... .. ...ffS w ~~~~23952 * ~~~~~~~~~January 2002 I- -S. - ~~~~~~~~~~~ 4 ~~~~~ -.-. 9"t 4;1lll, l; *lX l-- 74* OPERATIONS EVALUATION DEPARTMENT ENHANCING DEVELOPMENT EFFECTIVENESS THROUGH EXCELLENCE AND INDEPENDENCE IN EVALUATION The Operations Evaluation Department (OED) is an independent unit within the World Bank; it reports directly to the Bank's Board of Executive Directors. OED assesses what works, and what does not; how a borrower plans to run and maintain a project; and the lasting contribution of the Bank to a country's overall development. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank's work, and to provide accountability in the achievement of its objectives. It also improves Bank work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings. WORLD BANK OPERATIONS EVALUATION DEPARTMENT EON T) Promoting Environmental Sustainability in Development An Evaluation of the World Bank's Performance Andres Liebenthal 2002 The World Bank http://w-N,v.worldlbank. org/litml/oed. Washington, D.C. U Copyright © 2002 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, USA All rights reserved Manufactured in the United States of America First edition January 2002 The opinions expressed in this report do not necessarily represent the views of the World Bank or its member governments. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. The World Bank encourages dissemination of its work and will normally grant permission promptly. Permission to photocopy items for internal or personal use, for the internaL or personal use of specific clients, or for educational classroom use is granted by the World Bank, provided that the appropriate fee is paid directly to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers MA 01923, U.S.A., telephone 978- 750-8400, fax 978-750-4470. Please contact the Copyright Clearance Center before photocopying items. For permission to reprint individual articles or chapters, please fax your request with information to the Republication Department, Copyright Clearance Center, fax 978-750-4470. All other queries on rights and licenses should be addressed to the Office of the Publisher, World Bank, at the address above, or faxed to 202-522-2422. Cover photo: Andres Liebenthal ISBN 0-8213-5053-6 Library of Congress Cataloging-in-Publication data has been applied for. j Printed on Recycled Paper Contents v Acknowledgments vii Foreword, Pr6logo, Preface xi Executive Summary, Resumen, Resume Analytique xxiii Abbreviations and Acronyms 1 1. Introduction 3 2. The Historical Context 3 Environment in the World Bank 4 Environmental Policy and Strategy 5 External Situation 7 3. The Bank's Record 7 Bank Objectives 8 Stewardship, Policy, and Strategy 8 Environmental Lending and Mainstreaming 11 Safeguards and Environmental Assessments 11 Global Concerns 13 4. Main Findings 13 Stewardship, Policy, and Strategy 16 Environmental Lending and Mainstreaming 19 Safeguards and Environmental Assessments 22 Global Concerns 23 Internal Structure, Incentives, and Accountability 25 5. Recommendations Promoting Environmental Sustainability in Development 29 Annexes 29 Annex A. Donor Evaluations 31 Annex B. Report of the Advisory Panel 31 Summary 31 Background 32 Recommendations 35 Concluding Words 37 Annex C. Report from the Committee on Development Effectiveness 41 Annex D. World Bank Management's Response to OED's Environment Review and Recommendations 45 Endnotes 49 References Boxes, Figures, and Tables 9 Mainstreaming the Environment (Box) 10 Evolution of the World Bank's Environment Portfolio (Figure) 15 Indicators of Environmental Degradation for Selected Countries (Table) iv Acknowledgments This report would not have been possible with- John English (Poland), Pablo Gutman (Mexico), out the contributions of many people and organ- Fernando Manibog (Madagascar), and Klas izations. Preparation of the report was supervised Ringskog (India). by Andres Liebenthal. The main author was The report is also indebted to background John D. Shilling (consultant), assisted by Simone work and other materials prepared by Laurence Lawaetz, Muthukumara Mani, and Jane Pratt Boisson de Chazournes (on compliance with (consultants). William Hurlbut and Steven operational policies and procedures); Michael Kennedy provided editorial assistance. Soon- Flint, Fiona Nunan, and Dermot Shields (on envi- Won Pak provided administrative support. ronmental improvement and poverty reduction); An Advisory Panel reviewed drafts, provided Stein Hansen and Dag Aames (on environmen- advice, and served as a sounding board for the tal impacts of adjustment operations); Charles di recommendations. Many thanks to Alicia Barcena, Leva and others at the IUCN Environmental Law Chief, Environment and Human Settlements Divi- Centre (on environmental assessment policy and sion, United Nations Economic Commission for practice); Ken Green and Aaron Zazueta (on Latin America and the Caribbean; Ashok Khosla, environmental assessment safeguards in selected President, Development Alternatives Inc. (New projects); Thor S. Larsen, Shiveharn S. Dhillion, Delhi); David McDowell, former Director General, Anne Mossige, Odd Terje Sandlund, and Jorn IUCN; Frances Seymour, Program Director, Pro- Thomassen (on biodiversity conservation and gram in Institutions and Governance, World sustainable use); Simone Lawaetz (on poverty Resources Institute; and Bjom Stigson, President, reduction and environmental sustainability; main- World Business Council for Sustainable Devel- streaming the environment in infrastructure proj- opment. George Greene facilitated the discussions. ects; and a survey of task team leaders on Many individuals inside and outside the Bank institutional incentives and constraints); Ridley provided comments and advice. Victoria Elliot, Nelson and Simone Lawaetz (on dryland inter- Nils Fostvedt, Jorge Garcia-Garcia, Kristalina ventions); and John Shilling (on environmental Georgieva, Robert Goodland, Patrick Grasso, sustainability issues in IDA 10, 11, and 12). Kirk Hamilton, Jarle Harstad, Ian Johnson, Magda The team expresses its gratitude to those Lovei, John Redwood, John Underwood, Robert who hosted and organized the country work- Watson, and David Wheeler were particularly shops: Farouk Alioua, Department of Rural constructive and helpful. Development, Hassan II Institute of Agriculture The report draws heavily from country case and Veterinary Sciences (Morocco); Boris studies prepared by Roger Batstone (Nigeria), Graizbord, Coordinator, Program of Advanced v Promoting Environmental Sustainability in Development Studies in Sustainable Development and Envi- U.K. Department for International Development ronment, El Colegio de Mexico (Mexico); and is gratefully acknowledged. Adeniyi Osuntogun, President, Foundation for The study was published in the Partnerships Environmental Development and Education in and Knowledge Group (OEDPK) by the Out- Nigeria (FEDEN). Sincere thanks are extended reach and Dissemination Unit. The task team to the many workshop participants from the includes Elizabeth Campbell-Page (task team public and private sectors, academia, and non- leader), Caroline McEuen (editor), and Juicy governmental organizations. Qureishi-Huq (administrative assistant). The study team also acknowledges and sin- cerely thanks the hundreds of contributors who participated in the OED Development Forum and Director-General, Operations Evaluation: sent very useful comments on the design and Rober Picciono interim findings of the study. Muthukumara Director, Operations Evaluation Department: Mani adeptly managed the forum. Gregory K Ingram The generous financial support of the Swiss Manager, Sector and Themnatic Evaluation Group: Agency for Development and Cooperation, the Alain Barbu Norwegian Ministry of Foreign Affairs, and the Task Manager: Andres Liebenthal vi Foreword FOREWORD PROLOGO PREFACE The World Bank has made El Banco Mundial ha La Banque mondiale a substantial improvement in its mejorado apreciablemente considerablement am6liore environmental performance since su actuaci6n relativa al medio les resultats qu'elle obtient au plan 1987. It has focused on the ambiente desde 1987. Ha centrado la environnemental depuis 1987. Elle environment as a new area of atenci6n en el medio ambiente como a fait de 1'environnement l'un de activity, and it has sought to mitigate nueva esfera de actividad y ha ses poles d'activite, et s'efforce the negative environmental effects of tratado de mitigar los efectos d'attenuer les effets negatifs que its development interventions. The ambientales perludiciales de sus peuvent avoir en ce domaine ses Bank's participation in the 1992 intervenciones de desarrollo. Su interventions en faveur du United Nations Conference on participacion en la Conferencia de developpement. Sa participation Environment and Development and las Naciones Unidas sobre Medio a la Conference des Nations Unies the 1992 World Development Report Ambiente y Desarrollo de 1992 y el sur l'Environnement et le on the environment demonstrated the lnforme sobre el desarrollo mundial Developpement en 1992 et la Bank's engagement and helped 1922: desarrollo ymedio ambiente publication, la mime annee, d'un launch many environmental demostraron el compromiso del Rapport sur le Developpement dans activities. These efforts have Banco y contribuyeron a la iniciaci6n le Monde consacre a produced commendable results and de multiples actividades 1'environnement, qui ont contribue have promoted awareness in ambientales. Esa labor ha producido au lancement de nombreuses developing country governments of resultados encomiables y ha creado activites environnementales, the linkages between the conciencia en los gobiernos de los temoignent de l'engagement de la environment and development The paises en desarrollo de los vinculos Banque en ce domaine. Ces efforts Bank has helped many governments que existen entre el medio ambieente ont produit des resultats louables create environmental ministries and y el desarrollo. El Banco ha ayudado et ont permis de faire prendre environmental assessment a muchos gobiernos a crear conscience aux pouvoirs publics regulations. ministerios del medio ambiente y des pays en developpement des To be sure, these achievements a elaborar normas de evaluaci6n liens qui existent entre have fallen short of the ambiental. 1'environnement et le expectations of many stakeholders. Esos exitos no han logrado d6veloppement. La Banque a aide The momentum of the early 1990s colmar, por cierto, las expectativas de nombreux pays a se doter d'un dissipated in the face of constraints de muchos de los interesados. El ministere de l'environnement et a in the operating environment. impulso creado a comienzos de los mettre en place des r6glementations Environmental sustainability was anos noventa se debilit6 debido a exigeant la r6alisation d'6valuations not integrated into the Bank's core las limitaciones del entorno environnementales. objectives and country assistance operacional. La sostenibilidad Il est indeniable que ces strategies, and linkages between ambiental no se incorpor6 en los accomplissements ne repondent macroeconomic policy, poverty objetivos basicos ni en las pas totalement aux attentes de alleviation, and environmental estrategias de asistencia a los nombreuses parties prenantes. sustainability were not explicitly paises del Banco, ni se La dynamique observee au debut forged. There has been a lack of establecieron vinculaciones des annees 90 a ete compromise consistent management explicitas entre la politica par les obstacles operationnels. commitment to the environment, macroecon6mica, el alivio de la La viabilite ecologique n'a ete coupled with a lack of consistent pobreza y la sostenibilidad integree ni dans les grands management accountability. The ambiental. No ha habido un objectifs de la Banque ni dans vii Promoting Environmental Sustainability in Development Bank has not supported compromiso firme ni una les strategies d'aide-pays, et environment efforts as a responsabilidad sistematica les liens entre la politique central theme through staff de la administraci6n . macroeconomique, la incentives or resource respecto del medio r6duction de la pauvrete allocations. Yet staff have ambiente. El Banco no ha et la viabilite ecologique carried out many apoyado el caracter n'ont pas et clairement worthwhile activities related prioritario del trabajo sobre 6tablis. La direction n'a pas to the environment. el medio ambiente con el toujours fait preuve de son These shortcomings are rooted otorgamiento de incentivos al engagement dans le domaine in part in fundamental differences personal o con la asignaci6n de environnemental et n'a pas et of view among member countries recursos. A pesar de ello, el systematiquement tenue about the Bank's role. Many personal ha llevado a cabo muchas comptable des choix effectues countries are reluctant to borrow actividades valiosas relacionadas en ce domaine. La Banque n'a for environmental projects and to con el medio ambiente. pas accorde aux actions implement Bank environmental Esas deficiencias tienen su environnementales une place policies, which they perceive as origen en parte en diferencias de centrale en les appuyant par la costly and rigid. Many opini6n fundamentales entre los fourniture d'incitations au nongovernmental organizations paises miembros acerca del papel personnel ou de ressources remain critical of Bank del Banco. Muchos paises se financieres. Les services de la performance, and some advocate resisten a pedir prestamos para Banque ont neanmoins poursuivi policies that would downplay the proyectos ambientales y a aplicar de nombreuses activites economic prerequisites of poverty las politicas sobre medio ambiente importantes sur le plan reduction. del Banco, las que consideran environnemental. In short, this OED report finds costosas y rigidas. Muchas Ces points faibles s'expliquent that the Bank has made progress organizaciones no gubernamentales en partie par les opinions on environmental matters but notes continuan criticando la actuaci6n fondamentalement divergentes that its commnitments have not del Banco. Algunas, incluso, des Etats membres quant au r6le been accompanied by precise preconizan politicas que restarian de la Banque. De nombreux goals and performance monitoring. importancia a los requisitos pays hesitent a emprunter pour It advances explanations of why econ6micos esenciales para la financer des projets things have tumed out this way reducci6n de la pobreza. environnementaux et a mettre and offers recommendations that En resumen, en el presente en oeuvre les politiques focus on how to restore the informe del DEO (Departamento environnementales de la Banque environment to its proper role in de Evaluaci6n de Operaciones) se qu'ils jugent cofiteuses et rigides. the Bank's holistic, long-term ilega a la conclusi6n de que el De nombreuses organisations development agenda. Banco ha progresado en lo que non gouvemementales continuent respecta a las cuestiones de critiquer la performance de ambientales, pero se observa que la Banque et certaines preconisent sus compromisos no han estado I'adoption de politiques qui acompahados de metas precisas ni minimisent l'importance des del seguimiento de los resultados. conditions economiques Se presentan explicaciones sobre el necessaires a la reduction de la porque de ello y se formulan pauvrete. recomendaciones centradas en la Pour conclure, le rapport de forma de devolver al medio I'DEO estime que la Banque a ambiente el papel central que le realise des progres sur le plan corresponde en el programa de environnemental mais note que desarrollo integrado y a largo plazo son engagement en ce domaine del Banco. n'a pas donne lieu a la definition viii Foreword d'objectifs precis et a un suivi des resultats. I1 s'efforce d'en determiner les raisons et offre diverses recommandations pour redonner a l'environnement la place centrale qui lui convient edans l programme de developpement holistique a long terme de la Banque. Robert Picciotto Director-General, Operations Evaluation ix Executive Summary EXECUTIVE RESUMEN RESUME SUMMARY - ANALYTIQUE In its first review of the Bank's En su primer examen de las Au terme de son premier environmental policies and politicas y actividades examen des politiques et activities since the Environment ambientales del Banco desde que des activites environnementales Department was created in 1987, the se cre6 el Departamento del Medio de la Banque depuis la creation du Operations Evaluation Department Ambiente en 1987, el Departamento departement de l'environnement en (OED) finds that Bank performance de Evaluacion de Operaciones (DEO) 1987, le departement de l'evaluation has substantially improved. The Bank llega a la conclusion de que el Banco des operations (OED) note que la has mitigated the negative effects of ha mejorado notablemente su performance de la Banque en ce many of its development actuaci6n en esta esfera. Ha mitigado domaine s'est nettement amelioree. interventions, helped governments los efectos negativos de muchas de La Banque a reduit les effets negatifs build environmental institutions and sus intervenciones de desarrollo, d'un grand nombre de ses programs, and produced solid policy ha ayudado a los gobiernos a crear interventions a l'appui du analysis and economic and sector instituciones y programas developpement, a aide les pouvoirs work-but it has not yet integrated relacionados con el medio ambiente, publics a mettre en place des environmental concerns fully into its y ha producido analisis de politica institutions et des programmes core objectives or its country y estudios econ6micos y sectoriales environnementaux, et a realise assistance and sector strategies. The s6lidos -pero aun no ha integrado de solides etudes et analyses Bank has played a leading role in completamente las cuestiones economiques et sectorielles; addressing global issues and has ambientales en sus objetivos basicos toutefois elle n'a pas encore improved awareness of the links ni en sus estrategias sectoriales y pleinement inclus les questions between the environment and de asistencia a los paises. El Banco environnementales dans ses objectifs development, but the complex links ha desempeuiado un papel institutionnels ou dans ses strategies between environmentally sustainable preponderante en lo que respecta d'aide qui sont axees sur les pays development and poverty alleviation a abordar problemas de alcance ou sur les secteurs. La Banque mene should be made even more explicit. mundial y ha creado mayor I'action engagee pour lutter contre Until recently, the momentum conciencia de los vinculos que les problemes d'envergure mondiale achieved in the early 1990s had existen entre el medio ambiente y et contribue a faire mieux slowed in the face of operational el desarrollo, pero es preciso hacer comprendre les liens entre constraints, Dedicated staff and ain mas explicitos los complejos 1'environnement et le borrowers committed to improving vinculos entre un desarrollo developpement; il conviendrait the environment have achieved ambientalmente sostenible y el alivio toutefois d'etablir encore plus some notable successes, but many de la pobreza. clairement les rapports qui existent countries are reluctant to borrow Hasta hace poco tiempo, el entre un developpement for environmental projects or to impulso alcanzado a comienzos 6cologiquement viable et la implement Bank environmental de los anos noventa se habia reduction de la pauvrete. policies; Bank management, debilitado al tropezar con La dynamique observee au concerned with an ever-growing limitaciones operacionales. El debut des annees 90 a et development agenda, has not been personal y los prestatarios compromise par des obstacles consistent in its commitment to the empeniados en mejorar el medio operationnels jusqu'a une date environment; and managers have ambiente han logrado un exito r6cente. Si des progres notables not been held strictly accountable notable en algunos aspectos, pero ont et accomplis grace au for complying with the Bank's muchos paises se muestran reacios devouement de services de environmental policies. The Bank a pedir prestamos para proyectos l'institution et a la deftermination xi Promoting Environmental Sustainability in Development must provide better ambientales o a aplicar las d'emprunteurs desireux guidance, standards, tools, politicas ambientales del d'ameliorer la situation incentives, and monitoring - Banco; la administraci6n, environnementale, un grand if staff are to mainstream empeniada en un programa nombre de pays hesitent a environmental components de desarrollo cada vez mas emprunter pour financer in all Bank work, as amplio, no ha sido des projets proposed by the coherente en su environnementaux ou a environmental strategy compromiso con el medio mettre en ceuvre les recently approved by the Bank's ambiente, y no se ha hecho a los politiques environnementales de la executive directors. administradores estrictamente Banque; la direction de responsables del cumplimiento de l'institution, confrontee a un The Bank's Approach to the las polfticas ambientales del Banco. programme d'interventions Environment Es preciso que este mejore sus environnementales sans cesse plus In response to worldwide concerns directrices, normas, instrumentos, important, n'a pas toujours fait about whether economic incentivos y sistemas de preuve de son engagement en ce development was compatible with supervisi6n, a fin de que el domaine et n'a pas et vraiment protection of the environment, the personal incorpore componentes tenue comptable du respect de ses international donor community ambientales en todos los estudios, politiques environnementales. La began assigning higher priority to como se propuso en la estrategia Banque doit foumir de meilleures environmental concems in the late ambiental aprobada recientemente directives, normes et incitations et 1980s. Stakeholders urged the por los Directores Ejecutivos. de meilleurs outils et aussi assurer Bank to accelerate its efforts to un suivi plus rigoureux pour support more environmentally La estrategia del Banco con permettre a ses services de sustainable development through respecto al medio ambiente systematiquement integrer des increased lending, more attention Para atender a la preocupaci6n composantes environnementales to the environment in country mundial acerca de si el desarrollo dans les operations, comme le programs and policy dialogue, and econ6mico es compatible con la preconise la strategie more support for global and protecci6n del medio ambiente, la environnementale que viennent regional environmental initiatives. comunidad internacional de d'approuver les administrateurs. Since 1987, the Bank has vastly donantes comenz6 a asignar mayor expanded the level and scope of prioridad a las cuestiones La demarche environnementale its environmental activities, ambientales a fines del decenio de de la Banque according to this review, which 1980. Los interesados instaron al Face aux preoccupations suscitees was timed to inform preparation of Banco a que acelerara sus dans le monde entier par la a new Bank strategy for the esfuerzos en pro de un desarrollo compatibilite du developpement environment. The Bank created an mas sostenible desde el punto de economique et de la protection de Environment Department, greatly vista ambiental mediante el l'environnement, la communaute increased environmental staff (who aumento de las operaciones de des bailleurs de fonds now number about 250), instituted prestamo, una mayor atenci6n al internationaux a commence a environmental safeguard policies, medio ambiente en los programas accorder une plus haute priorite and launched a program of de paises y los dialogos sobre aux questions environnementales environmental lending. The Bank's politicas, y un mayor apoyo a las vers la fin des annees 80. Les participation in the U.N. iniciativas ambientales mundiales y parties prenantes ont enjoint la Conference on Environment and regionales. Banque d'accroitre son appui a un Development in Rio de Janeiro and De conformidad con el presente developpement plus viable sur le the World Development Report on examen, que estaba calculado para plan environnemental en the environment (both in 1992) que sirviera de base a la augmentant le volume de ses demonstrated the Bank's preparaci6n de una nueva financements au titre de engagement with environmental estrategia del Banco sobre el l'environnement, en accordant une xii Executive Summary issues and helped launch a medio ambiente, a partir de plus grande attention range of environmental 