FOR IMMEDIATE RELEASE

The World Bank

News Release No. 2000/077/S	Contacts:   In Prague  Nick van Praag  44-7990-507-087
In Washington  Kristyn Ebro  202-458-2736
Kebro@worldbank.org	

WORLD BANK SAYS LEADERSHIP IS CRITICAL
FOR ENVIRONMENTAL PROGRESS

PRAGUE, September 22, 2000—In its Annual Review of the Environment: Environment Matters released today at the World Bank/IMF Annual Meetings, the World Bank says the most fundamental brake on better environmental management is lack of leadership rather than lack of resources.  The Bank's new environment strategy described in the report and which is under preparation will strive to help fill the gap.

As a development institution, the Bank's overarching concern is not only lending money, but helping countries make the policy and institutional choices that benefit poor people most and facilitate equitable and sustainable growth, according to the report.  "Our aim is to help governments and other actors in developing countries improve poor peoples' livelihoods, health, and security and promote a sustainable use of natural resources," said Ian Johnson, Vice President for Environmentally and Socially Sustainable Development.

An underlying concern in the debate about globalization is that the environment and social dimensions of trade and investment are not given sufficient weight or attention in international affairs.  There are numerous conventions and other international agreements addressing the global problems such as climate change, biodiversity, and water management, but progress on dealing with these global issues is often slow, says the report.  

At the same time, public awareness of the risks of environmental degradation is growing, and there are signs that a new working partnership among government, business, and civil society is emerging to push for sustainable development.  The report identifies the need to build leadership and support responsible management of environmental issues at the national and international levels.

The Bank's new strategy aims to strengthen the Bank's environmental agenda and better integrate environmental concerns into development.  It will seek to establish the World Bank Group among the leaders on sustainable development in the run-up to Rio +10, committed to seeking out the institutions and individuals in the public and private sectors and in academia who are concerned about the environment.

The Bank began the process of formulating a new corporate environment strategy in 1999 that it will present to the Board of Directors in early 2001 after thorough consultations with civil society, governments, and other stakeholders. 

The main goal of the strategy is to better align the Bank’s environmental work with its central mission of poverty reduction, either through environmental interventions that directly benefit the poor or through changes in governance and public policies that foster sustainable economic growth.

	Recognizing the close links between sustainable growth, the environment, and poverty reduction, the World Bank Group environment strategy aims to:

•	Improve people’s health by supporting efforts to improve air quality in urban areas, and providing safe water to urban and rural populations.
•	Enhance the livelihoods of people by helping to manage natural resources sustainably — land, water, forests, and biodiversity.
•	Reduce people’s vulnerability to environmental risks such as natural disasters, severe weather fluctuations, and the impacts of climate change.

In drawing up the new strategy, the Bank is including input from a variety of external stakeholders, including client countries, international donors, civil and scientific organizations.

The Bank's Environment Portfolio

The Bank has funded a total of 97 environmental projects totaling some $5.1 billion, and a larger number of projects with primarily environmental objectives amounting to $10 billion.  About 47 percent of the Bank's environmental portfolio deals with urban pollution and related problems.  Another 36 percent go to natural resource and rural environment management.  Some 8 percent is for the build-up of environmental management capacity.  The remaining 9 percent goes to global issues funded by the Global Environment Facility and the Montreal Protocol's Multilateral Fund.

During FY 2000, 13 new environmental projects were approved, totaling $515 million.  In addition, there were over 30 new projects in other sectors with primary environmental objectives amounting to just over $1 billion.  Thus, environmental lending of projects approved in FY00 amounts to nearly $1.6 billion — 10 percent of total Bank lending ($15.3 billion).

Environmental Assessments and Safeguards

	All Bank projects have to be screened for potential environmental impacts.  This requirement has helped to minimize potentially negative environmental impacts of Bank projects.  Over the period from 1990 to 2000, 210 projects — about 14 percent of the Bank's lending portfolio — were classified as Category A, which requires a full environmental assessment.  Another 1,004 projects — about 35 percent of Bank lending — were classified as Category B, requiring a more targeted or limited environmental analysis.  The rest of the portfolio (51 percent) had no environmental impact, and therefore required no environmental analysis.

	The World Bank in fiscal 2000 continued its effort to improve the application of its 10 environmental and social safeguard policies, which are designed to protect those who might be adversely affected by Bank-funded operations and to ensure that projects do not cause unacceptable harm to the environment.

