CRS Report for Congress
Received through the CRS Web
Mulilateral Development Banks'
and Information Policies:
Impact of the Pelosi Amendment
February 12, 1998
Analyst in International Political Economy
Foreign Affairs and National Defense Division
Susan R. Fletcher
Senior Analyst in International Environmental Policy
Environment and Natural Resources Policy Division
Congressional Research Service ˜ The Library of Congress
Multilateral Development Banks' Environmental Assessment
and Information Policies:
Impact of the Pelosi Amendment
In 1989, the U.S. Congress passed legislation that included a provision known
as the "Pelosi Amendment" after its sponsor, Congresswoman Nancy Pelosi. It
requires U.S. Executive Directors at the World Bank and all the regional multilateral
development banks (MDBs) to abstain or vote against any proposed action with
significant environmental effects if it has not received an appropriate environmental
assessment, or if the assessment has not been available to the Executive Directors
and the public for 120 days before a vote. This report describes, reviews and
evaluates the environmental assessment and information disclosure policies of the
multilateral development banks that have been in effect in the period since the Pelosi
Amendment went into effect in 1991, and actions taken by the U.S. Government to
Environmental assessment and information access procedures have been
adopted and put into practice by all the major MDBs, due in large part, most
observers agree, to the Pelosi Amendment. These are widely credited with
increasing the attention paid to environmental concerns in projects, and with creating
greater environmental awareness in the banks.
However, evaluations by the World Bank and commentary by U.S. Government
and non-governmental organizations identify continuing problems in the actual use
by MDB decisionmakers of information generated by environmental assessments,
and in the adequacy of their content. In many cases, environmental assessments may
be done on a "parallel track," not as an integral part of project design and
decisionmaking, and they may overlook factors such as "downstream" impacts that
are not directly connected with the viability of the project itself. There also have
been problems--and benefits--with the way categories are used by the banks to
differentiate among projects that need full environmental assessments, and those that
need a reduced level of environmental analysis or do not have environmental
Examination of information availability reveals that while environmental
information is much more available now than before the Pelosi Amendment, there
are inconsistencies and gaps in how the banks implement their information policies
and procedures. Public access to environmental assessment information may not
occur in the early stages of project development, when key decisions are made.
Although the United States has invoked the Pelosi Amendment on both
substantive grounds and because of failure to make information available on time,
and voted "no" or abstained on numerous projects at the banks, these projects are
virtually always approved by the full boards. However, these occasions have been
reduced significantly over the past three years due to the banks' implementation of
their environmental assessment and information policies and important informal
interaction between the bank staff and U.S. officials.
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Environmental Assessment at the MDBs . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Access to MDB Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Executive Branch Implementation of the Pelosi Amendment . . . . . . . . . . . . 6
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
I. Policies of the MDBs on Environmental Assessment . . . . . . . . . . . . . . . . . . . 11
A. Environmental Procedures at the World Bank . . . . . . . . . . . . . . . . . . . . 11
Environmental Screening and Assessment Process . . . . . . . . . . . . . . . 12
Choosing or Changing Environmental Categories . . . . . . . . . . . 13
Clearance by Environmental Officials . . . . . . . . . . . . . . . . . . . . . 14
Costs of Environmental Assessments . . . . . . . . . . . . . . . . . . . . . 15
Effectiveness of the Bank's Environmental Assessment Process . . . . 16
Problems Found by the OED Report . . . . . . . . . . . . . . . . . . . . . . 16
Reorganization and Reformulation of Environmental Procedures . . . 18
B. Environmental Procedures at the
International Finance Corporation (IFC) . . . . . . . . . . . . . . . . . . . . . . . 19
The IFC Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The IFC's Environmental Screening and Assessment Process . . . . . . 20
C. Environmental Procedures at the
Inter-American Development Bank (IDB) . . . . . . . . . . . . . . . . . . . . . 21
The IDB Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Bank's Environmental Screening and Assessment Process . . . . . 21
Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The EIA Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Reorganization and Reformulation of Environmental Procedures . . . 23
New Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Continuing Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
D. Environmental Procedures at the Asian Development Bank (ADB) . . . 24
The ADB Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Bank's Environmental Screening and Assessment Process . . . . . 24
Effectiveness of the Bank's Environmental Assessment Process . . . . 25
E. Environmental Procedures at the African Development Bank (AFDB)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
The AFDB/AFDF Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
The Bank's Environmental Screening and Assessment Process . . . . . 27
Effectiveness of the Bank's Environmental Assessment Process . . . . 27
Reorganization and Reformulation of Environmental Procedures . . . 28
F. Environmental Procedures at the European
Bank For Reconstruction And Development (EBRD) . . . . . . . . . . . . 28
The EBRD Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The Bank's Environmental Screening and Assessment Process . . . . . 29
G. Evaluation of MDB Environmental Assessment Procedures . . . . . . . . . 30
Environmental Operations of MDBs and Responses to the Pelosi
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Impact on MDB Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
MDB Reviews of Their Own Performance . . . . . . . . . . . . . . . . . 31
Critical Role of Task Managers . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Inadequate Integration of Assessments into Project Design . . . . 32
Effect of Categorization on Assessment Procedures . . . . . . . . . . 32
Problems of Categorization and Miscategorization . . . . . . . . . . . 32
Changes in Environmental Organization and Procedures . . . . . . 33
Project Oversight, Evaluation, and the Approval Process . . . . . . . . . . 34
Impact of U.S. Opposition on the Approval of MDB Loans . . . . 34
Effect of "Behind the Scenes" Negotiations . . . . . . . . . . . . . . . . 34
Concerns About the Adequacy of Environmental Analysis . . . . 34
EIAs as Benchmarks during Implementation . . . . . . . . . . . . . . . 34
The Role and Impact of NGOs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
A Key Role in the Evaluation Process . . . . . . . . . . . . . . . . . . . . . 35
Environmental Assessments and Public Dialogue . . . . . . . . . . . . 35
II. Public Access to MDB Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
B. General Characteristics of the Disclosure Process . . . . . . . . . . . . . . . . . 36
C. Rationale for Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
D. Who Uses the Banks' Public Information Centers? . . . . . . . . . . . . . . . . 39
E. Types of Information Available to the Public from the Banks . . . . . . . . 40
Description of Current Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Information on Proposed Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Public Sector Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Private Sector Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Environmental Studies: Public Sector Projects . . . . . . . . . . . . . . . . . . 42
Environmental Studies: World Bank and IDB . . . . . . . . . . . . . . 45
Environmental Studies: ADB . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Environmental Studies: EBRD . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Environmental Studies: AFDB . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Environmental Studies: Private Sector Projects . . . . . . . . . . . . . . . . . 46
Availability of Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
The ADB Web Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
The EBRD Web Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
The IDB Web Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
The World Bank Web Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
The IFC, MIGA and GEF Web Pages . . . . . . . . . . . . . . . . . . . . . 49
The AFDB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
F. Information Not Available to the Public . . . . . . . . . . . . . . . . . . . . . . . . . 50
G. Limitations of the Current Disclosure Procedures . . . . . . . . . . . . . . . . . 51
Completeness of the Banks' Lists of Pending Projects . . . . . . . . . . . . 55
Availability of Environmental Information . . . . . . . . . . . . . . . . . . . . . 58
Availability of Information: World Bank . . . . . . . . . . . . . . . . . . 58
Availability of Information: IDB . . . . . . . . . . . . . . . . . . . . . . . . . 60
Availability of Information: IFC . . . . . . . . . . . . . . . . . . . . . . . . . 61
Availability of Information: ADB . . . . . . . . . . . . . . . . . . . . . . . . 61
Availability of Information: EBRD . . . . . . . . . . . . . . . . . . . . . . . 62
Information Included in PIDs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
What Information Should be Included? . . . . . . . . . . . . . . . . . . . . 62
Information in PIDs World Bank . . . . . . . . . . . . . . . . . . . . . . . . . 65
Information in PIDs: IFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Information in PIDs: ADB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Information in PIDs: IDB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Information in PIDs: EBRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
H. MDB Information Access Procedures:
Evaluation and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
1. Failure of Documents To Meet Stated MDB Goals . . . . . . . . . . 70
Need for Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ADB and EBRD: Too Little Information on Pending Projects . . . . . . 70
Inadequacy of Environmental Information in PIDs . . . . . . . . . . . . . . . 71
Out of Date Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Unavailability of Old Project Information . . . . . . . . . . . . . . . . . . . . . . 71
Need for Earlier Availability of PIDs . . . . . . . . . . . . . . . . . . . . . . . . . 72
Need for More Information on Projects in Early Stages of Preparation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
III. Executive Branch Implementation of the
Pelosi Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
A. Basic Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
B. Executive Branch Procedural Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Procedural Requirements of the Pelosi Amendment . . . . . . . . . . . . . . 73
The 1992 Temporary Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Public Comments on the 1992 Rule . . . . . . . . . . . . . . . . . . . . . . . . . . 75
C. Current Executive Branch Procedures for
Implementing the Pelosi Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 77
Official Forums for Analyzing MDB Environmental Issues . . . . . . . . 77
The WGMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
The Staff Environmental Group . . . . . . . . . . . . . . . . . . . . . . . . . 78
Other Avenues for Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
The Tuesday Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
The USAID Early Warning System . . . . . . . . . . . . . . . . . . . . . . . 79
Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
NGO-Government Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
D. U.S. Votes in the MDBs on
Environmentally Sensitive Loan Proposals . . . . . . . . . . . . . . . . . . . . . 80
The Record and Rationale for U.S. Votes . . . . . . . . . . . . . . . . . . . . . . 80
A Non-Confrontational Initial Approach . . . . . . . . . . . . . . . . . . . . . . . 85
More Recent U.S. Efforts to Strengthen the Process . . . . . . . . . . . . . . 86
EIAs Should Have an Impact on Project Design . . . . . . . . . . . . . 86
EIAs Should Be Done for Planned Subprojects . . . . . . . . . . . . . 86
EIAs Should Consider Alternatives and Consult the Public . . . . 86
E. Evaluation and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Changing MDB Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Information about U.S. Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Compliance with the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
The Pelosi Amendment and MDB Loans to Private Sector Borrowers
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
The Other MDBs and the Pelosi Amendment . . . . . . . . . . . . . . . 90
Arguments Why the Amendment Does Not Apply . . . . . . . . . . . 91
Problems with the Argument for Non-Application . . . . . . . . . . . 92
Areas of Possible Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Reclassification of MDB Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Circumscribed Scope of U.S. Review . . . . . . . . . . . . . . . . . . . . . . . . . 95
Consultation with the Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Appendix A. Description of the Environmental
Categories Used by the MDBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Appendix B. Text of the Pelosi Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Appendix C. Text of Treasury's 1992 Temporary Rule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
List of Tables
Table 1. Information Available to the Public from Each MDB . . . . . . . . . . . . . 43
Table 2. Consistency of MDB Reports about Projects under Consideration . . . 56
Table 3. Scope of MDB Project Information Documents . . . . . . . . . . . . . . . . . . 64
Table 4. Reasons for U.S. Opposition to MDB Loans on
Environmental Grounds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Table 5. U.S. Opposition to MDB Loans Because of the
Pelosi Amendment, 1992-1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
This report was prepared at the request of Representatives Barney Frank and
Congresswoman Nancy Pelosi. It was released on July 21, 1997 in a somewhat
different format. The present document is the same material that was released in
1997, reformatted for release as a CRS report for general congressional use.
Since the report was originally released, two substantive changes has occurred.
First, Congress mandated in the Foreign Operations Appropriations Act for fiscal
1998 (P.L. 105-118) that the International Finance Corporation (IFC) is to be
considered a multilateral development bank as regards the requirements of the Pelosi
Amendment. As noted on pp. 90-94, the Administration had argued that the Pelosi
Amendment did not apply to the IFC. Second, the African Development Bank has
proposed adoption of an access to information plan that the Treasury Department
believes is comparable to those in effect at the other multilateral development banks.
Multilateral Development Banks' Environmental
Assessment and Information Policies:
Impact of the Pelosi Amendment
Environmental Assessment at the MDBs
In 1989, the U.S. Congress passed legislation (Public Law 101-240; 22 U.S.C.
262m-7) that included a provision known as the "Pelosi Amendment" after its
sponsor, Congresswoman Nancy Pelosi. It provides that beginning in 1991, the U.S.
Executive Director (USED) at each multilateral development bank (MDB) is
prohibited from voting in favor of any project that might have a significant negative
effect on the human environment unless an environmental assessment (EA) or
comprehensive environmental summary has been done and made available to the
USED and the public at least 120 days before a vote on approval of the project.
The Pelosi Amendment has achieved a major portion of its intended effect-establishment of environmental assessment procedures in the major multilateral
development banks--although MDB critics continue to express their concerns about
the quality of assessments and the extent to which they are used in decisionmaking.
The amendment has been a major factor, most observers of MDBs would generally
agree, in the environmental progress of the MDBs in the 1990s. Environmental
assessment (EA) procedures are in effect at all the major multilateral development
banks, and are generally being carried out in accord with the MDBs' policies. As
several observers agreed, "Without Pelosi, we wouldn't be where we are today" with
respect to environmental assessment and public access to environmental information.
A recent World Bank evaluation of its environmental assessment procedures reported
that such assessment is now "standard practice in development planning."
Despite these improvements in EA procedures, critics and observers find cause
for continuing concern regarding the adequacy and content of the MDB
environmental assessments and analyses. They find cases in which there are major
gaps in the analysis of impacts, overly rapid appraisal techniques for large projects
that may overlook important elements, use of outdated material and poor data bases,
and other problems.
The effective use of environmental information produced in the environmental
assessments remains problematic. On the plus side, many observers find that the
need for internalization of environmental concerns into project planning design is
recognized by MDB staff, and the degree of emphasis on mitigation of
environmental impacts has also generally improved. This increased focus on
environmental issues is attributed to the Bank's EA policies, coupled with
information disclosure policies. However, there remain serious problems with
optimal use of EA analyses: World Bank evaluations of its experience with EA
procedures indicate that the EAs are frequently not available in time and/or are not
used in project design and decision-making. Environmental assessments are often
conducted in relative isolation from project preparation, and frequently have not been
used appropriately--or at all--in project design.
The MDBs have responded over the past several years with similar approaches
to environmental assessment. All the Banks have established categories for
levels/degree of environmental impacts, requiring a full environmental assessment
for projects with significant and serious environmental impacts. A second category
includes projects with environmental impacts that must be analyzed but with
flexibility for how extensive "appropriate" analysis must be. A third category covers
projects with no environmental impacts, that do not require environmental analysis.
This process of screening and categorizing projects has produced some
problematic results, especially in the early years of most MDBs' experience.
According to some Bank staff, project supervisors/managers have tried (often
successfully) to get their projects placed in the second category -- requiring less
environmental analysis -- rather than in the first category. In most cases, roughly
10% (to an upper range of 20%) of projects of a bank have been placed in the first,
(usually "A") category. Bank staff and others report that in recent years there seems
to be less resistance to placing projects in the first category, and that fuller analysis
is more often done even on projects in the second category. Nevertheless,
appropriate scrutiny and treatment of second category, (usually "B") projects and
information about them remains problematic. A recent World Bank evaluation
highlighted this challenge. Partly in response to these concerns, the Inter-American
Development Bank (IDB) recently abandoned the use of categories, a move which
may raise questions of its own.
As discussed Chapters I and III of this report, most MDB and U.S. Government
staff and non-governmental observers and critics generally have found the use of
categories beneficial, in terms of flagging projects with major environmental
concerns that bear close assessment and on-going scrutiny. However, it has also
been the case that Bank staff, U.S. agency staff, and NGOs tend to concentrate their
relatively scarce staff resources on the "A" projects, with relatively little routine or
systematic scrutiny of "B" projects -- some of which may be nearly as significant as
"A" projects. Moreover, it is unclear to many Bank staff whether the Pelosi
Amendment applies to projects that are not in category "A" -- although U.S. Treasury
is clear that it does. As a result, less attention is sometimes paid to deadlines and
levels of environmental analysis and information availability in lower ranked
As discussed in Chapter III, the U.S. Government has invoked the Pelosi
Amendment and opposed (voted "no" or abstained) MDB loans less often in recent
years than it did in the early 1990s. It has been invoked both on substantive grounds
-- for example, when an adequate environmental assessment has not been done on
a proposed project -- and when MDBs have not adhered to the 120-day deadline for
information availability. However, projects opposed by the United States virtually
always win approval of the Boards. Although additional interest and concern in
environmental problems is reportedly evident among some other countries' executive
directors, this results mainly in the queries about projects before they come to a vote
rather than opposition during the voting itself.
Notwithstanding the limited ability of the U.S. executive directors to impede
projects that do not meet Pelosi Amendment requirements, the legislation can be said
to have helped sensitize the MDBs to environmental issues and to have stimulated
extensive examination of projects, inquiries during project preparation, expressions
of concern, and negotiation between U.S. government agency staff and MDB staff.
This activity has resulted in additional information and some changes in project
operations before projects come to a vote. Thus the impacts of the Pelosi
Amendment include sometimes extensive "behind the scenes" activity by U.S.
government staff and undocumented, "informal" responses by MDB officials.
Non-governmental organizations (NGOs) play a key role in identifying
problems in MDB projects, networking with NGOs in the field in the affected
countries, and documenting problems, as well as directly negotiating with Bank
managers on such problems. Such NGO activity and assistance significantly
augments the activity of U.S. government staff in Treasury and other agencies. This
is a relatively ad hoc process--often highly effective, but lacking in capability to
systematically or rigorously review all MDB projects. The Pelosi Amendment
appears to have significantly aided this process, first because environmental
assessments provide critically useful information, and second because the
information availability requirements have made the information far more accessible.
Many of the problems with MDB projects and loans reported or investigated by
NGOs and U.S. government officials arise during implementation phase when the
environmental mitigation and other measures spelled out in loan agreements are not
being carried out satisfactorily. Though beyond the scope of the Pelosi Amendment,
this problem with implementation is often discussed and documented in the World
Bank evaluation reports. However, the environmental assessment process has been
useful in documenting the need for mitigation, assuring that environmental measures
are written into loan agreements or conditions, and providing the baseline
documentation for ascertaining where there are failures in implementation of such
Access to MDB Information
Much more information about MDB operations is available to the public today
than was the case before the Pelosi Amendment was enacted. The World Bank,
International Finance Corporation (IFC), Asian Development Bank (ADB), and
Inter-American Development Bank (IDB) all have systems for informing their
member countries and the public about projects they are considering. The
information is generally made public through the banks' Public Information Centers
(PICs). The European Bank for Reconstruction and Development (EBRD)
implemented a new information disclosure system in late 1996. It is still
incomplete. The African Development Bank (AFDB) has submitted to its Board a
proposal for the establishment of an information disclosure policy similar to those
used by the other multilateral banks.
Prior to identification and design of individual projects, the MDBs develop
country strategies that set forth their proposed country programs over the short to
medium term (typically three years.) The ADB makes these country operational
strategies and country program notes available to the public after Board approval.
This allows for public input into the ADB planning process, in many cases, before
individual projects have entered the project pipeline. The EBRD makes summaries
of its country strategies available to the public. The president of the AFDB has
proposed that his Bank should also make its country strategy papers publicly
available once they have been distributed to the AFDB executive board. The other
MDBs do not disclose the content of their country strategies. At the World Bank,
for example, the public has no way of knowing whether the suggestions or concerns
of outsiders have been taken into account in Bank planning documents.
The MDBs do not disclose much information to the public on projects in the
earliest stages of preparation. Generally, they release their project summary
documents to the public after the project's overall scope and design have been
determined and its likely environmental impact has been assessed. In recent years,
the banks have directed their staff to solicit views from potential beneficiaries and
other members of the public during the early phases of the project design process.1
Reports differ as to the extent to which members of the public are involved in the
project selection and project design processes at the banks. The burden of complying
with these directives lies with the task manager for each project. There is no way of
knowing whether task managers see such consultation as an opportunity or a burden
and whether they comply fully with the requirement. Many NGOs complain that
they are not consulted adequately or their input is not given sufficient weight in the
project preparation process. Participation in the process seems to be at the invitation
of bank staff. None of the banks appear to have procedures for soliciting input from
the general public during the preparation process as regards the likely environmental
impact, the environmental categorization, or the remedial measures needed for
The Asian Development Bank has an operational directive to staff titled Framework for
Mainstreaming Participatory Development Processes into Bank Operations which
encourages such staff consultation with members of the public. The IDB distributes through
its web page a Resource Book on Participation, which is both a directive to staff and
information for the public. (See: http://www.iadb.org/ENGLISH/POLICIES/participate
/index.html.) See also: Normal Schwartz and Anne Deruyttere, Community Consultation,
Sustainable Development and the Inter-American Development Bank, a Concept Paper. IDB
March 26, 1996. No. IND-101. The AFDB has a similar directives to staff, Procedures,
Mechanisms, and Guidelines for Cooperation between the African Development Bank and
Non-Governmental Organizations in Africa and Policy Paper on the Promotion of
Cooperation Between the African Development Bank and Non-Governmental Organizations
in Africa, approved in 1990 and 1991. The World Bank provides through its web page a
number of documents promoting consultation, including The World Bank Participation
Sourcebook, World Bank Environmental Department paper no. 19, Environmental
Management Series, 1996. The methods and case studies in the Sourcebook are what the
Bank calls "good practices" that staff are supposed to emulate. The Bank has also issued
Working with NGOs: A Toolkit for World Bank Field Offices, to help Bank country offices
in this area. (See: http://www.worldbank.org/html/hcovp/ngo/products/
toolkit/a-c.html and .../d-f.html.)
A great deal of information is available in MDB project or environmental
reports, once these are released by the banks. These can be very useful to persons
studying planned projects. The documents available in the MDB public disclosure
systems are often outdated, however, or lacking important information, such as the
name of the MDB task manager, the exact location of the project, the groups in the
recipient country who might be affected by the projects, and the project's
As noted above, the MDBs categorize loans according to their anticipated effect
on the environment. Category A projects are expected to have major, diverse, and
irreversible effects on the environment. Category B projects are expected to have
environmental effects that are potentially less significant and more subject to
mitigation by known procedures. All but one of the MDBs have procedures in place
providing the public with information on the likely impact of category A projects.
The current AFDB system informs its executive board, but information is released
to the public only if the borrower consents. The 120 day timetable is built explicitly
into the process only in the ADB and EBRD. (It is also built into the proposed new
AFDB policy for Category A projects.) Public disclosure occurs early enough in the
World Bank and IDB review processes, however, for there to be some assurance that
information on projects will be available to the public for at least 120 days before
their executive boards consider prospective loans.
The MDBs provide much less information to their member countries and the
public, however, about category B projects. The World Bank, for example, does not
regularly provide environmental analyses of proposed category B projects in its
project information documents, although its information disclosure policy states that
it should. Likewise, its quarterly environmental data sheets for projects are neither
as extensive nor as timely as the information disclosure policy says they should be.
Most of the regional MDBs provide little environmental information on category B
projects. The EBRD, however, provides a brief summary in its project information
The banks decide in accordance with their policies and procedures how projects
will be categorized and how much information will be made available. The U.S.
Government has some alternative sources of information, though they lack the
completeness and detail the MDB systems can provide. NGOs and U.S. agencies
can identify particular projects they believe merit further study. Information about
them can be sought from the MDBs. However, the breadth and thoroughness of the
U.S. evaluation process for projects are affected by the limited amount of
information the banks' routinely provide. The paucity of MDB information on
category B projects seems in particular a constraint on the overall thoroughness of
the U.S. evaluation process.
The MDBs assert that they have made a real commitment to openness and
effective communication with the public. A great deal of information about the
banks is available through their Public Information Centers. However, a close
examination of the information provided by the centers shows that, in many cases,
information promised in the banks' policy statements about public disclosure was not
available. In other cases, when information was provided, it was sometimes
outdated, incomplete, or lacking in detail. The issue seems to be one of performance
shortfalls, not policy or intent. The MDBs could improve the utility of their systems
if they each appointed a person with the authority and responsibility to ensure that
the requirements of their information disclosure policies are met and their existing
databases are properly maintained.
Executive Branch Implementation of the Pelosi Amendment
The Administration adopted rules in 1992 establishing procedures for the
implementation of the Pelosi Amendment. Despite initial concern by the Center for
International Environmental Law and other environmental organizations that they
would be used narrowly, the 1992 rules have not limited public access to MDB
information or constrained participation by non-governmental organizations (NGOs)
in the U.S. policy process. In fact, close collaboration between U.S. government
agencies and private environmental organizations is a principal characteristic of that
process. Without such collaboration and the foreign contacts and information it
provides, the Treasury Department and other U.S. agencies would most likely be
unable to effectively implement the Pelosi Amendment.
Between 1992 and 1996, the U.S. representatives at the MDBs cast more than
100 votes in opposition to MDB loans on Pelosi Amendment-related environmental
grounds. Most of these votes were cast in 1992 and 1993. Since that time, the
procedures in the MDBs have been adjusted in ways that meet the expectations of
the U.S. legislation. The United States rarely opposes MDB loans now on grounds
that their environmental analyses have not been publicly available for at least 120
days. In the few instances where it has opposed MDB loans on environmental
grounds in recent years, the U.S. government is more likely to cite specific concerns
about the project or substantive problems with the environmental impact analysis
(EIA) as the reasons for its vote.
The Administration supplies Congress with a memorandum every three months
informing it about U.S. votes and the reasons for U.S. opposition to some MDB
loans. Congress does not normally publish this information. There is no comparable
method for informing the public about U.S. votes in the multilateral banks apart from
the information provided to Congress. The annual reports to Congress and the
public, required by law, have not been filed for several years.
The Treasury Department and other U.S. agencies seem to be making a good
faith effort to implement the Pelosi Amendment. In the main, they seem to have
complied with its requirements. However, this study identified some areas of
uncertainty and some areas where improvement might be possible.
The Pelosi Amendment says the U.S. representatives at the MDBs should
oppose loans unless information on their environmental effects has been publicly
available for 120 days. But it is not clear who counts the days and when
"availability" begins. Treasury Department officials say they presume that
environmental studies are publicly available the moment they are released locally by
the prospective borrower. The time needed to distribute the information
internationally and to make it available to people in distant areas who may be
affected by the project is subsumed within those 120 days.
Treasury officials maintain that the Pelosi Amendment does not apply to the
International Finance Corporation (IFC) and other MDB private sector loan
operations. Key committees of Congress have indicated on several occasions their
disagreement with Treasury's interpretation of the Pelosi Amendment in this area.
In recent years, the IFC has released about half the EIAs for its projects with
potentially the most serious environmental implications (category A) early enough
to meet the requirements of the Pelosi Amendment. IFC rules stipulate, however,
that this information needs to be released only 60 days prior to Board consideration.
The proportion of MDB projects receiving the highest (category A)
environmental categorization is relatively small. Most are included in the next
highest environmental category. To some extent, this may be due to the fact that the
banks are now emphasizing activities such as institution-building which have fewer
direct environmental effects. To a major extent, though, it may be due to a seeming
tendency of the MDBs to avoid using the higher categorization when possible.
The Treasury Department and other U.S. agencies say they are not limited, in
their scrutiny, by the environmental classification the banks give their projects.
Nevertheless, relatively little information is available on the likely environmental
impact of category B projects and that information is only generally available late
in the review process. Treasury may raise questions about category B projects or ask
the banks to upgrade their rating if it has environmental concerns. The banks will
provide additional data to member country governments on request but they rarely
upgrade their environmental classifications. Treasury's interest in these projects is
often sparked by sources outside the government's MDB project information system.
It is difficult to know how many potentially significant category B projects are not
scrutinized by U.S. officials because unofficial sources do not identify them as
The Pelosi Amendment says that U.S. executive directors (USEDs) shall oppose
any prospective "action" by an MDB which is likely to have a significant impact on
the environment unless information is made available to the public beforehand. The
rule the Administration adopted in 1992 to govern its implementation of the Pelosi
Amendment specifies that U.S. agency staff shall examine MDB "projects" in this
The meaning of the term "action" as regards MDB operations is not clear.
Treasury officials say that MDB environmental strategy papers or policy guidelines
are not covered by the Pelosi Amendment. A full environmental impact study for
policy papers and operational directives may not be appropriate. On the other hand,
it seems reasonable to expect that environmental issues should be considered in any
far-reaching MDB policy paper. Moreover, it could be argued, on the basis of the
Pelosi Amendment, that the public should be informed that the banks are considering
such actions before they are approved by their executive boards.
Often, for MDB loans designed to fund a range of smaller projects, it is not
feasible for the banks to identify the future recipients of subloans in advance.2 In
In effect, the MDBs are the wholesalers and local development agencies in the borrower
1992 and 1993, the United States opposed, on the Pelosi Amendment grounds,
several MDB loans which lacked sufficient procedures for scrutinizing the
environmental effects of activities that would be ultimately funded by a loan but
were not fully planned at the time the project went before the MDB executive board.
The banks now require that borrower agencies have stringent procedures in effect to
assess the likely environmental effect of such future activities. They do not also
require, however, that borrowers have procedures for informing the public about the
existence of these loan applications and their likely environmental effects. Treasury
officials say that information on the potential environmental impact of subprojects
is available to the public prior to their approval. However, field examinations did not
show this to be the case. There is no evident reason why the environmental review
aspect of the Pelosi Amendment should apply to subloans but the public access to
information aspect should not. U.S. representatives at the MDBs have not opposed
any loans on grounds that they lack procedures for informing the public about the
potential environmental impact of the subloans they will finance.
Consultation with the public is a key element of the U.S. process for
implementing the Pelosi Amendment. Non-governmental organizations play a
valuable role helping the U.S. government identify and track projects for which there
might be environmental concerns. Information from the banks is also very decisive
in facilitating U.S. compliance with the requirements of this legislation. The U.S.
government has few alternative sources of information, other than those provided by
the public or by the banks, for assessing the likely environmental effects of
prospective MDB projects. The Early Warning System maintained by the U.S.
Agency for International Development (USAID) is the only independent system the
U.S. Government has for obtaining and analyzing this sort of information. The Early
Warning System has not been a major source of information. However, with the
closure of many U.S. aid missions abroad, its capacity may be diminished in the
future. In that case, the Administration will depend almost entirely on the
multilateral banks and on members of the public for information about the
environmental effects of prospective MDB operations.
[This report was prepared at the request of Representatives Barney Frank
and Congresswoman Nancy Pelosi and was released in mid-1997 in a
different format. It was reformatted in 1998 for release as a CRS report
for general congressional use.]
countries are the retailers of loans to the ultimate recipients. These loans are often too small
or specialized for cost effective consideration by the MDBs. Frequently, the recipient of a
microenterprise loan or a private sector development project or small town water and
sewerage project would not have thought about applying until after the MDB loan to the
development agency has been approved and the agency had persuaded them to seek such
In the mid-1980's, possible negative impacts of the projects of the World Bank
and other multilateral development banks (MDBs) emerged as a major concern
among environmental organizations, the U.S. Congress, and the U.S. Government
generally. A number of provisions promoting increased priority for environmental
concerns were enacted into law by the U.S. Congress during the 1980s, and the
World Bank and other MDBs responded with a series of reorganizations and policy
directives. A central Environment Division was established in 1987, as part of a
major reorganization of the World Bank, and has evolved over the years to a staff of
90, with environmental divisions in each of the regional operations. However, by
1989 there had still not been a systematic effort put into place by these institutions
to carry out formal assessments of environmental impacts.
A concurrent concern that emerged with environmental issues was the issue of
adequate availability of information on project design and environmental and social
impacts of MDB loans and projects. Many of the environmental and social problems
connected to MDB loan projects have been brought to the attention of policymakers
by citizen organizations--often environmental non-governmental organizations
(NGOs). However, these organizations usually found it extremely difficult or
impossible to gain access to project plans and documents. Therefore, the
accessibility of project planning documents is an issue closely related to
environmental concerns, and was included in the Pelosi Amendment.
By 1989, efforts in the United States to call attention to environmental problems
and lack of information access had been underway since hearings in 1983, with
subsequent passage of provisions in both authorization and appropriations legislation
to promote higher priority for these issues in the MDBs, and to make improvements
a condition of future U.S. funding. Although the World Bank, and to a lesser extent
the regional MDBs, responded with reorganizations and/or formulation of policy and
operational directives on environment and information availability, there was still no
systematic process of environmental assessment in place to assure that environmental
impacts and consequences would be identified and, it was hoped, avoided or
mitigated. It was also clear that without an effective policy on making information
on such assessments available to affected people and the public (on "transparency",
as this issue is termed), there would continue to be major questions and concerns
about implementation of environmental priorities and policies.
In 1989, the U.S. Congress passed legislation (Public Law 101-240, 22 U.S.C.
262m-7) which included a provision known as the "Pelosi Amendment" after its
sponsor, Congresswoman Nancy Pelosi. This amendment provides that beginning
in 1991, the U.S. Executive Director (USED) of each multilateral development bank
(MDB) is prohibited from voting in favor of any project or action with significant
impacts on the environment unless an environmental assessment (EA) or
comprehensive environmental summary has been done and made available to the
executive director and the public for 120 days before the vote.
