42821 Paper number 114 E N V I R O N M E N T D E P A R T M E N T P A P E R S Institutions and Governance Series Strengthening Policy Dialogue on Environment Learning from Five Years of Country Environmental Analysis Poonam Pillai February 2008 Sustainable Development Vice Presidency THEWORLD BANK ENVIRONMENT DEPARTMENT Strengthening Policy Dialogue on Environment Learning from Five Years of Country Environmental Analysis Poonam Pillai January 15, 2008 Papers in this series are not formal publications of the World Bank. ey are circulated to encourage thought and discussion. e use and citation of this paper should take this into account. e views expressed are those of the authors and should not be attributed to the World Bank. Copies are available from the Environment Department of the World Bank by calling 202-473-3641. CEA Review paper 2-12-08.indd FMi CEA Review paper 2-12-08.indd FMi 2/12/08 5:35:28 PM 2/12/08 5:35:28 PM © e International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. Manufactured in the United States of America First printing January 2008 Design: Jim Cantrell Cover photo: Gas flaring, natural gas being burned to CO2 during oil production: Simone D. McCourtie/World Bank Photo Library CEA Review paper 2-12-08.indd FMii CEA Review paper 2-12-08.indd FMii 2/12/08 5:35:32 PM 2/12/08 5:35:32 PM Contents Acronyms and Abbreviations ix Executive Summary 1 Chapter 1 Overview of Country Environmental Analysis and the Purpose of is Review 5 Background and Rationale for CEAs 6 Approach and Methodology of the Study 8 Audience 8 Structure of the Report 8 Chapter 2 Key Features and Methodologies Used in CEAs 9 Reasons for Preparing CEAs 9 Cost, Time, and CEA Team Makeup 10 Use of the CEA Building Block Structure 12 Methodologies for Determining Environment-Development Priorities and emes 13 Institutional Analysis in CEAs 16 Sectors and emes Covered in CEAs 20 Presentation of Recommendations 22 Main Points 23 Chapter 3 e CEA as a Means of Strengthening Policy Dialogue 25 Building Ownership 25 Engaging the Private Sector, NGOs, and the Media 25 Coordination with Donors 26 Strategies for Dissemination and Follow-up 28 Main Points 28 Chapter 4 Results from CEAs 29 Contribution of the Array of Analytical Tools 29 Types of Results from CEAs 32 Institutions and Governance Series iii CEA Review paper 2-12-08.indd FMiii CEA Review paper 2-12-08.indd FMiii 2/12/08 5:35:32 PM 2/12/08 5:35:32 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Link Between CEAs and DPLs 34 Timing of CEAs 34 Factors Contributing to Positive Results 35 Main Points 35 Chapter 5 Conclusion: Guidance for Future Preparation of CEAs 37 Policy Context and Timing 37 Planning and Preparing CEAs 37 Revising and Standardizing the CEA Building Block Structure 38 CEA Process and Follow-up 41 Collaboration with Donors 42 Sharpening the Profile of CEAs: Coding sector work as CEAs 42 APPENDIXES A. Completed, Ongoing, and Planned CEAs, as of September 15, 2007, by Region 43 B. Sample Questionnaire for CEA Teams and Task Team Leaders 45 C. Overview of the Objectives and Results of the CEAs Reviewed 47 D. Snapshot of Climate Change Issues in CEAs 53 REFERENCES 55 BOXES Box 1. Quantitative tools for priority setting 14 Box 2. Analyzing environment aspects of energy efficiency in Belarus 22 Box 3. Donor coordination: A good-practice example 27 Box 4. Importance of a good dissemination strategy: e Peru CEA 28 Box 5. Engaging stakeholders through cost of degradation analysis: e case of Colombia 30 FIGURES Figure 1. Key building blocks of country environmental analysis (CEA), from the CEA concept note 5 Figure 2. Growth in demand for country environmental analysis, 2003­8 6 Figure 3. Alternative building block structure for CEAs 39 Figure 4. Template for recommendations in CEAS 41 iv Environment Department Papers CEA Review paper 2-12-08.indd FMiv CEA Review paper 2-12-08.indd FMiv 2/12/08 5:35:32 PM 2/12/08 5:35:32 PM Contents TABLES Table 1. Cost estimates for the CEAs reviewed 11 Table 2. Approaches and criteria applied in determining focus areas to be analyzed in the CEAs reviewed 15 Table 3. Sectors and themes covered in the CEAs reviewed 21 Table 4. Examples of how recommendations from the CEAs reviewed are being implemented 33 Table C.1 Context and objectives of the CEAs reviewed 47 Table C.2 Summary of results linked with the CEAs reviewed 49 Institutions and Governance Series v CEA Review paper 2-12-08.indd FMv CEA Review paper 2-12-08.indd FMv 2/12/08 5:35:32 PM 2/12/08 5:35:32 PM CEA Review paper 2-12-08.indd FMvi CEA Review paper 2-12-08.indd FMvi 2/12/08 5:35:32 PM 2/12/08 5:35:32 PM Acknowledgments P reparation of this report was managed by CEAs and for their feedback on the various case Poonam Pillai, Environmental Specialist, studies. anks are also due to Ian Leslie Campbell Environment Department. Analysis presented (Consultant, AFTH3) for preparing the summary in this paper draws on summary reports of report on the Ethiopia CEA, and to Alex Ricardo completed CEAs prepared by Paola Posas (Consultant, Jimenez Cruz (Consultant, Environment Department) Environment Department), who also provided for preparing brief summaries for the Serbia and important inputs to the paper. An independent Montenegro and Tunisia CEAs. anks to Alexandra evaluation of three completed CEAs involving in- Sears, Program Assistant, Environment Department, country assessments prepared by Hans Hessel-Andersen for her assistance in compiling CEA costs and with (Consultant, Environment Department) also informs document preparation. anks are due to Nancy Levine this analysis. We are grateful to Dan Biller, Lead for valuable editorial assistance, and to Jim Cantrell, Economist, EASOP, and Estanislao Gacitua-Mario, Communication Analyst, Environment Department, Senior Social Scientist, SDV, for peer reviewing this for desktop publishing. report. e report was prepared under the guidance of Kulsum Ahmed, Lead Environmental Specialist Finally, a special thanks to the generous financial and Team Leader of the Institutions and Governance support provided by the governments of Norway, Program, and Laura Tlaiye, Sector Manager, both of the Finland, and Denmark, without which the preparation Environment Department. of this paper would not have been possible. e author is particularly grateful to CEA task team leaders for discussing their experiences with Institutions and Governance Series vii CEA Review paper 2-12-08.indd FMvii CEA Review paper 2-12-08.indd FMvii 2/12/08 5:35:33 PM 2/12/08 5:35:33 PM CEA Review paper 2-12-08.indd FMviii CEA Review paper 2-12-08.indd FMviii 2/12/08 5:35:33 PM 2/12/08 5:35:33 PM Acronyms and Abbreviations CAR Corporaciones autonomas regionales (regional environmental protection agencies) [Colombia] CAS Country assistance strategy CDM Clean Development Mechanism (of the Kyoto Protocol) CEA Country environmental analysis CMU Country management unit COED Cost of environmental degradation CONAM Consejo Nacional del Ambiente (Council on Environmental Protection) [Peru] DFID U.K. Department for International Development DPL Development policy lending; development policy loan DR­CAFTA Dominican Republic­Central America Free Trade Agreement EIA Environmental impact assessment ESW Economic and social work GDP Gross domestic product GEF Global Environment Facility GHG Greenhouse gas IDB Inter-American Development Bank MDGs Millennium Development Goals METAP Mediterranean Environmental Technical Assistance Program NEAP National environmental action plan NGO Nongovernmental organization OECD Organisation for Economic Co-operation and Development OP 4.01 Operational Policy 4.01, Environmental Assessment OP 8.60 Operational Policy 8.60, Development Policy Lending PCB Pollution Control Board [India] PEER Public environmental expenditure review PRSC Poverty reduction support credit PRSP Poverty reduction strategy paper QAG Quality Assurance Group SEA Strategic environmental assessment TAL Technical assistance loan TTL Task team leader UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCC United Nations Framework Convention on Climate Change All dollar amounts are U.S. dollars. Institutions and Governance Series ix CEA Review paper 2-12-08.indd FMix CEA Review paper 2-12-08.indd FMix 2/12/08 5:35:33 PM 2/12/08 5:35:33 PM CEA Review paper 2-12-08.indd FMx CEA Review paper 2-12-08.indd FMx 2/12/08 5:35:33 PM 2/12/08 5:35:33 PM Executive Summary O ver the past five years, the World Bank development partners who carry out work similar to has undertaken a major effort to improve CEAs. the quality of its upstream environmental analytical work. A key tool in this context is e paper is based on a desk review of completed country environmental analysis (CEA), which aims to CEAs and on interviews with task managers and integrate environmental issues into country assistance members of CEA teams. Several reports, including a strategies (CASs), poverty reduction strategy papers fieldwork-based assessment of the Ghana, India, and (PRSPs), development policy lending (DPL), and Guatemala CEAs commissioned by the Environment development assistance strategies and programs. e Department; a review on Tunisia by the Quality Bank has initiated 25 CEAs, 16 of them completed Assurance Group (QAG); and a report commissioned and nine ongoing; for several of the latter, completed by the Latin America and Caribbean Region, based on drafts exist and have gone through internal Bank in-country assessments of completed CEAs, have also review. Currently, more than 10 new CEAs are informed this study. A detailed case study analysis of planned. As the Bank scales up preparation of CEAs, it each completed CEA was prepared for this exercise; it is important to learn from experience with completed substantively informed the review and is available as a CEAs to ensure continued improvement in the use of background paper. this tool. Main Findings of the Review e objective of this paper is to review experience with completed CEAs to improve the effectiveness of e original CEA concept note proposed that CEAs CEAs as a strategic analytical tool. rough in-depth have three main building blocks: (a) establishment analysis of the process, methodologies, costs, and of environment-development priorities linked with results of completed CEA pilots, the paper assesses how growth and poverty reduction, (b) assessment of the effective CEAs have been in informing and providing environmental implications of sector policies, and strategic guidance to the Bank and client countries (c) institutional analysis. Assessing CEAs against this on environment-development issues and the extent to building block structure, the review highlights several which they have facilitated donor coordination. e findings. analysis carried out in this paper also provides feedback on when to prepare a CEA, how to prepare and Priority setting in CEAs. Many CEAs discussed links structure CEAs, and how to use specific methodologies between environment and economic growth and and processes in influencing policy dialogue with poverty, but only a few have undertaken detailed partner countries. e findings are of potential interest analysis to establish priorities linked with both growth to World Bank sector managers, country directors, and poverty reduction. Good practice examples include CEA task teams, and environmental staff, but also to the Peru and Colombia CEAs. Much more emphasis Institutions and Governance Series 1 CEA Review paper 2-12-08.indd B1 CEA Review paper 2-12-08.indd B1 2/12/08 5:35:33 PM 2/12/08 5:35:33 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis has been placed on assessing priorities linked with flows between national and subnational levels, or growth than on poverty reduction. Several CEAs transparency in use of resources. Finally, the depth and selected themes for analysis on the basis of two other level of detail of subnational institutional analysis vary criteria: focus areas of a DPL that formed part of tremendously, from extensive analysis of resources and the context in which the CEA was carried out, and priorities at subnational levels to brief mentions in consultation with partner country stakeholders. In some cases. terms of quantitative methods for priority setting, a number of different methods have been used: in In addition, environmental impact assessment (EIA) particular, quantification of costs of environmental emerges as a key area of institutional analysis in CEA. degradation and net savings indicator (to assess e study shows the need to improve EIA and licensing priorities linked with growth), and use of surveys and in many of the countries reviewed. distributional analysis of environmental priorities (that is, analytic work that assesses priorities based on Analysis of environment development priorities and income) to determine priorities linked with poverty. themes in CEAs. Two main approaches have been used Much more emphasis can be given in future CEAs in undertaking detailed analysis of main themes and to determine environment development priorities, sectors: cost-benefit analysis of alternative interventions, in terms of growth and poverty through use of these and institutional assessment of issues linked with quantitative tools and other innovative approaches. selected themes and priorities. e scope of institutional analysis with respect to key themes varies significantly; Institutional and organizational analysis. Although CEAs some CEAs focused mainly on the effectiveness of EIA have brought about considerable improvement in the processes in selected sectors (for example, analysis of the quality of institutional analysis, compared with past environmental implications of infrastructure expansion country-level environmental analytical work, there in the El Salvador and Guatemala CEAs); others looked are areas that could be improved further. Specifically, primarily at the environmental implications of sector CEAs have tended to focus much more on public policies (as in the Belarus energy chapter); and still sector institutions than on the private sector and others focused on institutions and organizations linked civil society, and point toward the need for stronger with the theme. Although institutional analysis related assessment of governance issues, including analysis to key themes and sectors is a significant improvement of the "demand side" of environmental governance over past country-level environmental analytical work, (that is analysis of actions and behavior of actors it can be further improved by making greater use of such as NGOs and communities that are outside the existing methodologies, such as stakeholder analysis, public sector). ey have emphasized formal rules for assessing political-economy and governance issues and organizations, with only a few assessing informal linked with a priority theme or sector. rules, and in analyzing organizations they have looked more at mandates, staffing, and resources than at CEA costs. e average cost for the CEAs reviewed decision-making processes or assessment of vertical was about $288,000. is is comparable to the cost of and horizontal accountability structures. Only a few certain diagnostic studies and ESWs Bankwide (OPCS CEAs have focused on political-economy issues or 2004; World Bank 2006i). However, 9 out of 16 CEAs assessed decision-making processes in the context of reviewed cost less than $232,000. A comparison of the power relations within which these are embedded. costs assumed by CEA teams at the concept note stage Public expenditure reviews, when carried out in CEAs, and actual CEA costs shows that typically CEAs cost focus more on determining the adequacy of resources more than what is initially planned and budgeted. to meet priorities than on assessing issues of resource Although CEAs are supported through trust funds, a 2 Environment Department Papers CEA Review paper 2-12-08.indd B2 CEA Review paper 2-12-08.indd B2 2/12/08 5:35:33 PM 2/12/08 5:35:33 PM Executive Summary considerable portion of the Bank budget is also spent of costs of environmental degradation has helped on their preparation. In nine out of the 16 CEAs raise the profile of environmental issues. Institutional reviewed, bank budget accounted for a greater portion analysis (including analysis of public expenditures of overall CEA costs. and EIA systems) has contributed to results such as redistribution of expenditures to better address priority Rapid and Full CEAs. Out of the 16 CEAs reviewed, areas, identification of lending operations, design of four were prepared as "rapid" CEAs. e average cost of policy reforms, and strengthening of EIA capacity. a rapid CEA is about $155,000. However, some rapid CEAs cost as much as extended CEAs. Even in terms Several of the CEAs reviewed were initiated in the of scope, rapid CEAs did not include fewer building context of the Bank's policy on Development Policy blocks (for example, the Nigeria, El Salvador, and lending, OP 8.60. With a few exceptions (for example, Guatemala CEAs). us, in terms of cost and scope, Orissa CEA), in most cases it has been a challenge the distinction between rapid and full CEAs is not very to incorporate CEA recommendations either in the meaningful. DPL program matrix, or the country program. It is important that preparation of CEAs be undertaken not Structure of CEAs. Whereas most CEAs included two only to meet due diligence requirements of OP8.60, building blocks, namely selection of themes, priorities, but seen as an opportunity to enhance dialogue and and institutional analysis building blocks, some studies engagement with partner countries to strengthen characterized as CEAs did not include these core institutional capacity on environment-development elements or cover them adequately. For instance, the issues. Ghana and the Orissa CEAs did not include a broad analysis of environmental management institutions Donor coordination. e review highlights four models and decentralization. In CEAs, recommendations, too, of donor coordination: (a) no coordination, (b) limited are often not presented in a standard way that would coordination, (c) joint task management with part facilitate their use in follow-up work and activities. 1 country donors, and (d) strong coordination with local donor groups. e extent of donor coordination Results from CEAs. CEAs have contributed to a range of depends on a number of factors, including differences outputs and processes. Types of results included input in donor agencies' institutional mandates and to policy and institutional changes, identification of capacities; the existence of common interests and the lending operations, integration of environment into timing of CEAs (as in Bangladesh and Ethiopia); the CASs and PRSPs, input to DPLs, identification of extent of coordination of the local donor group; and strategic environmental assessments, and in some cases, the degree of involvement by various donors in specific improvement or facilitation of donor coordination. countries. Strong coordination with the local donor In many cases CEAs were part of an ongoing dialogue group appears to be the most important factor in with the government on environment-development successful results. A good practice example here is the issues and were thus only one of the factors that have Ghana CEA. contributed to the outcomes. Types of results vary for each case and are linked to a range of factors, including Most of the CEAs reviewed have had some tangible the objective of the CEA, the quality of analysis, the results in strengthening the Bank's dialogue with process, and how various analytical tools were used in partner countries in the short run. e extent to which specific country contexts. Different types of analysis CEAs have helped consolidate dialogue over the longer have been used to mainstream environment into policy run, or in any indirect way, was difficult to measure dialogue in different ways. In several cases analysis within the scope of this review. Institutions and Governance Series 3 CEA Review paper 2-12-08.indd B3 CEA Review paper 2-12-08.indd B3 2/12/08 5:35:33 PM 2/12/08 5:35:33 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Planning and Preparing CEAs these periodically (say, every four to five years) can show how well the institutions and organizations in a country CEA is a tool for long-term engagement with partner are addressing these concerns. A broad assessment countries on environment development issues. e of environmental institutions and organizations is review shows that CEAs can provide useful strategic also crucial, as it provides an overall assessment of analysis when prepared in advance of a number the historical evolution of environmental institutions of different processes and contexts, including (a) and organizations, the main stakeholders involved, preparation of DPLs; (b) mainstreaming environment political-economy issues underlying environmental into CASs and PRSPs; (c) strengthening country management, and the major strengths and weaknesses dialogue on environment and identifying areas of in the governance structure and how they can be lending; (d) providing analytic basis for sustainable addressed. is broad analysis of environmental development DPL; and (e) reestablishing dialogue institutions is also crucial from the perspective of on environment development issues in postconflict integrating environmental issues into budget support situations. e report suggests actions with respect and meeting the requirements of OP8.60 (Hessel- to timing, task management, team composition, and Andersen 2007). Standardization of the first two preparation of CEAs. Given that the average cost is building blocks can lead to cost savings, as this part of $288,000, it is suggested that teams consider this in the the analysis need be conducted only every four to five initial stages of planning CEAs. years in a country. Refining the CEA Structure--Balancing e third building block includes detailed analysis Standardization and Flexibility of themes and priorities established as important in the CEA, or themes and sectors that are important From experience with CEAs reviewed and what from the perspective of specific processes such as seems to work better in terms of operational needs, development policy lending and PRSPs, in the context this paper proposes a revised building block structure of which a CEA is being prepared. is third building incorporating two standard building blocks, and a third block can thus be tailored to broader country-level building block that can be tailored to specific processes processes and allows for flexibility in the choice of in the context of which a CEA is being prepared. e tools and the content of the assessment. Attention two standard building blocks include (a) determination to all three building blocks thus gives scope for and of environmental themes and priorities linked to promotes the necessary balance between standardization both growth and poverty reduction, and (b) a broad of key features of a CEA and country- and situation- analysis of environmental institutions and governance specific variation. Ideally, CEAs should include all three that extends to informal rules and structures and building blocks. However, for an economic and sector to subnational levels of government. Assessment of work product to be coded as a CEA, "rapid" CEAs can environmental priorities is critical, as it helps identify be prepared that at minimum can include the first two key environment-development issues at a particular building blocks. time and can be tracked over a long period. Assessing 4 Environment Department Papers CEA Review paper 2-12-08.indd B4 CEA Review paper 2-12-08.indd B4 2/12/08 5:35:34 PM 2/12/08 5:35:34 PM Overview of Country Environmental Analysis (CEA) 1 and the Purpose of is Review O ver the past five years the World Bank has made Strategy (World Bank 2001a). CEA is an upstream a significant effort to improve the quality of its analytical tool that aims to integrate environmental environmental analytical work, with the goal considerations into country assistance strategies of integrating environmental concerns into the (CASs), poverty reduction strategy papers (PRSPs), earliest stages of decision