Subsidies, secrecy and lies. The case of the ADB’s missing forest policy

30 Apr

Since 2000, the ADB has been working on a new forest policy. It was supposed to be finished in 2002. Five years later, where is it?

By Chris Lang. April 2007.

The Asian Development Bank claims to be transparent. It claims to promote participation and consultation. The reality is that the ADB just isn’t listening. It isn’t listening to its executive directors. It isn’t listening to its consultants. And it certainly isn’t listening to civil society.

The process by which the ADB has attempted to produce a new forest policy is indicative of a deep malaise within the Bank. Seven years after starting work on a new forest policy, the ADB has failed to produce a new forest policy.

A couple of years ago, it appeared that the Bank might decide to do away with its forest policy and stop all lending to the forestry sector. But it is not only the Bank’s forestry projects that affect people and forests. Large scale infrastructure projects such as roads, dams or mines can have a major impact on forests. Other projects, such as projects to stop shifting cultivation, projects involving resettlement of indigenous peoples and agriculture projects also affect the people and forests of Asia.

The Bank’s forest policy is missing

In June 2000, the ADB started a review of its 1995 Forest Policy. In 2002, the ADB held a series of consultations on the first working paper for review. The Bank then drafted a revised working paper which was not publicly available. The new forest policy was initially supposed to be finished by the end of 2002. This was the first of many deadlines that the Bank missed. By the end of 2002, no forest policy had appeared. In June 2003, the Bank posted a draft version of its forest policy working paper on its website.

In July 2003, Javed Mir, ADB’s Senior Natural Resources Specialist (Forestry) and the Mission Leader for the new forest policy, sent an email to colleagues at the ADB explaining that a Working Paper of the Bank’s new forest policy would go to the Bank’s Board on 22 July 2003 for consideration. “Post 22 July 2003,” he wrote, “steps involve revising the Working Paper as per Board’s instructions, and preparing a final Policy Paper. This paper will be then submitted to Board for consideration and approval. Subject to Board Approval, the Paper will become the revised ADB Forest Policy. Our expectation is that this process will take us through to October 2003.”

The June 2003 draft was rejected by the Bank’s Board. According to the then-German Parliamentary State Secretary, Uschi Eid, the draft “remains unfortunately behind our principles and minimum standards for this sector; it does not reach the quality of the ‘Operational Standards’ of the World Bank. We, and several other countries, pointed this out in the session of the Executive Board of the ADB on 22 July 2003 and requested revisions.”

Three days after the Board meeting, Javed Mir met representatives of the NGO Forum on the ADB. “There was consensus from the board,” he told the NGOs, “on the general thrust of the document.” The truth is that there was no such consensus, as Eid’s reaction to the draft and subsequent events indicate.

Since July 2003, the forest policy has disappeared in the black box that is the ADB’s head office in Manila. Occasional rumours of glimpses of the forest policy have emerged from the bank, but little more.

In late 2003, a note appeared on the ADB’s website which stated that “A revised Draft Forest Policy Paper will be made available for stakeholder comments by January 2004.” In January 2004, Grant Curtis, an “NGO specialist” in the ADB’s Regional and Sustainable Development Department stated that “ADB plans to make the final version of the policy paper available to the public prior to the Board’s consideration.” January 2004 came and went with no sign of a new draft forest policy.

I asked Curtis when we might expect to see the next draft of the ADB’s forest policy. Curtis replied that “the draft will be made available to the public once the revision has been completed”. However, he added, “no firm date has yet been set for the posting of the latest draft”. He suggested I should “track it on our website as and when convenient for updates in the revision process”.

For a while, the Bank’s website asked for comments on the June 2003 draft, without mentioning that the Bank’s Board had already rejected this draft. Then the ADB stopped asking for comments and promised that it would release a revised draft in July 2004.

By September 2004, the Bank’s website still promised that the draft would be released two months previously, in July 2004. I wrote to Javed Mir, the Bank’s forestry specialist, to ask him, among other things, when we might expect the next draft to be released. Mir declined to reply.

