Bancomundial

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UNIVERSIDAD NACIONAL DE LA PLATA

Cátedra de Gestión Ambiental

(Ecología)

Material seleccionado por:

Ing.Marcelo Gaviño Novillo

La Plata – Noviembre 2.000

ACTUALIZACIONES AL LIBRODE CONSULTA PARA

EVALUACIÓN AMBIENTALDEL BANCO MUNDIAL



E n v i r o n m e n t a l A s s e s s m e n t

UPDATES o u r c e b o o k

The World Bank

and Environmental Assessment:

An Overv iew

Environment Department April 1993The World Bank Number 1

The sustainability of economic development has become one of the most important challenges facing the W orld Bank in

recent y ears. In response to growing awareness regarding env ironmentally sustainable development, the Bank is promoting a

variety of initiatives ranging from environmental assessment (EA) for specific projects or sectors to national environmental

strategies and action plans.

This first issue of EA SOURCEBOOK UPDATE provides a brief review of Bank efforts to integrate env ironmental

concerns into the mainstream of its lending activities during the last two decades. It also gives a summary of the main find-

ings and conclusions of the first EA Annual Review, and insti tu tional responsibilities for implementing the EA process in

Bank operations. This Update belongs to Chapter 1 in the Update Binder and does not replace any section of the EA

Sourcebook.

Background

A brief review of policy statements an d directivesdu ring the past d ecade reveals the World Bank’s in-creasing efforts to broaden its traditional approach toproject d evelopment. Environm ental concerns firstbecame an explicit par t of Bank activities wh en theposition of Environm ental Advisor w as established in1970. The Bank p layed an active role in this area bybecoming the first multilateral developm ent agency toscreen projects for their environmental consequencesand to adop t environmental guidelines for the evalua-tion of futu re lending operations.

One of the first significant p olicy statem ents is-sued was Operational Manual Statement 2.36: “Environ-

mental Aspects of Bank Work,” in May 1984, requ iringthat environm ental considerations be introd uced at thetime of p roject identification and prep aration, andrecognizing th at m odification could also occur at th etime of appr aisal, negotiations, and implementation.For all projects, staff were instru cted to u se pru dent jud gemen t w hen assessing environmen tal effects th atwere pot entially irreversible (for example, the extinc-

tion of species or ecosystems). The new policy furtherstipulated that p rojects with severe environmen talimpacts would n ot be financed withou t mitigatorymeasu res acceptable to the Bank (pa ra. 9[b]).

By the mid -1980s, the Bank was financing p rojectscontaining environm ental comp onents, includingseveral free-standing environmental projects, whichhad specific environm ental objectives, such as refores-tation, pollution control, and w ater resource manage-ment. Although these measures w ere designed tohelp both borrowers and the Bank imp rove the envi-ronm ental quality of p rojects, problems rem ained. In

developing countries, serious environm ental degrad a-tion accelerated and began to constrain economicdevelopm ent. It became ap paren t to Bank m anage-ment that th e degree of effort devoted to environmen-tal issues and th e app roaches actually used w ere in-sufficient to ensure full consideration of adverse envi-ronm ental impacts d uring project identification, d e-sign, and implementation.

This, combined with a few well-publicized casesin w hich Bank-financed p rojects were foun d to have



negative environmen tal consequen ces — such a s con-tributing to th e d estruction of trop ical rain forests andposing thr eats to wildlife, ind igenous p eople, and es-tablished hu man settlements —prom pted th e institu-tion to adjust its policies toward environmen tal man-agement an d to systematically bring environmentalissues into the mainstream of its lending activities.

In 1987, the Bank im plemen ted a series of structu ralchanges that includ ed strengthening of environmentalpolicies, procedu res, and staff resources. A central En-vironment Departm ent and Environment Divisions ineach of the four regional Techn ical Departm ents werecreated, leading the w ay to a significant expan sion of Bank staff assigned to execute, mon itor, and supp ortenvironment-related activities. The new EnvironmentDepartment wou ld help set the d irection of Bank envi-ronmental p olicy, planning, and research an d take thelead in developing strategies to integrate environmentalconcerns into Bank lend ing and policy work. The re-gional divisions would review and give clearance toBank-financed projects and provide technical supporton ind ividu al projects, sector pr ograms, and country orregional strategies, thus helping borrowing countries todesign and implement more sustainable approaches todevelopment.

EA Guidel ines for the World Bank

Since the 1987 reorganization, the Bank has m oveddecisively in institutional strengthen ing and policyreform. A notable achievement w as the introdu ction of an Operational Directive on Environmental Assessment

(OD 4.00, Annex A) in October 1989. This comp rehen -sive and detailed new policy mand ated an environmen-

tal assessment for all projects that m ay have significantimpacts on the environmen t. Bank staff were requ iredto screen and categorize all prosp ective loans (CategoryA throu gh D) for potential adverse environmentalpr oblems at th e time of pr oject identification.

Although th e borrower h ad the responsibility forcarrying out the environmental assessment, the Bank wou ld play a review and follow-up role to ensure thatthe project had been adequ ately pr epared; for example,assisting the borrower in preparing the terms of refer-ence (TOR) for the en vironm ental assessment. Withcareful planning , generally in the form of a m itigation

plan, adverse environmental effects could be avoidedor m itigated. The d irective recommend ed regional andsectoral assessments to reduce the work subsequentlyneed ed on specific investmen t pr ojects. It also requ iredthat the borrower u nd ertake approp riate consultationwith and disclosure of information to affected groupsand local nongovernm ental organizations.

After two years of Bank experience with environ-mental assessments, the op erational directive wasrevised to broad en its scope and app licability. The

Bank recognized that p rojects aimed at achievingenvironmental objectives could sometimes have nega-tive and un anticipated effects. In October 1991, OD4.00, Ann ex A was rep laced by OD 4.01 (see sum maryof revisions in Box 1). The rev ised d irective, whichincorporated th e gu idelines contained in OD 4.00,Annex A, introdu ced a new system for classifyingprojects according to the n ature a nd extent of their

environmental imp act. It pr ovided more sp ecific in-structions to staff on p ublic consultation and disclosureof information. It also recommend ed th at the Env iron-

mental Assessment Sourcebook , published in the WorldBank’s Technical Papers Series during fiscal 1991-92,be used for guidance throughout the environmentalassessment process.

First Environmental Assessment Annual Review

The first annu al EA review, initiated in late 1991, cov-ered th e period from October 1989 to October 1991 andextend ed th rough the end of fiscal 1992. It was p re-pared in close collaboration w ith the Regional Environ-ment Divisions and reviewed by the EnvironmentalAssessment Steering Committee, as well as staff throug hout th e Bank. The main find ings and conclu-sions were based on interviews w ith Bank regionalenvironmental staff and selected task m anagers, a sur-vey of twen ty p rojects for wh ich en vironmental assess-ments had been completed and evaluated by the end of fiscal 1992 un der the requirem ents of OD 4.00, AnnexA, and detailed case studies of seven of these projects.

The Bank’s EA pr ocedures were p roven to be realis-tic, workable, and instrum ental in helping to improvedevelopment planning and env ironmental manage-

ment. Even in countries with minimal or no p rior expe-rience, the EA p rocess was a va luable tool for identify-ing project problems an d the means to avoid or m iti-gate them. Although the review docum ented consider-able progress, it also revealed that the new policy re-quired ad ditional human and financial resources forBank EA w ork. The review iden tified the followingareas where Bank efforts should be continued and / orstrengthened to make the EA process more effective:

• Borrower capacity building, includ ing technicalassistance, institutional support and in-countrytraining sh ould be given greater attention to help

ensure that environmental assessment becomes aneffective plann ing tool du ring pr oject prepar ationand that the EA report presented to the Bank adequa tely covers all relevant issues and are of acceptab le quality.

• Borrower requirements should be explicitly takeninto account in defining th e EA prep aration sched-ule to ensu re that the EA p rocess is initiated at anearly enough stage to accomm odate in-countryreview p rocedu res.



The revised OD 4.01: “Environ men tal Assessment”

includ es the following principal changes from O.D.

4.00, Annex A:

Screening. Projects with m ultiple comp onen ts are to be

classified according to the comp onent w ith the m ost

significant adv erse imp act, i.e., if there is an “A”

comp onen t, the entire project is “A” (para. 17 and

Annex E). The “D” Category has been eliminated as

well as combined categories (A/ D, or B/ D) to redu ce

screening d ifferences.

Consultation . Consultation w ith affected grou ps an d

NGOs sh ould includ e: (i) making available to the

group s being consulted a sum mary d escription of the

pr oject, its objectives and poten tial adverse imp acts,

short ly after assignmen t of the EA category; (ii)

provid ing a sum mary of the conclusions of the draft EA

report, in a form and language that are meaningful to

the grou ps b eing consulted; and (iii) taking consulted

group s’ views fully into accoun t in the design of the EAstudy and the project, as appropriate (paras. 19-21).

Release of the Environmental Assessment to the Execut ive

Directors (EDs). The Bank requests the borrower’s

advan ce permission to release the EA report to the

Executive Directors (EDs) because th e repo rt is the

borrower’s property. On receipt of a copy of the EA

report from th e borrower, an English-language

summ ary is mad e available to the EDs, and a copy of

the rep ort is dep osited in the p roject file (para. 22).

Environmental Mit igation Plan. Annex C outlines items

to be covered in the env ironmental mitigation p lan

and incorporated into the p roject.

Global Environm ent Facility. GEF projects and comp o-

nents are su bject to EA requ irements un der OD 4.01

(para. 1 and footnote 1).

Environmental Advisory Panels. The borrow er “should

norm ally engage” adv isory panels of environmen tal

specialists for “ma jor, risky or conten tious” p rojects;

this section tightens th e original OD 4.00, Annex A,

wh ich recommend ed that establishm ent of such

panels for p rojects with major environmental con-

cerns be “explored” w ith Governmen t (para. 13).

Relation Between Preparers of EA and Feasibility Study .In the case of projects with potentially major adverse

impacts, the prep arer of the EA should not be

affiliated w ith the p roject, but sh ould liaise closely

with project p reparation/ feasibility teams (para. 16).

Grandfathering. OD 4.01 app lies to projects with IEPS

issued after October 1, 1991

Box 1. Operational Directive 4.01: “Environmental Assessment”

• EA training within the Bank should continue, asshould the use of case stud ies for this pu rpose.How ever, training shou ld become more sector-

specific. Bank case stud ies shou ld be developed toprovide greater orientation to staff on m ethods of local consu ltation and r egional and sectoralenvironmental assessments.

• Additional guidance on project screening shouldbe provided to Bank task man agers to ensure thatclassification for pu rposes of environmen talassessment is consistent across regions.

• Field visits, including consultation w ith affectedpop ulations and local NGOs, should be a consis-tent p art of scoping activities for p rojects requiring

a full EA.

• The “Checklist of Potential Issues for an Environ-men tal Assessment” (OD 4.00, Annex A-2) shou ldbe used for Term s of Reference (TOR) preparationfor EA work and associated scoping so tha t keyaspects and possible impacts are not missed.

• The potential benefits of regional and sectoral EAsshould be more w idely disseminated to borrowersand Bank staff and u tilized to a greater extent.

• Work is currently underway to follow up on theserecomm end ations, particularly in the area of EAtraining.

Institutional EA Responsibilities

Country Dep artments in the op erational vice presiden-cies, working closely with the Regional Environmen tDivisions, are d irectly responsible for overseeing an dappraising project preparation. The project task man-ager, in consultation with the Regional EnvironmentDivisions, is responsible for environm ental screening,prep aration of terms of reference for EA work whenan environmental analysis is required, monitoring of the EA process, and review of the report in d raft andfinal form. A summ ary of the find ings is prepared as

an an nex to the p roject staff app raisal report. The Re-gional Environmen t Divisions oversee the work intheir respective regions and offer technical expertiseand policy adv ice to TMs and borrower governm ents.

The Environmen t Departm ent w orks closely w ithoperational vice pr esidencies, pa rticularly the Re-gional Environmen t Divisions, to ensure that th e envi-ronm ental assessment process is effectively integratedinto Bank activities. To this end, th e role of the Depart-ment, now housed in the Environmentally Sustainable



Developm ent Vice Presidency (ESDVP), is to giveclearer focus to ana lytical, policy, and opera tionalsupport to activities related to “brown” (e.g., indus-trial pollution and urban infrastructure) as well as“green” (e.g., agriculture, forest man agemen t andbiodiversity) issues in its work p rogram . Recently, theDepa rtmen t has also become a focal point for add ress-ing social and resettlement issues in Bank lend ing

operations.

The “green” unit of the Environment Departm ent,the Land, Water and Natu ral Habitats Division(ENVLW), oversees and coordinates the Bank’s work on environmental assessment. The Division providesoperational support for analytical work, project prepa-ration, and supervision on issues related tobiodiversity, forestry, coastal zone m anagem ent, andenvironmental information m anagement. TheDivision’s EA team systematically m onitors th e Bank’sfollow-up of the EA Operational Directive and is re-sponsible for preparing the EA Ann ual Review, w hichis submitted to the President. The team is also respon-sible for continu ously up dating the EA Sour cebook asa “living” reference manu al for Bank staff and externalusers through the series of “EA Sourcebook Updates”.Finally, the team offers p roject-specific operationa lsupport on EA-related issues, especially during thepreparation an d supervision stages of the p rojectcycle. Special attention is given to sectoral and re-

gional environmental assessments, and environmentalaspects of pr ivatization activities, financial interm edi-ary and adjustment operations.

The “brown” u nit, the Pollution and Environmen-tal Economics Division (ENVPE), provid es technicaland economic analytical sup port with respect to issuesrelating to land and water p ollution, atmospheric emis-

sions and air quality, and global climate chan ge. It isalso responsible for work on the econom ic valua tion of environmental damage an d th e impacts of economicpolicies on the env ironm ent. The Division offers guid-ance to Bank staff on how to internalize environm entalcosts and benefits in econom ic analysis, wh ich is par -ticularly important wh en considering alternativeproject options.

The Social Policy and Resettlement Division(ENVSP) add resses the social dimen sions of sustain-able developm ent, particularly the social organizationof resource m anagement. It p rovides leadership insocial impact assessment, and sup port w ork on thesocial strategies in p roject design and imp lementation.The division supp orts the EA process by imp rovingsocial analysis in specific area s of Bank activity, e.g.,involun tary resettlement, treatment an d rights of in-digenous p eoples and other ethnic minorities, pu blicparticipation and consultation, NGO intermediationand institutional capacity building.

EA SOURCEBOOK UPDATE is designed to provide the most up-to-date information on the Bank’s policy and procedures for conducting

environm ental assessments of prop osed projects. This publication should be used as a sup plemen t to the Environmental Assessment Sourcebook,

which provides guidance on the subjects covered in Operational Directive 4.01. Please address comments and inquiries to Olav Kjørven,

Man aging Editor , EA Sourcebook Up date, ENVLW, The Wor ld Bank , 1818 H St. NW, Wash ington , D.C., 20433, Room No. S-5123, (202) 473- 1297.






Environmental Screening

Env ironmental screening is in tended to ensure that proposed projects are subject to the appropriate extent and type of

environment al assessment (EA ). This EA Sourcebook Update provides guidance to Bank staff on environmental screening,

based on t he Bank’s EA policy and evolving EA experience. This Update replaces the screening section in chapter 1 of the

Env ironmental Assessment Sourcebook (pp. 4-5).

Requirements for screening

The World Bank’s EA p rocess generally begins withscreening at the time of p roject identification. At this stage,the p roject is classified into one of three categories pr ior toissuance of the Project Concept Documen t. The chosen cat-egory signals the app ropr iate level of EA required . Envi-ronm ental screening also helps determ ine the choice of EAinstruments, depend ing on the needs of the p roject.

Det ermi ning the lev el o f EA

The Bank u ses the following three categories to signal theapp ropr iate level of EA for any given pro ject:

• Catego ry A: A full EA is needed in accordan ce withthe sp ecific requirem ents of the Bank’s EA policyand procedu re for Category A p rojects, including inareas such as p ublic disclosure, pu blic consultation,and the timing for subm itting th e EA report to theBank—see Op erationa l Directive(OD) 4.01, soon tobe reissued as Op erational Policy/ Bank Procedur e/ Good Practice (OP/ BP/ GP) 4.01.

• Catego ry B: EA is requ ired, bu t its scope corre-spond s to the limited env ironmental impacts of theproject (again, the Bank’s EA policy and procedureprovide specific guidance).

• Catego ry C: No EA is required.

The selection of the category shou ld be based on p rofes-sional judgment and information available at the time of project identification. If the p roject is modified or new in-formation becomes available, Bank EA p olicy permits theTM to reclassify a p roject with the concur rence of the RED.For example, a Category B project might become CategoryA if new information reveals that it may have diverse and

significant environmental impacts when they were origi-nally thought to be limited to one aspect of the environ-ment. Conversely, a Category A project might be reclassi-fied as B if a compon ent w ith significant impactsis drop ped or altered.

The op tion to reclassify p rojects relieves some of the pressure to m ake the initial decision the correct andfinal one. However, reclassification is not free of cost.For example, if a Category B project is later changed toCategory A, add itional resources will be required forenvironmental studies, public consultation, and report

preparation. The schedule for project preparation willalmost certainly be ad versely affected.

Selecting appropriat e EA instruments

In parallel with determining the appropriate project clas-sification, the screening p rocess should also identify thetypes of EA instruments that may be suitable for the project. Box 1 lists d ifferent project categor ies and EA instru -ments that are often useful in conjunction with such projects. This list is illustra tive and the final d ecision on theuse of these instrum ents has to involve the borrower.

Opp ortunities for undertaking strategic forms of EA(sectoral or regional EA) should be considered ear ly—if possible before the iden tification of concrete pro jects—in ord er to op timize the influence of the EA p rocess onthe selection an d d esign of projects (Updates nos. 4 and15 provide gu idance on sectoral and regional EA).

Criteria for making the classification decision

Initially, it is useful to look at key words in OP 4.01 (forth-coming) to d escribe each screening category. Projects are

Reissued with revisions: November 1996 Insert into Update Binder chapter 1



2

classified into Category A if they are “likely to havesignificant ad verse impacts that are sensitive, diverse, orunprecedented, or that affect an area broad er than thesites or facilities subject to physical works.” The impacts of Category B projects are “site-specific in natu re and do notsignificantly affect hum an popu lations or alter environ-mentally important areas, including wetlands, nativeforests, grasslands, and other major natural habitats. Fewif any of the impacts are irreversible, and in most casesmitigatory measures can be d esigned more read ily thanfor Category A projects.” In order for a project to classifiedinto Category C, it must be considered likely to have noadverse impacts at all, or the impacts would be negligible.In practice, the significance of imp acts, and the selection of

screening category accordingly, depends on the type andscale of the p roject, the location and sensitivity of environ-mental issues, and the natureand magnitude of the poten-tial imp acts. These dimensions are d iscussed below.

Pro ject t ype and s cale

Boxes 2–4 provide illustrative lists of projects assignedto each of the three categories based up on prior Bank andinternational experience. These lists prov ide a good start-ing point and framework for the screening d ecision. How -ever, because of other factors involved su ch as project sit-ing, the nature of impacts, and the need for the EA process

to be flexible enough to accommodate them, the listsshou ld not be u sed as the sole basis for screening.

Category A. In general, certain types of projects such asthose listed in box 2, are likely to have ad verse impacts of a Category A nature. Category A includ es projects whichhave one or more of the following attributes that make thepoten tial impacts “significant”: d irect pollutant dischargesthat are large enough to cause degradation of air, water orsoil; large-scale physical disturbance of the site and/ orsurroundings; extraction, consumption, or conversion of

substantial amounts of forest and other natural resources;measu rable mod ification of hydrologic cycle; hazardou smaterials in more than incidental quantities; and involun-tary d isplacement of people and other significant socialdisturbances.

Category B. Projects in Category B often differ from Aprojects of the same type only in scale (see box 3). Large ir-rigation and drainage projects are usually Category A;how ever, small-scale projects of the sam e type may fallinto Category B. Similarly, a 50-meter hydroelectric dam isclearly large in scale and will usua lly requ ire Category Aclassification, while low-head power dams may be Cat-egory B. Constru ction of a 50-km expressway would also

require Category A due to scale, while rural road rehabili-tation will tend to raise only minor environmental issues(Category B).

Projects entailing rehabilitation, maintenance or upgrad-

ing rather than new construction w ill usually be in Cat-egory B. A project with any of these characteristics mayhav e impacts, bu t they are less likely to be “significant” .How ever, each case must be jud ged on its own merits.Many rehabilitation, maintenan ce and u pgrad ingprojects—as well as privatization projects—may requireattention to existing environm ental problems at the siterather than potential new impacts. Therefore, an env i-

ronm ental audit may be more useful than an impa ct as-sessmen t in fulfilling the EA need s for such p rojects (seeUpdate no. 11: Env ironmental A uditing).

Category C. Typical Category C p rojects are listed inbox 4. However, before classifying a project in this cat-egory it is important to consider potential issues, someof which may not immediately spring to m ind. For ex-amp le, disposal of med ical wastes may be an issue inman y health projects. Likewise, wh ile most technicalassistance (TA) projects should fall into Category C since

Box 1. Project categories and correspon ding EA instruments

This list provides an overv iew of EA instruments that are typically relevant for d ifferent categories of pro jects. For any on e

project, the choice of instrum ent(s) shou ld be tailored to the environ mental issues at hand. For some situations, the use of just on e inst ru ment is appropriate, other tim es it makes most sense to com bine two or more instruments (for exa mp le EIA

and risk assessment) or to sequence them (for example, a sectoral EA followed by a num ber of EIAs for subp rojects).

Investment p rojects EIA, risk assessment

Sector ad justment loans Sectoral EASecto r in vestm en t an d “tim e-slice” op er atio ns Secto ral EA , EIA (fo r su bp ro ject s)

Urban development program/ project Regional EA, EIA (for subprojects)Rural development program/ project Regional EA, EIA (for subprojects)

Riverbasin or watershed p rogram / p roject Region al EA, EIA (for su bp rojects)

Reh abilitation an d m ain ten an ce p rojects En viron men tal au dit, h azard / risk assessm en tIndustrial expansion projects EIA, environmental aud it, hazard / r isk assessment

Privatization projects Environmental aud it, hazard / risk assessmentFinancial intermediary loans EIA, environmental aud it, hazard / r isk assessment,

checklists, screening and review criteria

Social investment funds EIA, checklists, screening and review criteria



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they involve no p hysical works, certain TA operationsare designed to p ave the way for major investments orpr ivatization (often in a par ticular sector). In such cases,it is app ropriate to und ertake a limited review of theenvironmental institutional and regulatory framework for

the sector and recommend improvements (as needed).Category B is normally the correct classification for suchprojects.

Pro ject locat ion

The selection of a screening category often depends su b-stantially on the project setting, w hile the “significance” of poten tial impacts is partly a function of the natural andsociocultural surroundings. There are a number of loca-tions wh ich shou ld cause the TM to seriously consider an“A” classification:

• In or near sensitive and valuable ecosystems —wetlands, wildlands, coral reefs and habitat of endangered species;

• in or near areas with archaeological and/ or historicalsites or existing cultura l and social institutions;

• in densely populated areas, where resettlementmay be required or potential pollution impactsand oth er disturbances may significantly affectcommunities;

• in regions subject to heavy development activities orwh ere there are conflicts in natural resource allocation;

• along watercourses, in aquifer recharge areas or inreservoir catchments u sed for potable water sup ply; and

• on lands or waters containing valuable resources (suchas fisheries, minerals, medicinal plants, prime agricul-tural soils).

Experience to date shows that p recise identification of the p roject’s geograp hical setting at the screening stagegreatly enhan ces the quality of the screening decision andhelps focus the EA on the important environmental issues.A map of the project area that includes key environmentalfeatures (includ ing cultural heritage sites) is invaluable forthis purpose. Information on the project setting may be

available to the TM from the RED, from colleagues incountry dep artments, or in-country environmental pro-files or Bank reports on other projects in the vicinity. Localinstitutions and NGOs are also valuable sources. In the ab-sence of any such information, the TM should considersending a reconnaissance mission to provide the basis forproper screening. Often a prod uct of this mission is a draftof the Terms of Reference (TOR) for the EA.

Sensitivit y of issues

Environm ental issues that are sensitive within the Bank orthe borrowing country require special attention d uring the

EA process. The project may involve activities or environ-mental features that are always of particular concern tothe Bank as well as to many borrow ers. These issues mayinclude (but are not limited to) disturbance of tropicalforests, conversion of wetland s, potential adverse effectson protected areas or sites, encroachment on lands orrights of indigenous peoples or other vulnerable minori-ties, involuntary resettlement, impacts on internationalwaterways and other transbound ary issues, and toxicwaste d isposal. The best way to ensure p roper treatmentof such issues is to classify the project as Category A, so

Box 2. Category A projects

The projects or compon ents includ ed in th is list are

likely to have adverse impacts that normally warrantclassification in Category A.

• Aquaculture and m ariculture (large-scale)

• Dams and reservoirs• Forestry production projects• Hazardous waste management and disposal

• Industrial plants (large-scale) and industrial

estates, including major expansion, rehabilitation,or modification

• Irrigation, drainage, and flood control (large-scale)• Land clearance and leveling

• Manufacture, transportation, and u se of pesticides or

other hazardous and / or toxic materials• Mineral development (including oil and gas)

• New construction or major upgrading of highwaysor rural roads

• Port and harbor development

• Reclamation and new land d evelopment• Reset tlement

• River basin development• Thermal power and hydropower development or

expansion

• Water supply and wasterwater collection,treatment and disposal p rojects (large-scale)

Box 3. Category B projects

The following projects and components may have

environm ental impacts for which more limited EA is

appropriate.

• Agro-industries (small-scale)• Electrical transmission

• Energy efficiency and energy conservation

• Irrigation and d rainage (small-scale)• Protected areas and biodiversity conservation

• Rehabilitation or maintenance of highways or ruralroads

• Rehabilitation or modification of existing

industrial facilities (small-scale)• Renewable energy (other than hydroelectric dams)

• Rural electrification• Rural water supply and sanitation

• Tou rism

• Watershed p rojects (management or rehabilitation)



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This Update was p repared by Thomas E. Walton and Olav Kjørven. The EA Sourcebook Updates provide u p-to-date gu idance for conducting

EAs of proposed projects and should be used as a su pplement to the Env ironmental A ssessment Sourcebook. The Bank is thankful to the

Government of Norway for financing the produ ction of the Updates. Please add ress comments and inquiries to Olav Kjørven and Aidan

Davy , Manag ing Edit ors, EA Sour cebook Up da te, ENVLW, The World Bank, 1818 H St. NW, Washin gton , D.C., 20433, Room N o. S-5139,

(202) 473-1297. E-ma il: eaup da tes@wo rld ban k.org.

that the level of effort will be adequate in terms of analyti-cal expertise, decision-making, interagency coord ination,and pu blic involvement.

Na t ure of impacts

It is difficult to describe the natu re of impacts withou thaving some overlap with the concepts of sensitivity and

project type. The TM should take into consideration thefollowing examples of impacts that warrant Category Aattention:

• Irreversible destruction or degradation of naturalhabitat and loss of biodiversity or environm entalservices provided by a natur al system;

• risk to human health or safety (for example, fromgeneration, storage or d isposal of hazardou s wastes,or violation of am bient air quality stand ards); and

• absence of effective mitigatory or compensatorymeasures.

Magnit ude of i mpact s

There are a number of ways in w hich m agnitude can bemeasured, such as the absolute amount of a resource orecosystem affected, the amount affected relative to the exist-

ing stock of the resource or ecosystem, the intensity of theimpact and its timing and duration. In addition, the prob-

ability of occurrencefor a specific imp act and the cumulative

impact of the proposed action and other planned or ongo-ing actions may need to be considered.

For example, the resettlement of 5,000 families is alarge impact, in absolu te terms. Conversion of 50 hectaresof wetland , however, d iffers markedly in significance de-pending on its size relative to the total area of wetlands inthe country or region. An average decrease in dissolvedoxygen concentration of 0.05 mg/ l in a receiving w ater isun likely to have serious biological or chemical implica-

tions, while a decrease of 3.0 mg/ l will in many circum-stances. The effect of either d ecrease on the aquatic eco-system w ill be different depend ing on its du ration andfrequency of occurrence—continuous or permanent, sea-sonal, intermittent or accidental. Where it is possible to as-sign probabilities to potential impacts, which often cannotbe done withou t detailed analysis, the risk of occurrencebecomes an aspect of magnitud e.

One of the requ irements of a full EA is that other cur-rent and proposed development activities within theproject area and more spon taneous activities spurred by aproject (such as migration of people into an area op enedup by a road project) must be taken into account. Such cu-

mulativeor induced impact may sometimes be the primarydeterminant of the appropriate level of EA.

Screening of operations w ith multiple s ubprojects

Financial in termediary,sector investment, and social invest-

ment fund operations present unique p roblems duringscreening because the details of the subloans or sub-projects are usually not known at the time of project iden-tification. One of the TM’s responsibilities is to see that theloan includ es a m echanism for condu cting environmentalscreening of subprojects and, as appropriate, carrying outand reviewing EAs. However, the entire loan must also beassigned to a category for the pu rpose of preparation andapp raisal. If it becomes eviden t that one or m ore sub-projects will require full EA, the entire loan should beclassified as Category A (see Chapter 6 of Volum e I, Envi-

ronmental Assessment Sourcebook ). When screening a sectorinvestment loan, the need and opportu nity for und ertak-ing a sectoral EA shou ld be considered (see Update no. 4:Sectoral Environmental Assessment ). Future Upd ates will

discuss EA for financial interm ediary lend ing and socialinvestment fund s in m ore detail.

