International Rivers' Reply to World Bank Response on Corruption Articles

Wednesday, June 14, 2006
Dear David,

Thank you for your detailed message of June 1. We would be happy to discuss the issues at stake in a personal meeting. Let me already respond to a few issues that you raised in order to clarify where we agree and disagree so that we can better prepare our next discussion.

We agree that a wide range of options need to be pursued in the water sector, and that in Pakistan and more generally, the World Bank is pursuing many of them. We do not agree with the way the Bank prioritizes different options, the Banks implementation of certain policy issues, and its approach to corruption.

Priorities: As we argue in the new International Rivers report, Spreading the Water Wealth, small–scale options in the water sector have a great potential for reducing poverty. While the World Bank occasionally supports such approaches, this support has so far been minimal. The Bank’s recent papers and presentations on water security (including for example Water Resources, Growth and Development) ignore and discount small–scale storage options completely while strongly emphasizing the supposed great benefits of large–scale options.

In Pakistan, the Bank’s new Water CAS devotes a mere $40 million out of a total budget of $1 billion to small–scale irrigation projects. We believe this illustrates a more general neglect of poverty reduction in the Bank’s past and present water sector strategies in Pakistan. (IEG’s 2006 evaluation of the World Banks assistance to Pakistan found that "the Bank failed to address land inequality and overlooked the capture of the benefits derived from Bank support to the sector by rural elites".)

The World Bank – and particularly the Energy and Water Department – also neglects the great potential of efficiency improvements in the water sector. While the Bank’s new report, Reengaging in Agricultural Water Management, proposes to prioritize efficiency improvements over new irrigation infrastructure, many publications and presentations of the Water and Energy Department do the opposite. While the AWM report shows that water saving techniques such as drip irrigation can revolutionize agricultural water management, the Pakistan Water CAS mentions this concept very tangentially, and does not propose any measures to promote it. (The same is true for the India Water CAS.)

Implementation of policy concerns: The new Pakistan Water CAS raises a series of important policy concerns, including the maintenance gap and environmental degradation. Yet these concerns are not integrated into the recommendations for future action.

The background paper on large dams that the Bank commissioned as an input into the Water CAS proposes "a clear priority for water–saving techniques" as a "pre–condition for future Bank support in replacement storage investment", and recommends seven specific conditions for such investment. The Water CAS does not define any such conditions, but does present new dams as "just one part of a set of necessary activities", which include improved transparency and efficiency. When the Bank published the Water CAS in September 2005, the senior water advisor promoted new large dams without mentioning any necessary pre–conditions.

The treatment of policy concerns by the new Water CAS creates the impression that at the end of the day, the World Bank is more interested in disbursing loans than ensuring a policy environment that is conducive to poverty reduction. This is not a new concern. IEG’s 2006 evaluation of World Bank assistance to Pakistan found that "the dominance of irrigation and drainage in the Bank’s program crowded out important policy and lending support for programs and projects that would have addressed the core problems of rural poverty and environmental degradation".

Corruption: We agree that the World Bank has become much more serious about corruption at several levels, and particularly at the procurement stage. At the same time, we find that the Bank systematically ignores corruption at the planning and options assessment stage. It narrowly interprets country ownership as ownership by infrastructure ministries, without mentioning the political economy within which these ministries operate. The perverse incentives of corruption at the planning stage need to be counteracted by transparency and public participation, but the World Banks renewed high–risk strategy is weakening such accountability mechanisms, and the preparation of the Pakistan Water CAS is an example for this.

We agree that in some cases, hard approaches may be the appropriate solution in water sector development. Yet such solutions need to be identified in transparent, balanced and comprehensive options assessment processes in which the influence of corruption is checked. The World Bank’s failure to support such a framework undermines the legitimacy of the options that it proposes, and will create further conflicts with civil society over specific projects.

We look forward to discussing these issues further in a personal meeting.

Best regards,

Peter Bosshard
International Rivers