ENVIRONMENT

# TABLE OF CONTENTS

EXECUTIVE SUMMARY 1

I. INTRODUCTION 3

II\. ENVIRONMENT AND DEVELOPMENT:

A PROGRAM FOR THE 1990s 5

A. STRATEGIC OBJECTIVES 5

B. ENVIRONMENTAL CONSTRAINTS TO DEVELOPMENT 5

C. TARGETING ENVIRONMENTAL PROBLEMS 6

1\. SELECTING PROBLEMS 6

2\. DEVELOPING SOLUTIONS 7

D. STRATEGIC APPROACHES 9

E. THE ROLE OF USAID/WASHINGTON 13

F. THE ROLE OF REGIONAL BUREAUS AND MISSIONS 14

G. RESOURCE IMPLICATIONS 19

III\. CONCLUSION 19

ENVIRONMENT

# EXECUTIVE SUMMARY

Wise use of natural resources and environmental protection are
fundamental to USAID\'s assistance program. Broad-based development,
expanded participation in the benefits of economic growth, and
improvements in the quality of human existence throughout the developing
world and other USAID-assisted regions are inseparably linked to
environmental conditions.

USAID\'s Environment Strategy for the 1990s reconfirms the environment
as an integral component of the Agency\'s development assistance program
and ensures that, within current and anticipated budgetary and political
realities, USAID will assist nations\' efforts to protect the
environment. The strategy identifies the major environmental problems
threatening development, establishes criteria for allocating resources
to address the most critical issues and for selecting appropriate
actions, and identifies priority approaches to environmentally sound
development, including those unique to each bureau.

USAID has extensive experience in integrating concern for the
environment with development objectives, beginning in the 1970s with
formal environmental regulations. This strategy refines and updates
previous environmental guidelines, including the 1988 Policy Paper on
Environment and Natural Resources, the 1990 Environment Initiative and
the 1992 Environment Strategic Framework. With its strong field presence
and access to highly qualified expertise, USAID is well-positioned to
enhance its environmental programs to meet the needs of the 1990s and
beyond.

**ENVIRONMENTAL CONSTRAINTS TO DEVELOPMENT**

Environmental degradation is a significant and growing threat to
development throughout the world, and its effects are felt most acutely
by poor families in developing countries. Economic growth, as well as
the potential for such growth, is endangered by a natural resource base
declining in quality and quantity, while deteriorating economies
exacerbate and accelerate degradation of the environment. The rapid and
poorly managed growth of cities in many developing countries has led to
a serious deterioration in urban environmental conditions, adversely
affecting human health and the urban infrastructure necessary for
efficient economic development.

USAID has identified five major environmental problems that most
directly affect the developing world and the Agency\'s developmental
objectives: 1) loss of tropical forests and other habitats crucial for
biological diversity; 2) unsustainable agricultural practices; 3)
environmentally unsound energy production and use; 4) urban and
industrial pollution; and 5) degradation and depletion of water and
coastal resources. Each of these threatens economic progress, biological
and other natural resources, and the health and quality of human life.
Each also has impacts well beyond national boundaries, often with global
consequences.

This strategy focuses specifically on those activities designed
primarily to enhance or protect the environment. However, USAID
recognizes that other issues, such as rapid population growth, also
affect the environment significantly; although in complex and often
indirect ways. Therefore, USAID\'s environment program is coordinated
closely with the Agency\'s family planning program to ensure an
integrated approach to addressing the complex relationship between
population growth rates and natural resources management.

The five major problem areas listed above include the full range of
serious environmental threats to development. Within this overall
framework, USAID missions, supported by USAID/Washington, are developing
a program targeted to specific problems where assistance will have the
greatest impact. Strategic allocation of resources is a basic
requirement for an effective program, because USAID simply cannot
address every problem in every country it assists.

USAID, therefore, is focusing its resources on environmental problems
that most constrain development and on those that, if not acted upon
immediately, will likely result in significant threats to human health
or irreversible damage to the natural resource base and the economy. The
Agency concentrates on problems that host countries are committed to,
capable of addressing and have identified as priority issues.

**DEVELOPING EFFECTIVE SOLUTIONS**

In its efforts to solve these problems, USAID supports activities
that: 1) attack root causes of environmental degradation; 2) support
local empowerment and public participation; 3) improve scientific
understanding of environmental issues affecting aid-recipient countries
and improve data on the natural resource base; and 4) promote
cooperation with other environmental and developmental organizations.

In carrying out this strategy; USAID emphasizes three broad approaches
that most effectively integrate the environment and development;
strengthening human/institutional capacity and building public
awareness; supporting developing country efforts to change wasteful or
unsustainable economic and environmental policies and procedures; and
encouraging private sector participation in promoting environmentally
sound activities.

Specific approaches to environmental activities vary considerably by
region given the unique ecological, political and economic
characteristics of the different geographic areas. To capture this
diversity, regional strategies that apply the guidelines presented above
have been developed to guide Agency environmental efforts in Europe,
Asia, the Near East, Latin America and the Caribbean and Africa. As
problems vary, regional approaches change. For example, in Africa the
program focus is on environmental problems associated with
forestry/biodiversity, sustainable agriculture, and coastal zone
management. Asia, while sharing some of these concerns, sees the
environmental problems of rapid urban and industrial growthurban and
industrial pollution and sound energy productionas key constraints to
sustained regional growth. No matter what the focus, however, each
regional approach relies heavily on discussions of policy issues with a
broad range of host country officials as a central element in strategy
implementation.

ENVIRONMENT

**I. INTRODUCTION**

Through the U.S Agency for International Development (USAID), the U.S.
government administers an economic and humanitarian assistance program
that combines an American tradition of international concern and
generosity with the active promotion of America\'s foreign policy
interests. USAID helps developing and other aid-recipient nations
improve the quality of life and expand the range of individual
opportunities by promoting broad-based economic growth and by reducing
poverty, ignorance, malnutrition and poor health. USAID\'s programs are
designed to help countries realize their full national potential through
individual initiative, the creation of jobs and income, the development
of open and democratic societies, the establishment of free and dynamic
markets, and the wise use of their natural resource base.

