71596 RIO 2O t OwaR d s us ta I nab le de v e l O pm e n t 2 01 2 a 2 0 -Y e aR Re t R Os p e C t I v e A Letter from the Vice President of Sustainable Development No Time Like the Present Rachel Kyte Vice President, By the time this edition of Environment Matters hits the stands, the international Sustainable Development community will be gathering in Rio, taking stock of what has been accomplished since 1992 and plotting a course for where we want and need to be in 2032. I am World Bank pleased that the World Bank Group is joining in that discussion, and that we, together with our clients and partners, will be part of concrete and speci�c action programs reflecting the sense of urgency we all feel today. Since the 1992 Earth Summit, economic growth has lifted 660 million people out of poverty and raised incomes for millions more. There has been signi�cant progress on life expectancy, literacy, and maternal and child health care. Rio+20 presents an ideal opportunity to build on these achievements by focus- sing on the converging food, water, and energy crises that we face. We need to meet the needs of the 2.6 billion people without access to sanitation, the 1.3 billion without access to electricity, the 1 billion who are hungry, and the 900 million who lack safe drinking water. We must do so in an era of increased uncertainty as we adapt to climate change and unprecedented urbanization. And we must do so without sacri�cing the environment. To make progress, we must give equal attention to the economic, environmen- tal, and social pillars of sustainable development. Inclusive green growth that takes into account the value of natural capital is the pathway to sustainable development for all. E N V I R O N M E N T M AT T E R S | 2 0 1 2 There is increasing recognition that GDP alone is not a suf�cient measure of progress toward sustainable development. The recent adoption by the UN Statistical Commission of the System of Environmental-Economic Accounts, a method to account for natural resources such as minerals, timber, and �sheries, is a major step forward. Rio+20 is an opportunity for countries and the private sector to step up their commitment to comprehensive wealth accounting and integrated reporting. A World Bank–initiated partnership, Wealth Accounting and the Valuation of Ecosystem Services, or WAVES, is helping countries incorporate natural capital into national accounts, and at Rio+20 we will be inviting more countries and the private sector to become WAVES partners. The 70 million people who move into urban areas each year warrant particular attention. Urban infrastructure is long-lived and decisions made today will impact communities for 50 to 100 years to come. We have a historic opportu- nity to design, operate, and build smart cities with decisions based on good data providing for the needs of residents today without reducing options for future generations. We also hope to see increasing support for the Global understand that you can’t have one without the other. To Partnership for Oceans (GPO) at Rio+20. The GPO is ensure food security and green growth for all, we must made up of public, private, and civil society interests that take a geographical as well as a socioeconomic approach will be setting priorities for restoring ocean health, to managing the land, water, and forest resources that recognizing that healthy and economically productive form the natural capital base. oceans are essential for food security and for inclusive green growth. It’s past time for action. The world needs action on natural capital accounting, action on healthy productive oceans, Rio+20 can be instrumental in advancing other impor- action on policies that deliver access to energy, sanitation, tant goals led by like-minded groups. Two in particular clean water, and food for all. It needs action that will come to mind—Sustainable Energy for All (SE4All) and underpin greater inclusion, enabling people to lift them- the Climate Change Action Coalition (CCAC). SE4All selves out of poverty. Public and private sectors must work aims to advance universal access to electricity and clean with civil society as full partners in implementation. cooking fuels, double the share of the world’s energy supplied by renewable sources from 15 percent to 30 Too often the struggle for sustainable development is percent, and double the rate of improvement in energy boiled down to a false choice between poverty allevia- ef�ciency—all by 2030. The CCAC wants to attack tion and environmental protection. Everything that we A 20 YEAR RETROSPECTIVE short-lived climate pollutants that exacerbate the see in the world and everything our clients tell us make impacts of climate change. Black carbon, methane, and it clear that this is a false dichotomy. Protecting, main- hydrofluorocarbons can be reduced substantially if we taining, and investing in the natural resource base is work together. The World Bank Group is mobilizing its essential for sustained economic success. That requires knowledge and �nancing to help achieve these goals in smart growth policies that are resource-ef�cient, work an effort that would complement the emerging road map for everyone, and do not lock countries into irreversible for Sustainable Development Goals. investment decisions. There is no time like the present. Today’s dynamic urbanization alters the ways we manage land more broadly. Integrated approaches to managing landscapes help countries better address food, water, and energy security. For many years, there was a notion that we had to choose between feeding the growing popula- tion and protecting the health of ecosystems. Now we 1 Two Decades On — A Personal Reflection Not everybody at Rio in June 1992 believed that the World Bank was part of the solution. Our booth at the NGO Forum was burned down. And how vividly I Andrew Steer remember being physically thrown off Greenpeace’s Rainbow Warrior in Rio’s harbor when they discovered I was a World Banker. (Happily, 12 years later when Special Envoy on Climate Change I was the Bank’s Country Director in Indonesia we helped the Rainbow Warrior World Bank obtain permission for its surveillance of illegal log exports, and I was welcomed at a reception on the ship in Jakarta harbor as a guest of honor.) Remember where we came from: In the early 1980s, when the world’s longest-standing Environment Minister, Emil Salim of Indonesia, asked the Bank’s President for help on environmental issues, he was told we were a development agency, so we didn’t do the environment. That’s what environment organizations are for! Fortunately, under the influence of the Brundtland Commission things changed in 1987, when the Environment Department was created and a �rst systematic set of safeguards established. Eighteen months before Rio the President asked me to lead a team to prepare a World Development Report as a way of forging a Bank-wide position on development and the environment. This was easier said than done. Our goal was to persuade the Bank’s core staff and managers, most of whom were economists deeply committed to poverty reduction, that environmental concerns must be integrated in all we do. To win this battle we needed to show with evidence that good environment is good economics and that smart environmental policies are strongly pro-poor. These propositions may seem obvious now, but they weren’t then. This and other events associated with Rio helped shift perceptions and incentives. The Bank’s environmental portfolio rose sharply following Rio—accompanied by an extraordinary flowering of analyti- cal work in dozens of countries. Not all of our investments worked out as well as hoped and in retrospect we perhaps grew a little too rapidly. We were climbing a very steep learning curve! In 1993 a Vice Presidency for Environmentally Sustainable Development was created, and in 1994 we launched E N V I R O N M E N T M AT T E R S | 2 0 1 2 Environment Matters at the World Bank—a name chosen to capture our beliefs as well as our actions. We’ve come a long way since then. There have been dozens of important innovations, ranging from the creation of the Prototype Carbon Fund and the birth of the Social Development Department (an offshoot of the Environment Department) to the creation of the $7 billion Climate Investment Funds and the widespread use of programmatic “direct access� �nancing through Environmental DPOs. We’re now supporting climate change actions in 130 countries—representing a silent revolution in development priorities. Disappointments since Rio? Yes. Several. Here are two. First, following Rio we launched a major program of work on the valuation of natural capital, and published a series of highly acclaimed volumes entitled Where is the (True) Wealth of Nations? Despite very high marks for quality, we failed to get serious take-up in either rich or poor countries. The WAVES program (see page 18) is vital to restart this effort. Second, in the spirit of Rio we worked hard with environ- ment and natural resource ministries around the world in an effort to get them better equipped to play a more power- ful role in development planning and execution. At best, success has been partial. Overall, the needle has certainly shifted signi�cantly in the right direction. But sadly it still doesn’t point to a sustainable future—which is why such a heavy burden rests on the shoulders of the leaders and the rest of us who will attend Rio this June. 2 © 2012 The International Bank for CONTENTS Reconstruction and Development / THE WORLD BANK 1818 H Street, NW Washington, DC 20433 All rights reserved. Environment Matters is a magazine of the World Bank Group. You will also (inside cover) 20 Countries Make Good Use �nd the magazine on the Bank’s website — A Letter from Rachel Kyte, of Environmental Impact http://www.worldbank.org/environmentmatters Vice President, Sustainable Assessments Development Stephen F. Lintner reviews the uses of the Sustainable Development Network The World Bank’s journey since Rio. tool of environmental impact assessments, Vice President showing how it has changed the ways Rachel Kyte 2 A Personal Reflection from complex projects are designed and Environment Director Andrew Steer implemented at the World Bank. Mary Barton-Dock How the World Bank became part of the solution in the global push for 22 Climate Change Comes of Age environmentally sustainable development. as a Priority Environment Matters is produced by the following World Bank Environment staff: James Warren Evans discusses the 4 Director’s Overview — World Bank’s rapidly evolving position Publisher: Sari Söderström Mary Barton-Dock on climate change, showing the ways Managing Editor: Jim Cantrell it reflects a willingness to rethink past Story Editor: Tim Carrington Associate Editor: Jane Sunderland assumptions and to change. Advisor: Elisabeth Mealey VIEWPOINTS 6 Reconciling Growth, Social Special Contributors Inclusion, and Environmental WORLD BANK GROUP Linda Starke Jeffrey Lecksell Protection ENVIRONMENTAL POLICY Sharon Esumei Izabella Teixeira, Brazil’s Environment HIGHLIGHTS FROM TWO Minister, recounts Brazil’s evolution in EVENTFUL DECADES (24) policy and approach. Notes: All $ = U.S. dollars except where noted. 8 The Spirit of Rio Is Alive REGIONAL REVIEWS (26) All tons = metric tons. Mayor Eduardo Paes comments on As the environment emerged as a priority that how the host city came to incorporate was inseparable from development, Bank IBRD maps numbered 31562 through 31567 contained in the Regional section of the magazine sustainability. operations shifted. Region by region, Bank were produced by the Map Design Unit of the World teams, and their partners in government, Bank. The boundaries, colors, denominations, and 10 Looking through the NGO Lens reoriented Bank-funded projects to incorporate any other information shown on these maps do not Manish Bapna retells how development the environment, often pushing up a steep imply, on the part of the World Bank Group, any judgment on the legal status of any territory, or any became sustainable development at the learning curve. endorsement or acceptance of such boundaries. The World Bank. countries identi�ed by name on these maps are 28 Sub-Saharan Africa Region countries to which the Bank provides development 30 East Asia and Paci�c Region assistance in the form of loans or advisory services, and for which the Bank has a designated of�cial FEATURE ARTICLES 32 Europe and Central Asia Region responsible for the country. 12 Unpacking Green Growth — 35 Latin America and Caribbean Greener Isn’t Necessarily Slower, Region Cover credits: (bottom left) Tran Thi Hoa/World Bank, Just More Ef�cient 37 Middle East and North Africa (bottom right) Arne Hoel/World Bank. All images from Shutterstock except where noted. Marianne Fay, chief economist for the Region World Bank’s Sustainable Development 39 South Asia Region Network, discusses what two years of research has made clear about growth INSTITUTIONAL A 20 YEAR RETROSPECTIVE that’s green. 42 How the Rio Climate Convention is Breathing New Life into Forest 15 Oceans Support Nutrition, Trade, Operations and Eco-services, but They’re in Benoit Bosquet shows how Rio 1992 reset Trouble the trajectory for World Bank–�nanced Marea Hatziolos traces the Bank’s forest operations. evolving mission from the Bretton Woods agreement to an ambitious new 45 Two Decades of GEF Partnership partnership to �ght degradation and Dominique I. Kayser reviews 21 years, depletion of the world’s oceans. and $10 billion in project allocations, in Printed with soy ink. the GEF’s push for a green, clean, and 18 Natural Capital Accounting — resilient world for all. World Bank Publications Information: The Need for Informed Policies 202-473-1155 Glenn-Marie Lange explains how the 48 De�ning Sustainable Private General Inquiries: 202-473-3641 world’s measurement and accounting Sector Development Department Fax: 202-477-0565 systems are moving past an exclusive William Bulmer, Elizabeth White, Web address: www.worldbank.org/environment reliance on GDP. But the road map and Vanessa Bauza follow sustainable forward requires accelerated action before development as a private sector framework, green accounting becomes the global norm. not just at the IFC but beyond. The World Bank Group 1818 H Street, NW 3 Washington, DC 20433 Director’s Overview At the World Bank we take stock and, at times, celebrate the tremendous progress that’s been made in attacking poverty. Developing countries now Mary Barton-Dock function as the engine of the global economy, attracting 40 percent of global investment and, over the past 10 years, growing at four times the rate of Director, developed countries. Environment Department World Bank But the celebration stops when we look at how much still has to be done to effectively address environmental problems such as pollution, �sh stock depletion, biodiversity loss, deforestation, and water scarcity. In addition, we anticipate a growing struggle to feed 8–9 billion people. Climate change is accelerating some of these threats and limiting the options for resolving all of them. If we fail to reverse these trends, many communities that have succeeded in climbing out of poverty will once again be vulnerable. Twenty years ago, leaders gathered in Rio, drawing the world’s attention to the full panoply of environmental challenges. Since then, much has happened to enshrine sustainable development at the level of international institutions, governments, and communities. But in this same period, the population has pushed from 5.5 billion past 7 billion. Hundreds of millions of people have migrated to cities within 100 miles of coastlines, and climate change is exacerbating weather extremes and increasing pressure on the ways humans interact with the environment. Forests, coral reefs, and coastal ecosystems have been wiped out at truly alarming rates. Our actions now will determine how livable the planet will be for our children and grandchildren. Bold new approaches are needed, and many are within reach. We must be aware of the sustainability consequences of lifestyles that, E N V I R O N M E N T M AT T E R S | 2 0 1 2 to date, have resulted in overexploitation and degradation of our atmosphere, lands, and oceans. We must begin accounting accurately for natural resource wealth—including ecosystems—so that we make informed policy decisions country by country, sector by sector, and investment by investment. We need economic growth to satisfy the needs of a growing population, but we understand that the nature of that growth matters. Growth derived from liquidating natural resources is a formula for future poverty and possibly irreversible damage to the planet. Growth that puts coastal and island states at risk by accelerating climate change is an irresponsible gamble. Growth that compromises the health of distant populations or future generations is unethical. The World Bank Group’s environment strategy for the next 10 years calls for a “green, clean, and resilient world for all�: green, with natural resources, including oceans, land, and forests, sustainably managed; clean, with smarter approaches for transport, agriculture, urban development, and energy, with a focus on managing the pollution released in the air and water and on land; and resilient, with a capacity to anticipate and manage more frequent natural disasters, more volatile weather patterns, and the long-term consequences of climate change. 4 Overview CURT CARNEMARK/WORLD BANK Achieving these goals will demand innovation, commit- difference. Bank-funded programs have helped to slow ment, collaboration, and a willingness to learn and make deforestation in Brazil and to manage depleted �sh stocks mid-course corrections when necessary. I feel con�dent that in Africa. The World Bank Group has supported partner we can meet this challenge because of what the world has governments in phasing out ozone-destroying chemicals done since leaders last gathered in Rio. and leaded petroleum. This issue of Environment Matters chronicles how the Bank But the response to Rio+20 will need to go much further and its partners responded to the global challenge set out 20 to address the impacts of climate change and population years ago. The learning curve was steep. Projects had to be pressure and to identify growth strategies that generate rethought and restructured. Institutions had to adopt new opportunities without damaging the environment, exacer- ways of working. But in one region after another, govern- bating climate change effects, or depleting critical natural A 20 YEAR RETROSPECTIVE ments took on the new challenges of improved environmen- assets. We must be open to learning and relearning. tal management, and their international partners developed We must leverage intellectual and �nancial resources. new ways to support them. We must collaborate. Moving to a green, clean, and resilient development para- What the record since the �rst Rio Summit tells us is that we digm presents a new set of challenges. But I would say that can do all those things. I hope that the stories we read at based on the achievements since the �rst Rio Summit, we Rio+40 will show that what we learned in the last 20 years have reason to be guardedly optimistic. The World Bank helped us to reverse the trends and manage the risks from Group started off with policies to “do no harm�—that is, environmental degradation in the next 20 years. to avoid or mitigate environmental damage arising from Bank-funded projects. But we soon moved into funding more projects to attack pollution problems at the source or to roll back environmental damage incurred over the years. Work to revive the northern Black Sea, to clean up the Ganga River, and to protect Indonesia’s coral reefs is making a huge 5 Reconciling Growth, Social Inclusion, and Environmental Pr ection Izabella Teixeira Twenty years ago, the United Nations Conference on Minister of Environment, Brazil Environment and Development, the Rio Earth Summit, provided a staging ground for a global conversation on sustainable development that continues to this day, enhancing the appreciation of the importance of healthy ecosystems, a healthy environment, and improved human well-being for present and future generations, in keeping with countries’ needs for economic growth. This June, the world gathers again in Rio to look at progress to date, assess the remaining gaps and challenges, and secure E N V I R O N M E N T M AT T E R S | 2 0 1 2 renewed political commitment for sustainable development. In the last 20 years, Brazil has made a lot of progress in this area and we are fully committed to the goals of sustainable development, which is the main reason why Brazil decided to host Rio+20. Brazil has made remarkable economic and social progress in the last decade and is on a path of inclusive and environmentally sustainable growth. Between 2003 and 2009, poverty fell by 40 percent and extreme poverty by 52 percent. Some 22 million Brazilians emerged from poverty and almost 13 million rose from extreme poverty. It is the only major middle-income country to have combined economic growth with reduced inequality and environmental protection, under