CHALLENGE

Tremendous progress has been made in reducing poverty over the past three decades. Nonetheless, more than 1 billion people worldwide still live in destitution. In addition, rising prosperity in many countries is accompanied by social exclusion and increasing inequality. The post-2015 Development Agenda has thus made reducing poverty its priority. The new World Bank strategy reinforces this objective, aiming to end extreme poverty in a generation and to promote shared prosperity for the bottom 40 percent. These goals will only be achieved if development is managed in an environmentally, socially, and fiscally sustainable manner.

The challenge for development is that the poor are often highly dependent on natural resources, such as forests. Although forests provide ecosystem services and safety nets for the livelihoods of the poor, forests are facing significant pressures from the range of sectors that are critical for economic growth, such as agriculture, transport and energy. Therefore, if sustainably managed, forests could play a significant role in achieving the twin goals of reducing poverty and building climate resilience. However, our understanding of this dual forest-poverty relationship is limited, which this study seeks to address..

APPROACH

This study focuses on the Philippines where, similar to many tropical countries, extensive deforestation and forest degradation have taken place over the last century due to logging, fires and other human disturbances, which are further aggravated by climate change. The country’s total forest cover has declined to merely 6.9 million hectares, or 23% of the total land area.

This study builds on the three primary roles that environmental income plays in supporting rural livelihoods: (i) supporting current consumption; (ii) providing safety nets to smooth income shocks or offset seasonal shortfalls, as well as impacts of climate change; and (iii) providing the opportunity to accumulate assets and exit poverty. Each of these roles is examined further in how they depend on and impact the ecosystem services provided by forests (including the impacts of climate change), and how they can help reduce extreme poverty and promote shared prosperity for the bottom 40%. Three case study sites were examined: the Upper Marikina RIver Basin Protected Landscape (UMRBPL), the Libmanan-Pulantuna Watershed (LPW), and the Umayam, Minor and Agusan Marsh Sub-basin (UMAM).

RESULTS

• Higher forest cover generates higher water yields during the driest months of the year. 
• If the water regulating services provided by forests were to be replaced by delivered water, the expected costs would be USD 419-1,064 per household per year, depending on the study site. These costs will be prohibitive to most households in the study sites as the majority subsist below the poverty line.
• Compared to a “no forest” scenario, forest reduce the volume of floodwater by 27% to 47% during the three wettest months of the year.  Forests on steep slopes (>30%) help mitigate the risk of erosion by 68% to 99% per hectare, and have the potential to reduce annual sediment outflows from watersheds by 7 to 100 times compared to bare soil. 
• Replacing erosion and sediment control services with manmade control measures will cost billions of pesos. Reforestation is a lower-cost alternative to securing erosion regulation ecosystem services over the medium term.
• Water was cited by poor upland communities as the most important subsistence benefit from the forest, which they use for domestic purposes and, in some instances, for irrigation. 

• Upland communities in UMRBPL reported that about 7% of their annual cash income comes from the sale of forest resources like bamboo products, charcoal, fish, and bush meat. Approximately 40% of their annual income comes from the sale of farm produce grown on forested land.
• Forests also provide fuelwood and wood for charcoal, which supplies most of the communities’ energy needs.
• Poorer households in upland communities rely more on forest resources for income and subsistence

The study concludes with a list of recommendations for landscape planning and forest management:

• Incorporate ecosystem service modeling and valuation, forest use analysis and scenarios in forest land use planning and forest management. 
• Improve access of upland and forest dwelling communities to forest resources.
• Enhance the value of forest assets by internalizing non-market values and adding value to the existing sources of income.

CHALLENGE

Tremendous progress has been made in reducing poverty over the past three decades. Nonetheless, more than 1 billion people worldwide still live in destitution. In addition, rising prosperity in many countries is accompanied by social exclusion and increasing inequality. The post-2015 Development Agenda has thus made reducing poverty its priority. The new World Bank strategy reinforces this objective, aiming to end extreme poverty in a generation and to promote shared prosperity for the bottom 40 percent. These goals will only be achieved if development is managed in an environmentally, socially, and fiscally sustainable manner.

The challenge for development is that the poor are often highly dependent on natural resources, such as forests. Although forests provide ecosystem services and safety nets for the livelihoods of the poor, forests are facing significant pressures from the range of sectors that are critical for economic growth, such as agriculture, transport and energy. Therefore, if sustainably managed, forests could play a significant role in achieving the twin goals of reducing poverty and building climate resilience. However, our understanding of this dual forest-poverty relationship is limited, which this study seeks to address..

APPROACH

This study focuses on the Philippines where, similar to many tropical countries, extensive deforestation and forest degradation have taken place over the last century due to logging, fires and other human disturbances, which are further aggravated by climate change. The country’s total forest cover has declined to merely 6.9 million hectares, or 23% of the total land area.

This study builds on the three primary roles that environmental income plays in supporting rural livelihoods: (i) supporting current consumption; (ii) providing safety nets to smooth income shocks or offset seasonal shortfalls, as well as impacts of climate change; and (iii) providing the opportunity to accumulate assets and exit poverty. Each of these roles is examined further in how they depend on and impact the ecosystem services provided by forests (including the impacts of climate change), and how they can help reduce extreme poverty and promote shared prosperity for the bottom 40%. Three case study sites were examined: the Upper Marikina RIver Basin Protected Landscape (UMRBPL), the Libmanan-Pulantuna Watershed (LPW), and the Umayam, Minor and Agusan Marsh Sub-basin (UMAM).

