matters AT T HE W ORL D The World Bank Group B A N K and the Environment Fiscal 1996 1 matters AT T HE W ORL D The World Bank Group B T T HNK and the Environment Fiscal 1996 Managers of the World Bank Group's C 1997 The International Bank for Reconstruction Environment Program and Development/The World Bank World Bank Environment Department: 1818 H Street N.W. Director: Andrew Steer Sr. Science Advisor:O Sr ioen asor A&s Washington, D.C. 20433, U.S.A. Robert Watson Sr. Environmental Advisor: 5 - Ken Newcombe All rights reserved Sr. Social Advisor: Michael Cernea Manufactured in the United States of America lend, Water & Natural Habitats, First printing April 1997 ENVLW Chief: Colin Rees This report has been prepared as a study by the World Bank's staff, and the judgments made Global Environment (includingheind ncsarl GEF and MP operations herein do not necessarily reflect the views of the Board of Executive Directors or of the coordination) EVGC countries they represent. The boundaries, colors, denominations, and other information shown Chief: Lars Videaus thyTecloslnkthrifrato hw on any map in this volume do not imply on the part of the World Bank any judgment on the I SoCial Poicy, ENvSP legal status of any territory or the endorsement or acceptance of such boundaries. Pollution & Environmental Economics, ENVPE The World Bank Group includes the International Bank for Reconstruction and Development -Technology and (IBRD) and the International Development Association (IDA), commonly known as the World Pollution Policy Chief: Richard Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Ackermann Agency (MIGA). The document reflects the environmental agendas for the entire Bank Group. -Indicators and Environmental Valuation The text is printed on recycled paper that exceeds the requirements of the 1988 guidelines of Chief: John Dixonprnepaerquem tso the U.S. Environmental Protection Agency, section 6002 of the Resource Conservation Environmental Law Unit, LEGEN: Recovery Act. The paper stock contains at least 50 percent recovered waste paper material as David Freestone Rcvr c.Tepprsokcnan tlat5 ecn eoee at ae aeila Environmental Research, PRDEI: calculated by fiber content, of which at least 10 percent of the total fiber is postconsumer Zmarak Shalizi, David Wheeler waste, and 20 to 50 percent of the fiber has been deinked. Chiefs of Regional Units: Asia: Maritta Koch-Weser Africa: Cynthia Cook Europe & Central Asia/ Middle East & N. Africa: Anand Seth Latin America & the Carib.:William Partridge International Finance Corporation Printed on Recycled Paper Technical & Environment Department: Director: Andreas Raczynski Environment Division Manager: Martyn Riddle ISBN 0-8213-3579-0 ISSN 1014-8132 Cover: Fishermen cast nets at sunrise on the Ubangui River on the Zaire-Central Africa Republic border. Photograph by Maurice Asseo contents . Foreword 1 Reflections 3 Maurice Strong Overview 4 Regional Reviews Africa 8 Support for sustainable resource management in the region has become an imperative, as it faces the world's fastest population growth and increasing reliance on its natural resource base. . East Asia & the Pacific and South Asia 12 Regional activities reflect a commitment to tackle widespread urban pollution and natural resource degradation, the results of economic growth without equitable environmental stewardship. Europe & Central Asia 16 As vehicle pollution increases and previously well maintained infrastructure deteriorates, the region is working to maintain the environmental improvements it has achieved since the former Soviet Union's break-up. Latin America & the Caribbean 20 In the face of rapid urbanization, the region is working to manage its rich biodiversity and keep pace with environmental infrastructure needs. Middle East & North Africa 24 The Bank is helping the region implement its environmental strategy, strengthening environmental institutions and public participation, intensifying management of scarce resources, and arresting pollution. International Finance Corporation 28 IFC's commitment to the environment is evident from its efforts to ensure due diligence, promote social and community development, and recognize environment as a business opportunity. Thematic Reviews Supporting the Biodiversity Convention 32 Mainstreaming biodiversity involves complementary objectives: allowing access to valuable resources while maintaining biodiversity Stratospheric Ozone Depletion and Climate Change 34 Progress towards phasing out ozone depleting substances is encouraging-, tackling the complex causes of climate change requires innovative approaches. contents Measuring and Valuing the Environment 36 Great progress has been made to develop environmental indicators which measure environmental changes, the effects of policy reforms and the value of environmental resources. Legal Dimensions of Environmental Management 38 Recognizing the importance of a sound legal basis for environmental management, the Bank is working to improve national and international legal and regulatory frameworks,. Strengthening Partnerships for the Environment 40 The Bank is committed to using collaborative approaches to environmental management, working with such partners as NGOs, bilaterals, and the private sector. Addressing the Pollution Challenge 42 As the paradigm of pollution control shifts toward environmental management, the Bank's support for urban environment and pollution initiatives has also evolved. The Environment as a Business Opportunity 44 Helping businesses overcome market barriers to environmental products and services results in increased global environmental benefits. Toward Social Sustainability 46 The Bank has increased its emphasis on social assessment and participation to support the emerging concept of social sustainability. Strategically Managing the World's Water 48 Support continues for the four complementary shifts in water resources management underpinning the Bank's Water Resources Management Policy. Publications so Appendix 53 World Bank Group Environmental Projects, July 1986-June 1996 Foreword Does the environment really matter for development? Absolutely. We are all equal stakeholders in the drive toward environmentally and socially sustainable economic development. This work is a daunting task. Since the 1992 Rio Earth Summit, the World Bank has carried out its commitment to the principles acknowledged in Rio through an environmental agenda which has grown exponentially. What started as a small unit of professionals looking at the envi- ronmental implications of our work has grown to a staff of well over 300 specialists whose job it is to integrate environmental and social sustainability into all aspects of the Bank's ongoing operations. Because of our large base of development tools, policies and procedures for economic development, we are able to carry out this new commitment with an ever-growing bank of environmental and social tools and good practices. Each year since the Earth Summit, we have documented the Bank's agenda for environmental and social sustainability in our Annual Report on the Environment. The fiscal 1995 report, Mainstreaming the Environment (October 1995), pointed out the Bank's movement into a 'third generation' of environmen- tal reforms, which called for a more deliberate and early integration of environmental work into all Bank work, in our growing portfolio of environmental projects, in our regular lending portfolio, and in all of our non-lending activities. It also called for an emphasis on on-the-ground implementation and a stronger focus on people and social structures to find solutions and make development more sustainable. This year, in our continuing effort to 'mainstream' our findings and best practices by making our work more accessible and applicable to Bank task managers, our client countries, our partners and the environ- mental community at large, we began a new publication called Environment Matters. This magazine, to be issued three times a year, folds together a number of separate publications, and is designed to be more participatory in its creation and more accessible in the information which it shares. The fall issue of the triannual magazine has now replaced the old Annual Report and serves as a more informal, more partici- patory annual review. It is issued in tandem with a descriptive matrix of environmental projects in the Bank Group's portfolio. This publication is the compendium of the fall 1996 issue of Environment Matters, containing the annual review for fiscal 1996 (July 1995-June 1996) and a 10-year accounting of the project portfolio in a pro- ject matrix (Appendix). The annual review portion of the publication is divided into four sections: an overview, a series of regional reviews, a set of reviews on a spectrum of environmental and social issues, and a brief scan of relevant publications. In addition, we have included the column called Reflections writ- ten by Maurice Strong at our invitation, which sets the context for the Bank's work in the larger global agenda drawn up in Rio in 1992. The magazine is available through the Environment Department and on the World Wide Web. Andrew Steer Director Environment Department The World Bank ·－--- --& -- ------ --- - - - -. - - - - - - →’ · · & & ■ · - r 매·‘··떼뱃뻐‘盼∼ 빔6 --―느―-----―∼‘---!-.－닙 Nations General Assembly will review progress towards implementing the agreements his year, on the fifth anniversary of the Earth Summit, a special session of the United reached there, focussing particularly on Agenda 21. In March, the Rio +5 Assembly in Rio de Janeiro will add the perspectives of a broad cross section of civil society. After only five years it may be too early to pronounce final judgement on the ultimate results of the Earth Summit. After all, Rio called for fundamental changes in our economic life and in the behaviour of individuals, corporations and nations. And fiindamental change does not come quickly or easily. At this point it can be said that in many respects the response to Rio has been disappointing. Offi- by Maurice Strong cial development assistance has declined. Despite progress in some areas, environmental deteriora- Secretary- General, 1992 tion continues while the unsustainable practices which give rise to it persist. Rio Earth Summit Senior Advisor to the However, there is also some good news. Developing countries have taken important steps to inte- World Bank President grate sustainable development into their own national development policies and practices. Many have adopted national strategies based on Rio's Agenda 21. China is an example, as is Costa Rica, which also took the lead in establishing a Central American Alliance for Sustainable Development. But it is at the level of civil society that some of the most promising progress has been made - much of it at the grass roots and community levels. More than 1500 cities and towns around the world have adopted their own Agenda 21. National Councils for Sustainable Development or equivalent bodies now exist in more than 100 countries to foster consultation and collaboration between civil society and governments. For me the single most important and encouraging development since Rio has been the emergence of the World Bank under President Jim Wolfensohn as a leading champion of sustainable develop- ment. Not only has the Bank become the single largest source of funding for environmental pro- grams and projects, it is integrating environmental and social dimensions into all of its operations. The World Bank is playing a key role in tackling global issues like climate change and regional issues like marine pollution and it is mounting an initiative to establish sustainable development guidelines for private investment. These and the many other activities that will be reported in Environment Matters clearly put the World Bank at the centre of the movement towards a more sustainable way of life on our planet for which the agreements reached at the Earth Summit provide the basic blueprint. Intrinsic to this are some essential premises: for development to be sustainable, environmental and social dimensions must be integrated fully into its planning and management processes; the creation of wealth must be accompanied by the reduction of po erty, resulting in a more equitable sharing of the benefits of development; human activities must respect and maintain the integrity of the nat- ural environment and the life support systems on which all life on Earth depends. I am persuaded that the 21st century will be decisive for the human species. We are pushing to the limits this planet's capacity to support human life. This confronts us with a challenge of unprece- dented proportions; we literally must manage our own future. Although science and technology provide us with new tools which vastly lever our capacity to do this, we will not find the solutions there. It will require the application of human ingenuity, political Will and social discipline on a scale never yet achieved to ensure the kind of cooperative management on which our survival will depend. Despite the current low level of support for international institutions, these organizations will inevitably be pivotal in facilitating and supporting the collaboration that is indispensable for deal- ing with the issues that win determine our common fiiture. No organization will be more essential to this process than the World Bank. And none is doing more to prepare itself for the new dimen- sions of service to its members and the world community which will be required of it as we move into the 21st century. J POST v -r vi ~w THE YEAR IN PERSPECTIVE by Andrew Steer, Director, Environment Department Recent years have witnessed a profound change in our under- Along with other international agencies, the World Bank has standing of the links between economic development and the sought to help its client countries make development sustain- environment. The key 'propositions' of sustainable develop- able, and in the process has undergone its own 'greening.' ment-laid out in the Brundtland Commission Report in 1987 Since the Earth Summit, our capacity to deal with environ- and in Rio's Agenda 21 in 1992-were controversial at the time, mental and social concerns has risen sharply. Environmental but are now broadly accepted. Among such propositions: and social specialist staff now number over 300, and a series of operational policies on the environment have been put in place * there is a crucial and potentially positive link between eco- (seepage 39). nomic development and the environment; * the costs of inappropriate economic policies on the envi- The Bank's environmental agenda is two-fold: to support ronment are very high; countries as they seek to reform their environmental manage- * addressing environmental problems requires that poverty be ment, and to factor environmental concerns into all Bank reduced and that economic growth be guided by prices activities. which incorporate environmental values; and * environmental problems pay no respect to borders Targeted Support for the regional and global problems require regional and global actions. Environment In attempting to reconcile economic development with envi- Broad acceptance of these propositions, however, has not ronmental protection, a growing number of developing coun- assured their effective implementation. Many environmental tries are attempting to implement a 'new environmentalism' problems continue to intensify and in many countries there are that recognizes economic development and environmental sus- few grounds for optimism. Nonetheless, in a growing number tainability as partners. The Bank's President, James Wolfen- of countries, awareness is leading to action. Around 100 sohn, recently articulated the principles of the new countries have now prepared national environmental strategies, environmentalism, which are increasingly reflected in our lend- and tangible changes are apparent in about half this number. ing for enhanced environmental management (see Box, page 5). 4 "What is sustainable development orld Bank Financing for the Environment other than sound economic The Active Portfolio management, rationality, respect 12 153 for the rights of others, and 136 concern for future generations? 11 To move from vision to action 8 requires methodologies and best 0 = 6 practices for improvements in F0 measurement, proper pricing, to 4 enabling environments and participatory approaches to 5 10 development". 0 I 198S 1987 1%88 19W9 19W- 19,91 1992 '3 1139-1 1991 '9%6 Ismail Serageldin, Vice President, Fiscal Year Environmentally Sustainable Not The b*gh o-f the t-r show the sl Ie actise parrfohk I lons.:urenh.Mt.ursings Development of profectb whose prtmar oblecive s to improve enviroonenal u.ndl:.n Tr,e numberi o1 achile prolects are shown at the top ol Vhe bars The World Bank's active environmental portfolio now stands at The focus of our biodiversity projects continues to evolve $11.5 billion for 153 projects in 62 countries (see Box, page 6). from traditional protected area management to an emphasis Of this amount, $7.2 billion has been committed since the Rio on sustainable natural resource utilization, participation and Earth Summit in 1992 (seefigure), including $1.6 billion (for involvement of the private sector (see page 44). IFC's Biodi- 20 projects) in the past year. Our lending for the environment versity Enterprise Fund for Latin America, for example, will has leveraged an additional $14.5 billion from other sources, support investments in sustainable agriculture, forest manage- bringing total investment in the environment to $26 billion. ment and the use of non-timber forest products. In addition, the past year has seen the completion of landmark work on The environmental portfolio is on average currently perform- defining a biodiversity conservation strategy for Latin America ing slightly better than the Bank's overall loan portfolio, but and the Caribbean (see page 22), and completion of a draft bio- continued strong progress should not be taken for granted. diversity conservation strategy for Sub-Saharan Africa. Environmental programs, due to their cross-sectoral nature and frequent opposition from vested interests, pose complex implementation challenges, and carefiul supervision will be PRINCIPLES OF THENE W necessary. ENVIRONMENTALISM This portfolio, which is unique in size and scope, is not only As developing countries struggle to forge paths that pro- a large responsibility, it is also a rich living laboratory from vide for both prosperity for their citizens and good stew- which we and others must learn. It is vital that lessons be ardship of the environment, they are searching for new distilled, and factored into future programs. With this in approaches. Among the imperatives guiding their actions: mind, we are currently carrying out a systematic review of project and policy implementation, focusing first on natural 1. Set priorities carefully. habitat protection, pollution management and capacity 2. Go for win-win options first. building. 3. Insist on cost-effectiveness. 4. Use market incentives where feasible. Beyond National Boundaries 5. Economize on administrative/regulatory capacity. Many environmental problems need regional or global solutions. 6. Set realistic standards and enforce them. The past year marked the second meetings of the Parties to the 7. Work with, not against, the private sector. Biodiversity and Climate Change Conventions, the Tenth 8. Recogmze that local involvement is crucial. Anniversary of the Vienna Convention on Ozone Depletion, 9. Build constituencies for change. and progress towards ratifying the Desertification Convention. 