~~~~~~~~~~~~ATTHE W0RL Di B4 AE NK A1PP t d r, a toward environmentally and socially sustainable development *Fall 1998 BackSa Fonvard u :Reload 50 ;: fHome Srch Ne-si'-0" l ii gei Print 0 Iri stop Netsite .4 1 _ =|M _ S ~Ei&Y YDA~. .J2 t; D; ffwREGIONS A UG-NMMS - ~~~Did you know that Indonesia's forests . are second only to I x,xlulplo.fl:.s.]RStbilUtAl ]U : :;-.4 . aii : : 005zuBrazil's in size, and =~ ::represent 10 percent of the world's reminig topialrainforests? Or that Costa Rica's t ropical rainforests have 1,400 tree species? Or that Turkey had a $77 million World Bank loan approvec in March 1993 for the Eastern Anatolia 0p Poet Learns- | ............. ,1 ,,,,.,Watershed Rehabilitation Project? Learn ,more by checking out the six regional site: Aric, EuopeandCentral Asia, East Asia and the Pacific, South Asia, 0 *V}It.'StUK']l o lPzlusn: Slts^znal: lAt2I::{Y Latin America and the Caribbean, and * a ! : :;: v t _ ~~~~~~~~~~~~the Middle East and North Africa. Successful learning implies participatory discussion and the sharing of informatioi _L I*, ._ -the Development Forum will provide ju. such a dialogue space. Please join mod- erated discussions on many interesting topics. You might want to check out how such a dialogue works by visiting the 0 0 0S^Z.ECtei.T.lliU^4ulg aRselw.:Xzrel:-i:u/lr*zuc:liXa:]_ Climate Change site's archived discussion area concerning the Bank's energy and environment strategy. THEWORLD SANK GROUP _li] N 4~~~~ 0'llllPfnw,ioi-,l 0v*qs _ 0' ~~~~~~~~~~~~~~~~~~~I . ,,,.S o : I. 1 About theWorld Bank Group * * . ., * * .M SEARCH FEEDBACK __ 0 - _ _ _.~~~~ I ' *k ss, ~~~~qb c Ev5Ft-p .S O~ - -{^/SX1[E0}i* E* *2~4 LL.-~ . - - r i9 _ o; R X t a~q :~~~C- e 7 d; kf ~~~~~~rL -E*g_ j o=2,.Bl ElU Denni5i Ma3im, Mtyn Ridl ECA Michele de Nevers [AC John Redwood Ear Kristalina Georgieva LEO EfUIRONMEHT SECTOR BOARD David Freetore Anchoi Robert T Watson Africa Franicois Flloux East Asia and Pacific Kristalinia Georgieva IIFIIIIP Europe and Centr-al Asia Michele de Nevers Latin America and Caribbean John Redwoocd Anupam Khanna Middle East and North Aftrica Salah Darghouth SaRah Darghouth South Asia Richaitd Ackernmann International Finance Corporation Martyn Riddle Legal Depar-tment Dav,d Freestone Economic Development Institute (EDI LLC) Dennis Mahar V.R Development Economics & Chief Economist Anupam Khanna AFR Environment Department Ken Newcomilbe sa EanosF niox N Richard Ackermann Francois Falloux Environmental Economics Ofcof[VUrban. Industry, and Envictronment Programic TemOffice of the Director Energy Management & Indicators Program Team R,,brl 1T:Program Team John Dixon. Progr-am Team Leadei Phore: ifai 47o.69 Da,id Hanrahan. Progiam Teain Leadef Phone: 202473.8594 FRkel Phone: 02.458.5686 Email: Jdixon@worldbank.org mnail: Dl2an05ahan56 orldbank.org Kenk Nev,co p e. St1l Ad .ISCF Ph lonee: 202.471 .60l Fna,lr: Knie-co-mbil ...ci lidbhai, i Natural Resources Environmental Management Program Team Assessment & Quality Ken Newcombe, Pr-ogramn Team Leader Program Team Photie: 202.473.6010 Pr-ogram Team Leader - vacant Global Environment Email: Knewcombe(worldbank.org Program Team Lars Vidaeus. Progi amii Team I eader Plhone: 202.473.4188 Erail: LvidaeusArwowldbank.oig I Letter fro the New Vice President Environmentally and Socially Sustainable Development The mission of the World Bank Group has always been to help reduce poverty and improve the standard of living in develop- ing countries, but the understanding of how best to do that has changed over the years. While earlier Bank activities focused largely on massive infrastructure projects, often involving the dislocation of communities and damage to terrestrial and marine ecosystems, in recent years the Bank-along with the United Nations and other development agencies-has come to appreciate the critical importance of sustainable dcvelopment. This concept, that sustainabilitv is at the heart of all successful development efforts, is now so much a part of the Bank's view of its mission that it is transforming the nature of our work. Sustainability means a number of things, but first and foremost it means that resources, including human resources, are enhanced or protected rather than damaged or depleted as part of the development process. This is an idea that is both simple and complex. On the one hand, it is hard to argue with the goal of preserving the earth and leaving communities undis- turbed. On the other hand, it sounds unrealistic, utopian-how can bridges and roads be built, enough food be grown, enough trees be harvested, enough dams be constructed without doing some damage? And how can investors be induced to support development activities in which they are constrained from doing what they feel they need to do to make a reasonable profit? The answers to these questions are still evolving, and part of my work as head of the Bank's Environmentally and Socially Sustainable Development (ESSD) Network is to help guide that process. In ESSD, we are working directly on sustainability in three major areas: the environment, social issues, and agriculture/rural development. Our Environment Family has teams working on water, forests, drylands, climate change, and cities. The Social Family is concerned with protection of indigenous peoples and other vulnerable groups, resettlement, post-conflict recon- struction, and the inclusion of marginal groups in designing and carrying out development projects. And the Rural Family is concerned with, among other things, agriculturally sustainable development, which means increasing the productivity of complex (as opposed to moinoculture) farminlg systemos on existing farmland without damaging the natural resource base. These three families also work across the Bank in cooperation with energy, infrastructure, and other departments. Sustainable development also means working in partnership with other development agencies, NGOs, and community groups to gain the benefit of their knowledge in areas where they have the comparative advantage. For example, the Bank has been privileged to work with IUCN, the Nature Conservancy, the World Wildlife Fund, and many other organizations to help facilitate programs to heal damaged rivers, forests, and coastal areas which we could not have carried out alone. Often the Bank helps to leverage financing, or provides technical assistance, or disseminates best practices. Whatever we do, we are now doing it with the awareness that we are one-but only one-of the important actors in the international community that are working toward a prosperous and healthy future for people all over the world. IanJohnson Environment Matters is a magazine of the World Bank Group. This Fall 1998 issue is an annual review of the Bank's environmental work during fiscal 1998. Also visit the mnagazine on the Bank's Web page. ANNUAL REVIEW * FALL 1998 Environment and Socially Sustainable Development Network Managers sThe EtRVIO e nIStOt Fanm. 2 Sic oi ClImate Chsge This article concerns the Bank's involvement in Chair Lneir ftintff thiie Now 1g2s0t8 FneIftlst 11 international efforts to reduce greenhouse gas emiissions. tan Johnson Rural Family L5@er froIm Yolanda allkaa5ba1se z 2sciai 2svalognerit dat Alexander McCatla This article notes the importance of cultural preservation, Social Family Cvenrviesv" O and the involvement of marginal polsindelomn Gloria Davis oetpeoples development Environment Family projects. Robert T. Watson Regional Reviews Each article highlights the Bank's wsork and partnerships Thes artice dEcribe then d F fro sto pt h fiored i FY9 to romoe th susainale ue ofresorces This article desctibes the Bank's efforts to protect the EnvironmentMatters formed in FY98 to promote the sustainable use ofresources. world's forests and promote the sustainable use of forest Editorial Committee resources. AfrIca 120 Carter J. Brandon, SA East AS ii Brad the) ftcgr,5 g 1a Safeguatrds Update 42 John Bryant Collier, MNA Europe a1d1 Central r51 5 This article desctibes the Bank's efforts to ensure that all Paavo Eliste, ECA Lattin America a the( Caylebb nu 522 projects include protections for natural habitats, forests, Jean-Roger Mercier. AFR Middle Ef s5 ast 5c5d North f t 2s waters, indigenous peoples, and cultural sites. Shawn Miller, IFC South AI aceIgPrurhp c tfcie 6 John Redwood, LAC This article says that public-private partnerships can help Special Contributors Regional SuplpiPement F uf' t- create consensus for achieving environmental goals. Jean-Philippe Brisson - Sj ustaInable Dtevrelopracat Capsact as James Douglasn Thematic Reviews dBuiditg Initiatives at ED/LLC Michael Kiernan | This article highlights several Bank programs to train Cities and Honah Be staff and experts from borrower agencies in environmen- Environment Matters is produced by the This article indicates that health costs resulting from tal best practices. World Banks Environment staff. urban air, water, and solid waste pollution can reach 10 percent ofurban income. X a GlauceS., 422 Editorial & Production Team | lapa nity res'z What's New at the Bank? for Annual Review Issue Evrn etlCpct ulmg This article says that long-term institutional capacity Publisher and Technical Editor building is needed to achieve environmental objectives. E nvirmeuwal Pghlreatea 7T Ken Newcombe Story Editor ln'ter-=ailn Water TrusfEra 4 Miailktg LDst 72 Deborah Davis |Emergin3g Trenlds Designer & Phote Editor This article discusses the environmental consequences of Jim Cantrell vater transfer schemes. Desktop Publisher |9l a tachbable Pester cti.taillug lots Jim Cantrell EnvivrouTtiental Econ Icists t Production and Circulation Manager and the Bank Jim Cantrell This article concerns the Bank's innovative work in and the ak -the cower cwae ofI Editorial & Production Associates developing indicators to track environmental change. Maritza Bojorge Chris Hean Choi Patricia E. R. Shanks Posternc q & t < This annual Katie Bannon Bank's enviomna Satish Vangal work in fiscal19 ih lightsouraccomp e T W B and remaini al It reflects the eprec f frRcotncin DvlpetFnneIvsmn Publications Info: 202-473-1604 staff from General Inquiries: 202-473-3641 EnvironmentlyadS-Et94Euh10Etb156s'b98 Department Fax: 202-477-0565 Web address: http://www.worldbank.org | cially Sustnl amitalys8rueon tO mebr | 173countries t45 members Environment Dprmn Printed with soy ink on 1 000, recycled paper; cover is 50% recycled and totally and Social chlorine free. Please recycle. o* Departmen,ad1 n oosneoris aepoecute eeomnb eeomn hog E The Wodd Bank Group MICA t 1818 H aStreet N.W E3Washington, D.C. 20433 Letter fro Yolanda Kkaadse, President, The World onaservation Unio n The Fruits of Partnersh/ip- IUCN'S Collaborative Vh;`rk with thie WTZor-ld Bank Since IUCN was created some 50 years ago as a union of governments and nongovernmental organizations, the concept of partnership has been central to our work. It was, however, the adoption of a new mission statement by the IUCN General Assembly in Buenos Aires in 1994, and the emphasis this mission placed on influencing societies, that ushered in a new era of institutionalized partnership. Indeed, the globalization of the world economy and the emerging sustainable development agenda necessitated collective wisdom and action in order to be effective in societies at all levels of development. When the IUCN signed a collaborative agreement with the World Bank in February 1995, many skeptics thought it both risky and impractical. It was considered risky because as a government-owned, results-oriented institution interested in development, the WNorld Bank was believed to be incompatible with a conservation and NGO-oriented institution such as IUCN. It was thought to be impractical because the Bank, as a multibillion dollar lending institution, was considered too big for IUCN to influence its policies and operations. The initial agreement was, therefore, seen as a pilot scheme designed to try to redefine the nature of IUCN's interaction with the Bank from frustrated critic or hired consultant toward a more equitable and effective partnership, but without compro- mising the Union's value as a fair but firm critic. In the years since then, our work together has made considerable progress on several fronts. There is a growing mutual understanding of the missions and cultures of the two institutions. It is becom- ing clear that the idea of getting close to the World Bank in order to have a positive influence on it was not quite so unrealis- tic. A solid atmosphere of mutual trust has developed and the number of collaborative programs and projects has continued to increase. One of the tangible results of our work has been a joint comprehensive review of the impact and effectiveness of large dams, followed by the creation of a 13-member World Commission on Dams (WCD). The WCD is now developing and promot- ing internationally acceptable standards for the planning, assessment, design, construction, operation, and monitoring of large dam projects. The Commission is also developing decisionmaking criteria and policy and regulatory frameworks to assess alternatives for energy and water resources development. Another result of our partnership has been the publication in February 1998 of an innovative handbook, Ecosystem Manage- ment: Lessons From Around the Wlorld - A Guide for Development and Conservation Practitioners. This was the result of an intensive eight-month effort. Another product of this alliance is the four-volume Global System of Marine Protected Areas. This report, the result of extensive investigation, is already having a significant impact on global funding priorities. Conferences, publications, and creative thinking involving stakeholders in different parts of the world are all helping IUCN and the Bank to generate new answers to old problems. Only by acting together will we be able to place the environment at the forefront of the international development agenda and ensure that the environment is mainstreamed into the Bank's policies and operations. In concert and by mobilizing our respective constituencies, we hope to have a greater effect than either of us could have alone. Y nda Kakabadse The primary goal of the WNorld Bank is to June 5, presented the Green Top Ten, a are being used to design environmen- assist menmber countries in alleviating pov- set of measures to protect air, land, and tallyT sound projects. ertv and achieving their development water resources that the Bank believes goals. However, the Bank believes that should be carried out on a global scale. o Lending policies and strategies in key such goals can be onlv be achieved if we Then on June 2 5, at the United Nations sectors are being revised with the view also address local, regional, and global en- General Assembly Special Session to making therm fully responsive to vironmental issues. This is particularly (UGS)o h niomn,M.environmental issues. An environ- important given that developing countries NVsolfensohn announced a set of actions the mental strategy for the energy sector is are, in most instances, much more vulner- Bank would take to help achieve those and scheduled for review by the Board in able to environmental degradation than ohrgbaeninm tlgas.October, and a policv implementation industrial countries. Local and regional review of the forest sector is currently problems such as air and water pollution, NON-,, 16 months tater, it is time to evalu- underway with the aim of developing a and global environmental problems such aewtprgssheBnhsmdeo-forest sector strategy; as~ ~ ~ ~ ~ ~ ~~~ ~t climat progree, loss Ban haso a made to- ascimt chne los of bogial di ward fulfilling these commitments. The versity, desertification, and defores ta- left column of the matrix shows the Bank's The development and dissemination of tion-compounded by an ever-increasing.. . analytical tools, such as sector resource world population-are threatening the cionm1ientaissues,r1n loc r lal en-iomna accounting and global overlays, is goal of meeting basic human needs: v1oretissues, anlu fot ochang ouvrowmnta helping to facilitate our environmental adequate food, clean water, safe shelter, instiutinas,ltr and oupefrt rochnedoure tow work. and a healthy environment. The rafifica- hel acievea cuthemrTe righ proleures tof tion bv our member countnies of a num- hepaheete h ih ouno Significant progress has been made in ber ofenvironmental conventions is evi- the matrix summan'es our progress to datethpatyrindvligne dence of the growving importance that all in each of these areas. products such as the Prototvpe countries place on the environment and Carbon Fund, and partnerships such envirnmentally sustainable development. Many of the policies, strategies, analvti-asteWrdBn-5olwi Fd cal tools, and new products and partner- for Nature (WWF) Alliance for In 1997, "Alorld Bank presidentJames D. ships generated in the past year are now Forest Conservation and Sustainable Wolfensohn and managing director Caio in place or progressing well. For exam-ple: Use. Koch-W>eser each made public statements that reconfirmed the Banik's strong com- o Key operational policies on environ- While it is too early to observe the impact mitment to sustainable development. Mr. mental assessment and economic of these tools on the Bank's lending and Koch-NV\eser, on \NNorld Environment Day, evaluation have been developed and nonlending portfolio, we fuilly expect that 6 ENVIRONMENT MAT-TERS * FALL 1998 they will be extremely useful in the effort development; and local, regional, and Strengthen and accelerate in-house to mainstream environmental issues into global environmental issues. It will (management and staff) and member our development work. Hence, while sig- also will define clear objectives and country training on environmental nificant progress has been made, much targets on a regional basis, with issues, emphasizing the links between remains to be done. Areas of emphasis monitorab]e performance incentives environmental objectives and sustain- during the next year will include: for Bank staff. able development. Develop a coherent World Bank Expand and accelerate the effort to There is no doubt that mainstreaming the Group corporate environment strategy, integrate environmental concerns into environment into the development process which will integrate the wide range of the Bank's economic sector work and is a major challenge, but it is one that the policies and activities currently its country assistance strategies. Bank and its member countries must meet underwav The corporate strategy will if the goal of a socially and environmen- address the linkages among poverty 4 Demonstrate the effectiveness of the tally sustainable world is to be realized. alleviation; economic and social Safeguard Policies Compliance Unit. Goal Progress in Fiscal 1998 Climate Change . Establish a Global Carbon Market . Continued research on baselines, and on certification and verif ication of enrissions reductions. (should the Parties to the . Developed a prelirrinary structure for operation of the Prototype Carbon Fund (PCF). However, the design and Convention find this helpful) to operation will not be finalized until after the next Conference of Parties to the Frarrework Convention on reduce the overall costs of liniting Clinate Change and the Kyoto Protocol in Noverrter 1998. The PCF is expected to corrmence operations in greenhouse gas errissions and to early 1999, subject to approval of the Bank's Executive Board. provide Bank rrember countries . Signed a Memorandum of Understanding with 13 conpanies and 5 govemrrents that have indicated their every opportunity to obtain an willingness, as potential participants, to take part in the developrrent and establishmient of the PCF. equitable share of the cost savings . Initiated, using donor funds from Switzerland, Canada, and Finland, the National Strategic Studies Program to and access to nmre environmentally build capacity on clirate change issues; workshops in India and Slovakia exanined the potential of the PCF f dendly technologies nechanism with prospective hosts (developing countries and econonies in transition). . Forma strategic partnership with . Established a working group to finalize details of Bank-GEF partnership, which will aimto increase the the GEF to increase the scale and pace of renewable energy development in menber countries. Partnership being designed in conmpetitiveness of renewable non- consultation with IFC, environrrental NGOs, and the private sector. Under this arrangermnt, GEF's greenhouse gas eritting contribution to renewable energy projects, currently $100 nillion a year, will be significantly increased. technologies . Following f urther consultations with Bank managerrent, the GEF Secretariat, and the GEF Council, the partnership will be piloted in 2 or 3 countries during FY99. Biodiversity and Sustainable Forestry . Conserve and nanage critical . For biodiversity, the Bank and GEF supported: ecosystems on land and at sea 0 Establishmnent of two new narine protected areas (MPAs) at Ranmsar (wetland) sites along Georgia's Black Sea coast under the Georgia Integrated Coastal Zone Management Project; o Creation of a national park along South Af rica's Cape Peninsula; o Consolidation of MPAs along the Caribbean coasts of Mexico, Belize, and Honduras under the Mesoamedcan Barrier Reef Initiative (under preparation); o Capacity strengthening for protection and rmanagement of Indonesia's coral reefs under COREMAP; 0 Pollution nitigation and protection of endangered species off the coast of Patagonia. * For terrestrial ecosystens, the Bank and GEF supported: 0 Conservation and sustainable forest management in tropical forests in Papua New Guinea involving local landowners and a conservation trust fund; 0 Planning for conservation and sustainable production in tenperate forests, and for wildlife corridors in the eastern and central Caucasus; 0 Regional cooperation to establish transboundary conservation areas and wildlife corridors in the western Tien Shan nmuntains, Central Asia (Kyrgystan, Kazakhstan, Uzbekistan); 0 Land use planning for conservation in the Cape Floral Kingdorr South Af rica; 0 Conservation of the Sunderbans coastal forests, a critical habitat for tigers (with the Asian Developnent Bank); o Changes in land nanagement to reestablish native wildlife in Zinbabwe for ecotourism and safaris; ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 7 Goal Progress in Fiscal 1998 . Establish strategic partnerships with . Established the \Ahrdd Bank-Wrid Wde Fund for Nature Alliance (April 1998) and a facility (July 1998) to build NGOs and industry to help conserve a pipeline of projects and activities to achieve conservation and sustainable rmnagerrent targets. The Brazilian biodiversity through the extension of governnent has issued a decree (April 1998) to create 25 nillion ha of new protected forest areas in the protected areas (50 nillion ha of Anmzon, and the Alliance is looking for ways to help the govemnment irnplerrent the decree. new protected forest areas plus a . Established (January 1998) an ad hoc forum of forest industry CEOs and environrrental NGOs, and issued con-parable area of existing reserves recomr.endations on conservation, forest nnBragerrent, and the creation of rrirkets for nontinber forest under effective protection), and by products. increasing the forest area under . Established, with World Resources Institute, Forest Trends (spring 1998) as an independent non-profit NGO sustainable n-anagerrent (100 with Bank and MacArthur funding. A strategic coalition of the private sector, financial institutions, NGOs, and rillion ha each of the world's research bodies, FT provides inforn-ation on forest rranagerrent and serves as a forumfor resolving tropical and boreaVten-perate contentious issues. production forests under . Initiated a study with Conservation International under the Critical Ecosysterms Partnership Fund to evaluate independently certified sustainable the key pressures onfour terrestrial ecosysterrs and develop a pipeline of projects. rranagement) . Launched (June 1998) the Carbon Forestry and Land Use Managerfent Action Plan to evaluate the developrrent benefits of trade in forest and soil-based carbon offsets within franework of the Kyoto Protocol. . Identify opportunities for rrarketQed . The year-old Marine Market Transforrmtion Initiative successfully launched three plots in FY98: change toward greener practices for o Support to an NGOtrade associationtotest and certify live coral reef fish for aquariurrs (Philippines); coastal and rrarine products o Assessrrent of nrarkets forthe reef food fish industry and supply alternatives (including cage culture of high valued species, Hong Kong and Taiwan), and o Consensus building for developing a Code of Conduct for Sustainable Shdrrp FamTing (Thailand). Stratospheric Ozone Depletion B Elininate the production of ozone- . Assisted Russia in reducing its annual consunmption and production of ODS frorn 120,000 tons to 15,000 tons depleting substances in Russia through a $60 nillion GEF phase-out project. . In conjunction with Russia's State Cormittee for Environmental Protection (SCEP), designed a plan, signed by each of Russia's 7 ODS-producing enterprises, to elimrinate ODS production by the end of 2000. The initiative is expected to be supported by $27 rillion in grant funding. A donor roundtable in Moscow is scheduled for October 1998. Desertification and Land Degradation * Assist the Desertification . In collaboration with UNDP, initiated assistance to nmentber countries to develop National Action Plans. Convention through a rural strategy . Finalized a best practice study, developed training nudules, organized three seninars, and established a erophasizing the links between knowledge node on technical and financial issues in drylands nrrnagerrent. poverty and land degradation . In partnership with others, establish . Modus operandi of the Global Mechanismr which is rranaged by the International Fund for Agricultural rrechanisrns for nDbilizing financing Developmrent (IFAD), UNDP, and the Vlbrld Bank, estabished during the first two mreetings (March and July and coordinating irrplerentation of 1998). the Desertification Convention Water * Support the Global Water . The new Global Water Partnership has established a global technical advisory conmittee; is preparing its work Partnership, which offers an programand establishing regional technical advisory conrrnittees for Southern Africa, Westem Africa, Latin opportunity to solve water issues in Amrerica, and Asia; and has organized an African Water Resources Managemrt Policy Workshop to be held in a more holistic nanner Tanzania in January 1999. * Support, in collaboration with IUCN, . The \llbrid Comrission on Darrs, established in June 1998, is f inalizing its staff ing, strategic work plan, and establishment of the V\hrld research program Commission on Dans to raise environmental and social welfare standards for large danms 8 ENVIRONMENT MATTERS * FALL 1998 Goal Progress in Fiscal 1998 . Support regional seas prograns * Expanded iTplerrentation of Helsinki Comrission objectives in the Baltic Sea. . Coordinated preparation of a strategic action planforthe Red Sea. . Designed a series of investn-ent projects for the Black Sea. . Contributed to the ICZM initiatives for protection of shared narine ecosystens in the westem Indian Ocean, western Caribbean, and Black Sea. . Make water an econorric asset . The Vater Resources Managenrent Policy emphasizes efficient water use and sustaining productive water given that it is a scarce resource systefs. The Bank, recogniing that institutional and policy ref orrris are just beginning, is: o Through the Af rica Water Resources Management Initiative, working to strengthen water nanagenrent institutions in 14 nations and the transboundary Nile, Southern Af rica, Volta, and Senegal river basins. O Pronmting water policy ref orns, including an increased private sector role in urban water rranagensnt, in LAC, MENA, and South Asia. Global Environmental Facility * Help the GEF Secretariat, UNDP, and UNEP ensure that govemrrents . GEF was replenished with $1.99 billion in new f inancing f rom 23 donor nations; with carryover, total GEF corrmnit nDre nuney for GEF financing for 1998-2002 is $2.75 billion. Environmental and Social Assessments . Strengthen supervision of the . All VVold Bank safeguard policies finalized and hamronized with those of IFC. Bank's lending and nonlending . A Safeguard Policies Corrpliance Unit establishedto nrnitor irrplementation of all safeguard policies during activities, including those of private project classification, preparation, and supervision. sector partners, by establishing a . Safeguards training courses developed for task team leaders. stronger systemto rrnitor . Dissemination of good practice, including pubication of EnvirorrentalAssessnent Sourcebook Updatesto corrpliance with environmental and guide staff and clients on the application of environrrental assessrrents. souial safeguard policies Green Accounting i Adopt greener accounting and . Genuine savings calculationsfor Latin America andthe Caribbeanfeatured inthe Environrrent chapter of elimrinate harf ul subsidies WorldDeveloprrent Indicators 1998. Full table on genuine savings and resource depletion in World Developrnent Indicators 1999. ITechnical assistance on developing greener national accounts provided to South Africa and Mongolia. * Where relevant, subsidy reductions were a conditionality for energency lending to Southeast Asian countries affected by the financial crisis. . Developed standard environnrental indicatortablesforcountry assistance strategies, including green accounting aggregates. * Initiated preparation of a how-to guide to sector resource accounting for forests, rrinerals, and water, and for valuing pollution. Lead Pollution . Facilitate the phaseout of lead in . Facilitated the acceleration of lead phaseout in several countries by raising political con-ritnent, facilitating a nnenrber countries within five years dialogue anung stakeholders and countries, and providing technical assistance. Specifically, the Bank has: 0 Provided assistance to prepare national lead phaseout prograrrs in Azerbaijan, India, Jarrmica, Kazakhstan, Pakistan, Peru, and Uzbekistan. O Collaborated with other organizations to support regional prograrrs in Latin America, the Caribbean, Central and Eastem Europe, and the former Soviet Union. Cities Manriy urban environmrental activities have been rainstreared into inf rastructure, energy, and other types of . Make cities rmre livable projects. There were also 7 stand-alone environrrental projects, totaling $480 in lending, appraised in FY98: * Pollution Managemrent, Argentina * Guangxi Urban Ervironn-ent, China * Shandong Environn-ent, China * Municipal Environnrental Infrastructure, Coatia * Solid Waste Management, Latvia rEnvironn-ental Sewerage and Sanitation, Maritius * Tashkent Solid Waste, Uzbekistan. This matrix is based on comments Iq James D. Wolfensohn before the United Vations GeneralAssembly Special Session, June 25, 1997, and on the Bank ' Green Top Ten. Matrix contribators: Jean-Philippe Brisson, Robin Broadfield, Sam Fankhauser, Kirk Hamilton, Marta Hatziolos, Kathleen MVackinnon, Ken Newncombe, Kerri Poore, Giinter Reitmacher, Ellen Tynan, Tonje