Following passage of this amendment, the U.S. Treasury Department actively
engaged the MDBs to achieve its objectives. They responded in most cases by
undertaking extensive activity, and both environmental assessment and information
disclosure policies have been adopted by nearly all of the MDBs since that time.
This report provides a summary of the environmental assessment and
information disclosure policies in place in the World Bank, the International Finance
Corporation (IFC), and the regional development banks.3 It analyzes the MDBs'
implementation of environmental assessment and information policies, using
available documentation and evaluations from the MDBs and by other organizations,
as well as interviews of experts inside and outside these institutions. It also reviews
the procedures the Department of the Treasury and other U.S. agencies have used to
implement the Pelosi Amendment.
The appendices provide a brief description of each MDB's system for
categorizing prospective projects in terms of their likely impact on the environment.
They also include the text of the Pelosi Amendment and the text of the rule the
Treasury Department adopted in 1992 to guide its implementation of that
The Inter-American Development Bank (IDB), the Asian Development Bank (ADB), the
African Development Bank (AFDB), and the European Bank for Reconstruction and
I. Policies of the MDBs on Environmental Assessment*
In the period since the Pelosi Amendment was passed, the World Bank and the
other MDBs have instituted policies on environmental assessment. This chapter
describes and discusses these policies and their implementation for each major
multilateral development bank, and reviews available evaluations of their
experiences. It seems clear that all of the banks have integrated consideration of
environmental impacts of their activities into their procedures, and there is extensive
consensus that the Pelosi amendment stimulated and/or hastened this process.
However, it is less clear that the environmental assessment procedures have had
optimal influence on decisionmaking in these institutions.
The World Bank has conducted extensive evaluations of its experience with
environmental assessment, concluding both that a great deal of progress has been
made, and that there remain problems with implementation of the policies and with
the degree to which they are used by decisionmakers. The other MDBs have not
conducted such assessments of their experiences, and in some cases, they have had
these policies in effect for a shorter time. However, many of the government
officials and non-governmental organizations involved in evaluating MDB
environmental performance express the view that similar problems and concerns
seem to be shared by the MDBs on many of the issues discussed here.
A. Environmental Procedures at the World Bank
In 1989, the World Bank adopted Operational Directive 4.00, requiring that all
projects under consideration for Bank loans must be screened for potential
environmental and social impacts. In 1991, this directive was updated with
Operational Directive (OD) 4.01. This provided specific procedures to be used in
environmental screening and assessment. This is the directive that has been in effect
during the period in which the Pelosi amendment has been operative. The 1991
Operational Directive says that:
EA is a flexible procedure, which should vary in breadth, depth, and type of
analysis depending on the project...EA is carried out during project preparation,
before appraisal, and is closely linked to the feasibility study. For the purpose
of this directive, EA covers project specific and other environmental impacts
in the area of influence of a project.1
In its section discussing the "Purpose and Nature of EA," the 1991 Operational
Directive indicates that:
The purpose of EA is to improve decision making and to ensure that the project
options under consideration are environmentally sound and sustainable. All
environmental consequences should be recognized early in the project cycle and
Prepared by Susan R. Fletcher, Senior Analyst in International Environmental Policy,
Environment and Natural Resources Policy Division.
The World Bank Operational Manual, Environmental Assessment. Operational Directive
4.01. October 1991, p. 1.
taken into account in project selection, site selection, planning and design. EAs
identify ways of improving projects environmentally, by preventing,
minimizing, mitigating, or compensating for adverse impacts. These steps help
avoid costly remedial measures after the fact.2
To assist Bank staff, and all environmental assessment practitioners, the Bank
put together in 1991 a three-volume Environmental Assessment Sourcebook with
extensive discussion and detailed guidelines for all aspects of environmental
assessment operations in the Bank (hereafter referred to as the Sourcebook).3
According to this Sourcebook, "Environmental review is required for all Bank loans
and credits except sectoral adjustment loans and structural adjustment loans." It
noted that sector investment projects and the investment component of hybrid loans
and credits are, however, subject to environmental review requirements. The
Sourcebook has been amended periodically with updates. Through June 1996, 15 of
these have been issued.
The 1991 Operational Directive and Sourcebook updates provided for several
categories into which loan proposals are placed. Category A projects have major
environmental impacts and require a full environmental assessment. Category B
projects have less significant impacts that can be remedied with known techniques
and require "environmental analysis" that is less extensive than a full environmental
assessment. Category C projects are regarded as not having environmental impacts,
thus do not require environmental analysis. Appendix A provides a description and
some discussion of the categories used by each of the banks.
The Bank's operational directive and the procedures it lays out have become
somewhat of a model for comprehensive environmental assessment procedures
followed by other MDBs and development assistance organizations.
Environmental Screening and Assessment Process. Organizationally, the
World Bank has established several focal points for environmental responsibilities.
A Vice President for Environmentally Sustainable Development was established in
1993, under whom a central Environment Department staffed by approximately 90
professionals operates. Within each regional vice presidency, there is a Regional
Environment Division (RED), with staff that has first-line responsibility for assisting
task managers with environmental screening, and for later approving and signing off
on environmental analysis and assessment reports. They participate in the scoping,
monitoring, and supervision on environment in projects in that region. The staffing
level varies considerably among regions, from about 8 to 9 in the smallest division
to up to 40 in very large divisions, such as Asia.
The environmental screening/review process begins at the time of project
identification, and is the responsibility of Bank task managers, with the advice and
Environmental Assessment Sourcebook, Volume I: Policies, Procedures, and Cross-Sectoral
Issues, World Bank Technical Paper Number 139, 227 pages; Volume II: Sectoral
Guidelines, World Bank Technical Paper Number 140, 282 pages; Volume III: Guidelines
for Environmental Assessment of Energy and Industry Projects, World Bank Technical
Paper Number 154 (237 pages). World Bank, Washington, D.C. 1991.
assistance of the Regional Environment Division. The categorization finding is
included in the Initial Executive Project Summary (IEPS), and is reviewed with the
borrowing country. The screening results are also supposed to be included in the
Bank's published Monthly Operational Summary (MOS), and the information
recorded on an Environmental Data Sheet. (See discussion in Chapter II).
It is the responsibility of the borrowing country to finance and carry out the
environmental assessment or analysis, often after consultation with World Bank Task
Managers (TMs). Consultants specializing in such analysis are often used. The task
manager also approves the terms of reference to be followed for category A
assessments by the borrowing country. Bank procedures require that the Bank must
receive the final EA report from the borrower prior to appraisal, and it should be
available before the Staff Appraisal Report (SAR).
The Sourcebook states:
The TM should agree with the borrower on which drafts, if any, the Bank
wishes to see, and when. At a minimum, however, the TM should review
a final draft, with RED assistance, in order to ascertain that the issues of
importance to the Bank have been addressed, to obtain any clarification
needed, and to provide other comments to the borrower in the interest of
having information on all the critical environmental issues ready before
The World Bank Sourcebook notes that, in practice, some final EAs may be
available only shortly before appraisal. Therefore, it says preliminary review at
interim stages is desirable, for example when significant environmental issues have
been identified and mitigating measures described. The Sourcebook states, "In
general, most major concerns become known within the first few months; the
remainder of the EA period focuses on mitigating measures."
This statement appears to acknowledge that mitigation is often the main focus
of an assessment. Yet it is the analysis of alternatives--which the World Bank's own
evaluations identify as a weak point in the EA process--that often provides for a
possible influence on changes in project design or location. If EAs focus almost
entirely on mitigation of the chosen approach, serious effort to consider any
alternatives in the EA as realistic options is less likely. On the other hand, some
informal and undocumented consideration of alternatives is likely to have occurred
prior to and during the environmental screening process. It is this informal process
that should, according to Bank procedures, be done and documented in a systematic
Choosing or Changing Environmental Categories. Changing categories into
which a project has been placed during the screening process has been problematic
in the view of U.S. government officials and NGO bank watchers, who attempt to
negotiate such changes when they see projects that are not getting what they consider
to be an adequate level of scrutiny. The 1993 Sourcebook Update on environmental
screening notes the option to reclassify a project from B to A if new information
Op.cit., supra note 5, p. 8.
reveals that it may have more significant environmental impacts than originally
thought, or from A to B if a component with significant effects is deleted.5
This Update acknowledges the tendency to opt for lower categories, and
implicitly, the difficulty in changing to a higher category:
While the option to reclassify projects relieves some of the pressure on the
TM to make the initial decision the correct and final one, it may also result
in a tendency to assign a borderline project to Category B in the hope that
nothing more serious will emerge from the environmental analysis.
However, the reclassification of a proposed project is not free of cost. For
example, if a Category B project is later changed to Category A, additional
resources will be required for environmental studies, public consultation,
and report preparation. The schedule for project preparation will almost
certainly be affected.6
Reading between the lines, there appears to be a strong presumption here against
reclassification, and this has been reflected in the difficulty that has been experienced
by Treasury and U.S. AID staff who approach Bank staff--usually unsuccessfully--to
try to get projects upgraded from B to A, in order to be able to obtain sufficient
Clearance by Environmental Officials. The Sourcebook states that the final
EA report must be submitted to the Bank for detailed examination before Bank staff
may begin the project appraisal process. World Bank procedures require formal
environmental clearance for the project. This is to be issued by the Regional
Environment Division, based on information in the Staff Appraisal Report (SAR).
The SAR is to contain summaries of the EA and its main findings, and the EA itself.
The Sourcebook states, "[This] Clearance is a necessary prerequisite to the Regional
Vice President's authorization to begin negotiations. In the negotiations themselves,
the issues and actions critical to environmental soundness and sustainability in the
project are discussed, and appropriate covenants are incorporated into loan or credit
According to a 1996 World Bank report evaluating the Bank's EA experience,
"The EA process is not intended to determine whether a project should proceed;
rather, it defines the conditions under which projects may proceed."8
As discussed in Chapter II, the World Bank and some regional MDBs do not
require explicitly that an environmental analysis or summary be publicly available
World Bank, Environmental Assessment Sourcebook Update: Environmental Screening.
April, 1993, Number 2. Environment Department, the World Bank, Washington, D.C. 4
Ibid., p. 1.
Op. Cit., supra note 5, p. 10.
World Bank. Operations Evaluation Department. Effectiveness of Environmental
Assessments and National Environmental Action Plans: A Process Study. Report No. 15835.
World Bank, Washington, D.C. June 28, 1996. p. 20.
for a specific number of days (for example, the 120 days stipulated in the Pelosi
Amendment) before projects can be submitted to the Executive Directors for action.
However, the banks argue that the policy of having the environmental assessment or
summary available before the staff appraisal report will, in effect, result in having
this information available at least 120 days or more before submission to the Board.
As discussed in Chapter II, Treasury Department staff report that in negotiations with
the MDBs regarding U.S. requirements for 120-day advance availability, the United
States agreed that this policy would be adequate, with the understanding that this
120-day period is critical to the U.S. executive directors.
Costs of Environmental Assessments. The expense of conducting EAs has
been a source of complaints by borrowing countries. Most cost between $60,000 and
$200,000 and take more than a year to complete. Those for very large projects may
cost significantly more. In most cases, consultants are hired by borrowing countries
to do the environmental assessment or analysis.
The cost of these studies may have an impact on the kind of projects
undertaken, or their design, especially in poorer developing countries. The issue of
cost raises some problems, discussed in the World Bank evaluation reports. The
1996 report of the Environment Department (ENV), for example, notes that in the
Africa region, most EAs cost less than $100,000. It suggests one reason is that large
construction activities are less emphasized in Africa than in other regions, but the
report also notes that funding constraints may play a role:
Another reason might be that funding for EA work is less readily available
[in African countries]. Relatively few countries have EA requirements of
their own (which would trigger financing through internal budgetary
processes), and many are reluctant to finance EA work from internal or
borrowed funds. External grant financing is sometimes a solution, but is
often limited to smaller amounts. Thus EAs may be somewhat scaled
down, and/or Bank environmental specialists may take on a larger role in
the EA preparation process (which brings the cost down for the country).9
Some funding is available from World Bank Trust Funds set up for project
preparation, or from bilateral aid to assist countries with EAs. However, use of a
proposed project's prospective loan funds during preparatory stages--prior to loan
approval--is usually not an option. Countries with budgetary problems face
difficulties in funding all phases of preparation for a project that has not been
approved for a loan, including environmental assessment.
Effectiveness of the Bank's Environmental Assessment Process. The World
Bank has conducted several evaluations of its environmental procedures, two of them
very recently. The World Bank Operational Evaluation Department (OED)
completed in June 1996 a report, "Effectiveness of Environmental Assessments and
National Environmental Action Plans: A Process Study," (hereafter referred to as the
World Bank. Land, Water, and Natural Habitats Division, Environment Department. The
Impact of Environmental Assessment: The World Bank's Experience.
Environmental Assessment Review. World Bank, Washington, D.C., November 1996, p.
OED report) which reviewed the Bank's experience with environmental screening
and assessment.10 It evaluates the experience of the World Bank and compares its
policies to other MDBs. It found in general that although environmental assessment
policies have been carried out in accord with Bank procedures, the underlying
purpose or objective -- influencing project design to reflect and avoid environmental
concerns -- often has not been realized.
In November 1996, the Environment Division completed its Second
Environmental Assessment Review, providing another frank evaluation of the World
Bank's experience with the EA process (hereafter referred to as the ENV report for
the acronym used for the Environment Division).11 Among other things, this report
found progress in impact identification, assessment, and mitigation planning. It
found continuing weaknesses in public participation and analysis of alternatives, and
identified the treatment of Category B projects as a special challenge, to be a major
focus in the next evaluation. The ENV report stated:
Examining development projects for the impact they are likely to have on
the environment is now standard practice in development planning.
Environmental Assessment (EA) and similar methodologies are required
by most multilateral and bilateral development agencies and a growing
number of developing countries.12
Both reports found a great deal of progress in environmental assessment
procedures. There are many areas where the experience of the past six years has led
to improvements and remedies to previous problems that had led to frequent
invocation of the Pelosi requirements by the U.S. directors in 1992-1993. Both
reports present evidence of these improvements in environmental assessments and
analyses. However, in addition to such progress, they also found a number of
continuing significant problems, discussed below.
Problems Found by the OED Report. The OED report found that since 1989,
more than a thousand projects have been through the screening process. Some 10%
were rated Category A, 41% been placed in Category B, and 49% were in Category
C. The report indicates that in subsequent reviews conducted by the World Bank of
its own EA activities, it was the fulfillment of the above-quoted "purpose and nature"
of the process--improving integration of environmental considerations into project
design and decision-making--that appeared most problematic. While environmental
screening and the conduct of both environmental assessments and analyses largely
followed the procedures set forth, the Bank study found that the assessments were
World Bank, Operations Evaluation Department. Effectiveness of Environmental
Assessments and National Environmental Action Plans: A Process Study. Report No. 15835.
[OED report] World Bank, Washington, D.C. June 28, 1996. 158 pages.
World Bank. Land, Water, and Natural Habitats Division, Environment Department. The
Impact of Environmental Assessment: The World Bank's Experience. Second Environmental
Assessment Review. [ENV report] World Bank, Washington, D.C. November 1996. 146
Ibid., p. xiii.
often conducted separately from the project preparation, and did not generally have
a significant influence in the project design.
The OED report stated: "The study found that in 17% of the projects (nine of
the 53 projects [evaluated]: two category A and seven category B projects) design
had been modified to some degree because of EA findings." 13 Moreover, the OED
reported that the Bank's Second EA Review found that supervision in the
implementation phase of projects in Category A "...is generally insufficient to
determine environmental performance, and may limit the Bank's ability to detect or
address environment-related problems during implementation in a timely fashion."14
In a summary of its findings, the Bank's OED report states that:
The EA directives, some of the most comprehensive in the world, have
been followed by and large, thus ensuring that environmental
considerations are reflected in Bank project documents, and that the
mitigation of environmental impacts is a prerequisite for project approval.
Still, the impact of this process on project design and implementation may
well be below its potential.
Because most EAs strive for
comprehensiveness rather than focus on major risk factors, massive
volumes are generated that increase cost and are of limited use. Analysis
of project alternatives in many EAs, when done at all, is weak. EAs are
often prepared when the project design is already well developed and the
implementation of the agreed action plan is often not well supervised.
There is no adequate reporting procedure and public participation and
information disclosure, while improving, remain weak. Borrower capacity
is often severely strained because EA procedures overwhelm recently
established, understaffed environmental institutions as further developed
in Chapter Four. Finally, sector and area specific EAs, which can improve
quality and save time, are infrequent.15
Summarizing the views of Bank staff and borrowers, the OED report showed
that 76% and 81% respectively "complain that by the time the results [of the EA or
analysis] are ready, it is too late to use them." The OED notes "Because it often
takes more than one year to conduct an EA, project design evolves more quickly and
often fails to take the environment into account, especially if the task manager
believes that EA is just a pro forma ritual and fails to monitor the process closely."16
The environmental screening process, in which categories are assigned, presents
several problems. The ENV report notes that the Bank has improved its consistency
in classifications, and that the problematic disagreements between operational and
environmental staff, which were evident in the early 1990's, are "rare." The report
indicates that the screening process results in identification of environmentally
sensitive components, which are sometimes altered or dropped. However, it also
Op.cit., supra note 12 (OED report), p. 24.
Ibid., p. 15.
Ibid., (OED report), p. 19.
Ibid., (OED report), p. 26
notes that "Nevertheless, the need to decide on a particular classification sometimes
draws attention away from the actual environmental issues and impacts associated
with a proposed project."17
It goes on to identify problematic practices that have been used during
screening in the past, and which it recommends be avoided. "This Review stresses
that project environmental classification should be based primarily on information
obtained in the field, and less on checklists, past precedents with similar projects, or
In discussing the influence of EA on project design, the ENV report notes the
possible negative role of high EA costs: "Another problem is that borrowers are
frequently interested in cutting costs, which may lead to the utilization of consultants
who do not have sufficient expertise to take an active part in the project design
process."19 The ENV report notes a finding also made by the OED review, "Many
EAs are still not an integral part of project preparation. Rather, they tend to be
relatively independent assessments, usually carried out by consultants that may be
detached from the broader preparation process."20
The Pelosi Amendment has been invoked only rarely in the last two years by
U.S. Executive Directors. But challenging situations continue to occur. As recently
as May 1996, the United States voted "no" on a transport sector project in Cameroon
because there was no environmental analysis before appraisal.
Reorganization and Reformulation of Environmental Procedures. The
World Bank is currently reformulating most of its policy and operational directives,
with the expressed goal of streamlining them and reducing what some regarded as
an unmanageable proliferation of detailed requirements for each project. Concerns
have been raised in the case of some of these reformulations that previously
mandatory practices have become "best practice" guidelines that are discretionary
and no longer mandatory. However, according to Bank officials, these
reformulations are not intended to change policy, only to streamline it and make it
easier to apply.
Early drafts of the environmental assessment operational directive seemed to
narrow the types of projects in various categories, and introduce other vehicles such
as environmental audits perhaps as alternatives to EA or environmental analysis. It
is not clear when a final draft will be completed and submitted to the Board for
The Bank is also undergoing substantial reorganization, a process sometimes
cited by Bank staff as holding up some implementation of improvements
recommended in the environmental assessment evaluations. One change in the
World Bank is to establish "networks" that will link staff throughout the Bank, with
Op. Cit., supra note 13 [ENV report] p. xv.
Ibid., p. 52.
Ibid., p. 51-52.
a goal of more effective coordination and mobilization of appropriate expertise. To
date, details and how these changes may affect the environmental assessment process
are unclear, but some critics have expressed concern that the reorganization will
consolidate decisionmaking in country directors and task managers to a greater
extent, and reduce the opportunities for technical staff such as environmental experts
to exert leverage and obtain necessary analysis and consideration of environmental
B. Environmental Procedures at the
International Finance Corporation (IFC)
The IFC Requirement. In September 1993 the IFC issued its guidance
document on environmental analysis entitled "Environmental Analysis and Review
of International Finance Corporation Projects. It noted that this document and the
World Bank's Operational Directive 4.01, summarized above and in Appendix A, are
"similar in many respects and have identical goals--to ensure that projects are carried
out in an environmentally responsible manner and meet high environmental
standards." It also notes that the IFC's and World Bank's procedures differ in some
details, "due to differences between IFC and the World Bank in mission,
organization, project cycle, and clientele (private sector versus national
One difference cited is that the World Bank OD 4.01 requires that an EA be
completed prior to departure of the appraisal mission, whereas the IFC has no such
requirement. According to the IFC, this is feasible for the World Bank because it
becomes involved in projects at the concept stage with a relatively long lead time
prior to appraisal. The IFC argues, by contrast,
Project sponsors normally approach IFC much later in the project cycle,
often after feasibility studies, site selection, and preliminary design work
are completed. Many projects sponsors have already completed some
level of environmental analysis prior to contacting IFC. However, some
project sponsors do not do any environmental analysis until required by
IFC. Since IFC's project cycle is short--three to six months for appraisal
and management approval--in such cases it may be necessary for the
sponsor to do the environmental analysis concurrently with the appraisal
and other aspects of the project. While IFC recognizes that environmental
analysis should be integrated into the feasibility study and encourages
potential project sponsors to do so prior to approaching IFC for financing,
IFC's procedure is designed to allow the flexibility to accommodate
projects which are brought to IFC in various stages of development.21
However, the basic IFC policy is that all operations "must comply with
appropriate World Bank environmental policies and guidelines." In potential
contradiction of the statement on how IFC differs from the World Bank in length of
project cycle, the procedure includes as part of its purpose to ensure
International Finance Corporation. Environmental Analysis and Review of Projects.
September 1993. Washington, D.C. p. 1
"...Environmental issues are addressed early enough in the project cycle to consider
all relevant alternatives, mitigation measures and efficiency improvements."22 In
accord with this policy, it would seem possible for the IFC to institute a requirement
that project sponsors complete EAs prior to appraisal, accepting some delays as a
necessary cost of ensuring environmental soundness.
The IFC's Environmental Screening and Assessment Process. The IFC
procedure notes that environmental analysis is part of project preparation, thus is the
responsibility of the project sponsor. The document indicates the preferability of use
of independent consultants to do this work.
The IFC uses the same categories A, B, and C as the World Bank. It adds a
category "FI" for financial intermediary, spelling out a procedure in line with World
Bank policy on how to deal with environmental impacts of subprojects when the loan
is to a financial institution that may be a lending agent for projects that are not
known or defined at the time of the IFC loan to the FI. The procedure states for this
category: "Projects may include financing for a variety of subprojects that may
result in environmental impacts. Verification that the financial intermediary is
capable of and committed to conducting environmental review of subprojects is
IFC procedures provide for an Environment Information Memorandum (EIM)
to be prepared as part of the Initial Project Review (IPR) that follows a decision to
put a project in IFC's "pipeline." In this document the project category, rationale for
categorization and environmental issues are outlined. On the basis of this IPR, the
IFC's Investment Review Committee determines whether or not to proceed with
At this point, the project is entered into the IFC's Monthly Operational Report,
which is reportedly available to the Board of Directors but not to the public. This
provides notice that a project is under consideration. In the next stage, appraisal, a
team collects more information, including environmental data for Categories A, B,
and FI projects. According to the procedures, the team usually consists of an
investment officer, a technical specialist, an economist, an environmental specialist,
and a lawyer, plus other support as needed.
In the case of Category A projects with full EA documentation, according to the
IFC document, the EA is to be released to the public--with sponsor's consent, and
without IFC's endorsement--at least 60 days before a proposed date for Board
consideration and vote. The application of the Pelosi Amendment to the IFC has
been a matter of some dispute among NGO's, the U.S. Government and the IFC--this
dispute is discussed below in Chapter III.
Ibid., p. 7.
Ibid., p. 13.
C. Environmental Procedures at the
Inter-American Development Bank (IDB)
The IDB Requirement. The Inter-American Development Bank adopted its
"Procedures for Classifying and Evaluating Environmental Impacts of Bank
Operations"24 in February, 1990. They covered "all operations of the Bank,
including (a) Specific and global loans, (b) Sector loans, (c) Technical cooperation
The procedures declared that their general objective was ensuring "that all Bank
operations include the investments and other actions necessary to prevent, control
and mitigate negative environmental impacts and improve environmental quality."
Determining the type and magnitude of potential environmental problems is
necessary in the initial (identification) stage of the project cycle. The IDB's
Environmental Management Committee (CMA in its Spanish acronym) approves the
project's proposed environmental classification.
The CMA is the key institutional unit dealing with environmental issues. The
CMA membership includes heads of the Environment Divisions within each of the
three Regional Operations Departments, and designated Division Chiefs from the
Strategic Planning Department, the Legal Department and the External Relations
Department, and Chiefs of the Environment, Indigenous Peoples, and Women in
Development Units in the Sustainable Development Department (SDS). The
Committee meets weekly to review projects, usually some 5 to 6 per week. Over the
course of a year, the IDB initiates some 50 to 60 projects, plus some 100 to 150
technical assistance projects (which rarely require environmental analysis).
The Bank's Environmental Screening and Assessment Process.
Categories. The IDB established four categories into which projects were
placed, reflecting the degree of impact on the environment, and consequent level of
environmental assessment or analysis. Category IV in the IDB is similar to the
World Bank's Category A (requiring a full environmental assessment), and III is
similar to the World Bank's Category B. (See Appendix A for a description of
requirements for these categories.) The IDB eliminated this system of categorization
in early 1997; it is described here because it is the system in use during most of the
period reviewed by this report.
The terms of reference for Environmental Impact Assessments (EIAs),25 where
needed, were defined by the IDB to be "....analyses in different forms and levels
(overview, survey, semi-detailed, or detailed) of impacts of development activities
on the environment, on renewable natural resources, on natural habitat, on human
Inter-American Development Bank, Environmental Management Committee. Procedures
for Classifying and Evaluating Environmental Impacts of Bank Operations. Washington,
D.C., February 1990. 5 pp.
For the purposes of this report, the terms "Environmental Assessment" (EA) and
"Environmental Impact Assessment" (EIA) are interchangeable.
settlements, the economy and society." Such EIAs should, the IDB indicates, include
direct and indirect impacts and propose solutions for problems identified--which
should be analyzed in the feasibility study and in final project designs.
The third and fourth steps would be review of the EIA by Bank staff and fourth,
approval by the CMA of the measures to be taken to avoid or minimize
environmental consequences during implementation stages.
The EIA Process. Following an initial scoping process, the IDB team/task
management staff prepare an Environmental Brief, giving the classification (the
category of the project for purposes of environmental assessment/analysis) and
identifying potential environmental impacts and the elements that will be important
in subsequent environmental analysis. The CMA must approve the classification,
and then the Environmental Brief and classification are included in a Profile II report
on the project, which recommends the studies or activities needed to determine the
magnitude of the impacts to be assessed by an environmental impact assessment.
The EIA is formally the responsibility of the prospective borrowing country.
Terms of reference for an EIA are to be prepared by the borrowing country and
agreed to by the IDB. IDB procedures state that beneficiaries as well as the general
public, such as local environmental groups, "should participate in a formal, verifiable
way in the preparation of the terms of reference of the EIA." The procedures also
indicate that "whenever possible", the Bank is to provide technical assistance to a
country for preparation of an EIA, "in agreement with Bank policies and the
availability of resources."
Primary supervisory responsibility for EIA preparation is assigned to the Project
Team, supported by the Environment division. According to interviews, the IDB has
also had problems with the appropriate assignment of categories. Avoiding category
IV was a high priority among project and team managers. Some 90% of projects
with environmental effects were in category III. As noted in Chapter II of this report,
a spot-check by CRS of projects in the pipeline for three large countries showed only
one in category IV, although environmental assessments were available for two of
the category III projects listed.
In its 1997 draft report to Congress on project proposals that might have
significant environmental problems (see Chapter 3 for discussion of this "Early
Warning System" report), U.S. AID listed seven projects of the IDB, up from three
such projects in its 1996 report. U.S. AID cautions that listing a project does not
mean that problems will not be resolved by the time the project preparation process
is completed. Several of these projects were categorized in Category III (equivalent
to "B" category for the World Bank), and the U.S. AID comments indicated its
opinion that they should be in category IV in order to receive a full environmental
As in the case of the other MDBs, while the original purpose of having
categories was to establish a "must" category that required an extensive EIA, the
practical effect often was to establish instead a category that MDB staff made every
effort to avoid.
Reorganization and Reformulation of Environmental Procedures.
New Procedures. In November 1996, the IDB reformulated its environmental
procedures and eliminated classification categories partly in an effort to avoid the
"bunching" of environmentally sensitive projects in Category III. Its new procedures
say that every project should be subjected to environmental review and evaluation
that is appropriate to its potential environmental impact.
The new Environmental and Social Equity procedures retain the institutional
focal point for environment in the CMA, renamed the Committee on Environment
and Social Equity, but retaining the same acronym. The General Framework of the
procedures states that the environmental policy of the IDB "require that all
operations financed by the Bank be environmentally and socially sustainable." The
procedures are "designed to implement these mandates in a manner that is consistent
with the organizational structure of the Bank and with the demands of its
programming and project preparation cycles."
The new procedures do not include environmental classification categories for
types or severity of environmental impacts. Instead, during the identification stage
of any proposal, Project Teams are required to "determine the scope of
environmental and related social equity issues." At the center of the scoping process
is an Environmental and Social Equity Brief (ESEB) as part of the Profile II report.
Operations under $3 million will be screened without an ESEB. The procedures note
"The ESEB, once approved by the CMA, establishes the environmental
assessment requirements to be met in preparing the operation, and
identifies the environmental and social equity issues that must be resolved
to ensure that the operation is viable and eligible for Bank support."
The procedures outline the contents required for the ESEB. These include an
indication whether a full EIA, or other more specific or limited study is needed and
a description of the depth, breadth and analytical requirements to be met.
The ESEB is to be made available to the public in accordance with the Bank's
Disclosure of Information Policy. During the evaluation stage for a Bank operation,
the EIA, if required, is to be prepared. The new procedures outline the objectives of
an EIA, and state that "...an Environmental Impact Assessment (EIA) will be carried
out for all operations with potential impacts on the environment."
The required elements of an EIA are listed. There must be an analysis of direct
and indirect environmental and social equity impacts and risks. A summary
description and evaluation of the alternatives considered and the rationale for
selecting the proposed method is required. A record of the process and a summary
of the results of consultations with affected groups must be provided. The EIA must
also provide details on options and budget for preventing, avoiding, and reducing
impacts of the selected alternative.
The new procedures say that some operations "may require environmental
and/or social equity studies of limited scope and relatively minor importance to the
overall design or impact of an operation." These studies are not called EAs. The
Bank says these studies are "identified on a case by case basis, and designated by a
title which reflects the specificity of their scope."
Continuing Concerns. These new procedures, by avoiding establishment of
entire categories that allow minimal or no environmental assessment, are -- among
other things -- intended to avoid the problem of "bunching" of projects and
operations in these categories -- outside of the category that requires a full
environmental assessment. However, a decision must still be made under the new
procedures as to whether such a full EIA would be needed. For projects that need
less than a full EIA, environmental evaluation/analysis would be done at a level of
detail regarded by the team leaders and the CMA as appropriate. The supposition
that there are categories that require minimal or no analysis for projects with little or
no presumed impact on the environment is avoided in the new procedures, although
it seems a decision along these lines could still be likely for many of the projects that
are now in the lowest-impact categories.
The challenge under the new system will be that even without the need to
categorize projects, there could still be avoidance of a determination that a full EIA
is needed, and "bunching" at the lower levels of analysis. What concerns some
NGOs and U.S. government staff is that the "red flag" of a category IV (or III)
designation that has in the past served to alert them to the need for special attention
and scrutiny will no longer be used.
D. Environmental Procedures at the Asian Development Bank
The ADB Requirement. The Asian Development Bank published in March
1993 its current "Environmental Assessment Requirements and Environmental
Review Procedures of the Asian Development Bank."26 The foreword of the
document notes that environmental assessment procedures were instituted in the
early 1980's, and formal environmental review procedures in the mid-1980's. These
were updated and revised regularly. The current document notes that it is prepared
especially for Bank project staff.
The Bank's Environmental Screening and Assessment Process. Like the
other MDBs, the ADB provides for categorization of projects. It has categories A,
B, and C, similar to those of the World Bank. (See Appendix A for description of
categories). Initial screening of all projects, as well as sub-projects, sector and
financial intermediary lending is done by the Bank's Environment Division (ENVD)
of the Office of Environment and Social Development (OESD), which is the focal
point for all environmental and social issues relating to projects and Bank policies.
After consultation with staff in Projects Departments, a category is assigned to each
The ADB procedures document indicates that environmentally sensitive
projects may be placed in Category A or in Category B according to location, type,
Asian Development Bank, Office of the Environment. Environmental Assessment
Requirements and Environmental Review Procedures of the Asian Development Bank.