10. Incorporate environment from the outset. The Bank, as an implementing agency for the Global Environ- ment Facility (GEF) and Montreal Protocol, and through its For more details, see James Wolfensohn: "The Environment regular lending, is committed to implementing these global for Sustainable Development", in Environment Strategy agreements and other regional environmental programs. America, 1995/96. 5 In the area of water resources man- agement, this year the Bank supported "But even as we seek to mainstream issues of sustainability in all we do, regional cooperation in water manage- we need to acknowledge frankly that the transition is not complete. We ment in Southern Africa, and national have much to learn, and we need to be disciplined and vigilant in ensuring water strategies in Tanzania, Kenya that stated policies and intentions are actually applied on the ground" and Zimbabwe. In Europe and Cen- tral Asia, progress was made in imple- Caio Koch-Weser, Managing Director, The World Bank menting five major international Address to OECD Environment Ministers, February 1996. waters programs in which the Bank plays a coordinating or supporting role: the Baltic, Black, Mediterranean and The past year also saw major mile- A simple - and rough - environmen- Aral Seas, and the Danube River stones in our GEF and MP ozone tal accounting of the Bank's total lend- Basin. programs. We supported the Russian ing since Rio is presented in Table 1. Federation and several Eastern Euro- Four types of projects are identified. The two main thrusts of our work in the pean countries in phasing out ODS First are those specifically targeted area of climate change were energy effi- and helped China to introduce a com- towards improving the environment ciency and renewable energy (seepage prehensive sectoral approach to ODS (discussed above). Second, are those 35). Examples of the former are the phase-out, using market-based instru- that are unarguably benign to the envi- Slovenia Environment Project and the ments (seepage 34). ronment while promoting economic China Efficient Industrial Boilers Pro- development - these "win-win projects jects, which will address the enormous Greening the Entire include population, education, health, problem of dependency on obsolete and and targeted poverty reduction projects. inefficient boiler technology throughout POrtfoliO Third, are projects where real trade-offs much of Chinese industry. This year we In addition to our targeted programs for may exist between protecting the envi- also continued work on Joint Implemen- the environment, we need to ensure that ronment and promoting economic tation and embarked upon a global all Bank activities take environmental development, such as road or energy pro- warming backcasting exercise. concerns into account. jects (EA category A - see Box, page 7). Finally are all other programs - in agriculture, urban development, eco- TH0OT O I FE VR N E T LP O E T nomic adjustment, and the like - which are benign if correctly designed; The active portfolio of environmental loans can be broadly divided into three categories. without proper care, these can damage Pollution and urban environmental management projects account for 60 percent of long-term sustainability. environmental lending and 38 percent of projects. Last year, ten such loans were made for a range of issues (see page) Rural environmental projects are currently being implemented In S 41 countries. and live new projects were approved in the past year improve natural resources Smce Rio the Bank has moved aggres- management. Three new Environmental institution building projects were also approved, with sively to ensure that environmental con- the objeciives of implementing national environmental action plans or strategies. cerns are progressively factored into all Active Portfolo of Environmental Projects, as of July 1996 these categories of projects. In so doing a number of imperatives are guiding our Project focus Number of Number of World Bank Total Project Avg. size of actions. projects countries contribution (loan Cost loan or credit or credit; billions (billions of (millions of of dollars) dollars) dollars) Assessing and Mitigating Environ- P.,I1u1,-r, ail the 58 31 6£9 173 118 mental Impacts. The Bank's EA Urtan Envinere process employs a combination of rNalural RE--ourcets Rurtl 69 41 36 7..0 a5obnaino Enr.:.nmenial Mana,Emeni proactive and preventive measures to Envirornmental Inslituions 26 23 0 9 1 6 36 ensure that projects are environmentally T.:13 15, 62 ii 5 75.o 7 sound and sustainable. Preventive mea- sures are directed to recognizing and T,'picaiy includes capacty building tunds for on-lending to enlerprises and agencies. chrect nvestment in poiiu- mitigating potential harm to people lor prevenlian arid abaismenl, and suppor lcw poicy reform for Improved environmental managemenl Addressing ics-jes rangig trom qtodivrsiy conservation, managemenr of forests land and waler rescorces. and the environment. More signifi- Aimed al srengihenng ralonal and local emironmental managenent capacy cantly, EA can proactively contribute to the design and implementation of envi- in addition to the three categories of environmental projects. the Bank also implements the ronmentat ec ere Global Environment Facility (GEF and the Montreal Protocol IMP). Over the past year, $126 ronmentally sustainable projects where million was committed for 15 new GEF projects, bringing the total GEF portfolio to $506 milton it is initiated early, at a strategic level, (or 59 projects over Me four focal areas- Biodrversity, Climate Change. Ozone Depleting with public involvement, and where it is Substances (ODSi Phaseoul, and Intemational Waters. The MP portfolio also grew and now used to compare and evaluate alternative totals $214 million approved for 461 sut3projects. investments. 6 In the past year, major reviews of the ENVIRONMENTA ASSESSMENT quality and impact of EA procedures ENVIRNMENAL ASESENT were completed by the Bank's Opera- OF BANK-FINANCEDPROJECTS tions Evaluations Department and the Environment Department. They con- All Bank projects are screened for potential environmental impacts. Those cluded that while very good progress expected to have adverse impacts that may be sensitive and irreversible are has been made, the proactive potential assigned to category A and subject to a full environmental assessment. Category of EA needs to be better realized - in B projects are those whose impacts are expected to be less significant; they are analyzing alternatives, involving local subject to some environmental analysis. Category C projects are not expected to communities and ensuring implemen- have any negative environmental impacts. Among the investment projects tation of mitigation plans. We have approved over the past year, 20 (8 percent) were classified as category A; 98 (39 already started to build on these percent) were classified as category B; and the remaining 133 (53 percent) were lessons. classified as category C. Incorporating Environment into Sec- local communities dramatically IUCN, WWF and private sector orga- toral Programs. Bank sectoral programs improves the prospects for improved nizations like the World Business increasingly acknowledge that develop- environmental management. While this Council for Sustainable Development ment will only be made sustainable if has been well known for some time in are becoming central to doing business, environmental and social concerns are rural programs, it is now becoming and are already having high payoffs (see factored into the core of policymaking. equally evident in efforts to manage page 40). Operational partnerships with This year, for example, the Bank's Board pollution and waste. UN organizations are also growing, adopted a new policy paper on "Sustain- especially with UNDP, UNEP, FAO able Transport", which places poverty This year the Bank launched its Partici- and with the Secretariats of the global and environment at the center of the pation Sourcebook (see Environment environmental conventions. Bank's transport work. Similarly, the Matters, Summer '96 Issue), a best prac- Bank's draft action plan to revitalize tice guide. We now need to make par- An important example this year has work on agriculture and rural develop- ticipatory approaches and active been the launch of the Global Water ment centers on social and environmen- involvement of civil society the norm in Partnership in August 1996. Initiated tal concerns (see page 51). Bank-supported activities. As part of by the Bank, UJNDP and the Swedish this effort, social assessments are being International Development Agency, the More important than statements of pol- undertaken on a growing number of GWP aims to assist local, national and icy is impact on the ground. Here, real projects (60 in the past 18 months) and regional authorities to implement change is becoming Agenda 21 principles of water manage- apparent, albeit slowly. In Table 1. World Bank Lending since Rio - A Simple Accounting ment. The structure of the GWP builds energy for example, World Bank Commitments, Fiscal Years 93-96 on the successful model of the Consulta- Bank-supported projects Type of Ildng Bilions cT Dolars Percentage tive Group on International Agricultural increasingly integrate Research (CGIAR), a structured prob- demand/supply-side effi- Total lending 87.0 100% lem-solving program with independent ciency and cleaner tech- 24nnist2 28. professional leadership, flexible, non- nologies -often with the Calegory A Prolects 160 18a' bureaucratic administrative structure, involvement of the pri- Al alwr Iend, 39e and strong involvement of NGOs, acad- vate sector - and usually See companion volume to ths mag3ane for a listing of environmental emics, and the private sector. include components to prrAecl% build environmental Building Capacity for the Task. Incor- management capacity in over the past year NGO "liaison offi- porating environmental concerns into all Ministries and utilities. Similarly, much cers" have been recruited at many of the development activities requires a contin- more attention is being given to Bank's resident offices. uous upgrading of technical skills and improved land and water management attitudes. This is true within the World in rural projects. Building and Strengthening Partner- Bank, where we are currently overhaul- ships. The Bank's primary partners are ing internal training programs and iden- Involving Local Citizens. Ensuring the governments and citizens of the tifying skills gaps. And it is true in our that stakeholders are involved in the developing countries we serve. But we client countries, where we are sharply design and implementation of projects, are most effective when we work with expanding support for training and and that social and cultural concerns are other partners who are sometimes bet- awareness-raising programs through the addressed is vital to the success of all ter placed to do innovative environmen- Economic Development Institute (EDI) that we are trying to do. There is now tal and social work. Strategic and our project work. compelling evidence that involvement of partnerships with groups such as the 7 Africa ub-Saharan Africa depends influencing migration toward a bet- l more on its environmental ter population distribution, espe- resource base for its economic cially in sensitive areas; A and social needs than any * making urbanization sustainable by Angola Ma-a other region in the world. But improving planning and services; Benin Mal with the natural resource base seriously * managing energy, water, and other Botswana Ma3untania declining, the entire region, rural and natural resources in an integrated Burkina Fa- launtrus urban, is being profoundly affected. fashion; and Burundi Mozambique * hastening Africa's development of Camerocon Namibia Two-thirds of the region's people live modern education, information, and Cape Verde Niger in rural areas and depend primarily on communication systems. Central Afrean Rep Nigeria agriculture and other natural resources Chad Rwanda for income; to them, the region's severe This last fiscal year, the Bank's regional Comoros Sao Tome & environmental problems like soil ero- team focused on meeting these chal- Congo Princie sion and declining soil fertility, defor- lenges by integrating the environment Cole dIvoire Senegal estation, pollution of water supplies, more fully into its development work. Dliboub Seychelles and biodiversity loss are everyday, real In the region's environmental portfolio, Equatorial Guinea Sierra Leone and critical concerns. projects focused on helping countries Eritrea SYmalia increase their environmental manage- Ethopia South Africa With the world's fastest growing popu- ment capacity, especially through GabWn Sudan lation, averaging about 3% a year, the National Environmental Action Plans Gambia Swaziland region will be home to more than a bil- (NEAPs) and Environmental Support Ghana Tani3nia lion people by the year 2025. With Programs (ESPs). In the regular Gu&nea Togo rampant migration and urbanization, investment portfolio, the region helped Guinea Bis5au Uganda an estimated 700 million of these peo- integrate environmental components Kenfa Zaire ple will be living in urban areas, facing into sectors like agriculture, infrastruc- Lesolho Zarribia health consequences which occur if ture, urban management and trans- Liberia Zimbabwe infrastructure and services fail to keep portation, and helped find Madagascar pace with urban growth. environmental solutions which move beyond national boundaries. Meeting the Challenges Sustainable development in this rapidly The Environmental Project changing region has become an impera- Portfolio tive, and must take place in the complex As of today, 31 active Bank projects in context of diverse and changing ecosys- Sub-Saharan Africa (in addition to 10 .Items, political transitions and evolution GEF projects) deal exclusively with toward market economies. Last August, environmental issues. The portfolio's the Bank's regional team collaborated natural resource management projects with a broad spectrum of participants focus on forest and wildlife resource - from African countries to develop management, and sustainable manage- Toward Environmentally Sustainable ment of agricultural lands or fisheries; Development in Sub-Saharan Africa-A its institutional projects support devel- World Bank Perspective, an agenda for oping environmental management action which builds the Bank's assis- capacity through NEAPs and ESPs; tance strategy around the region's major urban environmental management pro- environmental challenges: jects control the environmental and . .public health issues associated with * achieving food security through sus- water and sanitation in cities such as c tainable agricultural intensification; Abidjan and Lome; and its energy effi- facilitating a demographic transition ciency projects address efficient fuel- a L _to a more stable population level; wood use. The Bank's overall 8 Environment Projects Active During FY96 Cameroon, Mali, Senegal and Zim- projects which are environmentally and (S million) babwe made good progress toward socially as well as economically sustain- Global Eny. (GEF) finalizing theirs. The countries have able, supplemented their borrowing (10 projects) prepared these NEAPs through partic- with improved environmental manage- ipatory processes involving a wide ment training. Pollution & range of stakeholders, including envi- Urb. Eny. Mgt. (6 projects) ronmental and other ministries, This year, the Eritrea Community 186 wildlife service organizations, NGOs, Development Fund Project will finance Natural ResJ1 nsdttial and community-based organizations. community-based sub-projects to Rural Env. Mgt. po Out of the region's 48 countries, 26 improve poor households' income-gen- S421 have now completed NEAPs. erating capacity, such as environmental conservation and rehabilitation activities The Bank also helps countries imple- like check-dams, hillside terraces and ment new or updated NEAPs in the tree planting in areas affected by soil IBRDIDA=$715 million; GEF=$49 million form of ESPs through non-lending erosion and deforestation. The Guinea activities such as policy and legislative National Agricultural Services Project contribution to these projects is reforms, training and technical advice. aims to improve the Ministry of Agri- approximately $715 million out of a Although these projects have a 5-10 culture's capacity to arrest environmental total project cost of $1.3 billion. year time frame, they support programs degradation and strengthen agricultural to be implemented over a longer extension's adoption of sustainable tech- This year, the region's environmental period, allowing time to identify suc- nologies and approaches. The Guinea portfolio has expanded to include two cessful activities and build up institu- Mining Sector Investment Promotion new projects, in Niger and Uganda. tional capacity. Zambia and Malawi are Project aims to improve mining-related The Niger Natural Resources Man- currently preparing ESPs. environmental laws and regulations and agement Project is designed to encour- to protect water resources from pollution age sustainable agricultural production Environmental Components in caused by mining. The Madagascar and growth while improving rural liv- the Investment Portfolio Energy Sector Development Project is ing conditions. The project will also In the past year, the region made great creating a program for energy conserva- address building capacity for environ- progress in building environmental tion which includes pilot projects in mental management through improved national policies and strategies, strengthening institutions and, at a By the year 2000, nearly 300 million Africans will live in a water-scarce local level, training rural communities environment. About 65% of rural inhabitants and one-fourth of people in cities and funding for small resource manage- ment projects. The Uganda Environ- are now Wthout adequate water; 73% of the rural and 430. of the urban mental Management Project supports population are without proper sanitation. The region's forests also continue to the first 5-year phase of a longer-term program to build capacity for environ- be non-sustainably exploited. The threat of deforestation during the next mental management at the national, century extends to massive ecosystems like the Congo Basin primary forest, district, and community levels through distitnan comnt l throgh which makes up over 90% of the remaining primary forests in Sub-Saharan a National Environmental Manage- ment Authority, and to initiate a Africa. process in which communities can address their local natural resource components into projects in its invest- fuelwood supplies, and will explore degradation problems. One of the key ment portfolio, particularly in exten- options for similar programs in the objectives of the first phase is to estab- sion and education projects and in transport sector. The Ghana Urban lish the building-blocks for participa- agricultural research projects through Environmental Sanitation Project aims tory environmental management. soil conservation, soil fertility manage- to provide safe and adequate water sup- ment, agro-forestry and integrated pest ply, sanitation and solid waste services in During this past fiscal year, Cote management components. Several lower income neighborhoods in the d'Ivoire completed its NEAP and countries, recognizing the need for country's major cities. Similar projects 9 The E v were also approved in Tanzania. The environmental review process Bank Total required by the Bank present an oppor- Coun"y Project Name FY (Sm) Cost tunity to improve the environmental Angola L,ti0C. Berguela Urtan Environment Rehab 92 46 59 and social context for development pro- Benin NJatural R eManagemeni . 92 1- 24 jects, particularly through sectoral or En-.