Concern for the environment and for sustainable use of resources is
essential to USAID\'s assistance program because of the increasingly
evident and close linkages between the environment, economic growth and
human health and welfare. Wise management of the natural resource base
is an absolute requirement of any successful development program because
environmental degradation impairs economic growth and the potential for
such growth, while deteriorating economies exacerbate and accelerate
environmental degradation.

Natural resources are essential to the economies of nearly all
developing nations. Agriculture, fisheries and forestry contribute
greatly to economic production in developing countries throughout the
world. Such resource-dependent industries rely simultaneously on both
the use and conservation of natural resources. Similarly, sustained
economic growth depends on sufficient, reliable and environmentally
sound energy sources. Competing demands for resources must be balanced
to achieve long-term growth. Too great an emphasis on conservation will
unnecessarily impede growth, while a focus on growth alone will destroy
the resources on which that growth depends.

Balance is essential, and yet current policies and practices have not
yet achieved that balance. Consequently, economic, political and social
inequities, as well as intensified problems of institutional
capabilities and distorted incentives (and disincentives) for private
sector solutions, have led to unsustainable consumption of natural
resources. Indeed, many environmental problems can be traced to
political or policy failures that result in the production of goods or
provision of services that fail to incorporate the cost of environmental
degradation and resource depletion. Such failures occur locally,
nationally, regionally and globally.

The effect of policy failures on the private sector is particularly
important because private enterprise serves as the primary source of
financing for sustainable development through market-driven investments.
Again, balance is necessary to provide investment incentives without
encouraging or subsidizing industrial pollution and environmental
degradation. By creating a climate that attracts critical long-term
investment capital from responsible industries and entrepreneurs,
developing countries have an opportunity to greatly increase available
funds for environmentally sound development, well beyond the potential
of publicly funded assistance programs.

While policies that encourage market solutions are clearly critical to
development, inherent market failures must still be recognized and dealt
with effectively, and if necessary, by using non-market mechanisms. Past
efforts to balance the needs of environment and development have often
failed to account for two unique qualities of the environment that make
standard market-based approaches inadequate: environmental degradation
is often irreversible (e.g., species extinction), and many environmental
goods and services cannot be substituted (e.g., protection from
ultraviolet radiation) offered by stratospheric ozone). These qualities
are often neglected in policy-making and standard economic analysis.
Successful policies and programs recognize the significance of these
unique factors and maximize the flexibility remaining in selecting the
means of addressing environmental problems.

Rapid population growth is an important factor in loss and degradation
of natural resources. World population has more than doubled since 1950,
from 2.5 billion to 5.2 billion, and is expected to double again in 40
years. Ninety-six percent of the increase will be in developing
countries, with urban areas growing at twice the overall rate. The
explosive growth of urban populations and expansion of urban areas,
coupled with limited management and administrative capability in
governments, have contributed to an emerging environmental crisis in
towns and cities.

Beyond the borders of cities, population growth is often an important
contributing factor in the degradation of marginal lands where the
supply of natural resources is insufficient to meet basic needs. Further
exacerbating the problem is a decline in the rural land base suitable
and available for traditional agriculture. This is, in part, the result
of conversion of lands for large-scale agriculture and non-agricultural
uses, and degradation of lands that once had the potential for sustained
agricultural production, if appropriately managed. Environmental
degradation affects all people in the developing world, but it is urban
and rural poor who suffer the greatest consequences.

The relationship between population growth and environmental degradation
is complex. It is affected by resource use patterns and per capita
consumption, economic conditions, demographic changes, and the carrying
capacity and resiliency of affected ecosystems. A balance must be found
between population growth rates and available natural resources.
Reducing population growth rates is a critical way of achieving the
broader objective of better social, economic, environmental and health
conditions of the developing world. While the future capacity of
well-managed natural resources to sustain life may well be higher than
is thought today, lower rates of population growth will provide more
time for developing countries to find approaches to provide for their
populations without degrading the natural resources upon which they
depend.

Given the complexity of ecosystems, economies and their
interrelationships, integrating environment and development effectively
will be achieved only if based on a solid understanding of the
fundamental environmental constraints to growth. Critical environmental
problems cannot be solved without also addressing legitimate concerns
about economic and social development. Balance between competing social,
political and economic interests, the essence of broad-based development
sustained over many generations, is best accomplished in open markets
and democratic societies where people are able to bring about reasonable
solutions through their market choices and political will.

The resurgence of democracy throughout the world bodes well for the
environment. So, too, does the growing recognition among developing
countries and the donor community that heavily centralized government
decision-making is not a satisfactory approach to solving local
problems, the nature of many environmental issues. However, complacency
would be dangerous. Open markets and democratic societies are necessary
to achieve environmentally sound growth, but they are by no means
sufficient.

**II. ENVIRONMENT AND DEVELOPMENT: A PROGRAM FOR THE 1990s**

***A. Strategic Objectives***

The objective of the Agency\'s environmental strategy is to promote
environmentally sustainable development. This is accomplished by: 1)
ensuring through appropriate environmental review that all USAID-funded
activities are environmentally sound; 2) integrating environmental
consideration throughout USAID-supported sectors and programs; and 3)
supporting activities designed primarily to protect and improve
environmental management and promote the wise use of natural resources.
The Agency uses these three means in all regions to: 1) build an
awareness at key levels in USAID-assisted countries of the critical
linkage between environmental protection and economic and social
development; 2) assist developing countries in improving the management
of their natural resources for sustained economic growth and social
equity while conserving their environment; and 3) help developing
countries contribute to resolving key local, regional and global
environmental problems while they work to meet their own development
objectives.

