news from ero september 2001

12
NEWS from ERO Issue No. 13, September 2001 Asian Development Bank European Representative Office Rahmhofstrasse 2-4, 60313 Frankfurt am Main, Germany E-mail: [email protected] Telephone: (+49 69) 920 21 481 Facsimile: (+49 69) 920 21 499 ERO Web Site: http://www.adb.org/ERO/ ADB Web Site: http://www.adb.org Countries Covered: 14 European members: Austria, Belgium, Denmark, Finland, France, Germany, Italy, The Netherlands, Norway, Spain, Sweden, Switzerland, Turkey, and The United Kingdom Regional Representative: Keon-Woo Lee Halting Asias Environmental Decline The Asian Environment Outlook 2001 E nvironmental degradation in the Asian and Pacific region is perva- sive, accelerating, and unabated, putting at risk people’s health and liveli- hood and hampering the economic growth needed to reduce the level of poverty in the region. This is the scenario depicted by the Asian Environment Outlook 2001 (AEO) released in June by the Asian Development Bank (ADB). AEO pro- vides in-depth analyses of the environ- mental issues facing the region and a workable framework to improve the environment and reduce poverty. Asia’s economic development over the past few decades has come at a high environmental cost, according to AEO. By 2020, over half of Asia’s popula- tion is likely to live in cities, with the urban population tripling to over a billion in 2020 from 360 million in 1990, further straining an already (continued on page 3) inadequate infrastructure for water supply, housing, and sanitation. The region has already lost up to 90 percent of its original wildlife habi- tat to agriculture, infrastructure, de- forestation, and land degradation. One in three Asians lacks access to safe drinking water within 200 meters of home, with South and Southeast Asia suffering the most. The region is expected to replace the Organisation for Economic Co- operation and Development coun- tries as the world’s largest source of greenhouse gas emissions by 2015. Air pollution is a major cause of res- piratory ailments and premature death in several Asian cities. The poor, particularly children and women, suffer most from the accelerat- ing urban and rural environmental deg- radation. Asia is home to two thirds of Features G-7 Hurries Reform of Development Banking 2 LIBOR-Based Loan Product Unveiled 4 Operations Evaluation 5 Seeing the Forest and the Trees 7 Flooding in Bangladesh 8 Institutions for Development 9 Conserving Biodiversity 10 News Briefs Lending Rates for the Second Half of 2001 2 Poverty Statistics 7 ADB-KfW Conference 11 ADB Launches A$500 Million Public Bond Issue 12 News Releases 11 ERO Calendar 12 IN THIS ISSUE

Upload: olivier-serrat

Post on 17-Mar-2016

213 views

Category:

Documents


0 download

DESCRIPTION

This quarterly series represented ADB's work in Asia and the Pacific across its 14 European member countries. Five brochures were published between 2001 and 2002 including original articles titled Where Do We Stand on Organizational Performance? The Bank of the Future, Initiatives to Bridge the Digital Divide, E-Business: Big Business or Bermuda Triangle? Challenges to the International Order, Opportunities for Private Sector Investment, Private Financial Organizations Struggle to Find Green Solutions, Reading the Future, Output Accomplishment and the Logical Framework, A Note on Land Degradation, Deforestation Benefits, Seeing the Forest and the Trees, Flooding in Bangladesh, and Institutions for Development.

TRANSCRIPT

NEWSfrom

ERO��������������� �����������

������������ ������������� ������ ������������� �!�

��"�"� ���������#$�%���&���� �������'�����(�����)

�#����*� �+����,�+���-.��� "���*�/0$1�%12�1������$3�&�!������*���/0$1�%12�1������$11����4�������*� "�� *55666�+���-5���5����4�������*� "�� *55666�+���-

7���������7�����+*�$����� �����������*�������������-�������������&�����+��&���!���(�����)�����)��."�����"�����+������6�)��� �����6�+�����6��8�����+��.����)����+."��9����+�:��-+��

��-�������� �����������*:���#4���;��

<�����-�����=�����������������!���������������������� ��� �������

�nvironmental degradation in theAsian and Pacific region is perva-sive, accelerating, and unabated,

putting at risk people’s health and liveli-hood and hampering the economicgrowth needed to reduce the level ofpoverty in the region.

This is the scenario depicted bythe Asian Environment Outlook 2001(AEO) released in June by the AsianDevelopment Bank (ADB). AEO pro-vides in-depth analyses of the environ-mental issues facing the region and aworkable framework to improve theenvironment and reduce poverty.

Asia’s economic development overthe past few decades has come at a highenvironmental cost, according to AEO.• By 2020, over half of Asia’s popula-

tion is likely to live in cities, with theurban population tripling to over abillion in 2020 from 360 million in1990, further straining an already ������������� ���

inadequate infrastructure for watersupply, housing, and sanitation.

• The region has already lost up to 90percent of its original wildlife habi-tat to agriculture, infrastructure, de-forestation, and land degradation.

• One in three Asians lacks access tosafe drinking water within 200meters of home, with South andSoutheast Asia suffering the most.

