1tffW' 1999 I -t toward environmentally and socially sustainable development * 1999 T*M 3: TICE.':L D s A $ U P AWorld Free of Poverty East Timnor Indepenidence Leaderd Caills onp World Bank to F-eezeAld ~bout the World Bank Group Feature.. / ~~~~~~~~~~Boosting Adult Literacy in *Agric Jture Envri-onmet Poorest *Anli-Corruption Gender nrhn'j *Econom acs ~Heh Nwriin ..... *Education& a rainino Labo r & S or c iLOteeaP E-era~~~ 8 Mii~~j~~ Participationi index of eli To moo and Sub-TnvionmntoubtpicpKeiRedi DlrvCimates M hana Exodan mw~~~~~~~~~~~~~~m' -~~ l)f~~~ lands A fana ~EvironnAsst & (w,,batinn l)en-iiiIiGobalcnvirnmen eaaoas U I~ ~ ~ ~~~~~~~~Mntel rtoo (from President James 0. WilfeSohalrrs Gadres to a-a United ATE AE ~~jjjJ 2Nb-SpiecnialSsin"-rsCo ENVIRONMENTAL ECONOMICS and INDICATORS *MOVER VIEW ,aa 40ENviRONMENTAL INDICATORS RRO0 I&ENVIRONMENTAL VALUATION < ODENVIRONMENTAL PoLiCY 40 GREEN AccouINTINGRU00S Letter from the Vice President Environmentally and Socially Sustainable Development As the world's attention span gets shorter, the WVorld Bank faces the difficult challenge of trying to get people to think longer-term about the many dimensions of sustainable development. It is not easy, but in several respects we are making progress. WVe are extending our horizons to look at the risks posed by the continuing degradation of natural capital and the environment. There is a growing recognition within both the Bank and partner development organizations, that environmental considerations must be systematically factored into country assis- tance strategies and policy lending. The focus of environmental assessment, too, is expanding from a project-specific to a comprehensive sectoral or regional outlook. And we are paying more attention to meeting environmental objectives during implementation. The emphasis is on changing institutional behavior and performance to reduce poverty. In addition to the work of the Environment Department, the Environmentally and Socially Sustainable Development Network (ESSD) also includes social and rural development. One of the main objectives of our work on social development is to minimize and mitigate the adverse impacts that often accompany the Bank's development projects, such as resettlement associated with dam construction. The Social Develop- ment Department also addresses the social constraints in economic development, such as ownership, participation, civil engagement, and local capacity building. A major pillar of the Bank's overall agenda is support for community-based approaches and the involvement of local people and NGOs. All of the Bank's regional departments, many of its resident missions, and some networks hold regular NGO forums. NGOs are often the social actors who provide crucial information to the Bank in identifying development problems. On rural issues, we are increasingly taking a broad focus, as opposed to a narrow agricultural sector focus. The rural sector strategy focuses on the entire rural productive system. For example, the management of natural resources in sustainable production systems treats agriculture, forestry, aquaculture, and livestock as part of a larger system. Human capital develop- ment, infrastructure, and social development are integrated into rural development strategies and programs. Does the Bank's ESSD Network capture all the dimensions of sustainable development' Certainly not. But we are working with others in the Bank to broaden our impact. For example, we have just completed a new environmental strategy for the energy sector. As an institution trying to incorporate sustainability into all its activities, the Bank must be careful not to fund initiatives that bring people out of poverty very quickly only to put them back into poverty within a generation because we did not foresee the long-range draw-down of natural capital. We are on the right track in many places. In Papua New Guinea, for example, we have been looking at creating a conservation trust fund that would involve local stakeholders and use relatively small funds for conservation work. In Indonesia, we are looking at how to protect coral reefs by identifling the causes of loss and involving local communities. Regardless of the project or program, we must ask how sustainable development, environment, and social issues can sensibly permeate everything we do. Perhaps eventually we will be able to claim that all our efforts contribute to reducing poverty in ways that are environmentally and socially sound. This is a huge challenge, but one that together we are striving to meet. Jall Jo nson Environment Matters is a magazine of the World Bank Group. This 1999 issue is an Annual Review of the Bank's environmental work during fiscal 1999. Also visit the magazine on the Bank's Web page. Welcome to Environment Mafters... Environment and Socially Sustainable Development Network Managers Chair This issue, which serves as our annual review on the environment, looks back on the World Ian Johnson Bank's environmental work from July 1998 through this past June (our fiscal year 1999), and Environment Family highlights upcoming challenges and opportunities. Robert T. Watson Rural Family Alexander McCalla The overview article reviews major environmental activities in fiscal 1999 and describes the Social Family current effort to develop an Environment Strategy for the Bank. The second article describes Gloria Davis emerging trends in the Bank's environmental portfolio. Each of the Bank's operational regions has written an overview of the region's work for the Environment Matters past year, taking a close look at the accomplishments, lessons learned, and future challenges Editorial Committee within its own portfolio of projects. IFC and MIGA have done the same for their work. For AFR: Jean-Roger Mercier operational purposes, the Bank defines the world's regions as: EAP: Giovanna Dore ECA: Chrlstiane Kraus AFR-Africa LCR: Tom Lovejoy/Laura Tlaiye EAP-East Asia & the Pacific MNA: John Bryant Collier SAR: Richard Ackermannt ECA-Europe & Central Asia Carter Brandon LCR-Latin America & the Caribbean IFC: Elisabeth Culbard MNA-Middle East & North Africa MIGA: Harvey Van Veldhuizen MA-Soidh Ea SAR-South Asia Environment Matters is produced by the XVe also scanned the year's work in a series of cross-cutting thematic sections, many of which World Bank's Environment staff. are important inputs into the Environment Strategy Editorial & Production Team Poverty and Environment c'Nater Issues for Annual Review Issue Health and Environment Quality Assurance and Compliance Technical Editors Energy and Environment Global Environment and GEF David Hanrahan and Ken Newcombe Natural Resource MvIanagement Legal Environmental Issues Story Editor Forestry Sector Environmental Training Robert T. Livernash Photo Editor, Designer, and Desktop Publisher The World Bank Group Jim Cantrell The World Bank IBRD IDA lFC MIGA Editorial Coordinator international Bank International International Multilateral Anjali Acharya for Reconastruction Development Finance Investment & Development Association Corporation Guamntee Agency Production and Circulation Manager Jim Cantrell Estb 1945 Estfb 1960 Eseb 1956 Esfrb 1988 181 countries own, 160 members 174 countries 147 members Editorial Associate subscribe to its capital Kristine Schwebach Lends to creditworthy Lends at a favorable Assists economic ASsists economic brrowmgcomnries rae to etnercounmries devopmenr by d lopmestthmugh based on igh teal rates Aifia per capita GNP promotinggrowth loan guaLantees to ofeconomic return of less than $925 I inthe privatesector foreign investors Absut the Covers: Publications Inio: 202-473-1604 = Front Cover: General Inquiries: 202-473-3641 Dunes of the Sahara Desert, Corel Corporation Department Fax: 202-477-0565 Web address: htIp://www.worldbank.org j Inside Front Cover: Printed with soy ink on t 00o recycled e Graphic design, Jim Cantrell paper coeri 50%S recycled and totally chlorine free. Please recycle Inside Back Cover: Asian market, African fisherman, and sunset, World Bank Tne Wor l Bank C oup 181BHSteet NAV. Washington, D.C. 20433 contents ANNUAL REVIEW * 1999 Letter from the Vlce President, 1 Environmentally and Soclally Sustainable Development Overview 4 Overview Portfolio Review BFiscal 1999 was marked by continued progress towards reducing production Regional Reviews o ozone-depleting substances, creation of~ a Prototype Carbon Fund, Africa 12 strengthened partnerships in manv In the Africa Region, the emphasis is on areas, and work on a new Environment mainstreaming national and global environ- Strategy. mental concerns into Bank operations and building environmental management capacity in client countries. Thematic Reviews East Asia & the Pacific 16 Poverty and Environment 42 The East Asia Region is studying the impact of The Bank's work on poverty and environment follows a new broader definition of poverty that the regional economic crisis on poverty, with a emphasizes empowerment, security, and opportunity. special focus on the links between poverty and natural resource degradation. Health and Envlronment 44 Environmental health is a principal indicator of development and a major element in achieving the Europe & Central Asia 20 Bank's primary objective of poverty reduction. In ECA, the Bank is focusing on improve- ments in urban environmental management, Energy and Environment 48 improved water supply and sanitation, solid The Bank has recently completed a new environmental strategy for the energy sector. and hazardous waste management, and forestrv management. Natural Resource Management 50 Approaches to natural resources management will be a key component of the Bank's new Latin America & the Caribbean 24 environment and sustainable development strategy Containing urban pollution is a strong focus of Bank activities. An emerging issue in the Forestry Sector 54 region is disaster management. Outreach for consultation and partnerships is a strong focus of the Bank's work in the forest sector. Middle East & North Africa 28 Water Issues 58 In the MNA Region, the focus is on The Bank is increasingly internalizing envi-onmental issues as an integral part of water resources strengthening environmental institutions, policy development. increasing participation, improving natural resources management, and arresting emerging Quality Assurance and Compliance 62 pollution problems. The increasing emphasis on structural adjustment and programmatic lending requires some adjustments in the Bank's approach to safeguard pohices. The Bank is developing a cost-efective2 Global Envlronment and GEF 64 sthategy Bank isduce t udev inga cosefetivhea The Bank and the Global Environment Facility are partners in the effort to address critical global strategy to reduce the burden of ill healtheniomtaisu. associated with lack of water and sanitation environmental issues infrastructure and exposure to poor water quality. Legal Environmenftal Issues 68 The Bank's environmental law work is an important component of the Bank's comprehensive development agenda. Institutional Reviews Environmental Training 70 International Finance Corporation 36 The World Bank Institute (WBIF.N) facilitates a learning dialogue and disseminates innovative IFC is taking the lead in promoting a approaches to sustainable development. sustainable private sector. Back of the Book MIGA 40 All investments MIGA facilitates through its At a Glance 72 investment insurance guarantee program are What's New at the Bank? carried out in an environmentally and socially responisible iiianiner Environmental Publications 74 Mailing List 76 4<| e ~~~ $ by Roberlt T. Watson, Director, Environment Department ore than 1.3 bil- The Rio conference in 1992 gave improve the quality of investments, and h 8 7/ .lion people are international legitimacy to the impor- a range of targeted programs and 0 t /X/ g living in poverty tance of environmental issues for long- instruments have been introduced. V P7 around the world. term sustainable developmrent. Since =< \/ ffis For these people, then, the Bank and its parLners have Environment does not easily fit the develooment brings better access to worked with over 60 countries to help Bank's traditional definition of a service* such as education, health care, develop National Environmental Action "sector." Rather, it is the matrix in sicast ruct an, .also p res Plans and put appropriate policies, which activities of the various sectors and inFrastructure, and also promises investments, and institutions in place to (power, housing, transport, etc.) are emergence from poverty and opportuni- reduce the harmful impacts of growth embedded. A basic challenge continues ties for a better life for manv.~ Such and development. NVithin the Bank, a to be ensuring that those sectoral outcomes will be jeopardized, however, cadre of environmental specialists has activities are environmentally and if we ignore the ensvironmental conse- been developed, safeguard policies and socially sustainable through the applica- quences of economic development. procedures have been established to tion of the Bank's safeguard policies. 4 ENVIRONMENT MATTERS e 1999 Although the implementation of these progress has been made in addressing tal and social impacts as a first priority, policies is the responsibility of the task local air and water pollution issues than and help tackle climate change. Moni- managers, a Quality Assurance and in the global issues of climate change, toring of progress in implementing the Compliance Unit has been established desertification/land degradation, and strategy will be done using indicators in the ESSD Vice Presidency to provide loss of biological diversity. that focus on development outcomes. oversight of the safeguard policies and support to the regions. Key activities Over the years since Rio, the world has Some of the key concepts of this strategy include helping to review quality at gone through significant changes. In a are already being implemented. The cntry and quality of supervision, relatively brief time-span, the structure Bank's Board of Directors has approved development of a monitoring database, and process of government has changed the establishment of a Prototype Carbon working with the regions on the difficult in many countries, with growing Fund (PCF). The PCF, which has a cap issues of compliance for programmatic decentralization of power, and there has of $150 million, is designed to operate lending, and training and awareness. been a dramatic expansion of the private like a mutual fund and is intended to sector's role. Globalization has arrived, pilot carbon emission reduction activi- The major environment/development/ in terms of communication, information, ti w f ot fh lqj~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ties within the framewvork of two of the poverty challenges vary from region to and the increasingly free flows of . . . region. Key issues include: East and capital, goods, and people. Over the Prexibil mechanis the to South Asia-the health and economic years, the Bank's role and activities have will enter into agreements with "host" impacts of poor air and water quality, evolved, but there is now a need for loss of natural forest cover, and scarcity taking stock, learning from past countries for each project By using of water; Afr-ica-the high total burden experience, and looking forward to cleaner technologies and idependent of disease due to environmental causes, address the challenges of sustainable certification and verification experts drylands productivity, watershed development. In order to do this, the funded by the PCF, greenhouse gas management, and sustainable forest preparation of a new Environment reductions would be created and then management; Latin America and the Strategy for the bank has just begun. distnrbuted to the investors, or "partici- Caribbean-urban environmental pants," of the Fund on apro z-ata basis. quality, protection of ecological systems, The emphasis is turning from prevent- Emphasis will be placed on renewable and the environmental performanice of ing harnii to incorporating environinenl- energy projects. It is envisaged that the industry; Eastern Europe and Central tal and social values into the everyday PCF will initially be open for subscrip- Asia-maintaining water and sanitation operations of the major sectors in which tion from approximately November infrastructure and managing industrial the Bank invests. A key sector where 1999 until February 2000. hotspots; anzd Mlliddle East and INorth, evident progress has been made is Africa-rapid and uncontrolled urban- energy. Fuelfor Thought: An Environ- A central instrument for implementa- ization, worsening air pollution, poor mental Strateg for- thze Energy Sector, was tion of the strategy is the Energy- sanitation in urban centers, and scarcity endorsed by the Bank's Board in July Environment Review (EER). EER is of water. 1999. This strategy, which builds upon intended to cover the whole energy existing policies and practices, focuses chain and the range of its environmental Strategic Evolution on better understanding of policy and impacts (global, regional, and local). The Bank and its clients have made lending priorities at the nexus of energy These reviews will help map out Bank considerable progress in addressing and environment and will help to shape Group assistance on the supply and some environmental problems. Yet, country-specific assistance programs. It demand side of the energy sector, as well considering the magnitude of environ- involves three key instruments: policy as pollution avoidance and control in mental issues, the impact of these assistance, knowledge management, and areas such as efficiency, conservation, programs on broad environmental support for environmental best practice. rehabilitation, and decommissioning. A trends in the developing world has been Implementation of the strategy wvill recently approved initiative is the Bank- less than was hoped for at the time of create a framework for environmentally GEF Strategic Renewable Energy Rio, and the achievements of various sound energy sector development, Partnership, which will increase the scale programs have been mixed. Greater address local and regional environmen- and effectiveness of Bank-GEF joint ANNUAL REVIEW -JULY 1998-JUNE 1999 (FY99) 5 The development of an environmental strategy is taking place in the context of a much larger debate about develop- ment within the Bank.. The centerpiece of that effort is the Comprehensive Development Framework (CDF). The CDF is built on four principles: + The country, not assistance agencies, should own its development strategy; * Governments should build partnerships with the private sector, NGOs, assistance agencies, and civil society to define and implement their development needs; o Governments and their partners should articulate a long-term collective vision of needs and solutions; and + Structural and social concerns should be treated equally with macroeconomic and financial concerns. activities for the market penetration of Three principles are guiding the based on agreed common objectives renewable energy. development of the strategy: and comparative advantages. Links with the Comprehensive Development Building an Environment . Build on the Bank's mission tofight Framework should be carefully Strategy poverty and support development. The explored (see Box, above). The preparation of the new Environ- focus of development is people and ment Strategy is just beginning. The their quality of life. Environmental The CASE Program (Country strategy will (a) outline an agenda for concerns are an intricate part of this Assistance Strategy and the Environ- selective focus of Bank-group efforts development challenge; consequently, ment) is an example of ongoing work to and resources in high-priority areas the Bank's environmental strategy mainstream environment and natural where there is a strong potential for real should be people-focused. It should resource issues at the Bank, which will build on the close links between be incorporated into the strategy. The impact on the local, regional, and global impact on the lalregnal and global environmental objectives, poverty goal of the program is to develop a levels; (b) build awareness and under- standing of the poverty-development- alleviation, and development. broad approach and analytical frame- e* Target outcomes. There is growinlg work for dealing with environmental consensus and recognition, both within issues in the country assistance strate- and client countries; (c) begi to define the Bank and partner development gies that can be replicated across long-term goals and short- and me- organizations, that the environmental countries and regions. This work will dium-term performance benchmarks, agenda should be more closely linked lead to a best-practice document. which shift the focus from inputs and with the overall development objec- Training material for country teams will processes to impacts and outcomes and tives of the developing world, and that emphasize the lessons learned in the provide a transparent basis to evaluate a shift in focus should take place from development and application of the the Bank's environmental performance; inputs and processes to impacts and framework. and (d) promote a long-term partner- outcomes. ship with client countries and other * Be selective and buildpartnerships. The Strengthening Partnerships actors as part of the Comprehensive Bank cannot directly influence all The Bank is already investing substan- Development Framework (CDF). The environment/development issues in its tially in fostering partnerships in a Strategy, whose development will entail client countries. It should focus only number of areas, particularly in the an extensive external consultative on those areas where it can be most forest sector. For example, the Alliance process with key stakeholders, is effective in achieving desired environ- for Forest Conservation and Sustainable envisaged to be ready by the middle of mental outcomes. Selectivity calls for Use (originally the `WWF-Vi?orld Bank the year 2000 and will be carefully an assessment of experience in Alliance), in which the Bank and WNAWNF coordinated with ongoing forest and effective and less effective past are the managing partners, pursues water policy implementation reviews. interventions and on partnerships measurable targets for forest conserva- 6 ENVIRONMENT MATTERS * 1999 tion and management worldwide. of the Global Mechanism to facilitate ozone-depleting substances (ODS), Another important partnership is the implementation of the Convention to including sector approaches in China, Forest Alarket Transformation Initiative Combat Desertification by mobilizing auction programs in Chile and China, (FMTI), which includes the CEOs financial resources; and water sector and the first concessional loan program Forum for Forests, Forest Trends, and the activities such as the Global Water with Multilateral Fund and GEF Concession Management Program. In Partnership, Regional Seas Programs in funding - in cooperation with the addition, the Bank has stepped up its the Baltic, Red Sea, and Gulf of Aden, government of Thailand. participation in international forums and the Africa Water Resources Manage- and interactions on forest issues. ment Initiative. In fiscal 1999, the Bank delivered to the Global Environment Facility Council Beyond the forestry sector there are The Global Environment projects with total GEF funding in numerous examples of vital new The Bank continues to work with excess of $250 million, the strongest ever partnerships, such as the Bank-UNDP- countries to help them deal with global annual performance by the WBG's UNEP-GEF partnership on Land- issues and to meet their obligations GEF program. A key new element of Water Degradation in Africa to address under international conventions. the Bank's GEF program is the GEF the degradation of land and water Dunrng the last year a number of AMedium-Size Pr-ojects (MSPs) Window, resources in Africa and the associated innovative projects were developed to which grants up to $1 million to expand adverse impact on global environmental assist developing countries in meeting partnerships with NGOs under an values; the Bank-IFAD-UNDP their obligations to the Montreal expedited review and approval process. partnership on the facilitation committee Protocol by phasing out the use of POLLUTION PREVENTION AND ABATEMENT HANDBOOK 1998 The Pollution Prevention and Abatement Handbook 1998 compiles over a decade of experience in the World Bank about environmental management, pollution control and prevention technologies, and pollution manage- ment practices. This updated version of the BankCs 1988 publication Environmental Guidelines was approved by the Bank in late 1998 and is now formally pubtished. The Handbook is referenced in the environmental Opera- tional Policies used to prepare World Bank Group projects. Though primarily designed to help Bank staff in the preparation and implementation of Bank Group operations, the Handbook has become an international point of reference for investors, other development agencies, commercial banks, and insurance cornpanies. The Pollution Prevention and Abatement Handbook 1998 compiles experience and advice on implementing practical policies, together with industry-specific guidelines for improving performance. It has been prepared by environmental specialists in the World Bank Group, with the support of a wide range of organizations and individuals. The Handbook includes: * A summary of the key policy lessons in pollution management derived from a decade of practical experi- ence; + Examples of best practices used to implement the policies; and + Detailed guidelines on nearly 40 industries, which represent state-of-the-art thinking on how to reduce pollution emissions and provide numerical targets as well as achievable maximum emissions levels. The Handbook reflects changes both in technology and in pollution management policies and practices. It focuses attention on the environmental and economic benefits of prevenftng pollution and emphasizes cleaner production and good management techniques. The Pollution Prevention and Abatement Handbook 1998 is available on the World Bank web site, www.worldbank.org. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 7 The Bank's Evolving Environmental Agenda-Achievements and Future Challenges T he Bank's environmental agenda has Another 931 projects-nearly 33 percent of Bank been gradually evolvTing during the past lending-were classified as Category B, requiring a decades from a "do-no-harm" policy to more targeted or limited environmental analysis. targeted environmental interventions and an About 55 percent of the portfolio had no environ- increased effort to integrate environment into mental impact and, therefore, required no environ- sectoral and macro policies and operations. mental analysis (Category C). From Do-No-Harm... Active Bank Projects, by EA Category, 1990-99 To mitigate the potential adverse effects of the Bank's investment portfolio on the environment 350 and -vulnerahle populations, environmental 300 assessment procedures and safeguard policies 25 have been systematically applied to Bank 200 projects. In many cases, environmental assessments have 50 led to better project design and environmental o- - danagementplanshavesigntroancd enironmenl 1990 19S1 1992 1993 1994 1995 1996 1997 1999 1999 management plans have introduced Improve- Year ments in project implementation. For example, 3 Category "A" E Category "B" C Category in the Ghana Thermal Power Project, the environmental assessment recommended replacing the watcr cooling systcm, which In fiscal 1999, of the 278 new Bank projects, 10 would impact fisheries, with an air tower were classified as Category A and required a fill cooling system. environmental assessment. This represents 3.7 percent of all new projects, or over $1 billion in Dun'ng the period from fiscal vear 1990 to . . Durig th perod fom isca yea 199 tolending. An additional 99 projects-35 percent of fiscal year 1999, 186 projects-about 12 percent all new pro ects, or $7.8 billion in lending-were of the Bank's lending portfolio (by lending oj amount)-were classified as Category A, which classified as Category B and required a simpler requires a full environmental assessment. environmental analysis. Regional Distribution and Category"A" Projects in FY99 (Percentage shares equivalent to dollar totals) Proj. Cost Proj. Cost AFR Country Project Name $m Loan $m Country Project Name $m Loan $ SAR 5% Ghana Trade Gateway and Inv. 50.5 50.5 Bangladesh Road Reh. Maint. III 528.5 273.0 25 F ~~~~~~~~~~~~~~Proj. Cost F' ~~~EAP Di. :=. ,.; .. . )necessarily yield desirable outcomes Capacity building-through non- unless a serious effort is made to closely lending services, policy advice, and ECA 28% link projects, non-lending services, and assistance through regional and interna- 28% sector work to these outcomes and to tional programs-has contributed to ensure expected results and performance fostering better environmental steward- As an implementing agency for the during implementation. The Bank is ship and often to positive results on the Montreal Protocol (MP), the Bank making an increased effort to reorient its ground. The Bank's support to the supports programs in 20 countries. It focus from simply inputs and processes global phaseout of leaded gasoline and has been successful in facilitating the to achieving tangible environmental to regional lead phaseout programs in phaseout of 70 percent of the total mission tht poverty A common Latin America, Europe, Central Asia, amount of ozone-depleting substances understanding and aoreementr ith our and the Caucasus have accelerated (ODS) targeted under the MP This clients and partners on fundamental national action and resulted in improve- target has been reached with only 40 objectives and joint efforts toward these ments in urban air quality and health percent of the funds at a cost of less than goals are essential for a better environ- conditions. The Metropolitan Environ- $2 per kg. mental future for the 21'" Century. ment Improvement Program in Asia has built local capacity to address urban One of the major achievements in the This articte was prepared by Alagda Loveiand environmental challenges. last year was the long-debated and Aiiiati Achaya of45 he Environment Department, ANNUL202 458 5298, fax 8202N 477 0565 ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 1 A F R Africa Region l A frican experts and decision- The Strategic Framework proposes the makers increasingly acknowl- adoption of innovative "non-project" edge thatenvironmental models such as land conservancies, degradation is a major factor conservation easements, and the T - _ I I . liiii I s constraining economic develop- purchase of transferable development ment in Sub-Saharan Africa, and that rights, which can help provide land- reversing this trend is an essential holders with direct and concrete _ - l * ingredient in any poverty alleviation incentives to conserve biodiversity. policy. Many of these principles and ap- proaches apply to improved manage- - i . S i i l - l * | Helping African clients reverse environ- ment of other natural resources as well, mental degradation continues to be a with particular synergies to be achieved key focus in the activities of the Africa between biodiversity conservation and Region. During fiscal 1999, as in improved forest management. previous years, the emphasis has been on (a) ensuring that national and global Using Environmental Assessment. For the environmental concerns are past decade the Bank has been using mainstreamed in Bank operations; (b) Environmental Assessments to system- continuing to build capacity for envi- aticallv screen its activities. The Africa ronmental management in client Region, in cooperation with the Legal countries; and (c) effectively managing Environmental group and other sections the environmental portfolio. Here are of the Bank, drafted several key guid- some highlights of the past year's ance and analytical documents that will l m activities. be published and disseminated during 4 4 4 t Mainstreaming ~~~~~~~~fiscal 2000: a handbook on the manage- Mainstreaming the Environment ment of EA in the Africa Region; an Biodiversity. In fiscal 1999, the Africa analysis of EA legislation in the 22 Sub- ½ Reg~~~ion publse taegcFaeok Saharan African countries that have for Biodiversity Conservation in Sub- adopted such legislation; and a compila- A 0>:g, S t; <: 0000 ta - n Saharan Africa. Since habitat loss and tion of experience with environmental fragmentation are the major threats to assessments in the Africa Region. biodiversity, the report emphasizes the I ¾ 0 :f . ...... _ f ;0i=00 0 w central role of land use in biodiversitv Of the 58 projects that went to the conservation. It proposes a landscape Board in fiscal 1999 (for total lending of management approach that integrates $2.25 billion), one requires a full different forms of land use over large environmental assessment and 17 areas, including both core protected require a simpler environmental areas for sites of highest biodiversity analysis. importance and incorporating biodiversity conservation methods Capacity Building for XVf 0.;within the prevailing land uses in other Environmental Management areas. Another key point is that Environmental Assessment Capacity biodiversity conservation can provide Building. The East Africa Office of the mportant benefits to landowners and WNorld Conservation Union (IUCN), local communities. It also represents an the African Ministerial Conference on environmental service that other Environment (AMCEN), UNEP and i;- -.. 0stakeholders including the interna- the Economic Commission for Africa < X ; g:d (;=. 5. tional communit,-should be prepared (ECA) hosted a stakeholders consulta- 2 to support financially. tive workshop in Nairobi, Kenya, in 0 July 1998. The Bank facilitated the 12 ENVIRONMENT MAT`rERS - 1999 is supporting the development of core environmental institutions through a grant from the Institutional Develop- ment Fund (IDF). Many African countries have completed Livestock ion NEAPs but have been unable to core Aficn orin gou pesntd th Ancn esouthwestern implement them because of political and Chad.deconomic crises: Rwanda, Burundi, Congo, Democratic Republic of Congo, and Sierra Leone are examples of this situation. In other cases, lack of political commitment has hampered the effective implementation of NEAP policies and wonorkshop.nStaklehondher fintero mt Snow have completed and approved programs (Cameroon, Kenya, Tanza- Saharan African countries ,aincluding National En ronmental Action Plans nia). members of the academic community (NEAPs) or equivalents. Five nations and public and private sectors (Angola, Chad, Somalia, Sudan, and C6te d'Ivoire has recently expressed a pated in the preparation of an African Liberia) have not yet started, while strong political commitment to environ- EA Caacit Builing ctionPlan The NEAPs are underway in four nations mental management and an Environ- core African woRkiong grouppedsenteda an(the Central African Republic, Djibouti, mental Support Program is under and discussed a draft Action Plan at the Gabon, and Zimbabwe). However, due preparation with Bank funding. The aniual min etiig of the incternationeal to internal conflicts, the NEAP prepa- Cte d'voire ESP owill emphasize Association for Impact Assessment ration processes in the Central African d5centralization, capacity building, and (IAIA), in Glasgw, Scotland, in June Republic and Djibouti have been private-pubhic sector partnership 1999' The topic will be on the agenda at suspended. During the IDA-li development for pollution management. the next AMCEN meeting in the fall of implementation period from fiscal 1997 1999, which will be followed by a to fiscal 1999, NEAPs were completed Local Environmental Management. For donorkshropindableri theawinte. The oand approved for Senegal, Mali, Ni er, the third consecutive year, the Bank is doosigE rontoaddres Ningter winelta actvel imlmnigterNAsErpanUinnhrsasrn draft Action Plan recommended and Togo. Of the remaining countres, providing mana s upport ot treparainiong networking andinstitutnthe Gabon NEAP is nearly comipleted regional MELISSA initiative (Manag- bauinln,g ang and istatcou and is expected to be approved before ing Environment Locally in Sub- systemtic fr the end of 1999. Zimbabwe has adopted Saharan Africa), cofinanced by the The Africa Region facilitated several an ncremental approach, doing itsEo n nS subregional and national EA capacity environmental planning district-by- Knowledge management is the focus of building activities, including one district in order to build up a national the network, which now links more than general EA workshop for seven WVest plan. 500 practitioners and decisionmakers in African countries; a workshop on EA in tharan Afihcat the web and the mining sector for Mali, Mauritania, Currently, seven countries (Benin, Ehe (http://www.melissa.org) is constanyt Niger, and Burkina Paso;, and one Gambia, M\adagascar, M/alawi, updated and improved. An external workshop in Nigeria thiat focused on Seychelles, Uganda, and Zambia) are evaluation is being conducted by the using EA to address Niger Delta actively implementing their NEA-PsEuoenUi,adthrisatog pollution issues. Four workshops are in through Bank-financed Envi1ronmental possibility that a second phase of preparation in Mozambique, Chad, Support Programs (ESPs). Other funding wvill allow the regional initiative Cameroon, and Senegal. There is a countries are implementing their torah a more mature and sustainable systematic follow-up xvith trainees after NEAPs without Bank assistance, or by stage. teworkshops. incorporating support for envionena management in components of other The decentralization of government Nati'onal Envir_onmental Action Planni'ng. Bank-financed programs. In some cases authority is noticeable in many countries Most Sub-Saharan Afirican countries (Guinea, Senegal, Tanzania), the Bank in the region, both at the urban and ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 13 rural level. Environmental management Projects Active during FY99 with strong, showing 15 ongoing proposals is increasingly a dual responsibility of Significant Environmental Objectives while 21 GEF projects are active. both central and local governments. Institutional MELISSA staff are increasingly Pollution The dialogue with Sub-Saharan African meeting with and advising officials of rb. Ev. Mgt. countries on global issues is steadily newly created local governments. clX 29% developing and is increasingly becoming a regular part of the Bank's dialogue. As Environmental management capacity - part of the process of mainstreaming building. The MIELISSA coordinator global issues arid GEF operations in tlhe has also been instrumental in bringing Region's assistance strategy and work togcther environmentally rclatcd Natural Re program, the position of Global Envi- initiatives, such as NESDA (Network Rural Env. Mgt. ish P ronment C oordinator has been estab- for Environment and Sustainable 46% lished in the region. Development in Africa), the EIS Secretariat, and the nascent African EA tion and sustainable use of medicinal Recognizing that reducing land and practitioners network. Single focal plants (see Box, page 15). water degradation is crucial to Africa's points for environmental management sustainable development, the GEE are being created in African countries to GEF-financed Projects: The global partners agreed in March 1999 to maximize the potential synergy among environment operations portfolio develop an itegrated land and water regional and subregional environmental supported by the GEF is still growing program. Through its three implement- initiatives. The World Bank facilitates rapidly in Sub-Saharan Africa. In fiscal ing agencies, the GEE has so far this process with a long-term view to 1999, seven additional projects submit- invested over $500 million in projects speed up the creation of sustainable ted by the Africa Region have been that address the issue of land and water constituencies at the field level. approved by the GEF Council as well degradation in Sub-Saharan Africa. The as the first four GEF Medium-Sized Africa Region is committed, with the Portfolio of Environmnental Grants (MSPs). MSPs represent an support of the GEF, to explore ways to Portfojee of Environmental important mechanism for broadening integrate biodiversity, climate change, Projects and diversifying Bank support, enhanc- and international waters aspects towards ,Vatu;6ral Resou;rce Management: Client ing stakeholder participation, and the common objective of reversing land countries have continued to implement engaging a wider range of partners. For degradation and loss of productive NRM projects from previous fiscal example, the Kibale Forest Wild wetlands while accruing global environ- years. Biodiversity, soil conservation and Coffee Project in U,ganda is support- ment benefits. forestry management were the most ing an alliance between the private important themes in the portfolio. sector Coffee Trade Federation and the In fiscal 1999, the Africa Region also Several new initiatives are getting Uganda Wildlife Authoritv to improve promoted new financial instrumiienits started in fiscal 1999. In Uganda, for the protection and management of the using GEF resources, including the example, there is a new capacity build- Kibale National Park by capturing an GEF/Adaptable Lending Program for ing project for protected areas manage- international price premium for "envi- the protected areas management project ment (see Box, below), while in Ethiopia ronmentally friendly" coffee. The global in the Ivory Coast; the natural resource a new project will focus on the conserva- environment operations pipeline is also management project in Ghana; and the Learning and Innovation Loan for the medicinal plants project in Ethiopia. Such projects bring more flexibility and adaptability, promote innovation, and In Uganda, a three-year project focusing on Institutional Capacity Building for build knowledge and experience to Protected Areas Management and Sustainable Use started in March 1999. Its Africa Region is now increasing the objective is to establish effective institutional capacity in the public and private identification of GEE proposals that are sectors for strategic planning, program development, and implementation, with the fully integrated in sector activities such aim of restoring an environmentally sustainable nature-based tourism sector. It will provide assistance to the Ministry of Tourism, Trade and Industry, to establish a as agriculture, forestry, water, transport supportive policy and regulatory framework; to parastatals such as the Uganda and energy. Wildlife Authority, the Uganda Wildlife Education Center, and the National Com- mission for Antiquities and Museums, to preserve and develop the natural and Transboundary activities: The Bank is cultural assets on which tourism is based; and to the private sector, to build profes- currently funding two portfolio projects sionalism and enhance the quality of the tourism product. The project represents with cross-border elements-Commu- an essential first step towards a major investment project, with well-defined targets nity Wildlife Management (Burkina for institutional capacity and triggers for moving on to the investment phase. In Faso and C6te d'Ivoire) and effect, it followed an APL (Adaptable Program Lending) approach prior to an APL Transfrontier Conservation Areas instrument being put in place. (Mozambique, South Africa and Zimbabwe). Several other projects are 14 ENVIRONMENT MATTERS * 1999 Ethiopia In Ethiopia, the Conservation and Sustainable Use of Medicinal Plants Project aims to support the conservation, management, cultiva- tion, and sustainable utilization of medicinal plants for human and live- .j./ stock health in Ethiopia. The project will strengthen the capacity of the ,public and private sectors in Ethio- pia to provide safe, efficacious and affordable health care employing locally available medicinal plants. In doing so, it recognizes the signifi- cant contributions traditional knowl- edge and cultural heritage can make to integrated rural development. Specific elements include (a) the establishment of a medicinal plant conservation policy;, (b) support to mn n o farmers to adopt new methods for Baobob tree. Gumeln northern Nigeroa cultivating medicinal plants; (c) in- tegration of traditional health sys- under preparation. More broadly, the being pursued through the development tems into the government's formal Bank is supporting several major of strategic environmental management ealdthsterm pand ()ath incresasng initiatives aimed at supporting environ- frameworks and other analytical work to endinumer panertiation, ind rn esearh rmentally sustainable land and natural enable South Africa, Mozambique, and and establishing responsive link- ages among researchers, exten- resorce managementaontan tem Swaziland to harmonize and coordinate sionists, farmers, traditional heafth scale that spans national borders. This development across their common practitioners, and the primary health includes both shared water bodies and borders to ensure environmental care system. The project will focus terrestrial ecosystems. For example, sustainability. This includes establishing on the contribution women play in environmental management proects for multisectoral protocols on key environ- administering home health care and 1ake Victoria and Lake Malawi support mental issues such as water manage- in income generation, and in estab- research, monitoring, and cooperative ment, protection of watershed forests, lishing incentives for sustainable action among the riparian states to safeguarding against the cumulative private sector/NGO involvement in reverse ecological degradation that environmental impacts of industrial and the production and marketing of ef- threatens both the economic and urban development, cooperation in the fective and affordable phytomedi- biological values of these unique lakes. management of transfrontier conserva- cines. This GEF-funded project will Under the Maputo Corridor and tion areas and fisheries, and facilitation complement IDA and bilateral do- Lubombo Spatial Development and promotion of ecotourism. rnor-financed programs for the de- Initiatives, ecosystem management is velopment of forest and non-forest production systems that are environ- mentally and socially sustainable, and for the management of pro- tected areas with the involvement of local residents. The research and information management compo- More from cyberspace nent wfill provide a systematic docu- mentation and evaluation of threat, The 'Best Practice" Afr ica Region Web site contains information on the environ- rarity, and demand in relation to mental program at: http.//afr.worldbank.org/aft2/environ/rrs-env.htm medicinatly valuable plants that will be unparalleled in the East Africa re- For more about MELISSA, see http:llwww.me1issa.org gion in terms of its scope and For more about the Table Mountain Project, look at http:llWwwwterrarnare.co.za/ comprehensiveness. tmp/default.htm. This article was prepared b) Jean-Roger lercier of the Africa Region, (202) 473-5565, fax (202) 473- 8185. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 15 EAP pEast Asia and Pacific Region ast Asia's economic success In rural areas, rapid loss of natural over the last few decades has forest cover, scarcity of water, increased jI ! il I l lguaranteed neither uniform pressure on fisheries, and eroded soils l ll I ! ! ~~~~~reductions in poverty across have immediate negative impacts on * l ! ! ! ! ! * * l _ economies nor a healtlhy env'-I income and wvelfare of the more eco- I "! I " * * ronment. Further environmental nomically vulnerable, who have the 1! ! * ! ~~degradation wiLt clearly jeopardize highest direct dependence on the prospects for continued growth in the environment for both sustenance and region. The World Bank estimates that livelihoods. Furthermore, in the long i - l ~0 - -the region's costs from environmental run, the current trend toward degrada- degradation are above 5 percent of tion of key natural resources could annual GDP, and in China may be as prevent agriculture, forestry, fisheries high as 10 percent, with the poor and tourism from playing potential key suffering most from the consequences of roles in rural development, both directly environmental problems. as sources of livelihood and income for rural people, and indirectly through the Initiatives to protect the environment supply of inputs to -value-added would enhance the quality of life for activities. Asian people, especially for those most disadvantaged. A degraded environ- The realization that the economic costs . -- ~~ment adversely affects human health of environmental damage could and threatens the livelihoods of the rural ultimately compromise the efforts of the 9 m ~ S and urban poor, thus also exacerbating last three decades to improve living inequity in the country. Throughout standards in the region has prompted Asia, poor people living in urban areas efforts throughout East Asia to consider are at risk from air pollution caused bv the complex links between economic increasing traffic congestion, water development and environment. The pollution from untreated domestic and economic crisis has put some of these industrial waste, and ineffective waste efforts in jeopardy At the same time, it :00 001; management. It has been estimated that has presented an opportunity to re- the cost of poor air quality in 11 Chinese introduce long-term development goals, cities could including a proper balance between people and env.ironment, in the devel- amount to as g p much as a opment plans of East Asian countries. fifties inomte, Responding to the Crisis andthat' incoe The East Asia Environment and Social Bhumpoi~ ~ ~ ~ ~ ~ ~~~~~~~~ ~n thatvir Jhilnd Bangkok the Development Unit is preparing a high concen- follow-up study to the January 1999 tration of discussion paper entitled Environmental vehicullar Implications of the Economic Crisis and emissins can Adjustmnent in East Asia. This folloxv-up causeioas many study assesses the medium- and long- as 5,000 term impacts of the crisis on natural premature resources extraction and degradation. It premature considers the impact of the crisits on deathscos z annually ~~~~~~~~~~~~~~~~~~~poverty issues, with a special focus on the links between poverty and natural resource degradation. Bhumpoi Reservoir, Thailand. 16 ENVIRONMENT MATTERS * 1999 Voices from the Village - Coastal Resources Management in the Pacific Islands People in the Pacific Islands depend heavily on the marine life of coastal waters for food and income. Coastal areas, however, are facing many challenges. Popu- lation growth and the need for cash income have led to the overexploitation of fish and shellfish, while lagoons, coral reefs, and shores are threatened by pol- lution. Furthermore, the governments of most of the Pacific Islands do not pos- sess the institutional capacities to carry out the integrated efforts needed to deal effectively with threats to coastal resources. In 1998, the Bank sponsored a six-month study of community perceptions of coastal resources management in 31 coastal communities in five island nations: Fiji, Palau, Samoa, Solomon Islands, and Tonga. Using interviews and a ques- m tionnaire, the study attempted to uncover the perceptions of local groups re- garding coastal resource trends, the need for extemal assistance, and lessons learned from establishing marine sanctuaries. The aim of the study was to help the region's coastal managers understand the factors that contribute to suc- cessful management of coastal resources. The study produced useful insights and some unexpected findings. For example, purely centralized or purely community-based systems are unlikely to be suc- cessful in addressing the challenges facing coastal resources in the Pacific. Rather, comanagement approaches capitalizing on each partner's comparative advantage may be needed. Even more important, the study proposed an inno- vative approach to coastal resources management that would rely heavily on , the perceptions of the coastal communities. Attempting to aggregate the overall of the Department of Environment and industrial production has fallen, effect of the crisis and related policy Natural Resources has suffered a 25 pollution intensity may well have reforms on the enTironment is not easy. percent mandatory reserve on all increased. The effect of the combination For example, it is difficult to isolate expenditures other than personnel and of these two phenomena on aggregate impacts that result specifically from the debt service and the suspension of tax pollution loads is not clear. Further- crisis. However, a number of prelimi- subsidies to government units. The more, financial constraints of private nary observations are worth noting government of Korea's environmental and public sector companies might regarding changes in budgetary alloca- budget shrunk from 2.8 percent of increase the reluctance of governments tions for the environment and changes GDP in 1997 to 0.3 percent in 1998. and environment agencies to comply in environmental trends. These changes may lead to fewer with environmental standards. investments in conservation and In most nations in the region, budgetary protection activities, cutbacks in O&M The impacts of El Nino, forest fires, allocations for the environment have budgets for industrial and municipal and the 1998 drought have made it been reduced, but there are important treatment facilities, and delays in more difficult to understand the differences in the precise nature of these investments in capital renewal and consequences of the crisis on natural cuts. In Indonesia, environmental cleaner technologies. resources. Many simplistic scenanros agencies have generallv undergone have not been realized, including the substantial budgetary cuts. In Thailand, While a large number of industrial theory that natural resources degrada- budgets have also been reduced by facilities have closed down, those tion would worsen as a result of intense about 20 percent, especially for pollu- remaining in production do not neces- reverse migration from urban to rural tion control and energy conservation, sarily have the same resources to areas, that the crisis would increase although some agencies have not been continue to operate their pollution encroachment into protected forest affected. In the Philippines, the budget control equipment. Hence, while areas, and that it would increase ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 17 exploitation of marine and freshwater The Environment Portfolio Projects Active during FY99 with resources. Coastal and mangrove Throughout the crisis, the World Bank Significant Environmental Objectives resources have been threatened more by has continued to invest in environmental \nstitutional domestic and industrial effluent than projects and environmental components N P from additional fishing pressure. Often of projects throughout East Asia. Ratural En. Mt r\ Pollutions the crisis has merely heightened pre- During fiscal 1999, the Bank launched 31% 55% existing trends. I0 new operations. Many of them embody the principle of mainstreaming In the current context, priority is the environment into lending operations rightfully given to restoring growth to by promoting capacity building of reverse the decline in personal and environmental institutions, decentraliz- national incomes and continue the battle ing decisionmaking and management of GEF/MP against poverty At the same time, the natural resources, and establishing 10% recovery programs provide an opportu- effective public-private partnerships. nity to remove environmentally harmful for Thailand have included chapters on subsidies, to promote competitive gains The East Asia Region has the largest the environment. through energy savings and resources number of urban development projects optimization, and to create a framework in the Bank, with a strong focus on In the area of natural resources manage- for implementing positive environmen- urban environmental improvement ment, EASES has recently completed a tal fiscal incentives. As growth resumes, through support for water supply, 10-year retrospective of NRM experi- the choice should not be between sewage collection and treatment, solid ence in the Region that will help environment and development, since waste and traffic management, plus formulate a medium-term NRM both are needed. The challenge is to institutional development and capacity strategy (see Box, page 17). make the recovery work for the environ- building to improve the framework ment, so that the financial crisis may be within which urban planning and Portfolio Overview remembered as a w-indowr of opportunity investment decisions are made. Further- The Philippines LGUs Urban Water for improved environmental equality in more, EASES is working actively to and Sanitation Project improves East Asia. green the Country Assistance Strategy urban environmental conditions and other formal and informal sector through creation and upgrading of In response to the economiic cnrsis, the activities. For the first time, Bank sustainable water and sanitation services Indonesia Water Sector Adjustnent reports such as the 1999 Philippines and facilitation of investments in Loan (WATSAL) is a particularly Counntrv Economic Mlemorandum and the municipal water and sanitation systems.. innovative aid program (see Box, 1999 Social and Structural Policy Reviesw For several years, the Lao PDR Forest below). Management And Conservation Project has been developing and evaluating sustainable village-based ;-; z - * ~*forest management svstems for produc- tion forests. This project also is intended Among the most innovative aid programs designed in response to the East Asia to establish an Integrated Conservation economic crisis is the Indonesia Water Sector Adjustment Loan (WATSAL). This and Development (ICAD) systcm for $300-million loan would provide balance of payments assistance to support policy, priority protected areas. institutional, regulatory, legal, and organizational reforms in the management of the water resources and irrigation sector. In the short term, WATSAL would sup- The GEF Portfolio. The Region's GEF port the development and utilization of professional expertise within the country for portfolio has grown to 14 projects. Of a reform program, and the consolidation of reforms through institution building, these, eight projects address climate planning, and monitoring arrangements. In the medium term, the proposed sector change and six biodiversity conserva- reforms are expected to result in new management institutions that are better able tion. The two main thrusts of the to respond to the adverse impacts of changing land use, urbanization, and grow- climate change portfolio are to promote ing non-irrigation water demand. more efficient use of conventional WATSAL is the first adjustment operation subjected to a Sectoral Environmental energy and wider application of renew- WATSAL is the ~~~~~~~~~~~~~~~~able energy technologies, particularly Assessment (SEA), which is required for all sector adjustment operations under al poergeneration and solarho the new OD 4.01. It represents a concrete effort to incorporate environmental con- WVind power generahon and solar home cerns into the economic recovery process. The SEA, prepared by the government systems. The biodiversity conservation of Indonesia in cooperation with the Bank, seeks to assess the risk of possible projects focus on reducing threats to environmental and social impacts during the implementation of WATSAL, and to strengthening the management of some propose alternatives and mitigation options in case negative impacts are antici- of the region's key national parks and pated. Alternative options were identified and chosen through a public consulta- protected areas. The China Ozone tion process comprising selected groups from the government, civil society, and Depleting Substances (ODS) IV NGOs. Project, an umbrella project, uses a sector-wide, policy-based approach and 18 ENVIRONMENT MATTERS . 1999 positioning East Asian countries to Natural Resources Management achieve a balance between growth and environmental protection. EASES has recently published the Natural Resources Management Review, a 1 0-year retrospective of NRM experience in the Region designed to assist in for- The Indonesia Environment Study mulating a medium-term NRM strategy and promote innovations such as commu- aims at developing an operationallv nity-led initiatives. The Bank's NRM lending totaled more than $2.7 billion, about relevant environmental policy and 15 percent of all lending for the Region, and was able to leverage almost twice that management agenda to help the govern- amount in total project investments. Currently, 15 NRM projects are active in the ment of Indonesia respond rapidly to regional portfolio. Of these, there are six projects in Indonesia, five in China, two in emerging opportunities for more Laos, and two in the Philippines. effective environmental stewardship One of the notable NRM successes in the Region is China's Loess Plateau Wa- under conditions of de facto decentrali- tershed Rehabilitation Project I and It. Following the success of the first project, zation. The Thailand Environment which covered five years of a soil erosion control program and cost about $260 Sector Strategy Note (ESSN) million, the government of China asked the Bank to design a follow-up project to provides a framework for Bank involve- support its efforts to further develop and refine an integrated model of small water- ment in the environment sector after shed management. The project will have a beneficial environmental impact in 12 several years of absence from the river basins of 37 counties in Shanxi, Shaaxi, and Gansu Provinces, and in the country, and to promote dialogue and Autonomous Region of Inner Mongolia. These benefits include increasing agricul- build partnerships with the government, tural production and incomes; developing new income-generation programs in civil society, and private sector on the poorer provinces; and improving ecological conditions in tributary watersheds of major natural resource and environment the Yellow River. To ensure its sustainability, the project encourages people's par- challenges facing Thailand today. ticipation during the planning and implementation phases. In addition to this, EASES is reviewing the Implementation of Environmen- is supported by the Multilateral Fund million over 11 years. As China is tal Management Plans in Large for the Implementation of the Montreal currently the largest producer of CFCs Urban Envirommental Projects in Protocol. Following the success of the in the world, this is a significant step China and Indonesia. This review halon sector program, two new sector towards accomplishing the goals of the assesses the extent to which past plans have been developed and ap- Mlontreal Protocol. environmental management plans proved in fiscal 1999. The mobile air (EMPs) were adopted and imple- conditioning (MAC) sector phaseout Sector Work mented in the execution of Bank program, approved in November 1998, Against a background of the changing projects. It evaluates the effectiveness of will complctely phase out the use of economic and political context of East environmental assessments and environ- CFCs in the sector by 2001. In March Asia, EASES is conducting several mental management plans in mitigating 1999, the Multilateral Fund also country-specific studies to compare potential negative environmental approved the CFC production sector current environmental trends with long- impacts. phaseout program, which provides $150 term trends and to assist in better Initiatives to protect the environment would enhance the quality of life for Asian people, especially for those -~~ -~ ~~ ~ ~- r~~1~ most disadvantaged. -~~ ~ -~ Thailand. This article was prepared b} Giovanwa Dore of the East Asia and Packfic Region (202) 473-2934, fax (202) 522-1666. ANNUAL REVIEW - JULY 1998-JUNE 1999 (FY99) 19 E~ 090 ;A Europe and Central Asia Region M ost countries in the Europe picture is now characterized by growving and Central Asia Region are differences among countries in the coping with the economic and speed and type of their economic 1 _ r _ 1 \1 1 environmental consequences transition, standards of living, and X - I of the transformation from environmental challenges. centrally planned to market economies. Prior to the economic decline associated Most Central European countries and with transformation, many people in the the Baltic Republics are focusing on region suffered adverse health effects accession to the European Union, 3~ l g 33from chemical, air, water, and soil including implementation and compli- pollution. The landscape was heavily ance with EU environmental legislation. scarred as well, particularly soil and While this requires considerable effort surface water contamination from the and immediate investment, EU support use of pesticides. and the strictures of EU environmental law should ensure constantly and Initially, the transformation was accom- rapidly increasing standards of living panied in all countries by a decline in without unsustainable strains on GDP similar in magnitude to that of the environmental resources. In the rest of Great Depression, and pollution was the transition economies-i.e., all newly | l | . -- reducdtogetere with poutputTon dat, independent states except for the Baltic most ECA countnres are still in a Republics-recovery has not yet taken transition phase. They have not recov- place and people are struggling against ered from the decline in production and poverty. ZL + their populations are struggling with poverty; vulnerability, insecurity; and Nations in the region can be grouped in rising inequality terms of their main environmental As growth and recovery continue, prilengesi __environmental perollutiomayce s One group includes the newly indepen- again in the region unless output and dent states in the western area of the pollution growth can be de-linked. The formner Soviet Union and in the most successful transformation econo- Caucasus. For these nations, one of the mies Poland, Hungary, Slovenia, and the Czec Republc-have mprovedpriorities is to contain hot spots of environmental performance because of eindstials airomandhwaterpolluttion.air, economic reform, investments in more sorems-sionsfro voehiclesndesationry, efficient capital stock and environmental sources-such as power generators, control equipment, and sectoral restruc- chemical and petrochemical plants, and turing away from pollution-intensive ferrous and nonferrous metallurgy industry In the newly independent enterprises-have damaged human states, environmental improvement has health, particularly for the region's been much slower, partly as a result of urban population. These emissions are a stagnant economic reforms and a slow major contributor to the incidence of restructuring process. Furthermore, respiratory illness, cancer, and prema- limited access to capital has inhibited ture death. Children are particularly investment in more efficient capital affected by lead emissions, which harm stock and pollution-control equipment. their neurological development. Z New Dfferences Emerging Neglecting the containment of harmful c)~~~~~~~~o Dfffstances, Emerichcngrbdt h ci A decade after the collapse of centrally substances, which contributed to the Girl rinsing brushes. Sumgait, Azerbaijan. planned systems, the regional economic contamination of groundwater and 20 ENVIRONMENT MATTERS * 1999 surface water, has led to widespread health problems. This is the case in Participation/Awareness Sumgayit (Azerbaijan), where the most severe industrial pollution is linked to The ECA Region has historically been characterized by a relatively high level of the use of mercury in chlor-alkali environmental awareness. Over the past decade, awareness has eroded some- production. Organic methyl mercury what because of economic hardship and a seeming reduction in the environmental from the production process, whiclh is threat. In most NEAPs, environmental studies, and environmental strategy papers, released into groundwater and is likely participation is seen as key to the long-term success of environmental protection. to be leaking into the Caspian Sea, is a Most ECA countries consider it essential to strengthen environmental awareness dangerous poison to humans and can through an increase in financial and human resources to ensure effective commu- biomagnify through the food chain. nication and education of often complex environmental matters. For example: . Armenia has launched a program to increase awareness of domestic water use, In Central Asia, where economic along with several other environmental awareness programs, supported by na- activity is largely dependent on agricul- tional communication and environmental education programs. ture and natural resource extraction, . In Bulgaria, public support-though still limited at the time-is considered the environmental problems are linked to most significant factor in the success of the government's environmental strat- natural resource degradation. egy. Particular attention is given to environmental education, with ecology intro- duced as a school subject and some pilot nature schools established. The best example is the case of the Aral . In Hungary, the government is planning to get NGOs involved in the environmen- Sea, which has been destroyed through tal decisionmaking process. For energy policy, the government has set up a pro- unsustainable use of its source water. In gram that relies heavily on public participation. 