***B. Environmental Constraints to Development***

15 years has demonstrated that the environmental problems challenging
the developing world and most directly affecting USAID\'s developmental
goals fall into five major categories:

-   *loss of tropical forests and other critical habitats for biological
    diversity;*

-   *unsustainable agricultural practices;*

-   *environmentally unsound energy production and use;*

-   *urban and industrial pollution; and,*

-   *degradation and depletion of water and coastal resources.*

These problems threaten the economic progress of developing countries,
deplete biological and other natural resources, diminish health and the
quality of human life, and have impacts well beyond national boundaries,
often with global consequences.

USAID is well-qualified and well-positioned to help developing countries
address these problems. The Agency has extensive experience with
integrating environment and development, beginning in 1976 when USAID
adopted formal environmental regulations. USAID also has a strong field
presence throughout the developing world and access to highly qualified
expertise within the Agency and through a comprehensive range of
consultants.

While this strategy builds on these strengths and prepares USAID for the
future, it is based on and developed in the context of the Agency\'s
long-standing concern for the environment in its assistance program. The
strategy refines and updates previous environmental guidelines,
including the 1988 Policy Paper on Environment and Natural Resources,
the 1990 Environment Initiative (which contains a detailed history of
USAID\'s environmental work over the last two decades) and the 1992
Environmental Strategic Framework.

***C. Targeting Environmental Problems***

No single donor can effectively address, in every country, the broad
range of environmental issues encompassed within the five major
categories of environmental threats. Focus is essential. USAID,
therefore, is concentrating its resources on priority areas in each
geographic region, emphasizing those problems relevant to its mandate.

In selecting problems and developing solutions, USAID missions are
responsible for making program choices based on the criteria described
below and for justifying their choices against the criteria. The
regional bureau role is to monitor and concur with mission selections to
ensure the bureau is conforming to stated priorities. The directorates
for Policy and Finance and Administration, through review of resource
allocations and evaluation of strategy activities and project results,
ensure that regional bureaus are fulfilling this function.

The following criteria provide the basis for making strategic choices to
maximize the effectiveness of USAID\'s environment program.

**1. Selecting Problems**

Because of competing priorities, objective criteria need to be applied
to ensure emphasis on environmental problems where USAID assistance will
most likely have a significant impact. In selecting these areas of
concentration, USAID will:

*1) Focus on environmental problems that are significant constraints to
long-term development at the country level.*

USAID will focus on environmental issues that significantly constrain
development at the country level through adverse effects on ecological
systems and on the quality of human life. Within the context of these
critical national problems, USAID will emphasize local environmental
problems that have transnational, regional or global implications and
where coordinated country actions have the potential for significant
impact on global problems that will affect developing countries (e.g.,
tropical deforestation).

*2) Emphasize the most urgent environmental problems that require
immediate corrective action.*

USAID will focus on environmental problems where failure to take
immediate action will likely result in serious threats to human health
or irreversible damage to the natural resource base and the economy.

*3) Concentrate resources on problems that host countries themselves
have identified as priorities, and are capable of and committed to
addressing.*

USAID will work closely with developing countries to address those
issues most relevant to the needs of the host country. USAID will work
with governments at the local, national and regional levels, and, where
practical, will work directly with the non-governmental organization
community and the indigenous private sector. For those countries without
the institutional capacities necessary to identify the most critical
constraints, USAID will focus resources on helping the host country
develop the necessary capabilities.

All three criteria are fundamental to selecting issues to be addressed
by USAID.

**2. Developing Solutions**

Well-established, as well as innovative, solutions are available to
effect change in focus areas. In determining which set of solutions to
apply, USAID will emphasize activities that first and foremost attack
the root causes of environmental degradation, stressing the prevention
of problems.

The political, social, institutional and cultural causes of
environmental degradation are difficult to address in isolation. An
integrated approach and long-term perspective are critical to any effort
to address environmental constraints. By country and region, USAID will
work toward promoting an understanding of the fundamental, underlying
factors that result in environmental degradation.

Solutions to fundamental environmental problems must often be undertaken
in a logical sequence to reflect the chain of cause and effect. For
example, tax incentives that, in effect, encourage deforestation may be
an appropriate target of USAID policy discussions with country
officials, before the Agency makes large-scale investments in
reforestation. Likewise, improving tariff policies to encourage prudent
use of potable water in cities would be considered before initiating
costly measures to increase urban water supplies. Missions are
responsible for giving careful attention to the appropriate and logical
sequence for attacking root causes, when cause and effect can be
reasonably distinguished.

In addition, USAID will:

*1) Support local empowerment and public participation.*

Providing local people with access to resources, education and
information necessary to influence environmental issues that affect them
is an essential step toward sustainable management of natural resources.
These resources are often threatened because the responsibility for
their management has been removed from the people who live closest to
them, and instead has been transferred to governments, often in distant
capitals, with little experience or incentive to manage these resources
effectively. The current inequitable patterns of land control and access
to natural resources are key issues. Addressing these issues requires
greater public participation and more effective cooperation between
institutions responsible for resource use and those involved in
protection, rehabilitation and planning for sustainable development.

Particularly important to successful development is the involvement of
local stakeholders in project planning, implementation, benefit
distribution, monitoring and evaluation. USAID actively supports local
participation, including indigenous communities, non-governmental
organizations (NGOs) and the private sector in all phases of its
development and environmental activities. Involving these groups in the
discussions, required as part of the environmental assessment process,
is an important means of ensuring their participation in
decision-making. Given that women constitute 60 percent to 90 percent of
the subsistence agricultural labor force and already act as effective
stewards of natural resources in many cases, USAID will continue to help
strengthen the role of women in resource decision-making.

Although working with decentralized local governments and directly with
local non-governmental organizations often entails high costs in
management and staff line, USAID will follow this approach to the extent
practical. Where possible, the Agency will provide assistance to
mobilize community participation without drawing intensively on USAID
resources, through the use of demonstration sites and appropriate and
well-targeted training.