a solidly 6 Viewpoints democratic regime. We are building a stable economy, which implementing new programs to �nance renewable energy was able to recover decisively from impacts of the recent production and energy ef�ciency projects. global economic crisis. Increasing Brazil’s resilience to climatic shocks is another The annual rate of deforestation in the Brazilian Amazon is government priority. The country faces the challenge of decreasing as a result of a strong enforcement program enhancing its institutional capabilities and protecting its combined with land regularization. Concrete achievements population and infrastructure from the anticipated impacts include a reduction in the rate of deforestation to 620,000 of climate change. Negative effects include prolonged hectares in 2010. Deforestation has been reduced by 66 droughts, reduced potential for agriculture production, and percent since 2005. To give an idea of the importance of this increased evaporation from lakes, dams, and reservoirs. commitment, 74 percent of all protected areas created in the Moreover, long periods without rain will be punctuated by world from 2003 to 2008 were established in Brazil, with a brief torrential downpours resulting in floods. Some of these combined area of over 500,000 square kilometers. Brazil effects are already evident in the increased recurrence of continues to implement its national policy for prevention and flooding and droughts that have caused signi�cant social and control of deforestation in the Amazon and is expanding this economic impacts in recent years. The government is initiative to other biomes, such as the Cerrado (Brazilian currently developing a systematic and coordinated approach savanna) and the Caatinga (the Brazilian semiarid region). to disaster risk management, integrating all the sectors involved in this complex issue. The areas under sustainable forest management have also expanded to reach 3.3 million hectares of public/private These facts are a clear message that a developing country such lands. The National Development Bank, BNDES, has played as Brazil can effectively design development policies that A 20 YEAR RETROSPECTIVE a key role in this and other aspects of the environment reconcile economic growth with social inclusion and environ- agenda, including as the implementing agent of the Amazon mental protection. The recent economic crisis made it evident Fund, one of the most innovative and effective initiatives of that we cannot run the planet the way we have been, and this international cooperation to tackle deforestation in develop- is the main reason we are committed to tangible outcomes in ing countries. BNDES also led efforts to introduce sustain- Rio. The conference must pave the road for a paradigm shift able forest management of private and public lands with to a more inclusive and green economy for all. The success or programs that include concessional loans for small farmers failure of sustainable development depends on political to establish forest plantations and for the restoration of commitment at global level and implementation at national deforested areas in private lands. and local levels. Brazil has done its homework and is ready to continue leading the way. The country has been making signi�cant contributions to global climate change mitigation and, under its National Izabella Teixeira Policy for Climate Change, it has adopted voluntary goals Minister of Environment, Brazil of reducing greenhouse gas (GHG) emissions by 36 to 39 Ministério do Meio Ambiente, Esplanada dos Ministérios percent by 2020. Brazil continues to have one of the Bloco B, 5° andar, Gabinete, 70-060-900, Brasília - DF www.mma.br.gov “cleanest� energy matrices in the world and is 7 The Spirit of Rio Is Alive Eduardo Paes The year 1992 was a remarkable chapter in the life Mayor of Rio de Janeiro of the city: for 11 days, Rio de Janeiro became the capital of the world. Over 100 world leaders put their di erences aside and spoke one message: development has to come in harmony with the environment. The Earth Summit represented a landmark in the evolving relationship between humanity and our home, Earth. The 11 days spurred a new way of thinking about what we are doing. Climate change, biodiversity, and deserti�cation became international concerns. The Earth Summit is considered by many to be the most successful leaders’ summit meeting ever convened. It also kindled a great deal of reflection within the host city itself: E N V I R O N M E N T M AT T E R S | 2 0 1 2 We cariocas, people from Rio, became more aware of the natural wealth for which we are responsible. Two decades later, the “spirit of Rio� is more alive than ever. The concern with sustainable development has spread among citizens, representatives from all levels of governments, companies, and nongovernmental organizations. The search for alternative strategies that advance greener growth and lasting poverty eradication has evolved since then. That search will be the focus of discussions in June 2012, when again the city of Rio will be the main stage for important decisions on the future we want for the world. Rio de Janeiro is a special part of the world’s natural heritage. Rio combines a large metropolis that developed around a unique cultural and natural environ- ment. With over 100 kilometers of ocean shore, the city encloses the world’s two largest urban forests, Pedra Branca and Tijuca. Most of our energy comes from renewable resources. Biofuels drive a large part of our transportation fleet and carbon dioxide emissions are 1.9 tons per capita, one of the lowest among the largest cities in the world. 8 Viewpoints In the city administration, we are working hard to protect our attracting outside investment, and number four in the world, natural assets. It is not an easy task. Urban development according to the Financial Times. We bene�t from strategic frequently happens at a scale and pace, and in directions, that partnerships with a number of international organizations, challenge the environment. But we accept our responsibility including the World Bank, which has supported our push for to promote growth with social inclusion, while preserving the environmentally sustainable growth and social inclusion. natural patrimony. Eduardo Paes I am convinced we are making progress. Sustainability is Mayor, Rio de Janeiro central to our strategic vision for our city’s future, and it will Prefeitura da Cidade do Rio de Janeiro, Rua Afonso Cavalcanti, be prominent when we host the World Cup in 2014 and the 455 – 13° andar, Cidade Nova, 20211-110, Rio de Janeiro - RJ www.rio.rj.gov.br Olympic Games in 2016. I am honored to be part of this transformation and con�dent that the city is taking advantage of this critical moment, as the world faces the need to grow, but grow sustainably. The social and environmental legacies are among the most important of Rio’s “Olympic goals.� With the new Waste Treatment Center of Seropedica, built with the best technol- ogy available in Latin America, we have de�nitively resolved a long-standing disposal problem, reaching our 2012 goal of reducing greenhouse gas emissions in the city by 8 percent from 2005 levels. A 20 YEAR RETROSPECTIVE We are currently doubling our cycling lanes—already the second most extensive in Latin America—to 300 kilometers. Public transport also will expand: by 2016, 63 percent of the population will have access to high-quality public transpor- tation, up from only 18 percent today. Investments in sanitation are growing. Still, 1.4 million of our 6 million inhabitants live in informal settlements. Our goal is to urbanize all favelas in Rio by 2020—an ambitious challenge, but possible with sustained effort and focused investments. A big part of the city’s transformation involves the expecta- tions of entrepreneurs, institutions, and civil society, all of which have important roles to play. Growth and low-carbon development go hand in hand in Rio. Among Latin America’s cities, we come out number one in 9 Looking through the NGO Lens Manish Bapna In 1992, over 100 world leaders mingled with thousands Interim President, of representatives from NGOs, community and World Resources Institute indigenous groups, and trade unions at the Earth Summit in Rio de Janeiro. The summit proved to be a turning point for global cooperation on the environment and development. But at the World Bank—a critical actor for putting the post-Rio agenda into practice—relations with civil society at that time had reached a nadir. Two highly controversial Bank-�nanced projects were in part to blame. The �rst was the Polonoroeste highway in the Brazilian Amazon, which the Bank had supported E N V I R O N M E N T M AT T E R S | 2 0 1 2 in the mid-1980s. Designed to combat poverty, the 1,500-kilometer highway allowed loggers and prospectors to colonize the rain forest, often in indigenous territories. Ultimately, the highway affected an area the size of Great Britain. The second controversial project was the 455-foot-high Sardar Sarovar dam on India’s Narmada River, which displaced more than 300,000 people. An international NGO campaign resulted in U.S. congressional hearings and the eventual suspension of Bank support in 1993. These episodes left the Bank’s image battered—its practices seemingly out of touch with the emerging environmental zeitgeist. Responding to the Critics To its credit, the World Bank responded to the hard lessons of that turbulent era. Over the past 20 years, the Bank has strengthened its approach to environmentally and socially sustainable development. After the 1992 summit, the Bank created a Vice Presidency for Environmentally Sustainable Development and began to integrate environmental concerns into 10 Viewpoints macroeconomic and sectoral interventions and into country First, the Bank can play a pivotal role in making the eco- analysis, adopting its �rst formal environment strategy in 2001. nomic case for sustainability. The mainstream view among policy makers is that sustainability is too expensive. As one In parallel, the Bank strengthened project level safeguards of the few international actors that �nance and planning with respect to the environment, Indigenous Peoples, and ministries listen to, the Bank should redouble its efforts to involuntary resettlement. It also took steps regarded as build the evidence base for the economic bene�ts of sustain- critically important by civil society to improve transparency ability and how to best assist potential losers in this transi- and accountability, establishing a disclosure policy and tion. This is especially urgent as the emerging multipolar becoming the �rst multilateral institution to provide a world has produced new international �nancial actors less grievance mechanism—the Inspection Panel—for people wedded to environmental and social safeguards. Only if harmfully affected by its actions. governments and �nancial institutions deeply integrate sustainability into development planning will the environ- More recently, there has been an encouraging, if incom- mental threats outlined above be reversed. plete, shift in the Bank’s energy investments—away from fossil fuels and toward clean energy projects. The Bank has Second, the Bank should help build the institutions to also been proactive in building support for climate �nance implement sustainability policies, especially in developing to help developing countries mitigate greenhouse gas countries on the front lines of degrading ecosystems and emissions and adapt to a warming world. most directly confronting the impacts of climate change. Do electricity regulators in these countries have the techni- Many of these constructive changes were triggered by grass- cal capacity to assess options for generating power for their roots advocacy from civil society, coupled with experimenta- rapidly growing economies sustainably yet cost-effectively? tion from champions inside the Bank and leadership from Can their forest agencies identify and value the multiple certain World Bank shareholders. bene�ts that forest ecosystems provide society? The World Bank can play an important role in helping these emerging economies build institutions to turn good policy on paper Facing a New World into good practice on the ground. Even as the World Bank has shifted, however, the global agenda Finally, the Bank should prioritize further advancing has moved on. As national leaders gather for Rio+20 in June transparency and accountability through its policy and 2012, the world is a very different place than it was in 1992. investment lending. Put simply, the main barrier to advanc- ing sustainability is one of political economy. Powerful First, and most worryingly, environmental conditions have vested interests often resist investments in more sustainable worsened. A few signi�cant victories—including protecting sectors, the prime example being fossil fuel industry the ozone layer and cleaner air and water in industrialized opposition to clean energy. By using its influence to support countries—have been eclipsed by the losing battle against access to information, participation, and justice, the Bank resource depletion, ecosystem breakdown, and accelerating can help citizens and governments drive through needed climate change. Worldwide, 2.7 billion people face water changes despite such vested interests. shortages today. Global carbon dioxide emissions from fossil fuels jumped 5.9 percent in 2010. The World Bank must also practice what it preaches in its own portfolio. While it has come a long way since Narmada, Second, we are moving ever faster to a multipolar world. In it can do more on sustainability, for example, by putting a 1992, at the end of the Cold War, the United States was at price on carbon and ensuring that its cost-bene�t analysis A 20 YEAR RETROSPECTIVE the height of its global influence. By 2020, China is expected takes this into account when making investment decisions. to be the world’s largest economy, India the third largest. China, India, Brazil, and Indonesia all rank in the top 10 In short, the World Bank has an opportunity waiting to be nations for greenhouse gas emissions. grasped. Civil society expects it to place sustainability at the center of its agenda and will support genuine efforts to do Third, the rise of the urban middle class will put new voices so. The Bank came from behind on environmental issues and values in the global driver’s seat. Experts project the middle after the original Earth Summit. The question today is class will increase from 1.8 billion people in 2010 to 4.8 billion whether the Bank will follow or help lead the world as it in 2030. Most of this shift will occur in emerging world cities, continues to reach for the elusive yet essential goal of yet sustainability has been historically framed as a rural issue. sustainable development. Manish Bapna Beyond Rio+20 Interim President World Resources Institute Thus, as nations gather for Rio+20, a fundamental question 10 G Street, NE, Washington, DC 20002 www.wri.org confronting the World Bank is how to stay relevant in this new world order. Three recommendations come to mind. 11 CURT CARNEMARK/WORLD BANK RAY WITLIN/WORLD BANK Unpacking Green Growth — Greener Isn’t Necessarily Slower, Just More E cient Marianne Fay, chief economist for the World Bank Sustainable Development Network, led a study on green growth, de�ned as growth that is e cient, clean, and resilient: e cient in its use of natural E N V I R O N M E N T M AT T E R S | 2 0 1 2 resources, clean in minimizing pollution and environmental impacts, and resilient in fully accounting for natural hazards. Here, Environment Matters interviews Fay on what the study means. You’ve studied green growth growth, but the question was, Is intensively, reviewing experiences there economic validity to it? I am across the world and analyzing the convinced now, after a year of economics. What do you know today looking at it with mainstream about green growth that you didn’t economic frameworks, that there is know when you started? tremendous validity to it. I see green growth—or rather inclusive green MF: When I started out, I saw it as an growth, as we now prefer to cast aspirational goal: We all want green it—as something that makes 12 Feature Articles economic sense. There are plenty of satisfying basic needs, rather than on advance green growth and that we opportunities to implement growth the environment, is misleading. First, should do it, and we more or less have a that is greener without being slower. clean air and water and solid waste common de�nition. But we still have management are basic needs. Second, work to do on agreeing upon a good set environmental performance does not of indicators. The natural capital What made such a convincing case that automatically improve as income rises, accounting and valuation of ecosystem growth can be greener without being so the cleanup stage may not really services that our WAVES partnership slower? materialize. It might be impossible or colleagues are developing is a critical MF: We have growth patterns that are truly unaffordable to “clean up later,� part of the answer, and one hope is that deeply inef�cient, which means they because some environmental damages, Rio could lead to the mainstreaming of can be improved without sacri�cing like biodiversity loss, are irreversible or natural capital accounting. anything. For example, urban sprawl because structures get locked in, as and congestion are not just bad for the happens with a sprawling, poorly Are there examples of economies that environment. They also make cities less planned city. somehow went green at the start of, or ef�cient and workers less productive. early into, the process of urbanizing, There are immediate public health What would happen if current patterns industrializing, and expanding impacts. By addressing these sorts of of growth continued, at least for economically? problems, you improve the environ- another 30 years? ment as you eliminate inef�ciencies MF: A very interesting case is Brazil, that weigh down economic MF: If you just look at climate change, where so much of what is going on is performance. which is only part of the picture, we see green growth. They have reasonably that if all current patterns continue, sustainable biofuels—even if that Many environmental policies enhance we’ll have increases of 4 to 5 degrees industry didn’t start for green reasons income generation and poverty allevia- Celsius from preindustrial tempera- but for energy security reasons. Other tion. One of the world’s most successful tures. And then we enter a world very examples would include their manage- green programs is the mass reforesta- different from what we have known. ment of the Amazon. There also seems tion of China’s Loess Plateau, which, in Water is perhaps the most urgent and to be so much awareness of the need for addition to improving the environment scary part of the environment debate. progress on both inclusion and the locally and regionally, contributed to We tend to think of water as renewable, environment—even if a lot remains to signi�cant increases in local incomes. but a lot of it is not. be done. In the last election, the green candidate got 20 percent of the vote. And then there’s this green entrepre- Even so, aren’t there many developing When you look at a sector that is neurial spirit. countries that tend to view growth and growing, or an entire economy that is job creation as their �rst priority, with at growing, what helps you determine least an unstated assumption that they whether the growth is green, partly The study concludes that “Most if not can deal with the green agenda later? green, or something else? all green policies incur short-term MF: “Grow dirty and clean up later� MF: That is one of the most dif�cult economic costs, such as higher may not be an option. The argument questions for green growth at the investment or operational costs, or that poor countries should focus on moment. We’re all convinced we can involve redistribution from one group A 20 YEAR RETROSPECTIVE 13 In the push for sustainable, green economic expansion, how important is the question of energy? MF: It’s huge, but it’s not everything. We must not forget transport and urban design, which together can have a phenomenal lock-in effect. For electric- ity production, there are a lot of technological options, whereas with transport it’s a lot more complicated. You’ve got to change the behavior of millions of individuals who may be locked into a particular lifestyle. Within the World Bank, what is needed to establish green growth as a way of approaching development? MF: When I came to the Bank in the early 1990s, there were units concerned adequate �nancing instruments. To about social issues and others whose take a concrete example, when you job was to worry about economic switch from a thermal plant to wind growth and management. In the or solar or hydro, you’re switching mid-1990s that changed quite dramati- from an investment with low capital cally. Poverty reduction and economic costs and low operating costs to management are now integrated into a something with relatively high single network [PREM]. You no longer investment costs and virtually no have the person who thinks about operating costs. You need to think growth strategy without thinking about the �nancing problem in a about the human implications. What different way. we’re after is a similar culture shift to integrate growth thinking with environmental management. Some of How do you talk to skeptical govern- our SDN colleagues say, Why do we ments about what green growth really need growth? and some of our macro means to them? colleagues ask, Why can’t we let MF: In advocating green growth, it is countries grow �rst and clean up later crucial to avoid hype or patterns of like Europe, the United States, Canada, overpromising. Green growth is et cetera did? They might say that affordable and need not destroy jobs or environmentally sustainable growth E N V I R O N M E N T M AT T E R S | 2 0 1 2 harm the poor. But green growth will be expensive, even unaffordable. In policies are no substitute for good the green growth strategy, we need growth policies. If you’re maintaining both these communities working regulatory obstacles that stymie small together. We don’t need to have an and medium enterprises, or if your environmental camp and a growth workforce lacks the necessary skills to camp. Our Green Growth Knowledge to another.