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Environment and SafeguardsCase Study: ADB Policies

Session on Planning & Policy

Rita NangiaAsian Development Bank

The views expressed here are those of the presenter and do not necessarily reflect the views or

policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they

represent.

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itSession Description

• The Session covers topics at both macroeconomic

level and at project and policy planning levels.

Environmental challenges

Problems of urbanization and resettlement

Project level Issues

ADB’s guidelines

Good practice: Northern Economic Corridor case

study

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itContents

• Why do infrastructure planners need to worry about

environment?

• Policy and project level Issues

Special challenges of cross-border projects

• ADB’s guidelines

• Good practice: Northern Economic Corridor

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Why Do We Need to Worry

About the Environment?

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itEnvironmental Dynamics in Asia

• Decline in quality and quantity of natural resources

• Degradation of fundamental ecosystems, (e.g., natural

cycling of water and nutrients and biological dynamics)

• Increased climate related environmental hazards such

as floods and droughts

• Water and air pollution

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• Degradation of natural resources Freshwater resources Marine and coastal

environment Land degradation Deforestation Loss of biodiversity

• Ecosystems Loss of fish catch (e.g.,

average hourly catch fallen from 250 kgs to 18 kgs in Gulf of Thailand)

• Air pollution Urban air pollution (3 - 6

million life years lost) Cross-border (trans-

boundary) air pollution Climate change

• Others Solid waste problems

(more than ten-fold increases)

Hazardous substances and wastes

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itMajor Causes of Environmental Stress

• High income growth

Rapid production increases in agriculture +60%

Industrial production growth +40%

• Rapid globalization in Asia leads to

Leads to global consumption patterns

High urbanization rates

High energy use and low energy efficiency

• Development model biased towards economic growth

• Weak institutions, policy and planning

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itCross-Border Environmental Conditions

• Haze incidence of 1997-98

Losses around $9 billion

9 million hectares of land

70 million people affected

• Atmospheric brown clouds

• Air pollution due to SOx and NOx

Resulting losses due to acid rain

• Even difficult to assign responsibility for relatively simple impacts

such as logging and loss of biodiversity across borders.

• Weak institutions, policy and planning

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itPolicy Level Issues

• Differences in policy environment to deal with environmental and social offences

• Differences in institutional framework and legal remedial measures

• Quality of institutions

• Often remote areas difficulties in monitoring

• Negotiations to who pays the costs and system of compensation for those impacted difficult to arrive at

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itSafeguards: Why?

• Belief that nobody should be worse off due to projects and programs

• Prevent and mitigate harm to people and their environment in the development process

• Improve environmental and social sustainability of projects

Improving overall development outcomes

• Address reputational risk to ADB

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itADB’s Safeguards Policies

Environmental Considerations (Environmental Assessment)

EA

IR IP

Indigenous Peoples

Involuntary Resettlement

Subject to ADB’s accountability mechanism

Applies to all public and private

sector projectsSP

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Environmental Assessment

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itEnvironmental Considerations

• Potential environmental impacts are identified including indirect and cumulative impacts, and their significance assessed

• Alternatives are examined

• Least-cost (mitigation) measures are designed to avoid or minimize negative impacts and achieve environmental standards

• Environmental management plans prepared (with institutional arrangements, monitoring program, time plan and budget)

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itEnvironment Policy

• Promote environmental interventions to reduce poverty

• Mainstream environmental considerations in economic growth

• Maintain global and regional life support systems

• Build partnerships

• Integrate environmental safeguards in ADB operations

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itEnvironmental Assessment

• A process of environmental analysis, planning and

management

To mitigate environmental impacts

• Integrated with assessment of other aspects of project

(technology, economic viability, social analysis, etc.)

To establish project feasibility

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itEnvironmental Assessment

• An ongoing process

• Starts early and continues throughout project cycle

• Required for all public and private sector projects

• Required for all project components whether financed

by ADB, government or co-financiers

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it Guiding Principles

• Avoid, minimize, mitigate and compensate

environmental impacts

• Screen, classify and assess significance of impacts

• Examine alternatives

• Design least-cost mitigation measures

• Achieve environmental standards

• Categorization based on significance of impact of most

sensitive component Location sensitivity

Scale, nature, and…

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it Guiding Principles

• Categorization … (continued)

Magnitude availability of cost-effective mitigation measures

Classify early (after concept clearance)

