Development Policy Lending - Best Practice Case Studies

Eliminating adverse forest outcomes and enhancing beneficial forest outcomes

PROFOR's future work on this topic will focus on the development of guidelines to identify when forests are vulnerable to potentially adverse impacts arising from large macroeconomic adjustment programs. In September 2004, the World Bank Board of Executive Directors approved a new Operational Policy, OP 8.60, governing development policy lending. The social and environmental due diligence requirements in the new policy are more detailed and stringent than in Operational Directive 8.60, which the new policy supersedes. In light of this new operational policy, the Forests Team of the World Bank has been tasked to develop a clear and practical approach to assist Bank staff and client country institutions responsible for the design and implementation of development policy operations to meet due diligence requirements, especially in the context of forest outcomes.

Initial Bank analytical work (referred to as Economic and Sector Work (ESW) within the Bank) on Development Policy Lending (DPL) and forest outcomes to help the development of policy and practice in this key area will be completed by Summer 2005. The ESW on DPL and forest linkages will draw upon emerging lessons from a comprehensive review of the literature and a large number of country cases and examples from the Bank's adjustment lending portfolio. A key component of the due diligence approach requires a characterization of the initial conditions related to forests in countries where a DPL operation is under consideration. The initial conditions looked at fall into four categories: governance, forests' contribution to the economy, forests' conservation role, and forests' contribution to poverty reduction. In this context, PROFOR's work with partners on the development of a methodology to better articulate the forests-poverty linkages will provide essential input.

Next Potential Steps for PROFOR
Following the completion of the ESW on DPL, PROFOR is likely to carry out country specific analysis to accelerate action learning and testing of these emerging methodologies. This will subsequently find wide application in the ongoing due diligence work of the Bank and its clients in this area.

Last updated: March 1, 2005