Report No. 22088 Environmental Assessment Sourcebook Updates 1 998- 1999 -Numbers 22 26 Environment Department The World Bank These Updates either replace or complement parts of the Environmental Assessment Sourcebook, published in 1991, as part of the World Bank Technical Papers Series, numbers 139, 140, and 154. Environment Department March 1998 The World' Bank Number 22 Environmental Assessment of Mining Projects Expansion within the mining and metallurgical sector is central to the development and.economic growth of many developing countries. The products of the sector (inciuding metallic and non-metallic substances, construction materials or fertilizers) are not only essential to many industrial processes and for construction activities, but also are often a valuable source of foreign exchange earnings. However,;mining operations frequenitly involve considerable environmental disturbance that can extend well beyond the area of mining developments. The impacts of mining related activities commence with exploration, extend through extraction and processing of minerals, and may continue post-closure of the operation, with the nature and extent of impacts varying throughout the stages of project implementation. This Update provides an introduction to the environmental issues associated with mining activities, the relevant contexts where the Bank might be involved with mining projects, and the extent to which environmental issues should be addressed by private or puiblic sector organizations seeking Bank Group support for mining projects. While this Update briefly mentions certain social impacts, the primary focus is on physical environmental issues. This Update complements material in Chapter 10, pages 179-194 of the Environmental Assessment Sourcebook. Introduction effective environmental legislation and enforcement n c o wby regulatory institutions, and sound environmental In comparison with many other sectors, the paotential social and evom tmanagement practices by private and public sector social and -environmental issues associated with min- . - . . . . ~~~~~mine operators. ing and mineral processing operations are both highly - significant and complex to manage. The fixed location The International Conference on Development, of the mineralized zone of interest imposes con- Environment and Mining-jointly sponsored by the straints on all aspects of mining developments, includ- Bank, the International Council on Metals and the ing the method of mining, location of mine facilities, re- Environment (ICME), United Nations Environment :quirements for new infrastructure anid services (or Programme (UNEP) and the United Nations Confer- conflict with existing infrastructure), and the suitabil- ence on Trade and Development (UNCTAD)-held in ity of waste management or disposal methods. This in Washington, D.C. in 1994 highlighted the following in turn profoundly influences the environrmental, social relation to mining: and health impacts of mining developments, as well as the economic viability of developing a given miner- * Government approaches to environmental regula- alized zone. tion are shifting from centralized decision making, detailed regulations, and command-and-control The challenges posed to EA of mining projects are toward the setting of objectives, clear standards twofold. Firstly, to ensure that environmental, social and provision of information. and health costs are afforded adequate consideration * Environmental regulations do not act as a disin- in determining the economic viability and acceptabil- centive to investment, provided that the regula- ity of alternative project scenarios. Secondly, to ensure tions are realistic, .transparent and stable. that adequate control, mitigation or protection mea- * Mining companies should take full account for sures are incorporated into project design, implemen- social and cultural issues in promoting sustainable tation and decommissioning plans. This requires both development. Insert in Update Binder chapter 10 Accordingly, the primary objectives of this Update the immediate vicinity of the mine and waste dumps, are to: ecosystems and-communities far distant may be im- pacted in the case of riverine disposal of waste and by * Provide Bank Group staff and borrowers with a the transportation and shipment of ores and coal over brief overview of the environmental issues associ- long distances. Such factors need to be taken into con- ated with mining and metallurgical processing sideration in determining the aerial extent of any en- .* Identify the types of Bank Group lending within vironmental and social studies. the sector and describe the associated EA require- ments (with reference to.Bank policies and guide- Mining EA teams must determine the range, type, lines) and duration of baseline data needed to make defen- - Provide guidance on developing the institutional sible and robust impact predictions. Where baseline • Provide guidance on developing the institutional framework, and private sector environmental information is lacking, as is often the case in develop- framework, and private sector environmental ing countries, it is important to gather such data to management capacity, to support sustainable support impact prediction and assessment. Additional development in the mining sector. guidance on baseline data' is given in Update no. 16: Challenges of Managing the EA Process. This Update is not intended as a detailed source of o M h P information on the environmental implications of the - Exploration activities wide range of mining operations and project contexts. E However, sources of such information are included on Exploration activities encompass all actions in the the last page of the Update. field which precede feasibility studies. This might in- clude initial' reconnaissance flights and geophysical Overview of environmental aspects of mining surveys, stream sediment studies and other geochemi- Mining operations may generally be categorized as ei- cal surveys, construction of access roads, clearing of ther surface or underground. Surface mining may be test drilling sites, installation of drill pads and drilling broadly defined to encompassoenpit,opencast, rigs, benching, trenching/pitting, erection of tempo- quoarry,strip, drfinedging, endopacer op ydia,ic ma rary accommodations, and power generation for ex- quarry, strip, dredging, and-placer (hydrauilic) min- ploratory, drilling. The potential environmental impli- ing. Underground mining includes -a range of meth- cations of exploration depend on a number of factors, ods such as cut-and-fill, pillar-and-stope, shrinkage notably the following: stope, block caving, and longwall mining. Most min-, ing operations'(whether surface or underground) . Construction of new access routes share a number of common stages or activities,' each * Proximity of surface waters to drill sites (particu- of which have potentially adverse impacts on the larly those used for potable water abstraction) natural environment, social and cultural conditions, Ecological significance of affected habitat, and the or the health and safety of mine workers, or-commu- extent to which access has been improved as a .. . . - , -. .......................... .result of exploration nities in the environs of the mine. These adverse im- reutoexlain btles the especally sotevmmere whensminig takvers Proximity to and intrusion upop existing settle- pacts may be especially severe when mining takes ments or resources utilized by local or indigenous place in areas occupied or utilized by indigenous . people peoples. Mining and its related activities fall into the ' Extent to which local or indigenous communities following categories: ' are voluntarily isolated, or have been exposed to diseases prevalent among exploration workers. *Exploration *. Extraction and disposal of waste rock, and so forth The potential significance of the environmental and * Ore processing and plantsite operations social disruption associated with exploration has often * Tailings containment, treatment, and disposal' not been recognized, although experience suggests that .* Infrastructure, access, and energy - this is increasingly the first point of c.onflict on many * 'Construction workcamps and operational such issues. Exploration impacts may be controlled by townsites. - - - measures such as restricting land clearance to the mini- ac- mum required, removal or disabling of access infra- The potential adverse impacts of each of these ac- structure, use of helicopter access for personnel and tivities (including impacts on air quality, hydrology ' equipment wherever practicable, developing plans for and water quality, ecology and biodiversity, social managing contact'with local communities, and reha- and cultural conditions, human health, natural re- bilitation of abandoned exploration sites. sources, and infrastructure) are illustrated in a simpli- fied matrix in box 1, and briefly discussed below. Os ' ~ ~ ~ ~ . ~~~Ore extraction and disposal of overburden and waste rock The identification of the area (and communities) potentially affected by a mining project is a key initial Overburden and waste rock include non-mineralized task. While the most obvious impacts may occur in, strata overlying or interleaving mineralized zones, 2 K 4t~~~ ~~ t4rnKent~~t '~~ ~'~~¶ -, 44 4 4 4 4 4 4 4 4 . . 0 . * 0 4~~~~~~ 47v1 9qe* _sA ½ 9 4 * 4 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 4 S 4~ 44, . 4r 40 anid lowv-grade mineralization whiich can not be eco- posed of apd the effects on dump locations and nomically processed. The key issues to conisider in de- designs ternmining thle magnitude anda signlificance of environ- Th*osbe neettoiiyo tewse mental impacts include: o ~~~The potential for acid dirainiage from or erosion of *The extent and depth of the mineralized zone, mineralized stockpiles or wvaste rock dump-s and * The quantities of material to be m-ined and dis- requisite-environmental controls * Health and safety issues relating to transportation, assessed include the disposal of rejects and waste mate- storage, use of explosives and toxic materials, rial, dust containmeiit, and disposal of waste wAaters. radioactive materials in mine workings, and dust inhalation Talings cantainnent, treatment and disposal * Geotechnical competence of materials and suitabil- Management of tailings is one of the most significant ity for remedial or civil works (such as landscap- environmental.aspects of mining operations. Failure ing, road fill or aggregate, tailings dam or bund of tailings containment, treatment or disposal opera- construction, or clay liners for tailings disposal tions is of great concern, particularly in regions of areas or settlement ponds) seismic activity. It can have serious adverse environ- * Management (containment, control, and disposal) mental consequences, and may also be the focus of at- of slurries (for overburden disposal from dredging tention bv the media and NGOs. Examples include or placer mining) . the accidental release of tailings at a copper operation * Surface damage and subsidence resulting from on the Island of Marinduque in the Philippines in underground mining March 1996, which resulted in leakage of 2.4 millioni * Release of methane from underground coal mines. tons of-tailings into the Boac river. Similarly, the fail- The potential adverse environmental implications - ure of a tailings dam in August 1995 at a gold mine in of these activities include impacts on water qualitv or Guyana, resulted in the release of tailings to the Omai hydrology, plant and animal life, loss of natural habi- and Essicuibo rivers. tats, resettlement, loss of cultural heritage or religious The important issues to consider in evaluating al- sites, effects on visual amenity, noise nuisance, and ternative tailings disposal options include: loss of agricultural land or forestrv resources (see box 1). The geochemical characteristics of the area to be Ore processing and plantsite operations impounded /inundated by tailings, and potential' Depending on the type of mine, ore processing mav - for leachate migration from tailings involve beneficiation-where mined ore is either con- * Seismicity of the area, or other natural hazards centrated for further processing or graded for sale- and risks that might affect the suitability of followed by metallurgical processing and refining. For potential disposal areas or influence the engineer- some ores beneficiation consists of: preparation bv ing design crushing and/or grinding, concentration bv gravitv or Other siting issues including conflict with sites of magnetic separation or flotation, followed bV dewa- - ' e c tering and filtration. The outputs from such processes nimportance, and protection of livestock, wildlife, are ore concentrates and waste materials, in the form of tailings (which may include process chemicals and * Chemical characteristics of sands, slines, and heavy metals) and dust emissions. pond water, and requirements for treatment The water management regime and requirement Metallurgical.processing typically involves the . to discharge effluents (if any) and the degree of isolation of metal substances from ore concentrates bv treatment required pyrometallurgical, hydrometallurgical or electro- * The reclamationi potential of the site, based on the metallurgical methods, singly or in combination. pv- above factors. rometallurgical processes such as roasting and smelting result in atmospheric emissions (for ex- The options for tailings disposal include backfilling ample, sulfur dioxide, particulates, and heavv metalsj into mined-out areas, damming valleys, construction and slag containing toxic substances. Hydromnetallur- of a retaining bund (in relatively flat areas), and dis- gical methods typically retain pollutants in the aque- posal to river, lake, or sea. The latter options are gen- ous phase, and those wlhich are not recycled are' erallv resorted t6 only where land-disposal options usuallv discharged to-tailings-ponds. Wind entrain- are seriously constrained. For example, some uranium ment of dry tailings can result in airborne pollution. operations in Northern Canada employ deep lake Some of the chemicals used in processing (such as dispos.al in the anoxic zone to overcome tailings man- cyanide, mercury, and strong acids) are inherently agement difficulties related to long term frost condi- hazardous, and their transportation, handling, use, tions. Similarly, the Lihir Gold Mine project in Papua storage, and disposal should be carefully controlled in New Guinea is using deep ocean disposal, due to . the interests of health and safety, and the environment. physical constraints imposed by the island landform. In the case of coal, its preparation may include Pollution control from tailings disposal during removal of waste and rocks by hand or mechanical operation should address prevention of seepage, the methods, as well as, coal washing to produce a prod- treatment/return of decant waters, prevention of uct of higher and more consistent quality. Impacts to be wind erosion, and effects on wildlife. The World Bank 4 -- . ; .-e-.--; commit to preparing an emergency response plan Box Z Etvitonmeotai and sd p;-icies accQrdingly. This plan should identify the actions to poedres and giines el .i-: be taken in the event of various emergency scenarios, j both to prevent and control the release of tailings and ,,A; number ot$Banke snvirona andocid POW*l e E to alert and assist communities at risk. Responsibili- andprOCeures ae t. . ties for such actions should be clearly identified. -idered frtfan f %WC Y '4 : M:CA followpcpedure" s'that a Infrastructure, access and energy .iththese: ,............. This encompasses the means of gaining access to pro- . -OD LI?! £nvtronmEntatAsstssske (to bEisS;Wd-a< ; posed mines, for operating such mines and associated F - CPA*VC 'M3 jGt i d r facilities, for accommodating labor, for obtaining whereby t i LV k t power (both during construction and operation) and for 5 Wee tI, i paig, a:d exporting finished products. It also includes material proj-E-cts. ; - ; ......................>] . i, . handling systems within the mining area (including .O' QP/B P.W 4.02 Environmentw4 Actin P 0 ;,M-i-, in-pit crushers, conveyors, railroads, elevated tram- ' ' .7to encouraged supp&t borrowas top ~ . ways, pipelines for conveying tailings or mineral unpJe~rnent.ax W id awtaJnerivw*env£t4t t;t concentrates), and construction of railhead or port plans, which aliould be r3efI~cte lIZ ,ttIIC facilities. - 0P/fl4,04 Natti- rat YA'abitatst olicy to support the The environmental, social, anid health impacts of .protection, :5;trtrixtenaice, Md ,,-ahttaton ~these ancillary activities can be very significant and A . atura ablss Bhe warl e a .--a .-.; : - ural h*abidis. me X; -a~s~ace~irt Amanare influenced by factors such as: ,projets tKat.invulve -the; cnerso od%u :;ritic-l nauriias- : . ................ -; '-. - ;- *Proximity of the mine to suitable access infrastruc- ;04 Wahtr Resowsr& &4ng6zei .u -te- ecohomically &iawe, ?$1c~ture and energy sources .and ssd,eiotanycquitawwat ~ - -Number of construction and operational staff -lAs e . m- - .- - ; v -required, and level of in-migration GP 4.11 PIxropef .- . . * Proximity of mine concession to and influence on: Cutturii protected areas and natural habitats, potable water ;preservadon Avoidw ' ca-t sources and other water bodies, existing communi- oirreoi aceable cultura p f i; ties or lands used by indigenous peoples 00 4,20 .. 4 £ (to i - The relative extent to which existing communities ;c 4W .10): Policy toetwett 10 11$ 1095 P.......a and mine workers are affected by communicable i benelit . rom d: veloprnentprojels~4d tat3 diseases such as malaria, AIDS, or schistosomiasis. -iti:ated- Construction workcamps and operational townsites .00430/eS tnvottmtAr!, Res ent (toj be - The demand for labor and qualifications required at St -u. rrower responsib-it . toad industrial mining operations often exceeds local sup- d;splace4 per,Q4,in opdatlons lm~Iving invdj . ply, thereby creating a need to 'import' the requisite untary reset ri; S M 5 ' M 5bi ,ts ' ii.>- skills. The impacts of recruiting and providing the - $ - ~~~~~~necessary infrastructure for large numbers of migrant An workers can be very significant. Ca,realso of relavance, Where the availability of natural resources or other - :n M :,:-,Win& -:pen P4* .-- :-- - y- -i;.;: ' 'i |environmental factors have effectively constrained K: U- dngrorm4 ¼a1 Mininpg, Y04T.t.- 'inn It'ro' human settlement large influxes of mine workers can coa4l Washin et.,~ Guidelines elating - > ju - - -rapidly degrade environmental resources and result .Ii4ukl S$uents~ air ~iotiw ntaagemt of t-., j .in severe social conflicts. For example, mining com- :)ngs, erowsion and- redamation;9andtph - - ; - munities have been linked to degradation of forests heath rid (including protected areas), contamination and reduc- F -. -_ :__ E - tion of water supplies, local extinction of wildlife and trade in endangered species, and transmission of corn- Grounip's PolElttiorl Prevzention tnlt1 Abatcrlciit Hadll ook municable diseases and sexually transmitted diseases, details the maximum liquid effluent limits that bor- notablv AIDS. In addition, the EIA should address rowers are required to meet for mining projects. provisions for solid and sanitairy waste arising from the mine site and camps; sewiage effluent discharge The ETlA should evaluate the risks associated with standards are detailed in the Pollution Preveiition and an impoundment failure and the borrower should Abateenclt Handbook. 5 Decommissioning and closure plans small-scale mining using artisanal techniques. These typicallv involve rudimentary methods of ore extrac- At some point, the ore either becomes exhausted or t uneconomic to mine and closure becomes inevitable. and safety of workers or the environment are gener- lIlistoricallv, duie to a lack of ernphasis on environ-- ' - Historically,. due t o a lack of emphasis on environ- all' crude or noiexistent. This issue is discussed fur- mental matters, many mine sites were abandoned t without any attempt at rehabilitation. In principle however, the areas or resources affected by mining Relevant project contexts and application of the should be returned to a safe and productive condition Bank's EA policy through rehabilitation, which mav or may not involve a return to pre-mining conditions. This is not to sug- Summarized in box 3 are the five categories of mining gest that rehabilitation commences once minina project types in which the Bank Group is involved. It ceascs-reclamatibn should be an. ongoing 0also indicates the EA classification which will typi- ceasgoure lamatifeon shod operanongoin. activity cally apply and the recommended approach (for ex- ample, environmental audit of sectoral EA), consistent Rehabilitation techniques include: regrading, with the Bank's Operational Directive on Environ- recontouring, and revegetation of degraded land sur- mental Assessment (OD 4.01 soon to be reissued as faces; containment of toxic or acid generating wastes OP/BP/GP 4.01). through the use of physical (either solid or liquid) or vegetative barriers to prevent erosion or acid drain- Sector adjustment lending is usually linked to large age; and long term water management measures scale restructuring or privatization activities, such as through recontouring or phvsical barriers to help con- the Russia Coal Sector Restructuring Project or the tamn wTastes. Issues to consider in developing a recla- Peru Privatization Project. Such projects frequently mation plan include: involve mine closures or layoffs with attendant social and environmental issues. Sector reform and L longc term stability of impoundments, slopes, and privatization projects are desiglned to result in indus- surface materials tries that are financially stronger, more efficient and • Safety issues relating to open pits, shafts, subsid- less polluting. Sector investment lending typically ence, toxic, or radiological hazards involves strengthening institutional capacity in sup- 3 The physical characteristics, nutrient status, and port of mining and/or support for environmental and inherent toxicity of tailings or waste rock which social improvements at operations. For example, the manv constrain revegetation Coal Sector Environmental and Social Mitigation * TI he potential for acid drainage from abandoned Project in India, aims to improve Coal India Limited's pits and shafts, tailings, and waste rock dumps (as capacity to manage the social and environmental is- a consequence of oxidationi of sulfides contained in sues associated with its operations (see box 4). the ore or wastes) A Categorv A or B rating will normally apply to • Thle potential for miethaine generation in and emission from coal mines sector adjustment or sector investment projects, as failure to adequately address important issues could * The costs of ongoing and post deconmmissioningsu i rehabilitationC result in signl-ficant adverse environnmel-tal or social rehabilitation. consequences during implementationi; consequently, The socioeconomic aspects of decoinmissioninig are Bank assistance often includes measures to mitigate also important, particularly where the existence and these impacts. Strategic EA can offer considerable econoimic survival of large communities mav depend benefits to the planning and implementation of such on a mine. Aside from loss of incomes, the provision, projects. Where Bank projects promote sector reforms of services-such as water, sewerage, electricitv, and aimed at encouraging environmentally sound invest- health care-mav be directly linked to the mine. All ment within the mining sector, strategic EAs of exist- ing conditions in the sector can help to formulate these issues should be factored into post-closure plans egncondital inagemetranehes to boxmuat which arie adequately costed. environmental management strategies (see box 5). Another application of strategic EA is to help govern- Small-scale or artisanal mining ments demarcate concessions, wlhile excluding areas where social and environmental concerns wotuld Most of the activities and associated impacts de- present overriding constraints. Several other generic scribed above relate to industrial mining operations. advantages applicable to mining are outlined in Up- However, in some countries, such as Brazil and the date numbers 4 and 15 dealinsg with sectoral and re- Philippines, small-scale mining is also important and gionai EA respectively. may dominate the sector-for example,.in Tanzania less than 3,000 people are employed in industrial min- Bank technical assistance lending (TAL) to the min- ing operations compared with more than 500,000 in ing sector in the past decade has primarily been 6 Box 3. EA classification of Bank Group mining projects. Bank Group institution.tyi*atly - Project type . involved EA Classificaoantmd recommended EA approach Sector adjustment loans World Bank Category A or B3 depenling on the degree of environmrental (SECAJs) . (IBRD/IDA) sensitivity 'associated wi the mining sector. Sectoral EA examining potential impacts of the reforms is normally appropriate (a future Update wiltproyide guidance on BA for SECAILs), Sector investnent loans World Bank Category A or B, A prCgramrnRti EA approach is appropriae (IBRD/IDA) normally involving sectoral EA' to.address sector-wide issues, and. -environmental audits and EbAs as needed at individual tnine sites. ''Sector technical World Bank Normally C:ategory C unlei the loan is intended to facilitate major' 'assistance loans, - IBRD/IDA) new investments, in which case