Strengthening the value chain for indigenous and community forestry operations through increased investment and use of technical assistance

CHALLENGE

The link between sustainable forest management practices and community benefits has not been well documented. Likewise, the connection between the sale of certified products and conservation outcomes is sometimes lost amid general skepticism. Part of the reason investments in community forestry operations are not well understood is that studies tend to rely on anecdotal evidence rather than income and productivity data.

APPROACH

Building on the successful work of the Rainforest Alliance's Sustainable Forestry Division in Mexico and Central America, PROFOR co-financed three case studies documenting changes in income, return on investment and the role of technical assistance in bringing investments to their full potential in Mexico, Guatemala and Honduras.

The case studies are expected to motivate community forestry operations to invest in their operations and strive for improved competitiveness.

MAIN FINDINGS

• In Mexico, with an investment of $1.1 million over three years, the operation increased sawmilling efficiencies and lowered production costs by 43% without sacrificing jobs. A greater focus on secondary processing and investment in their business led to a change in annual profits from minus $561,646 to plus $1.7 million.
• In Guatemala, FSC certified community concessions increased their revenues by 209% to $5.8 million.  Improved saw milling efficiencies and higher grades of mahogany along with FSC certified mahogany price increases drove the increase in revenues as did the addition of a FSC certified non-timber product.  Employment increased for women though value added processing for non-timber products.  Investments by communities themselves have been modest but donor investments in training and technical assistance have probably exceeded $10 million.
   
• In Honduras, cooperatives banded together to provide semi-processed mahogany for export to certified markets, changing their production chain and adopting sustainable forest management practices. With only a 19% increase in volume harvested, revenues have increased by 128% to $579,375. Actual production costs rose 40% from 2006 to 2008, due to increased costs of forest management and taxes, as well as the extra care needed to produce quality mahogany grades.  The cooperatives have invested over $113,000 in simple machinery.

RESULTS

The results of the three case studies were presented at the World Forestry Congress in Buenos Aires, Argentina in October 2009. The Mexico case study was presented at the Expo Forestal in Mexico in September 2009. In both cases, the data on production, efficiency and community benefits was well received.

The indicators used in these cases studies will be useful for measuring impact in other communities. A new forestry project with CONAFOR/UNDP/GEF and the Rainforest Alliance will use the same methodology and variables in Mexico to measure community level impacts on wood harvesting, usage and income. The Rainforest Alliance is also starting two new community forestry projects in Ghana and Cameroon which will use a subset of these variables, adapted for West Africa.

Strengthening the value chain for indigenous and community forestry operations through increased investment and use of technical assistance

CHALLENGE

The link between sustainable forest management practices and community benefits has not been well documented. Likewise, the connection between the sale of certified products and conservation outcomes is sometimes lost amid general skepticism. Part of the reason investments in community forestry operations are not well understood is that studies tend to rely on anecdotal evidence rather than income and productivity data.

APPROACH

Building on the successful work of the Rainforest Alliance's Sustainable Forestry Division in Mexico and Central America, PROFOR co-financed three case studies documenting changes in income, return on investment and the role of technical assistance in bringing investments to their full potential in Mexico, Guatemala and Honduras.

The case studies are expected to motivate community forestry operations to invest in their operations and strive for improved competitiveness.

MAIN FINDINGS

• In Mexico, with an investment of $1.1 million over three years, the operation increased sawmilling efficiencies and lowered production costs by 43% without sacrificing jobs. A greater focus on secondary processing and investment in their business led to a change in annual profits from minus $561,646 to plus $1.7 million.
• In Guatemala, FSC certified community concessions increased their revenues by 209% to $5.8 million.  Improved saw milling efficiencies and higher grades of mahogany along with FSC certified mahogany price increases drove the increase in revenues as did the addition of a FSC certified non-timber product.  Employment increased for women though value added processing for non-timber products.  Investments by communities themselves have been modest but donor investments in training and technical assistance have probably exceeded $10 million.
   
• In Honduras, cooperatives banded together to provide semi-processed mahogany for export to certified markets, changing their production chain and adopting sustainable forest management practices. With only a 19% increase in volume harvested, revenues have increased by 128% to $579,375. Actual production costs rose 40% from 2006 to 2008, due to increased costs of forest management and taxes, as well as the extra care needed to produce quality mahogany grades.  The cooperatives have invested over $113,000 in simple machinery.

