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Bank balance: economy and ecology.

Bank balance: Economy and ecology

The World Bank and International Monetary Fund last week held a joint annual meeting in Washington, D.C., amid increased pressure from environmental groups to consider the social and ecological consequences of their development loans (SN: 8/29/87, p.137). As the bank directors began three days of private talks, Sen. Robert Kasten Jr. (R-Wis.) met with representatives of nongovernmental environmental groups from around the world to discuss new strategies for improving the lenders' ecological sensitivities. Kasten is the ranking member of the Senate appropriations subcommittee that is responsible for setting U.S. funding levels for the multilateral development banks.

"In order for development to be successful over the long term economically, it has to be sustainable over the long term environmentally,' Kasten said. "All of us have got to be aware of the tremendous dangers there are if we are not able to get a handle on [the development banks'] overall approach to resources, particularly tropical forests.'

Congress has for the past three years made U.S. contributions to the World Bank contingent on assurances that bank loans would not contribute to tropical deforestation or other significant ecological destruction. But despite a major policy statement by World Bank President Barber Conable Jr. last May, the bank is continuing to fund projects that threaten to wreak environmental havoc, critics say. It is supporting a 3,000-dam water project in India, for example, despite evidence that the project is ecologically unsound and will displace 1.5 million people, according to Medha Patkar of Narmada Dharan Grast Samiti, an Indian environmental group. The World Bank is financing another huge dam project in Brazil.

The bank has also been slow to hire environmental consultants, despite promises to the contrary, according to Bruce Rich, an attorney with the Washington, D.C.-based Environmental Defense Fund. Meanwhile, Kasten said, other international lending institutions--in particular the Inter-American Development Bank--are to an even greater degree "dragging their feet' over environmental reform.

Legislation now pending in the Senate would place greater restrictions on U.S. funding of projects deemed to be environmentally destructive. It would also encourage greater use of an innovative conservation scheme in which environmental organizations would be encouraged to purchase, at a discount, portions of a nation's foreign debt in return for that nation's promise to protect certain regions from development. A U.S.-based organization, Conservation International, negotiated such an arrangement with Bolivia in July. In return for taking over $650,000 of Bolivia's international debt, the organization received assurances that 3.7 million acres of land would be added to Bolivia's national reserve system.
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Title Annotation:meeting on social and ecological consequences of development loans
Publication:Science News
Date:Oct 10, 1987
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