RESULTS

• Higher forest cover generates higher water yields during the driest months of the year. 
• If the water regulating services provided by forests were to be replaced by delivered water, the expected costs would be USD 419-1,064 per household per year, depending on the study site. These costs will be prohibitive to most households in the study sites as the majority subsist below the poverty line.
• Compared to a “no forest” scenario, forest reduce the volume of floodwater by 27% to 47% during the three wettest months of the year.  Forests on steep slopes (>30%) help mitigate the risk of erosion by 68% to 99% per hectare, and have the potential to reduce annual sediment outflows from watersheds by 7 to 100 times compared to bare soil. 
• Replacing erosion and sediment control services with manmade control measures will cost billions of pesos. Reforestation is a lower-cost alternative to securing erosion regulation ecosystem services over the medium term.
• Water was cited by poor upland communities as the most important subsistence benefit from the forest, which they use for domestic purposes and, in some instances, for irrigation. 

• Upland communities in UMRBPL reported that about 7% of their annual cash income comes from the sale of forest resources like bamboo products, charcoal, fish, and bush meat. Approximately 40% of their annual income comes from the sale of farm produce grown on forested land.
• Forests also provide fuelwood and wood for charcoal, which supplies most of the communities’ energy needs.
• Poorer households in upland communities rely more on forest resources for income and subsistence

The study concludes with a list of recommendations for landscape planning and forest management:

• Incorporate ecosystem service modeling and valuation, forest use analysis and scenarios in forest land use planning and forest management. 
• Improve access of upland and forest dwelling communities to forest resources.
• Enhance the value of forest assets by internalizing non-market values and adding value to the existing sources of income.

CHALLENGE

Tremendous progress has been made in reducing poverty over the past three decades. Nonetheless, more than 1 billion people worldwide still live in destitution. In addition, rising prosperity in many countries is accompanied by social exclusion and increasing inequality. The post-2015 Development Agenda has thus made reducing poverty its priority. The new World Bank strategy reinforces this objective, aiming to end extreme poverty in a generation and to promote shared prosperity for the bottom 40 percent. These goals will only be achieved if development is managed in an environmentally, socially, and fiscally sustainable manner.

The challenge for development is that the poor are often highly dependent on natural resources, such as forests. Although forests provide ecosystem services and safety nets for the livelihoods of the poor, forests are facing significant pressures from the range of sectors that are critical for economic growth, such as agriculture, transport and energy. Therefore, if sustainably managed, forests could play a significant role in achieving the twin goals of reducing poverty and building climate resilience. However, our understanding of this dual forest-poverty relationship is limited, which this study seeks to address..

APPROACH

This study focuses on the Philippines where, similar to many tropical countries, extensive deforestation and forest degradation have taken place over the last century due to logging, fires and other human disturbances, which are further aggravated by climate change. The country’s total forest cover has declined to merely 6.9 million hectares, or 23% of the total land area.

This study builds on the three primary roles that environmental income plays in supporting rural livelihoods: (i) supporting current consumption; (ii) providing safety nets to smooth income shocks or offset seasonal shortfalls, as well as impacts of climate change; and (iii) providing the opportunity to accumulate assets and exit poverty. Each of these roles is examined further in how they depend on and impact the ecosystem services provided by forests (including the impacts of climate change), and how they can help reduce extreme poverty and promote shared prosperity for the bottom 40%. Three case study sites were examined: the Upper Marikina RIver Basin Protected Landscape (UMRBPL), the Libmanan-Pulantuna Watershed (LPW), and the Umayam, Minor and Agusan Marsh Sub-basin (UMAM).

RESULTS

• Higher forest cover generates higher water yields during the driest months of the year. 
• If the water regulating services provided by forests were to be replaced by delivered water, the expected costs would be USD 419-1,064 per household per year, depending on the study site. These costs will be prohibitive to most households in the study sites as the majority subsist below the poverty line.
• Compared to a “no forest” scenario, forest reduce the volume of floodwater by 27% to 47% during the three wettest months of the year.  Forests on steep slopes (>30%) help mitigate the risk of erosion by 68% to 99% per hectare, and have the potential to reduce annual sediment outflows from watersheds by 7 to 100 times compared to bare soil. 
• Replacing erosion and sediment control services with manmade control measures will cost billions of pesos. Reforestation is a lower-cost alternative to securing erosion regulation ecosystem services over the medium term.
• Water was cited by poor upland communities as the most important subsistence benefit from the forest, which they use for domestic purposes and, in some instances, for irrigation. 

• Upland communities in UMRBPL reported that about 7% of their annual cash income comes from the sale of forest resources like bamboo products, charcoal, fish, and bush meat. Approximately 40% of their annual income comes from the sale of farm produce grown on forested land.
• Forests also provide fuelwood and wood for charcoal, which supplies most of the communities’ energy needs.
• Poorer households in upland communities rely more on forest resources for income and subsistence

The study concludes with a list of recommendations for landscape planning and forest management:

• Incorporate ecosystem service modeling and valuation, forest use analysis and scenarios in forest land use planning and forest management. 
• Improve access of upland and forest dwelling communities to forest resources.
• Enhance the value of forest assets by internalizing non-market values and adding value to the existing sources of income.

