m A _) H Z D ~~--U m . ,\ m C) z > :'4s-h H X ,l -H W .! ' . m < C) ,t THE WORLD BANK 1~~~~~~~~~~ 4 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATECY JUNE 2002 This publication represents the environment strategy of the World Bank's Latin America and Caribbean Regional Office (LCR) for fiscal year 2002 and beyond. It was approved by the Regional Management Team in March 2001, and was incorporated as an annex to the Bank's Corporate Environment Strategy which was approved by the Board of Executive Directors on July 17, 2001. Copies of the LCR Strategy have been publicly available since June 30, 2001, and a final edited version was published in June 2002. Changes to the original were only editorial in nature and did not affect the substance of the strategy. The strategy is available in English, Spanish, and Portuguese. For more information on preparation of the strategy, including public consultations, visit the World Bank's LCR Environment homepage at http://www.worldbank.org/lacenv For information on the World Bank's activities and programs in Latin America and the Caribbean visit the LCR homepage at http://www.worldbank.org/lac Photos: Page 1 Iguaz6 Falls, Argentina/Brazil -Sven Gillsater Page 3 Swallow-tailed Gulls, Galapagos Islands, Ecuador-Patricia Davies Page 11 Sao Paolo, Brazil-Francis Dobbs Page 17 Monteverde Cloud Forest Preserve, Costa Rica-Peter Brandriss Page 29 Coking plant, Mexico-John Cleave Page 37 La Paz, Bolivia-Curt Carnemark ® Printed on Recycled Paper iiS S I ~Conte nts Foreword ................................. Acknowledgments ...............................1.i Abbreviations and Acronyms ............................... vii Introduction .........................................1 Development Trends and Environmental Issues.......................................................................3 Development Trends 3 Key Environmental Issues 5 The Role of LCSES and Other Sector Management Units 6 Stocktaking of the Environmental Portfolio ............................... 1 1 Irends in Recent Assistance 12 Linkages with the Bank's Revised Objectives 12 Mainstreaming the Environment 14 Strategic Priorities and Actions ............................... l 7 Trade-Offs in Time and Space 19 Strategic Priorities 21 Strategic Actions 22 Subregional Priorities 27 Implementation of the Strategy........................................................................................ Goals 30 Operational Implications 32 Staffing Implications 32 Funding 33 Working with Partners 33 Challenges and Risks of Implementation 35 Next Steps 35 Annexes 1. Key Environmental Problems in Latin America and the Caribbean 38 2. Current Portfolio of Environmental Projects in LCR (as of June 30, 2000) 40 3. Major Environmental Conventions to which LAC Countries are Signatories 42 4. Subregional Priorities Identified by World Bank Staff and Consultative Working Groups 4 5 5. Implementation Matrix: Instruments, Responsibilities, and Tentative Timetable 47 Iiii Contents continued Map 52 Boxes 1. Best Practice Examples of Environmental Mainstreaming 14 2. Structural Adjustment Programs and Environment 15 3. Focusing on Human Diseases Caused by Environmental Factors 16 4. Public Consultation on the Strategy 18 5. Trade-Offs Between Health and Environment: A Point for Further Discussion 20 6. The Clean Air Initiative in Latin American Cities 23 7. Resource Use Conflicts and Community Management of Protected Areas in Bolivia 23 8. A Regional Approach: The Mesoamerican Biological Corridor 24 9. Encouraging Better Environmental Management by Industry in Mexico 25 10.Institution Building with a Community-Focus in Brazil 25 11.The Colombian Water Pollution Charge Program 26 12.Proposed Goals: What Are Our Objectives for the Next Five Years? 30 13.Working with Partners 33 14. The LAC Environment Ministers Forum 34 Figures 1. Environmental Trade-Offs in Space and Time 19 Tables 1. Key Socioeconomic Indicators for the Latin America and Caribbean Region, and Selected Countries 7 2. Water and Air Pollution Indicators 8 3. Forest Cover, Protected Areas, Rate of Deforestation, and Desertified Areas in LAC Countries 9 4. Linkages of Current Portfolio with Corporate Objectives 13 iv LAT:N XMERICA AND ( EW UB1AN REGIONAL ENVIRONMENT STRATEGY ___ _ ___ Foreword I tir, ½n l-a anid T I-, aribbean is an area rich in the private sector. These contributions played at vir nn mr id rssowr ,>. The region contains the important part in enriching the environment str tegy. )r11 s I I 4c-t trop-k rainforest, the second-longest c.',ral -ee' . .\tt nsiv ' rc -&rves of cultivable land, and To monitor progress in carrying out the strateg , the i m( )f ': miost bHit. ersity-rich areas on Earth. Bank's Latin America and Caribbean Region h s I les re , i!-Cts, hce v r, are facing extreme pressures formed an Environment Strategy Implementatil n dJie t s 1 h rh-eats -, depletion of forest resources Working Group. The group is led by Country D rector aid . :ce':,.ra-tinlg soil dc-radation. At the same time, Orsalia Kalantzopoulos and includes represent tives p -ce r of the rcteioi's population is urbanized, from each of the Region's country and sector d part- ran' in !irue citie. \,here inadequate access to clean ments. The group is collaborating with our ext rnal xx ate seo\age treatmntenit, and solid waste collection, as partners, including the Inter-American Develop ent xxell s f lor air quality, threaten human health. These Bank, Pan American Health Organization, Uni ed u -ba er'. ironmenta' conditions disproportionately Nations Development Programme, Food and affec th poor. Agriculture Organization Cooperative Program United Nations Environment Programme, Organ zation The i atin America aintd Caribbean Region's Environment of American States, Economic Commission for Latin Si-rat gy. the Worlcl lhank's first explicit strategy in America and the Caribbean, and bilateral agen ies, to stip Irt . f environmnental improvements in the ensure complementarity between our work pro rams regi( i, i; a key elemenit in the Bank's response to and explore how we can work together towar the thes( growing environmental challenges. This strategy attainment of the Millennium Development G als (in was repared within the framework of the World particular Goal 7, which aims to ensure enviro mental Ban]. Group's new Corporate Environment Strategy, sustainability). whit i rr cognizes the fundamental importance of the enviF onnient to the Bank's poverty reduction and We look forward, as we implement the strateg 'to sustcinablie development strategies. Within this overall continued collaboration with our colleagues w thin fran work, the regional environment strategy is the Bank, our partners outside, our member g vern- tailk i ed i o the specific needs and priorities of Latin ments, and especially with those whose welfar is Amt ica and the Caribbean, addressing critical affected by our work in the region. problems such as urban-industrial pollution, misman- agertem of natural resources, threats to biodiversity, and IJiniate change. David de Ferranti During preparation of the strategy, we reached out to Vice President dive' se sectors-public and private, NGOs, civil Latin America and Caribbean Regional Office soci; ty, and academia-and actively sought feedback via t- ie internet and through a series of face-to-face Lt^- consultations in the region itself. More than 200 part icipants provided their comments during the Ian Johnson conSultations. A draft of the strategy posted on the Vice President intei net received over 2,000 hits and generated more Environmentally and Socially thai 10i) written comments, mostly from NGOs and Sustainable Development V AcknowLedgments This paper was prepared by a core team involvement and feedback; members from comprising Teresa Serra (LCR Environment our Brasilia office and the Costa Rica Sector Manager), Kulsum Ahmed (lead RUTA mission for their assistance with the author), Angela Armstrong, Gabriela Boyer, consultations; Kristalina Georgieva, Magda Kirsten Oleson, Sergio Margulis, and Rocio Lovei, and other colleagues from the Sarmiento. Environment Department for their support and suggestions; our development partners, It is the product of extensive consultations and in particular UNEP for its active with our clients, our partners, and our involvement in the face-to-face sessions; the colleagues. We are immensely grateful to all Forum of LAC Environment Ministers for their those who took the time to listen, read, support; the Central American Commission critique, and provide input to the paper. for Environment and Development (CCAD), Given the fact that several hundred people Monitor International and its NGO network, were involved in its production, it is difficult Yolanda Kakabadse, Fundaci6n Futuro to single out individuals. Latinoamericano, Fundaci6n VIDA, Nouveau Promoc6es e Marketing Direto We are particularly grateful to: participants Ltda., and CEGESTI for assisting us with our in the electronic, web-based, and face-to-face consultation process; and finally, our summer consultations for their constructive feedback; interns, Ligia Largura, Ciro Marcano, and LCR Sector Managers for their active Paula Posas, who were actively involved in involvement in the implementation plan; the early stages. LCSES Sector Leaders for their collaboration in representing their country departments' We are also grateful to the Norwegian Trust views on subregional priorities; our Fund for supporting our extensive regional colleagues in the LCR Environmentally and consultations. Peter Brandriss was the principal Socially Sustainable Development Sector editor and managed publication of the strategy. Management Unit for their input, advice, and Translation services were provided by Ligia support (in particular Laura Tlaiye who led Largura, Eloisa Marques, Irisangela S. de this task in its early stages, and Keiko Ashida Noronha, Karen Ravenelle, Rocio Sarmiento, who was actively involved with the web-based and Martha Uriona. Design and desktop consultation); our colleagues in LCSFP, publishing were provided by Studio Grafik. LCSHD, LCSPR, and LCOSU who provided The LCSES Department Director is John input and feedback at many stages; members Redwood III, and the LCR Vice President is of our regional management team for their David de Ferranti. vi Abbreviations and Acronyms AAA Analytical and Advisory Activities FY Fiscal Year NAFTA North Amencan Free Trade Agree rnt APL Adaptable Program Loan GDP Gross Domestic Product NEP National Environmental Project BB Bank Budget GEF Global Environment Facility NGO Nongovernmental Organization BNPP Bank-Netherlands Partnership GHG Greenhouse Gas NLS Nonlending Services Program GNP Gross National Product NRM Natural Resources Management CAC Command and Control IBRD International Bank for NSS National Strategy Studies CAI Clean Air Initiative Reconstruction and Development OAS Organization of American States CAS Country Assistance Strategy IDA International Development ODS Ozone-Depleting Substances CCAD Central American Commission for Association OECS Organization of Eastern Caribbean Environment and Development IDB Inter-American Development Bank States (Comisi6n Centroamericana de IDF Institutional Development Fund PAHO Pan American Health Organizatio Ambiente y Desarrollo) IFC International Finance Corporation PCF Prototype Carbon Fund CDF Comprehensive Development IFI International Financial Intermediary PM10 Particulate Matter Framework IMF International Monetary Fund PPP Purchasing Power Parity CEGESTI Center for Technology Management INECE International Network for PSD Private Sector Development and Industrial Information Environmental Compliance and PRSP Poverty Reduction Strategy Paper (Centro de Gesti6n Tecnol6gica e Enforcement OAT Quality Assurance Team Informaci6n Industrial) IPDP Indigenous Peoples Development RAP Resettlement Action Plan CFC Chlorofluorocarbon Plan RUTA Regional Unit for Technical CMU Country Management Unit LAC Latin America and the Caribbean Assistance CTF Consultant Trust Fund LCR Latin America and Caribbean SAL Structural Adjustment Loan CY Calendar Year Regional Office (World Bank) SAP Structural Adjustment Program DALY Disability-adjusted Life Year LCOSU Operations Support Unit (LCR) SECAL Sector Adjustment Loan DEC Development Economics Vice LCSES Environmentally and Socially SMEs Small and Medium Enterprises Presidency Sustainable Development SMU (LCR) SMU Sector Management Unit DGF Development Grant Facility LCSFP Finance, Private Sector, and TA Technical Assistance EA Environmental Assessment Infrastructure SMU (LCR) UNDP United Nations Development EAP Environmental Action Plan LCSHD Human Development SMU (LCR) Programme ECLAC Economic Commission for Latin LCSPR Poverty Reduction and Economic UNEP United Nations Environment America and the Caribbean Management SMU (LCR) Programme EIA Environmental Impact Assessment LEAP Local Environmental Action Plan WBI World Bank Institute EMA Environmental Management Agency MBC Mesoamerican Biological Corridor WHO World Health Organization EMS Environmental Management System MBI Market-Based Instrument ZMVM Metropolitan Zone of the Valley f ENV Environment Department M&E Monitoring and Evaluation Mexico (Zona Metropolitana del alle ESMAP Energy Sector Management MERCOSUR Common Market of the de Mexico) Assistance Programme Southern Cone (Mercado Comrn FAO/CP Food and Agriculture Organization del Sur) Cooperative Program MP Montreal Protocol vii viii .11 -.- - - - l. .1 I .1-... I . . ~I - 1-- - 1 - -- 4~~~~~~~~~~~~~~~4w In r d |1'- *E o | r F < 4, , , . , ' ,f: 4;Introdud o;~ T he 'I,1) Bank Group's new The Corporate Environment Strategy therefore E:nvironmlent Strategy reflects the proposes the following as key development broaider mission of the Bank to reduce objectives: (a) improve the quality of life by poverty within the context of sustainable reducing the impact of environmental development. It therefore attempts to build degradation on human health, improving on the syunergies between poverty reduction, livelihoods through the sustainable economic growth, and environment. management of natural resources, and reducing vulnerability to natural disasters; Poverty alleviation implies amplifying (b) promote the long-term sustainability of opportunities, strengthening participation, growth, particularly growth led by the and increasing security over risks, whereas private sector; and (c) improve the quality sustainable development implies guaranteeing of the regional and global commons. that future genierations have (at the very least) the same opportunities as present Within the general framework of the Bank generations. J hese together translate into the Group's Strategy, the Latin America and pursuit of growth and poverty reduction in Caribbean Regional Vice Presidency (LCR) the short term in a sustainable manner, is preparing its own strategy to address without compromising the future. environmental issues in the region over the l next five years, taking into account the As background to the strategy, the paper starts specific development trends of the region with a brief discussion of the major develop- in the wake of a new globalized world ment trends and environmental issues in the economy, progress made and lessons region; it then describes the changes in focus learned over the last decade in addressing in our environment portfolio over the last environmental problems, and the Bank's few years, as well as the extent to which comparative advantage in assisting such changes are consistent with our new countries relative to that at other players objectives related to human health, livelihoods, on the regional scene. The strategy centers promoting an enabling environment for sound strongly on aligning environmental environmental management, and equitable concerns with other sectoral strategies solutions to regional and global challenges. (such as rural, urban, transport, and On this basis, it proposes key strategic energy) and above all with the objectives areas of focus for LCR in the coming five and goals of the Bank's overall assistance years, as well as process-oriented changes, in to countries in the region. order to improve our effectiveness. 2 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY 1. 1 | | I I |~~~z DeveLopmer ! 