ADB Safeguard Policy ADB Safeguard Policy UpdateUpdate

Environment PolicyEnvironment Policy

Stephanie Fried, Ph.D.Stephanie Fried, Ph.D.

Environmental DefenseEnvironmental Defense

May 2007May 2007

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this presentation and accepts no responsibility for any consequence of their use. Terminology used may not necessarily be consistent with ADB official terms.

Update processUpdate process• ADB announces plan for “update” of ADB announces plan for “update” of

safeguard policies: 2005safeguard policies: 2005• Safeguard Policies: Indigenous Safeguard Policies: Indigenous

Peoples, Environment, ResettlementPeoples, Environment, Resettlement• NGO Forum on ADB: NO to Weakened NGO Forum on ADB: NO to Weakened

Standards, YES to AccountabilityStandards, YES to Accountability• Deep concerns: end result will be Deep concerns: end result will be

weakening or elimination of weakening or elimination of safeguards, move away from safeguards, move away from internationally accepted normsinternationally accepted norms

Infrastructure PlansInfrastructure Plans

• $3 trillion in “infrastructure needs”$3 trillion in “infrastructure needs”

• $300 billion / year sought – $300 billion / year sought – increasing private sector increasing private sector involvementinvolvement

• Strong safeguard policies even more Strong safeguard policies even more importantimportant

EnvironmentEnvironment• Categorization: significantly weaker than WB (all Categorization: significantly weaker than WB (all

“sensitive” projects are Category A, require full “sensitive” projects are Category A, require full environmental assessment)environmental assessment)

• ADB has “B-sensitive” projects, no EA ADB has “B-sensitive” projects, no EA requirementrequirement

• WB: projects are sensitive if impacts “may be WB: projects are sensitive if impacts “may be irreversible” (loss of habitat), or relate to irreversible” (loss of habitat), or relate to indigenous peoples, natural habitats, indigenous peoples, natural habitats, management of cultural property or involuntary management of cultural property or involuntary resettlement;resettlement;

• WB: must analyze “without project” alternativeWB: must analyze “without project” alternative• WB: must recommend “any measures needed to WB: must recommend “any measures needed to

prevent, minimize, mitigate or compensate for prevent, minimize, mitigate or compensate for adverse impacts and improve environmental adverse impacts and improve environmental performanceperformance

RecommendationsRecommendations• Eliminate “B sensitive”, use WB standards Eliminate “B sensitive”, use WB standards

for sensitivityfor sensitivity

• Any project involving Politically Exposed Any project involving Politically Exposed Persons should be defined as sensitivePersons should be defined as sensitive

• PEP: individuals currently or in the past PEP: individuals currently or in the past involved in “prominent public functions”, involved in “prominent public functions”, heads of state, senior politicians, heads of state, senior politicians, government, judicial, military officials, government, judicial, military officials, executives of state-owned companies, executives of state-owned companies, close associates, family membersclose associates, family members

• Meet or exceed WB Extractive Industry Meet or exceed WB Extractive Industry Review recommendationsReview recommendations

• WB Pollution Abatement HandbookWB Pollution Abatement Handbook

• World Commission on DamsWorld Commission on Dams

• Require analyses of alternatives Require analyses of alternatives including “no action”including “no action”

• Instead of “least cost mitigation” Instead of “least cost mitigation” require prevention, minimization, require prevention, minimization, compensationcompensation

• Commit to preference of “preventative Commit to preference of “preventative measures over mitigation or measures over mitigation or compensation” (WB)compensation” (WB)

For mitigation:For mitigation:

• Not “least cost” but mitigation Not “least cost” but mitigation resulting in no harm to affected resulting in no harm to affected communities or ecosystemcommunities or ecosystem

• Ensure institutional basis for Ensure institutional basis for implementing mitigation is in place, implementing mitigation is in place, including monitoring capacity and including monitoring capacity and functionfunction

Avoid ‘no go’ zonesAvoid ‘no go’ zones

• Require EIAs to be conducted by Require EIAs to be conducted by independent experts “not affiliated independent experts “not affiliated with the project”with the project”

