The Challenge of Low-Carbon Development - World Bank Internet ...

growth, poverty reduction (including access to energy andtransport), gender equity, and GHG emissions. Unfortunately,monitoring and evaluation data rarely exist for mostof these dimensions. This evaluation tries where possible tocharacterize an investment’s economic rate of return (ERR)as a summary measure of development impact. In addition,it tries to quantify as cobenefits the investments’ carbonrate of return: the net reduction in carbon dioxide (CO 2)emissions per dollar of investment.Evaluation findings are illustrated in figure 6.1. (Estimatesare based mostly on appraisal and should be taken withcaution.) In this figure, any project with emissions savingsand a high ERR (say, higher than 15 percent) is likely tobe a clear no-regrets investment. Projects with somewhatlower ERRs may still be no-regrets from a local viewpoint,because they confer large but hard-to-monetize benefitssuch as energy security. Some projects, including some forestconservation projects, may have low measured ERRsbut nonetheless contribute to local development objectivesagain in difficult-to-quantify ways. These would be strongcandidates for global financial support.Leverage and catalytic impactsThis figure points to several avenues by which the WBG canincrease its impact. Working at “retail” level, it can assembleportfolios of projects with high returns. It can also aspire tocatalytic, widespread impacts (GEF 2008). One way to dothis is through financial leverage, attracting capital fromlower to higher return activities, along both dimensions.A second way is to increase the returns to equity, for instance,by removing regulatory barriers that discourage investment.A third avenue is to boost the returns to an entireclass of activities, such as by supporting technical progressthat reduces investment costs.An important way of boosting returns (public and private)is through provision of information, especially through pilotand demonstration projects. These projects can work outtechnical and regulatory problems and hence reduce costand risk for all similar projects that follow. This evaluationpays close attention to piloting and demonstration projects.The relevant evaluation questions are: What, exactly, is beingdemonstrated? How is it being demonstrated, and towhom? How will the results of the demonstration changethe behavior of the target audience?For instance, an innovation that substantially and costeffectivelyincreased the efficiency of coal-fired powergeneration would reduce plant-level CO 2emissions. But itcould result in greater global emissions if it triggered substitutionof coal for hydropower or gas power. Improvementsin agricultural productivity could increase the incentivesfor deforestation, rather than lessening pressure on the forest.These system-level issues pervade climate mitigation.SummaryIn looking across a diverse variety of sectors, the evaluationasks—• What are the barriers to technology adoption and diffusion?• How appropriate were the WBG’s diagnosis of the barriersand prescription of interventions?• What was the impact of the interventions on technologyadoption and diffusion?• What are the economic and carbon returns to adoption?• Looking at the chain from intervention to impacts, whatis the WBG’s leverage in this area?• How well measured are these impacts?Evaluation ScopeThis evaluation faces two big challenges. First is the trade-offbetween depth and breadth. The range of relevant activitiesis dazzling, from geothermal power to community forestryto biogas digesters to school insulation. Any attempt to dealwith the idiosyncratic features of each of these endeavorsis doomed to be shallow. So this evaluation chooses to undertakedetailed analyses of specific subsectors that are importantin themselves but that also hold general lessons foromitted subsectors. This is done against a comprehensivedescription of the overall portfolio.The provision of information through pilotand demonstration projects is an importantway to boost returns to relevant WBGactivities.As a result of these catalytic interventions, prices maychange, with far-reaching effects that could vitiate leverage.© Frans Lanting/Corbis.Introduction | 7