In September 2004, the then-US Alternative Executive Director Troy Wray, wrote an internal memo to the Secretary of the ADB. In the memo Wray asked a series of very critical questions about the proposed forest policy and the process within the Bank for producing it. He asked about the proposed schedule for producing the proposed forest policy. He asked about consultation. He asked what changes had been incorporated as a result of the Board discussion in July 2003. He pointed out that “Corruption is a key reason for illegal or unsustainable levels of forest harvesting, not to mention social impacts and foregone revenues” and that the draft forest policy is “too polite with respect to the high level of corruption in the forest sectors of several DMCs [Developing Member Countries]”. Wray added that “Logging operations in the region have too often been involved in financial crimes as well, such as money laundering.”

Wray pointed out that the Bank needs a forest policy which applies “to Bank activities in other sectors”, including financial sector loans and sector adjustment loans, in order to prevent conversion of forests to large-scale farming or ranching. Wray noted that China has reduced its own rate of deforestation but has done so “at the expense of increasing unsustainable forest practices in other countries of the region”. Wray criticised the Bank’s promotion of industrial tree plantations. He asked how the differences between the Asian Development Bank’s forest policy and the World Bank’s forest policy will be resolved in projects which are joint financed, such as the Nam Theun 2 hydropower dam in Laos.

The Bank’s response? Robert Dobias, director of the Agriculture, Natural Resources and Social Sectors Division at the ADB, declined to answer Wray’s concerns. Dobias informed Wray that Bank staff had produced another draft version of the proposed forest policy in August 2004. “This paper has generated additional discussion on fundamental aspects of ADB’s support to the sector, especially given the long downward trend in demand for ADB’s services. Specifically, questions have been raised as to whether ADB should remain actively involved in forest sector activities.”

Dobias told Wray that “Staff are now examining these questions and identifying a course of action for Management’s consideration. Once we are more clear about ADB’s future role in the sector we will return to the comments and questions you have put to us.”

Dobias then told Wray that the Bank’s process is transparent: “Please be assured that we will follow a transparent process as we move towards a decision. Following internal discussions, we will provide the Board and the public an opportunity to review and comment on the issues and views reached by staff. The forest policy website will be revised to reflect these changes.”

In October 2004, Bank Information Center (BIC) wrote to Paul W. Speltz, the then-US Executive Director, with a series of concerns and recommendations regarding the proposed forest policy. Speltz did not reply.

Until late October 2004, the Bank’s website stated that the next draft of the forest policy would be posted in July 2004. Then, on 27 October 2004, the Bank posted the following comment on its web-site: “Following internal and external consultations, a draft working paper (W-paper) was prepared and discussed during the second half of 2003. A revised draft of the paper was expected to be posted here for public comment. However, recent (August 2004) internal discussions have raised fundamental issues related to ADB’s support to the forest sector. Further progress on the draft policy will depend on the results of these discussions, which are ongoing.”

In November 2004, 24 NGOs from 16 countries wrote to Tadao Chino, then-ADB President, to point out the flaws in the Bank’s forest policy review process and to ask for clarification of the process from now on. In his reply, Robert Dobias repeated the information on the Bank’s website. He explained that the Bank had revised the June 2003 draft policy to “incorporate comments received from internal and external reviewers” and that “fundamental issues were raised related to ADB’s support to the forest sector.” He added that “We currently are in the process of an internal discussion of these concerns.”

“Please be assured,” Dobias wrote at the end of his letter, “that we will make public the conclusions of our internal deliberations and invite comment on them.”

In March 2005, I wrote again to Javed Mir, the Bank’s forestry specialist. I asked him why the Bank did not release the working paper from the second half of 2003 and who, exactly, had discussed the draft. I asked whether notes of these discussions were available. I asked Mir what had happened between the second half of 2003 and August 2004. I asked him what “fundamental issues” were raised, and by whom. I asked when the Bank anticipated releasing the next draft of its proposed forest policy. Mir declined, once again, to answer my questions.