l tleseter Tom Waltz, Robert T Watson. ANNUAL REVIEW -JULY 1997-JUNE 1998 (FY98) 9 RAfrica e gie FJean-Roger Mercier n the Africa region in FY98, the effective and yields sustainable results. Bank's emphasis was on: (i) in- The report will be available from the cluding environmental concerns in BioNode website (see last section). country assistance strategies and mainstreaming them in Bank Climate Change. The World Bank has operations; (ii) capacity building for contributed both financially and environmental management in the techinically to establishment of the countries; (iii) effective management of Southern Africa Regional Climate the environment portfolio; and Outlook Forum (SARCOF, 1997) and (iv) environmental assessment and the West Africa Climate Outlook review activities. Forum (May 1998). These groups meet three times a year (pre-, mid-, and 0 l l~ 03 Ma3zalstrsismSlg thepost-growing season) and provide Eflylvonmentap ~~~~coordinated long-lead climate forecasts B ln . operst for local climate data user groups, 0 l Country Assistance Strategies. A 1997 including farmers' associations, weather concept paper on incorporating environ- forecasters, and extensionists. mental concerns into country assistance strategies (GAS) is guiding this effort The Africa Environment Group also ;~~ ~ ~ 4~~4 ~ by the region~s Environment Group. A supports the Southern African Develop- paper on linkages between poverty and ment Community (SAD C) in capacity the environment is also in preparation. building in Southern Africa, focusing on training in climate change issues, long- Environmental Indicators. A Bank- lead climate forecasting, and interpreta- supported project in C6te d'Ivoire is tion of climate information. Other developing a set of environmental SADC activities, in Zimbabwe and indicators for use in macroeconomic and South Africa, are testing the potential of sector planning and policymaking. The Activities Implemented jointly (AIJ) Ministry of Planning is taking the lead and the Clean Development Mecha- in integrating these indicators into nism (CDM) to facilitate greenhouse planning activities. The recent trends in gas emissions reduction and carbon environmental indicators will also be sequestration. central to the dialogue between C6te d'Ivoire and the international commu- In addition, the Bank is developing nity over forestry and environmental gul iEs i management policies, change that may later be integrated into GAS planning and sector work. B Biodiversity. In Sub-Saharan Africa, Integrated Coastal Zone Management current1practices0in the economically (ICZM). New developments in FY98 and socially important sectors of incupotde thecretratio fof CasBank- on agriculture and forestry are having a spotdSceaitfrCatlZn negative impact on biodiversity. The Management in Eastern Africa Strategic Framework for Conservation of (SEACAM), located in Maputo, Biological Diversity in Sub-Saharan Mozambique, which is assisting ~~~~~~~~ ~~~~~~ Africa, now under preparation by the member countries in capacity building Africa Environment Group, will and preparation of a regional ICZM provid infomatio and uidane for strategy. This strategy, to be published the Bnk an othes to nsurethatin FY99, will facilitate development of support for biodiversity conservation is mutscoplnigarahead 10 ENVIRONMENT MATTERS . FALL 1998 enhance cross-sector cooperation during implementation and monitoring of ICZM projects. Traditional and Renewable Energy. The new 5-year funding cycle of the Re- gional Program for the Traditional z- Energy Sector (RPTES), which began in FY98, coincided with implementa- tion of the Senegal Sustainable and - Participatory Energy Management Project ($5 million in Bank funding out a total pr ject cost of $20 million). Also in FY98, Burkina Faso launched a $2.4 million project component aimed at mitigating CO2 emissions by promoting ;AV photovoltaic systems and substituting woodfuel use with kerosene stoves and higher-efficiency charcoal kilns. WVith more than 10 years experience in successful community-based resource management, Burkina has also prepared a $9 million traditional energy project to improve management of the catchment Hyrax in the wild, Hwengue National Park, Zimbabwe. area of Ouagadougou. of disease. Phase II, funded bv Sweden At the subregional level (West Also in FY98, the Government of and begun in FY98, will carry out the Africa), 30 trainees from environ- Guinea completed a comprehensive recommendations of Phase I through a mental agencies, sector and economic traditional energy sector policy review pilot program in Ghana. Phase III, management ministries, and NGOs under the leadership of a local scheduled for FY99 and to be funded in Benin, Burkina Faso, Chad, C6te multisector team, with significant input bv the Swiss, will focus on rural d'Ivoire, Ghana, Niger, and Togo from NGOs, civil society, and urban- infrastructure. gathered in March 1998 for a two- based charcoal traders who had until week EA training session in recently been clearcutting forest lands in ii,;@c5 - ir Ouagadougou, Burkina Faso. The semiurban and rural communities. Ib3S=tSi1E',1,' [itL 3 omii network of EA practitioners that EA Capacity Building. The effort to build emerged from that session formed the Urban Environment and Health. Since capacity for environmental assessment second layer of networks strength- FY95 the Bank has been assisting a in Sub-Saharan Africa began in the ened after the Nairobi workshop. three-phase study; "Bridging Environ- earlv 1990s and gained momentum in mental Health Gaps," under the 1995, when African ministers of region's Urban Environment Manage- environment issued a declaration Local Environmental Management. The ment initiative. Phase I, funded by conccrning the need to enhance EA Bank is also assisting in decentralizing Norway and concluded in FY96, found capacitv in their countries. As a result, environmental management and is considerable untapped potential for the Bank supported two major BA responding to funding requests from urban infrastructure projects (primanrly capacity building activities in FY98: subnatonal entities: water and sanitation) to alleviate disease. The study established that for a fraction < At a workshop in Nairobi, Kenya, In Uganda, environmental policy- of the cost of health investments, 80 African EA experts strategized the making remains largely a function of infrastructure sector interventions may development of EA capacitv in Sub- the central government, but imple- be able to relieve as much of the burden 2h A Saharan Africa. mentation of policies and legislation is devolved to the districts. The ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 11 decentralization process is bein supported under the Bank-financed = Environment iManagement Project, launched in FY96. The Cape Peninsula Biodiversity Conservation Project is built on a local part- nership between World Wildlife Fund (WWF)-South Africa and the National Parks In Accra, the capital of Gllana, the Board. The project leverages $2.3 million in GEF resources with domestic financ- Bank-facilitated regional MELISSA ing. The resources will be used in part to prepare and launch a national park on initiative (Managing Environment Cape Peninsula with the exceptional Table Mountain chain as its backbone. The Locally in Sub-Saharan Africa), co- project will also support an in-depth survey of the most pressing issues of the Cape financed by the European Union, Floral Kingdom, a unique flora biodiversity area in South Africa. This project has Sweden, and Norway, carried out its catalyzed a closer relationship between the Bank and the new South Africa, which first pilot operation in FY98 to help now includes Bank assistance to: (i) develop environmental indicators; (ii) prepare create the basis for privatizing the an environmental assessment of the Maputo Corridor and support the Lubombo management of solid waste. Spatial Development Initiative, involving areas of Mozambique and Swaziland; (iii) support/develop capacity for local management of ecotourism in the northern Natunal Reswu cE Management province, through MELISSA; (iv) prepare a Provincial Environmental Action Plan for In the field of natural resource manage- the Cape provinces; and (v) assist SADC in developing nature-based tourism and ment (NRM), the Bank and other harmonizing EA requirements and procedures. development partners have increased support to community-based NRM E8a iP. , The Bank continues to plav a major role Environment Projects Active during FY98 ($ million) in supporting the conservation of The Bank's environmental assessment biological diversity in Sub-Saharaii and review activities in the Africa region Inslitutional (1~projeots) Pollution & Africa. In FY98, 25 ongoing projects in have been particularly intensive, with a (4 projt ct)U Eou on & t 21 countries contained components for sizeable increase in the number and $72 A i l (9 projects) biodiversitv conservation, 14 of them magnitude of category A and B projects $172 f b DA Gorby in the pipeline and in the portfolio (see Global Environment Facility (GEF), Fgie ae1) Natural ResJ and 5 by both sources. Those financed In to Rural Env. Mgt. by IBRD/1DA include environmental addition supportng EA capacity Rr(24 pE.jects) i building in the region, the Bank \ 521 managTement projects (supporting $921 management proJects (supportig olaunched three major internal assess- implementation of National Environ- ment and review initiatives in FY98 and IBRDIDA=$765 million; GEF=$133 million mental Action Plans) and projects added two senior EA specialists to the promoting the sustainable use and permanent EA assessment and review operations. Including FY98 operations, management of biological resources in team. The initiatives were: the Bank is supporting pilot or full-scale the forestry, fisheries, and wildlife/ community-based NRM projects and tourism sectors. GEF-financed, Bank- In-depth supervision of 10 ongoing programs in Burkina Faso, Uganda, executed projects and components target category A projects that have shown Benin, Guinea, C6te d'Ivoire, Mali, internationally significant biodiversity uneven implementation of their Niger, Senegal, Madagascar, Malawi and natural habitats, usually in or environmental management plans, Mauritania, and Ghana. These opera- around national parks and reserves. thus highlighting the need to build tions typicallv include improved land Institutional strengthening and capacity EA capacity in sector ministries, local management, support for socioeconomic building in agencies responsible for governments, and parastatals; infrastructure, and support for commu- environmental management and nity groups carrying out environmental biodiversity conservation, and involving Development of affinity groups nity groups carrying out environmental wit~~'hin the Bank among several major management components. Increasingly, local communities in the management of witin sectors (ealth, minng they also include land tenure clarifica- biodiversity, are major elements of all operational sectors (health, mining, | * ~~~~~~~~~~urban and transport infrastructure, tion and support to decentralization, and the projects. are implemented in close collaboration to with agriculture extension efforts. Also, GEF also approved funding in FY98 urism); in West Africa a systematic, field-based for the Cape Peninsula Biodiversity o Drafting of good practice and monitoring and evaluation system is Conservation project, one of the first guidance documents (for example, being established and tested, with Bank Bank-facilitated activities in South status of EA requirements and support, to track the progress and Africa (see Box, above). procedures in 22 Sub-Saharan impact of the complex and diverse countries) for the Bank's EA knowl- investment programs. edge management system. 12 ENVIRONMENT MATTERS * FALL 1998 Number of Category A and B Environmental Assessments in the Africa Region 45 40 35- 30- 25 -U A 20 FB 15 I0 90-91 92-93 94-9 5 96-97 98-99 _n r . IFteEn ironmental Management The development of proper environmental awareness within the Bank is a continuing process, and several training/sensitization efforts were undertaken in FY98 to provide staff and management wvith the proper concepts and methods. A two-day course, "EnVi- ronmental Assessment in Africa," for example, will be delivered by EDI/LLC starting October 1998; attendance will he mandatory for task team leaders of category A and contentious category B projects. The region has also developed and delivered a course on "Environment for Non-Environmentalists," and courses on climate change and the management of biodiversita The "Best Practice" Africa region website contains information on the environmental program. It can be reached at: http://afrworldbank.org/aft2/environ/rrs-envhtm. For more on EA good practices (internal Bank access only): http:// kms.worldbank.org/scripts/km.fcg?ESSD:Environment:topic: EnvironmentalAssessment. 41~~~~~~~~ ~~More on MELISSA can be found at: http://www.me1issa.org. For more on biodiversity in Africa, and more from the BioNode website, please see: http://wbIn0023/EN-V/grapevin.nsf/ Main+navigator?OpenNavigator. 'Ekbom, Anders and Jan Bqj6, MVain streaming Environment in CountryAssistance Strategies, Discussion Paper No. 1, Environment Group, Africa Region, World Bank, November 1997. 2Goodland Robert, Shirmwaavi MNuntemba, and Jean-Roger Mercier, En!,viromental :-- ~~~~~~~~~~Assessment in Africa: A Ibrld Bank Commitment, World Bank, AFTPES-ENVLW, -~~ -~ Jean-RogerlMercier of the Africa Region can be reaclhed at (202) 473-5565, u~~~ a.~~~~~ ...~~~~~~-. ~ ~ 0 fax (202) 473- 7916. ANNUAL REVIEW JULY 1997-JUNE 1998 (FY98) 13 Giovanna Dore ast Asia is a rich storehouse of prompted efforts throughout the region terrestrial and aquatic biodiver- to improve environmental management. sity but the countries of the The economic cnrsis, however, now ,region face natural resource threatens to cut short those ef'forts and 607 management (NRM) problems cause East Asia to fall once again into that are difficult to address because of environmental neglect. political disinterest, land rights and tenure questions, limited operating In addition to its economic problems, funds and suitably trained staff, and the during FY98 the region also experi- power of vested interests. Some of these enced one of' it tenv mental problems may only be solved in the long crises in recent memory-the Indone- _n run, when exploitation of natural sian fires, which put millions of ndi- < resources becomes less profitable. viduals at risk. East Asia was also hit by a serious El Nifio-related drought, _mnni vii~a is1~sia = which affected crop production and led et_gn n s U many countries to the brink of food ~~ >< Even before the current economic crisis, shortage. The interplay of these crises Fvishing 7>g - itt~47t people throughout the region were demonstrates the fragility of economic 14nK nit 111' beginning to see that a "grow now, clean performance even in those countries - up later" policy was resulting in which, until recentl); were considered <-~~><--- - - unacceptable environmental costs. success stories. From an environmental Congested and polluted cities were perspective, these crises may lead to a affecting health. The destruction of fundamental reordeting of regional forests increased the risk of erosion, priorities in a way that undermiines some foding, and elimination of natural recent positive, albeit tentative, trends in haitats. Water pollution was threaten- environmental management. ighealth and fisheries. This realization The Environment Sector Unit is doing domestic and mobile sources is already . | outweighing the decline of emissions The Bank is also acting as an umbrella - ~~~ '~~'~~ 27 ~~ from industrial sources and heating. In agency for a great number of donor '_ ro~v~ addition, deteriorating water infrastruc- activities to support and expand envi- t ture is causing serious supply problems ronmental activities in the region. in many areas, and the risk of bacterio- Maximum leveraging of Bank resources logical contamination of drinking water through better coordination with donors ______ ~~~~~~~is high in both urban and rural areas. xvill continue to be of great importance, The list of environmental hot spots also since government funds for environ- -AA ~ ~~~~~~remains long, mental improvements, both domestic and borrowed, are likely to be con- strained in the ECA countries in the The Bank, in partnership with muttilat- foreseeable future. eral and bilateral donors, is helping countries to identif an mne urgent seyond National c oundahres enironmental problems through the development of regional, national, and Addressiongl wther leong-term managementa local envi7ronmental action plans. The o einlwtrrsucshsbe ECA ortoliogivs spcia empasi to priority in ECA's environmental wvork. ECAporfolo gvesspeialempasi to The Bank is acti vel nvolved in aseries transboundary issues, especially poilu- ofitreadpogmsnthAa, ,o tion of international waterways, and to Caspian, Baltic, Black, and Mediterra- 4tt~~~~~~~~~~ signi ficant technical assistance and nean seas and the Danube river basin. capacity building activities. This These programs, based on strategic includes support to help European action programs prepared in coopera- Union (EU) accession countries tion wiNth bilateral donors, NGOs, and achieve compliance with EU directives, the governments, address pollution of The Bank is also assisting the countries international waters, management of with mainstreaming environmental coastal ecosystems and marine re- objectives into their economic and sector sources, and sustainable dev,elopment of policies and their overall development local communities. Building_ partner- and investment strategies.ships to protect these internationally and investmen strategies.important water bodies is a maj'or challenge, both to countries in the Enildln~~ ~~Sll!S~ region and to the international commu- Since beginning its operations in the nitv. region in the late 1980Os, the Bank has been actively building partnerships and Environment En the Lenzding supporting coordination among multi- Portfolio W lateral and bilateral donors through For almost a decade the Bank has Coastline, Estonia. mechanisms such as the Project Prepa- assisted the ECA countries through 18 ENVIRONMENT MATTERS * FALL 1998 Lake Ohrid, formed 2 to 3 million years ago, is one of the world's oldest lakes. Two-thirds of its 358 square km surface area belongs to the FYR of Macedonia, with the remainder in Albanian territory. Fishing villages and three major cit- ies-Ohrid and Struga in the FYR of Macedonia and Pogradec in Albania- populate the lake's shores. The lake is one of the most popular summer tour- ist destinations for both countries. provision of policy advice and invest- Lake Ohrid is also one of the largest biological reserves in Europe, possess- ment lending. ECA's current environ- ing unique flora and fauna that are extinct elsewhere. The long-term ecologi- mental portfolio consists of 2 8 lending cal stability of Lake Ohrid is in danger unless action is taken to improve envi- operations for 19 countries, and 2 ronmental management of the catchment area and the shoreline and to pre- regional projects that address interna- vent the accumulation of pollutants in the lake. These actions are critical since tional waters issues. Bank support for inflows and oufflows are so small that the lake's water is exchanged only ev- these projects is about $1.4 billion out of ery 60 years. Erosion, agricultural runoff, and high concentrations of phos- a total cost of about $3.4 billion. These phorus are the primary sources of pollution in the lake. projects address a variety of issues: The Bank is managing a $4.1 million GEF grant for the Lake Ohrid Conservation control of point source urban air and Project. The project wil conserve and protect the natural resources and biodi-= water pollution, rehabilitation of district versity of Lake Ohrid by developing and supporting cooperation between At- heating, management of nonpoint bania and FRY Macedonia for joint-environmental management of the lake's pollution from agriculture, management watershed. By investing now in preventive measures to protect the lake, bothn of important ecosystems, conservation of countries will save much that would be required for future cleanup and cor- biodiversity, and promotion of renew- rective measures. able energy sources for domestic use. 0 In FY98, five new projects were added in restoring the country's sturgeon tional Development Fund (IDF)- to ECA's environment portfolio: hatchery capacity, renmediate mercury funded activities in the ECA portfolio, pollution, demonstrate cleanup with a total commitment of about $4 o The Forestry Project in Bosnia and measures in the oil industry, and million. The IDF grants are funding Herzegovina will help to revive strengthen environmental manage- capacity building of environmental sustainable forest management ment institutions. management institutions or enabling the planning. The project will also development of action plans for environ- support recovery of the wood In addition, the Bank manages 22 mentally critical areas such as Lake harvesting and processing sector, and projects in the ECA region for the Sevan in Armenia and Donetsk in restore the system of protected areas; Global Environment Facility (GEF), Ukraine. In Latvia and Lithuania, IDF with a value of $179 million. In FY98, grants are funding priority activities o The Uzbekistan Water Supply, GEF committed nearly $25 million to identified in the country environmental Sanitation, and Health Project will two new projects addressing environ- strategies, such as improvements to help to improve the health of the mental management of two international ambient air quality monitoring systems, rural population by investing in water water bodies-Aral Sea and Lake review of environmental standards, and sanitation infrastructure; Ohrid (see Box). In FY98 a new ozone- technical assistance for policy imple- depleting substance (ODS) phase-out mentation, training workshops, and The Environmental Remediation project in Ukraine was added to the strengthening of local expertise. Pilot Project in Bulgaria will reduce portfolio of ODS projects in Belarus, environmental hazards caused by a Bulgaria, the Czech Republic, Hun- As a partner in the Task Force for copper smelter. The project will promote private investments in the gary, Poland, Russia, and Slovenia. Implementation of the Environmental smelatr and improve environmental Action Program (EAP) for Central and performance of the plant; _- Eastern Europe, the Bank is helping a Building institutional capacity for number of the Former Soviet Union o The Municipal Solid Waste Manage- environmental management in the ECA (FSU) countries prepare National ment Project Loan in Latvia, which countries has been the priority in the Environmental Action Plans (NEAPs). includes a GEF grant, will assist in Bank's lending and technical assistance In Azerbaijan, the Kyrgyz Republic, developing a self-sustaining munici- activities. Most of the lending opera- Moldova, and Ukraine, investment pal solid waste management system tions have institutional development and projects have been initiated based on through collection and sale of capacity building components and a priorities identified in NEAPs. The recovered methane gas; and number of regional programs provide other FSU countries have just com- technical assistance and analytical pleted or are finalizing their NEAPs o The Urgent Environmental Invest- support for environmental activities. (see Box, on page 20). ment Project in Azerbaijan will assist Currently there are eight active Institu- ANNUAL REVIEW- JULY 1997-JUNE 1998 (FY98) 19 Environment Projects Active during FY98 identify priority actions, and by organiz- the EU which will lead to their ultimate ($ million) ing workshops and sponsoring training membership. However, enormous GEF/MWP ssin ilgp oa (25 projects) s =ios, to fill gaps in local expertise. investments and major institutional $182 By the end of the process, the country restructuring will be needed in these has not only produced an environmental countries to harmonize their environ- Institutional Polltio action plan but has also developed mental policies and laws with EU (3 projects) _ Pollution & (128 s Urb. Env Mgt g reater expertise in environmental directives. To assist in this process, the (21 projects) management and a strorger consensus Bank has established an EU Accession Natural ResJ /1.8 billion for addressing environimenital issues. and Environment Regional WVork Rural Env. Mgt. TlhroiL1lhout the rUgi(n, NEAPs have Program. Its focus is to help tlc (3 projects) bcriirinstrutSntaCLISnISet>:nI axx arc- (3 pr265cts) la:Cl illstrUliiielltLl in11 i 1ci asing amware- iimember countries develop strategies to ness of environ mental issues amOnlog comply with EU environmllental IBRD/IOA=$2.2 billion; GEF=S182 million sectoral ministries, extcrnal donors, directives in ways that are cost efficient NGOs, and the general population. and that maximize the overlap between The impact of the NEAP process in the C s. . the directives and the countries' short FSU countries has been greatlv magni- Countries such as Azerbaijan, which and medium-term priorities. The Bank * - have just recently completed their action is also promoting direct exchange of fled by adoption of a participatory plans, have moved quickly to implement experience and technical assistance approach in preparation of the Bank- the projects prioritized therein (see Box). among ECA and EU countries to assisted NEAPs. These NEAPs have disseminate best practices in environ- been prepared with active participation European Union Accesslon mental policy, planning, and manage- of all relevant government agencies and and the Environment ment. stakeholders at all stages of the project. The prospect of EU accession is driving This country-owned process, coordi- environmental policies in countries that The Bank's regional work program is nated by local teams, attempts to have signed association agreements with focusing on three countries. In Poland, the Bank has launched a least-cost study of air pollution, a least-cost pilot study *11' ' 1- 14;'1* *-'1 I . for the water sector, and a study on pollution abatement measures (see Box, In Azerbaijan the NEAP process was carried out by a joint team of Azerbaijani pro- page 21). In the Czech Republic and fessionals, international consultants, and World Bank staff, supervised by a high- Hungary, the Banks s financing coun- level Govemmental Steering Committee. During the process a multidisciplinary team trywide least-cost planning studies for of local experts prepared environmental and natural resource sector studies and the water sector. In all of these coun- analyzed environmental issues within their physical, sectoral, and institutional con- tries, the Bank has mobilized a team of texts with assistance from international consultants. Experts from the Committee of experts to help develop strategies that Ecology, other governmental and nongovernmental organizations, the Academy of are both environmentally and fiscally Sciences; and representatives of municipalities, industries, ministries, media, uni- feasible, given the institutional capacity versities, and regional authorities were closely involved throughout the develop- and budgetary constraints. ment of the NEAP and, in particular, during the identification and discussion of na- tional environmental priorities and criteria for ranking those priorities. Bank staff lainstreamlng Environment assisted the government with setting environmental priorities, developing an elabo- into and rated action plan and costing the technical assistance and investment activities Sctu Stratees needed for its implementation. By promoting such a participatory approach to pre- Bank-supported economic reforms in pare the NEAP, a strong sense of ownership was created within the country. Also, the region that have promoted efficient the process increased the importance of environmental bodies within the Govern- resource allocation have also generated ment, as well as in the country as a whole; strengthened institutional capacity of significant environmental benefits. For organizations responsible for environmental management; and increased environ- example, removing subsidies and mental awareness in the Republic. liberalizing prices may yield a positive To make sure that the implementation of the most urgent actions would not be environmental effect if supported with delayed until the finalization of the NEAP, the Urgent Environmental Investment appropriate institutional restructuring. Project was initiated in 1997 by the working teams, financed by IDA and bilateral Therefore, faalitatmg the transition to a donors. The project represents a first step toward the NEAP implementation in free market economy can often be a Azerbaijan. The project address the most pressing environmental problems of cosr'fficient approach to achieving the country, identified in the NEAP and agreed with the government, and consists of environmental goals in ECA countries. the following components: (i) Sumgrt City mercury cleanup; (ii) sturgeon hatchery Bank-supported policy changes for development; (iii) oil pollution mitigaton; and (iv) institutional strengthening. reducing energy subsidies has had .,____________________________________________________ positive impact in many countries in 20 ENVIRONMENT MATTERS * FALL 1998 The EU Accession Work Program Activities in Poland EU environmental legislation contains technology-based standards for plants of different sizes and ages. It also contains specific na- tional emissions reduction targets. Depending on the specific tar- gets for Poland and the length of the transition period, the total cost of environmental investments for Poland to comply with EU require- ments has been estimated at $3.5 billion. However, a long-range air pollution study commissioned by the Bank found that Poland could achieve the sulfur dioxide reduction targets for 25 percent lower cost if lower-performance technologies, which later could be up- graded to higher-performance technologies, were installed. Complying with EU urban wastewater directives will also be a chal- - lenge for all countries in Central and Eastern Europe. The directive mandates that establishments with a population exceeding 2,000 inhabitants must install at least secondary wastewater treatment technologies. The Bank's least-cost pilot study for the Odra River estimated that constructing treatment plants in all establishments along a specific stretch of the river would cost $22-35 billion, de- pending on the interpretation of the requirements. On the other hand, the pilot study demonstrated that the water quality in the river could be cleaned to equivalent of full compliance through strategic place- ment of treatment plants, reducing the total cost of environmental investments by more than 40 percent. The interim plants might not comply with the EU directive, but could be upgraded at a later stage. Delaying construction of the most sophisticated plants would have Urban air pollution, Poland. an additional advantage of delaying operating costs, consisting