PO ; @-l24770 0 I ', K / t! - ' - \ I~~~~~~'~V se ' -/ f ),- - / ,wi tollrard ~ ~ ~ ~ ~ ~ ~ s,l eivrn na-adscalSibedipct*20 e 7i 1o-- ''A-DB' CMa B ° ODWi [I $SX djw3~~~~~~~~M - - ; On *Di WA XUM G& 0 o & - ,- oAz lumW 2, ~ ~ ~ ~ ~ ~ ~~mo&mf Wt --m .g~Dt .b , ;e bS D1§ fQ5 LETTER FROM THE PRESIDENT BUILDING A FOUNDATION FOR GLOBAL COLLECTIVE ACTION O ver the past year or more, we can see encouraging signs of a growing consensus on a development agenda. It emerged from the Millennium Development Goals defined in the Millennium Summit; the Doha Trade Round; and the agreements on common responsibility and accountability reached in the Monterrey Summit of Financing for Develop- ment. At Johannesburg and beyond, there is an opportunity to consolidate this consensus into an agenda for global collective action. This sustainable development agenda is based on the primacy of country ownership and stewardship for poverty reduc- tion; long-lasting partnerships between the public and the private sectors and with civil society; strong and stable poli- cies and transparent and well-governed institutions; and a vibrant private sector to play a pivotal role in socially responsible technological transformation. Enlightened public policy must provide the enabling and regulatory environment. For the private sector, corporate responsibility together with profits should represent the guiding principle. The key is achieving sustainable, equitable, long-term economic growth that is both environmentally and socially re- sponsible. For that to happen: Developed and developing countries must affirm their commitment to achieving the Millennium Development Goals by 2015 in a sustainable manner. Reaching the goals only to discover that the achievement cannot be sustained would be a tragic waste. Developed and developing countries, the public sector and the private sector, governments and civil society must build the partnerships that will take us beyond 2015 toward a prosperous and sustainable future. Actions must be taken this decade to lay the foundations that will carry us well into the middle of this century. Global and national policies, investment strategies, and new institutional relationships will need to be developed. In an increas- ingly interconnected world, the management of fragile ecosystems, transboundary water systems, communicable dis- ease, climate change, and scientific and technological pathways and knowledge systems warrant attention-they will require cooperative action and new institutional relationships. In an increasingly mobile world, issues of demographic change, migration, social conflict, and social exclusion need to be addressed. Increased attention should be given to global public goods-especially environment and research and development-and to promoting long-term development of social and human capital and social inclusion. At Johannesburg and beyond, world leaders have a historic opportunity to define a vision of sustainable development and social justice, one that combines actions for the next decade to assertively address poverty and lack of opportunity for poor people, as well as actions that can lay the foundation for future generations to enjoy an era of responsible prosperity shared by all. James D. Wolfensohn Environment Matters is a magazine of the World Bank Group. Visit th eW t , magazine at the Bank's website- -V elco m e to http://wwv.worldbank.org/ Environmentally and Socially Sustainable m a tte rs... Development Network Managers Chairtthen ofAgswolledrwii i T Lfote Ian Johnson t thc end of August this yeat, world leaders will gather in Johannesburg for t Environment World Sunimit on Sustainable Development to face together the dual challenge of Kristalina 1. Georgieva t c Rural -slriniking the ranks of the poor and laying the foundations for a sustainable future. Kevin M. Cleaver Social Steen Lau Jorgensen The scale of this challenge is dauntiig. In the next decades, our planet is expected to accom- inodate an additional 2 billion people, almost all ofthem in developing countries. It must also Environment Matters is produced by the ineet the legitimate aspirations for a better life of the nearly 3 billion impoverished people World Bank's Environment staff with contributions from the Bank's Regions. makinig less than $2 per day. A poverty-free, prosperous, and nmore equitable world will require today's $30 trillion world econiomy to quadruple by the middle of the century. To do Editorial & Production Team for the Annual Review this and maintain the health of the biosphere that supports us all, we siniply cannot rely on Technical Editor currenit economic patterns. Starting in the rich world, major transformationi will be needed to David S. Cassells de-couple growth and environmental impacts, radically chanige the composition of the world's Story Editor output toward high-input efficiency and environmental responsibility, and redefine consump- Robert T. Livernesh tion patterns. Designer, Photo and Managing Editor Jim Cantrell This edition of Environment Matters grapples with these issues. It examilnes the challenges of Associate Photo Editor equitable development, resource use efficiency, and treating natural capital as a key factor in Gerardo Cruz sustainable development. It looks into the critical building blocks for a more sustainable Editorial Assistants future and some of the important lessons learned since the 1992 Rio conlference. It sumima- Diane Flex rizes the portfolio of Bank projects and initiatives that are contributing to the implemenitation Emanuela Montanari Stephens of our new Environimiient Strategy, and demonistrates vhy the environment really does matter Special Contributors if we are to achieve the Millennium Development Goals. Anjall Acharya Judith Edstrom Anita Gordon As you read this year's Environment Matters, I would challenge you to think of the implica- David Hanrahan tions for your own work and lifestyle as we work together to create a nmore equitable and Notes: sustainable world. All $ = U.S dollars Thanks to Conservation International and Bank staff members J. & K MacKinnon for the biodiversity images on pages 12-27. rista eorgieva IBRD maps numbered 31562 through Vtrector 31567 contained in the Regional Environment Department section of the magazine were produced by the Map Design Unit of the World Bank. The boundaries, colors, denominations and any other information shown on these maps do not imply, on the part of the World The World Bank roup Bank Group, any judgment on the legal The World Bank status of any territory, or any endorsement or acceptance of such IBRD IDA IFC Ij1I>G ICSID boundaries. International Bank Internatiornal International Multilateral International Cover image. COREL Corporation for Reconstruction Development Finance Investment Centre for and Development Association ,Corporation Guarantee Agency settlement of Publications Info: 202-473-1155 Investment General Inquiries: 202-473-3641 Disputes Department Fax 202-477-0565 Web address. http://wwwworldbank.org Established in 1945 Established in 1960 - Established inm[56 Established n 1988 ztEstablished in 1w966 184 countries own. 162 members .j i :c-i.A e 154 members 133 members Printed with soy ink on recycled, chlorine- subscrbe to its capital free paper Please recycle 4 Lends to credirworthy Lends at a favorable e :1 e- , Assists econ-oriic Provides facilities for borrowing countnes- rate to poorer developmenthr6ough -i ih`e conciliation and based on high real rates countries with a per F :T*. Ih ..:irv _i- loan guarantees to .Qarbtratiorofdisputes ~~LLZLfl The World Bank Group ~~~~~~~of economic return captia income In 25000 r ..s.-:.:c foreig inveiffirs cu~ri The World Bank Group -gn~~~~~~~~-.~vstos~ 1818 H Street, NW of leis than5 i85and i . e. . 20433 lack the nancial abiliy to borrow from lBRD- Annual Review .2002 Letter from the President 1 VIEWPOINTS: CHALLENGES FOR JOHANNESBURG Natural Capitalism -A New Industrial Revolution 4 * for a New Century Amory Lovins proposes an environmentally friendly alternative i: . business model. . ei Development as if Equity Mattered 6 Angela Cropper argues that the development process should have J cquity as a defining outcome. i Linking Poverty Reduction and Environmental 8 : _ _- , Management Four international agenicies focus on ways to reduce poverty and sustain development by improving environmienital managemilenit. REGIONAL REVIEWS Africa 34 LEARNING FROM THE PAST AND LOOKING FORWARD ln Africa, the World Bank's mission to fight poverty is closely Building a More Sustainable Future 1 2 intertwined with environmental protection and natural resources. Jeffrey Sachs and Herman E. Daly speak at ESSD Nlonth on the East Asia & the Pacific 38 imealiiiig of sustainable developme nt. Environimental conditions arc generally worsening, furthier Making Carbon Finance Work 1 8 jeopardizing the prospects for continlucd growth in the: region. Strategies to manage greenilouse gas emissions and lower the Europe & Central Asia 42 costs of compliance with the Kyoto Protocol. The most serious problem in Central Asia is the availability of An Environmentally Sustainable Approach to 20 watcr to support energy irrigation, and drinkinig re(quiremiienits Water in Southern Africa A new report outlines practical measures to maniage water n Latin America & the Caribbean 46 Southern Africa. CouLitries in the regioni face difficult environental and rcsource problems in both rural anld urbatn areas. A Better Future for Forests 24 Thie Bank's proposed new Forest Stratcgy aligns the Banik's Middle East & North Africa 50 forest-related activities with the Batik's major institutionial The most difficult environniental issues include dcclining per objectives. capita water resources, the loss of arable land, pollution-related healthi problems, aid xveak cenvironmiiienital illstitLtions and legal Market-Based Mechanisms for Conservation 26 frameworks and Development Market-based mechaniisms can support conservation and provide South Asia 54 additional and diversified income for rural development. Most environmental problems in the region are rooted in poverty itself, and compounded by complex governance, ciltural, and MEETING SUSTAINABLE COMMITMENTS political issues. The Millennium Development Goals and 28 ISIUIN the Environment INSTITUTIONS In four key areas-livelihoods, healti, vulnerability and Promoting Sustainable Private Investment 58 participation aiid empowerment-envirornmenital managerimenit can help achieve the MDGs. IFC plays an importanit role in fostering sustainable development in emerging markets through its investments and advisory Implementing the Environment Strategy- 30 services Refocusing our Activities and Priorities (includes a World Bank Environment Strategy pullout brochure) Lessons and Future Directions for Learning 62 In the course of implementinig the Enviroiinmenit Strategy, the As part of the WVorld Bank's preparations for the JohaeICsburg Bank has takeni several steps to strengthen institutional incenitives Summilt, the 'World Bank Institute (\VBI) is offering an array of and help integrate environmiient into the Bank's work programs. learninig and training events. tN4wAniJuNri Ievo 4&tAno i rhev&ceztt4 VIEWPOINT by Amory Lovins Capitalism\ is the productive use and reinvestment of capital, percent of power-plant fuel into light. The U.S. economy wastes e/tIcapita .comprises not only money and goods, but also at least $300 billion worth of energy every year, despite past people and nature, which are even more valuable. Without savings of about $200 billion a year. 'jnaural capital" there is no life and therefore no economic ac- tivity>atie' provides such "ecosystem services" as nutrient Such gross shortfalls are a business opportunity. New design cycling, climatic stability, atmospheric composition, and bio- practices can make very large resource savings that cost less logical productivity. Estimating the correct value of ecosystem than small or no savings. For example: services will doubtless be long debated. However, we don't * DuPont plans in this decade to increase its revenue 6 percent need to spend decades arguing how much it's worth before we a year without increasing its energy use (by raising its can use it as if it were valuable. energy productivity at least 6 percent a year); to get a tenth of its energy and a fourth of its raw materials from renewable To protect these essential services and to help lift the millions sources; and to cut its greenhouse gas emissions to 65 of the world's poor out of poverty, the new imperative is to use percent below the 1990 level-all in the name of shareholder resources such as energy, water, fiber, minerals, and topsoil far value; more productively. This is not because oil and copper are be- * Ultralight, ultralow-drag, hybrid-electric HypercarssM coming scarce-powerful extractive technologies keep bring- (<>) can provide uncompromised ing commodity prices to new lows. Rather, it is to protect the customer attributes and decisive manufacturing advantages biosphere that sustains life and because such huge gains in re- while saving 82 percent of their fuel use. source productivity are highly profitable. In general, integrative design that optimizes whole systems for What is proposed is an alternative business model that yields multiple benefits, not isolated components for single benefits, astonishing benefits not only for future generations, but also can make very large resource savings that cost less than small for today's shareholders. Its operational principles enable busi- or no savings: that is, it can make investment in resource effi- nesses to behave as if they were properly valuing natural capi- ciency yield not diminishing returns but expanding returns. tal-and are highly profitable even today, when natural capital is effectively valued as zero. Natural capitalism combines four Redesigning Production richly interlaced and mutually reinforcing principles: (1) using The second key principle of natural capitalism is to redesign resources 10 to 100 times more productively; (2) redesigning ' ' b production on biological lines (<>), with production on biological lines (<>), closed loops, no waste, and no toxicity; (3) shifting businesses with closed loops, no waste, and no toxicity. This reduces pres- from selling goods to leasing a continuous flow of services; and sure on natural systems, turns wasted materials into inputs for (4) reinvesting profits to restore, sustain, and expand natural composting or profitable remanufacturing, and often yields capital. superior products at lower costs. For example, when Steelcase Resource asked architect William McDonough and green chemist Dr. Increasing Resource Productiviq Michael Braugart to redesign a textile, they reported that ehmi- The first step is to use resources 10 to 100 times more produc- nating the toxic 99.5 percent of cloth-treating chemicals yielded tively. Only 1 percent of today's resource flow ends up in du- a more attractive and durable product and cut its cost, because rable products. Today's cars use only 1 percent of their fuel the process could no longer poison the workers or the neigh- energy to move the driver. Ordinary light bulbs turn only 3 bors. 4 ENVIRONMENT MATTERS * 2002 RedesignIng dtIhe1[ ing, sustaining, and expanding natu- Business ~~~~~~~~~~~~~~~ ~ ral capital to yield more durably abundant biotic resources and ecosys- Both this biomimicry and advanced re- ter services. Farmers grow more food source productivity are rewarded by with higher profit and lower risk by _ 2, ~~~~imitating ecosystem behavior rather natural capitalism's third element-a i ehe _ i . ~~~~~than treating soil like dirt. Major com- shift of business model from selling t treating soi e. Majri com- goods to leasing a continuous flow of . panie lawns and biological wastewater service that meets customers' evolving t - l e value needs. For example, in Europe em - As more firms model their production and Asia, Schindler leases vertical trans- m o fin mdel their prodution , * /-= A\ s ~~~~~~~~~~~~~~processes o n aeterfesok portation services instead of selling el- p e o a take t \ i_ - ~~~~~from natural systems, more will ben- evators. Dow leases dissolving services systems, morewilben- instead of selling solvents, and Carrier e algns the interests of providers~ an cus frmeti naturalcail,ndfwril is starting to lease comfort services in- ment in natural capital, and fewer wil stead of selling air conditioners. This risk suffering the key business con- / , - ~~~straint of this new century-nature's aligns the interests of providers and cus- srito hsnwcnuyntr' tomers, rewarding both for the same falling behind on its deliveries of eco- thing-doing more and better for longer system services. with less. Firms that downsize their unproductive tons, liters, and kilo- .. . . ~~~~~~~~watt-hours can then provide more and better work for more Interface, a $1.5 billion global firm based in Atlanta, has com- watt-hours ries then shide more and income bined the first three principles of natural capitalism and now people. Countries that shift taxation from jobs and income to gets 27 percent of its operating profit from eliminated waste- depletion and pollution will need less tax revenue to repair the damage to both families and nature. Indeed, by applying to a $165 million so far. Its new carpet, Solenium%M contains noth- woect h aeitgae einpicpe n nrpe ing toxic, is certified climate neutral, doesn't stain or mildew, can be washed with a garden hose, and is five times more du- neurship that natural-capitalist firms apply to their production rable an 5ecetlesmteil-neniethnnomprocesses and equipment, the Brazilian city of Curitiba has pros- rable and 35 percent less material-intensive than normal car- prdee sispplto uduldadtdso oet pet. Next, Interface is beginning to lease a floor covering service lapped around it. Curitiba has built one of the world's great rather than selling carpet, so only the worn one fifth is replaced, cities-not through wealth but through design, in a brilliant not the whole area. This raises the materials savings to 97 per- processldb architets mil by wen. cent-and soon to 99.9 percent, because Solenium is designed to be completely remanufacturable into identical products with Toward a More Sustainable Future no loss of quality. Next will come conversion to renewable feedstocks, such as polylactic acid made from corn wastes. Natural capitalism will subsume industrial capitalism into its new paradigm much as industrial capitalism subsumed agrari- anism. This shift will take time. However, it is already acceler- Interface is doing well by doing good. The first four years of its a ating as early adopters gain stunning competitive advantage. transition to natural capitalism doubled revenue, nearly AsEgrWoademkdwhnCimnofD ot,c- doubled employment, and tripled operating profit. Imagine how hardit i tocompte ith ucha fim,hichuse9799 panies that take such opportunities seriously will do very well. how hard it is to compete with such a firm, which uses 97-99.9 Toeta o',h de,wntb rbe,bcuete percent less raw material and 90 percent less capital to deliver ultiat won't be ad. a better service at higher margin and lower costs. In addition, this service comes as a tax-deductible operating lease to the For more information on the ideas in this article, see Amory customer. This illustrates the kind of competitive break- Lovins and Paul Hawken's book Natural Capitalism: Creating the through-through competitive advantage-that early adopt- Next Industrial Revolution, which was published by Earthscan in .1999. See also their website <>. ers of natural capitalism are achieving. Amory Lovins is a co-founder and co-CEO of the Rocky Moun1tain Reinvesting Profits Institute, an independenit, market-oriented applied research center working mainly with the private sector. His work has been recognized by receipt of the "Alternative Nobel," Nissan, and Mitchell Prizes; the In the fourth aspect of natural capitalism, prudent capitalists Happold Medal; and the Heinz, World Technlology, Lindenberg and will invest their profits in the most productive way-in restor- "Heroes for the Planet" Awards. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY02) 5 D E V EN T AsI quir Malre) VIEWPOINT by Angela Cropper TheimminentWorld Summit on Sustainable Development Equity is more perceptible by its absence in any given rela- awill Jttemiptto assess progress made in advancing along tionship or situation-more evident in its breach than in its the course of sustainable development. We are likely to hear realization. Indications of inequity abound in all sectors of fromi the official Summit reports about the considerable public activity and in all spheres of human interaction. Eq- progress that has been made, for which conventional mea- uity has to do with powerlessness, and absence of opportu- sures of economic activity will be tendered as evidence. From nity, including lack of access to political processes and the fringe events, we can expect the usual reams of analysis political resources to advance one's cause. illustrating that no such progress can be claimed, based on a lot of other evidence, and especially on the inadequacy of There is some hard evidence that should not be ignored. The those conventional measures to tell the real story. World Bank's own figures show that even as worldwide real income is increasing, the gap between richest and poorest is Why is development generally leading to more and not less increasing, with 84 percent of the world's population receiv- inequity? In all of this, this question is unlikely to emerge at ing only 16 percent of the world's income. From UNDP's all, let alone be considered central to the assessment. In sus- 1999 Human Development Report, we learn also that in 1999 tainable development discourse, equity, whenever men- more than 80 countries had lower per capita incomes than tioned is usually considered in terms of intergenerational they had a decade or more before; that during the years 1994- equity. We do not pause to assert that the development pro- 98 the world's 200 richest people more than doubled their cess should in the first instance have equity as a defining net worth, to more than $1 trillion-the equivalent of the outcome for the present generation. This is a missing dimen- combined annual income of 41 percent of the world's people. sion in development debate and practice, both internation- And we have long heard that about one-fifth of the world's ally and nationally. population earn-and live on-the equivalent of less than $1 per day. Equity is a political notion. It does not lend itself to precise definition or measurement-not unlike democracy or par- Concern about equity goes beyond distribution of income ticipation, for that matter. It goes beyond the notion of equal- and wealth. Those without income or wealth are the same ity or asymmetry of income and wealth distribution. It is people who are without access to clean drinking water, con- concerned with justice; with elimination of discrimination; venient energy services, health care, basic education, and with securing a voice in institutions; with access to relevant the foundations for sustaining their livelihoods. Only occa- information and political processes; with fair and conscio- sionally do we point out that these same people lack access nable enjoyment among all of the benefits from the use of a to public decisionmaking processes and to political resources nation's (or the planet's) resources; and with consciousness that are essential for recognition of and attention to the struc- of the needs of others. tural and persistent inequity of which they are victims. 6 ENVIRONMENT MATTERS * 2002 In a recent international conference- ' /| \\ / jIa1|I7E T *Evidence-based tools for the International Conference on De- \i IIII \* ll ,.l! -I l.I planning, such as annual household velopment as if Equity Mattered, held surveys that would empirically in Georgetown, Guyana in September 1 measure social vulnerability as well 2001-participants examined why it LI as distribution of benefits of public is difficult to achieve equity as an out- . expenditure at the national level come of national development plan- \_. * A comprehensive, intersectoral, ning. They concluded that the most - human development strategy that critical issue is lack of local participa- specifies measures for achieving tion and empowerment. I- equity in education, equity in health, tion and empowerment. c equity in the labor market, with '. - ~~~appropriate attention to gender, Among countries, a similar pattern of a a exclusion and vulnerability is evident. ethnic, and minority considerations * A sound investment strategy for Ownership of capital and technology . Ae effective use of human and natural is increasingly being concentrated in the advanced economies. The free * Structural and functional decentralization of flow of goods and services and the competition they bring governance-a more "'direct democracy" model of is undermining and eroding local entrepreneurship, putting developmena phae devt ofracisioneakin many out of business and even more out of employment. tovlolevels to local levels * Establishing or strengthening mechanisms for people to Yet there is no concerted effort or dedicated process to ex- participt fl ingthendveomecnt sms participate fully in the development process. plore and expose the shortcomings of the development pro- cess, national and global, and to press for redressing them. Internationally, development targets and mechanisms with Even where conscionable individuals and organizations, mo- measurable objectives are needed. However, we have seen tivated by concern about these public interest issues, have repeatedly that collective effort on the part of civic society called these consequences to attention, the reaction has been to call attention, in the fringes of global meetings, to the to fence them out, instead of acknowledging and working downside of development remains just there-on the fringe. to rectify the limitations in policies and processes. No doubt the same will be the experience from the Johanunesburg Summit. Yet, until we find a mechanism dedi- Why can't international cooperation operate to favor the cated to systematic identification of and continuing atten- disdadvantaged, the marginal, the weak, to create opportu- tion to the real outcomes of the development process with nity for them to catch up instead of the opposite? Should authority and credibility, we will not be able to address the development not have as its cardinal objective the reduc- growing inequity, and the personal violence, national social tion of inequity? Why can't we make access to education, disorder, international terrorism, and other manifestations health, housing, and livelihoods rights-based and not com- of desperation that have become daily fare. passion-based? What is it that operates in us to dismiss such questions as naive and idealistic? Concern about equity provides a practical and powerful Angela Cropper is a sustainable development specialist from Trinidad and Tobago. She is the Co-Chair of the Millennium Assessmrent and Chair of focus for both planning and assessing development at all the Board of Trustees of the liookramiia Internationial Centrefor Rain levels. Development that has as a major objective reduction Forest Conservation and Development. She wvas the inaugilral executive secretaryfor the Convention on Biological Diversity. She also held the of inequity would require at the national level: position of Governance Officer for IUCN-Tlhe World Coniservationi Unioni. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY02) 7 POVERTY REDUCTION and ENVIRONMENTAL management a ddressing environmental issues that matter to the 0 Improving the quality of growth to promote sound poor is critical to sustained poverty reduction and environmental management and protect the environmental assets achieving the Millennium Development Goals. .. and livelihood opportunities of the poor. But this requires a more "pro-poor" and integrated 0 Reforming international and industrial-country policies approach-linking action at local, national, and glo- to address the poverty and environment concerns of developing bal levels. countries and the poor. This article is based on Linking Poverty Reduction and Environ- mental Management, which was prepared as a contribution to the 2002 World Sumnit on Sustainable Development by DFID; POVERTY AND IMPROVE THE ENVIRONMENT DG for Development, EC; UNDP; and the World Bank. It fo- cuses on ways to reduce poverty and sustain growthb im ' cuses on ways trThe environment matters greatly to people living in poverty. proving environmental management, broadly defined. It seeks 'The poor often depend directly on a wide range of natural to draw out the links between poverty and the environment ,-, . ~~resources and ecosystem services for their livelihoods; they and to demonstrate that sound and equitable management of are often the most affected by unclean water, indoor air pollu- the environment is integral to achieving the Millenmnuim De- in piao dtion, and exposure to toxic chemicals; and they are particu- velopment Goals, in particular to eradicating extreme poverty * velopment Goals, poverty ~~~~larly vulnerable to environmnental hazards (such as floods, and hunger, reducing child mortality, combating major dis- eases, and ensuring environmental sustainability. / prolonged drought, and attacks by crop pests) and environ- ment-related conflict. Addressing these poverty-environment Four priority areas for sustained policy and institutional linkages must be at the core of national efforts to eradicate change are highlighted: ,poverty. O Improving governance to create a more enabling policy and institutional environment for addressing the poverty- Many opportunities exist to reduce poverty by improving the environment concerns of the poor, with particular attention to environment-but there are significant and often deeply en- the needs of women and children. trenched policy and institutional barriers to their widespread O Enhancing the assets of the poor to expand sustainable adoption. The decade of experience since the 1992 Earth Sum- livelihood opportunities and to reduce the poor's vulnerability mit in Rio reveals some important lessons that help point the to environmental hazards and natural resource-related conflict. way forward. Three broad lessons are highlighted here: Department for * Directorate General United Nations The International * * * for Development, Development World Development * . European Commis- Programme Bank sion mm 8 ENVIRONMENT MATTERS * 2002 O First andforemost, poor people must be seen as part of the into sub-national policy and planning processes solution rather than part of the problem. Efforts to improve and sectoral investment programs. environmental management in ways that contribute to 0 Empower civil society, in sustainable growth and poverty reduction should reflect particular poor and the priorities of the poor. Supportive policies and marginalized groups, to a. institutions are needed, including access to information and influence environmental , decisionmaking, that expand the poor's opportunities to management policy and ,' invest in environmental improvements that can enhance planning processes at all their livelihoods. At the same time, it is essential to address levels by expanding public I f the activities of the non-poor, since they are the source of access to environmental . - most environmental damage. information, decisionmaking, O The environmental quality of growth matters to the poor. and justice. * * O~~~~~~ Address gender dimensions of \^ri It cannot be assumed that environmental improvement can 0 be deferred until growth has alleviated income poverty and poverty-environment issues by rising incomes make more resources available for ensuringthattheyarefullyintegrated environmental protection. This ignores the importance of into the formulation, implementation, and environmental goods and services to people's livelihoods monitoring of poverty reduction strategies and related and well-being, and how the diversity of these goods and policy reforms. services contribute to the poor's opportunities for moving 0 Strengthen anti-corruption efforts to protect the out of poverty. Further, there are many examples of how environment and the poor by improving legislative and bad environmental management is bad for growth, and of regulatory frameworks and oversight mechanisms, by increasing the penalties for violators, and by ensuring how the poor suffer most from environmental degradation. effective mechanisms for feedback from communities to Ignoring the environmental soundness of growth-even if enforcement agencies. this leads to short-run economic gains-can undermine O Redocementiaences. ";, ~~0 Reduce environment-related conflict by improving growth itself and its effectiveness in reducing poverty. \;conflict resolution mechanisms in the management of O Environmental management cannot be treated separately P natural resources and biodiversity and by addressing the from other development concerns. Rather, it must be a e i underlying political and economic issues that affect integrated into poverty reduction,,and sustainable intgrte into pov y rresource access and use, including the role of corruption. development efforts in order to achieve significant and 0 Improve poverty-environment monitoring and lasting results. Improving environmental management int assessment by strengthening government and civil society ways that benefit the poor requires policy and institutional capacity to monitor environmental change and how it changes that cut across sectors and that lie-mostly outside affects the poor, by integrating poverty-environment the control of environmental institutions-changes in indicators into national poverty monitoring systems, and governance, domestic economic and social policies, and by building capacity to apply monitoring and assessment international and industrial-country policies., results to poverty-environment policy formulation and implementation. IMPROVING GOVERNANCE ENHANCING THE ASSETS OF THE POOR O Integrate poverty-environment issues into national development frameworks by addressing the environ- O Strengthen resource rights of the poor by reforming mental concerns of the poor in nationally owned poverty policies and formal and informal institutions that influence reduction strategies and related macroeconomic and land and natural resource access, ownership, control, and sectoral policy reforms, so that they can become national benefit-sharing, with particular attention to resource rights sustainable development strategies. for women. 0 Strengthen decentralization for environmental 0 Enhance the poor's capacity to manage the environment- management by integrating poverty-enviromnent issues including conservation and sustainable use of land, water, ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 9 andbiologicalresources,andaccesstocleanenergy,water, poor, by providing incentives for local enterprise and sanitation services-by strengthening local development based on the sustainable use of biodiversity management arrangements and capacity and by (such as community-based ecotourism or sustainable supporting women's key roles in managing harvest of natural products), and by putting in place =-s natural resources. appropriate regulations and voluntary codes to safeguard 0 Expand access to environ- the interests of the poor and the environment. -^ r . mentally sound and locally 0 Implement pro-poor environmental fiscal reform by i; *' ' w appropriate technology- pricing natural resources appropriately, particularly energy such as crop production and water; by expanding the use of fiscal incentives to technologies that conserve promote environmentally sound practices and sustainable soil, water, and agrobio- use of biodiversity; by improving the use of rent taxes to diversity and that minimize better capture and more effectively allocate natural resource the use of pesticides, or revenues; and by improving the use of pollution charges 4. 1$' * -. ft *appropriate renewable to better reflect environmental costs in market prices. - energy and energy-efficient technologies that also minimize REFORMING INTERNATIONAL AND _- *-- ~~~air pollution-by improving pro- tection of and access to indigenous INDUSTRIAL-COUNTRY POLICIES knowledge and technologies, by improving incentives for pro-poor technology development, and by involving the 0 Improve international and industrial-country trade poor in technology research, demonstration, and policiesbyaddressingtrade-environment-povertylinksin dissemination. the negotiation and implementation of multilateral trade O Reduce the environmental vulnerability of the poor by' agreements, by reforming trade-distorting agricultural strengthening participatory disaster preparednes's and risk '< subsidies and trade barriers to give developing countries reduction and mitigation capacity, by supporting the formal equitable access to international markets and to encourage and informal coping strategies of vulnerable;grouips, and environment-friendly products and trade practices, and by by expanding access to insurance and other risk eliminating subsidies that lead to unsustainable management mechanisms. , - exploitation-such as subsidies for large-scale commercial fishing fleets that encourage overharvesting in developing- IMPROVING THE QUALITY OF GROWTH country fisheries. ---__ _ __ O Make foreign direct investment more pro-poor and pro- environment by encouraging corporations' compliance O Integrate poverty-environment issues into economic with the revised Code of Conduct for Multinational policy reforms by expanding the use of strategic . Enterprises from the Organisation for Economic Co- environmental assessment and poverty social impact operation and Development, by raising awareness among analysis approaches and by strengthening environmental shareholders and investors of corporate social and management standards and monitoring capabilities. environmental responsibility issues, and by expanding the O Increase the use of environmental valuation in adjusting United Nations Environment Programme's Global national income accounts and determining appropriate Reporting Initiative and other approaches price levels to better reflect the value of environmental to improving corporate social and goods and services and to improve economic environmental reporting. decisionmaking. 0 Enhance the contribution O Encourage appropriate private-sector of multilateral environmental involvement by strengthening government and agreements (MEAs) to pover- community capacities to partner with the private ty reduction by strengthening sector to expand environmental services for the 7 developing-country capacity 10 1 ENVIRONMENT MATTERS * 2002 to participate in the negotiation and implementation of agencies accountable and to ensure that a commitment by MEAs (for example, to ensure that the Clean Development senior management to addressing poverty-environment Mechanism promotes investments that benefit the poor and issues is put into practice throughout organizations. the environment), by improving coordination among MEAs so that scarce developing-country capacity is used C : U most effectively, and by increasing funding for the Global CONCLUSION Environment Facility as a major source of finance for global public goods in the environment, such as a stable climate, There is some degree of hope maintenance of biodiversity, and protection of international and optimism for the fu- waters and the ozone layer. ture-there are sometimes O Encourage sustainable consumption and production. win-win opportunities, and Industrial-country consumers and producers through their there are rational ways of trade, investment, pollution, and other activities affect the dealing with tradeoffs. Envi- environmental conditions of developing countries. Making ronmental degradation is not i rich-country consumption and production more inevitable, nor is it the unavoid- sustainable will require a complex mix of institutional able result of economic growth. changes-addressing market and government failures as On the contrary, sound and equi- well as broad public attitudes. table environmental management is key O Enhance the effectiveness of development cooperation to sustained poverty reduction and achievement of the Mil- and debt relief in addressing poverty-environment issues, lennium Development Goals. There are significant policy op- particularly for the poorest countries, where aid and debt portunities to reduce poverty and improve the environment, relief continue to have a valuable role to play in helping but more integrated and pro-poor approaches are needed. The governments make many of the changes needed. This World Summit on Sustainable Development is an opportunity includes "mainstreaming" environment in Idonor agency to focus on what is most important and to forge a coherent policies and operations through staff training; development framework for action, with clear goals and achievable targets and application of new skills, tools, and approaches; and backed up by adequate resources and effective and transpar- revisions to the way resources and budgets are allocated. ent monitoring mechanisms. There can be no more important Improved monitoring of progress against stated objectives goal than to reduce and ultimately eradicate poverty on our and targets is needed in order to hold development planet. DI'ID United Nations Department for Interna- Directorate General for Xp Development The World Bank tional Development Development, Programme 1818 H Street, N.W I Palace Street European Commission One United Nations Plaza Washington, D.C. 20433 London SWI E SHE 200 Rue de la Loi New York, New York 10017 U.S.A. United Kingdom 1049 Brussels U.S.A. Belgium Telephone: 202 522 3773 Switchboard: 020 7023 0000 Telephone: 212 906 5073 Facsimile: 202 477 0565 Facsimile: 020 7023 0016 Telephone: 2 296 8344 Facsimile: 212 906 6973 Internet: www.worldbank.org/ Internet: www.dfid.gov.uk Facsimile: 2 299 2908 Internet: www.undp.org environment E-mail: enquiry@dfid.gov.uk Internet: http://europa.eu.int/ E-mail: surf- E-mail: eadvisor@worldbank. Public enquiry point in UK: 0845 comm/dgs/development/ env@groups.undp.org org 3004100; and from overseas: index en.htm +44 1355 84 3132 Public enquiry e-mail: development@cec.eu.int ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) e use sustainability now in various explicit guis- es. We talk about debt sustainability. We have the debt sustainability analyses, which under- pin the process of debt reduction under the Heavily Indebted * , Poor Countries initiative, so that is a very pertinent kind of Ii| h e E c o n o m i c s S sustainability of S u sta i nab i I iity Another kind of sustainability is project sustainability or do- nor sustainability. It has been a norm of this institution and a norm of the donor world that projects have to be sustainable. by Jeffrey Sachs VWhen the funding ends after 3 or 4 years, the project has to continue. Usually, projects fund the capital costs or the start- up costs, but the recurrent costs need to be sustainable within This year's ESSD Week/Sustain- the recipient countries themselves. So, this is a second opera- able Development Month, held in tional kind of sustainability. April 2002, focused on sustain- able development and security Third, there is environmental sustainability-the sustainabil- and featured some of the world's ity of our physical environment, and our ecosystems, and our leading thinkers on this subject. pledge to turn over a livable environment to our children. Columbia University Professor With regard to the first two, we are on the wrong track and Jeffrey D. Sachs and University of ought to scrap them. And especially if we want to achieve the Darylyatoucd Pronfmasof tHer n i third, which is environmental sustainability, it is all the more sues raised by the other speakers, reason to scrap our current approaches to debt sustainability particularly the linkage between and to project sustainability, because I don't think they actual- environment and development, ly hold analytical muster. which is a key concern of the Jo- hannesburg Summit. This, and The kind of sustainability we all want to achieve is sustain- the following article, contain able development. We're talking about preserving the ecosys- abridged versions of their re- tem, but in a context where we have confidence that the poor __ marks. will be able to improve their material condition, and we pre- sume that the rich, at least, won't suffer adversely. So, by sus- tainable development we really mean achieving the millennium goals in a way that is supportive of our ecosys- tems, and not detrimental in fundamental ways to the inter- v i Xests of the already wealthy of the world. We are going to make it if we find a path in which the interests of the rich, or the conditions of the rich, in important ways are maintained while the poor find a way to catch up, and all of it is done in a man- ner that is ecologically viable. i- H uThe poorest people in the world are not going to be able to enjoy the benefits of sustainable development without signif- icant, large, continuing net resource transfers from the richest countries. Any idea that this is going to be done in any other way, merely through better govemance or through structural ENVIRONMENT MATTERS * 2002 LEARNING FROM THE PAST AND LOOKING FORWARD adjustment on the part of the poor countries, will not stand every year right now to the poorest countries to enable them up to the evidence. to scale up a minimally, humanly acceptable health system. That includes recurrent costs. There is no way that these Basically, my interpretation of the last 20 years is that we took funds can be replaced by local funds for the next 15 to 20 the view that all countries-all regions-could benefit from years. globalization if there was enough economic reform internally and a little bit of help here and there around the margins. May- Now, we need to do that kind of analysis systematically for be that help was to get a pilot project going, or help for capital the millennium development goals. We need to do it for health investment, or a little bit of debt relief along the way. But the in that context, although this is the kind of evidence that we overwhelming notion was that one does not need large trans- have. We need to do it for hunger, which is a very complex fers of income from rich to poor to make the development pro- and multifaceted problem-both urban and rural, both agri- cess work. cultural productivity and emergencies, humanitarian support and response to drought, and many other things. We need to My claim is that without large transfers, development in large d foniersa ghild ean, which is a ego parts of the world would be impossible. For 30 or 40 coun- do it for aess ton drinkin a and tries, the net resource transfer required to achieve the goals snai. We need to do this sously. Myiguess iat we thtw aealjitycnnte owudrqie10pr sanitation. We need to do this seriously. My guess is that we that we have all jointly committed to would require 100 per- aresiytlngbotheduigofficldvlpm t cent cancellation of debts plus a very substantial net resource assistance as the Bank's own very preliminary work illustrat- transfer for a decade or two to come. ed last fall in the run up to Monterrey. We are talking about an So debt sustainability has been a phony concept from the be- extra $50 billion; $25 billion is for health, and then you start ginning. Not once since the debt crisis has erupted have we adding in education, clean water, and so forth. It could be up actually seriously asked what would it take to help a country to 75 or 100 billion dollars. This means scrapping the second meet a specific set of development targets. That's why the Mil- idea of donor sustainability lennium Development Goals are so important, because for the first time we are getting results-oriented rather than process- This brings me to the last definition: sustainable development. oriented. After 20 years, in my view, we will have substantially broken the poverty trap. What we have to do is help to create a gener- That brings me to the second definition of sustainability: project ation of healthy and educated children, and I believe healthy sustainability. It is really the same story. In a health commis- and educated children with parents alive. We could, with part- sion I recently chaired, with tremendous support from the nership, realism, and transparency, make a generation of in- World Bank, we arrived at a basic understanding that said: If vestment in human beings to allow us not only to meet the you want to have a minimally acceptable health system in a specific goals of reducing infant mortality and having chil- poor country that provides for pretty good coverage-maybe dren in school, but actually create a base in which normal eco- for two-thirds of the population-that's going to cost 35 or 40 nomic development can go forward. dollars per person per year. How do we get to environmental sustainability as part of the How much can Malawi afford? Malawi is roughly at 180 development strategy? Well, the first point, I think, is obvi- dollars per capita right now. We are talking about 20 per- ous: without breaking the poverty trap of the poorest coun- cent of Malawi's GNP for the most basic, bare bones, mini- tries, we will not achieve environmental sustainability in large mally acceptable system. Pretty plausible standard for a parts of the world. human society, yet this is absolutely, completely outside of the possibilities of a country at $180 dollars per capita. So My own view is that a tremendous amount of the local-scale this is completely impossible to do out of one's own resourc- biodiversity loss, watershed function, of deforestation, flood- es. ing, erosion of steep topographies, and so forth is driven by poverty populations moving into even more and more mar- We need to understand that the poor are too poor to pay for ginal lands. So the first place for environmental sustainability their own health. What we are really talking about for health is in my view is in the poor countries-not to blame the poor a transfer of maybe 15 percent of developing countries' GNP but to help them solve the poverty trap. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 13 There are three components to solving the poverty problem. ments where the roads don't go. These are the things that as First, ensuring that children have meals, health access, clean specialists in development we should have at our core. These water, and so forth. This to me is the sine qua nonl of getting out are the very first things that we should know. What are the of this trap. A second component for getting out of the trap is special challenges of living in the African savannah? What are improving rural agricultural productivity. We need the green the special challenges of trying to make development work in revolution for arid and semi-arid zones, which we haven't had. the altiplano? Why is it that almost all of the tropics are poor? Third, I do believe that there is a case for investing in higher That's not accidental. What are the special challenges? Why productivity in rural areas, but I think urban-led growth is also doesn't agriculture work in the Amazon? Not because of lack pro-poor-led growth. And we need a better urban-based strat- of cooperation, mind you-it's because the soils cannot hold egy as well. We need to make these sprawling cities, which are the nutrients under current technologies, that's why. destinations of last resort of semi-starved people, into livable environments that create jobs. We need an urban-based strate- Poor people are poor not by accident, but because develop- gy as much as a rural-based strategy for the poor. ment hasn't reached them in a lot of ways. It's also not because every one of the 49 sub-Saharan African countries happened So first is breaking the poverty trap. Second is talking about to have miserable political leadership for the last 200 years, population control policy a lot more boldly than we have in because they didn't. It's because the good political leadership recent years. We need to keep invigorated population control couldn't solve the problems either. The countries were too vul- policies-family planning, access to family planning services. nerable to shocks, deterioration of the environment, fragility Population pressures in the poorest countries are undermin- of the soils, disease ecology, and the rest. ing the physical environment and the prospects for economic development, there's no doubt about it. We need to get fertili- This is my third point. We need a new way to understand this, ty rates down. The good news is that it is happening, even in a little less economics and a little bit more physical science. rural households with uneducated mothers. In my opinion, Keep the dialogue, definitely-but stop thinking it's always family planning policies have played a very large role in em- institutions, institutions, institutions. powering mothers to get contraception, in getting more op- tions to more poor households, and basically in speeding the The fourth point, in line with that, is that we need to mobilize demographic transition. And this is going to play a big role in major scientific inputs to succeed in sustainability of the envi- success or failure. ronment. Ecology itself as a science is brand new. The third part of environmental sustainability that I would There is a tremendous amount we do not understand about strongly urge more of is the science of human ecology. What sustainability. Again, it's not just a matter of cooperation or do I mean by the science of human ecology? I mean in doing ending conflict or other things. We don't know enough yet development, taking seriously the interface of human society about critical areas to get it right. It's knowable, but we have and the physical environment in which it is taking place. My to invest in it. colleagues in the macroeconomics profession are content to write thousands of papers on economic growth and develop- The fifth area that I would mention in sustainability is not sur- ment without mentioning issues of climate, without mention- prising-it is the social costing of critical inputs and outputs, ing the differences between tropical and temperate zones, particularly of carbon. We've just got to get to pricing carbon without any sense of life at 12,000 feet above sea level in the in this world through carbon taxes and through benefits for Andean altiplano or life in the steep slopes of the Himalayan carbon sinks. Because without that, we will send the wrong foothills. There is no sense in most of the economic academic signals throughout this century, which will continue to have a literature of the physical, ecological dimension of human drastic impact on the environment. society. One thing that I keep finding when I talk to scientists about We live in a physical environment, and poor people, especially, this is how many really ingenious, fabulous schemes there live close to the earth. They die when there is drought. They are to actually solve this problem. I am a huge lover of tech- suffer when the El Nifio comes. They are vulnerable to extreme nology and a believer in it. I think the scientific revolutions ecological, meteorological shocks. They live in fragile environ- that we are living through right now give us fantastic hope for progress. 14 ENVIRONMENT MATTERS * 2002 LEARNING FROM THE PAST AND LOOKING FORWARD One group from MIT has some great ideas about fixing carbon You need science for this, and for that you need incentives. to be the food bed for algae through special bio-reactors. The Part of it is direct investments, but part of it is market incen- algae can be turned back into fuel; not fossil fuels, but carbon tives, and that's why pricing is so important. Not just because fuels to fire power plants. So basically it is a solar energy cell, higher carbon prices or subsidies for carbon fixation will force not photovoltaics but rather photosynthesis. This could be a us with our current technologies to adjust what we are doing new way to generate energy from the sun through biomass. So on the margins, but will give huge incentives for these break- that's one promising idea. throughs and get large-scale private scientific activity under way to solve these problems. At the Earth Institute, Klaus Lackner has been working for many years on an ingenious scheme to fix carbon by adding In july 2002, Jeffrey D. Saclis assumied a n1ezo position as director of the carbon to highly plentiful magnesium ores that are a part of Columlbia University Earth Institutte. He was previously director of tfle the earth's crust. If you take the right magnesium ores and Centerfor International Development and Galenl L. Stone Professor of In- ternational Trade at Harvard University. In January 2002, Professor Saclis you pass carbon dioxide over it, you get magnesium carbon- was appointed by UN Secretary General Kofi Antiian as his special adviser ate, which is a very thermodynamically stable compound. This on the Millenizimni Developnieit Goals. Duriiig 2000-01, lie was chalr- can fix vast amounts of carbon. And then you can pi6t it back mian of thze Coininission onz Macroecomiommiics anid Healthz oft/ie World Healthi Organization. Sac/is has been an economic adviser to governmnents ill Latiii down your mine. It looks like this is probably cost-effective. It Anierica, Eastern Europe, the former Soviet Union, Asia, and Africa. He is one of many approaches to mass fixation of carbon. has been a consultant to tlie iintermiatiomial Monetary Funld, World Bank, Organisation for Econoniic Co-operation anid Developimiet, aiid the Umiited Nations Development Programnie. E l ..xactly what is it that is supposed to be sustainied in "sus- tainable" development? Two broad answers have been given: First, utility should be sustained; that is, the utility of future generations is to be non-declining. The future should be at least as well off as the present. Utility here refers to average per capita utility of members of a generation. Second, physical tlhrouighput should be sustained; that is, the entropic physical flow from nature's sources through the econ- I 4 '~ > ---iIrefi~i j -q tomy and back to nature's sinks, is to be non-declining. Through- gK = : >- _> put here refers to total throughput flow for the community vt sRtR ii fiiI I e over some time period. For two reasons, I adopt the throughput definition and reject I il m en tthe utility definition. First, utility is non-measurable. Second, and more importantly, even if utility were measurable, it is ,~ y t - E.8 Iimay still not something that we can bequeath to the future. We can- . t;:111not bequeath utility or happiness to future generations. To de- fine sustainability as a non-declining intergenerational bequest of something that can neither be measured nor bequeathed x - - -- strikes me as a nonstarter. I hasten to add that I do not think - economic theory can get along without the concept of utility. I __3;= _ w2.r- ;¢.t- --- =-;e -= .just think that throughput is a better concept by which to de- ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 15 fine sustainability. The throughput approach defines sustain- tive rather than absolute income, that is, of social conditions of ability in terms of something much more measurable and trans- distributive inequality. Growth cannot possibly increase ev- ferable across generations-the capacity to generate an entropic eryone's relative income. Insofar as poverty or welfare is a func- throughput from and back to nature. tion of relative income, then growth becomes powerless to affect it. Having defined "sustainable," let us now tackle "develop- ment." Since current economic theory lacks the concept of While growth in rich countries might be uneconomic, growth throughput, we tend to define development simply as growth in poor countries where GDP consists largely of food, cloth- in GDP, a value index that conflates the effects of changes in ing, and shelter, is still very likely to be economic. Food, cloth- throughput and utility. The hope that the growth increment ing, and shelter are absolute needs, not self-canceling relative will go largely to the poor, or at least trickle down, is frequently wants for which growth yields no welfare. There is much truth expressed as a further condition of development. Yet any seri- in this, even though poor countries too are quite capable of ous policy of redistribution of GDP from rich to poor is reject- deluding themselves by counting natural capital consumption ed as "class warfare" that is likely to slow GDP growth. (depleting mines, wells, forests, fisheries, and topsoil) as if it Furthermore, any recomposition of GDP from private goods were income. One might legitimately argue for limiting growth toward public goods (available to all, including the poor) is in wealthy countries, where it is becoming uneconomic, in or- usually rejected as government interference in the free mar- der to concentrate resources on growth in poor countries, where ket-even though it is well known that the free market will it is still economic. not produce public goods. We are assured that a rising tide lifts all boats, that the benefits of growth will eventually trick- The current vision of globalization requires the rich to grow le down to the poor. The key to development is still aggregate rapidly in order to provide markets in which the poor can sell growth, and the key to aggregate growth is currently thought their exports. It is thought that the only option poor countries to be global economic integration-free trade and free capital have is to export to the rich, and to do that they have to accept mobility. Export-led development is considered the only op- foreign investment from corporations who know how to pro- tion. Import substitution is no longer mentioned, except to be duce the high-quality stuff that the rich want. The resulting immediately dismissed as "discredited." necessity of