-rorrrienral Management r5 a regional Environmental Assessments (EAs). In the transport sector this past Bur.,na Faso Enronental Managemer 91 17 25 year, projects being prepared in Zambia Urran En.ir,rnn1 95 37 50 and Ethiopia have included sectoral Burina Fasi We-r AInc P-Ir.t Commuraly-Based EAs, which will establish criteria for Core d l,oire Natural RenourcE arFd Wlidlife Maragemenl' 96 7 13 road construction, rehabilitation or Burund, Enerq, Se-c-r Rehabinrari.n 91 23 23 maintenance sub-projects. CumrErn B2ed.erity Cr.nreaIalon and Manage*rnnl" 95 6 12 ** Training programs in Eritrea and cAR Natur9d Retource Manaoemn r 90 19 34 Namibia continue to build EA capacity, Congo 'hildiaro,s Protcii, ani Managemenr 93 10 17 with guidance emerging from the Bank's 147 Workshop on Environmental Assess- C:le rilire Foretry S~ctr 90 81 147ment in Durban, South Africa in June Abidlan Environmental Pr,Iector 90 22 SD 1995. The success of the Bank's and Gabon FrEmirv and En.,ronrrvei 93 23 38 other donors' EA capacity building activ- Gambia Capacily BuldinQ rar Environmen(al ManagementTA 94 3 5 ities becomes clear as governments rely more and more on local consultants to Ghsna Fore-j Rescurce Managomenr 69 39 65 prepare EAs for Bank-financed projects. C.wtali Veliand4 Managereni' 93 7 8 Envronment Resource Managerrent 93 18 36 Beyond National Boundaries Guir,ea F&recrry & Rsheries Managemem 90 8 23 Sustainable Water Resource Ken.,a Fo_restry; Deve[opmenm 91 20 65Management Pr-Jeted Area- ani 0Adille Seroces 92 61 143 In a move toward more sustainable Maa3r F-ye-nki3raqement and PrG~imvn 1 7 23 management of its water resources this M grr.Mr agement n 7 2 past fiscal year, the region adopted an Enoirr-rnmiur Program 90 26 86 Integrated Water Resource Manage- Ant3nan:,rr... Pla,n Development 90 31 69 ment Strategy for Sub-Saharan Africa. Malaml Ftsnera DE.veinpmernl 91 9 16 Since most major African rivers and Lake Maiam 'N1asa B linersity Conservariann 95 5 5 lakes are international, the regional and sub-regional dimensions of water Matli Natural Reioun: M3nagenent 92 20 32 resources are critical and require inter- HouserOld Ener.y' 95 3 11 country cooperation. The strategy aims Maurilara Waler Suprly 92 11 15 to contribute to better water manage- ment by evaluating resources, assessing Maunitus En,,viretraI Monitanng and De.elopment 91 12 21. use patterns and environmental threats, Sugar Bio-Energy Tehnolkogy 92 3 55 identifying the potential for sustainable B.iors,t.r Reslor 96 1 2 water resource management, and devel- Niger Energa 08 32 79 oping mechanisms for transboundary Naural Recurrn Manaqement 9o 27 42 cooperation. The region has made Nieria Ermno.men[al Management 92 25 as progress fostering cooperation on water resource management among the Seythelles Environmeni and Transprt 93 5 7 Southern African Development Coop- Bicaiversry Cor: & Marne P-llution Abalemenil' 93 2 2 eration (SADC) countries, and develop- Sudan S-uriesr, Aqt cu"ure so 16 35 ing national water management Resourre MarLaqemEni 92 I 26 strategies in Tanzania, Kenya and Tanzana F.Ireta Zimbabwe. TCQOg Lorne Urban De.elopment 94 26 29 Uiando Bwindi impenerrable Natiorai Park & I:4gahnga Preparatory work has also continued on Gonnla Jahrnal Parik Contervalian' 95 4 5 the GEF Lake Victoria Environmental En,runmental M4anagement Capacity Buirag 96 12 23 Management Project. The project will address the major threats facing the SGlobal Errrrnmert Fa,Ilty Lake's ecosystem, especially over-fish- 10 ing, eutrophication, and the effects of planning. The complementary proposed developed, they need to be comple- introduced exotic fish and plant species Congo Basin Initiative, now in its early mented by sectoral-level capacity and like the water hyacinth and the Nile stages of development, aims to develop capacity to manage cross-sectoral pro- Perch. Actions to be taken include long-term sustainable management of grams such as integrated coastal zone regional fisheries research and water the Congo's internationally important management or transboundary water- quality monitoring, harmonizing regula- tropical forest ecosystems. shed management. In parallel, increas- tory and enforcement systems, and pilot ing capacity for Environmental projects in land use management mea- The Challenges Ahead Assessment in the region, particularly sures like afforestation and soil conser- As Sub-Saharan Africa works to bal- for strategic Environmental Assessment vation in the catchment area. Other ance its critical social and environmental encompassing sectoral and regional international waters projects in the early needs in the future, it must foster approaches, represents a significant stronger ownership by building capacity challenge for the region's future. One notable example of rapid for environmental planning and man- 'World Bank, "Toward Emironmentally Sustainable agement, using participatory approaches Development in Sub-Saharan Africa: A World Bank urbanization is the urban at the national and local levels. The Agenda." (Washington D.C.: 1996). community of 50 million challenge will be to promote implemen- tation of NEAPs by focusing on Local Environmental Action Plans (LEAPs) coastal zone between Abidjan and and continuing to promote national This artirle was prepared by fean-Roger Merrier ofthe Aftica Region Technical Departments Lagos in West Africa. ESPs, building on the experience and Environmentally Sustainable Development Division best practices from the first generation (AFTE1) of ESPs. stages of development relate to manag- ing regional fisheries in West Africa, Developing institutional capacity will and designing oil spill contingency plans continue to be a high priority. As in the West Indian Ocean. national environmental agencies are Biodiversity Conservation A number of the region's biodiversity projects share an approach to participa- tory community management of areas In FY96, the region prepared the second phase of the Madagascar Environmental yconservation, many Support Program (EPIlt under the leadership of Malagasy authorities, working in of which span national borders. The close partnership with The Bank, other donors and NGOs. This program aims to GEF-financed West Africa Pilot Com- implement the countrys NEAR designed to establish a policy, regulatory and inslilu- GEEi-naed Weau a PlotrcCon- tonal framework for long-term environmental management and to resolve environ- munity-BasedmNatural Resource and mental problems like deforestation. soil degradation. energy and pollution. Wildlife Management Project uses a community-based approach to manag- EPII budds on the project's first phase. which focused on instilulion building. develop- ing 4,800 square kilometers of the . ing human resources and establishing sound environmental policies, methods. tools Comoe natural savanna ecosystem in and procedures. In the initial project, some of the small scale projects facilitated by southwestern Burkina Faso and north- the Agence National des Actions Environnementales (ANAE) at the village level were ern Cote d'Ivoire. The project compo- successful, notably for soil conservation. and there was progress in Geographic Intor- nents include community land mation Systems management. To upgrade institutional capacity, a National Environ- management, subsistence and commer- mental Office, Park Management Agency and Soil Conservation Agency had to be cial use of wildlife. Zimbabwe and created and existing ministries had to be reinforced, delaying on-the-ground imple- Kenya are applying similar community- mentation: as a result. fewer micro-projects than anticipated have been completed. based approaches to some of their own conservation projects. EPll will continue to strengthen activities already launched but will shifh its focus toward field activities by reallocating funds. Specifically, environmental and biodiver- The region has given high priority to sity conservation components will be complemented by funding for agricultural and environmental monitoring, reflected in other income generating activities that also aim to improve natural resource manage- the Regional Environmental Informa- ment at the local level. EPII increases the emphasis on rural development and small- tion Management Project (REIMP) holder land management on farmland and open access lands. especially in the areas for the Congo Basin's six countries. The where population pressure is greatest. These areas, often far from protected forests multi-donor project is designing a and parks, require strong links from protected areas to regional growth areas demand-driven satellite information A complementary GEF project will finance incremental measures such as system-wide database for central Africa's tropical for- planning for forests outside protected areas, planning for new protected areas and est region to build capacity for environ- community-based sustainable forestry management schemes mental monitoring and land use 11 Asia and the Pacific EA ver the last few decades, Asia are high in Asia's megacities and many has outperformed the rest of second-tier cities whose resident use the world in its rate of eco- coal for cooking and winter heat. The nomic growth. The region's economic cost of air pollution health EAST ASIA & THE SOUTH ASIA (SA) countries have made signifi- damages is an estimated $1 billion a PACIFIC (EAP) Atghanistan cant advances in alleviating poverty and year in Bangkok, Jakarta and other Can-o Dangaicesh improving living standards. As home to Asian cities. Chins, Bhulan half the world's people, this is a signifi- FijiInaa cant achievement. Natural Resources Degradation: lrd.nezi riaidive, Widespread soil degradation, iiiba rjepal But the region's emphasis on economic deforestation, wetland conversion, and Krr Pa6istan growth without equal attention to the biodiversity loss pose region-wide La-) PDR Sr Lanka environment has resulted in widespread resource management and use Mala.4i environmental damage. The costs of air problems. Rural soil degradation in Maihall lan.1s and water pollution and soil degrada- highly populated countries like Klcr : ea tion are large even in simple economic Pakistan, India, Bangladesh and China terms. The region's costs from environ- has a measurable impact on '"3 "mental degradation are above 5% of agriculture. Deforestation is depleting Parjua rii ciiiuia annual GDP, and in China may be as the national wealth of forest-rich phiip-'ineS. high as 10%. The poor suffer most countries like Cambodia, Laos, Soonic.n 1sland-, from the consequences of environmen- Indonesia, Papua New Guinea and the Tr,, lan tal neglect. Solomon Islands. Tonga Vaniuaiu ,, nAsian countries are learning that the Meeting the Challenges n trade-offs between effective environ- To address these problems, Asian mental action and economic growth countries are strengthening their envi- have changed. Economic progress ronmental institutions, regulations and around the world is proving to be ben- strategies, and committing more eficial for the environment as it gener- resources. But an estimated additional ates resources for better environmental $30 to $40 billion a year will be needed protection and promotes new and envi- by the year 2000. The private sector's ronmentally efficient technologies. Bet- participation has become essential. This ter education and higher incomes are calls for policy and pricing reform to crucial to reducing environmental improve the rate of return on infra- ..] damage. structure investments, improving the private sector's access to information, In spite of these new possibilities, how- government incentives, aggressive regu- ever, Asia's most vexing environmental lation enforcement, and environmental problems continue to intensify: education to create wider participation in the management process. - Pollution: As the urban population in Asia grows, urban degradation is The Bank has helped Asia meet increasing. Industrial pollution is these challenges on three fronts this growing even more rapidly than past year: pollution and resource economic growth. Water pollution is management investments; institu- pervasive, contaminating surface water tional strengthening through capacity and groundwater in urban and building; and policy analysis, dia- industrial areas. Levels of air pollution logue, and reform, in industrial pollu- 12 EAP: Environment Projects Active During FY96 SA: Environment Projects Active During FY96 Mitigation Project is designed to (million) ($ million)o 0 Global Eni. (GEF/MP) institution Building improve environmental and social $ / (poe aspects of Coal India's new mining investments, operations, land rehabili- tation, and resettlement of indigenous Global Env. a and other people; the Bombay Sewage (16 projects) Urb. Ern. Mgt. Disposal Project emphasizes new nstitutional Pollution & Urb. Env investment in sewage collection, dis- (4 projects) Mgt- (1 6 projects) sewag $2.1 billion posal infrastructure and financial sus- tainability while strengthening the IBRD/IDA=$3 billion; GEF/MP=$256 million IBRD/IDA=$2 billion; GEF/MP=$55 million municipal authority's environmental management capacity; and the tion control and energy and water China: This year, the Hubei Urban Hydrology Project targets institutional resource pricing. Environmental Protection, Yunnan and physical needs for improved water Environment, Second Shanghai Sew- resource management. The Environmental Project erage, and Chongqing Industrial Portfolio Reform and Pollution Control Pro- Activities in India also included a line This last fiscal year, Bank-supported jects were approved, to address urban of credit for Infrastructure Lending and environmental projects in the two Asia air and water pollution. These four Financial Services (ILFS), an interme- Regions grew from 45 to 53 (in addi- projects work with municipal and diary which will invest in water and tion to 8 GEF and 15 MP projects) in provincial authorities to develop more sanitation systems and other infrastruc- Bangladesh, Bhutan, China, India, effective enforcement of environmental ture operations to provide environmen- Indonesia, Korea, Laos, Nepal, Pak- regulations, manage demand for water tal and human health improvements. istan, Philippines, Sri Lanka and and other resources, and finance Their Environmental and Social Thailand. The balance between the investments to improve air and water Assessment Framework is being pollution and natural resource man- quality. applied to other Indian private sector agement projects in the two regions infrastructure development projects. reflects their different stages of devel- The Bank continued its assistance to opment. More than half of East Asia's China's National Environmental Pro- Indonesia: The Kerinci-Seblat Biodi- 29 environment projects target pollu- tection Agency (NEPA) in national versity Integrated Conservation and tion and urban environmental man- environmental policy, and to the Chi- Development Project was approved agement (10 in China alone), nese Academy of Sciences in coordina- this fiscal year. This Bank/GEF project compared to only 6 in South Asia (5 tion of ecological research. The Bank will safeguard the Kerinci-Seblat in India); South Asia has a much has supported policy dialogue on National Park by integrating park greater number of natural resource industrial pollution control, and energy management and conservation with management or rural environment and water pricing. Water and waste- local and regional development, with management projects (16 of 24 pro- water tariff reforms are beginning to be collaborative links between buffer zone jects in South Asia) than East Asia, implemented. Supervision continued communities, local NGOs and govern- which has 9. There are six institution on three natural resources projects ment. This approach is characteristic of building projects (4 in East Asia and 2 approved in FY94, and on one of the the Bank's Biodiversity Assistance in South Asia). The Bank's contribu- world's largest dams, Ertan, which has Strategy (see page 32). tion to these projects is $3 billion out a major environmental management of a total cost of $8.8 billion in East component. The Bank-supported PROPER, a sys- Asia and $1.7 billion out of $2.6 bil- tem that publicly rates firms on their lion in South Asia. India: Within the country's economic environmental performance, invites adjustment framework, the Bank con- public participation in industrial pollu- China, India and Indonesia were the tinues to seek opportunities to intro- tion control efforts by individual firms. focus of new environmental lending duce environmentally sound policies. Discussions are now underway in the this past fiscal year. Three projects were approved this year. Philippines to introduce a similar The Coal Environment and Social system. 13 Work also continued in Asia on policy Priority-Setting: Several South Asia pro- land resource management. As part of a dialogue and priority-setting: jects are addressing environmental prior- national biodiversity strategy, efforts are ity-setting and institutional capacity underway to improve participatory man- Policy Dialogue: In Vietnam, the Bank building. In Bangladesh, work is under- agement in a number of protected areas. focused on the industrialization strategy's way to implement the National Environ- environmental implications and technical mental Management Action Plan. In Sri Environmental Components in assistance to help the Government Lanka, a Bank review of the 1996-99 the Investment Portfolio develop enforcement standards and Public Investment Program and Core Environmental considerations are also mechanisms. In Thailand, work continues Investment Program identified funding integral to Bank-supported projects in to refine the health impacts of Bangkok's needs in the NEAR Efforts are underway agriculture, energy, land management, air pollution, and to calculate cost-effec- to prepare a biodiversity action plan and transport, water resource, and urban sec- tive measures to allow the city to attain its investment project for conserving medici- tors. The extent to which projects incor- targets at the least cost. In Laos and nal plants. In Pakistan, two studies porate environmental components is a Cambodia, deforestation is receiving addressed national environmental priori- measure of how well environmental con- attention to reform the policy and institu- ties, institutions, and policies. In addition, cerns are addressed by more traditional- tional framework for forest management. four projects currently cover forestry and and powerful-government agencies. t As - Examples include: land management in S - *Bangladesh coastal areas, Laos, Shaanxi Bank Total province and Gansu Hexi Corridor in Country Project Name FY (Sm) Cost China, and Sulawesi and Nusa Tenggara, r.na BeIIIng EnvirnmenI 125 299 Indonesia; fuel and technology upgrading Ship Waste Deposal 92 15 £4 in large thermal power projects like Ship Waste Dspoal 92 30 Orissa Power Sector Restructuring Pro- lanl,, Urban De,sloprner1 3nd Enrc.nmeni 92 140 ject in India, Henan (Quinbei) Thermal Enurornmer Technral Asskisar<.e 93 50 70 Power Project in China, Mongolia Coal S|,Ih Jianasu Environmeni Prolrcicn 93 150 584 Project, and Vietnam Power Develop- F.rer Resource Deelopmeti and Proteclion 200 356 ment Project; improved environmental L?S Plaleauj Walershed Rehabilitaion 94 150 259 management of highway construction in Sranghnl Enuironient 94 160 457 China's Shanghai-Zhejiang Project, and S:ruar Gas Transmission and Disirloullon Rehao 9- 10 12Z highway environmental assessment pro- Lianinq Envircomen 95 110 351 cedures and air quality monitoring in rature Reserves Managemem- 9- 18 24 Thailand; improved water resource man- CongQtlria Inhusrinal Reform ara Por Control 96 170 178 agement in India's Uttar Pradesh Rural I ,,Ue, Urban Enwronmnial Protecran 96 150 370 Water Supply Project, and improved 5icond Shanqhai Sewerage 96 250 633 urban environmental services, such as the Vunran En.,ronmeni 96 160 310 Second EastJava Urban Development ozons upleli.3n Pres; 1.31r 91-96 56 5 Project and the Manila Second Sewer- Indanes a F.resrrv InslItutions and Cnservain 88 30 63 age Project. YCgQ1karta Upland Area Developmen 91 16 25 BAPEDAL De.e4opmeni Terinical Assitance 9 12 15 Ini..rated PEal Management 93 32 53 This fiscal year, a new strategy, the rjallonalVWatershed Managemenril and ConFerxstion 94 57 488 South Asia Sub-Regional Initiative, was SUrabava Urban Development 94 175 618 initiated to look at South Asia's regional Ker'nc-Seblzt Bic Inegraled C-Dns and Developmer %5 1? 