Ongoing process, category may change

In case of major change in scope during implementation,

classify change

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itProcess

• Prepare environmental management plan Mitigation measures Institutional arrangements Monitoring program Budget

• Disclose information and consult affected people and public

Category A required at least twice Category B projects at least once Borrower’s responsibility to consult

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itProcess

• Disclose information… (continued) Groups affected by the proposed project and local NGOs

Borrower to provide information in form and language(s)

accessible to those being consulted

Disclose SEIA to public through web, 120 days in advance

of Board consideration; Need to make EIA available on

request

Make environmental monitoring reports publicly available

upon submission

• Monitor and report results

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itContents of EMP

Before ADB Board Approval

Draft EMP

• Environmental impacts

• Proposed mitigation measures

• Monitoring programs

• Public consultation activities

• Responsibilities for mitigation

and monitoring

• Initial cost estimate

Detailed Engineering Design

Final EMP

• Final EMP broken down into

contract level-EMPs

• Mechanisms for feedback and

adjustment

• Final responsibilities for

review, monitoring and

reporting

• Final cost estimates

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Involuntary Resettlement

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itInvoluntary Resettlement

• IR addresses social and economic impacts caused by acquisition of land or fixed assets, change in land use, restriction on access to land

• IR is to be avoided, where feasible, and minimized

• If IR unavoidable, compensate affected people at replacement cost of assets and/or through livelihood/ income restoration and social rehabilitation measures

• IR measures to be designed with time-bound actions, adequate budget, institutional arrangement and monitoring program

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Indigenous Peoples

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itIndigenous Peoples

• IPs include groups with social or cultural identities distinct from the dominant or mainstream society

• Interventions should: Achieve reduction of poverty among affected IPs and

extend benefits to them Be designed with their informed participation Be equitable and consistent with their needs and

aspirations Minimize, and mitigate negative impacts, if unavoidable

• IP development plan to be prepared if IPs are affected significantly or adversely

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itCommon Features

• Involves a structured process of screening, assessment, planning and management to address the impacts of projects

• Starts as soon as potential projects for ADB financing are identified and continues throughout the project cycle

• Applies to all projects, including private sector operations and to all project components whether financed by ADB, Government or co-financiers

• Information disclosure and consultation specified in ADB’s public communications policy

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itCommon Features (continued)

• Information on environmental, IR and IP issues is made

available to affected people before or during

consultation with affected people/groups and local

NGOs

• Safeguard reports are made publicly available

• Information disclosure and public consultation apply to

Category A and B projects (three safeguards policies)

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itProject Classification

• All projects are classified (ongoing process)

• Category (A, B, C, FI) based on most sensitive component

• Significance of impacts Environment: Depends on type, sensitivity, scale and

location of the project, the nature and magnitude of potential

environmental impacts

Involuntary Resettlement: Depends on number of people

physically displaced and/or income and productive assets

lost

Indigenous Peoples: Depends on nature of impacts

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itSafeguard Documentation

• Reports requirements depend on significance of impacts (A, B, C) and lending modalities

• Environment - Environmental Impact Assessment (EIA) Initial Environmental Effects (IEE) Environmental Management Plan (EMP)

• Involuntary Resettlement - Resettlement Plan (RP) Summary Resettlement Plan (SRP) and/or Resettlement

Framework (RF)

• Indigenous Peoples - Indigenous Peoples Development Plan (IPDP) Indigenous Peoples Development Framework, or Specific Action

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itCategorization

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Role and Responsibility of ADB

and the Borrower in Safeguards

Preparation and Implementation

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itBorrower and the ADB: Who Does What?

• Responsible for

implementation of

safeguard policies

• Advises borrower on

safeguard requirements

• Assists borrowers in

meeting requirements

• Monitors implementation of

agreed safeguards

• Capacity development

Borrower ADB

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itSome Final Points

• Distinction between procedural and substantive compliance

• Need for continued awareness raising and training

• Building country level capacity

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itLoan Documentation

• Environmental requirements included in loan documentation

• Government clearance of IEE or EIA if not issued before loan negotiations

• EA process to be adopted (special studies and mitigation measures) in case of uncertainties in alignments or location of facilities before loan approval

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Northern Economic Corridor Project

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itBasic Information

• A 228 kilometer road project in Northern Laos connecting

Kunming to Chiang Rai

• 98% of population ethnic minorities

• Poverty widespread

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itComplexities: Safeguard Aspects

• Project was in Lao PDR

• No GMS framework about cross-border projects Thailand’s process

• Weak institutional arrangements in Lao PDR

• Significant local impacts

• Significant cross-border impacts with uneven distribution of costs and benefits

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itImpacts

• Category A project

• Passes along Nam Ha protected area An important habitat to at least 37 mammals and 288 bird

species, including a number of endangered and threatened species such as wild Asian elephants, tigers, and bears.

