WORKING PAPER ON MANAGEMENT IN ENVIRONMENTAL PLANNING The World Bank’s Water Sector Policy Reforms

Integrated Water Resources Management (IWRM) has been developed as a concept integrating the management of all water resources with the major water using sectors (water supply and sanitation, irrigation agriculture, environmental protection, flood protection, shipping and hydro-power) nearly two decades ago. The World Bank is clearly the most prominent donor agency endorsing the concept analytically and providing substantial financial support for its implementa-tion. It undertook two major efforts in the 1990s and between 2001 and 2004 in translating the concept into a set of policies guiding its own operations. The paper assesses these policy devel-opments in the framework of the principal-agent theory, focusing on the interest of the World Bank of maintaining its autonomy as an agent and the role of NGOs as third party to the principal-agent relationship. The first effort consisted of the Water Resources Management Policy Paper of 1993 which was based on an internal review with limited involvement of NGOs, but constituted a reaction to the external critiques of the World Bank’s lending in general and in the water sector which had re-sulted earlier in the creation of the Environment Department in 1987. The second effort meant to come to a deal with its external critiques over dam and other water infrastructure building, th