7vLnds and Environment ~ ues Dcveclopm~enit Trecndts only 2 percent of wastewater is treated in cities such as Santiago and San Salvador; the Latin America is far from being aair rsheds of maniy of the major cities in the homogeneous region in terms of its region fail to meet World Health Organization socioeconomic conditions. Gross (WHO) standards; and income distribution the overall national product (GNP) per capita measured patterns are among the worst in the world, econoic, scial, at purchasing power parity (PPP) ranges from with Brazil, Chile, Colombia, Guatemala economic social, $430 in Nicaragua to $7,600 in Argentina; and Paraguay showing Gini indices of 55 or and environmental the percentage of people living in cities is as higher (see tables 1 and 2). agendas of high as 91 percent in Uruguay and as low as 35 percent in Haiti; the population living GLOBALIZATION countries in the below the poverty line is about 65-70 percent Most countries in Latin America have been in Honduras and Guatemala, while in pursuing macroeconomic stabilization and region need Uruguay it is only about 6 percent; access to liberalization of their economies during the to become safe water in urban areas is relatively good last decade. This has been an inevitable increasingly (typically 70-90 percent), but in rural areas response to the increasing integration of the access to safe water ranges from only 22 world economy. The specific consequences of aligned percent in Bolivia to 62 percent in Mexico; the emerging patterns of integration are yet 3 uncertain, but they will be different across Governments in Latin America have the countries in the region, depending on their formidable task in the short term of current participation in economic flows and making cities more hospitable venues for the specific choices of production and economic development and at the same specialization of their economies. time improving the living conditions of the poor. This requires large investments in On average, Latin America has maintained a infrastructure: municipal, state, and federal comparative advantage in the production of governments must raise substantial commodities with a relatively high content of investment capital, usually only available natural resources. Despite the efforts of many in private capital markets. The solution to countries to shift from resource-based the region's urban-environmental problems exports to more high-technology exports, will thus largely depend on the capacity of overall most countries in the region will likely local governments to design new regulatory, continue to rely on their natural resource political, and institutional arrangements to base to compete in the world economy. The finance such investments. The challenge is region has also been seeing the formation of great but there are tremendous synergies to regional trading arrangements (notably be tapped. MERCOSUR and NAFTA), which should promote greater economic activity within the GOVERNANCE region. The environmental consequences of In the coming decade we expect to see a globalization and regional integration will deepening of democracy and a push toward not necessarily be negative: governments may greater decentralization and improved in fact use the opportunity to pursue higher governance. Human rights issues and environmental standards, as opposed to environmental agreements also will likely creating "pollution havens," since responsible continue to be at the forefront of the environmental performance is becoming an agenda. This means that civil society in important determinant of economic general will increasingly put pressure on comparative advantage among countries. governments and will position itself to monitor government and to demand URBANIZATION greater effectiveness of public policy. With Latin America is a highly urbanized region tight control over expenditures still likely (see Table 1), with 75 percent of its 500 to be a major issue over the coming years, million inhabitants living in cities and making government budgets will tend to decrease a living in the industrial and service sectors during an adjustment period, making it (industry accounts for 29 percent of GDP in potentially more difficult to respond to the region, and services for 63 percent). such demands. It is also uncertain Urban poverty and environmental conditions whether the pressure ultimately will be are intimately related to each other, with the toward more or less environmental control, most serious urban environmental conditions since different segments of civil society impinging disproportionately on the poor. pursue competing interests. 4 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY Whatever the outcome, much more effective threats to terrestrial and marine biodiversit institutional and policy frameworks and the also rank high on the environmental agend use of flexible instruments to address According to the recent UNEP study, GEO environmental problems will be required. Latin America and the Caribbean: Environm nt This calls for the continuous integration of Outlook 2000, 6 million hectares of natur, 1 environmental concerns in public sector forest cover per year were cleared or went ip policies, notably the fight against poverty and in smoke between 1990 and 1995, 822 the creation of development opportunities. The vertebrates are currently in danger of extin overall economic, social, and environmental tion, and more than 300 million hectares f agendas of countries in the region need to land have been degraded, mainly due to so I become increasingly aligned. erosion caused by deforestation, overgrazi g, or poor agricultural practices. Key Environmental Issues Table 3 gives details of losses in forest are In Latin America and the Caribbean (LAC), and levels of desertification by country. environmental degradation continues to occur Forest loss seems to have stabilized in muc at an accelerated pace due to the poor of South America but not in Central socioeconomic conditions of large segments of America, where it has increased slightly- its population, the high dependence of many from between 1.5 and 2 percent per year ur- economies on the exploitation of their natural ing 1980-90, to between 2 and 3 percent er resources, and the high vulnerability of urban year during 1990-95. On the other hand, and rural populations to natural disasters. desertification of irrigated land, rainfed cr p- land, and rangeland is in the 70-90 percet t The strong links between environmental range in a number of LAC countries, with degradation and poor socioeconomic over half the rangelands experiencing sign fi- conditions, coupled with the very high levels cant loss in potential productivity since th I of urbanization in the region, suggest that the mid-1940s (crop and pastureland product vi- highest social costs from environmental ty has decreased by 4-7 percent in South problems may be due to urban and industrial America and by 9-15 percent in Central pollution. In this sense, access to clean water, America). In most of these cases, particul rly sewage collection, solid waste collection, and where the agricultural frontier is still air pollution control in large cities are perhaps expanding, small peasants are the ones w o at the top of the environmental agenda in the suffer the most in the medium-long term LAC region, particularly as cost-effective from increased environmental degradatior . means to improve the welfare of poor because their livelihoods depend directly c n segments of the population. the natural resource base. As a richly endowed region, problems of Finally, the poorest populations in both mismanagement of natural resources (water, urban and rural areas are at far greater ri k soils, forests, fisheries, natural habitats) and to natural disasters than are higher inco DEVELOPMENT TRENDS AND ENVIRONMENTAL ISSUES 5 groups. Such risks include droughts in north- The Role of LCSES east Brazil and the uplands of Mexico, floods and Other Sector and volcanic eruptions in Central America, Management Units and floods and associated landslides in the slums of most metropolitan and peri-urban Within the Bank's Latin America and areas throughout Latin America and the Caribbean Regional Vice Presidency (LCR), Caribbean. Natural disasters closely associated responsibility for the environmental program with climate variability have increased in is borne by several different groups. The frequency and intensity over the past decades Environmentally and Socially Sustainable and economic losses due to these events are Development Sector Management Unit estimated to have increased eightfold between (LCSES) currently has responsibility for 1961-70 and 1986-95. While the social (a) ensuring compliance with safeguard impact and economic costs of such events can policies, (b) supporting quality at entry and in only be roughly estimated, their association the implementation of all regional operations with poverty puts them at the forefront of with respect to social and environmental environmental problems in the region. aspects, (c) developing and implementing environmental operations, (d) assisting Annex 1 summarizes the key environmental borrowers through nonlending services, and problems and their impacts by subregion in (e) exploring new frontiers of environmental LAC. Because the prevalence and social cost management through analytical work. Each of these problems vary across the region, of the other LCR sector management units- priorities should also vary accordingly. namely Finance, Private Sector, and However, response is often suboptimal due to Infrastructure (LCSFP), Poverty Reduction limited awareness of impacts and costs and and Economic Management (LCSPR), and the perception that environmental conservation Human Development (LCSHD)-also has a is a constraint to growth. As a result, decision- responsibility with respect to environmental making often fails to take environmental management. These SMUs must (a) ensure concerns into account. While in most countries that their operations "do no harm" as required progress has been made at the project level by the safeguard policies, and (b) implement over the past decade, poor policies (including environmental components such as institu- unclear property rights and inappropriate tional strengthening of environment units in resource pricing and subsidies) are often at sectoral agencies, or components that have the root of environmental degradation. At the strong environmental linkages such as other extreme, enforcement of environmental rehabilitation of mining sites, slum upgrading, regulations and policies relies on inflexible energy sector reform, urban transport and ineffective instruments, and would benefit improvements, and tertiary environmental from greater use of economic incentives, education. participation by stakeholders, partnerships with polluters, and the development of better basic data and planning methodologies. 6 L ATN AMERICA AND rARIBBEAN REGIONAL ENVIRONMENT STRATEGY Table 1. Key Socioeconomic Indicators for the Latin America and Caribbean Region, and Selected Countries LAC region Argentina Bolivia Brazil Colombia Dom. Rep. Haiti Honduras Mexico Nicaragua SOCIAL INDICATORS Population (millions) 509.2 36.6 8.1 168.1 41.5 8.4 7.8 6.3 97.4 4.9 Population, avg. ann. growth (1992-98) 1.7 1.3 2.4 1.4 1.9 1.8 2.1 2.9 1.7 2.8 Urban population (% total population) 75 +90 62 81 73 64 35 52 74 56 Poverty (% below $2/day) n.a. n.a. 38.6 17.4 28.7 16.0 n.a. 68.8 22.1 n.a. Distribution of income (Gini index)a n.a. n.a. 42 60 57 49 n.a. 54 54 50 Life expectancy at birth (years) 70 74 62 67 70 71 54 69 72 69 Mortality under 5 years old (per 1,000 live births) 38 22 78 40 28 47 116 46 35 42 Child malnutrition (% children under 5 years old) 8 2 8 6 8 6 28 25 n.a. 12 Access to safe water-urban (% of population) n.a. 71 78 85 88 74 37 81 91 81 Access to safe water-rural (% of population) n.a. 24 22 31 48 67 23 53 62 27 Access to sanitation in urban areas (% of urban population) n.a. 80 77 74 76 76 42 81 81 34 Access to sanitation (% population) n.a. 75 41 67 83 78 24 65 66 31 Illiteracy (% population age 15 +) 12 3 16 16 9 17 52 27 9 32 < Net primary enrollment (% school pop.) 94 100 97 97 89 91 n.a. 88 100 79 ECONOMIC INDICATORS z GNP/capita (Atlas method, $)b 3,840 7,600 1,010 4,420 2,250 1,910 460 760 4,400 430 GNP (measured at PPP, billion $)c 3,197.1 414.1 17.8 1,061.7 237.2 39.1 11.0 14.3 752.0 10.6 L m Industry z o % GDP 29 32 31 29 24 35 20 30 27 21 | 2> Average annual growth 3.6 4.8 n.a. 3.2 2.3 6.8 -1.0 3.6 3.6 4.1 z 0 m Services 0% GDP 63 61 54 62 61 54 50 52 68 53 | o Average annual % growth 5.4 4.8 n.a. 2.7 6.3 5.7 -0.3 3.7 2.4 1.1 z -; Sources: World Development Indicators 2000 and World Development Report 2000/2001: Attacking Poverty World Bank. n.a. = not available. -7 a. Gini index measures the extent to which the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. As defined here a Gini index of zero would represent perfect equality and an index of 100 would imply perfect inequality (one person or household accounting for all income and consumption). C b. World Bank uses GNP per capita in U.S. dollars to classify economies for analytical purposes and to determine borrowing eligibility. The Atlas conversion method uses a three-year average of exchange rates. P Cs . PPPs provide a standard measure allowinn comparison of real price levels between countries. °° Table 2. Water and Air Pollution Indicators Table 2a. City Air Pollution, 1995 (mean annual values in pg/m3 except as noted) z WHO Buenos Aires, Sao Paulo, Santiago, Mexico City Lima-Callao, Caracas, > standard Argentinal Brazil2 Chile3 Mexico4 Peru5 Venezuela6 I m Particulate matter (PM-10) 75 (EPA) 49-59a 70 109 l54a 259.47 n.a. > Total suspended particulates (TSP) 75 200 86 222 279 n.a. 53 > Ozone: Number of days above standard n.a. n.a. looa 150 320a n.a. n.a. 0 Nitrogen dioxide (NO2) 40 125b 83 80 130 249.53 57 Sulfur dioxide (SO2) 50 7-10c 20 39 74 113.13 33 1. Source: Air Quality Diagnosis for the Argentina Pollution Management Project, June 1998. 3. Source: CONAMA, Plan de Prevenci6n y Descontaminacion Atmosferica de la Region Metropolitana, 1998. >z a. Range of daily measurements at three stations. Short-term campaign 1997. 4. Sources: Comision Ambiental Metropolitana; World Resources 1998-99. Z- b. Value for 1996. a. 1998. ;o c. 1994-95. 5. 1998 values. Source: DIGESA, 1999. rn 2. Sources: CETESB, Relat6rio de Qualidade do Ar no Estado de S50 Paulo, 1994-95; 6. Source: World Resources 1998-99. 5 The World Resources Institute, World Resources 1998-99. z ~ a. 1997. 3 z Table 2b. Emissions from Fossil Fuel Burning and Cement Manufacturing, 1995 Argentina Bolivia Brazil Colombia Dom. Rep. Haiti Honduras Mexico Nicaragua 0 -< CO2 emissions (thousand metric tons) 129,464 10,475 249,196 67,524 11,769 638 3,855 357,834 2,700 z Solid fuels 3,572 0 48,851 15,246 293 0 0 23,358 0 -I mA Liquid fueLs 59,767 5,276 180,837 38,670 10,750 612 3,528 257,158 2,528 Gaseous fuels 56,334 2,928 9,479 8,075 0 0 0 61,830 0 M. Gas flaring 6,600 1,923 2,324 739 0 0 0 3,544 0 Cement manufacturing 3,189 349 12,707 4,796 724 25 326 11,945 174 Per capita CO2 emissions (metric tons) 3.7 1.4 1.6 1.9 1.5 0.1 0.7 3.9 0.7 Sources: The World Resources Institute, World Resources 1998-99. Table 2c. Water and Sanitation Indicators for Selected Cities, 1993 La Paz, Rio de Janeiro, Santiago, Bogota, San Salvador, Guatemala City, Bolivia Brazil Chile Colombia El Salvador Guatemala Water connection (percent of urban households) 981 802 98 853 86 52 Sewerage coverage (percent of urban households) 661 462 92 753 80 n.a. Water use per capita (liters/day) 73 299 286 176 186 240 Wastewater treated (percent) 0 282 2 n.a. 2 3 Solid waste generated per capita (kilograms/day) 0.5 1.1 n.a. 0.6 0.9 n.a. Garbage collection (percent of households) 92 88 95 94 46 53 Sources: The World Resources Institute, World Resources 1998-99, except: (1) INE, 1997; (2) CEDAE (State Water Utility), 1998; (3) MDE, National Inventory of the Waterand Sanitation Sector Vol 1-2, 1998. n.a. = not available Taible 3. Forest Cover, Protected Areas, Rate of Deforestation, and Desertified Areas in LAC Countnes Land areaa Forest coverb Protected Drylands, 1986d (thousand Area (thousand hectares) Avg. annual % change areas, 1997c Total areae Desertificationf Countries hectares) 1980 1990 1995 1980-90 1990-95 (thousand ha.) (1,000 ha.) 1,000 ha. Percent Latin America and the Caribbean 2,016,518 2,506 North America 190,869 152 Mexico 190,869 55,423 55,927 55,387 0.4 (0.9) 152 149,775 127,180 85 Central America 51,073 384 Betize 2,280 2,048 1,995 1,962 (0.3) (0.3) 49 Costa Rica 5,106 1,925 1,455 1,248 (2.8) (3.1) 109 Et Salvador 2,072 156 124 105 (2.3) (3.3) 2 135 20 15 Guatemata 10,843 5,049 4,253 3,841 (1.7) (2.0) 42 882 655 74 Honduras 11,189 5,720 4,626 4,115 (2.1) (2.3) 81 Nicaragua 12,140 7,255 6,314 5,560 (1.4) (2.5) 70 Panama 7,443 3,764 3,118 2,800 (1.9) (2.2) 31 Caribbean 22,868 533 Dominica 75 .. 46 46 .. 0.0 7 Dominican RepubLic 4,838 1,432 1,714 1,582 1.8 (1.6) 45 Grenada 34 .. 4 4 .. 0.0 1 Haiti 2,756 38 25 21 (4.3) (3.5) 8 1,784 1,602 90 Jamaica 1,083 516 254 175 (7.1) (7.5) 142 166 119 72 St. Kitts and Nevis 36 .. 11 11 .. 0.0 2 St. Lucia 61 .. 6 5 .. (3.6) 46 St. Vincent and the Grenadines 39 .. 11 11 .. 0.0 25 Trinidad and Tobago 513 204 174 161 (1.6) (1.6) 14 South America 1,751,708 1,437 z Argentina 273,669 36,527 34,389 33,942 (0.6) (0.3) 224 192,626 126,730 66 BoLivia 108,438 55,582 51,217 48,310 (0.8) (1.2) 37 32,687 26,880 82 rn Brazit 845,651 600,762 563,911 551,139 (0.6) (0.5) 582 80,762 69,950 87 0 c::7 ChiLe 74,880 8,087 8,038 7,892 (0.1) (0.4) 88 35,252 17,400 50 > ty CoLombia 103,870 57,771 54,299 52,988 (0.6) (0.5) 94 10,022 8,140 81 z Ecuador 27,684 14,372 12,082 11,137 (1.7) (1.6) 134 8,926 7,490 84 rn ,,Paraguay 39,730 16,886 13,160 11,527 (2.5) (2.6) 20 16,433 5,007 30 z C Peru 128,000 70,714 68,646 67,562 (0.3) (0.3) 34 50,455 35,300 70 Uruguay 17,418 803 816 814 0.2 (0.0) 13 | ° VenezueLa 88,205 51,768 46,512 43,995 (1.1) (1.1) 194 10,397 6,940 67 Not available. Sources: a. Food and Agriculture Organization of the United Nations FAO (at http://apps.fao.org/nhp-wrap.pl?LandUse&domain=LUl&language=espanol&servlet=1). * n } b. Food and Agriculture Organization of the United Nations and the International Tropical Timber Organization, in World Resources 1998-99, The World Resources Institute. Numbers in italics from FAO, State of the World's Forest 1997 (at http://www.fao.org/montes/fo/sofo/sofo97/97toc-e.stm). c. World Conservation Monitoring Centre WCMC: 1997 United Nations List of Protected Areas (at http://www.wcmc.org.uk/protected areas/albany-al.pdf). L d. Dregne, H. t, ano N-1. unou. 1 9Ž. Gluobal uber icin Di ,, lenS,d Costs. In D Fctoratian ot Arid L du bbock T Thch ' Iniverst (at http//ww.ciesin.org/docs/002- 186/002-1 86.html). e. Excluding hyperarid areas. to0 f. Desertification of irrigated land, rainfed cropland, and rangeland. Includes moderate, severe, and very severe, but not slight desertification. ot ~~~~. -_ : l - g~.