1954 the Amu Darya and Syr Darya , In the Kyrgyz Republic, a public participation program has been developed and rivers were diverted for agricultural launched by an environmental NGO. This will provide a vehicle for consultations irrigation. This deprived the Aral Sea of with local administration and local NGOs during the implementation of the NEAR a substantial portion of freshwater flows; , Romania is setting up environmental councils as forums for discussion, begin- as a result, the sea's area was reduced by ning with a pilot program in Constanta. Furthermore, guidelines for public partici- 70 percent. The resulting salinitv of the pation are being developed. NGOs will complement governmental work in the arable land in the Aral Sea Basin is now area of environmental protection. undermining the health and livelihood * Uzbekistan has set up a program of continuous environmental education and ofn 2milon.inh i . t an. later awareness aimed at all levels of the population, beginning in early childhood. dfivers2miion destroyedithe AratSea's Other activities include using the cultural tradition of the Uzbek people to help fishri i ndustroy whe employed develop an environmental culture for the future. fishing industry, which once employed 60,000 people, and left behind a biologically dead sea. More than 40,000 mental, social, and economic conditions Furthermore, surface and groundwater square kilometers of the heavily saline in the provinces of Karakalpakstan and sources are polluted from mining and sea bed have been exposed, and soil is Khoresm have worsened considerably. refinery enterprises and from agro- now being blown away by frequent XWith the help of the Bank, the Central industrial chemicals. winds over thousands of kilometers of Asian countries affected by the destruc- inhabited land. tion of the Aral Sea are now trying to Environmental degradation in cope with a multitude of environmental Kazakhstan also affects the Caspian Sea. The increasing salinity of irrigated land and social problems. WAater pollution from inundation of and water is now the biggest problem in wastewater stabilization ponds has the sea basin, Apart from negativeln Kaakhs become an increasing threat, and the affecting the quality of water supply in motyrltdt aua eoreproposed exploration and development mostlyrelate to naural rsourceof off-shore oil reserves in the northern the area, salinity reduces the productiv- extraction have caused severe water part of the Caspian Sea is also expected ity of over 50 percent of irrigated pollution, contaminating nrvers and to have significant environmental and agncultural farmland. It is estimated groundwater. The primary reason for socioeconomic consequences. that $2 billion is lost every year (about 5 water pollution is the almost complete percent of Central Asia's GDP) due to lack of adequate wastewater treatment Poverty rates are increasing, particularly salinization. As a consequence, environ- facilities in industrial enterprises. in Central Asia but also in the rest of ANNUAL REVIEW - JULY 1998-JUNE 1999 (FY99) 21 In the past, populations of the newh, independent states enjoyed health standards higher than those in countries -42, with comparable per capita incomes- thanks to high literacy, good public health infrastructure, and well devel- oped municipal infrastructure and services. However, those benefits seem to be eroding quickly, owing to the wave of new poverty, whereby the rising infant mortalitv-especially in Central Asia and the Caucasus-appears to be mainly linked to poor quality and limited supply of safe drinking water. The Bank Response The World Bank's portfolio of environ- mental projects in the ECA Region currently consists of 17 lending opera- tions in 13 countries. These are targeted - .------.-. ~~~~~~envlironmental projects that are opera- tionally managed in the environmental i5|1 l_ Iunits. These projects represent total World Bank support of roughly $363.2 m'llion out of a total project cost of $6 f1.1 million. The pr oects focus on improveients in urban environmental management, improved water supply and sanitation, solid and hazardous wvaste management, coastal zone management, and forestry management. In addition, the Bank manages 20 GEE grants (totaling $213 million) dedi ated developing nisTto biodiversity conservation, energy efficiency, alternative energy sources, condition of basic environmental epidemic of the disease struck 180 +and climate change. One of the projMects supports wasteCatFr rexatmpein Azerbaijan Thison receat. experienced arepidicsly of fnAzerhaijan's efforts to address the leCad For examreduct in wazerbuaitjand in theenv dexerioinc envirnme l ovmercury polution problem in Sumgavit. 1997, 60 percent of the population had dysentery and typhoid fever in the A component of the project would fallen 'below the poverty line, and 20 regons of Archangels, Northern excavate mercury-contaminated sludge percent could not meet their basic Ossetia, Rostov, and Krasnoyarsk. and design a nen, en ironmentally safe nutritional needs. Partly as a result, Cholera outbreaks and cases of dysen- landfill for the waste. environmental problems are arising that teryv were registered in Moscow and are more commonly associated w ith other large cities in 1995. In 1996, 875 In fiscal 1999, new projects in the ECA developing nations. The most trouble- suspected cases of bacterial dysentery Region include: some dlevelopment is the deteriorating were reported in Armenia, an d an condition of basic environmenltal epidemic of the disease struck 180 The Georgia Integrated Coastal infrastructure such as sewers and people in the city of Sagarejn o in Geor- Zone Management Project (co- wastewater treatment plants. This often gia. Children are particularly vulnerable financed by GEE) will help the leads to a reduction in wvater quality and to these deteriorating environmental govern-men't of Georgia meet its a consequent rse in infectious diseases. conditions. In Turkmenisan, childrene n under 14 account for 50-70 percent of Black Sea EnVIronmental Program Throughout the newlty independent the cases of hepatitis A and about 80 and implement priority' actions states, micro biological contaminants are percent of the reported cases of diar- outlined in the Biodiv'ersity Strategy. present in drinking water, which greatly rhea. In the whole of Central Asia, The project will support capacity increases the risk of cholera, hepatitis, intestinal infectious diseases are a building activities, improve th~e diarrhea, and other gastrointestinal leading cause of infant mortality. quality of mnonitoring, protect critical illnesses. The Russian Federation resources, and develop an oil splill 22 ENVIRONMENT MATTERS * 1999 contingency plan and emergency European Environmental Program and Projects Active during FY99 with response capability. efforts to improve the long-term Significant Environmental Objectives management of regional water bodies. Institutional * The Romania Biodiversity Con- The Bank is actively insvolved in a series 8% servation Management Project of interrelated programs for the Natural ResJ Pollution & Project ~~~~~~~~~~~~~~~ ~~~Rural Env. Mgt. Urb. Env. Mgt. (GEF) will establish an inter- Danube/Black Sea, Baltic Sea, Aral Sea 19% 59% sectoral, participatory planning, and Basin, Volga Basin, Caspian Sea, and sustainable management framework Mediterranean, addressing issues such at three demonstration sites in the as pollution of international waters, Carpathian Mountains. management of coastal ecosvstems and marine resources, and sustainable GEFIM * The Central Asia Transboundary development of local communities. Biodiversity Protection Project (GEF) will focus on mountain Beyond development and supervision of ecosystems, critical biodiversity the project portfolio, technical assistance planning has begun to clean up the vulnerable habitat, strengthening of activities included support for prepara- hazardous waste and to secure a safe existing protected areas, and rein- tion of National Environmental Action water supply for the region. forcement of national biodiversitv Plans (Bosma-Herzegovina, Croatia, strategies. Kazakhstan, Turkey, Turkmenistan, and Environmentally sound economic recovery. * The Czech Republic Climate Uzbekistan) as well as biodiversity A second set of problems stems from Change Project (GEE) will support action plan/strategies (Albania, Croatia, poverty caused by the economic collapse installation of a combined-cycle heat Georgia, Macedonia, and Moldova). in the aftermath of the communist and power plant at the Vletropak Furthermore, assistance was extended to period. Economic recovery is necessary Moravia Glass Factory in Kyjov and four EU accession countries in develop- to tackle those problems, and the prime modernization and expansion of the ing least-cost ways to comply with EU challenge is to achieve such a recovery district heating network of Kyjov. environmental directives. without hazardous levels of industrial This project will help reduce green- pollution and unsustainable use of house gas emissions and improve Future Challenges natural resources. local air quality by reducing the Conpliance with EU environmental law. proportion of lignite in the fuel mix ELJ accession cotntries must continue The Former Yugoslavia. Finally the for heat and power generation. to adapt to European environmental conflict and post-conflict areas in the rules and regulations and to implement former Yugoslavia are facing a multi- Mainstreaming the Environment the corresponding laws. In particular in tude of challenges, among which Environmental concerns are increas- the area of wastewater treatment, restoration of the destroyed environ- ingly incorporated into sectoral lending considerable financial efforts will be mental infrastructure is just one. If the and structural adjustment operations. necessary Bank assisance will be largely international effort to restore security for Last year, 14 of 73 projects approved in in the form of technical support to war refugees is successful, environmen- ECA included components or activities idenrtify least-cost solutions. tal cleanup of the war will become a addressing environmental quality and necessary condition for the resumption management. The environmental Facing The Environmental Heritage. of normal life. In that context, the components help to identify and create Some environmental problems left over presence of landmines is particularly measures to mitigate possible negative from the Communist era will require vexing, since it impedes reconstruction environmental consequences, fully extreme care and timely action. The both of houses and infrastructure. In capture potential environmental prime example is the case of the Aral Bosnia-Herzegovina, forests and soil benefits, and create an institutional base Sea mentioned above. were most heavily impacted by the war, to stimulate the linking of environmen- again because of landmines. The Bank tal activities with sectoral development. Similar consequences may still be is supporting reconstruction efforts in avoided for people living in the area the former Yugoslavia. There are Projects in Kazakhstan and Albania aim downstream of the Irtysh River from currently three projects (Wood Supply to improve the infrastructure for East Kazakhstan oblast in Kazakhstan. and Forest Management Project in publlcly provided environmental More than 6,000 tons of kerosene, Bosnia-Herzegovina; Coastal Forest services such as safe drinking water. spilled at a militarv airbase in Reconstruction Project, and Eastern Another set of projects in Tajikistan, Semipalatinsk, are in groundwater a few Slavonia Reconstruction Project in Turkmenistan, Poland, and the Kyrgyz hundred meters from the Irtysh River. Croatia), as well as mine clearing both Republic support emergency assistance If this hazardous waste were to leak into in Croatia and in Bosnia-Herzegovina. activities in the aftermath of environ- the river, the health and livelihood of mental disasters, people over hundreds of square kilome- ters would be threatened. This threat, This article was prepared by Christiane Kraus of the On a regional scale, the environment however, has been recognized, and Europe and CentralAsia Region (202) 473-3870, group continued to support the Central fax (202) 614-0696. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 23 L O R DLatin America and Caribbean Region T ~ he Latin America and Caribbean vulnerability to future disasters (see Box, Region faces a diverse and com- page 25). ii S ili_lilli plex set of environmental and social development challenges. Building Participatory Strategies I ii - -_ _ With a largely urban population Projeto Umidas. In 1997 and 1998, a -. i li_ exceeding 400 million people, the region participatory process that involved more increasingly must deal with problems than 1,000 people helped design a such as urban-industrial pollution, future scenario for the Brazilian state of traffic congestion, and transportation- Rondonia. This scenario, combined with related air pollution. At the same time, the results of expert projections, the region's rich forest and biodiversity provided the basis for designing resources are under pressure. The loss sustainable development strategies. The of these resources has dire implications first phase of the study provided a both for the region and for the global diagnosis of Rondonia, a set of future environment as well, scenarios and an agenda of 10 major pnorities to be pursued. The second During fiscal 1999, the LCR Region phase synthesized the results of the continued to develop an active portfolio study and ways to orient future develop- of projects focusing on solutions to ment policies. A report entitled A pollution problems in urban and Participatory Approach to the Sustainable industrial areas. A flagship regional Development of Rondonia highlghts the program is the Clean Air Initiative (see importance of considering the whole life the projects under preparation or dimensions of sustainability-economic, approved during 1999 are: (a) increas- social, environmental, and political- ing the capacity to regulate and enforce institutional. pollution prevention laws; (b) working "M " with the private sector to adopt environ- Environment Policy Reform. In the mental management systems in small Dominican Republic, the National and medium enterprises; (c) incorporat- Environmental Policy Reform g air quality management in long- Project ($3 mllon) will conduct term transport and traffic planning; and, background studies, test innovative (d) seeking cost-effective measures to environmental pollcv initiatives with address coastal polution from sewerage, pilot projects, and prepare a national solid waste, and oil spills. enironmental management program in a broad-based, participatory manner. Other high prionties for the region The proect enjroys the support of major include enhancing participation, political parties, civil society, and the sustainable forest man agement, and private sector. biodiversity conservation. Sustainable Forest Management Disaster management is an emergingImacFoetRsre nzeaTh priority in thle region, particularly in the Bmankc isoassstingeve Venezuela. inanlyin afterath f thetremndousdamae in policy options for the vast mineral and several Central American nations caused bilgclrsuesoth3.-lin by Hurricane Mitch in late 1998. Apart hectare Imataca Forest Reserve. SE from short-term needs engendered by z , ],. ,,,Imataca iS also home to some lO,OOO < the cnrsis, the Bank is actively helpingdignous people, along with non- nations in the region reduce their indigenous Venezuelan and non- Fishermen, Mexico. 24 ENVIRONMENT MArTERS * 1999 processes among actors at various levels Responding to Natural Disasters in the Latin America Region of organization. On a wide variety of fronts, the World Bank is working to help rebuild nations af- Peru Forest Concession. Peru is proposing fected by natural disasters and to reduce the risk of damage from future events. a new forest management regime that PROARCO. The Amazon Emergency Fire Prevention and Control Project was -would put 25 percent of the current approved in fiscal 1999. It will support the Brazilian government in the prevention uncontrolled national forest under and eventual suppression of fires in the Amazon region in the aftermath of the fires permanent forest production. Under that devastated the State of Roraima in February 1998. The project provides sup- this initiative, the Biabo Permanent port for an early warning network using satellite technology and for the training of Forest Zone Project in the Peruvian local fire brigades as a first line of defense against fires. It also seeks to educate Amazon is a pilot project designed to farmers and ranchers about the proper use of fire in their activities. capture increased revenue by privatizing public forests while demonstrating that Hurricane Mitch. Through a project funded by the Netherlands Government/World sustainable forcst management can be Bank Partnership Program, the Bank is supporting the Central American Integra- achieved through private concession. tion Secretariat's (SICA) effort to ascertain regional needs for the reconstruction The Alliance for Forest Conservation and transformation process emerging out of the Hurricane Mitch disaster, which and Sustainable Use (a joint project of struck the Honduras/Guatemala region in late 1998. The project is undertaking a the Bank and the World Wide Fund for study on vulnerability and sustainability indicators for the region. Nature) is sponsoring expert workshops OECS Disaster Management Program. This project, which was conceived before to review the concession process, Hurricanes Georges and Mitch hit the region, is assisting the Organization of East- identifx: gaps and weaknesses, and ern Caribbean States (OECS) to reduce their vulnerability to disasters by con- propose alternatives to minimize the structing physical works, improving disaster planning, and conducting community- environmental and social risks associ- level training. The program's first stage provides $25 million in assistance to St.Kitts ated with these activities. and Nevis, Dominica and St. Lucia. Disaster awareness and training of local disas- ter committees is being emphasized in each country. Blodiversity Conservation Dominican Republic. An emergency operation was initiated immediately after Hur- Biodiversity Strategies. The governments ricane Georges hit the Dominican Republic in September 1998. The project, spon- of Haiti and the Dominican Republic sored jointly with the Inter-American Bank and others, cost about i 111 million. Key recently began work on national features of the project include environmental damage prevention and mitigation . biodiversity protection plans, which are The Bank also supported efforts to improve the country's capacity to identify vul- financed bv GEF through the Bank. nerable areas, prepare disaster plans at the national and community level, receive Both governments are committed to and disseminate early wamings, and adopt and enforce risk-mitigation standards eventually preparing a joint biodiversity and codes. protection plan that would coordinate Mexico. The Bank's Disaster Management Facility published Managing Disaster Risk protection for the island of Hispaniola. in Mexico: Market Incentives for Mitigation Investment, which analyzes various as- These projects have become vehicles for pects of natural disaster management in Mexico. As a follow-up, the Bank is prepar- ing a Natural Disaster Management Project for Mexico, which will focus on im- Projects Active during FY99 with proving the operations of Mexico's Fund for Natural Disasters (FONDEN) and devel- Significant Environmental Objectives oping mitigation programs for implementation through the federal ministries. Instituial Natural Res./ - Pollution & Rural Env. M Urb. Env. Mgt. Venezuelan inhabitants, the majoritv of analysis supported by the Bank, the whom work in mining operations and government announced that a new plan support sectors. Conflict has arisen will be issued within six months. The after the government issued a new Bank's assessment of the Imataca management plan allowing increases in conflict is that environmental change is mining and commercial forestrv. Based not a technical phenomenon but largely on socisocioomceconomic GEF/MP 5Au ANNUAL REVIEW v JULY 1998-JUNE 1999 (FY99) 25 promoting the exchange of environmen- tal information and coordinating the * dI-1 11 I5r;r§T preparation of other joint projects - such as the establishment of bi-national This joint undertaking of the Latin America Region and the World Bank Institute parks and biosphere reserves. emphasizes outreach, partnering, and disseemination. The initiative is governed by a steering committee composed of representatives of city governments, private The Haitian Ministry of E nvironment sector companies, development banks and agencies, and NGOs and foundations. is abso continuing to successfully fThe program's main goals are to (a) promote the development and enhancement implement the Forest and Parks 0 0 of clean air action plans; (b) advance the exchange of knowledge and experience Protection Technical Assistance arnong all partners; and (c) foster public participation and the active involvement of Project. This 6-year, $21 5 million the private sector for the accelerated introduction of cleaner technologies. credit focuses on establishing effective protected area management in Haiti by The Clean Air Initiative has carried out the following major activities: reducing poverty in the buffer zones of , Development of a Clean Air Action Plan for the metropolitan area of Lima- three critical national protected areas Calao, Peru. The Bank, the Clean Air Management Committee for Lima-Callao, and reforming management institutions. and local authorities are developing the plan with the assistance of international The long process of delivering effective I experts that visited Peru in February, March, and April 1999. rural development services to local * Clean Air Action Plan for the Mexico City Metropolitan Area (MCMA). Initia- populations and establishing tive activities in Mexico City are closely coordinated with the preparation of the comanagement institutions is underway. Air Quality Management i 1Project for the MCMA, which supports preparation of the Third Air Quality Managemrent Plan. Alesoamerican Biological Corridor (MBC). * Clean Air Web Site and Distance Learning (www.worldbank.org/wbi/cleanair). The Bank has continued to support this The objective of this activity is to promote regional communication, information conservation/development concept, sharing, and dissemination of best practices on air quality management. whicl is strongly promoted in Central America under the leadership of the The next two activities will be citi -specific workshops in Rio de Janeiro and Buenos Central American Commission on Aires. Environment and Development (CCAD). In addition to 30 projects . lexic6. PROAIRE II is a Global Environment linked to the MBC, the LCR Region is multisectoral initiative that aims to GEF medium-sized grants. While past currently managing about $6 million in constlmnaina out$6mldation of improve air quality in Nlexico Citv in programs often relied on large national trust funds to support consolidation of a cost-effective way. The prolect interventions, todav's portfolio is more the program and reduce disaster supports a 10-year action plan diversified and includes smaller, vulnerabilit7 through improved natural currently being formulated with the localized initiatives managed by civil resource managemient. Some of these regional mactivitiesminclude prmeparaion o Mexican authorities society. During fiscal 1999, seven regional activities include preparation ofIeimSz r'ct(I a 1:250,000-scale ecosystem map for all + Argentina. Launched in 1999, the approved i z provide supportfor NGO of Central America, support to CCAD Pbllution Management Project is programs related to biodiversity (in coordination with t TNDP and LTE) rinn fidieosadintended to improve the central conservationi. MSP alctivities range Afro-Caribbean iop n e government's capacity to promote from promoting conservation in aouatic populations collaboration in solving pollution ecosvstems (Ecuador) to building AiIBC in better resource management, issues from within government and consensus for conservation at the and support for a communicatons with the private sector. Examples of ecoregion/Ilandscape level on private strategy' for the M\IBC. collaboration include support for lands (Venezuela). Pollution Management adoption of cnvironmental manage- ment svstems in small and medium Bank/GF Projects. Bank/GEF assis- With a predominantly urban popula- enterprises. tance is being requested for a broad tion, pollution problems in Latin range of interventions that have in America bear many similarities to those + Ur-uguay and Argentina. WNith common the goal of harmonizing of urban areas in developed nations, cofinanicinlg from GEF, several sustainable development with conserva- most notably air pollution. The Bank is projects intended to protect the tion of critical habitat. In Mexico and strongly supporting efforts to reduce coastal environment of Argentina and Peru, projects are under preparation to and more effectively manage urban air Uruguav are under preparation assist indigenous peoples to create their pollution. One important example is the during 1999. These projects wvill own communa. reserves on ancestral Clean Air Initiative in Latin Ameri- address oil spill prevention and lands. In Costa Rica, an ccological can Cities (see Box). mitigation, improved pollution services easement progranri will consoli- maniageimenrt at commliercial ports, date 'he Mesoamerican Biological Other pollution managemenit projects in sustainable fisheries management, Corridor in critical habitats. ln Brazil, the region include: and institutional strengthening. the government has launched an 26 ENVIRONMENT MATTERS * 1999 ambitious program to bring 10 percent meeting in Venezuela on tropical ment; (b) integrated watershed man- of the Amazon under effective protec- forestry, including its relation to carbon agement: (c) biological diversity and tion within the next 10 years. In and the climate convention. The protected areas; and (d) climate Mesoamerica, a four-country initiative occasion provided an opportunity to change. At subsequent meetings, IDB is being developed to protect and ensure invite the ministers and/or vice-minis- and UNDF joined forces with UNEF the sustainable use of the Great Barrier ters of environment of Bolivia, Brazil, to provide an Interagency Technical Reef System of Mexico, Belize, Guate- Colombia, Guyana, Ecuador, and Committee (ITC) to support the mala, and Honduras. Venezuela to a subsequent meeting in Forum. In September 1998, the Bank Bolivia to discuss the Clean Develop- and ECI.AC became part of the Mlfontreal Protocol Implementation. ment Mechanism and how Amazon Technical Interagency Committee. During fiscal 1999, new operations were forests related to it. A third meeting in prepared for Colombia and Ecuador. In Quito explored the management of At present the Bank is supporting the addition, an innovative non- environ- LAC Ministerial Forum and adminis- grant financing scheme will be mental tering resources provided through the tested in Mexico using adDu tc'h Trust Fund for the following concessional financing for social activities: replacement of CFC-chillers impfcuedreortosevionmental (building air-conditioning and sustainable development trends systems) xvith energy-efficient gas in the region to be presented in the svstems. This pilot is the first f o 1 .conces- M'vontreal Protocol initiative to inonDvlpetfamnserl Montrethat isrotongcolfinitiativedto .;i ll the workshop to cxchangc information by the local government. 