World Bank’s Transformation of Human-Environmental Relations in the Global South

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Table of Contents

The World Bank’s Positive Impact
Negative Impact of the World Bank
Summary
References

This paper explores how far, and in what ways, the World Bank has transformed human-environment relations in the global south, since the mid 20^th century.

Evidence from this paper shows that although the World Bank has contributed to environmental degradation in some countries in the global south, the global financial institution has had a more positive (than negative) impact on human-environment relations in the global south.

In detail, this paper shows that the World Bank has positively influenced human-environment relations in four ways – providing legal support to environmental management practices, promoting sustainable development, promoting environmental awareness, and securing compliance to environmental standards.

Overall, this paper shows that the World Bank has changed its approach to environmental issues in the global south by promoting sustainable development through structural adjustment programs.

This approach is a departure from the bank’s previous development criteria for gaining access to aid, which were insensitive to environmental concerns. The structure of this paper explains this transition by focusing on World Bank’s “greening” interventions in Mongolia, Sri Lanka, Botswana, Brazil, and Morocco (as some examples of World Bank’s intervention in the global south).

The World Bank’s Positive Impact

Most countries in the global south have traditionally relied on natural resources for economic growth. Agriculture is especially a dominant economic activity that accounts for exports in developing countries (Babb 2005). Such kinds of activities depend on natural resources. Consequently, many countries in the global south have experienced natural resource depletion, including deforestation and over-exploitation of natural resources to support agriculture (Babb 2005).

The World Bank has intervened in most developing countries to restore the depleted natural resources. Through effective natural resource management strategies, the bank has used its institutional capacity to promote global environmental conservation. Providing legal support to environmental management practices is one way the bank has managed to do so.

Providing Legal Support to Environmental Management Practices

Providing legal advice to improve natural resource conservation is one way the bank has transformed the approach of countries in the global south to embrace environmental awareness. For example, through the World Bank’s former president Robert McNamara’s leadership, the World Bank has consistently participated in the drafting and development of progressive legislations that incorporate environmental policies in development projects.

For example, in 1981, World Bank proposed a raft of legislative changes to its financing framework that required borrowing governments to adhere to environmental appraisal concepts in their loan applications (Shihata 1992). In the 1972 Stockholm meeting, which led to the subsequent establishment of the United Nations Environmental programme (UNEP), the World Bank sought to redefine the relationship between economic development and environmental conservation.

Referring to this meeting, Shihata (1992) said World Bank’s main concern was not to ascertain if economic growth should continue at the expense of the environment, or if the two considerations were interlocked; instead, it sought to redefine the relationship between the two concepts. An example of World Bank’s intervention in Mongolia shows how the bank has successfully managed to do so.

The past few decades have seen Mongolia grapple with several environmental challenges. Most of these challenges revolve around key environmental management tenets, such as natural resource management, urban environment and health planning, and institutional planning (World Bank Group 2013).

The last decade has seen Mongolia transition its economic model of a centralised economy to a free-market economy. This transition birthed widespread environmental exploitation to support economic activities (Blunden 2008). Deforestation is one such economic activity that expanded during this period. The World Bank Group (2013) says deforestation increased from 40,000 ha to 60,000 ha yearly. At the end of the mid 1990s, Mongolia only had about 12.4 million ha of forested land remaining (World Bank Group 2013).

The World Bank intervened to transform how the Mongolian people interacted with the environment by influencing the government’s approach in addressing environmental concerns. Through a partnership with the Mongolian government, the World Bank helped Mongolia to formulate progressive environmental laws that would redefine how its citizenry interacted with the environment (World Bank Group 2013).

Within the same administrative framework, the Mongolian government expanded its nature reserve system and demanded that manufacturing firms (operating in the country) reduce their carbon emission to obtain an operating license. The government also encouraged the use of energy efficient technologies in its industrial sector by lowering the taxes for equipments that adopted such technology.