1987 el Banco ha ampliado Z a cette question dans le activities. The Bank has - enormemente el nivel y el . cadre des programmes helped many governments alcance de sus actividades etablis pour les pays et create environmental ambientales. Cre6 un du dialogue sur I'action ministries and introduce Departamento del Medio " a mener, et en fournissant regulations requiring Ambiente, aument6 un plus grand appui environmental assessments. considerablemente el aux initiatives It has undertaken about 140 nfimero de funcionarios que se environnementales d'envergure environmental projects and has ocupan del medio ambiente (el mondiale et regionale. subjected roughly 1,200 projects to que ahora asciende a unos 250), Le present examen, qui a ete an environmental assessment or instituy6 politicas de salvaguardia prepare aux fins de la preparation review. OED assessed the Bank's ambiental y puso en marcha un d'une nouvelle strategie performance record in four broad programa de prestamos para fines environnementale de la Banque, areas of environmental activity: ambientales. Su participaci6n en la a permis d'etablir que, depuis 1987, * Stewardship: helping member Conferencia de las Naciones l'institution a considerablement countries develop strategic Unidas sobre Medio Ambiente y accru le volume et la portee de ses priorities, build institutions, and Desarrollo celebrada en 1992 en activites environnementales. Elle a implement programs to support Rio de Janeiro y el Informe sobre el cree un departement de environmentally sustainable desarrollo mundial 1992: l'environnement, gonfle les effectifs development. desarrollo y medio ambiente charges de ce domaine (ils sont * Mainstreaming: integrating demostraron el compromiso del actuellement 250), adopte des environmental considerations Banco con las cuestiones mesures de sauvegarde into Bank operations and ambientales y contribuyeron a la environnementale et lance un helping member countries build iniciaci6n de una variedad de programme de prets au titre de on the positive links between actividades ambientales. El Banco l'environnement. La participation de poverty reduction, economic ha ayudado a muchos gobiemos a la Banque a la conference des efficiency, and environmental crear ministerios del medio Nations Unies sur l'environnement protection. ambiente y a introducir normas et le developpement, a Rio de * Safeguards: ensuring that que exigen una evaluaci6n Janeiro en 1992, et la publication, la potential adverse environmental ambiental. Ha emprendido unos meme annee d'un rapport sur impacts from development 140 proyectos ambientales y ha le developpement dans le monde projects are addressed. sometido a evaluaci6n o estudios consacr6 a l'environnement * Global challenges: building ambientales unos 1.200 proyectos temoignent de l'interet porte awareness about and aproximadamente. El DEO evalu6 par l'institution a ce domaine et partnerships to address pressing la actuaci6n del Banco en cuatro ont permis de lancer toute une transnational and global amplias esferas de actividad gamme d'activites en ce domaine. environmental issues. ambiental: La Banque a aide un grand nombre * Gerencia ambiental: Prestaci6n de pays aL se doter de minist&es Stewardship, Strategy, and de ayuda a los paises miembros de l'environnement et a mettre Policy Dialogue para el establecimiento de en place des reglementations After Rio, at the urging of prioridades estrategicas, la exigeant la realisation d'6valuations International Development creaci6n de instituciones y la environnementales. Elle a Association (IDA) deputies, the implementaci6n de programas entrepris environ 140 projets Bank pressed for the completion of destinados a apoyar un environnementaux et a assujetti national environmental action desarrollo ambientalmente quelque 1?0 autres projets a une plans (NEAPs) in borrower sostenible. evaluation ou a un examen countries. By the end of 2000, 92 * Integraci6n: Inclusi6n de las environnemental. L'OED a &value NEAPs (of mixed quality) had been consideraciones ambientales en la performance de la Banque en xiii Promoting Environmental Sustainability in Development completed. Within the Bank, las operaciones del Banco y s'attachant a quatre grands however, only half of the ayuda a los paises aspects des activites Country Assistance - miembros para consolidar - environnementales Strategies reviewed (from a los vinculos positivos entre * Une bonne intendance de 1992-99 sample) had la reducci6n de la pobreza, I 'environnement, c'est-a- adequately addressed la eficiencia econ6mica y la dire l'aide fournie aux environmental issues as protecci6n del medio pays membres aux fins de cutting across all sectors. ambiente. la formulation de leurs Substantial progress has been * Salvaguardias: Adopci6n de priorites strategiques, du made where committed Bank staff medidas para atender a los renforcement de leurs and line managers have been posibles efectos ambientales institutions et de l'execution des proactive in making the case for adversos de los proyectos de programmes a l'appui d'un the environment and where desarrollo. developpement ecologiquement borrower countries recognize its * Problemas mundiales: Toma de durable. importance. Countries as diverse as conciencia acerca de los * L'int6gration, c'est-a-dire la prise China, Costa Rica, Mozambique, urgentes problemas ambientales en compte systematique des and Poland have demonstrated transnacionales y mundiales, y considerations how much can be done in gaining establecimiento de asociaciones environnementales dans les government commitment to and para abordarlos. operations de la Banque et la improving the design and fourniture d'une aide aux pays application of a country's Gerencia ambiental, estrategia membres pour leur permettre environmental policies. Satisfying y dialogo sobre politicas d'exploiter les liens positifs qui results have been obtained in both Con posterioridad a la Conferencia existent entre la reduction de la low- and middle-income countries. de Rio, a instancias de los pauvrete, l'efficience de The priority the Bank gives the Delegados de la Asociaci6n l'economie et la protection de environment in its own objectives, Internacional de Fomento (AIF), el l'environnement. strategy, and programs is as Banco insisti6 en que se * Les mesures de sauvegarde, c'est- important a signal to member completaran los planes nacionales a-dire les dispositions prises countries as the extent of the de protecci6n ambiental en los pour que les effets negatifs que financial assistance it offers. paises prestatarios. Para fines de peuvent avoir les projets de 2000, se habian tenninado 92 developpement sur Environmental Lending and planes (de calidad desigual). l'environnement soient pris en Mainstreaming Dentro del Banco, sin embargo, consideration. The amount of direct s6lo la mitad de las estrategias de * Lesproblemes d'envergure environmental lending rose from asistencia a los paises examinadas mondiale, c'est-a-dire la $564 million in 1993 (7 projects) to (de una muestra que abarcaba el sensibilisation des parties $1,072 million in 1996 (15 periodo 1992-1999) habia tratado prenantes a ces problemes et la projects), dropping to $514 million adecuadamente las cuestiones formation de partenariats pour in 2000 (13 projects). Some of the ambientales como problemas que s'attaquer aux problemes Bank's environmental projects and afectan a todos los sectores. environnementaux pressants qui programs have served as models of Se han realizado avances sortent du cadre des frontieres successful direct lending and of considerables en los casos en que nationales ou se manifestent a mainstreaming the environment los funcionarios del Banco l'echelle mondiale. into other operations-for entregados a su trabajo y sus example, the Loess Plateau supervisores inmediatos han Une bonne intendance, des Watershed Rehabilitation and abogado activamente en favor del strategies et le dialogue sur Sustainable Coastal Resources medio ambiente y en que los I'action a mener Development projects in China, the paises prestatarios reconocen su A la suite de la conference de Rio Uttar Pradesh Sodic Lands importancia. Paises tan diversos et a la demande expresse des xiv Executive Summary Reclamation project in India, como China, Costa Rica, delegues de l'Association an industrial pollution Mozambique y Polonia han internationale de project in Bulgaria, the - demostrado lo mucho que developpement (IDA), la Arid Lands Resource se puede hacer para lograr Banque a insiste pour Management project in la adhesi6n del gobierno a que ses pays emprunteurs Kenya, district heating las politicas ambientales del me nent a bien la projects in Poland, and air pais y para mejorar la preparation de plans pollution projects in Mexico. formulaci6n y la aplicaci6n nationaux d'action Results are still uncertain for de estas. Se han obtenido environnementale (PNAE). A la significant efforts made in other resultados satisfactorios tanto en fin de 2000, 92 PNAE (de plus countries to implement major and paises de ingreso bajo como en ou moins bonne qualite) etaient vitally needed reforms in the paises de ingreso mediano. La acheves. Toutefois, la moitie treatment of the environment. prioridad que asigna el Banco al seulement des strategies d'aide- One objective of mainstreaming medio ambiente en sus objetivos, pays de la Banque (tirees d'un is to integrate environmental su estrategia y sus programas es echantillon de strategies se concems into the design and una sefial tan importante para los rapportant a la periode 1992-99) implementation of all projects. This paises miembros como la medida qui ont ete examinees repla,aient, will be more difficult to put into de la asistencia financiera que comme il se doit, les questions practice and to monitor than direct ofrece. environnementales dans un cadre environmental lending, but could intersectoriel. have much more dramatic effects. Prestamos para fines Des progres importants ont In the past, the Bank's sectoral ambientales e integraci6n et accomplis dans les pays ou orientation made it difficult for de las cuestiones ambientales les agents et les cadres environmental staff to participate in en proyectos de otra indole operationnels de la Banque ont projects in other sectors and to El monto de los prestamos directos fait preuve d'initiative en encourage sensitivity to para fines ambientales aument6 de encourageant la prise en compte environmental issues. In the 1990s US$564 millones en 1993 (7 des questions environnementales the proportion of adjustment proyectos) a US$1.072 millones en et ou le gouvemement reconnait lending that dealt with 1996 (15 proyectos), para luego l'importance ces questions. Des environmental issues was only 23 disminuir a US$514 millones en pays aussi differents que la Chine, percent. 2000 (13 proyectos). le Costa Rica, le Mozambique et Algunos de los proyectos y la Pologne ont montre ce qu'il est Safeguards and Environmental programas ambientales del Banco possible d'accomplir lorsque Assessments se han tomado como modelo de les pouvoirs publics sont The Bank has addressed the los buenos resultados de los determines a ameliorer la potentially adverse environmental prestamos directos y de la conception et l'application des impacts of projects it supports integraci6n del medio ambiente en politiques environnementales. through implementation of otras operaciones, por ejemplo, el De bons resultats ont et obtenus environmental assessments (EAs) proyecto de rehabilitaci6n de la dans des pays a revenu faible and related safeguard policies. cuenca hidrografica de la meseta aussi bien que dans des pays OED reviews have found the de Loess y el proyecto de a revenu intermediaire. A cet Bank's environmental safeguard ordenaci6n sostenible de los egard, la priorite accordee par policies to be generally satisfactory, recursos biol6gicos costeros en la Banque a l'environnement au but implementation of China, el proyecto de niveau de ses objectifs, de ses environmental assessments has rehabilitaci6n de tierras con alto strategies et dans ses programmes been mixed. Often the assessments contenido de sodio en Uttar est une indication aussi importante are not completed (and safeguard Pradesh en la India, un proyecto pour les pays membres que le issues are not identified) early sobre contaminaci6n industrial en volume d'aide financiere qu'elle enough in the project cycle to have Bulgaria, el proyecto de peut offrir. xv Promoting Environmental Sustainability in Development much impact on project ordenaci6n de los recursos Le financement des design. In a recent de tierras aridas en Kenya, interventions assessment of supervision - proyectos de calefacci6n en . environnementales et la quality, the Quality distritos de Polonia y prise en compte Assurance Group found proyectos sobre systematique de ces that, for projects with contaminaci6n atmosferica questions significant safeguard en M6xico. Los resultados Le volume des prets aspects, the mitigation de los ingentes esfuerzos directement consentis au actions and arrangements were realizados en otros paises por titre d'activites environnementales inadequate in 20 percent of cases. aplicar reformas necesarias y de est passe de 564 millions de dollars Some borrowers and task vital importancia para el en 1993 (7 projets) a 1 072 millions managers see environmental tratamiento del medio ambiente de dollars en 1996 (15 projets) mitigation measures as an added aun son inciertos. pour tomber a 514 millions de cost and burden that retards project Uno de los objetivos que se dollars en 2000 (13 projets). execution. Environmental persiguen es la integraci6n de las Certains des projets et des assessments must contain a cuestiones ambientales en la programmes environnementaux de policing element, but the Bank's formulaci6n y la ejecuci6n de la Banque sont des modeles culture and structure have todos los proyectos. Esto sera mais d'operations de prets directs et produced an unnecessarily dificil de poner en practica y de d'inclusion systematique de adversarial relationship between vigilar que el otorgamiento de l'environnement dans d'autres compliance with safeguards and prestamos directos para fines operations ; c'est le cas, par the promotion of environmental ambientales, pero sus efectos exemple, des projets de sustainability. podrian ser mucho mas rehabilitation du bassin versant du espectaculares. En el pasado, la plateau de Loess et de mise en Global Challenges orientaci6n sectorial del Banco valeur viable des ressources Bank efforts to address global hacia dificil que el personal que se c6tieres en Chine, du projet de issues in research and analysis ocupaba de cuestiones ambientales regeneration des terres sodiques en have been satisfactory. It has also pudiera participar en proyectos de Uttar Pradesh (Inde), d'un projet begun developing effective otros sectores y alentar la de lutte contre la pollution partnerships. More could have sensibilidad a las cuestiones industrielle en Bulgarie, d'un projet been done to mitigate the local ambientales. En la decada de 1990 de gestion des ressources de terres impacts of climate change or to la proporci6n de prestamos para ardes au Kenya, de projets de address regional and fines de ajuste que se ocupaba de chauffage de district en Pologne et transboundary issues. The Bank's cuestiones ambientales era s6lo del de projets de lutte contre la attention to global issues-such as 23%. po,lution atmospherique au biodiversity, desertification, forest Mexique. Il est encore trop t6t protection, ozone depletion, and Salvaguardias y evaluaciones pour evaluer les resultats donnes climate change-is appropriate but ambientales par les efforts significatifs deployes tends to understate the importance El Banco ha atendido a los dans d'autres pays pour proceder a of environmental concerns to local posibles efectos ambientales des r6fornies importantes et interests and welfare. Recent Bank adversos de los proyectos que cruciales dans le domaine de research has shown, for example, financia mediante la realizaci6n de l'environnement. that an approach to reducing evaluaciones ambientales y la L'un des buts recherches particulate air pollution that aplicaci6n de las politicas de consiste a assurer l'integration produces great local health benefits salvaguardia conexas. Los systematique des questions is also nearly optimal for reducing examenes del DEO han environnementales dans la greenhouse gases, while an determinado que las politicas de conception et l'execution de tous approach that focuses initially on salvaguardia ambiental del Banco les projets. Cette demarche sera reducing greenhouse gases would son en general satisfactorias, pero plus difficile a mettre en ciuvre et xvi Executive Summary have much less impact on que los resultados de las _ suivre que des operations reducing local pollution. evaluaciones ambientales de pret direct au titre de Bank country activities - han sido relativos. Con 1'environnement, mais elle should focus more on the frecuencia las evaluaciones pourrait avoir des effets local impacts of global no se ejecutan (y las bien plus considerables. En degradation of the cuestiones de salvaguardia raison du ciblage sectoriel environment and the local no se indican) con rapidez des operations de la benefits of implementing a suficiente dentro del ciclo Banque, il s'est avere assez global environmental agenda. de los proyectos para que tengan difficile pour les specialistes de Global environmental issues by alguna influencia en la formulaci6n L'environnement de participer a des their nature involve public goods, de los mismos. En una evaluaci6n projets dans d'autres secteurs et de which market forces normally do reciente de la calidad de la sensibiliser les parties prenantes a not provide adequately. Nationally, supervisi6n, el Grupo de Garantia l'importance des questions public intervention to provide de Calidad determin6 que, environnementales. Dans les public goods is a govemment tratandose de proyectos con annees 90, seulement 23 % des responsibility; internationally, importantes componentes de operations de pret a l'ajustement addressing public goods issues salvaguardia, las medidas y traitaient de questions requires collective action, the mecanismos de mitigaci6n eran environnementales. leadership of international bodies, insuficientes en el 200/o de los and effective partnerships among casos. Algunos prestatarios y jefes Les mesure de sauvegarde public institutions, the private de proyectos consideran que las et les evaluations sector, and groups from civil medidas de mitigaci6n del dafio environnementales society. The Bank has increased its ambiental constituyen un costo y La Banque prend en compte efforts to form partnerships with una carga adicionales que retardan l'impact negatif que pourraient key stakeholders, private sector la ejecuci6n de los proyectos. Las avoir sur l'environnement les interests, and local NGOs. The evaluaciones ambientales deben projets qu'elle appuie en procedant pent-up demand for a Bank role in contener un elemento de a des evaluations multicountry partnerships remains vigilancia, pero la cultura y la environnementales et en strong. estructura del Banco han appliquant les mesures de producido una relaci6n sauvegarde correspondantes. Falling Short of innecesariamente contradictoria L'OED a determine, dans le cadre High Expectations entre el cumplimiento de las de ses examens, que les mesures By and large, OED's findings are salvaguardias y el fomento de la de sauvegarde environnementale similar to those for other donors' sostenibilidad ambiental. de la Banque sont, dans environmental programs. The Bank 1'ensemble, satisfaisantes mais que recognized the environment's Problemas mundiales les resultats obtenus au plan de la strategic importance with creation Los esfuerzos del Banco por realisation des evaluations of the Environment Department abordar los problemas mundiales environnementales sont mitiges. and reaffirmed it at the Rio en su labor de investigaci6n y Dans de nombreux cas, ces conference, in the 1992 World analisis han sido satisfactorios. evaluations n'ont pas ete achevees Development Report, and in various Ademas, el Banco ha comenzado a (et les problemes necessitant presidential statements and forjar asociaciones eficaces. De Iladoption de mesures de individual initiatives. National todos modos, se podria haber sauvegarde n'ont pas et6 identifies) Environmental Action Plans were hecho mas para mitigar los efectos a un stade suffisamment pr6coce supposed to be integrated into locales del cambio climatico o para du cycle du projet pour pouvoir countrry strategies, environmental abordar los problemas regionales y avoir un impact sur la conception assessments were supposed to lead transfronterizos. La atenci6n que de ce demier. A l'occasion d'une to sectoral and Regional presta el Banco a las cuestiones de recente evaluation de la qualite des assessments, and global concems alcance mundial -como la activites de supervision, le Groupe xvii Promoting Environmental Sustainability in Development were supposed to be diversidad biol6gica, la de contr6le de la quafite a integrated into country desertificaci6n, la protecci6n determine que les actions et programs, not just added - forestal, el agotamiento de les dispositions adoptees on. Why didn't this happen? la capa de ozono y el pour attenuer les impacts The preponderance of cambio climatico- es negatifs ont ete inadequates evidence suggests the apropiada, pero tiende a dans 20 % des projets pour following: minimizar la importancia de lesquels il etait important de * Country Assistance las cuestiones ambientales prendre des mesures de Strategies have tended to treat para los intereses y el bienestar sauvegarde. Certains emprunteurs the environment as just another locales. Las investigaciones et certains chefs de projets sector competing for attention, recientes del Banco han considerent que les mesures rather than as a crosscutting demostrado, por ejemplo, que un d'attenuation des theme, and have not made sistema de reducci6n de los environnementales representent explicit (and built upon) the link contaminantes atmosfericos s6lidos une charge et un cout between environmentally que produce grandes beneficios supplementaires et ne font que sustainable development and para la salud local, es ademais casi ralentir l'execution du projet. Les poverty reduction. 