless otherwise stated, however, all the interpretation and
the study topics and guaranteeing its authors and researchers freedom of findings set forth in WRI publications are those of the authors.
Copyright © 2000 World Resources Institute. All rights reserved.
ISBN 1-56973-424-0
Library of Congress Catalog Card No. 00-101940
Printed in the United States of America on chlorine-free paper with
recycled content of 50%, 20% of which is post-consumer.
C O N T E N T S
Acknowledgments...................................V 4. Indonesia..........................................83
Foreword...............................................VII Frances J. Seymour and Hariadi Kartodihardjo
Executive Summary.................................I Background...........................................................83
Adjustment Lending and
1. Introduction........................................7 Forest Policy Reform.......................................89
World Bank Forest Policy.....................................11 Implementation Experience................................93
The Changing Face of Structural The Roles of Other Stakeholders......................100
Adjustment Lending.........................................17 The Bottom Line.................................................105
2. Papua New Guinea...........................29 5. Kenya ...............................................113
Navroz K. Dubash and Colin Filer Frances J. Seymour and John Mugabe
Background..........................................................29 Background..........................................................113
Adjustment Lending............................................38 The Proposed“Environmental Adjustment”
Implementation Experience................................44 Loan......................................................................117
The Roles of Other Stakeholders.......................46 The Process Stalls...............................................123
The Bottom Line...................................................51 The Roles of Other Stakeholders.......................125
The Bottom Line.................................................127
3. Cameroon.........................................59
6. Conclusion.......................................133
Jake Brunner and François Ekoko
Twisting Arms and Tipping Scales...................134
Background..........................................................59
Building Coalitions for Change.........................139
Adjustment Lending and
Implications for the World Bank.......................143
Forest Policy Reform........................................61
The Bottom Line.................................................147
Implementation Experience...............................68
Appendix: Research Design.................151
The Roles of Other Stakeholders........................73
The Bottom Line..................................................77 About the Authors................................155
WRI:THERIGHTCONDITIONS
iii
BOXES
Box 1.1: Structural Adjustment Defined
Box 1.2: Suriname: International Support Buys Time for Forest Policy Reform
Box 1.3: Philippines: Borrower Ownership Through Forest Sector Lending
Box 1.4: World Bank Conventional Wisdom on Forest Policy
Box 1.5: The Environmental Impacts of Structural Adjustment
Box 2.1: Solomon Islands: Borrower Ownership Necessary to ‘Tip the Scales’
Box 2.2: Chronology of Adjustment and Forest Policy Reform in Papua New Guinea
Box 2.3: Sustainable Development Conditions in the ERP Policy Matrix
Box 3.1: Chronology of Adjustment and Forest Policy Reform in Cameroon
Box 3.2: Forest Conditionalities
Box 4.1: Chronology of Adjustment and Forest Policy Reform in Indonesia
Box 4.2: Commitments in the January 1998 Letter of Intent Related to Forestry and Environment
Box 4.3: The Right Conditions?
Box 4.4: Cambodia: Learning to Dance Smoothly with the World Bank
Box 5.1: Environment-related Commitments Contained in the 1996–1998 Policy Framework Paper
Box 5.2: Chronology of Events Related to Environmental Adjustment and Stakeholder Involvement
in Kenya
TABLES
Table 1.1: World Bank Lending in Case Study Countries
(In Total Commitments US $ Million), 1980–1998
Table 3.1: World Bank Lending to Cameroon (In Total Commitments US $ Million), 1980–1998
FIGURE
Figure1-1:Adjustment Lending as a Percent of Total Lending Commitments for
the World Bank, 1980–1999
WRI:THERIGHTCONDITIONS
iiii
A C K N O W L E D G M E N T S
T he creation of this report was a team Institute workshop in April 1999 to review
effort. We wish to thank our col- our preliminary results.
