The Assessment of Water Resources Projects Involving Economic, Social and Environmental Costs and

Benefits: The World Bank’s View

JOSG OLIVARES Senior Agricultural Economist, Agricultural and Rural Development

Department, The World Bank, Washington, D.C. 20433, USA

In evaluating the costs and benefits of water resources dcvclopment projects, the World Bank examines the economic. social and environmental aspects of the project. Some of these aspects are more easily quantified than others. The paper reviewssome aspects that have been quantified by the Bank and describes others which have not. By way of illustrating the difficulty of quantification, the Bank’s efforts to quantify the health hazards resulting from the introduction of irrigation projects is examined. In addition, the Bank’s requirements with respect to social and environmental factors as they affect

water resources projects are described.

1. INTRODUCTION

The World Bank uses quite sophisticated methods for the evaluation of proposals for financing water resources development projects in member coun- tries. Not only are costs and benefits assessed at their market value, but also taken into considera- tion are distortions introduced into the price system by overvalued rates of exchange, taxes and subsidies, or by other macro or micro-economic policies, different rates of effective protection, difference between private and social costs and benefits, as well as income distribution effects. Specific methodological variants are used in different sectors and subsectors, and different indicators of project performance are chosen whenever the standard ones do not fit properly a

project’s characteristics. Trade-offs between economic and financial benefits in different sectors are carefully assessed. Also analysed are the projects’ effects on people, their societies and cultures and vice versa, as are, too, project effects on the environment.

Although a full set of techniques and procedures are applied to the analysis, this paper briefly describes only how the World Bank handles the evaluation of water resources development pro- jects which involve economic costs and benefits on the one hand, and social and environmental costs and benefits on the other.

I t is important to recount the role that the Bank plays in the financing of projects. First and fore- most, the Bank does not “own” or “carry out” projects; the projects are executed by the

Mr. Olivares has ruuglit at the University of Chile and served as Director of the Agricultural Planning Office, Government of Chile. Prior to working for the World Bank he wus an Experr in Agriculturul Planning with the Latin American Irzstitute for Economic and Social Planning (ILRES).

This paper was presented at the Utrited Nations Semirrar on Assessment arid Evaluatiori of Multiple Objective Water Projects, Budapest, Hungary, 16-18 October 1985.

Natural Resources Forum 0 United Nations, New York 1986.

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countries. It is the countries who come to the Bank to request financing for those projects which they think are important for their development. Of course, the distinction is not entirely clear-cut. The Bank frequently works together with its member countries in identifying suitable projects for future development. The Bank may also become involved during project preparation, by either supervising, providing technical assistance, or even, at the country’s request, providing financing for it. It is only at the end of project preparation that the member country’s government decides whether to submit the ensuing project to the Bank for its financing, to go to another financing agency, to implement the project with its own resources, or to freeze, postpone or cancel it.

Most of the important decisions regarding trade- offs among the different objectives a project might serve are handled not at appraisal, when a project is ready for final assessment, but during prepara- tion, when different alternative designs, sizes, locations, structures, and the like are being considered. For instance, in the case of a multi- purpose water development project involving irrigation, power generation, navigation and salinity control, the preliminary assessment of each of the possible alternative single-purpose projects to serve each of these objectives, as well as of different multi-purpose project designs in which these different objectives are served in different proportions, is carried out while the project is being prepared.

Therefore although this paper refers strictly to project assessment, many of the processes pre- sented here are carried out well before that. If the Bank - or the FAOWorld Bank Co-operative Programme, which often carried out this task in the agricultural sector - is involved in supervising project preparation, it takes care to ensure that the required analyses are carried out so that the final project design achieves its different objectives in the best possible way.

Because the Bank’s member countries are free to look for other sources of financing, the Bank may or may not be asked to finance a particular water resources development project. This reduces substantially the leverage of the Bank to ensure that all social and environmental impacts of a project are properly taken into consideration before, during, or after implementation.

2. THE ASSESSMENT O F A PROJECT’S ECONOMIC COSTS AND BENEFITS

Throughout this paper, the terms “evaluation” and “assessment” are used interchangeably to refer to the ex ante assessment (or evaluation) of the costs, benefits and economic worth of a proposed project.

All quantifiable variables are explicitly taken into consideration in computing a project’s worth.

