agrIculture & rural Development 53033 NOTES Rethinking Forest Partnerships and Benefits Sharing Issue 51 january 2010 rethinking collaborative arrangements with local partners Summary of Findings More forest area is being designated for use by local communities and indigenous peoples. In a growing number of countries legislation is being introduced to ensure that local partners share in the benefits of for- est operations and participate as active stakeholders in the sustainable use of forest resources. Private sector investment in the forest sector is increasing as well. For businesses in an expanding range of investment settings, establishing and maintaining positive working relationships with local communities is an essential part of gaining access to natural resources, local skills and labor. Afforestation and reforestation activities and programs to reduce greenhouse gas emissions from deforestation and forest degradation (REDD), includ- ing sustainable forest management (SFM) and forest restoration, seek to increase forest carbon sequestra- tion, and their success or failure will rely in many respects on the effective cooperation of forest dependent people. These developments are giving partnerships and benefit-sharing arrangements between local and outside partners greater prominence than they have generally had in the past. The significance of these collabora- tive arrangements is increasing whether the local partner is a community, a user or producer association, or a group of individual landholders, and whether the outside partner is a private firm, a government agency, or a nongovernmental or civil society organization. The arrangements vary widely in purpose as well for the respective partners. Local partners may be interested in employment and income generating opportunities, in the security of their access to forest land, in the protection of resources that have traditional or other values, or in capitalizing on small business opportunities. Outside partners may be interested in gaining and secur- ing access to forest products, in obtaining the cooperation of local communities in how forest resources are used, in alleviating rural poverty, or in managing risks and ensuring the provision of environmental services. Collaboration with rural people is also an urgent practical priority among international development agencies, whose goals include poverty reduction and the sustainability of positive social and environmental impacts. These development outcomes often rely heavily on the active engagement interested participation of the households and communities involved in a project. The conditions that lend themselves to successful collabo- ration have therefore become the focus of increasing attention on the part of international organizations that support sustainable forest operations. The World Bank has published a report titled Rethinking Forest Partnerships and Benefit Sharing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners. The report pres- ents evidence from a large number of surveys and interviews that were intended to capture the priori- ties and concerns of the different partners that have been involved in collaborative arrangements. The results can inform the design and conduct of partner- ships and arrangements between stakeholders who have different interests but who also potentially have ARD much to gain through mutually-beneficial outcomes. They also provide important practical insightsinto AGRICULTURE AND what concepts such as "trust" and "mutual respect" RURAL DEVELOPMENT Photograph by: Heriberto Rodriguez / The World Bank MAKING AND KEEPING GOOD Self determination - neither party felt compelled to negoti- ARRANGEMENTS ate or sign the agreement ­ they acted on their own free Collaborative arrangements between partners take many will. If either party was persuaded to attend, they agreed to forms, from informal agreements, to agreements with provi- see what was being offered, and what was being offered sions that permit one partner to leave the arrangement, to was not viewed as an ultimatum. fully enforceable legal contracts. Some agreements are not Trust - the partners in effective arrangements trust one documented. Some have elements that are set forth in or another. based on legislation, forest management plans, organiza- tional bylaws, or property records. Verifiable obligations ­ it is easy to determine if partners are fulfilling their obligations. Effective and lasting collaborative arrangements tend to be characterized by a number of features analyzed in academic These features apply both to making agreements and to literature on law, negotiation, and conflict resolution. The maintaining them. In keeping a long-term agreement, the study examined the importance of twelve of these factors, sides frequently must come together, renegotiate bits and including: pieces, and revise their relationship to account for new information or changing conditions. Common expectations about the undertaking and what it will deliver. While different combinations of these features proved im- portant in different types of collaboration, four emerged as Communication - both formal or informal, which satisfies nearly universally important: mutual respect, trust, practical- both sides and promotes transparency. ity, and communication. Furthermore, strong and lasting Fully bargained - parties in a negotiation feel they under- partnerships are characterized by processes and practices stand the other's motives to their own satisfaction. that go beyond what is captured in an agreement itself. Incentives tend to be specific as well. The collaboration CONTEXT MATTERS must be worthwhile not just to the community as a whole, but also to the particular people who have the power to help The conditions in which partnerships are negotiated and in or hinder the project. which the respective partners operate can be as important to the success or failure of the collaboration as the form of Legally recognized - where details are optimally set down the partnership itself. For instance, in situations in which a in writing. partnering community relies heavily on the natural resource concerned, the issue of bargaining proved highly significant. Mutual respect - neither side comes to the table from a Where community livelihoods are less dependent on position of superiority or inferiority and neither leaves the forests, incentives tend to become more important. table feeling that the will of their counterparts was imposed or that some larger advantage and disadvantage provided ELEMENTS OF A GOOD CONTRACT unfair leverage. Contracts serve a number of important functions in col- Mutual understanding of their own and each other's laborative arrangements, and their structure and content responsibilities, and of specific details that are important or should be adapted to suit the purpose of the arrangement. unimportant, such as deadlines and certain record keeping In benefit-sharing arrangements for instance, contracts tend requirements. to emphasize communication and dispute resolution, while commercially-oriented contracts are more concerned with Past history of conflict is thoroughly addressed ­ the contingencies, loss prevention, and how risks are divided arrangement addresses past conflicts - particularly if the between the partners. conflict regarded use of the resource being negotiated. Practical - both sides view the terms of the arrangements A review of good forest partnership contracts reveals a as practical, and each has the technical knowledge, capital, number of distinguishing attributes. They are generally clear, equipment, infrastructure, or simply labor and time neces- understandable, and complete, and address issues such as sary to fulfill their obligations. practicality, verifiability, and incentives. They are also legally valid at the same time that they provide means to resolve disputes that do not require those involved to go to court. 