Then, in June 2005, an internal Memorandum, dated 7 April 2005, leaked from the Bank. The Memorandum lists a Forest Policy R-paper (the “R” stands for restricted) for discussion and possible approval by the ADB’s Board. Despite the Bank’s previous assurances that the next draft would be made public, this R-paper has never been made publicly available.

After obtaining a copy of the leaked Memorandum stating the existence of the R-paper on the forest policy, I wrote to Rolf Eckermann, then-Executive Director for Germany at the ADB. I asked him about the current status of the Bank’s proposed new forest policy and when the Bank anticipates producing the new policy. I asked what documents the Bank had produced since July 2003. And I requested Eckermann to make sure that Javed Mir, or someone else at the Bank, answers my emails from September 2004 and March 2005. Eckermann declined to reply.

In October 2005, I wrote to the ADB’s President Haruhiko Kuroda to ask him whether he could shed any light on what had happened to the proposed new forest policy. I also asked him the questions which Javed Mir and Rolf Eckermann had declined to answer. I asked for a copy of the latest draft of the forest policy. I asked whether the Bank’s board had discussed any drafts of the proposed forest policy since July 2003. And I asked when the Bank anticipated that the next draft of the proposed forest policy might go before the Board for possible approval.

Four months later, I got a reply from Katsuji Matsunami, Director, Agriculture, Environment and Natural Resources Division. Following the tradition of transparency within the ADB, Matsunami declined to answer almost all of my questions. He explained that “The work on the revised policy has been put on hold, since ADB Management embarked on the Internal Reform Agenda and the second Medium-Term Strategy (MTS) in 2005.” According to Matsunami, “These initiatives aim to enhance ADB’s development effectiveness with greater selectivity.” Whatever that might mean.

Matsunami explained that the Bank may decide not to bother with a new forest policy after all. “Whether ADB will renew the drafting of a revised Forestry Policy is dependent on the finalization of the second MTS, and its strategic selection of sectors in which ADB should continue to remain active. The final decision on the draft Forest Policy therefore should be available sometime during the second half of this year.” The second half of 2006 came and went without the ADB making anything public about its forest policy.

The 30-page Medium-Term Strategy II (2006-2008) mentions the word “forest” 13 times. It states that “ADB should help contain the loss of forest cover, using a river basin/landscape approach, and ensure that ADB-supported projects do not adversely affect forest capital and biodiversity resources.” No details are given about how the ADB might achieve this. The Medium-Term Strategy makes no mention of the Bank’s proposed new forest policy.

At the end of February 2007, the ADB posted a note on its website stating that “A synthesis report is under preparation and will be available for circulation in November 2007.” According to a source, ADB staff have already produced a new “synthesis report” on the Bank’s proposed forest policy. The draft synthesis report is for internal circulation only and is not available publicly. In early June 2007, the synthesis report will be made available for external peer review.

Today, the only version of the Bank’s proposed new forest policy is the draft dated June 2003. The Bank’s website states that “The proposed Policy is based on a review and revision of ADB’s Policy on Forestry (March 1995) and a participatory review process.” Presumably to spare the blushes of the responsible Bank staff, the website provides no further details of this “participatory review process” since February 2002. The Bank’s website makes no mention of the fact that the June 2003 draft was rejected by the Bank’s board in July 2003 (although the ADB acknowledges elsewhere on its website that “The draft Forest Policy Working Paper was discussed by the Board on 22 July 2003”). The Bank provides no details about what has happened regarding the ADB’s proposed forest policy since then. The Bank’s website gives no information about the process from now on.

The Bank’s claim that its proposed forest policy is based on a “participatory review process” is nonsense. The Bank’s process exposes the ADB for the secretive, dishonest, undemocratic institution that it is.

Poverty alleviation, or promoting corporations?

The purpose of the Asian Development Bank is supposedly poverty alleviation. The ADB claims to have a “development goal of halving poverty in the region by 2015 in an environmentally and socially equitable manner”. This sounds good, perhaps, until you realise that this is not the purpose of the Bank. The real purpose of the ADB is to open up access for corporations to new markets. While much of the Bank’s rhetoric regarding its role in the forests of Asia is couched in terms of land tenure, rights of forest dependent communities and the rights of indigenous peoples, in practice this is little more than a front. The purpose of the ADB’s involvement in forests is to privatise, to enclose the commons, and to turn the forests into a profit for corporations.

