Making sustainable commitments an environment strategy for the world bank

MAKING SUSTAINABLE
COMMITMENTS:
An Environment Strategy
for the World Bank

Kristalina Georgieva

The World Bank


MAKING SUSTAINABLE COMMITMENTS
An Environment Strategy for the World Bank

The World Bank
Washington, D.C.


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Contents

Preface

ix

Acknowledgments

xiii

Executive Summary

xvii

Abbreviations and Acronyms
Introduction

xxxvii

1

Chapter 1: Development, Poverty, and the Environment —Tracing the Connections
The Evolution of Thinking about Sustainable Development
3
Tradeoffs, Choices, and Priorities
4
Three Links between Environment and Development
6
The quality of life

7

The quality of growth

9

The quality of the regional and global commons
Changing Global Context

14

Increased private sector role
Political changes

12

14

14

Technological change

14

Population growth and demographic changes

15

Greater Scope for Markets with Effective Public Regulation and Oversight

Chapter 2: Lessons from World Bank Experience
Safeguard Policies and Procedures
19
Progress made in applying environmental assessment
Areas for further improvement
Emerging challenges

24

22

19
20

16


Making Sustainable Commitments — An Environment Strategy for the World Bank
Integration of Environmental Concerns and Economic Development
Setting environmental priorities
25
Lending for environmental activities
27
Lessons from environmental lending
31
Environmental aspects of adjustment lending

33

Addressing Regional and Global Environmental Challenges

34

Projects and programs for the global environment
35
Mainstreaming the global environment in the country dialogue
Partnerships
37
The Changing Bank Context

36

38

New strategic approaches
38
The need for selectivity
40
The Bank's comparative advantage as a basis for selectivity
The need for a cross-sectoral approach
42
The need for institutional realignment
43
Notes

41

43

Chapter 3: The Strategic Framework
Our Objectives

45

46

Improving the quality of life
46
Improving the quality of growth
48
Protecting the quality of the regional and global commons

Our Toolkit

50

52

Strengthening analytical and advisory activities
53
Addressing environmental priorities through projects and programs
Improving the safeguard system
60
Selectivity in Implementation

62

Chapter 4: Institutional Realignment

65

Strengthening Accountability and Incentives

66

Operational departments
66
The environment family
68
Senior management
71
Coordinating across Sectors and Networks in the Bank

Improving Skills

Realigning Budgets

71

73

Continuing to realign the skill mix
74
Joint appointments, secondment, and training

75

76

Managing the transition while exercising selectivity
Budget requirements
77
External Relations and Partnerships
Realigning with corporate priorities
Stocktaking and realignment
80
iv

25

78
79

76

56


Contents

Performance Monitoring and Reporting
Conclusion

81

82

ANNEXES
A. Regional Strategies

85

East Asia and the Pacific

87

Europe and Central Asia

95

Latin America and the Caribbean
Middle East and North Africa
South Asia

105
113

121

Sub-Saharan Africa

129

B.
C.
D.
E.
F.
G.

Poverty and Environment
139
Environment and Health
147
Natural Resource Management
153
Urban Environmental Priorities
165
Climate Change
173
The IFC's Approach to Environmental and Social Issues — A Roadmap to Sustainable
Investment
181

H. Multilateral Investment Guarantee Agency
187
I, The Environment Strategy and the World Bank-GEF Program
191
J. Consultation Process and Feedback
199
K. Selected Partnerships
207
L. World Bank Management's Response to OED's Environment Review and
Recommendations 211
M. Mapping Environmental Conditions
215
Bibliography

221

BOXES
1

Key benchmarks for monitoring Bank performance in Strategy implementation

1.1

Goals for international development

4

1.2

Indicators of sustainable development

1.3

From protectionism to sustainable ecosystem management

1.4

Environmental degradation and economic productivity

5

1.5 What makes environmental problems different?
1.6

7

9

Industrial and developing countries have different perspectives on environmental
challenges

1.7

6

11

Global environmental issues

12

xxvii


Making Sustainable Commitments — An Environment Strategy for the World Bank
1.8

Corporate responsibility: The triple bottom line

15

1.9

Poverty, population, and environment links

2.1

Community Driven Development: The challenges of acting locally

2.2

The FY99 Lesotho Country Assistance Strategy

2.3

Environmental adjustment lending

2.4

Improving livelihoods by better natural resource management in Nepal

2.5

Assistance to support payments for environmental services

2.6

Evaluation of the Bank's past environmental performance

2.7

IFC-GEF cooperation

2.8

World Commission on Dams

2.9

The Comprehensive Development Framework

3.1

Improving livelihoods through sound management of micro-watersheds

3.2

The South Asia Urban Air Quality Management Initiative

3.3

Strengthening national EA capacity: The METAP experience

3.4

Linking local and global benefits: Energy efficiency projects in China

3.5

Providing decisionmakers with scientific information: The Millennium Ecosystem

16
27

29
29

31
32

36
38
39
47

48
49

Assessment and the Intergovernmental Panel on Climate Change

51
52

3.6

Strategic environmental assessments

3.7

Promoting good practice in environmental management

3.8

How we will work

3.9

Adaptable Program Loan for improving environmental management in Brazil

3.10

vi

24

55
56

57

Capacity development activities by other international organizations

57

59

4.1

Collaborating with the energy sector: Fuel for Thought

73

4.2

Partnerships review in the ESSD network

A.1

Analytical work shapes natural resource management in East Asia

A.2

Preparing an environment strategy for East Asia

A.3

Albania: Community-based forest management in a transition economy

A.4

The Clean Air Initiative in Latin American cities

A.5

A regional approach: The Mesoamerican Biological Corridor

A.6

Public consultation during preparation of the LAC Environment Strategy

A.7

Sustainable watershed management in India

A.8

NEAPs and ESPs in Africa

A.9

Partnerships for sustainable development in Africa

B.1

Poverty is multidimensional

B.2

The impacts of fuelwood scarcity on women's health

B.3

Environmental mainstreaming in PRSPs

D.1

Community-based natural resource management

D.2

Linkages between the Environment Strategy and the revised forest strategy

E.1

Supporting the global phaseout of leaded gasoline

79
89

94
99

107
109
111

123

136
137

139
141

145
157
167

159


Contents

E.2

Environment in the Bank's urban strategy

El

Strengthening environmentally responsible energy strategies through Energy
Environment Reviews