2.1 THE ASSESSMENT OF A PROJECT’S DIRECT COSTS AND BENEFITS

The first step is the assessment of the costs and benefits which are directly linked to the project concept, namely, the cost of the investments in the project (including foregone benefits for some par- ticipants) and the direct benefits, such as irrigation, power generation, improved naviga- bility, and the like. Standard project evaluation techniques are used here. First, the assessment of the costs and benefits of the required investments for the individual economic units to be involved (farmers, ranchers, co-operatives, private or governmental support agencies, etc.) is carried out at private, market prices (which, in the Bank, is called “financial analysis” using “financial prices”). Then, the assessment of the costs and benefits for the country at large is made, using social prices (which, in the Bank, is called “economic analysis” using “economic prices”). These social prices are estimated for each country utilizing several tools and approaches which estimate what the real cost is to the economy of the resources which the country would have to invest in the project (usually in terms of the foregone benefits which could have been obtained using those resources elsewhere).

2.2 THE ASSESSMENT OF A PROJECT’S QUANTIFIABLE ENVIRONMENTAL AND

SOCIAL COSTS AND BENEFITS

Other costs and benefits which are not directly related to the investments in the project, but which are associated with them anyway, wanted or unwanted, must be assessed as joint costs and benefits. For example, a project may improve or deteriorate the quality of water for other users, create additional employment or eliminate jobs, increase or reduce the frequency or intensity of floods, and the like. Therefore, the assessment of a project’s worth must also include the costs to be

NRF. 10, NO. 2,1986 ASSESSMENT OF WATER RESOURCES PROJECTS 135

incurred, as well as the benefits to be derived, from all environmental and social project requirements, impacts or results.

A surprisingly large number of such impacts can be quantified in economic terms. This can be illustrated with two examples: (i) Employment. Gross and net project effects on employment are considered in the economic analysis of water resources development projects by evaluating the employment likely to be gen- erated or eliminated by each project at both the market wage rates, and the social wage rate. The first reflects the private cost of the employment created or eliminated by the project; the second would reflect the economic opportunity cost of the employment created or eliminated by the project for the economy and the society as a whole. If properly done, the comparison between the “with- project” and “without-project” situations will account for the economic worth of the creation or reduction of permanent employment positions, or the decrease or increase of seasonal employment, unemployment or underemployment. Sometimes, projects which introduce new activities (e.g. rice cultivation, double-season cropping) may substantially change the seasonal patterns of labour requirements in the project area, thereby substantially changing the private and social wage rates in those months where employment has changed either from being idle to intermediate or peak labour demand periods or vice versa. (ii) Fisheries. A second example is provided in fisheries. Quite often water resource development projects involve the creation of reservoirs or the substantial diversion of waters which can seriously jeopardize migration patterns of fish, breeding grounds, feeding grounds, fish grounds etc., as well as water temperature, oxygen and nutrient content. Thereby, some projects may substantially reduce the production of fish, shrimp or other species. In other situations the creation of reservoirs or the regularization of river flows can, in contrast, increase fisheries production. In either case, the increased or decreased production is valued, and its net worth added to the cost and benefits of the main project.

Even if it may be more difficult to value the same may be done with projects which may result in decreased or increased salinity intrusion into estuaries and aquifers, thereby reducing irrigation, or making i t more expensive for industries to obtain water with acceptable levels of salinity and

more difficult for cities to deliver drinking water to consumers.

All these refer, of course, to the assessment in economic and financial terms of the additional costs resulting from a project due to unavoidable negative impacts on society or on the quality of the environment. During project preparation and during appraisal, however, the Bank seeks to minimize, or even to pre-empt those negative impacts which may otherwise be associated with the project. For instance, in the case of an irrigation project, drainage systems may be added to reduce the watdogging which might have been associated with the project; control wells may be added to monitor groundwater level, and enclo- sure dams may be required to prevent additional salinity intrusion into estuaries when fresh water is to be stored and diverted upsteam. Therefore, many of the “unavoidable” costs which a project might incur are actually avoided through careful preparation. Their quantification, thus, does not become an issue during project assessment.

2.3 ASSESSMENT OF THE OVERALL PROJECT WORTH

Once all quantifiable project costs and benefits have been quantified, different aggregate indicators of project worth are computed, such as the net present value, the benefit-cost ratio, and the internal rate of return, both for the “financial analysis” and the “economic analysis” modes. These are compared with, or computed using, the opportunity cost of capital for the country. The Bank further processes only those projects whose rate of return is larger than the opportunity cost of capital, or whose net present value or benefitxost ratio computed using the opportunity cost of capital as discounting factor, are larger than zero or one, respectively (Fig. 1).

