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The new Country Partnership Framework (CPF or framework) presents the engagement of the World Bank Group (WBG) in Sri Lanka over the next four years (fiscal years 2017-20 (FY17–20)). The CPF aims to support the achievement of some of the government’s medium-term goals in areas that are critical for reducing extreme poverty and promoting shared prosperity, and that are consistent with the WBG’s comparative advantage. Notably, the CPF provides the framework for engagement in several key policy areas. Following presidential and parliamentary elections in 2015, the new coalition government, the National Government of Consensus, has set out an ambitious vision for Sri Lanka. It focuses on supporting job creation in the private sector, advancing the country’s global integration, improving governance, enhancing human development and social inclusion, and balancing development with environmental conservation. The vision has been captured in the Prime Minister’s Economic Policy Statement of November 5, 2015. The new government’s development agenda is well aligned with the findings of the 2015 Systematic Country Diagnostic (SCD) for Sri Lanka. The SCD identified the most critical constraints and opportunities facing Sri Lanka in accelerating progress toward the twin goals of ending extreme poverty and promoting shared prosperity in a sustainable manner. The analysis concluded that key priorities are to address the country’s fiscal, competitiveness, and inclusion challenges, as well as cross-cutting governance and social, economic, and environmental sustainability challenges. The CPF is anchored in this analysis.

Many ex ante measures taken to reduce disaster risk can deliver co-benefits that are not dependent on disasters occurring. In fact, building resilience to climate extremes and disasters can achieve multiple objectives. These are secondary to the main objective of disaster risk management of avoiding disaster losses, but identifying and measuring additional co-benefits can enhance the attractiveness of disaster risk management investments. Co-benefits are often economic, such as investment in dams or irrigation to reduce drought risk generating greater productivity; but they can also include significant environmental and social benefits. This paper identifies some of the potential categories of co-benefits associated with disaster risk management investments, expanding on typologies created by agencies seeking to promote social and environmental safeguarding in their work. The paper looks at previous studies on disaster risk management where co-benefits are mentioned but not explored in any detail. The paper examines two new case studies where environmental and socioeconomic co-benefits were uncovered in an irrigation project to reduce drought risk, and an urban flood risk management project, in Jamaica and Mexico, respectively. This review points to several challenges in traditional cost-benefit analysis techniques and puts forward alternative approaches to identify environmental and socioeconomic co-benefits when planning disaster risk management investments. The authors argue that a comprehensive disaster risk management co-benefits framework is needed that includes and categorizes all potential positive environmental and socioeconomic impacts. Co-benefits research focused on revisiting existing cases and developing new case studies could play an important role in this regard.

Bleak short-term economic outlook raises the risk that social and environmental achievements may not be sustained. The changed economic circumstances have exposed shortcomings in Brazil’s development model, epitomized by the struggle to achieve a sustainable fiscal policy. Against this background, some Brazilians are now asking whether the gains of the past decade might have been an illusion, created by the commodity boom, but unsustainable in today’s less forgiving international environment. Brazil thus finds itself at an important juncture and, to a certain extent, the policy course set today will determine whether the country can sustain the gains of the past and return to a path of solid, inclusive and environmentally sustainable growth. This Systematic Country Diagnostic offers a contribution to the debate about Brazil’s future development.

Ethiopia has many advantages as a destination for mining investment. These include promising geology, a well-designed fiscal regime, stable government and a growing domestic market. Additionally, it has a well-managed and successful artisanal and small scale mining sector. Under the second phase of Ethiopia’s Growth and Transformation Plan, Ethiopia has the ambitious target for the mining sector to contribute 10% of GDP by 2025. Ethiopia must overcome significant challenges to achieve this target. These challenges range across simplifying the licensing regime, developing its investment promotion efforts and clarifying institutional responsibilities for social and environmental management to enhancing stakeholder engagement in the governance of the sector.