making and strengthening development policy lending (DPL), and country-level the basis for development assistance. An important tool development assistance strategies and programs. As in this effort is country environmental analysis (CEA), originally conceived, CEAs have three methodological developed in response to the call for systematic country building blocks (figure 1): diagnostic studies in the World Bank's Environment Figure 1. Key Building Blocks of Country Environmental Analysis (CEA), as Originally Conceived COUNTRY ENVIRONMENTAL ANALYSIS State of the environment and priorities for Policy analysis Institutional capacity assessment development · Identification of key macroeconomic · Assessment of policy making, · Prioritization of environmental and sector policies with potential administrative efficiency, and challenges through available data, cost environmental implications implementation capacity of degradation studies, stakeholder · Lessons from strategic environmental · Methodology and process for priority analysis, qualitative methods assessments (SEAs), relevant studies, setting and cross-sectoral coordination · Environmental trends in priority areas and analytical work · Assessment of environmental · Poverty-environment linkages · Areas for new SEAs assessment capacity · Indicators · Public environmental expenditure · Data gaps reviews · Indicators for measuring public sector capacity · Areas for intervention BUSINESS PLAN · Stocktaking of and lessons from the Bank's and development partner's' past environmental assistance to client country · Review of the Bank's planned lending and nonlending activities in key sectors and their links with environmental priorities · Review of development partners' ongoing and planned environmental support activities · Assessment of the Bank's comparative advantage in relation to development partners · Suggested Bank assistance in the form of lending and nonlending assistance and partnerships Source: World Bank 2001a. Institutions and Governance Series 5 CEA Review paper 2-12-08.indd B5 CEA Review paper 2-12-08.indd B5 2/12/08 5:35:34 PM 2/12/08 5:35:34 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Figure 2. Growth in Demand for Country Environmental Analysis, 2003­8 12 10 8 6 4 2 0 2003 2004 2005 2006 2007 2008 Source: World Bank sta . Note: The numbers include both completed CEAs and CEAs for which decision drafts exist at the time of writing. Numbers for 2007 and 2008 are estimates of CEAs expected to be completed in these years. · Systematic evaluation of a country's environ- Background and Rationale for CEAs ment­development priorities, linked with growth ree primary concerns led to the introduction of and poverty reduction CEAs in 2001 in response to the World Bank's new · Assessment of the environmental implications of Environment Strategy (World Bank 2001a). key macroeconomic and sector policies · Assessment of institutional capacity for managing 1. Quality. Although the Bank was systematically environmental concerns. producing a variety of diagnostic studies such as poverty assessments, public expenditure reviews, and investment ese, along with a review of Bank and donor activities, climate assessments, diagnostic work on environmental form the basis of a business plan that involves lending issues tended to be sporadic (World Bank 2001a). as well as nonlending activities and partnerships. Moreover, a review of Bankwide economic and sector Since the approval of the World Bank's Environment work by the Bank's Operations Evaluation Department Strategy by the institution's Board of Executive Directors in 2001, the Bank's regions have initiated 1CEAs are a form of Bank economic and sector work (ESW) approximately 25 CEA pilots. At present, 16 pilots have and, like other ESW, are considered complete when a final report approved by the country government and the Bank country been completed, nine are ongoing, and about 10 are director is available. At the time of initiation of this paper, two planned (appendix A).1 Given that the number of CEAs of the CEAs counted here as "ongoing" already had decision is increasing (see figure 2), it is important to take stock drafts but had not received final approval from either the country government or the Bank's country management unit (CMU). of experience with CEAs so far so as to streamline and For counting purposes, they are therefore included in the strengthen preparation of future CEAs. "ongoing" category. 6 Environment Department Papers CEA Review paper 2-12-08.indd B6 CEA Review paper 2-12-08.indd B6 2/12/08 5:35:34 PM 2/12/08 5:35:34 PM Overview of Country Environmental Analysis (CEA) and the Purpose of This Review (OED) found that ESWs in the environment sector to greater harmonization between donors and thus were among the most outdated products, compared to improved development effectiveness. e extent to with diagnostic work in other sectors, and emphasized which CEAs have contributed to donor coordination the need to improve the quality and relevance of and the factors that are important for improving environmental analytical work (World Bank 2001b). coordination between donors are discussed in this paper. 2. e changing nature of development assistance. In addition to traditional investment lending, increasing In addition to the factors outlined above, there is a use was being made of long-term programmatic and broader rationale for upstream environmental analytical policy-based lending. e revised Operational Policy work. Environmental and natural resources contribute 8.60 required assessment of the capacity of a country's substantially to growth and poverty reduction in policies and institutions to address the environmental developing countries. In many African countries-- implications of specific policy reforms, beyond project- Chad, Madagascar, and Sierra Leone, for instance-- level due diligence, and along with other tools such as natural capital constitutes more than a quarter of strategic environmental assessment, CEAs were seen as national wealth (Gylfason and Zoega 2006). In a way to fill the analytical gap. countries such as Costa Rica and Tanzania, the growth rate in certain natural resource management sectors 3. More systematic integration of environmental issues outpaces the overall rate of growth of the economy. Yet, into CASs, PRSPs, and country policies and programs despite the importance of environmental and natural was needed, as noted in the Environment Strategy. resources to their economies, developing countries face CEA was seen as an important mainstreaming tool. a plethora of problems linked with natural resource Experience with national environmental action plans degradation and environmental externalities such as (NEAPs) prepared by partner countries underscored air and water pollution, associated with unsustainable the need to design analytical tools that would economic growth and consumption processes. Rather focus on a few important issues and guide partner than being considered a resource and an asset that countries strategically, rather than yield exhaustive can contribute to sustainable economic growth, accounts of all environmental issues in a country. environment is in many contexts still regarded as an e experience with NEAPs highlighted the need to add-on to core development processes. provide selective guidance on key entry points for improving environmental outcomes, focusing on Macrolevel environmental analysis can help in intersectoral coordination and improved assessment of determining a country's strategic environment- environmental institutions and governance (see Pillai development priorities and in assessing institutional 2002; for a review of NEAPS, see World Bank 1996). and governance issues related to these concerns. Such strategic analysis should feed into the formulation of Another consideration is that CEAs can facilitate donor the country's development strategies and the Bank's coordination. Various development agencies carry out country assistance strategies. at environmental upstream analytical work that shows many similarities issues should be addressed at an upstream level--not to CEAs. ese include environment performance simply at the project level, through a "do no harm" reviews carried out by the Organisation for Economic approach--has long been recognized. CEA is one in Co-operation and Development (OECD), country a range of upstream analytical tools that can facilitate environmental analysis (Asian Development Bank), the integration of environmental governance concerns and environmental profiles (European Union). at the earliest stages of policy making and decision Coordination of upstream country-level work can lead making. Institutions and Governance Series 7 CEA Review paper 2-12-08.indd B7 CEA Review paper 2-12-08.indd B7 2/12/08 5:35:34 PM 2/12/08 5:35:34 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Approach and Methodology of the Study 2006). ese studies, all of which involved assessment of results based on interviews with stakeholders in is paper reviews the World Bank's experience with the country, were consulted for this review. It was not completed CEAs with a view to improving the overall possible to undertake field visits to assess results of all effectiveness of CEAs as a strategic analytical tool. the CEAs reviewed in this paper. rough in-depth analysis of the process, methodologies, and results of completed CEAs, it assesses the e study takes a cross-sectional view of CEAs and effectiveness of CEAs in informing and providing aims at providing a broad perspective on the structure, strategic guidance to the Bank and client countries methodologies, process, and results of completed CEAs on environment-development issues and the extent to rather than compiling detailed case studies. Detailed which they have facilitated donor coordination. e analysis of each completed CEA is, however, available as analysis carried out in this paper also provides insights background to this report (see Posas 2007). on (a) when to prepare a CEA, (b) how to plan and prepare CEAs more effectively, and (c) how to use specific methodologies and processes to influence policy Audience making in partner countries. e review highlights e main audiences for this review include (a) CEA factors that are important to the effectiveness of CEAs task teams and team leaders, regional sector directors and draws together lessons and experiences from the and managers, country management units, and country Bank's regions. An underlying assumption for the directors; (b) environment staff who are interested in study is that CEAs are not a purely technical exercise integrating environment into CASs, PRSPs, and DPL; but a process of negotiation and dialogue with partner and (c) development partners who carry out work similar country stakeholders that contributes to decision making to CEAs and who may find the Bank's CEA experience regarding environmental issues at the country level. useful. e review paper will also provide input to the Environment Strategy Update currently in preparation. e analysis draws on a desk review of 15 completed CEAs2. One CEA listed as "ongoing" in appendix A (Orissa State in India) was also included in the review Structure of the Report because the decision draft had been produced at the Chapter 2 next, summarizes key aspects of CEAs-- time of writing, even though final approval by the the context in which CEAs have been prepared, government and the country management unit (CMU) their objectives, team composition, cost, and the had not yet been obtained. In-depth interviews were methodologies employed for priority setting and conducted with task managers, and in some cases with institutional analysis. Chapter 3 focuses on the other members of CEA teams, using the questionnaire preparation process, including selection of a counterpart presented in appendix B. agency, donor coordination, engagement with In parallel to the desk review, an in-country assessment stakeholders, and dissemination of CEAs. Chapter 4 of three completed CEAs (for Ghana, Guatemala, summarizes the results and outlines how different types and India) was commissioned by the Environment of analysis have been used to enhance the policy dialogue Department (Hessel-Andersen 2007). In addition, on environment. Chapter 5 presents lessons, proposes the Bank's Quality Assurance Group reviewed the a revised building block structure for CEAs, and Tunisia CEA (QAG 2006), and the Latin America recommends actions for preparation of future CEAs. and Caribbean Region commissioned a study on the results of the Colombia CEA (Arturo Chavarro Vásquez 2 ese were completed at the time this review was initiated. 8 Environment Department Papers CEA Review paper 2-12-08.indd B8 CEA Review paper 2-12-08.indd B8 2/12/08 5:35:35 PM 2/12/08 5:35:35 PM Key Features and Methodologies 2 Used in CEAs T his chapter describes the key features of CEAs, Meet the Requirements of OP 8.60 and drawing heavily on interviews with task managers Inform DPLs and on CEA reports. e context and objectives e revised OP 8.60 (World Bank 2004a) requires the of CEAs are summarized in appendix C. Bank to determine whether specific country policies supported by a DPL operation are likely to have Reasons for Preparing CEAs significant effects on the country's environment and natural resources. Where such effects are likely, the At the World Bank, CEAs are typically initiated and Bank is asked to draw on relevant analytical work to carried out by regional teams. Unlike the case in some assess the borrower's systems for reducing the adverse other institutions such as the Asian Development effects and enhancing the positive outcomes of the Bank and the Inter-American Development Bank, proposed policies. CEAs are one of several analytical they are not explicitly mandated by any Bank tools used meet the requirements of OP 8.60 (World policy. Rationales for preparation of CEAs can Bank 2004c). be broadly clustered in four areas: (a) to meet the requirements of the World Bank Operational Policy CEAs prepared to provide an upstream assessment of a on development policy lending (OP 8.60), and inform country's institutional capacity to address the potential policy reforms proposed by DPLs; (b) to provide an environmental implications of policy reforms supported analytical basis for programmatic environmental and by DPLs include those for Bangladesh, El Salvador, sustainable development DPLs; (c) to strengthen or Orissa, Guatemala, India, and Pakistan.3 In both El reestablish policy dialogue with a partner country Salvador and Guatemala there was increasing stress on environmental issues; and (d) to integrate on trade-related economic growth and infrastructure environmental issues into a range of Bank or country- expansion in view of the impending adoption of the level processes such as CASs and PRSPs and to inform Dominican Republic­Central America Free Trade implementation of national environmental policies or Agreement (DR­CAFTA). e focus areas of the CEA the United Nations Millennium Development Goals were linked to those of planned DPLs. How closely (see table C.1 in appendix C for a summary of the the objective and the analytical focus of the CEA were objectives of the CEAs reviewed). In some cases CEAs aligned with those of the DPL varied significantly, cannot be strictly placed in any one category; rather, however. they cut across them. 3Some of the CEAs (for example, Bangladesh, India, and Pakistan CEAs), as discussed later, had other objectives as well. Institutions and Governance Series 9 CEA Review paper 2-12-08.indd B9 CEA Review paper 2-12-08.indd B9 2/12/08 5:35:35 PM 2/12/08 5:35:35 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Provide an Analytical Basis for Sustainable Integrate Environmental Issues into Bank and Development DPLs Country-Level Processes In Colombia the government had requested a CEAs have been prepared as input into such documents sustainable development DPL to help implement the as CASs and PRSPs, as in Nigeria, and to assist priorities set forth in its national development plan. implementation of the Millennium Development Goals e Bank was already conducting a dialogue with (MDGs). In the Arab Republic of Egypt, as in many of the country on environmental issues, but analytical the countries reviewed, the Bank already had a dialogue work was needed to provide the basis for a long-term with the country. e Egypt CEA was prepared to programmatic policy and investment program, and a help mainstream environment into sector policies, CEA was accordingly initiated (see Posas 2007). inform implementation of the country's commitment to the MDGs, provide input into the CAS, and lay the foundation for the Bank's dialogue with the country on Strengthen Dialogue and Improve Lending environmental issues. In several countries the aims of the CEAs were to strengthen the Bank's dialogue with the partner CEA as a Multipurpose Tool country, reengage with the government on environment and natural resource issues, and improve lending. In e CEAs in, for example, Bangladesh, India, Ghana the Bank's environmental portfolio had been Pakistan, and India, do not easily fit into any of the weak for many years, and a 10-year adaptable program aforementioned categories. Some were initiated in the loan for a natural resource management project context of DPLs, but their objectives, as stated in the had recently been closed because of unsatisfactory CEA reports, were to inform other Bank and country performance. Moreover, there was an increasing level-processes such as CASs and PRSPs, or to improve shift toward programmatic and budget support. Bank lending. In Pakistan the Bank's Board suggested Analytical work was needed to reengage with the that a CEA be prepared as a condition for going ahead country on environmental and natural resource issues with a poverty reduction support credit. Since there and to develop concrete proposals for addressing had not been a Bank-supported environmental project environmental degradation (World Bank 2006d, 9). A in Pakistan for some time, the CEA (termed a strategic CEA was therefore initiated. country environmental analysis, or SCEA) was used to strengthen policy dialogue on the environment and CEAs have also been used to strengthen or reestablish identify areas of engagement. dialogue following a conflict. e CEA for Serbia and Montenegro was initiated when the country was rejoining the Bank after years of civil war and a Cost, Time, and CEA Team Makeup 10-year lapse in Bank engagement there. e Bank Available information in SAP indicates that the average needed to take stock of the state of environment, cost of the 16 CEAs reviewed was approximately in part to explore possibilities for cooperation. In $288,000 (table 1).4 However, 9 out of 16 CEAs Ethiopia, when the potential for a CEA was first reviewed cost approximately US$232,000 or less. A discussed, the country was emerging from a two-year war with Eritrea, and the Bank was reestablishing 4In some cases, information from SAP was missing, and for this dialogue to revive shelved initiatives and expand the reason estimates provided by task team leaders (TTLs) have been country program. used. 10 Environment Department Papers CEA Review paper 2-12-08.indd B10 CEA Review paper 2-12-08.indd B10 2/12/08 5:35:35 PM 2/12/08 5:35:35 PM Key Features and Methodologies Used in CEAs Table 1. Cost Estimates for the CEAs Reviewed (1999­2008) CEA Planned Actual (SAP & TTL)* Bangladesh Total: Not available (NA) Total: $467, 687 BB: $377,211 TF: $90,476 Belarus Total: NA Total: $150,000 BB: $150,000 TF: NA Colombia Total: $300,000 Total: $347,000 BB: $347,000 TF: NA Dom. Republic Total: $56,000 Total: $120,578 BB: $120,578 TF: NA Egypt, Arab Rep. of Total: $80,000 Total: $170,000 * BB: $44,000 TF: NA Additional Costs El Salvador Total: $172,000 Total: $225,631 BB: $163,655 TF: $61,976 Ethiopia Total: NA Total: $232, 921 BB: $$118,656 TF: $114,265 Ghana Total: $370,000 Total: $309,226 BB: $79,472 TF: $229,754 Guatemala Total: $185,000 Total: $185,000 * BB: $132,203 TF: $21,150 Additional Costs India Total: $230,000 Total: $534,909 BB: $317,727 TF: $217,182 Nigeria Total: $90,000 Total: $94,751 BB: $67,180 TF: $27,571 Orissa Total: $230,000 Total: $533,997 BB: $369,180 TF: $164,817 Pakistan Total: NA Total: $625,521 BB: $462,626 TF: $162,895 Peru Total: $293,000 Total: $250,000 *** BB: $334,316 TF: $234,601 Serbia & Montenegro Total: $115,000 Total: $180,136 BB: $180,136 TF: NA Tunisia Total: $171,000 Total: $183,000 BB: $88,756 TF: NA Additional Costs Average Cost of CEAs: $288,147 Source: World Bank sta . NA = Not Available. * Cost gures have been obtained from SAP. In some cases, TTLs estimated that larger funds were used and possibly linked to code di erent from the CEA code in SAP. In such cases TTL estimates have been used. ** Additional costs re ect costs of CEAs that may have been linked to di erent code. *** In Peru the BB and TF costs add up to a higher gure because the Peru CEA code was also used to charge for 7 policy notes and other activities. comparison of actual costs for preparing CEAs and costs Average costs of CEAs are somewhat higher than assumed at the concept note stage shows that CEAs average costs for Bankwide ESWs, which is closer tend to cost considerably more than what is initially to $207,000 for FY 06 (QAG 2006; OPCS 2004).5 estimated and budgeted. is suggests that teams need Costs of CEAs, however, vary considerably. e to budget for more funds when planning CEAs. variation in costs of CEA preparation to some extent reflects differences in scope of analysis, as well as In at least nine of the CEAs reviewed, greater Bank methodologies used.6 Whereas the El Salvador and Budget (BB) was used compared to trust funds (TFs). Nigeria CEAs each addressed only two themes, the is does not necessarily exactly reflect resources Bangladesh CEA analyzed four thematic areas, in spent on staff and consultant costs, as in some cases addition to environmental policies and institutions, BB was used to fund consultants as well. Examples of CEAs where greater BB resources were used include 5 e QAG review is available at http://intresources.worldbank. Bangladesh, Guatemala, El Salvador, and Nigeria. org/INTQAGNEW/Resources/ARPPFY06eBoard.pdf. See Although CEAs are supported through trust funds, also OPCS review at http://intresources.worldbank.org/ INTDELIVERYMGMT/Resources/AAA_OM2004-0047.pdf. table 1 provides strong evidence that substantial Bank 6An analysis of how efficiently these resources were used was not staff and budgetary resources go into CEA preparation. undertaken for this review. Institutions and Governance Series 11 CEA Review paper 2-12-08.indd B11 CEA Review paper 2-12-08.indd B11 2/12/08 5:35:35 PM 2/12/08 5:35:35 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis and incorporated a background study on public environmental institutions, and two sector- specific environmental expenditures. In the Orissa State chapters on oil and water resources management. us, assessment the focus was mainly on environmental in terms of scope and cost, the distinction between issues in the minerals sector, but household surveys rapid and full CEAs is not very meaningful. in two pilot areas contributed to the high costs of the study. In some cases CEAs have benefited from studies CEAs typically take one to two years to complete. done prior to the CEA, or while the CEA is being In some cases (for example, Nigeria) significant time prepared. In Ghana a natural resource management elapses between finalization of the report, eventual ESW study costing approximately $300,000 had been launch of the CEA in the country, and closure of carried out the year before initiation of the CEA. activity according to Bank procedures. Regional sector Although the earlier work was used in the CEA (for managers could play a stronger role in providing example, in the chapter on forestry), the costs of the oversight and ensuring that finalized CEAs are prior analysis are not included in the costs of the Ghana completed more quickly according to procedures for CEA. However, CEA costs do not vary as much as ESWs. some other diagnostic work. For instance, the