Greening Aid? Understanding the Environmental Impact of Development Assistance

Return to Event List

June 11 2008, 3:00 p.m. - 5:00 p.m.

Manish Bapna, Executive Vice President and Managing Director, World Resources Institute (opening remarks)
Robert Goodland, formerly of World Bank Group (discussant)
Bradley C. Parks, Research Fellow, Institute for the Theory and Practice of International Relations, College of William and Mary; Associate Director, Department of Policy and International Relations, Millennium Challenge Corporation
J. Timmons Roberts, Chancellor Professor of Sociology and Acting Director, Environmental Science and Policy Program, College of William and Mary
Michael J. Tierney, Associate Professor of Government and Director, International Relations Program, College of William and Mary

“Given the urgency, the scale of the global environmental challenges we’re facing today, if…we’re going to have any chance at halting and reversing these troubling environmental trends, environmental aid has a crucial role to play,” declared Manish Bapna of the World Resources Institute at a June 11, 2008, discussion of the new book Greening Aid?: Understanding the Environmental Impact of Development Assistance sponsored by the Wilson Center’s Environmental Change and Security Program and the World Resources Institute. Bapna was joined by three of the book’s authors, Bradley Parks of the Millennium Challenge Corporation and J. Timmons Roberts and Michael Tierney of the College of William and Mary, as well as by Robert Goodland, formerly of the World Bank Group, who offered his own assessment of environmental aid’s past and future.

A Partial Greening of Aid: 1970-2000

The authors of Greening Aid examined global trends in environmental aid from 1970-2000. They defined environmental aid as including funds allocated for projects like reforestation, carbon dioxide reduction, ecosystem preservation, and renewable energy. In contrast, “dirty” aid includes funds for activities like mining, logging, chemical manufacturing, and air and road transport. A third category, neutral aid, consists of funds for activities like education, health, and trade. Comparing the ratio of environmental aid to dirty aid, the authors found that absolute levels of dirty aid have remained relatively constant, while absolute levels of environmental aid have risen dramatically. Bilateral environmental aid increased by 370 percent and multilateral environmental aid by 140 percent during the 1980s and 1990s, while dirty aid decreased from 55 percent of all aid in the 1970s to approximately 30 percent of all aid today.

Despite its absolute rise over the past several decades, environmental aid remains just 10 percent of total aid because neutral aid has increased significantly and now constitutes the majority of foreign aid. On the whole, bilateral donors have greened the most, “a bit of a surprise,” said Roberts, given that so much emphasis has been placed on improving the practices of multilateral donors like the World Bank. The five bilateral donors with the highest per capita environmental aid from 1995-1999 were Denmark, Norway, Germany, the Netherlands, and Japan.

Who Are the Biggest Beneficiaries and Why?

The main focus of the book, and what Tierney called its “biggest academic contribution,” are the questions of which countries receive the most environmental aid and why. To answer these questions, environmental aid was classified as either “green” aid—for global or regional environmental issues such as climate change—or “brown” aid—for local environmental issues such as sanitation. The top 10 environmental aid recipients from 1990-1999 were China, India, Brazil, Mexico, Indonesia, the Philippines, Egypt, Argentina, Turkey, and the Least Developed Countries (counted as a single recipient). “If you look at Egypt, Argentina, Turkey, these unusual entries on the top 10 list…are more geo-strategic countries and as you can see, they tend to get more brown aid then they do green aid,” said Parks.

According to Parks, “some donors are targeting countries where they think their environmental aid may actually make a difference.” However, “in the grand scheme of things, we found that the impact of these eco-functional variables is small when compared with some of the more traditional determinants of foreign aid allocation—the geo-strategic, commercial, colonial legacy issues.” Generally speaking, donor countries consider their own self-interest when giving out environmental aid. As Parks explained, even when donors allocate environmental aid strictly based on environmental criteria, they “target countries with a potential to deliver global environmental benefits.…[such as] reducing carbon emissions in China. We also found some evidence that donors target countries in their neighborhood that may be big contributors to regional environmental problems.” In addition, Roberts added, countries with large groups of “entrepreneurs who can make money from selling green technology” are more likely to give out environmental aid.

A Treasure Trove of Information

To track and measure aid projects, the authors of Greening Aid, in collaboration with other researchers, created the first comprehensive database of aid projects. The Project-Level Aid Database, or PLAID, contains records of 428,663 bilateral and multilateral aid projects totaling $2.3 trillion from 1970 to 2000.

PLAID allows researchers to track the impacts of projects in specific sectors. In most aid databases, “when you evaluate the impact that total aid flows have on economic growth, which has been done quite a bit, you’re forced to combine productive-sector funding for things like infrastructure or agricultural productivity with support for peacekeeping operations, landmine clearance, free and fair elections, HIV/AIDS assistance, drug trafficking, you name it,” said Parks. PLAID enables researchers to examine the effectiveness of specific types of projects, which should be a great boon to investigators.

The database, which will move online in the coming months, also serves a watchdog function. “A lot of donors are under a lot of public pressure to show that they are greener than their peers, and so there are strong incentives to over-report your commitment,” said Roberts. Although the UK Department for International Development (DFID) claimed that 25 percent of its projects during the 1990s were environmental, an analysis using PLAID produced a more accurate figure of 10 percent, as DFID had counted all its agricultural projects as “environmental.”

A project called PLAID 2.0 will extend the data through 2006. Bapna also suggested expanding the database to include foundations, as “some of the recent estimates show that the donation or the value of private philanthropy has now equaled or exceeded official aid.”

The Future of Environmental Aid

“The World Bank Group…is de-greening itself,” argued Goodland, who criticized the Bank’s recent environmental performance, noting that

Between ‘92 and ‘05, the World Bank Group committed about $28 billion to fossil fuel projects, 17 times more than its financing for renewables. Recently, the World Bank has been ramping up finance for coal, agri-fuels and biodiesel, vast industrial cattle ranches in the Amazon, deforestation worldwide, including clearance of tsunami-buffering mangrove forests for shrimp culture in Indonesia and elsewhere, widespread industrial logging in the Congo, Cambodia, Peru, and elsewhere.