Outputs of screening

The screening results are recorded and explained in

the Project Concept Document and the Environmental

Data Sheet. The Monthly Operational Summary also

records the screening d ecision. The Bank reviews the

results with the borrower, especially with regard to the

type of EA instrum ents required , the general scope of the

EA, public disclosure and consultation requirements,

schedu le, and implementation arrangem ents. As soon as

possible after screening, the borrower should prepare theTerms of Reference (TORs) for any EA required. The Bank

assists as necessary in preparing the TORs and always

reviews their contents.

Box 4. Category C projects

These projects are likely to h ave negligible or n o

environmental impacts. EA is normally not required.

• Ed u cation• Family planning

• Health

• Institution development• Most human resources projects

• N utrition



Environment Department June 1996The World Bank Number 14

Environmental Performance Monitoring

and Supervision

One of the purposes of Environmental Assessment (EA) is to minimize potent ially adverse impacts and enhance the

overall quality of the project. The effectiveness of an EA in meeting these objectives is determined during project implemen-

tation through performance monitoring by the borrower and Bank supervision. Environmental performance monitoring

should be directed towards measuring and evaluating changes brought about by projects and assessing the effectiveness of

proposed mit igation measures. Bank env ironmental supervision activit ies ensure diligence of Borrowers in implementing

mitigation measures. A recent review of the Bank’s experience with EA concluded that arrangements for monitoring and

supervision could be made more effective.

The 1992 W apenhans T ask Force Report “Effective Implementation: Key to Development Impact” emphasized the

importance of managing the quality of projects under implementation. This resulted in a Bank-wide effort to develop practi-

cal performance monitoring indicators. The Environment Department recently issued a note on Environmental Perfor-

mance Indicators (EPIs) which complements this Update. While the EPI note presents examples of measurable indicators to

monitor the environmental impact of projects, this Update discusses the process of implementing effective environmental

performance monit oring and supervision of Bank projects.

Definitions and objectives

Environment al performance moni toring may bedefined as technical and institutional activities thatare implemented by a Borrower to measu re andevaluate environm ental (including h ealth and socio-economic) changes induced by a project. The overallobjective of performan ce monitoring is to identifypred icted and un anticipated changes to the ph ysical,biological and social environment brough t about bythe project. This requires baseline information on pre-developm ent environmen tal and social conditions,against which development and post-developmentimpacts and m itigation measures can be measuredand compared . Deviations from th e baseline beyondpred etermined limits should trigger correctiveactions. In this respect monitoring is a d ynam icactivity as opposed to passive collection of data.

During the construction ph ase, for example,mon itoring m ay involve checking the p erformanceof contractors or government institutions againstcommitments expressed in formal docum ents, such as

contract specifications or loan agreements. During thepost-construction ph ase, it may involve measuringph ysical, biological or social parameter s againstrequired limits (e.g. measuring a ir and w ater dis-charges against Borrower country or World Bank guid elines). As the degree of u ncertainty in impactprediction or effectiveness of mitigation measuresincreases, monitoring becomes more critical.

Performan ce mon itoring is therefore concernedwith the immed iate outcome and longer term imp actof development projects (whether p ositive or nega-tive). The EPI note provides examples of measurableindicators drawn from different environmentalsectors. Sup ervision, in contrast, relates to the imp le-mentation p rocess. A well-designed and executedmonitoring progr am ensu res that information isprovid ed in the correct form and a t the right timeto trigger the approp riate sup ervisory response.

Envi ronment al sperv is ion may be defined asany Bank activity directed tow ards en suring thatBorrowers implement projects respon sibly, regard ing





2

agreed environm ental safeguards and th e need toadd ress unanticipated en vironmental problems. Thistyp ically involves visiting project sites and m eetingwith Borrower representatives, and reviewingenvironmen tal monitoring reports and correspon-den ce with the Borrower. It may also involve asectoral or regional imp lementation review coveringseveral projects. Where environmental or socio-economic problems arise du ring pr oject imp lementa-

tion, the Bank w orks w ith the Borrower to resolvethem. This may require corrective actions by theBorrower, su ch as m odifying th e d esign of the projector mitigation program .

Project preparation and appraisal consi derations

Opp ortun ities for p reventing, minimizing, mitigatingor compensating for adv erse imp acts can only berealized if they are integrated into overall projectimplementation. This is supp orted by clearly d efining

the environmen tal requirements (of wh ich p erfor-man ce monitoring is but one element) within anEnvironmental Management Plan (EMP) (see box 1).EMPs should demonstrate that proposed monitoringactivities will encompass all major impacts and willbe integrated into project supervision. The Task Manager should en sure that the Borrower d raftsTerms of Reference (TORs) for the EA which ad -

equately reflect the importan ce of preparing a com-prehen sive EMP.

Dev elopi ng a performance moni toring program

An effective environmental p erforman ce monitoringprogram should consist of the following elements:

• Monitor ing object ives;• description of performance indicators which

provid e linkages to impa cts and mitigationmeasur es identified in the EA;

• description of parameters to be measured, meth-ods to be emp loyed, sampling locations, frequencyof measur ements, detection limits (where app ro-priate) and definition of thresholds tha t w ill signalthe need for remedial actions;

• institutional responsibilities, timing and timescalesfor monitoring;

• reporting arrangements (to the regulatory authori-ties and t he Bank); and

• costs and f inancing provisions.

Monitoring objectives must clearly spell out thequestions to be answered by measu rement activities.By w ay of illustration, sup pose p articulate emissionsfrom a p roposed project are a concern. If the monitor-

ing objectives are simply to d etermine wh ether theseemissions w ill cause a pub lic nu isance, citizen com-plaints w ou ld be a su itable ind icator. If the objectivesare to ensure that r espiratory risks attributed toparticulate matter are reduced, an ambient mon itor-ing program for particulate materials with a diam eterof less than 10 microns (PM 10) wou ld be a pp ropriate.However, if the objective is to contr ol the health risksfrom toxic constituents, a more extensive monitoringprogram focusing on the fate, transport an d h ealtheffects of these constituents m ight be necessary. Oncethe monitoring objectives have been established, boththe imm ediate outcome of the p roject (for example,

redu ced particulate emissions from th e smoke stack)and the longer term environm ental imp act (ambientconcentrations of particulates) should be mon itored.An examp le of the u se of measurable indicators in th eLithuania Siauliai Environment Project is provided inAnn ex 2 of the EPI note.

The monitoring program p rovided in the EMPshould clearly show the linkages between specificimpacts identified in the EA an d indicators to bemeasured . These linkages should be d emonstrated in

Box 1. Environmental Management Plan

Environmental Managemen t Plans (EMPs) outline th e

measures to be taken du ring p roject implementation

and operation to control adverse environmental im-pacts and th e actions needed to imp lement these mea-

sur es. Such p lans are essential elements of Category Apr ojects; for ma ny Category B projects, mitigation

plans alone su ffice. A mitigation or managem ent p lan

should includ e the following items:

• Identificat ion and summary of all anticipated ad-verse environmental imp acts;

• Description of each mitigation measure, including

the type of imp act to which it relates and the con-ditions und er wh ich it is required (for example,

continu ously or in the even t of conting encies), to-gether with d esigns, equipment d escriptions, and

operating procedu res, as approp riate;

• Descript ion of the elements of the monitoring pro-gram (as outlined in the m ain text);

• Institutional arrangements (responsibilities for

mitigation and monitoring), which m ay includ erecommend ations for strengthening existing insti-

tutional capacity;• Implementation schedule for measures that must

be carried out as p art of the pr oject, showing linkswith overall project imp lementation plans;

• Monitoring and report ing procedures that are de-

signed to ensure early d etection of conditions th atnecessitate corrective actions, and pr ovid e infor-

mation on th e progress and results of mitigation

and institutional strengthening measur es; and• Cost est imates and sources of funds for both the

initial investment and recurring expenses forimplementing the EMP, integrated into the total

pr oject costs.



3

a way that can be readily und erstood by decision-makers. It is not essential to have complete d etails of mon itoring in the EA Report. In some cases furthercollection of baseline data may be necessary. Never-theless, the EMP should describe the process throu ghwh ich final monitoring arrangements will be agreed.Associated costs, fun ding and institutional needs(training, legislative or regulatory) required to com-

plete the p lan shou ld be id entified. The costs (includ-ing personn el, samp ling and analytical charges) areintegral to the p roject, and therefore will need to befactored into loan negotiations.

Verification of mitigation measures prior tofinal app roval of the EMP is important. A formalenvironmen tal sign-off shou ld cover both detailedmitigation and monitoring pr oposals (as well asassociated man agement an d training) prior to loannegotiations. It is necessary to ensu re that ap prop riateskills are available to design and verify the mitigationmeasur es agreed d uring project ap praisal. Similarly,commitments to environmental protection du ringconstruction need to be checked against bid specifica-tions and tenders.

Prepari ng a superv is ion pl an

In prep aring a su pervision plan for a p roject (asrequ ired by OD 13.05 on Project Super vision) the Task Manager shou ld consider :

• the magnitude and significance of the project’spotential environmental imp acts;

• uncertainties associated with the predicted envi-ronmental effects;

• past experience of similar projects within thesector, region or with th e same imp lementingagency;

• institutional complexities and capacities of thevarious agencies that may be involved in projectmonitoring and management; and

• availability of specialist skills within the Bank,implementing agency, Non-governmen tal organi-zations (NGOs) or consultants.

Projects with p otentially large, significant andun certain environm ental impacts will normallyrequire more intensive supervision. This is especially

valid wh ere past experience shows an u nw illingnessor inability of the implementing a gency to monitor orun der take corrective actions effectively (see box 2).

Sup ervision is based in par t on project condition-ality. Project legal documentation (which encom-passes the loan, credit or grant ag reements per se,subsidiary agreements, bidding d ocuments andrelated contracts) provide mu ch of the framew ork tosup port and enforce sup ervision. It is therefore criticalthat su ch docum ents ad equately reflect the project

Box 2. Benefits of intense supervision

The Category A Yacyreta II H yd ro-electric project on

the Rio Parana between Argentina and Paraguay h asbeen closely su pervised d ue to the scale and sensitiv-

ity of its potential social and en vironm ental imp acts.A Bank team was assembled to sup ervise the project

and pr ovide technical assistance to the Borrow er on

environmental aspects.

While sup ervision on th is scale is atyp ical, theYacyreta experience dem onstra tes the benefits of

intense supervision for complex and sensitive

pr ojects. Critical element s of the Resettlement a ndEnvironmental Managemen t Plan (REMP) include

water qu ality m onitoring, establishment of compensa-tory protected areas and wildlife rescue, archaeologi-

cal salvage, and housing and economic rehabilitation

for resettled fam ilies. By p rovid ing techn ical assis-tance and em ph asizing the importance of the REMP,

the Bank h elped ensur e compliance with REMP re-quirements prior to reservoir filling.

A Bank mid-term review recommended institu-tional improvem ents prior to the second phase of

reservoir constru ction and filling. It also high lightedthe importan ce of intensive supervision in ensuring

comp liance with the REMP. Reliance on inten sive

Bank su pervisory pr esence may be essential whereinstitutional capacity or political commitment to man-

aging environmental and social aspects is insufficientor questionable.

environmental requirements and implementationmechan isms (see box 3). It is good p ractice to ensurethat add ressing major environmental comp onents belinked to disbursemen t conditions.

Two vital links w ith the m easures contained inthe EMP are the Project Implementation Plan (PIP)(see Bank Procedure 10.00) and the env ironmentalcovenants agreed to by the Borrow er as a cond itionfor receiving the loan. The Task Manager and Bor-rower shou ld agree on the most important environ-mental p erformance (and other) indicators specifiedin the PIP. These help to reinforce project sup ervision.

To reinforce the legal documen tation it is recom-mended that a sum mary schedule of performancemonitoring be included as an ann ex to the environ-mental covenants. The annex should be as pr eciseas possible.

For Category A projects, the Task Managershould ensure annu al participation of an environ-mental and / or social sciences specialist (depend ingon th e impor tance of environmental or social issues)in p roject sup ervision. For category B pro jects,



4

participation in mid-term reviews shou ld be theminimum requirement.

Implementation cons iderations

During project imp lementation, the Borrower isresponsible for un dertaking p erforman ce monitoringin accordan ce with the EMP, and for reporting theresults to the Bank’s Task Manag er. In ad dition, theremay be a requ irement to report mon itoring results tonational or local regulatory au thorities. Where resultsviolate pr e-agreed limits the imp lementing agencyhas th e respon sibility to take corrective action toachieve the project’s en vironmental requirements.

Box 3. Translating EA recommendations into

project documentation

EA requirem ents are no t always w ell-reflected in Staff

App raisal Reports (SARs) and other p roject documents.Implementation schedules and bud gets for mitigation

and monitoring m easures are often ill-defined. TheSecond Ertan Hydroelectric Project in China provides

an excellent exam ple of effective incorpo ration o f EA-derived m itigation and m onitoring measures into theSAR, in the form of a detailed chron ological schedu le.

The environmental mitigation and monitoring plan

summ ary defines the agencies and ind ividuals respon-

sible for the programs. It includes details on coordina-tion of sub-components, agencies contracted for p ro-

grams, agency rep resentatives, the sup ervisory agencyand the supervisor.

The summ ary plan also outlines the timing of program sub-components, the location of studies to

be carried ou t, the data collection method s and type

of data analysis. In add ition, bud getary prov isionsfor the seven year monitoring period are ou tlined.

The detailed env ironmental measures d efined in thisSAR institutiona lize the project’s environ men tal as-

pects within the d esign and implementation plans,thereby providing a sou nd basis for monitoring

and supervision.

One asp ect rarely ad dressed in d etail in pr oject

SARs is inclusion of environm ental requ irements inbidding and construction contracts. During pr oject

prepar ation, environmen tal and social provisions

should be reflected in bidd ing docum ents for majorproject components. These might include restrictions

on location or restoration of borrow areas and con-struction camp s. Where construction camp s are essen-

tial, issues to be ad dressed sh ould includ e recruitment

of local labor, controlled access to natur al resour ces(such as fuelwood), healthcare provisions, and treat-

ment or disposal of solid and effluent w astes (prima-rily domestic sewage).

Box 4. Evaluating implementation of a

monitoring plan

The Guangd ong and H enan Provincial Highw ay

projects in China includ ed construction of four lanehighways in Guang don g, a two lane expressway in

Henan and improvement programs for a few thou-sand kilometers of existing road s. Monitoring require-

ments for the new highw ay components w ere speci-fied in th e EMPs of the p roject EAs and fully reflectedin the implementation and bud getary arrangements

specified in the Staff App raisal Reports (SARs). Sub -mission of EMPs for road improvem ent sub -projects

were a condition of d isbursement. The Bank also re-

quired that each local project supervision team had atleast one environm ental specialist.

A 1993 sup ervision m ission found implementation

of monitoring measures to be variable, often lagging

behind committed timescales. Dust and noise moni-toring of the expressway p rojects and the training

component required strengthening. Inter-project com-

mu nication between m onitoring staff was also inad-equate, and som e agreed mon itoring progr ams had

not been initiated. In addition, staffing of the environ-mental un it with imp lementation resp onsibility was

insufficient. How ever, following th e signing of con-tracts w ith local environmental institutes to un dertake

monitoring, significant progress was mad e with

implementing agreed monitoring m easures. Fullyequipp ed mon itoring stations are du e to be opera-

tional before the expressways are opened to traffic.

The inclusion of environm ental monitoring requ ire-

ments w ithin the EMP and project legal documenta-tion provided a soun d basis for measuring p rogress

with implementation du ring sup ervision and for Bor-rower comp liance with monitoring commitments.

Any m onitoring program requires allocationof respon sibilities. The task of assigning r oles canbe aided by the use of the matrices developed toshow linkages between impacts and mon itoring.This can h elp establish the app ropriate level of expertise for particular tasks, and in assigningfunctions to different organ izations. For examp le,inspection of construction might be assigned to a

consultant engineers staff, while monitoring mightbe performed b y staff from the implementing agen cy.Cross-checking can be facilitated by comp arison of results from d ifferent m onitoring sources, includinglocal comm un ities. For examp le, the effectivenessof bans on timber extraction by contractors can beverified using aerial ph otography su pp lementedby field observations.

The recipients, structure and intended usage of monitoring rep orts shou ld be clearly identified. It is



5

isfactory, the RED should agree on an app ropriatecourse of action with th e Bank’s Coun try Depar tmentstaff. The Cou ntry Departm ent n otifies the Borrow erof this action and any n ecessary follow up andconsults with th e RED on significant en vironmentalchanges du ring implementation. The likely interfacesbetween the Borrower, implementing agency andBank staff du ring p roject implementation are outlined

in figure 1.

Ad herence to the monitoring and su pervisionschedule should ensure that the necessary mitigationmeasures are completed in a timely and satisfactoryman ner. It should also assist personn el involved inmonitoring and su pervision (particularly wh ereresponsibilities change), by providing a succinctsum mary of the agreed environmen tal requirements.To reinforce effective meshing of environ men taland other project requ irements, financial disincen-

imperative that the reporting structure ensu res thatnon-compliance is rapidly brou ght to the attention of the appropriate decision makers, to facilitate timelycorrective actions. In addition, the structure, contentand timing of reporting to the Bank shou ld be de-signed to facilitate sup ervision an d provid e back-groun d for Bank m issions. The Task Manager sh ouldcarefully consider arr angemen ts for tracking receipt

(and su bsequent d issemination) of monitoringreports. The importan ce of missions in project sup er-vision is highlighted in box 4.

The Task Manag er, who has the p ivotal role inproject superv ision, confirms that progress reportssubm itted by the Borrower include th e requisiteperformance m onitoring information. It is advisablethat the Bank’s Regional Environment Divisions(REDs) review these reports an d help Task Managersto assess comp liance with EA requirements. If unsat-

Monitoring

Supervision

Regulatory entityassesses compliance& recommends action

Bank’s Task Managerinforms

Implementing entity

Bank assesscompliance withEA requirements

Implementing entitytakes corrective action

Reporting

ProjectImplementation

No

WorldBank

Reporting

Bank confirmsadequacy of

monitoring information

Adequate

Inadequate

ImplementingEntity

Implementing entityundertakes monitoringper EMP requirements

Figure 1: Monitoring and supervision during project implementation



6

Project status reports (Form 590)

In recognition of the need for more realistic andtransparen t p erformance assessments of p rojects,the Bank’s Operations Policy Department (OPR) hasrecently revised the project status rep orting format(form 590). This repo rt is comp leted by Bank Task Managers following project sup ervision missions.

The change in rep orting arrangem ents should be fullyoperational by the end of FY97. Two imp ortantchanges includ e identifying k ey performan ce indica-tors linked to d evelopment objectives (wh ich m ayinclud e environm ental objectives), and ratings of implementation p rogress. Guidance on specific ratingcriteria which app ly to the p erforman ce of environ-mental, and resettlement comp onents has recentlybeen issued by OPR. The imp lementation progressrating criteria for the env ironmental compon ents(often sp ecified in the EMP) are as follows:

Highly

satisfactory (HS)

Satisfactory (S)

Unsatisfactory (U)

Highly Un-

Satisfactory (HU)

Institutional issues

Many IBRD projects require the strengtheningof environmental managem ent capacity w ithinagencies responsible for overseeing the imp lementa-

Box 5. Towards improved monitoring and

supervision strategies in Sri Lanka

Und er the N ational Environm ental Act, the Govern-

men t of Sri Lanka requ ires EAs for m ajor p rojects.The Act and its implementing regu lations d efine

explicit mon itoring an d sup ervision requ irements as

part of the p roject planning and implementationcycle. However, as in many other countries, in

Sri Lanka m onitorin g is often the weakest link inthe pr oject imp lementation cycle.

The Central Environmental Au thority (CEA)

and the United States Agency for International

Developm ent convened an intensive workshop in1995 to iden tify and ad dr ess critical issues imp eding

environmental monitoring and sup ervision pro-grams. Attendees included representatives from

government agencies, universities, research institu-

tions and NGOs.

Consensus was reached on a nu mber of imp ortantissues includ ing improving:

• Regulatory programs and policies by clearly de-fining m onitoring and supervisory respon sibili-

ties, development of sectoral guidelines and es-tablishing time frames for legal action in respon se

to non-compliances;

• capacity of agencies with monitoring responsibili-ties throu gh p rovision of ad ditional resources,

staff and sp ecific bu dg etary allocations;• proficiency of laboratories and environmental

pr ofessionals by establishing certification pr oce-

du res; and• inter-agency coordination of monitoring activities

by developing legal provisions under m emorand aof und erstanding; establishing a central database

within the CEA to improve the qu ality of and ac-

cessibility to baseline data, and m aintaining anup -to-date register of data sou rces.

Environmental componentsare being implementedin a timely and satisfactorymanner.

Implementation of thecritical aspects of the env iron-mental components is pro-ceeding in a timely andsatisfactory manner. Thereare some problems withcertain other asp ects, butthese are not und ermining theprogress of imp lementing thecomponen ts and are being

add ressed by the borrower/ implementing agency.

There are major problems inimplementing some or all of the environmental comp o-nents of the project, includingaspects critical to the su ccessof the components and theproject as a w hole. However,appropriate measures arebeing taken by the borrower/ implementing agency to

address the problems.

As in “U”, but problems arenot being satisfactory (HU)

add ressed appropriately.

tives can be utilized. Refusal to d isburse fund sun less work is done in compliance with environmen-tal requirements is a stand ard construction contract

condition that could also be elevated to the loanagreement level.

In add ition to assessing pred icted imp acts,mon itoring m ay also reveal un anticipated impacts.Effective sup ervision ensu res that corrective action istaken commen surate w ith the scale of such impacts.This can sign ificantly influen ce project costs, whichun derlines the importance of accurate and timelyreporting. This redesign or mobilization of contin-gency fund s may be required.



7

tion of mitigation measures and mon itoring.This should result in a better und erstanding of performance monitoring and better imp lementationof futur e pr ojects (see box 5). Monitoring m ay beshared betw een an imp lementating entity and anenvironmen tal regulatory entity, to help d evelopman agement capacity.

It is importan t that some fund ing for monitoringbe allocated to the relevant agencies, otherwise thenecessary environmental actions may not be effectivelyimplemented . Opportu nities should also be sought todevelop links with national monitoring networks andto ensure app ropriate roles for environment m anage-ment institutions.

Public consultation and involvement

Public involvement is crucial to a soun d decision-making process. The EMP should therefore clearlydescribe and justify the prop osed performan ce moni-toring ap proach. Local residen ts will often be in thebest position to observe and rep ort environmental andsocial imp acts. A first step is to involve them inestablishing baseline cond itions before a projectproceeds, typically through the u se of local NGOs orun iversities with th e requ isite skills. In ad dition, thereshould be one clearly identified prima ry point of on-site office contact with t he pub lic on comp lianceissues a nd complaints. This office shou ld keep com-plete records and provid e input to resolutionof issues. There should also be provision for appealsby interested parties. Many countries, especiallyin Latin America, are establishing positions of environmen tal omsbudm an, to hear public concerns

and bring them to th e attention of the au thorities.

Consultation with affected p eople and N GOs(as specified w ithin OD 14.70 on Involvem ent of NGO sin Bank Sup ported Activities) shou ld be an integralpart of the EMP for all Category A and are adv isablefor many Category B projects. In some instances NGOshave been invited to be p art of the monitoring process.Bank su pervision should ensure th at local concerns areadequ ately add resed du ring implementation. Disclo-sure of information is an importan t element of theconsultation p rocess. Information on progress w ithmitigation imp lementation and monitoring activities

should be shared with the pu blic.

Panel of experts

In some instances, there may be disagreement as tothe sign ificance of the imp acts of a project or theeffectiveness of mitigation m easur es. The op tion of an indep end ent panel of experts is provided for un derBank EA procedu res and the involvement of sucha group in the design and imp lementation of a moni-toring program can be useful.

Box 6: Invol vement of Panel of Experts

The Ghazi-Barotha H ydrop ower project in Pakistan

is designed to meet the acute pow er shortage inPakistan. The main pr oject elements includ e a bar-

rage located on the Indu s River, a pow er chann el(designed to convey water from the barrage to th e

pow er complex) and a pow er complex. The SAR for

the project includ es detailed TORs for an indepen-dent environmental and resettlement pan el (ERP) for

the imp lementation p hase of the p roject. A separateERP was actively involved in project preparation.

During implementation the ERP (which will com-prise an environmental sp ecialist, an agricultural

specialist an d a social scientist) will wo rk closelywith th e agencies involved in project imp lementa-

tion. The chairm an of the ERP will hav e respon sibil-

ity to app oint shor t-term sp ecialists if necessary. TheERP will be required to u nd ertake semiannual onsite

reviews of the followin g:

• implementation of the environmental mit igation,

monitoring, and resettlement plans;

• activities of the Project Information Center;• act ions or studies which should be undertaken to

sup port the p roject’s environm ental, resettlementand public information objectives;

• TORs for environmental and resett lement

activities at the request of the implementingagency; and

• appropriate advice or guidance required to ad-

dress un anticipated imp acts during p rojectimplementation.

The find ings of each review will be reported and

detailed briefings will be given to the implementingagency and oth er concerned p arties.

The principal advantage is that an a rms-lengthinstitutional arrangemen t can provide a forum fordiscussion of technical issues an d recomm end ationson futur e actions, without th e app earance of a vestedinterest that Borrowers or the Bank may incur (seebox 6). To maintain its indep enden ce it is importan t toestablish clear procedures for disclosure of

the Panel’s deliberations.

Sectoral and regional EAs

The use of sectoral EAs (SEAs) and regiona l EAs(REAs) is increasing w ithin the Bank , wh ich offerscertain advan tages for monitoring and sup ervision,compared with a project-specific approach (see Update

no. 4: Sectoral EA and forthcoming Update no. 15 on

Regional EA). They p rovide a framework for assessinginstitutional needs and project-specific proposals.



8

They can also help to rationalize mon itoring andsup ervision efforts w here similar projects are fun dedfrom different sources. REAs are compatible withdevelopm ent of monitoring protocols that are con-tiguous with the bound aries of natu ral or man -madesystems such as watershed s or large metropolitanareas, and can also facilitate inter-agency coord ina-tion. This app roach can result in th e systematic

strengthening of overall environmental managem entcapability in a region.

Conclusions

It is essential that m onitoring and sup ervision begu ided by clear objectives. Specific requ iremen tsshould be linked to impa cts identified du ring theEA process.

The incorporation of d etailed m onitoring andsup ervision ar rangemen ts into pr oject legal docu-ments is essential to ensure effective implementation.Where sup ervision id entifies inad equacies in th eapp roach to mon itoring, project legal documentsshould p rovide a soun d basis for agreeing to andimplementing r emedial actions.

Institutional capacity to implement or overseemonitoring should be evaluated, and reinforced asapp ropriate. The associated costs should be anintegral part of the pr oject costs.

It is important to maintain effective publicinvolvement through out p roject implementation.This shou ld includ e provision of a forum for submit-ting and resolving comp laints, access to m onitoring

information, and involvement in monitoring to theextent feasible.

References

AGRAF. 1995a (draft). Land Quality Indicators for

Agricult ural and Resource Management Projects. Wash-ington: the World Bank, Agriculture and Natu ralResources Departm ent.

AGRAF. 1995b (draft). Performance Indicators in Bank-

Financed Agricultural Projects. Washington: the WorldBank, Agriculture and Natu ral Resources Department.

Dixon, J.A., Kunte, A. and Pagiola, S. (1996). Env iron-

mental performance Indicators. A First Edition N ote.

World Bank, Washington, D.C.

ENVGC. 1995a (draft). Monitoring and Evaluation

Guidelines for OD S Phaseout Investment Projects, Wash-ington: The World Bank, Global Coordination Division.

ENVGC. 1995b (draft). Monitoring and Ev aluation

Guidelines for GEF Global Warming Investment Projects,Washington: The World Bank, Global Coord inationDivision.

ESD. 1995. Monitoring Environm ental Progress: A Report

on Work in Progress. Washington: The World Bank,Environment Department.

Global Environ men t Facility. 1992. Guidelines for

Monitoring and Evaluation of GEF Biodiversity Projects.Washington: Global Environment Facility.

OECD. 1994. Env ironmental Indicators. Paris: OECD.

Pieri, Christian , J. Dum ansk i, A. Ham blin, A. Youn g.

1995. Land Quality In dicators. World Bank DiscussionPap er No . 315.

This Update was prep ared by Aidan Davy and Phil Paradine, an independent consultant. Extensive review and comments have been

provided by John Dixon, Arundhati Kunte (ENVPE) and John Butler of IRG consultants. Based on Bank policy and procedures on

Environmental Assessment (EA) (Operational Directive 4.01), the EA SOURCEBOOK UPDATE provides up-to-date guidance for

condu cting EAs of proposed pr ojects. This publication should be used as a supplem ent to the Env ironmental Assessment S ourcebook. Please

add ress commen ts and inq uiries to Olav Kjørven an d Aida n Davy, Managing Ed itors, EA Sourcebook Update, ENVLW, The World Bank,

1818 H St. NW, Washington, D.C., 20433, Room No. S-5139, (202) 473- 1297. The Bank is thankful for the Government of Norway for

financing the production of the EA Sourcebook Update.



Environment Department June 1996The World Bank Number 15

Regional Environmental Assessment

Regional environm ental assessment (REA ) is a tool to help development planners design inv estment st rategies, pro-

grams and projects that are environmentally sustainable for a region as a whole. REAs take into account the opportunit ies and

limit ations represented by the environment of a region and assesses on-going and planned activ ities from a regional perspective.

This EA Sourcebook Update describes REA in t erms of its nature and purpose, advantages, operational cont ext, selec-

tion criteria, and key components. It also discusses challenges associated with REA preparation and offers examples from

Bank experience. The Update expands upon exist ing information in Chapter 1, pp. 12–14 in the EA Sourcebook.