costs of All but one of the CEAs reviewed were task managed country social analysis (CSA) range from $15,000 to or co­task managed by regional staff. Only in $950,000, depending on the scope of the work (see Ethiopia was a CEA task managed solely by anchor World Bank 2006i, annex 4). staff. Typically, CEA teams comprise environmental As originally conceived (see CEA concept note)7, CEAs economists, environmental specialists, and relevant were distinguished between rapid and full CEAs. A sector specialists (see Posas 2007), and may include full CEA, it was suggested, would undertake detailed institution specialists. Teams consist of both Bank analysis of issues identified in three key building staff and consultants--in some cases, only local blocks (see figure 1). When quick input into a Bank consultants, and in others, a combination of national or country policy process was needed, a "rapid" CEA and international consultants. Experience with CEA could be prepared. ese could draw mainly on a desk teams shows that expertise in both environmental review of available documents, require smaller budgets, and institutional analysis is needed for assessing and be prepared in a shorter time. Of the 16 CEAs environmental institutions. Poor-quality consultant reviewed for this paper, four (Nigeria, Dominican work on economic and institutional analysis has in Republic, El Salvador, and Guatemala) were prepared several cases contributed to higher staff costs. as "rapid" CEAs. Our review, however, shows that all four of the rapid CEAs went beyond a desk review of Use of the CEA Building Block Structure available studies and documents, and involved field research and consultations in the countries involved. CEA is a flexible tool that has three building blocks: (a) Rapid CEAs took approximately eight months to a year identification of the main environment-development for completion. e average cost of a "rapid" CEA was priorities linked with growth and poverty reduction; approximately $155, 687. However, two of the "rapid" (b) assessment of the environmental implications of key CEAs, those for El Salvador and Guatemala, cost sector policies; and (c) institutional capacity assessment approximately $225,632 and 185,000 respectively-- (see figure 1 in chapter 1). e review showed that most and were as expensive as some of the full CEAs. In terms of scope as well, the rapid CEAs did not have a 7http://siteresources.worldbank.org/ narrower scope. e Nigeria CEA, for instance, includes INTRANETENVIRONMENT/214574- a priority-setting building block, a broad analysis of 1175623851209/20797940/CEAConceptNote10Jan2005.pdf. 12 Environment Department Papers CEA Review paper 2-12-08.indd B12 CEA Review paper 2-12-08.indd B12 2/12/08 5:35:35 PM 2/12/08 5:35:35 PM Key Features and Methodologies Used in CEAs CEAs include two of the three main building blocks. Tools for Assessing Priorities In one CEA--that for Serbia and Montenegro-- e CEA concept note suggested that CEAs determine numerous themes and sectors are discussed, but there environment-development priorities in light of their is no systematic determination of environmental impact on growth and poverty (see box 1). Among priorities, and thus the first building block is missing. the CEAs reviewed, the Colombia and Peru CEAs, e Ghana and Orissa State CEAs contain no general undertook to determine priorities in this way and analysis of environmental policies, institutions, and are among the best examples of priority setting in organizations at the national or subnational levels; the CEAs. In the Colombia CEA, analysis of the cost of analysis of institutions and organizations is undertaken environmental degradation found that among the only as part of the analysis of specific themes or sectors. most important environment-development problems Here, too, a primary building block, the third (see in Colombia were urban and indoor air pollution; figure 1, chapter 1), is missing. Absence of a broad inadequate water supply, sanitation, and hygiene; analysis of environmental institutions is limiting, natural disasters such as flooding and landslides; because without this important piece of the analysis, the and land degradation. e burden of the associated CEA cannot provide the analytic groundwork needed costs, the equivalent of approximately 3.7 percent of to mainstream environment into budget support gross domestic product (GDP), fell most heavily on or meet the requirements of OP8.60. In the India vulnerable segments of the population, especially poor CEA, environmental institutions and organizations children under five years old. In addition, a survey of are only partially analyzed. e report focuses on a public perceptions was conducted in 2004 in which specific issue--public participation and consensus more than 2,600 persons were interviewed, including building--and assesses constraints on compliance and a random sample of 616 citizens and 2,024 individuals implementation of regulations in three sectors: industry, from a wide range of regions, sectors, and government power, and highways. agencies, civil society organizations, and ethnic groups Only a few chapters in a few CEAs focused primarily (World Bank 2006f, 109). is survey showed that on assessing the environmental implications of the environmental problems that impose the highest macroeconomic policies--the second building block costs on the country's economy were also those of (see figure 1, chapter 1). Examples include chapters the greatest concern to the population; 79 percent of on trade and environment in the El Salvador and the population of the sample perceived air pollution Guatemala CEAs, and chapters on macroeconomic to be the most serious problem. e survey revealed, trends and linkages and the environmental implications however, significant differences between the priorities of of energy policies in the Belarus report. Most CEAs different income groups: whereas upper income groups treat the analysis of the environmental implications regarded global warming, loss of biodiversity, and of sector policies within a broad assessment of inappropriate land use in urban areas as high priorities, environmental policies and institutions (as in the low-income groups identified air pollution, noise, and Ethiopia and Tunisia CEAs), or as part of institutional natural disasters as major problems. About 74 percent analysis of specific themes and sectors (as in the fisheries of those in the low-income category cited air pollution chapter in the Bangladesh CEA). as the main environmental problem. CEAs have used a number of tools and approaches for In the Peru CEA, too, environmental priorities were identifying environment-development priorities and determined both in view of terms of impact on key themes or sectors. ese are discussed below and economic growth, and the effect on the more vulnerable are shown by country in table 2. sections of the population (cf. World Bank 2007a). Institutions and Governance Series 13 CEA Review paper 2-12-08.indd B13 CEA Review paper 2-12-08.indd B13 2/12/08 5:35:36 PM 2/12/08 5:35:36 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Box 1. Quantitative Tools for Priority Setting In CEAs, a number of quantitative tools have been used for setting priorities linked with growth and poverty reduction. The most frequently used quantitative tool is the quantification of costs of environmental degradation, which measures the loss in a country's welfare due to environmental degradation. It includes loss of healthy life and well-being of the population because of pollution, and productivity losses because of natural resources depletion, such as that linked to deforestation and soil degradation. Cost of degradation estimates are often expressed as percentage of gross domestic product (GDP) to provide a useful benchmark for economic policy makers (see Bolt, Ruta and Sarraf 2005). In CEAs, the use of cost of environmental degradation analysis varies. In some, costs of degradation have been assessed more broadly to include brown issues (for instance, valuation of health impact of air and water pollution), natural resource sectors (soil degradation, deforestation, and so on), economic costs linked with impact of natural disasters. However, in some other CEAs, only costs linked with environmental health impacts were determined as part of the CEA (for example, Ghana CEA). In some CEAs, natural resource costs are only partially captured owing to lack of data availability (for example, Colombia and Nigeria CEAs). A limited number of CEAs go beyond cost of environmental degradation to include the costs of abatement (for example, Egypt). This is useful in that it allows a rapid assessment of priorities. In short, while we have improved in the use of cost of degradation analysis in the context of CEAs, it is important to understand that it is only one of several tools for decision making. An important indicator used in some CEAs (Tunisia, Ghana) is the genuine savings indicator that measures the true savings rate in an economy by taking into account investment in human capital, as well as depletion of natural resources. This type of analysis, based on environmental accounting, can also show the importance of specific natural resource sectors that are important from the perspective of sustainable economic growth, and can be used as another tool for priority setting. In order to assess priorities linked with poverty reduction, available tools include use of surveys and distributional analysis of environmental priorities. For instance, in the Peru CEA, the cost of degradation analysis was supplemented by distributional analysis to assess environment development issues relevant to people in different income quintiles. Although all of these methodologies have their limitations, they do provide an informed way of understanding what the key environment development issues in a country are, and are an improvement over ad hoc selection of key themes or selection of key issues, based mainly on consultation with a small set of stakeholders. Source: Author. e cost of environmental degradation was found to soil degradation, water quality, and indoor air quality be equivalent to about 3.9 percent of GDP in 2003. (see World Bank 2005a, 15). e focus areas assessed Distributional analysis of environmental health in the CEA, however, did not include analysis of soil impacts undertaken as part of the CEA showed that and land degradation; rather, coastal zone management environmental health impacts (for all categories--urban was chosen even though it was more of a priority for air pollution; water, sanitation, and hygiene; and indoor the nonpoor than for the poor (World Bank 2005a, air pollution) per 1,000 population were nearly 20 13). e presidential directives of May 28, 2002, and percent higher for the poor than for the nonpoor: the the cost of degradation analysis led to identification of impacts on the poor were 4.5 times higher than for the air quality, water quality, solid waste management, and nonpoor. coastal zone management as the key issues in view of their impact on economic growth (World Bank 2005a). In the Egypt CEA a cost-of-degradation analysis was Environmental sustainability indicators were also used carried out, and the impact on the poor assessed, but to substantiate this choice. the findings only partially shaped the selection of priorities. Analysis of poverty environment linkages In numerous other CEAs, environmental priorities showed that environmental degradation affected the were assessed with an eye to the estimated costs of poor more than nonpoor groups and, that ranked by environmental degradation to a country's overall per capita costs of environmental degradation for the welfare but were not analyzed in relation to effects poor and nonpoor, the main concerns for the poor were on poor socioeconomic groups. e implication is 14 Environment Department Papers CEA Review paper 2-12-08.indd B14 CEA Review paper 2-12-08.indd B14 2/12/08 5:35:36 PM 2/12/08 5:35:36 PM Key Features and Methodologies Used in CEAs Table 2. Approaches and Criteria Applied in Determining Focus Areas to be Analyzed in the CEAs reviewed CEA Inputs into determination of key themes and sectors and priority areas Bangladesh Cost of environmental degradation analysis and sector work on some topics such as climate change and forestry were conducted prior to the CEA; consequently these issues were not considered in the CEA. Belarus The main considerations in selection of focus areas were (a) harmonization with government priorities, (b) consistency with the country assistance strategy on issues of both global and local importance, (c) existence of studies and available information, and (d) the need to limit the scope for budgetary reasons. Colombia Cost of degradation analysis; surveys of public perception regarding environmental issues. Dominican Republic Stakeholder analysis in workshop; rough estimates from cost of degradation analysis. Egypt, Arab Rep. of Cost of degradation analysis; environmental sustainability indicators; presidential directive of 2002. El Salvador Priority development policy lending areas; cost of environmental degradation analysis. Ethiopia Available cost estimates of environmental degradation; consultations with government counterparts. Ghana Available estimates of cost of degradation analysis for natural resource management sectors; natural wealth estimates, cost of degradation analysis linked with brown sectors undertaken as part of CEA. Guatemala Priority development policy lending areas; cost of environmental degradation analysis. India Consultation with counterparts and key stakeholders; main issue was to select sectors important from the perspective of growth; no cost of degradation analysis. Nigeria Cost of degradation analysis; importance of oil in the economy. Orissa State Focus on mining, selected because of the sector's importance to growth in Orissa and the increasing investment in mining; no cost of degradation analysis. Pakistan Consultation with federal and provincial authorities regarding areas of intervention likely to have greatest impact; cost of degradation analysis. Peru Cost of degradation analysis combined with distributional analysis. Serbia and Montenegro Consultation with government counterparts and donors. Tunisia Cost of degradation analysis; wealth estimates. Source: World Bank sta . that much more attention needs to be given in CEAs seen in the reports for Bangladesh, Belarus, Ethiopia, to assessing priorities in light of poverty reduction, Pakistan, and Serbia and Montenegro. For example, as well as growth. In the Ghana and Tunisia CEAs, the Belarus report discussed poverty trends, poverty in environmental priorities were determined by drawing Belarus compared with other countries in the region, on natural wealth estimates based on net savings the primarily rural nature of poverty in the country, and analysis and cost of degradation analysis, but no the consequent pressure on natural resources (World analysis to assess impacts on the poor was undertaken.8 Bank 2002, 9). Yet, in determining the main focus areas, poverty was not a consideration in the same sense CEAs do discuss the implications of environmental as in the Colombia and Peru studies. issues for economic growth and poverty, as can be Dialogue with the Partner Country 8An ESW conducted prior to the preparation of the Ghana In some countries the key CEA themes and focus CEA yielded natural wealth and cost of degradation estimates for the natural resources sector (World Bank, ISSER, and DFID areas were determined mainly through consultation 2005). Additional cost estimates for health impacts linked with with the government, counterparts, donors, and other environmental degradation were made as part of the CEA. e stakeholders. For example, a cost of environmental natural wealth estimates showed cropland, forests, and minerals to be the main natural assets and found that the genuine savings degradation analysis was conducted for the Pakistan rate (a measure of growth that takes environmental factors into SCEA, but the focus areas (EIA implementation and air account) for Ghana was negative and compromised the country's and water quality) were ultimately selected on the basis capacity to sustain its potential for growth (World Bank, ISSER, and DFID 2005; Hamilton 2006). Overall, the analysis showed of consultation with federal and provincial authorities that approximately 10 percent of the country's GDP was lost (World Bank 2006d, 4). Although a CEA report annually as a result of unsustainable management of the country's had previously been prepared, the government had natural resources and health costs related to water supply and sanitation and to indoor and outdoor air pollution. not taken ownership of that document. In preparing Institutions and Governance Series 15 CEA Review paper 2-12-08.indd B15 CEA Review paper 2-12-08.indd B15 2/12/08 5:35:36 PM 2/12/08 5:35:36 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis the new CEA, emphasis was placed on involving the situation, data pertaining to the environment sector government and making the process more participatory. in the republics, which would be needed for cost of degradation analysis, was poor. In the Dominican In the India CEA as well, consultation with Republic CEA, according to a team member, counterparts and availability of existing research stakeholder consultation at a workshop, combined helped define the focus areas of the CEA (World Bank with (sparse) data on poverty-environment links, was 2006e, 14).9 ree key sectors--power, industry, and used to identify key areas--a weak example of priority highways--were selected for analysis because of their setting. A cost of environmental degradation study was significance as drivers of economic growth and their apparently carried out later, but the data availability was potential environmental risks. Considerable secondary weak. literature substantiating the environmental implications of growth and poverty risks was also cited. Institutional Analysis in CEAs Influence of the Focus Areas of Development Simply stated, the objective of institutional analysis Policy Lending and the CAS in CEAs is to analyze existing institutions and organizational arrangements, identify institutional In two CEAs, those for El Salvador and Guatemala, bottlenecks, and propose areas of reform or the main themes were chosen to align with the focus capacity building.10 is type of analysis should areas of the DPL program pipeline. In both cases cost be undertaken in the context of broader political of degradation analysis was conducted, and the CEA and economic processes and should assess decision reports also drew on cost estimates of environmental making, accountability structures, and flows of degradation from available studies (see Strukova 2005; resources between the national and subnational Larsen and Strukova 2006). ese estimates, however, levels.11 Institutional analysis undertaken in CEAs were not used to select the main focus areas of the is also expected to provide input into the Country CEAs. In Guatemala, although the cost of degradation Policy and Institutional Assessment (CPIA) indicator analysis showed water pollution, indoor and outdoor air pollution, deforestation, soil and land degradation, and vulnerability to natural disasters to be the main 9For instance, at the time of initiation of the India CEA, a review priorities, given their implications for economic of environmental assessment commissioned by the Ministry of growth, the focus areas in the CEA were trade and Environment and Forests was nearing completion. 10Institutions refer to the "rules of the game" that shape infrastructure, in accordance with the DPL. collective action, while organizations refer to the "actors" that play a game (North 1990). Rules can be formal (policies, In two CEAs environmental priorities were not laws, and regulations) or informal (implicit codes of conduct; cultural practices). Although public sector institutions and identified at all, or only weakly. e Serbia and organizations are key players in environmental governance, Montenegro CEA covered a large number of issues, NGOs and private sector institutions also have crucial including energy and air pollution, water supply roles in a number of ways, including facilitating delivery of environmental services, mobilizing the community, and making and sanitation, tourism and environment, waste government more accountable. is definition is closely linked management, coastal zone management, biodiversity with the Bank's definition of governance more generally, as and protected areas management, and forestry. presented in a recent paper elaborating the Bank's strategy on governance and anticorruption (for a summary, see "Governance Although the importance of these issues for growth and Anticorruption: Strategy," http://go.worldbank.org/ and poverty reduction was discussed, the CEA did not Q0ZEMR8DM0. 11A number of notes and papers have been developed to provide undertake any systematic priority-setting exercise. is guidance and frameworks that can be used for institutional is understandable because in the prevailing postconflict analysis; see Lovei and Pillai (2003); Pillai and Lunde (2006). 