World Bank Environmental Reform: Revisiting Lessons from Agency Theory

Abstract

's article, "Delegation to International Organizations: Agency Theory and World Bank Environmental Reform"~International Organization, Spring 2003!, makes a strong argument for ways in which principal-agent~P-A! models advance theoretical explanations of the behavior and performance of international organizations~IOs!+ Most IOs suffer from widely recognized gaps between their mandates and their performance, gaps not well explained by the major theories in our field+ P-A models are premised on the assumption that performance problems naturally arise when one actor~the principal! delegates to another actor~the agent! the authority to act in the former's interests+ The models seek to explain why and how the divergence of interests between the two parties may result in the agent's actions differing from the principal's intentions, how agents may be better controlled, and the costs of doing so+ The article is a straightforward application of the basic insights of the P-A model to the case of the World Bank's environmental behavior+ The authors want to explain what they identify as sudden and significant environmental reform at the Bank in 1994, after previous Bank reforms fell short of altering its behavior+ The authors argue that the successful reform efforts reflect the convergence of preferences among the Bank's major member state principals, and their use of a variety of screening, oversight, and contracting tools to reduce slippage between their interests and those of the Bank staff agents+ The authors test their model by examining the Bank's environmental behavior from 1980-2000 and use descriptive statistics to assess Bank environmental lending behavior during the same period+ They conclude that a comparison of lending patterns in 1994-2000 with the 1987-93 period shows "significant behavioral changes that stick follow institutional reforms+" 1 Although the article explores important theoretical territory, it contains empirical and methodological problems that seriously undermine its arguments+ In a I would like to thank

Difficult Partnerships: The World Bank, States, and NGOs

“…l . Others have analyzed the steep learning curve and the uneven pattern of change within the bank itself as it faced pressure from NGOs to alter its established practices (Nelson 1995;Wade 1997;Covey 1998;Fox and Brown 1998;Ibrahim 1998;Nielson et al 2006;Mallaby 2004;Weaver and Leiteritz 2005;Gutner 2005).…”

“…In the early 1980s, international environmental NGOs began a sustained campaign against the bank over the environmental and human impact of a series of high-profile infrastructure projects. The Polonoroeste road project in Brazil and later the Narmada Dam in India created an international uproar, as northern NGOs pointed out how they displaced indigenous and local populations and damaged the environment (Wade 1997;Gutner 2005). To facilitate damage control and to respond to their NGO critics at the international level, the World Bank formally initiated policy dialogue with NGOs through the NGO-Bank Committee, established in 1982. Throughout the 1980s and into the early 1990s, the bank's relations with international NGOs remained contentious.…”

The Bretton Woods Institutions and the Environment: Organizational Learning within the World Bank and the International Monetary Fund (IMF)

“…Thus, the environment office was under-resourced and powerless ( [72], p. 17). Until 1983, the environment office had only three environmental specialists on staff which were integrated into the project-approval process of the World Bank at a later stage, which, however, merely made environmental recommendations ( [66], p. 230).…”

Multilateral Cooperation and Congress: The Legislative Process of Securing Funding for the World Bank1

“…Agency theory has been criticized from two directions that are relevant to Congress: problems in its application to the legislature, and problems with its interpretation of the motivations of members of Congress and bureaucrats. With respect to the former, the reality on the ground in Congress and at the World Bank is that the roles of principal and agent are not so clear-cut (Gutner 2005). The president of the World Bank is an American by tradition, with his own ties to the Hill and the banking community.…”