Environmentally sustainable development

Environmentally sustainable development in:

Revitalizing rural development

CGIAR

In 1992 the Bank's work in ESD was only a small part of its lending portfolio. Now, in recognition of continuing problems, the Bank has an extensive commitment to environmental sustainability with a portfolio that includes investment programs to reduce pollution, protect ecosystems, and build capacity for environmental management (see figure 2-3).

Strengthening the environmental agenda

The Bank's fiscal 1997 environmental agenda focused on building a more strategic and integrated approach to ensuring that environmental sustainability is at the core of economic development. The main prongs of the strategy included:

· Building capacity for environmental management. At the end of fiscal 1997 the Bank was helping seventy countries to strengthen their environmental management capacity. The fiscal year witnessed support for innovative projects such as the regional Lake Victoria environment project in Kenya, Tanzania, and Uganda, the Solar Home System project in Indonesia, and India's Ecodevelopment project. The Bank supported natural resource management in forested areas in Argentina, Haiti, and Mexico and general environmental management in India, Madagascar, and Sri Lanka. It also helped these and other developing countries move toward more flexible and cost-effective environmental policies and to develop innovative market-based instruments to promote environmental sustainability. Market-based instruments such as effluent charges, deposit-refund schemes, performance bonds, and tradable permits are all being utilized by Bank clients. Countries as diverse as China, the Czech Republic, and Mexico are basing their policies and investment plans on careful cost-effectiveness analysis with Bank support. And client countries are creating more attractive business climates for private investment in environmental projects as well as reducing subsidies and pricing distortions to free up resources for investment. With the IFC and the GEF, the Bank launched private sector venture capital funds for investments in biodiversity and renewable energy.

· Mainstreaming environmental sustainability into development programs. Over and above its $11.6 billion portfolio of programs targeted at protecting and improving the environment, the Bank also requires that all Bank-financed programs practice environmental sustainability. One key means of achieving this is the environmental assessment (EA) process.

A fiscal 1997 review shows that, although there are still weaknesses, the benefits of EA are considerable: promoting investment in activities that are more sensitive to ecological concerns than those financed a decade ago. In fiscal 1997, eighteen projects totaling $2.9 billion of Bank lending underwent full EA, including public consultations, and a further eighty-two projects totaling about $6.1 billion in Bank lending underwent some measure of EA appropriate to their potential environmental impact.

The Bank has extended the process to include sectoral environmental assessments, such as an EA of the irrigation sector in Kazakhstan and of the power sectors in Nepal and Vietnam; and regional EAs, including one for the Aral Sea basin and one for flood protection in Argentina. Analysis of the environmental implications of policies, institutions, and development plans for investments in agriculture, energy, and transport provided an array of options to guide sustainable development.

The Bank's Economic Development Institute environment program helps to mainstream environmental issues into all aspects of development by providing training for policymakers on biodiversity, climate change, coastal and marine environment, urban and industrial pollution, resettlement and rehabilitation, and environmental aspects of sustainable agricultural development. EDI initiated a multistakeholder, multiseminar approach in fiscal 1997 through its Mainstreaming Environmental Sustainability program. This comprehensive approach facilitated awareness and policy dialogue among a wide audience--including ministers, policymakers, parliamentarians, journalists, and NGOs. Programs on economic globalization and sustainable development were implemented in southern Africa, Central America, and South Asia in fiscal 1997.

· Investing in partnerships that work. Recognizing that all groups in society have a role to play in promoting sustainable development and that its own work can only be effective in partnership with other key stakeholders, the Bank heightened its efforts to build and strengthen partnerships in fiscal 1997. Its formal partners now include multilateral financial institutions; United Nations agencies; bilateral donors; NGOs, such as the World Conservation Union (IUCN), the Earth Council, the World Resources Institute, and the World Wildlife Fund (WWF); academic institutions; and private organizations such as the World Business Council for Sustainable Development. In partnership with the private sector, the Bank is creating a series of market transformation initiatives that bring together coalitions of private companies, NGOs, and development financiers to fund private sector investments for sustainable development in a number of sectors, including forest, marine, photovoltaics, and hydrocarbon refrigerants.

The WWF and the World Bank have identified priority areas and strategies for biodiversity conservation throughout Latin America and the Caribbean. This effort is complemented by another joint effort of the Bank, Agriconsulting, and the World Conservation Monitoring Center to pinpoint critical natural habitats in Argentina, Chile, Paraguay, and Uruguay. Improved planning and environmental assessment, mitigation of harmful effects of development projects, and new targets for biodiversity conservation investments have resulted from this work.

· Building and sharing knowledge. Each year brings new understanding about what makes development sustainable. The Bank and its clients continue to learn from innovative pilot activities so that good practices can be replicated and mistakes avoided. The Bank is filling knowledge gaps and creating a knowledge-management system for development professionals using new information technologies and working with partners. The technical networks, established in fiscal 1997, include a network of some 300 environmentally and socially sustainable development professionals that is facilitating the generation and dissemination of knowledge. Environmental communication was strengthened through broader dissemination of the two-year-old journal for practitioners, Environment Matters; while joint publication of best practice and research with partners resulted in the "Wetlands in Asia" paper, along with three major papers prepared for the fifth anniversary of the Rio Earth Summit: "Advancing Sustainable Development," "Expanding the Measure of Wealth," and "Five Years After Rio: Innovations in Environmental Policy."