},J s_s9i g Stocktaklng of the Environme l here has been no explicit LCR environ- such as the Mexico Groundwater Study, And ment strategy in the past. Rather the initiatives such as the Clean Air Initiative we need to better implicit strategy has been to respond (described in Box 6). understand the to emerging country demands, needs, and priorities. The current portfolio consists of Annex 2 lists the current portfolio of the LCR links between the following major areas of environmental Environment Group, including its Global, environment, activity: institutional development, biodiversity, Environment Facility (GEF) and Montreal natural resources management (NRM), water Protocol (ozone depleting substances phaseout) growth, and resources management, pollution management, portfolios. LCR's Montreal Protocol program poverty, and and disaster management, with the latter consists of $51.9 million in commitments! to poverty, and being a relatively new area of engagement. eight countries. As of June 30, 2000, LCRk's better integrate There are about 81 active projects with portfolio of GEF projects under implemeo~ta- environmentalenvironment as a primary objective totaling tion for more than 12 months consisted of 15 $2.35 billion. In addition, the Bank has been full projects and 9 medium-size projects. The programs within engaged in a number of nonlending services combined grant value of this GEF portfolio the Bank's ~(NLS), including policy dialogue such as the was $134 million, with full-size projects Mexico Policy Notes and the Bolivia accounting for 95 percent in dollar termsi. broader agenda Environmental Dialogues, analytical work The biodiversity focal area dominates LCR's 4grt i~ ~ ~ ~ ~ ~ ~~~~~1 GEF portfolio, accounting for 18 out of 24 Linkages with the Bank's projects and two-thirds of the portfolio in Revised Objectives dollar terms. The remaining six projects include four in climate change and two with As the Bank focuses more strongly on poverty multiple foci. There are also, of course, many alleviation through sustainable growth, we more projects with either direct or indirect need to better understand the links between environmental objectives, particularly in the environment, growth, and poverty, and better LCSFP portfolio. integrate environmental programs within the Bank's broader agenda. While some synergies Trends in Recent are well understood and relatively straight- Assistance forward ("win-win"), others are more difficult to understand or require trade-offs In recent years, key trends in the assistance ("win-lose"), and thus are more difficult to we have provided to our clients include: integrate. * Diversification of the environmental agenda For countries with an agricultural frontier from green to brown issues and from where there is still pressure to convert or tap sectoral to integrated approaches through natural resources unsustainably to achieve use of the Comprehensive Development short-term goals, poverty reduction through Framework (CDF) and regional (landscape- support to natural resources management based) initiatives. (including water management and disaster * Better integration of social concerns into preparedness) that contributes to sustainable environmental management through livelihoods is a key strategy, with a strong promotion of community-based initiatives, focus on more vulnerable groups, including greater focus on indigenous communities, and indigenous peoples. In economies that are increasing attention to resettlement and other more dependent on the secondary and social impacts of development projects. tertiary sectors, pollution control and well- * Greater emphasis on participation and designed (environmentally sensitive) consultation. infrastructure are perhaps the key areas * Moving from project-specific to strategic through which to address environmental and (sectoral or regional) environmental poverty objectives. assessment. * Increased recognition of linkages between Table 4 shows linkages of our current local and global environmental issues, portfolio with the corporate objectives of including assistance to countries to meet improving quality of life, promoting long-term their commitments under various interna- sustainability of growth, and improving the tional and global conventions. quality of the regional and global commons. 12 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY Table 4. Linkages of Current Portfolio with Corporate Objectives Project type Quality of life Quality of growth RegionaVglobal commons Natural resources Direct link to livelihoods in newer projects. Direct link to Direct link in internatienal management Emphasis on resource sustainability in most water productivity through waters projects and in management projects has a health implication. emphasis on resource biodiversity components. Also projects generally present a strong focus on sustainability in most avoiding soil degradation and protecting forest projects. cover (positive impact on livelihoods). Disaster Direct link with reducing people's vulnerability to Indirect link through management environmentaL risks, such as forest fires, hurricanes, avoidance of economic floods, droughts, and climate change. The bulk of losses (assets, crops, projects focus primarily on disaster response, with infrastructure, etc). the majority of projects being ex-post recovery projects, with small components addressing preparedness for future disasters. The newer operations focus more on preparedness, and thus promote a greater emphasis on vulnerability reduction. Pollution control ConceptuaL link with health, but this is rarely used Direct link through Direct link through in project design. Further work needs to be done to cleaner production air quality projects, better understand the linkages beyond a simplistic projects/pilots. national strategy level, and to apply this to project design to maximize (climate change) health benefits. Also there is need to develop good studies, Montreal baseline data and monitoring systems. Protocol program. Infrastructure and Direct link to livelihoods, typically generating both Direct link to Direct link through productive sector positive (e.g., access to electricity or to markets as productivity and climate change proje s (e.g., energy, transport, a means of generating income) and negative economic growth. (renewable energy, mining, and private impacts (e.g., reservoir formation for the purposes energy efficiency, an sector development) of power generation or privatization in the mining landfill gas). sector leading to closure of mining facilities). In some of these cases environmental/social objectives may be at odds with developmental goals and/or the fight against poverty. Proper mitigation of negative impacts needs to be ensured through timely environmental and social assessments and implementation of action plans. Municipal services Project objectives are often linked to an implicit Indirect link to (e.g., water and understanding of health improvements. However, productivity and growth. sanitation, solid waste indicators typically are at the level of access to management) services. Barriers to a more explicit approach to health improvements include insufficient epidemiological information and lack of an adequate database in many countries in the region on environment-related diseases. Biodiversity Indirect links to health through sustainabLe Direct link with all production of natural food products, natural GEF-financed project medicines and other forest products, and agriculture (majority of portfoli )- without agrotoxics. Indirect links to livelihoods through subsistence, commercial, and tourism activities. Indirect link to vulnerability through forest conservation. Institution buiLding Direct link through objectives of improved environmental governance, policy design and enforcement, and priority-setting. STOCKTAKING OF THE ENVIRONMENTAL PORTFOLIO 13 Mainstreaming the * Regulatory reform, institution building, Environment and clean-up of contaminated sites in the mining sector. Mainstreaming environmental concerns-that * Efficient use of resources and raw materials is, integrating them into sectoral projects and and environmental management systems in policy dialogue-is a key tenet of both the the competitiveness agenda of small and corporate and regional environment strategies. medium enterprises (SMEs). There clearly have been many successes in recent * Addressing environmental liabilities and years; the glass is probably half full. Examples regulations in the regulatory reform and of sector-environment linkages are especially privatization agenda. strong in the LCSFP portfolio and include: Indeed, the capacity of environmental units * Renewable energy, energy efficiency, fuel in the sectoral ministries of many LAC quality, fuel substitution, and energy countries has increased considerably over pricing policies in the energy sector. the last ten years. Box 1 describes some * Solid waste management, municipal examples of best practices in environmental development, and slum upgrading in the mainstreaming in recent Bank projects. urban sector. * Air quality management through monitoring However, the glass is also half empty. These networks, technical assistance, and better successful examples of mainstreaming indicate traffic management in the transport sector. the impact that projects can have, but also * Wastewater management and water quality point to the fact that such efforts are long- standards in the water and sanitation sector, term and will require continued support over Box 1. Best Practice Examples of Environmental Mainstreaming Sector Country Project Transport Colombia Third NationaL Roads Project (strengthening of environmental unit in road agency) Hydrocarbon Bolivia/Brazil Gas Sector Development Project (gas pipeline) Power El Salvador Power Sector Technical Assistance Project Water Colombia Santa Fe Water Supply and Sewerage Project Agriculture Nicaragua Agricultural TechnoLogy Technical Assistance Project (environmental education co-ponent) 14 LATIN AMERICA AND I REGION;AL N the coming years in the very same sectors. management and economic growth or One area that is particularly worth poverty alleviation, need to be enunciated mentioning, in which much clearly remains within the Environment Family. Greater to be done in our client countries and thus linkage of the health and environment in our own work program, is placing greater agendas through more effective application emphasis on environmental linkages in our of the knowledge gained from health LCSPR portfolio (see Box 2 on Structural surveillance projects is another priority Adjustment Programs). Conversely, a better (see Box 3), as is including environment as economic case for environmental manage- an integral subject in early education ment, and illustration of the linkages and programs in order to help build a strong trade-offs between natural resources and informed environmental constituency. Box 2. Structural Adjustment Programs and Environment During the past two decades, 566 IMF and World implications for the environment, since sound Bank Structural Adjustment Programs (SAPs) have environmental management is a key objective of th been implemented in more than 70 countries. In Bank's assistance to countries." Strategic environ- 1999 an estimated 53 percent of Bank lending was mental assessments are a potentially powerful tool through SAPs, and the upward trend in SAP lending is during program preparation for identifying win-win expected to continue. Studies by both the Bank and opportunities, ensuring compliance with Bank NGOs have consistently shown that SAPs have a major Safeguard Policies, and verifying consistency with he impact on the environment. Trade liberalization, Bank's focus on sustainable poverty reduction. Suc privatization, increased foreign investment, and assessments could enhance the institution's under- reduction of government spending can alter resource standing of environmental and social risks associat d use patterns, increase land degradation and with the programs, and strengthen their overall qua ty. deforestation, increase extraction of nonrenewable resources, and draw down natural capital. A recent good practice example is the Mexico Decentralization Loan. This loan seeks to link the However, many reforms have the potential to improve objectives of overall accountability and transparen both environmental and economic outcomes by of fiscal transfers and state debt management wit implementing complementary environmental policies ongoing operational efforts to improve service deli ery and strengthening institutions and regulations. in the health and environment sectors. The synerg es Furthermore, Operational Directive (OD) 8.60 on between other operations, both under preparation Adjustment Lending states in paragraph 13 that and implementation, have provided cohesiveness t "analysis of adjustment programs aLso considers the the portfolio. STO)KTAKING THE PORTFOLIO 15 Box 3. Focusing on Human Diseases Caused by Environmental Factors A background paper prepared for the Bank the Comisi6n Ambiental Metropolitana (CAM), in Environment Strategy notes that "recent estimates developing the Third Air Quality Program 2000-10 for suggest that premature death and illness due to the Mexico City Metropolitan Area (Zona Metropolitana major environmental health risks accounts for del Valle de Mexico, or ZMVM). To analyze the economic one-fifth of the burden of disease in the developing benefits of further efforts to reduce emissions, a recent world-comparable to malnutrition (15 percent) and Bank-funded study estimated the health benefits in larger than all other preventable risk factors and monetary terms of numerous scenarios in air quality groups of disease causes. While the total burden of improvements (ozone and PM10) in the ZMVM. disease in rich countries, expressed in Disability- Adjusted Life Years (DALYs) per million people, is The health benefits included in that study are about half of that in developing countries, the (a) reduced cost of illness, (b) reduced productivity disease burden from environmental risks is smaller by losses, (c) willingness-to-pay for reduced acute and a factor of 10." chronic morbidity effects, measured with the contingent valuation method (CVM), and (d) willingness-to-pay In LCR, public health surveillance projects typically for reduced acute and chronic mortality effects, also have components that include studies to determine measured with the CVM. the extent of diseases caused by environmental factors (including water quality, indoor and outdoor Based on these health benefits, the total economic air quality, insecticides, agrotoxins, soil quality, benefits of a 10 percent reduction in concentration reptile toxins, and ground water pollution), and the of ozone is estimated at $1.0 billion in the year 2010. formulation of environmental health policies in A 10 percent reduction in PM10 yields a benefit of coordination with other ministries that can prevent $1.4 billion in the year 2010. Furthermore, this scenario such diseases, There are three projects of this type in is estimated to lead to 266 fewer infant deaths. the current portfolio of the Human Development Obtaining compliance with air quality standards can SMU-one each in Brazil, Argentina, and Venezuela. achieve benefits of as much as $6.8 billion per year Close collaboration on the projects and an examination for ozone and $6.5 billion per year for PM1O by 2010. of their implications for our sectoral operations in these countries should be a high priority. It is clear from these estimates that the calculated benefits associated with air pollution reduction The health and corresponding economic benefits of justify relatively high expenditures to further reduce reducing pollution are often very high. The Bank has polluting emissions. supported Mexico City's Environmental Commission, 16 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIROfNMENT STRATEGY J7, - ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~- |' aP-,,i,- I'wiL -^!