� How signi�cant are these compete, a green growth program isn’t Platform is full of insights from both, short-term costs, and how much going to solve the full scope of your and hopefully this has enabled us to be resistance will those costs generate problems. Then, we can’t assume green rigorous on both the green and the within governments or a ected growth policies will necessarily be growth side. industries? inclusive. Let’s say a country decides to remove subsidies for fossil fuels. MF: What’s important to understand That’s green, but poor people could be Marianne Fay mfay@worldbank.org is whether there is an increase in net hurt in the transition. So it would be Green Growth Knowledge Platform cost or just a change in the �nancing important to think about a comple- website: ggkp.org pro�le of the investment. If the mentary set of interventions to protect former, we need new and additional the poor or particular social groups resources. If the latter, we need that were vulnerable. 14 Oceans Support Nutrition, Trade, and Eco-services, but They’re in Trouble The environment was conspicuously The World Bank Group, edging toward its 70th birthday, absent from the agenda during each has evolved, refocused, and redeployed through a of these chapters, though virtually every building block of economic progression of global shifts. development both influenced and was influenced by the state of ecosystems and natural resources. Born at the close of World War II, the Bank embraced The 1990s brought the full panoply of environmental stresses into focus, the goal of helping to rebuild Europe and jump-start with the Earth Summit in Rio not A 20 YEAR RETROSPECTIVE only capturing global attention but, exhausted economies. Later, as former colonies through Agenda 21, committing the gained independence and sought to feed growing Bank and others in the UN family to a road map to sustainability. To populations, the focus on physical capital gave way many analysts and advocates, the environment presented challenges of to rural development and agriculture. The late 1960s comparable urgency to the postwar reconstruction needs that headed and ’70s saw an emphasis on education and health, the agenda at the 1944 Bretton Woods meeting. while the 1980s addressed economic reforms, with an emphasis on �nancial capital flows and new The world also was beginning to assume greater responsibility for lending instruments to help countries make the global commons, or public goods, where environmental concerns were transition into industrializing nations. mounting. Chapter 17 of Agenda 21 15 called on signatories to “protect the Sub-Saharan Africa and Southeast shell-bearing organisms. The rapid oceans, all kinds of seas, and coastal Asia, where burgeoning cities were buildup of CO2 in surface waters alters areas … and to foster rationale use of overwhelming both coastal ecosys- ocean chemistry, making it very their resources.� The Bank formed its tems and local public services and dif�cult for these organisms to calcify �rst Blue Team in 1994, adding a blue where impacts from upstream devel- and ultimately causing their shells to dimension to the green agenda opment were contributing to loss of dissolve. The unprecedented speed of embraced at Rio. The Blue Team water quality and productivity and to these changes in ocean temperature connected aquatic habitats to the coastal erosion downstream. and chemistry is reason for alarm. ecological integrity of the larger hydrological system—from its origins Coastal areas can expect continuing For developing countries, the stakes are high in the sierras, through river stresses, as populations shift from signi�cant. One billion people in basins, lakes, aquifers, and lower rural to urban and from hinterland to developing countries depend upon �sh watersheds flowing to the sea. The coast. By 2050 an estimated 6.4 billion and seafood for their primary source of intricately linked ecosystems sup- people will be living in cities, the protein. Over half a billion people in ported life, biodiversity, and produc- majority located on or near coastlines. these countries depend on �shing as a livelihood. For developing countries, including many island and coastal nations, �sh represent the single most traded food product, valued at $25 billion a year, and for many Paci�c Island countries, �sh make up 80 percent of total exports. Worldwide, coral reef–based tourism—a major source of livelihoods for tens of millions of people—is estimated at nearly $10 billion a year. Scientists documented the trend and warned that business as usual was no longer viable. Countries signed declarations and protocols for ocean conservation, but a gaping implemen- tation de�cit has meant that, despite some clear successes in marine protection and �sheries restoration, the global trend lines showed continuing pillage and degradation. Supported by �nancing from the tivity—necessarily playing a central Population pressure and pollution have Global Environment Facility, the Bank E N V I R O N M E N T M AT T E R S | 2 0 1 2 role in economic development. translated to overexploited �sheries, a has increased its support for marine proliferation of marine dead zones, protected areas and biodiversity The Blue Team trained Bank staff and and biodiversity loss. Climate change conservation, coastal zone manage- client country of�cials in integrated compounds the threats, as was ment, environmental education, and management of water resources and apparent when the El Niño effects in reduction of land-based pollution. coastal zones. The analytical tool of 1997–98 pushed up sea surface Because few countries were willing to Strategic Environmental Assessments temperatures in the tropics for a period borrow for marine conservation and took a “ridge to reef� approach, of several weeks, generating the �rst coastal resources management, invest- recognizing that hydrological systems observed global-scale bleaching of ments were largely grant-�nanced, expanded beyond national boundaries. coral reefs. Afterward, scientists opportunistic, and donor-driven. An The Global Environment Facility’s recorded the death of 16 percent of the early exception was the Coral Reef program in international waters world’s coral reefs. Climate change had Rehabilitation and Management promoted transboundary water arrived, they concluded. Since then, Program in Indonesia (COREMAP), resources management, �nancing global warming’s evil twin—ocean which strengthened local capacity to some of the Bank’s �rst operations in acidi�cation, the result of increasing restore coral reef health in the heart of integrated coastal zone management. levels of CO2 being taken up by the the Coral Triangle through community The early oceans work drew attention world’s oceans—has emerged as a empowerment and comanagement with to gathering risks along the coasts of major threat to coral reefs and most local government. 16 Feature Articles The Bank ramped up its coastal manage- Robert B. Zoellick said the partnership „ Doubling marine protected areas ment portfolio, invested in marine aims to mobilize at least $300 million, science and knowledge networks, and which would leverage another $1.2 „ Harmonizing certi�cation proce- reengaged in the �sheries sector with billion in investments over �ve years. dures for aquaculture and wild the establishment of PROFISH (the �sheries Global Program on Fisheries). An Once it is fully operational, the important catalyst for this reengage- partnership will focus on three spheres „ Tripling the combined length of ment was economic analysis that began of support: coastlines under active management. to de�ne the full costs of neglect and degradation of the marine sector. „ Valuation of ocean ecosystem The new partnership will be assessed Research by the Word Bank and the services and identi�cation of reforms, according to what it accomplishes. But Food and Agriculture Organization to better inform decisions about the the Bank’s expanding commitment to showed that mismanagement of use of the oceans and prioritize healthy oceans—and its alliance with �sheries alone has cost the world an needed investments dozens of like-minded partners, from estimated $2.2 trillion in lost income civil society to the private sector, and opportunity over the past 30 years. „ Investments in reforms to support foundations, and others in the donor rights-based �sheries, sustainable community, to achieve this—signals a In 2009 the Bank Board approved a aquaculture, pollution control, and paradigm shift for this institution. $220 million loan to India, the largest habitat protection With the understanding that green investment to date in integrated growth relies on healthy ecosystems coastal zone management, and a new „ Knowledge and advocacy for the as a foundation for economic develop- project in Brazil (another of the BRICs) living oceans, to lock in support for ment and human well-being, the is in the works to establish a system of sustainable �shing, reduced degrada- wealth that healthy ocean ecosystems marine protected areas over 5 percent tion, and expanded marine provide is potentially transformative. of Brazil’s marine space—at a cost of protection. It means �nding a green economy in a $100 million. blue world. Participating organizations will The Bank’s most far-reaching commit- establish shared goals, including: This article was prepared by ment to healthy and productive oceans Marea Hatziolos emerged this year in the formation of „ Rebuilding strategies for half (mhatziolos@worldbank.org) the Global Partnership for Oceans, an the �sh stocks now identi�ed of the East Asia and Paci�c Social, Environmental, and Rural Sustainable alliance of international agencies, as depleted Development Unit. Global Partnership governments, civil society organiza- for Oceans website: tions, and private sector organizations. „ Reducing state subsidies that have www.globalpartnershipforoceans.org Speaking at The Economist’s World created overcapacity in commercial Oceans Summit in Singapore in �shing, thereby cutting in half the February, World Bank president economic losses that �sheries incur A 20 YEAR RETROSPECTIVE COURTESY OF OVE HOEGH-GULDBERG 17 KIRK HAMILTON KIRK HAMILTON Natural Capital Accounting — The Need for Informed Policies Environment Matters interviews Glenn-Marie Lange, program leader, WAVES, and team leader, Policy and Economics, at the World Bank’s Environment Department, on the progress made in establishing global accounting systems that incorporate natural capital. Twenty years ago at Rio, leaders of that resource isn’t accounted for. methodology for environmental called for better measurement The same is true for natural forests— accounting. Even before then, the of the role that the environment overharvesting adds to national Bank supported work on the founda- plays in national economies. income, but there is no entry for any tions for the conceptual methodol- Why was this important? depletion of natural capital. There is ogy for environmental accounting. something missing there. We also The Bank supported some of the GML: It was important because it was didn’t have good tools for linking piloting of environmental accounts E N V I R O N M E N T M AT T E R S | 2 0 1 2 the �rst time you had an interna- economic activity with the use of in developing countries in the early tional agreement that we needed to materials and pollution. Many 1990s. The Bank also developed systematically take natural capital critical ecosystem services, like green accounting indicators and into account in our economic carbon storage, pollination services, began using them—adjusted net decision making. It is particularly or flood mitigation by wetlands, savings and comprehensive wealth; important to target national aren’t explicitly represented. more recently, adjusted net national accounts, because they are so widely income. These use data that are used in evaluating national economic The Bank has always played a role publicly available for a large number performance. in helping countries measure what of countries. Within World Bank was happening in their economies. country work, these �gures can give What did the Bank do to help with What was wrong with the existing you a �rst crack at the issue of the challenge of measuring the role set of measures? the environment plays in national whether a country’s development is economies? sustainable long term. GML: Let’s look at the measure of the gross domestic product, which has a GML: The World Bank and the IMF Like many other initiatives following number of well-known shortcom- are participants in the London Group Rio, this was challenging. What are ings. When you have a nonrenewable that the UN Statistical Commission some of the main obstacles that have resource like minerals, the depletion formed in 1994 to develop the been addressed? 18 Feature Articles GML: There are institutional challenges. “A �rst step towards the integration of sustainability into Everyone said, “This is a great idea, but economic management is the establishment of better I think that this or that other ministry should do it.� There was apprehension. measurement of the crucial role of the environment The focus in the 1990s was on how as a source of natural capital and as a sink for by-products we’re using up our natural capital, and there was a lot of emphasis on the bad generated during the production of man-made capital news. Some countries were concerned and other human activities. … A programme to develop that natural capital accounting could national systems of integrated environmental and make their indicators look worse, and possibly increase their costs of borrow- economic accounting in all countries is proposed.� ing or affect their eligibility for certain international programs. There have — Chapter 8, Agenda 21 been fears that this could somehow become part of conditionality. Plus accounting—as articulated in SEEA- clear methodology for material natural there was no agreement of methodol- 2012—the norm, to make it the basis resources. Then we need demonstra- ogy. So a lot of countries were reluctant for policy decisions. We want to see tions of how the data can strengthen to stick their necks out. the framework for material natural policy making, and we need to develop resources implemented, and we want the methodology for ecosystem How did advocates of natural capital real progress on developing an approach accounting. accounting manage to push beyond for ecosystem accounting. the apparent impasse? What would you say to a �nance What do you understand now minister from a country that is consid- GML: Under the auspices of the UN about this challenge that you didn’t ering environmental accounting? Statistical Commission, experts were understand in 1992? exploring—and debating—alternative GML: I would say that what you need to environmental accounting approaches GML: The big change is that the do �rst is assemble a steering commit- throughout the 1990s. A new frame- understanding is much broader than it tee that includes the agencies that deal work emerged that came to be known was in 1992, when this was still very with different aspects of natural as the System of Environmental- much within the environmental resources. The committee would be led Economic Accounts (SEEA), with a community. The idea of accounting for by a major user of the data, such as the draft manual coming out in 2003, built natural capital and the importance of ministry of �nance or planning, or a on a much briefer interim manual this for long-term sustainable develop- ministry of environment, with close published in 1993. ment is much more widespread than it collaboration with a national statistical was. Finance and national planning of�ce to ensure integration with the Then the more important milestone was agencies see that this is a way to national accounts. The question to in February this year, when the UN manage the economy better. examine would be: What are the Statistical Commission established critical issues holding back our develop- SEEA-2012, whose central framework Plus we can analyze much more ment? It could be managing scarce provides an internationally agreed experience of countries that have water resources; it could be the deple- approach—a “statistical standard�—for established some form of environmen- tion of mineral resources or land accounting for material natural resources. tal accounting. There now is valuable management. Then you �gure out what A 20 YEAR RETROSPECTIVE This is solid and can be put into practice. experience among a mix of countries, the data gaps are, and also look at what In addition, there is a call for more work, including a number of European Union is coming up, to know where the entry and experimentation, on accounting for countries, Australia, Canada, Colombia, points for decision making are. You ecosystems, and guidance on the Mexico, the Philippines, and South might have a new draft water bill or a application and policy uses of the SEEA Africa. Their experience is crucial in national development plan. The key will be provided in an additional compo- showing the ways that governments question is, What is coming up where nent of the SEEA in 2013. can tailor the available methodologies you really want to have this input? The to support better-informed decisions in nice thing about SEEA is that it can be But in 2010, at the Convention on the context of their own economies. implemented incrementally. It’s a Biological Diversity in Nagoya, Japan, flexible framework. the World Bank launched WAVES, What are the priorities now? Wealth Accounting and the Valuation of Ecosystem Services. A partnership GML: The agenda for the next 20 years Glenn-Marie Lange funded by France, Japan, Norway, and starts with countries implementing glange1@worldbank.org WAVES website: www.worldbank.org/ the United Kingdom, this effort is what we have in place, namely the programs/waves designed to make natural capital SEEA central framework that sets out a 19 ARNE HOEL/WORLD BANK Countries Make Good Use of Environmental Impact Assessments Over the last 40 years, various forms of the The World Bank adopted the instrument of environmental and Environmental and Social Impact Assessment have social assessment in 1989, when the Board of Executive Directors been the primary instrument used worldwide to inform endorsed Operational Directive 4.00 on Environmental Assessment. The decision makers and the public about the impacts and policy not only mandated the use of environmental assessment in E N V I R O N M E N T M AT T E R S | 2 0 1 2 risks of proposed policies, plans, programs, and proj- Bank-supported operations but also required public consultation and ects. In operations, impact assessments provide a disclosure while the studies were being prepared and considered. The mechanism to integrate environmental and social Operational Directive provided the basis for integrated examination of dimensions into project design and implementation. potential physical, biological, socioeconomic, and cultural heritage Frequently, they also serve as the entry point for trans- impacts and risks, including evaluation of alternatives, measures parency in decision making through public consulta- for avoidance or mitigation, and monitoring. Since 1989, additional tions and disclosure of information to stakeholders. Operational Directives or Operational Policies have been adopted by the Bank to address in further detail speci�c environmental and social issues, and they collec- tively have become known as the 20 Feature Articles Safeguard Policies. The Safeguard concerns into the mainstream of measures to “do good.