Ch. 11— Biological Diversity and Development Assistance • 295 



stance, a protected area in conjunction with 

 an irrigation project in Indonesia. In this case, 

 the designated area protects tropical forest and 

 wildlife while providing key watershed man- 

 agement services. Even conservation compo- 

 nents that represent a small fraction of a 

 project's total cost can play a substantial role 

 in preserving diversity. 



The performance of MDBs in preserving di- 

 versity depends on their more general environ- 

 mental policies and the degree to which these 

 policies are implemented. In this regard, the 

 banks have issued statements emphasizing the 

 need for sound environmental management 

 projects. 



The World Bank, the Inter-American Devel- 

 opment Bank, the Asian Development Bank, 

 and six other multilaterals in 1980 signed a 

 "Declaration of Environmental Policies and 

 Procedures Relating to Economic Develop- 

 ment." As a result, these organizations formed 

 the Committee of International Development 

 Institutions on the Environment (CIDIE), un- 

 der the auspices of the United Nations Envi- 

 ronment Programme (UNEP). CIDIE has met 

 five times since 1980 to exchange information 

 on progress and plans of MDBs for improving 

 their environmental performance. Under the 

 terms of agreement, the agencies will perform 

 systematic environmental analyses of activities, 

 fund programs and projects designed to solve 

 environmental problems, manage resources 

 sustainably, and provide support for improving 

 environmental policymaking institutions and 

 their capacity to implement environmental con- 

 trols in developing countries. 



A study prepared by the International Insti- 

 tute for Environment and Development for the 

 fourth CIDIE meeting found, however, that the 

 commitment of MDBs to sound environmental 

 management in development projects was not 

 effectively translated into action. The study 

 came to the following conclusions: 



The fact that we found so little evidence of 

 the application of existing guidelines suggests 

 that either they have been tried and found use- 

 less, or that agencies have not made sufficient 

 resources and incentives available to sustain 



their use. We suggest that some agencies never 

 put some guidelines into operation because 

 their function is to improve public relations. 

 ... In many cases, staff do not use guidelines 

 because agencies do not require their use, nor 

 provide appropriate training and resources, 

 nor establish any institutional penalties for fail- 

 ing to use them (16). 



A number of congressional hearings have 

 brought to light evidence of serious ecological 

 problems resulting from projects supported by 

 MDBs (54,55,56,57). Through testimony pre- 

 sented at these hearings, several categories of 

 projects were identified that may directly con- 

 tribute to large-scale environmental destruc- 

 tion. Categories cited as problematic included 

 large-scale cattle ranching (especially in the 

 tropics), hydroelectric power projects and ir- 

 rigation systems, and resettlement projects (41). 

 Evidence of low economic returns and high 

 environmental costs associated with a number 

 of these projects suggest that greater scrutiny 

 of environmental impacts should be applied be- 

 fore MDBs provide financing. 



Following these hearings, the House Subcom- 

 mittee on International Development Institu- 

 tions and Finance issued a series of recommen- 

 dations to the U.S. Treasury Department, in 

 effect proposing a U.S. environmental policy 

 for MDBs (41). These recommendations were 

 largely supported by the Treasury Department, 

 the lead Federal agency for U.S. participation 

 in these organizations. Included were calls for 

 increased environmental staffing and manda- 

 tory procedures for project review, and for the 

 U.S. executive directors of the MDBs to try to 

 modify or oppose projects that would erode the 

 natural resource base. Recommendations also 

 emphasized the needs for institution-building 

 and training in conservation, improved man- 

 agement of protected areas, involvement of in- 

 digenous peoples in development planning, and 

 withdrawal of support from projects that cause 

 extensive damage to habitats in species-rich 

 areas. 



Because U.S. influence in MDBs has tradi- 

 tionally been strong, a concerted effort from 

 the U.S. executive directors no doubt could im- 

 prove MDB environmental performance and 



