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received only 3.3 percent of national income, while the richest 10 percent received 38.8 percent. Land distribution was equally skewed. In 1984, 42 percent of the nation's farms were too small to support a family, while farms larger than 200 hectares tied up almost half of all agricultural land. High birth rates, especially in rural areas, meant that more and more peasants were forced to migrate in search of land or employment.

Costa Rica's traditional land tenure policies also have exacerbated the destruction of frontier lands. Squatters were traditionally granted provisional rights to any under-utilized public or private land that they occupied for a year, if they "improved" the land by at least partially clearing it. They could then sell the land to a speculator or a cattle rancher who could receive full title. With government incentives for cattle ranching buoying demand for pasture, "professional squatters" had a compelling reason to clear land merely to sell their "improvements" and then move on to repeat the process elsewhere in the forests.

The "debt crisis" that hit Costa Rica in the early 1980s brought burgeoning unemployment and plummeting real wages, and pushed many more landless peasants toward the frontiers in search of subsistence. The roots of that crisis can be traced to the early 1970s, when economic policies biased toward industry undermined the basis for sustained economic growth. The growth Costa Rica experienced later in the decade was maintained only by rapid expansion in the government sector, which was financed by foreign loans. In 1974, Costa Rica's total long-term debt was $21.3 million (in 1984 dollars). By 1979, the debt had multiplied 13-fold and equalled 10 percent of GDP.

Due to a weakening global economy, falling commodity prices, and rising interest rates, Costa Rica found it impossible to service its debts and declared a moratorium on interest payments in 1981. To obtain approval for new loans from the International Monetary Fund, the government adopted a stabilization plan that cut government expenditures by 28 percent between 1980 and 1982. This dramatic contraction in the government sector led the downturn of the rest of the economy.

Most of Costa Rica makes poor pastureland; nevertheless, many forested acres were cleared in the 1960s and 1970s so that beef could be produced for export. Remaining forests show up dark in the background.

In just two years-1981 and 1982unemployment doubled and real wages dropped by 30 percent.

Rural areas became the refuge for those with nowhere else to turn. While migration from rural to urban areas was a major feature of the 1970s, during the five-year period leading up to 1984which included the two years of deep recession-more migrants left the metropolitan area than entered it. At the same time, the net number of those leaving rural areas whose land resources were ranked as "poor" or "very poor" dropped dramatically. Four times as many squatters received rights to land in the period of economic crisis as did in the earlier census period. The vast majority of these settled in districts with poor or very poor lands-lands that were unsuitable for agriculture.

Fortunately, although Costa Rica's economic crisis was deep, it was also

Rick Maloof photo.

short-lived. Between 1977 and 1983, the number of people living below the poverty line swelled by 50 percent, but by 1986 it had fallen again to its earlier level. Because the economic recovery was led by growth in agriculture, the poorest people benefitted the most. Between 1981 and 1989, the incidence of poverty fell from 25.4 percent to 10.2 percent, even as per-capita income declined. Today, the Costa Rican government has better positioned itself to encourage both economic growth and environmental protection. The structural adjustment policies Costa Rica adopted in the early 1980s laid a firm foundation for its economic future. The nation has also moved to protect its natural resource base by repealing the economic incentives that encouraged beef exports and reforming land-tenure policies that encouraged forest clearing.■

The World Bank's
Post-Rio Strategy

The bank plans to follow through on Agenda 21

by Mohamed T. El-Ashry

wenty years ago, popular consensus held that the goals of economic development and environmental protection were mutually exclusive. Economic development was believed to be unavoidably destructive to the environment and environmental protection was considered a constraint to development. Today, this dichotomous view has largely given way to a better understanding of the linkages between development and the environment. The accords agreed to at the United Nations Conference on Environment and Development (UNCED) indicate that development policy makers have come to realize that degradation of the environment and depletion of valuable natural resources not only impede economic development but threaten human survival. At Rio, the world community reached an unprecedented consensus on the need to fully integrate environmental concerns into the mainstream of economic decision making. This is essential for successfully redirecting the economic, demographic, and political forces that underlie environmental degradation at both local and global levels.

To ensure that this vision materializes, however, we need to move beyond agreement on the need for better and integrated policies and on to their effective implementation. We must learn

(El-Ashry is Chief Environmental Advisor to the President and Director of Environment at the World Bank.)

how to operationalize sustainable
development, and equipped with that
knowledge, we must set about closing
the gap between the rhetoric of sustain-
able development and its limited practice
in the field. Regrettably, national and
international institutions-the World
Bank included-have in the past not
fully met this challenge of implementa-
tion. The poverty, hunger, and disease
suffered by millions in the developing
world demand that we do better.

