The World Bank yesterday approved a US$100 million loan to help China develop and protect its forest resources. The loan is supplemented by a US$5.25 million grant from the Global Environment Facilities (GEF) for biodiversity conservation.

China has long been a forest-poor country. The government has done a remarkable job in increasing forest cover, mainly through an extensive plantations program, from 13 percent in 1980s to 18.2 percent today. However, the hectare per capita of 0.13 is significantly below the world average of 0.6. The increasing gap between timber supply and demand is a key constraint to sustainable forestry development. The annual timber consumption outpaces supply by about 80 million cubic meters. The reduction in natural forests has, in turn, led to a threat to biodiversity. 

The Guangxi Integrated Forestry Development and Conservation Project aims to assist China in improving the effectiveness of its forest management and institutional arrangements in timber production, watershed protection and nature reserves management and to enhance the conservation of globally significant biodiversity in selected areas of the Guangxi Zhuang Autonomous Region. 

"The project would introduce a sector-wide, integrative and comprehensive approach to sustainable forest management and biodiversity conservation by supporting improvement of all three forest categories of timber production, ecological environment protection and biodiversity conservation in the context of sustainable forest management in Guangxi Zhuang Autonomous Region," said Liu Jin, World Bank Agriculture Specialist and Task Manager for the Guangxi Forestry Project. 

The World Bank loan will finance the establishment of high-yield timber plantations and the introduction of superior genetic materials and forest management technologies.  The GEF Grant will finance the formulation and implementation of management plans for five globally significant nature reserves for demonstration purposes, the conduct of targeted biodiversity surveys and research to better integrate biodiversity conservation into the broader landscape and the strengthening of collaboration between nature reserves and local communities.

The World Bank has been the largest external funder for China's forestry programs, supporting six forestry projects since 1985 with a total of more than US$900 million in loans and credits. GEF has provided two grants of a total of US$33 million for China's forestry projects.
The IBRD loan has a payment period of 20 years, including a five-year grace period.

(China Development Gateway December 15, 2006)