How much do poor rural households rely on environmental extraction from natural ecosystems? And how does climate variability impact their livelihoods? This paper sheds light on these two questions with household income data from the Poverty and Environment Network pantropical data set, combined with climate data for the past three decades. The study finds that extraction of wild resources (from natural forests, bushlands, fallows, etc.) provides on average as much income (about 27 percent) as crops across the smallholder sample. The cross-section data on past reactions to household self-perceived economic shocks and observed production reactions to climate anomalies can, respectively, provide hints about livelihood vulnerability to current climate variability, which is likely to worsen with climate change. Forest extraction did not figure among the most favored response strategies to households’ self-perceived economic shocks, but households undertake subtle substitutions in sector production in response to weather anomalies that accentuate suboptimal climatic conditions for cropping. By relying more on forest extraction and wages, households compensate quite successfully for declining crop incomes. This paints a cautiously optimistic picture about fairly flexible rural livelihood reactions to current climate variability, and featuring forests as potentially important in household coping strategies.

This paper identifies the low-elevation coastal zone populations and developing regions most vulnerable to sea-level rise and other coastal hazards, such as storm surges, coastal erosion, and salt-water intrusion. The focus is on the rural poor in the low-elevation coastal zone, as their economic livelihoods are especially endangered directly by coastal hazards and indirectly through the impacts of climate change on key coastal and near-shore ecosystems. Using geo-spatially referenced malnutrition and infant mortality data for 2000 as a proxy for poverty, this study finds that just 15 developing countries contain over 90 percent of the world’s low-elevation coastal zone rural poor. Low-income countries as a group have the highest incidence of poverty, which declines somewhat for lower-middle-income countries, and then is much lower for upper-middle-income economies. South Asia, East Asia and the Pacific, and Sub-Saharan Africa account for most of the world’s low-elevation coastal zone rural poor, and have a high incidence of poverty among their rural low-elevation coastal zone populations. Although fostering growth, especially in coastal areas, may reduce rural poverty in the low-elevation coastal zone, additional policy actions will be required to protect vulnerable communities from disasters, to conserve and restore key coastal and near-shore ecosystems, and to promote key infrastructure investments and coastal community response capability.

The city of Kampala has undergone a period of rapid urbanization that has contributed to the degradation of the city’s natural environment. The urban environmental profile for Kampala has been prepared as the first component of the assignment promoting green urban development in Africa: enhancing the relationship between urbanization, environmental assets, and ecosystem services, a project being conducted under the leadership of the World Bank. An overall objective of this project is to link the study of urban environmental issues with the advancement of more sustainable urban growth. The profile summarizes the existing quality of the wetlands and other aquatic and terrestrial environmental assets, identifies the key drivers that are the cause of their vulnerability, and describes the key institutional challenges and constraining factors that limit the city’s ability to address environmental management challenges. Identification of the key environmental assets and key drivers of environmental degradation within the city required a more comprehensive review of reports on urban planning and infrastructure services. The city has recently made progress in the development of key infrastructure systems such as solid waste management and sanitation. The report is organized as follows: section one gives introduction. Section two sets the background and context for Kampala, providing an overview of the impacts of rapid urbanization and climate change, drawing linkages to urban environmental assets. Section three, quality of the environmental assets of Kampala describes the state of the key environmental assets, including the terrestrial assets, aquatic assets, and air quality, and attempts to infer the associated historic and current trends. Section four, drivers of environmental vulnerability and degradation describes the key issues that are driving degradation and the impacts caused. Section five, institutional issues and challenges describes the key factors that constrain Kampala‘s ability to effectively address environmental management challenges. Section six, provides a synthesis of key findings.

The objective of this Systematic Country Diagnostic (SCD) is to identify the priority constraints Bolivia faces in sustaining its gains on reducing poverty and enhancing shared prosperity over the next years. It will analyze the dynamics behind the progress achieved in the past decade on inclusive growth, and identify a number of key constraints for sustaining and consolidating this progress. The SCD begins, in Chapter two, with a presentation of four characteristics that make Bolivia special, including its State‐led development strategy, large natural resource wealth, difficult geography and landlocked condition, and rich ethnic diversity. In chapter three, this SCD presents an in‐depth evaluation of the generally positive evolution in growth and in the reduction of poverty and inequality over the past decade. An assessment of the recent past and current context concludes that there is a need for enabling new inclusive growth engines, particularly through increased private investment and higher productivity. Chapter four makes a case for rebalancing the path of inclusive growth, and presents three main challenges in this sense: sustaining macroeconomic and fiscal stability, developing non‐extractive sectors with higher productivity and a lower environmental footprint, and reducing gaps and disparities in access to opportunities. The discussion of these challenges reveals a number of priority constraints, a key input for the prioritization exercise. Finally, in chapter five the SCD presents the findings of a prioritization exercise aimed at producing a restricted list of prioritized constraints, as well as a list of knowledge gaps identified in the different parts of the analysis.

