The purpose of the Bank's activities in the forest sector is to assist member countries to utilize and conserve their forest resources to provide social, economic and environmental benefits to the present and future generations. The Bank seeks to ensure the maintenance and improvement of the forests so as to increase the sector's production and productivity, with due regard to the function these forests perform in protecting the environment and in supporting the livelihood of various groups. Specifically, the Bank will cooperate with member countries in their efforts to:

  • Improve the effectiveness of institutions responsible for formulating, coordinating and implementing policies, legislation and regulations, programs and projects related to the management, utilization and protection of forest resources and promote the training of technical personnel, extension activities, and the education and participation of the local population in the development of forest activities. Special attention will be given to the support of science and technology for methods to protect forest areas and improve forestry practices.
  • Promote the management and conservation of the natural and man-made forests and the realization of programs of afforestation and reforestation for land and watershed protection, timber production, energy, industry and other uses.
  • Promote agroforestry and other forest-based activities and programs.
  • Enhance the sustainable development and modernization of forest industries and the wise utilization of forest raw material, and mobilize investments in the forest sector--whether public, private or of mixed origin--to stimulate interest in forest plans and programs.
  • Support forest conservation measures with the aim of protecting essential natural cycles and the equilibrium of ecosystems including forest soil, water, fauna, flora and microclimates.
  • Provide the technical and financial means to construct and maintain the infrastructure required for forest management and conservation as well as for forest resources utilization.
  • Support forest conservation measures with the aim of protecting essential natural cycles and the equilibrium of ecosystems including forest soil, water, fauna, flora and microclimates.
  • Provide the technical and financial means to construct and maintain the infrastructure required for forest management and conservation as well as for forest resources utilization.

Fields of Activity

In accordance with the objectives of this policy, and as requested by member countries, the Bank will provide financing and technical cooperation for forest activities aiming at the utilization and conservation of forest resources to provide long-term social, economic and environmental benefits, in area such as the following:

1. Institutional Strengthening. The Bank will cooperate in the efforts of member countries to:

a) establish forest-related institutions, entities or services and improve the capacity of existing ones to formulate, coordinate and implement policies, legislation and regulations, programs and projects related to the use, management and protection of fores resources;

b) stimulate interest in forestry plans and programs and adapt regulations to foster investments in forest development;

c) train personnel such as forest specialists, middle-level technicians, forest workers and extension agents in order to achieve better management of forest resources and to facilitate technology transfer. Particular attention will be given to the appropriate training of extension agents for the promotion of community-based forestry and related beneficiary-oriented activities.

2. Research and Studies. The Bank will cooperate in the programs of member countries for applied research and studies in areas such as:

a) acquisition of scientific data on timber resources, forest soils, hydrology, genetic and ecological characteristics of different tree species;

b) studies on forest management, agroforestry and reforestation techniques; research on ecosystems and appropriate techniques for their use, including research on the impact of natural resources accounting;

c) studies on forest product preservation and utilization technologies, such as logging and processing for local, industrial and energy uses;

d) research on the commercial potential of seldom used tree, forest flora and fauna species; quality control and market studies for forest products;

e) studies on the integration of forest activities with forest protection programs and other activities in related sectors such as agricultural, energy, infrastructural and industrial investments, and in rural development schemes;

f) studies on the factors that determine community participation in reforestation activities and in forest protection, management and utilization; research on transfer of appropriate forest-related technology to the beneficiaries and among the communities; studies on indigenous people in primary forest areas and the relationship between forest activities and livelihoods; and

g) other studies related to forestry development.

3. Forest Management , Reforestation, Afforestation and Restoration Programs. The Bank may finance member countries' actions that promote management and conservation of natural and made-forest for the long term production of goods and services. The investments in natural forest management include activities such as:

a) establishment and management of extractive reserves for the utilization of multiple (often non-timber) forest goods;

b) establishment, equipping and management of national, state and municipal forests, community woodlots, privately managed multiple use forests and other forms of managed forest resources;

c) protection against fire and pests, and natural disasters;

d) silvicultural techniques that have been demonstrated to sustainably improve yields in natural, secondary growth or plantation forests through thinning of overly dense forest stands, fertilization, pruning, etc.;

e) rehabilitation of degraded forest ecosystems, including species reintroduction when necessary;

f) stand treatment that has been demonstrated to sustainably improve the natural regeneration potential of existing forests; and

g) restoration of forest areas that have been degraded.

The Bank also supports reforestation and afforestation activities to sustain productive capacity in the long run, to relieve pressure on the natural forests and to counterbalance losses caused by depletion of the forest cover. Species selected for planting should be suited to local climatic and geographical conditions and to present or future markets, taking into consideration long term risks on forest production caused by fire and pests. Plantations can be established in secondary growth or degraded areas for the purposes which may include: timber production for industrial and energy uses; creating village woodlots for fuel wood and other uses at the community level; environmental protection; and multiple uses.