*2) Improve and augment data on the host country resource base and on
effective and sustainable technical interventions.*

Although the Agency\'s goal is environmentally sustainable development,
available knowledge on sustainable techniques and practices in many
developing countries is limited. For example, except in very few
instances, tropical timber extraction has not been achieved on a
sustainable basis, yet this is an important goal in managing this
critical resource. The abundance and distribution of natural resources
are poorly documented in most countries. USAID programs should play a
leading role in strengthening the knowledge base of environmental
problems and solution s in developing countries, reflecting current
scientific thought and hose country empirical experience.

*3) Promote cooperation and collaboration with other environmental and
developmental organizations.*

Building on its history of leadership in this area, USAID will continue
to emphasize coordination among donors, other U.S. government agencies,
the private sector and local, national and international NGOs.
Coordination will help avoid duplication of effort and will help donor
countries to focus on areas of their respective strength.
Non-governmental organizations often provide useful communication links
between USAID, host country governments and local communities. NGOs
assist the Agency in delivering services and training local groups and
play a significant role in influencing community and national
decision-makers.

*4) Address region-wide issues, where appropriate.*

Many environmental problems transcend national boundaries and have
regional or global effects (e.g., climate change, acid rain and
pollution of international waters). In addition, many local
environmental problems and constraints to development, such as loss of
biological diversity or deteriorating urban environments, have global
impacts through the cumulative effects of degradation in many different
countries. USAID will address these local problems with global impacts,
to the extent possible, through regional cooperation.

Improved communication and cooperation among USAID missions within a
region are necessary to develop coordinated efforts to address
transboundary and regional environmental problems especially among
countries sharing common borders. Where appropriate USAID will focus on
national development issues that may affect other countries where
prospects are good for transnational cooperation and where such
cooperation will help advance national objectives. Missions are
encouraged to focus on transboundary and regional issues where such
issues are first and foremost a major constraint to development within
the host country and where the issues fall within the bureaus focus.
Where such coordination makes good programmatic sense, it should be
appropriately institutionalized through formal arrangements between
missions.

***D. Strategic Approaches***

The success of an environment strategy rests on the approaches used to
achieve stated objectives. In carrying out this strategy, USAID will
concentrate on the three broad categories of activities that most
effectively address development issues: 1) strengthening
human/institutional capacity and building public awareness; 2) changing
unsustainable economic and environmental policies and procedures (e.g.,
through policy dialogue); and 3) encouraging private sector
participation in promoting environmentally sound development activities.
Because the constraints in any given country are usually interrelated,
Agency activities in the chosen focus areas will generally be most
effective by combining these various approaches.

*1) Strengthen Human and Institutional Capacity/Build Public Awareness*

Important development decisionsto build a road or a dam, to adopt a new
export policy or a tax incentive for cattle raising, or set the price of
gasoline, or to revise tariffs for water or electric useoften have
significant environmental implications. In many cases, however,
developing countries lack the human and institutional capacity to assess
the environmental effects of their planning decisions. In some cases,
developing countries lack the professional expertise to analyze problems
adequately or develop alternatives to unsound practices and policies.
Exacerbating the problem are weak enforcement of laws and regulations
and a lack of coordination among government agencies responsible for
environmental protection and resource management.

USAID will help build human and institutional capacity in both public
and private institutions in developing countries through a combination
of training, technical assistance and public awareness programs. The two
principal targets are: 1) individuals or groups who, with better
technical, managerial and analytical skills, will participate more
effectively in decision-making and management of the environment; and 2)
the general public, which through increased awareness about the linkages
between environment and development, will better appreciate the
consequences of environmental mismanagement and the range of options for
action.

Reaching the first target audience will require a substantial increase
in training programs, both in-country and elsewhere, as well as
increases in advisory services from contractors, non-governmental
organization, the university community and other federal agencies. USAID
will emphasize strengthening the capacity of NGOs and, where practical,
community-based organizations in their efforts to improve management of
local natural resources.

Reaching the second target audience will require successful public
outreach techniques, such as those used in USAID\'s population program,
as well as efforts by community-based non-governmental organizations.
The involvement of indigenous NGOs often helps to place environmental
issues in a local development context. It also facilitates efforts to
improve communication between local communities and government officials
and their ministries.

As a component of this program, USAID will actively encourage and
support host country efforts to establish country environmental
implementation plans. These broad-based plans provide a means for local
and national policy planners and decision-makers to identify and
prioritize the most critical environmental problems and appropriate
actions. This process strengthens the capacity of host country
governments to plan and more effectively manage the use of their natural
resources. As a partner in analyzing the issues and developing
appropriate solutions, the country becomes a stakeholder in ensuring the
success of environmental programs. USAID will work actively with
appropriate host country institutions and other donors to develop such
plans. Broad public participation in formulating the action plan is
fundamental to its success.

Institutional strengthening is important within USAID as well. Agency
staff, particularly decision-makers in the field, will be more fully
informed through appropriate training about environmental issues so that
they can knowledgeably engage host country individuals and others in
discussing the relationship between the environment and development.
Where appropriate, agreement between missions to coordinate programs on
transboundary environmental issues will strengthen the Agency\'s ability
to address region-wide environmental constraints to development.

Institutional strengthening within USAID also means ensuring that the
Agency\'s environmental procedures are rigorously implemented and
enforce. To be an effective planning and design tool for creating better
developmental activities, environmental review (initial environmental
examination, and if warranted, and environmental assessment) needs to be
conducted early in project development. Involving host country agencies
and interested and affected parties is an important means of
institutionalizing the environmental review process. USAID\'s capacity
building efforts in this area will include helping host countries
develop, carry out and monitor environmental assessments of proposed
development activities.

While USAID has made significant progress over the past two decades,
more can be done to ensure the environmental soundness of all Agency
activities. Therefore, each regional strategy includes a specific plan
of action to strengthen implementation and enforcement of the Agency\'s
environmental regulations.