March 1993. 44 pp.
sensitivity, scale or nature of impacts. The ADB reports that each project and its
category is entered into the Environmental Monitoring Information System (EMIS),
which includes relevant environmental information and suggested mitigation
measures. Environmental aspects of projects that may need to be reviewed are also
The ADB expects that by the time of project appraisal, the environmental and
social assessments should have been completed, and at appraisal, environmental
concerns, issues and proposed solutions are to be written into a Memorandum of
Understanding that creates commitments to the obligations associated with
environmental issues that have been identified. During the preparatory phases, the
ADB describes the categorization process as an evolving one. An Initial
Environmental Examination (IEE) is done during the Project preparatory Technical
Assistance, prior to loan fact finding; during this process, the IEE may reveal greater
or lesser environmental impacts that may occasionally lead to recategorization of a
project from B to A or vice-versa. Summaries of EIAs or IEEs are made available
to the public; full EIAs are available on request, according to ADB procedures.
The ADB reports that it regards environmental assessment as an integral part
of project preparations. In contrast to some other regional banks, the ADB notes that
most of the its developing country members have established their own
environmental procedures, which are often comprehensive and include preparation
of EIAs and public consultation.
The costs of preparing an EIA may be financed, the Bank notes, under project
preparatory technical assistance. However, the borrowing and private sector
investment entities are in charge of the environmental studies and documentation.
During preparation of environmental studies, the Bank interacts with these entities,
and this may result in changes in the EIA.
The ADB reports that its Environmental Loan Covenants with borrowers have
become increasingly detailed in stipulating the environmental requirements for a
loan. The ADB's 1992 and 1993 reports indicate that the ADB prefers use of such
legally binding covenants to the conditions for loan disbursements used more
commonly by the World Bank. The ADB has concluded that use of such covenants
is important in assuring adherence to environmental requirements during
implementation phases of its loans.
Effectiveness of the Bank's Environmental Assessment Process. In its 1994
report to Congress on MDBs and the Environment, Treasury reported on the
completion of environmental assessment requirements in 1993, and progress in
several areas. It said that "As a result, the U.S. abstained from only 4% of ADB
projects on Pelosi grounds, down from 15% in 1992."27
Department of the Treasury. 1994 Annual Report to Congress: Environment and the
Multilateral Development Banks. Unpublished report directly to Congress ["The following
report is submitted in compliance with section 539(e) of Title V of Public Law 99-591;
section 533(b) of Public Law 101-167; section 533(b) of Public Law 101-513; and section
532(c)(1) of Public Law 102-391. These Congressional Requirements instruct the Secretary
However, as with other MDBs, there continue to be some problems. In the fall
of 1996, the United States abstained on Pelosi Amendment or other environmental
and social grounds in Board votes on two ADB projects. A Pelosi abstention
occurred on a Laos community irrigation project due to lack of an EA on a sensitive
road component. A bridge access road project in Bangladesh did not have a
resettlement plan until after the staff appraisal, and Treasury said that its "B"
category was inappropriate in the face of significant resettlement.
In general, however, Treasury staff commented that the ADB has very reliably
adhered to its EA policies, especially in meeting the 120 day deadline for making
environmental documents available to the public and to the Executive Directors. Of
the 20 projects listed in the U.S. AID "Early Warning" report to Congress in March
1995 on MDB projects with potential environmental problems, two were ADB
projects in the Philippines. The March 1996 U.S. AID report to Congress did not list
any ADB projects on upcoming projects with environmental concerns. In the draft
1997 report, one of seven projects in Asia listed in the report was an ADB project.
(See Chapter III of this report for a discussion of this U.S. Agency for International
Development reporting process).
E. Environmental Procedures at the African Development Bank
The AFDB/AFDF Requirement. The African Development Bank and African
Development Fund jointly approved in 1990 an "Environmental Policy Paper" that
outlined environmental assessment procedures. These procedures provide for
screening and categorization of projects that are generally similar to the World Bank
In May, 1992, the Bank's Environment and Social Policy Division of the Central
Projects Department approved and finalized operational "Environmental Assessment
Guidelines" to implement the policy outlined in 1990. These guidelines stated what
kinds of environmental review and procedures are required at each stage of the
project cycle, and listed types of projects and ecological areas that would be in the
As in the other MDBs, if a full environmental assessment is required, this is the
responsibility of the recipient government, with assistance from Bank and/or
The Bank's Environmental Screening and Assessment Process.
Environmental information collected during preparation stages is to be presented and
evaluated in the appraisal stage. The appraisal report should, according to the policy
paper, suggest mitigating measures and alternative designs for avoiding or limiting
adverse environmental impacts. The guidelines and policy paper also indicate the
need to assure that environmental mitigation measures are employed during the
of the Treasury to account how the MDBs have been moving to meet goals in the areas of
the environment and sustainable development."] Washington, D.C.Treasury Department
1994 report to Congress, op. Cit., p. 5.
implementation stage, and that monitoring of such implementation is important to
determine that environmental conditions for the loan have been met.
The 1990 Policy Paper concludes with a section on institutional, staffing and
financial implications. The financial implications cited include major constraints on
implementation of the policy, due to lack of resources available to borrowing
countries for environmental assessment studies.
Effectiveness of the Bank's Environmental Assessment Process. The
African Development Fund ran out of money and has not lent since 1994. There is
no evaluation of AFDB environmental assessment policy and procedures such as the
studies done by the World Bank on its EA procedures. In the 1994 report submitted
by the Treasury Department to Congress on Environment and the Multilateral
Development Banks, Treasury stated:
The environmental impact assessments which have been carried out for
AfDB projects have generally been of poor quality, often omitting
essential information such as a complete description of the project and
project site, analysis of alternatives, or discussion of public participation.
The United States, through its Executive Director, has made suggestions
to bank management for improving the quality of environmental impact
assessments by focusing on aspects such as these. Despite these
shortcomings, however, progress continues to be made; in 1993, the U.S.
abstained from only 6 percent of African Bank projects on Pelosi grounds,
down from 25 percent in 1992.28
A Treasury staff member who recently visited the headquarters of the AFDB
and reviews AFDB projects, reported that loans being prepared over the past several
months show encouraging indications of integration of environmental concerns into
project design and decision-making. A restructuring of the Bank has already resulted
in additional environmental personnel, with expectations that eventually there will
be 16 professionals in an Environment Division, including five stationed in regional
AFDB observers note that, as is often the case in the MDBs, the attitudes and
approaches of task managers toward meaningful integration of environment in their
projects vary widely, and constitute a key variable. If a task manager believes that
environmental concerns are important, he or she will assure their integration. If they
are seen as peripheral -- or an unwelcome obstacle to swift project design -- they may
be treated superficially at best.
Reorganization and Reformulation of Environmental Procedures. The
recent AFDB reorganization has created an Environment and Sustainable
Development Unit. The June 1996 document that outlines the mandate and functions
of the new unit indicates that the environmental policy will be reformulated, although
the director of the unit has reportedly recently stated that the environmental policy
will not change. The June 1996 document states policy functions related to
environment as including: "Revise environment policies and strategies to better
Ibid., p. 2.
incorporate the new global environmental agenda, ensure that other sectoral policies
address environmental issues."29
F. Environmental Procedures at the European
Bank For Reconstruction And Development (EBRD)
The EBRD Requirement. At its September 1996 meeting, the Board of
Directors of the EBRD approved its Environmental Policy and Environmental
Procedures, documents that had been long awaited since the EBRD began
functioning in 1991. The policy points out that the EBRD is the first international
financial institution to be given a "proactive environmental mandate" in the
agreement establishing it. The Environmental Policy cites Article 2.1.vii of the
agreement, which directs the Bank to "promote in the full range of its activities
environmentally sound and sustainable development."
The EBRD states in its first item among its General Principles and Objectives,
that "The Bank will ensure, through its environmental appraisal process, not only
that its projects are environmentally sound, but that their environmental performance
is monitored. It will seek to realize additional environmental benefits through its
operations, in particular if they also provide economic benefits."30 The Bank
generally uses the term "environmental appraisal" for the process that involves
screening, assigning categories, and carrying out environmental assessments or
In order to implement the mandate in its Environmental Policy, the EBRD also
formulated its Environmental Procedures, "to ensure that all of its investment and
technical cooperation activities undergo environmental appraisal as part of the
overall financial, economic, legal and technical due diligence which is carried out."31
The Procedures indicate that the purpose of environmental appraisal is "both to
help the Bank decide if an activity should be financed and, if so, the way in which
environmental issues should be incorporated in operation financing, planning and
implementation. An overall objective of environmental appraisal is to improve
decision-making." A project sponsor is expected to provide sufficient environmental
information to the Bank to make decisions possible, usually by commissioning or
conducting necessary environmental investigations that would be satisfactory to the
The Bank's Environmental Screening and Assessment Process. The
Operation Leader in the Bank has responsibility within the Bank for environmental
aspects of the operation. The Environmental Appraisal Unit (EAU) is to provide
assistance in preparing terms of reference for environmental studies, "such as
African Development Bank, report from the President, Report on Environment and
Development Unit. June 1996, p.3.
Environmental Policy. Document of the European Bank for Reconstruction and
Development. BDS96-24 (Final). 19 November 1996. P. 4.
Environmental Procedures. Document of the European Bank for Reconstruction and
Development. BDS96-23 (Final). 19 November 1996. P. 5.
assessments or audits," and to review any preliminary environmental information
about an operation and identify concerns. It then prepares an Environmental
Screening Memorandum outlining environmental concerns and the nature of
environmental investigations that will be needed. This screening, undertaken by the
EAU, identifies the environmental category, A, B, or C, into which a proposed
project is to be placed. It also decides whether or not an environmental audit is
After terms of reference are completed by the Operation Leader, with EAU
help, the EAU reviews the results of the environmental investigation, including the
public investigation. The EAU then prepares an Environmental Review
Memorandum detailing which environmental control and/or enhancement measures
should be incorporated into the operation. The EAU also assists in monitoring
implementation of environmental aspects of the operation.
The procedures describe types of environmental appraisal work to be done by
the EBRD. They indicate that an Environmental Impact Assessment (EIA) is carried
out to identify, predict and assess the future environmental impacts of an operation
where these impacts are "potentially significant and cannot be readily identified,
assessed or mitigated. The procedures reference Annex D in which types of
greenfield projects (operations in previously undeveloped areas), major expansion
projects, or transformation-conversion operations are listed that will be subject to an
EIA, regardless of their location, due to their environmental significance. It indicates
that additional types of operations may also be subject to EIA if they are in
environmentally protected or sensitive areas like parks and nature reserves.
The procedures also describe Environmental Analysis. It is "carried out on
operations or activities where any future environmental impacts are potentially
significant but where, because of their nature, size and location, they can be readily
identified, assessed and mitigated. The content of an environmental analysis is
similar to that for an EIA although the scope of environmental analysis is usually
Annex D of the EBRD procedures lists 24 types of operations as "A" level
operations, although the procedures themselves and the discussion of operations
needing an EIA do not refer to categories "A", "B" or "C." The 24 types of
operations listed in the Annex for Category A include crude oil refineries, nuclear
fuel enrichment installations, integrated chemical installations, large dams and
reservoirs, large diameter oil and gas pipelines, large scale logging, large scale
tourism development, tanneries, etc.
Following the list of examples, the A Level Operations section states:
The above list is clearly non-exhaustive and the types of projects it
contains are examples only. EIAs are also required for "greenfield" or
major extension or transformation operations which pose a serious
accident or health risk....planned to be carried out in sensitive locations,
even if the operation category does not appear in the above list. These
Ibid. (Procedures), p. 9.
sensitive areas include National Parks and other conservation areas of
national or regional importance, such as wetlands and areas of
archaeological significance, areas prone to erosion and/or desertification,
and areas of importance to ethnic groups.33
Annex D state that all "greenfield" or major extension or transformation projects
not receiving an "A" rating "are subject to a project-specific "B" level environmental
analysis unless location, scale or other factors require an "A" level EIA to be
undertaken.34" Since the "A" category list is described as non-exhaustive and as
examples only, it is unclear why Category "B" should include all operations not on
the "A" list.
A third section of Annex D specifies the treatment of "C" level operations.
"Operations which do not require either an "A" level environmental impact
assessment or a "B" level environmental analysis are screened," it says, "in Category
"C" which do not require an environmental assessment.35
Annex D concludes by saying that operations in any category may be subject
to an environmental audit, which "identifies past or present concerns and potential
environmental and health and safety risks and liabilities associated with the
operation." It may also identify baseline conditions for agreeing on responsibility
for environmental damage, and may encompass one or more phases of an operation.
Because the EBRD policy and procedures on environmental assessment are so
recent, there have been no opportunities to evaluate how they will operate.
G. Evaluation of MDB Environmental Assessment Procedures
The following section provides a general critique of the MDB environmental
assessment procedures, and summarizes some of the points made in the sections
above on the individual banks. It is based on a distillation of comments by
interviewees at the banks, the U.S. Treasury Department, and NGOs, and an analysis
of relevant documents. The comments in this chapter reflect the preponderant view
of these sources, but do not include all possible perspectives.
Environmental Operations of MDBs and Responses to the Pelosi
Impact on MDB Procedures. Environmental assessment policies are now in
place in all of the MDBs, and have become a standard part of the operations of the
banks. Although the banks point to an evolution of policies on environment that led
up to the environmental assessment procedures, most observers outside the Banks
(and some inside them) credit the Pelosi Amendment with getting the process started,
first at the World Bank and then in the other MDBs, and creating incentives for
environmental assessments and related mitigation and planning.
Ibid., p. 35.
Ibid., p. 35.
Ibid., p. 35.
From the perspective of those who see all or most loan proposals--whose major
focus is on overall bank performance, not environment per se--it seems apparent that,
as one of them put it, "Pelosi worked." They see a change in project preparation that
reflects the institutionalization of environmental procedures,
implementation of these procedures, and internalization of the need for
environmental screening and analysis on the part of MDB managers. Moreover,
according to many observers, the inclusion of environmental concern in scoping
projects, deciding on project location or design, and the responsiveness to
environmental concerns from outside the MDBs have all improved.
However, from the perspective of those who are concerned primarily about
environmental issues, and whose attention is mainly on projects where environmental
problems may still remain, there are continuing problems with adequacy of analysis,
and with various elements of environmental assessment such as participation,
analysis of alternatives, etc. From this perspective there is considerable reason for
continuing concern about the adequacy of environmental analysis and incorporation
of environmental issues into MDB decision-making.
MDB Reviews of Their Own Performance. The World Bank has developed a
great deal of experience in environmental assessment since its policy went into effect
in 1989, and it has made extensive efforts to candidly evaluate the EA experience in
the Bank. In two late-1996 evaluations, the Bank found adherence to its policies,
along with problems remaining in several areas, discussed in the section on the
World Bank. No comparable evaluations have been done by the other MDBs, and
their experience is generally over a shorter time period because their environmental
assessment policies were adopted later than that of the World Bank. However, a
review of Pelosi votes and comments by observers indicate that many similar issues
and problems affect the environmental assessment process across all the MDBs.
Critical Role of Task Managers. Task managers vary considerably in their
attitudes toward the incorporation of environmental issues into the project design
process. Some have tended--and some reportedly still continue--to view
environmental concerns as an unwelcome obstacle, and will accept relatively
inadequate EAs or analyses unless challenged by other bank staff, concerned citizens
or Treasury officials. When approached by concerned U.S. officials or NGOs, their
cooperation may be problematic in addressing such problems.
However, there are other task managers who are interested in assuring
environmental soundness, and take the view that this is important to the success of
the project. When problems are brought up, a task manager with this approach is
more likely to try to investigate problems and find remedies. The World Bank
evaluations acknowledge that training for Bank staff on environmental issues and
concerns has been insufficient and needs to be broadened and spread throughout the
staff. The situation is likely to be similar at the other MDBs.
Inadequate Integration of Assessments into Project Design. One of the stated
goals of most MDB environmental assessment policies is that environmental
concerns should be addressed early in the project preparation process, and
environmental protection goals should be integrated into project design. Both World
Bank evaluations found that environmental assessments often were completed too
late to have the desired influence on project design. The need to "upstream" the
environmental analysis and to integrate it into the project design remains a major
challenge at the banks.
Effect of Categorization on Assessment Procedures. Because Category A
projects are almost by definition large projects with potentially serious
environmental effects, they receive most of the scrutiny given to MDB projects by
the banks, by U.S. officials, and by NGOs. (The MDBs use different terms for their
categories, but Category A is the one most commonly used for those needing a full
EIA). All parties cite their own scarce resources in describing their tendency to
concentrate on "A" projects. The "A" category serves as a "red flag" indicating
which projects need to be watched for quality of analysis--and for conformance with
Pelosi Amendment requirements on timing of information availability. (Some 20 or
so Category A projects come up for a vote each year at the World Bank). For this
reason, the move by the IDB to eliminate all categories is viewed with concern by
those who depend upon the categories to flag projects with especially sensitive
The Treasury Department also routinely reviews environmental information on
"A" projects. Its attention to "B" projects is much less systematic, however, again
due to scarce resources. It is the policy of the U.S. government that any project,
regardless of category, that has significant potential environmental effects must have
an appropriate environmental assessment. In several cases, especially in the early
1990's, "B" projects were subject to Pelosi abstentions or no votes because they
lacked the necessary level of environmental assessment. Thus, when problems with
"B" or "C" projects are brought to the attention of the U.S. agency officials, either
through the AID Early Warning process, through NGO contacts, or other means, the
U.S. government will enter into inquiries and negotiations with the relevant Bank to
attempt to get improvements and adequate analysis. (See discussion in Chapter III,
However, it remains the case that NGOs, U.S. government staff, and the MDB
environment staff continue to concentrate most of their efforts on the large category
A projects, with less routine attention to Category B. Some U.S. government
officials view with concern the possibility of ending categorization, as the IDB has
Problems of Categorization and Miscategorization. Miscategorization can be
a problem. There have been a number of abstentions by the United States in votes
on second-category projects because they did not have the more thorough and
comprehensive environmental impact assessment that U.S. officials thought the
project needed. Projects placed in the second category, thereby receiving more
limited environmental analysis, do not receive the more thorough analysis that some
of them may deserve. Information available to the public about such projects is
much more limited.
Some projects placed in the third--no impacts or "C"--category may have
subcomponents that have environmental impacts that many feel should be analyzed.
One recent example concerns health services projects that have medical waste
incineration elements opposed by local people or NGOs on environmental grounds.
Yet, having been placed in Category C, they do not receive environmental analysis.
NGOs concerned about these health services projects point out serious health hazards
associated with emissions from medical waste incinerators that are not designed to
control such emissions. Because of the "C" category, alternatives favored by
environmental groups and local NGOs have not received analysis or consideration
in these cases.
The World Bank's 1993 Environmental Screening Update to its Environmental
Sourcebook notes that some aspects of a Category C project may have environmental
impacts. It states, "not all Category C projects are entirely devoid of environmental
impacts. For example, in a health project, the design may have to provide for
disposal of medical wastes." However, the Update does not go on to state how or if
such components would be treated in terms of assessing impacts, or whether some
environmental assessment would then be required. Thus the medical waste disposal
components of larger health projects have not always been assessed or alternatives
examined, despite concerns raised by NGOs about harmful toxic emissions and
environmental impacts of incineration.
Categorization usually occurs at a very early stage of the project identification
process. It is uncommon for a Bank to change a category once it has been
determined -- especially to one requiring more extensive environmental assessment
or analysis. In some cases, this is true even in the face of extensive urging by
Treasury and/or NGOs concerned about the project. Bank officials and critics alike
acknowledge a tendency toward "oversubscription" in the second environmental
category, but it should be noted that no systematic analysis of this concern has been
made by the U.S. Government.
Changes in Environmental Organization and Procedures.. The current period
continues to be one of extensive change. Several of the banks are reformulating their
environmental policies, as discussed in sections above on the individual banks. In
some cases, this involves potentially major shifts in resources and in approach.
Because of the current changes underway, some not yet finalized, the experience to
date is more instructive as to the process and what has been achieved so far than as
a guide to future outcomes once new policies take effect. At the same time,
problems of miscategorization, inadequate analysis, bureaucratic inertia, and other
general problems appear deep-seated and are likely to persist, absent fundamental
shifts in lending philosophy that have yet to become operative.
Project Oversight, Evaluation, and the Approval Process.
Impact of U.S. Opposition on the Approval of MDB Loans. The Pelosi
Amendment has been invoked on numerous occasions (albeit on a small minority of
projects considered) by U.S. Executive Directors in all the MDBs, with statements
by directors explaining U.S. opposition. Sometimes it is because of lack of
substantive analysis on important environmental aspects of a proposed loan, or
because of lack of the 120-day lead time before a vote. In virtually every case, the
proposed project has won Board endorsement, with few or no directors from other
countries joining the United States in its concerns, and the projects have gone ahead.
Staff of the U.S. Executive Director at the World Bank report that, recently,
there has been more interest in environmental concerns among other EDs, who now
are more inclined to join in the process of inquiring about environmental issues that
have surfaced through U.S. government or NGO processes. They do not usually
share U.S. concerns about the 120-day deadline for information availability, but they
are more likely to join in substantive inquiries and concern over the need for better
analysis or mitigation.
Effect of "Behind the Scenes" Negotiations. Prior to invoking the Pelosi
Amendment, and in many other cases where it is not invoked, the U.S. Treasury
Department, the U.S. Executive Director's office, the U.S. Agency for International
Development and/or the Environmental Protection Agency may have determined that
a project has problems. In these cases, U.S. officials will have conducted
investigations and/or entered into negotiations with the Bank--first, to get additional
information and then to try to get a satisfactory remedy. In some cases, U.S. officials
and NGOs indicate, improvements are made as a result of these discussions, but the
process is very ad hoc, and these "behind the scenes" negotiations are not formally
Concerns About the Adequacy of Environmental Analysis. There is
widespread agreement that there has been significant improvement in meeting
procedural requirements in MDB policies on environmental screening and
assessment, as well as in institutional capacity among borrowers and consultants
involved. However, problem projects continue to be identified by Bank critics in
which the adequacy of analysis is challenged. The World Bank ENV and OED
evaluations agree that analysis of alternatives is a continuing area of difficulty, as
well as targeting the need for remedying insufficiencies in bank staff training and
knowledge in the EA area.
Some large assessments are done on a rapid appraisal track, sometimes in six
weeks, a timeframe that many experts feel is too fast to allow appropriate data
collection and analysis, or appropriate consultation with the public in the affected
areas. Moreover, experts in U.S. agencies have sometimes identified major gaps in
impact analysis, such as lack of analysis of downstream impacts of dam projects. At
present, it appears that neither the Banks nor the U.S. government have been able to
establish a mechanism for quality control that would consistently identify and rectify
poor quality environmental analysis.
EIAs as Benchmarks during Implementation. Environmental problems
continue to arise as the banks implement projects following their approval. The
existence of an environmental assessment may provide a benchmark that is of critical
value when problems arise. The establishment of the World Bank Inspection Panel
in 1994 arose out of implementation concerns. Recent preliminary investigations by
the Panel substantiate complaints that environmental and social elements included
in loan agreements are not always carried out. According to one observer, it can too
often be the case that once a loan is approved, the bank in question considers the
matter closed and "moves on to other things," with little on-going supervision and
little effort to assure that environmental and other conditions or requirements are
being met. However, bank staff point out that effective supervision requires
intensive environmental staff work, and that the environment staff has been cut back
in recent years as part of over-all bank budgetary constraints.
The Role and Impact of NGOs.
A Key Role in the Evaluation Process. According to U.S. officials, nongovernmental organizations play a key role in the process of identifying
environmental concerns in MDB projects and evaluating the quality of EAs. The
Treasury and other agency staff work to obtain environmental improvements in Bank
projects, but these staff are few in number and cannot monitor all MDB projects on
a systematic basis. They are highly dependent upon notification and/or feedback
from NGOs to identify projects with potential problems, and to document the nature
of problems in the field. Government staff are both dependent on and responsive to
NGOs, as has been the case since Treasury first began tracking environmental
aspects of MDB operations in the mid- to late 1980s. This is an example of how
government and private/NGO actors can work synergistically; however, the
"downside" is that the process is essentially ad hoc, with effective work done on the
relatively few projects that are identified as problems and become the focus of
intensive activity, but little or no attention to others that may also be problematic.
The process also is heavily dependent on the capability of NGO staff who
"volunteer" their services to assist--and pressure--the government and the banks to
take action on the problems they perceive and document. Also, as noted below,
while EAs of "Category A" projects are available and of value, it is less clear how
accessible and useful the less extensive analyses for "Category B" projects are.
Environmental Assessments and Public Dialogue. NGO spokesmen say that
the existence of environmental assessments--especially in a context that provides for
public access--has proven to be very valuable to the process of tracking MDB
activity to identify and work to remedy environmental problems. The EAs provide
documentation and data on project plans and environmental aspects of them, and
they establish the need for mitigation options--often written into loan documents as
conditions, covenants, or requirements--that can be tracked during implementation.
There is broad consensus that the Pelosi Amendment, with its requirements for the
EA and for public availability of environmental information, has been instrumental
in enhancing opportunities for public participation and dialogue.
II. Public Access to MDB Information*
The Pelosi Amendment seeks to strengthen the environmental standards for
multilateral development bank (MDB) projects by making information on MDB
operations available to the public in a timely fashion. It says the United States may
support MDB loans that are likely to have a significant effect on the environment
only if an environmental impact assessment (or a comprehensive summary of such
an assessment) is available to the U.S. Government and the public at least 120 days
prior to the loans being considered by the MDBs' executive boards. This chapter
examines the MDBs' policy statements regarding public access to information, noting
in particular their requirements for disseminating information and the procedures
used to put them into effect. The chapter examines the project descriptions,
environmental analyses, and other relevant documents issued by the banks. A
sample of each type of document for each bank was obtained from their public
information systems and the contents were compared with the guidelines set forth in
the banks' policies on the disclosure of information. The analysis is based on
interviews with staff from the MDBs and U.S. government agencies, and
representatives from various non-governmental organizations (NGOs). A field visit
to El Salvador and Honduras provided insights into the ways banks' procedures for
public access to information work in practice.36
B. General Characteristics of the Disclosure Process
As a result of the Pelosi Amendment and persistent U.S. pressure, all the MDBs
have adopted (or are in the process of adopting) procedures giving the public access
to information about their plans and operations. Previously, the multilateral banks
operated under confidentiality ground rules that limited the amount of information
outsiders could obtain about their procedures or operations. Beginning in 1989,
however, with the adoption of the World Bank's environmental assessment
procedures, the MDBs began to adopt procedures making environmental assessments
available to the public and member country governments prior to their executive
boards' consideration of proposed loans.
In 1993, at the urging of the United States and with the concurrence of other
member countries, the World Bank approved new information disclosure procedures
giving the general public expanded access to certain kinds of information about Bank
Prepared by Jonathan E. Sanford, Analyst in International Political Economy, Foreign
Affairs and National Defense Division.
The author wishes to thank the USAID missions and Inter-American Development Bank
resident missions in El Salvador and Honduras for their assistance during this visit,
particularly their assistance making contacts with key government officials and grassroots
leaders from a diverse sampling of NGOs. The World Bank does not have resident missions
there. Some examples of development programs or situations in these two countries are
mentioned in this chapter. Based on conversations with MDB officials and NGO personnel,
it is very likely that field visits elsewhere would have revealed similar situations. The
findings of this chapter should not be taken as relevant only to Central America.
policy and operations. Also with strong U.S. encouragement, the Asian
Development Bank (ADB) and Inter-American Development Bank (IDB) adopted
similar guidelines in 1994. The International Finance Corporation (IFC) approved
somewhat more limited procedures in 1995. The European Bank for Reconstruction
and Development (EBRD) implemented procedures resembling those of the World
Bank and the IFC in 1996.
In July 1996, top management of the African Development Bank (AFDB)
proposed a draft policy on information disclosure that was less extensive and less
open than those currently used by the other MDBs. With the strong encouragement
of the United States, the AFDB held a symposium for NGOs in December 1996 to
discuss the draft policy and other key issues of concern to African NGOs. According
to the Treasury Department, a new draft information policy similar to those currently
in use at the other MDBs has been sent to NGOs and member country governments
for their comment.
Generally, the MDB procedures provide more and prompter access to
information on MDB-financed projects when a government is the borrower or the
guarantor for a loan. For reasons related to concerns about proprietary business
information, less information is made available to the public and that information is
provided at a later stage in the MDB deliberation process when the borrower is a
private organization and the loan is not officially guaranteed.
C. Rationale for Public Disclosure
In a 1994 publication explaining its new information disclosure policy, the
World Bank said it "recognizes and endorses the fundamental importance of
accountability and transparency in the development process. Accordingly," the
document reported, "it is the Bank's policy to be open about its activities and to
welcome and seek out opportunities to explain its work to the widest possible
audience.37" The policy applies to the Bank's two largest components, the
International Bank for Reconstruction and Development (IBRD) and the
International Development Association (IDA).
The World Bank cited several justifications for its new policy. Broader
distribution of information would help expand public understanding and support for
development activities, it argued. The dissemination of information to local groups
and non-governmental organizations would facilitate their participation in Bankfinanced projects. The Bank said this would strongly enhance the effective
implementation and sustainability of those projects. Finally, it reported, increased
openness would help keep the Bank accountable to its stockholders, strengthen its
relationship with its bondholders, and improve its staff's understanding and
participation in the Bank decision-making process.
World Bank. The World Bank Policy on Disclosure of Information. Washington, D.C.:
The World Bank, March 1994, p. 2.
Taking this all together, the World Bank concluded in its policy statement,
"there is a presumption in favor of disclosure.38" To facilitate the distribution of
information, the Bank created a Public Information Center (PIC) as a principal
contact for people seeking to obtain Bank documents. The Bank directed that the
staff should prepare a variety of documents describing projects in the pipeline (i.e.,
under consideration as possible loans). It also specified that other existing
documents or studies should also be made available to the public through the PIC.
The other MDBs have explained their information access policies in similar
language. All say that broader public access to their data will help improve public
understanding and support for their activities, enhance the effectiveness of their
operations, and improve accountability. The IDB and ADB echo the World Bank's
presumption in favor of disclosure. The IDB states, in its policy statement, that
"absent a specific reason to the contrary, any Bank policies which affect the control
of Bank information should be interpreted as permitting public release of the
information.39 The ADB notes in its policy on disclosure that there may be situations
where information may not be released. Still, it says, the ADB "should provide the
fullest possible degree of transparency and disclosure in all areas of the Bank's
operations." To implement the policy, it suggests, "the Bank should instill among
its staff `a presumption in favor of disclosure of information,' in the absence of
[certain specified] constrains.40"
The institutions whose activities focus primarily on the private sector put more
emphasis on the need for confidentiality. The EBRD says its policy is "based on the
presumption that, whenever possible, information concerning the Bank's operational
activities would be made available to the public in the absence of a compelling
reason for confidentiality.41" The IFC has more reservations. Its policy statement
says "there is a presumption in favor of disclosure where disclosure would not
materially harm the business and competitive interest of clients.42
Management at the African Development Bank recommended, in its March
1997 policy proposal concerning the disclosure of information, that the Bank adopt
"a presumption in favor of public disclosure of information about the Bank Group's
Ibid., p. 3.
Inter-American Development Bank. Memorandum to the Board of Executive Directors
titled "Information disclosure policy," transmitting document titled "Policy on Disclosure
of Information." GN-1831-3, November 2, 1994, p. 2, paragraph 3.3.
Asian Development Bank. Board of Directors. Paper titled "Confidentiality and
Disclosure of Information." R134-94, August 18, 1994. The quotes are found on pp. 20 and
European Bank for Reconstruction and Development. Document titled "Public Access and
Disclosure of Information." BDS95-68 (Final), April 3, 1996, p. 1.
International Finance Corporation. Policy on Disclosure of Information, January 1997, p.
5. IFC Executive Vice President Jannik Lindbaek says, in his introduction to this document,
that the IFC policy "is designed to balance the need for openness and transparency with the
need for confidentiality to protect the competitive and proprietary business interests of our
private sector clients." Ibid., p. 2.
activities." It said that "existing or future Bank Group policies which affect the
control of Bank Group information should be interpreted as permitting public release
of such information.43" Nevertheless, the draft AFDB policy specifies several kinds
of information which should remain confidential by definition. Most are comparable
to exceptions allowed by the other MDBs. The list includes, however, "Information
concerning the Bank Group's operations, including proposed projects whose public
disclosure might prove prejudicial or adverse to the national interest of any member
states." It also exempts "Other information which the Bank Group, an individual
member state, or a co-financing institution determines to be confidential or sensitive
and which would adversely affect its interests.44 Treasury and the USED Office at
the AFDB say they believe that, with some additional fine-tuning, the final policy
should be similar to that of the World Bank.
D. Who Uses the Banks' Public Information Centers?
The World Bank Public Information Center reports45 that, in 1996, it received
20,546 requests for information by telephone or in person from requestors whose
constituency type could be identified. (Another 10,133 requests by fax or electronic
mail were not categorized.) Of the requests received in person or by telephone, over
two-thirds came from businesses and nearly another quarter came from public
agencies (including governments). Inquiries from scholars and other academics
comprised 8% and questions from members of the World Bank staff accounted for
another 6% of the total. Less than 3% of all inquiries in this total came from nongovernmental organizations. The World Bank PIC distributed 9,493 documents in
1996 in response to these inquiries. Staff appraisal reports and other loan documents
accounted for half, while economic and sector reports comprised almost another third
of the total. Environmental assessments accounted for 7% of the documents
distributed, while other environmental documents (national environmental action
plans, policy statements, etc.) comprised another 2% of the total.