RESULTS

The results of the three case studies were presented at the World Forestry Congress in Buenos Aires, Argentina in October 2009. The Mexico case study was presented at the Expo Forestal in Mexico in September 2009. In both cases, the data on production, efficiency and community benefits was well received.

The indicators used in these cases studies will be useful for measuring impact in other communities. A new forestry project with CONAFOR/UNDP/GEF and the Rainforest Alliance will use the same methodology and variables in Mexico to measure community level impacts on wood harvesting, usage and income. The Rainforest Alliance is also starting two new community forestry projects in Ghana and Cameroon which will use a subset of these variables, adapted for West Africa.

Strengthening the value chain for indigenous and community forestry operations through increased investment and use of technical assistance

CHALLENGE

The link between sustainable forest management practices and community benefits has not been well documented. Likewise, the connection between the sale of certified products and conservation outcomes is sometimes lost amid general skepticism. Part of the reason investments in community forestry operations are not well understood is that studies tend to rely on anecdotal evidence rather than income and productivity data.

APPROACH

Building on the successful work of the Rainforest Alliance's Sustainable Forestry Division in Mexico and Central America, PROFOR co-financed three case studies documenting changes in income, return on investment and the role of technical assistance in bringing investments to their full potential in Mexico, Guatemala and Honduras.

The case studies are expected to motivate community forestry operations to invest in their operations and strive for improved competitiveness.

MAIN FINDINGS

• In Mexico, with an investment of $1.1 million over three years, the operation increased sawmilling efficiencies and lowered production costs by 43% without sacrificing jobs. A greater focus on secondary processing and investment in their business led to a change in annual profits from minus $561,646 to plus $1.7 million.
• In Guatemala, FSC certified community concessions increased their revenues by 209% to $5.8 million.  Improved saw milling efficiencies and higher grades of mahogany along with FSC certified mahogany price increases drove the increase in revenues as did the addition of a FSC certified non-timber product.  Employment increased for women though value added processing for non-timber products.  Investments by communities themselves have been modest but donor investments in training and technical assistance have probably exceeded $10 million.
   
• In Honduras, cooperatives banded together to provide semi-processed mahogany for export to certified markets, changing their production chain and adopting sustainable forest management practices. With only a 19% increase in volume harvested, revenues have increased by 128% to $579,375. Actual production costs rose 40% from 2006 to 2008, due to increased costs of forest management and taxes, as well as the extra care needed to produce quality mahogany grades.  The cooperatives have invested over $113,000 in simple machinery.

RESULTS

The results of the three case studies were presented at the World Forestry Congress in Buenos Aires, Argentina in October 2009. The Mexico case study was presented at the Expo Forestal in Mexico in September 2009. In both cases, the data on production, efficiency and community benefits was well received.

The indicators used in these cases studies will be useful for measuring impact in other communities. A new forestry project with CONAFOR/UNDP/GEF and the Rainforest Alliance will use the same methodology and variables in Mexico to measure community level impacts on wood harvesting, usage and income. The Rainforest Alliance is also starting two new community forestry projects in Ghana and Cameroon which will use a subset of these variables, adapted for West Africa.

Strengthening the value chain for indigenous and community forestry operations through increased investment and use of technical assistance

CHALLENGE

The link between sustainable forest management practices and community benefits has not been well documented. Likewise, the connection between the sale of certified products and conservation outcomes is sometimes lost amid general skepticism. Part of the reason investments in community forestry operations are not well understood is that studies tend to rely on anecdotal evidence rather than income and productivity data.

APPROACH

Building on the successful work of the Rainforest Alliance's Sustainable Forestry Division in Mexico and Central America, PROFOR co-financed three case studies documenting changes in income, return on investment and the role of technical assistance in bringing investments to their full potential in Mexico, Guatemala and Honduras.

The case studies are expected to motivate community forestry operations to invest in their operations and strive for improved competitiveness.

MAIN FINDINGS

• In Mexico, with an investment of $1.1 million over three years, the operation increased sawmilling efficiencies and lowered production costs by 43% without sacrificing jobs. A greater focus on secondary processing and investment in their business led to a change in annual profits from minus $561,646 to plus $1.7 million.
• In Guatemala, FSC certified community concessions increased their revenues by 209% to $5.8 million.  Improved saw milling efficiencies and higher grades of mahogany along with FSC certified mahogany price increases drove the increase in revenues as did the addition of a FSC certified non-timber product.  Employment increased for women though value added processing for non-timber products.  Investments by communities themselves have been modest but donor investments in training and technical assistance have probably exceeded $10 million.
   