of some 40 percent of annualized investment costs. promoting energy conservation, and FY98, 25 have environmenital improve- financing strategies for environmental facilitating use of cleanier fuels, thus ment as one of their direct objectives. investments, by mobilizing resources, reducing air pollution. Of the 14 newly approved structural and by facilitating a range of environ- adjustment loans, 6 contain energy price mental initiatives. The Bank also has been active in liberalization conditions. In addition, mainstreaming environmental objectives Bank-approved sector loans to Albania, Project preparation and implementation into its structural adjustment and Armenia, Bosnia and Herzegovina, capacity are still relatively weak in the sectoral lending activities. Of 69 Croatia, Georgia, and Turkey also have region. Strengthening of staff skills and investment operations approved in coomponents that target environmental institutional structures so they can issues and promote integration of implement the NEAPs and conduct n - w ~- environmental objectives into sector effective environmental compliance policies. These projects address rehabili- monitoring and enforcement remains a tation of power generation facilities, significant long-term challenge. En- upgrading of urban transport fleets, and hancing environmental awareness improvements in irrigation and drainage through education campaigns and by -& , t ~ ' s infrastructure. making environmental information s3I . - -. Financial'resources available for more accessible are low-cost, high- Challenges Ahead return investments that increase support - Financial resources available for for environmental policies and limit environmental investments in ECA polluters' ability to obtain exemptions countries are still limited, but as from regulations. o' countries experience economic growth, more domestic resources will eventually become available to address environ- mental needs. In the meantime, the Bank plays an important role in sustain- Paav o Eliste and Sari Soderstr6m of the Europe _a _ ing environmental activities in the and Centra/l.sia Region can be reached at (202) 473- - - - ^. - region by supporting national govern- 7123and (202) 473-8726,fax (202) 477-3285. mTents in their efforts to design efficient Toxic waste, Hungary. Backgroundphoto bi S. L.intnei: ANNUAL REVIEW * JULY 1997-JUNE l998 (FY98) 21 IAs: C' -,2i i.t' Mean Ragbnt John Redwood HII 2 jith a population exceeding design a sustainable development 0, 400+U million, most of it strategy for the state of Rondonia in the ig i urban, and a land area of 1 8 Brazilian Amazon. Local environmental ~ ~I million square kilometers plnigiiitvscntinued in the K coverin:g diverse estes, four largest cities in Colombia under the the Latin America and Caribbean Urban Environmental Technical 0 ~~~~~~~~~~region faces major environmental and Assistance Project, approved in FY96. social development challenges. These include: setting pfrorities for sustainable Work has started on an environmental development, mainstreaming the strategy for the Caribbean, which will l ienvironment into national and sector focus on sustainable tourism, water edecisionmaking, strengthening manage- resource and coastal zone management, ent capacity introducing market- and natural disaster preparedness. And 3~ based instruments, and promoting an environmental issues paper for Peru public-private partnerships to address will soon get underway. At the sectoral urban-industrial pollution, land and lcvcl, a national encrgy-environmcnt forest degradation, greenhouse gas review has begun in Mexico and similar emissions, and biodiversity loss. With exercises are planned for other coun- high levels of rural and urban poverty, tres. Environmental considerations are growling crime and violence, and a large now being integrated into investments indigenous population, LAC's efforts to in the Brazilian water sector through achieve socially sustainable development two operations approved in FY98, the are equally important. Bahia Water Resources Management Project and the Federal Water Resources The Bank is helping meet these chal- Management Project. ~~~~~~~~~~lenges through participatory strategic planning, decentralized environmental -a management, pollution prevention, mentl adcn icpannt biodiversity conservation, coastal zone Ten LAC countries have benefited from management, indigenous peoptes Bank prNOects aimed at developing development, and support for sustain- environmnental capacity. Two (in Bolivia able development in ecolo ically rich and Mexico) were concluded and two subregions such as the Amazon Basin others (in Brazil and Chile) entered and the Mesoamerican Corridor, their final stages in FY98. New capacity building operations were approved in ~~~ ~~~ ~ ~~ ~ FY98 in Venezuela and the Dominican iamppm Tv'~PJ~~~tt' Republic, and second generation In FY98 the Bank supported several projects are under advanced preparation important priority setting exercises. One in Brazil aiid Mexico. All four enicour- involved identification of key pollution age decentralization and the use of and natural resource management market-based instruments to comple- problems in Bolivia, including the ment more traditional regulatory impact of agricultural and livestock approaches: expansion on land, forests, and biodiver- sity. Another was a participatory The Venezuela Environmental -~- planning process through which a M-anagement and Cartography Project diverse group of stakeholders, including will strengthen integrated environ- farmers, ranchers, rubbertappers, mental and economic planning, indigenous communities, and NGOs monitoring and evaluation, and wrked with government officials to decentralized management through 22 ENVIRONMENT MATTERS - FALL 1998 PROTECTING PATAGONIA'S COASTAL ECOSYSTEMS in Argentina, the Pollution Management Project will strengthen the capacity of The Argentina Pollution Management Project will be complemented by a GEF the Natural Resource and Sustainable Coastal Contamination Project, currently under preparation, to conserve biodi- Development Secretariat to introduce versity along the Patagonia coastline and protect the fragile Patagonia Shelf, a large innovative instruments for pollution marine ecosystem threatened by coastal loading facilities, oil spills, and ship dis- prevetion.trwilltse pulici charges of oil ballast and bilge waters. This chronic pollution is harming large amounts prtnerships t promote cleanerprovduc of marine life. More than 800 oil-covered seabirds were counted in a coastal census partnerships to promote cleaner produc- in 1995, and there has been one reported occurrence of about 20,000 penguins t1 perishing from oil contamination. The project will strengthen institutions and imple- components to address air and noise ment priority investments to safeguard coastal and marine biodiversity from the pollution in Greater Buenos Aires and effects of oil spills and commercial ship traffic, as well as from land-based urban sewage, solid waste, and industrial effluents. improved policies, economic incen- tives, and information systems. It will also provide licensing, environmental_ assessment, and certification services to the pnivate sector, and modernize the national cartography system. The Environmental Policy Reform Project in the Dominican Republic -financed by the Bank's first Learning and Innovation Loan (LIL) for the environment-wvill assess environmental management problems and identify priority reforms. ( The Second National Environment Project in Brazil and the Enviromnen -i tal Management and Decentralization w Project in Mexico will likew~ise set - environmental pnrorities and strengthen Sea turtle on Gala pogos Islands off the coast of Ecuador. capacity\atthe subnfional llPlblicPao vatm Partnerships for coastal pollution in Patagonia (see Box, Environment Projects Active during FY98 LadndPluinM agm t abv) (Smillion) Two FY98 lending operations are promoting public-private partnerships In addition, the Guadalajara Environ- IBRD/IA. b ; G 7 mfor environmental management. In the mental Management Pilot, carried out in Urb. Env. Mgt. important state o FY98, has helped small enterprises, (2pr6e7s (1 9 birlojets Paulo, the Third Land Management working with mnentoning larger firms, Project will1 replicate the success in training institutes, and government InstitutionalsuhrBrzlwtsol aecs,oA (3 projects) sotenBai ihparticipatory si agne,tointroduce improved $43 conservation and water resource managyement systems that generate Rral Env. Mgt. management. The operation involves significant eco'nomic and environmental $1.4 bill ~collaboration among farmers, public and benefits. Public-private partnerships private sector extension agents, and will also be a key, element in the Clean [BRDAIDA=S3.3 billion; GEF=$167 million municipal and state governments. And AiIniaiefrLinA rcaCtes ANNUAL REVIEW .JULY 1997-JUNE 1998 (FY98) 23 which wvill feature stakeholder work- shops to develop action plans for joint utransport-related air pollution in several large urban areas. Biodiversity Conservation. Twvo maj or multidonor initiatives, the Pilot Program to Conserve the Brazilian Rain Forest and the Mesoamerican Biological Corridor (see Box, below) are among the vehicles through which the Bank is / and their sustainable management; and (v) disseminating les- moted and implemented bythelping protect the region's rich biodiversity. The Bank is also sponsor- ing studies on fisheries management and aquatic biodiversity for Argentina, Central America, and the Amazon River system. And in FY98 the GEF supported conservation programs in Argentina, Costa Rica, Honduras, and Panama, as well as provieMCding LAC's first medium-sized grant, for the Promotion of Biodiversity Conservation within Coffee Landscapes in El Salvador. The Pilot Program to Conserve the Brazilian Rain Forest, a a Rainsforest corridors. A new project to link protected areas joint undertaking of the Brazilian government, civil society, and and their buffer zones, creating wider spaces for species the international community, seeks to conserve the Amazon dispersal and genetic flux, is under advanced preparation. and Atlantic coastal forests. Financed by the G-7 countries, the ieU, and the Neerlparind andtcoordinated byvirthmenrld Bank- Amazon floodplains. Amazon riverine ecosystems will re- the program supports: (i) experimentation and demonstrationroth recetlypaisedlon projects; (ii) conservation of protected areas; (iii) environmen-nto t tal institution building; (iv) scientific research on tropical forests The Mesoamerican Biological Corridor (MBC) is being pro- and their sustainable management; and (v) disseminating [es- moted and implemented by the countries of Central America. It sons of experience. Key accomplishments include: is based on the existence of a natural corridor linking the biotas L Civil society organizations. Strong programosuppoityhas of North and South America, and reflects the imperative to bal- in2the4Amazon and ance conservation with the development needs of the local helped to create ative NGO networkspopulation, much of it indigenous. Over the past three years, Atlantic forest regions. ~~~~~~the Bank has been the largest sponsor of the MBC, which pro- *Community-based initiatives. Demonstration projects have vides a mechanism for people, projects, and donors to work enabled some 1 00 communities and organizations, includ- together toward common goals. ing ndienos oes, o tst ew pprache tonatralre- About 450 significant MBC activities are underway in the re- source use. gion, with the Bank supporting some 75 major projects and *Extractive reserves. Four reserves have been established studies. The core projects receiving Bank assistance include and consolidated. GEE investments in Mexico, Honduras, Nicaragua, Costa Rica, * Envronmntalpoliy. Sate overment in he Aazon and Panama to protect both terrestrial and marine (coral reef) regin hve bgunto srenthenther eniromentl aen- ecosystems. MBC's real success, however, has been its influ- cies and are preparing integrated environmental manage- ence on regular Bank lending operations, including rural devel- ment projects. ~~~~~~~~~opment, land administration, road rehabilitation, conservation, decentralization, and institutional strengthening projects. MBC *Science. Two imporlant scientific centers in the Amazon also promotes indigenous rights through legal reform and is have been modernized and research grants provided for 23 influencing the planning processes of sector agencies and priority projects. local governments. 24 ENVIRONMENT MATTERS - FALL 1998 GEF is also supporting preparation of a fires. An Emergency Fire Prevention and and implement local development new tropical forest protection project in Control Project in Brazil is also under efforts. Brazil. The project reflects the Brazilian preparation in response to the greatly government's commitment to protect increased danger of forest fires in the Reducing Violence. The Bank is also ten percent of its rainforests under the southern Amazon region due to the assisting LAC countries to achieve Bank-World Wide Fund for Nature drought in the first half of 1998. These social sustainability by reducing poverty (WWF) "Forest for Life" initiative. activities are part of a broader Bank and violence. Based on an analytical Civil society will be fully involved in initiative with national governments and framework that identifies the main types preparing the project and identifying other aid agencies to help LAC coun- and causes of political, economic, and new areas for protection. tries assess their vulnerability to natural social violence, the Bank initiated a Other Global Environmiental Acti'vities. Two GEF projects, the High Efficiency Lighting Pilot in Mexico and the Wider Caribbean Initiative for Ship Waste, were success- fully completed in FY9v . And new GEF projects for renewable energy in rural areas in Argentina and energy efficiency in Brazil are currently under advanced d preparation. In addition, the Bank is helping Colombia and Mexico elaborate strategies to reduce greenhouse gas emissions under the Kyoto Protocol, signed in Decem- ber 1997. The Second Transport Air Quality Project in Mexico, now under t development, will seek toU. limit greenhouse gas emis- sions and reduce local pollutants from vehicular sources. The disasters and develop strategies to regional Urban Peace Program in Bank is also supporting certification of mitigate these risks. FY98. In this connection, studies have carbon sequestration in protected areas been undertaken for Colombia, where in Costa Rica. Finally, in FY98 the Indigenous Peoples. The Bank provides violence was identified in the Bank's Bank continued to assist seven countries support to indigenous peoples through country assistance strategy as a majbor in reducing their use of ozone-depleting natural resource management proj'ects constraint to development. Research on substances (ODS), consistent with their in Bolivia, Brazil, Colombia, Mexico, violence also began in FY98 for an Montreal Protocol commitments. A new Nicaragua, Panama, and Peru. Other urban poverty assessment in Brazil. ODS operation was recently approved efforts include the Indigenous Lands Finally, an LIL was recently appraised for Mexico and projects are under component of the Pilot Program to to help local citizens reduce poverty and preparation in Colombia and Ecuador. Conserve the Brazilian Rain Forest, increase peaceful coexistence in the which featured demarcation of 106,000 Magdalena Medio region of Colombia, Natural Disaster Prepared-ness and square kilometers in FY98, benefiting which has suffered from extensive rural Mitigation. In FY98, the Bank re- 19 ethnic groups. Also in FY98 the violence over the past decade. sponded to El Nufb-related flooding Bank approved a pioneering Indigenous with emergency operations in Argen- Peoples Development Project in tina, Bolivia, Ecuador, and Peru, and Ecuador. This project aims to help poor reallocated resources from existing indigenous and Afro-Ecuadorian projects in Mexico, Central America, communities develop the technical, and Brazil to address El Nifio-related legal, and institutional capacity to plan John Redwood of the L4C Region can be reached at (202) 473-1693, fax (202) 473-3112. ANNUAL REVIEW. JULY 1997-JUNE 1998 (FY98) 25 Middle East and North Africa Region A n : z J.B. Collier and Sherif Arif ince the publication of Towards the region's urban centers are growing Sustainable Development: An at an unprecedented rate, exposing more Environmental Strategyfor the of the poor to shoddy housing, worsen- Middle East and North Africa' ing air pollution, and inadequate in 1995, policymakers in sanitation. Middle East and North Africa countries have developed a better understanding Increasing air pollution in major population of the linkages between sustainable centers. Uncontrolled use of leaded economic growth and a clean environ- gasoline and diesel for transportation, ment. The region faces three maj'or and of high-sulfur fuel oil for power, are challenges in its efforts to achieve worsening air pollution and increasing environmentally sustainable develop- the incidence of pulmonary disease ment: ~~~~~~~~among urban populations. * Protectling the hiealth of citizens; Threatened coastal and marine resources. Preventing further degradation of Urban expansion and the resulting natural resources; and waste disposal issues, pressure from o Integrating environmental concerns developing tourism, increased shipping into national social and economic traffic, and poorly regulated fisheries are development programs in a manner threatening fragile coastal zones and the that makes protecting the environ- sustainable use of marine resources. ment an instrument of growth rather than a restraint on development or Meetigt tla1 chaliefig$ trade. The World Bank is working with each To achieve these goals, the countries will otrohe tM a lcuntries to maincstrea need to address a number of interrelated i t s problems: economic planning and development. In FY98, the Bank assisted the Govern- Overuse ofwater resources. The popula- ment of Lebanon in preparing its tion in this ard region is growing Environmental Code, which was rapidly and the countries continue to approved by the Council of Ministers. over-exploit precious water resou[rces by Aloi Y8Syacmpedit mining nonrenewable fossil aquifers atlso in F9 syr eted alarming rates. Such over-exploitation is National Environmental Action Plan understandable since more than 50 (NEAP), bringing the number of million people have no access to clean countries in the region with completed drinking water and few other affordable NEAPs or environmental strategies to options are available. The challenge is to seven (Egypt, Iran, Jordan, Lebanon, develop affordable, sustainable options Syria, Tunisia, and Yemen). NEAPs are frmeeting their needs. also being prepared in Algeria and Morocco, with completion expected in Desertification ofarable land. Farmers FY99. continue to overgraze marginal lands, overcut scarce forest resources, and use Th investment Porffool increasingly poor quality water for The Bank is also helping to strengthen irrigation, causing the continual the ability of the MNA countries to shrinkage of productive land. carry out environmental impact assess- ments (EIAs). In FY98, under financ- Rapid, unregulated urbanization. As both ing from the Strategic Compact, the water and arable land become scarcer, Bank conducted an environmental 26 ENVIRONMENT MATTERS * FALL 1998 review of projects in the water and The Algeria Low-Income Housing Environment Projects Active during FY98 wastewater sectors and recommended Project (A) improves water, sanitation, (s millon) improvements in their environment and solid waste collection in urban components. In addition, an in-depth slums and nonserviced low-income Pollution & analysis of the EIA svstem in Tunisia areas. It also strengthens the capacity of Urb. Env. Mgl. was the basis for developing an action the Ministry of Housing to analyze the (6 $385 plan to harmonize that system with the environmental and social impacts of (10 projects) - Bank's environmental directives. And low-income housing projects. S49 the Mediterranean Environmiiental Nural Enl Technical Assistance Program The Egypt East Delta Agricultural (9 projects) (METAP see Box, page 29) approved a Services Project (B) provides core $269 $400,000 initiative to work with the 13 services (irrigation and drainage, METAP countries to strengthen potable water, agricultural extension) to IBRDlIDA=$654 million; GEF=$49 million national EIA systems and harmonize facilitate settlement and increase their environmental guidelines. agricultural production in newly transportation system in Tunisia by Strengthening national EIA systems is developed lands. It also improves developing a plan to increase the use of of kev importance as both private infrastructure for on-farm drinking cleaner fuels across the sector, therebv investors and multilateral financial water and management of soil and reducing air pollution and related institutions increase their capital irrigation water. illness. The project also creates air investment in the region, requiring monitoring capacities in major urban high-quality EIAs for all major projects The Gaza Industrial Estate Project (A) centers. to avoid liability for environmental develops an industrial site with core damage. utility and waste disposal services, as Also in FY98, the Bank continued to well as standard factory, administration, make significant strides in decentraliz- Of the 24 investment projects approved and distribution buildings. It includes ing its environmental activities and for the MNA region in FY98, two are environmental training for the Ministry personnel to Resident Missions. For category A projects, requiring extensive of Planning. both Egypt and the Wbest Bank and EIAs and environmental monitoring Gaza, the country directors and the plans (EMPs); 14 are category B The Second Tourism Development majority of the country teams are now projects, requiring an environmental Project (B) develops and expands located in the field. The Gaza Industrial analysis and monitoring during imple- Jordan's tourism potential, especially at Estate Project, one of the two category mentation; and only 8 are category C Petra and Wadi Rum, in a sustainable A projects approved in FY98, is being projects, which are expected to have manner. The project addresses ongoing managed directly from the Bank's West little to no environmental impact. In environmental degradation and imple- Bank and Gaza offices. In addition, fact, approximately $700 million of the ments improved land-use management several projects are under preparation $1 billion approved for lending in plans to prevent future degradation. around the region at the METAP MNA in FY98 includes environmental regional facility in Cairo (see below). components to be monitored during The Morocco Rural Water and Sanita- implementation. Countries are working tion Project (B) improves potable water Beyond National Boundaries closely with the Bank and other lending supply and sanitation, and thereby The MINA countries are engaged in organizations to ensure that their sector public health, in rural areas of the several regional environmental initia- development projects are indeed good country. The project is an outstanding tves: for both their economies and their example of participatory design. The environments. target population-the rural poor, and The Mediterranean Environmental particularly women-was involved in Technical Assistance Program Several of the 16 category A and B designing the project and will be (METAP), now is in its third phase, has projects approved in FY98 stand out as involved in implementaton. established a regional facility in Cairo examples of the forward thinking that is (in the offices ofthe Egyptian Environ- going into integrating environmental The Tunisia Transport Sector Invest- mental Affairs Agency) as its primary concerns into sector investments and ment Project (B) improves the overall center for project development and strategies. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 27 capacity building throughout the mobilize financial resources for imple- The Gulf of Aqaba Environmental Mediterranean region.2 The opening of mentation of environmental action Action Plan, another peace process the regional facility is one of the programs. initiative, links Egypt and Israel in cornerstones of METAP III and marks collaborative mechanisms to strengthen a significant shift toward decentralized, On June 1-3, 1998, the parties met in capacity to protect marine biodiversity field-based project management and Cairo to: and the coastal zone. increased country ownership. The facility prepares investment projects and Begin development of a 21st century The Red Sea and Gulf of Aden Environ- develops capacity building activities on vision for a balanced, efficient, and mental Strategic Action Program (SAP) the national and regional levels. equitable \vater resources manage- was included in the work program In addition to the activities of the ment strategy; approved by the GEF Council in FY98 regional facility, there are four METAP o Exchange experiences from ongoing and is scheduled for implementation in activities-MEDPOLICIES, Public- efforts to formulate and implement FY99. This partnership of the littoral Private Partnership, the EIA Initiative, water resource management strate- states aims to prevent pollution and and MED-BRANCH-that deal gies; and unplanned coastal development in one directly with mainstreaming environ- a Discuss the relative merits of alterna- of the world's most pristine marine mental issues into sector policies (these tive policy options as well as opportuni- environments. The prevention and activities are described in the Box on ties for and constraints to policy readiness aspects of the SAP are of page 29). reform. particular importance given the high volume of marine traffic through the The MENA/MED Water Initiative is a The Regional Initiative for Collaboration region-especially oil tankers. partnership among the countries of the to Control Natural Resource Degrada- Mediterranean, Middle East, and tion (Desertification) of Arid Lands in Caspian Environment Program. Iran North Africa regions; the European the Middle East continues to plan field and its neighbors around the Caspian Commission; the European Investment activities and elicit donor support for (Azerbaijan, Kazakhstan, Russia, and Bank; the World Bank; and the interna- developing solutions to natural resource Turkmenistan) have joined with the tional donor community. It helps degradation. As part of the Middle East World Bank, TACIS (the EC's Techni- countries to formulate and implement peace process, this program enables cal Assistance Programme for the CIS policies and strategies to achieve scientists and planners from Egypt, countries), UNDP, and UNEP to sustainable management of limited Israel, Jordan, Tunisia, and the West counter the negative effects of sea level water resources and sustainable eco- Bank and Gaza to share experience and fluctuation and industrial pollution, and nomic grow,Nth. It also helps them to expertise in desert land rnanagement. promote the sustainable use of the 28 ENVIRONMENT MATTERS * FALL 1998 Mainstreaming Environment through Regional Programs-the METAP Experience MEDPOLICIES The Harvard Institute for International Development (HIID) is coordinating the MEDPOLICIES effort, which brings local researchers together with representatives of environmental and sector ministries in each country. Through roundtable discussions and case studies on such issues as trade and the environment, the social and economic impacts of air quality, and environmental liability in privatization, MEDPOLICIES is helping facilitate the integration of practical solutions into planning and policymaking. The EIA Initiative To improve the region's business climate and achieve environmentally sustainable economic growth, there is a need to establish clarity and transparency in environmental rules, regulations, and legal liabilities. All of the METAP countries have taken steps to introduce EIA systems, but legislation, institutionalization, and implementation are at varying stages of development. The EIA Initiative will help selected METAP countries to acquire the technical and policy tools needed for credible and operational EIA systems. The initiative has four specific objectives: * Build capacity in EIA procedures and management, through training and involvement with EIA-relevant projects; * Develop the technical capacity of line agencies, private consulting firms, and financial institutions to carry out ElAs; * Develop the capacity to evaluate and approve ElAs; and * Advise on guidelines developed by national and environmental institutes. Public-Private Partnerships (PPP) Public-Private Partnerships is a pilot activity developed jointly by the Bank and UNDP which is being implemented in Tunisia under the leadership of the METAP regional facility. It emphasizes collaboration among government, business, and community groups to create for-profit environmental enterprises specializing in environmental management. The first PPP project, Tunis Package Waste Collection and Recycling, aims to establish a joint effort between the municipal government and a private company to relieve strain on municipal landfills by promoting profitable recycling activities. Building Regional and National Capacity in Hot Spots (MED-BRANCH) This is a pilot effort to build capacity to manage the region's environmental hot spots and to initiate policy dialogues on urban environmental management and planning, water legislation, and other key issues. The objective of MED-BRANCH is to create a common vision among different stakeholders in order to generate a sustainable development approach to managing these zones, while promoting public participation through information sharing and mobilizing the commitment of decisionmakers. The six hot spots are: * Oued El-Harrach, Algeria * Lake Maryut, Egypt * Zarqa Basin, Jordan * Casablanca, Mohamedia, Morocco * Aleppo/Sheikh Said, Syria * Lac Sud de Tunis, Tunisia. Case studies from each hot spot were presented at a course on Integrated Environmental Management and Pollution Abatement in Hot Spots held in Tunis in March 1998. Caspian's unique bioresources. At a air pollution, and coastal zone degrada- are increasingly reporting on environ- meeting in Iran in May 1998 the tion-will not soon diminish, the ability mental issues, helping to generate public countries adopted the framework for the of the countries to mitigate these threats pressure for environmentally responsible program and a draft GEF program in ways that promote sustainable activities. brief, which will be proposed to the development are improving every year. GEF Council in November 1998. If National and local environmental accepted, the program would begin in institutions are being strengthened. ' orld Bank Report #13601-MNA, February 17, January 1999. Legal frameworks are being put into 1995. place and laws are being enforced. The Challenges and Environmental issues are being ad- 2. METAP countries in the MNA region are Appertunities