Back to cover

The Natural Resource Degradation and Vulnerability Nexus:

Chapter 4 | Explanatory Factors of Effectiveness in Achieving Natural Resource Management and Vulnerability Reduction Outcomes


This chapter explores three sets of factors that distinguish how well the World Bank’s support is achieving natural resource management and vulnerability outcomes. These factors are (i) natural resource management practices, (ii) approaches to natural resource management governance, and (iii) financial incentives.

World Bank projects that apply natural resource management practices (such as area closures and watershed management) struggle to find the right balance between achieving resource recovery and meeting the welfare needs of vulnerable resource users. The effectiveness of these management practices also depends on their appropriateness for specific socioecological systems.

Natural resource governance arrangements, including access and use rights and appropriate regulations and policies, are critical determinants of whether resource users will adopt and benefit from sustainable management practices.

The effectiveness of financial incentives to promote improved use of natural resources and to reduce vulnerability depends on whether programs accurately target the most threatened areas and vulnerable groups. Inherent in targeting the right groups is identifying those for which the incentives to be provided will create enough motivation to induce the desired behavioral change.

This chapter explores three sets of factors that distinguish how well the World Bank’s support is achieving NRDV outcomes. These factors are (i) natural resource management practices, (ii) approaches to natural resource management governance, and (iii) financial incentives. These factors, which emerged from the structured literature and portfolio reviews, were explored in depth as part of the case-based analyses (see appendix B for case analysis summaries).1 Cases were chosen to ensure representativeness within different socioecological systems and within the relevant subset of the NRDV portfolio (table 4.1).2, 3 Proportionate with the number of SLM cases in the portfolio, four of the six cases focused on typical SLM interventions in (i) tropical highlands, (ii) drylands, (iii) rangelands, and (iv) savanna. A fifth case was conducted on groundwater management in India since one-third of the groundwater portfolio approved during the evaluation period was implemented there. The sixth case draws on findings from a desk review of the World Bank’s small-scale fisheries portfolio.

Table 4.1. Representativeness of Typical Cases in the Natural Resource Degradation and Vulnerability Portfolio

Socioecological System

Typical Case

Representativeness of the Typical Case within the NRDV Portfolio (FY10–20)

Tropical highlands: high-pressure and intensively cultivated tropical highland, midaltitude, and mountain regions of Africa, Asia, and Latin America

Ethiopia: Sustainable Land Management Project Phases I, II (2008–18); Resilient Landscapes and Livelihoods Project (2018–present); Productive Safety Nets Project Phases I–IV (2005–present)

This case is representative of 45 percent of the NRDV SLM portfolio in 29 countries. Similar projects target watersheds in high-pressure areas and resource users within those watersheds. They also include one or more of the following practices: integrated watershed and landscape management, soil and water conservation, afforestation or reforestation (including area closures), rehabilitation of degraded areas, protection of critical ecosystems, conservation agriculture, environmental payments, institutional strengthening, training, land use planning, and land administration.

Drylands in the Sahel: low rainfall and water-scarce ecosystems (excluding deserts) in the arid, semiarid, dry, subhumid tropics

Niger: Community Action Program Phases I, II, III (2004–present)

This case is representative of 28 percent of the NRDV SLM portfolio, including projects that are designed to operate in drylands. It is most representative of the portfolio of NRDV projects implemented across the 12 countries located in the Sahel and West Africa. Similar projects target a combination of farmers, agropastoralists, pastoralists, local government, and rural inhabitants. Often designed in a participatory manner, the projects include one or more of the following practices: land restoration, tree planting, soil and water conservation (including area closures), training, and environmental payments.

Rangelands in the steppe/Central Asian grasslands: montane subtropical and temperate grazing lands in Asia

Mongolia: Sustainable Livelihood Program Phases I, II, III (2001–present)

This case is representative of 15 percent of the NRDV SLM portfolio in 11 countries. Similar projects target herders, agropastoralists, and rural populations. They also include practices such as community-based rangeland management, institutional strengthening, training, pasture-related infrastructure, pastoral risk management, land use planning, and livelihood investments.

Tropical savanna: extensive production systems in tropical grasslands, shrublands, and forest margins in Africa and Latin America

Brazil: Brazil Investment Program in the Cerrado (2012–present); Sustainable Production in Areas Previously Converted to Agriculture Use (2015–20); Integrated Landscape in the Cerrado Biome (2015–present)

This case is representative of 17 percent of the NRDV SLM portfolio in nine countries. Similar projects target farms and watersheds that have been degraded. They also include practices such as silvopastoral approaches, low-carbon emission agricultural practices, afforestation or reforestation, institutional strengthening, training, and environmental payments.