• In Honduras, cooperatives banded together to provide semi-processed mahogany for export to certified markets, changing their production chain and adopting sustainable forest management practices. With only a 19% increase in volume harvested, revenues have increased by 128% to $579,375. Actual production costs rose 40% from 2006 to 2008, due to increased costs of forest management and taxes, as well as the extra care needed to produce quality mahogany grades.  The cooperatives have invested over $113,000 in simple machinery.

RESULTS

The results of the three case studies were presented at the World Forestry Congress in Buenos Aires, Argentina in October 2009. The Mexico case study was presented at the Expo Forestal in Mexico in September 2009. In both cases, the data on production, efficiency and community benefits was well received.

The indicators used in these cases studies will be useful for measuring impact in other communities. A new forestry project with CONAFOR/UNDP/GEF and the Rainforest Alliance will use the same methodology and variables in Mexico to measure community level impacts on wood harvesting, usage and income. The Rainforest Alliance is also starting two new community forestry projects in Ghana and Cameroon which will use a subset of these variables, adapted for West Africa.

CHALLENGE:

Investment in forest management was always traditionally driven by conservation and sustainable forest management objectives. Most lending operations on forests focused on solutions within the forest sector itself. This inward paradigm changed over the recent years especially after the introduction of REDD+, which started to systematically analyze the drivers of deforestation outside the forest sector.  Additionally, the development world increasingly recognized that forests provided concrete and valuable services for other sectors. Although REDD+ initially provided new financial resources for client countries and opened engagement in many new countries, forest operations are still either underrepresented or their full operational potential has not yet been explored to tackle the underlying issues that plague the forest sector.

Therefore, CFNs will allow going deeper into the key issues in the forestry sector in a coordinated manner over time to fill knowledge gaps. The primary goal is to increase the understanding of the strategic value of forests in the Strategic Country Diagnostic (SCD) and Country Partnership Framework (CPF) process; in countries where this goal is achieved, the Country notes will help to shape a more programmatic approach to forests over time.

APPROACH:

The program supports an integrated development model that advances socioeconomic opportunities and needs without jeopardizing the health of forests, based on four features: country-owned program, appropriate mix of financial instruments, cohesive financial architecture, and long-term engagement. Activities will involve the following:

• Analyze the threats to forests in individual countries or regions and the opportunities for socioeconomic growth in the forest sector.
• Inform the SCDs and CPFs and then work towards a more programmatic engagement and explore how to tap into the full range of instruments available to address the underlying challenges.
• Provide strategic inputs into the development of the Nationally Determined Contributions (NDCs).

The CFNs are meant to be ‘living documents’, in that they will be reviewed and updated regularly to reflect additional data, a changing portfolio and the evolving dialogue and engagement with the relevant counterparts. The notes will act as a template to think through the complex issues, initially internally within the Bank, but over time, in coordination with partners and clients in the country as well.  The CFN process will involve critical assessment, preparation and annual implementation of action plans to address gaps and deep dives into the solutions needed for Forest Smart Investments.

A total of 7 countries has been selected to deliver on Country Notes based on (i) priorities of the Bank and its partners, forest size and opportunities on the ground and (ii) demand coming from the country units, clients and WB management. Selected countries are: Colombia, Mexico, Ethiopia, DRC, Indonesia, Nepal and Vietnam and possibly Liberia. Other countries have already expressed interest for the next round, including Brazil, Honduras, Lao PDR, Mozambique and Turkey.

