Publication: How Has Environment Mattered? An Analysis of World Bank Resource Allocation
Loading...
Published
2004-04
ISSN
Date
2013-08-01
Author(s)
Acharya, Anjali
Hamilton, Kirk
Buys, Piet
Dasgupta, Susmita
Meisner, Craig
Pandey, Kiran
Wheeler, David
Editor(s)
Abstract
How has environment mattered for the World Bank? The aggregate figures suggest that it has mattered a great deal, since the Bank's total environmental lending has exceeded $US 9 billion over the past six years. In this paper the authors use newly available data to address a more precise version of the question: Across countries and themes, how well has the Bank's environmental lending and analytical and advisory activities (AAA) matched the incidence of environmental problems? For their assessment, the authors extend their previous work on local pollution and fragile lands (Buys and others 2003) to consideration of global emissions, biodiversity, water resources, and institutional development. They construct cross-country problem indicators for each environmental theme and combine them with country risk measures to estimate optimal thematic lending and AAA for each country. The authors then compare their estimates with actual lending and AAA to assess the match between environmental problems and the Bank's response. The authors begin by constructing an overall indicator of environmental problems from their thematic indicators. Using regression analysis, they find a strong relationship between countries' general indicator values and the scale of their environmental borrowing, but a relatively weak relationship for AAA. At the thematic level, the authors find that problem indicators have relatively weak relationships with both lending and AAA. Adding country risk to the analysis, they test an optimal allocation model and find that it is consistent with the Bank's actual lending and AAA since 1998. The authors conclude that their model's assignment of lending and AAA to countries reflects the Bank's actual experience with partner countries. The model's explanatory power is relatively low, however, and when they compare model assignments to actual allocations, the authors find many large discrepancies for countries and environmental themes. Some gaps may reflect activity by other donor institutions, but many others may represent problems with efficient implementation of the Bank's Environment Strategy. To promote further discussion of this issue, the authors use their optimal allocation model to develop measures of lending opportunity by environmental theme for the Bank's partner countries.
Link to Data Set
Citation
“Acharya, Anjali; Ijjasz-Vasquez, Ede Jorge; Hamilton, Kirk; Buys, Piet; Dasgupta, Susmita; Meisner, Craig; Pandey, Kiran; Wheeler, David. 2004. How Has Environment Mattered? An Analysis of World Bank Resource Allocation. Policy Research Working Paper;No.3269. © World Bank. http://hdl.handle.net/10986/14753 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication The State of Global Services Trade Policies: Evidence from Recent Data(Washington, DC: World Bank, 2025-10-28)The economic environment for services trade has changed dramatically over the past 15 years, driven by rapid technological progress that has expanded the possibilities for exchanging services. How has trade policy responded to these changes? How do policy stances in a wide range of service sectors compare across economies? With its unprecedented global coverage, the Services Trade Policy Database and the associated Services Trade Restrictions Index, developed jointly by the World Bank and the World Trade Organization, help address these questions. This paper makes three principal contributions. First, it offers an in-depth discussion of the current state of services trade policies and their differences across 134 economies and 34 services subsectors. Second, the paper reveals how recent (2016–22) changes in policy stances have seen progressive liberalization by lower-income economies but stabilization or even slight policy reversals in high-income economies. This dynamic differs fundamentally from the trend that unfolded after the Great Recession over 2008–16. Third, the paper shows the implications of policy changes over the past six years on services trade costs, and it showcases how the Services Trade Policy Database’s regulatory information can inform trade negotiations, regulatory analysis, and policy making. Alongside these contributions, the paper documents updates to the Services Trade Policy Database’s economy and sector coverage and explains the latest methodological improvements made to the World Bank–World Trade Organization Services Trade Restrictions Index.Publication It’s Not (Just) the Tariffs: Rethinking Non-Tariff Measures in a Fragmented Global Economy(Washington, DC: World Bank, 2025-10-22)As tariffs have declined, non-tariff measures (NTMs) have become central to trade policy, especially in high-income countries and regulated sectors like food and green technologies. Although NTMs may serve legitimate goals, they could also sort countries and firms into or out of markets based on compliance capacity and differences in product mix. Documenting recent advances in the estimation of ad valorem equivalents (AVEs), this paper uncovers new patterns of use and exposure of NTMs. High-income countries rely more heavily on NTMs relative to tariffs, while low- and middle-income countries face steeper AVEs on their