I 'I ~;ts,IAt2W II&fi" ' l, " h l, 8 .^ _ _ t s- - - ______ - so M~~~~~~~M e~~~~~~~~~~~~~m , .61 . . . ~~;XJ:vfi. t -- tS t~~~~~~~~~~~4 a , ,'I'A .. _.ts , ; ....... ,.-We'a Environment Matters is a magazine of the World Bank Group. Visit the magazine at the Bank's website - W elcom e to http://www.worldbank.org/environment Environmentally and Socially Sustainable Cm a tte rs... Development Network Managers Chair/Vice President This issue, which serves as our annual review on the environment, looks back on the Ian Johnson Environment World Bank's environmental work from July 2002 through this past June (our fiscal year Kristalina 1. Georgieva 2003) and highlights upcoming challenges and opportunities. Rural Kevin M. Cleaver Social The overview article, by Environment Department Director Kristalina Georgieva, reviews Steen Lau Jorgensen b eatet~ogea progress in the implementation of the Environment Strategy over the last year. Environment Matters is produced by the World Bank's Environment staff with This year we are happy to include articles by such esteemed contributors as Borge Brende, contributions from the Bank's Regions. the Norwegian Minister of Environment; Ronnie Kasrils, the South African Minister of Editorial & Production Team Water Affairs and Forestry; Achim Steiner, the Director General of IUCN-The World Con- for the Annual Review servation Union; and Mark Rosegrant and Joachim von Braun of the International Food Technical Editor Policy Research Institute. Ede Jorge Ijjasz-Vasquez Story Editor Robert T. Livernash Each of the Bank's operational Regions has written a review of the Region's work for the Designer, Photo and Managing Editor past fiscal year, taking a look at the accomplishments, lessons learned, and future chal- Jim Cantrell Associate Photo Editor lenges. IFC and WBI have done the same. For operational purposes, the Bank defines the John Richard Shea world's regions as: Africa (AFR), East Asia and Pacific (EAP), Europe and Central Asia Editorial Assistants (ECA), Latin America and Caribbean (LCR), Middle East and North Africa (MNA), and Diane Flex Alexander Kirilkin South Asia (SAR). Special Contributors Kristyn E. Ebro James Warren Evans THE WORLD BANK GROUP Notes: The World Bank All $ = U.S. dollars except where noted. IBRD IDA IFC MIGA ICSID All tons = metric tons. International Bank International International Multilateral International for Reconstruction Development Finance Investment Centre for Thanks to Bank staff members J. & K. and Development Association Corporation Guarantee Agency Settlement of MacKinnon for the biodiversity images Investment on pages 18 and 23-35. Disputes Thanks to Bank saJennfer Sara for the Established in 1945 Established in 1960 Established in 1956 Established in 1988 Established in 1966 images on page 21. 184 countries own, 164 members 175 members 163 members 139 members subscribe to its capital IBRD maps numbered 31562 through 31567 contained in the Regional Lends to creditworthy Provides intrest-free Assists economic Assists economic Provides facilities for section of the magazine were produced borrowing countries credits tO poorer development by development through the conciliation and by the Map Design Unit of the World countries that have a per promoting growth in loan guar antees to arbitration of disputes Bank. The boundaries, colors, capita income in 2002 the private sector foreign investors between member denominations, and any other of less than $875 and countries and information shown on these maps do lack thefinancial ability foreigninvestors not imply, on the part of the World Bank to borrow from IBRD Group, any judgment on the legal status t b of any territory, or any endorsement or acceptance of such boundaries. The countries identified by name in these About the Cover maps are those countries to which the Bank provides development assistance in the form of loans or advisory tancThe photo, taken at Nungwi village on the northern tip of UngUja Island in services, and for which the Bank has a Zanzibar, shows local fishermen preparing for night fishing. Zanzibar is designated official responsible Ban ha a - Zaendowed With highly diverse and resource-rich coastal areas that support country. - an array of important natural habitats, including coral reefs, estuaries, lagoons, sea grass beds, coastal forest, and extensive mangrove Publications Info: 202-473-1155 forests. The poor in these areas depend directly on natural resources General Inquiries: 202-473-3641 for their livelihoods. Coastal marine products (fish, mollusks, shrimps, Department Fax: 202-477-0565 and crabs) provide a last-resort income-earning opportunity and are Web address: http://www.worldbank.org r Web address: http://ww.worthe main protein component in the diet of the majority of coastal people. Recently, there has been a significant decline in coastal and Printed with soy ink on recycled, chlorine- - marine resources-due in part to unclear property rights, unsustain- free paper. Please recycle.4 - able fishing levels and practices, unregulated coastal zone develop- -___-____ ment, lack of alternative income-earning opportunities, limited access to markets and social infrastructure, and limited cross-sectoral coordination. The World Bank Group 1818 H Street, N.W. Photographer: Paavo Eliste, Natural Resources Economist, Environment and Social Washington, D.C. 20433 Development Unit, Africa Region, World Bank. Annual Review * 2003 WVelcome from Ojr Vice President, Ion Jonnson 2 and from Vice President Nemat Toloat Shafilk Director's Overview 3 Environment Department Director Kristalina Georgieva considers the opportunities and obstacles to achievings the Mlillennium Development Goals. Ways Forvvard to Deliver on Our Water Commitments 8 Borge Brende, Norwav's Minister of the Environment, considers the challenges for governments and institutions to meet the water-related commitments made at Johannesburg. Water Gives Life 11 Protected Areas as Tools for Water Conservation 30 Ronnie Kasrils, South Africa's 'Minister of Water Affairs and and Management Forestry, examines South Africa's new approach to water Kathx' MacKinnon and Claudia Sobrevila discuss the value of management. protected areas as tools for water conservation and manage- ment. Working on the Water's Edge 1 4 IUCN Director General Achim Steiner reflects on the need for a more integrated approach to water resources management. Jean-Roger Mercier describes the Bank's efforts to mainstream its safeguard policies in an active lending pipeline and adapt Water, Food, and the Environment 1 6 safeguards to new lending priorities. Even a moderate worsening of current trends in water and food The Environment and Natural Resources 34 policv, note IFPRI's Nlark V. Rosegrant and Joachim von Braun,couldtriggr a geuine ater risisManagement Portfolio Braun, could trigger a genuine wvater crisis. Anjali Acharya and Rita Lohani review the fiscal 2003 environment and natural resources management portfolio. Feature Articles Regional Articles The Bank's New Water Resources Strategy 1 8 Th Bak' Ne Wae Reore Statg . Environmental priorities varv among the Bank's six Regions. John Briscoe, the Bank's Senior Water Adviser and principal author of the new Water Resources Strategv, outlines some of The Regional articles describe progress in implementing the the Strategy's main messages. Environment Strategy and supporting their clients' efforts in promoting environmentally appropriate policies and programs. The articles also highlight operational linkages Water Supply and Sanitation - Creating 21 between water and environment in the Regional programs. a Clean and Healthy Environment The Bank's Director of the Energy and WVater Department, Africa 36 Jamal Saghir, and Mleike van Ginneken describe the linkages East Asia & the Pacific 40 between the NIDG goals for water supply and sanitation and Europe & Central Asia 4 4 environmental sustainability. Latin America & the Caribbean 48 W*And Environment 24 Middle East & North Africa 52 Water Resources Sout Asianm nt 56 Emerging Operational Challenges South Asia 56 Rafik Hirji describes some of the key operational challenges in Institutional the water resources and environment area. IFC and Sustainability - The Global Context 60 Environmental Flaws - Linking Catchments 26 IFC is at the forefront of efforts to promote private sector to Coasts in Water Resources Management investment in water supply and sanitation and environmental Nlarea Hatziolos and Richard Davis describe the critical need improvements. to broadly integrate the management of the downstream and WBI -Collaborating Through Partners 63 upstream portions of river systems, including catchments and WBI C rough Parners 63 coastal areas. In support of the MDGs, WBI sponsors training and learnig programs, policy services, knowledge-sharing activities, and Partnerships - The Next Step in People, 28 knowledge networks. Planet, and Prosperity Back of the Book Jocelvne Albert of the Environment Department describes the News Updates 64 progress in key partnerships after the Johannesburg summit. Environmental Publications (inside back cover) LETTER FROM THE VICE PRESIDENT OF ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT AND FROM THE VICE PRESIDENT OF ,1i'I, UiIT Pcomrut to the 2003 edition or Eub'iioictit AfattL'rs, dedicated thits Veai | to Water and1 the Environment on the occasion of the 5th World Parks Congress A in Durban, South Africa. Enz,iron,uc,zt .\f ttters reviews the World Bank's envi- - ronmenltal programs in developing coLunitries and its global engagement. It brings - - together external and internal viewpoints on the challenges ahead1. 4 - During, the past century; while the world's population tripled, the aggregate use ' of water has increased sixfold, with irrig,ation consuming over 70 percent ot available water. These increases have come at high environmental costs: halt ot f fr the wvorld's wetlands disappeared over the last century, with some rivers now no longer reaching the sea, and 20 percent of freshwater fish now endangered or extinct. If current trends continue, 4 billion people will live under conditions of severe water stress by 2025, particularly in Africa, the Middle East, and South Asia. It is widelv recognized that water is central to the issue of sustainabilitv. WVater was the single most important topic identified b! decisionmakers at the 2002 World Summit on Sustainable Development (X\'SSD) in Johannesburg, South Africa. It was the focus 0: the Meeting of the G8 in Evian, France. Furthermore, the Third World Water Forum held in Kyoto, Japan, in 2003, consolidated z; growing consensus on the hurdles to be overcome in order to deliver the Millennium Development Goals. Financing the water sector wvill need an additional $100 billion per year over the next 20 years-as established by the report of tht World Panel on Financing Water Infrastructure, led by Michel Camdessus. WXater financing will require a renewed implementatior effort supported by a broad coalition of stakeholders. Water is a basic component underlying responsible economic growth and pov ertv reduction in poor and middle-income countries. Safe water and proper sanitation help improve human health; more effectivt water management helps boost growth and provides better protection against droughts and tloods, thus reducing the vulnerability o poor people. Success in meeting the Millennium Development Goals will require strategies that are adapted to the economic, political, and histori cal conditions of each countrv. If by 2015 we are to reduce by half the number of people living without access to clean and safe water management of water resources and services will need to be dramaticallv improved, including efficient use of water, reduction o pollution, and development and sharing of resources among productive users in all segments of society. There is no one-size-fits-al approach in the water sector, and no one approach should be considered as universal. Fundamental changes in policies and institu tions coupled with substantial increases in financing should pave the way for new implementation modalities through multi-stake holder partnerships among the public sector, private sector, and civil society . In response to these challenges, the ANbrld Bank's Board of Directors has recently endorsed a new WVater Resources Strategy as well a a new Infrastructure Action Plan in response to strong client-country demand for infrastructture. The WVater Resources Strategy repre sents a balanced approach that promotes both effective management of water resources and responsible infrastructure development A key challenge will be to assist countries in developing appropriate stocks of well-performing hydraulic infrastructure. The nev Infrastructure Action Plan encompasses innovative ways of financing infrastructure projects, an.d will apply new and existing instru ments more effectively, including a spectrum of public-private partnerships, and project financing at regional, national, and sub national levels. A sustainable path to development starts and ends with political will and good governance. Decisive action by governments, civi society, and the private sector at the national, regional, and global levels is needed in the coming vears to fulfill the commitment endorsed by the international community and steer the water sector away from business-as-usual and toward a path of more environ mentally and socially responsible growth. Nemat Talaat Shafik Ian Jo),son 0~~~~~~~~~~~~~~~~~~~~~~~~~ by Kristalina 1. Georgieva, Director, Environrmenl Department * n September 2002, world leaders stood together in $57 billion a year. The World Bank calculates that achieving Goal 7 ' Johannesburg to reaffirm their commitment to eliminat- may imply up to $35 billion a year in additional aid over the next ing poverty through environmentally sound and socially 15 years. But money alone is not enough to get the job done. New responsible economic development. They stressed that alliances are needed at the local, national, and global levels to a healthy environment is central to the international devel- allow more equitable sharing of the burden and benefits of devel- opment agenda and an integral part of meeting the Millennium opment. In addition to increasing aid, rich countries must open Development Goals (see Box 1, next page). Households must have their markets further and raise the flow of new technologies to adequate supplies of uncontaminated water, sanitation facilities, developing countries. Governments in the developing world, in and clean fuels if the goals to combat disease, reduce child mor- turn, must become more accountable and transparent and ensure tality, and improve maternal health are to be realized. Reversing that poor people are able to obtain secure land tenure, as well as land, watershed, and biodiversity degradation is essential for ag- access to education, health care, and other basic services. ricultural productivity and reduction of rural poverty, which in turn strengthens the foundations for healthy, educated, and equi- Environmental sustainabil ity table societies. The threat of climate change must be addressed, both through adaptation and mitigation, if all of these goals are to at the World Banl be met and the achievements sustained for future generations. We at the World Bank have developed a comprehensive imple- Achieving the Millennium Development Goals is a tall order. It mentation plan for actions to meet the global commitments stem- will require substantial improvements in governance and at least ming from the UN Millennium Declaration and decisions made doubling the size of development assistance, currently at about in Johannesburg, Monterrey, and Doha. We have confirmed envi- ANNUAI REVIEW * JULIY 2002-JUNE 2003 (FY03) 3 THE MILLENNIUM DEVELOPMENT GOALS (MDGs) ergy and financial-sector adjustment loans. Both in terms of number and qual- The following eight goals and their targets are to be achieved by 2015, compared to ity, non-lending advisory services are also 1990 levels: rising. For example, in fiscal 2003 we de- 1. Eradicate extreme poverty and hunger veloped 140 analytical and advisory prod- * Halve the proportion of people whose income is less than one dollar a day ucts in support of the integration of * Halve the proportion of people who suffer from hunger environment in both World Bank and cli- 2. Achieve universal primary education * Ensure that boys and girls alike complete primary schooling ent development strategies and programs. 3.Prmoe enereqaltyan epoerwoe The Strategy emphasizes the role of stra- 3. Promote gender equality and empower women * Eliminate gender disparity at all levels of education tegic analyses, including CountryEnviron- 4. Reduce child mortality mental Analysis (CEA) and Strategic * Reduce by two thirds the under-five mortality rate Environmental Assessments (SEA). The 5. Improve maternal health refinement of methodologies and guide- * Reduce by three quarters the maternal mortality ratio lines for both instruments, as well as their 6. Combat HIV/AIDS, malaria and other diseases application in the field, has been progress- * Reverse the spread of HIV/AIDS and the incidence of malaria and other major diseases ing well, with close to 10 pilot CEAs initi- 7. Ensure environmental sustainability ated and 12 SEAs under way. * Integrate sustainable development into country policies and reverse loss of environmental resources During this past fiscal year, the Bank has * Halve the proportion of people without access to safe drinking water During ispasvisa yth Ban ha * Significantly improve the lives of at least 100 million slum dwellers continued improving its application of 8. Develop a global partnership for development * Raise official development assistance cies. For example, the new Policy on Dis- * Expand market access closure of Information has been * Encourage debt sustainability successfully implemented. About 83 per- _________--____________ _ -cent of all new investment lending (in volume) is subject to Category A, B, or Fl ronmental sustainability as one of seven Currently, active projects with environ- Environmental Assessment (EA), reflect- core development issues for special em- mental and natural resource management ing the more rigorous application of the phasis and corporate focus in the years to content amount to $13 billion, represent- EA policy. Improved guidance has been come. We have recently reported on our ing about 13 percent of the total active prepared for new lending instruments progress in implementing the 2001 cor- portfolio of the World Bank. In particular, such as community-driven development porate Environment Strategy, which in- lending for environmental policies and in- sucts Finity-dre n islbent dicates a renewed focus in three areas stitutions, a key area emphasized by the projects. Finally, more attention is being where environment, quality of life, and Bank's Environment Strategy, is rising of safeguard measures in the field and to poverty reduction are strongly interlinked: sharply. Innovative approaches-like the training and strengthening of client capac- enhancing livelihoods; preventing and Mexico Programmatic reducing environmental health risks; and Structural Adjustment LENDING TRENDS reducing people's vulnerability to environ- Loan-are supporting t ENRM lending at World Bank mental hazards. the first stage of an out- 3,000 * ENRM as % oftotal Bank lending 16% come-based program to 2,500 M The Bank's environmental lending has promote sustainable , 1 \ C 12% responded positively to the commitments development and main- 0 made in the Strategy. After declining for stream environment in E 1,500 8% several years, lending for environmental the policies and pro- - I and natural resource management issues grams of other sectors. Do 1,00 ,I 4C. is now increasing, reaching $1.1 billion in In Brazil, environmental 500 C fiscal 2003, and is projected to grow to $2.1 concerns have been i billion in fiscal 2004 (see Figure, at right). mainstreamed into en- FYr FY97 n98 FY9 9 FYO FY0l FY02 FY03 FYt04 (Projected) 4 ENVIRONMENT MATTERS * 2003 OVERViEW ity on EA; in fiscal 2003, more than 500 LINKS BETWEEN PROTECTED AREAS AND POVERTY local experts, officials, consultants, and I NGO representatives were trained in cli- Ensuring that uniquely critical natural areas are effectively protected is a key ele- ent countries. 1 ment of the Bank's program of support for biodiversity conservation and overall en- vironmental sustainability. Natural habitats and ecosystems reduce human n vulnerabilities to natural hazards such as drought and floods, which disproportion- Initegrating environm7ent Into poverty re- ll ately impact the poor. Biological resources provide the raw materials for livelihoods, I cluction strategies and processes. The Bank . is implementing a program to support the sustenance, trade, and medicines. Around the world, the Bank is helping to establish new reserves and strengthen management of existing protected areas in 85 coun- I adequate incorporation of poverty- tries. Over the past 15 years, the Bank has approved 233 projects with a total portfo- environment linkages in Poverty Reduc- h lio of $3.2 billion in lending, grants, and co-funding. Many of these programs are tion Strategy Papers (PRSPs), including t explicitly linked to sustainable livelihoods and improved resource management for environmental reviews, training in client local communities.The India Ecodevelopment Project provides development oppor- countries, selective support to priority tunities to communities to reduce the pressure on national parks. In Indonesia, a na- PRSPs, and contributing to a Poverty-En- tional effort to manage and restore coral reefs in the world's richest marine hotspots vironment Partnership with other donors. includes collaboratively managed marine reserves as the centerpiece of the program. Specifically, the World Bank has provided, In Bolivia, the Bank is supporting a 15-year program to establish a self-sustaining and over the last 18 months, targeted environ- decentralized national protected area system managed through partnerships with * I~~~~~~~~~ocal and indigenous communities. mental input to PRSPs in 13 countries, l meeting the Strategy target of 5 to 15 countries per year. In Yemen, for example, after an initial - . _ PRSP that contained little or no mention of environmental issues, the World Bank _ i' provided support for a study by local ex- perts on poverty-environment linkages. In the second review of PRSPs, the full PRSP for Yemen was among the top perform- . ers. Furthermore, the environment section of the PRSP was used by the government to develop a business plan on sustainable development. En1i l71in,g livelihoods by improving natu- ral resources mianagem'ncnt. In many de- veloping countries, poor people- especially those living in rural areas-tend h' to be highly dependent on natural re- sources for their livelihoods. In many cases, natural resources provide as much as 30 to 40 percent of their income. The World Bank's Environment Strategy seeks to enhance the livelihoods of the rural poor on an environmentally sustain- , able basis. An example is the Mesoamerican Biological Corridor (MBC), a region extending from Southern Mexico Huts on the river in Indonesia. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 5 j to Panama that includes protected areas, menting new protected areas, the pro- buffer zones, and connectors. Through fi- gram will seek greater socioeconomic in- nancial and technical support of the $70 tegration with local society by working in million business plan for the MBC, the the buffer zone of the protected areas. Bank has been instrumental in widening the focus from primarily biodiversity pres- Preventing and reducing environmental ervation to a broader, more inclusive fo- health risks. The Bank continues its active cus on sustainable livelihoods, land support to clients to prevent and reduce administration, and regional develop- environmental health risks. About one- ment. third of the environment and natural re- sources portfolio is devoted to this issue, A more recent initiative is the 10-year with special emphasis on indoor and out- L. _ .rs, ' Amazon Region Protected Areas (ARPA) door air pollution and water supply and L _-- program, which was jointly launched by sanitation. the Government of Brazil, the Bank, the _. - ' - _ Global Environment Facility (GEF), and On urban air pollution, the Bank has con- the World Wildlife Fund (WWF) during the 2002 Johannesburg summit. In addition h nued ltS actpve support, along with sev to protecting 50 million hectares of Ama- eral development partners, of the Clean 1 izl i | | 11 i ~~~~~~zon rain forest by implementing existing Air Initiatives in East Asia, South Asia, - z protected areas and creating and imple- Africa, and Latin America. In all cases, the Thailand. partnership brings together expertise in __ _ __ _ _ _ _ _ ________ _ urban development, transport, energy re- THE COMMUNITY DEVELOPMENT CARBON FUND form, environmental management, and BENEFITS TO POOR COMMUNITIES AND THE GLOBAL ENVIRONMENT environmental health. Although climate change is a global phenomenon, its negative impacts are felt more by poor countries and poor people in them. Developing countries are more vulnerable Integrating environment into sectors, poli- because of their heavy dependence on natural resources and their limited capacity to cies, and institutions. The Strategy stresses cope with climatic variability and extremes. While 80 percent of carbon emissions are the need for supporting policy, regulatory, produced in richer countries, 96 percent of deaths from natural disasters already occur and institutional reforms and sustainable in poor countries, which are more vulnerable to hurricanes, droughts, and floods.The private-sector development in client 1997 Kyoto Protocol opened the doors to action on carbon emissions reduction.The countries. Bank-managed Prototype Carbon Fund (PCF) is an innovative public-private partner- ship to channel funding and know-how for project-based greenhouse gas emission reductions in developing countries. The fund has sponsored projects involving emis- Pesstowardjmaistrogming env sion reduction credits for more than $100 million. However, despite the PCF's efforts, men in seto ralpe programs, aNd carbon finance rarely reaches small projects in low-income countries or poorer com- polical hastbenenneral tie ne munities in middle-income countries.To reach this market niche, the Bank and the In- analytical instruments, such as the Coun- ternational EmissionsTrading Association have launched the Community Development try Environmental Analysis, are being used Carbon Fund (CDCF). The target size for the fund is $100 million. Two examples illus- to highlight the important links between trate the projects supported by the CDCF. Kenya is the world's third largest tea ex- environment and economic development. porter, with small growers accounting for 60 percent of production.The CDCF project The water resources sector is a particular proposes to reduce carbon dioxide emissions by 240,000 tons and raise the income of case where the linkages among water sup- small producers by switching from expensive fuel oil to wood fuels to dry their tea, thereby reducing energy bills by 66 percent a year. A proposed CDCF project in Viet- ply ervices t resomanagemn nam will finance biogas plants with 60MW capacity that would reduce carbon emis- and resbecmingralei sions by 2 million tons over 10 years and would bring fuel for cooking to poor rural water-stressed and resource-degraded families. Further, it would reduce the workload on women and children, who would no areas. The articles in this issue of Environ- longer have to collect firewood for cooking. ment Matters look at a variety of these link- ____ __ _- _ _ ages. 6 ENVIRONMENT MATTERS * 2003 OVERViEW governments, companies, and individuals WHERE THERE Is A WILL, THERE Is A WAY act to avert a growing risk of severe dam- THE PHASEOUT OF OZONE DEPLETING SUBSTANCES age to the environment and profound so- Now in its twelfth year, the Montreal Protocol (MP) Program at the World Bank has cial unrest. If a leap forward to a better assisted more than 30 countries reduce consumption and production of harmful world for all is to be realized, we simply ozone-depleting substances (ODS) by channeling $530 million in grant funding from cannot afford current production, con- the MP Multilateral Fund (MLF) and the GEF. Bank MP clients have phased out 41 sumption, and distribution patterns much percent of the 172,755 ozone-depleting potential (ODP) tons of consumption and longer. Substantial increases in the effi- 95 percent of the 54,563 ODP tons of ODS production that were to be phased out ciency of natural resource use, and more under the entire MLF. inclusive means of decisionmaking, are within our reach, and we must master the Ending ODS supply while curbing demand is a central focus of the MP Program. Under will to build a future that puts fewer strains Bank projects, the three major producers of chlorofluorocarbons (CFCs) in develop- on society and the environment. ing countries have drastically reduced production: the Russian Federation stopped CFC production in 2000, India has phased out 75 percent of its production,and China has announced that it will accelerate complete CFC production closure by 2007. is to pursue a long-term commitment to Bank clients have come full circle in their phaseout efforts, from over 500 straightfor- our clients on the environmental front, ward investment projects to mature, policy-oriented, national-level strategies focused striving for a better understanding of the on the final phaseout of ODS consumption in all sectors. These performance-based linkages between environment and struc- programs will provide the foresight and resources needed in the final push toward tural economic issues, supporting efforts complete CFC phaseout in 2010. to strengthen the policies and institutions ------ - ----- that are indispensable to achieve a sus- tainable development path, promoting The environmental sustainability of the cused on mainstreaming biodiversity in donalign ment fh t efficint private sector is growing in importance, protected areas and beyond into rural de- of scarce development resources, and es- notably in countries where the environ- velopment and infrastructure programs; tablishing effective ways to mainstream mental effects of such growth can affect sustainable financing for conservation and environmentinthedesign and implemen- the quality of life of the population, par- sustainable use of biodiversity; develop- tation of all our programs. ticularly the poor. The Bank's private- ment of sustainable renewable energy sector arm, the International Finance Cor- markets and efficient energy use; and res- poration (IFC), has made sustainability a toration and protection of transboundary corporate priority. As described in this is- water resources and their associated eco- sue, IFC has established three new facili- systems. Land degradation and persistent ties-with an estimated funding of $55 organic pollutants are two new focal ar- million over three years-that will sup- . . . eas identified in the October 2002 GEF As- port increased environmental sustain- sembly. These areas-along with climate ability by the private sector in emerging change adaptation activities to address the markets. increasing vulnerability of poor countries Buildinig on synergies betzveen local anid to the adverse impacts of this change- global beniefits. The Environment Strategy will become areas of increased Bank-GEF calls for an increased emphasis on the lo- assistance. cal aspects of global environmental chal- a lenges and on reducing the impacts of the Looking degradation of the global environmental commons on developing countries. By the middle of this century we can con- _ ------__- _ ceivably quadruple the global economy The author, Kristalina Georgieva, is Working in partnership with the Global and bring into being a world free of pov- Director of the World Bank's Environ- Environment Facility, the Bank has fo- erty as we know it today-provided that ment Department. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 7 7TF !