repaying these foreign loans reinforces the need to orient the economy toward exporting, and exposes the bor- Will this theory or ideology of "development as global growth" rowing countries to the risks of volatile international capital be successful? I doubt it, for two reasons, one having to flows, exchange rate changes, and unrepayable debts, as well do with environmental sustainability, the other with social as to the rigors of competing with powerful world-class firms. equity. The whole global economy must grow for this policy to work, because unless the rich countries grow rapidly they will not First, ecological limits are rapidly converting "economic have the surplus to invest in poor countries, nor the extra in- growth" into "uneconomic growth"-i.e., throughput growth come with which to buy the exports of the poor countries. that increases costs by more than it increases benefits, thus making us poorer, not richer. The macroeconomy grows into Principles and Policies for and encroaches upon the finite ecosystem, thereby incurring Sustainable Development an opportunity cost of preempted natural capital and servic- es. These opportunity costs (depletion, pollution, sacrificed I am not advocating revolutionary expropriation of all private ecosystem services) can be, and often are, worth more than property in land and resources. If we could start from a blank the extra production benefits of the throughput growth that slate, I would be tempted to keep land and minerals as public caused them. We cannot be absolutely sure because we mea- property. But for many environmental goods, previously free sure only the benefits, not the costs. We do measure the re- but increasingly scarce, we still do have a blank slate as far as grettable defensive expenditures made necessary by the costs, ownership is concerned. We must bring increasingly scarce yet but even those are added to GDP rather than subtracted. unowned environmental services under the discipline of the price system, because these are truly rival goods the use of Second, even if growth entailed no environmental costs, part which by one person imposes opportunity costs on others. The of what we mean by poverty and welfare is a function of rela- necessary price or scarcity rent that we collect on newly scarce 16 ENVIRONMENT MATTERS * 2002 LEARNING FROM THE PAST AND LOOKING FORWARD environmental public goods-such as atmospheric absorption less necessary, nor does it give rise to a scarcity rent that can be capacity-should be used to alleviate poverty and finance the redistributed provision of other public goods. Reducing poverty is indeed the basic goal of development, as The modern form of the Georgist insight is to tax the resources the World Bank now commendably proclaims But it cannot and services of nature-those scarce things left out of both the be attained by growth for two reasons. First, because growth production function and GDP accounts-and to use these funds m GDP has begun to mcrease environmental and social costs for fighting poverty and for financing public goods. Taxing faster than it increases production benefits. Such uneconomic away value that no one added, scarcity rents on nature's con- growth makes us poorer, not richer. Second, because even tru- tribution, does not create resentment. In fact, failng to tax away ly economic growth cannot mcrease welfare once we are, at the scarcity rents to nature and letting them accrue as unearned the margin, producing goods and services that satisfy mainly income to favored individuals has long been a primary source relative rather than absolute wants. If welfare is mainly a func- of resentment and social conflict. tion of relative income, then aggregate growth is self-cancel- ing in its effect on welfare. The obvious solution of restraining Charging scarcity rents on the throughput of natural resourc- uneconomic growth for rich countries to give opportunity for es and redistributing these rents to public uses can be effected further economic growth, at least temporarily, in poor coun- either by ecological tax reform, or by quantitative cap-and-trade tries, is ruled out by the ideology of globalization, which can systems initiated by a government auction of pollution or de- only advocate global growth. We need to promote national and pletion quotas. In differing ways, each would limit through- international policies that charge adequately for resource rents, put and expansion of the scale of the economy into the m order to limit the scale of the macroeconomy relative to the ecosystem, and also provide public revenue. The currently fa- ecosystem and to provide revenue for public purposes. These vored strategy might be called "efficiency first" in distinction policies must be grounded in an economic theory that includes to the "frugality first" principle embodied in both of the throughput among its most basic concepts. These efficient na- throughput-limiting mechanisms mentioned above. tional policies need protection from the cost-externalizing, stan- dards-lowering competition that is driving globalization. "Efficiency first" sounds good, especially when referred to as Protecting efficient national policies is not the same as protect- "win-win" strategies. But the problem of "efficiency first" is ing inefficient national industries with what comes second. An improvement in efficiency by it- self is equivalent to having a larger supply of the factor whose Herman E Daly is a Professor at the University of Maryland School of efficiency increased. The price of that factor will decline. More Publtc Affairs He was previously a senior econonmist at the World Bank, uses for the now cheaper factor will be found. We will end up where he helped to develop policy guidelines related to sustainable develop- nient He is a co-founder and associate editor of the journal Ecological consuming more of the resource than before, albeit more effi- Economucs, and the author of numerous putblications on sustainable de- ciently Scale continues to grow. A policy of "frugality first," velopment, including Steady-State Economics (1977), Valumg the Earth however, induces efficiency as a secondary consequence; "ef- (1993), Beyond Growth (1996), and Ecological Economics and the ficiency first" does not induce frugality-it makes frugality Ecology of Economics (1999) r < I' .4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. - Indonesia ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 17 3) _ n educing emissions of then transferred to the Fund's - . rk | carbon dioxide and contributors in the form of other greenhouse gas- emissions reduction credits es that affect climate change is rather than cash. The primary *, one of the key challenges fac- focus is on renewable energy ing the international commu- technologies-such as wind, ___ I Il *. nity. The Bank's Prototype small-hydro, and biomass en- ; X v . aki ng Carbon Fund (PCF) provides a ergy technology-that become framework for action, learning, more profitable with financial C a r b o n F I nan c e and research to demonstrate support from the PCF. how greenhouse gas emission- W ork for reduction transactions can The PCF began operations in , . s * s contribute to sustainable de- April 2000. Six governments Co n s e r vat I o n an d velopment, while lowering the and 17 companies, all from in- costs of compliance with the dustrialized countries, have - S u sta I n ablI e Kyoto Protocol-the 1997 contributed funds to the PCF, t agreement to cut industrial- and have already approved .D eve lo p m en t ized world emissions of green- projects with emissions reduc- house gases. tion potential of more than $100 million. PCF projects are Established with contributions all subject to independent val- from governments and the pri- idation and verification, and vate sector, the PCF is the first may be potentially certified to attempt to experiment with the receive carbon credits under creation of a market in emis- the rules of the Kyoto Protocol. sions reductions under the In June2002, Fund participants Kyoto Protocol's "flexibility" expanded their contributions mechanisms. Kyoto's Article 6 to the PCF from $145 million allows for the "joint implemen- to $180 million. These compa- tation" of projects by industri- nies see the PCF as a powerful alized countries, including tool for learning how market- those with economies in tran- based mechanisms can help sition. Article 12 calls for simi- mitigate climate change. lar project-based carbon offset tradingbetweenindustrialized One of the Fund's early and developing countries un- projects is supporting an inno- der the Clean Development vative fuel-substitution project Mechanism (CDM). in Brazil. The Plantar proper- ties in the state of Minas Gerais PCF invests in cleaner technol- will produce charcoal for pig ogies in developing countries iron smelting with new plan- and transition economies, thus tations of high-productivity reducing their greenhouse gas eucalyptus stands. The project emissions. These emissions re- also produces biodiversity ductions will be independent- benefits by supporting areas of ly verified and certified, and cerrado (savanna) forest, which ,IS =ENVIRONMENT MATTERS * 2002 _-- LEARNING FROM THE PAST AND LOOKING FORWARD is predominant in the State of port a clean water or literacy Minas Gerais. Brazil's cerrado CARBON EMISSIONS REDUCTIONS BEGINS AT HOME project for the local communi- ecosystem has recently been ty. ranked as one of the 26 most The World Bank is seeking to reduce its own carbon footprint. In a first move to deal with its carbon emissions-estimated at important targets globally for 203,700 tCO2 across the Bank and its field offices-the World Both the BioCarbon Fund and biodiversity protection. The Bank's Environentally and Socially Sustainble Development the Community Development Plantar Project will allow re- (ESSD) vice presidency has committed almost $100,000, to offset its carbon footprint for 2001. The money from these off- Carbon Fund will have a tar- covery of the natural cerrado sets will purchase emissions reductions in the Scolel Te project get size of $100 million. The ecosystem on Plantar lands. in Chiapas, Mexico, where small farmers in the poorest regions CDCF will be launched at the will be paid for increasing tree cover and solid carbon as a This will occur as aresult of fire means of increasing fertility on their farms. The ESSD pilot World Summit on Sustainable suppression and the cessation phase will be followed by other areas of the Bank before the Development m August. The of grazing on those degraded end of 2002 Bank staff have also responded at an individual level In April 2002, during ESSD Week/Sustainable Develop- BioCarbon Fund will be cerrados. ment Month, more than 554 people took their personal carbon launched at the Katoomba For- footprint, through a computer test created to determine their estry meeting in Tokyo in ear- Under its governing articles, own carbon emissions-counting everything from the carbon , dioxide that comes out of the tailpipe of their car, to how far Iy November 2002. the PCF can only invest a max- they traveled by plane on their last vacation. More than 250 imum of 10 percent of its funds staff registered for the voluntary program-pledging to reduce their carbon footprint, first by changing their lifestyles to re- on activities focused on land duce their carbon output over time, then by paying to offset use, land use change, and for- their remaining surplus emissions. estry (LULUCF). This mirrors developments under the Kyo- change, biodiversity conserva- to Protocol, where only refor- tion and management, and de- The Bank is also launchmg the estation and afforestation have esa tn asertification and land Community Development been recognized as eligible ac- degradation Projects will pro- Carbon Fund (CDCF), in col- tivities for emissions trading vide information to the UN- laboration with the Interna- with developing countries un- derthdeveCopingthoug sunh FCC parties as they make tional Emissions Trading wider range, oftLULuc decisions about eligibility rules Association (IETA), to ensure projectsare potentally elgible under the CDM in the first that carbon fmance might en- for economies in transition commitment period for emis- hance the icome opportuni- sions reductions from 2008 to ties of the rural poor, especially under joint implementation.comnteinsalrpo- 2012. The projects will also pro- communties in smaller, poor- . . . . ~~~er countries and in small- Thls wider range of activities, vide the parties with practice- island developing states. Pro- from conservation to seques- based insights on activities . tration, also has a significant they may wish to consider for ties with epther direct or udi- influence on the global carbon subsequent commitment peri- rect benefits. A community cycle. Many opportunities m ods. The BioCarbon Fund will cooperative-based shade coffee these areas are likely to be support projects in areas such project, for example, may di- found in the agricultural and as improved forest manage- rectly benefit the livelihoods of forestry sectors. The BioCar- ment, agroforestry, improved the local community. Or, a bon Fund-a new fund cur- agricultural practices, the pre- wind energy facility located on rently in the design and vention of land degradation, tribal lands that generates elec- marketing phase-will help watershed management, and tricity for the national grid may Thlis article was prepared by Ken marketing phase-will help ~~~~~~~~~~~~~~~~Newcombe, Maniager of the Prototype improve our understanding of wetland protection and resto- provide indirect benefits by Carbon Fund (PCF) Website - the linkages among climate ration. using carbon finance to sup- <>. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 19 T. q )~ he water resources Angola, Botswana, Democrat- management challenge ic Republic of Congo, Lesotho, in Southern Africa is Malawi, Mauritius, Mozam- reaching crisis proportions, bique, Namibia, Seychelles, threatening the natural re- South Africa, Swaziland, Tan- source base, social and eco- zania, Zambia, and Zimba- nomic development, and bwe.) poverty reduction in the re- gion. This is a result of multi- Dimensions of the ple and linked factors, Challenge including a limited endow- m n ment of freshwater, growing It is a commonly accepted demand from increasing pop- measure that nations are expe- Environm entally ulations, low levels ofresource riencing "water stress" when development, climate variabil- availability falls below 1,700 Sustaina dvopmnt climraate vai cubic meters per person per Sustainab e ity, grwing degrdation ofyear. As Figure 1 shows , wa- Ao water resources, and the diffi- ter availability per person in A p p roaoac t0 culties of managing numerous Southern Africa is expected to watersheds shared by several drop dramatically by 2025; Wvv ate r I n nations. many nations are expected to fall below the water stress Southern A f r i c a The crisis is potentially man- benchmark, and a few will be ageable, but not without con- water-scarce. - - 11 ~~~~~~~~~~~~~~certed efforts on the part of cerwated reffourcs ontheplarte The region faces a long list of water resources planners, challenges in the water re- managers and regulators, sources area, including: multi-sectoral users agencies, governments, international aid . Provision of basic water institutions, communities, and supplies and sanitation is nongovernmental organiza- inadequate in both rural tions. Many practical ap- and urban areas. . | > proaches are outlined in the * Overall demand for water forward-looking technical re- is growing rapidly as ,Yt]'', port by the Southern Africa economies in the region Development Community develop and diversify t.1 . _, '(SADC) entitled Defining and away from subsistence Mainstreaming Environmental agriculture toward cor- Sustainability in Water Resourc- mercial agriculture and es Management in Southern manufacturing-based es Management in Southern industries and continue to Africa. The report will be depend on water for launched at the World Summit power generation. on Sustainable Development * Water resources in the I ^ 11 in Johannesburg in August region are subject to 2002. This discussion draws on extreme variability, with the recommendations of the significant social and SADC report. (SADC covers economic consequences. 20 ENVIRONMENT MATTERS * 2002 L- > LEARNING FROM THE PAST AND LOOKING FORWARD Droughts are endemic, Water stressed and water scarce countries - 2025 projections floods are relatively fre- -_ ___ quent occurrences, and many rivers do not have year-round flow. Global climate change will only - exacerbate these problems. *Many of the major river i^ , _ basins in the region are shared between two or more countries, leading to a uncertainties and tensions , regarding water alloca- - tions, planning, develop- ment, and management. In addition, water resources degradation (the main focus of the report) is a huge and grow- ing challenge caused by: Water Water * Pollution from point and Stress '- W Scarcity nonpoint sources, making many water sources unfit * Degradation of watersheds resources, invasive alien spe- processes and policy remains for use without expensive due to poor land use cies and aquatic weeds, regu- superficial at best; the enforce- pretreatment practices, which is causing lation of river flows, and ment of environmental impact * Over-abstraction and sedimentation of river encroachmentofhuman settle- assessment regulations in wa- regulation of surface wa- channels, lakes, and reser- ments onto floodplain areas. ter resources development ter resources, which has voirs, changes in flow projects is poor; community led to significant changes regimes that lead to alter- Further, the SADC review involvement in water resourc- in the flow regimes and ations in hydrological and found that, though there have es management is generally water quality of many ecological processes, and been some encouraging policy still poor; the environmental rivers, resulting in nega- loss of critical habitats for shifts recently, there are still and social costs and benefits of tive impacts on aquatic important aquatic species fundamental weaknesses and projects are not adequately in- biota and subsequent loss * Invasive weeds, which are shortcomings in water resourc- tegrated into the water re- of ecological function and causing major water losses es management in the region. sources project development health and imposing a huge cost and management process; in- * Encroachment of human on the operations and For example, water is utilized stitutional capacity in the re- settlements onto flood- maintenance of water by many sectors, but water gion is weak; and data insuf- plain areas and riparian supply, agriculture and policies and legislation remain ficiency is a critical weakness. zones, which is increasing energy infrastructure, compartmentalized and frag- vulnerability to floods water quality, fisheries, mented, making implementa- Finally, conflicts and tensions and also causing loss of health and functions. tion and enforcement difficult. in the region, some of which wetland habitat, with Coordination among sectors is are related to water issues, can serious consequences for Fisheries, an important source weak. potentially lead to uncertainty biodiversity conservation of protein in local diets and the and weakness in water re- and subsistence agri- mainstay of several economies, In addition, the integration of source management, particu- cultural and fishing are declining due to over-ex- environmental sustainability larly transboundary water communities ploitation, pollution of water criteria into decisionmaking resources, and make coopera- ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 21 tion between countries diffi- ic values of such goods and cult. services. A Conceptual Maintain aquatic ecosystems. Restoration and maintenance Frameworl of the natural biodiversity of aquatic ecosystems is vitally The report draws many posi- iprati nuigta tive lessons from the SADC re- water resources retain their re- gion. It recommends a concep- silience and ability to recover tual framework for sustainable from the pressures of utiliza- water resources management tion P tion. Policy and regulatory in the region that rests on three . f w a > r 'U, \ 7 frameworks and watershed key principles.. ^ key princplmanagement strategies must Principle .. Recognizing the recognize the biodiversity of Principle 1. Recognizing the 1" ; qatcecssem s e environment as the resource e aquatic ecosystems as a key base. Although there has been - criterion in sustainable water base. Although there has been reore mangemnt . ~~resources management. a tendency to think of water itself as the only commodity of * v 8 Clar2 tu value provided by water re- _ *-.-2- t J ^nDn3s,wT\F£gn X ~Clarifcy the legal status of aquatic value provided by water re- -Tepoiino sources in fact aquatic ecosys- Outeniqua Pass, South Africo. ecosystems. The provision of sources, in fact aquatic ecosys- sufficient water of adequate tems provide a number of addressed narrowly. An im- trends that affect demograph- quality, delivered in as close to valuable goods and services. portant challenge is the devel- ics and hence water demand; a natural flow regime as possi- Principle 2. Recognizing the opment of clear criteria that the status of water resources, ble, underpins the protection economic value of goods and define environmental quality in terms of both biophysical of aquatic ecosystems, which services provided by water goals or objectives, which can factors and ecological health; in turn ensures the sustainabil- resources. Trad a eguide water resources plan- and indicators of economic ity of water resources. In or- resources. Traditional econom- mciyo ae eore.I r ic approaches, which have fo- ners and managers in their de- well-being, which allow as- der for the water requirements cisionrmaking. sessment of the degree to of aquatic ecosystems to be as- bysethenuse ofnewate presouces which environmentally sus- sured, explicit and clear status by the use of water resources, Lessons Learned tainable utilization of water should be afforded to these have ignored the benefits ofshudbafoedttee environmental management, The SADC report provides sev- resources is generating socio- water requirements in water the economic implications of eral important lessons for the economic benefits for commu- policy and law. Determina- degraded water resources and region, including: nities. tions of the water requirements aquatic ecosystems, and the Value all goods and services. Pol- of aquatic ecosystems should opportunity cost of environ- Provide better information. Sus- icymakers and decisionmakers be based on the principle of mentally damaging economic tainable water resources man- need to be made aware that maintaining an adequate level activities and management agement is underpinned by water resources provide a of natural ecological processes approaches. As a matter of good information. To integrate range of goods and services and functions to sustain the course, both direct and indirect environmental sustainability apart from just water, and that provision of the various goods values should be included in issues into water resources the maintenance and utiliza- and services that are valued or cost-benefit analyses. planning, long-term monitor- tion of these goods and servic- relied upon by communities. ing programs are needed to es depend to a large extent on Principle 3. Mainstreaming collect information on water the protection and mainte- Consolidate policy and planning. environmental sustainability availability; present and future nance of healthy, functional The linkages between land use criteria into water resources water uses and land uses; pro- aquatic ecosystems. Planners and water resources should be policy and management. The jected demands on water and water users need to iden- explicitly recognized in policy environment continues to be resources; macroeconomic tify and quantify the econom- and regulatory frameworks. 22 ENVIRONMENT MATTERS * 2002 LEARNING FROM THE PAST AND LOOKING FORWARD This may require that sectoral sources usually far outweigh Environmental sustainability striving for a reasonable bal- policies be reviewed, harmo- the short-term economic ben- criteria should be incorporat- ance between the short-term nized, and possibly consolidat- efits of over-exploitation. The ed into regulatory frameworks, needs of people for social and ed in order to promote inte- precautionary principle should utilizing regulatory tools that economic development and grated management of land be applied in decisions regard- are flexible; relatively simple to the longer-term imperatives and water resources at a water- ing development and alloca- administer and enforce; tai- for protection of the natural shed level. The use of Strate- tion of water resources, or lored to suit southern African resource base. If that balance is gic Environmental Assessment those regarding control and aquatic ecosystems; and based struck, water resources can (SEA) approaches should be management of land-based ac- on the use of economic instru- continue to provide benefits to promoted and followed when tivities that cause degradation ments-such as charges, incen- improve people's livelihoods planning and setting objectives of water resources. Preventive tives, and penalties-to pro- and quality of life. for land and water resources management strategies should mote self-regulation and en- management. Institutional include and promote demand- courage minimization of im- The SADC report is a vital con- structures and mechanisms side management approaches pacts on water resources. tribution to the region's devel- may need to be concurrently over supply-side interven- opment agenda. It fills an reviewed and reformed in or- tions. Mobilize capacity throtigh knozol- important knowledge gap and der to implement integrated edge sharing networks. Expertise shares best practices from watershed management strat- Control invasive species. The and capacity for sustainable within the region. It provides egies. control of invasive and nui- water resources management a framework for defining the sance species, particularly is severely limited in southern complex and elusive concept Support user-group representa- aquatic weeds, requires the Africa, especially in the pubtic of environmental sustainabili- tion. Water resources institu- development and implementa- sector. This is a critical weak- ty in the water sector and tions such as river basin tion of holistic long-term strat- nsec oin it is a cmaril web- mainstreaming that concept in authorities must be represen- egies. Preventive management ess, sce is pimarily su operational terms in water re- tative of the multiple water remains the most efficient way ic sector organizations such asr sources policies and institu- user interests in the basin. of dealing with the problem. government agencies and rv- tional reforms, and in the Planning and decisionmaking Once invasives are present in er basin authorities that are re- decisionmaking for water re- processes related to develop- a water resource, short-term sponsible for the various sourcesplanning and develop- ment, allocation, and utiliza- controls such as mechanical aspects of water resources ment. It paves the way forward tion of water resources must be and chemical methods must be management. Communica- for developing sound, sensible, broadened from a narrow tech- balanced with longer-term tion between the different and sustainable water resourc- nical exercise to also integrate controls such as biological con- countries is often slow and in- es investments and manage- effective participation of water trols and with long-term com- effective, and sharing of ment systems for meeting the user groups and communities mitment to integrated control knowledge between profes- region's priority goals. impacted by such decisions. programs. Collaboration be- sionals and water resource Community and user partici- tween neighboring countries managers at the operational This article was prepared by Rafik pation in planning and man- and those sharing water re- level is frequently constrained Hirji of the Environnment Depart- agement decisionmaking is the sources is essential; control due to bureaucratic processes. lent, (202) 458-1994,fax (202) 477- agemnt dcisinmakng i 0565. Defining and Mainstream- only way to ensure that the dis- programs should be designed At the national and regional ing Environmental Sustainabitity tribution of costs and benefits and implemented jointly by all levels, innovative strategies are in Water Resources Management of water resources develop- affected countries. needed to overcome existing in Southern Africa was prepared bi SADC and its partniers, including thle ment, allocation, and manage- barriers to sharing of knowl- World Conservation Union Regional ment is equitable. Incorporate environmental sus- edge, experience, and exper- Officefor Southlern Africa, the South1- tiaiiycriteria. Regulatory tise. ern African Researchi anid Documiien- tainability criteria. Regulatory tise. tation Centre, India MusokotVane Encoutrage preventive manage- frameworks for water resourc- Environmnent Resource Centre for ment. Preventive management es management should be Southern Africa, the Environment is more cost-effective than re- strengthened, particularly re- Conclusion Department and Africa Water Re- souirces Managemienit Initiative of thie habilitation or remediation. lated to the assessment and Sustainable water resources World Bank, and the Swedisih Inter- The long-term costs of rehabil- mitigation of environmental management in Southern Afri- national Developmlent Cooperation itation of degraded water re- impacts on water resources. ca can only be achieved by Agency. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 23 he management, con- The World Bank has been a servation, and sustain- major source of financial assis- I able development of tance for forest conservation forest ecosystems and their and development (see Box, be- associated resources have been low). some of the more difficult chal- lenges of the last several de- New directions and cades. Forests were the source ,~**,, I worki ng for a of much concern and conflict opportunities at Rio, and have since contin- The conservation and wise use Better Futu re ued to occupy a prominent of forest ecosystems is a cen- B ", et.t. e r .Fut. u 'r e place on the agenda of the in- tral pillar of World Bank as- forf For sts and temational community. There sistance and is embodied in the 4. for Forests anhave been many useful pro- Bank's new EnvironmentStrat- Fos rest-D ep e n d e nt posals for action, yet the egy. The Bank's proposed new Forest-DJependen t world's forests continue to suf- Forest Strategy and 0peration- fer unacceptably high rates of al Policy on forests is fully con- P e o p,le loss and degradation. sistent with the Environment Strategy, and will provide Up to 1.6 billion people depend much more detailed guidance in whole or in part on forests for all Bank-supported activi- for their livelihoods. In addi- ties that involve or affect for- tion, wood is the main house- ests. hold energy source for many of the world's poorest communi- The Forest Strategy is the cul- ties. Forests can also contribute mination of a 5-year process of substantially to economic detailed internal and external growth and development. A analysis, review, and consulta- study done for the Bank's For- est Policy Review indicated that as much as $15 billion a THE SCALE OF year is lost from inappropriate BANK INVOLVEMENT forest regulation and illegal The Bank is the largest sin- harvesting. gle source of development assistance finance for forest Forests also support as much conservation and develop- as 0 eren ofth wrl's ter- ment. At present, some a as 9Opercent of the world's ter- $1.72 billion of World Bank restrial biodiversity and pro- lending is supporting 34 ac- vide environmental services tive forestry projects. In ad- such as watershed and coastal dition, another 94 Bank projects include forest con- protection that reduce human servation and management vulnerability to natural haz- components worth a further _ rards such as drought, floods, $1.79 billion. Over the last 10 years, Bank lending has also and hurricanes. Some of these been complemented by 145 environmental services-such forest conservation projects as carbon storage and biodi- supported by a further $1.23 billion in grants from the Glo- versity conservation-provide bal Environment Facility. benefits of global value. a S ENVIRONMENT MATTERS * 2002 LEARNING FROM THE PAST AND LOOKING FORWARD tion. There was strong stake- governance and control of Approach to and Sustainable Use. This al- holder support for the recom- illegal activities, promot- . liance sought to catalyze mendations of the Bank's ing active stakeholder Implementation meaningful progress in re- Operations Evaluations De- involvement in forest The proposals for implementa- versing the trends of contin- partment that the Bank expand management decision- honoftherevisedStrategyfo- ued forest loss and its policy to explicitly cover making, and managing tion o revised Sey fo- degradation by securing at interventions in all forest areas adverse cross-sectoral and cus on a number of key areas. least 50 million hectares of and refocus its strategy on pov- macroeconomic impacts country ownership by sup- new protected forest areas by erty reduction, economic man- on forest ecosystems and count one b y su- 2005, along with the im- agement, and good gover- their dependent people. portng and building on na- proved management of anoth- nance. ~~~~~~~~~~~~~~~~~~~~~~~er 50 million hectares of forest . Protectin vitallc related country-driven pro- protected areas and 200 mil- * Protecting vital local and . The proposed revisions to the global environmental ser- cesses. They will give priority lion hectares of production Forest Strategy and its associ- vices and values by sup- to rigorous economic and sec- forest outside key protected ated Operational Policy are v tces ahd values by sup- tor analysis though activities areas. Substantial progress aligned with these priorities porting the development such as resource and market has been made in achieving of new markets for both assessments, strategic environ- these targets, but there is still ments emeing programmaticn - local and global environ- mental assessments, poverty an enormous amount of work ments in programmatic lend- mental services, assisting assessments, and social analy- that needs to be done to fully duction programs and credits. governments in strength- ses. The Bank's analytical work realize these goals. The new Strategy aligns the ening policies and invest- will be developed through Bank's forest-related activities ments in conservation multistakeholder planning The proposed new Strategy with the Bank's major institu- and protected areas, and and review processes that will will be considered by the tional objectives by pursuing ensuring that Bank- help support the policy re- Bank's Board of Directors in three equally important and supportedinvestmentsdo formsrequiredtoachievemore October. If adopted, it will interdependent goals: no direct or indirect harm open and transparent gover- provide a sound basis for to critical forest conserva- nance. This, in turn, will help strengthening and extending * Harnessing the potential to tion areas. to ensure that forest manage- this strategic alliance to accel- reduce poverty by creating ment and development is re- erate progress and ensure a security, empowerment, The proposed new Strategy sponsive to all stakeholder better future for the world's and opportunity for rural places particular emphasis on interests. forests and the world's forest- people-especially issues of governance and par- dependent people. indigenous people and the ticipation, including inde- The Bank will seek to bring in- rural poor-in the man- pendent, performance-based novative blends of public and agement and sustainable certification of any commercial private investment to support use of forests. forest operations supported by the integrated management of Bank lending. Essential ele- the forest resource. The Bank * Integrating forests into ments of acceptable certifica- will also extend its partner- sustainable economic deve- tion processes encourage good ships with communities, gov- lopment by addressing the governance in the forest sector ernments, and environmental undervaluation, gover- by including stakeholders in organizations to support the nance failures, and per- the definition of management identification and conservation verse incentives that standards; balancing the eco- of critical forest conservation commonly plague the logical, economic, and equity areas and to monitor projects. sector. Support will focus dimensions of forest manage- on developing markets for ment; and developing inde- One of the most significant This article Was prepared by David a broader range of forest pendent and credible perfor- Bank partnerships in this area 522-1142, and Katl7y MacK76oa(02i, goods and services, mance evaluation and report- is the World Bank-WWF Alli- (202) 458-4682, fax (202) 522-3256, encouraging improved ing mechanisms. ance for Forest Conservation of the Environmizenit Departmenit. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 25 j i, ^ ) a rket-based proaches work in practice. Ex- I_ I mechanisms of- perience with market-based I V I g v fer many advan- mechanisms is still young, and tages over conventional ap- much remains to be learned. proaches to conservation. They Though the principles are sim- can mobilize new funding ple, putting them into practice from consumers of environ- is not. A review of numerous M arke V arket-B ased mental services, better match case studies of market-based funding to the supply of ser- mechanisms throughout the N4R R M e c h a n I s mns for vices, and provide additional world suggests some broad M echanism r !and diversified income for ru- initial lessons: C onservation and ral development. U One size does not fit all. No single mechanism is De lo m ent For example, forests provide universally applicable. ev e p m e t valuable hydrological services, Even when mechanisms including controlling the vol- are similar, the details of ume of water flows and pro- their application are likely tecting water quality, reducing to differ substantially, in sedimentation, preventing light of local technical, floods and landslides, conserv- economic, and institu- ing biodiversity, and storing tional conditions. THE SIMPLE LOGIC OF PAYMENTS carbon. These services are rare- * Identify the services ENVIRONMENTAL SERVICES ly paid for, however, and so are being provided clearly. 1 ESllXI FOR ENVIRONMENTAL SERVICES often lost. Market-based mech- Potential buyers are not As the figure shows, land users receive few anisms seek to remedy this interested in generic benefits from forest conservation-often, less market failure, for example, by forest, water, or biodiver- than the benefits they would receive from al- charging municipal and indus- sity services. Rather, they ternative land uses, such as conversion to trial users an additional fee on are interested in clean pasture. But deforestation can impose costs _, 4on downstream populations, who no longer their water bills to pay up- water, or in a reliable dry- receive the benefits of ecological services stream land users for invest- season water supply, or in such as water filtration. A payment by the ments in forest conservation access to genetic informa- downstream beneficiaries can help make con- (see Box, at left).gh c - servation the more attractive option for land tion. Without a clear un- users. The payment must be more than the derstanding of which additional benefit to land users of the alterna- Recent studies have found al- specific services a given tive land use (or they would not change their most 300 examples of such forest is providing, and to behavior) and less than the value of the ben- . . ang ii efit to downstream populations (or they would mechanisms worldwlde, and whom, developing market- not be willing to pay for it). the list iS constantly growig. based mechanisms is *1t . . Helping countries find innova- difficult. Conversion Conservation Conservation solutions to pasture with servicetivesolutionito such prob- * Understand and docu- | \ 11 - $/ha payment lems-which intersect with ment the links between i6 qPayvment livelihood, vulnerability, and ecosystems and services. Beneffts to j 1Sfor service health issues-is a key element Just as important as land managers of the World Bank's Environ- of the World Bank_s Environ- identifying the services is .1 ment Strategy. understanding how these services are generated. Costs to While interest in market-based Too often, mechanisms downstreamr approaches to conservation is F f t ~~~populations _.rely on conventional wis- popu at 0E _rowin throughout the worldo growing ~oug l: _ vdom that forests provide L 6 relatively little information is =,, . ' ~~~~~~~~~~~~~~~~~~~~~~services such as improved available on how these ap- 26 ENVIRONMENT MATTERS * 2002 _~ 1 kS LEARNING FROM THE PAST AND LOOKING FORWARD water supply. Even when potential suppliers with- WORLD BANK SUPPORT FOR THE PAYMENT FOR the conventional wisdom out necessarily providing ENVIRONMENTAL SERVICEs APPROACH is right, it is often more reassurance to buy- insufficiently precise to ers. Finding the right The World Bank is working with several countries to develop allow effective mechan- balance of information Payment for Environmental Services (PES) systems that could isms to be designed. What and compliance costs is an help substitute for the absence of markets and promote the kind of forest is most on-going concern, as seen maintenance of environmental services-especially in Central effective inmprvig ithcsefmrkt and South America, where the effects of Hurricane Mitch in effective In improving in the case of markets for 1998 underscored the dependence of the population, espe- water supplies, for ex- certified timber and cially poor people, on environmental services and the protec- ample, and where should agricultural products. tion provided by natural ecosystems. Bank-supported it be located? How com- * Design flexible mechan- operational work on PES includes: patible are other uses? isms.Market-basedmed-can- * Costa Rica. The Ecomarkets Project, which supports the Without answers to ques- isms must also be suffici- country's PES program, includes a $32.6 million loan from the World Bank to help the government ensure current lev- tions such as these, the ently flexible to respond to els of environmental service contracts and an $8 million grant mechanism is unlikely to changing demand and from the Global Environment Facility (GEF) to assist the pro- work effectively. supply conditions and gram's conservation of biodiversity. * Begin from the demand improvements in knowl- * Colombia, Costa Rica, and Nicaragua. The Regional Inte- side, not the supply side. edge about how forests grated Silvopastoral Ecosystem Management Project is pi- loting the use of PES as a means of encouraging a shift By focusing on the de- generate services. They from unsustainable agricultural practices to sustainable sil- mand for services and should reward efforts to vopastoral practices. askinghowbesttomeetit, expand and improve * Dominican Republic, Ecuador, and El Salvador. Pilot PES it is more likely that an service delivery and to re- programs are under preparation in these countries. effective and sustainable duce costs, while minimi- * Mexico. The World Bank is supporting a survey of land man- mechanism will be deve- zing the incentives for agement practices in the ejido (communal land ownership) loped. Without demand, destructive rent-seeking sector, which includes most of the country's remaining for- est area and most of the rural poor. The goal is to help de- there can be no market. or free-riding. sign a PES system and provide a baseline to monitor its Beginning from the * Ensure the poor can par- implementation. supply side risks deve- ticipate. Market-based In addition, the World Bank Institute (WBI) has developed a loping mechanisms that mechanisms have great training course on PES targeted to technical personnel in min- supply the wrong services, potential to provide addi- istries, conservation agencies, and nongovernmental organi- in the wrong places, or at tional income sources to zations involved in implementing PES programs. As of 2002, the course has been presented four times. prices that buyers are rural land users, as well as unwilling to pay. Supply- reduced risk through drwiveingto mcanism areply redivers rifi o athero Carefully designed markets for Thzis article was prepared by, Stefano dliven tochavesa hge directibnefts ow- ecosystem services can make Pagiola (e-mnail spagiolaoworldbank likely to have a higher indirect benefits. How- an important contribution to .org) and Gunars Platais (e-mail mortality rate than demand- ever, realizing this poten- gplataisEworldbank.org) of the driven ones. tial often requires that both environmental improve- World Bank's Environmiiient Depart- * Monitor effectiveness, particular efforts be made ment and rural development. mient (website: wzvww.worldbank.org/ *While most initiatives are still environmentaleconoinics). It is based Monitoring effectiveness to ensure that the poor are . on a review of market-based meciha- is essential to document- not excluded, through in the early stages of develop- nisnis for forest conservationi co- ing tbyshth ae eosoment, they all provide useful sponsored by thte World Bank Insti- ing to buyers that they are efforts to secure land lessons and inspiration for fur- tute (WBI), the Initernational lnsti- getting what they are tenure of marginalized tute for Environment and Develop- paying for, and to adjust groups, support for coop- ther innovation in this rapidly ment (lIED), and the UK brancih of the functioning of the erative institutions for changing area, for the benefit the World Wildlife Fuond (WWF- the functioning of the erative institution s. for ofbt ,cssem n epe UK). mechanism should pro- bundling and bargaining, blems arise. At the same access to training and For more information, see: Stefano Pagiola, Joshua Bishop, and Natasha time, excessively burden- start-up capital, and of Landell-Mills, eds 2002, Selling For- some monitoring require- course the design of the est Environmental Services: Market- Based Mecliaiiisniis for Consirvation ments can discourage market itself. aiad Developmtenit. Earthscan, London. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 27 THE MILLENNIUM DEVELOPMENT GOALS AND THE ENVIRONMENT What are the Millennium GOAL 7-ENSURE Development Goals? ENVIRONMENTAL SUSTAINABILITY Development Goals? Targets: The Millennium Development Goals (MDGs)- * Integrate the principles of sustainable developed from world conferences organized by development into country policies and the United Nations in the past decade, includ- programs and reverse the loss of ing the September 2000 UN Millennium Sum- environmental resources * Halve, by 2015, the proportion of people without mit-have been commonly accepted as asutialacesosfednkgwtr framework for measuring development progress. sustainable access to safe drinking water framworkformeasrin devlopmnt rogrss. * Achieve, by 2020, a significant improvement The eight MDGs focus on achieving significant, civ,b 00 infcn mrvmn T egM scoaic , in the lives of at least 100 million slum dwellers. measurable improvements in people's lives. They establish yardsticks for measuring results- not just for developing countries, but for the rich programs, policies, laws, and institutions. The countries that help to fund development pro- Poverty Reduction Strategy process is an ex- grams and for the multilateral institutions that ample of a promising tool to integrate the envi- help countries implement them. ronment into policymaking. Achieving the second target, which ad- THE MILLENNIUM DEVELOPMENT GOALS dresses the considerable health and economic 1. Eradicate extreme poverty and hunger costs of inadequate water supplies, could save 2. Achieve universal primary education 400,000 lives per year. 3. Promote gender equality and empower women The third target-improving the lives of 4. Reduce child mortality slum dwellers-will require numerous interven- 5. Improve maternal health 6. Combat HIV/AIDS, malaria, and other diseases tions, including improved housing, access to 7. Ensure environmental sustainability waste management services, access to cleaner fu- 8. Develop a global partnership for development. els to reduce indoor air pollution, reduced urban I air pollution, and access to safe transport services. Causesofdeaths amongchildren The Environment Environment and the MDGs under five (1999) Goal 7 is dedicated to ensuring envi- Acute °nmentl sustinabilty Thi goalIn four key areas-livelihoods, health, vulnerabil- Acute ronmental sustainability. This goal respiratory .g. ity, and participation and empowerment-envi- infection ronzes hat all ooofen ev ronmental management can help achieve the ronment has been overlooked by MDs policymakers as an important re- Other - : T , Diarrhea source for growth and poverty al Livelihoods Goal 7 includes three targets, Goal 1-eradicating extreme poverty and hun- _,, Maria which seek to capture the complex ger-is closely connected to the issue of liveli- Source:WHO. interaction among the environmental, hoods. For example, agricultural systems social, and economic aspects of sus- support the livelihoods of the vast majority of tainable development. the rural poor; degradation of such systems is The first target focuses on the integration of undermining present and future livelihood op- sustainable development principles into country portunities for many poor people. 28 ENVIRONMENT MATTERS * 2002 MEETING SUSTAINABLE COMMITMENTS In addition, the sustainable man- ronmental degradation, is a key dimen- Investment Implications agement of natural resources is impor- sion of poverty. Environmental shocks tant to sustain export revenues. The and stresses-including droughts, Reaching the environment goal will de- poorest countries are still heavily de- floods, and forest fires-can affect both mand a wide range of measures. Some pendent on natural resource exports short- and long-term poverty, making of these measures require financial ex- such as cocoa, coffee, sugar, and oil, gas, them highly relevant for attaining Goal penditures-such as the cost of building and minerals. 1. The rural poor often live and work in sanitation infrastructure. ecologically fragile areas, and the urban The World Bank's Environment De- Health poor are more likely to live and work in partment has calculated that additional areas with high exposure to environmen- aid of $35 billion per year over 15 years Goals 4,t5,end i roenit in k tal hazards. As a consequence, the poor is required to achieve Goal 7. This rep- heages betweend y iprovemntsion humanure suffer the greatest losses of income and resents a 4.5 percent increase in current dealth and iltnery rduection. moremuro- assets at least in relative terms, and are levels of net ODA flows (for all devel- death and illness due to major environ- in the weakest position to cope and opment purposes) from DAC countries. mental health risks account for 20 per- cent of the disease burden in the adapt. Additional aid needed to meet the developing world. This is comparable to D , n * A- andMDGs: $65-85 billion the toll from malnutrition and larger than IWlIcipation and Upgrading and providing Water supply secure tenure in slums the burden from other preventable risk Empowerment Wan sanernenn factors~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~n andgrup oadsese on Eactrsnvigronmental hfealssues a Goals 2 and 3 address the issue of par- _ sr.-c.' Environmental health issues are tiiainadepwrettruh Desertdication / fbi-n11nena fa~~~~~tciptiors and gropsofwiease.t t..,-evronnentaln particularly important for achieving tiiainad-moemn thoghals education and gender equality. The bur- Blodmversty / goal 4-reducing child mortality. Envi- v d den of environmental degradation oftenI / ronmentally related diseases-most no- f / r tably diarrhea, acute respiratory fs pr to e n in turn affects opportunities open to A significant share of additional aid to developing infections, and malaria-are leading countriesneedstobedirectedtoenvironmentalissues causes of child mortality, accounting for them, including education if sustainability is to be ensured. some 40 percent of under-five mortality Many hours devoted to gathering (see Figure, at left). water and fuel often mean that women The Bank estimates that $30 to $50 bil- Malaria, which is explicitly men- have less opportunity than men to par- lion would be needed for the other tioned in Goal 6, kills 1 million people ticipate in market-based work or earn in- MDGs, bringing the total for all eight per year, 90 percent of them in Africa. come independently. For adolescent girls, goals to $65 to $85 billion. Malaria threatens an estimated 40 per- who commonly share responsibility for Achieving goal 7 and the other cent of the world's population-mostly household tasks, these activities often goals will involve more than money. To those living in developing countries. come at the expense of schooling. Invest- ensure progress toward sustainability, As a vector-bome disease, malaria ments in environmental infrastructure can the policy context is as important as the is affected by a wide-range of environ- empower women to participate in other availability of funds. mental factors. Stagnant water supports activities, whether income generation or If environmental sustainability is mosquito populations, and the increase community affairs, and facilitate in- not ensured, the achievements for the in temperature associated with climate creased education for girls. rest of the goals may be short-lived. En- change is expanding the area affected by The burden of environmental health vironmental actions may be among the malaria. Interventions-such as main- also falls disproportionately on women. most cost-effective ways of achieving taining irrigation, drinking water, and Acute respiratory infections, the leading many of the other goals. sanitation infrastructure-will help re- contributor to the global burden of dis- duce malaria. ease, are more common in women. In developing countries, these are largely Vulnerability associated with exposure to indoor air pollution from cooking and heating with This article was prepared by Kathlerine Bolt of the Vulnerability to environmental change, traditional fuels. Improving access to Environment Departnient's Policy and encompassing both natural disasters modern fuels would reduce the gender Economics Team, (202) 473-7108,fax (202) and the more gradual processes of envi- gap related to environmental health. 522-1735. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 29 IMPLEMENTING THE ENVIRONMENT STRATEGY REFOCUSING OUR ACTIVITIES AND PRIORITIES A fter two years of stocktaking, research, countries. In Cambodia, Laos, and Vietnam, a and broad consultations, Making Sus- new research program is exploring the tainable Connnitments, the World Bank's linkages between natural resource man- new Environment Strategy, is now being imple- agement and poverty. In order to help build mented. The Strategy has re-focused the Bank's local capacity to mainstream environment into activities to areas where it can be most effective PRSP processes, several national and regional in supporting sustainable development by en- workshops have been organized in Abuja, hancing the quality of people's lives, improving Nigeria; Johannesburg, South Africa; Nairobi, the quality of growth, and protecting the quality Kenya; and Tirana, Albania. An initial review of the global commons. Implementing the Strat- of 40 PRSPs indicate that their coverage of egy requires adjusting and realigning the Bank's environmental issues is still low, but there are priorities, tools, activities, and institutional in- good practices emerging; examples include centives. The following highlights key elements PRSPs for Bolivia, Honduras, Mozambique, of this adjustment. and Nicaragua. * Launched initiatives to apply strategic Mainstreaming environment environmental analyses more systematically. Country-level and sectoral analyses explore The Strategy emphasized the imperative to main- key environmental challenges, their linkages stream environment into policy dialogues, coun- with development objectives and policy try assistance strategies, poverty reduction changes, and the institutional capacity of programs, lending and non-lending programs, countries to address their priorities. Such and partnerships. Analytical and advisory assis- analyses have been launched, for example, in tance and learning programs play a key role in the Indian states of Andra Pradesh, Kar- supporting good environmental management nataka, and Uttar Pradesh, as well as in and stewardship in client countries, as well as in Egypt and Tunisia. In addition, sectoral facilitating the mainstreaming of environmental environmental analyses-such as energy- considerations into the Bank's activities. environment reviews-have been conducted in numerous countries, including recently in Since the adoption of the Strategy, the Bank has Bulgaria, Mexico, Macedonia, Sri Lanka, and made significant progress in several areas. For Turkey. A review has indicated a steady example, the Bank has: improvement in the integration of * Initiated research to explore poverty- environment into the Bank's Country environment linkages in order to help equip Assistance Strategies (CAS), which is often a our client countries with existing knowledge direct result of strategic analyses prepared on poverty-environment links and assist before the CAS. them with analytical activities in this area, * Provided technical assistance, knowledge, particularly in the context of the preparation and learning programs to support policy of Poverty Reduction Strategy Papers innovations such as payments for ecological (PRSPs), which are now required for all IDA services in countries such as Costa Rica and 30 ENVIRONMENT MATTERS * 2002 MEETING SUSTAINABLE COMMITMENTS El Salvador; developed indicators same operations (see Figure, below). The In fiscal 2002, the World Bank approved and programs to meet the Millen- new system allows a better tracking of 42 projects with environmental and natu- nium Development Goals; facilita- environmental lending and mains- ral resource management objectives, ted the positive environmental treaming in various sectors. According amounting to $869 million. Examples outcome of privatization in coun- to preliminary data at the end of fiscal include the Forest Conservation and tries such as Bulgaria; and ad- 2002, projects with environmental and Management Project ($31.3 million) in dressed complex cross-sectoral natural resource management objectives Tanzania, which initiates an integrated issues such as urban air quality and components represent 14 percent biodiversity conservation strategy for management in Latin America and ($14 billion) of the total Bank portfolio the Eastem Arc Mountains, thus strength- the Caribbean, East Asia and the of $100 billion. ening the country's capacity to coordi- Pacific, and South Asia. (For a more nate forest biodiversity conservation detailed description of the learning Two categories-pollution management interventions. activities supported by WBI, see and environmental health, and water re- page 62.) sources management-accounted for The Bank also helps client countries ad- dress regional and global environmen- ^ I I I ~~~~~more than half of environmental objec- ta obetvstruhtogoa A reWw lOOK at tnF tives, while land management, environ- tal objectives through two global environment por iio mental policies and institutions climate financing mechanisms-the Global En- vironment Facility (GEF) and the Multi- At the core of the World Bank's assis- change, biodiversity protection, and oth- lateral Fund for the Implementation of tance to client countries is its lending ers accounted for the remainder (see Fig- the Montreal Protocol (MFMP). A sizable portfolio. In order to better reflect the ure, top of page 32). In terms of regional portfolio of GEF and MFMP projects di- complexity of its operations, the Bank distribution, 43 percent of environmen- rectly address global environmental con- has introduced a new system of classi- tal objectives and components were cems such as biodiversity loss, climate fying its portfolio. Under this new sys- found in East Asia and Pacific region change, international waters, ozone tem, each operation can have up to five projects. The Latin America and Carib- depletion, and land degradation. sectoral assignments and five thematic bean and South Asia regions followed, objectives. The sectoral and thematic as- each with 16 percent of all environmen- In fiscal 2002, the Bank approved 21 full- signments are two dimensions of the tal themes. size GEF projects with GEF co-financing World Bank Project Portfolio by Sector and Theme, end of fiscal 2002** Total Portfolio by Sectoral Distribution Total Portfolio by Thematic Distribution Urban Development Transportation Rural Energy and Water, HuDevelopment mining * sanitation and Development AWtS. . flood protection 0 L d Social r ^ Environmental and Industry and - ~ Law andEniomtaad trade uv ---0% justice Development, Natural Resource Other social g Gender,Aand i 8% Management servicesU*.. *IAgiuueInlso tervlces BY _ . - X > fishing and / §;- \ 1 % Management forestry Social Protection Heafth and Risk Public Sector iw yPblic Management Governance Finance TaeadGvrac Finuce ti*n l/ adninistration Integration Financial Education 1% and PSD Rule of Law preliminary data lnforrration and conmnication ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 31 Composition of World Bank's environment and natural resources disclosure policy, effective since management portfolio, end fiscal 2002, ($14 billion)* January 1, 2002, has