1 * - l M Andean on a subject of specific interest to be countries defined by Ministers in ongoing Climate Change. The National ofteconsultations. Strategy Study (N SS) Pro- AmaonStrengthening of the Central Amenl- gram is a collaborative bai.can Commission on initiative between the govern- Environment and Devel- ment of Switzerland, the Bank, opment through the and other bilateral donors establishment of an (e.g., Finland, Austria, Ger- interagency technical many, Australia) to assist assistance u nit. This interested country govern- facility would receive ments in assessing their role in .initia financial support the Clean Development NMechanism from UNDP, UNEP, and (CDM), identifying potential invest- the World Bank (through ment projects, and developing national iNonal the recently approved policies regarding the CDM. Intaie -'NetherlandsA\Vorld Bank Partnership Programme). NSS studies identifv a pipeline of Established in * An environmental and greenhouse gas (GHG) abatement 1982 as a _ - . vulnerabilitv assess- projects and potential sources of exchange Ao ment of Central financing. With a better understanding information reconstruction and of the international demand for GHG and promote future development offsets, the traded volume and the price regional atos of potential offsets, the country can collbtion 9t make informed decisions about market the Forum of options and opportunities. Thesc Environmen- decisions include options for establish- tal Ministers ing the necessary domestic institutions is now the region's principal political and other regulatory mechanisms that intergovernmental body on environ- may be necessarv for effectively engag- mental matters. ing in the GHG offset business. Top: Panamanian tlora. The Forum established four priority Bottom: Kuma tioman, San Bias Islands. Amnazonia Initiative. Early in 1999, the areas for regional cooperation: (a) Panama. World Bank Institute and the Latin institutional frameworks, policies, and This article vas prepared bv the staff of the Latin American Region jointlv sponsored a instruments for environmental manage- America Environmnental Unit (202) 473-1841, fax (202) 676-9373. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 27 r1ii r\I A4, Middle East and North Africa Region O ver the course of the past 3 0 urbanization results in increasing years, the countries of the poverty, worsening air pollution, and Middle East and North poor sanitation in urban centers. The Afnca (MNA) Region have national environmental agencies, which experienced a penod of for the most part did not even exist a unprecedented economic growth (1970- decade ago, are just now beginning to E 1985) folowxed by a longperiod of develop as professional institutions xvith economic stagnation (1985-1999) that real enforcement power; however, thev only now shows signs of ending. Based still have a long way to go. In short, the ond groilth resulted in a signA's costs of decades of poor natural re- rapid grwhrsle in aigificant sources management continue to mount. decrease in the level of absolute poverty, Thes inage: a 50 percent reduction in the infant They include: mortality rate, and increased access to safe water and sanitation for both rural * Impairment of public health; and urban populations. The economic + Agricultural and fishery productivity stagnation brought on bv the drop in oil losses; prices in the mid-1980s brought growth * Reduction in tourism revenue; to a standstill and slowved improvements * Degradation of ecosystems; and in other social well-being indicators. + Loss of biodiversitv and reduction in The maj'orit-v of MINA countries are still amenity values. viewed as middle-income and, happily, t l 0 l g | g gimprovements both in environmental Addressing the environmental chal- awareness and governance of environ- lenges described above requires capital- mental issues have continued over the izing on the positive linkages betwveen past 15 years, despite slow economic e c growth, pe reduction, and environmental sustainability. Restoring growth is a critical task in the In 19,tergo' ouaini 1xpt999, the region's population is region. Growth must be widely shared 44 expected to grow by 3.3 percent, which and sustained and depend less on the 0,j, 0 | 1is equal to that of South Asia. The 1' ' ;N regin i plagued by high and exploitation of rapidly declining oil, increaing uneploymen rae,water, and land resources, and more on Educatin and halth stndards,the skills and capacity of the region's particularly for wlomen and rural people. The future of developmcnt in populations, are still behind those of the region must focus on establishing similarly developed countries in other the policy and legal frameworks neces- regions. And, although great gains were sarv for sustainable development and made during the late 1970s and early growth. 1980Os, 45 million people live without access to safe water and 85 million Meeilng the Challenges people live Fwithout access to proper In the 1995 publication Towards sanitation. Fiv e countn'es are wxithin 20 Sustainable Development: An Env'ron- years of depleting economically available mental Strategy for the A/iddle East and oil reserve; 1 countries are currently North Africa Region, i athree-pronged consuming moeirree thant0 pesrcent oapproach was put forth that emphasizes: their renewvable water resources. < _ l E i t mentprograms resultm over-use of + ~Strengthening env-ironmental z ~~~~~~~~~~~Food self-sufficiency and rural employ- *Steghngeviomta ment programs result in over-use of institutions and increasing public Traditional houses in Sana'a, Yemen. marginal land. Rapid and uncontrolled participation; 28 ENVIRONMENT MATTERS * 1999 * Improving natural resources man- fruition. Tunisia, Morocco, and Egvpt Projects Active during FY99 with agement; and have alreadv concluded their Associa- Significant Environmental Objectives * Arresting emerging pollution tion Agreements with the European Institutional problems. Union; others like Algeria, Lebanon, Natural Syria, and Jordan are still negotiating Rural Env. Mgt. Pollution & The MNA Countries have each made those agreements. Meeting EU rb.Env.Mgt. 61% significant progress towards that standards on exports should result in the strategy's objectives through both reduction of waste and improved capital and human investments. env7ironmental standards. Free trade should also encourage greater While the environmental threats facing privatization, allowving market forces to : EFIMP/ the MNA countries w'ill not soon help reign in unsustainable use of 4% v_ diminish, the ability of the countries to natural resources. The Bank, through mitigate those threats in ways that METAP (see below), is working with promote sustainable development are many of the MNA countries on the that their development investments meet improving every year. National and issues of trade and environment in order the challenge of environmental local environmental institutions are to prevent environmental issues from 5vaindbility. being strengthened. Legal frameworks being used as a non-tariff barrier to are being put into place and laws are trade and to ensure that free trade with The Category A project financed in being enforced. Environmental issues Europe does not mean promotion of fiscal 1999 is the Sana'a Emergency are being addressed by economic, poorly regulated domestic industry Power Project in Yemen, which is a planning, and sector ministries. Envi- $54 million IDA Credit. It will begin a ronmental NGOs are having more WAlorking within the context of free trade phased approach for rehabilitation and influence at the national and local levels. and privatization, a more holistic view of development of the Power Sector. It Similarly, the media is increasingly development-like that of the Compre- wvill help guarantee a power supply for reporting on environmental issues, hensive Development Review-is seen one of the region's poorest cities well helping to generate public pressure for as a possibility for the region. into the next century environmentally responsible activities. The Investment Portfollo The Category B projects include: The W'\orld Bank remains committed to In fiscal 1999, the World Bank ap- working with each of the MNA proved 25 investment projects for a total The SOiEAG Rural Development countries to develop policies that of nearly $1.2 billion in loans and $440 Trust that uses an innovative approach address poverty in a sustainable manner. million in International Development t ipon ural service andredc- National Environmental Strategies and/ Association (IDA) credits. Of those or National Environmental Action projects, onc was in the Environmental ing poverty through a multi-sectoral Plans (NEAPS) have been completed Assessment (EA) Category A, which approach that icludes improvig in seven of the MNA countries (Alge- requires a comprehensive environmental irrigation and transportaton infrastruc- ria, Egypt, Iran, Jordan, Lebanon, impact assessment and environmental ture, a line of credit for villagers Morocco, Tunisia, and Yemen). The monitoring plan. Another 1.3 were in including women, and emphasis on Syria and Algeria NEAPs are scheduled the EA Categorv B, requiring substan- improvig women's education; for completion in fiscal 2000. The Bank tive environmental review, and 11 were is working with each of these countries in EA Category C, having littie to no The Prmvate Sector and Agrpcultural to include recommendations made in negative environmental impact. In fact, $225 million loan and $75 million IDA the NEAPS in the countries' overall approximately $740 million out of the crdi motin sustanable ral development strateg total $1.64 billion approved in fiscal credit promotan sustainable rural 1999 includes environmental compo- development and pioneerie g the use of One area of economic growth that nents to be monitored during imple- financdal o ntermed;aries to finance rural should promote greater sustainability is metation. The MNA counties aredevelopment; that of freer trade with the European committed to working with the Bank The Amman t Union, which is quickly coming to and our partner institutions to ensure Project in Jordan is a $55 million ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 29 IBRD loan to improve the efficiency, and the WNorld Bank. Now in its third water policy reform has been held in management, operation, and delivery of phase, the METAP Regional Facility Amman in Mayv 1999. Follow-up water and wastewater services for the (MRF) in Cairo, Egypt, developed five activities under preparation include the Amman Governorate (AG); pre-feasibility and feasibility studies for organization of a workshoF to be held in investment projects. One of these, Yemen at the end of 1999 on sustainable The Lakhdar WVatershed Manage- Diyarbakir Sewerage, resulted in one management of groundwater resources. ment Project in Morocco is a $4 loan from the European Investment million IBRD loan to pilot a participa- Bank. There are now seven studies The Amman seminar was the second in tory approach towards improved land under preparation by the MRF In a series of seminars organized by the use and natural resources nianageinerit addition, the MRF is workinig with MENA/NMED Water Initiative. in mountainous areas; each of the METAP countries to build Participants included 52 delegates from capacity for environmental manage- 15 countries, together with 37 represen- The Bethlehem 2000 Project in the ment. More information about tatives from 18 donor agencies, govern- WN,est Bank and Gaza is a $25 million METAP can be found on the NWborld ments, and NGOs. The first seminar IDA Credit from the trust fund for Wide WNTeb at wvvw.METAPorg. was held in Cairo in June 1998 to WVest Bank and Gaza to provide support exchange global experiences and to for the staging of the Bethlehem 2000 In addition to the activities of the consider the relative merits of alternative celebration activities and extend the regional facility, METAP regional water policy options. The main chal- existing MIDP to the Bethlehem area activities like MIEDPOLICIES and lenges in the water sector that the region niunicipalities. In addition, the project the EIA Initiative (see Box) are proniiot- faces were identified as: begins to address some of the issues of ing the mainstreaming of environmental tourism development and cultural isues into sectoral policy, In January t VYlater scarcilt, quality deterioration preservation specific to these munici- 1999, MEDPOLICIES, which is and drought; palities; implemented by the Harvard Institute * WVYeak institutional framework and for International Development, held a financing; The Solid Waste Management regional seminar in Tunis to publish the * XXater-intensive agriculture and Project in the NVest Bank and Gaza is initial results of studies carried out in irrigation policies. an $8 million IDA Credit from the trust each of the METAP Countries. fund for NWVest Bank and Gaza designed Cyprus, Egypt, Jordan, Morocco, Syria, The Amman seminar moved the debate to demonstrate environmentally sound Tunisia, and Turkey presented studies on water policy reforms from an and sustainable solid waste management on Trade and Environment; Albania, international to a regional perspective, (SWiM) systems in the West Bank; and Croatia, and Slovenia presented studies with the discussion focusing on the on Environmental Liabilities and cases of Jordan, Oman, and Tunisia. The Solid Vaste and Environment Privatization; and Algeria, Lebanon, These countries have contrasting Project in Yemen is a $20 million IDA and the West Bank and Gaza presented hydrological and economic charactetis- Credit designed to improve solid waste studies on the Economic Impact of Air tics and their different experiences hold collection in 15 to 20 medium- and Pollution. Based on the results of those useful lessons for all countries in the small-sized towns in Yemen, and to initial studies, MEDPOLICIES is region. introduce sustainable, locally based now working with selected countries to ianlagemenat of these services. The pilot nmethods of stronger policy The Regional Initiative for Collabo- project also would strengthen environ- dialogue between environment minis- ration to Control Natural Resource mental management to support (a) trie. (or national environmental authori- Degradation (Desertifieation) of environmental assessments; (b) pilot ties) and the policysetting ministries like Arid Lands in the Middle East establishment of the Environment economy, trade, and planning. continues to develop field activities and Fund; and (c) regulations and pilot elicit donor support for developing community-based protected areas and The MENA/MED Water Initiative is solutions for natural resource degrada- coastal zone management. a partnership armong the countries of the tion. As part of the Middle East peace Mediterranean, Middle East, and process, this program links scientists Beyond National Borders North Africa regions; the European and planners from Egypt, Israel, The MNA countries are engaged in Commission; the European Investment Jordan, Tunisia, and the West Bank and several regional environmental initia- Bank; the World Bank; and the interna- Gaza so they can share experience and tives: tional donor communitv Its purposes expertise in desert land management. are to help countries formulate and The first phase of the Initiative will end The Mediterranean Environmental implement policies and strategies to in December 1999. Implementation of Technical Assistance Program achieve sustainable management of the Initiative's national activities on the (METIA-) celebrated its 10th vear of lirlited water resources and sustainiable ground is substantial. Regional partnership between the countries of the economic growth; and to mobilize collaborative efforts have been con- region2 and the European Commission, financial resources for the implementa- strained bv the delicate political situa- the European Investment Bank, the tion of environlmental action programs. tion in the region, but current positive United Nations Development Program, A second regional seminar on national developments have already renewed 30 ENVIRONMENT MATTERS * 1999 efforts to improve this vital aspect of the the sustainable use of the Caspian's Initiative. Support for the Initiative unique biological resources. At a M E TA P E I A I n it i at i v e remains strong and all of the partners meeting in Iran in May 1998, the have expressed enthusiasm and govern- countries adopted the organizational The METAP Environmental Im- mental backing for a next phase. An framework for the program and a draft pact Assessment Initiative re- external review of the Initiative has been GEF program brief; which was ac- sponds to the need for EIA systems, conducted and the "blue-ribbon" panel cepted by the GEF Council in Novem- which are an important emphasis of has made recommendations for the next ber 1998. Final arrangements are the Euro-Mediterranean Partnership phase that will be taken up at the next currentlv under negotiation to bring this and the Bank's safeguard policies. Steering Committee meeting in late project to the Bank' R oard and begin thenitie Is desi9n to . (J ~~~~~~~~strengthen EIA systems in the September 1999. implementation. METAP countries through linkages between the EIA Center at The Gulf of Aqaba Environmental The Chalbenges and Manchester University and the En- Action Plan, another peace process Opportunities Ahead vironmental Assessment (EA) Cen- initiative, links Egypt and Israel in The Environmental challenges facing ter at the International Center for collaborative mechanisms to strengthen the AINA Region are well knowrn and Environmental Technology (CITET) capacity to protect marine biodiversity the countries are each making signifi- in Tunis. The outcome of those link- and the coastal zone. The environmen- cant progress in addressing them. The ages, which are based on CITET's tal action plan for Egypt under this World Bank is committed to working existing EIA training program and initiative was prepared and discussed with those countries to improve their the joint work begun with the EIA with officials from government, private, overall development programs and Center at Manchester University, and public sector entities. increase the knowledge base necessary would be to provide the region with to. accopls tt w framework a long-term venue for developing to accompish that ithin thesouth-south and north-south coop- The Red Sea and Gulf of Aden of the NMNA Regional Environmental eration, EIA on-the -job training, and Environmental Strategic Action Strategy. Specifically, the continued information dissemination.The spe- Program (SAP) was approved by the strengthening of national environmental cific activities that are being carried World Bank's Board in Mlarch 1999. institutions will allow the countries to out under the EIA Initiative are: This $19 million Global Environment bring environmental issues into the Facility project is being jointly executed mainstream of their development policy . Documentation resource. Facility' J aisramo terdeeopetpoiyCITET will continue to develop a by the NWorld Bank, the United Nations and assist the Bank in ensuring those lirr of EA lelation, proce- Development Program, and the United issues are included in the Country dures, guidelines, technical and Nations Development Program through Assistance Strategies and Comprehen- academic reports and papers and The Regional Organization for the sive Development Framework. The EA reports, from all countries in Conservation of the Environment of the strategic emphasis is on institutional the region and from relevant in- Red Sea and Gulf of Aden, which is frameworks in environmental manage- ternational organizations. A data- based in Jeddah. The Bank is imple- ment, as well as actions to strengthen base of these documents will also menting twvo components, Reduction of knowledge managenment, particularly in be maintained and made readily Risks to Navigation and Integrated the areas of water and sanitation and accessible for searching. Coastal Zone Management. This financial intermediaries. * Seminars and workshops. The partnership of the littoral states and Center plans to organize at least international agencies aims to preserve The Bank remains committed to two region-wide workshops on EA the fragile environment by preventing assisting the countries to develop topics of current interest in meth- pollution and unplanncd coastal stronger and more reliable environmen- ElAs and best practices for review- development in one of the world's most tal safeguard policies. To this end, the ElAs an best as freview- ing EIAs, as well as specialized on- pnstine marine environments. The Bank is also working with the countries thejobtraininginwaterandwaste- prevention and readiness aspects of the to develop stronger national and local water treatment, industrial and air SAP are of particular importance given oversight institutions. As the countries pollution, and solid waste manage- the high volume of inarinc traffic finish their NEAPs, the Bank will work ment. CITET's existing laborato- through the region, especially oil with them to implement and update ries will allow for hands-on training tankers. them. The Bank is also beginning the for the participants. process of updating the 1995 MNA In the Caspian Environment Pro- Environmental Strategv based on the gram, Iran and its neighbors progress made over the past few years. World Bank Report #136014YINA, Fcbruary 17. (Azerbaijan, Kazakhstan, Russia, 1995. Turkmenistan) around the Caspian have The MNA Region is poised to enter the MIETAP countries in the MNA region are joined with the WMorld Bank, TACIS, new millennium with ever closer Algeria, Egypt. Jordan, Lebanon, .orocco, U7NDP, and UTNEP to counter the partnerships with its neighbors, and S)Tia. Tunisia, and West Bank and Gaza. negative effects of sea-level fluctuation with stronger national institutions for Thlis artidle was prepared by J.B. Collier of the and industrial pollution, and to promote improving the environment. Middle East and Aorth Afnrca Rgion, (202) 473- 8551,fax (202) 477-1374. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 31 S AEu0000A; R n South Asia Region O ver the past vear, the Xvaorld To deal with these overwhelming Bank's South Asia Region problems, approaches must be single- committed ttself to ftnding mindedly focused on the desired better wavs to achieve results outcome: How can activities and projects on the ground. This involves (whether supported by the W\orld Bank, shifting the emphasis much more local or international partners) directlv toward development outcomes, specifi- contribute to health improvements and callv how environmental programs can poverty reduction-for example benefit the poor. This is being accom- through a combination of measures to plished through systematic efforts at address water and sanitation needs, partnerships with local communities and indoor air pollution, female education, aid agencies, and a multisectoral nutrition and vaccination programs? approach by World Bank staff To The World Bank's South Asia Region is improve the effectiveness of knowledge systematically refocusing its activities transfer and technical assistance, the toward this "outcome-based approach." World Bank's South Asia Region is This will help shift the emphasis axvay slhiftiuig niaiv of its day-to-dav activities fronm "output delivery" to the critical to the field offices, where high-qualitv changes in behavior and institutional staff are in a position to offer hands-on performance that contribute to improv- advice on a continuous basis. ing the well-being of the poor. No longer xvill success be measured in terms New Thinking on Environmental of the number of projects, or the Issues construction and installation of hard- Focusing on outcomes. In South Asia, vare, or even the number of staff environmental measures are among the xvorking on a given activity most cost-effective wvav,s to reduce illness and death in the population. BuilDing tne A p of a n effor Some20 prcen of he ttal urde of to promote a coordinated and holistic 4 f~~~~~~~~~~~~ome 20ly percent of thetoa burden of apoc to dexternaln assistance. i om n disease is due to environmental causes approach ao d alogue pmenteasisitiatei ver half from diarrheal diseases and t rh lackod1 e n antto.I ni with multilateral and bilateral agencies o_fro wateniroandanitalftion. IIndiaworking in South Asia. Initial efforts in alone, illnesses related to water and Sri Lanka have been very promising; sanitation lead to about 0.5 million for example, a round-table discussion deaths a year of children under five, and rith donors in Colombo helped identify indoor air pollution fro2 cook stoves is a number of critical concerns that estimated to cause another 0.5 million uniderminec thle effectiveness of develop- deaths a year of children and women. ment assistance. The round-table Urban air pollution in South Asian identified ftuture opportuniLtiles for cities and industrial pollution account pursuing a more coordinated approach for "only" 3 percent of the burden of to external assistance. A common M ~~~~~~~~~~disease, wvhich still tr-anslates into over approach and joilnt dialogue with the 100,000 premature deaths a year, and Asian Development Bank led to major almost 2 billion work days of lost or commitments on the par-t of the govern- reduced productivity Out of this, ment of Sri Lanka to initiate critical automobile pollution - while serious - inttioarermasaprquiefr may, be responsible for only a smahl further lending to the wildlife sector. U ~~~~~~~~~~~~fraction of the total burden of disease a ~~~~~~~~~~~~from environmental factors (under 1 The South Asia Region has taken the Market in India. percent of the total disease burden). lead in promoting an innovative 32 ENVIRONMENT MATTERS * 1999 approach in fostering understanding and wilL coordinate further work in the MlIainst;evaning Knowledge Management. between development staff and local region on energy and environment On several fronts, the South Asia communities. In the Village Immer- issues. The South Asia Region's health Region is mainstreaming information sion Program, organized with the help and environment sector units have systems and knowledge management of local NGOs, Bank staff volunteer to jointly prepared a Regional proposal to into its environmental operations. This live in South Asian villages and experi- launch a South Asia Environmental includes the integration of environmen- ence the everyday life of the villagers. Health Program and are now w,vorking tal information systems-such as The staff gain valuable insight into the together on a pilot environmental health Geographic Information Systems (GIS) complex interlinkages among environ- project in India. A study on water, and other information management mental, social, and economic develop- sanitation, and health in Andhra tools-to promote knowledge manage- ment and have reported a renewed Pradesh, India, benefited from partici- ment concepts in Bank-supported commitment to the Bank's central pation of staff from environment, health, projects in client countries. mission of poverty alleviation. Staff have infrastructure, and rural development. further mainstreamed this approach into South Asia Environmental regular Bank activities by initiating Enhancing Bank Projects. The Bank's Portfolio immersion-type supervision missions for South Asia Region has stepped up its ZMIitigating Envir.-onmental Health Risks. some rural water supply and sanitation efforts to improve the environmental Environmental health was a focal issue projects; under this approach, mission- quality of its projects by taking a more in South Asia last year Water supply team members reside in the villages proactive approach during all phases of and sanitation improvements have the where components of the projects are the project cycle. During project potential to achieve significant positive being implemented. preparation, this approach not only environmental health impacts. A study addresses traditional safeguard policies, in Andhra Pradesh, India, initiated in Building collaboration. The integration of but also enhances the design of projects. July 1998 to assist in the preparation of environmental issues into sectoral and For example, a strategic vision was a State Environmental Action Plan, is thematic strategies is an effective wav to adopted to conduct regional environ- assessing the overall burden of ill-health mainstream pollution and natural mental assessments for rural develop- associated with lack of water and resource management issues across ment projects in India and Nepal. In sanitation infrastructure and exposure to sectoral activities. During the last year, Bangladesh, India, and Pakistan, the poor water quality, and outlining a cost- the South Asia Region has considerably Bank conducted combined environmen- effective strategy for reducing this strengthened inter-sectoral working tal and social sectoral assessments for burden through a varietv of interven- relationships on environmental issues. A both urban and rural development tions in rural and urban water and team drawn from the energyv and projects and for highwvay projects. In the sanitation and pollution control. environment units produced a South hospital waste management area, model Asia environmental strategy for the studies have been designed and in- The Bank's South Asia Region is energy sector, a regional adaptation of cluded in two health sector projects in supporting several urban and rural the Bank-wide Tuelfor Thzouzghzt paper, India. Management-oriented training infrastructure projects aimed at increas- Projects Active during FY99 with programs have been designed to ing environmental health benefits, Significant Environmental Objectives strengthen environmental and social especially for the poor. The recently assessment capacities among central and approved India Second Tamil Nadu 3nio state governments' emnironmental staff, Urban Development Fund Project Natural Rend /~ g Pollution & municipal development fund compa- will provide sanitation services for the Raural Env Mg IUr.Sa.Mg. nis fnnca F-ural Sup. \ nves, and ffanctal ntermneduaries. urban poor and thereby improve > Supervision efforts on industrial environmental conditions in cities. pollution and energy sector projects Grants and loans under this project have been increased to ensure that the would be utilized for common and Bank's safeguard policies are fully individual toilets, sullage, and garbage 4 = .< implemented. To increase teclhnical and collection in over 500 poor communities procurement scrutiny of projects, Bank through partnerships among urban local staff from the field offices are now governments, communitv-based GEF/MP heavily involved in project supervision. organizations, and NtGOs. The benefi- ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 33 environmental outcomes and attaches * - _ -. the highest priority to mitigating indoor and urban air pollution on the basis of High Environmental Health Risk manifested by high infant and child mortality their health impacts. This implies a shift and high morbidity, especially among the rural and urban poor. in air pollution mitigation focus from Principal causes are: large-scale sources such as power plants to household energv and other small * Poor quality and unreliability of drinking water supply and lack of sanitation; pollution sources, which (combined) are . Indoor and urban air pollution; and responsible for the bulk of human * Toxic and hazardous agro-industrial waste disposal and discharges. exposure to harmful air pollutants. Weak Governance and Low Institutional Capacity in the form of weak and out- Natural Resources Management. The dated institutions that result in little or no enforcement of environmental standards South Asia Region is involved in manv or good practice, and the continuing depletion and degradation of critical natural acti to Romote Suinable natr resources such as water and forests. activities to promote sustainable natural resources management. For example: Principal causes are: * Strongly centralized administration with little transparency, accountability, or par- * In the last year, a second Sodic ticipation; Lands Reclamation Project was , Negative incentives that mitigate against good performance, including initiated in Uttar Pradesh, India, to uncompetitive salaries and service conditions, huge subsidies, and policy distor- supplement the activities of the first tions; one launched in 1993, which has had . Aging, inefficient organizations that lack modern management skills, have not a significant impact on poverty and been able to sustain their technical capacity, and do not use modern knowledge institutional development. The management and information tools; and primary beneficiaries targeted are , Huge financial deficits and perverse budget priorities and incentives. poor farmers on tnarginal lands. The project seeks to integrate various Resource Depletion and Ecological Degradation that threaten the livelihood of innovative technical, scientific, and the poor. social aspects into project design, Principal causes are: implementation, and monitoring, which includes extensive community , No institutional framework for integrated management of natural resources, in- participation use of remote sensing adequate legal and policy framework and lack of incentives for resource conser- pandGIS, e sie omontoring vation and protection; and GIS, extensive montonng , Lack of public awareness of the value and importance of healthy and sustainable systems, and appled research. ecosystems, or the causes of change that are diminishing their value; and , Users and resource managers lack information on which they can make sound * The new Integrated Watershed short- and long-term decisions because there is little comprehensive and mod- Development (Hills) II Project, ern planning and analysis, nor efforts to collect and compile reliable data. although a follow-up to a project that closed last year, has radically changed its implementation approach to being ciaries will contribute part of the costs as The project involves the identification of a communitv-led project that seeks to well as labor for construction of these the extent of the contamination, research increase the productive potential and facilities. A similar participatory and on v iable technical options, and on-site promote sustainable watershed partnership approach will be piloted for mitigation efforts. Local communities management in five Indian states in provision of water supply, sanitation, are being involved to work with various the fragile and highly degraded and solid waste management in low- government agencies and other stake- Shivaliks Hills, the lowest of the incomc communities under another holders to devise strategies for long- Himalayan ranges. newly approved project, the Bangladesh term action. Municipal Services Project. * The Fisheries IV project in There are many challenges in improving Bangladesh aims to address the manv In Bangladesh, the World Bank is also urban air quality in South Asia. Some environmental problems stemming tackling a serious water-related health activities underway include the integra- from unplanned shrimp and fish problem: that of arsenic contamination tion of air quality concerns into urban production, including water qualitv in groundwater, where tens of thousands transport projects in the region, and the problems, disease control, wetland of people are being exposed to high promotion of integrated air quality and mangrove deforestation, and concentrations of arsenic from contami- management concepts, e.g., in the Air agricultural land degradation. It nated wells. The Arsenic Mitigation/ Quality Management Learning and would make shrimp and fish produc- Water Supply Project addresses the Innovation Loan being developed for tion for domestic consumption and urgent need to provide clean water to Dhaka. Furthermore, the regional exports more environmentally the Bangladeshi people dependent on environmental strategy for the energy friendly and sustainable. This project the arsenic-contaminated groundwater. sector adopts a holistic approach to seeks to alleviate poverty by creating 34 ENVIRONMENT MATTERS * 1999 wi'der range of financial instruments, as 77-~' A ~ | 2well as analytical and advisory services and external partnerships, while A ~~~~~~~~~~~~~maintaining a coherent approach that is consistent with Country Assistance Strategies. The integration of GEE into the Bank portfolio includes cofinancing Pakistan~~~~~~~~~~~~~~~~~~~~~~~~~~~a market. arrangements such asi1h Bangladesh Fisheries IV Project. The South Asia Region is making a serious more j eeffort to better understand the tradeoffs between local and global environmental outcomes, especially in the areas of energy and natural resource manage- ment. The Region hopes to enhance consultations throughout project on the central ministry to beffective utilization of GEE resources to support mainstream Bank environmen- tal activities. Pakistan market. The on-going Montreal Protocol more jnobs in the fishing industry, In line with the regional trend towards program in So Aaphasiue especially for women and the very decentralization, the Environnental expand. In India, with the maturing of poor. Beneficiarnes and NGOs are Aetion Project in Sri Lanka has been teor of sub-pojt implemen being directly involved in manage- re-focused during the mid-term revie thationt pike up etitn in th2ya, 1n Osub ment decisions through extensive from concentrating technical assistance phaseot of 580 me tons ind 2 sub-ntdd consultations throughout project on the central ministry to building poects Couldtbe o n addi- technial asistane) an hardw enironmntal nstituions n coutriesand 1S subder cnswidrthio ndn g F ourne preparation and implementation. enravironmental management capacity at 4 o with f iniof mental nstitutons atthe cenral anddegradtion, etensiv poery andio were approved,fo brimngitng the provinciallocal level and promoting $1.6 million were approved bri Stregthnin Envronentl Maageent public-private partnerships. the total number of approved sub- Cipacity. Weak institutional capacity is a ts to v , w ith o]utmentsss f facto respnsibl for he Th recetly cosed akistn Envron- $26.8 million. In addition, a proposal leading factr Polletior trol reentlv of a Enveron- for accelerated phaseout of production continuing environmental problems in mental and Resource Conservation of CeCs in lndia was submitted to the the region. Bank supported activities Project (EPRCP) reflects the best Executive Committee on behalf of India include both software (training and other traditional thinking on how to build and is under consideration. Four new technical assistance) and hardware enevhironmental institutions in countries projects wihfnigo $n (equipment and faciities) for environ- characterized by severe environmental wercecapprved ford implectmen ion mental institutions at the central and degradation, extensive poverty and duri grthied yainng Pkisaenaimonpr- provincial levels and prloect financial nonexistent or weak and heavily tanLy, withe tes resotion pao istsues intermediaries. In India, the recently fragmented iistitutional and policv dealing with i dutie an taxes activities~~~~~~~~~~~~ inlddsitnente nr n uevso, n h fetv- callenge with bemfort dutie sandholders ton closed Industrial Pollution Control frameworks. Part of a 15-year policyottlnek Project and continuing Industrial dialogue and 7-year implementation for implementation were removed, and Pollution Prevention Project are effort, the project helped Pakistan enact imple ment os approvedti being implemented in four states each comprehensive environmental le isla- earierears of begin. and have such capacity-building tion and promote a general awareness components. The Environmental about environmental issues. The project The Road Abead... Management Capacity Building provides valuable lessons to future Project is also making progress in projects on the need to involve a broad A major rethinking of our environmen- enhancing national and local capacity in range of stakeholders, inter-sectoral to22ake stategies t acition plnsi vanous aspects of environmental coordination, improving the quality of management. Examples of Bank Bank technical assistance, quality-at- twr taei ucms h i activities include assisting in the entry and supervision, and the effective- challenge will be for all stakeholders to development of state-level en-virne- ns f sadaoe evrnetlagree on which outcomes matter most, tal action plans; a Zoning Atlas for operations, offering hiope and opportunity naot onlly industrial siting with environmental for this generation, but for future considerations; waste minimization MWainstr-eaming Global Concerns. Thegeraintocm.Ttiswt circles (pollution prevention techinical recent decenitralization of Globalsutialdelomnisllbu. assistance through the concept of Envfironment Facility (GEE) coordina- knowledge-sharing); and a GIS-based tion activlities to the Regions has Tli is artit -le was p repared by t/he staff of the S o uth hazardous wvaste tracking system. proVided the Bank's South Asia Region Asia Enviroccment U's/t (202,) 473-2606 fax (202) the opportunity to offer its clients a 522 1664. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 35 Promoting Sustainable Private Sector Investment Excerpts from a presentation to HRH The Prince of Wales'Business and the Environment Program (UK) International IFC's mission-To promote private sector investment in Finance developing countries, which Corporation will reduce poverty and t is increasingly clear that sustainable heavv burden on the local and global rpImprove people's lives. environmental management is good environment and will profoundly for business. This is especially true change the social fabric. Rich countries, - - - * ** _ as the private sector continues to be which have gained their wealth at times the engine of economic growth in at the expense of the environment, E E | ZE fiboth industrialized and developing rightlv want to avoid the mistakes of the countries. past and protect critical natural environ- s E * i - 3 x s ments in developing countries. Devel- * * e - - - 9 I ~~~~Jim XVolfensohn re-articulated recenitly opinig countri'es uniderstand this neced, * E i - * -Z *' * the role of the NVorld Bank Group but their priorities are often different. Em - * e. * -within a so-called "Comprehensive Food supplies, access to energy, educa- * 5 eza - - * * * a Development Framework." This tion and basic health services-all these * * a *. - framework sets forth a holistic approach imrmediate needs of the poor-have to to development. It can be likened to a be addressed with urgency and often "balance sheet," with the left side appear to be in conflict With the long- focusing on macroeconomic data while term objectives of sustainable develop- the right side encompasses structural, ment. al - m. -x .1 zi l social, and human aspects of develop- ment. Like the human brain, the right The international community has and left sides of the balance sheet would recognized the need to support develop- *1 | - S ll ll complement one another. Development ing countries in financing the cost of can only be successful if a judicial addressing global environmental system is in place, good governance is problems. In this spirit, international an accepted principle, a financial system conventions are established. For is sound, and health and education instance, the Global Environment system provde people with protection Facility, (GEE) was created to assist in and give them a chance to advance, financing the costs related to global climate change, preservation of Bv attempting to establish high stan- biodiversity, and pollution of interna- dards of environmental management, tional waters. However, the GEF, now the WVorld Bank Group can play an replenished at a level of $2.75 billion, important, positive catalytic and can play only a small, catalytic role in demonstration role. This puts an address'ing these problems. GovTern- enormous responsibility on our shoul- ments also have to do their part in ders. The shareholders of our institu- creating the institutional and regulatory tions, for example, the countries of the environment to provide market incen- world, don't always see eye-to-eye on tives toward this objective. how far and fast this responsibility extends. Increasingly, however, it falls upon the private sector to plav an important role The global environmental agenda is in providing finance to developing largely dnrven by industrialized coun- countnres and in particular in transfer- tries from a position of wealth, well- ring technology that allows developing established institutions, and strong countries to build up industrial and financial and industrial sectors. This agricultural sectors that are socially agenda recognizes that, in the future, responsible, clean and eco-efficient. Peter L. Woicke, Executive Vice President the main driver of economic growth and Again, a holistic approach is required. International Finance Corporation and increases in demand for basic products Managing Director, Private Sector and services will, however, come from While IFC may be a relatively small Operations, World Bank Group developing