_ ~ ~~ , - - A W -a s Forward to DeOiver on _______;Our Water L BY B0RGE:BREMDE -Commitments We don't realize the value of water until the well is dry, Benjamin Franklin once said. This statement captures in many ways the water development and management challenges we are ,. E N _-= *: - faced w ith. The valLie of wxater to hIllmlanis anid nlatLure i~s not properIl recognilzed. The role oft water as an enginie tor gIow\ th -___ < -and the macroeconiomiic impactS ot pooit x\ater mianiagemienit andl water reSOUrces dLegradatioin are largel I Lyiunknowni The %_'orld taces an LliprecelientedL wxater crisis. It is a crisis for people and tor natLire Tlime has ci:ome toir action-not talk! At the UN WVorIld Suinimmit oin Stistainable Development (\VSSD) in JohannesbUrg last N-ear, it *was agreed to halve the piropor- tio n of people WithouIt access to sate drinking water and basic sanitatioin services by 2015 and1 to stop the -1nsuIstainable e\- ,X ploitation of -ater resOUrces anid to) develop integrated water > _ -= resouirces mlanagemlent anid efficiency plans by 2005. WVe mu1Ist take specific initiatives in order to deliver on ouir ccl)lmitnmentb frontm Johannesburg, anid we uLst show tangible resuilts in thle imost crLicial areas in the fight against po\ert\ antd environ- _ - -, -' mental degradLation. EN\I ONNIFNT NIFI .T ,,,, I have been given a specific task and responsibility to coordi- pact agreed to in Monterrey. Developing countries themselves nate and spearhead our efforts to achieve the MDGs and WSSD- need to assign priorities, draw up strategies, invest in human targets as Chairman of the 12th Session of the United Nations resources, and implement poverty-oriented policies. Good gov- Commission on Sustainable Development (CSD). As Chairman ernance (that is, anti-corruption policies), democracy building, for CSD-12, I see the transformation of words into action and and respect for human rights are crucial to combat poverty focusing on implementation as our main challenge; the inter- and to make development sustainable. national water community has a key role to play in this. Better governance is essential for improving water manage- Mobilizing political will from governments at all levels and ment and providing efficient water supply and sanitation ser- the international community is a prerequisite for solving the vices. National- and basin-level water management strategies global freshwater crisis. Decisionmakers must now make up must give priority to the fight against poverty. The primary for the political inertia of the past and take steps forward to responsibility for ensuring equitable and sustainable water reach the ambitious goals. The UN must take a leading role management rests with governments, at all levels, in accor- and the international community must mobilize political will dance with the principles of integrated water resources man- and financial resources. National governments must recognize agement. Countries should make sure that water and sanitation that participation, transparency, and eliminating corruption is are integrated into development strategies, including poverty the only way forward to ensure access to clean water and basic reduction schemes, allowing the effective integration of the sanitation for all. water and poverty agenda with macroeconomic policies and public finance. The water cycle and inherent ecosystems are the life support of the planet, but human activities have caused serious dam- However we in the iternationa c uys so beacog tni ageto hes ecsysems theatnin th helthandlivlihods zant of the fact that there are many ways of organizing the agetof p heo e whosydtepen threm.ening the keylto good soeltihons water sector, reflecting local political, cultural, and adminis- trative traditions. It should be entirely up to the countries them- within a basin context is to deal with the underlying problems- selves to decide how they will organize their water sector. poor governance, lack of access, poorly performing utilities, Regardless, a key issue will be to hold the water actors and inequitable distribution of water, pollution of water resources, and water scarcity. Solving these problems requires our atten- size that fits all! tion at the local, national, regional, and global levels. There is a strong linkage between the state of environment of Governments unfortunately do not give water sector issues fehae eore nacutyadiscpct o oet high priority. Often politicians tend to interfere in the sector, eraiatio aevelop nt. Cns fehater habita the legal and administrative framework is inadequate, utili- sucas aks river,prings marses,ind ish oneo the ties are underperforming, and there is lack of transparency and mstcefficientsandicost-effectiv m eands ofeuarate s most efficient and cost-effective means of guaranteeing sup- accountability. Part of the explanation is that water tends to be ply services for safe drinking water. If these ecosystems are a local responsibility, and local and national priorities differ. not looked after, basic human needs cannot be met and further A key challenge will therefore be to mobilize the required po- social and economic development will be retarded. litical will at lower levels of government and to include all rel- evant stakeholders in the work. We marketed the World Summit as a time-shift from words to action. I will-through the CSD-contribute to giving us the Reforms in the water sector are of key importance-all coun- power needed to follow our commitments. This will, however, tries need to put their own house in order, to improve their require financial resources. In this respect, donors and inter- water policies and governance. This is part of the global com- national financing institutions, including the World Bank, have ANNUAL REVIEW * JULY ''-IL NI. 2003 (FY03) 9 a key responsibility in prioritizing support to the water sector. To a large extent we have the means. Lots of good policies are Official development assistance (ODA) can, however, only be being implemented both nationally and at the basin level. Still, a catalyst. We need to use ODA strategically to catalyze and the remaining challenges are formidable. We as ministers ac- mobilize capital from domestic markets and develop public- knowledged this in Johannesburg and made commitments to private partnerships to finance the required water infrastruc- action both at the national and the international level. ture. The CSD has the potential to play a crucial role in maintaining I am, however, confident that the world has the financial re- the momentum of Johannesburg and to give a strong political sources needed to implement the Johannesburg targets if we impetus to the implementation of the WSSD targets. The CSD can mobilize the political will to do so. We need growth, but it is a unique forum in the sense that it is the only global institu- has to be sustainable. Growth is needed to eradicate poverty, tion focusing on the integration of the three dimensions of sus- the most important threat to human well-being. Unhealthy tainable development. I would like to see the CSD keep and growth makes it impossible to sustain nature, the most impor- further strengthen this focus. The CSD should draw on its tant source of life. strengths and be more focused on policy coherence and the underlying economic and legal framework that can make sus- To eradicate poverty and protect our ecosystems and tainable development a reality. biodiversity, we must use the opportunities nature gives us today in a way that does not reduce our benefits from nature CSD-12 will focus on how to reach our common objectives, tomorrow. Zero growth cannot be a goal, but zero emissions and it will uphold the political pressure on us to deliver. It will most certainly can. The challenge is to achieve more growth be a scorekeeper, identify obstacles, and provide clear and con- with less use of land, resources, energy, harmful chemicals, cise recommendations for further action. The CSD will take and waste. To de-couple economic growth and environmental advantage of the good work that is being done in other inter- damage is essential to protect nature. It is also essential in or- national organizations and the focus will be on implementa- der to eradicate poverty. In short, it is essential to sustainable tion of the water-related goals we have agreed on. development. We have the means-if we choose to use them. We need to forge alliances that can attack poverty and provide Building, maintaining, and operating infrastructure-pipes, water services. And we must bring business, NGOs, and other treatment works, and connections-to get water to households major groups on board to drive the process forward. In costs money. There are only two sources of paying for invest- Johannesburg it was an alliance of business, NGOs, and ments-payments by users or payments by taxpayers. Only decisionmakers that made it possible to agree on the sanita- by charging those who are served can services be extended to tion target. the unconnected. Tariff setting must include subsidies to the poor. Subsidies are not free; they come from state budgets. I believe that the CSD will be able to fulfill its mandate. My job Subsidies waste money regardless of need-money that could now is to make the CSD a relevant and effective organization have been targeted to give the poor a better life. More sustain- and ensure that the world community is set on the right track able production cannot be realized without adoption of the toward stopping unsustainable exploration of water resources "polluter pays principle" and the elimination of harmful sub- and providing safe water supply and sanitation for all. sidies. B0rge Brende is the Norwegian Minister of the Environment and the Chairman of the 12th Session of the UN Commission on Sustainable Development. 1 0 I1N' I1(C\NXIINT MATTERS * 2003 -~~~~~~~~~~~L VIEWPOINT Givesi76f - A . , ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~r i ater gives life. The amount an(i nature of the throuLgh rea-sona.-ble legislative andi hetler meai, Lre that \available wstater determines the extent anid prevent pollution and ecologicaI derdaLi( ln; pInote 1 14/ nature of that life. The amount and nature of conIserv ation; andc1 secure sustaina,ible development and use w\,ater available also determines wvhere devel- of natural resources; vhile pronmotiln ustifiak c coinoic opnmentt can take place. Southl Africa's water belongs to its anld social die\velopmert. people It is the task of the South African Government to care ior this water, to seek its fair distribution, and to facilitate its The Constitution, along with the 1994 keconstructin and Dc- \\ 1se~ us \ elopmiienit Programmnie (which stressed tHie imiportalllce of citi- /(-I participation in dcclisilonrakirlv4 PI-0\ proide the 11mpetus trl Iwtvo pirovisions of the Bill of Rights-part of the Constitution a coMplete re\view\ ancd revision of the l,Policy and(i lawm thiat ye- passed in 1996-are particularly r elevant to the management lates to w\ater and resulted in the developmienit of the \ational of water resources. These are sections 27 and 24, which state Water lolicv for South Africa (1997) and the Nationlal Water tlat: Act (j! IS). I Everyone has the right to have access to (among others) stufficient food and water, and that the State must take reasonable legislative and other measures, within its j :' water i available resources, to achieve the progressive realization of these rights. In SouLth Africa, w\-e have been thirouL.7-h (I remarkarible process I Everyone has the right to an environment that is not harmful of IrevisSinlg our Water law. This exercise w,\a s driven [y twh\,o ke!\ to their health or well-being; and to have the environment factors: the demandils and dreams of ouLr- people in a new de- protected, for the benefit of present and future generations, mocracv and the linited physical resoturces at otur disposal. I.INULIAI REVIEW * JUJLY 2002-JI.NIE 20(3 (F'f"03) . We spent a lot of time in consultation, debate, and discussion, vulnerable to floods and droughts. Our legislation gives pri- and finally agreed that our vision was that "The objective of macy to the protection of aquatic ecosystems and the provi- managing the quantity, quality, and reliability of the nation's sion of water for basic human needs. It gives us powerful tools water resources is to achieve optimum long-term, environmen- to reallocate water to address issues of over-allocation, resource tally sustainable, social and economic benefit for society from degradation, or social inequity. their use." Water supply and sanitation This is a simple, but far-reaching understanding-that even in In 1994 an estimated 14 million people in rural areas of South countries where water is plentiful, the protection of the resource Africa had inadequate access to safe water and some 21 mil- from the impacts of human activities requires that we live lion people did not have access to a basic level of sanitation. within our means. Acknowledging that access to water and sanitation was cru- cial for human well-being and development, the newly elected It is for this reason that the National Water Act is premised on democratic government faced the challenge and initiated the three fundamental principles: equity, efficiency, and sustainability. Each of these principles is important for differ- Community Water Supply and Sanitation Programme. Since its inception, the program has provided 9 million people ac- ent reasons. cess to safe, clean water and is expected to eradicate the cur- rent backlog of 5 million without a water supply by 2008. Equity. Water is one obvious tool in the eradication of pov- erty-providing a way for the poorest of people to survive and In terms of sanitation, the program is expected to provide ba- make a living, a burden that so often rests upon women in sic levels to the 16 million remaining people without adequate society. It is the responsibility of the Department of Water Af- access by the year 2010. Our approach has been more than just fairs and Forestry to ensure that we use our water resources wirsel ind Fouresear for ensocialuju thatweuse suwamer tme,hes building toilets. It has recognized that health and hygiene prac- tices and education are critical to the success of the sanitation needs of industry, agriculture, and the demands of cities and of ordinary people all need to be catered for, now and in the program. future. The National Water Act also requires the government The program has had a fundamental positive effect in rural to address the issues of gender inequity in water as much as it areas by reducing the vulnerability of the poor to disasters and must address inequity arising from race or disability. In a coun- improving their capacity to generate sustainable livelihoods. try with one of the highest degrees of social inequity anywhere It has already created over 430,000 employment opportunities, in the world, this is a crucial element of our approach. with more than 50 percent going to women and approximately 33 percent to young people. Sustainability. We have increasingly understood our obligation to protect the natural environment while we promote devel- opment so that we can meet not only the needs of current gen- Government and effective erations but the needs of future generations as well. While most d en human activities take place on land, these activities often af- development fect the quality and quantity of water. The state is not a fashionable agent in this post-industrial world. More and more emphasis is placed on the role of the private Efficienicy. South Africa is a water-scarce country. Our average sector. Yet the developed part of the world, which is pushing annual rainfall is a little more than half of the world average, this position, is characterized by high levels of infrastructure and much of our country is semi-arid. Potential evaporation is investment that in most cases would not have occurred were it higher than rainfall across most of the country. Our land is dependent on the whims of the market. For example, on the 12 ENVIRONMENT MATTERS * 2003 eastern seaboard of South Africa, the Komati Basin could sup- International rivers port much more economic activity in Swaziland, Mozambique, and South Africa. But the figures show that it could take around Under the new water law of South Africa, the national gov- 45 years to reap a return on the initial investments needed to ernment is defined as the custodian of the nation's water re- tap those waters. There are few private investors willing to sources. But it is recognized that many of these resources serve wait for that time frame to get a return. So we must depend on more than the people of South Africa. Rivers do not respect the states of the region to take the steps needed to harness political boundaries. South Africa shares four major river sys- unexploited water resources. Countries such as Namibia and tems with neighboring countries. Botswana, perceived of as arid (although they in fact have more water per capita than South Africa) are using only 5 to 10 per- In relation to our neighbors, the law reinforces the approach cent of their usable water compared with South Africa's use, we have already begun. On a bilateral basis, we are actively which is approaching 60 percent. committed to cooperation. At the regional level, we have rati- fied the Protocol on Shared River Courses and we are keen to In short, we find that in our region we cannot accept institu- see the management of water given a higher priority within tional prescriptions appropriate to developed countries, where the regional framework provided by the South African Devel- the role of the state in achieving a mature infrastructure has opment Community. been played out. In the water resources area, we have come to the conclusion that our challenge is to reinvent government, Conclusion not to abandon it. We are in the process of establishing 19 Catch- ment Management Agencies that will enable us to manage We need to develop visions for water resource management water according to watershed boundaries, rather than politi- that extend to entire regions. It is vital to achieve equity-and cal boundaries. They are also designed to ensure that stake- the prosperity that can flow from the best management of a holders can play a key role in water management decisions common resource. We should pool our intellectual energy to that directly affect them. look toward total basin management, which can transcend na- tional boundaries and ensure the use of water for the common Our Proposed National Water Resources Strategy, published good of all. in August 2002, sets out the policies, strategies, plans, and pro- cedures by which we aim to achieve integrated water resources We need to apply our intellectual energy to the even greater management in South Africa. It also provides essential infor- benefits that could flow from collaboration based on compara- mation, for use by all spheres of government and the private tive regional advantage through trade in commodities. sector, for planning developments and initiatives. We have gone through a country-wide public consultation process, in- In Southern Africa, we are trying hard to ensure that our man- cluding workshops in all 19 water management areas. My de- agement of water resources is a source of peace and develop- partment is now in the process of considering the many ment, both internally and with our neighbors, just as we would hundreds of comments it has received on the Proposed Strat- hope to see sustainable development leading to peace and de- egy, which will be changed where necessary and then submit- mocracy throughout the world. ted to Cabinet for final approval. Ronnie Kasrils is the Minister of Water Affairs and Forestry in South Africa. ANNUAL REVIEWV * JULY 2002-JUNE 2003 (FY03) 1 3 4 -> 44 d' 1 t- - - , ;.,.,.- ' fa"l vdL 1\f! r T IE ~~~~a ra Sucia-a small village in El Salvador-means of services that protect water quality and availability, it is be- "dirty face." In that little village, fishers are wor- coming increasingly clear that they too should be considered ried. They say that catches of fish and shrimp are an economic part of water infrastructure and supply. Their in- dropping. The conversion of the mangroves that terests should therefore be defended at the negotiation table nurture young fish and shrimp, the pollution of the water by and in the marketplace, as one of the stakeholders in the basin, agricultural runoff, and the reduction in river flows in the ba- as a source of water investment and funding, and as a major sin due to abstraction are directly affecting their livelihoods consumer of water. and economic well-being. But they also deserve a much more profound protection in le- We see similar situations the world over. They reveal the com- gal frameworks, given the inextricable link between water and plex patterns of water resource uses and their consequences, nature. One cannot exist without the other, and one cannot be where poverty and environmental degradation often lie both managed sustainably without the other. at the beginning and at the end of the chain. The poor who live downstream typically suffer the most intense consequences of In South Africa, the National Water Act recognized the need water quality and quantity being reduced upstream. to allocate water to a healthy environment and established pro- visions for environmental flows. Water of sufficient quality and The international community has accepted integrated water quantity is left in the river to maintain it in a desired state. It is resources management as the way to deal with the complexi- an excellent tool to ensure healthy rivers, share water equita- ties on the ground. It is an approach that encompasses im- bly, and reduce poverty. proved governance, environmental protection, water supply and sanitation, and so on. It is based on stakeholder participa- For instance, the Lesotho Highlands Water Project proposes tion. It is also an approach that recognizes the complex link- several dams on the Senqu River System in Lesotho. Research ages among economy, livelihoods, water, and ecological shows that the 155,000 rural communities downstream catch integrity in river basins. ~~~an average of 22.7 kilograms of fish per household and gather Natuall, te evirnmet ad naurein he idet snseare on average 148 plastic bags of wild vegetables and medicinal Nausrally,wather Teenvironmpen anidenatue inho theawidest senekae plants. This may seem negligible in GDP terms, but the mar- dams, irrigation schemes, and domestic consumers-they are kevauoftsepdcsis77eryrprhueol.Ia en cs owen Conomicproducersofservi country where over half of the rural population lives below ecnadtomic userase of oswa tern cnm ic provducers imoftn srvices the poverty line, these natural resources are of extreme impor- In aditin, ecaue eosysemsprovde n imortnt rnge tance. The application of environmental flows allocations pre- 1 4 L.N\ 1RUNNIENJT MATTERS * 2003 vented these communities from losing a substantial part of their extend its use if we are to turn environmental protection and livelihood. nature conservation into a tool for poverty alleviation. Values and uses need to be translated into a system of incentives and In that sense, it is important to remark that the debate on wa- transfers that not only pay for maintenance of environmental ter supply often ignores the conception of our forests and wet- services but also address the needs of poor communities in- lands as an integral part of the water infrastructure that delivers volved in their management. The challenge is to turn the main- water to our homes, farms, and industry. We pay the costs of tenance of healthy ecosystems into a substantial development pipes and pumps, but we do not pay the costs to maintain our option. natural supply chain: our rivers, wetlands, creeks, ponds, and forests. Investments in water supply and sanitation cannot be Integrated water resources management, or the ecosystem ap- limited to drilling wells or installing faucets, but should also proach to water resources management, has already delivered extend to the maintenance of ecosystems that, in the end, en- tangible results in many river basins. Progress is being made, sure the provision of water. for instance, with the implementation of environmental flows and with innovative financing for water management. The most Provision of environmental flows is also important for protected progressive of these, South Africa, has based its water man- areas. In the light of this year's IUCN World Parks Congress, agement on two pillars: environmental protection and meet- water resources management cannot ignore their legitimate ing basic human needs. Another example is the World claim to a share of water. The allocation will have a significant Commission on Dams. The process and report alike proved to return, because protected areas, especially upper watershed be major steps forward in multi-stakeholder decisionmaking forests, are also important for water supply and regulation. on one of the most contentious issues in water management, This is demonstrated by the increasing investments of water including the WCD's "rights and risks" approach to provide utilities in the management of raw water supplies, such as an honest and balanced assessment of the cost and benefits of through land purchase or agreements with farmers to under- dams. take watershed protection for urban areas such as New York City and Quito. Given such achievements, many environmental experts remain concerned that valuable lessons-on, for instance, governance, But the need for water for protected areas also poses a chal- equity, poverty alleviation, and environmental protection and lenge to the protected area community. Parks have mostly been management-have not been adequately captured in the World established for their biodiversity and landscape values. Now Bank's Water Resources Sector Strategy approved earlier this we must also build the case for their importance to the hydro- year. logical cycle and their contribution to the Millennium Devel- opment Goals. Evidence is growing and, in the future, I can For the complex issues in water resource management there is imagine more protected areas will be established solely for their no generic solution. The issues need to be resolved at the basin importance to water quantity and quality. level by the stakeholders who come together to find integrated solutions that are best for all-in the long run. Despite this An emphasis on the services of ecosystems almost automati- lack of a simple answer, the examples are inspirational. They cally means that we need to find tools to consider these values show that, when we recognize the necessity of a healthy envi- in decisionmaking. Economic valuation is one of these tools. ronment and the basic needs of the people, we can arrive at Valuations demonstrate, time and time again, that natural habi- water management that is truly sustainable and equitable. tats deliver an array of services that often exceed those of pro- posed development options. In El Salvador, the fishers of Cara Sucia take part in a roundtable of resource users, set up with support from IUCN almost two The small Muthurajawela Wetland in Sri Lanka represents a years ago, where they discuss the problems in the basin and total value exceeding $7.5 million per year. The Hadejia-Nguru define joint action to solve them. They may not see their fish floodplain in Nigeria provides at least $32 per 1000 cubic meters catch increase tomorrow, but I am confident that in the future of water, against $0.04 for a proposed irrigation scheme. we can add the Barra de Santiago-El Impossible basin to the list of good examples. Economic valuation gives us a powerful tool to arrive at dif- ferent, more rational development decisions. But we need to Aclil StciiS er is Director Geineral OJ ILICN - The IVOrlr.d ConiselraXtion Unioni. ANNUAL REVIEWV JULY 2002-JUNE 2003 (PY03) 15 4. fi ,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~9 .4 _ VIEWP OINUi by Mark W. Rosegrant and Joachim T.fYie 1TIE R ecent research at the International Food Policy Re- I he relative scar, ity of irrigation water will mean slower search Institute (IFPRI) indicates that further inat- ii-rowth of food production. Cereal yield growth rates will fall tention to water-related investments and policies t om 1.5 percen-t p er year over 1982-95 to 1 percent annually could lead to a severe water crisis that precipi- bletween 1995 and '025. For developing countries, the rates will tates a food crisis. .iecline from 1.9 p( rcent to 1.2 percent. The direct contribution of water scarcity to the yield slowdown translates into 130 Fortunately, there are alternatives. Policies and investments I iillion metric tons less cereal production each year, equiva- that promote sustainable water use can contribute to greater lent to a year of rice output in China or two years of wheat water and food security. Water may be a scarce resource, bitt production in the United States. humans have already developed many ways of using it more efficiently in irrigation and in household and industrial uses. I lowever, rising inicomes and brisk urbanization in develop- i TIg countries will . iccount for most of the 47 percent growth in Business a i usual means growing ereal demand ov ,r 1995-2025. The resulting growth in meat .ind dairy consurrption will mean strong growth in demand Irrigation water scarcity lor maize for aninial feed. Assuming that current trends in water and food policy, man- Given the gap between domestic grain production and demand, agement, and investment continue, IFPRI projects a 22 percent (eveloping countries will more than double their imports be- increase in total global water withdrawals between 1995 and I ween 1995 and 2025. These "virtual water imports," which 2025. Non-irrigation uses-domestic, industrial, and live- substitute food imports for irrigated agricultural production, stock-will increase dramatically, rising by 62 percent. Rapid offer developing countries one means of conserving water. population growth, mainly in the cities of the developing world, I lowever, it is unlikely that Sub-Saharan Africa will be able to will drive a 71 percent rise in domestic water consumption, I inance a projecte I threefold jump in cereal imports on com- with more than 90 percent of this coming from developing imercial terms, so It will require financial or food aid. countries. As a result, irrigation water use will rise by only 4 Nater crisis scenario percent, although irrigation water demand will grow 12 per- cent in all developing countries and 27 percent in Sub-Saharan yven a moderate worsening of current trends could spur a Africa. g.,enuine water cris is. In such a scenario, governments further 16 ENVIRONMENT MATTERS * 2003 cut their spending on irrigation systems and rapidly turn over To stimulate water conservation, the effective price of irriga- irrigation systems to farmers and farmer groups without the tion water will need to gradually increase. Governments in necessary reforms in water rights. Governments and donors many regions will have to shift water rights and management reduce investments in crop breeding for rainfed agriculture in responsibilities to users and offer them training and support. developing countries. This would result in an additional 13 This will stimulate increased farmer investments in water-sav- percent increase in water consumption in 2025, almost entirely ing technologies. Higher prices for (and stricter regulation of) for irrigation, and much of this water will be wasted. Farmers domestic and industrial water use can likewise lead to greater will extract increasing amounts of groundwater and environ- efficiency. Industrial water recycling can be a major source of mental flows, causing failure of key aquifers and compromis- water savings, and domestic use can be made more efficient ing aquatic ecosystems. through improved maintenance of municipal systems. Higher water prices must be accompanied by targeted subsidies to Given the inefficiency of water use in this scenario, cereal pro- ensure that poor urban consumers have access, and by com- duction will decline by a further 10 percent over the business- pensation to farmers for reduced water consumption. Even as-usual shortfall, equivalent to the entire Indian cereal crop. with such policies, raising water prices is politically difficult, Grain prices will rise dramatically, causing a 23 percent fall in given the range of actors with vested interests in maintaining developing-country imports from the business-as-usual sce- the status quo. Some of the reduced water consumption that nario. Per capita cereal consumption in developing countries results from these measures can be allocated to environmental in 2025 will drop below 1995 levels, meaning an increase in uses. In order to maintain adequate food production, more food insecurity. efficient water use can be achieved through technologies such as drip irrigation (which also has the health benefit of reduc- Sustainable water use ing malaria mosquito habitat) and precision agriculture and through management changes such as adoption of demand- In a sustainable water use scenario, governments and donors based irrigation scheduling systems. increase investments in crop research, technological change, and reform of water management to boost water productivity The sustainable water scenario results in 20 percent less water and the growth of rainfed yields. Improved policies and in- consumption than under business as usual, but developing creased investment in rural infrastructure will help link remote countries reap greater benefits. Water savings left instream farmers to markets and reduce the risks of rainfed farming. If for environmental purposes will be triple the annual levels of reduced investments in irrigation and water supply were com- the Mississippi River. Faster growth in rainfed yields will com- bined with growth in rainfed cereal production and increased pensate for declining growth of harvests in irrigated areas, harvesting of rainwater, this would mean 153 million metric boosting global cereal production in 2025 by 1 percent over tons less irrigated output, but 187 million tons more rainfed harvests in the business-as-usual scenario. production. This requires crop breeding targeted to rainfed The strategies outlined in the sustainable water scenario can environments, agricultural extension services, and access to avert the impending water crisis that much of the world faces, markets, credit, and input supplies in rainfed areas. but they will require time, political commitment, and money. To succeed, implementation of these strategies must begin now. Halting unsustainable groundwater pumping in China, India, and the Middle East will reduce developing-country cereal production and necessitate imports. Efforts to restore sustain- Mark W. Rosegrant and Joachim von Braun are Senior Research Fellow and Director General at the International Food Policy Research Institute. able groundwater supplies must be accompanied by policies This article is based on Mark W. Rosegrant, Ximiing Cai, and Sarah A. to increase the efficiency of water use, to encourage diversifi- Cline, World Water and Food to 2025 (Washington, DC: Interniational Food Policy Research Institute and Colombo: International Water cation of production beyond irrigated cereal cultivation into Management Institute, 2002). All projections are based otn IFPRI's crops that give more value per unit of water, and to boost the International Modelfor Policy Analysis of Agricultural Commodities and crops Trade-Water (IMPACT-WATER), as described in Rosegrant, Cai, and nonfarm rural economy in overdrafting regions. Cline. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 17 he new World Bank Two challenges Water Resources Strat- egy-agreed to by the In brief, developing countries World Bank's Board in Febru- need both better management ary 2003-represents a signif- and development of infra- icant new chapter in the Bank's structure. s L n I t ~~~~ongoing work in the water re- h e Bank" songoin wrk h e First, all countries face major sources area. challenges in developing the [N%ew VVate Water has historically been a laws, regulations, and institu- tions to manage water resourc- Resources folimajor part of thefBank's port- es in ways that are econo- S folio (see Box, at left), and the mically productive, socially ac- Str ateg urgent need for increased in- ceptable, and environmental- L vestment in infrastructure and ly sustainable. Better resource services for water supply, food and demand management production, and energy is therefore has a high priority widely acknowledged. The for the World Bank and many World Commission on Water of its borrowers. These coun- estimates that, over the next 25 tries need to invest heavily in years, anuainon-structural management BAK' LENDING years, annual investments ITHE BANK'S LENDING ,solutions. Such efforts range need to rise from the current COMMITMENT FOR WATER from the massive efforts at level of about $75 billion to watershed managJement in the Water has been a large compo- $180 billion. Upper Yangtze catchment in nent of Bank lending for de- China to the development of cades. Lending for water Making headway also requires improved hydrology data in resources development and more than just money. It re- India and elimination of water- water-related services ac- quires changes to be made in using invasive plants in South counted for about 16 percent the way governments operate Africa. World Bank invest- of all Bank lending over the and further recognition of the ments in non-structural solu- past decade. Historically, the World Bank Group has invest- important role of water in pov- tions are increasing rapidly. ed about $3 billion a year in ertyreduction,socialdevelop- For example, Bank invest- water-related sectors,account- ment, and environmental ments in watershed manage- ing for about 5 percent of in- sustainability. Governments ment are projected to reach vestment in developing coun- must support reforms to make about $300 million a year in the tries. the water sector more account- next few years. able, transparent, efficient, and . . ~~~~~Second, all countries face a environmentally and socially ecn, alcutisfc major challenge in developing responsible. Strengthened par- and maintaining an appropri- ticipation in these reforms by ate stock of water infrastruc- water users and civil society at ture. Industrial countries have large is indispensable. And largely completed these in- when governments in poor vestments, but the developing countries adopt appropriate countries have not. For exam- policies, they need to be sup- ple, Australia and Ethiopia ported by the international have similar degrees of climat- community. ic variability, but Australia has ENVIRONMENT MATTERS * 2003 5,000 cubic meters of water the opportunity and value of tural, and historical circum- storage capacity per person, such use. In ensuring that wa- However, World Bank in- stances. while Ethiopia has 45 cubic ter is allocated and used effi- volvement in major hydraulic meters. Developing countries ciently, it is essential that there infrastructure has declined An important new instrument must simultaneously improve be institutional arrangements substantially over the past de- in this effort is the Country the way in which water and for ensuring that these "oppor- cade, in large part due to Water Resources Assistance water services are managed tunity costs" are taken into ac- concerns about social and en- Strategy, which will pull to- and invest in developing pri- count. Where water is scarce vironmental impacts. The new gether the specific water re- ority infrastructure. the central challenge is the de- Strategy argues that this de source challenges and deve- velopment of a legal and en- facto withdrawal needs to be lopment opportunities in a Principled and forceable system of water reconsidered. particular country at a partic- rights. Once established, such ular time; the Country Assis- pragmatc Ireforms rights give rise to a series of As water challenges grow in tance Strategy that the govern- The Strategy reaffirms the im- fundamental and healthy scale and complexity, the Bank ment and the Bank have portance of basic economic changes. is perceived as one of the few agreed on as a framework for principles. Sound resource institutions that can provide overall engagement, the coun- management requires that us- For example, those requiring integrated support on the mac- try's Poverty Reduction Strat- ers take into account both the additional resources (such as roeconomic, financial, techn- egy (where relevant), and the financial costs of supplying growing cities) will frequent- cal, social, and environmental broad principles articulated in services and the costs that their ly be able to meet their needs dimensions. Borrowers find the 1993 Policy Paper and the use of water imposes on oth- by acquiring the rights of those that the Bank is unique in per- 2003 Strategy. The resulting ers for whom water is no long- who are using water for low- formance, knowledge, conven- Country Water Resources As- er available ("opportunity value purposes and are willing ing power, and relations with sistance Strategy will provide costs"). to give up their rights, making almost all riparian countries. It an explicit program of Bank reallocation both politically combines knowledge and fi- lending and non-lending sup- Financial costs. Water supply attractive and practical. Al- nancal resources. It can en- port in water. Five pilot coun- services have traditionally though there is no unanimity gage at all scales-local try strategies have been been underpriced, resulting in on the concept of water rights trict, river basin and aquifer, completed in Azerbaijan, Bra- inefficiency (and an inability to and it is not simple to intro- try, and al-and zil, China, Pakistan, and Ye- attract new investment) and duce it in administratively coun ry, an regona-and men. A second round is under inequity (since the poor are weak environments, there has tegrated re- preparation. often excluded). Pricing to cov- been substantia proress sponse. The World Bank, the er financial costs is essential for been substanhal progress m International Finance Corpora- Watev resources three reasons. First, itprovides recent years in a number of tion, and the Multilateral In- Wat r c and the user with information on nations, including Brazil, vestment Guarantee Agency the environment the cost of providing the ser- Chile, Mexico, and South Af- are also indispensable in at- vice, inducing more consider- rica. tracting much-needed invest- The environment is, of course, ate use than if it were free. i ment by the private sector. a special "water-using sector," Second, revenues from tariffs Investing in that most environmental are the basis for maintaining infrastructure A tailored approach concerns are a central part of existing and building new in- overall water resources man- frastructure. Third, payments Developing countries need to The 1993 Water Resources agement. Environmental con- for services are essential in en- make large investments in in- Management Policy Paper and cerns, such as legal and suring that providers are ac- frastructure of all scales, rang- the complemetary new Strate- regulatory instruments gov- countable to users. ing from local rainwater gy provide broad principles erning water allocation, envi- harvesting structures to major for World Bank engagement, ronmental assessment, and Opportuinity costs. When one infrastructure such as dikes, but these general principles pollution control all form part person consumes water, other canals, dams, and interbasin need to be adapted to specific of the core water resources potential users may be denied transfers. economic, political, social, cul- management activities. In ad- ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 1 9 dition, there are important en- the poor, who often ignored. Here, too, new in management AND vironmental service activities inhabit these fragile forms of practice are development of water associated with water resourc- areas-and give them an evolving, with mainten- resources infrastructure. es, such as: incentive to maintain such ance of ecological flows * The main management activities. Water utilities now becoming an issue to challenge is not simply a * Terrestrial services, inclu- and hydropower com- be addressed early in general vision of inte- ding management of panies are increasingly project design. The World grated water resources forests and land in developing innovative Bank is actively bringing management but a "prag- watersheds, which are partnerships with up- bestpracticetobearinthis matic but principled" essential for moderating stream communities for area. approach that respects hydrological variability, maintenance of catchment principles of efficiency, reducing silt, and con- quality. Main messages of equity, and sustainability, serving biodiversity. In * Aquiatic services, including l while also recognizing the past decade there has the conservation and the new strategy that water resources been a rapid increase in management of wetlands In closing, some of the main management is intensely World Bank activity in and floodplains, both messages of the Bank's new political, and that reform watershed management at underpin the fisheries and Water Resources Strategy are requires the articulation of different scales, ranging crop production systems the following: prioritized, sequenced, from land management of on which many poor practical, and patient the whole of the Loess communities depend and * Water resources manage- interventions. servevitalfunctons i Wtrrsucsmng- The World Bank needs to Plateau in China, to serve vital functions in ment and development is community-based water- attenuating extreme hy- central to sustainable assist countries in deve- shed management in the drological events. The growth and poverty re- loping and maintaining foothills of the Himalayas. report of the World duction and therefore of appropriate stocks of well- The core lesson from these Commission on Dams has central importance to the performing hydraulic experiences is ensuring correctly stressed that the mission of the World infrastructure and in that such activities pro- rights of "downstream Bank. mobilizing public and duce economic benefits for ecosystems and people" * Most developing count- private financing, while local people-particularly have historically been ries need to be active both meeting environmental and social standards. _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. . ~ .......f VI 7 --~ t t This article was prepared by John j v Ms . Briscoe, (202) 473-5557, fax (202) 614-0678, the Bank's Senior Water Advisor and principal author of the new Water Resources Strategy. Wa- Ethiopians traveling via river. Collecting well water in Ethiopia. ter Resources ALI;ia, int website: <>. 20 ENVIRONMENT MATTERS * 2003 ~' mub% J>! or millions of people, the path to sustainable devel- environmental squalor opment. starts at their doorstep. Lack of adequate water supply Water supply and and sanitation turns their sur- 1z U L r o u n d i n groundings into a polluted, un- sanitation - A l#flate s| 1/ |heathy, and undignified place millennium priority ter Supply to live and degrades water quality in rivers, lakes, and Improving water supply and L~aiJ and San itation aquifers downstream. The sanitation services is now rec- poor suffer most as they often ognized as a critical compo- depend directly on these wa- nent of poverty reduction, as Crea ting a Clean and ter bodies for their needs. The well as making progress in provision of water supply and health, education, gender, and Healthy Environment sanitation services is a vital environmental sustainability. part of building communities that can take control of their The Millennium Summit, the lives and make real strides on International Conference on FACTS AND FIGURES . In the developing world, 2 out of every 10 people are with- out access to safe water supply, 5 out of 10 live without _I] ' adequate sanitation, and 9 out of 10 do not have their wastewater treated. a Every year 2.2 million people die from diarrheal diseases. * The urban population is expected to grow by 1 billion peo- M- ple in the next 15 years, many of whom will live in unsani- tary slums. a The Millenium Development Goals (MDGs) set targets to _ _~ _ a,,3,reduce by half the number of people without sustainable access to drinking water and basic sanitation by 2015. . The MDG targets imply that an additional 1.5 billion and 2 billion people will need access to safe water and sanita- tion, respectively, between 2000 and 2015. Number of new people with access to WSS per day 400,000 - 7Water supply 300,000 - Sanitation 200,000 100,000 1991-2000 2001-15* * Needed for MDG. 2.. I REVIEW * JULY 2002-JUNE 2003 (FY03) 21 -4I Financing for Development at viders to account for their pol- Special attention main reasons. First, the bene- Monterrey, and the World icies, actions, and use of funds. e fits of improved sanitation and Summit on Sustainable Devel- Local governments need to environmental hygiene depend largely on in- opment (WSSD) at Johannes- strengthened capacity to meet sustainability vestment decisions at the burg moved water supply and the challenge of increased re- household level. Second, the sanitation out of its narrow sponsibility and decentralized In the water and sanitation ser- demand and willingness to sectoral purview into the budgets. vices sector, three interven- pay for sanitation and waste- broader poverty reduction tions-sanitation and hygiene, water treatment lag behind agenda. At the WSSD, water The main sources of funding wastewater treatment, and those for water. Third, sanita- and sanitation was selected as for water supply and sanita- water conservation-play a tion and hygiene require a one of the five key areas need- major role in improving tion are users and domestic . .cag ealr,ntJs ed to improve the lives of all healthy living conditions for humans while protecting the taxpayers. All other financing all in a sustainable environ- investment. global environment. The target sources-with the exception of ment. to improve access to sanitation limited grants by internation- The energies of all parties need was one of the few new inter- al donors-are premised on Saniitationi and hygiene. Sanita- to be harnessed to promote national commitments made sustainable finances from tion coverage continues to lag and support changes in house- at the WSSD. these two sources. Of course, far behind water supply. Com- hold behaviors. Sanitation pro- tariff setting should take into pared with water supply, san- fessionals need to team up Time to move account social and environ- itation and hygiene require with social marketing and mental considerations. distinct approaches for three health and environmental ed- te ac l on ucation specialists. THE WORLD BANK AND WATER SUPPLY AND SANITATION Successful programs require high on the development agen- da. The challenge is to seize the The World Bank supports the water supply and sanitation sec- tatching ofsulyato d opportunity and translate the new global targets into im- tor through specific interventions and through joint activi- mand. Consumers are willing provements g o targets gund. ties with other sectors, from city governance and services to to pay for sanitation services, provements on thae ground . public health,water resource management, municipal finance, and environmental management.TheWorld Bank lends about provided they have a strong Within the international com- $1 billion per year for water supply and sanitation, and sup- voice in the level and quality munity, it is widely acknowl- ports nearly 100 countries through advisory work and policy of service. edged that increased invest- dialogue. ments in water supply and The greatest sanitation chal- sanitation-accompanied by Regional distribution of IBRD/IDA financing for lenge lies in the rapid growth decisive institutional and fi- water supply and sanitation, FY1990-2002 of high-density slums. Given nancial reforms-are urgently South the current and projected scale needed. Asia Africa of the problem in urban areas, Middle East l and North Africa 14% more emphasis should be Effective institutions at all lev- 10% placed on building sanitation els are needed to sustain past firmly into the urban develop- and future investments. Sound N ment agenda. The process of governance includes a clear 31% upgrading informal settle- division of responsibilities and 25% East Asia ments needs to be accelerated and the Pacific lines of accountability among with due consideration to san- sector institutions. Empow- Latin America andv itation services. In the mean- ered communities need to be -itime, the informal sector able to call public officials and Europe and should be supported to serve public and private service pro- these communities. 22 ENVIRONMENT MATTERS * 2003 Better sanitation services re- Wastewater treatment. The dis- municipal wastewater treat- water in many countries, wa- quire action in other sectors. charge of untreated wastewa- ment should increase to $70 ter withdrawals for human Sanitation strategies must fit ter is a growing environmental billion. consumption are substantial at into broader city level and ru- concern, with many rivers be- a basin level in arid regions. ral development strategies, ing turned into open sewers. Municipal wastewater treat- Waterconservationcanbepro- building codes, and land use Only about 10 percent of ment cannot be implemented moted by setting prices that and solid waste policies. wastewater in developing in isolation from broader ac- reflect the scarcity of the re- countries is collected and only tions at the river basin or aqui- source, by increasing delivery IMPROVING SANITATION about 10 percent of existing fer level. Often, municipal efficiency, by installing water- exsigwastewater treatment alone svn ehooisa h IN OUAGADOUGOU, wastewater treatment plants can only bring marginal envi- saving technologies at the BURKINA FASO operate reliably and efficiently. ronmental benefits as on-site household level, and by edu- wastewater disposal and non- g The Ouagadougou Strate- Expansion of water supplies point source pollution can ac- without simultaneous waste- count for a large share of Forsome cities inrelatively arid gic Sanitation Plan (PSAO) is water collection and treatment pollution loads at a regional regions with high variability in an integrated sanitation facilities can lead to environ- scale. rainfall, population growth re- and hygiene promotion mental and public health prob- quires freshwater supplies be- program implemented by lems. Due to the sequencing of URBAN WATER QUALITY yond local sources. In those the National Water and San- demand (people generally AND POLLUTION CONTROL cases, responsible development itation Office with the sup- want water first, then sanita- PROJECTS IN BRAZIL sic hydraulic infrastructure for port of a local NGO (ADRA) tion, then wastewater treat- water storage and conveyance and a regional training cen- ment), step-wise approaches World Bank-supported are of crucial importance. ter (CREPA).The plan recog- are needed in line with local projects in Sao Paulo,Curiti- nizes that conventional demand and local institution- ba,and Minas Gerais repre- WATER CONSERVATION sewerage is not an afford- al and financial capacity. Se- sent the first generation of IN C O RE able option for all and ex- quencing of improvements projects in Brazil based on IN SINGAPORE pects 80 percent of the requires careful planning, an integrated viewof urban city's population to adopt starting with on-site solutions, water quality and pollution n Singapore,a water-scarce on-site sanitation solutions. followed by sewerage systems control to clean up highly city-state,the Public Utilities Through PSAO, thousands for urban areas that have polluted urban water bod- Board provides water sup- of people have upgraded reached higher levels of water ies. This integrated ap- piyto apopulationiof about their latrines and installed usage, and-as a last step- proach is essential for 2.8 miilon.Fresh waterthus soakaways. Consumers are sewage treatment plants. prioritizing investments in a conservation is economi- informed about the techni- cal options available and Wastewater treatment invest- ronment and for involving taining a metering and leak negotiate the work with ments will require massive the municipal, state, and tmreduction program, the leves o inremnta fudin federal stakeholders in the rdcinporm h trained artisans. Some sub- levels. implementation of the re- Public Utilities Board has sidies are available-fund- In order to reach the water and quired institutional and le- succeeded in reducing un- ed bya surcharge levied on sanitation MDGs, it is estimat- gal reforms. The three accounted-for water (phys- water bills. The PSAO has ed that annual investments projects combine technical ical and commercial losses) shown that a community- will need to double from the and legal instruments and from the already low level based and pragmatic ap- historical level of $15 billion to support the upgrading of of 10 percent in 1989 to 6 proach to environmental $30 billion. These numbers do slums,which are majorcon- percent in 1994. sanitation, using low-cost not include wastewater treat- tributors to the pollution of techolog, ca yild r- met cots,which depend on kwaterbodies. v Thtis article wvas prepared by Jam7al technology, can yield re- ment costs, wihdpnon .atrcle Saghir, Director, Energy anzd Water, sults, even in urban areas. A the type and level of service (202) 473-2798, fax (202) 522-3228, reliable and autonomous provided and local conditions. Water coniservation. Water scar- Sand Meike Sape Giitineke t, Water anzd source of funding was a key But even with simple treat- city is an increasing concern Sanitation Unit, Infrastrlnctntre Vice ment systems, the Global Wa- for countries with growing ur- PrIsidleicil, (202) 458-7796, fax (202) to the sustainability of the ter Partnership has estimated ban populations. Although ag- 522-3228. Water Spply ad Saitatio ~~p~rogra~~m ~ ~ ~ te Patesizavsimtdbnpplton.Atog g ebsite: <>. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 23 ^ ; 1 ' _ he recently endorsed The case of Kenya illustrates I Bank strategies on en- the extent of the costs imposed K vironment, energy, ru- by climate variability. The El ral development, and water re- Nino floods of 1997-98 and La sources, and the 2003 World Nina drought in 1998-2000 Development Report, present a caused direct economic losses clear and logical framework to equivalent to 11, 16, and 16 apprachwatr rsoucesde-percent of GDP in those three v a mnter atemen years, including about $777 t; t _ ~~~~~~~~~~~~~~~~~~~~~~~~~velopment and management milo ndmae rnpr ce s a in an environmen million in damaged transpor- - - * K ~~~~~~~e so ur c es a ndc i nevrnmnal n o tation infrastructure, $1.4 bil- cially responsible way. They lion in industrial production E n viX r o n m e n t also underscore the multiple (largely associated with re- values of water and water- duced hydropower produc- based ecosystems (see Figure, tion), and over $300 million in at left). This article reviews se- agricultural and livestock loss- - r * lected operational challenges es. GDP growth dropped from ,. '<1 t mergln at the global, regional, nation- 4.6 percent in 1996 to -0.3 per- JOpera tional al, and river-basin levels asso- cent in 2001. ciated with the implementa- Challenges tion of this framework. A key factor that contributed to Kenya's losses was inade- quate investment in sustain- : w -5 Climate variability able infrastructure to control ;and change -floods or store water for use during droughts. Kenya's to- The case of Kenya tal storage capacity of about 60 m3/capita is less than 10 per- Climate variability and change cent that of South Africa, and pose perhaps the most signifi- 1 percent of Australia or the cant water resources challenge United States. The widespread of this century. Climate vari- destruction of natural storage ability influences the amount, capacity-due to severe catch- timing, and frequency of rain- ment degradation, threatened fall, floods, and droughts. lakes, and encroached re- Global warming will alter pre- charge areas, wetlands, and cipitation, evaporation, and ^ sw . , , ~~~~~~~~~~~~~~~~floodplains-compounded the snowmelt and will enhance the i floodp the impacts of floods and impacts of climate variability. These changes will impose droughts. The weaknesses of huge costs on national econo- the water allocation and pol- WATER AND WATER.BASED ECOSYSTEMS mies and on climate-sensitive lution control systems were NF .1g>; ;~r_WATER AND WATER-BASED ECOSYSTEMS mlsaao lmt-esheanother factor. Finally, sever- L , v n n n n sectors such as agriculture, ir- , t r a h a rigation, and hydropower, al hydropower dams, irriga- DIRECTVALUES INDIRECT VALUES OPTION VALUES NON-USE VALUES among others. Most countries tion schemes, and water C..sumptiw Ecosystema Prem.ium Intrinsic s p l rjcsd v lp di nd Consptive functions and placed on significance In are ill equipped today to ade- supply projects developed in consumptivc services such as: possible future terms of: quately address the multi- the 1980s and 1990s-but .,e of resoula Water quality uses and Cultura value q a ey a d e st e m li - se Oof resrce sc aPplications, Aesthetic value sectoral nature of water re- without proper regard for the D)ttte,i,' use Wwae storage Including:. He~ritage~ value * vIloiustrial inpat Water purification Pharmaceutical Bequest value sources management. Mitiga- social, environmental, and eco- Irrigating crops Watr recharge Agricultural etc... X 1 , ~~~Waterings,toek Floold cotrol Indus,trial tion and adaptation to climate nomic consequences-have Widrplants Storm protection Leisure variability and change will re- failed to achieve the expected pildantmas Nutrocitn.t change re Finimals Shotalizati ec quire an even higher level of benefits. Two examples are the Transport dfcl. Reereatione technical and institutional ca- overdesigned and costly Turk- etc... pacity to manage water. well Dam and the Tana Delta ENVIRONMENT MATTERS * 2003 Irrigation scheme. In 1987, the The challenge facing the Bank based on the 1986 treaty be- irrigation, and adequate envi- Bank-financed Mombasa wa- and its client countries is to tween the Governments of ronmental flows in hydropower. ter supply intake was aban- ensure that the social and en- Lesotho and South Africa- doned after only six years of vironmental impacts on both provides a unique example of Innovative mechanisms-such operation because of excessive upstream and downstream how downstream social and as payments for ecological ser- siltation caused by severe up- communities and ecosystems environmental impacts are be- vices-are bringing in water stream erosion. are properly recognized and ing integrated systematically and energy utilities as partners addressed systematically and in the operation of two of Af- to support the protection of Investing in water resources in a timely manner with the rica's largest dams through an natural resources. Under the infrastructure in Kenya is a participation of-and account- instream flow requirement Bank-supported Ecomarkets fundamental part of dealing ability to-impacted commu- policy. This policy defines ink Costa Ecaral with climate variability and nities. This is technically modified water-release levels, project in Costa Rlca, several change. However, new storage challenging. It entails defining as well as mitigation and pane are payic for co- infrastructure is not enough. the complex links among wa- compensation measures for panes are payig for the pro- Kenya needs fair water alloca- ter flow, water quality, and impacted communities down- tection of the watersheds in tion and pollution control sys- land use; the interdependen- stream. which they have power gener- tems, catchment management, cies of terrestrial and aquatic ation or water treatment and a program to restore its ecosystems; and the direct and Reforms in water plants. In the proposed Vene- natural storage capacity. The indirect values that dependent zuela Canaima National Park Kenya Water Resources Sector communities attach to the energy, and Global Environment Facility work supported by the Bank is proper functioning of these . .irao (GEF) medium-sized project, promoting a reform program ecosystems. Given the diversi- irrigation the electricity utility CVG- and a mixture of structural ty of interest groups, the deci- mrg EDELCA would provide sim- measures and nonstructural sionmaking often entails L ilar support to watershed elements with careful exami- difficult trade-offs. The Bank environmental conservation. nation and mitigation of social has gained considerable expe- and environmental issues. rience in systematically ad- challenges International dressing environmental and Hydraulic social issues upstream of ma- The World Bank has support- waters - The jor dams and other hydraulic ed the reforms of public infrastructure infrastructure, and its experi- institutions and, where appro- environmental ence with downstream issues priate, the participation of the development - is growing. private sector in water supply, flows challenge energy, and irrigation. The The downstream Environmental Flow Assess- economic and financial regula- The management of interna- challenge ments are tools developed to tory aspects of these reforms tional rivers, aquifers, lakes, ensure that river flows main- have received greater atten- and wetland ecosystems is a As noted in the Bank's Water tain downstream ecological tion. The current operational growing part of World Bank Resources Sector Strategy, functions after hydraulic struc- challenge is to improve the so- and GEF support. Some of the many hydraulic infrastructure tures have been built. The ex- cial and environmental dimen- key issues in this context in- projects have handled down- perience with their use is sions of these reforms; to clude the allocation and shar- stream environmental effects growing, but there is a need for strengthen water resources ing of water resources to serve poorly and undermined the systematic application and for and environmental regulatory expanding populations