Country Level Environmental Diagnostic Tools in the World Bank

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1 Country Level al Diagnostic Tools in the World Bank Summary of a Review 1 1. Background and Objectives Analytic work plays a crucial role in informing policy dialogue with client countries. It guides priority setting, provides relevant upstream information about possible outcomes of specific interventions, evaluates risks and alternatives, and influences development outcomes over the long term through input into the design and implementation of projects and programs. As the concept note on Country Analysis (CEA) points out, the Bank regularly uses various types of analytic tools to monitor and provide guidance on development assistance, for example, through poverty assessments, public expenditure reviews, or more recently, through institutional and governance reviews. Diagnostic work on environmental issues, by contrast, has tended to be unsystematic and sporadic, even though numerous diagnostic tools and methodologies have been used by the Bank. This has limited the Bank s ability to effectively integrate environmental issues into country programming, policy dialogue, projects and programs. Recognizing this shortcoming, the Bank Strategy (BES) emphasized the need to strengthen the analytic foundation of environmental work both at the country and sector level. In response to the above concern, CEA has been identified as the main country level environmental diagnostic tool. It is intended to provide systematic analytic input into Country Assistance Strategies (CASs), integrative analyses such as Development Policy Reviews (DPRs) and sector strategies on key environment-development links facing client countries. It is intended to inform policymakers about the environmental implications of specific policy choices and the country s environmental management capacity and performance. The focus of the on-going work-program on CEA is to develop a consistent approach for providing such analytic input into countryprogramming. Given that there are numerous analytic tools and methodologies used by the Bank, other donor agencies and client countries, it is important that the CEA build on the strengths of previous approaches. Therefore, a review of Bank and international experience has been undertaken to provide input into the methodology for CEA. This note summarizes the findings of the review of Bank s analytical tools, a separate note focuses on a review of international experience Objective of this Note This note is based on a desk review of country level environmental analytic work undertaken by the Bank. 3 The objective of the review was to take stock of existing diagnostic tools, identify their key elements, strengths and weaknesses, highlight good 1 This note is written by Poonam Pillai with input from Magda Lovei, Anjali Acharya, Hans Olav Ibrekk, and Nanako Tsukahara. The author wishes to thank Milen Dyoulgerov for extensive input on the Issues Papers. 2 A review of international experience is being undertaken by Stockholm Institute. 3 In addition to comprehensive country-level analytic studies, the Bank has been supporting analytic work in a range of environmental thematic areas (such as pollution management, urban environmental issues, forestry, and biodiversity protection. 1

2 practices and summarize lessons learnt in order to build on the strengths of existing tool and methodology for CEA. 3. Brief Summary of Reviewed Documents 4 The desk review included 20 National Action Plans (NEAPs), 7 Country Strategy Papers (CESPs), 3 Monitors (EMs), 11 Strategy Studies and Papers (ESPs), 7 Issues Papers (EIPs) and 1 Policy Note. The following summarizes their key characteristics: National al Action Plans (NEAPs) are country-owned action plans used to address key environmental priorities of a given country. Information from NEAPs is often used to feed into the Bank s Country Assistance Strategy (CASs) to ensure that environmental issues are incorporated into the development of programs and projects. NEAPs are prepared by client countries often with technical and financial assistance from the Bank and other donors. NEAPs are also mandated by International Development Association (IDA). The World Bank has assisted countries in preparing NEAPs in all regions since the late 1980s, often in the form of environmental profiles, sectoral analyses with environmental components, and national conservation strategies (Lampietti and Subramanian, 1994). The Madagascar NEAP (1987) was the first one initiated and Mauritius was the first country to officially approve its NEAP. Country Strategy Papers (CESPs) are country level environmental diagnostic tools prepared by the Bank s Africa Regions (AFR). In many cases, CESPs provided a comprehensive assessment of a country s environmental problems for the first time (Bojo, 1995). The main objective of CESPs was to strengthen country dialogue about environment policy and assess the environmental impacts of the Bank s country portfolio. In many cases, the Bank proposed drafting CESPs as an intermediate measure to facilitate preparation of NEAPs, especially when IDA countries were not able to prepare NEAPs fast. Some countries that have CESPs include Nigeria, Mauritania and Chad. Strategy Papers and Strategy Studies (ESPs) were prepared by the environment units in various Regions in the Bank, especially in the East Asia and Pacific (EAP), Europe and Central Asia (ECA), Middle East and North Africa (MNA) and South Asia Regions (SAR). In some cases, ESPs provided input to countries for developing sustainable development strategies. In general, their objective has been to help governments develop their environmental policies, and assist donors in targeting assistance and avoid duplication of efforts. Few examples of countries that have ESPs include China, Indonesia, Bulgaria, Iran, and Pakistan. Monitors (EMs) are much more recent in origin than other documents reviewed. All of the EMs (3 so far) have been prepared in EAP Region, specifically, two in Thailand and one in Philippines (several more are under preparation, for example for Vietnam). EMs seek to provide a snapshot of key environment trends in each country, tracking indicators with respect to brown, green, blue, as well as global issues. EMs started out as a Bank initiative but increasingly, they are jointly owned by the Bank and client countries. In some cases like Thailand, the document contains the logos of the 4 See Matrix 1 for key features of various environment analytic tools used by the Bank. 2