2 If there is any history of disagreements or disputes, the is- are recognized as being legitimate by all partners involved. sues involved are fully taken into account by the contract. They sometimes entail cash payments to communities or The structure and content of contracts are informed by the individuals, which some project designers find eminently purpose of the contract. practical when the project's output consists of a marketable commodity produced through the efforts of an individual SHARING THE BENEFITS: THINKING BEYOND or small team, the value of which is readily measured. One COMPENSATION project used cash payments for environmental services, Using forests imposes local costs, whether the use involves based on participants keeping the land in particular uses. production or environmental services. Benefit sharing ar- Where the project required a community effort or the use of rangements can ensure that the communities and house- a community-owned resource, some paid cash into a trust holds that bear these costs share in the benefits of the use. fund for community use, subject to outside review or control. Good benefit sharing arrangements characteristically go well beyond questions of compensation, and relate directly to The use of cash payments, however, can be problematic. the needs and livelihoods of the local partners concerned. When the payments are made to community leaders, They tend to be purposefully tailored to local contexts, accountability, corruption and elite capture can become a and to be transparent with beneficiaires whose interest concern. When they are made to heads of households, they may not benefit all household members, such as women INPUTS, OUTPUTS, AND OUTCOMES Partnerships and collaboration can be usefully considered in terms of their performance and their outcomes. Perfor- mance is generally considered in terms of how effectively inputs are used to generate short and medium term outputs or the ultimate objective of the partnership. In Rethinking Forest Partnerships and Benefit Sharing a table is presented that describes inputs, outputs and outcomes for each of the twelve factors. Below is an extract from this table: Factors Inputs Outputs Outcomes Practicality · Carefully assess the following aspects of proposed · Realistic overall project plan · Reduced risk of actions: · Training, technology transfer, unmet expecta- · Legal, technical, financial, and material needs and credit, and other assistance tions and resulting constraints integrated into plans conflicts · Risks · Unwanted external impacts · Environmental and social impacts minimized or mitigated Communication · Identify and try to overcome barriers to communica- · Regular and free flow of · Fewer misunder- tion: cultural, physical, institutional, and so on information among the standings · Try to agree upon (or create) practical channels of parties · Control of rumors communication · Frank discussion of problems · Enhanced trust · Identify party representatives, set out their authority, · Regular flow of information · Earlier warning of and create an obligation for them to communicate between representatives and problems with the people they represent those they represent · Better management · Create procedures to deal with grievances during · Prompt and fair handling of of conflicts the term of the partnership grievances Mutual respect · Open-mindedness: suspend judgment of other · Improved understanding of · Better working rela- parties other parties tionship · Consider different perspectives: be willing to listen · Avoidance of small, unintend- and empathize ed insults · Culturally sensitive: use courtesy in communications Trust · Use candor in discussions · Increased credibility · Parties are willing to · Build a reputation of reliability/persistence in keeping put faith in others' past promises promises of future performance. · Keep key project transactions, especially those involving money, transparent to all affected people · Increased patience 3 and youth. Some communities, therefore, elected alterna- Model contracts, model designs, and reproducing part- tive forms of payment. These alternatives included combi- nerships. Fully bargained arrangements can be costly nations of cash payment with technical assistance, market to achieve, especially when there is a need for multiple vouchers, productive goods (e.g., beehives), access to deals. The scale and scope of a partnership can influence land, decision-making power over nearly public lands and whether the partnership is individually crafted--where resources, extension services, credit or opportunities for the parties can afford to bargain, to innovate, to tailor the employment. The alternatives were selected because they agreement carefully to each party's needs--or based on a did more to advance the long-term prospects of the standardized agreement, because the transaction costs of community and to reduce poverty than cash payments bargaining each agreement would just be too high. In would have. situations where standardized agreements are necessary, it is good practice to develop the contract template based LESSONS FOR COLLABORATIVE on consultation and discussions with the key stakeholders ARRANGEMENTS and experts. Contracts and other legal documents are useful instru- Transplanting designs from one location to another is dan- ments, but not ends in themselves. Writing out a contract gerous for two reasons. First, context matters, and each can lead the sides to explore roles and risks in detail. location presents different conditions and issues. Second, Contracts provide a reference point for further discussion, process matters, and attempts to shorten the process and their execution impresses upon the parties that they may reduce trust, respect, communication, and other are making a true commitment. Contracts can also be a characteristics that are important to the long-term success means of informing potential outside investors and others of the project. Partnerships based on standardized agree- about the agreement. If the contract can be recorded in ments need to involve some individual bargaining and the official property records, it may be a means of binding tailoring of the project to the community. future owners of the land. Project design. Risk management is a vital element of Contracts, however, are not