and livelihoods of downstream improving the analytical capa- capacity; and to establish clear economic growth; pollution communities, particularly the bility to determine the appro- guidelines for ensuring fair control and water quality man- poor who depend on aquatic priate releases, the linkages access to water, protect envi- agement; and protection of ecosystems. A disproportion- between downstream bio- ronmental quality, and include freshwater, coastal, and ma- ate number of complaints filed physical changes and socio- affected parties in a transpar- rine ecosystems. While inter- atenumer f cmplint fied hyscalchagesandsoco-ent decisionmaking process. ntoa aescnb with the Bank's Inspection economic impacts, and the Coordinated planning of in- national waters can be Panel have been for water and necessary mitigation and com- vestments in these sectors is flashpoints of conflict among dam projects, and many of pensation programs. The also needed, notably in sewer- nations sharing these resources, these complaints concern World Bank-supported Leso- age and wastewater treatment they can also be opportunities downstream issues. tho Highlands Water Project- in water supply, drainage in for cooperation and integration ANNUAL. REVIEW * JUL.Y 2002-JUNE 2003 (FY03) 25 in the search for joint develop- Lakes and disseminate lessons to govern- ronmental issues in water re- ment opportunities. ment agencies and other stake- sources and related sectors. reservoirs holders involved in lake Among the challenges of inter- N management programs. For further information national waters, environmen- eglected water and analyses of these is- tal flows need particular es sues, see the new Water uare a resourcesConluio Resources and Environ- attention, an issue rarely ad- mn ehia oe e dressed in transboundary wa- Even though lakes and reser- The World Bank faces new rient Tecnical Notes se- ter-sharing agreements. Two voirs contain about 90 percent operational challenges as it Strategy Paper No. 2, En- leading examples supported of the earth's surface storage of implements its new sector vironmental and Water by the Bank and GEF to ap- liquid fresh water and are crit- strategies using a more effec- Resources Management. proach this challenge are the ical elements of the earth's tive business model. This mod- Mekong and Senegal rivers. freshwater hydrological sys- el calls for promoting water The Mekong River Commis- tem, they have not received resources development and sion is supporting an environ- sufficient attention by the glo- management in an environ- mental flow assessment as bal water community. Increas- mentally and socially respon- input to its water utilization ingly, their ecological integrity sible manner. To respond program, a precursor for fu- is threatened. As closed sys- effectively, the Bank will need ture investments in upstream tems with relatively long de- to improve its understanding hydraulic infrastructure. The tention times, they are and methodologies on the en- recently signed Senegal River particularly vulnerable to a vironmentally sustainable use Water Charter explicitly calls range of anthropogenic stress- and quality of water, and sup- for systematically addressing es. In response to the knowl- port the strengthening of inter- This article was prepared by Rafik downstream environmental edge gap in this area, the nal and local capacity Hirji, (202) 458-1994,fax (202) 477- impacts and flows in the oper- World Bank is implementing a (including river scientists, 0565, of the Environment Depart- ment. Water anid Environment ations of the Manantali hydro- GEF Lakes Basin Management freshwater ecologists, and lim- website: <>. \ AI /ater flows from doubles that of the global pop- mountains to the ulation. The quality of these V V sea through an flows is highly compro- expanding network of streams, mised-by sediments from rivers, lakes, and wetlands. deforested watersheds, nutri- Ł n n v i r nnv ronm ental Because of its heavenly ori- ents and pathogens from agri- gins, life-giving quality, and cultural runoff and untreated FlI o w~' s cleansing properties, water waste, and heavy metals, was considered sacred by an- PCBs, and persistent organic cient civilizations and handled pollutants. Many downstream with an ethic of stewardship populations receive either too Llnking Catchments and respect. much or too little water or con- ~ ' toCoasts in W]t taminated water that is unsuit- to C s i r Today, more than ever, clean able for use and compromises R ResoLIrc s M an e *- flowing water is an essential the aquatic resources that sup- resource. Humans withdraw port their livelihoods. ; '-':about 20 percent of the normal / - flow of the world's rivers for These downstream impacts 0O,; mS - 'v~' > 'pr t' ibtX7. agriculture, hydropower, and are felt most acutely in the domestic use. The rate of coastal zone, where more than growth of these withdrawals half of the world's population 26 v ENVIRONMENT MATTERS * 2003 F4>''S < s w lives, and 12 of the world's 17 eas, and coral reefs that catchments in partnership by GEF, the Bank, and numer- megacities (populations of evolved over millions of years with all stakeholders. ous other partners in the re- over 10 million) are located. in nutrient-poor, clear tropical gion. The coastal ecosystems sup- waters now receive pulses of The Bank's experience in ad- port multi-billion-dollar in- nutrients, causing algae dressing catchment-to-coast The key challenge is to build dustries in ports and shipping, blooms thatblock sunlight and linkages is still limited, but an understanding in all fisheries, tourism, and miner- cover the reef, undermining its evolving. Coastal managers segments of society that devel- al exploration. The trends are very structure, and tourism are generally more aware than opment and management increasing exponentially: by with it. their riverbasin counterparts interventions upstream can se- 2015, the projected four new of the need to look upstream riously affect the ecological in- megacities will be coastal, and The divorce between the man- for impacts that may affect the tegrity of freshwater, coastal, by 2030 two-thirds of the agement of downstream sustainability of coastal eco- and near-shore systems and world's population will live and upstream portions of systems and livelihoods. the human populations who along a coast. catchment-river-coastal sys- While Integrated Riverbasin depend on them. Once this tems is at the root of these Management is now widely understanding has taken root, In the fragile coastal zone, problems. The impacts of up- viewed as the paradigm for there are many planning in- overburdened and poorly stream infrastructure, poor management of freshwater struments that can be used to maintained sewerage systems land use practices, and con- systems, Integrated Coastal identify these linkages and and inadequate wastewater taminated runoff on coastal Area and Riverbasin Manage- minimize impacts down- treatment lead to contami- and near-shore environments ment is just beginning to be stream, such as Strategic Envi- nants seeping into aquifers are seldom considered. Some used. The Cetina Watershed ronmental Assessments and and untreated wastewater af- still believe the oceans have that drains into the Adriatic, Environmental Impact Assess- fecting fresh surface and coast- infinite capacity to absorb and the remediation of the ments, supported by remote al waters. These local impacts Daima Dam in the lower Sene- sensing and water quality are compounded by upstream clnd-based th ers gal River are two examples of monitoring data systems. In catchment activities. The most tureder a ture or cap- this approach. the Bank, the cross-sectoral tured by agriculture or cities graphic examples are the deoxy- and vertical linkages from genated dead zones at the a acturces Innovative water policies for catchments to coasts are be- mouths of major rivers such as freshwater management, such coming an important element the Mississippi; siltation of as South Africa's "water re- of how we jointly implement coral reefs from uncontrolled Failure to manage water as one serve" (which provides basic our Environment and Water logging, as in the Palawan s- continuous system from catch- water requirements for human Resources Sector strategies. land, Philippines, or the Athi- ment to coast is not limited to needs and for ecosystem func- Galana-Sabaki River Delta in industrial countries. Many de- tions), can provide useful Kenya; and the hyper-saline veloped countries also are models for combined freshwa- For further information, see deltas and estuaries of the grappling with the most ap- ter-coastal management. In the Concepttual Framework and propriate governance arrange- ~~~Planning Guiidelines for Inte- Senegal and lower Indus riv- propriate governance arrange- case of international waters, grated Coastal Area and Riv- ers. The impacts of upstream ments to accommodate Transboundary Diagnostic er Basin Management (UNEP activities are felt in many oth- competing interests, while Analysis has proved to be a and PAP/RAC 1999). ISBN er coastal regions. One exam- maintaining environmental useful tool to evaluate threats ple is the disruption of flows. Australia's Great Barri- to the Black Sea Large Marine freshwater flushes that pro- er Reef, where tourism and Ecosystem. It provides input to vide breeding and migration fisheries bring in A$1.5-2 bil- the cooperation and manage- This article was prepared by Marea cues for fish and invertebrates. lion annually, has faced seri- ment efforts among riparians Hatziolos, (202) 473-1061,fax (202) In addition, sediments that ous threats from cattle in the Danube and Black Sea 522-1142, anld Richard Davis, (202) provided the substrate for sea- ranching and agriculture in Basins through the Strategic 473-6267,fax (202) 522-1142, of the Environment Departmentt. Coastal grass beds now blanket and coastal catchments. There are Partnership for Nutrient Re- and marine managemnenit Website: smother these productive ar- now attempts to manage these duction, which is co-financed <>. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 27 ne of the most suc- the WSSD. One of the Africa- cessful aspects of focused partnerships is the the Johannesburg Africa Stockpiles Programme World Summit on Sustainable (ASP), which is led by the Development (WSSD) was its Bank, World Wildlife Fund focus on partnerships for sus- (WWF), and the Food and Ag- tainable development. Over riculture Organization (FAO). Irt n e r,. ship300 voluntary, non-negotiated Over the past 40 years, virtu- , z .a r t n e r sh. . I p s partnerships between govern- ally every African country has The _N ext Step * ments, business, and civil so- accumulated stockpiles of ob- s The N ext Step I n ciety were featured on the solete pesticides that are pos- United Nation web site (with ing serious health threats People, Planet, approximately $300 million in (estimates indicate at least resources), and over 60 part- 50,000 tons of obsolete pesti- r * * ~~~a n d P ro sp er i ty nerships were launched in Jo- cides, and tens of thousands of hannesburg. The Summit's tons of contaminated soil). The main document, the Johannes- objective of the ASP is to clean of = burg Plan of Implementation up stockpiled pesticides and ;N3Outcomes of the (POI), makes clear that these pesticide-contaminated waste XW orld Summit partnerships complement and in an environmentally sound do not substitute for intergov- manner and to provide capac- t 1 on Sustainable ernmental commitments. ity building on chemicals-re- lated issues. De velopm en t A World Bank analysis of these partnerships and the Johan- The ASP initiative is expected nesburg POI showed that our to last between 12 and 15 years sector strategies, investment and cost a total of $250 million. programs, and poverty focus The first five-year phase will in support of the Millennium cover seven countries, prepare Development Goals were ful- 15 more, and cost about $70 ly aligned with the WSSD pri- million. The partnership has orities. The Bank is also raised $48.5 million in firm involved in most of the larger pledges and commitments, in- partnerships, either through cluding a $30 million contribu- financial support from the De- tion by Croplife International. velopment Grant Facility (with a budget of $157 million in fis- Global village energy cal 2003, covering 48 grant pro- grams), or through project partnership financing, analytical work, and support to country pro- The Global Village Energy grams. We review here Partnership (GVEP) aims to progress in a few of these part- accelerate the provision of nerships. modern energy services to the * . . rural poor. It brings together consumers, suppliers, and a Africa stockpiles wide range of stakeholders to n :programme promote linkages between en- ergy and poverty reduction in African development issues- rural areas, facilitate the devel- from HIV/AIDS to access to opment and implementation energy- were a major focus of of service delivery models, and ENVIRONMENT MATTERS * 2003 catalyze the scaling up of in- Now in its fifth year, the Alli- ronment and to address and governments worldwide, vestments in rural energy. ance has proved to be a highly knowledge gaps. the Bank expects the CDCF to successful collaboration. This more than triple its capitaliza- Since the WSSD, the list of was evident again at the At Johannesburg, the first ma- tion to $100 million by early partners continues to grow: WSSD, where Brazilian Presi- jor report of the PEP was 2004. 221 organizations (including dent Fernando Cardoso- launched-Linking Poverty Re- 103 NGOs, 74 private-sector joined by the World Bank duction and Environmental Man- Global reporting firms, 36 government agencies, president, the WWF director agement: Policy Challenges and .i v and 8 multilateral agencies) general, and the GEF CEO- Opportunities. PEP has now inltiative have signed the GVEP State- announced the most signifi- expanded its work to poverty One of the most debated issues ment of Principles. Regional cant tropical forest conser- and climate change and has atothemitdeassue multi-stakeholder workshops vation initiative in history. The begun interagency work on social responsibility (CSR). have been held in Africa, Lat- Amazon Region Protected Ar- environmental health issues. There is a broad-based and in America, and South Asia. eas Program sets aside 50 mil- growing international move- Funding for the GVEP is pro- lion hectares of Amazon rain Communit ment to encourage companies vided by Canada, Germany, forest under federal protection and organizations to voluntar- Switzerland, the United States, over the next 10 years, includ- development carbon ily integrate social and envi- UN Foundation, and UNDP, ing samples of all 23 Amazo- ronmental concerns into their among others. Negotiations nian eco-regions. This fund operations. are under way with donors to program will triple the amount Founded by the Bank and the raise the current funding from of protected Amazon rainfor- International Emissions Trad- The Global Reporting Initia- $1.9 million to $2.9 million. est to about 12 percent of Bra- ing Association, the Commu- tive (GRI) often provides an zil's total forest area-twice as nity Development Carbon intellectual framework for an- WWF/World Bank big as the United Kingdom. Fund (CDCF) operates through alyzing CSR issues. GRI's mis- t Il. ~~~~~~~~~~~~~~~the Kyoto Protocol's Clean De- sion is to develop globally forest alliance Poverty environment velopment Mechanism. This applicable guidelines for re- partnership pioneering program allows porting on the economic, envi- At the UN Conference on En- partnership OECD countries to fulfill some ronmental, and social perfor- vironment and Development of their greenhouse gas emis- mance of an organization. (Rio +5) in New York in 1997, One of the major break- sion reduction commitments Since its launch in 1997, a wide the presidents of the World throughs of the WSSD was the by financing small-scale green- range of stakeholders-includ- Bank and World Wide Fund recognition by the over 180 house gas reduction projects in ing business, nonprofits, ac- for Nature announced the es- participating governments the least-developed countries counting bodies, investor tablishmentoftheAlliancefor that responsible economic and in poor communities in organizations, and trade Forest Conservation and Sus- growth meant that environ- developing countries. The unions-have participated in taoreste CservaTion partndeus- mental and social consider- CDCF supports initiatives the GRI. An agreed set of re- tainable Use. This partnershiP ations have to be factored into with significant and measur- vised 2002 Suistainability Re- supports the goal of ensuring their policy choices. The lack able community development porting Guidelines was released sustainable livelihoods for for- of solid analytical work link- benefits in fields such as re- at the Johannesburg Summit. est-dependent poor and indig- ing natural resources and pov- newable energy, energy effi- As part of its commitment to enous peoples. The Alliance erty hinders the consideration ciency, and solid waste to CSR, the Bank has provided has three broad targets: 50 mil- of these linkages in policy de- energy conversion. $300,000 to the GRI through lion hectares of new forest pro- cisions. OECD, UNDP, DfID, . Developthe GRI Facil- tected areas; a comparable and the Bank are the founding At its first annual meeting held the Development Grant Facil- area of existing but highly members of the Poverty Envi- in July 2003 in Washington, the ity; additional support has threatened forest protected ar- ronment Partnership (PEP), an importance of the Fund as a threatsened fo dres protectved a informal network that now in- vehicle to bring benefits from easasecured under00 effecte cludes over 10 bilateral and the Kyoto Protocol to some of Thlis article was prepared by Jocelyne management; and 200 million multilateral partners. PEP's the poorest countries and com- Albert, (202) 473-3458, fax (202) hectares of production forests objective is to build a consen- munities was made abundant- 477-0565, of thle Environiment De- part nen t. Website: <>; Partnier- sustainable management. between poverty and the envi- from a number of companies ships and Initiatives. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 29 'f5'r {~onservation and wise ya, Uganda); montane habitats use of natural ecosys- (Bhutan, China, Morocco, Tur- ' v , _ 'tems is a central pillar key); unique habitats such as of World Bank assistance and forests on karst limestone is embodied in the new World (Croatia, Vietnam); marine Bank Environment Strategy. A systems (Indonesia, Me- key challenge for the Bank and soamerica); and freshwater I otected A reas its borrowers is to find ways lakes and wetlands. In many as T ools for ~A1ate r to promote development that countries, including Brazil, In- as Tools forV ater encourages both biodiversity dia, Indonesia, and Madagas- conservation and poverty alle- car, such protected area (C1o n s e rvat I o n viation. Protected areas are the programs are explicitly linked and M anage m ent cornerstones of biodiversity to sustainable livelihoods and r a n d M a n a g e m e n t protection, but they can also improved resource manage- 1% provide other goods and ser- ment by local communities. ENTERPRISE AND JOB DEVELOPMENT IN vices, many of them funda- BIODIVERSITY PROJECTS IN UKRAINE AND ROMANIA mental to poverty alleviation The Bank programs in biodi- BIODIVERSITY PROJEc-rs IN UKRAINE AND RoMANIA and sustainable livelihoods. versity include activities in buffer zones and biological * -n The Danube Delta, one of Europe's largest natural wet- . corridors; sustainable financ- * K _ Llands, covers 564,000 hectares, including 122,000 hect- Today the World Bank isonal ing mechanisms; new manage- , - 4 ares in Ukraine and 442,000 hectares in Romania. The largest single international mechanisms new mng- ares ment arrangements for pro- J reedbeds, riparian forests, dunes, and open waters of funding source for biodiversi- tected areas by communities the maze of tributaries of the Danube River provide crit- ty projects, with more than $3 indigenous peoples, and the ical habitat for over a million migratory and resident billion in loans, credits, and waterbirds. The delta ecosystem has been a source of grants since the Rio Summit pivale secies; and ofonr- -_ . . ~~~~~~~~~~~~~~~~~~~~~~~~sive alien sp ecies; and ecotour- subsistence and income to humans for over 500 years, and the Fourth World Parks . but over the last 50 years fish harvests have significant- Congress in Caracas. A new sm. ly declined.CnrsinCrc.Ane ly declined. report, prepared for the Fifth The role and Two complementary projects-the transboundary Ro- World Parks Congress in Dur- roesa mania-Ukraine Danube Delta Biosphere Reserve and ban, shows that since 1988 the services of - the Danube Delta Biosphere Reserve (DBR) Project- Bank has contributed more have improved collaboration between Romania and than $3.2 billion in loans, watershed forests Ukraine, especially through joint programs and exercis- grants, and co-funding to sup- Forests and other natural eco- - es in warden training and through exchange of region- port 10 regional programs, as systs not nlyumaintain * al expertise on scientific and wetlands management well individual reserves and bydiers t als bestow issues. The projects also have promoted collaboration protected area networks in 85t with other European organizations engaged in coastal countries ecosystem, resource, an management and nature conservation. health services. They serve as buffers against the spread of Sustainable use and protection of wetland biodiversity Throughout the world, the disease, pollution, and pests. , was a key element of the DBR project, which was sup- Bank is supporting the estab- Natural habitats stabilize ported with a $1.5 million GEF grant. Since the project lishment of new conservation coastlines and protect land- was completed in 1999, the DBR has been developing areas (Brazil, Indonesia, Laos, scapes, soils, and watersheds. revenue sources and creating jobs through ecotourism Panama) as well as strengthen- Forest ecosystems play a role and reed harvesting. Private commercial companies are ing management of existing in influencing rainfall regimes now invited to harvest the biosphere's reeds, based on parks in tropical and boreal and climate at local and re- the DBR's sustainable use plans. Reed harvesting reve- forests (Ecuador, Georgia, In- gional levels, helping to con- nues have more than doubled from 2000 to 2002 and . _ nues have more than doubled from 2000 to 2002 and dia, Peru, Poland, Russia); nat- tain global warming through - - ^ ~~have created about 1,000 jobs, improving the local pop- t lave creaite ab 1 jobs, im pEr the locar ural grasslands and savannas carbon sequestration and stor- ulation's benefits and stake in the reserve. (Argentina, C6te d'Ivoire, Ken- age in soils and plant biomass. ENVIRONMENT MATTERS * 2003 ' i' 1 -.! The role of many protected ar- Over the last decade, a num- For example, after the severe natural forests, will now be re- eas as "water towers" is in- ber of World Bank projects floods of 1998, the Chinese assessed (according to their creasingly recognized. Bank have expanded the traditional government requested Bank biological and protection val- projects in 14 countries are linkage between forests and support for the Natural Forest ues) for designation as nature Protection Program, which is reserves, forest parks, water- helping to strengthen the man- biodiversity to consider carbon design togre thlog shed forests, or areas for selec- agement of key protected ar- sequestration and watershed desg p to ens tong- tive logging. In Costa Rica, the term protection of national for- Ecmrespoec sspot eas that serve as water towers values associated with erosion iEcomarkets propect oS support- . . . . ~~~~~~~~~~~ests in watershed catchments ing development of markets from major cities such as Abid- control, clean water supplies, and reduce vulnerability of for ecosystem services, there- jan, Caracas, Dar es Salaam, flood control, and coastal pro- downstream villages and by fostering conservation of Jakarta, Johannesburg, Mexico tection. Many protected areas towns to flooding. Approxi- forest ecosystems on private- City, Mumbai, Nairobi, and can be justified for their eco- mately 50 million hectares, ly owned lands outside pro- Sofia-see Table. nomic benefits alone. more than half the country's tected areas in the Meso- american Biological Corridor. Parks and protected areas in the World Bank biodiversity portfolio, 1988-2003 In Bulgaria, natural and re- (which also provide protection of water supplies for major cities and other economic activities) storedwetlandprotectedareas Major city are serving as natural filters to Country Protected area drinkingwater Other biological and economic values extract pollutants from the ASIA Danube River system. China Qinling Mountains Xi'an Panda reserve India Periyar, Kerala Tamil Nadu Tiger reserve Coastal forest projects in Irrigation & hydroelectric power Croatia, Bangladesh, Hondu- Pench Bhopal Tiger reserve Hydroelectric power ras, Lithuania, and Vietnam Erivakulam Munnar Western Ghats hotspot are improving management of Borivili N.P Mumbai coastal forests, swamps, flood- Ranthambhore, Rajasthan Sawai Madhopur Tiger reserve plains and mangroves, includ- Water aquifer in drought-prone area ing restoration of degraded Tourism Indonesia Gunung Gede-Pangrango Jakarta javan endemics habitats. Forest services such Water generation $1.5 billion annually for as coastal protection and nurs- agriculture & domestic use ery grounds for quality fisher- Gunung Gede-Pangrango Bogor, Sukabumi Tourism and recreation ies are increasingly being Kerinci Jambi, Padang Sumatran fauna recognized as essential to these Water for 3.5 million people & 7 million hectares of agriculture countries' coastal economies. Philippines Northern Sierra Madre Manila Philippine endemics/hotpsot In Ecuador and Argentina, LATIN AMERICA & CARIBBEAN flood control projects utilize Chile Santiago foothill forests Santiago Forests provide 20% of potable water for the natural storage and re- Santiago Ecuador Andean protected areas Quito 80% of Quito's 1.5 million population charge properties of critical receive water from two protected areas forests and wetlands by inte- Andean protected areas Guayaquil Andean hotspot grating them into "living with Haiti La Visite N. ? Port au Prince floods" strategies. Pic Macaya Les Cayes Mexico Maniposa Monarca Mexico City Monarch butterflies; Tourism For further information, see Venezuela ElAvilaN.P Caracas I_World Bank 2003, Corner- AFRICA stones for Conservation: C6te d'lvoire Banco N.P. Abidjan Tourism World Bank Assistance for Kenya Aberdare & Mt Kenya N.P Nairobi Tourism Protected Areas 1988-2003. South Africa Maloti-Drakensberg Durban World Heritage site; Tourism This article was prepared by Kathy Maloti-Drakensberg Johannesburg Transfrontier area. MacKin non, (202) 458-4682, fax Cape Peninsula N.P Cape Town Proposed World Heritage site; Tourism. (202) 522-3256, and Clautdia Tanzania Udzungwa N.P Dar es Salaam Eastern arc forests - endemism Sobrevila, (202) 473-5004, fax (202) EASTERN EUROPE & CENTRAL ASIA 522-3256, of the Enivironment De- Bulgaria Rila & Viticha N.Y Sofia partment. Websites: < anid <>. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 3 he operational policies fiscal 2003 vs. 229 the previous of the World Bank are year), and the amount of in- U vital to its efforts to vestment lending increased by promote poverty reduction 29 percent from $9.7 billion in and sustainable development. FY02 (IDA $5.6 billion, IBRD A subset of these policies re- $4.1 billion) to $12.5 billion in quires that potentially adverse FY03. The breakdown of these , * a f e g u a r d environmental impacts and projects by Environmental As- selected social impacts of Bank sessment (EA) is shown in the Policies investment projects should be table below. identified, avoided or mini- mized where feasible, and mitigated and monitored. EA categories of investment * Update on Although the Bank has projects in fiscal 2003 I- ' Recent Efforts had environmental and NumberC(%) Len)27 :IA _ ! social policies for more C A2 than 20 years, Bank man- Cate gor C 149 agement first articulated cate o Fl 7 6 the concept of safeguard Note: Percentages are rounded and may not policies in 1997 to stress total 100. the importance of this spe- cific set of operational policies The proportion of Category A for achieving its environmen- projects (those receiving full tal and social objectives and for Environmental Assessment) in enhancing the quality of the portfolio remained at 10- The safeguard policies at the World Bank its operations. During 12 percent of new lending (IBRD and IDA) this past fiscal year, high- projects (27 percent in dollar OP/BP 4.01 Environmental Assessment lights of the work have volume). The proportion of OP/BP 4.04 Natural Habitats included mainstreaming Category B and Fl projects in- OP 4.09 Pest Management the safeguard policies in creased to 57 percent in num- OP/BP 4.12 Involuntary Resettlement a record lending pipeline, ber and dollar volume of the OD 4.20 Indigenous Peoples continued progress in the new investment lending, com- - OP/BP 4.36 Forests conversion of three key pared with 43 percent in the OP/BP 4.37 Safety of Dams safeguard policies, and a previous year. This is partial- OPN I11.03 Cultural Property decisive move toward ly explained by more rigorous OP/BP 7.50 Projects on International Waterways more attention to super- application of the Environ- .^' iS~..-id OPIBP 7.60 Projects in Disputed Areas vision of the implementa- mental Assessment policy to 1,- F t tion of safeguard policy projects in the Human Devel- Forthefulltextpleasevisitourwebsite:<>. a * org/safeguards». sector projects, 23 out of the 32 Mainstreaming approved projects were in Cat- egories A or B (72 percent of safeguard concerns projects in number, 70 percent P in Bank lending in dollar volume). All in all, 83 percent of the new investment During fiscal 2003 the number lending (in volume) has been of projects approved by the submitted to Category A, B, or Bank increased by about 13 Fl for Environmental Assess- percent (259 new projects in ment. ENVIRONMENT MATTERS * 2003 Disclosure of safeguards doc- sis for CDD projects and the global fund for meeting, known as "the Mar- uments also increased, now regions are now collaborating indigenous people has rakech Declaration," sets the that the application of the Pol- on formal technical guidance been created by the Bank framework for the building of icy on Disclosure of Informa- that is being standardized that will provide grants a constituency regrouping civil tion is fully mainstreamed. across regions. HIV/AIDS to indigenous peoples society, the private sector, and . , ~~thepbisetrtwda During FY03, the World Bank prevention and treatment groups and support for e public sector toward a received and disclosed 369 In- projects have also received the UN Permanent Forum common goal of helping pro- tegrated Safeguards Data specific guidance on the appli- on Indigenous Issues. environment from the un- Sheets (ISDSs; as these are up- cation of the safeguard policies * The policy on Physical wanted/undesirable effects of dated and disclosed at least in order to mainstream the Cultural Property has the large investments needed twice during project prepara- treatment of common issues, been largely completed to alleviate poverty. tion, these 369 ISDSs cover more specifically health care and is expected to go fewer than 300 projects), 294 waste management and, in to the Bank's Board of Emerging challenges EA reports, 80 Resettlement some cases, indigenous peoples. Directors before the end Action Plans and 32 Indige- 2003. The challenges for fiscal 2004 nous Peoples Development Other major efforts . More than 500 staff mem- are many, but the safeguard Plans. Together, the higher bers were trained on safe- teams in the Regions and at the number of projects subject to on safeguards guards, at headquarters as corporate level are taking them environmental scrutiny and ... . well as in field offices. A up, including: the larger number of docu- Other noteworthy actvities i number of local experts, * Increasing the client ments disclosed reflect the in- fiscal 2003 include the followmg: officials, consultants, and ownership and develop- creased mainstreaming of * Policy Conversion: the NGO representatives ment effectiveness of conversion of the Forestry were also trained in the safeguard policies environmental and social con- wr lotandl h cerns in the Bank's lending Policy was completed in field (over 500 of them * Broader application of portfolio. November 2002 and was during the fiscal year), strategic approaches to the result of a very par- including at one inno- Environmental Assess- ticipatory process in- . . ~~ment at the sectoral and Work has also been done to ticipatory process, in- vative West African one- adapt safeguards to new lend- cluding extensive use of week training course in regional level adapsafguadstoewlnd- Internet posting and we rnigcus *Continued emphasis on ing priorities. For example, a Inta ting and Ouagadougou (Burkina strengthening Bank and noteworthy trend of the new consultation. The new Faso) in November 2002. borrower supervision of FY03 lending is the larger pro- phasis on the Bank's Among the interesting Environmental Manage- portion of Community Based mission to assist in new training themes is a ment Plans and Community Driven De- mainstreaming the sus- course linking Environ- m Building client capacity velopment (CDD) projects, tale manget of mental Assessment and and using it increasingly now making up 20 percent of forest products with procurement practices, where clients have a the Bank-wide new lending (30 active cooperation from one on the management of strong track record of percent in Sub-Saharan Afri- local communities. health care waste, and good performance ca). These projects are submit- * The Indigenous Peoples one on the design and U Participating actively in ted to Environmental Assess- poiyhsbe iey monitoring of Environ- integratingsafeguardpohicies tedntobecausenmtheylfunsess- policy has been widely mental Management Plans. in the Bank's renewed ment because they fund in- discussed this past year. commitmenttoinfrastructure vestment. They receive a spe- This has been a significant Finally, the World Bank was lending and water resources cific treatment on a case-by- undertaking with lots of well represented at the 23rd development. case basis because of the pro- feedback from the consul- meeting of the International grammatic nature of the in- tations, which is being Association for Impact Assess- This article was prepared by Jean- vestments and because of the integrated into the policy. ment, which took place in Mar- (202) 477-0565, of t(0e Qu4lit5 As- risks of cumulative impacts. The expectation is that the rakech in June 2003 with the suranzce and Compliance Unit, with During fiscal 2003, guidance policies will be adopted theme of "Building Capacity input2from Gloria Davis, (202) 458- was prepared on appropriate during fiscal 2004. In for Impact Assessment." The set75ioation Unit. Website: <. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 33 4# R T Overviewtutes 13 percent of the total IThe Overview Bank portfolio at the end of fis- h- - . Ie In fiscal 2003, the Bank ap- cal 2003. 1,* * proved 52 investment projects Envi ronm ent in 42 countries with environ- Of the $13 billion, the core mental and natural resource portfolio (projects with more T and N at u ra I management (ENRM) lending than 65 percent environmental amounting to $1.1 billion. This content) consists of 69 projects Resources represented 6 percent of total representing almost $4 billion Bank new lending in the year. in environmental lending. PM anag ement In addition, there were 140 new analytical and advisory As much as 78 percent of Pri rtf~~ I ~ io activities with environmental ENRM portfolio projects are , v 0 O O themes. currently being managed by W L Tren-d other sector (not environment) Over the last year, the trend in units-indicating the extent of r ' S __ ~~~~~~~~~~ENRM lending at World Bank -4-- ENRMeas% oftotaldBanklending the Bank's environmental environmental mainstream- IL 3,- ENRMas' oftotalBan g ,0 lending has been shifting in ing. 2 v A12 response to the new Environ- V. .2 : + ment Strategy. Lending for -~~~~~~~~~~~~ ~~~~~environmental and natural re- _ - j°1 l4source management issues is for Bank lending * - sao l now increasing after a decline o ]1 Ii U. < b 1 oss over the last few years. In par- To better track the distribution - 'tfFv tE n Bp~r¶I dticular, lending for environ- of the Bank's work programs, mental policies and institu- a new two-dimensional coding Total World Bank Project Portfolio tions, a key area emphasized system was implemented in by Sectoral Distribution b fiscal 2002. All lending data in by the Bank's Environment b'rdustry ti e otrfet h e and trade Strategy, is rising sharply. this report reflects the new 4% Agriculture coding system. Each loan is =, 4^ ~~~~Water/sanitation; flood protection % 9 a&pbicTeevromna cneti 10% o.| Law&dpublic The tracked by both theme and sec- ti4 104Q .. ,,,,,' ' / ~~~~~~administrationTh nrom tacnetm h Bank's overall investment tor codes. The 11 theme codes information and prflo beona correspond to thegolan , t ~~~~~~Transportation \ crructolportfolio has been on a rela-corsndtthgalad communicationhare-golan 21% Ic. tivelv trend, a objectives of Bank activities, tieydeclining trn,from andte1 etrcdsmi Educalion high of $2.5 billion in 1996 to $924 million in 2002. In 2003, cate the parts of the economy Energy&mining \ Finance however, ENRM lending in- that directly benefit from Bank wlr 1111196.. ~~~~~Health& social 5% o t n io m n n services creased to $1.1 billion, and it support. Environment and t ;; \ 14% is expected to reach $2.2 billion natural resource management in 2004. As a proportion of is I of 11 themes. Total World Bank Project Portfolio E ~~~~~~~~~~~~~~~~~overall Bank lending, environ- K by Thematic Distribution mental content has risen from The new coding system en- ratural resources manarenent 4.7 percent in 2002 to 6.0 per- ables the Bank to better man- Rrl 1 3% 1% publicsetlc dwelepmen. . gPnment cent in 2003. age its portfolio and monitor lb * , 150, 8% progress toward achieving its Ruleof law 2% At the end of fiscal 2003, the goals as defined by its corpo- Ur um :Finate setrrnetltee/otntwiemitiigafcso devic,int Fprivate s&or total active projects with envi- rate priorities and the MDGs, ->,>! E 13 2- ' 7 development ronmental themes/content while maintaining a focus on 77 _M, \\/ 7 Traie& (the ENRM portfolio) amount- economic segments. It allows Hum^k_ integraaln ed to $13 billion. This consti- for up to five themes and five -~ development Sociai protection *|r g development and risk 7% i 4 F 8% ENIVIRONMENT Nl.*TTFR5 * 2003 sectors per activity, recogniz- Analytical and financing of $103 million. As of Active ENRM portfolio - ing that many Bank projects .July 2003, there were 119 full- Thematic distribution, FY03 are multifaceted. ~~~~~~~~advisory acLIiviLies size (more than $1 million Ote NMBiodiversity each) GEF projects amounting ($463 million) 2% Climate change Analytical work is the founda- toattlo 64blinin to- Water -9 ($1.2 billion) NRM lending tion for defining strategic m~~~~~~~resources -. Environmental E NRM Jending tion for defining strategic ~~~~~~~~~~~~~tal project costs, of which $1.6 management policy and portfolio priorities and integrating bnillion1biliBank Near-ttuton ronmentl concens intobillionis Bnfilnancing. Near-($1.7 billion) In terms of thematic distribu- pronmentsand cronrnms. iToe ly three-quarters (72 percent) 3/ Ln tion, a third of the environ- Bn'aaltclnddvs-of Bank financing in GEE management ment and natural resource inld omle-projects is for climate change ($1.7 billion) ry activities inld omle-issues. In addition, there are 58 Pollution management management portfolio consists vrnetleptsucasand environmental health of lending for pollution man- viounmryEntaironepotsl suchas- medium-sized projects (leSS ($4.3 billion) agement andCoutryenvironmental yss nomlrprsandal- than $1 million each) repre- Active ENRM portfolio- health issues. An additional tivities such as policy notes commitmnt and$23 millioninBk Regional distribution, FY03 of lending goes to wa- and conferences, and technicaltment and. Middleion MddEaststand quarter oledngostwa ancofrne,adtcialin total commitments. North Africa ter resources management. In assistance programs. ~~~~~~~~~~~~~~~~~~~~~~($0.7 billion) South Asia ter resources management. In assistance programs. Latin America and ($2.2 billion)ati Amerca ad ($22 bilion response to recommendations Thr a enaporsieMontreal Pooo the. Caribben , 'AC made in the Environment ThrAasbefrporsivirtcoc$.ablin reversal of the downward There were 29 new subprojetsEurope and 1 )$1.3 billion) Strategy, lending fotrendvinonon-lending activities .Central Asia 12% mental policy and institutions trn nnnin fiscal 2003, including 7 pipe- ($1.6 billion) now accounts for a further 13 observed in the past years. line approvals, 17 investment Over the last two years, 10 projects, and 5 non-investment 41% percent (increasing from 6 per- Country Environmental Anal- technical assistance sub- East Asia and the Pacific cent the previous year). Land yses and 12 Strategic Environ- projcts.Apprvedound management also remains an mental Assessments have been ing associated with these Analytical and advisory activities important issue, accounting launched. In addition, target- subprojects amounted to with ENRM themes, fiscal 1999- for $1.7 billion in lending in the ed environmental input was $80.5 million, including 2003 active portfolio. With nearly provided to 13 PRSP countries. $0.4 million for pipeline 20164 $300 million for biodiversity in Overall, between fiscal 2002 approvals, $77.6 million '$014 its active portfolio, the Bank re- and fiscal 2003, the number of for investment projects, 100 69 80 mains one of the largest inter- analytical and advisory activ- and $2.5 million for non- 46 national supporters of biodi- ~~ites with ENRM content in- investment technical aSSiS- 5 creased from 115 to 140 tance. versity projects. products. FY 99 FY 00 FY 01 FY 02 FY 03 FY04 (e5t.) In terms of regional distribu- Global Environment Active GEF portfolio - tion, 41 percent of environ- Thematic distribution, FY03 mental lending in the active Facility International portfolio was in the East Asia .waters The World Bank is an imple- Multi- 10% and Pacific Region. Most of menting agency for the Global sectoral 6% these projects are focused on Environment Facility. GEF pollution management and en- projects focus on biodiversity This article was prepared by Anjali Ciae~ vironmental health issues. The conservation, climate change, Acharya, (202) 458-5298, anzd Rita Chmange South Asia and Latin America international waters, and Lhn,(0)4326,fx22) 24% B Bidi vers it y 477-0565, of the Environment De-59 and Caribbean Regions fol- ozone depletion. In fiscal 2003, partmenit, with inputs from thle Eni- lowed, with 17 and 14 percent 29 new GEF projects were ap- vironment Strategyj Team. Environ- menit Strategy website: <>. 1% ANNUAL REVIEW' * JULY 2002-JUNE 2003 (FY03) 35 Veide W' s,-Q 6 {,. ~~Si -2 Somalia ~KnaSeychelles q - I- Comoros 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ _ 1)tS7 AUGUST Namibia he main themes of Environment Matters 2003 Ca turing povert/environment are particularly relevant in Sub-Saharan Af- na es 4 rica. Water scarcity is a key constraint to g improving health and production, while Poverty alleviation continues to be the core mission of the biodiversity assets represent a principal basis for existing live- World Bank and a central concern of our clients. Clarifying lihoods and future economic development. and addressing environment/poverty linkages is a top pri- ority. New instruments-such as Poverty Reduction Strate- The Bank's Africa Region Environment Strategy (ARES) seeks gy Papers (PRSPs) and Poverty Reduction Strategy Credits to support environmentally sustainable development by in- (PRSCs)-are increasingly setting the development agenda tegrating environment into the strategies and programs that and serving as a main channel for World Bank assistance. are considered priorities by African stakeholders and their Mainstreaming environment in this context begins with im- development partners. Africa Region activities during fiscal proving poverty assessment, analysis, and monitoring. For example, in Nigeria an analysis of poverty/natural resource 2003 reflected ARES priorities, such as poverty/environment likgsnruahoeodsrvyhscntbtdtoae- linkages; water resource management; fragile and marginal likgsnruahoeodsrvyhscntbtdtoae- linkages; water resource managemet; fragile and marginal ter understanding of the sources and implications of rural lands; community management of natural resources; protect- poverty. In Uganda and Tanzania, environmental sustainabil- ed areas within a broad ecological, social, and economic con- ity and management capacity are being built across all sec- text; and environmental capacity building. tors, with special emphasis on poverty-environment 36 ENVIRONMENT MATTERS * 2003 AFRICA REGION indicators (see Box on Tanzania, below). yet much of the continent consists of arid trend worldwide but is often difficult to Benin aims to complement the upcoming and semi-arid lands with variable and apply in Africa, due to the poverty of the PRSC with two Global Environment Fa- unreliable rainfall. Water-related infra- beneficiaries. One option is for govern- cility (GEF)-financed projects targeting structure is underdeveloped in both ru- ments and other stakeholders to pay on coastal, marine, and freshwater ecosys- ral and urban areas, and almost all major their behalf. In the successful "Working tems, as well as forests and adjacent lands. rivers are shared by two or more coun- for Water" program in South Africa, na- tries. Altogether, water management rep- tional poverty reduction funds pay for MAINSTREAMING resents one of the region's most urgent removing water-hungry alien vegetation ENVIRONMENT/POVERTY development challenges. The Bank's cur- from important watershed areas. Eco- rent portfolio supporting water-supply nomic analysis can help justify payment LINKAGES IN THE POVERTY infrastructure includes 24 projects in ru- by demonstrating the importance of these REDUCTION STRATEGY ral and urban areas totaling $885 million. ecosystem services (see Box on Madagas- PROCESS IN TANZANIA Other projects help harness the econom- car, below). ic power of water through irrigation and Agriculture, tourism, and mining are the hydroelectric development. Increasingly, Sustalnable livelihoods mainstays of the Tanzanian economy. Envi- these investments are being undertaken ronment/poverty linkages across many as part of broader water resource man- and conflict manage- sectors are well recognized, as income in t trategies and programs, with rural areas is almost exclusively based on e o ment on fragile lands natural resources. Their degradation is a em on ment on frail lands major source of vulnerability for the rural management and attention to water-re- In Africa, 180 million people (39 percent poor. The vice president's office is leading lated environmental services. The most of the population) live on fragile drylands the mainstreaming of environment into the ambitious is the 10-country Nile Basin where growing numbers of pastoralists PRS process. The PRSC is likely to include Initiative, built around a "Shared Vision and agriculturalists increasingly compete poverty/environment linkages with ade- Program" for regional cooperation, trans- for water and land. Government policies quate indicators, integrate this knowledge boundary environmental action, efficient have typically encouraged agricultural into the PRS and public expenditure review and equitable water use, and water re- expansion and undermined the liveli- process and sectoral/district-level investment sources management and planning. hoods of the pastoralists. However, mo- plans; use Strategic Environmental As- bile pastoralist systems are known to be sessment as a planning and management P f tool; and build capacity in government insti- Payment for water-related and other en- a very efficient form of land use in arid tutions responsible for environmental man- vironmental services is an emerging tropical regions. The Bank is supporting agement and mainstreaming. LINKING ENVIRONMENT AND To promote mainstreaming of poverty/ POVERTY REDUCTION IN MADAGASCAR environment issues, the Africa Region has launched a program to develop and Madagascar has been locked in a downward spiral of poverty and environmental degrada- promote among clients and Bank teams tion, including a 35 percent decline in GDP per capita and the loss of almost half its forest area the use of appropriate environmental over the past 40 years. Forest destruction has undermined watersheds and soil stability vital outcome indicators and tools for moni- to the agrarian economy, with losses of up to 150-200 metric tons of topsoil/hectare/year,and toring the contribution of PRSPs, coun- has caused siltation and water shortages in dams and irrigation systems. tory asithne otribteionso PRSPd oun-y try assistance strategies, and policy! A recent Bank report showed that the economic benefits of biodiversity conservation far out- program-based lending operations to weigh costs in Madagascar. Sustainable management of a network of 2.2 million hectares of improving environmental management forests and protected areas over a 15-year period would cost $97 million (including opportu- and in-country capacity. nity costs of foregone agricultural expansion).The total benefits are estimated at $117 million, made up of direct payments for biodiversity conservation (15 percent), ecotourism revenues (45 percent), and watershed protection (40 percent), primarily from averting the impacts of soil erosion on smallholder-irrigated rice production on 200,000 hectares and improving the management quality of 14 million cubic meters of water. Recognizing that there are winners and losers from forest conservation, the study notes the need for equitable transfer mechanisms to close African economies and livelihoods are this gap, but emphasizes that conservation will help maintain or improve the welfare of at least haif a million poor peasants. highly dependent on rainfed agriculture, ANNUAL REVIEWY * JULY 2002-JUNE 2003 (FY03) 37 ecosystem management approaches and Communi l-based nities to manage forest resources effec- conflict reduction through jointly agreed tively and sustainably. However, success sustainable land management plans in natural resource depends on a supportive policy and in- projects such as the Niger Community manaement CBNRMw stitutional environment, as illustrated in Action Program, the Ghana Northern m U Cameroon and Gabon, where forest and Savannah Biodiversity Conservation The Bank is supporting many CBNRM environment sector programs aim to ad- Project, the Tanzania Forest Conservation projects that reinforce common property dress these issues to help preserve some and Management Project, and the Burki- management systems and strengthen of the largest remaining tropical forests na Sahel Integrated Lowland Ecosystem land tenure. This is done for rural house- in the world (see Box on Cameroon at top Management Project (see Box on Dry- holds and communities throughout the of next page). lands, below). In the Ghana project and region as part of the Bank's overall sup- the Ethiopia Conservation and Sustain- port for decentralization and democra- Capacity building for able Use of Medicinal Plants Project, the tization. For example, a Bank/GEF- e rn Bank is also helping to mobilize indige- supported project-the Integrated Ecosys- environment nous knowledge to manage these envi- tem Management Project in Namibia- management ronments. will support the expanding community * conservancy network in the country. As budget support credit and program- MANAGING CONFLICT matic instruments become more frequent, Community-driven development (CDD) strengthening the relatively weak envi- OVER LAND AND projects provide financing and technical ronmental institutions and Environmen- NATURAL RESOURCES assistance directly to communities. New tal Assessment (EA) capacity in Africa is IN AFRICA'S DRY LANDS CDD projects increasingly include invest- becoming all the more urgent. The Bank ment in sustainable livelihoods and nat- is working with African EA stakeholder In Nigeria, continuous conflict over natural ural resource management (NRM) in groups to develop a new strategic frame- resources by many rural stakeholders is ag- addition to building traditional social in- work with elements that include gravated by unclear and insecure property frastructure (see Box on community-driv- strengthening an emerging network of rights, inequitable access to resources and lackts, of utransparen andcweak onfi res-urs a en development, below). EA practitioners; increasing borrower lack of transparency, and weak conflict res-' olution mechanisms.The FADAMA II project institutional capacity to manage EA pro- aims to mainstream conflict resolution pro- The Bank supports numerous CBNRM grams; extending regional training and cesses within the preparation and imple- projects aimed at empowering commu- learning-by-doing programs; and build- mentation of community Local Develop- ment Plans. The objective is to maintain ecosystems (wetlands, riverine forests, MAINSTREAMING ENVIRONMENT groundwater resources, and biodiversity), IN COMMUNITY-DRIVEN DEVELOPMENT which are critical to the sustainability of the fadama agricultural resource base, as well The pastoralist population of arid northern Kenya is vulnerable to frequent, acute food inse- as conserve biodiversity benefits of region- curity related to drought. The Kenya Arid Lands Resource Management project aims to help al and global significance. them help themselves break out of the prevailing survival/relief cycle.The first phase of the project covered nine districts and focused on improving crop and livestock resilience to Thervatin N rorhern Saannah Bimtodiverston- drought, developing a drought preparedness strategy, and improving basic health and water therlivaihonojec ind Ghanalthof aim l toimp services for the mobile population.The recently approved second phase will expand the pro- nities, livelhort ahesustanablth ue lofnal u- gram to more communities. It will continue to use a CDD approach and seek to enhance NRM nities, support the sustainable use of natu- activities. ral resources, including medicinal plants, and manage conflict over these resources The Burkina Faso Community-Based Rural Development (CBRD) Project is a three-phase, 15- among different communities (farmers, year Adaptable Program Loan (APL) that helps to support a national CDD program.The com- herders, hunters, etc.) and with reserve au- plementary GEF-financed Sahel Integrated Lowland Ecosystem Management Project, also a thorities. The project will help establish a 15-year APL, will strengthen local capacity, policies, and implementation resources for inte- conflict resolution and management system grated ecosystem management.The CBRD will finance community initiatives with local bene- that will allow community access to resourc- fits (such as soil and water conservation, reforestation,and renewable energy),while the SILEM es. It will also deal with human/wildlife con- will provide incremental funding for activities with national and global environmental bene- flict in transfrontier corridors that connect fits (such as zero tillage, organic fertilizer, agro-biodiversity crop seed production, and biodi- two protected areas. versity-based enterprises such as cultivation of medicinal plants). 38 ENVIRONMENT MATTERS * 2003 AFRICA REGION tourism, and community/private sector IMPROVING GOVERNANCE ...TEA RRGOA partnerships. The rapidly growing tour- THE AFR REGIONAL IN THE FOREST SECTOR ism industry and high-level political ENVIRONMENT PORTFOLIO IN CAME ROON commitment to transborder cooperation Water resource provide rich opportunities in Southern management Cameroon is Africa's largest wood export- Africa (see Box, below). 19% Other environmental er and home to some of the region's rich- mnen est biodiversity. Historically, logging has j 7 B odve sity been poorly managed and regulated, has PollutionSUSTAINABE imperiled rare wildlife and the ecological management 37% ~ j~~Cimatc.hange integrityof theforest,andyielded littleben- IN SOUTHERN AFRICA U efit for local communities and govern- ments. In 1994, a new forestry law, enacted Southern Africa offers a unique opportuni- ironmental as part of a Bank structural adjustment ty for "win-win' solutions linking sustain- Land policyandinstitutions credit condition, met considerable opposi- able economic development with 9% tion. Local support gradually increased biodiversityconservation and environmen- At the end of June 2003 the active portfo- thanks to a growing constituency of gov- tal management through tourism.Tourism lio of World Bank environmental lending in ernment reformers and positive results at rates and investment in the area are grow- the Africa Region was $ 1.3 billion. In fiscal the community level. A second structural ing rapidly, particularly for "bush and 2003, new total environmental lending adjustment operation further supported beach" packages that depend on healthy amounted to $227 million. forest sector reform, including disclosure of natural ecosystems and abundant wildlife. concession details in local newspapers, use The Bank and other development partners of independent (Cameroonian and interna- are assisting southern African countries to tional) observers, and satellite imagery to create a diverse and integrated regional tourism circuit to rival any tourism attraction monitor concessionaire compliance. GlobaI in the world. To ensure environmental sus- Forest Watch Cameroon reported more .... tainability and poverty alleviation impacts, transparent concession allocations in the the emphasis is on spatial planning and June 2000 round. Annual fees have in- management at an ecosystem level and on creased from $0.14 to $6 per hectare, with community participation and benefits. the total value of contracts expected to , reach $600 million over the 30-year forest The multi-phase, multi-donor Mozambique L' 4 management period. A new legal frame- Transfrontier Conservation Areas (TFCA) v - workforcommunityforestrygivescommu- Program builds on the fact that Mozam- = Ł:"! ; nities priority access to forestland. Further, bique has large areas of rich biodiversity new protected areas have been created, adjacent to well-established conservation - ; v - short-term speculators are being replaced and tourism areas in neighboring countries. , / . - a-. by long-term investors, and local commu- The first phase, a GEF-financed project laid i 7 nities' revenues have increased from negli- the political and institutional groundwork. - A gible levels in 1998 to $8 million in 2002. The second phase, to be supported by IDA, GEF, and bilateral partners, will focus on . ;X TFCAs (included embedded Protected Ar- 3 eas) and tourism development. The ing awareness and constituencies in govern-.. .. ,_I- _ Mozambique Coastal and Marine Biodiver- . _ ment, the private sector, and civil society. sity Management Project supports the cru- - , cial "beach" element by promoting 8 environmentally and socially sound tour- - . Protected areas ism in the context of integrated coastal in context zone management.The Swaziland Biodiver- sity Conservation and Participatory Devel- An indigenous tree planted with support from the Protected areas (PAs) are increasingly opment Project will provide support for World Bank-financed Environment Management Protected areas (PAs) are mcreasmgly participatory spatial planning within two Project. being viewed within a larger ecological broad "tourism and biodiversity"corridors and social/economic context. The Bank's whose endpoints fall within transfrontier strategy for PAs includes an ecosystem conservation areas. The proposed IFC South East African Integrated Tourism In- management approach, including trans- vestment Program will support tourism in- This article was prepared by Agi Kiss, (202) frontier conservation areas, community- vestments based on environmental 458-7180,fax (202) 473-8185, of the Environi- based conservation, mobilization of sustainability and partnership with local mentally and Socially Ststainable Development economi benefis throuh natur-based communities. Uniit for Soutliern Africa. AFR website: economic benefits through nature-based <>. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 39 -L East Asia anN :J 14U4. f5~ ~ ~ ~ ~ ~ ~~lrl *4 j Kiribati ./ ~ - iu; onga!t o 2;;jj1.;: 3 e= -s2-- ' mmo Cm ..~~~~~~~~~~~~~~~ Fiji N.. I ~~~~ast Asia's remarkable growth over -he last Water An importai l,t regional tv ~three decades is in part due to its copious and resource diverse natural resources. But growth (and poverty reduction) has been accompanied by East Asia's dynamic growth-charaictei-ized by rapid increase serious environmental costs. Maintaining sustained economic in GDP and population and by migration from rural to urban growth remains dependent on natural resources and ineeds to aesi eeeysrsigubnwtrspl n aia be based on better attention to and better husbandry of the tion (WSS) systems, increasing compe tition for surface and region's remaining resource base. For East Asia to continue grudaersocs,nagrigvtrqaly,ndr- putting emphasis on the quality of growth rather than on its aigcniin fwtrsact ns n ra.Irgto c magnitude, it should continue promoting opportunities for consfrsm 5preto rswtrwtdaas The local community involvement and participation in environ- lresaeirgto cee mlmne ui h re mental protection and management of natural resources; in- creae inestmnts hat ill mproe enironenta quaity Revolution are inefficient, deliverin-g as little as 40 percent of in ~ Asa meaite an ote,ra ra hog elcin water to crops. Subsidies exacerbate ttle problem by encour- in air and solid waste pollution; and, especially, give priority aging the expansion of inefficient supply systems and by dis- to the developm-ent and management of water resources across couraging demand-side behavior that would improve water the region. delivery services. 40 EN'\ IRONMENT MATTERS * 2003 EAST ASIA AND PACIFIC REGION The development of water resources, ac- principles articulated in the WRMP re- gy for China has already been complet- companied by extensive deforestation main valid and emphasizes the need for ed, and strategies for Cambodia and the and other factors, has disrupted the full a more holistic approach to water re- Philippines are under preparation. In spectrum of freshwater ecosystem servic- sources management (WRM) throughout addition, the Mekong River Commission es. Many regions are characterized by re- the region. The Strategy states that wa- (MRC), an intergovernmental body estab- duced stream water levels, lowered water ter resources management must deal lished in 1995 by the governments of tables, degraded riparian wetlands, di- with (a) the institutional framework; (b) Cambodia, Lao PDR, Thailand, and Viet- minished freshwater aquatic diversity, management instruments; (c) develop- nam, promotes and coordinates the use, and increased flood damage. Excessive ment and management of infrastructure; management, and conservation of the demand for groundwater in cities such and (d) the political economy of water water and related resources of the as Bangkok, Jakarta, and Manila has led management and reforms. Individual Mekong River Basin (MRB). The World to saline intrusion and ground subsid- Country Water Resources Strategies will Bank is engaged with the MRC through ence. provide an overall vision and framework a GEF-financed Water Utilization Project, to facilitate achieving sustainable inte- which is helping establish a database and Water quality is declining due to increas- grated management of water resources regulations for effective, collective deci- ing industrial and urban pollution. It has throughout the region. To date, a strate- sionmaking on water-related issues in the been estimated that more than 500,000 infants die each year in the region as a result of waterborne diseases linked to EAST ASIA AND THE GLOBAL ENVIRONMENT dirty water. About 60 percent of these deaths are a consequence of the deficit in Ozone Depleting Substances (ODS).The East Asia ODS program is the largest in the world, rural water supplies, while another 30 with current commitments of approximately $590 million. The region intends to phase out percent are due to the lack of sanitation consumption and production of 235,723 MT of ODS by 2010, accounting for nearly 75 percent in urban areas. Furthermore, most house- of the remaining ODS production in all developing countries.There are currently operational programs in five countries, with the largest program in China focusing on both ODS produc- holds without access to safe water pay tion and consumption. China's Mobile Air Conditioning Sector Plan was the first such plan to up to 10 percent of their annual income becompletedintheBank'sODSProgram.Nationalchlorofluorocarbon phaseoutplans(NCPPs) for this water, often more than the cost are under implementation in Thailand and Malaysia; a NCPP has been approved for the Philip- pines, along with a Mobile Air Conditioning Sector Plan for Indonesia; and a NCPP is being of providing piped or boiled water. The dvlpdfrVenm developed for Vietnam. health benefits of providing clean water are significant. Carbon Finance. In the climate change area, the Bank is building on the achievements under the GEF portfolio to assist project entities to access financing through the windows available under the Prototype Carbon Fund and other carbon finance windows that have become op- erational. Proposals for projects in energy efficiency and solid waste management are cur- under increasing pressure. The produc- rently being formulated in China, Indonesia, Philippines, and Vietnam. tivity of many fisheries is declining, large- ly as a result of overharvesting. Other Persistent Organic Pollutants (POPs). Currently, China is the only country in the region with significant trends include destructive an active POPs program. It includes three pilot activities: 1) a toxicity study on health effects on women and children; 2) a termite study; and 3) a polychlorinated biphenols management fishing, reduced access of traditional us- capacity building project. Based on the results of the pilot activities, GEF-financed full-size ers to fishing grounds, and potential demonstration projects will be launched in China in the next fiscal year. damage to tropical marine ecosystems The Global Environment Facility.The region's GEF portfolio has grown to 36 projects, of which from rising sea levels. 