22 July 2008The New York Times
Back in 1989, when I spent four months scouring the road-laced reaches of the western Amazon researching my first book, The Burning Season, I learned a lot about the power of loans to propel environmental and social progress or trouble. Road-paving projects, many underwritten by wealthy countries, were spreading ranching and logging into areas inhabited by rubber tappers and Indians, with environmental destruction and violence the result.
Since that era, when rain forest destruction achieved something close to the visibility of global warming today, the World Bank and its sister institutions, including the International Finance Corporation, have been talking the sustainability talk.
But a fresh examination of more than $400 billion in development loans since 1990 by the bank's own internal monitoring group finds glaring gaps all along the chain from Washington offices to oversight of construction in poor countries. (I haven't had time to see whether the International Finance Corporation's approval of loans for India's "Ultra Mega" coal-burning power plants is included.)
My news article on the review of environmental policies and practices of the World Bank Group is online.
As the world heads toward nine billion people, with most population growth in the poorest places, how can prosperity be spurred — by lenders or in other ways — without erasing the planet's natural assets? That is the question. I've added a bit below on a couple of points that didn't fit into the news story.
Jouni Eerikainen, who wrote the report's section on the International Finance Corporation, the bank's private lending arm, noted that nearly 40 percent of the roughly $10 billion in annual investment these days is handled by private banks in developing countries. "The I.F.C. has limited leverage on the approach of these local banks," Mr. Eerikainen told me. "Building commitments and the capacity of these intermediaries is a huge task."
I asked the report's authors about another problem I've been tracking at the World Bank — what some officials there say is a persistent lack of focus on investments that can limit losses in inevitable natural disasters (like reinforcing schools in earthquake zones). Sure enough, some of them had worked on that, too.
Vinod Thomas, the director-general of the World Bank Group's independent evaluation group, said a recent report on the Bank's work on disasters found the same problem. "The bank has done well on the reconstruction side," he told me. "But even where disasters recur, the preventive side gets neglected, for political reasons. Reconstruction gets photos."
Things appear to be improving, though, Mr. Thomas said, partly because analysts for the bank and its lending partners are running the numbers on the economic benefits of resilience. "The rate of return on prevention can be 4 to 12 times the investment," he said.
Often, he noted, there is no inconsistency between environmental conservation and resilience to disasters. He cited the example of maintaining coastal mangrove forests as a buffer against flooding. Communities bounded by mangroves persist while those exposed to the waves vanish. There's no need to crunch numbers to figure that out.
