Many of the world’s poor people depend on natural resources for their well-being. Four-fifths of the world’s poor people live in rural areas, and most rural poor people depend on natural resources for their livelihoods (World Bank 2018c).

The renewable natural resources on which poor people depend are increasingly being degraded, posing significant risks to resource-dependent communities. These essential resources are increasingly unable to sustain uses necessary for human well-being and inclusive growth. One-third of all land and one-fifth of all forest cover are severely degraded (UNCCD 2017). Groundwater, which accounts for half of drinking water and 43 percent of irrigation water, is being depleted at an alarming rate (Smith et al. 2016). The fraction of fish stocks at biologically sustainable levels fell from 90 percent in 1974 to 67 percent in 2015 (FAO 2018b). Natural resource degradation can also exacerbate social tensions that lead to conflict.

Climate change exacerbates the vulnerability risks associated with natural resource degradation. Natural resource degradation increases susceptibility and exposure to climate shocks and further strains the adaptive capacity of resource-dependent communities (Lange, Wodon, and Carey 2018).

The World Bank has committed to reducing the vulnerability of resource-dependent people. The World Bank has indicated that its twin goals should be obtained in a “sustainable and inclusive manner” and the resulting “prosperity also needs to be shared across individuals over time, requiring forms of sustainable development that fully account for environmental degradation and natural resource depletion and, crucially, their close interrelation with poverty” (World Bank 2015, 1).

Although this evaluation was conducted before the coronavirus pandemic, it offers lessons relevant to the World Bank’s efforts to address the significant increase in poverty caused by the pandemic. The pandemic is compounding the negative impacts that natural resource degradation was already having on the lives of vulnerable populations. For example, many urban residents seeking refuge in their rural homes of origin are putting pressure on already stressed resources that sustain food and water systems in rural areas.

Evaluation Aim, Methods, and Scope

This evaluation assesses how well the World Bank has addressed natural resource degradation to reduce the vulnerabilities of resource-dependent people. It answers two main questions:

1. Relevance. How well has the World Bank identified and addressed resource degradation issues threatening resource-dependent people in the places where those threats are most prominent?
2. Effectiveness. How effective has the World Bank’s support for natural resource management been at promoting sustainable use of resources and reducing the associated vulnerability of resource-dependent people?

This evaluation focuses on natural resources that are critical for the livelihoods and welfare of vulnerable people who depend on them. Such resources include soil and land, local forest resources, groundwater, and small-scale fisheries. The evaluation excludes issues that pertain to the global commons (such as global deforestation, biodiversity, air pollution, and marine health) because these issues have been or are scheduled to be covered in other Independent Evaluation Group evaluations.

The evaluation uses a mixed methods approach that draws on a range of evidence to derive explanatory factors and conclusions. The methods include structured literature reviews, a global data analysis, geospatial analyses, interviews, portfolio review and analysis, and comparative case studies. To assess the relevance of the World Bank’s approach, the evaluation identifies “nexus countries,” which are those with high resource degradation and high resource dependence by rural poor people.

Relevance of the World Bank’s Approach

The World Bank adequately diagnoses and addresses forest and soil and land degradation issues but not groundwater and small-scale fisheries issues. Most Systematic Country Diagnostics (SCDs) of forest and soil and land nexus countries analyze resource degradation, but SCDs only diagnose these issues in half of groundwater and small-scale fisheries nexus countries. Country Partnership Frameworks (CPFs) also have significantly higher coverage of forest and soil and land degradation issues than of small-scale fisheries and groundwater issues.

The World Bank does not adequately address the vulnerability of resource-dependent people where resource degradation threats are prominent. SCDs and CPFs tend not to jointly analyze resource degradation and associated human vulnerability. Analysis of resource-related human vulnerability is included in, on average, half of the SCDs and CPFs, with more coverage for forest resources. Gender-related resource management and use rights are also not diagnosed in SCDs and thus not addressed in country strategies and lending programs.