16 Environment Department Papers CEA Review paper 2-12-08.indd B16 CEA Review paper 2-12-08.indd B16 2/12/08 5:35:36 PM 2/12/08 5:35:36 PM Key Features and Methodologies Used in CEAs focusing on policies and institutions for environmental those for Bangladesh, Colombia, and Nigeria) have sustainability.12 addressed these issues.13 e CEAs reviewed employed various approaches to assess institutional and governance issues. ese Emphasis on Public Sector Organizations include a framework drawn from World Development Although CEAs almost always addressed the roles of Report 2003 (World Bank 2003b), as in Colombia; NGOs and the private sector, the thrust of institutional political-economy analysis (Nigeria); historical analysis analysis tended to be much more on public sector of environmental institutions (Ethiopia and Peru); and institutions and organizations. is is true of the combinations of these approaches. In the India CEA Bangladesh, Dominican Republic, Egypt, Nigeria, Peru, the chapter analyzing consensus building and public and Tunisia CEAs. e India CEA (World Bank 2006e) participation uses a broad stakeholder-type analysis is an exception. to examine stakeholder positions and interests and mechanisms of coordination among the public sector, private sector, civil society, and judiciary. e Political-Economy Dimension In assessing organizations, many CEAs tend to focus e CEAs reviewed exhibit considerable variation on the mandates and functions of ministries and in the scope, depth, and quality of institutional agencies and on staffing, training, and resources. analysis. Factors involved included the participation ey accordingly point out weak capacity for key by institutional experts in the team, the expertise of functions such as monitoring environmental quality consultants selected to undertake institutional analysis, and overlaps in mandates and responsibilities. access to data, and the availability of existing research. Political-economy analysis is, however, shortchanged.14 Some of these issues are discussed next. 12For an extended discussion of this issue, see Pillai and Lunde Formal and Informal Rules and Structures (2006), page 37. For a discussion of the Bank's CPIA--a performance based system for allocating resources to borrowing One intended improvement in the CEA tool in countries, see http://intranet.worldbank.org/WBSITE/INTRA comparison with past approaches is an emphasis on NET/UNITS/INTOPCS/INTCOUNTECONOMICS/0,, contentMDK:20228840~menuPK:479870~pagePK:64137152~ analysis not merely of formal policies and institutions, piPK:64136883~theSitePK:388784,00.html. but also of informal rules that structure relations 13Even though corruption can be considered a form of between actors and organizations. Analysis of informal informality, it should not be conflated with informal rules. Corruption is typically understood as the abuse of public office rules, which are typically much harder to change than for private gain (see Kaufmann 2005); informal rules refer to formal rules, is particularly important, as it can help the implicit norms and cultural practices that shape interaction between organizations and actors. show how an organization functions, why coordination 14In current development literature, political economy is used as between sectoral actors is difficult, and which a shorthand for the interaction between political and economic behaviors and incentives need to change to improve forces in a society, the distribution of power between different social groups, and the processes that maintain or change these implementation of formal rules and regulations. Of the relationships over time. In the context of environmental issues, completed CEAs, only a few (for example, those for political-economy analysis would involve explaining how political Bangladesh, Colombia, and Nigeria) have examined the and economic processes influence access to environmental resources, public goods, or services and how power relations underlying informal rules, interests, and power relations between different social groups shape decision making with that impede the successful functioning of formal respect to these resources. In the academic literature there has been a long-standing debate concerning the links between rules. Although CEAs still shy away from the issues of political and economic processes. Numerous approaches are corruption and rent seeking, some (again, including taken, depending on the assumptions made about the role of Institutions and Governance Series 17 CEA Review paper 2-12-08.indd B17 CEA Review paper 2-12-08.indd B17 2/12/08 5:35:37 PM 2/12/08 5:35:37 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis In-depth assessment of incentive structures, agencies. e Ethiopia CEA, drawing on extensive power relations, decision-making processes within field research, highlighted various aspects of environmental agencies, planning and priority intersectoral coordination, including mandates, setting for environment-development concerns, and the presence of environmental units within sector processes of intersectoral coordination remains a agencies, the incorporation of environment into weak area in organizational analysis in CEAs. Only sector policies, relations with regional agencies a few CEAs assessed mechanisms of transparency regarding environmental management, environmental and accountability between national and subnational monitoring within sectoral agencies, and capacity for agencies--Bangladesh and Nigeria--or examined environmental management (World Bank 2004d, 56). organizational culture (Bangladesh). In many CEAs the analysis of environmental institutions was not placed Subnational-Level Institutional Analysis in the context of broad public sector reforms, with attention to how the latter might influence the former. In most countries policies and regulations are In assessing links between national and subnational implemented at lower administrative levels. Of agencies, the mandates and functions of various the 16 CEAs reviewed, Belarus, Egypt, Serbia and agencies were discussed, but with little attention to Montenegro, and Tunisia did not include an in-depth decision-making processes, the flow of information and examination of subnational-level environmental resources between administrative levels, or the links management in the analysis of environmental between national and subnational priorities. None institutions. e Egypt CEA, for instance, contained of the CEAs reviewed analyzed the role of frontline one paragraph on the mandates and weak capacity of workers, staff motivation, or the mechanisms by the 26 governorates (World Bank 2005a, 94). Although which performance is monitored and rewarded within the Belarus report emphasized the importance of agencies--key issues in organizational analysis. decentralization and of strengthening local government capacity (World Bank 2002, 43), it did not analyze subnational environmental management. e Tunisia Intersectoral Coordination CEA did not address this issue in its broad analysis Most CEAs assessed intersectoral coordination as of environmental institutions, but it called attention part of a broad analysis of environmental institutions. to subnational environmental management as an e El Salvador CEA (World Bank 2006h, 39), important issue emerging from the CEA (World Bank for example, assessed the environmental mandates 2004e, 66, fifth bullet). e Dominican Republic of sector ministries, the mechanisms used by the CEA, noted that decentralization of environmental Ministry of Environmental and Natural Resources management was being initiated at the time of to encourage intersectoral coordination, and preparation of the report (World Bank 2004b, 29), but factors constraining the effective functioning of the did not go farther to shed light on the decision making National Environmental Management System. e associated with the process, or on the entry points Guatemala report similarly examined intersectoral for strengthening environmental management in the coordination between environmental and sectoral context of decentralization. Some CEAs offer a more detailed analysis of "politics" in the allocation of resources--whether it is an obstacle, subnational environmental management. e or an inherent aspect of economic and social existence--and Colombia CEA assessed the performance of 33 about the roles of the state or government, bureaucrats, corporaciones autonomas regionales (CARs, the politicians, and citizens. See, for example, Bates (1981); Bardhan (1984); Lal (1984); Grindle (1989). regional environmental protection agencies), the links 18 Environment Department Papers CEA Review paper 2-12-08.indd B18 CEA Review paper 2-12-08.indd B18 2/12/08 5:35:37 PM 2/12/08 5:35:37 PM Key Features and Methodologies Used in CEAs between allocation of resources and priority setting, environment-related investments in other sectors), reforms in CAR governance, conflicts of interest, and the link with priority areas, and the sustainability the links of CARs with other agencies. An important of financial resources (World Bank 2005a, 109). finding of the study was that allocation of investment An important finding from the analysis was that, spending across various environmental risks was not in contradiction to the prevailing assumption that well aligned with the severity of risks in the CARs investments in environment are donor driven, Egypt (World Bank 2006f, 52­62). e Bangladesh CEA was allocating significant funds for environment-related highlighted the country's partially deconcentrated projects. e review also looked at the use of resources, model of environmental management (World Bank concluding that subsidies in the water and energy 2006a, 74): it assessed relations of authority between sectors were a drain on the state budget and had limited national agencies and subnational units, analyzed the effect on changing consumer behavior. process of decision making regarding environmental issues at the upazila (subdistrict) level, and identified e PEER for the Colombia CEA was carried out the potential role union parishads (local governments, both at the national and subnational levels. e covering 15­20 villages) can play in an otherwise subnational analysis showed that in 2001 the regional highly centralized model of public administration. environmental protection agencies (CARs) were Subnational institutional issues are more likely to be allocating 28 percent of their investment funds to addressed in the context of detailed analysis of themes projects involving flora and fauna--much more than and sectors; see, for example, the solid waste chapters for pollution control projects (World Bank 2006f, 51). in the Belarus and Egypt CEAs and the chapter on Collectively, the largest portion of CAR investments urban environmental issues in the Ghana CEA. had gone for wastewater treatment plants, water basin management, reforestation, and conservation. is finding suggests the need to realign expenditures at the Assessment of Budgets and Expenditures regional level with actual environmental priorities. Whereas the CEAs for Bangladesh, Colombia, Egypt, Overall, the review found that CEAs have used Ghana, Peru, and Tunisia featured separate public expenditure analysis primarily to show how expenditure reviews, in other CEAs analysis of budgets environmental expenditures align with priorities. ere and resources for environment was undertaken as part has been less emphasis on issues of resource flow among of a broader analysis of environmental institutions. In government levels, transparency and accountability, Ghana, expenditure analysis was integrated into the the use of existing resources, and the impact of thematic chapters. In the Serbia and Montenegro CEA, expenditures on improving environmental quality.15 a brief chapter on environmental expenditures and financing summarized key issues relating to financing for environment; it was not possible to verify whether a Use of EIA and Other Environmental separate expenditure analysis was carried out as part of Management Tools the study. In many developing countries environmental impact Typically, public environmental expenditure reviews assessment (EIA) is one of the main environmental (PEERs) have focused on determining sources of management tools, if not the main one. at being so, revenue, identifying expenditures, and assessing how these match up with environmental priorities. In 15For a brief discussion of transparency and accountability with the Egypt CEA, the expenditure analysis focused on respect to use of resources, see the Nigeria CEA (World Bank assessment of investments in environment (including 2007b), which does not, however, include an extensive PEER. Institutions and Governance Series 19 CEA Review paper 2-12-08.indd B19 CEA Review paper 2-12-08.indd B19 2/12/08 5:35:37 PM 2/12/08 5:35:37 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis assessment of EIA capacity has received considerable sectors. Of increasing importance recently is the issue of attention in CEAs (as in those for Pakistan and climate change; appendix D provides a snapshot of how Peru), and is a strong complement to country systems CEAs have addressed climate change issues. analysis.16 In most CEAs, EIA capacity assessment is incorporated into the broader institutional capacity In addition to determining themes and priority areas assessment; in some (for example, Colombia, El and analyzing environmental institutions issues, many Salvador, Ghana, and Guatemala), it is assessed in CEAs include a more detailed analysis of specific the context of a specific sector. In the Guatemala themes and sectors. e main approaches to analyzing CEA the main focus of the analysis in the chapter themes and focus areas are discussed next. on infrastructure was on the EIA system, the principal instrument for managing the environmental Cost-Benefit Analysis of implications of infrastructure expansion in the Alternative Interventions country. e chapter assessed policies, organizational arrangements, and constraints related to implementing Some CEAs undertake extensive technical analysis the EIA system. using cost-benefit analysis to identify and weigh alternative interventions. For instance, the analysis of An extensive discussion of how EIA is assessed in CEAs waterborne disease in the Colombia CEA looked at is not possible here, but it should be noted that CEAs the government's main approach toward preventing consistently highlight shortcomings in various aspects waterborne diseases--increasing access to water and of EIA policies and implementation. Examples of such sanitation. It showed how gaps in the environmental weaknesses include, for example, Nigeria's three different regulatory framework (EIA requirements in the EIA systems; unofficial payments for EIA approval and environmental licensing system, the effluent charge licensing in Bangladesh; lack of (or only limited) public system, and wastewater discharge standards regulations) participation in the EIA process in Bangladesh, India, constrained the government's efforts to expand and and Tunisia; limited capacity in state agencies in Serbia improve access. Most of the analysis then focused on and Montenegro and in Tunisia for screening projects, cost-benefit analysis of alternative interventions to reviewing EIAs, and monitoring; and the weak role of reduce diarrheal illness and mortality in Colombia state or local governments in EIA implementation in (World Bank 2006h, 129­46). A key finding was Bangladesh, India, and Orissa State, India. e CEAs that "a hygiene program that includes a hand- highlight the urgent need to strengthen institutional and washing component has the largest potential health organizational arrangements for EIA and licensing in benefits" (World Bank 2006h, 145), which led to developing countries. Sectors and emes Covered in CEAs 16In Egypt and Tunisia a country systems analysis was carried out subsequent to the CEAs. For more information, see "Expanding As table 3 illustrates, environmental themes are defined the Use of Country Systems in Bank-Supported Operations," at http://go.worldbank.org/RHRJVXDW60. in CEAs in several ways: (a) in terms of environmental 17Urban environmental issues include water and sanitation, media (urban air quality, water quality, land environmental health, solid waste management, urban air pollution, and environmental conditions associated with poor degradation, deforestation, waterborne diseases, and so housing and slums. Global environmental issues include climate forth); (b) by sector (industry, fisheries, infrastructure, change, biodiversity, and transboundary environmental issues. mining, power); or (c) spatially (urban environmental For a review of how climate change issues have been addressed in CASs, PRSPs, and CEAs, see Jimenez (2006). e CEA review issues, global environmental issues).17 e themes paper does not attempt to examine in detail how CEAs deal with incorporate a range of environmental concerns or each of the many environmental issues. 20 Environment Department Papers CEA Review paper 2-12-08.indd B20 CEA Review paper 2-12-08.indd B20 2/12/08 5:35:37 PM 2/12/08 5:35:37 PM Key Features and Methodologies Used in CEAs Table 3. Sectors and Themes Covered in the CEAs Reviewed CEA Environmental-development themes covered in depth Bangladesh Management of water quality in Dhaka; capture fisheries; soil quality; environmental health Belarus Environmental aspects of energy efficiency, water supply and sanitation, and municipal solid waste management Colombia Environmental health risks linked with water and sanitation, air quality, indoor air pollution, urban environmental issues (including housing and waste management), water resources management, land degradation and forestry, and global environmental issues, including climate change Dominican Republic Water quality; solid waste management; water scarcity; watershed and land degradation Egypt, Arab Rep. of Air quality; water quality; solid waste management; coastal zone management El Salvador Trade and environment; infrastructure and environment Ethiopia Land degradation­food security­energy access­livelihoods nexus; water resources­health­catchment management­power nexus; urban waste­pollution­health and productivity nexus Ghana Forestry and wildlife; mining; land resources; urban environment (water supply and sanitation, waste management) Guatemala Trade and environment; infrastructure India Highways; power; industry Nigeria Environmental issues in oil sector; water resources management Orissa State, India Mining; industry Pakistan Environmental impact assessment; urban air quality; water quality Peru Disease and mortality burden linked with environmental degradation; fisheries; natural disasters; conservation of natural assets; natural resource conservation (soil, forests, biodiversity) Serbia and Montenegro Energy and air pollution; water supply and sanitation; waste management; coastal zone management in Montenegro; forestry, biodiversity, and protected areas management Tunisia Water resources management; soil degradation; coastal management Source: World Bank sta . recommendations for the design and implementation Some CEAs concentrated mainly on assessing policy of a hygiene program incorporating components options, as in the analysis of environmental aspects of on hand washing and point-of-use disinfection of energy efficiency in Belarus (see box 2), or the trade drinking water, and for the reform of the environmental and environment chapter in the Guatemala CEA. regulatory system to improve private sector In the latter, although environmental implications participation. of CAFTA are discussed, an analysis of the capacity of key organizations to address the environmental e Peru CEA analyzed alternative interventions for implications of CAFTA is not undertaken (see also addressing urban air pollution, indoor air pollution, Hessel Andersen, 2007). In the El Salvador and and water and sanitation (World Bank 2007a, chapter Guatemala CEAs sector-specific institutional analysis 4). e Egypt CEA, drawing on the 2003 energy primarily emphasized assessment of the effectiveness of environment review (EER), assessed damage costs from EIA in the infrastructure sector, as EIA was the primary air pollution in the energy sector for different pollutants tool for managing the environmental implications of by fuel and by sector to help the government weigh infrastructure expansion in these countries (see, for policy options and prioritize interventions. e CEA Guatemala, World Bank 2006h, 59). Others surveyed included recommendations on how to qualify for Clean the sector and examined key policies and organizations, Development Mechanism (CDM) status, and how to the government's approach to addressing the issue, generate additional resources for reducing greenhouse lessons learned, and recommendations. Examples include gases. the solid waste management chapter in the Egypt CEA, Institutional Assessment linked with themes and priorities 18 Approaches for addressing major themes vary not only among CEAs but often within the same CEA (for example, chapters e review showed variation in the focus and depth on "Reducing death and disease caused by environmental degradation," and on "Reducing vulnerability to natural disasters" of sector- and theme-specific institutional analysis.18 in the Peru CEA). Institutions and Governance Series 21 CEA Review paper 2-12-08.indd B21 CEA Review paper 2-12-08.indd B21 2/12/08 5:35:37 PM 2/12/08 5:35:37 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Box 2. Analyzing Environmental Aspects of Energy E ciency in Belarus A chapter in the Belarus report focused on the environmental implications of energy efficiency for various policy options and for the government's approach to improving energy conservation. The CEA identified several reasons for the decline in atmospheric emissions in Belarus, including overall economic decline, changes in the structure of production from heavy industry to services, a shift from fuel oil to natural gas, and implementation of the government's energy efficiency and environmental management program, which was designed to reduce dependence on imported fuel and electricity through such measures as investment in energy savings programs, increased use of renewable energy, and more sourcing of energy from independent power producers. The chapter recommended the introduction of energy price reforms that would contribute to energy efficiency in addition to benefiting the environment. Belarus' status in relation to the United Nations Framework Convention on Climate Change (UNFCCC) was also discussed. Source: Author. the capture fisheries chapter in the Bangladesh CEA, and that typically does not include in-depth analysis of the forestry chapter in the Ghana CEA. lessons from past Bank and donor assistance, or a review of the Bank's lending and nonlending activities Institutional analysis can be further improved by in key sectors and their links with environmental addressing political-economy issues and placing greater priorities. A summary matrix of all donor activities is emphasis on explaining processes of decision making, as often missing. e Serbia and Montenegro CEA does discussed earlier. In addition, much greater use can be provide such a matrix; it includes areas of investment made of specific tools for conducting political-economy and capacity-building activities, based both on analysis analysis, such as stakeholder analysis. An example of and on assessment of areas where other donors are such an approach was the assessment of environmental active (World Bank 2003a, xii). issues in the conflict-ridden oil sector in Nigeria. Although the team had to work with very sparse data e presentation of recommendations in CEAs varies in preparing the rapid CEA, the analysis assessed gaps considerably, even though consistency of presentation in formal rules, looked at the role of informality with could be useful. e Egypt CEA is a good-practice respect to integration of environmental issues in the example; it provides extensive recommendations on sector, and assessed the interests and incentives facing the roles of various public sector agencies, private key stakeholders. sector actors, NGOs, and donors, and highlights issues that need to be addressed, specific actions for addressing them, policy and legal measures, and Presentation of Recommendations expected impacts (World Bank 2005a, 138). Also, it e main CEA concept note suggested that CEAs proposes a role for the Bank that involves "knowledge arrive at a "business plan" based on an analysis that sharing," lending, and partnerships (World Bank included (a) stocktaking of lessons from past Bank and 2005a, 133). In the Pakistan CEA, although numerous donor assistance, (b) review of the Bank's lending and recommendations are made, in only one area, that nonlending activities in key sectors and their links with of the clean air program, are short-term and long- environmental priorities, (c) review of development term actions proposed, along with identification partners' past and ongoing development activities, (d) of the responsible agencies. e Bangladesh CEA assessment of the Bank's comparative advantage with makes recommendations and highlights areas of Bank respect to development partners, and (e) suggested support, but these are not presented in matrix form Bank assistance through lending and nonlending showing short-term and long-term actions and broken assistance and partnerships (World Bank 2005b, 4). down into policy reform, technical investment, and CEAs, however, take a much more modest approach lending. Some CEAs do not propose a business plan 22 Environment Department Papers CEA Review paper 2-12-08.indd B22 CEA Review paper 2-12-08.indd B22 2/12/08 5:35:38 PM 2/12/08 5:35:38 PM Key Features and Methodologies Used in CEAs or role for the Bank. In the El Salvador and Guatemala of environmental institutions and organizations. CEAs, DPL triggers based on CEA recommendations In a few CEAs, however, these two important are suggested (see World Bank 2006g, 92). e building blocks were missing. e policy analysis India and Orissa State studies highlight key issues building block is usually integrated into the emerging from the analysis, types of interventions, analysis of main environmental issues, institutional and responsible agencies in the partner country and analysis, or detailed assessment of focus areas and suggest a timeline for action (World Bank 2006e, 99; themes addressed in the CEA. World Bank 2006b, 63­65), but the Bank's role is not · Many CEAs considered growth and poverty discussed. reduction in selecting focus areas, but only a few undertook analysis (such as cost of degradation estimates, surveys of public perception, or distri- Main Points butional analysis) to arrive at priority areas in light · CEAs have had a variety of objectives. e revised of impacts on both growth and poverty. Good Operational Policy 8.60, on development policy practice examples include the Colombia and Peru lending, has provided an impetus for undertaking CEAs. A number of other factors shaped selection CEAs (and other types of analytical tools). CEAs of CEA focus areas, including the thrust areas of have also been carried out to strengthen policy DPL (for example, the El Salvador and Guatemala dialogue and improve lending, to mainstream CEAs) and consultation with partners and donors. environment into Bank and country-level processes · Institutional analysis has been a key element in such as CASs and PRSPs and implementation CEAs, but its overall quality needs to be improved. of the Millennium Development Goals, and to Good practice examples include the Colombia, provide an analytical basis for sustainable develop- Bangladesh, and Nigeria CEAs. Greater emphasis ment DPL. needs to be placed on private sector and civil · e average cost of a CEA was about $288,000. society institutions, assessment of informal rules, However, 9 out of 16 CEAs reviewed cost and political-economy issues. $232,000 or less. Whereas full CEAs do tend to · Two main approaches were used for the detailed cost more, some rapid CEAs cost as much as a full analysis of themes and sectors selected in CEAs. CEA. Although CEAs are sustained through trust ese included cost-benefit analysis of alternative funds, for most completed CEAs, Bank budget interventions, and institutional analysis. e scope resources constituted a greater portion of the total of institutional analysis with respect to key themes cost of CEAs. varied significantly. · Despite considerable variation in objectives, scope, · CEAs considered lessons from past Bank or donor methodology, and context, CEAs tended to share activities but typically did not engage in in-depth certain elements, including determination of envi- review of them. ronmental themes and sectors and broad analysis Institutions and Governance Series 23 CEA Review paper 2-12-08.indd B23 CEA Review paper 2-12-08.indd B23 2/12/08 5:35:38 PM 2/12/08 5:35:38 PM CEA Review paper 2-12-08.indd B24 CEA Review paper 2-12-08.indd B24 2/12/08 5:35:38 PM 2/12/08 5:35:38 PM CEA as a Means of Strengthening 3 Policy Dialogue C EAs are prepared in partnership with client Multi-Donor Budget Support Group (see Hessel- countries and, ideally, with donors. ey have Andersen 2007). three main audiences: the partner country, the Bank, and donors active in the country. In Peru the main counterparts were the Consejo is review of CEAs shows that CEAs have, overall, Nacional del Ambiente (CONAM, National helped strengthen the Bank's dialogue with partner Environmental Council), the Ministry of Finance, countries; they have provided an important platform and the Instituto Nacional de Recursos Naturales for integrating environment into country-level policy (INRENA, National Institute for Natural Resources). dialogue; and in some cases they have contributed In El Salvador the two primary counterparts were the substantially to improving Bank lending in the partner Ministry of Environment (MARN) and the Technical country. is chapter examines various aspects of the Secretariat, which coordinates all ministries in the CEA process and cites good-practice examples. government. Linking the CEA process with the Technical Secretariat greatly increased its potential for influence because of the political power of the Building Ownership secretariat and its links to the office of the president. e traditional approach for upstream environmental analysis has been to work with the ministry or Engaging the Private Sector, NGOs, department of environment as the main counterpart. and the Media For most of the CEAs reviewed, this has been still the case, but CEA analysis has often been used to Field research in India showed that engaging extensively engage relevant sector ministries. For instance, in the with nongovernmental stakeholders, particularly India CEA the main counterpart was the Ministry NGOs, is not a straightforward matter, especially where of Environment and Forests, but the team worked the relationship between public sector institutions closely with the Ministries of Power, Highways, and and NGOs is visibly antagonistic (Hessel-Anderson Industry. 2007). Some CEAs have been very successful in engaging a broad range of stakeholders and building Some CEAs included other powerful ministries or long-term constituencies. A good practice example is cross-sectoral agencies as principal counterparts. In the Colombia CEA, where engagement went beyond Ghana the Ministry of Environment and Science was public sector institutions to include politicians, the the main counterpart, but the Ministry of Finance media, and NGOs (see box 5, in chapter 4). In some was an important champion of the CEA. Field other CEAs (El Salvador, Guatemala, India, Peru, and research in Ghana showed that the CEA process did Orissa State, India), there is evidence of an attempt at not sufficiently involve the EPA or the relevant sector broader engagement--though limited--not just with institutions, but was more strongly anchored in the government actors, but also with NGOs, academics, Institutions and Governance Series 25 CEA Review paper 2-12-08.indd B25 CEA Review paper 2-12-08.indd B25 2/12/08 5:35:38 PM 2/12/08 5:35:38 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis and the private sector, and with the media.In Orissa donors have joined Bank CEA missions (as the Inter- State the team consulted with government staff and American Development Bank did for the Colombia NGOs before preparing the concept note. In addition, CEA), and have participated in discussions with the it provided funding to an NGO to publish and partner country and in CEA workshops. Sometimes disseminate a bimonthly newsletter on environmental representatives of local donor organizations were issues associated with the mining sector in the state, consulted and participated in CEA workshops (for which apparently generated considerable debate in the example, in El Salvador, Guatemala, Nigeria, and Peru). community. In preparing the India and Orissa CEAs, workshops were held with private sector groups (Hessel- e third model, which includes joint task Andersen 2007). As in the case of the Colombia CEA, management and cofinancing of the CEA, represents in the case of the Ghana CEA the media were invited to more of a partnership approach. During preparation the workshops and have helped publicize the findings of the Ethiopia CEA there was extensive collaboration of the studies. In Ghana, findings from the net savings between the World Bank and DFID colleagues in and cost of degradation analysis done as part of a prior London. In addition to joint task management, there study on natural resource management were picked was significant collaboration on the preparation of up by the media. Although there was extensive donor terms of reference, joint funding of consultant time involvement, field research did not find evidence for and travel, comments on drafts, and joint missions broader engagement with the private sector and NGOs and workshops. Yet despite the strong coordination, in the preparation of the CEA (see Hessel-Andersen the CEA did not strengthen policy dialogue with the 2007). In some CEAs engagement beyond government partner country because of lack of follow-up by the agencies has been less extensive: for example, the Bank. e lesson is that strong donor coordination is preparation and dissemination of the Tunisia CEA by itself insufficient to improve the Bank's dialogue on focused mainly on government agencies, according to a environment with partner countries.19 QAG report (QAG 2006). e fourth model involves strong coordination of the CEA team with the local donor group. In the Coordination with Donors Egypt, Ghana, and Tunisia cases this resulted in a number of joint follow-up activities. In Tunisia, for e CEAs reviewed illustrate four models of donor instance, coordination with development partners coordination: (a) no coordination; (b) limited in the preparation of the CEA was achieved through coordination with the local donor group, including engagement with the Mediterranean Environmental peer reviewing and sharing of analytical work Technical Assistance Program (METAP), the European and information; (c) joint task management with Commission, the European Investment Bank, the development partners based in part 1 countries; and (d) United Nations Development Programme (UNDP), strong coordination and joint follow-up activities with a local donor group. 19 e Ethiopia CEA did, however, make important ere was one case of no coordination: the CEA contributions. Institutional analysis undertaken in the CEA for Orissa State. e more typical case, limited was used in an assessment of federal and regional capacity for coordination, is seen in El Salvador, India, Nigeria, environment management, which was supported by the United Nations Environment Programme (UNEP), and it was also and Pakistan. In India background reports prepared by employed to integrate environmental issues into Ethiopia's Plan other donors were used, and the concept was discussed for Accelerated and Sustained Development to End Poverty (PASDEP), the country's second PRSP. It also influenced with DFID, but coordination did not go beyond environmental capacity building in the context of the national that. It has also happened that Washington-based Productive Safety Net Programme (PSNP). 26 Environment Department Papers CEA Review paper 2-12-08.indd B26 CEA Review paper 2-12-08.indd B26 2/12/08 5:35:38 PM 2/12/08 5:35:38 PM CEA as a Means of Strengthening Policy Dialogue Box 3. Donor Coordination: A Good Practice Example The Ghana CEA, a continuation of prior analytical work on natural resources, was prepared in collaboration with the group of donors that coordinates development partners' support to the environmental and natural resources sector in Ghana. Since there was already a strong donor network in place, all the donors soon became interested in the CEA. While the Bank took the lead on the CEA, development partners were kept informed and in general regarded the CEA as an activity being undertaken in common. Other donors financed certain components of the CEA, including the preparation of individual chapters (approximately $100,000 total from the French Development Agency and the Royal Netherlands Embassy). Upcoming operations will cover all of the priority issues identified in the CEA through such means as the mechanism for the joint donor CAS--the Ghana Joint Assistance Strategy (GJAS). Source: Posas 2007. and the governments of Finland and Switzerland a particular country and the timing works for both. In to promote a regional technical assistance program Ethiopia common interests in CEA preparation were for water quality and coastal zone management, important for cooperation by the Bank and the DFID. municipal waste management, and the development of At a time when the Bank was considering undertaking environmental policy tools (see Posas 2007). In Ghana a CEA for Ethiopia, the DFID approached the the strong coordination with the local donor group Bank regarding the preparation of an environmental resulted in a harmonized approach toward support for capacity assessment to support its strategy in the the government (see box 3). country and, in particular, to promote environmental mainstreaming in the Sustainable Development and A number of factors have influenced donor Poverty Reduction Program (SDPRP). e proposal coordination in CEAs. First, differences in donor resonated with the Bank's interests of postconflict agencies' institutional mandates, capacities, and reengagement with Ethiopia on environmental issues. operational needs pose a significant challenge to Ethiopia had also been selected as a pilot for donor coordination of CEA preparation. For example, CEA harmonization and provided an opportune context is not a requirement for the World Bank, but in the for collaboration between the Bank and the DFID. Asian Development Bank (ADB) CEAs are mandated is led to a productive partnership, at least for the by the institution's environmental policy and are duration of CEA preparation. In Bangladesh the Bank required input for its CASs. e ADB's assessments and donors coordinated extensively, as they were are carried out on a much smaller budget than those interested in providing joint input into the PRSP, in the World Bank, and in some cases are managed by then under preparation. In the later stages of CEA a local consultant. Although there is variation among preparation, however, coordination among donors CEAs prepared by the ADB, in some cases the same waned. consultant has done CEAs for several countries (in, for example, Central Asia). Bank CEAs, by contrast, have ird, the extent of coordination of the local donor higher budgets, are not mandatory, involve significant group on environment and the initiative taken by the involvement by both headquarters and country office CEA team have shaped overall coordination. In Ghana staff, entail two or more missions, and undergo much the local donor group on environment appears to be more rigorous peer review. CEAs are also mandatory for well coordinated, and its coordination was strengthened the Inter-American Development Bank. in the course of CEA preparation. In Egypt and Tunisia local donors are coordinated through the METAP, Second, coordination seems to be more likely where and the CEA process seems to have strengthened the donors have common interests in CEA preparation in process, as indicated by a number of joint follow-up Institutions and Governance Series 27 CEA Review paper 2-12-08.indd B27 CEA Review paper 2-12-08.indd B27 2/12/08 5:35:39 PM 2/12/08 5:35:39 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Box 4. Importance of a Good Dissemination Strategy: The Peru CEA Four workshops were held on the CEA for Peru, and the final report was placed on the Internet. In addition, four policy notes were prepared on the basis of the CEA, on environmental health, natural resources, fisheries, and mining. The team conducted discussions with all political parties during the presidential campaign and, after the elections, intensified its dialogue with the new administration. Alan Garcia attended discussions of one of the policy notes, and apparently e-mailed the team to express his appreciation for it. The team is planning to produce a film based on the findings of the CEA. (Films linked to CEAs are also planned for other countries, including India.) In addition, the Peru team intends to publish three short documents on environmental assessment, public environmental expenditure review, and environmental health, drawing on analysis undertaken as part of the CEA. Source: World Bank sta . activities. Finally, different donors are involved to · In at least a few cases there is evidence that different degrees in partner countries: for example, engagement with NGOs and the private sector the Canadian International Development Agency was substantial. Where distrust between NGOs (CIDA) plays a much more active role in Bangladesh and public officials is long-standing and deep, in environment than does the Danish development such engagement is not easy. Much more effort agency. e degree of involvement has influenced the can be made by teams in engaging a broader set extent of donor coordination and the possibilities for of stakeholders with a view to building long-term partnership with the World Bank team. constituencies. A good practice example here is the Colombia CEA. · Four models of donor coordination emerge from Strategies for Dissemination and Follow-up the review: (a) no coordination; (b) limited coor- Findings from CEAs have often been disseminated dination; (c) joint task management with part 1 in the preparation stage while engaging stakeholders. country donors; and (d) strong coordination with Nevertheless, a well-planned dissemination strategy for the local donor group. A good practice example of the final document is important for gaining support for donor coordination is the Ghana CEA. the analysis and publicizing its results. e Peru CEA is · Donor coordination depends on a number of a good example of such a strategy (see box 4). factors, including differences in the institutional mandates and capacities of donor agencies; the existence of common interests and the timing of Main Points CEAs (as in Bangladesh and Ethiopia); the extent · Although ministries of environment, or the equiva- of coordination of the local donor group; and lent, tend to be the main counterparts for CEAs, the extent of involvement of particular donors in engagement is typically often broader, extending to specific countries. Strong coordination with the sectoral ministries. local donor group seems to be the most important · Some CEAs (for example, those for Ghana, factor in successful results. Guatemala, and Peru) galvanized multiple champi- ons, which provided a strong anchor for the policy dialogue in the country. 28 Environment Department Papers CEA Review paper 2-12-08.indd B28 CEA Review paper 2-12-08.indd B28 2/12/08 5:35:39 PM 2/12/08 5:35:39 PM 4 Results from CEAs T his chapter discusses results from CEAs--that only as indicative, and should not be seen as adhering is, changes in World Bank, partner country, to rigid timelines. or donor activities that have been catalyzed through CEA preparation and follow-up (see Contributions of the Array table C.2 in appendix C for a summary of results of Analytical Tools of each CEA reviewed). Types of results can include integration of environmental issues into specific outputs Different elements of the analysis have been used such as CASs, PRSPs, and DPL; identification of a for different purposes in CEAs. Cost of degradation lending project; design of a policy reform process; and analysis has helped identify priority issues and raise the institutional changes within a country. It is not possible profile of environmental issues for various stakeholders. to attribute the results discussed here solely to the CEA Institutional analysis and assessment of sector-specific process. In many cases, CEAs are part of an ongoing issues have helped analyze institutional gaps and dialogue with the government on environment- weaknesses, provide an analytical basis for policy development issues and so are only one of the factors reforms, and identify lending areas. In a few cases, as that have contributed to the outcomes. e results of discussed below, they have contributed to incremental the Ghana CEA, for instance, cannot be separated from institutional changes. the cost of degradation and net savings analyses that preceded the CEA (see Hessel-Andersen 2007). Cost of Degradation and Results linked with CEAs can emerge during Net Savings Analysis preparation of the CEA, in the postcompletion Despite the variation in how cost of degradation period (a span of one to three years), or over a longer analysis has been used in CEAs (see box 1), in several time (more than three years). ese breakdowns are, cases (Colombia, Egypt, Ghana, and Tunisia), cost of however, somewhat arbitrary. After a report has been degradation analysis has helped generate government peer-reviewed in the Bank, it may take anywhere from interest and raise awareness of environmental issues. In two months to a year to be approved by the country Tunisia the cost of an environment degradation study government and completed by CEA teams according to was presented to the Council of Ministers in a session Bank procedures, so a strict distinction between "during chaired by the president of the country. e 2006 QAG preparation" and "after completion" is not possible. report found that because policy makers in Tunisia e categories "after completion" and "a longer period" prefer quantitative analysis, the Bank's CEA was still are also arbitrary: in a few cases much time has elapsed frequently being used and quoted two years later. since preparation, yet the report is not considered formally "completed." us a discussion of the In Colombia (see box 5) analysis of the cost of temporal dimension of CEA results is to be regarded environmental degradation received media coverage Institutions and Governance Series 29 CEA Review paper 2-12-08.indd B29 CEA Review paper 2-12-08.indd B29 2/12/08 5:35:39 PM 2/12/08 5:35:39 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Box 5. Engaging Stakeholders Through Cost of Degradation Analysis: The Case of Colombia In August 2004 the Colombian government hosted a national Spreading CEA findings: Colombian media compare workshop that brought together more than 150 individuals costs of environmental damage with those of war from more than 50 organizations representing bilateral and multilateral lending institutions, the public and private sectors, and civil society. In addition, 27 of the country's 33 regional environmental authorities were represented. Through this wide scope of engagement and dissemination, the results of the CEA have had a significant impact on the development of government policies and on public awareness of environmental priorities. For example, for the first time ever, Colombia's leading newspaper carried a front-page story on the country's environmental priorities and the costs imposed by environmental degradation. The story emphasized the magnitude of environmental degradation by comparing annual environmental costs with the costs of the country's ongoing internal armed conflict (see the following figure). In recent elections some politicians called for reductions in ambient air pollution in the country's largest cities, citing the findings of the CEA, and the National Planning Department has used the findings of the CEA to help design programs and policies, particularly for enhancing sustainability strategies. Both the medium-term National Development Plan and the long-term Visión Colombia II Centenario: 2019 (Vision for the Second Centennial: 2019) specifically call for policies based on the findings of the CEA, and the CEA was one of the key inputs to the 2005 National Sustainable Development Policy. Source: Armstrong 2006a. and generated broad discussion among stakeholders. topic in great detail, a follow-up technical assistance Even in the case of Ghana, the cost of environmental activity on indoor air pollution was under way at the degradation analysis received considerable media time of writing. us, while the immediate value of coverage.20 In Peru initial estimates from the cost cost of degradation analysis is to provide an analytical of degradation analysis helped bring together base for priority setting and help raise the profile of stakeholders interested in a range of environmental concerns--biodiversity, climate change, natural 20In Ghana, an ESW done prior to the preparation of the CEA resource conservation, and air and water pollution. In undertook net savings analysis based on natural wealth estimates El Salvador, the Ministry of Environment and Natural and assessed costs of environmental degradation linked with a Resources was very interested in the results, seeing it as range of natural resource management sectors (forestry, land, fisheries, minerals, and so forth). Presentation of these results a way of promoting environmental issues and a tool for provided leverage to the Ministry of Environment to help negotiating the budget. increase the visibility of environmental issues. Results on the cost of environmental degradation presented at a workshop were Following up on the analysis. In several cases, issues later aired on a television show. Following the presentation of the net savings findings, the Ministry of Finance requested that net identified by the cost of degradation analysis were savings be included in the country's macroeconomic indicators. picked up in follow-up work. In Bangladesh the In fact, the CEA was prepared to help address issues identified through these tools. e Ghana CEA built on these earlier analysis identified indoor air pollution as an important estimates and undertook additional cost of degradation analysis issue, and even though the CEA did not focus on this to value health impacts linked with the brown sectors. 