head dressed by economic, planning, and Algeria, Egypt, Jordan, Lebanon, Morocco, Opportunities Aha rse yeooi,pann,adSyria, Tunisia, and Wlest Bank and Gaza. While the environmental threats facing sector ministries. Environmental NGOs J.B. Collier and SherifAofthe Middle East and the region-the overuse of water are having more influence at the JVorth AfrcaRgocnerecdt (202) 473- resources, desertification, urbanization, national and local levels. And the media 8551 and (202) 473-7315,fax (202) 477-1374. ANNUAL REVIEW - JULY 1997-JUNE 1998 (FY98) 29 ES ~~~South AsaRegion Carter Brandon Meeting the Challenges tensions over allocation rights to the waters of the Ganges, and is helping S T O G SuhAsahs guarantee minimum flows to ft LTHOUGH Suth Asia has Bangladesh during the dr-y season. This remained largely untouched will help restore aquifers, provide by the financial crisis of East needed irrigation water, and maintain f l and Southeast Asia, environ- sufficient flows to the Sundarbans-the mental degradation in the world's largest mangrove area-to region continues to worsen-driven by reduce the saltwater intrusion that has the familiar factors of increasing already started to take place. industrial and urban pollution in urban i~~~~~~~~~~~~~~~~~~~~~~~u The rea'nk nees moemphaszng isoa)tedvrn areas (see Cities article, page 3 8) and by Bgm isoatedi degradation in rural and coastal areas eniom taiiitvs;tned fromi the uinsustainable use ofnland, improved planning and management, for Jniiatiests andiwater resetourcest(see t Boxwhich is largely an institutional chal- _ < indu~~~~~~~orsts,iand polltion reontrces (see Box). lenge.i that porder IcA ll spothe for tenvion India, xvhich has been relatively well mengae. Buagpeo icl sup foarm anviron studied from an en-Vironmental point of mna aaeeti prdca et viex, shows rising levels of sickness and and surfaces mainly in reaction to crises. death from pollution, as well as eco-r Envionmental Portfolio lbutab unedThel e to resour E nvironmenal Port foIo nomic costs attributa e to eroure degradation ofmore than 5 percent of The Bank's South Asia environmental GDP Pakistan, Bangladesh, and other portfolio is concerned xvith clarifying the counties in the region are experiencing proper role of the public sector in all similar trends, albeit at lower levels, aspects ofthe environmental agenda. The Bank is emphasizing: (a) environ- In the face of these problems, there have mental impact assessment, (b) strategic been some notable environmental analysis across a broad range ofsectoral initiatives. Private sector investments in issues, and (c) environmental invest- industrial pollution control and com- ments-in that order. All three of these mon effluent treatment plants are approaches build on a long-term Bank expanding in India, party b in response to commitment to help build in-country private sector ISO' incentives and to the institutional capacity to address environ- voluntary compliance of some larger mental issues. industries. Cleanser vehicle fuels, suchA as unleaded gasoline in major Indian cities Environmental Impact Assessment (lIA). and compressed natural gas (CNG) in Strengthened EIA procedures and Dhaka, are being introduced. joint compliance are fundamental to environ- forestry management involving both mental management. In South Asia, communities and government in India however, neither the procedures used for and Nepal is slowing forest degradation conduicting and reviewing EIAs, nor in some of their hill areas, and private procedures used to monitor EIA plantations are increasing the tree cover compliance throughout the life of in other degraded areas, such as in West projects, are currentiy adequate. The Bengal. Investment in renewable energy Bank is placing high priority on in India and Sni Lanka, especially wind technical assistance and specialized and small-scale hydro, has been signifi- training programs to increase EIA cant. A water treaty between India and capacity and introduce worldwide best 'j Bangladesh has reduced bilateral practice into sector, regional, and strategic EIAs. 30 ENVIRONMENT MATTERS * FALL 1998 Strategic Analysis. One objective of Key Environmental Problems in South Asia strategic analysis is to help over- stretched and often relatively junior environment ministries focus on the few * Water quality degradation from poor sanitation, environment ministries focus on the few most important activities with the industrial effluents, and pesticide runoff; greatest environmental and economic * Urban degradation from lack of clean water, poor returns. It typically consists of priority solid waste management, and air pollution; setting, valuation, and cost-effectiveness * Poor management of water resources and unre- analysis. Strategic analysis is also used to solved issues such as balancing the needs and mainstream environmental concerns... mainstoeth lic and . oerat ons o potential of hydropower, irrigation, and inland fish- into the policies and operations of other sector ministries, such as Energy, eries; Transport, and Agriculture. For * Dwindling forests, coastal wetlands, and fresh- example: water bodies; and poorly managed protected ar- eas; * In New Delhi and Dhaka, the Bank * Soil degradation in agricultural and range lands; facilitated workshops in which the * Energy-related damage from the commercial en- government and private sectors agreed on a plan to reduce transport- ergy sectors and the collecton and burning of related air pollution. Participants biomass; and were presented with the estimated * The impact of global climate change, particularly marginal costs and benefits of many in low-lying Bangladesh. possible interventions and engaged in an exercise to rank options for achieving pollution control targets. o In Nepal, a Bank-sponsored study is Environmental Projects. The region's calculating the incremental costs and environmental portfolio consists of 29 * In Andhra Pradesh, ajoint govern- benefits of eight distinct sustainable projects-17 in India, 6 in Pakistan, ment-Bank study iS quantifying: forest management systems. 3 in Sri Lanka, and one each in (a)pthe th impatowter Bangladesh, Bhutan, and Nepal. These pollution tosjustify expenditures on In Bangladesh, the Bank facilitated a projects span the pollution, natural wocatgovernments; and sanitati str re bn framework for implementing the resources, and capacity building aspects local governments; and (b) the loss in National Environment Action Plan of environmental management. agricultural yields due to land (NEAP), involving a dozen govern- degradation. ment ministries in the analysis of The Bank approved two new forestry options for improved environmental projects in India in FY98: Kerala management (see ECA article, page Forestry and Uttar Pradesh Forestry. ($ million) 18, for more on NEAPs). The These projects add to a portfolio of strength of the exercise lay in each forestry projects that is the Bank's ministry applying a simplified cost- largest for any country in the world. In GEF/MP Urb. Env. Mgt& benefit analysis to assess the eco- addition, GEF is supporting with PDF (7projects) (P$611 poec) Anomic, technical, and political grants preparation of a Nepal Biodiver- viability of each option-leading to a sity Trust Fund and a Bay of Bengal Institutional short list of a dozen priority actions regional initiative. GEF is also support- (1 project) Natural ResJ from an initial list of nearly a hun- ing, under the Montreal Protocol, an $50 Ru(21 proaects. dred. Separate environmental projects ozone-depleting substance phaseout were originally identified, but most project in Pakistan. were subsequently mainstreamed into IBRD/IDA=$1.9 billion; GEF=$95 million other projects (see Box, page 32). ANNUAL REVIEW. JULY 1997-JUNE 1998 (FY98) 31 ties. For example, a strong push is being -, . . -. .m made to increase the share of private investment in urban and regional In FY98, preparation began on the proposed Bangladesh Environment Project infrastructure, ranging from roads to (BEP), a project intended to help Bangladesh implement its NEAP. But nearly water supply and sanitation to telecom- all the priority environmental issues identified in the original project concept munications. Governments cannot paper were subsequently taken out of the BEP and mainstreamed into other continue to finance all of these invest- Bank investments. The following six projects now include environmental com- ment needs, especially in light of low ponents that were originally part of the BEP: cost recovery. In industrial pollution control, the practice of the public sector A vehicle emissions inspection program under the Dhaka Urban Transport cfinanci the cruction of effluent Project, fin~~~~~~~~~~~~~~~ancing the construction of effluent Project, trcatment plants is beginning to be Investment in CNG distribution stations under the Gas Marketing Develop- replaced by private sector solutions, ment Project, such as a new privately owned common * Improved slum sanitation and drainage under the Slum Improvement effluent treatment plant in Andhra Project, Pradesh. Wetlands conservation under the Fisheries IV Project, Water quality monitoring under the Arsenic Mitigation Project, Environmental concerns are also being Environmental education under the Post-Primary Education Project. mainstreamed into such projects as the Uttar Pradesh Diversified Agriculture As a result of this mainstreaming, the BEP was broken up into three environ- Project and the Coal Environment and mental activities and the name was formally dropped. These three activities Social Rehabilitation Project in India, as are: well as into projects addressing indus- * A proposed Air Quality Management Project, to improve air quality in Dhaka; trial pollution, land degradation, urban * A proposed School and Community Sanitation Project, to improve sanita- water supply and sanitation, cleaner tion facilities, water quality, and environmental awareness nationwide; power production, and improved water * Environmental Capacity Building Technical Assistance (UNDP-funded, resource management. Bank implemented), to address core environmental assessment and policy C,I society issues. Public awareness of environmental This combined approach of mainstreaming the original set of environmental issues is steadily increasing in the region priorities into several project components, plus unbundling the BEP into three due to NGO activity, the media, activist stand-alone operations, has resulted in a more decentralized institutional ar- courts (especially in India), and govern- rangement for introducing improved environmental management in Bangladesh. ment education programs. This in- creased awareness is fundamental to both improving the effectiveness of Manantireammlng the Environment developing environmental capacity in government policies and enabling Because experience with stand-alone sector ministries and-in the case of and communities. environmental investments in the region India and Pakistan-at the state and has been mixed-due largely to the lack local levels. The environmental compo- Beyond National Bundaries of capacity of environmental minis- nents of sector investments focus on tries-the Bank is moving away from appropriate policies, good management, The four transboundary efforts in the such investments and toward and pollution abatement incentives region are relatively unchanged from mainstreaming environmental concerns rather than on narrow actions to deal FY97. into sectoral projects (for instance, in with specific environmental problems. r i URBAIR and the Two-Stroke Vehicle transport, fisheries, and education, see Box). As a consequence, no new stand- This approach also encourages private Engine Initiative addresses the rapidly alone environment projects were sector investment and community worsening air pollution problem in approved in FY98. involvement in addressing pollution Asia's largest cities. The URBAIR problems, and focuses the role of Guidebook, published in spring 1998, This mainstreaming approach, which government more toward regulatory lays out a strategy to combat air has proven more promising, involves concerns than investment responsibili- pollution and its harmful effects. 32 ENVIRONMENT MATTERS * FALL 1998 Consultation with potentially affected people for Anun Hydro (dam) Project, Nepal. * The Bay of Bengal Environment involvement and financial support of environmental assessment of all invest- Program (GEF funded and jointly the public, nonprofit, and private ments, not just Bank-funded projects; implemented with FAO) addresses sectors to rehabilitate national (b) instill a greater strategic sense in fisheries research, environmental heritage sites that are deteriorating government and community operations emergencies, large marine ecosys- from neglect and environmental regarding the need for more efficient tems, and coastal zone management damage (such as acidic air pollution use of scarce natural resources; and in and around the bay. Both South damaging the marble in the Taj (c) mainstream environmental concerns Asian (Sri Lanka, India, Maldives, Mahal and the old city of Lahore, into sector operations. This three-fold Bangladesh) and East Asian (Thai- and water salinization eroding the approach is important for meeting the land, Malaysia, Indonesia, and structures in Moenjadoro, the ancient environmental challenges that lie ahead. Myanmar as an observer) countries city ruins in Pakistan). This activity are involved. also remains in the preliminary study phase. * The South Asia Development Initiative seeks to improve regional Chalinga-s and Oppartuarids cooperation in the poorest part of Aheadat South Asia (Bangladesh, Bhutan, With their growing understanding of Nepal, and eastern India) in water the close linkages among economic resource management, energy growth, poverty alleviation, and envi- development and trade, and transport ronmental degradation, the countries of and commerce. This activity is in the the region are beginning to generate the preliminary study phase. political will to introduce needed International Standards Organization, which regulatory, financial, and policy reforms, promotes quality management (series 9000) o Cultural Heritage in South Asia, including private sector incentives. To and environmental management (series 14000) being carried out in Bangladesh, assist in this process, the Bank will India, and Nepal, promotes the active continue to: (a) support improved Carter Brandon of the South Asia Region can be reached at (202) 458-2752, fax (202) 522-1664. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 33 International Finance Corporation I Shawn Miller and Lee Doran Toward Environmentally and Sociallyl Sustainable Development The International Finance Corporation resulted in IFC adopting, for the first in the Private Sector (IFC), is the private sector development time, its own environmental and social arm of the World Bank Group. IFC is safeguard operational policies (OPs), committedtofinancing environmentally which include: and socially soundprojects in its member countries. 9 OP 4.01, Environmental Assessment to A.0 OP 4.04, Natural Habitats uring the past year, IFC has o OP 4.09, Pest Management undergone an extensive * OP 4.36, Forestry exercise to more clearly * OP 4.3 7, Safety of Dams articulate its environmental and X OP 7.50, Projects on International social review and information Watcr-ways. disclosure requirements and provide its sponsors and staffwith improved These policies are harmonized with g . X g | guidance. The Environment Division those of the World Bank while reflect- compiance. The Enioremthnt 100Ivisthieonl Bn hePll has also taken initiatives to strengthen ing JEC's unique private sector man- its social review capacity and ensure that date, pro ect cycle, and organizational stafffrom its EnviXronmental Prj ects structure. Three other policies are still Unit, Environment and Social Review une rvsio byjont IFClW ord Unit, and Capital Markets Environ- Bank working groups and are forth- mental Ser ices Team are integrated coming. They are: more fully into project teams. 0 o~~~~~~~~~~~~~~~~~ OP 4.1 1, Safeguarding Cultural In support of the policy review exercise, Property in IFC-Financed Proj'ects IFC commissioned two independent plOP 4.12, Involuntary Resettlement studies. The first assessed the effective- P 4.20, Ingenou Peoples. ness of IFC's 1993 environmental review procedure and reviewed the In addition, JEC has jointly published compliance ofm ore than 100 IEC with the World Bank the Pollution projects across a spectrum ofindustries Prevention and Abatement Handbook, and regions. The second study was which includes revised environmental conducted by an independent consulting guidelines for 41 sectors and industries. firm which reviewed IF:C's experience IFC has also recently published a Good with public consultation and disclosure. Practice Manual on public consultation That study included site visits to eight and disclosure in the private sector (see Caeory A projects. It concluded that Box, page 36). One project approved in IEC generally complies with its public F9,teLFreSraCmn consultation and disclosure require- Project in Bangladesh, required the use mentse but suggested improved guid- ofla number of IFC's environmental ance in this area for its sponsors. Both studie are aailabl throuh theconsultation requirements (see Box, Environment Division, which is part of page 3) IFC's Technical and Environment Department. EnviFonUeUtRE, and S cial Review for sound Ina astin lPC's EnvironmentaD a.d Social During the past fiscal year, IFC also safeguard Poll lee revised the environmental and social These external reviews, in addition to review procedure (ESRP) used in Proposed site of the Lafarge Surma IFC's own internal deliberations and an project reviews. The updated procedure Cement Project, Bangladesh. extensive public comment process, have reflects lFG's commitment to a stron- 34 ENVIRONMENT MATTERS * FALL 1998 and social supervision of IFC's portfo- BANGLADESH - Lafarge Surma Cement Project lio. Overall, the unit is now better equipped to implement the strengthened The Lafarge Surma Cement Project includes construction and operation of a review procedure and new policies that greenfield cement plant in the northeastern district of Sylhet, Bangladesh with a will go into effect during fiscal 1999. production capacity of 1.2 million tons per year. A 15 or more kilometer closed overhead conveyor will be used to transport limestone and sandstone from a quarry Promoting compatitive at Meghalaya, India to the plant site in Bangladesh. Envisnmental Advantage This project was classified category A under IFC's environmental review procedure, The Environment Division's Capital and the sponsor prepared environmental impact assessments (ElAs) for the plant in Markets Environmental Bangladesh and the quarry in India. The project will meet all World Bank Group Services Team continued Capital Markets effluent guidelines. Dust emissions from the plant are controlled throughout using to grow in FY98. The Environmental appropriate pollution control technology and will be below the specified effluent limits. Team has the responsibil- Services Team ity for environmental and A resettlement plan addressed all aspects of resettlement activities with particular social review of financial attention to income restoration and improvement options, including: intermediary (FI) projects, a continu- * Assistance in purchasing equivalent land on the active local land market ously expanding area of IFC activity. * Head-of-queue (starting with the poorest families) employment opportunities in The Team also provides internal and the plant and with contractors external training on environmental and * Training in small enterprise development and other assistance to the local com- social issues and procedures. The munity. objective of the external training is to train senior officials involved with IFC- Public consultation was conducted in Bengali via group and individual meetings, supported financial intermediaries to with local and World Bank InfoShop disclosure of the EIA and resettlement plan in identify, assess, and manage environ- accordance with IFC requirements. IFC will provide regular monitoring to ensure full mental and social risks and opportuni- implementation of all mitigative measures. ties. Executives from more than 180 finan- ger, more systematic, and more effective to reflect that change. IFC expects to cial institutions attended IFC's intro- and unified process of environmental continue the development of its capacity ductory environmental management and social review. The on social issues to stay at the leading workshop, aimed at demonstrating the Environment and new ESRP clarifies edge among international financial value of environmental risk analysis to Social Review requirements that were institutions working with the private strengthen portfolios. In addition, IFC Unit (ESRU) previously either sector. IFC realizes that this area is launched a new week-long workshop for unclear or implicit and complex and that our knowledge is senior managers. The workshop, provides more detailed and specific evolving. We continue to work with our "Competitive Environmental Advan- guidance to IFC staff and project clients, the interested public, and tage: Leading Environmental Change sponsors in many areas. IFC's Policy on industry leaders in many sectors on in the Financial Sector," is conducted Disclosure of Information was also these issues. quarterly and examines opportunities for updated to reflect new disclosure financial institutions to transform the requirements and more clearly define In May 1997, Glen Armstrong, increasing risk posed by environmental the constraints to disclosure. formerly Managing Director of a and social issues into financial opportu- leading UK environmental consulting nity, generating competitive advantage One of the more significant changes to firm, joined IFC as head of the ESRU. through the delivery of value-adding the review procedure is increased New staff and additional capabilities services to industry clients. attention to social issues. Over the past have been added to ESRU in several year, IFC has significantly expanded its discipline and sector areas over the past investing in the EnVaronment social science capability and staff and fiscal year to strengthen and deepen the The Environmental Projects Unit added "social" to the name Environ- group's capabilities, including an (EPU) acts as a catalyst in identifying, ment and Social Review Unit (ESRU) increased focus on the environmental ANNUAL REVIEW- JULY 1997-JUNE 1998 (FY98) 35 services for solid waste disposal in Durban, South Africa. In FY98, the EPU received final approval for the It is good business to engage in public consultation and disclosure on a project's $ 3 0 million IFC/GEF Photovoltaic potential environmental and social impacts. This is a central theme of IFC's new Market Transformation Initiative, which Good Practice Manual. The manual demonstrates how, through adequate pub- aims to accelerate the use of solar energy lic consultation and disclosure on a project's environmental and social impacts, in India, Morocco, and Kenya. In companies can: addition, the IFC/GEF Small- and * Improve relations with local communities, leading to a more stable social Medium-Scale Enterprise Program environment and the provision of the most appropriate social benefits began its $16.5 millioni expansioni phase, * Reduce financial risk and direct costs due to delays, including from commu- including loans to a photovoltaic nity opposition company in Bangladesh and energy * Raise brand awareness and, ultimately, market share efficiency companies in northern Africa. * Earn a good public reputation that can lead to winning future government And the IFC/GEF Hungary Energy contracts and other business Efficiency Cofinancing Program * Foster greater trust between communities and their new corporate neighbors. provided its first credit guarantee. The Good Practice Manual provides Looking ahead, the EPU has begun much-needed guidance to project - i * l . .. : preparation of the IFC/GEF Efficient sponsors by establishing bench- - Lighting Initiative. This initiative builds marks for good practice, as well as i . . - on lessons learned from the IFC/GEF advice on managing local commu- Poland Efficient Lighting Project to nities' expectations and tailoring con- promote the use of efficient lighting sultation to a private sector context. devices in 7 other countnres. The EPU Geared toward I FC project sponsors, wl locniu opru e the Manual is based on lessons learned from an independent review of IFC's will also contnue to pursue new experience with public consultation and disclosure. For copies, contact the En- ventures, such as projects that mitigate vironment Division of IFC at (202) 473-6770 or via fax at (202) 974-4348. climate change pursuant to the Kyoto Protocol (including potential opportuni- ties to develop funds that invest in developing, and structuring projects with specific environmental goals. In _____________ supporting projects Environmental ranging from renew- Projects Unit able energy to clean water supply, the EPU draws on IFC's own resources as well as concessional funding from sources such as the Global Environment Facility (GEF). IFC has arranged about $100 million in GEF funding for a variety of innovative private sector projects and has pioneered the provision of nongrant funding by GEE In FY98, the EPU assisted IFC's Powver Department in appraising and securing lFC approval for a $70 million investment in the Honeywell Energy Service Company Multi-Project Facility, which will improve energy efficiency in Eastern Europe, Russia, and elsewhere. The EPU also supported an investment by IFC's Utilities Group in the Binh An Bulk Drinking Water project in Vietnam, and assisted in the provision of advisory 36 ENVIRONMENT MATTERS * FALL 1998 'i gi ~~~~~~~~~~ ~ ~~~~Bank Ttlfij Country Prp ect Name FY Total Regional (Burkina Community-Based NRM* 96 7 13 Faso, Cote d'ivoire) Regional (Kenya, Lake Victoria Env. Mgt.'- 97 35 78 Tanzania, Uganda) Angola Lobico-Benguela Urban Env. Rehab. 92 46 59 Benin Environmental Management 95 8 9 Natural Resources Management 92 14 24 F Burkina Faso Environmental Managernent 91 17 25 Urban Environment 95 37 40 Burundi Energy Sector Rehabilitation 91 23 23 Cameroon Biodiversity Conservation and MgcJ 95 6 1 2 Central African Rep. Natural Resource Management 90 19 34 Congo Wildlands Protection and Mgt.' 93 10 17 Cote d'lvoire Rural Land Mgt. and Infrastructure Dev. 97 45 65 Eritrea Biodiversity Strat., Action Plan & Nat'l Report* 97 0.28 0.28 Gabon Forestry and Environment 93 23 38 Gambia Capacity Bldg., Env. Mgt:.-Technical Assist. 94 3 5 - Ghana Coastal W/etlands Managementc 93 7 8 Environment Resources Management 93 I 8 36 Forest Resource Management 89 39 65 Natural Resource Management 98 9.3 60 Kenya Biodiversity Strat., Action Plan and Nat'l Report" 97 0.16 0.16 Forestry Development 9 I 20 65 Lake Victoria Environment 97 13 13 Protected Areas and Wildlife Services 92 61 ! 43 Tana River National Prirnaue Reserve' 97 6 7 Madagascar Antananarivo Plain Development 90 31 69 Environment 11 Project 97 30 I55 Environment Program 90 26 86 Environment Program Support 97 21 155 Malawi Environmental Management Project 97 12 14 Fisheries Development 9 1 9 1 6 Lake Malawi/Nyasa Bio(diversity Conservation' 95 5 5 Mali Household Energy' 95 3 1 1 Natural Resources Management 92 20 32 Maurtania Rainfed Natural Resources Management 97 14 24 Water Supply 92 11 IS i Maurtius Biodiversity Resto,atior.' 96 1 2 Environmental Monitoring and Dev. 91 12 21 Environmental Sewerage & Sanitation 98 12.4 65.5 SugarBio-energyTechnologye 93 3 55 Mozambique Transfrontier Conservation Areas Pilot' 97 5 8 Niger Energy 88 32 79 Natural Resources Management 96 27 42 Senegal Sustainable and Participatory Energy Mg-. 97 5 5 Sustainable and Participatory Energy Mgt. - 98 5 19 Seychelles Biodiversity Conservation & Marine PollutionX 93 2 2 Environment and Transport 93 5 7 South Africa Cape Peninsula Biodiversity 98 12 1 17 Tanzania Forest Resources Management 92 18 26 Lake Victoria Environment 97 10 10 River Basin Mgt. otSmaliholder irr-igation 97 26 31 Togo Lome Urban Development 94 26 29 Uganda Bwindi & Mgahinga Nat'l Parks Conservation' 95 4 6 Environmental Mgt. Capacity Building 96 12 23 Lake Victoria Environment 97 12 12 Zambia Environment Program 97 20 40 Zimbabawe ODS 1 94 1 1 3if g83 r3ank Tstal ___ . ,PCou F roject NIame FYn( G Cost China Beijing Environment 92 125 299 Chongquing Indust. Reform/ Pollution Control 96 170 47810 BEficient Industrial Boilers' 97 33 101l Energy Conservation r 98 22 202 -1' , Environment Technical Assistance 93 50 70 X , ,ett,nt, Forest Dev. in Poor Areas 98 100 364 Forest Resource Dev. and Protection 94 200 356 Guangxi Urban Env. 98 92 175 Hubei Urban Environmental Protection 96 150 370 Liaoning Environment 95 1 10 351 Loess Plateau Watershed Rehab. 94 i50 259 Nature Reserves Management' 95 18 24 ODS Project 11- 94 8 8 ODS Proj. II"* 94 I I ODS Proj. III- 95 67 67 ODS Proj. IV- 95 100 400 Second Shanghai Sewerage 96 250 633 Shandong Environment 98 95 200 1 Shanghai Environment 94 160 457 Shilp Waste Disposala 92 1 5 64 Note. Global Environment Facility Montreal Protocol (includes several subprojects) (conltinuid on next pae)t (continued from prev io-s page) al f ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Bank Total l Country Proect Nanae FY Cost China Sichuan Gas Transmission Rehab.' 94 10 123 South Jiangsu Environment Protection 93 250 584 Sust. Coast Res. Dev. 98 100 190 Tianjin Urban Development and Env. 92 100 195 Yunnan Environment 96 160 307 Indonesia BAPEDAL Dev. Technical Assist. 92 12 1 5 Biodiversity Collections' 94 7 1 1 Coral Reef Rehabilitation and Management Proj.V (COREMAP) 98 12 60 Integrated Pest Management 93 32 53 Kerinci Seblat Integrated Conservation/Dev.' 96 I 5 47 Kerinci-Seblat Integrated Conservation/Dev. 96 1 9 47 National Watershed Mgt. and Conservation 94 57 488 ODS Proj. lI" 95 16 16 Renewable Energy Small Power Project 97 66 14 1 Renewable Energy Small Power Project (RESPP)' 97 4 14 1 Solar Home Systems (SHS)" 97 24 1 18 Solar Home Systems Project 97 20 1 12 Surabaya Urban Development 94 1 75 6 18 Yogyakarta Upland Area Development 9 1 1 6 25 U .:: j i: S Si <:i An ::0 ;b: Korea, Republic of Environmental Research and Education 93 60 97 Environmental Technology Development 94 90 156 Kwangju and Seoul Sewerage 93 1 10 530 Ports Devel. & Env. Improvement 95 100 1 107 Waste Disposal 95 75 305 Lao PDR Wildlife & Protected Areas Conservation' 94 5 20 Forest Management and Conservation 94 9 20 Southern Provinces Renewable Energy* 98 0.74 2 Malaysia ODS Investment Proj. I** 96 9 9 ODS Recycling Proj.*' 93 2 2 Philippines Community-Based Resources' 98 50 70 Conservation of Priority Protected Areas" 94 20 23 Environment & Natural Resources Management 91 224 369 Leyte-Luzon Geothermal' 94 30 1334 ODS Proi. I"" 95 12 12 Thailand Clean Fuels & Env. Improvement 95 90 370 ODS Proi. I* 95 17 17 Promotion of Electricity Energy Efficiency" 93 10 89 Vietnam Forest Protection & Rural Development" 98 21.5 32.2 Bank Total i Courgty Project Name F. (m) cost j l Albania Biodiversity Strat., Action Plan & Nat'l Report' 97 0.1 0.1 Azerbaijan Emg. Environ. Impr. 98 15.0 24. 