El Salvador is the smallest country in Central America, and one of the most densely populated in the world. El Salvador is among the countries most affected by weather-related events and other hazards, incurring annual losses of around 2.5 percent of GDP. Worldwide, it ranks second highest for risk exposure to two or more hazards and highest for the total population at a relatively high risk of mortality. Furthermore, climate change is expected to increase the frequency and severity of weather, related events. The new Administration is committed to making El Salvador more ‘productive, educated, and safe’ by promoting inclusive growth and resilience. The World Bank Group’s (WBG) proposed new CPF intends to promote inclusive growth and to foster resilience, with a focus on policy levers that could contribute to break the vicious circles in a sustainable manner. The proposed CPF is aligned with the Government’s priorities and informed by the WBG’s recent SCD. To strengthen the mutually-reinforcing foundations of inclusive growth, the proposed WBG engagement would support objectives which seek to: (i) build capacity to create safer communities for economic development; (ii) improve secondary-school attainment; (iii) enhance youth employability and skills; and (iv) increase access to finance. To foster sustainability and resilience, the proposed CPF seeks to: (v) promote the efficiency of public spending; and (vi) build capacity to manage disasters and environmental challenges. Taking into account the challenges faced by El Salvador, the WBG wishes to provide a modest but catalytic role through the implementation of these six objectives.

This report provides a baseline institutional and regulatory assessment of the oil and gas, mining (including jade and gemstones) and the hydropower sectors in Myanmar. As such the report is an input to Extractive Industries Transparency Initiative (EITI) in Myanmar. However, it is not exhaustive with respect to all the sectors that may be considered under a scoping study for EITI .This report is the first in-depth study of the context within which EITI will be implemented in Myanmar, and can inform broader efforts to improve natural resource governance. This includes support for developing natural resource policy, law and regulations, fiscal regime design, tax administration (including support to the Large Tax Payers Office on the extractive industries sector), license management and cadaster systems, community development agreements, strategic environmental and social mitigation and management, training needs assessments and capacity building. The follow-up to this baseline assessment is a scoping study, which will determine which companies should be included within the first MEITI report and what payment flows they will need to report on.

The use of the phrase, ‘political economy’ originates in Adam Smith’s Wealth of Nations and is also found in the writings of David Ricardo and Karl Marx. What is presently understood as ‘economics’ was, at that time, termed ‘political economy’. This was understood to mean ‘conditions of production organization in nation-states’ (Acemoglu and Robinson, 2012, Beuran, Raballand and Kapoor, 2011). Venerable scholars such as Smith, Ricardo, Mills, Rosseau, Ruskin and de Tocqueville, took a consistently holistic view of the interaction between economics (technical means of production) and politics (relationships of production) in their debates on wealth, prosperity, and international trade, and explanations of development outcomes. However, subsequently, ‘economics’ and ‘political science’ developed along parallel tracks, constraining us from fully exploring their interactions and joint contribution to incomes, livelihoods and to economic development more generally. For the forestry sector too, when stakeholders’ power and influence is uneven, vested interests get to control the resource, and institutions are weak (or deliberately weakened by the same vested interests) the result is resource plunder, institutional erosion and breakdown of the rule of law and concentration of wealth in a few hands. (In the next section of this chapter, specific examples from forestry will illustrate these challenges clearly). If we are to come to grips with the fundamentals determining sustainable forest management, there is a need to develop a good understanding of stakeholder interests and the complex balance of power relationships, via political economy analysis. Thus, the major objective of this report is to offer preliminary guidance to conduct a practical political economy analysis for the forest sector. The report provides this guidance by considering eight ‘front-runner’ political economy analysis approaches that have emerged over the last few years. In principle all are capable of being applied to address political economy challenges in forestry and the report develops a set of criteria, geared to political economy considerations for forestry, which would assist a practitioner in selecting among the available approaches.