Background

Generic guidance on regional EAs was introdu ced in theWorld Bank in 1989 with th e adop tion of an Operationa lDirective on environmental assessment (amended in 1996as OP/ BP/ GP 4.01). The Environmental Assessment

Sourcebook (1991) prov ided add itional advice on the na-ture and pu rpose of REAs and possible operational con-texts. REAs have had limited use to date, but emergingexperience in the Bank and other development institu-

tions has revealed that this tool can improve regionaldevelopment p lanning by helping to formulate moresustainable investment strategies and to build environ-mental management capacity at the regional level. ThisUpdate draws on th is experience. The term ‘region’ isdiscussed in box 1.

Nature and purpose of REA

The main purpose of REA is to improve investmentdecisions by bringing environmental opportunities andconstraints into developm ent p lanning at the regionallevel. REA is similar to sectoral EA (see Update no. 4:Sectoral Environmental Assessment ) in that it is used du ringthe early stages of developmen t plann ing, before deci-sions about specific projects have been m ade and withthe purp ose of influencing such d ecisions. Both EA typesallow for comprehensive assessment of environmentalissues (one within a sector and the other a region), andcan be u sed to establish environmentally soun ddevelopment policy.

Regional EA differs from oth er forms of EA becauseit assesses environmental issues and impacts in a dis-

tinctly spatial setting. Ongoing activities, plans and poten-tial projects are assessed by how they may cumulativelyaffect the ecology and human living conditions within alarger area. The spatial area to be investigated can bedelimited based on ecological, socio-econom ic, adminis-trative or other boundaries (see Box 1). In the first case,the geograp hic area may be a river basin, a coastal zone,a highland area or other areas that can be viewed as natu-rally bound ed. In the second case, a regional EA may, forexample, focus on a p rovince, a group of counties or a

mu nicipality. The spatial area can also be delineated bydemographic factors; this applies most commonly tourban areas. Sometimes a defined region extends to morethan one administrative area, e.g., more than one munici-pality, coun ty, province or even na tion state. In suchcases, cross-jurisdictional issues often create a need forinnovative institutional arrangements.

REAs are m ore comprehensive und ertakings thanproject-specific EAs being broader in terms of the ph ysi-cal area to be assessed, the time fram e to be considered,and the analytical content. REAs are also more open-ended in terms of impact predictions and recommend a-tions. They do not substitute for project-specific EAs of individual investments, but can limit the need and scopeof project-specific EAs dow nstream .

Some regional EAs are used in a proactive manner asa development planning tool for a region. They examinea given region in term s of its natura l resources, ecologicaland socioeconomic characteristics and identify invest-ment projects that are environmentally sustainable forthe region as a whole. The end result may be a compre-hensive regional development p lan. However, most

Insert in U pdate Binder chapter 1





2

Box 1. Definition of “region”

One d efinition of a region is “any subn ational area

that a country calls a region for pur poses of planningor d evelopm ent (Organization of American States—

OAS, 1984).” Such a n area is u sually d emarcatedalong administrative boun daries and may be com-

posed of one or more m un icipalities, provinces or

states. Other times, a region is defined as th e locus of a specific problem (e.g., pov erty, social tension, pop u-

lation pressure) or according to ethnic makeup. Socio-economic characteristics may also d efine regions,

such as a generally poor rural area, or a major ind us-

trial area.

For purp oses of integrated r egional planning andREA, the ideal app roach is norm ally to d efine the

region in natural-spatial terms. Common geographi-

cally defined un its are river basins, moun tain pla-teaus, forested areas, coastal zones, airshed s and

island configurations. An urban area can also be avery u seful u nit of analysis, often pr oviding a d egree

of consistency across n atu ral-spacial, socio-econom ic

and administrative boundaries.

Given this wide variety of definitions and charac-teristics, regions have no general distinguishing char-

acteristics as stud y areas. H owever, method ology for

regional development p lanning in general is rela-tively well defined an d ad vanced.

A range of coun tries have experience with REAsand other environmental planning tools with a regionalapp lication. This experience suggests tha t, effectivelyused, REA can provide a number of additional benefits:

• Provide a baseline overview of environmentalconditions within the stud y area (a regional “stateof the environment”), wh ich is key to m aking

reliable impact assessments and mon itoringenvironmen tal changes over time;

• Assist governments in forming a long-term viewof regional planning an d increase the transparencyof the planning process (that is, show the reason-ing behind d evelopment p lans), thereby modify-ing or eliminating decisions that might be environ-mentally harmful;

• Analyze the institutional and legal framework relevant to th e p articular r egion, identify institu-tional and jurisdictional gaps, and make recom-mend ations regarding, for example, environm en-tal stand ard s and law enforcement approp riate forthe region (thus redu cing the n eed for similaranalysis in dow nstream EA work);

• Suitably collect and organize regional environ-mental da ta and , in the p rocess, iden tify data gap sand needs at an early stage, and outline methods,schedules and responsibilities for data collectionand management du ring program or p rojectimplementation;

• Allow for comprehensive planning of region-wideenvironmental management and monitoring, andidentify broad institutional, resource and techno-logical needs at an early stage, including p otentialfunding problems;

• Provide a basis for collaboration and coordination

across adm inistrative boundar ies and b etweensector-specific authorities and help avoid contra-dictions in policy and planning w hile enhan cingefficiencies;

• Strengthen preparation and implementation of individu al projects within the region, by recom-mend ing criteria for environmental screening,analysis and review of such projects and settingstandar ds and guid elines for project implementa-tion; and

• Provide a vehicle for public participation inshaping the futur e development of a region,thereby building p ublic sup port for the p rocess.

The operational context

The World Bank m ay supp ort REAs in the context of: (1)a region-specific investment program involving multiplesubp rojects, such as the Argentina Flood ProtectionProject featured in box 3; (2) a series of independ entinvestments within a region w here the Bank m ay beinvolved in one or several of them; (3) a large, singleproject w ith comp lex implications for oth er activities inthe region, such as the Lebanon Solid Waste and Envi-

regional EAs are more in the nature of a cumulativeimpact assessment of mu ltiple projects and activities thatmay be on-going, planned, or simply expected. Such an

REA may be carried out in conjunction with a regionaldevelopment plan, and may also help shap e investmentpriorities and activities downstream. However, the em-phasis is on influencing an evolving strategy or plan(including projects) and assessing cum ulative impactsrather than designing a full-fledged development plan.Boxes 2 and 3 discuss two REAs of the second type.

Advantages of REA

REAs can influence investment plann ing in a largearea where project-specific EAs can only address thedesign and man agement of individu al projects. REAs

can assess the cum ulative and interactive environ-mental impacts of several projects where the project-specific varian t looks at site-specific impacts. Likesectoral EAs, REAs move environmental analysisup stream in the p lanning p rocess into the policyarena, at a stage wh ere major strategic decisions haveyet to be m ade. Thu s, REAs offer opp ortun ities formore comp rehensive and realistic assessment of investment alternatives and can help eliminate at anearly stage those investments that m ight generateparticularly adverse environmental imp acts.



3

Box 2. Biodiversity Conservation Project in Indones ia: The regional impacts of conservation

This project, financed in p art by th e Global Enviro n-

men t Facility (GEF), aims to conserv e biological diver-

sity and imp rove natural resource management andeconomic opportunities for local communities in and

around the Kerinci-Seblat National Park on the island

of Sum atra.

A REA was p repared to assess the environmental,land use and socioeconomic developm ent imp lications

of this project and help d esign ap prop riate policy,adm inistrative and fiscal responses from national and

local governmen ts. The REA was an integral part of

project development from the earliest stages andevaluated th e following:

• the extent to which the design of the project met

GEF criteria and objectives for natu ral resou rce and

biodiversity conservation;• the potential impacts of adjacent development

activities on biodiversity conservation and integrityof the national park; and

• the impacts (positive and negative) of the project on

adjacent hum an commu nities and on opp ortunitiesfor future economic development.

The REA included detailed baseline surveys of the

natural env ironment an d of socioeconomic conditions

in the p roject area, enabling the REA consultants toevaluate the evolving p roject design and give concrete

recommendations in a nu mber of areas. For examp le, theREA found that the p ark bound aries were inadequ ate

for biodiversity conservation, and that a clear commit-

ment from the Governm ent of Indonesia to rationalizethe bou nd aries progressively over a five-year p eriod

would be needed.

Perhaps the m ost important finding of the REA was

that current rates of deforestation and land degrad ationare so high in th e area that for th e project to be viable,

immediate and strong environmental management m ea-sures w ere required. Logging, agricultural encroach-

ment, mining and road d evelopm ent are activities wh ere

immediate control and enforcement m easures areneeded. The REA outlined a n um ber of such measures

and also discussed how the prop osed project mightinfluence regional developm ent op portu nities. It con-

clud ed that th e project has a low op portu nity cost

because remaining land areas with biodiversity value

hav e major use limitations. Suitable land for agr iculturehas already been converted. Further logging and conver-sion to agriculture and other uses are already causing

major erosion p roblems as remaining forested areas are

typ ically in steep h illside areas. While the p roject is notlikely to mak e a significant regional econom ic contribu -

tion in the short-term, it might lead to a significant slow-ing in the degrad ation of land , water and biological

resources. Over the med ium to long term , park-based

tourism could become an imp ortant source of income.

ronm ental Managem ent Project discussed in box 4 ; and

(4) regional planning that m ay go ahead independ ently of any Bank-supported project preparation in the region.

In the first three instances, the REA wou ld n or-ma lly be tied to on e or several pr ojects. These mayhave p otential environmental imp acts that are eithersignificant or mod erate (classified by the Bank incategories A or B—see Update no. 2: Environmental

Screening). Thus, the REA should be carried ou t inaccordan ce with the Bank’s EA policy and procedu re(OD 4.01: Env ironmental Assessment ). How ever, in thefourth context the REA is emp loyed withou t any d irectlink to lending activities that norm ally requ ire EA

work. In this case, the REA can be tied to Bank eco-nom ic and sector analysis for any given country, orto technical assistance or adjustment operations. TheBank’s EA p olicy does not app ly although it, as wellas this Update, may p rovide valuable information.

Criteria for undertaking REA

The following criteria help indicate if a REA is approp ri-ate to a given investment p roject or p rogram (wh ereOD 4.01 applies):

• Is the Bank considering supporting an investment

program or p roject(s) in a region w ith existing,significant and inter-related environmentalproblems or m ajor u ncertainties about ecologicalfunctions and relationships?

• Could the proposed program or project(s) havesignificant region-wid e environm ental imp acts(including environment-related social imp acts andimpacts on cultural heritage) that need a compre-hensive treatment to be un derstood and add ressed?

If the answ er is “yes” to one or both of these ques-tions, a REA should be considered. In add ition, there areconditions that, when m et, increase the value and feasibil-

ity of a REA:

• Is the borrower at an early planning stage or at anew m ajor investment phase, wh ere imp ortantstrategic decisions have n ot yet been m ade concern-ing developm ent of the region?

• Are the economic and social conditions in theregion relatively stable and pred ictable (as opposedto rapid and un pred ictable change), to allow fora medium to long-term planning horizon andenhan ce the long-term value of the REA?



4

ment of a region, it is strongly recommend ed th at acomprehensive scoping exercise be und ertaken tohelp lay a solid foun dation for the stud y. The scopingshould encompass the following activities:

Understanding the regional planning framework .There mu st be a compelling connection betweenthe REA process and the existing d evelopmentplanning framework for the region. In som e cases

the situa tion is clear-cut: the bou nd aries of an existingregional institution, such as a river basin au thority,provid es both an organizational home and the geo-graph ical bound aries for the REA. At other times,a region is characterized by overlapp ing respons-ibilities across institutions and even ov erlapping jur isd ictions, m ak ing it m ore complicated to institu -tionally position the REA and determine the ap pro-priate bound aries. The key is to understand theexisting institu tional setting and link the REA ina functional way.

Box 3. A proactive regional EA: A flood protection project in Argentina

The central objective of the Argentina Flood ProtectionProject is to improv e flood p rotection for the hum an com-

mu nities inhabiting the flood plains of the Parana, Paraguay

and Urugu ay rivers in northern Argentina. It would financeimplementation of a comprehensive pr ogram of investments

within the flood p lains lying within the boun dar ies of sevenprovinces. This region has suffered enormou s econom ic and

hu man loss from floods, the last occurring in 1983 and 1992.

At the same time, the period ic flooding su stains ecologicalsystems and man y forms of prod uctive activities. The

pro ject has therefore adop ted a “living with floods” strategy.The investments includ e both structural and non-structural

measures to protect imp ortant economic and social infra-

structure and enhance the provincial capacity to deal withperiodic flooding.

At the Bank’s suggestion, a REA was initiated during

the earliest stages of project prep aration, to serve as an

inpu t to its d esign. The REA stud ied the interaction of natural and manm ade systems within the flood plains,

includin g the ecological functions of the period ic floodsand the curr ent state of critical ecosystems such as

wetlands an d gallery forests.

The stud y, und ertaken by an Argentine team led by a

Colombian specialist, foun d that to a surpr ising extent manyecosystems and hum an activities depend ed on the floods.

This had a direct impact on the way th e project was de-

signed. Criteria for the selection of investments w ere mod i-fied to ensu re that flooding w ould continue but n ot threaten

human well-being and economic infrastructure.

The study also documented the extent to w hich w et-

lands, gallery forests and aquatic ecosystems of the tributar -

ies to the three rivers are threatened by ongoing h um anactivities. The REA foun d that th e most disruptive activities

were road construction, followed by poorly planned urbanexpansion, and effluent from the meat p acking ind ustry.

Another significant finding was that poor urban sanitation

services were d irectly und ermining existing flood p rotectionworks. For example, many communities d isposed garbage

along protective dikes, attracting rodents which weakenedthe dikes by digging tu nnels making th em ineffective

against floods.

The REA helped d esign four key project compon ents to

help improve the environmental and economic benefits of the project. These included (a) a compon ent to strengthen

EA procedures in key institutions within the seven prov-

inces; (b) techn ical assistance for u rban environm ental man -agement; (c) environmental education and awareness pro-

grams in communities benefiting from protection works;and (d) supp ort to pr otection and management initiatives

for wetlands and other ecosystems.

How ever, perhaps the most important contribution of

the REA was its direct contribution to screening p otentialinvestments under the project and assessing the cumulative

impacts of selected sub-pr ojects. From a total of some 150

possible investments, 51 subp rojects with clear economic,social and environm ental benefits were shor t-listed. Project-

specific EAs were prepared for all sub-projects, on the basisof which the REA team examined the likely cum ulative im-

pacts of all the 51 subprojects, ensuring th at such impacts

wou ld be m inimized. Public consultation was an importantpart of the entire p rocess and, in one case, a subp roject was

significantly redesigned following community input.

A highly experienced team was used an d the total cost of

the REA d id n ot exceed US$300,000—a small amou nt

compared to the cost of the project and the expectedeconomic, social and environmental ben efits.

• Is the borrower likely to give due consideration tothe find ings and recommend ations of the REA?

Undertaking a REA: The process

Like any other form of EA, the process of undertaking aREA can be d ivided into designing the stud y and execut-ing the study. The design stage essentially consists of determ ining the scope of the REA (“scoping”), prepara-

tion of TOR and selection of the REA team . The executionstage involves the preparation of the REA. What makesthe REA process different from other EA processes is thatthe regional/ spatial perspective needs to be p resentthroughou t, and that the scope poses some particularchallenges in design and execution.

Des igning t he study

Since a REA by its very natu re is a complex und ertak-ing and can have significant imp acts on the develop-



5

mary, secondary and tertiary urban centers of the re-gion; and (d) assess demograph ic patterns and migra-tion trends to und erstand the popu lation dynamicslikely to influence the region’s developm ent.

Determining the optimal mult i-sectoral focus. Develop-ment problems are frequently defined in a sectoralcontext that often obscures casual relationships. Because

Task 3: Prediction and evaluation of the cumulative impacts

of the scenarios

• What are the significant adverse and beneficial

imp acts/ resou rce use conflicts by the year 2010?• What are the relative probabilities of the impacts

occurring?• Which of these expected adverse impacts are

irreversible?

• Which adverse impacts are reversible and howmight this be achieved?

• How might expected beneficial impacts be enhanced?

• What is the temporal and spat ial distribut ion of theimpacts and resource use conflicts?

• Which protected areas, non-designated but impor-tant sites or resources might be affected?

• Which protected, rare or endangered species might

be threatened?• Which international or national standard s, criteria or

guidelines, and policies for pollutant levels, human

health/ activities, protected areas/ species will becontravened?

Task 4: Comparative analysis of the development alternatives

• What are the main differences between the scenarios

in terms of environmental impacts and r esource use

conflicts?• Are these differences of type or scale?

• What are the major differences in type?• What are the major differences in scale?

• What are the implications of these differences for

institutional arrangements and the nature/ type of Coastal Zone Management Plan needed ?

Task 5: Recommendations/input to Coastal Zone

Management Plans

• What are the priority “hot spots” which need

remedial action?• What sectors are contribut ing most to these “hot

spots”?

• What types/ mix of measures a re needed to improvethe “hot spots” in the short and long term?

• What beneficial impacts could be enhanced?• What measures could achieve this object ive?

• What might be the costs and inst itut ional implica-

tions of the recommend ed measur es?

• What capaci ty building measures might be needed?

This pro ject has tw o m ain objectives: Rehabilitation of

Lebanon’s solid w aste management system, and revers-

ing the current trend of environmental degrad ation incoastal areas of the coun try. The second o bjective is ad -

dressed thr ough a coastal zone management (CZM) com-ponen t aimed at strengthening development planning

and environmental man agement in coastal areas. Aregional EA for Lebanon’s coastal zone is the first step inthe pr ocess of designing this comp onent. It is intend ed to

identify the cum ulative pressures and impacts of coastaldevelopments u nd er different investment scenarios,

identify the “h ot spots” in terms of environmental sensi-

tivity and potential hazard, and prop ose potential miti-gation actions. It will also provide key information that

will feed into (a) the establishmen t of a Geograph ic Infor-mation System (GIS) for phy sical planning and monitor-

ing; (b) preparation of a CZM p lan to be appr oved an d

legally binding for all futu re d evelopm ents on the coast;and (c) implementation of emergency actions to protect

and rehab ilitate coastal resources. Below are exerts from

the Terms o f Reference (TOR), in th e form of qu estionsthat the REA needs to add ress:

Task 1: Description of the development scenarios

• What are the expected developments/ t rends at the

micro and macro levels that w ill affect the coast?• What are the assumptions behind the scenario(s)

identified and wh ich are th e main u ncertainties?

• What is the most likely scenario?• What are the main concerns related to expected

coastal im pacts, 1995–2010?• What are the expected resource use conflicts, 1995–

2010?

• What are the institutional responsibilities andfunctions in control and managem ent of the coast?

Task 2: Description of the environment

• What are the main features and natural resource usesof the coast?

• What and where are the main, current environmentalimpacts and resource use conflicts?

• What are current t rends in coastal environmental

“quality”?• What and w here are the relat ive contribut ions of the

various economic sectors to these trends?• What and where wil l the net effect be of current

infrastructure rehabilitation?

Box 4. A solid waste and environmental management project on Lebanon’s coastal zone

Defining the spatial context . Defining the geograp hicand environm ental context for a REA is essential. Somesteps tha t will help define context includ e the following:(a) identify the major ecosystems of the region to under-stand the broader ecological context and the rationalboundaries for natural resources management (e.g., ariver basin or a coastal zone); (b) determ ine the boun d-aries of econom ic and m arket systems; (c) define the pri-



6

sectoral problems frequently requ ire multi-sectoral solu-tions, the challenge is to design stu dies with a suffi-ciently broad technical focus. Consequently, before em-barking on a REA, the following steps are needed : (a)determ ine which sectors have the potential to causeenvironmental problems in the region so that the studycan be designed to include all relevant asp ects; (b) ana-lyze sectoral cause-and -effect relationships so that th e

REA is d irected toward add ressing m ain causes ratherthan symptoms; and (c) encourage sectoral institutionsto supply information, feedback and political support.Involving sectoral interests early may defuse potentialconflicts and reveal false assumptions that can misdirectthe study.

Limiting the study goals while retaining an integral fo-

cus. One common problem in d esigning regional stud iesinvolves stretching limited financial resources to covertoo many stud y objectives. The challenge is often to cutthe problem down to fit the resources available, withoutlosing the integral focus of the study or producing plansand proposals too general to be imp lemented. Ways tobalance these concerns may include: (a) limiting theoverall size of the geograph ical area; (b) studying the re-gion at d ifferent levels of detail, phasing the investiga-tion from the general to the specific; (c) limiting the timehorizon of the proposed development p lan and projects;(d) limiting the sectoral focus of the study after a rapidintegrated overview of the various sectors; or (e) focus-ing the study on a particular target popu lation w ithin adesignated geographical area.

Setting up appropriate institutional arrangements.This point is particularly imp ortant for REAs where themain objective is to shape regional development plan-

ning. The most common management structure is atechnical unit composed of national and internationalprofessionals and support personnel who jointly executethe study. It is importan t for the effectiveness of thestudy that the degree of interaction and teamwork bevery high. In terms of institutional arrangements at thenational and subnational levels, several options areavailable, including (a) setting u p a task force of agen-cies to execute th e stud y; (b) working with a sectoral ex-ecuting agency under the aegis of a national or provin-cial planning agency; (c) working with a natu ralresource or environmental agency; (d) working with aregional development corporation or similar agency;

and (e) helping establish an independently fundedstudy team that can evolve into a regional developmentinstitution. All these options have their strengths andweaknesses and specific country circumstan ces shou ldguide the final selection.

Developing a detailed TOR. The TOR needs to addressthe following: (a) define the objectives of the stud y andtasks to be perform ed to achieve the objectives, includ -ing clear allocation of responsibilities among those in-volved; (b) identify the specific technical produ cts to be

delivered (reports, maps, training, development projectproposals, etc.); (c) define available information resources;(d) allocate the available human an d financial resourcesto the various tasks; (e) establish a tim e frame for thedelivery of different prod ucts; (f) design a system for con-tinually integrating information and forcing the interac-tion of specialists throughout the study; and (g) providefor app ropr iate levels of public consultation.

Planning appropriate public consultation. Publicconsultation is an integral part of the EA process(see Update no. 5: Public Involvement in Environmental As-

sessment: Requirements, Opportunities and Issues). Since aREA is invariably initiated before concrete investmentdecisions are made, it may not always be possible to sys-tematically consu lt representatives of p otentially a ffectedpeop le during REA preparation. The exception is if ac-tivities with potential impacts on specific locations arealready being p lanned. Consequently, an ap prop riateapp roach may be to target consultations w ith thoseNGOs that a re active in the region, scientific experts,relevant agencies from all levels of governm ent andperhaps industrial, commercial and labor interests.The scope of the consultations would normally be atthe level of strategic choices for regional development.

The REA can also be an effective vehicle for design-ing a p ublic consultation p lan to be carried out w ithin thecontext of the implementation of a regional developmentprogram. In the case of a proposed u rban infrastructureprogram for the Ind onesian island of Bali, the regionalEA will design d etailed p rovisions for consulting withstakeholders at local (‘banjar’), county (‘kabupaten’) andprov incial levels. At the local level, the need to consultwom en has been p articularly emphasized, as they are the

principal end users of water, solid waste and other ser-vices. A well-planned and successfully implementedconsultation process will help ensure public support forthe final regional plan or program, and increase overallpublic awareness of major environmental issues and theirinterrelatedness in the region.

Defining a review process. It is impor tant to agreeon a review process in advance, including scope andprocess for report d istribution, allocation of review re-sponsibilities and definition of review stages. In establish-ing the review process public consultation needs andrequirements should be fully taken into account.

Executi ng t he study

REAs vary in scope an d content according to theregion of concern, types and significance of environmen-tal issues and the opera tional context. Primary areasrequiring attention in a full (Category A) REA are pre-sented below. It is imp ortant to keep in mind that flexibil-ity is needed to adjust the REA process and methodologyaccording to the particular context (geographical, admin-istrative and operationa l). Being a relatively new ap-



7

proach, REAs require innovative thinking , careful jud g-ment and a structured “learning-by-doing” p rocess.

Policy , legal and administ rat iv e framew ork. Thissection should be considered a fund amental part of aREA report. It is impor tant to take into accoun t those as-pects of the national policy, legal and institutional frame-work likely to influence environmental management in

the region, in add ition to the regional framew ork itself.This should includ e looking at existing political prioritiesand how they might constrain or facilitiate implementa-tion of environm ental policy and activities in the region.If other, recent studies have analyzed these dimensionsadequately, the REA should use this work rather thanduplicate it.

• The national framework. The relevant nationalenvironmental p olicies, laws and regulationsshould be assessed for comp leteness and ap prop ri-ateness in light of the particular conditions andproblems of the region, and gaps and weakn essesnoted. N on-environmental laws and policies of significance to th e region’s utilization of resou rces,prod uction processes, or pollution shou ld also beidentified. Similarly, the national regulatory frame-work for EA prepar ation and review should beassessed. The REA should look closely at theinstitutional capacity of the m ain environm ental ornatu ral resources ministry or agency, in terms of effectiveness an d capacity for p roviding guid elines,setting and enforcing standard s, and reviewingEAs. The capacity and performance of agenciesresponsible for specific environ men tal services suchas nature conservation and cultural heritage shouldalso be reviewed w hen relevant.

• The regional framework. The REA should analyzeregionally-based policies and regulations that haveenvironm ental implications. It shou ld also identifyhow responsibilities are distributed and assessinstitutional capacity for environmental management(including enforcement). The regional investmentplanning process should be carefully reviewed interms of objectives, method ology and procedures forreview and approval of plans and projects. The rela-tionship betw een timing of project review, issuance of licenses and permits, and the regional planningprocess more genera lly shou ld be clearly indicated.

Baseline condit ions . A central comp onent of the REAstudy is the assessment of the existing environmentalconditions in the region, including the development con-straints and op portun ities that the environment and natu-ral resource base pose. The baseline survey shou ld beclearly focused on those aspects of direct relevance tothe key environmental issues the REA is intended toaddress, rather than attempting to cover all possibleenvironmental aspects. The survey wou ld norm allycover the following main themes, reviewing the sub-themes on a selective basis:

• The physical env ironment : Geology; topograp hy;soils and land cap abilities; meteor ology; surfaceand groundw ater hydrology; water quality andquan tity; air quality; potential natural h azards.

• The biological environment : Flora and fauna(particularly rare or endan gered species);critical habitats and ecosystems; parks andreserves; significant na tur al sites; and species

of commercial importance.• The socioeconomic and -cultural environment : Popula-

tion; land u se and p atterns of land ow nership andtenure; planned developm ent activities; commu -nity structure; employmen t; distribution of income, goods an d services; public health; culturalheritage; indigenous p eoples; and customs,aspirations and attitudes.

The emp hasis given to each of the issues listedabove would depend on the given regional setting, par-ticularly on whether the setting is urban or rural but alsowh ether it is coastal or inland , densely or scarcely popu -lated, largely pristine or highly developed, and so on.Thus, those who p repare REA TORs should provideclear d irection on these matters on a case-by-case basis.Box 5 describes criteria for baseline data collection andsum mar izes some lessons of experience. Where aproject-specific EA describes cond itions around a pro-posed project site, the REA should concentrate on theissues and problems that are characteristic of the regionas a whole. For examp le, deforestation may be a dom i-nant problem in one region, leading to associated prob-lems such as loss of biodiversity, soil erosion an d sedi-mentation of river systems. Or, if rap id industrializationand urbanization is taking place, the main concerns maybe management of water supp ly, air and water pollu-

tion, or congestion.

Importan t regional resources and activitiesshould be given par ticular emp hasis. For example, if the region of concern is a rur al coastal flood p lain,major sectors are likely to be agriculture/ irrigationand fisheries. The interrelationship of these sectorsand the imp acts on the n atural resources of the floodplain and coastal zone could be major issues. Waterquality and floods could be other areas of concern.

Geographic Information Systems (GIS) may be an

effective instrument for gathering, organizing and ana-lyzing baseline environmenta l data (see Updates nos. 3and 9), particularly at the regional and n ational levels.If GIS capability is not in p lace, a regional EA m ayprovide opportun ity and rationale for introducingit immediately or in the future.

It is always usefu l to cross-reference the pertinen tenvironmental regulations and standards w hen d e-scribing baseline conditions. If regulations and stan-dard s are absent, this should be explicitly noted. The



8

REA report should also critically take into account thequality of available data an d n ote major d ata gaps.

Des crip t ion of dev elopment pl an and associa ted

pro ject s. To the extent that th e REA is intended toassess an existing developm ent p lan, includ ing associ-ated p roject proposals, the REA need s to prov idea detailed description of the plan and the prop osed

pr ojects. If several var iations of a plan are beingconsidered , or if one or m ore plans are u nd er con-ceptual developm ent, the REA shou ld d escribe thesein su fficient d etail for a u seful analysis of impactsand consequences.

Inventory of ot her plans and projects. The develop-ment context of a region is as important as its resourcesand population d ynamics. The quantity of existing plansand proposed projects—prepared w ith or without Bank or other international development assistance—will nor-mally be h igh. (In the Chap are region in Bolivia, for ex-ample, 54 agencies supported development activitiesduring the same period, many of them conflicting.)Making an inventory of all relevant p lans and projects isexceedingly important, but can be overwhelming.

Guidelines from the Organization of American States(OAS, 1984), on integrated regional developmen t p lans,suggest some ways to avoid problems:

• Identify all significant development plans andprojects in the region, no m atter wh at agency isinvolved, but collect detailed information onlyabout th ose that serve or contrad ict the pr oposeddevelopm ent objectives. Efforts at being toocomprehensive will only delay the stud y.

• Organize planned projects in a t ime sequence, andavoid including projects that fall outside the timehorizon of the stud y.