I.1

170

177

World Bank-GEF projects demonstrate innovative approaches to financing sustainable
natural resource management with global and local benefits

J.1

Environment Strategy consultation through the Internet

J.2

Results of an Environment Strategy questionnaire

194
201

202

FIGURES
1
2.1

What's new in the Environment Strategy

xxviii

IBRD/IDA commitments by EA category, fiscal 1990-2000

21

2.2

Environmental and safeguard input into the Bank's decisionmaking and project cycle

2.3

World Bank environmental lending, fiscal 1990-2000

2.4

GEF and MFMP commitments, fiscal 1992-2000

4.1

Environment in the ESSD network

23

28
35

69

4.2

Environmental interface with other networks and families

4.3

Cross-sectoral affiliation of environmental staff

4.4

Realigning partnerships

B.1

Environmental links to the dimensions of poverty

B.2

Peru 1996 health outcomes

72

74

80
140

142

C.1

Burden of disease and environmental risks

D.1

The value of water and water-based ecosystems

147

J.1.

Strategy consultations map

160

200

MAPS
Regional
East Asia and the Pacific

87

Europe and Central Asia

95

Latin America and the Caribbean
Middle East and North Africa
South Asia

105
113

121

Sub-Saharan Africa

129

Environmental

1

Gross domestic savings

216

2

Genuine savings

3

Health burden associated with waterborne diseases

4

Estimated ambient concentration of particulates (PM10 ) in urban areas (ug/m3)

216
217
217

vii


Making Sustainable Commitments — An Environment Strategy for the World Bank
5

Population in areas of relative water scarcity

6

Areas of high biodiversity importance

7

Per capita CO2 emissions

8

CO2 emissions per PPP-adjusted GDP

218

218

219
219

TABLES
1

Strategic framework matrix

2

Strategy implementation and monitoring matrix

xxx
xxxiii

4.1

Institutional accountabilities for promoting environmental sustainability

A.1

Sub-Saharan Africa: Priority environmental issues

C.1

The burden of disease from major environmental

C.2

Health outcomes and environmental interventions

J.1

134
risks

149

152

World Bank Environment Strategy consultation schedule

K.1

Selected partnerships

L.1

OED's recommendations and management's action response

VIII

205

208
212

83


Preface

T

his Environment Strategy outlines how the World Bank will work with client countries to address their environmental challenges and ensure that Bank projects and programs integrate principles of environmental sustainability. The Strategy sets a vision, objectives, and a course of

action for the longer term and suggests specific actions, targets, and institutional measures for the next five

years, as described in Tables 1 and 2 of the Executive Summary. Table 1 links proposed measures with key
development objectives, while Table 2 sets targets and monitorable indicators.
The Strategy is the product of a multiyear effort, including an extensive evaluation of the Bank's past
performance by the Bank's independent Operations Evaluation Department (OED) and numerous workshops and consultations with client governments, civil society, academia, multilateral and bilateral development agencies, and representatives of the private sector (see annex J for details). These consultations have
played an important role in shaping the final document. We are profoundly grateful to all those who have
taken the time and trouble to contribute to the process.

Within a strategic framework, we recognize that one size does not fit all. The countries served by the World
Bank differ enormously in their stage of development and in the nature of their economic, social, and
environmental concerns. It would be both presumptuous and futile to define a small set of specific problems that we would tackle in all or most of our client countries. A central theme of the Strategy, therefore,
is the importance of working in collaboration with our clients and partners to identify the critical environmental issues that should be addressed in specific circumstances. Detailed country environmental diagnostic analysis based on National Environmental Action Plans (NEAPs) and other strategies and assessments,
along with other country-specific assessments, is part of the input for the Bank's Country Assistance
Strategies (CASs).
This Strategy does not attempt to provide a detailed assessment of the state of the environment, natural
resources, and ecosystems in our client countries or in the world. It draws on work undertaken by client
ix


Making Sustainable Commitments - A n

Environment Strategy for the World Bank

countries, the World Bank, and many others. This

Directors discussed Fuelfor Thought, an environ-

work includes NEAPs, strategies and assessments,

mental strategy for the energy sector. The Envi-

the World Resources Institute’s World Resources se-

ronment Strategy builds on the analysis undertaken

ries, the Worldwatch Institute’s State of the World

for Fuelfor Thought and incorporates that strategy’s

series, t h e United Nations Environment

objectives and actions. The Bank is also preparing

Programme’s Global Environmental Outlook 2000,

or planning to prepare strategies for its activities in

and the Bank‘s WorldDevelopmentIndicators series.

a number of other fields, including forestry, water

It also builds on a rich storehouse of analytical work

resources, rural development, and social develop-

that spells out a broader vision of development and

ment. These strategies have implications for issues

its environmental linkages and maps out options

that are important concerns for the Environment

for broadening the benefits of economic develop-

Strategy, in particular, in natural resource manage-

ment while reducing its adverse environmental ef-

ment. The concerns, approaches, and conclusions

fects. The results of such assessments-including

of these strategies are reflected here, though they

assessments prepared for the Intergovernmental

are not discussed in detail.