*2) Reforming Unsustainable Economic and Environmental Policies and
Procedures (Policy Dialogue)*

Strengthening human and institutional capacity for managing the
environment is a necessary first stop toward formulating, adopting and
enforcing effective environmental and economic policies and regulations.
Policy dialogue extends and reinforces these efforts.

Unsound economic and environment/natural resource policies, and
ineffective environmental laws and regulations, are among the major
causes of environmental degradation in developing countries. The
principal economic problem is the failure of markets and lack of
appropriate accounting methods to price natural resources properly to
include the full environmental costs of resource use, depletion and
degradation. Equally important, ill-advised subsidies and tax policies
lead to inefficiency and environmentally harmful land and resource use.
Finally, insecure and inequitable resource tenure on both public and
private lands often causes impoverishment of rural people. In the
absence of secure and equitable resource tenure, there is little
incentive for conservation, and this often leads to unsustainable
resource exploitation.

Through years of experience, USAID recognizes that policy reform is one
of the most important and critical components of its development
objectives, despite the complexity of the problems and the long-term
commitment necessary to effect lasting change. USAID also recognizes
that success in the policy arena depends on both developing and
enforcing sell-meaning policies and regulations. The best policies have
little significance in the absence of effective application. USAID
recognizes as well that there are real resource costs to policy changes
and other methods of achieving environmental objectives, and that
practical effects of policy changes cannot always be clearly predicted.
Therefore, research and analysis of these changes are necessary
components of policy reform.

The objective of USAID\'s policy dialogue efforts is to encourage
practices that maintain and, if possible, enhance stocks of renewable
natural resources. USAID will emphasize activities to: a) improve host
country capacity to conduct environmental impact assessments and
economic analyses; b) identify and advocate change of those policies,
laws and regulations that lead to environmental degradation and natural
resource depletion; c) develop policies with incentives for
environmentally sound production; and d) work toward securing tenure to
natural resources and the benefits of their use for the less privileged.

*3) Encouraging Private Sector Participation in Promoting
Environmentally Sound Development Activities*

Private sector participation and cooperation with government efforts are
critical to stimulate and sustain environmentally sound economic growth.
Private enterprise is the primary force of growth in market-oriented
economies and is the major player in creating the resources needed to
protect the environment. The private sector is the primary means through
which \"clean\" technology and associated skills and information are
transferred. It is also an important provider of environmental
management information to the public sector.

While strengthening environmentally responsible businesses is an
important objective, some caution is advised. This approach must be
based on the realistic assessment that many current business practices
are not environmentally sound, and often contribute to resource
degradation. Nevertheless, in a stable environment of appropriate
incentives, policies and regulations, the private sector can be an
active force in solving environmental problems and producing
environmentally sound products and services. USAID will, therefore,
promote public/private sector cooperation on environmental issues, in
the context of the caveat mentioned above. This includes activities that
seek to link trade, private investment and economic development for the
mutual benefit of developing nations and the United States.

To promote private sector solutions to environmental constraints,
missions will:

a\) Encourage policy reform to provide market incentives that will
improve the trade and investment climate for environmentally beneficial
services, systems and technologies, including those relating to energy
production, distribution and use. Environmentally unsound practices also
are economically unsound in the absence (?) of price or other market
distortions. The private sector would respond appropriately if prices
reflects the cost of resource use and degradation.

b\) Identify and develop business opportunities that are both
environmentally sound and commercially and economically viable. Private
industry, local communities, NGOs and the private baking sector should
be involved in developing these opportunities.

c\) Encourage technology transfer and assistance through increased trade
and investment by U.S. businesses involved with environmental problems
and emphasize the transfer of clean technologies. U.S. firms are often
leaders in environmentally beneficial, resource-conserving technologies
and could help develop skills in pollution prevention and control,
recycling, renewable energy, energy efficiency and food production.
USAID should be a catalyst in working with U.S. private industry to
transfer relevant environmental and energy technologies. The Agency also
can help developing country businesses select, adapt and use these
technologies to meet special circumstances and markets. USAID will
support research and development that encourages the involvement of the
private sector in developing approaches to non-timber forest products,
ecotourism, extractive reserves and sustainable natural forest
management.

d\) Collaborate on innovative financing of environmental projects with
NGOs and the private banking sector. Such mechanisms include debt for
equity swaps, environmental bonds or trust funds. Since the record has
been somewhat mixed regarding the local distribution of benefits from
past debt-for-equity swaps carried out by other organizations, USAID
will pursue these and other creative financing mechanisms with great
care to ensure the full participation and informed consent of occupants
and users of the land (or other resources) to be swapped.

The Agency strongly supports private sector solutions that involve
participation of local communities, enabling them to participate in a
project\'s environmental and economic benefits. Benefits accruing to the
surrounding communities from the wise use of the natural resources
provide powerful incentives for conservation. Problems of deforestation
and loss of biodiversity, for example, cannot be resolved simply by
putting fences around areas and declaring them reserves. Efforts and
interest in maintaining natural resources are best served by providing
appropriate economic incentives to local communities. When natural
resources have a fair market value, the market can provide a powerful
economic incentive to conserve resources.

Market forces are not a simple cure for environmental problems, however,
because danger lies in market failure. Some environmental goods and
services cannot be held privately: the ozone layer is a good example.
When an environmental good or service is \"open access,\" it often has
zero price. (Even with zero price, an open access environmental good or
service may be considered quite valuable by its usersgrazing land, for
examplebut there is no market mechanism available to measure that
value.) This can lead to waster and eventual depletion of the resource
because the resource may not by sufficiently abundant to keep up with
demand. Demand may keep growing, but it is not regulated by an increase
in price to reflect a scarcity: (In addition, in the absence of proper
resource tenure, no individualor community has an incentive to maintain
the resource).