� The increased Policies reflect important values held project development, implementation, emphasis on risk identi�cation and by the Bank, its development partners, and operation. management and “doing good� will not and borrowers. The Safeguard Policies eliminate the need for careful impact also reflect a commitment to make assessment; however, it will open up these safeguards an integral element of Broad Alignment by the opportunity to test and adopt new support for sustainable development Development Partners approaches to address environmental and responsible economic growth. and social issues in policies, programs, As development partners have aligned and projects through recognized their policies with those of the World principles of risk management. A Requirement of Borrowers Bank Group, the approach has been used with a broader array of projects. This article was prepared by Today nearly every country where the Environmental and social impact Stephen F. Lintner (slintner@worldbank.org) World Bank Group operates has assessment policies of the multilateral of the Operational Risk Department, policies, laws, and procedures mandat- development banks, OECD bilateral Operational Policies and Country Services, in the Of�ce of the Vice President. ing the use of impact assessments to donors and export credit agencies, and evaluate potential environmental and the Equator Principles Banks are now social impacts and risks. Our borrow- broadly aligned with those of the Bank ers increasingly use strategic environ- and IFC/MIGA. By adopting compat- mental and social assessments in ible policies, donors have facilitated policies, plans, and programs. In the co�nancing and increased consistency case of involuntary resettlement and in projects. There is still a need to land acquisition, signi�cant changes improve the alignment between have occurred in domestically sup- policies used for public and private ported projects, with governments sector operations, given the increase in making greater efforts to avoid or public-private partnerships. The minimize negative impacts in the early emerging bilateral donors and export phases of planning and to use com- credit agencies are also considering pensation rates more effectively to ways to address these issues as integral support livelihood restoration in elements of their operations. affected communities. Borrowers have also shown progress in address- ing the rights and concerns of Moving Forward — A Shift to Indigenous Peoples through policy Risk Management and legal measures. Since the impact assessment policy and Over the last decade, the Bank’s public other safeguard policies were adopted, and private sector partners have been there have been signi�cant investments increasingly committed to incorporat- in developing legislative frameworks, ing sustainable development as a core client capacity, and increased country value. This has led to the adoption of ownership. Today it is possible to frameworks and procedures to manage explore some new directions. A 20 YEAR RETROSPECTIVE environmental and social impacts and International good practice in identify- risks. The decision of borrowers to ing and managing environmental and internalize the use of environmental social impacts has also evolved, with and social assessment, progressive development partners focusing on aid approaches to land acquisition and effectiveness and harmonization. These involuntary resettlement, and engage- changes enable the Bank to shift from ment with local communities and risk avoidance and mitigation to Indigenous Peoples has made a major informed risk-taking in return for STANISLAS FRADELIZI/WORLD BANK difference in achieving sustainable higher development impact, while development. This approach has been transparently managing associated most noticeable in the private sector environmental and social risks. As a and in government-owned corpora- result the Bank’s main risk management tions (inspired by IFC’s risk manage- activities, long de�ned by “do no harm,� ment approaches) that have used their will be seen as moving from risk corporate environmental and social avoidance toward a greater focus on management systems to move these risk management and more proactive 21 Climate Change Comes of Age as a Priority The World Bank Group’s climate change program underscores the institution’s will- ingness to change, take on new challenges, and innovate. In 1991, with the creation of the Global Environment Facility as a pilot program in the Bank, climate change emerged as one of its principal priorities. But the Bank’s engagement in global public goods was new, with the sta ’s attention mostly directed to country operations. The idea was that the GEF funds awareness of the threats of climate 3. Developed countries need to could offset the incremental costs of change, among other issues, stating, �nance pilot programs and test technologies for climate mitigation. “Enough is known to discern a innovative approaches that could Soon it was clear that there were not threat of climate change from lead to lasting solutions. nearly enough funds in the GEF to increasing concentration of green- achieve mitigation at scale. The house gases, but not enough to The 1992 Rio Summit created the “incremental cost� concept, theoreti- predict how much will occur or how United Nations Framework E N V I R O N M E N T M AT T E R S | 2 0 1 2 cally interesting, was impractical. The fast, the regional distribution of Convention on Climate Change Bank and GEF reoriented their change, or the implications for (UNFCCC), which came into effect approach, addressing policy reforms human societies.� in 1994. That same year the GEF and piloting low-carbon development. became an independent agency, with Together, these would enable the The 1992 WDR proposed a threefold the Bank as its largest implementing scaling up of mitigation investments. climate change strategy that has agency. The Bank, with GEF �nancing, largely been followed since: undertook a series of groundbreaking The next evolution came in response pilot projects, with potential for to the 1992 Rio Earth Summit. 1. Countries should adopt measures replication and scaling up. The effort Amid growing awareness of the role that can be justi�ed on the basis of showed ways of lowering the costs of of a healthy environment in achiev- ef�ciency gains and reductions in technologies; it demonstrated the ing sustainable development and local pollution. potential of lowering carbon levels shared concern about a rapidly through forest conservation; and it deteriorating local and global 2. Research should continue on the highlighted land-use management environmental outlook, the Bank magnitude of the climate change, practices to reduce GHG emissions. dedicated the 1992 World Development especially the potential impacts Report to “Development and on developing nations, and on The Bank was an early supporter of Environment.� The study raised possible solutions. the UNFCCC, participating in the 22 Feature Articles UNFCCC pilot initiative for carbon highlighted the risks that climate trading, the basis for the Kyoto change posed to development, with Protocol. One upshot of the Bank’s adaptation emerging as a strategic involvement was the creation of a core priority in 2005, and in 2006 the Bank team of “climate-development� staff hosted the Global Facility for Disaster and managers. Reduction and Recovery. In 2000 a dedicated Bank team launched In 2002 the environment portfolio of the the Prototype Carbon Fund (PCF), Bank was about $14 billion, of which providing a framework for action, about 11 percent related to climate learning, and research to demonstrate change. Projects included innovative how greenhouse gas reduction could investments with GEF support, such as contribute to sustainable development solar thermal power in India. while lowering the costs of complying Meanwhile, by helping countries meet Energy for Poor Countries have already with the Kyoto Protocol, which eventu- the Montreal Protocol phaseout of had signi�cant impact and strengthened ally took effect in 2005. Established with ozone-depleting substances, the Bank collaboration among multilateral $145 million in contributions from six was also supporting substantial reduc- development banks. governments and 17 private companies, tions in GHG emissions. the PCF began operations in April 2000, Recently, the WBG has supported the growing to $180 million by June 2002 In 2007 the Clean Energy Investment international negotiating process, at the and ultimately capitalized at $220 Framework (CEIF) was adopted. The request of the COP hosts, bringing million. CEIF—which was actually a climate lessons learned from working in 130 strategy in disguise, not simply focused countries supporting climate adaptation As the groundbreaking experiment in on clean energy—called for main- and mitigation. Climate change is creating a market in emission reduc- streaming adaptation into routine understood to be a central development tions, the PCF set the stage for other operations. The 2007 Bali Conference issue not only at the World Bank but pioneering carbon funds managed at of Parties (COP) brought �nance among donor governments and client the World Bank. Eventually, carbon ministries into the climate dialogue and countries. The last two International funds under management rose to $3 launched the Forest Carbon Partnership Development Association replenish- billion, with $1.9 billion committed to Facility, to pilot Reducing Emissions ments succeeded partly because of purchase reductions in carbon emis- from Deforestation and Forest Bank-generated evidence that climate sions, mostly through the Clean Degradation (REDD). There, President change will increase the resources Development Mechanism (CDM). Robert B. Zoellick described climate needed to maintain current levels of With the support of government, change as “a critical pillar of the development support. Today, 25 percent private sector, and civil society development agenda.� of Bank lending projects approved in organizations, the Bank continued to 2011 in over 60 countries are expected to pioneer new approaches to carbon With the support of GEF and some key provide climate change cobene�ts. �nance and carbon reduction markets. donors, including Finland, the The Community Development Carbon Netherlands, Norway, and the United The future will involve dif�cult Fund explored ways to generate local Kingdom, the Bank scaled up analytical trade-offs and competing demands. development bene�ts in poor countries work. In 2008 the CEIF was replaced Now is the time to integrate climate and communities that had previously with the Strategic Framework on action into the green growth and A 20 YEAR RETROSPECTIVE bene�ted little from the CDM. The Development and Climate Change, sustainable development agenda. The BioCarbon Fund showed how carbon integrating climate action as a cross-cut- most important contributions that we �nance can support agricultural and ting development objective. The can make at this stage would be to forest initiatives that sequester carbon framework also stressed the need to ensure that the WBG successfully and generate �nance for poor rural strengthen resilience to climate risks and completes programs already under households, achieving cobene�ts such to tailor programs to local conditions. way, continuing to generate and share as improved water management and knowledge, and to accelerate support biodiversity conservation. In 2008 the Bank, initially working with for innovative �nancing solutions, Japan, the United Kingdom, and the particularly by scaling up work with The Bank’s 2001 Environment Strategy United States, led talks to establish the private sector actors. included a commitment to “address the Climate Investment Funds (CIF), with vulnerability and adaptation needs of pledges today of about $7.2 billion from This article was prepared by developing countries� as one of its �ve 14 donor countries. The Clean James Warren Evans (wevans@worldbank. principles, but the bulk of climate Technology Fund, Pilot Program for org) of the Sustainable Development operations supported climate change Climate Resilience, Forest Investment Network. SDN website: www.worldbank.org/ sustainabledevelopment mitigation. Meanwhile, analyses Program, and Scaling-up Renewable 23 World Bank Group Environmental Policy Highlights from Two Event l Decades In 1987 the World Bank establishes central Environment Department and regional environment divisions with focus on strengthened safeguards and support for environmental investments. UN Framework Convention on Climate Change and UN Convention on Biological Diversity in effect. The World Bank and the Environment reports Bank launches Prototype fourfold approach for MIGA establishes Carbon Fund, pioneering the rest of the decade— Bank’s active environmen- environmental of�ce. a global carbon market stewardship, safeguards, tal portfolio almost $12 to transfer �nance and mainstreaming, and global billion for 153 projects in 62 IFC establishes safeguard climate-friendly technology sustainability. countries. policies. to developing countries. 1993 1996 1998 2000 1992 1994 1997 1999 2001 International Coral Reef World Wide Fund for Nature WBG’s Pollution Prevention Initiative is launched with and World Bank launch and Abatement Handbook Bank as founding partner. Global Forest Alliance. adopted. Bank �rst publishes MIGA’s Environmental WDR 1992 Development Bank adopts Environment Environment Matters, its Assessment and Disclosure and the Environment. Strategy to further integrate annual report on its work in Policies are approved. environmental concerns the environment. The PROFOR (Program E N V I R O N M E N T M AT T E R S | 2 0 1 2 Bank creates Environmen- into the Bank’s projects and on Forests) partnership tally Sustainable Develop- programs, with focus on Bank-led partnership is for sustainable forest ment Vice Presidency. poverty/environment nexus. established to support management is established UN Convention to Combat in Bank. Bank issues an Operational Deserti�cation. Directive on Environmental Action Plans. IFC creates a Technical and Environmental Department. Global population, 5.5 bil- lion; WBG lending, $121.5 billion, of which 8.5% is for environment. United Nations Conference on Environment and Devel- opment (the Earth Summit) in Rio de Janeiro. 24 World Summit on Sustainable Development is held in Johannesburg. $100 million each from the Community Develop- ment Carbon Fund and the BioCarbon Fund are to provide �nancing to reduce greenhouse gas emissions. MIGA safeguard policies are approved on an interim Millennium Ecosystem basis in 2002. Assessment highlights IFC updated Sustainability severe degradation and Framework is adopted. Global population, 6.3 bil- accelerating loss of natural MIGA Policy on lion; WBG lending, $100.3 resources. Environmental and Social Partnership for Market billion, of which 4% is for Sustainability/Perfor- Readiness is launched to environment and, of that, Kyoto Protocol becomes mance Standards become WDR 2009 Development support national carbon 11% for climate change. effective. effective. and Climate Change. markets. 2002 2005 2007 2009 2011 2003 2006 2008 2010 2012 WBG endorses Extractive IFC adopts the Sustainabil- Industries Transparency ity Framework, a strategic Initiative. commitment to sustainable development. Global Partnership for Equator Principles are Establishment of the Launch of the Wealth Oceans launched. adopted by 10 global WBG Kyoto funds reach Climate Investment Funds Accounting and the �nancial institutions $2.5 billion. with initial commitments of Valuation of Ecosystem and are based on WBG $6.5 billion. Services (WAVES) global environmental and social partnership, with the safeguards. WBG approves a strategic Bank as a lead partner. A 20 YEAR RETROSPECTIVE A 20 YEAR RETROSPECTIVE framework on development and climate change. IFC creates the Climate WBG adopts new Environ- Business Group. ment Strategy for the next Launch of Global Tiger decade. Initiative. The Bank and GEF are founding partners. Global population, 7 billion; WBG lending, $156.6 billion, of which 11% is for environment and, of that, 24% for climate change. Rio+20 United Nations Conference on Sustainable Development 25 26 E n v i r o n m E n t m at t E r s | 2 0 1 2 The World Bank Learns Hard-Won Lessons Incorporating Environment into New Development Paradigm From Rio 1992 to Rio 2012 the World Bank has been A 20 YEAR RETROSPECTIVE working across all six Regions to support countries in their environmental management e orts and has evolved into a sustainable development agency. It has been a steep learning curve for the Bank. Here each Region tells a story of 20 years of learning and change. 27 Cape Mauritania Verde Mali Niger Senegal Chad Eritrea Burkina Sudan Sub-Saharan Africa Region Faso Nigeria Guinea Benin Sierra Togo C.A.R. South Ethiopia Leone Cameroon Sudan Somalia Liberia Uganda Guinea-Bissau Congo The Gambia Rwanda Côte d'Ivoire Burundi Kenya Ghana Tanzania Equatorial Guinea D.R. of São Tomé and Congo Seychelles Príncipe Angola Comoros Gabon Zambia Malawi The environment of Sub-Saharan Africa has been subject to Namibia Zimbabwe Mauritius Botswana Madagascar radical shifts in understanding. The continent was seen as an South Mozambique untouched wilderness—a setting for �lms such as Born Free— IBRD 31567R MAY 2012 Africa Swaziland Lesotho with spectacular game parks and reserves. In the 1970s and 1980s Africa became associated with Malthusian hardship, with images emphasizing an arid, treeless landscape, exhausted by account environmental and social consequences of development overfarming, overgrazing, and overpopulation. These shifting projects, and the environment perceptions helped shape the response of Africa’s international commanded attention at summit partners, who moved from an emphasis on conservation to meetings of the Group of Seven large industrial nations. community-based e orts to address land degradation. More recently, Africa’s international partners are helping countries The Bank began to shy away from �nd ways to unlock natural resource wealth while managing large, complex projects such as dams and power plants. Community- the environment sustainably. driven development projects prolifer- ated, many focused on natural In the 1990s the World Bank The 1996 World Bank book Toward resource management. The natural focused on two programs: National Environmentally Sustainable Development resources projects, initially funded Environmental Action Plans in Sub-Saharan Africa examined by the International Development (NEAPs), which analyzed environ- demographic and environmental Association, were increasingly picked mental threats and solutions, and trends up to 2025, calling for up by the Global Environment Environmental Support Projects stronger capacities in areas such as Facility. Many of these efforts have (ESPs), which helped countries gear planning, environmental impact been grouped under the program- up to take the actions called for in assessments, and environmental matic structure of TerrAfrica, a the NEAPs. information systems. partnership that aims to address land degradation by supporting sustain- Madagascar was the �rst African In 1994 the Bank’s Kevin Cleaver and able land management. country to express interest, preparing Götz Schreiber published a milestone a NEAP in 1989 and an ESP in 1990. study that helped de�ne the environ- By 1995 22 African countries had ment as an integral development Safeguards and What E N V I R O N M E N T M AT T E R S | 2 0 1 2 approved NEAPs, and 18 others were concern. Reversing the Spiral: The They Allow preparing them. Eight countries, Population, Agriculture, and Environment supported by $123 million in Nexus in Sub-Saharan Africa focused As Africa’s population grew, the �nancing from the Bank and other on the linkages between rapid region’s leaders underscored the need partners, had ESPs, which sought to population growth, the degradation for energy, power, and infrastruc- establish the policies, laws, and of the environment through nutrient ture—but without the environmental reforms to advance the goals set by depletion of soils, and the sluggish and social costs associated with the NEAPs. Worries about expanding progress in agricultural productivity. some earlier projects. John Reed, deserts and widespread land former chief executive of�cer of degradation influenced the Bank’s Citibank, is quoted saying that “a car approach, and some ESPs included Criticism and Apprehension has brakes so that you can drive fast,� community-based natural resource and in many ways the same concept management programs. Other ESPs Increased environmental awareness applies to safeguards in large supported conservation, manage- in the late 1980s intensi�ed criticism development projects. A rigorous ment of protected areas, environmen- of Bank-funded development projects safeguard policy enabled the Bank to tal information systems, and public in which the environment had been help Africa address its energy and awareness. neglected or inadequately planned infrastructure de�cit. for. The U.S. Congress voted to Alongside the ESPs was a new require U.S.