CHALLENGE

In the forestry sector, small and medium-scale enterprises (SMEs) are often considered a vehicle for development, jobs, and poverty alleviation among forest-dependent households. SMEs are thought to constitute 80–90 percent of enterprises in the forest sector, with an estimated over 40 million people employed (either part-time or full-time) through such enterprises. SMEs also primarily service the domestic markets for wood and non-wood products—markets that in many regions of the world are growing in tandem with the growing middle class.

Despite widespread support for SMEs, the success of such enterprises in the forest sector has been mixed. Forest sector SMEs, like SMEs more generally, suffer from limited access to business and financial services, lack of support to enhance their competitiveness, regulatory measures that constrain their ability to operate in a "legal" space or that create perverse incentives, and limited access to markets. These and other challenges and constraints for SMEs have been widely identified, but recommendations and efforts to address them have been fragmented and are often sectorally bounded, limiting the effectiveness of the intervention.

APPROACH

This programmatic activity proposes to adopt a “sector-neutral" approach to determine how to create jobs and growth in a sustainable manner. The step-wise approach involves first examining if forestry can contribute to a broader national sustainable development agenda compared to other sectors, especially when sustainability (including life cycle analysis) is considered. This is followed by examining if, where, and how SMEs can be part of the forestry contribution to the development objective. Where SMEs are well positioned to contribute to sustainable development agenda, the activity will provide guidance on how to enhance their competitiveness and to develop the needed regulatory, financial, and technical environment. Accordingly, such an approach starts with understanding the optimal uses of timber and non-timber products, given national and subnational development objectives, followed by assessing which subsectors of SMEs could be competitive in and how to help them accomplish this.

The long-term development objective of the proposed programmatic activity is to create market and policy environments that support competitive SMEs in the forest sector that are sustainable and contribute to job creation and growth. The long-term development objective is to increase the client’s ability to generate jobs, promote climate resilience and environmental sustainability, and fuel domestic growth through competitive SMEs. This programmatic activity will involve working with colleagues from the Finance and Markets Global Practice and from the Trade and Competitiveness Global Practice.

The work will be done under with three pillars. The first pillar will involve a high-level analysis of issues and experiences and documentation of methodologies. The aim is to bring together the evidence and justification for adopting the approach (compared with the more common approach of identifying how to make SMEs competitive independent of the trends and changes emerging in the subsector). The second pillar will involve in-depth analyses in a small set of countries. The third pillar will focus on knowledge sharing and uptake throughout the activity. The second phase will involve to roll out the approach. The second phase will have four pillars.

Pillar 1: Analysis of issues and experiences and methods  

This pillar will capture existing knowledge from:

• Prior applications of the proposed approach in the forest sector
• Cases in which competitive forest SMEs have helped create sustainable jobs and growth
• Evidence of how financial and technical services are delivered to SMEs in the forest sector and lessons learned from effective efforts (this will involve drawing on experiences from rural finance initiatives and activities in the trade and competitiveness field)
• Approaches for assessing the impact of regulations, and enhancing competitiveness.

Pillar 2: Country level analysis of demand, supply and business environment

This pillar will conduct country level analysis in 3 countries. The analysis will involve the application of tailored approaches and tools identified in pillar 1. The country level work will analyze if, where and how forest sector SMEs can contribute to the national sustainable development agenda, carry out demand, supply and business environment analysis , and propose concrete actions for enhancing the competitiveness of SMES by lifting regulatory constraints, and improving access to financial services, technical support and markets .

Pillar 3: Capture and broadcast in a targeted manner the knowledge on opportunities to engage with SMEs.

This pillar will involve:

• Augmenting existing briefs and infographics on the extent of forest sector SMEs in countries and information on their role in meeting the demand for wood and non-wood products/services in domestic markets and any information on the employment and job creation;
• Bringing together the work that PROFOR and partners have supported on investing in locally controlled forests, opportunities for investing in SMEs, and Forest Connect and making it more user friendly way for Bank TTLs (working in partnership with LLI); and
• Bringing together the findings and tools developed in the other pillars into user friendly outputs and working with systems available through LLI for dissemination

A fourth pillar may be added to this activity in the coming year. This pillar would focus on enhancing the link between SMEs/community enterprises and job creation in the natural resource sector. This would entail three activities: a stocktaking on which demographic segment benefits from forest-sector SME employment and job opportunities; an assessment of the skill development needs for rural enterprises plus cost-effective models for meeting these needs as part of broader initiatives on young people and job creation; and ideas on how to increase opportunities for young people to engage in innovation in rural areas and forest-based enterprises (examples of applying models used in developing and developed countries). An alternative approach will be to fold these activities into the existing three pillars.

RESULTS

Global/knowledge work: The background note on small and medium forest enterprises (SMFEs) presents trends and key findings. The key findings include evidence on the levels of informality in SMFEs (in the 22 countries that account for the majority share of wood production, using the latest Bank enterprise survey information), ranging from 1 to 52 percent. The findings also include evidence on trends in different subsectors of forestry. By way of illustration, in the subsector of wood processing, SMEs provide the most significant share of formal employment.

For wood processing, the employment impact per unit (m³) wood products is higher in countries with low industrialized processing industries. Thus, with advancing technology, the expected impact is reduced employment. In Eastern Asia (Japan, Republic Korea and China), for example, industrialization of the forestry sector is taking place, triggered by strong demand for wood processing; in these, reduced employment through SMEs in forest sector could decline. The growing demand, however, could compensate for losses in employment due to technology. There currently is no analysis that has determined how much increased demand can buffer the impact of technology.