5 i Belar2s PhaseoutofOzone-DepletingSubstances* 97 6.9 15.7 Bulgaria Env. Remed. Pilot 98 16.0 25.0 Ozone Depleting Substances Phase-out' 96 10.5 13.5 Croatia Biodiversity Strat., Action Plan & Nat'l Report' 97 0.1 0.1 Coastal Forest Reconstruct. & Protection Proj. 97 42.0 60.0 Munic. Envir. Unfra. 98 36.3 145.4 Cypruis Southeast Coast Sewerage and Drainage 92 32.0 103.0 nCzecn Republic Biodiversity Strategy, Action Plan, and National Report* 98 0.1 0.1 Biodiversity Protection* 94 2.0 2.8 Phaseout of Ozone Depleting Substances 95 2.0 4.0 Power and Env. Improvement 92 246.0 246.0 Estonia District Heating Rehabilitation 94 38.0 65.0 Haapsalu and Matsalu Bays Environment 95 2.0 8.3 Georgia Biodiversity Strat., Action Plan & Nat'l Report* 96 0.12 0.12 Hungary Phaseout of Ozone Depleting Substances* 96 6.9 8.4 Kyrgyzstan Biodiversity Strat., Action Plan & Nat'l Report' 97 0.1 0.1 LatviL Liepaja Environment 95 4.0 21.0 Solid Waste Management 98 8.0 1 S. I Lithuania Biodiversity Strat., Action Plan & Nat'l Report' 97 0.1 0.1 Klaipeda Environment 95 7.0 23.1i Klaipeda Geothermal Demonstration 96 5.9 18.0 Klalpeda Geothermial Demonstration* 96 6.9 18.0 Siauliai Environment 96 6.2 22.9 Poland Coal-to-Gas Project' 95 25.0 48.3 Energy Resource Development 90 250.0 590.0 Environment Management 90 18.0 27.0 Forest Development Support 94 146.0 335.0 Heat Supply Restructuring and Conservation 91 340.0 739.0 Katowice Heat Supply 95 45.0 92.9 Phaseout of Ozone Depleting Substances" 97 6.2 20.2 Romania Danube Delta Biodiversity* 95 4.5 4.8 Russian Federation Biodiversity Conservation" 96 20.1 26.0 Emergency Oil Spill 95 99.0 140.0 Environmental Management 95 1 10.0 195.0 Greenhouse Gas Reduction' 96 3.2 130.9 ODS Consumption Phaseoutc 96 60.0 44.3 Ei_ !!NIINIII (continuecl from previous page) Bank Total Country Proiect Name FY C$rm' cost Slovak Republic Biodiversity Protection" 94 2.3 3.2 Slovenia Environment 96 34.6 55.4 PhaseoutofODS' 96 6.2 9.7 Turkey Ankara Sewerage 90 173.0 557.0 -i -Bursa Water Supply and Sanitation 93 130.0 258.0 Eastern Anatolia Watershed Rehab. 93 77.0 121.0 IFC-ODS Proj. I"' 95 0.9 0.9 In-Situ Conservation of Genetic Biodiversity' 93 5.1 5.7 Istanbul Water Supply and Sewerage 88 218.0 570.0 ODS Proj V""* 94 6.2 6.2 ODS Proj. I1** 96 4.0 4.0 Tek-lz- iFC Proj."" 96 0.7 0.7 Ukraine Biodiversity Strat., Action Plan & Nat'l Report 97 0.1 0.1 Danube Delta Biodiversityu 94 1.5 1.7 Uzbekistan Tashkent Solid Waste 98 24.00 56.00 Bank Total .County Project Name FY L$rns Cost Regional Planning lor Adaptation to Climate Change' 97 6 6 Regional Terra Capital Biodiversity Fund (IFC) 98 5 55 A m ei" A rite - Regional Ship-Generated Waste Management* 95 1 3 SI Regional lnitiadive for Ship-Generated Waste' 94 6 6 Argentina Native Forests and Protected Areas 97 20 30 ____ . & i t Biodiversity Conservation 98 10.1 21 .9 ODS Proj. I"- 97 22 22 Pollution Management 98 IS8 36 Bolivia Biodiversity Conservation' 93 5 8 Eastern Lowlands Regional Dev 90 35 55 Environment, Industry& Mining 96 1 1 50 Brazil Brazilian Biodiversity Fund, 96 20 25 Env. Conservation and Rehabilitation 96 50 109 Espirito Santo Water Supply & Coastal Pollution Mgt. 94 154 308 Land Management 11 90 33 72 Land Management III 98 55 124.7 Mato Grosso Natural Resources Management 92 205 286 Minas Gerais Water Quality and Pollution Control 93 145 308 National Biodiversity Project" 96 10 20 National Environment 90 1 17 166 ODS Proj. I" 94 8 8 Rondonia Natural Resource Management 92 1 67 228 Water Quality & Pollution Control-Sao Paulo Parana 93 245 494 Costa Rica Biodiversity Resources Development 98 7 1 I Tejona Wind Power 94 3 31 Chile Environment Institurions Development 93 12 33 ODS Proj. *"* 93 2 2 Colombia Natural Resource Management Program 94 39 65 Urban EnvironmentTechnical Assistance 96 20 40 Dominican RepL Dlic Biodiversity Strategy, Action Plan and 98 0.25 0.25 National Report to the Conference of the Parties National Environmental Policy Reform 98 3.00 3.70 Ecuador Biodiversity Protection' 94 7 9 Environment Management 96 I S 20 Lower Guayas Flood Control 91 59 98 Mining Dev. and Env. Control (TA) 96 14 24 ODS Proj. I"-' 94 2 2 El Salvador Promiiotion of Biodiversiry Conservation 98 0.3 0.3 within Coffee Landscapes Haiti Forestry and Parks Protection TA Project 97 22 23 Honduras Biodiversity in Priority Areas 98 7 21 Environment Development 95 1i 13 Land and Natural Resources Management 97 35 40 - Jamaica Demand Side Management Demonstration' 94 4 12 Mexico Community Forestry 97 15 23 Environment and Natural Resources 92 50 127 High Efficiency Lighting Pilot" 94 10 23 MAC Recycling and Aerosols- 92 0 0 - Northern Border Environment 94 368 762 ODS Proj. I ` 93 4 4 Protected Areas Program5 92 25 42 Second Solid Waste Management 94 200 416 Transport Air Quality Management 93 220 1087 - Water and Sanitation 11 94 350 770 Water Resources Management 96 187 342 Nicaragua Aclantic Biodiversity Corridor- 97 7 22 1ECS Counci-les Solid Waste Management 95 13 5 I Panama Atlantic Mesoamerican Biological Corridor 98 8.4 1 2.8 Rural Poverty and Natural Resources 97 23 30 Paraguay Land Use Rationalization 92 29 41 Natural Resources Management 94 50 79 - Peru El Nino Emergency Loan 98 150 430 i ni ienlle Iroyni pre,i tit paSc3 .8ank Totai : Co LntT Pro.ct iniae FY (mrs) C oSt Perui National Trust Fund for Protected AreasW 95 5 8 Sierra Natural Resources 97 5 ! 93 St. Vincent and Biodiversity Strategy, Action Plan and 98 0.4 0.4 the Grenadines National Report to the Conference of the Par-ies Trinidacl and Tobago Environmental Management 95 6 I _ Uruguay Natural Resources Mgt. & lrrigation Dev. 94 4i 74 I3 ODS Proj. 1 * 95 i I Venezuela AA.SA-MAC** 96 4 4i j ~~~~~~~~~~~Chiller Retrof its- Ciinica Atlas"' 94 0.1 0.1 Chiller Retrofits- Congreso de la Republicea 94 0.1 I 0. Chiller Retrofits- nstit. de Previncion Socia dei Medico 94 0.1 0.1 Environmental Management and Cartography 98 28.0 45.0 FAACA-Mac* 95 3 3 INPARQUES 95 33 96 ODS Proj. 1- 93 1 I ~5 iYf-~~~~~ .J Al Tour-tn'; Prsect l\~~~~~~~~~~~~~~~~~~~an~~~e ganlu Total~Bak Tta S Regional (Algeria, Ol Pollution Mgt.-Southwest Mediterranean' 94 ISa 20 Morocco, Tunisia) 01 Algeria El Kala National Parl and Wetlands Mgi. 94 9 11I P'ilot orestry and Watershed Mgt. 92 25 37 7 r--1 -b t :./Water Suppiy and Sewerage Rehabilitation 94 I 10 170 ~~~ 1>] 3j E~~~~ ~~~~~gypt !FC-MCMC Compressor- 93 2 2 iX R & t:2'E ! ~~~~~~~~~~~~~~~~~~~~~~~~~~ ~ ~ ~~~~~~~~~~~~~~~~Ma-.ruh Resource Managemenet 93 222 3 1 -3 . * Pollution Abatement 96 3 Si Pollution Abatement 98 33 48.7 r-j~~~~~~~~~~ ___ ~~~~~~~~~~Private Sector Tourism 93 1 30 784 Red Sea Coastal and Marine Resoirce Mgt.' 93 S 6 r ran 7eheran Transport Emissions Reduction 94 2 4 jordan. C-u4foAqaoDa Environmental Action Plan' 96 3 1 3 ODS Proj. -* 94 2 2 ODS Prom. 11- 93 I I iLebanon Coastal Pollurton Control 97 53 308 Solid Wiaste & Environmental Management 95 55 135 Morocco Environmental Management 94 6 1 1 Second Foresaury Development 90 49 100 Watwe Resource Management 96 1 0 Tunisia Biodiversity Strat., Action Plan & Nat'l Report" 97 0.09 0.09 Natural Resources Management Project 97 27 SI iNorthwiest Mountainous Areas Development 94 28 50 5' ODS Proj. 1*' 94 2 2 Second Forestry Development 93 69 148 Solae Water Heating 95 4 21 Yemen Republic of Land and Water Conservation 92 33 46 a nl k Total CoutrF Project Nlame FY ( Cost ,i Bangladesh Forest Resources Management 92 SC 59 Bhutan Third Forest Development 94 5 9 A irust Fund for Env. Conservationr 92 IC .8 India Alternate Energy' 93 26 1865 Andhra Pradesh Forestry 94 77 89 Bombay Sewage Disposal 96 I 92 280 : i* A Coal Environment and Social Mitigation 96 65 80 Ecodeveiopment 97 28 67 .5 ~~~~~~~~~~~Ecodeveloprnent' 97 20 67 Environmental Mg:. Capacity Building 97 50 61I Forestry Research Education and Extension 94 47 56 Hydrology 96 147 278 Industrial Pollution Control 9. 157 236 Industrial Pollution Prevention 95 168 3523 Integrated Watershed Development (Hills) 90 75 75 Integrated Watershed Developmenit (Plains) 90 33 SS Kerala Forestry 98 39 45 Madhya Pradesh Forestry 95 58 67 Maharashtra Forestry 92 12z 142 ODS Proi. 9 , ODS Proj. 11"r 95 25 25 Renewable Resources Develoemert 93 190 44 0 Uttar Pradesh Sodic Lands Reclamation 93 55 80 U.P Forestry 98 33 65 Nepal Ill Community Forestry 89 31 45 Pakisi-an Balochistan Natura! Resource Man.agement 9' i 18 Env. Protection & Resource Conselvation 92 29 57 Fordweh E. Sadiquia iririgation and Drainage 93 54 7 j Northern Resource Management 93 29 40 ODS Proj. I* 97 2 2 Punjab Forest Sector Development 95 25 34 Second Scarp Transition 9 20 49 Sri Lanka Colombo Environmental Improvement 95 39 49 Energy Services Delivery* 97 6 55 Environmental Action 97 1 5 21 Conservation and Sustainable Use of Medicina. Plants' 98 5.00 25.00 greenhouse gas emissions reduction; see Matrix in Overview, page 7). IFC is WORKING WITH THE WORLD BANK also planning a joint initiative with the Bank and several private foundations to Oyee the Past year, IFC has increased its coordination and interaction with support the use of solar power in off- othe World Bank Group institutions. IFCys development of environmenfa grid applications, and ,social policies has been based on and closely coordinated with those Technical Assistance and of the World Bank. IFC will remain involved with these policy initWativas to Environment ensure continuing harmony with the Bank. IFCls Environmenta Projfcis IFC's Technical and Environment iUnif has also worked very closely with the World Bank on GEF prets Department (CTE) includes a large sector strategies, anda joint initiative to support off-grid solarpoww% SEC Technical Group with a wide range of also continues to advise MIGA on environmental and social jssu ea rJ 'eso technical skills, commercial expertise, to their projects (see Box below). and industrial experience. IFC i a4s taken an active role in the new Bank structure created to addcr-eoc. CTE specialist teams provide technical envi: onmental and social issues. The director of lFC's Technical and Envi- assistance to IFC investment officers ronn ient Department is a member of the Environmental y and Soc'W y S&s- and clients, as well as: tairable Development (ESSD) Council. In addition senior staff .fro the Environment Division are on the sector boards of the Envirornmnnn and o Hands-on business and industrial Social Development families. experience and management expertise * Authoritative identity and continuity _ Knowledge of business risk and issues in a variet of industral sectors o Global perspective and enduring The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank institutional knowledge. Group, has the mission of encouraging the flow of private sector investment to de- veloping countries by providing political risk insurance to eligible foreign investors The objective of CTE's technical that request it. MIGA is committed to supporting investment that is environmentally assistance and support is to make a responsible and sustainable. To fulfill this commitment, MIGA continues to obtain tangible contribution to successful the advice of environmental specialists in the IFC. MIGA began in FY98 to develop business ventures in IFC's target its in-house environmental capabilities, which will be further expanded in FY99. markets and to strengthen the competi- MIGA also has had extensive discussions with its Board in FY98 to formalize its tive position of IFC's clients. In policies on environmental matters. conjunction with their departmental colleagues in the environmental and A prospective MIGA project is carefully reviewed before a guarantee contract is social development areas, nTE's issued to ensure that the investment meets World Bank environmental policies and technical specialists make significant guidelines. In addition, MIGA guarantee contracts require the investor to comply contributions to optimizing the techni- with the host government's laws and regulations. In FY98, MIGA issued 55 guaran- cal and environmental features of IFC tee contracts for $831 million in coverage, and expanded its country membership to projects by advising on clean and 145. efficient technologies, training, energy MIGA has made a special effort to assist environmentally beneficial private sector efficiency, and health and safety im- investments in natural habitat conservation, natural resource management, pollu- provements. tion control, recycling, and renewable energy sources. In FY98, MIGA added to its portfolio one new project in renewable energy (an 18 MW run-of-river hydropower project in Costa Rica), and two new projects to achieve significant cleanup of exist- ing environmental problems (tailings from an old copper mine in Uganda; and the use of low-emission, fluidized bed technology to revitalize an existing in-town power and district heating plant that was not meeting strict Czech Republic emissions requirements). The cleanup program associated with the Uganda project is particu- larly important because it will abate an existing threat to water quality and aquatic habitat in Lake George and Queen Elizabeth National Park. This investment will Shawn ilVilerandLeeDoran of IFCs Technicaland generate income while eliminating a significant source of contamination. Environment Department can be reaclhedat (202) 473-6770,fax (202) 974-4348. ANNUAL REVIEW-JULY 1997-JUNE 1998 (FY98) 37 Cities and Health Carter Brandon ITIES in developing countries are such diseases as the plague, carried by rats increasingly unhealthy places to live, (although this is far less common than the first with local governments lacking the two); and (d) toxic waste and toxicitv-related capacity to collect and dispose of cancers and neurological problems. Health municipal sewage and solid waste, or impacts can be divided into premature deaths control effluents from industry and (mortality) and sickness (morbidity), some cases emissions from transport. Infrastruc- of which mav involve hospitalization. ture and services are often unable to keep pace with the discharge of pollutants, and the concen- Bank studies estimate that the human costs of air tration of waste overwhelms the assimilative and water pollution in many of the world's major capacity of natural ecosystems, within city cities run to tens of thousands of deaths, millions boundaries and often downstream as well, of incidents of moderate to severe sickness, and ~W'~ .creating problems for rural household and billions of dollars in lost productivity and other agricultural water use. damage per year-per city. In Africa and in South, Southeast, and Central Asia, water These problems will only be compounded as pollution has the severest health impact, while in J rapid urbanization continues in the next century. China, Latin America, and Eastern Europe, the A. E -XIn Asia, the urban population is expected to reach severest impact comes from polluted air. In 2.5 billion in 2025, three times what it was in general, cities in temperate zones and with higher ~> 1990, and even now, 87 Asian cities (38 in China, per capita incomes have relatively worse air 23 in India) have more than one million inhabit- pollution problems, often in winter- whereas ants. Latin America is even more urbanized than warmer cities with lower income levels and lower 4 N ,;S@Sw Asia, while Africa is slightly less so. Across the rates of access to clean water and sanitation have world, not only is the number of large cities relatively worse water pollution problems. increasing, but smaller cities are becoming larger at a faster rate. At a time when environmental health damage is worsening in many cities, careful quantificatiofi of Of all the costs of urban environmental degrada- that damage is helping policymakers combine tion, damage to human health is by far the environmental and health decisions with sound highest. This is followed in importance by higher economics. Quantification helps set priorities, v ;'# productivity costs, with environmental problems mobilize public awareness, and encourage imposing higher costs to producers and consum- communication across different constituencies ers. These include the higher costs of supplying and interest groups, including environmentalists, clean water due to polluted nearby sources, of health professionals, and anti-poverty NGOs. For transport due to congestion, of repairing and example, studies from the mid- 1 990s showing maintaining buildings damaged by air pollution, that thousands of people die every year in New of higher wages to compensate workers for Delhi due to air pollution-and tens of thousands working in unhealthy environments, and tourism more across India-have been frequently cited in losses. In addition to these local effects, urban the media, updated by NGOs trained in air areas also generate global environmental costs, pollution modeling, and cited in parliament and specifically the global damage associated with in the high courts. greenhouse gas emissions. Poverty and the Urban Environment. As described Quantifying Health Impacts in detail in the Box on page 40, the poor bear the The most direct links between urban environ- brunt of urban environmental degradation: they mental degradation and public health are: (a) air are less buffered than the non-poor from water pollution and respiratory diseases (see Box, page pollution, solid and toxic waste, high traffic, and < 39); (b) water pollution and water-related air and noise pollution. In addition, slums lack diseases such as diarrhea, dysentery, cholera, and potable water, sanitation, and drainage; are City street in Pakistan. typhoid (see Box, page 40); (c) solid waste and overcrowded; and are often located closer than 38 ENVIRONMENT MATTERS * FALL 1998 Cities and Health This article notes that health costs The two largest health impacts of air pollution are: (i) premature mortality, primarily from exposure to high resulting from levels of fine particulate matter; and (ii) excess cases of chronic bronchitis and other respiratory infections, again associated with fine particulates. While ozone, sulfur dioxide, nitrogen dioxide, and atmospheric lead also cause sickness and occasional death, the impacts are generally less severe than those associated urban air, water, with particulates. Such impacts have been estimated through epidemiological work begun in industrial countries in the 1950s, but similar work is increasingly being done in developing countries as well. and solid waste A worldwide review of 126 cities in which high levels of particulates exceed World Health Organization pollution can (WHO) guidelines estimates that 130,000 premature deaths and 50-70 million incidents of respiratory ill- ness occur each year due to air pollution.a In East Asia alone, there are more than 10,000 deaths a year in reach 10 percent Beijing, 3,000-6,000 in each of ten other Chinese cities, 6,000 a year in Jakarta, and 2,000-4,000 a year each in Bangkok, Seoul, and Manila. There are also 30,000-90,000 cases a year of severe chronic bronchi- of urban income. tis in each of these cities. In monetary terms, these costs total 28 percent of urban GDP in Beijing, 8-30 percent in other Chinese cities, 7 percent in Manila and Bangkok, and 4 percent in Seoul.The costs in many cities, such as Jakarta and Bangkok, would be 20-40 percent higher if vehicle costs and the value of time lost in traffic congestion were included. Elsewhere in the world, air pollution impacts are comparable: 40,000 premature deaths a year in India, 36,000 in the Newly Independent States, 4,000-6,000 in Cairo, 4,000 in Sao Paulo and Rio de Janeiro combined, and 6,400 in Mexico City. The economic value of this health damage represents 3-10 percent of urban income. One recent study has shown that the "environmental costs of fuel use in large cities can be so high that marginal damage costs are comparable with or even exceed (for some fuels) both producer and retail prices."b These numbers make urban pollution both a major health and a major economic concern. These health damage estimates are increasingly being used to compare the cost of pollution abatement with the health benefits gained, and the findings are that the cost of abatement per life saved is extremely low-often $1,000 or less. Specifically, the rate of return on particulate emission control is so high that it is an extremely cost-effective public health approach to pursue in all cities with high particulate levels. Notes: a. Maddison, David, "A Meta-analysis of Air Pollution Epidemiological Studies," Center for Social and Economic Re- search on the Global Environment, University College London, 1997. b. Lvovsky, Kseniya and Gordon Hughes, "Addressing the Environmental Costs of Fuels in Developing Countries,' World Bank, presented at a conference of the Association of Environmental Economists, Venice, Italy, June 1998. other neighborhoods to waste dumps and indus- elsewhere in cities. Although the poor may have trial sites. One study showed that urban slums in to pay the cost of improved services, this has Bangladesh have twice the infant mortality rate as proven not to be a serious barrier. Worldwide, the the overall urban population, and nearly 50 urban poor have been willing to pay for improved percent higher infant mortality than rural areas.' water supply, sanitation, and solid waste collec- While these data capture the effects of other tion, mainly because they are already paying factors, including the hygiene and access to heavily in other ways: in illness from drinking medical services of slum dwellers, they are a polluted water, in fuel costs from boiling their strong indicator of the environmental insults to water, or from buying clean water from private public health in slum areas. hawkers, often at two to twelve times the price paid to water utilities by the middle and upper Overall, urban cleanup will reduce more sickness classes. and death in the poorest neighborhoods than ANNUAL REVIEW-JULY 1997-JUNE 1998 (FY98) 39 rbiac aEnvsoadepenita he naoenviont investment through user fees and the plscing of Addressing the health damage caused by air natural resources such as water and fossil fuels to pollution, water pollution, and solid waste does capture the cost of their use (see Box, page 41). not impose a special agenda on city governments. The challenge, therefore, is for countries to adopt There is no difference between good urban urban management strategies that combine sound management strategic thinking and urban fiscal management and the provision of urban environmental strategic thinking, since good services with efficient environmental regulation. urban management encompasses the core public health concerns raised by pollution. Experience has shown that the most successful efforts to integrate environmental and health concerns into urban management emphasize the recovery of 40 ggE ENVIRONMENT MATTERS I FALL 1998 Cities and Health 0_ Environmental health problems in Surat, the oldest municipality in India, were at their worst in the early I 1990s. This city of 2.2 million was incurring nearly half of all diarrheal cases in Gujarat, even though it represented only 5 percent of the state's population. Then, in 1994, it had an outbreak of the plague- making international headlines and costing the city both lives and an estimated $1.5 billion in disrupted commerce and trade. Considered one of the dirtiest cities in India, it was mobilized into action despite the tight fiscal constraints common to all Indian municipalities. By 1997, Surat was voted the second cleanest city in India. As a result of prudent actions over four years, water supply and sanitation coverage has improved considerably, and the incidence of diarrheal disease has dropped to only 10 percent of the state total. The plague disappeared. Incidents of malaria-correlated with stagnant surface water and poor drainage-dropped significantly. These health gains were achieved largely through decentralization, improving efficiency, enhancing infrastructure performance standards, and strengthening health services. In addition, sanitation and drainage infrastructure in the city has been extended: 217 of the previously 253 unserviced slum communities have been provided with proper sanitation (including toilets) and drainage facilities. The city has upgraded two sewage treatment plans, which now meet discharge standards. Solid waste management has dramatically improved, to a collection efficiency of nearly 98 percent, and has been partly contracted out in order to make it financially viable. The city also operates a controlled landfill. To combat air pollution, traffic management has been streamlined with the intention of reducing congestion and hence vehicular emissions, but reductions in ambient levels are yet to be recorded. Unleaded gasoline will be introduced shortly. lWorld Resources Institute/UNEP/ U'NDP/WXorld Bank, The municipal corporation collects 85 percent of its property tax-the highest rate for any city in India-and Th UN Vrlban has earned an investment grade credit rating. Its infrastructure policies and investment planning have met Enmironment, 1996. its urgent environmental needs in a way that is consistent with sound urban fiscal management. To continue making progress in badly needed infrastructure, the city has made ambitious plans to reach full coverage in South Asia Region can the provision of piped water supply, expand the sewerage system to cover half the city's population, and be reached at introduce buses fueled by natural gas. (202) 458-2752, fax (202) 522-1664. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 41 Envmn ment al Capa ct Bu dn - A Porolo Revi Sergio Margu/is and Tonje Vetleseter Backg ound ACK of institutional capacity in member countries has long been a constraint to implementing environ- Environmental institutions. Some countries mental policies and programs. To have mature institutions for environmental man- address this problem, the Bank has agement (Colombia), but most projects involve been heavily involved in providing the establishment, consolidation, or restructuring technical assistance for environmental of very young institutions. institutional development (ID). These efforts are Policies and instruments. Reviewing, develop- part of a large environmental portfolio consisting ing, and streamlining policies and guidelines for of 163 projects costing nearly $11 billion in Bank environmentally sound management in a loans in such areas as biodiversity protection, number of sectors. pollution control, and water supply and sanita- tion. The Bank also continues to support the Information systems, data management, and development of National Environmental Action monitoring. To facilitate the gathering and man- Plans (NEAPs), as it has since the mid-1980s, to agement of environmental information.The focus help countries establish a framework for environ- can be general or on specific issues such as biodi- mental management. By the end of 1997, 57 IDA versity (China), coastal zone management and IBRD countries had completed NEAPS, (Brazil), or urban pollution (Mexico, Chile, and and 24 more were preparing them. The Bank's Russia). current environmental ID portfolio-29 out of the 163 projects, valued at $1.5 billion-follows Financing mechanisms. Creation of incentive directly from this effort. structures, public-private partnerships for environ- mental management, environmental funds for While it is too early to conclusively judge the protected areas or pollution abatement, credit impact of ID projects, there is a perception lines for environmental projects. that-although most have been rated satisfactory -the results in terms of improved environmental Education and research. Both primary schools management have been frustrating. ID is a slo' w and universities are targeted. Some projects have gradual process, requiring long-term commit- research components. ment and learning by both the borrower and the Public awareness campaigns.To build consen- Bank. As they have evolved, ID projects have sus for environmental programs and policies, and increasingly emphasized participation, decentrali- encourage the participation of local communities zation, flexibility, and a long-term perspective. and rural people. Media campaigns use televi- 7he Environmen tal ID Poretfoo rsion, radio, posters, and newsletters. The Bank's first two environmental ID projects, in Madagascar and Brazil, became active in rather than on improvements in indicators. The 1990; today there are active projects in 26 earlier projects tended to minimize risks such as countries in all regions. The projects average the limited absorptive capacity of local agencies, $55 million, reflecting the relatively low cost of unfavorable macroeconomic conditions, and lack technical assistance, though this is pushed up by a of government commitment, which later were few large projects that mix ID with environmen- cited as having negatively affected implementa- tal investment components. Projects are generally tion. Based on these lessons, the trend is now larger in Europe and Asia, though the majority toward encouraging greater participation by are located in Africa and Latin America. various stakeholders, the use of gradual and piloting approaches, the introduction of economic Qualty at Entry pincentives, and the decentralization of environ- Projects tend to focus on the process of creating mental management. or strengthening environmental institutions 42 ENVIRONMENT MATTERS * FALL 1998 Environmenta3 Capacity Building Implementation institution, and identify priorities based on a This article says The performance of environmental ID projects country's specific needs and conditions. They has improved in the last four years, but in FY98 should be designed as a series of building blocks, that long-term a number of projects had serious implementation with specific objectives defined as the project problems. The most cited were: develops, as institutional capacity deepens, and as institutional the Bank learns more about the country's institu- * Borrowerfactors: (i) volatile political or economic tions. capacity building environment; (ii) lack of political will/counterpart funding; (iii) institutional rigidity or tensions n is needed to o G overnment agencies must assume ownership of proj ects and be committed to involving beneficia- * Bankfactors: (1) more emphasis on preparation ries other stakeholders and the public, which will achieve environ- than on implementation, with limited resources help enure thoeracco ndtat pinituins. for supervision; (ii) high task manager turnover; help ensure the accountablity of istitutons. mental objectives. (iii) complex Bank procedures. ( New operating procedures, such as the Adaptable Main Lessons Lending system, should support longer-term Changing institutions involves changing institu- programs and pilot initiatives. tional cultures, and such cfforts are inevitably Task managers must be given the incentives to slow and gradual. Institutional development in the environmental field is further complicated by the cross-sectoral nature of the problems, the lack design small rather than big projects, and to take of understanding of environmental issues, and the the time to realistically assess the government's fact that institutions are typically young, without interest in and capacity to carry out a project. c learly defined responsibilities. o The overall objective of such projects is to Three main types of internal Bank problems strengthen the environmental management systcm negatively affect its projects: (i) the incentives for as a whole, not only an environmental agency in task managers to promote large projects rather isolation. It is thus important to create partner- than skills transfer and improved management ships with other environmental institutions and capacity; (ii) the project cycle, originally designed stakeholders. for infrastructure investments, is unsuited to a continuous, gradual capacity building effort; and o Stand-alone ID projects may be necessary to help (iii) blueprint solutions, which are inappropriate prepare or strengthen the policy framework, but in the case of ID because of the individuality of specific objectives maybe clearer and easier to countries and institutions, achieve when combined with investment projects. On the government side, the key elements for While the factors mentioned above may have successful implementation are ownership and undermined the Bank's effectiveness in environ- political support. External assistance can help weak institutions define and carrv out their mental ID, the lessons of experience are now being responsibilities, but governments and beneficiary incorporated into the implementation of older agencies must have the political motivation to projects and the design of the new ones. But like ultimately lead the process from the inside. the institutions that such projects support, the Sergio Margulis of the Bank also needs time to change. The Bank will EconomicDevelopment Recommendations continue to review its performance in this and Institote/Learning and other reas,and wil folow upwhere he ned forLeadership Center and * Projects must clearly define what needs to be other areas, and will follow up where the need for Tone Veteseter of the strengthened, clarify the responsibilities of each improvement is found. Environment Department can be reachedat (202) 473-3238 and (202458-5770, fax (202) 676-0978. ANNUAL REVIEW.JULY 1997-JUNE 1998 (FY98) 43 Inter-Basin Water Transfers - Emerging Trends1 Rafik Hir&i ATER is scarce in many arid countries' water policies to restore damaged and semi-arid regions-the ecosystems. And two newer schemes in develop- Middle East, Eastern and ing areas, China and Southern Africa, both Southern Africa, and parts of designed within the last decade with the benefit of Latin America, the Caribbean, environmental impact assessments (EIAs). The and South Asia. But even in newer cases show that although EIAs have countries with an overall become an important tool for safeguarding the abundance of water resources-Australia, Brazil, environment in water transfer schemes, they are China, Mexico, and the United States-demand insufficient for mainstreaming the environment in exceeds supply in some areas. To address such the absence of sound water policies. Such policies deficits, should give high priority to the ecological value of agencies at the rivers and other bodies of water, and should national, define explicit criteria and approaches for regionalhtchrie ana0nilsodanl.Ianra roonal, andl protecting those waters and restoring damaged often import aquatic ecosystems. water through inter-basin Early Schemes in Industrial Countries transfers. United States In California, which now has the seventh largest Such transfers eIconomy in the world, a variety of federal, state, can have and local inter-basin water transfers were devel- envi ronmnoped over the past 85 years to meet rapidly envimpacents- growing demand. the exporting In 1913, the city of Los Angeles built a 233-mile area, the aqueduct to transfer water from the Owens valley sco gimporting area, in eastern Sierra Nevada. This scheme still C.