-supported international It took several rounds to create the 28 emphasis on strengthening capacity. �nancial institutions to take into safeguards structure. A 1989 policy Regional Reviews required an environmental impact Forests and their environmental assessment (EIA) for projects that could services are threatened, and the have a “signi�cant negative effect on the African wilderness is being shrunk. environment.� The system evolved, by The challenge is to intensify agricul- the late 1990s requiring protection of tural production and limit the natural habitats, cultural property, and footprint of today’s farm sector. But indigenous and vulnerable populations. such a shift requires capital that few countries have and massive social With tools for mitigating social and transformation. environmental risks, the Bank embarked on complex—and controver- „ Extractive industries. International sial—energy and power projects, demand for minerals, oil, and gas is including the Chad-Cameroon Oil driving investments. Exploitation of Pipeline, the West Africa Gas Pipeline, Africa’s still untapped potential will the Songo Songo Gas Development and involve energy and transport Power Generation Project in Tanzania, infrastructures that leave huge the Bujagali Dam in Uganda, the environmental footprints. ilmenite mining project in Madagascar, and Cameroon’s Lom Pangar „ Land deals. A new land rush is Hydroelectric Project (see box 1). under way, with foreign investors leasing large swathes of land for BOX 1 More Pr ections, More commercial agriculture, including The Next Wave of biofuels. Comprehensive informa- Infrastructure — Lom Pangar Environmental Concerns tion on land investment doesn’t Hydroelectric Project exist, but expressed demand for A complex project with e ensive safeguards, the New environmental challenges are farmland comes to an estimated 60 mounting in Africa, whose economic million hectares. The land deals Lom Pangar Hydroelectric Project calls for a large growth falls short of being green, clean, affect livelihoods, food security, and regulating dam in an ecologically sensitive area of and resilient. Some prominent concerns ecosystem services. Countries need Cameroon’s eastern woodlands and forests. The for the next decades: to identify investment models that project involves the flooding of wooded lands, the discourage land speculation and relocation of communities, and the disruption of „ Land degradation. Population maximize bene�ts for local natural habitats. A er standing apart from the growth continues to drive the populations. conversion of natural habitats to project, the Bank g involved in 2005, advising farms, with the area of land farmed „ Urbanization. Africa is rapidly the government of Cameroon on ways to adhere predicted to double by the year 2050. urbanizing, with pressures on water, to Bank standards in the preparation. Assured Africa shows the fastest degradation sanitation, and municipal services. In that environmental and social safeguards were rate, with 70 percent of the cultivated many societies, urbanization also being applied, the Bank board agreed in March land area degraded due to deforesta- has brought positive development 2012 to help �nance the project. tion and poor agricultural practices. results over time. To offset disruptions associated with the project, the Bank assisted the government of Cameroon in A 20 YEAR RETROSPECTIVE establishing the 58,000-hectare Deng Deng National Park, providing unprecedented pr ection for a variety of local wildlife, including a population of western lowland gorillas and her primates. Moreover, in an innovation from the Africa Region, the recurring costs for managing the new national park are nded through the water tariff associated with the dam. ARNE HOEL/WORLD BANK 29 Mongolia East Asia and Paci�c Region China Rep. of Korea Lao P.D.R. Myanmar Vietnam Cambodia Thailand Philippines Marshall Islands Malaysia Palau Fed. States of East Asia and the Paci�c island states, home to 40 percent of Micronesia Kiribati Papua Indonesia the world’s population, have registered some of the highest Timor-Leste New Guinea Solomon Is. Samoa growth rates in human history—and face some of the world’s Vanuatu Fiji Tonga IBRD 31562R MAY 2012 most challenging environmental problems. Land degradation, deforestation, severe urban pollution, and rapid biodiversity loss environmental policies. Regional present increasingly urgent priorities. Governments have come programs such as the Metropolitan Environment Management Program, to understand that a “grow now, clean up later� approach is the Urban Air Quality Management costly and unsustainable. Strategy for Asia, and the Clean Air Initiative Asia—all implemented in The region’s political leaders view Millennium (2001) together provided partnership with development effective environmental management a framework for environmental partners—helped build capacities and as a necessary part of their national action in the world’s second largest enabled partnerships for the improve- development agendas. Policy, regula- economy. ment of the urban environment. tory, and institutional frameworks have Country-speci�c projects, such as the been established, and environmental „ Similarly, environmental sector Environmental Management Project action plans are a part of each country’s reports in Indonesia, the in China and the BAPEDAL overall development strategies. Philippines, and Vietnam set the Development Technical Assistance stage for environmental projects Project in Indonesia, helped govern- that will follow in those countries. ments establish environmental Strategy, Analysis, and Multiyear and comprehensive management frameworks. Capacity Development studies—Cost of Pollution in China: Economic Estimates of Physical Damages In 1993 the World Bank published and Poverty-Environment Nexus in Financing Transformative Toward an Environmental Strategy for Asia, Cambodia, Lao PDR, and Vietnam— Investments outlining environmental challenges in documented the many linkages the Region, and a dozen years later between environmental and The Region’s portfolio of projects issued Environment Strategy for the World development challenges. More with environmental objectives and Bank in the East Asia and Paci�c Region. recently, a series of studies on components has gradually grown to This latter publication reviewed key lowering carbon emissions provide support sustainable natural resource trends, priorities, and Bank activities, options for adjusting development management and biodiversity E N V I R O N M E N T M AT T E R S | 2 0 1 2 setting key objectives and a course of paths in China and Indonesia. protection, urban environmental action for Bank support. The program improvements, cleaner energy, and has included analytical work, advice, „ The Bank’s Environment Monitor sustainable transport. The Global capacity building, and �nancing for series—launched in 2000 in Environment Facility has helped environmental projects. Thailand and the Philippines and support policy reform and innovative later extended to Cambodia, approaches to “greening� sector The Bank has devoted considerable Indonesia, Lao PDR, Papua New projects. In China, for example, GEF effort to establishing the analytical Guinea, Thailand, and Vietnam— grants helped pilot energy ef�ciency basis for governments to set environ- uses maps, charts, and graphs to and renewable energy programs, mental priorities and shape the policy illustrate environmental trends in supporting important policy and environment for controlling pollution accessible formats that inform the institutional change toward more and preserving natural habitats and public debate on critical environ- sustainable practices. In Indonesia biodiversity. mental issues. they helped integrate coral reef protection with coastal livelihood „ Clean Water, Blue Skies: China’s Capacity building has been crucial to improvement (see box 2). Environment in the New Century (1997) equipping government institutions and China—Air, Land, and Water: with the knowledge and skills needed The Region has also developed large Environmental Priorities for a New to formulate and implement effective global environmental programs, 30 Regional Reviews including successful implementation of BOX 2 Indonesia Coral Reef Rehabilitation and Management Project the Montreal Protocol for the phaseout of ozone-depleting substances Indonesia’s coral reefs are considered an epicenter of marine biodiversity, spanning an area of some 51,000 (see box 3) and the largest carbon square kilometers. In the heart of the Coral Triangle, they represent about 18 percent of the world’s coral �nance portfolio. reefs. Yet they are at increasing risk from escalating atmospheric CO2 levels and climate change impacts, as well as population pressure, over�shing, and coastal development, which brings with it the side effects of To address East Asia’s environmental challenges, the Bank has actively pollution and habitat degradation. recruited environment professionals, For the last 15 years, the Coral Reef Rehabilitation and Management Project (COREMAP) has worked through while decentralizing operations to decentralized governance and community co-management to address the various threats. Education and place staff closer to clients. awareness raising, technical training, and community empowerment have led to local management of reef resources. Economic incentives such as community development grants and microloans offered �shers Looking to the Future alternative strategies for income generation. Government, donors, and her partners have come to realize that participatory management by local communities of the resources they depend on for livelihoods and food As large parts of the region continue security is essential to developing viable models for the sustainability of coral reefs. The approach has been a fundamental rural-to-urban applied in some 360 villages in eastern Indonesia with support from the World Bank. Communities have come to transformation, governments are seeking to manage the environmental understand the importance of coral reefs and have curtailed destructive �shing practices and created new challenges to ensure that development marine pr ected areas. Indonesia has recorded measurable improvements in the condition of reefs and net gains are sustainable. The 2008 �nancial increases in household incomes in the majority of COREMAP sites since the start of the program. crisis demonstrated the fragility of the global economy, while global climate A third phase is planned to ramp up these efforts across coastal districts in Indonesia, with a greater change has introduced another set of emphasis on rights-based approaches to managing coral reefs, marine spatial planning, and robust long-term vulnerabilities, particularly regulatory frameworks. These will be matched with scaled-up investments in alternative livelihoods linked for small island nations in the Paci�c. to innovation in capturing wealth more sustainably from coral reef ecosystem goods and services to deliver Many leaders in the region are looking bene�ts to the poor while safeguarding globally important biodiversity. for a new development paradigm that uses environmental innovation—“green� and “smart� approaches—to get on a sustainable path that is consistent with continued economic growth. The main pillars of the Bank’s new environment strategy—clean, green, and resilient development—are nowhere more relevant than in East Asia and the Paci�c. BOX 3 ODS Phaseout Program in East Asia to Implement the Montreal Pr ocol The World Bank has assisted countries to implement the Montreal Pr ocol on Substances that Deplete the Ozone Layer—a measurable environmental achievement of the past two decades. The Bank’s ozone-depleting substance (ODS) phaseout program in East Asia—implemented in China, Indonesia, Malaysia, the Philippines, A 20 YEAR RETROSPECTIVE Thailand, and Vietnam—represented 80 percent of the World Bank’s Montreal Pr ocol portfolio ($800 million). The phaseout of CFCs was completed in all countries by the end of 2009. Provided no her types of ozone-depleting substances are released to the atmosphere, the stratospheric ozone layer is expected to return to its 1970s conditions by 2050. Because CFCs are also p ent greenhouse gases, with a global warming p ential of as much as 10, 000 times that of carbon dioxide, the phaseout carries signi�cant climate bene�ts. The World Bank’s ODS phaseout program in East Asia contributed to the t al phaseout of more than 200,000 tons of CFCs a year and avoided emissions of high global warming p ential gases of 500 million tCO2 equivalent a year. In 2007 the Parties to the Pr ocol decided to accelerate the hydrochlorofluorocarbons (HCFCs) consumption and production phaseout schedule for b h developed and developing countries. HCFCs are chemical substances used primarily as refrigerants in refrigeration and air-conditioning equipment and as blowing agents for producing insulation foam. HCFCs were introduced as transitional substances to replace CFCs. The �rst measure for controlling the production and consumption of HCFCs will enter into force in 2013 for developing countries and complete phaseout by 2030, with a small allowance for servicing existing equipment until 2040. HCFCs also have signi�cant global warming p ential, which is a key consideration driving the accelerated phaseout. East Asian countries partnering with the Bank in addressing HCFC phaseout include China, Thailand, Indonesia, the Philippines, and Vietnam. HCFC consumption and production in these countries represent more than 60 percent and 90 percent, respectively, of t al HCFC consumption and production in the developing world. 31 Europe and Central Asia Region Russian Fed. Poland Estonia Latvia Lithuania Belarus Russian Federation Czech Rep. Ukraine Slovak Rep. Kazakhstan Moldova Slovenia Hungary Romania Croatia Bosnia and Serbia Bulgaria For the Europe and Central Asia (ECA) Region, the 20-year Herzegovina Kosovo Montenegro FYR Macedonia Georgia Armenia Azerbaijan Uzbekistan Kyrgyz Rep. Turkey Turkmenistan Tajikistan Albania trajectory opened with the unique set of challenges posed by Cyprus the rapid political changes in Central Europe in the late 1980s, IBRD 35099 MAY 2012 followed almost immediately by the collapse of the Soviet Union. Three crises overlapped: extreme economic hardship Accelerated Management Support in Poland brought about by the sudden withdrawal of Soviet subsidies, energy transfers, inputs, and markets; an institutional collapse In 1990 the Bank Board approved an $18 million environmental manage- occasioned by underfunded or fully bankrupted governments ment loan to Poland. The �rst project shutting down various functions; and an environmental crisis of its kind in the Region, the loan as failing factories wound down operations, sometimes adding provided accelerated assistance in establishing new management to the extensive map of degraded, toxic waste sites left by systems for the environment. The neglect and mismanagement of the environment. project also focused on operational activities in three designated “ecological disaster� areas— Katowice, Krakow, and Legnica. The Bank was actively engaged at consideration of environmental different levels during this dynamic aspects. State enterprises changed Unfolding in the early phases of period, including the Environment hands quickly and without clarity Poland’s transition, the project faced for Europe process; regional environ- on questions of responsibility for challenges, but it bene�ted from the mental programs focused on trans- existing environmental damages. strong commitment of the Polish boundary river basins, lakes, and Moreover, as outmoded, uncompeti- government—despite changes in seas; national environmental tive factories shut down, countries government and shifting personnel. strategies; and both investment and turned to the intensive exploitation The model was understood to be one capacity-building projects. To take of natural resources such as forests, of cooperation rather than interna- on this complex work, interdisciplin- minerals, and oil to increase tional assistance, and a shared vision ary teams formed from the Bank, export earnings. These challenges soon emerged on the best ways to development partners, and the extended to the restructuring of the integrate environmental concerns country governments. A key chal- agricultural sector, which faced a into the larger process of Poland’s E N V I R O N M E N T M AT T E R S | 2 0 1 2 lenge was integrating environmental major problem of pollution from economic and political transition. priorities into governments’ eco- large-scale livestock operations. nomic planning and resource Poland required a new management allocation processes. The Bank had diverse experiences structure for designing and imple- in working with governments to menting various activities and for Governments had variable success in upgrade environmental manage- allocating local and international strengthening environmental ment capacity in ministries of resources. Key institutions, includ- management and incorporating environment and other agencies ing structures in the designated environmental considerations into responsible for key functions ecological disaster areas, were plans, programs, and projects. such as water and wastewater, strengthened, with dozens of Estonia, Latvia, Lithuania, and solid waste, and air quality. of�cials receiving intensive training Poland, for example, were able to Some investment and capacity- at facilities in Denmark, Sweden, make signi�cant progress with Bank building projects were highly and the United States. support, while others proceeded more successful while others presented slowly and faced greater challenges. major obstacles, reflecting the When the project concluded six years diversit y of political and later, the country had a set of Many countries embarked on mass economic settings in the functional institutions, using modern sell-offs of state assets, with little post-Soviet ECA region. management approaches. In addition, 32 Regional Reviews there were national environmental economic, social, and political Measurable Gains audit techniques, along with trained adjustment. specialists to carry them out. Poland Amid the dif�cult challenges associated also had established a modern system Environmental data were unreliable. with the sweeping transition, some of air quality monitoring, including a The legal and regulatory systems were measurable gains for the environment network of compatible monitoring ineffective, and command and control emerged, demonstrating that some stations, linked to environmental systems couldn’t address industrial inherited ecological problems could be management programs, for the pollution. Appropriate standards for reversed. The Aral Sea—virtually Katowice and Krakow regions. The discharge and ambient environmental shrinking away in a widely docu- government also had a comprehensive quality didn’t exist, and companies mented eco-disaster—was helped by a inventory of sources of air pollution lacked both �nancial resources and $86 million World Bank project in 2001, and a data bank of pollution measure- economic incentives to invest in with counterpart funds provided by the ments established. pollution control systems. government of Kazakhstan. The resulting Syr Darya Control and To address water pollution, the project The challenges multiplied. As the Northern Aral Sea Project brought in demonstrated an integrated approach to project was implemented, the Russian new hydraulic structures to support water resources management in the government repeatedly restructured increased flows. The effort has essen- upper Vistula River Basin and estab- institutions, laws, and regulations. tially brought back the northern Aral lished regional water management For example, in 1996 the Ministry of Sea, restoring a number of critical boards in Katowice and Krakow. Environment and Natural Resources ecological functions. Modern environmental laboratories was reorganized as the State were operating in Katowice and Committee for Environmental Another visible environmental disaster Tarnow, with new computer-based Protection, which in turn was abolished had appeared in the northern Black Sea. quality control systems. Poland also in 2000, with its functions folded into The Danube River, coursing through 17 gained new techniques for groundwater the Ministry of Natural Resources, countries, carried urban and industrial monitoring, along with 10 emergency whose management expressed little wastes to this body of water, along warning stations and a flood forecast- interest in the project. with high levels of nitrogen pollution ing and management system. from fertilizers used in Eastern Europe. For these and other reasons, the The 1998 Danube River Protection Environmental Management Project Convention provided a legal framework Challenges in Russia was extended four times and amended for cooperation among the Danube 13 times, eventually closing in 2011, countries, and a subsequent program The Bank’s Environmental 11 years later than planned. led by the United Nations Development Management Project in Russia illus- Nonetheless, the project effectively Programme helped identify the sources trates some of the challenges during