the only mechanism for good project design. Partners need to discuss possible recording rules governing the partnership. Some partner- risks and account for them in the design of the project. ships detail parts of their understanding in management It is particularly important for them to mutually under- plans. Some partners have agreed to adopt certification stand each other's responsibilities in the event that the standards. A partnership may also put its agreement into risk becomes imminent. Because not all risks or practical the founding documents of a new association or business issues can be anticipated at the beginning of a project, entity. To ensure that the rights of parties are fully docu- agreements should be structured with sufficient flexibility mented, projects may need more than a single contract, to address unanticipated risks and potential conflicts as and there may need to be subagreements with others they arise. besides the main partners, e.g., with an outside investor or auditor. This note was prepared by Kenneth Rosenbaum (Sylven Environmental Consultants) and Diji Chandrasekharan Behr (World Bank) with editorial inputs from Gunnar Larson (World Bank). It is based on the economic and sector work entitled Rethinking Forest Partnerships and Benefit Sharing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners financed by the Trust Fund for Environmentally & Socially Sustainable Development (TFESSD). 1818 H Street. NW Washington, DC 20433 www.worldbank.org/rural agrIculture & rural Development NOTES Rethinking Forest Partnerships and Benefits Sharing Issue 51 january 2010 rethinking collaborative arrangements with local partners Making Partnerships Work in Forest-Based Carbon Activities Cooperation with forest-dependent people is vital to the effectiveness of programs and mechanisms that seek to capitalize on the carbon sequestration potential of forests and to reduce emissions from deforestation and degradation (REDD). REDD requires transferring benefits from reduced emissions to those who use and access forests. Afforestation and reforestation activities as source of emission reduction credits both on the voluntary market and through the Clean Development Mechanism (CDM) often occur on the land of smallholders and communities. Sustainable forest management (SFM) and forest restoration initiatives engage communities in forest planning and management. Even where forest-dependent people have only limited ownership rights, forest-based carbon activities become largely, and in some instances entirely, unworkable without their active support. Projects that do not benefit the local partners involved, or that fail to earn the trust of those communities are unlikely to succeed. Long-term and stable partnerships between outside parties (e.g., investors, government, NGOs, or donors) and local partners therefore warrant priority in both the design and the implementation of carbon-related forest interventions. Among the most promising types of arrangements to formalize these partnerships are benefit-sharing arrangements. A World Bank study--Rethinking Forest Partnerships and Benefit Sharing: Insights on Factors and Context that Make Collaborative Arrangements Work for Communities and Landowners--presents an analysis of the elements of successful natural resource based partnerships, including benefit-sharing arrangements. These arrangements can make local partners stakeholders with an active interest in the project's outcome, and can be used to compensate them for any local costs that may be incurred in providing the global public good of reduced greenhouse gas emissions. PROCESS VS. CONTENT IN AN The Clean Development Mechanism mandates AGREEMENT some process elements; among other things, it The process of reaching agreement with a local part- requires project developers to provide local stake- ner is as important to the success of a partnership holders with a clear description of the project, to as the content or legal form of the agreement itself. accept local comment, and to document how the Project sponsors and community supporters there- developer took local comments into account (Con- fore need to think beyond the technical parameters ference of the Parties, Kyoto Protocol, UNFCCC, of the project. Successful partnerships must weigh .1, Decision 3/CMP Annex 37 (Montreal, 2005)). While biophysical and economic issues as well as business "stakeholders" may be a larger class than just the practices, laws, social relations, and cultural factors. local participants, going beyond the CDM minimum consultation requirements with direct participants This applies both to making and maintaining agree- and benefit recipients could contribute to strength- ARD AGRICULTURE AND ments. In keeping a long-term agreement, the sides frequently must come together, renegotiate bits and pieces, and revise their relationship to account for ening partnerships. Full, two-way engagement and negotiation can build foundations of communication, mutual respect, and trust. These will pay dividends RURAL DEVELOPMENT new information or changing conditions. throughout the course of the project. THE KEY FACTORS Full, interest-based bargaining. The parties should negoti- Effective and lasting collaborative arrangements tend to be ate with each other and feel they understand the other's characterized by a number of features analyzed in academic motives to their own satisfaction. The local partner should literature on law, negotiation, and conflict resolution. Re- be engaged in negotiating the details of the partnership. Ne- thinking Forest Partnerships and Benefit Sharing examined gotiations should focus on interests -- not solely on what twelve factors which are listed below in an indicative order partners are demanding, but why they want them. Such of significance for making and maintaining agreements. negotiations allow greater latitude for reaching agreement. While different combinations of these factors proved When transaction costs are too high to tailor the agreement important in different types of collaboration, the first four and standardized contracts are necessary, a good practice is emerged as nearly universally important. to engage a sample of potential partners -- through work- shops, interviews, surveys, or other means -- to develop Communication. Communication should be among all the contract template. parties on all aspects of the partnership, throughout the duration of the agreement, without physical, behavioral, or Shared expectations. Parties should share common expec- cultural barriers. This facilitates transparency. tations about the undertaking and a mutual understanding of their own and each other's responsibilities. If you ask Trust. Most partnerships are based on commitments to each to describe the agreement, their stories must mesh. deliver payments or products in the future. To enter into partnership each party must trust that the other party will Verifiability. For purposes of transparency, the obligations keep their end of the deal. Over the course of long-term should be verifiable and easy to determine if partners are collaborative arrangements