~ ~ ~ ~ l and the pathpemne n 90b tesae inkg the patw provides 75 percent of the city's annual supply areas. The Then, in 1937, a Central Valley Project (CVP) exporting area was funded by the federal government to divert sn tcan experience water from the Sacramento-San Joaquin river reduced flows, delta to southern California. The scheme com- Lesotho Highlands, Africa. chasnged prised 20 reservoirs, I11 power plants, 3 fish hydrology or hatcheries, and 500 miles of canals. In a normal beforeduced dnviuton.ena I mpo gars can bchyear, it still delivers 7 million acre-feet of water to damaged from inefficient or overuse of water (for irigate 3 million acres of farmland and supply 2 example, water logging and salinity buildup), milliouracstms.TeCPfilis disposal of toxic wastewater, or the transport of were constructed primarily for river reg-ulation, nutrients. Imported water can also exacerbate naovigation, eerto and flodeon ro,btheyalson scouring and erosion in the receiving rivers, provide powe gnai an recrceatiS o This article discusses four cases that illustrate The CVP was supplemented in 1960 by the state- such impacts: rtvo older water transfer schemes in funded State Water Project (SWP), comprising industrial countries, the UJnited States and 22 dams and reser-voirs and a 444-mile aqueduct Australia, designed and built 5 0-60 years ago, from the northern to the southern part of the before the environmental impacts of such projects state. Of the 2.4 million acre-feet of developed were understood. The resulting degradation of firm yield from SWP, 30 percent is used for the environment has catalyzed reforms in these 44 ENVIRONMENT MATTERS * FALL 1998 Water Resources !Managernent This article discusses the The CVP and SWP water transfer schemes have had a n imber of serious and interrelated environmental environmental impacts in both northern and southern California. In the north: consequences of The San Joaquin delta is a habitat for 25 percent of the state's warm water and anadromous sport fish and 80 percent of its commercial fishery. The large amounts of water pumped from the delta to southern Califor- watertransfer nia have contributed to: low fresh water outflows in dry years, intrusion of sea water, and high salinity in water supplies for farmers, urban communities, and wildlife. In addition, large-scale irrigation in the San schemes. Joaquin Valley has resulted in the conversion of 95 percent of the state's wetlands to farms, causing the migratory bird and waterfowl population to decline from 60 million in the late 1940s to 3 million in the early 1990s. Irrigation has also accelerated the leeching of se:enium into wildlife refuge ponds, causing many deaths and deformations. In the south: The diversion by the city of Los Angeles of 4 of the 7 Monc Lake tributaries in the Owens Valley has caused the lake level to drop 40 feet, increasing the lake's salinity, threatening its unique shrimp and bird popula- tion, and uncovering stretches of the lake bed that con ain high levels of alkali. During wind and dust storms, alkali particulates, which are harmful to the respiratory system, pose a major public health hazard. irrigation in the San Joaquin Valley and 70 Since 1987, the San Francisco Bay Delta percent for residential, municipal, and industrial Hearings between state and federal regulatory needs in the south. agencies and major water operators have led to the development of a comprehensive ecosystems The CVP and SWP improved the welfare of the plan for protecting the ailing Sacramento-San state's farming communities and aided the growth Joaquin river estuary. of cities and industries. They also relieved pressure on depleted groundwater aquifers, which c The 1992 CVP Improvement Act fundamentally had caused severe land subsidence (up to 30-40 changed CVP operations and water allocation, feet) and massive damage to urban and rural making fish and wildlife protection and restora- infrastructure. However, these schemes also tion one of the primary purposes of this water created massive ecological changes throughout scheme. The Act reallocated 800,000 acre-feet to created massive ecolo 'cal changes throughout 1 e sadwllf,sgfcnl - 91 ~~~~~~~~~~restore valley fisheries and wildlife, significantly the state, especially in the San Joaquin Valley (see altered the operatons of CVP facilities (and Box). added a $100 million temperature control device), and established a $50 million environ- Remedial Actions and Reforms. As a result of mental restoration fund. improved knowledge about environmental impacts, growing public pressure, and use of o In addition, court decisions in the 1980s and programmatic EIAs to review the impacts of 1990s (the result of lawsuits by local and existing water resources operations, new water environmental interests) have amended the water policies have been legislated. These policies are rights of the city of Los Angeles and reduced altering the operations of many old California diversions from the feeder streams in the Owens water projects in order to restore damaged Valley to protect and restore Mono Lake. The ecosystems. In particular: lake level has increased by 4 feet. ANNUAL REVIEW -JULY 1997-JUNE 1998 (FY98) 45 Australia Recent Projects In Developing Countries The Snowy Mountains Hydroelectric Scheme in In light of the environmental consequences of Australia was constructed between 1949 and such early water projects, and growing public 1974. It uses 16 major dams, 7 power stations, a concern, the Bank and other donors now require large pumping station, 145 km of tunnels, and 80 that environmental impact assessments (EIAs) be km of aqueducts to collect and divert 98 percent performed for all water projects in developing of the inflows to the SnoNvy Mountains into the countries. As the two cases below illustrate, Murray and Murrumbidgee rivers for agricul- however, ElAs by themselves still are not suffi- tural production and to meet urban demanid inl cient to mitigate major environmental impacts, southeastern Australia, including Syndey and since they are often carried out late in the plan- Melbourne. The scheme meets 5 percent of the ning process to justify a project after it has already southeast's total annual energy requirements and been designed. provides 10-33 percent of flows in the Murray and 25-60 percent of flows in the Murrumbidgee. China Irrigated agriculture in the river valleys contrib- The Bank-financed $400 millionWanjiazhai utes 25-30 percent of regional output, income, Water Transfer Project (WWTP), in its early > and employment. stages of implementation in FY98, will serve the This scheme, like those in California, was industrial mining cities in Shanxi province. f:i ~~~This scheme, like those in California, was constructed at a time when there was little t.i X . , \~~~~~~~~~~~~~~NNtater deficits in Shanxi have resulted in farmers concern about the environment. As a conse- quence, it too had serious ecological conse- irrigating with untreated industrial wastewater, - mx qu~~ence, 't too hadl ser'ous ecolog'cal conse- industries conserving water at the expense of i ;Rg_ quences. production, and the population not having R, In the exporting area, the diversion of the Snowy sufficient water for regular hygiene. The project River and tributaries reduced natural flows to 1 entails construction of a large dam (not Bank 5g;z Xpercent of those before dam construction, altering funded) and a Bank-funded water transmission habitats, species abundance, and biodiversity. The facility, as well as implementation of institutional scheme also extended salt water intrusion into the reforms, pollution control measures, and an estuary, impacting the estuarine lakes and the industrial waste management and wastewater productivity of farmland collection and treatment strategv. Its aim is to on the flood plain, improve water quality and supply and reduce groundwater overdraft and saltwater intrusion In the importing area, into coastal cities, in order to enhance economic 'The toxic algae bloom, as the additional water growth and relieve human distrcss. The toxic algae bloom, as well as growing salin- contributed to destabiliz- ity problems in the Murray Darling basin, cata- ing and eroding the river The EIA carried out during project preparation lyzed efforts to reform the country's water sector, banks and increased determined that the benefits of the project, which began with an audit of water use in the wastewater discharges including improved public health and reduced river system.The audit found that water use would from municipal, indus- pressure on local water resources, would outweigh grow to 90 percent of the natural flows at the trial, and agricultural its environmental and social costs: (a) resettle- mouth of the Murray if policies were not changed. activities. This increased ment of 54 individuals from 16 households and In response, the Murray Darling Basin Ministerial nutrient loads in the loss of land for 1,024 individuals; and (b) Council-in a major policy shift-instituted a per- Murray-Darling river increased wastewater generated from the large manent cap on water use in 1996. The cap was basin, particularly volumes of water imported. Instream effects of defined as the volume of water that was diverted phosphorous and the transfer are not likely to be significant. At full from the Murray at 1993/94 consumption levels. nitrogen. As a conse- operation, the project will divert only 2 percent of The rest of the water was left for instream eco- quence, during the the mean annual river flow and 5 percent of the logical needs. summer of 1991 the flow in dry years. However, cumulative effects Darling River recorded could be significant if downstream consumers use In addition, the Murray Darling River Basin Com- the world's largest bloom more water than they are allocated. mission, in conjunction with state and local land of toxic blue-green algae, and water conservation agencies, has instituted which extended for 1,000 Southern Africa innovative measures to improve land use and km (see Box). The algae In 1986, the governments of Lesotho and South reduce waste discharge into receiving waters. It bloom depleted the Africa signed a treaty to implement the Lesotho is also planning changes in the operations of dissolved oxygen in the Highlands Water Project (LHWP), which will dams and other water infrastructure to achieve water, resulting in export water from the Senqu/Orange river in L massive fish kills. Lesotho to water-short Gauteng province, the 46 ENVIRONMENT MATTERS * FALL 1998 Water Resources Wastewater Discharges rn J dina Are on the Rise Management 60 D 60 . C Municipal sources a 40 m _ _ I I Township and village oL _ industrial enterprises 20 Regulated industries 1981 1989 1995 .'Vote: WIastewater discharges from township and village industrial enterprises in 1981 are estimated based on the 1989-95 increase. Source: NEPA, rihina Fnvironmental Yearbook, 1996. industrial hub of South Africa. Under the treaty, O eangthenlg E2As 2 h1hwo ug i tlatotieai South Africa will pay Lesotho royalties for water RZfam exported and is responsible for all project costs, These cases show that while environmental including construction, operations and mainte- assessments are an important tool for identifying nance, and mitigation of social and environmental the negative impacts of maj or water projects, they impacts. The project is being implemented in five are not sufficient to protect and preserve the phases. Phase IA is completed and lB began water resource base, particularly if they are implementation in FY98 (the Bank is providing performed, as they typically are, after important $45 million of the $2.4 billion for phase 1B). project elements have been designed. W"Tater policy reforms are needed to ensure that instream Detailed EIAs were carried out for phases 1A uses of water are given as high a priority as and 1B, which determined that the economic industrial, agiricultural, and other uses, and that benefits of the project would outweigh the EIAs are required well before projects are environmental costs. Phase lB alone involves designed. South Africa has been one of the resettlement of 360 households, destruction of forward thinking countries in this regard. Its new habitats of endangered and threatened species, Water Law places a higher priority on water induced seismic activity, and the flooding of 39 requirements for ecosystems than for most other hectares of wetlands currently under cultivation uses, including energy, agriculture, and industry. or used for grazing. In addition, in the exporting area, the mean annual flow at the confluence of Sound water policy should require that projects ' This article is a the Senqunyame and the Senqu rivers will be include explicit criteria and approaches to protect summary of a paper presented at the reduced by 40 percent and the resulting down- and restore threatened and damaged aquatic Fifth International stream impacts are not known. The Lesotho ecosystems. Such policies are emerging in both Conference on Highlands Development Authority has commis- industrial and developing countries, and will have 'Vater Resources Management in sioned a long-term study to determine required far reaching consequences for the operations of Fortaleza, Brazil, instream flows. In the importing area, significant water infrastructure and for the health of the on May 22. 1998. impacts are expected on the Ash River, where the environment. It will he expanded in a WNorld Bank additional water could cause heavy scouring and Technical Report. erosion, affecting the riparian and aquatic communities. Rafik Hirli of the Environment Department can be reached at (202) 458-1994, fax (202) 522-0367. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 47 Environmental Economics and the Bank John Dixon S an economic institution dedicated country's progress toward sustainable develop- to the reduction of poverty, the ment. These include six indicators for environ- Bank makes an effort to adhere to mental sustainability: whether a country has an sound economic principles in all its environmental action plan, the number of people - activities. In the past few years, with access to safe water, annual freshwater these principles have been extended withdrawals, biodiversity land area protected, to include the environment. The energy efficiency, and carbon dioxide emissions. Bank is increasingly concerned about the impacts Indicators to measure air quality in cities, land of its activities on ecosystems and ecological use patterns, and coastal resource management sustainability, and has been creating tools and also are being developed. methods to understand the close linkage between economically and environmentally In addition, the EEI team has developed two sustainable development. indicators to track important changes in the - environment: Total Wealth and Genuine Savings. The Bank's 1992 World Development Total Wealth measures four major types of : ~~~~~~~~~Report, issued for the Rio Earth Summit, capital-produced assets, natural capital, and focused on links between economic human and social capital. This is a stock concept on trade and environment linkages development and prudent environmental that reflects the aggregate resource base a country was that they are quite country spe- management. Since then, we have has for economic development. Genuine Savings chic. Three different effects can be learned that sustainable deveLopment is a flow concept that values changes in wealth identified: requires attention to three sets of (including the use and/or mismanagement of factors-economic, environmental, and natural resources) over time by subtracting the * The scale effect is due to greater social. value of resource depletion from traditional economic activityAccodfollowing Batrade iveltedsavings measures. A negative Genuine Savings alAccordingly thenBan ts ited estimate for a country is a clear signal that it is on environmental de radtion. heavily in strengthening its capacity t ,an unsustainable de lo nt th Work * h ehiqeefc rslsfo crrypou ecoanomic Oafnbhav lysisofenvirn-a pouedast vepmstte pa.uo r souc increaedttrnsferiofamdientalstaf enoron presently underway with a number of countries emental econoist and w n (including China, Mongolia, and South Africa) technology andstrictermenvironanindicators to further develop and apply these indicators. mental regulations andnomi enforce- adheat all operational levels, and there is a ment at higherincomerlevels.dThis new environmental economics and indicators (EEl) team within the The Figure, page 49, shows that negative Genuie Environment Anchor of ESSD.t1 The Savings is more than just a theoretical possibility efforts of environmental economists Plotting the savings rate net of the depreciation of * The omposiion efect rsults throughout the Bank have resulted in a produced assets against the value of resource orf benefi- rapid expansion of both applied and depletion as a share of GNP shows that many shifts can beudamagingltheoretical work.2 countries-those to the right of the "marginal ciaLdepending on whether they ~~~~~~sustainability" line-in fact have negative occur in more or less pollution- During the past year the EEL team has Genuine Savings.3 intensive sector's.focused on four main areas: indicators, economic policies and the environment, ' tmr Roios: Innoation iEn vionen have opposite impacts, the key fac- trade and the environment, and training. Once indicators identiff trends and potential The team is also exploring the concepts problems, the next step is to design effective tot determining thet fina result is. . the abof "benefits transfer" to estimate values policies to address those problems. Over the past goods4pmduced8in each country. An for environmental damage or benefits, 10 years, the Bank and other agencies have examle f tis ws te tade ibeal- and of placing an economic value on introduced a number of innovative policy izatio betwen Indoesia ad Ja- cultural resources. initervenltionis. This experienice has beeni pulled pan, which increased industrial pol- ~~~together by the EEI team in a report entitled Five lution in Indonesia (as aa0g result ofagmoreDYears a rRio: Innovations in Environmental econoic acivity and,at th same EnvirotnietP"k ~Intl LtO Policy. time dereasd Wn Jpan becuse The Bank has been actively working of ashif in he ix o indstris), with OECD and the UN to develop The Bank has also identified four broad types of about 20 core indicators to measure a policy approaches: those that rely on existing 48 ENVIRONMENT MATTERS * FALL 1998 markets (pollution taxes, deposit-refund investments (the "race to the bottom" hypoth- schemes); that create markets for improved esis)? An international conference on trade and environmental management (development of the environment, held at the Bank in April 1998, Env ra;rnanlmf tradeable pollution permits); that rely on com- addressed many of these issues (see Box, page 48, Eon omics mand and control (setting emissions levels, or for selected results.) mandating technology to be used); and that rely on an involved public (public compliance monitor- Eiuvironmental Training ing, green labeling, and other information-based systems). These approaches address two broad dseminat e talnknogeas ti classes of environmental problems: `green' ordismntevro etakowdgas' classesofenironmentalprobes: "gr" odeveloped. The recent merger of the Economic This article resource management issues, and "brown" or Development Institute (EDI) and the Learning pollution-related problems. and Leadership Center (LLC) offers exciting concerns the possibilities for joint training on environmental Another dimensilon to the economc/environment issues for Bank staff and their professional Bank's innovative agenda is the difficult issue of demonstrating the counterparts from member countries (see article link between macroeconomic policies and the ontErparts from mebe coutris seeartcl * . on EDI/LLC page 66). ~~~~~~~~~~~~~~~~work in develop- environment. For example, how do particular o changes in the economic structure-the removal of distorting subsidies or opening to capital IJuly 19 eDir l esented a newori tors to flows-affect forests or water resources? The course on environmental economics and develop- Bank is exploring this issue both at the regional ment policy, attended by more than 50 partici- track environmen- level (as with work on the environmental impacts pants from around the world. It will be offered on of the Southeast Asian financial crisis) and for a regular basis, making it possible for the Bank to tal change. individual countries (as in the preparation of disseminate best practice in applying economics to country assistance strategies). environmental management. Trade and the Environment Danclusion The Bank's innovative work on trade and the Recent advances in environmental economics environment focuses on the impacts of trade have produced many useful tools. With such tools liberalization. Does freer trade promote the at our disposal, we find that what is usually relocation of polluting industries to countries with needed is not more theory, but rather the disci- lower standards (the so-called "pollution haven" plined application of these tools to the wide mix hypothesis)? Does eco-labeling of environmen- of environmental issues facing the Bank's member tally friendly products produce environmental countries. This is both the challenge to and the 'Economically and changes? Do countries compete with each other to direction of the Bank's work in environmental Socially Sustainable lower environmental standards so as to attract economics. A sample of this work can be obtained by visiting these Bank wveb sites: Net Saving Rate vs. DepBed ion Share of GNP Kw-esdanorldbank.org/ 5000%] wvww.worldbank.org/nipr. More on the wvealth and savings estimates can be 40.00%/ found in lbrld * Sustainable DevelopmentIndicators v / >\/1998(\vorld Bank); 30.00%f / Marginal sustainability of llxa:indiaetorsso= Enmironmentallv ~~ooovo ~~~~~~~ a * a Unsustainable ~~~~~~~~~~~~~~~~Sustainable Dev'elopm,en t 20.00%; b*O Unsustainable ESD Studies andrUCpm Monographs, No. 17, 1997), and Estimating 10.00% v - oational lTbalth: *, + IT MethodologyandResults, Environment Depart- 0.00 S- 6 . _ C_C____ ment Papers, No. 57, % 5.00% 10.00% 15.00% *20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% January 19 d a ~~~~~~~~~~~~~~~~~~~~~~~ESD Studies and * 6 Monographs, No. 18, -10.00%4 1997. -20.00%- John Dixon of the Environment Department Depletion (including CO,damages) l 2 ~~~~~~~~~~~~~~~~~~can bet reached at Vote: Each dot represents the average net savings and depletion shares of GNP for individual countries over the (202) 473-8594, period 1988-1993. fax (202) 522-1735. ANNUAL REVIEW . JULY 1997-JUNE 1998 (FY98) 49 (D3 Climate Change -Faing Up to the Challenge of yoto Charles Feinstein, Odil Payton, and Kerri Poore I:DRESSINVG the threat of GHG emissions more than any other factor, so it climate change will require large is in a country's best interest to pursue actions reductions in greenhouse gas with both economic and climate change benefits, (GHG) emissions. Industrial such as eliminating subsidies for fossil fuels. To countries are primarlly respon- support such efforts, the Bank aims to invest in a sible for the buildup, and so far country's energy sector only if that country has only they have made commit- shown its commitment to efficiency improve- ments to cut emissions. Yet developing country ments through economic policy reform and market- emissions are also growing fast, and may exceed based economic restructuring, as well asproduczion those of industrial countries by early next and end-use efficiency. W, ith increasing eVidence century. Thus the focus with regard to climate that the market is an effective means to address change will inevitably shift toward developing environmental problems, the Bank is working countries in coming actively through JFC to help the private sector -C years. The fundamen- move toward environmentally sustainable TFE;:Z 7iboEth ' DurES@XS31;Lo2;3no Of I tal question for them practices. The Bank is supportingcompetition and gIin 9k C`3m i ta Chs nge Iriaflves will be how to recon- private sector investment, enabled by sound regula- cile economic growth toryframeworks, to stimulate efficiencv gains in Initiatives Events a primarily fueled by production, fuel substitution, and trade coal, oil, and gas, with WB/GEF Strategic /\ protecting the environ- The Bank also encourages countries to address Renewables Partnership ment. environmental issues as part of their larger Environmental Strategy 998 \idevelopment picture by measuring and internaliz- for the Energy Sectora Industrial and devel ng the cost of environmental damage from pollution Prototype Carbon K otoc oping nations alike will and identifying environmentallyfriendly processes and Fund proposed 1997 have to improve energy technologies that can be put into place early in the UNGASS efficiency, reduce policy and investment cycle. The Bank and IFC Studies Program launched reliance on fossil fuels, are also working to mobilize new resources to Stue AJProgram Xand move toward support such investments. As this process Al] begins 1996 UNFCCC COP-2 renewable energy develops, countries will be able to create synergies I . Countries can achieve among local, regional, and global pollution Global Overlay strong abatement efforts (see Box). The Bank is also Program initiated g ecn strengthening its own capacity to assess the risks growth even as they and rewards of new technologies and of market- Directive on 1995 UNFCCC COP- I pursue a lower-carbon based approaches to environmental problems. Economic Analysis and I energy path, and in Environment Externalities i nact, such a path will In addition, the Bank aims to increase its support mensure that develp- for long-term technological substitution and interna- JI Demo mtional market mechanisms to reduce the cost of Program begins 1993-94 able. The Bank is working on several greenhouse gas abatement measures. In the long I I xv~~~~~~~~~~~orking on several strategic fronts to help term, a major shift to renewables and low-carbon GEF operations l | Cr energy sources will be necessarv to reduce begin at the countries find effective begin at the countries nnn errective ~emissions, but gien the long lead times required World Bank 1991-92 UNCED I climate change UNCED ~ ~ ~ hageto develop and commercialize new technologies, it solutions that are is crucial to start now The Bank recently began EnDirective on GEF created i consistent with their working wvith other partners, particularly GEF, to E EAssessmental] development priorites. Assessment I deploy such technologies, in addition to allocating Policy on 1984-90 Changes more resources for existing options such as Polnvio' onmeYn i 1 S Changes 1n economic natural gas development (see Box). At the same Environmental H Conventions rp structure affect energy time, the Bank is exploring wavs to cut the cost of - ___ _ _ i use and resulting 50 ENVIRONMENT MATTERS * FALL 1998 0 ~~~~~~~~ -'- K ~~~~~~~~~~~~~~This article =-.