• Be sure to identify projects with high-level politi-cal supp ort that have already gained m omentum.

Cumulat ive impact assessment . The mainobjective of a REA in term s of impact assessm ent isnormally to estimate (or forecast) the potential cumu-

lative impacts of planned activities on a region’s envi-ronm ent, natur al resource base, and socio-economicconditions, taking into account the baseline situation,and activities included in the inventory of plans andprojects, and expected sp ontaneou s developmen ts.

Updates nos. 3 and 9, on GIS and EA). In the

Pilcomay o River Basin (Argentin a, Bolivia, Para-

guay), satellite imagery w as the key to the rap idanalysis of land capability and the d elineation of

developmen t zones worthy of more detailed stud y.

• Use resource survey specialists who are experienceddevelopment practitioners as well as good scientists.

Such specialists can direct and train local profession-als along p ractical and efficient lines of investigation

as well as interpretation of d ata from severaldisciplines for analytical purposes.

• Where possible, a single national agency should be

respo nsible for resource survey s. This greatlyfacilitates the compatibility and integration of data.

• Use maps to synthesize the final produ cts of sectoralinvestigations. Integrating map ped information is

one w ay to m erge the wor k of different d isciplines.

As d evices for d ata integration, map-overlaytechniques an d composite maps are p articularly

usefu l, althou gh av ailability of base maps is limitedin man y countr ies. In the Eastern Cibao valley of the

Dominican Republic, for example, the map-overlay

technique was used very effectively for agriculturalzoning. The combination of information abou t

geomorp hology, vegetation and land capability inspecific areas facilitated the ident ification of v iable

agricultural and agro-ind ustry p rojects.

Source: Int egrated Regional Development Planning: Guide-

lines and Case Studies from OAS Experience. Organizationof American States, 1984.

Box 5. Conducting baseline surveys

General criteria for data collection:

• Information contributed by the main sectors coveredby the REA should be at app roximately the sam e level

of detail, with any b ias reflecting the emp hasis of theREA. Setting comm on d ata standard s and formats in

advan ce can be u seful.

• Data should prove or disprove specific hypothesesrelated to the stu dy ’s objectives and answ er specific

questions about the environm ental situation in theregion. The TOR should sp ecify who will use the data

being developed and h ow.

• Where possible, data collection should be und ertakenin conjun ction with d omestic institutions. The use of

intern ational consultan ts to do basic data collection canbe very costly and need s special justification.

• Local popu lations, NGOs, research institutions and

un iversities shou ld be u sed as sour ces of information.This saves time and resou rces and gives access to

un ique information.

• Keep description to a minimum and emphasize analysis.

Lessons of experience

• Use modern satell ite imagery and remote-sensing

techniques for resource surveys of large sparselysettled or u np opu lated r egions about wh ich little is

kno wn . These tools facilitate rapid an d relatively

accurate m app ing and analysis of geology, geomor-ph ology, soils, natural vegetation, land u se and so

forth wh en coupled with gr ound verification (see also



9

The pu rpose of this assessment is first and foremost tobe able to analyze the environm ental impacts of theplann ed activities—usually formu lated as a d evelop-ment p lan—against other options, before the opportu-

nity for realistic evaluation of these alternatives is closed

(see below u nd er Analysis of Alternatives). The und er-lying objective should be to determine w hich optionspresent a framew ork for environmentally sustainable

development.

Step one. The first step is to und ertake limited, pre-liminary impact assessments of the major individual in-vestments under consideration, covering potential directand indirect, positive and negative impacts. These as-sessments cannot be as rigorous and thorough as forproject-specific EAs, du e to the fact that REA is an u p-stream planning instrument normally undertaken at apre-feasibility stage wh ere investments have not yetbeen ou tlined sufficiently to make d etailed analysis fea-sible or econom ically justified. If any p roposed sub-project is expected to cause significant imp acts, the REAshould recommend a course of action to ad dress them,including carrying ou t a project-specific EA.

Step two. The second step is to look at the sumtotal of the ind ividu al activities and estimate th eircumulative effects. For example, regional authoritiesmay be contemplating a p lan w ithin a largely forestedwatershed wh ich includ es agricultural expansion,hydropow er development and rural road construc-tion. All these activities would result in some defores-tation as a d irect impact. There wou ld m ost likely beinduced impacts from these developments, such asmigration and land settlement along road s. This,in turn , could lead to increased d eforestation as an

indirect impact. Improved access for loggers couldlead to ad ditional deforestation.

The REA need s to take into account these impacts,first separately and then in terms of their added andcumulativeimpact. The cum ulative effect has often beenfound to be bigger than the sum of its parts. It may be,for examp le, that the total deforestation from the th reedevelopments described above wou ld redu ce the forestcover of the river basin to such an extent that remainingtracts wou ld be too small as to be viable habitats forwildlife. Loss of wildlife would then be a cumu lativeeffect on top of the deforestation. Or, the cum ulative

impact might surface in the form of rapidly increasingsoil erosion and siltation of rivers. This in tu rn couldnegatively effect the hydropower development as wellas other economic activities. Where project-specific EAscould effectively assess the impacts of each individualinvestment and develop good mitigation plans to limitand manage these impacts, they would not be wellplaced to analyze such cumulative and interactiveeffects. Only a REA type assessment can d etermine howmu ltiple projects, in a variety of sectors, may cum ula-tively affect the environment and each other, includ ing

the risk tha t the econom ic viability of one or severalprojects might be un dermined.

In many cases, it may also be imp ortant to include eco-nom ic policies in the cumulative impact assessment. Forexample, tax and subsidy rates on extraction and use of natu ral resources may greatly influence extraction ratesand patterns of consumption. Sometimes, changing such

variables may alter the significance of environmentalimpacts more profound ly than technical or otherchanges in plans and programs. Economic analysis isneeded to address such issues, a topic covered in a forth-coming Update.

Analysis of alternativ es. The REA should alwayscompare the results of the impact assessment against theimpacts of realistic alternative plans, if they exist, andthe “no p lan” (business as usual) option. If there are noplans under consideration other than the one the REA isrelated to, the REA shou ld not d evelop elaborate alter-natives just for the sake of analysis, but rather comparethe plan with other broad strategic options for the re-gion. Perhaps the most important p urp ose of a REA is toanalyze the environmen tal costs and benefits of majoralternative strategy and investment options, and recom-mend a course of action tha t will best achieve environ-mental sustainability.

Comp arison of alternatives becomes particularlyimportant when a region is un der environmentalstress, w here severe comp etition for scarce natu ralresources is pred icted, or w hen considering plansfor a relatively pristine area. Options shou ld be evalu-ated carefu lly for extent of irreversible imp acts andeffects on long-term p rod uctivity of the region’s

natur al resources.

Alternative investment options shou ld be consid-ered in terms of their ind ividu al and cumulative im-pacts. Private as w ell as public sector activities maybe included in the analysis, as appropriate. Whereseveral donors are involved in the region, the REAshould review their existing and/ or planned activitiesand , if necessary, suggest ways to improve coherenceand complimentarity.

Alternative mitigation options may also be includedin the analysis, where preparation of individual invest-

ments is relatively advanced. Experts responsible forREA p reparation may p ropose mitigation measures andcompare them with those proposed by the governmentor third parties. In other cases, this analysis is better in-clud ed in the mitigation p lan.

It is useful to prepare a m atrix sum marizing theproject-specific and cumulative impacts of the variousoptions un der consideration. A forthcoming Update

will provide further guida nce on analysis of alterna-tives in EA.



10

Recommendations tow ards an optimal regional

investment plan. The REA can be a useful vehicle todesign an op timal regional investment p lan based on theprevious analysis, by feeding into strategy formulation,the identification of potential projects, developm ent of environm ental gu idelines for certain sectors or activities(e.g., land zoning), and the formulation of a detailed andcoherent investment or action plan. More often, how-

ever, the mand ate for the REA will only allow it to giverecommendations for improving an existing plan. Atany rate, REA p rovides unique opportunities to internal-ize environmental factors into regional developmentplanning to minimize futu re environmental costs andensure long-term economic and environmentalsustainability.

Environmental management s trategy. Based onits findings, the REA should p ropose a strategy forstrengthening environmental managem ent within theregion. The plan would normally include: (a) measuresto ensure that environmental impacts of proposedprojects are adequately mitigated; (b) general guidelinesfor long-term environm ental monitoring; and (c) a planfor institutional strengthening.

Mitigation. Mitigation measures are generallyof a detailed, technical nature, and therefore normallydeveloped within project-specific EAs. How ever, REAcan be an effective tool for identifying, at an early stage,projects that will require special mitigation m easures. AREA may also suggest broad solutions for reducingnegative impacts on important regional environmentsand natural resources, or develop m itigation guidelinesfor specific activities. For example, construction of sec-ondary sewage treatment plants may be recomm ended

to contain the effects on coastal ecosystems of antici-pated rapid urban growth. Or, requ iring catalytic con-verters on au tomobiles might be a solution for contain-ing the grow th of urban air pollution. Reforestationalong important waterways to reduce soil erosion isanother example of a mitigation measure that requiresa comprehensive, strategic approach.

REA m ay be an effective vehicle for recomm end ingmitigation measures that can on ly be implemented atthe regional level for regu latory or economic reasons.For example, a regional EA may fall within an u rban ju-risdiction with mandate to set its own air quality stan-

dards. Similarly, costly mitigation solutions tha t requireeconomies of scale (such as a hazardous w aste incinera-tor) are normally best introduced in conjunction withdevelopment planning at a regional, sectoral or evennational level.

Monitoring. The REA shou ld p rovide general guide-lines for long-term environmental monitoring to ensureadequate imp lementation of the regional program or set of projects and evaluate p rogress. The findings of thebaseline data section shou ld be u sed to m easure progressover the course of implementation. The REA should alsorecommend measures needed to collect and organ izeneeded d ata. Geograph ic Information Systems (GIS)

should be considered, if not already in place, to supportregional environm ental monitoring activities.

Institutional strengthening. The REA might recommendtraining or add itional hiring, or m ore sweeping changessuch as reorgan ization of un its or agencies, and red efini-tion of roles and responsibilities. Under certain circum-stances, a REA may recommend that a new institution becreated to manage a region’s natu ral resources base, e.g.,a river-basin authority.

This section m ight also include recommend ations onpolicy and regulatory instrum ents for environmental m an-agemen t in the region. If not already in p lace, an environ-mental screening and review process for individualprojects should be designed and instituted.

For further reading

Little has been wr itten abou t regional environmentalassessment. H owever, there is a bod y of literature onregional development and environmental planning,such as those ind icated below. In add ition, the REAprep ared for the Argen tina Flood Protection Project ishighly recomm ended reading an d is available (inSpanish) from the Bank’s Public Inform ation Cen ter.The Environment Dep artment also has available

TORs for REAs.

An Update is forthcoming on the ap plication of REA fordevelopm ent p lanning w ithin river basins. The existingUpdates referenced in this document also provide gu id-ance on asp ects relevan t to REA (e.g., coastal zone m an-agement, Geograph ic Information Systems, and pu blicinvolvement in EA).

Other relevant sources of guidance are:

Asian Developmen t Bank. 1988. Guidelines for Int egrated

Regional Economic-cum-Environmental Development Plan-

ning. Environment Paper No. 3 (two volumes). Manila.

Organ ization of Am erican States. 1984. Integrated Regional

Development Planning: Guidelines and Case Studies from OAS

Experience. Washington, D.C.

This Update was prepared by Olav Kjørven. Based on Bank policy and procedures on Environmental Assessment (EA) (Operational

Directiv e 4.01), the EA SOURCEBOOK UPDATE provid es up-to-date gu idance for conducting EAs of prop osed pr ojects. This pu blication

should be used as a supp lement to the Env ironmental Assessment Sourcebook. Please address comments and inquiries to Olav Kjørven and

Aidan Davy, Mana ging Editors, EA Sourcebook Upd ate, ENVLW, The World Bank, 1818 H St. NW, Washing ton, D.C., 20433, Room No.

S-5139, (202) 473- 1297. The Bank is than kful for the Governm ent of N orway for financing the prod uction of th e EA Sourcebook Update.



Environment Department December 1996The World Bank Number 16

Challenges of Managing the EA Process

Successful implementation of env ironmental assessment s (EAs) must address a number of challenges for those manag-

ing EA s and preparing EA reports, particularly in countries with limit ed EA experience. This Update att empts to ident ify

the most important of these challenges (including selection and management of EA teams, impact ident ification and predic-

tion, evaluation of impact significance, and information presentation) and suggests approaches to addressing them. It

supplements in formation in chapter 1 of the EA Sourcebook.

Background

EA is a tool to manage the d evelopment p rocess andnot just a technical aid in pr oject app raisal. Conse-quen tly, man aging the EA process requires a combina-tion of scientific jud gment a nd man agement skills.EAs are not scientific stud ies; instead they u se theresu lts of scientific stud ies, and techniqu es basedon scientific principles, to provid e defensible and justifia ble con clusions w hich form a p ar tia l basisfor decision making. They are usually und ertakenwithin strict bud getary and time constraints and in

situations where data m ay be unav ailable or of du bi-ous reliability. EAs are also often u nd ertaken in situa-tions wh ere social and env ironmental conditions canchange q uickly.

The key objectives in undertaking EAs are toimplement an effective EA process and produ ce a use-ful EA report. Both are importan t, but in differentways. The EA process is related to th e projectconceptu alization, preparation and implementationph ases and should influence the prod uction of an en-vironmentally sound project. The EA report (and pre-liminary or interim versions) synthesizes results and is

a formal dem onstration to key d ecision-makers,NGO s, and the p ublic that the EA has been done ac-cording to good professional practice. Key technicaland man agerial challenges to implementing an effec-tive EA process include:

• Selection of an appropriate EA team, in terms of technical and managerial capabilities;

• identifying the likely environmental impacts anddetermining their anticipated relative sign ificance inthe early stages of the p rocess;

• determining the range and type of baseline dataneeded to make defensible and robust impactpred ictions, collecting th ese data an d making th epredictions;

• evaluating the significance of predicted social andenvironmental imp acts; and

• effectively presenting the information obtained atrelevant decision m aking stages.

Collecting, evaluating and presenting relevant envi-ronm ental information for use in p roject plann ing anddecision m aking are importan t aspects of the EA pro-

cess. For most p rojects, the outp ut consists of pred ic-tions on how the environm ent m ay change if specifieddevelopm ent alternatives were to occur an d h ow bestto manage th e anticipated environm ental changes.Decisions occur throu ghou t the d evelopment p rocessfrom initial concept to d ecomm issioning or aband on-men t. In the context of Bank pr ojects, there is no singlebig decision (with th e exception of the posssible decisionnot to proceed w ith a p roject), but a sequ ence of linkeddecisions often involving a variety of decision-makers.

EA team structure and management

EAs require a variety of specialist inp uts d epend ing onthe potential imp acts to be add ressed; for major devel-opm ents these can be extensive. To p redict environmen-tal impacts it is necessary to firstly evaluate the elementsof the existing environmen t (air, land , water and social)and interfaces between these elements. The results arerelated to alternative development scenarios to assessenvironmen tal impacts. Thu s, specialists may be need edin topics as diverse as air em issions dispersion m odel-ing, health risk assessment, pred iction of pollutant mi-gration within aquifers or ecological assessment, de-






2

pend ing on the scope of the p roject and characteristicsof the existing environm ent.

Each EA team needs an effective manager, experi-enced and familiar with hand ling the imp acts to beanalyzed. Only someone w ith this expertise and expe-rience can ensure th e quality of individual imp actstud ies and integration of results into an overall“picture” of environmen tal consequen ces. The ap-

pointmen t of a comp etent EA manager makes, per-hap s, the greatest contribution tow ards effective EA.

Identifying impacts

The initial identification of potential environmentalimpacts takes place du ring environmental screening

(see Update no. 2). Following screening, a fieldbasedexamination is often required to identify more pre-cisely the range of relevant imp acts and indicate theirrelative imp ortance. This examination, wh ich should

always involve consultations with poten tially affectedpeople an d relevant local organizations (see Update no.

5), is often called “scoping”, “environmental reconnais-sance” or “initial environmental examination”. Cat-egory A pr ojects need su ch scoping in ord er tofocus th e EA process on the key env ironmental issues.It can a lso be a cost-effective app roach for m anyCategory B pr ojects since the resu lts of the scoping

may be d ocum ented as the main w ritten outpu t of theEA process. When th e scoping d etermines a need forfurther EA work (wh ich w ould be the n ormal situationfor Category A projects and also some Category Bprojects), it is important to “translate” the scopingresults into coheren t terms of reference (TORs) andschedules for un dertaking th is work. Scoping shouldtherefore normally precede developm ent of detailedTORs for the EA or, alternatively, be an integr al partof preparing the TORs. Experience show s that TORs“ground truthed” through scoping are more focusedon the key environmen tal issues and risks than d esk based TORs, wh ich tend to dem and coverage of allpotential issues. Too often, such TORs result in produc-tion of volum inous and un focused EA reports. Sincethe outcome of scoping (for example, a short rep ort ora TOR) may significantly influen ce the focus an d costof any further EA w ork, it should be su bject to reviewby the Bank and Borrower p rior to proceeding w ithany such work.

Impact identification is a continuing process whichoccurs d uring screening and scoping and continu esthroug h imp act prediction as new information be-comes available and insights are obtained. A system-atic and rigorous app roach to identifying imp acts (asan aid an d su pp lement to scoping activities and for

provid ing a framew ork to guide EA imp lementation)can be based on th e following method s:

• Ch ecklists;• interact ion matr ices;• n etw orks; an d• overlay mapping and GIS.

Each has adv antages, draw backs and potential ap-plication in other EA tasks. They can be used in combi-nation a s well as singly; for example, a ma trix can beused to identify d irect impacts wh ich in tu rn can beused as a basis for constructing a n etwork.

Checklists

There are m any d ifferent typ es of checklists. Some ar elists of environm ental factors while others list environ-mental factors and d evelopmental actions likely to causeimpacts. By systematically comp aring factors and actionslikely imp acts are identified. Also, there are checklists,listing the typ ical impacts of specific project typ es whichare easily available. The Bank’s Operational DirectiveonEA (OD 4.01, soon to be reissued as OP/ BP/ GP 4.01)

Box 1. Role of EA manager for a regional EA

of Victoria Falls, Zimbabwe & Zambia

This regional EA iden tified environ mental imp lications

of cross-sectoral developm ent scenarios (high, mediumand low growth) for an area within a 30 km radius of

the Victoria Falls World H eritage site on th e bord erbetween Zimbabwe and Zambia, up to the year 2010.

The pred icted imp acts of the scenarios show the ex-

pected state of the environ ment in 2010. Based on theEA results a management p lan was prep ared to help

avoid, or red uce, the severity of significant ad versechanges and to assist realization of potential benefits.

The EA man ager performed the following keymanagerial fun ctions:

• Established the characteristics of the scenariosinvestigated (they were upd ated and r evised

throug hout m ost of the EA work);

• issued detailed guidance notes to each specialistinstructing them on the scope of their work, the

baseline information n eeded, the consultationsrequired, and the type of data needed on imp acts

for inclusion in the EA Report;

• organized and managed face-to-face discussionwith individu al team mem bers to deal with spe-

cific issues and periodic team meetings to discussresults obtained and further w ork;

• managed the continuing program of consulta-

tions with stakeholders;• prepared inte rim and mid-term repor ts on

progress of the EA for an EA Steering Group ; and• produced the draft and fina l EA report s.

The Environmental Management Plan w ill

be jointly imp lemented by th e Governments of Zimbabwe and Zambia.



3

contains a checklist. All such checklists can be u sefulsources of information to guide and structure scopingand other impact identification activities.

Int eract ion mat rices

A m atrix is a diagram w hich links environmentalfeatures, or potential environmental impacts on thesefeatures, with actions associated w ith a p roposal. Matricesmay be constructed before scoping, and used to guidescoping sessions with p articipan ts discussing the signifi-cance of prop osed actions for environmental features. Thedecision is recorded by marking the box representing theintersection between an action and an environmental fac-tor (if no impact is expected, the “box” is left blank). Thecompleted m atrix forms the basis for determining EAwork and can be updated as necessary. One difficultywith matr ix methods is the inability to clearly identify thelinks between impacts. The systematic consideration of in-direct impacts, and th eir linkages, is vital in all EAs.

Net w orks

The network, or flow diagram , was developed to iden-tify the links between d ifferent imp acts and th e w ays inwh ich asp ects of the environment might be affected bymore than one imp act ‘pathw ay’. A generic structurefor a network is shown in box 2. This mod el can beadap ted to meet particular needs. Networks may bepartially constructed in ad vance of scoping sessions orthey can be “bu ilt-up” as p art of the session. Once con-structed they provide a framewor k to guide EA work and can be up dated or am ended as w ork progresses.

Ov erlay mapping/GIS

To use overlay map s it is necessary to prepare m apsthat show the position, nature and extent of natural andhuman attributes of an area. Attributes wh ich m ay bemapped include su rface water bodies, agricultural land,wetlands, settlements, and cultural resources. The featuresmapped are those wh ich are expected to be sensitive tothe project. Individual transparency maps are overlaid toprovide a composite picture of the environment in termsof its basic comp onen ts (see box 3). If available, comp uter

technology and expertise allows overlay mapping to beincorporated within a Geographic Information System(GIS) (see Updates nos. 3 and 9).

Direct and indirect imp acts can be identified,broadly and generally, by superimp osing a map show -ing the proposed d evelopment (with required infra-structure such as roads and transmission lines) and as-

sociated p rojects (for examp le, a new quarr y or onewh ich w ill expan d op erations) onto the comp ositemap . Overlay maps are u seful for identifying impactsand comparing alternatives for all types of develop-ment, but achieve most usefulness for EAs of lineardevelopm ents (pipelines, roads an d transmission lines)and mu ltiple investments or activities resulting incumu lative imp acts.

Impact predi ction

Pred iction is the techn ical ‘heart ’ of EA and is an at-tempt to assist decision making by isolating an dredu cing u ncertainty w ith respect to anticipated envi-ronmental changes. Prediction is a complex activityand the following techniques may be used to qu antifythe natu re and extent of environmental changes:

• Mathematical models (such as noise propagationmod els, air or water dispersion mod els, incomemultipliers);

• physical models (such as wind tunnels and hydrau-lic mod els of, for examp le, estuaries);

• fie ld exper iments;• structured or semi-structured approaches to

prod uce a mix of qualitative and quan titativepred ictions (for examp le, land scape change

and social imp acts); and• scientific experience and judgment.

Most EAs use a mix of these techniqu es with m any re-lying h eavily on the latter two.

EA team mem bers must determine the rangeand type of baseline data need ed to make d efensibleand robust imp act predictions. These requirementsdictate the technique to be used and not the reverse—a common misconception in p redictive mod eling. Arisk- based ap proach can be u seful in d etermining theappr opr iate degree of deta il for data collection. In

general terms, where u ncertainties regarding theoccurrence of potential impacts are large, and theconsequences of the impact occurring are significant(for example, deteriorating air quality affecting thehealth of peop le or crop s), detailed data collection isapp ropriate. If the p otential consequences are notsignificant, detailed data collection is inappropriateregard less of the level of un certainty. Given the lack of standar dized gu idance it is un surp rising that thequality of impact pred ictions is a common technicalweakn ess in EA work.

INITIALCONDITION

PROJECTACTIVITY

PRIMARYIMPACT

SECONDARYIMPACT

TERTIARYIMPACT

Box 2. Example o f a network diagram

Cut & filloperation

Change inslopes

Soil erosioninto streams

Alteration ofstream turbidity

Decreased lightpenetration



4

Impact prediction must not only concern itself withestimating the magnitude or scale of change, but alsoprovide information on the following aspects of impacts:

• Duration (time period over which they will occur);• likelihood or probability of occurrence (very likely

or unlikely);

• reversibili ty (natural recovery or aided by humanintervention);• area affected (size and whether near or far from the

project);• num ber (and characteristics) of people likely to be

affected an d th eir locations; and• transboundary aspects—do impacts cross national

borders?

There is also the issue of determ ining distribution of impacts. For examp le, impacts may be identified ind i-vidu ally (noise, ecological and health effects) and sensi-tive receptors d etermined . It is only following the predic-tion of each imp act that the geographic overlap of imp acts

and their relative spatial and temporal d istribution m aybe determined. If specific human settlements or naturalhabitats are subject to a range of impacts, the cumu lativeimpact has to be identified and evaluated. The overlaymapping m ethod is useful in this regard.

It should not be forgotten that the sustainabilityof a project can be influenced by the impacts it causes. EApractitioners sometimes incorrectly view the project asactive and the environment as passive. A project and itsenvironment form a dynamic system w ith interacting

components. Often, there are feedback loops throughwhich the sequence of environmental changes caused bya project can u ltimately affect it. A well-known exampleconcerns the reduction in the efficiency of hydro-powerprojects in the tropics due to increased sed imentation (seebox 4). Such threats to project sustainability w ill not occurin every case, but it is imp ortant that the EA evaluatesuch p ossibilities. Early warning of possible threats, andinitiation of mitigation measures to prevent or reducetheir severity, can make imp ortant savings to projects andregional or even nationa l econom ies.

Baseline studies

Where there is a lack of information, many EA teamshave to revert to gathering baseline data before proceed-ing to the stage of impact pred iction. This is done to es-tablish an overview of the environment; its main featuresand key natural p rocesses, and any identifiable trends(for examp le, whether air quality is stable or declining).

The role of baseline stu dies in EA is frequen tlymisund erstood. Traditionally, obtaining and interpret-ing information to describe existing environmen talconditions was needed to assist identification of im-pacts. This is now th e major objective of scoping anddoes not requ ire large expend itures of time and re-sources. Locally based participants in scoping bringtheir environm ental knowledge with them to thescoping sessions. Participant s from central or localgovernm ent agencies and other non-local organiza-tions may p rovide secondary sou rces of information.

Box 3. Illustrative example of o verlay mapping

Natural habitats

Compositeconstraints map

Ground waterregime

Populationdistribution

Land capability

+

+

+

+

E n v i r o n m e n t a l c o n s t r a i n t s



5

Und er certain circumstances it may be necessary forEA teams to collect information prior to scoping.Usu ally, little time w ill be available for detailed su r-veys. Experienced EA practitioners need little guidanceon h ow to obtain sufficient information for scoping.Others can use checklists. However, most checklists aregeneric and strict adh erence may result in time andresources being w asted on un necessary d ata collection.

The best appr oach to baseline stud ies is to use th eimpacts identified in scoping to guid e d ata collection.This does not preclude subsequ ent gathering of otherdata, but d oes help to avoid n on-directed baseline da tacollection. The key to cost-effective baseline stu dies isto strike a balance between obtaining sufficient infor-mation to describe existing features, their inter-rela-tionships, and overall environmental status or qu ality(realizing th at imp act data w ill be synthesized at theend of the EA) while obtaining su fficiently d etaileddata on current status and trends to enable specific im-pacts to be pred icted. The d anger lies in collecting toomu ch detailed information of limited practical value toEA. In baseline stud ies, the relevan ce of the d ata ismu ch more important than the amoun t. EA managersshould resist deriving false comfort from collection andpresentation of large amoun ts of baseline data.

There are a number of approaches to do this quicklyand cost-effectively. Site visits are useful, but may be diffi-cult because of lack of access, supp ort facilities and thenatu re of the terrain. In such circum stances it is useful tobegin with maps, aerial photographs and satellite images.Considerable information can be obtained rapidly fromsuch sou rces, especially if there are images or ph oto-graphs taken over a period of time. Where practicable, a

well-focused site visit should be undertaken to ‘groundtru th’ da ta. If time and bud get allows, a GIS may be initi-ated particularly for EAs of large-scale or linear p rojects,such as roads or pipelines, and for sectoral and regionalEAs (see Updates, nos. 4 and 15).

EAs always face problems of data availability andreliability. Some techniques for acquiring d ata have beenoutlined above. Other sources of da ta includ e: un iversitiesand research institutes; local and national governmentdep artmen ts and agencies; N GOs; and local peop le. Suchinformation sources should be u sed initially and primarydata collection undertaken only if there are serious data

gaps, or doubts regard ing reliability, as it can be expen-sive and time-consum ing.

The issue of time and resources for da ta collection is aconstant challenge in EA work. For many ecosystems,habitats and species, little information exists on their be-havior, variability and trends. How is it possible to pre-dict changes when so little is known about what exists?One approach is for the Task Manager and implementingagency to allocate sufficient time to obtaining da ta span -ning climatic cycles (wet/ dry seasons; sum mer/ winter).

For example, in India the EA law requires that certainEAs are allocated at least one year to achieve this objec-tive. Many p rojects have long lead times and EAs shouldbe scheduled to tie in w ith the key points in the p rojectcycle. If, for example, ecological impacts in an area withlimited data ava ilable are identified as p otentially signifi-cant, work shou ld begin early enough to collect informa-tion for the main seasons.

Those implementing EAs hav e a resp onsibility to en-sure th at they exercise best professional jud gment as tothe minimum data need ed to describe the environm entand to m ake d efensible predictions. If essential datacannot be gathered, ad ditional time or financing m ightbe requested. Alternatively, data gap s or weakn essesshould be iden tified and evaluated in the EA report.

One final issue deserves attention. Almost all EAguidelines state that the impact of alternative proposalsshould be compared, at a minimum , with the “no devel-opment” or “no-action” situation. Unfortunately, manyconsider the n o-action scenario to be iden tical to the cur-

rent environmental conditions (determined by baselinestud ies). Rather, the most useful comparison is the situa-tion as it would be if the proposal d id not occur. For ex-amp le, the no-action alternative to a regional strategy toshift energy supply from coal to natural gas w ould n eedto consider the implications of add itional coal fired capac-ity to supply projected increases in demand. The environ-ment is not a static entity; it changes du e to natural pro-cesses and human activities.