category Butoi perhaps A is nmre . - appropriate. A.sectoral LA isithen ideally suited to examine key environmental issues associated with such investments, Greentield investment IFG and MICA Category A. A compreherisive ETA is normally required. For. project (loan, equity or . * particularly large projects or projectslikely to affect sensitive ateas, a guarantee) . . ' regional EAis recommended. Rehabilitation, . IFC and MIGA Category A or B' depending on the environmental risks associated up gradig, or -with the existing operationt and proposed new inv,estments. An privatization of existing ^ - ' environmenta audit and/or risk £ssessment of existing operation is mining operation (loan, almnost.iwAys necessary, sometim,es followed by an ETA. equity or guatantee) linked to developing the public sector policy and in- include the Tanzania Mineral Sector Development stitutional framework to support investment (often bv, Technical Assistance Project and the Argentina Min- the private sector) in the mining sector. Examples ing Development Technical Assistance Project. Once Box 4.. Managing social and environmental issu'es of coal'production, India Approximately two-thirds of India's coal comes from . * Test these policies in 25 rnines, due to receive 'large highly Techanized opencast mnines which often ' support under a propopsd Coal Sector Rehabilita- have severe environmental and iocial impacts. ur- ' ton Project. ing implenientation of^a number of Bank supported coal investments in India, social and environmental , The project will support CIL's compliance with -issuies-particularly those related to land acqiuisition Bank's policies in relation to' etivironment and re- and involuntary tesettlement-have often resulted, mi settlement. in particular, the project will support the, crppling delays and increased project costs. Domes-- developn*nt of institutional capacity within (and ac- tic oppoaition to opencast coal mining in India is tions by) CIL to implemen enviromnental action growing ts ea direct consequerice bf past failures by plans., resettlement action 'plans, and indigenous Coal lAdia Limited (CIL) to adequately address such , peoples deVelopmnent plat (IDPs). The rehabilita- issues. tion and mitigation projects are linked through cross- conditiofnality-satisfactory progresS witlriinipleinent- The overall objective of thfe Coal Sector Environ- ing these plans at ea4i of the 2^5 mines is a conditionz -mental-and Social Mitigation Project is to improve f fr continued Dank support for rehabilitation. management of the environmental and social issues ' - associated with production of coalby IL. C CLs revisedR & R policy self-mps respnibi i * -'ties which greatly exceed minimum legal requirements. The specific objectives are to: - L have used a participatory approach in developing * Enhance the capacity of Coal India. to deal with the various plans' Implementation of both projects envir6nmental and social issues ~ should, s4fguard, rehabilitation of 9,260 people, resettle- *Implement appropriate polices fbr environmental m-et of 10,000 people, and improve the livs of 18S,0o mitigation, reettlement, and rehabilitation (R & RI people through comunifty based infrastructure devel- -of project affected pe6ple, and community . oprnent. All projectspecific environmental and socal developmient, in particular tribal communities mitigation costs are fully accounted for. 7 7~~~i ~~~ ~ ~ tives to regularize informal mining May lead to in- creased small-scale mining and associated environ- mental impacts. Experience has shown that convincing informal miners to improve mining prac- tices is fraught with difficulties. Consequently, in ~~~~~ ~~~~certa.in cases, for exa-mple the Ecuador Mining Techni- cal Assistance Project, it may be appropriate to assign Ug S g }g1 * Envlronmemining TALs a category A rating. ~1~&w'' as~il~ ~0#~I~i# ~&~4The World Bank Group's involvement in mining migh~ ~ ~4 tz~ tq~~i~i ~A[~ investment projects is typically through the IFC and S MIGA which both -provide support for specific mining ~~ ~ ~ ~~d ka* ~~development proposals. IFC cofinances both green field mining projects and expansion projects. such as the 'Ashanti Goldfields development in Ghana. MIGA typically,provides' investment guarantees against political risks for either greenfield or expansion projects. Greenfield mining operations require a cat- egory A rating, aend the potential environmental im- pacts are addressed within a comprehensive EA bilities of ministries and government agencies.which addresses all relevant policies and guidelines. i~A~ i44~t~ZI~i~1The major issues to be addressed have been described sin the overview section above: As most TAL excludefinancingofinvestmentstivBank Group involvement, investments in, or guarantees for, existing mining operations should be preceded by an ~~ ~ ~ Pl~~~~~ .'~~~ environmental audit. The audit should' determine the: E nvironmental performance of the operations purposes. However, TA projects that include initia-(with respect to all applicable logislation and Bank 8~~~~~~~~~~~~~~~~~ policies and guidelines) d ~~ nf~41~1.'~~ a$i * EnviTonmental management. capacity and capabil- ~~~~~~ ~~~~~ity within the operation * Terms of reference for any EA requirements with ~~~~ ~~~~~~ ~~ respect to the proposed expansion (where relevant, ~~~~~~~~ ~~~~~~~and subject to screeninig under OP 4.01). Where the environmental audit identifies noncom- pliance with legis lation or Bank Group policies anid ~~~4i . ~~~~~~ guidelines, an environmenamnge ntpn _ , ~~~~~~~~~~(EMP) should be prepared wvhich provides for impl~e- ~~~ ~ ~ ~ ... ~~~~~~mentation of appropriate corrective actions. These might include strengthening environmental manage- i.ment c 4aacity through employment of environmental ~~~~ '. ~~~~~~~~~ technologists. and reh-abilitation specialists. Depend- ing on the extent and severity of such noncompliance, again, support for environmentally sustainable devel- the Bank Group may dieclide not to proceed with its opment within the sector is an increasingly corinmon participation, or to require initiation or completion of objective of such projects (see box 6). This may be . remedial actions in advance of disbursement or sign- achieved through modernizing the mining codes to ing of loan guarantees. incorporate environmental and social provisions, and''Aayi&fatraie strengthening the monitoring and enforcemnent capa- bilities of ministries and government agencies. OP 4:01 requires a systematic comparison of design, S'ite, technology and operational alternatives. In prac- As most TALs exclu,de financing of investments tice; comparative evaluations of mining development and do not directly result in impacts, they have been . -alternatives are severely constrained by the fixed loca- ranked Category B or C for environmental revie'w tion of the mineralized zone, and by the absence of al- purposes. However, TA projects that include. initia- ternaeives to meet market demands for precious met- 8 als and other minerals. The economic viability of.de- Box 6. Pomotin ofenvroumnt y. veloping a mine is primarily a function of the magni- sustainable mining in the vp ate sector,: - tude, grade, and, proximity to the surface of the ore T - - . ;- -- - --- : ........................... .+ .4 -. body, and the infrastrudture required to link the mine to its markets. It is those factors which determine Despite its div&re natural -reso uve ead htoiy whether proposed mining developments proceed to Of m- n g,'Tanzia's ningsector has declin ed the detailed feasibility stage. E dtrig Wecent dees Ofpub&owtic dm agement; -n pa Ahe it paduaXithe lesab regulatry, Ax Despite these constraints, the potential environ- -and f,scaJ reg,, tes governing at,i in didt ,. not: -i mental and social impacts of mines can be profoundlv in'infrmalt ingwisa ty, tenn* anrd rtd influenced by the design and location of mine facili- ton*ental iss&.The ongoing and ^e-, ties. For example, metallurgical processing of sulfide opment Technical Assistancerec ,imstopo t . gold concentrates can use high temperatures, which envirorn,aily sustainaible tnvstmint bly - results in release of sulfur dioxide and he'avy metals, or [vate-sot throu.gh- * leaching methods-heap leaching or carbon-in-pulp 1* Estalishing a evelop0mentpo iy and stay fr'. leaching-which generates a liquid effluent contain- I the;- ~ mlnl'ngs@4or - - ' - ' ' --' - 4- - - ing sulfates and cyanide. Aside from technical and Revising the legal and regulatory ramvorkfr i . economic factors, the choice of such methods should -thit sect6r,-indudin ate estaSls*Seot an of . .< %t .ce k4, Y9ns the estabis t o- an E,., -also reflect the assimilative capacities of the receiving inana$tinient freniroewent Stre,nhening tfhecapacity o 'the Ministryiof . environment. Mines ndseora} agecieto:c #&out i.eir responsibilities (with particular emasis on . .: Analysis of alternatives for EAs of nmining projects ' romoting ILvestments *in e sr, monitorin, should extend to: i ''nspgetion,an eiforen,iSaent wcifizs,iec) ."-: * Promoting eixvfrnmentallyi -aQ; ' ' 2 * The method of mining and processing options ,;w fithin sll-sca,le andfonl 1,We -, - , E:, - * Options for conveying ore and tailings (conveyors, road, rail, or pipelines) ' Theproect h' i developd ina ptii * Sources of water and water management strategies -tdry approachinvdvinvmga sert(es Oforkshops ~To b 4 ,,__> * stdr approachin:rvolving a seris fof Wio rkso To - Tailings management alternatives agement and the regulaitry tole of the MRiD, mdr - Locations of, inter alin, the plantsite, tailings enviomnmental, health and sfety'regulations were disposal area, waste rock dump, construction collaboratively developed by Xi mninistries responi-. workcamps, permanent accommodation, power 'ible fo~ r inint4n4 envirdomnt:X, Thisirainewo .ksupply, and access routes. Was uridespirirtd by increased staffing, training a4d kudget for field inspection And nmonitonighy to -For additional guidance on this subject, see Update The small-scale .iiriing sector, c-mp.sin -n . + no. 19 on Anialysis of Alterniatives int EA. nI -^ atid 30Ci4D hrsanal-(primarily gold) mier'pro- sents specific chalIenge including poor sty prac- Socioeconomic aspects and public involvement :es in ha veilated w6kar4as (as deep 4 - in EA . OO mieterst ncntrolled.tuse of nietry;; un Y .ated a,nd b einentlydusty methods of dre cruhn While technicallv robust approaches to managing and and grii4i~ig; and Poor wdte sand stateio adif-g mitigating the environmental impacts of mining are -;to tmmunakle diseases. Intiavs suppoted by, well developed, socioeconomic issues associated with K t,he prbjet toi addres thie issu4s included: '. Detaile ass,e,s,s,men,ts',of the extentotenvirotim. mining present signiticant unresolved challenges. 'taad socia problemesinthe sector-and develop.. - Many mining companies are struggling with the man- '. meitf action pa~ (which also identifypoliy.'-', agement of social issues, wlhich are not dealt with in legal a instutional is^u to address these great detail within this Update. These may be broadly ; - :concernis ; : . : ;- - ., : . . - defined as: * Ot-sit denitnstratioh of the environme6tal 4n " .- he- th tiofi ssinpk lowcost o and . * Compensating for loss of land and/or.access to . apProah(such as :metury roto;' ' '' resources on such lands (including custormarv land -cnSh} s,ubmewrskepups, agd yit roeeton c:u;hers, subinrI le p sI aind pi p o rights), as well as potential loss of economic/ meaurs)to managing thtse msli5 cutura G* radnal Tegularizat of, illicit, infomal iricniltr, ,lvelihood and progressive.efarcem6n o enviromental - Managing impacts related to the mine operations, and; sdfety tandards,f, such as the influx of migrants and camp followers, 2 - - potential for increasing income inequality, poten- 9 tial impacts on water and other resources used by Further information on the management of social communities, etc. issues related to mining operations is contained in- Realizing development benefits of the mine, such Integrating Social Concerns into Private Sector Decision as ermployment opportunities, and mechanisms to Making: A review of Corporate Practices in the Mining distribute social benefits more widely among local and Oil and Gas Sectors. This documrent presents a communities. series of recommendations which form the basis for . For example,'large-scale mining operations require developing a social issues management framework. mgcsuoa oeionan workforcequMiere These include the adoption of a policy on social and larg'e construction and operational workforces. Where comntisu,idtfygs2ahodrad mining development takes place in sparsely popu- lated areas from which a workforce can't readily be acknowledging the legitimacy of their perspectives, recruited, the social, environmental and health im- . addressing social.equity issues, and developing mechanisms for conflict resolution'. pacts of large influxes of mine workers can be very significant. . . ' Health and safety aspects of mining Large-scale mining projects may result in involun- tary resettlement. Where the communities to be re-. The principal health concerns associated with min- settled have no land rights and are involved in . ing projects relate to: occupational injury (much of it informal mining (sometimes several thousand traffic related); increases in non-communicable dis- people), the social issues are even more complex and - eases resulting from poor occupational health and difficult to manage. Ironically, there are also opportu- safety conditions or environmental pollution; occu- nities for environmental gains by controlling impacts pational injury; increases in communicable diseases from the informal sector. The apparent "win-win" ' arid disease vectors such as mosquitoes; and the solution of employing informal rminers within the risks of structural failure of tailings dams or waste formal operation may not be straightforward - mine dumps. operators may be unwilling to employ informal min- ers for various reasons, in which case alternative in- Non-communicable diseases which include respi- come generating opportunities should be evaluated. ratory disorders or heavy metal poisoning are fre-. Another related issue is how to deal with opportunis- quently associated with mining operations. For tic in-migration in anticipation of development, example, chronic lung disease is common amongst Managing social issues is particularly difficult in migrant underground mine workers in South Africa. relation to people where their dependency Mine workers and adjacent communities may also on indigenou is-bohintimat d - .suffer chronic exposure to heavy metals. This prob- on environmental resources iS ioth irmate and com- , - . - ' . ~~~~~~~~lem is particularly associated with inforrnal and plex. The Bank's requirements relating to resettlementacla and indigenous. people are specified in Operational small-scale.operations involved in gold extractidn, Directive 4.3 an 4.2 rsetvl. Th maae, where mercury is extensively used in the final gold Directives 4.30 and 4.20 respectively. The manage- ment of such issues is integral to the India CoalSector . recovery process by amalgamation, for example in Environmental and Social Mitigation.Project (see box Ecuador. The risks of injury is also high in informal 4), and to a lesser extent at the privatized Tarkwa gold mines, where inadequate protection of pit walls and mine in Ghana. ' . - - - underground workings is commonplace-for ex- ample, the fatality rate amongst informal miners in Due to the significance of potential environmental, Tanzania is reputed. to be 5 percent per annum. In- health and social impacts of mining operations, the dustrial mining facilities frequently make personal effective involvement of stakeholders is essential to protective equipment available, such as boots, hard the EA process. The challenge for Bank Group staff is hats, ear defenders, and dust masks: However, en- to assist client countries and borrowers to understand forcement of the use of personal protective equip- Bank policies-and.encourage the adoption of a com- ment is less common. prehensive decision-making approach, following timely and adequate consultation with affected stake- Mining projects have sometimes been associated holders. There are many examples of where consulta-. with an increased incidence of malaria, partly due to tion'has been too little and too late or with the wrong increases in breeding areas for mosquitoes,-and groups of people. Well-designed consultation should partly due to the influx of non-immune mine work- ensure the identification of groups likely to be im- ers. The known or likely presence of endemic water- pacted'by, or benefit from, mining projects. For related disease vectors (such as mosquitoes and additional guidance, refer to Update no. 5 on Public water snails), should provide an indication of poten- Involvement in Ihe Environmental Assessment Process tial increases in related communicable diseases such and the Bank's Participation Sourcebook. as malaria and schistosomiasis. 10 Early screening of mining projects for risks to the complimentary nature of measures aimed at health is strongly recommended, supported by appro- mitigating adverse impacts. priate measures to adequately address these risks * In managing the ongoing environmental, social during project preparation, implementation, and be- and health impacts of private and public sector yond (see Update no. 18 on Health Aspects of EA). industrial mining operations, an environmental management system (EMS) approach to systemati- Building capacity for improved environmental cally manage these aspects is strongly recom- management mended. An EMS should encompasses the organi- zational structure, responsibilities; and procedural Capacity building for improved environmental man- controls to ensure sound environmental and safety agement involves activities ranging from develop- management. ment of appropriate envirohmental, safety and health * While the responsibilityfor managing environ- standards within the ministries of mining or environ- mental, social and health programs of industrial ment or equivalent, to ensuring that responsibilities mining operations is likely to be placed at several are allocated for undertaking specific actions to pre- levels (from senior management to mine workers), vent or control accidental releases of process chemi- the manager(s) with the prime responsibility for cals from a mining operation. The principles which these issues should be allocated sufficient author- guide development of environmental management ca- ity and budget to effectively manage the issues, for example hiring or contracting specialists to de- pacity should include the followin: - velop a reclamation plan. The employment of * The development of a regulatory framewo'rk and community liaison officers to act as the focal point environment,health and safety guidelines and for community issues and concerns is strongly environmental, ~~~~recommended. standards, should take due account of accepted international practices, the availability and cost of Boxes 4, 5 and 6 contain specific examples of insti- the associated technological controls in-country, tutional capacity development within the sector. In and the baseline environmental conditions. addition, the EA Sourcebook deals with such issues in v Effective environmental regulation is critically detail in Chapter 5. dependent on government monitoring and en- forcement capacity, the availability of injunctive, Monitoring and supervision measures to help enforce compliance, the use of A monitoring plan should be prepared for projects in- such measures where appropriate, and the ability volving development or expansion of industrial min- of the mining sector to finance the costs of compli- ing, as part of or separate to an environmental man- ance. agement plan (EMP). This should. set the framework * Regulation of the informal sector is fraught with for assessing the acceptability of impacts from ongo- practical difficulties. The first priority should be to ing operations and the need for additional mitigation. formalize small-scale artisanal operations as the The level of detail will depend on the scale and- com- basis for managing the associated environmental plexity of the mining project. issues. * It is imperative to ensure that disincentives related The monitoring plan should define monitoring to formalization (such as taxes or land titling fees) objectives which dearly identily the questions to be do not outweigh perceived benefits. This will answered by measurement activities. It should in- require educating informal miners of the benefits clude a description of monitoring to be performed of formalization, perhaps through grant assisted . and linkages to impacts and mitigation'measures access to environmentally sound low-cost tech- identified in the EA. The pararneters to be measured, nologies -(such as retorts for ore recovery of sampling locations, methods to be employed, fre- mercury) or guidance on sustainable mining quency of measurements, detection limits (where techniques. In practice, there are benefits in appropriate) and definition of thresholds that will ensuring that environmental improvement costs to trigger remedial-actions should also be specified. informal miners are minimal (at least initially), as - The basic framework within which supervision the hidden-costs of environmental degradation, occurs is project conditionality in accordance with social and health impacts of informal rnining are Bank policies and guidelines. It is vital to link mea- likely to be very high. sures in the EMP to the project legal agreement in the * The interrelated nature of the social, health and - form of environmental conditions and covenants the environmental impacts of mining should be - borrower and Bank Group agree on. To reinforce the recognized, and maximum advantage gained from legal documents it is recommended that a monitoring 1:1 summary be prepared that is linked to the project's Marcus, J. J. (Ed.) (1997). Mining Environment Hand- legal agreements. Where an environmental manage- book: Effects of Mining on the Environment and American- ment system has been instituted, this should be of Environmental Controls on Mining. Imperial College great assistance in setting the framework for supervi- Press, London. sion. Detailed guidance on monitoring and supervi- sion of projects is contained in Update no. 14: Environ- McPhail, K. and A. Davy. (1998). Integrating Social mental Performance Monito'ring and Supervision. Concerns into Private Sector Decisionmnaking: A Review of For further reading Corporate Practices in the Mining, Oil, and Gas Sectors. The World Bank. Washington, DC. Biller, D. (1994). Informal Gold Mining and Mercury Pol- lution in Brazil. Policy Research Working Paper 1304. World Bank. Washington, DC. Ripley, E. A., R. E. Redmann, and A. A. Crowder. (1996). Environmental Effects of Mining. St. Lucie Press. Birley, M. H. (1995). The Health Impact Assessment of Florida. Development Projects. HMSO, London. UNEP (1995). Environmental Impact Assessment Environment Department. (1996). Industrial Pollution Training Resource Manual. Available at following Prevention and Abatement Handbook. The World Bank. Web-site: http:/ /www.environment.gov.au/portfo- Washington, D.C. .lio/epg/eianet/manual.html. Number andjTitle Date Nubr TteDate The World 04nkd tniroent r9l oone leting Substances Ma Aissessment: Ani Overview 13 GuidelinesfMareOtas and Mar. 96 .; 2 nir mentalSc g Apr.9 . 0; ;000 030 : Al;XternativeDiss MalndeOuseOptions ma 06 3 Georphic Informaton SyStems for p.3 1 niomna efrac oioig Jn9 Environmnental Asse$ssmn adRviwaOdSprvso 4 Sectoal& Envirometal Assessment Oct.93t 15* 96 R n Envirel Asessment Jun.96 5; P I in Environmental Oct9 3e(: Assessmnt: Reuiremets, oportunites 16 hallenes of anagin tEBA Prcess Dec.96 aind issues,.1 nlsso lentvsi niomna .Dc 6 6 4rvatizat ionand Environmtental Mar.4 Assm0ent * Assessmenit Issue adApproaches.1HelhApcsfEvi5mtlJu.7 7 C-oastal Zone Managemnent and Ma.4 Asessment Envifhronment Assessment,(also in Arabic) 19 Assessing; the;, ,Evironmentl Impact of Ot.97 8Ctura Hieritage in, &Envir SeP.94 U Development j Assessmt (also in Ab0 tiij' ?siYt an EaOt.97 .