The World Bank’s involvement in the Mongolian case highlighted three pillars of environmental management – land resource management, urban environmental services, and overall environmental management. Particularly, the World Bank helped the Mongolian government to succeed on these fronts by providing it with technical assistance.

For example, the World Bank provided technical assistance to the Ulaan Bataar Urban Services Improvement II Project, which aimed to improve the quality of water sanitation and treatment processes undertaken by the Mongolian government (Kamata 2010). The project helped to expand water treatment services in the country.

To strengthen the commitment of the government’s natural resource management efforts, the World Bank also provided technical assistance to improve animal production and marketing systems in the country (experts said increased livestock numbers largely contributed to Mongolia’s grassland degradation) (Kamata 2010).

Similarly, the global financial institution lent technical support to the Mongolian government to strengthen its community-based forestry management laws. Comprehensively, these practices explain how the World Bank has helped Mongolia to redefine how it interacts with the environment (World Bank Group 2013). In the same context, the World Bank’s influence has helped Mongolia to improve its legislative framework to accommodate sustainable development.

Promoting Sustainable Development

The World Bank has influenced human-environment relations in the global south through its influence on economic projects. Building on the works of other global institutions, like the World Commission on Environment and Development, the World Bank has strived to promote the concept of sustainable development in the global south.

The World Bank has firmly maintained this concept in helping developing nations meet the demands of sustainable development. In particular, this commitment emphasises the reorientation of World Bank’s development programs to meet the needs of sustainable development in the global south.

In 1970, the speech by the then World Bank’s president, Robert McNamara, reaffirmed the bank’s role in promoting sustainable development. He said the bank was committed to finding sustainable solutions for development, without compromising the economic goals of developing countries (Shihata 1992).

Through this conviction, the bank introduced a special unit in the institution’s loan approval process to assess the environmental impact of its projects, as a precondition for lending credit to developing countries (Goldman 2001). The World Bank has effectively used such instruments to redefine how borrowing countries interact with the environment. Its involvement in the Brazil-MBR Iron Ore Project demonstrates this fact.

In 1971, Brazil sought funding from the World Bank to undertake an ambitious energy project – Iron Ore Project (Shihata 1995). Before providing funding for the project, the World Bank reviewed the environmental impact assessment of the government’s plan through an ecological study.

From the study’s findings, the World Bank introduced specific provisions in the loan approval process that required the Brazilian government to embrace sustainable development and minimise the impact of the project on the environment and the local population (Shihata 1995). Particularly, the document outlined that the project should not have an adverse impact on the ocean and the mining location.

Specific details of the agreement did not limit the extent of environmental protection, but it emphasised on the protection of the waters of the Sepetiba Bay, where the mining activities occurred (Shihata 1992). This provision aimed to protect the natural resource from pollution. Additionally, the loan agreement required the guarantor to construct pelletizing plants at the bay to prevent further environmental degradation from the project.

The World Bank and the government of Brazil were required to oversee this construction. Through this initiative, the World Bank influenced how the Brazilian government and its people would interact with the environment. Broadly, the influence of the World Bank provided a model framework through which other Brazilian development projects occurred.

A deeper analysis of the project shows that this initiative was among the first attempts by the Brazilian government to introduce the concept of sustainable development in its economic activities. This concept has existed in many similar projects in the country.

Promoting Environmental Awareness

Environmental awareness is an old concept of the World Bank. Indeed, since the 1950s, the World Bank engaged in environmentally sensitive development projects (Shihata 1992). Through the introduction of an environmental unit in the Bank’s loan approval process, World Bank handles environmental issues daily (Goldman 2001).

Since 1970, the Bank’s employees have learned how to weigh environmental issues as a prerequisite for developing nations to gain access to loans for their development projects (Davies 1992). One requirement for borrowing governments to gain access to a loan is to present their environmental impact assessment surveys to the bank’s office, alongside their loan request applications. Another requirement is the need to undertake investigations into the environmental impact and dimensions of complex projects (Goldman 2001).

