The World Bank has decided to extend loans totaling US$1.2 billion to Brazil over four years to support the South American country's goal of balancing economic growth with social development and the improvement of environmental quality.
The first loan of the series, for US$505 million, was approved by the Bank's Board of Executive Directors on Tuesday. It seeks to contribute to a more sustainable Brazil, helping to reduce poverty and achieve a higher quality of life in rural and urban areas.
Brazilian Environment Minister Marina Silva worked as a rubbertapper in her youth. (Photo courtesy Minesterio do Meio Ambiente)
Brazil’s Environment Minister Marina Silva said the loan supports an entirely new approach to protecting Brazil's environment. "One of the most important features of the government’s environmental strategy, recognized and supported by this loan, is its strong focus on involving all relevant players around key issues in the sector, something unprecedented in Brazil," she said.
The loans, extending over a four year period, complement existing programmatic approaches involving both investment and capacity building in key priority areas such as public sector environmental management at the national and sub-national levels.
Two technical assistance projects will help develop government capacity for the second and third phases of the program.
The loan will be used to build on the country’s comparative advantage in natural resources while helping conserve them, a policy the Board said is in line with the Bank's Country Assistance Strategy for Brazil.
Brazil has one third of the world’s tropical rain forests, the largest reservoir of fresh water - 20 percent, one of the longest coastal lines with over 8,500 kilometers, and the savanna with the highest biodiversity in the world.
A significant part of Brazil’s economy relies on the use of natural resources for production inputs or to store waste. Despite the importance of its natural resource base, Brazil faces major challenges to reverse a trend of unsustainable use of its natural resources.
"The costs to society from environmental destruction are high, rough estimates placing them at as much as four percent of the country’s GDP," said Vinod Thomas, World Bank Director for Brazil.
Cattle production in the Brazilian Amazon has touched off controversy, and some fear that the Amazon rainforest could disappear unless attitudes and policies change. (Photo courtesy FAO)
"The gains to society from environmental protection accrue especially to the poor, because their incomes are primarily derived from environmental assets," Thomas said.
The loan recognizes the current administration’s efforts and achievements to better integrate environmental objectives with social and economic ones, including policy and institutional changes leading to more effective environmental management and the improvement of environmental conditions in the medium and long term, the Bank said.
The loan supports fundamental first steps by the government to modernize the environmental management system in light of the broader growth agenda, improvements in the business environment, and better quality of life for Brazilians.
The four main goals for application of the funding are based on the Brazilian government’s Environmental Reform Agenda and Multi-Year Plan.
- increasing the transparency and social control of the environmental management system
- better coordination and clearer definition of responsibilities among the three levels of government
- promoting sustainable development in the Amazon and the protection of other key ecosystems
- improving water resources management through increased decentralization, improved local management and increased financial autonomy.
A second focus of the loan is the "mainstreaming" of environmental concerns with other sectors, the Bank said. Poor integration of environmental policies in sector and macroeconomic policies often causes environmental aspects to be considered too late in project planning and sector policy design, leading to high social and economic costs for the country.
Brazil's imperiled golden lion tamarin (Photo courtesy Minesterio do Meio Ambiente)
Highlighting the upstream inclusion of environmental sustainability concerns in sector policies and programs, six important sector ministries - Finance, Mines and Energy, Agrarian Development, National Integration, Cities and Tourism - in addition to the Environment, signed the loan’s Letter of Development Policy.
The initial priorities for mainstreaming include support for environmentally sustainable development in the Amazon, urban planning, regional land use and development planning, fiscal and financial policies, licensing for energy and infrastructure, agrarian reform and eco-tourism.
"There are many win-win opportunities for policies that are good for the poor, the environment, and growth,"said Luiz Gabriel Azevedo, World Bank Sector Leader for Environmentally and Socially Sustainable Development and Task Manager of the Program. "They will depend on the capacity of ministries and other economic sectors to incorporate environmental considerations in their sector and macro policies."
The World Bank’s current investment portfolio in Brazil includes 50 projects, totaling more than US$4.5 billion in commitments.
Since 1949, the Bank has made more than 300 loans and invested more than US$33 billion to promote poverty reduction, social and economic development in Brazil.
