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Environment Makes ’Quantum Leap’ in Middle East and North Africa

August 16, 2007

August 16, 2007— In the 1990s, concern for the environment was not a top priority in the Middle East and North Africa region (MENA).

Fifteen years later, there’s been a “quantum leap” on the environmental front as the region has moved from zero investment in environmental protection to investments in every country, says Sherif Arif, World Bank Regional Environmental Advisor for MENA.

The turning point came in 1999, when the Bank began confronting countries with the high cost of doing nothing about environmental degradation, says Arif.

In an innovative effort, a team of World Bank staff, financed through the multi-partner Mediterranean Environment Technical Assistance Program (METAP), calculated the “cost of inaction” as ranging from 2.1 percent of GDP in Tunisia to as high as 7 or 8 percent in Iran.

“This was a big evolution,” says Arif. “Now we can put a price on the cost of inaction and compare the benefits and costs of investing in natural resource management.”

The estimates gave environment ministers a tool to discuss the importance of environmental protection “in the same language as the finance ministers, the people who speak money,” explains Arif.

Critical Factor in Economy

As a result, governments began to see pollution and the degradation of natural resources as critical factors in the economy, he adds.

Recent environmental progress and successes are also the fruit of years of building relationships and trust, even among countries that weren’t clients of the Bank, he says. “We’ve developed a very tight working relationship over 15 years.”

The Bank has assisted with developing environmental policy, action plans, strategy, analysis, and helped establish environmental ministries throughout the MENA region. Governments are or are planning to allocate significant resources to environmental protection. Even more significantly, environmental concerns are affecting other policy areas, such as trade and industry.

“In 15 years, we have achieved what we call a quantum leap by really establishing those institutions, building their capacity, and providing them with grants and loans,” Arif adds.

Climate Change

In addition to their local environmental issues, countries in the region are also confronted with climate change, says Arif.

“Climate change is becoming the topic of everybody. It impinges on everyone from the Minister to the farmer. They know that they are not going to escape the negative impacts that will affect their daily lives.”

“This new way of thinking will help future climate change adaptation efforts gain quick acceptance,” predicts Arif.

Already Tunisia has begun efforts to adapt to climate change, and the Bank is helping other countries such as Yemen and Morocco on this front.

“All these countries are going to be affected in some way and they’ve got to change their behavior and the way they do business,” Arif says.

Carbon Market

A factor in this newfound interest for countries in the region is the booming US$30 billion global carbon market. The carbon market allows developing countries that have ratified the Kyoto Protocol agreement to receive payments as incentives for investments in climate-friendly projects that reduce greenhouse gas emissions, thus reducing pollution, increasing energy efficiency, and increasing participation in global efforts to halt climate change, states Arif.

Three such projects are operating in Egypt and Tunisia, and more are expected to come online in Jordan, Algeria, Morocco, Iran, Saudi Arabia, and “potentially across the whole region,” says Lasse Ringius of the Bank’s Carbon Finance Unit.

Landfill projects that capture methane (a potent greenhouse gas) and improve often dangerous working conditions for young workers at landfills, would otherwise not be economically viable. Some projects produce electric power as a byproduct.

Carbon finance could potentially help build “green cities” with enhanced energy regulations, standards, and cleaner fuels—a prospect already contemplated by Egypt, says Ringius.

 Blend to Lend

“The MENA region was the first to blend World Bank loans with emission reduction revenues,” says Arif.

Such blended loans, with revenues helping to offset interest payments, are in place in Tunisia and Egypt. The year-old Egypt Pollution Abatement Project II leveraged a US$20 million World Bank loan to attract another US$145 million in financing. The project, which targets industrial pollution, sells emission reductions to the Bank and others, with a portion of the revenues going to the government’s new pollution abatement program.

Arif states that the “blend to lend” approach provides a strong incentive to tackle pollution problems that may otherwise languish for years.

“Protecting the environment is good business,” says Arif. “This is the first time that people are being rewarded for protecting the environment.”