the created a framework in which various of degradation and invest in policies, transition period. In 1992 staff began environmental efforts could be regulations, and institutions responsible preparing the project, which became designed, including projects on biodi- for managing the basin. Since 2002, effective in 1995, aiming to incorporate versity protection, environmental 10 projects supported by the Investment sound environmental and natural epidemiology, and decision systems for Fund for Nutrient Reduction �nanced resource management into Russia’s managing water resources. by the Global Environmental Facility A 20 YEAR RETROSPECTIVE WORLD BANK 33 successfully piloted measures to reduce support around three broad areas: world. Countries are focused on energy nutrient loads entering the Black Sea pollution management, natural security, and avoiding possible energy and Danube Basin—with projects in resources management, and shortages, but they want to use the Bosnia and Herzegovina, Bulgaria, climate change. cleanest energy possible. In Turkey the Croatia, Moldova, Romania, Serbia, Private Sector Renewable Energy and and Turkey. For pollution flows, the Bank is Energy Ef�ciency Project is helping supporting improved environmental increase privately owned and operated The World Bank assisted countries in infrastructure, pollution management, renewable energy production within a phasing out ozone-depleting substances and policy advice on regulations and market-based framework. And in the under the Montreal Protocol, projects economic incentives to address contam- Ukraine a new project supports whose success was assisted by the fact ination from industry, energy, agricul- investments in energy-saving actions that a narrow set of pollutants and ture, and cities. Work to strengthen for industry, municipalities, and industries were involved. institutions in environmental manage- municipally owned enterprises and ment continues. energy companies. Meanwhile, for a large group of countries, the prospect of European Within the natural resources manage- Finally, governments are working with Union (EU) accession accelerated ment area, the Bank is supporting international partners to make their improvements in environmental sustainable forest management, with an economies more resilient to climate management, with the EU accession emphasis on governance, the role of change. These changes include process requiring investment in human communities and the private sector, managing water resources more capital and institutional strengthening. conservation, and carbon sequestration. wisely, upgrading transportation A major forest operation is being drawn infrastructure, and making utilities up in Russia, with other operations run with greater ef�ciency. Hydro- Today’s Emphases — Pollution, under way throughout the region, meteorological services are being Natural Resources, Climate including afforestation and carbon upgraded in Central Asia, Moldova, �nance operations launched in Bulgaria, and Russia. Tajikistan, one of the most The enormous diversity of ECA’s 30 Central Asia, Czech Republic, Latvia, vulnerable countries, has tapped the countries and 480 million people and Poland. Climate Investment Funds to invest in requires flexibility. The Bank tailors greater climate resilience across a range today’s programs to individual country Meanwhile, the region’s carbon emis- of development programs. needs, organizing its environmental sions are among the highest in the BORIS BALABANOV/WORLD BANK E N V I R O N M E N T M AT T E R S | 2 0 1 2 34 The Bahamas Haiti Regional Reviews Jamaica Dominican Rep. St. Kitts and Nevis Mexico Antigua and Barbuda Belize Dominica St. Lucia Guatemala Honduras Latin America and Barbados El Salvador R.B. de St. Vincent and the Grenadines Nicaragua Venezuela Grenada Trinidad and Tobago Costa Rica Panama Guyana Colombia Caribbean Region Suriname Ecuador Peru Brazil Bolivia Paraguay The Latin America and Caribbean (LAC) region presents a Chile daunting mix of environmental challenges. The region is Uruguay Argentina exceptionally well endowed with natural assets. It is home to Falkland Islands (Islas Malvinas) A dispute concerning sovereignty over the islands exists between �ve of the ten most biodiverse countries in the world (Brazil, Argentina which claims this sovereignty and the U.K. which IBRD 31564R MAY 2012 administers the islands. Colombia, Ecuador, Mexico, and Peru). The fertile highland valleys in the Andes and the rich tropical belt support a buoyant agricultural sector. Likewise, the Amazon forests serve as a worsening urban air pollution, global sink of greenhouse gases and play an important role in responsible for about 3,900 prema- ture deaths each year. The program climate regulation. involved tougher fuel quality standards, conversion of 86,000 vehicles to natural gas, improved At the same time, Latin America has led the developing world in reducing vehicle inspection and maintenance registered the world’s highest rates of harmful urban pollution and programs, and the design of overall urbanization in the world, generating providing clean water and sanitation air quality management programs for pressures involving water overuse services. cities with the most extreme pollu- and pollution, solid waste, land use, tion problems. The loan also allowed and transport-related pollution. The Peru to address a dif�cult problem Region’s challenge, therefore, Instruments to Enhance involving over�shing of anchoveta— involves simultaneously addressing Sustainability an important export industry. the green challenges as well as the Currently, the full anchoveta fleet pollution impacts of growth and The Bank has used an array of operates within a government quota rapid urbanization. instruments to help countries address system. A voluntary retirement plan environmental problems and for the �shers addresses the problem Recognizing the global signi�cance enhance sustainability. Analytical of overcapacity. of LAC’s natural assets, the World work such as Country Environmental Bank has long played a pioneering Analyses (CEAs) helped identify Another example of the World role in developing innovative policies gaps and opportunities, informing a Bank’s partnership with LAC clients for environmental protection. The series of Development Policy Loans is its engagement with Mexico on Bank has worked with partner to enhance policy instruments and climate change. The dialogue and A 20 YEAR RETROSPECTIVE governments to strengthen the to build capacity for environmental support span over 15 years of institutions responsible for environ- management. Investment projects collaboration, ranging from analyses mental management and to train the have addressed environmental of low-carbon approaches and people who would run them. problems ranging from air pollution adaptation, GEF-funded mitigation Because this effort has involved novel management to land management projects, and policy loans. These and experimental approaches, the and conservation. loans have bolstered Mexico’s learning curve has been steep, but institutions and policy frameworks the rewards have also been The Peru Development Policy Loan for the reduction and monitoring of signi�cant. series shows the ways that new emissions across sectors and for systems for environmental manage- enhancing its ability to adapt and Costa Rica, for example, has gone ment can help tackle urban air protect the most vulnerable against from a country with high deforesta- pollution, address fuel quality issues, the inevitable impacts of climate tion rates to one with net forest and promote more sustainable change. Similarly, policy loans in increases. Deforestation rates have �sheries management. Drawing from Colombia and Brazil have been used also dropped signi�cantly in Mexico a comprehensive CEA, the program to build institutional capacity and and Brazil. Many cities in LAC have helped the government address develop policies to address the causes 35 of environmental problems through often cited as models for the rest of the from improving management of natural systemic reforms. world. For example, the region leads the resources and biodiversity conservation developing world in the extension of to increasing efforts in pollution areas under protection (20 percent management. Many challenges still Conservation and Biodiversity versus 13 percent in the rest of the remain: the region’s megacities and developing world) and is often con- rapidly expanding medium-size cities There have been signi�cant achieve- sulted on how to successfully establish continue to put stress on the quality ments in the area of conservation, with conservation trust funds (20 such funds and quantity of water resources; the region leading the world in new exist today and help mobilize and expansion of the agricultural frontier in policy initiatives for conservation. As secure �nancing for protected areas and various countries still drives deforesta- elsewhere, the early emphasis was on for other conservation initiatives). tion and land degradation; and climate command and control instruments— change brings with it new challenges, establishing new protected areas with Policy innovations began in the late such as glacier melt and changes in the the aim of minimizing anthropogenic 1980s with a series of debt for nature natural environment (increased water interference and the destruction of swaps, beginning with Bolivia in 1987. scarcity in some regions, saltwater habitats. But it was soon apparent that The process was subsequently re�ned, intrusion in coastal areas, and impacts legal declarations seldom translated culminating in innovations in Costa to forests including the Amazon, to into effective conservation, and a Rica and Mexico with a series of name a few). A recent struggle in many variety of alternative instruments were payment for environmental services countries is how to take advantage of developed, recognizing the need to projects. The new policies, comple- the high global demand for oil, gas, provide incentives for more effective mented by regulations, seek to remove minerals, and other natural resources stewardship of natural habitats. incentives for land conversion while without degrading the natural environ- E N V I R O N M E N T M AT T E R S | 2 0 1 2 strengthening biodiversity protection. ment and livelihoods in the surround- Over the past 20 years, governments The new programs encourage ecologi- ing areas. and society at large in the region have cal territorial planning, clearer land learned to appreciate biodiversity’s rights, stronger enforcement against The region needs to balance manage- intrinsic value and its contribution to illegal logging, reforestation, and native ment of its environmental quality and many human activities (agriculture, forest management. The region has natural wealth with providing better water regulation, flood control, and so demonstrated the bene�ts of empower- living conditions to a sizable proportion on). Through partnerships with the ing resource-dependent indigenous and of the population that lives in poverty. GEF, World Bank, bilateral agencies, farmer communities that can function The good news is that Latin American and many other stakeholders, mature as effective stewards of natural and Caribbean countries can draw from programs and policy tools help reduce resources and biodiversity. experience acquired over the past years threats to biodiversity, notably land in environmental management—using conversion to agriculture, deforestation economic and institutional tools and and forest degradation, and overexploi- Future Challenges — harnessing the energy of civil society— tation of coastal and marine resources. The Long-Term View as well as its innovative spirit to tackle The creation and strengthening of the new challenges. protected area systems and other Over the past 20 years, the LAC Region complementary regulatory tools are has done a lot of things right—ranging 36 Regional Reviews Syrian Lebanon A.R. Middle East and Malta Tunisia Iraq I.R. Morocco West Bank and Gaza of Iran Jordan Algeria Kuwait Arab Libya Rep. of Bahrain Egypt Qatar North Africa Region U.A.E. Saudi an Om Arabia Rep. of Yemen Djibouti The countries of the Middle East and North Africa have been subject to an unusual mix of environmental pressures and IBRD 31565R MAY 2012 bene�ts. Population growth and rapid urbanization have Eight countries issued decrees for strained water resources, exacerbated pollution problems, and environmental impact assessments. stretched basic services. Vast natural assets—including oil, gas, The program supported policy and some land and marine resources—have contributed to analysis for environmental sustain- growth and, in some states, generated unusual wealth. But ability, using Cost Assessment of exploitation of these resources is pushing the limits of Environmental Degradation method- ology. The METAP program also sustainability. Climate change adds to these challenges, with supported several countries in the more frequent weather extremes, increased pressure on water preparation of National resources, and greater vulnerability for coastal cities. Environmental Action Plans. Countries formulated regional In 1990 the Middle East and North institutions to address the mounting strategies for water quality and Africa countries were ill equipped environmental challenges facing the integrated coastal zone management. even to take stock of their own region. The EIB and the World Bank As institutions and analytical tools environmental needs, let alone made the environment a priority in improved, the countries developed a address threats and risks. Only Syria their assistance strategies and in pipeline of environmental projects had a separate ministry for environ- 1990 prepared an Environmental totaling $2.5 billion, with the ment protection, and it employed Program for the Mediterranean World Bank poised to provide only a handful of professional staff. (EPM), assessing the region’s $500 million in �nancial support, Other countries lacked laws, regula- challenges. Soon after, the and EIB, $2 billion. The projects tory authorities, and systems for Mediterranean Environmental included industrial pollution control environmental management. Technical Assistance Program in Algeria, pollution abatement in (METAP) became the operational Egypt, environment management in The few environmental activities arm of the EPM, establishing Morocco, and solid waste manage- were principally �nanced by grants programs in Albania, Algeria, Bosnia ment in Jordan, Morocco, Tunisia, from international donors. The World and Herzegovina, Croatia, Egypt, and the West Bank and Gaza. Bank and European Investment Bank Jordan, Lebanon, Libya, Morocco, A 20 YEAR RETROSPECTIVE (EIB) supported water and wastewa- Syria, Tunisia, Turkey, and the West METAP supported extensive ter treatment in a handful of countries Bank and Gaza. capacity building. The network such as Algeria, Tunisia, and Turkey. MED-CITIES, established by A few regional initiatives monitored METAP grew into a multifaceted, METAP, became a self-sustaining and reduced Mediterranean marine $60 million program, spanning four network, headquartered in pollution, such as the Mediterranean phases over two decades and Barcelona, providing technical Strategy and Action Plan, �nanced by assisting a transformation in the way support to selected northern and the European Union, and the countries approached the environ- southern municipalities. The core Mediterranean Action Plan, under the ment. National strategies, operating goal was to build national and Barcelona Convention. at the multicountry level, led to the regional expertise in policy analysis, emergence of regional approaches on environmental economics, solid solid waste and pollution manage- waste management, integrated A Wholesale Change ment. The necessary legal frame- coastal zone management, and works and institutions emerged, with environment impact assessment. The The 1990s began a 20-year effort to ministries of environment in Algeria, METAP countries today can draw on build systems, capacities, and Lebanon, Morocco, and Tunisia. national and regional expertise, 37 DORTE VERNER DORTE VERNER supplementing it when necessary with prepared to take on the ambitious markets in Europe. Adaptation to a international consultants. In the fourth programs needed to control pollution, Changing Climate in the Arab Countries, a phase of the program, METAP trained manage scarce water and land report undertaken with the League of 600 country of�cials in environmental resources, and expand renewable Arab States, offers guidance to 22 Arab economics, environment and trade, energy and sustainable �sheries. countries on the challenges of climate environmental assessments, coastal Climate change promises intensi�ed change adaptation. zone management, and solid waste water scarcity problems, plus new management. pressures on coastal cities, which are The Bank, in partnership with several already stressed from population countries and the GEF, recently Both the region and the Bank growth and unchecked development. launched the MENA Desert Ecosystems became better equipped to address and Livelihoods Program, a 10- to environmental challenges through The World Bank portfolio spans four 15-year program to enhance livelihoods regional approaches involving multiple areas: shared seas, climate change, in desert ecosystems. The program partners. The Bank drew these lessons deserts, and pollution and chemicals begins with $21 million in Bank-GEF from the experience: management. support for national and regional projects in Algeria, Egypt, Jordan, and „ Countries should invest their own The shared seas program includes the Morocco. Proposed projects include money in key projects, ensuring Mediterranean Environmental investments in ecotourism, agriculture, greater ownership and lowering the Sustainable Development Program and livestock management. To vulnerability that accompanies (Sustainable MED). A successor strengthen sustainability, all projects excessive reliance on outside grants. program to the original METAP, it will will use an integrated ecosystem integrate the environment into the management approach. „ Decision makers other than environ- economic development agenda of mental specialists must grasp the southern and eastern Mediterranean Under the pollution and chemical costs of degradation and loss of countries. In 2009 the Global management program, countries are natural resources. Environmental Environment Facility had earmarked establishing systems to better track and policies should enjoy support within about $50 million in support. manage chemicals—crucial as popula- �nance ministries. Meanwhile, the Bank extended its tion centers grow and health effects of engagement in the shared seas portfo- pollution become more evident. In „ Donors need to stay engaged over lio, broadening its support to other Egypt the government, private sector, the long term. Building capacity and regional shared seas, such as the Gulf banks, and civil society are working strengthening institutions is a and the Red Sea. The Gulf Environment together to encourage industries to E N V I R O N M E N T M AT T E R S | 2 0 1 2 time-consuming process requiring Program and Action Plan engages move toward compliance through changes in mindset and behavior. several Gulf states in a “fee for service� several policy tools, including credit arrangement for technical assistance to lines for industries, improved enforce- „ Regional programs present special strengthen their environmental ment, and pilots for disclosure of challenges. Regional analysis and management capacity, with the industrial performance. Lebanon, action are required, along with ultimate objective of facilitating interested in a similar approach, is actions by individual countries. sustainable development of the Gulf coordinating with a European Union Regional programs must promise region and its waterways. project to strengthen enforcement. bene�ts for individual countries; otherwise, they would have little In the climate change area the Bank Twenty years of investments in incentive to participate. supports Algeria, Egypt, Jordan, capacity and institutional strength Morocco, and Tunisia in accelerating now make it possible for countries in cleaner power technologies like the region to manage the complex METAP’s Legacy concentrated solar power, which will challenges posed by resource avoid CO2 emissions, reduce depen- scarcities, population growth, and With stronger institutions and dency on fossil fuels, generate green climate change. expanded capacities, countries in the jobs, and help build an industry with Middle East and North Africa are better export potential to high-paying 38 Regional Reviews Afghanistan Nepal Bhutan South Asia Region Pakistan India Bangladesh South Asia faces two sets of environmental challenges. There are the environmental de�cits associated with poverty—such as Sri Lanka degraded land, poor sanitation, and high incidence of vector- borne diseases. And there are the environmental strains Maldives stemming from accelerated growth—urban crowding, increased