3. ASSESSMENT OF NON-QUANTIFIABLE SOCIAL AND ENVIRONMENTAL

PROJECT IMPACTS

There are other project results (intended or unintended) which may not lend themselves to easy quantification in economic or financial terms. Examples are: the forced relocation of the people living in the areas to be inundated by reservoirs; organized or spontaneous migration into the new areas to be developed; changes in the health status of the population affected or benefitted by the projects; retention or protection of traditional

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grounds of tribal people; the role and share of women and minorities in the development; and the reduction in the size, or breaching in the continuity, of ecological units required for the reproduction and sustenance of some animal species (e.g. orangutans, elephants, pandas, rhinoceros) or plants.

Many quantifiable costs and benefits are associated with most of such “unquantifiable” impacts, such as the cost of relocating certain populations, demarcating tribal lands, or vaccinating the people at risk. As discussed below, efforts are being made to quantify others, such as changes in health status, which previously had not seemed quantifiable. Whenever such costs or benefits can be quantified, they are added by Bank analysts to the more typical project costs and benefits, and included in the economic assessment of the project.

However, this in itself does not solve the essence of the problem-how to handle the unquantifiablc aspects: human suffering; destruction of invaluable resources; extinction of species. In appraising every project (water resources development projects included) the Bank’s appraisal should verify that the project design has taken into account cultural and demographic characteristics, and that it is based on a sound understanding of the social organization of productive activities. Projects involving local groups must also be culturally acceptable, i.e. understandable, agreed to, and capable of being operated and maintained by them. Efforts are made to use natural or other resources properly for

development, and to protect them from unwarranted deterioration or destruction.

The Bank’s policy is to handle these secondary or associated effects, when they are negative, through what could be called a “gated” response. Certain standards are established in qualitative terms. If these are satisfied, the request for project financing can be further processed; if not, the Bank requests that the project design be changed, adapted, or completed to satisfy these requirements, or that mitigatory measures or components are added. If the design cannot be modified, or if the government refuses to do so, the Bank does not finance the project (Figs 2 and 3).

If Bank appraisal determines that the project is likely to be highly risky in social or environmental terms, but inadequate information is available to support a firm conclusion, consideration is given to either a pilot project or to a postponement of the project until sufficient information is available (Fig. 2).

Some examples of the way the Bank handles the most common of such social and environmental project impacts are provided below.

Forced resettlement. The Bank recognizes the human suffering and hardship caused by involuntary resettlement of the population living in areas to be flooded by reservoirs built under a project. Therefore, the Bank tries to avoid relocation whenever possible. If displacement is unavoidable, then at the time of identification, preparation, and appraisal the Bank tries to reduce

NRF. 10, NO. 2,1986 ASSESSMENT OF WATER RESOURCES PROJECTS 137

Yes Project Accepted (goes to next stage)

Yes

Project Accepted (goes to next stage)

No 0 ? Pilot

Project

(Can project design be modified so as to,cornply with norm?)

Fig. 2 Non-quantifiable indicators: only projects which satisfy the “gated” requirements are further processed.

Project Accepted

Modified Project Accepted

Yes

DO ? -b Pilot Project

Fig. 3 Overall: only projects approved on both previous accounts are further processed.

138 JOSB OLIVARES NRF. 10, NO. 2,1986

it to a minimum compatible with the purpose of the project. Then, it requires that proper plans are prepared for the resettlement of the population affected, either a proper compensation or, if possible, relocation into the areas to be benefited by the project. If the latter cannot be arranged, the resettlement plan should give former residents access to assets which will allow them to earn their living at levels preferably above but certainly not below those they enjoyed before the project. Planning and financing the resettlement becomes an integral part of the project. In some cases, such as recently in India, the Bank has made complementary loans to support the Government’s efforts to deal with the relocation problem. This is an absolute condition; no project is considered for financing unless such a resettlement plan is produced and found satisfactory by the Bank. Where only few people are to be displaced, appropriate compensation for assets lost, coupled with arrangements for removal to a new area and a relocation grant, may suffice. Where the number of people is large and when whole communities are involve, a more detailed plan is required. Besides including compensation, such a plan should also involve relocation and establishment within a new settlement area or integration into existing communities in an already settled area. Two major objectives are to ensure that those resettled are afforded opportunities to become established and economically self- sustaining over the shortest possible period, and to facilitate the maintenance the community structure, social networks and key groups.