||:E11-~~1 T he Bank's new Environment Strategy selectivity, and working effective ly with proposes that we refocus our efforts at different partners including local commu ities, keeping "people" at center stage. As the private sector, and othe- ins:itutions. the environmental noted previously, the Corporate Strategy proposes the following as key development Within this context we specificallv propose problems to be objectives: (a) improve the quality of life by that the objectives for the UCR Environn ent tackl,ed on a reducing the impact of environmental Strategy be (a) improvemert of people's degradation on human health, improving health by reducing exposure to harmful priority basis in livelihoods through the sustainable management environmental factors, (b) enhaicement Df LAC !hould be thosia of natural resources, and reducing vulnerability livelihoods through sustainable managen ent to natural disasters; (b) promote the long-term of natural resources, (c) development of that impose the sustainability of growth, particularly growth enabling frameworks for sound environ ental highest expected led by the private sector; and (c) improve the management, and (d) facili--ation of equi able quality of the regional and global commons. Its solutions to regional and g.oba challen es principles include a focus on outcomes, a so that future generations are guarantee,I at multisectoral long-term vision, cost-effectiveness, least the same opportunities as present 17 generations. These objectives are the result of light the importance of (a) the human health a constructive consultation with our clients, of poor people, (b) the effect of high levels of partners, and colleagues (see Box 4). In inequality, richness of the natural resource choosing these objectives, we elect to high- base, and frequent natural disasters on poor Box 4. Pubtic Consultation on the Strategy The Process A draft of the LCR Environment Strategy was posted The strategy was presented in Mexico City in October on the World Wide Web in early August 2000, and 2000 at the Intersessional Committee of the Forum of supplemented by an e-mail campaign to promote Environment Ministers. Soon thereafter numerous widespread dissemination. Throughout the Fall partici- development partners-including the Pan American pants could read the strategy, answer a short ques- Health Organization (PAHO), World Heatth tionnaire online, and were provided with a forum for Organization (WHO). Inter-American Development comments and questions. Three subregional consulta- Bank (IDB). Organization of American States (OAS), tions were held in fall of 2000: one for the Andean Food and Agriculture Organization Cooperative countries (in Cartagena). one for the MERCOSUR Program (FAC/CP), and United Nations Development countries (in Rio de Janeiro), and one for Mexico, Programme (UNDP)-attended a similar presentation Central America, and the Caribbean (in San Jose, and affirmed their interest in collaborating in Costa Rica). More than 200 participants provided implementation of the strategy. their comments during the consultations. A draft of the strategy posted on the internet received over Furthermore, extensive internal consultations were 2,000 hits and generated more than 100 written held with Sector Leaders and Sector Managers within comments, mostly from NGOs and the private sector. LCR. A side-by-side comparison of the subregional The dialogue was very constructive and input from all priorities, as identified by the Sector Leaders and the participants helped fine-tune the environmental regional consultations, is presented in Annex 4. priorities, criteria for decisionmaking, and lessons learned. Summary of the Evaluation Results According to participants and respondents, the World Respondents recognized the growing comparative Bank is headed in the right direction. The pubLic advantage that the Bank has gained in terms of strongly agreed with the substance and direction of global environmental management and local natural the strategy. Two-thirds of respondents "agreed" with resources management issues. Still, the responses to the general criteria laid out in the Latin America the questionnaires indicated that the Bank has some Regional Strategy, and respondents "strongly agreed" challenges in coming years. In managing issues such that the Bank should link environmental issues to as pollution, water resources, forestry, biodiversity, poverty reduction and that the institution should and sustainable land use, the institution's effectiveness emphasize health, livelihoods, and vulnerability to was considered "average" on the whole. Reasons disasters as broad development objectives of its articulated by respondents for giving for an "average" Environmental Strategy. Furthermore, the questionnaire effectiveness rating included, among others, (a) revealed that the respondents support the idea of the limited cross-sectoral coordination, (b) lack of Bank helping develop markets for global environmental institutional capacity in some of the World Bank's goods such as carbon credits or payments for client countries, and (c) a tendency to work with ecosystem services. central governmental agencies. 18 A ANF) (ARKE-AN If people's livelihoods, (c) the importance of highlights some of the trade-offs, which often cut good governance and appropriate policies across sectors, thus requiring difficult decisions and instruments to ensure sustainable about the relative priority of health, econ mic growth, and (d) the commitments of our growth, and environmental sustainability. clients to international environmental conventions (see Annex 3). In air pollution control, for example, the debate has centered on harmonization of Following a brief discussion of the trade-offs local and global benefits-which polluta ts that were considered in setting priorities and should receive priority and whether to a Pt their financing implications, the rest of this technologies that, while perhaps less effecti e in section describes in more detail substantive mitigating emissions with local environm ntal priority areas for the next five years. impacts, are more effective at curbing pollutants that contribute to global cdim te Trade- Offs in change. Part of the debate is the fact tha the Space and Time potential beneficiaries of local air polluti n abatement, especially from stationary so rces, Since the Bank's Environment Strategy are often populations living in poorer approaches poverty reduction within the neighborhoods close to industrial distric s. context of sustainable development, and prizes cost-effectiveness and selectivity, two For water and sanitation, a key question is distinct trade-offs should be considered- whether beneficiaries should be required to clearly targeted beneficiaries versus a diffuse pay for sewage treatment to avoid envir n- interest group, and short-term versus long-term mental degradation in the long term or benefits. Figure 1 illustrates these concepts with whether emphasis should be placed on project examples. The discussion that follows obtaining immediate health improveme s for Figure 1. Environmental Trade-Offs in Space and Time Geographic reach of benefits Local Regional and global Priority for cLients: 1 Pfiority for clients: 3 E Example: Water and sanitation Example: Treatment of polluted waters a Comparative advantage for Bank: Very high Comparative advantage for Bank: Low to mode te v Financing: Beneficiaries willing to pay Financing: PoLLuter pays principle should appli o Priority for clients: 4 Priority for clients: 2 = Example: Environmental education Examples: Mitigating climate change; . Comparative advantage for Bank: Biodiversity conservation r_ Low to moderate Comparative advantage for Bank: High Financing: Taxpayer resources Financing: Resources from "global' programs (internal subsidies) i (external subsidies to cover incremental co ts) STRATEGIC PRIORITIES AND e ':: 19 Box 5. Trade-Offs Between Health and Environment: A Point for Further Discussion There is often an important trade-off that has to be majority of them constructed their sewerage systems carefully evaluated when considering sanitation (often with subsidies)-introducing any kind of interventions. Providing wastewater collection and wastewater treatment for systems that discharge transportation/disposal systems in the short term sewage directly into receiving waters. Furthermore, that improve living conditions in a community by the impact of the point domestic wastewater discharge effectively cleaning up the community's "backyard" on a water system has to be compared with the and bringing its inhabitants the associated health diffuse poLlution discharges from agriculture and the benefits (and benefits to their immediate environment) point discharges from the more concentrated industrial may have a negative impact on the environment at effluents and the dilution capacity of the receiving the point of discharge. However, because of financial bodies. Such analyses are best carried out by taking constraints wastewater treatment is often introduced in the river basin as the context for comparing waste- steps over a longer timeframe (preliminary treatment, water infrastructure interventions and impacts. and followed by primary treatment, then secondary their costs and returns. treatment and, as appropriate, tertiary treatment) in accordance with the beneficiary community's Thus, over the coming decade it is likely that willingness and ability to pay the associated costs. increasing the provision of safe drinking water and sewerage coverage will be a higher priority than It should be remembered that this gradualist sewage treatment for most countries in Latin America approach to wastewater collection and treatment was and the Caribbean. In highly polluted watersheds a taken in the West following the 'sanitary revolution" comprehensive, multisectoral approach using a blend of the eighteenth and nineteenth centuries. Many of instruments (such as investment in appropriate towns and cities in Western Europe and North treatment technology, pollution charges, and water America are only now-more than a century after the rights) is likely to be more effective. poorer people through sewage collection and basis that in the long run it is significantly disposal without treatment. To promote cheaper to implement prevention or mitigation significant progress toward cost-effective measures early than to delay action. outcomes in terms of health benefits we explicitly suggest that, in the five-year time For biodiversity conservation and natural horizon of this strategy, borrowers focus their resources management projects, the debate interventions on collection and disposal of centers on whether to manage resources to sewage, and not necessarily on sewage ensure sustainable local and global community treatment (see Box 5). However, to ensure use in the long term, or to allow local that this short-term decision does not affect consumption for short-term, localized long-term resource sustainability, the Bank economic gain that typically produces will require-either as a precondition or as immediate relief to poor rural people. an integral part of a sanitation project-that a phased plan for future wastewater treatment is In most cases intermediary solutions may developed. In other areas (such as hazardous well exist, so that a balance between short- waste management), choices are made on the versus long-term environmental goals, and 20 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY I local versus diffuse interests can be reached. agenda; and global environmental goals into Equally important, depending on the structure the local environment agenda. of the project or intervention, different financing arrangements come into play. For Consistent with the general trend in rece t example, direct local beneficiaries generally years, this implies an evolution in the co cept are willing to pay for improved health and of mainstreaming from one of including living conditions from water and sewerage environment in lending operations prima rily projects in their neighborhoods, whereas in to avoid the negative impacts of projects the case of diffuse beneficiaries, it is often (the "do no harm" approach) to one of difficult to make polluters either adjust their integrating environmental sustainability is behavior (reducing their emissions) or pay for a development outcome. public clean-up programs to correct for the negative impact of their individual behavior. Ultimately, mainstreaming means that co erns In the case of long-term benefits (those flowing about sustainability should be adequatel to future generations), taxpayer money can factored into client country objectives, incl ding be used to ensure future local benefits, decisions on economic policy and sector 1 whereas resources from global programs strategies (such as rural, urban, transpo t, (such as the GEF) are usually required for and energy). The LCR Environment Str tegy cases with global beneficiaries. Moreover, therefore centers strongly on the proper global programs such as the GEF are alignment of environmental concerns wi h increasingly tapping into the synergies the objectives and goals of the Bank's o erall between local and global interests. This is a assistance to countries in the region. welcome trend because experience shows that when conservation of global assets brings direct Within this overarching approach, the benefits to local populations there might be a environmental problems to be tackled o a better chance for sustainable management. priority basis in LAC should be those th at impose the highest expected costs to so iety. Strategic Priorities Valuation problems impede a clear calc lation of these costs in the current instance, b t We propose that the major emphasis over the based on a balance of existing estimate and next five years in the LCR program be on other qualitative assessments, as well as mainstreaming-that is, further integrating consideration of the Bank's comparative pollution management into the infrastructure advantage, the next section presents act ons and productive sectors; NRM and biodiversity related to the environment under each c f the protection into the rural poverty alleviation four pillars of the strategy. We propose that agenda; environmental institution building these strategic actions would be the ref rence into the public sector reform agenda; and rationale for projects and analytica environmental costs and benefits into the work in the ILCR pipeline. While environ ental macroeconomic agenda; environmental activities that do not fit directly within hese capacity building through the tertiary education priorities could still be financed, appropriate STRATEGIC PRIORITIES AND ACTIONS 21 justification for financing would need to be (avoiding exposure on the part of the poor made on a case-by-case basis. Further, lack of who often live on or next to improvised or emphasis in a particular area does not imply poorly managed solid waste dumps). that it is not important; rather it may reflect * Financing wastewater treatment for highly our belief that it would not be in our com- polluted or sensitive water bodies (with parative advantage, vis-a-vis our partners, to impacts on the health of downstream play a major role in that area. inhabitants and the quality of water used for agricultural, recreational, or municipal Strategic Actions water supply purposes). * Financing air quality improvement in To move toward our development objectives- critical urban areas and industrial corridors improving health, enhancing livelihoods, (see Box 6 on the Clean Air Initiative), and promoting an appropriate enabling framework in areas of slash-and-burn agriculture. for sound environmental management, and * Reducing exposure to toxic substances, par- promoting equitable solutions to regional ticularly in industry, agriculture, and mining. and global challenges-we propose to work through the lines of action described below. LIVELIHOODS Livelihoods would be improved through HUMAN HEALTH (a) identification and analysis of the causes, Human health would be improved by (a) impacts, and costs of environmental degradation identifying and analyzing linkages between and natural resource depletion, (b) adoption environment and health, and (b) increasing of sustainable environmental management the efficiency, effectiveness, and sustainability practices to address environmental degradation of municipal services targeted to the poor and natural resource depletion, and (c) pro- and/or municipal services with a high degree motion of win-win activities that allow of externalities, which are likely to benefit countries to improve poor people's livelihoods the poor among others. This focus would be and reduce environmental degradation. This applied to: focus would be applied to: * Developing a better understanding of * Developing a better understanding of linkages environment-health linkages through and trade-offs between environment, analytical work and implementation of poverty, and economic growth, including health surveillance projects (see Box 3) to long-term versus short-term implications improve project design and policy dialogue, of natural resource use (see Box 2) and resulting in more strategically focused subsequently incorporating environmental projects and using outcome indicators to issues into the policy dialogue and into measure progress and impact. Country Assistance Strategies (CASs), * Improving access in the near term to safe Poverty Assessments, and Poverty water; collection and disposal of sewage Reduction Strategy Papers (PRSPs). and primary treatment in conjunction with * Promoting sustainable integrated natural a plan for future wastewater treatment; and resource management of land, freshwater, solid and hazardous waste management and marine ecosystems (e.g., forestry, 22 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Box 6. The Ctean Air Initiative in Latin American Cities The Clean Air Initiative (CAI) in Latin American Cities The activities of the Initiative, which were agree has emerged as a complement to conventional lending during a December 1998 Launching Workshop, in lude operations in urban transport and air quality manage- city action plans and workshops, clean air tool-ki ment to help raise awareness and increase capacity to and distance [earning courses, and the promotio of manage air quality problems in urban areas. The public-private partnerships for the introduction f Initiative is a partnership between the World Bank clean technologies. In 1999 the CAI supported cty- (LCSES and WBI), city governments, private and specific action pLans and workshops in Lima-Call o, public institutions, development banks and agencies, Mexico City, and Rio de Janeiro, as well as the d vel- and NGOs interested in collaborating to improve the opment of a Clean Air Initiative website. Leverag ing understanding of these problems and provide tools to consultant trust funds, private sector contributio ns, city leaders for making the difficult choices involved and in-kind contributions from technical, bilater l, in addressing air pollution and mitigating its health and multilateral agencies, the CAI has a budget or impact. The CAI is governed by a Steering Committee the 2000 calendar year of about $1 million for a work that endorses the