World Bank warns on sustainable development 

ALAN BETTIE / Financial Times (UK) 22aug02

Development report is critical of past failures to safeguard limited natural resources, writes Alan Beattie

The world has a short window of opportunity to solve pressing environmental and social problems before they threaten to overwhelm economic development, the World Bank said yesterday.

The dependency ratio is the ratio of non-working
 population (under 15 years of age and over 64) to
 the working- age population (ages 15-64).

 **Projections

Publishing its annual world development report, the bank also defended its own record, saying it was a world leader in promoting environmental and social sustainability.

The bank has been criticised by its own inspectors for transgressing environmental guidelines in two of its most high-profile and controversial projects - the Bujagali dam in Uganda and the Chad-Cameroon oil pipeline in west Africa.

Caroline Anstey, the bank's spokesperson, said: "It is hard to do risky projects. But does that mean we don't go into risky projects? No." Ian Johnson, the bank's vice-president for sustainable development, called for a commitment from rich country governments attending the United Nations' summit in Johannesburg next week to end damaging energy and agricultural subsidies.

The report was sharply critical of past failures to safeguard limited natural resources, particularly fisheries and forests.
More optimistically, it said that the one-off shift from rural to urban living in developing countries over the next few decades, along with a temporary decline in the "dependency ratio" of non-working to working age populations, meant there was a window of opportunity to shift to more sustainable patterns of development.
The rising proportion of working-age people "enable[s] societies to spend less on school-age construction and on old age medical expenses", and will also reduce pressure on farmland, the report said.

The bank's warning that imminent action was needed seems to be at odds with the position taken by the US, which has called for more research on the effects of global warming and other environmental problems. But Ms Anstey said the bank would continue to warn even its largest and most important shareholders about the threats to sustainable development posed by their policies.

The report, which has in the past been the battleground for ideological disputes within the bank, is eagerly watched for any signs of shifts in the bank's thinking. This year's report appears to be more sceptical about free markets and economic growth as the overwhelming drivers of poverty reduction. "There is more to development than just economic growth - much more," it says.

As befits a report aimed at the Johannesburg world summit, it discusses the need for overarching mechanisms of consultation and intervention - local, national and global - to correct market failures and make sure that sustainability and conflicting interests are taken into account.

But Nicholas Stern, the World Bank's chief economist, says that this represents an evolving view rather than a sudden recognition of the strains which development puts on society and the environment.

"You have to see these things not as deviations from past stories but complements," he told the FT in an interview.

But Mr Stern's emollience conceals deep controversies over the environmental and social effects of World Bank projects.

The greening of the bank was complete with the creation in 1998 of a special unit, its "environmentally and socially sustainable development network".

"There has been some intensification of the work on environmental and social sustainability since five or so years ago," Mr Stern says. "Many of these issues were not well understood previously."

Non-governmental organisations say the bank has not incorporated the guidelines into its own policies, while borrower governments and companies say the bank is pandering too much to those same NGOs and making it impossible to get involved in large infrastructure projects.

Mr Stern says "It is not a question of who shouts the loudest We have got better at listening over these last half-dozen years or so, but that doesn't mean we have a responsibility not to do something just because some group says we should not."