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Ot 97 9 Implemnenting eogrpic Information . Jn9 es~ 10 International Agreements o t Mar.96 Assessment Alication in Enviromenta seset. Pot (sec'ond edition) This Update was 'preparedb Aia bay xesv eiwadcmmentds h i eA rvddb1feirvi.dr1ve,JhSrnmn Leo Maraboli (ItNM,adMrdt asn lnn oslat h AS reokUdtspoiegii nefrcnutn The Bank is thankfltotGoemetoNowyfrfnnigtepoutoofteUdt.Peaeadssomnsadiquie t1 Cohn Rees and Aian DavyM Wasinton, D.C., 2043,; Room No&M-- 5 22 5-75 12 XTT\ *_ __ _ AI:: Environment Department April 1998 The World Bank Number 23 Economic Analysis and Environmental Assessment Successful economic development depends on therational use of naturalresources andon reducingasfaraspossible the adverse environmental impacts of developmentprojects. Environmental assessment (EA) is a primary tool for achieving this objective, by inserting critical environmental information into the process of project identification, preparation, and implementation. Economic analysis, by comparison, is employed to determine if the overall economic benefits of a proposedproject exceed its costs, and to help design the project in a way that produces a solid economic rate of return. Adverse environmental impacts are part of the costs of a project, and positive environmental impacts are part of its benefits. Consideration of environmental impacts, therefore, should be integrated with the other aspects of the project in the economic analysis to the extent possible. This EA Sourcebook Update discusses the relationship of EA and economic analysis and gives guidance on how economic analysis might incorporate environmental costs and benefits. This Update replaces guidance provided in Chapter 4 of the EA Sourcebook. Bank requirements monetary terms, however. A major reason behind the generally weak link between EA and economic The World Bank's Operational Policy on EA (OP 4.01) analysis has been the lack of useful guidance on states that "environmental costs and benefits should converting physical impacts into monetary terms. be quantified to the extent possible, and economic Recently, however, the science of environmental values should be attached where feasible." This economics has moved to a point where it can be more should be done for both alternative project designs readily applied in the project context. This Update and alternative mitigation options. Moreover, the seeks to explain how this might be done. Operational Policy on Economic Evaluation of Investment Operations (OP 10.04) states that EA The role of EA and environmental economic findings and recommendations should be taken into analysis in the Bank's project cycle is illustrated in account in project appraisal and supporting simplified terms in table 1. Environmental economic benefit-cost analysis. analysis can play an important role at three main stages: (i) in the assessment of the impacts of a EA, economic analysis, and the project cycle proposed project and its various alternatives; (ii) in the analysis of preventive or mitigative options; and EA is an information-gathering and analytical process (iii) in project appraisal, once a specific alternative has that helps avoid environmentally unsound been selected. In the case of both economic analysis development. It focuses on environmental and environmental assessment, the important externalities: unintended adverse effects of distinction is between what would happen with the development projects on the environment. For project and without the project, not other changes that example, land clearing for an aquaculture project may be happening over time. This point is sometimes could convert wetland areas, resulting in reduced bird lost as there may be important long term trends that habitat and water quality. EA seeks to identify and occur irrespective of the project itself. evaluate these environmental effects in qualitative terms, and to quantify them when feasible (for In the first stage, the economic analysis will example, air pollution in parts-per-million, or tons of normally consist of estimating monetary costs and topsoil lost to erosion). The impacts identified in the benefits (valuation) of the various environmental EA process have not often been converted into impacts identified in the EA, using a range of Insert in Update Binder chapter 4 Table 1. EA, economic analysis, and the projeciwtt0t cy cle Preparation Environmental screening Potential evironmental costs and benef are considerd on a A; ; asa I;t0 HAfinPreparation of E TOR R nt Wo q envronmentaimpsandassign to~~~~~~orls Agmnearrvlussplldeu valuation technique. IEA team selectndi on the analyX, EA teamilu arece orahelthecniw approprialt is etened o cnsieA prepartsatind EAetamfitsyssth impacts roffe di roctalter n tives and sae prevenive ad mitgativemeasues, sthcompares g t ca,usi ng m effectr vafueculn theircstabih and comparsons cn be ade wih theoriginl pr bent eviswerit ofeavib mnalipcsefe epnso impats. t ththrdsaevitew mofnetrvalusfr the acBuankrvesthen oA preortbnludin oher tieono ric ce AppraelscedaltenaivarincorpratiofeA into thoeall o findings Mancldnyh environmental costs and benviefits, ecoomc ealaton fheproject sesinad arjetTe e incorpornted mankts, the proj economicnanalysisy adThe disussd biefy twadocumeentatonhi Upa estmaioyo the emprcnolmictateiof rturnvalbl atr Neortheiatgrtions ofAgremnts reachedmi onayito fensrcorfporqlt. besuccessfl, actionse to be taesin,d based ona cnmcvau.Eooi alaini tl undertaen with the fnedingsth ofther inmn.Al a vligsineAFrsm od n evcs(o indices of environmental damage are notequally enr mpletal c iost an ben f fit a s mt of valuation techniques. In the second stage, the analysis generally far from straightforward. Environmental is extended to consider the costs and benefits of impacts are often dislocated in time and space, preventive and mitigative measures, so that making cause and effect difficult to establish. The comparisons can be made with the original project severity of environmental impacts often depends on impacts. At the third stage, the monetary values for the accumulation of problems (over time, over space, the selected alternative are integrated into the overall or both). Many environmental goods and services do economic evaluationn of the proposed project. These not enter markets, or do so only imperfectly. The evaluation techniquese E , whichar geneic are difficulties this causes for valuation are compounded discussed briefly towards the end of this Update. by the empirical limitation that available data are often scarce or of poor quality. For the integration of EA and economic analysis to be successful, both need to be designed and Total economic value. Economic valuation is still undertaken with the needs of the other in mind. All an evolving science. For some goods and services (for indices of environmental damage are not equally example, a kilo of rice or fish, or a cubic meter of helpful for economic analysis. For example, a measure timber), the market provides prices that are good of soil loss in areas affected by erosion will be less reflections of the values society places on that good or useful than a measure of the resulting change in service. For other goods and services, market prices agricultural productivity. Similarly, consideration of either do not exist or only capture a small part of the the economic benefits at stake can help target BA total value. Examples of such goods and services resources to the areas of greatest interest. These include endangered species and scenic vistas. To ease possible inter-relationships should be incorporated in the task of analysis, therefore, it is often useful to from the beginning in the development of TORs, the disaggregate any environmental impact into selection of the EA team, and other stages of the EA individual components of value. One approach to and project preparation process (see table 1). Needless doing this is called the Total Economic Value (TEV) to say, the services of a trained economist will be approach, whereby an impact is decomposed into a required. number of categories of value (figure 1). The idea Valuing environmental impacts behind the TEV approach is that any good or service iS composed of various attributes, some of which are For a project's environmental impacts to be valued, concrete and easily measured, while others may be they must first be identified and measured. This is more difficult to quantify. The total value. however, is 2 the sum of all of these components, not just those that Indirect use value. Indirect use value, also known can be easily measured. The breakdown and as non-extractive use value or functional value, terminology for the components of TEV vary slightly derives from the services the environment provides. from analyst to analyst, but generally include (i) direct For example, wetlands often filter water, improving use value; (ii) indirect use value; and (iii) non-use water quality for downstream users, and national value. The former two are generally referred to parks provide opportunities for recreation. These together as "use value". Each is often further services have value but do not require any good to be subdivided into additional categories. harvested, although they may require someone's physical presence. Measuring indirect use value is Direct use value. Direct use value, also known as often considerably more difficult than measuring extractive, consumptive, or structural use value, direct use value. The "quantities" of the service being derives from goods which can be extracted, provided are often hard to measure. Moreover, many consumed, or directly enjoyed. In the context of a of these services often do not enter markets at all, so forest, for example, extractive use value would be that their "price" is also extremely difficult to derived from timber, from harvest of minor forest establish. The visual aesthetic benefits provided by a products such as fruit, herbs, or mushrooms, and landscape, for example, are non-rival in consumption, from hunting and fishing. In addition to these directly meaning that they can be enjoyed by many people consumed goods, direct use values can also be non- without detracting from the enjoyment of others. consumptive. For example, people who enjoy hiking or camping in the same forest receive a direct use Option value. Option value is the value obtained value, but do not actually "consume" any of the forest fomemaintin the option oftrakin v °o l eoure.Simlary.in a coral reef direct use values something's use value (whether extractive or non- resource. Similarly, ing of reef dict of extractive) at a later date. It is, therefore, a special case can include the harvesting of shells and catching of of use value, akin to an insurance policy. (Quasi- fish, or the non-consumptive use of the reef by scuba option value, which derives from the possibility that even though something appears unimportant now, information received later might lead us to re- All of these benefits are real, can be measured, and evaluateit related conept.) have values, even if the consumption by one evaluate it, IS a related concept.) individual does not reduce the consumption by Existence and bequest value. In contrast to use another (economists call this non-rival consumption, value, non-use value derives from the benefits the and these goods are classified as public goods). environment may provide which do not involve using Consumptive use is generally the easiest to value, it in any way, whether directly or indirectly. In many since it usually involves observable quantities of cases, the most important such benefit is existence products whose prices can usually also be observed. value: the value that people derive from the Non-consumptive use is often more difficult to value knowledge that something exists, even if they never since both quantities and prices may not be observed. plan to use it. Thus, people place a value on the Figure 1. Total economic value and selected valuation techniques Total economic value Use value Non-use value Direct Indirect opio Exsec Beus (extractive) (non-extractive) Option Existence Bequest use value use value value value value Change in output of Cost-based approaches Contingent valuation Contingent Contingent marketable goods Contingent valuation Hedonic princes valuation valuation Cost-based approaches Change in output of Hedonic princes marketable goods Contingent valuation Travel cost 3 existence of blue whales, or of the panda, even if they This section focuses on valuation techniques, and their have never seen one and probably never will; if blue use in project analysis.' In most cases, the techniques whales became extinct, many people would feel a have two parts: measuring the physical impact, and definite sense of loss. Bequest value is the value then assigning a value to that impact. derived from the desire to pass on values to future generations. Non-use value is the most difficult type As can be seen in figure 1, a number of valuation of value to estimate, since in most cases it is not, by techniques are potentially applicable to each category definition, reflected in people's behavior and is thus of value. Figure 2 provides a simplified guide to wholly unobservable. choosing an appropriate technique for a given situation. The flow chart begins with an environmen- Benefit-cost vs cost-effectiveness. Two approaches tal impact and asks if there is a measurable change in are possible to the economic analysis of environmen- production, or a change in environmental quality. tal impacts. The first is to use standard benefit-cost Depending on the answer, it traces out different criteria, in which the benefits of an action are possible scenarios and their possible impacts. It shows compared to its costs to determine whether the action the most commonly-used techniques used to estimate is worth undertaking. This approach is commonly monetary values for each kind of impact. As an used to compare alternative options and requires that example, consider the case of an aquaculture the environmental impacts be identified and that development project which will reduce the area of monetary values be placed on the outcomes. An mangrove forest. The EA might identify reduced example is the analysis of different air pollution water quality due to loss of the mangrove forests' control measures and the expected health benefits water-filtering services and loss of habitat as adverse associated with each alternative. impacts. Unless the mangrove forests are directly harvested, techniques such as change-in-productivity In some cases, however, a traditional benefit-cost will clearly not be very useful. Several techniques analysis may not be feasible or desirable. It may not might be used to value the reduction in water quality; be possible to make monetary estimates of benefits. some are based on the cost of obtaining clean water by For example, some natural areas may be so unique other means (for example, replacement or relocation that it might be felt they should be conserved at all cost), while some are based on the consequences of costs. In other cases, there might be substantial reduced water quality (increased sickness or death). uncertainty about the benefits provided by The specific choice of technique will depend on the environmental goods and services, either now or in situation and on data availability. Likewise, the loss of the future, or great problems in determining habitat could be valued in a number of ways, appropriate values in monetary terms. When loss of depending on the specific nature of the situation. these goods and services would be irreversible, it may Figure 2 is only intended as an indicative guide; be desirable to choose the strategy that minimizes depending on the specific conditions encountered and maximum possible losses due to environmental on the data available, other techniques may be damage, unless the social cost to do so is unacceptably preferable in a given situation. large; this is known as the safe minimum standard approach. In such cases, the appropriate approach to I. Valuing Changes in Outputs and Direct Costs the analysis is one of cost-effectiveness rather than cost- benefit; that is, the issue becomes one of finding the Change in output of marketable goods cheapest and most effective way of achieving the conservation objective or some other goal. Note that In many cases, the environmental effects of projects the cost-effectiveness approach does identify the most manifest themselves (at least in part) in changes in efficient way of reaching a goal, but does not tell you if output of marketable goods: loss of forest, for the expected benefits justify the costs. Answers to the example, results in the loss of timber products, of latter question must rely on informed judgment and fuelwood, of fodder (whether collected or eaten on common sense. site by livestock grazed in the forest), and a variety of non-timber products such as fruit, herbs, and Valuation technliques mushrooms. In cases such as these, the value of the unintended benefits and costs can be estimated by Incorporating environmental impacts identified in the using the simple technique of valuing the change in EA into the project analysis is a two-step process. output caused by the project. This approach is often First, one has to understand what are the impacts. This referred to as the change-in-productivity approach. In information is provided by a traditional EA. Second, Croatia, for example, reforestation activities under the one has to estimate the value of the impacts (where Coastal Forest Reconstruction and Protection Project feasible and appropriate) in monetary terms to were estimated to result in increased wood determine their relative economic importance, and production, which would be harvested at various assess the benefits and costs of various alternatives. intervals in the future. Using the increased wood 4 Figure 2. Choice of valuation technique l l | Envirromlrnental irnpeet o Measurable charige iChnge in enivitonteta production qIr 9uality Replcemt earnibsita L Recreation | Preene M lAesthetcs UNodistortee d Usarket so ogaie Landh value eede cs | Ccualpt prices available7 Opportantp- Historical approach apply shadow ReplaappoachCemet- !t I cost approach t ~~~~~~effectiveness of Asc prices atchancrelction Losscs CEAtof TCntgent in3 produnonRepla>met| earnings prevention -ut r Source; DiPoreavdenotivein Dixon etMae.d 1994. oupt(ntrso ohqatt an quliy) the pollu |vaution (xoue otedge fhat feta of 10e te peUse surrogate ofpn| i asd-u w d lelo costs o an i | hnein- market l |apoc productivi approachest a a proacv an apply shadow o the u priceseto change d tCon angent e r from i r n fproducin a amatoition f d h v Source; Dixon and Boj6i in Dixon et aL., 1994. output (in terms of both quantity and quality), the pollution (exposure) to the degree of health effect as expected prices at time of harvest, and a discount rate well as information on how the project will affect the of 10%, the present value of increased wood level of pollution. The costs of an increase in production was estimated at between 2.5US$/ha and morbidity due to increased pollution levels can then 82US$/ha, depending on the site. Box 1 below be estimated using information on various costs provides an additional example of the use of this associated with the increase in morbidity: any loss of technique, to value the damage to agriculture earnings resulting from illness, medical costs such as resulting from flooding and damage to irrigation for doctors, hospital visits or stays, medication, and caused by watershed degradation in Haitio Even any other related out-of-pocket expenses. This .when prices cannot be obser-ved (for example, approach is symmetric: the benefits of actions that products harvested for home consumption), there are reduce the level of pollution and hence of morbidity generally-accepted and reliable ways to estimate the are estimated in the same way. value of the products (for example, by using the value of close substitutes or the cost of collection). This approach was applied in Santiago, Chile, where a package of air pollution control investments The biggest difficulty in valuing such impacts was evaluated in terms of the health benefits from generally arise from measuring the amounts of goods reduced levels of particulates, volatile organic being produced and in predicting how these amounts will change with and without the project. The EA can Gable 2ehncles e 3 b4 a be very helpful c arrplvg at esi mates or t7ese l 7 3 changess Once these estimates are in hand, valuing the pollution control strategy in Santiago, Chile changes is usually relatively simple. fr oaS$ mCii0ons) 8 |program Net l Cost of illness anld human apital |component Benefits Costs _benefits| Many environmental impacts, such as air and water |Fixed sotrmes, 27 1 1 1 6 l pollution, have repercussions for human health. Gasoline vehicles 33 1 4 1 9 l Valuing the cost of pollution-related morbidity Buses 37 30 7 j (sickness) requires information on the underlying Trucks 8 4 7 l damage function (usually some form of a dose- ;Control strategy, 108 60 48 l response relationship) which relates the level of Source: World Bank, 1994. 5 compounds (VOC), and nitrous oxides (NOx) in the (see World Bank, 1996c, for more on these estimates). city. As shown in table 2, the analysis estimated that In general, estimating monetary values for mortality the benefits of the overall strategy exceeded costs by is a complicated, quite subjective process that has to about 70 percent, with the benefits of individual be used with great caution and transparency. components of the strategy exceeding their costs by between 20 percent and 140 percent (World Bank, Cost-basedapproaches 1994; Ostro and others, 1996). The costs of doing this type of study, both in money and time, can be When the benefits of a given environmental impact considerable. In the case of Santiago, however, since cannot be estimated directly, information on costs can data were available for many variables, it was be used to produce valuable information. For possible to produce good results in a timely manner. example, an order of magnitude estimate of the The details of the analysis are presented in the papers potential costs (or savings) to society from a change in cited earlier. an environmental problem, can be obtained by using the cost of reducing or avoiding the impact, or the cost The estimates obtained in this manner are of replacing the services provided by the environmen- interpreted as lower-bound estimates of the presumed tal resource. The major underlying assumptions of costs or benefits of actions which result in changes in these approaches are (i) that the nature and extent of the level of morbidity, since this method disregards physical damage expected is predictable (there is an the affected individuals' preference for health versus accurate damage function available), and (ii) that the illness, for which they may be willing to pay. Also, the costs to replace or restore damaged assets can be method assumes individuals treat health as estimated with a reasonable degree of accuracy. It is exogenous and does not recognize that individuals further assumed that these costs can be used as a may undertake defensive actions (such as using valid proxy for the cost of environmental damage. special air or water filtration systems to reduce That is, the replacement or restoration costs are exposure to pollution) and incur costs to reduce assumed not to exceed the economic value of the health risks. In addition, the method excludes asset. These are strong assumptions and may not be non-market losses associated with sickness, such as valid in all cases. It simply may cost more to replace the pain and suffering to the individual and to others or restore an asset than it was worth in the first place. concerned, and restrictions on non-work activities. For example, cultivated hillsides may be eroding and Also, the approach ignores other, non-health benefits there may be methods available (terracing, changes in from reducing pollution levels such as amenity values cropping patterns) to reduce or prevent the erosion. (better views), productivity losses, and ecosystem Each of these preventive measures has a cost, impacts. however, and it is the responsibility of the analyst to determine if the total costs of prevention are greater When this approach is extended to estimate the or less than the benefits of preventing erosion. In costs associated with pollution-related mortality some case, the costs of erosion control may be so high (death), it is referred to as the human-capital approach. (and/or the benefits from controlling erosion may be It is similar to the change-in-productivity approach in so low) that erosion control measures would be an that it is based on a damage function relating inappropriate use of scarce resources. pollution to productivity, except that in this case the loss in productivity of human beings is measured. The In some cases, there may also be more cost-effective human-capital approach is an extension of the more ways to compensate for environmental damage than standard human capital theory which relates the to replace the original asset or restore it to its original demand for education to its potential payoff in terms condition, and these substitution possibilities are of expected life-time earnings. Because it reduces the ignored with the use of this technique. If substitutes value of life to the present value of an individual's are available, the method will likely overestimate the future income stream, the human-capital approach is value of the damaged or destroyed asset. Because of extremely controversial when applied to mortality. this, these methods are generally thought to provide We recommend, therefore, that this approach not be an upper-bound estimate of the benefits of measures used. In many cases, the costs and benefits of taken to prevent the damage from occurring. activities that affect mortality can be expressed in terms of changes in the number of deaths (without Replacement cost. The replacement cost approach monetary values) and a cost-effectiveness approach is often used as an estimate of the cost of pollution. used. Alternatively, the US/OECD type estimates of This approach focuses on potential damage costs as the value of a statistical life based on willingness to measured by ex ante engineering or accounting pay estimates (which includes much more that just estimates of the costs of replacement or restoration if lost productivity and is often 5 to 10 or more times damage from pollution were to occur. For example, larger than the straight human-capital estimates) the costs of air pollution-related acid deposition in might be used, adjusted using relative per capita GNP urban areas could be approximated by the restoration 6 and replacement costs from damaged infrastructure. cost of pollution of potable water can be made. For Similarly, the cost of restoring a river or a