Hard-rock aquifers and alluvial aquifers of central and northwest India; water-scarce and groundwater-dependent systems (SAR, MENA, China, and LAC)

India: Andhra Pradesh and Telangana Community-Based Tank Management (2007–16); Tamil Nadu Irrigated Agriculture Modernization and Water Restoration Management (2007–15, 2018–present); Rajasthan Agricultural Competitiveness (2012–20)

This bundle of India groundwater cases is representative of one-third of the NRDV groundwater portfolio. Similar projects target critical watersheds with overexploited aquifers and farmers of irrigated agriculture. They also include one or more of the following practices: watershed and tank management, demand- and supply-side policies (metering, pricing, drilling restrictions, feeder segregation, subsidy reform, low-water-intensity crops, subsidized solar pumps, or participatory groundwater management), and institutional strengthening for groundwater management.

Source: Independent Evaluation Group.

Note: FY = fiscal year; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; NRDV = natural resource degradation and vulnerability; SAR = South Asia; SLM = sustainable land management; SSF = small-scale fishery.

Natural Resource Management Practices

World Bank projects that address natural resource degradation through various management practices struggle to find the right balance between achieving resource recovery and meeting the welfare needs of vulnerable resource users. The effectiveness of these projects also depends on their appropriateness for specific socioecological systems. This explanatory factor revealed itself across natural resource management practices and different socioecological systems:

  • Area closures implemented in Ethiopia and Niger support resource recovery but also can increase the vulnerability of resource users if livelihood risks are not mitigated. Fencing in Inner China has led to increased degradation and vulnerability; in Mongolia, however, the choice not to fence was well aligned with mobile herder vulnerability-reducing strategies, but land degradation has continued unabated.
  • World Bank support for recharging groundwater aquifers in India, including through watershed management, has reduced farmer vulnerability in the short term, but in the absence of regulation, it could not prevent overexploitation and vulnerability in the long run.
  • Dryland soil and water conservation practices, such as rainwater harvesting techniques used in the Sahel, have reduced degradation and contributed to short-term vulnerability reduction through public works, but the sustainability of these effects is drawn into question by the misestimation of the role of rainfall and the absence of institutional mechanisms to finance maintenance, including through public works, in the long run.

The following subsections discuss these cases in turn.

Land Area Closures and Fencing

Many World Bank SLM projects use area closures—technical land management approaches that temporarily close off a designated area (for example, degraded hillsides or catchments) for productive use to allow for land and resource recovery. These ecological restoration programs often involve direct or indirect (physical or managerial) area closures of land and resources in the short to medium term to reduce or prevent resource extraction pressures. The land is often treated with soil and water conservation practices (trenches, bunds and terraces, or integrated watershed management approaches) before closure to reduce erosion and facilitate natural regeneration. These initiatives are designed to increase the productivity of land and the flow of ecosystem services (for example, soil fertility, water availability, flood protection, fodder, fuelwood, medicinal resources) in the long term. Area closures have been mostly used in World Bank projects in Africa, and much of the research on area closures, including for World Bank projects, has been conducted in Ethiopia and Kenya.

Area closures can be effective at restoring and rehabilitating degraded land. The literature shows that, when supported by practices for controlling gullies and soil erosion, areas closures have been effective in supporting biomass production of grasses, herbs, and trees and increased plant biodiversity (Angassa 2016; Jeddi and Chaieb 2010; Yayneshet, Eik, and Moe 2009). IEG’s analysis of geospatial data in more than 500 high-pressure and intensively cultivated watersheds in tropical highlands,4 where area closures had been applied as part of watershed management programs with the support of the Ethiopia Sustainable Land Management Project (SLMP) I and II (2008–14 and 2014–19), showed statistically significant positive effects on land restoration compared with controls (table 4.2). Using three remote-sensing land restoration metrics, the statistical analysis found that SLM practices, including area closures, significantly reduced land degradation. This was further confirmed through IEG case study analysis in 22 watersheds supported by SLMP, which showed that the land and restoration efforts were achieved at a substantial level or higher (for example, in terms of restoration quality) on both communally held land and farmland (table 4.3). This expanded analysis also showed that results were notably better in low-moisture environments, which is consistent with the literature.

Table 4.2. The Relative Land Restoration Impacts of Sustainable Land Management Interventions in Ethiopia (Percent increase over controls)


Increase in Vegetation Covera

Increase in Vegetation Cover and Qualityb

Soil and Land Capacity to Withstand Water Stressc

Dry season (Bega)




Short rainy season (Belg)




Source: Independent Evaluation Group difference-in-differences analysis of remote-sensed pixel-level geospatial Sustainable Land Management Project II data.a. Measured using the Normalized Difference Vegetation Index.b. Measured using the Enhanced Vegetation Index.c. Measured using the Land Surface Water Index.