Panel on Climate Change (IPCC), the Organisation for Economic Co-operation and Devel-

The World Bank Group (WBG) includes four

opment (OECD), the United Nations, and the

closely associated but distinct institutions that sup-

U.K. Department for International Development

port development in low- and middle-income cli-

(DF1D)-are

ent countries. The International Bank for Recon-

widely available.

struction and Development (IBRD) and the InThe 2003 WorldDevelopmentReport (WDR), sub-

ternational Development Association (IDA) have

titled Sustainable Development with a Dynamic

a mandate to lend to sovereign governments. To-

Economy, will provide an opportunity to take a com-

gether, they are often referred to as the World Bank

prehensive look at the various dimensions of sus-

(WB).The WB, through its ongoing dialogue with

tainable development. This Environment Strategy

client governments on a wide range of issues and

provides one of the building blocks for the WDR.

its financial support to the public sector, is in a po-

T h e Strategy is an operational document that

sition to influence government policy directly. The

guides the Bank‘s actions in the environment area

International Finance Corporation (IFC) promotes

and that recognizes that environment is part of the

sustainable private sector investment as a way of

sustainable development challenge; points to close

enhancing economic growth and improving peoples’

linkages with other areas of development; and em-

lives. It operates principally through direct or indi-

phasizes the need to integrate environmental issues

rect support of private sector projects. The Multi-

into sectoral and macroeconomic policies, strate-

lateral Investment Guarantee Agency (MICA) pro-

gies, and actions, taking into account evolving in-

vides guarantees against certain noncommercial

stitutional conditions and capacity constraints in

risks (primarily political risk insurance) to foreign

client countries.

investors for qualifjring investments in developing
countries.

The Environment Strategy works in a complementary fashion with other Bank strategies and action

The four WBG institutions are aligned with the

plans. For example, in 1999 the Bank‘s Board of

core mission of poverty reduction-and,

X

therefore,


Preface
the overall vision, strategic framework, and objec-

Strategy to linkages among members of the WBG,

tives of this Strategy, as described in Chapters 1

and annexes G and H provide detailed informa-

and 3, are shared by the entire WBG. Members of

tion on the approach to supporting sustainable de-

the WBG, however, are legally and financially in-

velopment taken by the IFC and MIGA.

dependent and have different sets of owners and
clients, structures and mandates, staffs and toolkits.

Strategy making does not end with the publication

Accordingly, specific operational and institutional

of the document. Continuous communication and

implications differ and need to be spelled out sepa-

collaboration with clients, partners, and World

rately. The lessons learned and the operational and

Bank staff in diverse sector and country units, as

institutional details described in Chapters 2, 3, and

well as systematic monitoring and assessment of

4 of this document apply specifically to the WB

the Strategy's effectiveness, are essential to its up-

(IBRD/IDA). References are made throughout the

dating, improvement, and successful implementation.

xi


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Acknowledgments

T

he preparation of the Environment Strategy was overseen by the Environment Sector Board,
chaired by Environment Director Kristalina Georgieva, and co-chaired by Robert Watson, Chief
Scientist and Director of the Environmentally and Socially Sustainable Development Network

(ESSD). Kristalina Georgieva guided the Strategy preparation process.

All members of the Environment Sector Board played an active role in the strategy preparation process:
Richard Ackermann (South Asia Region), Sherif Arif (Middle East and North Africa Region), Glen
Armstrong (International Finance Corporation), Charlotte Bingham (Africa Region), Zafer Ecevit (East
Asia Pacific Region), David Freestone (Legal Department), Jane Holt (Europe and Central Asia Region),
Anupam Khanna (Development Economics Vice Presidency), Michele de Nevers (World Bank Institute),
Maria Teresa Serra (Latin America and Caribbean), Martyn Riddle (International Finance Corporation),
and David Wheeler (Development Economics Vice Presidency).
Magda Lovei (ENV) managed the preparation of the Environment Strategy. The core Strategy drafting
group also included Julia Bucknall (ECSSD), Gordon Hughes (Consultant), Stefano Pagiola (ENV), and
Lars Vidaeus (ENV). Anjali Acharya (ENV), Kulsum Ahmed (LCSES), Sherif Arif (MNSRE), Aziz
Bouzaher (SASEN), Gonzalo Castro (ENV), Kirk Hamilton (ENV), David Hanrahan (ENV), Martin

Fodor (ENV), Hans-Olav Ibrekk (ENV), Todd Johnson (ENV), Agi Kiss (AFTES), Stephen Lintner
(ENV), Kseniya Lvovsky (SASEN), Ajay Mathur (ENV), Jean-Roger Mercier (ENV), Judith Moore
(ENV), and Mahesh Sharma (ENV) all participated in the Strategy working group. Many others contributed or provided advice and comments, including Gayatri Acharya (WBIEN), Motoko Aizawa (CTEED),
Jo Albert (ENV), Mohammed Bekhechi (LEGOP), Rob Crooks (EASES), John Dixon (ENV), Giovanna
Dore (EASES), Yoko Eguchi (ESDVP), Indumathie Hewawasam (AFTERS), Christiane Kraus (WBIEN),
Ken Newcombe (ENV), and Nightingale Rukuba-Ngaiza (LEGOP). Alethea Abuyuan (ENV) assisted
the team with research and data.

xiii


Making Sustainable Commitments — An Environment Strategy for the World Bank
General guidance was provided by the Operations

lowing topics: Capacity Building for Environmental

Policy Committee, which is chaired by Shengman

Institutions, led by Ina-Marlene Ruthenberg

Zhang, and the ESSD Council, which is chaired

(LCSEN) and Mohammed Bekhechi (LEGOP);

by ESSD Vice President Ian Johnson. The prepa-

Climate Change, led by Ajay Mathur, Todd Johnson,

ration of the six Regional Environment Strategies

and Mahesh Sharma; Country Assistance Strategies

was overseen by Regional Sector Directors and

and Environment, led by Kirk Hamilton (ENV);

Managers: Richard Ackermann (South Asia), Hans

Donor Survey on Environmental Aid

Binswanger and Roger Sullivan (Africa), Kevin

led by Hans-Olav Ibrekk (ENV); Environment and

Cleaver and Jane Holt (Europe and Central Asia),

Natural Resources chapter in Poverty Reduction Strat-

Zafer Ecevit (East Asia and Pacific), Doris Koehn

egy Paper Sourcebook, led by Julia Bucknall

and Salah Dargouth (Middle East and North Af-

(ECSSD), Kirk Hamilton (ENV), Nalin Kishor

rica), and John Redwood and Teresa Serra (Latin

(WBIEN), and Poonam Pillai (WBIEN); Health

America and the Caribbean).