wetland instance, assuming an estimated investment cost for could be used as an estimate of the costs of alternative water supply on the orcler of US$0.5-1.0 environmental damage to these natural assets. Note per cubic meter, and current level of total potable that this approach provides only a partial measure of water use at about 100 million cubic meters per year, damages caused by pollution. the cost of pollution of potable water would be approximately US$50-100 million per year at current For example, the replacement cost technique can be levels of water use. Box 1 provides an example of the used to estimate the costs of pollution of potable use of replacement cost to value the benefits obtained water supplies. Pollution of water resources by from reduced flooding thanks to watershed protection agrochemicals is common in many countries, in Haiti. resulting in drinking water below acceptable health standards. Quantifying the aggregate health impacts, The replacement cost technique is particularly or estimating a damage function for this type of water useful to assess the costs associated with damage to pollution, is often difficult because of the complex tangible assets, the repair and replacement costs of relationship between ambient quality, exposure, and which are easily measurable. This information can illness. However, order of magnitude estimates of the then be used to decide if it is more efficient to allow cost of providing alternative safe water supplies often the damage to occur and pay the replacement costs or are possible. The incremental investment cost of to invest in preventing the pollution in the first place. alternative water supply usually can be derived from The technique is less useful, however, for very unique proposed water supply investment projects assets, such as historical or cultural sites and unique containing data on total investment cost and the natural areas, which cannot be replaced and cannot quantity of incremental water supply. Using the easily be restored, and about which restoration costs replacement cost technique, an estimate of the annual are uncertain. Box 1. Costs and Benefits of the Pic Macaya National Park in Haiti The economic analysis of the Natural Reserve Man- US$2-7 million (the wide range reflecting the agement component of the Forest and Parks Protec- weakness of the underlying data). tion Technical Assistance Project in the Republic of Haiti provides an example of the use of several valua- * Replacement cost. The costs of damage to irriga- tion techniques in a data-scarce environment (World tion and other infrastructure were estimated using Bank 1996d). The main objective of the project is to their replacement costs (2,500 to 5,000 US$/km for protect critical remnants of Haiti's forest ecosystems, irrigation canals and 3,500 to 7,000 US$/km for including the Pic Macaya National Park- By protect- roads). This resulted in an estimated benefit from ing this area, Important benefits are expected in terms avoided damage, relative to the no-project case, of of (I) protecting some of the last remnants of the about US$2.5-5 million. Hispaniolan moist forest ecosystem, which is consid- Opportunity Cost. Protecting the Pic Macaya area ered regionaly outstanding and as having the high- also means forgoing its use as agricultural land est priority for conservation at the regional scale: and the benefits of harvesting standing tmuber. By (ii) preserving the potential for ecotourism develop- using crop production budgets developed for the ment; (iii) protecting downstream areas, which in- surrounding area, the potential value of the Pic clude one of the country's main irrigated areas, from Macaya area for agriculture can be estimated. damage from flooding and sedimentation; and (iv) Assuming that half of the area still under forest at helping to regulate downstream water flows. Pic Macaya (about 3,500ha) is suitable for agricul- * Change in productivity. Protecting the Pic Macaya tural use (the rest being too steep or inaccessible), watershed will help reduce damage to irrigation the present value of forgone agricultural produc- systems downstream, both from siltation and from tion is about US$175 thousand. This relatively low reduced dry-streason flow,twhich Isrfom tion and festimate is due to the unsustainability of agriculture reduced dry-season flow, which is forcing a under conditions such as those at Pic Macaya. The reversion to rainfed cultivation and a switch to foregone wood harvesting benefits could not be lower-value crops. Returns from rainfed produc- estimated for lack of data on standing timber, but tion are about 200-800US$/ha/year lower than for were expected to be relatively low due to the high irrigated production, depending on the crops transport costs of extracting timber from the area. being planted. Combined with estimates of the effects of damage to irrigation Infrastructure on Table 2 summarizes the results of the economic the area irrigated, the present value of the benefits analysis of Forest and Parks Protection Technical As- of avoided reduction In productivity, relative to sistance Project, which covered Pic Macaya and two the no-project case, were estimated to be about other National Parks. 7 Relocation cost. Similar to the replacement cost II. Valuing Environmlental Amenities: Recreation. approach, the relocation cost approach uses estimated Nature, and Biodiversity costs of a forced relocation of a natural or physical asset due to environmental damage. For example, the Often, the environmental good or service being construction of brackish water ponds in a coastal area valued is not traded per se in the market place. of Thailand resulted in the discharge of salt water Examples of these amenity-type services include into nearby freshwater streams traditionally used for recreational sites and the preservation of biodiversity. irrigation and domestic water supply. Part of the A number of valuation techniques exist that can be environmental costs associated with this discharge is used to place monetary values on these resources and the need to relocate the intakes for both irrigation this information, in turn, can be incorporated into a facilities and domestic water supply. The costs of more conventional benefit-cost analysis. relocating these intakes can then be compared to the Hedonic analysis alternative costs of redesigning and constructing drainage canals from the brackish water ponds We know that environmental quality affects the price directly to the ocean, to obviate the need for discharge people are willing to pay for certain goods or services. into the nearby freshwater streams. Ocean front hotels, for example, charge different rates depending on the view (rooms with ocean views cost Another recent example of the relocation cost more than the same size room with a "garden" view approach can be found in China, where the -usually a nice way of saying the parking lot!). government decided to relocate Shanghai's water Hedonic models have been widely used to examine intake. Shanghai, a city of 14 million, was facing the contribution of different attributes to prices for increasing difficulties in ensuring a safe potable water housing and to wage levels, including the supply. The lower Huangpu River was heavily contribution of environmental quality.' Many polluted by wastes from industries and ships, and by observed prices for goods are prices for bundles of municipal sewage. The cost of moving the municipal attributes. For example, property values depend on water intake up river to take advantage of cleaner physical attributes of the dwelling (such as number water supplies, reduced pre-use treatment costs, and and size of rooms, amenities such as plumbing, lower risk of major pollution incidents was estimated. condition); on the convenience of access to This was then compared to subjective estimates of the employment, shopping, and education; and on a cost to clean up the industries and plants discharging number of less tangible factors such as environmental wastes into the river - that is, to clean up the existing quality. Since each house will differ slightly from pollution. The analysis did not consider the benefits of others, the influence of the various factors on its price a clean, safe water supply, however. The costs of can be broken down statistically, provided sufficient relocation were judged less than the costs of cleanup, observations are available. so the relocation option was chosen. This approach is of interest because many Opportunity cost. In some cases it is decided to environmental dimensions are likely to be embodied protect a particular resource and forego other in property values. A home in a neighborhood with development options. The term opportunity cost refers low air pollution, for example, should sell for more to the value of these lost economic opportunities due than a similar home in a neighborhood with high to environmental protection. It is, therefore, a measure ambient air pollution. Hedonic techniques allow this of the cost of environmental protection in terms of effect to be measured, holding other factors such as size and amenities constant. In essence, the technique development benefits foregone. Box 1 provides an example of the use of this approach in Haiti. Since estimates the implicit prices for various attributes, this approach gives no information on the expected which together make up the sale price. benefits from protection, society must still decide if When applied to housing data, this approach is the opportunity cost of conservation is acceptable or often referred to as the property value approach; when not. This is a very powerful technique, however, since applied to wage data, it is generally referred to as the it clearly identifies the expected economic cost of wage differential approach. In Croatia, for example, a protection to society. In many cases, this amount is hedonic analysis was used during preparation of the actually very small; in other cases, this information Coastal Forest Reconstruction and Protection Project can be used to mobilize other sources of funds to to help estimate the landscape benefits of compensate individuals or society for the opportunity reforestation. Analysis of hotel room prices showed cost of protection. The Global Environment Facility that rooms with views of forested landscapes cost, on (GEF) and other donors may be willing to provide average, about 3-6US$/day more than rooms in grant funds to cover these types of costs, especially hotels in areas without such views. The challenge of when the benefits produced are important at the both of these techniques is to correctly specify the global level, relevant variables and the functional forms. 8 Hedonic methods require observations of the prices follow-up questions with higher or lower amounts are of goods and of the attributes of these goods. To often used). enable the effect of the many different factors to be distinguished, large data sets are usually needed. CV can, in principle, be used to value any Because of their data intensity and the need for open environmental benefit. Moreover, since it is not reporting of prices, the application of these techniques limited to deducing preferences from available data, it has had limited (but often successful) application in can be targeted quite accurately to ask about the developing countries. specific changes in benefits that the proposed project would result in. This also means that, with Travel cost appropriately-worded questions, CV can provide an all-encompassing estimate of the perceived costs and The travel cost (TC) method is an example of a benefits of environmental changes, in contrast to other technique that attempts to deduce value from techniques which, as noted above, often only provide observed behavior.3 It uses information on visitors' a partial estimate of environmental costs and benefits. total expenditure to visit a site to derive their demand Because of the need to describe in detail the good curve for the site's services. The technique assumes being valued, interviews in CV surveys are often quite that changes in total travel costs are equivalent to time-consuming. It is also very important that the changes in admission fees. From this demand curve, questionnaire be extensively pretested to avoid the total benefit visitors obtain can be calculated.4 various sources of bias. CV methods have been the subject of severe criticism by some analysts (see, for The TC method was designed for and has been example, Hausman, 1993). A "blue-ribbon" panel was used extensively to value the benefits of recreation. organized by the US Department of Interior following The TC method depends on numerous assumptions, controversy over the use of CV to value damages many of which are problematic in the context of from the 1989 Exxon Valdez oil spill. The report of this international tourism. The basic technique generally panel (NOAA, 1993) concluded that CV can provide assumes that travel cost is proportional to distance useful and reliable information when used carefully, from the site and that people living at the same and the panel provided guidance on doing so. This distance from the site have identical preferences. report is generally regarded as authoritative on While these assumptions are often valid in the case of appropriate use of the technique. national tourism (tourism within a country), neither assumption may be valid in the case of international In some cases it is possible to do both a CV and a tourism. The technique also assumes a single-purpose Travel Cost analysis for the same valuation question. trip and encounters difficulties when trips have This allows the analyst to "cross check" the two multiple purposes. It should also be borne in mind estimates and get an idea of the robustness of the that the resulting estimates are site-specific. The main results. This approach has been used a number of application of TC methods in developing countries is times in determining the consumer's surplus of safari to valuing tourists' willingness to pay for national visitors to game parks in East Africa, with parks. In Zimbabwe, a TC analysis of tourists found surprisingly consistent results. It is particularly useful that they derived about US$610 per person of benefit since one measure is based on observed behavior (the (consumer's surplus) from their trip, of which about travel cost approach) while the other is based on US$275 was obtained from visiting national parks hypothetical survey information (the CV approach). (Brown, Ward, and Jansen, 1995). In Costa Rica, the Box 2 provides some examples of the application of benefit obtained by tourists visiting the parks and CV methods in the context of Bank operations. reserves was about US$1,150 per person (Mekhaus Benefits transfe and Lober, 1996). Benefits transfer is not a methodology per se, but Contingent valuation rather refers to the use of estimates obtained (by whatever method) in one context to estimate values in Unlike techniques which use observed data, the a different context.6 For example, an estimate of the Contingent Valuation (CV) technique relies on direct benefit obtained by tourists viewing wildlife in one questioning of consumers (actual or potential) to park might be used to estimate the benefit obtained determine their willingness-to-pay (WTP) to obtain an from viewing wildlife in a different park. This has, in environmental good.5 A detailed description of the fact, been done in East Africa where estimates of the good involved is provided, along with details about consumer's surplus for safari visitors in one country how it will be provided. The actual valuation can be have been used to estimate the benefits to new safari obtained in a number of ways, such as asking destinations in nearby countries. The main attraction respondents to name a figure, having them chose of benefit transfer is that it provides a low-cost way of from a number of options, or asking them whether estimating values when time or resources do not they would pay a specific amount (in which case, allow fuller valuation studies, or when the good or 9 Bo .Aplctin f otnent alato in Ban opertions''s d In reyadagas, therewasbei anusefo e ofon-u during th war as partof th e s e o anls t logec aluaton C tchiustovle enio-frteCaalFesRcntucinadPoe- mentealods adservices,in bthdevlpdand de to P:U o$3ect (Word flank, 19:0;0 096b) ; Tw parallel th!cnt- of Wol Ban oprtonicld: Croti itelf adoe mog fo_g torit a Xtf area''s ei o in Iy Bt s service to be valued has not yet been created (for forested landscapes are relatively similar, estimates of example, a new safari-tourism destination national tourist willingness to pay obtained in one location can park) so that here are no users to survey. This be used in another. The benefits transfer technique approach also has considerable risks, however. For should be used with caution, therefore, and only many reasons, estimates derived in one situation can when no site-specific measures are possible. be inappropriate in another. As a result, benefits transfer has been the subcect of considerable Incorporating environmental costs aiind benefts controversy in the economics literature. A consensus idto economic analysis seems to be emerging that benefit transfer can provide valid and reliable order-of-magnitude estimates The choice of technique depends on the specific under certain conditions: problem being studied. Except in lvery simple m The commodity or service being valued have to be situations, however, it is likely that a variety of very similar at the site where the estimates were techniques will be necessary to estimate the full range made and at the site where they are applied; and of benefits. Moreover, where substantial investments o The populations affected must be very similar. are contemplated, it might be desirable to cross-check estimates by deriving them from multiple sources. Of course, the original estimates being transferred must themselves be reliable for any attempt at Once the various environmental impacts have been transfer to be meaningful. The estimates of the value identified and the benefits and costs of various of timber products produced by reforestation in alternatives assessed, this information can be Croatia cited previously indicate the limitations of incorporated into the broader economic analysis of benefits transfer techniques: even in a seemingly the project. This is usually done in a benefit-cost homogeneous area, environmental benefits can vary framework, whereby the streams of benefits and costs by an order of magnitude. The likelihood that benefits of a proposed project (including both direct project transferred from another area will be appropriate is, inputs and outputs, as well as environmental impacts therefore, extremely low. Conversely, thrabse of CV to to the extent that they can be identified and value tourists' willingness to pay for forested monetized) are compared over so:me period of time. landscapes in Croatia (see Box 2) provides an example The three main decision criteria used in benefit-cost of a situation in which benefits transfer can be used analysis are: net present value (NPV), intereal rate of with e comm odity n. cor ice ine tourists visiting return (IRR) and benefit-cost ratio (BCR). All of these Croatia are drawn from the sae w pool as those criteria rely on the concept of discounting a stream of visiting other Mediterranean resort areas, and since benefits and costs which occur at different times over 10 the duration of the project being evaluated. costs) can be computed, and then incorporated in the Discounting puts all of these costs and benefits into a normal project analysis framework in the same way common time frame to allow for more accurate that a residual value estimate for a long-lasting capital comparison. Adding environmental costs and benefits good would be. does not change the method of analysis and guidance is available in various Bank publications, such as the Spatial Boundaries. When environmental effects Handbook on Economic Analysis of Investment Operations are present, careful thought must also be given to the (World Bank, 1996a). However, several aspects of appropriate spatial boundary of the analysis. The project analysis need particular attention when analyst often has to look far beyond the geographical environmental problems are present. The impacts of boundaries of the project itself, especially when water many environmental changes, whether positive or or air pollution is involved. In other cases, global negative, are often only felt in the future, long after aspects may be important and require a further the activity which caused the change has ceased. expansion of the "accounting stance" of the analysis. Similarly, effects are often felt far beyond the boundaries of the project itself. Special attention must With both spatial and temporal externalities, the be given, therefore, to the temporal and spatial important rule is to be transparent in the assumptions boundaries of the analysis. being made, and explicitly state the adjustments that have been used in defining the analytical boundaries Temporal Boundaries. Since environmental for the project-both in space and over time. impacts extend long beyond the normal life of the project, it is important to extend the time horizon of Whatever the actual techniques used to estimate the analysis so as to include all the benefits and costs the value of environmental benefits or damages, an associated with environmental impacts, even if they important point that should be borne in mind is the go further into the future than the normal life of a likelihood of underestimation. Inevitably, some types project. The effective length of the time horizon of an of value will prove impossible to estimate using any analysis is determined by both the number of actual of the available techniques, either because of lack of years included in the analysis and the discount rate data or because of the difficulty of extracting the used. Using too short a time horizon effectively desired information from them. To this extent, any ignores many environmental impacts, both positive estimates of value will underestimate the total value; and negative. For example, an activity that results in the estimates of project benefits will, therefore, be the permanent loss of a fishery should include in the conservative, while estimates of costs will be analysis the present value of the entire future loss of optimistic. That some environmental benefits cannot that resource, even if the activity itself only lasts for a be quantified, however, does not mean that they few years. should be ignored, Rather, any unquantified benefits should be described qualitatively to the extent The choice of the appropriate discount rate is also an possible. Table 3 illustrates how a mix of quantifiable important decision, since a high discount rate and unquantifiable benefits might be presented in a effectively reduces to zero the present value of table. Several of the benefits that were not quantified benefits and costs that occur many years in the future. in this instance are in fact potentially quantifiable, This does not imply that a different discount rate using the techniques indicated, but data and budget should be use when environmental impacts are constraints prevented this. Since the quantifiable important; in fact, it is always wrong to mix discount benefits were large enough to justify the proposed rates within one analysis. Given the importance of the investments by themselves, devoting additional discount rate, however, it is important to do resources to quantifying the remaining benefits was sensitivity analysis using different discount rates. This judged to be unnecessary. can yield useful information to the decision maker when comparing alternatives that have very different Another potential problem which must always be time profiles of benefits and costs (including considered is the risk of double-counting. The environmental ones). likelihood that total benefits will be underestimated because some benefits cannot be measured is Two approaches are possible to incorporating long- well-recognized. Less well recognized is the opposite term environmental effects. One approach is to extend danger: that benefits (even if accurately measured) the time horizon of the entire analysis to cover a might be overestimated because some benefits are period long enough to include all environmental counted twice. An example will illustrate the effects (at least to the point where, given the discount problem. Suppose that the project aims to reduce air rate, any additional environmental impact has no pollution at the site by relocating or shutting down further effect on the analysis, typically after 50-100 polluting activities. The benefit of this reduction could years). Alternatively, the present value of the entire be estimated by predicting the reduction in the future stream of environmental impacts (benefits and prevalence of respiratory illnesses and valued using 11 Table3. Quantifed an unqanifled jbeneiets -of prottig national parks in HaMiti 0 k ;0t | S Aoun tVoutn Benefints;;; (US$;;f :ft:X mllion) Comm4-P;f-:;ents-;;-0 :0vf. etech piqueA;f;f;;; Cots Forgodbne agicul;tua incomei 20 Oppor0 0t\ itii, 0:) 0ti:;tg; ,:: ;;-00itt 9)i0;00tun4 i000i; ty t 0 co t;; Total 0Biodiversit:y cneration Regiona00 700:00000;0000llly outstadn ecosste CV00:: ;y;fj0g0f0:;tX;;;;0 Toites Aiitmouteenial Consi e pntalte termsi ldluCntd at 100V T the reduction in treatment costs. At the same time, Bibliography suppose that a hedonic technique is used to estimate the value of overall environmental quality, Since air ADB. 1996. Economic Evaluation of Environmental pollution is part of environmental quality, treating Impacts: A Workbook. 