Holy Grail or Pandora’s Box? The art and science of measuring policies and institutions

1. Holy Grail or Pandora’s Box?The art and science of measuringpolicies and institutions ____________________________________ Giovanni Ruta World bank gruta@worldbank.org

2. Overview • Some background on CPIA • The early efforts to assess environmental institutions and policies • The new methodology • Unbundling • The dimensions of governance • Considerations for moving forward

3. Assessing Country Policies and Institutions • CPIA • Part of the IDA Performance Based Allocation • 16 criteria grouped in 4 clusters • Assessment of policies vs. outcomes • Main presumption Good policies and institutions will lead, on average, to higher growth rates and poverty reduction, notwithstanding possible yearly fluctuations due to external factors

4. Principles • Ratings should depend on actual policies… • NOT on intentions (which do not guarantee results) • NOT on outcomes (which are often out of the country’s control) • Ratings should depend on the level rather than changes from the previous year • Ratings should take into account the country’s level of development (no absolute yardsticks)

5. In the beginning there was (almost) nothing… • A Zen process for assessing environmental policies and institutions • Environmental issues were bundled together • No clear benchmark for scoring • Two examples

6. Question: Extent to which economic and environmental policies contribute to the incomes and health status of the poor, by fostering the protection and sustainable use of natural resources and the management of pollution Subsidies and/or ownership and tenure structures promote non-sustainable resource use or degradation. Policies and public programs for the management of natural resources and pollution control are ineffective. Environmental services such as water and sanitation are of limited scope and financially unsustainable. The regulatory framework and its implementation are inadequate to handle major environmental challenges. Gaps exist in the coverage of policies concerning pollution and natural resources. Funding levels are low and not well matched to environmental priorities. Capacity to implement and enforce policies is weak. Policies concerning pollution and natural resources are fairly broad, reasonably matched to environmental priorities and funded at minimally acceptable levels. Basic capacity to implement and enforce policies exists. For pollution a policy framework and implementing regulations are in place. Monitoring and enforcement of regulations is credible. Water and sanitation services are broadly available and financially sustainable. For natural resources there are clear property rights and transparent mechanisms for the allocation of concessions and quotas. Resource royalties are captured in the mineral, energy and forest sectors, and quotas control access to fishery resources. Protected areas are effectively managed and financially viable.

7. Question: Extent to which economic and environmental policies contribute to the incomes and health status of the poor, by fostering the protection and sustainable use of natural resources and the management of pollution Subsidies and/or ownership and tenure structures promote non-sustainable resource use or degradation. Policies and public programs for the management of natural resources and pollution control are ineffective. Environmental services such as water and sanitation are of limited scope and financially unsustainable. The regulatory framework and its implementation are inadequate to handle major environmental challenges. Gaps exist in the coverage of policies concerning pollution and natural resources. Funding levels are low and not well matched to environmental priorities. Capacity to implement and enforce policies is weak. Policies concerning pollution and natural resources are fairly broad, reasonably matched to environmental priorities and funded at minimally acceptable levels. Basic capacity to implement and enforce policies exists. For pollution a policy framework and implementing regulations are in place. Monitoring and enforcement of regulations is credible. Water and sanitation services are broadly available and financially sustainable. For natural resources there are clear property rights and transparent mechanisms for the allocation of concessions and quotas. Resource royalties are captured in the mineral, energy and forest sectors, and quotas control access to fishery resources. Protected areas are effectively managed and financially viable.

8. Question: Extent to which economic and environmental policies contribute to the incomes and health status of the poor, by fostering the protection and sustainable use of natural resources and the management of pollution Subsidies and/or ownership and tenure structures promote non-sustainable resource use or degradation. Policies and public programs for the management of natural resources and pollution control are ineffective. Environmental services such as water and sanitation are of limited scope and financially unsustainable. The regulatory framework and its implementation are inadequate to handle major environmental challenges. Gaps exist in the coverage of policies concerning pollution and natural resources. Funding levels are low and not well matched to environmental priorities. Capacity to implement and enforce policies is weak. Policies concerning pollution and natural resources are fairly broad, reasonably matched to environmental priorities and funded at minimally acceptable levels. Basic capacity to implement and enforce policies exists. For pollution a policy framework and implementing regulations are in place. Monitoring and enforcement of regulations is credible. Water and sanitation services are broadly available and financially sustainable. For natural resources there are clear property rights and transparent mechanisms for the allocation of concessions and quotas. Resource royalties are captured in the mineral, energy and forest sectors, and quotas control access to fishery resources. Protected areas are effectively managed and financially viable.

9. Country X’s rating for question 10: Policies and Institutions for Environmental Sustainability An Environmental Protection Law was passed by the Assembly in 2003 and provides the broad legal framework for environmental management and biodiversity conservation. The Law on Forests was passed in March 2003. In terms of performance indicators, some progress is being made in addressing both industrial pollution and solid waste management with the help of International donors. However, donor support for activities that target improving water quality and building the capacity of both the MOE and municipal governments to effectively support the environmental management process, has been slow to develop. The country is developing a Forest Inventory, which will document the diversity, location, and relative abundance of the country’s forest resources. Wastewater treatment remains a problem. Only 28% of population, mainly in urban areas has access to sewage system. For the rural population, drinking water from the wells is contaminated by wastewater in many cases. Environmental pollution is severe, especially related to the large lead mining site in Mitrovica which generates lead, cadmium, zinc, copper, and other toxic gases. Score: 3,5 Environmental issues raised: Forests and biodiversity Industrial pollution Solid waste management Wastewater treatment Water pollution Dimensions analyzed: Legal framework Policies Capacity building Information base Selected outcomes WHY?

10. The new scoring mechanismStep 1 – Unbundling • Sector specific scores for • Brown issues • Air pollution • Water pollution • Solid and hazardous waste • Green issues • Water management • Biodiversity management • Marine and Coastal Resources management • Commercial natural resources sustainable use (energy, minerals, commercial forests)

11. The new scoring mechanismStep 2 – Define policies and institutions Political will Legal Framework (broad principles) Government - Subsidiarity National Government Local Government • National Environmental Policies • Laws and regulation • Property rights decisions and security • Management activities • Economic incentives Local Government Policies Financing • Society participation • Access to information • Participation in decision • Ability to challenge decisions • Economy-wide Policies • Quality of EA and safeguards • Strategic Environmental Assessment • Existence of government council for environmental issues

12. The new scoring mechanism

13. The new scoring mechanism

14. Country specific results

15. Cross-country results and implications for a pro-active work

16. Our experience so far

17. Challenges • Taking into account the development level of countries • Understanding what “facts” are relevant for environmental management (i.e. is decentralization good or bad?) • Give “proper” weights to environmental issues • Information burden

18. Objective of the indicator Analytical rigor High country coverage Country comparability Policy relevance Action • Measurability and subjectivity trade-off • Unbundling is a step in the right direction • Coordination with development agencies; NGOs • Identify proxy indicators (i.e. linked to policy) • Protected areas • Adjusted Savings • Use same yardstick • Development level should be treated exogenously • Need to identify relative importance of issues • Unbundling useful • Measure what can be changed • Short vs. Long term • Action Looking aheadMeasuring countries’ commitment to economic policies that promote the sustainable management of natural resources

19. Good reasons to un-bundle • It allows to treat country equally, while taking into account their diverse environmental problems • Scoring process is faster and clearer • Justification (and review) of scores can be done more easily • Clear policy implications for countries

20. Genuine Savings – Evolution over time

21. Genuine savings, natural resources management and future consumption

22. Thank you!