Lessons from Environmental Policy Lending

Sustainable development, including environmental sustainability, is at the core of the World Bank Group’s strategy.  Policy lending has been a major part of the World Bank’s lending operations for decades, but recently the number of policy lending operations with environmental goals has increased, supporting policy actions across a broad range of subsectors.

This Learning Product seeks to offer lessons from experience to help inform stakeholders on how to design and implement this instrument, outlining some of the tensions and tradeoffs that must be grappled with in design. The main audience is Bank operational teams helping governments to prepare and implement DPF with environmental goals.

Despite the variation in the types of policies supported, operations have tended to generate lessons focusing on a common set of issues. These center around issues of political economy, of operation design and preparation, and of institutional strength and capacity. Many of these lessons are not unique to environmental policy lending but rather to the instrument, and may apply to other sectoral DPF operations or even to multi-sectoral operations.

The report includes lessons on:

  • The context in which environmental policy lending is most effective;
  • The political economy factors that influence operation design;
  • The selection of policy actions, objectives, and monitoring and evaluation indicators; and,
  • The use of analytical work and technical assistance.

In addition to the report, a companion database is available that can help task teams to locate previous operations that covered similar policy areas or grapple with and generated lessons on similar challenges.

Download the Report

View the Companion Database