The ADB Public Information Center received inquiries from 666 members of
the public in 1996.46 Nearly half came from business firms, while another quarter
each were from individuals and institutions. Inquiries from non-governmental
organizations comprised about 6% of the total. The Asian Bank PIC distributed
1,672 documents in 1996 in response to these inquiries. Technical assistance reports
and loan documents accounted for over half, while country economic reviews and
country strategy papers together accounted for almost a quarter of the total.
African Development Bank. Memorandum to the AFDB Board of Directors from Cheikh
I Fall, Secretary-General. ADB Group--Draft Policy on Disclosure of Information, Revised
Document. ADF/BD/WP/97/11/Rev.1. March 16, 1997, para. 3.1 and 3.3. This version
incorporates changes which the Bank's Joint Administrative Affairs and Operations
Committee made in the proposal originally submitted by AFDB President Omar Kabbaj in
Ibid., para. 3.4, items 6 and 11. Emphasis in the original.
World Bank. The World Bank Public Information Center. Annual Report, FY96, July
1996. Distributed by the PIC on its home page and at http://www.worldbank.org/html/pic/
Information provided by the office of the U.S. Executive Director, ADB.
Summary EIA documents comprised less than 6% of all documents distributed to the
The IDB says47 that, in 1996, its Public Information Center received 9,217
inquiries by telephone or in person. A breakdown according to the type of requestor
was kept for this data. (The IDB PIC also received another 1,562 requests by fax or
electronic mail for which no breakdown is available.) Of the telephone or personal
inquiries, almost 53% came from the private sector. Requests from government
agencies or other international organizations comprised about 17%, while inquiries
from IDB staff accounted for another 6% of the requests. About 13% of the
telephone and personal inquiries came from non-governmental organizations and
about 12% came from academics.
E. Types of Information Available to the Public from the Banks
Description of Current Pipeline. The World Bank's Monthly Operational
Summary (MOS) has long been a major vehicle for informing Bank staff and
outsiders about the status of pending loan proposals (i.e., the "pipeline"). The MOS
contains a brief paragraph describing the project and an indication (updated monthly)
of the latest action on the proposal. Except for those in the earliest stages of
consideration, an environmental impact category is provided for each project.
Redesigned in November 1996, the MOS is now easier to read but less clear about
the status of proposed loans. The MOS is an internal document, distributed to
executive directors and senior Bank management or officials. In practice, however,
copies circulate widely outside the Bank. A commercial version (with a larger press
run) is available by paid subscription. Copies of the MOS may be viewed at the
World Bank PIC but are not distributed electronically by the Center.
The other MDBs provide similar reports. Ten times annually, the IDB issues
a report titled IDB Projects (available by subscription), showing the status of all loan
proposals under consideration by the Bank. This report is also available free from
the IDB's world wide web Internet page under the "business opportunities"
heading.48. The ADB also publishes a report, ADB Business Opportunities Monthly
(available by subscription), showing the status of projects in its pipeline. The
identical report is also distributed electronically through the ADB home page.49 For
the EBRD, the list of projects in the pipeline shown on its home page includes only
those offering procurement opportunities.50 Private sector projects are not listed.
Information supplied by IDB External Relations office.
This information can be found at http://www.iadb.org/pipeline/projects.html, at "Project
Pipeline: listing by country." That address is http://www.iadb.org/pipeline/zcountry.html.
The address for the ADB home page is http://www.asiandevbank.org. On that web page,
click on "business opportunities" and on the next web page, click on "proposed projects."
The list of proposed projects can be found directly at http://www.asiandevbank.org/adbbo/
The address for the EBRD web page is http://www.ebrd.com. The EBRD does not use the
".org" extension. Click on "operations" to get to the listing for "project summary
documents." The direct address is http://www.ebrd.com/opera/index.html.
The ADB pipeline document often similarly omits information on prospective
private sector projects.
The AFDB publishes a quarterly operational summary of the projects it has
under consideration. The Treasury Department says that, once the AFDB is linked
to the Internet and its new disclosure policy is in effect, information on projects in
its pipeline should also be available from the AFDB web page.
The IFC also reportedly prepares a Monthly Operational Summary for the
projects it has under consideration. A confidential document, this report is shared
with member country governments but is not available to the public.
Information on Proposed Projects.
Public Sector Projects. The World Bank operational manual requires its country
departments to file a Project Information Document (PID) with its public information
center when they approve an Initial Executive Project Summary (IEPS) for a project
or an Initiating Memorandum (IM) for an adjustment operation. These documents
are the first official signal by Bank management that a project is under consideration.
Initially, PIDs were brief two page statements. Now, reportedly as a result of U.S.
encouragement and oversight, they are longer and more detailed. The operational
manual says PIDs must be updated as projects develop and revised later if major
changes occur in the plan. PIDs are available to the public electronically from the
World Bank's worldwide web page on the Internet. As discussed below, the World
Bank information disclosure policy says that PIDs should contain information on the
project's likely environmental effects.
The IDB, ADB, and IFC provide summary descriptions of proposed projects on
their Internet pages similar to those from the World Bank. The IDB says the full text
of a project proposal may be purchased (free to nationals of the borrower country)
from its PIC. The EBRD began listing summaries on its page in September 1996,
but the coverage is currently incomplete. Treasury officials suggest this may stem
from the fact that the EBRD policy is not retroactive and from the greater
confidentiality the EBRD accords to private sector projects.
AFDB management says the AFDB should use a similar procedure. Once the
AFDB formally adopts a new information disclosure policy and once the AFDB is
fully connected to the Internet (reportedly scheduled for late 1997), its prospective
project briefs (PPB) will be available from its public information center at least 6
months prior to the project's presentation to the Board. The IDB and ADB say
information on public sector projects is listed as soon as a project enters the pipeline.
The EBRD makes information on public sector projects available following Initial
Review, a stage comparable to the IEPS process at the World Bank.
Private Sector Projects. All IFC assistance goes to private firms or majority
state-owned firms in the process of privatization, without government repayment
guarantees. To protect the interests of its clients, the IFC does not distribute
information about pending projects (as in the World Bank) when they have received
initial authorization by management to prepare a project design. Rather, the IFC
information access policy says that summary information on projects will be
available through the World Bank PIC at least 30 days before they are scheduled for
consideration by the IFC executive board.51 The IFC may waive the 30 day notice
provision if it believes market conditions or other factors make observance of the 30day notice period inappropriate.52 The EBRD and ADB follow the IFC example in
their private sector non-guaranteed projects. AFDB management recommended, in
its February 1997 information disclosure policy proposal, that the African Bank do
likewise for any private sector projects it might finance.
Environmental Studies: Public Sector Projects. The World Bank, IDB,
ADB, AFDB, and EBRD require borrowers to prepare environmental impact
assessments (EIAs) for all public sector projects the banks believe likely to have a
major impact on the environment. In many cases, copies of the EIA summary for a
project may be obtained electronically from the banks' world wide web pages.
Printed copies of the full EIA can be purchased at a nominal charge. They are
generally free to nationals of the country where the project is located.
The IFC is a legally separate organization from the IBRD and IDA. It has its own staff and
its own executive vice president, overseeing IFC operations. IFC executive vice president
reports to the President of the World Bank Group, however, and the IFC executive board
consists of the same individuals who comprise the executive board of the other World Bank
International Finance Corporation. Policy on Disclosure of Information, January 1997, p.
8. The IFC says, in its information disclosure statement, that project summary documents
should contain a brief factual summary of the main elements of the project, its sponsors, the
project company's shareholders, total project cost, the location of the project, a description
of the project and its purpose, the environmental category, a brief description of any
environmental issues (including mitigating environmental effects) and methods for accessing
TABLE 1. Information Available to the Public from Each MDB
Name of Project
Public sector: both
Private sector: like WB
often 6 mo
At least 60 Summary EIA
days before released 120
Board vote days before
min 60 days
At least 30
most have no
min 30 days
before Bd vote
Period from EIA
to Board Action?
Environ Analyses Before
TABLE 1 (continued)
Environ rept None
on IDA proj
plans (if submitted)
both to be
Environ Brief No
Inspection Panel Yes
by the MDB
Report & Recommendation
from PIC, full
RRP available if
seen by Board
Country Econ & Country: when No
given to Board*
okayed by Board
*but not country strategy paper
Environmental Studies: World Bank and IDB. The World Bank and IDB say
EIAs for all potential public sector projects will be available publicly as soon as they
have been released publicly in the borrower country and submitted officially to the
respective banks. Technically, these two banks do not specify a minimum time
period which must elapse after release of this information before loans can be
considered by their Executive Boards. In practice, however, these documents are
generally available well in advance of board deliberations. The World Bank and
IDB say their staff may not visit a country to assess an environmentally-sensitive
project until after the prospective borrower has released the EIA to the public and
given a copy to the banks. Most projects require at least 5-to-6 months additional
work following the assessment mission to prepare them for final consideration.
Consequently, in most case, 120 days will elapse between the release of the EIA and
Board action. Copies of the EIA for proposed IDB projects are available for a charge
from its PIC.
The World Bank and IDB say, in their information disclosure policy statements,
that bank staff will prepare environmental analyses for category B projects. These
are supposed to be available through the World Bank or IDB public information
centers either as annexes to PIDs or as separate environmental documents. The IDB
information disclosure policy also says that copies of its Environmental Brief for
each project should be available to the public by request from headquarters, country,
and European offices. This document shows the IDB staff's initial assessment of a
project's potential environmental impact and its recommendations concerning means
of addressing those issues during the project preparation process.
The World Bank operational manual provides that, when IDA finances a
category B project, the borrower may submit an environmental analysis of its own
to the Bank. These are then to be made available in the borrower country in the same
manner as are EIAs for projects with more substantial environmental effects. World
Bank officials report that few if any separate analyses for IDA projects have been
The World Bank information disclosure policy also says that environmental
data sheets for "all projects in the Bank lending program" will be publicly available
through the Bank's PIC. Updated quarterly, these are supposed to briefly describe
the major environmental issues identified or suspected in the project and issues of
lesser scope. They are also supposed to show what actions are planned to mitigate
adverse impacts. Copies are supposed to be available from the World Bank PIC web
The World Bank encourages, but it does not require, countries to prepare
National Environmental Action Plans (NEAPs). In many cases, the Bank contributes
technical assistance and seed money to the preparation of these plans. The Bank
operational manual says that, if a country files such a plan with the Bank and if the
country consents to public distribution of the plan, the Bank country desk must send
a copy to the PIC. The public can then order a printed copy of the plan from the PIC.
One such report (from Bangladesh) is currently listed in the PIC menu.
Environmental Studies: ADB. The ADB environmental review and
information disclosure policies say that Summary Environmental Impact
Assessments (SEIA) of both public and private sector projects to be made available
to the Board at least 120 days prior to Board consideration. (The 120 day
requirement is embedded in the ADB environmental rules rather than in its
information disclosure policy.) The Treasury Department says that, in accordance
with Bank policy, the ADB Board provides the public with access to these
documents upon their receipt. The ADB information disclosure policy says that
others related documents -- Environmental Impact Assessments (EIAs), Initial
Environmental Examinations (IEEs), and Summary Initial Environmental
Examinations (SIEEs) -- for category A and category B projects with significant
environmental impacts shall also be available to the public on request after they have
been released locally and transmitted to the Bank.53
Environmental Studies: EBRD. The EBRD requires that EIAs be prepared by
the project sponsor for all projects having a potentially significant effect on the
environment which cannot be readily identified and for which remedial measures
cannot easily be prescribed.54 The project sponsor must make the EIA and an
executive summary in the local language available for public comment in the country
where the project will be located, in accordance with relevant national legislation.
For public sector operations, the EBRD requires that at least 120 days must elapse
before a loan proposal may be considered by the Executive Board. The public may
examine the EIA studies for EBRD projects at the Bank's PIC, though no
photocopies may be made and copies are not available (electronically or otherwise)
to potential users outside the PIC. The EBRD recently began allowing the public to
view draft EIA studies at its PIC. The EBRD requires that an Environmental
Analysis be prepared for category B projects that are likely to have significant
environmental effects. The EBRD does not require, however, that these must be
available to the executive board or the public any particular number of days before
a loan may be considered by the board.
Environmental Studies: AFDB. The president of the AFDB proposed in
March 1997 that environmental impact assessments prepared by the borrower
country should be made available to the public (including affected groups and
NGOs) in the borrower country before the AFDB proceeds with its appraisal of the
proposed project. No specific time period is mandated. As with the comparable
process at the World Bank, however, more than 120 days are normally required to
take a project from appraisal to final submission to the executive board. A proposal
to allow countries to restrict circulation of this information outside their borders was
dropped in the March version of the plan, as was a proposal allowing the AFDB
Board to restrict public access to summary EIAs. The latter, prepared by the AFDB
staff, would contain its conclusions and recommendations regarding the project.
Both documents will now apparently be available from the Bank's PIC.
Environmental Studies: Private Sector Projects. Less information is publicly
available and it is provided later when the MDBs assist private sector firms in the
absence of government repayment guarantees. The IFC information guidelines say
ADB policy statement Confidentiality and Disclosure of Information, para. 39.
The EBRD says these are category A projects. EBRD. Public Access and Disclosure of
Information. Document BDS95-68 (Final), April 3, 1996, p. 7.
that EIAs and accompanying summaries for category A projects will be released
through the World Bank Group PIC at least 60 days before a project is considered
by the IFC executive board. An environmental review summary, less extensive than
a full EIA, is released for category B projects at least 30 days before board
The U.S. Government and NGOs contend that the IFC often lists as category B
projects whose characteristics would suggest an "A" categorization is more
appropriate.55 In an effort to respond to these concerns about "Big B" projects, the
IFC says that more scrutiny will be given to category B projects which have "special
components that may cause additional environmental impacts."56 Project sponsors
will be required to do additional environmental studies of these components and to
release the results to locally affected groups as part of the appraisal process. It is not
clear whether the environmental review summaries for these projects will be
upgraded to full EIAs or whether they will be as publicly available as EIAs for
category A projects. The World Bank PIC evidently will still treat these as category
B projects, releasing their environmental review summaries a least 30 days (not 60
days, as if they were category A projects) before the loan is scheduled to go to the
The EBRD rules say that EIA reports and summaries must be released to the
public and provided to the executive board at least 60 days before a project is
scheduled for board consideration. The rules say this must also occur at least 30
days before the staff prepares a proposal for its final examination by top EBRD
The Asian Bank's information rules state that EIAs for private sector projects
must be released publicly and provided to the ADB Executive Board at least 120
days before Board consideration. However, the rules also say ADB management
may reduce the time period or block any release if it decides commercial conditions
require that no information should be released publicly before the proposal goes to
the Board. The rule proposed by AFDB management in its February 1997 draft
policy does not mention any similar limitation on the release of EIA studies for
private sector loans. It does indicate, however, that information on private sector
projects (including environmental categorizations) will be available to the public 30
days before a project is presented to the Bank's Executive Board.
The IDB does not distinguish, in its statement about public access to
environmental data, between loans to public and private sectors borrowers. The
disclosure requirement of EIA studies applies to both kinds of borrowers.
Availability of Loan Documents. For many years, MDB loan documents were
not available publicly, though copies were often obtainable unofficially from bank
See, for example: Christopher H. Chamberlain. Public Access to Information at the
International Finance Corporation and the Multilateral Investment Guarantee Agency: A
Bank Information Center Review. A study prepared for the Bank Information Center, March
IFC, Policy on Disclosure of Information, pp. 9-10.
or member government officials. In recent years, the MDBs have taken steps to
allow the public access to edited versions of these documents.
At the World Bank, Staff Appraisal Reports (SARs) are the basic documents the
executive board reviews when it considers a proposed project. Since 1993,
prospective borrowers are told the SAR will be available to the public. Borrowers
can ask that sections be deleted if they consider them confidential or sensitive or
likely to adversely affect relations between the Bank and the borrower country
government. Summaries of the SARs for approved loans are available from the
World Bank PIC web page. Printed copies of the full SAR may be ordered, for a
nominal price. Nationals of the borrower country can reportedly obtain the full SAR
at no charge from the field office responsible for that country. The Bank operational
memorandum says the staff must submit an update to the PIC if major changes are
subsequently approved in a project. However, there seems to be no device for
requiring that updates be filed.
The other multilateral banks have (or, in the case of the AFDB, plan to have)
similar procedures for releasing loan proposals to the public once their executive
boards decide to finance the projects. Generally, the text available to the public is the
same text that was submitted to the banks' executive boards. However, the banks'
information access policies usually say sensitive or confidential information about
projects may be transmitted to the boards by other means. At the IDB, loan
documents for private sector non-guaranteed projects and regular IDB public sector
loans are both available to the public. At the AFDB, management says the
investment briefs for private sector projects will be available to the public 30 days
before Board presentation once they have been edited to remove all proprietary
information. Project appraisal reports (the loan documents that go to the Board) will
evidently not be available for AFDB private sector projects. The ADB, EBRD, and
IFC do not distribute loan documents for their private sector projects, though
summaries are provided in their annual reports, web pages, and press releases.
Other Information. The MDBs make public a variety of other documents or
reports. Economic reports on individual countries or staff studies of particular
economic issues can often be obtained, for example, from their web pages.
Generally, as the World Bank operational manual says, borrower countries may
identify confidential information they wish deleted from the public version of the
studies and MDB staff will modify them "as appropriate." The World Bank has
established 240 depository libraries, three-quarters of them in developing countries,
where members of the public can read any of the books or studies that the Bank
publishes (about 300 titles a year). The ADB has also established comparable
depository libraries in its member countries.
The ADB Web Page. The ADB supplies a considerable amount of information
through its web page. Besides project information documents and environmental
data, for example, the public can access statistical information on ADB borrower
countries, lists of ADB publications (often with actual text or summaries), press
releases and descriptions of approved projects, country economic reviews, and policy
papers. The public can also order copies of the ADB's country strategy papers and
country notes for individual countries. Much of the information available from the
ADB web page is incomplete or out of date, however. For example, most country
economic studies in April 1997 were several years old (that for India being dated
1992). Only 8 country operational strategy papers were listed (for Kazakstan, Nauru,
Kyrgyz Republic, Cambodia, India, Maldives, Pakistan, and Vietnam). No
information was provided on the page offering access to ADB country notes. The
ADB is currently taking steps to improve the content and scope of its web page.
The EBRD Web Page. The EBRD web page offers a summary description of
the Bank's current operations and policies in each borrower country (in effect, its
country strategy.) It also supplies detail about each signed project in the pipeline, a
summary of new economic or business laws in borrower countries, and a list of titles
(without text) of EBRD publications or studies. Most of the information seemed (in
April 1997) up to date, though often little detail was available.
The IDB Web Page. Unique among the MDB web pages, the IDB web page
contains articles on Latin American development issues or Bank activity in the
region. It also provides access to a substantial body of socio-economic data on IDB
borrower countries, the text and explanations for IDB policy statements, text of IDB
strategy papers and best practice guidelines for addressing particular issues, and a list
and brief synopsis of IDB publications. Information is available both in English and
Spanish. No country strategy paper is provided.
The World Bank Web Page. The World Bank web page supplies information
on Bank policy and operations. It provides, for example, official statements on issues
of current interest and articles on development issues and Bank activity from the
Bank's monthly news report. It offers summary economic reports on particular
regions or countries. These were current as regards their content, in April 1997, but
no information was available for many countries. (None were listed for countries in
sub-Saharan Africa, for example.) Country economic reports are valuable, but
copies of the Bank's country strategy papers are not provided. The web page lists all
the titles (966 items) in the Bank publications catalog, with a detailed summary of
the more "popular" titles and articles from the Bank's economic journals. A search
facility was provided, allowing readers to search the Bank publication list for works
containing key words or phrases. The Bank has a similar facility on its home page
allowing readers to search these sources as well as documents not in the Bank
catalog (minutes of public seminars, statements by study groups, consultant reports,
and other selected Bank internal documents) for information.
The World Bank web page has links to other web pages, such as those for the
Consultative Group to Assist the Poorest (CGAP), the Special Program for African
Agricultural Research, the Consultative Group on International Agricultural
Research (CGIAR), the International Center for the Settlement of Investment
Disputes (ICSID), the Multilateral Investment Guarantee Agency (MIGA), the
International Finance Corporation (IFC), and the Global Environment Fund (GEF).
All are or have been affiliates of the World Bank.
The IFC, MIGA and GEF Web Pages. The IFC web page57 provides
summaries of IFC discussion papers and studies, with full text in some instances. It
supplies access to the IFC's Emerging Markets Data Base, with information on stock
The address of the IFC web page is http://www.ifc.org.
markets in developing countries. It also supplies access to the IFC's data base on
trends in private investment in developing countries. Text of some IFC policy
statements are also available. Project summaries and environmental data are
supplied via the IFC listing on the World Bank PIC web page. The MIGA web
page58 provides a description of the organizational structure, services, and recent
history of MIGA. It also lists upcoming activities. No description of prospective
projects or environmental data is supplied, however. The GEF web page59 provides
information on the organization's structure and purpose as well as copies of its semiannual newsletter and a list (titles only) of GEF working papers. It shows the
countries where the GEF has projects, but no information is provided about potential
projects or their likely environmental effects. The Treasury Department maintains
that the IFC (and, presumably, the MIGA) are not covered by the Pelosi Amendment.
(See discussion in the next chapter.) It is not evident, from a reading of the
Amendment, that the GEF is covered by that legislation.
The AFDB. The AFDB hopes to have its web page in service by late 1997. At
the present time, nearly half the countries of sub-Saharan Africa lack effective
participation in the Internet. The United Nations, USAID, World Bank, and others
are seeking to initiate and expand connectivity in African and other regions. AFDB
management recommended in February 1997 that country strategy papers should be
available to the public from its new PIC following consultation with the borrower
and approval by the Board. Treasury says that the AFDB directors later agreed that
sensitive or confidential portions of those papers should be removed prior to
F. Information Not Available to the Public
Several types of information on MDB activity are not accessible. The
proceedings of the banks' boards of executive directors are not available, for
example. This includes statements and votes by members of the boards, text of
resolutions or documents prepared for consideration of the boards, or similar
information they chose not to release. However, individual executive directors can
release information on their own votes and statements if they choose.
Similarly, internal documents, reports, or memoranda prepared by bank staff or
by outside advisers for use in its internal decision-making process are not available
to outsiders, executive directors, representatives of member country governments,
and the public. Operations evaluation reports on particular activities, project
evaluation reports on projects currently under implementation, recommendations or
determinations about proposed projects, information on some Bank financial
management operations or current procurement bidding, and other similar data are
considered confidential and not circulated. Access to information received on a
The address of the MIGA web page is http://www.miga.org.
The address of the GEF is http://www.worldbank.org/html/gef/gefgraph.htm. The GEF is
a legally separate international organization, with it own staff and decision-making structure.
As its web address indicates, however, the GEF depends on the World Bank for many
technical and operational functions.
confidential basis from borrowers, countries, or other financial institutions is
The World Bank, IDB, and ADB have established independent panels with
authority to investigate whether the banks have complied with their established
policies and procedures in specific situations. At the World Bank, it is called the
Inspection Panel. At the IDB and ADB, respectively, they are called the Independent
Investigation Mechanism or Inspection Committee.
Private citizens, groups, or others may appeal to these panels for assistance if
they believe they have been adversely affected because a bank failed to follow its
own policies or procedures on a bank-funded project. If the World Bank, IDB, or
ADB executive board believe a sufficient complaint has been made, it may ask the
independent panel to study the problem. The panels have full authority to interview
bank staff or management, hold hearings, conduct field inspections, and examine all
relevant bank files or information. The panels file their reports with the banks'
executive boards. However, board action is required in a specific period of time and
the guidelines specify that the banks shall release these reports to the public within
two weeks (seven days for the ADB and fifteen days at the IDB) of board action.
The independent panel procedure is not a device for releasing internal bank
communications and confidential data publicly. The World Bank guidelines specify
that "Documents of a confidential nature will not be released by the Panel without
the express written consent of the party concerned." The IDB guidelines say "The
Panel shall maintain the confidentiality of any information to which it has access, but
which is required by Bank policies to be confidential." Nevertheless, confidential
information can be communicated to the banks' executive boards and the panels can
make findings based on that information without revealing it publicly. The
procedure seems to suggest that actions by the World Bank, IDB, or ADB staff or
management that violate their institutions' declared policies cannot be hidden from
public view simply on account of the banks' rules concerning confidentiality.
G. Limitations of the Current Disclosure Procedures
Availability. Spokesmen for non-governmental organizations indicate
dissatisfaction with the adequacy of information disclosed by the banks. For
example, they report that MDB resident missions (MDB offices located in borrower
countries) have declined to supply NGO requestors with copies of EIA studies or
other project information that should be available publicly. The USED office at the
ADB says this has never happened at the Asian Bank. Spokesmen for other MDBs
admit that some of their local personnel are not familiar enough with the new bank
policies. They acknowledge that more work needs to be done to attune them with
the new procedures. Some of the NGO reports about non-cooperation by MDB
country offices are quite recent.
There are indications that NGOs in borrower countries may not be relying on
MDB country offices for information on pending projects. The IDB offices in
Honduras and El Salvador indicated, for example, that they had received relatively
few requests from local groups for environmental information on proposed projects.
An NGO in El Salvador reported that its people had to travel to Washington, D.C.
to obtain information on a World Bank project of particular concern. (The World
Bank has no office in El Salvador, though it does have a regional office in Costa
Rica.) On the other hand, staff report -- and interviews with NGOs and municipal
officials in the two countries affirm -- that the MDBs often require prospective
borrowers to consult widely with local groups and communities about environmental
and other issues during the project preparation process. In Honduras, for example,
local NGOs were a major source of environmental data for several IDB projects.
To publicize and distribute information, the MDBs rely heavily on the internet.
Many NGOs argue that this places an undue burden on local groups and
organizations. Spokesmen for local NGOs in El Salvador and Honduras told the
author in September 1996, for example, that they lack the funds and capacity to use
the internet. Many developing countries have only been recently connected to the
internet via local networks. (See box on the following page.) Telephone service is
often very expensive and undependable and many users must pay long-distance
charges to connect with internet providers inside their country. The NGOs claim that
local MDB offices have not been willing, despite claims to the contrary by
headquarters officials, to allow local NGOs or communities to use their network
connections to access information from the banks' public information centers. MDB
spokesmen say that network connections will improve in most countries in the future
and the internet is the fastest and most cost-effective method available for the
worldwide distribution of information on their operations.
Some MDB officials argue that it would be wrong to slow the pace of MDB
operations by requiring the physical distribution of printed material to local
requestors because some local NGOs lack the resources to subscribe to Internet
services. NGOs say it is a mistake to use technical "fixes" that are beyond the
organizational and financial capabilities of most potential beneficiaries.
Both points have supporters, but they argue from different perspectives. The
internet is an inexpensive way for the MDBs to disseminate information, but it is
currently an expensive way for private citizens and NGOs in developing countries
to receive that information. Many developing countries lack effective internet
service and the service often costs more than most private citizens and most NGOs
can afford to pay. (See box.) Governments are sometimes reluctant to see private use
of the internet expand because of concern about implicit challenges to their authority
caused by the free flow of information and ideas, foreign cultural influence, security,
or the loss of revenue from their current telecommunications setup. Often, the local
networks in developing countries are connected only through intermediaries in
Europe or North America. This increases their cost and decreases their flexibility.
In dollar terms, the cost of internet service is often higher in low-income countries
than in middle income countries. This is particularly so if relative income levels are
taken into account. The number of users (particularly private or non-official users)
connected to the internet most developing countries is relatively small, by world
standards. In sub-Saharan Africa, according to one expert, "those [countries
Internet Service in Developing Countries:
Availability and Cost
Most developing countries have some access to the internet's world wide
web, though in some the extent and scope of the available service is limited.
Many poor countries, however, lack internet connections. In Asia, at least
10 countries have no connectivity. These include Afghanistan, Bhutan,
Burma, Cambodia, Laos, Kiribati, North Korea, Solomon Islands, Tajikistan,
and Vietnam. For the most part, the MDBs do not have large loan programs
in these countries.
On the other hand, the World Bank's loan program in sub-Saharan
Africa is large and comprises a substantial share of its concessional lending
operations. Nevertheless, at least 18 countries of the region have no public
internet connections. These include Burundi, Cape Verde, Chad, Congo,
Djabuti, Eretria, Equatorial Guinea, Gambia, Gabon, Guinea, Guinea Bissau,
Liberia, Malawi, Mauritania, Rwanda, Sierra Leone, Togo, and Zaire.
Several other countries with internet connections seem to have only limited
The cost of internet service varies considerably from country to country.
A brief survey of available information or inquiries to providers provided the
following information on the monthly cost of dial-up service. The price is
usually the cost for unlimited hourly access, though in some cases an hourly
use charge was levied. In such cases (marked*), a 10 hour monthly use is
assumed. Access to a computer and local telephone service are required and
taxes may be levied, though these costs are not included in the figures below.
For reference, the average monthly income in each country is also shown.
Dialup Per Capita
Sources: Network Resource Startup Center (http://www.nrsc.org), USAID
(http://hawkeye.info.usaid.gov/africalink/search/isps-cpr.cfm), direct inquiries to providers,
and World Bank, World Development Indicators, 1997, table 1.1.
connected to full Internet Providers score the least density [of local connectivity] in
If the MDBs want to use the internet as their principal means for channeling
information to the public, they might help NGOs in developing countries make more
effective use of the medium.61 In most countries, the MDBs use leased lines to
connect their resident missions electronically to their headquarters offices. At little
additional cost to themselves, the banks could set up work stations in their country
offices where NGOs, scholars, and other appropriate members of the public could
connect via the internet to the banks' public information centers or to other sources
of information on development issues. This need not hamper the work of the banks'
local personnel. The MDBs would need to be sure that their local representatives
understand and comply with their policies regarding public access to MDB
As discussed in Chapter I, the MDBs require a full environmental assessment
of projects only when they believe they might have a substantial effect on the
environment. The decision whether a project meets this standard is made at the
beginning of the process and is based on criteria set forth in the Bank's
environmental assessment procedures and the professional judgment of Bank staff.
MDB project officers have a principal voice in the categorization process. The
decision is not subject to appeal by outsiders or member country governments.
Generally, a project's environmental category is not reassessed or changed as it
moves through the review process.
Lishan Adams, African Connectivity, Problems, Solutions and Actions: Some
Recommendations from Inet'96, at http://www.nsrc.org/AFRICA/regional-reports/inet.txt.
There is controversy about the extent to which the World Bank has fostered connectivity
in Africa. Some have suggested that the Bank has been the principal force in wiring the
continent into the internet. (See, for example: Christopher Koch. "It's a Wired Wired
World." WebMaster, March 1997.
Internet version: http://www.cio.com/WebMaster/
030197_wired_content.html.) The World Bank hosted meetings with the Internet Society
and White House in 1994 that endorsed the Society's proposal for a plan to establish full
connectivity in 20 African countries then lacking service. The Bank subsequently sponsored
the participation by some potential African internet providers in various training programs
held by the Society. It also helped finance the initiation of full internet service in several
African countries. In 1995, the Bank initiated its Information for Development Program
(infoDev), which held its first donors meeting in November 1995 and began funding work
programs in April 1996. The creation of programs to help countries better use connectivity,
rather than the funding of connectivity itself, seems the principal focus of infoDev activity.
(See: http://www.worldbank.org/html/fpd/infodev. Also see other sources generated by the
query "internet" on the World Bank home page.) The Bank's Electronic Media Center says
it generates ideas and proposals for strengthening the internet's infrastructure in developing
countries and for expanding the internet's use as a development tool.
Nevertheless, many countries in Africa already had internet connectivity programs
underway before the World Bank initiated its efforts in this area. The UN Development
Programme, USAID, the French research agency ORSTOM, and several others have been
active in the region.
The records of the Network Startup Resource Center
(http://www.nsrc.org) show that, for the African countries mentioned in the WebMaster
article and for other countries in the region as well, the first "ping" evidencing full internet
connectivity occurred well before World Bank involvement. The World Bank's technical
efforts seem designed to strengthen and extend these existing initiatives.
NGOs and others argue that many projects with potentially significant
environmental effects are given a lower rating (category B rather than A, in the
World Bank system, for example) to avoid the delay that would likely be caused by
preparation of a full EIA. The banks study the potential environmental effects of
category B projects, but in these cases, their analyses are generally less extensive and
the amount of information provided to the public is generally less than that available
for full EIAs. Some MDBs provide minimal information to the public on the
analysis of environmental implications of category B projects.
Confidence in the banks' system for environmental categorization could be
enhanced if the decision making system were more transparent and autonomous.
