Lenders Must Think ‘Green’ in Third World

Third World scientists meeting in India early this year concluded that developing countries--highly dependent on natural resources and ill-equipped to adapt to a rapidly changing climate--will experience particular strain from warming driven by the greenhouse effect.

Developing nations currently contribute about one-third of total greenhouse gas emissions. By the middle of the next century they will be releasing the preponderance of these gases, most importantly carbon dioxide (CO2). Ways must be found to help them moderate unnecessary growth in these emissions while simultaneously furthering larger development objectives.

The greenhouse effect also adds considerably greater urgency to policies--energy efficiency, forest conservation and elimination of chlorofluorocarbons (CFCs)--that make sense for other economic and environmental reasons.

Development assistance from the World Bank could accomplish these goals.

Energy is essential to economic development, and Third World countries must increase power-generating capacity to satisfy their needs. But fossil fuels are the primary source of CO2. There is a way out of this double bind. According to respected Third World energy specialists, by the year 2020 the world can achieve an acceptable standard of living without increasing global energy consumption.

That does not mean limiting access to the energy services necessary for development. Rather, Brazil, India, Costa Rica and other developing countries can cut the need for growth in power-generating capacity by up to 30% or more through investment in state-of-the-art energy-saving industrial equipment, lighting systems, air conditioners and other appliances, realizing considerable monetary savings in the bargain. Regrettably, the bank--the planet’s biggest development assistance institution and the Third World’s largest single source of foreign exchange for energy investments--has devoted at most 4% of its energy and industrial-sector lending to these “end-use” energy efficiency improvements over the last decade. Economically viable technologies exist, and the World Bank should help deploy them.

Although World Bank President Barber Conable pledged last week at the annual meetings of the bank and the International Monetary Fund to make Third World environmental problems a priority for the 1990s, the director of the bank’s Industry and Energy Department has publicly expressed doubt that bank loans to improve end-use energy efficiency are even necessary. Another bank staffer said that he can count the number of staff with experience in end-use efficiency on one hand. “And I still have fingers left over!” he added.

Tropical deforestation is the leading source of Third World greenhouse gas emissions, accounting for 10% to 30% of global CO2 emissions and 10% to 20% of methane emissions. If the trend continues, tropical forests could be wiped out during the next century. Through forest conservation and tree planting, developing countries could instead create a living repository for excess carbon. Studies have demonstrated that well-managed, intact forests have substantial economic as well as environmental value.

Nonetheless, a World Bank draft greenhouse paper, which dismisses forests as “less important” than energy, devotes only a few sentences to this crucial issue. While the bank has paid lip service to the need for tropical-forest conservation, and Conable has pledged to triple lending in this area, the bank’s forestry projects continue to generate substantial criticism. Logging and plantation projects designed with inadequate input from the affected people have been unresponsive to their needs and on occasion have triggered strenuous opposition from the local populace.

The World Bank can play a major role in disseminating substitutes for CFCs, which are responsible for 10% to 25% of the overall global warming threat. These chemicals, the principal culprits in depletion of the stratospheric ozone layer, will very likely be outlawed by international measures now under negotiation. But instead of emphasizing the necessity for the bank to seize leadership in helping developing countries accomplish this transition, the bank’s draft greenhouse policy characterizes deployment of alternative chemicals as no more than an “insurance option” in which the bank will be relegated to at most a passive “monitoring role.”

This situation is symptomatic of the bank’s continuing failure to integrate development goals with environmental imperatives. In June, the U.S. Agency for International Development published a list of $3 billion in environmentally questionable investments proposed for bank financing through 29 loans in Africa, Asia and Latin America.

Conable has now joined the growing club of world leaders calculatedly reaping substantial political benefits from disingenuous “greenspeak”--talking a good line on the environment without closing the gap between rhetoric and policy.

Business as usual puts the future of our planet at risk. There is no excuse for foot-dragging on the national and international level on the greenhouse issue by the industrialized world. But neither is there justification for half-hearted consideration by the World Bank of a wider variety of development alternatives that are in the interest of both developing nations and, for that matter, the entire world.