and Environment, led by Kseniya Lvovsky (SASEN)

Effectiveness,

and Maureen Cropper (DECRG); Natural Resource
The main authors of Regional Environment Strat-

Management, led by Jan Bojo (AFTE1) and Stefano

egies were Teresa Serra and Kulsum Ahmed (Latin

Pagiola (ENV); Outcomes and Indicators, led by Aziz

America and Caribbean Region), Aziz Bouzaher

Bouzaher (SASEN); Partnerships, led by Ken

(South Asia Region),Todd Johnson (East Asia and

Newcombe (ENV) and Nalin Kishor (WBIEN);

Pacific Region), Agi Kiss (Africa Region), Sherif

Poverty and Environment, led by Julia Bucknall

Arif and Maria Sarraf (Middle East and North

(ECSSD) and Poonam Pillai (WBIEN); Reducing

Africa Region), and Jane Holt and Konrad von

Vulnerability to Environmental Variability, led by

Ritter (Europe and Central Asia Region). Many

Mahesh Sharma (ENV); Safeguards, led by Stephen

others contributed, including Angela Armstrong,

Lintner, Jean-Roger Mercier (ENV), and Glen

Gabriela Boyer, Sergio Margulis, Kirsten Oleson,

Morgan (EASES); Strategic Environmental Assess-

Rocio Sarmiento, and Laura Tlaiye (Latin America

ments led by Olav Kjorven (Consultant) and David

and Caribbean Region); Carter Brandon, Kseniya

Hanrahan (ENV); Urban Air Quality Management,

Lvovsky, and Bekir Onursal (South Asia Region);

led by Masami Kojima (COCPO) and Magda

Carter Brandon, Rob Crooks, and Giovanna Dore

Lovei (ENV); Urban Environmental Priorities, led

(East Asia and Pacific Region); Anita Gordon and

by Carl Bartone (INFUD) and David Hanrahan

Marie-Claude Verlaeten (Africa Region); Hocine

(ENV); Environmental and Water Resources Man-

Chalal, John Bryant Collier, Nicole Glineur, Roger

agement, led by Rafik Hirji and Hans-Olav Ibrekk

Gorham, Samuel O'Brien-Kumi, Allan Rotman,

(ENV); and World Bank and the Global Environ-

Kanthan Shankar, Shobha Shetty, Manuel Shiffler,

ment, led by Lars Vidaeus and Gonzalo Castro

and Shatory Ueda (Middle East and North Africa

(ENV). Several of these background papers are

Region); and Marjory-Anne Bromhead, Julia

summarized in the annexes.

Bucknall, Amy Evans, and Vesselina Hekimova
(Europe and Central Asia Region).

Judith Moore (ENV) organized external consultations in collaboration with regional coordinators:

The Strategy draws on several background papers

Gabriela Boyer (LCSES), Giovanna Dore

and notes prepared by working groups on the fol-

(EASES), Elena Heitman (Consultant), Vandana

XIV


Acknowledgments
Sareen (ECSSD), Maria Sarraf (MNSRE), and

environmental policies, procedures, and activities

Marie-Claude Verlaeten (AFTEl), as well as Anita

and their impacts; regional consultation meetings

Gordon (Consultant) and Elke Nickel (Consult-

with a range of stakeholders; and two electronic dis-

ant), who worked on the North American and

cussion forums. The Strategy team received valu-

Western European consultations. Martin Fodor

able comments from the following in OED; Rob-

(ENV) managed the electronic web consultation

ert Picciotto, Greg Ingram, Alain Barbu, Andres

and coordination.

Liebenthal, and Jed Shilling. Annex L summarizes
the OED's recommendations and the Bank re-

The Strategy team is grateful for the guidance and

sponses and actions outlined in the Strategy.

comments from Marisela Montoliu Munoz (Operations Policy and Country Services). Many oth-

The Strategy team is grateful for the constructive

ers provided valuable comments, advice, and input

discussions and comments provided by the Com-

to the Strategy: John Briscoe, Csaba Csaki, Jim

mittee for Development Effectiveness and the

Douglas, Odin Knudsen, Robin Mearns, and Rob-

Board of Directors.

ert Thomson, (Rural Development); Steen
Jorgensen (Social Development); Nemat Talaat

Editorial support was provided by Bob Livernash

Shafik (Private Sector and Infrastructure); Jamal

(Consultant). Additional editorial advice was pro-

Saghir and Lee Travers (Infrastructure, Water and

vided by Nancy Levine, Daniel Litvin, and Jenepher

Sanitation); John Flora and Ken Gwilliam (Urban

Moseley (Consultants). Jim Cantrell (ENV) man-

Transport); Carl Bartone (Urban Development);

aged desktop publishing, design, and production.

Chas Feinstein and Richard Spencer (Energy);

Administrative and logistical support were provided

Mariam Claeson and Christopher Lovelace

by Isabel Alegre, Sriyani Cumine, Nenuca Munoz

(Health); Michael Klein and Syed A. Mahmood

Robles, Vessela Radeva Stamboliyska, and Jason

(Private Sector Development); Kiran Pandey, Jo

Steele (ENV).

Ritzen, Zuarak Shalizi, and David Wheeler (Development Economics); Giovanna Prennushi (Pov-

Many organizations and individuals outside the

erty); John Todd (Corporate Strategy Group);

Bank provided constructive oral or written com-

Nicolette Dewitt (Legal); Manuel Penalvar-

ments. These comments have been valuable inputs

Quesada (South Asia Region), Kathleen

in shaping the Strategy. We are indebted to the

Stephenson (Resource Mobilization); Richard

hundreds of people who participated in the meet-

Caines, Gavin Murray, Andreas Raczynski, Bernard

ings and who provided thoughtful comments m

Sheahan, and Peter Woicke (International Finance

person, by mail, or by e-mail. Because of space con-

Corporation); and Harvey Van Veldhuizen and

straints, we can only acknowledge a few of the or-

Gerald West (Multilateral Investment Guarantee

ganizations that helped organize meetings; how-

Agency).

ever, we thank all the individuals and organizations
that participated. Their contribution was invaluable,

