Forests and Natural Habitats

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The planet’s irreplaceable and rapidly disappearing forests provide countless vital environmental services, including air and water purification, erosion control, climate regulation, water cycle regulation, resilience to climate change and natural disasters, pollination, and more tangible products such as medicine, food, fuel, and fiber. While the benefits provided by natural habitats are enjoyed by all, the world’s population living in extreme poverty relies particularly heavily on natural resources for their livelihoods. Consequently, the realization of World Bank President Kim’s recent pledge to reduce extreme poverty by 2030 is inextricably tied to maintaining the integrity of natural environments— a  task which requires robust safeguards.

The new safeguards, approved on August 4, 2016, are the result of four years of negotiations. The process of the safeguards review and the resulting new safeguards policy is a product of political compromise, and will have ramifications for forests and indigenous people for years to come. The World Bank stated in its press release that compared to current safeguards, the new safeguards are a streamlined approach that will help to build the capacity of borrowing governments and will improve protections for the world’s most vulnerable people and the environment. Many others including human rights and environmental groups have called the safeguards a “dangerous setback” in ensuring that World Bank lending does not have irreversible and damaging effects on people and the environment, specifically indigenous rights and forest protection.

The new safeguard policy on natural habitats has been a serious dilution of current requirements in that it has the potential to expand deforestation and degradation into areas that were previously no-go areas (see the BIC press release here). The current safeguards protect the rights of forest dependent communities by recognizing the role forests play in poverty alleviation. They include OPs on both natural habitats and on forests. The new policy, however, is much more narrowly focused on biodiversity, and has introduced dangerous flexibility around development in protected areas, including critical habitats and salvage logging in primary tropical forests. Furthermore, it is doubtful that the new safeguards language on ecosystem services, which implicitly link forest benefits to forest community benefits, will be binding or implemented in a meaningful way.

The new safeguards have allowed for the increased responsibility for management of projects by financial intermediaries (FIs), which have no legal incentive to protect indigenous and vulnerable people unless it is in their financial interest. Experience with the Bank’s private sector arm’s lending to FIs has shown that they often lack the capacity or will to spot and manage risks to communities, resulting in projects beset by human rights abuses.

However, it is important to keep in mind that much depends on the individual interpretation of the safeguards. Guidance notes are being drafted on key issues that are not explicitly addressed in the new safeguards along with new pilot projects. The new safeguards will go into effect in 2018 and will run alongside the current safeguards for the following 5 years.