Some lessons learned from the cases examined in the global study include the following: 

• Value chain development programs are effective when they are designed to address several bottlenecks in the value chain simultaneously.
• Smallholders are willing to invest in tree planting—even for relatively long rotations of teak—provided they receive initial financial and technical support. 
• The role of the lead company is key to facilitate financial and technical support and open access to the market for smallholders who will invest in tree planting.
• A few key reasons for the establishment and funding of the incubation model to support SMEs:
• Incubation helps overcome market failures through strategic and planned access to information, workspace, services, technology, finance.
• It extends government role in providing public good –knowledge, research, infrastructure, innovation.
• The incubation models generally (not forestry-specific) have 80-plus percent success; other methods of small business development have a 35 percent success rate on entrepreneurs evaluated 3 years after incubation process.

Vietnam country diagnostic: Some of the initial findings from the work to date: In 2017, Vietnam’s export value of major forestry products was US$7.97 billion (increasing 9.2% year-on-year). In Vietnam, wooden products have a higher growth rate in terms of export share than the national average (though it is lower than the average world trade growth rate). 

The Vietnamese government has promoted increased recognition of land tenure (a common institutional barrier in Vietnam) for households involved in the linkage model. The wood products export is recognized to be of strategic importance. Through models such as that of Ikea and Scancia in Vietnam, 564 smallholders organized in groups and managing plantations totaling circa 1,700 hectares were enabled to participate in export market value chains and improve their overall competitiveness.

This activity indirectly influenced the design of the Ghana FIP project focused on private sector. The SMFE project informed the design of the $7 million loan component of $20 million Ghana FIP additional financing, which would support private sector involvement in forest plantation development. It contributed to the adoption of public-private partnership approach to manage the loan fund. Under the envisaged design, a competitively selected regulated financial institution will manage the loan fund, making long-term loans to small and medium-scale plantation enterprises (SMPEs); the Forest Commission will provide technical assistance to the SMPEs, monitor technical performance of the plantations, and ensure that the timber buyers pay any outstanding loan funds to the financial institution before they pay the SMPEs; and the Ministry of Land and Natural Resources will provide overall management of the project. The change that resulted by being able to bring the expertise from FCI to the Ghana project resulted in a shift from the original approach—a loan being managed by the line ministry—to a more mainstream approach.

This activity is ongoing.

CHALLENGE

In the forestry sector, small and medium-scale enterprises (SMEs) are often considered a vehicle for development, jobs, and poverty alleviation among forest-dependent households. SMEs are thought to constitute 80–90 percent of enterprises in the forest sector, with an estimated over 40 million people employed (either part-time or full-time) through such enterprises. SMEs also primarily service the domestic markets for wood and non-wood products—markets that in many regions of the world are growing in tandem with the growing middle class.

Despite widespread support for SMEs, the success of such enterprises in the forest sector has been mixed. Forest sector SMEs, like SMEs more generally, suffer from limited access to business and financial services, lack of support to enhance their competitiveness, regulatory measures that constrain their ability to operate in a "legal" space or that create perverse incentives, and limited access to markets. These and other challenges and constraints for SMEs have been widely identified, but recommendations and efforts to address them have been fragmented and are often sectorally bounded, limiting the effectiveness of the intervention.

APPROACH

This programmatic activity proposes to adopt a “sector-neutral" approach to determine how to create jobs and growth in a sustainable manner. The step-wise approach involves first examining if forestry can contribute to a broader national sustainable development agenda compared to other sectors, especially when sustainability (including life cycle analysis) is considered. This is followed by examining if, where, and how SMEs can be part of the forestry contribution to the development objective. Where SMEs are well positioned to contribute to sustainable development agenda, the activity will provide guidance on how to enhance their competitiveness and to develop the needed regulatory, financial, and technical environment. Accordingly, such an approach starts with understanding the optimal uses of timber and non-timber products, given national and subnational development objectives, followed by assessing which subsectors of SMEs could be competitive in and how to help them accomplish this.

The long-term development objective of the proposed programmatic activity is to create market and policy environments that support competitive SMEs in the forest sector that are sustainable and contribute to job creation and growth. The long-term development objective is to increase the client’s ability to generate jobs, promote climate resilience and environmental sustainability, and fuel domestic growth through competitive SMEs. This programmatic activity will involve working with colleagues from the Finance and Markets Global Practice and from the Trade and Competitiveness Global Practice.

The work will be done under with three pillars. The first pillar will involve a high-level analysis of issues and experiences and documentation of methodologies. The aim is to bring together the evidence and justification for adopting the approach (compared with the more common approach of identifying how to make SMEs competitive independent of the trends and changes emerging in the subsector). The second pillar will involve in-depth analyses in a small set of countries. The third pillar will focus on knowledge sharing and uptake throughout the activity. The second phase will involve to roll out the approach. The second phase will have four pillars.

Pillar 1: Analysis of issues and experiences and methods  

This pillar will capture existing knowledge from:

• Prior applications of the proposed approach in the forest sector
• Cases in which competitive forest SMEs have helped create sustainable jobs and growth
• Evidence of how financial and technical services are delivered to SMEs in the forest sector and lessons learned from effective efforts (this will involve drawing on experiences from rural finance initiatives and activities in the trade and competitiveness field)
• Approaches for assessing the impact of regulations, and enhancing competitiveness.