The Strategy has also benefited from a review of
the Bank's environmental performance undertaken

We thank the governments of Japan, Norway, Swe-

by the Operations Evaluation Department (OED).

den, and Switzerland for their financial support,

This review included an analysis of the Bank's

which made the consultations possible. We thank
XV


Making Sustainable Commitments — An Environment Strategy for the World Bank
Monitor International (Annapolis, USA) for their

Environment of Georgia organized regional meet-

advice, convening and facilitation skills, and their

ings. CEEWEB and the Georgian Center for the

independent reports of a number of the meetings,

Conservation of Wildlife provided independent

We thank the members of the GEF-NGO network,

reports on the meetings held in Hungary and Georgia.

for their participation in most of the meetings, helping to identify and convene participants, and con-

In the Middle East and North Africa, IUCN pro-

tributing to reports on findings. We also thank

vided assistance with the first consultation in

Stratos, Inc. (Ottawa, Canada) for their advice and

Amman, Jordan; for the second meeting, the Min-

facilitation of the final joint OED/ENV workshop

istries of Planning and Environment in Jordan pro-

held in Washington, DC.

vided assistance.

We are indebted to all of the government agencies,

We would like to acknowledge the following orga-

expert organizations, and individuals who generously shared their time and knowledge with us. In
each region some organizations assumed special
roles in the process. In Africa, meetings were organized by the Environmental Liaison Centre International (ELCI, Nairobi, Kenya); the World Conservation Union (IUCN) Country Office in
Pretoria, South Africa; and the IUCN Country
Office in Ouagadougou, Burkina Faso. EnerWise
International submitted an independent report of
the meeting held in South Africa.

nizations in Latin America and the Caribbean;

Central American Commission for Environment
and Development (CCAD, El Salvador), the
Fundacion Futuro Latinoamericano (Quito, Ecuador), the Fundacion Vida (Cartagena, Colombia),
Nouveau Promocoes e Marketing Direto (Rio de
Janeiro, Brazil), and CEGESTI, a nonprofit organization that specializes in clean production and
environmental management (San Jose, Costa Rica),
as well as the United Nations Environment
Programme (UNEP) for its active involvement in

In Asia, the Japanese Foundation for Advanced
Studies on International Development (FASID)

each of the sessions. The Caribbean Conservation Association and Fundacion Ecologica Univer-

supported a regional meeting in Bangkok, Thai-

sal provided independent reports on the meetings

land; the Foundation for the Philippine Environ-

in Costa Rica and Brazil.

ment and Monitor International prepared reports
of the meeting. In Japan, meetings were organized

For assistance in Western Europe, we thank to

by Keidanren (Japan Federation of Economic Or-

Euronatur (European Natural Heritage Fund), the

ganizations), the Environment Assistance Study

German Federal Ministry for Economic Co-Opera-

Group of the Japan International Cooperation

tion and Development (BMZ), the Swiss State Sec-

Agency, the Japan Bank for International Coop-

retariat for Economic Affairs (SECO), and U.K.

eration, the Economic Cooperation Bureau of the

Department for International Development (DFID).

Ministry of Foreign Affairs, the International Bureau of the Ministry of Finance, the Ministry of

In North America, we would like to acknowledge

the Environment, and FASID.

the Bank Information Center (Washington DC,
USA), Canadian International Development

In the Europe and Central Asia Region, the Re-

Agency (CIDA), the North-South Institute (Ot-

gional Environment Center (Budapest, Hungary),

tawa, Canada), and the World Affairs Council (San

the Bank's office in Moscow, and the Ministry of

Francisco, USA).

XVI


Executive Summary

E

conomic development has led to dramatic improvements in the quality of life in developing
countries, producing striking gains unparalleled in human history. But the picture is far from
entirely positive. Gains have been unevenly distributed, and a large part of the world's popula-

tion remains desperately poor. At the same time, environmental factors such as indoor and outdoor air
pollution, waterborne diseases, and exposure to toxic chemicals threaten the health of millions of people,
and natural resources—land, water, and forests—are being degraded at alarming rates in many countries.
Simultaneously, far-reaching trends—globalization, the increased role of the private sector and of civil
society, and rapid technological advances—have been reshaping the world, causing development and environmental challenges to be ever more intertwined.
As a development institution, the World Bank has been involved in addressing environmental issues for
many years. This Environment Strategy draws on lessons learned on the basis of the Operations Evaluation
Department's (OED's) environmental review {OED 2001); adjusts to a changing global context; and reaffirms the Bank's commitment to environmental sustainability. It sets a direction for the World Bank's
future actions in the environment area for the longer term, as well as specific actions for the next five years.
It emphasizes the need to tailor our assistance according to differences in institutional development and
environmental management capacity in client countries. It is based on an understanding that sustainable

development, built on a balance of economic growth, social cohesion, and environmental protection, is
fundamental to the Bank's core objective of lasting poverty alleviation—a link that has been recognized by
international environmental conventions and in the International Development Goals (IDGs) set forth in
the United Nations Millennium Declaration in 2000,

ENVIRONMENT AS INTEGRAL PART OF THE DEVELOPMENT CHALLENGE
Many view concern over environmental issues as a rich-country luxury. It is not. Natural and man-made
environmental resources from agro- to freshwater, forest, and marine ecosystems represent an important
xvll


Making Sustainable Commitments — An Environment Strategy for the World Bank
element of countries' wealth, and provide a foun-

tivity is considered, they may disappear. Overfish-

dation for economic growth and livelihoods.

ing, for example, may temporarily improve people's
income, making conservation seem costly. But these

People in most developing countries are increas-

costs will pay off if they help avoid the collapse of

ingly concerned about their environment. They are

fisheries, which deprives people of both nutrition

particularly worried about the impacts of pollution

and income in the longer term. Similarly, the con-

and natural resource degradation on their health

siderable social costs of pollution can justify the

and on prospects for sustainable growth. While

costs of measures that prevent and mitigate it.

industrial countries have successfully addressed
many of the environmental problems that directly