30 Environment Department Papers CEA Review paper 2-12-08.indd B30 CEA Review paper 2-12-08.indd B30 2/12/08 5:35:39 PM 2/12/08 5:35:39 PM Results from CEAs environmental issues, in the longer run it can also assist authority of the (recently dissolved) federal Ministry of with the identification of issues (such as indoor air Environment and Natural Resources, and the checks pollution, importance of hygiene and sanitation) that and balances created by an earlier EIA law (World would be important to pursue in more depth, in follow- Bank 2007b, 38). Where maintenance of dysfunctional up analytic activities. organizations takes precedence over broader poverty reduction goals, institutional change is incremental and Importance of reliability of estimates. Cost of degradation slow. analysis has not always had the effect of raising awareness of environmental issues, and in some cases Institutional analysis encounters difficulties in its use has been limited. e reliability of the estimate addressing sensitive issues such as regulatory capture, affects a team's ability to build consensus around rent seeking, and corruption. e analytical work it. In Nigeria the methodology of the analysis was for the Bangladesh, Colombia, and Nigeria CEAs contested during consultations with counterparts. highlighted these issues, but the language had to be In Ethiopia the existence of several estimates of costs modified in the final CEA reports. All this means that of land degradation undermined the potential for results from institutional analysis cannot be expected building consensus around the analysis. e quality and to be immediate and, depending on the nature of the availability of data are limiting factors; in a postconflict recommendation and support for them from main situation such as that in Serbia and Montenegro, it can counterparts, may take a long time to emerge. be difficult even to carry out an analysis. Bringing neglected environmental issues into the discussion. Despite the problems discussed above, Institutional Analysis institutional analysis can bring about a number Institutional analysis does not yield silver bullets; of changes during preparation of CEAs and after rather, it aims to assess strengths and weaknesses in completion. Table 4 provides specific examples of policy existing governance structures and highlights actions recommendations arising from broad institutional and interventions for addressing them. Reforms and analysis, or from detailed analysis of specific themes recommendations suggested by institutional analysis or topics in CEAs. In Peru, for instance, a historical typically require consensus building between country analysis of environmental institutions demonstrated stakeholders. ey can have implications for other that much more prominence had been given to institutions than environmental agencies; and in many conservation and natural resource management in the instances they involve changes in broader constitutional country's environmental agenda than to issues such as and governance structures. Recommendations indoor and outdoor air pollution, water pollution, and coming out of a CEA can therefore be very difficult to sanitation and hygiene. e study thus helped bring implement politically and may never materialize. is "brown" issues into the discussion and reshape the was true of the suggestions for federal oversight of EIAs environmental agenda. that emerged from the Pakistan CEA. Identifying investment areas and influencing policy e Nigeria CEA called for consolidation of the reform and organizational change. In a number of cases country's three existing EIA laws into one. is would, institutional analysis of specific sectors and priority however, be politically difficult because one of the areas led to identification of investment activities. For agencies involved, the Department of Petroleum instance, discussions based on institutional analysis Resources, has over the years created a parallel system relating to natural disasters in the Peru CEA led to a of environmental clearances without regard for the direct request by the president for a loan on natural Institutions and Governance Series 31 CEA Review paper 2-12-08.indd B31 CEA Review paper 2-12-08.indd B31 2/12/08 5:35:39 PM 2/12/08 5:35:39 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis disasters. In Bangladesh the institutional analysis institute a better screening process and to increase staff contributed to proposals for a project dealing with responsible for EIA enforcement from none to 16. In environmental issues in the Dhaka metropolitan area. Orissa State, India, CEA recommendations also led to Recommendations from institutional analysis have an increase in staff, particularly educated tribals, for contributed to organizational change. In Tunisia the EIA, where previously only 15 inspectors had to cover National Environment Authority ceded its mandate for 400 mining-related industries in the state. A number solid waste management--one of the recommendations of EIA processes were streamlined--for example, of the CEA--and a separate ministry was eventually by extending the period of consent for low-risk and established for this sector. In Colombia findings from medium-risk projects from one to five years, and by subnational-level institutional analysis led to real-time introducing an inspection strategy for "red" (high- reforms that resulted in budget allocations focused risk) categories. Discussions during the CEA process on the priorities of the poor, new arrangements for also contributed to decentralization to regional offices aligning specific regional environmental objectives with of the Pollution Control Board (PCB) of such EIA- national ones, and stronger accountability mechanisms related functions as clearance for low- and medium- for the leadership of the regional environmental risk projects; consent at the state level is no longer agencies. ese changes were made well before the CEA needed. A joint inspection strategy at the regional level findings were officially published (see Posas 2007). is currently being worked out, and experienced staff members from the state-level PCB are being moved to regional offices within Orissa. Public Environmental Expenditure Reviews (PEERs) e extent to which CEAs have contributed to In Egypt the PEER undertaken as part of the CEA the design of investment projects is not clear. In showed that Egypt was investing in environment and Bangladesh, Ethiopia, India, and Tunisia, for example, undercut the myth that only donors were doing so. institutional analysis from CEAs is said to have In Bangladesh findings from the broader institutional influenced the design of follow-up investment projects. analysis and the PEER were used in discussions In India it is apparently being applied in the context with the government concerning the Department of of an ongoing industrial pollution control project. Environment budget. e outcome was endorsement of Institutional analysis from the Bangladesh CEA has a preexisting strategic plan for the department through been used with the Dhaka environmental management the development support credit (DSC) program and project currently in preparation. It should be noted that its inclusion in the matrix for the third DSC. In Peru although upstream institutional analysis is an important CONAM was able to obtain a 100 percent increase in starting point, it is not sufficient for designing follow- its budget allocation on the basis of PEER findings and up investment projects. Project-specific institutional relations with the new vice minister. analysis needs to be conducted during project preparation to address governance issues specifically linked with the objectives and scope of the investment Environmental Impact Assessment (EIA) project. In a number of cases the CEA analysis has contributed to small but important institutional changes in EIA Types of Results from CEAs systems. For example, El Salvador's Ministry of Environment had a backlog of 2,000 requests for EIA. e results from CEAs can be grouped as follows (see Discussions about the EIA analysis led the ministry to table C.2 in appendix C for specific country details): 32 Environment Department Papers CEA Review paper 2-12-08.indd B32 CEA Review paper 2-12-08.indd B32 2/12/08 5:35:40 PM 2/12/08 5:35:40 PM Results from CEAs Table 4. Examples of How Recommendations from the CEAs Reviewed are being Implemented CEA Analytical issue or finding Recommendation Result Colombiaa A high cost of environmental Revise and establish national standards Resolution 601 of April 2006 sets degradation was associated for particulate matter (PM2.5 and PM10) national air quality standards for PM10, with air pollution. in priority areas; update major emission sulfur dioxide, nitrogen dioxide, ozone, standards for mobile and nonpoint and carbon monoxide. It also sets out a sources to reflect new scientific and requirement by environmental authorities technological advances. to begin measuring PM2.5 when they identify probable health concerns. Strategic and systematic tools Install and implement systems to Establishment of a system of indicators for priority setting were needed. monitor and evaluate environmental to evaluate the implementation of management and the extent to which the National Policy on Sustainable the objectives of environmental priorities Development and adequate funding were efficiently met. of Colombia's National Environmental System, as evidenced by improved functioning and coordination at various levels. Egypt, Arab Rep. of Need to reduce burden Reduce damage costs through Project on natural gas; use of Clean of respiratory disease, by readjusting pricing policies and through Development Mechanism (CDM) improving air quality. a set of 19 policies suggested in the initiated; 10 million euros of CDM credits energy environment review; establish purchased for pollution abatement. energy policy support unit in the Ministry of State for Environment Affairs. India Ministry of Environment and Consider creating state-level authorities The New Environmental Policy (NEP) Forests (MoEF) has no offices of the MoEF. supports this recommendation, under at the state level. certain conditions. After NEP approval, sector ministries are to prepare action plans; analysis in the CEA contributes to the action plan. Growth was putting pressure Capacity-strengthening plan for PCBs Despite an overall hiring freeze for public on state Pollution Control needed. sector employees, the government made Boards (PCBs). an exception to strengthen the capacity of the PCBs. Capacity strengthening will be supported as part of a capacity- building project currently in preparation. Serbia and Montenegro Environmental management Strengthen environmental management The CEA contributed to the establishment system has been institutionally capacity, with a focus on monitoring key of an environmental protection agency, and legally weak. pollutants and clarifying responsibilities. although enforcement remains problematic. Unique species of flora and Prepare a national biodiversity strategy, A national biodiversity strategy was fauna were under various identify threatened species, and prepare prepared. degrees of threat. an action plan. Energy subsidies were Introduce measures to enhance energy The Serbia Energy Efficiency Project was contributing to inefficient efficiency and use of renewable energy. implemented with IDA funding. Other energy use. These would include phasing out energy projects have also been implemented in subsidies and investing in more energy- response to the CEA findings. efficient technology to offset the higher energy prices. Tunisia Responsibilities for solid waste Solid waste management functions NEPA ceded responsibility for solid waste management rested with should be decentralized; roles and management, and a new agency for this the National Environmental responsibilities of different entities function was established. Protection Agency (NEPA). should be clarified. Source: World Bank sta . Note: DPL, development policy lending; IDA, International Development Association (of the World Bank). a. See Agreed Program Matrix for Programmatic Development Policy Loan (World Bank 2005c, 102); this is also, based on information from country team based on ongoing dialogue with Colombian authorities. b. World Bank 2005a (chapter on air quality). Institutions and Governance Series 33 CEA Review paper 2-12-08.indd B33 CEA Review paper 2-12-08.indd B33 2/12/08 5:35:40 PM 2/12/08 5:35:40 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis · Identification of and request for investment seen as a safeguard compliance of OP8.60, but as an projects upstream strategic analytic tool that aims to inform · Inputs to immediate policy reforms supported and enhance a long-term process of engagement with through development policy loan partner countries to strengthen institutional capacity on · Upstream analysis to meet requirements of OP key environment development issues. 8.60 · Integration of environment into CASs and PRSPs; Timing of CEAs input into country policies · Preparation of strategic environmental assessments e review showed that timing of CEAs, particularly · Improved donor coordination when prepared to provide environmental input into · Stimulus for extensive political debate on improv- specific processes, was important for their overall ing public accountability with respect to environ- effectiveness. For instance, the El Salvador and mental issues that had been traditionally neglected Guatemala CEAs were rapid CEAs intended as input in the country into planned DPLs. e Nigeria CEA was prepared · Institutional changes in parallel with the CAS, and the team contributed to · Strengthening of EIA capacity the draft CAS document. e Bangladesh CEA was · Improved coordination between sectoral ministries initiated during the PRSP process and provided input in the implementation of a national environmental to it. e Colombia CEA was timed to feed into the policy; improved sectoral engagement on environ- design of the programmatic sustainable development mental issues. DPL. In Ghana the CEA was carried out in parallel to preparation by the Multi-Donor Budget Support Link between CEAs and DPLs Group of a new joint assistance strategy for the country; Given that a number of CEAs were initiated in the the CEA provided input to the discussions on the context of DPLs and triggered by OP8.60, it is strategy, and to the performance assessment framework important to reflect briefly on how successful CEAs for implementation of budget support (Hessel- have been in providing input to DPLs. While an Andersen 2007). e strategy contains a chapter on in-depth review of how DPLs have drawn on CEAs environment reflecting the findings of the CEA. was not conducted for this paper, in only a few cases, e timing of the CEA's completion, as well as its recommendations of the CEA influenced the DPL initiation, matters. In some cases, despite preparations program matrix (for example, Orissa).21 In others, for follow-up, country-specific contextual issues have it was included in the program document but not led to limited engagement in that stage. In El Salvador, included in the DPL matrix or in the country program. responding to the animosity between the reigning In some instances this occurred even where the CEA political parties, the Bank has slowed and reduced its was initiated in the context of OP8.60 (for example, current operations and engagement in the country in Guatemala).22 It is important that CEA is not simply environment and in other sectors as well. is situation is limiting the Bank's dialogue on environmental issues. 21 See Orissa Socio-Economic Development Program 2 at In Bangladesh the final launch workshop for the CEA http://imagebank.worldbank.org/servlet/WDSContentServer/ report was delayed because of elections and political IW3P/IB/2006/07/13/000012009_20060713092547/Rendered/ PDF/337670rev0pdf.pdf. unrest, even though the CEA report was completed 22 See program document for third Guatemala DPL at http:// in June 2006 and has already had important results. imagebank.worldbank.org/servlet/WDSContentServer/IW3P/ IB/2007/07/13/000020439_20070713094930/Rendered/PDF/ In Nigeria, at the time of writing, follow-up was on 397390GT0R20071015211.pdf. hold as a result of major changes in the public sector 34 Environment Department Papers CEA Review paper 2-12-08.indd B34 CEA Review paper 2-12-08.indd B34 2/12/08 5:35:40 PM 2/12/08 5:35:40 PM Results from CEAs and government downsizing on the eve of elections. operations, integration of environment into CASs e main counterpart for the CEA, the Ministry of and PRSPs, input to DPLs, identification of strate- Environment and Forests, has been merged with the gic environmental assessments, and in some cases, Ministry of Housing and Development, and a new improvement or facilitation of donor coordination. autonomous regulatory agency has been formed, in · Important factors for positive results include the difficult political circumstances. quality of the analysis, the process through which the analysis is integrated into policy dialogue, and the presence of multiple champions. Strong coordi- Factors Contributing to Positive Results nation with the local donor group matters for a A number of factors seem important if CEAs are to harmonized approach to environmental actions in have positive results during preparation and follow-up. partner countries, although some CEAs seem to ese include ownership by the counterpart ministry have had tangible results in relation to the Bank, or agency, the presence of multiple champions in the even without a broader engagement with donors, partner country, the quality of the analytical work, and the private sector, and NGOs. timing. Inclusion of CEAs in country programming as · Different types of analysis have been used to an ESW, as was the case in most of the CEAs reviewed, mainstream environment into policy dialogue. In has helped validate the CEA process within the Bank. As several cases, quantitative analysis of priorities in for donor coordination, what matters most in the short economic terms helped raise the profile of envi- or long run is coordination with the local donor group. ronmental issues. Institutional analysis, including Only a few CEAs, however, were helped by a strong analysis of public expenditures and EIA systems, local donor group and demonstrated this approach. has contributed to such results as redistribution of expenditures to better address priority areas, Even with limited engagement with NGOs and the identification of lending operations, and improve- private sector, some CEAs seem to have had tangible ments in EIA systems. results in the near term. A broader engagement with · For CEAs to yield concrete results and have the these stakeholders in future CEAs will be critical to potential for strengthening policy dialogue on building constituencies and for a long-term impact for environment, active follow-up after completion CEA recommendations. of the CEA is crucial. Agreeing to do a CEA in a country should imply that the Bank is committed, Main Points in terms of resources and time, to a long-term engagement with a partner country on environ- · Types of results from CEAs include input to policy mental issues. and institutional changes, identification of lending Institutions and Governance Series 35 CEA Review paper 2-12-08.indd B35 CEA Review paper 2-12-08.indd B35 2/12/08 5:35:40 PM 2/12/08 5:35:40 PM CEA Review paper 2-12-08.indd B36 CEA Review paper 2-12-08.indd B36 2/12/08 5:35:40 PM 2/12/08 5:35:40 PM Conclusion: Guidance for Future 5 Preparation of CEAs C ountry environmental analysis is a strategic, Policy Context and Timing analytical, and decision-making tool for If the Bank's regions seek to have long-term engagement informing the Bank, partner countries, and on environment-development issues in specific partner donors about environmental development countries in the Region, then those countries must first priorities and institutional capacity for addressing those be identified. In countries where long-term dialogue on priorities and themes. As we have seen, a number of environment has been lacking, or where engagement on CEAs have contributed to tangible results and have environmental issues has been weak or sporadic, CEAs provided a strong analytical basis for a dialogue on can be a particularly important analytic tool to enhance environment in the short run. e extent to which a strategic and long-term process of engagement with CEAs have helped consolidate the Bank's dialogue with partner countries, strengthen institutional capacity on partner countries over the longer run, or in any indirect key environment-development issues, and identify areas way, is difficult to measure within the scope of this of lending. From experience, CEAs can be useful in the review. In some cases CEAs did have concrete results following contexts: but did not necessarily contribute to strengthening dialogue. Nor have all CEAs been successful in all · To perform environmental analysis as mandated by respects; for instance, much needs to be done toward OP 8.60 (as in El Salvador and Guatemala) improving donor coordination with respect to CEAs. · As a tool for integrating environment into CASs and PRSPs, and for informing the implementa- As is the case with any form of policy dialogue, the tion of national environmental and development process of CEA preparation is imperfect and depends policies and the Millennium Development Goals heavily on the political context and the interests (as in Bangladesh, Egypt, Nigeria, and Tunisia) and perceptions of policy makers, donors, and other · As a tool for strengthening country-level dialogue stakeholders. In this review it has not been possible on environmental issues and identifying lending to capture the extent to which individual CEAs have areas (as in Egypt, Ghana, and Peru) negotiated this difficult terrain, and have managed to · To provide the analytical basis for sustainable influence political decision making and the perceptions development DPL (as in Colombia) of major stakeholders about environmental issues. · As a tool for reestablishing Bank dialogue on (More detailed discussions are found in Hessel- environment in postconflict situations (as in Serbia Andersen 2007; Posas 2007.) What is provided here and Montenegro). is a cross-sectional view of the approaches taken, the methodologies used, and the elements of the process Planning and Preparing CEAs that seem to work well or poorly in different cases. is chapter draws on lessons from the review to suggest In preparing a CEA, a number of process issues some practical guidance for future preparation of CEAs. need to be managed, including support from Bank Institutions and Governance Series 37 CEA Review paper 2-12-08.indd B37 CEA Review paper 2-12-08.indd B37 2/12/08 5:35:40 PM 2/12/08 5:35:40 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis colleagues (for example, country director, sector follow up on them (as in Ghana). CEA teams manager), selection of counterparts, choice of partner should consider at the beginning whether the min- country stakeholders, dialogue with counterparts, istry of finance or the ministry of planning would donor coordination, and choice of consultants. How make valuable strategic counterparts, in addition to these decisions are made plays a key role in building the ministry of environment, on account of these ownership for the CEA process and shaping the ministries' greater convening power and influence. eventual results of the CEA. e following issues are · Timing. When CEAs are intended to contribute important: to PRSPs, CASs, or national strategies or policy reforms, they need to be planned sufficiently ahead · Task management. CEAs are more likely to be of time to be able to provide meaningful input into effective when regional staff members lead or co- these processes. manage tasks . If CEAs are led solely by the anchor, their effectiveness can be diminished. · Team composition. In addition to sector specialists Revising and Standardizing the CEA linked with priority issues being analyzed in the Building Block Structure CEA, CEA teams should include staff with skills in e CEA building block structure (see figure 1, in institutional analysis and environmental economics chapter 1) suggested what the main elements