The International Bank for Reconstruction and Development (IBRD) or The World Bank, as it is best known, is one of the three original pillars of the international political economy created in the aftermath of World War II. (The other two are the International Monetary Fund IMF and the General Agreement on Tariffs and Trade GATT.)

Now in its sixth decade of operation, the bank's role as the primary inter-governmental international long term, large scale lender remains intact.

Staffed by economists and financial experts, and driven by political considerations, environmental issues received less than high priority consideration in bank lending policy throughout most of the bank's first forty years of operation. Bank receptivity to green organizational and economic ideas, formally acknowledged in 1987 with the establishment of an Environment Department, continues today. In fact, any interested bystander would probably not exceed the bounds of objective analysis by suggesting the bank currently ranks number one on the green scale in comparison with its other internaitonal economic institution counterparts.

Flexibility also characterized much of the bank's institutional and policy positions, including the green ones, through changing global political and economic circumstances. For example, the end of the cold war and the emergence of independent states once part of the Soviet Union, meant that the Bank nneded to deal with a membership increase.

This event, coupled with the ending of the global fiscal crisis, spurred on by the twin oil price hikes in the 1970s, allowed bank employees to refocus their attention away from short term rescheduling issues, based partially on political issues, back to long term sustainable development project planning. According to bank accounts, their "broad environmental" portfolio, including both strictly and loosely defined environment projects, constituted 10% of total bank lending in 2000 and amounted to an accumulated total of $15 billion worth of investment projects.

The most recent bank environment initiatives, which call for increased cooperation among governments, industry and citizens throughout the project development process, grew out of conversations and consultations with citizens, governments, industry and environmental groups critical of bank support for macro-economic policy prescriptions which generally fall under the label neo-liberal development economics. The term encompasses a variety of specific economic policy initiatives designed to help states either build, grow or transition their economy. While bank prescriptions vary from state to state, generally speaking, the bank supports an export led growth strategy and fiscally conservative state budgeting practices.

Environmental concerns and criticisms of bank policies throughout the 1990s tended to focus on the practical impacts associated with bank policies and projects. For example, many developing states export earning are derived from a single or a few commodities such as timber or coffee or tin. Bank export led development policies often translate into increased pressure on already fragile eco-systems as states increase production of the commodity to accumulate investment capital.

All developing states, be they single commodity or multi-product and services trade oriented, face additional sustainable development problems related to technology costs. Whether they are looking to increase their electricity capacity or improve urban water quality, states following World Bank budgetary policies often face a choice between adopting the most environmentally friendly and more expensive technologies or opting for the less friendly and more affordable alternatives.

Additional Information

World Bank Environment Department

Friends of the Earth/World Bank

© 2001-2005. Patricia A. Michaels.