- ,. < concerns the Many measures imposed to reform the energy sector or reduce local pollution also help to solve global Bank's environmental problems. And measures taken to reduce GHG emissions (adopting renewable energy technologies, improving energy efficiency) simultaneously reduce local and regional pollution. Design- involvement in ing the right response, however, presents a tough challenge; while benefits accrue to the whole world, the costs accrue to the country where the investment or policy change takes place. international But while improvements in economic and technical energy efficiency produce simultaneous local/re- gional and global environmental benefits, a tradeoff is not operative: benefits are produced in 1:1 effotstoreduce relation, with a 20 percent efficiency improvement associated with 20 percent less fossil fuel consump- . tion for a given output, 20 percent less local/regional pollution, and 20 percent lower GHG emissions. greenhouse gas Once these efficiency gains are fully exploited, however, the available options present quite different emissions. combinations of local/regional and global benefits. One option in the power sector would be to adopt coal plant emissions controls, perhaps flue gas desulfurization (FGD) for SOx abatement. However, FGD has no benefits for greenhouse emissions. Alternatively, money could be invested in natural gas substitution. Gas reduces NOx emissions by about 90 percent and SOx and particulate emissions by nearly 100 percent, and it contains half the carbon content of coal per unit of primary energy. So, depending on how aggressively gas substitution is pursued, it should reduce GHG emissions without sacrificing local air quality compared with FGD. Finally, any tradeoffs may cease to exist in the long run. In a future world of technologically advanced and affordable large-scale renewable supply options, perhaps developed in response to climate change, concerns, local/regional and global environmental benefits would once again accrue simultaneously. Sources: Pollution Prevention and Abatement Handbook 1998; IPCC Guidelines for National Greenhouse Gas Inventories, 1997. addressing climate change through an interna- At the Third Conference of the Parties to the tional market for carbon emission offsets. Such a UNFCCC in Kyoto, Japan in December 1997, mechanism was accepted in principle at the Kyoto the Parties adopted the Kyoto Protocol. The Conference, and the Bank will participate in the Protocol represents an historic first step toward development phase as details of implementation reducing GHG emissions, with 39 industrial are worked out. countries and economies in transition-known as Annex 1 countries under the UNFCCC and as The United Nio@ ns Annex B countries under the Kyoto Protocol- Convention tea C:FMW &d a iOTs accepting binding commitments (or "quantified Kyoto Protagap carbon emission limitation and reduction com- The United Nations Framework Convention on mitments," QELROs) to ensure that their GHG Climate Change (UNFCCC) was signed at the emissions do not exceed their assigned amounts. Earth Summit in Rio de Janeiro in 1992 and Overall emissions will be reduced by at least 5 entered into force in 1994. UNFCCC provides a percent below 1990 levels in the commitment framework within which countries can begin to period 2008 to 2012. Developing countries do not address the threat of climate change, but does not assume any emissions reduction obligations at this impose binding obligations to limit GHG time. Specific implementation decisions will be emissions. made at future Conferences of the Parties. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 51 CbMata ChE2n, bS a a-&, h$ca s EbE - GEFT - tan. The upward trend Fn Vs ana of Bark arc- counting -eor azo'r- 4.5 pam-er :ct a nun 190c- ineg 'or renewables and affix,ernca also refiects forays. Since E's es'aLsthi -ti&EF ahas sc8a, an increasirg Hiognrent wtlch the p,`toriloes ci GEF about $1 00-1 25 r-nHHcn a '9@a, `L- a:didbmss C.Ifriag2- 2ncd 11he UdNbCCC. c:nange n Bank pzc'ects. Annual Bank/GEF Commitments for MiL crvs n0 3 5 a 3. :.n.-t5 Renewable Energy and Energy Efficiency energy daev&cpur.ent. nwbas ' i~Po Yic enc%y7. 1l3espixIea an o'uerolf daHre -'; rgy $ Iending since tlie sari,t 199$0s Crcn ,--sa on2 _ ~~~~~~~~~~~~~~~~~180 7:00blieii0n in FY92 to 2.A. 53- bWior -n FY928) b-i3e shar30-e t8160 cJ e 0; S:; 3DjF l2ndindg -Lfo re oenewab.g<.^res E~ aLd~ 32*1@gR\F (}SCH'G 140 has been increasir g5The u-N s -se u a hae ants 120 poioi iin tradilflonaf renswv a enarg; I00cga:ta : e r21ai new rnerawales (w'no], solar, b iasal, an X 80 _ end-usa efficiaeno. t each case. E-rarn enrc sdrr 60 hnas increased Cc.n:erMitnt' ' wTh GEF `HLnanc i9g, 0 40 Thir's growith rateacts telon3a-s 3vsag'ng effftact ofL 223 20 sach do (Far GEF cnan ffia anin C 0as ~~'' "~~~ - ~Tradtionnal New End-use stdirnua:ed abcuS $.25 En Essos atct BSanh b Renewable Renewable Energy t0 -0 .; n2nfisng,5 as vGlreia as about 841tC .In biarara,8U''>. Efficiency cofinancing, g3vs-rnenit funts. :enif pratoat car- | GFBANK The Protocol allows countries to meet their 6 Emissions Trading: Article 17 provides for the QELROs on their own and through the follow- possibility of trading emission reduction and ing three flexibility mechanisms: limitation obligations among Annex B countries. Trades are permitted only to fulfill the countries' c Joint Implementation (Jl): Article 6 of the commitments and must be supplemental to Protocol allows Annex B countries to transfer or domestic actions. acquire emission reduction units resulting from emissions reduction projects. The countries may While the Protocol obligates only Annex B also authorize legal entities, including the Bank, countries to reduce emissions, developing to participate, under the country's responsibility, countries have responsibilities as well. For in actions leading to the generation, transfer, or example, under Article 10 they agree to formulate acquisition of emission reduction units. regional emission reduction programs that take account of the socioeconomic conditions of each o The Clean Development Mechanism (CDM): The country in the region, and to implement other purpose of the CDM, as outlined under Article measures, including market-based mechanisms, 12, is to help non-Annex B countries achieve to address climate change. sustainable development while assisting Annex B countries in complying with their QELROs. ZtgLpicSaftns @e Of th[ `%qDta PvoA%xterN 90L7 The CDM allows non-Annex B countries to sell vi s2a lt iftUm s! J certified emission reductions obtained through The Kyoto Protocol contains several provisions of project activities beginning in the year 2000. The significance to Bank operations. Its concern with V CDM will be supervised by an executive board energy efficiency and renewable energy technolo- g04 and operate under the authority of UNFCCC. gies underscores the importance of the Bank's A share of the proceeds will be used to help new environmental strategy for the energy sector, particularly vulnerable developing countries meet which calls for increased emphasis on energy the costs of adapting to climate change. Private efficiency, phasing out of market imperfections, and public sector entities can participate in and market-based mechanisms (see first item in CDM activities under the guidance of the Overview matrix) to encourage widespread use of Ug executive board. renewable energy technologies. 52 ENVIRONMENT MATTERS * FALL 1998 The Protocol implies the following actions by the Crri a, .e Bank and IFC: Building Capacity for Market-based Responses to Climate Change o Increased integration of climate change consider- ations in Bank-country dialogues and develop- vBaiR programc are helpan g m ebor couri- ment planning; i xplore opprtuunoias or trads in GHG re- o Expanded mandate to transfer and implement luction Gredits: efficiency and renewable technologies in member countries; rIna tax? 9e2g-am' o o Consistency of lending with Annex B countrv ieitftly A,injared in o. 'ip obligations; :-f t!e Govevnment of Noray, is experimaentiuo o Enhanced capacity building activities in the area vih uiSng markiset ma%hantOSMns to thrcTh of climate change; .nvironrnantal 'interesis af Bark memmeir zounr o Expanded role in financing climate change ries The pr gram Includes poit oofoe-s in, vulnerability/adaptation projects (see Box on Me oldrid,adand Burkina Faso (see BO .1, left)', and has hrad ~consi.daraSte impa t on Burkina Faso); and awaoeness and ca)acts`-n cnnhese cuntries. it als o Exploration and near-term implementation of ; s .volv extens a ethor a .esear..a market mechanisms utilizing project-based ie ca'T'patorn intn cern p ocesss to de emission reductions trading based on Articles 6 . trade necha asrn and sr and 12, subject to UNFCCC guidance (see Box 3. n d resuts on Building Capacity). The mAam RIA'.7 ) is sp&nsored by the gover m-ents The Kyoto Protocol has created a solid framework 3 Switzltand'. Firnland, and Canada. Before the for addressing climate change, yet it needs (veto Conference, ethe sudiies toeusedd on cun- considerable fleshing out. This will depend on eS wrth e.ooom.es i rtanSuo Afer t ean continued political momentum and on increased 5eve.Iopmnt Me, lehamismi was established in financial resources to support the UNFCCC fto: ty ancluded develop!ong t no oisare- assessing the polet tal for trade h process. ~ proc. 3H edut credits and id tibydr'n pfotenttial 2raeois ini ttle Czech^ anf4 Slovak re ubl.cs, Rus- ri, zbeiist-an, imnbabwe, Sout-hfiurica, rg. Jna, Co!lobia, India. and trie ph,iiippines. The Protocol will take effect 90 days after it is The Burkina Faso AUJ (Activities Implemented ratified by 55 parties to the Kyoto Convention, JoeBurkintay) FraectsupporAJtis devepop menteof nd ' provided they represent at least 5 5 percent of total Jointly) project supports development of low and l1990 CO emissions of all Annex B countries. A noncarbon energy sources. It promotes efficient 9 2 e o carbonization techniques, community-based for- i number Ot observers have commented on the est management, improved kerosene cooking implications ofthis trigger, and wonderwhether I stves,and olarphotvoltic (V) sstem fo the Protocol will ever enter into force in the face stoves, and solar photovoltaic (PV) systems for of susata opoito frmfcinswti.e rural communities. The project, which began inopposton from factns wthin key project, which beganiin countries. However, in the Bank's view December 1996, is contributing to the sustainable such scenarios are not fatal, nor do they represent use of 130,000 tons of wood for charcoal process- I a rationale for inaction. Perhaps as significant as ing per year, resulting in the abatement of 1.5 million tons of 002 emissions over the six-year, the legal requirements posed by the Protocol is project life, M the effect it is having on the awareness and attitudes of decisionrnakers in both corporate The C02 abatement, at a cost of $1.66 per ton, boardrooms and government agencies. will create alternative sources of income for com- All of the Environment munities, and strengthen local institutional capac- The Protocol is a modest but important first step Family, Charles ity for natural resource management. Deforesta- i in a process that will continue for decades to Feinstein and Odil tion in Burkina Faso will be reduced. The intro- come. The Bank is committed to actively sup- Payton can be reached duction of PV systems will create social benefits porting the UNFCCC and Kyoto Protocol byt (202) 473-2896 such as access to safer drinking water and im- financing activities that support their goals, and f(x (202) 522432-6, proved education and health conditions, as well as by helping countries build capacity to carry out andKer7 Poore,at expanded market opportunities. environmentally sound policies and sustainable (202) 473-2898, ___________________________________________ investments. fax (202) 522-2130. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 53 Social Development Update' Bonnie Bradford HE THER considering the and focus areas of the Social Development social impacts of the East Asia Family. crisis, structural adjustment in Africa, privatization in Eastern At a regional level, members of the new Social Europe and the former Soviet Development Family designed and carried out a Union, or the social costs and wide range of activities in FY98, many of which benefits of infrastructure and are still ongoing. For example, regional staff are: large dams, the World Bank is increasingly concerned with the fact that to be sustainable, Africa. Involving civil societ- in the design of development must be broadly inclusive. Bank strategies, and assisting in a gender and poverty study for the Special Program of Assis- "Iflhat we are In recent years the Bank has embarked on a tance for Africa. Post-conflict w ork is also seeing in the world course of organizational and cultural change in underway in a number of countnes. today is the tragedy order to focus on the eradication of poverty and O,f exclusion. Ou' support social development. These actions are EastyAia and Pacifc. Developing a strategy to of exclusion. Our anchored in a new paradigm of development: that understand and help mitigate the social conse- goal must be to without attention to the social underpinnings of quences of the current crisis in East Asia on a reduce these development, it is difficult for economic growth regional and country-by-country basis. disparities across and development to succeed-and virtually and within impossible for it to be sustained. Europe and Central .A-ia. Focusing on the social countries, to bring impacts of transition, and fine-tuning countrv more and more In 1997, World Bank President James D. assistance strategies and poverty assessments to be Wolfensohn commissioned a Task Group to look more inclusive. An issues paper on the elderly is people into the at current social development initiatives and being prepared. economic approaches, and recommend further actions to mainstream, to advance this work. Since the Task Group's Social Latin America and Caaribbean. Developing a promote equitable Development Report (SDR) was issued on May 1, Regional Urban Peace Program with a focus on access to the 1997, significant progress has been made. reducing violence and its effects on poor commu- benef ts of develop- nities, and designing a new rural violence One of the major initiatives cited in the Task reduction initiative in Colombia. ment regardless of Group Report was the January 1997 launching of nationality, race, or the Social Development Family in the Environ- Middle East and North .Afica. Addressing social gender. This-the mentally and Socially Sustainable (ESSD) concerns in public sector reform and carrying out Challenge of Inclu- Network. The Social Development Family builds regional economic and sector work on cultural sion-is the key on the work of the former Social Policy and heritage. A region-wide review of social inclusion development Resettlement Division of the Environment also has been completed. challenge of our Department, and it works in close collaboration time. "2 with the Environment and Rural Development South Asia. Planning a study of gender-based families, also in the ESSD Network. violence and its economic and welfare conse- quences. A Povertv and Gender team has also The Social Development Family provides been also formed with the PRENI Network for technical guidance within the Bank and works in conducting participatory poverty assessments. partnership with agencies outside the Bank on social development issues. It promotes social During the past year, the Social Development assessment, social analysis, and participatory Family also developed a number of products and processes in sector work and country assistance programs identified as high priorint for the Bank. strategies; participation and community-based We developed a strategy to guide Bank-NGO development; and substantive work on social relations, worked to strengthen the Bank's inclusion, social capital, and civil society. The Box capacity in post-conflict reconstruction, and provides summaries of the major thematic teams supported a new cultural heritage initiative. To 54 ENVIRONMENT MATTERS * FALL 1998 This article notes the importance of SocialAssessment Helps task teams incorporate social analysis and participatory processes into project cultural preserva- design, address social issues, and assist clients in reaching the poor. CAS/Macro-Social Analysis: Promotes stakeholder and institutional analysis as tools for aligning country tion, post-conflict assistance strategies (CAS) with the goals of poverty reduction, social inclusion, and sustainable develop- mrent. resolution, and the Participation: Promotes methods and approaches that encourage the involvement of stakeholders, espe- involvement of cially the poor, in development initiatives that affect them. marginal peoples Indigenous Peoples: Involves vulnerable cultural and ethnic groups in Bank-financed operations. in development Resettlement: Helps identif plan, implement, and monitor involuntary resettlement to minimize disptace- ment and restore incomes& projects. NGOs and Civil Society: Works with NGOs to strengthen operational coltaboration and encourage policy dialogue- supports government efforts to create an enablig enviment for civil society organizations. Post-Conflict Reconstruction: Supports conflict-affeced countries in the transition from conflict to sus- tainable peace and development. Culture in Sustainable Development: Supports living and material culture as a key element of social and economic development that results in poverty reduction, social inclusion, and envirornmental protection. Two overarching concepts, institutions and social inclusion, help integrate the Family's thematic teams. The Family is developing a conceptual framework and techniques to better understand and identify institutions m that promote inclusive and sustainable growth.The Family also develops policies and projects to include people who might otherwise be excluded from economic and social development. Digging for water in a dry wadi bed, Karamoja district, Uganda. support the expanded work program, the number much progress has been made; but more work is of social scientists in the Bank is growing, and needed to ensure that momentum is maintained to NGO and civil society liaison officers are on site make Bank operations socially, as well as eco- in most resident missions. nomically and environmentally, sustainable. Over the next year or two, the Social Develop- ment Family will focus on partnerships with other Bank networks on two major issues: inclusion and institutions (see Box). XWork in these areas is well underway. The Social Development Family looks ''This article is based on the Social Deielopment U_pdate: forward to a rich range of partnerships within the :l'akinu;Developmentllore Inclusive and Elkctitye. Social Bank and with member countries and county , Development Paper Number 27, Mav 28, 1998, prepared by Bank and with member countries and country the Social Development Family of the Bank's Social institutions to help expand understanding of these Development Department. issues. '2world Bank President James D. Wolfensohno 'The Bonnie-Aradfordof Challenge of Inclusion," Annual Meetings Address, Hong Kong, China, September 23, 1997. the SocialDevelopment In short, considerable work on social develop- ' Social)Development: Results on the Ground Task Group Family can be reached ment has been initiated in and by the Bank and Report. Social Development Paper Number 22. Social at (202) 458-0316, Development Family. Norld Bank, May 1, 1997. fax (202R 522-3247. ANNUAL REVIEW -JULY 1997-JUNE 1998 (FY98) 55 Thne World Bank and Forests Ken Ne wcombe, Juergen Blaser, and Kerstin Canby LL over the globe, natural recognition of the fact that saving the forests forests are being lost at a rate depends not only on changing the behavior of all unprecedented in human history. critical stakeholders, but also on partnerships to Large parts of formerly un- accomplish what no country, government agency, touched boreal forests have donor, or interest group can do alone. become the object of intensive timber exploitation in the past In a speech before the United Nations General few years. Old-growth forests in temperate Assembly Special Session (UNGASS) in June climate zones, most of them located in industrial 1997, World Bank PresidentJames 761olfensohn countries, continue to disappear. The tropical rain committed the Bank to playing a leading role in forests, spread over more than 60 countries, are improving forest conservation and management. diminishing at a rate of around 15 million The ambitious "stretch" targets for improved hectares a year because of the human need for forest management and ecosystem conservation food, timber, energy, minerals, and other re- (see Box) set forward in that speech have helped sources. With the destruction of the forests- to catalyze the international conservation and estimates are as high as two- development communities and set the stage for a thirds of the planet's original number of important partnerships, including forest cover-has gone much public-private partnerships, to achieve these of the biodiversity of the goals. The Bank is now working to strengthen planet, since forests are home relationships with multilateral organizations and to at least half of all life forms NGOs and to facilitate forest initiatives at the on earth. ~~~~~global and national levels. Some of these initia- tives are described below. There is, however, growing recognition that wise forest I unarer tont orkd Bae Prrogram onr F rets mnagement is cintical to Forests Pord olio. The Bank forests portfolio1 is sustainable development, estimated at roughlv $4 billion. The projects par lticularly where the local or cover a wide range of forest activities including national economy is based investments in collaborative forest management directly on the use of forest and social forestry, forest institutions capacity resources. The economic building, protected areas, and technical assistance developmentlof some South- for policy reform and for regulatory and enforce- east Asian countries, for ment systems. example, depends on the exploitation of their rainforests In addition to directly financing projects, the (dipterocarp forests), and local Bank is giving increasing attention to linking Reforestation, Madagascar communities in tropical rural policy dialogue and its major country-level areas depend heavily on forest adjustment interventions to its specific forests resources for their livelihood. In addition, forest involvement, and to resource mobilization from ecosystems have maj'or impacts on soil, water; and GEE, IF'C, and other donor sources. This coastal marine productivity over very large areas. approach allows the Bank to pursue powerful They also influence carbon cycles, which play a reform proposals that eliminate unfair concession crucial role in local and global climate regulation. policies and perverse market incentives such as ivianagemen: transport subsidies and underpriced timber; A Olw Ap rroach to Forest-Mngmn which can rarely be justified on the grounds of Although forest management has been high on efficiency or equity. The Bank also enters into the international agenda for twvo decades, little has partnerships to complement its strengths and been achieved so far. The Bank is now fundamen- compensate for its weaknesses (see Box). tally reviewing its approach to forests issues, in 56 ENVIRONMENT MATTERS * FALL 1998 Forests This article TARGETS FOR FOREST CONSERVATION AND IMPROVED MANAGEMENT describes the The Targets for the year 2005 Bank's efforts to * An additional 50 million hectares of new forest protected areas, plus a comparable area of existing reserves under effective protection; protect the world's * 200 million hectares of independently certified improved forest managementa_100 million hectares each in tropical and temperate/boreal forests. forests and The World Bank-WWF Alliance for Forest Conservation and Sustainable Use promote the To achieve the targets, the World Bank and World Wide Fund for Nature (WWF) have agreed to work sustainable use of together to form a broad-based Alliance for forest conservation and sustainable use. The organizations recognize that their mutual concerns for biodiversity conservation, deforestation, forest degradation and forest resources. climate change can be more effectively addressed through a strategic partnership that takes advantage of complementary skills to address common goals. Both organizations are convinced that these targets could be a rallying point for a broad-based initiative involving many partners and stakeholders who will see it as a way to halt the ever intensifying cycle of forest destruction. The Targets Explained Similar types of targets had already been discussed in international fora and adopted by WWF. For adop- tion by the World Bank, initial global targets for forest protection and improved forest management had to be very significant, considering the scale of the problem. They also had to be achievable (even if with difficulty) within a reasonable timeframe. The targets are intended to be short term (7 years) and interim-even more ambitious longer-term goals will still need to be discussed and developed in partnership with other stake- holders. Protected Area Target: Of the 3,300 million hectares of forests remaining on Earth, only 6 percent are in legally protected areas. Many of these exist only on paper, lacking effective management and protective infrastructure in place on the ground. Achieving the 7-year protected area target would represent a signifi- cant increase in the area under effective protection in all IUCN categories, and would make a meaningful contribution to long-term biodiversity conservation. Improved Forest Management Target.This target aims to improve the overall biological, social, cultural, and long-term equity and economic outcomes of existing forest timber operations. Achieving the target would mean improved management in approximately 10 percent of existing production forests worldwide by 2005. Note: a The interpretation of independently certified forest management for the purpose of these targets is provided in a "Guidance Note for Improved Forest Management & Certification Target;' issued jointly by the World Wide Fund for Nature and the Bank. The Guidance Note, available on the Alliance website, recognizes that the steps toward this goal will vary considerably from one country and region to another. In some countries, export markets are not significant enough to provide an incentive for improved forest management in the domestic forest sector. In these cases, alternate systems of independent monitoring and verification, as well as stan- dards, need to be agreed with clients and stakeholders as appropriate. The Guidance Note provides a set of criteria that any system of certification or independent verification must meet, in order to be acceptable for scoring against Alliance targets. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 57 costs own defoarestati a~~~~~~~~reviw udraseyteidpnetOpratons 'Fn omicNatrAllyace (WB- Evaluaic nDprmn,i ihycnuttv,aW Alance) ws launcgd i Tol betther deveopet over assis nex 18 motsArl198gihntiramework the uBrlan highf t th for ests s.elne uer wtieh aenndmbers tet burden of these costsBakintitiesar eig arie ot falls mostbegn heavilyfit fo- mon onm those who can leastpliiesan isue, dtevelopin wold Ton oest as forestme sector, and Worl Bank-Wo Wide oefvtie conservn ationbyrtin ist operajon Fund foradation of alls fWBp depicted aslutonDearmnt a concernlttie,a W F llace ws anofdi the rich, allbeth luxuryn oerth nxt18mthe I view is tragically short-~~~~ ~Ar'198 Niti tisfrmeok,th Bn stakeholders. worldwide. The Alliance will promote forest 58 ENVIRONMENT MATTERS * FALL 1998 conservation and the adoption of international Participating companies include Weyerhaeuser best practices in forest management. and Caterpillar of the United States, Samling of Malaysia, Grupo Roda of Bolivia, and Danzer and o Bilateral partnerships with donors, foundations, ISOROY operating in Africa. Participating and NGOs are being pursued to build the NGOs included WWF, IUCN, the Nature Bank's technical capacity, particularly through Conservancy, Conservation International, the exchange and training of staff, to help Greenpeace Russia, and Centre pour implement program initiatives. Staff exchanges l'Environnement et Development (Africa). In are in place with the MacArthur Foundation, January 1998 the Forum established a series of WWF, and Swiss Development Cooperation/ working groups to produce recommendations on Intercooperation of Switzerland, and are antici- conservation and forest management. These pated for Germany and Finland. recommendations can be seen at the website http ://www-esd.worldbank.org/forestry/ a Within the framework of the recently created umbrella/index3.htm. The Forum continues to be Intergovernmental Forum on Forests (IFF), the ad hoc, and will exist only as long as it continues Interagency Task Force on Forests (ITFF) is the to be an effective vehicle for dialogue and vehicle for transforming the Forum's recommen- progress. dations into concrete actions. Multilateral partnerships within the ITFF, including with The Carbon Forestry and Land Use Management FAO, UNDP, UNEP, the International Tropical Action Plan, to be implemented by the Bank in Timber Organization (ITTO), and CIFOR collaboration with a range of governmental and (Center for International Forestry Research), will nongovernmental partners over the next decade, enhance the Bank's strategy in the forest sector. was created in response to a request from Costa Rica and Mexico for the Bank to be more 7, SE 1"RD.F a b 5u 1'in gii 3 @ t proactive in defining the development benefits of [nRi90V9, taiF 2 i'i trade in forest and soil-based carbon offsets. The FMTI is a Bank initiative designed to promote dialogue and pilot activities to assist in The plan includes an evaluation of the policy and turning market forces toward more forest-friendly related market development issues that need to be practices. Three major FMTI activities are addressed to gain credibility within the frame- described below. work of the Kyoto Protocol (see article on Climate Change, page 50, for more on the Kyoto Proto- Forest Trends is a strategic coalition of the private col). Elements of the plan include research on sector, financial institutions, NGOs, and research the local economic benefits of generation and sale bodies that believe market forces will play an of carbon emissions reductions to smnallliolder increasing role in making the use of forest agriulture; improved forest management and products ecologically, economically, and socially conservation; and demonstration projects to sustainable. Formally organized in June 1998 develop baseline determination, monitoring, with commitments from the World Bank and the certification, and offset verification tools and MacArthur Foundation and temporarily hosted procedures. A note on policy issues relating to by the World Resources Institute in Washington different classes of forest-based carbon sequestra- DC, Forest Trends will provide credible, balailced tion activities and how these might be addressed information about best practices in forest manage- will be issued in November. ment and improved technologies to reduce the demand for virgin fiber. It will also support and encourage sustainable cooperative forest-related activities, and provide a neutral forum for the 'The portfolio includes IBRD/1DA. world Bank-implemented KenNewombe, resolution of disputes. GEF, and G-7 Rainforest Trust Fund projects, as well as Juergen B/aser and forestry components within other sectoral projects. Kersuin Canby of the Recognizing that the private sector has a critical .More details on the Banks forest policy review and sector Environment Family role in stopping forest degradation and loss, the strategy can be found at http://-v,wwesdd.worldbank.org/ can be reacledat CEOs' ad hoc Forum met twice in 1998 to forestry/umbrella/index3.htm. (202) 473-6010, promote dialogue between the CEOs of interna- (202) 458- 7867, and p t dF is known as the World Wildlife Fund in the United (202) 473-1407 tional forest industries and environmental NGOs. States and Canada. fax (202) 522-0367. ANNUAL REVIEW-JULY 1997-JUNE 1998 (FY98) 59 Saf-eguards Updiate Colin Rees NVIRON\IENTAL and social including the possibility of sanctions, for staff policies instituted by the Bank over and managers responsible for noncompliance the past 10-15 years have helped to identified through the audit process. ensure quality and consistency within its investment portfolio. Scrutiny by * Putting in place quick response procedures to NGOs and others of Bank operations promptly resolve issues that may arise between or -especially the Narmada Dam in among the anchors, regional staff, and/or the India and other contentious projects-has Legal Department. reinforced the importance of strict compliance with these policies (see Box), as has the creation of c Strengthening support for quality assurance by the Inspection Panel in the early 1990s in the ESSD anchors through the formation of a response to criticism of environmentally damag- Safeguard Compliance Unit; this will include This article ing projects. These policies include the Bank's technical support for project preparation and important environmental and social "safeguard" implementation (available within the next few describes the policies, designed to protect those who might be months), advice on policy issues, and mandatory adversely affected by Bank-funded operations. training of task team leaders on safeguards. Bank's efforts to The responsibility for policy compliance in the In addition, a number of existing functions ensure that all Bank rests with the six regional vice presidencies, managed by ESSD and others will be strength- consistent with the effort to devolve decisionmak- ened to enhance quality assurance throughout the projects include ing and resources closer to the operational front Bank Group. The ESSD anchors will help line. (This approach differs from that of IFC, identifv performance/qualitv issues to be investi- protections for which for business reasons has chosen to central- gated by the Bank's Quality Assurance Group; ize the clearance of activities that come under its support quality assurance training and institu- natural habitats, safeguard policies.) WNith the Bank's devolution tional capacity in countries with the largest of responsibility, however, comes the need to portfolios and where internal capacity is weakest; forests, waters, ensure consistent compliance with the safeguard and disseminate good practice information to policies across the six regions. Thus, the Bank is Bank Group staff and clients through the indigenous taking steps to monitor implementation of the knowledge management infrastructure. safeguard policies and related procedures. These peoples, and include: Arrangements to implement an audit system are also underway. The proposed system defines cultural sites. e Providing dedicated, nonfungible resources to interventions to ensure compliance and quality the regions, the Environmentally and Socially assurance and the application of criteria for Sustainable Development (ESSD) anchors, and selecting projects to audit; it also specifies levels the Legal Department to strengthen their review, of auditing effort and organizational and staffing advisory, and monitoring activities. arrangements. The Safeguards Compliance Unit will be charged with overseeing all auditing o Conducting comprehensive, random audits activities and coordinating operational, training, (performed by the anchors in cooperation with staffing, and budgetary arrangements across the the Legal Department, the Quality Assurance ESSD Network and reporting to senior manage- Group, and the regions) of the safeguard aspects ment on a regular basis. of representative projects at the Project Concept Document, Project Appraisal Document, and supervision stages. * Ensuring that regional staff address concerns promptly if an audit determines noncompliance witha saeguad poicv akfrewl develop with a safeguard pol icy A task force will Colin Rees of the Environment Department can be reached at a framework to facilitate greater accountability (202) 458-2715,fax (202) 477-0565. 60 ENVIRONMENT MATTERS * FALL 1998 Safeguards OD 4.01 Environmental Assessment (EA) (to be issued as OP/BP/GP 4.01) This directive outlines Bank policy and procedures for the environmental assessment of Bank lending operations. Environmental consequences should be recognized early in the project cycle and taken into account in project selection, siting, planning, and design by preventing, minimizing, mitigating, or compensating for adverse environmental impacts and enhancing positive impacts. EA in- cludes the process of mitigating and managing environmental impacts throughout project implementation. OP 4.04 Natural Habitats The Bank does not support projects involving the significant conversion of natural habitats unless there are no feasible alternatives for the project and its siting, and comprehensive analysis demonstrates that overall benefits from the project substantially outweigh the environmental costs. If the EA indicates that a project significantly converts or degrades natural habitats, the project must include mitigation measures acceptable to the Bank. OP 4.36 Forestry This policy statement provides guidance to Bank staff involved in forestry projects, detailing that the Bank will not finance commercial logging operations or acquisition of equipment for use in primary moist tropical forests; in forests of high ecological value, the Bank will finance only preservation and light, nonextractive use of forest resources. Objectives are to provide for a sustainable stream of direct or indirect benefits to alleviate poverty and to enhance community income and environmental protection. OP 4.09 Pest Management This policy supports safe, effective, and environmentally sound pest management. It promotes the use of biological and environmental control methods. In Bank-financed projects, pest management is carried out by the borrower in the context of the project's environmen- tal assessment. An assessment is made of the capacity of the country's regulatory framework and institutions to promote and support safe, effective, and environmentally sound pest management. OP 4.12 Involuntary Resettlemrlent Involuntary resettlement as used in this policy covers both (a) the involuntary displacement (physical and nonphysical) of affected people that arises from change in land or water use, loss of productive assets, or loss of income or means of livelihood, whether or not the people must move to another location; and (b) the measures for mitigating the impacts of displacement. The policy applies whether or not the Bank is financing the part of the project that may require involuntary resettlement, and it covers resettlement resulting from activities that are not part of the Bank-financed project but are necessary to achieve the objectives of the project. Displaced persons are assisted in their efforts to improve their former production levels, income-earning capacity, and living standards, or at least restore them to the levels they would have been without the project. OD 4.20 Indigenous Peoples This directive provides guidance to ensure that indigenous peoples benefit from development projects, and to avoid or mitigate ad- verse effects of Bank-financed development projects on indigenous peoples. Measures to address issues pertaining to indigenous peoples must be based on the informed participation of the indigenous people themselves. Operational Policy Note No. 11.03 Management of Cultural Property in Bank-Financed Projects (to be issued as OP/ BP/GP 4.1 1) Bank policy is to assist in the preservation of cultural property where it is part of a Bank-financed operation, and to avoid its destruction. The Bank normally declines to finance projects that will significantly damage irreplaceable cultural property, and assists only projects that are sited or designed to prevent such damage. OP 4.37 Saafetv of Dams For large dams (15 meters or more in height), the Bank requires: reviews by an independent panel of experts throughout the investiga- tion, design, and construction of the dam and the start of operations; preparation and implementation of detailed plans; and periodic inspections of the dam after completion. OP 7.50 Projects on International Waterwvays Under this policy, the international aspects of Bank-supported projects on international waterways projects are dealt with at the earliest possible opportunity and, where appropriate, other riparians are notified of the proposed project and its details. Any proposed project's potential to harm other riparians through deprivation of water, pollution, or otherwise is determined and affected riparians are notified. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 61 Devepig Parners h r Efiv e UP aMia David Hanrahan, David Wheeler, Michelle Keene, and David Shaman ON-TROL of pollution cannot be government, industry, and the public-are achieved without laws and regulations, helping to create innovative pollution manage- but legislation alone is rarely enough ment tools that encourage and support environ- to produce major improvements in mentally sustainable development practices. environmental performance in most of These tools include: the Bank's member countries. There are limited resources available for o Pollution inventories inspections, monitoring, enforcement, and Corporate environmental reporting and informa- prosecution of offenders, and in the absence of tion dissemination on firm performance sufficient government pressure, many regulations o Cleaner production techniques are implemented unevenly or not at all. e Environmental management systems _ Greening of the supply chain ''Ihe Bank is working with many countries to o Negotiated agreements between regulators and increase and upgrade their regulatory frame- industrv works, but there is a growing acceptance that this is a long-term task. In any case, moves to Negotiated agreements between regulators and downsize government will make it difficult to industry help to translate regulatory requirements 8 ~~~~rapidly increase the number of environmental into implementable terms, based on popular regulators. At the same time, there is a growing support. The other tools listed above target * - - l_ appreciation that even in industrial countries, industrial environmentaL improvements by * -|! ! environmental legislation is just an initial step in strengthening public and private sector capabili- the long and complex process of creating a social ties through partnerships with external players, * - i consensus-backed by legal instruments-on including universities, institutes, and other what is acceptable environmental behavior. centers of expertise. The initial step away from a purely command and International experience has shown that consulta- jgaumuw.wuaiwu control approach in the 198 Os was the use of tion with both industry and the public in the market-based or economic instruments to control design of environmental policies helps to ensure the behavior of polluters. But while such instru- that the policies are feasible and can be success- ments were found to be effective in some cases, fully implemented. Such collaboration can also they are ineffective in others, and the administra- facilitate implementation of existing environmen- tive and information requirements are often high. tal regulations, where large gaps frequently exist In the search for other options, it has become between regulatorv requirements and actual increasingly clear that government is only one performance. This is particularlv true for local player in the complex set of interactions that environmental issues, where public participation defines environmental management, and that can contribute local knowledge and build a effective partnerships are needed at all levels to stronger commitment to solutions. Similarly, achieve environmental goals. Such partnerships consultation with industry can help regulators are being driven in part by the increasing open- identify more cost-effective approaches to ness of many economies and the expanding role of achieving environmental goals. In addition, the private sector, which has been instrumental in partnerships that link centers of expertise and forging a collaborative approach between regula- knowledge in dealing with pollution management tors and industry-one that balances more issues can significantly enhance the ability of flexible regulation with more targeted and individual facilities to effectively deal with such effective enforcement and with market-driven challenges. incentives for improved environmental manage- ment. The Bank's portfolio increasingly reflects the growing importance of such partnerships. In While there is no substitute for an environmental Guadalajara, Mexico, for example, the Bank regulatory regime, such partnerships-involving assisted a pilot in which large companies (some of 62 ENVIRONMENT MATTERS - FALL 1998 Partnerships which were multinationals) mentored some of their own operations as they see fit, as long as they This article says their smaller suppliers (small and medium pay for their emissions. However, many cost- enterprises; SMEs) as they implemented environ- conscious managers will likely choose to invest in that public-private mental management systems (EMS) to try to pollution control, because the base charge improve their environmental performance (see provides a powerful incentive to abate. An FY98 partnerships can Graphic, page 65). The Bank and the large evaluation by the Bank's Development Research companies provided the SMEs with funding for Group's industry-environment team (DRGIE) of help create EMS training and implementation support, cases where pollution charges were implemented which was delivered by a team of international suggests that the program is beginning to work, consensus for and national consultants, including experts from since BOD and TSS emissions from several large two local universities. The incentive for the factories have fallen sharply in the face of stiff achieving SMEs to participate was largely their desire to pollution charges. maintain relations with their buyers-the larger environmental companies. The incentives for the mentor The Bank is also supporting the use of negotiated companies included enhanced competitiveness compliance agreements between industry and goals. and improved quality of products through government as part of the Second National enhanced supplier performance. With the success Environmental Project in Brazil. And the Bank is of this pilot, momentum has been created also promoting partnerships through its support throughout many parts of Latin America for of privatization (see Box). improving the environmental performance of SMEs. Colombia, El Salvador, Argentina, and Brazil all have requested Bank assistance in replicating this approach. The Bank is now working in Argentina to bring The Bank's support of privatization is helping to national and local regulators together with private forge public-private partnerships to achieve envi- industry to develop consensus-based environmen- tal goals, targets, and solutions. Under this ronmental goals. Prvatization offers tremendous project, the Bank is encouraging industries and opportunities to improve both commercial and en- regulators to form partnerships with outside vironmental performance, especially as govern- organizations, including universities, NGOs, and ments integrate environmental goals into their other experts, to share experiences in improvingr envionmnta pefrac an eeo eoi privatization efforts. The Bank's portfolio increas- environmental performance and develop negoti- ated agreements and other consensus-based ingly reflects this important nexus between pub- means of achieving environmental goals. lic and private sector efforts to improve environ- mental performance. In Bulgaria, for example, the Colombia provides an example of collaborative..c Colombia providsanxamplofcllaboatBank is supporting efforts to privatize a large cop- work on economic instruments for pollution control. The Environment Ministry developed a per smelter by facilitating private investments in program under which representatives from the company, while simultaneously reducing haz- municipalities, industry, and regulatory agencies ards caused by past pollution and contributing to negotiate pollution reduction targets for bio- improvements in the environmental performance chemical oxygen demand (BOD) and total suspended solids (TSS) in major river basins. of the plant. Starting from a common national charge rate, regions will increase their charges each semester until their targets are reached. Although they In addition to promoting partnerships, the Bank initially were skeptical, many Colombian industri- continues to refine methods for estimating the alists now support the program because they benefits and costs of pollution control and testing appreciate its flexibility. They are free to adjust the effectiveness of different regulatory instru- ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 63 ments. Collaborative projects between Bank pollution regulation. Policy dialogue in FY98 operations and environmental agencies in Asia between the Bank and the Chinese government and Latin America have helped the DRGIE has incorporated the results, which suggest that team understand existing regulatory practices, the welfare of China's citizens would be improved industry's environmental performance, and the by substantially higher pollution charges. cost of pollution abatement. This has enriched the team's work with environmental agencies and Other policy and research initiatives have shown its contribution to the design, implementation, that regulators are not the sole source of pressure and evaluation of new approaches to pollution on plants to improve environmental performance. regulation. The team has focused particularly on Communities and market agents, ignored by economic instruments, public information traditional regulatory models, are now recognized strategies, and benefit-cost assessment of regula- as playing important roles. Communities that are tory priorities. richer, better educated, and better informed find ways of enforcing environmental norms even if In addition to benefiting the environmental formal regulation is weak or nonexistent. DRGIE agencies in many developing countries, including research carried out in FY98 also suggests that Brazil, Mexico, Colombia, China, Indonesia, and international and local investors already include the Philippines, the team's collaborative work has environmental performance in their assessment of given it unprecedented access to new information financial risk (see Box for more on DRGIE and has promoted many new research initiatives. research). Stock markets in Latin America and China provides an excellent example: a wealth of Asia adjust the valuation of publiclv traded firms new data has permitted econometric research on by 5-15 percent in response to media reports the impact of China's pollution charge system, about polluters. This provides a clear, powerful variations in compliance and enforcement across incentive for improved environmental perfor- provinces, and the role of citizen complaints in mance. aSg i~~~~~~~~~~~~~~~~~~~~~~~~~~~n our As resultofheBanksinceasingnme oflinkst outsideorganizations,weare improvingo oped to provide links_to relevant work s~de and outside the Bank. This pollution &te wti be stoo 64 ENVIRONMENT MATTERS *FALL 1998 Partnerships Environmenital Management lnvolves Multiple Players Commitments; Performance MeasuremenrI and Feedback BET:TERX MANAGEMENT IND/USYIPRIVAlE SECTOR Multinational Small-Medium and large ___ Enterprises I Corporations -V ' --~ Regulations Public I Incentives Market . _ - r ------ 8/- :&-E j Disclosure GOVERNMENT~ CIVWL SOCIETY National/Regional!/ulcNO Lecal ievels a \ ,' I PublicfNGOs I Local levels/ The Bank, more broadly, is also beginning to take organizations such as Resources for the Future David Hanrahan of a more proactive role in developing partnerships and the World Resources Institute. We are also the Environment withi outside organizatioins and agencies in order increasingly engaged in dialogue with representa- Family can be reached to benefit from their experience and knowledge tives from the private sector to assist member at (202) 458-5686, and more effectively achieve program goals. We countries in developing the most efficient and fax (202) 477-0565. David Shaman and are continuing to share ideas on pollution man- cost-effective solutions to pollution management. David Wheeer of the agement and to learn from others, including Development Economics Department can be reached at (202) 473-3779, and (202) 473-3401, fax (202) 522-1158. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 65 Sustainable Development Capacity Building Initiatives at EIIULC EDIEN Sfaff N conjunction with the Bank's efforts Collaborating for Cost-Effective to become a knowledge-based devel- Pollution Management opment institution, the Economic October 26-28, 1998, WNashington DC Development Institute (EDI), which has trained participants from member This seminar will bring together senior govern- countries, merged in FY98 with the ment and private sector representatives to high- Learning and Leadership Center light successful collaborative approaches and les- (LLC), which has been responsible for staff sons for: training. The resulting sharper focus on selected * enhancing profitability through responsible en- themes, including the environment, has put EDI/ vironmental management; LLC in the position to reach broader audiences * designing environmental information disclo- through new technologies and partnerships, to sure programs; better deliver core policv and skills training, and * managing environmental liability and related to promote knowledge networks, issues; and * removing barriers to and promoting incentives EDI/LLC's Environmental and Natural for environmental innovation. Resources Division (EDIEN) promotes capacity An important outcome of the seminar will be an building in the environmental, health, and social action plan to establish networks and focal points dimensions of development. Its program is for encouraging public-private partnerships for organized around three cross-cutting themes: pollution management in various countries. urban environment and pollution, sustainable land use, and water resources manageniierat. The Clean Air Initiative in Latin Wiithin these themes, priority is given to issues American Cities surrounding the often difficult tradeoffs between December 3-5, 1998, W,Vashington DC, and First development and the environment. Semester 1999, various Latin American cities URBAN EN'IIRONMENT AND LLU The program aims to bring together development The goal of EDIEN's Urban Environmental agencies, local leaders from the public and pri- and Pollution team is to strengthen the capacity of vate sectors, NGOs, and academics from cities central and local governments, the private sector, facing significant air pollution problems to share andcivl socit tovmanage the enviro mental experiences and propose ideas and actions to and aCiVlil s ocizety to m an age the e nviron men talimrvubaarqalt.Tentaiewl: consequences of rapid urbanization and economic improve urban arhquaitngyof technical knowledge growth. This team also promotes understanding and experience among participating cities to among these key stakeholders of the importance improve urban air quality cost-effectively; of shared responsibility and collaboration in * promote action plans based on the participa- addressing such challenges, including through tion of local stakeholders and the private sec- public-private partnerships (see Developing tor; Partnerships for Effective Pollution Manage- * facilitate technical and financial assistance mcnt, page 62). from development agencies; and * foster the exchange of experiences among Key programs: participating cities. o Pollution Management SUSTAINABLE LANID USE o Decentralization and Strengthening of State Helping countries manage and utilize their land- and Local Environmental Agencies based natural resources in a sustainable way is the o Urban Air Quality Management in Latin main goal of the Sustainable Land Use team. American Cities Work in this area builds capacity for designing o Urban and Industrial Environmental and implementing strategies and polcies for Management. sustainable land use, within the overall objective of promoting economic growth and alleviating poverty 66 ENVIRONMENT MATTERS * FALL 1998 Key programs: o Water Supply and Sanitation for the Urban Poor EDi o Sustainable Irrigation Policy. * Rural Development * Forestry Management Africa Water Resources * Wetlands Management and Fisheries. Management Policy Workshop January 11-14, 1999, Tanzania Policy and Institutional Reform for Sustainable Rural Development This workshop, to be organized in conjunction with This article December 7-11, 1998, Washington DC the Global Water Partnership, will be the first of a series of joint learning and capacity building ac- . s The course aims to strengthen the capacity of tivities of the Africa Water Resources Manage- highightsseveral senior government officials to promote rural de- ment Initiative. The purpose of the workshop will Ba k velopment in the context of sustainable natural be to share and disseminate lessons of their ex- n programs to resources management. Since the majority of perience in reforming water resources manage- rural people rely for their livelihoods on land and ment policies in Africa. The workshop objectives train staff and water resources, the first major objective will be are to: on policy and institutional reforms to enhance the * provide a forum for senior policymakers to experts from sustainable management of land and water re- share their experiences with institutional re- sources. The second major objective will be to forms and the challenges of managing water borrower agencies institutionalize strategies such as decentralization resources in an integrated manner; and and community-based development to improve * promote the development of a network of African in environmental governance of the rural sector. water resources professionals. Sustainable Forestry-National and Global Economic Growth, Aquatic Biodiversity, and best practices. Perspectives Water Resources in the Amazon River Estuary December 7-12, 1998, Indonesia November 16-20, 1998, Brazil The program aims to strengthen efforts to control The program will support the creation, implemen- deforestation in tropical rainforests in East Asia, tation, and coordination of sustainable grassroots the Amazon, and the Congo basins. The program initiatives to manage aquatic and water resources objectives are to: in the estuary to enhance human welfare, ensure * develop dissemination and training activities the long-term viability of natural resource use, and on forestry issues for a multisectoral audience; preserve as much biodiversity as possible. * create international professional networks of government officials, private sector executives, CROSS-CUTTING THEMES NGOs, journalists, and academics to foster in- stitutional and policy reforms in the forestry sec- Cross-thematic linkages permeate all of tor; and EDIEN's work and contribute to the essential * encourage regional cooperation in forest con- strategies in addressing natural resources, servation, especially where forest ecosystems environmental, health and social problems. Cross- go beyond national boundaries. cutting theme events focus primarily on: The program will focus on management of forest o Public-private partnership fires, sustainable logging, and managing forests o Decentralization and participation for biodiversity conservation and climate change X Information management, transparency, and mitigation. accountability Formore information, WATER RESOURCES MANAGEMENT e Institutional capacity building pleasecontactDennis The Water Resources Management team devel- 0 Economic valuation. Mahar, Manager EDIENat oped the Water Policy Reform program. This Environmental Economics for (202) 458-7970, program pays particular attention to the environ- Development Policy fax: (202) 676-0978, mental, institutional, economic, and social aspects Juli 6-17, 1998 and First Semester 1999,l of integrated water resources management in the a-VaIshin ton DC drahar@rkorg. three main water-using subsectors: ecosystem This article was protection, irngation and drainage, and water This course presents analytical tools that prepared by EDIEN supply and wastewater. link economic and environmental/health/ staff and compiled and social issues and policies. EDI/LLC will Dited byFdiL Key programs: also deliver the course through partner He can be reached at organizations. Encouraging such partner- (202) 473-6315,fax * Integrated \Nater Resources Management ships will help spearhead EDI/LLC's dis- (202) 676-0977. * NWater Supply and Wastewater Policy tance learning strategy, which is intended to provide policy services at the regional, national, and local levels. ANNUAL REVIEW * JULY 1997-JUNE 1998 (FY98) 67 What's New at the Bank ? E i W3 POLLUTION PREVENTION AND ABATEMENT HANDBOOK 199& The World Bank Group has recently version is expected to be available on-line adopted, for use in its projects, the Pollution by October 1998. Prevention and Abatement Handbook 1998. This document replaces.the Environmental Hardcover copies of the Handbook will be < . u 1 ~his document replaces the Environmental X S . . 1 r . ~~~~~~~~~~published by the Bank and should be avail- Guidelines 1988 and supercedes draft versions of the Handbook that have been in circula- able through the Infoshop by November of., the 11998. A limited number of copies will be tion for comment and discussion. provided to Bank staff at Headquarters 'i'he Handbook was released in August 1998 and in country offices but it will not be and about 200 copies were distributed to possible to meet all individual requests for managers and technical specialists within copies. Reference copies will also be pro- the Bank, IFC, and MIGA. It will soon vided to Resident Missions, partner orga- be disseminated more widely in two ways: nizations, and government agencies. Other requests will be referred to the The full text will be made available on the Infoshop. web, accessible both internally and exter- nally, via the Pollution Node at www- Requests for information can be sent by e