Improving institutional accountability: Environmental and social policy compliance in Asian Development Bank-funded projects in Cambodia, Laos, and Vietnam

Accountability of international financial institutions (IFIs) affects the lives of millions of people and has enormous environmental and social impacts. This study takes the case of the Asian Development Bank (ADB), the leading IFI in Asia and the Pacific, and examines if it is accountable by (i) analyzing its environmental and social policies, (ii) assessing its degree of policy compliance, and (iii) evaluating the effects of the environmental and social polices on protecting the environment and people's livelihoods. The goals of this research are (i) to explore the linkages among the ADB's environmental and social policies, the degree of project-level policy compliance, and their environmental and social impacts on the local communities, and (ii) to identify key factors that could improve policy compliance and accountability at the ADB. This study employs an interdisciplinary analytical approach, combining (i) institutional behavior (organizational theory), (ii) the literature on accountability related to the World Bank, and (iii) political ecology. Methods include content analysis of the policy literature; institutional ethnographic research; qualitative analysis; and three country case studies in Cambodia, Laos, and Vietnam in the Mekong river region, which sustains over 30 million people and harbors unique biodiversity. This study differs from previous research on safeguard policy compliance, which focused on projects subjected to external pressures from non-governmental organizations. Analysis of safeguard policy compliance in projects that were not the focus on advocacy campaigns provides a clear test case of the degree to which the ADB invests economic, technical and political resources in encouraging project-level compliance with its standards. This study analyzes and compares the degree of compliance in ADB-financed three power transmission projects. The country case studies include field visits, literature reviews, and semi-structured interviews with government officials, officials of executing and implementing agencies, project affected people, and ADB staff.;The study demonstrates the slow and challenging process of the institutionalization of environmental and social considerations at the ADB, and the reform process of the compliance mechanism. In addition, the case studies in Cambodia, Laos, and Vietnam show the low degree and uneven effects of policy compliance. Furthermore, the case in Vietnam demonstrates that the ADB's involvement in the power transmission project enabled the government to build the controversial Son La hydropower project which has caused enormous environmental and social impacts, and also ADB's commitment to ensure the safeguards of the associated facility proved ineffective. The case reveals that the Son La hydropower project opened up an opportunity for large-scale rubber plantations under the name of forest restoration and livelihood project. This development of rubber plantation could place increased pressure on both water availability and people's livelihoods in northwestern Vietnam. Regarding the institutional change, with pressures by the donor countries, and the bitter lessons from the Samut Prakarn Wastewater Management Project in Thailand, the ADB has shifted from a project-lending bank for agricultural development to a regional development institution for poverty reduction. Although the ADB's policy changes were prompted mostly by the donor countries until the early 2000s, the study also highlights the role of non-governmental organizations and the emerging economic power in the region which has started to influence the policy process at the ADB. Yet the study shows the power of the nongovernmental organizations superseded the voices of the emerging economic power and developing member countries, and significantly influenced the substance and process of the ADB's safeguard policy reform.