47 inter-country potential for sustainable Kernn-Sedal BIL Inlegraled Cons and Deelopmenr .6 15 47 development, particularly in the 'devel- Ktensian 94 47 Belgium, the Netherlands, and Aus- Bombay Sewage Dispusai 96 192 280 tralia. MEIP has also initiated work Coal En6 ronmen and Sical Mirigarion 96 65 S< in Vietnam, and is extending activi- Hydrclogy 96 142 172 ties to secondary cities in Philippines, in.usial Pzluton Premetion C's ic1 353 Sri Lanka and Indonesia. Madhya Pradesh Forestrq 95 E8 67 * The Cleaner Production Initiative Ozore Depletion Projer-as 0C 01-96 22 2 assists programs in Vietnam, China, Nepal Hol comunt Foresry a 31 Philippines, Indonesia, India, and Sri Pak-stan Secoe Scarr Transaimn 91 .0 -14 Lanka, focusing on policy and insti- Environmental PrilecriOn and Resource Conseraiion 90 29 S7 tutional development, analysis of Nortnern Resource Managemen ?3 ;-9 4i0 economic instruments, information Fordwah E Sadiquia Irrigaion and Drainoce 93 54 -1 dissemination, and training and tech- Balctxilan Natural Re-ource Management '14 15 13 nology transfer. Punjio Forest Sprio.r Deuelopmen? s 54 :,4 The GEF/Bank India Ecodevelopment SnLna Frs Sector Deemen fig ;-0 3 Sni Lanka FrtSeorDeueiopmernt 89 ~O 31 TheGEFBan IniaEcoeveopmntColombo Enli,rcnmental frmpro%errsent 9a 3--1 Project, which has been negotiated and E omi rviro9 presented to the Bank's Board, aims to onra Pror. ncludes Several zubpfcjecn.si conserve biodiversity in seven globally 15 Eastern Europe and Central Asia s most of its countries trans- mental management systems need to form to market economies, be developed with clear sets of envi- the Europe and Central Asia ronmental priorities, established within region's environment has the financial constraints of the transi- improved. Pollution is declin- tion process. Since the region's coun- Albania Lithuania ing, and air, water and soil quality is tries are embarking on transition Armenia Macedonia improving. Lead and heavy metal dust strategies which vary in objectives, iAzerb.aian Malcova levels have decreased in response to speed of transformation, and emerging BelaruB Poland lower outputs and new emissions con- partnerships, they need access to a Bosnia-Herzegovina Portugal trol measures. Particulate and sulfur variety of instruments and institutional Bulgaria Romania dioxide emissions from large stationary and investment support. The region's Croatia Russian Federation sources have decreased through indus- most important new challenge is to Cyprus Slovak Republic trial decline and price adjustments in combine economic growth and Czech Republic Slovenia the power and metallurgy sectors. Estonia TaJIkesan Nitrates, heavy metals and toxic chemi- Georgia TurkeV cals in drinking water have been Hunary Turkmensan reduced, and waste water collection and aeUnless environmental concerns Kazakh,an Ukrine treatment has improved in areas like are addressed head-on during Kyr9yz ReprAic Wzbek-slan the Baltic and Black Seas. the economic and enterprise Latvia transition in the Region, there is But environmental progress has been a serious risk that the recent mixed. In many areas, air quality environmental gains will be lost improvements appear to be less than as growth resumes." proportional to the fall of total emis- sions. Even though particulate emis- Johannes Linn, sions from large sources have decreased Vice President, ECA substantially in some areas, increased emissions from smaller sources like cars, small boilers, households and new commercial establishments have meant recovery with environmentally sustain- that average exposure has remained able improvements. almost unchanged. Bacteriological con- tamination risk remains high in drink- Meeting the Challenge - ing water, and may even increase in Since the early 1990s, the Bank has places with deteriorating water utility helped the region's countries establish operation and maintenance. realistic regional and national targets for environmental improvements. At a Countries in the region with advanced regional level, the Bank has contributed market reforms are more likely than to developing and implementing the less reformed economies to keep pollu- Environmental Action Programme tion down as they increase their GDP (EAP) for Central and Eastern Europe. and industrial production. Phasing out Nationally, the Bank supported 14 subsidies and eliminating market dis- countries as they prepared national tortions provide a better foundation for environmental action plans (NEAPs) or efficient natural resource use and sus- environmental strategies. Programs tainable environmental improvements have also been launched in partnership (see Figure page 19). But even coun- with Azerbaijan, Armenia, Uzbekistan tries successfilly transforming to mar- and Kazakhstan, and in collaboration ket economies need to complement with the international Task Force for their reform measures with effective the Implementation of the EAP, the environmental policies and institu- WHO and NGOs. tional frameworks. Proper environ- 16 In the past year, the Bank has sought provide technical assistance and invest- ing of environmental objectives with to support the region's countries by ment for construction of a geothermal sectoral development. investing in environmental projects demonstration plant to provide energy with strong institutional development for a district heating system. The plant Poland's Bielsko-Biala Water and components, increasing projects with will bring about reductions of 56,000 Wastewater Project is designed to environmental components in the tons of CO2 and 1,200 tons of SO2 support rehabilitation and improved investment portfolio, and enhancing annually, and will demonstrate the management of the country's water and countries' capacity to address environ- value of developing indigenous geo- wastewater sector, as are similar pro- mental issues beyond national thermal energy resources. jects in Wroslaw, Krakow, Bydgoszcz, boundaries. and Warsaw. The project aims to The Slovenia Environment Project is improve the Biala and Vistula Rivers' The Environmental Project designed to reduce particulate and sul- environmental quality by reducing pol- Portfolio fur dioxide emissions in some of the lution and industrial waste discharges. Currently, the Bank's environmental country's most heavily polluted cities. The project initiates combined sewer portfolio in the region consists of 22 Environment Profects Active DurinFY96 overflow control programs, introduces a projects (in addition to 19 GEF and 4 """"1"on more effective monitoring program for MP projects), in Cyprus, Estonia, R.- M industrial waste discharges, and insti- Latvia, Lithuania, Poland, Russia, , , i,. tutes a technical assistance and an Czech Republic, Turkey and Slovenia. )2prinstitutional strengthening program. The portfolio's pollution and urban GbE. environmental management projects (16 , EIn Kazakhstan, the Irrigation and deal with oil spill problems, urban air Drainage Improvement Project will pollution abatement, and improving Eny. ' improve existing drainage technology water and sanitation. The natural and reduce water losses, waterlogging resources/rural environmental manage- and salinity problems, and help reduce ment projects deal with land-based IBRDADA2.2billion;GEFRMP=S132million pesticide use through farmer training sources of pollution affecting the Baltic and information dissemination. The Sea, and forest management for water- The project involves institutional project will also help strengthen legisla- shed protection or biodiversity conser- strengthening and an environmental tive, monitoring and enforcement vation. Institution building projects are management scheme for the Soca Val- capacities in the Ministry of Ecology designed to develop natural resources ley. An Air Pollution Abatement Fund and Bioresources. In the Estonia Agri- management capacity, and energy pro- (APAF) will be established as a trust culture Project, a land use manage- jects promote energy efficiency or the fund managed by the Slovenian Eco- ment component helps the Ministry of use of renewables. The total Bank sup- fund to finance conversion from coal to Environment prepare a wetlands man- port for these projects is almost $2.2 cleaner fuels or district heating systems. agement strategy in cooperation with billion out of a total project cost of Ultimately, the APAF will become a the World Wide Fund for Nature, $4.8 billion (Table). self-sustaining revolving loan fund for finances laboratory equipment for envi- similar projects in other Slovenian pol- ronmental monitoring, and funds envi- During FY96, the Bank committed luted cities. ronmental studies for future drainage financing for two projects in Lithuania investments. and one in Slovenia, with broad Environmental Components in Two energy sector projects in Moldova regional benefits which go beyond the Investment Portfolio and Romania have included measures environmental problems of national In this past fiscal year, Bank-approved to improve efficiency in power produc- priority. In Lithuania, the Siauliai projects in the region have components tion, reduce leaks and waste, and curb Environment Project, the seventh which address environmental quality air pollution. The Moldova Energy Bank pollution project for the Baltic and management. These components Project would also upgrade financial Sea region, has a water and wastewater serve to identify and create measures to management systems to reduce non- improvement and an environmental mitigate possible negative environmen- technical losses, facilitate better finan- management component, and the tal consequences, fully capture potential cial decision-making and induce Bank/GEF-supported Klaipeda Geo- environmental benefits, and create an subsequent sector reforms. The Roma- thermal Demonstration Project will institutional base to stimulate the link- nia Power Sector Rehabilitation 17 Project envisages technical and effi- The tendency to incorporate environ- research undertaken by the Bank has ciency measures which would result in mental concerns is noticeable not only also contributed to integrating environ- significant reductions in NOx, SO2 and in sectoral lending, but also in structural mental concerns and management. particulate emissions. The project would adjustment operations. Of the 41 struc- New policy reviews and programs, such also provide technical assistance for tural adjustment operations in the as the Gas Sector Review for Poland, institutional strengthening in environ- region since 1990, including 8 this fis- Coal Sector Review for Ukraine, Oil mental management, and health and cal year, 21 contain energy pricing con- and Gas Issues Study for Uzbekistan, safety improvements. ditions. Regional policy work and Agricultural Sector Review for Georgia, Transport Sector Review for Kaza- T E P Potoi khstan, and Energy Sector Review for Macedonia, are likely to contribute pos- Bank Total itively to closer coordination of envi- Country Project Name FY (Sm) Cost ronmental and economic development BelaruE Biodive-rsty Proiecion- 93 1 1 objectives. Bulgaria Ozone Depleting Subsiances Phase-oul" 96 11 14 Cyprus Lirnassci Analhus Sewerage and Drainage 90 25 69 Beyond National Boundaries Sourheasl Coast Sewerage and Drainage 92 32 103 Many of the region's national agendas Cech Repubie Power and En-ronmental Improiement 92 246 246 address environmental concerns beyond Bidiversirty Protection' 94 2 3 their boundaries through regional pro- Rhasaclut cAo0zone Depleting Subtiances' 95 2 4 grams and support from the GEE Estonia Disinc Healing Rehabilnsetion 94 38 65 The Bank has participated in collabora- Haapsalu and Matsalu Bays Environmenl 95 2 8 tive efforts to improve the Baltic, Black, Hungary Prseour 0i Ozone Deplearrg Sunslancis' 96 7 8 Aral and Caspian Seas, and the Danube Latvia Liepas3 Envoronment 95 4 21 River Basin. i o Kaipeda Environment 95 7 Z3 Through the Baltic and Black Sea Klaispeda Geothermal Dernonstralion 96 6 18 Klaiped Geothermal Dermonstratorn' 96 7 18 Environmental Programs, the Bank has Siauliai Envirnment 96 6 23 moved quickly from regional problem identification and priority-setting to P.:land Energy Resource DevelopmenI 90 250 5 project preparation and financing Ernvironment Mgt 90 18 27 investments. The Baltic Sea Environ- Heat SuprAy Restructurin anm Conservaion 91 340 7a9 mental Program has focused on pre- F.rest &-mversiry Prolec tion 92 5 6 ventative and restorative actions to Forest Develc.pment Supporl 94 146 335 protect the sea based on 130 identified Coal-io-cas Prolect- as as 48 'hot spots,' and has recommended policy El,cynt Lbgrtung' 95 5 5 and legislative reforms and supported Krimowlce sa Surv 95 -5 93 institutional strengthening, research, Rornin[a Danutvp Delta B.rdhvers1Ty" 95 5 5 and public environmental education. Russian Enironnenial Mot 95 110 195 The Black Sea Environmental Pro- Federalion Emargency 0il Spill 95 99 140 gram has analyzed transboundary and idserir,ty Conservaton-Pomrrry Response Prograrmr 96 20 26 local environmental issues, identified Greenhouse Gas Redurion' 96 3 131 urgent investment actions and sup- Pr,asecui at Ozone Depletrig Substance (first trancer 96 9 21 ported the Urgent Investment Portfolio, Sk).ak Repuric 2,ad,ers, Protecion' 94 2 3 facilitated multi-sector coordination, Ozone Depleling substiances* 9e 3 6 and provided technical assistance for local institutional capacity-building. Slovenie Envir.nment. 96 35 55 Truhtepormsitgae Pha&noul of Ozonv Depieting Substances' 96 6 10 Through the program's integrated I.-mir ataeupplyOzone Deege 87 164 5coastal zone management and biodiver- Turkevmir Water Supply and Sewerage 8 18 5 sity components, the Bank has strength- Istanbul Water Suppv and Sewerage 88 218 570 Ankaa Seer3ia 9 173 557 ened institutional capacity through Arilara Sewerage 90 173 557 capcit eursa Waler Suppty and &anilabon 93 130 258 training, establishing activity centers, Eastern Anatolia Watershed Rehabilitation 93 77 121 expanding information networks, and In-SILl Co'neer4alion o1 Genetic Bloriversity' 93 5 6supporting national reports and pilot Ozone Depletion Projecls i419 projects. Utraine Danube Delta Btodi%ersity- 94 2 2 In the Environmental Management of TraacarpatnLer Bloliver-3tj Protecion" 94 1 1 the Danube River Basin Project, the SGlirbal Environment Faclily Bank was involved in agricultural stud- Montreal Pr_ckcnL in-clude seieral -ubpr actsl ies in Moldova, pre-investment work for 18 100. 100 90 -s0 .. SO 40 ... GDP 40 .. .G 70 7 60~~ 0. --N 60 50 -so, 50 -o 40 ..... DP 40GP 30 30 20 20 10 10 0 0 1990 1991 1992 1993 1994 1990 1991 1992 1993 1994 Czech Republic Bulgaria A comparison between the Czech Republic, the region's reform leader, and Bulgaria, the least reformed, illustrates the environmental risk of 'unreformed' growth. the Budapest wastewater treatment pro- The Challenges Ahead and certain heavy industry decreases, ject, and a public awareness campaign Bank projects in the region are vehicular traffic is becoming the main for the Bucharest water supply project. designed to promote long-term solu- source of lead pollution in urban areas. tions through sustainable policy The issue goes beyond simple numbers Seven Bank/GEF projects were changes, financing mechanisms and of automobiles: it affects policies and approved in the region this past year. institutional capacity-building. Projects broader trends in fuel substitution, Projects in Bulgaria, Hungary, Russian are also designed to have a demonstra- transport, and shipping. Effective poli- Federation and Slovenia addressing tion effect. In the narrow view, a pro- cies and incentives must be imple- ozone depleting substances (ODS) ject is successful if it achieves specific mented to address these complex, phaseout will collectively eliminate environmental objectives, such as emerging challenges. Some countries in more than 4500 metric tons of Ozone improved air, the region, such as the Slovak Republic, water and soil have instituted policy and tax changes quality. In the in conjunction with targeted invest- broader view, suc ments to address the problem of air- cess must be mea- borne lead emissions. Others have --- sured by the asked the Bank for technical and project's value and investment assistance. replicability as a model for future The regional economic picture is chang- activities. The ing rapidly. Some countries in Central Bank is commit- and Eastern Europe are facing the . _ted to supporting immediate challenge of European ---both perspectives. Union accession; others are undertaking major structural changes and building Financing sources new trade and economic zones. The A. BOND are diversifying in Bank must respond appropriately to Depleting Potential (ODP) annually. ECAS reforming economies, and the each of these differentiated needs. For The Klaipeda Geothermal Demonstra- emerging private sector is becoming the the accession countries, the Bank can be tion Project described above is linked to main source of growth, income, and instrumental in proposing least-cost greenhouse gas (GHG) reductions. and employment. But the pollution poten- strategies for meeting the EU's environ- the Russia Greenhouse Gas Reduc- tial is increasing as private firms, pri- mental requirements and financing parts tion Project will determine the princi- marily small and medium-size ones, of the public investment programs. For pal sources of GHG emissions from enter the market, and they require dif- the majority of the former Soviet Union natural gas production, transport and ferent environmental standards and (FSU) countries, outside of the immedi- use, and the most cost effective options enforcement policies than the large, ate EU expansion, the Bank can mobi- for their reduction. The Russia Biodi- state-owned enterprises in the old cen- lize support for economic recovery and versity Conservation-Priority trally-planned economies. The Bank and environmental management Response Program aims to establish a can help the central and local environ- improvements. national biodiversity conservation strat- mental authorities develop adequate egy, provide institutional support and policies for the dynamic new private technical assistance to critical protected sector. The shift from point to non- areas, and support integrated natural point sources of airborne emissions also This article was written by Kristalina Georgieva and resources management in the Lake represents a challenge. As private car MATechnicalDepartment's Environment Baikal region. ownership and road transport increases 19 Latin America and the Caribbean -1 atin America and the challenge is to align economic growth Caribbean has emerged from with social equity, sustainably manage the economic stagnation of the biologically diverse areas and control u 1980s. Today, democracy is urban environmental problems. L spreading, the private sector's aHen performance is dramatically improving, Meeting the Challenge Bahlamas Honduras productivity and exports are on the rise, During the 1990s, the region's coun- Bartados Jamaica per capita income is growing, and infla- tries began to address this challenge Belie MeXIcO tion continues to fall. with the Bank's support. The number Ho1ma Nicaragu. of Bank-funded environmental projects Bral OECS Memb~er Against this bright economic picture, has doubled in this period, as has Bank chale Stites overcrowded and polluted cities, persis- support for health, education and pop- colpr1 Peama tent poverty, and threatened biodiver- ulation projects. Cl Rc1a7%3 PaRa sity stand in stark contrast. C-osia Rica Paraguav Dominican Repuoiie Peru Du.inir R urinme More than 70% of Latin America's ."Susanable economic Ecua3dcr Suniname El SakartVr Trinidad & Tobago people live in urban areas. An esti- (velopmyent is inseparable from Guatemala Uruguay mated 300 million city dwellers gener- Wise management of natural ate 225,000 tons of solid waste every Guyana Venezuela .FSUCS day, much of which is discharged into water bodies, open dumps and wet- S dk Juved Burki, LAC Regional lands, contaminating surface and Yce President ground water. Less than 5% of cities' sewage is treated. Urban air is severely polluted by motor vehicles and uncon- In view of the need to take a strategic trolled industrial emissions. approach to environmental reform, many of the region's countries have More than a third of the region's peo- now prepared National Environmental ple live below the poverty line. Most of Action Plans (NEAPs). The Bank has the 40 million indigenous people, the helped them prepare these documents, bulk of the 'absolute poor', are excluded and in a number of cases is helping to from the development process and finance their implementation. A key deprived of income opportunities and new element of Bank support has basic public services like education, been participation by beneficiaries and health and housing. To survive, the other private sector and local govern- poor too often resort to over-using ment stakeholders in project selection, environmentally fragile areas. design and implementation. This not only enhances the sustainability of The region is the most biologically Bank investments but also supports diverse on the planet, but its biodiver- democratic processes and accountable sity is being severely threatened. The systems of governance. Amazon Basin alone harbors about 90,000 known species of higher plants, The Environmental Portfolio 950 bird species, 300 reptile species, Today, there are 35 Bank-supported 3,000 fish species, and uncounted mil- projects in LAC's environmental port- '. lions of insect species. But the region's folio (in addition to 8 GEF and 7 MP forests, grasslands, wetlands, coral reefs, pro The pltion and rba and other natural habitats are beurban severely r environmental management projects s ydegraded, ordestroyed. target pollution from industrial and mining operations, water pollution and In light of these problems, the region's 20 sanitation, solid waste management, Conservation and Rehabilitation resource use and greater involvement of transport pollution and environmental Project provides a loan to the paras- local communities and private owners. quality at the U.S.