automobile emissions, and industrial pollution. IBRD 31566R MAY 2012 Governments in the region are From “Do No Harm� to then-common “end-of-pipe� working to address both sets of “Do Some Good� pollution control approaches, which problems, recognizing the rising treated emissions but didn’t address costs of environmental degradation, The World Bank began to fund industrial processes at the source. which the World Bank estimates to stand-alone environmental projects The projects suffered from imple- be as much as 7 percent of gross in South Asia in the early 1990s. mentation delays and some project domestic product. Essentially, these sought to go design flaws. A Bank evaluation beyond “do no harm� to “do some concluded that the projects would In the 1980s social and environmen- good,� often through cleanup efforts have bene�ted from a more compre- tal damages linked to Bank-supported to address degradation and pollu- hensive pollution abatement dam projects in the region ignited tion. Two linked industrial pollution strategy, taking into account the full harsh criticism, and new projects projects in India were typical. Both scope of air, water, and land were intensely scrutinized. India’s focused on mitigating pollution degradation. Narmada Dam set off a global from large industrial facilities, using opposition campaign. Bank manag- ers responded with environmental assessment procedures, leading to clear safeguard policies to prevent or mitigate the damage that develop- BOX 4 ment projects caused to communities Mainstreaming Biodiversity in India’s Transport Sector Highway Projects and their environment. In several In India the Bank is trying to balance the need for improved infrastructure, in particular road A 20 YEAR RETROSPECTIVE cases, the safeguards work has been development, with the pr ection of flora and fauna. Between 2002 and 2004 the Bank produced a systematized and disseminated at the sectoral level (see box 4). collection of 20 self-contained dissemination n es summarized in a report covering lessons learned in managing environmental and social concerns in India’s highway projects. A later analysis, Environmental protections some- “Strengthening Institutions for Sustainable Growth in the Highways Sector,� undertaken as part of times strengthened or expanded a the 2008 India Country Environmental Analysis, studied examples of best practice. These analyses project. For example, environmental have been disseminated throughout India. assessments associated with a school-building project in Pakistan’s The Orissa (India) State Roads Project involved forests and pr ected areas bordering the road Sindh Province led to guidelines to network. Biodiversity assessments, part of the environmental assessment effort, included the reduce the vulnerability of schools upstream identi�cation of likely impacts on intertidal areas, wildlife habitats, and places of rich to floods, earthquakes, and other natural disasters. The project team biodiversity. Measures to pr ect and mitigate disruption to habitats and species were built into the also added a new feature—environ- project. Project managers integrated environmental and biodiversity management plans into mental education as a part of the engineering designs and bidding documents, ensuring that pr ections would be respected during the curriculum. construction phase. 39 “At the time we were getting started in In February 2009 the Indian govern- de�ning these environmental projects, ment established the National Ganga we, like others, tended to focus on the River Basin Authority (NGRBA) to point of emissions,� said Herbert manage a multisector program to clean Acquay, Manager, World Bank South and conserve the Ganga. The goal of Asia Region. “People later came to see ending the discharge of untreated that you could do much more by municipal or industrial wastewater building in greener industrial processes, into the main stem of the river after as opposed to continuing with high- 2020 is ambitious, requiring engage- pollution processes, followed by a ment with �ve Indian states. cleanup effort.� (For an example, see box 5.) The Bank’s National Ganga River Basin Project will help build the The Bank’s environmental engagement capacity of the NGRBA’s operational has since become more nuanced. The institutions not only to manage the MARIA SARRAF India Ecodevelopment Project, current cleanup but also to establish a approved in 1996, set a goal of con- lasting conservation program. The serving biological diversity in seven project will help fund investments protected areas. The complexity of the critical to reducing pollution, including project, covering multiple sites and demonstration projects to establish the multiple species, generated some best approaches in wastewater BOX 5 Cleaner Bricks for Better Air start-up dif�culties, but eventually collection and treatment, industrial Quality in Dhaka, Bangladesh local institutions began to protect the pollution control, solid waste manage- Dhaka’s badly degraded air quality during the biodiversity base, and today some of ment, and riverfront management. The the project’s innovations are used in project will also strengthen the central winter is partly the result of countless brick kilns other forestry projects. and state pollution control boards, that pour unhealthy levels of �ne particulates into which are responsible for monitoring the air. However, bricks are the foundation of the Other programs sought to strengthen pollution, modernizing information country’s fast-growing construction industry. government’s overall capacity for systems, and training staff. A Ganga environmental management, assisting, Knowledge Centre will act as a Approximately 90 percent of the country’s bricks for example, the Bhutan government in repository for information on the are made in outdated and highly polluting strengthening its capacity for conduct- conservation of the river. technologies. Modern, cleaner technologies can cut ing environmental assessments. that pollution burden in half. For example, Hoffman “Twenty years ago, it was unlikely that The shift to more complex, ambitious the Bank would ever have gotten Hybrid Kilns (HHK) and Vertical Sha Brick Kilns environmental projects is perhaps best involved in so complex an environ- cause less than half the emissions of older kilns illustrated by the sweeping National mental project—with multiple states, and save more than 40 percent of the energy used Ganga River Basin Project. The Ganga different layers of environmental by them. accounts for one-fourth of India’s management, and built-in, systemic water resources and its sprawling ways of cutting back on pollution over E N V I R O N M E N T M AT T E R S | 2 0 1 2 Through the Clean Air and Sustainable basin is home to more than 400 time,� Acquay said. Environment Project, plus a grant from the million people, many of whom revere Energy Sector Management Assistance Program, the river as a living goddess. Despite the Bank is introducing clean technologies. To its unique heritage, the Ganga faces Future Challenges make them attractive, a carbon �nance operation extreme pollution pressures and associated threats to its biodiversity Over the past two decades, South is being prepared, providing carbon bene�ts of and environmental sustainability. Asian governments have passed $75,000 per year to each HHK. An additional environmental laws, created agencies bene�t: the new technologies operate on higher Surging population growth, urbaniza- to monitor and enforce that legislation, land, thus providing year-round employment and tion, and rapid industrialization have launched forestation efforts, and improved living conditions for workers. combined to generate devastating invested in water quality. However, levels of degradation in parts of the rapid economic growth, demographic river. Only about one-third of the shifts, and climate change present a sewage from towns and cities on the constellation of challenges that will Ganga’s main branch is treated. require going beyond the steps taken Industrial effluents that pour into the to date. Reliance on “command and river are either poorly treated or control� type environmental regula- completely untreated. tion, together with weak enforcement, 40 Regional Reviews GENEVIEVE CONNORS has undercut incentives to reduce simply “grow out� of their environ- rising prosperity usually brings pollution. mental problems or deal with them heightened demand for improved later. The problem with this frame- environmental management. The Bank, though recognized as a work is that the costs of environmental Globalization has created further trusted partner in the region, remains a degradation are cumulative, often incentives and pressures to address small player, given the scope of South irreversible, and, if neglected, become degradation at the source, building Asia’s environmental challenges. And a threat to development. in green production, and more while many high-level decision makers broadly green growth, from the view the environment as central to The hopeful element is that economic planning stage onward. development, some hold to a stubborn growth provides resources to address belief that countries can ignore or environmental concerns. Moreover, A 20 YEAR RETROSPECTIVE This section was prepared by the following: AFR—Yves Prevost (yprevost@worldbank.org) of the Environment Department. AFR website: www.worldbank.org/AFR EAP—Gayane Minasyan (gminasyan@worldbank.org), with contributions from Magda Lovei (mlovei@worldbank.org), Marea Hatziolos (mhatziolos@worldbank.org), and Viraj Vithoontien (vvithoontien@worldbank.org), all of the East Asia and Paci�c Social, Environmental, and Rural Sustainable Development Unit. EAP website: www.worldbank.org/EAP ECA—Craig Meisner (cmeisner@worldbank.org) of the Europe and Central Asia Environment and Natural Resources Management Unit, with contributions by Stephen F. Lintner (slintner@worldbank.org) of the Operational Risk Department, Agnes Kiss (akiss@worldbank.org) of the Europe and Central Asia Operational Services and Quality Unit, and Marjory-Anne Bromhead (mbromhead@worldbank.org) of the East Asia and Paci�c Agriculture and Rural Development Unit. ECA website: www.worldbank.org/ECA LAC—Sebastian Martin Scholz (sscholz@worldbank.org) and Lorraine Sugar (lsugar@worldbank.org) of the Latin America and Caribbean Regional Environment Unit. LAC website: www.worldbank.org/LAC MENA—Kulsum Ahmed (kahmed4@worldbank.org) of the Europe and Central Asia Environment Unit and Alaa Sarhan (asarhan@worldbank.org) and Salenna Prince (sprince@worldbank.org) of the Middle East and North Africa Environment Unit. MENA website: www.worldbank.org/MENA SAR—Muthukumara Mani (mmani@worldbank.org) of the South Asia Environment, Water Resources, and Climate Unit. SAR website: www.worldbank.org/SAR 41 COURTESY OF WORLD VISION COURTESY OF WORLD VISION How the Rio Climate Convention is Breathing New Life into Forest Operations The World Bank’s forest operations have responded The UNFCCC, responding to a over the past two decades to the Rio conventions, growing concern over the effects of climate change, makes only a brief especially the climate convention and its subsequent reference to forests, recognizing their agreements, though �nancial incentives at scale have role in climate regulation. But the Kyoto Protocol, which entered into E N V I R O N M E N T M AT T E R S | 2 0 1 2 yet to materialize. force in 2005, created so-called flexible mechanisms, which do have importance for the world’s forests. The 1992 Rio Earth Summit adopted not one Under Joint Implementation, coun- convention on forests but three related ones: the tries de�ned as Annex I Parties could Convention on Biological Diversity, the United Nations implement afforestation, reforesta- tion, forest management, and Convention to Combat Deserti�cation, and the United revegetation projects that remove Nations Framework Convention on Climate Change. carbon from the atmosphere and store it in biological sinks in another Annex Of the three, the UNFCCC has the most profound I country and receive credit under the impact on forests and related World Bank operations. protocol. Rules are more limiting under the Clean Development Mechanism, which provides that an Annex I Party may only implement afforestation and reforestation in a non-Annex I country. ABOVE IMAGES: Ethiopia Humbo landscape before and after assisted natural 42 regeneration supported by World Vision and the BioCarbon Fund. Partnerships & Institutional World Bank Response recommended to the CDM Executive tropical and subtropical forest Board. (The lessons learned by the countries to develop the systems and The World Bank responded to the BioCF are synthesized in “BioCarbon policies for REDD+, and also pro- Kyoto Protocol by creating the �rst Fund Experience.� vides them with performance-based global carbon fund in 2000 to demon- payments for emission reductions. strate the potential of the flexible Despite the BioCF’s best efforts, the mechanisms set up by the protocol. The regulatory carbon market has been a The FCPF, now capitalized at around Prototype Carbon Fund (PCF) was disappointment for forests. First, the $430 million, complements the created as a public-private partnership CDM has restricted eligibility to UNFCCC negotiations by demonstrat- �ve years before the Kyoto Protocol and afforestation and reforestation. ing how REDD+ can be applied in the EU Emissions Trading Scheme (EU Second, out of fear that CDM forest countries. The Facility has created a ETS) entered into force. The PCF, carbon credits would flood the framework and processes to help committed to exploring the potential emerging carbon market, it was countries get “ready for REDD+� along for incorporating forestry elements in speci�ed that an Annex I country with the necessary �nancial incentives. carbon �nance, supported the afforesta- would not be allowed to use such Countries come to understand what tion and reforestation of 6,000 hectares credits to meet more than one percent they need to do to participate, including of degraded land in Romania. of its 1990-level emissions. Third, establishing monitoring systems and these credits were created as tempo- national management arrangements. The World Bank’s 2002 forestry policy rary (they are akin to a lease) and have recognized the critical role of forests in to be renewed periodically, and To complement the FCPF’s work in the both climate change adaption and ultimately replaced by permanent areas of readiness and performance- mitigation, and underscored the credits from non-forestry projects. based payments for REDD+, the Bank importance of the new opportunities Fourth, the EU ETS, the powerhouse of and other development banks saw the created by the Kyoto Protocol. the carbon market to date, has com- need for a more systematic and pletely excluded the use of any forest focused approach for raising capital The Bank expanded its engagement carbon credits to offset emissions. upfront to �nance transformational by launching the BioCarbon Fund investments in and outside of the (BioCF) in 2004, a public-private forest sector. Without these early initiative mobilizing resources for Ascent of REDD+ actions, it would be hard for countries pioneering projects that sequester or to reduce forest carbon emissions. This conserve carbon in forests and In 2005, recognizing that the restric- realization that a “missing middle� agro-systems. Ideally, these efforts tions of the CDM would limit their needed to be �lled between readiness could both help mitigate climate access to incentives for protecting and receiving payments led to the change and improve local livelihoods, and managing their forests, a number creation of the Forest Investment demonstrating the potential for of developing countries created the Program (FIP) in the framework of the projects that reduce emissions while Coalition for Rainforest Nations. The Climate Investment Funds. The FIP, providing strong social and environ- coalition introduced the concept of capitalized at $620 million by seven mental community bene�ts. reducing emissions from deforesta- donors, supports investments in eight tion in the UNFCCC negotiations. pilot countries. Part of the capital The BioCF has committed $90 million The scope was expanded �rst to supports a Dedicated Grant for purchasing carbon credits through forest degradation and then to Mechanism for Indigenous Peoples 26 projects, of which 21 involve affores- conservation, sustainable forest and Local Communities. A 20 YEAR RETROSPECTIVE tation and reforestation and 5 involve management, and enhancement of avoidance of deforestation and changed forest carbon stocks, eventually REDD+ incentives require careful agricultural practices. The fund also becoming today’s REDD+. design. There is a need for signi�cant developed innovative transactions, funds early on to catalyze transfor- methodologies, and tools that are now The Bank saw an opportunity to mative changes that will move coun- part of the public domain. The BioCF work with forested countries and tries’ development paths away from has demonstrated the potential of these donors, building on its convening consumptive patterns to more protec- projects to generate both development power and long involvement in the tive uses of the forests. Avenues to and climate mitigation bene�ts. In forest sector, including forest carbon explore include insurance of political addition, the fund’s groundbreaking �nance. The G8 summit of 2007 and physical risks involved in REDD+ experience has produced important encouraged the Bank to design a and land-use programs (for example, lessons and shed light on the early forest carbon partnership. The capital investments and prepayments challenges to the development following year, the Forest Carbon on carbon contracts); monetization by of afforestation and reforestation Partnership Facility (FCPF) was born. �nancial institutions of future pay- projects under the CDM, with a The FCPF, with the support of 18 ment streams under carbon contracts; number of procedural improvements �nancial contributors, assists 35 and issuance of climate bonds that 43 The Influence of Rio and the Road Ahead The conventions born out of Rio brought a renewed focus on forests and their importance to the well- being of local populations and to the planet. The Bank has led the way in implementing the �nancial mecha- nisms for forest carbon, starting with afforestation and reforestation and then REDD+. The UNFCCC has underscored the importance of forests as one of the regulators in the global carbon cycle, in addition to their environmental and social functions. Given the variety of forces that drive deforesta- tion and forest degradation, REDD+ has highlighted that the sustainable use and protection of forests will require intersectoral cooperation and RHETT BUTLER participatory arrangements allowing for the full participation of, among other things, Indigenous Peoples and local communities. In this sense, climate change has brought a new focus to the political, economic, and social changes required both inside and outside of the forest sector for preserving, sustainably managing, and restoring forests. Looking to the future, the Bank will continue to innovate to harness the incentives created by the UNFCCC (including the decisions reached at climate negotiations in Cancun and Durban). Strategically, the battle to E N V I R O N M E N T M AT T E R S | 2 0 1 2 save forests will be won by address- ing the pressures from agriculture, RHETT BUTLER energy, mining, and infrastructure. It requires an integrated approach to managing the natural landscape, including land and water. Deeper partnerships with governments, TOP: In Colombia and elsewhere, Indigenous Peoples are key partners in forest protection. Indigenous Peoples, and local commu- nities, as well as the private sector, BOTTOM: Making agriculture more sustainable, such as aquaculture in Indonesia, is essential to preserving the ecosystem functions of forests, including climate regulation. will be necessary. Rhett Butler This article was prepared by Benoit Bosquet (bbosquet@worldbank.org) of the Carbon Finance Unit. CF website: may be linked to the future carbon the use of endowments, and auc- www.carbon�nance.org emission reductions of REDD+ tions of emission reductions may and land-use programs. In addi- help boost the recurring �nanc- tion, advanced market commitments, ing that will be needed. 