Making World Bank aid sustainable
Clare Shakya sets out seven ways the World Bank can make its development aid sustainable and inclusive.
The World Bank is in replenishment talks where, every three years, donors top up International Development Aid (IDA) resources.
These talks focus on the results the World Bank will deliver against a set of core indicators, becoming the performance metrics against which the Bank reports to its members – donor and recipient.
IIED believes the IDA indicators should reflect recent global agreements – Financing for Development, the Sustainable Development Goals (SDGs), the Paris Agreement on climate change and the World Humanitarian Summit (WHS).
At the Financing for Development talks in July 2015, in Addis Ababa, donors committed to integrating climate finance into their development investments. September 2015 in New York saw the world commit to a new framework for measuring development, ratifying the 17 SDGs with sustainability at the core.
At COP21 in Paris in December 2015, the World Bank agreed to increase the proportion of its core finance for climate finance – so committing not only to manage trust funds for climate finance but to integrate climate objectives into its core lending. And in May 2016, donors at the WHS agreed to breaking down the artificial silos between humanitarian response and climate smart development – with the latter seeking to mitigate the need for humanitarian responses.
Together, this unprecedented set of global agreements call for integrating sustainability into the core of development action.
…but the Bank shows little sign of change
But looking at the current list of IDA indicators, there is little sign that the World Bank has taken on these commitments to change how development is financed – i.e. integrating climate-smart action and making long-term investments sustainable.
It would be a travesty if the World Bank had to go to donors, as it has in the past, asking for additional funding on top of their core replenishment to help them ensure their investments are sustainable.
Sevens steps to sustainability
The World Bank should demonstrate its commitment to Agenda 2030 by putting sustainability, equity and people at the heart of the IDA indicators. To do this, IIED urges the World Bank to make the following changes:
- Social inclusion: we welcome efforts to disaggregate indicators by sex, but would encourage the World Bank to also disaggregate by age, disability, ethnicity and religion to ensure investments are at least equitable, and may indeed empower excluded groups.
- Water and sanitation: current indicators focus on annual freshwater withdrawal and access to improved water and sanitation. Instead, we recommend they measure water stress (SDG 6.4.2) and sustainability of investments in water and sanitation (as reflected in the SDG 6.1.1 and 6.2.1 indicators on "safely managed"). We note this was considered but rejected on grounds the definition has yet to be standardised – but the World Bank could help define it.
Alternatively, we suggest the Bank tracks "sustainable access" incentivising a greater focus on results that last over the longer term and that water drawn from groundwater is sustainable.
- Forests: adding the indicator on change in deforestation rate is welcome, but the indicator on numbers of policy notes is inadequate as an interim indicator. IIED recommends indicators on: percentage of forest cover under sustainable management plans; percentage of forest cover owned by and, separately, with commercial use rights held by, communities and indigenous peoples; and, volume of production per labour unit by classes of, among others, forestry enterprise size (SDG 2.3.1).
- Food and agriculture: the current indicators give little sense of how well the World Bank will provide opportunities to smallholder farmers or support the long-term resilience of the land they farm. Equally, given the lack of clarity over what climate smart agriculture really means, we propose using SDG 2.4.1 (proportion of agricultural area under productive and sustainable agriculture), and define sustainability in terms of how it contributes to food security and farmers’ livelihoods over time, alongside an indicator around improved productivity despite climate effects on small holder farming.
- Climate change: we propose an amended version of SDGs 1.5.3 and 13.1.1, to provide an indicator of national and subnational adaptation plans, generated and implemented. It is also critical that the World Bank tracks the amount of finance it invests directly into adaptation and clean energy, and how much private finance it mobilises.
Instead, we suggest indicators are money mobilised per capita per country/region and the percentage of people covered by activities appearing in adaptation plans.
- Energy: the current indicator on megawatts will continue to incentivise investment in new generation without considering the value of the energy to meet demand. At minimum, it should be disaggregated by clean and fossil fuel energy, but ideally also reflect value to the energy needed. The new indicator on plans to achieve sustainable energy for all is welcome, but we would encourage the World Bank to ensure this also supports long-term "whole of energy system" planning and management.
- Cities: the commitment to "improved urban living conditions" conflates the many interventions needed to improve urban productivity and sustainability. Instead, IIED proposes that the World Bank tracks the actual changes most needed – the number of people with secure tenure, people with durable, permanent housing, the percentage with access to piped drinking water and with urban solid waste regularly collected.
It is also important that the World Bank contributes to more inclusive and effective local governance if these development gains are to be sustained. IIED therefore urges the Bank to consider indicators such as the percentage of local government revenue generated directly from sources within the city (to capture fiscal capacities) and years since last census (to capture quality of evidence for decision-making).