Daily report for 13 March 1996

Discussion of countries with low forest cover continued in the morning of day three of theIntergovernmental Panel on Forests second session. In the late morning and afternoon,delegates opened consideration of programme element II, financial assistance andtechnology transfer for sustainable forest management.

NEEDS AND REQUIREMENTS OF COUNTRIES WITH LOW FOREST COVER

Co-chair Holdgate invited continued dialog on programme element I.5, the needs andrequirements of LFCs.

UGANDA said it should be listed as an LFC. He recommended a less restricted definitionof protected areas that would address biodiversity factors in multiple use areas and aprioritization of proposed activities. UKRAINE stressed the need to adopt a holisticapproach and to value non-market forest resources. Public participation is important inestablishing national programs and precise methodologies should be developed topromote it. INDIA proposed that LFCs determine their own minimum forest cover andthat the IPF set general guidelines. He stressed the need to reduce waste of forest goodsand services.

SOUTH AFRICA said it should be listed as an LFC. Industrial plantations provideeconomic and social benefits, however, developers should meet costs. Strongerconsideration of the use and non-use values of forests is needed. WWF on behalf ofseveral NGOs emphasized biodiversity values and an integrated and precautionaryapproach. LFCs should be redefined on the basis of production and use of goods andservices.

The Co-chair summarized the Panel’s discussion of program element I.5 as follows: thecriteria for LFCs may need to be redefined in terms of countries’ causes of deforestationand their uses and needs; the role of forest services should be better characterized andconsidered, particularly economic aspects; countries should attempt to determine theminimum forest cover they can afford; the Panel should prioritize proposed actions; andan intersectoral approach is needed.

FINANCIAL ASSISTANCE AND TECHNOLOGY TRANSFER

Ralph Schmidt (UNDP) introduced the report on financial assistance and technologytransfer (A/CN.17./IPF/1995/5), highlighting two broad premises. From an economicview, conservation means “wise use,” maximizing present net worth of all future benefitsincluding wood, non-wood and environmental services. Sustainable development meansthat natural capital is not only to be maintained through replenishment, but enhanced tomeet growing needs. The report attempts to link investment and different categories offinancing and their implications to technology.

The G-77/CHINA said the Forest Principles from UNCED represent the principaldocument for these discussions and highlighted several provisions. Expectations for SFMare linked to the availability of funds, and ODA should be maximized. CHINA requestedfurther explanation of the “political difficulties” of donor countries. He commended thereferences to innovative funding, but said they were based on trade. He asked forjustification of a statement that ODA increases are unlikely, and stated that IPF shouldurge donors to meet their commitments to assistance and technology transfer.

The EU said the report inaccurately notes a decline in ODA for forestry. It does reflectthat many donors have adopted multi-sectoral aid and have integrated forestrycomponents into rural development projects. Efforts should be made to ensure effectiveuse of assistance and contributions from donors. He said the responsibility for finance lieswith each countries’ public and private sector, and on increases in forest revenues.

IUCN, supported by CANADA, said the report neglects to mention national trust fundsand foundations as a means for rational disbursement of funds for conservation activities.WWF, on behalf of several NGOs, challenged the statement in the report noting atendency among donors to give higher priority to projects on conservation and lowerpriority to industry and marketing.

UGANDA said the Panel should bring plantation forest financing back onto theinternational agenda because plantations play an important role in the management andconservation of biodiversity. Capacity building should be a means to an end. TheREPUBLIC OF KOREA called for a reversal of the negative investment trend in forestry.Innovative financing mechanisms should complement, not replace ODA. He encouragedincentives for private sector investment. CHILE said carbon offsets and tradable emissionpermits are not simply innovative funding mechanisms but should take account ofdifferentiated commitments under the FCCC.

The UK said ODA is most effective in building local authorities’ capacity, assistingvaluation of forest goods and services, and encouraging private investment to tackle newareas and act in accordance with SFM. Market mechanisms, tax reform, and otherdomestic policies can mobilize domestic resources. POLAND said SFM may requiremore investment in forestry, especially for forest and biodiversity protection andplanning. International cooperation is needed, especially debt-for-nature swaps.CANADA said donors should increase support to SFM in their ODA and shouldformulate incentives to private investment. New measures based on environmentalexternalities of forests should replace traditional measures funding timber alone.

AUSTRALIA said national governments have a role in setting standards and creatingenabling conditions. It is appropriate to consider mechanisms for forestry investments tobe traded, but he did not favor funding quotas. NORWAY praised practical options tostimulate domestic resource flows, including carbon offsets and tradable emissionspermits but emphasized that tradable permits would take time to develop. He suggestedthat private sector investment in sustainable development is worthwhile for developedcountries. ECUADOR stated that the section on donor priorities should be used forreference only, and that each country must be encouraged to establish its own priorities.

FRANCE welcomed language on marketable and tradable resources. Although involvingthe private sector could mobilize sizable resources, he cautioned against potential abuse.He urged closer study of forest economics. INDONESIA said realization of UNCEDprinciples depends on financial assistance. The report elaborates on technology transfer,but fails to address the progress made since Agenda 21 or to identify effective ways andmeans. KENYA said many initiatives have been planned, but support has not beenrealized. He said many development agencies attempt to introduce priorities beyond thoseof recipient governments.