6ptimo para la reducci6n de los evaluations environnementales * The Bank's safeguard policies gases de efecto invemadero, en doivent avoir une certaine (to prevent or mitigate tanto que un sistema centrado connotation disciplinaire, mais la environmental harm from its inicialmente en la reducci6n de los culture et la structure de la Banque projects) were sound in concept gases de efecto invemadero seria ont produit une relation but unaccompanied by clear mucho menos eficaz para reducir inutilement conflictuelle entre le stan- la contaminaci6n local. Las respect des mesures de sauvegarde dards and inconsistently actividades del Banco en los paises et la promotion de la viabilit implemented. This has diverted deberian prestar mas atenci6n a los environnementale. attention to damage control. efectos locales de la degradaci6n . The Bank's efforts in dealing del medio ambiente mundial y a Les problemes mondiaux with global issues have been los beneficios que reporta a nivel Les efforts deployes par la Banque hampered by con-flicts between local la ejecuci6n de un programa pour s'attaquer a des problemes their early ambiental mundial. d'envergure mondiale dans le formulation as goals extemal to Los problemas ambientales cadre de ses travaux de recherche member countries and the mundiales guardan relaci6n por su et d'analyse sont satisfaisants. Bank's strong country naturaleza con los bienes publicos, L'institution a 6galement entrepris orientation. los que las fuerzas del mercado de forger des partenariats efficaces. * The structure of priorities, in- generalmente no proporcionan en Elle aurait pu faire davantage pour centives, and accountability cantidad suficiente. A nivel attenuer l'impact au niveau local processes-from senior nacional, la intervenci6n publica des changements climatiques ou management on down the para el suministro de bienes s'attaquer a des questions de line-has not supported a publicos es responsabilidad del portee regionale et transfrontieres. strategic emphasis on the gobierno; a nivel intemacional, L'attention qu'eile prete aux environment, rigorous para abordar el problema de los questions d'envergure mondiale - monitoring, or positive bienes pulblicos se requiere una comme la diversite biologique, la recognition of environmental acci6n colectiva, la funci6n rectora desertification, la protection des staff and activities. de los 6rganos intemacionales y el forets, l'appauvrissement de la establecimiento de asociaciones couche d'ozone et les changements These shortcomings will be eficaces entre las instituciones climatiques - est adequate mais a addressed by the new puiblicas, el sector privado y las tendance a faire oublier environmental strategy recently agrupaciones de la sociedad civil. l'importance des preoccupations endorsed by the Board of El Banco se ha esforzado mas por environnementales pour les xviii Executive Summary Directors, restoring the crear asociaciones con los interets et le bien-etre des environment to its role in principales interesados, el populations locales. Les the Bank's long-term - sector privado y las ONG - travaux recemment development agenda. locales. Sigue habiendo una consacr6s par la Banque a fuerte demanda para que el ce sujet montrent, par Next Steps Banco estimule la exemple, qu'une demarche The environment strategy cooperaci6n multinacional. visant a reduire la pollution paper provides an atmospherique due aux opportunity to achieve a realistic Las grandes expectativas particules en suspension qui a and workable consensus among no cumplidas d'importants effets positifs sur la Bank members about the Bank's En general, las conclusiones del sante de la population locale future role in environmental efforts. DEO son similares a las relativas a contribue egalement de maniere Toward that end, OED offers these los programas ambientales de otros quasiment optimale a reduire les broad medium-term donantes. El Banco reconoci6 la emissions de gaz a effet de serre, recommendations, among others. importancia estrategica del medio tandis qu'une demarche ax6e The Bank should: ambiente con la creaci6n del initialement sur la reduction des * Build on its comparative Departamento del Medio Ambiente gaz a effet de serre aurait un advantage and analytical y la reafirm6 en la Conferencia de impact moindre sur la reduction de capacity to demonstrate the Rio, en el Informe sobre el la pollution a l'echelon local. Les environment's critical role in desarrollo mundial 1992 y en activites menees par la Banque sustainable development and diversas declaraciones del dans les pays devraient cibler poverty reduction. Presidente e iniciativas davantage l'impact local de la * Review its environmental individuales. Se parti6 del supuesto degradation de l'environnement a safeguard oversight system and de que los planes de acci6n l'echelle mondiale ainsi que les processes, to strengthen nacionales sobre el medio avantages procures aux accountability for compliance. ambiente se integrarian con las populations locales par la mise en * Continue to update its policy estrategias de asistencia a los ceuvre d'un programme framework, adapting it to paises, que las evaluaciones environnemental mondial. chang- ambientales darian origen a Les questions ing practices and new Bank evaluaciones sectoriales y environnementales de port6e instruments and to take account evaluaciones por parte de las mondiale font intervenir, par of recent experience. oficinas regionales y que los d6finition, des biens publics que * Help implement the global problemas mundiales no serian un les forces du marche ne produisent environmental agenda by mero agregado a los programas de normalement pas de maniere concentrating on global issues los paises sino que quedarian adequate. Au plan national, la that involve local and national incorporados en ellos. yPor que no responsabilite de la fourniture des benefits. ocurri6 asi? La mayor parte de los biens publics incombe a l'Etat; au datos apuntan a lo siguiente: plan international, la resolution des Las estrategias de asistencia a problemens concernant les biens los paises han tendido a tratar al publics exige une action collective medio ambiente simplemente menee sous l1'gide d'organismes como un sector mats entre los intemationaux ainsi que la que se disputan la atenci6n, en constitution de partenariats lugar de considerarlo un tema efficaces entre les institutions intersectorial, y no han publiques, le secteur prive et des expresado en forma categ6rica groupes de la societe civile. La el vinculo que existe entre un Banque a intensifie ses efforts clans desarrollo ambientalmente le but de forger des partenariats sostenible y la reducci6n de la avec les principales parties xix Promoting Environmental Sustainability in Development pobreza ni lo han tomado prenantes, des interets du como fundamento. secteur prive et des ONG 3 * Las politicas de locales. Sa participation a salvaguardia del Banco des partenariats * (establecidas para plurinationaux continue prevenir o mitigar el * d'etre sollicitee. dafio ambiental derivado de sus proyectos) se Des attentes ambitieuses basaban en un concepto s6lido qui ne sont toujours pas pero no estaban acompafiadas satisfaites de normas claras y no se Dans l'ensemble, les conclusions aplicaban de forma sistematica. de l'OED sont similaires a celles A causa de ello, la atenci6n se qui ont et formulees a l'egard des ha desviado hacia la reparaci6n programmes environnementaux de los dafios. d'autres bailleurs de fonds. La . Los esfuerzos desplegados por Banque a montre qu'elle el Banco para hacer frente a los comprenait l'importance problemas mundiales se han strategique de l'environnement visto obstaculizados por la lorsqu'elle a cree le departement contradicci6n entre su de l'environnement et a reaffirme formulaci6n prelirninar como I'interet qu'elle porte a cette objetivos ajenos a los paises question a l'occasion de la miembros y la fuerte orientaci6n conference de Rio, de la del Banco hacia los paises. publication du Rapport sur le * La estructura de las prioridades, developpement dans le monde los incentivos y los procesos de 1992, de diverses declarations du rendici6n de cuentas -desde president et de nombre la administraci6n superior para d'initiatives. Les plans nationaux abajo- no ha sido propicia d'action environnementale para un enfasis estrategico en devaient etre integres dans les el medio ambiente, una strategies formul6es pour les pays, supervisi6n rigurosa o un les evaluations environnementales reconocimiento positivo del etaient censees deboucher sur des personal que se ocupa del evaluations sectorielles et medio ambiente y sus regionales, et les preoccupations actividades. d'envergure mondiale devaient etre La nueva estrategia ambiental integrees dans les programmes aprobada recientemente por el nationaux et non pas simplement Directorio Ejecutivo subsanara esas annexes a ces programmes. deficiencias, con lo que se Pourquoi cela ne s'est-il pas restablecera el papel que produit ? Les nombreux elements corresponde al medio ambiente en d'information disponibles el programa a largo plazo del suggerent que: Banco en materia de desarrollo. * Les strategies d'aide-pays considerent 1'environ-nement Los pr6ximos pasos comme un secteur El documento de estrategia supplementaire auquel il faut ambiental ofrece la oportunidad de preter attention et non pas lograr un consenso realista y comme un probleme xx Executive Summary factible entre los miembros intersectoriel; elles ne del Banco acerca del papel definissent pas clairement -s futuro de este en la acci6n l les liens entre un sobre el medio ambiente. A developpement * ese efecto, el DEO presenta ecologiquement durable et estas recomendaciones la reduction de la generales a mediano plazo, pauvrete, et ne les entre otras. El Banco exploitent pas. deberia: * Les mesures de sauvegarde de * Aprovechar su ventaja la Banque (qui visent a prevenir comparativa y su capacidad de ou a attenuer les dommages analisis para demostrar el papel causes a l'environnement par decisivo que cumple el medio ses projets) sont bien congues ambiente en el desarrollo mais ne sont pas accompagnees sostenible y la reducci6n de la de normes clairement formulees pobreza. ; elles sont, en outre, appliquees • Revisar su sistema de de maniere inegale. 11 s'ensuit supervisi6n de las salvaguardias que l'attention s'est portee sur ambientales y los procesos les mesures prises pour limiter correspondientes, a fin de les degats. reforzar la responsabilidad de su . Les efforts deployes par la cumplimiento. Banque pour faire face aux * Seguir actualizando su marco problemes d'envergure normativo y adaptarlo a las mondiale ont ete compromis nuevas practicas y a los nuevos parce que, au depart, les instrumentos del Banco y tener objectifs en ce domaine ont ete en cuenta la experiencia formules comme des reciente. preoccupations qui debordaient * Ayudar a poner en practica el du cadre national alors que les programa mundial sobre el activites de la Banque sont medio ambiente, definies par reference aux pays. concentrandose en problemas . La structure des priorites, des de envergadura mundial que incitations et des processus de conlievan beneficios locales y responsabilisation - de la nacionales. direction au personnel op6rationnel - n'est pas favorable a une strategie axee sur l'environnement, un suivi rigoureux de la question ou la reconnaissance des efforts du personnel et des activites concernant l'environnement. I1 sera remedie a ces carences dans le cadre de la nouvelle strategie environnementale que viennent d'enteriner les administrateurs, et qui fait de l'environnement l'un des objectifs xxi Promoting Environmental Sustainability in Development du developpement a long terme de la Banque. Action future Le document sur la strategie - environnementale foumit aux pays membres de la Banque l'occasion de forger un consensus realiste et applicable sur le r6le que l'institution devra jouer dans le domaine de 1'environnement. A cette fin, l'OED pr6sente, entre autres, plusieurs categories de recommandations pour le moyen terme selon lesquelles la Banque devrait * Exploiter l'avantage comparatif dont elle jouit ainsi que ses capacites d'analyse pour exposer la contribution cruciale de l'environnement a un developpement durable et a la reduction de la pauvrete. * Examiner le systeme de supervision et le processus d'application des mesures de sauvegarde environnementale afin de mieux rendre compte de leur application. * Continuer d'adapter le cadre de ses polidques et procedures face a l'evolution des pratiques et de ses propres instruments, et compte tenu de l'experience acquise. * Contribuer a l'application du programme d'action environnementale mondial en portant son attention sur les questions de port6e mondiale qui ont des avantages au plan local et national. xxii ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank BP Bank Procedure CAE Country Assistance Evaluation CAS Country Assistance Strategy CDF Comprehensive Development Framework CEO Chief Executive Officer CIDA Canadian International Development Agency DFID Department for International Development (United Kingdom) EA Environmental Assessment ENVIS Environmental Information System ESSD Environmentally and Socially Sustainable Development Network ESW Economic and Sector Work GDP Gross Domestic Product GEF Global Environment Facility HIPC Highly Indebted Poor Country Initiative IBRD International Bank for Reconstruction and Development IDA International Development Association IUCN International Union for the Conservation of Nature NEAP National Environmental Action Plan NGO Nongovernmental Organization OD Operational Directive OECD Organisation for Economic Cooperation and Development OED Operations Evaluation Department OMS Operational Manual Statement OP Operational Policy OPN Operational Policy Note OPS Operations Policy and Strategy Department PCD Project Concept Document PRSP Poverty Reduction Strategy Paper QAG Quality Assurance Group USAID United States Agency for International Development WDR World Development Report xxiii Introduction T his is the first OED evaluation of the World Bank's overall environmental strategy since the Environment Department was created in 1987. It provides an independent assessment of World Bank performance and draws lessons from experience.' It is timed to inform the new environmental strategy being formulated by the Environmentally and Socially Sustainable Development (ESSD) Vice-Presidency. Assessments of environmental programs This report presents the highlights and recom- conducted by OED, the Environment Depart- mendations of the evaluation. Supporting evi- ment, regional units, and others constituted the dence is provided in a background technical report starting point for the evaluation. Background (Shilling 2000). This report deals with the envi- reviews of Bank performance were commis- ronmental performance of the Intemational Bank sioned in selected countries and areas critical for Reconstruction and Development (IBRD) and to the environmental strategy.2 Two surveys of the International Development Assocation (IDA). staff were conducted, and numerous staff were Since stakeholders and the Advisory Panel have interviewed.3 Extensive consultations were urged that the whole World Bank Group share a held with stakeholders in the Regions. Two common approach and strategy, the ESSD envi- Internet forums were conducted. The OED ronment strategy formulation team has consulted evaluation team worked closely with the envi- with the International Finance Corporation (IFC) ronment strategy team and shared informa- and Multilateral Investment Guarantee Agency tion and drafts. An Advisory Panel reviewed the (MIGA), and the strategies of those members of the drafts and served as a sounding board for the World Bank Group will be formulated in light of recommendations.3 the strategy developed by ESSD. The Historical Context Environment in the World Bank T he Bank created the Office of the Environmental Adviser in 1970 in reaction to externally voiced concerns about the potential unplanned effects of Bank-supported projects. The office was given a small staff, reviewed all projects, and recommended changes where necessary. Its impact was modest, and Bank project officers widely regarded it as an "adversary." It remained isolated from the Bank's "mainstream," and by the mid-1980s the Bank was lagging behind other multilateral agencies and bilateral donors in implementing environmental policies and practices.' Several Bank projects (including the and strengthening the Bank's environmental poli- Polonoroeste project in Brazil and the Narmada cies. The department launched initiatives to project in India) subsequently elicited strong assess environmental conditions in borrower negative public reactions owing to their adverse countries, introduced mechanisms to improve environmental and social impacts. Complaints them,2 and set up a computer database to track were registered by the Bank's major sharehold- project content and implementation.3 ers and by environmental nongovernmental In preparation for the 1992 United Nations organizations (NGOs). In response, an Environ- Conference on Environment and Development ment Department was created, the number of in Rio de Janeiro, the Bank set up 23 task forces environmental staff was sharply increased, envi- to provide technical input on a wide range of ronmental safeguard policies were instituted, issues related to the environment and develop- and a program of environmental lending was ment. It also agreed to help member countries launched during the 1987 reorganization. The fulfill their obligations under international con- new department was given wide responsibilities ventions. The 1992 World Development Report for developing new environmental initiatives (WDR), Development and the Environment, was (often with Regional staff), performing regular a major intellectual contribution and advanced environmental reviews of projects (including thinking on the environment within the Bank and authority over environmental design aspects), in the development community at large.4 The 3 Promoting Environmental Sustainability in Development Bank also led efforts to address global issues as variables or indicators that apply on a national an implementing agency for the Montreal Pro- level.5 tocol on substances that deplete the ozone layer In order to guide its operations, the Bank and as one of the three executing agencies of issued formal environmental policies, matching the Global Environment Facility (GEF). best practice in other intemational financial insti- Translating the Bank's wide-ranging agenda tutions (in particular, the Asian Development into concrete action has proved difficult, how- Bank and the United States Agency for Interna- ever. Unclear objectives in the Environment tional Development). Environmental assessments Department in its early years and poor coordi- were formalized in Operational Directive (OD) nation between the Environment Department 4.01 in 1991.6 Other policies grounded in Oper- and the Regional environmental divisions led to ational Manual Statements and Operational Pol- tension and confusion. Each unit vied for icy Notes were later added.7 Undertakings called resources and control of the environmental for by the IDA deputies included preparation of agenda. This led to a series of structural changes National Environmental Action Plans (NEAPs), that gradually transferred more resources and inclusion of environmental issues in Country authority to the Regions. Assistance Strategies (CASs), and public disclo- In the early 1990s the Technical Departments sure of environmental assessment documents provided Regional leadership on environmental (Shilling 2001). issues, with technical support and a focus on While not espousing a formal sector strategy, broad issues being provided by the Environ- the 1992 WDR was widely accepted as the strate- ment Department. The 1996 reorganization fur- gic framework for the Bank's environmental ther reduced the role of the center, leading to a activities. It was supplemented by annual Envi- loss of momentum on crosscutting issues and ronment Reports (1990-95) and subsequently reinforcing sectoral treatment of the environ- by an annual publication called Environment ment. More recently, the Environment Sector Matters. Two complementary policy approaches Board and the ESSD Network Council have been were identified in the WDR: those that build on working to enhance the role of the center in coor- the positive links between development and dinating environmental initiatives and in shaping the environment ("win-win") and those that a new environmental strategy. break the negative links. The first approach focused on exploiting the synergies between poverty reduction and envi- The Bank has adopted environmental ronment, removing subsidies with negative envi- sustainability as a corporate goal. ronmental externalities, and clarifying property rights regimes for land, forests, and fisheries. The WDR recognized that such policies, by them- Environmental Policy and Strategy selves, were not enough. The second approach The Bank has adopted environmental sustain- recognized that strong institutions and policies ability as a corporate goal. According to the targeted at specific environmental problems Brundtland Commission, sustainable develop- were essential to break the negative links. Fur- ment "meets the needs of the present without thermore, the WDR emphasized that the envi- compromising the ability of future generations ronment is a crosscutting issue that needs to be to meet their own needs" (World Commission on addressed in operations in most sectors. This Environment and Development 1987). So far, no implied a strong commitment to integration of one has translated this broad and appealing environmental concerns in all Bank activities- statement into direct operational guidance for the what is commonly known as `mainstreaming." Bank. Analyses of what it takes to achieve sus- Critics of the Bank have suggested that the tainability have been undertaken for a number focus on win-win did not take full account of the of specific biological and physical topics, but it tradeoffs implicit in many environmental policies has not been possible to aggregate these into and understated the opposition of those who 4 The Historical Context stood to lose, as indicated by difficulties in imple- claims by eligible local parties regarding alleged mentation. There was widespread concern about lack of compliance with Bank policies.9 the environmental "Kuznets Curve," which Chronic concerns about the application of assumes that environmental degradation increases safeguard policies have led the Bank to initiate with economic growth at low income levels but process reforms, to take a more environmentally is eventually reversed as incomes rise above a constructive approach to high-profile projects (for distinct "inflection" point associated with each example, at Nam Theun dam in Laos), and to form of degradation (World Bank 1992b).8 withdraw from controversial projects, often at the However, such views were deemed by envi- request of the borrower. Developing country ronmental experts inside and outside the Bank governments have criticized the Bank for giving as too complacent and implicitly supportive of in to the views of advocacy NGOs, while devel- the discredited doctrine of "grow now and fix oped country governments have criticized the the environment later." The Bank does not sub- Bank's efforts to apply the safeguards and have scribe to this view and has issued guidelines and urged it to do more to promote the environment. publications, such as Tbe Pollution Prevention and Abatement Handbook (World Bank 1999b), M demonstrating effective ways to improve the environment at all stages of development. Unfor- international concern over environmental tunately, some Bank operational staff still argue problems in their countries as intrusive and that selectivity and the important role of growth likely to impede development in poverty reduction are valid reasons to give a low priority to the environment in low-income countries. Many developing country governments view international concern over environmental prob- External Situation lems in their countries as intrusive and likely to For the past three decades, the environment impede development. They argue that developed has been a highly contentious aspect of Bank countries have overexploited the environment, work. Much negative publicity materialized have refused to take full responsibility for mit- because of Bank involvement in several high- igation of their own impacts on the global com- profile, high-risk projects, including the Nar- mons, and want to shift that responsibility to the mada dam in India, the proposed Arun dam in developing countries without adequate com- Nepal, the Itaparica Resettlement and Irrigation pensation. This perception has substantial valid- project in Brazil, and, most recently, the Chad- ity, and it has complicated the role of the Bank. Cameroon Pipeline project and China Western At the same time, public tolerance for inadequate Poverty Reduction project. Concerns about the compliance by the Bank of its own policies is mixed implementation record of Bank safeguard low. All member country govenments expect the policies precipitated the creation of an Inspec- Bank to deliver on its promises, and therefore tion Panel in 1993 to review and investigate to promise only what it can deliver. 