• Independent internationally Independent internationally recognized advisory panel, members recognized advisory panel, members with site-specific experience for high with site-specific experience for high risk projectsrisk projects

• Make monitoring reports re social Make monitoring reports re social and environmental impacts publicly and environmental impacts publicly available when they are writtenavailable when they are written

• Monitor CO2 emissions associated Monitor CO2 emissions associated w/ADB portfolio, cap on emissionsw/ADB portfolio, cap on emissions

Consultation and Consultation and ParticipationParticipation• Free Prior and Informed Consent before Free Prior and Informed Consent before

implementation of any ADB supported implementation of any ADB supported activity or policyactivity or policy

• Information made available to in-country Information made available to in-country stakeholders and potentially affected stakeholders and potentially affected communities “in a form and language that communities “in a form and language that are understandable and accessible to the are understandable and accessible to the groups being consulted”groups being consulted”

• Publish views of those consulted and Publish views of those consulted and demonstrate how these views have been demonstrate how these views have been taken into account and influenced EA and taken into account and influenced EA and project design and implementationproject design and implementation

CofinancingCofinancing

Maintain current requirement that all Maintain current requirement that all components of a project must components of a project must comply with EA policy, regardless of comply with EA policy, regardless of whether or not ADB is financing a whether or not ADB is financing a particular componentparticular component

OED FindingsOED Findings

The results of the OED survey of 147 The results of the OED survey of 147 Appraisal Mission Leaders (AML) regarding Appraisal Mission Leaders (AML) regarding environmental safeguards found that a environmental safeguards found that a significant majority of staff interviewed significant majority of staff interviewed support the Environmental Safeguards support the Environmental Safeguards process, and do not feel that it imposes process, and do not feel that it imposes unreasonable costs or delays on project unreasonable costs or delays on project implementation. A majority also felt that implementation. A majority also felt that follow-through was inadequate to ensure follow-through was inadequate to ensure proper mitigation of impacts.proper mitigation of impacts.[1][1]

• For example, 45 – 52% of those For example, 45 – 52% of those questioned disagreed with survey questioned disagreed with survey statements indicating that the statements indicating that the safeguards process “causes safeguards process “causes unacceptable project delays and, unacceptable project delays and, thus increases costs”, that criteria for thus increases costs”, that criteria for classifying projects by environmental classifying projects by environmental category (i.e. A, B, C) are “too rigid, category (i.e. A, B, C) are “too rigid, causing higher than necessary costs” causing higher than necessary costs” or that “environmental requirements or that “environmental requirements cost too much for the Executing cost too much for the Executing Agencies.” Only 13 – 26% agreed Agencies.” Only 13 – 26% agreed with those statements. with those statements.

• Between 54 to 65% of those Between 54 to 65% of those surveyed disagreed with assertions surveyed disagreed with assertions that the Safeguard process “does not that the Safeguard process “does not address specific project needs address specific project needs effectively”, is “mostly box-effectively”, is “mostly box-checking”, and “fails to focus on key checking”, and “fails to focus on key environmental impacts”. Only 20% environmental impacts”. Only 20% agreed with those assertions. agreed with those assertions.

• Fully 67% of those surveyed felt that Fully 67% of those surveyed felt that “the environmental safeguard “the environmental safeguard process is working effectively and process is working effectively and delivers satisfactory results.” delivers satisfactory results.”

• Fully 58% felt that even subprojects Fully 58% felt that even subprojects needed to have environmental needed to have environmental assessments. 51% of the AMLs felt assessments. 51% of the AMLs felt that there was a lack of adequate that there was a lack of adequate follow through to ensure adequate follow through to ensure adequate mitigation measures.mitigation measures.

Yet the Executive Summary of the OED report Yet the Executive Summary of the OED report

concludes:concludes:• “ “the efficiency and sustainability of ADB’s the efficiency and sustainability of ADB’s

current procedures are questionable current procedures are questionable due to due to the high transaction costs and limited the high transaction costs and limited benefitsbenefits. .