Also, procedures might be adopted allowing the public or member country
governments to provide formal input during the categorization process or to appeal
categorization decisions to the banks' inspection panels or their executive boards for
Completeness of the Banks' Lists of Pending Projects. The World Bank,
EBRD, and IDB have two main vehicles for informing the public about prospective
projects--their monthly operational summaries (or pipeline list) and their project
information documents (or project list). Neither seems to be a complete description
of all the projects currently under review at these banks. Projects may be discussed
on the pipeline list but not on the project list or vice versa. (See Table 2, below.)
Comparison of the two lists for the World Bank showed that 40% of the projects in
the sample62 were listed only in the MOS, 20% were listed solely in the project list
(PIDs on the World Bank Internet page), and 40% were listed in both sources. There
was more overlap in the IDB and less overlap in the EBRD reporting systems.
The two systems have different goals. The project pipeline list was originally
intended to keep bank officials informed about the status of pending projects. It is
also used to keep businesses informed about future procurement opportunities at the
banks. The project summaries are designed to inform the public about the details
(including possible environmental effects) of prospective projects. projects. The
project pipeline lists for the EBRD and IDB are available from their Internet web
pages. The ADB uses its list of potential projects as its pipeline list. It does not have
a separate list of projects currently in its project preparation pipeline.
For the World Bank, the sample examined all projects listed in the MOS and PIC data base
for the first ten countries (alphabetical order) in each of the Bank's operational regions. For
the IDB, the projects listed in the pipeline document and PIC data base for the first ten
countries were scrutinized. For the EBRD, the projects for all countries in both sources were
TABLE 2. Consistency of MDB Reports about
Projects under Consideration, 1996*
Mid East/No Africa
Total World Bank
Projects in (B)
Listed in Listed That Were
Project List in
Development Bank 135
European Bank for
Recon and Develop 105
* For World Bank and IDB, first 10 countries in each group only.
Neither system seems to provide a comprehensive and up-to-date source of
information on prospective MDB projects. The MDB project development process
can be quite lengthy -- typically one or two years but sometimes longer -- and project
concepts and specifics can change substantially during this process. Projects are
entered in the project pipeline document when a country first expresses interest in
a loan and the idea takes shape. Little detailed information is provided about them
in the pipeline list. Nevertheless, the pipeline list is published well before any
information about the planned project is available for distribution through the banks'
public information centers. A considerable amount of work will have taken place
and firm decisions may have been made regarding the shape, direction, and
environmental categorization of the project before a project information document
is ready for distribution through a bank's PIC.
The banks differ in this regard. The World Bank MOS often says, for example,
that identification missions or appraisal missions may visit a country even though no
PID has yet appeared for the project in question. The MOS sometimes says that the
PID will not be written until specific actions have taken place. The USED office at
the ADB reports, on the other hand, that the PIDs for potential ADB projects are
written before a fact finding mission visits its borrower countries. This suggests that
the ADB makes its environmental categorizations before its staff inspect the
Projects may occasionally go through most or all their development process
without their being publicly identified. Several instances might be cited.
! At the World Bank, a loan for secondary education in Sumatra (Indonesia)
was approved by the executive board in September 1996 even though no PID
seemed to be available to the public. The World Bank executive board also
approved a poverty alleviation loan for Bangladesh on September 17, 1996,
though the date of preparation for the PID for that loan was two days later.
! At the IDB, the pipeline document for October reported that an urban
development loan for Bolivia was scheduled for board consideration in
February 1997, though no project information document was then available
at the PIC. The same document said an energy efficiency project for
Colombia was scheduled for board action in mid-December 1996. The PID
for this loan seems to have appeared on the PIC menu in November. At the
time of its appearance, no environmental classification had yet been made for
! At the EBRD, all 32 projects on the pipeline list for December 1996 were
infrastructure projects with official (public sector) borrowers. For 9 of these,
consideration by the executive board was the next step in the process. Project
information documents were available for only three of them. No commercial
or private sector projects were shown on the EBRD pipeline list. In fact, an
examination of the project information documents available from the EBRD
public information center suggested that three-fifths of the loans under
consideration by the EBRD -- mostly private sector projects -- were not
shown on its pipeline list.
The ADB does not issue both a project list and a pipeline list. In effect, it uses
its pipeline document as its list of pending projects. Unlike the World Bank and
IDB, it does not publish one document listing the proposals it is contemplating and
another showing in more detail the draft projects it is actually preparing for Board
review. Projects are listed in the ADB web page's list of projects when they have
received concept clearance (presumably a step comparable to the approval of an
Initial Executive Project Summary at the World Bank). There is no way of knowing
how many potential projects the ADB has under consideration that have not yet
reached this stage of development. As noted earlier, 40%-to-50% of the projects in
the World Bank or IDB monthly operational summaries (most of them at the early
stages of identification or conceptualization) are not listed in those banks' lists of
projects in active preparation. If a similar situation pertains at the ADB, then no
information is available from its PIC on a significant share of the projects the ADB
staff has under consideration.
Projects often remain in both the project pipeline document and the PIC project
information menu for several months after they have been approved by a bank's
executive board. They may even continue to be listed on the PIC project information
after they have been removed from the pipeline list. According to the World Bank,
this often occurs when task managers do not submit a Staff Assessment Report to
the PIC.63 The project information document is then kept in the system as a source
of data in lieu of the SAR and a notation is placed on the PID list to that effect.
If projects are not listed in the pipeline, outsiders cannot easily monitor their
progress or ascertain their likely schedule. Pipeline documents may be difficult to
use for this purpose anyway, since (except for the project summaries reported by the
ADB) none of them show dates. One cannot tell how long a prospective project has
been under consideration or when the last action on the proposal occurred.
Most MDB project information documents have dates showing when they were
entered into the PIC data base. The World Bank and EBRD show when the PID was
originally prepared and when it was updated. The PIDs for the other banks often
have no indication whether they have been updated. The dates on PIDs are often
months or even a year or more old. Sometimes, as at the IDB, there are no dates on
project summary documents.
Availability of Environmental Information. The environmental data
available to the public from the MDBs are neither as complete nor as extensive as
the banks' disclosure policies might lead one to expect. The banks all have (or
anticipate having) procedures giving the public access to the full text or detailed
summaries of the EIAs for all prospective projects with major (category A)
environmental effects. Their procedures for informing the public about the possible
environmental effects of category B projects are often considerably less extensive.
Availability of Information: World Bank. The World Bank indicates in its
information disclosure policy statement that staff assessments of the likely
environmental effects of category B projects should be attached as annexes to the
project information documents distributed by its public information center.64
Inspection shows that this rarely occurs. A sample of 17 PIDs for category B
projects on four continents, selected for this inquiry, showed that only one had an
environmental annex (a copy of the environmental data sheet) attached. In the body
of each PID, a brief paragraph mentioned environmental issues. In 11 of the 17, the
paragraph said the project raised no environmental concerns (though by definition-since all were category B projects--some environmental issues must have existed.)
One said, for example, that the project was "not expected to result in any significant
negative environmental impact and has been rated `Category B'." Three of the 17
The reasons why Bank staff did not submit SARs to the PIC are not clear. The PIC says,
in its description of its functions, that certain types of projects (structural adjustment
operations, technical assistance loans, emergency loans) do not have an SAR. World Bank.
Public Information Center, p. 7. However, the instances in the sample where PID remained
in the PIC system after the loan had been approved do not seem to be of this sort. The
Bank's information disclosure policy says that a country director may restrict release of an
SAR "in exceptional cases, [where] extensive issues of confidentiality arise." World Bank.
The World Bank Policy on Disclosure of Information, p. 6. The instances in the sample did
not seem to fit this criterion.
"The environmental analysis of a `Category B' project, whether it is a separate document
or is contained in a relevant section of the SAR, is attached as an annex to the PID and is
publicly available through the PIC." The World Bank Policy on Disclosure of Information,
PIDs mentioned potential environmental concerns in general terms. Three others
provided some detail or specific references to possible environmental issues and
A PID for a small South American country, selected at random during this
inquiry, had no environmental rating and no environmental paragraph. The text
mentioned, however, that the project would fund (among other things) solid waste
disposal and construction of marketplaces and slaughterhouses in secondary towns.
It also mentioned plans to expand and upgrade the network of all-weather roads in
rural areas. Road improvements of this sort sometimes have led to migration into
previously inaccessible or marginal forest lands.
The World Bank distributes environmental data sheets for many of its projects
through its public information centers. These are potentially useful documents.
They ask the staff to list the major environmental issues and other environmental
issues likely to arise in the project and the actions the staff proposes for dealing with
those issues. They also ask the staff to specify the reporting schedule for action
along this line. Environmental data sheets are supposed to be "prepared and updated
quarterly for each project in the Bank lending program," the World Bank reports.65
The quality of the environmental data sheets currently available from the World
Bank PIC is uneven. Generally, for category A projects, a substantial body of
information is provided. (This information would have been generated previously
in the EIA study for the project.) For category B projects, however, the content of
environmental data sheets is more mixed. In random sample of 22 sheets for
category B projects selected for this study, 10 indicated that the project had no
environmental implications. Most limited themselves to describing the project
components or goals. One health project said the only environmental issue had to
do with the disposal of toxic medical waste, though it gave no indication how the
Bank planned to deal with the question. A transportation project for a Baltic country
said "There are no negative environmental issues other than the emission of fumes
and waste from the asphalt mixing plants." It did not say what steps might be
contemplated to deal with this detail.
Five of the environmental data sheets discussed possible environmental risks
and countermeasures in general terms. Some were projects in the early stages of
preparation, for which little detail was likely available. Seven sheets provided a
catalog of likely environmental risks and a description of the steps planned to
There is little evidence that the environmental data sheets in the World Bank
system are updated quarterly. Many had old dates and said that issues would be
addressed during a future period which often seems to be well before the date in
January 1997 when CRS drew the data from the system. Often the estimated dates
when the projects will come before the Executive Board are several calendar quarters
old. If environmental sheets are out of date, they are of little use to persons outside
or inside the banks who are monitoring the formulation or implementation process.
Ibid., p. 7
They are also of little use to Bank staff members who are responsible for developing
procedures to mitigate potentially negative environmental effects.
The coverage also falls far short of the Bank's statement that the data sheets
include "all projects in the Bank lending program." The only data sheets available
are for projects currently under consideration or recently approved. No data sheets
are provided for projects approved earlier, where money is still being disbursed, even
though these projects are still "in the Bank lending program." Outsiders have no
systematic way of knowing what new environmental concerns or actions might have
arisen since these projects were initially approved.
The regional scope of the system is limited. In January 1997, environmental
data sheets were available from the PIC for only some of the projects being
considered or implemented by the Bank. These included 117 in sub-Saharan Africa,
41 in East Asia, 17 in South Asia, 78 in Europe and Central Asia, 28 in the Middle
East and North Africa, and 69 in Latin America. The Bank had many more projects
under consideration or in the early stages of implementation at that time.
Availability of Information: IDB. For category IV projects, which are deemed
most likely to have a substantial effect on the environment, borrowers are required
to prepare an EIA and release it to the public early in the IDB project cycle. Copies
may be obtained from the Bank's PIC. Category IV projects at the IDB are the
functional equivalent of category A projects in the World Bank. In April 1997, 26
EIAs were available from the IDB. Many of these have been approved by the IDB
executive board and are no longer pending.
The IDB staff prepares environmental briefs or environmental reports for
pending projects deemed likely to have a significant though remediable effect on the
environment. These are category III and II projects, roughly equivalent to the World
Bank's category B operations. The IDB's environmental reports for category III
projects are very detailed, often running to 11 or 12 pages in length. Those for
category II projects are generally shorter and less detailed.
In January 1997, the author examined the 67 projects then under consideration
for Argentina, Brazil, and Mexico. Nineteen environmental reports were on file, 14
for category III and 5 for category II projects. Seven category III projects had no
environmental report. No category IV projects were identified. In April 1997, the
author made a second examination of the 57 projects then pending for these three
countries. Seventeen environmental reports were found, 13 for category III and 3 for
category II projects. One project had an environmental report but no environmental
classification. Two category III projects had no environmental briefs. One category
IV project was identified. No environmental report was available, but some
information on its likely environmental impact was included in the project
Many of the projects surveyed in January and April 1997 seemed to be the kinds
of projects that would have received a category B rating in some other MDBs. Many
projects for port or highway construction, development of sanitation systems, water
resource development, and similar activities had no environmental rating. Little
information about their likely environmental effects was included in their project
descriptions. The IDB presumably categorized them as category I or II, equivalent
to category C in the other banks. In the absence of more information, it is difficult
for the public to judge whether such IDB projects might have worrisome
Availability of Information: IFC. IFC project information documents may
identify the kinds of concerns raised by the project (air emissions, liquid effluent, fire
prevention, etc.). Discussion of those issues in the PID is often very brief, however.
For category A projects, a copy of the full EIA can be ordered; no summary is
available from the PIC. On the other hand, the World Bank PIC has a substantial list
of environmental review summaries (ERS) for IFC projects, all evidently for
category B projects. In January 1997, 169 PIDs and 107 ERS for pending IFC
projects were available from the PIC. (Most of the projects lacking environmental
review summaries were category A projects for which copies of the EIA were
available.) Ten ERS were selected at random. For the most part, they provided a
detailed assessment of the environmental issues raised in the pending loans and
discussion of the types of actions contemplated to deal with these concerns. They
averaged almost 3 pages in length (single space, small type).
Availability of Information: ADB. The ADB does not include information on
environmental issues in its project information documents. Copies of the Summary
Environmental Impact Assessments (SEIAs) for category A projects are available to
the public on request, at least 120 days before Board consideration. Often 15 to 30
pages in length, these explore the project's possible environmental implications in
considerable detail. The Bank says SEIAs are also available some category B
projects if they have aspects (in areas such as biodiversity, resettlement, handling or
disposal of toxic or hazardous substances) that warrant rigorous examination.
The ADB's information disclosure policy says that "environmentally-related
documents for all Category A and Category B projects which have significant
environmental impact will be made available to the public" once they have been
released locally to borrowers. SEIAs, EIAs, Initial Environmental Examinations
(IEEs), and Summary Environmental Examinations (SEEs) are specifically
mentioned. The ADB staff reportedly prepares IEEs for all category B projects.
Based on the findings for those studies, EIAs are subsequently prepared for projects
deemed likely to have significant adverse environmental effects.
The ADB said, in response to a CRS inquiry, that more than 70 SEIAs had been
circulated to the executive board and outside groups as of the end of 1996. The ADB
Public Information Center lists 39 SEIAs, issued during the period 1995-1997, which
the public may request. Five of these were category B projects; the rest were
category A projects.66
To see if data on other category B projects might be available upon request, the
Congressional Research Service asked in May 1997 to see copies of IEEs and SEEs
for four category B projects. Given their descriptions, none appeared likely to have
Strictly speaking, the document available for the five category B projects was the SIEE;
no SEIAs were listed for them. Two other projects on the list had been originally designated
as category B in their SIEEs but were upgraded to category A when their SEIAs were
extraordinary environmental effects. These projects were among the oldest in the
ADB list of pending proposals. ADB management reported that the IEEs for the four
had not yet been prepared. They may not be prepared, management said, until about
the time the projects were scheduled to go to the executive board.
Availability of Information: EBRD. The EBRD listed 63 projects in its public
information center as being under consideration in 1996. (More than this were under
review, but the PIC began operations only in September.) Of these, two were
category A projects and 28 were category B projects. EBRD borrowers must provide
the public with copies of the EIA studies for projects the EBRD believes likely to
have a significant (category A) impact on the environment. For both category A and
B projects, a summary environmental analysis is attached to project summary
documents. Examination of the 30 category A and B in the system in January 1997
showed that the environmental summaries ranged from a few paragraphs to a page
in length. Most identified the major environmental concerns associated with the
project and steps that might be taken to respond to those concerns. The amount of
detail was limited; in some cases, potential remedial steps were not specified.
Information Included in PIDs.
What Information Should be Included? In October 1995, the Bank
Information Center (BIC) issued a report assessing the World Bank's information
disclosure policy.67 This section of the present study looks at the information
currently available in MDB project information documents in light of the concerns
raised by the BIC study. A table shows relevant information obtained from
documents currently in the banks' public information systems.
BIC is a clearing house organized by non-governmental organizations that helps
NGOs in developed and developing countries obtain information on the activities of
the multilateral banks, with a major emphasis on environmental issues. Created
during the period when public information on MDB operations was scarce, BIC and
its affiliates have been leading critics of the banks' information policies.
The authors of the 1995 BIC study sent copies of World Bank project
information documents to NGOs in developing countries. Many of the responses
from NGOs said the PIDs lacked critical information. In particular, many stressed
the need for a detailed explanation of the potential environmental and socialimpact
of prospective projects. Many also said the PIDs needed to explain more clearly the
reasons for the projects' environmental categorization.
The BIC study examined a half-dozen PIDs released by the Bank in 1995.
Based on the responses from local NGOs and their own study of Bank documents,
Chamberlain, Christopher H. and Martha L. Hall. The World Bank's Revised information
Disclosure Policy: a Report on Content and Accessibility. Washington, D.C.: Bank
Information Center, October 1995 (photocopy).
BIC: What Information Should Be Included in PIDs?
The Bank Information Center recommended in 1995 that PIDs issued
by the multilateral banks should include the following kinds of
PIDs should identify the individuals and key agencies with
primary responsibility for the project, including their name and
For projects still being negotiated, PIDs should name the
individuals and agencies negotiating on behalf of the borrower.
PIDs should show the name, address, and phone number for the
MDB task manager responsible for the prospective project.
PIDs should show at the outset the project's environmental
PIDs should identify the groups most affected by the
prospective project, including names and addresses.
PIDs should indicate which non-governmental organizations or
individuals had been consulted during the preparation of the
project and they should inform readers about ways they can
participate in the consultative process.
PIDs should indicate the specific location of the prospective
project and not merely list the province or general locale.
PIDs should discuss the background and context for the project.
PIDs should explain the rationale for Bank involvement in a
PIDs should provide a full explanation of the project's risks and
not just discuss the major concerns.
PIDs should be translated into the predominant local language
in the borrower country, rather than being available only in
PIDs should provide a full description of the planned project.
Only sensitive or confidential information in the IEPS should be
the authors made several recommendations as to ways PIDs might be made more
useful. These are listed in the box on the previous page.
TABLE 3. Scope of MDB Project Information Documents
Number of Loans
A5 B8 A2 10B
yes no yes no
Name of MDB
Environ category on
top of PID?
Specific location of
Cite affected groups?
Rational for MDB
Full discussion of
Environ impact discussed in PID?
For A projects?
For B projects?
Environ annex for B? 6 4
6A ?B 1A 10B
yes no yes no
* Sample included only projects with likely A or B category (based on
In the absence of direct knowledge about projects or access to IEPS reports or
other internal bank data, the accuracy or completeness of PIDs currently distributed
by the banks cannot be assessed. Some general impressions can be registered,
however, and the contents of PIDs can be assessed in terms of the criteria mentioned
in the BIC study. Table 3 shows the results of a survey by the Congressional
Research Service of PIDs for projects under consideration by the World Bank and
The PIDs generally contain more information on the prospective projects than the points
listed for Table 3. The purpose of the table is to determine whether these particular items
are also included in PIDs.
Information in PIDs World Bank. Project Information Documents from the
World Bank were originally supposed to be two pages in length. Following criticism
by NGOs and others about excessive brevity, Bank management decided in late 1993
to relax the length limits on PIDs.69 The PIDs currently issued by the Bank are now
more detailed and informative, running (in the sample used for Table 3) an average
five of pages each (single spaced, small type). Most show the organization
responsible for implementing the project, though often the name of the responsible
person was not included. Generally, however, even though many projects were in
the negotiating stage, the PIDs did not indicate which agencies or individuals were
negotiating on behalf of the borrower. Likewise, in many cases, PIDs did not show
which unit or individual at the Bank was responsible for the projects. These
deficiencies can be an impediment to persons seeking further information about a
The documents distributed by the Bank PIC all seem to be in English. The
Bank reports that its country offices in Russia, Bulgaria, India, Bangladesh, Brazil,
and Cote d'Ivoire are translating PIDs for local projects into local languages. No
effort was made by the Congressional Research Service to determine if these
translations have taken place or if the resulting documents are available to local
In most, but not all cases, World Bank PIDs indicate somewhere in the text
what the environmental category is for the proposed project. Very rarely, however,
is this shown at the outset. World Bank PIDs generally provide a substantial review
of the background and context for the proposed loan, though they rarely explain why
the World Bank is involved with the project. Also very rare is any indication that
NGOs or affected groups were consulted during the loan preparation process.
Occasionally, PIDs indicated what groups might be affected by the project, though
(as with information on consultations) no further identification is shown. PIDs did
not indicate how NGOs or other members of the public could participate in the
consultative process. Most PIDs emphasized the likely benefits of the proposed
projects; none provided what seemed a comprehensive review of the likely risks or
Most PIDs indicated the location for the proposed project, though none included
maps specifying the exact site. However, for projects with a broad geographic
distribution or with an institutional or sectoral focus, the location for the activities
funded by the loan was often not indicated.
Full texts of Staff Appraisal Reports (SARs) for projects approved by the World
Bank may be ordered. An abstract is also available for most projects from the PIC
web page. According to World Bank staff, the country desks sometimes decide not
to submit SAR abstracts to the PIC. In those cases, the PIDs for approved projects
are left in the system. SAR abstracts provide a one-paragraph summary of the
components and purposes of the project. In only one of the 12 abstracts surveyed,
however, was there any indication of the amount of money the Bank had lent for the
project. None revealed the environmental categorization. Only one noted any
Memorandum from Jan Wijnand, Acting Director, Operations, to all staff recipients of the
World Bank operational manual, December 2, 1993.
environmental concerns to be addressed.
addressed in the projects.
None discussed other issues to be
Once PIDs for approved projects are removed from the PIC data base, SAR
abstracts are the most detailed description of ongoing projects that outsiders may
obtain without incurring the $15 cost for the full SARs. SAR abstracts are very
concise. They do not clarify issues or show changes that may have occurred after the
project was approved by the Bank's executive board.70
Information in PIDs: IFC. The project summary documents for prospective
IFC projects are concise and seem to follow the original two-page model for World
Bank project information documents. Some examined for this survey were one page
in length. All the projects surveyed for this study identified the borrower and (since
the borrower negotiates on its own behalf) the party negotiating on behalf of the
recipient. None identified the unit of the IFC or the IFC task manager responsible
for the project. All contained the types of project data the IFC said should be in
these documents (see footnote 22).
For example, according to U.S. government and Salvadoran sources, the World Bank
approved a loan in 1996 to improve the land registration system in El Salvador. The original
plan for the project included some policy suggestions or comments by consultants which
sought to encourage private ownership of land in order to strengthen the incentives and
opportunities for higher production. If farmers owned individual parcels of land, for
instance, they would have assets they could use as security to get loans to increase their
productivity. Cooperatives often rely on grants or discount loans from government, rather
than commercial credit, for such purposes. Campesino organizations and agricultural
cooperatives saw these as efforts by the Bank and Government of El Salvador to break up
cooperatives. The project information document for this project, prepared in February 1995,
made no mention of such goals or gave any indication that such issues had been raised. See:
World Bank Public Information Center. The original PID, titled El Salvador--Land
Administration, Project ID SVPA7174, prepared February 2, 1995, was obtained from the
PIC by CRS through special request. An extensive survey of campesino and cooperative
organizations and NGOs in El Salvador during a field visit by CRS in September 1996 found
no one who had seen the PID. Some had obtained the Staff Appraisal Report, however,
which contained the language that concerned the Salvadoran organizations.
Alerted to this concern, representatives of the U.S. Government reportedly met with
officials of the Bank and received assurances that the table of policy recommendations and
guidelines in the SAR would not govern implementation of the land tenure project. This
information was apparently never communicated back to the Salvadoran organizations. The
SAR abstract the World Bank placed in the PIC system did not address the issue. The SAR
copies available from the PIC are the same version that alarmed the Salvadoran
organizations. The Government of El Salvador persuaded its National Assembly to pass
legislation embodying some of the policy recommendations presented in the original SAR.
The Government reportedly told Salvadoran legislators that the World Bank required
adoption of those policies as a condition of the land registration loan.
It is not clear whether the World Bank intended to seek adoption of the policy
guidelines, notwithstanding its assurances to the U.S. Government, or whether those
guidelines were implemented solely at the initiative of the Salvadoran Government. It is
clear, however, that the project was implemented in ways different from those the U.S.
Government reportedly expected, and the World Bank has been held responsible (in
Salvadoran eyes) for the new policy regime. The Bank's information access system does
nothing to clarify the situation or to show the Bank's actual objective in this situation.
The IFC project summary documents are sometimes vague as to the identity of
the local partners. The IFC disclosure policy says this information will be included
in these documents. Names are sometimes provided. In many cases, however, the
IFC documents say that certain number of unnamed local citizens will own the firm
or they say that certain corporations would own stated shares of the project
company's stock. In many countries, the existing corporate registration procedures
do not show clearly who the beneficial owners of a corporation might be. If this
information is not included in the IFC document, the public may not be able to
ascertain it otherwise.
All the IFC project summaries examined for this survey had a separate section
discussing the project's environmental categorization and implications. The category
was not listed at the top of the report, though in some cases, the report being one
page in length, the categorization was easily apparent.
The IFC project summaries and environmental reviews provided little
background on the proposed project and no justification for IFC involvement. None
discussed any consultation with NGOs or local groups, though three of the 12 project
summaries mentioned (in general terms) the groups or types of persons likely to be
affected by the undertaking. Four of the 10 environmental summary reports for
category B projects provided some discussion of the broader risks or possible
The IFC does not release to the public copies of the project documents which
go to the World Bank executive board when prospective projects are considered for
approval. Except for information provided in press releases and brief references in
IFC annual reports, no detailed descriptions of IFC projects are available to the
public once a project is approved and the documents relevant to it are removed from
the World Bank PIC data base.
Information in PIDs: ADB. The descriptions of projects not yet approved by
the ADB are very concise.71 None of the twelve selected at random were much
longer than a page in length, and most were shorter. The objectives and scope of the
project are often stated in one paragraph. Another sentence shows its status in the
project preparation process. The environmental category is one of the last entries.
In some cases, because of the shortness of the document, it can be found in the top
half of the page. The ADB task manager and the organization responsible for
implementing the project are always listed. No background for the project or
rationale for ADB involvement are usually shown, nor is there any indication that
any non-governmental groups were consulted. In one case, the project description
says poor people will be the beneficiaries. In other cases, there is no identification
of affected groups. Generally, there is no discussion of likely benefits or possible
adverse effects from the project.
These are found at http://www.asiandevbank.org/adbbo/adbbo.html.
Considerably more information is available on projects already approved by the
ADB. Called project profiles, these are available from the ADB web page and PIC.72
These are much lengthier documents. They include discussions of the cost and
financing arrangements for the project, issues in the ADB policy dialogue with the
borrower, environmental impact and mitigation measures, social aspects and remedy
measures, target beneficiaries, consultation with the public, and participation by
beneficiaries in project implementation. For some projects, the entries in each
category may be no more than a sentence or two. For others, a lengthy paragraph is
Projects are listed among the project profiles as long as they are in the process
of implementation. Project profiles do not seem to be updated very often.73 They do
not seem to include information about problems or new issues that emerge during the
implementation process. As a device for informing the public about progress
achieved in the implementation of projects, they are not very useful. ADB
management and member country governments presumably have some other method
for monitoring the implementation of projects previously approved by the executive
Project profiles appear, from their structure and content, to be documents
prepared for use by the Bank during the project preparation process. In many
respects, they resemble the project information documents issued by the World Bank
or project profiles released by the IDB. They appear to be information recorded
before projects go to the executive board. Unlike the World Bank or IDB, the ADB
does not put the information in this document on-line as it becomes available during
the project preparation process.
Information in PIDs: IDB. The project summary documents (project profiles)
for the IDB provide considerable amounts of information on proposed projects. The
dozen IDB summaries examined for this survey averaged almost 5 pages (single
space, small type) in length. One comprised 12 and another 9 pages. The project
summaries and environmental reports in the sample were not dated, so it is
impossible to determine the currency of the data they contain. Project summary
documents are retired from the system once projects have been approved by the IDB
executive board. The IDB has no documents comparable to the World Bank
quarterly environmental data sheets or ADB project profiles for informing the public
about projects in the implementation process.
These may be found at http://www.asiandevbank.org/projects/projlist.html. The office of
the USED at the ADB says the Bank may now be including on this list projects currently
under preparation. As of May 1997, the list did not show dates when projects had been
approved by the ADB executive board. Consequently, it was not possible to distinguish
approved projects from those that were pending.
A CRS survey of all 174 projects listed in May 1997 showed that one profile for a project
approved prior to 1997 (in Laos) had been updated in 1997. Two projects initially listed in
1993, one initially listed in 1994, and eleven originally listed in 1995 (five of them in Nepal)
had been updated in 1996. Most profiles had not been updated since the year they went in
The documents available from the IDB PIC are usually available in the
language of the borrower country. However, the project summaries in the sample for
two Brazilian loans were written in Spanish and the environmental report for a
Colombian loan was written in English. Other project summaries or environmental
reports (not in the sample) were in the local language.
Most project summaries from the IDB identify the agencies responsible for
implementing the proposed project, though few show the agencies responsible for
the negotiations. None of the 12 project summaries in the sample identified any of
the key individuals involved. Only one identified the IDB task manager.
Almost half the IDB summaries in the sample indicated somewhere near their
top the environmental category for the proposed project. Most also provided a
substantial review of the background and context for the project and half provided
some rationale for IDB involvement. None mentioned any NGOs or local groups
that might have been consulted. Two of the 12 referred in general terms to groups
likely to be affected by the project. Two provided an overview of the project's likely
risks and implications. The others were silent or very brief in their discussion of
possible adverse effects from the project.
Copies of project appraisal documents may be purchased from the IDB after the
IDB executive board approves a loan. The PIC also provides a two-to-three page
summary of the main points for each loan. These generally include a few paragraphs
describing the purpose, composition, and specific objectives of the project. They
also indicate what consultant services will be needed during the implementation of
the project, what goods and equipment are to be procured, and what civil works will
be constructed. Persons familiar with the country or with the type of project under
consideration might be able to mine this information for insights regarding the
project's likely scope and implications.
Information in PIDs: EBRD. The project summary documents for loans being
considered by the EBRD are generally one or two pages long, depending whether a
summary environmental analysis is attached. Eleven project summaries were
surveyed by CRS. The agency or firm responsible for implementing the project was
always shown, but no listing was provided for the EBRD task manager. A number
is provided for all projects, however, where callers can initiate inquiries about
pending projects. The EBRD says that task managers can be reached through that
number, if they are needed to provide further information. The EBRD project
summary documents show the environmental category only if a summary
environmental analysis is attached. The specific location for the project was
generally indicated, though this information was not provided for projects with a
broader institutional or geographic focus. No background or context or rationale for
EBRD involvement was shown. Likewise, there was no discussion about
consultations with NGOs, affected groups, or the broader risks or benefits of the
The EBRD also provides on its web page a list of projects previously approved
by the Bank. It identifies the borrower and the economic sector involved and it gives
a one sentence description of the undertaking. No information is given, however,
about its status of implementation or any problems or issues that might have arisen
since the loan was approved.
The EBRD guidelines on public access and disclosure of information say that,
after a project has been approved by the EBRD executive board, an edited copy of
the Board report (loan document) will normally be made available to the public on
request. It is not evident from the EBRD web page, however, how the public can
request this information.
H. MDB Information Access Procedures:
Evaluation and Discussion
Failure of Documents To Meet Stated MDB Goals. The multilateral
banks say, in their policy statements on public access to information, that
their procedures are intended to inform the public about the content and
purpose of their pending operations. Increased public access to
information about MDB projects is likewise intended to expand public
understanding and confidence in the multilateral agencies.
The project summaries and project documents available from the World Bank
and IDB seem conducive to the achievement of these goals, though (as noted below)
they could be improved in several areas. By contrast, the project summaries
available from the IFC, ADB, and EBRD are either very concise or silent on issues
of potential concern to outside observers. On the whole, these project summaries
seem to fall short of the goals articulated in the IFC, ADB, and EBRD policy
statements on information access and public disclosure. In many cases, for all the
banks, the project and environmental documents issued by the banks do not include
information that the banks' policy statements say they should include.
Need for Additional Information. One need not accept as necessary all the
criteria suggested by the authors of the BIC study and listed in Table 3. However,
it seems reasonable that some background and context for the prospective project and
a rationale for bank involvement might be useful to outsiders and to MDB
stockholders as well. Likewise, it seems reasonable to expect that project
information documents will identify the persons at the borrower organization and the
bank with principal responsibility for the prospective loan. A list of the NGOs
consulted for a project might be counterproductive and perhaps (in some countries)
detrimental to the interests of the NGOs themselves. However, some discussion of
the groups likely to be affected by a project and the overall risks and benefits might
be useful both to the bank and to the public.