Immigration and settlement of project beneficiaries. Water development projects - and particularly irrigation projects - usually bring additional development. In many cases, the irrigation projects serve areas which are already settled, providing water, increasing water supplies, or enhancing water reliability to heretofore rainfed or precariously irrigated areas. In others, the areas are deserted or sparsely populated. In such cases, the Bank usually calls for immigration and settlement plans to be prepared. The Bank checks on the criteria utilized to draw up such plans, but very seldom imposes any particular condition on the geographical or ethnic source of the potential immigrants, their age, civil status or other personal conditions. As mentioned above, the only requirement is that an effort be made to resettle some or all of the families formerly living in the

area to be inundated by the project reservoirs into the future irrigated areas. Changes in the health status of the affected populations. Water resource development projects have often increased the risk of disease for the affected populations. Diseases which are particularly linked or associated with irrigated projects are malaria, schistosomiasis, onchocerciasis and filariasis, but many others may be important in certain localities. Health impacts of irrigation projects are not always negative. The introduction of controlled water supplies in areas previously subject to flooding; the addition of drainage systems to evacuate excess waters; the elimination of rapid flowing river stretches, and the like may reduce the incidence, o r completely eliminate conditions for the development of onchocerciasis, malaria and other diseases. Although it has not yet been officially established as a mandatory requirement for all projects, the Bank increasingly requires that a health impact assessment be carried out for water development projects which, in light of known ecological conditions or previous experience, would seem to pose such risks. The Bank has not developed its own guidelines for the preparation of such assessments, nor is it likely to do so. Guidelines prepared by other agencies, such as WHO, are used instead. Tribal lands. Experience has shown that, unless special measures are adopted, tribal people are more likely to be harmed than helped by development projects that are intended for beneficiaries other than themselves. Therefore, whenever tribal peoples may be affected, the design of projects should include measures and all components necessary to safeguard their interests and, whenever feasible, to enhance their well- being. In areas where unacculturated tribal minorities exist, the project design proposed by the Government is carefully checked by the Bank to see whether it would adversely in any way affect lands and other resources which have been either officially set aside as reserves, or which, even if not officially delimited, are needed for their proper livelihood.

As a general policy, the Bank does not assist development projects that knowingly involve encroachment on traditional territories being used or occupied by tribal people unless adequate safeguards are provided. If a project does impinge upon them, a revision of the project design is

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requested to minimize or avoid altogether such damage to the native populations. If the project design cannot be amended in any way to protect the traditional tribal lands, alternative locations for these, acceptable both to the tribes involved and to the Bank, are sought. The Bank assists projects only when satisfied that the borrower or relevant government agency supports and can implement measures that will effectively safeguard the integrity and well-being of the tribal people. The bank does not finance a project if it appears that the project sponsors have forceably “cleared” the area of tribal people beforehand.

Because successful acculturation is slow and gradual, development projects having tribal people in their zone of influence must provide time and conditions for acculturation. Usually they include: (i) recognition, demarcation and protection of tribal areas; (ii) appropriate social services; (iii) maintenance, to the extent desired by the tribe, of its cultural integrity; and (iv) a forum for the participation of the tribal people and decisions affecting them which provides for adjudication and redress of grievances. Project effects on women and minorities. The Bank increasingly checks on whether a project submitted for its financing would be detrimental to, or jeopardize, the sources of employment and income flows to women or minorities. During appraisal, the Bank examines whether the project design adequately takes into account the local circumstances that impede or encourage the local participation of women and minorities, the contribution that either of them could make to achieve the project’s objectives, the changes which the project will introduce that might be disadvantages to either, and whether the implications of women and minorities are included in the provisions for monitoring the impact of the project. If i t is found that these provisions are not adequate, then the Bank requests the government to try to find alternative ways of designing the project or of selecting project beneficiaries so as to minimize these detrimental effects. No definite condition in this regard is made by the Bank, however, even if the revised project design is still not satisfactory or if the country refuses to accept the Bank’s point of view. Natural habitat for wild animals andplants. Similar requirements are made in the case of those projects which would impinge on the size or continuity of areas ecologically required for the

breeding or sustenance of wild animals or plants. The bank seeks to avoid contributing finance to projects which eliminate animal or plant wildlife. When significant wildland conversion (say, more than 100 km’), or the conversion of a significant proportion of the remaining wildland area of a specific ecosystem is unavoidable under certain projects, compensatory wildland components should be included in the project. The most common such components are the conservation or protection of ecologically similar tracts nearby, improved wildland management of the areas remaining, and the setting up of specific reserves or parks. Such components usually become a part of the project and are thus financed, and their implementation supervised, by the Bank. Sometimes, they may become a separate project.

