World Bank: Take the Global Green Deal
1 December 2000
Helping the poor while respecting the earth: surely social justice types should applaud that kind of work. The problem is, the World Bank often does not live up to its lofty mission.
By Mark Hertsgaard
The value of the World Bank's work is best measured not by abstruse statistical analyses but "by the smile on a child's face when a project has been successful." So says the Bank's president, James Wolfensohn. Since assuming his post in 1995, Wolfensohn has cultivated a public image as a compassionate, fresh-thinking leader. He has acknowledged previous mistakes of the Bank and promised to revise its practices to better service the world's poor and respect the environment. But how well has the Bank lived up to his promises? One area worth watching during the coming months will be the Bank's policy on large dams, such as those already built in or proposed for the Mekong River basin that Oxfam and other development groups have criticized.
Despite his public relations skills, Wolfensohn and the Bank are seen as villains by many activists working on environmental and poverty issues.
But why is that? After all, the Bank's mission is to alleviate poverty and promote sustainable development. In nations where private capital is too cautious or greedy to tread, the Bank is supposed to step in and fund basic development projects: water and sewage systems; ports, roads, and transportation infrastructure; electricity and communications networks; and health and education facilities—the foundations of a modern economy.
Helping the poor while respecting the earth: surely social justice types should applaud that kind of work. The problem is, the Bank often does not live up to its lofty mission.
Time and again, it has financed gargantuan, ill-conceived projects whose anti-poverty effects are indirect at best and whose environmental consequences are downright disastrous. Like the International Monetary Fund, the Bank often attaches conditions to its loans that force countries to reduce badly needed social spending in order to repay banks in the wealthy North. Likewise, Bank-funded projects often do more to subsidize Northern corporations than to fight Southern poverty.
Large-scale dams have been a particular sore spot between the Bank and its critics, but recent developments have opened the door to change. Last November, the World Commission on Dams (WCD), a blue-ribbon panel of experts representing all sides of the dams debate, released a landmark report that could well mark the beginning of the end for mega-dams.
Ironically enough, the WCD was established by none other than the World Bank, and the Bank has pledged to honor its conclusions.
The WCD report acknowledged that large dams have brought drinking water, electricity and irrigation to millions of people around the world.
However, the report stressed, "in too many cases, an unacceptable and often unnecessary price has been paid to secure those benefits . . . by people displaced, by communities downstream, by taxpayers and by the natural environment." The full report is available on the web at www.damsreport.org; among its specific findings are that large dams supply 19 percent of the world's electricity and 30 to 40 percent of its irrigation water. But dams have also forced between 40 million and 80 million people from their homes while inundating millions of acres of farmland, forest, and wetlands and driving numerous species to extinction. The economic benefits of large dams, meanwhile, have largely gone to the already prosperous, while the costs have been borne by the impoverished peasants whose communities disappear under water.
The WCD's conclusion that dams do more harm than good overturns decades of orthodoxy within the Bank and the other development agencies that have bankrolled so many of the 45,000 dams now sitting astride the world's rivers. And the WCD's policy recommendations are even more explosive.
Among other measures, the WCD suggested that no dam should be built without first obtaining the consent of the affected people, including those whose land would be flooded. It advises policymakers to seek out alternatives to mega-dams, and to give priority to maximizing the efficiency of existing systems before considering a mega-dam. While not advocating an outright ban on such dams, the WCD's guidelines will likely have that effect, if they are put into practice.
That is a big if, of course. But there are genuine signs of movement. Deborah Moore, a dams expert with the NGO Environmental Defense who served as one of the twelve WCD commissioners, says, "Representatives of the U.S. Export-Import Bank told us informally that they will adopt our guidelines. They also said they would push their European and Asian counterparts, including the development banks now financing the Three Gorges and Pashwar dams, to do the same." If the Export-Import Bank does live up to the promise Moore describes, the consequences will be enormous. Financing from western development banks has always been essential to megadams' hopes of attracting the massive additional financing they require from private banks; the private banks view the public institutions' involvement as a kind of risk insurance, an implicit guarantee that the dam will be completed and investors repaid. It follows, then, that if the Export-Import Bank and its overseas counterparts begin instead to withhold their seed money, mega-dams will quickly become a thing of the past.
Activists will have to make sure the development banks actually follow through on this pledge—no easy task. But it's worth remembering that it was activist pressure on the World Bank that brought the WCD into being in the first place.
What happens next? Some activists still complain that the Bank is irredeemable. They argue that the Bank, by allowing its laudable public purpose to be hijacked by private interests, has forfeited any claim to moral high ground and should be dismantled. But the Bank is too important a potential force for good in the world to write off. It is, furthermore, a publicly funded institution, which therefore should be susceptible to public pressure. Indeed, the story of the WCD suggests that the Bank can be pressured into at least saying the right thing, which then provides activists the leverage to demand that it also do the right thing, and not just about dams.
Activists should push the World Bank to support what I call the Global Green Deal: a program to environmentally retrofit human civilization and fight poverty in both the impoverished South and the wealthy North by underwriting the biggest jobs and investment program of our time. And make no mistake: poverty is central to humanity's environmental predicament.
Today, four billion of the planet's six billion people endure deprivation inconceivable to the wealthiest one billion whose lifestyles are advertised as the global ideal. As the poor strive to improve their lot, humanity's environmental footprint will grow. To accommodate this mass ascent from poverty without ruining the ecosystems that make life on earth possible in the first place is the great challenge of the new century.
The World Bank, by virtue of its enormous technical and financial resources and global reach, is uniquely situated to jump-start the environmental revolution needed to meet this challenge. On the issue of dams, that means abandoning mega projects and the topdown development model they imply in favor of consulting with local people and promoting small-scale dams and highly efficient "drip irrigation." To compensate for the electricity supplied by large dams, the Bank should support an immediate increase in energy efficiency, which would buy time for a shift to wind, solar, and other alternatives. The most compelling example here is China, the world's largest consumer of coal and its second largest producer of greenhouse gases. With its huge population and grand economic ambitions, China could, by itself, doom the world to severe global warming simply by continuing its planned expansion of coal use. But China would use 50 percent less coal if it simply installed the energy efficiency technologies—better lights, motors, and insulation—now available on the world market.
Under the Global Green Deal, the World Bank (as well as kindred institutions
in Europe, America, and Japan) would help China buy these technologies. This would reduce the ghastly air and water pollution now responsible for nearly one of every three deaths in China, but without reducing the energy supply Chinese need to escape poverty. Northern governments would also benefit, for they could address climate change while creating jobs and profits for their own workers and companies; they would also learn the advantages of adopting similar principles at home—a good thing, for the Global Green Deal cannot be credible or successful unless both North and South participate.
The World Bank would also benefit from backing the Global Green Deal. For not only would it have the satisfaction of matching its rhetoric with concrete achievements on the ground, it would be rewarded with the smiles on children's faces that James Wolfensohn rightly regards as the true measure of success.
Mark Hertsgaard is a commentator for NPR's "Living On Earth" and the author of four books, including most recently, Earth Odyssey: Around the World In Search of Our Environmental Future, now available in paperback from Broadway Books.