certain commitments may be fulfilling theirs. Measures such as milestones to demon- violated. The partners involved will need to rebuild trust to strate progress towards a distant goal, or recordkeeping fix the resulting problems. that satisfies outside investors or regulators can facilitate verifiability. Mutual respect. Neither side should come to the table from a position of superiority or inferiority, nor leave the Legal validity. The promises and duties of all sides in the table feeling that the will of their counterparts was imposed collaborative arrangement should be written out -- in a con- or that some larger advantage and disadvantage provided tract, a charter, a regulation, or some other formal, compre- unfair leverage. hensive, and legally valid and enforceable document. Often the costs and risks of going to court are so high that agree- Practicality. All participants must have the technical knowl- ments are not enforced through the formal judicial system. edge, capital, equipment, infrastructure, or simply labor and Regardless, the process of reaching a written agreement time to fulfill their obligations. Skills required can range from builds common understandings of responsibilities. The writ- bookkeeping, to forest management and conflict resolution. ten agreement also serves as a reference to the details of the arrangement over time. BOX 1: SHARING BENEFITS ­ PROS AND CONS OF CASH PAYMENTS Some project designers chose cash where the output was a market commodity that was easily measured and produced by individual or small team effort. Some used cash payments for environmental services, based on keeping the land in particular uses. However, cash is sometimes a problem. Cash payments can be difficult to trace and verify, unless they are made through a banking system or placed in a trust subject to outside auditing. When cash goes into the hands of community leaders, communities are not always able to hold them accountable. Corruption becomes a concern. If the payments go to heads of households, they may not benefit the women or youths. A community may prefer the alternative options listed in the text of this brief. Often these arrangements can advance the long-term prospects of the community and contribute to poverty alleviation more sustainably than cash payments. 2 Legal validity can also require verifying and clarifying the BENEFIT SHARING ­ THINKING BEYOND local partner's underlying rights to the resource. In certai COMPENSATION situations, the benefit that the local partner values most in a Capturing carbon delivers a public good but often imposes a collaborative arrangement is acknowledgement of its rights local cost. to the land. Benefit sharing arrangements can transfer benefits due to Shared understanding about agreements. The par- local partners that bear these costs. Appropriate benefit ties should share a sense of what it means to make and sharing supports long-term viability, reduces risks, and maintain an agreement. They should understand and accept extends the development impact of the activities through its how the other party views the agreement. All partners must contribution to poverty reduction. comprehend the commitments being made, and share a common view of the importance of specific provisions in The best way to share benefits depends on the local the agreement, e.g., deadlines, abiding by local laws, sub- context. Benefit sharing should be open, verifiable, and mitting reports, and so forth. should serve legitimate beneficiaries. Ideally, it should look beyond compensation, towards promoting broader social Self-determination. The decision to enter into a partnership and economic development (see Box 1). Benefit sharing should be informed. Neither party should feel compelled arrangements reviewed in Rethinking Collaborative to negotiate but rather come of their own free will. If they Arrangements included: were persuaded by an outside party to attend and agreed to see what was being offered, the offer should not be viewed · Cash payments to local partners for land leased, as an ultimatum. The choices, and the accountability for commodities delivered, or environmental services making the choices, must belong to the local partner. provided. · Combinations of cash payments with technical · Incentives. The collaboration must be worthwhile not just assistance or services for commodities or environ- to the local partner, but also to the particular people who mental services. have the power to help or hinder the project. · Provision of alternative benefits for land, commodi- ties, or environmental services. These alternative Past issues resolved. Agreements underpinning collab- arrangements included: orative arrangements should address any past conflicts · Market vouchers between the participants, and attempt to resolve them. · Productive goods (e.g., beehives) Partners must deal with preexisting problems and reasons · Access to new land for distrust of similar arrangements, including past conflicts · Extension services among the parties involved. This is particularly so if past is- · Credit sues concern rights to land. · Opportunities for employment These factors apply to partnerships as inputs, outputs, and · Decision making power over land and outcomes (see table on inputs and outcomes In Summary resources, including clarification and acknowl- of finding). edgement of the local partners' ownership rights. This note was prepared by Kenneth Rosenbaum (Sylven Environmental Consultants) and Diji Chandrasekharan Behr (World Bank) with editorial inputs from Gunnar Larson (World Bank). It is based on the economic and sector work entitled Rethinking Forest Partnerships and Benefit Shar- ing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners financed by the Trust Fund for Environmentally & Socially Sustainable Development (TFESSD). 3 Forest-sector collaborative arrangements come in many forms. The local partner may be a community, an association, or a set of individual landholders. The outside partner may be a private organization or a government. The interest of the local partner may be production of income from the forest, security of access to land, increased labor or small business opportunities, protection of traditionally valued resources, or other values. The interest of the outside partner may be similarly varied, from securing access to forest products, to obtaining the cooperation of the local community in the partner's resource use, to securing a source of labor, to alleviation of rural poverty, to production of environmental services and management of risks. Establishing arrangements that effectively deliver sustainable forest management and benefit local communities is a challenge because of the range of participants, objectives, and scales of partnerships and benefit-sharing arrangements. Using an evidence-based approach Rethinking Forest Partnerships and Benefit Sharing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners provides insights into developing and maintaining collaborative arrangements in the forest sector. Building on negotiation and dispute-resolution literature for the analytical framework, this