Pillar 2: Country level analysis of demand, supply and business environment

This pillar will conduct country level analysis in 3 countries. The analysis will involve the application of tailored approaches and tools identified in pillar 1. The country level work will analyze if, where and how forest sector SMEs can contribute to the national sustainable development agenda, carry out demand, supply and business environment analysis , and propose concrete actions for enhancing the competitiveness of SMES by lifting regulatory constraints, and improving access to financial services, technical support and markets .

Pillar 3: Capture and broadcast in a targeted manner the knowledge on opportunities to engage with SMEs.

This pillar will involve:

• Augmenting existing briefs and infographics on the extent of forest sector SMEs in countries and information on their role in meeting the demand for wood and non-wood products/services in domestic markets and any information on the employment and job creation;
• Bringing together the work that PROFOR and partners have supported on investing in locally controlled forests, opportunities for investing in SMEs, and Forest Connect and making it more user friendly way for Bank TTLs (working in partnership with LLI); and
• Bringing together the findings and tools developed in the other pillars into user friendly outputs and working with systems available through LLI for dissemination

A fourth pillar may be added to this activity in the coming year. This pillar would focus on enhancing the link between SMEs/community enterprises and job creation in the natural resource sector. This would entail three activities: a stocktaking on which demographic segment benefits from forest-sector SME employment and job opportunities; an assessment of the skill development needs for rural enterprises plus cost-effective models for meeting these needs as part of broader initiatives on young people and job creation; and ideas on how to increase opportunities for young people to engage in innovation in rural areas and forest-based enterprises (examples of applying models used in developing and developed countries). An alternative approach will be to fold these activities into the existing three pillars.

RESULTS

Global/knowledge work: The background note on small and medium forest enterprises (SMFEs) presents trends and key findings. The key findings include evidence on the levels of informality in SMFEs (in the 22 countries that account for the majority share of wood production, using the latest Bank enterprise survey information), ranging from 1 to 52 percent. The findings also include evidence on trends in different subsectors of forestry. By way of illustration, in the subsector of wood processing, SMEs provide the most significant share of formal employment.

For wood processing, the employment impact per unit (m³) wood products is higher in countries with low industrialized processing industries. Thus, with advancing technology, the expected impact is reduced employment. In Eastern Asia (Japan, Republic Korea and China), for example, industrialization of the forestry sector is taking place, triggered by strong demand for wood processing; in these, reduced employment through SMEs in forest sector could decline. The growing demand, however, could compensate for losses in employment due to technology. There currently is no analysis that has determined how much increased demand can buffer the impact of technology.

Some lessons learned from the cases examined in the global study include the following: 

• Value chain development programs are effective when they are designed to address several bottlenecks in the value chain simultaneously.
• Smallholders are willing to invest in tree planting—even for relatively long rotations of teak—provided they receive initial financial and technical support. 
• The role of the lead company is key to facilitate financial and technical support and open access to the market for smallholders who will invest in tree planting.
• A few key reasons for the establishment and funding of the incubation model to support SMEs:
• Incubation helps overcome market failures through strategic and planned access to information, workspace, services, technology, finance.
• It extends government role in providing public good –knowledge, research, infrastructure, innovation.
• The incubation models generally (not forestry-specific) have 80-plus percent success; other methods of small business development have a 35 percent success rate on entrepreneurs evaluated 3 years after incubation process.

Vietnam country diagnostic: Some of the initial findings from the work to date: In 2017, Vietnam’s export value of major forestry products was US$7.97 billion (increasing 9.2% year-on-year). In Vietnam, wooden products have a higher growth rate in terms of export share than the national average (though it is lower than the average world trade growth rate). 

The Vietnamese government has promoted increased recognition of land tenure (a common institutional barrier in Vietnam) for households involved in the linkage model. The wood products export is recognized to be of strategic importance. Through models such as that of Ikea and Scancia in Vietnam, 564 smallholders organized in groups and managing plantations totaling circa 1,700 hectares were enabled to participate in export market value chains and improve their overall competitiveness.

This activity indirectly influenced the design of the Ghana FIP project focused on private sector. The SMFE project informed the design of the $7 million loan component of $20 million Ghana FIP additional financing, which would support private sector involvement in forest plantation development. It contributed to the adoption of public-private partnership approach to manage the loan fund. Under the envisaged design, a competitively selected regulated financial institution will manage the loan fund, making long-term loans to small and medium-scale plantation enterprises (SMPEs); the Forest Commission will provide technical assistance to the SMPEs, monitor technical performance of the plantations, and ensure that the timber buyers pay any outstanding loan funds to the financial institution before they pay the SMPEs; and the Ministry of Land and Natural Resources will provide overall management of the project. The change that resulted by being able to bring the expertise from FCI to the Ghana project resulted in a shift from the original approach—a loan being managed by the line ministry—to a more mainstream approach.

This activity is ongoing.

PROGRAM SUMMARY

The objective of this activity is to support the Government of Mozambique in implementing nature-based solutions for urban flood risk management, particularly in coastal cities. The activity will also leverage the lessons learned in Mozambique to support the future application of similar solutions in the wider Africa region.

CHALLENGE

Many of Africa’s major cities are located in river deltas along the coast. These cities are highly prone to damaging floods due to the combination of climate extremes and rapid urbanization. Mozambique is one of the countries most exposed to coastal and river flooding in Africa. The World Bank has been active in providing emergency recovery after flooding in Mozambique, and is increasingly supporting the Government in preventive disaster risk management operations on the city and regional levels. While traditional infrastructure-based interventions still make up the majority of global financing to improve disaster risk management, the application of nature-based solutions is gaining momentum.