-Mexican border. tatal Compania Vale do Rio Doce These are the Argentina Forestry The natural resources and rural envi- (CVRD), which operates mining, Development Project, the Brazil ronmental management projects aim to industrial, rail and port facilities, to Rural Poverty Alleviation and Nat- improve sustainable land use planning finance investments in air, water, and ural Resources Management Project, and management for agriculture, soil pollution control and land reclama- and the St. Lucia Watershed and improve cross-sectoral natural resources tion. Components of the project are Environmental Management Project. management, and sustainably manage aimed at improving the welfare of The Colombia Santaf6 Project water resources and forests. The insti- communities and ecosystem conserva- includes a component to protect the tutional projects focus on improving tion. CVRD is also implementing wetlands in the city of Santaf6 de national, regional or sectoral capacity environmental management systems Bogotd and surrounding areas. These for environmental management. The throughout its operations, aimed at wetlands, now almost totally destroyed, overall Bank contribution to these pro- controlling all their environmental are rich in endemic birds, fish, and jects is approximately $3.2 billion, of a aspects. other organisms. total project cost of $6.8 billion. Environment Projects Active During FY96 In response to the urbanization chal- Five of these projects were added to ($ million) lenge, governments have realized the the environmental portfolio this past need to work with the private sector to fiscal year. Technical assistance projects augment public sector investments. supporting environmental institution A; Privately operated companies are development were approved in Colom- 13pojes oluon a . increasingly assuming responsibility bia and Ecuador. The Colombia (,Env. Mgt. for basic infrastructure services like Urban Environment Technical Assis- $1.7 billion water supply, sanitation and public tance Project is designed to strengthen *Oel Env. onZ transport. The Bank is working with municipal environmental management (24 projects) national, state and local governments agencies in Cali, Medellin, and Barran- to support the transition from publicly quilla, formulate pollution standards, IBRD/IDA=$3.2 billion; GEF/MP=$165 million controlled environmental and infra- and establish pollution charging and structure services to a system where monitoring systems for industry. The the state takes on key regulatory and Ecuador Environmental Manage- The Bolivia Environment, Industry monitoring functions and transfers ment Project, aimed at strengthening and Mining Project was designed some operations and investments to environmental management capacity to within the context of privatization in the private sector, as in the Brazil support the NEAP through a partici- the state-dominated mining sector. It is Federal Railways Restructuring and patory approach, is targeting the Gulf aimed at implementing a regulatory Privatization Project. Partnerships of Guayaquil, the upper Amazon, and framework to assure sound environ- with the private sector have also been a number of urban areas. mental management of privately-led encouraged in environmental policy mining and industrial activities. It also implementation. Self-reporting, envi- Two natural resources and rural envi- helps remediate contamination from ronmental audits, voluntary agreements ronmental management projects were historical mining activities, for which and formation of semi-independent also approved. The Mexico Water the state accepts responsibility. river basin authorities are increasingly Resources Management Project pro- being advocated for controlling the motes conditions for environmentally Environmental Components in region's industrial pollution. sustainable, economically efficient, and the Investment Portfolio equitably allocated use of water In addition to the projects primarily Indigenous People and Civil resources by improving groundwater targeted toward environmental Society conservation, restoring surface water improvement, a number of other pro- Since 1994, the region has allocated quality, water allocation, and fee collec- jects include components built in to about $2 million in Institutional tion and registry of water rights for improve land, water, and forest man- Development Fund grants for capacity users. The Brazil Environmental agement, through more sustainable building for indigenous communities in 21 h E Chile, Colombia, Bolivia, Ecuador, Nicaragua and Mexico. Following par- Bank Total ticipation in workshops, the communi- Country Project Name FY ($m) Cost t ties have been able to design and Argenna [ Ozone Depietion Prc4ec 91 -iii - 22 negotiate their own development strate- Plivia Ea4Irm Lov.iland. PegIonal Development 90 35 55 gies for presentation to government and Biodi',er.it, ar Consa&ac.n" 93 5 a the Bank. Beginning in FY96 with the Enuirnmenlal Technical Assisian.:e G3 5 9 Ecuador Indigenous Peoples Develop- Enrirorimentl InrduMry. t8 Miningp 96 it 50 Pepestev.p Eri.irvnnngn __naustr,,__ _&_PA__nin __%2__11_ _50ment Project, this is leading to a new Brazil Saco In.nizrral Pollution Control 87 s1 1oC' generation of lending operations target- M,n1a C-era,s Forestre Development 88 49 1of .d.r.t. Ln.Marigemeni I - Parana o 63 1s ing indigenous development needs in Land Maniagerneni 11 90 33 7, Latin America. Mitigating against risks rJaworial Emir.nmeo? 90 117 166 of impoverishment from displacement Mar, Grosso Natural Resource Management 9 205 286 and resettlement by Bank investments is National Industrial Polin ConrroI 92 50 100Cr Rondonia Natural Resourre Manaement S7 167 228 a key objective. Countries are receiving Minas Gerais Waler Oualit%- and Polin Control 93 145 208 technical and financial assistance to pre- %Naler Du3ity ana Poin croirol-Sao Paulo Parana 93 245 4a," pare sound resettlement approaches in Espirito Sari:o Water Supply and Ctasal Polln Mgi 94 154 308 more than 15 ongoing investment oper- Brailian Bodiversy Fund' 96 20 2S ations in the region. The Bank also con- Enironmental C.nser.alion and Renabilitallon 9 50 110 r4ar,cnal Bvoleversiry Prolenf a 10 20 tinues to support poverty alleviation DZone Depletion Project' 91-96 11 11 projects such as the Haiti Employment Anril Second Vaiparai5o Waler Supply and Seeerage 91 50 142 Generation Project. Enrrnmenrt Instuitons Developmen 93 12 33 Ozone Depletion Projecls (21 91-96 2 2 The Bank is also supporting civil society 2o1..mbia Natur l Reource Manajement P(ogram -4 39 r5 participation in development planning Urran En%aonmen Techni.al kszislance 96 20 40 and decision making. It has recruited -j RI-C 3 Tel:-Ia VAnj Pov,er 94 3 1 and trained 10 NGO and Social Analy- ELu Ga'-i-syas Flooo CUntroi 91 5 sis Specialists, and posted them with its 81 ,odt.,tl., Protckon" `- -j Resident Missions to support civil soci- Mining Devalopment and Enironmental Control - TA Q-4 14 24 ety participation in 20 'flagship' opera- Enronmeni Management 96 is 2') tions which already entail some C:one Deelion Piotec1 91-% 2 partnership between government and H.-.nduras En.ironment oe,elopirmen 95 11 13 civil society, and another 40 new pro- JamaC2 Demand Side Management Dernonstratin' 9Q 4 13 jects. The first generation of projects to include Participation Action Plans as in Me"cr Enuroniment and Natural Revources 42 50 127 i Protected Are Prcram* 92 25 32 their strategy are expected in FY97. Transpor Air Qualirt Management 93 220 187 From there on the challenge will be to High Elliriency Lighting PIloG 94 1i 23 mainstream participatory approaches. Norrerm B.rder Environment 94 36 762 Second Sold Ware Management 945 200 416 wI;er nd Sn,tazfe 0 e q4 350 416 Beyond National Boundaries IVWaier 3rd SAniatlion 11 "04 350 -.10 Water Reo1ur.:es Managemnr 96 18; 342 On a broader level the Bank, with the O:one Deit,an Prcle:n 1t" 91-E World Wildlife Fund and many collab- OEC. r.inres Soil Waste Management 95 13 51 orators in Latin America, contributed Ship-Generated Waste Mg1 95 13 51 analytical work on the definition of a Paraqual Land LISe Ratiwnalietlon 92 29 41 biodiversity conservation strategy for 1atiural Resources riflna.merll 9d 50 79 the region.A Conservation Assessment of Feru Ndi,onal Tnsrt Fund ior Protected Aieas- 95 5 7 the Terrestrial Ecoregions ofLatin America Trni1..1,,i. and the Caribbean' was written in part- Tubag.- Erv.ironmenral Management 95 s 11 nership with World Wildlife Fund and Urugia,. idiural Resources Mgt and Irrigalion Deliopment 94 41 7.1 formally launched at the Bank's Third o-ne Depletcin Prnjecl- N1-96 2 2 Annual ESD Conference in October Vene:uela INPARDUES 95 55 96 1995. This work is being complemented o. Qne Depletion Projects re" 9 0 by a series on Critical Natural Habitats Mder Car. Wiear wer Carntlnahve for Ship-Generated Wiii 94 6 in Latin America and the Caribbean,2 of which the first volume, covering the .. Global En-ronmeir Fa sct- r Southern Cone (Argentina, Paraguay, P.tnmreal Protocol lin.,ludjet si-eral sublroi16tSt\e in ,irauy Uruguay, and Chile), has already been 22 produced. This book will improve Envi- sector partnerships. The two closely poverty With Bank support, the region ronmental Assessment (EA) in infra- linked projects received a combined $30 will also help the Andean and Central structure and other development million in GEF funding. The National American countries establish indigenous projects, and will help identify sites for Biodiversity Project, managed by the peoples development strategies. Involv- new conservation investments. Ministry of the Environment (MMA), ing civil society in supporting environ- includes a series of workshops to set mentally sustainable development and Another effort, the region-wide training biome-level priorities for biodiversity resolving social problems will remain a program in EA, supports national stew- conservation and a national biodiversity key theme in the Bank's agenda into the ardship programs. A grant from the conservation strategy. The Brazilian next century. Norwegian Consultant Trust Fund Biodiversity Fund (FUNBIO), which enabled the Bank to support EA train- provides financing for projects meeting The accelerating growth of cities in the ing for regional staff and NGOs in the priorities being established in the region poses a tremendous challenge in Colombia, Peru, Brazil, Jamaica, MIA-managed workshops, takes an the future, and is likely to result in a Dominican Republic, Ecuador, Hon- innovative approach to project manage- shift in emphasis from natural resources duras and Nicaragua. Over 500 govern- ment by giving responsibility for fund management to pollution and urban ment officials and NGOs have been management to the Getulio Vargas environmental management. Brazil, trained in EA techniques and methods, Foundation, an NGO. New biodiversity Mexico, Chile and Argentina already Bank environmental and social policies, projects being prepared for submission have urban populations above 75%, a and inter-sectoral EA analysis. to the GEF Council in the coming fis- pattern being repeated in other coun- tries. Since governments can't afford the massive investments needed for urban infrastructure even with multilateral development agency help, they need to strengthen their partnerships with the private sector. Controlling urban envi- ronmental pollution is likely to depend increasingly on market-based instru- ments. The Bank remains committed to supporting the region in these efforts. Biodiversity protection will also remain an important issue because of the region's extreme ecological richness. New protected areas must be established and demarcated, and the protection of vital ecosystems, such as the Amazon, - Mata Atlantica, and Caribbean Sea and D CASSELLS coastal zones, must be better enforced. The Bank's support for natural resource cal year include ones in Nicaragua and management and biodiversity protection Honduras, and several others elsewhere ' "A Conservation Assessment of the Terrestrial Ecore- also includes several GEF grants. The in the region. All planned investments gions of Latin America and the Caribbean." In associa- tion with the World Wildlife Fund. 1995. ISBN number of GEF projects under imple- in Central America are linked to the 0-8213-3295-3. mentation in LAC increased to 11 dur- concept of a Meso-American Biological ing FY96, with two new biodiversity Corridor and include efforts to integrate "Critical Natural Habitats in Latin America and the a . . Caribbean. Volume 1: Southern Cone (Argentina, projects in Brazil. Six GEF projects in economic and biological interests in Chile, Paraguay and Uruguay)." In collaboration with the region now support biodiversity long-term planning. Agriconsulting S.p.A. and the World Conservation conservation, three are targeted at cli- Monitoring Center. August, 1996. Latin America and the Caribbean Environment Division, (202) 676- mate change, and two support interna- The Challenges Ahead 9373. Volumes 2-4 in Draft. tional waters initiatives. The sustainable development challenges in the region are formidable. Reducing A recently completed review of the the gap between the rich and poor will GEF Pilot Phase concluded that stake- clearly remain an essential condition for This article was written by William Partridge, Chief of holder participation is key to success- its success. Brazil, Colombia and the Latin America and the Caribbean Regional Environment Divisisn (LATEN). (202) 473-8622, fully preparing conservation projects. Jamaica have asked for the Bank's help Fax (202) 676-9373. The two new projects in Brazil look to in formulating policies on national promote biodiversity conservation involuntary resettlement to advance and through innovative public and private deepen their commitment to reducing 23 Middle East and North Africa n the 1960s and 70s, economic Environment Projects Active During FY96 ($minion) growth in the Middle East and Global En (GEF/MP) North Africa was the highest in n (1r oject)> the world, primarily because of oil exports. During these years, in a drive for self-sufficiency, the region lgt.Urb. Aigera MorCcco embarked on a strategy of industrial (4pNets) Bahrain Ornan and agricultural protectionism sup- Eg1PL Galar ported by trade barriers, a strategy S256 Iran Saudi Arabia encouraged by publicly subsidized Iraq Syna energy, water and agrochemicals. Jordan Tunisia IBRD/IDA=545 million; GEFIMP=$56 million Kuwait Unied Arab But by the 1980s, as international oil Lebanon Emirates prices slumped in the wake of global These problems now cost almost $15 Liblla Yemen overproduction, these economic gams the e rgins billion a year, 3% of GDP, in impaired laira became unsustainable and the r o' region's health, premature deaths, lost natural countries witnessed slow or even nega- resoureaturis loss. tive per capita growth rates. By the 1990s, the 'lost decade' of the 80s prompted many governments in the Ti n the ens region to begin economic reform pro- Today, as many of the region's countries grams to improve resource efficiency move toward economic reform and and spur private sector growth. In the trade integration with the European process, however, the region came face Union, the Bank is helping the region to face with the environmental legacy meet its environmental challenges, sup- of its earlier development strategy porting national and regional environ- (Box), with its unsustainable use of nat- mental action plans and strategies, ural resources and widespread environ- helping improve environmental man- mental degradation. The region now agement through institutional faces four major environmental chal- strengthening and capacity building, lenges: helping create an improved economic incentive framework for environmental 60 million people are exposed to protection, and providing targeted urban air pollution of particulates, lending for 'hot spots.' lead, and sulfur dioxide. This could increase to 160 million in ten years. In 1995, the Bank's regional staff pro- *-45 million people lack safe drinking duced a Middle East and North Afica water and 85 million lack safe sani- Environmental Strategy, a program to tation, mostly in rural areas. address environmental problems by * Ten of the region's 18 Bank member strengthening the capacity of environ- countries already consume more mental institutions and engaging public freshwater resources than can be participation, intensifying management - renewed, relying on depletion of of scarce natural resources, and arrest- non-renewable aquifers and/or ing pollution, particularly where public expensive desalinization of seawater. health is affected. The Bank has sup- * Land, pasture and forest degrada- ported this strategy through projects in tion is threatening the livelihoods of its environmental portfolio, environ- = millions of rural poor who depend mental components in projects in its z for their sustenance on their regular investment portfolio, and pro- surroundings. grams and projects beyond national 24 .