study identifies factors and practices promoting the formation and maintenance of partnerships, and explains how the factors are influenced by context. The publication informs discussions and approaches to forest partnership and benefit-sharing arrangements. It also offers guidance on how to implement key factors that influence contract- based forest partnerships and benefit-sharing arrangements. The results should be of interest to those promoting partnerships and developing benefit-sharing arrangements. This includes government, private sector, and nongovernmental organizations, development partners, and managers of forest programs offering payments for carbon sequestration and reduced emissions from deforestation and degradation (REDD). This work benefited from support from the Program on Forests (PROFOR) and the Trust Fund for Environmentally & Socially Sustainable Delelopment (TFESSD) made available by the governments of Finland and Norway. For any questions or additional information on this note or the publication it is based on, please contact Diji Chandrasekharan Behr at the World Bank at dchandrasekharan@worldbank.org 1818 H Street. NW Washington, DC 20433 www.worldbank.org/rural agrIculture & rural Development NOTES Rethinking Forest Partnerships and Benefits Sharing Issue 51 january 2010 rethinking collaborative arrangements with local partners Potential Roles for Civil Society Growing waves of land acquisition, mechanisms for promoting sustainable forest management, restoring forest landscapes, and producing forest carbon all point to the need for partnerships between resource dependent communities and outside parties such as businesses, government agencies, and civil society organizations (CSOs)1. Partnerships involving the development and management of a resource can be effective instruments for empowering local communities, reducing poverty, and protecting the environment. The outside partner connects the community with new opportunities and incentives. Structured well, a partnership can benefit everyone. Civil society organizations often participate in these arrangements, sometimes as the outside partner, but often in a helping role, as the community's advocate or as the honest broker who brings the sides together (see Box 1). A World Bank study titled Rethinking Forest Partnerships and Benefit Sharing: Insights on Factors and Context that Make Collaborative Arrangements Work for Communities and Landowners examined community partnerships for resource development to discover the processes and practices that foster success. The result is a working guide to better process in community partnerships. Although its findings are aimed at process partners, it also has insights for those acting as facilitators, advocates, or catalysts. PROCESS VS. CONTENT IN AN KEY FACTORS AGREEMENT Effective and lasting collaborative arrangements tend The process of reaching agreement with a local to be characterized by a number of features analyzed partner is as important to the success of a in academic literature on law, negotiation, and partnership as the content or legal form of the conflict resolution. Below are twelve factors and the agreement itself. Project sponsors and community potential role for CSOs listed in an indicative order of supporters therefore need to think beyond the technical parameters of the partnership. Successful partnerships must weigh biophysical and economic issues as well as business practices, laws, social relations, and cultural factors. This applies both to making and maintaining agreements. In keeping a long-term agreement, the sides frequently must come together, renegotiate terms, and revise their relationship to account for new information or changing conditions. When transaction costs are too high to tailor the agreement and standardized contracts are necessary, a good practice is to engage a sample of potential partners -- through workshops, interviews, ARD AGRICULTURE AND surveys, or other means -- to develop the contract template. Photograph by: The World Bank RURAL DEVELOPMENT 1. For purposes of this note, the terms resource-dependent communities and community includes Indigenous Peoples. significance for making and maintaining agreements. While imposed or that some larger advantage and disadvantage different combinations of these factors proved important in provided unfair leverage. CSOs should encourage all sides different types of collaboration, the first four emerged as to consider and understand the other points of view at the nearly universally important. table and to navigate cultural differences. Communication. Communication should be among all Practicality. All participants must have the technical parties on all aspects of the partnership, throughout the knowledge, capital, equipment, infrastructure, or simply duration of the agreement, without physical, behavioral, labor and time to fulfill their obligations. CSOs should or cultural barriers. This facilitates transparency. CSOs evaluate local partners' capacity, assess their needs, and, should encourage ongoing contact among parties, train where possible, assist local partners in filling capacity gaps. local partners to be effective representatives of their interests; advocate that the arrangement provide for Full, interest-based bargaining. The parties should conflict resolution mechanisms and open and regular negotiate with each other and feel they understand the communication among the partners. other's motives to their own satisfaction. The local partner should be engaged in negotiating the details of the Trust. Most partnerships are based on commitments to partnership. Negotiations should focus on interests -- not deliver payments or products in the future. To enter into solely on what partners are demanding, but why they want partnership each party must trust that the other party will them. Such negotiations allow greater latitude for reaching keep their end of the deal. Over the course of long-term agreement. During negotiations, CSOs can serve all parties collaborative arrangements certain commitments may be involved as a mediator or facilitator. Alternatively, CSOs can violated. The partners involved will need to rebuild trust to serve one side: (i) as a negotiation and bargaining coach; fix the resulting problems. CSOs should facilitate the trust (ii) by informing the local partner about costs and benefits building and encourage honesty and openness. of similar arrangements; (iii) by framing the discussions in terms of interests rather than positions; and (iv) by Mutual respect. Neither side should come to the table encouraging creative problem-solving. from a position of superiority or inferiority, nor leave the table feeling that the will of their counterparts was BOX 1: POTENTIAL ROLES FOR CSOS In collaborative arrangements CSOs can be: (i) independently funded advisors and advocates for the local partner; (ii) financed by the outside party to serve as an advisor to the local partner; and (iii) the outside party that enters into agreements with local partners. In some situations, CSOs can take on more than one role as well as assume a temporary