Agenda 21-the main operational
product of UNCED-provides the post-
Rio world with a starting point. A
remarkably comprehensive document, it
guides the implementation of national
and international policies in support of

and the Environment provided the
impetus and intellectual foundation for
the bank's current four-point strategy for
sustainable development, outlined
below:

• Environmental Assessment. The first
component of this strategy is the devel-
opment of a comprehensive environmen-
tal assessment procedure which aims to
ensure that development options under
consideration are environmentally sound
and sustainable. All projects the bank
helps to finance other than those such
as education or family planning projects,
which are unlikely to have direct,
adverse environmental consequences-
must undergo an environmental analysis
or a full environmental assessment,

sustainable development into the coming depending on their potential environ

century. Agenda 21 also embodies one
of UNCED's major themes-that
concerted action and shared responsibil-
ity by developed and developing
countries are crucial for addressing the
linkages between development and the

environment.

What role should the World Bank play in response to the Earth Summit's clarion call for sustainable development? With its long-standing commitment to poverty reduction and uniquely diverse capacity-in technical assistance, project finance, policy dialogue, and researchthe bank is well placed to adopt, and follow through on, the holistic approach championed by Agenda 21. The Earth Summit and the bank's own 1992 World Development Report on Development

mental impacts. Borrowers' environmental assessment capabilities are strengthened by methodological, technical, and staffing assistance provided by the bank, and internal bank support for environmental assessment has been bolstered until borrowers' capacities have improved.

Environmental assessment is a vital first step. It recognizes and responds to a powerful reality: If soils are damaged, aquifers depleted, and ecosystems disrupted, then regardless of any shortterm income benefits, the long-run prospects for development will be undermined. But environmental assessment is only part of a strategy for sustainable development. With the

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Better access to education can help break the cycle of poverty, population growth, and environmental degradation. The World
Bank plans increased funding for education, health, nutrition, and family planning. This primary school is in Calcutta.

addition of four billion people to our numbers over the next 40 years, it is not enough simply to protect the environment and promote economic growth. We must strike at the roots of poverty. • Reduction of Poverty. The second component of the bank's strategy for sustainable development builds on the relationships between poverty alleviation, economic efficiency, and environmental quality. More than any other influence on the environment, none is as immediately powerful as poverty. For the poor just to survive, they are compelled to take what they can from the land today, and they lack the means to conserve their natural resources for tomorrow. Yet, they suffer most directly and severely when these resources deteriorate.

To improve the environmental health of developing countries, we must attack the political consequences of poverty as well as its economic basis. Poor people

are often politically marginalized and excluded from the decision-making and policy-implementation processes. Local community participation and consultation can change this by establishing the legitimacy of development efforts and policies at the outset, building powerful constituencies for environmental stewardship, and greatly improving the prospects for successful implementation. The key to effective change is empowering the poor to break the vicious cycle of poverty, population growth, and environmental degradation.

This means better access to education and social services as well as a voice in and "ownership" of development efforts that affect them. The bank's annual social sector lending is projected to average about $5 billion over the next three years. Lending for clean water and sanitation is expected to double, and investments in education, health, nutrition, and family planning are expected to increase

by two-thirds. And with the 10th grant refunding of the International Development Association (IDA)-the lending arm of the bank-IDA has pledged a stronger attack on poverty in the poorest countries of Southeast Asia, Africa, and Latin America. Particular emphasis will be on poverty reduction, family planning, and social services for women in these areas.

Building on the synergy between poverty reduction and economic efficiency also has a powerful impact on the environment. The bank is working with its borrowers to develop policies that can provide both substantial economic and environmental benefits, such as the elimination of subsidies for environmentally harmful activities, clarification of property rights, and liberalization of trade. The elimination of energy subsidies in developing countries, for instance, would save governments nearly $230 billion each year with a dramatic

World Bank photo.

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Ten countries, including the Philippines, have national environmental action plans that will help foster sustainable development. These terraced rice fields are part of a Philippine project studying the comparative success of different strains.

impact on air quality. Where the links between poverty and the environment are not so positively related, policy measures can minimize the tradeoffs by targeting environmentally destructive behavior with market-based incentives, such as taxes or charges, or government regulations. A recent study of air pollution from transport in Mexico City, conducted by the bank and the Mexican regulatory authorities, recommended a mix of such policies-mandated emission standards, fuel improvements, and a gasoline tax-some of which the city has already begun to implement.