Initiative's annual work plan, program that includes workshops and developme t of oversees its implementation, and promotes the air quality action plans in Buenos Aires and San iago, Initiative through in-kind and financial contributions, application of a health-based economic tool-kit o fundraising, and networking. The Steering Committee establish priorities, a clean technology informat on includes representatives from city govemments, pool, distance learning courses, and other produ ts. private companies, development banks and agencies, The major challenges of the CAI include ensurin that and NGOs and foundations. The World Bank acts as the institutional coordinating arrangements are n the Technical Secretariat of the Initiative and provides place in the participating cities and that the m nage- overall management, which over time will be transferred ment of the CAI can be successfully transferred o to institutions in the region. regional institutions. Box 7. Resource Use Conflicts and Community Management of Protected Areas in Bolivia The Biodiversity Conservation Project in Bolivia- government or external donor funds to finance financed by the Bank and the GEF-has helped recurrent costs. These conditions did not exist when ensure protection of some of Bolivia's most endan- the project started and it took almost three ye rs to gered ecosystems through an integrated approach obtain a favorable environment in which manag ement involving indigenous communities, NGOs, and regional agreements could be reached with four NGOs and one and central government institutions. One of the key native community. lessons learned during the project's implementation was that successful management of protected areas The project also found that the protected areas run by NGOs and local communities requires (a) that by NGOs and local indigenous groups were mor NGOs and native communities have the technical, capable of attracting external financing and we re as administrative, and financial capacity to manage successful as the government-run areas in prev nting parks, (b) the absence of socioeconomic and political extractive incursions (mining, logging). Today ve conflicts in the protected area (such as conflicts areas are being managed by NGOs: Estaci6n Bi l6gica between ethnic groups, disputes over land tenure, del Beni, Noel Kempf Mercado, Laguna Colorad , Kaa and a traditional mistrust of government programs), Iya, and Tariquia. Native community groups pr sently (c) availability of mechanisms to ensure that manage the Chaco National Park and plans are nder local communities participate in protected area way to sign management agreements with NGO for management, and (d) availability of secured the management of additional decentralized un ts. STRATEIGIC PRIORITIES AND w 'it' 23 fisheries) with a focus on highly degraded including environmental management or threatened ecosystems and disaster systems in small and medium enterprises prone areas, ensuring generation of benefits (see Box 9 on the Guadalajara Pilot). for indigenous and poor communities (see Box 7 on the Bolivia experience), preferably ENABLING ENVIRONMENT through community-based approaches, and An appropriate enabling environment for using strategic implementation tools such sound environmental management would be as property rights, appropriate technology, promoted by (a) supporting more effective and tradable development rights. policies and instruments, (b) targeted * Assisting clients to better prepare for and institution building, (c) building national respond to natural and human-induced environmental constituencies to ensure disasters and accidents (for example, by sustainability of interventions, and (d) developing early warning systems, analyzing strengthening participatory and conflict potential hazards, identifying suitable resolution mechanisms. Some of these efforts prevention and contingency planning have a longer timeframe than this strategy's techniques, preparing disaster response and five-year horizon. However, in the short term disaster mitigation plans, developing risk we would seek to increasingly mainstream these management services such as insurance into our programs. The focus would apply to: schemes, financing critical infrastructure, * Developing environmentally appropriate and using urban environmental land use macroeconomic policies and instruments, planning as a preventive tool). including growth, trade and regional * Promoting clean industrial production, integration strategies, fiscal incentives for Box 8. A Regional Approach: The Mesoamerican Biological Corridor The Mesoamerican Biological Corridor (MBC) is a more almost $200 million that are related to the overall or less continuous band of natural ecosystems MBC initiative, and the Bank serves as the extending from southeast Mexico to the northern Implementing Agency for nearly $40 million in departments of Colombia. The Atlantic coastal areas ongoing national and regional GEF grants (with of this zone include the second-largest barrier reef another $50 miLlion in the pipeline). In addition, system in the world. The MBC was recently identified just last year the Bank executed more than $6 million by the international scientific community as one of from trust funds to support regional activities for the the world's 25 critical biodiversity areas or consolidation of the MBC. including ecosystem 'hotspots.' For the last few years the World Bank has mapping, environmental management. vulnerability worked with the GEF, national governments, regional assessment, and development of a communications organizations, civil society, bilateral and multilateral strategy. The concept of the MBC has been evolving donors, and technical cooperation agencies in in the past few years from a focus on biodiversity supporting the MBC initiative as a unique, landscape conservation to a broader sustainable development ecology approach to the conservation and sustainable framework for Central America. The effects of use of biodiversity and forest resources in Central Hurricane Mitch brought across a strong recognition America, a platform for the sustainable development of the close link between natural resources of the region. The Bank is preparing and supervising management and vulnerability reduction. national and regional IBRD/IDA/IDF projects for 24 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY sound environmental management (such as of GDP and the percentage of expendit res full-cost pricing that reflects environmental on environmental management progra s externalities and reevaluating subsidies to as a percentage of public sector budget in ensure meaningful targeting), and natural key productive and infrastructure secto s). resource and expenditure accounting * Support for targeted institution buildin frameworks (for example calculating costs of (see Box 10 on the Brazil experience), environmental degradation as a percentage including promotion of: Box 9. Encouraging Better Environmental Management by Industry in M co The Bank supported a project in Guadalajara, Mexico two-month cycles of intensive training, impLement ition, that tested whether small and medium enterprises and review sessions. Within one year scores incr ased (SMEs) could successfully adopt environmental from zero points (on a scaLe of 20) to around 1 management systems (EMS). Eleven Large companies, points for environmental planning and to 11 po nts many of them multinationals, agreed to provide for EMS implementation. About 80 percent of th assistance to 22 small- and medium-scale suppliers plants reported lower pollution and nearly 50 p rcent who were interested in improving their environmental reported improved compliance and waste handli g. performance. The project, which enlisted the private Many also reported improved work environments, sector, local academic institutions, the Mexican more efficient use of materials, and better over It government, and the World Bank, entailed several economic performance. Box 10. Institution Building with a Community Focus in Brazil The Brazil Second National Environmental Project to stakeholder coalitions consisting of municip Lities, (NEP II), approved in December 1999, builds on state and/or federal government agencies, priv te some of the successful features of the first Brazil NEP. sector corporations, and NGOs. To become eligi le for One of these features is community management of such grants. states must first demonstrate fulfil ment environmental assets. Under the project, eLigibte of policy reforms representing improvements in heir states may request grant support from the Ministry of environmental management capacity, selected f om a Environment for subprojects aimed at the protection matrix of policy reforms. The higher the level o or sustainable use of an environmental asset that has fulfillment, the larger the grant that can be ma e. been determined to be a high priority in that state. Thus states have a financial incentive to impro e their environmental management capacity. Environmental assets are defined as features of the natural or built environment that provide services to NEP 11 is designed as an Adaptable Program Lo n human communities. Some examples of environmental (APL) with three phases. A scoring system mea ures assets are the airshed above a city, a body of water the aggregate level of fulfillment of policy refo ms by used for fishing or potable water, or a conservation all the states. When the aggregate score of all tates unit such as a nature preserve. Proposals for grants participating in the system is reached, the nex phase should identify (a) the asset. (b) specific actions to is triggered and new loan funding can be relea ed. be taken to improve management of the asset, States will be able to apply for more than one rant, (c) a management coalition consisting of the but only by progressing to a higher level on th relevant stakeholders concerned with that asset, and reform matrix. The Ministry of Environment wil (d) environmental quality goaLs pertaining to that asset provide technical assistance to help any state that can be monitored. Typically, grants will be made requesting it to fulfill the selected policy refor ns. STRATEGIC PRIORITIES AND ACTIONS 25 * Regulatory and enforcement frameworks, and building national environmental and decision-support systems (such as management capacity through tertiary priority-setting tools and outcome- education and vocational training. oriented monitoring systems). * Developing mechanisms for effective * Comprehensive approaches to participation, negotiation, and conflict environmental management, including resolution, including greater stakeholder watershed management and urban involvement in the EIA process (such as development/land-use planning. early involvement through provision of * Sectoral mainstreaming and gradual information, use of interest focus groups, and decentralization, with a focus on targeted public hearings), appropriate consultation assistance for highly polluting sectors or on policy and program design, and use of critically polluted cities/industrial corridors, market-based instruments, information while using a wholesale approach to disclosure schemes, and voluntary compliance small and medium enterprises or cities. schemes, etc. (in addition to traditional * Sustainable financing of environmental command-and-control approaches). initiatives through the use of fiscal instruments, appropriate pricing of natural EQUITABLE SOLUTIONS TO REGIONAL AND resources and environmental services (see GLOBAL CHALLENGES Box 11 on the Colombian Water Charge Equitable solutions to regional and global Program), and positive and negative challenges would be promoted through subsidies, thus also assisting clients to harmonization of the global and local develop a graduation strategy to move agendas, in particular with respect to: away from a high dependence on external * Promoting biodiversity conservation in funding for environment. critically threatened ecosystems, with a * Strengthening awareness and building focus on comprehensive approaches (such as environmental constituencies through primary systems of protected areas, hotspots within and secondary environmental education, a subregion, and biological corridors, as Box 11. The Colombian Water Pollution Charge Program One of the most innovative programs for controlling factories have reduced their organic discharges by pollution can be found in Colombia's Antioquia 52 percent. Colombia's recent experience reflects a region. Its goveming maxim is simpLe: all polluters- movement toward regulatory reform throughout the towns, factories, and farms-must pay for each unit developing world. Decades of attempts to control of organic pollution they discharge into the waterways. pollution through traditional regulations, which make BoLstered by community support for cleaner rivers, discharges above designated levels illegal, have often the results are impressive. Reported organic yielded disappointing results. In an effort to break discharges dropped by 18 percent during the out of this one-size-fits-all approach, many countries program's first year. The most striking change has are opting for more flexible and efficient regulation occurred along the Rio Negro, where factories have that nevertheless provides strong incentives for accounted for 40 percent of organic pollution. These polluters to change their ways. 26 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY described in Box 8), promotion of current linkages and trade-offs between environment, or near-term financially sustainable national poverty, and economic growth, (b) prom ion biodiversity strategies, and generation of of environmentally appropriate macroecon mic positive impacts on local livelihoods. and sectoral policies and instruments, *Assisting client countries to prepare for and (c) providing access to safe water, collect on respond to climate change by mitigating and disposal of sewage, and solid waste greenhouse gas (GHG) emissions, ensuring management, (d) sustainable natural reso rce and protecting the carbon sequestration management with a focus on threatened functions of forests and rangelands, ecosystems, disaster-prone areas, and promoting renewable energy and energy indigenous and poor communities, efficiency options, and facilitating LAC (e) biodiversity conservation focusing on countries' participation in international comprehensive approaches, generation o carbon markets-for example through positive impacts on local livelihoods, an preparation of national strategy studies sustainable financing, (f) targeted institu ion (NSS) on greenhouse gas offset potential, building, and (g) strengthening mechanis s preparation of Prototype Carbon Fund for effective participation, negotiation, a d (PCF) projects, etc. conflict resolution. * Phasing out ozone-depleting substances, with a focus on targeted assistance to In addition, a series of other issues are producers and wholesale assistance to relevant on a subregional basis: wastew ter small end-users. treatment of highly polluted or sensitive * Protecting and restoring international water bodies is important in Mexico an the waters. Caribbean; air quality improvements in critical urban areas, industrial corridors and Subregional Priorities areas of slash-and-burn agriculture in B azil, Mexico, and the Southern Cone; disaste Annex 4 gives greater details of strategic preparedness in Mexico, Central Ameri a, priorities on a subregional basis for Mexico, and the Caribbean; promoting clean Central America, the Caribbean, the Andean industrial production in the Andean cou itries; countries, Brazil, and the Southern Cone. The strengthening awareness and manageme nt matrix presents ratings given by LCR country capacity through environmental educati n department staff, as well as ratings assigned and vocational training in the Andean during the regional consultations of the LCR countries; and responding to climate ch nge strategy by a sample of government, NGO, in the Caribbean. and private sector representatives. As can be seen, certain objectives stand out as areas of It should be noted that the subregional high priority and in which LCR sees itself as priorities shown in Annex 4 indicate po ential having a comparative advantage: (a) developing future areas of work for the Bank, prov ided a better understanding of the linkages they are supported by the individual co intry between environment and health and the dialogues and corresponding CASs. 1 127 28 4ft~~~~~~~~~~~~~~~~~~~~~~~~- 1.0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 I]~~ ~~~~~~~ ~~~ .,,e ,, .. * s~ +~~~~~. i .J . I mplementation of this strategy would be consistent with the Bank's new Strategic at two levels: on a country basis and on Framework Paper, which supports . . a regional basis. At the country level the comprehensive diagnoses as a basis for we propose strategy provides a framework for thinking selective intervention. to take a about environmental issues. As indicated, the proactive look country program itself will depend on the On the other hand, cross-boundary regional dialogue with the government, which is work stems from four sources: (a) cross- at mainstreaming normally reflected in the Country Assistance boundary environmental problems, in environmental Strategy (CAS). Hence, input during CAS particular the global environmental issues formulation is an important strategy goal for described above, (b) regional infrastructure concerns in key the coming years. projects such as the Brazil-Bolivia pipeline, sectors and in (c) studies or sector work with a regional To prepare for such dialogue, we propose to focus or with regional applicability, such as macroeconomic take a proactive look at mainstreaming design of economic instruments, and finally policies environmental concerns in key sectors and (d) support for regional initiatives and in macroeconomic policies by carrying out bodies, such as the Mesoamerican Biological country-level environment background Corridor and the LAC Forum of papers for some countries. This approach is Environment Ministers. 