The bottom line is that market forces are essential to conservation, but
when they fail, they can cause serious and large-scale environmental
problems. In such cases, government regulations or other interventions
to assign property rights may be required. These realities will be taken
into account in USAID\'s encouragement of private sector support for the
environment.

To ensure that the Agency\'s strategy is having the desired effect, and
the evaluate the effectiveness of the various approaches to sustainable
development as described above, environmental activities will
incorporate indicators of success against which progress can be
measured. While USAID will focus on those environmental problems that
have both national importance and global implications, indicators will
likely be most useful in measuring effectiveness as the local or
national levels.

***E. The Role of USAID/Washington***

A decentralized approach to program selection builds on USAID\'s
strengths, particularly its experienced field staff with knowledge of
host-country problems and cultural/political sensitivities. To provide
overall program coordination, the directorates for Policy and Finance
and Administration will monitor decentralized activities to help ensure
consistency between proposed bureau budgets, bureau strategies and
Agency priorities. Such monitoring improves Agency-wide program
coherence, particularly on global environmental issues, and the
development of an effective environmental program that is manageable
within the Agency\'s limited financial and technical resources.

In addition, when geographic bureaus and their missions request
assistance, operational central bureaus in Washington, such as the
bureaus for Private Enterprise, Research and Development, and Food and
Humanitarian Assistance, provide support to enhance the effectiveness of
field operations in carrying out regional strategies.

The Research and Development Bureau (R&D) provides technical support to
geographic bureaus, including assistance in the design, implementation,
monitoring and evaluation of mission projects and programs. R&D
technical assistance will be an important element in the effectiveness
of bureau environment strategies. R&D also provides overall coordination
of research and development and synthesis of experience in
environmentally sound practices in the five areas of emphasis. This is
particularly true in the following:

*Addressing transnational or global environmental problems:*

In the case of environmental problems that cross national boundaries,
(e.g., urban/industrial pollution affecting two countries), or where
environmental problems affect the entire globe (e.g., loss of
biodiversity), a coordinated response is essential. In these
circumstances, R&D will play an active role, inclose cooperation with
regional bureaus, to support bureau activities and mission coordination
within and between regions.

In the area of climate change, for example, USAID has an important role
in working with developing countries to evolve strategies appropriate to
the country\'s development objectives that also will contribute to
mitigating global climate change. In addition, R&D, along with the
Policy Directorate, is actively involved with the Department of State in
establishing coordinated international responses to climate change, and
loss of biodiversity and tropical forests, through international
agreements and conventions.

*Developing broad-based research, synthesis and training in the areas of
emphasis:*

Economy of scale can often best be achieved by centralized planning and
coordination of: 1) critical research and development on environmentally
sustainable practices in the five areas of emphasis; 2) synthesis of
regional and interregional experience in these areas; 3) training and
technical assistance on sustainable practices, technologies and analyses
(e.g., environmental economic analysis). Central bureau technical
experts also maintain contact with other institutions working in the
areas of emphasis and, together with the regional bureaus, determine how
relevant research findings should be synthesized and distributed.
Additionally, centralized training of host country personnel in
Agency-sponsored courses provides for sharing of knowledge and
experience.

The Private Enterprise Bureau (PRE), through its Office of Housing and
Urban Programs, supports mission efforts to help developing countries
meet the growing challenges associated with the rapid growth of their
urban areas. PRE focuses on helping developing countries meet the needs
of low-income urban families, largely by helping governments assume an
\"enabling\" role and relying primarily on the private sector to deliver
urban services and to produce affordable shelter. In terms of
environmental issues, PRE supports regional bureau needs in the
following key ares:

1\) Local Governmentenhancing the capabilities of officials responsible
for managing municipal governments.

2\) The Urban Environmenthelping to find affordable, practical
approaches to dealing with the health and economic implications of
degraded environmental conditions in cities, and improving policies and
practices to reduce such problems in the future.

3\) Shelter, Land and Infrastructuresupporting developing country
governments in establishing suitable policies to improve the operation
of financial markets, produce appropriate development standards,
increase cost recovery, and allow land markets to operate efficiently to
ensure that the growth of cities takes place on an environmentally sound
basis.

The Bureau for Food and Humanitarian Assistance (FHA), through its
Office of U.S. Foreign Disaster Assistance, focuses its environmental
activities on the prevention and mitigation of acute-onset technological
disasters. USAID has long recognized the environmental problems brought
about by the rapid increase of industrial production and urbanization in
developing countries. The history of industrial accidents illustrates a
trend that, if unabated, has the potential to undermine years of
development and produce long-lasting environmental effects.

FHA supports efforts, based on regional bureau needs, to improve the
capabilities of local authorities and corporate managers to prevent or
mitigate technological disasters in specific high-risk areas. FHA also
supports activities in countries particularly vulnerable to natural
disasters, helping those countries improve their disaster-response
efforts by establishing well-defined indigenous mitigation and
preparedness systems.

***F. The Role of Regional Bureaus and Missions***

USAID has five regional bureaus (Africa, Asia, Europe, Latin America and
the Caribbean, and the Near East) with field missions and offices in
more than 100 countries, including an expanding presence in the New
Independent States (NIS) of the former Soviet Union. (Because USAID\'s
program in the New Independent States has only recently started, NIS
environmental activities are at an earlier stage of development than the
regional bureau programs). This extensive field experience, unique among
donors, greatly facilitates access to key decision-makers in government
and private sector organizations. The presence of USAID staff in the
field also improves the ability to adapt technology to meet the
requirements of local people and provides and opportunity for effective
policy discussions. USAID field missions employ foreign service
nationals with knowledge about the country, experience in dealing with
officials of their government and local organizations, and insights into
how the economy and society function.

The invaluable experience gained from the field shapes the Agency\'s
actions worldwide. This experience is reflected in the regional bureau
strategies, which build on the common guidelines, criteria and strategic
approaches described above. Following are brief descriptions of the
regional strategies.