or transitional role. Below are brief descriptions of CSO roles in two cases. In Tanzania a project with the objective of helping villages manage forests under FSC certification for a particular tree species involved two agreements. A non-governmental organization (NGO) played different roles in each of these agreements. One agreement was between the communities and the government and sought to enable the former to gain control over the forests. The NGO advised the communities in this process. In the second agreement the NGO was the outside party. The second agreement was to obtain certification for the management of the specific tree species. This agreement made the community a member of the NGO's certification group. In a payment for environmental service arrangement aiming to protect a watershed in Bolivia, the NGO served as organizer, funder, and outside partner in the arrangement. In this arrangement, the NGO will eventually step aside and have the downstream water users pay for the service and form a partnership with the local service providers. Independent of the role of a CSO in a collaborative arrangement, the organization must avoid a narrow focus of delivering on only certain factors, and overlooking other problems. The CSO must consider all aspects of a successful partnership. 2 Shared expectations. Parties should share common partners must comprehend the commitments being made, expectations about the undertaking and a mutual and share a common view of the importance of specific understanding of their own and each other's responsibilities. provisions in the agreement, e.g., deadlines, abiding by If you ask each to describe the agreement, their stories local laws, submitting reports, and so forth. CSOs should must mesh. CSOs should encourage the parties to discuss assist in ensuring that the parties involved share clear the arrangement and all its ramifications; help communicate understandings about their commitments. their expectations, listen to each other, and come to agreement. Self-determination. The decision to enter into a partnership should be informed. Neither party should feel Verifiability. For purposes of transparency, the obligations compelled to negotiate but rather come of their own free should be verifiable and easy to determine if partners will. If they were persuaded by an outside party to attend are fulfilling theirs. Measures such as milestones and agreed to see what was being offered, the offer should to demonstrate progress towards a distant goal, or not be viewed as an ultimatum. The choices, and the recordkeeping that satisfies outside investors or regulators accountability for making the choices, must belong to the can facilitate verifiability. CSOs should encourage the parties local partner. The local partner may need technical or legal involved to be transparent in designing and implementing advisors to understand the proposed deal. This is a potential the collaborative arrangement, and to clearly define how role for a CSO. The advisors should not make the agreement they will know if the agreement is being fulfilled. but should assist the local partner's decision-making, while stepping back to let the local partner assert its will and Legal validity. The promises and duties of all sides in the accept responsibility for its choices. collaborative arrangement should be written out -- in a contract, a charter, a regulation, or some other formal, Incentives. The collaboration must be worthwhile not just comprehensive, and legally valid and enforceable document. to the local partner, but also to the particular people who Often the costs and risks of going to court are so high have the power to help or hinder the project. CSOs should that agreements are not enforced through the formal ensure that local partners receive their due benefits from judicial system. Regardless, the process of reaching a a collaborative arrangement, and that these benefits are written agreement builds common understandings of distributed appropriately. The CSO should also advocate responsibilities. The written agreement also serves as a for benefit sharing that advances the social and economic reference to the details of the arrangement over time. development of the local partner. Legal validity can also require verifying and clarifying the Past issues resolved. Agreements underpinning local partner's underlying rights to the resource. In certain collaborative arrangements should address any past situations, the benefit that the local partner values most conflicts between the participants, and attempt to resolve in a collaborative arrangement is acknowledgement of its them. Partners must deal with preexisting problems and rights to the land. CSOs should supply legal advice to local reasons for distrust of similar arrangements, including partners. In appropriate situations CSOs should advocate for past conflicts among the parties involved, particularly local partners to have secure rights. if past issues concerned rights to land. CSOs should identify unsettled issues, particularly regarding land rights; Shared understanding about agreements. The parties place these on the agenda when the arrangement is first should share a sense of what it means to make and negotiated; and act as a mediator to resolve issues between maintain an agreement. They should understand and local partners, such as location of land boundaries. accept how the other party views the agreement. All This note was prepared by Kenneth Rosenbaum (Sylven Environmental Consultants) and Diji Chandrasekharan Behr (World Bank) with editorial inputs from Gunnar Larson (World Bank). It is based on the economic and sector work entitled Rethinking Forest Partnerships and Benefit Shar- ing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners financed by the Trust Fund for Environmentally & Socially Sustainable Development (TFESSD). 3 Forest-sector collaborative arrangements come in many forms. The local partner may be a community, an association, or a set of individual landholders. The outside partner may be a private organization or a government. The interest of the local partner may be production of income from the forest, security of access to land, increased labor or small business opportunities, protection of traditionally valued resources, or other values. The interest of the outside partner may be similarly varied, from securing access to forest products, to obtaining the cooperation of the local community in the partner's resource use, to securing a source of labor, to alleviation of rural poverty, to production of environmental services and management of risks. Establishing arrangements that effectively deliver sustainable forest management and benefit local communities is a challenge because of the range of participants, objectives, and scales of partnerships and benefit-sharing arrangements. Using an evidence-based approach Rethinking Forest Partnerships and Benefit Sharing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners provides insights into developing and maintaining collaborative arrangements in the forest sector. Building on negotiation and dispute-resolution