ADB and EBRD: Too Little Information on Pending Projects. The ADB
could enhance the effectiveness of its information disclosure policy if it published
a separate list showing all the projects currently under consideration at the Bank and
their status. As with the monthly operational summaries of the World Bank and IDB,
the amount of detail provided in this pipeline document would not need to be
substantial. But its comprehensive nature and its inclusion of projects in the earliest
stages of consideration would enhance public confidence in the ADB disclosure
process. A separate list, comparable to the one published on the ADB web page,
could provide detailed information on projects that have received ADB managements
initial tentative approval. This would parallel the current practice of the World Bank
The EBRD would likewise enhance the utility of its information disclosure
system if it took steps to include more projects in its pipeline document and its
project list. The EBRD disclosure policy says that project summary documents are
supposed to be listed as soon as they are prepared (for public sector borrowers) or
at least 60 days before Board action (for private sector borrowers.) The EBRD does
not seem to be adhering to either criterion. Likewise, the EBRD omits many private
sector projects from its pipeline document. A pipeline document that lists only
projects which offer procurement opportunities may be useful to potential suppliers
but it is not very useful to persons wishing to monitor the potential environmental
impact of EBRD operations. Such a list does not seem to comply with the
requirements of the Pelosi Amendment.
A side question arises as to whether the EBRD should fund projects where the
international competitive bidding procedures do not apply and where procurement
is limited in advance to certain providers.
Inadequacy of Environmental Information in PIDs. From all the banks,
written copies of the full environmental impact assessment can be obtained by
request for category A projects. However, only the World Bank, IFC, IDB, and
EBRD make summary environmental analyses regularly available for category B
projects, and these are often quite brief. Though less substantial in their anticipated
impact, category B projects by definition are expected to have a significant effect on
the environment. The project information documents for category B projects would
be more useful if they provided information about the project's likely environmental
effects and the steps planned to ameliorate those effects. Among other things, this
would help strengthen the reader's confidence in the banks' categorization system and
in their judgment concerning the risks and benefits of prospective projects.
Out of Date Documents. The banks' information access guidelines say that
project summaries should be updated during the preparation process as the project
takes shape. They also say that staff appraisal reports or other descriptions of
projects previously approved by the banks should be updated if significant changes
are effected in their plans. Often, however, the banks' project information documents
reviewed by CRS were undated or they carried dates that were several months or
perhaps a year old. Consequently, it may be impossible for outsiders to know
whether the information in those documents is current and if it represents the banks'
most recent thinking on those projects. Listing the dates for each update and the
dates for each important benchmark would at least help the outside reader to monitor
the status of the project preparation process.
Unavailability of Old Project Information. The banks all retire their project
information documents from their PIC systems once the projects have been approved
and a summary Staff Appraisal Report or project profile has been received.
Sometimes, however, researchers may find they need copies of old project
information documents (PIDs). For example, they may need to see whether issues
or problems that gained prominence during the implementation of a project were
discussed in the PID prior to project approval. CRS encountered two such instances
in the preparation of this report. The World Bank PIC staff found that these old PIDs
were in an electronic archive and they provided CRS with copies by special
arrangement. The MDBs would enhance public understanding if they created some
mechanisms in their web pages giving the public access to old PIDs and other
relevant documents, or if they indicated that they were available upon request. This
information would be particularly useful to persons examining the project
The MDBs could also facilitate better public understanding if they released
more information about the implementation of projects they have already approved.
Project information documents and environmental impact assessments help predict
what the effects of prospective projects might be. The MDBs have no effective
vehicle, however, for informing the public or their member country governments
about the actual results of previously approved projects. The World Bank quarterly
environmental data sheets and the ADB project profiles are efforts in this direction.
However, they are not maintained in a timely fashion and they do not seem to
encompass information about new issues or problems encountered in the
The Pelosi Amendment addresses the issue of public access to information
about projects that have not yet approved by the banks. It does not deal with the
question of public access to information about projects as issues arise during the
implementation process or about the ultimate impact of projects once they have been
put into effect.
Need for Earlier Availability of PIDs. If the banks want to facilitate public
information and public consultation in the project development process, they might
reexamine the timetable they use for their reports. Project information documents
(PIDs) are the basic vehicles the banks use to inform the public about their
prospective loans. However, these are made available only after the bank staff and
the borrower have reached agreement on the basic purposes and components of the
prospective loan. Some information about projects in earlier stages of preparation
can be gleaned from the banks' pipeline documents (monthly operating summary,
etc.). However, the PIDs would be more useful if they were available to the public
earlier in the project cycle, while the basic outlines and purposes of the projects are
still under discussion.
Need for More Information on Projects in Early Stages of Preparation. At
any one time, 40%-to-50% of all the proposals under consideration by a bank will
be in the early stages of development. This may be, in fact, the moment when
consultation with NGOs and local groups could have the most impact on the shape
of the project. The World Bank and IDB provide some information about projects
in this stage of preparation in their monthly operational summaries. The other MDBs
do not tell the public or their member country governments what projects they are
considering until the project information documents have been written and bank staff
have given them an environmental categorization. The banks could enhance the
consultation process if they included more information in their pipeline documents
about projects in the early stages of consideration. Alternatively, as noted before,
they could issue their initial PID for a project when it is still just an idea (i.e., before
bank management has agreed it should be a potential candidate for assistance) and
before its environmental category has been determined.
III. Executive Branch Implementation of the
A. Basic Findings
Strictly speaking, even though the MDBs have adopted new procedures in
response to the U.S. legislation, the Pelosi Amendment directly governs only the way
U.S. Government officials respond to environmental issues at the multilateral banks.
First, the law requires the USEDs to abstain or vote against MDB actions likely to
have a significant effect on the environment unless environmental impact
assessments (or comprehensive summaries) have been performed and released to the
public at least 120 days in advance of board deliberations. Second, as discussed
below, the Pelosi Amendment requires the U.S. Government to establish procedures
for considering the environmental implications of proposed MDB actions and for
instructing USEDs on the way they should vote.
This chapter examines the regulations and procedures the Administration has
established to monitor the environmental implications of MDB projects. It also
discusses how the United States has voted on environmentally sensitive MDB loans
B. Executive Branch Procedural Rules
Procedural Requirements of the Pelosi Amendment.
Amendment requires the Secretary of the Treasury, in Section 1307(c) of the IFI
Act, to "ensure that an environmental impact assessment or comprehensive summary
of such assessment...accompanies loan proposals through the agency review
process...." It also directs the Secretary to "take into consideration recommendations
from all other interested Federal agencies and interested members of the public."
The Pelosi Amendment instructs the Secretary of the Treasury to develop and
prescribe procedures for determining the U.S. position on any action the MDBs
propose to take that would have a significant effect on the environment. These
procedures must consider the environmental impact assessment of the proposed
MDB action, allow "interagency and public review of such assessment", and permit
other "environmental review or consultation of such action that is required by other
Prepared by Jonathan E. Sanford, Analyst in International Political Economy, Foreign
Affairs and National Defense Division.
Section 1307 of the International Financial Institutions Act (P.L. 95-118), added to that law
by section 521 of the International Development and Finance Act of 1989 (P.L. 101-240).
For the full text of the Pelosi Amendment, see appendix A.
The 1992 Temporary Rule. The Pelosi Amendment went into effect two years
after it was signed into law on December 19, 1989. In April 1992, the Treasury
Department issued a temporary rule establishing procedures the U.S. Government
would use to comply with the requirements of the Amendment.75 The public was
invited to comment on the temporary rule. The 1992 temporary rule remains in
effect and has not been superseded by any newer rules, regulations or administrative
guidelines governing the implementation of the Pelosi Amendment or U.S.
participation in the MDBs.
Treasury Department officials say the rule is being followed, albeit as one
admitted "rather loosely." With the adoption of public disclosure policies and the
establishment of public information centers by the MDBs, many of its provisions
have been overtaken by events. Treasury has been waiting to establish a final rule
until the AFDB adopts an information disclosure policy comparable to those in force
at the other MDBs. AFDB action on this score is expected in 1997. Treasury
officials say revision of the 1992 rule is currently underway.
In its preface to the 1992 rule, the Treasury Department stated that the Pelosi
Amendment requirement for U.S. Government and public review of proposed MDB
actions "is satisfied by circulating a comprehensive summary of an EIA and making
the full EIA available upon request." The primary purpose of the environmental
assessment and comment process, the Department indicated, is encouragement of
borrower countries "to conduct a wide-ranging and detailed environmental
assessment, including consultation and full sharing of information with local nongovernmental organizations and affected parties." The rule stated that the U.S.
Government will seek to encourage the MDBs to expand the consultative process
and it will also work "to ensure that the public will have direct access to EIAs and
summaries thereof at the MDBs and in the borrowing countries, without the U.S.
Government's acting as intermediary."
The 1992 rule said the office of multilateral development bank affairs at
Treasury will assure that a variety of U.S. agencies and private organizations
concerned with environmental issues will receive information on prospective MDB
projects. Specifically mentioned were five U.S. government agencies -- the U.S.
Environmental Protection Agency (EPA), Council on Environmental Quality (CEQ),
U.S. Agency for International Development (USAID), Department of State, National
Oceanic and Atmospheric Administration -- and one non-governmental organization
(NGO) -- the Bank Information Center (BIC). As noted in the previous chapter, the
latter is a private NGO located in Washington, D.C. It is not an affiliate of the
multilateral banks or their public information centers. In particular, the rule says the
MDB office will see that the U.S. agencies and BIC receive copies of the relevant
MDB project documents and EIA summaries. If copies of this information are not
subsequently available to the public from BIC, the rule says members of the public
may make arrangement to examine or copy the documents through the Treasury
Department of the Treasury. United States Government Procedures for the Consideration
of Environmental Impact Assessments for Multilateral Development Bank Projects. 31 CFR
Part 26. For the full text of the 1992 Temporary Rule, see appendix B.
Environmental Impact Assessments (EIAs) for projects sponsored by the
AFDB, EBRD, and ADB may be examined, by prior arrangement, the rule said, at
the Treasury Department library. EIA studies for IBRD, IDA, or IDB projects may
be seen at the World Bank or IDB public reading rooms. The rule indicated that
documents can be viewed and copied at the Treasury Department library by
arrangement if the World Bank or IDB do not have a public reading room. (The two
banks subsequently allowed public use of reading rooms.)
The rule said that members of the public may file written comments with the
MDB office for any MDB documents they have reviewed. The public can make oral
comments on prospective MDB projects "in [the] periodic meetings convened by
BIC.76 The rule indicated that Treasury Department officials will summarize these
written or oral comments and communicate them to the Working Group on
Multilateral Assistance (WGMA), the inter-agency committee that coordinates U.S.
policy concerning prospective MDB loan.
The 1992 rule specified that, if the WGMA and Treasury Department believe
a prospective MDB project is likely to have a significant effect on the environment
and they believe it has not received the appropriate environmental categorization,
they shall instruct the USED at the relevant bank to seek an upgrade. Upgrades
would require the MDBs to do additional environmental assessments or analyses.
If the WGMA and Treasury believe a project will have a significant environmental
effect but they believe a full EIA is not necessarily warranted, the rule stipulated,
they are to obtain more information from the bank on the project. Examples cited
were the environmental chapters from feasibility studies or environmental data
sheets. The rule said Treasury shall provide this material to the relevant U.S.
agencies and BIC. The 1992 rule said that Treasury shall instruct the USED at the
bank to oppose a project if this additional information does not provide "an adequate
basis for analyzing the environmental impact of the proposed project and alternatives
to the proposed project."
Public Comments on the 1992 Rule. Two comments were filed with Treasury
in response to the invitation for public comment on the 1992 rule. One was from the
World Bank; the other was from the Center for International Environmental Law
(CIEL), an NGO that focuses primarily on environmental issues. Though requested
on several occasions, the Treasury Department and World Bank did not provide CRS
with a copy of the World Bank's comments on the rule. The preface to the rule says
that all comments will be available for public inspection.
The comments in 1992 by the Center for International Environmental Law77
said the coverage in the 1992 rule was too limited. First, it noted, the rule covered
only projects funded by the MDBs. The Pelosi Amendment was considerably
broader, CIEL noted, as it addressed whether the United States could vote for "any
action proposed to be taken" by the multilateral banks. The proposed rule was too
constrained, CIEL said, as it ignored votes the USEDs might cast on MDB policy
1992 Temporary Rule, section 26.4(a)(2).
David R. Downes, Robert F. Housman, David Hunter. Comments on Temporary
Procedures for the Environmental Assessment of Multilateral Development Bank Activities.
Center for International Environmental Law, July 31, 1992. Photocopy.
guidelines or on policy reform or adjustment loans. MDB policies and MDB
adjustment loans might cause bank staff or borrowers to act in ways that would have
a negative environmental effect, CIEL argued. It said the 1992 rule puts such MDB
actions outside the scope of the Pelosi Amendment's environmental requirements.
Secondly, CIEL noted that the 1992 rule omitted several multilateral agencies
from its jurisdiction. The IFC, EBRD, and Multilateral Investment Guarantee
Agency (MIGA) are not mentioned in the rule. CIEL held that these three
institutions are included in the term multilateral development bank, as that term is
used by the Pelosi Amendment. The Treasury Department has decided, as a matter
of policy, that the IFC is not an MDB within the meaning of that legislation and that
the regional banks' private sector operations are not be governed by the Pelosi
Amendment. (See below.) Treasury would presumably hold that the MIGA would
similarly be exempt from its requirements.
CIEL also contended that the 1992 rule fell short of the requirements of the
Pelosi Amendment in several other respects. CIEL argued, for example, that it was
not enough for Treasury to assign BIC the principal responsibility for disseminating
MDB information to the public. CIEL said Treasury had a responsibility, under the
Pelosi Amendment, for assuring that citizens' groups and environmentalists
worldwide have access to copies of MDB environmental studies. Without such a
global distribution of the information, CIEL argued, the Pelosi Amendment's goals
concerning public dialogue about potential MDB operations cannot be realized.
CIEL said Treasury should publish MDB environmental studies and take other steps
to distribute information on MDB activities directly to persons in developing
CIEL said the period for comment (two weeks after a person saw an MDB
document) was too short. It said a 120 day period would be better and Treasury
should create a method by which persons located outside Washington, D.C. would
have time to comment. An international electronic mail network accessible to NGOs
was one suggestion. CIEL also said the requirement that oral comments to executive
branch officials about MDB projects could be made officially only at meetings held
by BIC in Washington, D.C. was unduly restrictive. Organizations located abroad
should be able to present oral comments, it said, to the USEDs at particular banks.
CIEL argued that the procedures needed for implementing the 1992 rule were
not sufficiently precise. For example, it argued:
! There was no mechanism for determining whether a proposed MDB action
would have "significant" environmental effects.
! There was no procedure for assuring that an environmental review occurs and
is available to the public at least 120 days before a board vote.
! The rule does not say how Treasury will assure that other U.S. agencies
receive MDB documents.
! There is no requirement that Treasury consider the MDB environmental study
and the comments of other U.S. agencies or the public in the formulation of
CIEL suggested that the language of the rule should be changed so the WGMA
must, rather than "may", meet to consider MDB actions with potential environmental
effects. It recommended that EPA and CEQ be given a significant voice in the
development of U.S. policy on environmentally sensitive MDB initiatives.
Finally, CIEL said the 1992 rule was weak because it did not require Treasury
to articulate a rational basis for the U.S. votes on MDB projects with environmental
implications. The rule did not require Treasury to announce publicly how the U.S.
had voted on an environmentally-sensitive loan. CIEL recommended that the rule
be amended to require a explanation of the U.S. vote in the Federal Register. It said
this would create a public record and require the Department to justify publicly its
C. Current Executive Branch Procedures for
Implementing the Pelosi Amendment
Official Forums for Analyzing MDB Environmental Issues. The executive
branch has two principal forums for analyzing the potential environmental impact of
proposed MDB projects. The interagency Working Group on Multilateral Assistance
(WGMA) meets weekly to examine loan proposals scheduled for consideration by
the MDB executive boards during the next two to three weeks. A second interagency
working group meets periodically to review environmental issues and impact
assessments received from the MDBs for future loans. The executive branch also
has several channels for gathering information from U.S. official and nongovernmental sources about potential environmental problems affecting MDB
The WGMA. The WGMA (usually pronounced "wig-ma") was created in 1977
as the successor to the National Advisory Council on International Monetary and
Financial Policies (NAC), an interagency coordinating committee originally created
in 1945 by the Bretton Woods Agreements Act. Chaired by Treasury, the WGMA
includes members from the State, Agriculture and Commerce Departments, the
Export-Import Bank, and the Agency for International Development. WGMA
meetings examine a wide range of U.S. concerns and U.S. legal requirements
touched by prospective MDB loans. It does not focus primarily on the environment.
Staff working on environmental issues generally attend WGMA meetings only if
environmental issues need to be resolved. Treasury officials say the relevant MDB
documents are distributed directly by the banks to the WGMA participating agencies.
Following WGMA sessions, staff of the Treasury Department MDB office make
recommendations to Treasury policy officials about the instructions they might give
to USEDs concerning their votes on MDB proposals. If Pelosi Amendment issues
are involved, a decision memo is prepared for top Treasury decision makers.
Treasury staff say they look, during the WGMA loan review process, to see
whether EIAs and other relevant documents have been publicly available for at least
120 days prior to the date loans are scheduled for action by the MDB executive
boards. They report that it is sometimes difficult to tell from MDB documents when
the local release occurred. Officials say they generally give the MDBs the benefit
of the doubt, when counting days. They also say that, if environmental issues arise
during consideration of a project, enough questions can be raised to delay a vote on
the project until 120 days have elapsed. According to U.S. officials, significant selfregulation takes place at the MDBs. For example, at the ADB one project in 1996
was postponed by management because the EA had only been circulated 119 days
in advance of board consideration and the Bank wished to be in full compliance with
The Staff Environmental Group. Staff with environmental responsibilities
from various U.S. agencies also meet at irregular intervals to examine environmental
issues and EIA studies received from the multilateral banks. The need for physical
meetings is often obviated by telephone or electronic communications among the
people concerned. The banks normally send documents to the agencies directly. The
Treasury Department has three staff members in the MDB office working primarily
on environmental issues. The State Department, EPA, USAID, and NOAA normally
have one person each dealing with these topics in the multilateral banks. The
technical assistants in the USED offices participate in these discussions, as they often
have the prime responsibility for pursuing environmental issues with MDB staff.
Treasury and USAID officials acknowledge that the interagency environment
group has no objective standard for determining whether a project will have a
"significant" effect on the environment. They say, however, that the members of the
group can recognize "significant" projects when they see them. They insist they do
not use the banks' categorizations as the only determinants for their agenda. The
interagency staff discussions mainly focus on category A projects, however. They
do not normally review MDB staff assessments of the likely environmental effects
of category B projects.
Occasionally the interagency group may decide that a category B (or even a
category C) project may have a significant impact on the environment. Information
received from NGOs or other members of the public is often instrumental in calling
these projects to the attention of U.S. agency staff. In those cases, U.S. officials say,
they will ask bank staff for additional information and for assurances that
environmental problems the U.S. agencies perceive with these projects will be
addressed. They may also argue, usually without success for a change to category
A in such cases. The Treasury Department says it is not aware of any systematic
analysis of the MDBs' record of changing the categorization of projects on the basis
of new information or additional analysis, although it has happened in some
Other Avenues for Information. In addition to these forums, U.S. officials
have several established channels for assessing the potential environmental effects
of pending MDB projects. These include the "Tuesday Group" and the U.S. Agency
for International Development's Early Warning System on MDB projects.
The Tuesday Group. The Tuesday Group is a gathering of NGO participants
and U.S. officials that convenes the first Tuesday of each month to discuss the
environmental implications of proposed MDB projects. Sources say it has been
meeting since at least 1988. Thirty to forty people may attend, including several
from the Treasury and State Departments and EPA. Meetings are chaired jointly by
the Director of the Bank Information Center (BIC) and the USAID official who
manages the USAID Early Warning System.
The 1992 Temporary Rule stipulates that the "periodic meetings convened by
the BIC" shall be the official forum for the receipt of public oral comment about
MDB projects. Treasury officials say they communicate information or views
obtained from NGOs at these sessions to the other WGMA participant agencies.
Discussion at Tuesday Group meetings normally goes well beyond the presentation
of views to U.S. officials, however, to include a mutual exchange of information
among the NGO and U.S. participants about specific projects or MDB activities.
The USAID Early Warning System. The Early Warning System was set up as
a result of legislation enacted by Congress in 1986. The act making appropriations
for foreign assistance and related programs for fiscal 1987 directed the Administrator
for USAID to create a system, in consultation with the Secretaries of Treasury and
State, for assessing the potential impact of pending MDB projects.78 Overseas
USAID missions and U.S. embassies were told to analyze the likely environmental
and social impact of MDB projects under consideration for their host country.
Among other things, they were to address the economic viability of the project, its
likely impact on the environment, natural resources, and indigenous peoples, and any
alternatives that might mitigate or eliminate adverse impacts. Unless restricted under
the U.S. national security classification system, the information gathered by these
reports was to be made available to the public.
The USAID Administrator was directed to report semiannually to the House and
Senate Appropriations Committees, beginning in December 1986, on the information
developed by the early warning system survey. The Secretary of the Treasury was
directed to instruct the USEDs at the MDBs to seek changes in projects in order to
eliminate or mitigate negative impacts discovered by the system.
The Early Warning System was made permanent in legislation adopted the
following year.79 The 1987 law added, to the duties enumerated the previous year,
a requirement that USEDs seek to delay consideration of MDB loans (if the Early
Warning System found them problematical) until other major MDB member
countries also had time to examine the proposals. The 1987 law also directed that
Sec. 101(f) of the Continuing Appropriations Act, 1987 (Public Law 99-591), approved
October 30, 1986, sec. 539(g).
Sec. 101(3) of the Continuing Appropriations for 1988 (Public Law 100-202), approved
December 22, 1987, contained the Foreign Operations, Export Financing, and Related
Programs Appropriations Act, 1988. Sec. 537(h) of that Act restated the requirements for
the Early Warning System enacted in 1986 with the additional requirement that reports also
be sent to the House and Senate authorizing committees. Title I of that Act enacted by
reference the bill H.R. 3750 as it had been introduced on December 11, 1997. Among other
things, that bill inserted as section 1303 of the International Financial Institutions Act (Public
Law 95-118) -- the permanent law embodying most MDB policy requirements -- a nearly
identical requirement for an Early Warning System. This version includes a directive that
USEDs seek to delay consideration of problematical MDB loans until other countries have
had time to study them adequately.
the semi-annual reports to Congress should go to both the authorizing and
appropriating committees of the House and Senate.
Internet. The Treasury Department recently installed equipment allowing it to
examine information the MDBs publicize through their internet web pages. The
capability of other U.S. agencies is not known. Treasury officials say the internet is
not a significant source of information about pending MDB projects for U.S. agency
personnel. The U.S. agencies rely more on the U.S. offices at the multilateral banks,
on information provided by the MDBs, on MDB staff, and on members of the public
to provide them information about MDB operations.
NGO-Government Cooperation. A close relationship between NGOs and the
relevant U.S. agencies is widely viewed as important for the effective functioning of
the U.S. process for monitoring the environmental impact of MDB projects.
Treasury and other agency staff are few in number and they cannot monitor all MDB
projects on a systematic basis. They depend on input from NGOs for help
identifying problem projects, soliciting information about local conditions, and
documenting deficiencies in the field.
This is often cited as a good example of how government agencies and private
organizations can work synergistically, but there are some "downsides" to the
relationship. For one thing, it tends to be ad hoc, with effective work done on the
relatively few projects that are identified as problems. These become the focus of
intensive activity, but little attention is paid to other projects that may also be
problematic. For another, the priorities of the NGOs have a considerable impact on
the kinds of projects that receive special attention. The NGOs have their own
priorities and concerns that motivate their staff to "volunteer" their time to assist the
official environmental review process. It is not always possible for U.S. officials to
be sure the NGOs give equal weight to the government's own priorities or concerns
in this area.
D. U.S. Votes in the MDBs on
Environmentally Sensitive Loan Proposals
The Record and Rationale for U.S. Votes. The executive branch takes the
position that the United States can register its opposition to pending MDB loans
either through an abstention or through a negative vote.80 In recent years, the U.S.
representatives at the MDBs have opposed only a few MDB loans because of
environmentally-related (Pelosi Amendment) concerns. As Tables 4 and 5 indicate,
This dates from at least 1977, when Congress approved language requiring the U.S.
Executive Directors at the MDBs to "oppose" all assistance to countries that violate
international standards of human rights. The House sponsor of the human rights amendment
said, during House consideration of the conference report for the International Financial
Institutions Act, that the word "oppose" meant "vote no". The Senate sponsor of the
amendment said, during Senate action on the conference report, that the word "oppose"
meant "abstain" or "vote no." The Administration has chosen to accept the Senate definition
of the term. See: House Committee on International Relations. Congress and Foreign
Policy, 1977. (Prepared by the Congressional Research Service) Committee Print.
U.S.G.P.O., 1978, p. 112.
the U.S. Government opposed a large number of MDB loans in 1992 and 1993
because it believed they did not conform to the requirements of the Pelosi
Amendment. Between 1994 and 1996, the United States voted 10 times to oppose
MDB projects because of the requirements of the legislation. Two projects (the
Jumuna Bridge in Bangladesh and Zhejiang Power in China) accounted for 5 of the
TABLE 4. Reasons for U.S. Opposition to MDB Loans
on Environmental (Pelosi Amendment) Grounds
No EIA 120 Days in Advance of Vote
Plus Some Project Concerns
Plus Definite Project Concerns
Not Enough Public Circulation for EIA
EIA Available; Problems with Project
EIA on Time but Inadequate
Initially, as Table 4 indicates, the most common reason why the United States
opposed MDB loans on environmental grounds was a concern that EIAs were not
available 120 days before the votes occurred. In 75 of the 80 decision memoranda
for 1992 and 18 of the 21 for 1993, this was the main reason why top Treasury
officials directed USEDs to oppose MDB loans on environmental grounds. On 53
occasions in 1992 and 13 in 1993, it was the sole reason cited to justify U.S.
opposition to MDB loans. On 6 occasions in 1992 and 4 occasions in 1993, Treasury
officials also believed some aspects of the proposed projects needed further study.
In 11 instances in 1992 and one in 1993, Treasury had reservations about specific
aspects of the projects. On 5 occasions, the United States opposed MDB loans
because Treasury officials believed the EIAs had not been sufficiently circulated to
the public (though they were done on time) to meet the requirements of the Pelosi
Concern about the possible environmental impact of projects, rather than
concern about the availability or timing of the EIA study, also prompted U.S.
opposition to some MDB loans on a few occasions in 1992 and 1993. Three times,
during those years, Treasury officials ordered U.S. opposition to MDB projects
because they believed there were still serious environmental problems in their design
even though the EIAs had been circulated at least 120 days prior to board action. On
four other occasions, the United States voted against MDB loans because U.S.
agencies found major flaws in the EIA studies.
In recent years, the record shows that Treasury officials believe the MDBs
generally complete their EIA studies on time. They say the MDBs are aware of U.S.
Pelosi Amendment voting requirements and attempt to avoid running afoul of them.
Only twice, between 1994 and 1996, did Treasury officials require U.S. opposition
to MDB loans solely on grounds that their EIA studies were not available 120 days
before the board votes. On 3 other occasions, where EIAs were not available on
time, Treasury officials ordered U.S. opposition because they also believed
significant environmental problems with the projects had not been corrected. (Some
of these were category B projects where no EIA study was required by the banks but
where U.S. analysts believed there was a significant impact on the environment.) On
4 occasions between 1994 and 1996, Treasury officials ordered U.S. opposition to
loans because they believed the EIA study had major flaws or because they found
major environmental deficiencies in the project itself.
Much of the U.S. effort in the initial years went toward persuading MDBs to get
their environmental impact studies done early enough to avoid triggering a
requirements under the Pelosi Amendment for U.S. opposition to a pending MDB
loan. Treasury noted, in a decision memorandum in February 1992, that the loan in
question was the first where an EIA had been received at least 120 days before a
board vote. On several occasions, Treasury said the United States must insist that
EIA studies be prepared in advance of the board vote rather than being funded with
the proceeds of MDB loans after they were approved.
TABLE 5. U.S. Opposition to MDB Loans
Because of the Pelosi Amendment, 1992-199681
(* indicates "no" vote; remainder were abstentions)
Lobito/Benguela Urban Enviro Rehab
National Potable Water
Yanshi Thermal Power
Shrimp and Fish Culture
Transport Infrastruct Development (A)
Transport Infrastruct Development (B)
Tourism Infrastructure Development
Irrigated Ag Dev in Anambe Basin
Ag Rehab Program II
Fourth Line of Credit to BNDT
Power Utilization Effic Improvement
Water Pollution Control
Development of Pichincha West Area
01/28/92 World Bank
In a few of the instances listed here, the Administration explained its opposition to MDB
loans on the basis of environmental concerns other than those specified in the Pelosi
Amendment. An argument could be made, however, that the Administration would have had
to oppose these loans on Pelosi Amendment grounds if it had not explained its opposition
on the basis of other environmental concerns.
Rural Water Supply
Protected Areas/Wildlife Services
Second Mombassa/Coastal Water Rehab
Forest Resources Management
Rubber Scheme Phase II Project
Second Bhola Irrigation
Water Sector Modernization
Private Sector Industrial Credit
Rondonia Natural Resources Managemt
West Bengal Forestry
Marita East II Power
Credit to Banque Malienne de Credit
Fifth Drinking Water Supply Project
Power Efficiency Sector Program
Third Natl Roads Sector
Pusan and Taejon Sewerage
National Fadama Development
Municipal Development III
Structural Adjustment Loan
Blantyre Water Supply Phase VII
Treetops Smallholder Develop
National Highways II (A)
National Highways II (B)
Feasibility for Fertilizer Production
Studies/Explor Drilling, Fertilizer Prod
Dyke for Diama Dam, Senegal River
Oro Smallholder Oil Palm Dev
Ship Waste Disposal
Chido-Sodo Road (A)
Chido-Sodo Road (B)
Wool and Mohair Processing
Maharashtra Power II
Housing Market Development
Petroleum Pilot Modernization
Energy Strengthening Dereg & Privat
Third Power Transmission (Sector)
Guangzhou Pearl River Power Co
Floating Glass Manufacturing
Study Addis Ababa Water Supply III
First Multistate Water Supply (A)
First Multistate Water Supply (B)
Smallholder Tree Crop Processing
Shanghai Yangpu Bridge
Guangdong Provincial Highway
Bihar Plateau Development
Aquaculture and Artisinal Fisheries (A)
Aquaculture and Artisinal Fisheries (B)
Makebuki-Ruyigi Road (A)
Makebuki-Ruyigi Road (B)
Salt, Soda, Chloride
Second Agric Line of Credit to BNA
Secondary Towns Flood Protection
Rehab of Agric Drainage Systems (A)
Rehab of Agric Drainage Systems (B)
Third Urban Water Supply
Priv Sector Tourism & Enviro Managt
Shanghai Yangpuy Bridge
Caribbean Pine Plantation Study
Housing Completion and Sector Dev
International Road Corridor Proj
Sixth Railway Project
Feeder Highways and Rural Roads
Road Rehabilitation and Improvement
W. Siberia Oil and Gas Fields Rehab
First Municipal Finance Project
Land Dev Proj for Low-Income Families
Second Transport Sector Project
NTPC Power Generation Project
Petroleum Sector Reform Project
Koudiat Acerdoune Dam
Sidi Ban Taiba Irrigation Dam
Fisheries Sector Support Proj
Power Plant Modernization Project
Ayoun Moussa Power Project
Industrial Tree Plantation
2d Stage, Electric Power Sector III
Waste Disposal Project
02/28/95 World Bank
02/28/95 World Bank
Zhejiang Power Development
Zhejiang Power Develop (Guarantee)
05/30/96 World Bank
Jamuna Bridge Roads
Community-Managed Irrigation Sector Proj
A Non-Confrontational Initial Approach. In seeking to improve bank
performance, the Treasury Department chose not to be confrontational in its
approach to questionable loans. A few examples might be noted. In April 1992, at
the World Bank, the USED supported an IBRD power loan for an Asian country
even though the EIA had not been circulated and was only deemed to be "available"
upon request. Treasury directed the USED to inform the IBRD board that "We
expect the Bank in the future to adhere to the established practice of circulating EIA
summaries of category A projects at least 120 days prior to Board votes and are
concerned that this did not occur in this case."
In May 1992, the United States opposed an AFDB loan for a sub-Saharan
African country because the EIA had not been provided to the USED or the public
120 days beforehand, even though it was dated (and presumably prepared) earlier.
The following month, the United States supported an IBRD loan to a Latin American
country even though the EIA summary was received by the USED less than two
months beforehand. Treasury accepted the argument by World Bank staff that the
study had been completed five months earlier and would have been available on
In September 1992, the United States voted for an IBRD education loan for a
Latin American country even though it was a category A project and no EIA had
been prepared. Treasury said the project had no significant environmental effects.