--boundaries, including METAP- - financed activities (Box, page 27). The Environmental Project Portfolio As of today, the Bank actively supports 12 environmental projects in Algeria, Egypt, Lebanon, Morocco, Tunisia and Yemen (in addition to 7 GEF and 4 MP projects). The portfolio's pollution and urban environmental management projects aim to address environmental - and public health issues related to solid waste, domestic effluent and industrial pollution. The natural resources and rural environmental management pro- jects deal with sustainably managing forests, soils and water, and building i capacity for managing environmental protection. The overall Bank contribu- tion to these projects is $645 million out of a total project cost of $1.7 billion. This fiscal year, the Bank approved two Causes of the Region's Environmental Problems industrial sector pollution projects, in Algeria and Egypt. The Algeria The causes of the current environmental situation. rooted in past policies and Industrial Pollution Control Project incomplete reforms, are: is designed to strengthen the country's institutional and legal framework by * energy policies with no accountability. that continue to supply fuel oil with high sul- increasing national and local capacities fur content and leaded gasoline- to design, monitor, and enforce policies and regulations, and to help finance * high energy consumption in relation to economic output caused by low energy t a d t reduc- prices: investments aimed at pollution reduc- tion and prevention in two industrial * highly polluting public enterprises still responsible for the bulk of industrial air and plants-an iron and steel complex and water pollution: a fertilizer complex with several sulfu- * old. fuel inefficient and highly polluting vehicle fleets, replacement of which is dis- ric and phosphoric acid plants. couraged by high import barners, The Egypt Pollution Abatement Pro- * lack of cost recovery for water and sanitation services, which has constraint ject, prepared with METAP assistance, finances available for exiending and improving service provision; aims to introduce innovative, replicable market mechanisms for collaborative * massive abstraction and inefficient use of water for irrigation, encouraged by low environmental management between or no-cost water and a lack of incentives for conservation and allocation to higher financial/regulatory institutions and value uses. industrial enterprises; help the govern- ment improve its monitoring and * lack of adequate natural resources tenure nghts and protection. coupled with enorce e ity itrod rapi Poplatin grwth.enforcement capacity; introduce pollu- rapid population growth. tion prevention investment as an envi- ronmental management tool; and 25 promote NGO and media participation opportunities while they maximize and wastewater services in Fez by reha- to create a public expectation for good environmental benefits. The Egypt bilitating and expanding the sewerage environmental and safety practices. The Second Social Fund Project supports collection system and providing waste- investment component provides envi- job creation through community infra- water treatment and quality control. ronmental financing through the com- structure works (small scale wastewater The project will also finance sanitary mercial banking sector for industrial treatment, rural roads, community cen- education campaigns, water quality con- enterprises, on a demand basis, to miti- ters), and small and micro-enterprise trol and credit lines for house connec- gate pollution and comply with environ- development, with environmental con- tions to sewers in low income mental regulations. siderations built into the project. Public neighborhoods. The West Bank and works in agriculture and water, sewer- Gaza Municipal Infrastructure Devel- Environmental Components in age and road maintenance financed by opment Project also aims to improve the Investment Portfolio the Algeria Social Safety Net Support sewerage collection, treatment and dis- Poverty and unemployment can exacer- Project include control of soil erosion in posal systems and conserve water bate existing pressures on natural vulnerable areas in two provinces and resources through wastewater re-use and resources from the poor as they look to maintenance of watershed infrastructure leakage control from irrigation systems. fragile 'open access' natural resources for in Bourmedes. The Yemen Public sustenance. Environmental degradation Works Project aims to promote com- Projects with components to strengthen and health hazards can also result from munity participation in small works environmental management capacity deteriorating public infrastructure such as irrigation improvement and soil include the Jordan Export Develop- caused by governments' budget con- conservation. ment Project, designed to build the straints. banking sector's capacity for 'clean' pri- Two projects approved in FY96 support vate sector development and growth A number of newly approved projects infrastructure to improve environmental and enhance the country's export com- in the Bank's investment portfolio for and public health conditions. The petitiveness; and the Tunisia Industry the region are designed to address this Morocco Second Sewerage and Water Support Institutions Upgrading Pro- problem by creating employment Re-Use Project will improve sewerage ject, designed to develop information and research on clean technologies, upstream waste minimization and T* E P reduction, economies in the use of raw Bank Total material, energy, water and hazardous Country Project Name FY (Sm) Cost substances, waste recovery and recy- 1-a Poor ore, an-1 Watershed Mariagerm-t 92 25 37 cling, training in best practices, and environmental audits. Water Suppiv and Sewerage Rehab 94 110 170 nrvduIrk. PO lIn Control 70~ 8 11This past fiscal year, the Bank also El Kala Naltonal Park and Wetlands Managenionli 94 9 12 helped prepare environmental strategies Tunisia Oi PoHn Managemen Projec for ine SW Mea Sea, 94 is 20 for Jordan and Lebanon, and completed Egypt Matruh Resource Management 93 22 31 a pollution load assessment for Saudi Private Seccr7founsm 93 130 784 Arabia (on a cost reimbursable basis). Pollution ADaternent 95 40 51 Emphasis is also placed on disseminat- Red Sea Coastal and Manre Resource Management- 93 5 6 ing environmental assessment proce- Ozone Depletton ProWect" 91-96 2 2 dures, and introducing environmental iran Tenran Transport EmissIons Reduaion' 94 2 4 economics through case studies and Jordan GulN of AqaLb3 Envrnonmental Action Plan' 96 3 13 workshops. Oz.one Depletion Proecs" 91-96 2 2 ozon 0.Plet PrWLIS 9196 2 1 2Beyond National Boundaries Lebanon Solid Waste & Emrrnmerntal Management 95 55 135on to B o es Moroco .ondForstryDayk~meL ~'19In addition to the six GEF projects under implementation in the region, the En.iironmenlal Management 94 6 11 Jordanian Gulf ofAqaba Environmen- Repoenng of Power Planl 95 6 46 tal Action Plan was approved this fiscal Tunisla Second Foretry Development 93 69 148 year. This project will develop collabora- Norlhwest Mounlaireus Areas De,piopment 94 28 50 tive mechanisms for strengthening the SoAar Waler Heanirqg 95 4 21 regional capacity to protect marine bio- Ozone Depleiran Pyo[ect 91-m6 1 1 diversity and the coastal zone. Specific Yemen Rep. Land and Water Consarvaion 92 3 D4M objectives include: developing and Global Environmeni Facilriy enforcing the legal framework and regu- Montreal Prorx.:4 iirFcluie! several subprolects) lations for transboundary pollution con- 26 To meet the challenges ahead, METAP METAP, the Mediterranean Environment Technical Assistance Program. is a is leading the way towards environmen- program designed to strengthen the links between northern and southern tally sustainable development in the region. The Bank, with its international rim countries as they deal with their common environmental problems, partners, is now launching METAP's giving priority to water resources management, solid and hazardous waste third and final phase (METAP III, 1996-2000), a $100 million program management, integrated coastal zone management and coastal and marine which will implement concrete projects pollution. in three integrated priority areas: capac- ity building, participation and partner- ships; arresting and prevention of trol; safeguarding against oil pollution; . - pollution at 'hot spots'; and integrated devising and implementing guidelines water and coastal areas resource man- for sustainable development of the - agement. It is envisaged that, by shifting coastal zone; and establishing and man- the program's management to the aging a marine protected area. . region, METAP III will result in several - billion dollars in environmentally related During FY96, the Bank's participation investments through such initiatives as a in METAP (Box) focused on preparing METAP Regional Facility at Cairo, a pipeline of environmental investments ... with a UNDP-managed Capacity for the Mediterranean region, in parallel Building Unit, a Bank- and European with initiatives to strengthen natural Investment Bank-managed Project resources management capacity in the Preparation Unit, a Private Public Part- basin. nership which will expand partnerships and collaborations between government, By the end of the fiscal year, METAP II business, and community groups, and a (1993-1995) was made up of 63 country Special Grants Fund for local environ- and regional activities totalling $18.1 mental NGOs in the MEIAP benefi- million, supported by the European ciary countries. Commission, European Investment Bank, UNDP and the Bank. 34 were The region's countries have been slow to aimed at solid waste management, - respond to growing lead pollution from industrial pollution control, wastewater leaded gasoline, and many countries treatment and oil pollution control, continue to use large quantities of high including the Algeria Industrial Pollu- . -.----- sulfur fuel oil near population centers tion Control and Egypt's Pollution -' and dirty diesel in transport. A few Abatement Project. Regional capacity - countries have introduced unleaded building initiatives focused on training D. ARONSON gasoline on a limited scale, but relative in environmental communications, con- prices of leaded and unleaded gasoline flict mediation and negotiation and ment and services; improve soil and provide no incentive for using unleaded environmental economics. METAP rangeland productivity and sustainable gas. In the coming years, the region's interventions for institutional strength- use by reducing fertility loss, erosion, countries can take advantage of other ening over the past year included a and vegetative cover and value; and regions' experience in the move to MEDGEOBASE land information manage water resources sustainably, par- unleaded gasoline. system in Morocco, advanced phases of ticularly in countries with serious water EIA units in Algeria and Egypt and an shortages and contamination. The Bank "Middle East and North Africa Environmental Strat- Environmental Strategy for Lebanon. is also ready to help countries in the egy: Towards Sustainable Development. February region confront the issue of environ- 1995." ECA/MNA Technical Department's Environ- The Challenges Ahead ment and international trade as they ment Division (EMTEN), Fax (202) 477-0711. integrate with the world economy. Eco- The Bank stands ready to continue its inomicand se world schnas Ep' support to the region in the future to: n a protect public health; manage natural upcoming Country Economic Memo- This article was written by Bjorn Larsen of the control air pollution; increase randum, will give attention to environ- ECA/MNA Technical Departments Environment resources; mental product quality, the World Division (EMTEN), (202) 458-2153, Fax (202) municipal wastewater collection and Trade Organization and the environ- 477-0711. treatment capacity, and industrial pre- ment, and ISO 14,000, issues in which treatment through regulation and enfrement; nh a ruain nd p several countries have expressed interest. enforcement; enhance rural develop- 27 International Finance Corporation *FC is committed to integrating consultation with local populations. "Environment is a central priority for environmental considerations into Environmental staffing resources were IFC. We have a two-pronged the mainstream of its activities, to increased substantially to provide approach: to ensure that all lFC involving civil society in major stronger support to investment depart- a decisions, and to consulting with ments and to quicken the pace of new projects are sustainable and affected parties on sensitive projects. innovative environmental projects. environmentally sound, and to be To promote and strengthen its role in sustainable development led by the pri- more proactive in developing new vate sector, IFC has expanded its envi- Environmental Due Diligence: ideas and initiatives to catalyze ronmental staff, reviewed its internal Meeting High Standards private sector investment. IFC must policies and practices, and established All IFC projects must meet high envi- regular dialogues with non-govern- ronmental standards. 'Environment' is a be a pioneer and leader in the effort to mental organizations (NGOs) and term used broadly to cover natural improve the environmental clients (Box, page 29). resources, social and cultural impacts, performance of the private sector in and health and safety. Environmental This year, IFC launched a series of imi- review procedures are designed to our developing member countries. tiatives to strengthen sustainable pri- ensure consistency with the World This is a fundamental role for us." vate sector environmental activities. Bank's environmental policies and pro- The Corporation worked closely with ject requirements, and also with host Jannik Lindbaek, the Bank to develop the Pollution Pre- countries' requirements. vention andAbatement Handbook, which Executive Vice-President provides environmental guidelines for For IFC's direct investments, projects IFC projects. It also began an NGO out- are environmentally assessed using a reach program, updated its policy on classification process similar to the information disclosure, and strength- Bank's', with the addition of Category ened requirements for project-related FI projects, involving sub-projects This past year. MIGA continued its pattern of expansion since beginning operations in 1990. In FY96 MIGA has issued 68 guarantee contracts for a total of S862 million in coverage, and expanded its membership to 134. Prospective MIGA projects are reviewed before a guarantee contract is issued to ensure that the investment is consonant with World Bank environmental policies and guidelines In addition, MIGA's guarantee contracts have always required the investor to comply with the host government's laws and regulations. In reviewing projects, MIGA has drawn on the environmental expertise of other World Bank Group mem- bers. Initially. MIGA relied exclusively on the Bank. In recent years. the IFC has served as MIGA's environmental advisor for all its projects. Under a formal agree- ment, IFC has now reviewed more than 200 prospective MIGA projects This year. MIGA identified the need to expand its environmental review capacity to address speclic environmental issues related to prospective guarantees. It is now drafting its own environmental review procedures, which will be consistent with those of IBRD and IFC. MIGA has extended and revised its original agreement retaining IFC as its Environmental Advisor, and has secured the approval of is Board to hire an environmental liaison to deal with environmental experls in the Bank Group, cor- porations. and external environmental organizations. 28 ,~ 41 4. T he Africa Enterpnse Fund (AEF) is IFC's . - , - special purpose vehicle for investing in small and medium-sized businesses in Africa In FY96, 42 new projects were approved in 18 Afnican countries In the agricultural, manufacturing, industrial. consumer services and tourism sectors, an IFC investment of $28.5 million. - All AEF proposals are screened for environmental impacts in recognition that, in spite of their small size, their potential to pollute may be high. To help investors meet IFC's environmental requirements, the Environmental i Assistance Fund was initiated as a pilot in the past year with support from Japanese Trust Unsecured fuel drums in an ecologically sensitive area create environmental, fire. and health and safety hazards, highlighting the need to screen small scale investments. financed by financial intermediaries that In 1996, IFC and MIGA (Box, page operate a former government-owned may result in environmental impacts. In 28) project sponsors dealt with a broad refinery in San Lorenzo. Refisan has this fiscal year, IFC approved 15 cate- spectrum of environmental issues in begun a comprehensive environmen- gory A, 135 category B, 72 category C, designing projects, ranging from very tal cleanup, decontaminating soil by and 42 category FI projects. basic pollution prevention, abatement and cleanup to more complex issues During project planning, project spon- such as natural habitat protection, land Senior sors that receive IFC's support must rights for the landless, and worker Management analyze environmental impacts and education. For example, the Kasese Commitment develop a plan to mitigate them. Finan- Cobalt Project in Uganda helped pro- cial intermediaries must develop their tect an important wetland system (Box, The Director of IFCs Technical and own capacity to conduct environmental page 31). Environment ofpIFCestTeni reviews, with IFC providing training Eniron theDeparment reports and backup support for sub-project Privatization programs often provide diretly toneExcective Vice Pres environmental review. It is critical to fertile ground for environmental dnt. F nion ensblity fo . integrating environmental issues into continually supervise direct investments improvements, from staunching the the mainstream of IFC operations has and capital market projects to filly real- flow of pollutants from inefficient been given to a Vice President of ize the benefits and opportunities in the operations to cleanup of contaminated Operations, Jemal-ud-din Kassum. sponsor's environmental analysis. sites and installation of energy-efficient IFC's General Counsel, Carol Lee, and clean production technologies. has taken a very active role in defin- What Can the Private Sector ing IFCs environmental and disclo- Do? In Argentina, Refineria San Lorenzo sure policies and in structuring better Opportunities abound for improving (Refisan) shows how privatization systems of outside accountability and the environment through private sector can lead to environmental benefits. communications. initiatives. Refisan was established to own and 29 biodegradation and removing oil pol- impacts on affected communities can tions, which will increase BSS's enroll- luting an aquifer. To avoid future con- be significant. In the Sucrerie Bour- ment by 16,000 students. An education tamination, Refisan is extensively bon Tay Ninh Project, a French-Viet- specialist, funded by a Japanese trust upgrading equipment, replacing namese joint venture, the sponsors fund, will help develop a BSS educa- underground pipelines with above- made a concerted effort to ensure that tional action plan and disseminate best ground pipelines that can be moni- land rights issues were handled sensi- practices to other schools. All buildings tored and repaired. Their installation tively and that small farmers' interests will be constructed with basic fire detec- of a closed cooling water system will were taken into account in construc- tion and alarm systems, and will be reduce river water intake and dis- tion and operation of a large sugar equipped for handicapped children. charge. New air pollution control refinery. The nucleus of the land for equipment has significantly reduced the sugar cane fields was occupied by Environmental Capacity air emissions from refinery operations. small farmers who had traditionally Building worked the land but had no legal title IFC provides loans, equity financing Promoting Social and to it and faced potential displacement. and credit lines to commercial financial Community Development Sucrerie and IFC worked with the institutions, which in turn provide loans Social and community issues are an local government to ensure that these to local businesses for working capital, integral part of sustainable develop- farmers were able to continue to culti- trade finance, project finance, venture ment. To better understand its projects' vate the lands they occupied. As a capital, and equipment leasing. The result, the displacement of farmers, development of training workshops for financial institutions has been an impor- kFC' ENVRON ENTA IN ESTM NTStant IFC contribution. This year IFC continued its training program on Envi- ronmental Management for Financial IFC has developed a portfolio of environmental investments with a value of approxi- Institutions, introducing senior officers malely $55 million, leveraging grant funds from the Global Environment Facility and . the Multilateral Fund of the Montreal Protocol and IFC co-financing to develop innov- from 72 institutions in 14 emerging ative private sector approaches. These approaches include a joint IFC/GEF program markets to the principles and methods to provide financing to enable small and medium sized enterprises (SMEs) and the of environmental management. Since Poland Efficient Lighting Program (see Engaging the Private Sector, page 44). 