Environmental risks. In the preparation and appraisal of water resources development projects (as well as in any other kind of projects), the Bank pays particular attention to the direct and indirect impacts that the projects under consideration may have on the environment, including the pollution of air, water and land, the risk of exhaustion of renewable resources, the waste of resources, the treatment of unique sites and habitats (especially for endangered species) and the preservation of mankind’s aesthetic and cultural heritage.

In all of these matters, the Bank is concerned with the human ecology and occupational health and safety of both current and future generations. Some environmental effects are neither quickly nor easily identifiable. Therefore, the Bank considers environmental aspects of projects over a time-span which is somewhat longer than usual for most other aspects of cost-benefit analysis. In environmental aspects, prevention is preferable and generally less costly than remedial actions, which may sometimes be impossible. In view of such uncertainties, Bank policy emphasizes the need for caution when assessing environmental effects, especially when these are potentially irreversible.

The Bank periodically publishes environmental guidelines, prepared on the basis of a wide range of national and international recommendations and standards, which suggest acceptable ranges to be followed in bank operations. The Bank has not adopted environmental standards. Rather, the Bank’s approach is tailored to local circumstances and respects the vast differences among its developing member countries.

140 JOSB OLIVARES NRF. 10, NO. 2,1986

Particularly, the Bank endeavours to ensure that projects affecting renewable natural resources do not exceed their regenerative capacities, and that projects with unavoidable adverse consequences for the environment are sited in areas where environmental damage is minimized, even if that might call for greater initial costs.

The Bank does not finance projects that: cause severe or irreversible environmental deterioration; could significantly harm the environment of a neighbouring country without the consent of that country; would significantly modify natural areas designated by international conventions of national legislation as national parks, wildlife refuges, or other protected areas; or contravene any environmental agreement to which the concerned member country is a party.

4. THE QUANTIFICATION O F HUMAN HEALTH RISKS ASSOCIATED WITH

IRRIGATION DEVELOPMENT

The Bank is carrying out a study on Options and Investment Priorities in Irrigation Development. Phase 1, covering five countries, was co-financed by the UNDP and the government of France; Phase 2, which will carry out similar studies on another set of five countries, is being co-financed by the government of the Netherlands. Of all possible social and environmental impacts, the Bank chose in particular to study in further detail the impact of irrigation projects on the health status of the populations affected.

The study assessed the options, potential and priorities for irrigation development on a country- wide basis and was carried out on a project-by- project basis, studying one river basin at a time, and producing regional and national totals through the aggregation of individual project figures. Projects were then ranked in a decision matrix according to the different development objectives the government might have. The study aimed at making health risks, which are usually neglected, explicit as one of the variables that policy-makers should take into consideration when choosing between alternative investment opportunities.

An irrigation project adds water - or changes the seasonality of its occurrence -to areas which previously were being cropped under rainfed conditions or under unreliable irrigation. In many cases, the agricultural development associated with new or improved irrigation brings additional

people into the project area. Large numbers of people move into irrigated areas which were previously desert or arid, both during construction and after project completion. Thus, irrigation adds water and people to given landscapes. The study attempted to assess, for all possible irrigation projects nationwide, whether this increment in water and people could make the conditions for the development of vectors and parasites more favourable and, therefore, would increase the health risks to which the “beneficiary” population would be exposed.

Five levels of risk were considered: (i) areas already infected with high levels of transmission ; (ii) areas already infected with modest prevalence where irrigation could lead to epidemic or hyperendemic situations; (iii) areas currently without disease that could become highly receptive to disease after irrigation; (iv) areas currently without disease that would become marginally receptive to disease after irrigation development; (v) risk-free areas.