of a CEA (particularly economic valuation of environmental should be when CEAs were originally conceived. Figure costs). e quality of both these kinds of analysis 3 presents a revised structure, based on experiences with is also dependent on the quality of the consultants. CEAs reviewed, that may respond better to operational Expertise in technical aspects of specific issues such needs. as climate change, fisheries, or solid waste manage- ment is not a substitute for skills in institutional Over the past five years, CEA teams have experimented analysis and environmental economics. with various structures and analytical tools. As · Budget. e average cost of a CEA has been about preparation of CEAs is scaled up, the tool should $288,000, although nine out of 16 CEAs reviewed be standardized to some extent, while allowing for cost approximately $232,000 or less (see table variation to accommodate adaptation to different 1). CEA costs depend on the scope of the work, outputs and processes. At a minimum, CEAs should number of workshops, dissemination strategies, include the first two building blocks shown in figure and follow-up. A comparison of costs assumed by 3. is will allow for some level of standardization in CEA teams at the concept note stage and actual CEAs. As explained below, the third building block can CEA costs shows that typically CEAs cost more be tailored to the specific processes (for example, focus than is initially planned and budgeted. us, task areas of the DPL) in the context of which the CEA is team leaders need to plan accordingly. being prepared. · Counterpart ministry or agency. In undertaking a CEA, the Bank is entering into a long-term policy e first building block (in figure 3), assessment of dialogue, and the choice of counterpart agency is environmental priorities with respect to growth and a critical decision. In most cases the main counter- poverty reduction, is of critical importance: it helps part is the ministry of environment or its equiva- identify the key environmental development issues at lent. Some CEAs were able to successfully include a particular time and tracks them over a long period. other powerful ministries or cross-sectoral agencies Mapping environmental trends and indicators in as key counterparts (as in Peru), or as champions priority areas should be an important part of this that helped generate interest in CEA findings and analysis. Periodic review of the issues (say, every 38 Environment Department Papers CEA Review paper 2-12-08.indd B38 CEA Review paper 2-12-08.indd B38 2/12/08 5:35:41 PM 2/12/08 5:35:41 PM Conclusion: Guidance for Future Preparation of CEAs four to five years) can show how well a country's e third building block, analysis of environmental institutions and organizations are addressing these priorities and themes, provides scope for variation in concerns. e second building block (see figure 3), CEAs. Detailed assessment of environmental themes broad assessment of environmental institutions and and priorities can be tailored to the focus areas of the organizations at the national and subnational levels specific processes (for example, sector-specific DPLs, (missing in some CEAs), provides an overall picture of PRSPs, and so on) in the context of which a CEA is the historical evolution of environmental institutions being prepared. and organizations, the main stakeholders involved, the political-economy issues underlying environmental Building Block 1: Identifying Environment- management, and the major strengths and weaknesses Development Priorities in the governance structure and how these can be addressed. Standardizing CEAs by including an analysis Although many CEAs discuss poverty-environment of the first two building blocks in figure 3 can also links, only a few have undertaken analysis to determine result in cost savings, as this part of the analysis need environmental priorities with an eye to both growth be conducted only every four to five years in a country. and poverty reduction; greater emphasis has been For instance, once this part of the analysis is done, it placed on growth, as indicated by the large number of can provide input to DPLs or a CAS prepared at a later CEAs using cost of degradation analysis (see box 1 for date. quantitative tools that can be used in CEAs for priority Figure 3. Revised Building Block Structure for CEAs COUNTRY ENVIRONMENTAL ANALYSIS Identification of Assessment of environmental policies and institutions Analysis of environmental priorities and themes environment-development priorities · Mechanisms through which information is monitored · Key indicators and trends; key environmental and shared with the public; processes through which issues linked with the sector or priority · Importance of environment citizen feedback is incorporated into priority setting, policy · Cost-benefit analysis to identify appropriate to economic growth and formulation, and planning interventions poverty reduction · Assessment of gaps in formal rules (for example, · Policy and institutional analysis focusing on · Prioritization of policies and regulations) and in informal rules underlying a. Integration of environmental considerations environmental challenges implementation into sector policies through available data, · Analysis of key actors and stakeholders and of interests; b. Analysis of stakeholders and assessment of cost of degradation studies, assessment of budgets, expenditures, and transparency underlying political-economy issues (analysis surveys, distributional and in resource use of formal and informal "rules of the game") net savings analysis · Analysis of main environmental management tools, c. Assessment of environmental management · Environmental trends in including environmental impact assessment tools relevant to the sector (for example, priority areas · Analysis of intersectoral coordination, horizontally environmental assessment, licensing, public between sector ministries and vertically between national disclosure) and subnational levels d. Analysis of budgets, resource flows, · Subnational environmental management transparency, and accountability e. Subnational-level institutional analysis BUSINESS PLAN · Stocktaking of and lessons from the Bank's and development partners' past environmental assistance to client country · Review of the Bank's planned lending and nonlending activities in key sectors and their links with environmental priorities · Review of development partners' ongoing and planned environmental support activities · Assessment of the Bank's comparative advantage in relation to development partners · Suggested Bank assistance in the form of lending and nonlending assistance and partnerships Source: Author. Institutions and Governance Series 39 CEA Review paper 2-12-08.indd B39 CEA Review paper 2-12-08.indd B39 2/12/08 5:35:41 PM 2/12/08 5:35:41 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis setting). In future CEAs much more attention should · More detailed analysis of environmental manage- be given to systematically assessing priorities linked ment at the subnational level; greater emphasis with poverty reduction as well as with growth. e in PEERs to assessment of issues of resource flow main CEA concept note should be revised to further between national and subnational levels. clarify this issue. Using the framework presented in World Development In some CEAs focus areas and themes were chosen on Report 2003, considerable guidance has been prepared the basis of focus areas of the DPL, as in Guatemala, on how to frame and structure institutional analysis or other decision criteria such as issues important in CEAs and in specific tools such as PEERs.24 In from the perspective of stakeholders, as in Pakistan. addition, terms of reference for preparing institutional Selection of key themes and focus areas in CEAs, as in analysis with respect to a range of sectors and themes any other policy processes, is a process of negotiation. have been collected and made accessible to task Nevertheless, even if the focus areas are chosen for other teams electronically through the CEA toolkit.25 CEA reasons, a systematic priority-setting exercise should teams can also draw on indicator-based tools such be undertaken. If detailed analysis of priorities is not as those developed by the Access Initiative to assess possible in the context of a CEA, this can be picked up public sector performance with respect to access in follow-up work, as happened in Bangladesh, which to information, participation, and justice in issues received technical assistance on indoor air pollution. relating to the environment.26 Building on existing literature, additional guidance can be developed on how to assess the role of the private sector and Building Block 2: Assessment of Environmental NGOs in environmental management. For example, Policies and Institutions the guidance can draw on a substantial literature e review showed that although institutional analysis dealing with the role of NGOs in service delivery, the is a core building block of CEAs, the scope, quality, and organizational characteristics of successful NGOs, and depth of analysis (see chapter 2) vary considerably, and the demand side of service delivery. As we improve institutional analysis needs to be strengthened in several the quality of institutional analysis in CEAs, the areas. ese include the following: questionnaire used for determining the indicator for policies and institutions for environmental · Greater focus on assessing decision-making sustainability, part of the broader CPIA indicators processes rather than limitation of organizational needs to be revisited, to ensure greater synergy and analysis to a static description of mandates and cross learning between the two. functions · Focus on political-economy issues and analysis of power relationships underlying decision-making 23 processes between stakeholders23 Institutional analysis that involves analysis of "rules of the game" can be undertaken without examining the political · Assessment not only of gaps in formal rules, but relations within which rules are embedded, but in CEAs it is also of informal rules and how they structure important to do both. 24See Markandya, Hamilton, and Sanchez-Triana (2006); Pillai relations between organizations and stakeholders and Lunde (2006). · Assessment of the role of private sector and civil 25 e External CEA Toolkit Website can be accessed at http:// society institutions in environmental management, www.worldbank.org/ceatoolkit. Within the Bank, the internal CEA toolkit can be accessed by typing "ceatoolkit" in the Intranet and thus a stronger assessment of the demand side address field. of environmental governance 26http://www.accessinitiative.org/. 40 Environment Department Papers CEA Review paper 2-12-08.indd B40 CEA Review paper 2-12-08.indd B40 2/12/08 5:35:41 PM 2/12/08 5:35:41 PM Conclusion: Guidance for Future Preparation of CEAs Building Block 3: Institutional Analysis Linked types of issues: policy reform and institutional changes, with emes and Sectors areas for technical assistance, and areas for investment lending. e time frame (short, medium, and long- A major shortcoming of past analytical work such as term) for carrying out the recommendations should NEAPs and Bank environmental analytical work is that also be provided. Finally, the counterpart agency to institutional analysis has typically not been carried out which each recommendation is addressed should be in relation to specific themes and sectors. e structure noted. e format shown in figure 5 is drawn from proposed in figure 3 includes institutional analysis recommendations presented in several CEAs. linked with themes and sectors, or with issues identified as priorities. Where needed and relevant, cost-benefit analysis to weigh different interventions can first be CEA Process and Follow-up done (as in Colombia and Peru; see also the chapter on is review consistently shows the importance of the air quality in the Egypt CEA), after which institutional process of CEA preparation and, in particular, of three analysis can be undertaken to assess the political process issues. feasibility of carrying out selected interventions. A framework for assessing environmental institutions · e analysis in the CEA must be well integrated using the World Development Report approach suggested into the dialogue with key counterparts and for building block 2 can also be applied in assessing stakeholders. As highlighted by the experience with governance issues linked with a theme or sector. In the Colombia CEA, engaging different stakehold- addition, much greater use can be made of tools such as ers, particularly politicians and the mass media, stakeholder analysis to assess systematically the interests can play an important role in generating public and influence of different groups in relation to a sector debate about environmental priorities. or priority theme. · CEA is not a single process. Different types of analysis undertaken in CEAs can be used for Writing Recommendations different purposes. · Concerted follow-up is crucial after completion of As discussed in chapter 2, CEAs vary considerably the CEA report. If such follow-up does not take with respect to presenting recommendations, and place, the potential for dialogue created by the whether the role of the Bank is discussed. Although CEA can be lost. A good dissemination strategy this flexibility is important for shaping follow-up can in fact be the beginning of more focused discussions with partner countries, some consistency discussions on strengthening environmental in presentation of recommendations would be institutions and for working on specific areas of helpful. On the basis of analysis undertaken in CEAs, policy reform. recommendations can be made with respect to three Figure 4. Template for Recommendations in CEAs Issue Recommendation Time frame Counterpart Role of the Activities · Policy and institutional reforms (short, medium, agency/stakeholder Bank (including coordinated · Areas of technical assistance and long-term) sources of with donors · Investments financing) Source: World Bank sta . Institutions and Governance Series 41 CEA Review paper 2-12-08.indd B41 CEA Review paper 2-12-08.indd B41 2/12/08 5:35:41 PM 2/12/08 5:35:41 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Collaboration with Donors a particular ESW product as a CEA. At a minimum, CEAs should consist of the first two building blocks-- Collaboration with donors is crucial for avoiding that is, determination of environmental priorities linked duplication and agreeing on a common platform for both with growth and with poverty reduction, and a dialogue on environment. Donor coordination is detailed analysis of environmental institutions. is influenced by a number of factors, including differences can be seen as a meaningful way of characterizing a in agencies' organizational capacities and mandates, "rapid" CEA. e third building block, which calls for shared interests of different donors in a particular detailed analysis of themes and priorities that are the country, and coordination between local donors. e focus of the particular CEA, allows for flexibility in the review shows that engaging with the local donor group choice of tools and the content of the assessment, in seems to be the most important factor. In cases where accordance with the particular context. It is suggested a coordinated donor group does not already exist, that a CEA should typically include all three building CEA teams can work to galvanize one around the CEA blocks. Attention to all three building blocks thus gives process. scope for and allows the necessary balance between standardization of key features of a CEA and country- Sharpening the Profile of CEAs and situation-specific variation. Teams are encouraged to refer to the revised building block structure (figure 3) to assess whether to regard 42 Environment Department Papers CEA Review paper 2-12-08.indd B42 CEA Review paper 2-12-08.indd B42 2/12/08 5:35:42 PM 2/12/08 5:35:42 PM Appendix A -- Completed, Ongoing, and Planned CEAs, as of December 15, 2007, by Region Region Country and date Task team leader Completed AFR Nigeria (rapid) (2007) Sergio Margulis AFR Ethiopia (decision draft, 2005) Magda Lovei AFR Ghana (2007) Jean Christophe Carret, Mani Muthukumara ECA Belarus (2003) Anil Markandya ECA Serbia and Montenegro (2003) Anil Markandya EAP Vietnam Phillip Brylski, Giovanna Dore LAC Dominican Republic (rapid) (2004) Pierre Werbrouck (took over from Theresa Bradley) LAC Colombia (2006) Ernesto Sanchez Triana, Kulsum Ahmed LAC El Salvador (rapid) (2006) Juan Carlos Belausteguigoitia LAC Guatemala (rapid) (2006) Juan Carlos Belausteguigoitia LAC Peru (2007) Ernesto Sanchez-Triana MNA Egypt, Arab Rep. of (2005) Sherif Arif MNA Tunisia (2004) Sherif Arif, Aziz Bouzaher SAR Bangladesh (2006) Paul Jonathan Martin SAR Pakistan (2006) Paul Jonathan Martin SAR India (national) (2007) Kseniya Lvovsky SAR Nepal (2007) Bilal Rahill SAR India, Northeast Region (2007) Karin Kemper Ongoing AFR Namibia Christophe Crepin AFR Senegal Peter Kristensen EAP Indonesia Joe Letimann, Giovanna Dore ECA Tajikistan R. Sudharshan Canagarajah, Muthukumara Mani LAC Ecuador (decision draft, 2007) Juan Carlos Belausteguigoitia MNA Jordan Raffaello Cervigni SAR Orissa State, India (decision draft 2006) Kseniya Lvovsky, Sanjay Srivastava Planned AFR Democratic Republic of Congo Paul Jonathan Martin AFR Madagascar Jean-Christophe Carret AFR Mali Remi Kini AFR Sudan Herbert Acquay EAP Philippines Jan Bojo EAP Timor Leste Jan Bojo ECA Armenia Artavazd Hakobyan LAC Argentina Carter Brandon LAC Honduras Juan Carlos Belausteguigoitia LAC Panama Juan Carlos Belausteguigoitia MNA Lebanon TBD SAR Bihar State, India Ernesto Sanchez Triana SAR Punjab Province, Pakistan Ernesto Sanchez Triana Source: World Bank sta . *At the time of this review was initiated, only 16 CEAs were completed. Several CEAs included in the above list were completed later. Planned CEAs are indicative only and are subject to change. Institutions and Governance Series 43 CEA Review paper 2-12-08.indd B43 CEA Review paper 2-12-08.indd B43 2/12/08 5:35:42 PM 2/12/08 5:35:42 PM CEA Review paper 2-12-08.indd B44 CEA Review paper 2-12-08.indd B44 2/12/08 5:35:42 PM 2/12/08 5:35:42 PM Appendix B -- Sample Questionnaire for CEA Teams and Task Team Leaders Name of task team leader or person filling out the 13. How were the findings and recommendations from questionnaire: __________________ ______ institutional analysis used in discussions with the government? What were the results? Country: 14. What is the single most useful technique (process or methodology) applied in the CEA? Why? Current status of the CEA: 15. What is the single most useless technique--that is, 1. How was the CEA identified? Who initiated the what you would not repeat again, either in terms CEA (government, country management unit, of choice of methodology or process--applied in regional economist, other?) the CEA? Why? 2. What was the main objective of the CEA? 16. What were main results of the CEA, and over what 3. What was the context in which it was prepared? time frame were these achieved? Were they differ- 4. How did the team identify areas of focus, priority ent from what was originally planned? To what areas, and types of methodology to use? extent did the CEA achieve its original objectives? 5. What was the main methodology for priority Was there ownership of the process by different setting? stakeholders (government, country director, sector 6. What was the main methodology for institutional manager, and so forth) in and outside the Bank? analysis? 17. What was the nature of follow-up? How did 7. If there were other methods used, please identify you/your team follow up with the government? them. 18. How did the CEA help (or not) mainstream 8. What was the overall CEA process? How was the environmental concerns into policy dialogue with CEA discussed with the government? How was the client country? Which factors contributed to ownership of the process brought about? What this process? was the main counterpart ministry? Which sector 19. To what extent was the CEA process successful ministries were engaged with? in mainstreaming environmental concerns into 9. What was the nature of coordination with other PRSPs, CASs, DPLs, and so forth? What were the stakeholders (private sector, civil society)? main issues constraints? 10. How much did the CEA cost (staff plus consul- 20. In what way did the CEA help influence or shape tant)? the Bank's business plans with the client country? 