In 2002 the Bank adopted a revised Forests Strategy and Operational Policy that allows the Bank to more proactively engage in the forest sector to help attain the goal of poverty reduction without jeopardizing the environmental values intrinsic to sustainability. The strategy is founded on three equally important and inter-related pillars: Harnessing the potential of forests to reduce poverty in a sustainable manner; Integrating forests more effectively into sustainable development; and Protecting vital local and global environmental services and values. Addressing these three pillars together makes the World Bank s work in the forest sector complex and multifaceted. It is not only about growing or protecting trees but also involves a complex interaction of policy, institutions, and incentives. Its approach embodies a multi-sector approach that addresses cross-sector issues and takes into account the impacts of activities, policies, and practices outside the sector on forests and people who depend on forests for their livelihoods. The purpose of the Forests Sourcebook is to be a resource for Bank clients, task managers and other stakeholders in designing and implementing projects in line with the Forest Strategy. The Sourcebook draws on experiences from within and outside the Bank in using innovative approaches to addressing the three pillars of the Strategy. The Sourcebook is divided into two parts: Part one contains seven modules looking at priority themes in the sector. It covers topics associated with: how forests can contribute to poverty reduction, engaging private sector, meeting the growing demand for wood, optimizing forest functions at the landscape level, improving forest governance, mainstreaming forest considerations in macro policy dialogue, and monitoring forest sector activities. The second part provides some guidance on implementing the World Bank s safeguard policies that are relevant to forests.