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18 had their administrative budgets lowered so that they had to find country or task (project) managers who would contract for their services, imitating a market for consultancy services. Furthermore, the country managers formulated the lending priorities with the recipient country finance ministries which had lower priorities for environmental projects. One of the previous sources of environmental lending, the environmental staff with staff time and own resources, had dried up. Environmental assessment now relied on an established set of guidelines, but the incentive structure of environmental staff changed as they became dependent on task managers for work assignments. In the words of the author of the 2001 Operations Evaluation Department (OED) report on the Bank’s environmental performance “the quality of the EA process deteriorated” (World Bank 2001a, 21). The empirical research on the effects of these changes progressed consi<strong>der</strong>ably in the last five years (Gutner 2002; Nielson, Tierney 2003; 2005), but remained somewhat inconclusive, mostly for the difficulties of operationalizing the variables: First, the dependent variable ‘environmental behavior’ and second, ‘environmentally relevant changes in the institutional structure of the World Bank’ as the independent variables are subject to an intensive debate. True, for the dependent variable, there are the cases of damaging projects which were the basis for the criticism and the NGO-campaigning against the World Bank since 1983 (Rich 1994), the results of internal evaluations of the World Bank (World Bank 1996b; 2002a), the results of the evaluations by the Wapenhans Commission and the Morse Commission 1992 and the Inspection Panel evaluations (World Bank 2003e). This evidence is sufficient to identify the problem, but for analytical purposes it suffers from the small numbers problem. The most comprehensive effort so far to solve this problem has been by categorizing Board approved project commitments according to their environmental quality in time series between 1980 and 2000 (Nielson, Tierney 2003). The authors first classified 5300 World Bank (and Global Environmental Facility) projects (numbers and volume of committed spending) into free-standing environmental, traditional, agricultural, economic and social. In a later paper (Nielson, Tierney 2005), they classified the projects on an ordinal five point scale from strictly dirty to strictly environmental independently from the World Bank classification (see Figure 1): Here, the major changes are the continuous decline of broadly “dirty” projects over the whole period, the decline of the strictly ”dirty” project only in the first decade and the increase of environmentally neutral projects. Environmental projects increased only slightly until the mid-nineties and then declined (Nielson and Tierney 2005, 795).
19 Figure 1: Percent of World Bank project dollars by category (Three year rolling average) Source: Nielson and Tierney 2005 This measure of environmental behavior has been debated as problematic since it does not measure behavior in terms of implemented projects and their performance (Gutner 2005b). Nielson and Tierney (2005) counter claim that the commitments in the projects approved by the Board is the best available performance measure of the agent as the actual project implementation is the result of joint actions of the World Bank, the borrowing governments, the national implementing agencies and the project contractors. Their actions cannot be described by the principal-agent relationship as they are mostly voluntary contracts. The measures of institutional reform are subject to a similar debate. While Nielson and Tierney (2003) emphasize institutional changes in 1994 (creation of the Inspection Panel, increased reporting requirements, changes in the environmental assessment process) that stuck because it increased the role of the Board, Gutner (2005b, 778) described the institutional change as a continuous, slow, ongoing process with advances (the 1987 organizational change, the 1989 introduction of EA, the 1994 changes), but also with backward or sideways steps such as the 1997 Strategic Compact. Not included in the above analysis are the effects of highly visible cancellations of advanced projects proposals (Narmada dam 1992, Arun dam 1995, Qinghai project 2000) on the incentive structure of task managers (Wade 1997; Mallaby 2004).
Page 1 and 2: WORKING PAPER ON MANAGEMENT IN ENVI
Page 3 and 4: SUMMARY Integrated Water Resources
Page 5 and 6: 1 I. INTRODUCTION Integrated Water
Page 7 and 8: 3 formance gap. Considerable attent
Page 9 and 10: 5 ade saw then the application of t
Page 11 and 12: 7 donor countries (and to some exte
Page 13 and 14: 9 ment banks may be seen as overlap
Page 15 and 16: 11 (Kapur 2002). The gentlemen’s
Page 17 and 18: 13 ing and selection seems to be wo
Page 19 and 20: 15 presidents who have undertaken t
Page 21: 17 the reorganization in 1987 creat
Page 25 and 26: 21 Figure 2: A comprehensive framew
Page 27 and 28: 23 VI. THE DEVELOPMENT OF THE WATER
Page 29 and 30: 25 major problems. The internal ass
Page 31 and 32: 27 breaking the stalemate of dam co
Page 33 and 34: 29 works, the World Water Council a
Page 35 and 36: 31 cation and explanation of the Ba
Page 37 and 38: 33 result of a combination of cause
Page 39 and 40: 35 Hawkins D.G., Lake D.A., Nielson
Page 41: 37 World Bank (1996c) Operations Ev

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