5 The Bank's Record Bank Objectives T he Bank sharply increased its attention to the environment in its operations after 1987. Its efforts were guided by a series of policies, procedures, and management instructions issued over time, including a series of papers for the Development Committee, the IDA replenishment recommendations (IDAs 9-12), the WDR of 1992, annual environmental reports, and diverse initiatives.' All together, these documents defined a fourfold agenda consisting of: • Stewardsbip: To help member countries environmental issues through direct envi- develop environmental priorities, build insti- ronmental projects and, more important, by tutions, and implement programs to support integrating environmental objectives into Bank environmental sustainability. Operationally, activities in general and into sectoral projects this would be implemented by setting standards in particular. Designing and using appropri- for the Bank's own strategy, research, and ate environmental indicators was to be used policy efforts regarding the environment and to set targets and monitor results.2 by helping countries prepare environmental . Safeguards., To ensure that potential adverse action plans, integrate short- and long-term environmental impacts from development environmental concerns into country strategies, projects were addressed. This would be imple- and through capacity building and policy dia- mented through environmental assessment logue with core economic ministries. (EA) and related safeguard policies. These * Mainstreaming: To help member countries assessments would be undertaken as early in build on the positive linkages between the project cycle as possible, and the assess- poverty reduction, economic efficiency, and ment process would be fully understood by environmental protection. The Bank would all staff. implement this by making environmental sus- * Global Environment: To ensure that global tainability a core objective in its operational and transnational environmental challenges activities and economic and sector work are properly addressed in member countries. (ESW) and by using its lending to address This would be implemented by raising aware- 7 Promoting Environmental Sustainability in Development ness of these issues and supporting actions Stewardship, Policy, and Strategy in member countries to reduce adverse Following the 1992 U.N. conference in Rio, and impacts on the global environment and by at the urging of the IDA deputies, the Bank using the Bank's convening power to build pressed forward with the completion of NEAPs understanding and partnerships around these or their equivalent in member countries. Many issues. The Bank has a special responsibility of these documents took longer to complete than to focus on the local impacts of global envi- expected, especially recent NEAPs, which went ronmental degradation, and the local bene- to great lengths to promote the participation of fits of implementing the global environmental local stakeholders. By the end of 2000, 92 NEAPs agenda in member countries. had been completed.6 These documents were intended to build national commitment to envi- The first three elements were well within the ronmental sustainability and to define concrete Bank's mandate to assist developing countries. programs to be implemented, with Bank assis- The fourth extended its responsibility beyond tance where needed. They did lead to a number national development issues to a range of global of institution-building projects and identifica- topics, including promoting environmental aware- tion of important issues. Overall quality was ness, supporting international conventions,3 and mixed, however, and there has not been a reg- executing GEF projects. This agenda implied full ular program to keep them up to date. integration of the environment as a core theme During the past decade, the Bank has both in the Bank's overall program. In practice, how- undertaken and sponsored a great deal of pol- ever, the environment has all too often been icy analysis and ESW on environmental issues. treated as just another sector competing for atten- The Research Department allocated more than tion rather than as a crosscutting theme. 10 percent of its resources during the 1990s to environmental issues. Much of this work was Seminal work was done on natural capital, highly regarded and has contributed to a better environmental indicators, and "green understanding of the role that environmental fac- tors play in development and of how to quan- accounting"by the Environment Department. tify environmental impacts. Seminal work was done on natural capital, environmental indica- Under the leadership of President Barber tors, and "green accounting" by the Environment Conable, the Bank's allocation of resources to Department. Environmental data are regularly environmental activities increased substantially published in the World Development Indica- after the 1987 reorganization. Staffing went from tors and are summarized in a new annual pub- a handful before the reorganization to 70 in lication, The Little Green Data Book (World Bank 1990 and 300 in 1995. It leveled off at around 2000c). With the adoption of holistic long-term 250 in 2000.4 Budgets evolved in a similar fash- development as a Bank priority through the ion. However, in an effort to strengthen its coun- Comprehensive Development Framework (CDF), try focus, the Bank adopted a cumbersome there is a need for more research to probe the chargeback system whereby country program linkages between the environment, sustainable units contracted for environmental staff time. This livelihoods, and poverty reduction. fragmented environmental work, damaged the morale of staff required to report their "billable Environmental Lending and hours," and reduced efforts on crosscutting and Mainstreaming cross-border issues. Currently, only about one- Although good data are available for direct Bank third of the budget resources of Bank environ- lending for environmental projects and institu- mental units are their own funds. The rest are tion building, considerably less attention has contracted from other budgets. Increased reliance been given to providing guidance or monitor- on external trust funds has made it difficult to ing funding for environmental mainstreaming get a precise measure of amounts spent.5 (see box). This is unfortunate in light of the 8 The Bank's Record ~~~ij ~~~~~TJ~ P"M 7I 4~.bu~*eu p u*~p**i~ a1pqimm4Ti1 importance that policy statements give to inte- In addition, a wide range of Bank projects grating environmental concerns broadly into have explicitly included environmental compo- the Bank's program. nents (for example, forest protection in a high- As shown in the figures below, the portfolio way project, or wastewater treatment in an of direct environmental projects rose from $564 energy project). Various attempts have been million in 1993 (7 projects) to S 1,072 million in made to monitor this mainstreaming, but no 1996 (15 projects), but dropped to $514 million consistent criteria for doing so have emerged, in 2000 (13 projects).7 The portfolio includes proj- and reliable time series do not exist to indicate ects that address sustainable natural resource whether environmnental component lending has management (36 percent of the portfolio for offset the decline in direct lending." fiscal 2000), pollution management and urban environmental improvements (47 percent), insti- Aayi fevrn etlcmoet ln tutional development and capacity building (8 percent), and global issues, such as protection misses a major objective of mainstreaming. of international waters and biodiversity, mitiga- tion of greenhouse gas emnnissions, and phase-out of ozone-depleting substances (9 percent)." Analysis of environmental components alone IBRD lending has concentrated more on misses a major objective of mainstreaming- pollution-abatement issues (the "brown agenda"), consideration of environmental factors in the while IDA credits have been weighted more design of projects, even where there is no explicit toward natural resource management (the "green environmental component. The lack of guide- agenda'), since IDA borrowers tend to depend lines for monitoring of the extent of main- more directy on these resources for ensuring sus- streaming is itself a cause for concern. Lack of tainable livelihoods.9 The trend in new projects commitment by countries and country man- in both categories peaked in 1996 (amount) agers, budget constraints, and the ascendancy of and in 1998 (numbers).c0 other priorities have been cited as reasons.12 fiscal 2000), pollution management and urban~~~~~~~~~~ Promoting Environmental Sustainability in Development *'S 1 lU . K'1 U I 1f ;1 E5A'* ** L! ~ L L t l Core Environment Projects, 1989-2000 (number of projects) 25- 140 20 Annual + Cumulative - 120 / 100 15 - - 80 100- -600 - 40 5- -20 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 implementing aeFinancing for Core Environment Projects, 1989-2000 (in $US millions) c l r 1The Bak_ Annual s Cumulative 7000 6000 800- 5000 600 - - 4000 -3000 400- - 2000 200 1000 0- -0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Source: World Bank Business Warehouse. Beyond its own lending, the Bank is a major have grown in line with available resources, implementing agency for the Montreal Protocol and GEF projects have been catalytic in bring- and the GEF. Efforts under the former are now ing global environmental issues to the fore and largely completed and have been successful. helpful in mainstreaming the increase in GEF dis- The Bank has consistently exceeded its annual bursements through the Bank. Bank cofinanc- targets for phasing out ozone-depleting sub- ing of GEF projects has increased since 1997 to stances (World Bank 1999a, 2000d). GEF grants about 20 percent, on average. 1 0 The Bank's Record While acting as an important source of lever- (requiring a full EA). Another 1,004 projects, age in expanding the scope of Bank lending, nearly 35 percent of Bank lending, were classi- GEF support is provided only for incremental fied as Category B (requiring a limited or targeted costs associated with global environmental issues. EA). About 51 percent were classified as Cate- It was never intended to be a large portion of gory C (requiring no environmental analysis) Bank environmental support. Bank staff have (World Bank 2000a). There has not been a dis- noted, however, that using GEF funds is almost cernable trend over the period. the only way to get an environmental project into the program in some countries. This limits envi- There has been great ambivalence regarding ronmental interventions to global areas covered the incorporation of environmental by the GEF and hinders progress toward the GEF's goal of leveraging its impact by address- considerations into adjustment lending. ing the incremental costs of global issues through joint Bank/GEF operations. The Bank has been In most cases, the EA process has identified working with the GEF to simplify procedures13 environmental impacts and has led to satisfactory and to improve the development impact of GEF redesign or mitigation. In some instances, envi- grants. In general, the availability of grant fund- ronmental staff have used the reviews to suggest ing (from other donors) for many environmen- improvements in projects outside the EA process tal activities in borrower countries has reduced and to incorporate environmental concems in interest in borrowing from the IBRD and IDA for other sectors. Along with increased delegation of environmental purposes. authority to country units, funding for safeguard Over the past decade, the overall composi- implementation has been included in regular tion of Bank lending has shifted from project- task budgets. However, there was no independ- based operations to adjustment lending and ent funding or staff assignment for monitoring and now to new forms of programmatic lending. implementing the safeguards until FY01. Adjustment lending amounted to about one- The EA process has not been foolproof. The quarter of total lending over the decade. In FY most visible failures of the Bank on environ- 1999 it rose to $15.3 billion (52.9 percent of total mental issues have stemmed from actual or lending) and exceeded investment lending, but alleged failures to implement the EA process fully declined to 33.4 percent in fiscal 2000 as the East and creatively.16 Creation of the Inspection Panel Asian crisis receded (World Bank 2001). The was one reaction to external pressure.17 There Bank has not made a concerted effort to incor- have been allegations of many more violations porate environmental concerns into these types that have not been submitted to the Inspection of operations. Central guidance has been limited, Panel, but there has been no systematic analy- and despite the identification of critical policy sis of these concerns, and no conclusions can issues with substantial environmental impact in be drawn. The most recent Quality Assurance the 1992 WDR and subsequent analyses, there Group (QAG) assessment of supervision qual- has been a great deal of ambivalence regarding ity found that, in a sample of 150 projects, 5 per- the incorporation of environmental considera- cent had significant safeguard issues that had not tions into adjustment lending.14 been identified at the time of approval. For proj- ects with safeguard aspects, the mitigation of Safeguards and Environmental adverse impacts and arrangements for monitor- Assessments ing compliance were inadequate in 20 percent The Bank's environmental safeguard policies of the cases. have been reviewed twice1' and found to be gen- erally satisfactory. All Bank investment projects Global Concerns are covered. Between FY90 and FY00, 210 proj- The Bank has used its advisory services and con- ects (about 14 percent of the Bank's portfolio by vening power to raise awareness of global envi- loan amount) were classified as Category A ronmental issues among member countries. It has Promoting Environmental Sustainability in Development supported country actions in line with interna- uing Bank role in multicountry partnerships tional conventions and supported the GEF. The remains strong. issues of biodiversity and climate change have The Bank was instrumental in the creation of important local impacts and must be addressed the World Commission on Dams, based in part on in the context of local support and generation the Bank's increasing concern about the envi- of local benefits, which can be substantial. For ronmental and social impacts of large dams. In a example, recent Bank research has shown that consensus report, the commission proposed global one approach to reducing particulate air pollu- guidelines for dam building through a process that tion that has large local health benefits is also would involve all interested parties. It remains to nearly optimal for reducing greenhouse gases, be seen how the commission's recommendations while another approach that focuses initially on will be put into effect by the Bank. reducing greenhouse gases would have much During the period under review, the Bank's less impact on reducing local pollution. performance on the environment has improved Global environmental issues are concerned in a number of areas, but progress has been halt- by their very nature with public goods. Normal ing and fragmented. Bank strategy has been market forces do not typically result in adequate ambivalent, leading to uncertainty about whether provision of these goods, and public interven- to treat the environment as a sector or as a tion is therefore needed. Within national bound- theme. Guidelines and expectations about per- aries, such intervention is usually the formance have not been clear. Indicators, mon- responsibility of government, which is sup- itorable targets, and regular evaluation of posed to protect the common good. On the progress on the environment have been the international level, public goods issues require exception rather than the rule. Accountability has collective action. Thus, leadership by interna- been weak. Managers have not been systemat- tional bodies, and effective partnerships among ically held accountable for meeting Bank objec- civil society groups, public institutions, and the tives or complying with Bank policies in this area. private sector, are critical. The Bank has These shortcomings should not distract from increased its efforts to form partnerships with the many successes that have been achieved, but key stakeholders, including local environmen- they highlight why performance has not lived up tal coalitions (MesoAmerica), NGOs (World to Bank rhetoric and help explain the continu- Resources Institute and World Wildlife Fund), ing dissatisfaction with the Bank's performance private sector interests (forest company CEOs), on the environment among responsible external and local NGOs (in the GEF and the new Crit- critics, as well as the frustrations felt by many ical Ecosystems Fund). The need for a contin- environmental staff.18 12 Main Findings T he crosscutting nature of environmental issues and the variety of interventions relevant to protecting the environment make it difficult to apply the usual portfolio approach to this evaluation. Shareholder expectations and the Bank's own strategic formulations have conceived of the environment as a theme rather than a sector. Operationally, and in its organizational structure, however, the reverse has been true. Accepting the thematic approach as dominant, this evaluation looks at how well the Bank has performed on the objective of incorporating the environment into its activ- ities, as well as its performance on environmental projects and safeguards. The absence of an explicit strategy statement and and staff. Most of the needed expertise was the lack of agreed and verifiable corporate and specialized and not part of the background of country performance indicators have hindered the most Bank staff. The concept that environmen- conduct of this evaluation. Hovwever, the intent tal sustainability is an integral part of sustainable of numerous Bank policy statements is clear: to development has not been explicitly accepted integrate the environment into the Bank's devel- at a strategic and policy level, although a great opment agenda. Accordingly, over and above the deal of importance has been given to specific record on projects, country strategies, and other aspects of the environmental agenda in terms of activities, this evaluation looks at how intemal projects and safeguards. The long-term, sys- organization, incentives, and accountability struc- temic nature of environmental issues is difficult tures have affected performance. to reconcile with the short time horizons and sec- toral structure of the Bank and its borrowers. The Stewardship, Policy, and Strategy long-term, holistic vision of the Comprehensive The Bank has structured its approach to the Development Framework has yet to take hold environment as an economic sector and has (OFD) 1999). focused primarily on individual projects. The The absence of integration is reflected in the introduction of a major new area of attention formulation of Bank strategies. The Mission required a concerted effort by dedicated units Statement includes "help[ing] people help them- 1 3 Promoting Environmental Sustainability in Development selves and their environment" as an adjunct to transparent and compelling in relation to achiev- fighting poverty, but that part of the statement ing the International Development Targets for is rarely referred to in justifying country assis- 2015 (DFID 2000a). tance strategies or budgetary allocations. Perhaps Strategy papers that have addressed envi- most surprising, and despite recommendations ronmental issues in different sectors show clear from the IDA deputies, the Environment Depart- overlap-for example, Water Resources Man- ment, and many extemal agencies, the Bank did agement, a World Bank Policy Paper (World not pursue either analytically or operationally the Bank 1994b) and Cities in Transition: World links between environmental sustainability and Bank Urban and Local Government Strategy poverty alleviation in the context of a sustain- (World Bank 2000h). Fuel for Thought (World able development strategy (DFID 2000b).i These Bank 1999c) was a unique attempt to draw the links are important, particularly for natural implications of a global environmental priority resource management in rural areas and for in terms of programmatic results. Its preparation health in urban areas. was fraught with contention about how large a role environmental factors should play in other The links between environmental sectors. Other sector strategies have been less sustainability andpoverty alleviation comprehensive in their treatment of the envi- ronment, and few have provided analyses of the in the context of sustainable development linkages between environmental objectives and are important, particularly for natural sector strategy goals. The treatment of environ- resource management in rural areas and mental issues in private sector development activities has been particularly weak. for health in urban areas. Even when the environment has been incor- porated into a sector strategy, its importance has Neither the 1990 nor the 2000 WDR demon- not necessarily been reflected in subsequent strated the link between poverty and the envi- projects. This has to do with incentives and the ronment, although environmental degradation is sectoral orientation of the Bank's organizational a major factor in hindering the creation of sus- structure. There have been few efforts to estab- tainable livelihoods for the poor. The link was lish and build upon cross-sectoral links despite demonstrated in the 1992 WDR, but an authori- the obvious impacts that actions in most sectors tative statement of corporate strategy linking have on the environment. The environmental poverty reduction with the environment has not strategy currently under preparation should be been issued. designed to remedy this situation. The poor often contribute to degradation The Comprehensive Development Frame- when pushed to the margins in order to survive. work (CDF), introduced in 1999, brought a holis- More important, environmental degradation from tic and long-term vision to the Bank's approach various aspects of industrialization and growth to development. The environment, together with have had very adverse effects on the poor: air cultural heritage, was included as one column and water pollution affect their health, soil ero- in the CDF matrix. This, however, falls short of sion weakens their productive capacity, and addressing the crosscutting nature of environ- land encroachment restricts their access to tra- mental considerations: the environment column ditional productive assets. The recent "Voices of does not intersect with other sectors in other the Poor" exercise and consultations about envi- columns. Similarly, the Poverty Reduction Strat- ronmental strategy have underscored the fact that egy Papers (PRSPs) introduced in the context of the poor consider achieving sustainable liveli- the Highly Indebted Poor Country (HIPC) ini- hoods from environmental resources and tiative treated the environment as a subsidiary improving the environmental aspects of quality sector. The Strategic Compact launched in 1996 of life to be very important. The U.K. develop- did not include enhancement of environmental ment agency recently made this connection work.2 These are signs that the Bank has not yet 1 4 Main Findings succeeded in making the environment a core the- such inclusion. Reviews of 37 CASs in 1999 and matic priority that should be emphasized in all of 51 IDA CASs over the period 1992-99 show relevant aspects of Bank activities. that treatment of environmental issues was only The Bank's program to support NEAPs and partially satisfactory. They were adequately environmental ESW did put the environment addressed in only half the CASs. Moreover, the on most policy radar screens, but the docu- quality of the treatment did not improve over the ments themselves have been of mixed quality period (Shyamsundar and Hamilton 2000; Ekbom and follow-up has not been consistent. The and Bojo 1997). Senior management did not NEAPs have helped member countries gather make inclusion of environmental issues into the information on the environment. The Bank has CAS a review priority. Typically, the environment supported research on environmental indica- is mentioned as a sector rather than integrated tors, such as genuine savings, and has estimated into the development strategy, although there are the costs of environmental degradation in terms best practices that take a broader approach of gross domestic product (GDP) (see table).3 (such as the CASs for Vietnam and Panama).4 This substantial body of work, despite the strik- Admittedly, CASs carry a large burden and tend ing environmental threats and damages recorded, to be short-term in focus, perhaps more so than has not had the expected impact on country pol- needed for a strategic document. However, inclu- icy dialogue and strategy work. sion of a summary diagnosis of the environment Integration of the environment into CASs has in each CAS is essential to ensure that environ- been limited, even when IDA deputies stressed mental considerations are adequately included in Bangladesh Mexicco A ll Nhigera 142 20 Philippines l S g0l0 g Poland 4 ll.6....... 20 }... .. Yemen 20. 