21 are full-sized projects (FSPs) and 15 are medium-sized (MSPs). Out of these 36 projects, 12 FSPs and 3 MSPs address climate change and 8 FSPs and 11 MSPs address biodiversity conser- The recently completed East Asia vation. In FY03, the Region delivered 4 pipeline entries, 3 Council approvals, and only 2 Board Water Resources Management Strategy approvals, largely due to the impact of SARS on project processing schedules. aims to achieve consistency between EAP The Clean Air Initiative (CAI). Since its inception in 2001, CAI continues to advance innovative water resources programs and projects, ways to improve air quality in cities by sharing knowledge and experience through partner- the Bank's 1993 Water Resources Man- ships in selected countries of the region. Over the last year, CAi brought together a range of agement Policy (WRMP), and its new cross-cutting expertise in urban development, transport, energy reform, environmental man- 2003 Water Resources Sector Strategy. agement, and environmental health for Asian cities to implement successfully a wide range of The East Asia Strategy recognizes that the activities. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 41 Strategies, poverty reduction programs, ment monitor is currently under and partnerships. Specifically, EASES: preparation. -~ U Initiated research to broaden and * Provided technical assistance, _- |. , strengthen our understanding of knowledge, and learning programs _-7 ~poverty/environment linkages in to support policy innovations in Cambodia, Lao PDR, Vietnam, and industrial pollution abatement, China; helped equip client countries developed indicators and programs -- *: i--~ ~ _ _ ,, with state-of-the-art knowledge on to meet the Millennium Develop- poverty/environment linkages; and ment Goals (MDGs), and addressed assisted countries with analytical complex cross-sectoral issues such activities in this area, particularly in as urban air quality and environ- connection with the preparation of mental management. PRSPs for Cambodia, Lao PDR, * Fostered environmental partner- Indonesia, and Mongolia. ships to address problems per- * Strengthened strategic country and taining to environment and natural - sectoral environmental analysis to resources management more explore key environmental chal- effectively. Successful, ongoing lenges, their linkages to development environmental partnerships include objectives and policy changes, and the World Bank-WWF Forest Alli- ~- ___-~- --~ ____-_________~~ - - the institutional capacity of countries ance, the World Bank-Nature Prehistoric votive steles in northern Mongolia. to address their priorities. Envi- Council-Birdlife International for ronment Monitors have been com- biodiversity, the World Bank-Korea MRB. The World Bank support to the pleted for the majority of EAP Knowledge Partnership, the Thai- MRC is seen as critical to achieving the countries, and a regional environ- land Country Development Partner- long-term objectives of the Commission. EAP has a large and diverse portfolio of . - water-related projects, which account for some 22 percent of all lending in the Re- --- --- - gion for the period 1992-2002. Of partic- -_ _ ular importance are the investments in - - _ - ~-~I hydropower and flood control and those addressing the challenges of develop- - ment regulations and instruments for - better economic, environmental, and so- cial management of water resources. Ex- amples include the Indonesia Water - Resources and Irrigation Sector Manage- - ment Project, the GEF Mekong River 4 _ W __w Commission Water Utilization Project, _ - . and the China Tarim II Basin Project. Mainstreaming environment -- j--.--,- In fiscal 2003, EAP's Environment and e -. - , - . , Social Development Unit (EASES) also _ - .i - _ " ', - 'o continued mainstreaming environment into policy dialogues, Country Assistance Washing at a river in Virachey National Park, Cambodia. 42 ENVIRONMENT MATTERS * 2003 EAST ASIA AND PACIFIC REGION ship, and ongoing work with major to a total investment value of approxi- THE EAP REGIONAL faiths in the region to show the mately $8.9 billion, of which $4.9 billion ENVIRONMENT PORTFOLIO strong links between religious beliefs (55 percent) is for environmental purpos- and practices and environmental es. Thematically, about 30 percent of to- Water resource management stewardship. tal environmental investment deals with Pollution m climate change. An additional 25 percent manag meni Other N32 manageomenta At the end of fiscal 2003, the regional pro- focuses on pollution management, main- /ma environmental gram appeared highly mainstreamed. ly through the large urban environmen- `1-- Bodiversay EASES only delivered 4 percent of total tal program, and 17 percent deals with mt change water resources management, represent- Lad |;tlmtc3 environmental assistance, with the re- /Ln , 1 maining96 tprovided primarily ing a combination of river basin manage- management Environmental maining 96 percent arojects in 14% policyandinstitutions through the Rural Development and Nat- ment projects in the rural portfolio and 11% ural Resources Sector Unit, the Urban De- some urban environmental investments. At the end of June 2003 the active portfo- velopment Unit, and the Energy and lio of World Bank environmental lending in Total investment in other EAP countries the EAP Region was $5.2 billion. In fiscal Mining Sector Unit. The regional environ- teEPRgo a 52blin nfsa mining SetortfUnit.oThe regionald enron-s amounted to approximately $1.6 billion, 2003, new total environmental lending mental portfolio comprised 94 projects of which about $0.8 billion (48 percent) amounted to $232 million. (sentan altonetan c maistramen ) rfpre6bi- was for environmental purposes. The the- sioning abtothloals commi nts.' Of $10.6 bthe matic distribution of environmental in- the Philippines (55 percent), and Cambo- vleon invbothmlants and grants.'rofnthis the vestments focused on biodiversity and dia (48 percent). The level of environmen- value of investments for environmental policies and institutions, less on pollution tal investment in Vietnam was low (32 activities amounted to approximately management, and varied significantly percent) and quite inconsistent with both $5.2 billion (55 percent of the total), which across countries, thus reflecting differenc- the scale and importance of environmen- is the highest in both absolute and pro- es in financial absorbtive capacity. Coun- tal problems in that country and its portional terms of any Region in the try programs in which environmental awareness and assimilative capacity. Bank. China accounted for nearly 85 per- assistance was quite substantial includ- cent of the total value of the regional in- ed Indonesia (74 percent of total assis- EASES plans to continue supporting cli- vestment program; its 53 projects amount tance devoted to environmental purposes), ent countries by implementing policies and programs that distribute the gains of EAST ASIA AND ENVIRONMENTAL SAFEGUARDS development in a more equitable man- ner, avoid unnecessary impacts on the The EASES safeguard review team (SRT) is entrusted with the responsibility of ensuring that environmental and social risks in Bank projects are systematically evaluated. In fiscal 2003, the environment, and build on the emerging safeguards work remained a significant component of the Region's work program, focusing global consensus that natural resources on key areas such as project review and clearance; thematic supervision to ascertain portfolio and other environmental assets must be performance trends and emerging issues; training of operational staff in the region and client managed sustainably. capacity building; and support to Bank-wide policy development. In fiscal 2003, the SRT completed project reviews at 65 project milestones for 18 Category A projects, 26 Category B, 18 Category C, and 3 Category Fl. The top four countries were China (18), Indonesia (13), Vietnam (10), and the Philippines (7). The SRT completed a thematic re- Note: 1. The data on the size and content of the EAP view of decentralized projects in the Philippines, along with desk reviews of Community- regional environmental portfolio are consistent with a separate portfolio analysis conducted in 2002 by the Driven Development projects and Social Assessments. Environment Department, following the introduction of new sectoral and thematic project classification A three-day training program and retreat was held in Hanoi in November 2002 for all field- codes. based safeguards staff in the Region. The SRT successfully completed client training initia- tives, including a Lao workshop in September and training for project staff in Mindanao. Field-based safeguards staff participated in a progress review of the safeguard assessment capacity of the Asian Institute of Technology. Thlis article was prepared by Giovanna Dore, (202) 473-2934,fax (202) 522-1666, and Suirhlid Finally, EASES's safeguards staff continue to represent the Region in a variety of Bank-wide policy Gaittam, (202) 473-3976,fax (202) 522-1666, of and procedural initiatives such as the ongoing revisions to the indigenous peoples policy, and tlhe Environment and Social Development Sector have been actively involved in leading Bank-wide dialogue on key emerging safeguards issues. Unit of the East Asia and Pacific Region. EAP website: <>. ANNUAL REVlEW * JULY 2002-JUNE 2003 (FY03) 43 -Sip e~ q -E Rep.i -i ~--i E~~~~~~ui Ser n Ntw_.-m Croifti SloWnia_ . _ _ _ _ , _ ~ ~ ~~~~~~~~~~~~~~~~~~~~~. _~ - '˘ ^- .>> z-- Tajikistan | ignificant progress has been made over the Forested areas in ECA have increased significantly as a re- past decade to improve environmental sult of greater forest certification, adoption of fees for felling - quality in the Europe and Central Asia of trees, and improved fire and pest management. Compared Ul_ i_ aI(ECA) Region. Energy efficiency increased with 1990, about 500,000 hectares of forest are now better man- 35 percent since 1992 and carbon dioxide (CO2) emissions aged. Efforts are under way to establish an additional 800,000 declined 27 percent from 1992 to 1999. While the economic hectares of protected areas. collapse in the region is largely responsible for these imrvmns man conre aemlmne The region has also made progress in tackling global envi- stpructuralmanges mand coutriesto ved GDplgrowth d wironmental problems, notably the successful phasing out of inrucureas pchutiange and restored GDPgrowthwithoutozone-depleting substances in selected countries. Emissions trading in carbon rights are also starting to take hold, which Water quality also has improved in the region. For example, should help to address another global environmental chal- water supply rehabilitation in small cities and rural settle- lenge, climate change. ments in Kazakhstan improved health and sanitation for 10 Many challenges remain. .. percent of the population. Institutional and pricing reforms in the Baltic States have led to water conservation and re- Despite achievements that have been made over the past de- duced pollution. Many activities are also under way to im- cade, many challenges remain. Considerable scope exists for prove and safeguard the Aral, Baltic, Black, and Caspian Seas. increasing energy efficiency and further reducing CO2 emis- 44 ENVIRONMENT MATTERS * 2003 EUROPE AND CENTRAL ASIA REGION sions. Hazardous industrial hotspots and cal standards. Financial performance and Water resources management. ECA has 12 waste management also continue to pose cost recovery measures are undermined percent of the world's supply of renewable a significant threat. by inefficient cross-subsidy policies, non- fresh water, more than any continent ex- payment, barter, and political influence cept Antarctica. Yet water resources are not Overall, more emphasis is needed on in tariff setting. distributed evenly. Broadly speaking, in structural reforms to protect the environ- norther and wester areas that are water- ment. The phasing out or elimination of The high reported access rates also do not abundant, improving water quality is the subsidies, installation of meters to im- reflect the fact that only 30 percent of ru- main challenge. In the south and west, prove collection and cost recovery for ral households receive piped water. Fur- water is scarce, so irrigation and water energy and water utilities, and privati- thermore, the serious issue of water zation of consumer and industrial sectors quality, especially in rural areas, is not qnstity mneent regt os press- would contribute significantly to promot- apparent from the data. In Moldova, for ing issues (see Box, top right o page 6) ing environmental sustainability. example, 60 percent of water samples in rural areas do not meet biological or ge Major efforts are needed in the area of chemical standards. ment issues-deteriorated dams and hy- institutional reforms, including strength- draulic structures, the lack of emergency ening the legal basis for environmental The level of access to basic sanitation is response plans for flood disasters-ap- management; increasing monitoring and also officially quite high at 93 percent. ply only to some countries. Coastal zone collection of data to guide decisionmak- Again, however, these data do not reflect management is a major issue in the Bal- ing; and improving public participation the serious state of disrepair of many kans, where uncontrolled construction, and access to information. Above all, sewage systems. For example, in agricultural pollution, and lack of waste- there is a need to strengthen the capacity Ukraine, about 23 percent of water pipe- water treatment along coasts are imped- of environmental ministries and develop lines and 25 percent of sewage treatment ing the growth of tourism. horizontal links with other ministries re- systems need urgent rehabilitation. The sponsible for water, sanitation, energy, situation in rural areas in the region is Hydropower. Many FCA countries already forestry, and biodiversity. significantly worse. It is estimated that rely to a large extent on hydropower. 25 percent of annual deaths of children ' p ' t Water... a particularly under age five in ECA can be prevented prouctin, r is the of estricity by providing universal access to sanitation. p pressing issue power generator in the world. Tajikistan The costs of meeting the water supply (98 percent), Albania (97 percent), and the Most serious in terms of health and pov- and sanitation MDG targets in CIS coun- Kyrgyz Republic (92 percent) rely almost erty linkages in ECA is ensuring access tries will be considerable. In a Bank re- completely on electricity produced from to clean and affordable drinking water port entitled "Meeting the and sanitation and safeguarding water Environment Millennium resources. Investment in water infrastruc- Development Goal in ECA," Access to improved water source ture is vital to protect against droughts it was estimated that CIS MDG Target and floods, produce energy, and support countries alone will have to 100 l 2 agriculture to ensure economic growth. spend $1.1 billion per year 2000 to meet the water and san- a 80 Water supply and sanitation. Despite sta- itation 2015 targets, consid- ° 60 tistics indicating high levels (91 percent) erably more than current 0 investment. Candidate 40 of access to improved water supply (see cntest seng to g 4 Figure at right), systems throughout ECA ° 20 access to the European u are in disrepair due to lack of mainte- Union also face high costs 0 nance, poor planning, low-quality con- to comply with the EU's m 2 r X struction, and overemphasis on capacity environmental component a a t i . expansion. Water losses from networks of the acquis communautaire . are as high as 50 percent in some cases. (see Box, top left on page Source: Meeting the Environment Millennium Development Goal in Regulations impose unaffordable techni- 46). Europe and Central Asia. World Bank, 2003. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 45 COSTS OF MEETING EU WATER-RELATED DIRECTIVES WATER ISSUES IN CENTRAL ASIA In 2002, accession candidate countries adopted the EU's acquis communautaire. Meeting the environmental directives will bring considerable improvements in quality of life, with total Water is key to survival and peace in Cen- benefit estimates ranging from E103 to E531 billion. Some of the greatest benefits, estimated tral Asia. Unfortunately, competing water to range from E43 to E98 billion (2005 to 2020), will come from meeting EU water directives. interests are leading to damage to the en- vironment and human health, less-than- The benefits of meeting EU environ- Ratio of benefits to costs optimal investment decisions,and conflict. mental standards will come at a cost. of complying with the EU water directive There is enough water in Central Asia to Approximately El 10-Eli 6 billion will | : :3 ffi E |meet energy, agriculture, and WSS needs, be needed over a period of some 20 Bulgaria 0.73 1 .94 while sustaining the natural resource base, years, representing anywhere from 23 Czech Republic 10.43 16.48 provided that resources are managed prop- to 134 percent of countries' present Estonia 0.39 1.48 erly. GDP.Meeting the EU water supply,and Hungary 0.93 3.59 particularly wastewater directives, Latvia 0.50 1 77 A large part of the solution will have to alone will require investment ofabout Lithuania 1.17 2.61 come from the agricultural sector, which E51 billion. Poland 1.70 3.99 represents over 90 percent of water use. Romania 0.89 2.72 Lack of maintenance of infrastructure, com- For all countries (see table), the ratio Slovak Republic 3.57 7.87 bined with excessive irrigation, has led to of benefits to costs to meet water sup- Slovenia n.a. n a. extremely high water aosses. The result has ply directives is greater than 1 under Total 1.94 4.39 eem high waterlos.Tesu s a high scenario. Careful case-by-case lin growin droblems. assessments are needed, however, since these figures do not reflect the fact that the costs of linity, and erosion problems. some investments may exceed potential benefits. Rehabilitation of deteriorated irrigation sys- tems and investments in drainage are key, While large levels of investment are crucial, they will be ineffectual without stronger environ- but these must be combined with reforms mental institutions and legal frameworks that are harmonized with those of the EU. Building to increase water charges and collection this institutional and legal base could considerably prolong the time needed to meet envi- rates to promote more efficient use. The ronmental directives. creation of water user associations is cru- cial to ensure that incentives are in p lace Source: Meeting the EU EnvironmentalAcquis: Costs Estimates for Accession Candidates. World Bank, 2002. to maintasi n systems. A recent Bank study-Irrigation in Central hydropower. The challenge is to main- lems are being addressed through region- Asia: Social, Economic and Environmental tain hydraulic infrastructure already in al cooperation, shows that progress is Considerations-found that communities place and ensure proper management of possible. are in a vicious cycle of falling incomes, re- duced maintenance, deteriorating service, flows for irrigation and ecological pur- WE a.rhir ledn an laddgaain Wl-once-n lAInfnt ra ater antilnls and land degradation. Well-connected and poses. WateLr-rlated le ding wealthy upstream users often take water As of June 2003, 63 water-related projects first, leaving very little for others. A large number of irrigation schemes are econom- Transboundary issues and regional seas. The (including GEF) were under implemen- ically viable, even when environmental management of regional seas and rivers tation in ECA, totaling $1.96 billion in damage is considered. It would cost the is an important challenge for virtually all lending to 22 countries. This represents government less to rehabilitate on-farm structures than to compensate people for countries in the region. In addition to the 15 percent of total project lending ($6.4 lost income. drying up of a large part of the Aral Sea, billion) of the Region. the Caspian Sea is threatened by oil pol- lution and uncontrolled sturgeon poach- The majority of water-related lending is Two kflood emrec poet inPond and Turkey that total $569 million. ing. Over the past 30 years, the Black Sea for water supply and sanitation or for has experienced a catastrophic decline water resources management (see Figure, GEF projects address municipal, indus- from agricultural nutrient runoff and bottom of page 47). Over 75 percent of trial, and agricultural pollution current- municipal discharges of sewage, solid WSS projects focus on urban areas. The ly degrading the Black and Baltic Seas, waste, heavy metals, and oil. The experi- high percentage of WRM lending may be as well as waterlogging and salinization ence of the Baltic Sea, where similar prob- somewhat misleading, since it includes problems in the Aral Sea Basin. The Bank 46 ENVIRONMENT MATTERS * 2003 EUROPE AND CENTRAL ASIA REGION also executes part of the GEF-UNDP- THE ECA REGIONAL FI I I lfunded Caspian Environment Program. ENVIRONMENT PORTFOLIO a lr _New projects approved in 2003. A total of Water resource New ; . _ rmanagement 10 new water-related projects worth $194 27% Ł ,^ , million (including GEF) were approved Pollution Otherenvironmental , in 2003, representing 52 percent of all new 30% ma2% .19\ --s~ I environment-related project lending. Of Biodiversity .4 w ~~~~~~~~~~~~~~~~~~~~~~~1% these, three were for WSS, three for irri- # gation and drainage, one for hydropow- 9t er and two (described below) for water Environmental Land policy and institutions quality improvement. management 9% 22% * A new project in northeastern At the end of June 2003 the active portfo- Kazakhstan will remove serious lio of World Bank environmental lending in the ECA Region was $1.5 billion. In fiscal < mercury pollution in the Nura River 2003, new total environmental lending to provide a safe, secure, and cost- amounted to $123 million. effective alternative source of water supply to meet the needs of local Looking forward water users in the area, particularly the residents of the capital city of In the coming year, the Bank aims to in- Astana. crease its involvement in water-related activities to assist ECA countries toward * The GEF Baltic Sea Regional Project their goals of meeting the MDGs, and in (Phase 1) aims to address the three the case of accession candidate countries, main threats to the Sea: excessive EU water-related directives. It will aim nutrient loads, industrial contami- to focus more on rural areas where WSS nation, and overexploitation of services have been neglected and where -,marine resources. The focus will be action can have a significant impact on Fishers in Russia capturing sturgeon from the on reducing nutrient runoff from reducing poverty and addressing health Volga River to be used as broodstock for Caspian farms, coastal zone management, concerns. Sea hatcheries. sustainable use of fisheries, and improved government decision- Helping countries to meet the MDGs will ECA's water-related lending making. also require improving data reliability portfolio and establishing clear baselines and con- (Total $1.96 billion in project lending, including GEF, June 2003) P t under preparation. ECA' water- crete targets. The Bank plans to under- rojecs ~~~~~~take work to identify ways to improve Hydropower related pipeline includes $926 million for ta quality intECA e ay inre 21%tu 41 projects (including GEF). Four new dataental health. Water supply ronmental health. 1 and sanitation WSS projects, mainly urban-focused, are Irrigation I :, 38% 23% j under preparation in Armenia, Croatia, Georgia, and Kazakhstan. Two new wa- tershed management projects are planned for Tajikistan and Turkey, as Tlhis article zvas prepared by Jane Holt and well s irrgatin proects or Abania Ro- mberly Hezickroth of thle Enivironzment and well as irrigation projects for Albania, Ro- Social Development Unit of the Europe and mania, Turkey, and Uzbekistan. In Ro- Central Asia Region, (202) 458-8929. More Water resources mania, a flood hazard project is being iniformation about environmental activities in management prepared projec beng the region, inclluding publications, can be 37% to develop better dam manage- obtainied at: <>. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 47 The Bahamas ___________Haiti I Jamaica 7 Dominican Rep. K.- ~~~~~St. Kitts and Nevuis Antiguo and Barbuda ?-B~eIiie - Dominica j _________~St. Lucia ,I- ii ~~~~~Guatemala 4'LHonduras I,. tuia = ,g Guatemala-" iiOfl~~.aUFOS ~ -Barbados El Salvador-. j St. Vincent and the Grenadines Nicaragua--" ~~~~~~e' '- ~Grenadc. s Nicaragua- 2 - Trinidad and Tobago * . _ Costa Rica : Colombia PT' Ecuador 1 ''- 2< s t l'<- Chile*1, Se- t N: Chile~\ ~ Uruguay tURD 3 f564 AUGUST 2003 - 4~~~~~~~~~7 ~~u.Ip .'~~----- - - he Latin America and Caribbean Region gy The Strategy 10(115(2 o 2 mo-.1 11th a I n\ it !11(21tal (LCR) continues to face environmental and problems in tfli regio( n um lnwng Lrhiin and indn- Aial pol- natural resource pressures due to population lution, misnaia rtciiaicn t A na tinral tulo-es, thlreatt, b iodi- growth, rising income inequality, and depen- versity, and cliiate changliml. Itv addssing these p4ielnS, dence on the exploitation of natural resources. Of the 418 mil- LCR is moving Morward in it,, ichie\-n mt of tlhe "-rategv's lion hectares of natural forest lost worldwide over the past 30 objectives of imnpro\ ing hlcailfh, de\(\ feo inlg er,am ks for years, more than 40 percent was in Latin America. In Brazil, sound em\ironietl(il ItalllI tHanrnerilt, ohliancing lki l lihoods, deforestation has reached its highest rate since 1995, with an andfacilitating, ( ynLliltahh solnltolns toi- regonl and globalclal- area slightly smaller than Haiti deforested between 2001 and lenges. 2002. Urban environmental problems, especially air pollution, water contamination, and inadequate waste disposal, are hav- E nvi ri 'i rh ing severe health impacts on the 75 percent of the region's population that lives in cities. In Argenti-na, ( o lomia and the east n C Cat ribbean, IC s1p- ported p rojects thia t i ncease ccess to -ate \water, solid wilste In fiscal 2003, the World Bank's Latin America and Caribbe- collection, and: salttationi \- tems, Ini addition, projects in an Regional Office continued to respond to these challenges Chile, Colormbiak, NlIe\ico, an(d PertL are providiing mio re ( ffi- through implementation of its 2002-06 Environment Strate- cient and sustainablelLl UnbaIn mass transit svstemns arlid the gy, which seeks to align environmental concerns with other Clean Air Initiati\ e in Main \rmericanii Cities sup po rte d im- sectoral strategies, such as rural, urban transport, and ener- provemen ts in a ir cqL1 1ait\7 48 , !003 LATIN AMERICA AND CARIBBEAN REGION Indoor air polluition in Guatemala is close- Solid waste management was improved in ment, one with a strong institutional ly linked with the well-being of children six eastern Caribbean countries through framework and legal foundation as well and women, mainly in poor, rural indig- a project that enhanced the coverage and as effective environmental instruments. enous households. Eliminating indoor effectiveness of waste collection, treat- In fiscal 2003, LCR directly promoted pollution in the country's rural highlands ment, and disposal. The project helped more effective policies, instruments, and could reduce acute respiratory infections eliminate open, informal garbage dumps institutions in Mexico, Brazil, Colombia, in children under the age of five by as and reduce waste from cruise ships that the Dominican Republic, and other coun- many as 16,000 cases and could prevent polluted coastal waters and beaches. It tries. For example, the Bank supported 700 deaths per year. A recent ESMAP- also helped establish new solid waste the first stage of the Mexican govern- funded study quantified the health im- management entities, private-sector col- ment's program to decentralize environ- pacts of traditional fuel use in Guatemala lection services, sanitary landfills, and mental management and mainstream and outlined strategies and policies for successful cost-recovery mechanisms. environment in key economic sectors, mitigating those effects. The study rec- These innovative mechanisms include a namely water, forestry, energy, and tour- ommended (a) monitoring indoor air tourism levy, environmental taxes, and ism (see Box). pollution to better understand its health household service charges linked to elec- impacts and build support for address- tricity and water consumption. In addi- Under the Second National Environment ing the issue; (b) improving coordination tion, all six countries have developed or Project in Brazil, matching grants for en- among the government agencies and ju- already enacted new solid waste legisla- vironmental investments (environment risdictions responsible for mitigating tion, started basic environmental educa- asset subprojects) have been provided to those impacts; (c) building public aware- tion programs to increase public states that have completed a priority-set- ness; and (d) implementing mitigation awareness, and implemented specific ting exercise and demonstrated compli- options, such as better ventilation, im- waste reduction initiatives. ance with policy reforms. Nearly all the proved stoves, and cleaner fuels. The states have qualified for various stages study proposed that incentives be tai- Promoting of financial incentives that encourage lored to make existing initiatives, such as them to make policy reforms in the key the Social Investment Fund's improved environmentally areas of environmental management that stove program, more effective. they select. Solid waste management has ap ropriate pol'ici'es been the environmental issue most fre- Water quiality, sanitationi, and biodiversity and instruments quently identified as a high priority by protection in Colombia were improved the states. Under the project, a dozen though the Santa Fe Water Supply and Sound environmental management re- states have formulated solid waste man- Sewerage Rehabilitation Project, which quires an appropriate enabling environ- agement policies and seven states have received a Green Award from the Bank's Environment Department for its success MAINSTREAMING ENVIRONMENT AND DECENTRALIZING in mainstreaming environmental consid- MANAGEMENT FUNCTIONS IN MEXICO erations. The project has helped Bogota's water utility expand services to the ur- The Mexico Programmatic Environment Structural Adjustment Loan was recognized this year ban poor and address major environmen- for its promotion of environmental mainstreaming with a Green Award from the Bank's Envi- tal concerns through sewage control and ronment Department. In less than a year, this loan-the first of its kind in LCR-has helped: * Define and publicly disclose measurable medium-term targets in the water,forestry,energy, restoration of a once extensive wetland and tourism sectors system. Public health has been improved * Establish intersectoral technical working groups to promote environmental through construction of 670 kilometers of mainstreaming and alignment of sectoral agendas aqueducts, 120 kilometers of sewerage * Increase municipal payments of water fees to cover 58 percent of municipal water use in canals, and 23 kilometers of storm canals 2002, compared with 24 percent in 2001 c Increase marine park revenues 200-fold by collecting user fees and earmarking this revenue and through installation of 46,254 house- for reinvestment in protected areas hold water and 23,830 sewerage connec- * Attain quality certification (IS09001) as part of the decentralization of environmental tions in poor neighborhoods. Approxi- functions from the federal to the state level * Obtain federal grants to finance capacity building in at least 10 states, so they can assume mately 770 hectares of highly degraded environmental management functions wetlands were restored to provide valu- * Publicly disclose, on a pilot basis, processing information for certain Environmental able habitat, environmental services, and Impact Assessments and permits through the environment ministry's website even recreational opportunities. >. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 49 proposed specific legislation on this sub- Improving livelihoods socioeconomic surveys indicate that ject for submission to the legislative as- farmers are pleased with the payments sembly. In fiscal 2003, 10 states qualified Efforts to improve livelihoods are under and technical assistance received under for a total of $56 million in matching way in Colombia, Costa Rica, Mexico, the program. Anticipated benefits from grants from the program, eight of which Nicaragua, and Panama through the the project include reduced erosion, im- are implementing environmental assets adoption of sustainable environmental proved soil and water quality, and great- subprojects. In addition, more than a doz- management practices that address deg- er productive capacity of the degraded en states are implementing environmen- radation and resource depletion by lands, consequently increasing income tal licensing subprojects. In Minas Gerais, means of community-based approaches and employment. a new integrated licensing system has and strategic implementation tools such been launched that combines industrial, as property rights and appropriate tech- Environmental considerations are being agricultural, and water licensing in a sin- nology. incorporated into a large-scale, area- gle process. based land tenure regularization system In Mexico, some 8,000 forest ejidos and under the Nicaragua Land Administra- In small- and medium-sized cities on Co- indigenous communities own approxi- tion Project. Under the project, approxi- lombia's Caribbean coast, private- mately 70 percent of the country's 55 mately 10 indigenous communities on sector participation in the management and million hectares of forest. This extensive the Atlantic Coast are being demarcated, operation of water utilities is being facili- communal ownership poses important which will have a favorable impact on tated under a Water Sector Reform Assis- challenges for the sustainable develop- some 26,000 indigenous peoples living in tance Project. The project seeks to create an ment and conservation of forest reserves, an area of 1.4 million hectares. These in- enabling environment that improves the and requires unique solutions. The Com- digenous groups represent the poorest in efficiency and sustainability of these utili- munity Forestry Project has helped many Nicaragua, who lack clear property rights ties, while expanding coverage of water indigenous communities and ejidos in and whose lands have been encroached and sewerage services and providing great- Mexico to better manage their forest re- upon by commercial logging, mining, er access for residents in low-income areas. sources while strengthening social capi- and livestock operations. The demand for project assistance has been tal and increasing community incomes. high in medium-sized cities, where sever- The project has helped improve manage- Promoting solutions to al private-sector management contracts are ment of 166,000 hectares of forest, pro- O m in place. moted land-use planning for 117,000 Lobal environmental hectares of noncommercial forest, placed 13,700 hectares of forest in conservation, C'allenges and generated economic activity that has To harmonize both global and local agen- created 1,500 permanent new jobs. das, LCR continues to help countries ad- dress climate change by mitigating In Colombia, Costa Rica, and Nicaragua, greenhouse gas emissions, protecting the deforestation has largely been a function 411, i \ fof poverty, unemployment, and inequi- carbon sequestration functions of forests Y S z table land distribution that encourages and rangelands, promotig renewable the landless poor to clear tropical forests energy optons, and faclitating partici- ' 3! ^ v JR for subsistence farming. In many areas pation in international carbon markets. this practice is unsustainable, eventual- The region boasts the largest Prototype ly leading to loss not only of livelihoods Carbon Fund (PCF) portfolio in the Bank, ' / but also environmental services such as with projects in Colombia, Chile, Brazil, 1%> -3 | carbon sequestration, watershed protec- and Costa Rica representing an estimat- fi)t] tion, and habitats for biodiversity. Under ed reduction of more than 17 million tons the Silvopastoral Integrated Ecosystem of CO2 over a 21-year crediting period. Management Project, farmers in these Efforts to mitigate greenhouse gases are countries are given incentives (payments also underway in Mexico, where in just E for certain environmental services) to a year's time the Methane Capture and convert degraded pastures into land with Use Project is recovering enough landfill Men working near an irrigation ditch in Monteria, more diverse vegetation that to a large gas in Monterrey to provide power to a Colombia. extent mimics forest ecosystems. Recent 7-megawatt plant that is used to operate 50 ENVIRONMENT MATTERS * 2003 LATIN AMERICA AND CARIBBEAN REGION - I tion of deforestation rates in Latin Amer- 1-, ica, which are among the highest in the THE LCR REGIONAL I G tecteworld. A flagship of this effort is the Bra- ENVIRONMENT PORTFOLIO zilian government's Amazon Region Pro- > *tbi s ss tected Areas Initiative (see Box). In Water resource -4 ~~~~~~~~~ ~ ~~~~~~~~~~~~~~Pollution management Bolivia, the Sustainable National System management 21% - =1 " of Protected Areas Project is helping to 32% Other . - develop various financing mechanisms environmental _ ~~~and to strengthen management capacity management Stove built in Guatemala's Quetzaltenango region under a t m _ 4% Social Investment Fund's improved stove program. in targeted protected areas. The project | Biodiversity is implementing market-based cost re- managemen 4% the city's subway system during the day covery mechanisms such as park en- 18% Climate change trance fees, 25 percent of which are ~~~~~Environmental and light the city at night. trance fees, 25 percent of which are policy and institutions currently directed toward community de- 19% One of the PCF projects, the Colombia velopment projects. In addition, a trust At the end of June 2003 the active portfo- Jepirachi Carbon Offset Project, is sup- fund developed under the project has lio of World Bank environmental lending in porting greenhouse gas emission reduc- raised $17 million and provides financ- the LCR Region was $1.8 billion. In fiscal tions in the power sector through a ing for 40 percent of the system's recur- 2003. new total environmental lending 19.5-megawatt, wind-based electricity rent costs, already exceeding amounted to $240 million. generating facility. By supplying emis- end-of-project targets. sion reductions, the project-the first car- System Project (MBRS) is addressing is- bon finance project for wind in In Brazil, efforts are under way to im- sues related to conservation of valuable prove biodiversity conservation and sus- transboundary ecosystem services and region-alscarbon hel t dvel the Kyoteo- tainability by developing a long-term resources. The MBRS has established tional carbon market under the Kyoto sustainable financing mechanism and National Barrier Reef Committees to re- Protocol s Clean Development Mecha- promoting partnerships with govern- flect diverse stakeholder interests in each csm. It is anticipated that the PCF will ment agencies, nonprofit organizations, country and has supported transbound- purchase up to 800V ,000 tons Of CO2 equiv- academic institutions, and the private ' s t alent worth $3.2 million. The project is sector. Since inception, the Brazil Global ary commissons to address marine re- also supporting local development activ- Environment Facility FUNBIO Project source management concerns in border ities by providing the Wayuu Indians has leveraged more than $5 million in areas. The project has also trained man- with improved access to potable water private-sector funding, established im- agers of protected areas in how to design (produced by a wind-powered desalin- portant partnerships (with the Ford Particp a ry m gnag p lans andh ization plant), health services (solar-pow- Foundation, Fundaci6n Rureco, Institu- developed a regional protocol to moni- ered), education facilities, and to Terra, and others), and actively en- tor ecosystem health. Torelieve pressure community strengthening measures. gaged a diverse range of experts. on marine protected areas, training has been provided to fishers on alternative LCR also supports conservation of eco- In Mexico, Belize, Guatemala, and Hon- livelihoods and to small and medium- systems critical to biodiversity and reduc- duras, the Mesoamerican Barrier Reef size enterprises in the tourism and fish- eries sectors on sea kayaking, recreational diving, and catch-and-release sport fish- COMBATING DEFORESTATION AND CONSERVING CRITICAL ing. Best practices are also being imple- ECOSYSTEMS IN THE BRAZILIAN AMAZON mented through establishment of a regional tourism forum and development The Brazilian government's Amazon Region Protected Areas Initiative, a 1 0-year program that of a regional certification system for ma- began in August 2002, is the largest conservation effort in the humid tropics. The program rine-based tourism enterprises. addresses the major direct and indirect threats to existing and potential protected areas in Brazil. The Bank, in partnership with WWF's Alliance for Forest Conservation and Sustainable Use, is supporting the first phase of this initiative, which creates 18 million hectares of new This article was prepared by Angela Armstrong, protected areas, establishes and operates an endowment fund for the protected areas, and (202) 458-0975,fax (202) 522-3132, and Peter consolidates 7 million hectares of existing protected areas.The first new protected area creat- Brandriss, (202) 473-9379,fax (202) 676-9373, ed under the project covers 38,867 square kilometers (almost the size of Switzerland) in the of the Environment Group of the Latin America state of AmapS.This area-the world's largest tropical forest protected area-ensures full pro- and Caribbean Region, with inputs from other tection of an important part of the Amazon forest. members. LCR website: <>. ANNUAI REVIEW * JULY 2miii-ILLNJ 2003 (FY03) 51 N~~~~mY rWl lUrr .JlDaN, NJ m9Nr. !@o ia FwezvuEsute .... F, , ,,, ;-vg t; I~~~~~~~~~h Bank and - --------- - * -* - - o1 a ' 1 # i fU~~~~~~~~~ ~ ~~ ~~~~~ .- -- :: - - --- W ~~-v--- - -~- - -- - __ - _ _ _ _ _ _Morocco- he Middle East and North Africa (MNA) Re- the quality of life and the quality of economic growth. MNA gion is assisting its clients in meeting the is focusing on mainstreaming environment into policies, pro- s Millennium Development Goals. However, grams, and projects through three main intermediate out- >- - - while the incidence of abject poverty in MNA comes. remains low, the percentage of people with income of less than $2 a day has grown over the past five years as regional Improving public sector efficiency anid environmental governance economies remain stagnant. Increasing water scarcity and through better planning and priority setting of environment- land degradation remain the primary environmental issues related institutions, based on sound cost-benefit analysis and confronting countries in MNA. Population pressure, partic- the participation of civil society. This will be achieved through ularly in crowded urban centers, exacerbates the incidence of developing and sharing knowledge on the use of economic pollution-related illness in many MNA countries. Addition- criteria and valuation externalities and understanding the ally, while much progress has been made over the past few linkages between environment and poverty, trade, health, and years in improving the quality of national environmental leg- energy for better allocation and efficient use of public expen- islation, regulatory institutions remain weak. ditures in the environmental field. Recent accomplishments include the following: Srate-gy outcomes StrAtegy o utcomes * In Iran, the World Bank-supported Environment The objectives of the MNA Environment Strategy, which was Management Support Project was approved in April 2003. adopted in 1995 and updated in 2001, are to improve both This is the first phase of a long-term effort by the 52 ENVIRONMENT MATTERS * 2003 MIDDLE EAST AND NORTH AFRICA REGION government to improve environ- planning of policies, programs, and the International Center for mental management. Its main projects, and on predictable environmen- Environment and Technology at objective is to enhance the capacity tal guidelines for private-sector develop- Tunis, received the 2003 Regional of the Department of Environment ment. This will require enhancement of Award for substantial contribution and other related agencies to plan, the enabling environment through the from the International Association monitor, and enforce environmental development of environmental protec- for Impact Assessment (see <> or <> * In the recent Country Assistance nomic instruments, a workable system for further information). Strategies for Algeria and Jordan, the of Environmental Assessment, a well- linkages among environment, structuredlearningprogram,andtheuse Lowering environmental health risks poverty, and health were described- of Strategic Environmental Assessments through the development of health-and- notably in the discussions about as a tool for decisionmaking processes. poverty-related prevention and mitiga- improved urban water and Accomplishments in the last year include: tion measures in MNA's selected sanitation and on sustainable land portfolio of projects. In this area, oppor- and watershed management. * An active effort in the region to tunities include adding an environmen- * Building on an initiative developed evaluate the EA system, with the tal health component in water supply and through the Mediterranean Envi- objective of harmonizing these sanitation and municipal waste projects, ronmental Technical Assistance systems with the safeguard policies while at the same time enhancing local Program (METAP), national assess- of the Bank. Client training on communities' knowledge about the neg- ments of the cost of environmental safeguard policies and their ative impacts of poor water and waste degradation were prepared for implementation is now being management practices. During fiscal Algeria, Egypt, Jordan, Lebanon, institutionalized through the 2003, MNA achievements included: Morocco, Syria, and Tunisia, with establishment of an EA center in Iran to be completed in the near Tunis. In-country training has been * In Egypt, preparation of a pilot study future (see Tool boxes, page 54). provided in Egypt, Lebanon, on the implications of water * METAP has completed assessments Morocco, Tunisia, and Yemen on resources on income and the health of environmental impacts on trade Environmental Impact Assessments of the poor. were done in Egypt, Jordan, Lebanon, and Environmental Management * In Yemen, the Sana'a Water Basin Morocco, Syria, and Tunisia. Plans. Project was modified to address * In Tunisia, MNA prepared a Country * The METAP Environmental Impact wastewater treatment, which will Environmental Analysis (CEA)-a Assessment Initiative and its host, have beneficial health impacts for new Bank diagnostic report-to systematically evaluate environ- mental priorities. These reports assist , MNA clients in mainstreaming environ-mental issues into relevant sector activities for greater poverty reduction and more sustainable - development. A CEA also was 4 started for Egypt. * Energy-environment reviews were done in Iran and Egypt; these reviews help integrate energy sector development and investments with the country's environmental objectives. --% Adoptinig a more efficient safeguiard system - based on upstream considerations in the A group of boys pose for the camera in Iran. ANNUAI. REVIEW * JULY 2002-JUNE 2003 (FY03) 53 surrounding farmers as the effluent The costs of environmental degradation as a percentage of GDP is used in irrigation. 6 - . |~~~~~~~~~~~~~~~~ Water Early signs of success 5 Soil 4.8 After the introduction of the 1995 Strate- I Coastal Zone 3.67 3.7 U4 gy, one of the region's first environment- * Waste 3.41 3.49 related projects was the Algeria Q 2.74 Industrial Pollution Control Project. This project, which was prepared during the u 2 early 1990s with the assistance of two METAP grants, aims at improving pub- lic health in Annaba (on Algeria's north- east coast) by reducing levels of local 0 , ,-- industrial pollution. Through this Tunisia Jordan Lebanon Syria Algeria Morocco Egypt project, the Government of Algeria was able to take necessary measures that were implementation of an important training of environmental degradation with the both environmentally and economically program; and installation of air quality most recent data available; (2) an analyt- sound. The project financed environmen- monitoring equipment in Algiers and ical framework that can be applied peri- tal investments in two major industrial Annaba. odically by professionals to assess the complexes-one producing fertilizers cost of environmental degradation over and the other iron and steel. Early on, Tool boxes time; and (3) a basis for a training pro- the project financed the closing of two of gram for ministries, agencies, institutes, the most polluting units. In 2003, MNA continued its pioneering wokpoiigplcmkr iheo and other interested parties to incorpo- work providing policymakers with eco- rate assessments of the cost of environ- Through the environmental investments nomic tools for environmental sustain- component, major reductions in pollution ability, including costing environmental mental degradation in policymaking and have been achieved in the Annaba region. degradation and studying the environ- environmental management. The two fig- Specifically, the project has reduced the mental impacts of trade and competitive- ures on this page show these costs as a annual flow of phosphogypsum into ness. These activities culminated in a percentage of GDP for the countries stud- Annaba Bay by nearly 300,000 tons. An- June 2003 high-level meeting in Beirut to ied, which could be used as baseline in- ecdotal evidence suggests that improved discuss these tools. The meeting was at- dicators for mainstreaming environment water quality in the bay has had the un- tended by more than 150 people from 17 policies, programs, and projects. More in- expected positive side effect of increased countries. formation can be found at either <> or <. As the MNA countries continue to work ENVIRONMENT PORTFOLIO toward the MDGs, the policy dialogue on Water resource Regional partnerships managing water will be shaped by com- 41% MNA continues to work closely with a peting claims from multiple stakehold- Other environmental number of regional programs in order to ers for an increasingly scarce resource. management promote partnerships with and among / Biodiversity Water resources management will be , 0% the MNA countries and foster the main- 0 addressed in the Iran Environment Man- Pollution / Climate change streaming of environmental issues on a agementSupportProject,andalsoaspart management 0% 28% ~~~~~'Env ~~ronmental regional level. These partnerships in- of the Region's water advisory program L3cyan d%institutions clude the Mediterranean Environmental (fiscal years 2003-05). Water quality will management Technical Assistance Program (<>), the MNA Regional Water water and sanitation projects in Yemen At the end of June 2003 the active portfo- Initiative . <>)w the Nile Basin Initiative Wlllalso focus onwater qualtymanage- 2003, new total environmental lending <>theRegionalment by strengthening coordination and amounted to $186 million. («wwwni bainor)tl improving the policy, legal, institution- Dry Lands Management Project, and the al, and information framework. Red Sea and Gulf of Aden Environmen- finance, and particularly private-sector tal Strategic Action Program (<>). More information on the support improvements in the manage- partnerships is available through the ment of environmental institutions and aimed at reducing risk exposure through agencies. Len g amore environmental assessment of above ~ ~ ~ ~ ~ . lnsoatww wodbk. agencies. Lending activities include the above links or at <>. Environment Management Support Additionally, at the request of the Gov- Project in Iran, Conservation of Medici- eminment of Yemen, the Bank IS lookinlg nal/Herbal Plants GEF Project in Jordan, at ways to coordinate donor support for Tehran Solid Waste Management Project the development of local private-sector in Iran, and Municipal Waste Manage- . b ~~~~~~~~~~~~~~~~~~capacity for conducting Environmental ment Project in Algeria. Non-lending Impact Assessments. activities include work on safeguards re- =~ H - .j X \> view; safeguards training for clients, with ' Gender will be given particular attention an emphasis on project counterpart staff and their interlocutor ministries; the Support ProjectinIranthe Conservation METAP Regional Capacity Building Pro- of Medicinal/Herbal Plants Project in gram, which strengthens client environ- Jordan, and the Second Matruh Project mental assessment systems; and the in Egypt. The Jordan project will train Regional Capacity Building Program for women and disadvantaged groups in the Solid Waste Management, which will es- conservation and sustainable manage- tablish centers of expertise in eight MNA ment of plants, both in-situ and ex-situ, countries. and in using these plants to manufacture products that will bring them greater Private-sector development will be pro- benefit. moted in the Conservation of Medicinal/ This article was prepared by Shlerif Arif, J. B. Herbal Plants Project in Jordan. It will Collier, and Maria Sarraf, of the Rural Deve- also be enhanced through METAP activ- lopment, Water, and Environment Group of tlle Middle East and Nortlh Africa Region, (202) ities, including technical assistance on 473-8551, fax (202) 477-1374. MNA website: Egyptian woman. environment and trade, environment and < . >. ANNUAI., REVIEW * JUl.Y 20)(2-JUNE 2003 (FY03() 55 _ _________ ______,, South Asia Region , W -Pakistan _ _ \-i - India Sui Lanka 2 ~~~~~~ ~ ~~Maldives* -, IBRD 31566 AUGUST 2003 MaId__ : __ __ India1 __ _ . .. . he achievement of the Millennium Develop- nomic and regulatory instruments to promote integrated ment Goals, especially those related to pov- water resources management and improve the productivity erty and environmental sustainability, of water. depends to a great extent on the performance of South Asia, where 40 percent of the world's poor live, with Spurred by public awareness, judicial scrutiny, and govern- half a billion earning less than $1 a day and twice that earn- ment and NGO efforts, environmental aspects of water are ing less than $2 a day. Half the children under five are mal- under increasing scrutiny. The Bank is assisting some of the nourished and the region accounts for over a quarter of the efforts to improve resource management as well as water ser- global deaths in this group. More than one in three people vice delivery. In Pakistan, for example, the Bank is support- without access to adequate sanitation live in the region, as do ing institutional reforms through the National Drainage one in six people without access to safe water supply. Program and emergency drought assistance, and in India, the creation of water resources management and basin organiza- Water resources management and reform. Water resource degradation problems-over-abstraction, waterlogging, salinization, and pollution-are widespread In the Palar Basin in Tamil Nadu, the Bank is supporting the and severe in South Asia. In part, these problems have been preparation of basin plans through multi-stakeholder partic- caused by the limitations of current institutional arrangements ipatory processes and analytical work. A strategic basin en- for water resource management, as well as the absence of vironmental assessment process has helped identify and multi-stakeholder basin organizations and appropriate eco- prioritize key environmental issues and outline solutions. 56 ENVIRONMENT MATTERS * 2003 SOUTH ASIA REGION THE QUEST FOR A SUSTAINABLE SOLUTION TO THE villagers are organized into ecodevelop- ment committees, including tribal peo- ARSENIC PROBLEM IN BANGLADESH ples who are among the poorest and most dependent on natural resources. Creative In many areas of Bangladesh (as in some areas in India and Nepal), groundwater, the primary solutions are being used, ranging from source of drinking water, has dangerously high levels of arsenic contamination. Millions of rehabilitation of traditional water-collect- people are potentially at risk of arsenic poisoning. The Bank, in coordination with other do- ing points, bawari, at ancient historical nors and NGOs, is assisting the government and local communities with the piloting of piped sites at Ranthambhore, Rajasthan, to the systems as an option to provide safe water in rural areas.The pilots will provide lessons on the use of ex-poachers' knowledge of the for- appropriateness of this technology and possible institutional arrangements involving the pri- est in Periyar, Kerala, to develop a new vate and NGO sectors in the delivery of sustainable water supply services. ecotourism venture. All seven states have passed new ecodevelopment legislation and are adopting the ecodevelopment Using basin decision support systems vice or health benefits or in helping to ode for other parks. and tools such as GIS and remote sens- conserve water, to a continuous system. ing, stakeholders can make a fuller ap- The Bank is supporting integrated pest praisal of the key "hardware" and Natural resources management approaches, phasing out "'software" options for water resources management the use of hazardous pesticides. The Di- development and management. In Ne- me versified Agricultural Support Project in pal, the Bank has financed the develop- Sustainable natural resources manage- Uttar Pradesh and Uttaranchal is sup- ment of a recently adopted National ment requires broad policy and institu- porting these states in environmentally Water Resources Strategy and tional frameworks to support both friendlyagriculturalpracticessuchasthe use of compost, vermicompost, biofertil- follow-up plans for sustainable and op- holistic and community-driven a.gP- izers, biopesticides, and green manure. ..mu utlzto of it strategicwate proaches. The Bank is assisting the region in conserving its rich biodiversity while resources. Indenous knowlede can be a useful provid ing comm unitiesw ne In- tool for environmental sustainability in hoods and income opportunities. In In- rural areas. The state of Karnataka is im- Promoting greater synergy between dia, the Bank and GEF-supported plem s. The stste of anatis 9~~~~~ plementing the first stage of an ambitious achieving MDG targets in water supply Ecodevelopment Project is providing in- program to rehabilitate, jointly with com- and sanitation and environmental health novative development opportunities to munities, traditional water harvesting will remain a key focus of the Bank's fu- poor communities living in and around structures, some of them centuries-old. seven of the country's most important An innovative program to safeguard tra- infrastructure p r servies B uc abov ate) Ef national parks, including Gir, home to the ditional knowledge is being piloted un- infrastructure services such as water sup- last remaining population of Asian lions. der the GEF Conservation and ply and sanitation are vital to improved Across the country, from Gujarat to West Sustainable Use of Medicinal Plants environmental health. In India, diarrhea Bengal and Kerala, more than 350,000 Project in Sri Lanka. The project is sup- alone is the second leading cause of child mortality, with over 700,000 deaths per -4 year. The Bank is supporting countries in incorporating in their projects simple measures individuals can take at home to cleanse their water. Home chlorination is a feature of the Maharashtra (India) Ru- ral Water Supply and Sanitation Project. In Nepal-as in other countries such as Ghana, Peru, and Senegal-the Bank is fostering public-private partnerships to promote hand-washing with soap. One specific challenge in India is to upgrade intermittent water supply services, which p A river and mountainous landscape in Nepal. are ineffective in providing reliable ser- ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 57 porting the Guru-kula apprenticeship training program, where young village IMPROVING URBAN AIR QUALITY IN SOUTH ASIA students are undergoing training under the tutelage of older ayurveda physicians The South Asia region has made substantial progress toward improving urban air quality. It and exchanging information with East was the first region to eliminate leaded gasoline.The Bank has played a facilitating role in this African nations on a variety of technical, process through policy advice, analytical work, and awareness-raising. The Bank is now sup- porting India and Sri Lanka with new initiatives to control emissions from high-circulation legal, and institutional issues related to dislvhce amjo ' ~~~~~~~~~diesel vehicles-a major indigenous knowledge. source of harmful emissions. The drop in particulate levels (PM2.5) in Dhaka, In Bangladesh, where the Bangladesh after a 2-stroke 3-wheeler ban Envronmental healh and Bank has been most active 350 in urban air quality, there 300 infrastructure services were visible and measurable " itiffam cwre sem%F..3 -E haka, 250 improvements in Dhaka, af- 2 Infrastructure development is crucial for ter the government banned , 200 economic growth and poverty reduction, two-stroke three-wheeler 2 1 and is an essential part of Bank support 'baby' taxis. Air pollution 2I levels remain alarmingly trn 100 in the region. The Bank pays close atten- hgacos man citesin m tion to ensuring the environmental sus- India an50 P a n t tainability of large infrastructure Bank will cn ti and the work 0 0 iw L tainability of large infrastructure Bank will continue its work0 Dec- Dec- Dec- Dec- Dec- Dec- Dec- Jan- Jan- Jan- Jan- Jan- Jan- Jan- investments. For example, in the high- in this important area. 02 02 02 02 02 02 02 03 03 03 03 03 03 03 ways sector in India-with expected in- vestments of about $20 billion over the next five years-the Bank has been pro- lem. A recent study evaluated household Global commons viding close to $1 billion per year. The fuel choices and the impact of fuel pric- In South Asia, the Bank strategy on glo- road agencies in India have taken signif- ing and distribution policies. The study bal issues has focused on securing tangi- icant strides in understanding and miti- showed that subsidies for domestic ker- ble local benefits. Building on one of the gating the environmental implications of osene and LPG are not effective in pro- largest and most successful Montreal Pro- the sector. Transport agencies are expect- moting equitable access to these clean tocol programs to phase out ozone-de- ed to pay increasing attention to environ- cooking fuels. The main beneficiaries of pleting substances in India and Pakistan, mental and social aspects of highway the LPG subsidy are the urban rich, while the Bank is now assisting countries to projects, evaluation frameworks, and the as much as half of the kerosene subsidy deal with persistent organic pollutants. implementation of mitigation measures is diverted, mainly to the transport sec- These chemicals have been found in in the field. tor. Eliminating subsidies and fostering many food products and even bottled open and competitive markets for these drinking water. A regional assessment of The Bank is also active in urban (see Box) fuels, while strengthening the govern- the issues and options on POPs has been and indoor air pollution (IAP) programs, ' . . initiated and will form the basis for a new largly bcaus of he gowin and ment's capacity to enforce quality and largely because of the growing and saeysadrs.sabte prah program with Bank and GEF support. safety standards, iS a better approach. alarming evidence of the large health prga ihBn adGFspot The study also illustrated the greater impacts of IAP from cooking and heat- . . The South Asia region is highly vulnera- ing with traditional biomass fuels, par- llenge n rural areas, where micome ble to the impacts of climate variability ticularly in rural areas. The WHO World levels are lower. A long-term market and change. Bank efforts have focused on Health Report-2002 ranks indoor smoke transformation toward cleaner options helping the region in post-disaster recov- from solid household fuels as the fourth ed iomass-bas. technge needs ery efforts and greenhouse gas emissions leading cause of illness and premature ed in rural areas. This change needs a reduction programs. The agenda is now death in developing countries (the third parallel development of rural micro-en- shifting toward building in-country ca- leading cause in India), just below mal- terprises for energy products and servic- pacity for adaptation to natural variabil- nutrition and lack of safe sanitation and es, as well as greater involvement of ity and long-term climate change, as well drinking water. NGOs and local government bodies in as in disaster preparedness and manage- outreach and social marketing activities, ment. A regional assessment of these is- The environment and energy divisions of particularly to promote low-cost mea- sues has recently been initiated. the Bank are jointly supporting several sures to reduce IAP, such as behavioral governmental partners in India, reflect- change or simple house design improve- Support for climate change mitigation, in ing the multi-sectoral nature of the prob- ments. partnership with GEF and other donors, 58 ENVIRONMENT MATTERS * 2003 SOUTH ASIA REGION also continues. Two rural electrification frameworks and build local environmen- projects-in Sri Lanka and Bangladesh- tal management capacity is at the heart THE SAR REGIONAL with renewable energy components sup- of Bank activities. In Sri Lanka, success- ENVIRONMENT PORTFOLIO ported by GEF were initiated last year, ful capacity building efforts at the Cen- Water resource Other and a GEF renewable energy project is tral Environmental Agency (CEA) over management environmental under development in Nepal. India, the past five years have been extended % management which is the largest emitter of CO, in the to supporting district offices. In recogni- B'.Biodiversity region, remains a strong focus. The re- tion of strong links between sound envi- 3% cent Energy Conservation Act adopted ronmental management and the coun- Pio Climate change Pollution ~~~~~13% by the Government of India provides a try's development goals, the Sri Lanka management good foundation for scaling up energy Poverty Reduction Strategy Credit in- 41% cludes specific support to regionalizing ~ ~ ~ ~ ~ ~ tnironmental conservation initiatives, some of which cludes specific support to regionalizing iy and institutions will be supported by a GEE Energy Con- the CEA and streamlining its major func- management 17% servation Policy Implementation Project tions. under preparation. At the end of June 2003 the active portfo- Recent initiatives have also focused on lio of World Bank environmental lending in upstream analysis and identification of the SAR Region was $2.2 billion. In fiscal Eny'ironmental polic major environmental concerns to better 2003, new total environmental lending Enio m na r- mao*niometlcnen amounted to $94 million. and institutions integrate environmental objectives in the development planning process. A Coun- Assisting South Asian countries to try Environmental Analysis in Pakistan issues, policies, and institutions, and lays strengthen their policy and institutional takes a strategic view of environmental out the basis for addressing key issues in the country's poverty reduction strategy and development programs. Technical assistance programs to enhance environ- + ^ ite > s mental planning, monitoring, regulation -f _ t and enforcement capabilities were launched last year in Andhra Pradesh and Karnataka, India. The India Indus- trial Pollution Prevention Project has helped strengthen the laboratory, aware- '_ * - *' : >ness building, and information manage- ment capacity in six state pollution .