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Ward, and D.J. Jansen. 1995. or measures necessary to reconcile the individually "Capturing the Value of National Parks in and socially desirable actions. Zimbabwe." ZWLMEC Project. World Bank. 12 Carson, R.T., 1991. "Constructed Markets." In J.B. Palmquist, R.B. 1991. "Hedonic Methods." In J.B. Braden and C.D. Kolstad (eds), Measuring the Braden and C.D. Kolstad (eds), Measuring the Demand for Environmental Quality. Contributions to Demand for Environmental Quality. Contributions to Economic Analysis No.198. Amsterdam: North- Economic Analysis No.198. Amsterdam: North- Holland. Holland. Dixon, J.A., L.F. Scura, R.A. Carpenter, and P.B. Pearce, D.W., and J.W. Warford. 1993. World Without Sherman. 1994. Economic Analysis ofEnvironmental End: Economics, Environment, and Sustainable Impacts. London: Earthscan. Development. Oxford: Oxford University Press. Dixon, J.A., and P.B. Sherman. 1990. Economics of Randall, A. 1991. "Total and Nonuse Values." In J.B. Protected Areas: A New Look at Benefits and Costs. Braden and C.D. Kolstad (eds), Measuring the Washington: Island Press. Demand for Environmental Quality. Contributions to Economic Analysis No.198. Amsterdam: North- Gittinger, J.P. 1982. Economic Analysis of Agricultural Holland. Projects. Second edition. Baltimore: Johns Hopkins World Bank. 1994. "Chile: Managing Environmental University Press. Problems: Economic Analysis of Selected Issues." Hanemann, W.M. 1992. "Preface." In S. Navrud (ed.), Report No.13061-CH. Washington: World Bank. Pricing the European Environment. Oslo: World Bank. 1996a. "Handbook on Economic Scandinavian University Press. Analysis of Investment Operations." Washington: Hausman, J.A. (ed.). 1993. Contingent Valuation: A World Bank. CriticalAssessment. Contributions to Economic World Bank. 1996b. "Staff Appraisal Report: Republic Analysis No.220. Amsterdam: North-Holland. of Croatia Coastal Forest Reconstruction and Protection Project." Report No.15518-HR. Hufschmidt, M.M., D.E. James, A.D. Meister, B.T. Washington: World Bank. Bower, and J.A. Dixon. 1983. Environment, Natural Systems, and Development: An Economic Valuation World Bank. 1996c. "Valuing the Health Effects of Air Guide. Baltimore: Johns Hopkins University Press. Pollution." DEC Note No.7. Washington: World Bank. Kramer, R.A., N. Sharma, and M. Munasinghe. 1995. "Valuing Tropical Forests: Methodology and Case World Bank. 1996d. "Technical Annex: Republic of Study of Madagascar. Environment Paper No.13. Haiti Forest and Parks Protection Technical Washington: World Bank. Assistance Project." Report No.T-6948-HA. Washington: World Bank. Mekhaus, S., and D.J. Lober. 1996. "International Ecotourism and the Valuation of Tropical Endnotes Rainforests in Costa Rica." Journal of Environmental 1. For a general survey of techniques used in valuing Management. Vol.47, pp. 1 - 1 0. environmental benefits, see Dixon and others (1995). For a more detailed exposition of the use of Mitchell, R.C., and R.T. Carson. 1989. Using Surveys to many of these techniques, see H ufschmidt and Value Public Goods: the Contingent Valuation Method. oter (1983). Ftechnicaludscusiono Washington: Resources for the Future.ohr 18)Fratenildscsonfte economic theory behind many of these technique, see Braden and Kolstad (1991). Hanemann (1992) Navrud, S. (ed.). 1992. Pricing the European provides a historical account of the development Environment. Oslo: Scandinavian University Press. of the principal environmental valuation -techniques. NOAA, 1993. "Report of the NOAA Panel on Contingent Valuation." Federal Register, Vol.58 2. Palmquist (1987) reviews the theory that forms the No.10, Friday January 15, pp.4602-4614. basis of hedonic estimation. Ostro, B., J.M. Sanchez, C. Aranda, and G.S Eskeland. 3. The theory and application of TC methods are 1996. "Air Pollution and Mortality: Results from a described fully in Hufschmidt and others (1983). Study of Santiago, Chile." Journal of Exposure For numerous examples of the application of TC Analysis and Environmental Epidemiology. Vol.6 methods to value recreational benefits in Europe, No.1, pp.97-114. see Navrud ( 1992). 13 4. These benefits take the form of consumer's surplus, and Carson (1989); for a more theoretical the benefit they enjoy above the costs involved in exposition, see Carson (1991). taking part in the recreational activity. A basic assumption is that the consumer's surplus of the 6. A special issue of the Water Resources Research was most distant visitor is zero, and that anyone more devoted to benefits transfer, and provides the best distant does not come to this site since the costs available overview of the conceptual and (travel costs) exceed the value of the benefits of the empirical issues involved; see Brookshire and Nell visit (It is important to note that the value of the (1992) and the following papers in that issue. A site is not given by the total travel cost; this recently completed report by the Asian information is only used to derive the demand Development Bank relies heavily on the use of curve and thereby estimate the consumer's surplus benefit-transfer (ADB, 1996), and contains many of visitors.) examples of the application of benefit transfer. 5. A vast literature has developed on contingent valuation techniques. The standard text is Mitchell NumbWer and0tk Ttle0 Date Number0 an T -0itle Dte0 1 The WorXT ld Baknd Envronmna Apr.0 93 t ;12 UEhiminainof OzoeDepletingSubstanes 0 Mar. 96 A 0t00stsessment:0 AnOvervew000 t0000000;0000000040000 0 00l00;000000013 Gu idlines fr MaieOutfalls 0 and 0 00 000Mar. 96 20 EnvironmetalSreenin X0400gl:84 000:0 Apr. 93000000 Alternative Disposal nd ReuseOptionst00;0000 3t Gegapi Iorato Sytm for- g Apr.: 93 14 0nirnena Dernmaceontig Ju. 96 EnviromentA Assessment and Ri nd Spervson 7 CoaStalZEnvironent&aentd Oc 0 15 Resiona Enionet A s J 96 5; Puli nviolvmenta .lssinettloi ri-0 :;000 1 ssin-h. Environmental Octact 93Ot.9 6ErvtztinadEvironmnental Mr9 Assossnien Environenta Asessmet (alsoin Arabc) 19 ssessin the Enironmetal Imipact of Oct. 97 8Cultural i Se 9 Impleei G p f n 95 Asse-sment 1 4 | | | | | s ~~~~o u r c e. b o o k ) | |PDATBE -# TA Environment Department January 1999 The World Bank Number 24 Environmental Assessment of Social Fund Projects M i maniy developing coutnitrics, Social Funds (SFs) have beconmle at mlajor souircc of deoelopnmcntfinance c t thie coinuunity level. Set utp as financial inztcrmiied7iaries to chlatnniecl resources fromti international doniors to sm77all, poor and vulnerable commun771ltities. SFs finanlc utp to several thousand subprojects annuiiially, suchI as schlool antd healthl cliniics, village waterssupply anzd sanitation, ruiral roads, rural electrification, and smtiall irrigation works. Siubproject proposals ar' submksitted byi local commiulmnities or their. representatives anld evaluated againlst specific criteria. Manm subp rojects finianiced by1 SFs raise onily mjinlor or nco environmnental issuies. ifowevei; experience sho7ws tlhait SFs nieed to establ7lish simplt7le environ71l7iietn7l asscssmenlt procedur7cs to 7void cauisiig' atdv,erse lanm to the Ceu7ironmpgenlt a7ndl ld human hlealthl. Th1is Update discuisses wvhy sutch priocedures are iieeded an7d howo they inight be integrated inito the Social Ftind Project Cycle. Background . SF subprojects provide critically important social services to relatively poor beneficiaries in all the countries where Social Funds (SFs) are financial intermediaries that they operate, principally in areas such as infrastructure; channel resources to poor and vulnerable beneficiaries health and education. When these funds were first for small-scale projects, based on pre-determined eligi- implemented in the late 1980s, most project compo- bility criteria. These projects are proposed, designed, and nents were not considered to hav7e significant environ implemented by public or private agencies, such as local mental impacts. Today, however, the large number and governments, NGOs or community groups themselves. increasing diversity of fund projects require closer envi- SFs were designed to alleviate the impact on the poor, ronmental.evaluation, and most SFs are subject to envi from employment losses and income reductions caused ronmental screening and review processes. by the debt crisis and related structural adjustment mea- sures of the late 1980s and early 1990s in Latin Environmental impacts related to SF projects include, Aimierica. Bolivia led the wav with the creation of its increased soil erosion and associated degradation of wa Emergency SF (FSE) in 1986, less than a year after the ter quality from road construction and rehabilitation, start of a comprehensive economic reform program. threats to human health from increasing applications of pesticides and contamination of drinking water systems The number of SF projects in the World Bank's lending' by human and anirmal waste. This Update provides a portfolio has grown significantly in recent vears. At the closer exatnination of these issues and provides clear, end of fiscal year 1996, the Bank had approved 51 SF practical guidance on how to design and implement projects in 34 countries with 40 active projects amount- these projects in a more environmentally sustainable ing to a portfolio of about US$ 1.2 billion. In fiscal 1996 manner. alone, commitments for SF projects exceeded half a bil lion US dollars accounting for about 37 percent-of cu- SF activities mulative Bank SF commitments over the period 1987 to end of the fiscal 1996. In virtually all SFs, external fi- SFs operate with armandate to deliver social services nancing is also provided by regional development banks while minimizing administrative costs. Roughly one- and a varietv of multilateral and bilateral donors. third of total project costs are allocated to economic infrastructure projects, and a similar proportion to health, nutrition, population and education projects. ABox2.En o etal con o lfund These activities include helping municipalities and com- prjects im lscaleirrigation schemes in munitv groups assume responsibilitv for providing basic Ethiopia health and education services as well as local water sup- : n E a ti of h Social F tfolio is ear- ply, sanitation, and rural road projects. The remaining In Ethibr, A 1 * 1 r 1 1 * 1 \ m~~~~~~~~~~arf6d for ingreasing AgricuWtural prQ:eti through one-third of project budgeting covers activities such as mred f e a p t training or microfinance. on fmicrodan> and small scale irrigation schemes. These subprpjects; are desperately needed, -since muchofthe nbrthrn part of tPcuntry. remains The growth and expansion of these funds into nu- to prone to'nfaine year after yeaOr, Initial planningof these merous countries over the last several years is paralleled . subprnjects did nt identify anyrajor environmental- by a shift from the original objective of providing short- issues smce in ternis of cost and complexy to other term emergency assistance towards longer term goals. 'la scale 'dm prqjects: funded by the Bank over the For example, portfolios in miany infrastructure sectors - past thirty years, these were all minor projects. How- are expanding to include rural roads, small scale irriga- aever,aloser examinAtion af these projt shed impor- tion, etc. This shift presents new challenges to ensure tantf insight into significant envirorwental concerns.' that the benefits thev provide are sustainable (see ; Box 1) Thee construction of 15 to 20Q meter high earth dam heads creates reservoirs ofistanding waterBeowthe- bette damr, itrigation canals are built to.deliver water to 100 to It is now apparent that SFs must develop better 150hectaresof land. Te infrastrcture-will con- methods to classify subprojects in their portfolio, ac- tribute to a second season of agricultrl production (by cording to potentially significant adverse environmental providing reservoir water to the}fe ::beo durig te impacts. Review of Bank SF appraisal documents (re- -dry season). Kevy environmental sustainabiity concerns ferred to as Staff Appraisal Reports - SARs) and specific include:. SF Operational Manuals indicates that in a number of cases potentially adverse environmental impacts were . . Watershed management, Practicalwatrshed:e management practices for erosion control were lacking. Sedimenon on the reservoir bottom Box 1.: SEnvironmenta l0 susfainabity:i w; 00 0 f ith *; :; '; would,K in s several years time, result in reduced water saniationprojects in the El Salador Socal ; - capaiy and subsequent reduced water flow to the, - Fund (FIS) - . i : - : :cgation. canals. In El Salvador, a recent study conducted in the country . Human healh.- Th:e ceation of small reservoirs attempted to determinei the a'cceptance and use of la- . provides very favorable conditions for expansion of trines. Throughout the count, 1FS has been support- hto prevalent diseases in the region, malaia and. ihg the conrstrction and technologytransfeit of schistosomiasis.The malara mosquito vectors thrive composting latrnes, Co osirg latnes are Wilt' in such favorable standmingwater habitats. The mp stiCopotn nltrnenaee itwith two ;'composting^:or fanaerobic chaiimbers that are Esed introduction of rapjdly reproducing snail populations alteriiately to ensure the proper breakdown of parasitic -6f the variety that spread schistosomiasis. has already pathogens. The piomotion of this type of latrinis logi- - been documiiented inpother irrigation projects in the cal, each household can take adntage of the country. Current in-country experts feel that moreL byproduct of night soll. When properly maintained and., research isrequired to gn a better understanding of used, this source of nutrients is availble foir local - these potentilhealth cone6rns. -household gardens. Noto is the helth of the house:i: *: icultral inputs. Expansion of agriculture hold-improved, bu suppleerntal;foodcropsi can be ' production intto: a two cropping system requires use grownl, wiithout requiring the additionalexpense of fer- - .: of appropriate seed varieties which often require tiliier apeplication, Unbrtunat; it was found that o I increased use of both pesticides an fertilizers, It is 40 percent of the surveyed latnanesyWere being yused -iportant'to reablize that the use of pesticides can properly.-People were not keeping the'anaeob c- 'k Q :pose two signifcant thfiehts; adverse healffi effects post chamber closed. for the required and fo rfd- m worers ajid others exosed to pesticides, often empiied the waste andd usd it as night soil before and contamination of the environment and organ- the pathogens werekliled. These survey results suggest isms esd to these chemicals. that although the latrines were being constructed ac- cording to standardguidelines,0 heir useanid mainte6- ' The Ethiopian'Social Rhabilitationrand Develoip- nance were far fromacceptable. In an undesirable tist m tenthFuedESRDF)has recentlreevauaedhese sub- Of circumstances, the promotion and use of these corn- projects tb incoporate bettr environmental consider- post latrines mayIbe contributing'to increased exosure ations to addiress the Above issuesR The obiective is to to h-armful pathogens, not reduction. - . promote more effective and sustainable prcjects- .2 overlooked or not fully apprecia'ted (see Box 2-Envi- Targeting. The first step in the SF project cycle is tar- ronmental Concerns Ethiopia small scale irrigation). ge'tingactivities to ensure that SF subprojects reach poor Furthermore, in those instances where subproject envi- communities. This process identifies intended beneficia- ronmental impacts were identified, delineation of spe- ries using tools such as national poverty maps to locate cific impacts was difficult since specific subprojecfs are communities in greatest need within the country. not known until after funds are implemented. In addition to identifying beneficiaries, most SFs also Applicability of World Bank environmental policies allocate'funds between subproject types based on pov- erty and geographic needs. Subproject allocations are SF projects, like all projects considered for financing by also concerned with community-based needs and de- the Bank, are subject to Operational Directive (OD) 401 mands, activities of other governmental and nongovern- on EA. Other ODs and Operational Policies (OPs) may . mental organizations, and the capacity of the SF to be of -elevance to SF projects. These include Pesticide. reach. needy communities. Management (OD 4.03), Natural Habitats (OP 4.04), Water Resources Management .(OP 4.07), Indigenous .' Promotion. Poor communities often have little oppor- Peoples (OD 4.20), Involuntary Resettlement (OD 4.30), tunity to leam about the existenceof programs designed. 'Forestry (OP 4.36), and Cultural Property (OD 11.03). to help them. Therefore, SFs have established means of Most SF s .bprojects will fall into EA'categoryB, . disserninating information to intended beneficiaries about the types of projects eligible for financing, the which means that all subprojects rhust undergo environ- . mechanisms for submitting proposals and the selection. mental analysis to determine potentially adverse- im- - criteria pacts and their mitigation measures. The redason for this, classification is that although many subprojects have no - - ~~~~~ Ensuring that environmental issues are taken into adverse environmerital impacts, some subprojects might - g m.. .ti-.. account during this phase is very irnportant. Training result in significant adverse impacts if appropriate m- and awareness programs can assist loca beneficiaries to gation~ ~ ~ ~ ~~~~~~~~~~~n awarsures proe can assisttd I calbeneiciarestt gation measures are not implemented. During project understand the need for environmentally sustainable preparation, Task Managers should seek expert environ-a l D~~~~~~~~~~~~~~~ro ects (and where relevant, their relationship to na- mental guidance to review the proposed EA and deter- pe ( w r .evnt t rel - w - . ~~~~~~~~~tional environ'mental policies and 8traeifges). These' mine the extent of impacts associated with each . i e p a . T activities should also be directed at intermediaries such categr of subproject to be financed. category as NGOs or other executing agencies. Raising aware-. .Fs .inc a variety of geographically dispersed ' ness can be achieved via the national .media (primarily .SFs finance a variety of geograp3hically dispersed- -- subprbjects to be submitted by pei b fa . . . .* ,- * *radio), local government, indigenous leaders, religious subprojects to'be submitted by poteritial beneficiaries over , ,, . . , .- -organizations local NGOs and community cooperative over the fund. lifetime. The long term success of these o l O a c .projects is closely. associated with sustainability, and - associations (see section below on training). minimizing environmental impacts. minimizing environmental impacts. Projectformulation. This step includes the identifica- SF project.cycle and EA . - . . tion of fundable projects (throughout the lifetime of. the fund) and transfofrration of project concepts into fea- Sihce SFs differ from standard Bank lending operations, sible application documents. Project formulation. may be the normal EA process must be adapted fo SFs. The ma undertaken by a variety of actors, from local commu- jor steps in SF projects include targeting, promotion, - nity-based organizations to NGOs and governmental project formulation, appraisal, approval, implemen- organizations. Recipient communities must also demon- tation and mnonitoring and evaluation. A general ' strate some ability to successfully implement and sustain framework for undertaking EA within the SF projec subprojects. cycle is provided in Figure 1.-'- This step is designed tcr ensure that proposals meet All SFs operate with a well defined management and all eligibility and applicatio.n criteria and will be ready. administrative mandate which is detailed in an Opera-. for appraisal and technical evaluation. It is at this point. tional Manual. This Manual identifies all project imple - 'in the fund project cycle that environm'ental impacts can mentation steps and related procedures, review . - . be identified; and.alternative sites and/or designs and requirements, and accountability. Some SFs have devel- mitigation measures developed. oped helpful guidelines for potential beneficiaries to better understand the nature of demand driven, projects The EA process needs to become standard practice and the procedures related to project approval. For ex- during this part of the project cycle and will require SF ample,. the El Salvador Social Fund (FIS) has recently staff,- or delegated authorities, to undertake initial envi- made public a useful Manual of Administrative Proce- ronmental reviews or a linifed or full EA. These pro- dures for Project Formulation and Implementation. cesses are discussed in more detail in Box 3. 3 Figure 1. Environmental assessment process of a social fund subproject eviuronmentaises are ofwnietlIse r mpcshv enaaye n Actions: pooec cyl esgd.n C dte bnf ae on : ssestn owent issuesand Prvd techcal.se nce . e prbpaf caoize , requiremnt: of th -.~ .iet~ torje fomltr prjet acon to the t;eo * rmot nvitronmeentallye woh; fa.equiesared tordrtisU4fa th e y 0 :$;nvibrownal revsiewta il b : benefricial.S prjcsubrjc rpsl utb omly sol o ealwdt astru pria ni *nsurmted cnrmty wtth natpronrale hFamnitaiel ofic formultieepoblem ardqarely reoulveide.iiEvromn environmenal. sThaprateiesal process imsct antite witghio an Rexe- .mte - n na linesmof eachsfund (which rnay includeenvironmenas ures are roquiredb fraessment, ore prour critria Deendng n te tpe.o suproectproi-ectt disouromerss conractningand alsessmet.o whic impacis..~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~il dniy mat~addsg tionaltechncal fasibiity inormaton rny be equire. funs. Mot of he ar an-gmens asocatedmtgo mesures.on In manv cases,particuarly inmro plerojects . struction andn imlmettonar typicallycnandi fvaund tiffndetk a.il ii adsbi rUeprt lga cnrat ige Obectw :eln th moutnedd and th ml- Whten visitsuiongl prectnca or fesbirytdepare co- mettactscy I wit c vritical thatth rsoundpoets oforeEAb qiede,uthon SFi soper atvo fuo d ailbenvioommnta- inucs orpoae notelglcnrc osqety li assotesshwenvtuirnentl. gonailraiationa maurs deig Aespeiiain an- uevso bsreteniirgand mitigation conimunitiet t exeuirecets ne to pr rf ectd i a bee sc rece The~ ~ ~ ~ ~ ~~~~eniomna crtei eniomna reeciews or alsessment hautbeen have succeeded minimiuigese mitigation measures. asth required by esrth-compltdcua roblectin can e be in cii Deeridnce. if chagearedn h Asol cotats havied beninopornsatld approvediel vi$it to msess envronmentas aeededtaen 't intoroject vianility ce frtevirFnenvairsoesmentaspclito Reeqgiredc-angeshor ensuretht aldesign stndard ass, approvalg eniomeyn- comm toune rAppra requirad to issuefinta ons bnd sitifatoincmeasreare gathe febc.paymet-fr prqoec cosrcto ntQro ject:design Appraisal. SF subproject proposals -must be formially shouldl not be allowed to pass thiroughi appraisal until submitted to the appropriate SF administrative office for these problems are adequately resolved. appraisal. The appraisal process is initiated with an ex- amination for eligibility under the Operational Guide- Implementation. Upon approval, admin-istrative pro- lines of each fund (which may include environmental cedures are required for management review, procure- criteria). Depending on the type of subproject, addi- ment, disbursements, contracting and allocation of tional technical feasibility information may be required. funds. Most of the arrangements associated with con- In manv cases, particularly in more complex projects, struction and implementation are typically contained in fund staff undertake a field visit and submit a repbrt. a legal contract ~signedl between. the fund and the imple- When additional technical or feasibility studies are re- menting agency. It is critical that the resuflts of the EA be quired, the SF shiould have funds available to commis- in-corporated into the legal contract. Consequently, miiti- sion these studics. gation measures, design specificationis and supervision - requirements need to be reflected in the contract. The SF environmental specialist or delegated author- ity should review the EA documents to determine the Monitoring and Evaluat-ion. Projecft monitoring is acceptability of suggested mitigation measures. If the required to ensure that- contractual obligations are being quality of environmental analysis is unsatisfactory, spe- met by the executing agencies and the contractor. Moni- cific guidance, for upgrading the EA should be provided. toring usually includes fi'eld v'isits to assess progress Where a full EA has been undertaken, it is mandatory with implementa tion. This provides an opportunity to for the SF environmental specialist or delegated author- ensure that all design standards, including environmen- itv to undertake a field visit. In those cases with obvi ous tal contractual obligations and mitigation measures, are *and significant environmental problems, the subproject being properly implemented. 4 : . .....