RESULTS:

From Feb 2017- Jan 2019, this activity supported Country Forest Notes (CFN) produced for Nepal, Liberia, Mozambique, DRC, Mexico, Indonesia, Colombia, and Ethiopia.  As a result of this activity, the World Bank`s engagement on forests is integrated across sectors, accessing new and innovative finance in an integrated manner. The key outcomes from the CFNs supported by this activity are summarized below:  

Colombia: 

• Provided an upstream analysis of threats to forests and opportunities for socioeconomic growth 
• Served as an input to policy dialogue at 2017 Spring Meetings and with key forest-sector donors at the COP22 to infrom government, Bank, and donor strategy in the forest sector.  
• Donors utilizing the CFN and other inputs to define their forest investment strategy in Colombia.  
• Informed the Bank’s programmatic approach on forests, including the preparation of the Sustainable Low-Carbon Development in Orinoquia Region Project (BioCF ISFL, including its Emission Reductions Program), the Orinoquia Sustainable Integrated Landscape Project (GEF), and the GEF7 FOLUR Sustainable Supply Chains in Deforestation Hotspots.  It also informed more strategic ASAs to identify IPF and IFC entry points.  
• CFN led to a client request for a follow-on study “Support to Forest Economy”, which informed Colombia’s Green Growth policy, specifically the pillar on promoting Colombia’s forest economy. The GG policy was formally adopted by the GoC in June 2018. This ASA developed three knowledge products: 1) A Business Plan for Sustainable Forest Management and Non-Timber Forest Products (NTFP) in the Southern Pacific region (Cauca and Nariño), 2) A Business Plan focusing on the altillanura savannah area of the Orinoquia region, with a view of improving local communities and private sector investors productive practices options, which provided an opportunity to explore IFC interest in developing forest business in this region (who peer-reviewed the product and identified areas for continued due diligence to explore a potential investment), 3) An analysis of financial instruments that reviewed financing and incentive requirements necessary to support the successful development of commercial forestry and sustainable forest management activities. The structure of a national forest service to promote a competitive development of the forest sector that could be supported by the World Bank, was also explored. This knowledge product is supporting ongoing dialogue with the government. 

DRC: 

• CFN is beginning the dialogue again with the CMU since the previous WBG engagement came to a standstill in 2015.  The CFN is promoting dialogue to begin a new phase of engagement 
• The note is clearly reflecting the status of forests, the role of these for national economic development, livelihoods, provision of ecosystem services, climate change mitigation and adaptation and  the main challenges and opportunities present in DRC in regards to promote for forest smart development 
• The note highlights that agriculture, artisanal wood production, fuel wood and charcoal for energy production and mining are the main direct drivers of deforestation 
• Emphasizes on the Maï-Ndombe Emission Reductions Program which is a first step in implementing the country’s national REDD+ strategy. 

Ethiopia: 

• Built on analytical studies prepared for the REDD+ readiness program, Forest sector reviews, Forest Public-Pirvate Dialogue, and the preparation of forest chapters of the Country’s Growth and Transformation Plan 2 (GTP-2) and technical discussions.  
• CFN has been used directly and indirectly in forest policy and investment dialogue involving the government and other partners including donors including in the formulation and issuance of the new “Forest Development, Conservation and Utilization Proclamation”.  These have been used as inputs in the new forest laws and regulations.  
• The note presents a forward looking business case beyond the current investment portfolio and assesses key investment needs and potential interventions.  The Bank is advancing analysis and dialogue on critical land use and forest challenges including links to poverty, equity, sustainability and governance.  It is also building opportunities to integrate climate-smart approaches into sectoral dialogue and entry points with key ministries.   
• The key operations being influenced through this dialogue and analyses include: The Resilient Landscape and Livelihood Project (RLLP); the Oromia Forested Landscape Program (USD$68m); and dialogue between the Ethiopian Chamber of Commerce and Sectoral Association, the Forest Sector Transformation Unit, and other partners on meaningful engagement of private sector.   
• CFN has identified weak cross-sectoral policy and investment coordination as a key challenge 
• The OFLP program is therefore opening channels and coordination platforms across administrative tiers in the regional state of Oromia involving agriculture, livestock, energy, land use planning and civil society engagement.  
• CFN has positioned the Bank to leverage investment money through the operations mentioned including USD$119m for RLLP, and USD$19m from the Norwegian Government; and additional financing of USD$15m expected from Canadian government.  A GCF proposal for USD$183m has been submitted.   

Indonesia: 

•  Provided opportunities to identify forest-smart investment, TA and policy options, and supported discussion with the GOI team especially on further development of jurisdictional programs in East Kalimantan and Jambi, preparation of Social Forestry project, and identification of mangrove forests as a priority area for engagement.   

