International aid agencies have introduced SEA into development planning. The first institute to incorporate it into its policies was the Word Bank. Having experience applying the Sector and Regional Environmental Assessment during the 1990's, the World Bank established a new Environment Strategy, which explicitly includes SEA in its operation.The background paper prepared for the new Environment Strategy, however, describes many difficulties in actually putting SEA into practice for projects/programs. While Japan is the second largest hi-lateral donor country, the institutional division between planning and implementation makes the introduction of SEA even more difficult. The Japan Bank for International Cooperation (JBIC), which finances infrastructure development projects requiring options assessments at early stages of project preparation, cannot apply SEA due to its late involvement in the project preparation process. On the other hand, the Japan International Cooperation Agency (JICA), which is responsible for technical assistance, including development planning, established its new Environmental and Social Guidelines in April 2004 and it declared it would incorporate the "philosophy" of SEA. This paper provides an overview of how international aid agencies have adopted SEA, and analyzes the challenges Japanese aid agencies are facing in applying SEA to Official Development Assistance operations.
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