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IFI governance


Proposal on environmental impacts on adjustment

6 February 2001

World Wide Fund for Nature (WWF) have set out new proposals for assessing the environmental consequences of macro-economic reforms. The proposed Environmental Impact Assessment (EIA) process aims to “ensure that reforms are designed and implemented with full awareness of their consequences, both positive and negative”.

Designed to move decisively beyond orthodox models which rely on simple assumptions about prices and economic behaviour, it uses “both quantitative and qualitative tools of economics and political economy to understand the changes reforms will bring”.

The EIA teams should include both economists, environmental and social scientists. They should also include participants from government departments, civil society and academia. The team should first conduct a scoping exercise. In the case of agriculture this might trace links between the promotion of exports, expansion of the agricultural frontier, soil degradation and biodiversity loss.

Scoping would be followed by an in-depth assessment. Possible methods for analysing likely impacts include producing balance sheets to outline likely environmental gains and losses. Environmental effects can be ranked according to factors such as probability, significance and irreversibility. This implies difficult judgements, so alternative options are to use a checklist or matrix which can tabulate impacts without using numbers. Finally the report suggests producing various diagrams which trace causes and effects using boxes and arrows.

The EIA team should suggest ways to reduce environmental impacts and put in place a system to monitor the outcome of reforms according to publicly agreed criteria. This would increase public accountability of the government and of agencies like the World Bank and IMF.

Whilst the tools and concepts are very useful, the report appears to underestimate the bureaucratic, political and analytical hurdles to changing current planning practices. Recent World Bank studies show that only 37 per cent of adjustment loans contained even a paragraph talking about environmental impacts. And the macroeconomic models being developed within the Bank for use in PRSP countries are still very reliant on orthodox economic assumptions.

For a copy of the WWF Environmental Impact Assessment for Macroeconomic Reform Programmes

Bank assessment policies discussed