• The region is expected to replacethe Organisation for Economic Co-operation and Development coun-tries as the world’s largest source ofgreenhouse gas emissions by 2015.

• Air pollution is a major cause of res-piratory ailments and prematuredeath in several Asian cities.The poor, particularly children and

women, suffer most from the accelerat-ing urban and rural environmental deg-radation. Asia is home to two thirds of

������

(#>�<��������� ����� ������ �����������- ������

;����#����+� ;���� ?��+�!�� 9������+ $

� ��������� ���������� @�����-� �"��&������ ��+� �"��.���� >&���+��-� ��� ���-��+��" 3������������� ��� ������ ���� 17��������-� ���+�������) ��

���� ���

;��+��-������� ����"����!��+<�� � � � ���� �

?�����)� ��������!� >���#: 4�7�� ����!� ������;���!"����A@���'������

?����!����+� ����� ����6���������� ������7����+�� ��

���.<������9�

;��+��-������� ����"����!��+<�� �� �����

.he variable lending rates forthe Asian Development Bank(ADB)’s multi-currency and

US dollar loan facilities are adjustedon 1 January and 1 July each year. Foreach facility, the lending rate isdetermined by adding a spread of0.60 percent per annum to the pre-ceding six months’ average cost ofthe relevant pool of outstandingADB borrowings.

For multi-currency loans, theaverage cost of the pool of outstand-ing borrowings during the period

1 January to 30 June 2001 was4.61 percent. Accordingly, thevariable lending rate to be in ef-fect from 1 July to 31 Decem-ber 2001 for such loans is 5.21percent per annum.

For US dollar loans, theaver- age cost of the pool of out-standing borrowings during theperiod 1 January to 30 June2001 was 6.10 percent. Accord-ingly, the variable lending rateto be in effect from 1 July to 31December 2001 for such loansis 6.70 percent per annum.��

(#>�<��������� ����� ������� ����������-

�n 7 July, finance ministersfrom the world’s leadingindustrialized countries

agreed to continued reform of theAfrican Development Bank, AsianDevelopment Bank, European Bankfor Reconstruction and Development,Inter-American Development Bank,and World Bank.

The Group of Seven finance min-isters confirmed that the banks are anessential component of the develop-ment architecture and that they havemade considerable progress in improv-ing their efficiency and effectiveness.But they cautioned that progress mustcontinue if they are to carry on theircrucial role of combating poverty andsupporting equitable, sustainable de-velopment. Their recommendationsfor reform are contained in the reporton Strengthening the InternationalFinancial System and the MultilateralDevelopment Banks that was releasedon 9 July by the ministers.

The report includes calls for(i) improved coordination at the coun-try and institutional level to achieve a

more selective approach to develop-ment issues and avoid overlap or dupli-cated efforts; (ii) enhanced internal gov-ernance, accountability, and transpar-ency; (iii) closer attention to strength-ening public sector management,

accountability, and anticorruption mea-sures in all countries; (iv) a review of lend-ing instruments and pricing; and(v) deeper involvement in providingglobal public goods, such as fighting in-fectious diseases, promoting environ-mental improvement, facilitating trade,and supporting financial stability, andenhancing action to help borrowingcountries strengthen their financial sec-tor consistently.

A second report, Fighting theAbuses of the Global Financial System,will also be released. It focuses on inter-national efforts to combat money laun-dering and harmful tax practices and theneed for improved supervisory and regu-latory practices in some offshore finan-cial centers. Both reports were presentedto a summit meeting of G-8 leaders—the G-7, plus Russia—in Genoa on20–22 July.

The heads of all five developmentbanks joined the ministers to discussthe proposed reforms. ADB PresidentTadao Chino presented ADB’s policy topromote good governance in ADBmember countries.��

��������������������

��������������

��������������� ���

the world’s poor. “The poorare often most directly de-pendent upon forests, fish-eries, and other natural re-sources threatened bydepletion and degrada-tion,” says Rolf Zelius,Chief of ADB’s Office ofEnvironment and SocialDevelopment. “The poorare especially vulnerableto lack of access to cleanwater and inadequatesanitation systems.” De-clining environmentalquality and continued de-pendence on natural re-sources are constrainingthe economic growth thatis needed to reduce pov-erty in the region over thenext 20 years, the reportsays.

With only a few ex-ceptions, Asia’s “grow now,clean up later approach”has resulted in a long list ofinstitutional, policy, and governance fail-ures, says AEO. The separation of eco-nomic growth from environmental con-cerns has led to· excessive reliance on centralized,

top-down approaches;· inadequate participation of civil

society in environmental issues;· weak enforcement;· absence of political will;· corruption;· market distortions; and· limited funding for environmental

management.Yet, as AEO points out, economic

productivity and environmental im-provement are not mutually exclusive,but can go hand-in-hand, with significantimprovements achievable at low cost.The costs of remedying policy failurescan be relatively low, while at the sametime can produce major environmentalbenefits.