- -- .. ..........Management Issues Box 3.. Procedures for social fund M gA su As~t cifscreeni'g 'rocesses will improve the ability of The previous sections provided procedural guidance on tiethdis to iderhtify potentially adverse subpxojects- EA, but procedures are ineffective in the absence. of a According tt inforial procedures, checklists should be well designed management stru cture. Successful SF EA used to classify subprojects into one of four categonies: planning and implementation requires a large array of actors and supporters. These include representatives of (i) No ipects . donor institutions, Fund Director.s and their staff, na- ii) Subprojects that rnay create a few minor and easily tional and local authorities, and community representa- ecognizable environmental probem§s . tives 'and.local contractors. These parties need to under- .ii Siubprojects wit,t minor environriiental probrms stand their specific roles and responsibilities for effective that require site visits to include connstiuctlon EA (see Box 4) Additional management considerations madificatipns to minimize or eliminate impact include institutional structure and staffing, training and (iv), Subprojects With potentialyt significant direct-or capacity building, public involvement, use of appropriate indirect adverse impactst ; . ' . ,, - . - indicators, and promotion of environmentally beneficial - The .ubpro~ectsin will thn .improvements. lBe subpr6jects'in the,last three -categojes will then -require a different set of EA responses. The- ( category . -- - - . 11~~~~~~~~~~~Intitutinl tatti nd Stntffingv Coltsideratiotis subproj ects can be miti}gted with standard and simple design corrections, often accompished. through a desk- A ra . . . - t- - .omtra riw.Ctgx .ii .upoetr ................ Arnge of institutional structures for undertaking the .top envirninental review. Categor7 (iii) subpxofects.re- - .U quire-a limtlfed environmental asessment (LEA) that. environmental review function within SFs are possible. . c6ines best professidna.l khowledge irnput from spe-- The environmental capacity could be mandated to rel- cialists together with site visits. Category. (iv) sub- '. evant fund units, or as is more often the case, the re- - projects require an eflvironmentaI impacssessmeUt! . sponsibility of a separate environmental unit (or indi- .(EIA). A highly stilled environmental expert or team of vidual). Such units are often del ached from the main- experts is often required to spend sigffificant time on stream SF operations. However. this arrangement - the EIA, and a TOR and coritract may be necessary. diminishes their role and effectiveness and recommen- :-. dations made by the unit are often ignored. Environ- - . - ' ' - mental issues need.to be considered at almost every The evaluation of SF projects, fromr an environmental stage of the project cycle, and relevant expertise is gen- perspective, can usually be accomplished with little ad- erally poorly represented within SFs. While there is no perspective, can usuiallv, be accomplished with little ad- ditional expense if proper guidance -is provided to staff universal solution, it is preferable that the environmen- - . ......... -..tal unit is not tied to a single operational unit and is who routinely make field visits to examine the progress high enough in the institutional hierarchy to have over- of projects.. However, it is important to have some envi -' of .roectsHowever is importanttohivesomenv arching responsibilities. A unit attached to the Directors ronmental capacity available for monitoring, either - o - . ' ~~~~~~~~~~office iS often a good solution. within the SF, contracted out to specialists, or by ar- rangement with Government ministries or departments. Because of personnel and resource constraints, it will Development and use of standardized monitoring - rarely be possible to staff an environment unit with checklists or schedules is useful. These need to be com- more than one or two persons. In smaller SFs- it may * pleted in parallel with the reporting cycle and submitted even be justifiable to have this. position filled on a part- to the SF environmental specialist or oversight agency. time basis by a consultant or.appropriately trained - - member of the fund staff. Some funds have a special, Most SFs have some kind of evaluation process to environ-mental unit (such as, the Honduras SF, FHIS; determine the extent of beneficiary use and satisfaction the El Salvador SF, FIS; and the Nicaragua FISE) and with the project, as well as-the physical state of the . others have hired one or several environmental special- project. The evaluation process should provide somne . ists under contract (the Nicaragua FISE and the Panama pfoject The ealuatin proces sS-udFpro)de som insight into how environmental impacts were reduced. ' Bevond the evaluation of individual projects, SFs should - T a - ... . .I- Tranin11g an1d cjipa]ciy dezVelOp11ment periodically evaluate their portfolio to determine factors such as: success of mitigation measures; incidence f It isimportant to provide general environmental aware- - unanticipated impacts becoming'significant; impacts s r . ~~ness training for all staff and more specialized training (positive and negative) on quality of life or health;, and for those individuals directly responsible for EAs, It is quality of coordination with relevant'agencies. However, also important to enhance environmental awareness for all of these factors, practical indicators are needed among beneficiaries and g6vernment agencies. Senior (see more detailed discussion on indicators below). management must be persuaded of the- importance of -5 environmental issues to project od tcomes, which in turn should focus on environmental issues related to improved shotld gaintheir endorsementtfor iriteglating tenviron- project forrnulation and design at the local level. mental concerns into project planning and impleomen- tation. The recent shift towards decentralization of program-i- - . ~~~~~~~~~~~~ming for SF projects, enables beneficiaries-to have more cIalroFndgsthe andprstcadingowleenvionmehowl Fssuns operatfinancial and administrative control throughout the amongst St staff is best achieved bv demonstrating the- an e t . - T-e Dirctr andsniordeputesfomvaiouslinetproj ct cvcle. Part of this mandate includes buoldig environmental aspects of their areas on responsibility. T capacaty among beneficiaries to assurie responsibilitv Traiing for dephartmental technical staff -should help to perts wit littl , .onnal t,aifiihg .ndtuideistan4t of envfr for admlinstrateon and decision-making. Transfer of develop an integratep understandig o ervronmentalment a skills to the community level for preparation of propos-- issues n relation to the proiect cycle. In those funds that * ~Line leg atiii withpfimamyevEonmenals inldrigAthme ab~niiityt Ofdetaen noudfmentary wnith rely on decentralized regional project offices, there is al,icungtebltvoudrakrdmnayev- also the need for regional training todintegrate central q : ronmental evaluationg s, is becoming increasinglya: administrative and technical staff with their counterparts .nimportant. Access to SFs will be, inked to improving the On the fietd. Regionau workshops area 6sitable for training ability r and capability of target communities to manage the various parties associated withendad beneficiar i kam- uthe environmental screening process. Training at the shingm such as local goveironment officials and staff, commu- local l eveel is facilitated b a high level of public nity leaders, NGO representatives and contractors. This consultation. 6 Puiblic involveinent religious groups, savings societies, women's groups, schools or smanll enterprise grou]ss. In general, new or- The extent and timing of involvement of local communi- ganizational fora with which people are unfamiliar ties in SF activities varies. However, th.e earlier a consul- should be avoided in preference for existing social tation process-begins, the greater the probability thiat groupings within which people feel comfortable. stakeholders will be adequately represented. A primary objective of consultation is to encourage people to dis- Indicators of SF environmental performnce cuss all issues and concerns. The challenge is to provide mechanisms compatible with local culture and customs Most evaluations focus on the performance of a. project and provide an appropriate setting for stakeholders to in achieving its objectives and its economic and financial voice concerns. -- efficiency. Performance is measured by comparing whether implementation proceeded as expected and on Public consultation is an essential part of the EA. The . . ~~schedule, and determining it- the outputs were achieved p-remise of public consultation is: (a) if the citizens are informed about a project and given the opporturnity to according to project plans and within budget. In SFs, ex- infomedabot aprojct nd ive theopprttnit to amples of outputs have traditiontally been the number of raise. concerns, those most interested will respond; (b) al of puts haveted number of most citizens have access to some form of communica- rural road projects completed, number of latrines built, tion media; (c) citizens who participate are accustomed population served by water projects, etc. Associated in- to the democratic process of discussion. Unfortunately, puts that have needed evaluation included the amount in many of the communities affected by SF projects, of funding provided for each project, man-hours re- these premises are not necessarily valid and citizen par- quired to complete projects, and so forth. ticipation must be facilitated. An enormous challenge to SFs is to shift to measur- Large meetings are usua.lly inappropriate fora for . ing environmental performance by using key indicators. consultation at the community level. Smaller meetings For example, evaluation of water supply projects should and interviews with key individuals is often more-useful. consider the effects on the environment and health of All communities have. social groups through which they populations. To do so however simple and practical normally organize activities, such as work groups, indicators must be developed (see Figure 2). Figure 2. Simnple and practical indicators for water supply subprojects Type Of Basickquestion - -ndictors. monitoring ils water pply intake sufficiently protected from Rnoff flows into spring Iaoetnspton .' conta-nadon?, . . .-' .,, ,., , - - .. 'Agricultural is undertaken above - sOpdng '.1 jS . - - f ' . '. . 'Animal access prevented Are proper measures in place for drainage and- Standing water pools Inspection . ,runoff ?., ..........-,-,,-.... ..... runoff? ~ ' . ,Breeding mosquitos Are proper,measures in place orowater quality? Disinfectior. Collect sample M.nitoftophysical,chemica, Bacteriai Is there properconstruction to protect from Sanitary seal .spection' p,-i lation contamrnnaTon? Are proper measures implemented for waier, ' Dsnhfecti ' Cmblect sample iquakiy? physical, chemical, bacterial' .7 Box 5. Exaples of coimunity-based environmentally beieficial projects ForestrylReforestation These programs afford.local communities two major benefits, the expansion of existing forest cover tQ sta- bilize soils. and improve microwatershed conservation 'and production of firewood supplies. The former activities may involve various forms of reforestation or agroforestty, techniques that are designed to both improv.e tree cover or by using combinations of tree and crops, improve crop pioduction in a mixed plant- ing project: The result will be erosion control, soil conservafion and land reclamation. The objective is to provide self reliant fuel that requires little'capitaltexpendittires.and does not require large demands of tiue and maintenance. All of these activities regquire nurseries, seedlinrg distribution, technicalassistance and provision of basic supplies such as shovets, axes, and hoes: In some cases, these programs-might also in- clude parallel charcoal production (preferably with improved charcoal kilns) and improved cooking stoves (see below). Improved Pasture and Grazing' Ahother environnentally beneficial project is the implementation of "silvipasture' programs. This practicee incIudes controlled grazing of vegetation and- is important in areas where range lands haive beer'depleted 'as a result of ov.ergrazing. Steps in these activities may include reducing the number of animals grazing in a particular area, preventing further erosion and repairing.erosion damage, improving fodder production. by reseeding or replanting, and- adopting a good set of management practices which can include providing w.ater, rotating grazing stock by use of fences, changing grazing patterns,jetc.'The inputs require a'greater degree of technical assistance in the form of -extension work, which often is beyond the scope of quick de- livery of services as part'of SFs. However, the dernand for these projects is growing. -Improved Cooking Stoves Another approach in reducing the demand for firewood, improving the health of mothers and their chil- dren and decreasing household'.expenditures. on wood -is the introduction of more efficient cooking stoves. These stoves: are designed to improve. the way the wood is burned by providing ways to regulate air intake and combustion. Ihe -flow of air and gases is designed to concentrate heat on the cooking surface. A chimney is usually incorporated into the design to prevent back draft-and indirectly significantly reduce the risk of acute respiratory infections.'The history of promoting improved cooking stoves in Latin' Anerica has a mixed rev'iew.- In some countries and regions, there has been a high degree of acceptance, while in others a low. Many-factors complicate the acceptability of a cooking stove: cost, type of mtaterials needed for constfuction, size and type of wood available, famfly size, cooking-practices, and types of dishes-to be prepared. One very important lessori learned is that there is no ore universally.acceptable stove. Training and extensionr must be part ofthe-lprogram to help educate the households members about how these stoves improve both the health of the famnily and envirornment. 8 .Box 6. Guidance for successful environmental sustainability in social -funds Environmental Policy and Procedures' a Does the Fund use subproject efnvironmental appraisal checklists? a Is the cuirent subproject appiaisal process and standard forms satisfactory,in identifying envirolqrftental issues and developing mitigation measures? * Have iinkages between the Social Fund and other supportive agencies and institutions dealing wth environmental issues been established? Management and Administration * Have environmentally beneficial projects beeninTcorporated into the Social Fund portfolio? Is there an annual targe.t established to ensure-that these subprojects are implemented? * Does sufficient material exist for promotional officers to'assist in the promotipn of,environmentally beneficial projects at the'community level? -* Does,a well'designed plan and organizational structure exist for supporting environmental review for the Social Fund? Have terms* of i6ferenct been developed for this.suppott? * Have practical indicators.been identified. to use in the monitoring and evaluafioni process? Capacity Building * Has a short workshop been designed to inforn senior management'about environmental issues? - ' a Has a training,plan been identified for pfoject officers to improve environmental review for the apprais process? - Are regional workshops planned. to provide environmental awareness training to regional staff, local beneficiaries, and o-therinterested parties?. Using tihe Social Funds for Environmenttilly B4ieftcici . emerging SFs have identified these as concrete targets. Im7lprovemenv7ts - - Specific examples of these opportunities are presented in Box 5. The evolution of Social Funds in certain countries has been associated with growing demands to implemnent Conclusions community based environmentally beneficial schemes. Beneficiaries are using the Social Fund to deliver other- With the expansion and growth of the SF portfolio, it is wise unavailable opportunities for a myriad of projects; ' becoming clear that each Fund needs to develop niecha- such as reforestation, improved pastures, improved . nisms to ensure that environmen'tal issues are properly cooking stoves, alternatiVe energy, soil conservation etc. addressed1throughout the entire project cycle. Task Managers and fund senior managers should ideally in- In Honduras, the Fund established a goal of incorpo- corporate these. considerations from the earliest stages rating a specified number of environmentally beneficial of project planning (see Box 6). Furthermore, midterm projects into the annual portfolio. The Zambia Environ- evaluations need to include a review of the Funds envi- ment Support Program intends .to implement projects to ronmental and social performance. As the funds mature communities through the Social: Fund Project Cycle and and the Bank's management experience grows, ad- administrative structure. There is growing recognition equate attention to such issues will enhance the long- that the Funds have greater potential to improve com- term sustainability of subprojects. munity natural resources, and many of the newer 9 WaS: .: SlmW.gW.*Wvibu puls)in EASucYokldf Assessment0:E;S00 0 -0a0SAnti i 0 0 130 Gudeine--00s for Maine0000 u00tfa- nd Altertive00 Mar.960 2 Environmental' /4 )X0S£ gA :SCuS00 s i'Sf2:d'.'SliE, ,S : 'i,Dl! C'V> Z SSDXL 0 70 Screing-Apr, 9); W '1'0'< ispcei; as Rese Op;0V0t; ions 3 egrpi nfrtio Sy3m o Ap.9 14 EUVIEICIa Prorae Moiorn and Jun.96 Bn: onxna Ases4n an i W RevieW 4t\X ds@0 fo bw 6 Prvatzatonnd Ev onm ntal ?Ut. :*; 170jz Anaysis fAimtie nni ronmetal z ec 96.; E 80 Cul;tura0000l freag as Environmenta Sep.940 19 Asesin th Environmental Impact of ts*' -Od 97 Assessment;000.0000 < 0 0 \ 2 :00 0000 00 0000 (als in000 Arabic)000 -- eve: as00lnpmejnt 0- j00v 9, H . imlmnig(orpi fm:in@'0 idvriyadEniomna 0esetOt9 Sytmsi EnioeintAssmn 10 International Agreements on Environment Mar.96 '21 En meental Hazard and Rink Asseastuebi eo.97~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ an1 aua0eorcs eeac n Envronment Department January 1999 The World Bank Number 25 Environmental Management Plans Prediction ofthepotentialadverse~environmental andsocial impacts arisingfrom development interventions is at the technicalheart of the environmental assessment (EA) process. An equallyessential.elementof this process is.todevelop measures to eliminate, offset, or reduceimpacts toacceptable levels duringimplementation andoperation ofprojects. Theintegration of such measures intoproject implementation and operation is supported by clearly defining the environmental requirements within an environmental nianagement plan '(EMP), EMPs provide an essential link between the impacts predicted and mitigation measures specified within the EA report, and implementationz and operational activities. They outline the anticipated environ1neintal impacts of projects, the mzeasures to be undertaken to mitigate these impacts, responsibilities for mitigation, timescales" costs of mitigation, and sources offunding. This Update provides an introduction to mitigation measures and EMPs, identifies the policyframeworkfor preparing EMPsfor Batik financed activities, outlines the main components of EMPs, and discusses means to ensure that commitments within the EMP are carried through to implementation and operation. It compliments information presented in Chapter 1 of the -EA Sourcebook. Introduction enhance public awareness. An example is.the introduc-' tion of irrigation service fees to promote efficiency of A development project's mitigation' measures encompass water usage and water conservation. Structural mea- all actions taken to eliminate, offset, or reduce poten- sures encompass design or location changes, engineered tially adverse environmental impacts to acceptable lev- structures, or landscape treatments, based on the use of els. Such measures are typically associated with the lat- environmentally sound techniques and technologies. ter stages, of project planning, although in practice they may occur at any stage throughout the project cycle. Environmental management plans (EMPs) outline the Normally, potential impacts are identified early during miti.gatin, monitoring, and institutional measures to be the initiation and scoping stages of EA for a project, and A . . . U . l } ~~taken during project implementation and -operation to measures to avoid or minimize impacts are incorporated avoid or control adverse environrnental impacts, and the into the alternatives being considered. In this respect, - a n some of the nriost important measures to protect the en- proi dea ci inkletwen tere rTitain . . - . ~~~~~provide-a -crucial link between alternative mitigation -' vironment or local communities become integral to the project design, and are never reflected within a formal measures evaluated and described within the EA report environmental management plan (EMP). For example, (see Update no. 17, Analysis of Alternatives), and ensur- the environmental and social bases for choosing a pre- ing that such measures are implemented. EA reports are . ferred location for a 'project will not necessarily be evi- essentially planning documents with no legal basis. In dent within the EMP. Some of the primary objectives of mnany cases, mitigation measures outlined in EAs are mitigation measures-are- summarized in Box 1. described in illustrative terms, or have neither been committed to by the borrower nor reflected in the Mitigation.measures may be broadly defined as either project design. In this regard, the EMP is a basis for structural or non-structural Non-structural measures" negotiation and reaching agreement with borrowers on include improvements to the. legal or institutional a project's key social and environmental performance framework, economic incentives (such as realistic pric- standards. The components of an EMP are described in *ing of utility services), training, and measures to ' the section below on components. Insert in Update Binder chapter 1 associated action plan (in effect an EMP) is often the best approach to determining the nature and extent of environmental concerns at an existing facility. The plan should identify appropriate mitigation measures, esti- mate the cost of proposed measures, and recommend a schedule for implementing them. For certain projects the EA report may consist of an environmental audit, in t.. g<. other cases, the audit is part of the EA documentation and the EMP. World Bank Policy in relation to EMPs The Bank's Operational Policy 4.01 (OP 4.01) identifies ~~ ~ 7y~~ EMPs as an essential feature of category A projects; for. ,category B projects, the EA.may result in development of an EMP only, with no separate BA report. The specific < i g g requirements relating to EMPs are set ofit in Annex C to the Bank's business procedure 4.01 (BP'4.01)-these Y5Si procedures are mandatory. The content of BP 4.01 is largely reflected within this Update, which also includes many elements of recommended good practicle. Components of an EMP There is no standard format for EMPs. The format needs to fit the circumstances in which the EMP,is being de- oped and the requirements whieh'it is designed to meet. Mi,igation measures and the means of ensuring, their implementation for larger category A projects will often be desiirib ed in s ome detail. Conversely, an EMP anising from an environmental, audit might be summa- rized in a one or two page schedule. An EMP may be prese~nted as two or three separate plans depending b borrowing country requirements and project circumstances. The EMP should be formulated in such a way that it is easy to use. References within the plan should be EMPs are essential elements of EAs for. Category A clearly and readily identifiable. Also, the main text of the projects, but for many Category B projects, a simple EMP needs to be kept as clear and. concise as possible, EMP alone may suffice. Typically, this applies to smaller with detailed information relegated to annexes. The projects not affecting environmentally sensitive areas, EMP should identify linkages to other relevant plans which present issues that are narrow in scope, well- relating to the project, such as plans dealing with re- defined, and well understood. Alternative approaches settlement or indigenous peoples issues. The. following may be more effective in integrating environinental aspects should typically be addressed within EMPs. concerns into the planning process of such projects, including: environmental design criteria and emission Summary of impacts: The predicted adverse envir.on- standards for small-scale industrial plants; design crite- mental and social impacts for which mitigation is re- ria and construction supervision for small-scale rural quired should be identified and briefly summarized. works; and environmental siting criteria, construction Cross-referencing to the EA report or other documenta- standards, and inspection procedures for many social tion is recommended, so that additional detail can fund projects, such as housing or local schools projects. : readily be referenced. For industrial rehabilitation, expansion, or Description of mitigation measures: -The EMP identi- privatization projects, an environmental audit and fies feasible -and cost effective' measures to reduce 2 potentially significant adverse environmental and social. Legal frameworkfor environmental protection: Is the impacts to acceptable levels. Each mitigation measure. framework for protection ancd management of should be.briefly described with reference to the impact resources affected by the project robust, and sup- to which it relates and the conditions under which it is. ported by enforcement measures? required (for example, continuously or'in the event of * Responsibilities for environmental management: Are' contingencies). These should be accompanied by, or these clearly defined i-n relation to the resources' referenced to, designs, equipment descriptions, and affected by the project, and adequately resourced? operating procedures which elaborate on the technical - Responsibilities fQr implementing mitigation measures: aspects of implementing the various measures. Where Are these clearly defined for environmental and the mitigation measures may result in secondary im-. social mitigation measures, and adequately pacts, their significance should be evaluated. resourced? * Legal basis for mitigation: Do the project legal docu- ' Description of monitoring prQgram: Environmental ' ments help to ensure that borrowers implement performance monitoring should be designed to ensure mitigation measures? that mitigation measures are implemented, have the, intended result,- and that remedial measures are -under- When the borrower's-institutional or technical capac- taken if mitigation measures are inadequate or the im- ity to effectively implement mitigation measures proves pacts have been underestimated within the EA report. It inadequate, a specific environmental component may be should also assess comphance with national standards included in the project to strengthen that capacity. Insti- and World Bank Group requirements or guidelines. - tutional difficulties may soimetirrmes be best resolved - through establishing an autonomous, stable and quali- The mnonittoring program should clearly indicate the . fied project:implementation unit. If the project imple- - linkages between impacts identified in the EA report, menting agency lacks sufficient commitment or capacity indicators to be measured, methods to be used, sam- for carrying out mitigation measures, it may be prefer- pling locations, frequency of measurements; detection able to contract out operational responsibility for these limits (where appropriate), and definition of thresholds. measures. that will signal the need for corrective actions, and so - forth. Although not essential to have complete details of Implementation schedule, and -reporting procedures: monitoring in the EMP, it should describe the means by. ' The timing, frequency,, and duration of mitigation.mea- which final monitoring arrangements will be agreed. For sures should be specified-in an imnplementafion sched- additional details, refer to EA Sourcebook Update no. 14: u tle, showing links with the overall project '- Environmental Perfonnance Monitoring and Supervision. implementation plans (PIP).