exports. Firm-level evidence shows that NTMs disproportionately affect smaller firms, leading to market exit and concentration. Poorly designed NTMs can harm productivity and welfare, while coordinated, capacity-aware use can deliver inclusive outcomes. Policy design, transparency, and diagnostics must evolve to reflect the growing role—and risks—of NTMs in a fragmented global trade landscape.Publication The Marshall Plan: Then and Now(Washington, DC: World Bank, 2025-10-14)This paper is a product of the Development Policy Team, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Measuring Up : New Directions for Environmental Programs at the World Bank(World Bank, Washington, DC, 2003-07)The World Bank's new environment strategy advocates cost-effective reduction of air and water pollutants that are most harmful to human health. In addition, it addresses threats to the livelihood of over one billion people who live on fragile lands-lands that are steeply sloped, arid, or covered by natural forests. The new approach will require accurate information about environmental threats to health and livelihood, as well as an appropriate resource-allocation strategy. Drawing on recent research at the World Bank and elsewhere, this paper attempts to apply an optimal investment approach. It develops a rule for optimal cross-country resource allocation that reflects the Bank's investment policy. Using this rule, the paper estimates optimal country shares of the Bank's environmental investments from two sets of variables: threats from outdoor air pollution, water pollution, and fragile lands; and estimates of the likelihood that Bank projects will succeed. The paper combines the country shares with the Bank's investment data to estimate optimal country allocations for each environmental problem. Finally, it aggregates the country results to allocations for the major regions in which the Bank operates. Combining optimal investments for pollution and fragile lands, it finds that the largest share of total investment goes to East Asia (44 percent), followed by South Asia (21 percent) and Sub-Saharan Africa (19 percent). Other regions get significantly lower shares.Publication The Economics of Regional Poverty-Environment Programs: An Application for Lao People's Democratic Republic(World Bank, Washington, D.C., 2004-04)Program administrators are often faced with the difficult problem of allocating scarce resources among regions in a country when interventions are aimed at addressing multiple objectives. One main concern is the tradeoff between poverty reduction and improvement of environmental quality. To provide a framework for analysis, the authors develop a model of optimal budget allocation that allows for variations in three factors: administrators' valuation of objectives; their willingness to accept tradeoffs among objectives and regional allotments; and regional administrative costs. The results from an application of this model using information for Lao People's Democratic Republic show that simple poverty indicators alone do not provide consistent guidelines for policy. However, when different poverty indicators are embedded in an optimizing model that incorporates preferences and costs, the resulting provincial allocations are very similar. This suggests that adoption of a formal analytical approach to resource allocation can help promote the harmonization of regional policy guidelines.Publication Air Pollution During Growth: Accounting for Governance and Vulnerability(World Bank, Washington, D.C., 2004-08)New research on urban air pollution casts doubt on the conventional view of the relationship between economic growth and environmental quality. This view holds that pollution automatically increases until societies reach middle-income status because poor countries have neither the institutional capacity nor the political commitment necessary to regulate polluters. Some policymakers and researchers have cited this model (called the "environmental Kuznets curve," or EKC) when arguing that developing countries should "grow first, clean up later." However, new evidence suggests that the EKC model is misleading because it mistakenly assumes that strong environmental governance is not possible for poor countries. As the authors show in this paper, the empirical relationship between pollution and income becomes much weaker when measures of governance are added to the analysis. Their results also suggest that previous research has underestimated the effect of geographic vulnerability (climate and terrain factors) on air quality. The authors find that weak governance and geographic vulnerability alone can account for the crisis levels of air pollution in many developing country cities. When these factors are combined with income and population effects, the authors have a sufficient explanation for the fact that some cities already have air quality comparable to levels in OECD urban areas. To summarize, their results suggest that the maxim "grow first, clean up later" is too simplistic. Appropriate urban growth strategies can steer development toward cities with lower geographic vulnerability, and governance reform can reduce air pollution significantly, long before countries reach middle-income status.Publication The Poverty/Environment Nexus in Cambodia and Lao People's Democratic Republic(World Bank, Washington, DC, 2003-01)Environmental degradation can inflict serious damage on