	As reported in last year's Environment Matters, the Quality Assurance and Compliance Team (QACT) was established in 1999 to oversee the Bank's safeguard policies.  In the past year, QACT has been significantly strengthened with increased resources, complemented by a system of Regional Safeguards Coordinators.

Corporate Environmental Initiatives 

The Bank has been supporting several innovative programs and corporate environmental initiatives.  The chapter on Payment for Environmental Services highlights an exciting new approach to preserving the services provided by natural environments that is being piloted, with Bank assistance, in Central and South America.  These schemes involve lowland farmers paying annual fees to upland landowners for the preservation of forests near the headwaters of watersheds, in effect a payment for the hydrological services provided by a natural environment. 

The Bank is working with its clients on global environmental issues, such as the phaseout of ozone-depleting substances, biodiversity conservation, greenhouse gas reduction, and protecting international waters.  

Two innovative programs were initiated in FY00 — the Critical Ecosystem Partnership Fund (www.cepf.net), which focuses on protecting biodiversity in critical ecosystem hot-spots by working with local groups; and the Prototype Carbon Fund (www.PrototypeCarbonFund.org), which helps facilitate cost-effective ways of carbon emission reductions through establishing carbon markets.  

The Global Environment Facility has continued to support environmental projects and programs to address climate change; and protect biodiversity, fresh and marine water resources, and the ozone layer.  In fiscal 2000, the Bank’s GEF program reached a new all-time high of $280 million in grants approved by the GEF Council, representing a 12 percent increase over the previous year. 

REGIONAL ROUND-UP

Africa

	With two-thirds of Africa's population living in rural areas, dependent on rainfed agriculture and other natural resources for their livelihoods, and major African cities also heavily dependent on natural resources from surrounding areas, the Bank's efforts continue to focus on assisting its client countries to reverse environmental degradation in their pursuit of sustainable economic development.

	The Bank's Africa Region, during fiscal 2000, as in previous years, continues to emphasize:

•	Mainstreaming national and global environmental concerns in Bank operations;
•	Encouraging the region's private sector to incorporate principles of environmental sustainability through approaches such as the green certification of products, eco-labeling, and meeting the requirements of ISO 14000.
•	Conserving biodiversity and managing forests sustainably;
•	Environmental planning and management of city growth;
•	Deciding about resource allocation transparently; and
•	Using Environmental Assessments proactively.

East Asia

	In fiscal 2000, East Asia began to emerge from its worst economic collapse in modern times.  However, the resumption of sustained economic growth remains dependent on natural resources, which must be better managed.  Throughout the crisis period, the Bank has maintained its commitment to East Asian countries with a combination of lending and non-lending instruments.  

During fiscal 2000, the East Asia and Pacific Region launched 10 new environmental operations and continued mainstreaming environment in Country Assistance Strategies (CAS) and economic sector work in countries such as Thailand and Indonesia.  Furthermore, the Region is contributing to the World Bank Group's Environment Strategy with an East Asia and Pacific regional environment strategy.  The region has an active GEF portfolio of 15 operations which focus on global environmental concerns such as biodiversity, climate change, and a regional program addressing the Mekong River.

	The Region has undertaken a number of new sector analyses, including the recently completed ”Indonesia Environment and Natural Resources Management in a time of Transition”, and the first analysis of the mining sector in the region — Mining and the Environment in Indonesia: Long-term Trends and Repercussions of the Asian Economic Crises.  

The Region has also piloted several innovative products for monitoring environmental performance including the Thailand Environmental Monitor and the Philippines Environment Monitor.  The monitors attempt to set baseline trends in various environmental indicators associated with air and water quality and natural resources management.  Through its Metropolitan Environment Improvement Program initiatives in Thailand and Vietnam the region has focused considerable attention on issues relating to community-based programs to address urban pollution problems.

Europe and Central Asia

	Since the early 1990s, most countries in Eastern Europe and Central Asia, with the exception of Turkey, have seen dramatic declines in their GDP and sharp increases in poverty.

	Pollution levels have fallen, largely because of the drop in industrial production.  If economic growth resumes, most countries can expect pollution levels to increase too.  In some countries of central Europe, however, the economy has grown, yet pollution has remained stable.  This is because the composition of industry has changed, new owners have invested in modern production technology, and countries have applied good environmental policies, eliminated market distortions, and invested heavily in environmental infrastructure.