29 Our proposed approaches corresponding to regional interventions and the work of these four areas are: (a) actively pursue GEF decisionmaking forums, for which there is an resources for our clients in order to tackle increasing demand but for which we do not global environmental issues, (b) handle currently have adequate instruments. regional infrastructure projects on a case-by- case basis, ensuring compliance with safe- Goals guard policies and appropriate coordination in the CASs of the countries involved, LCR's proposed near-term goals are shown in (c) focus on studies and sector work that Box 12. We see four major areas in which we have wider applicability than in just one would like to make progress over the next country and for which the need originates five years, namely, avoid negative impacts of from several CASs, and finally (d) investigate projects, mainstream environment in other suitable financing instruments to support sectors as well as generate critical mass in Box 12. Proposed Goals: What Are Our Objectives for the Next Five Years? Avoid Negative Impacts of Projects ('Safeguard Policies") * Improve screening and facilitate upstream guidance with respect to safeguards in operations * Ensure environmental due diligence in structural adjustment loans (SALs), sector adjustment loans (SECALs), intermediary lending, and investment operations as required under Bank policies for environmental assessment and adjustment lending * Emphasize thematic supervision * Increase use of strategic environmental assessments Mainstream Environment and Generate Critical Mass * Improve understanding of poverty, growth, and environment linkages * Include environment in CASs and in poverty alleviation and sectoral strategies * Develop GEF, MP, and climate change (NSS) strategies in countries/region * Emphasize a programmatic approach * Promote mainstreaming by developing cross-sectoral products (for example environment/infrastructure, environment/health) * Improve selectivity in new environmental projects Work More Effectivety with Clients and Donors * Align a case for environmental management that is convincing for finance ministers and legislators * Promote greater collaboration within the public sector and between the public sector, private sector, and civil society * Seek complementarity with respect to other donors' programs, given the Bank's comparative advantage (for example using CDF as a tool) Become Increasingly Results-Oriented * Develop and incorporate impact indicators into project design and implementation * Improve the results of operations under implementation * Be at the forefront of best practices 30 | iATIN ' MERICA AND C N ENVIRONMENF :'JEGY selected environmental operations, work vulnerability and risk and promoting better more effectively with our client and coordination of our social protection donor countries, and become increasingly operations with the region's disaster results-oriented. management work, and (e) working jointly with our partner institutions (PAHO and This strategy will have implications for each IDB) on the Shared Agenda for of LCR's sectoral departments. Annex 5 Environmental Health in the Americas. presents details of an implementation plan for each of the sectoral departments. In With respect to LCR's Finance, Private LCR's Poverty Reduction and Economic Sector, and Infrastructure Group (LCSFP Management Group (LCSPR) we propose to we propose to (a) develop typical impact focus on (a) building an economic case for indicators for the subsectoral typology o environmental management by looking at projects, (b) upstream the safeguard macroeconomic policy and environment compliance process, (c) improve supervisi n of linkages (such as pricing of natural resources, environmental components, and (d) inte sify environmental implications of regional cross-support and joint management in integration, and emerging environmental operations by actively promoting multisec oral services markets), (b) considering the teams, in particular on air quality manage ent, opportunity cost of environmental conservation private participation in infrastructure, se toral versus the direct cost of restoration of reform, climate change, competitiveness, environmental quality and human health, roads, transport infrastructure, traffic (c) upstreaming environment in the dialogue management, urban development, slum by incorporating environment in CASs, upgrading, and water and sanitation pro ects. poverty assessments, public expenditure reviews, and other nonlending activities, In terms of the Environmentally and Socially (d) mainstreaming environment into structural Sustainable Development Group (LCSE ) we adjustment, PRSPs, and public sector reform propose to (a) improve selectivity with r spect operations, and (e) improving economic to new environmental operations thereb analysis in environmental projects. generating critical mass in interventions, and focus mainly on integrated natural resoL rces In the case of LCR's Human Development management, air quality improvements, Group (LCSHD) we propose to focus on management of toxic wastes, clean indu trial (a) developing linked health and environment production, natural disaster preparedne s, indicators and appropriate monitoring and and targeted environmental institutiona evaluation systems, (b) better understanding strengthening, and (b) increase both oper ional the causes of environmental diseases through support by LCSES to other sectoral gro ps our health surveillance operations, (c) working and the use of those groups' sectoral st ff in closely to build environmental awareness and LCSES operational teams, thus helping o management capacity through our education mainstream environment in all sectors, operations, (d) improving assessment of including rural, infrastructure, and edu ation. IMPLIEMENTATION 0F STi 31 We also propose to enhance the effectiveness environment linkages as well as on economic of the Quality Assurance Team (QAT) by instruments. And with the World Bank emphasizing a collaborative, problem- Institute we intend to collaborate on the solving approach in the safeguard review Clean Air Initiative, support to the process. This implies (a) upstreaming the International Network for Environmental dialogue on safeguards to early stages of Compliance and Enforcement (INECE), project preparation and to sectoral targeted training programs, distance learning, discussions, issuing technical guidelines, and regional seminars. and disseminating best practices to sectoral project proponents and client countries, Operational Implications (b) increasing the use of strategic environmental assessments, (c) putting greater emphasis on The above implementation plan involves compliance during implementation (for increased cross-support, that is, increased use example, through thematic supervision and of multisectoral teams and joint products. A periodic reviews for specific safeguard move in this direction is the LCSES-LCSFP policies), and (d) carrying out due diligence jointly appointed disaster management in adjustment and financial intermediary specialist, LCSES-LCSFP joint management lending (such as SALs, SECALs, and IFIs) of the water resources group, and the in addition to standard investment assignment of an energy-environment liaison. operations as required under Bank policies Other mechanisms for closer collaboration for environmental assessment. that increasingly are being used are joint task management, task managers appointed from Finally, with respect to LCR's Operational different sector management units (SMUs), Support Unit (LCOSU), we propose joint and joint appointments by SMUs. To facilitate work with LCSES and other sectoral coordination across sector management units management units to develop a monitoring for the purposes of implementation of this program for this environment strategy, as strategy, a contact person would be appointed well as to develop and ensure the use of by each sectoral cluster (for example health, appropriate output and impact indicators in education, transport). Monitoring of project preparation and implementation. implementation would be carried out jointly by LCSES and LCOSU. LCR also proposes to work together with colleagues in different parts of the World Staffing Implications Bank Group, based on their respective areas of expertise. We intend to work with the Given the importance of making a better eco- Environment Department on thematic input nomic case for environmental management, on our dialogue, nonlending services, and the number of environmental and natural operations. We propose collaborating with resource economists in LCSES clearly needs the Development Economics Group (DEC) to be expanded through strategic staffing. In on the work concerning growth-poverty- addition, more effective mainstreaming of 32 -A .. . 3iR ON F N T ST: :: environmental issues in LCR will require based budgets, LCR will need to play an additional environmental engineers and possibly active role to ensure that adequate funding is also ecologists to provide cross-support to available (from a variety of sources) to fund, operations led by other sector units, as well in particular, cross-boundary or regional as environmental health specialists. This also tasks (like the Mesoamerican Biological suggests that cross-sectoral skills in future Corridor Program, the Clean Air Initiativ hires should be emphasized and should be or the proposed Pan-Amazonian Initiativ agreed with other departments. Lastly, joint and unique LCSES mandates (like the Q ). appointments, especially for positions in the Further, resources will also need to be assi ned field, may become more frequent. for strategic work, such as thematic strate ies, comments on Country Assistance Strateg s, Funding policy notes for new administrations, sup ort to regional forums, etc. Given the current constrained budget situation, we have designed an implementation plan W or-kig ttviih Par tner-s that entails preparation of annual action plans that are compatible both with emerging In implementing the strategy we will con inue demands from our clients and with the to collaborate with our external partners resources available to the LCR Vice including the [DB, UNDP, FAO/CP, UNE Presidency. Ensuring cross-support between OAS, ECLAC, and the bilateral agencies to sector units will be critical to improving ensure complementarity between our mu ual mainstreaming of environmental concerns in work programs and a flow of informatio the region's activities. In addition to CMU- between parties. Two examples of excell nt Box 13. Working with Partners RUTA-Regional Unit for Technical Assistance The technical assistance project for agriculture and ruraL development in Central America, RUTA, has the foll wing members: UNDP, IDB, IBRD, International Fund for Agricultural Development, Inter-American Institute for Cooperation on Agriculture, FAO, and the governments of the United Kingdom, Japan, and Sweden. The prc ect's development objective is to contribute to the relief of poverty in Central America by increasing the contrit ution of the rural production sector to generate a greater share of jobs and incomes and to offer a stable food supply, access to foodstuffs, and foreign exchange earnings, while at the same time improving the sustai able use of natural resources. Pilot Program to Conserve the Brazilian Rain Forest The Pilot Program is a joint undertaking of the Brazilian government, Brazirs civil society, and the interna ional community that seeks ways to conserve the tropical rain forests of the Amazon and Brazil's Atlantic coas . The i project aims to (a) demonstrate that sustainable economic development and conservation of the environ nent can be pursued simultaneously in tropical rain forests, (b) preserve the biodiversity of the rain forests, (c) reduce deforestation to help control global warming, and (d) set an example of international cooperation betwe n industrial and developing countries on global environmental problems. 33 Box 14. The LAC Environment Ministers Forum Established in 1982 as a mechanism to exchange information and promote regional collaboration, the Forum of Environmental Ministers is now the region's principal political intergovernmental body on environmental matters. The Forum has established four priority areas for regional cooperation, namely (a) institutional frameworks, policies, and instruments for environmental management, (b) integrated watershed management, (c) biological diversity and protected areas, and (d) climate change. The Forum is supported by an Interagency Technical Committee, consisting of UNEP, UNDP, IDB, ECLAC, and the World Bank. collaboration with our partners, namely the to dominate, energy issues-particularly con- Regional Unit for Technical Assistance servation, rural electrification, and off-grid (RUTA) and the Pilot Program to Conserve renewable energy technologies-are now the Brazilian Rain Forest, are described in receiving greater attention as a means to reduce Box 13. The CDF, of course, will be an GHG emissions and associated climate change essential tool to ensure this complementarity risks as well as to promote poverty alleviation. at the country level. In selecting our programs International waters and desertification are we will take into consideration the comparative also themes that are likely to receive greater advantage of our partners with respect to attention in coming years. The Montreal such parameters as presence in the field, Protocol program is completing a cycle of length of intervention, etc. In particular, we phasing out ozone-depleting substances (ODS) propose to focus on meeting the commitments in major sectors and will be focusing in the of the Interagency Technical Committee of coming years on wholesale approaches to ODS the Forum of Environment Ministers with phaseout in remaining small end-users as well UNEP, IDB, and ECLAC (see Box 14); the as on phaseout of ODS production in LAC. Shared Agenda for Environmental Health in the Americas with IDB and PAHO; Mainstreaming of global issues and GEF and environment-health indicators with PAHO; MP operations is occurring in LCR through a capacity building, training, and seminars with number of mechanisms, including (a) integrating the IDB; transboundary issues, especially national global commitments in CAS prepa- water, biodiversity, disaster management, and ration and updates, (b) piloting the development environmental law with the OAS; and land of strategic frameworks for a country, subre- degradation, desertification, and disaster gion, or sector, (c) promoting more "blend" management with FAO. IBRD/GEF operations rather than stand-alone GEF operations, and (d) increased contact with The main thrust of our special partnership with a broad range of task teams in different sectoral the GEF in coming years is to help our clients units (rural development, environment, social, integrate global environmental concerns into energy, urban, transport, etc.), as a result of the their national development strategies. As decentralization of the Regional GEF Coordinator mentioned earlier, the focus of GEF attention since March 1998, resulting in increased identi- in LAC has traditionally been on biodiversity fication of synergies between Bank-supported conservation. Although this focal area continues development programs and GEF goals. 34 LATIN AMERICA AND CARIBBEAN REGI0NAL . : - - r .T .; We also expect the private sector to play an Management Team, (b) working out the essential role in this Bank strategy as (a) stake- implications of this strategy for individual holders in Bank project work, for example in unit business plans and work programs, projects with private provision of infrastructure, including gradual shifts in the assistance (b) as beneficiaries in Bank Competitiveness strategy, budgets, strategic staffing, and projects, and (c) through Bank NLS-type partnerships (see below), (c) establishing t ie initiatives such as the Guadalajara right incentive structure to support Environmental Management Pilot (though to implementation of the strategy, especially a lesser extent as we continue to mainstream mainstreaming (for example joint product the results of this activity into World Bank and increased cross-support), (d) ensuring Competitiveness projects). In addition, the compatibility with other sector strategies, private sector is also a direct beneficiary of including Fuel for Thought, forestry, wat IFC's technical assistance, loans, and equity rural, and urban transport strategies, participation. We believe that the private (e) incorporating this program into CASs, sector's role in promoting responsible and (f) developing instruments and fundi g environmental management is especially mechanisms for regional initiatives and important, in particular their involvement in nonlending services, such as support to t e compliance with regulations, voluntary schemes Mesoamerican Biological Corridor Progr m, such as public disclosure and EMS implemen- Pan-Amazonian Initiative, Clean Air tation, and use of economic instruments for Initiative, Disaster Warning Systems, and the cost-effective pollution management. Regional NGO and Ministerial Dialogue. We will continue to work with NGOs on a Next Steps number of fronts: (a) as key participants in consultations during preparation and imple- By June 2001, LCR's country and sector mentation of projects, (b) as implementing management units will prepare a detailed agents in IBRD, IDA, and GEF projects, and implementation schedule of key activities, (c) in broad-based policy and strategic dialogue. together with a monitoring and evaluatio We specifically propose to support client plan. During this period we also intend t countries in strengthening mechanisms for negotiate partnerships, develop terms of effective public participation, negotiation, and Ireference for our fiscal 2002 activities, conflict resolution in decisionmaking with and secure funding (including Bank budge t respect to environmental policy and projects. and other resources) and staffing for fisc 1 2002 and beyond. Implementation progr ss Challenges and Risks of of this strategy will be monitored on a y rly Implementation basis over the next five years, as with ot r sectoral strategies. The challenges of implementing this first LCR Environment Strategy include (a) agreeing on realistic goals and targets with the regional IMP I0N OF THE STRATEGY 35 36 1, .. l 1.