• Setting Priorities and Defining National Strategies. The third part of the bank's post-UNCED strategy is to assist member countries in setting priorities, building institutions, and formulating targeted policies for environmental stewardship. To this end, the bank continues to provide advice and help arrange technical assistance for countries in the preparation of their national environmental action plans (EAPs). The EAP process aids government decision

makers in environmental planning and investment strategies by reviewing environmental priorities and identifying required policy actions, investments, and institutional changes, coordinated across economic and social sectors. EAPs also facilitate policy dialogue between donors, recipients, and beneficiaries, as their development is based on a process of popular participation at all levels of the community. Ten such action plans-for Burkina Faso, Egypt, The Gambia, Ghana, Lesotho, Madagascar, Nigeria, Rwanda, the Philippines, and Sri Lanka-have been completed by IDA countries thus far. Nineteen more are

expected by the close of the bank's 1993 fiscal year. Regional environmental action plans are also underway (e.g., in Central and Eastern Europe and in Africa) to address environmental problems that transcend national borders.

Environmental action plans explicitly recognize that the environment cannot be sectorially delineated. By integrating sustainability considerations into a

country's entire development strategy, EAPs represent the holistic, crosssectoral approach called for by Agenda 21. They also help development assistance institutions and donor agencies set their own appropriate targets and funding priorities. The bank's own country assistance strategies are reinforced by analytical and policy work done as part of national EAPs.

• Global Environment Facility. The fourth and final component of the bank's strategy calls for addressing international environmental challenges through participation in the Global Environment Facility (GEF). Two important conventions, dealing with biodiversity conservation and climate change, were signed in Rio, and the GEF has emerged as both a facilitator and funding mechanism to secure the participation of developing countries in realizing the goals of the Rio conventions and for integrating global environmental concerns into the development process.

Established in 1990 as a three-year pilot program to address global environ

mental issues of climate change, ozone depletion, loss of biodiversity, and pollution of international waters, the GEF is implemented by the U.N. Development Program, the U.N. Environment Program, and the World Bank. The GEF provides a reasonably large volume of additional resources to developing countries to invest in global environmental protection. In total, industrialized and developing countries have pledged some $1.3 billion to the facility for commitment over the three-year pilot phase. The facility is also uniquely important because it is specifically designed to serve the interests of the world as a whole. Protection of the global commons has typically been considered a classically unresolvable problem of collective action, but at UNCED, the international community rose to the challenge of defending the global commons from further degradation. The GEF stands as the practical manifestation of that resolve. A number of donors pledged in Rio a two-to-threefold increase in its resources beyond the pilot phase.

In the transition from pilot to permanent status, the GEF is undergoing a number of important institutional adjustments. Membership will become universal-any country that wishes to join the GEF will have the opportunity to do so without paying a membership fee, and can join the current restructuring discussions. Efforts are underway to establish decision-making procedures within the facility that guarantee a balanced and equitable representation of the interests of developing countries while giving due weight to the funding efforts of donors. The GEF is also

working to articulate linkages to the biodiversity and climate change conventions, and to assist developing countries in the formulation of their national action plans and strategies under these conventions. A major challenge for the GEF is how it can play the catalytic role of integrating global environmental considerations into the regular development assistance programs sponsored or co-financed by bilateral and multilateral agencies particularly in the areas of energy planning and development, forest management, and agriculture. Another challenge is integrating the global actions it supports into country priorities and national sustainable development plans. The GEF illustrates a new approach to North-South cooperation on the impor

More emphasis is being given to social and cultural issues, such as the role of women in development ....

tant issues of global environment as they relate to sustainable development in developing countries. Institutionally, it may be a model for broader international cooperation without setting up new bureaucracies. More important, I believe the GEF points to a willingness on the part of the world's wealthier states to safeguard the inheritance of future

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generations by helping developing countries mitigate their growing contribution to global environmental degrada

tion.

Behind the transition from policy integration to implementation at the World Bank is a spectrum of research and analysis that informs policy making for environmentally sound development. The research efforts of the bank's environment department and other sector departments emphasize the integration of environmental concerns into the bank's policy work through, for example, the economic valuation of environmental "goods" and "bads" and improving efficiency in energy production and use. More emphasis is being given to social and cultural issues, such as the role of women in development, cultural heritage and indigenous peoples, and the challenges of equitable resettlement practices. To this end, a new division of social policy has been established in the bank's environment department.

The challenges of environment and development are daunting, and the real work of integration and implementation lies ahead. International institutions have a major role to play in bringing about a new era of international cooperation for sustainable development. We have accumulated an unprecedented wealth of scientific knowledge and improved tools for analysis and prediction, and we have gained the technical and institutional experience to take action. Further, the agreements at UNCED mark the beginning of an international political will to take the necessary steps to protect the earth on which our survival depends. ■

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1,000

Per capita income (dollars, log scale)

Note: Estimates are based on cross-country regression analysis of data from the 1980's.
Source: World Bank.

*Emissions are from fossil fuels.

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