	Apart from the severe air pollution problems — which affects 57 cities in the region, or 61 million people — poor water resource management, particularly related to irrigation, affects the livelihoods of some 30 million people.  And deteriorating infrastructure and lack of funds for operation are causing an increase in water-borne diseases.  Increasing poverty and sharp rises in utility prices are putting pressures on natural resources in some parts of the Newly Independent States (NIS — the states emerging from the dissolution of the former Soviet Union, except for the Baltic Republics) and the Caucasus.

	Apart from the Bank's environmental portfolio of $652 million in the region, and GEF or Montreal Protocol Trust Fund grants totaling $217 million, the Region is emphasizing the linkages between poverty and environment and the critical role of good governance.

Latin America and Caribbean

	Though the Latin America and Caribbean Region has a rich natural resource base that supports livelihoods and ecosystems of global relevance, environmental degradation continues to occur at an alarming pace.  On the positive side, the rate of forest loss seems to have stabilized in much of South America, although in Central America it has increased slightly, to about 2-3 percent annually.

	Projects approved in fiscal 2000 for the Latin America and Caribbean region addressed land regularization, community management of environmental assets, energy efficiency and renewable energy, and indigenous peoples' development.  Increasingly, the Bank has been asked to provide assistance during the transition to new administrations through preparation of policy notes where the integrated view of sustainable development issues and options are discussed (as in the case of Mexico).

	Special initiatives in the region include the Mesoamerican Biological Corridor, which encompasses nearly 30 percent of Central America's territory.  Although it began as an effort to connect various national parks, it is now becoming a driving force behind the integration of development priorities and environmental agendas for the entire Central American region.  Other initiatives are the Pilot Program to Conserve the Brazilian Rain Forest and the Clean Air Initiative.

Middle East and North Africa

	In fiscal 2000, the World Bank approved 21 investment projects for a total of $760 million loans and $190 million in either IDA credits or special credits to the West Bank and Gaza.  Projects in the region addressed sewerage in Iran; drainage in Egypt; protected areas management in Morocco; water in Tunisia; social protection in Yemen; and emergency community restoration after the December 22, 1999 earthquake in Ain Temouchent, Algeria.

	Fiscal 2000 also saw an increased emphasis on mainstreaming environment into the nonlending services that the Bank provides.  Of particular importance is the on inclusion of environmental staff in the dialogues with countries on Country Assistance Strategies and Comprehensive Development Frameworks.  

	As part of the World Bank's overall effort to establish a corporate environment strategy, the Middle East and North Africa Region recently began to revisit its 1995 policy document, Towards Sustainable Development: an Environmental Strategy for the Middle East and North Africa Region, to ensure its continued relevance.  This process is on-going.  After detailed consultation with both government and civil society in the region's countries, the policy document is expected to be completed in the late fall of 2000.

South Asia

With about 1.3 billion people, South Asia is home to almost 22 percent of the world's total population and about 40 percent of the world's poor.  Despite impressive economic growth in recent years (averaging 5.3 percent GDP growth over the past decade), South Asia still has persistent — even increasing — levels of poverty.  And of the roughly 1 billion people to be added to the world's total population over the next 15 years, one third will be born in South Asia — implying that poverty reduction will continue to be the region's most fundamental challenge.

Environmental problems in South Asia cover a wide spectrum of issues.  For example, in the case of health issues alone in India, environmental factors play a role in almost 20 percent of all illnesses and deaths.  Environmental health is a major health issue, second only to malnutrition and exceeding the current impact of other single health threats such as HIV/AIDS, tuberculosis, or cancer.  

Land degradation, deforestation, fishery depletion, and water scarcity threaten the livelihood of nearly half the region's rural poor.  Environmental problems, magnified by the inadequacy of governance structures in every country of the region and at all levels, cause substantial loss of life and threaten the livelihoods of millions of people.

In the South Asia Region of the World Bank, the term "environment" is primarily thought of in terms of the productivity and sustainability of natural resources contributing to livelihoods; the impact of pollution on human health; and the functioning of ecosystems to reduce people's vulnerability, especially of poor people.  

The current Bank project portfolio in South Asia include 150 projects, about a quarter of which include major environmental objectives, covering both pollution and natural resource management issues.

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