The report identifies three core ele-ments of a new approach to meet ADB’svision of a region where consumption isbased on services rather than ownershipor assets; ecosystems and biodiversityare valued and protected; and environ-mental management is decentralized,participatory, and effective. The threeelements are the following.· Environmental and development

policies must be integrated at thenational and regional levels. Cur-rently, a stand-alone agency is usu-ally responsible for environmentalprotection but often lacks theauthority.

· Development by design shouldguide sustainable development.This means guiding urban andindustrial development accordingto publicly accepted and integratedenvironmental and economicdevel- opment plans.

· A strong political will is essential totranslate environmental rhetoricinto actions. This means a minimumlevel of environmental compliance,adequate budget and humanresources, access to informationand public participation, and elimi-nation of subsidies that aggravateresource degradation.“As the region’s capacity to support

human activity becomes increasinglystressed, policymakers and leaders willdiscover that integrated solutions thattranscend traditional disciplines andapproaches are clearly more effectivethan parochial solutions that divideregions, institutions, infrastructure, andtechnology,” AEO concludes.

AEO 2001 is the first in a biennialseries. It will be followed by back-ground reports on various environ-mental themes and reports on issuesfacing individual countries.��

$

;����#����+�;����?��+�!��9������+�������� !��������������"�����#����$����

&rom 1 July 2001, the AsianDevelopment Bank (ADB) willoffer borrowers in the public

and private sector a LIBOR (Londoninterbank offered rate)-based loan thatwill carry a floating lending rate con-sisting of a six-month LIBOR and aspread fixed over the life of the loan.The new terms will apply only to loansfrom ADB’s ordinary capital resources(OCR). In 2000, some 70 percent ofADB’s loans were from OCR.

“This first step is a milestone in aprocess of adding new features toADB’s menu of loan products. I expectthat, in a couple of years,ADB’s borrowers will beable to design the finan-cial features of each loanto the specific require-ments of each project ina manner consistent withtheir debt managementgoals,” says ADB Presi-dent Tadao Chino. Thenew product also givesaccess to risk manage-ment products to many ofADB’s developingmember countriesfor the first time.

“This is a water-shed event in ADB’srole as a financial in-termediary,” saysADB Treasurer ShinjiIchishima. He adds,“To be more respon-sive to our members’needs, ADB com-pleted a surveyamong borrowers last year. The newproduct is in response to many bor-rowers’ wishes for a wider choice ofloan terms and flexible hedging toolsto meet their evolving sovereign assetand liability management needs. Thenew product is also more transparent.”

Based on current LIBOR rates forUS dollars of around 3.8 percent per

annum, the new ADB product will offersignificantly lower interest rates than itscurrent lending rate of 6.7 percent perannum for pool-based US dollar loans.Noting that LIBOR rates could move upas well as down, Ichishima says, “Whilefloating rates are inherently riskier dueto volatility in LIBOR, the new producthas options to fix, cap, or collar the float-ing lending rates as appropriate.”

The following loan terms and con-version options will be available to bor-rowers from ADB’s OCR under the newproduct.· A choice of three loan currencies:

the Euro, Japanese yen, or US dollar.· A choice of floating or fixed lending

rate based on LIBOR or the fixed rateequivalent of LIBOR, plus a spread

that would be fixed for the life ofthe loan.

· Options to convert the lending ratefrom floating to fixed rate or viceversa at any time during the life ofthe loan.

· Options to convert the loan cur-rency at any time during the life ofthe loan.

· Options to cap and collar the float-ing lending rate at any time duringthe life of the loan.The choice of currency and interest

rate basis will allow borrowers to struc-ture loan terms that are most appropri-

ate for the project and theirrisk management strategy.The conversion options willprovide borrowers with moreflexibility to alter loan termsto suit their changing needs.Importantly, the new productwill provide borrowers withpotential cost savings in theirdebt service payments of ADBloans. While offering poten-tially cheaper loans and hedg-ing options, ADB stresses the

new product will not ex-pose ADB to additionalrisk as it will maintain itspolicy of avoiding for-eign exchange and inter-est rate risks.

ADB will nowquickly evolve into a full-fledged LIBOR-basedlender. Effective 1 July2001, it will no longeroffer pool-based multi-currency loans. ADB will

also withdraw its pool-based US dollarloans from 1 July 2002. In addition, ADBwill offer borrowers the option to con-vert undisbursed amounts of their pool-based US dollar loans to the LIBOR-based product. It will also consider inthe future offering borrowers moreflexibility in repayment terms and free-standing hedging products.���

@

.he Asian Development Bank’s(ADB’s) renewed concern overthe impact of its assistance on

poverty reduction has added a newdimension to operations evaluation.While learning through evaluation re-mains the key objective of its OperationsEvaluation Department (OED), evalua-tion and learning activities now have aclearer focus on ADB’s overarching goalof reducing poverty. Because of thebroader significance of the impact ofpoverty reduction interventions, evalu-ation procedures must be strengthenedthrough more rigorous evaluation stan-dards and practices. Evaluation must pro-duce results that are operationally useful.