• There is a need to revise Environment Policy There is a need to revise Environment Policy in “recognition of the need for alignment with in “recognition of the need for alignment with national systems, “a shift to an emphasis on national systems, “a shift to an emphasis on capacity building rather than project focus”capacity building rather than project focus”[1][1] and a move away from the “negative and a move away from the “negative emphasis” of “avoiding environmental harm.”emphasis” of “avoiding environmental harm.”[2][2]

The staff survey does not lead to these The staff survey does not lead to these conclusions. Neither does an examination of conclusions. Neither does an examination of the case studies.the case studies.

Case Studies: India and ChinaCase Studies: India and ChinaDe facto “country systems”De facto “country systems”

““self-monitoring”; host country self-monitoring”; host country environmental assessmentsenvironmental assessments

• The OED conducted 16 brief case studies The OED conducted 16 brief case studies (often without visiting sites) on six projects (often without visiting sites) on six projects in China, two in Vietnam, four in the in China, two in Vietnam, four in the Philippines and India. Descriptions of the Philippines and India. Descriptions of the case studies are found in Appendix 4 of case studies are found in Appendix 4 of the OED report. the OED report.

In India, OED expressed concerns about the In India, OED expressed concerns about the

quality of environmental assessments: quality of environmental assessments: • “ “vague on details of potential impact”vague on details of potential impact”• no “quantitative assessment of type, no “quantitative assessment of type,

magnitude, location of possible adverse magnitude, location of possible adverse impact”impact”

• “ “without site-specific assessment.” without site-specific assessment.”

They found that the IEE reports for all of the They found that the IEE reports for all of the case studies “show a close resemblance in case studies “show a close resemblance in content” and featured a “relatively weak” content” and featured a “relatively weak” analysis of alternatives and prediction and analysis of alternatives and prediction and assessment of impacts. assessment of impacts.

They found a “failure to initiate the EIA They found a “failure to initiate the EIA at the earliest stage of project design. at the earliest stage of project design. In some cases, EIAs were undertaken In some cases, EIAs were undertaken when most of the crucial aspects of when most of the crucial aspects of the project design had already been the project design had already been decided.”decided.”[1][1]

““prediction and assessment of impacts prediction and assessment of impacts is found to be generic”, appropriate is found to be generic”, appropriate analytical tools were not used and analytical tools were not used and “little attention was paid to induced, “little attention was paid to induced, secondary, and offsite impacts.”secondary, and offsite impacts.”

The “absence of regular environmental The “absence of regular environmental

safeguard personnel” in the ADB’s India safeguard personnel” in the ADB’s India Resident Mission was cited as a key factor.Resident Mission was cited as a key factor.

They found that the ADB is “almost They found that the ADB is “almost completely relying on the semi-annual self-completely relying on the semi-annual self-monitoring reports” of project proponents; monitoring reports” of project proponents;

Road rehabilitation and construction projects Road rehabilitation and construction projects routinely declared as Category B projects routinely declared as Category B projects despite “potentially serious significant despite “potentially serious significant environmental impacts”; and that “the environmental impacts”; and that “the ADB has never sent an environment-ADB has never sent an environment-related mission.” related mission.”

ChinaChinaThe Chinese projects all used official The Chinese projects all used official

Chinese environmental assessments Chinese environmental assessments – i.e. “commissioned by the Sichuan – i.e. “commissioned by the Sichuan Provincial Communications Provincial Communications Department” or “compiled by the Department” or “compiled by the Highway Research Institute of the Highway Research Institute of the Ministry of Communication.” Ministry of Communication.”

Projects cited often had significant Projects cited often had significant impacts on minority populations yet impacts on minority populations yet claims were made, for example, that claims were made, for example, that “public consultations indicated that “public consultations indicated that between 86% and 90% of the people between 86% and 90% of the people supported the projects.”supported the projects.”[1][1] They note They note (in the Appendix) that “the samples (in the Appendix) that “the samples may have been skewed, and the may have been skewed, and the people who did not show support people who did not show support could have been those who were could have been those who were adversely affected.”adversely affected.”