-Where implementation of mitigation-measures is tied to the project legal agree- -Institutional arrangements: Responsibilities for miti- ments, these linkages should be outlined. For example, gation and mQnitoring should be clearly defined. The . some mitigation measures may be made conditions for ' EMP should identify arrangements for coordination . loan effectiveness or disbursement. between the various actors responsible for mitigation. -. ' . - . Procedures to provide information on the progress Environmental management usually involves many and results of mitigation and mcnitoring measures governmental bodies and other agencies, and links be- . should also be clearly specified. As a minimum, the tween the-various actors are often complex and the hier- recipients of such iriformation should include those with ' archy for decision making unclear. Agencies may be responsibility for ensuring timely implementation of somewhat territorial, and reluctant to consult with or -mitigatio'n measures, and for undertaking remedial ac- share information with others: Conflicts riay also arise tions in response to breaches of monitoring thresholds. between institutions, particularly between those pro- In addition, the structure, content and timing of report-. moting development and those with a miandate for en- ing to the Bank should be designed to facilitate supervi-. vironmental protection. Shared or overlapping sion. The Task Manager should carefully consider responsibilities within several institutions can also - arrangements for tracking receipt (and subsequent dis- - hinder effectiye enforcement of environmental control semination) of monitoring reports. measures. It is important to account for such location- - -specific circumstances and constraints in developing Cost estimates and sources of funds: These should be EMPs. - . ' specified for both the initial investment and recurring expenses for implementing all measures contained in Some of the key legal and institutional considerations the EMP, integrated into. the total project costs, and with respect to EMPs are: factored into loan negotiations. 3- Where practicable, decisions regarding appropriate Flexibility is best achieved by ensuring that response mitigation measures should be jistified by an economic arrangements can be rapidly adapted to n6w and chang- evaluation of potential environmental impacts, aimed at: ing circumstances. Decentralization of responsibilities for EMP implementation, where appropriate, can aid * Measuring the cost-effectiveness of different mitiga- flexibility, for example by empowering those responisible tion options where a project is required to meet a set for monitoring to sanction and undertake remedial mea- of environmental standards or achieve specific sures. In some cases, the project design changes follow- environmental objectives ing appraisal and even during implementation, which * Determining the appropriate level of mitigation highlights the importance of periodically revising EMPs. where there is scope for a trade-off betwveen envi- ronmental quality and the costs (and benefits) of' Public involvement in developing EMPs achieving it * Internalizing the economic value of residual impacts The EMP should clearly describe and justify the pro- or intended environmental improvements into the posed mitigation measures to facilitate public consulta- final economic appraisal of the project. tion. Consultation with affected people and NGOs should be integral to all Category A projects, and are ad- The level of mitigation required may be determined visable for many Category B projects in order to under- by political or legal considerations, Bank requirements, stand the acceptability of proposed mitigation measures international agreements (see Update no. 10: Interna- to affected groups. fri some situation5, the development - tional Agreements on Environment and Natural Resources), of environmental awareness amongst stakeholders is stakeholder needs, or a combination of these factors. It important to ensuring effective consultation on the is important to capture all costs-including administra- iMPort tojensuingfete sultatd onithe EMP.. Where projects involve,socially and politically tive, design and consultancy, and operational and main- sensitiveland acquisition or resettlement, these issues tenance costs-resulting from. meeting certain standards should be fully addressed in either the EMP or resettle- or modifying project design. The aim is to satisfactorily ment action plan (RAP) or indigenous peoples develop- mitigate adverse impacts at least cost. ment plan (IPDP). The costs of preparing an EMP, which are borne by The consultation process should help to design the borrower, vary depending on factors such as the .- achievable mitigation measures. In this regard, it is rec- complexity of potential impacts, the'extent to which ommended that the affected public participate in the international consultants are used, and the need to pre- design of such measures, particularly where their suc- pare separate EMPs for sub-projects (for example with cess depends on buy-in or actions on their part; Where sectoral investment loans). Options for financing in- appropriate, this may be supported by including formal clude the borrower's own resources, project preparation requirements within the TOR for public participation in facilities (PPF), institutional development funds (IDF/, developing the EMP. or trust funds. Implementation costs may be met from the project loan, the borrower's/sponsor's own re- Usually there are no formal mechanisms for the pub- sources, or from trust fun'ds. lic to determine whether environmental commitments made by a proponent or government in the EMP are Maintainingflexibility of EMPs followed. It is recommended that information on progress with implementing mitigation and monitoring EMPs should be dynamic flexible, and subject to pern- activities should be shared with the affected public. odic review. The extent to which EMPs should be re- viewed and updated varies between and within sectors. EMPs for strategic EAs As a rule, where the major environmental impacts are associated with the operational rather than the con- Whereas the aim of project specific EAs is to,ensure that struction phases (particularly where operations are in- projects, are implemented in an environmentally accept- herently variable), EMPs should be regularly revised. In able manner, strategic EAs are aimed at ensuring that part this is linked to the influence of changes in legisla- the choice and design of projects are inherently accept- tion on such operations. For example, an EMP for a able from an environmental perspective. They also aim road or a river crossing should be subject to review to establish a sound basis for mitigation, monitoring, throughout the construction period, but thereafter the and management at the project level. impacts are either static or best controlled by traffic management. Conversely, an EMP for a power plant or An EMP derived from a regional EA should help to muining operation should.be revised at regular.intervals. establish a sound planning and management framework throughout the operational lifetime of the project. - that. provides for addressing cumulative, direct and 4 indirect impacts of ongoing and-planned investments environmental management, to ensure that the EMP is through a spatial approach to mitigation, monitoring adequately budgeted, and to determine whether the and management. EMPs fo'r sectoral EAs should recom- mitigation measures are properly addressed in project mend measures for mitigating, mrnitoring, and manag- design and economic.analysis. ing impacts within the sector of interest, taking into account the overall environmental management capacity The Project Appraisal Docurnent (PAD) should sum- in the country. marize the main measures contained in the EMP, de- scribe environment=related loan conditionalities and EMPs for strategic EAs should include the following: covenants, and outline the program and budget for en- virohmental supervision. During negotiations, Bank staff * Recommendations for mitigation measures, tied to are responsible for translating the mitigation measures alternative development scenarios, to be irnple- in the EMP into the project implementation plan (PIP) mented at the national, area-wide or sector level and loan agreement. Implementation and supervision of * Guidelines for strengthening, adjusting, developing the EMP provisions should occur during project imple- or harmonizing long-term environmental monitor- mentation, operation and evaluation. ing programs, with reference to applicable standards and international obligations During project implementation, the borrower reports * Recommendations for changes to the environmental on compliance with environmental commitments, the management framework td ensure adequate envi- status of mitigatory measures, ind the findings of moni- ronmental resources management, and interagency toring programs as specified in the project documents. coordination. The Bank bases supervision of the project's environ- mental aspects on the EMP as set out in the legal agree- Strategic EAs should-highlight major impacts of con- ments for the project. cern in the sector or region, and strategic EMPs may prescribe standard approaches to subproject design and Translating EMP into legal agreement mitigation through environmental guidelines, manuals and monitoring requirnments. This reduces the scope of It is important to translate the main findings and recom- work for individual EAs and EMPs for subprojects, and mendations of the EMP into the legal documents, the can positively influence investment activities throughout principal legal instruments being the "loan agreement" the-sector or region. (for the IBRD and IFC) or "development credit agree- ment" (for IDA) entered into with the borrower and the Ensuring implementation of EMP commitments "project'agreement" entered into with the pfoject ex- ecuting agency (where applicable). The loan/credit 'Effective implementation of commitments set out in agreements normally include the terms of the loan or EMPs is aided by the borrower and Bank staff'under- credit/guarantee, repayment obligations, provisions for standing their responsibilities at each stage of the the use of the proceeds of the loan and for the procure- project cycle, and by translating these commitments into ment financed by it and, in this context, obligations with a form that is legally binding. These aspects are dis- respect to the carrying out of the project in question. cussed below. Such obligations can include the borrower's undertak- ings with respect to the environment and are comple- Responsibilities of Bank staff and borrowers mented at times by detailed requirements in "project agreements" concluded with th e project executing The borrower or sponsor is responsible for preparing agencies. A &nd implementing the EMP, and TOR for EAs should clearly reflect the importance of preparing a comprehen- A key condition for effective environmental imple- sive EMP. In practice, when the draft EA report and mentation is the extent to which there are clear and EMP are submitted to the Bank prior to appraisal, many specific environmental deliverables and performance mitigation measures will be tentative or illustrative. indicators in the EMP and PIP, including adequate bud- However, the EMP needs to be finalized during ap- geting and specificity about financing of environmental praisal and agreed upon during negotiations; together . measures, and associated environmental clauses in loan with performance monitoring indicators. agreement and contract documents. When this is not the case: there is frequently less commitment on the The responsibilities of Bank staff vary depending on part of the borrower and its implementing agencies; it is the stage of the project cycle. During appraisal, Bank more difficult to supervise projects in terms of their en- . staff are required to review the EMP with the borrower, vironmental aspects; the supervision is less effective in to assess the adequacy of the institutions responsible for terms of influencing.the subseluent course of action; 5 and there is generally less environmental information in The vital link with the activities defined in the EMP is supervision reports. Lack of specific environmental the environrmental conditions and covenants the bor- clauses also makes it more difficult for implementing rower and the Bank agree on. The basic factor to be agencies and contractors to know what is expected. considered include required activities and timing, as- Some of the options for irniproving the legalbasis for signrment of responsibilities, and inclusion of appropri- - environmental mitigation are given in Box 2. ate funding and reporting arrangements. To reinforce Box2. Iaompvng ith leg s o motition a o t b f s : C tinsuincr5aigyb p opredthait ilnkdto t hasae Mprjcmtenshintod appropiae olanugedt follo enppronriane-rnvated. ea goeditins, coean n mlmntto ceue n thleal hgeemets, For sfthistapurpostb sedueralsoption * are available: ~ ~ ~ ~ mih icld caue rlaig o Cq i impornt tor e EMa requtiremont oa d o e.f- migayd bentheabet dcmeants tof ensurenthaproblgres awthitigtio Preevtoioan effetiveness lladcptheetn co cltiloningicuat semeton the achievement ofdkey e onmental m estoearrie ecent i f weight. Fori empl whnsubprojectst o lso intauye environmentally daagig ae n ar ae p to poe apvl it is 6importat to condjtio d s o satsft reie o E r inor th concened aes wheepnimplten o pefraceipoe. Coeat have the ad tge of brng* key issus t thehi apr -g,'atntio fbth flnk supervisio f ad heimpeetn a#nie on thg' th mai se ctions ofh0 th lega agreement .d D couni ry aisnd cpait for0 imlementato ndefremen e deqae a genea stt rn ulnt ma be; sufent.00 00; thae legldcumntsiti^s reommededthta monitr- pat ofthe basi fo seetn cotacos Cotrators00 legalagremnt.a * *eimental, health,s a nd saftet stgandardstreduce associ ding leandcnrc documents to isrcmensued that aobniatir-ns . paresrato of the natura lasletndscaperators Cotheaetents are clearly communiated tocontrctor Th biddin posksible,iandcrestoraction indth e&enatiofnavoidabEA documents might also include environmental criteria as damages.. *6 * Conversion of construction camps and buildings into implementation of projects, and EMPs in particular. permanent residences, or removal to avoid deteriora- Therefore, it is vital that an appropriate supervision pro- tion into shantytowns gram be developed-preferably in collaboration with * Prevention of accidental spillage of contaminants, governmental implementing and environmental agen- debris, or other pollutants, especially into streams or cies as well as with affected populations and NGOs-to underground water resources monitor progress and analyze and overcome any ob- * Noise, dust and sediment loading stacles encountered in the implementation of the EMP. . * Ensuiring proper disposal of waste materials and Detailed guidance on environmental performance moni- rubbish. toring and supervision is provided in EA Sourcebook Up- date no. 14: Environmental Performance Monitoring and Supervision of the EMP Supervision. Bank experience confirms that systematic supervision and monitoring are fundamental to the successful 7 Prevkusy pid1iiw4 EA Sourceb*,pk Jp4ates Nun ier arni Date Nun4cr and l'ite I wWo4BkandEnv1ronxnentd Apr93 13 GdelinesrOutaIban4 l!4r.96 Assesnwni; An Overview atIve Dspo3a1 d 1eE*se Options ti$kta1 SCflIfl , X4 Env xnta1 Perforc Monhtorlig Jun. 96 nd Su'rvision Eimeat Aeview 13 R$ionaJ EflVni1e1A55$n1en JiniA6 S PehVerprw.enta1 Ot. 93 4 S4 ESInflt 16 ChUg o Matigzi, the EA Pwees 17 Atoent R rejxits Opporturitie  EW1O1¶Ii andisss Assnnh 6 Pviona&tronniental MarA4 18 WAwironjnentai JUL97 Asment 1an4Appnaches 19 eae*g tall atof 7 Coast1 Zn Memenh axd M. 94 Ewiwnta1 A et 1so nArabiv Thbsn Ov¶elopnwnt 8 CuJtual Hentage nnentai ep. 94  odive1$iY fl4 flvrouiiaflt4 ()cL 97 Anent(a1sinArabic) Aessmeiit 21 iioiuenta1 Izid and Rk 9 Implenwnting Craphie IM'nnation Jan.93 Syteria in E6niiiental esnnt 10 li rtaiinh Agrenents on Envfrment Mar.96 and NatmA Reaoune Rdevance 4M  vta1 Apr. Applhc - ~~~~~~~opportuinities will arise during project design to Aensurethat -00 - ho~~~~~~~~~~~~~~~~~~~vlneral gro oupshe A are gier special attention, that equith issues are -A A ~~~considered and. Stakeolde grouthat the needs pf may Anclue fr e :thepoorreceive Enivironmental A ., ~~~~~~~~~~~~~~Managemrent - A - . * he onearycostof eserch Plan s which result from tFhe EA process are more A A A ~~~effective. Box 1.2 ptovides A Governments i oexamples fromnsev- A ~~~eral recent World greater trasprecyanacoutailtycasebdeligitis Bank-funded projects in which public con- sultation has contrib- -uted substantial ad ded value. furthe undThe Costs and - 7 ~~~~~~~~Risks of Public Consultation A -~~~~~~~~ . ~~~~Altho'ugh consulta- A--tions offer significant A ben~~~~~~~~efits to all stake- - holder groups, they also involve real - The Benfits of ublic Conultationcosts, which ma-y-fall disproportionately on one group- - - . usually the proponents or sponsors of a project. Such Stakeholder group's benefits from public consijiltation cssicue may include fOr example: - - * ~The monetary cost of research and of commi-unicating * Fewer conflitcts anid delaiys translate into imrproved - with the public -- - profitaIbility for inveistors - *Extra time and resources to manage consultation e~~~~~~~~~~~ 2 Governments improve-decisionmaking and secure The cost of delays and/or uncertainty that may be greater transparency and accountability caused by dealing with issues raised during Public agencies and NGOs may gain credibility and -consultation and building these into the schedule of -further understanding of their mission - project activities.- -- - 2 sustainability and the contribution of international agen- Box U Impaets of Plibk CotiSbit;s, / w cies and NGOs. In a Sid Wstie Anamet ied e gaz s tion Eastern CariStates negtiveenvirotuaW-. taim#actsofaproposedncllsiteinGeVwindaW khl SECTION 2-DESIGNING AND IMPLEMENTING A the A te had missed we iwre identieftedthg p`blc PUBLIC CONSULTATION PLAN consultatnio leading to the potection iaendan m gered sees. Many countries do not share the traditions of public de- PUbkic conulmt4tions ona -Water Mn-agement Pnhjeet S bate, transparency, and accountability that have become EspiritoSanto, Braz, serv4toidentify adverssoc central to the Western model of democratic ipacs and help in itedevlmt o appr.priate decisionmaking. Indeed there may be resistance to acceiitordmeases to prtt an tns broad consultation in centrally planned or culturally con- access to daF deposits and -prvet a ecline - tt the h servative societies. Thus gaps or contradictions may arise g standardqfa nearby urban irhod. - . . between the Bank's legal and policy requirements and - in fhe C ia Eneg Sector Twhtnical A nce Proi 1 -. those of the client country. It is important to identify .ha1N to thoe nanaalpowr se stteg weree such gaps early so that they may be addressed in the agreed upon by a wide-range of seholde, h consultation plan. withinandteyotid te etter, thrh adtioat-vel cnsultation program,. helprnt° to .uild COZ1S~XISU& It may also be the case that not all members of the Pnblic consultationin the EA of ihe AliaFrt EA team fully appreciate the benefits of consultation. In :n ject identified the need bra program of fti u such cases a clear strategy, a systematic methodology p{blkrons<ationf in the mananementkif state foe-s carried out by a well-integrated team, facilitates the arid helped to identfy the maor issues to beiv-.es d understanding of the benefits of public involvement and before suta prograrnxould X tplC.iIttfl4 - . may influence the outcome of the EA process in favor of Consultation wfrhgroups affected by flood ootiol - the affected parties. pr#ct in the Ecuader LoW Gtiy4s Ft ntn4 Pt.e. resulted i anges to the talgnment of floodev-cu_in Key Issues in Developing a Strategy canals, despite highercotsi to savean importtan Wet-. lands area. . . - . * . . -A number of issues must be considered when planning As part of the ChinayLfenan a detafi- a strategy for consultations. analysis of oaes ibted amoresi- dents seied to idenrtify c.ne aboutlatd qLisiTi, Define goals clearly. The general goals of consultation .reloation,and-resetmnrt. The A recomnda tinare described above but, in addition, consultation pro- induded inreased issemination of information and . grams may provide excellent opportunities to achieve .consultatio efforts. - .' . * . ' goals associated with the wider development aims of the Moreover itis not possible-or desirable-for th'e Bank arid the client country. These may include building Moreover it is not possible-or desirable-for the capacity, encouraging NGOs, or improving decision- proponents of a project to retain complete control of the p consultation process, once it'is underway. Strongly felt making. The success of the progr-am' depends on having consultation process, .nce it is unerwaySclear, well-defined goals that are understood by all ma- stakeholder concerns and the activities of special inter- est groups, justified or not, are among the wide range of jor players. factors that may divert the process into unanticipated Accommodate localegislation. As meaningful consul- avenues. Conflicts may arise that prove difficult and tation-in environmental'decisionmaking in its diverse costly to reconcile or that cannot be addressed within forms wins acceptance worldwide, basic legal require- the scope of the project. ments for access to inf6rmation cnd consultation have been instituted in many countries. The consultation plan Such risks and their cost implications can be mini- must therefore consider the legal requirements of the mized, but never entirely eliminated, by careful prepara- country in question and examine the extent to which tion and management of'the process. The risks are they complement or coincide with World Bank policies balanced by the fact that, overall, the process is likely to and procedures. Conflicts may arise not only about the enhance the project's long-term sustainability. It is the need for consultation, but also about the timing, scope, responsibility of the task team leader to assess the costs funding, methodology, and the use of the findings. Ad- and risks of consultaticon, weigh them against immediate ditionally, international conventions.may apply. A dia- and long-term benefits, and ensure that the balance is logue to accoffmmodacte differing requirements and positive. This assessment should take account of the resolve poten'tial conflicts should be initiated early in the wider context of global concern for environmental process. 