So, OED pays increased attention toapproaches, objectives, and designs thatcan be evaluated to facilitate monitoringand verification. Progress was significantwhen OED carried out the following.· Introduced the project performance

management system. This empha-sizes identifying monitorableproject performance indicators and

� �������������������reporting on project progress anddevelopment impact, includingpoverty, through the project per-formance report. (Use of the logi-cal framework is mandatory.)

· Carried out a special study on the ef-fectiveness of ADB’s approaches topoverty reduction in five countries.

· Examined crosscutting issuesthrough three special evaluationstudies covering governance (pub-lic expenditure management), non-government organizations, and thesocial and environmental impactsof hydropower projects.

· Completed a country assistance pro-gram evaluation for Viet Nam anda special evaluation study on ADB’slending operations in Thailandduring the Asian financial crisis.More recently, OED introduced re-

vised Guidelines for the Preparation ofProject Performance Audit Reports. Thenew edition includes a substantial revi-sion of the criteria for rating success.

Undoubtedly, a major activity of

OED remains the preparation of project(or program) performance audit reportsof completed projects (or programs) forwhich completion reports have beenprepared by ADB’s operational depart-ments. These audit reports involve thecomprehensive evaluation of effective-ness in achieving objectives and provideanalytical commentary focusing on les-sons of operational significance. But asindicated previously, OED also under-takes various intensive studies ofbroader relevance to ADB’s operations.They include technical assistance per-formance audit reports, impact assess-ments and other special evaluation stud-ies, and reevaluation studies. To ensurethe usefulness of operations evaluation,OED also provides effective feedbackon lessons learned for the operationalsystem of ADB through several chan-nels, including annual reviews of evalu-ation activities, country or sector synthe-ses of operations evaluation findings, anda computerized operations evaluationinformation system. Additionally,through technical assistance, OED assistsADB’s developing member countries indeveloping and strengthening indepen-dent evaluation capabilities. �

@

?��B�!��?�� �����!����+����� ���� ���������!�� ��"�������)� �"��� �!���������� � ��B�!������ ��-����� ����!"�����-� �"�����+�?��-����?�� �����!����+�� ��B�!��������+�-�����������)��!�������������� �!����-�������������+���������� �� ���� � ���������� ��-�� �!��!�

.�!"��!�����������!��?�� �����!� ��������"�����+���+�C��!)����+�� �!���������� � ��!"��!�����������!��� ��!��+��-� �� �!���+����� ���� ��� ��!"��!���� � ����������� ��������������� ��+� ��!���!�����!� �� �!��

�� �!������������� ���+��� ?����+������-"���������"���D��������6"�!"��"������ ����� ��������+��-������ ����!������!������������!��������� ���+���+���������+

������������� ���+��� &�!������ ��B�!�� �� �!����+��������������)������� ����)������ ���� �"�� �����������������-�

� �!���� ����������� ���+��� ����)8�� ����������)��� ����!����� �"�����!� �������!����� ��!��������!��������

7�����)���������!��?��-��� �D���������� !�����)�� ���������� ������-)� ���+����� !�����)���������!�� ������ ����������������� ��!"��!�����������!�����+��!�����!���+���!����6������������������� �)���������

����!����� !�����)

7�����)��)��"������ �� �������� ����)8����)� �!������ �!���-��"�� �� ������������� � ��B�!��E� �������)�����+�������������� &��+��-� ����������� �� ����

��!�����)��"������ �� �������� ����)8����������)�������������D �����!�� ��� �"����!������+�"�-"��-"�� �"����B��� ����������������� &��+��-� ��+����������"�������� �� �����������������!�������-���-���+� ������ ��B�!��

������������6��� ����������� �������8���"�� ��+��-�� ����������������� ����� �� ���+�+����-��"�� ��������)���E�� ���� ��!��+��-� /�2�+��������-� ����������+������ ��!��!�������6���� ��� �"���!����-����+���B��

������������+�����"���� ������/��2���������-�!������� ���!������+� ��!��!���� ���������� ��#��������������+�/���2�+��!�����-���6���������������������������-�"����"�� ��+��!� �)������+������������"�����!"������ ��� ����6#� ������!�����+������� ���������������� ����

�������?�� �����!������������ ����-���-��"����"���!���������� �+� ������+� �����������+�� �!���� �������+� ������?��-���� ��!�� ��"������� �����6�� � �"�� ��������)���=�����#6�+�� ��-����� � �!��������

������+���� ��B�!�� �� �����!����+� �����+��!��������� ����"��!�������)���

�� ���������������%����

%

������������ �&�$�'���

������������� 666�+����-���������6 666�+���-5+�!������5 ����+�!���5���F�����6�-��!������ 666�+���-5�-��!��������������� ��� 666�+���-5+�!������5�� ����5������F�� �������!���� ���� 666�+���-5����!���� ���������������� �����&��+ 666�+���-5 ����!����������� ���������� 666�+���-5��������5� ����������7����+���� ������� 666�+���-5��6�5!����+���� 7��������������� ����!� 666�+���-5!����������7� ����!��-�� ���������� 666�+���-5!� ����!��-7��������-������!�� 666�+���-5!��������-7�����)���������!��?���� 666�+���-5+�!������5!� �7�����)��!�����!������6� 666�+���-5+�!������5!���7�����)�� ����������������-)����+��� 666�+���-5+�!������5!���7�����)�� �������� 666�+���-5!���������� ������)�;�����)�?��-��� 666�+���-5 ����!������5+� ��������������� �����.� �!� 666�+���-5+����� ������������� 666�+���-5���������!�����!���+���!������������!� 666�+���-5��������!��!�����!����+������� �����������!��7����� 666�+���-5�+�!�� ��)������ ���������� 666�+���-5�� ��)��������������� 666�+���-5�����������&����!����'���-����� 666�+���-5 ����!�(��+�����+������� ���� 666�+���-5-��+��(�������!� 666�+���-5-�������!�(�������'����-������-��� 666�+���-5-��(���������� �������� 666�+���-5+�!������5�������5� ��������5����� ��+�-������?�� ��� 666�+���-5+�!������5 ���!���5��+�-�����F �� ������ �!���� 666�+���-5��� �!�����������"� �?��-��� 666�+���-5�� ��)����5�������"� �� ����������)������������� 666�+���-5+�!������5 ���!���5����������)F������������G� ����!"�����"� �?��-��� 666�+���-5+�!������5���!"����5�!"�����"� F ��-���G� ���� �!����&��+ 666�+���-5+�!������5�� ����5B� ��F� �!���F ��+;�6���+�?���!)��� ��� 666�+���-5��6'�!�� ����!� 666�+���-5��!�� ����!���6�)���+��������8�+��!������� 666�+���-5������-������������-���8������ 666�+���-5�-��� �!��� ��D���������������� 666�+���-5���� �!��� �?�!� �!�� �������� 666�+���-5� �� ��������������������� �!� 666�+���-5�����-���8������7"��� 666�+���-5�����5��-!"����� ?�!� �! 666�+���-5 �!� �!?���!������+�������-��� 666�+���-5+����� ����5 ���!����� ?�����)���+�!���� 666�+���-5 �����)?���������!���������� ���� 666�+���-5 ��������!���?��!������� 666�+���-5 ��!�������?��-������� ��������H����� 666�+���-5 �+?��-������� ��������H�4��� 666�+���-5 6+?����!������ 666�+���-5 ����!��������-������7�� ������� 666�+���-5!��������5!�� ��������� ����"����� 666�+���-5����"��������"��������� 666�+���-5����"��������.�!"��!�����������!� 666�+���-5��.�!"��!�����������!���� ���� 666�+���-5 ��B�!��5�� ������ I���-�?�� ����������?��-��� 666�+���-5�� ��)����5) ��

>

?�����)���������!�

.he Asian Development Bank(ADB) is building a database ofkey poverty indicators. Besides

core poverty statistics (such as magni-tude and depth of poverty), the data-base will also include key demographicand economic statistics and indicatorsof social and living conditions (suchas health and mortality, education, gen-der inequality, housing and basic house-hold amenities, employment, environ-

ment, and governance). An inventoryof existing poverty reports and poverty-related surveys undertaken recentlyin each country is being carried out.Already, ADB’s web site provides a glos-sary of poverty-related terms, muchcountry data, and regional tables. Addi-tional information will be regularlyposted.��

"�� *55666�+���-5��������!�5?�����)5

�����-��"��&��������+��"��.����

.ake a leaf from Maslow. Someneeds are common to allpeople—at all times and in all

places. They are the need to make a liv-ing, the need for social organization, theneed for knowledge and learning, theneed for normative and metaphysicalexpression, and the need for aestheticmanifestation. These nuts and bolts ofeveryday life work through the coevolv-ing realms of environment, economy,society, polity, and technology to makeup systems of mutual sustainabilityor (in opposition) mutual vulnerability.

Alone, cultural theory pays si-multaneous and even attention tothese needs and makes possible afocus on the whole and the parts, oncontexts and contents, on values andvalue systems, and on strategic rela-tionships between key variables. So,it yields conceptual insights and prac-tical benefits. It enables us, for in-stance, to deal better with complexityand fragmentation—the emphasis is onsystems rather than on parts of systems.And it helps to ensure that economiesare contextualized properly and pointedin the right direction. For those reasons,among others, economies can be con-strained and enriched by the larger cul-tures in which they are located. Conse-quently, they stop functioning as self-governing entities.

Culture, defined in its broadestsense, is the totality of a society’s dis-tinctive ideas, beliefs, values, and knowl-edge. Since people (not economies) arethe main object and ultimate purpose ofendeavors to progress, a society’s cul-ture is not just an instrument of devel-opment cooperation: it is its basis. Themarriage of economy and environmenthas been overdue and has spawned a

world agenda for that purpose. Likewise,the relationship between culture and de-velopment should be clarified and deep-ened, in ways that are authentic, indig-enous, self-reliant, sovereign, civilized,and creative.��

�����������������������������������������

���������������������������������� ��!�

������"����#������$

3

&���+��-�������-��+��"

&lood losses in Bangladesh growdespite large investments inflood control infrastructure.