The destruction of forests in Asia is a direct result of increased corporate access to forests. Logging companies have a simple and straightforward relationship to forests. The forests are there as a means to make a profit. Plantation companies have a slightly more complex relationship with forests. Plantation companies need to control large areas of land on which they can plant monocultures of fast growing trees. Any forest on this land is simply in the way. A villager in Indonesia summed up the difference between logging and plantation companies like this: “Loggers used to come, log the forest and then go away. The plantation companies come, clear what’s left of the forest, plant their trees and stay.”

Since the ADB’s first forestry sector loan to Burma in 1977, the Bank has lent over US$1 billion for forestry projects. Of this, more than 80 per cent was spent on plantation projects and an area of more than one million hectares has been planted using ADB financing, including 775,000 hectares of commercial plantations.

One of the aims of the Bank’s only publicly available draft of the proposed new forest policy (June 2003) is to promote industrial tree plantations. A specific objective of the Bank’s draft forest policy is to “increase the extent and productivity of plantations and trees on farms to increase wood supply and rural employment opportunities.”

“Monocultures exist in natural forests so plantations are nothing new,” the ADB’s forestry specialist, Javed Mir, said during a meeting with NGOs in July 2003. He explained that plantations are needed to supply the increasing demand for wood in Asia. And plantations will take pressure off natural forests, according to Mir.

These arguments are myths put forward by the pulp and paper industry and its proponents. Let’s look at them in turn.

Myth number 1: Plantations create rural employment

“Large-scale plantations provide employment mainly during planting and harvesting,” wrote Ricardo Carrere of the World Rainforest Movement in a booklet which counters the pulp industry’s plantation propaganda. The booklet is titled “Ten replies to ten lies”. Once the trees are planted, Carrere points out, “employment opportunities fall dramatically”.

The jobs that are provided in plantations are extremely dangerous and often poorly paid. Plantation operations are increasingly mechanised and many of the jobs are contracted out. When this happens, workers often lose the few benefits they had. In Chile, almost all timber harvesting is carried out by contractors. A 1998 survey of forest workers in Chile found that when their jobs were contracted out two-thirds of workers saw a reduction in pay and benefits and half lost out on pensions

Many villagers have been forced to move away to find work since the land surrounding their villages has been taken over by eucalyptus plantations belonging to the recently-built Veracel pulp mill in Brazil. “There are no jobs here now and no money from the eucalyptus,” as one villager puts it.

Pulp and paper giant Mondi is one of the largest private landowners in South Africa. The company provides only 0.7 jobs for each 100 hectares of land that it owns. The actual figure in rural areas is even lower, because this figure includes people employed in Mondi’s offices and pulp and paper mills.

“Of all the activities capable of generating local employment, tree plantations are probably the worst option,” Carrere concludes.

Myth number 2: “Monocultures exist in nature, so plantations are nothing new”

This is an extraordinary statement. Deserts exist in nature but no one, as far as I’m aware, would use this as an argument for creating more deserts. There is nothing natural about an industrial tree plantation. The trees are not only of the same species, they are often genetically identical. They are completely reliant on management techniques, including spraying chemicals to fight weeds and kill pests. They are clearcut when they are harvested and will only regrow through planting (although eucalyptus tree can regrow from coppicing, new seedlings are often planted so that plantation companies can benefit from their research into ever faster growing trees).

Underlying Mir’s statement that “monocultures exist in nature” is the myth that a plantation is a forest. This deliberate confusion between industrial tree plantations and a wood or a forest is “the starting point of all propaganda in favour of tree plantations”, writes Carrere. The only thing that industrial tree plantations and forests have in common is that trees predominate in both. Industrial tree plantations are established to produce one product – often raw material for the pulp industry. Forests on the other hand provide a wide range of goods for local communities.