One of the first nature-based urban flood management projects supported by the World Bank is in the coastal city of Beira in Mozambique. To maximize results from such projects, it is important to clarify the exact benefits for urban flood risk management and how such approaches can be best adjusted and scaled up to other cities in Mozambique and other countries in Africa. More generally, nature-based urban flood risk management projects struggle to provide a structured and comprehensive assessment of grey and green infrastructure solutions and produce and communicate evidence on the cost effectiveness of such solutions compared to other priorities. 

PROFOR’s activity aims to enhance and upscale the green infrastructure pilot for urban flood risk management to other cities in Mozambique by building on lessons learned in Beira and using guidelines produced under PROFOR’s ongoing Harnessing Forests for Nature-Based Solutions to Disaster Risk Management funded under the DRM and Forestry Global Knowledge Management program.

APPROACH

The activity will conduct the following key tasks and outputs:

1.         Compile lessons learned from the green infrastructure pilot in Beira with a view to extend the knowledge base on green infrastructure development for urban flood management purposes in Africa.

2.         Assessment of relevant legal, regulatory, and institutional framework in Mozambique to identify gaps in the enabling environment to mainstream nature-based solutions (NBS) into planning and implementation of urban drainage and flood risk management, considering climate change. The expected output will be a policy note providing a set of recommendations to improve the enabling environment.

3.         Urban Flood Risk Assessment for one other major delta city in Mozambique that is prone to flooding and erosion (potentially Nacala or Xai-Xai). Outputs from this assessment will include flood risk maps for different climate change and urban growth/expansion scenarios, identification of land-use typology and the potential for nature-based solutions, and a proposal on potential types of nature-based solutions that could be feasibly implemented in the specific setting. A workshop for representatives from national and local government, civil society, academia, and other donors will be conducted to validate the findings and define possible risk reduction strategies.

4.           Cost-benefit analysis of different investment scenarios for green and hybrid flood management solutions. Based on the urban flood risk assessment and stakeholder workshop, a range of investment scenarios for green and hybrid solutions for urban flood management will be generated and analyzed in terms of costs and benefits. A final dissemination workshop will be organized in Mozambique to present and discuss findings with key stakeholders from the national and local level.

The abovementioned outputs will utilize and contribute to the comprehensive guidance on nature-based solutions for flood management that the World Bank is currently preparing under the PROFOR-funded program on Disaster Risk Management and Forestry. Activities will also feed into the preparation of new investment lending operations in aiming to improve drainage and resilience of cities across Mozambique.

RESULTS

The activity contributed to reducing the knowledge gap and extending the knowledge base on the implementation of nature-based solutions for urban flood and erosion management.

• The lessons from the report have informed World Bank project teams who are working on green infrastructure in cities facing similar challenges, such as inspiring uptake of NBS in a World Bank investment project in Rwanda. 
• The reports proposed several NBS that could be considered to reduce flood and erosion risk in Quelimane and Nacala, providing an initial assessment of their viability and impact that may inform future investment projects.
• These lessons learned have been feeding into the implementation and preparation of WB-financed projects in Mozambique. Specifically, contributed to finetuning remaining activities related to the green urban infrastructure in Beira under the Mozambique Cities and Climate Change Project (P123201), especially with regards to maintenance arrangements, and are informing the design and preparation of additional nature-based interventions in Beira that will be financed under the Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040).
• The risk assessment and cost-benefit analysis show that the implementation of proposed NBS measures would contribute to a significant reduction in flooding risk, be financial and economically viable, and bring additional benefits (ecosystem services, human health, potential job opportunities, etc.).
• The CBAs will inform proposed investments under the Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040).
• The findings allowed decision-makers to understand how potential green and gray solutions compare from effectiveness and cost-benefit perspective. The contributions/feedback from national actors also demonstrated that they now consider green/NBS solutions on an equal footing to gray solutions than before.
• The presentation and discussion of these findings raised awareness for the potential and benefits of NBS with local and national policy-makers in Mozambique, fostering interest in pursuing these solutions to complement or substitute more traditional grey approaches and contributing to building alliances between different actors to work together towards the application of such solutions.

PROGRAM SUMMARY

The objective of this activity is to support the Government of Mozambique in implementing nature-based solutions for urban flood risk management, particularly in coastal cities. The activity will also leverage the lessons learned in Mozambique to support the future application of similar solutions in the wider Africa region.

CHALLENGE

Many of Africa’s major cities are located in river deltas along the coast. These cities are highly prone to damaging floods due to the combination of climate extremes and rapid urbanization. Mozambique is one of the countries most exposed to coastal and river flooding in Africa. The World Bank has been active in providing emergency recovery after flooding in Mozambique, and is increasingly supporting the Government in preventive disaster risk management operations on the city and regional levels. While traditional infrastructure-based interventions still make up the majority of global financing to improve disaster risk management, the application of nature-based solutions is gaining momentum.

One of the first nature-based urban flood management projects supported by the World Bank is in the coastal city of Beira in Mozambique. To maximize results from such projects, it is important to clarify the exact benefits for urban flood risk management and how such approaches can be best adjusted and scaled up to other cities in Mozambique and other countries in Africa. More generally, nature-based urban flood risk management projects struggle to provide a structured and comprehensive assessment of grey and green infrastructure solutions and produce and communicate evidence on the cost effectiveness of such solutions compared to other priorities. 

