Climate business for poverty reduction? The role of the World Bank
- 623 Downloads
The World Bank is increasingly active in the area of climate change mitigation. While it justifies this engagement with its poverty reduction objective and its capacity to pave the way for new business activities in developing countries, critics blame the World Bank as a “climate profiteer” and as an unfair competitor in private markets. Our econometric analysis of over 2,000 projects registered until May 2010 under the Clean Development Mechanism (CDM) of the Kyoto Protocol allows us to compare the activities of the Bank with those of other, primarily private actors. The results indicate that hardly any of the CDM projects can be considered as strongly pro-poor. Nevertheless, in comparison to the rest of the CDM projects, the Bank’s portfolio shows a relatively clearer orientation towards poor countries. Within these countries, however, the Bank does not show any particular pro-poor focus, and tends to implement those projects that are commercially most attractive. Moreover, there is no evidence of the Bank phasing out its activities once the market becomes fully operational, which goes against its professed pioneering and catalytic role in carbon markets.
KeywordsClean Development Mechanism (CDM) World Bank Climate policy Carbon market Poverty reduction Allocation of resources Competition Political economy Recipient need versus donor interest
JEL codesO13 O19 Q54 Q56
We thank two anonymous referees and the participants of the Egon Sohmen Memorial Conference on the “Political Economy of International Financial Institutions,” 10–13 June, 2010, Tübingen, for all their helpful and constructive suggestions. Special thanks go to Catherine Weaver for her detailed and thoughtful comments that led us to dig a little deeper into the “black box” of the World Bank. Finally, we thank Christopher Humphrey who helped us to improve the writing, and to reflect about some further interpretations of Bank behavior.
- AidData (2010). AidData: Tracking development finance, http://www.aiddata.org. accessed 19 May, 2010.
- Alberola, E., & Stephen, N. (2010). Carbon funds in 2010: Investment in Kyoto credits and emissions reductions, Climate Report 23. Paris: CDC Climate Research.Google Scholar
- Bank Information Center (2009). World Bank loans exacerbate climate change, Press Release 10 February, http://www.bicusa.org/en/Article.11033.aspx. accessed 15 January, 2011.
- Benecke, G., Friberg, L., & Schröder, M. (2008). From PPP to Market: The Clean Development Mechanism (CDM) as a new mode of governance in climate protection, SFB-Governance Working Paper Series, No. 10, Berlin.Google Scholar
- Bredenkamp, H., & Pattillo, C. (2010). Financing the response to climate change, IMF Staff Position Note 10/06, Washington.Google Scholar
- Bretton Woods Project (2008). Is the Bank’s carbon markets approach an effective way to address climate change? London.Google Scholar
- Camco (2006). Annual report, 2005, London.Google Scholar
- Camco (2007). Annual report, 2006, London.Google Scholar
- Camco (2008). Annual report, 2007, London.Google Scholar
- Camco (2009). Annual report, 2008, London.Google Scholar
- Camco (2010a). Annual report, 2009, London.Google Scholar
- Camco (2010b). Investor presentation. Trading Update 30 June 2010, London.Google Scholar
- Carbon Finance Assist (2007). Annual Progress Report 2006–2007. Washington: World Bank Institute.Google Scholar
- Carbon Finance Unit at the World Bank (2007). Carbon finance for sustainable development 2007, Washington.Google Scholar
- Dutschke, M. (2003). Guiding the use of Global Environment Finance for operations offering carbon sequestration benefits in Africa Region, mimeo, Hamburg.Google Scholar
- Ecosecurities (2006). Annual report, 2005, Oxford.Google Scholar
- Ecosecurities (2007). Annual report, 2006, Oxford.Google Scholar
- Ecosecurities (2008). Annual report, 2007, Oxford.Google Scholar
- Ecosecurities (2009). Annual report, 2008, Oxford.Google Scholar
- Gosh, A. (2010). Harnessing the power shift: Clean Technologies, Innovative Finance and the Challenge for Climate Governance, Paper presented at the Oxford-Princeton Global Leaders Fellowship Colloquium, Princeton, 3–4 May 2010, http://www.princeton.edu/~pcglobal/conferences/GLF/ghosh_glf.pdf. accessed 3 August, 2010.
- Government of Spain (2004). National allowance allocation plan, Madrid.Google Scholar
- Greene, W. (2002). Econometric analysis (5th ed.). Prentice-Hall: Upper Saddle River.Google Scholar
- IFC (2010). What we do in IFC’s carbon finance unit, IFC, http://www.ifc.org/ifcext/gfm.nsf/content/CarbonFinance_WhatWeDo62. accessed 28 July, 2010.
- Instituto Brasileiro de Geografia e Estatística (2009). Regional accounts of Brazil 2004–2008, http://www.ibge.gov.br/english/presidencia/noticias/noticia_visualiza.php?id_noticia=1756&id_pagina=1. accessed 5 Jan., 2011.