There are only two plausible explana-tions: a physically driven increase inthe occurrence and importance offloods and a man-driven increase in vul-nerability caused by denser floodplainoccupancy. Deforestation is occurringin the Himalayan region. But, withoutevidence to support arguments thatenvironmental degradation there isexacerbating floods in Bangladesh, itis generally accepted that humanactions are on the whole responsible.

Even though floodplains are oneof the more obvious hazard-proneenvironments, widespread invasionhas occurred because of countless in-dividual decisions based on the beliefthat locational benefits outweigh risks.

Population pressures and general pov-erty have encouraged this expectationfurther. Once floodplains become urban-ized, however, there follows an almostinevitable demand for flood protectionfrom (now organized and vocal) localcommunities. This is because the con-struction of flood embankments orother physical controls is perceived torender part of the floodplains safe.Next, land values rise and the devel-opment of floodplains gathers steam(even though structural works cannotwithstand the most powerful riverflows and channel changes thatthreaten human life in disaster years).Development encourages furtherhuman encroachments and it be-comes more and more difficult toshake off the massive structurallegacy. Yet in the meantime, flood

e m b a n k m e n t sand other physicalcontrols isolatefish farmers andjute farmers fromthe beneficialspread of monsoonfloods in normalyears.

Internationalassistance may haveadvanced this trend.The Flood ActionPlan prompted byheavy floods in1987 and 1988 rec-ommended great-er reliance on em-bankments alongthe major rivers.This worked wellat first. But somedoubt the sustain-ability of the em-bankment pro-gram. It is long-term by nature andmust be sustainedto make sense,with the embank-ments raised every

year to cope with the rising channel bedsthat result from deposition. And thenagain, history shows that the integrity ofembankments is the exception ratherthan the rule.

Bangladesh may be in a no-winsituation and failure to understand envi-ronmental management issues couldhave dire consequences. Experienceconfirms the need to develop moreopen systems of management permit-ting flexible attitudes to turbulent envi-ronments, where local communityneeds define the modi vivendi. Floodproofing—which entails going back tousing floods as much as possible insteadof trying to prevent or control them—may be a more appropriate behavioralapproach preferable to structuralresponses. The latter usually aggravatesthe situation in many economic, social,ecological, and institutional ways andtends to impact the poorest most se-verely because they are not empow-ered to participate in making thedecisions that shape their lives.

In Bangladesh, cost-benefit analy-sis of planned abandonment of thefloodplain structures might show accept-able financial and economic returns thatequal or surpass those from further in-vestments in flood control infrastruc-ture. Social analysis would reveal a com-plex of necessary concessions betweenwinners and losers, but the opportuni-ties to avoid poverty and conflict wouldthen be richer overall. Ecological analy-sis would undoubtedly indicate greaterpossibilities for a return to ecosystemhealth and vitality. Institutional analysiswould show also the need for a moreopen society where public servantsserve the people better and calm theirengineering fervor to supply manage-ment services that encourage andsustain development outside the flood-plains.��

�����������������������������������������

���������������������������������� ��!�

������"����#������$

1

������������� ��������� ����

�very day, we are reminded of thechanges needed for economic andsocial progress, but not that insti-

tutions are the channels through whichsuch changes can happen. We would dowell to consider what is meant by (andcan be accomplished through) partici-pation, how participation grows out ofdemocratic processes, how these pro-cesses depend on the structure of insti-tutions, and how institutions originatefrom (and are supported by) human re-sources. Only then will we understandbetter the processes of progress and pic-ture more accurately the necessarilydiverse levels of the organizational set-ups on which progress depends.

(�����"�����) The rights andresponsibilities of people are central toprogress. And participation is essentialbecause privileged minorities seldom

approve of reforms and concentrationof political, economic, or social power intheir hands has retarded development.Therefore, five questions must be asked.Who initiates? Who participates? Whodecides? Who controls? And who ben-efits? If it is the people, then develop-ment activities will most likely succeed(bearing in mind that the chance to takepart hinges in turn on access to informa-tion, freedom of association to hold dis-cussions, and arrangement of regularmeetings at which officials and repre-sentatives can listen and respond to com-munities and be held accountable fordelivering particular outputs).

����������"����) But democ-racy is more than multipartyism or thegranting of concessions by authorities.Civil society needs to be fortified at alllevels in agreement with the customarychecks and balances of cultures. So oneshould also ask what manner of demo-cratic processes and what kinds of insti-tutions are necessary to release the pro-

ductive energies of people, and whatconditions are required to make theseprocesses and institutions work. Theanswer is that democratic processes muststart from where people are and that—for democratic processes to unfold—accountability, transparency, predicta-bility, and participation are essential.