The Global Environment Facility and the Montreal Protocol

The Bank shares responsibility for implementing GEF activities with UNEP and UNDP.

The Bank is currently responsible for a GEF work program of about $1 billion, covering four focal areas: biodiversity, climate change, ozone-depleting substances phaseout, and international waters. At the end of fiscal 1997, World Bank management had approved sixty-nine projects in over fifty countries, totaling GEF grant commitments of $675 million and leveraging an additional $2,848 million. The Bank adopted important changes to streamline its GEF implementation processes and improve effectiveness. As a result, project processing time under the Bank's control is expected to halve.

As trustee of the GEF Trust Fund, the World Bank, at the request of the GEF Council and in cooperation with the CEO/chairman of the facility, initiated the second GEF replenishment process in May 1997.

The Bank recently completed its fifth year as an implementing agency of the Multilateral Fund of the Montreal Protocol (MFMP). During the past year, elimination of the use of ozone-depleting substances (ODS) amounted to over 9,000 tons, about 5 percent of total ODS usage by all developing countries eligible for assistance from the MFMP. This phaseout represents 75 percent of the total phased out by all MFMP agencies and demonstrates the MFMP's tangible and measurable global environmental protection achievements.

Revitalizing rural development and sustainable agriculture

In fiscal 1997 the Executive Board endorsed the sector strategy paper, "Rural Development: From Vision to Action." The renewed focus on rural development is intended to foster economic growth and reduce poverty in rural areas where 75 percent of the world's poor live. It will reduce urban poverty by bringing down the price of food in cities. It will also contribute to increasing national and global food supplies--an essential goal in view of the expected increase in the world's population to over 8 billion by 2025.

The new strategy focuses on four areas of action:

· improving rural strategy formulation and consensus building;

· improving project quality;

· increasing international awareness of the importance of rural development; and

· building staff capacity.

Actions were taken in all four areas in fiscal 1997, with rural strategies being incorporated into country assistance strategies for Mexico and Morocco and the Country Economic Memorandum for India; reviews of the irrigation and forestry portfolios completed and others planned; Bank participation in several high-profile activities for increasing awareness; and a core staff training program developed.

During fiscal 1997, two events spotlighted rural issues. The first, the Bank's Environmentally Sustainable Development Conference--called Rural Well-Being: From Vision to Action, attended by delegates from NGOs, national governments, academia, and foundations, as well as the heads of the African Development Bank, the International Fund for Agricultural Development, and the World Bank--resulted in a shared vision for revitalizing rural development and the actions needed to achieve it. Second was the United Nations' Food and Agricultural Organization's World Food Summit in which the Bank participated. The summit's broad plan of action addresses issues fundamental to the Bank's assistance strategy that go beyond agricultural and rural development to stress the need for education--especially for girls; measures to improve environmental sustainability; and decentralization and participation.

Several other important activities were undertaken during fiscal 1997:

· Implementation of the Focus Program Initiative began in several countries. Through a combination of political will and rigorous application of best practices, the program will show that it is possible to achieve significant regional and global impacts on food security and poverty reduction through a variety of activities, including rural strategy formulation, increased lending, and policy advice.

· Significant progress has been achieved in land reform. Pilot projects are ongoing in Brazil and Colombia. In Brazil the pilot was expanded to five states, with approval of the first loan exclusively for land reform since the Bank's support to Kenya some thirty years ago. Additional loans are under preparation in Colombia and Guatemala.

· An innovative agricultural research operation in Brazil is enhancing private sector involvement and supporting a competitive grant system for allocating public research resources.

· The report "Rural Finance: Issues, Design, Best Practices" was released. It sets out a new approach for providing credit to farmers and rural entrepreneurs, moving away from nurturing subsidized government institutions toward developing institutional capacity for a broader range of rural financial institutions, including those offering microfinance.

Consultative Group for International Agricultural Research (CGIAR)

Central to agricultural development is agricultural research. CGIAR is the leader in international research aimed at promoting sustainable agriculture for food security in developing countries. A global endeavor of cooperation and goodwill, CGIAR celebrated twenty-five years of effort and achievement this year.

Pakistan, South Africa, and Syria joined CGIAR, bringing to fifty-three the number of developing and developed countries, foundations, and international and regional organizations, including the World Bank, that collectively support the work of sixteen international research centers.

The Global Forum on Agricultural Research was convened during CGIAR's International Centers Week in October 1996 to broaden partnerships among national agricultural research systems, regional organizations, research institutions, NGOs, universities, and the private sector. The Declaration and Plan of Action for Global Partnership in Agricultural Research, adopted by the Global Forum, was tabled at the World Food Summit. Global Forum participants committed themselves to join in partnership to address common concerns vigorously, thereby strengthening the capacity of the agricultural research community to help combat poverty, hunger, environmental degradation, and inequity in developing countries.