Area closures can exacerbate the vulnerability of resource users who are not adequately compensated for losing access to enclosed land. Ethiopia’s SLMP found that, juxtaposed with their positive resource-related effects, area closures that limit grazing mobility can reduce livestock production and increase vulnerability if support for fodder production is not provided. IEG’s case analysis found that communities in Ethiopia acted to mitigate these effects by rotating the areas designated for closure to allow for partial continued access. The same vulnerability-producing effects occurred in Niger through projects that used technologies and policies practiced throughout the Sahel in the SLM portfolio (box 4.1).

Table 4.3. Independent Evaluation Group Ratings of Impacts on Land Restoration in Ethiopia’s Sustainable Land Management Project Microwatersheds

Communal Land

Individual Farmland

Agroecological Zones

Rating (percent)

Rating (percent)

Cases (no.)







Dry highlands/midaltitude








Moist highlands








Moist midaltitude








Source: Independent Evaluation Group analysis of 22 cases from the Sustainable Land Management Project I and II microwatersheds.

Box 4.1. Results of Area Closures in Niger

In Niger, area closures involving tree planting yielded resource- and income-related benefits for some resource users, but they also increased the vulnerability of transhumant herders and local livestock owners when grazing and other resource collection activities were prohibited.

Earth and site observations of investments supported by the Niger Community Action Program (2003–20) confirmed that vegetation was successfully established on what previously were hardpan erosion surfaces on elevated plateaus that had not supported significant vegetation for many decades. Lands were rehabilitated through large commitments of labor for soil works (for example, half-moons, zaï or tassa [soil pits], stone bunds [embankments]). The density of trees and shrubs increased dramatically. These land investments yielded many benefits, including temporary employment (digging, tree planting) and associated income, access to knowledge about tree saplings, the development of small nursery businesses, and, eventually, the production of “sweet leaves” accessed by goats and sheep after areas were opened for grazing. Observations at older sites, however, show reduced vegetation cover due to limited funds for upkeep and maintenance of these land works and the conversion of rehabilitation sites to other uses.

Photo B4.1.1. A Land Restoration Site in Sambéra Commune, Dosso, Niger


Photo B4.1.1. A Land Restoration Site in Sambéra Commune, Dosso, Niger

The vulnerability of transhumant herders and local livestock owners was inadequately addressed in developing area closures. There is little evidence that these groups were consulted or played a role in revegetation decisions. The fieldwork revealed cases where the rehabilitated sites increased land use pressures on existing transhumance corridors in ways that lowered livestock mobility and the associated value of livestock wealth, critical for household resilience.

Sources: Earth observation images, drone images, and Independent Evaluation Group interviews conducted in June–July 2019 with 195 individual resource users in project sites in four regions (including smallholders, landowners, landless mobile pastoralists, married and unmarried women, and youth).

For mobile pastoral societies, the choice of not fencing has reduced potential herder vulnerability, but in the absence of land regulation, it has also contributed to unsustainable use and resource degradation. For example, IEG case analysis in Mongolia showed that the World Bank recognized that area closures are not an effective tool to reduce herder vulnerability, because fencing is antithetical to herder culture and mobile coping strategies. The World Bank’s Sustainable Livelihood Program was instead designed to support community-based pasture management—a system that supported land restoration through seasonal pasture rotation and mobility, agreed to by herding communities and aligned with Mongolian herding culture, which supports strong norms of reciprocity. However, although sharing pastures can reduce the vulnerability of herders during harsh conditions, it can also increase the vulnerability of hosting communities. In the case of the northern Chinese region of Inner Mongolia, the use of fencing resulted in increased land degradation and herder vulnerability (box 4.2).

Box 4.2. Results of Area Closures in Northern China

Area closures in Inner Mongolia have yielded less-than-anticipated productivity and restoration benefits while abutting traditional nomadic culture. The Chinese autonomous region of Inner Mongolia resembles Mongolia in its climate, people, and mobile pastoralist culture and economy. China, with the support of the World Bank (in Inner Mongolia and Gansu, 1999–2006 and 2004–10), applied a development strategy based on fencing and intensifying livestock. The collective grassland was divided and fenced at the household level. Although legal ownership resided at the village level, herders were assigned use rights. However, research has shown that fencing has significantly limited animal and herder mobility critical for maintaining rangeland and livestock health (Xu et al. 2015). Fencing has not achieved its goal of reducing degradation, and in some instances, there has been increased degradation where restricted herder movement has led to overgrazing (Taylor 2006). In addition to reducing the grassland’s carrying capacity, fences have also restricted the movement of large wildlife, reducing wildlife biodiversity (Li and Huntsinger 2011). Area closures have also led to increased inequality among herders because some were better able to gain access to more or better land when the land was divided (Taylor 2006).