increased the transparency of the work on - Water Resources safeguard policies. According to the Pollution Management and Management policy, category A and B environ- Environmental Health 3 j/ mental assessment reports, as well ( | r - . _ g Other as Resettlement Action Plans and Indigenous Peoples Action Plans, /L- 1;< i>3% are now available to the public in vz j w r Biodiversity client countries and at the World 13% Climate Change Bank InfoShop before appraisal of Land Bank-funded projects. These policy Management Environmental revisions have been part of a Policy and broader effort to strengthen safe- Institutions guard policy implementation, and to convert existing directives into a of $225 million. Examples include the people and their environment-are a format that allows a clearer Partnership for Natural Ecosystem Man- cornerstone of sound business, and cen- distinction between mandatory agement (PAGEN) Project in Burkina tral to the World Bank's support of sus- policies and procedures and Faso; the Wetlands Restoration and Pol- tainable development. Since the mid- desirable good practices. lution Reduction Project in Bulgaria; 1970s, environmental assessment proce- * The integrated safeguard system and the Solar Thermal Power Project in dures and other environmental and so- and compliance tracking system India. In addition, 10 new medium-sized cial safeguard policies have been have been established and main- projects (GEF grants up to $1 million) systematically applied to Bank projects streamed into Bank operations. were approved, including the Biodi- to avoid and mitigate the potential ad- Safeguard policies have been versity Conservation in the Lower verse effects of the Bank's investment integrated into project supervision Dniester Delta Ecosystem Project in portfolio on the environment and vul- reports, and coordination and Moldova. Under the MFMP, the grant nerable populations. Nevertheless, as consistency across Regions has been agreement of the Thailand Building the Strategy pointed out, there is a need improved through the establishment Chiller Replacement project, approved for continuing improvement and adjust- of a multi-departmental team at $5 million, became effective in fiscal ment of our policies and practices to re- (Safeguard Management And 2002.This project assists Thailand in flect emerging good practices, lessons Review Team-SMART). An internal improving energy efficiency and reduc- learned, and changing lending profiles. audit of the safeguard system has ing greenhouse gas emissions in the The following are key highlights of confirmed that the new system is building chiller sector, and reducing con- progress made: operational. sumption of ozone-depleting sub- * The new operational policy on * Safeguards risk assessment exer- stances. involuntary resettlement was cises have been completed by all adopted in December 2001. In Regions. These exercises have addition, extensive external consul- helped develop appropriate project The continui g tations have been conducted on the risk management strategies and improvement of our indigenous peoples and physical resulted in allocation of adequate saf uard system cultural resources policies to inform resources to proactively address eguar the draft policies to be presented to safeguard issues. Safeguard policies-which are designed the Bank's Board of Directors in the * There were continuing efforts in to prevent and mitigate undue harm to coming year. The new public fiscal 2002 at harmonization of Envi- 32 ENVIRONMENT MATTERS * 2002 rIN NG SUSTAINAB I COMMITMENTS AN ENVIRONMENT STRATEGY FOR THE: WORLD BANK the first time, the,World.Bank-is-consolidating . * A , ,--,) - its 'approach to environmental protection intto a single-document. The goal of "the Bank's forthcom- ing Environment Strategy is to promote-environmental --' improvements)as a fundamental element of-development and poverty reduction strategies and actions. Building a Foundation: Stockta/king, Research, and Consultation Making Sustainable Commitments is the culmination of a two-year effort involving extensive stocktaking, research, consultation, and feedback. The Bank prepared numerous background papers on the linkages between the environment and issues such as poverty, health, and natural resources management: * Internally, the Operations Evaluation Department and the Strategy team reviewed the Bank's experience and record in the environ- mental area over the past few decades to draw lessons for the Strategy. * Each operational Bank Region prepared a Regional Environment Strategy. These reports were instrumental in identifying areas of unique concern to each Region, as well as underlying themes that are common to all Regions. Western Eastem * Between May 2000 North Ame-aC. Europe CenutrpAsia and May 2001, over - -/ - 4 30 formal and --* * r informal meetings t , East/Nor. t or working sessions *'_Africa A s a/ took place in Sub- / 'W. Pacific Saharan Africa, Larbin Arnerc 7 SouthAsia_ Caribbean Siub Latin America, the Saharan Middle East and Africa North Africa, South Asia, East Asia, Europe, Japan, and North America (see map). * Background documents, a discussion draft, and detailed reports on the consultation meetings and outcomes are available at the Strategy Consultation Website (see figure). ~JAddress I§ http:/Aw/.wordbankorgtenvironmentfstrategyrindexishtmI Theintilrathm of th Enirnmn Statg wettruha \ t _, . -. intensive review process, which is now concluding. The final Strategy will be discussed by the Bank's Board of Directors, and published soon afterwards. Check the Strategy website for publica- tion news. WHAT'S NNEW IN THE ENVIRONMENT STRATEGY The Environment Strategy builds upon ongoing efforts and programs. It considers lessons from the past, responds to a changing global context and changing Bank, and deepens our commitment to sustainable development. The new elements of the strategy include a strengthened emphasis on poverty-environment linkages and local environmental concerns; increased focus on tools that help integrate environment into sectoral decisions and policies, and efforts to improve institutional incentives. KEY FACTORS STRATEGIC INSTITUTIONAL OF CHANGE FRAMEWORK TOOLS REALIGNMENT * Build on client Emphasis on Systematic Emphasis on commitment poverty-environment country institutional * Set realistic targets links diagnostic commitments * Focus on policy studies framework 3 3 | UL0 E *'Mamnstreaming" ~~011 (im~proving cross- SrtgcSrntee *Globalization sectoral links) and Strategic r eStrengthened * Increasing role of "Upstreaming" Environmental incentives for private sect r Assmns(Es antemn * Stronger role of (focusing on policy civil society framework) F" *1 -Focus on overlaps Programmatic * Transparent * Poverty focus between local and approaches monitoring and * Comprehensive global benefits reporting Development Framework (CDF) * Changing lending profile I -. _ Environment Strategy Background Papers Donor Survey of Environmental Aid Effectiveness Health and Environment Mainstreaming Environment in Country Assistance Strategies Natural Resources Management Poverty and Environment Reducing Vulnerability to Environmental Variability Sourcebook on Poverty, Environment, and Natural Resources (for the Poverty Reduction Strategy Papers) Urban Air Quality Management: The Transport-Environment-Energy Nexus Urban Environmental Priorities Environmental Indicators Relevant to Poverty Reduction These papers are available at the Environment Strategy website. For further information: I THE WORLD BANK 1818 H Street, NW Washington, DC 20433 USA Telephone: 202-477-1234 Facsimile: 202-477-6391 Internet: www.worldbank.org The Environment Strategy web site: http:/Iwww.worldbank.org/environment/strategy The ESSD Advisory Service: Email: eadvisor@worldbank.org Phone: (202) 522-3773 All images: World Bank Printed on recycled paper using soy inks. MEETING SUSTAINABLE COMMITMENTS ronmental Assessment principles W among Multilateral Development WINNERS OF THE 2002 GREEN AWARDS Banks (MDBs). Three country directors and five project teams won the 2002 Green Awards, which this year recognized efforts to mainstream the Environment Strategy. In fiscal 2002, of the 229 new Bank projects, 18 were classified as Category The country director awards went to: A, which requires a full environmental * Orsalia Kalantzopoulos, Country Director for the Caribbean, for her leadership and assessment. This represents 13 percent- commitment to promoting the environmental dimension of sustainable development, $2.5 billion-of all new projects in terms both internally and with client countries. of lending amount. An additional 83 * Joseph Saba, the Middle East and North Africa Region's Director for the Mashrek projects, 24 percent of all new projects, Region, for his contributions in mainstreaming environment in Iran's Country worth $4.7 billion, were classified as Assistance Strategy and the National Environmental Action Plan for Syria, as well as Category B and required a simpler en- for environmental projects in the West Bank and Gaza, Jordan, Lebanon, and Iran. vironmental analysis. Further, there were 14 Financial Intermediary (Category F) * Luca Barbone, Country Director for Belarus and Ukraine, for pioneering economic projects approved in fiscal 2002, repre and sector work on environmental expenditure reviews in the ECA Region, and for senting 5 percent of all new project lend- contributing to the inclusion of environmental concerns in the Belarus Country ing, or $1 billion. Assistance Strategy. Institutional changes Awards also were given to five project teams: the Mozambique Poverty Reduction The Strategy recognized the need for in- Strategy Paper; Tunisia Northwest Mountainous Areas and Forestry Development Project;I stitutional realignment, including chang- China Wai Gao Qiao Thermal Power Plant Project; Costa Rica Ecomarkets Project; and ing incentives, reallocating resources, India Mumbay Urban Transport Study and Project. improving our skills, and building ef- fective partnerships. The following illus- trate some of the steps taken in this realignment. A comprehensive training Coordination and monitorinig. A dedi- direction. program has been implemented for Bank cated Strategy implementation team has staff with a special focus on safeguard been established in the Environment Green Awards. The Environment Depart- training, which was provided to nearly Department. Strategy coordinators-ap- ment has launched the Green Awards to 1,000 staff members. Through these pro- pointed in the Regional environment acknowledge colleagues across the Bank acknowhoeh e pionleered envronmthentalk grams, the knowledge of Bank staff of units to oversee and monitor the imple- mainstreaming. These awards have been safeguard policies and their application mentation of the Environment Strat- effective in building alliances and gain- has significantly improved. In addition, egy-provide ongoing strategic ing support for the implementation of a new training program on poverty-en- directions and report on progress. the Strategy (see Box, at right). vironment linkages has been success- fully launched. Strategy implementation-and the nec- Mainstreaming Fund. In order to support essary adjustment in the Bank's pro- the implementation of the Strategy, the Partnerships. With the participation of grams-is a gradual process, and Bank's management approved a several key development partners, a new requires a concerted effort with our cli- Mainstreaming Fund for Environment Poverty-Environment Partnership has ents and development partners. We have (MFE), which has played a catalytic role b fo d t failit a bett d made progress, but large challenges lie in launching several of the activities de- bend ofo ptoefaclitn- mad. scribed above and facilitating cross- standing of poverty-environment link- sectoral coordination. ages, support the mainstreaming of environment into poverty reduction This article wvas prepared by Magda Lovei (202) Staff learning. Staff learning and training strategies, and build on synergies among 473-3986, anid Anjali Aclhanya (202) 458-5298, has been an essential part of institutional the partners' programs. of the Environmiiienit Departmenit. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 33 X1 -- ' \\ .. EU~~T I IBS~~,. _ _~ .s > ~~1 -~~kenYa I n Africa, the World Bank's mission to fight poverty is sources; environmental conditions affecting health; and vul- closely intertwined with environmental protection and nerability to environmental disasters and extreme events, in- natural resources. African livelihoods and national econo- cluding the impact of climate change. mies rely heavily on agriculture and natural resource utiliza- tion. The rural poor are the most affected by inadequate access Integrated ecosystem management to natural resources and resource degradation, and have few iy alternatives to compensate for these losses. Rapid urbaniza- Natural resource management in the Africa Region increas- tion also is putting enormous stress on environmental sys- ingly builds on an integrated ecosystem management ap- tems and resources, and contributing to high rates of proach. In many cases an ecosystem approach provides environmentally related diseases. opportunities for cross-border cooperation. Examples of ini- tiatives with a strong cross-border element include the Mali, The Bank's support in Africa is guided by the Africa Region Lake wi, andtLake chad proje t aswllda the Mam- Environment Strategy, which emphasizes the need to main- tain the envirounmental goods and services and the ecological bique Transfrontier Conservation Areas Project and the re- systems that are fundamental to sustainable development m cently approved South Africa/Lesotho Maloti-Drakensberg both rural and urban areas. The strategy targets the aspects of Project. environmental management and degradation that most affect the poor: management of natural resources for livelihoods and In Mali, as in much of the Sahel, the degradation of ecosys- energy, including land and soil, water, and biological re- tems and near disappearance of wildlife are linked to increas- 34 ENVIRONMENT MATTERS * 2002 AFRICA REGION ing livestock numbers, poor management the great majority of the eutrophication ability to make and implement timely de- of grazing resources, cultivation of mar- and siltation originated from erosive ag- cisions, set high performance standards ginal lands, and unregulated hunting. In ricultural practices in the catchment, par- for staff and management, and mobilize part, these forces prosper because of a ticularly from certain steep escarpments funds. The government office established lack of incentives, knowledge, and capac- in Malawi and through river courses in to coordinate management of the PA net- ity to pursue more environmentally sus- Tanzania. The Lake Malawi Ecosystem work will collaborate with a wide range tainable alternatives. In 1993, the govern- Management Program will build on this of partners, including private contractors, ment instituted decentralization reforms information to maintain and restore the community enterprises, NGOs, commu- that call for empowering commnunities to lake ecosystem. Its components include nity associations, and private tour and manage land resources. In most cases, the integrated watershed management, fish- safari operators. While tourism and sa- land is shared by several communities, eries management, mobilization of social fari hunting are expected to generate requiring cooperation and coordination. and institutional capital, and a regional some revenues, this will not be sufficient The WB/GEF-financed project supports program to enhance cooperation among to sustain conservation of the PA net- a holistic approach that includes partici- the three riparian countries. Local com- work. Continued support from the gov- patory diagnosis focusing on the causes, munities will participate in monitoring ernment and other sources will be rather than the symptoms, of ecosystem the progress and impacts of the program. required. A GEF grant is supporting the degradation, and assisting resource users establishment of an endowment fund to develop solutions in the form of com- Biodiversify aimed at providing reliable financing for munal development plans. The diagno- . core expenditures over the long term. sis extends into Burkina Faso and the conservation Niger delta, reflecting the cross-border In Madagascar, an autonomous agency nature of both the resources and the Biodiversf coser ianaesential with the status of an NGO has been es- people. Following the diagnostic and Yelme of ecosystemfmanaement bthe tablished to manage the national network planning phases, the project will support in termstof itms gb lsgcancelandt of protected areas. The National Associa- local projects and ventures for conserv- and economies. Support for protected tion for the Management of Protected ing biodiversity-particularly grasses- areas (PAs) continues to be an important Areas (ANGAP) is progressively taking in these communal areas. eleme ntiwihi to bersityns direct management responsibility for pro- element within the biodiversity conser- tected areas that were initially established Lake Malawi, which is shared by Malawi, vation p rto,ewit aneasi oin by other entities, sometimes in the con- Tanzania, and Mozambique, is bothaglo- tegrating protected areas with text of integrated conservation and bal biodiversity priority-particularly for surrounding land uses and ensuring the development projects. The World Bank- its huge variety of endemic fish, includ- representativeness, coherence, and financed Environment Program (EP2) is ing over 800 cichlid species-and a vital sustainability of entire national PA net- supporting ANGAP's long-term vision local economic resource. Over 95 percent works. and management plan. This includes di- of the lake's fish catch in Malawi is landed rect investments in the management of by small-scale and artisanal fishing com- In C6te d'Ivoire, for example, protected about 40 protected areas, as well as sup- munities within two kilometers of the areas are threatened by poaching and ag- porting decentralized management, im- shoreline. But the lake is in trouble. The ricultural encroachment. Ensuring pro- proved financial management, and fish catch has declined by 40 percent since tection is difficult for several reasons, monitoring and evaluation systems. For the early 1990s, and an unprecedented including limited government expertise the third phase, the government is work- lake-wide fish kill occurred in September- and resources, low wildlife densities, and ing with donors and international NGOs November 1999. With support from GEF poor tourism infrastructure. The World to formulate a long-term financing plan and the Southern Africa Development Bank and other donors are assisting the that will combine income from various Community, the Lake Malawi Biodi- government to implement its conserva- sources with strong performance moni- versity Conservation Project determined tion strategy, which is based on the prin- toring and cost control. that the lake ecosystem was in grave dan- ciples that protected areas are public ger of permanent deterioration through resources that require public funding. At Water resources eutrophication of its upper water layers; the same time, the protection of protected that siltation was causing severe impacts areas requires an "enterprise-oriented" Freshwater is a vital and increasingly on near-shore fish populations; and that style of management characterized by the scarce resource in much of Africa, with ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 35 water shortages, pollution, watershed and resource development, poor gover- 500 kilometers of coastline from Accra to degradation, and invasive aquatic weeds nance of water resources, and serious the Niger Delta. This rapid and often un- threatening human health, agricultural degradation of water resources. The main planned growth puts enormous stress on and livestock productivity, and water- factors contributing to water resources environmental systems and resources. based natural ecosystems and degradation are weak water apportion- One result is that Africans continue to biodiversity. The Africa Region Water ment and allocation systems; severe and suffer from the world's highest rates of Resources Management Strategy recom- widespread catchment degradation; in- environmentally related diseases, par- mends an integrated, cross-sectoral, creasing pollution from municipal, indus- ticularly those associated with a lack of catchment-area approach to water re- trial, mining and agricultural sources; access to safe water and sanitation. sources management. It identifies five uncontrolled use and development of priority areas: household water security; groundwater; and invasive weeds. In Mauritania, for example, the share of the population livingr in urban areas in- catchment area and wetland protection .l creased from 4 percent in 1962 to 61 per- (environmental stewardship); food secu- The Kenyan government has made a cent in 2001, with more than half of the rity; water quality and human health; and commitment to improving the manage- urban population concentrated in the city intra-national and international coopera- ment and protection of water resources of Nouakchott. About 35 percent of the tion and conflict resolution. To support to ensure equitable allocation for domes- urban population is impoverished, resid- the implementation of this strategy, the tic and public use, industry, agriculture, ing in substandard squatter settlements Bank has supported the Southern African energy, livestock, wildlife, tourism, and without any kind of basic infrastructure Development Conurunity in the prepa- other uses. The government has begun a or services. The city is lacking urban man- ration of a regional technical report on process of reforming the water sector, in- agement skills to face growing service environmental sustainability in water re- cluding the development of an autono- delivery needs such as solid waste man- sources management in southern Africa mous institutional framework that will be agement. A new 10-year Urban Develop- (see article on page 20 of this issue). solely responsible for the management of ment Program (UDP) is focusing on slum water resources. The reforms are based upgrading, including improvement in the In Kenya, for example, the Bank is sup- on the globally accepted principles of quantity and quality of water supplied to porting water management reforms. decentralization, participation, and slum areas, on-site sanitation and fecal Kenya is a chronically water-scarce coun- sustainability of water resources. sludge treatment, and solid waste collec- try with a freshwater endowment of only tion; land development to prevent emer- 647 cubic meters per capita per year, far Urbanization in coastal gence of new slums; economic and below the benchmark of 1,700 cubic mat- environmental infrastructure and ser- ers per person that indicates water stress. areas vices for 14 cities; and capacity building Water is scarce simply because of the lim- in the relevant municipal and national ited natural endowment, climate variabil- VWhile the great majority of Africans still authorities to monitor and manage the ity, the growing needs of increasing live in rural areas, Africa has the fastest environmental and social impacts of the populations, low levels of water supply urbanization rate in the world. The ur- program. A Land Acquisition and Re- ban population has settlement Action Plan (LARAP), pre- . --. grown twice as fast as pared in consultation with stakeholders, 0 -7- -7 S~ - the population of the re includes a process for relocation and com- a ----~ gion as a whole, increas- pensation measures. An Environmental ing from 90 million to Monitoring Plan will be executed by the . s , - \ j ; - m~~~ig from 90 millilon to fl . ~ ~ ~ 15 ilonpolesne municipal authority under the guidance - Et i| 150 million people since and supervision of the national services - * jw < jr g . ' ~~~~1980. There are now 18 190.Thr res nwi1 in charge of environmental assessment. African cities with . populations of over 1 The Africa Region's Integrated Coastal .X . million. Urban growth Management Strategy-Marinie and has mainly been concen- Coastal Environment of Sub-Saharan Africa: = ~ trated in coastal areas, Strategic Directions for Sustainable Devel- - - including the "mega- opmnent-outlines an agenda to guide in- Victoria Falls, Africa. lopolis" of over 50 mil- vestment in the coastal and marine areas lion people living along of Sub-Saharan Africa. 36 ENVIRONMENT MATTERS * 2002 AFRICA REGION Energy Partnerships THE ENVIRONMENT PORTFOLIO The Bank's lending for energy in Africa The Bank's Environment IN AFRICA is increasingly shifting from small-scale Strategy stresses the need rural household energy interventions to for the Bank to develop Biodiversity comprehensive sector reform support and promote strategic Other 3% programs. partnerships. Water Resources ,1 , < CI mate Change Management ' . "O/ _ng n / Environmental One important building block is the Re- For example, the multi- . Policy and newable Energy Strategy for the Africa country Lake Chad Basin - Institutions Region (RESAR). Under the GEF Strate- Commission (LCBC) has gic Partnership of 1999, the Bank commit- received support from a .PWA Land ted to expanding support for renewable GEF project for coopera- \ Management energy. The Bank's Environment Strategy tive management of this also emphasizes the need to create syn- transboundary lake and its Pollution Management and ergies between environrmental and eco- surrounding watershed. Environmental Health nomic objectives in GEF-financed Through this program, the initiatives, including those in the area of four member countries are At the end of June 2002, the active portfolio of environmental climate change. The RESAR outlines ob- collectively designating lending for World Bank projects in the Africa Region (exclud- ing GEF) amounted to $1.3 billion. Over half of the lending in jectives and approaches for supporting 2.5 million hectares of in- the Region is in the pollution management and water re- decentralized rural electrification and for ternationally important sources management categories. In fiscal 2002, seven new accelerating rural transformation and de- wetlands. Chad and Niger World Bank projects with environmental objectives were ap- velopment by improving access to elec- have alreadyprepared and proved; environmental lending totaled $146 million. tricity and promoting commercially submitted their shoreline lands, and Nigeria and Cameroon are in oriented small-scale renewable energy designations and initial management the process of doing so. The Worldwide development. plans to the Ramsar Convention on Wet- Fund for Nature (WWF) and the Ramsar Convention Bureau provide technical as- THE AFRICA 5TOCKPILES PROGRAM sistancetoguidethetransboundaryman- The Stockholm Convention on Persistent Organic Pollutants (POPs) provided the agement plan and execution of the basis for a major effort to tackle the long-standing and worsening problem of stock- micro-grant program. This program pro- piles of obsolete pesticides in Africa. With an estimated 50,000 tons of stored chemi- vides a framework for cooperation cals-in some locations up to 30 percent of them containing POPs-plus substantial among the governments of Cameroon, quantities of contaminated soils, these pesticides constitute the region's most critical Chad, Niger, and Nigeria, the Lake Chad chemical management problem. Much of the material is stored in densely populated Basin Commission, WWF, GEF, the areas under extremely unsafe conditions, often with deteriorating and leaking pack- United Nations Development Program- aging. Mostly poor and ill-informed populations are exposed to hazardous ground me (UNDP), and the World Bank. and surface water pollution, contaminated soils and containers, and airborne expo- sure. In Mali, where the problem is particularly acute, thousands of tons of obsolete pesticides have been dumped in the open in unprotected areas. In some areas, wells Other important partnership programs in and boreholes have had to be closed, further aggravating water shortages. In Africa the Africa Region during fiscal 2002 in- as a whole, thousands of pesticide-related poisonings are recorded each year, many clude the Nile Basin Initiative and the resulting in death. African Stockpiles Program (see Box on the Africa Stockpiles Program, at left). The Africa Stockpiles Program (ASP) is a multi-partner, multi-phased regional pro- gram that aims to eliminate all stocks of obsolete pesticides in Africa over the next 15 years. The ASP is currently under preparation by a group of NGOs-WWF, the Pes- ticides Action Network (PAN-UK and PAN-Africa), UN Agencies (FAO, UNIDO, UNEP, Basel Secretariat), regional organizations (UN-ECA, OAU), industry (CropLife Inter- national), and the World Bank. Financial support is being provided by the GEF-in its Tlhis article was prepared by Agi Kiss of tl,e role as the interim financial mechanism of the Stockholm Convention-the Canadian Environment and Social Developmenit Uniit of Government, and other partners. The estimated cost of the total program, targeted to the Africa Region, (202) 458-7180,fax (202) start in mid-2003, is $250 million. 473-8185 AFR website - «<>. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 37 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ * >#~~~~~~e , . gE7( g h - w '~~,* ---.