In October, the United States supported a category B-equivalent loan at the IDB,
though it argued that an EIA should have been done because the project raised
significant zoning and land-use concerns. In December 1992 and February 1993, the
United States supported IBRD loans for two large Asian countries, even though the
EIAs had been received less than 120 days beforehand. Treasury again accepted the
argument of World Bank staff that the EIA studies had been prepared much earlier
and would have been available upon request. Treasury expressed doubt, in its
analysis of one of these loans, whether the public would have been able to acquire
copies of the EIA independent of a U.S. Government request, but it decided to
support the loan anyway.
More Recent U.S. Efforts to Strengthen the Process.
EIAs Should Have an Impact on Project Design. As the timeliness and
availability of EIA studies have improved, the United States had stressed other
issues. In recent years, for example, Treasury officials have argued that EIA studies
should be used to bring about improvements in proposed projects. Their preparation
120 days in advance of the board vote was not sufficient, if the issues raised in the
EIA studies were not addressed in the subsequent project design. As discussed in
Chapter I, the World Bank's own recent evaluations of its EIA performance have
found that environmental analysis is often not used effectively in the MDB project
design process. The United States opposed a loan to an Asian country in 1994
largely on account of these concerns. Likewise, the United States opposed three
loans in 1993 and another in 1996 because the EIAs did not address resettlement
questions when these were relevant and when the project was not consistent with the
policy of the bank financing the loan.
EIAs Should Be Done for Planned Subprojects. The United States has also
addressed other environmental issues in its reviews of MDB loans. The United
States opposed an ADB loan for a large South Asian country in 1996, for example,
because the EIA studies for its major subcomponents had not been completed.
Efforts to improve environmental standards for project subcomponents have been a
constant theme in Treasury Department analyses of prospective MDB projects. In
1993, the United States opposed two IBRD loans for countries in North Africa and
Eastern Europe and an EBRD loan for a country in Central Europe on grounds that
no EIA studies were being done for identifiable subprojects. The U.S. vote in 1996
suggests that the United States believes that EIA reviews for planned subprojects
should not only be required but should be completed before the MDB loan is
EIAs Should Consider Alternatives and Consult the Public. The United States
opposed other loans in recent years because their EIAs were deemed inadequate or
because they failed to examine alternatives to the project under consideration or
because the public was not consulted or involved in the execution of the EIA study
itself. The United States opposed an IDB power loan in 1994, for example, because
of insufficient public participation in the EIA and project design. Treasury officials
argue, and a CRS field study later confirmed, that the U.S. concerns on this score
were alleviated after the IDB stressed the need for public participation in its
implementation of the project. The examination of alternatives and increased public
participation have been issues of continuing concern. As discussed in Chapter I,
recent World Bank studies have confirmed that these are two areas of weakness in
World Bank procedures. Since at least 1992, Treasury officials have mentioned
them in decision memoranda as reasons why the United States should question and
possibly abstain or vote against particular MDB loans.
E. Evaluation and Discussion
Changing MDB Procedures. The strategy envisioned by CIEL in its
comments on the 1992 rule involved establishment of mechanisms in the U.S.
Government for disseminating information and informing NGOs about MDB
operations. The strategy which the U.S. Government pursued instead envisioned
establishment of mechanisms in each bank for making information accessible to the
Most analysts agree the latter has been a preferable approach. All the MDBs
have created or are creating systems for disclosing information to the public. The
approach taken by the U.S. Government enabled it to sidestep many potential
conflicts that might have occurred between it and the banks or other member country
governments. For example, it avoided the controversy that would have likely
occurred if the United States publicly distributed information the MDBs and other
countries wished to keep confidential.
It also has contributed to changing the banks' attitudes. In many respects, the
MDBs are now more open and more willing to inform the public about their plans
and operations. (As noted in the previous chapter, there are problems or
shortcomings with the banks' implementation of their procedures in that area.) The
MDBs now say officially, and many MDB officials seem to believe, that disclosure
of information and public discussion can help improve the prospects and
effectiveness of their planned operations.
Information about U.S. Votes. CIEL recommended, in its comment on the
1992 Temporary Rule, that Treasury be required to publish a statement in the Federal
Register justifying its vote on every MDB loan affected by the Pelosi Amendment.
U.S. officials respond, with some frustration, that they already lack sufficient time
and staff to meet all reporting requirements. More reporting requirements, they say,
would either put them further behind or reduce the time they have to monitor MDB
activities. CIEL may have been motivated, in 1992, by concern that Treasury would
ignore the requirements of the Pelosi Amendment.
CIEL argued that the U.S. Government should tell the public how the USEDs
vote on environmentally-sensitive MDB initiatives. The U.S. Government currently
has no procedure for making this information systematically available to the public.
The Pelosi Amendment does not require the Administration to inform Congress
or the public concerning about votes the USEDs have cast on environmentallysensitive proposals.82 Other provisions of law require the Secretary of the Treasury
to report annually to Congress and the public about U.S. policy in the MDBs and
The Pelosi Amendment requires the executive branch to report to Congress about the
progress the United States has made encouraging the MDBs to adopt consistent and timely
environmental review procedures for their projects. The question of publicizing the votes
cast by U.S. Executive Directors is not addressed. International Financial Institutions Act,
steps taken to meet particular legislative mandates. These do not require the
Administration to disclose how the USEDs voted on individual MDB loans.
The human rights provisions of the International Financial Institutions Act
require Treasury to report quarterly to Congress, however, about U.S. votes in the
MDBs. Each loan and each vote must be listed and information must be provided
about human rights conditions in the borrower country and any basic human needs
orientation for the loans.83 The Administration has used this report to Congress as
a vehicle for explaining all U.S. abstentions and negative votes in the MDBs,
including all loans opposed on account of Pelosi Amendment requirements.84 The
Treasury Department does not normally distribute copies of this report to the public
and the Congressional committees do not normally publicize their contents.
The executive branch could delete references to the Pelosi Amendment (and
other legislation which prompts U.S. opposition to MDB loans) from its quarterly
human rights reports to Congress. This might be unacceptable to Congress, however,
as it could hinder congressional oversight of the executive branch and MDB
operations. Quarterly reports to Congress may be made available to the public by
legal process under the Freedom of Information Act (FOIA).
Some officials argue that the United States should not publicize its votes on
MDB loans. They say this will shift the focus of attention away from the overall
content of the banks' environment policy towards debate about the details of
particular loans. They also say more publicity could hurt U.S. relations with other
countries and it could lessen the spirit of government-to-government cooperation
necessary for the implementation of environmental reforms. Other observers argue,
though, that the disclosure of U.S. votes will help the public monitor the
implementation of U.S. policy. They also say it will help the public determine
whether the banks' are complying in their loan programs with the principles and
standards approved in their general policies.
In lieu of potentially being required to release the quarterly reports to the public
under the FOIA, the Administration might establish a system for releasing a version
of the quarterly reports voluntarily. The simplest procedure might be for Treasury
to give the Commerce Department a copy of the quarterly report. The Commerce
Information Service could then distribute it, at a nominal charge, to the public.
International Financial Institutions Act, sec. 701(c).
See, for example, the report to the House and Senate authorizing and appropriating
committees, International Financial Institutions' Quarterly Transactions Opposed by the
United States on the Basis of Human Rights Considerations (01/01/96 - 03/31/96), August
9, 1996. The Administration used to publish this same information in its public report on
U.S. participation in the international financial institutions. This report has not been issued
for several years, due to the shortage of staff at Treasury and the pressures of other, more
immediate, obligations relating to U.S. participation in the IFIs. For the latest volume in the
series, see: International Finance. Annual Report of the Chairman of the National Advisory
Council [NAC] on International Monetary and Financial Policies to the President and to the
Congress for Fiscal Year 1992. U.S.G.P.O., 1994. The Secretary of the Treasury chairs the
Compliance with the Law. Some U.S. votes in 1992 and 1993 seemed to be
generous in their acceptance of propositions that seem only marginally in accord
with the requirements of the Pelosi Amendment. Noteworthy was the view that
unpublicized EIA studies would have been made available to the U.S. Government
more than 120 days before the board vote if the U.S. Government had requested
them. Also noteworthy was the assumption that these studies would have been
equally available to the public if requested, even for countries where the concept and
procedures for public disclosure are not well established.
Arguably, however, the executive branch's approach to the disclosure issue in
1992 and 1993 has borne fruit. The MDBs have all adopted (or plan to adopt)
procedures providing the public with considerable access to information. In many
ways, the focus of debate has undergone a major shift. Previously, there was
considerable discussion whether the MDBs can or should disclose any information
about their operations to the public. Now, the issue seems to be more a question
whether enough of the right kinds of information is being disclosed to satisfy public
The Pelosi Amendment stipulates that USEDs may not vote for
environmentally-sensitive MDB loans unless an EIA or a comprehensive summary
"has been completed by the borrowing country or the institution, and has been made
available to the board of directors of the institution" and to "affected groups and local
nongovernmental organizations" at least 120 days before the date of the vote.85 The
executive branch interprets the 120 day rule quite broadly. Leaving aside controversy
about the applicability of the Pelosi Amendment to IFC and other MDB nonguaranteed private sector loans (see below), however, there is little evidence that it
is ignoring the requirement.
The MDBs generally require that EIA studies be released to the public in the
borrower country before they are submitted to the banks and before the banks begin
serious evaluation of the proposed project. The executive branch has no independent
procedure for knowing when 120 days have elapsed between the public release of an
EIA and consideration of the relevant loan by an MDB executive board. Some
MDBs require that 120 days must elapse. Others (such as the World Bank) have no
such requirement but they say that environmental studies must be released in the
affected country at the same time they are submitted to the banks. Key steps in the
project preparation process cannot occur before the EIAs are released. Treasury
officials assert that this procedure will normally allow enough time for public
discussion to meet the U.S. time requirement. The banks seem to have
acknowledged through their procedures that 120-day waiting period is of critical
importance to USEDs.
U.S. officials argue that the 120 day rule has been satisfied if the EIA is
released early enough by the borrower country. They say the U.S. Government does
not need to determine whether members of the public inside or outside the country
or U.S. agencies have had possession of the EIA for the requisite 120 days.
According to this interpretation, a document is "available" to the MDB board of
directors, affected groups, and NGOs when it is publicly released in the borrower
International Financial Institutions Act, sec. 1307(A)(1)(a).
country. This interpretation seems to assume that it is the responsibility of the MDB
board, affected groups, and NGOs to acquire copies of the publicly released
environmental studies. It does not assume it is the banks' duty to see that copies are
made available to all concerned members of the public 120 days before the scheduled
The language of the Pelosi Amendment does not appear to address this
interpretation of the 120 day rule. Analysts can debate whether MDB documents
should be assumed to be "available" everywhere the moment they are available
somewhere. Most would agree, however, that the executive branch does have some
leeway (absent a firm legislative history to the contrary) in its interpretation of the
law. Treasury's current position is more oriented towards disclosure than the
position it took in 1992 and 1993. At that time, Treasury accepted the banks'
argument that documents were "available" to the public and the U.S. executive
director if they had been written at least 120 days before loans came up for
consideration by the board -- even when they were held unpublicized and
uncirculated in the files of MDB staff.
The Pelosi Amendment and MDB Loans to Private Sector Borrowers. The
Treasury Department argues that the Pelosi Amendment does not apply to the IFC
and the private sector financing programs of the regional banks. Many NGOs and
other observers argue, by contrast, that the Pelosi Amendment applies to the
multilateral agencies' private sector operations. These NGOs believe the executive
branch is in violation of its responsibilities under the U.S. legislation in this regard.
The International Finance Corporation channels all its assistance (both loans
and equity investments) to private firms without any provision for government
guarantees of repayment. The EBRD channels most (about 75% of total
commitments in 1995) of its funds to such recipients. The IDB and ADB lend a
small portion (in 1995, 3% of all ADB and 2% of all IDB commitments) of their
funds annually to private sector borrowers. The AFDB has announced plans to begin
providing such assistance in the near future.
The Other MDBs and the Pelosi Amendment. The World Bank and the
regional banks generally provide the public with information about their planned
loans to public sector borrowers well in advance (usually at least 120 days) of their
executive boards' action on those loans. For loans and equity investments involving
private sector borrowers, however, they provide the public with less information and
they disclose it later in the process than they do information on their public sector
operations. (For more details, see chapter 2 of this report.) For example, the IFC
says copies of its summary project information documents will be distributed to the
World Bank public information center at least 30 days before the date the Bank's
executive board is scheduled to consider the project. EIA studies for IFC projects
likely to have a major impact on the environment will be distributed at least 60 days
before the board vote. The EBRD seems to model its procedures in this area after
those of the IFC. The IDB applies the same disclosure rules to its private and public
sector operations. The ADB requires that summary EIAs for category A (and some
category B) private sector projects must be available to the public and executive
directors 120 days prior to Board consideration, as with its public sector lending.
Project briefs for private sector ADB projects are available, however, only 30 days
Arguments Why the Amendment Does Not Apply. The Treasury Department
posits three reasons why it believes the Pelosi Amendment does not apply.86 First,
it argues that the IFC is not a "multilateral development bank." The Pelosi
Amendment speaks, on several occasions, about assistance provided to "borrower
countries." Treasury argues that an organization such as the IFC, which lends only
to private entities without official repayment guarantees, is not an MDB within the
meaning of the Pelosi Amendment because it has no "borrower countries."
Second, Treasury says that application of the Pelosi Amendment to the private
sector financing operations of the regional banks would be inappropriate. While
agreeing that the EBRD, ADB, and IDB are multilateral development banks,
Treasury officials argue that the need for confidentiality and the time requirements
for MDB private sector operations are much more demanding than those for MDB
public sector loans.87 These projects are often developed much faster than the 120
day timetable will allow. Treasury Under Secretary Summers noted, for example,
in a April 1995 decision memorandum approved by Treasury Secretary Rubin, that
"The IFC project cycle is shorter than the World Bank's and often dependent on
actions of a private sector investor responding to market conditions."88 Treasury
officials say the same situation prevails in the EBRD and other MDB private loan
programs. Premature disclosure of the client's plans or other proprietary information
could have a negative effect on a project's viability or the client's broader interests.
Since the Pelosi Amendment does not address these concerns, Treasury officials say
its application to the MDB private sector programs would be unwise.
Third, Treasury legal analysts says Congress has accepted the Treasury
Department's interpretation of the Pelosi Amendment because it has not legislatively
overturned or revoked it.89 They cite, for example, language in a 1990 Senate
Appropriations Committee report 90 which notes that the Committee included
Then-Treasury Secretary Lloyd Bentson first made this argument to Congress when
responding to a question by Representative Pelosi in 1993. U.S. House of Representatives.
Committee on Appropriations. Subcommittee on Foreign Operations. Foreign Operations,
Export Financing, and Related Programs Appropriations for 1994. April 28, 1993. Part 4,
p. 58. The argument was spelled out in more detail in a legal paper prepared by the
department the following year. David D. Joy, Senior Counsel (International Affairs).
Department of the Treasury Office of the General Council. Application of the Pelosi
Amendment to the International Finance Corporation ("IFC"). August 1, 1994.
Discussion with Treasury Senior Council David Joy, February 1997.
U.S. Department of the Treasury. Memorandum from Lawrence Summers, Under
Secretary for International Affairs, to Treasury Secretary Robert Rubin. FY 1995 IFC
Appropriation: April 1 Conditions. April 25, 1995. Photocopy. Mr. Summers said he
believed this was "a defensible legal argument" supporting this waiver of the Pelosi
Interview with Treasury Senior Counsel David Joy, February 1997.
Senate Committee on Appropriations. Foreign Operations, Export Financing, and Related
provisions in the foreign operations appropriations bill relating to the EBRD in order
to ensure that "efforts to broaden private sector activities in Eastern Europe will not
further aggravate the existing environmental crisis, and actively promote economic
activities which will contribute to the restoration of the environment in the region."
These included procedures for "consultation with, and involvement of, the public and
interested nongovernmental organizations in Bank operations, including an
opportunity for comment by local communities which may be affected by Bank
operations." Treasury legal experts argue that Congress knew in 1990 how the
Treasury Department planned to interpret the Pelosi Amendment.
appropriations committees did not criticize the Department's interpretation in their
reports. This shows, the Treasury legal experts indicate, that they accepted the
Treasury interpretation of the Pelosi Amendment in 1990.
The House Banking Committee -- which had originated the Pelosi Amendment
the previous year -- did not criticize the Treasury interpretation in its 1990 report
authorizing U.S. participation in the EBRD.
The Committee said that
"environmental conditions in Eastern Europe are so degraded" as to warrant special
action by the EBRD.91 Arguably, by this line of analysis, the absence of contrary
language in the Banking Committee report is an indication that it accepts Treasury's
view of the Pelosi Amendment in 1990.
Problems with the Argument for Non-Application. Whether Congress could
be expected to agree in 1990 with an argument the Treasury Department did not
express publicly until 1993 is a matter for conjecture. Congress has spoken more
recently on this issue. In 1994, it included provision relating to the IFC and the
environment in the FY1995 foreign operations appropriations act. It specified that
half the funds appropriated for the IFC would be available for payment after April
1, 1995 only if the Secretary of the Treasury determined (and reported to Congress)
that the IFC is pursuing "reforms comparable to those adopted by the [IBRD]
regarding the environment, information disclosure, and resettlement.92 The House
Appropriations Committee said, in its report accompanying that legislation that it
"continues to believe that the IFC is lax in considering the environmental effects of
its lending operations. The Committee believes that the IFC should come into
compliance with the intent of the Pelosi Amendment." Treasury Secretary Rubin
determined in April 1995, that the IFC's environmental reforms are comparable to
those of the IBRD.93 That Congress enacted this legislation would suggest that it did
Programs Appropriation Bill, 1991. S. Rept. 101-519, p. 55.
House Committee on Banking, Finance and Urban Affairs. International Development and
Eastern European Recovery Act of 1990. H. Rept. 101-590. Pp. 39-42. Though the issue did
not come up in discussion, Treasury would presumably interpret the fact that the Banking
Committee made no reference to the Pelosi Amendment in its discussion of the IFC (pp. 424) as further evidence that the Committee accepted the Treasury Department's interpretation.
Section 567(b)(2) of the Foreign Operations, Export Financing, and Related Programs
Appropriations Act, 1995. (P.L. 103-306.)
Memorandum from Summers to Rubin, April 25, 1995. The formal document
[Determination Required Under P.L. 103-306, Section 567, Subsection (b)] is dated April
not accept the Treasury Department's argument that the Pelosi Amendment did not
apply to the IFC or that different standards should apply to the IFC and other World
The Pelosi Amendment does not define the term "multilateral development
bank." Therefore, the Treasury Department may have a basis for arguing that the
IFC is not covered by that legislation. However, there are other reasons for believing
the IFC might be covered by the Amendment.94 Titles XII and XIII are the only parts
of the International Financial Institution Act which do not define the term
"multilateral development bank." The Pelosi Amendment is in Title XIII. The
Administration has acted in the past as though those titles covered the IFC. For
example, it has never said the IFC was exempt from the Title XII congressional
consultation requirement. Likewise, it never argued that the IFC is exempt from the
Title XIII language establishing the Early Warning System. Information on IFC
funding plans and IFC projects have been included in both the congressional
consultation and the early warning processes.
The immediate recipients of IFC assistance are not "borrower countries."
Nevertheless, the idea of recipient countries is not foreign to the IFC's vocabulary.
Its Articles of Agreement say the purpose of the IFC is to "further economic
development by encouraging the growth of productive private enterprise in member
countries, particularly in less developed areas, thus supplementing the activities of
the International Bank for Reconstruction and Development." Assistance to private
sector firms is therefore a means towards this goal, not the goal itself. The annual
reports of the IFC, and the regional banks report prominently the amounts of money
they have provided to individual countries. They do not organize their data as
though the concept "country" is irrelevant. Governments have a role in IFC
operations, even though they are not required to co-sign or guarantee the repayment
of IFC funds. The IFC Articles of Agreement say that it "shall not finance an
enterprise in the territories of any member if the member objects to such
Areas of Possible Agreement. There may be validity to the argument by
Treasury and World Bank officials that the timetable and notification requirements
of the Pelosi Amendment may not be appropriate for all MDB private sector
operations. There is nothing intrinsically determinative about a 120 day requirement.
The issue is whether the notification period allows sufficient time for the public and
member country governments to assess proposed IFC projects and to inform the IFC
about possible problems.
28, 1995. Under Secretary Summers notes in the memorandum that information on IFC
projects with major environmental impacts is available 60 days and information on projects
with lesser but still significant impact is available 8 days before the board vote. He noted
that Treasury's environmental group "has opined that the IFC has not met the Congress's
For a further discussion of these points, see: Jonathan E. Sanford. Does the Pelosi
Amendment Apply to the IFC? Memorandum to the Honorable John E. Porter. (Distributed
by permission.) Congressional Research Service. August 12, 1994.
In some cases, where the technology is known, the project location is relatively
accessible, and the applicant has a good environmental record, a shorter time period
might be feasible. The fact that a potential IFC customer needs fast action on an
application in order to protect its commercial viability may be a legitimate concern
but not necessarily one that overrides appropriate environmental review of the
proposed activity. Likewise, there may be times where the IFC needs to disclose
project information of a proprietary nature to its member country governments but
not to the public. However, a case-by-case rather than a general authority for such
restrictions could meet these requirements. The IDB's private sector program seems
able to function effectively using the same 120 day disclosure rule applicable to
regular IDB public or publicly-guaranteed loans. The IFC itself reported that, in
1995, the EIA studies for over half its category A projects were released to the public
more than 120 days before those projects were considered by the executive board.
The House Banking Committee said, in the committee report accompanying the
original legislation containing the Pelosi Amendment, that any waivers of public
disclosure shall "be the exception rather than the rule.95" The basic question is
whether the Pelosi Amendment applies to U.S. participation in the IFC and the other
private sector MDB programs. The legal rationale the Administration cites to justify
its position may seem strained. However, the operational concerns the
Administration cites -- its assertion that the requirements for an MDB private sector
assistance program are sometimes different from those for MDB public sector loans
-- seem reasonable. This controversy likely complicates U.S. participation in the
IFC and exacerbates public uneasiness about the MDB program. Congress and the
Administration might want to consider whether they perceive any grounds for
flexibility or compromise on this issue.
Reclassification of MDB Loans. The 1992 Temporary Rule for implementing
the Pelosi Amendment says that U.S. officials should seek a reclassification to put
proposed MDB projects in a higher category for environmental sensitivity if they
believe these projects need more environmental analysis than the banks intend to
require. Treasury and USAID officials say the interagency group has sometimes
identified projects with lower categorizations that U.S. experts believe merit a
category A classification.96 They indicate, though, that it is extremely rare for
projects to be upgraded because of a U.S. request, although they note they have not
conducted any systematic analysis of the issue. They say that MDB staff may order
an environmental review (including an EIA) for a project if the United States raises
persistent concerns. The original "B" categorization, though, remains in effect.
The issue of reclassification is a major one. Success in persuading the banks
to sometimes order the preparation of environmental studies for category B projects
is a step towards that goal. However, it does not address the broader issue. As
discussed above, those EIA studies may not be available to the public as easily or as
House Committee on Banking, Finance, and Urban Affairs. International Development and
Finance Act of 1989. H. Rept. 101-271, October 6, 1989, p. 51.
The office of the USED at the ADB says there have been very few cases where the United
States has made a formal request for reclassification. Hence, it says, the idea that
reclassification happens only rarely is based on a rather small number of cases where it was
early as are EIA studies done for category A projects. As discussed in Chapter I,
many analysts believe the banks' current procedures result in too many projects with
potentially significant environmental consequences being listed as category B
projects. U.S. officials say they believe the banks' current procedures identify most
of the projects that are likely to have significant negative effects on the environment.
The record shows, however, that the United States has opposed some category B
projects and raised questions about others regarding possibly negative environmental
The banks generally do not have formal procedures for reconsidering the
environmental classifications of projects determined when they are first listed with
the MDB public information centers.97 Consequently, there is no way to know
whether many or few of the projects on their category B lists have unaddressed
environmental problems. Absent information on this score and absent procedures
for gathering that information, outsiders must trust that MDB staff will be correct in
their judgments about the likely environmental effects of projects and their need for
environmental impact analyses.
U.S. officials have few expectations of success when they seek the
reclassification of particular projects. The executive branch might be more effective,
and arguably more in compliance with the spirit of the rule, if it promoted instead
reform of the MDB classification system and adoption of an official appeal
mechanism within the multilateral banks.
Circumscribed Scope of U.S. Review. CIEL argued, in its comment on the
1992 Temporary Rule, that the executive branch was improperly limiting the scope
of the Pelosi Amendment. The Amendment limits how USEDs may vote on a
prospective "action" by a multilateral bank. The 1992 Temporary Rule governs how
the U.S. Government shall deal with proposed MDB "projects" which might have a
significant impact on the environment. Specific projects are only one of several
kinds of activities the banks may finance through their loan programs. Others
include structural adjustment (SAL) and sector adjustment loans (SECAL), technical
assistance loans, financial sector loans, public sector reform loans, and loan
guarantees. Other MDB board actions which may affect the environment include
approval of MDB policies or operational directives regarding the environment, MDB
organizational changes affecting the environmental staff, and MDB country strategy
The interagency staff environmental group does not normally examine the
possible environment effects of MDB adjustment loans. It does study SECALs,
though, if they seem to include embedded projects -- particular activities funded as
a part of the larger sector reform -- that might need environmental analyses if they
were proposed as separate loans. Officials say they previously examined the possible
environmental consequences of SECALs, but they found it was often difficult to
show a direct effect on the environment. SECALs for some sectors -- transportation
for example -- are still studied to see whether they contain embedded projects that
require further attention. Officials say the interagency group also examines other
The Office of the USED at the ADB says the Asian Bank has a formal mechanism for
reclassification, as the ADB Environment Division is involved in project processing.
MDB initiatives that touch upon the environment. In particular, they mention MDB
policies and operational directives and the environmental aspects of MDB country
In their environmental review, the U.S. agencies do not limit themselves to an
examination of MDB "projects," as the language of the 1992 Temporary Rule might
suggest. It is not clear, however, that they take into account all the environmental
issues that might be associated with prospective MDB "actions."
The World Bank Operation Evaluation Department (OED) has noted,98 in a
discussion of the lessons learned from the Bank's past programs of adjustment
lending, that "Adjustment policies have both positive and negative implications for
the environment." OED noted, for example, that trade liberalization, exchange rate
depreciation, or changes in taxes or subsidies may "induce changes in the structure
of production, which inevitably affects the environment." OED analysis said that
more emphasis on the environmental implications of adjustment programs is needed.
Experts from the World Bank's environment department agree.99 They found
that the broad economic policies embodied in many MDB programs can have farreaching effects on environmental conditions. "Although these programs are not
intended to effect (sic) environmental quality," they report, "they can easily do so -for good or bad."
The linkages between economy-wide policies and the
environment are not well understood. The World Bank environmental experts
indicate, however, that they hope further "empirical work may help identify and deal
with the most important potential environmental impacts."100
An adequate methodology for determining the likely environmental effect of
MDB adjustment loans does not currently exist. Consequently, there is no
World Bank. Operations Evaluation Department. Adjustment Lending: Lessons of
Experience. World Bank Home Page (http://www.worldbank.org), OED Lessons and
Practices, 12 pages. The reference to the environment is on p. 6.
Mohan Munasinghe and Wilfrido Cruz. Economywide Policies and the Environment:
Lessons from Experience. World Bank Environment Paper Number 10. The World Bank,
1995, p. 1. Examining the effects of Bank macroeconomic or sectoral policies in eleven
countries, the authors identified a number of key relationships and possible implications.
They summarize their findings in five points (p. Ix). First, removal of price distortions,
promotion of market incentives, and relaxation of other constraints will generally lead to
both economic and environmental gain. Second, adverse side effects occur when economywide reforms are undertaken and other policy, market, or institutional imperfections remain
unaddressed. Third, measures aimed at restoring macroeconomic stability will generally
yield environmental benefits because instability undermines sustainable resource use.
Fourth, the stabilization process may also have adverse short-term impacts on the
environment. Fifth, economy-wide policies will have additional long-term effects on the
environment through changes in employment and income distribution. The study was later
rewritten (by the same authors with the addition of Jeremy Warford) for broader distribution.
See: "Greening Development: Environmental Implications of Economic Policies."
Environment, v. 38 (June 1996), pp. 6-11, 31-38.
Ismail Serageldin, World Bank Vice President for environmentally sustainable
development, in his introduction to the study. Ibid., p. iv.
systematic basic on which the Treasury can apply the Pelosi Amendment to these
loans. Nevertheless, consistent with the goals of the Pelosi Amendment and the
findings of the above-mentioned studies, the U.S. executive directors might urge the
banks to pay more attention to possible environmental impact in MDB adjustment
loans. They might, for example, ask their borrower countries to document whether
they have adequate environmental procedures in effect to deal with the conditions
that may exist if the policies embodied in the MDB adjustment loans have their
intended effects.101 The banks often report that the environmental laws and
enforcement procedures in developing countries need improvement.102
It could be argued that the Pelosi Amendment requires U.S. executive directors
to oppose MDB loans when the banks or the borrowers have no mechanism in effect
to inform the public that project funded with MDB money is planned and what its
likely environmental effects might be. As noted before, the MDBs finance many
programs where the ultimate recipients of the money lent by the banks cannot be
identified at the time the loan comes before the MDB executive board. The banks
require that their borrowers have procedures for assessing the likely environmental
impact of these future subloans, but they do not require that they also have
procedures for making this information available to the public. Treasury says that
this information is available to the public in borrower countries. The CRS
examination of projects in Central America showed, however, that the MDBs do not
normally require that their borrowers have procedures for informing the public
In 1993, for example, the World Bank approved an IDA agricultural sector adjustment
loan for Honduras which sought, among other things, to increase agricultural production
(including non-traditional exports such as pineapples and melons) through reforms in the
land titling and agricultural credit systems. The U.S. Executive Director voted for the loan.
The World Bank did not attach any conditions to the loan requiring the Honduran
Government to prevent the inappropriate conversion of forest to cropland, to restrict
cropping of steep grades, or to regulate the post-use runoff of agricultural chemicals. The
loan document noted, as an acceptable risk, the fact that the institutional capacity of the
Honduran Government was weak and it might have difficulty monitoring the implementation
and effect of the measures that were mandated by the loan. The loan did not require the
government to strengthen its capacity. Observation suggests that the new incentives initiated
by the SECAL may have had some negative environmental consequences. South of San
Pedro Sula, for instance, one can see fields of pineapples on hillsides that were reportedly
planted in recent years. Some of this farmland is reportedly within the boundaries of a forest
reserve and was cleared without official permission. It seems possible that, if such activity
is visible so easily from the main highway between the two largest cities in the country,
similar activity must be taking place less visibly elsewhere.
For example, the World Bank and IDB said, in the loan proposals for activities they
financed in Honduras and El Salvador in the early 1990s, that the projects would (in the
words of one loan for Honduras) "comply with all provisions of current legislation on
environmental protection and the conservation of natural resources...." (IDB. Multisector
Preinvestment Program Loan Proposal. August 3, 1993, p. 19.) Subsequently, the World
Bank and IDB approved loans in 1995 to help these countries strengthen the agencies
responsible for the implementation of their environmental policy, to develop improved
environmental policies, and to strengthen their legal and regulatory framework for
beforehand (or even afterwards) about the likely environmental effects of these
U.S. officials might encourage the MDBs to require their borrowers to build
systems for the public disclosure into the projects funded by MDB loans.104 This
would seem to be consistent with the goals of the Pelosi Amendment and the spirit
of the banks' own information disclosure policies.
Consultation with the Public. A considerable amount of informal discussion
apparently takes place between NGOs and U.S. officials through telephone, personal
or electronic mail conversations on occasions other than formal NGO-government
meetings. There is no indication, despite concerns raised by CIEL and others in
1992, that the executive branch has sought to limit public comment to particular
The 1992 Temporary Rule says the public may file written comments on
prospective MDB projects with Treasury and that the public may examine the staff
appraisal reports for these projects at the banks' public reading rooms or the Treasury
For example, in 1994 and 1995, the IDB made loans to El Salvador and Honduras to help
finance through their Social Investment Funds (FIS) the construction of infrastructure
facilities designed to meet pressing community-level educational, health, water, and
sanitation needs. In 1993, the IDB made a loan to the Central Bank of El Salvador to finance
a relending program for microenterprise. In 1995, it made another loan to the Central Bank
for a relending program designed to stimulate growth in the private sector. The U.S.