While countries and societies may differ in their

affect people's livelihoods, environmental factors

choices about environmental priorities and other

continue to impose considerable human, economic,

aspects of sustainable development, these choices

and social costs in many developing countries,

have to be informed by good analysis and the par-

threatening the foundation for sustainable devel-

ticipation of the key stakeholders affected by them,

opment. The economic costs of environmental deg-

The challenge for the World Bank and other insti-

radation have been estimated at 4 to 8 percent of

tutions concerned with development assistance is

gross domestic product (GDP) annually in many

to work with clients to develop and implement

developing countries.

policies, programs, and investments that not only
support continued economic development but also:

Distorted policies, governance structures, institu-

Distribute the gains of development in a more

tional frameworks, incentives, and pressures to ex-

equitable manner, with a particular focus on re-

port natural resources may favor a short-term fo-

ducing poverty

cus, making programs with a long-term horizon

Avoid sacrificing the interests of future genera-

difficult to implement. The "grow now, clean up

tions to meet the needs of the current genera-

later" approach to development, however, imposes

tion

very high costs—costs that could be avoided by

• Build on the emerging global consensus that

adopting policies and programs that prevent seri-

natural resources and other valuable environ-

ous environmental damage.

mental assets must be managed sustainably.

Although there are many "win-win" opportunities

This Strategy discusses how we will support our

to simultaneously achieve economic, environmen-

clients and partners as they face these challenges.

tal, and social objectives, balancing these aspects of
development through everyday decisions inevitably involves value judgments and societal choices,

OUR RECORD SO FAR

which often require difficult tradeoffs. These

During the past decades, the World Bank has de-

tradeoffs—among generations, social groups, and

veloped safeguard policies, procedures, and ex-

countries—influence what different people see as

amples of good practice for addressing the envi-

sustainable development. These tradeoffs may only

ronmental and social aspects of our projects, and

be apparent—that is, when the time dimension is

these have become internationally accepted refer-

added and the full social cost of the economic ac-

ences and models. We have helped client countries

XVIII


Executive Summary
develop National Environmental Action Plans

tives, designing complex interventions, and tar-

(NEAPs) and strengthen their systems of environ-

geting tight deadlines, without giving sufficient

mental regulation through institutional develop-

attention to the complexity and practicalities of

ment projects. We have built up a portfolio of in-

implementation and the competing pressures in

vestments devoted to environmental issues and have

our client countries.

made considerable progress in "mainstreaming"

• The environment has yet to be fully

environmental objectives into our sectoral lending

mainstreamed into the Bank's operations. Al-

programs. As an implementing agency for the fi-

though Bank professionals in general are aware

nancing mechanisms of international environmen-

of the importance of environmental issues, they

tal conventions and their protocols, specifically the

often see them as a self-standing agenda and not

Global Environment Facility (GEF) and the Mul-

as an element of their core task of supporting

tilateral Fund for the Montreal Protocol (MFMP),

development and poverty reduction. Environ-

we have taken on a key role in dealing with threats
to the global environmental commons, such as climate change, desertification, biodiversity loss, the
depletion of the ozone layer, and the degradation
of international waters.

mental professionals have an ongoing challenge

to make the "business case" for sustainable development.
Similarly, awareness of the importance of environmental issues is still evolving in many of our
client countries. While they increasingly recog-

Our clients, often with our help, have made significant progress. They have introduced environmental policies, regulations, and institutions; implemented projects and programs to improve environmental conditions; and heightened the public

nize that environmental concerns are important
for making development sustainable, our clients
face difficult choices in allocating scarce resources among pressing development needs, and
environment often has a hard time competing
with other goals.

awareness of environmental issues. Environment is
now clearly a significant concern on peoples' minds,
and it is on the political agenda in many of our
client countries. Nevertheless, as was pointed out
in the OED's environment review, the Bank has

We have learned many lessons about complying
with safeguard policies, preparing and implementing environmental projects, and undertaking policy
dialogue. We have learned that in order to be ef-

been only partially successful in supporting envi-

fective, we have to demonstrate the benefits of en-

ronmental sustainability in client countries. Our

vironmental improvements and the links between

achievements overall have fallen short of our own

environmental and development objectives; listen

high expectations and those of others, even bear-

to people and respond to our clients' aspirations

ing in mind that by itself, the Bank can never stem

and concerns; and assist with building awareness,

the tide of global environmental change. Several

commitment, and capacity to help clients face their

broad factors have constrained the Bank's effective-

development and environmental challenges. Our

ness in promoting sustainable development:

Strategy applies these lessons to our future efforts.

Our commitments have sometimes outpaced our
and our clients' capacity to deliver. We have been

Our Strategy also responds to a changing global

overoptimistic in setting environmental objec-

context—globalization, rapid technological
xix


Making Sustainable Commitments — An Environment Strategy for the World Bank
progress, the changing roles of private and public

clients address the environmental challenges of de-

sectors, and civil society—and to evolving new ap-

velopment. In keeping with the World Bank's mis-

proaches to development assistance—program-

sion of reducing poverty within a framework of eco-

matic, as well as bottom-up community-based in-

nomic development, the Environment Strategy

struments. The Bank has reaffirmed its commit-

gives priority to issues where the links between

ment to poverty reduction and the IDGs and has

poverty and the environment are particularly strong,

adopted the Comprehensive Development Framework (CDF), which emphasizes a long-term, holistic, client-focused, and participatory approach to
development assistance. To respond to these
changes, we have been adjusting our lending and
nonlending instruments including those that support community-driven development, poverty reduction strategies and long-term development programs. Our work on the environment must adapt

Therefore, the Strategy puts the environmental
challenge into a local perspective, focusing on
people in client countries and on the way environmental conditions and resources affect them. The
Strategy's overall framework, its objectives, and the
necessary adjustments in Bank instruments and
actions are outlined in matrix form in table 1 at the
end of this summary.

