Environment and Safeguards Case Study: ADB Policies

1. Environment and SafeguardsCase Study: ADB Policies Session on Planning & Policy Rita Nangia Asian 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.

2. Session 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

3. Contents • 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

4. Why Do We Need to Worry About the Environment?

5. Environmental 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

6. 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

7. Major 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

8. Cross-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

9. Policy 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

10. Safeguards: 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

11. EA SP IP IR ADB’s SafeguardsPolicies Environmental Considerations (Environmental Assessment) Subject to ADB’s accountability mechanism Applies to all public and private sector projects IndigenousPeoples Involuntary Resettlement

12. Environmental Assessment

13. Environmental 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)

14. Environment 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

15. Environmental 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

16. Environmental 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

17. 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…

18. 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

19. Process • 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

20. Process • 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

21. 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 Contents of EMP

22. Involuntary Resettlement

23. Involuntary 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

24. Indigenous Peoples

25. Indigenous 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

26. Common 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

27. Common 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)

28. Project 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

29. Safeguard 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

30. Categorization

31. Role and Responsibility of ADB and the Borrower in Safeguards Preparation and Implementation

32. 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 Borrower and the ADB: Who Does What?

33. Some Final Points • Distinction between procedural and substantive compliance • Need for continued awareness raising and training • Building country level capacity

34. Loan 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

35. Northern Economic Corridor Project

36. Basic Information • A 228 kilometer road project in Northern Laos connecting Kunming to Chiang Rai • 98% of population ethnic minorities • Poverty widespread

37. Complexities: 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

38. Impacts • 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.

39. Table 1: Logging in Louang Namtha and Bokeo Provinces Source: Ministry of Agriculture and Forests, Lao PDR

40. Summary Environmental Matrix(See Appendix 1 of SEIA)

41. Summary Resettlement Matrix

42. Source: Draft Resettlement Plan.

43. Source: Draft Resettlement Plan.

44. Participative 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

45. Participative 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.

46. Participative 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.

47. Key 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.