-s- IRO I16 AUUS 200 l__ Tongc t/i E 30i }a2 --- P.a Pe. _ te.f acrss ounris. n fctgaisadichieveensihav been unevenly dIstributed, with largepotionsoftheEastAsianOvrthepatyear,heEnvio - I , :~~~~~Sio a putneigo.ndi,nrmacd enU (ASotEtsadeafRg.ion tions are generally worsening, further jeoparhas pects o i w n ri aest.saseooi ucsoehatfwdcd sensusethatio anatsural resviourcestand potherenironadmentalga- Fo hast Asia couarntreset stifrik arbalactbetween quality met qanyof gownth tey In toin achievem pin- hav nomic stabinly; ditbueepe poiticalaargenestios rearin theEs Aim- Ovrn h fisals202 yeaSES thas EateaenvironmentadScal eeon- popultanc ofhem environmentaadthidc-imtet tnint oErAtoS of other oantionalits, Coutry tin aegeeall oseig fute jepadiin th prs ha been suprtn clen conre in thei qusorbl penvi fronmntasutinabuiyead gotinhestablishon. Teffective an admn sitnce Strategooie(cA, Pniovmertal Redusction Staegylopa- tistrative andm reuaoy4rmwr to ecnfachieveDP lastingh poverty n prsograsP) ha PubicsEpenibtue Rhevgiews (PR) aeeomnd in ote suffer8ng mst ENVIR N MTconom s20ucess ofTenviro tng- les sensu that guarantee resourrm redcton othe envioertya as-t LJI acro~~~~~~~~~~~ses coustries manfac,geisad staievmnthably Foreastunsianlydistribuesd,withrikeportioanceoftweenEqalitysa vrteps er h niomnnoilDvlp aind qaregntitly ogrwth,nng futheyree jeopardiingete poltcladeos- Porfbeen spovrvigcientcutisiwherqetfrbl nomctsfocntaiity;uedegowhen pltica awregines ThegWordinh Bank Inficamon 20eASEonomic, treme environmental,adscl ceeon- portiances ofa the renviron'secots from tenirconnimentalo degrada- cmsento obetivesb deveraiosopin othe impleertoauniting Colicies enironmrantal sus4tai8percetyof andnusabls anP effectihe admin andsprogance StrategiestributPoerthegan Reuton developegy Pna- itativ qantit ofegultrowhhy fraewor to achieve plastica ng poertco-(RP,PbicEpniueRves PR,adite 38 ENVIRONMENT MATTERS - 2002 EAST ASIA AND PACIFIC REGION economic and sector strategies. Neverthe- less, in some areas the environment unit continued to manage projects and stud- COMMUNITY DRIVEN DEVELOPMENT iestofillexistinggapsintheregionalpro- Community Driven Development (CDD) emphasizes giving control over decisions gram and to make the best use of skills and resources to community groups, often working in partnership with other groups and expertise resident in EASES and not and institutions such as civil society, local and higher-level governments, the private available elsewhere. sector, and donors. Working through inclusive and accountable local groups, CDD is seeking to both improve the lives and well-being of all community members, as well as to improve communications and governance within and among communities and Safeguard s with outside institutions. To reduce and manage adverse risks of CDD emphasizes both policy dialogue and operational mainstreaming. For example, projects, the EASES Safeguard Review at the policy level in 'Indonesia, a dialogue regarding decentralization is continuing with the government. In the Philippines, the government has expressed interest in Team (SRT) ensures that environmental developing CDD projects. In the mainstreaming area, the Rural Infrastructure Demo- and social risks are systematically evalu- bilization/Reintegration LIL in Cambodia, the Northern Mountains Poverty Project in ated in Bank decisionmaking. In addition, Vietnam, and the Kalahi Comprehensive Integrated Delivery of Social Services Project SRT helps identify opportunities for pro- in the Philippines all seek to mainstream community driven development. moting environmental and social benefits An important example of CDD is the second Kecamatan Development Project (KDP) and provides a process for full disclosure in Indonesia, which is a continuation of a longer-term participatory program for pov- and meaningful stakeholder consultation. erty alleviation that includes two village infrastructure projects and the first KDP. KDP In fiscal 2002, SRT reviewed a total of 65 provides unearmarked block grants for poor subdistricts (kecamatans) to support a bottom-up, participatory planning process. The KDP projects are intended to support projects. Of these, 14 were category A participatory planning and development management in villages; support a broad- projects, which are likely to have signifi- based construction program of social and economic infrastructure; and strengthen cant adverse environmental impacts and local formal and informal institutions by making them more inclusive, accountable, require the borrower to prepare an envi- and effective at meeting villagers' self-identified development needs. Results from the first project show that community-managed projects can produce high-quality, ronmental impact assessment, and 27 low-cost infrastructure provided that information is complete and accessible, that com- were category B, which may have poten- munities retain control over planning decisions, and that a strong facilitation process tially adverse environmental impacts and is in place to promote direct negotiation of conflicting interests. normally require an environimental as- KDP's basic design is deceptively simple. Its core elements are a fast system of direct sessment that is narrower in scope than a cash transfers from a special account to subdistricts, where village representatives CategoryAproject. There were 18 projects hold collective bank accounts; a tiered system of technical and social facilitators; in China, 9 in Indonesia, and 8 in both open project menus; a process for technical review of subproject proposals that ex- Vietnam and the Philippines. The review cludes any higher level review or modification; support for village management of procurement, financial management, and project implementation; and full transpar- team provided extensive support for ency through a program of disclosure and independent civil society monitoring. Dur- project preparation and supervision, and ing the first year, subprojects implemented in 3,650 villages in 501 kecamatans continued working with the World Bank benefited 1.5 million people. By the third year of the project, over 1,000 kecamatans- Institute to develop and strengthen safe- out of a total of 4,000 in the country-were involved. guard training materials. dia, Lao PDR, and Vietnam. The second of key environmental conditions and Sector work phase of the PEN Study will maintain the trends. They also aim to engage and in- focus on the same three countries, deep- form stakeholders on key environmental EASES launched a two-phase study to ening the analysis and further elaborat- changes. In fiscal 2002, work began on the investigate the complex relationship be- ing the relationship between environ- first issue of the Cambodia Environment tween environment and poverty. The first ment and poverty. The findings of the Monitor. In addition, EASES published phase of the Poverty-Environment Nexus study will be mainstreamed into country- (PEN) study considered how environ- specific Poverty Reduction Strategy Pa- the first issues of the Environment Moni mental change may relate to the various pers (PRSPs). tor for Indonesia, Mongolia, Papua New dimensions of poverty. It attempted to Guinea and Vietnam, and the third issues clarify specific aspects of this relationship, In fiscal 2002, the Environment Monitor for the Philippines and Thailand. The first and constructed indicators for measuring series has been strengthened and ex- issues provide an overview of key envi- poverty-environment linkages in Cambo- panded. These reports provide a snapshot ronmental trends; the 2002 issues for Phil- ANNUAI REVIEW * JULY 2001-JUNE 2002 (FY2002) 39 ippines and Thailand focused on the nam; a five-year targeted research project EASES developed five new full-size GEF problem of air pollution. on the interactions between permafrost operations. However, despite this melt, biodiversity loss, and herding pat- achievement, the Region fell significantly As part of the China Environmental Sector terns in northern Mongolia; and a media- short of the GEF Council and Board de- Technical Assistance program, an assess- based initiative on forests in Indonesia. livery targets. The region was able to ment of the possible environmental ef- The Bank's Biodiversity and Environmen- achieve only three of an intended six GEF fects of China's accession to the World tal Assessment Toolkit has appeared this Council presentations, and only three of Trade Organization was completed. The year in Vietnamese, Chinese, and Indo- eight Board approvals. The collapse of the Bank is also supporting an evaluation of nesian editions. Thailand program, which was mainly the administrative and management ca- caused by government inaction, ac- pacity of China's environmental protec- GEF and MP counted for two of the Council and Board tion agency. shortfalls. In medium-sized projects, As a multilateral institution, the Bank is three of an intended four submissions The effort to integrate environmental is- one of the implementing agencies of the were delivered. sues into CASs (China and Thailand), Global Environment Facility (GEF). By PRSPs (Cambodia and Mongolia), and accessing GEF resources to cover the in- In China, many policies and regulations other formal and informal sector activi- cremental costs of additional actions on to phase out ozone-depleting substances ties has also continued over the past year. global issues, the Bank helps its member (ODSs) are either already in place or un- For the first time in the EAP region, re- countries conserve and sustainably use der consideration. China remains on track ports such as the Indonesia Development biological diversity, reduce emissions of to meet its ODS obligations as scheduled. Review and Mongolia Public Expendituire greenhouse gases, manage shared water Under the China ODS III Project, one new Review have included chapters on the bodies, and reduce emissions of ozone- sub-project (household refrigeration) was environment. depleting substances. In fiscal 2002, approved. Under the China ODS IV Natural Resources THE EAST ASIA CLEAN AIR INITIATIVE Management The Clean Air Initiative (CAI) advances innovative ways to improve air quality in cities by sharing knowledge and experiences through partnerships in selected regions of In forestry, EASES is continuing to sup- the world. The CAl brings together a range of cross-cutting expertise in urban devel- port the Indonesia Forestry Policy Dia- opment, transport, energy reform, environmental management, and environmental logue by coordinating the donors in their health. Since its inception in February 2001, the CAI for Asian Cities has developed and successfully concluded many activities. dialogue with the government and pre- paring selected analyses to update and fill A bimonthly newsletter provides regular updates on CAI activities. The CAI website gaps in the analytical underpinnings for has been revamped. It now includes new features such as online discussion groups and a list serve to facilitate and widen the exchange of information between interna- tional and regional partners and specialists on air quality management and related and use, the Bank is helping the Govern- topics. Regional workshops were organized on two-stroke engines, scrappage ment of Indonesia (Gol) design a Land schemes, inspection and maintenance programs, fuel quality, transport management, Policy Reform Agenda by mobilizing re- and indoor air pollution. The workshop discussions are also available on the CAI web. New activities on regional harmonization of fuel standards and switching to four-stroke sources; assisting Gol to identify priority engines are currently under preparation. issues and organize a national forum for in-depth discussions; and ensuring ad- A regional network of Asian and international training institutes has been established equate public consultation for consensus to help coordinate activities and support the delivery of capacity enhancement activi- ties in the region. One of the main activities is a video and web-based urban air building. quality management distance learning course, which is currently being finalized by the World Bank Institute with contributions from Asian specialists and Bank experts. To conserve biodiversity, EASES is assist- There are ongoing discussions to merge the CAI network with the Air Pollution for ing its clients through a variety of ap- Megacities in Asia (APMA) Project-organized by UNEP in collaboration with the World proaches. It manages major GEF projects Health Organization, the Stockholm Environment Institute, and the Korea Environ- in China and Cambodia. Medium-sized ment Institute-to strengthen CAI-Asia's capacity to implement activities based on projects are focusing on ecosystem ap- the strengths of each of its partners and avoid duplication of effort among donor proaches to limestone landscapes in Viet- agencies. 40 ENVIRONMENT MATTERS * 2002 EAST ASIA AND PACIFIC REGION Project, two new sector plans-foam and edge Partnership is designed THE EAP REGIONAL commercial refrigeration-were initiated to share Korea's environ- ENVIRONMENT PORTFOLIO for a total commitment of $278.8 million. mental experience with In the Philippines, there are ongoing dis- other countries in the region. with th governent the Currently focusing on indus- Pollution Management and cussions with the government on the trialyfocution int Environmental Health - Water Resources preparation of a National CFC Phaseout al environ ment _ Management and environmental manage- _ Plan. In Indonesia, sector plans for aero- ment, this partnership could sol and foam have been launched. e t cr expand to cover other issues : t,2 i m I of importance in the region. Other Envroni jenta In Thailand, the Country % par ners IpS Development Partnership Ld.4% Biodiversity Over the past year, formal and informal for Environment has also Land - Climate Change achived rogess oth ithManagement ~ environmental partnerships have proven achieved progress both with Environmental to be an effective tool to work with client the government, other do- Policy and nors, civil society, and Institutions countries to address environmental prob- nGos, Finly s eASE is lems. Several forestry activities are under NGorkingwith the major The active portfolio of World Bank environmental lending way as part of the World Bank/WWF y activitie are unin the East Asia and Pacific Region (excluding GEF) is faiths in the region, produc- $5.9 billion. Pollution management, water resources man- Forest Alliance, while the World Bank- ing books and other materi- agement, and land management account for nearly three- Nature Council-Birdlife International als to show the strong links fourths of environmental lending in the Region. In fiscal 2002, six new World Bank projects were approved with partnership focuses on major biodiversity between religious faiths and total environmental lending amounting to $102.5 million. concerns. The World Bank-Korea Knowl- environmental stewardship. -Indonesia 7~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~_ i - 9 ~ ~~~~~~~~ -'-. mn Teani EA ebste-« p/ J: : i , -h'3£ ' | Thvs artzcle 8wns prepared by Giova/cap. Dore, ANNUAL4_ ' REVIEW * JULY 2001-JUNE2002)473-2934,fx (2022) 1522-1666, ad _ ''_.7/ wo< F' 1 Szlriiid Gaitani of t1e East Asia and Pacific } / \ l 1 S %t;y ~~~~~~~~~~~~~~~Region, wvit/i inlputsfronl tilc EASES EDiviron1- - .: / - a.J - - - h m~~~~~~~~~~~~~~~~netit Teanrn. EAP wecbsite - <> . ANNUAL REVIEW *JULY 2001-JUNE 2002 (FY2002) 41 s0, - r c 1 /.'-- 4IQX O- D-J W<, --_ ./ ,. - W-\ -,-,D/g -tss -2DD Ag ~~ .- / b0 Estonia Russian Federation v2~ /Latvia , . , - yLithuania i Poland Beloru_ Kazakhstan / -- * X ~ -~~PMoldovo az s I - run ary;._,_- r _-m f -f -~ 'Romano --' . , r AriWenia'Axerbaijan ' v Rep. t I l Z Turkey 6 -v Turkmenistan Taiikistan 1~~~~~~- - FE ,vs1g'3--- ' iw ','>.--oot C2ct,~~ ~ ~~ ~ ~ ~~ '~- I K- IBRD,31563 AUGUST 2002 / initial codtin are crt.al deisv an sutie igmncipl water, sewerage, an ditrc heain utlte M ~ ~ A' \\ / \ fter 10 years, the experience of transition countries Other structural reforms that help the environment include /L\in Europe and Central Asia demonstrates that while promoting incentives for more efficient energy use; reform- .initial conditions are critical, decisive and sustained ing municipal water, sewerage, and district heating utilities reforms are key to the recovery of growth. Recovery is also by eliminating subsidies; improving collection and cost re- related to the development and strengthening of legal and covery by introducing metering; privatizing consumer and regulatory institutions. industrial sectors; promoting free trade and reducing agricul- tural subsidies; and improving natural resource management. These findings also hold true for the environmental sector. Land reform and clarification of property rights also helps Countries where growth has resumed have also developed the environment, since owners often take more care to ensure strong capacity to manage the environment and now rely the sustainability of their property. Also essential is a trans- largely on private sector financing to fund environmental in- parent legal and regulatory framework to support environ- vestments. Where substantial progress in restructuring indus- mental management and monitoring activities as well as try and realigning the public and private sectors to better fit a commitment to more seriously involve the public and civil market-based economy has occurred, pollution intensity has society in environmental decisionmaking. been reduced as industry modernizes, incorporates pollution abatement techniques, or shifts to less-polluting sectors. Where Within ECA, the Baltic and Central and Southeastern Europe past liabilities are addressed, foreign investors are more will- countries are better able to manage environmental issues than ing to participate in the privatization and modemization of countries where the reform process has been sharply inter- polluting industries. rupted or where the institutional and regulatory framework 42 ENVIRONMENT MATTERS * 2002 EUROPE AND CENTRAL ASIA REGION is still developing, such as Albania, Strategic priorities Where growth has resumed, ECA is pro- Bosnia and Herzegovina, FYR Macedo- a 0 moting policies to help ensure that it is nia, and Romania. The Western Newly In- and actions sustainable. This includes working with dependent States (NIS) also have made ECA' . ts governments to better integrate the en- less progress than some of the Central and the renvionmn sterategyois sap by vironment into macro and sector policies, East European countries. Central Asia tating EU accession for the fast-reform- strengthen legal and regulatory frame- and the Caucasus are among the slowest works, and help address environmental reformers and include three of the poor- img countries; (b) reversing poverty and liability in the context of privatization. In reviving growth in the NIS; (c) helping those countries where growth has not re- est ECA countries, to bring about peace and prosperity in the covered, ECA is supporting projects to Balkans; and (d) fostering cooperation on prevent further declines and lay the ba- tn comld,parisonui many other piro nts o regional and global environmental issues. sis for recovery in munlicipal services, the world, pressures on ot environment natural resources, agriculture and energy. and natural resources are not critical, ex- World Bank activities in the environment cept in Central Asia. In this arid region, sector in fiscal 2002 vary considerably by To improve the quality of the global com- the most serious problem is the availabil- country. For the EU accession countries mons, the ECA Region has supported ity of water to support energy, irrigation, and faster reformers, ECA has provided projects to promote better forest manage- and drinking requirements. The poor con- analytical work to assess the costs of ment, reduce greenhouse gas emissions ditionofirrigationinfrastructureandbad meeting EU environmental standards; through energy reforms, address agricultural practices have led to salin- encouraged policies to strengthen gov- transboundary environmental problems ization of soils, threatening livelihoods ernmental monitoring of compliance with within regional seas, and protect corri- and contributing to land degradation. In environmental regulations; and assessed dors of unique biodiversity. many ECA countries access to clean wa- the nature and adequacy of environmen- Project ter and sanitation is endangered by the tal expenditures. In less reform-oriented J lending deteriorating financial condition of mu- countries, ECA has supported processes In fiscal year 2002, many new projects nicipal water and wastewater utilities, to identify the most urgent environmen- were approved-primarily in rural devel- but basic access is high in cities. Adequate tal problems and projects needed for the opment, municipal infrastructure, trans- environmental legislative frameworks are rehabilitation of services critical to the port, or energy-that are not primarily inplace, if poorly administered, and with population's health and livelihoods. All environmental but provide significant the general decline in population and eco- aim to improve quality of life, quality of environmental benefits. For example, the nomic activity, air pollution has been sig- growth, and the global commons. energy and infrastructure sector in the nificantly reduced. Environmental ECA Region has over 15 environment-re- era Efforts to enhance livelihoods of the poor lated water supply and sewage projects liabilities stemming from the Soviet er fottehneieiodoteor under implemnentation, and about 10 remain an issue in highly polluting indus- include projects that support sustainable under pleparation, and effi- tries. The Caucasus face coastal and land natural resource management, particu- ciency is supported by at least 10 active degradation issues. Oil-rich Azerbaijan larly forests and water; protect people's projects, with around another 5 under and Kazakhstan are concerned with oil health from environmental risks and pol- preparation. drilling, pipeline construction, and oil lution; or reduce people's vulnerability spill prevention and clean-up. Natural to environmental risks. Ongoing projects Projects with primarily environmental resource management and preservation promote access to safe drinking water and objectives include those supporting bet- of coastal ecosystems are important issues sanitation, mitigate health threats from ter water resource or forest management, in some countries. In Russia, which has toxic substances, support conversion to protection of biodiversity, improved ru- 22 percent of the world's forests and ac- less polluting heating fuels, promote ral environmental practices, solid waste counts for 17 percent of total greenhouse more efficient heating, improve traffic management, remediation of hotspots, gas emissions of Annex 1 countries to the management, and reduce power emis- nutrient reduction of seas and groundwa- United Nations Framework Convention sions. Projects to assist in the recovery ter, and climate change. on Climate Change, forest management from floods and earthquakes also include and carbon reduction issues are particu- measures to mitigate against further natu- Bank-GEF Lenidinig. The Bank manages a larly important. ral disasters. portfolio of Global Environment Facility ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 43 (GEF) trust fund grants in 21 ECA coun- tries in the GEF focal areas of biodiversity, climate change, international waters, and ozone depletion. In fiscal 2002, the Bank managed 24 full-sized ($231.27 million), - - 5 medium-sized ($4.1 million), and 4 en- abling activity ($1.2 million) projects. Of _ these grants, five were approved in fiscal year 2002, totaling about $30 million. - For example: * The Pilot Fishery Development Project in Albania will improve the operation and management of - - - . fishing ports, introduce an effective. - ~ - - - 2 <- ) institutional framework forcommunity- . - . - - . driven co-management of marine The Armenia Natural Resources Project, a GEF/IDA co-financed project, supports an integrated approach resources, and restore the country's to land management in the mountain, forest, and grassland ecosystems of the Southern Caucasus capacity to manage its aquaculture. P The Armenia Natural Resources protected area management for five * The World Bank continues to provide Project, a GEF/lDA co-financed national and nature parks. assistance to the Caspian Environ- project, supports an integrated * The Syr Darya Control and Northern ment Program (CEP) with the approach to land management in the Aral Sea Project in Kazakhstan will implementation of a new small mountain, forest, and grassland rehabilitate the northern part of the grants program. The first round of ecosystemsoftheSouthemrCaucasus sea by building a dike across the grants will support wastewater (see photo at right). channel to connect with the larger treatment, water supply, cement and * The Bulgaria Wetlands Restoration part of the sea. The project will help concrete waste recycling, brackish Project, under the GEF-sponsored stabilize the level of the sea, slow the water culturing of sturgeon, and Strategic Partnership for Nutrient desiccation of lakes and wetlands in wind and solar energy projects in the Reduction in the Black Sea and the river delta, re-introduce Caspian region (see CEP website for Danube Basin, will restore priority sustainable fisheries, and support more information: <>. establish a comprehensive moni- the local population. A toring system for water quality and * The Romania Agricultural Pollution Analytical and advisory ecosystem health, support protected Reduction Project, also part of the areas management planning, and Black Sea/Danube partnership, aims work to increase the use of environmen- strengthen capacity to protect and . . . In addition to project lending the ECA and natural tally friendly agricultural practices to diintrojc ledig th C manage biodiversity and natural .reduc phosp s annit Region of the Bank has also undertaken resources. (see World Bank Black Sea pollution entering the river and sea. a number of studies to understand the and Danube River website: <>.) the costs of environmental requirements danube>>.) * The GEF-funded Azov-Black Sea for EU accession, and legislative frame- * The new GEF Croatia Karst Eco- Corridor Biodiversity Conservation works and institutional capacity for en- system Conservation Project will Project in Ukraine will conserve vironmental protection. protect and enhance unique moun- biodiversity by strengthening the tain, forest, and aquatic karst protected areas network and Analyzing poverty-environment links. Ef- ecosystems that host regionally and mainstreaming biodiversity conser- forts were made to ensure that environ- globally important biodiversity. The vation into adjacent agricultural mental issues were included in the project will support improvements in landscapes. Poverty Reduction Strategy Papers 44 ENVIRONMENT MATTERS * 2002 EUROPE AND CENTRAL ASIA REGION (PRSPs) produced in the past year for www.worldbank.org/eca/ THE ECA REGIONAL PORTFOLIO Albania, Armenia, Azerbaijan, Bosnia and environment>> under "en- Herzegovina, Georgia, the Kyrgyz Re- vironmental impact as- public, and the Former Republic of Yu- sessment" for findings by dPoElution MantagleHmenth Water Resources goslavia. country). Another study -- Management examined the effectiveness _ ;I111, Studies of environmnental expenditures and of EA in Russia and recom- 2% ~~~~~jOher priorities. Several studies focused on en- mended that greater O vironmental financing in client countries, screening and scoping of ,% including a review of the effectiveness of projects be introduced to 214 Biodiversity public expenditures on the environment prevent unnecessary EAs. 22% Cimate Change in Ukraine and several others on the costs Land of meeting environmental requirements Suipportinig institutional ca- Management Environmental for EU accession. Reviews of the state of pacity building for environl- Policy and the environment in Belarus and Yugosla- mental protection. Institu- Institutions via helped prioritize their most pressing tional development fund environmental issues. grants have been used to At the end of June 2002, World Bank environmental lending incr eenvironmental le- in the ECA Region (excluding GEF) totaled $1.7 billion. Most increase environmental le of the environmental lending in the Region is in three cat- Legislativeframeworkfor environmental pro- gal and regulatory capac- egories: pollution management, land management, and wa- tection. A study assessing environmental ity in Albania, Belarus, ter resources management (see Figure). In fiscal 2002, eight assessment (EA) legislation compares na- Uzbekistan, Slovenia, and new projects with environmental components were approved tional EA systems in 28 ECA countries Croatia. The Bank also with total environmental lending of $131 million. with those of the World Bank and EU, and oversaw preparation of and is now assisting Tajikistan to obtain recommends ways to improve the EA National Environmental Action Plans funding for a NEAP. regulatory framework. (See <>. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 45 7 _a ttg'V 7$ ' d i ° '@X - X 1 £S(0 XE1 )2 27 t 4 Oo >9 X :7-/ Cn//<.& ~~~~~~~St. Vmic-_ lXcd ho Grena4=5 :s_ CtC tia:t,Uj mainstreaming of environmental con- ems m in key sectoral development agen- - ~~~das; and (b) improving the effectiveness and efficiency of local environmental management processes in Mexico. - \ -ffil E ! F _ Brazil Amazon Region Protected Areas. The 1 1' * ; . ; j $ , program aims to expand and consolidate protected areas in the Amazon region. . < ' ~ -Brazil currently has approximately 12.5 = , .. million hectares of tropical forest under strict protection in the Amazon region. Ecuador - Indigenous and Afro-Ecuadorian Peoples Development Project. The proposed project, to be carried out 48 ENVIRONMENT MATTERS * 2002 LATIN AMERICA AND CARIBBEAN REGION infouryears,wouldbethefirstphaseof sions inventory for fixed THE LCR REGIONAL PORTFOLIO a 10-year program. The specific objectives sources in Buenos Aires; an of the program under its first phase are emissions inventory for mo- Pollution Management and to (a) create 18 million hectares of new bile sources in Lima; a clean Environmental Health protected areas; (b) consolidate seven mil- technologies and fuels infor- Water Resources lionhectaresofexisting"strictprotection" mation pool; and the prepa- Management protected areas; (c) establish and operate ration of an air quality L tOA an endowment fund for protected areas; management toolkit devel- /-3% and (d) establish a biodiversity monitor- oped in coordination with the Other ing and evaluation system at the pro- US EPA. In addition, the Re- Land UE' l\ tected area and regional levels. Project gion continued to support the Management , \ 9% costs, estimated at $68.1 million, would Clean Air Website, which is . - Biodiversity be financed through a partnership among managed by the World Bank Environmental Climate KfT, the World Wildlife Fund, the Bra- Institute (WBl). Policy and Change zilian Government, and the GEF. Institutions Environmental Protection and At the end of June 2002, total World Bank environmen- Mexico Air Quality and Urban Transport. Sustainable Developmenit of tlhe tal lending in the LCR Region (excluding GEF) amounted This project, with support from a $70 mil- Guarani Aquiifer System. This to $2.2 billion. About half the total is in the pollution man- lion loan and $5.8 million GEF grant, recently approved project- agement and water resources management categories. In fiscal 2002, 12 new World Bank projects with environ- would help develop policies and mea- GEF's first transboundary mental objectives-totaling $177 in environmental lend- sures that will promote a long-term shift aquifer project-will support ing-were approved. toward more efficient and less polluting Argentina, Brazil, Paraguay, transport in Mexico City, supporting the and Uruguay in jointly developing and Regional Integrated Silvopastoral Approachles city's Air Quality Management Plan for implementing a common institutional to Ecosystem Managemenit. The objective of 2002-10. and technical framework for managing this recently approved pilot project is to and preserving the Guarani Aquifer Sys- demonstrate and measure the effects of Regional initiatives and tem. the introduction of payment systems for environmental services to farmers adopt- projects Mesoamerican Barrier Reef. The Meso- ing environmentally friendly technolo- proec tse need to better address cross- american Barrier Reef System, which ex- gies in degraded pasture systems in Givnther nssuee to bellastter adres cs- tends from the southern half of the Colombia, Costa Rica, and Nicaragua. frontier issues as well as to promote in Yucatan Peninsula to the bay islands of formation sharing and the exchange of Honduras, is the second longest barrier experience, the Region has been increas- reef system in the world. In addition to ingly involved in projeCtS and programS protecting coastal landscapes and main- that have a regional dimension. taining coastal water quality, over 1 mil- lion people living in coastal zones Caribbean Mainstreaming Adaptation to Cli- adjacent to the reefs benefit from employ- mate Change (MACC). The proposed Car- ment opportunities such as fishing and ibbean MACC project aims to integrate tourism. To conserve areas threatened by climate change and variability into biodiversity loss, an $11 million GEF sectoral agendas such as tourism, agricul- grant is providing technical assistance ture, fisheries, and infrastructure. MACC and training to both the public sector and will build capacity in the participating nongovernmental organizations respon- countries to develop strategies and mea- sible for the planning, management, and sures for adaptation to climate change. monitoring of marine areas. To promote environmental sustainability in the fish- Thlis article was prepared by Angeln Armlstronlg of the Latin America and Caribbean Regional The Clean Air Initiative in Latin Americani ing and tourism industries, incentive- Office Environmnent Famzily, (202) 458-0975, Cities. In fiscal 2002, the CAI partnership based policies are being studied and fax (202) 522-3132. LCR rvebsite - <. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 49 West sanktandGanza< Lccx ' X -~ ~~~~~ ." - / C- 1 / X ' 5 Au espie s t ad s y is of alc- mTQf l 8 -nd i lated espitei c, and stead impirovments over ith The region lseois thatene by the los ofearae land and and legal frameworks. Pollution-related health problems, particularly in urban and For example, water is in short supply and the situation is get-in ndustrial centers, represent another challenge. The causes ting worse. Annual renewable water resources per capita are include open municipal waste dumps; the use of leaded gaso- expected to fall from 1997 levels of 1,045 cubic meters per year line in an aging and poorly maintained 'vehicle fleet; the inef- to 740 m3/yr by 2015. Despite growing urban populations, an ficient use of fossil fuels for power generation; and particulate average of 88 percent of MINA's water resources are allocated and sulfur oxide emissions from industry. to the agriculture sector, with only 7 percent going toward domestic consumption. Water scarcity is aggravated by in- Finally, weak environmental institutions and legal frameworks creased degradation of water quality, which primarily affects prevent countries from adequately addressing environmen- the region's poor. tal challenges like the three described above. 50 ENVIRONMENT MATTERS - 2002 MIDDLE EAST AND NORTH AFRICA REGION The MNA environment completed for Algeria, Egypt, and works; and other material on inter- strategy Tunisia; and two policy notes were national environmental conventions The World Bank is working with MNA prepared on trade, environment, and and project funding. clients to address these challenges competitiveness, and on the impact through a comprehensive Environment of proposed cadmium content Non-lending services Strategy that was approved by the Bank regulations on the fertilizerranen As demonstrated above, MNA non- in 1995 and then updated in July 2001 as tries. lending services are also fostering envi- part of the Bank's overall Environment countries, edn evcsaeas.otrn ni Strategy. The basic thrust of the MNA * Integrating environnmental componienits ronmental mainstreaming through cross- Strategy isto mainstream environmental into targeted sectoral investment sectoralcoordination and communicatioll issues into policies, programs, and projects,aszvellasglobalenvironniental as well as strengthening mainstreaming projects. The strategy is focused on four areas such as the protection of efforts between the ministries of environ- areas: biodiversity and the reductioni of ment and sector ministries and private * Enhancing the quality and effectiveness greenhouse gases. In the past year, and public sector entities. For example: of countries' environmental and social water quality and water re-use * Studies on the cost of environmental assessment processesfor all development components were included in the degradation, which were financed by actions, not just Bank projects. In the Beka'a Region Water and Wastewater the Mediterranean Environmental past year, for example, Morocco was Project in Lebanon; the GEF- Technical Assistance Program completing work on its Environ- supported Tunisia Protected Areas (METAP), will enable the Ministries mental Impact Assessment (EIA) Management Project was approved; of Environment in every country to Decree; Syria enacted an Environ- environmental liability requirements present their priorities in a form and mentProtectionLaw,whichincludes were incorporated in the Third substance understood by Ministries the requirement for EIA preparation; Economic Competitiveness Adjust- substance undEroodyM evaluations of Environmental ment Loan for Tunisia; a solid waste of Finance and Economy. Assessment systems were completed management study was conducted * To enable the chambers of commerce, in nine MNA countries; Lebanon for all countries; a Decision Note on industries, and Ministries of Trade to conducted 18 awareness seminars on solid waste management in Algeria understand the effect of environment Environmental Assessment; Egypt was prepared; and draft standard regulations on trade, MNA is was completing an Environment and bidding documents-including financing a rapid assessment on the Energy Review (EER) that includes environmental performance require- potential effects on output, exports, a Sectoral Environment Assessment ments-were prepared for solid and imports of compliance with (SEA) for the energy sector; and waste management projects. more stringent environmental Jordan initiated a strategic environ- * Developing "Monitoring and Evalua- standards across several economic tion" (M&E) systems, as well as ment assessment in the water sector. sectors in six countries. * Demonstrating the economi .c indicators to measure progress at the project/program and strategy/policy * To strengthen cooperation between imnportance of a clean environment by levels. Environmental Country the Ministry of Environment and undertaking studies to assess the cost Profiles for MNA countries, which Ministries of Water Resources and of environmental degradation, as well will capture indicators through a live Irrigation, MNA has launched a joint as analytical work on identifying database and highlight major topics thematic review on water quality linkages between environment and of operational relevance, are coming issues in Bank-financed projects in trade, and environment and poverty soon to the worldwide web. Look for Egypt, as well as a strategic enviro- reduction. In the past year, Algeria their links on the MNA Environment nmental assessment for the water completed its National Environ- website <>. sector in Yemen. mental Action Plan (NEAP); They will allow extemal browsers to st m Ban. Yemen prepared a background quickly find links to information, report on poverty and environment including major environmental on progress that can be measured on and integrated it into the Yemen challenges facing the country; key the ground, a country environmental PRSP; studies on the cost of environmental indicators and sta- analysis is being prepared in environmental degradation were tistics; legal and institutional frame- Tunisia and Egypt. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 51 Regional partnerships West Bank and Gaza-so they can share Department of Environment (see Box experience and expertise in desert land on Iranian capacity building, below) MNA continues to work closely with a management. * In Tunisia, the Northwest Moun- number of regional programs in order to tainous Areas & Forestry Develop- promote partnership with and among the The Gulf of Aqaba Environmental Action MNA countries and foster the main- Plan, which closed on June 30, 2002, suc- IRANIAN INSTITUTIONAL streaming of environmental issues on a ceeded in equipping the Aqaba region regional level. with a strong Environmental Commis- CAPACITY BUILDING sion with regulatory authority and pro- Iran's rapid growth over the last few The Mediterranean Environmental Tech- ducing and legalizing essential years has resulted in worsening envi- nical Assistance Program (METAP), environmental regulations, including ronmental problems that are seriously which assists in project preparation and enforcement of environmental assess- affecting public health and well-being. capacity building in selected regional ments. In addition, this project has been Major cities such as Tehran, Mashhad, enviroru'ental mng etaiie,i aiIsfahan, Tabriz, and Ahwas, which con- environmental management activities, iS an instrumental contributor to the envi- tain nearly 60 percent of the population, an instrument for implementing the ronmental peace process initiative that face ambient air concentrations that ex- MNA Environment Strategy. METAP links Egypt, Jordan, and Israel in collabo- ceed World Health Organization (WHO) serves 15 Mediterranean countries and is rative mechanisms to strengthen capac- guidelines and range from 40 percent sponsored by the World Bank, the Euro- ity to protect marine biodiversity and the to 340 percent over maximum allowable limits. Industries in the country emit pean Commission, the European Invest- coastal zone. more than 450,000 tons per year of ment Bank, UNDP, the Swiss Develop- sulfur dioxide and 100,000 t/year of to- ment Cooperation, and The Government The Red Sea and Gulf of Aden Environ- tal suspended particulates (TSP). Air of Finland. METAP beneficiaries in the mental Strategic Action Program (SAP) is pollution is causing respiratory and al- NINA region are Algeria, Egypt, Jordan, a partnership of the littoral states- lergic ailments in an estimated 20 per- Lebanon, Libya, Morocco, Syria, Tunisia, Djibouti, Egypt, Jordan, Saudi Arabia children Water qpuality is deterioratingy and West Bank and Gaza. Somalia, Sudan, and Yemen-and inter- due to the disposal of untreated sew- national agencies. It aims to preserve the age, industrial effluents, and agricultural The MNA Regional Water Initiative fragile Red Sea/Gulf of Aden environ- runoff. Cities generate about 15 million (RWI) is designed to address critical wa- ment by preventing pollution and un- tons of municipal solid waste annually, ter issues in MNA and assist the coun- planned coastal development. The but urban areas lack appropriate sani- ter issues ~~~~~~~~~~~~~~~~~~~~tary landfills. Industries in Iran produce tries in the process of water sector reform. program is implemented by the Regional about 100,000 t/year of hazardous Work is under way on groundwater and Organization for the Conservation of the waste, but there are no controlled haz- aquifer management, public-private part- Environment of the Red Sea and Gulf of ardous waste disposal facilities in the nerships for irrigation water manage- Aden (PERSGA) and supported by a $19 country. ment, and on water, food security, and million GEF project jointly executed by The Government of Iran is already ad- agricultural policies. These activities are the World Bank, UNDP, and UNEP dressing the environmental problems being carried out under a partnership through PERSGA. facing the country. It has requested program with the Secretariat of the 3rd World Bank assistance to supplement World Water Forum, which will be held ahead these efforts by strengthening the in Japan in March 2003. Looking ahead capacity of the Department of Environ- Looking ahepan the chalrchge 2003. to b d ment (DOE), the lead agency respon- Looking ahead, the challenge iS to build sible for environmental protection in the The Regional Dry Lands Management on the progress made over the past seven country. The World Bank-supported En- Project is another effort to bring together years by ensuring that the results of ac- vironmental Management Support countries to exchange information and tivities and projects undertaken reflect, in Project (EMSP) represents the first undertake research on dry lands. It con- both preparation and implementation, einment to improve environmental man- tinues to develop field activities and elicit the environmental priorities of the MNA agement in the country. Its main ob- donor support for developing solutions countries through the application of the jective is to enhance the capacity of the for natural resource degradation. As part MNA Environment Strategy. In fiscal Department of Environment (DOE) and of the Middle East peace process, this pro- 2003, key lending activities will include: other related agencies to plan, moni- gram links scientists and planners-from * In Iran, an institutional strengthening tor, and enforce environmental regula- Egypt, Israel, Jordan, Tunisia, and the and capacity building project for the tions_and_action_plans. 52 ENVIRONMENT MATTERS * 2002 MIDDLE EAST AND NORTH AFRICA REGION * In both Algeria and THE MNA REGIONAL PORTFOLIO TUNISIA Iran, solid waste man- DEVELOPMENT PROJECT agement operations Water Resources The Tunisia NW Mountainous Areas are being designed Management & Forestry Development Project ad- that build on the dresses the important problems of ru- lessons learned and 4% Other ral poverty and natural resource avoid pitfalls experi- degradation. By using a participatory enced p p Polluton Climate approach, it will strengthen farmers' in similar pro Management _0 Change and improve the responsiveness of ru- and Lebanon. Environmental 0% Biodiversity ral service agencies to farmers'needs. Health | nionetlU The project will support development of K nlding Environmental a participatory approach to watershed ey non- en ng services 3% Policy and rehabilitation in about 50 micro- will include: Land Institutions catchments in the Governorates of Beja, * In Tunisia and Egypt, Management El Kef, Siliana, Jendouba, and Bizerte completing the coun- over a six-year period. Treatments-in- try environment ana- At the end of June 2002, World Bank environmental lend- cluding improved range management, Y ing in the Middle East and North Africa Region (excluding improved fodder production, soil and lyses GEF) totaled $591 million. The bulk of the lending is in the conservation works-will be selected * InfiveMNAcountries, water resources management and pollution management and implemented with the participation completing studies on categories. In fiscal 2002, two new projects with environ- of the local population The project will . mental objectives were approved, with environmental lend- also provide such basic infrastructure the cost of environ- etotaling $21 million. as feeder roads, potable water, health mental degradation centers, and schools. and organizing a regional conference * Starting implementation of a to discuss the results and recom- regional solid waste capacity ment Project addresses the mendations building project financed by the important problems of rural poverty * In Jordan, completing a strategic European Com-mission and na-tural resource degradation environment assessment (SEA) in the * Preparing a series of policy notes on (see Box on Tunisia Development water sector, and initiating a similar the impact of environmental regu- Project, above) assessment in Yemen lations on trade and competitiveness * In Egypt, the Second Matrouh * In Egypt, initiating an environment- * Continuing the regional EA training Natural Resources Management poverty linkage activity program, with special focus on Project includes a GEF component on * In Morocco, initiating a country environment safeguards and on the protecting natural habitats environment analysis implementation of the environment management plans in Bank-financed projects. For a complete copy of the MNA Envi- * . ...~, - ronment Strategy as well as up to date -<+-<-w X X r4X;- - information on environment activities in i Al~*-5 i Ji[ djz w~fw 5 r ! t-5, {' s.fa.rrw jl ;'tti. z ',' - the MNA Countries, please visit the e i- '-i e ( r , , -| 0 ' fJ - t .,e World Bank's MNA and Environment C_, ' C - websites <>. -. 0- w - ! r i---Z R--- - ' - %%t es-J i¢-3 .~~ ~~~~~ MWiiw I } . ' | L i _. n O a = _G ;,' U This article was prepared by Joiln Bryanit Collier EL- - - - r - - -r E" "-! _l - and Sherzf Arif of the Middle East and North 1 !FF a A | 1.1'3 -S t s 5f.L - = z Africa Region's World Developmenit, Water and Environment Department, (202) 473-8551, fax X 19E' r --, '~ - :- R e;_ (202) 477-1374. Cairo, Egypt. MNA zoebsite - <>. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 53 r g|0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ > g? : >X ~~~~~~~~~~~~1~ ~ ~ ~ ~ ~~~~3 .-.IBRD 31566 AUGUST 2002 0 \ chieving the global Millennium Development Goals South Asia, where most environmental problems are rooted /L \will not be possible without significant progress in in poverty itself, and compounded by complex governance, 1L Lhuman, economic, and infrastiructure development cultural, and political issues. Every government intervention, in South Asia. India alone accounts for about 23 percent of whether an investment project or policy measure, must bal- the world's annual deaths of children under 5, and meeting ance not only the competing demands for resources, but also the global target of reducing infant and child mortality by the environmental and sustainability aspects-a challenge the two-thirds by 2015 will require significant progress in this re- region is beginning to accept. gion. This in turn will require tangible progress in dealing with difficult water, sanitation, indoor air, and urban air pol- In the Bank's work in the region, environmental and social lution issues. Since nearly a fifth of the overall burden of dis- management approaches can and do often become "integra- ease in South Asia is rooted in environmental issues, the tion agents." For example, consider rural water supply and challenge is immense, but critically important for the coun- sanitation. While provision of potable water to the region's tries and the people of the region. rural areas remains an important development objective, other aspects must be considered in rendering rural water supplies A ([X)$$(:0tig appmach ~~~~~~sustainable. For most of the region, this means, first, the de- cross-cuumng approach ~ ~~~~velopment of capacity to deal with water quality issues-par- Experience since Rio has clearly shown that the road to a bet- ticularly as several countries are dealing with widespread ter environment is not always through interventions that are arsenic contamination, and major parts of India and Pakistan purely environmental in nature. This is particularly critical in have high levels of fluoride. Furthermore, sustainability of 54 ENVIRONMENT MATTERS * 2002 SOUTH ASIA REGION supplies often depends on the capacity there is increasing recognition of the im- of local communities to maintain the in- portance of the sustainability aspects of INHDOOR A POLLUTIONNT frastructure and to handle social issues project design, even in the difficult cir- FIGHTING A SIGNIFICANT associated with managing a shared re- cumstances of reconstruction. Why? Be- HEALTH THREAT TO WOMEN source. Community forestry projects also cause the long-run benefits of improved AND CHILDREN IN INDIA raise fundamental resource management standards are becoming more clear. issues that cannot be solved without full ~~~~India currently bears the largest burden issues that cannot be solved without full of indoor air pollution-related health and careful resolution of social issues at The region is making significant strides problems in the world, due mainly to the the local level. in capturing environmental outcomes fact that 75 percent of its households throughsectoralinterventions,aboveand use wood, dung, crop residues, or a combination of biomass-based fuels for The notion that dealing with environmen- beyond the "do-no-harm" requirement of cooking. When used in simple house- tal issues slows down development is the Bank's environmental and social safe- hold stoves, these fuels emit consider- also quickly losing credence, even in the guard policies. The magnitude of the en- able amounts of airborne pollutants, exposing those nearby to much higher most urgent situations. A case in point is vironmental challenge Itself IS possibly concentrations of harmful particulate the Bank's recent efforts in Afghanistan, the most important determinant of strat- matter than in the ambient air of most where environmental issues have been egy: change has to be pursued through polluted cities. Acute respiratory infec- fully integrated into the emergency re- early interventions-upstreaming- and with this exposure strongly associated covery programs developed to assist the through integration into other projects- women who cook on biomass stoves for reconstruction of a shattered country (see mainstreaming. There are numerous ex- many years exhibit a higher prevalence Box, below on Afghanistan). This follows amples where mainstreaming environ- of chronic lung disease, pregnancy-re- lated problems, and cataracts. As a re- in the steps of an environmental manage- mental management is evident, such as sult, an estimated 500,000 women and ment framework that was developed to the emerging strategies being developed children, mostly from poor rural fami- better integrate environmental planning for dealing with the pervasive issue of lies, die in India each year, accounting for 25 percent of indoor air pollution-re- parameters into the Bank-supported re- indoor air pollution (see Box on India, at lated deaths worldwide. construction work in the Indian state of right). Another is the strategic environ- Gujarat that followed the devastating mental analysis being done in selected In- A recent Bank study-India: Household earthquake in January 2001. In effect, dian states in the context of World Bank Energy, Air Pollution and Health-found that the transition from traditional bio- mass fuels to modern fuels, such as kerosene and LPG, would have a sig- REBUILDING AFGHANISTAN nificant impact on lowering exposure for all household members. Improved bio- War, political instability, and weakly implemented resource management policies have mass stoves-and cleaner biomass- taken their toll on Afghanistan's natural resource base. Recent fighting has only ac- based fuels-will continue to be an celerated historic trends in environmental degradation, particularly deforestation, over- Important option for reducing exposure use of land resources, and the related problems of erosion and desertification. in the short and medium term. Health Afghanistan has historically been prone to a variety of natural disasters, including benefits can be further enhanced with droughts, floods, landslides and earthquakes, and the accelerating environmental simple housing improvements, such as degradation has increased their magnitudes and impacts on the people. With the a separate kitchen and better ventila- return of peace, millions of refugees are expected to resettle in Afghanistan, particu- tion. Last but not least improving the larly in urban areas, thus exacerbating pressures on the environment and the natural stiast of w omenand emprowing them resource base. Health problems associated with poor water, lack of sanitation, and status of women anboupt the type of poor solid waste management, are expected to worsen. stoves and fuels they use can be a par- ticularly effective intervention. As donors work to help rebuild Afghanistan, these environmental concerns are start- ing to be addressed as well-particularly in urban areas. Even while recognizing the urgency of reconstruction efforts, and the uncertain security situation, an Environ- adjustment lending, sectoral reforms, and mental and Social Safeguards Framework has been developed for the initial recon- accelerated growth. struction operations. Some operations, such as the Community Empowerment and Public Works, Infrastructure and Education Projects, are already under implementa- tion. The Framework is designed to ensure due diligence in managing potential envi- A third example is the phaseout of lead ronmental and social risks, by providing general guidelines and specific procedures from gasoline. Many South Asian nations to be integrated into the implementation of World Bank-financed emergency recon- are moving toward banning the use of struction operations, lead in gasoline. Bangladesh and India ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 55 have already banned lead in gasoline to- energy. Across South Asia, the reform and tally. Nepal, which imports gasoline from efficiency dialogue is a significant part of CFC PHASEOUT IN INDIA- India, is consequently lead-free, and Pa- the energy sector strategy. In addition, A 1 0-YEAR PARTNERSHIP kistan has adopted a plan to eliminate regional activities and programs on ur- STILL GOING STRONG lead in gasoline in the near future. This ban air pollution, clean fuels, and even response has been prompted by the indoor air pollution all capture significant Over nearly a decade, the Bank and globalenvirnmentl benfits,while India's Ministry of Environment and For- emerging epidemiological evidence dem- global environmental benefits, while ests (MoEF) have built the second larg- onstrating the adverse health impacts of leading to direct local benefits as well. est program in the developing world for These types of interventions will continue the phaseout of ozone-depleting sub- lead even at exposure levels previously to receive significant attention over the stances (ODS). To date, grants from the considered safe. The latest success story coming years, especially as they also con- Multilateral Fund for the Implementation is in Sri Lanka, which recently decided tribute to progress in meeting the region's of the Montreal Protocol (MLF) amount to move the official target date for gaso- Millennium Development Goals. to well over $100 million. India has line lead elimination from 2010 to 2002. ~~~made significant progress in establish- line lead elimination from 2010 to 2002. ing a national program of information More targeted and issue-specific global dissemination, technical assistance, On the global efforts complement sector-level interven- and investment projects that eliminate tions.*Experience under the Montreal Pro- the use of ODS. India is also meeting environment front tocol has confirmed the importance of ducing its use oftcolobligations- Prigaobjec- establishing solid partnerships, while at CFCs, the most important family of Pursuing global environmental obleC- the same time retaining program flexibil- ODS-below its allowable ceiling. The tives-using strategies that also bring lo- ity. In India, the Bank and the Ministry of next important milestone for India will cal and regional benefits- has been at the Environment and Forests have been be in 2005, when its consumption of of the region's operational strategy working together for almost 10 years, and CFCs will have to be half of its baseline core Ot tne region s operahonal strategy woking together for almost 10 years, and consumption, and consumption of car- for some time. A number of the Bank's considerable progress has been achieved bon tetrachloride-CTC, another impor- sectoral strategies also capture global en- (see Box on CFC phaseout at right). tant ODS-will have to be reduced by vironmental benefits by default, such as 85 percent. Bank-wide initiatives on power sector In the region, opportunities for more ef- The Bank is assisting MoEF in the reform, energy efficiency, and renewable fective mainstreaming of the global en- preparation of a series of sector strate- gies that target the remaining large ar- ,, ~: v + , ^ ; * eas of ODS consumption in the country. - : 6 *- The recently completed Sector Strategy for the Phaseout of CFCs in the Chiller Sector is the first. Sector strategies for ODS use as chemical processing agents and CTC production sectors are = s ES. _ _ - . - currently under preparation. These : ~~~~ ~strategies are intended to assist India |1 ; t t - lt, > {, r - . _in formulating programs for those sec- F i titS x \ . i<, W\; . W tors still using ODS. F- 't .rt 2 - T , . partnership has yielded significant .. ;/; ; sI _n~ --. achievements, including the phaseout < 1 > 25. * a - . i i, < s _ r ; of over 4,000 tons of ODS by the end Xi '<7 tYP j {t 9 / 8 ', _ 2+' ' S . of 2001, a 20 percent reduction in CFC s1 '.> - l \, - / . -: ; ,2 ; %* u production, and progress toward meet- closure. '* - x '- ' : <4? 