An Economic/Institutional Perspective on Poverty, Growth, and the Environment Luca Barbone Director Poverty Reduction World Bank June 2006

2 Poverty and the Environment: Definitions Poverty: a numeric or multidimensional concept? Environment: How does it fit? Part of the concept? Who are the victims? What is the role of institutions and politics? How to deal with this complex problem?

3 Poverty as a Multidimensional Concept Income numbers do not tell the whole story But we like shortcuts, so we use consumption numbers A few friends try to go further, but as yet an uncertain methodology We need to do better, and develop better diagnostic tools The problem of syloses in the Bank

4 Environment and poverty reduction: what avenues? Environment affecting the lives of the poor directly (slum pollution, deforestation, emissions). Environment corrupting societies (oil and mineral resources) and therefore the direction of policies. Environment as a global public goods problemit concerns the poor, but everybody else.

5 Need to design politically-savvy strategies, depending on the angle taken At the country level: understand the politics (why is environment often absent from PRSPs?) Instruments: need to be commensurate to the problem Investments? Maybe. In some circumstances. But should know who is playing what game Policy conditionality? Reckon what amounts are in play: can we affect the game?

6 Experiences from Ukraine A perfect example of the complexity of policy- making in the environment arena Technical approaches fail, with little understanding of why Scratch under the surface, discover a tantalizing political economy The polluters run the country! How to go about it?