PROFOR’s activity aims to enhance and upscale the green infrastructure pilot for urban flood risk management to other cities in Mozambique by building on lessons learned in Beira and using guidelines produced under PROFOR’s ongoing Harnessing Forests for Nature-Based Solutions to Disaster Risk Management funded under the DRM and Forestry Global Knowledge Management program.

APPROACH

The activity will conduct the following key tasks and outputs:

1.         Compile lessons learned from the green infrastructure pilot in Beira with a view to extend the knowledge base on green infrastructure development for urban flood management purposes in Africa.

2.         Assessment of relevant legal, regulatory, and institutional framework in Mozambique to identify gaps in the enabling environment to mainstream nature-based solutions (NBS) into planning and implementation of urban drainage and flood risk management, considering climate change. The expected output will be a policy note providing a set of recommendations to improve the enabling environment.

3.         Urban Flood Risk Assessment for one other major delta city in Mozambique that is prone to flooding and erosion (potentially Nacala or Xai-Xai). Outputs from this assessment will include flood risk maps for different climate change and urban growth/expansion scenarios, identification of land-use typology and the potential for nature-based solutions, and a proposal on potential types of nature-based solutions that could be feasibly implemented in the specific setting. A workshop for representatives from national and local government, civil society, academia, and other donors will be conducted to validate the findings and define possible risk reduction strategies.

4.           Cost-benefit analysis of different investment scenarios for green and hybrid flood management solutions. Based on the urban flood risk assessment and stakeholder workshop, a range of investment scenarios for green and hybrid solutions for urban flood management will be generated and analyzed in terms of costs and benefits. A final dissemination workshop will be organized in Mozambique to present and discuss findings with key stakeholders from the national and local level.

The abovementioned outputs will utilize and contribute to the comprehensive guidance on nature-based solutions for flood management that the World Bank is currently preparing under the PROFOR-funded program on Disaster Risk Management and Forestry. Activities will also feed into the preparation of new investment lending operations in aiming to improve drainage and resilience of cities across Mozambique.

RESULTS

The activity contributed to reducing the knowledge gap and extending the knowledge base on the implementation of nature-based solutions for urban flood and erosion management.

• The lessons from the report have informed World Bank project teams who are working on green infrastructure in cities facing similar challenges, such as inspiring uptake of NBS in a World Bank investment project in Rwanda. 
• The reports proposed several NBS that could be considered to reduce flood and erosion risk in Quelimane and Nacala, providing an initial assessment of their viability and impact that may inform future investment projects.
• These lessons learned have been feeding into the implementation and preparation of WB-financed projects in Mozambique. Specifically, contributed to finetuning remaining activities related to the green urban infrastructure in Beira under the Mozambique Cities and Climate Change Project (P123201), especially with regards to maintenance arrangements, and are informing the design and preparation of additional nature-based interventions in Beira that will be financed under the Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040).
• The risk assessment and cost-benefit analysis show that the implementation of proposed NBS measures would contribute to a significant reduction in flooding risk, be financial and economically viable, and bring additional benefits (ecosystem services, human health, potential job opportunities, etc.).
• The CBAs will inform proposed investments under the Cyclone Idai and Kenneth Emergency Recovery and Resilience Project (P171040).
• The findings allowed decision-makers to understand how potential green and gray solutions compare from effectiveness and cost-benefit perspective. The contributions/feedback from national actors also demonstrated that they now consider green/NBS solutions on an equal footing to gray solutions than before.
• The presentation and discussion of these findings raised awareness for the potential and benefits of NBS with local and national policy-makers in Mozambique, fostering interest in pursuing these solutions to complement or substitute more traditional grey approaches and contributing to building alliances between different actors to work together towards the application of such solutions.

CHALLENGE
The Upper Guinea Forest, which covers six West African nations, is being severely threatened by commercial logging, slash-and-burn and plantation agriculture, weak governance, industrial-scale mining, and unsustainable bushmeat hunting.  Civil conflict adds a further strain when refugees turn to the forests for shelter and firewood.

At the same time, growing national interest in climate change and forest governance trade initiatives (REDD+, FLEGT) is encouraging radical re-thinking in fields such as timber supply and tree and land tenure. The importance of agriculture, energy security and mining to national growth strategies also has implications for forests, both positive and negative.

Development partners have the opportunity to generalize good practices and build regional capacity to confront the coming challenges in the West-Africa sub-region.

APPROACH
PROFOR supported an effort to analyze the forests sector in five countries (Cote d’Ivoire, Ghana, Guinea (Conakry), Liberia and Sierra Leone) and define elements toward an effective West African forests strategy to ensure conservation and sustainable use of forests, the maintenance of forest ecosystem services, and the fair and equitable allocation of revenues and benefits from forest resources.

RESULTS
"Toward a West African Forests Strategy" was published in draft form in April 2011. It is based on five country studies and a synthesis of regional forests sector issues. Elements from this draft strategy will inform the World Bank's future work on forests for Africa and should be helpful to a variety of development partners and forest stakeholders in defining priority areas of support.

MAIN FINDINGS
Among the country level issues which could benefit from policy support, the report singles out: 

• restructuring of forest industry to promote value addition and foster economic growth;
• improving forest governance and public finance management;
• balancing supply and demand issues in export and domestic markets and addressing the issue of ‘illegal’ chainsaw logging;
• support for small and medium forest enterprises and community forestry;
• reforming tree and land tenure so as to favour forest conservation and regeneration;
• reforming revenue sharing arrangements and channelling these so that these provide incentives to farmers and land owners; 
• integrating REDD+ and other climate actions into forest policy;
• and improving the sustainability of rural energy (wood fuel & charcoal).