This report examines how green growth and sustainable development policies can be incorporated into structural reform agendas. Indeed, as demonstrated in the report, many of these policies are closely linked and synergistic with the framework policies applied by G20 governments in their efforts to pursue strong and sustainable growth. The report, has been prepared in response to the request from G20 Finance Ministers and Central Bank Governors in their communication of 25-26 February 2012 that asked the Organization for Economic Co-operation and Development (OECD), with the World Bank and the United Nation (UN), to prepare a report that provides options for G20 countries on inserting green growth and sustainable development policies into structural reform agendas, tailored to specific country conditions and level of development. The report will be an input to the G-20 leader's summit in Los Cabos and provides a toolkit of policy options from which countries may draw-upon when designing their own green growth strategies. The G20 development working group has also tasked the International Organizations with the development of a non-prescriptive toolkit of policy options to support inclusive green growth in the context of sustainable development and poverty eradication in developing countries.

In 2012, the Mexican Presidency of the G20 introduced inclusive green growth as a cross-cutting priority on the G20 development agenda. The second meeting of the G20 Development Working Group (DWG), hosted by the Government of the Republic of Korea, took place in Seoul the 19th and 20th of March 2012. As agreed during the first DWG meeting, this second meeting focused on the priorities for their presidency in the first half of 2012: infrastructure, food security and inclusive green growth (IGG). At its Seoul meeting, the DWG also agreed that IGG co-facilitators and relevant international organizations (IOs) should work together in 2012 to develop a nonprescriptive good practices guide/toolkit on enabling national policy frameworks for inclusive green growth to support countries who voluntarily wish to design and implement affordable and inclusive green growth policies, with the aim of achieving sustainable development and poverty alleviation. The toolkit is organized as follows. First, the necessity of applying the different tools in the context of a broad inclusive green growth strategy is stressed, and a harmonized framework combining approaches and tools identified by all four IOs is set forth. Second, the document offers an overview of key tools that can be mobilized to implement an inclusive green growth strategy. Quick technical descriptions of these tools are offered along with suggested sources for further details. Finally, capacity building and knowledge sharing initiatives are presented, with the Green Growth Knowledge Platform (GGKP) highlighted as a powerful collaborative tool to advance policies for inclusive green economies.

Current international financing (primarily ODA) for environmental services in developing countries is very roughly estimated to be upwards of $21 billion annually (not including climate change financing), but additional resources on the order of tens, if not hundreds, of billions of dollars are needed. In 2009, environmental ODA was estimated at $18 billion with a few billion more delivered through philanthropic and market-based financing channels. Although there are only a few studies of the additional financing needed, and those are relatively narrow in scope, the estimates that are available clearly indicate that significantly higher levels of finance still need to be reached. Additionally, the impacts of environmental finance on environmental sustainability and development objectives are poorly understood. Systematic reviews of previous experience, and standardized monitoring in the future, would support the countries and projects monitored, while also providing important lessons for the broader development and environment communities.

These organizations have joined together to recommend the principles presented below. The document concludes with anticipated next steps, which point toward a toolkit of best practices, guidelines, governance frameworks, and possibly codes of practice by the major sets of private actors.

In this paper, the authors discuss the ways in which national governments, firms, and individuals respond to policy related to food safety, environmental protection, and trade. These responses must be considered in the development of policy to ensure the best possible outcomes. It accounts for uncertainty about policy impacts and scientific knowledge and incorporates stochastic environmental factors. The authors argue use of such a model in the development of health and environmental policy can overcome capture by domestic forces opposed to trade liberalization. The effectiveness of policy, of course, is dependent upon firm and consumer response to policy. Section one describes the impacts of international transfer of species and genetic material, paying particular attention to the introduction of alien invasive species. Section two discusses issues surrounding trade in environmental amenities. Food safety and environmental regulations are reviewed in section three, along with mechanisms by which such policy can serve as a proxy for protectionists. Section four develops a risk assessment model that can be used in policy design. Section five considers the role of institutional, firm and individual behavior in the development and effectiveness of policy. Section six summarizes our analysis in offering an agenda for trade talks.

Through a survey the authors study willingness to pay for improvements in air quality in Sofia, Bulgaria. Using a stochastic payment car approach - asking respondents the likelihood that they would agree to pay a series of prices - they estimate the distribution of willingness to pay various prices. They find that people in Sofia are willing to pay up to about 4.2 percent of their income for a program to improve air quality. The income elasticity of willingness to pay for air quality improvements is about 27 percent. For comparison, they also used the referendum contingent valuation approach. Results from that approach yielded a higher estimate of willingness to pay.