Sources: Fratkin and Mearns 2003; Li and Huntsinger 2011; Taylor 2006; Xu et al. 2015; Ying and Ruimin 2011.

Groundwater Recharge through Watershed Management

The recharging of groundwater aquifers, including through watershed management, can reduce human vulnerability in the short term, but regulation is needed to control overexploitation and to ensure that vulnerability is reduced in the long run. Two decades of watershed management experience in India shows that the approach can support aquifer recharge but could also accelerate groundwater depletion in water-stressed areas (Darghouth et al. 2008; Gray and Srinidhi 2013; World Bank 2011, 2019). World Bank support has helped the states of Andhra Pradesh, Tamil Nadu, and Telangana increase water productivity, groundwater recharge, and water availability, mainly by rehabilitating water tanks (World Bank 2019a). But the watershed and tank management projects did not include support for groundwater management, including regulations, to prevent farmers from drilling new wells. Consequently, the IEG case study and research evidence show that the gains in groundwater recharge have been lost through unsustainable use of the resource.5

Dryland Soil and Water Conservation Practices

Rainwater harvesting microcatchment techniques—small structures designed to collect soil runoff and increase soil moisture—have contributed to both vulnerability reduction and degradation reduction in the short term. Used often in drylands, including in the Sahel, the most common techniques are zaï or tassa (soil pits), demi-lunes (half-moons), and banquettes. The World Bank financed such microcatchments in its $1 billion Sahel and West Africa Program, implemented in 12 Sahelian countries. Evidence—from both the literature and the Niger case analysis—indicates that microcatchments in the Sahel have reduced soil erosion and degradation and, in combination with manure or inorganic fertilizers, can increase millet yields (Turner et al. 2020; Vohland and Barry 2009; Warren, Batterbury, and Osbahr 2001).

However, the vulnerability and degradation reduction effects associated with the use of rainwater harvesting microcatchment techniques are questionable in the long term. First, misestimation of the role of rainfall variability as the key parameter affecting vegetative cover and agronomic productivity has a long history in the African drylands. Regional increases in vegetative cover since the early 2000s in the Sahel—referred to as “the greening of the Sahel” (map 4.1)—are significantly shaped by changing rainfall regimes and resource use decisions made by farmers and herders. Still, unqualified statements attribute Sahelian greening entirely to the actions of farmers (GEF 2019; Great Green Wall website;6 various World Bank SLM Implementation Completion and Results Reports), despite the fact that greening (increased ligneous [woody] cover) has occurred widely on sandy soils whether managed or not (Dardel et al. 2014; Herrmann, Anyamba, and Tucker 2005; Hutchinson et al. 2005; Ouedraogo et al. 2014). Second, the construction of the various dryland structures was achieved through large public works programs that were financed by World Bank projects. None of the Sahelian countries that participated in these projects institutionalized these programs, nor did the projects establish systems to support the recurrent finance needed for maintenance. There was short-term vulnerability reduction associated with the project-financed cash-for-work programs, but this effect was also temporary.

Map 4.1. The Greening of the Sahel (1981–2014)


Source: Cherlet et al. 2018.

Note: Image shows analysis of Earth observation data over the Sahel area, depicting changes in vegetation greenness and rainfall (obtained using Normalized Difference Vegetation Index time series). Cumulative changes in vegetation greenness are shown as green dots, and decreases in vegetation greenness are shown as red dots.

Map 4.1. The Greening of the Sahel (1981–2014)

Source: Cherlet et al. 2018.

Note: Image shows analysis of Earth observation data over the Sahel area, depicting changes in vegetation greenness and rainfall (obtained using Normalized Difference Vegetation Index time series). Cumulative changes in vegetation greenness are shown as green dots, and decreases in vegetation greenness are shown as red dots.

Resource Governance Arrangements

Natural resource governance arrangements, including access and use rights and appropriate regulations and policies, are critical determinants of whether resource users will adopt and benefit from sustainable management practices. These explanatory factors were derived from the literature, portfolio, and cases across different socioecological systems:

  • Land access and use rights were identified as a critical determinant of effectiveness in the Sahel, including as demonstrated by the case of Niger.
  • Extending and enforcing local fishing rights in East Asia and parts of West Africa helped reduce illegal extraction and increase incomes.
  • Extending governance and management rights to communities in India helped stem illegal well drilling that was leading to groundwater depletion.
  • Poor groundwater regulations and policies (for example, power subsidies) play a critical part in accelerating groundwater depletion in India (World Bank 2010a).

The following subsections discuss these cases in turn.