����������) It follows that institu-tions should be located at three levels.• At the community level, a viable

institutionreflects theideas, inter-es ts , andneeds ofcommuni-ties. It has their confidence and thestrength to communicate theirviews to higher authorities. Natu-rally, this assumes a degree ofdecentralization of decision mak-ing. It presupposes too a capac-ity to act on rights and responsi-bilities. Above all, perhaps, theright to organize must exist.

• At the regional level, a viable insti-tution possesses a mix of technical,

managerial, and information-handling skills. It has also the abilityto interpret communities to the na-tion (and vice versa). Most of all, ithas a reasonable measure of au-tonomy (including independentrevenues).

• At the national level, a viable insti-tution has competence in policymaking, in socioeconomic analysis,and in technical research. It has ne-

gotiating parity with inter-national bilateral and multi-lateral agencies. It providesinputs to national policymaking without relying onexternal advice. And it

assists in identifying linkagesamong the national, regional, andcommunity levels.A tall order? Yes—on which eco-

nomic and social progress depends.��

�����������������������������������������

���������������������������������� ��!

������"����#���������$�%#������������"���������&�������'��#(������������)#�� �

�����������*�'���������+���,--�$

���(�����"���������

�������#��������

"�������

�������������"����

����������������

"��"��������

��

7��������-����+�������)

�iodiversity, as defined under theConvention on Biological Diver-sity of 1992, is the variability

among living organisms from allsources, including, inter alia, terrestrial,marine, and other aquatic ecosystems,and the ecological complexes ofwhich they are part. This includes di-versity within species, between spe-cies, and of ecosystems. Conservationof biodiversity is therefore a form ofnatural resource management that has,as its priority goal, maintenance ofthe long-term potential of biologicalresources to meet the needs and aspi-rations of future generations.

Biodiversity conservation in Asiais in critical need of (i) surveys andtaxonomy, (ii) ex situ conservation inthe form of gene banks and zoos,(iii) database and information systems,(iv) establishment and managementof protected areas, and (v) publicawareness and institutional develop-ment. Modern society has brought ex-panding populations, global markets,and new pressures on land and re-sources. Protected areas are an essen-tial element to ensure that biodiversityis conserved for present and futuregenerations. (The term “protected ar-eas” is now held to include nationalparks, wildlife sanctuaries, conserva-tion areas, biosphere reserves, sacredgroves, and even some types of farm-land allocated for conservation. Theyprovide a wide range of economic,social, cultural, recreational, scientific,and spiritual values.)

The main threats to biodiversityarise from loss of habitat and disrup-tion of ecosystems due to pressures ofgrowing populations and unsustain-able resource use. Factors include habi-tat destruction from clearing and burn-ing of forests, exploitative and illegallogging, fuelwood collection, en-croachment, wetlands conversion,degradation of grasslands, inappropri-ate development in coastal areas, andurbanization. Poaching, hunting, intro-duction of exotic species, and pollu-

tion also contribute substantially tobiodiversity loss. Marine life is particu-larly vulnerable to outside interven-tion, such as the extensive oil explo-rations taking place in Asian waters.Adequate marine conservation willrequire developing and implement-ing integrated coastal zone manage-ment plans with the active participa-tion of local communities.

Developing countries of the re-gion face many competing demands

on their limited funds, expertise, andpolitical realities. Meeting their na-tional conservation objectives andobligations under international law(such as the Convention on BiologicalDiversity) will require governmentsto mobilize support from moresources. ADB has a role to play in thisregard.

�� � &�*� ��� (������

��#�����+)�In 1989, ADB observedthat virtually all types of developmentprojects can incorporate biodiversitymanagement components to benefitboth development and conservation.In translating this principle into policy,ADB’s Medium-Term Strategic Frame-

work (1993–1996) placed increased em-phasis on environmental issues, seekingto support new biodiversity conservationprojects (including protected areas) andincorporating biodiversity conservationobjectives into more traditional loan andtechnical assistance schemes, ranging fromagriculture and forestry to hydropower andpoverty reduction.

ADB programmed about US$37 mil-lion in technical assistance grants andUS$404 million in investments from 1995

to 2000 for biodiversity conservationprojects. These included biodiversity con-servation in the Sundarbans (Bangladesh);integrated area development and conser-vation in Central Sulawesi, Indonesia;fisheries resource management in thePhilippines; and upper watershed man-agement in Sri Lanka.

For instance, the livelihoods of morethan 120,000 people will be improvedthrough a US$32 million loan approved in1998 to conserve biodiversity in CentralSulawesi. The project area covers the227,000-hectare Lore Lindu National parkand about 117 poor rural villages in thefour valleys and watershed adjoining thePark. In addition, in 1999, there was a

��

������6���������������"��4��

���",--���)�#$)��-���-

US$40 million loan to Sri Lanka to estab-lish integrated management of coastalresources to improve sustainability. Theproject will address the problem ofcoastal erosion and resource degrada-tion, including pollution; promote sus-tainable coastal fishery management;improve fish quality and reduce hand-ling losses; and strengthen the capacityof concerned institutions.