The G-77/CHINA, recalled specific provisions of the Forest Principles, such as 1(b), onproviding agreed full incremental costs, 10 on new and additional financial resources, and11 on technology transfer on favorable terms. He said the report indicates the need forresources is not being met, that it emphasizes internal resources, and that assistance fundsfall short of those envisaged in Agenda 21. He said: increased donor coordination maylessen the flow; private financial resources do not typically favor sustainabledevelopment; and multilateral institutions frequently impose conditionalities.

DENMARK noted that the report does not reflect its continued commitment to assistanceor its provision of new and additional funds since UNCED. SOUTH AFRICA highlightedthe upcoming workshop on financial mechanisms. BULGARIA said increasedeffectiveness of ODA calls for recipients to adopt and implement sound policies andpursue SFM. He said debt-for-environment swaps proved successful and debt-for-sustainable-development swaps should be considered.

SWITZERLAND urged identification of measures to increase levels of ODA funding andimprove its efficiency. The IPF should adopt financing mechanisms conducive to donorparticipation that address program quality, secure land tenure, are incentive-driven andprovide roles in decision-making. Partnership arrangements between developed anddeveloping countries should be encouraged. ECUADOR called for innovations in fundmobilization and encouraged the use of internationally tradable CO2 emission permits. Hesaid tradable development rights could impinge on state sovereignty and ignore the rightsof indigenous peoples, and that partnership agreements with donors should beencouraged. The EU encouraged linkages between scientific and resource institutes ofdeveloped and developing countries and welcomed private sector involvement. He statedthat national capacities should be increased.

JAPAN stated the decline of the ODA may be due to a lack of projects in the forestsector. He encouraged the mobilization of domestic resources and suggested thatinternational institutional arrangements should follow the CBD approach. He stressed theneed to create more predictable and investor-friendly markets to facilitate technologytransfer. The PHILIPPINES said international cooperation, not domestic investment,should be the focus. Technology transfer limited to the private sector might not bemotivated by sustainable development needs. Joint implementation, “unmentionable” inclimate change negotiations, and other measures need to take account of otherconventions. Timing and emphasis on conservation over sustainable use and benefitssharing mean the GEF is not fully compatible with SFM. COLOMBIA said mobilizingthe private sector will not pay for international environmental services provided byforests, and encouraging private participation could be dangerous without a strict code ofconduct. He supported debt-for-nature swaps, but rejected debt-for-policy reform swapsand the recommendation for national forestry funds. The IPF needs to quantify availablefinancial resources to assess the possibility of meeting Agenda 21 targets.

SWEDEN questioned whether it is realistic to halve deforestation rates by 2000 andwhether it is possible to balance depreciation by deforestation of “forest capital.” Hecalled for study of private sector investment and stated that: “sustainable forestry” impliesactivities that are economically sustainable; building management capacity in recipientcountries can coordinate donor funding; and working closely with the agricultural sectormay increase support to forestry. The NETHERLANDS stated that: the paragraphsdescribing the effect of investment and disinvestment on forests and forest managementneglect social and biodiversity issues; donor coordination can be achieved throughnational planning; and donor agencies should work to link private investment tosustainable forestry.

BELARUS noted that implementing new forestry policy will require financial resourcesand technology, and, citing the need to mobilize new and additional resources, proposedan interstate fund for mitigating the effects of transboundary air pollution. MALAYSIAstressed adequate financial resources, and stated that: the cost of forest investment shouldinclude rehabilitating degraded lands; Malaysia uses tax incentives to encourage privatesector tree plantations; that the ASEAN Timber Technology Centre is closed due to lackof support; innovative mechanisms such as carbon offsets and emissions permit tradingrequire further work; and IPF-3 should study technology transfer for sustainable forestry.IRAN called for technology transfer and new and additional financial resources, andstudying the cause of “low absorptive capacity” for assimilating ODA in developingcountries.

The US called figures on investment and disinvestment “gross generalizations” anddisagreed with use of the term “shortfall,” which implies an agreed level of finance. Themost important incentives for private investment are the enabling conditions of the hostcountry, but private investment can have detrimental impacts if not regulated. Shesuggested identifying factors that facilitate long-term, positive private investment, andhighlighted joint ventures, environmentally oriented debt programmes and mobilizationof additional domestic funds as options.

IN THE CORRIDORS

Early discussions on financial assistance and technology transfer led some delegates andobservers to question the continuity between the recently concluded CSD IntersessionalAd-Hoc Working Group of Experts on Finance and Technology Transfer and IPF-2.While the the Working Group decided to consider non-ODA financial sources, includingmobilization of national resources, private sector investment, and innovative financialmechanisms, under the rubric of “new and additional funding,” some IPF participantsnoted that this decision has not carried over into the IPF’s debate on similar issues. Theysaid this difference may be due to concerns specific to IPF or to the participation ofdifferent ministries at the two fora.

THINGS TO LOOK FOR TODAY

FINANCIAL ASSISTANCE AND TECHNOLOGY TRANSFER: Theconsideration of programme element II, financial assistance and technology transfer forsustainable forest management should conclude during the morning session.

MULTIPLE BENEFITS OF ALL TYPES OF FORESTS: Delegates are expectedto begin programme element III.1(a) Assessment of the multiple benefits of all types offorests following the discussion of finance and technology transfer.