Applicability of the World Commission on Dams' recommendations for public financial institutions: a case for Japanese yen loan assistance

The World Commission on Dams (WCD) published 'Dams and Development' as its only and final report in November 2000. Identifying 'core values' and 'strategic priorities', the report proposed 'internationally acceptable criteria and standards'. Despite the fact that the WCD itself did not intend that the report be used as a blueprint, many non-governmental organizations strongly support the report and the criteria and guidelines recommended in the report, and demand that they be adopted in their current form by funding organizations. The WCD criteria and guidelines were found to have several 'methodological' problems, and it appears impossible to apply the recommended criteria and guidelines as they stand. This study examines the applicability of the WCD criteria and guidelines for public financing institutes involved in overseas development assistance and proposes necessary measures to increase their applicability in order to realize core values and strategic priorities. The character of and relationships among key decision points, strategic priorities, criteria, and guidelines should be clarified. Then, this study examines the applicability of the WCD recommendations for Japanese public financial institutions, as Japan has nearly become the sole bilateral donor providing financial assistance (loans) for large dam construction projects. The public financial institution can only be mandated to check the legal status of the decisions made regarding Stages I and 2 which are the first two of the five successive stages from the planning to the operation of the dam project. Needs assessment and alternative selection are expected to be conducted at Stage I and 2 respectively. The Japan Bank for International Cooperation (JBIC), which deals with the Japanese concessional yen loan, and the Japan International Cooperation Agency (JICA), which is in charge of technical assistance, are featured in this study. As for the Japanese concessional yen loan assistance, there are other inherent problems for adopting the recommendations. First, it is not clear which government agency officially and substantially carries the decision-making responsibility. Second, JBIC may be involved only when Stage 2 has been completed, and it should be decided and clarified to what extent the Japanese government, as well as JIBC and JICA, should be involved in Stages I and 2 (2A: intensive studies on alternatives) of a project for which funding is requested. These issues need to be solved if the Japanese government wishes to adopt the recommendations. Copyright (C) 2003 John Wiley Sons, Ltd.