• OED found that projects included those OED found that projects included those which had chosen routes which “while which had chosen routes which “while minimizing project costs, meant more flat minimizing project costs, meant more flat land used and more resettlement required”land used and more resettlement required”[2][2];;

• projects with “zero costs” budgeted for projects with “zero costs” budgeted for environmental protection measures;environmental protection measures;[3][3]

• a project in the “experimental part” of a a project in the “experimental part” of a National Nature Reserve where the original National Nature Reserve where the original EIA (which was “missing”) had failed to EIA (which was “missing”) had failed to assess the impacts caused by hydropower assess the impacts caused by hydropower development and transmission lines. The development and transmission lines. The SEIA failed “to address the impact of the SEIA failed “to address the impact of the access road on the fragile local ecosystem access road on the fragile local ecosystem due to improved access to areas previously due to improved access to areas previously inaccessible.” inaccessible.” [1][1]

• Sewer project : environmental assessment Sewer project : environmental assessment that “is quite vague about how to deal with that “is quite vague about how to deal with one of the main pollutants from wastewater one of the main pollutants from wastewater treatment, viz., sludge.” The ADB’s treatment, viz., sludge.” The ADB’s environmental consultants “were engaged environmental consultants “were engaged primarily for translating and reformatting the primarily for translating and reformatting the EIA report.” EIA report.”

•The OED did not visit the site of a Category A The OED did not visit the site of a Category A railway project “located between several railway project “located between several major natural reserves and inhabited by a major natural reserves and inhabited by a number of ethnic minorities, rich in cultural number of ethnic minorities, rich in cultural and archaeological artefacts” but were and archaeological artefacts” but were informed by officials that “since the 1990s, informed by officials that “since the 1990s, the Ministry of Railways has accumulated the Ministry of Railways has accumulated substantial experience in environmental substantial experience in environmental management… and its environmental management… and its environmental awareness and practices have improved awareness and practices have improved significantly.”.significantly.”.[1][1]

• Chinese officials “stressed that the EIA Chinese officials “stressed that the EIA

procedures in the PRC are stringent, procedures in the PRC are stringent, and the laws and regulations are in and the laws and regulations are in place” but indicated that the 120 day place” but indicated that the 120 day rule for Category A projects “may rule for Category A projects “may have caused delays in loan approval, have caused delays in loan approval, especially considering that the especially considering that the domestic EIA process already included domestic EIA process already included consultation with project-affected consultation with project-affected people and local civil society.”people and local civil society.”[2][2]

Country SystemsCountry Systems• When interviewed, ADB Staff expressed concerns When interviewed, ADB Staff expressed concerns

regarding the potential use of “country systems” regarding the potential use of “country systems” – i.e. adopting the environmental safeguard – i.e. adopting the environmental safeguard system of client countries – such as is may system of client countries – such as is may already be occurring in China. already be occurring in China.

• ““When asked about the risks that ADB would face When asked about the risks that ADB would face in adopting the country system for the project in in adopting the country system for the project in various countries [specified by country] 22% various countries [specified by country] 22% indicated that ‘the country environmental indicated that ‘the country environmental safeguard system was either non-existent or safeguard system was either non-existent or inadequate,’ 61% indicated that ‘the country inadequate,’ 61% indicated that ‘the country system looked good on paper but implementation system looked good on paper but implementation was weak,’ and 13% felt that ‘corruption would was weak,’ and 13% felt that ‘corruption would have prevented effective implementation of the have prevented effective implementation of the country system.’”country system.’”[1][1]

Thirty three percent of respondents felt that Thirty three percent of respondents felt that

the “ADB could not have adopted the the “ADB could not have adopted the country’s environmental safeguard system country’s environmental safeguard system without compromising its own safeguard without compromising its own safeguard system.” system.”

Only 17% of respondents felt that “ADB could Only 17% of respondents felt that “ADB could have adopted country’s environmental have adopted country’s environmental safeguard system without compromising its safeguard system without compromising its own safeguard system.” own safeguard system.”

29% felt that country system could work but 29% felt that country system could work but only with “additional efforts on monitoring only with “additional efforts on monitoring and enforcement” and enforcement”

10% felt that country system could work with 10% felt that country system could work with “additional efforts on monitoring, “additional efforts on monitoring, enforcement, and an accreditation system enforcement, and an accreditation system supervised by ADB”.supervised by ADB”.