1 ll ^ 12> Nore: Unless otherwise noted, all statistics are drawn from The Little Green Dare Boo0k 2000(Wsrld Bank 2000Ic) and the Environmental Economics and Indicators Unit gEEl), Wenld Bank, 2000.The data in this bookare fortheyears 1990, 1997, and 1999. orthe msstrecentyearforwhich data are available. a. Genuine domestic savings is defined as being equal to net domestic savings pies education expenditare, minuo energy depletion, mineral depletion, net forest depletion, and carbon dioside damage. b. World Bank 1997a. Air and mater pollution damages were estimated to beeat least $54 billion a year, or nearly 9 percent of GDP, is 1995. c. Hommant and Brandon (19951 assessed annual environmental costs at 4.5 percent vf GDP Baba and Khanna 11997) estimated costs from air pollotion, groundwater mining, deterio- rating quality of aquifers, lens degradation, and deforestation to be 5 percent ot GUP. Annual economic costs of air pollusion, contaminates water. soil degradation, and deforestation were estimated to bea8 percent of total GDP by Tsta Energy Research Institute (1999). d. Estimsted from Worlo Bank (199BOa). Indonesia ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~1 Promoting Environmental Sustainability in Development the overall development vision and strategy. If been made where committed staff and line man- the environment is a corporate priority, it should agers in the Bank have stressed the issue and be covered in the CAS. It may be that other borrower countries have recognized the impor- objectives take priority in a particular country at tance of the environment. China, Costa Rica, a particular time, but if so, the CAS should note Mozambique, and Poland demonstrate that sub- the rationale for that decision so that senior man- stantial progress can be made in gaining gov- agement and country officials are aware of their ermnent commitment and improving the design strategic choices. Lack of such treatment, and lack and application of a country's own environ- of insistence on it, is worrisome. mental policies. Many other countries, however, The quality of any country strategy or policy show significant deficiencies (such as Jordan, dialogue on the environment depends on the Mexico, and, until recently, Indonesia). Satisfy- underlying information. Environmental indica- ing results have been obtained in both low- tors are not yet required in CASs, although use- and middle-income countries. The priority the ful ones are available, and a project funded by Bank gives to the environment in its own objec- external donors has created a standard format tives, strategy, and programs is as important a and data set.5 NEAPs are becoming dated, and signal to member countries as the extent of the there is no program to keep them current. Man- financial assistance it offers. agement has not requested any regular follow- Overall, the Bank has been partially suc- up on NEAPs and has made no effort to cessful in incorporating the environment into sec- incorporate lessons from their preparation into tor strategies, country strategies, and policy other environmental activities. dialogues.6 Even OED evaluations of country assistance programs have not regularly assessed Environmental ESW is declining compared the Bank's activities in relation to the environ- with the early 1990s, with respect to both ment. Recent reviews of 29 Country Assistance Evaluations (CAEs) by OED (16 IBRD countries numbers of studies and budgetary allocations, and 13 IDA countries) found that only 9 exam- ined the treatment of environmental issues fully. Environmental ESW is declining compared Ten gave some reference to environmental with the early 1990s, with respect to both num- issues, and nine had no, or only marginal, ref- bers of studies and budgetary allocations. A erences to the environment despite significant recent study by the Bank's Operations Policy and environmental challenges. Of course, CAEs Strategy (OPS) group found that the Bank needs should not be expected to cover everything. At to be diligent in ensuring that environmental the same time, since environmental sustainabil- issues are analyzed for all countries, and that ity is not just another theme or sector but one there is current environmental ESW where it is of the core objectives of the Bank (along with an important issue. For this purpose, adequate poverty reduction and broad-based growth), it coverage in integrative ESW (such as the pro- would be appropriate for CAEs to review its rel- posed Development Policy Review) would be evance and coverage in the Bank's country pro- an important first step. grams, even if only to note that taking action on The reluctance within the institution to be the environment may be a lower priority at a par- more proactive in making the case for the envi- ticular point in time. ronment to clients cannot be wholly explained by country resistance or the recent emphasis on Environmental Lending and serving client objectives. Nurturing policy reform Mainstreaming is a central Bank objective. The evidence of Among the Bank's environmental projects and major negative impacts from environmental programs are many successful examples both of degradation (where the analysis has been done) direct environmental project lending and of proj- argues for the Bank making a stronger case, ects that have mainstreamed the environment based on the facts. Substantial progress has into other operations, some of which have served 16 Main Findings as models for other projects. The Loess Plateau strategies, energy sources, forestry develop- Watershed Rehabilitation and Sustainable Coastal ment). This is more difficult to do and to mon- Resources Development projects in China, the itor than specific projects and components, but Uttar Pradesh Sodic Lands Reclamation project it can have much more dramatic effects. So far, in India, the Industrial Pollution project in Bul- the Bank has not established guidelines, incen- garia, the Arid Lands Resource Management tives, or monitoring procedures for this degree project in Kenya, district heating projects in of mainstreaming, although many environmen- Poland, and air pollution projects in Mexico are tal supporters inside and outside the Bank have all good examples. Significant efforts have been urged more efforts in this direction. Developing made in countries such as Madagascar to imple- an effective methodology for mainstreaming in ment major and vitally needed reforms in the this manner should be a high priority for sen- treatment of the environment. These positive ior management. results demonstrate the potential of the Bank. They are a function of individual efforts in the A more important objective is to integrate borrowing country or the Bank, or, more often environmental concerns in tbe design and than not, both, according to interview data. In countries wh-iere domestic authoiities have shown implementation of projects across sectors. less interest in the environment, staff efforts have been less successful (for example, forest To shed some light on the extent of main- reform in Cameroon and Indonesia, industrial streaming in nonenvironmental projects, OED pollution in India, and water projects in Mexico). undertook a desk review of a random sample The Bank's treatment of the environment as of 30 infrastructure projects. Six energy projects a sector rather than as a crosscutting priority is within the sample were found to have produced reflected in the difficulty of getting environ- the positive environmental externalities of mental projects into country programs and envi- increased supply of environmentally superior ronmental components into sectoral projects. energy sources or improved energy efficiency. The current structure pits environmental units In 20 of the remaining 24, modest efforts were against other sector units in a competition for made to mainstream the environment beyond the funds and slots in country lending programs. mitigation of the immediate negative impacts of There are few incentives for mainstreaming into the project. other sectors, and few independent Bank Initiatives in mainstreaming the environment resources to draw on to mainstream environ- have included policy reform measures, strength- mental components into other projects unless an ening environmental staff capacity, undertaking enliglhtened task manager is determined to do resource strategies and plans, and developing so. Some environmental staff offer projects on environmental guidelines and regulations. These "loss-leader" terms, hoping to make up the dif- activities were also noted in some country case ference from trust funds or other sources. This studies. Partly as a result of the Bank's involve- competitive structure has made it difficult for ment in Morocco, for example, most ministries environmental units to form constructive part- and agencies have an environmental unit in nerships for mainstreaming the environment.7 charge of mainstreaming the environment in The Asian Regions, in contrast, have stressed the sector's policies and projects. Within the mainstreaming, encouraged the inclusion of sample of infrastructure projects, a state highway environmental concerns into projects in other project in Brazil helped establish environmen- sectors, provided budget allocations, and, in tal units within State Roads Departments to some cases, joint appointments of staff. implement environmental guidelines prepared A more important and persuasive objective of with technical assistance financed under the mainstreaming is to include environmental con- project. In Cyprus, the Southeast Coast Sewer- cerns in the design and implementation of proj- age and Drainage project led to increases- ects across sectors (for example, transport albeit much lower than planned-in water 17 Promoting Environmental Sustainability in Development charges to help promote the rational use of public goods nature of many environmental water. It also supported innovative engineering investments means that full cost recovery may to permit the re-use of treated wastewater for irri- not be feasible, meaning that beneficiaries in gation of "green" areas. The country case stud- China will not be able to repay on IBRD terms. ies also revealed Bank-supported energy price The Bank is trying to find other sources of con- reforms in India and Poland, and mainstream- cessional finance from other donors to remedy ing of natural resource conservation in infra- this problem.8 So far, financing has not proved structure projects in Madagascar. to be a major difficulty, but it does illustrate the importance of finding ways to fund the public There needs to be real commitment from goods aspects of environmental projects in a con- the borrower that is demonstrated by sistent way. Lending for adjustment operations and new adequate budgets and the accountability forms of programmatic lending has been an of operations managers. increasing portion of the portfolio in recent years.9 Adjustment lending is aimed at macro or Despite these indications of progress, many sector policy reforms, while programmatic lend- difficulties have been faced in introducing main- ing typically provides budget support for an streaming activities. Sector reviews may be com- approved sector or public expenditure program. pleted but their recommendations not followed In both cases, it has proved difficult to incorpo- up. Environmental capacity can be developed but rate environmental concerns. The guidelines for then lost when environmental specialists move adjustment lending recommend that staff iden- elsewhere. There needs to be real commitment tify environmental impacts. OD 8.60 states that: from the borrower that is demonstrated by ade- quate budgets and the accountability of opera- Analysis of adjustnment programs also tions managers. This commitment is more easily considers the implicationsfor the environ- found where the value of the environmental ment, since sound environmental man- resources is large and obvious. The value of the agement is a key objective of the Bank's resource can be tied to its economic potential, assistance to countries. To help prepare its effects on health, or its ecological value. appropriate assistanceprograms, Bank staff An issue faced by Bank staff is the reluc- should review the environmental policies tance of countries to borrow for environmental andpractices in the country. The design of projects, even on IDA terms. Understandably, adjustment programs should take into countries prefer to seek environmental project account the findings and recommenda- grants from bilateral agencies and to use rela- tions of such reviews and identify the link- tively scarce IBRD/IDA funds for other priorities. ages between the various reforms in the This has led to environmental concerns dropping adjustmentprogram and the environment. out of Bank strategies despite the need to inte- grate the environment into the overall strategy, It goes on to suggest that environmental issues even if not funded by the Bank (as happened, should normally be addressed by other policy for example, in Bolivia and Mozambique). It also actions. This is circular reasoning, since adjust- highlights the importance of building stronger ment operations are the Bank's primary tool for partnerships with other agencies, which is supporting policy reform. expected to occur under the CDF initiative. In practice, most adjustment loans do not In one important case, the China Department address environmental issues.'0 Policy work by expressed concern that China's graduation from the Environment Department in 1995 identified IDA may lead to a drop in Bank environmental extensive potential linkages and suggested a lending to a country that has made major efforts matrix with which to analyze the environmen- in that area. China requires beneficiaries to gen- tal impacts and make adjustment loans more erate the funds to repay Bank or IDA loans. The environmentally sensitive (Munasinghe and Cruz 18 Main Findings 1995). This matrix was never applied. An ongo- The modest extent of mainstreaming the envi- ing review of adjustment lending by operations ronment into the Bank's overall program is dis- staff found that the proportion of adjustment turbing. Having identified the pervasive aspects lending that deals with environmental issues of environmental issues, recorded their impor- has varied widely over time, averaging about 23 tance to poverty alleviation, and confirmed that percent in the 1990s. When the Bank has tried mainstreaming is essential to achieving its envi- to incorporate environmental issues into adjust- ronrnental objectives and commitments, in prac- ment lending the results have been mixed, tice the Bank has done little institutionally to despite significant efforts by staff (see, for exam- promote, monitor, or otherwise make main- ple, Seymour and Dubash 2000). Mainstreaming streaming happen. Anecdotally, there are excel- the environment into programmatic and adjust- lent examples of mainstreaming, but there is no ment lending remains a major challenge. sense of whether those represent a trend or suf- The Bank's performance on direct environ- ficient coverage. What is missing is evidence of mental project lending compares well with its a clear, operational, institutional commitment. lending in general. Performance rating of indi- Performance on project lending and main- vidual environmental projects by OED and by streaming has been partially satisfactory.1 QAG indicates that the projects have improved since the beginning of the decade and now do What is missing is evidence of a clear, about as well as other projects on the indicators used. Recent evaluations, however, have raised concerns about institutional development proj- ects being too complex and not designed to sup- Safeguards and Environmental port institution-building processes long enough Assessments to have lasting effects (Margulis and Vetleseter The Bank's performance on environmental safe- 1999). Both QAG and OED have looked at the guard policies remains contentious. Implemen- impacts of individual projects on the environ- tation has been mixed. OED and ESSD reviews ment, which has led to positive recommenda- of the EA process have found tlhat the policies tions in several cases to improve Bank and objectives are generally sound, although performance. there is room for improvement, refinement, and Performance on mainstreaming the environ- updating (World Bank 1993a, 1997c). These ment into other sectors and into adjustment lend- reviews have consistently found that EAs are ing is harder to measure than the results of direct often not completed soon enough in the proj- environmental projects. The management deci- ect cycle to have much impact on project design. sion to abandon the Environmental Information As a result, the EA process focuses much more System (ENVIS) database in 1992 deprived staff on mitigation than on improving project design. and evaluators of an important tool for analyz- Criteria for application of EA standards have ing the extent and effects of mainstreaming. not been consistently applied across Regions and Interview data suggest that the Bank's sectoral oil- countries. Delays in making the EAs available to entation and lack of established environmental the public have contributed to external criti- priorities have made it difficult for environmen- cism. Heavy reliance on external consultants tal staff to participate in projects in other sectors has undercut EA effectiveness and has not con- and incorporate more sensitivity to environ- tributed to building local capacity. mental issues. Although it is widely agreed by Compliance shortfalls highlighted in highly both management and staff that an integrated visible projects have cast doubt on the integrity approach is highly desirable, lack of clear objec- of quality assurance processes. The Inspection tives, insufficient means of monitoring, and lack Panel report on the Western China project of internal incentives have pushed in the oppo- highlighted many issues (World Bank 2000e). site direction. It is too soon to judge the results Guidelines for the application of policies have of recent efforts in some Regions to change this. not been internalized by many task managers 19 Promoting Environmental Sustainability in Development and staff, partly because the provisions are not design modifications or mitigation activity to always clear. This is complicated by the diffu- satisfy the recommendations of the EA. Atten- sion of responsibility and accountability associ- tion to the process falls off thereafter. Supervi- ated with matrix management. Line staff are put sion of environmental aspects of category A in the difficult position of trying to apply poli- and particularly category B projects has been cies when they have the dual responsibilities of weak, and monitoring of action plan imple- monitoring compliance with safeguards while mentation spotty. This aggravates the systematic also promoting the environment. For example, weakness in compliance monitoring and report- staff who depend on task managers for work ing. As a result, it is nearly impossible to verify assignments under the current work program sys- the effectiveness of mitigation measures. Perhaps tem may also be required to monitor compliance most important, the Bank's involvement in the with EA policies in projects of the same task man- EA process formally ends when the project is ager, creating a conflict of interest. Key findings completed (that is, when disbursements are of this report with respect to the Bank's safeguard completed). There is no regular program for policies include the following. monitoring the implementation and sustain- ability of environmental measures during the sub- There is insufficient guidance on how staff sequent life of the project. can implement the Bank's standardsflexibly Harmonizing Borrower/Bank Standards. enough to harmonize with local rules and to Borrowers are now establishing their own environmental assessment regulations and imple- strengthen local processes. mentation procedu-res, often with Bank assistance and encouragement. Many of these are still rel- Clarifying the Policies. Recent Inspection Panel atively new and they are not strong, but they reports have highlighted a significant problem have grown out of domestic processes and con- with the implementation of EA policy in the stitute important first steps in environmental Bank due to perceived ambiguities in the scope, policy development. However, national EA intent, and requirements of the policies among requirements are often different from those of staff responsible for their implementation. Accord- the Bank. Concerns have been raised by bor- ing to Inspection Panel interviews, lack of clar- rowers that lack of effort to harmonize Bank and ity and sharp differences of interpretation are national policy standards leads to unnecessary prevalent even among senior management (World friction and harms the overall cause of the envi- Bank 2000e). Recent studies sponsored by OED ronment.12 There is insufficient guidance on (Boisson de Chazournes 2000; IUCN 2000) con- how staff can implement the Bank's standards firm the need to clarify certain aspects of EA poli- flexibly enough to harmonize with local rules and cies (for example, the term "significant" is not to strengthen local processes-and to do so defined in OP 4.01, but it is the distinction without undermining the basic safeguard policy between A and B projects). Surveys of task man- objectives. This is an important question that agers confirm that lack of clarity and authorita- should be considered in revisions of the Bank's tive guidance play a role in the problems EA policies.13 encountered with the application of EA poli- Application to Adjustment and Programmatic cies. While the policies themselves may be appro- Lending. Adjustment lending was excluded from priate and adequate, the language of both the the EA process when OD 4.01 was initially policies and the standards by which they are to formulated. Several NGOs and internal stud- be applied need clarification and reliable inter- ies (Munasinghe and Cruz 1995; Reed 1992, pretation to ensure consistent implementation. 