Land Access and Use Rights

The link between land access and resource rights and the adoption of SLM practices is well established.7 When resource rights are uncertain, land users may not invest in SLM practices (on both communal land and private land) to reduce land degradation (Tuck and Zakout 2019). When rights are unequal or access is not ensured for some users, SLM interventions can yield uneven benefits and inadvertently cause some resource users to lose rights to lands and resources, triggering a range of negative social impacts.

Traditional land access and use rights are underdiagnosed and inadequately addressed in the SLM portfolio, which can lead to increased exclusion and vulnerability of resource users. World Bank SLM projects do not reflect an understanding of vulnerable resource users’ coping strategies, which include accessing degraded lands as a social safety net (Turner et al. 2020). Lands viewed as degraded are often relied on, despite their low productivity, by local communities as common property resources. When project documents acknowledge that afforestation, reforestation, and revegetation activities could disrupt livelihood practices, attention is more likely to be directed to eviction, while the consequences of more subtle disruptions to resource access are grossly underappreciated. Project documents also do not address overlapping land and resource claims brought about by customary and modern tenure regimes associated with different seasons and land uses. Mobile pastoralists often do not reside in project areas but hold informal rights to some of the land’s products. This is the case in the Sahel, where many World Bank SLM projects were implemented. In the Sahel, projects articulated tenure-associated risks but did not discuss flexible common property tenure arrangements that play a significant role in maintaining livelihood resilience, especially among the most vulnerable, who herd, collect firewood, and gather other basic goods in degraded areas.

Increasing the value of open- or pooled-access degraded grazing land without clear land use and rights agreements among the users can lead to predation by elites and farmer encroachment. In the absence of tenure security, any distributional benefits achieved under project auspices may dissipate if open-access community land is later divided or sold outside of the community. Interviews with several affected stakeholders indicated that these infringements occurred across Niger when project-supported sites were no longer monitored by national authorities or project teams.8 These infringements were especially egregious in sites near cities, where land values had increased significantly since the start of the land restoration activities.9 Land, pasture, and watershed user associations supported by SLM projects can sustain land management when project-based support ends. However, such associations lack institutional and financial support, and efforts are nullified if land is sold to people outside of the community.

The creation of rules for shared common-pool land management responsibility can increase herder incomes, improve livestock health, and reduce overgrazing. Without clear access and use rights, the common-pool nature of pastureland presents complex challenges for herders to achieve sustainable natural resource management and reduce vulnerability. About 20 percent of global pasture and 73 percent of rangelands are degraded (Steinfeld et al. 2006). An important driver of rangeland degradation is the lack of enforceable rules for sustainable resource use among mobile pastoralists. This is also the case in Mongolia, where 76 percent of the land is open-access rangeland. Consequently, in a classic “tragedy of the commons” situation (where self-interested behavior reduces the common good from a shared resource), herders lack incentives not to overgraze and degrade pastures. The World Bank–supported Sustainable Livelihood Program in Mongolia tested voluntary activities for enhanced pasture and livestock management (for example, insurance, microfinance, hay stocking, early warning systems), but these activities were insufficient to address the market failure associated with the tragedy of the commons and ultimately had little impact on rangeland management. A parallel Swiss Agency for Development and Cooperation project, referred to as Green Gold (approved in 2006), addressed tenure-related challenges by creating informal pasture-user agreements among herder groups. By creating rules for shared land management responsibility, Green Gold increased herder incomes, improved livestock health, and reduced overgrazing.

Local Fishing Rights

The clear assignment and enforcement of fishing rights to small-scale fishing communities can reduce fishing pressures and increase small-scale fishers’ income. Support for small-scale fishing communities has been successful in East Asia, Indonesia, and Vietnam, where governments have supported and enforced comanagement arrangements with communities. These processes have resulted in fewer fishing violations and increased incomes in fishing communities. In African countries where interventions have built the capacity of local institutions to monitor and enforce regulations (for example, Guinea-Bissau, Libera, and Senegal through satellite-based monitoring, increased patrols, and enforcement through the prosecution of infractions by large fishing vessels), the comanagement approach has worked well. Where it has been less successful, in some West African countries, comanagement plans were issued but not enforced at a national level because of the influence of illegal fishing activities.

Community Groundwater Rights

Strengthening the role of community rights in groundwater governance can improve groundwater management. The structured literature review highlights the importance of community institutions in helping government regulators curtail illegal groundwater access and use for the sustained benefit of farming communities (Msangi 2020). For example, the IEG case study showed that in the water-stressed states of Andhra Pradesh and Telangana of India, illegal well drilling and the expansion of irrigated areas resulted in the depletion of almost all open well water. A pilot project financed by the World Bank in the Nalgonda district, Telangana, showed how participatory management with community-enforced restrictions can help state regulators reduce the drilling of illegal bore wells and improve sustainable use (box 4.3).