countries. This will put a player in the broad context of private 36 ENVIRONMENT MATTERS * 1999 investment in developing countries, we have learned a great IFC invested in Alexandria Carbon Black (ACB) Company S.A.E. (Egypt) in mid- Environment deal from our global 1992. After conducting a comprehensive environmental impact assessment, the com- and Social experiences. x\"e view pany took several steps to protect natural resources in its operations. It invested in Review Unit the IFC projects vacuum extraction, thereby minimizing dust emissions during product packaging; described in this article constructed a containment pond for production effluents rather than discharging to as positive catalytic investments that the sea; and converted from burning fuel oil to natural gas for heat and energy re- have had a true demonstration effect. quirements, using waste gas for co-generation. Further added value was created when ACB sold some of this cleaner energy stream to its nearest customer, thereby While there are a number of leading reducing their demand for and emissions from fossil fuel as well. industrial companies who have set high IFC and its private-sector partners have helped make ACB the world's only carbon environmental and social standards for black company to receive ISO 9002 (quality) and ISO 14001 (environmental) certifi- their operations, much more has to be cation. The project also included investment and technology transfer from U.S. car- done. Industrial companies are increas- bon black leader Continental Carbon, and demonstrated how private enterprises in ingly recognizing this, but the financial developing countries can promote economic development through "South-South" sector seems to be lagging behind. The co-operation (in this case between Egyptian, Indian, and Indonesian shareholders). time is gone when industrial companies could consider themselves good corpo- rate citizens on the basis of a license to Para Pigmentos S.A. (PPSA) involves the development of a 44 million-ton kaolin operate and being in compliance with deposit in northeastern Brazil for the supply of kaolin primarily to the paper indus- local laws and regulations. Foday a try. PPSA successfully completed project construction at a time when state gov- private sector company in a developing ernments in Brazil expected private enterprise to contribute to the social develop- country has to consider its impact on the ment of local communities. communities affected by its operations Through the development of good relationships with local government, universities, and on the broader environment. The citizens organizations, as well as local residents-and by understanding their tradi- executives of leading companies can no tions and needs-PPSA was able to build consensus and help residents address longer be just good operations and environmental and social concerns about the project. Construction also displaced finance managers. They have to be able nine local families. PPSA relocated them, building 11 houses, a church, school build- to manage with due attention to the ing, and community center as well as providing water and electrical utilities. In con- broader political, environmental, social, sultation with Brazil's indigenous-affairs agency (FUNAI) and Para State University, and community impacts as well. PPSA has also developed and implemented an extensive social development and medical program for the indigenous peoples living around the facility. The private sector may also have to assume some of the traditional govern- ment roles, particularly in countries social considerations-share the 1st tier in developing countries, we must whler-e the institutional fi-amework is on an equal basis. Indeed, if a project is encourage public awareness and weak. Financial institutions can no not financially sustainable, it will not culturally appropriate consultation on longer just look at the commercial and can not proceed. Of equal impor- envTironmental and social issues. IFC's performance of a creditor, but have to tance, if a project is not environmentally public consultation Good Practice consider their broader performance in and socially sustainable, it will not AIanuaZl has provided solid, practical the social and environmental areas. This proceed either. advice to our clients in helping them to is not just to respond to the pressures of achieve this goal. civil societv and to do good. It is As a multilateral development institu- essential to create a sustainable business tion, IFC must lead in promoting a How does IFC help allev-iate these environment over the long term. WNe in sustainable private sector, but we also risks, As the leading multilateral the Whorld Bank Group and particularly must be pragmatic. IFC has concen- financial institution working in the in the IFC, who work with the private trated increasingly on environmental private sector in the developing world, sector, have to convey this message, use and social due diligence because we we also work to influence other private our influence to push in this direction, realize that environmental and social financing institutions and other multi- and tailor our advisory services and our issues can be good for business. Indeed, lateral development banks through financing to achieve these objectives. ensuring that our projects are environ- policy dialogue and financing joint mentally and socially responsible is projects. WNe speak regularly with these The Comprehensive Development NOT a fad. WNTe are well aware that if institutions to ensure a common Framework considers not only economic we don't address these issues early on approach to environmental and social matters in development, but environ- and in a systematic manner, there may issues. \We also continue to coordinate mental and social ones as well. IFC is be reputational risks and, ultimately, and consult very closely with NGOs. increasingly seeking to ensure that this financial repercussions for both IFC NVe look to NGOs as partners on policy more holistic form of "sustainability"- and our clients. And, most importantly, dialogue and, more recently, even as that is, financial, environmental, and if we are to improve the lives of people potential project partners. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 37 I I harmful child labor, and how to plan for In 1992, the Kunda Cement Plant in Estonia had operated for 120 years with no lavoffs as a result of major privatizations major renovation since the 1960s. Old equipment resulted in more than 82,000 or downsizing. We may not have all the tons per year of dust emissions, as well as high levels of sulfur- and nitrogen-oxide answes,bu we try tob rove and emissions. Today, the air has cleared, thanks in part to IFC's investment. The ce- a t in tr toVbe and de ment works were restructured into Kunda Nordic Cement (KNC), a modern, effi- lpragmatec i our advsce and due cient, and privately held enterprise. dilgence efforts. KNC now stands as a model of how to produce effectively for the market while also IFC adopted recently a policy statement safeguarding the environment. New equipment was installed, reducing dust emis- prohibiting its projects from engaging sions to just over 1,000 tons per year. The benefits of improved air quality also in harmful child labor practices. The extend throughout Estonia, as far away as Finland, Sweden, Norway, Russia, policy focuses on eliminating work that Belarus, and Poland. consists of the employment of children Had the Kunda factory failed to change its operations in 1992, environmental and that is economically exploitative, or is business concerns would have probably forced the plant to close. Instead, the likely to be hazardous to, or interfere plant has continued to produce cement at the same level as during the Soviet era, with, the child's education, or to be pay salaries to local workers, purchase goods worth an average $5 million per harmful to the child's health, or physi- year, and contract-on average-$3 million per year in services. Reduced dust cal, mental, spiritual, moral, or social emissions have also made the town cleaner and reduced metal corrosion, improv- development. Following on the prepa- ing Kunda's public image and attractiveness for future investment and tourism. ration of an interirm guidance note, IFC is seeking to develop practical guidance An example of how the IFC is trans- social practices are indeed good business geared towards our clients in the private forming risk into opportunitv is though is that our developing country clients sector. Financial Markets our are increasingly coming to us for advice innovative on how to deal with these Issues. Over As part of this new development Environmental Services Unit environ- the past few years, IFC's work in the agenda, IFC continues to seek out new mental training of senior officials at social development area has expanded sectors (for example, IFC-supported financial institutions- rapidly. WVe presently provide advice to health and education), Environmental significant because about one third of our clients on such diverse issues as fund innovative Projects Unit IFC's business last year was providing rcsettlcment implementation and projects, and lead new direct support to the financial sector. monitoring, communitVy development, initiatives. IFC currently has a unit how industry and our clients deal with designed specifically to act as a catalyst IFC 's Financial Markets Environmen- tal Services Unit also conducts a quarterly weeklong workshop that teaches financial institutions how to transform increasing nrsk posed by cnviroinmenital and social issues S wE , into financial opportunity-and tilerefore conipetitive advantage. This adds to 1FC's development imnpact by affecting the wav in which financial institutions in developing countries view environmental risk. It is also important to remember that the social side of development continues to rise in importance. Developmnent is aboutin impeopande. partlofmour istraei Sarshatali consists of an opencast coal-mining project in West Bengal, apoutproah , anand part is tou strteduc eastern India. It is a project where substantial time, effort and resources approac and mandate istorhave been expended by both IFC and our client in bringing this project Poverty and improve people's lives. It is no secret, ,owevei~ that there may be up to World Bank Group standards with regard to involuntary resettle- no secret, however, that there mav be tensio between achieving .ully realized ment, community development, and environmental issues. While the tension between achieving fullv reatized cidevelopment, social I develop- greatest challenge still lies ahead in implementation, our client has made economic notable progress on a number of fronts with the help of IFC staff. These ment, and environmental protection, include the implementation of a community development initiative, which WNe are therefore trying to bring a balanced, thereforagmatryicn to bring ahas led to the special needs of local tribal groups being taken into ac- transactions, count, and the implementation of direct and open consultation with af- fected villages, using NGOs to assist with outreach initiatives and ongo- Perhaps the most important indication ing consultation. that sustainable environmental and 38 ENVIRONMENT MATTERS * 1999 we are adding value to our transactions. In the Ivory Coast, the community Indeed, we help make better projects. d ' H?.-, of Blingue, a shantytown partially As long as we can contribute to making moved to make way for the Riviera all of our projects more environmentally Marcory approach road, has been and socially sound from the outset, our in existence for over 40 years. The on-the-ground development impact can population consists of poor migrants be immense. from neighboring Mali and Burkina Faso, however, the community is a ImrvnAco talfy IF cohesive entity and well estab- I on ACountblity r/ lished. People living there had no anbdsMCACmalnc Avsr land title or security of tenure, mini- Ombudsman mal sanitation, and poor water sup- International development institutions ply. The government of the Ivory are also being called on to be more Coast paid for the majority of the accountable to the taxpayers that compensation for this project. support them and to the people thcir IFC's investment in Riviera Marcory projects affect. IFC is committed to ha's set a standard for important newimproving its accountability to project Meg Taylor, newly appointed z has set a standard for important new infrastructure investments antici- affected people and other interested Compliance Advisor/ Ombuds- pated in the Ivory Coast, which now parties. man at JFC and MIGA. has one of the best track records in resettlement in Sub-Saharan Africa. To achieve this commitment, IFC, NGOs and of several private sector Riviera Marcory has also set a pre- together with MIGA, has embarked on companies in PNG in the natural cedent by involving civil society in a a unique and innovative idea through a resources, financial, and agricultural context where formerly all opera- vice-presidential level appointment of an sectors. tions would have been handled by environmental and social Compliance the state. The NGO CARITAS man- Advisor/Ombudsman (CAO). The Through the fall of 1999, Ms. Taylor aged most of the resettlement on CAO will report directly to the Presi- will be developing procedures for access the ground. Local leaders and no- dent of the World Bank Group. to the CAO office through a consulta- table representatives of civil society tive process involving both NGOs and played a key oversight and dispute The CAO's role will be to act as a the business community. WAle invite resolution role. The project has also problem-solver to address external interested parties to keep in touch with stimulated cooperation between the complaints and concerns in a pragmatic, IFC and MIGA on how this interesting World Bank and the government in transparent and solution-driven manner. position evolves over time. the development of national policies The CAO will also provide practical and capacity building. advice to IFC management and staff on Finally, it's clear that the issue of particularly sensitive or complex "sustainability" is central to our core environmental and social issues and will objective of poverty alleviation. They are ing idojentifyin, devespecin andvitrumntu be a conduit for complainants to be inextricably linked. "Sustainabilitv" ig oj heard. includes not only addressing economic goals. and financial issues, but also environ- Last fall, IFC and MIGA appointed an mental and social development issues, Ienewsupponrtigy projet angn fatromppy outstanding external search committee including how our clients and the the Environmental Pro ects Unit drasu representing a vanrety of perspectives private sector deal with local communi- the Environmental from both the NGO and business ties in a socially responsible and on IFC's own resources as well as communities to add credibility to the accountable manner. concessional funding from sources such search process. as the Global Environment Facility (GEF). The unit will also continue to Ms. Meg Taylor of Papua New Guinea pursue new ventures, such as projects (PNG) was selected as the first CAO that mitigate climate change pursuant to from a long list of distinguished the Kyoto Protocol-including potential individuals. Ms. Taylor, a former opportunities to develop funds that ambassador to the United States from invest in greenhouse gas emissions PNG, brings a weatth of experience to To find out more about IFC's commitment to reduction. the position. In addition to her skills in ensuring environmentally and socially responsible diplomacy and conflict resolution, Ms. investment, visit IFC's wvebsite on NnWwJif ore' IFG does not mind the responsibility to Taylor has been a consultant on projects conduct envilronmental and social due dealing with complex environmental This article has been prepareel by Lis Cuabard, (202) diligenice on our mainstreami projects, and social issues for many years. She 473-7022, fax (202) 974-4348, of IFG"s Environ- because we know that in the long run has also served on the boards of both ment and Social Revief£ tnit and Shawn Miller (202) 473-1304 of IFC's Corporate Relations Untit. ANNUAL REVIEW -JULY 1998-JUNE 1999 (FY99) 39 tAL 1aV fLLG: i.A. tfl - Multilateral Investment Guarantee Agency _> tM.LG.A.]` < VNT EE NC T - he Multilateral Investment Operational Regulations are predicated, Guarantee Agency (MIGA) in part, on standard practices of the was established as a member of investment insurance industry. In the NWorld Bank Group in addition, the Convention and Opera- 1988. MIGA,'s creation wvas in tional Regulations provide the host direct response to the debt crisis of the country with a powerful role in deter- 1980s, and the subsequent realization mining the acceptability of prospective among political leaders that sustainable foreign direct investment to be insured economic growth in many developing by MIGA. and transitional countries required the stimulation of private enterprise and It is MIGN's policy that all the invest- flow of foreign capital. For this to ments it facilitates through its guarantee happen, however, many investors and program are carried out in an environ- lenders needed comfort that their mentally and socially responsible respective investments would be manner. Since mid-1990, MIGA has protected against certain types of been applying World Bank environmen- political risks. MIGA's establishment tal policies and guidelines to NIIGA lwas an attempt to address shortcomings projects, with the environmental counsel in the investment insurance (guaranitee) and advice of the IEC. Thus, i\V11GA industry, and provide a risk-mitigation has taken care that the projects it insures service that was not readily available are operated in accordance with interna- elsewhere. tionaily recognized environmental standards and practices. To fulfill its mission, MIGA was given limited programmatic means, including At the recommendation of the Board of (a) an investment insurance (guarantee) Directors, NMIIGA began drafting in program, which provides political risk 1997 its own specific policies. MIGA's coverage to foreign investors from any board instructed MNIGA management of its member countries; and (b) a to find an appropriate balance in technical assistance program, which MIGA's proposed enVironmiental assists developing member countnres in assessment and disclosure policies with attracting foreign direct investment. respect to its role as a provider of MIGA neither invests nor lends monev political risk insurance, as a develop- to investors, nor does it propose or ment institution, and as a member of the design projects. Like anv other form of \Yorld Bank Group. Achieving this insurance, investors and lenders who balance was of particular concern as want this coverage pay premiums. MIGA expands its reinsurance and coinsurance actiVities, because such MIGA's Environmental and Social activities require a relativelv high degree Safeguard Policies of harmonization benveen insurers in | When MIGA was created as a separate terms of underwriting, contractual development institution, a deliberatereuemnsadpoiywdng decision was made that MIGA would Moreover, the Board expressed concern carryout ts madateunderdiretion that MIGA be able to continue to fulfill provided by its Convention and Opera- its mission by providing a valuable risk Sustainable economic growth in many tional Regulations, rather than the mitigation service to its clients. There- developing and transitional countries IBRD/IFC svstems of Articles, Opera- fore, its Board instructed MIGA to requires the stimulation of private tonal Directives, Policies, and Proce- review its portfolio and to provide an enterprise and flow of foreign capital. dures. MIGA's Convention and analysis of the types of investors that rely 40 ENVIRONMENT MATTERS * 1999 on MIGA so that the impacts of the public review and comment, which was Regulations direct MIGA to reach a proposed environmental and disclosure a valuable contribution to finalizing an prompt decision on the issuance of a policies could be carefully weighed. appropriate policy framework for guarantee, and, to the extent possible, to MIGA. With some changes to the texts, make the decision within 120 days of MIGA's clients are private sector the Board approved MIGA's environ- receiving the completed application. investors or lenders, though publicly mental assessment and disclosure owned investors can also be eligible if policies and procedures; they took effect In essence, a potential investor applies they operate on a commercial basis. with all new applications received after for political risk insurance coverage, and MIGA's guarantees (i.e., insurance June 30, 1999. The approved policies MIGA, after determining whether the contracts) can be broadly divided and procedures are now available on proposed investor and the investment between those involving financial sector MIGA's web site (www.miga.org). are eligible, decides whether to under- investments and those involving project- write the risk. During the underwriting related investments. Financial sector The environmental assessment policy process, MIGA reviews the economic invcstmcnts typically involve the formalizes an approach to environmen- and environmental soundness of the establishment, expansion, or investment tal review that has been taken by MIGA applicant's proposed investment, and in local financial institutions. Project- for many years. The disclosure policy assesses the development impacts. A related investments are in sectors such now encompasses the required disclo- paper and a management recommenda- as manufacturing, agribusiness, infra- sure by MIGA of environmental tion are presented to the Board of structure, and resource extraction. information for projects considered Directors prior to issuance of a contract. About 30 percent of MIGA's current environmentally and socially sensitive In addition, host-country approval of contracts are for investments in the (i.e., Category A projects). MIGA's decision to offer a contract financial sector, and therefore are not must be obtained. tied to specific projects. Another 10 In addition to these MIGA policies, percent of MIGA's contracts are held bv various other environmental and social In association with MIGA's business lenders to specific projects. policies provide additional guidance to process rcview, MIGA management MIGA staff in determining the sound- expects that the overall effect of the new The remaining 60 percent of MIGA's ness of a project's contribution to the environmental assessment and disclo- contracts are for various types of development of the host country. Thus, sure policies and procedures will be a investors in projects. However, very few it is MIGA's policy that the projects it more efficient underwriting process and of these contracts have been issued to insures are consonant (if applicable) continued assurance that the agency is majority owners in the project. Overall, with the following environmental and facilitating environmentally and socially about 15 percent of MIGA's contract social policies developed by the IFC: sound and sustainable foreign direct holders are majoritv owners. In fact, Natural Habitats; Forestry; Indigenous investment. Additional information among MIGAs clients, the median Peoples; Safeguarding Cultural Property in regarding these and other environmen- ownership in a project is about 33 IFC-Financed Projects; Involuntary tal matters at MIGA is available on percent (i.e., half of MIGA's contracts Resettlement; Pest llanagement; Safety of MIGA's web site, www.miga.org (see are with investors or lenders with less Dams, and Projects on International below). than 33 percent interest in the project). Waterways. Their application is ad- These statistics clearlv highlight the dressed in the MIGA environmental importance of MIGA to minority review procedures, along with the G partners in projects, and to the financial application of MIGAs environmental sector, assessment and disclosure policies. MIGA's draft environmental assess- M16A's Busines Processes ment and disclosure policies, and the MIGAs role as a provider of invest- procedures for implementing them, ment insurance requires a very different, were the subject of extensive discussions and shorter, project cycle relative to that in 1998 bv NIIGA's Board and manage- of a lender or investor such as the This article vwas prepared i'y Harvey Uan OldAizen ment, These included a period for IBRD and IFC. MIGA's Operational of MIGA, (Z02) 473-3390, fax (202) 522-2630. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 41 Poverty and Environment ORE than ever, alleviating water and sanitation. One study estimates the poverty is the World Bank's causes of death and illness of the bottom 20 central mission. But the Bank is percent of the world's population by income constantly rethinking that effort, (GDP per capita) compared to those of the and particularly the role of richest 20 percent. It found that the two biggest environmental work in that causes of death of the poor were respiratory effort. The Bank's new environ- infections and diarrheal diseases.2 Both are linked ment strategy is putting particular emphasis on to environmental factors (dirtv water and dirty understanding the contribution of environmental activities to povertv reduction, air). It also found that diseases with strong links to environmental factors are highly concentrated First, what is poverty? Like "environment," among the poor. Sixty percent of all malaria poverty is difficult to define. It is cross-sectoral deaths, for example, occur amongst the poorest 20 and multidisciplinary and percent of the world's population. Half of all can mean different things deaths from diarrhea are among the poorest 20 to different people. percent. Another Bank study estimates that, in Traditionally, in the Bank the Indian state of Andhra Pradesh, the Bank Oldadai, Arusha, Tanzania. 'Women are most and elsewhere, indicators could reduce the burden of disease by 17 percent a.fectedbecause they have to lose most of their of income and consump- with three activities-providing clean water from bm erching for water. During the dry season .. . tome Auguse i for wuater. Ding the dpryg sea tion have been used to taps inside the house, providing private latrines, from August to January, when the springs be- define poverty. That and rcducing indoor air pollution through clean come dry, we have to walk 2 km to Kishimbo to get water. When we reach there, we find that remais an important cooking fuel. , ~~~aspect of poverty, but the there are so many people lined up for water, it definition is broadening to Environmental conditions also affect the liveli- include issues such as hoods of poor people. Poverty is overwhelmingly Southwest Province, Cameroon. "Sometimes... health, education, security, rural in most countries of the world, and the poor the water is brown. We call it tea, but we drink it and political voice.' Next often depend on natural resources. Poor women anyway." year's \'Xorld Development and children can spend several hours a day Report will focus on three collecting water and fuelwood. Often, poor Miti, Kilimanjaro, Tanzania. "Water is scarce. dimensions of poverty: people have developed complex and effective There is only one stream which becomes dry empowerment, security, mechanisms for managing natural resources, even during the dry season, June to September. The and opportunity. The over long time periods. In some circumstances, stream is about 1.5 km from here. Searching for Bank's work on environ- overl time peris. In so eaircumsanc water affects women and children, especially ment and poverty follows however; these mechamnsms can break down and school children. When they come back from this broader definition, lead to a deterioration in natural resources so school they immediately have to leave to look thinking of income poverty severe that people can no longer support them- for water rather than do their studies. You can- as well as other tvpes of selves. What causes these mechansms to break not build proper mud-brick houses because you povertv. down varies from place to place and depends on need water. People have to buy water at 400 complex interactions of social, economic, and shillings per tank (200 liters)." Second, how are environ- natural factors. Potential solutions also vary mental activities linked to enormously. Kansur, Pakistan. 'The most pressing needs of poverty reduction? One poor urban communities relate to water and direct link is through the Natural disasters-such as floods, storms, more particularly sanitation. In the absence of health of the poor. Many droughts, and landslides-have a disproportion- latrines people are forced to use open studies have shown that ate effect on poor people. This is because thev spaces .. For women this was expressed as clean drinking water and often live on vulnerable land, flood plains, or representing a particular problem as they are sanitation are important for steep slopes and in precarious housing. And, confined to relieving themselves before dawn basic health. Recent work perhaps, more importantly, they lack assets, or after dusk and are often victims of sexual ha- is allowing the Bank to savings, or other resources to meet their basic rassment or attack." quantify the importance of needs in the aftermath of a disaster. 42 ENVIRONMENT MATTERS * 1999 Is it true that poor people often degrade the What kinds of environmental activities most help Poverty and environment they depend on, People often say reduce poverty? Projects that provide safe water Environment that the poor are compelled to exploit marginal from private taps and that provide private latrines areas, which are particularly vulnerable to or toilets to poor people will play a major part in degradation. Another commonly cited trend is improving the health of the poor, as will projects that the poor have shorter time horizons than the that reduce indoor air pollution in rural areas. Of non-poor and are forced to deplete the resources course, identifying these priorities is far easier on which they depend merely to feed their family. than implementing projects that are both afford- Circumstances do exist where both of these things able and sustainable. Increasingly, however, we are true. But there are no general trends, indeed have examples where such poverty-focused there are countless examples to the contrary. And activities do succeed. A well-known example in the notion that environmental degradation the water sector is Brazil's Prosanear initiative, increases poverty, which in turn worsens the which provides low-cost water supply and degradation, is certainly not inevitable and does sanitation to poor communities in several states, not appear to be a useful way to think about the many with World Bank financing. Environmental relationship between the poor and the natural work as part of cross-sectoral initiatives to combat resources on which they depend. vector-borne diseases such as malaria would also have a major positive effect on the health of the In each situation, when planning Bank interven- poor. tions it is more useful to assess whether specific policies or interventions designed to improve Projects that improve the conditions of the natural resources management have had svstem- natural resources on which poor people depend atic impacts on the poor's wellbeing. And, when will also do much to improve their wellbeing. thinking about natural resource interventions, this Here the causal links are even more complex and needs to address who has access to resources and the points of intervention will vary from case to what policics, social rclations, institutions, and case. Interventions need to deal with the interac- policies shape the terms of that access. Activities tions between resource allocation, social relation- such as the Uttar Pradesh Sodic Lands ships, and policies that govern each particular Reclamation Project in India have seen sub- case. The Eastern Anatolia Watershed Reha- stantial improvements in the wellbeing of local bilitation Project in Turkey is a good example of communities through poverty-focused natural an initiative that followed such an approach and resource management. resulted in positive social and poverty impacts as well as improving the environment. In addition, Recognizing that the poor are the true experts on projects that help alleviate the effects of natural poverty, the Bank has undertaken a program disasters-predicting and preparing, as well as called "\Voices of the Poor." This program uses efforts to provide resources to those affected-can participatory and qualitative methods to let poor also have a major impact on the well-being of the people in some 70 countries express their views poor. about their wellbeing. To ensure that information is not being filtered through the lenses of outsid- ers, data is gathered and analyzed in the field by and with poor people themselves. Many of these ' See, for example. Bourgtuignon, R and S. R. Chakravarty. studies ask the poor to list or rank the problems A Faminly ofMultidimensional Povertv,tleasures. Working that most affect them. These lists vary consider- Paper. DELTA, Paris. January,, 1998. Gvatkin, Damidson R., and Mlichel Guillot. The Burden of ably from country to country and between rural Doisease .4mong the Global Poor Current Situation, Future and urban situations. Two items feature promi- Trends and /miplications for Strategj, Globa] Forum on nentlv n almot all f thes exercses, hwever:Health Research WAorking Paper. Juily 1999. A shorter nentlv in almost all of these exercises, however: Hversion of this paper will be publishe d in The Lancet. access to and quality of drinking water, and issues 'WVorld Bank. Ecuador: Poterty Report. 1996 relating to natural resources (droughts, floods, 4Narayan, Deepa. Toices of the Poor: Poverty and Social availability of ftuelwood, pollution, etc.). In Capital in Tanzania. Fnvironmentally and Socially aval I I 1 ~~~~~~~~~~~Sustainable Development Studies and Monographs Series qualititative surveys in the Sierra in Ecuador, for 20. October, 1997. World Bank. Icameroon: Diversity, example, respondents consistently identified lack Growth and Poverty Reduction. April 1995. For informa- oflandandoorqualityof lan (steepterrain,tion on the Voices of the Poor project, see http:// Otfland and poor quality of land (steep terrain, \xvvw.worldbank.org/poverty/. Sce World Bank poverty erosion) as primary reasons for their poverty3 assessments and participatory poverty assessments The study has also examined poor people's published by the World Bank Infoshop for results of preparedby Julia ranking exercises. Several authors (e.g. Robert ChamberspraedbJla concerns about water and sanitation in Tanzania from IDS in Sussex) have published participatorv poverty Bucknall (202) 473- and Cameroon (see Box, page 42).' analyses that inulude ranking exercises for v-anous 5323, far (202) 614- countrics. 0696. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 43 Health and Environment REMATURE death and illness due to environmental health risks account for one fifth of the total burden of disease in the developing world- The definition of environmental health is still evolv- comparable to that of malnutrition (15 ing. The conventional list of main health hazards percent), and larger than all the other in the household and community environment preventahle risk factors and groups of includes the following: disease causes (see Box). Traditional hazards-Lack of safe water; inad- In developing countries, an increasing health equate sanitation and waste disposal; indoor air burden from modern forms of exposure to urban, pollution; vector-borne diseases (malaria, etc.). industrial, and agrochemical pollution adds to traditional house- Modern hazards-Urban air pollution; agro- hold risks, which industrial chemicals, and waste. still play the larger Other health hazards may be added-at least role. On the global partially-to the environmental health category, f scale the lack of such as food contamination, occupational safety, I X | . ; X1access to clean water and natural disasters. The health and environ- and sanitation and ment nexus is broader than environmental health indoor air pollution per se ; for example, it may include health care 2 are the two principal waste management; health impact of land deg- causes of illness and radation and impoverishment; and the impact of death, which biodiversity loss on medicinal plants. These is- predomnantlyaffect sues, however, are outside the scope of this note. children and women Source: WHO website. in poor families. In all developing countries, over 2 in Disability Adjusted Life Years or DALYs (see million people, Box, next page). Inadequate water supply and primarily young sanitation (WSS) pose the largest threat to human children and health in Bank client countries, except for China women, may die as a and the transition economies of Europe, where air result of indoor pollution causes the most damage. Indoor air exposure from dirtv pollution is the highest in Asia and Africa. solid fuels each year. Malaria has taken a heavy toll on the population The health burden of Sub-Saharan Africa. Even though it is not from poor water nearly as significant in other regions, it is the supply and sanita- third-highest environmental health threat tion is even larger. globally. Regional Traditional environmental health hazards exceed Differences the impact of modern hazards hv a ratio of over Among regions, the 10 for Africa, 6 to 1O for Asian countries and 2.5 burden of disease for Latin America. Conversely, modern threats to from environmental human health prevail in rich countries and ..causes varies (seEuropean economies in transition. < c .. ~. Table), as measured Overall, the environmental health burden as a India percentage of the total disease burden is the 44 ENVIRONMENT MATTERS * 1999 Health and Environment Burden of Disease from Major Environmental Risks (worksheet) Percent of total DALYs in each country group Environmental Asia & health group AFR India China Pacific LCR FSE LDCs EME Water supply&sanitation 13 11 4.5 10 7 2 9 1.5 Malaria 9 0.5 0 1.5 0 0 3 0 Indoor air pollution 5.5 6 9.5 4 0.5 0 5 0 Urban airpollutio 1 2 5 2 3 3 2 1 Agro-industrial waste 1 1 1.5 1.5 2 2 1 2.5 All causes 29.5 20.5 20.5 19 12.5 7 21 5 Note: AFR-Africa, LCR-Latin America, FSE-former socialist economies of Europe (does not include Central Asia); LDCs (less developed countries) comprise all regions/countries in the first six columns; EME-established market economies. Regions slightly differ from World Bank regions. See a definition in WDR 1993 and Murray and Lopez 1996. Note that Asia and Pacific includes countries from East and South Asia, except for China, India, and Pakistan. Source: Murray and Lopez 1996, Smith 1998. highest in the regions that house the majority of Health and Poverty the world's poor (30 percent in Africa and 20 The observed relationships between the burden of percent in Asia) and the smallest in industrialized environmental diseases, traditional environmental countries. Within individual countries, it is again risks, and wealth makes environmental health a the poor who suffer disproportionally from unsafe pnncipal indicator of develpment and a major environmental conditions at the household and elment in achieving the Bank's pnmary objecive of community levels. poverty reduction. While the total burden of DALYs as a Measure of the Burden of Disease DALYs (disability-adjusted life years) are a standard measure of the burden of disease. The concept of DALYs combines life years lost due to premature death and fractions of years of healthy life lost as a result of illness or disability. A weighting function that incorporates discounting is used for years of life lost at each age to reflect the different social weights that are usually given to illness and premature mortality at different ages. The combination of discounting and age weights produces the pattern of DALY lost by a death at each age. For example, the death of a baby girl represents a loss of 32.5 DALYs, and a female death at age 60 represents 12 lost DALYs (values are slightly lower for males). The use of DALYs as a measure of the burden of disease has provided a consistent basis for systematic comparisons of the cost-effectiveness of alternative interventions designed to improve health. When com- bined with the results of large epidemiological studies, it enables public health specialists to identify priorities and focus attention upon developing programs that have the potential to generate large improvements in the health status of poor households in the developing world. Source: Murray and Lopez, 1996. ANNUAL REVIEW * JULY 1998-JUNE 1999 (FY99) 45 . .wr I -. - 0 I --g a- I - m 300,000 0 a) m 250,000 - o 200,000 - U Environmental DALYs 150,000 El Other DALYs D 100,000- u 50,000- _J 0 LDCs EME Source: Murray and Lopez (1996), Smith (1998). disease in rich countries, expressed in DALYs diseases, malaria) can reduce the disease burden a per million people, is about half of that in further 23 to 28 percent. Most environmental developing countnres, the disease burden from interventions are verv cost-effective as a means of environmental risks is smaller by a factor of 10 achieving health outcomes (see Box). (see Figure). This illustrates two important points: (a) health, Improving Environmental Health especially the environmental health component, is Environmental health risks can be prevented or a principal outcome of many interventions and significantly mitigated through a variety of project activities outside the health sector; and (b) economic activities in different sectors. a key development objective of improving people's health requires a holistic approach to For mitigating traditional environmental risks, mitigating major risks by integrating efforts better infrastructure and energy services for inside and outside health care systems. This households and communities are the key mea- approach is particularly important for improving sures, together with improved housing and vector the health of the poor-the group most vulner- control interventions. For reducing modern risks, able to both main environmental hazards and pollution prevention and abatement measures deficiencies in health services provision. through setting and enforcing environmental standards, developing the culture of environmen- Bank experience With environmental health as a tal compliance, and creating effective incentives primary project objective has been limited due to are needed. In Sub-Saharan Africa, for example, (a) lack of awvareness of the scale of the problems remedial measures outside health care systems, and of the means of dealing with them; and (b) such as improved water and sanitation, household the complex and multisectoral nature of the energy, housing, vector control, and pollution causes of the problems. The Bridging Environmen- management, are estimated to reduce the total tal Health Gaps initiative in the Africa region has burden of disease by 23 to 29 percent. Health been a major exercise to date. There is, however, a care interventions aimed at the same clusters of growing interest in these issues both by Bank diseases that are affected by environmental factors clients and Bank staff, facilitated by a sharpened (e.g., diarrhea, respiratory symptoms, eye focus on poverty and outcome-oriented activities. 46 ENVIRONMENT MATTERS - 1999 Health and Environment Cost-Effectiveness of Interventions to Improve Environmental Health A review of selected studies undertaken by the World Bank to assess the effectiveness of measures outside the health sector in achieving health improvements (i.e. preventing the loss of DALYs) provided the follow- ing estimates of the costs per DALY saved for various interventions: . Hygiene behavior change (WSS)-$20 per DALY (EHP 1998) . Malaria control-$ 35-75 per DALY (Mills, 1997) * Improved stoves (indoor air)-$50-100 per DALY (Smith 1998) . Improved quality of urban air-large variations, from negative costs (e.g., replacement of two-strokes engines) to $20,000 per DALY and more for some pollution control measures. WDR 1993 suggests that interventions up to $150 per DALY saved should be considered cost-effective. Source: World Bank estimates. Health and the New Environment * Integrate critical environmental health issues in Strategy the operations of the relevant sectors, such as Current work on a new World Bank Environ- indoor air pollution in energy operations; health ment Strategy pays serious attention to environ- considerations in WSS projects; urban air mental health by promoting three major types of pollution in city development strategies; quality activities: of fuels in petroleum sector restructuring work; and Improve knowledge of environmental health problems and develop an appropriate response, * Adopt a holistic approach to development taking account of institutional, financial and impacts consistent with the Comprehensive social constraints; launch advocacy and dissemi- Development Framework (CDF), which focuses nation activities; deepen collaboration with on tangible improvements in human health and strategic partners such as Whorld Health Organi- facilitates cross-sectoral collaboration inside the zation (WHO), UN agencies, and bi-lateral Bank and in client countries to achieve these organizations with experience in environmental impacts (e.g., "child survival" programs health; composed of multisectoral interventions that are most crucial for reducing child mortality). ~~ ~ On the global scale the lack of access to clean water and sanitation and indoor air pollution are the to principal Acauses of illness and -~~~ ~~ death, which predomi- nantly affect children and women npoor families. This article was < ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~prepared bi Kseniya z fxo~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Jvosky, (202) 473- L) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~6120, fax (202) 522- 13 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1664. ANNUAL REVIEW *JULY 1998-JUNE 1999 (FY99) 47 Energy and Environment HE links between energy and regarding future emissions of greenhouse gases environment present a difficult and their likely impact on global climate. Even in paradox in the development debate. scenarios with fairly optimistic assumptions about Energy is vital to economic develop- the growvth of hydropower and other forms of ment; poverty, will not be reduced renewable energy, carbon emissions from burning Awithout greater use of modern forms fossil fuels are predicted to increase quite dra- of energy. At the same time, the matically. They will probably double, from a total provision of energy services-especially through of 6.5 gigatons today to 13.8 gigatons by 2050, the combustion of fossil fuels and biomass-can according to mid-range scenarios developed by create and contribute to adverse environmental the Intergovernmental Panel on Climate Change. effects such as indoor and urban air pollution, acid rain, and global climate change. While the industrialized world is now having to deal with the environmental legacy of its past Dealing with the implications of rapid growth in energy use and policies, the developing world has energy demand presents a tremendous challenge the opportunit to ensure a more benign relation- ship between economic growth and energy _- - - - _consumption by pursuing efficient production processes and reducing waste, by using fuels Gtoe more efficiently,, and by relying more on 20 renewables. 16 j D eve oping COL