<p>Since their creation, the multilateral development banks have accumulated performance records that include both substantial successes and stunning failures. Nowhere have their performance records been more mixed and controversial than with respect to environmental management issues. The multilateral development banks have financed projects that are widely considered to be environmental disasters, but have also financed projects that successfully included best practice environmental mitigation measures. They have wasted hundreds of millions of dollars financing unsuccessful environmental protection programs, while at the same time they have supported programs that contributed to the rapid development of environmental management capacity in less-developed countries. The purpose of this dissertation is to explore when and why monitoring and evaluation can prompt the multilateral development banks to move away from poor performing projects and towards high performing projects.</p><p>This type of performance-based allocation has been repeatedly highlighted as a key element in the successful delivery of development assistance. To test when the multilateral development banks practice performance-based allocation, I assembled a team that coded environmental performance information from 960 project evaluations, 174 program evaluations, and 74 civil society complaints. I use the resulting data to model when four multilateral development banks - the World Bank, Asian Development Bank, Inter-American Development Bank, and African Development Bank - make performance-based allocation decisions about environmentally-risky and environment-improving operations. In addition, I visited the headquarters of each of these organizations and conducted interviews with 54 staff members about the processes that are in place to use monitoring and evaluation information as part of decision-making.</p><p>I find that the establishment of monitoring and evaluation systems at the MDBs has not created incentives for staff to practice performance-based allocation. Instead, performance information influences allocation decisions when it helps MDB staff approve future projects more quickly. It does so by helping staff identify development projects that are likely to face significant delays due to the inability of the borrowing country to manage negative environmental impacts and to identify the borrowing countries that are likely to successfully implement environment-improving operations.</p> / Dissertation

More than a decade after the World Bank was forced out of the dam-building industry due to the social and environmental consequences of the projects they helped to finance, World Bank support for the development of the Nam Theun 2 (NT2) Hydroelectric Project, located atop the bio-diverse Nakai Plateau in central Laos, signals the re-emergence of the Bank’s involvement in large-scale dam construction initiatives. The NT2 project is the Bank’s response to its international critics. The project is a ‘test case’ for a new model of hydropower development that seeks to counteract any negative consequences to the surrounding environment and populations through the enactment of a new set of environmental and social safeguards that the Bank had spent over a decade developing. As the optimal consequence, if NT2 achieves the goal of safeguarding the bio-diverse environment of the Nakai region through the creation and implementation of long-term ‘socially and environmentally sustainable’ livelihood activities capable of raising the living standards and income levels of Nakai villagers beyond the national poverty line, then the NT2 model of development will be validated and its use in other World Bank supported hydroelectric initiatives all but assured. The alternative result is that the new safeguard mechanisms fail to achieve these goals, significantly contributing to the destabilization of one of the of the most environmentally and culturally unique regions in the world. This thesis analyzes the effectiveness of NT2 social and environmental safeguards in order to determine to what extent this new model of development is achieving the objectives it set prior to construction. Using a range of data, it analyzes outcomes produced from the core safeguards program of the project: the resettlement livelihoods’ programmes. Analysis of villagers’ livelihoods after resettlement clearly indicates that the NT2 model was never able to overcome challenges posed by reduced access to forest and agricultural lands for re-establishing villagers’ core land-based livelihood activities. As a result, many villagers have abandoned the livelihoods programmes at resettlement villages across the Plateau. In the short term, these villagers have, nevertheless, significantly increased their incomes through intensified commercial fishing and export-oriented rare timber and endangered wildlife extraction activities. The problem for NT2 developers such as the World Bank is that this form of economic activity is neither socially nor environmentally sustainable, placing the regional environment, local populations and the NT2 project in jeopardy. / Graduate