Box 4.3. Participatory Groundwater Management in India

The World Bank Telangana State Water Sector Improvement Project (2010–18) piloted a user-centric, aquifer-level groundwater management approach in the Nalgonda district. The approach featured a combination of supply- and demand-side activities, including (i) aquifer mapping to identify areas with high recharge potential, (ii) check dams with recharge shafts to replenish bore wells, (iii) community-regulated restrictions on the drilling of new bore wells, and (iv) support for an extension designed to incentivize farmers to adopt low-water-intensity cropping and enhanced irrigation practices. Efforts to regulate the drilling of new wells led to a significant decline in per capita well ownership and stabilization of the aquifers. There has also been a rise in groundwater levels from a critical to a semicritical category of water security in pilot areas. As a result of the pilot’s success, Telangana is expanding these activities, and efforts are under way to apply them to other regions through the World Bank’s new national groundwater project.

Sources: Independent Evaluation Group; World Bank 2019b, 2019c.

Groundwater Regulation and Policies

Balancing supply- and demand-side interventions—through regulations and incentives—can ensure groundwater security and reduce vulnerability in the long term. Regulations, including restrictions on well licensing and drilling, are important to reduce overexploitation in water-stressed areas (Msangi 2020). However, as the India case example shows, in the absence of such regulations, the World Bank has focused its efforts on incentivizing demand-side water-saving practices, including by helping farmers to switch to less-water-intensive crops. But as IEG case studies in Andhra Pradesh and Telangana have shown, although crop switching can reduce water use, it is not enough to combat unabated groundwater extraction. Such demand-side incentives need to be accompanied by supply-side responses to recharge groundwater and prevent illegal well drilling. Failure to regulate well drilling and the expansion of irrigated areas resulted in the depletion of almost all open well water (where the number of bore wells also increased, on average, by more than fourfold in project areas).

In the absence of appropriate regulations, providing solar pumps for groundwater extraction and subsidies for electricity can dramatically reduce the cost of irrigation for smallholder farmers in the short run, but they can also provide incentives for aquifer depletion in the long run. Solar pumps convert energy from the sun into power to help pump groundwater at low or minimal cost for use in irrigation. The World Bank supported the government of Rajasthan in supplying subsidized solar pumps for agriculture through the Rajasthan Agricultural Competitiveness Project, which seeks to test whether farmers can augment their income by selling excess power to the main grid. The IEG case study shows that these subsidies for solar pumps in Rajasthan (at a rate of 50–90 percent),10 as in other states in India, can accelerate depletion through secondary market distortions. Interviews found that farmers who received subsidies for solar pumps were also being provided subsidized electricity for farming.11 As a result, some farmers in Rajasthan were selling water at about half the normal price rather than selling their excess power to the main grid. Solar pumps, even without such subsidies, can contribute to overexploitation of groundwater resources and lead to farmer vulnerability over the long term. Further experimentation is needed to determine how to develop the market for solar power to disincentivize the overextraction and sale of cheap groundwater.12

Financial Incentives

The effectiveness of financial incentives to promote improved use of natural resources and to reduce vulnerability depends on whether programs accurately target the most threatened areas and vulnerable groups and provide timely benefits. Inherent in targeting the right groups is identifying those for which the incentives will create enough motivation to induce the desired behavioral change. The World Bank has offered various financial incentives to farmers and landowners in exchange for managing their land and providing some essential ecological functions and services. Two main financial incentives were assessed: (i) payments for environmental services (PES), including carbon payments; and (iii) discounted loans. All of these provide conditional payments to voluntary providers for improved use or conservation of resources. The literature, including a systematic review of PES and case analyses in Brazil, Ethiopia, and Niger, highlights the importance of targeting the specific areas at highest risk of degradation to reduce the vulnerability of marginalized and vulnerable resource user groups.

Payments for Environmental Services

Governments and donors use PES programs to pay landowners for the global public goods and positive externalities associated with managing land and natural resources sustainably in ways that generate benefits for others. The World Bank has piloted and sometimes expanded different types of PES systems in 17 projects in the NRDV portfolio. Evidence is derived from a systematic review of PES conducted by the International Initiative for Impact Evaluation, which included analysis of World Bank–supported projects (Snilstveit et al. 2019). This section also presents complementary evidence derived from case analyses on the use of various forms of payments for improved resource management, including biocarbon payments in Ethiopia and Niger and conditional loans in Brazil.