• Project would require in Lao PDR Land acquisition of 122 hectares of mainly rice land 1.7 hectares of residential land, Affecting 2,550 people in 502 families, 543 dwellings, 61 small retail shops, and 133 rice storage bins, all of which would need to be relocated.

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Table 1: Logging in Louang Namtha and Bokeo Provinces

Louang Namtha Bokeo

Year Planned Quota (in m3)

Actual Utilization (in m3)

Planned Quota (in m3)

Actual Utilization (in m3)

1996–1997 3,000 3,000 2,500 290

1997–1998 3,300 2,172 3,000 3,000

1998–1999 2,300 4,160 1,000 1,613

1999–2000 2,000 2,000 500 500

2000–2001 2,300 2,320 500 500

Source: Ministry of Agriculture and Forests, Lao PDR

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Summary Environmental Matrix(See Appendix 1 of SEIA)

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Summary Resettlement Matrix

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itType of Loss Entitled persons Compensation

Dwellings Registered taxpayer or occupant identified during survey

Full replacement cost so as to enable affected persons to have a dwelling of the same size and standard.

Residential land Registered taxpayer or occupant identified during survey

Replacement land as a priority or sufficient cash at full replacement cost at current market value.

Expenses of residential relocation

Registered taxpayer or occupant identified during survey

Lump sum payment sufficient to cover all relocation costs

Rice storage bins Owner identified during survey

Lump sum payment sufficient to cover all relocation costs

Small retail shops Owner identified during survey

Lump sum payment sufficient to cover all relocation costs

Agricultural land Owner or person with use rights identified during survey

Replacement land of comparable yield

Source: Draft Resettlement Plan.

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itType of Loss Entitled persons Compensation

Crops and trees Owner or person with customary use rights

Full compensation of anticipated harvest at market value

Common property resources

Community losing the resources

(a) Restoration of affected community buildings and structures to at least previous condition;

(b) Replacement in areas identified in consultation with affected communities and relevant authorities

(c) Full compensation for loss of income.

Temporary impact during construction

Owner or person with use rights identified during survey

(a) Extreme care by contractors to avoid damaging property.

(b) Where damage does occur, the contractor will be required to pay compensation immediately to affected families, groups, communities, or government agencies.

(c) Damaged property will be restored immediately to its former condition.

Source: Draft Resettlement Plan.

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itParticipative Process

• Had to get multi-country agreement between four parties (Governments of Lao PDR, Thailand and PRC; and ADB)

• Working groups meetings

• Series of meetings on project design, alignment, environmental costs, and investments for mitigation

• Standards to follow

• PRC agreed to meet Lao PDR standards

• ADB had to ensure that its policies were met by Lao PDR

• Instruments used Loan documents Capacity building Third party monitoring

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itParticipative Process

• Environment Management. The Government will ensure that the approved SEIA will be implemented for the project road irrespective of contractual and financing arrangements.

• The Government will inform the bilateral financing partners of its safeguard obligations on ADB's loans and incorporate these aspects in bilateral loan agreements.

• Environment impacts of the Project will be minimized through the appropriate mitigative measures recommended in the SEIA.

• The Government will ensure that appropriate prohibitions are built into the contract documents for the contractors' work financed under loans from the governments of Thailand and the PRC so that negative environmental and social impacts are mitigated during construction.

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itParticipative Process

• The SEIA will be attached to the bidding documents and

appropriate clauses inserted into the contract documents for

all sections of the project road. In such cases where

contracting is carried out directly by the financiers, loan

documents will clearly specify these requirements.

• Within 6 months of loan effectiveness, Department of Roads

will strengthen the capabilities of the Environment and

Social Division in social analysis, particularly to monitor

social impacts of road projects. Additional staff resources

will be provided in areas of social development issues.

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itKey Messages

• The environment can be a real challenge and barrier to economic growth and poverty reduction in the region.

• Integrating these concerns at the planning stage can be the best solution;

• Need to address cross-border environmental and social (positive and negative) impacts;

• Policy harmonization is necessary to set acceptable standards of environmental considerations across countries.