*w_!. v1 'Ws;-SsWiv-5 - vt - - . - ;N.-EI. Anne~es>.. F t t (! ,,,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~, 1. Key Environmental' Probems in Latin America aind the Caribbean 2. Current Portfolio of Environmental Projects in LCR (as of June 30, 2000) 3. Major Environmental Conventions to which LAC Countries are Signatories 4. Subregional Priorities Identified by World Bank Staff and ConsuLtative Working Groups 5. Implementation Matrix: Instruments, Responsibilities, and Tentative Timetable 37 <:2 AiiiAex 1. Key Environmental Probtems in Latin America and the Caribbean Marine and Region/country Land Forestry Biodiversity coastal environments Mexico * Desertification * Deforestation (due to expansion * Changes in key areas used by * Endangered ecosystems (mangroves) * Erosion of agriculture, forest fires) migratory birds * Contamination of coastal water (toxic and * Habitat change and degradation dangerous substances) * Endangered species * Impact of tourism Central * SoiL Erosion (poor agriculturaL * Deforestation (due to * Habitat changes (Chaco) * Sedimentation (from erosion of inland areas- 'Z America practices) overexploitation of resources) Costa Rica and Panama) * OverexpLoitation of resources * Contamination of coastaL water (high >' * Land tenure probLems (unequaL concentration of popuLation and activities- land distribution) Guyana, Honduras) co * CLimate variations and adverse * Contamination of coastaL waters (toxic and meteorologicaL conditions dangerous substances, mainLy oiL) z Caribbean * Land management, poor zoning, * Deforestation (due to expansion * EnvironmentaL vulnerabiLity rein- * Sedimentation (from erosion of inLand areas) and land degradation, particuLarLy of agricuLture and high demand forced by ecosystem fragmentation * Diversity of activities reLated to coastal and in connection with beach erosion for firewood and construction (due to fast topographic changes); marine resources, including fishing, arts and > and watershed degradation materials) high concentration of popuLation crafts, and tourism r- and activities; high frequency of * Overexploitation of marine resources rnl z natural disasters * Intense tourism activity leading to high - pressures on coastaL areas *Contamination of coastal waters (sewage z discharges without treatment, waste dumping) m * Endangered ecosystems (coraL reefs) z Andean * Desertification (Peru) * Deforestation (BoLivia, Ecuador, * Significant number of endangered * Important fish industry (Peru) >, countries Venezuela) species (birds in Peru and * Fast transformation in coastal zones due to rri CoLombia) increase in port activities (Ecuador) * Contamination of coastaL waters (toxic and dangerous substances, mainLy oil-CoLombia, Venezuela) Brazil * Access to land * Deforestation, both cLearcutting * Habitat loss * Tourism and second residence development * Land degradation, resuLting in soiL and seLective removal of vaLuabLe * Habitat fragmentation causing land degradation, coastal water erosion, guLLying, and siLtation of species * Endangered species of pLants and poLLution, etc. rivers * Fire damage animaLs (Land and aquatic) * Contamination of coastal waters, especially * Contamination by agrochemicals * Loss and fragmentation of major * Low percentage of area under pro- urban beaches (fertilizers and pesticides) biomes tection and poor management of * Destruction and conversion of sanctuaries, existing protected areas especiaLLy estuaries and mangroves i Overfishing Southern Cone * Desertification (Argentina- * Deforestation (Paraguay) * RuraL poverty and probLems with * OverexpLoitation of commerciaL fisheries Patagonia) fauna and fLora conservation (ChiLe, Argentina, Uruguay) * Contamination by agrochemicaLs (Chile) * Fast transformation in coastaL zones due to (fertilizers and pesticides) * Significant number of endangered increase in port activities (Argentina, Uruguay) species (mammaLs) * DisLocation of fishing industry Sources: GEO America Latina y el Caribe 2000 - Perspectivas de/ Medio Ambiente, UNEP; World Resources 1998-99, World Resources Institute; World Bank Staff. Annex 1. Key Environmental Problems in Latin America and the Caribbean continued Air Water Urban areas Natural disasters Mexico * Significant production of * Arid areas in the northern and centraL * SprawLing slum settlements in major cities * High occurrence of naturaL disasters CFCs parts of the country * Poorer segments of the popuLation with inadequate (hurricanes, fLoods, earthquakes, droughts, , High level of air pollution * Contamination of surface and groundwater sheLter/housing coupLed with lack of access to safe erosion, LandsLides, mudfLows, voLcanic due to urban transport and (due to disposaL of crude industriaL and water and sanitation activity) industrial activities (Mexico urban effLuents) * Fast urban growth without urban pLanning City) * High costs for water provision * Inadequate soLid waste disposaL and sewage treatment * High demand for water for irrigation faciLities * OverexpLoitation of aquifers * Poor hazardous waste management * Pricing/subsidies issues Central * Rivers highLy contaminated by wastewater * Sprawling slum settLements in major cities (EL * High occurrence of naturaL disasters America from urban, industrial, and agricuLturaL SaLvador, Honduras, Nicaragua) (hurricanes, floods, erosion, Landslides, activities (EL SaLvador and Costa Rica) * Poorer segments of the popuLation with inadequate mudflows) * Lack of wastewater coLLection systems sheLter/housing coupLed with Lack of access to safe * Absence of pLanning, prevention, and and treatment faciLities water and sanitation mitigation measures for vuLnerabLe areas * Contamination of surface water * Fast urban growth without urban pLanning o Inadequate solid waste disposaL and sewage treatment faciLities Caribbean * High costs of desalinization * Sprawling sLum settLements (Haiti, Dominican * Tectonic events (earthquakes and volcanoes) * Lack of wastewater collection systems RepubLic, Jamaica) * Frequent meteoroLogicaL events (hurricanes, and treatment faciLities * Inadequate solid waste disposal and sewage fLoods) treatment faciLities * Absence of planning, prevention, and * Fast urban growth without urban pLanning mitigation measures for vulnerabLe areas Andean * Significant production of * Arid areas in Peru and BoLivia * SprawLing slum settLements in major cities (Bolivia, * High occurrence of naturaL disasters countries CFCs (Venezuela) * Contamination of watersheds (Peru) CoLombia, Ecuador) (erosion, mudfLows) * High leveL of air poLLution Leading to increases in treatment costs * Poorer segments of the popuLation with inadequate * Occupation of environmentally sensitive due to urban transport and * Lack of wastewater coLLection systems sheLter/housing coupLed with Lack of access to safe areas (riversides, hiLLsides) more LikeLy to be industriaL activities (Bogota) and treatment faciLities water and sanitation affected in the event of naturaL disasters * Fast urban growth without urban pLanning (VenezueLa) * Inadequate soLid waste disposaL and sewage * MeteoroLogicaL events (rain-Venezuela) treatment faciLities (BoLivia, Ecuador, Peru) * Absence of planning, prevention, and * Poor hazardous waste management (VenezueLa, CoLombia) mitigation measures for vuLnerabLe areas Brazil * Poor air quality in Large cities, * Inadequate management of water sources * Poorer people with inadequate shelter coupLed with * Occupation of sensitive areas (fLoodpLains, especiaLLy in Rio and Sao Paulo especiaLLy in water scarce areas such as poor sanitary conditions (water, sewerage, soLid waste) hiLLsides) exposing people to risk of naturaL and many other Locations due the Northeast * Rapid urban growth and urban sprawl without disasters to poLLution from industriaL * Inadequate access to safe drinking adequate pLanning * Lack of watershed management Leading to and transport sources, and water, * Transport systems skewed to use of private automobiles erosion, siltation, and flooding in other Locations due to particuLarLy by the urban poor resuLting in increased air poLLution, noise pollution, * Inadequate management of hazardous industriaL emissions and * Contamination and degradation of water and traffic congestion substances, for exampLe petroleum agricuLturaL burning bodies especiaLLy around highLy * Inadequate soLid and hazardous waste disposaL and * Increased vulnerabiLity to forest fires due to * Poor indoor air quality, deveLoped areas sewage treatment faciLities poor fire management and cLimate change particuLarLy from burning of * Expansion of settlements, especiaLLy squatments, into fueLs in domestic kitchens unsuitabLe high-risk locations such as hiLLsides and * GHG emissions floodplains Southern * High LeveL of urban air * Pollution of groundwater in urban areas * SprawLing slum settLements in major cities (Paraguay, * High damage caused by frequent fLoods Cone pollution due to urban * Low efficiency of irrigation Leading to Buenos Aires) (flash fLoods) in urban and ruraL areas due to :1> transport and industriaL saLinization and soiL Loss * Poorer segments of the popuLation with inadequate inadequate drainage, zoning, and response z activity (Santiago, C6rdoba) * Contamination of aquifers (Argentina) sheLter/housing coupled with Lack of access to safe pLanning m * Significant production of * Intensive poLLution in river and water bodies water and sanitation * High occurrence of naturaL disasters rnx CFCs in urban and peri-urban areas (Argentina) * Fast urban growth without urban pLanning (erosion, LandsLides, mudfLows in foothiLLs- LAl * Contamination of surface water due to crude urban and industriaL effLuent r 3 disposaL (Argentina) Sources: GEO America Latina y el Caribe 2000 - Perspectivas del Medio Ambiente, UNEP: World Resources 1998-99, World Resources Institute; World Bank Staff. Annex 2. Current Portfolio of Environmental Projects in LCR (as of June 30, 2000) Loan/grant amount Country Fiscal year Project title (in US$ millions) Biodiversity Argentina 1998 Biodiversity Conservation Project 10.1 BeLize 1999 Northern MBC Consolidation 0.8 Bolivia 1993 Biodiversity I 4.5 BraziL 1996 Biodiversity Fund 20.0 Brazil 1996 NationaL Biodiversity 10.0 Colombia 1999 Sustainable Use of Biodiversity-Serrania deL Baudo 0.7 CoLombia 2000 San Andres Archipelago 0.7 Colombia 2000 Sierra Nevada SustainabLe DeveLopment 5.0 Colombia 2001 Mataven Forest 0.9 Costa Rica 1998 Biodiversity Resource Development 7.0 Ecuador 1994 Biodiversity Protection 7.2 Ecuador 1999 Monitoring the Galapagos IsLands 0.9 Ecuador 1999 WetLands Priorities for Conservation Action 0.8 Ecuador 2000 Choco-Andean Corridor 1.0 EL SaLvador 1998 Biodiversity Coffee 0.7 Haiti 1997 Forest and Parks Protection 21.5 Honduras 1998 Biodiversity in Priority Areas 7.0 Mexico 1999 Biodiversity Conservation-EL Triunfo Biosphere Reserve 0.7 Nicaragua 1997 AtLantic BioLogical Corridor 7.1 Panama 1998 Panama Mesoamerican BioLogicaL Corridor (PAMBC) 8.4 Peru 1995 National Parks-GEF 5.0 Peru 2000 Community Management-Northwest Biosphere Reserve 0.7 Peru 2000 Conservation in ViLcabamba 0.7 VenezueLa 2000 Conservation Los LLanos 0.9 Disaster management Brazil 1999 Emergency Fire Prevention 15.0 Caribbean 1997 Planning for Adaptation to Global Climate Change 6.3 Ecuador 1998 EL Nino 60.0 Honduras 2000 Emergency Disaster Management 10.8 Institution building Brazil 2000 NationaL Environment 2 15.0 CoLombia 1996 Urban Environment 20.0 Dominican RepubLic 1998 Environmental PoLicy 3.0 Ecuador 1996 EnvironmentaL Management 15.0 Honduras 1995 Environmental DeveLopment 10.8 Trinidad and Tobago 1995 EnvironmentaL Management 6.2 Venezuela 1998 Environmental Management 28.0 Natural resources management Argentina 1996 Forestry Development 16.0 Argentina 1997 Native Forests and Protected Areas 19.5 BraziL 1992 Mato Grosso Natural Resources 205.0 BraziL 1992 Rondonia Natural Resources 167.0 40 LATIN i. t;: A AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY Annizex 2. Current Portfolio of Environmental Projects in LCR (as of June 30, 2000) continued Loan/grant amount Country Fiscal year Project title (in US$ millions) Natural resources management continued Brazil 1998 Land Management 3 (Sao Paulo) 55.0 Chile 1996 Secano Agricultural Development 15.0 Colombia 1994 Natural Resources Management 39.0 Colombia 1998 Peasant Enterprise 5.0 El Salvador 1996 Land Administration 50.0 Guatemala 1999 Land Administration 31.0 Guatemala 1999 Land Fund 23.0 Honduras 1997 Rural Land Management 34.0 Mexico 1997 Community Forestry 15.0 Mexico 1998 Rural Development in Marginal Areas 47.0 Mexico 1999 Oaxaca Sustainable Hillside Management 0.7 Mexico 2000 Rural Development in Marginal Areas II 55.0 Nicaragua 1994 Agricultural Technology and Land Management 44.0 Nicaragua 1997 Rural Municipalities (PROTIERRA) 30.0 Nicaragua 1999 Private Forestry 9.0 Nicaragua 2000 Agricultural Technology and Rural Education 23.6 Panama 1997 Rural Poverty and Natural Resources 22.5 Panama 1999 San Lorenzo 0.7 Paraguay 1994 Natural Resources Management I 50.0 Peru 1997 Sierra Natural Resources 51.0 Peru 2000 Research and Extension 9.6 Uruguay 1994 Irrigation and Natural Resources Management 41.0 Venezuela 1995 Inparques 55.0 Pollution management Argentina 1997 Reduction of Ozone 25.0 Argentina 1998 Pollution Management 18.0 Bolivia 1996 Environment, Industry, and Mining 11.0 Brazil 1994 ODS Phaseout Program 8.5 Chile 1993 Montreal Protocol 1.2 Chile 1997 Montreal Protocol Phase II 1.2 Mexico 1994 Northern Border Environment I 67.1 OECS 1995 Ship Waste Management 12.5 OECS 1995 Solid Waste Management 11.5 Uruguay 1995 Reduction of Ozone 5.0 Uruguay 2000 Landfill Methane (MSP) 1.0 Water resources Brazil 1990 Northeast Irrigation I 210.0 Brazil 1997 Ceara Water Pilot 9.6 Brazil 1998 Bahia Water Resources 51.0 Brazil 1998 Federal Water Management 198.0 Domican Republic 1995 Irrigated Land and Watershed Management 28.0 Ecuador 1991 Guayas Flood Control 59.0 Ecuador 1994 Irrigation Technical Assistance 20.0 Mexico 1996 Water Resources Management 186.5 41 4-1- Aiiiiex 3. Major Environmental Conventions to which LAC Countries are Signatories Topic Convention Goal Signatories Hazardous materials Transboundary movements BaseL Convention The objective of the convention is to provide for a Antigua and Barbuda, Argentina, Bahamas, Barbados, Z and disposal comprehensive regime for liability as well as adequate BeLize, BoLivia, Brazil, ChiLe, CoLombia, Costa Rica, > and prompt compensation for damage resuLting from the Dominica, Dominican Republic, Ecuador, El Salvador, 3n :transboundary movement of hazardous wastes and other Guatemala, Guyana, Honduras, Mexico, Nicaragua, wastes, incLuding incidents occurring because of ilLegaL Panama, Paraguay, Peru, St. Kitts and Nevis, St. Lucia, traffic in those wastes. St. Vincent and the Grenadines, Trinidad and Tobago, > Uruguay, Venezuela Z Biodiversity a ° Conservation Convention on BioLogical Diversity The objectives of the convention are conservation of Antigua and Barbuda, Argentina, Bahamas, Barbados, D \ ; biologicaL diversity, sustainabLe use of its components, e BeLize, Bolivia, Brazil, Chile, CoLombia, Costa Rica, Cuba, and fair and equitable sharing of the benefits arising from Dominica, Dominican RepubLic, Ecuador, EL Salvador, wnOD the utilization of genetic resources; and reducing any Grenada, GuatemaLa, Guyana, Haiti, Honduras, Jamaica, > , potentiaL risks resuLting from the transboundary movement Mexico, Nicaragua, Panama, Paraguay, Peru, St. Kitts and z of living modified organisms (LMOs). Nevis, St. Lucia, St. Vincent and the Grenadines, :M , SuSrname, Trinidad and Tobago, Uruguay, VenezueLa o Conservation Convention on InternationaL Trade Limiting internationaL trade of endangered species of wiLd Antigua and Barbuda, Argentina, Bahamas, Barbados, D in Endangered Species of Wild Fauna flora and fauna. BeLize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, and Flora (CITES) Dominica, Dominican RepubLic, Ecuador, El Salvador, m t Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, z c , H = High-areas in which significant progress is expected within the five-year time frame, where conditions are favorable, and the Bank should strive to be involved and has a comparative advantage. z M = Moderate-areas which are of lesser importance within this time frame, or where progress is expected to be modest in the five-year time frame or where other IFIs are likely to be as effective as the Bank. Z L = Low-areas which are not very relevant for the subregion or where