3 Bank and the Thai Ministry (MoSTE) suggesting the buy-in and support of the government to the contents of the document. For each country, it is expected that an EM will be published once every five years. In addition, in the intervening years, EMs will highlight emerging problems by focusing on specific themes. In 2002, EMs are being prepared for 7 countries. Issues Papers (EIPs) were prepared by the environment unit of the Latin America and Caribbean Region (LCR) of the World Bank for Latin American and Caribbean (LAC) countries during the late 1980s and 1990s. The objective of the Issues Papers was to show how Bank lending in particular countries could include environmental concerns. They were expected to provide input to Country Strategy Papers (equivalent to what is now referred to as CASs) and thus influence country dialogue regarding environmental issues. EIPs highlighted environment priorities and management issues facing client countries, showed how environmental concerns could be incorporated into sectoral lending and inform ESW work. As in the case with CESPs in the Africa region, the EIPs in many cases were the first systematic attempt to chart a coherent environment strategy for the countries. EIPs are Bank owned documents and were prepared with input from client countries. Some countries for which EIPs have been prepared include Venezuela, Paraguay, Peru, Columbia and Dominican Republic. Policy Notes (PNs), like the EIPs, have been prepared by LCR. The objective of the PNs is to provide each incoming presidential administration with a comprehensive account of the Bank s diagnoses and policy recommendations for the country s key sectors, especially those in which the Bank is involved. PN reflect the views of the authors, affiliated mainly with the World Bank. They do not reflect the views of the Bank, though its production is institutionally housed at the Bank. Publication of PNs is timed so that it is available when a new administration takes office. Thus for instance, the Mexico PNs will be prepared once every six years. Unlike other documents reviewed where the main focus was on environment priorities, the focus of the PNs is much more broad in that it addresses the Bank s vision, diagnosis and recommendations for key sectors (such as education, health, infrastructure, agriculture, etc.) and is not limited to the environment alone. PNs have been prepared for Mexico and is currently being prepared for Columbia. 4. Conclusions The following conclusions are based on a desk review of the above documents. Issues relating to the process of preparation and how they have been used to provide input into CASs or other policy instruments have not been addressed as part if this review. General Conclusions An interesting finding from the review is that many different Regional environmental units in the Bank have developed their own environmental diagnostic tools (see Figure 1). These are EIPs and PNs in LCR, the EMs in EAP, CESPs in AFR and the ESPs in ECA, MENA, EAP and SAR. In addition the Bank has also supported NEAPs that are owned and prepared by client countries, to draw input about environmental issues into policy dialogue. A review of the various diagnostic tools showed that two content areas are common to most of the documents reviewed. These include (a) an examination of 3

4 the environmental priorities and state of the environment in a given country, and (b) discussion of the country s environmental management capacity. This is particularly interesting since there has been no explicit plan to address similar issues by different regional environment departments within the Bank. Documents tend to be long and descriptive and often do not provide a clear-cut message or provide concrete input into broader policy dialogue. While many documents variously state lack of data or research in a particular area as a limitation, data gaps are not adequately highlighted as an important element of further analytic work. State of the and Priority Setting There are several good practice studies that use a systematic priority setting exercise to establish priorities, such as the Kenya NEAP, the Bangladesh National Management Action Plan (NEMAP) and the Indonesia ESP. Priority-setting, however, is often done in an ad hoc way. In many cases, priorities are stated without specifying criteria used to identify them. Indicators are not systematically tracked. The EMs and several Strategy Studies (e.g. Bulgaria) are good practice examples. While many documents discuss poverty-environment links, these are not systematically examined (that is, links to health, income and security are not always explored). In some cases, as in the EMs reviewed for this study, povertyenvironment links are not addressed at all. Policy Analysis Documents often make links between environment and sector policies. In many of the documents reviewed, policy analysis is embedded within a diagnosis of environmental degradation. For example, improper pricing policies and subsidies are often seen as contributing to environmental degradation. Recommendations for policy change derive from a typical diagnosis of the causes of environmental degradation. These include a combination of the following: (a) lack of well-defined property rights, (b) need to make prices reflect scarcity by removing explicit and implicit subsidies (on water, basic grains, energy etc.) (c) improving governance (often through decentralization, fiscal austerity, removing corruption and improving transparency and accountability) (d) better use of market instruments to protect environment, (e) intervening in the vicious cycle of poverty and environmental degradation. Capacity and Performance Assessment The discussion of institutional and organizational issues in the reviewed documents tends to be descriptive and general. It often remains at the level of factual descriptions of specific ministries. Further, institutional capacity is discussed in a general way and is not analyzed with respect to specific environmental priorities, even when priorities are established by the diagnostic work. In analyzing institutional capacity, most documents primarily focus on 4