Thus, in EA it is imp ortan t to consider, explicitly, the“moving” baseline. This is not easy and attempting todo so m akes EA work m ore complex. Nevertheless, an

attempt sh ould be m ade to iden tify the m ost significantcauses of curren t environmen tal change and to projecttheir effects into the futu re. Also, it is necessary to iden -tify other p rojects, either u nd erway or plann ed (with ahigh p robability of implementation), which m ay affectthe environment and perhap s even the sustainability of the p roject sub ject to the EA. The condition of the en vi-ronm ent, resulting from this analysis, should be u sedas the baseline. In many situations, it may only be p os-sible to make a “best guess” in relation to sp ecific envi-ronm ental features.

Evaluating impact significance

Qu antifying imp acts is an objective, techn ical task where-as evaluating significance is subjective and po-litical. There are two asp ects to assigning sign ificance.First, there is the importance of individual impacts. Forexample, if a proposed rou te alignm ent for a new roadwill increase nigh t-time noise levels by 10 dB(A) andgroun d-level concentrations of NOx by 5 µg/ m3, arethese significant in terms of sleep disturbance andrespiratory effects? Secondly, if an alternative alignmentwou ld increase noise levels by 5 dB(A) and N Ox by 10



6

µg/ m3, what is the relative importan ce of these alterna-tive impact scenarios in relation to each other and to otherpredicted imp acts? Explicitly add ressing such trad eoffs isnecessary if a number of alternatives are being compared.

The concept of “significance” in EA presents theoreti-cal and p ractical difficulties. The most common app roachis to assum e that significance, once assigned , is constant.It is, however, not appropriate to maintain a constantview of significance if add itional data and experience in-dicate that an impact scenario needs revision. There is agrowing realization that EA should incorporate a m ore

fluid concept of significance depending on knowledge atthe various EA stages and on the views of importantstakeholders. The role of EA throu ghou t the p roject cycle(particularly during implementation) makes a rigid as-signment of sign ificance u njustifiable.

Significance shou ld be determined on the basis of biophysical context and sensitivity of receptors; socio-economic and cultural context; characteristics of theimpacts such as m agnitude, d uration, and reversibility;and app licable environmental laws and regulations.Box 5 illustrates how these factors may be combined, in alocal context, to p roduce d iffering views of significance.

Currently, there are two basic approaches to assigningsignificance (they are not exclusive and should normallybe used in combination). Firstly, any formal pred eter-mined criteria must be respected. For example, interna-tional treaties and conventions, national legislation, gov-ernment policies and regional/ local plans will often haveestablished that certain natural resources or environmen-tal and cultural features are important (sometimesthrough formal p rotection). Ambient stand ards or envi-ronm ental qu ality objectives for specific environm ental

compon ents such as noise levels or water qu ality alsohave inherent significance criteria (sometimes referred toas “Thresholds of Concern”). For example, the threshold of concern for drinking water quality may be based on n a-tional or World Health Organization (WHO) standards.Thresholds can rep resent an objective to be achieved or alimit not to be exceeded . Any imp act which exceeds alimit or does not achieve an objective shou ld be consid-

ered significant to decision makers.

Secondly, where env ironmental aspects are notcovered by p redetermined criteria, significance mu stbe d etermined in the context of the project. Duringscoping, stakeholders may assign significance to bothenvironmental features and likely impacts. Prior toprep aring a draft EA rep ort, the significance of pre-dicted impacts should be d iscussed w ith key stake-holders with a view to bu ilding consensus. The morerepresentative the stakeholders, the greater the likeli-hood of the consensus holding. Assigning significance,therefore, shou ld be a joint effort on the p art of the EAteam and stake-holders. Values, special interest con-siderations, and best professional jud gment can be ap-plied jointly to assign or re-assign sign ificance. Muchof this work will form a political process with discus-sion, argument, negotiation and comprom ise. Thereare a nu mber of app roaches to help group s reach acomprom ise or consensus, as outlined in the Bank’sParticipation Sourcebook .

Comparative evaluation of alt ernatives

As a sum mary display format, checklists can beadap ted or expand ed to comparatively illustrate alter-natives. Predicted imp acts (for example, amoun t of ag-

ricultural land or natu ral habitat lost) of developm entalternatives m ay be converted into simple scales suchas low, medium and high. A reader can readily seehow each alternative compares in term s of impacts.Unfortunately, where more than tw o or three alterna-tives are being evaluated, it is usually not easy to iden-tify one p referred op tion.

This problem has encouraged th e development of method s that p lace all impacts on a single scale(scaling) and assign a numerical expression of relativeimportan ce to each imp act (weighting). Once done,it is possible to manipulate, mathematically, the EA

results to form a tota l score (or index) for each alterna-tive op tion. This score includes a ll beneficial andadverse imp acts and enab les, easily, a preferred optionto be ident ified. Box 6 show s the basic structur e andoperating p rinciples of these methods. A var iation onthis method is provided by an EA of water supp lyoptions for Kathmand u (see box 7) wh ich incorpo-rated a p robabilistic dimen sion.

There are d ifferent views of the validity and useful-ness of such m ethods. Many criticize them for being:

Box 4. Saguling hydropower, Indonesia

The EA of the Sagu ling hydr opow er project in Ind onesia

considered th e likelihood of feedback loops affecting theviability of the project. Using a n etwork, an attem pt w as

mad e to iden tify the ways in which the impa cts of theproject might interact, through time, and redu ce the like-

lihood of it achieving som e of its objectives.

The EA identified the stron g possibility that local

people, resettled from the area to be inundated, wouldreturn and attempt to establish farms on the slopes above

the reservoir. This wou ld involve d eforestation to create

areas for cultivation. Over time, erosion w ould increaseand the reservoir w ould receive enhanced sediment

loads wh ich would redu ce the capacity of the reservoirand hence its usefulness. Also, run-off from such culti-

vated land might red uce the potential benefits from the

plann ed aqu aculture p rojects in the reservoir. The EAidentified a n um ber of ways in w hich the viability of the

project would be threatened and suggested mitigationmeasures to prevent them from occurring.



7

• Simplistic (reducing a complex, multi-dimensionalenvironm ental reality to un i-dimensional scales andindices);

• falsely objective (the numbers imply some form of scientific credibility, whereas the scales and weigh tsare often the p rodu ct of the subjective views of theEA team only);

• technocratic (using these methods may “force”specific, single d ecisions on decision m akers);

• non-participatory (the extent to which the publicand other stakeholders can p articipate in imp lemen-

tation of these methods an d in critical review of their resu lts is limited because of the comp lexitywhich characterizes their operations); and

• reductionist (it is difficult to deal with indirectimpacts and feedback loops).

There are also adv antages to using these meth ods inEA, as they p rovide ‘answers’ to complex questions

within the restricted timescales and bud gets whichtend to characterize the d evelopment p rocess. In re-cent years, attempts have been mad e to imp rove themby incorporating a wider p ublic inpu t into the weight-ing schemes, estimating probabilities and using sensi-tivity analysis to test the results. Unfortunately, theimprovem ents can make the method s more comp lexand less amenable to critical scrutiny not on ly by thepu blic, but also by experts. These method s are perhap smost useful wh ere there is a large nu mber of alterna-tives to be assessed an d a need to d iscard some earlyin the EA process. In such circumstances a simple andbasic use of this type of method m ight be app ropriate.Add itional guidan ce on compara tive evaluation of alternatives is given in Update no. 17: Analysis

of Alternatives in Environmental Assessment.

Information presentation

The role of EA repor ts is to inform all stakehold ers of the expected imp acts of alternative developm ent ac-tions and th e mitigation m easures wh ich w ill beneeded . Readers of EA reports will includ e experts inenvironmental issues, interested p arties such as N GOs,and mem bers of the p ublic. As a result, EA teams havea responsibility to communicate effectively with a verydiverse aud ience. Maximum use should be mad e of

pr esentation techn iques w hich facilitate effectivetransfer of information.

Box 5. Differing perceptions of environmental

benefits: Kathmandu water supply options, Nepal

An EA was und ertaken for three options to sup ply wa-ter to the Kathmand u—Lalitpur u rban area. Two of the

options required a balancing reservoir to be locatednear the urban area.

Kathman du is built on the Bagmati river which is sa-cred to Hindus. The Pashtupatinath temple complex, used

for ritual bathing and cremation, is sited on th e banks of the Bagmati. The Bagmati has p eriods of low flow in

wh ich th e effects of existing w ater pollution are exacer-

bated. Those und ertaking the EA saw a possibility of aug-menting th e low flow of the Bagmati w ith water from the

balancing reservoir to red uce the ad verse effects of waterpollution d uring n atural low flow conditions.

This was seen as a p ositive impact and potential ben-efit of the water sup ply scheme. However, this proposal

was viewed differently by many d evout Hindus whoconsidered the add ition of w ater, from a source exter-

nal to the Bagmati river system , as a type of ritual pol-lution and therefore an adverse impact despite the wa-ter quality advantages wh ich all agreed wou ld occur.

Environmental

factors

Relative

importance

Magnitude ofimpact on each

alternativeGrand index

1. Flora

2. Fauna

3. Water quality

4. Air quality

5. Noise levels

6. Wildlife

7. Land use

8. Topography

9. Soils

10. Micro-climate

7

6

9

10

7

5

8

3

6

5

A

7

6

5

7

6

2

8

8

7

9

B

10

6

5

4

8

7

6

3

2

9

C

5

2

4

7

4

2

10

1

2

7

A

49

36

45

70

42

10

64

24

42

45

427

B

70

36

45

40

56

35

48

9

12

45

386

C

35

12

36

70

28

10

80

3

12

35

321Total

Box 6. A comparative analysis of three alternatives using scaling-weighting checklists

(Relative importance) X (Magnitude of impact) = Grand index

Step 4Step 3Step 2Step 1



8

Box 7. Comparative evaluation of water supply

options

A comparative assessment method was used for assessing

the biophysical environmental impacts of three water sup-ply options for Kathmandu—Lalitpur, Nepal. Each im-

pact was described in terms of magnitude (major, moder-

ate, minor); extent (regional, local, site only); and du ration(long-term, med ium-term, short-term). A simple scale was

devised for each of these characteristics and specific im-pacts were assigned a value from the scale as follows:

Magnitude Extent Duration

Major 60 Regional 60 Long-term 20Moderate 20 Local 20 Medium-term 10

Minor 10 Site 10 Short-term 05

Assigning these num erical values to an impact incor-

porates an element of weighting as a site-specific, short-term imp act of major magnitude is less significant than

one of minor magn itude, but of regional extent and long-

term d uration (75 and 90 points respectively). The follow-ing impact scores were derived for redu ced d ownstream

water quality and increased erosion:

Impact Magnitude Extent Duration Total

Water quality 10 20 20 50

Erosion 60 20 20 100

Probab ilities were estima ted o n a scale of 0.1 to 1.0.

The probability for each impact was m ultiplied by thetotal scores. When multiplied by the probabilities for

the thr ee options (a) Melamchi, (b) Modified Melamchiand (c) Lower Rosi Khola, the followin g scores wer e

derived (probabilities are in p arentheses):

Impact Option 1 Option 2 Option 3

Water qu ality 50(0.1) = 5 50(0.1) = 5 50(0.2) = 10

Erosion 100(0.4) = 40 100(0.4) = 40 100(0.2) = 20

Such scores were obtained for all imp acts of the three op-

tions and an aggregate total obtained. The option with thesmallest total was the least environm entally damaging.

This Update was p repared by Safei El-Deen Ha med , Ron Bisset of Scott-Wilson Resource Consulta nts, and Aidan Davy. The EA Sourcebook

Updates provide guidance for conducting environmental assessments (EAs) of proposed projects and should be used as a sup plement to

th e Env ironmental Assessment Sourcebook. The Bank is thankful to the Governm ent of Norway for financing the produ ction of the Updates.

Please add ress commen ts and in quiries to Olav Kjørven an d Aida n Davy, Managin g Editors, EA Sourcebook Update, ENVLW, The World

Bank, 1818 H St. N W, Wash ingt on, D.C., 20433, Room No . S-5139, (202) 473-1297. E-mail: eau pd ates@wor ldb ank .org.

It can be u seful to determine, in advance, the desiredlength of the various sections of an EA repor t and usethese as a guide in report p reparation. It also is helpful todecide which information can be append ed on the basisthat it provides background to the main findings of theEA. All EA reports should contain an Executive Sum -mary p roviding information on the key issues pertinent

to the app roval decision. It should not be a summ ary of all the contents of the EA report and should be restrictedto 10–20 pages. The EA report itself shou ld normally notexceed 150 pages (exclud ing techn ical annexes).

The EA report should be written in a consistent,simple and clear style. Technical terms, acronyms and jargon shou ld on ly be used when essen tia l and a g los-

sary should be su pp lied to explain the meaning of suchterms. It is not acceptable to produ ce an EA reportwh ich has been comp iled by bind ing together a seriesof specialist reports p rodu ced by d ifferent experts atvarious times in the EA w ork. A coherent text withmaximum use of cross-referencing is needed.

The use of visua l aids is strongly encouraged to helpclarify locations of p laces or geographic features referredto in the text, the extent of environmental resources, loca-tions of peop le or aspects of the natu ral environm ent af-fected by the project, and sam pling locations. How ever,too many EA reports contain maps and other diagramswhich are poorly prepared an d cannot be reprodu cedeasily and clearly. For location maps, it is recommendedthat a limited num ber of representative base-mappingscales and aerial coverages be used consistently throu gh-out the text. Methods used to help identify impacts, suchas checklists or matrices, can also be u sed to presentresults in a visual summary.

For further reading

Biswas, A .K. and Q. Gep ing (eds). 1987. Env ironmental

Impact A ssessment for Developing Countries.TycoolyPublishing. Lond on.

Can ter, L. 1995. Env ironmental Impact A ssessment. 2ndEdition. McGraw-Hill. New York.

ENVLW. 1996. The Impact of Environmental Assessment:

The W orld Bank’s Experience. The World Bank. Washing-ton, D.C.

Morr is, P. and Thérivel, R. (eds). 1995. Methods of Environ-

mental Impact Assessment . UCL Press Ltd. Lond on.

Wathern, P . (ed). 1988. Env ironmental Impact Assess-

ment: Theory and Practice. Unwin Hym an. London.

UNEP. 1996. Env ironmental Impact Assessment : Issues,Trends and Practice. United National Environm entProgramm e. Nairobi.



Environment Department December 1996The World Bank Number 17

Analysis of Alternatives

in Environmental Assessment

Background

Since the introdu ction of the EA process and subse-quen t developm ent of EA method ologies and legisla-tive provisions, the analysis of alternatives has beenone of the m ain tenets of EA p olicy and procedu res. In-deed, a thorough, u nbiased an d transparent assessmentof investment alternatives from an environmental andsocial per spective (as well as a techn ical and econom icstandp oint) is one of the most important contributionsEA can make to imp roving d ecision-making.

Alternatives analysis in EA is designed to bring en-vironmental and social considerations into the “up -stream” stages of developm ent p lanning—projectiden tification and earlier—as well as the later stages of site selection, design and implementation. In the ab-sence of such consid eration, those step s in the pr ojectcycle are t aken solely on th e basis of techn ical feasibil-ity, econom ics, and political pr eferences, and the EAfor such a project tends to be d irected to sup porting oraffirm ing a p roject prop osal. At best, EA becomes adamage limitation exercise, with the benefits restrictedto identification of mitigation measures. Whereas envi-ronm ental and social analysis at an earlier stage mighthave revealed another cost-effective way of achieving

the same project objectives at lower environmentalor social cost (measu red either by the sever ity of the

impacts or the costs of measures to mitigate them),the likelihood of find ing it late in the p rocess is small.Furthermore, even if such an option w ere to be foun din the p roject EA, it often cannot be imp lement edwithou t disrupting project preparation in a mannerthat is so time-consum ing and expensive as to beimpractical.

Alternatives that differ in env ironmental and socialimpact may be foun d at several levels in develop-ment p lanning: alternative policies and strategies atthe n ational and sectoral levels; alternative patternsof economic grow th, land d evelopment and resourceuse for regions; and alternative sites, techn ologies,designs and operating procedu res for individualprojects. Within the Bank, too, the environmental andsocial dimensions of alternatives can be considered ineconomic and sector w ork (ESW) and formulation of a Country A ssistance Strategy (CAS).

Ideally, the environm ental impacts of the alterna-tives at the higher levels would be evaluated an dcompared as an integral element of the plann ing pro-cess, in parallel with the economic analysis, and hence

The Bank’s Operational Directive OD 4.01 on environmental assessment (EA) calls for, inter alia, systematic compari-

son of the proposed investment design, site, technology, and operational alternatives in terms of their potential environmen-

tal impact. Despite this emphasis on evaluating alternatives, the recent ly completed Second EA Review of Bank-financed

projects found that analysis of alternatives is often inadequately addressed. Reasons include the t iming of key decisions inrelation to EA and lack of methodological guidance. As a result , many EAs focus only on min imizing the adverse impacts of

a given project proposal.

This EA Sourcebook Update builds upon the lessons learned from the Second EA Review, and outlines how analysis of

alternatives can be undertaken at different levels of development planning, through project-specific, sectoral and regional

EAs. A lthough it does not attempt to provide a thorough review of decision methods for comparative assessment of alterna-

tives, this Update aims to provide broad guidance on comparative assessment and an introduction to systematic methods for

comparing alternatives. This Update expands on existing material in chapter 1 of the EA Sourcebook.






2

wou ld have been taken into accoun t prior to pr ojectidentification. In some instances, environmental consid-erations are partially factored into d evelopment p lan-ning, but the p rocess is often n either transp arent norsystematic. How ever, the EA process at the Bank an d inman y countries is evolving in that direction, with in-creasing efforts to introd uce environm ental concernsfurther u pstream and to combine or at least closely link

EA w ith feasibility stud ies. How ever, the evolution isnot comp lete, and it is still comm on to encoun ter pro-posed p rojects in which the decisions up to and includ -ing selection of site and technology have been mad ewith little or no environm ental consideration.

Avoidance of the d isruptive and sometimes artificialpr ocess of examining alternatives once the site andtechnology have been chosen is one of the main reasonsthe Bank encourages the u se of strategic EA (encompass-ing both sectoral and r egional EA), which provides aframework for systematic analysis of alternatives. ThisUpdate therefore describes a tiered ap proach, in w hichana lysis of alternat ives occur s at strategic and p roject-specific levels. Not all of the elements d escribed her e

will apply in every situation. Bank staff and borr ow-ers should app ly this guidan ce selectively to takeadva ntage of opp ortunities to examine available andrelevant alternatives, and to enhan ce alternativesanalysis in futu re development p lanning.

Process of alternatives analysis in EA

Sectoral EA (see Update no. 4) should be u sed for dis-tinguishing amon g alternative strategies and invest-ment p rograms w ithin a sector (such as pow er), andfor reviewing the effects of sectoral policy changes.Regional EA (see Update no. 15) should be u sed tocompare alternative development scenarios and torecommend sustainable policies and d evelopmentpatterns at a regional level. Both sectoral and regionalEA may be u sed to screen p roject alternatives basedon limited d ata, prior to more detailed stud y—theyfacilitate development of an overarching framew ork within w hich individua l project proposals can be ex-amined . The subregional energy sector stud y for theMekong Basin (box 1) illustra tes the ben efits of suchupstream assessments.

In 1993/ 94 the Asian Developm ent Bank (ADB) und er-

took an energy sector study to evaluate sup ply options

over a 25 year period for th e Mekong region, an area of rapidly grow ing energy d emand . The objective was to

identify the scope, opportu nities and means for enh ancingcooperation in t he fields of w ater resou rces, electric pow er

and natural gas between Cambod ia, Lao PDR, Myanmar,

Thailand, Vietnam, and Yun nan Province of the PeoplesRepublic of China. Two basic power developmen t strate-

gies were comp ared —national self-sufficiency versus re-gional cooperation.

In the self-sufficiency scenar io, Thailand w ould hav e togenerate significant new thermal generating capacity

based on its high pow er deman d. A regional cooperationscenario how ever, taking full advantage of the Mekong’s

hyd ropow er resources, wou ld redu ce the need for add i-

tional thermal capacity. The two scenarios were comparedon th e basis of a nu mber o f techn ical, econom ic, environ -

men tal, and so cial criteria.

Some 54 hyd ropow er alternatives were evaluated

based o n criteria which includ ed: installed capacity; easeof access; dam type an d height; degree of flow regulation;

area of agricultural and forest land inund ated; number of people resettled; multi-pu rpose use of imp ound ed w ater;

and impacts on ethnic minorities. Options were ran ked as

having low to severe impacts using comparative indiceswh ere possible, such as area inu nd ated or persons re-

settled p er kWh. Environmen tal and social aspects w erecombined w ith technical and economic evaluations to

identify p otential least-cost p rojects.

Box 1. Analysis o f alternatives in a strategic pow er & water sector study for the Mekong region

The environmental aspects of fuels used in thermal

pow er stations w ere assessed with regard to impacts onthe atmosp heric environment— acid deposition causing

pollutants (sulfur dioxide and oxides of nitrogen) and

the greenhouse gas carbon dioxide—and hum an healthimpacts of particulate matter.

On balance, the most sustainable hydrop owerprojects wou ld be a m ore benign solution to meeting fu-

ture energy demands than new thermal power op tions.If thermal capacity is developed withou t

pow er sharing, the region w ill experience a serious d e-cline in air quality. Substituting new thermal capacity

with renewable hydro through p ower sharing would re-

du ce atmospheric emissions within importing countrieslike Thailand , Vietnam, and Yun nan . For examp le, CO

2

emissions are p rojected to in crease from 50 milliontonn es (in 1995) to 357 tonn es by 2020 assum ing p ower

sharing, or to 432 million tonnes w ith no p ower-sharing.

Over the sam e period, SO2emissions w ould increase

from 0.18 million tonn es to 1.4 million tonn es if power

sharin g takes place, or otherw ise to 1.8 million tonn es.The power shar ing scenario wou ld also reduce regional

investment in generating capacity by 15-20 percent.

Finally, it is worth noting th at the evaluation

criteria for hyd ropow er alternatives did n ot encompassecological concerns. Therefore in ran king th e Nam

Theun 2 alternative in Laos (see box 2) as one of th e

most p romising options, the conservation value of the Nakai p lateau wh ere the reservoir is located, w as

not considered .



3

Screenalternative

technologies*

Identifyalternativelocations

PROJECT-SPECIFIC EA

*For natural resource projects, substitute‘resource management strategies’ for ‘technologies’

Defineproject

objectives

Producedevelopment

proposal

Define sectoraland regionaldevlopmentobjectives

STRATEGIC EA

Identifyalternative

developmentstrategies

Identifyalternative

technologies*

Define‘resource’

requirements

NoneScreen

alternativelocations

Evaluateselected

alternatives

Operational &mitigation

alternatives

Implementationalternatives

Designconfigurationalternatives

Comparativelyassess

alternatives

Proceed withpreferred

alternative(s)

When th e framework tha t strategic EA can prov ideis absent , as is frequen tly the case for pr ojects pr o-posed to th e Bank, it may be necessary to examinesome sectoral or regional alternatives such as sites andtechnologies w ithin th e pr oject-specific EA. In anycase, there will be design and implementation alterna-tives to be exam ined at the pr oject level. Because it iseasier to introd uce the alternatives analysis procedurein the context of a project, steps for generation a ndana lysis of alternat ives illustr ated in figu re 1 are dis-cussed for the p roject-specific case first, then extend edto strateg ic EA.

Stages in the analysis process

The starting poin t is the overa ll project objective. Al-ternatives that w ill meet the objective should be identi-fied w ith as mu ch freedom from limiting conditions aspossible, consistent w ith m aintaining reasonablenessand practicality. This is fundamental; it fosters thekind of creative planning and engineering need ed toreveal options that are tru ly different, not only interms of environmen tal impact, but also cost and easeof implem entation . It also sends a m essage to affectedcommu nities and oth er interest group s that decisions

still remain op en in th e areas u sually of most concernto them—location, size and techn ology—in contrast tocases in w hich the n ature of the project and its locationhave already been decided .

Box 2 illustrates the point. When first proposed bythe Lao Peoples Democratic Repu blic (PDR) to theBank and IFC, Nam Theun 2 was a hyd ropowerproject w ith established dam height, reservoir sur facearea and generating capacity. The 600 MW of powerwas to be sold to Thailand . Within the p roject, alterna-

Figure 1. Stages in analysis of alternatives

Box 2. Example of a tiered approach to

analysis of alternatives: Nam Theun 2

The Nam Theun 2 H ydroelectric Project in th ePeople’s Democratic Repu blic of Laos is intend ed to

increase revenues and strengthen the base for eco-

nomic development by exporting pow er to Thailand.

An alternatives analysis stud y was d esigned toensure that the project complied with the Bank’s EA

requirements. An importan t aspect of this was pu blicparticipation ap prop riate to each stage of the stud y.The key stages are as follow s:

• Evaluat ion of the potent ial for demand sidemanagem ent (DSM);

• identification and screening of alternative energy

sources to hydropower;• evaluation of realistic alternative energy sources;

• comparat ive assessment of alternatives;• identification of hydroelectric alternatives;

• evaluat ion of hydroelectric alternatives;

• comparative assessment of hydroelectric alterna-tives; and

• comparison of conceptual and design alternativesfor the proposed project.

The final prod uct is designed to be u seful innational pow er sector p lanning by the Lao PDR; in

planning by d evelopm ent finance institutions for theiractivities in the region and the sector; for plann ing by

private investors; in identifying stakeholder concerns

and bu ilding consensus; and as an inpu t to prepara-tion and env ironmental assessment of ind ividual pro-

posed p rojects such as Nam Theun 2.



4

tive dam h eights and tailrace alignm ents had alreadybeen considered, and alternative transmission linerights-of-way were being evaluated. Before it w ouldagree to finance the project, the Bank requested thatthe p roject prop onents retu rn to the overall objective, a600 MW increase in generating cap acity for Thailand ,and analyze alternative ways to achieve it.

Identifying the alternatives. For energy or watersup ply p rojects, an evaluation of the potential fordem and -side an d sup ply-side efficiencies should beincorporated at an early stage, which may lead to a

refinement of project objectives and consequently thedevelopment proposal. However, while demand-side-management and sup ply-side-management measurescomplement pow er supp ly expansion programs by at-tenuating electricity deman d, they u sually are not asubstitute for generation capacity expansion in devel-oping countries with rapidly increasing deman ds.

For indu strial, infrastructure and energy p rojects, itis recommended that alternative technologies be iden-tified generically, withou t reference to pr oject loca-

tions. This might include p rodu ction, abatement ortreatment technologies for industrial processes, oralternative transport modes for transportationpr ojects. The id entification of alternative technologiesmay relate to the entire project or specific components.For examp le, energy p rodu ction alternatives mightinclud e combined cycle gas turbines, hyd ropow er,coal-fired p lants or w ind p ower. Within each of these

options, a variety of alternative technologies could beconsidered , such as flue gas d esulfurization alterna-tives for coal-fired plan ts.

A similar app roach should be followed for naturalresource man agement projects (for examp le agricul-tural, forestry or water resources development pr opos-als). However, in this context alternative strategiesshould be considered (as opp osed to technologies). Forexample, if a prop osed agricultural program sup portsconversion of w etlands to r ice p rodu ction, alternativestrategies such as resorting to higher yield varieties inexisting fields or conversion of other land types shou ldbe considered. The potential of wetland s to sustain fishyields or other edible resources should also be assessed(the “no-project” op tion). It may also be ap prop riate toresort to other crop typ es in alternative locations.

At this stage it is imp ortant to consult w ith keystakeholders, including relevant govern ment institu-tions, agencies and non-governm ental organizations(NGOs), on w hether the range of technologies beingconsidered is comp lete. A workshop provid es a suit-able forum , which w ould also facilitate developm entof a pu blic consultation progra m.

Hav ing d efined a range of technologies or strate-

gies, “resource requirements” should be determinedfor each alternative. This includ es energy types an dquan tities, water, land areas, associated infrastructure,staffing, raw materials/ fuel, solid waste and effluentdisposal and other requirements p lus associated costs.All phases of the project should be considered—siteprep aration, construction, op eration and , if applicable,decommissioning or closure.

Screening of alternative technologie s helps tolimit the efforts and costs associated w ith data collec-tion and processing. Screening shou ld be based onfactors such as ability of the techno logy to meet the

pr oject objectives, availability of resour ce requirem ents(at a macro level), suitability in a par ticular situation ,and th e broad environm ental and economic accepta-bility (see box 3). The lead-times associated w ith bring -ing p rojects on-line are also important in d eterminingthe su itability of alternatives. The screening pr ocessshou ld d efine a realistic range of alternatives forfurther consideration. At this stage, a consultationexercise involving key stakeholders shou ld takeplace in order to seek consensus on the short-listedtechnologies.

Box 3. Screening alternative technologies in EA

The Environmental Improvement and Clean Fuels

Project in Thailand is designed to help m eet the RoyalThai Government’s (RTG) clean fuel specifications intro-

du ced in 1993. The project finances upgrad ing of theequipment an d p rocessing facilities at the Bangchak re-

finery in Bangkok. In ad dition, Bangchak refinery safety

and environmental standards are to be upgraded to meetexpected stand ards to the year 2000. The primary specifi-

cation changes affecting th e refinery p roducts involve re-moval of lead; redu ction of aromatics and benzene levels

in gasoline; and redu ction of the sulfur content and boil-

ing ran ge of diesel oil.

Four alternative pr ocessing configurations w ereconsidered includ ing deep gas oil hyd rotreating

(DGHT); hydr ocracking; fluid catalytic cracking (FCC)

combined with a d eep gas oil hyd rotreater; and a re-du ced crud e catalytic (RCC) cracker comb ined w ith a

deep gas oil hydrotreater.