3 Secure commitmnent to effective, implementation. Th'e success of a consultation exercise requires that local ,- authorities and project proponents (if they are different) understand its purpose and are committed to its success. c ^ I - ,xbfk i-. Their positive attitude will give the process credibility 6 t g y uI)eor and play a large part in securing the trust and coopera- tion of the public at large. Moreover, the quality. a d and ili Wb; ^; A -iyg follow-through of the process are enhanced if those tiyf $4aio,3 Uldt16d who are investing time and money are convinced that resources are being well spent. . . Determine responsibility for implementation. The i target area may not have institutions with the capacity - and skills to collect and analyze data, interact- effectively with the public, and interpret findings for decisionmakers. It may be possible to increase capacity a o f through systematic training programs (see box 2.1), or it may bf necessary to engage local or international con- sil r dExpe-te bn-fits shue c . sultants. c I. any case it is vital that responsibilitiesfor undertaking o anthropology, o e consultations andproducingeoutputs areclearly defined, and-- that appropriate public authorities, accept (and are equipped * ~ e t .teo ~tt~ to play) a role in quality assurance. V/henimore than one c agency is involved in the project there is potential for conlflict over the implementation of the public consultation plan. I is critical to determine which institutions will be responsibler for al d overseeing implementation.of the plan anidwhich will be responsible for monitoring and evaluationi (see section 4). ~ cnPlan consultation timing and phasing. Conflictingl- p et budg eeta shoul cQnetses fo local os, whic imperatives may arise in regard to the timing of consul- Prisd ts-dbenih toe'-- tations. Private deVelopers often require confidentialitV (to avoid possible competition) and maywish to avoid potential conflict until they are reasonably certain of hiiiiv ~ h t~n their intentions. Where possible, public consultation- t4 - fi e mr4d 1 X b should begin before major decisions are finalized. In ~ itfb ~ y~n~~i~wtfd these cases the aim will be to build a consensus about ,M y ~ ~ ~ h the direction of the wider development effort based on the informed involvement of stakeholders. Where the-~ Bank has been approached after technical decisions are1 w have been taken, consultation measures may focus more yw aid4.tep- on mitigating negative impact's and resolving or con- i rdth Ii taiming opposition. Each stage of the EA cycle may re1 - -quire a different approach to consultation, supported by. the appropriate level of detail and involving a distinct group of stakeholders. The process may take several - ability of financial resources and specialized technical years for ver large projects, particularly in some devel- skills required. Expected benefits should be commen'su- oped countries .where greater resources and experience -rate with costs, and weight should be,giveni to the needs in consultation eoincide with a demanding public, as of disadvantaged groups. Professionals with back- demostrted n bx 2. wich escibe th o- pe grounds in sociology or anthropology, or with experi-. consultation pro'cess for the Charnnel Tunnel Rail Link in ence.in public consultation; conflict resolution, or England. ' -meaningful community consultation will usually be needed to design and implement a consultation plan. Provide adequate resources. The scale and scope of the 'Fees for such professionals should be foreseen in the consultation process must take into acc&unt the avail- project budget, as should expenses for local costs, which 4 :ox 2, Phasing of Consultafims overcome them or to minimize their effects upon the Box 2.2 Pasi:ng ofConlt-ations .poes process. e Channet Tunnel RagL Link Often different values inform local versus national * Etnsive consultation was built into the planing of a - perceptions of the future. Also the particular values of ratI hrik between London and the Channel Tunnel on c d m the south coast of England. All -feasible routes had to-' culturally distict miorties (for example indigenous pass through some of the most highly valued land- people) and the conservation of cultural diversity may scape and imost populous suburbs in England.. clash with the strategic priorities of the nation ( more electricity or irrigation water for example). In such cases goch sfage of design ivoked different stakehol e the task of the consultation strategy may be to educate - groups. Each such groupas approached with methods and inform stakeholders of each others' views and find apMriate to fs particular n'eeds and interests and- t the ppose o th pr need a nd ste. d . acceptable comprises rather than attempting to reconcile the p.oe of the p' oje at ''"fundamentally differing value systems. At the eariest stage the many local 4uthorities were consulted about local factors affecting feasibility, Be aware of the historical context. The public's past development plans inmthe area, and likely ervironmen- tal impacts. Insttutions and interest groups with re- experience with authorities, developers, or site operators sponsibilities or irtterests along each route were identi- is likely to affect its response to efforts to create a dia- fied and asked for comments. The inforrmation gained logue. Past broken promises or mismanagement often assisted in narrowing the choice to three main routes. leave a legacy of mistrust that can frustrate communica- Maps were prepared and distrbuted by dkect mail to tion. In such cases trust-building mechanisms (indepen- residents dose to toite alternatives. A preiininary EnVi- dent mediation, written outputs) must be included in ronmental Impact Assessment (EIA) was prepared anrd the consultation strategy. distributed, the environmental:constraints affecding each route were nmapped for easy comparison, and pub- each r*ute were mapped for easy comparison and pub. - Recognize the interests bf developers/proponents. It is ck meetins:were staged to explai the analysms *ic .ieetings'Were staged t-e-xplain the analysis. axiomatic that a properly designed Bank-sponsored once a single route was seeted, engineers cox-l project should have an overall positive social and envi- beg to identif and map with mare precision te lasudf ronmental effect, and that, potential adverse effects will to be purchased and public areas that might be suif~able be avoided, minimized, or mitigated. Meaningful public worksites. Detailed maps.were published in sections, . showing each residence arid public building afected. A consultation improves projects by helping to reduce the full E- A was published-explaiiatory leaflets were issued, uneven distribution of costs and benefits and by maxi- and residents were invited to discuss issues of concern. mizing opportunities that may arise for additional un- isputes temaininK unresolved were debated in publi planned gains. With this in mind, it is important that the in fro.t of the national parliament. - consultation strategy take account of the needs and urinng constructon, due to cmmertce in.20, con- interests of project proponents, so that perceived risks *tractors wil be required to publish their work pns and (in terms of cost, delays, future commitments) do not to make arrangements to receive, record, anid respond endanger project viability. to complaits; the developer wil rmaintain.a 24-hour telephoe hotline. Be prepared to hiear different views of the world may include "sitting fees" for government officials in Political context. Another unanticipated cost of public some countries. Where funds and expertise from exter- consultation is that associated with inflated expectations nal sources are necessary, the availability of such re- in response to investment decisions. Land invasions, sources throughout the process should be assured. rent-seeking activity, and unfair advantage, will need to be addressed as will the particular individual concerns Be aware of site-specific sensitivities. Difficulties often and positions of the powerful and politicians. Consulta- arise when carrying out consultations associated with a tions will need to analyze the public value of those in- particular location. They may be related to political or yestments and weigh them against the value to particu- cultural factors in the affected communities such as lar interest groups. The consultation process is a major restricfions on women or ethnic prejudices, or to the pillar on which transparency and accountability can be geography of the area (inaccessibility, poor communica- strengthened and with which corruption can be coun- tions, or diffuse settlement over a wide area). Such con- tered. Recognize that a consultation process can never straints must be identified when designing a. consulta- be politically neutral and that it is about the negotiation. tion strategy so that approaches can be developed to between different sets of values with different access to 5 power and resources-another reason for ensuring the Many of the techniques and methodologies that are effective representation for those who would otherwise used in social assessment can help identify stakeholders remain voiceless-the poor and the vulnerable. Recog- and assess how and to what extent a project affects nize that while it may be necessary to identify all rel- them. Social assessment can help to determine what evant stakeholders there are certain stakeholders with interests each stakeholder group has in the project, how whom one will not want to encourage consultation. those interests compare in importance, and which groups have the most influence or control. For instance, Planning the Consultation Process social assessment methodologies can help collect data Principals of planning of der on language and dialects, ethnic mix, division of gender The planning process should take full account of the roles, cultural traditions, environmental decisionrnaking strategic concerns outlined above, as well as the follow- mechanisms, recent history with development projects, ing key planning tasks: and key local concerns and priorities-all important in adequately identifying the variety of stakeholder groups * Identify all stakeholder groups (typically integrated (see box 2.4). with social assessment) * Identify the key issues around which consultation Scoping will be needed (scoping) Soi * Understand the decisionmaking process The first step in designing a plan is to gain an under- .dentein ten consultation .oint standing of the key issues and the areas where most of * Identify key consultation points the effort needs to be directed, including: * Select consultation techniques * Define a communication methodology - Develop a budget. * Environmental-and social issues (such as indigenous peoples or resettlement) or decisions at stake Identifying stakeholder groups * Key organizations and interested parties involved * Local authorities and the agencies involved This is a critical element. Failure to identify all relevant . Size of the issue or importance of the decision stakeholders can invalidate the entire process and lead * Urgency and fime frame. to conflicts that become intractable-although they might easily have been avoided or resolved at an earlier Understand the decisionmaking process stage. In general the basic questions to consider in iden- tifying affected populations and stakeholders (see box 2.3) are: The next step is to understand how environmental deci- sions are made: that is, to identify which parties (such as * Who will be directly affected? government, sponsors, or financing institutions) make * Who will be indirectly affected? which decisions (scope of the EA, site consents, building * Who might have an interest or feel that they are permits, or emission limits for example), and at what affected? points in the project cycle. 6 Box 2.4 Potential Costs of Inaequate Stakeholder Identification One df the consequences of failing to-identify and consult stakeholders is that incomplete, misleading, or false information may reach them through other means, creating tong-lasting, unwarranted hostility to the project. M4unicipal authorities in RMga, Latvia, received techrncal assistance to conduct a site survey for a new sanitary landfill. Consultation and social survey-work7was planned afer site selection during the full EA study. During site evaluation the local media discov.ered that oneof the shortlisi.sites was very close to,a pre-Worid War I Vattle site of great cultural sig-, nifarice, The veterans assoation became involved and qUestions were raised in paliiament. The Minister bf the Environ- ment assured parliament that the site would nofbe used. Through the BA process, the EA team discovered that the actual battle site need not be affected by the developxnerAt. Te veterans association cirmed that their conterns coula be addressed b minor modificainns to the project des. Application of the criteria for site selection ccinfirmed that this site was the most economical option then available. Reviv- ing the issue, however, risked raising a storm of pplitical protest, and the site was dis&llowed on that basis. Considerabiy-more attention waspaid to consultation frof that point onward, lnforamation was disseinatel through tinwspapers; televisian, community associations, and local governmert. A series of pubc meetings estabJished that a large, reservoirof public mstrustand hostility to waste-disposal schernes retnainedfrom the former Soviet govemment's poor site management. This issue, became a major corisideration in siteselection and the eventual decision not to develop a new waste-disposal site, but X upgade he existing dump Detenrine the necessary level of consultation dialogue will be required, but with a smaller number of people. If the public's direct input to decisionmaking is Public consultation and meaningful consultation typi- being sought, this waill likely involve ongoing discussions cally take place at three different levels: conveying infor- with a small group of representatives of stakeholder groups. mation to the public, listening to the opinions and pref- Site-specific factors, such as a history of local opposition to erences of the public, and involving the public in mak- similar projects in the area, will also be important in deter- ing decisions. The nature and size of the project, mining the level of consultations (see box 2.5). combined with both the nature and number of stake- holders and the status of national legislation will largely Identify key consultation poinits define when, where,. and what level of public consulta- tion is required for an EA and its Environmental Man- According to the OP consultation is required, at a mini- agement Plan (EMP). .mum, shortly after the EA category has been assigned (during scoping) and again once a draft EA has been For instance, if the aimi is to inform the public about a prepared. Timely disclosure of information is ,key (see project or important issue the initial numiber of people to section 1) and it may be useful to develop systems to contact will be quite large but the interaction may be limited. ensure that stakeholders receive information (including If puiblic preferences are being sought, closer contact and scientific reports) on time and in an accessible format. Box 2.5 Usinig a Variety of Consutation Techniques to Reach a Diverse Audience The Ghazi Barotha Hydropower Project is a major run-of-the-iiver power project designed to meet energy needs inPAki- stan. Because of the expected environmental,and social impact a thorou BA was condcted. The EA team.faced the chaUenge of informing diverse public stakelholder groups about the layout and workings of the project and listening to their corcerns. In order to reach the'range ofiaffected groups, therefore, the VA team devised a publfic consultation strategy that mixed a variety of techniques: -A survey of-a sampip of 15 viages that would be affected by the project was conducted early in the preparation proces.s. Cons,ultation techniques induded surveying andstructured interMews. - A suryey of women in the project area was carried out by a female sociologist in order tc learn the particularconcemrs of . women. * Scoping-sessions with natioi and proviheial assemblies, representatives tf the district administration and distrit councils, and national and internationW NGOs provided opportunity for debate with civil ety.- * -A focused census and sample survey was undertaken to determine, as precisely as possible, the actual number of people to.be affected-by the project their socioeconomic status; and the pattern of impact on various groups. * A Project InformatioiiCenter'vas planned for the project area to disseminate information to the pubic and respond to inquiries. Te center wl have available material written in the local -a age'tiat twi provide answers to comon questions and it will provide access to roject staff for face-to-face conversatios. . 7 While it is important that consultation take place before - T X . major decision points, the aimn should be to facilitate consultation throughout the preparation and implemen- tation phases. This implies that consultation will often be necessary as part of the research effort of the BA and 4 ~ a~A in the development of mitigation measures during the analysis phase of the study. M @ E 3 D A ) :C ~~~tHri *b xel i~r 1 :M Develop a btudget Whatever the approach to public consultation it will in- volve direct investment costs in terms of time and mate- . "W rials. Determination of the budget 'should take into con- - sideration such factors as the complexity of the project,mk the diversity of the stakeholders, and the importance of the effects, as well as such constraints as the availability vi st o. ofskilled practitioners, availabilityoffunds and project deadlines. The principal cost elements vary widely ac- ~ ~ cording to the context of the project but are likely to in-fit inwt dude some of the following: ( o .h te ove all d ionmagfework. gh time * Consultants fees 4Pcia d Hiring and outfitting of meetinbg venues m -.Public opinion surveys * Preparation and distribution of materials ltoa nteers * icldig aergelevl-f ductin,envrometal beexecte to mee~ttigh wdeadlnes Staff time preparing, attending, and keeping records on public meetings to be cdnveye * Maintenance of channels of communication (tele- C m phone hotline, radio announcements, or other f evn means) tn~r~iaig tatifr eTravel expenses. l~)aeh4~0 'C1Ot) n The budgets of the consultation eixercises described in k a fea boxes 2.1 through 3.3 ranged from US$25,000 to US$1.5 m-illion, or approximately 0.0025 percent of t'otal project , costs. w tw pe rmGn en Select techniques ~edvkp '~~csi i~i A variety of techniques is available to achieve meaning- ful consultation. The most effective programs will make Scin3lsscmol sdtcnqe,ofrn use of a range of techniques for conveying information, comnsnthiapiablytovrusiutos. listeing Q opnionsor cncers, an invlvin theThe acti'vities selected should be scheduled to fit in with public in decisionmaking (see box 2.6). D-eterminingthovrldcsinangfmwrkEouhie which technique is most appropriate will depend on: sol ealwdfrpol orcieifrain digest it, and comment sensibly, bearing in mind that *The number of stakeholders and their characteristics consultees are for the most part volunteers and cannot including average level of education, environmental be expected to meet tight deadlines. knowledge, and social and cultural status *The nature and, in particular, the, technical content of Achieving Openness and Transparency the information to be co'nveyed *The institutional situation of the country concerned, Communication methods should be transparent and particularly the types of skills and financial resources open to review. Some general principles for achieving available for the project. -this include notification, record keeping, and feedback. 8 Appropriate treatment of the Consultation proceeds in reaching agreement through dialogue. Available ap- the'EA report is summarized in box 2.7. proaches and tools may conveniently be categorized ac- cording to their suitability for: Notification. Clearly the target groups must be noti- fied how, when, and where they can participate. In gen- * Conveying information to the pub]ic eral, effective notification is highly visible to the target * Listening to public opinion audience, delivered early, uses more than one medium * Involving the public in decisionmaking. to reach the target groups, and is repeated shortly before major events. Matching Tools to the Immediate Purpose of Communication Record-keeping. A record of the types of consultation activities held, the target groups and numbers reached, Tables 3.1 through 3.3 outline the tools commonly used the information conveyed, and thestageatwhichthduring EAs for each purpose.2 Tools appropriate to any the information conveyed, and the stage a-t which the. priuapojcwllvyacrdn to th tv information was provided should be kept and analyzed particular project will vary according to the type of to reveal: - project and its setting, but an effective consultation plan will usually make use of one or several items from each of the three menus as part of an integrated program. * Summaries of views by type of stakeholder Conveying information to the public and listening to *A summary of points of agreement, disagreement,. issues raised and options discussed * Analysis of the validity of the concerns and issues Box 3.1 Con raised by different stakeholders - o t e * Recominended responses to valid comments Developers in a Central Asian country wanted to con- * Discussion of the implications and options for struct a factoTy and had selected a site near, to the city decisionmakers. center. A local NGO) was concerned about the site, arnd encouraged the 4evelopar to carry out a full EIA which included publicconsultation. Working together, the fac-: Feedback should be provided to the public, clearly explaining . tory management and theNGO nounted adispaand the response to their concerns, describing the decisions made created a prblic opinion video providinginformoation and why they were made, and explaining how the information about the design and location ph= and the potenfial they provided was used. Otherwise participants mayfeel that environmentaI impActs. ,their input had no impact on the decision and some of the he displayprovded genera ifo nation on the benefits of the process may be lost, and effective conslultation pros oject, incluing photogras and maps of may become more difficult in the future. the proposed tocation, liteature on the enmronmrental.. .impacts and prosaoed tnitigation riaasures, and the de- SECTION 3-TooLs AND TECHNIQUES FOR PUBLIC sign and architectural plans. The diiplay was set- tp at CONSULTATION the local town hall for a period of three weeks, approxi-- matey eight weeks, before the begirnng o;f any project -activi Tyhe PAGO anaalyz~ the restdts of- whfen notes Communication during environmental assessments in- ae N analyded ther die note: volves seeking information, imparting information, or develbypte.The- displayd prqved to be ant extelletrocom- -munins tool foralf concemed. 1i inforned certain sect - of the publictfiatoitherwise may not-have Box 2.7 Discussion of Public Consultation In an known about the factory development, and the publi- - EA4 ti.epot* .was able to voice goncems about the proposed site. Among the key issues related tb public consiutation thatshpuld be addressed-jn an v report are: public opinion are specifically required by the OP, while involving the public in decisionmaking is fundamental to * Methodologies used to informn and invohie the public quality EA. Building consensus often has the added in the EA process -*- Analyis of the data and ormation gathered.. value of building trust and ownership, leading to part- Discussion of the strategic issues prsented in section 2 nership during EMP implementation. * Documentation of public meetings and interews, inddngates, amesttopicsof uss; andConveying Inforrnation to the Public lncldl~dats,,names, topics' of discussion,' And important outcomes * Recommendations Un how the project might address . Table 3.1 summarizes some of the most commonly used or tate issues raised during publi cosuWttion techniques for conveying information to the public and lists * Recommendation sfor ongoing public consultatioh some of the advantages and disadvantages of-each. Box 3.1 during the EMP. provides a practical example of the application of diverse techniques to achieve differentcommunication objectives. 9  . . I . I  . . 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Use of a Mediator to Resolve Conflicts Occidental Petroleum Corporation's Experience in The government of the Lao People's Democratic Re- iBangiadesh . . - - .public requested financial support from the World Bank * ' . ' . . ~~~~~~~ . , ~~Group for the Nam Theun II Hydrbelectric Project. The. Obcidental Petroleum Corporation (Oxy) entered into a main features of the project are.a dcam on the Nam production-sharing contract with the Bangladesh Na- `-Theun river, a reservoir, a powerhouse, and transmis- tion, Oil Corporation to explgre and develop gas fields sion liries. The projectwill have substantial social and in the Northeast of the couitry. The International Fi- enviromnental impacts, including the relocation of nance Corporation (IFC) provided some of the capital 4,500 people and the inundation of over 400 square ki- investment, ard an EA was produced in accordance lometers of the Nakai Plateau, 30 percent of which is with IFC guidelines. Seve al aspecfs of the local culture. forested an(d horme to "several important.species. demanded an innovative approach to social assessment. - ' . -' . - .'Because of the magnitude of both the environmental A physical. survey that they carried.out of the envi- and social impacts, public consultation took place at the, tonment around the proposed sitei