Liberia:  

• The note is supporting the ongoing IDA engagement in Liberia on forests (Liberia forest sector project) 
• Identified data and information needs that have led to an LSMS survey, a review of the FDA’s staffing, and other analytical studies including the Forest Sector Public Expenditure Review 
• Informed a high-level policy brief to the new government that was shared with HE the President in early 2018. 

Mexico: 

• The CFN utilized inputs from recently-conducted analytical work, helping to integrate and consolidate this work 
• CFN assessed opportunities to strengthen community forest enterprises, foster competitiveness in the forest sector, promote inter-institutional coordination to tackle perverse incentives (e.g., in the agriculture and livestock sectors) that lead to deforestation and degradation, and facilitate more inclusive forest landscapes, in which vulnerable populations are included in efforts to halt deforestation and degradation and implement integrated landscape management. 
• This work has shaped the design of the new IBRD/ISFL Strengthening Entrepreneurship in Productive Forest Landscapes Project (2018 – 2023) and helped advance the Bank’s dialogue on forests with Government counterparts and donors. 
• CFN has informed strategic instruments, such as the Country Partnership Framework, Policy Note on Sustainable Landscapes (a joint Agriculture and ENR GP exercise), Country Policy and Institutional Assessment, as well as a forest sector policy note. In addition, the Country Forest Note is also being used to inform an ISFL BioCarbon Fund Emissions Reduction Program that is in the initial design and preparation phase. 

Mozambique:   

• The process of preparing the note has influenced the existing blended finance program in Mozambique which includes FIP, FCPF, ILFM, MozBio, SUSTENTA and Zambezia ILMP.  
• The note is forming the basis of discussions with the government to consolidate a strategic vision for the future of the forest sector 

Nepal:   

• The note has been used to formulate the FIP Investment Plan for Nepal. The resulting FIP project will have IDA co-financing of $50mn out of a total of $95mn. 
• The data and statistics in the note have also been used to provide input to the SCD and CPF 
• The note is promoting dialogue on involving other sectors such as transport and hydropower in improving the forest clearance policy of Nepal 

BIC analysis:  The Bank Information Center has also published its review of a few of the CFNs – Liberia, Mozambique, Nepal and Indonesia.  The conclusion of the analysis is that CFNs have proved to be a useful exercise, aligning with the Forest Action Plan 2016-21, addressing cross-cutting issues, summarizing key policy challenges and opportunities, and integrating across sectors. 

CHALLENGE:

Investment in forest management was always traditionally driven by conservation and sustainable forest management objectives. Most lending operations on forests focused on solutions within the forest sector itself. This inward paradigm changed over the recent years especially after the introduction of REDD+, which started to systematically analyze the drivers of deforestation outside the forest sector.  Additionally, the development world increasingly recognized that forests provided concrete and valuable services for other sectors. Although REDD+ initially provided new financial resources for client countries and opened engagement in many new countries, forest operations are still either underrepresented or their full operational potential has not yet been explored to tackle the underlying issues that plague the forest sector.

Therefore, CFNs will allow going deeper into the key issues in the forestry sector in a coordinated manner over time to fill knowledge gaps. The primary goal is to increase the understanding of the strategic value of forests in the Strategic Country Diagnostic (SCD) and Country Partnership Framework (CPF) process; in countries where this goal is achieved, the Country notes will help to shape a more programmatic approach to forests over time.

APPROACH:

The program supports an integrated development model that advances socioeconomic opportunities and needs without jeopardizing the health of forests, based on four features: country-owned program, appropriate mix of financial instruments, cohesive financial architecture, and long-term engagement. Activities will involve the following:

• Analyze the threats to forests in individual countries or regions and the opportunities for socioeconomic growth in the forest sector.
• Inform the SCDs and CPFs and then work towards a more programmatic engagement and explore how to tap into the full range of instruments available to address the underlying challenges.
• Provide strategic inputs into the development of the Nationally Determined Contributions (NDCs).

The CFNs are meant to be ‘living documents’, in that they will be reviewed and updated regularly to reflect additional data, a changing portfolio and the evolving dialogue and engagement with the relevant counterparts. The notes will act as a template to think through the complex issues, initially internally within the Bank, but over time, in coordination with partners and clients in the country as well.  The CFN process will involve critical assessment, preparation and annual implementation of action plans to address gaps and deep dives into the solutions needed for Forest Smart Investments.

