Annual Report on the Environment and Natural Resources 1999

During the past two years, the Bank has broadened its focus on the environmental front. Propelled by the mandate imparted by the Eighth Replenishment in 1994, we have integrated our environmental objectives more completely with those of the Bank's goals of combating poverty and supporting equitable social and economic development in Latin America and the Caribbean. Increasingly, Bank lending is concentrating on the priority areas of poverty reduction, human capital formation, rural poverty and sustainable agriculture, integrated natural resources management and the environment, urban development, economic and financial modernization and integration, and strengthening civil society and democratic institutions. Over the next three years, some $10 billion in projects have been identified that support the goals of sustainable development. This year's Annual Report of the Bank's Committee on Environment and Social Impact highlights some of the more significant steps we have taken in this direction during last year. In 1996, the IDB and the Multilateral Investment Fund approved 12 environmental and natural resources loans for a total of $815 million, up from $796 million a year earlier. In addition, the Bank approved 50 technical cooperations for a total of $27 million reflecting an emphasis on policy formulation, management and the design of institutional and legal frameworks. Environmental projects covered sanitation and sewerage, potable water, wastewater treatment and flood control in urban areas and three major sustainable natural resources management projects totaling $129 million in Colombia, Nicaragua, and the Peten region of Guatemala. Special emphasis has been given to poverty and social equity which are targeted to receive 40% of the Bank's lending. In 1996, the Bank approved 40 operations in the social area totaling $2.7 billion. As the composition of the Bank's lending shifted in response to the new mandates of the Eighth Replenishment, we found it necessary to design new approaches to ensure the environmental quality of Bank projects. For the past 15 years, the Bank's Environment Committee (CMA) reviewed IDB operations, classifying them for potential environmental impact and indicating measures to mitigate harm. In 1996, the CMA's scope was broadened to include the social impacts of IDB-financed projects, and its name was changed to the Committee on Environment and Social Impact (CESI). The new review process underscores the Bank's commitment to ensure that all future operations, not only address environmental issues and opportunities, but also take serious steps to assess, prevent, reduce and mitigate the adverse effects they might have on low-income people, women, indigenous communities, minorities and other vulnerable groups. The CESI provides a tool to address environmental and social issues at an early stage in the project preparation cycle, and thereby, offers an opportunity to shape the design and content of operations in order to enhance their social and environmental sustainability. In tandem with a strengthened internal review, the Bank is identifying methodologies and strategies to guide the staff and borrowing countries in their efforts to address critical problems in environmental and natural resource management. Now we face the task of integrating the lessons of environmental assessment into our search for solutions to the critical problems of social equity and the reduction of poverty. To provide an orientation to future operations, the Environment Division of the Social Programs and Sustainable Development Department is preparing innovative strategies to be considered by the Bank's senior management and the Board of Executive Directors. The thrust of the new water resources management strategy, which is designed to help countries improve their ability to allocate and conserve water and reduce conflicts among uses, will be an integrated approach to problem solving, rather than the individual project procedure of the past. The strategy for coastal and marine resources, which represents a new focus for Bank activities, also aims at developing integrated programs to meet economic, social and environmental needs. A new strategy for rural development will call for linking programs with measures to conserve natural resources and the elimination of a negative bias toward the rural sector. These strategies, which are built upon Bank experience, broad consultation and an analysis of state-of-the-art concepts, will be implemented through Bank lending activities, technical assistance and broad outreach and dissemination efforts as the Bank engages the regional actors in a dialogue on these topics. The recently established Sustainable Markets for Sustainable Energy Program embodies this effort to bring new ideas and practices to the region in the form of pilot projects for energy efficient technologies and practices and sources of clean energy. Through its lending program, strategies, technical assistance programs and outreach efforts, the IDB and its member countries are exploring the complex issues related to sustainable development. Drawing forth lessons and ideas to guide our common action is clearly a dynamic process of learning, testing, applying and exchanging knowledge and is one of the central roles for a regional institution such as the IDB. Waldemar W. Wirsig Chairman, Committee on Environment and Social Impact