1996) have highlighted important impacts that Effects on Project Design and Supervision, adjustment lending can have on the environment and Ensuring Sustainability of Results. Most EA and have recommended methods for incorpo- work occurs early in the project cycle and rating attention to environmental issues in adjust- focuses on completing the EA and on project ment operations. Since March 1999, sector 20 Main Findings adjustment loans have been included among accountability for the implementation of safe- the projects subject to the EA process. ESSD is guards with the networks. In turn, Regional currently examining to what extent, and how, management held major sway over network safeguard policies should be applied to adjust- Anchors through the budget and influence in the ment lending and to other programmatic oper- sector board. The quality of the EA process ations. It is important that satisfactory guidelines deteriorated. be developed for all Bank lending. External criticism by NGOs and some donors Internal Structure and Incentives. Since the of the Bank, combined with lack of clear mana- creation in 1970 of the Office of the Environ- gerial accountability, created a risk-averse men- mental Adviser, the application of environmen- tality among both managers and staff. Some tal mitigation measures has been viewed by a projects have been rejected because of potential number of borrowers and task managers as an environmental risks, and senior management added cost and burden that has impeded rapid attention to environmental issues has been project execution. While EAs necessarily have a directed mainly to high-profile, high-risk projects. policing element, the culture and structure of the Partly as a result of the issues raised in the recent Bank have resulted in an unnecessarily adver- Inspection Panel investigation of the proposed sarial relationship that has contributed to mak- Westem China Poverty Alleviation project, sub- ing the environment an enclave activity. The stantial additional resources (estimated to be Bank's model for managing EAs has changed about $6 million) have been allocated to strength- over time but has yet to find a fully satisfactory ening the application of environmental safeguards form. and restoring more responsibility to the ESSD Vice- Following the 1987 reorganization, the Envi- Presidency. Finding a functional model for bal- ronment Department had authority to review the ancing the roles of the center and the Regions in environmental aspects of all projects, one of EA processes should be a high priority. only three mandatory reviews external to the While strengthening safeguard processes is crit- Region (the other two were legal and procure- ical to the credibility of the Bank, care must be ment). For a variety of reasons, authority for the taken not to reinforce perverse incentives. Safe- EA process migrated to the Regions, while the guard policies are increasingly seen as having pri- Environment Department retained substantial macy among the Bank's environmental objectives, independent resources to assist in and review rather than in their proper role as a backup decisions in the EA process. assurance to high-quality environmental main- This model was further modified following the streaming in project design. These safeguard creation of networks and the shift to country- activities, while essential to display the Bank's based task budgeting that began in the 1996 reor- commitment to development "with a human ganization. Both the central and the Regional face," should not distract attention from the pri- environmental units saw their budget resources ority to be given to mainstreaming the environ- reduced and became more dependent on coun- ment in strategy work and in all lending activities. try directors and task managers for most of their Overall, performance in the area of safe- funding and staff assignments. As a result, fewer guards has been only partially satisfactory. Fun- resources were available for crosscutting and damental reform of implementation and cross-border issues, and work became more accountability processes is critical. Management fragmented as staff sought the security of spe- is aware of these shortcomings and is strength- cific assignments to support their "billable hours." ening its approach to safeguards. This also placed Regional environmental staff in OED has expressed some reservations about the conflict-of-interest situation of both policing recently proposed changes. Two issues in the safeguards and trying to build constructive particular remain to be addressed. First, under relations with colleagues in other sectors. the emerging safeguards compliance framework Regional management was held responsible for of decentralized responsibility with central over- delivering the lending program, but shared sight, the members of the Regional safeguards 21 Promoting Environmental Sustainability in Development compliance team will still depend on cross- times been isolated operations responding to the support from project task managers for a sub- global mandate of GEF and not integrated into stantial portion of their work program, and thus coherent national strategies.15 In other cases face a potential conflict of interest. they have contributed to larger environmental objectives and have helped the Bank's efforts to While global issues require global cooperation, mainstream.16 The Bank is beginning to recog- nize that while global issues require global coop- there are also very important local reasons eain hr r lovr motn oa eration, there are also very important local for concern about such issues. reasons for concern about such issues. It has made modest efforts to promote renewable Second, since Bank management monitors energy, and much larger efforts to improve elapsed time between the Project Concept Doc- energy conservation in Eastern Europe and the ument (PCD) and the project approval date as states of the former Soviet Union, although the a key performance indicator, there is a built-in environmental benefits were primarily a result incentive to delay the formal issuance of a PCD. of improving economic efficiency rather than a At the same time, since the PCD often represents primary focus of the operations.17 In addition, the first time that a project can be reviewed by the Bank has promoted the Prototype Carbon those not involved in the project, including the Fund, global forest initiatives, and assisted in staff responsible for quality assurance on safe- work on the desertification convention. It has guards, safeguard issues may be identified too also, as noted earlier, been a major supporter and late in the project processing cycle to allow executing agency for the GEF. adequate consideration of more environmentally The Bank's emphasis on global issues should sound alternatives. not detract from addressing regional environ- mental issues, which are very important for Global Concerns member countries. Many environmental issues The Bank, on the basis of its own analyses and involve watersheds or ecosystems that span on the recommendations of others, has pro- national borders. Cooperation among countries moted initiatives related to climate change at the is needed, and the Bank has the potential to facil- country level and as part of the global agenda. itate more cooperation than has been the case Its focus on global concerns has been appro- so far. Although the Bank has encouraged mem- priate."4 However, the emphasis on the global bers to take these issues into account, it has not aspects of climate change, protecting forests undertaken projects to address multicountry and biodiversity, desertification, and the like environmental issues. The Bank's strong coun- has seemed to reflect the concems of the devel- try and sectoral orientation has impeded such oped countries and to understate the impor- activities.18 The GEF has taken some initiatives tance of these environmental concerns to local on regional issues, and the Bank should learn interests and welfare. The issues have become from those experiences. Meanwhile, the Bank's divisive in international forums, such as nego- Regions should find ways to do more regional tiation of conventions and meetings of the U.N. environmental work. Commission on Sustainable Development. Considering resource constraints, the Bank's Opportunities for cooperation have been missed. efforts to address global issues in its own research Fuelfor Thought (World Bank 1999c), the Bank's and analysis have been satisfactory. It has also strategy for improving environmental perform- begun working with international agencies and ance in the energy sector, was caught in a sim- NGOs on global issues. This approach has ilar debate between global and local approaches proven partially effective in promoting attention and was a weaker document as a result. to global issues in its country dialogues but has The Bank has prepared GEF projects to not made much progress in gaining borrower address biodiversity, ozone depletion, and inter- support. The Bank's efforts have not yet been national water issues. These projects have some- satisfactory in the areas of mitigating the local 22 Main Findings impacts of climate change nor in addressing ment its safeguard policies effectively. The envi- regional issues, but the Bank is beginning to ronment has too often been viewed as a luxury expand its work in the former. that can wait rather than as a central part of the Bank's development objectives.19 Internal Structure, Incentives, and With increasingly constrained budgets, task Accountability managers in other sectors have often viewed Understanadinig the Bank's organization and environmental inputs as an added cost and have incentive structure is a prime factor in evalu- chosen not to engage environmental staff unless ating its performance in the areas discussed absolutely necessary. This has made main- above. The initial push to expand environ- streaming harder and has led to underfunding mental activities was given a highly sectoral fla- of some safeguard activities.20 Environmental vor by the Bank's sector- and country-based staff have exercised a great deal of ingenuity to structure and the weakness of the Network raise funds from other sources to support their Councils. There were few incentives to build activities. Although external funding sources crosscutting themes into holistic approaches have been valuable in the short term, they have at either a strategic or operational level. The their costs. Considerable staff time is spent rais- joint emphasis on safeguards and environment ing funds rather than working directly on tasks, projects and the continuing priority to advance and conditions on this funding may shift the projects have reinforced the compartmental- direction of the activities to the priorities of the ization of the environment and have perpetu- donors,21 The reliance on external funding has ated the adversarial relationship between tended to reinforce the separation of the envi- environmental interests and those who wanted ronment from mainline Bank activities and access to speed up project preparation and simplify to regular Bank funds, creating more division procedures. So long as mainstreaming the envi- rather than integration.22 ronment was not clearly stated and pursued as The Bank as an institution and in the state- a core institutional objective and staff were ments of its past four presidents has made strong not recognized for their accomplishments in this commitments to supporting the environment. area, there were few material incentives to This has been reflected in the creation and allo- move in that direction. cation of resources to the Environment Depart- The expansion of the environmental units, ment, expanded environmental activities, a however, brought into the Bank a number of number of major external partnerships, and the highly motivated and innovative staff commit- strengthening of safeguard processes. These ted to the environment, and they received actions, however, have not been accompanied encouragement within the Bank's environmen- by incentives or direct action by management to tal community and from some managers. When ensure that mainstreaming takes place. Senior the Environment Department had substantial management reviews of CASs have not focused independent resources for environmental activ- on environmental issues unless there was a rep- ities, there was a rapid expansion of research, utational risk issue. Responsibility for other envi- analysis, and lending. The subsequent efforts to ronmental aspects was delegated to the decentralize responsibility and budgets to the Environment Department, which was outside the Regions and country units eroded the capacity operational line responsible for country strate- of the Environment Department to integrate the- gies, projects, and other activities, and for which matic environmental concerns more broadly it had insufficient independent resources. The ini- into sector programs or to monitor implemen- tial instructions for the PRSPs did not mention tation of policies. Increased necessity to compete the environment. No system has been established for resources further reduced the environment to define objectives for mainstreaming or to to a low-priority sector. These changes dimin- monitor results. Without guidelines and assign- ished the Bank's capacity both to mainstream the ment of responsibility, no one is held account- environment into country programs and to imple- able for mainstreaming. 23 Promoting Environmental Sustainability in Development The goals of the series of Bank reorganiza- rent system does not provide the appropriate tions over the past 13 years have included accountability structure to meet the Bank's com- improving cooperation across sectors and mov- mitments to incorporate environmental sustain- ing toward a more holistic approach. Unfortu- ability into its core objectives and to mainstream nately, the successive reorganizations have the environment into its operations. It is not that tended to reinforce the Bank's tendencies toward the individuals who operate within the system sector fragmentation. With some exceptions, do not work hard to try to meet the objectives the other networks are not moving to main- on which they are judged.23 Rather, the time has stream the environment in their strategies or come to examine how the Bank should align its programs. environmental goals and priorities with clear incentives, lines of accountability, and author- Without guidelines and assignment of ity to achieve results. Management has a respon- responsibility, no one is held accountable sibility to define its priorities and objectives in a manner that can be implemented with avail- for mainstreaming. able resources, even in the face of pressure to overload its mandate. In the case of the envi- The allocation of responsibility and account- ronment, which is commonly seen as central to ability for the environment is a major factor in poverty alleviation and growth, this means bet- this. Senior managers have not been held ter integration into a coherent strategy as well accountable for incorporating environmental as better monitoring. concerns into the activities of their units, either The Bank's organizational and incentive struc- in the Regions or in the networks. This problem ture has supported the expansion of Bank direct has been recognized, and a new task force has lending for the environment to about 6 percent been formed to clarify accountability in the of the overall portfolio. (If mainstreamed envi- matrix. The results have yet to emerge. In the ronmental components are included, the share case of safeguards, Regional responsibility for may be about 10 percent.) Environmental lend- approval of EAs has not been accompanied by ing made up nearly 3 percent of new commit- adequate accountability. The Regional vice pres- ments in fiscal 1999. The recent budget cuts idents have not been accountable for the EA will test whether this level can be maintained. process, which was located in the Regional envi- However, the Bank's structure and incentives ronmental units. These were then faced with con- reinforce the treatment of the environment as a flicting objectives of enforcing the policies while sector, and the Bank's accountability structure has contributing to Regional lending targets. ESSD not been able to encourage the mainstreaming and senior management are putting in place a of the environment in a satisfactory manner or new system that is intended to produce clearer to convince managers and staff to make it a cross- accountability and better results. It should be cutting theme. Unless and until that happens and monitored closely. the environment becomes part of the Bank's core Given the many other pressures on staff and objectives and a normal part of doing quality managers, and the ambivalence of many gov- analysis, projects, and strategies, the tension ernments regarding the role of the environment between the Bank and its stakeholders that has in development, it is understandable that the characterized the past decade will continue, and environment has gotten a low priority. The cur- probably intensify. 24 Recommendations B y and large, the findings of this evaluation are not new and are similar to what other donors have found when they evaluated their environmental programs (see Annex A). Many of the findings are based on internal and external studies done over the past decade. The need to make the environment a strategic priority was recognized by the Bank with the creation of the Environment Department and was reaffirmed at the Rio conference and in the 1992 WDR. Various presidential statements and individual initiatives also reflect an awareness of the importance of the environment. NEAPs were to be integrated into damage control. (3) The Bank's efforts in deal- country strategies, EAs were supposed to be ing with global environmental issues have been broadened to sectoral and Regional bases, and hampered by their early formulation as goals the GEF was supposed to complement Bank pro- external to member countries and by the strong grams, not become a substitute. Why didn't this country orientation of the Bank. happen? The preponderance of evidence sug- In all of these areas, the structure of incen- gests the following: (1) The Bank did not mount tives, priorities, and direct processes of account- a concerted effort to integrate doing positive ability from senior management down the line environmental good as a critical priority in its has not been supportive of strategic inclusion of core objectives. The cross-sectoral and thematic the environment, adequate monitoring and eval- aspects of the environment received little empha- uation, or positive recognition of activities and sis, and, most disconcertingly, the fundamental staff. While it may be argued that Bank man- link between environmental sustainability and agement attitudes reflect the ambivalence of its poverty alleviation was not pursued. (2) The collective membership on this issue, that ignores Bank's safeguard policies to prevent or mitigate the leadership role attributed to and accepted by environmental harm from its projects, while the Bank for the promotion of equitable and sus- sound in conception, were not accompanied tainable development. Unless the Bank expresses by clear standards and consistently effective the priority it gives to the environment and implementation. This has resulted in increased demonstrates how to implement this priority in reputational risks and diversion of attention to its programs, it is difficult to expect its borrowers 25 Promoting Environmental Sustainability in Development to do likewise. Simply recommending more or* Make the environment a central feature of pol- better NEAPs, allocating more staff or resources icy dialogue with core ministries, giving par- to the environment, or doing better EAs will have ticular attention to the links between the no more impact than in the past. The recent environment, poverty reduction, and sus- emphasis on being responsive to clients makes tainable livelihoods. exercising the Bank's leadership and role- * Ensure that the environment is adequately cov- modeling functions even more critical. ered in due diligence ESW (such as the pro- posed Development Policy Reviews). When the The Environment Strategy Paper provides CAS indicates a need for more in-depth analy- sis of environmental issues, environmental a unique opportunity to secure a realistic ESW should be carried out in a participatory and workable consensus among the manner, taking full account of the work carried membership about the future role of the out by partners (e.g., national strategies for sustainable development proposed by DFID). Bank on the environment. . Mainstream environmental concerns into its research and operations. Adequate guidance, Our findings highlight a number of specific standards, and monitoring should be put in strengths and weaknesses of the Bank's per- place so that staff have the tools and incen- formance on the environment. Many of the tives to implement the environmental strategy. weaknesses can be-and are being-addressed. * Strengthen monitoring and evaluation of The critical issues that must be addressed by the progress on the environment in CASs and Sec- Bank's environmental strategy and its senior tor Strategy Papers. To this end, it should management stem from the three major short- expand the use of environmental indicators comings identified above. The agenda presented in country analysis, particularly indicators of below is a medium-term set of corporate objec- environmental degradation in terms of GDP. tives. It calls for judicious sequencing and grad- * Enhance its efforts at capacity building in ual implementation in line with the resources member countries by strengthening institu- actually allocated to enhance the implementa- tions, policies, and regulatory enforcement. tion of this corporate priority. The forthcoming Environment Strategy Paper provides a unique Recommendation 2- The Bank should review opportunity to secure a realistic and workable its environmental safeguard oversight sys- consensus among the membership about the tem and processes to strengthen accounta- future role of the Bank on the environment. bility for compliance. In parallel, the policy framework should be modernized and Recommendation 1: In pursuit of holistic, adapted to the changing practices and instru- long-term development and the Millennium ments being used by the Bank and take Development Goals, the Bank should build account of recent experience. In particu- on its comparative advantage and analytical lar, the Bank should: capacity to demonstrate the critical role of * Ensure that safeguard policies and standards the environment in sustainable develop- for their implementation are clear and are fully ment and poverty reduction. It should understood by managers and staff. incorporate environmental objectives into - Define policies and practices for treating envi- its core strategy and its operations. In par- ronmental issues in adjustment and pro- ticular, the Bank should: grammatic lending not currently covered by * Reform the structure of its management, staff, EA policy. and budget incentives to give added empha- - Provide adequate and independent funding sis to achieving environmental objectives. for oversight of safeguard processes and * Integrate environmental sustainability into shield compliance review processes and staff country and sector strategies.' from conflicts of interest. 26 Recommendations * Allocate accountability and responsibility for * Help countries prepare for the impacts implementation of the safeguard policies to of global environmental degradation, such the relevant line managers and empower the as global warming, and support transitions central environment unit to intervene where to renewable energy sources and end-use compliancc problems are identified.2 efficiency. * Establish a transparent adjudication process * Give adequate attention to regional (trans- to resolve internal differences and avoid mud- boundary) environmental issues in its dying responsibility and accountability. analytic and program work, including cross- * Help build the capacities of borrower coun- boundary cooperation. tries to formulate and implement EA policies * Enhance its role as a global leader in the and manage environmental resources and environment through public statements, by risks. serving as a role model through its own actions, and by promoting greater under- Recommendation 3: The Bank should help standing of the poverty-environment-devel- implement the global environmental agenda opment nexus. by concentrating on global issues that * Use its convening power and partnership involve local and national benefits. In par- programs to increase attention to envir- ticular, the Bank should: onmental issues of common concern, pro- * Identify environmental actions that achieve mote coordination among donors, and national and local benefits while addressing empower all stakeholders to achieve com- critical issues of global concern. mon objectives. 27 ANNEXES ANNEX A: DONOR EVALUATIONS Four donors have recently evaluated their envi- * Not enough skilled staff are available, and ronmental aid programs: Norway, 1995; Den- current staff are stretched too thin and do not mark, 1996; Finland, 1999; and the United have the necessary authority. Kingdom, 1999 (Denmark, Ministry of Foreign * There is not enough integration or main- Affairs 1996; Finland, Ministry for Foreign Affairs streaming of environmental issues into other 1999a-f; FNI and ECON 1995; Flint and others projects. 1999). These major studies of one to several vol- * There is a paucity of monitorable environ- umes have come to surprisingly similar con- mental indicators. clusions that are consistent with those of this * Application of EAs is deficient and, where review. Although their programs are generally applied, they are often too late in the proj- smaller than the Bank's, these evaluations are ect cycle to do more than mitigate risk. important because many Bank countries have expressed a preference for bilateral (grant) sup- The reports also focus on the lack of adequate port for environmental projects. monitoring, lack of evaluation of environmen- While the emphasis and terms of expression tal projects, and the absence of environmental differ across reports, the themes expressed concems in other projects. Internal feedback sys- here are common to all of the studies. They tems were deemed inadequate. Management all note that environment has been made a reviews rarely addressed environmental issues, high priority in their aid programs and express so there was no effective accountability for confidence in the formulation and emphasis achieving the environmental principles and of their policy statements. They also express goals that had been articulated. some satisfaction that their programs have The recommendations suggested improve- had positive impacts and that progress has ments in the areas noted above. Particular been made. Beyond that, the picture is not attention was given to getting better strategies, good. improving implementation across the board, A significant gap between rhetoric and real- getting better indicators, and improving ity is a major theme in all reports, and the more monitoring. recent ones indicate a falling-off in performance Although the Bank has rightly been under in the late 1990s. Effective priorities seem to have pressure from its donors to improve its per- shifted away from the environment. formance, it is interesting to note that the short- The reports find that translation of environ- falls identified for the Bank also occur in many mental goals into action is weak for several of the donors' programs. This suggests that reasons: promoting environmental sustainability is dif- * Country-level strategies are nonexistent or ficult and is not internalized in any of these in- inadequate (usually from both the donor stitutions to the extent that it ought to be. There and the country points of view, though the may be good reasons for a cooperative effort availability of NEAPs was welcomed). to improve performance. Coordinated efforts * There is a lack of clear targets and guidelines on developing environmental strategies, envi- for staff to follow. ronmental indicators, and monitoring and 29 Promoting Environmental Sustainability in Development evaluation procedures would be a good place programs and their evaluation, rather than inde- to begin. This should be supplemented by effec- pendent implementation and evaluation of each tive in-country coordination of environmental donor's program. 