A total of 7 countries has been selected to deliver on Country Notes based on (i) priorities of the Bank and its partners, forest size and opportunities on the ground and (ii) demand coming from the country units, clients and WB management. Selected countries are: Colombia, Mexico, Ethiopia, DRC, Indonesia, Nepal and Vietnam and possibly Liberia. Other countries have already expressed interest for the next round, including Brazil, Honduras, Lao PDR, Mozambique and Turkey.

RESULTS:

From Feb 2017- Jan 2019, this activity supported Country Forest Notes (CFN) produced for Nepal, Liberia, Mozambique, DRC, Mexico, Indonesia, Colombia, and Ethiopia.  As a result of this activity, the World Bank`s engagement on forests is integrated across sectors, accessing new and innovative finance in an integrated manner. The key outcomes from the CFNs supported by this activity are summarized below:  

Colombia: 

• Provided an upstream analysis of threats to forests and opportunities for socioeconomic growth 
• Served as an input to policy dialogue at 2017 Spring Meetings and with key forest-sector donors at the COP22 to infrom government, Bank, and donor strategy in the forest sector.  
• Donors utilizing the CFN and other inputs to define their forest investment strategy in Colombia.  
• Informed the Bank’s programmatic approach on forests, including the preparation of the Sustainable Low-Carbon Development in Orinoquia Region Project (BioCF ISFL, including its Emission Reductions Program), the Orinoquia Sustainable Integrated Landscape Project (GEF), and the GEF7 FOLUR Sustainable Supply Chains in Deforestation Hotspots.  It also informed more strategic ASAs to identify IPF and IFC entry points.  
• CFN led to a client request for a follow-on study “Support to Forest Economy”, which informed Colombia’s Green Growth policy, specifically the pillar on promoting Colombia’s forest economy. The GG policy was formally adopted by the GoC in June 2018. This ASA developed three knowledge products: 1) A Business Plan for Sustainable Forest Management and Non-Timber Forest Products (NTFP) in the Southern Pacific region (Cauca and Nariño), 2) A Business Plan focusing on the altillanura savannah area of the Orinoquia region, with a view of improving local communities and private sector investors productive practices options, which provided an opportunity to explore IFC interest in developing forest business in this region (who peer-reviewed the product and identified areas for continued due diligence to explore a potential investment), 3) An analysis of financial instruments that reviewed financing and incentive requirements necessary to support the successful development of commercial forestry and sustainable forest management activities. The structure of a national forest service to promote a competitive development of the forest sector that could be supported by the World Bank, was also explored. This knowledge product is supporting ongoing dialogue with the government. 

DRC: 

• CFN is beginning the dialogue again with the CMU since the previous WBG engagement came to a standstill in 2015.  The CFN is promoting dialogue to begin a new phase of engagement 
• The note is clearly reflecting the status of forests, the role of these for national economic development, livelihoods, provision of ecosystem services, climate change mitigation and adaptation and  the main challenges and opportunities present in DRC in regards to promote for forest smart development 
• The note highlights that agriculture, artisanal wood production, fuel wood and charcoal for energy production and mining are the main direct drivers of deforestation 
• Emphasizes on the Maï-Ndombe Emission Reductions Program which is a first step in implementing the country’s national REDD+ strategy. 

Ethiopia: 

• Built on analytical studies prepared for the REDD+ readiness program, Forest sector reviews, Forest Public-Pirvate Dialogue, and the preparation of forest chapters of the Country’s Growth and Transformation Plan 2 (GTP-2) and technical discussions.  
• CFN has been used directly and indirectly in forest policy and investment dialogue involving the government and other partners including donors including in the formulation and issuance of the new “Forest Development, Conservation and Utilization Proclamation”.  These have been used as inputs in the new forest laws and regulations.  
• The note presents a forward looking business case beyond the current investment portfolio and assesses key investment needs and potential interventions.  The Bank is advancing analysis and dialogue on critical land use and forest challenges including links to poverty, equity, sustainability and governance.  It is also building opportunities to integrate climate-smart approaches into sectoral dialogue and entry points with key ministries.   
• The key operations being influenced through this dialogue and analyses include: The Resilient Landscape and Livelihood Project (RLLP); the Oromia Forested Landscape Program (USD$68m); and dialogue between the Ethiopian Chamber of Commerce and Sectoral Association, the Forest Sector Transformation Unit, and other partners on meaningful engagement of private sector.   
• CFN has identified weak cross-sectoral policy and investment coordination as a key challenge 
• The OFLP program is therefore opening channels and coordination platforms across administrative tiers in the regional state of Oromia involving agriculture, livestock, energy, land use planning and civil society engagement.  
• CFN has positioned the Bank to leverage investment money through the operations mentioned including USD$119m for RLLP, and USD$19m from the Norwegian Government; and additional financing of USD$15m expected from Canadian government.  A GCF proposal for USD$183m has been submitted.   