Myth number 3: “Plantations are needed to supply the increasing demand for wood in Asia”

Much of the “demand” for wood in Asia appears to come from China. In fact this demand is largely driven by consumption in the North. The wood is imported into China (much of it illegally logged), processed into flooring, doors or furniture and exported to North America or Europe. Between 1997 and 2005, imports of Chinese manufactured wood products to the US and Europe increased by between 700 and 900 per cent. A 2006 report, “China and the Global Market for Forest Products”, by the Centre for International Forestry Research (CIFOR), Forests Trends and the Centre for Chinese Agricultural Policy demonstrates that “demand in the United States and the European Union (EU) in particular is driving China’s rising demand for forest products”.

A similar pattern is clear in the pulp and paper sector in China. China has the fastest growing paper industry anywhere in the world and has accounted for more than half of the world growth in paper and paperboard production since 1990. But much of this production is of packaging, for fridges, computers, flat screen plasma TVs or jeans, to be exported to North America, Japan and Europe.

China’s pulp industry has only recently become reliant on timber as a raw material. Before 2000, only ten per cent of China’s pulp was produced from wood. Today the figure is more than 50 per cent. Since the mid-1990s, thousands of small pulp and paper mills which used agricultural residues as raw material, have been closed down. The mills were polluting, but it would be perfectly possible to install alternative pulping techniques and reduce the pollution. In many rural areas, selling crop residues to pulp mills was an important source of income.

The restructuring of the pulp industry in China has created a bonanza for the industry. China has become the “Promised Land” for pulp and paper equipment suppliers, as the editor of Pulp and Paper International magazine puts it. Of course, converting the industry to one reliant on timber as a raw material has created a massive new demand for wood – one which plantations cannot currently meet. The destruction of Asia’s forests has continued as the area of plantations has increased.

Myth number 4: “Plantations take pressure off natural forests”

This appears, at first glance, to be logical. Plantations make more timber available, therefore less timber will be needed from native forests. But in a 2003 report on “Fastwood” plantations around the world, CIFOR states that only in a small number of countries do plantations appear to have taken pressure off forests. CIFOR concludes that “there is little evidence to suggest that fast wood plantations have taken pressure off natural forests elsewhere”.

Plantations often lead directly to deforestation. In Thailand the rapid spread of eucalyptus plantations during the 1980s and early 1990s was associated with forest clearance and destruction of forests and rural livelihoods. In January 1990, for example, 156 employees of Suan Kitti were arrested for illegally logging a forest area in eastern Thailand to convert the land to eucalyptus plantations. Suan Kitti is a subsidiary of Suan Hua Seng, one of Thailand’s largest plantation companies and the owner of the Advance Agro pulp and paper mills. As a result of the public outcry, the Thai government banned all commercial tree plantations in National Reserve Forests.

Indonesia has one of the largest pulp industries of any country in Asia. By the end of 2001, Indonesia had 1.4 million hectares of industrial tree plantations to feed the pulp industry. CIFOR estimates that about half of this area was established on land cleared of forest during the previous 20 years. The pulp mills built in Sumatra were designed to start up using timber from rainforests. The plantations which are being established to feed these pulp mills in the future are replacing forest, not taking pressure off forest. For example, the Sinar Mas Group, which operates in Riau and Jambi provinces in Sumatra plans to establish 290,000 hectares of plantations over the next ten years. “Most will replace peat swamp forest, a habitat already in serious decline in Indonesia,” notes CIFOR.

In January 1987, ADB published “A Review of Forestry and Forest Sector Industries in the Asia Pacific Region”. In the report, the UN Food and Agriculture Organisation notes that “there is a distinct danger that the option of establishing quick-growing plantations can become an alibi for unjustifiable destruction of climax forest. Further, plantation development is not without risks. Clearing of secondary forests for planting can be a destructive process, particularly in mountain areas.”

Often the causes of deforestation, such as conversion to oil palm plantations, or agriculture, or the flooding of forest for large-scale hydropower dams, have nothing to do with supplies of timber. Establishing plantations to provide wood has no impact whatsoever on the rate of destruction of forest to make way for oil palm plantations, for example.