Need for increased safeguard Need for increased safeguard implementation, fundingimplementation, fundingCase study reports documented the fact that – due Case study reports documented the fact that – due

to a startling lack of environmental staff and the to a startling lack of environmental staff and the dismantling of the environment department -- dismantling of the environment department -- the Bank is, de facto, devolving away from its the Bank is, de facto, devolving away from its own safeguard systems and allowing client own safeguard systems and allowing client countries to carry out due diligence on countries to carry out due diligence on themselves. themselves.

The OED’s “internal desk study” finding that The OED’s “internal desk study” finding that resettlement practices were “uniformly resettlement practices were “uniformly unsatisfactory” and environment case study unsatisfactory” and environment case study findings of a lack of detailed and appropriate findings of a lack of detailed and appropriate environmental analyses with alarming environmental analyses with alarming environmental and social impacts point to the environmental and social impacts point to the need for need for increasedincreased staffing for environmental and staffing for environmental and social monitoring and increasing attention to social monitoring and increasing attention to international best standards. international best standards.

Nonetheless, the report’s Executive Summary Nonetheless, the report’s Executive Summary concludes that given the “high transaction concludes that given the “high transaction costs and limited benefits” of the existing costs and limited benefits” of the existing safeguard system, “a uniform approach to safeguard system, “a uniform approach to safeguard procedures…does not respond safeguard procedures…does not respond effectively to the specific needs” of each effectively to the specific needs” of each country.country.[1][1]

• The Bank recommends “a progressive shift in The Bank recommends “a progressive shift in emphasis to reliance on national emphasis to reliance on national procedures…targeted first at those countries procedures…targeted first at those countries such as PRC and India that have made good such as PRC and India that have made good progress in institutional development and progress in institutional development and environmental legal frameworks.” environmental legal frameworks.”

Demands developed via NGO Demands developed via NGO Forum ProcessForum Process• NGO Forum on ADB: NO to Weakened NGO Forum on ADB: NO to Weakened

Standards, YES to AccountabilityStandards, YES to Accountability• Deep concerns: end result of SPU will be Deep concerns: end result of SPU will be

weakening or elimination of safeguards, move weakening or elimination of safeguards, move away from internationally accepted normsaway from internationally accepted norms

• Enhance, strengthen, fully fund Enhance, strengthen, fully fund implementation of safeguard policies to implementation of safeguard policies to ensure rigorous social and environmental ensure rigorous social and environmental protectionsprotections

• Uphold, ensure compliance with international Uphold, ensure compliance with international human rights, labor, environmental, human rights, labor, environmental, Indigenous Peoples laws, conventions, best Indigenous Peoples laws, conventions, best practice;practice;

““Country Systems”Country Systems” Unacceptable to use a “country Unacceptable to use a “country

systems” approach that would allow systems” approach that would allow downgrading of internationally downgrading of internationally recognized standards, moving away recognized standards, moving away from internationally accepted norms from internationally accepted norms or a re-setting of safeguard or a re-setting of safeguard requirements for each recipient requirements for each recipient country according to that country’s country according to that country’s “capacity”“capacity”

**UpwardUpward harmonization harmonization

Rights-based ApproachRights-based Approach• Apply rights-based approach to SPUApply rights-based approach to SPU

• Protection, promotion of human rights of Protection, promotion of human rights of project-affected people should be the project-affected people should be the central focus of ADB’s policies and practicecentral focus of ADB’s policies and practice

• Recommended by World Commission on Recommended by World Commission on Dams as a “principled basis for mediating Dams as a “principled basis for mediating development choices among competing development choices among competing interests”interests”

• Broad community support, negotiated Broad community support, negotiated settlements, free, prior, informed consentsettlements, free, prior, informed consent

• Best international practice, ADB as Best international practice, ADB as contributor and Forum member of WCDcontributor and Forum member of WCD

