When the learning curve is long

Doubts about the loan were not confined to angry tree-huggers. In a paper that was initially confidential but leaked on the internet,the bank8217;s own Independent Evaluation Group IEG 8211; which is supposed to watch the secondary effects of the agency8217;s work 8211; had argued that the credit posed 8220;a grave risk to the environment8221;.

The IFC overruled this advice,saying in January 2008 that its loan to Bertin would help the firm 8220;in establishing sustainable operations throughout its supply chain,especially with its cattle suppliers in the Amazon region.8221; But on June 12th there was a change of heart. The bank said it was pulling out of the Bertin project: it was no longer satisfied that its concerns over sustainability were being met.

There were yelps of glee from greens 8211; along with harder questions about how possible it really is for the world8217;s leading development agency to promote growth,satisfy its member governments and protect the planet all at the same time.

Defenders of the bank say that its concerns over climate change are more than verbiage: of the 7.5 billion it lent for energy projects in 2008,a respectable 2.7 billion went to efforts aimed at saving energy or boosting renewable power. This was twice as much as it had lent for such projects in 2007. Admittedly,the bank does also fund coal-fired projects,but it insists that wherever possible,it will opt for greener forms of power.

Earlier this year,a public report by the IEG said the bank could congratulate itself on promoting energy efficiency. But as it recognised,this success did not mean everyone8217;s heart had turned green: rising fuel prices had made energy saving an easy sell in many countries. And this benign atmosphere may not last. There are poor countries that see environmentalism as a luxury that hurts their immediate growth prospects. On June 22nd Ethiopia blamed power cuts on the World Bank8217;s refusal to fund a 60MW diesel generator.

David Wheeler,a former World Bank economist who is now at the Centre for Global Development,a think-tank,says such tensions are bound to persist. The bank8217;s regional units are under pressure to meet lending targets and get money out to governments. In that culture,the bank8217;s bureaucrats won8217;t work too hard on goals that hold little appeal for client countries.

Still,when countries want to act over climate change,the bank can do a lot to assist. Mexico,for example,has sought help with cutting energy use in city transport and producing cleaner power. The bank is lending it 500m in low-interest credits out of a 5.2 billion Clean Technology Fund to finance new bus networks,replacing the gas-guzzlers that clog Mexico8217;s roads.

Vinod Thomas,the IEG8217;s director-general,sums up the dilemma: 8220;Climate change threatens to derail development,while business-as-usual development threatens to destabilise the climate.8221;

Managing this tension will involve a lot more reflection about the trade-off between growth,the mitigation of climate change and adaptation to its effects. At the bank,some thinking does seem to be going on: that is the topic of its next World Development Report 8211; an annual assessment of the fight against poverty.

Whatever the report says,it will be hard to convince poor countries that action over climate change is a necessity,not a luxury,and that it will not impede growth. The Bertin shambles may go down as a warning for everybody involved in a giant exercise in on-the-job learning.

The Economist Newspaper Limited 2009