The results of such investigations contribute to the formulation of environmental safeguard measures in the recipient countries. This happens through the redesigning of project plans. World Bank’s Office of Environmental Affairs has spearheaded most of these initiatives. In line with its mandate, the agency has issued a set of guidelines that borrowing countries could use to gain access to loans. Over the decades, the agency has expanded these guidelines and summed them in a manual that is freely accessible to all countries (Davies 1992).

Following the extensive measures undertaken by the World Bank in introducing environmental reforms in developing nations, the International Institute for Environment and Development reported that the World bank has a greater awareness to environmental issues than it did in the past (Shihata 1992).

The unique policy interventions by the World Bank have changed the human-environment relations in the borrowing countries by introducing new dynamics to how the governments and people in such countries interact with the environment (Goldman 2001).

Davies (1992) believes the introduction of such provisions has redefined how governments approach environmental issues because they have created a high sense of environmental awareness in government operations. The Botswana-Shashe Project and the Morocco-Jerada coal-mining projects demonstrate the World Bank’s success in this regard.

Similar to the Brazilian MBR Iron-Ore project, Botswana also sought World Bank’s assistance to undertake a mining project. The World Bank granted the loan after including specific provisions in the agreement for preventing pollution and environmental destruction (Jean-Quentin & Candolle 1995). The loan agreement required the borrower, the Botswana government, to ensure the project did not have any public health implications for the people.

These provisions were crucial to the approval of the country’s loan application because experts had cited public health and environmental concerns for the project (Jean-Quentin & Candolle 1995). Botswana complied with the loan agreement terms by ensuring its environmental safety standards met World Bank’s standards. This project marked among the first attempts by the Botswana government to sensitize its citizens on the importance of environmental protection when undertaking economic activities.

The Morocco-Jerada coal-mining project shares many similarities to the Botswana mining project because the World Bank imposed the same environmental standards as it did in Botswana. Moreover, both projects involved mining activities that had the same environmental concerns. Indeed, experts said both projects had several health and environmental concerns (Shihata 1992).

Consequently, the World Bank required the Moroccan government to meet its health and environmental protection standards before it could finance the project (Pevato 2003). The formulation of these standards occurred during the project design phase. The government adjusted its proposal to ensure the coal mining process would not have an adverse impact on the environment. This way, World Bank introduced the framework of sustainable development to guide future human-environment relations in the African country.

Securing Compliance to Environmental Standards

The World Bank ensures full compliance of environmental laws by ensuring borrowing governments state their commitment to such provisions through the loan agreement, development credit agreement, and project agreement documents (these documents are crucial during the loan signing process). Indeed, Shihata (1992) says in special circumstances, the World Bank often requires a written commitment by the borrowing governments to uphold the environmental safeguards of their projects.

These agreements provide the legal framework for guaranteeing the commitment of borrowing governments to adhere to environmental standards, as prescribed in their loan application agreements. These agreements have ensured governments remain committed to environmental reform. In an unrelated context, some researchers believe World Bank has played a significant role in worsening the quality of human-environment relations in the global south. Some of their views appear below.

Negative Impact of the World Bank

Privatisation of Natural Resources

Although the World Bank has largely had a positive impact in redefining how countries in the global south interact with the environment, evidence also exist to show how the institution has worsened environmental degradation in some countries. For example, the bank’s policies in Sri Lanka caused uproar among civil right groups and environmental agencies in the country for their potential negative influence on Sri Lanka’s agriculture and environmental sectors (Treakle 2013).

Sri Lanka’s national movement for Land and Agricultural reform highlights the impact of the bank’s policies (introduced in the seventies) on the country’s agricultural sector, today. Particularly, the movement highlighted recommendations by the World Bank that supported the private ownership of water resources (Treakle 2013).

The movement also highlighted the liberalisation of the land market and the withdrawal of subsidies as other “dangerous” measures that World Bank introduced in Sri Lanka (that worsened the country’s natural resource use). The media and other concerned parties debated these issues in the public. They recommended that the bank should modify some tenets of its proposals to protect the environment, to no avail (Treakle 2013).