**AFRICA**

*The Plan for Supporting Natural Resources Management in Sub-Saharan
Africa* guides USAID efforts to improve natural resources management in
Africa by making natural resources management in Africa by making
natural resources management an important component of the Agency\'s
overall development strategy for Africa and by establishing priorities
for the best use of limited resources. The plan also focuses Africa
Bureau programming on two critical problem areas: Unsustainable
agricultural practices and loss of tropical forests and other critical
habitats for biological diversity.

This focus includes technical priorities of vegetation loss or
degradation, soil erosion and fertility decline, declines in biological
diversity, and integrated pest managementall areas in which the United
States has a comparative advantage. The sub-regions targeted are arid
and semi-arid tropics, tropical highlands, the country of Madagascar and
the humid tropical forest of the Congo Basin.

To establish priorities for integrating natural resource considerations
into mission programs, the plan divides African countries into priority
groups. These are the same groups used by the Africa Bureau to focus and
prioritize country programs under the Development Fund for Africa. In
Category I countries where natural resource management is emphasized,
the missions will have comprehensive natural resources programs. The
second priority, Category II, countries have more limited natural
resources programs concentrating on one or more technical priorities.
Category III countries generally have small humanitarian and/or
political programs and will not undertake bilateral natural resources
management programs. However, there may be regionally supported
analytical or training activities in these countries working through
private voluntary organizations and non-governmental organizations to
address important natural resources management issues.

**ASIA**

The countries and territories of the Asia region represent a broad
diversity of biogeographical features and land-use patterns. More than
half of the world\'s 5 billion people live in Asia, and 35 percent are
under the age of 15. In the next 35 years, another 1.7 billion people
will be added to this most densely crowded region of the world.

The region also has experience relatively high economic growth over the
past two decades. This economic growth and population expansion have led
to urban and industrial pollution and destruction and degradation of the
region\'s renewable natural resources. These problems are projected to
increase in the future as demands for natural resources continue to
increase and as pressures on natural ecosystems intensify.

To tackle the key environmental problems of the region, the Asia Bureau
has identified four priority areas for the 1990s: 1) loss of tropical
forests and biological diversity; 2) urban and industrial pollution; 3)
degradation and mismanagement of water and coastal resources; and 4)
energy shortages, inefficiencies, and environmental impacts of energy
development. Each mission has selected a subset of these four problem
areas to address on a country basis and is already active in at least
one of these areas.

While mission programs address problems on a country-specific basis, the
recently announced presidential initiative, the United States-Asia
Environmental Partnership (US-AEP), provides a unique regional approach.
This initiative, coordinated by the Asia Bureau, is an unprecedented
coalition of American and Asian business, governments and community
groups working together to enhance Asia\'s environment and promote
economic progress. The US-AEP reinforces the Asia Bureau\'s
environmental priorities and regional needs through four components:
fellowships and training; technology cooperation; environment and energy
infrastructure; and a regional biodiversity conservation network.

Through mission and bureau programs and the US-AEP, the Asia Bureau
works to solve these problems by using the Agency\'s three strategic
approaches: 1) policy reform; 2) institution building and public
awareness; and 3) private sector participation.

The Asia Bureau will continue to increase environmental awareness of its
staff at all levels. In addition, the bureau will continue to assure the
soundness of all its projects and programs through rigorous
implementation of the Agency Environmental Procedures (22CFR 216) with
the ultimate objective of enabling Asian countries to assume
responsibility for all aspects of their environmental management.

**EUROPE**

The countries of Central and Eastern Europe (CEE) are suffering the
effects of the worst pollution in the world. Effects include increased
respiratory diseases and mental retardation, shortened life spans,
rivers too polluted for drinking or even industrial use (50 percent of
Poland\'s rivers) and the degradation of conservation area. It is
estimated that the costs of environmental degradation are between 7
percent and 15 percent of individual countries gross domestic product
and that it will cost hundreds of millions of dollars over the next 20
years to clean up past pollution.

As Central and Eastern Europe undertakes programs necessary to transform
centrally planned, non-competitive economics into market-based
economies, environmental issues must be addressed. USAID environmental
objectives in the region are to strengthen the capacity of CEE to
improve environmental conditions in a market economy and to correct the
roost causes of environmental degradation. These causes are: 1) policy
and price distortions; 2) state monopolies and lack of a private sector;
3) institutional weakness; 4) lack of information about environmental
conditions; and 5) lack of public participation in environmental
management.

Program priorities in order of importance are to reduce immediate
threats to human health and support economic restructuring, and to
protect the remaining important conservation areas. USAID will
concentrate on two major areas in the region; improving energy
efficiency and reducing urban and industrial pollution. Conservation
will receive limited support.

To promote energy efficiency, USAID will provide assistance to: 1)
rationalize and decontrol energy prices, which will promote energy
conservation; 2) restructure, improve efficiency and privatize the
energy sector, which will lead to reduced air pollution; 3) stimulate
U.S. and foreign investment, joint ventures and technology transfer,
which can supply more efficient technology; 4) reduce environmental
pollution and improve safety at nuclear power plants; and 5) encourage
regional cooperation and integration with Western Europe and
international energy markets, which can reduce the overall near-term
demand for energy production.

The strategy for reducing urban and industrial pollution is to: 1)
promote policy and price reform, including efforts to rationalize and
decontrol prices for natural resources, promote economic policy, legal
and regulatory reforms, and remove environmental barriers to private
investment and privatization; 2) strengthen environmental institutions
by developing environmental action plans, improving the efficiency of
public sector investments, adopting management tools such as risk
assessments and environmental impact assessments; 3) encourage
privatization and adoption by the private sector of efficient and
environmentally sound technology through U.S. investments and joint
ventures; and 4) increase public participation in government
decision-making.