Build on Lessons LearnedBuild on Lessons Learned

• ADB accountability mechanisms and OED ADB accountability mechanisms and OED documentation of numerous cases of documentation of numerous cases of egregious safeguard violationsegregious safeguard violations

• Most instances and trends of non-Most instances and trends of non-compliance still not addressedcompliance still not addressed

• OED SPU “internal desk study” of 15 OED SPU “internal desk study” of 15 projects found “resettlement processes projects found “resettlement processes and outcomes are almost uniformly and outcomes are almost uniformly unsatisfactory.” Study not released to unsatisfactory.” Study not released to publicpublic

Resettlement – “uniformly Resettlement – “uniformly unsatisfactory”unsatisfactory”Buried towards the end of the separate file of Buried towards the end of the separate file of

“Supplementary Appendixes” to the OED “Supplementary Appendixes” to the OED Evaluation Study on Involuntary Resettlement Evaluation Study on Involuntary Resettlement Safeguards is a table summarizing the “internal Safeguards is a table summarizing the “internal desk study prepared by Mohammed Zaman for desk study prepared by Mohammed Zaman for the Environment and Social Safeguard Division.” the Environment and Social Safeguard Division.”

15 projects, including 6 projects studied by OED: 15 projects, including 6 projects studied by OED: “the resettlement processes and outcomes are “the resettlement processes and outcomes are almost uniformly unsatisfactory.” almost uniformly unsatisfactory.”

Unfortunately, this desk study is not made public, Unfortunately, this desk study is not made public, findings are tersely summarized in a table. Most findings are tersely summarized in a table. Most of Appendix G is taken up with “reasons” for this of Appendix G is taken up with “reasons” for this finding – including the fact that the author “uses finding – including the fact that the author “uses relatively more cases outside People’s Republic of relatively more cases outside People’s Republic of China.” For the purposes of public consultation, it China.” For the purposes of public consultation, it is important that this study be released to the is important that this study be released to the public in its entirety.public in its entirety.

ResettlementResettlement

• ADB must shift resources to ADB must shift resources to implementation, monitoring, implementation, monitoring, supervisionsupervision

• Address frequent underestimation of Address frequent underestimation of numbers of Affected personsnumbers of Affected persons

• Timebound action requirementsTimebound action requirements

Three Guiding PrinciplesThree Guiding Principles

1.1. Avoid involuntary resettlementAvoid involuntary resettlement

2.2. Minimize resettlement where population Minimize resettlement where population displacement is unavoidabledisplacement is unavoidable

3.3. Ensure displaced people receive Ensure displaced people receive assistance so that they are better off than assistance so that they are better off than under “no project” scenariounder “no project” scenario

Poverty alleviation, protection of vulnerable Poverty alleviation, protection of vulnerable groups as central criteria to measure groups as central criteria to measure effectiveness of IR policyeffectiveness of IR policy

Indigenous PeoplesIndigenous Peoples• Commitment to full consultation with Commitment to full consultation with

Indigenous Peoples, Free Prior Informed Indigenous Peoples, Free Prior Informed ConsentConsent

• Uphold international standards on human Uphold international standards on human rights, indigenous rightsrights, indigenous rights

• Strong concerns about “country systems” and Strong concerns about “country systems” and implication that this may mean moving away implication that this may mean moving away from international norms and standardsfrom international norms and standards

• Concrete policy recommendationsConcrete policy recommendations• Deep concerns about projects in repressive Deep concerns about projects in repressive

states or regions of conflict between state states or regions of conflict between state and Indigenous Peoplesand Indigenous Peoples

Can you make a commitment Can you make a commitment here today that the ADB will here today that the ADB will not weaken in any way the not weaken in any way the safeguard policies or safeguard policies or replace the detailed specific replace the detailed specific safeguard requirements safeguard requirements with a single, vague general with a single, vague general policy?policy?

Can you commit here today Can you commit here today that any move to “country that any move to “country systems” or “alignment with systems” or “alignment with national systems” will not, in national systems” will not, in any way, involve a move any way, involve a move away from internationally away from internationally recognized standards or recognized standards or norms – or be weaker in any norms – or be weaker in any way than these standards?way than these standards?