to these changing conditions.
Our objectives

THE STRATEGIC FRAMEWORK

In support of our goal, the Strategy sets three in-

The Bank's mission of lasting poverty reduction

terrelated objectives: improving people's quality of

requires that development be sustainable. This

life, improving the prospects for and the quality of

means that proper attention has to be paid to the

growth, and protecting the quality of the regional

social and environmental aspects of development

and global environmental commons.

challenges, as stated in our mission statement: "To
fight poverty with passion and professionalism for last-

Improving the quality of life. We will focus on three

ing results. To help people help themselves and their

broad areas where environment, quality of life, and

environment by providing resources, sharing knowl-

poverty reduction are strongly interlinked:

edge, building capacity, and forging partnerships in the
public and private sectors... "
The goal of the Environment Strategy, therefore,
is to promote environmental improvements as a
fundamental element of development and poverty
reduction strategies and actions. The Bank will do
this by helping our client countries set and address

Enhancing livelihoods. Because poor people often depend heavily on the productivity and environmental services of ecosystems and natural
resources, the World Bank will help improve the
sustainable management and protection of these

resources. This includes helping communities
sustainably manage natural resources such as

their environmental priorities and challenges, in-

land, water, and forests; helping clarify and es-

cluding those of a regional or global nature; and by

tablish property rights; strengthening or reform-

supporting sustainability through its operations.

ing incentive systems that influence how resources are used; and building the analytical base

This Environment Strategy outlines the priority

and institutional capacity to improve natural

actions the World Bank plans to take to help its

resource management.

xx


Executive Summary
Preventing and reducing environmental health

international competitiveness of our client coun-

risks. Environmental factors, such as unsafe wa-

tries. Recognizing the important changes in the

ter and air pollution, are major contributors to

respective roles of the public and private sectors,

the total burden of disease and impose signifi-

our interventions will focus on promoting better

cant economic costs, particularly for poor people.

policy, regulatory, and institutional frameworks for

Our interventions will focus on cost-effective

sustainable environmental management, on the one

measures to prevent and reduce environmental

hand, and harnessing the role of the private sector

health risks through reducing people's exposure

to become an engine for sustainable development,

to indoor and urban air pollution, waterborne

diseases, and toxic chemicals. Measures include
improved access to cleaner commercial fuels by
households, the phaseout of leaded gasoline and
the introduction of cleaner transport fuels, and
improved design and coverage of safe water and
sanitation services to increase health benefits.
• Reducing people's vulnerability to environmental

on the other:
• Supporting policy, regulatory, and institutional
frameworks for sustainable environmental management. In cooperation with client countries and
development partners, we will help client countries (a) strengthen their environmental policy,
regulatory, and institutional frameworks with a
special focus on local environmental institutions;
(b) strengthen environmental assessment sys-

hazards. Millions of poor people are vulnerable

tems and practices; (c) reinforce the positive role

to natural disasters and environmental hazards,

of markets and the environmental benefits of

a threat that is expected to increase as a result of

sectoral and macroeconomic reforms; and (d)

climate change. Our interventions will aim to

support good governance, institutions for col-

reduce this vulnerability and the cost of natural

lective action, increased transparency, access to

disasters by supporting upland resource manage-

environmental information, and public partici-

ment and payments for environmental services;

pation in decisionmaking.

assessing the impacts of natural disasters; im-

Supporting sustainable private sector development.

proving weather forecasting and the dissemina-

We will assist in harnessing the role of markets

tion of weather-related information; providing

and the private sector in promoting sustainable

information to communities about the risks they

development by helping clients introduce envi-

face; and stabilizing hillsides and coastal zones.

ronmental regulations that allow flexible market mechanisms to achieve environmental ob-

Improving the quality of growth. It is not enough to
improve the quality of people's lives today; we have
to ensure that short-term gains do not come at the
expense of constrained opportunities for future de-

jectives and by helping to create markets for environmental goods and services. As part of the
World Bank Group, IFC and MIGA will promote, through their investments and guarantees,
respectively, environmental and social responsi-

velopment. Sustainable environmental manage-

bility and good environmental management in

ment, therefore, is an essential condition for long-

the private sector. We will facilitate partnerships

term economic growth and lasting improvements

between the public and private sectors and civil

in people's well-being. There is also increasing evi-

society to resolve environmentally sensitive is-

dence that attention to the environmental and so-

sues and to agree on benchmarks for good envi-

cial aspects of business development increases the

ronmental management.
XXI


Making Sustainable Commitments — An Environment Strategy for the World Bank
Protecting the quality of the regional and global com-

As implementing agency of the GEF and MFMP,

mons. The search for solutions to sustainability

we remain fully committed to our mandate to help

needs to go beyond individual countries. The dete-

client countries address the objectives of interna-

riorating quality of the regional and global com-

tional environmental conventions and associated

mons—climate change; the degradation of land,

protocols including the conventions on climate

forests, water resources, and biodiversity—threat-

change, ozone, and biodiversity. We will engage in

ens many developing countries. They face poten-

these and other partnerships that help facilitate

tial conflicts over shared resources, such as scarce

technical assistance, the transfer of financial re-

water resources and fertile land. They are also ex-

sources and environmentally friendly technologies,

pected to suffer most of the worst effects of cli-

and the development of markets for environmental

mate change despite the fact that over 75 percent

goods and services.

of the cumulative greenhouse gas (GHG) emissions
have been emitted by industrialized countries over
the past 150 years, and per capita GHG emissions
today are still five times less in developing than in
industrialized countries.

