Management of the World Bank thanks the Independent Evaluation Group for the report The Natural Resource Degradation and Vulnerability Nexus: An Evaluation of the World Bank’s Support for Sustainable and Inclusive Natural Resource Management (2009–19). This evaluation is timely and provides useful findings that inform both the International Development Association and International Bank for Reconstruction and Development agendas, especially with respect to climate change.

World Bank Management Response

Management is pleased with the evaluation’s assessment that the World Bank “adequately diagnoses and addresses forest, soil, and land degradation issues,” and that “the World Bank has been effective at improving natural resource management practices.” Notwithstanding this progress, management acknowledges the report’s conclusion that the World Bank could perform better in addressing resource degradation and associated vulnerability reduction issues and is determined to do so. First, as noted in the report, climate change exacerbates the vulnerability risks associated with natural resource degradation. Management has raised its ambition regarding fighting climate change by aiming to ensure that 35 percent of operational financing provides climate cobenefits over FY21–25. As a plan to reach that target is developed, addressing natural resource degradation becomes a central goal, particularly given its negative consequences on the poorest segments of the population. Second, the COVID-19 pandemic is compounding the negative impacts that natural resource degradation was already having on the lives of vulnerable populations, particularly in the world’s poorest countries. As the World Bank continues to help countries respond to the pandemic, a focus on long-term goals associated with climate and environmental challenges is maintained. This approach aims to help countries rebuild in a greener, more resilient, and more inclusive manner. Management will internalize the report’s recommendations to seize opportunities for improvement.

Management believes that the report’s account of the World Bank’s work on groundwater and small-scale fisheries is less elaborate than deserved. In general, management finds discussions in the report on groundwater management useful, but groundwater issues cannot be effectively addressed or managed in isolation, and the discussion does not expand on the critical links with surface water and the need for conjunctive management, especially for improving the drought resilience of rural communities in the face of climate change. Although inclusion of groundwater in the report is helpful, its treatment is not sufficiently informed and detailed; a single case study of groundwater management, for example, does not appropriately describe the wide range of ways in which this problem may be addressed. Management does not share the report’s view that inadequate attention is paid to groundwater and small-scale fisheries nexus countries because half of the corresponding Systematic Country Diagnostics (SCDs) include diagnoses of resource degradation. This observation does not sufficiently consider prioritization and selectivity in country engagements.

Management agrees with the first recommendation, to analyze natural resource degradation and vulnerability nexus issues in SCDs and in country engagements, where such issues matter for achieving sustainable poverty reduction and shared prosperity. This is consistent with management’s view of the SCD as a diagnostic tool that, by its nature, is not expected to be exhaustive in its review of the development issues facing a country but rather to be selective in choosing those issues that constitute the key development bottlenecks at the time that the SCD is prepared. SCDs have the strategic objective “to identify the most critical constraints and opportunities facing countries as they work to end extreme poverty and promote shared prosperity in a sustainable manner.” Given varying circumstances and conditions, not every SCD and Country Partnership Framework will present assessments of the drivers and consequences of natural resource degradation and related vulnerability. As in all cases, the World Bank will work with clients to help define and prioritize country-level objectives and will endeavor to ensure that natural resource degradation (and its effects on vulnerable populations) remains central to this dialogue in countries where these issues are prominent for poverty reduction, as suggested by the report.

Management agrees with the second recommendation—to direct attention to resource governance challenges—and will do so by combining different lending instruments. Management believes that the World Bank has made significant efforts supporting policy and regulatory reforms. The World Bank has lending instruments for addressing different development challenges, and this evaluation primarily focuses on one of those instruments—traditional investment project financing. development policy operations or loans are more suited to promoting policy, regulatory, and other governance reforms (including land tenure). Management believes that the evaluation’s portfolio analysis could have been more insightful in this regard had more development policy operations been included. Similarly, the analysis could have been further enhanced by the inclusion of more Program-for-Results operations, which have been used to support natural resource degradation and vulnerability investments in some cases. Management notes that many of the natural resources discussed in the report are common-pool resources and their respective restoration efforts will be sustainable when problems are collectively addressed through various appropriate channels. It should also be noted that the specific governance challenges identified in each case may require responses that fall outside the scope of individual projects (for example, coordination across different sectors and institutions) and may require a combination of lending and nonlending instruments (for example, the provision of knowledge and capacity building) delivered through programmatic engagements.

Management agrees with the third recommendation—to work across Global Practices to share knowledge, improve measurement, and enhance coordination to optimize development effectiveness—and it is acting on it. Management is continuously striving to enhance knowledge management practices, particularly to help ensure stronger outcome orientation of country engagements. Numerous examples of coordination and knowledge sharing from global programs such as PROGREEN and PROBLUE illustrate the progress underway in this realm. The Social Protection and Jobs Global Practice is strengthening its efforts to build, reflect and disseminate insights and evidence of social protection programs and policies that are adaptive and contribute to addressing natural resource degradation. The Social Protection and Jobs Global Practice flagship report “Adaptive Social Protection: Building Resilience to Shocks” is one such example and is complemented by multiple knowledge pieces on public works. Additionally, the Sustainable Development Practice Group has developed and shared its work and experience in areas such as integrated land use planning, benefit sharing, program design based on understanding the drivers of deforestation, ensuring the voice of marginalized and indigenous peoples in program design, diagnostics on social inclusion, and empowerment and resilience. Management will reflect on additional opportunities to continue enhancing measurement and knowledge sharing, with a view to achieving and reporting on development outcomes.

Management believes that, given the report’s time horizon, evidence of the achievement of longer-term outcomes of projects targeting natural resource degradation and vulnerability is difficult to collect and so it will reflect on better ways to do so. The report notes that “the World Bank has been effective at improving natural resource management practices, but there is little attributable evidence of a reduction of natural resource degradation or associated human vulnerability of resource users.” Management notes that livelihood improvements are not only difficult to measure but also to attribute to World Bank interventions, given the many forces at play and the length of time required for the effects of interventions to coalesce as tangible results. In many cases, the impact of operations on natural resources and on the well-being of the affected populations may not be fully observable until well after a project closes and an Implementation Completion and Results Report is completed. Any analysis that limits itself to Implementation Completion and Results Reports, therefore, is likely to tell only a partial story, as the impact of World Bank interventions on degradation and vulnerability extends beyond the project period, with benefits accruing after the project end-date. For this reason, it is often not possible to conduct the type of monitoring suggested in the evaluation in standard World Bank reporting. Equally, the long-term nature of impacts on resources and direct users (with focus on vulnerable populations) is challenging to assess through indicators in standard and relatively short-term project- and country-level results frameworks. Therefore, World Bank efforts include support to enhance client capacity and institutionalization of monitoring of impacts on natural resources. In practice, this is what many World Bank projects are aiming to do. In line with the World Bank’s efforts to better assess and articulate its contribution to long-term country-level outcomes, consideration is being given to extending the time frame applied to assessing the effectiveness of critical activities that follow long-term indirect pathways (such as institutional development, including capacity building, transfer of knowledge and policy dialogue) and identifying appropriate criteria against which success can be measured.