leagues who researched and wrote the
background case studies for this project and This report has greatly benefited from
co-wrote the country case studies: Jake experts who reviewed the entire manuscript
Brunner, François Ekoko, Colin Filer, and we are grateful for their helpful com-
Hariadi Kartodihardjo, and John Mugabe. In ments: David Kaimowitz, Joan Nelson, Dan
addition, we are grateful to Kilyali Kalit, Ritchie, Michael Ross, and Angela Wood. We
George Krhoda, and Benson Mak’Ochieng also appreciate detailed reviews of portions of
for providing considerable analytical assis- the report by Mubariq Ahmad, Mark Baird,
tance with the background papers. Jean-Marc Bouvard, David Brown, Jean-
Christophe Carret, Lafacadio Cortesi, Laurent
Lily Donge managed the writing, produc- Debroux, Peter Dewees, Jim Douglas, Joanna
tion, and review process, while also providing Elliott, Vicente Ferrer, Marianne Haug,
research assistance. Her work has made the Korinna Horta, Lisa Jordan, Alain Karsenty,
report possible and we deeply appreciate all Jean-Jacques Landrot, Nick Menzies,
her efforts. We also wish to thank Nathan Boniface Essama Nssah, Eavan O’Halloran,
Badenoch, Lily Donge, Tony La Viña, Richard Simon Rietenbergen, Wahidah Shah, Hinrich
Payne, and Nigel Sizer for their contribu- Stoll, Fred Swartzendruber, Meg Taylor, Rod
tions to the text boxes on Cambodia, the Taylor, Tom Walton, and Nurina Widagdo.
Philippines, Solomon Islands, and Suriname.
In addition, we wish to thank our WRI col-
This report is built on the collective reflec- leagues who reviewed and helped with this
tion and feedback of many people in bor- report: Duncan Austin, Chip Barber, Paul
rower country governments, nongovernmen- Faeth, Debbie Farmer, Tony Janetos, Tony La
tal organizations, industry, and the World Viña, Jesse Ribot, Nigel Sizer, and Peter Veit.
Bank. We wish to thank our sources who We greatly appreciate the reviewers’ com-
generously gave their time and insights in ments and suggestions, which have helped
not-for-attribution interviews and correspon- strengthen the report. The authors assume
dence. Special thanks to colleagues and part- full responsibility for any remaining errors of
ners who participated in a World Resources fact and interpretation.
WRI:THERIGHTCONDITIONS
v
Hyacinth Billings, Debbie Farmer, and We are grateful for financial support from
Carollyne Hutter provided valuable support the Charles Stewart Mott Foundation, the
in editing, production, and publication of the Netherlands Ministry of Foreign Affairs, the
report. We thank them and the rest of WRI’s Spencer T. and Ann W. Olin Foundation, and
Communications staff for their assistance in the Wallace Global Fund.
distribution and outreach.
FRANCES J. SEYMOUR
NAVROZ K. DUBASH
WRI:THERIGHTCONDITIONS
vi
F O R E W O R D
O ver the last 15 years, the World Bank intersection of these two controversial arenas
has come under a steady stream of by asking the question: to what extent, and
criticism for the negative impacts of under what conditions, can the World Bank
its policy advice and lending operations on be an effective proponent of forest policy
environmental sustainability, social equity, reform through adjustment lending?
and good governance in borrower countries.
An important question facing reformers A key finding of the report is that under
inside and outside the World Bank is certain circumstances, the World Bank has
whether the institution’s significant analyti- been effective in supporting domestic con-
cal capacity and financial leverage can be har- stituencies for reform against entrenched
nessed to promote those goals in collabora- vested interests in unsustainable logging.
tion with domestic constituencies for reform. The World Bank’s engagement of stakeholder
groups and ability to sustain its commitment
Two of the most contentious issues raised to the reform agenda are identified as key
by critics of the World Bank’s performance elements of effectiveness. However, where
have been the institution’s involvement in institutional capacity is weak, the World
the forest sector and its promotion of struc- Bank has been much less successful in utiliz-
tural adjustment. Both of these issues are ing adjustment lending to leverage imple-
high on the policy agenda in the year 2000, mentation of agreed policy changes. The
as the World Bank concludes a two-year report identifies changes in World Bank
Forest Policy Implementation Review and policy and practice that would improve the
Strategy process, and considers the implica- institution’s effectiveness, credibility, and
tions of unprecedented levels of adjustment legitimacy as a proponent of forest policy
lending in the wake of the financial crises of reform.
the late 1990s.