11. What was the nature of donor coordination? What 21. What were the main lessons from the CEA were the main issues and constraints? process? What would you do differently if you were 12. How were findings from specific methodologies to prepare another CEA? (for example, cost of degradation) used to generate discussion? What were the results? Institutions and Governance Series 45 CEA Review paper 2-12-08.indd B45 CEA Review paper 2-12-08.indd B45 2/12/08 5:35:42 PM 2/12/08 5:35:42 PM CEA Review paper 2-12-08.indd B46 CEA Review paper 2-12-08.indd B46 2/12/08 5:35:42 PM 2/12/08 5:35:42 PM Appendix C -- Overview of the Objectives and Results of the CEAs Reviewed Table C.1. Context and Objectives of the CEAs Reviewed CEA Contextual factors Objective (drawn from CEA reports) Bangladesh Development support credits planned; ongoing Help reduce the environmental constraints on economic growth by PRSP process; CAS in preparation; need to recommending measures to reduce environmental health burdens borne strengthen policy dialogue on environment and by the poor and to promote more sustainable management of the natural identify areas of engagement. resources on which the poor depend. The recommendations are intended to help guide support provided by development partners and the Bank through technical assistance, DPL and investment projects (World Bank 2006a, 4). Belarus The government requested assistance in Engage the government and local stakeholders in a dialogue on the links updating the Belarus Environment Strategy Study, between the more technical aspects of environmental management and which was carried out jointly with the Bank in the underlying national policy framework. The CEA recommended policy the 1990s after Belarus became independent actions in four areas--water, energy, solid waste, and natural resource and was published in 1993. The CEA would management-- where there was potential for World Bank follow-up be a mechanism for doing this and a means of activities (World Bank 2002, 1). identifying and targeting key priorities. Colombia Sustainable development DPL program requested Present an analytical framework to support the efforts of the government by the government. of Colombia toward achievement of the Millennium Development Goals (World Bank 2006h, 23). Findings from the CEA were expected to help design and implement policies to (a) improve the effectiveness and efficiency of Colombia's National Environmental System, and (b) integrate the principles of sustainable development into key sector policies, with emphasis on protecting the most vulnerable groups (World Bank 2006h, 24). Dominican Republic CAS in preparation; planned environmental loan Identify environmental priorities, develop recommendations for institutional to newly formed Ministry of Environment. and policy reforms, and support the Ministry of Environment and Natural Resources in its reform efforts; provide input for the CAS and an analytical basis for the proposed environmental loan (World Bank 2004b, 5). Egypt, Arab Rep. of CAS (2005­07) in preparation; need for analytical Facilitate mainstreaming of selected environmental issues into relevant basis for mainstreaming environment into sector activities for improving development and poverty alleviation; improve CAS, sector policies, and strategies; helping to capacity and strengthen environmental mainstreaming (World Bank 2005a, meet Millennium Development Goals (MDG) 3). The CEA sought to focus sharply on key environmental issues (a) targets, particularly MDG 7, on environmental having detrimental impacts on public health or key natural resources, (b) sustainability; defining priority actions for Bank resulting in irreversible damage, and (c) requiring multisectoral intervention. engagement with Egypt; and supporting policy dialogue on environment. El Salvador Planned series of DPLs Analyze the efficiency and effectiveness of El Salvador's environmental policy and institutional framework to address current and future environmental issues, particularly those arising from trade liberalization and infrastructure investments; identify gaps and provide politically feasible and cost-effective recommendations (World Bank 2006i, 3). Ethiopia Country emerging from war with Eritrea; Bank Analyze Ethiopia's institutional capacity for sustainable natural was reengaging to revive shelved initiatives resource and environmental management in support of the Sustainable and build country program; several initiatives Development and Poverty Reduction Program (SDPRP); identify key were in progress--the CAS, PRSP process, a constraints on achievement of good environmental performance; and public sector capacity-building program, and a identify areas for capacity building (World Bank 2004d, 12). countrywide decentralization initiative. (Continued on next page) Institutions and Governance Series 47 CEA Review paper 2-12-08.indd B47 CEA Review paper 2-12-08.indd B47 2/12/08 5:35:42 PM 2/12/08 5:35:42 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Table C.1. Context and Objectives of the CEAs Reviewed (continued) CEA Contextual factors Objective (drawn from CEA reports) Ghana Need to improve environmental and natural Assist the government of Ghana and its development partners in (a) resource management (NRM) lending; economy assessing the country's environmental priorities, the environmental driven by a few NRM-driven sectors; shift toward implications of key economic and sector policies, and the country's budgetary support and sectorwide approach. institutional capacity to address them, and (b) finding practical management, institutional, and policy solutions to issues of natural resource management, environmental degradation, and sustainability of growth. Guatemala Planned series of DPLs; adoption of Dominican Analyze the efficiency and effectiveness of Guatemala's environmental Republic­Central America Free Trade Agreement policy and institutional framework in addressing current and future (DR­CAFTA) likely to accelerate trade-related environmental issues, with special emphasis on those arising from trade economic growth and expand infrastructure; need liberalization and infrastructure investments (World Bank 2006h, 3). to assess capacity of borrower's institutions to address the environmental implications of trade and infrastructure expansion as mandated by OP 8.60. India Rapid economic growth; major sectors driving Help strengthen the environmental policy implementation framework in the growth included industry, power (coal, hydro, context of a rapidly growing economy (World Bank 2006e, 14). and transmission), and highways; draft New Environmental Policy prepared. Nigeria CAS in preparation; revised OP 8.60 approved; Provide environmental input into the CAS and strengthen policy dialogue improved dialogue on environment with partner on environment; make proactive attempt to inform potential DPL lending country on environmental issues needed. (World Bank 2006f, 4). Orissa State, India Growth led by planned investments in mining and Support growth objectives of the state government by helping to analyze industry. strategies for addressing key environment-development pressure points, with a focus on the mining and industry sectors (World Bank 2006b, 11). Specifically, the study was aimed at (a) assisting the government of Orissa with improving the effectiveness of environmental institutions, procedures, and processes; (b) supporting the development of a broad- based partnership between stakeholders for improved environmental management and compliance; (c) identifying critical institutional and technical capacity needs for managing the environmental implications of growth, particularly in the mining and industry sectors; and (d) assisting mining regulators in improving environmental compliance by the mining industry and developing a benefit-sharing framework to address social risks. Pakistan Development policy lending planned; need to Review status of high-priority environmental concerns; strengthen dialogue with the government on assess capacity of environmental institutions charged with managing these environment, identify areas of lending; CAS concerns; propose areas of Bank support for strengthening capacity (World in preparation, with DPL lending representing Bank 2006g, 2). almost half of proposed lending program; new National Environmental Policy (NEP) approved; significant budget allocated to implement NEP; PRSP agenda embodied in MTEF (Medium Term Expenditure Framework ) 2005­10. Peru Ongoing reforms being undertaken by the Provide government of Peru with an analytical framework with a view government to reform environmental institutions; toward integrating principles of sustainable development into country planned DPL lending;. policies and programs and reversing loss of environmental resources. Findings were designed to help improve the effectiveness and efficiency of the environmental management system and integrate the principles of sustainable development into key sector policies, with emphasis on protecting the most vulnerable groups (World Bank 2006c, 10). Serbia and Montenegro Postconflict situation; break-up of country into Review situation, identify priority areas for investment, and examine role two semiautonomous republics; 10 years of Bank of donors, the private sector, and government; assess macroeconomic- disengagement with country; need to reengage environmental linkages and measures that affect long-term sustainability with government on environmental issues and to and financial viability in the environment sector; provide a basis for defining integrate environmental input into ongoing CAS the Bank's future engagement in the environment sector (World Bank process; country interest in input into planned 2003a, 1). NEAP process. (Continued on next page) 48 Environment Department Papers CEA Review paper 2-12-08.indd B48 CEA Review paper 2-12-08.indd B48 2/12/08 5:35:43 PM 2/12/08 5:35:43 PM Appendix C -- Overview of the Objectives and Results of the CEAs Reviewed Table C.1. Context and Objectives of the CEAs Reviewed (continued) CEA Contextual factors Objective (drawn from CEA reports) Tunisia CAS (2000) in place at time of CEA concept Facilitate integration of environmental issues into economic development note (2002); long history of Bank cooperation in strategies of sectors that affect the sustainability of development; improve Tunisia through METAP; need to take stock of and build institutional capacity and decision-making processes for progress on environmental issues since 1992 Rio environmental mainstreaming (World Bank 2004e, 6). Summit and identify areas of Bank support. Source: World Bank sta . Note: CAS, country assistance strategy; DPL, development policy lending (or development policy loan); METAP, Mediterranean Environmental Technical Assistance Program; NEAP, national environmental action plan; PRSP, poverty reduction strategy paper; SEA, strategic environmental assessment. Table C.2. Summary of Results Linked with the CEAs Reviewed CEA Date completed Results (and main counterpart) Bangladesh 2006 Assistance with identifying second Urban Air Quality Management project (Department of Environment). (launch workshop pending) · Technical assistance on indoor air pollution (Ministry of Local Government); ongoing. · Dhaka Environment Project; in preparation. · Integration of Department of Environment strategic plans into development support credit discussions (counterpart, Department of Environment). · Potential support for an inland fisheries project (in the CAS as a reserve project, pending clear request from the government). · Assistance with integrating environment into PRSPs. · Integration into CAS; aforementioned projects are in the 2006 CAS. Colombia 2006 · Help with design of sustainable development DPL and technical assistance loan. · Stimulus for major debate about environmental priorities in Colombia among the media, politicians, academics, and NGOs. · Use of study findings by candidates for Congress in election campaigns. · Input into several projects in the pipeline, including a solid waste disposal program at the national level; a second DPL; a water resources management project; a conservation project; a carbon finance project; and a project on natural disasters and emergency response. Dominican Republic 2005 Summarized in the 2005­9 CAS; findings provided supporting rationale for possible further investment in water and sanitation, as well as a GEF-financed project to support the national park system in combination with a watershed management program (financed by an external partner) to reduce hurricane-induced flood impacts. Egypt, Arab Rep. of · Mainstreaming into CAS. · Second Pollution Abatement Project derived from CEA. · Study on air and water pollution, for which the Bank contributed $20 million and donors, $150 million, for a loan of $170 million--an example of how CEA follow-up was used to bring donors together to address air and water quality issues (CEA was referenced in the project appraisal document). · Project on natural gas; use of Clean Development Mechanism (CDM) initiated; 10 million euros of CDM credits purchased from Onyx for pollution abatement. · Water quality project focusing on water and sanitation issues at the governorate level (currently in preparation). · Request by Ministry of Environment for a loan on solid waste management, agricultural waste, and hospital waste (currently pending approval by Ministry of Finance and the president of Egypt). · SEA for integrated coastal zone management initiated; includes cost-benefit analysis relating to renowned pristine areas. · Establishment (following completion of the CEA) of an environmental management system, as well as creation of a national committee for sustainable development, as recommended by the CEA, that includes all sectors and is headed by the Minister of Environment, following a presidential decree. · Creation of new environmental guidelines as a result of use of country systems, harmonization with OP 4.01, on environmental assessment (World Bank 2005a, 92); use of country systems approved as of March 2006. El Salvador 2006 · Government request for a regional SEA, which is being partially funded by the Bank. · Government request to the Bank for help in determining water tariffs. · Launch of a process for establishing a single environmental policy, which did not exist before; CEA contributed to this step. · Initiation of a voluntary program to educate large agricultural producers about compliance promotion and certification. · Projected input into next DPL. (Continued on next page) Institutions and Governance Series 49 CEA Review paper 2-12-08.indd B49 CEA Review paper 2-12-08.indd B49 2/12/08 5:35:43 PM 2/12/08 5:35:43 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Table C.2. Summary of Results Linked with the CEAs Reviewed (continued) CEA Date completed Results (and main counterpart) Ethiopia · Facilitation of environmental mainstreaming in a national development program; input of CEA analysis-- particularly regarding environmental capacity building at the woreda (district) level--into core component of the Productive Safety Net Programme (PSNP), which is aimed at upgrading the natural resource base through community-executed public works. · Input into National Sustainable Land Management Programme (submitted by the GEF for PDF funding). · Input into UNEP-supported government program for federal and regional capacity assessment. · Help in integrating environmental issues into Ethiopia's Plan for Accelerated and Sustained Development to End Poverty (PASDEP), which is the country's second PRSP. · Creation of more favorable climate for discussing environmental issues in the federal Environmental Protection Agency and other sector ministries; the federal EPA endorsed the CEA; although the environment agenda was advanced, the potential for strengthening the dialogue on environment was not realized, as a result of limited follow-up by the Bank Ghana · Inclusion of environment and natural resources in the joint assistance strategy that has replaced the CAS and also in the PRSP process. · Inclusion, for the first time, of forests as a sector for budgetary support by the Bank and other development partners. · Government request for a SWAP with other donors for $60 million for environmental governance; a joint mission took place along with the U.K. Department for International Development (DFID) and the Dutch international assistance agency · Change in stance of country director, who has become supportive of the policy dialogue that has been established and is interested in financing environmental issues. (There had been no environmental portfolio in the country.) · Facilitation of donor coordination agenda. Guatemala 2006 · Assistance to minister of environment in presenting arguments regarding Guatemala's environment policy, which is now sanctioned by the president. · In large part thanks to the CEA, acceptance of SEA as a tool for strengthening environmental management in the sectors. A refinery project to be implemented will undertake an SEA, for which the Bank will finance one consultant. · Allocation by the government of $5 million to improve the EIA process, in light of the coming investments and trade expansion. · Plans to follow up some of the recommendations on trade by simplifying enforcement and certifying laboratories. India · Input into the final content of the New Environmental Policy (NEP). For example, one recommendation of the CEA was to establish state-level environmental authorities of the Ministry of Environment and Forests (MoEF), and the NEP recommends this, under certain conditions. · Promotion, through the participatory CEA process, of bridge building between different stakeholders, particularly sector ministries, providing a good foundation for implementing the NEP; CEA recommendations were agreed to by various sector ministries. · Strengthening of country dialogue: the CEA helped make the case for capacity strengthening in the Pollution Control Boards, a step already under consideration. · Within the Bank, support for higher priority for environmental issues--for example, CAS update. Environment is now a higher priority for India. · Input of CEA institutional analysis into a capacity-building project. · Discussions on a second CEA in India in progress. · Influence of CEA recommendation on work in the transport sector and on the energy sector agenda. Nigeria 2006 · Input into the CAS.a Orissa State, India · Increase in staff (particularly educated tribals) for EIA (previously, there were 15 inspectors for 400 mining-related industries in Orissa); the Bank team requested the central government to exempt the state Pollution Control Board (PCB) from the existing hiring ban. · Streamlining of some EIA processes (for example, extension of period of consent for low-risk and medium-risk projects from one to five years. · Introduction of inspection strategy for red (high-risk) projects. · Input to decentralization of EIA-related functions such as clearance for low- and medium-risk projects to regional offices. A joint inspection strategy at the regional level is being worked out, and experienced staff members from the state-level PCB are being moved to regional offices within the state. · Significant influence on second DPL operation. Pakistan 2006 · Identification of Urban Air Quality Project (Ministry of Environment); request pending. (launch workshop · Discussion with Bank about an environmental program; performance-based partnerships to link federal pending) and provincial authorities under discussion. · Project on industrial pollution and clean production (Ministry of Industry); request from government pending. (Continued on next page) 50 Environment Department Papers CEA Review paper 2-12-08.indd B50 CEA Review paper 2-12-08.indd B50 2/12/08 5:35:43 PM 2/12/08 5:35:43 PM Appendix C -- Overview of the Objectives and Results of the CEAs Reviewed Table C.2. Summary of Results Linked with the CEAs Reviewed (continued) CEA Date completed Results (and main counterpart) Peru 2006 · Based on PEER findings and relations with the new vice minister, 100 percent increase in CONAM's budget allocation obtained. · Ongoing discussion on DPL; official request for DPL pending. · Request for a loan on natural disasters, as a result of a policy note based on CEA analysis on this issue. · Government interest in using the analysis of EIA effectiveness to design regulations; interest in publishing EIA analysis as a book. Serbia and Montenegro 2003 · Contribution to generating project ideas, some of them currently being prepared or implemented (for example, Serbia Danube River Enterprise Pollution Reduction Project; Serbia In-Situ Agro-Biodiversity Project, now part of the transitional Agricultural Reform Project; MN Tara and Lim Integrated Watershed Management Project). · Wide use by the governments of the CEA in PRSPs (fiscal 2003). · Input to the CAS. · Reduction of energy subsidies as recommended in the CEA. · Contribution to agreement with water agencies to raise water and wastewater treatment charges. · Contribution to preparation of biodiversity strategy; impetus for national discussions on climate change and persistent organic pollutants. Tunisia · Cessation by National Environment Authority of responsibility for solid waste management (QAG 2006). Establishment, as a result of the CEA and with METAP assistance, of a new agency for solid waste management; government request to the Bank to cofinance a solid waste management project of $22.0 million, in preparation; CEA influence on preparation of both the solid waste management project and an upcoming carbon finance operation (QAG 2006). · Greater awareness of economic costs of environmental degradation up to level of the presidency (QAG 2006). · Government request, based on CEA recommendations, for economic and sector work on soil and water conservation policies; request included in the 2004 CAS. · Assessment of cost of environmental degradation of water quality being conducted by METAP, as well as a new study to be launched in fiscal 2007 on the impact of climate change on agriculture. · Identification of Tunisia as a country systems pilot; follow-up work on strengthening EIA capacity in progress (QAG 2006). · Strengthened capacity in environmental economics at University of Tunis through work carried out as part of the CEA. Source: World Bank sta . Note: CAS, country assistance strategy; CONAN, Council on Environmental Protection, Peru; DPL, development policy lending, or development policy loan; EIA, environmental impact assessment; GEF, Global Environment Facility; METAP, Mediterranean Environmental Technical Assistance Program; PEER, public environmental expenditure review; PSP, poverty reduction strategy paper; SEA, strategic environmental analysis. a. Environmental issues linked with oil sector management are discussed in the Nigeria Country Partnership Strategy (World Bank and DFIC 2005, 7, 26). Analytical work on environmental sustainability in the Niger Delta region is also included in the Country Partnership Strategy matrix (see World Bank and DFIC 2005, annex 7, p. 8). It was not possible to assess in the short term whether the Nigeria CEA contributed to strengthening the policy dialogue on environmental issues with the partner country. Institutions and Governance Series 51 CEA Review paper 2-12-08.indd B51 CEA Review paper 2-12-08.indd B51 2/12/08 5:35:43 PM 2/12/08 5:35:43 PM CEA Review paper 2-12-08.indd B52 CEA Review paper 2-12-08.indd B52 2/12/08 5:35:44 PM 2/12/08 5:35:44 PM Appendix D -- Snapshot of Climate Change Issues in CEAs A s is being increasingly recognized, changes in program and the Sustainable Cities program) linked human activities--especially those associated with mitigation and adaptation (World Bank 2006c, with release of greenhouse gases (GHGs) from 32). e Colombia CEA also looked at climate change the burning of fossil fuels--are cumulatively issues in relation to natural disasters. In the Egypt contributing to extreme changes in weather patterns and Tunisia CEAs climate change was assessed in the and climate variability that affect water quantity and context of coastal zone management; the Egypt CEA quality, agricultural production, human health, human also discussed climate change in relation to air quality, settlements, and biodiversity. Research shows that in which was identified as one of the main environmental addition to the significant constraints these changes priorities in the country, and described policies and impose on sustainable economic growth, often it is the initiatives being undertaken to improve air quality. poorest population groups that are most vulnerable Drawing on cost-benefit analysis, the Egypt CEA to severe weather patterns and other effects of climate suggested several mitigation measures, including change. us, there is a need to address climate energy policies and the use of the Clean Development change issues at the national level through country- Mechanism (CDM) to raise funds. In the Belarus CEA level policy dialogue. As this review shows, CEAs climate change was addressed in the context of energy have discussed climate change issues in the context of efficiency. In the India CEA, one of the priority areas sectoral or thematic analysis and cost of environmental is the power sector, which has implications for GHG degradation analysis. emissions. 1. Analysis of specific sectors or environmental concerns 2. Cost of environmental degradation estimates. e identified as priorities in the CEA. e Peru CEA Nigeria CEA found that Nigeria's contribution to global showed that even though Peru's contribution to GHG greenhouse gases was substantial. Flaring and venting emissions was modest, climate change was one of the of gas accounted for more than half of the country's factors contributing to the country's high vulnerability total carbon dioxide emissions, and the costs of these to natural disasters. Economic costs linked with natural emissions were estimated at 1.27 percent of GDP. disasters in Peru were approximately 0.5 percent of GDP and affected roughly 2 million people in fiscal A number of CEAs recommended measures specifically 2000­2004. e CEA discussed Peru's ratification of linked to climate change issues. For example, the the United Nations Framework Convention on Climate Tunisia CEA recommended undertaking an "SEA Change (UNFCCC) and the Montréal Protocol, of the impacts of climate change and adaptation implementation arrangements for these agreements, policies and their impact on the management of approval of the National Strategy for Climate Change natural resources" in the area of integrated soil and in 2003, and various programs and initiatives (for water management. e Egypt CEA report proposed example, the Peruvian Climate Change and Air Quality establishing a Climate Change Unit within the Institutions and Governance Series 53 CEA Review paper 2-12-08.indd B53 CEA Review paper 2-12-08.indd B53 2/12/08 5:35:44 PM 2/12/08 5:35:44 PM Strengthening Policy Dialogue on Environment -- Learning from Five Years of Country Environmental Analysis Egyptian Environmental Affairs Agency to oversee Both mitigation measures (emissions reductions the implementation of the Energy-Environment and the like) and adaptation measures, including Review Action Plan as well as the CDM, the Global risk preparedness and management and engineering Environment Facility (GEF), and other mechanisms solutions, were described and promoted in the established by international conventions, and to assist CEAs--although statements about climate change in building a portfolio of projects with local and global were more often presented as background than as benefits. 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