4 inig the 2010 target for CFC production vironmental agenda remain significant. The impacts of climate change and op- '-t 'e," portunities for climate change adaptation strategies are only beginning to be under- An Indian from the state of Arunachal Pradesh crosses into Bhutan to attend a Buddhist festival.The fuel stood. Work on climate change in South on his back is for his campfire. Asia is rapidly expanding, both in terms 56 ENVIRONMENT MATTERS * 2002 SOUTH ASIA REGION of flexible instruments available under environmental analyses THE SOUTH ASIA the Kyoto Protocol, and in the context of in each state, the Bank is REGIONAL PORTFOLIO adaptations designed to reduce local vul- supporting Uttar Pra- nerability to natural disasters. There are desh's pilot testing of further opportunities under the recently ecooi instme EvrPollution Management and adoptedStockhlm Convntion n Per- economic instruments Environmental Health adopted Stockholmn Convenhion on Per- WaeRsors for pollution control, Water Resources sistent Organic Pollutants, also known as Mngmn POPs. The implications of this new inter- and Kamataka's stream- national convention on agriculture, lining of the environ- health, and industry need to be under- mental regulatory pro- 3O Other stood, and used as the basis for a toxic cess. chemical agenda in South Asia. * Ongoing work on en- Land f Biodiversity vironmental health, Management 4% Climate From here to there: including on refining Environmental Change . . ~~~~~~~~~~~~~~~~~~~~~~Policy and BUldcIng pro rams and implementing the Institutions Buildin, I 0 rams strategies for reducing and partnerships indoor air pollution. At the end of June 2002, World Bank environmental lend- ing in the South Asia Region (excluding GEF) totaled $2.3 WVhile the challenges are significant, the One effort will be in the billion. Most of the lending is in pollution management, road to a better environment is increas- area of improving access environmental policies and institutions, and water re- inlybr of the urban poor to sources management. In fiscal 2002, seven new World inglybetterunderstood.Afewofthepri- °f the urban poor to Bank projects with environmental objectives were ap- orities for the coming year include: modern fuels. Others proved, with total environmental lending of $291 million. * Deepening the environmental will be in continuing management policy dialogue in India work on urban air pollution (see the * Finalizing the national environment at the state level-particularly in . http://www.worldbank. strategy for Pakistan, which will Uttar Pradesh, Andhra Pradesh, and website provide a new focus on water Karnataka-by sharpening the org/sarurban air>>), and in careful resources and droughtmanagement- strategic focus of environment- designandmonitoringofruralwater related issues-perhaps the most relatedwork,particularlyinlinewith supply and sanitation projects to urgent sectoral issue in Pakistan health and livelihood-related MDGs. maximize both health and environ- today (see Box on Pakistan, at left). In addition to carrying out strategic mental benefits. * Working more closely with India on disaster management issues- drawing on an opportunity for PAKISTAN ENVIRONMENTAL SUSTAINABILITY- capturing lessons of experience, and MOVING TO A CROSS-SECTORAL SHARED VISION evolving new regional global Effective work on environmental issues often involves little in the way of traditional strategies to reduce vulnerability. environmental data, environmental issues, or even environmental institutions. For * Expanding the Bank-supported example, one of the key long-term sustainability issues in Pakistan is the sustainability community forestry program in of natural resources and its implications for the poor. Water scarcity, especially in India in Andhra Pradesh, Madya times of drought, is an important environmental issue, although not under the man- Pradesh, and some new states as date of traditional environmental institutions. An understanding of these issues and a well. search for medium- and long-term solutions requires an integrated water resources management framework and a focus on policies in agriculture, irrigation, rural devel- * Increasing opportunities for more opment, and energy. effective mainstreaming of the global environmental agenda, particularly Bank-supported research is making use of the latest remote sensing and GIS tech- niques to detect trends in soil moisture, water consumption, and crop yields, This on climate change. data, in conjunction with reported data and stakeholder viewpoints from villages, is being used to determine agricultural coping strategies. This work will lay the founda- tion for a future process of multi-sectoral and multi-provincial stakeholder involve- This article wvas prepared by Carter Brandon of ment to determine how increasing the productivity of water and land can improve the the Soutlh Asia Environmenit Sector Unit, (202) livelihoods of Pakistan's poor. 458-2752,fax (202) 522-1664. SAR zoebsite - <>. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 57 P RO M O T IN G he World Bank onstration projects with broad- Group is increas- er environmental and social ingly focused on benefits. supporting sustain- SUSTAINABLE able private sector IFC and development. As its private sector arm, the International sustainability - X P R I V A T Ein Finance Corporation (IFC) A renewed plays an important role in fos- tering sustainable develop- corporate priority I N V ES \/ C C T M EN C KI T ment in emerging markets IFChas for some time made it t tv INI 1 v ELSTMI ENv L I M IT through its investments and apriority to prevent its invest- advisory services. Since 1956, mentprojectsfromdoingharm ; IFC has shown that good in- to the environment or people. vestment returns are compati- Its investment activities are ble with creating employment, governed by a host of environ- a healthy environment, and an mental and social safeguard improved quality of life in de- policies and guidelines mod- veloping countries. eled on those of the World A; /t,y Bank, but adjusted to reflect Working with business part- IFC's private sector focus. .>- ners and financial institutions, IFC's Environment and Social * ~ J~> IFC invests in sustainable pri- Development Department is vate enterprises in regions and staffed with 30 specialists ded- sectors underserved by invest- icated to appraising and mon- mentfromprivatesources.IFC itoring projects to assure sets high standards for envi- compliance with these safe- ronmental and social perfor- guards. The department and mance and corporate gover- its "do no harm" responsibili- nance and brings its expertise ties have been in place and to project transactions to help evolving since 1989. its partners achieve the best fi- nancial, environmental, social, The importance of ensuring :i Ep, ^ *and governance outcomes. In responsible development 4 ' ;9'@ } addition to its primary role as through safeguards and a "do a lender and direct investor, no harm" approach has not di- IFC at times uses concessional minished with time. At the * A. INTERNATIONAL FINANCE CORPORATION financing to develop innova- same time, the world is chang- A Member of the World Bank Group tive business models and dem- ing, and public response to that >~ 8-5> ENVIRONMENT MATTERS * 2002 I F C change is altering the land- To date, most of the firms that on-line sustainability toolkit 4. Process eco-efficiency and scape for business. Public un- have responded to today's designed to assist IFC invest- environmental footprint derstandingofenvironmental, competitive environment are ment teams in helping clients 5. Environmental perfor- social, and governance issues from more developed econo- identify potential opportuni- mance of the product or is growing, driven by press re- mies. Developing-country ties to add value and improve service ports, activism, and global firms risk being left behind in their bottom line. Developinlg 6. Local economic growth communications. This new this new area, missing oppor- Value: The Business Casefor Suis- and partnerships awareness is driving changes tunities and finding them- tainability in Emerging Markets 7. Community development in consumer behavior and in- selves at a competitive was published in July 2002 in 8. Health, safety, and welfare vestment trends, as well as in- disadvantage in an increasing- collaboration with Sustain- of the labor force. creasing the pressure for ly global market. IFC seeks to Ability, a U.K.-based strategy business to play a positive role address this imbalance. With consultancy, and the Ethos In- Beneficial highi impact in each in sustainable development. its global reach and capacity to stitute of Brazil. of these areas is more than a With these global shifts in transfer best practice, IFC is simple yes-or-no issue. For mind, IFC has chosen to ex- well-positioned to help clients Sustainiability Framnework. While each of the eight categories in pand its attention to matters of see the risks and opportunities. IFC and many of its clients its Sustainability Framework, environment, social develop- have a solid track record of IFC has established four levels ment, and governance issues To this end, IFC has created a achievements in adding value of performance. Level One in- beyond the boundaries of its business case database that or doing good, they have not dicates basic compliance with "do no harm" or compliance contains over 400 specific ex- beensystematicallymeasured, IFC minimum requirements amples showingeensysemhowalyfirmsed,and national law. Level Four measures. IFC is seeking to sig- amples showing how firms analyzed, or given adequate indicates that company or the nal to its investment partners have benefited financially from credit, in part because they are that striving for business val- improved environmental, so- more difficult to identify and project is a global leader in that ue and "doing good" for the cial, or corporate governance articulate. Through internal area, while Levels Two and environment or society need performance. The database and targeted external consul- Three capture performance not be contradictory pursuits. seeks to aggregate this compa- tation, IFC developed a Sus- levels between these two ex- ny-specific data so that it be- tainability Framework to tremes. The Businiess Case for Sustainz- comes possible to see both define more precisely what o . ability. While "business as usu- industry and circumstance- "doing good" means from an ronmental, social, and gover- al" is no longer an option for specific evidence and to create environmental, social, or gov- nance dimensions of a project IFC or its clients, a growing comparators or potential mod- ernance perspective, while willdepend onthespecificcir body of evidence holds that, in els. Emerging lessons include maintaining its existing high cumstances of that project. In many situations, improved the following: standards of "doing no harm". some frontier markets, meet- environmental, social, and * Firms across many sectors . F , , . 1 . . m¢~~~~~~~~~~in IFC minimum standards governance performance leads are already gainimg a com- ,Doing good" can occur in a may be all that can realistical- to better financial returns. m- petitive advantage from number of different areas. ly be achieved; to attempt proved sustainability perfor- Thebusiness case can work IFC's Sustainability Frame- more could be inappropriate or mance can provide a variety of in emerging markets, in- work organized these elements counterproductive. While business benefits, such as in- cluding frontier countries into eight broad categories: there is no IFC policy require- creased revenues, cost savings, * Sustainability can work in 1. Environmental manage- ment for any IFC project to risk reduction, access to capi- both new and existing ment and social develop- achieve a Level Two or above, tal, or enhanced brand value projects. ment commitment and the framework will allow due and other intangibles. This is capacity credit to be given to invest- the business case for sustain- Together with the Sustainabil- 2. Corporate governance ments and project teams that ability-it is at the heart of ity Framework and other re- 3. Accountability and trans- make sustainable outcomes a IFC's new approach. sources, the database forms an parency priority. ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 59 IFC's Environmental and Social sistent with IFC's commitment achieve sustainability, it is also priate, limited concessional Specialists. Through their close to sustainable development, actively seeking ways to accel- funding may be available from interactions with the IFC in- the goal of the environment erate market acceptance of the Global Environment Facil- vestment department and cli- and social development spe- technologies, products, and ity (GEF) and other sources. ents, IFC's environment and cialists is to direct their exper- operating practices that bene- GEF funding supports projects social development specialists tise to help the investment fit the environment. The Envi- that contribute to global envi- deliver quality assurance ser- departments and their clients ronmental Finance Group ronmental objectives like con- vices for IFC, environmental identify and capitalize on op- within the Environmental and servation of biodiversity and and social risk management portunities to address the en- Social Development Depart- mitigation of climate change. for project companies, and vironmental and social ment is acting as a catalyst to Inaddition,IFCisinterestedin training in environmental and impacts of projects, and to im- identify, develop, and struc- supporting projects that ad- social risk management for fi- prove project outcomes on the ture innovative projects with dress local environmental is- nancial institutions. They pro- ground consistent with the vi- environmental benefits and to sues such as water supply, vide know-how and guidance sion of the Sustainability mainstream those investments solid waste management, pol- on interational best practices Framework. within IFC and the private sec- lution abatement services, and (see Box, below on CES) to help project companies and finan- tor. sustainable use of resources. cial institutions in emerging New markets and markets move beyondcompli- Opportunities In supporting projects with IFC is also actively seeking ance with IFC minimum re- 0 environmental benefits, IFC projects that can reduce green- quirements as well as appli- As IFC helps clients become turns first to its own invest- house (GHG) emissions under cable legal requirements. Con- aware of opportunities to ment resources. Where appro- the Kyoto Protocol. A key ini- Adding to IFC's well-received good practice guidance materials on public CES GOOD consultation and community development, CES this year produced the following publications, which are available at <>. Select PRACTICE MATERIALS- publications will also be available through the World Bank's InfoShop. RECENT Handbook for Preparing a Resettlement Action Plan. A good practice guide to designing and implementing resettlement action plans for IFC clients and ADDITIONS paTiiaResettiement private sector companies. Based on the collective experience of IFC staff in Action applying the involuntary resettlement policy to IFC investments, the handbook explains the resettlement planning process and includes practical tools such as implementation checklists, sample surveys, and monitoring frameworks. CES Good Practice Note: Addressing Child Labor in the Workplace and Supply Chain. The first in a new CES publication series, this good practice _RIFC note offers a unique private sector perspective on the topic of harmful child labor. It seeks to share corporate learning and experiences by providing companies with a range of basic good practice approaches that other businesses have successfully applied in addressing harmful child labor in their D.ft utt. &w- own workplaces and those of their vendors and suppliers. CES Good Practice Note: HIV/AIDS in the Workplace. An introduction to the issue of HIV/AIDS in a business context. This publication looks at the impact of the epidemic on the private sector, assesses the costs to companies, and provides a menu of program options-from awareness raising and policy development to prevention, care, and treatment programs-for businesses * t[FC Rus interested in implementing HIV/AIDS initiatives to support their employees and the communities in which they work and live (available September 2002). 60 ENVIRONMENT MATTERS * 2002 I F C DFC'S NEW [ENVIRONMENTAL [FACILITIES - Corporate Citizenship Facllity. This facility allows IFC to work with its project sponsors and other emerging-market busi- - - 'vSt . < Z . 9 S > nesses to demonstrate the benefits of a progressive approach to corporate citizenship. It provides knowledge and resourc- J 3 Xt' es to influence change and enhance benefits for industry and 0i 96\%^ \ %^ , s > ! F 9 civil society-in cases where this function lies outside the -,111 X 1 - tsphere or capacity of any individual project sponsor. Sustainable Financial Markets Facility. This facility focuses ,t on environmentally and socially responsible lending and invest- ment through IFC's financial intermediaries and in the emerg -v ing-markets financial sector at large. It aims to increase the sustainable development impact of IFC's intermediated financ- ing, enhance the competitiveness of the local financial servic- es industry, and promote more environmentally and socially _ , -_ responsible investment. Environmental Opportunities Facility. This facility provides catalytic development funding and flexible investment financ- ing for innovative projects that address local environmental jj!,41jl T E V | | \\ _ issues. By moving projects toward commercial viability, the facility "pushes the market" toward adopting new business models and technologies that address the most immediate environmental problems of those living in developing coun- tries, especially the poor. tiative in this effort is the IFC- IFC's efforts over the last de- and systematic manner. The InvestGng in a Netherlands Carbon Facility cade m the environmental and total funding requirements for (INCaF), which will purchase social area. Rather than re- the three facilities over five Sustainable Private project-based GHG emission sponding to these challenges m years are estimated at $55 mil- Sector F C's fi st reductions under the Clean an ad hoc manner, IFC now lion. n rp t Development Mechanis aa ocmne, owsuGstaina&billty repo0rt¢ Developmet Mechansm hopes these facilities will accel- (CDM) for the benefit of the erate the adoption of more sus- This year, for the first time, Government of the Nether- tamable practices by private IFC's annual report will in- companies in a more strategic clude a chapter on sustainabil- Enhancing Sustainability: IFC's ity. It highlights the business New Environmental Facilities. A D D I T I 0 N A L 0 N F O R M A T I O N case for sustainable business Recognizing the demand for IFC's environmental and social policies, guidelines, pro- practices, includes examples of IFC's services to enhance envi- cedures, and good practice materials, as well as informa- projects illustrating the main tion on the business groups of the Environment & Social sustamability issues, and con- ronmental and social impacts Development Department, can be found at http:www.ifc.org/ tains additional information of projects, IFC has just estab- enviro/ about IFC's emerging roles lished three new facilities that For further information on IFC's annual report, please con- and activities It will be avail- will support increased envi- tact Sujani Eli, Corporate Relations at (202) 458-0933 or able in the fall of 2002. ronmental and social sustain- by e-mail at seli@ifc.org ability by the private sector in .._______._____._ Additional information on the activities of IFC's Environ- Thils article was prepared by IFC's emergmg markets (see Box, at ment & Social Development Department or its publications, Environment & Social Development top of this page). The demand can be acquired by sending an email to: enviro@ifc.org. Department, Gaviii Murray, Direc- for these facilities grew out of tor ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 61 W O R L D he World Bank Insti- WBI actively supports the cre- LItUiJ B A N K tute's (WBI) mission ation of knowledge networks _;__1 I N S T I T U T E is to "create learning and learning partnerships as opportunities for part of its commitment to countries, Bank staff building long-term collabora- and clients, and people com- tive relationships in the public F U T U RE mitted to poverty reduction and private sectors and with and sustainable develop- civil society. WBI has devel- ment." oped more than 200 learning partnerships. It works closely WBI supports the Bank's learn- with local institutions to help ing and knowledge agenda them build in-country capaci- with clients and Bank staff ty and help clients achieve F O R worldwide through capacity their own poverty reduction building and by providing and sustainable development learning programs and policy objectives. advice. WBI is helping to im- prove the Bank's operational Lessons learned quality and effectiveness; to share knowledge with clients The scope and focus of the S U S TA IN A B LE and partners; and to enhance World Bank Institute continues the capacity of clients to access to evolve. Its approach to and make effective use of learninghasmovedawayfrom D~ E V/ E L 0 P Mv~ E N T knowledge and information. short-term technical coopera- D EV E LO PM E N T ~ ~~~~~~~~~~~~~~~~tion, one-time skills develop- Partnerships ment, and one-way knowledge In co.abratio withpa transfer toward results-orient- In collaboration with partners, WBI currently delivers more ed, continuous learning, and than 550 learning programs two-way communication with SUSTAINABLE DEVELOPMENT annually, reaching over 45,000 clients and partners. LEARNING ACTIVITIES participants from 150 countries WBI's Sustainable Development program delivered in all major regions of the WBI Vice President Frannie A. more than 100 learning activities and programs in fis- world. These activities range Leautier notes: "The learning cal 2002. Topics included environmental management, from face-to-face activities us- process means benefiting from improving air quality (through the Clean Air Initiative partnerships program), climate change, environmen- ing traditional media such as the lessons of success and fail- tal economics, environmental governance, natural re- print materials, to distance ures as well as from the lessons sources management, market creation for biodiversity, . of others Knowledge builds conflict resolution for natural resources management, learmng programs that rely on water policy and management, rural poverty and de- Internet tools and videoconfer- capacity, and capacity building velopment, and a range of activities (including work- encing to bring together partic- leads to growth, security, and shops, courses, e-discussions, and global dialogues) in preparation for the Johannesburg 2002 Summit. ipants from different cities, empowermentof the poor. We The Sustainable Development program is geared to- countries, or regions (see Box, have found that the best way ward policymakers, parliamentarians, practitioners, at left). WBI is also offering an to build capacity is by creating academics, researchers, journalists, and nongovern- mental organizations. For more information, visit the array of learning and training an enabling environment website at: <>. burg Summit (see Box, top of allowed to flourish and con- next page). tribute to global knowledge; 62 ENVIRONMENT MATTERS * 2002 World Bank Institute and joint research with JOHANNESBURG SUMMIT 2002 partners. LEARNING ACTIVITIES * Developing and providing As part of the World Bank's preparations for the Johannesburg Summit 2002, the new and innovative ser- World Bank Institute (WBI) is offering an array of learning and training events, includ- vices such as B-SPAN, an ing: Internet-based broad- casting station launched *The Global Dialogues on Sustainable Development (October 2001-June 2002) by WBI in 1999 thatbroad- brought together leading experts to discuss topics that are high on the Johannes- casts World Bank semi- burg Summit 2002 agenda. Specialists from developing countries engaged in the nars, workshops, and con- discussions through video-conferencing. Topics included food security, financing ferences on sustainable for sustainable development, corporate responsibility, and environmental gover- development and poverty nance. The Dialogues website provides links to background materials, the on-line reduction for free to any- discussion, and videos of the Dialogues. Visit the website at: www.worldbank.org/ one with Internet access wbi/sustainabledevelopment/globaldialogues/ (<>). a Collaboration with GLOBE (Global Legislators for a Balanced Economy), an infor- mal group of parliamentarians from around the world, on Towards the World Sum- At the local and country level, mit on Sustainable Development: Parliamentarians Take Action, which is mobilizing WBI's close collaboration with parliamentarians, raising awareness about Johannesburg 2002, and enabling par- partners helps to ensure that ticipants to take an active role in the preparatory process. programs are grounded in lo- cal cultural and social condi- *Special training programs, courses, and policy services on a range of Summit- tions. At the global level, the related topics such as poverty, environment, and development linkages; sustain- Institute will continue to help able rural development; sustainable water management and water sector reform; bridge the digital divide by and environmental governance. helping to extend the reach of knowledge and learning where people learn from one to-facelearningprograms, seminars, global dia- through global electronic another as they also innovate as well as by tapping the logues, and moderated knowledge networks, distance on their own; and where glo- power of the Internet and electronic discussions. learning initiatives, and other , websites expanding the m~~~~~~~~inovations designed to reach bal and local knowledge in- websites; expanding the use of distance learning, * Ongoing development of increasing numbers of people form actio and inespecially through the knowledge and skills with the aim of reducing pov- change. The ability of a society Global Development through formal courses, erty and making development to mor sustainabl.couses to problem-solve and innovate Learning Network; and electronic-based learning, more sustainable. is key to sustainable develop- providing more web- communities of practice, ment. That is what a process of based learning opportu- learning ensures." nities and courses avail- ad pactionlarni in able by CD-Rom to those which partcipants follow- Tlhis article wvas prepared by Michiele Future challenges who have computer access up using what they have de Nevers (202) 473-8607, anid bute lack reliable ornagforslearned to make real Bonnie Bradford (202) 458-0316 of but lack reliable or affor- learned to make real the World Bank Institutte's Enivironi- The Institute will continue to dable Internet connecti- changes in their countries. nzentt and Natural Resources Div- work toward: . sion (WBIEN) fax: (202) 676-0977 vity. or 676-0978. * Increasing the scope and * Building institutional reach of the Knowledge * Raising awareness and capacity through training Eniail: sustainabledevelopment@ Bank through more tradi- building skills for policy of trainers, joint course worldbank.org Website: <> ANNUAL REVIEW * JULY 2001-JUNE 2002 (FY2002) 63 P u b II cat I on s A Selection of World Bank Group Environmental Publications The following publications may be obtained by sending an email message to eadvisor@worldbank.org, or by phoning the ESSD Advisory Service at (202) 522-3773. General Environmental and Water Resources Management Making Sustainable Commitments: An Environment Strategy Paper no. 2 Strategy for the World Bank - SUAIMARY Rafik Hirji and Hans Olav Ibrekk Also available in Chinese, French, Russian, and Spanish. October 2001 Includes CD-ROM of complete book in English. World Bank Health and Environment Spring 2002 Strategy Paper no. I Kseniya Lvovsky The Little Green Data Book 2002 October 2001 World Bank April 2002 Environment Strategy Notes Country Assistance Strategies and the Environment: A Brief Payments for Environmental Services Priya Shyamsundar, Kirk Hamilton, Lisa Segnestam, Strategy Note no. 3 Samuel Fankhauser, and Maria Sarraf Stefano Pagiola and Gunars Platais November 2001 May 2002 Third Environmental Assessment Review (FY96-2000) Kenneth L. Green and Alison Raphael Country Assistance Strategies and the Environment - May 2002 Taking Stock Strategy Note no. 2 Thie Environment and the Millenium Development Goals Arati Belle, Priya Shyamsundar, and Kirk Hamilton World Bank February 2002 June 2002 Environment, Health, and Poverty The Environmental Implications of Privatization: Lessons for Strateg Nteano. 1 Developing Countries Seny Lotsoy Magda Love' and Bradford S. Gentry Janua 2002 World Bank Discussion Paper no. 426 January 2002 2002 (ISBN 0-8213-5006-4) Environment Department Papers Environment Strategy Papers Public Consultation in Environmental Assessments 1997-2000 Strategic Environmental Assessment in lWorld Bank Operations: Environment Department Paper no. 88 Experience to Date - Future Potential Nightingale Rukuba-Ngaiza, Rusdian Lubis, Michelle Cullen, Strategy Paper no. 4 Zongmin Li, and Christopher Mausolff Olav Kjorven and Henn'k LindhJem June 2002 May 2002Jue20 Environmental Indicators Relevant to Poverty Reduction Policy Applications of Environmental Accounting Strategy Paper no. 3 Environment Department Paper no. 87 Norbert Henninger and Allen Hammond Glen Marie Lange January 2002 June 2002 64 ENVIRONMENT MATTERS * 2002 Poverty Reduction Strategies and Environment: A Review of Environment Assessment Updates 40 Interim and Full PRSPs 40 Interim and Fufl PRSPs Wetlands and Environmental Assessment Environment Department Paper no. 86 EA Update no. 28 Jan Bojo and Chandra Reddy CA Rees Jue 00 Colin Rees June 2002 May 2002 Biological Resource Center: Integrating Biodiversity Concerns in Rural Development Projects and Programs Financial Intermediary Lending and Environmental Environment Department Paper no. 85 Assessment Robin Grimble and Martyn Laidlaw EA Update no. 27 October 2001 Aidan Davy and Colin Rees May 2002 Poverty and Environment Indicators Environmenit Department Paper no. 84 Rural Development Priya Shya0sundar No-'ill Farming for Sustainable Rural Development October 2001 Christian Pieni, Guy Evers, John Landers, Paul O'Connell, Beating the Resource Curse: The Case of Botswana and Eugene Terry Environment Department Paper no. 83 June 2002 Maria Sarraf and Moortaza Jiwanji October 2001 Social Development Indonesia's Kecamatan Development Project - DIsseminatlon Notes Is it Replicable? Public Consultations in the Environmental Assessment Social Development Paper no. 39 Process: Perspectives of WVorld Bank Task Team Leaders Judith Edstrom March 2002 March 2002 To be added to the Environment Matters mailing list, complete coupon and mail to address below! r------------------------------------ __ Name Title Office telephone Fax number Organization Address City/State/Postal Code Country E-mail address To order other Environment Department publications, refer to our publications list and write those you would like to receive below. To order more than 4, please contact the Environment Department publications office directly. Title Series No. Author Date Mail or fax to: Environment Department Publications Fax: (202) 477-0565; phone (202) 473-3641 The World Bank 1818 H Street, N.W., Room MC-5-126 Washington, D.C. 20433 U.S.A. ._________________________________________ Making Sustainable Linking Poverty Commitments - An Reduction and Environment Strategy ; - Environmental for the World Bank: Management- - S U M M A R Y - E s' _ Policy Challenges (includes CD-ROM with and Opportunities unabridged edition) fwim _ _mm n by DFID, DG of Spring 2002 a6 pages . *-- P, 3r o Development, EC, Available in Chinese, UNDP; and the English, French, World Bank. Russian, and Spanish. July 2002 .. 90 pages. . -_ Financing for The World Bank and Sustainable Agenda 21 Development July 2002 .1 by the IMF, UNEP * 188 pages. j1_ and the World Bank. 1INANCING FOR July 2002. 5USTAdINA1LE July2002 LI Sus ~ AaLC52 pages. DEVELOPMENT Th W Id k ; __, +>>.1 Agenda 21 Co) : The Environmental The Environment and Implications of m the Millennium Privatization - Development Goals Lessons for ' June 2002 Developing 21 pages. ' Countries ,.v-<.; By Magda Lovel and Br-adford S. Gentry -t he ...rnnd.the World Bank Discus- Dev eloenniGnl Development Goals sloio Paper No 426. 2002 100 pages (ISBN 0-8213-5006-4) $15.00 The Little Green Data ; . Biodiversity Conservation Book 2002 . 7 in Forest Ecosystems- April 2002 . . . World Bank Assistance 239 pages 1992-2002 (ISBN 0-8213-5103-6) .aodivty July 2002. 1'; tX 5 $15 00 Et ,~sy.in .r; 54 pages. For information on lhow to obtain these publications please call the World Bank Environment Department at (202) 473-3641, or e-madl eadvisor@worldbank org.