PES programs, where implemented appropriately for the context, have prevented the loss of forest cover and have yielded some economic benefits for landowners. However, these outcomes can only be tentatively reported because of the lack of rigorous environmental evidence and the substantial heterogeneity of the programs that have been evaluated. Evidence on socioeconomic outcomes is even thinner. Many of the studies that find positive economic outcomes for the resource users did not identify a valid comparison group outside the program, making those findings less credible. The studies with more credible designs tended to find no effect on recipients’ economic well-being.

The programs that have yielded the largest benefits—both environmentally and socially—were those where threatened areas and vulnerable resource users were carefully targeted. In terms of resource benefits, right-sizing the incentive to induce improved management (for example, conservation of forests instead of deforestation of land for other uses) and targeting meant identifying the specific areas that were at highest risk of deforestation. If this targeting was not done correctly, landowners sometimes enrolled only those portions of their land with the least valuable trees, which they would not have cut down anyway. If a program goal was primarily to help local communities economically, targeting required identifying marginalized and vulnerable social groups who lived in areas where conservation aims were desired but who could not afford to forgo resource extraction for the public environmental good.

Carbon Payments

Carbon payments have been more effective at reducing degradation and vulnerability when areas targeted for restoration are well defined and monitorable and when vulnerable groups are provided with timely benefits.13 As shown in Ethiopia, carbon payments are easier to administer when a targeted degraded site is monitorable, resource users are clearly identified, and their rights are defined. In Ethiopia, carbon payments supported the restoration of a degraded hillside, generating ecosystem services for resource users, who also received timely payments (box 4.4).14 This experience contrasts with that of Niger, where remote and dispersed sites located across different types of terrain and representing different socioecological conditions, often far away from villages, were hard to monitor. In Niger, severe payment delays reduced the incentive for land users to maintain sustainable practices; they also undercut vulnerability reduction benefits.

Box 4.4. The Humbo Biocarbon Project in Ethiopia

In Ethiopia, the World Bank–supported Humbo Assisted Natural Regeneration Project (2008–18), which restored a degraded hillside, was successful in delivering carbon and economic and social cobenefits. It increased sustainable land use and productivity while yielding benefits for targeted vulnerable communities. Using farmer-managed natural regeneration, the project helped restore 2,728 hectares of natural forest, allowing for the sequestration of 338,000 tons of carbon. The BioCarbon Fund subsequently delivered $826,000 in payments to local communities. To better protect reforested hillsides, the project also distributed tree seedlings and supported diversified economic activities (for example, beekeeping, flour milling, and livestock fattening). Improved land management increased fodder for livestock. A key factor in achieving distributional benefits was the assignment of land use rights to people living around the hillside, to whom training and technical support was also provided to support diversified livelihoods.

Sources: Independent Evaluation Group; Kaboré 2013; UNEP 2016; World Bank 2013.

Discounted Loans

Discounted loans—a form of environmental payment—can promote increased uptake of climate-friendly natural resource management practices. In Brazil’s Agricultura de Baixo Carbono (Low-Carbon Agriculture) Cerrado Initiative, for example, discounted loans, combined with technical assistance, promoted increased farmer uptake of climate-friendly natural resource management practices (for example, low tillage, planted pasture, agroforestry). The program helped the Brazilian government put 312,757 hectares of degraded farmland under improved management through the incentives provided by the loans and on-farm demonstrations of climate-friendly agricultural practices, which led to increased profitability.

Discounted loans that target large farms may not be the right mechanism for supporting reduced farmer vulnerability on small and family farms. The approach used in the Cerrado, targeting large farms, is applicable to other efforts aimed at achieving large-scale climate mitigation goals but not to those aimed at promoting reduced degradation and decreased farmer vulnerability on small or family farms. Family and small farms that are less than 20 hectares, constituting 80 percent of all farms in the Cerrado, for example, did not benefit from the Low-Carbon Agriculture Cerrado Initiative. The transaction costs were too high to engage small farms, whose risk tolerance for the loans was also low. Interviews indicated that this lack of an inclusive approach was associated with the terms of the concessional finance (for example, carbon payments provided by the Forest Investment Program) combined with the IBRD loans in Brazil’s wealthier states. The program also carries the risk that successful farmers will expand their farms by deforesting neighboring lands. Because deforesting is more expensive than recovering degraded land, enhanced incentives could include a credit line for farmers to purchase and recover degraded land.

