This paper addresses the need arising from both within and outside the World Bank for a document that discusses the nature and magnitude of environmental problems in Asia, explores technical and policy approaches to solving these problems, and documents World Bank experience in assisting Asian countries to deal with environmental problems. The paper does not set out specific strategies for any particular country, as that would be beyond its scope. It does, however, make a clear statement on World Bank principles and priorities for the near future. Economic growth and population densities have had severe negative impacts on the Asian environment. Pressure on the region's resources is intense and growing. There are serious problems in the areas of urban environmental degradation; industrial pollution; atmospheric emissions; soil erosion and land degradation; water resource degradation; deforestation; and loss of natural habitat. The real costs of environmental degradation are mounting in the form of increasing health costs and mortality, reduced output in resource-based sectors, and the irreversible loss of biodiversity and overall environmental quality. The answer to these problems does not lie in trying to stop the trends toward greater urbanization and industrialization in Asia. Rather, these fundamental economic trends can be made far more sustainable through target environmental policies and investments. In fact, Asia's achievements -its relatively high levels of growth, economic efficiency, human resource development, and declining levels of poverty - give many Asian countries greater latitude to address their environmental management. The first of its five components is the need to set priorities - and obvious but difficult step imposed by shortages of financial and administrative resources. The paper then addresses the four key components of national environmental strategies: designing cost-effective policy instruments; improving institutional capacity; increasing public and private sector investments; and improving technology, even in areas not fully supported by the market. This framework is then applied to specific sectoral issues in the urban industry, energy, agriculture, forestry, biodiversity, and water sector. The report emphasizes that there are real institutional and resource constraints in all sectors and that any strategy to achieve greater sustainability must be continually updated as these constraints change. The last section of the report outlines the World Bank's role in assisting Asian countries to address environmental issues. The environmental focus of the Bank´s lending program and analytical work has grown over the last several years, and is expected to grow further. The strategies employed vary by country, as do the relative areas of emphasis (such as natural resource management vs. pollution abatement), partnerships with other donors, NGOs and the private sector, and the role of technical assistance. Still, there remain areas in which there is potential for the Bank to do more, as outlined at the end of the report.

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