literature for the analytical framework, this study identifies factors and practices promoting the formation and maintenance of partnerships, and explains how the factors are influenced by context. The publication informs discussions and approaches to forest partnership and benefit-sharing arrangements. It also offers guidance on how to implement key factors that influence contract- based forest partnerships and benefit-sharing arrangements. The results should be of interest to those promoting partnerships and developing benefit-sharing arrangements. This includes government, private sector, and nongovernmental organizations, development partners, and managers of forest programs offering payments for carbon sequestration and reduced emissions from deforestation and degradation (REDD). This work benefited from support from the Program on Forests (PROFOR) and the Trust Fund logos? for Environmentally & Socially Sustainable Delelopment (TFESSD) made available by the governments of Finland and Norway. For any questions or additional information on this note or the publication it is based on, please contact Diji Chandrasekharan Behr at the World Bank at dchandrasekharan@worldbank.org 1818 H Street. NW Washington, DC 20433 www.worldbank.org/rural agrIculture & rural Development NOTES Rethinking Forest Partnerships and Benefits Sharing Issue 51 january 2010 rethinking collaborative arrangements withlocal partners Better Partnerships between Private Sector and Communities For the private sector, partnerships with resource-dependent communities and landowners can produce three kinds of value: economic, social, and environmental. On the economic side, partnerships give the private sector access to land, natural resources, local skills, labor and contribute to profit. On the social side, partnerships can generate jobs and enhance quality of life. On the environmental side, partnerships can be an avenue leading to sustainable resource use. The three kinds of value are inseparable. Rural people appreciate responsible businesses bringing jobs, contributing to poverty alleviation, and improving their quality of life. Customers today are more and more aware of the "invisible quality" that corporate social responsibility adds to products. Socially and environmentally responsible conduct ensures"social license" for a business's efforts to develop local natural resources. Achieving this may come with costs. In the end, however, responsible conduct advances the triple bottom line of the company. But how does the private sector approach a local partner to build a partnership that will be low in risk, reasonable in transaction costs, and high in satisfaction for both sides? For arrangements involving carbon payments or payments for environmental services, how can an investor create working relationships that will last for an extended period? A World Bank Study -- Rethinking Forest Partnerships and Benefit Sharing: Insights on Factors and Context that Make Collaborative Arrangements Work for Communities and Landowners -- offers success stories, and a few cautionary tales, for businesses to consider. In addition, it provides a list of inputs that managers can use when planning projects, negotiating agreements, and maintaining ongoing partnership work. These inputs build towards outcomes that support long-term, successful relations with local partners. PROCESS VS. CONTENT IN AN AGREEMENT The process of reaching agreement with a local partner is as important to the success of a partnership as the content or legal form of the agreement itself. Project sponsors and community supporters therefore need to think beyond the technical parameters of the project. Successful partnerships must weigh biophysical and economic issues as well as business practices, laws, social relations, and cultural factors. This applies both to ARD making and maintaining agreements. In keeping a long-term agreement, the sides frequently must come together, renegotiate bits and pieces, AGRICULTURE AND RURAL DEVELOPMENT and revise their relationship to account for new information or changing conditions. Photograph by: The World Bank When transaction costs are too high to tailor the agreement violated. The partners involved will need to rebuild trust to and standardized contracts are necessary, a good practice fix the resulting problems. is to engage a sample of potential partners -- through workshops, interviews, surveys, or other means -- to Mutual respect. Neither side should come to the table develop the contract template (See Box 1). from a position of superiority or inferiority, nor leave the table feeling that the will of their counterparts was imposed THE KEY FACTORS or that some larger advantage and disadvantage provided unfair leverage. Effective and lasting collaborative arrangements tend to be characterized by a number of factors analyzed in academic Practicality. All participants must have the technical literature on law, negotiation, and conflict resolution. knowledge, capital, equipment, infrastructure, or simply Rethinking Forest Partnerships and Benefit Sharing labor and time to fulfill their obligations. Skills required can examined twelve factors which are listed below in an range from bookkeeping, to forest management and conflict indicative order of significance for making and maintaining resolution. agreements. While different combinations of these factors proved important in different types of collaboration, the first Full, interest-based bargaining. The parties should four emerged as nearly universally important. negotiate with each other and feel they understand the other's motives to their own satisfaction. The local partner Communication. Communication should be among all should be engaged in negotiating the details of the parties on all aspects of the partnership, throughout the partnership. Negotiations should focus on interests -- not duration of the agreement, without physical, behavioral, or solely on what partners are demanding, but why they want cultural barriers. This facilitates transparency (See Box 2). them. Such negotiations allow greater latitude for reaching agreement. Trust. Most partnerships are based on commitments to deliver payments or products in the future. To enter into Shared expectations. Parties should share common partnership each party must trust that the other party will expectations about the undertaking and a mutual keep their end of the deal. Over the course of long-term understanding of their own and each other's responsibilities. collaborative arrangements certain commitments may be If you ask each to describe the agreement, their stories must mesh. Verifiability. For purposes of transparency, obligations BOX 1: MODEL CONTRACTS should be verifiable making it easy to determine if Transplanting contracts from one location to another partners are fulfilling theirs. Measures such as milestones is dangerous for two reasons: (i) context matters, and to demonstrate progress towards a distant goal, or each location presents different conditions and issues; recordkeeping that satisfies outside investors or regulators and (ii) process matters, and attempts to shorten