Indonesia: 

•  Provided opportunities to identify forest-smart investment, TA and policy options, and supported discussion with the GOI team especially on further development of jurisdictional programs in East Kalimantan and Jambi, preparation of Social Forestry project, and identification of mangrove forests as a priority area for engagement.   

Liberia:  

• The note is supporting the ongoing IDA engagement in Liberia on forests (Liberia forest sector project) 
• Identified data and information needs that have led to an LSMS survey, a review of the FDA’s staffing, and other analytical studies including the Forest Sector Public Expenditure Review 
• Informed a high-level policy brief to the new government that was shared with HE the President in early 2018. 

Mexico: 

• The CFN utilized inputs from recently-conducted analytical work, helping to integrate and consolidate this work 
• CFN assessed opportunities to strengthen community forest enterprises, foster competitiveness in the forest sector, promote inter-institutional coordination to tackle perverse incentives (e.g., in the agriculture and livestock sectors) that lead to deforestation and degradation, and facilitate more inclusive forest landscapes, in which vulnerable populations are included in efforts to halt deforestation and degradation and implement integrated landscape management. 
• This work has shaped the design of the new IBRD/ISFL Strengthening Entrepreneurship in Productive Forest Landscapes Project (2018 – 2023) and helped advance the Bank’s dialogue on forests with Government counterparts and donors. 
• CFN has informed strategic instruments, such as the Country Partnership Framework, Policy Note on Sustainable Landscapes (a joint Agriculture and ENR GP exercise), Country Policy and Institutional Assessment, as well as a forest sector policy note. In addition, the Country Forest Note is also being used to inform an ISFL BioCarbon Fund Emissions Reduction Program that is in the initial design and preparation phase. 

Mozambique:   

• The process of preparing the note has influenced the existing blended finance program in Mozambique which includes FIP, FCPF, ILFM, MozBio, SUSTENTA and Zambezia ILMP.  
• The note is forming the basis of discussions with the government to consolidate a strategic vision for the future of the forest sector 

Nepal:   

• The note has been used to formulate the FIP Investment Plan for Nepal. The resulting FIP project will have IDA co-financing of $50mn out of a total of $95mn. 
• The data and statistics in the note have also been used to provide input to the SCD and CPF 
• The note is promoting dialogue on involving other sectors such as transport and hydropower in improving the forest clearance policy of Nepal 

BIC analysis:  The Bank Information Center has also published its review of a few of the CFNs – Liberia, Mozambique, Nepal and Indonesia.  The conclusion of the analysis is that CFNs have proved to be a useful exercise, aligning with the Forest Action Plan 2016-21, addressing cross-cutting issues, summarizing key policy challenges and opportunities, and integrating across sectors. 

CHALLENGE

Lack of community participation in forest control and supervision often hold back efforts to improve forest law enforcement and solve issues affecting indigenous people and local community's livelihoods and access to forest resources.

APPROACH

The aim of this activity was to support grassroots organizations targeting forest stakeholders at communal, municipal and departmental (sub national) levels in Honduras to establish Forest Consultative Councils as mandated by the new forestry law (Ley Forestal Decreto 98-2007).

RESULTS

This activity implemented by Comisionado Nacional de los Derechos Humanos (CONADEH) promoted the organization of 88 Forestry Communal Councils and 24 Municipal Councils in four departments of Honduras with important forest areas (Olancho, Yoro, Francisco Morazán and El Paraiso), specifically in the area of influence of the Forests and Rural Productivity Project (PBPR) financed by the World Bank.

CHALLENGE

Lack of community participation in forest control and supervision often hold back efforts to improve forest law enforcement and solve issues affecting indigenous people and local community's livelihoods and access to forest resources.

APPROACH

The aim of this activity was to support grassroots organizations targeting forest stakeholders at communal, municipal and departmental (sub national) levels in Honduras to establish Forest Consultative Councils as mandated by the new forestry law (Ley Forestal Decreto 98-2007).