1993, over 250 financial institutions IFC approved grants from the Montreal Protocol totaling over $4.8 million to help pri- have participated in this workshop. vate sector firms comply with requirements for phasing out chlorofluorocarbon (CFC) A new, in-depth course now under use. Assan Demv ve Sac Sanayi. A.S., and Tek-iz lzolasyan ve Yapi Elemanlari Sanayi. A.S . leading Turkish manufacturers of materials for the cold storage industry, development for environmental coordi- will revamp their manufacturing processes to replace CFC use. Calex and Samsung- nators in financial institutions will focus Calex, the only two manufacturers of refngerators and freezers in Slovak Republic, on practical aspects of integrating envi- will also eliminate CFC use. Together these programs will eliminate over 600 tons of ronmental management into financial CFC use per year operations. Course development is sup- ported by the European Commission through the IFC/EC Asia Trust Fund. social impacts on communities and including those who lacked official IFC also conducts an internal training identify good corporate practices in tenure, was prevented. program to increase environmental working with local groups, IFC is awareness and bring up-to-date infor- reviewing its portfolio's social dimen The private sector can also contribute to mation on environmental management sions. This will enable it to help its social development in emerging to staff working directly with project clients address the complex social issues economies by investing in sectors such sponsors to design and finance environ- arising from private investment and will as education or health. The IFC- mentally sustainable projects. enhance its projects' development bene- financed Beaconhouse School System fits. Initial findings suggest that across a (BSS), Pakistan's largest privately- Environmental Projects broad spectrum of countries and sectors, owned school system with more than Taking a proactive stance toward envi- IFC sponsors are involved in a range of 29,000 students in 64 schools, has ronmental issues means finding oppor- development activities from providing focused on providing high quality edu- tunities for private sector financing in communities with clean water, health cation at costs affordable to Pakistan's environmental projects. "Forward look- services and education to sponsoring growing middle class. Approximately ing companies are recognizing that training programs and rehabilitating 70% of the professional staff and 40% of local and global environmental con- roads and community infrastructure in the students are women, which is cerns provide new business opportuni- collaboration with local governments. important in an area where adult female ties," says Jamil Kassum, Vice President literacy rates are 21%. The IFC- of Operations. "The challenge is to In projects which involve issues of financed project involves construction of identify and focus on such business resettlement and land rights, the social 14 school buildings at multiple loca- opportunities, which represent a grow- 30 ing new frontier of development and for private sector investments in the environmentally sustainable develop- investment activity." environment. Proposed investments such ment. Andreas Raczynski, Director of as the Biodiversity Enterprise Fund for the Technical and Environment Depart- Developing a strong pipeline of environ- Latin America will mobilize equity or ment, summarizes this role: "IFC recog- mental projects such as water and waste quasi-equity investments in sustainable nizes that our contribution represents management services continues to be a or alternative agriculture, sustainable only a small portion of the large capital priority. This fiscal year, IFC invested in forestry, ecotourism, or other sectors flows to developing countries. Consis- the first privatization of water and sewer with links to biodiversity. A Renewable tent with the new paradigm of private services in Brazil. Aguas de Limeira (AdL), a 50-50 consortium of a major THE___KASESE_____ COBALT____PROJECT_____IN ___UGANDA __ Brazilian construction company, CBPO, and Lyonnaise des Eaux of France assumed operational control of the Western Uganda's Kilembe copper deposit was worked from 1956 to 1982. when the water/sewer system in June 1995. AdL Kilembe Mine ceased operations. The mine's metallurgical operations left behind walleroee ap mte $12m. stockpiles containing nearly 1 million tons of cobalt-rich pyrte concentrate. Over the owill proivestmen urinte 25 years. some of the material eroded downhill and through Queen Elizabeth National Park, filling portions of a large wetland system and stifling vegetation on Lake George. concession, increasing safe drinking Additionally, rains leached heavy metals from the stockpiles. This threat to the first water and sewage collection pipes and wetland designated by Uganda as a wetland of international importance will be signifi- providing treatment of domestic and cantly reduced as a result of the IFC/MIGA-supported Kasese Cobalt Project, through industrial wastewater prior to discharge which Kasese Cobalt Company Limited (KCC) will reprocess the cobalt pyrite concen- into the Tatu, the city's principal stream. trate to produce high grade cobalt. Newly processed tailings will be placed in a more The Tatu is one of the most polluted secure chemical matrix significantly less susceptible to leaching of heavy metals. rivers in the Piracicaba, draining much Reclamation programs already underway by KCC have significantly reduced stockpile of the State of Sao Paulo's surface erosion to Queen Elizabeth National Park. As a result, natural soil is beginning to waters. A major element of this program cover the concentrate and naturally revegetate in some areas. KCC will monitor the is completion of a treatment facility that reclamation and revegetation programs. the city was unable to complete with its own resources. AdL's investment will reduce the waste load in the Tat by Energy and Efficiency Fund will invest sector driven development, IFC should more than 90% over the next 5 years. in on-grid and off-grid renewable find ways to extend its influence beyond energy projects. A proposed photovoltaic its financial reach. Our vision is that Looking Ahead (PV) market transformation initiative, if leading private sector companies, espe- IFC has been able to promote environ- approved, will combine IFC, GEF, and cially those active in sensitive natural mentally sustainable development private sector funds to support both resources and infrastructure develop- beyond its own projects in support of commercially proven and innovative PV ment, together with NGOs, academia, regional investment and development technologies. (see Environment as a and multilateral financing institutions, strategies, by establishing benchmarks Business Opportunity, page 44). would agree on broadly accepted guide- for environmental performance in the lines that would govern investments in developing world and Eastern Europe. To spearhead the Corporation's activities developing countries. If the World Bank Strengthening staff environmental in financing environmentally sustainable Group can assist in achieving a broad awareness and knowledge will continue development, IFC has created a Special agreement between these parties, it to be emphasized in day-to-day opera- Projects Unit within its Technical and would have made a major contribution tions. As capital markets increase in Environment Department. The unit will to sustainable development." importance in developing countries, act as a catalyst to develop and imple- IFC will continue to work closely with ment a variety of new financing vehicles Category A projects have the potential for significant and diverse impacts and require a fiffl Environmental other multilateral financial institutions to help the private sector address a broad Impact Assessment. Category B projects may result in to develop a consistent, pragmatic range of environmental issues. Accord- specific impacts for which performance standards, approach to environmental management ing to Martyn Riddle, Manager of the gideines a desi Catera C becus d oavoid not in financial intermediary lending. IFC Environment Division, "By centralizing result in any environmental impact. Category FI pro- intends to continue to act as a catalyst management of the numerous environ- jects involve financial intermediaries which finance in developing new investment vehicles mental projects initiated by IFC and our sub-projects that may result in environmental impacts. to help the private sector finance envi- projects funded by GEF, our goal is to This article was written by Todd Hanson and Letitia ronmentally sustainable development, enhance IFC's role in environmental Oliveira, ofthe International Finance Corporations building on its experience and existing investments and their integration into Technical & Environment Department (CTEED), portfolio of environmental investments. IFC investment activities." (202) 473-3987, Fax (202) 676-9495. In the coming fiscal year, IFC will con- These initiatives are steps toward realiz- tinue its efforts to provide opportunities ing IFC's broader role in encouraging 31 Supporting the Biodiversity Convention purred by the alarming loss of biodiver- last September, recognizing natural habitat loss as sity around the world, 149 countries have the main threat to biodiversity. As a result, the now ratified the Convention on Biologi- Bank does not support projects which would sig- cal Diversity (CBD). The Convention is nificantly convert or degrade critical natural habi- built around three imperatives: conserva- tats, and avoids other natural habitats entirely if tion, sustainable use, and the equitable sharing of possible by locating projects on previously cleared the benefits of biodiversity. Implementing these or converted lands. Where avoidance is not feasi- imperatives is now an urgent challenge to the ble and environmental assessment indicates that a world community, and the World Bank, along project would significantly affect natural habitats, with other international partners, is committed to the design must include mitigation measures such helping its member countries do so. as establishing and maintaining an ecologically similar protected area. This past November, after consulting with a broad spectrum of external stakeholders and Important work in support of this policy was partners, the Bank presented its Biodiversity begun this fiscal year on Critical Natural Habitats Assistance Strategy' to the Second Conference in Latin America and the Caribbean (page 22), of of the Parties to the CBD in Jakarta. The strat- which the first volume, covering the Southern egy is built on the recognition that protected Cone countries of Argentina, Chile, Paraguay areas are essential but not sufficient for biodiver- and Uruguay, is now complete. The series, which sity conservation, that significant biodiversity is pinpoints the region's critical natural habitats, is located in land- and water-scapes outside pro- being designed to improve planning, environ- tected areas, and that the opportunity cost to mental assessment and mitigation of proposed developing nations for not using these resources infrastructure and other development projects is prohibitive. This strategy now guides the evo- and identify high-priority sites for new targeted lution of Bank support from a traditional focus biodiversity conservation investments. on targeted government-led conservation efforts to 'mainstreaming' biodiversity concerns (Box). Priority-Setting - SThe Bank has also supported regional biodiver- Supporting Targeted Conservation sity strategies and priority-setting exercises, as in Since the 1970s, the Bank has supported pro- its Latin America and Caribbean Region (LAC) tected area establishment and management, work. Last October, LAC and WWF launched a wildlife management, conservation planning, priority-setting exercise for South American ter- buffer-zone management and ex-situ conserva- restrial ecoregions (see page 22). The overview of B. RAHI.L tion. Starting from a fairly modest level, Bank the conservation status and biological distinctive- assistance to biodiversity conservation has grown ness of 191 ecoregions making up the region's rapidly. The portfolio now totals $805 million for land-based natural habitats identifies high-prior- 95 projects or project components in 54 coun- ity areas for biodiversity conservation throughout tries, and an additional leveraged $536 million the region. This past year, the Bank also devel- from borrowing governments and other donors, oped its Assistance Framework for Biodiversity bringing the total support to $1.34 billion since Conservation in Sub-Saharan Africa. 1988. Over the last three years, this has involved average annual incremental support of $198 mil- Partners in Conservation lion. In this last fiscal year, the Bank approved an The Bank recognizes that successful conservation additional 9 projects at $134 million. depends on active partnerships among all stake- holders-governments, local communities, the Natural Habitats Policy private sector, NGOs and international institu- In addition to conserving biodiversity, the Bank's tions like the Bank. In the past year, working with activities must not inadvertently harm biodiver- Conservation International, The World Conser- sity. With this in mind, the Bank finalized its vation Union-IUCN, the World Wildlife Fund, Operational Policy on Natural Habitats (page 39) the World Resources Institute and other national 32 Biodiversity and Natural Habitats ELEMENTS OF THE BANK'S BIODIVERSITY ASSISTANCE STRATEGY This section Supporting Learning and Innovation in Conservation: The Bank supports biodiversity conservation and focuses on sustainable use through regular lending to client governments and grant financing through GEF Bank assis- tance will evolve as lessons from earlier experience are fed back into new operations One focus is envi- management of ronmental education livelihood funds to realize changes in incentives and attitudes. Another is support for incorporating biodiversity concems in integrated resource management planning for forests. river basins biodiversity and coastal zones. The Bank also maintains an action learning program to streamline implementation of its policies and procedures, reviewing best practices and training Bank staff. development agencies and deci- sion-makers in client countries conservation, Internalizing Blodiversity as a Priority: The Bank recognizes that to play an effective role in biodiversity especially in conservation and sustainable use, it must go beyond traditional lending for btodiversity and integrate biodi- versity conservation with economic development. It is working to ensure more ngorous and syslematic con- forests and sideration of biodiversity concerns in its country assistance strategies and economic and sector work. It is also contributing to valuation methods and indicators to allow more consideration of biodiversity concerns marginal lands. in development planning. Building Stronger Partnerships for Conservation: To make its conservation and management assis- tance more effective, the Bank is buRding on existing partnerships and establishing new ones Deeper. more effective partnerships are being sought with client governments, the privale sector, other development agencies and NGOs. Grant programs for NGOs and local communities, are a particularly powerful tool for tapping the social energy needed for better conservation and development outcomes. and international NGOs, the Bank has supported mechanisms to amplify existing government-led conservation activities through NGO and com- . munity-based actions. The Critical Ecosystems Partnership Fund (CEPF), a grant facility pro- - moting conservation and sustainable development in globally critical areas, is being considered and .- will hopefully be launched shortly. . Looking Ahead In its Biodiversity Assistance Strategy, the Bank N AiW $ calls not only for targeted biodiversity conserva- B. tion support, but for developing biodiversity- friendly policies and programs in sectors like the approach for implementing this new frame- agriculture and forestry During the past year, it work. launched a Global Overlays Program, which seeks to develop the conceptual framework and In partnership with Wetlands International, the toolkit for mainstreaming global environmental Bank will also continue its work on wetlands, The article was objectives in national environmental planning and is holding discussions to see how it can help written by David and Bank operations. The Program's initial countries provide further maintenance of inter- Cassells, Forest focus has been on mainstreaming biodiversity national flyways, now partly funded by the Bank Resources Specialist, conservation in agricultural development. and GEE andNatural Mainstreaming Biodiversity in Agricultural Habitats Division of Development Toward Good Practice, will be "'Mainstreaming Biodiversity in Development: A World Bank the World Banks issued at the Third Conference of the Parties to Assistance Strategy for Implementing the Convention on Biologi- Environment the CBD in Buenos Aires this November. The cal Diversity," Environment Department Paper No. 29, November Department develop atoolkit 1995. Available from the Environment Department, fax (202) (EN IW), (202) challenge remains to dvlpa toktand test 477-0565. 473-9235, Fax (202) 477-0568. 