The changes in incidence and prevalence for each of the water-related diseases under study likely to occur in each project area as a result of the introduction of irrigation were estimated. Incidence is a measure of the number of new cases of disease reported in a given period of time (usually a year); incidence is usually a good indicator for acute diseases such as cholera, infectious hepatitis o r typhoid. Prevalence is a measure of the total number of cases of the disease at any particular time, which is a better measure for chronic diseases such as schistosomiasis or malaria. However, incidence and prevalence indicators do not fully capture the relative importance of diseases in terms of the burden on the human population. One could consider the number of cases as if they were related directly to the actual disease burden. However, 5000 cases of malaria is a different and much more important matter than 5000 cases of gastroenteritis. Therefore, the study attempted to compute a composite indicator of health status which could also capture the temporary and permanent disability and the premature mortality associated with each disease. For this, the “numberofhealthy days of life lost”, or “potential years of life lost”, were computed (A Quantitative Method of Assessing the Health Impact of Different Diseases in Less Developed Countries by the Ghana Health Assessment Project Team, International Journal

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of Epidemiology, Vol. 10, No. 1, pp. 73-80, or Potential Years of Life Lost construct, which appears monthly in Morbidity and Mortality Weekly Report, published by the U.S. Public Health Service, Center for Disease Control, Atlanta, Georgia). This composite indicator better expresses disease burdens, and permits easier and more meaningful comparisons, particularly by analysts and decision makers who lack medical training. If the estimated number of healthy days of life lost are multiplied by the average productivity of labour, or by the market wage rate, the value of the production lost through increased disease burden or the salaries foregone (which is admittedly only one of the effects of the disease) can be computed and added to the other project costs and, therefore, included in the assessment of the project’s economic worth.

The analysis of the risk of increasing the incidence and prevalence of water-related diseases after the introduction of water and people through an irrigation project proved to be a complicated task, but after time and effort were put to the task, a lot of sense could be made out of existing health information. The health consultants could estimate the likely increases in incidence and prevalence for the most important water-related diseases in all countries that were studied, and were able to identify areas with different levels of risk. In some of the first countries studied, such as Morocco, only two levels of risk were identified: areas at risk and risk-free areas. In the last two countries studied, Sudan and Mali, all five levels of risk could be assessed. Maps could be produced showing the areas in the country where, for each individual disease analysed, the risk of disease development would increase (see Fig. 4, map of distribution of schistosomiasis in Sudan). Similarly for each project it was possible to indicate the health risks associated with its possible implementation.

The quantification of these healthy days of life lost in economic terms proved much more complicated. Firstly, the indicator was found to be useful with static populations (namely, when irrigation does not imply immigration); it is difficult to conceptualize it when a massive immigration would be associated with irrigation development. Second, to compute the worth of the days lost at the average added value per day becomes meaningless when unemployment and underemployment are high, and equals zero when

the shadow price for labour in a particular season or locality is deemed to be zero. In third place, it was found that the computation and valuation of the healthy days of life lost when a child dies was very complex and, most likely, meaningless. And fourth, the computation of the economic value of a shift in the burden of days of life lost between different age groups was found to be almost impossible, and most likely meaningless. The example which led to this last problem was the introduction of permanent irrigation in an area where seasonal malaria currently prevails. In the “without” project situation, all age groups are similarly affected. In the “with” project situation, malaria may become endemic. Child mortality would increase as a result, while surviving adults would develop some kind of resistance and lose fewer healthy days as a result.

In short, the Bank has advanced a great deal on the methodological problems of quantifying the human health risks associated with irrigation development, but we are still far away from a methodology which can produce meaningful values for the “cost” of an increased disease burden on the supposedly “beneficiary” population.

5. CONCLUDING REMARKS

The Bank seeks to accommodate both the quantifiable and the non-quantifiable variables, and uses whatever leverage it may have to introduce safeguards in the projects it finances in order to ensure that no or minimal damage is done to populations or resources. The Bank has a special Environment, Science and Technology Unit and an environmental adviser; it also has an adviser on women in development, and a rural sociology adviser. All of them have as one of their responsibilities to review every project being considered for Bank financing to check and confirm that Bank policies and regulations are strictly adhered to.

Finally, this paper may give the impression that the Bank is a well-oiled machine which processes project after project, with perfect knowledge, and taking everything relevant into account. Actually, the Bank is as normal an institution as any other; in some cases it has failed to anticipate some damages or situations in which people or resources were jeopardized. It was precisely because of its fallibility that thirteen years ago the Bank

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o 100 200 300 km 1...

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established an ex-post evaluation system, which kinds of impacts are under an increasingly stricter has been most helpful in identifying areas of surveillance with the result that improved systematic shortcomings. The Bank has been assessment is leading to fewer unanticipated learning from its experiences and, as a result, these adverse impacts.