RESULTS

This activity implemented by Comisionado Nacional de los Derechos Humanos (CONADEH) promoted the organization of 88 Forestry Communal Councils and 24 Municipal Councils in four departments of Honduras with important forest areas (Olancho, Yoro, Francisco Morazán and El Paraiso), specifically in the area of influence of the Forests and Rural Productivity Project (PBPR) financed by the World Bank.

CHALLENGE

Lack of community participation in forest control and supervision often hold back efforts to improve forest law enforcement and solve issues affecting indigenous people and local community's livelihoods and access to forest resources.

APPROACH

The aim of this activity was to support grassroots organizations targeting forest stakeholders at communal, municipal and departmental (sub national) levels in Honduras to establish Forest Consultative Councils as mandated by the new forestry law (Ley Forestal Decreto 98-2007).

RESULTS

This activity implemented by Comisionado Nacional de los Derechos Humanos (CONADEH) promoted the organization of 88 Forestry Communal Councils and 24 Municipal Councils in four departments of Honduras with important forest areas (Olancho, Yoro, Francisco Morazán and El Paraiso), specifically in the area of influence of the Forests and Rural Productivity Project (PBPR) financed by the World Bank.

CHALLENGE
The objective of the national Chain of Custody (CoC) System is to capture the economic potential of the Liberia forest sector and its associated benefits for rural livelihoods and national growth through a comprehensive monitoring system ensuring that wood products and associated revenues are tracked down and accounted for. The CoC allows the tracking of logs harvested in the forestry concessions in Liberia, from the stump to the port. In addition to the tractability of commercial timber, the CoC controls the legality of log export and ensures that all taxes and fees related to the logging concessions are reported and collected.

The CoC is considered a crucial governance and transparency initiative, mandated by law in Liberia, and was a requirement for the lifting of the UN logging ban on Liberia. It provides a foundation for the Liberian Extractive Industry Transparency Initiative (LEITI) and the Voluntary Partnership Agreement (VPA) that has been negotiated and signed with the European Union and is due to be ratified. 

APPROACH
Société Générale de Surveillance (SGS) was hired in October 2007 to build, implement and eventually transfer the CoC system known as LiberFor to the Forestry Development Authority (FDA).

SGS is responsible for the following services:
 

• Control logs and wood products from stump to point of export or domestic market, and develop and maintain a computerized CoC information system;
• Invoice and monitor all forest payments related to log, wood production and trade;
• Issue timber export permits upon confirmation that the shipment originates from registered harvesting area and all relevant forest payments have been made to the Central Bank of Liberia;
• Provide training to FDA counterpart staff and other relevant government staff in the Ministry of Finance, Central Banks and Ports Authority.

In addition to providing support for Liberfor in 2010-2011, PROFOR committed to sharing lessons from the development of this chain of custody system on its website.

RESULTS AND NEXT STEPS

• Between 2009 and end of 2012, almost 370,000 m3 of timber were exported under the CoC system. In 2012, stumpage, export and other fees and taxes collected by the CoC system generated almost $9 million in revenue for the Government of Liberia. Over the 2008-2012 period, the system secured $27 million in net state revenue (gross revenue, minus the CoC management fee).
• FDA personnel have been incorporated into SGS operational teams in field offices and at SGS headquarters.
• The system has been developed to adapt to the requirements of field operations, from the trees’ felling to the export of logs.
• Training of FDA staff and independent block verification and data processing is preparing the ground for a gradual transfer of responsibilities to FDA.

The viability of the CoC system was challenged initially by the slow roll out of concessions -- and resulting slow export of timber -- and insufficient numbers of officers, trainers, monitoring vehicles and offices in the field. A number of daunting forest governance and logitical issues, from controversy surrounding Private Use Permits to rehabilitation of roads and ports, remain ahead.

The system however has been continuously refined to tackle difficulties. For example, Standard Operating Procedures have been added to handle new challenges such as in-country change of ownership or cross border shipments. And the barcode has been reworked from 12-digits to 8-digits to reduce the number of barcodes errors.

Liberia is preparing to transition to a Legality Verification Department that includes LiberFor.

A field note summarizing lessons learned from the establishment of the chain of custody was published by PROFOR in February 2013.