Executive Director at the IDB voted for all four loans. The IDB required, in the loan
documents approved by the IDB executive board, that the Honduran and Salvadoran FIS and
the Salvadoran Central Bank have firm procedures in effect to assess the environmental
implications of all the subloans financed by these operations. Interviews showed that the
IDB staff worked closely with the borrowers to see that the quality of their environmental
review procedures was sustained. There were no provisions in these loans, however, for
public access to information about the likely environmental impact of the subprojects. Top
management officials in several of the borrower organizations told the author they would
have been willing to have a public disclosure system if the IDB had required it and included
its costs in the loan. Given the nature of the activities financed, it is likely that the IDB
would have required an environmental review and public disclosure for many of the
subprojects if they had been identified initially in the loan documents approved by the IDB
Prominent among the goals of the IDB's 1994 El Salvador environment loan and the
associated technical assistance were steps to improve the government's systems for obtaining
environmental information and doing environmental impact assessments. These were
intended to "provide the basic tools needed to finish putting in place the environmental
management system ...[as] an essential prerequisite for launching an environmental qualitycontrol program and for setting a standard for sustainable development, as set forth in the
country's environmental strategy." Ibid. (Loan document), para. 2.7, p. 6. There was no
indication in the loan document or environmental brief that the agencies strengthened by the
loan and grant were asked to institute procedures for informing the public about
environmental conditions in the country or about the results of their environmental impact
studies. When asked, the key officials of the relevant Salvadoran agencies expressed strong
reservations about the public disclosure of this type of information. Spokesmen for
Salvadoran NGOs said they thought the government would institute disclosure procedures
only if it were required to do so by a donor organization.
Department library.105 Two weeks is allowed for the submission of such comments
after a public reader sees a document. This type of access was seen as a necessary
option in 1992, when the MDBs were still sometimes unwilling to share information
directly with the public.
Treasury officials say this process has fallen into abeyance with the
establishment of public information centers at the multilateral banks. The 1992
Temporary Rule says that public comments on MDB projects shall remain on file
and be open to public examination. Treasury officials say that few written
communications are received. Notes on oral comments by NGOs may be kept by
U.S. officials but they are not normally shared with third parties.
The Treasury Department reports that the USED offices at the banks receive a
considerable amount of information directly (through faxes, calls, letters, etc.) from
NGOs, companies, and other members of the public about projects the MDBs have
under consideration. This information is reportedly given serious consideration. The
concern by CIEL in 1992 that the formal requirements of the 1992 Temporary Rule
would be used to constrain public comment has proven groundless.
There is no indication that direct written public comments received by USED
offices are submitted to the Treasury Department. As mentioned, the 1992 rule says
that all written public comments shall be available for public inspection at Treasury.
Oral comments are supposed to be made in a public forum.106 There is no indication
in the rule how Treasury should treat oral comments received privately outside a
public forum. No information is currently available as to what interests contact the
USED offices most often. The patterns may be similar to those for public contact
(see section D above) with the banks' public information centers.
Sources say that information developed by NGOs is a major way the U.S.
Government becomes informed about potential MDB environmental problems or
issues. In some ways, projects are deemed to have a "significant" environmental
impact if they elicit sufficient NGO concern. Close collaboration with NGOs helps
amplify the U.S. Government's ability to monitor the environmental implications of
pending MDB loans. The process is rather ad hoc, however. Considerable attention
is given to the relatively few projects that are perceived to be problems. Little
attention is given to other projects that raise fewer immediate concerns. The process
is heavily dependent on the capability of NGO staff who offer their services,
assisting -- and pushing -- the U.S. Government and the MDBs to take action on
problems they identify and document.
Reports by U.S. officials are likewise an important way the NGOs get additional
information about projects or about changes that may have taken place as a result of
their protestations or U.S. official inquiries. Discussions at Tuesday Group meetings
may identify points of concern. U.S. officials may discuss these with MDB staff and
Text of 1002 Temporary Rule, paragraph 26.4(a)(1).
Ibid., paragraph 26.4(a)(2). Presumably, though the notes taken by the Treasury
Department are not available for public examination, members of the public attending these
meetings are aware of the comments made by other participants.
report their findings to the NGO participants. This may serve to alleviate concerns
or it may lay the groundwork for a new round of analysis and inquiry.
The deliberations of the Tuesday Group and the public access to EIA studies
and other MDB documents has been very valuable to the NGOs who track MDB
activity in order to identify and work to remedy environmental problems. These
provide documentation and data on the potential design and environmental
implications of planned MDB projects. They also establish the need for mitigation
options--often written into loan documents as conditions or requirements--that can
be tracked during implementation.
It is less clear how useful this process is for local populations, who often are not
aware of projects or information about projects until they are contacted by
Networking between Washington or Western-based
organizations and local people or groups may help shape the "grassroots" issues the
international NGOs will subsequently emphasize in their discussions with the banks
and the U.S. Government.
Coverage by USAID's Early Warning System has been uneven. It does not
appear to be a sufficient means, in the absence of NGO input, for the accumulation
of information about the likely environmental impact of planned MDB projects.
Most U.S. missions abroad have neither the time nor the skills needed for an
independent examination of proposed MDB operations. Most draw upon discussions
with MDB resident missions, local or foreign NGO observers, or local government
agencies for much of the information they develop.
The number of projects studied by the USAID Early Warning System is
normally only a fraction of the total number of environmentally-sensitive projects
under consideration by the banks. The March 1996 Early Warning System report
focused on 21 MDB projects -- two in Africa, two in Asia, three in the Middle East,
eight in Eastern Europe, and six in Latin America.107 By comparison, in January
1997, the World Bank had 190 IBRD and IDA projects under consideration for subSaharan Africa alone.108
Until the MDBs began implementing their public disclosure policies in 1992,
the USAID Early Warning System was one of the few publicly available documents
assessing the potential environmental impact of prospective MDB projects.
Arguably, it helped identify projects whose environmental problems were most
serious and most evident. NGO and U.S. officials say it is unusual today for the
Early Warning System to identify problems in MDB projects that other observers
have not already identified. Several instances were noted, though, where
investigations by USAID staff following up leads from the Early Warning System
. U.S. Agency for International Development. Office of Environment. Bureau for Policy
and Program Coordination. List of Upcoming Multilateral Development Bank (MDB)
Projects with Possible Environmental Concerns. March 1996.
International Bank for Reconstruction and Development; International Development
Association. Monthly Operational Summary of Bank and IDA Proposed Projects (as of
January 15, 1997). February 3, 1997. SecM97-62.
have identified problems previously unknown to most WGMA and Tuesday Group
Still, the Early Warning System is the main mechanism the U.S. Government
has available to it, outside those controlled by NGOs, for obtaining information from
foreign countries about possible problems with upcoming MDB projects. It is also
a channel the U.S. Government can use for raising issues directly with foreign
governments about MDB projects and for checking information provided to it by
NGOs, MDB staff, or other sources.
As more USAID missions are closed overseas, Congress may want to monitor
whether the effectiveness of the Early Warning System will atrophy without their
input into the process. Congress may consider whether alternative means within the
U.S. Government are needed -- e.g., perhaps separate funding for the System or
transfer of its functions to a different agency -- for gathering and assessing relevant
information. In the absence of a comparable mechanism, the U.S. government will
need to rely on non-governmental organizations, MDBs, foreign governments, and
private firms for information on the potential environmental effects of MDB projects.
Appendix A. Description of the Environmental
Categories Used by the MDBs
THE WORLD BANK GROUP
The World Bank's environmental assessment directive, OD 4.01, requires an
initial screening of every loan proposal that results in classifying it in one of three
categories, described below; as noted in discussion of the International Finance
Corporation, the IFC uses these categories, and adds a fourth, "FI" for financial
intermediary loans, which is discussed in the main text of this report.
Projects (or project components) require a full environmental assessment if they
are "likely to have significant adverse impacts that may be sensitive, irreversible, and
diverse" and if the impacts are "likely to be comprehensive, broad, sector-wide, or
precedent-setting." Negative impacts in a Category A project would be expected to
affect the area as a whole, or an entire sector. Among the examples of projects that
would likely be in Category A are dams and reservoirs; forestry and production
projects; large-scale industrial plants; large-scale irrigation and flood control;
mineral development, including oil and gas; port and harbor development;
resettlement and all projects with potentially major impacts on people. A 1993
Update on Environmental Screening to the Environmental Assessment Sourcebook
elaborates on attributes that would make potential environmental impacts
"significant": "direct pollutant discharges that are large enough to cause degradation
of air, water or soil; large-scale physical disturbance of the site and/or surroundings;
extraction, consumption, or conversion of substantial amounts of forest and other
natural resources....and involuntary displacement of people and other significant
The 1993 Sourcebook Update on environmental screening also elaborates on
project location as a criterion for classification, adding "the 'significance' of potential
impacts is partly a function of the natural and sociocultural surroundings." It adds,
that the types of locations that "should cause the [task manager] to seriously consider
an "A" classification," include those in or near sensitive and valuable ecosystems,
such as wetlands, wildlands, coral reefs; in or near archeological and/or historical
sites; in densely populated areas where pollution impacts might be significant or
where resettlement might be required; where there are conflicts in natural resource
use in areas already or potentially heavily developed; along watercourses or in areas
from which potable water is withdrawn; or on land or waters containing valuable
resources. The Update also suggests sources of information on such variables in the
project's proposed location, and if such information is lacking, a reconnaissance
mission should be considered by the TM.
Environmental Assessment Sourcebook Update. Environmental Screening. Number 2,
April 1993. Environment Department, World Bank. P. 2.
Particularly sensitive issues are also suggested in the 1993 update, such as
disturbance of tropical forests, conversion of wetlands, potential adverse effects on
protected areas, and other such areas and issues. It states that "The best way to
ensure proper treatment of such issues is to classify the project as Category A, so that
the level of effort will be adequate in terms of analytical expertise, decision-making,
interagency coordination, public involvement, and disclosure."2
The 1991 OD 4.01 and the 1993 Update on environmental screening further
note the importance of considering cumulative and induced impacts, such as when
an addition to an existing project would cause pollutant emissions to violate
environmental standards, or when the project being considered is a small part of
longer term plans for much greater development.
Projects in this category do not require a full EA, but require environmental
analysis. They "may have adverse environmental impacts that are less significant
than category A impacts. Few if any of these impacts are irreversible. The impacts
are not as sensitive, numerous, major, or diverse..." The 1993 Update on
Environmental Screening to the Environmental Assessment Sourcebook adds that
"Category B projects often differ from A projects of the same type only in scale."3
The OD indicates that in this category, remedial measures are more easily designed,
and a mitigation plan may suffice. The format for the environmental analysis is also
different: "Few category B projects would have a separate environmental report;
most may be discussed in a separate chapter of the project preparation or feasibility
study." Examples of types of projects expected to be in Category B include smallscale agro-industries; electrical transmission; aquaculture and mariculture; smallscale irrigation and drainage; renewable energy; tourism; watershed projects.
The 1993 Update indicates that "Projects entailing rehabilitation, maintenance
or upgrading rather than new construction will usually be in Category B. A project
with any of these characteristics may have impacts, but they are less likely to be
"significant" to the environment. However, each case must be judged on its own
Projects in this category do not normally require an EA or environmental
analysis, "because the project is unlikely to have adverse impacts. Professional
judgement finds the project to have negligible, insignificant, or minimal
environmental impacts." Examples of projects that would be expected in this
category include education; family planning; health; nutrition; institutional
development; technical assistance; and most human resource projects.
Ibid, 1993 Update, p. 3.
Environmental Assessment Sourcebook Update. Environmental Screening. Number 2,
April 1993. Environment Department, The World Bank. P. 2.
Ibid., 1993 Update No. 2, p. 2.
The 1993 Sourcebook update No. 2 on environmental screening also notes
"special issues" in screening intermediate credit operations and sector investment
loans, when subloans or subprojects are not known/identified at the time of project
identification. It states that the Task Manager's responsibilities include assuring that
the loan includes a mechanism for conducting environmental screening of subloans
and, when appropriate, environmental assessment or more limited environmental
analysis. The Update states, "If it becomes evident that one or more subprojects will
require full environmental assessment, the entire loan should be classified as
INTER-AMERICAN DEVELOPMENT BANK (IDB)
IDB projects and operations are classified on one of four categories, depending
on the potential environmental impacts:
Those designed specifically to improve environmental quality. "In general,
these operations do not require an EIA, however, they do require intensive
participation of environmental specialists in the preparation, analysis and supervision
of the execution phase." Examples include watershed management, air pollution
reduction, land use planning and zoning, and protected area establishment.
Operations in this category "have no direct or indirect environmental impact and
therefore do not require an EIA." Examples include education programs, science and
technology, and dissemination of appropriate technology information.
In this category are placed operations with moderate impact on the environment
and "those that have recognized and well defined solutions." These usually require
"a semi-detailed EIA and in certain cases specific components may require a
detailed." Examples include potable water, agricultural and forestry credit, sanitary
engineering, rehabilitation of existing infrastructure, mini hydroelectric power, and
Operations in this category are those "which may have significant negative
impacts on the environment (including indigenous populations and other vulnerable
groups in the area of influence of the project) and which require a detailed EIA."
Examples include road construction in ecologically fragile areas, large hydroelectric
developments, large irrigation projects, mining, and toxic waste disposal.
According to the IDB procedures, screening and classification of specific and
global loans is done by the IDB Country Team, with participation of the
Environment and Natural Resources Division (ENV). It is reviewed by ENV and the
relevant operations division. After initial scoping of the possible environmental
impacts, an Environmental Brief (EB) is prepared. Approval by the CMA follows,
and the classification and EB are then incorporated into the Profile II stage when it
is approved. If changes are required in the classification, they must be made before
the next stage in Profile III, and subjected to CMA review for final approval.
The procedures state "While changes in the classification should be avoided, if
sufficient justification is presented the CMA will review a request for
reclassification." In cases where information is insufficient, the procedures indicate
that a mission or additional studies may be required to justify final classification and
changes in classification.
ASIAN DEVELOPMENT BANK (ADB)
The Asian Development Bank uses three categories, similar to those used by the
World Bank. These three categories are:
Projects with significant adverse environmental impact as predicted by an Initial
Environmental Examination (IEE); an EIA is required for activities placed in this
category. Projects in this category, according to the ADB procedures, "may include"
environmentally sensitive areas, usually are large-scale, and/or affect large numbers
of people. Impacts may be irreversible, and could lead to significant changes in land
use and the social, physical and biological environment, or cause harmful emissions,
or disrupt/displace large numbers of people. Examples given include large-scale
forest industries, large scale irrigation, river basin development, large power plants
and industries, new transportation projects, etc.
Projects with adverse environmental impact, but of lesser degree and/or
significance than Category A impact; an EIA may not be required, but an IEE is
required. The procedures note: "If the IEE confirms that there are no significant
adverse environmental impacts requiring detailed environmental impact assessment,
the IEE represents the complete environmental assessment report." The impacts, less
than those of Category A, are characterized as those that "would cause some changes
in land use or the social, physical and/or biological environment, but would not
normally include large-scale nor environmentally sensitive areas." Examples
provided include tourism projects, renewable energy, aquaculture, and small scale
projects in areas such as agro-industries, industries without toxic emissions, and
rehabilitation projects. The procedures indicate that an Environmental Specialist
would be expected to assist in the formulation of the terms of reference for the IEE
and in reviewing its adequacy.
Projects unlikely to have adverse environmental impact; no EIA or IEE is
normally required. The procedures state: "An environmental assessment is normally
not required for Category C because the project is unlikely to have adverse
environmental impact. By the very nature of these projects, the social, physical and
biological environment is not significantly affected." An Environmental Specialist's
input may be minimal and may involve only in-house review. Examples given
include: forestry research and extension, rural health services, marine sciences
education, family planning, capital market development study, etc.
AFRICAN DEVELOPMENT BANK (AfDB)
The African Development Bank has established the categories described below
into which projects are to be placed in the initial environmental examination during
the project pre-selection or identification stage:5
Projects with the potential for significant environmental impacts requiring
detailed field review and in most cases, an environmental impact assessment (EIA).
The 1992 Environmental Assessment Guidelines offer a listing of some 18 types of
projects that fall into this category, including airports, dams and hydropower, roads
and railway construction, river basin development, mining, large-scale industrial
plants, projects with serious accident risk, etc. They also list some 13 types of
ecologically sensitive areas in which any project would be a category I, including
coral reefs, tropical rainforests, areas with erosion-prone soils, areas of importance
to threatened ethnic groups, etc.6
Projects with limited environmental impacts that can be routinely resolved
through application of mitigation measures and design changes. The types of
projects listed by the Environmental Assessment Guidelines for inclusion in this
category include reforestation, small-scale irrigation and drainage, small-scale
industry development, renewable energy development, road rehabilitation, etc.,
unless the project is located in or close to the sensitive ecological areas.
Projects not anticipated to result in adverse environmental impacts that would
not require detailed environmental review. Examples of projects that would fall into
this category include institutional development, health programs, education
programs, environmental programs, unless physical interventions in the environment
were involved, which would upgrade these to category II.
Environmental Policy Paper, African Development Bank, African Development Fund, June
1990. P. 48-49.
Environmental Assessment Guidelines, African Development Bank, African Development
Fund, Côte d'Ivoire, May 1992, p. 11.
For projects with potentially beneficial environmental impacts, the policy states:
"This initial examination is considered as an important checkpoint in the project
review process. No project will be allowed to continue until it has gone past this
initial environmental examination, and every appraisal report will therefore contain
an environmental statement based upon the above categorization." (policy paper, p.
49). The policy indicates that projects in both categories I and II require special
missions to the country to identify environmental issues of major importance.
Appendix B. Text of the Pelosi Amendment
SEC. 1307. ASSESSMENT OF ENVIRONMENTAL IMPACT OF PROPOSED
MULTILATERAL DEVELOPMENT BANK ACTIONS.7
(a) Assessment Required Before Favorable Vote on Action.-(1) In general.--Beginning 2 years after the date of the enactment of this
section, the Secretary of the Treasury shall instruct the United States Executive
Director of each multilateral development bank not to vote in favor of any
action proposed to be taken by the respective bank which would have a
significant effect on the human environment, unless for at least 120 days before
the date of the vote-(A) an assessment analyzing the environmental impacts of the
proposed action and of alternatives to the proposed action has been
completed by the borrowing country or the institution, and been made
available to the board of directors of the institution; and
(B) except as provided in paragraph (2), such assessment or a
comprehensive summary of such assessment has been made available to
the multilateral development bank, affected groups, and local
(2) Exceptions and reports.-(A) Exceptions.--The requirement of paragraph (1)(B) shall not apply
where the Secretary finds compelling reasons to believe that disclosure in
any case described in paragraph (1) would jeopardize the confidential
relationship between the borrower country and the respective bank.
(B) Reports by secretary.--The Secretary shall submit a quarterly
report in writing to the Committees specified in subsection (f)(1) of the
findings described in subparagraph (A).
(b) Access to Assessments in All Member Countries.--The Secretary of the
Treasury shall seek the adoption of policies and procedures, through discussions and
negotiations with the other member countries of the multilateral development banks
and with the management of such banks, which result in access by governmental
agencies and interested members of the public of such member countries, to
environmental assessments or documentary information containing comprehensive
summaries of such assessments which discuss the environmental impact of
prospective projects and programs being considered by such banks. Such
assessments or summaries should be made available to such governmental agencies
and interested members of the public at least 120 days before scheduled board action,
and public participation in review of the relevant environmental information should
(c) Consideration of Assessment.--The Secretary of the Treasury shall-(1) ensure that an environmental impact assessment or comprehensive
summary of such assessment described in subsection (a) accompanies loan
proposals through the agency review process; and
Sec. 521 of the International Development and Finance Act of 1989 [P.L. 101-240, enacted
December 19, 1989] adding sec. 1307 to the International Financial Institutions Act of 1977
[P.L. 95-118 as amended].
(2) take into consideration recommendations from all other interested
Federal agencies and interested members of the public.
(d) Development of Procedures for Systematic Environmental Assessment.--The
Secretary of the Treasury, in consultation with other Federal agencies, including the
Environmental Protection Agency, the Department of State, and the Council on
Environmental Quality, shall-(1) instruct the United States Executive Director of each multilateral
development bank to initiate discussions with the other executive directors of
the respective bank and to propose that the respective bank develop and make
available to member governments of, and borrowers from, the respective bank,
within 18 months after the date of the enactment of this section, a procedure for
the systematic environmental assessment of development projects for which the
respective bank provides financial assistance, taking into consideration the
Guidelines and Principles for Environmental Impact Assessment promulgated
by the United Nations Environmental Programme and other bilateral or
multilateral assessment procedures; and
(2) in determining the position of the United States on any action proposed
to be taken by a multilateral development bank, develop and prescribe
procedures for the consideration of, among other things-(A) the environmental impact assessment of the action described in
(B) interagency and public review of such assessment; and
(C) other environmental review and consultation of such action that
is required by other law.
(e) Use of United States Personnel.--The Secretary of the Treasury, in
consultation with the Secretary of State, the Secretary of the Interior, the
Administrator of the Environmental Protection Agency, the Chairman of the Council
on Environmental Quality, the Administrator of the Agency for International
Development, and the Administrator of the National Oceanic and Atmospheric
Administration, shall-(1) make available to the multilateral development banks, without charge,
appropriate United States Government personnel to assist in-(A) training bank staff in environmental impact assessment
(B) providing advice on environmental issues;
(C) preparing environmental studies for projects with potentially
significant environmental impacts; and
(D) preparing documents for public release, and developing
procedures to provide for the inclusion of interested nongovernmental
organizations in the environmental review process; and
(2) encourage other member countries of such banks to provide similar
(f) Reports.-(1) In general.--The Secretary of the Treasury shall submit to the
Committees on Foreign Relations and Environment and Public Works of the
Senate and the Committee on Banking, Finance and Urban Affairs of the House
of Representatives-(A) not later than the end of the 1-year period beginning on the date
of the enactment of this section, a progress report on the efficacy of efforts
by the United States to encourage consistent and timely environmental
impact assessment of actions proposed to be taken by the multilateral
development banks and on the progress made by the multilateral
development banks in developing and instituting environmental
assessment policies and procedures; and
(B) not later than January 1, 1993, a detailed report on the matters
described in subparagraph (A).
(2) Availability of reports.--The reports required by paragraph (1) shall be
made available to the member governments of, and the borrowers from, the
multilateral development banks, and to the public.
Appendix C. Text of Treasury's 1992 Temporary Rule
DEPARTMENT OF THE TREASURY8
United States Government Procedures for the Consideration of Environmental
Impact Assessments for Multilateral Development Bank Projects.
Departmental Offices, Treasury
Temporary Rule; Request for Public Comment
SUMMARY: This document establishes temporary procedures governing the
availability of environmental information on projects of multilateral development
banks, comments on such projects, and the consideration of the U.S. Government of
such information and comments.
DATES: This temporary rule is effective [insert date of publication in the
FEDERAL REGISTER]. Written comments must be received by June 30, 1992.
ADDRESSES: Send copies (preferably 3 copies) to: Office of Multilateral
Development Banks, Room 5400, Department of the Treasury, 1500 Pennsylvania
Ave, N.W., Washington, D.C. 20220, Attn: Priscilla S. Coburn.
FOR FURTHER INFORMATION CONTACT: Priscilla S. Coburn, Office of
Multilateral Development Banks, Department of the Treasury, 1500 Pennsylvania
Avenue, N.W., Washington, D.C. 20220 (202-566-2394, not a toll-free call).
Section 1307 of the International Financial Institutions Act (22 U.S.C 262,-7),
as added by section 521 of Public Law 101-240 (December 19, 1989), imposes
certain requirements concerning the review by the U.S. Government of certain
actions proposed to be take by multilateral development banks (MDBs), when those
actions will have a significant effect on the human environment.
Section 1307(d) requires the Secretary of the Treasury, in determining the
position of the U.S. Government on any action which is proposed to be taken by a
MDB and which would have a significant effect on the environment, to develop and
prescribe procedures for the consideration of an environmental impact assessment
(EIA), interagency and public review of the EIA, and other environmental review of
such action otherwise required by law. Section 1307(c) provides that either an EIA
or a comprehensive summary thereof (prepared pursuant to section 1307(a)) serve
as the basis for interagency review. Together, subsections (c) and (d) provide that
Treasury Department Request for Comment and Text of 1992 Rule, as Issued by Treasury
in 1992. (Photocopy obtained from U.S. Treasury Department.) The text of the rule is
printed, as indicated later in the text, in 31 Code of Federal Regulations (CFR) Part 26.
the requirement for U.S. Government and public review is satisfied by circulating a
comprehensive summary of an EIA and making the full EIA available upon request.
The primary purpose of the environmental assessment and comment process is
to encourage a borrowing country to conduct a wide-ranging and detailed
environmental assessment, including consultation and full sharing of information
with local non-governmental organizations and affected parties. The U.S.
Government is working toward this goal by strongly encouraging each MDB to
ensure that such public disclosure occur before the MDB Executive Directors vote
on a particular project. The U.S. Government also is working to ensure that the
public will have direct access to EIAs and summaries thereof at the MDBs and in the
borrowing countries, without the U.S. Government's acting as intermediary.
Request for Comments.
Before the final adoption of these procedures, consideration will be given to any
written comments submitted by June 30, 1992 to the address specified above. All
comments will be available for public inspection and copying in their entirety.
Because this document concerns a foreign affairs function of the United States,
neither a notice of proposed rulemaking nor a delayed effective date is required
pursuant to 5 U.S.C. 553(a)(1), and the provisions of Executive Order 12291 do not
apply. Moreover, the Department of the Treasury has determined that delaying the
establishment of procedures governing the environmental review of and comment
on MDB projects would be contrary to the public interest. Because no notice of
proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq. do not apply.
The principal authors of this document are Priscilla S. Coburn, Office of
Multilateral Development Banks, Department of the Treasury; and David D. Joy,
Office of the Assistant General (International Affairs), Department of the Treasury.
Other personnel in the Department of the Treasury participated in the development
of this document.
List of subjects in 31 CFR Part 26:
Part 26 is added to read as follows:
PART 26--ENVIRONMENTAL REVIEW OF ACTIONS BY
MULTILATERAL DEVELOPMENT BANDS (MDBs)
(31 CRF Part 26)
26.2 Availability of project listings.
26.3 Availability of Environmental Impact Assessment Summaries (EIA
Summaries) and Environmental Impact Assessments (EIAs).
26.4 Comments on MDB projects.
26.5 Upgrades and additional environmental information.
AUTHORITY: 22 U.S.C. 262m-7, 31 U.S.C. 321.
SOURCE: 57 FR 24545, June 10, 1992.
This part prescribes procedures for the environmental review of, and comment
by Federal agencies and the public on, proposed projects of multilateral development
26.2 Availability of project listings.
(a) The Office of Multilateral Development Banks of the Department of the
Treasury (hereinafter "MDB Office") will ensure that the Environmental Protection
Agency (EPA), the Council of Environmental Quality (CEQ), the Department of
State, the Agency for International Development (AID), the National Oceanic and
Atmospheric Administration (NOAA), and the Bank Information Center (BIC)
(which is a private, nongovernmental organization located in Washington, DC)
receive copies from each multilateral development bank (MDB) of project listings
describing future MDB projects and assigning environmental categories based on the
environmental impact of each project. If an MDB has not provided a project listing
to one of these entities, these entities may obtain the project listing by contacting the
MDB Office, 1500 Pennsylvania Avenue, N.W., Washington, DC 20220, (202) 6220765.
(b)(1) Members of the public may obtain copies of project listings from the
BIC, 2025 Eye Street, N.W., suite 522, Washington, DC 20006 ((202) 466-8191, not
a toll-free call).
(2) If a copy is not available from the BIC, members of the public may arrange
to review and/or copy a project listing by contacting the MDB Office which will
make a copy available at the Department of the Treasury Library, 1500 Pennsylvania
Avenue., N.W., Washington, DC ((202 622-0990, not a toll-free call). Members of
the public are advised that they must make an appointment with the Treasury Library
before they visit and that a charge (currently 15 cents per page) is imposed for the
use of the library photocopier.
26.3 Availability of Environmental Impact Assessment Summaries (EIA Summaries)
and Environmental Impact Assessments (EIAs).
(a) EIA summaries.
(1) The MDB Office will provide for the distribution of EIA Summaries to the
entities identified in section 26.2 (a).
(2)(i) Members of the public may obtain copies of EIA Summaries from the
BIC, 2025 Eye Street, N.W., suite 522, Washington, DC 20006.
(ii) If a copy of an EIA Summary is not available from the BIC, members of the
public may arrange to review and/or copy an EIA Summary by contacting the MDB
Office (202) 622-0765 (not a toll-free call), which will make a copy available at the
Department of the Treasury Library, 1500 Pennsylvania Avenue, N.W., Washington,
DC. Members of the public are advised that they must make an appointment with
the Treasury Library (202) 622-0990) before they visit, and that a charge (currently
15 centers per page) is imposed for the use of the library photocopier. To the extent
possible, EIA Summaries will be available for review and copying at least 120 days
before scheduled consideration of a project by the MDB Executive Directors.
(1) The African Development Bank, the European Bank for Reconstruction and
Development, and the Asian Development Bank. Arrangements to review an EIA
may be made by contacting the MDB Office ((202) 622-0765 (not a toll-free call)),
which will obtain a copy of the EIA through the Office of the United States
Executive Director of the appropriate MDB and make it available for review and
copying in the Department of the Treasury Library. Members of the public are
advised that they must make an appointment with the Treasury Library, ((202) 6220900 (not a toll-free call), before they visit, and that a charge (currently 15 cents per
page) is imposed for the use of the Library photocopier.
(2) the International Bank for Reconstruction and Development, the
International Development Association, and the Inter-American Development Bank.
(i) Members of the public may review EIAs at the public reading room of the
(ii) If a particular MDB does not have a public reading room, members of the
public may arrange to review and/or copy an EIA by contacting the MDB Office
((202) 622-0765 (not a toll-free call)), which will obtain a copy through the Office
of the United States Executive Director of the concerned MDB and make it available
in the Department of the Treasury Library, 1500 Pennsylvania Avenue, N.W.,
Washington, DC. Members of the public are advised that they must make an
appointment with the Treasury Library ((202) 622-0990 not a toll-free call) before
they visit, and that a charge (currently 15 cents per page) is imposed for the use of
the library photocopier.
26.4 Comments on MDB projects.
(a) Public comments--(1) Written comments
(i) A member of the public wishing to provide written comments on a MDB
project must provide 2 copies of the comments to the Office of the Multilateral
Development Banks, U.S. Department of the Treasury, 1500 Pennsylvania Avenue,
N.W., room 5400, Washington, DC 20220. Written comments should be submitted
not later than two weeks after the member of the public has access to the particular
document on which it wishes to offer comments--either the project listing, the EIA
Summary, or the EIA for a particular project. Written public comments will be
provided by the MDB Office to the U.S. Government agencies participating in
meetings of the Working Group for Multilateral Assistance (WGMA), which
meetings are described in 26.4(c). The WGMA is an intergovernmental
subcommittee of the Development Coordination Committee whose functions are set
fort in the Presidential announcement of May 19, 1978, Vol. 14, No. 20, p. 932 of the
Weekly Compilation of Presidential Documents. The WGMA meets to discuss the
U.S. position on upcoming MDB projects.
(ii) All written comments will be available for inspection and copying in their
entirety in the Department of the Treasury Library, 1500 Pennsylvania Avenue, NW.,
Washington, DC ((202-622-0990). Members of the public are advised that they must
make an appointment with the Treasury Library before they visit, and that a charge
(currently 15 cents per page) is imposed for the use of the library photocopier.
(2) Oral comments. Oral comments from a member of the public may be made
in periodic meetings convened by the BIC. Information concerning these meetings
may be obtained by contacting the BIC or the MDB Office. The MDB Office will
summarize the present such comments in the WGMA meetings described in 26.4(c).
(b) U.S. agency comments. Comments from U.S. agencies shall be provided
through the WGMA.
(c) Consideration of comments. The WGMA will consider all comments made
by the public and U.S. agencies. The WGMA may review a project up to three
times. The first review will consider whether the project has been assigned the
appropriate environmental category by the MDB. This review will take place as far
in advance as possible of Board consideration for the project. The second review
will consider the EIA Summary or the EIA (or information discussed in 26.5(b)(1)),
and comments received from the public on such documentation. The third WGMA
review, which will take place shortly before Board consideration of the project, will
consider the position of the U.S. Government on the project.
26.5 Upgrades and additional environmental information.
(a) Environmental category upgrades. If the WGMA and the Department of the
Treasury determine that a project would have a significant impact on the human
environment analysis planned by the MDB is insufficient, the Department of the
Treasury will instruct the United States Executive Director of the concerned MDB
to request that the MDB upgrade the project to an environmental category requiring
additional environmental analysis. Members of the public may call the MDB Office
to inquire about upgrade requests for specific projects.
(b) Additional environmental information-- (1) If the WGMA and the
Department of the Treasury determine on the basis of the first WGMA review that:
(i) A MDB project would have a significant impact on the human environment,
(ii) The MDB appears to have made an appropriate decision that such project
merits environmental analysis, but less than a full-fledged environmental impact
assessment as defined by the MDB's own procedures, the Department of the Treasury
will obtain, through the United States Executive Director of the concerned, MDB,
such environmental information from the MDB (e.g., environmental chapters from
project feasibility studies or environmental data sheets) which contains this
environmental analysis. The MDB Office will provide this environmental
information to the entities described in Department of the Treasury will instruct the
United States Executive Director of the concerned MDB not to vote in favor of the