44 CURT CARNEMARK/WORLD BANK Two Decades of GEF Partnership Twenty years ago the Rio Earth Summit Over 21 years the GEF partnership has allocated more than $10 billion in “green� mobilized the public, private, and nonpro�t �nancing, unleashing signi�cant partner co�nancing. In addition to the original three sectors to better integrate environmental and implementing agencies—the World Bank, development e orts. Leaders endorsed the UNDP, and UNEP—additional UN agencies and multilateral development banks have Global Environment Facility, a multilateral fund- joined the partnership over time, bringing the A 20 YEAR RETROSPECTIVE ing mechanism established in October 1991 as a partnership to 10 agencies working with governments across the globe. GEF funding $1 billion pilot program by the World Bank, with worldwide has addressed complex environ- mental risks: climate change, biodiversity, the United Nations Development Programme polluted international waters, land degrada- (UNDP) and the United Nations Environment tion and deserti�cation, persistent organic pollutants (POPs), and ozone loss. Programme (UNEP), with the mandate to help The Bank’s engagement with the GEF is cover the incremental costs in reaching the aligned to its overarching mission to alleviate goals in Agenda 21, the Rio blueprint for envi- poverty through sustainable development, balancing economic, social, and environmen- ronmental action at the global, national, and tal considerations. Some $4.5 billion of GEF funding has flowed to client programs, with local levels. more than twice this amount in International Bank for Reconstruction and Development (IBRD) and International Development 45 Association (IDA) co�nance. carbon-resilient development. Wherever change. The Kiribati Adaptation Environmental considerations are possible, the Bank has tried to combine Project II used the $50 million GEF integrated into Bank country assistance GEF funds with other resources to Strategic Priority on Adaptation strategies and lending. GEF grants have expand impact and increase ef�ciency. funding window to increase public helped Bank clients to test innovative „ The China Renewable Energy awareness of climate risks, improve approaches and lay the foundations for Scale-up Program used a renewable policies and procedures for water other �nancing partners to invest. For energy “feed-in� tariff policy to resource and coastal management, example, GEF funds have helped set the support wind farms, biomass power, and strengthen the government’s stage for larger-scale programs like the and small hydropower projects. With capacity for climate risk management Climate Investment Funds. these and other investments, China and adaptation planning. Further is becoming one of the world’s work is now funded by the LDCF. The World Bank has mobilized over fastest growing markets for wind „ In the Caribbean, the Bank has $30 billion in additional funding for and renewables. backed a series of GEF-supported projects, generating economies of scale adaptation projects, beginning in the and stimulating synergies. Particularly „ Indonesia’s Geothermal Power Development Project strengthened late 1990s. The efforts have prepared important were GEF grants in interna- countries to carry out vulnerability tional waters, biodiversity conserva- capacity for geothermal develop- ment, introducing ef�cient project and risk assessments as well as tion, and sustainable land management, adaptation planning. The which historically haven’t received transaction procedures and practices for the creation of approximately 350 Mainstreaming Adaptation to strong international lending support. In Climate Change Project strength- 2011, 42 percent of the Bank’s GEF megawatts in geothermal energy capacity, targeting elimination of 60 ened capacity to collect and analyze grants were combined with projects data on physical and socioeconomic �nanced with IBRD or IDA resources. megatons of CO2. The initial GEF-funded work mobilized further vulnerabilities and to analyze World Bank and CIF investments as options for adaptation. An imple- well as the sale of carbon credits mentation of adaptation measures in Results Over Time the Caribbean project promoted under the Clean Development Mechanism. climate-resilient development and Climate Change – Mitigation. Climate protection of resources vital to change threatens to stall or reverse „ The Egypt Kureimat Solar Thermal tourism, �sheries, agriculture, and development progress in many coun- Hybrid and the Morocco Integrated forestry in four countries. tries. More than 35 percent of the Solar Combined Cycle Power Bank’s GEF Program has supported projects produce energy from a solar Conserving Biodiversity. Safeguarding climate change mitigation investments, �eld with a range of about 20 natural ecosystems and promoting resulting in CO2 reductions of 100,000 megawatts each. These programs more sustainable natural resource kilotons—equivalent to taking 740,000 renewed global interest in concen- management have underpinned the cars off the roads. The reductions have trated solar power technology and World Bank’s biodiversity work for come through renewable energy, energy spawned a follow-on regional more than 20 years. One-third of World ef�ciency, new technologies, and investment in Algeria, Egypt, Jordan, Bank GEF grants have supported transport investments. Morocco, and Tunisia that is being biodiversity conservation. This has led scaled up with an additional GEF to over 114 million hectares set aside as The World Bank’s GEF-funded support grant plus �nancing from the CIF’s protected areas (PAs); more than 20 concentrates on low-carbon and Clean Technology Fund. conservation trust funds have been established and are generating revenues E N V I R O N M E N T M AT T E R S | 2 0 1 2 Climate Change – Adaptation. The to support the management of PAs; World Bank, using grants from the biodiversity considerations are inte- WB GEF Program 1991–2011 Least Developed Countries Fund grated into productive agricultural, (LDCF) and the Special Climate rangeland, coastal, and forestry „ $4.5 billion in GEF grants matched by $11.4 Change Fund (SCCF), helps countries landscapes; and biodiversity conserva- billion of IBRD/IDA/IFC loans and credits to reduce vulnerabilities, build resil- tion is spurring ecotourism and supply ience, and adapt to a changing climate chain certi�cation. and $19.3 billion of her co�nancing by investing in climate-resilient approaches and promoting synergies „ The Amazon Region Protected Areas „ 700 projects across 120 Bank client Project (ARPA) supports designation through ecosystem-based adaptation countries and disaster risk reduction. of 24 million hectares of new PAs in Brazil to combat biodiversity loss and „ Working across all World Bank Regions „ The Paci�c island state of Kiribati, deforestation, while preserving the acutely vulnerable to climate change bene�ts of carbon sequestration and IFC and sea level rise, faces risks to (0.43 billion tons offsets by 2050). coastal zones, water supply, and Indigenous and traditional communi- „ GEF programming integrated across agricultural production. The coun- ties also bene�t. ARPA’s nationally environment, energy, urban, transport, try’s National Adaptation Program of managed endowment fund, valued in agriculture, and health sectors Action laid the foundations for 2010 at $27 million, covers recurrent managing the impacts of climate costs of sustainable PA maintenance. 46 Partnerships & Institutional pollution entering waterways from agricultural, municipal, and indus- trial wastewater. Historical program distribution, by focal area and „ The Environmental Protection and World Bank Region and IFC (1991–2011) (T al approved $4.5 billion) Sustainable Development of the Guarani Aquifer System Project GEF Council WB Approvals by Region GEF Council WB Approvals by Focal Area targeted the sustainable management Int’l Finance Corp Mult-Focal Area projects of the aquifers shared by Argentina, Global 8% Ozone 13% Brazil, Paraguay, and Uruguay and 2% 3% Eastern Africa played a crucial role in incorporating Europe & 22% International Climate Waters groundwater concerns into the Central Asia Change 13% 11% 38% water management agendas of South Asia Land all four countries. 5% Degradation 3% Middle East & Chemical Pollution. GEF grants North Africa support clients’ goals of eliminating East Asia 7% & Pacific persistent organic pollutants by phasing Persistent Organic 22% Latin America & Pollutants 3% out production and use of toxic Biodiversity 29% the Caribbean 21% chemicals, demonstrating safe chemical destruction techniques, promoting safe chemical use and handling, and introducing emission control technolo- gies to capture toxic gases. „ In Liberia GEF funds support key PA than 20 Sub-Saharan countries, management projects tied to the bene�ted from an early $150 million „ The Moldova POPs Stockpiles country’s forest sector reform, and its GEF grant to implement the Strategic Management and Destruction Project “3 Cs� approach—commercial, Investment Program (SIP) for contributed to a modern regulatory community, conservation. One Sustainable Land Management system for the management of POPs project focused on preservation of (SLM) with the support of the World and other toxic chemicals and wastes, biodiversity in Sapo National Park, Bank. The SIP advanced program- allowing for remediation of over the most pristine forest tract in West matic approaches to scale up 1,600 POPs hot spots. Africa and home to the pygmy climate-resilient SLM practices, „ In Vietnam, a hospital waste hippopotamus. Others support park including watershed management management project will co�nance management, establishment of a PA and land-use planning, low tillage, a $150 million Bank loan to support network, and sustainable community intercropping, agroforestry, small elimination of POPs in the health livelihoods across the country’s PAs. water infrastructure, woodlots, and sector by reducing dioxins and „ The Periyar Tiger Reserve, through erosion control. mercury releases from hospital the India Ecodevelopment Project, „ The success of the SIP spawned the incinerators. promoted a conservation and 2011 Sahel and West Africa Program poverty alleviation strategy to in Support of the Great Green Wall Despite the achievements, the scale of mitigate the impact of local commu- Initiative, a land-use program to global environmental problems remains nities’ tiger poaching, overharvesting increase productivity and climate vast. Biodiversity loss, deforestation, of �rewood, and other practices to resilience for 12 West African and overexploitation of marine resources, protect rare, endemic, and endan- Sahel countries supported by GEF, and degradation of water and land all gered species. Today Periyar pro- LDCF, and SCCF funding. World continue. Climate change presents new motes community-based, Bank agriculture, environment, and challenges and makes other chronic A 20 YEAR RETROSPECTIVE park-centered ecotourism. water resource sector projects will problems more complex. The World provide critical baseline �nance. Bank, in its partnership with the GEF, Sustainable Land Management. will redouble efforts to help countries Bank-GEF grants have demonstrated International Waters. World Bank toward greener, cleaner, more resilient, best practices for land and water clients have used GEF grants for water and more inclusive growth. management, preventing carbon loss pollution mitigation, capacity building, from forests, soil erosion, and saliniza- and cooperation across river basins, tion; recovering marginal lands; and aquifers, and seas. This article was prepared by Dominique Kayser (dkayser@worldbank.org) introducing climate risk insurance „ The Strategic Partnership on the and Karin Shepardson (kshepardson@ through adaptation strategies. These Black Sea and Danube Basin, worldbank.org) of the World Bank GEF efforts have been concentrated on areas involving 17 countries and multiple Coordination Team. GEF World Bank in Sub-Saharan Africa where communi- website: www.worldbank.org/gef agencies, addresses nutrient pollution ties struggle with food security. and resulting eutrophication within „ The TerrAfrica Initiative, a global the basin. Ten Bank-supported partnership to scale up sustainable projects under the partnership land and water management in more reduced nitrogen and phosphorus 47 IFC PHOTO LIBRARY De�ning Sustainable Private Sector Development In 1987—a very di erent era with respect to Many would argue that the Brundtland Commission gave much needed visibility how world leaders viewed the environment to the concept of sustainable development, alerting the public to emerging risks and economic development—the International associated with the depletion and contam- Finance Corporation (IFC) recruited its �rst ination of the earth’s resources. Economic E N V I R O N M E N T M AT T E R S | 2 0 1 2 development strategies would have to look environment specialist. That same year, the beyond the immediate needs of the Brundtland Commission released its report, current population, taking into account the need to safeguard resources for future Our Common Future, which challenged the generations. Projects that could generate near-term growth or pro�ts but leave a predominant thinking that societies could legacy of pollution and resource exhaus- either protect the environment or develop their tion would come under heavy criticism. economies. A new perception was beginning In the context of a shifting development paradigm, IFC began ramping up its to emerge, which maintained that long-term efforts. In 1990 IFC amended its Project Review Procedure to incorporate a success—for societies and for businesses—would systematic environmental review of each depend on the ability to do both. of its investments. In 1991 IFC created an environment unit and recruited a small cadre of environmental specialists. A turning point came with the Pangue Hydroelectric Project in Chile in the 48 Partnerships & Institutional early 1990s. Notwithstanding an needed stronger environmental and of 2009, IFC updated its Sustainability unprecedented set of IFC policies for social risk-management systems, turned Framework. The revisions, which environmental and social protection, to IFC, which had already established a became effective on January 1, 2012, the project generated signi�cant standard that could be easily referenced. reflect the evolution in good practice controversy, more than any other in around environmental and social risks the IFC’s history. The project involved In 2002 a group of commercial banks that should be addressed at the the �rst major hydroelectric dam built gathered with IFC to discuss environ- company level, as well as develop- on the Biobío River. ENDESA, Chile’s mental and social issues in project ments in IFC’s changing business largest private utility, built the dam, �nance. The following year, 10 leading model. The changes include increased but the controversies surrounding the banks from seven countries agreed to attention to climate change, supply project’s social and environmental use IFC’s safeguard policies as the chain management, gender, conserva- impacts posed reputational risks for basis for a voluntary risk-management tion of natural resources, ecosystem IFC and focused senior management’s framework known as the Equator services, and revised procedures for attention on the need to avoid or Principles. It has now been adopted by working with �nancial intermediaries. mitigate potentially harmful impacts 76 �nancial institutions worldwide. of IFC-funded projects. Because IFC is the largest global Although IFC’s adoption of the development �nance institution Efforts to strengthen existing protec- World Bank’s safeguard policies was a focused exclusively on private sector tions were stepped up. In 1996 IFC signi�cant step forward, it was clear development, its standards and recruited its �rst social specialist. It set that this was not a long-term solution. guidelines have a multiplier effect. about revising environmental and In addition to the practical problems Many companies worldwide have social procedures and guidance. In identi�ed by IFC staff, the CAO issued incorporated the Performance 1998 IFC modi�ed the World Bank’s a report in 2003 noting serious Standards into their policies. safeguard policies for its own use. An limitations of IFC’s safeguard policies. Governments, such as Bangladesh, independent recourse mechanism, the A particular challenge was IFC’s need Canada, China, Norway, and Vietnam, Of�ce of the Compliance Advisor/ to engage with clients at all stages of are using the IFC standards to help Ombudsman (CAO), was established the project cycle and adapt to compa- inform their thinking on how compa- in 1999 with a mandate to address the nies with wide-ranging differences in nies—particularly in the �nancial and concerns of individuals or communi- scale, risk pro�le, and management extractive sectors—can move toward ties affected by IFC projects, enhance capacity. In 2003 a small team started sustainable practices. projects’ social and environmental to design a framework that was more outcomes, and foster greater public suited to IFC’s needs. It would need to The widespread adoption of IFC’s accountability. distinguish IFC’s responsibilities from standards as a global benchmark has those of its clients; be concise and been welcomed by IFC—although it In 2000 IFC’s environmental unit was understandable for a nonexpert was not fully anticipated. IFC does elevated to department status and a audience; integrate environmental and recognize that the use of its standards director was recruited. The following social dimensions; provide a prag- as a benchmark places a greater burden year IFC adopted environmental matic, outcome-oriented approach; on it to undertake broader consultation sustainability as a core pillar of its avoid prescriptive solutions and with stakeholders when changes are corporate strategy and an integral part provide flexibility to achieve desired made or expected. To help facilitate of its operations. IFC’s new progress over a reasonable period of this knowledge sharing, IFC regularly Environment and Social Development time; and emphasize the importance hosts “Community of Learning� events Department was also directed to go of management systems to achieve and disseminates good practice notes, beyond a risk-management function results. After a two-year global guidance, and other publications. and be more proactive in helping IFC’s consultation period, IFC adopted clients manage their businesses more the Sustainability Framework, IFC seeks to stay at the forefront of sustainably. In effect, this meant consisting of the Policy and sustainability issues in partnership A 20 YEAR RETROSPECTIVE changing the department’s culture Performance Standards on Social and with the private sector and develop- from one that avoided “bad� projects to Environmental Sustainability and the ment partners. Whether managing one that helped clients do business in a Disclosure Policy, on April 30, 2006. downside risk, creating business value sustainable way as part of their The Equator Principles were revised by incorporating sustainable solutions, long-term success. in 2006 to reflect IFC’s Performance or identifying innovative ways to Standards. �nance sustainability, the private Meanwhile, it was becoming clear that sector is the engine of competitive, commercial banks also were increas- In 2009 a review of the framework sustainable solutions and can help ingly exposed to environmental and concluded that it had not—as some �nance and address challenges in the social risks in the projects they �nanced. had feared—become an impediment to years ahead. Nongovernmental organizations were IFC’s growth. In fact, a signi�cant recognizing the vulnerability of publicly number of IFC clients (88 percent listed companies to media campaigns surveyed in 2011) believe that IFC’s This article was prepared by William Bulmer (wbulmer@ifc.org), Elizabeth White (ewhite1@ that drew attention to poor environmen- environmental and social requirements ifc.org), and Vanessa Bauza (vbauza@ifc.org) tal and social performance and appealed are helpful to their long-term business of the International Finance Corporation. to shareholders and consumers to take interests. Following an 18-month IFC website: www.ifc.org action. Banks, convinced that they consultation process starting in the fall PUBLICATIONS Toward a Green, Lessons Learned for REDD+ Clean, and Resilient from PES and Conservation World for All — A Incentive Programs. World Bank Group Examples from Costa Rica, Environment Mexico, and Ecuador Moving Beyond GDP — Strategy 2012–2022 By FONAFIO, CONAFOR, and How to Factor Natural Environment Ministry of Environment Capital into Economic Department 2012 Decision Making June 2012 144 pages Environment Department 112 pages June 2012 40 pages Inclusive Green Growth — The Pathway to Sustainable Development The Little Green May 2012 Data Book 2012 192 pages 2012 ISBN: 978-0-8213-9551-6 241 pages ISBN: 978-0-8213-8993-5 eISBN: 978-0-8213-9517-2 Addo Elephant National Park — From Planning to the Implementation of a Successful Conservation and Socio-Economic Model By Dominique Kayser, Claudia Sobrevila, and Climate Risks and Adaptation in IFC Performance Standards George Ledec Asian Coastal Megacities — on Environmental November 2011 A Synthesis Report and Social Sustainability — 20 pages September 2010 Effective January 1, 2012 97 pages International Finance Corporation January 2012 72 pages These publications are available electronically at www.worldbank.org/publications; for information on obtaining printed versions, please call the World Bank Environment Department at 202-473-3641, or e-mail us at ematters@worldbank.org. 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