Structural Adjustment and Forest Resources : The Impact of World Bank Operations

Over two decades, the World Bank has
undertaken many structural adjustment operations with
governments of developing countries. During negotiations for
structural adjustment loans (SALs), partner governments
agree to specific policy reforms, whose implementation
becomes a condition for disbursement of SAL funds.
Conditionality varies with local circumstances, but
generally supports privatization of state enterprises,
liberalization of the domestic economy, and openness in
international trade. Structural adjustment operations have
often been controversial because they are explicitly
political. Opposition, or support reflects ideological
perspectives, perceptions of who gains, and who loses
economically from a SAL, or beliefs about its environmental,
and social impacts. Environmental groups express particular
concern about SALs' impacts on the rate of
deforestation. Debate about adjustment, and deforestation
has been fueled largely by anecdotes, and a few country
cases bases on limited time-series data. The authors broaden
the analysis by combining a complete record of Bank SAL
operations, with a 38-year socioeconomic database for 112
developing countries. They find that adjustment has greatly
affected imports, exports, consumption, and production in
many forest products sectors (such as fuel-wood, sawn-wood,
panels, pulp, and paper). Some activities have increased,
and some declined, but overall, the effects have balanced
each other. The net impact on domestic round-wood
production, the authors' proxy for forest exploitation,
has been almost exactly zero. Their results suggest that
growth in round-wood production is explained well by
population growth, urbanization, and world demand for forest
products. Their findings suggest that adjustment has not
promoted domestic deforestation, but it has increased net
imports of wood products, implying some displacement of
pressure onto other countries' forest resources. They
also find that devaluations have significantly increased the
exploitation of forest resources.