30 Annexes ANNEX B: REPORT OF THE ADVISORY PANEL Summary responsibility to assist borrowers to comply An external Advisory Panel convened by the with international commitments and norms. World Bank's Operations Evaluation Depart- ment (OED) wishes to convey six recommen- Background on the Panel's mandate and dations to the OED as the Panel's response to activities, and further detail on the six recom- the Review of the World Bank's Performance on mendations, are provided below. the Environment. The Panel requests that the OED transmit these recommendations to the Background Bank's senior management and Executive Board. In March 2000, the World Bank's Operations Evaluation Department (OED) recruited five 1. The World Bank's senior leadership must individuals-Alicia Barcena, Ashok Khosla, David reassert environmental sustainability as a core McDowell, Frances Seymour, and Bjorn Stig- element of the World Bank's mandate. son-to serve as an independent Advisory Panel 2. The World Bank's senior leadership must for its "Review of the World Bank's Performance establish staff accountability for compliance in Promoting Environmental Sustainability in with the Bank's environmental policies, and Development." The review had been initiated the to this end, should re-centralize clearance previous year. OED's stated objectives for con- authority on every project with environmen- vening the Panel were to: tal implications. 3. The World Bank must dramatically improve its * Bring to bear diverse perspectives in the con- performance in mainstreaming environmental duct of OED's evaluation considerations into nonenvironment lending - Serve as a sounding board for the findings of and policy advice, which will require a signif- the evaluation as they emerge icant realignment of staff incentives and more * Add authority and credibility to the findings. transparent accountability for mainstreaming. 4. The World Bank must do a better job of iden- It was understood that each Panel member tifying and exploiting synergies among envi- would represent his or her individual views and ronmental protection, economic development, not those of the organization with which each and poverty reduction objectives within a is affiliated. Panel members were expected not sustainable-livelihoods framework. to disclose the findings of the evaluation until 5. The World Bank must harmonize its envi- after they had been presented to the World ronment strategy across the World Bank Bank's Board of Executive Directors. OED shared Group to ensure greater consistency and with the Panel draft background documents that accountability, and to facilitate appropriate were either commissioned for or related to the integration into private sector-oriented finance review. Two meetings of the Panel were con- and policy advice. vened, one in May and one in October. At the 6. The World Bank has an important global October meeting, OED requested that the Panel leadership role to play on environmental mat- prepare written comments on the review and, ters through its convening power, and a if possible, submit a consensus report. 31 Promoting Environmental Sustainability in Development This brief report is designed to accompany ness. Moreover, the absence of environmental the OED "Review of the World Bank's Performance concerns in Poverty Reduction Strategy Papers on the Environment," and to capture the princi- and in the recent World Development Report pal consensus views of the Advisory Panel. The indicates a failure to make the conceptual link Panel's comments are in response to the draft of between environmental sustainability and the the main report dated December 15, 2000, and the Bank's central mission of poverty reduction. draft of the technical report dated November 27, The recent decline in new lending for environ- 2000. Individual Panel members have communi- mental projects, and the finding that competition cated comments of an editorial nature to OED sep- for budgetary resources has "further reduced arately. The Panel's mandate did not extend to the environment to a low-priority sector," do not commenting on the World Bank environment bode well for improvement in the near future strategy currently under preparation elsewhere in without a swift and dramatic change in course. the Bank in parallel with the OED review, although The Panel is thus concemed that the con- the two processes are coordinated. gratulatory tone of some of the introductory This report conveys six principal recommen- and summary text of the OED report is incon- dations to the World Bank's senior management sistent with these more disturbing findings and Executive Board as the Panel's contribution detailed in the body of the report. The Panel con- to deliberations on the implications of OED's curs that the Bank has indeed achieved much review. These recommendations are based on the in the period under review, and that there are documentation provided by OED, the discussions many specific project, country-level, and global we have had at our meetings and electronically, initiatives of which the Bank can be proud. as well as on Panel members' own collective However, we believe that the appropriate bench- knowledge and experience of the World Bank's marks for measuring performance should be performance on the environment. The remain- the Bank's own stated commitments, and the der of this report provides supporting detail on degree to which the Bank's response has been the six recommendations. We seek to clarify commensurate with the urgency and impor- those findings and recommendations of the OED tance of the challenge. By both of these meas- report that we agree with, those findings and rec- ures, and particularly in light of the failure to ommendations that we disagree with, and issues mainstream and the evidence of recent back- that we believe should have been addressed, but sliding, the Bank's performance has clearly been were not. unsatisfactory. Improved performance will require significant attention and leadership from Recommendations the highest levels of the institution. 1. The World Bank's senior leadership must reassert environmental sustainability as a 2. The World Bank's senior leadership must core element of the World Bank's mandate. establish staff accountability for compli- Members of the Panel agree with OED's find- ance with the Bank's environmental policies ing that the World Bank "has not succeeded in and, to this end, should centralize clear- making the environment a core strategic prior- ance authority on every project with envi- ity," and are alarmed by evidence that the Bank ronmental implications. has in recent years begun losing ground in this The Panel agrees with OED's finding that a regard. The declining prominence of environ- great deal of accountability for compliance with mental sustainability in the very instruments environmental safeguard policies seems to have used by the Bank to signal its strategic priori- been lost during the decentralization of Bank ties-the Country Assistance Strategy, economic structure following the 1996 reorganization. The and sector work, and the Comprehensive Devel- Panel is particularly concerned by the reported opment Framework-indicates the need for the conflict of interest now faced by environment Bank's senior leadership to reassert the central- staff in the Regions in the wake of decentral- ity of the environment to the Bank's core busi- ization. The Panel supports the OED recom- 32 Annexes mendation that "the central environmental unit At the country level, OED finds "little indi- should have adequate resources and authority cation . . . that environmental concerns have to advise and intervene on issues where differ- been integrated in the Bank's economic policy ences of opinion arise." The Panel would go fur- dialogue" with borrower governments, and that ther and recommend that definitive clearance only about half of Country Assistance Strategies authority on every project with environmental address environmental issues. (Ironically, OED implications should be centralized to ensure finds that OED itself has not systematically mon- clarity and consistency in the application of itored effectiveness of efforts to promote envi- safeguard policies. ronmental sustainability in Country Assistance While the Panel believes that the first order Evaluations.) And while an increasing propor- of business is to ensure accountability for safe- tion of the Bank's portfolio is now in program guard policies already in place, we also agree lending, OED reports that most adjustment loans with OED's recommendation that the safeguard do not address environmental issues, and that framework be reviewed to promote clarity, con- treatment of environmental issues in adjustment sistency, and comprehensiveness. In particular, lending has declined in recent years. Despite there is a need to make explicit the articulation some examples of best practice, available evi- of social and environmental issues in the envi- dence indicates that the Bank's performance ronmental classification and assessment process. overall in mainstreaming at the country level has In addition, the policy framework should be been unsatisfactory. updated to incorporate new insights on how to It is unfortunate that the OED review is "do good," such as those related to dams emerg- equivocal in its assessment of mainstreaming of ing from the World Commission on Dams environmental concerns into other sectors, cit- process. ing lack of clear objectives and insufficient means of monitoring. In the view of Panel 3. The World Bank must dramatically members, the Bank's performance in this regard improve its performance in mainstream- is critical, as (in OED's words) the "benefits of ing environmental considerations into non- stand-alone environmental projects can be more environment lending and policy advice, than offset by the negative environmental which will require a significant realignment impacts of lending in other sectors that ignores of staff incentives, and more transparent environmental benefits." Nevertheless, the OED accountability for mainstreaming. rcport provides sufficient evidence to conclude Members of the Panel agree with OED's find- that potential tools that would support integra- ing that the mainstreaming agenda, that is, inte- tion of environmental concerns into other sec- gration of environmental objectives into the tors-such as economic and sector work, and Bank's regular, nonenvironment lending and Regional and sectoral environmental assess- non-lending activities (including concessional ments-are not being used, and that budgetary activities supported by trust funds), has been rel- and staff incentives are pulling in the wrong atively neglected compared with the attention the direction. Bank has given to environment sector projects Members of the Panel agree with OED's find- and safeguard policies. (Indeed, OED's own ini- ing that "the current system does not provide the tial approach to this review reflected a similar appropriate accountability structure to meet the misplaced emphasis. Too much analytical effort Bank's commitments to incorporate environ- was focused on the performance of environ- mental sustainability into its core objectives and mental projects and processes, and not enough to mainstream the environment in its opera- on the Bank's performance in dealing with the tions." Indeed, task team leaders surveyed by environmental implications of non-environmental OED expressed the view that that there are cur- projects-especially large infrastructure proj- rently no positive incentives for mainstreaming, ects-and processes such as country and sector and that lack of interest on the part of senior strategies.) management is a significant constraint to main- 33 Promoting Environmental Sustainability in Development streaming environmental concerns into non- the expense of attention to more systemic, long- environment activities. The OED finding that term threats to economic development and sus- many of the Bank's more positive environmen- tainable livelihoods posed by environmental tal initiatives "have tended to be a function of degradation. For example, the Panel believes the efforts of individual staff" is consistent with that there is room for increased Bank emphasis the observations of Panel members. on the synergies among increased efficiency and The Panel thus strongly agrees with the OED productivity in the use of natural resources, eco- recommendation that the Bank's structure of nomic growth, and poverty reduction. incentives, allocation of resources, and man- agement accountability be reformed to give 5. The World Bank must harmonize its envi- greater emphasis to achieving environmental ronment strategy across the World Bank objectives, and in particular, that line managers Group to ensure greater consistency and take responsibility for environmental sustain- accountability, and to facilitate appropri- ability throughout their operations. There cur- ate integration into private sector-oriented rently appears to be a (mis)perception among finance and policy advice. many in the Bank that environment staff and Over the past decade, the World Bank has units are responsible for ensuring the imple- emphasized private sector development as a mentation of the mainstreaming agenda, central theme of its lending and policy advice, although they are clearly not in a position to do and the private sector arms of the World Bank so. Senior Bank officials thus need to hold line Group-the International Finance Corporation managers accountable for integrating environ- (IFC) and the Multilateral Investment Guarantee mental considerations into all of the Bank's Agency (MIGA)-have grown significantly. More- lending and policy advice, and to align incen- over, recent restructuring has merged World tives with this objective as a matter of urgency. Bank and IFC management units in key sectors. It is thus extremely unfortunate that the review 4. The World Bank must do a better job of of the Bank's environmental performance, and identifying and exploiting synergies among the parallel environment strategy process, are environmental protection, economic devel- limited to the IBRD and IDA. At its first meet- opment, and poverty reduction objectives ing in June 2000, the Advisory Panel strongly within a sustainable livelihoods framework. urged the Bank to integrate the Bank's private A particular area of concern to the Panel is sector entities into the review and strategy the Bank's failure (until recently) to link envi- process, but this was not done. ronmental sustainability and poverty reduction Even within the more narrow mandate of objectives. OED reports that there has been the review of IBRD and IDA activities, the OED "surprisingly little" analytic work on the links review fails to provide an adequate treatment of between poverty and environmental degradation. the environmental performance of the Bank's pri- While the Bank's environment staff have vate sector development activities, including attempted to establish links with other thematic lending, guarantees, and policy advice. Given areas, OED finds that this outreach has not been that Bank support for privatization and guaran- reciprocated. tees of private provision of infrastructure are While the Panel is supportive of the attempt often controversial on environmental grounds, to link the new environment strategy with poverty this is a significant omission. In addition, the OED reduction objectives, we are concerned that such review does not treat the potential positive role linkages need to be broadly construed in the con- of the Bank in promoting opportunities to inte- text of long-term economic development objec- grate environmental concerns into the objectives tives and a sustainable-livelihoods framework. of private sector development. For example, Otherwise, there is a danger that the Bank's the potential of strict national environmental environment-related work will be constrained to standards to promote innovation and eco- local interventions with a short time horizon at efficiency deserves increased attention. 34 Annexes 6. The World Bank has an important global the Bank has entered into in the environmen- leadership role to play on environmental tal realm. matters through its convening power, and These partnerships have ranged from its responsibility to assist borrowers to com- Alliance with the World Wildlife Fund and con- ply with international commitments and vening of corporate CEOs in the forestry sec- norms. tor, to its creation (with the World Conservation The Panel supports OED's recommendation Union) and subsequent arm's-length support for that the Bank should revise its approach to the World Commission on Dams (and as-yet- global issues, concentrating on capturing the unknown role in promoting the recommenda- local and national benefits from addressing tions of the latter's recent report). Each of these issues that are of global concern. In addition, presents a very different model of engagement, the Panel supports the recommendation that and some have been controversial with various transboundary environmental issues should stakeholder groups. Members of the Panel receive more attention in the Bank's analytic and believe that Bank resources should be used to program work, as this is an area with significant support global public policy-making and imple- unexploited potential and need. mentation with respect to the environment, but However, the Panel believes that there is suspect that there are likely many lessons more to be said about the selective use of the learned regarding how this is best done that are Bank's global convening power to promote left uncovered by the OED review. international consensus-building on environ- mental challenges, the role of the Bank in Concluding Words directly assisting borrowers to implement the The members of the Panel wish to thank the commitments and norms that emerge from World Bank for providing us with the oppor- such processes, and indirect assistance through tunity to participate in the review process, and cooperation with other international organiza- extend our gratitude to colleagues in OED who tions. It is unfortunate that the OED review did facilitated our meetings and responses to our not include an evaluation of the many inter- requests. We hope that our input is received in national partnerships and global processes that the constructive spirit in which it is offered. 35 Annexes ANNEX C: REPORT FROM THE COMMITTEE ON DEVELOPMENT EFFECTIVENESS 1. The Committee met on May 2 and May 23, lending policy and harmonization across Bank 2001 to discuss the papers OED: Review of the instruments. Bank's Performance on the Environment 4. Following are a number of issues that the (CODE2001-0029) and ENV: Making Sustain- Committee feels warrant the particular atten- able Commitments. An Environment Strategy tion of Executive Directors at the Board dis- for the World Bank Discussion Draft cussion of the strategy on July 12, 2001. (CODE2001-0041), prior to its being submit- * Policy Advocacy, Country Ownership and ted for Board review on July 12, 2001. Fol- Capacity. The Committee noted that bal- lowing the May 2nd CODE meeting, ancing policy, setting minimum standards Management prepared and circulated a Q&A and managing reputational risks for the (CODE2001-0051). The Committee com- Bank at the country level was a key chal- mended both OED and Management for a lenge. Several members believed that the well-coordinated process. The Committee wel- strategy was weighted more toward pol- comed the Strategy's poverty-focused agenda, icy advocacy and imposed environmental emphasizing environmental health, sustainable standards and minimizing the Bank's rep- livelihoods, and vulnerability and environ- utational risk than toward "doing good" mental change. The Committee also supported and addressing client concerns about costs, Management's two-pronged approach focus- delays, and implementation capacity. Oth- ing on strengthening the incentive and ers cautioned that weak country capacity accountability structure and on the supervision should not result in lowering Bank stan- of the environmental aspects of projects. dards and underlined that the proposed 2. The Committee welcomed the OED review, approach should strike the right balance which rated the Bank's performance on the envi- between the costs of compliance and the ronment as "partially satisfactory." The Com- Bank's reputational risk. Members stressed mittee supported the OED recommendations the importance of country ownership and and was pleased to hear that Management had institutional capacity building and said that found the review useful in guiding the devel- the focus, in the long run, should be to opment of the Strategy. Although not all mem- integrate safeguards into country systems. bers supported all the elements of the strategy, They called on flexibility in applying the the Committee believed there was enough com- policy and emphasized that the localization mon ground to support its going to the Board. of global public goods was critical to client 3. The Committee raised issues on linkages buy-in. Executive Directois may wish to dis- between the environment and poverty reduc- cuss whether they are satisfied with the tion, tradeoffs between global and local issues, balance and treatment of "country own- and balancing advocacy, minimum standards, ership, " "capacity building, "and "reputa- and country ownership. It also discussed tional risk" in the revised draft. safeguards and institutional incentives, and * Safeguards and Institutional Incentives. how to mainstream environmental objectives The Committee believed that more effort into the Bank's work, including adjustment is required to strengthen the accountabil- 37 Promoting Environmental Sustainability in Development ity and incentive structure to mainstream monitoring and for more ambitious targets for environment into the Bank's work, includ- mainstreaming environment into CASs and ing the need to clarify the working modal- PRSPs. Other specific implementation issues ities between the central review function raised included the need to: rationalize the and Regional responsibilities for imple- role of different instruments to take into mentation and monitoring. Management account clients' capacity to benefit fully from agreed to provide a matrix on accounta- them; more clarification on the roles of the bility and incentives. Executive Directors Bank and its key partners in implementing the may wish to discuss the proposed meas- strategy, including how the GEF protocol ures to clarify and strengtben incentives would be mainstreamed into the Bank's work; and accountabilityfor safeguard compli- and more guidance on interim measures to ance in the Bank. be taken in circumstances where the strategy Resources/Budget. Some members believed could not be immediately applied. Manage- that the strategy would increase the Bank's ment noted that performance indicators would administrative costs and supported the be tested in the first year prior to wider adop- proposed five-year resource envelope. tion and that it would revisit the proposed Other members questioned the need for "tool kit" of instruments. Issues of main- incremental funding and requested to see streaming the GEF protocol into the Bank's a program of activities within the current work would be taken up by the GEF Coun- resource envelope. Executive Directors cil following Board review of the SSP. may wish to discuss the case for incre- 7. Treatment of Environment Issues in Pro- mental resources and adequacy of grammatic/Adjustment Lending. The Com- resources for implementation. mittee noted the need for more clarity on how Following are the Committee's discussion of environmental issues will be incorporated these and other issues in greater detail. into Bank instruments, including adjustment 5. Linkages between Environment and Poverty lending and PRSCs. Management proposed Reduction. The Committee noted that while that this issue be taken up when the Com- the linkages between environment and sus- mittee discusses OP 8.60 Adjustment Lending tainable livelihoods in the long term were Policy and also informed the Committee that clear, the links between Regional and global it was accelerating its clarification of policies commons and poverty reduction were less and integrating all safeguards into a single risk direct. Members called for the strategy to management system. explicitly acknowledge tradeoffs that could 8. A World Bank Strategy. The Committee noted exist in the short term between realizing the that the SSP approach should move beyond goals of poverty reduction and environmen- a focus on governments and projects to tal sustainability. Members also noted that include the role of the private sector in while the Bank's focus was on poverty reduc- implementing the strategy and asked for tion, many of the proposed actions would more information on implications of the require moving beyond a poverty focus, to a strategy for MIGA and for IFC. Management broader focus on social sustainability. Man- from IFC and MIGA informed the Commit- agement agreed that poverty reduction and tee that they supported the strategy and that sustainable development were not mutually their activities were in alignment with its exclusive, and presented questions of trade- objectives. offs that must be examined carefully. 