  1. A review of the lessons learned sections of the closed projects in the portfolio revealed that issues pertaining to technologies and practices were highlighted as factors of effectiveness in 94 percent of cases, governance was cited in 61 percent, and financial instruments were cited as a key implementation modality in 45 percent.
  2. A socioecological system is a set of resources (natural, economic, and cultural) regulated by a combination of ecological (natural) and social (human) systems. The concept captures the insight that there is no fixed distinction between human systems and natural systems. The two are usually interdependent in complex, dynamic ways.
  3. Representativeness is assessed on the basis of the following characteristics: (i) a typically occurring intervention logic based on an accepted theory of change, (ii) a representative project design—component composition and alignment with causal theory, and (iii) results indicators, including corporate indicators, that are frequently used to measure attributable outcomes of the intervention typology.
  4. The geospatial analysis was based on 504 Sustainable Land Management Project (SLMP) I and 624 SLMP II treated microwatersheds in Amhara, Oromia, and Tigray regional states. The number of treated microwatersheds in the data vary by region: 247 and 317 in Amhara, 184 and 206 in Oromia, and 73 and 101 in Tigray covered under SLMP I and SLMP II, respectively.
  5. In addition to the on-site depletion effects, the watershed projects can also trigger negative downstream effects. For example, the promotion of forestry, irrigation, and soil and water conservation measures, including water harvesting upstream, produced serious water shortages in the lower part of the catchment (Darghouth et al. 2008).
  7. As stated by the former vice president of Sustainable Development for the World Bank, “Research has shown that people are better stewards of the environment and their natural resource base when their property rights are secure” (Tuck and Zakout 2019).
  8. Interviews at Niger Community Action Program sites were conducted with elected commune leaders, traditional authorities, former land management committee members, project regional facilitators, and various resource users present at the site (women and men). Anonymized transcripts and photographic evidence are available by request.
  9. An IEG site visit to Commune V, just outside of Niamey, revealed the potential for elite capture of Community Action Program sites. After Community Action Program funding had ceased and the land had been restored to a relatively habitable state, interest in the land skyrocketed, and several parcels of the former community land were sold by the local village chiefs with ownership over the land to private buyers, some of whom had political connections to the ruling political party. This purchase occurred after the project closed. Interviews revealed that interest in buying the rehabilitated lands was not unique to this project site.
  10. The subsidy depends mainly on the income or caste social category of the farmer. The average farmer pays about 10 percent of the actual cost. Small and marginal farmers and those belonging to scheduled caste or scheduled tribal communities pay 5 percent of the actual cost. For water-efficient microirrigation systems, the subsidies generally range between 50 and 90 percent depending on the social category of the farmer. Scheduled caste farmers get a 90 percent subsidy on microirrigation systems and building greenhouses. In Rajasthan, polyvinyl chloride pipes for water conveyance and drips and microsprinklers were provided by the Rajasthan Agricultural Competitiveness Project at a 75 percent subsidy, and most farmers paid 25 percent of the cost for microirrigation systems.
  11. Several states in India provide free or heavily subsidized power for agriculture (Badiani and Jessoe 2018; World Bank 2010b). Although these subsidies offer farmers in water-stressed areas greater access to water, they also create perverse incentives that lead to overexploitation and depletion of scarce groundwater resources.
  12. The free or heavily subsidized supply of electricity for farmers has significantly contributed to overexploitation of groundwater resources (for example, in Telangana), leading to farmer vulnerability over the long term. A solar subsidy is expected to transform agriculture in water-stressed areas from crop farming to “solar farming.” However, the system needs to be designed carefully so that farmers will be able to sell surplus power to the main grid rather than using it to pump groundwater. If effective, the solar subsidy could provide multiple benefits, including clean green energy and poverty reduction.
  13. When land is restored and its vegetative cover increased, carbon emissions are sequestered and can be certified and sold as carbon credits. The resulting carbon payments to vulnerable resource users can supplement the ecological and economic benefits of land restoration.
  14. The IEG case study on the Humbo Assisted Natural Regeneration Project in Ethiopia showed that the project was able to deliver the full contracted amount of 165,000 tons of CO2e certified emission reductionsduring 2007–18 under the World Bank’s BioCarbon purchase agreement. The carbon payments to community forest cooperatives have been invested in nine flour mills, with an average net annual income of 28,320 Ethiopian birr for each mill over six months, and nine warehouses used to store grain during harvest and for selling when prices are high. The cooperatives also provide credit for members to buy farm inputs like improved seeds that increase farm productivity. In addition, the biodiversity of the forest recovered; streams started flowing again, increasing water supply; the landscape is fully rehabilitated, and gullies are controlled; erosion and flooding has been reduced; and livelihoods have diversified through new sources of farm and nonfarm income (farm income includes beekeeping and vegetable and fruit production; nonfarm income includes income from employment and petty trading). To secure future carbon payments, Humbo, with the assistance of World Vision Ethiopia, is in the process of transitioning to the gold standard system to access voluntary markets similar to the neighboring Soddo Reforestation Project, which has also received strong demand for carbon credits, particularly in Europe (Dean Thomson, World Vision Ethiopia, personal communication 2019).