ADB increasing poverty and deforestation in Laos

The ADB’s lending in support of industrial tree plantations in Laos illustrates what is wrong with the Bank’s lending to the forest sector. The ADB’s Industrial Tree Plantations Project in Laos started in 1993 and was completed in 2003. The project aimed to create an area of 12,000 hectares of plantations. In November 2001, I visited Laos and saw some of the plantations established using ADB financing. In Khamouane province, I saw areas of forest being cleared to make way for ADB-funded monoculture eucalyptus plantations. Villagers told me that they had to walk further to collect mushrooms and other forest products since the plantations were established near their village. Wildlife such as mice and birds have moved to remaining forest areas away from the plantations they said.

The plantations are now owned by Oji Paper. The company decided to invest in Laos shortly after taking part in an ADB-supported workshop promoting industrial tree plantations in Laos. Oji Paper has continued to clear villagers’ forests to make way for its plantations.

In a critique of the ADB’s draft forest policy dated May 2003, I wrote that “In Laos an ADB-funded ‘Industrial Tree Plantations Project’ has supported a private company which has replaced community managed forests, swiddens and fields with monoculture eucalyptus plantations.”

Jan P. M. van Heeswijk, then-Director General at the ADB’s Regional and Sustainable Development Department, replied. “With regard to Lao allegation, we have looked into these issues and found no evidence to support the allegations against ADB forestry sector operations in Lao.” I asked van Heeswijk how, exactly, the ADB had “looked into these issues”. I pointed out that part of the reason I wanted to know was because at the time the ADB was planning a new plantations project in Laos. This project was supposed to “build on the successes and lessons learned” from the Bank’s Industrial Tree Plantations Project. I asked van Heeswijk whether anyone from the Bank’s Regional and Sustainable Development Department had visited Laos to inspect the sites where ADB-funded plantations had been established. I asked for copies of any reports produced as a result of any such visits.

In October 2003, Javed Mir accidentally copied an internal email to me. In the email, which was addressed to his colleague Robert Dobias, Mir described my comments about the Bank’s project in Laos as a “diatribe”. He said he would respond soon. “But you have to find a way,” he wrote to Dobias, “to tell him that he can’t keep on repeating the same old story and ask us to do his work. We are not working here to do his investigation, analysis – this is not our job.”

Of course I wasn’t suggesting that the ADB should do my work. I was suggesting that they should do their own work, including checking up on an environmentally and socially damaging plantations project in Laos.

A month later, Grant Curtis, the ADB’s “NGO Specialist”, provided another fascinating glimpse into the inner workings of the ADB. He told me that “The plantations [in Laos] contribute to enhancement of the environmental landscape through reforestation of degraded forestlands and making more productive use of marginal agricultural soils.”

Was this based on an in-depth study of the situation? Or a visit to the area to look at the plantations? Or a comment from a villager living near the plantations? Er, no. It was paraphrased from an Initial Environment Examination for the Bank’s proposed second plantations project Laos, which states: “The proposed project is seen as contributing to the enhancement of the environmental landscape throughout the project area through reforestation of degraded forest lands and making more productive use of marginal agricultural lands.”

In other words, Curtis took a prediction of what a Bank consultant hoped that a proposed project might achieve in an attempt to convince me of what had happened on an existing project.

When the Industrial Tree Plantations Project was completed, the Bank produced a project completion report. The report was finished in 2004, but only released in November 2005. The following month, the Bank’s Operations Evaluation Department (OED) also produced an evaluation of ADB lending to the Natural Resources Sector in Laos. Both reports are extremely critical of the ADB’s plantations project in Laos. The Project Completion Report declared the project “unsuccessful” and described the ADB’s performance in the project as “unsatisfactory”. The OED report found that the project had increased poverty.

According to the OED report one of the problems was the extremely weak monitoring of the project. Bank missions included few trips outside Vientiane. Between 1996 and 2003, there was no forestry specialist on any of the Bank’s project review missions. Between July 2000 and February 2002, there were no ADB review missions at all.