the can facilitate verifiability. process may reduce trust, respect, communication, Legal validity. The promises and duties of all sides in the and other characteristics that are important to the collaborative arrangement should be written out -- in a long-term success of the project. In situations where contract, a charter, a regulation or some other formal, standardized agreements are necessary, it is good comprehensive, legally valid, and enforceable document. practice to develop the contract template based on Often the costs and risks of going to court are so high consultation and discussions with potential partners that agreements are not enforced through the formal and key technical advisors. judicial system. Regardless, the process of reaching a In an outgrower scheme in South Africa, the company written agreement builds a common understanding of reviews its model contract with grower groups every responsibilities. The written agreement also serves as a year and revises it based on their feedback. These reference to the details of the arrangement over time. changes apply to contracts signed with new growers or Legal validity can also require verifying and clarifying the growers entering a new rotation. In addition, every year local partner's underlying rights to the resource. In certain the company renegotiates the costs of some goods situations, the benefit that the local partner values most in a that it sells to all growers, such as fertilizer. collaborative arrangement is acknowledgement of its rights 2 to the land. making the choices, must belong to the local partner. Shared understanding about agreements. The parties Incentives. The collaboration must be worthwhile not just should share a sense of what it means to make and to the local partner, but also to the particular people who maintain an agreement. They should understand and accept have the power to help or hinder the project. how the other party views the agreement. All partners must comprehend the commitments being made, and share Past issues resolved. Agreements underpinning a common view of the importance of specific provisions collaborative arrangements should address any past in the agreement, e.g., deadlines, abiding by local laws, conflicts between the participants, and attempt to resolve submitting reports, and so forth. them. Partners must deal with preexisting problems and reasons for distrust of similar arrangements, including past Self-determination. The decision to enter into a partnership conflicts among the parties involved. This is particularly so if should be informed. Neither party should feel compelled past issues concern rights to land. to negotiate but rather come of their own free will. If they were persuaded by an outside party to attend and agreed to These factors apply to partnerships as inputs, outputs, and see what was being offered, the offer should not be viewed outcomes. (see table on inputs, outputs and outcomes in as an ultimatum. The choices, and the accountability for Summary of Findings) BOX 2: USING THIRD PARTIES TO BOOST COMMUNICATION Communication in partnerships can be facilitated through formal and informal structures. Formal channels included grievance committees and schedules of meetings with local representatives. Informal approaches included hiring local people who have needed technical competence and exposure to outside parties. Developing communication takes time, expertise, and resources. A company can leverage its investment in communication by bringing in third parties who share an interest in seeing the partnership succeed and are willing to lend their expertise at a modest cost. In Uruguay, a forest products company joined a local economic development roundtable and asked for help to communicate with local partners and identify projects to fulfill the company's social development obligations. The outcome was small-scale dairy and woolproducing cooperatives in need of pastures signed contracts to graze livestock on company lands. When logistical difficulties arose with one of the contracts, a member of the roundtable - the local municipal government - stepped in to improve the cooperative's capacity. This note was prepared by Kenneth Rosenbaum (Sylven Environmental Consultants) and Diji Chandrasekharan Behr (World Bank) with editorial inputs from Gunnar Larson (World Bank). It is based on the economic and sector work entitled Rethinking Forest Partnerships and Benefit Shar- ing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners financed by the Trust Fund for Environmentally & Socially Sustainable Development (TFESSD). 3 Forest-sector collaborative arrangements come in many forms. The local partner may be a community, an association, or a set of individual landholders. The outside partner may be a private organization or a government. The interest of the local partner may be production of income from the forest, security of access to land, increased labor or small business opportunities, protection of traditionally valued resources, or other values. The interest of the outside partner may be similarly varied, from securing access to forest products, to obtaining the cooperation of the local community in the partner's resource use, to securing a source of labor, to alleviation of rural poverty, to production of environmental services and management of risks. Establishing arrangements that effectively deliver sustainable forest management and benefit local communities is a challenge because of the range of participants, objectives, and scales of partnerships and benefit-sharing arrangements. Using an evidence-based approach Rethinking Forest Partnerships and Benefit Sharing: Insights on What Makes Collaborative Arrangements Work for Communities and Landowners provides insights into developing and maintaining collaborative arrangements in the forest sector. Building on negotiation and dispute-resolution literature for the analytical framework, this study identifies factors and practices promoting the formation and maintenance of partnerships, and explains how the factors are influenced by context. The publication informs discussions and approaches to forest partnership and benefit-sharing arrangements. It also offers guidance on how to implement key factors that influence contract- based forest partnerships and benefit-sharing arrangements. The results should be of interest to those promoting partnerships and developing benefit-sharing arrangements. This includes government, private sector, and nongovernmental organizations, development partners, and managers of forest programs offering payments for carbon sequestration and reduced emissions from deforestation and degradation (REDD). This work benefited from support from the Program on Forests (PROFOR) and the Trust Fund for Environmentally & Socially Sustainable Delelopment (TFESSD) made available by the governments of Finland and Norway. For any questions or additional information on this note or the publication it is based on, please contact Diji Chandrasekharan Behr at the World Bank at dchandrasekharan@worldbank.org 1818 H Street. NW Washington, DC 20433 www.worldbank.org/rural