SCDs, CPFs, and lending programs for sustainable land management (SLM), forest resources, and groundwater are not addressing many of the underlying factors that drive resource degradation. These factors include (i) a lack of clearly defined resource and land use rights, including inadequate awareness of customary, flexible common property arrangements; (ii) policy distortions, such as subsidized energy for irrigated agriculture; and (iii) weak regulatory and governance arrangements that undermine sustainable use and negatively affect vulnerable resource users.

Effectiveness of the Natural Resource Degradation and Vulnerability Portfolio

The identified natural resource degradation and vulnerability (NRDV) portfolio consists of 253 World Bank projects in 82 countries approved between fiscal years 2009 and 2019, with financing of almost $33 billion. This portfolio comprises 104 SLM projects mapped to the Sustainable Development Practice Group and 41 Social Protection projects with resource restoration activities mapped to the Social Protection and Jobs global practice; 55 projects with groundwater activities; and 53 projects with small-scale fisheries support.

The World Bank has been effective at improving natural resource management practices, but there is little attributable evidence of a reduction in natural resource degradation or in associated human vulnerability of resource users. Most evaluated NRDV projects were rated at least moderately satisfactory, but ratings reveal little about the effectiveness of natural resource- and vulnerability-related outcomes and their sustainability. First, only 10 percent of the closed Sustainable Development SLM projects, and none of the Social Protection SLM projects, provided attributable evidence of resource restoration. Second, although groundwater activities strengthened institutional capacity, little is known about the effects of these activities on intensity and patterns of groundwater use and impacts on resource depletion. Third, although many small-scale fisheries projects achieved their resource governance objectives, few assessed effects on fish stock health or the welfare of fishing communities.

NRDV projects do not adequately identify, address, or assess heterogeneous effects on different subgroups of vulnerable resource users. SLM projects infrequently use metrics to measure the vulnerability of resource-dependent people. Most groundwater projects reduced vulnerability by increasing water availability but did not curb overuse, nor did they indicate for whom benefits would accrue. Few small-scale fisheries projects assessed the effects of improved governance on the welfare of fishing communities.

Explanatory Factors of Effectiveness

Reducing natural resource degradation and associated human vulnerability is difficult. Interventions are situated within specific political and institutional settings and need to take account of the heterogenous factors present across different socioecological systems. Broadly speaking, three sets of factors help explain the relative effectiveness of the NRDV portfolio within specific socioecological systems: (i) natural resource management practices, (ii) resource governance arrangements, and (iii) financial incentives.

Natural Resource Management Practices

Projects that address natural resource degradation through various natural resource management practices struggle to find the right balance between achieving resource recovery and meeting the welfare needs of vulnerable resource users. Area closures enhance resource recovery but can also increase vulnerability if livelihood risks are not mitigated, as shown in Ethiopia and Niger. Fencing in Inner China, for example, led to degradation and vulnerability; the choice not to fence in Mongolia was well aligned with herder vulnerability-reducing strategies, but land degradation continued unabated. Watershed management in India reduced farmer vulnerability, but in the absence of regulation, it could not prevent overuse and vulnerability in the long run.

Resource Governance Arrangements

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 underdiagnosis and inadequate treatment of traditional land access and use rights in the SLM portfolio has been shown to lead to increased exclusion and vulnerability of resource users. SLM projects that aim to enhance the value of degraded land are not designed with an understanding of the coping strategies of vulnerable resource users who access these lands as a social safety net. Nor do they address overlapping land claims. Increasing the value of open- or pooled-access degraded land without clear, enforceable land use agreements has led to predation by elites and farmer encroachment. In the absence of tenure security, distributional benefits achieved through SLM may dissipate if land is divided or sold outside of the community.