Our toolkit
Environment is not a sector or an add-on. It has
been long recognized that environmental considerations have to be reflected from the early stages
of decisionmaking processes. The Environment

A poverty-focused environmental agenda will require an increased emphasis on the local aspects of
global environmental challenges, on reducing the

Strategy emphasizes the importance of continuing
our efforts to work with clients to integrate, or
mainstream, environment into investments, pro-

impacts of the degradation of the global environ-

grams, sector strategies, and policy dialogue mind-

mental commons on developing countries, and on

ful of the institutional requirements and capacity

interventions that are carefully targeted to benefit

constraints. This translates into actions through-

developing countries and local communities. There-

out the Bank. The Strategy stresses improvements

fore, in addressing global challenges, we will apply

in three key areas:

the following key principles:

1. Strengthening analytical and advisory activities—

• Focus on the positive linkages between poverty

the foundation for defining strategic environ-

reduction and environmental protection

mental priorities and informing policy dialogue

Focus first on local environmental benefits, and

and decisions on projects and programs. A sys-

build on overlaps with regional and global ben-

tematic approach is needed to ensure that envi-

efits

ronmental considerations enter the development

Address the vulnerability and adaptation needs

planning process at an early stage by taking a

of developing countries

multisectoral and long-term view of develop-

• Facilitate transfer of financial resources to cli-

ment.

ent countries to help them meet the costs of gen-

• Country-level environmental analysis will

erating global and environmental benefits not

build on NEAPs and other country-led en-

matched by national benefits

vironmental work, as well as analyses under-

• Stimulate markets for global environmental public goods.
XXII

taken by the Bank and development partners
to assess environmental trends and priorities,


Executive Summary
policies, and institutional capacity in man-

Improving the design and performance of envi-

aging environmental resources and risks.

ronmentalprojects and components. Our expe-

Country-level environmental analysis work

rience has shown that environmental projects

will become part of our diagnostic tools that

or project components work best when they

inform country dialogue, poverty reduction

are based on a good understanding of the

strategies, and country assistance strategies

causes of the problem, are expected to have a

(CASs).

major impact, and have the commitment and

• Strategic—sectoral, regional, and policy-

capacity of local stakeholders, so that project

focused—environmental assessments (SEAs)

outcomes are sustainable after the project is

will be used more systematically as analytical

over. We will continue to ensure that the les-

tools through a structured learning program

sons from our growing experience in envi-

involving clients and partners for addressing

ronmental projects are disseminated and ap-

complex cross-sectoral environmental issues
and for integrating environment at early
stages in sectoral decisionmaking and planning process.
• In our advisory activities, we will respond to
client demand, priorities, and capabilities and
build on the Bank's comparative advantage
in working across sectors and throughout the
world to transfer good practices in policy and
technical issues. We will help clients set and
address their own environmental priorities
and improve their environmental management capacity. We will pay particular attention to poverty-environment linkages, the
economic valuation of environmental resources and of their degradation, and environmental policy analysis.

plied to new projects.

Coordinating investments and policy reforms.
Some investment projects are unlikely to
bring lasting results in a distorted policy environment. At the same time, individual investment projects may lead to a dialogue on
policy reform. We will consider carefully the
proper sequencing of policy reform efforts
and specific investments in each case.
Applying a location-specific focus. Because the
linkages between natural resource management and poverty are complex and locationspecific and because implementation capacity varies, efforts to integrate environmental
considerations into investment projects, adjustment lending, and programs will clearly
vary from country to country. We will rely

2. Addressing environmentalpriorities through project

on enhanced analytical work and dialogue

and program design. Addressing environmental

with clients to assess the best location-spe-

priorities that affect the long-term sustainability

cific interventions in priority countries.

of development requires a proactive approach.

Supporting capacity development. Capacity-

Some environmental problems are best addressed

building efforts will be targeted, based on cli-

by dedicated projects, others by integrating en-

ent demand, and tailored to existing environ-

vironmental activities into sectoral projects and

mental regulatory and institutional frame-

programs. Depending on client demand and cir-

work. We will collaborate with other devel-

cumstances, we will work on both fronts with

opment partners involved in environmental

attention to the following areas;

capacity development to improve overall dexxiii


Making Sustainable Commitments — An Environment Strategy for the World Bank
velopment effectiveness. In a few cases where

Addressing short-term priorities. Our imme-

strong commitment exists in the country to

diate priority is to strengthen compliance

undertake environmental institutional re-

with the safeguard policies, establish an in-

form, we will apply a programmatic approach.

tegrated safeguard system, and improve re-

• Enhancing the environmental outcome of ad-

sults on the ground. To this end, we will (a)

justment lending. Considering the importance

continue to strengthen the Bank's internal

of the policy framework to environmental

review, monitoring, and tracking system to

sustainability, we will pay special attention

improve corporate consistency and compli-

to reinforcing the positive and minimizing

ance in applying the policies; (b) integrate

potentially negative environmental outcomes.

environmental, social, and legal policies into

Strengthened analytical work will inform
policy dialogue, help identify environmental
trends and resources at threat, assess country
institutional capacity to manage resources
sustainably, and prepare guidelines for good
practice. Systematic upstream reviews and
monitoring will help to ensure that environmental concerns are appropriately integrated
into the changing lending profile. These issues will be further elaborated during the
update and conversion of the Operational
Directive on adjustment lending.

3. Improving the safeguard system. The Bank's safeguard system is an essential tool for integrating
environmental and social concerns into development policies, programs, and projects by providing minimum requirements that all Banksupported operations must meet. We will continue improving the quality and consistency of
the application of our safeguard policies with
increased attention to results on the ground,

an integrated safeguard compliance system
including the use of the Integrated Safeguard
Data Sheet (ISDS); and (c) help improve incountry capacity for safeguard implementation through enhanced training and technical assistance.
Reforming the safeguard system. In parallel, we
will (a) respond to new challenges posed by a
greater variety of lending instruments including programmatic lending and projects
implemented at the grassroot levels; (b) help
move safeguard considerations earlier into the
decisionmaking process; (c) work with clients and partners to coordinate and harmonize good practice; and (d) focus increasingly
on client ownership, capacity and safeguard
systems. We will prepare a medium-term plan

for reforming the safeguard system to adapt
to a changing lending profile, direct more
attention to clients' own capacity for good
environmental management, and develop a

where many issues are intertwined. Improving

risk management system that takes into ac-

the safeguard system is a dynamic process that

count not only the risk characteristics of

involves both the Bank and its clients in a series

projects but also the capacity of countries to

of actions designed to create better linkages be-

comply with safeguards. Over the long term,

tween policies and their application in projects

the Bank seeks to develop a single unified

and programs. We will follow a two-pronged

safeguard policy to provide a consistent ap-

approach:

proach.

XXIV