The first two stand -alone op tions require the im-

portation of FCC quality high octane, low aromaticsand benzene gasoline wh ich are u navailable on a long

term basis in large quantities. The RCC wou ld p ro-du ce 5 tons per d ay of spent catalyst compared to

one ton p er day from the FCC. The comp arative

assessment w as therefore limited to the DGH T,hyd rocracker combined with DGHT and FCC com-

bined with DGHT.

The preferred option, on th e basis of environm ental

and economic considerations (plus security of sup ply)was the FCC combined w ith DGHT.



5

Having identified a shortlist of alternative tech-nologies, the next stage is to identify a range of alternative locations. It may be ap prop riate to iden-tify alternative locations for the entire p roject or se-lected comp onen ts of the pr oject (see box 4). In m anyinstances, some elemen ts of the project may b e fixed,such as the ore body in a mining project, terminalpoin ts of road and r ail pr ojects, and location of oilreserves. However, this still leaves scope for analysisof alternat ive sites for facilities such as tailings dam sor alternative alignm ents for roads, rail lines or p ipe-

lines. Iden tification of suitable altern ative locationsshould take into consideration the resource require-ments identified for the short-listed technologies.

The basis for screening alternative locations issimilar to that u sed for screening technologies andincludes ability to meet pr oject objectives, resou rcerequirements for short-listed technologies, and broad

environmental plann ing and economic considerations(includ ing the ab ility to meet Bank econom ic rate-of-retu rn criteria). For exam ple, reasons for rejection of alternative locations could include conflict with exist-ing p lanning p olicies or settlements, encroachm entinto conservation areas or habitat of end angered spe-cies, distur bance of archaeologically imp ortan t sites,opp ortunity cost of inun dating high qu ality agricul-tural land, seismic hazard , and risks to ground water.

Significant social concerns, such as inv olun taryresettlemen t, often form th e basis for rejection of locations. During th e initial screening of alternativelocations, the concerns of the w ider p ublic may berepresented by government agencies, institutions,commu nity organizations or NGOs.

Once the short-list of alternative project proposals(or project element p rop osals) is finalized an evalua-

tion of each alternative should be un dertaken. Envi-ronm ental, social and health impa cts of the short-listed a lternatives shou ld be determ ined in sufficientdetail to facilitate their comparative assessment.Engineering feasibility and institutional issues shouldbe addressed concurrently, and factored into theevaluation. Where p ossible, external environm entalcosts wh ich h ave not p reviously been accoun ted for

should be evaluated an d internalized within the over-all econom ic analyses to reflect the effects of environ-mental costs on the rates-of-return of alternatives.Integration o f externa lities can either be achieved bydirect monetary valuation (see forthcoming Update on Economic Analysis in EA) or by the u se of comp arativeassessment techniqu es described below. The lattercan be used to accoun t for environmental, health orsocial imp acts that do n ot readily lend th emselves tomonetary valuation, such as loss of biodiversity orcultural heritage.

In man y cases, the evaluation can be carried ou t

with little fieldw ork other than site reconnaissanceand review of existing information sources, such asdocum entation on p erformance of technologies ormethod s, aerial photograp hs and satellite imagery,geological and soil surveys, and hyd rologic records.How ever, the EA team shou ld have resources avail-able for fieldwork to obtain missing informationthat it determ ines will be critical in discriminatingamong alternatives. Typical examples are site visitsto estimate the extent of resettlement tha t w ould berequired or to v erify soil survey d ata on qu ality of

Box 4. Siting alternatives in an EA for a

hydropower project (Pakistan)

The Ghazi-Baroth a Hyd rop ower Pr oject is a major

run -of-river p ower p roject designed to meet the acutepow er shor tage in Pa kistan. The main project elements

include a barrage located on th e Indu s River, apow er channel (designed to convey water from the

barrage to the power comp lex) and a p ower complex.

Alternative locations for these elements w ere evalu-ated based on technical, economic, environmental

and social constraints by an in terd isciplinary p rojectteam and subject to review by an external environ-

mental and resettlement panel.

Initial screening of five barrag e sites identified by

the project consultants resulted in two options beingselected for detailed evaluation. The preferred option

had less storage capacity than the m ain alternative,

but w as preferable in terms of environmental impact.

The most economical alignment for the p ower

channel wou ld h ave necessitated resettlement of an

estimated 40,000 people. Movement of the alignment

to less densely pop ulated areas, although technicallymor e complex and finan cially less attractive, red uced

the resettlement requ irement to ap proximately 900people. Add itional mod ifications further redu ced the

impact on archaeological sites and graveyards.

Five power complex sites were initially studied,

and three remained for detailed evaluation followingscreening. Topographical factors determined the p re-

ferred option as the environmental implications were

broad ly similar in each case. Sub-elemen ts of thepow er complex such as access roads, headpon d

capacity and emban kments were chosen based onenvironmental an d technical considerations.

Finally, four alternative alignments were evalu-ated for th e 500 kV transmission line connections to

the Peshwar grid station. The selected rou tes hadminimal environm ental and socio-cultural imp acts.

Detailed design of this compo nent w ill focus on

choosing alignment an d tower locations w ith mini-mal impacts on d wellings, agricultural land and

archaeological sites.



6

agricultural land that wou ld be converted, and p lantvisits to see alternative technologies in operation anddiscuss operating experience with ow ners.

During evaluation, the process of pu blic consulta-tion should be continu ed to ensu re that d ecisionmakers and stakeholders (includ ing those at theindividual sites) have confidence in the process. As afirst step, stakeholders shou ld be identified based ona review of the institutions or agencies that m ay be-come involved in implementation of project activities,NGO s and commu nity group s local to the short-listedsites. Consultation shou ld entail clearly pr esentingalternat ives to all parties, in the local langua ge(s), in aforum th at encourages discussion.

The final stage is to compare alternatives basedon the ou tpu t from the evaluation. There are a varietyof tools which may be employed for this purp ose.In all cases, the basis for selection of the pr eferredalternative(s) should be transparen t and clearly de-scribed. Wh ere alternatives have been selected thatare sub-optimal from an environm ental perspective,the justification for their selection sh ould also be

documented. Additional guidance on comparativemethod s is given below.

Application to sectoral and regional EA

When analysis of alternatives is cond ucted in strategicEA, the sectoral or regiona l developmen t objectivesare a key compon ent of the framew ork for screeningstrategic developm ent options. Demand side manage-ment and sup ply side efficiencies are par ticularly rel-evant to energy or water su pp ly strategies in asectoral and regional context.

The stages in figure 1 which relate to generation of realistic alternatives (technology or strategy and loca-tion iden tification and screening) at a p roject-specificlevel are arguably more app licable at a sectoral andregional level. For examp le, a regional EA for a watersup ply p roject with the objective of developing op ti-mal resource allocation strategies should first evaluatesup ply side efficiencies. A broad range of sup plyoptions should be iden tified wh ich m ight includeincreased exploitation of surface and groun dw atersources, construction of additional storage capacityto harn ess and exploit p eak flows (run-of-river orbank -side), inter-basin transfers or re-use of treatedwastew ater. Resource requirements in this context

wou ld includ e water volum es, land areas for reservoirconstruction, and infrastructure such as p ipelines,pu mp ing stations, and w ater treatment plants. Screen-ing of alternative strategies should be based on suit-ability to sup ply p rojected uses (dom estic, ind ustrial,agricultu ral, civic, recreational or ecological) qu alita-tively and qu antitatively, and br oad environm entaland economic acceptability.

In this example, alternative locations might includespecific water bod ies or aqu ifers, alternat ive sites fordam or reservoir construction, pipeline rou tes orpoints for transfer of water between rivers. Screening

of such alternatives would need to consider conflict-ing u ses of the water bodies (for examp le effluent dis-posal and recreation), current abstractions and enduses, water quality criteria vis-à-vis the intended uses,and the implications for aquatic ecology (includingcomm ercial fisheries). Terrestrial constraints w ouldinclud e land use, plann ing p olicy designations, socio-cultur al and ecological conflicts. Economic factorsshould focus on opportu nity costs, and app roximaterates-of-return. A similar ap proach could be ap pliedto sectoral and regional development investmen ts in

Box 5. Strategic EA of f lood protection in

Argentina

The central objective in the Ar gentina Flood Protec-

tion Project is to improve flood protection for commu-nities inhabiting the flood plains of the Parana, Para-

guay an d Uru guay Rivers in north ern Argentina. This

region has suffered enorm ous hum an and economiclosses as a resu lt of flood ing, most recently in 1992.

However, periodic flooding sustains ecological sys-tems and many prod uctive agricultural activities. The

project has therefore adopted a “living w ith floods”strategy. A comprehensive investment program in

structural and non -structural measures has been de-

signed to en hance the p rovincial capacity to d eal withperiodic flooding.

At the Bank’s suggestion, a reg ional EA initiated in

the early stages of project pr eparation determined the

importance of flooding for natural and m anmad e sys-tems w ithin the flood p lains. These included the eco-

logical imp ortan ce of floods in su staining criticalnatural h abitats such as w etland s and gallery forests.

Accordingly, initial criteria for the selection of inv est-

ments were m odified to ensure that flooding wou ldcontinue w ithout threats to hu man well-being or eco-

nomic infrastructure.

All 150 investm ents initially iden tified w ithin the

pr oject were screened ba sed on these selection criteria.The regional EA helped select 51 subpr ojects with

clear econom ic, social and environ men tal justification.Brief project-specific env ironm ental ap pr aisals were

prep ared for all subprojects by the regional EA team.

Upon completion of these ap praisals, the cumu lativeimpacts of all 51 subprojects were evaluated, and miti-

gation measures d esigned to minimize overall envi-ronm ental impacts. Public consultation was an impor-

tant compon ent of the selection an d refinement

pr ocess. For example, in one instance a subpr oject wassignificantly r edesign ed to reflect social concerns.



7

transport, energy, agriculture, sanitation, flood p rotec-tion and other sectors. The regional EA prep ared forthe Argentina Flood Protection Project is an example(box 5).

Linkages to the project cycle

It is essential to integra te the identification of alterna-

tives into the p roject ident ification process (prior toprod uction of concept pap er) to ensure a compreh en-sive analysis of alternatives (see figure 1). This isusu ally the pr e-feasibility stage of a p roject, wh ichmay involve reconnaissance visits and preliminaryinvestigations.

At the p roject ident ification stage, the onu s is onborrow ers to generate realistic alternatives (sup portedby the Bank) that can be carried through to projectprep aration. The evaluation and comparative assess-ment of realistic alternatives should be an integral partof the EA and pre-feasibility stud ies, and should bedescribed in the EA report p rior to appraisal. It isimperative that Task Managers en sure that EA TORsadequ ately reflect the need to consider alternatives.

“No-action” alternative

The “no-action” or “no-project” alternative shouldroutinely be included in analysis of alternatives in EA.(Only in rare cases is it not relevan t—for examp lewh en an investmen t is necessary to respond to legisla-tive requirements.) This involves projecting what islikely to occur if proposed investment projects are notun dertaken. It provid es the means to comp are theenvironmental, social, and economic impacts of vari-

ous project alterna tives with th ose of a scenario inwh ich th e project is not implemented . In evaluatingthe no-action alterna tive, it is imp ortan t to take intoaccount all probable public and p rivate actions wh ichare likely to occur in the absence of the pr oject.

For examp le, if the developm ent p roposal is toconstruct a rail link betw een an ind ustrial area and apo rt facility to alleviate road congestion , the no-actionalternative should consider: the implications forincreased traffic and related air pollution and noiseas indu strial outp ut increases, and the associatedeffects on adjoining communities; the potential

disincentives for further investmen t in the ind ustrialzone; requisite road imp rovements to accomm odatetraffic increases and the effects on adjoining proper-ties; and the economic costs of delays in transportand shipment.

Cond ucting a tru ly objective evaluation of theno-action alternative requires extra care, since variousinterest groups hav e historically used it to sup portpositions for and against pr ojects. Environmentalgroup s that favor preservation over developm ent

have u sed it to highlight the n egative imp acts whiledow np laying p roject benefits. At the oth er extreme, ad-vocates of developm ent w ithin the sector concernedtend to emp hasize the economic benefits that w ill beforegone, using the no -action op tion as a vehicle forprovid ing sup port for a pr oject proposal. A balancedevaluation can provide objective guidance to sup portinformed decision m aking.

Data requirements

An analysis of alternatives is dep enden t up on theavailability of sufficient da ta. The data base mu st bedesigned so that th e d ata d escribe the characteristics of the variables to be comp ared an d allow d ata to betransformed and aggregated satisfactorily at th e d iffer-ent stages of the ana lysis process. Ideally, the da tashould be as h omogenou s as p ossible—collected in amethod ologically consistent man ner, rep resentative forthe time of project plann ing and implementation, andcollected to comp arable standar ds of accuracy.

In general, the investment in collecting andprocessing data mu st be relative to the benefit of theirapp lication. Existing data sources should be usedwh erever possible, particularly in th e earlier stagesof ana lysis, subject to their efficacy. Baseline stu diesare usually only app ropriate in the evaluation stageof selected alternatives.

Public involvement

Providing op portu nities for stakeholders to expresstheir views du ring alternatives analysis can be benefi-cial in two w ays—to obtain information and to build

consensus. First, some stakeholders will be sourcesof valuable local knowledge, others may be expertsin the sector, and stakeholders in general are the mainsour ce of informa tion on acceptab ility of certain alter-natives. Second, p articipation th rough out identificationof the alternatives that will be considered, as well asdu ring their evaluation and comparison, helps to buildconsensus for the p referred alternative. Consensus-building is particularly importan t in operations likeintegrated conservation and developm ent projects thatdep end on stakeholders for successful imp lementation.It is also critical where con troversy is likely, mostnotably in selecting sites for d ams, therm al pow er

plan ts, or waste d isposal facilities. One of the bestways to counter the “not in m y backyard” reactionis to condu ct an an alysis of alternatives that is p er-ceived as tran sparent, balanced, and r esponsiveto stakeholder views.

In a straightforwar d, non-controversial project, thegeneral pu blic consultation p rocess for the EA m ay besufficient. When a pr oject is pot entially controver sial,how ever, as in the case of hydrop ower p rojects or high-ways throu gh pop ulous or environmentally sensitive



8

areas, it is advisable to focus additional consultationefforts on th e analysis of alternatives, primarily forconsensus-building. Stages in the p rocess wh ereconsultation m ay be worthw hile includ e:

• Development of analytical methodology andTORs;

• selection of alternatives to be analyzed;

• determination of weights or importance values forevaluation param eters (discussed further below);

• comparison of alternatives; and

• formulat ion of recommendations.

There is amp le guidan ce available on consultationand decision-making techniques that provide for pu b-lic involvement, such as The Participation Sourcebook

an d Update no. 5: Public Involvement in EA . In ap plyingit to alternatives analysis, how ever, it is importantto remember that different levels of public involve-ment are u sually approp riate at each stage of theprocess, and this often dictates involving differentstakeholders at each stage. For example, in the caseof the EA for N am Theun 2 (box 2), involving commu -nities adjacent to possible dam sites in Lao PDR indiscussions of analytical techniqu es or dem and sideman agement an d alternative energy sources inThailand wou ld neither be helpful to the processnor m eaningful to the comm un ities. How ever, envi-ronm ental NGO s (Thai, Lao, and international) aswell as technical experts an d institutions, consumergroup s, private ind ustry, and representatives of the

pow er and en ergy sectors wou ld be intensely inter-ested in this phase and could usefully contribute.Conversely, potentially affected communities andlocal NGOs interested in environmental and socialissues wou ld be the primary stakeholders in analysisof alternative sites for pow er generating stations.The design of the consultation elements can befacilitated by social assessment, which can helpto identify key stakeholders and establish an ap pro-priate framework for their involvement.

Application to “constrained” project scenarios

Where project identification has largely been com-pleted p rior to Bank Grou p involvement, elementsof the pro ject may be fixed , includ ing the location.This is particularly true of some private sectorprojects where a borrow er or sponsor may be re-sponding to a site or technology specific project pro-posal—examples could includ e m ining concessions orprivately financed toll roads (in response to a specificalignm ent). It is also true of many situations w hereBank a ssistance is being sou ght w here p roject plan-ning is almost comp lete. In such instances, to wh at

extent should project identification be revisited or amore thorou gh an alysis of alternatives be und ertakenretroactively?

Wher e the Bank (IBRD and IDA) is directly in-volved (as opposed to IFC and MIGA), the opportu -nity exists for constructive d ialogue with govern-men ts. Revisiting pro ject iden tification or requ iring a

more thor ough analysis retroactively shou ld be con-sidered w here there are potentially significant envi-ronm ental and social impacts associated w ith theproject as prop osed—as was the case with the N amTheun 2 H ydrop ower project (see box 2). In ad dition,the option of examining sectoral or institutional issueswithin a project-specific EA shou ld be p ursu ed w henit appears advisable and the prop onent has not takenthe opp ortunity to explore them in strategic EAs.

The opp ortu nities to revisit pr oject iden tificationare more limited with IFC and MIGA. How ever, in asituation like Nam Theun 2, assuming the Bank werenot involved, an alternatives analysis wou ld need toconsider alternative d am heights, locations for thepow er complex, alternative app roaches to handlingwater from the tu rbines (wh ich can’t be routed back to the Na m Theun River), and alternative alignm entsfor access routes. In such circum stances, and wh ereno strategic analysis has been un dertaken, th e pr ojectlevel EA shou ld d etermine the acceptability orsustainability of the project as prop osed w ith app ro-priate m itigation m easures. In ad dition, considerationshould be given to the cumu lative impacts of othercross-sectoral developments. For example, theeconomic sustainability of the p roject migh t beadversely affected by sed imentation resulting from

deforestation and poor land m anagemen t practiceswithin the river catchm ent.

Comparative assessment of alternatives

The objective of comp arative an alysis is to sharp lydefine the merits and demerits of realistic alternatives,thereby providing d ecision makers and the pu blicwith a clear basis for choosing betw een op tions.The key challenge to EA practitioners in comparativeassessmen t is to show distinctions objectively, andas simply as p ossible. The ad option of u nnecessarilycomplicated techniques can confuse decision-makers

and exclude the p ublic from effective participation.

As a g eneral rule, the following p rinciples shouldbe adopted in determining an appropriate compara-tive assessment m ethodology:

• In every case, a table or matrix should be preparedsum marizing qu alitative or quantitative informa-tion for each option w ith decision criteria (eco-nomic, technical, environmental and social) on oneaxis and options on the other.



9

• In many cases, particularly where only a fewalternatives have been generated, a p referredalternative w ill become ap parent by inspection of the m atrix. Where the en vironmental or social

impacts are broad ly similar for each op tion,technical or economic factors shou ld d etermine thepreferred alternative.

• Where a larger number of realistic alternatives hasbeen generated or where options have varying levelsof imp act, it may not be possible to identify a pre-ferred alternative from the matrix. The matrix shouldstill be prepared, since it enhan ces transp arency of the process and p rovides the information that otherreviewers of the analysis will need if they w ish to

To alleviate congestion an d m eet pro jected traffic in-creases between Cirebon and Batang in n orthern Java, the

Indonesian Ministry of Public Works is planning for con-

struction of a new four-lane d ual-carriageway toll road.The project feasibility study includ ed an an alysis of three

alternative rou te alignments, which h ad been selected

based on broad technical, social and environmental crite-ria. The n orthern Java coast run s app roximately East to

West in the p roject area, and the three rou te options fol-low a br oadly similar alignment an d comprise a coastal

route (option 1), a d irect rou te (option 2), and an inlandroute (option 3).

The comp arative assessment of route op tions wasbased on criteria which includ ed:

• Construct ion and maintenance costs (including landacquisition and resettlement costs);

• savings to road users arising from reduced travel

times and vehicle operating costs;

• support for economic development pol icies andconsistency with m ational and regional plans;

• impacts on protected areas, ecology and aesthetics;

an d

• direct and indirect impacts on households, and on theintegrity of communities.

No single route had clear advan tages over the other

two op tions based on all criteria—for examp le, the inland

route w ould have th e greatest ecological and aestheticimpacts, whereas the d irect rou te wou ld involve resettle-

ment of twice the num ber of households as the inland

route—and the choice of an op timal route entailed atrade-off between the var ious factors. A tabular sum mary

of potential environmental impacts (21 negative and 6positive) was constructed. For the three route options,

each imp act criterion w as scaled as 1 to 3, based on th e

likely imp act of the rou te on the d ecision criterion.

Importance weightings of 0.5 to 4 were assigned to

imp act criteria based on th eir relative imp ortan ce. Forexample, disturban ce of nature reserves was w eighted

more highly than changes in landscape, wh ereaspeople ind irectly affected w ere weighted below peop le

directly affected or community severance. Importanceweightings were multiplied by scaling scores, to deriveimp act criterion scores for each route. These scores w ere

summ ed to give an overall environmental impact ratingfor each alterna tive, and sim ilar app roaches wer e fol-

lowed for the traffic, planning and engineering aspects.

The coastal route had the best overall environm ental

impact scores, but fared bad ly based on traffic and engi-neering criteria. The inland route h ad the highest overall

environmental impact, but scored best based on engi-

neering criteria. Overall, the preferred option was thedirect route, route 2, based on an aggregate score of

all factors.

Assessment Summary of weighted scores

Route 1 Route 2 Route 3

Environment

Negative impacts -48 -57.5 -72.5

Positive impacts 6 8.5 5

Traffic 30 73 47

Planning 49.5 71.5 34

Engineering 31 48 71

Total score 68.5 143.5 84.5

Priority rating 3 1 2

Rating for econom ic &

financial assessment 3 1 2

Box 6. Comparative assessment of alternative toll road alignments, Indonesi a

check its conclusions or apply their own methods tocompare alternatives. However, a more systematicapp roach m ay be needed , involving the u se of multi-attribute decision making techniques. More complex

techniques and associated sensitivity analysesshould on ly be used if straightforward methods failto prov ide a clear basis for decision making.

Systematic approaches to comparative assessmentof alterna tives involve the application of scaling,rating or ranking checklists. These are used inconjun ction w ith the results derived from the com-parative evaluation of selected alternatives in the EApr ocess (based on d ecision criteria such a s effects onair quality, ecology, and h um an h ealth). Importance



10

This Update was p repared by Aidan Davy, Thomas E. Walton and Tor Ziegler. The EA Sourcebook Updates provide guid ance for conducting

environmental assessments (EAs) of proposed projects and should be u sed as a supplement to the Env ironmental A ssessment Sourcebook.

The Bank is thankful to the Governm ent of Norway for financing the prod uction of the Updates. Please address comments and inquiries

to Olav Kjørven and Aidan Davy, Mana ging Editors, EA Sourcebook Upd ate, ENVLW, The World Bank, 1818 H St. NW, Washington , D.C.,

20433, Room N o. S-5139, (202) 473-1297. E-mail: ea up da tes@wor ldb ank .org.

weighting of decision criteria may also be used , eitherin isolation from or in combination with scaling,rating or ranking methods.

Ranking entails ordering alternatives from best toworst in terms of p otential imp acts on d ecision crite-ria. Rating refers to the u se of a pre-defined ratingscheme to rate th e significance of decision criteria for

each option. Scaling involves the assignment of nu -mer ic or algebraic scales to the imp act of each alterna-tive on each decision criterion (see box 6). Impor-

tance weighting involves assigning a weighting fac-tor to each d ecision criterion relative to the otherdecision criteria (see box 6). Explan ations on the va ri-ous techniques, and their limitations, may be obtainedfrom the growing bod y of literature on EA meth ods.Ad ditional guidance may also be obtained from Up-

date no. 17: Challenges of M anaging the EA Process.

For further information

Canter, L.W. 1994. Environmental Impact Assessment.

McGraw-Hill. New York.

Dixon, J. et al. 1994. Economic Analysis of Env ironmental

Impacts. 2nd Edition. Earthscan Publications. London.

ENVLW. 1996. The Impact of Env ironmental Assessment:The W orld Bank’s Experience. The World Bank. Wash-ington, D.C.

ENVSP. 1995. Social A ssessment. Environment Depart-ment Dissemination N ote No. 36. The World Bank.Washington, D.C.

ENVSP. 1996. The Participation Sourcebook . The WorldBank. Washington, D.C.



1


Economic Analysis and

Environmental AssessmentSuccessful economic development depends on the rational use of natu ral resources and on reducing as far as possible the adverse

environmental impacts of development projects. 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 proposed project exceed its costs,and to help design the project in a way that produces a solid economic rate of retu rn. A dverse env ironmental 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. ThisEASourcebook Upd ate 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 EASourcebook .


Bank requirements

The World Bank’s Op erationa l Policy on EA (OP 4.01)states that “environmen tal costs and benefits shouldbe qu antified to the extent p ossible, and economic

values shou ld be attached wh ere feasible.” Thisshould be don e for both alternative project designsand alternative mitigation options. Moreover, theOperational Policy on Economic Evaluation of Investm ent Op erations (OP 10.04) states that EAfind ings and recommend ations should be taken intoaccount in p roject app raisal and sup portingbenefit-cost analysis.

EA, economic analysis, and the project cycle

EA is an information-gathering and analytical processthat helps avoid environm entally unsou nddevelopm ent. It focuses on environm ental

externalities: unintended adverse effects of developm ent pr ojects on th e environment. Forexample, land clearing for an aquaculture projectcould convert wetland areas, resulting in reduced birdhabitat and water qu ality. EA seeks to identify andevaluate these environmental effects in qualitative

terms, and to quan tify them wh en feasible (forexample, air pollution in p arts-per-million, or tons of topsoil lost to erosion). The imp acts identified in theEA process have not often been converted into

monetary terms, how ever. A major reason behind thegenerally w eak link betw een EA and economicanalysis has been the lack of useful gu idance onconverting p hysical impacts into monetary terms.Recently, however, the science of environmental

economics has moved to a point w here it can be morereadily app lied in the p roject context. This Updateseeks to explain how this might be d one.

The role of EA and environmental economic

ana lysis in the Bank’s pr oject cycle is illustrated insimplified terms in table 1. Environmental economicanalysis can play an imp ortant role at three main

stages: (i) in th e assessmen t of the imp acts of aproposed project and its various alternatives; (ii) in

the an alysis of preventive or mitigative op tions; and(iii) in p roject ap pr aisal, once a specific alternative hasbeen selected. In the case of both economic analysisand en vironmental assessment, the imp ortantdistinction is between w hat wou ld happ en with theproject and withou t the project, not other changes thatmay be ha pp ening over time. This point is sometimeslost as there may be important long term trend s thatoccur irresp ective of the p roject itself.

In the first stage, the economic analysis willnorm ally consist of estimating mon etary costs andbenefits (valuation) of the various environmen talimpacts identified in the EA, using a ran ge of





2

generally far from straightforward . Environmentalimpacts are often d islocated in time and space,mak ing cause an d effect difficult to establish. Theseverity of environmental impacts often d epend s onthe accumu lation of p roblems (over time, over space,or both). Many environm ental goods and services do

not enter m arkets, or do so only imperfectly. Thedifficulties this causes for valuation are compou nd edby the emp irical limitation th at available d ata areoften scarce or of poor qu ality.

Total economic value. Econom ic valuation is stillan evo lving science. For some good s and services (forexamp le, a kilo of rice or fish, or a cubic meter o f timber), the mar ket provid es prices that are goodreflections of the values society places on th at good orservice. For other good s and services, market p riceseither do not exist or only capture a small part of thetotal value. Examples of such good s and services

includ e end angered species and scenic vistas. To easein the ta sk of analysis, therefore, it is often u seful todisaggregate any environm ental impact intoindividu al comp onents of value. One app roach todo ing this is called the Total Economic Value (TEV)app roach, wh ereby an impact is decomposed into anu mber of categor ies of value (figure 1). The ideabehind the TEV app roach is that any good or serviceis comp osed of various attributes, some of wh ich areconcrete and easily measured , while others may bemor e difficult to quantify. The total value, however, is

valuation techniqu es. In th e second stage, the an alysisis extended to consider the costs and benefits of preventive and mitigative measur es, so thatcomparisons can be mad e with th e original projectimpacts. At the third stage, the m onetary values forthe selected alternative are integrated into th e overall

economic evaluation of the p roposed project. Theseevaluation techniques, wh ich a re generic, arediscussed briefly toward s the end of this Update.

For the integration of EA and econom ic analysis tobe successful, both need to be d esigned andun dertaken w ith the needs of the other in mind. Allindices of environmental d amage are not equa llyhelpful for economic analysis. For example, a measureof soil loss in ar eas affected by erosion will be lessuseful than a measure of the resulting change inagricultural productivity. Similarly, consideration of the economic benefits at stake can help target EA

resou rces to the areas of greatest interest. Thesepossible inter-relationships shou ld be incorporatedfrom the beginning in the d evelopm ent of TORs, theselection of the EA team , and other stages of the EAand project preparation process (see table 1). Needlessto say, the serv ices of a trained economist w ill berequired.

Valuing e nvironmental impacts

For a p roject’s environm ental impacts to be valued,they m ust first be identified an d m easured. This is

Table 1. EA, economic analys is, and the project cycle

Project stage EA activity Associated economic analysis activity

Pr ep ar ation En vir on m en tal scr een in g Poten tial en vir on men tal costs an d ben efits ar e con sid er ed o n a

preliminary basis

Prepara tion of EA TORs Requirement to quant ify environmenta l impacts and ass ign

monetary values spelled out

EA team selection EA team in clu des resou rce or health econ om ist, as ap prop riate

EA preparation EA team analyses the impact of project alternatives and

compares them , using monetary values on their costs and

benefits, where feasible

Review of EA The Bank reviews the EA report, including the economic

analysis

Appraisal Incorporation of EA into

project design an d

documentation

EA find ings, including the environm ental costs and benefits,

are incorporated into the pr oject economic analysis and the

estimation of the economic rate of retur n

N egotiations Agr eem en ts r eached on

actions to be taken, based on

the findings of the EA

Implementat ion Environmenta l supervision Sup ervision includes m onitoring th e pr oject’s actual

environm ental costs and b enefits



3

the sum of all of these comp onents, not just those thatcan be easily measured. The breakdow n andterminology for the components of TEV vary slightlyfrom analyst to analyst, but generally includ e (i) directuse v alue; (ii) ind irect use value; and (iii) non -usevalue. The former two are generally referred totogether as “u se value”. Each is often furthersubd ivided into add itional categories.