the Bank does not have a comparative advantage. m * x n.r. = not rated by working group during regional consultations. *= The ntral America Group rafed this as "high priority and thought that the World Bank has "medium" to "high" comparative advantage in this area. However, the group noted that the issue was not -PI Aniniex 4. Subregional Priorities Identified by World Bank Staff and Consultative Working Groups continued Andean countries Brazil Caribbean Central America Mexico Southern Cone r World Bank World Bank Development objectives/ (Colombia, (BoLivia, Working Working World Working World Working World Working World Working World Working desired outcomes Venezuela) Ecuador, Peru) Group 1 Group 2 Bank Group Bank Group Bank Group Bank Group Bank Group ,rf, Promoting an appropriate enabling environment through: * Promotion of environmentally H H L M/H L L H H L L* H H M H appropriate macroeconomic and sectoral policies and instruments * Targeted institution building H H L H M M M H H L* H H H H Strengthening of awareness and H H H M M M L H L L* M L L H management capacity r>, * Strengthening mechanisms for M M H H H L H n.r. H H M n.r. H H .z effective participation, negotiation, and conflict resolution S Promoting equitable solutions to :> regional and global environmental challenges and harmonizing global and z local agendas through: * Assisting countries to prepare for and M M L/M M L M H H L n.r. M M M M C) respond to climate change Z * Biodiversity conservation focusing on M M L H H M H H H M* H H H H comprehensive approaches, generation of positive impacts on local livelihoods, 'V) and sustainable financing *Phasing out CFCs M M L L L L L L L n.r. L L M M * Protecting and restoring international L L n.r. n.r. M n.r. H n.r. L n.r. M n.r. H n.r. C) ~~waters Note:The priorities shown in this matrix were identified by staff from the World Bank's Country Management Units and by working groups composed of government, NGO, and private sector representatives. (see Box 5). The priorities indicate potential future areas of work for the Bank, provided they are supported by the individual country dialogues and corresponding CASs. H = High-areas in which significant progress is expected within the five-year time frame, where conditions are favorable, and the Bank should strive to be involved and has a comparative advantage. M = Moderate-areas which are of lesser importance within this time frame, or where progress is expected to be modest in the five-year time frame or where other IFIs are likely to be as effective as the Bank. L = Low-areas which are not very relevant for the subregion or where the Bank does not have a comparative advantage. n.r = not rated by working group during regional consultations. = The Central America Group rated this as "high" priority and thought that the World Bank has "medium" to "high" comparative advantage in this area. However, the group noted that the issue was not likely to be taken up or that significant progress would be unlikely because of insufficient awareness or weak institutional capacity, or because of insufficient cross-sectoral coordination in the World Bank. Anniex 5. Implementation Matrix: Instruments, Responsibilities, and Tentative Timetable A. Improving Health Development objectivesl Units Funding desired outcomes, Instrument2 involved3 Fiscal 20024 Fiscal 2003-06 sources5 Partnerships Better understanding of NLS LCSHD * Guatemala Indoor * Analytical and advisory activities (AAA) on BB PAHO, IDB on the environment-health linkages TA LCSES Air Pollution Study linkages between health and land, air, and water CTF Shared Agenda LCSFP pollution; development of environment-health ESMAP indicators in context of project preparation DGF * Collaboration on the Shared Agenda for Environmental Health in the Americas * AAA on lessons learned from health surveillance projects, focusing on policy implications, impact indicators, and improved design criteria Access to safe water; Lending LCSFP * Peru National Rural Water Supply * Ten urban projects or project components (for BB Cities Alliance on urban collection and disposal of LCSES (tentative) example, in urban upgrading and municipal CTF upgrading sewage; solid waste LCSHD * Colombia Water Sector Reform development) management * Dominican Republic Solid Waste UL * Ten rural projects or project components (such * Brazil Comunidade Solidaria as rural community-driven development and * Brazil Recife Urban Upgrading infrastructure projects) * Brazil Rural Poverty Alleviation (3) * Four social funds projects * Mexico Rural Municipal Development * El Salvador Local Development * Guatemala Social Infrastructure Wastewater treatment for Lending LCSFP * Colombia Water Sector Reform * Four Projects or project components with a focus BB highly polluted or sensitive LCSES on pollution control in critical water bodies CTF water bodies - Air quality improvement in NLS LCSES * Brazil Fortaleza Transport * Two air quality projects or components in BB WBI and various donors on critical urban areas, TA WBI * Brazil Sao PaoLo Metro IV urban transport projects CTF Clean Air Initiative industrial corridors, and Lending LCSFP * Mexico City Air QuaLity * Clean Air Initiative (cont.) ESMAP areas of agricultural burn-off Management TA private sector Reduction in exposure to Lending LCSFP * Argentina Mining BB toxic substances in industry, LCSES Decontamination CTF agriculture, and mining z z m 14 4-11 Annex 5. Implementation Matrix: Instruments, Responsibilities, and Tentative Timetable continued 00 B. Improving Livelihoods Development objectives/ Units Funding ::j desired outcomes' Instrument2 involved3 Fiscal 20024 Fiscal 2003-06 sources5 Partnerships z :> Better understanding of NLS LCSPR * Regional Flagship Project on * AAA on poverty-environment linkages BB DEC and ENV 3 environment-poverty- TA LCSES Trade * AAA on macroeconomic policy-environment CTF economic growth linkages * Mexico study of linkages, including export-led growth, persistent DGF >> and trade-offs poverty-environment linkages reliance on natural resource base, emerging > environmental services markets (e.g. carbon z offsets), greening of industry, interregional integration wu Sustainable integrated Lending LCSES * Brazil Rural Poverty Alleviation (3) * Ten projects or project components with a BB FAO on land degradation, co natural resources manage- * Guatemala Western Altiplano focus on highly degraded or threatened CTF desertification, disaster :> ment (land, freshwater, and * Panama Canal Watershed ecosystems, disaster-prone areas, and GEF management z marine ecosystems) * Ecuador Rural Poverty indigenous and poor communities BNPP OAS on transboundary rn * Nicaragua Land Administration * Mesoamerican Biological Corridor Program issues (especially water * Mesoamerican Biological Corridor (cont.) and biodiversity) z Program (cont.) mn Assisting clients to prepare TA LCSES * Review of El Ninio Disaster * Four projects with a focus on disaster BB UNDP < for and respond to natural Lending LCSFP Management Projects preparedness, flood control, and landslide CTF UNEP especially on and human-induced disasters NLS * OECS APL IV for Contingency mitigation prevention/control of o Lending * Technical assistance on risk assessment and forest fires and natural z * Nicaragua Disaster Management early warning systems disaster warning systems z * Strategy on Disaster LAC Forum of Ministers 4 Management for LAC OAS on transboundary -l issues rn> Promoting clean industrial NLS LCSES * Honduras Competitiveness * Two projects on competitiveness/export BB < production, including TA LCSFP promotion/SMEs that incorporate clean CTF environmental management production, environmental management private sector systems in small and systems, occupational health and safety, etc. medium enterprises * AAA on environmental constraints to competitiveness Annex 5. Implementation Matrix: Instruments, Responsibitities, and Tentative Timetable continued C. Promoting an Appropriate Enabling Environment Development objectives/ Units Funding desired outcomes' Instrument2 involved3 Fiscal 20024 Fiscal 2003-06 sources5 Partnerships Promotion of environmentally NLS LCSPR * CoLombia Water Sector Reform * Four water/urban transport/energy sector BB DEC and ENV appropriate macroeconomic TA LCSFP * Participation in Technical reform projects with a focus on regulatory CTF ECLAC and UNEP to and sectoraL policies and LCSES Secretariat of the LAC Forum of frameworks, pricing poLicies, environmentaL DGF support the RegionaL instruments Environment Ministers impact assessment (EIA) capacity, monitoring Action Plan of the LAC and evaLuation, environmental cost/expenditure Forum of Environment accounting Ministers * AAA on vaLuation: green accounting for top priority issues * PiLot/AAA on environmentaL expenditure accounting for key infrastructure/productive sectors * IncLude environment in I PER * Meeting of LAC Environment and Finance Ministers * Support to UNCED +20 * Participation in TechnicaL Secretariat of the LAC Forum of Environment Ministers Targeted institution building, NLS LCSES * BraziL EnvironmentaL PLan * AAA to assess Lessons of LCR projects BB IDB with joint training, including: reguLatory and TA LCSFP (within BraziL NEP II) * Four water/urban transport/energy sector CTF seminars enforcement frameworks and Lending LCSPR * AAA on BraziL PluriannuaL reform projects with a focus on reguLatory DGF UNEP through Regional decision support systems; Budget frameworks, pricing poLicies, EIA capacity, IDF Action PLan of the LAC comprehensive planning * Participation in TechnicaL monitoring and evaLuation, environmentaL Forum of Environment approaches (e.g. watershed Secretariat of the LAC Forum of cost/expenditure accounting Ministers management, urban Land use Environment Ministers * Mainstreaming in 10 sector operations (e.g. WBI on INECE, targeted pLans); sectoraL mainstreaming municipal deveLopment, finance and training programs, and graduaL decentralization; decentralization projects, privatization, pubLic distance learning, and and sustainable financing sector reform, and infrastructure projects) regionaL seminars * Two programmatic approach operations in institution buiLding in the environment sector * Pilot/AAA on sustainabLe financing for environmental agenda Strengthening of awareness TA LCSES * BraziL Teachers DeveLopment * Three projects on primary/secondary/ BB WBI and management capacity Lending LCSHD * OECS Education DeveLopment nonformaL education CTF through environmentaL Project * Four projects on higher education, vocationaL IDF education and vocationaL * Chile TechnicaL Education training, and research and deveLopment training * Uruguay Basic Education QuaLity Improvement Project z Strengthening mechanisms TA LCSFP * CoLombia MagdaLena Medio II * Ensure appropriate participation and conflict BB OAS on participation for effective participation, Lending LCSES * Ecuador Hydrocarbons resolution mechanisms in resettLement components CTF mechanisms in negotiation, and confLict * Strengthen EIA procedures with reLation to IDF environmentaL management and environmental law process, etc. 4Ž..~~~~~~~~~~| in C) Annex S. Implementation Matrix: Instruments, Responsibilities, and Tentative Timetable continued D. Promoting Equitable Solutions to Regional and Global Environmental Challenges z Development objectivesl Units Funding > desired outcomes' Instrument2 involved3 Fiscal 20024 Fiscal 2003-06 sources5 Partnerships m Assisting countries to NLS LCSES * Mexico City Air Quality * Six operations on rural electrification, GEF UNDP >, prepare for and adapt to TA LCSFP Management TA renewables, and energy efficiency BB ECLAC climate change Lending * Mexico Off-Grid Rural * National Strategy Studies (NSS) in four PCF Z Grants Electrification LIL countries CTF * Mexico Hybrid Solar-Thermal * One energy-environment review > * Nicaragua Rural Electrification * Promote methane capture in solid waste Study management operations co * Uruguay Energy Efficiency * Strategy paper to guide Bank assistance in :> * Argentina NSS II response to international developments in Z * Chile NSS I climate change 0 a* Colombia NSS II z° Biodiversity conservation Lending LCSES * Ecuador National Parks and * Develop biodiversity strategies for six specific GEF LAC Forum of > Grants Biodiversity countries/regions BB Environment Ministers - e* Brazil Amazon Region Protected * Ten biodiversity projects or project BNPP OAS Z Areas components focusing on comprehensive * Brazil Rain Forest Pilot Program approaches, generation of positive impacts on o (cont.) local livelihoods, and sustainable financing 3 * Mesoamerican Biological Corridor (e.g. in rural development projects) mTi Program (cont.) * Brazil Rain Forest Pilot Program (cont.) --i * PanAmazonian Initiative * Mesoamerican Biological Corridor Program (cont.) Phasing out CFCs Grants LCSES * Strategy paper * Phaseout of CFC production in Mexico, MP ) 0* Exit strategies for Mexico, Argentina, and Venezuela Argentina, Colombia, and * Apply wholesale approach to remaining small Uruguay end-users * Strengthen regulatory frameworks Protecting and restonng TA LCSES * Guarani Aquifer (tentative) * Four operations GEF OAS international waters Lending BB Subregional organizations Grants (e.g. OECS) Annex 5. Implementation Matrix: Instruments, Responsibilities, and Tentative Timetable continued E. Incorporating the Environmental Dimension in Bank Operations and Promoting Compliance with Bank Safeguard Policies Development objectives/ Units Funding desired outcomes' Instrument2 involved3 Fiscal 20024 Fiscal 2003-06 sources5 Partnerships In Country Assistance --- LCSPR * Background papers as input to * Eight background papers as input to CASs with BB Strategies, Structural CMUs Mexico CAS, Peru CAS, critical environmental problems CTF Adjustment Loans, and QAT GuatemaLa CAS * Operational support to monitor implementation Poverty Reduction * Monitoring of PRSP of PRSPs Strategy Papers impLementation * One SAL with pilot focus on environmental (and social) issues In Sectoral Adjustment EIAs LCSPR * Operational support in preparation of SECALs BB Loans RAPs LCSFP CTF IPDPs LCSHD QAT In investment operations EIAs LCSPR * Operational support from LCSES * Operational support from LCSES in preparation BB * PubLic sector reform, RAPs LCSHD in preparation and supervision of and supervision of investment operations CTF judicial reform, and IPDPs LCSFP investment operations * Review by QAT of specific operations ensuring decentralization projects LCSES * Review by QAT of specific agreement with project proponents early in the * Health, education, and OAT operations ensuring agreement project cycle on project preparation plans social fund projects with project proponents early * Training for task managers and clients * Private sector in the project cycle on project * Preparation of eight best practice notes development, energy, preparation plans (technical guidelines) transport, urban, water, * Training for task managers and * Periodic review of safeguard policy and sanitation projects clients implementation (once every two years) * Rural development, natural * Preparation of two best practice resources management, notes (technical guidelines) and disaster management * Two reviews of safeguard policy implementation (indigenous issues, natural habitats) * Thematic supervision 1. In addition to the development objectives and desired outcomes indicated above, LCR will ensure compliance with the Bank's environmental and social safeguard policies in all its operations. 2. Instrument most likely to be used; does not exclude eventual use of other instruments as needed. NLS=nonlending services; TA=technical assistance; EIA=environmental impact assessment; RAP=reseftlement action plan; IPDP=indigenous peoples development plan. 3. Sector Management Units in the World Bank's Latin America and Caribbean Office: LCSES=Environmentally and Socially Sustainable Development; LCSFP=Finance, Private Sector, and Infrastructure; LCSHD=Human Development; LCSPR=Poverty Reduction and Economic Management. Other units: QAT=Quality Assurance Team (based in LCSES, monitors compliance with Bank safeguard policies); CMUs=Country Management Units. 4. Does not include projects under supervision as of Dec 2000. 5. BB=Bank Budget; BNPP=Bank-Netherlands Partnership Program; CTF=Consultant Trust Funds, including the Policy and Human Resources Development (PHRD) Fund; DGF=Development Grant Facility; ESMAP=Energy Sector Management Assistance Programme; GEF=Global Environment Facility; IDF=lnstitutional Development Fund; MP=Montreal Protocol; PCF=Prototype Carbon Fund. U, Z/ U1 IBRD 31994 The World Bank Latin America and the Caribbean Regional Office MEXICO , Santo Domingo DOMINICAN REPUBLIC ;Mxico D\I. - S ~~~~~JAMAICA~ BEL_Z r~Kngston- HAITI HODRAS Port-au-Prince * Guatemala City GUATEMALA-- ' C r TIIDAD and EL SALVADOR I TOBAGO Managua NICARAGUA - R.B de Georgetown GUYANA San Jose COSTA RICA /-, VENEZUELA SURINAME PANAMA / COLOMBIA _.\, .'ECUADOR-1|li }|y Forlaleza G Recifeg 1 | | B~~~~~~ R A Z I L ei * * Brosilia COUNTRY MANAGEMENT UNITS Y LCC IC - MEXICO, COLOMBIA, VENEZUELA .nc.on LCC2C - CENTRAL AMERICA CHILE LCC3C - THE CARIBBEAN LCC5C - BRAZIL LCC6C - BOLIVIA, ECUADOR, PERU - LCC7C - ARGENTINA, CHILE, PARAGUAY, URUGUAY URUGUAY * Resident Missions and Other Field Presence - .3 This map eas prodoced by the Map Design Unit of The World Bank The boundaries colors, denominations and any other 0iformation shorn on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries JUNE 2002 521 LATIN AMERICA AND CARIBBEAN REGIONAL ENVIRONMENT STRATEGY I ° (D' 00 q rZ ~~~ U,~~ I' o 00( o s- o o 0 -4 ON) M MW W W IA l~~~~~~~~~~~~~~~~h i~~~~~~