Some of the  primarily sub-regional issues identified in the strategy include:

• improving the governance of cross border trade in a context of FLEGT, and helping to harmonize sub-regional trade policies; 
• enhancing the geographical information and forest inventory data available for sub-regional policy making and trade controls;
• institutional capacity building to support sub-regional policy coherence;
• investing in the cross-border dimensions of protected area management;
• and developing awareness of the extra-sectoral implications of forest policies across the sub-region.

CHALLENGE
The Upper Guinea Forest, which covers six West African nations, is being severely threatened by commercial logging, slash-and-burn and plantation agriculture, weak governance, industrial-scale mining, and unsustainable bushmeat hunting.  Civil conflict adds a further strain when refugees turn to the forests for shelter and firewood.

At the same time, growing national interest in climate change and forest governance trade initiatives (REDD+, FLEGT) is encouraging radical re-thinking in fields such as timber supply and tree and land tenure. The importance of agriculture, energy security and mining to national growth strategies also has implications for forests, both positive and negative.

Development partners have the opportunity to generalize good practices and build regional capacity to confront the coming challenges in the West-Africa sub-region.

APPROACH
PROFOR supported an effort to analyze the forests sector in five countries (Cote d’Ivoire, Ghana, Guinea (Conakry), Liberia and Sierra Leone) and define elements toward an effective West African forests strategy to ensure conservation and sustainable use of forests, the maintenance of forest ecosystem services, and the fair and equitable allocation of revenues and benefits from forest resources.

RESULTS
"Toward a West African Forests Strategy" was published in draft form in April 2011. It is based on five country studies and a synthesis of regional forests sector issues. Elements from this draft strategy will inform the World Bank's future work on forests for Africa and should be helpful to a variety of development partners and forest stakeholders in defining priority areas of support.

MAIN FINDINGS
Among the country level issues which could benefit from policy support, the report singles out: 

• restructuring of forest industry to promote value addition and foster economic growth;
• improving forest governance and public finance management;
• balancing supply and demand issues in export and domestic markets and addressing the issue of ‘illegal’ chainsaw logging;
• support for small and medium forest enterprises and community forestry;
• reforming tree and land tenure so as to favour forest conservation and regeneration;
• reforming revenue sharing arrangements and channelling these so that these provide incentives to farmers and land owners; 
• integrating REDD+ and other climate actions into forest policy;
• and improving the sustainability of rural energy (wood fuel & charcoal).

Some of the  primarily sub-regional issues identified in the strategy include:

• improving the governance of cross border trade in a context of FLEGT, and helping to harmonize sub-regional trade policies; 
• enhancing the geographical information and forest inventory data available for sub-regional policy making and trade controls;
• institutional capacity building to support sub-regional policy coherence;
• investing in the cross-border dimensions of protected area management;
• and developing awareness of the extra-sectoral implications of forest policies across the sub-region.

CHALLENGE
The Upper Guinea Forest, which covers six West African nations, is being severely threatened by commercial logging, slash-and-burn and plantation agriculture, weak governance, industrial-scale mining, and unsustainable bushmeat hunting.  Civil conflict adds a further strain when refugees turn to the forests for shelter and firewood.

At the same time, growing national interest in climate change and forest governance trade initiatives (REDD+, FLEGT) is encouraging radical re-thinking in fields such as timber supply and tree and land tenure. The importance of agriculture, energy security and mining to national growth strategies also has implications for forests, both positive and negative.

Development partners have the opportunity to generalize good practices and build regional capacity to confront the coming challenges in the West-Africa sub-region.

APPROACH
PROFOR supported an effort to analyze the forests sector in five countries (Cote d’Ivoire, Ghana, Guinea (Conakry), Liberia and Sierra Leone) and define elements toward an effective West African forests strategy to ensure conservation and sustainable use of forests, the maintenance of forest ecosystem services, and the fair and equitable allocation of revenues and benefits from forest resources.

RESULTS
"Toward a West African Forests Strategy" was published in draft form in April 2011. It is based on five country studies and a synthesis of regional forests sector issues. Elements from this draft strategy will inform the World Bank's future work on forests for Africa and should be helpful to a variety of development partners and forest stakeholders in defining priority areas of support.

MAIN FINDINGS
Among the country level issues which could benefit from policy support, the report singles out: 

• restructuring of forest industry to promote value addition and foster economic growth;
• improving forest governance and public finance management;
• balancing supply and demand issues in export and domestic markets and addressing the issue of ‘illegal’ chainsaw logging;
• support for small and medium forest enterprises and community forestry;
• reforming tree and land tenure so as to favour forest conservation and regeneration;
• reforming revenue sharing arrangements and channelling these so that these provide incentives to farmers and land owners; 
• integrating REDD+ and other climate actions into forest policy;
• and improving the sustainability of rural energy (wood fuel & charcoal).

Some of the  primarily sub-regional issues identified in the strategy include:

• improving the governance of cross border trade in a context of FLEGT, and helping to harmonize sub-regional trade policies; 
• enhancing the geographical information and forest inventory data available for sub-regional policy making and trade controls;
• institutional capacity building to support sub-regional policy coherence;
• investing in the cross-border dimensions of protected area management;
• and developing awareness of the extra-sectoral implications of forest policies across the sub-region.