Until the onset of the Asian financial crisis, World Bank’s policies in Sri Lanka greatly affected access to natural resources and the utilisation of the same (especially by the poor and vulnerable communities). The crisis forced the bank’s president, James Wolfensohn, to admit failure by the bank to protect the environment and increase access and equity in natural resource use (Treakle 2013). This admission led the bank to modify its proposals.

Environmental Destruction

Evidence from Chile also shows the failure of the World Bank’s policies to protect the environmental welfare of borrowing countries. Through a Chilean private utility company, the World Bank financed an ambitious plan to construct a hydroelectric dam in Chile (Blaser & Feit 2004). Although the project would have a positive effect on the Chilean energy sector, it failed to factor the environmental and social impact on the country.

Consequently, the construction of the dam destroyed large tracts of forestland and displaced indigenous people from their native lands. Chilean environmental groups decried this environmental destruction and petitioned the World Bank to stop the project (Blaser & Feit 2004).

This did not happen. Effectively, this project destroyed a significant part of the country’s natural resources. Comprehensively, these examples show that the World Bank has had a negative and positive impact on the quality of human-environment relations in the global south.

Summary

As shown in this paper, countries in the global south experience unique environmental issues, which characterise their social and economic spaces. Particularly, these issues concentrate on unique economic sectors, such as transport, agriculture, and energy sectors. Mainly, this paper shows that the World Bank has transformed how such countries interact with the environment by avoiding, or minimising, environmental risk.

Concisely, the World Bank has taken an extra initiative of guaranteeing the commitment of such countries to undertake environmentally sustainable practices in their economic projects. Typically, the World Bank has ensured the compliance of borrowing governments to these measures by influencing the project design and implementation processes of such entities. However, the bank has also had a negative influence on human-environmental relations in some countries, but the bank’s recent strategies depart from this action.

Overall, this paper shows that the World Bank has had a significant impact on the lives and livelihoods of people in the global south. Its structural adjustment programs and collaborations with local governments have elevated the institution’s status from a bank to a development institution. World Bank’s economic and environmental policies have also transformed human-environment relations in the global south through legislative changes.

From this influence alone, possibly, we could argue that the bank has more influence on governments in the global south than other global entities that could exert the same influence. Through its loans and guarantees, the bank has introduced environmental awareness and sensitivity in the formulation of macroeconomic policies in the global south. Consequently, most of these countries contend with undertaking sustainable development as part of their economic agenda.

References

Babb, S 2005, ‘The Social Consequences of Structural Adjustment: Recent Evidence and Current Debates’, Annual Review of Sociology, vol. 31, pp. 199-222.

Blaser, M & Feit, H 2004, In the Way of Development: Indigenous Peoples, Life Projects, and Globalization, IDRC, New York.

Blunden, J 2008, Mongolia 2^nd, Bradt Travel Guides, London.

Davies, S 1992, ‘Green Conditionality and Food Security: Winners and Losers From The Greening of Aid’, Journal of International Development, vol. 4 no. 2, pp. 151-165.

Goldman, M 2001, ‘Constructing an Environmental State: Eco-governmentality and other Transnational Practices of a Green World Bank’, Social Problems, vol. 48 no. 4, pp. 499-523.

Jean-Quentin, K & Candolle, B 1995, Arbitration and Renegotiation of International Investment Agreements, Kluwer Law International, New York.

Kamata, T 2010, Managing Urban Expansion in Mongolia: Best Practices in Scenario-based Urban Planning, World Bank Publications, Washington.

Pevato, P 2003, International environmental law, Ashgate/Dartmouth, London.

Shihata, I 1992, ‘The World Bank and the Environment: a Legal Perspective’, Maryland Journal of International Law, vol. 16 no. 1, pp. 1-41.

Shihata, I 1995, The World Bank in a Changing World: Selected Essays and Lectures, Martinus Nijhoff Publishers, New York.

The World Bank Group 2013, Mongolia Environment. Web.

Treakle, K 2013, The World Bank And Esc Rights. Web.

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