Improving infrastructure in developing countries is key to reducing poverty, increasing growth, and achieving the MDGs. Leaders of developing countries often say they need not only more and better infrastructure facilities and services but infrastructure that is environmentally sound, socially accepted, and financially sustainable.

By building on the increased investment opportunities available under the Infrastructure Action Plan and by integrating the lessons learned in its long involvement in infrastructure worldwide, the World Bank has remained a leader in working with developing countries in this area. It assists them in providing the basic sustainable infrastructure capacity and services needed for permanent poverty reduction.

The Bank increased commitments involving infrastructure to $9.9 billion in fiscal 2007, a 24 percent increase over the previous year. Transport remained the largest component, with $4.9 billion in lending (50 percent of the total), followed by new water and sanitation commitments of $3.1 billion (31 percent of the total).

The Bank supports activities in a wide range of infrastructure services, including energy, transport, water supply and sanitation, urban services, land use management, and information and communication technologies.

By building on the increased investment opportunities available under the Infrastructure Action Plan and by integrating the lessons learned in its long involvement in infrastructure worldwide, the World Bank has remained a leader in working with developing countries in this area. It assists them in providing the basic sustainable infrastructure capacity and services needed for permanent poverty reduction.

The Bank increased commitments involving infrastructure to $9.9 billion in fiscal 2007, a 24 percent increase over the previous year. Transport remained the largest component, with $4.9 billion in lending (50 percent of the total), followed by new water and sanitation commitments of $3.1 billion (31 percent of the total).

The Bank supports activities in a wide range of infrastructure services, including energy, transport, water supply and sanitation, urban services, land use management, and information and communication technologies.

The continued growth in lending was accompanied by an organizational realignment that saw infrastructure units within the Bank integrated with units working on the environment,

agriculture and rural development, and social development. The result was the creation of a robust Sustainable Development Vice Presidency charged with ensuring that Bank infrastructure programs yield the kinds of environmentally and socially sustainable programs that countries need and request.

A report produced by the former infrastructure unit—Infrastructure at the Crossroads: Lessons from 20 Years of World Bank Experience—foreshadowed the integration by exploring the importance of integrating environmental and social dimensions into project identification, preparation, appraisal, and supervision, and of allocating sufficient resources to mitigate any adverse impacts of development.

IEG has been actively reviewing the Bank’s work in infrastructure in fiscal 2007. A recent IEG evaluation of Bank assistance to the transport sector concluded that past performance has generally been effective but that the focus on rural and intercity roads is insufficient because of the rapidly growing impact of urbanization and globalization. More emphasis needs to be given to the reduction of urban traffic congestion, vehicle emissions, and accidents. IEG also looked at management of agricultural water. Effective management is vital for feeding growing populations and for managing competition from urban regions for limited water resources. IEG called for greater attention to the role of agricultural policy and trade in alleviating regional water shortages, and it encouraged the Bank to demonstrate the impact of sound agricultural water management on poverty reduction, employment, and health. (See www.worldbank.org/infrastructure.)

Increasing access to safe, modern, and economical energy in developing countries, and working to ensure that this energy is as clean as possible, is a major and growing field of activity for the Bank. As a leading international organization with the financial, technical, and human capacity to work throughout the developing world, the Bank is in a unique position to help countries accelerate their use of clean energy for sustainable development. The Bank has consistently surpassed the target it set for itself in 2004 to increase its annual investments in energy efficiency and new renewable energy by an average of 20 percent between fiscal years 2005 and 2009. In the first two years of that commitment, investments in new renewable energy and energy efficiency totaled $1.13 billion, more than double the target of $552 million over the two years.

Additionally, the Bank is developing a Clean Energy Investment Framework, which addresses three interrelated issues: accelerating investments that help increase supplies of clean energy for development and improve access to affordable energy for the poor, particularly in Africa; promoting the transition to a low-carbon economy; and assisting developing countries as they adapt to the inevitable impact of climate variability and change.

Total energy support from all sources—including the Bank Group, the Carbon Finance Unit, and the Global Environment Facility—is expected to exceed $10 billion in the three-year period beginning in fiscal 2006, up from $7 billion over the previous three years. Furthermore, an action plan in support of the Clean Energy Investment Framework will encourage the expansion of African initiatives that aim to increase the number of households with access to modern energy from 25 percent today to 35 percent by 2015 and to 47 percent by 2030. The plan also aims to support the transition to a low-carbon economy—especially in Brazil, China, India, Mexico, and South Africa—by increasing analytical, knowledge, and investment support. The plan also seeks to assist countries as they adapt to climate variability and change by providing for analytical work and for development of risk-management instruments and other tools and methodologies. The goal is not just to increase investments but to "climate proof" them as well.

IEG assessed a subset of the Bank’s clean energy portfolio—that is, new and renewable energy—in fiscal 2007 and found its work responsive to the needs of developing countries and in agreement with the Bank’s overall energy strategy. In its review, IEG recommended that the Bank continue to support investment climates conducive to commercialization

of new and renewable energy and to make allowances for the long periods often required for adoption of renewable energy sources. IEG further recommended that the Bank strengthen the monitoring and evaluation of its renewable energy projects. The review encouraged the Bank to support new and renewable energy in country and energy sector strategies.