4. Agroforestry Systems to Enhance Rural Developement. Because of the importance of developing approaches that address the needs of rural communities for food, fodder, fuel wood and other forest-based products, the Bank will support agroforestry operations, which should be designed in accordance with the production possibilities of forest soils and which may include:

a) the production of intercropping systems with crops and trees and a combination of pasture and trees (agrosilvicultural and silvipastoral practices);

b) the growing of multiple-use trees for food, fodder and wood supply; and

c) other systems that combine agricultural and forestry production both in space and time.

5. Establishment of Forest-Based Industries. In order to contribute to an increase in efficiency and output of forest-based products, including those products that are for export, the Bank may finance activities such as:

a) establishment of industries for the utilization of managed forests. Eligible industries are saw-milling, wood chips, wood panel and secondary wood industries; pulp and paper industries; processing plants for resins, glues and other chemical and pharmaceutical industries based on forest products;

b) small-scale processing and marketing of forest products, in cottage industries, as community cooperative or artisan efforts, or integrated with larger-scale ventures;

c) installation of facilities for drying, sorting, classification and other treatment of forest products that assure their improved utilization and commercialization;

d) establishment of facilities for charcoal, biogas and alcohol production; manufacturing of stoves in combination with the use of fuel wood for energy; and development of other energy-efficient technologies based on forest products;

e) other investments related to industrial development such as transportation, equipment and access roads as well as the large-scale marketing of forest products.

6. Forest Conservation and Protection Measures. The Bank will support conservation and protection measures including:

a) the establishment, management and protection of forest areas with specific ecological, economic and social functions, such as: national parks, wilderness areas, sanctuaries, demarcated territory for forest-dwelling people, ecological stations and reserves for the preservation of biodiversity, fauna and flora, soil, water, landscape, watersheds, and areas with unique geomorphological characteristics;

b) mechanisms for protection and security of forests, and for the prevention of indiscriminate cutting and destruction of forest stands due to inappropriate use of fores areas; and

c) forestry activities for watershed, soil and reservoir protection, particularly in relation to the protection high value infrastructure investments, such as roads, irrigation works, hydroelectric plants and other structures, the economic efficiency of which may be reduced due to ecological damage.

7. Forestry-Related Services. This category includes cadastral and aerial surveys; development of land use plans, land demarcation, remote sensing; the development and dissemination of public education programs and information modules on the importance and functions of forests, ecotourism development and ways and means to protect the forest resource base.


The following criteria will guide the Bank's assistance for activities in the forest sector:

  • Development projects that affect forest areas should be consistent with national development priorities, statutes and regulations.
  • Proposed activities in the forestry sector should be assessed in terms of potential environmental impacts. Loan proposals as well as project and program designs should address potential environmental impacts including where appropriate, an examination of alternatives and proposed activities to mitigate adverse impacts.
  • In multisectoral projects in which a forestry development component is envisaged, the Bank will seek to ensure that this component is clearly defined and that the necessary mechanisms for coordination among the different components to ensure success of the program are in place.
  • In forestry projects financed by the Bank it will be ensured that local groups, including indigenous communities, participate directly or indirectly in the economic benefits generated by these projects. Deterioration of the living conditions of these groups should be avoided, respecting their land and other rights, as determined by the national legislation.
  • In forestry projects that are social and community-oriented an that aim at improving living conditions in rural areas, the participation of the final beneficiaries in project activities is important. The Bank will support and encourage innovative financial mechanisms that are targeted for low-income groups and will stimulate local interest in such projects.
  • Whenever pertinent, ex-post evaluation must include an assessment of the environmental impact of the project, and in community-oriented operations, of the participation of the beneficiaries of the project. In these cases, the evaluation will be financed by the Bank on a nonreimbursable basis.
  • Whenever possible, the Bank will promote regional programs and technical cooperation for the application of this Policy.

Criteria for bank financing

The new environmental orientation of the forest sector policy requires the inclusion of modalities of financing forest projects whose basic designs produce significant externalities not generally taken into consideration by the investor. The time profile over which some projects yield benefits to the investor and the economy are skewed: early years produce mainly costs, while benefits start accruing in the later years. These cases would justify flexibility in establishing the terms and conditions of Bank loans in the sector.

In the forest sector, each proposed Bank financing should include a financial plan that:

a) takes into account the nature of the proposed program or project and its particular time pattern of costs and benefits;

b) formulates the plan under terms and conditions of Bank lending policy with due regard to periods of grace and amortization; and

c) takes into consideration the terms and conditions of other relevant participating agencies.


Prevailing Reference Document: GP-115-4, March 1991. 

* The operational policies of the Inter-American Development Bank are intended to provide operational guidance to staff in assisting the Bank's borrowing member countries. Over the course of the Bank's more than 40 years of operations, the approach to developing operational policies has taken various forms, ranging from the preparation of detailed guidelines to broad statements of principle and intent. Many policies have not been updated since they were originally issued, and a few reflect emphases and approaches of earlier years which have been superseded by specific mandates of the Bank's Governors, the most recent being the Eighth Replenishment mandates of 1994.

In accordance with the Bank's information disclosure policy, the Bank is making all of its operational policies available to the public through the Public Information Center. Users please note that the Bank's operational policies are under a process of continuous review. This review process includes preparation of best practice papers summarizing experience at the Bank and other similar institutions, and sector strategy papers.