- . ; . ,, control boards. In Karnataka, the pro- gram supported an extensive multi- '' 6iro. ek4; _ t' stakeholder process to prepare the first State of the Environment Report and Ac- tion Plan. In Bhutan, a program to use Stra- tegic Environmental Assessment is in development planning activities has been launched. The increased attention in the re- gion to environmental sustainability as an integral part of the development agenda is E'-'- ^ , - an encouraging sign and the Bank is trying -~ _;=Je t .to best support this through its facilitating, knowledge, and financing services. * j ; 3 W _ ; - ZThis article was prepared by Nagaraja Rao Harshadeep, (202) 473-9173,fax (202) 522- 1664, Kseniya Lvovsky, (202) 473-6120,fax *Q l ,6 ss.5SF; M-1 a ,-_y_ _ b_(202) 522-1664, and othler members of the South Washing an elephant in Sri Lanka. Asia Environment and Social Unit. SAR website: <>. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 59 T * ~ [ 1hepastyearbrought of the past. Throughout the into sharp relief developing world, clean wa- several major chal- ter, clean air, biodiversity, lenges for sustain- fisheries, and fertile soils are INERNATIONAL FINANCE CORPORATION able development in IFC's all at risk because of unsus- A Member of the World Bank Group member nations. The global tainable growth. economy-facing a combina- tion of corporate governance The need for IFC's capital is scandals, overcapacity in key clear, but so also is the need sectors, political instability, for IFC to pioneer the creative slowed trade negotiations, solutions that will contribute SARS, and backlashes in some to the sustainability of private- places against market liberal- sector activity in emerging r t A N D ization-continued to struggle markets. to regain momentum from its steepest decline since the oil IFC's fiscal 2003 crisis of 1973. SUSTAINABILITY - water supply and The situation in many devel-saiton rn rt mT ME G L~.../ BALL oping countries remains chal- sanitation projects HEfLO BAL lenging. Some 2.5-3 billion IFC considers infrastructure, people in developing coun- including water and sanita- tries continue to live on less tion networks, a priority sec- t O N T EXT than $2 a day. Over the next tor and has participated in a 30 years, the world's popula- number of investments in fis- tion is expected to increase by cal 2003. To achieve Millenni- an additional 2 billion, with um Development Goal (MDG) nearly all the increase occur- targets, it is estimated that 1.5 ring in developing countries. billion people will have to To address this increase in gain access to water, while 2 population among other chal- billion must receive adequate ., --~~ -~ lenges, growth and innovative sanitation services by 2015. ~ -= - < approaches are essential. These improvements will re- quire a doubling of current ~-* -->- -_ Together, these factors have global investment levels from placed privatesectornv $15 billion to $30 billion per _^placed private-sector invest- ya vrti eid .; - . ~~~~~~year over this period. ment as an engine for econom- ic growth at the forefront of To account for this dire need - -- __ ~~~~~~~~~~~the poverty reduction agenda. _ _ the poverty reduction agenda.for increased investment, pri- _: veF - - ~~~~~~~~~~But the World Summit on Sus-. .' But the World Summit on Sus- vate sources of capital will be tainable Development, held in essential. Governments around September 2002 in Johannes- the world, in developed and 7E 'burg, underscored the sober- industrial countries alike, ______________________ - ing reality that the global have begun to turn to private This water treatment facility serves the city of Petrolina in Brazil; IFC is providing growth needed in coming de- operators in an effort to im- advisory services in connection with the privatization of water and wastewater cades cannot be achieved us- prove the efficiency and reach services in the city. ing the methods and models of their water and sanitation 60 ENVIRONMENT MATTERS * 2003 services. Details of our fiscal IFC co-hosted an event with its commitment to preserving which have been illegally 2003 investment commitments the World Business Council for biodiversity in developing smuggled. It will also employ in water supply and sanitation Sustainable Development and countries, IFC has launched about 250 families and con- follow (see Table, below). its regional chapters. This innovative projects in Peru and serve more than 3,000 hect- event, "The Business Case for Mongolia in partnership with ares of tropical forest. IFCs sustainability Sustainable Development: local civil society organiza- Doing Good and Doing Well," tions. The projects are funded In northern Mongolia, IFC in- update featured speakers and presen- by the Global Environment vested in a river conservation In fiscal 2003, IFC took advan- tations from some of the lead- Facility. project that will protect the Si- tage of opportunities to en- ing experts on sustainability berian salmon, a threatened gage with sustainability in the developing world. Four In the rain forests of Peru, IFC fish species, and provide a leaders, participate in global JFC investment client compa- is working with two nongov- sustainable source of income discussions, and provide re- nies-DESC, a Mexican chemi- ernmental organizations to for local nomadic communi- search regarding the business cals firm; Spier Estates, a establish a ranching and ex- ties. The project contributes $1 case for sustainability. IFC South African tourism con- port business for poison dart million to help the Taiman also trained staff on sustain- cern; Intercell, a pulp and pa- frogs. This will help rural . . . . ~~~~~~~~Conservation Fund, a nongov- ability issues and the use of per producer in Poland; and communities generate income IFC's sustainability tools. The Sinoforest, a Chinese forestry from a practice that enriches ernmental organization, de- veop a financialsutibe following are highlights from company-participated in the the rain forest rather than de- vel v ally sanabe these efforts. event. pletes its diversity. The project conservation management is expected to stabilize or in- system for the Eg-Urr water- IFC participation at tlieJolannes- Suistainable economic beniefits crease the population of at shed. Theplanallowsforde- buirg summit. At Johannesburg, from saving species. As part of least 60 frog species, many of velopment of low-impact tourism in this wild and sce- IFC's fiscal 2003 investments in water supply and sanitation nic waterway. Project Country Description AAA Colombia IFC is guaranteeing payment of up to $24 million for two local currency Facilityfifndingfor environimeni- bonds issued by a private company to fund improvements in water and tal inprovetnents. IFC has es- sanitation to over 1.5 million people in Barranquilla, Colombia. The company-a water, sanitation, and solid waste service utility-will be tablished environmental and expanding service to the southwest part of the city, its poorest area. New social facilities designed to construction will connect 350,000 previously unserved people to safe water scale up the institution's abil- and adequate sanitation services by the end of 2003. to pr te ch through ity to promote change through Aguas de Panama IFC will provide a $5 million loan and syndicated loans totaling $9 million to its client companies. The facil- Panama Aguas de Panama in connection with its provision of treated potable water ities have become fully oper- to the urban areas of Arraijan, Chorrera, and Capira. The project is to construct and operate a water treatment plant to supply treated potable ational and were instrumental water to the existing distribution network, which serves 270,000 people. in facilitating many environ- Manila Water Philippines IFC will lend $50 million to Manila Water as it develops new water sources, mental programs through the Co., Inc. expands service to east and southeast portions of Manila, improves its private sector over the past distribution network, expands water supply facilities, and increases provision year. For example: of sewage and sanitation services. U EC's Environmental Oppor- Manila Water makes special arrangements to increase service to the poorest tunities Facility will make areas. It works through community leaders to establish neighborhood $120,000 available to cooperatives to manage water systems and allows for the sharing of costs Grupo Calidra, a Mexican and use of water meters among residents. Since the program's inception in lime producer, for the 1998, 306,000 residents have been connected to safe and uninterrupted installation of water re- water service. Through the planned expansion, 350,000 new people will be equipmen as part served. Connected households pay $.07 per cubic meter of water as covery equipment as part compared to $1 .96 per cubic meter charged by water vendors, previously of a pilot to test the feasi- the only alternative for safe water in the poorer areas of the city. bility of the approach. ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 61 EQUATOR PRINCIPLES - COMMERCIAL BANKS ADOPT IFC/WORLD BANK STANDARDS On June 4, 2003, IFC played host to 10 leading banks from seven countries as they announced their commitment to environmental and social responsibility through the adoption of the "Equator Principles." ABN AMRO, Barclays PLC, Citigroup, Credit Lyonnais, Credit Suisse Group, HVB Group, Rabobank, Royal Bank of Scotland,WestLB AG, and Westpac Banking Corporation will apply these voluntary principles, which are based on the environmental and social policies and guidelines of the IFC and World Bank, to their global project-finance activities in all industry sectors. "In all my years as an investment banker, this is unprecedented," said Peter Woicke, Executive Vice President of the IFC. "And we could not be happier to be associated with this path-breaking initiative." Woicke pointed to three reasons why the adoption of the Equator Principles by commercial banks is such an important development.The first is the sheer amount of global investment-estimated to be a staggering $100 billion over the next 10 years-that will be subject to the application of the principles. (The banks will apply the Equator Principles to all project finance lending involving projects with a capital cost of $50 million or greater.) Second, the Equator Principles, unlike many voluntary codes that apply only to a single industry, are | ' , impressive in both breadth and reach. They will affect project financing across multiple E industries from forestry and manufacturing to oil, gas, mining and infrastructure.Third, the 0 adoption of the Equator Principles explicitly recognizes the interdependence between .I the fate of the rich economies on the one hand and responsible growth and development -, - in the poorer economies on the other-an issue at the heart of the globalization debate. For IFC and the World Bank, the fact that these major banks have chosen our environmental and social requirements as the benchmark for commercial banking operations in emerging markets confirms the importance of a continued global role for the private sector in promoting sustainable development and good practice. It also affirms the fact that IFC's in-house environmental and social expertise and capacity repre- sents tremendous value for clients, sponsors, co-investors, and member countries, and that these strengths distinguish IFC from other develop- ment finance institutions. The plants are located in Vietnam represent the Vietnam (an IFC client funding to conduct a desert locations where last ecosystems of their based in the region) and program of outreach and water is scarce and is type in Vietnam and hold the International Crane training for over 320 essential to the production significant biodiversity, Foundation, the Corpo- independent banana gro- process. The water recovery including the globally rate Citizenship Facility wers. equipment will permit endangered Sarus Crane- (CCF) supported a land M Funded through IFC's recovery of roughly 10 the world's tallest flying use mapping and critical Sustainable Financial percent of the water used the world's tallest flyig natural habitat identifi- Markets Facility, Market in processing. If successful, bird and a cultural icon cation exercise from Intelligence Briefs (MIB) thecompanywillreplicate throughout the region. January to April 2003. are a series of concise for all its operations in The area has been subject The results of this work publications designed to desert regions. to rapid conversion, much were presented in a familiarize IFC financial * The grasslands of the Ha of it unsustainable. In workshop to key stake- intermediary clients with Tien Plain in southwest collaboration with Holcim holders in May 2003, from a range of sustainability which two specific conser- issues relevant to their IFC ENTERS MUNICIPAL FINANCE vationproposalsemerged. operations. An MIB giv- Municipal governments provide most essential infrastructure ser- The next stage of the ing a general overview of vices in developing countries, but usually lack access to market project will be to subject sustainability issues affec- financing. With a $3 million partial credit guarantee for a munici- these proposals to a ting financial institutions pal bond issuance, IFC has entered the municipal finance market detailed feasibility analy- is currently in production, for the first time. Bond proceeds will be used to provide a loan to sis. as is one on socially respon- thecityofTlalnepantla,Mexico,anditsmunicipalwatercompany * Favorita Fruit, an IFC sible investing and its for design and construction of a wastewater treatment plant. client in Ecuador, was the applicability to emerging The wastewater treatment plant will recycle residential and indus- first company to have all markets. trial wastewater for industrial reuse and free up potable water to its owned farms certified meet growing demand from residential and commercial custom- to the Rainforest Alliance- ers.This will help to correct the existing situation in which sewage sponsored Eco-OK/Better This article was prepared by flows untreated into the Rio San Javier and should also serve to Banana standard for Harry Pastuszek, (202) 473-1382, relieve pressure on heavily exploited groundwater aquifers. environmental and labor hpastuszek'ifc.org, of the Environ- IFChasnowestablishedamunicipalfundingdepartmentinajoint practices. In an effort to ment and Social Development De- endeavor with the World Bank. This unit will mobilize funds and encourage better perfor- partmiient of the IFC. For miore ifor- make direct investments in municipalities without taking sover- enc e mation please visit: <> anid <. 62 ENVIRONMENT MATTERS * 2003 SUSTAINABLE DEVELOPMENT LEARNING ACTIVITIES WBI's Sustainable Development learning program delivered more W 0 R L D B A N K I N S T I T U T E than 150 learning activities and programs in fiscal year 2003.Top- Promoting knowledge and leorning for a better world ics included water management, water and sanitation services, improving air quality (through the Clean Air Initiative partner- ships program), climate change, environmental economics and management, environmental governance, markets for biodiversity, consensus building for natural resources manage- ment, community empowerment and social inclusion, and rural poverty and development. A range of activities has also been of- fered as part of the preparations and follow-ups to the Johannesburg 2002 Summit and the World Development Report 2003 on sustainable development. WBI's Sustainable Develop- he World Bank Insti- geted to meet the needs of a ment program is geared toward policymakers, parliamentarians, tute's vision, as de- wide audience that ranges practitioners, academics, researchers,journalists, and nongovern- | scribed by WBI Vice from government officials to mental organizations. For more information, visit the website at: scribed by WBJ Vice from government officials to «<>. President Frannie local community leaders. A. L6autier, is "to spur the knowledge revolution in de- Collaborating grams, to strengthen their im- cisions. WBI has adopted a veloping countries to be a pact, and to promote the shar- country focus for its activities, global catalyst for creating, through partners ing of local and global matching these even more sharing, and applying the In collaboration with partners knowledge. WBI has formal closely with client country de- cutting-edge knowledge nec- worldwide, WBI delivered agreements with more than mands and the Bank's Coun- essary for poverty reduction more than 715 learning offer- 115 organizations and works try Assistance Strategies. and economic development." ings in fiscal 2003, reaching informally with an addition- nearly 56,000 client partici- al 250. WBI collaborates close- The Global Development In support of the Millennium pants from 200 countries in all ly with local institutions to Learning Network (GDLN) is . . . . . . ~~~an essential part of the Bank's Development Goals, WBI is major regions of the world. help them build in-country campaign to scale up develop- promoting capacity building These included face-to-face capacity and help clients ment efforts through technol- for sustainable development activities using traditional achieve their own poverty re- ogy. Launched by WBI and (see Boxes, this page and next) media such as print materials, duction and sustainable de- operating since September and other important topics. To as well as distance learning velopment objectives. 2000, the GDLN is a world- meet the MDGs, it is essential programs that rely on Internet wide partnership of nearly 60 to increase access to knowl- tools and interactive video- Client focus and distance learning centers, all edge and expertise about de- conferencing to bring togeth- operating on the same tech- velopment as well as to enable er participants from different innovative nology platform, with a man- velopmeto asap well asplytoheabl cities, countries, or regions. aproaches date to use distance learning people to adapt and apply this WBI continues to offer a wide Pr techniques to advance devel- thowledgeial d cirm taces to range of learning and train- Experience shows that WBI opment. their local circumstances. ing events related to sustain- can achieve its greatest impact able development, including by customizing its programs B-SPAN, an Internet-based WBI iS taking a lead role on those specifically focused on to the priority needs of the broadcasting station initiated behlfng to theld Wod Barenkth i water. Bank's client countries, offer- by WBI, continues to provide ing best-practice pedagogy, open access to World Bank en this kind of local capacity WBI brings together an alli- helping to maintain a sus- seminars, workshops, and through training and learning ance of partner organizations tained presence at the country conferences on a variety of sus- programs, policy services, to leverage the resources and level through local partners, tainable development and knowledge-sharing activities, expertise needed to broaden and collaborating with those poverty reduction issues by and knowledge networks tar- the reach of knowledge pro- who can implement policy de- making these available to the ANNUAL REVIEW * JULY 2002-JUNE 2003 (FY03) 63 WBI's WATER PROGRAM & LEARNING ACTIVITIES public through its website (www.worldbank.org/wbi/ The key objectives of WBI's Water Program are to: B-SPAN/). * Strengthen current core water learning activities, with an emphasis on water sector reforms aimed Distance learning-along at improving water services to the poor with blended applications of * Develop and deliver policy advice and skills development services in water resources management new and traditional education in support of Bank priorities, including the MDGs methods-is transforming the * Create a suite of learning products for targeted aspects of water management that are useful to way WBI reaches clients. client countries Technologies such as video- * Build consensus for the reform agenda in the water sector through advocacy and public awareness conferencing, the Internet, activities, and help implement action plans through partnerships, particularly utilizing distance learning electronic discussions, and technology. CD-ROMs are reducing deliv- For example, the Water Media Network, which includes more than 700 journalists worldwide, is help- ery costs and greatly expand- ing to strengthen public awareness of water issues and to improve water reporting. Nearly 70 journal- ing the number of participants ists from the network, representing some 40 different countries, were selected through a global com- who can be reached. petition to attend the 3rd World Water Forum in Kyoto in March 2003. They published more than 400 stories during the week about the forum and water issues in their countries. This article zvas prepared by Lautra Tlaiye, (202) 473-1841, Bonnie Other examples of Water Program activities include support for the creation of an African network of Bradford, (202) 458-0316, and Va- water sector reform coordinators who are sharing valuable experiences and knowledge in a decen- World Balnk Institute's Environ- tralized way and national-level country-specific policy workshops for key stakeholders to advance mentally and Socially Suistainiable sector reforms. Developmenit Division. Fax: (202) 676-0978. Email: <>. website at: <>. Website: <>. 1\e e W~ 7S7U p d aUltes social, and poverty-reducing dimensions of f TOWARD A STRATEGIC APPROACH CL p ~ ; 0 sustainable development. It gives priority to multi-sectoral proposals that cut across TO CHEMICALS MANAGEMENT * Trust Fund for Environmentally themes. Half of all TFESSD funds are de- With the increasing recognition of the seri- I f * 11 f * Ll ~~~voted to work in Sub-Saha ran Africa; else- and Socially JSutainable voted to work in Sub-Saharan Africa; else- ous health and environmental issues associ- where, IDA countries are preferred. The ated with chemical production, attention is Development TFESSD) approach and structure of the TFESSD are f Receives $12.7 million now considered as best practice among cusingo concerte action toward trust funds in the Bank. The Environment chmal ang et.Te20 Wod The TFESSD is a large multi-donor um- Window of the TFESSD is actively used to Summit on Sustainable Development Plan brella fund that received $12.7 million in support strategic analytic work and of Implementation sets a goal of using and fiscal 2003 from the governments of Nor- strengthening of client capacity in support producing chemicals in ways that minimize way and Finland (who joined the TFESSD of the Bank's Environment Strategy. At the adverse effects on health and the environ- in December 2002). The TFESSD pro- end of fiscal 2003, the TFESSD was sup- ment by 2020, and calls for the develop- vides grant resources for World Bank ac- porting 108 activities; 47 additional activi- ment of a strategic approach to international tivities that mainstream environmental, ties have been approved for fiscal 2004. chemicals management (SAICM). The first * preparatory meeting leading to a SAICM is The Bank Group's greening efforts are a reflection of the strong need for environ- GREENING scheduled for November 2003 in Bangkok; mental accountability, not only in its core lending activities and development assis- sentatives from governments, nonprof- tance, but also in its own internal operations. The Bank now purchases I0 percent TE repre of its energy from renewable sources (6 percent is wind energy from a local wind PROGRESS its, industry, and intergovernmental organi- farm), making the Bank the largest single purchaser of renewable energy in the IN 2003 zations will attend. After 2005, a high-level Washington area. The Bank's effort to reduce the "carbon footprint" of its facilities ministerial meeting will make decisions has been recognized by the U.S. Environmental Protection Agency with the Energy Star Award (a about the scope and objectives of the symbol of energy efficiency) for two of its buildings. The Bank has also instituted an incentive program to encourage staff to use public transportation for their commute to work. SAICM. 64 ENVIRONMENT MATTERS * 2003 A SELECTION OF WORLD BANK GROUP CENVIRONMENTAL PUBLICATIONS The following publications may be obtained by sending an email to eadvisor@worldbank.org, or by phoning the Environment Department Publications Unit at (202) 473-2976. C Preventable Tragedies - The Impact of Toxic Substances Public Environmental Expenditure Reviews - on the Poor in Developing Countries Experience and Emerging Practice n Lynn Goldman and Nga Tran Environment Strategy Paper no. 7 > August 2002 Phil Swanson and Leiv Lunde May 2003 ° Environment Department Papers A Decade of Environmental Lending z Environment Strategy Paper no. 6 Climate Change and Agriculture - Anjali Acharya and Alethea M. T. Abuyuan A Review of Impacts and Adaptations November 2002 Environment Department Paper no. 91 Private Sector Development and the Environment - Pradeep Kurukulasuriya and Shane Rosenthal An Analysis of the World Bank Privatization Portfolio June 2003. Publishedjointly with the Agriculture and Rural Environment Strategy Paper no. 5 Development Department Alethea M. T. Abuyuan October 2002 A Critical Review of Literature on Structural Adjustment and the Environment Water Resources and Environment Environment Department Paper no. 90 Technical Notes, 2003 Anna Gueorguieva and Katharine Bolt Edited by Richard Davis and Rafik Hirji April 2003 C.1 Environmental Flows - Concepts and Methods C.2 Environmental Flows -Case Studies Indicators of Environment and Sustainable Development - C.2 Enironmental Flows - FloodFls Thore an Prcia Exeiec C.3 Environmental Flows -Flood Flows T heories and Practical Experience Environment Department Paper no. 89 D.1 Water Quality - Assessment and Protection Lisa Segnestam D.2 Water Quality - Wastewater Treatment January 2003 D.3 Water Quality - Nonpoint-Source Pollution E.1 Irrigation and Drainage - Development E nvi ro n m e nt St rat egy Pa p e rs E.2 Irrigation and Drainage - Rehabilitation rEl Water Conservation - Urban Utilities Country-Level Environmental Analysis - E2 Water Conservation - Irrigation A Review of International Experience F3 Wastewater Reuse Environment Strategy Paper no. 8 Lisa Segnestam, Asa Persson, Mans Nilsson, Andres G.2 Lake Management Arvidsson, and Ede Ijjasz G.3 Wetlands Management July 2003 G.4 Management of Aquatic Plants To be added to the Environment Matters mailing list, complete coupon and mail to address below! Name Title Organization Address City/State/Postal Code Country E-mail address To order other Environment Department publications, refer to our publications list and write those you would like to receive below. To order more than 3, please contact the Environment Department publications office di- rectly. Title Series No. Author Date Mail or fax to: Environment Department Publications Fax: (202) 477-0565; phone (202) 473-3641 The World Bank 1818 H Street, N.W., Room MC-5-126 Washington, D.C. 20433 U.S.A. LI) Putting Our L Water Resources Commitments to Work: Sector Strategy- _ H- Environment Strategy _J Strategic Directions < Implementation . -:' for World Bank U Progress Report Engagement -j (contains a CD-ROM of February 2003. __ _____ co Making Sustainable. ntoWor 101 pages- D Commitments: An For a complete copy _ _ Environment Strategy go to: < > published in October 2001) ' J _Sr_ he May 2003. _ 64 pages. m Reaching the Rural Poor: A Revised Forest A Renewed Strategy for Strategy for the World Rural Development stt rs Bank Group The World Bank. for the World Bank October 2002. 2003. 90 pages. 204 pages. For a complete copy go to: (ISBN 0-8213-5459-0) < < www. worldbank. org/ .. * s*:.lII~r.hrI: il CJ.!.t: l$25.00 forestry> > ~~~~~~~~~~~~~~~~~~~ is W,, . X.,* /.' Climate Change Wastewater Reuse, 7 Mitigation in the Urban Technical Note F.3 Transport Sector: one of the series Priorities for clt .~ ftw Water Resources and Water Resources and Environment the World Bank the Environmenteip by Stephen Karekezi, Technical Notes Lugard Majoro, Edited by Richard Davis = and Todd M Johnson. , , -+ andRafik Hirji. June2003 2003. 51 pages. - The Little Green Mainstreaming j The Data Book 2003 Mainstreaming Biodiversity Biodiversity in Little April 2003. in Development __ Development: Case 239 pages. Studies from South Africa 03 Data (ISBN 0-8213-5427-2) Edited by S. M Pierce, R. M Book $15.00 Cowling, T Sandwith, and K MacKinnon. r ^ , s '"''^^Z>'' August 2002. +; + 159 pages. For information on how to obtain these publications, please call the Wor-ld Bank Environment Department at (202) 473-3641, or email eadvisor@worldbank.org.