Book excerpt: Since 1978, when the World Bank published its policy paper on forestry, the world's understanding of and concern about the forest sector of the developing world has increased substantially. It has become clear that forests and woodlands play an even more important economic and ecological role than had earlier been recognized. In particular, the importance of tropical moist forests in protecting biological diversity has become more fully appreciated, as has their role in the carbon cycle and in global climatic change. The nature of the challenge; Deforestation and forest degradation; The growing demand for forests and trees for basic needs; Strategies for forest development; The role of the world bank; Challenges for the forest sector; Strategies for forest development; The role of the world bank.