- International Bank for Reconstruction and Development as Trustee and Administrator for the Prototype Carbon Fund (2001). Report and Financial Statements, June 30, 2001, Washington.Google Scholar
- International Bank for Reconstruction and Development as Trustee and Administrator for the Prototype Carbon Fund (2002). Report and Financial Statements, June 30, 2002, Washington.Google Scholar
- Marchesi, S., & Sirtori, E. (2011). Is two better than one? The effects of IMF and World Bank interaction on growth. Review of International Organizations, 6(3), forthcoming.Google Scholar
- Ministry of Statistics and Programme Implementation (2009). Per capita net state domestic product at constant (1999–2000 prices), http://mospi.gov.in/State-wise_SDP_1999-2000_20nov09.pdf. accessed 5 Jan., 2011.
- Mosley, P. (2011). Trust and conditionality; or, can the World Bank ‘Leopard’ change its spots?, Review of International Organizations, 6(3), forthcoming.Google Scholar
- OED. (2004). The Prototype Carbon Fund: Addressing challenges of globalization, an independent evaluation of the World Bank’s approach to global programs. The Word Bank: Washington.Google Scholar
- Prototype Carbon Fund (2004). Annual report 2003, Washington.Google Scholar
- Redman, J. (2008). World Bank: Climate profiteer. Washington: Institute for Policy Studies.Google Scholar
- Sumner, A. (2010). Global poverty and the new bottom billion: What if three-quarters of the world’s poor live in middle-income countries? Brighton: IDS.Google Scholar
- Tomz, M., King, G., & Zeng, L. (1999). RELOGIT: Rare events logistic regression, Version 1.1. Cambridge: Harvard University.Google Scholar
- Tricorona (2006). Annual report, 2005, Stockholm.Google Scholar
- Tricorona (2007). Annual report, 2006, Stockholm.Google Scholar
- Tricorona (2008). Annual report, 2007, Stockholm.Google Scholar
- Tricorona (2009). Annual report, 2008, Stockholm.Google Scholar
- Tricorona (2010a). Annual report, 2009, Stockholm.Google Scholar
- Tricorona (2010b). Tricorona has now registered over a hundred climate projects with the UN, http://tricorona.se/news/212/. accessed 5 January, 2011.
- UNDP. (2010). China Human Development Report 2009/10: China and a sustainable future. Beijing: UNDP.Google Scholar
- UNEP Riso Centre (2010). CDM Pipeline, http://www.cdmpipeline.org. accessed 5 May, 2010.
- Vallette, J., Wysham, D., & Martínez, N. (2004). A wrong turn from Rio. World Bank’s road to climate catastrophe, SEEN, Washington.Google Scholar
- Vaubel, R. (1985). The international organizations and the international debt problem: The next steps. In: The Report of the Technical Committee of the Global Economic Action Institute, New York: Global Economic Action Institute. 21–23.Google Scholar
- Vaubel, R. (1988). Die Wissenschaft denkt, die Politik lenkt - Der Fall MIGA. In M. E. Streit (Ed.), Wirtschaftspolitik zwischen ökonomischer und politischer Rationalität, Festschrift in honor of Herbert Giersch, Wiesbaden. 107–119.Google Scholar
- Weaver, C. (2009). Hypocrisy trap: The World Bank and the poverty of reform. Princeton: Princeton University Press.Google Scholar
- World Bank. (2001). OED Review of the Bank’s Performance on the Environment. Washington: The World Bank.Google Scholar
- World Bank. (2003). Scaling up carbon finance: A note on status and strategic directions of carbon finance operations in the World Bank. Washington: The World Bank.Google Scholar
- World Bank (2005). Kyoto protocol enters into force. Governments, private sector highlight bank’s role in emerging carbon market, http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/EXTECAREGTOPENERGY/0,,contentMDK:20356865~menuPK:511396~pagePK:2865114~piPK:2865167~theSitePK:511377,00.html. accessed 23 May, 2010.
- World Bank. (2009a). 10 Years of experience in carbon finance. Washington: The World Bank.Google Scholar
- World Bank. (2010). Multiple solutions to address the climate change challenge: IBRD results. Washington: The World Bank.Google Scholar
- World Bank (2010b). The World Bank carbon finance website, www.carbonfinance.org. accessed 15 May, 2010.
- World Bank (2010c). News & broadcast: Carbon finance, http://go.worldbank.org/67Z703R3L0. accessed 15 January, 2011.
- World Bank (2011a): Vacancy: Senior carbon finance specialist, Washington, http://unjobs.org/vacancies/1268481592385. accessed 2 August, 2010.
- World Bank (2011b). The World Bank Carbon Finance Approach to Determining Price Ranges for ERPAs, Washington, http://wbcarbonfinance.org/docs/The_World_Bank_Carbon_Pricing_Approach.pdf. accessed 23 May, 2010.