**LATIN AMERICA AND THE CARIBBEAN**

The Bureau of Latin America and the Caribbean (LAC) environmental
strategy is developed from the premise that broad-based and sustainable
economic growth, expanded participation in the benefits of this growth
and improvements in the quality of human existence throughout the region
are inseparably linked to environmental conditions.

LAC Bureau actions will be guided by the following cross-cutting,
strategic principles: 1) attack root causes underlying environmental
degradation, stressing prevention of problems; 2) integrate
environmental considerations broadly into USAID-supported sectors and
programs; 3) promote economic and environmental policies for sustainable
development; 4) strengthen institutions, including non-government
organizations and government agencies for resource management; 5)
strengthen education and training in all areas of environmental
management; 6) build participation and empowerment of the public in
environmental initiatives; 7) strengthen the role of the private sector
in environmental management and prevention of resource degradation; 8)
promote research, information exchange and appropriate technology
transfer for sustainable development and environmental management; 9)
strengthen implementation of Agency environmental procedures; and 10)
promote donor collaboration and coordination for sustainable development
and environmental management.

The LAC Bureau will work in all five environmental problem areas to some
extent. However, LAC resources will be principally focused on the
following; conservation of tropical forests and other critical habitats
for biological diversity; sustainable agriculture; and improved
management and protection of water and coastal resources. The bureau
also will be engaged in the other two areas, promotion of
environmentally sound energy production and use and reduction of urban
and industrial pollution, on a more limited basis where these problems
are particularly significant constraints to development. Individual
missions are expected to focus on three or fewer of the five priority
environmental problem area, applying the cross-cutting principles in
each problem area chosen. Determining the mix of priorities will be
principally the responsibility of the mission.

Selection of areas of focus is based on the determination by the mission
and the host country that the areas selected for strategic action;
attack those environmental problems that are the most significant
constraints to economic development or pose significant threats to human
health and well-being; address problems where lack of action will result
in irretrievable losses (e.g. biodiversity); and focus resources on
areas identified as priorities by the host country and that it is
capable of and committed to addressing.

While concentrating environmental resources in this manner, the LAC
Bureau is equally committed to ensuring that environmental
considerations are broadly and fully integrated into Agency-supported
sectors and programs. The bureau will continue to assure the
environmental soundness of its entire program and actively incorporate
environmental considerations into its development goals. Particular
attention will be placed on increasing environmental awareness both
within the bureau as well as throughout the countries in the LAC region.

The objectives of the LAC Bureau\'s environmental activities extend far
beyond immediate environmental and natural resources concerns. The
ultimate goal is sustained, broadly based economic growth that will
improve the quality of human existence while preserving resources and
options for future generations throughout the region.

**NEAR EAST**

The Near East Bureau\'s Environment and Natural Resources Strategy,
developed according to guidelines set forth in the Agency\'s
Environmental Strategy Framework, reflects existing programs and the
current environmental and natural resource issues facing the Near East
Region.

The most critical environmental challenges facing this arid region are
associated with water resources. The region is plagued by water
shortages and deficits, while the degradation of water quality increases
at an alarming rate  further exacerbating the problem of water
availability. Water, as well as other natural resources, is being used
in an increasingly unsustainable manner because of unrestrained urban
and industrial growth; a poor appreciation of conservation and
environmental protection; and inadequacies in technical and regulatory
infrastructure to protect and manage these resources.

The population growth rate through this region is among the highest in
the world, resulting in rapid degradation of limited and fragile water
and arable land resources. Climate, access to limited water and arable
land, proximity to trading routes and access to existing infrastructure
has resulted in urban populations being clustered along the
Mediterranean shores and major rivers throughout the region.

Because of the transnational nature of water resources in the region,
many of the water issues are the cause, and continuation of,
geopolitical instability. Prospects for lasting regional peace depend
heavily on resolving transnational water issues  issues that for some
countries threaten their future existence.

The region has reached a critical crossroads in its history, and
individual countries are beginning to recognize the strong relationship
between sound environmental and natural resources management and
economic development. This recognition of the importance of sound
environmental management is beginning to surface in the form of a
proliferation of individual country environmental strategies such as
those evolving in Egypt, Jordan and Morocco.

This growing awareness provides an excellent opportunity for the Near
East Bureau to respond to the challenge of developing and carrying out a
comprehensive strategy for supporting the economic growth of the Near
East countries. the opportunity is in promoting sustainable economic
growth of the Near East countries. The opportunity is in promoting
sustainable economic growth by sound economic management of natural
resources and the environment through more efficient production and use
of natural resources.

The treatment of transnational issues in the Near East may involve
countries assisted by other regional bureaus and/or countries that do
not receive USAID assistance. This situation complicates the development
of effective regional activities. For this reason, the Near East Bureau
will explore opportunities to cooperate with other international donors
and NGOs in order to broaden the opportunities for regional approaches
and to strengthen the effectiveness of such approaches.

The Near East Bureau has identified four of the Agency\'s five critical
environmental areas as major constraints to development in the region.
These constraints and their priority for the Near East region are: 1)
degradation and depletion of water resources; 2) urban and industrial
pollution; 3) environmentally unsound energy production and use; and 4)
unsustainable agricultural practices.

***G. Resource Implications***

The choices and priorities presented in regional strategies will be
clearly reflected in mission and bureau budget allocations. The level of
resources committed should reflect the high priority accorded the
environment in USAID\'s program. All funding sources should be
considered, including Economic Support Funds. Annual budget reviews will
provide an opportunity for bureaus to show demonstrate that stated
environmental goals correspond to budget priorities.

**III. CONCLUSION**

Development can only occur if the natural resource base on which it
depends is carefully managed. In recognition of this critical linkage
between environment and development. USAID\'s environmental strategy is
to integrate environmental concerns into all of the Agency\'s
developmental activities and to take direct actions to work with host
countries to protect and better manage their environment. Putting this
strategy into action will help USAID achieve its primary objectives
through coordinated regional approaches to the critical environmental
constraints to development.