In groundwater regulations and policies, balancing supply- and demand-side interventions—through regulations and incentives—can ensure groundwater security and reduce vulnerability in the long term. Policies that subsidize electricity for pumping groundwater can reduce farmer vulnerability in the short run but can also accelerate aquifer depletion, especially in stressed areas.

The devolution of resource rights to communities can contribute to the reduction of resource degradation and human vulnerability. Strengthening community groundwater rights in India helped stem illegal well drilling that was leading to groundwater depletion. The provision and enforcement of local fishing rights in East Asia reduced illegal extraction and increased incomes.

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 with benefits that accrue in a timely manner. Payment for environmental services (also referred to as payments for ecosystem services) programs have prevented forest cover loss and have yielded some economic benefits for landowners when implemented appropriately for the context. Programs that carefully targeted threatened areas and vulnerable resource users yielded the largest environmental and social benefits. 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 receive benefits in a timely way. Discounted loans can promote uptake of climate-friendly land practices. However, discounted loans, especially those used for climate mitigation goals, may not be the right mechanism to support reduced farmer vulnerability because transaction costs are too high to engage small farms with low risk tolerance for loans.

Overall, the analysis of these three explanatory factors reveals that the success of all types of natural resource management interventions depends on the flow of benefits to resource users over reasonable time frames. When those benefits are too small or take too long to accrue, resource users are disincentivized from maintaining sustainable resource management practices, which undermines vulnerability reduction benefits.

Conclusions and Recommendations

In sum, the World Bank could perform better in addressing resource degradation and associated vulnerability reduction issues. The evaluation shows that there are gaps in the relevance and effectiveness of the World Bank’s support for reduction of natural resource degradation and the associated human vulnerability of resource users. Because of these gaps, the World Bank is not doing all it can for vulnerable natural resource users, who constitute a large fraction of the world’s poor people. The report offers three recommendations to improve the World Bank’s performance in this area.

Recommendation 1. The World Bank should identify and analyze NRDV nexus issues and leverage this knowledge in SCDs and in country engagements where such issues matter for achieving sustainable poverty reduction and shared prosperity. In a subset of countries where NRDV nexus issues matter for achieving sustainable poverty reduction, SCDs can draw on data and analytics to identify and prioritize these issues. Management can leverage this knowledge to address these issues in country engagements, including through advisory work and, where relevant, prioritize lending, including through partnerships.

Recommendation 2. World Bank operations that address natural resource degradation should direct attention to resource governance challenges and use a mix of resource management practices and financial incentives appropriate for the relevant socioecological systems. World Bank operations that include support for natural resource degradation can identify and address governance issues by, for example, clarifying resource rights and addressing regulatory failures and distortive policies that drive resource degradation and increase the vulnerability of resource-dependent people. These governance challenges can be addressed through concurrent operations or sequential programmatic approaches. Operations that use resource management practices (such as area closures and watershed management) should find the right balance between achieving resource recovery and meeting the welfare needs of vulnerable resource users. Such trade-offs can be managed by ensuring timely economic and social benefit flows to resource users. When using financial incentives (such as payments for environmental services), it would be important for these operations to target both threatened areas and vulnerable groups.

Recommendation 3. World Bank Global Practices involved in addressing natural resource degradation and associated vulnerability should share knowledge, improve measurement, and enhance coordination in the design and implementation of their projects to optimize development effectiveness. The Social Protection and Jobs Global Practice and the Sustainable Development Practice Group should measure, assess, and report the attributable resource- and vulnerability-related outcomes of their different sustainable land and resource management approaches. For enhancing coordination, the Social Protection and Jobs Global Practice could share lessons on targeting vulnerable groups and measuring vulnerability-reducing effects. Similarly, the relevant Global Practices within the Sustainable Development Practice Group could share knowledge on the most appropriate scientific resource management practices and how to apply and measure their effects in the relevant socioecological systems. These projects should also ensure synergies when they are operating in the same geographic area. Possible ways to enhance coordination include cross-support, co-task team leadership, and joint advisory services and analytics.