Direct use value. Direct use value, also know n asextractive, consum ptive, or stru ctural use valu e,derives from goods w hich can be extracted,consumed , or directly enjoyed . In the context of aforest, for example, extractive u se value w ould bederived from timber, from harvest of minor forestprod ucts such as fruit, herbs, or mu shrooms, andfrom hu nting and fishing. In ad dition to these directlyconsumed goods, direct use values can also be non-consump tive. For example, people wh o enjoy hikingor camp ing in th e same forest receive a d irect u sevalue, but d o not actually “consume” any of the forest

resou rce. Similarly, in a coral reef d irect use valuescan includ e the h arvesting of shells and catching of fish, or the n on-consum ptive u se of the reef by scubadivers.

All of these benefits are real, can be m easured, an dhave values, even if the consump tion by one

individu al does not redu ce the consum ption by

another (economists call this non-rival consump tion,

and these goods are classified as p ublic goods).

Consum ptive use is generally the easiest to value,

since it usually involves observable quantities of prod ucts wh ose prices can usually also be observed.

Non -consum ptive use is often more d ifficult to valuesince both quan tities and p rices may not be observed.

Indirect use value. Indirect use value, also know nas non -extractive u se value or functional value,derives from the services the environment provides.For example, wetlands often filter w ater, improvingwater qu ality for dow nstream u sers, and n ationalparks p rovide op portu nities for recreation. Theseservices have value but d o not require any good to beharvested, although th ey may requ ire someone’s

ph ysical presence. Measuring ind irect u se value isoften considerably m ore d ifficult than measuringdirect use va lue. The “quantities” of the service beingprovid ed are often hard to measure. Moreover, man yof these services often do not en ter markets at all, sothat th eir “pr ice” is also extremely d ifficult toestablish. The visua l aesthetic benefits provid ed by alandscape, for examp le, are non -rival in consump tion,meaning that they can be enjoyed by ma ny peop lewithou t detracting from the enjoyment of others.

Option value. Option value is the value obtainedfrom maintaining the option of taking advan tage of something’s use value (wh ether extractive or non -extractive) at a later d ate. It is, therefore, a special caseof use value, akin to an insurance policy. (Quasi-

option value, wh ich d erives from the p ossibility thateven though something app ears unimportant now,information received later might lead u s to re-evalua te it, is a related concept.)

Existence and bequest value . In contrast to usevalue, non-use value d erives from the benefits theenvironment m ay provide w hich do not involve usingit in an y w ay, wheth er directly or ind irectly. In m anycases, the most imp ortant su ch benefit is existence

value: the value that p eople derive from the

know ledge that som ething exists, even if they neverplan to u se it. Thus, people place a value on th e

Figure 1. Total economic value and selected valuation techniques

Use value Non-use value

Total economic value

Direct

(extractive)

use value

Change in outpu t of

marketable goods

Cost-based app roaches

Hed onic princes

Contingent valuation

Travel cost

Option

value


Hed onic princes

Indirect

(non-extractive)

use value

Cost-based ap proaches


Change in outpu t of

marketable goods

Bequest

value

Contingent

valuation

Existence

value

Contingent

valuation



4

existence of blue w hales, or of the pand a, even if theyhave n ever seen one and probably never w ill; if bluewh ales became extinct, many p eople wou ld feel adefinite sense of loss. Bequest value is the valuederived from the d esire to pass on values to futu regenerations. Non-use value is the m ost difficult typ eof value to estimate, since in most cases it is not, bydefinition, reflected in p eople’s behavior and is thus

wh olly unobservable.

Benefit-cost vs cost-effectiveness. Two approachesare p ossible to the economic analysis of environmen-tal impacts. The first is to use stand ard benefit-costcriteria, in w hich the ben efits of an action arecompared to its costs to determine w hether the actionis worth u nd ertaking. This app roach is commonlyused to comp are alternative options and requ ires thatthe environm ental imp acts be identified an d th atmon etary values be placed on the outcomes. Anexamp le is the analysis of different air pollutioncontrol measures and the expected h ealth benefitsassociated w ith each alternative.

In some cases, however, a traditiona l benefit-costana lysis may not be feasible or desirable. It may n otbe possible to make monetary estimates of benefits.For examp le, some natur al areas may be so un iquethat it might be felt they should be conserved at allcosts. In other cases, there might be substan tialun certainty about the benefits provided byenvironmen tal goods and services, either now or inthe future, or great problems in determ iningapp ropriate values in monetary terms. When loss of these goods an d services wou ld be irreversible, it ma ybe d esirable to choose the strategy that m inimizes

maximu m p ossible losses du e to environmentaldam age, unless the social cost to d o so is un acceptablylarge; this is known as the safe minimum standard app roach. In such cases, the approp riate approach tothe an alysis is one of cost-effectiveness rather than cost-benefit; that is, the issue becomes on e of find ing thecheapest and most effective way of achieving theconservation objective or some other goal. Note thatthe cost-effectiveness approach does identify the mostefficient way of reaching a goal, but d oes not tell you if the expected benefits justify the costs. Answers to thelatter question mu st rely on informed jud gment andcommon sense.

Valuation techniques

Incorporating environmental imp acts iden tified in theEA into the p roject analysis is a two-step p rocess.First, one has to und erstand what are the imp acts. Thisinformation is provided by a traditional EA. Second,one has to estimate the v alue of the impacts (wherefeasible and app ropriate) in m onetary terms todetermine their relative economic importan ce, andassess the benefits and costs of various alternatives.

This section focuses on valuation techniques, and theiruse in p roject ana lysis.1 In most cases, the techniqueshave tw o parts: measuring the p hysical imp act, andthen assigning a value to that imp act.

As can be seen in figure 1, a nu mber of valuationtechniques are potentially applicable to each categoryof value. Figure 2 prov ides a simp lified gu ide to

choosing an app ropriate techniqu e for a givensituation. The flow chart begins w ith an environm en-tal impact and asks if there is a measur able change inprod uction, or a change in environm ental quality.Depend ing on the an swer, it traces out d ifferentpossible scenarios and their possible impacts. It show sthe most common ly-used techniques u sed to estimatemonetary values for each kind of imp act. As anexample, consider the case of an aquaculturedevelopm ent pr oject which will reduce the area of man grove forest. The EA might identify redu cedwater qu ality du e to loss of the man grove forests’water-filtering services and loss of habitat as adverseimpacts. Unless the man grove forests are directlyharvested, techniques such as change-in-prod uctivitywill clearly not be very u seful. Several techniqu esmight be used to value the red uction in w ater quality;some are based on the cost of obtaining clean w ater byother means (for example, replacement or relocationcost), wh ile some are based on th e consequences of redu ced w ater qu ality (increased sickness or d eath).The specific choice of techn ique w ill dep end on thesituation and on data availability. Likewise, the loss of habitat could be valued in a num ber of ways,dep ending on the specific natu re of the situation.Figure 2 is only intended as an ind icative guide;dep ending on the specific conditions encountered and

on the d ata available, other techniqu es may bepreferable in a given situation.

I. Valuing Changes in Outputs and D irect Costs

Change in output of marketable goods

In man y cases, the environmen tal effects of pr ojectsman ifest them selves (at least in part) in changes inout pu t of marketable goods: loss of forest, forexample, results in th e loss of timber p rodu cts, of fuelwood, of fodder (whether collected or eaten onsite by livestock grazed in the forest), and a variety of

non-timber prod ucts such as fruit, herbs, andmu shrooms. In cases such as these, the value of theun intended benefits and costs can be estimated byusing the simp le techniqu e of valuing th e change inoutp ut caused by the p roject. This app roach is oftenreferred to as the change-in-productivity app roach. InCroatia, for example, reforestation activities under theCoastal Forest Reconstru ction and Protection Projectwere estimated to result in increased w oodproduction, which would be harvested at variousintervals in th e future. Using the increased w ood



5

Environmental impact

Change in environmental

quality

Use

change-in-

productivity

approach

Habitat

Measurable change in

production

Use surrogate

market

approaches,

apply shadowprices to change

in production

Yes

Nondistorted market

prices available?

No

Yes No

Opportunity-

cost approach

Replacement-

cost approach

Land-value

approach

Contingent

valuation

Cost-

effectiveness of

prevention

Preventive

expenditures

Replacement/

relocation costs

Air and w ater quality Health effects Recreation

Aesthetics,

Biodiversity,

Cultural,

Historical

Assets

Contingent

valuation

Contingent

valuation

Travel costDeathSickness

CEA of

prevention

Human

capital

Loss of

earnings

Medical

costs

outp ut (in terms of both quantity and quality), theexpected p rices at time of harvest, and a discount rateof 10%, the presen t value of increased w oodprod uction was estimated at between 2.5US$/ ha and82US$/ ha, d epend ing on the site. Box 1 belowprovid es an ad ditional examp le of the use of thistechnique, to value the d amage to agricultureresulting from flooding an d d amage to irrigationcaused by watershed d egradation in Haiti. Evenwh en pr ices cannot be observed (for example,prod ucts harvested for home consum ption), there aregenerally-accepted and reliable ways to estimate thevalue of the prod ucts (for example, by using the v alueof close substitut es or th e cost of collection).

The biggest difficulty in valuing such impactsgenerally arise from m easuring the amou nts of goodsbeing p roduced and in predicting how these amountswill change w ith and withou t the p roject. The EA canbe very h elpful in arriving at estimates of these

changes. Once these estimates are in h and , valuing thechanges is usually relatively simple.

Cost of illness and human capit al

Many environm ental imp acts, such as air and w aterpollution, have repercussions for huma n health.Valuing the cost of pollution-related morbidity(sickness) requires information on the u nd erlyingdam age function (usually some form of a dose-response r elationship) w hich relates the level of

pollu tion (exposur e) to the d egree of health effect aswell as information on how the p roject will affect thelevel of pollution. The costs of an increase inmorbidity d ue to increased pollution levels can thenbe estimated using information on various costsassociated with the increase in morbidity: any loss of earnin gs resulting from illness, medical costs such asfor doctors, hosp ital visits or stays, med ication, andany other related out-of-pocket expenses. Thisappr oach is symm etric: the benefits of actions thatredu ce the level of pollution an d hence of morbidityare estimated in the same way.

This app roach was ap plied in Santiago, Chile,wh ere a p ackage of air p ollution control investmentswas evalua ted in term s of the health benefits fromreduced levels of particulates, volatile organic

Figure 2. Choice of valuation technique

Source: Dixon an d Bojö in Dixon et al., 1994.

Table 2. Annualized benef its and costs of air

pollution control strategy in Santiago, Chile(US$ millions)

Program Net

component Benefits Costs benefits

Fixed sources 27 11 16

Gasoline vehicles 33 14 19

Buses 37 30 7

Trucks 8 4 7

Control strategy 108 60 48

Source: World Bank, 1994.



6

compou nd s (VOC), and nitrous oxides (NOx) in thecity. As show n in table 2, the analysis estimated thatthe ben efits of the overall strategy exceeded costs byabout 70 percent, with th e benefits of individualcomponen ts of the strategy exceeding th eir costs bybetween 20 percent and 140 percent (World Bank,1994; Ostro a nd others, 1996). The costs of d oing th istype of study, both in money and time, can be

considera ble. In the case of Santiago, how ever, sincedata were available for man y variables, it waspossible to prod uce good results in a timely man ner.The details of the analysis are presented in th e pap erscited earlier.

The estimates obtained in this mann er areinterpreted as lower-bound estimates of the presum edcosts or benefits of actions wh ich result in changes inthe level of morbidity, since this method disregardsthe affected individuals’ preference for health versusillness, for which they m ay be willing to pay. Also, themethod assumes individu als treat health asexogenous and d oes not recognize that ind ividualsmay u nd ertake defensive actions (such as usingspecial air or w ater filtration systems to r edu ceexposure to p ollution) and incur costs to redu cehealth risks. In add ition, the method excludesnon-market losses associated with sickness, such asthe pain and suffering to the ind ividual and to othersconcerned, and restrictions on non-work activities.Also, the app roach ignores other, non-health benefitsfrom redu cing p ollution levels such as am enity values(better views), productivity losses, and ecosystemimpacts.

When th is approach is extended to estimate the

costs associated with pollution-related mortality(death ), it is referred to a s the human-capital approach.It is similar to the change-in-prod uctivity ap proach inthat it is based on a dam age function relatingpollution to p rodu ctivity, except that in th is case theloss in p rodu ctivity of human beings is measured . Thehu man-capital approach is an extension of the morestanda rd hu man capital theory which relates thedem and for education to its potential payoff in termsof expected life-time earning s. Because it redu ces thevalue of life to the p resent value of an individu al’sfuture income stream, the hu man -capital appr oach isextremely controversial when a pp lied to mortality.

We recommend , therefore, that this app roach not beused . In man y cases, the costs and benefits of activities that a ffect mortality can be exp ressed interms of changes in the nu mber of deaths (withoutmon etary values) and a cost-effectiveness ap proachused . Alternatively, the US/ OECD type estimates of the va lue of a statistical life based on w illingness topay estimates (which includes mu ch more that justlost produ ctivity and is often 5 to 10 or more timeslarger than th e straight hu man -capital estimates)might be u sed, adjusted u sing relative per capita GNP

(see World Bank, 1996c, for m ore on these estim ates).In general, estimating monetary values for mortalityis a comp licated , quite subjective pr ocess that has tobe used with great caution and transpa rency.

Cost -based approaches

When th e benefits of a given environmental impa ct

cannot be estimated directly, information on costs canbe used to prod uce valuable information. Forexample, an order of magn itude estimate of thepoten tial costs (or savings) to society from a chan ge inan environm ental problem, can be obtained by u singthe cost of reducing or avoid ing the imp act, or the costof replacing the services provided by the environm en-tal resource. The major und erlying assu mp tions of these appr oaches are (i) that the natu re and extent of ph ysical dam age expected is p redictable (there is anaccurate damage function available), and (ii) that thecosts to replace or restore dam aged assets can beestimated with a reasonable degree of accuracy. It isfurther assum ed that th ese costs can be u sed as avalid proxy for the cost of environm ental dam age.That is, the replacement or restoration costs areassumed not to exceed th e economic value of theasset. These are strong assum ptions and may n ot bevalid in all cases. It simp ly may cost mor e to replaceor restore an asset than it w as w orth in the first place.For example, cultivated hillsides may be eroding andthere m ay be method s available (terracing, changes incropping p atterns) to redu ce or prevent th e erosion.Each of these p reventive measures h as a cost,how ever, and it is the responsibility of the analyst todetermine if the total costs of preven tion are greateror less than the benefits of preventing erosion. In

some case, the costs of erosion contro l may be so high(and/ or the benefits from controlling erosion may beso low) that erosion control measures w ould be aninapp ropriate u se of scarce resources.

In some cases, there may also be more cost-effectiveways to compensate for environmental dam age thanto rep lace the original asset or restore it to its originalcondition, and these substitution p ossibilities areignored w ith the u se of this technique. If substitutesare available, the method will likely overestimate thevalue of the dam aged or destroyed asset. Because of this, these methods are generally though t to provide

an upper-bound estimate of the benefits of measu restaken to prevent the d amage from occurring.

Replacement cost. The replacement cost appr oachis often u sed as an estim ate of the cost of pollution.This approach focuses on p otential damage costs asmeasured by ex ante engineering or accountingestimates of the costs of replacement or r estoration if dam age from pollution w ere to occur. For example,the costs of air pollution -related acid deposition inurban areas could be ap proximated by the restoration



7

and replacement costs from d amaged infrastructure.Similarly, the cost of restoring a river or a wetlandcould be u sed as an estimate of the costs of environmen tal damage to these natural assets. Notethat this appr oach provides only a partial measure of dam ages caused by p ollution.

For example, the rep lacement cost technique can be

used to estimate the costs of pollution of potablewater sup plies. Pollution of w ater resources byagrochemicals is comm on in man y countries,

resulting in dr inking wa ter below acceptable healthstanda rds. Quan tifying the aggregate health impacts,

or estimating a da mage fun ction for this type of waterpo llution, is often d ifficult because of the complexrelationship betw een ambient qu ality, exposu re, and

illness. How ever, order of mag nitud e estimates of thecost of providing alternative safe water sup plies often

are possible. The incremental investment cost of alternative water supp ly usually can be d erived fromprop osed water sup ply investment projects

containing d ata on total investment cost and thequan tity of incremental water sup ply. Using thereplacement cost technique, an estimate of the annu al

cost of pollution of potable water can be m ade. Forinstance, assuming an estimated investment cost for

alternative water supply on the order of US$0.5–1.0per cubic meter, and current level of total potable

water use at about 100 million cubic meters per year,the cost of pollution of potable water wou ld be

appr oximately US$50–100 million per yea r at curr entlevels of water u se. Box 1 pr ovides an examp le of the

use of replacemen t cost to value the benefits obtainedfrom redu ced flooding thanks to w atershed p rotectionin Haiti.

The replacement cost technique is particularlyuseful to assess the costs associated w ith dam age totangible assets, the repair and replacement costs of wh ich are easily measurable. This information canthen be used to decide if it is mor e efficient to allowthe dam age to occur and pay th e replacement costs orto invest in preven ting the p ollution in the first place.The techniqu e is less useful, however, for very un iqueassets, such as historical or cultural sites and un ique

natur al areas, wh ich cannot be replaced an d cannoteasily be restored, and about w hich restoration costsare uncertain.

Box 1. Costs and Benefits of the Pic Macaya National Park in Haiti

The economic analysis of the N atur al Reserve Man -

agement compon ent of the Forest and Parks Protec-

tion Technical Assistance Project in th e Repu blic of

Haiti provides an example of the use of several valua-

tion techniques in a data-scarce environment (World

Bank 1996d). The m ain ob jective of th e p roject is to

pr otect critical remnan ts of Haiti’s forest ecosystems,

includ ing the Pic Macaya N ational Park. By pr otect-

ing this area, important benefits are expected in terms

of (i) protecting some of the last remn ants of the

Hispaniolan moist forest ecosystem, which is consid-

ered regionally outstand ing and as having the high-

est priority for conservation a t the regional scale;

(ii) preserving the potential for ecotourism develop-

ment; (iii) protecting d own stream areas, wh ich in-

clude one of the country’s main irrigated areas, from

dam age from flooding and sedimentation; and (iv)

helping to regulate down stream water flows.

• Change in p roductivity. Protecting the P ic Macaya

watershed will help r edu ce damage to irrigation

systems down stream, both from siltation and from

redu ced dry-season flow, w hich is forcing areversion to rainfed cultivation and a switch to

lower-value crops. Returns from rainfed p rodu c-

tion are about 200-800US$/ ha/ year lower than for

irrigated prod uction, dep ending on the crops

being planted. Combined with estimates of the

effects of damage to irrigation infrastructure on

the area irrigated, the present value of the benefits

of avoided r eduction in p rodu ctivity, relative to

the no-p roject case, wer e estimated to be abou t

US$2–7 million (the wid e rang e reflecting th eweakness of the und erlying d ata).

• Replacement cost. The costs of dam age to irriga-tion and other infrastructure w ere estimated usingtheir rep lacement costs (2,500 to 5,000 US$/ km forirrigation canals an d 3,500 to 7,000 US$/ km forroads). This resulted in an estimated benefit from

avoid ed d ama ge, relative to the no-pr oject case, of about US$2.5–5 million.

• Opportunity Cost. Protecting the Pic Macaya areaalso means forgoing its use as agricultural landand the benefits of harvesting stand ing timber. Byusing crop prod uction budgets developed for thesurrou nd ing area, the potential value of the PicMacaya area for agriculture can be estimated.Assuming that half of the area still und er forest atPic Macaya (abou t 3,500ha) is suitable for agricul-tural u se (the rest being too steep or inaccessible),the present value of forgone agricultural pr odu c-tion is about US$175 thousand. This relatively lowestimate is du e to the un sustainability of agricultureun der cond itions such as th ose at Pic Macaya. Theforegone wood harvesting benefits could not beestimated for lack of data on stand ing timber, butwere expected to be relatively low du e to the hightransp ort costs of extracting tim ber from th e area.

Table 2 sum mar izes the results of the econom icanalysis of Forest and Parks Pr otection Techn ical As-sistance Project, wh ich covered Pic Macaya and twoother National Parks.



8

Relocation cost. Similar to the rep lacement costapproach, the relocation cost approach uses estimatedcosts of a forced relocation of a natu ral or physicalasset due to environm ental dam age. For example, theconstruction of brackish water p ond s in a coastal areaof Thailand resulted in th e discharge of salt w aterinto nearby freshwater streams traditionally u sed forirrigation and dom estic water supp ly. Part of the

environmental costs associated w ith this d ischarge isthe need to relocate the intakes for both irrigationfacilities and d omestic water su pp ly. The costs of relocating these intakes can th en be comp ared to thealternative costs of redesigning an d constructingdrainage canals from the brackish water p ond sdirectly to th e ocean, to obviate the need for dischargeinto the nearby freshwater streams.

Ano ther recent examp le of the relocation costapp roach can be found in China, where thegovernm ent d ecided to relocate Shanghai’s w aterintake. Shang hai, a city of 14 million, was facing

increasing d ifficulties in ensur ing a safe potable wa tersup ply. The lower Hu angp u River was heavilypolluted by w astes from ind ustries and ships, and bymu nicipal sewage. The cost of moving the m un icipalwater intake u p river to take ad vantage of cleanerwater su pp lies, redu ced pre-use treatment costs, andlower risk of major pollution incidents w as estimated .This was then compared to subjective estimates of thecost to clean u p the ind ustries and p lants dischargingwastes into the river — that is, to clean up the existingpollution. The analysis did n ot consider the ben efits of a clean, safe w ater sup ply, how ever. The costs of relocation were jud ged less than the costs of cleanup ,

so the relocation option w as chosen.

Opportunity cost. In some cases it is decided toprotect a particular resource and forego otherdevelopm ent options. The term opportunity cost refersto the value of these lost econom ic opp ortunities dueto environm ental protection. It is, therefore, a m easureof the cost of environmen tal protection in terms of developm ent benefits foregone. Box 1 pr ovides anexample of the use of this app roach in Haiti. Sincethis app roach gives no information on the expectedbenefits from pr otection, society mu st still decide if the op portu nity cost of conservation is acceptable or

not. This is a very p owerful technique, how ever, sinceit clearly iden tifies the expected econom ic cost of pr otection to society. In ma ny cases, this amount isactually very sm all; in other cases, this informa tioncan be used to mobilize other sources of fun ds tocompensate individu als or society for the op portu nitycost of protection. The Global Environm ent Facility(GEF) and other don ors may be w illing to p rovidegran t fund s to cover these typ es of costs, especiallywh en the benefits prod uced are important at theglobal level.

II. Valuing Environmental Amenities: Recreation,

Nature, and Biodiversity

Often, the environmental good or service beingvalued is not traded per se in the market place.Examples of these amenity-type services includerecreational sites and the p reservation of biodiversity.A nu mber of valuation techniques exist that can be

used to place mon etary values on these resources andthis information, in turn , can be incorporated into amore conventional benefit-cost analysis.

Hedonic anal ysi s

We know that env ironmental qu ality affects the pricepeople are w illing to pay for certain goods or services.Ocean front hotels, for example, charge d ifferent ratesdep ending on the view (rooms with ocean views costmore than th e same size room w ith a “garden” view—usually a nice way of saying the park ing lot!).Hed onic mod els have been wid ely used to examinethe contribution of different attributes to prices for

housing an d to w age levels, includ ing thecontribution of environmental qu ality.2 Manyobserved p rices for good s are p rices for bund les of attributes. For examp le, prop erty values depen d onph ysical attributes of the dw elling (such as nu mberand size of rooms, amenities such as plum bing,cond ition); on th e conven ience of access toemp loyment, shopp ing, and ed ucation; and on anu mber of less tangible factors such as en vironmentalquality. Since each hou se will d iffer slightly fromothers, the influen ce of the var ious factors on its pricecan be br oken d own statistically, prov ided sufficientobservations are available.

This approach is of interest because m anyenvironmental d imensions are likely to be embod iedin property values. A home in a neighborhood w ithlow air p ollution, for example, should sell for m orethan a similar home in a neighborhood with highambient air p ollution. Hed onic techniqu es allow thiseffect to be m easured, h olding other factors such assize and amenities constant. In essence, the techniqueestimates the implicit prices for various attributes,wh ich together mak e up the sale price.

When ap plied to housing da ta, this appr oach isoften r eferred to as the property value approach; when

app lied to w age da ta, it is generally referred to as thewage differential app roach. In Croatia, for example, ahedon ic analysis was used d uring prep aration of theCoastal Forest Reconstru ction and Protection Projectto help estimate the land scape benefits of reforestation. Analysis of hotel room prices showedthat room s w ith views of forested land scapes cost, onaverage, about 3–6US$/ day m ore than rooms inhotels in areas w ithout su ch views. The challenge of both of these techn iques is to correctly specify therelevant variables and the functional forms.



9

Hed onic methods requ ire observations of the pricesof goods and of the attributes of these goods. Toenab le the effect of the m any d ifferent factors to bedistinguished, large data sets are usually needed.Because of their data intensity and the need for openreporting of prices, the application of these techniqueshas had limited (but often successful) application indeveloping coun tries.

Travel cost

The travel cost (TC) meth od is an exam ple of atechnique that attempts to ded uce value fromobserved behavior.3 It uses information on visitors’total expend iture to visit a site to derive their d emandcurve for the site’s services. The techniqu e assum esthat changes in total travel costs are equivalent tochanges in adm ission fees. From this deman d curv e,the total benefit visitors obtain can be calculated .4

The TC method was d esigned for and has beenused extensively to value the benefits of recreation.The TC method d epends on nu merous assum ptions,man y of wh ich are p roblematic in the context of international tourism. The basic techniqu e generallyassumes th at travel cost is prop ortional to distancefrom the site and that p eople living at the samedistance from the site have identical preferences.While these assump tions are often v alid in the case of national tourism (tourism w ithin a country), neitherassump tion may be v alid in the case of internationaltourism. The technique also assumes a single-pu rposetrip and encounters difficulties when trips h avemu ltiple pu rposes. It should a lso be borne in mindthat t he resu lting estimates are site-specific. The m ain

app lication of TC method s in d eveloping countries isto valuing tourists’ willingness to pay for nationalparks. In Zimbabwe, a TC analysis of tour ists foundthat th ey d erived abou t US$610 per p erson of benefit(consum er’s surp lus) from their trip, of which aboutUS$275 was obtained from visiting national parks(Brow n, War d , and Jansen , 1995). In Costa Rica, thebenefit obtained by tourists visiting the p arks andreserves was about US$1,150 per person (Mekhau sand Lober, 1996).

Contingent valuat ion

Unlike techniques wh ich u se observed data, theContingent Valuation (CV) technique relies on directquestioning of consumers (actual or potential) todetermine their willingness-to-pay (WTP) to obtain anenvironmental good.5 A d etailed d escription of thegood involved is provided , along w ith details abouthow it will be provided . The actual valuation can beobtained in a nu mber of ways, such as askingrespond ents to name a figure, having them chosefrom a num ber of options, or asking them w hetherthey w ould p ay a specific amou nt (in which case,

follow-up qu estions with higher or lower amou nts areoften used).

CV can, in p rinciple, be used to value anyenvironmental benefit. Moreover, since it is notlimited to d edu cing p references from available d ata, itcan be targeted qu ite accurately to ask about thespecific chan ges in benefits that the proposed pr oject

wou ld result in. This also means that, withapp ropriately-word ed qu estions, CV can provide anall-encompassing estimate of the perceived costs andbenefits of environm ental changes, in contrast to othertechniqu es which, as noted above, often only p rovidea p artial estimate of environm ental costs and benefits.Because of the need to d escribe in d etail the goodbeing valued, interviews in CV surveys are often quitetime-consuming. It is also very imp ortant th at thequestionnaire be extensively p retested to avoidvarious sources of bias. CV methods have been thesubject of severe criticism by som e ana lysts (see, forexample, Hau sman, 1993). A “blue-ribbon” pan el wasorganized by the US Departmen t of Interior followingcontroversy over the use of CV to value dam agesfrom th e 1989 Exxon Valdez oil spill. The rep ort of thispan el (NO AA, 1993) concluded that CV can p rovideuseful and reliable information w hen u sed carefully,and th e panel provided gu idance on doing so. Thisreport is generally regard ed as au thoritative onapp ropriate use of the techniqu e.

In some cases it is possible to do both a CV and aTravel Cost analysis for the sam e valuation q uestion.This allows the analyst to “cross check” the twoestimates and get an idea of the robu stness of theresults. This app roach has been used a nu mber of

times in determining the consum er’s surp lus of safarivisitors to game p arks in East Africa, withsurprisingly consistent results. It is particularly usefulsince one measu re is based on observed b ehavior (thetravel cost app roach) while the other is based onhyp othetical survey information (the CV app roach).Box 2 provid es some examp les of the app lication of CV method s in the context of Bank op erations.