9. Conclusions. Management agreed to revise 6. Implementation andMainstreaming ofEnvi- the draft report focusing on the executive ronment Objectives. The Committee stressed summary to take into account comments from that implementation will be the real test of the the Committee, including with regard to: revis- strategy. Members noted the need for sharper ing the accountability and incentive matrix; definition of benchmarks for environmental clarifying the role of the regions; balancing the 38 Annexes costs and the benefits of compliance; ration- to the Board. Following the Board discussion alization of the use of current and new instru- the Strategy will be made available to the ments; and the development of monitorable public. indicators. Management will prepare a Man- agement Action Record (MAR) to be submit- Pieter Stek ted at the time the OED report is circulated Chairman 39 Annexes ANNEX D: WORLD BANK MANAGEMENT'S RESPONSE TO OED'S ENVIRONMENT REVIEW AND RECOMMENDATIONS Several "building blocks" contributed to the porating the environment into sector strategies, preparation of the environment strategy, includ- country strategies, and policy dialogues, (b) ing Regional environment strategies, environ- mainstreaming into the Bank's overall operations, ment strategy background papers, and an and (c) implementing safeguard policies. extensive strategy consultation process. One of In defining a course of action for the longer the key building blocks was OED's environment term and setting specific measures to adjust review, which assessed the Bank's performance Bank actions, tools, and institutional incentives in supporting environmental sustainability. for the next five years, the strategy has taken into The OED review found that the Bank had account the findings and recommendations of made substantial improvements in its environ- the OED review. The management action mental performance, but large challenges response matrix below summarizes OED's main remained. It rated the Bank's performance as sat- recommendations, and outlines the elements of isfactory in addressing global environmental the strategy and implementation plan that directly challenges; and partially satisfactory in (a) incor- respond to these recommendations. Major OED recommendations Response Recommendation 1: Bank management concurs. To support the linking of environ- In pursuit of holistic, long- mental issues with the Bank's core opcrations, improvements and term development and the actions will be taken in the following areas: Millennium Development * Country-level environmental analyses will be part of the stan- Goals, the Bank should dard package of diagnostic tools that informs policy dia- build on its comparative logue, particularly in connection with the preparation of CASs advantage and analytical and PRSPs. Key sustainability and environmental indicators will capacity to demonstrate become part of the country indicator set included in CASs. We the critical role of the will refine the methodology of country environmental analy- environment in sustainable sis during fiscal 2002, and over the next 5 years, carry out 5 development andpoverty to 15 country diagnostic studies annually, linked with CAS reduction. It should preparations in priority countries. incorporate environmental * Targeted environmental input to PRSPs-analytical work, objectives into its core training, and facilitation of cross-sectoral dialogue-will help strategy and its integrate environmental sustainability issues into the policy dia- operations. logue in 5-15 priority PRSP countries annually. * Structured learning on strategic environmental assessments (SEAs) will help introduce environmental considerations ear- lier in sectoral decisionmaking and planning processes. We will refine methodologies and procedures during fiscal 2002, 41 Promoting Environmental Sustainability in Development Major OED recommendations Response then pilot and disseminate good practice in SEAs based on about 10-20 SEAs annually. The following measures will be taken to measure progress: • Monitoring and evaluating the environmental aspects of CASs. Our objective is to achieve satisfactory coverage based on methodology developed by ENV. . Regular reviews of the environmental aspects of PRSPs. * Refinement of the methodology for measuring the extent of environmental mainstreaming in key sectors (rural, urban, water and sanitation, energy) during FY02, and annual report- ing on progress. Recommendation 2: Bank management concurs and is committed to continue improve- The Bank should review its ments in the safeguard system, following a two-pronged approach environmental safeguard described in the strategy (chapter 3). oversight system and Addressing sbort-term priorities: processes to strengthen * Implementing an integrated safeguard system, and improving accountabiltyfor compli- consistency in safeguard application validated by an inde- ance. In paralel; the policy pendent internal audit in FY02. framework sbould be mod- * Establishing a corporate safeguard tracking and monitoring sys- ernized and adapted to tem by the end of FY02. the changing practices and * Strengthening corporate consistency and oversight and meet- instruments being used by ing safeguard implementation targets that will be established the Bank and take account in FY02. of recent experience. * Developing and piloting a client capacity assessment and development program in FY02. Reforming the safeguard system: * Developing a medium-term workplan for reforming the safe- guards system to be reviewed by CODE in FY02. * Implementing a client capacity development program over the next 5 years. * Implementing systematic staff training. During the next 5 years, 90 percent of all operational staff and managers will be trained in safeguards. * Work with clients and other development institutions to review and harmonize safeguards. * Improved monitoring and regular reporting at the Regional and corporate levels will provide up-to-date information on safeguard implementation issues (chapter 4). 42 Annexes Major OED recommendations Response Recommendation 3: Bank management concurs. The strategy emphasizes the need The Bank should help to build on synergies by addressing local, regional, and global implement the global environmental issues, and spells out the principles to guide the environmental agenda by Bank in actions to address global concerns (chapter 3). The fol- concentrating on global lowing are key aspects: issues that involve local * Supporting the integration of global concerns into PRSPs. Sev- and national benefits. eral global environmental concerns-such as land degrada- tion, water resource management and biodiversity loss, and the impacts of climate change-have strong linkages with poverty reduction. Such aspects will be included in PRSP reviews and joint staff assessments (JSA). A methodology will be developed during FY02 to guide annual reviews of PRSPs and inputs to JSAs. Integrating GEF resources with Bank operations. The strategy aims to improve the integration of GEF assistance into Bank operations measured annually by the proportion of the GEF portfolio blended with Bank resources, compared with the cur- rent level (reported in World Bank 2000e). * Addressing climate change comprehensively. The Bank will also seek to enhance the proportion of Bank projects that carry out an assessment of their climate change impact. Assess- ment methodologies for sectoral operations will be updated and disseminated to operational staff. Annex G on climate change spells out in detail the proposed actions for reducing the vul- nerability of people to climate change including the develop- ment of methodologies for assessing vulnerability. 43 ENDNOTES Chapter 1 8. These are based on the economic Kuznets 1. The findings of a parallel study of the environ- Curve, which postulates that income inequalities will ment conducted by OED as part of the independent increase initially before decreasing over time (a the- review of IDA 10, 11, and 12 have been incorporated ory that is not well supported by evidence). in this report. See Shilling 2001. 9. Two background papers touch on issues raised 2. These are identified in the References section. by the Inspection Panel about the Western China 3. See the Acknowledgments for the names of Project: Boisson de Chazournes 2000 and IUCN 2000. panel members. The Report of the Advisory Panel is See also, Shihata 1994, 2000. attached as Annex B. Chapter 3 Chapter 2 1. See World Bank 1987, 1988, 1990b, 1991, 1992a, 1. This section is based on information in Wade 1993b, and 1994a. 1997. 2. Various interpretations have been adduced 2. The program for NEAPs was the most visible of about mainstreaming as applied to the Bank. For the these initiatives. sake of clarity in presentation, this report uses stew- 3. The ENVIS system allowed extensive word and ardship to address policy and strategy issues that topic searlches of project ducunlielnts rcgarding envi- govern actions affectinlg the en1viruonmliletl. Main- ronmental and other topics and was well in advance streaming is used for integrating environmental con- of other systems then available. siderations in the Bank's operations-both direct 4. Despite criticism from many environmental lending (on which information is available) and incor- advocates, the WDR went about as far as was feasi- poration into other lending (for which, despite its ble for the Bank at that time. It stopped short of importance, few indicators are available). addressing environmental sustainability, although 3. Including the Convention on Biological Diver- considerable background material had been prepared sity, United Nations Convention to Combat Deserti- on that topic. fication, Montreal Protocol on Substances that 5. Bank research and publications on natural cap- Deplete the Ozone Layer, and Kyoto Protocol to the ital and genuine savings and joint efforts with other United Nations Framework Convention on Climate partners, such as the Organisation for Economic Change. Cooperation and Development, to develop and refine 4. World Bank Business Warehouse database. The various sector-specific environmental indicators are at number has declined slightly since 1998 as part of the the forefront of attempts to define valid measures of overall retrenchment of budgets and staffing in the environmental sustainability on a country basis. The Bank, but the change was roughly proportional. The underlying data, however, are often hard to come by. separation of the Social Development Department has 6. USAID, the Canadian International Develop- also resulted in some changes in the overall figures. ment Agency (CIDA), the Netherlands, and the Nordic 5. Owing to changes in reporting, conversion to countries had already mandated environmental assess- new management information software, and increased ment of their own programs. The Bank's environ- use of trust funds, it has not been possible to get accu- mental ratings system was adapted from the Asian rate and comparable figures over time. Development Bank (ADB). 6. Under pressure to complete them quickly, some 7. The original policies, many of which have been were largely the product of foreign consultants and converted to Operational Policies (OPs) and Bank Pro- allegedly not reflective of local participation. Inde- cedures (BPs), and their issuance dates are: OMS pendent reviews of NEAPs have found mixed qual- 2.36 Environmental Aspects of Bank Work, issued May ity regardless of the means of preparation. 1984; Annex A to OD 4.00 Environmental Assessment, 7. World Bank Business Warehouse database. As issued October 1989; Annex B-B4 to OD 4.00 Envi- a share of total Bank lending, direct environmental ronmental Policy for Dam and Reservoir Projects, projects accounted for 2.4 percent in 1993, 5.0 per- issued April 1989; OD 4.20 Indigenous Peoples, issued cent in 1996, and 3.4 percent in 2000. September 1991; OP 4.36 Forestry, issued March 1993; 8. World Bank 2000a. OPN 11.02 Wildlands: Their Protection and Manage- 9. India and China are major exceptions, owing to ment in Economic Development, issued June 1986; the size of their industrial and energy sectors. OPN 11.03 Management of Cultural Property in Bank- 10. Although the share of environmental lending Financed Projects, issued September 1986; and OP/BP rose in 2000 (from 1999), that was primarily due to 4.07 Water Resources Management, issuedJuly 1993. a sharp drop in other (primarily adjustment) lending. 45 Promoting Environmental Sustainability in Development By itself, that was not a sign of renewed emphasis on their treatment of the environment (World Bank the environment. 2000i). 11. The most recent effort (IDA 2001) does not 5. Only two of the CASs reviewed included envi- include information on closed projects, which is ronmental indicators: South Africa and Zambia. essential for an analysis of trends. Analysis carried out 6. Bank performance is comparable to that of by the Environment Anchor indicates that the value other donors, based on their own evaluations. See of environmental lending through nonenvironmental Annex A. sector projects through the 1990s was at least of the 7. These relations are complicated by the policing same order of magnitude as direct environmental function of the same units with respect to safeguard lending over the same period. policies, which often creates an adversarial relationship. 12. Cited in staff interviews and survey responses. 8. China has been one of the Bank's strongest coun- 13. Staff involved say there is still a long way to go. terparts on the environment and has made substan- 14. Munasinghe and Cruz 1995 and World Bank tial progress, with Bank support. 1997c discuss environmental policy issues that could 9. Programmatic lending includes Sector-Wide have an impact on the environment. Assistance Programs (SWAPs), Public Expenditure 15. World Bank 1993a, 1997c. A third review by Review Loans (PERLs), Poverty Reduction Strategy ESSD is under way. Loans (PRSLs), and policy-based budget support 16. In some cases, failure led to actions before the loans. Inspection Panel; in others, pressure led to a Bank 10. ESSD is currently reviewing how to better response during project preparation, as in the proj- incorporate environmental concerns into adjustment ects involving the Chad-Cameroon pipeline and the lending. Nam Theun dam in Laos. 11. The Advisory Panel concludes that "the Bank's 17. IFC adopted another approach, creating a performance overall in mainstreaming at the country Compliance Adviser/Ombudsman (CAO), who is able level has been unsatisfactory." to deal with issues similar to those brought to the 12. From interviews during country visits under- Inspection Panel but in a more constructive and less taken in preparation of this report. adversarial manner. 13. A background survey on incentives found that 18. The Advisory Panel believes "that the appro- task team leaders considered the mismatch between priate benchmarks for measuring performance should the Bank's OP 4.01-Environmental Assessment pol- be the Bank's own stated commitments, and the icy and the borrower's corresponding policies, regu- degree to which the Bank's response has been com- lations, and legislation the greatest constraint to mensurate with the agency and importance of the chal- implementing 4.01. lenge. By both of these measures, and particularly in 14. See World Bank 2000g for a complete discus- light of the failure to mainstream and evidence of sion of the efforts made and challenges encountered recent backsliding, the Bank's performance has clearly in this area. been unsatisfactory" (see Annex B). 15. The Lake Victoria project in Africa, a success- ful GEF project, did lead to some associated IDA Chapter 4 lending after the GEF project demonstrated definitively 1. The 2002 WDR on sustainable development the value of those activities. may address this issue. 16. See World Bank 1998b for more detail on GEF's 2. There was a small item for environmental assess- performance, which is not a topic of this evaluation. ments in Africa. Although the Strategic Compact did 17. Reviews of Bank projects since 1997 in the not provide additional funds for the environment, that power, energy, and oil and gas sectors have revealed "sector" shared in the subsequent cutbacks. that few projects have explicitly analyzed or esti- 3. Studies have shown, for example, that the costs mated potential greenhouse gas emissions. of environmental damage amount to about 8 percent 18. The strong country-oriented structure and the of GDP in China each year, and about 5 percent in difficulty of making loans to more than one country India. See Babu and Khanna 1997, Hommann and account for part of this reluctance. There have been Brandon 1995, Tata Energy Research Institute 1998, exceptions using grant funds, such as the riverblind- and World Bank 1997b. Estimates for other countries ness program in West Africa and several GEE-funded also suggest substantial costs. projects (Aral Sea, Lake Victoria, Maghreb Shipwaste 4. The last CAS Retrospective showed that only 16 Disposal, Caribbean Shipwaste Disposal). These sug- percent of CASs were unsatisfactory with regard to gest that innovative means could be found. 46 Endnotes 19. Unfortunately, a number of high-level envi- 22. This is also true of GEF funding. Some Bank ronmental initiatives and partnerships, while impor- staff interviewed stated that they were really work- tant in themselves, have reinforced the sectoral ing for GEF and doing GEF projects as the only way separation of the environment from other activities. to maintain their positions and get an environmental Many of these initiatives have created small, separately "foot in the door" of many country programs. funded units to carry out specific mandates, such as 23. Many environmental staff and some managers the Prototype Carbon Fund, or they carry separate follow their own commitment to the environment grant funding, such as the Montreal Protocol. Both despite the lack of rewards and incentives in the system. approaches fragment rather than integrate environ- mental issues. Chapter 5 20. There were increments to the budget overall 1. This is not to propose a one-size-fits-all in 1997 for safeguards activities, but after allocation approach, but appropriate inclusion among other to the Regions they were not earmarked and went into key priorities, with explicit, country-specific priorities general resources. It has not been possible to deter- worked out within the overall framework. mine how they were spent. 2. The Advisory Panel recommends "that defini- 21. This is not a criticism of donor priorities, but tive clearance authority on every project with envi- the need to respond to differing external priorities ronmental implementations should be centralized to makes putting together a coherent program within a ensure clarity and consistency in the application of country context more difficult. safeguard policies" (see Annex B). 47 REFERENCES Background papers for this study are identified ment Co-operation: Policy Issues and Gen- with an asterisk (*). eral Management. Helsinki. Flint, M., P. Balogun, A. Gordon, R. 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Washington, D.C. 51 OED PUBLICATIONS Study Series 2000 Annual Review of Development Effectiveness Agricultural Extension: The Kenya Experience Agricultural Extension and Research: Achievements and Problems in National Systems Bangladesh: Progress Through Partnership Developing Towns and Cities: Lessons from Brazil and the Philippines Financial Sector Reform: A Review of World Bank Assistance Financing the Global Benefits of Forests: The Bank's GEF Portfolio and the 1991 Forest Strategy and Its Implementation Fiscal Management in Adjustment Lending India: The Challenges of Development India: The Dairy Revolution Information Infrastructure: The World Bank Group's Experience Investing in Health: Development Effectiveness in the Health, Nutrition, and Population Sector Mainstreaming Gender in World Bank Lending: An Update Nongovernmental Organizations in World Bank-Supported Projects: A Review Paddy Irrigation and Water Management in Southeast Asia Poland Country Assistance Review: Partnership in a Transition Economy Poverty Reduction in the 1990s: An Evaluation of Strategy and Performance Reforming Agriculture: The World Bank Goes to Market The World Bank's Experience with Post-Conflict Reconstruction The World Bank's Forest Strategy: Striking the Right Balance Zambia Country Assistance Review: Turning an Economy Around Evaluation Country Case Series Bosnia and Herzegovina: Post-Conflict Reconstruction Brazil: Forests in the Balance: Challenges of Conservation with Development Cameroon: Forest Sector Development in a Difficult Political Economy China: From Afforestation to Poverty Alleviation and Natural Forest Management Costa Rica: Forest Strategy and the Evolution of Land Use El Salvador: Post-Conflict Reconstruction India: Alleviating Poverty through Forest Development Indonesia: The Challenges of World Bank Involvement in Forests Uganda: Post-Conflict Reconstruction Proceedings Global Public Policies and Programs: Implications for Financing and Evaluation Lessons of Fiscal Adjustment Lesson from Urban Transport Evaluating the Gender Impact of World Bank Assistance Evaluation and Development: The Institutional Dimension (Transaction Publishers) Evaluation and Poverty Reduction Monitoring & Evaluation Capacity Development in Africa Public Sector Performance-The Critical Role of Evaluation Multilingual Editions Assessing Development Effectiveness: Evaluation in the World Bank and the International Finance Corporation Appreciation de l'efficacite du developpement: L'e valuation a la Banque mondiale et a la Societe financiere internationale Determinar la eficacia de las actividades de desarrollo: La evaluacidn en el Banco Mundial y la Corporacion Financiera Internacional Cdte d'lvoire: Revue de l'aide de la Banque mondiale au pays Philippines: From Crisis to Opportunity Filipinas: Crisis y oportunidades Rebuilding the Mozambique Economy: Assessment of a Development Partnership Reconstruir a Economia de Mocambique www.worldbank.org/html/oed f*mm'1 TU*6 ViW*QLW BANK &loIg StretNW Vubx%wn1 v C 2W43 U S.A. 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