In January 2006, a month after the OED report was published, the ADB’s Board approved a new Forest Plantations Development Project in Laos. This project would include the setting up of a Lao Plantation Authority, the purpose of which was to attract multinational corporations to invest in the plantations, pulp and paper sector in Laos. Akmal Siddiq, an economist at the ADB, describes the Lao Plantation Authority as “a one-stop window for private investment in plantations”. At a 2004 workshop in Vientiane, Siddiq suggested a target of 500,000 hectares of industrial tree plantations in Laos by 2015.

A recent report for the ADB looks at indigenous peoples’ livelihoods in the Central Highlands of Vietnam and in northern Laos. Naresh C. Saxena, the consultant responsible for the report, wrote that “In supporting industrial tree plantations, the Bank makes a political decision to support the pulp and paper industry – often at the expense of local communities, who as a result lose access to their land and forests.”

I agree with this statement. I should do, because I wrote it. Although Saxena did not say so, he copied it from an article I wrote in September 2003 criticising the ADB’s involvement in the forests of Asia.

In his report Saxena stated that “The assumptions on which the ADB has based its strategy of discouraging shifting cultivation and encouraging industrial plantations in subsistence economies need to be re-examined and settled through objective research.” Despite this lack of “objective research” on the impact on industrial tree plantations on rural communities the ADB continues to repeat the mantra that plantations relieve poverty. “The development of livelihood plantations is an effective way to reduce poverty,” says Akmal Siddiq, an economist at the ADB, in a press release announcing the ADB’s new plantations project in Laos. Saxena disagrees. “On the whole”, he wrote in his report for the ADB on indigenous peoples’ livelihoods, “ADB has encouraged plantations through private companies, and discouraged use of forests for subsistence by the poor people.”

The ADB’s support of industrial tree plantations is a subsidy to the pulp and paper industry. Such subsidies do not benefit the poor, the supposed beneficiaries of the Bank’s loans. “Subsidies create economic distortions and make plantations viable in situations where other land uses might make better economic and environmental sense,” wrote Christian Cossalter and Charlie Pye-Smith in their 2003 report on tree plantations for CIFOR. Cossalter and Pye-Smith concluded that “the sooner subsidies to commercial plantations are phased out, or at least dramatically reduced, the better.”

In January 2007, the ADB cancelled its loan for the second ADB Plantations project in Laos “because the Lao government was unable to meet the loan conditions”, according to a source.

Whatever the reasons for the removal of this subsidy to the pulp industry, perhaps this will help create some political space in Laos to investigate the impacts of industrial tree plantations on rural communities. Perhaps it might stop the further handing over of rural communities’ land to the pulp industry to establish industrial tree plantations.

Perhaps it might even help convince the ADB to stop all subsidies for plantations and to the pulp and paper industry. That would be a welcome addition to the Bank’s “synthesis report” of its proposed new forest policy when it is released in November 2007.


Naresh Saxena (no date) “Ethnic Minorities in Central Highlands of Vietnam and Northern Laos: Poverty Alleviation through NRM”, TA 6242-REG: Developing New Paradigms for Sustainable Livelihoods Protection and Natural Resources Management among Ethnic Minorities of the GMS: A Study of Policies and Their Impacts, Strategies for Change.

Ricardo Carrere (1999) “Ten Replies to Ten Lies“, Briefing Paper, Plantations Campaign, World Rainforest Movement.

Sector Assistance Program Evaluation for the Agriculture and Natural Resources Sector in the Lao People’s Democratic Republic“, SAP: LAO 2005-17, Operations Evaluation Department Asian Development Bank, December 2005.

Parts of this article previously appeared in articles for the World Rainforest Movement Bulletin.


One Response to “Subsidies, secrecy and lies. The case of the ADB’s missing forest policy”


  1. Increased poverty, land conflicts and deforestation: The Asian Development Bank’s plantations record « - 27 February 2008

    […] overview of the ADB’s forest policy review process, since 2000, see Chris Lang (2007) “Subsidies, secrecy and lies: The case of the ADB’s missing forest policy“, April 2007. [14] My email to the ADB is here and Mamonong’s reply is here. [15] […]

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