poor people because their livelihoods often depend on natural resource use and their living conditions may offer little protection from air, water, and soil pollution. At the same time, poverty-constrained options may induce the poor to deplete resources and degrade the environment at rates that are incompatible with long-term sustainability. In such cases, degraded resources may precipitate a downward spiral, by further reducing the income and livelihoods of the poor. This "poverty/environment nexus" has become a major issue in the recent literature on sustainable development. In regions where the nexus is significant, jointly addressing problems of poverty and environmental degradation may be more cost-effective than addressing them separately. Empirical evidence on the prevalence and importance of the poverty/environment nexus is sparse because the requisite data are often difficult to obtain in developing countries. The authors use newly available spatial and survey data to investigate the spatial dimension of the nexus in Cambodia, and Lao People's Democratic Republic. The data enable the authors to quantify several environmental problems at the district and provincial level. In a parallel exercise, they map the provincial distribution of poor households. Merging the geographic information on poverty and the environment, the authors search for the nexus using geo-referenced indicator maps and statistical analysis. The results suggest that the nexus is country-specific: geographical, historical, and institutional factors may all play important roles in determining the relative importance of poverty and environment links in different contexts. Joint implementation of poverty and environment strategies may be cost-effective for some environmental problems, but independent implementation may be preferable in many cases as well. Since the search has not revealed a common nexus, the authors conclude on a cautionary note. The evidence suggests that the nexus concept can provide a useful catalyst for country-specific work, but not a general formula for program design.Publication Who Suffers from Indoor Air Pollution? Evidence from Bangladesh(World Bank, Washington, D.C., 2004-10)In this paper the authors investigate individuals' exposure to indoor air pollution. Using new survey data from Bangladesh, they analyze exposure at two levels-differences within households attributable to family roles, and differences across households attributable to income and education. Within households, they relate individuals' exposure to pollution in different locations during their daily round of activity. The authors find high levels of exposure for children and adolescents of both sexes, with particularly serious exposure for children under 5. Among prime-age adults, they find that men have half the exposure of women (whose exposure is similar to that of children and adolescents). They also find that elderly men have significantly lower exposure than elderly women. Across households, they draw on results from their previous paper (Dasgupta et al, 2004), which relate pollution variation across households to choices of cooking fuel, cooking locations, construction materials, and ventilation practices. They find that these choices are significantly affected by family income and adult education levels (particularly for women). Overall, the authors find that the poorest, least-educated households have twice the pollution levels of relatively high-income households with highly-educated adults. For children in a typical household, pollution exposure can be halved by adopting two simple measures-increasing their outdoor time from 3 to 5 or 6 hours a day, and concentrating outdoor time during peak cooking periods. The authors recognize that weather and other factors may intervene occasionally, and that child supervision outdoors may be difficult for some households. However, the potential benefits are so great that neighbors might well agree to pool outdoor supervision once they became aware of the implications for their children's health.
Users also downloaded
Showing related downloaded files
Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Europe and Central Asia Economic Update, Spring 2025: Accelerating Growth through Entrepreneurship, Technology Adoption, and Innovation(Washington, DC: World Bank, 2025-04-23)Business dynamism and economic growth in Europe and Central Asia have weakened since the late 2000s, with productivity growth driven largely by resource reallocation between firms and sectors rather than innovation. To move up the value chain, countries need to facilitate technology adoption, stronger domestic competition, and firm-level innovation to build a more dynamic private sector. Governments should move beyond broad support for small- and medium-sized enterprises and focus on enabling the most productive firms to expand and compete globally. Strengthening competition policies, reducing the presence of state-owned enterprises, and ensuring fair market access are crucial. Limited availability of long-term financing and risk capital hinders firm growth and innovation. Economic disruptions are a shock in the short term, but they provide an opportunity for implementing enterprise and structural reforms, all of which are essential for creating better-paying jobs and helping countries in the region to achieve high-income status.Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.