ADB’s technical assistance grantsconnected with biodiversity haveranged from protecting and managingcritical wetlands in the Mekong basinand preparing a bioregional develop-ment plan for one of the Lao People’sDemocratic Republic’s largest and mostimportant river basins, to strengthen-ing coastal and marine resource man-age- ment in the South China Sea andimproving the forestry sector in

Bangladesh, Cambodia, Indonesia, SriLanka, and Viet Nam.

�� �'�����+� ��� ��#�����+

����������) With ADB’s increasingemphasis on poverty reduction, the in-tegration of biodiversity conservationwith sustainable and equitable develop-ment is becoming more important. Thus,biodiversity conservation will featureprominently in ADB’s new environmentpolicy, which is being prepared. WhileADB has sought to address biodiversitythrough conservation projects, it is recog-nizing that this issue will need to be ad-dressed also by mainstreaming bio-diversity concerns into many types ofdevelopment projects.

For instance, entire river basins arenow being considered in water resourceproject planning. The needs of coastal com-munities will be addressed by protecting

critical habitats, such as mangroves andcoral reefs, and investing in coastal andmarine resource management. Commu-nities should be organized and empow-ered to manage their own reef systems,supported by local governments.

ADB will assist governments inensuring that lending and grant opera-tions do not negatively impact onbiodiversity. The environmental assess-ment process is the main existing mecha-nism in avoiding or mitigating suchimpacts and in identifying opportunitiesfor mainstreaming biodiversity conser-vation into development projects andprograms.��

%#������������.����������%#���������

����/�� ���0)#����� ����)#�� ����

�#���'��� �#�*�'1���������������

����������� ��!,--�$

���#: 4�7�� ����!������ ������!�������+�?�����)��+�!������������

�n 26 September, ADB andKreditanstalt für Wiederaufbau(KfW) will meet in the

Berlin City Hall to discuss infra-structure’s contribution to economicand social progress in Asia. The ple-nary session will emphasize theFederal Ministry for Economic Coop-eration and Development’s strategyfor development cooperation in Asia,

the future of private-publicpartnerships, sectoral agendasfor reform, approaches to com-mercializing public utilities, andrequirements for infrastructurethat reduces poverty. In the after-noon, parallel streams will bringto light KfW and ADB’s experi-ence in social and economicinfrastructure and their plans.��

!���������.��+�/001

���J��;����#����+�;����?��+�!����6������������;��+��-������� ���?���#����+�;�����������!�+�/��G��)2

?"��� �����;��+���+��.��-�+)�(�������������'�+���7�������)�?��B�!��/%�G��)2

����� �����D����� �!������ ��+�� ���"������������4�������(�B�����/1�G��)2

���J������+�� �����!��������"���8����+� ��+������� �!������ �������?�������4����6�����.���������?��B�!��/���G��)2

��

����7����+���������

����� � ������ � ���� � ������������

��������

����������� ����� ������������������������������������������������������������������������������

������������ � ����!�����"�#$���

�%��������� &'�()����������*�����+����� *� ����#�,���� �-�# *��������&����

������������ � �����"�#$���

./0��*���� � ������������ �������������� � ������������ ��

�����"�#$���

11��*���� � ������������ �������������� 2����*���+��� � �����"�#$���

��3��*����

������������*����*�����*��������������������������� ��������� ���4�*�������*������ ������������#�,����������!���������(���#���#� �(��5�#�����������

6� ��������!��5����#�

����!�����"�#$���

��/�%��*����

�-��,���������������&'�� +���� ���4 �� � �����"�#$���

��������������

��6�� ��������6������ �������-��������!�����

2 *3�����#�3��"���4�������5

���=���������K

���� ����� �����������

� �!�

666�+���-5���5

����;���!"����A@��'�������?����!����+������

�n 22 June 2001, ADB launchedan A$500 million public bondissue in the Australian domes-

tic bond market through a syndicateheaded by Commonwealth Bank ofAustralia and UBS Warburg. The syndi-cate group consists of Deutsche Bankand RBC Dominion Securities as co-managers.

The bond issue, with a coupon rateof 6.25 percent per annum payablesemiannually and a maturity date of 15June 2011, was priced at 99.411 per-cent to yield 47 basis points over the5.75 percent Commonwealth Govern-ment Bond, which was due 15 June2001. The transaction is ADB’s third bor-rowing in the Australian dollar domes-tic bond market. The bonds will be

listed on the Australian Stock Exchangeand settled through the domestic clear-ing system “Austraclear.”

At 10 years, this is the longest matu-rity deal launched thus far by a suprana-tional entity. The issue marks another steptoward ADB’s long-term objective ofbuilding its yield curve in the Australiandollar bond market. In total, ADB plans toborrow US$3.4 billion equivalent in 2001/2002.

The entire principal amount ofA$500 million has been swapped intoUS dollar floating rate liability underrelated currency liability swap transac-tions, the proceeds of which will beincluded in the ordinary capital resourcesof ADB and used in its nonconcessionaloperations.�

����������������������������

ISBN: 971-561-290-3

����������� ����������������

ISBN: 0-19-592976-4ISSN: 0117-0481

��+����)��#������-��+� ��,�+���-