The report challenges the conventional
In The Right Conditions: The World Bank, World Bank wisdom in several respects.
Structural Adjustment, and Forest Policy First, with respect to forest policy, the report
Reform, Frances Seymour, Navroz Dubash, recommends that the Bank move beyond effi-
and their colleagues in Papua New Guinea, ciency-oriented reforms within an industrial
Cameroon, Indonesia, and Kenya address the forest management paradigm to embrace
WRI:THERIGHTCONDITIONS
vii
more fundamental reforms oriented toward good governance, forest issues must be
equity and environmental sustainability. addressed front and center.
Second, with respect to the effectiveness of
conditionality in adjustment lending and bor- WRI has addressed the changing interna-
rower commitment to reform, the report tional political economy of the forest sector
finds that the process by which the World in several reports including: Logging Burma’s
Bank engages the borrower in the reform Frontier Forests: Resources and the Regime by
agenda is significant. A strict application of Jake Brunner and colleagues; Tree Trade:
the principle of selectivity—in which the Liberalization of International Commerce in
World Bank only lends to governments Forest Products by Nigel Sizer and colleagues;
already fully committed to reform—would and Trial by Fire: Forest Fires and Forestry
result in missed opportunities for the World Policy in Indonesia’s Era of Crisis and Reform
Bank to “tip the scales” toward embattled by Charles V. Barber and colleagues.
constituencies for reform.
Support for this report, companion reports
Finally, the report sheds light on the World and events in case study countries, and for
Bank’s new governance agenda, articulated in WRI’s International Financial Flows and the
President Wolfensohn’s 1999 Annual Environment Project has been provided by
Meetings address. The report concludes that the C.S. Mott Foundation, the Wallace Global
in order to be an effective proponent of Fund, the Spencer T. and Ann W. Olin
reform in the forest sector, the World Bank Foundation, and the Netherlands Ministry
must address governance issues. Conversely, of Foreign Affairs. I am pleased to express
in countries where forests are important, for our appreciation for their generosity and
the World Bank to be a credible proponent of foresight.
JONATHAN LASH
PRESIDENT
WORLD RESOURCES INSTITUTE
WRI:THERIGHTCONDITIONS
viii
E X E C U T I V E S U M M A R Y
PURPOSE AND APPROACH as well as to develop a forward-looking
strategy.
O ver the last 15 years, two of the most
contentious issues faced by the This report addresses the intersection of
World Bank have been its involve- these two controversial arenas by asking the
ment in the forest sector and its structural question: to what extent, and under what
adjustment lending. Concern about the conditions, can the World Bank be an effec-
World Bank’s role in contributing to forest tive proponent of forest policy reform
degradation in borrower countries led to a through adjustment lending? The report
ban on World Bank finance for logging in focuses on experience in a few exceptional
primary tropical forests in 1991, but the cases where the World Bank has explicitly
impact on forests of lending in other sectors included forest policy reform conditions in
and structural adjustment remains controver- adjustment lending operations: Papua New
sial. Critiques of structural adjustment lend- Guinea, Cameroon, and Indonesia. In addi-
ing have focused on the unintended negative tion, the report includes an analysis of what
consequences of macroeconomic reform and happened in Kenya, where the World Bank
fiscal austerity for the poor and for the envi- proposed, but did not move forward on, an
ronment, as well as on the World Bank’s adjustment operation focused on environ-
infringement on national sovereignty and mental policy reform.
democratic process.
Previous World Bank forest policy reviews
The late 1990s witnessed a spike in struc- have focused on the positive and negative
tural adjustment lending in absolute terms impacts on forests of project-specific loans,
and as a proportion of overall World Bank while past reviews of adjustment lending
lending, as well as a revival of debates about have examined the unintended, usually nega-
the effectiveness of conditionality, spurred by tive, social and environmental consequences
the World Bank report, Assessing Aid. And in of macroeconomic policy change. By con-
1998, the World Bank initiated a two-year trast, this analysis concentrates on the few
Forest Policy Implementation Review and examples of the World Bank’s intentional use
Strategy process, designed to assess the of structural adjustment as an instrument to
World Bank’s experience in the forest sector, bring about changes in forest policy.
WRI:THERIGHTCONDITIONS
1