33 Stratospheric Ozone Depletion he ozone layer protects life on Earth undermined by, continUiing~ a%ailabilin~ oflo"cally from dangerous ultraviolet radiation. produced ODS; illicit rrde in Roi.lan CFC\ in Excessive exposure to UV radiation can North America. Europe and deek,ping ouCOn- oday, sustainable increase skin cancer and eye cataracts, tries 0,;o undermine the world communirn' development is suppress the immune response system, eftbrts to phase out all CFCz. The pirduction threatened by two and adversely affect terrestrial and aquatic pha;ecut project will addrc;, these ri ks and ecosystems. Increasingly, anthropogenic emis- accomplish %%hat is probably the most co t-eftec- global atmospheric sions of ozone depleting substances (ODS) like rive large-scale ODS phase'our in the world. environmental issues: chlorine- and bromine-containing chemicals, stratosphenc ozone particularly chlorofluorocarbons (CFCs), are Market-Based Instruments depletion and climate threatening the ozone layer's stability. This ear, the Bank undertook a study on market- change. Both threats based imtruments (IBI) t :, s.pport ODS are examples of When countries around the world signed the phaseout. The srudy idenrfies potenr applica- textbook'global Vienna Convention for the Protection of the tions tor conentiona1 MBI.. like r:c:e and trad- environmental Ozone Layer and its Montreal Protocol (MP), able production permits, and recominiends a they committed to phasing out all CFCs by national bidding tem or IFI\IP grint di4trib- xKenalitie- 2010 (1996 for OECD). This past year, the unon. In a competitive auction_ a tirm -U'&er unintended or World Bank supported its client countries as price or "wingne-s to accept' a 4rant in exchanze unforeseen side- they worked to meet these obligations: for ODS elimination reveals the firm,' e ti- effects of human mate of its true incremental co,t4 of conver,ion economic activity. Montreal Protocol away from ODS. A nationtl auction would reducc These atmospheric Since 1991, as an implementing agency for the cO.sts to the NIFMP in,e tirm; IM-wILd hitc r,, Multilateral Fund for the Montreal Protocol compete 1or the Fund's resource- and w-uld have pollution problems (MFMP), the Bank has approved 461 invest- incentives to minimize their corxrsi'n c.-,r, In have charactenstics ment projects (about 40% of all MFMP invest- Nla, the MFIIP E.ecurik e C0r1n irteV .1ppr0% that render their ment projects) at about $210.5 million (nearly $1 million fur such a ;cherrie in Chile. solution particularly 50% of MFMP investment project resources). complex in geo- This fiscal year alone, 112 investment projects, at Sectoral Approach to ODS Phaseo.i poldical terms. They $51.5 million, were approved. These projects Since September 1495. the Bank ha been %%ork- produce large-scale have resulted in an annual phaseout of over ing with the Government of China on a pr.-r to effects which 7,800 tons ofODS weighted for their ozone- phase out over 35,000 tons at ODS arinut in a depleting potential, and will ultimately result in the haon sector, used primraril in fire plwt cnon potentially impact a an annual phaseout of over 42,000 tons. s%sten. Through polcy mreasire4 and tinancing. high proportion of the the pilot will provide enterprle %ith ine..-- earth's people and Global Environment Facility (GEF) to idenrify and adopt least-cost optiom. Co-t ecosystems. Many countries with economies in transition are estimates show that this approach u achieve collective action is not eligible to receive financing from the MP more saumgs than a project-b--prc-jct a-roach. required for their but are eligible under the GEF. Through the It would also all-w Fund disburenicnr t be resolution. as no o Bank as an implementing agency, the GEF is based on achieving halo sector phascout tar.et.. financing ODS phaseout in six economies in masurnr succe,, bN enironnenEal pcdortinance nation is responsible transition, including Russia. The value of the instead of the number ct project pn.p . for causing the approved projects is now over $85 million, and problem. And no one will ultimately result in an annual phaseout of 11ydrocarbon Refrigeration nation workng alone over 18,000 tons of ODS. The Bank, Germanv and Swvised - could eliminate the ate"Lastudy on the global hydrocarbon domesti. threat even with full ODS Production Phaseout in Russia re ration markM 1to evJuar L mJ'a incentive. The Bank is supporting a special initiative to byhbydroc rbotechnolo -, :- commitment and help the Russian Federation phase out ODS w&ther or not thyxjoy a lev! layin t.eld production. Although ODS consumption in tive to o,Ah:c. Russia has fallen over recent years, this could be a .uv e this ,r.A: d ...Ax. 34 Global Climate Change The Global k3j Atmosphere : lYt ear, in a global tudy on lirnate sions and that it is often in a country's best inter- This section * hange, cernsts concluded that human est to pursue actions that also capture climate i%riaes. e;peciallY fosil fiid combu§tion change benefits. Because agriculture, industry, focuses on the and land-use changes like aVriculture and energy and transport investments can impact the * deforestation, are ncreasing concentra- global atmosphere, climate change must be taken Bank's work in .anI t -rcenhouse gases tGHGs), and altering into account in their design. Conversely, agricul- z.- Earth's chmate. This ixill adversel affect tural and infrastructure investments, if not fostering global human health. ecological systems, and ;ocio-eco- designed with climate change in mind, could be *: .c scmtors. th developing countries being adversely affected by future changes in tempera- warming the mi.r vulnerable. 1hile the Framework Con- ture, rainfall and sea level regimes. venton on Climate Change (FCCCI place- solutions through '.d4iAui.5 on OECD countries and economies Up to a point, domestic and global benefits are I trinson tI' [unit emission- in the %ear 2000 to produced jointly. But climate change's global risk energy efficiency, -kcce i- 140 , it onl% requires de%eloping coun- also warrants actions beyond domestic economic .es to repurt on acti%ities to address GHG emis- and environmental efficiency. Increasingly, the demand side .:c climate changc strateges. N leering the Bank is helping countries integrate climate FCCC' obectives wdl require 'I:lobal' irnprte- change concerns into policymaking and invest- management and rent; in entrgy efficiencY and tran ition a%Wy ment planning. Prototype climate change'global rom fhtl thels. The challerne the world gs is overlay' studies have been completed and guide- renewable to meet enerp- needs in the most environmIltallv lines finalized for Ukraine's and Mexico's energy benagn manner, and to take clmate chant!into sector and Argentina's forestry sector. Work was technologies, and accfin iuriculture. f':restry. tiherie%,tlogz- also begun to bring the global climate change cil vwten c,nserxatin and sustainableq' dimension into Indian and Philippine power sec- its role in c'.a,r:d zone managenent- and hunan, th. tor planning. carrying out the Climate change wall continue to hl gnti- Carbon Shadow Price Backcasting it impact on the Bank'. portfi5k4tihtrea4- Study GEF and Montreal r.::rau to develop technologiet4an policies This past year, the Bank began a study to analyze promotiuig efticient energy and.renewablecnergv the economic implications of including a shadow Protocol work. .- ntw mTchanirns augaent or p- a 1i price for carbon damages for selected projects, aelCac. traditional finding, the flank Group can and will assess how including a shadow price fc litate and lexerage fun& for cliite change would have influenced each investment's design. r-pos. in parricular by coser cooperation ttirh The study should help clarify how climate .i prit ate Sector (ir e page 44). This last fiscal change concerns could influence the Bank's lend- .r, the Bank has taken the lead in helping ing, provide support for policy formulation and coLintries reduce emissions and enhance sinks of identify priority investments. greenh-uAie gases on 4 principal fronts: Activities Implemented Jointly Global Environmental Facility Glba lEnvironm a Gl The FCCC Parties established a pilot phase for :1 ?-GEF implementing agerity, the Bank Activities Implemented Jointly (AIJ), where This article was .remtnt t m es countries contract with parties in another coun- written by Robert - *.....partes i anoherWatson, Senior , -:, ... , try to reduce that country's GHG emissions. AIJ Sc Advsor to tbe . n is important for stimulating additional resource office of the Director . -us.iygjE.F flows for the global environmental good. With ofthe Environment .! . .4 ....L..-2.fl V 5 S ilinn M~UP'F Norway's co-financing, the Bank has expanded Department at the k.-inj .7 R- renewable eerg rct'. its AIJ Work Program to clarify how AIJ and WoRld Bank other market mechanisms can promote the 473-6965, Fax - - ..-m Bank's client countries' interests. (202) 477-0565 35 Measuring and Valuing the Environment ignore the costs of environmental degra- Philippines, a joint IMF/World Bank team iden- Traditional measures of economic progress crowd out attention to the environment. In the dation and depleting natural resources. tified key policy reforms the government must The Bank has been at the forefront of make to address environmental issues in its efforts to correct this, pioneering new macroeconomic growth program on the road to ways to measure progress by linking the eco- becoming an Asian 'green tiger': introducing nomic and environmental spheres. Following on water pollution charges to increase the govern- the heels of such work as the integrated national ment's fiscal capacity to manage pollution and accounts it built with the United Nations for user charges to fund protected areas development Mexico and Papua New Guinea in 1991, the and maintenance, increasing fuel excise taxes, Bank continued its pioneering work this past and reforming the fiscal regime for mining, including resource royalties, to provide a secure revenue stream for the government and proper incentives to resource exploiters. .. Monitoring Environmental Progress: Policy Reform and the Environment Expanding the Measure of Wealth, Expigs te measures of wealth, aAs liberalization and policy reform spreads highlights new measures of wealth and worldwide, the environmental effects are most national savings and reductions in directly seen in the 'win-win' policies that aim to environmentally damaging subsidies. eliminate subsidies which damage both the economy and the environment. In 1992, the Bank's World Development Report highlighted fossil fuel subsidies as egregious examples of year when it published Monitoring Environmen- 'lose-lose' policies: scarce fiscal resources are tal Progress (MEP). The MEP presented first wasted, investment decisions distorted, and pol- estimates of total national wealth, embracing lution emissions elevated. Preliminary results natural resources, produced assets and human from work tracking the changes in fossil fuel resources for a broad spectrum of countries. The subsidies from 1990 to 1995 in 5 countries in document highlighted 'genuine savings,' which Eastern Europe show that total subsidy levels on extends traditional measures of net saving by coal, natural gas and petroleum products deducting the value of environmental depletion dropped from $14.4 billion in 1991 to $6 billion and degradation, as a new key policy indicator in 1995, 4.3% of the region's combined GNP for countries aiming to create and maintain total (Figure). Subsidy reductions are beginning to wealth. have an effect. In Poland, the aggregate effi- ciency of fossil fuel use (measured as quantities The Bank has made progress in four related of fuels used per unit of real GDP) has increased areas this year: by about 20% from its mid-1980's levels. Increased fuel efficiency translates directly into Economy-Wide Policies and the reductions in emissions of sulfur and nitrogen Environment oxides, particulates and carbon dioxide. An explicit link must be made between macro- economic planning and the environment through Another stream of work is assessing subsidies on a common analytical framework which recog- agricultural inputs, particularly fertilizers and nizes that, while human-made capital assets are pesticides, whose excessive use leads to runoff essential for development, they can only substi- into the environment. Input subsidies are sizable tute at the margin for natural, human and social in some countries: budgeted fertilizer subsidies in capital. This year, a Bank study on Jamaica India rose from roughly $900 million in 1982 to demonstrated that natural resource management nearly $2.5 billion in 1992. The past few years is important to sustainable growth and the press- have seen a significant reduction in the degree of ing fiscal and political concerns that tend to subsidization of agricultural inputs. Although 36 New Indicators of Progress This year, World Development Indicators This section Fossil Fu Subsidy Rates in Five (WDI) will be expanded to become the focuses on Countries iBank's most comprehensive and authorita- products tive set of data and indicators on economic environmental and social development. Environmental information at two S1990/91 tables will cover land and deforestation, natural gas .1995 protected areas and biodiversity, freshwater levels: under- use, energy taxes and use, energy efficiency standing projects' and CO2 emissions, urbanization, air pol- coal lution, and traffic and congestion. environmental dimensions and 0% 10% 20% 30% 40% 50% 60% Evolving Measures of Value Liberalization in five Eastern European countries (Bulgaria, Former Republic of InnOVatiVe WOrk has been done on valu- monitoring their Czechoslovakia, Hungary, Poland and Romania) has led to dramatic decreases in implicit and explicit subsidies on fossil fuels. Total fossil fuel subsidies fell from US$14.4 billion ing the environmental impacts of Bank performance; in 1990/91 to $6 billion in 1995, a drop of 4.3% of GNP. projects. These include the landscape val- sorc- Inte Irn rgy Agency, World Bank and authoes calculations. a and observing I ues of forested hillsides in Croatia, off- site benefits from expanded protected a nation's these reductions have often been driven by fiscal areas in Haiti, the economic dimensions of coral management of problems and adjustment programs, they can reef protection in Indonesia, and tourism and have important environmental consequences. In other benefits from improved wildlife manage- its environment. some cases, as with Indonesian pesticide subsi- ment in Kenya. Lessons from this work will feed It also explores dies, the subsidy reductions have arisen directly into the development of indicators and efforts to from a recognition of environmental damage. further 'green' the national accounts. economic Indicators of Environmental Change Collaboration on Indicators Work analysis tools to The Bank is working with Indonesia, Costa Rica Collaboration with other international institu- link physical and South Africa to develop green national tions in ESD indicator development is essential. environmental accounts, expanding their traditional economic With the United Nations Commission for Sus- accounts to include natural resources and the tamable Development, the Bank has played a key effects to environment. A major program on development role in developing poverty indicators, and is economic and policy use of environmental indicators at the helping the Baltic states define their national country level will also begin this year, with assis- environmental indicator sets. A global coalition impacts. tance from Scandinavian trust funds. for Land Quality Indicators took shape this past year: UNEP, UNDP, FAO, CGIAR (the Con- New guidelines for environmental performance sultative Group for International Agricultural This article was monitoring indicators are part of a Bank-wide Research) and the Bank are working on a two written byJohn effort to improve project implementation and year program to expand our knowledge of the Dixon, Unit Chief better monitor the impacts of the Bank's lending. pressures on, and changing state of, agricultural Indicators and The first edition note of Environmental Perfor- land worldwide. Environmental mance Indicators is now being implemented. Valuation, and Kirk Hamilton, Environmental The second edition of Monitoring Environmental World Bank, "Monitoring Environmental Progress: A Report on Economist, ofthe Progress, scheduled for early 1997, highlights sec- Work in Progress." (Washington, D.C.: 1996). Pollution and toral indicators for land quality, updated portfo- Environmental . . . 2"Environment Performance Indicators-First Edition Note." Febru- Economics Division lio indicators on wealth and genuine savings, ary, 1996. World Bank's Environment Department, Fax (202) 477- of the Environment analysis of evolving themes such as poverty and 0565 Department the environment, and new indicators on policy "World Development Report 1992: Development and the Envi- (ENVPE). (202) reform and the environment. This edition will ronment." Published for the World Bank by the Oxford University 473-8594, Fax include human capital formation in the genuine Press, New Yoric 1992. (202) 477-0968 savings measures. 37 Legal Dimensions of Environmental Management nvironmental protection is now accepted nents early in a project's development reinforces as a crucial component of a modern legal its legal aspects. The benefits of this approach system, as Agenda 21 highlights in its can be seen, for instance, in the Industrial Pollu- guidelines for effective legal and regula- tion Control Project in Algeria and the Environ- tory frameworks. As governments mental Management Project in Burkina Faso. increasingly turn to the private sector, the impor- tance of sound, adequately enforced environmen- Transboundary and Global tal regulation and policy and pricing reform Assistance increases. The legal aspects of solutions to global Regional and global environmental solutions and transboundary environmental problems also often have national and international law com- present new challenges for inter-governmental ponents. The Bank's legal staff have helped draft such regional instruments as the GEF-financed regional trust fund agreement in the Eastern N G Carpathian mountains and the Resolution of the "You're not going to be successful in Wider Caribbean countries to develop laws the Bink- lis c. getting foreign investment unless you needed to ratify the global marine pollution ftri., t have a good legal system" waters convention (MARPOL 1973/78). In . hresponse to growing pressures on the Congo it Bank operaions t James Wolfensohn, World Bank President Basin's biodiversity, the Bank is helping draft a NGOS pwdnien Memorandum of Understanding between the six nrd :tracurid the countries of the Basin to establish a Regional world, and reentih Environmental Information Management system pirTicipard h cooperation. In the past year, the Bank has con- (seepage ll). firq kribic Work- tinued to play a crucial role in helping its client Jiop un Environ- countries integrate environment and develop- LEGEN was part of the team drafting the nicnral Assezsment. ment through law and institutional capacity working paper on the Red Sea's environmental The nriikIJf.p held building. management and publications on the Desertifi- iiidb th the GAdf cation Convention and CIS States' participation CounCd (fCV-1.pCra- Environmental Law and Capacity in international environmental treaties. tic-ii GCC) uning the Building Bald. A .bIC-wrsI'n Many developing countries are seeking advice on LEGEN has also helped coordinate the Bank's E.1 Surcrbrkhk, %va- how to enhance the scope, content and capacity role as trustee and administrator for global envi- aitended bY fitr% of existing national frameworks to create a sound ronmental funds such as the GEF, the Ozone idgh-ranked stift legal foundation for their environmental man- Trust Fund and the Rain Forest Trust Fund, tronm eninment.l agement. LEGEN (Box), working with the aspniic g , t ater responsibility country lawyers, have helped 50 THE WORLD BANK'S ENVIRONMENT rcourc: manaigement countries produce overarching or sectoral legisla- AND INTERNATIONAL LAW UNIT Fax: (46 8) 27-00-71 RO. 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