5 public sector capacity. This emphasis on capacity assessment derives from the general assumption that a well-functioning public sector is crucial for meeting targeted environmental outcomes. While there is considerable uncertainty in the literature on the determinants of good organizational performance (especially drawing upon case studies in developing countries), a staple of interventions is usually mentioned in existing environmental analytic work. Typically, these include enhancing technical skills of the staff through training, particularly in environmental economics, changing the size or pay of the staff, and improving information and monitoring systems. Moreover, there is a general paucity of examples of good governance in these documents reflecting client country experience. Capacity issues are not related to the broader macro-economic, social and political context in which organizations are located. Further, in discussing capacity, most documents reviewed do not address issues relating to compliance and implementation. 5. Recommendations for CEA The discussion of the state of the environment should be based on available data and indicators, and systematically point out gaps in existing data and areas for further research. CEAs need to approach priority setting in a more systematic way. First, for a given client country, existing priority setting exercises done by organizations within the client country and/or other international agencies should be researched, documented and synthesized. Second, different methodologies for priority setting (such as using cost-benefit analysis for various environmental interventions, participatory methodologies, etc.) should be made available in the CEA toolkit for possible use by CEA pilot studies. The review indicated several good practice examples of priority setting. These should be included in the CEA toolkit. Given the extent to which the poor depend upon natural resources for their livelihood, and the strong links between environmental degradation and wellbeing, poverty-environmental links should be specifically addressed in the CEA including in the set of indicators presented. Instead of being embedded within a discussion of environmental degradation, it will be useful to separate policy analysis as a separate area of focus within the CEA. Ongoing work on strategic environmental assessment (SEAs) within the Bank and internationally can provide relevant input into this work. The policy analysis should be interdisciplinary and place greater attention to political economy and social issues than is the case with existing diagnostic tools. This has important implications for making policy recommendations for environmental change and influencing development outcomes. The analysis of capacity issues should be linked to environmental priorities. The CEA toolkit should recommend a systematic approach to capacity assessment that 5

6 identifies the specific tasks for which capacity is being assessed, and suggests a way of including the institutional, organizational and human resource factors influencing the accomplishment of those tasks. Analysis of capacity and performance needs to make far better use of the vast literature on public sector capacity and governance. This implies that task teams undertaking institutional capacity assessment need training in addressing institutional and organizational issues. Examples of good practices in environmental management in specific client countries should be highlighted by the diagnostic work. While development of indicators for capacity assessment can be useful, they should be developed bearing in mind that capacity for specific tasks is not static and can vary at the level of the organization and at the country level. 6

7 Matrix 1: Key features of different environmental diagnostic tools used by the World Bank Name of Document Ownership Objective Focus Priority Setting Policy Analysis NEAPs Country owned To establish national env. priorities, strategy, and develop an action plan CESPs Bank Strengthen Bank s country dialogue about env. issues; input to NEAPs Strategy Papers Monitors Issues Papers Bank Bank (increasing client govt. buyin) Bank Strengthen Bank s country dialogue about env. issues; input to country env. policies Monitor key environmental trends and indicators, input topolicy dialogue Inform Bank s country dialogue, lending and ESW work Policy Notes Bank Present Bank s position on key policy issues to each new admin. Institutional Analysis WB env asst. Influence WB CAS; country dialogue on env.; B sst rategy for lending Country Env. Strategy and investments Country Sector Policy Ad hoc ---- Ad hoc ---- Ad hoc Ad hoc ---- Env. seen as part of broader development processes ---- Input to NEAPs/Assist governments to develop env. policies and strategies 7

8 Figure 1:Regional Affiliation of Country Level al Analytic Tools in the World Bank AFR EAP ECA SAR MNA LCR National al Action Plans - Madagascar - Laos - Albania - India - Morocco - Guyana Regional al Strategies Country Strategy Papers (CESPs) - Niger r - Mali Strategy Studies/ Papers (ESPs) - Indonesia - Belarus - Pakistan - Iran Monitors (EMs) - Thailand - Philippines Issues Papers (EIPs) - Peru - Uruguay Policy Notes (PNs) - Mexico - Colombia 8