Benefit s t rans fer

Benefits transfer is not a methodology per se, butrather refers to the u se of estimates obtained (bywh atever method ) in one context to estimate values in

a d ifferent context.6 For example, an estimate of thebenefit obtained by tou rists viewing wildlife in onepark might be u sed to estimate the benefit obtainedfrom view ing w ildlife in a different p ark. This has, infact, been d one in East Africa where estimat es of theconsumer’s surplus for safari visitors in one countryhave been u sed to estimate the benefits to new safaridestinations in nearby countries. The m ain attractionof benefit transfer is that it prov ides a low-cost way of estimating values w hen time or resources do notallow fuller valuation studies, or wh en the good or



10

service to be valu ed h as not y et been created (forexample, a new safari-tourism destination nationalpark) so that th ere are no u sers to survey. Thisapp roach also has considerable risks, how ever. Forman y reasons, estimates d erived in one situation canbe inapp ropriate in an other. As a result, benefitstransfer has been the subject of considerablecontroversy in the economics literature. A consensus

seems to be emerging that ben efit transfer can p rovidevalid and reliable order-of-magnitud e estimatesun der certain cond itions:• The commodity or service being valued have to be

very similar at the site wh ere the estimates w eremad e and at the site wh ere they are app lied; and

• The populations affected m ust be very similar.

Of course, the original estimates being transferredmu st themselves be reliable for any attemp t attransfer to be mean ingful. The estimates of the valueof timber p rodu cts prod uced by reforestation inCroatia cited previously indicate the limitations of

benefits transfer techniques: even in a seeminglyhom ogeneous area, environmental benefits can va ryby an order of m agnitud e. The likelihood th at benefitstransferred from another a rea will be approp riate is,therefore, extremely low. Conversely, the use of CV tovalue tourists’ willingness to p ay for forestedland scapes in Croatia (see Box 2) pr ovides an examp leof a situation in wh ich benefits transfer can be usedwith consider able confidence. Since tourists visitingCroatia are drawn from the same pool as thosevisiting other Med iterranean resort areas, and since

forested landscapes are relatively similar, estimates of tourist w illingness to pay obtained in one location canbe used in another. The benefits transfer techniqu eshould be u sed w ith caution, therefore, and onlywhen no site-specific measures are possible.

Incorporating environmental costs and benef itsinto economic analysis

The choice of techniqu e dep end s on the specificproblem being stud ied. Except in very simp lesituations, howev er, it is likely that a variety of techniqu es will be necessary to estimate th e full rangeof benefits. Moreover, wh ere substantial investmentsare contem plated , it migh t be desirable to cross-check estimates by d eriving th em from m ultiple sources.

Once the various environmental imp acts have beenidentified and the benefits and costs of variousalternatives assessed, this information can beincorporated into th e broader economic analysis of

the p roject. This is usu ally don e in a benefit-costframework, w hereby the streams of benefits and costsof a pr oposed project (including both d irect p rojectinpu ts and outp uts, as well as environmental imp actsto the extent that they can be id entified andmonetized) are comp ared over some p eriod of time.The three m ain decision criteria used in benefit-costanalysis are: net present value (NPV), int ernal rate of return (IRR) and benefit-cost ratio (BCR). All of thesecriteria rely on the concept of discoun ting a stream of benefits and costs which occur at different times over

In recent years, there has been increasing u se of con-tingent valuation (CV) techniques to value environ-mental goods and services, in both developed and de-veloping countries. Recent examples carried out inthe context of World Bank op erations include:

• In Madagascar, CV was u se to value the cost tolocal communities of refraining from using thearea of the Mantadia National Park, establishedun der the Bank-financed Forest Managem ent andProtection Pr oject, to gather a variety of p rodu cts(Kramer and others, 1995). Local residents wereasked w hether they w ould b e willing to acceptspecified levels of comp ensation (denom inated inun its of rice, the local staple food ) to forgo access tothe forests in the Park. Their responses were u sedto estimate a mean value per h ousehold of about$108—very similar to the valu e obtained by oth ermeans. A separate CV surv ey of internationaltourists showed they would be willing to pay abou t

$65 more p er tour ist for access to the n ew Par k.

• In Croatia, CV was used to estimate tourists’willingness to pay for restoration of forestedlandscapes in coastal areas that were destroyed

Box 2. Appli cations of contingen t valuation in Bank operations

du ring the w ar, as part of the economic analysis

for the Coastal Forest Reconstru ction and Pr otec-

tion Pr oject (World Bank, 1996b). Two par allel

surveys w ere carried out, one amon g tourists in

Croatia itself and one am ong foreign tourists at

similar destinations in Italy. Both showed a

willingness to p ay for forested landscapes of about

US$3/ person/ day.

• In Morocco, CV was u sed to estimate tourists’

willingness to pay for conservation an d rehabilita-

tion of the h istoric Medina at Fès, a UNESCO

World H eritage site that is rapidly d eteriorating.

The survey d istinguished the w illingness to pay

for impr ovem ents of visitors of the site itself (wh oderive use value from visiting the site) from th ose

of other visitors to Morocco (who only derive

existence value an d option value). Visitors to th e site

itself were foun d to be willing to p ay as mu ch as

US$70 each in th e form o f increased tou rist taxes

or ad mission fees for impr ovements aimed at

preserving and imp roving conditions in the

Medina, wh ile non-visitors w ould be willing to

pay abou t US$30 each.



11

the d uration of the p roject being evaluated.Discounting pu ts all of these costs and benefits into acommon time frame to allow for more accuratecomparison. Add ing environmen tal costs and ben efitsdoes not change the method of analysis and guidan ceis available in variou s Bank p ub lications, such as the

Handbook on Economic Analysis of Investment Operations(World Bank, 1996a). How ever, several aspects of

project analysis need p articular attention w henenvironmen tal problems are present. The impacts of man y environmen tal changes, wh ether positive ornega tive, are often on ly felt in the fut ur e, long afterthe activity w hich caused the change h as ceased.Similarly, effects are often felt far beyond thebou nd aries of the p roject itself. Special attention m ustbe given, therefore, to the temporal an d spatialboundaries of the analysis.

Temporal Boundaries. Since environmentalimpacts extend long beyond the norm al life of theproject, it is importan t to extend the time h orizon of the an alysis so as to include all the benefits and costsassociated w ith environm ental impacts, even if theygo further into the futu re than the norm al life of apr oject. The effective length of the time h orizon of ananalysis is determined by both the nu mber of actualyears included in the analysis and the discount rateused. Using too short a time horizon effectivelyignores many environmental imp acts, both p ositiveand negative. For examp le, an activity that results inthe p ermanen t loss of a fishery shou ld includ e in theanalysis the present value of the entire futu re loss of that resou rce, even if the activity itself only lasts for afew years.

The choice of the app ropriate discount rate is also animportan t d ecision, since a high discount rateeffectively red uces to zero th e p resent value of benefits and costs that occur man y years in the futu re.This does not imply that a different discount rateshould be use wh en environmental impacts areimportan t; in fact, it is always w rong to mix discountrates within on e analysis. Given the imp ortance of thediscount rate, however, it is important to d osensitivity analysis using different discount rates. Thiscan yield useful information to the d ecision makerwh en comparing alternatives that have very d ifferenttime p rofiles of benefits and costs (includ ing

environmen tal ones).

Two ap proaches are p ossible to incorporating long-term en vironmental effects. One ap proach is to extendthe time h orizon of the entire analysis to cover aperiod long enou gh to include all environmentaleffects (at least to the point w here, given th e discoun trate, any add itional environmental impact has nofurth er effect on the analysis, typ ically after 50-100years). Alternatively, the present value of the entirefuture stream of environmental imp acts (benefits and

costs) can be comp uted , and th en incorporated in thenorm al project analysis framew ork in the sam e waythat a residu al value estimate for a long-lasting capitalgood would be.

Spatial Boundaries. When environmental effectsare present, careful thou ght m ust also be given to theappropriate spatial boundary of the analysis. The

analyst often has to look far beyond the geograph icalbound aries of the p roject itself, especially when w ateror air pollution is involved . In other cases, globalaspects may be importan t and requ ire a furtherexpansion of the “accounting stance” of the analysis.

With both sp atial and tem poral externalities, theimportan t rule is to be transpar ent in the assump tionsbeing mad e, and explicitly state the ad justmen ts thathave been u sed in defining the analytical bound ariesfor the project—both in space and over time.

Whatever the actual techniques used to estimatethe value of environmen tal benefits or dam ages, animportan t point that should be borne in mind is thelikelihood of underestimation. Inevitably, some typesof value will prove imp ossible to estimate u sing anyof the available techniqu es, either becau se of lack of da ta or because of the d ifficulty of extracting thedesired information from th em. To this extent, anyestimates of value w ill und erestimate th e total value;the estima tes of project benefits will, therefore, beconservative, w hile estimates of costs will beoptimistic. That some environmen tal benefits cannotbe quantified, how ever, does not mean th at theyshould be ignored. Rather, any unq uan tified benefitsshould be described qualitatively to the extent

possible. Table 3 illustr ates how a mix of quan tifiableand un quan tifiable benefits might be presented in atable. Several of the benefits that wer e not qu antifiedin this instance are in fact po tentially quan tifiable,using the techniques indicated, but data and bu dgetconstraints prevented this. Since the quantifiablebenefits were large enou gh to justify the prop osedinvestments by themselves, devoting ad ditionalresources to quantifying th e remaining benefits was jud ged to be unnecessary .

Another potential problem which must always beconsidered is the risk of double-counting . The

likelihood that total ben efits w ill be u nd erestimatedbecause some benefits cannot be m easured iswell-recognized. Less well recognized is the oppositedan ger: that benefits (even if accurately measured )might be overestimated because some benefits arecounted twice. An example w ill illustrate theproblem. Supp ose that the p roject aims to red uce airpollution at the site by relocating or sh utting d ownpollu ting activities. The benefit of this red uction couldbe estimated by pred icting the redu ction in theprevalence of respiratory illnesses and valued using



12

the red uction in treatment costs. At the same time,sup pose that a hed onic technique is used to estimatethe value of overall environmental quality. Since airpollution is part of environm ental quality, treatingthese two estimates as though they d escribed separateproblems and ad ding the correspond ing benefitstogether wou ld be inaccurate.

A final point. One shou ld not lose sight of the

beneficiaries and stakeholders involved in an y p roject.Because of the existence of externa lities, the costs andbenefits of various activities to ind ividu al actors canvary su bstan tially. The socially desirable outcom e oraction may w ell not be p rivately beneficial. Thereforeit often is imp ortant to carry out an app ropriateana lysis of pr ivate retu rns (“financial analysis”) inorder to und erstand the individu al perspective. Onlyif this is done w ill it be possible to iden tify the policiesor m easures necessary to reconcile the ind ividuallyand socially desirable actions.

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ADB. 1996. Economic Evaluation of Env ironmental

Impacts: A W orkbook . Manila: Asian Developm ent

Bank.

Braden, J.B. and C.D. Kolstad (eds). 1991. Measuring

the Demand for Environmental Quality . Contribu-

tions to Economic Analysis No.198. Amsterdam:

North-Holland.

Brookshire, D.S., and H.R. Nell. 1992. “Benefit

Transfers: Conceptual and Empirical Issues.”

Water Resources Research, Vol.28 No.3, March,

pp.651-655.

Brow n, G., M. Ward , and D.J. Jansen . 1995.

“Captu ring the Value of National Parks in

Zimbabw e.” ZWLMEC Project. World Bank.

Table 3. Quantified and unquantified benefits of protecting national parks in Haiti

Amount ValuationBenefits (US$ million) Comments technique

Costs

Project expenses 6 From PAD

Forgone agricultural income 2 Opportunity costForgone logging income ? Unlikely to be large due to high Opportunity costtransport costs

Total 8

On-Site benefits

Biodiversity conservation ? Regionally outstanding ecosystem CV with many endemic species

Tourism potential ? Considerable potential, but will CV, TCrequire additional investment

Sustainable harvest of ? Limited potential due to high Change in productivity timber products transport costs

Non-timber products ? Considerable potential, but no data Change in productivity

exist to estimate incremental benefits

Sub-total

Off-site benefits

Reduced damage to irrigation 624 Siltation and reduced dry-season flow Change in productivity reduce yields and area irrigated

Reduced damage from flooding 46 Flooding damages standing crops and Replacement costinfrastructure

Increased water availability ? Reduced dry season flow endangers Replacement costthe populations water supply

Sub-total 10-30

Total quantifiable benefits 10-30

Notes: All amounts are expressed in present value terms, discounted at 10%.

Source: Adapted from World Bank, 1996d.



13

Carson , R.T., 1991. “Con structed Markets.” In J.B.

Braden and C.D. Kolstad (eds), Measuring the Demand for Environmental Quality . Contributions to

Economic Analysis No.198. Amsterdam: North-

Holland.

Dixon, J.A., L.F. Scur a, R.A. Carp enter, and P.B.Sherman . 1994. Economic A nalysis of Environmental

Impacts. London: Earthscan.

Dixon, J.A., and P.B. Sherman. 1990. Economics of Protected A reas: A N ew Look at Benefits and Costs .

Washington: Island Press.

Gittinger, J.P. 1982. Economic Analysis of Agricultural

Projects. Second ed ition. Baltimore: John s Hop kins

University Press.

Hanem ann , W.M. 1992. “Preface.” In S. Navru d (ed .),Pricing the European Environment . Oslo:

Scandinavian University Press.

Hausman, J.A. (ed.). 1993. Contingent V aluation: A

Critical Assessment . Contributions to EconomicAnalysis No.220. Amsterdam : North-Holland.

Hufschm idt, M.M., D.E. Jam es, A.D. Meister, B.T.

Bower, and J.A. Dixon. 1983. Environment , NaturalSystems, and Development: An Economic Valuation

Guide. Baltimore: John s Hop kins Univer sity Press.

Kramer, R.A., N. Sharma, and M. Munasinghe. 1995.

“Valuing Tropical Forests: Methodology and Case

Stud y of Madagascar. Environment Pap er No.13.Washington: World Bank.

Mekhaus, S., and D.J. Lober. 1996. “Interna tional

Ecotourism an d the Valuation of TropicalRainforests in Costa Rica.” Journal of Env ironmental

Management , Vol.47, pp .1-10.

Mitchell, R.C., and R.T. Carson. 1989. Using Surveys to

Value Public Goods: the Contingent Valuation Method .Washington: Resources for the Future.

Navru d, S. (ed.). 1992. Pricing the European

Environment . Oslo: Scand inavian University Press.

NO AA, 1993. “Report of the N OAA Panel on

Contingent Valuation.” Federal Register , Vol.58

No.10, Friday January 15, pp.4602-4614.

Ostro, B., J.M. Sanchez, C. Ar and a, and G.S Eskeland .1996. “Air Pollution an d M ortality: Results from a

Study of Santiago, Ch ile.” Journal of Exposure

Analysis and Environmental Epidemiology . Vol.6No.1, pp.97-114.

Palmquist, R.B. 1991. “Hed onic Methods.” In J.B.Braden and C.D. Kolstad (eds), Measuring the

Demand for Environmental Quality. Contributions toEconomic Analysis No.198. Amsterdam: North-Holland.

Pearce, D.W., and J.W. Warford . 1993. World Without End: Economics, Environment, and Sustainable

Development . Oxford : Oxford Un iversity Press.

Rand all, A. 1991. “Total and Nonu se Values.” In J.B.Braden and C.D. Kolstad (eds), Measuring the

Demand for Environmental Quality. Contributions toEconomic Analysis No.198. Amsterdam: North-Holland.

World Bank. 1994. “Chile: Managing Environ men talProblem s: Econom ic Analysis of Selected Issues.”Report N o.13061-CH. Washington : World Bank.

World Bank. 1996a. “Han dbook on Economic

Analysis of Investment Operations.” Washington:World Bank.

World Bank . 1996b. “Staff App raisal Report: Repu blicof Croatia Coastal Forest Reconstr uction andProtection Project.” Repor t N o.15518-HR.Washington: World Bank.

World Bank . 1996c. “Valuing th e H ealth Effects of AirPollution.” DEC Note No.7. Washington: WorldBank.

World Bank . 1996d. “Techn ical Annex: Repub lic of Haiti Forest and Parks Protection TechnicalAssistance Pr oject.” Report No.T-6948-HA.Washington: World Bank.

Endnotes

1. For a general survey of techniques used in valuingenvironmental ben efits, see Dixon and others(1995). For a m ore d etailed exposition of the u se of man y of these techniqu es, see Hu fschmidt an dothers (1983). For a technical discussion of theeconom ic theory behind man y of these technique,see Brad en an d Kolstad (1991). Hanem ann (1992)provid es a historical account of the developm ent

of the principal environmental valua tiontechniques.

2. Palmquist (1987) reviews the theory that forms thebasis of hedonic estimation.

3. The theory and app lication of TC methods aredescribed fully in Hufschmidt and others (1983).For num erous examp les of the ap plication of TCmethod s to value recreational benefits in Europ e,see Nav rud ( 1992).



14

This Update was prepared by John Dixon and Stefano Pagiola of the Environmental Economics and Indicators Unit. The EA Sourcebook

Updates provide guidance for conducting environmental assessments (EAs) of proposed projects and should be u sed as a supplement to

th e Env ironment al Assessment Sourcebook. The Bank is thankful to the Governm ent of Norwa y for financing the prod uction of the Updates.

Please address comments and inquiries to Colin Rees and Aidan Davy, Managing Editors, EA Sourcebook Updates, Environment

Dep art me nt, The World Bank, 1818 H St. N W, Wash ingto n, D.C., 20433, Room No. MC -5-105, (202) 458-2715.

EA Sourcebook Updat es

Number and Tit le Date

1 The World Bank and Environmental

Assessment: An Overview

Apr. 93

2 Environmental Screening Apr. 93

3 Geographic Information Systems for

Environmental Assessment and Review

Apr. 93

4 Sectoral Environmental Assessment Oct. 93

5 Public Involvement in Environmental

Assessment: Requirements, Opportunities

and Issues

Oct. 93

6 Privatization and Environmental

Assessment: Issues and Approaches

Mar. 94

7 Coastal Zone Management and

Environm ental Assessment (also in Arabic)

Mar. 94

8 Cultural Heritage in Environmental

Assessment (also in Arabic)

Sep. 94

9 Implementing Geographic Information

Systems in Environmental Assessment

Jan. 95

10 International Agreements on Environment

and Na tural Resources: Relevance and

Application in Environmental Assessment(second edition )

Mar. 96

11 Environmental Auditing Aug. 95

Number and Tit le Dat e

12 Elimination of Ozone Depleting Substances Mar. 96

13 Guidelines for Marine Outfalls and

Alternative Disposal and Reuse Options

Mar. 96

14 Environmental Performance Monitoring

and Sup ervision

Jun. 96

15 Regional Environmental Assessment Jun. 96

16 Ch allen ges of Man ag in g th e EA Pr oces s Dec. 96

17 Analysis of Alternatives in EnvironmentalAssessment

Dec. 96

18 Health Aspects of Environmental

Assessment

Jul. 97

19 Assessing the Environmental Impact of

Urban Development

Oct. 97

20 Biodiversity and Environmental

Assessment

Oct. 97

21 Environmental Hazard and Risk

Assessment

Dec. 97

22 Environmental Assessment of Mining

Projects

Mar. 98

23 Economic Analysis and Environmental

Assessment

Apr. 98

4. These benefits take the form of consumer’s surplus,the benefit they enjoy above the costs involved intaking p art in the recreational activity. A basicassum ption is that the consumer’s surp lus of themost distant visitor is zero, and that anyon e moredistant d oes not come to this site since the costs(travel costs) exceed the value of the benefits of thevisit (It is impor tant to note that the value of the

site is not given by the total travel cost; thisinformation is only used to d erive the demandcurve and th ereby estimate the consumer’s surp lusof visitors.)

5. A vast literature has developed on contingentvaluation techniques. The stand ard text is Mitchell

and Carson (1989); for a mor e theoreticalexposition, see Carson (1991).

6. A special issue of the Water Resources Research wasdevoted to benefits transfer, and provid es the bestavailable overview of the conceptual andempirical issues involved; see Brookshire and Nell(1992) and the following p apers in that issue. A

recently completed rep ort by th e AsianDevelopment Bank relies heavily on the u se of benefit-transfer (ADB, 1996), and contains m anyexamp les of the ap plication of benefit transfer.



Environment Department January 1999The World Bank Number 25

Environmental Management Plans



Prediction of the potential adverse environmental and social impacts arising from development interventions is at the technical heart of the environmental assessment (EA) process. An equally essential element of this process is to develop measures to eliminate, offset,or reduce impacts to acceptable levels during implementation and operation of projects. The integration of such measures into project implementation and operation is supported by clearly defining the environmental requirements within an environmental

management plan (EMP).

EMPs provide an essential link between the impacts predicted and mitigation measures specified within the EA report, andimplementation and operational activities. They outline the anticipated environmental impacts of projects, the measures to beundertaken to mitigate these impacts, responsibilities for mitigation, timescales, costs of mitigation, and sources of funding. ThisUpdate provides an introduction to mitigation measures and EMPs, identifies the policy framework for preparing EMPs for Bank

financed activities, outlines the main components of EMPs, and discusses means to ensure that commitments within the EMP arecarried through to implementation and operation. It compliments information presented in Chapter 1 of the EA Sourcebook.

Introduction

A development project’s mitigation measures encompass

all actions taken to eliminate, offset, or reduce poten-tially adverse environmental impacts to acceptable lev-els. Such measures are typically associated with the lat-ter stages of project planning, although in practice they may occur at any stage throughout the project cycle.Normally, potential impacts are identified early during the initiation and scoping stages of EA for a project, andmeasures to avoid or minimize impacts are incorporatedinto the alternatives being considered. In this respect,some of the most important measures to protect the environment or local communities become integral to theproject design, and are never reflected within a formalenvironmental management plan (EMP). For example,the environmental and social bases for choosing a pre-ferred location for a project will not necessarily be evi-dent within the EMP. Some of the primary objectives of mitigation measures are summarized in Box 1.

Mitigation measures may be broadly defined as eitherstructural or non-structural. Non-structural measuresinclude improvements to the legal or institutionalframework, economic incentives (such as realistic pric-ing of utility services), training, and measures to

enhance public awareness. An example is the introduc-tion of irrigation service fees to promote efficiency of water usage and water conservation. Structural mea-sures encompass design or location changes, engineeredstructures, or landscape treatments, based on the use of environmentally sound techniques and technologies.

Environmental management plans (EMPs) outline themitigation, monitoring, and institutional measures to betaken during project implementation and operation toavoid or control adverse environmental impacts, and theactions needed to implement these measures. They provide a crucial link between alternative mitigationmeasures evaluated and described within the EA report(see Update no. 17, Analysis of Alternatives ), and ensur-

ing that such measures are implemented. EA reports areessentially planning documents with no legal basis. Inmany cases, mitigation measures outlined in EAs aredescribed in illustrative terms, or have neither beencommitted to by the borrower nor reflected in theproject design. In this regard, the EMP is a basis fornegotiation and reaching agreement with borrowers ona project’s key social and environmental performancestandards. The components of an EMP are described inthe section below on components.

Insert in Update Binder chapter 1



2

EMPs are essential elements of EAs for Category A projects, but for many Category B projects, a simpleEMP alone may suffice. Typically, this applies to smallerprojects not affecting environmentally sensitive areas, which present issues that are narrow in scope, well-defined, and well understood. Alternative approachesmay be more effective in integrating environmentalconcerns into the planning process of such projects,including: environmental design criteria and emissionstandards for small-scale industrial plants; design crite-ria and construction supervision for small-scale rural works; and environmental siting criteria, constructionstandards, and inspection procedures for many socialfund projects, such as housing or local schools projects.

For industrial rehabilitation, expansion, orprivatization projects, an environmental audit and

associated action plan (in effect an EMP) is often thebest approach to determining the nature and extent of environmental concerns at an existing facility. The planshould identify appropriate mitigation measures, esti-mate the cost of proposed measures, and recommend aschedule for implementing them. For certain projects,the EA report may consist of an environmental audit; inother cases, the audit is part of the EA documentationand the EMP.

World Bank Policy in relation to EMPs

The Bank’s Operational Policy 4.01 (OP 4.01) identifiesEMPs as an essential feature of category A projects; forcategory B projects, the EA may result in development of an EMP only, with no separate EA report. The specificrequirements relating to EMPs are set out in Annex C tothe Bank’s business procedure 4.01 (BP 4.01)—theseprocedures are mandatory. The content of BP 4.01 islargely reflected within this Update , which also includes

many elements of recommended good practice.

Components of an EMP

There is no standard format for EMPs. The format needsto fit the circumstances in which the EMP is being developed and the requirements which it is designed tomeet. Mitigation measures and the means of ensuring their implementation for larger category A projects willoften be described in some detail. Conversely, an EMParising from an environmental audit might be summa-rized in a one or two page schedule. An EMP may bepresented as two or three separate plans depending on borrowing country requirements and projectcircumstances.

The EMP should be formulated in such a way that itis easy to use. References within the plan should beclearly and readily identifiable. Also, the main text of theEMP needs to be kept as clear and concise as possible, with detailed information relegated to annexes. TheEMP should identify linkages to other relevant plansrelating to the project, such as plans dealing with re-settlement or indigenous peoples issues. The following aspects should typically be addressed within EMPs.

Summary of impacts: The predicted adverse environ-mental and social impacts for which mitigation is re-quired should be identified and briefly summarized.Cross-referencing to the EA report or other documenta-tion is recommended, so that additional detail canreadily be referenced.

Description of mitigation measures: The EMP identi-fies feasible and cost effective measures to reduce

Box 1. Primary objectives of mitigationmeasures

Mitigation measures aimed at eliminating, offsetting, orreducing adverse environmental impacts can have arange of objectives. Some of these are briefly definedbelow in approximate order of priority. The first priori-ties are avoidance or prevention of impacts, whereas the

priority of the other categories is less rigid.

n Avoidance. Avoiding projects or activities thatcould result in adverse impacts; avoiding certaintypes of resources or areas considered to be environ-mentally sensitive. This approach is most effective

when applied in the earliest stages of projectplanning.

n Prevention. Measures aimed at impeding theoccurrence of negative environmental impacts and/orpreventing such an occurrence having harmfulenvironmental and social impacts.

n Preservation. Preventing any future actions thatmight adversely affect an environmental resource or

attribute. This is typically achieved by extending legal protection to selected resources beyond theimmediate needs of the project.

n Minimization. Limiting or reducing the degree,extent, magnitude, or duration of adverse impacts.Mitigation can be achieved by scaling down,relocating, or redesigning elements of a project.

n Rehabilitation. Repairing or enhancing affectedresources, such as natural habitats or water sources,particularly when previous development has resultedin significant resource degradation.

n Restoration. Restoring affected resources to anearlier (and possibly more stable and productive)state, typically “background/pristine” condition.

n Compensation. Creation, enhancement, orprotection of the same type of resource at anotherlocation, to compensate for resources lost todevelopment.



3

potentially significant adverse environmental and socialimpacts to acceptable levels. Each mitigation measureshould be briefly described with reference to the impactto which it relates and the conditions under which it isrequired (for example, continuously or in the event of contingencies). These should be accompanied by, orreferenced to, designs, equipment descriptions, andoperating procedures which elaborate on the technicalaspects of implementing the various measures. Wherethe mitigation measures may result in secondary im-pacts, their significance should be evaluated.

Description of monitoring program: Environmentalperformance monitoring should be designed to ensurethat mitigation measures are implemented, have theintended result, and that remedial measures are under-taken if mitigation measures are inadequate or the im-pacts have been underestimated within the EA report. Itshould also assess compliance with national standardsand World Bank Group requirements or guidelines.

The monitoring program should clearly indicate thelinkages between impacts identified in the EA report,indicators to be measured, methods to be used, sam-pling locations, frequency of measurements, detectionlimits (where appropriate), and definition of thresholdsthat will signal the need for corrective actions, and soforth. Although not essential to have complete details of monitoring in the EMP, it should describe the means by which final monitoring arrangements will be agreed. Foradditional details, refer to EA Sourcebook Update no. 14:Environmental Performance Monitoring and Supervision.

Institutional arrangements: Responsibilities for miti-gation and monitoring should be clearly defined. TheEMP should identify arrangements for coordinationbetween the various actors responsible for mitigation.

Environmental management usually involves many governmental bodies and other agencies, and links be-tween the various actors are often complex and the hier-archy for decision making unclear. Agencies may besomewhat territorial, and reluctant to consult with orshare information with others. Conflicts may also arisebetween institutions, particularly between those pro-moting development and those with a mandate for environmental protection. Shared or overlapping responsibilities within several institutions can alsohinder effective enforcement of environmental controlmeasures. It is important to account for such location-specific circumstances and constraints in developing EMPs.

Some of the key legal and institutional considerations with respect to EMPs are:

• Legal framework for environmental protection: Is theframework for protection and management of resources affected by the project robust, and sup-ported by enforcement measures?

• Responsibilities for environmental management : Arethese clearly defined in relation to the resourcesaffected by the project, and adequately resourced?

• Responsibilities for implementing mitigation measures: Are these clearly defined for environmental andsocial mitigation measures, and adequately resourced?

• Legal basis for mitigation: Do the project legal docu-ments help to ensure that borrowers implementmitigation measures?

When the borrower’s institutional or technical capac-ity to effectively implement mitigation measures provesinadequate, a specific environmental component may beincluded in the project to strengthen that capacity. Insti-tutional difficulties may sometimes be best resolved

through establishing an autonomous, stable and quali-fied project implementation unit. If the project imple-menting agency lacks sufficient commitment or capacity for carrying out mitigation measures, it may be prefer-able to contract out operational responsibility for thesemeasures.

Implementation schedule and reporting procedures:The timing, frequency, and duration of mitigation mea-sures should be specified in an implementation sched-ule, showing links with the overall projectimplementation plans (PIP). Where implementation of

mitigation measures is tied to the project legal agree-ments, these linkages should be outlined. For example,some mitigation measures may be made conditions forloan effectiveness or disbursement.

Procedures to provide information on the progressand results of mitigation and monitoring measuresshould also be clearly specified. As a minimum, therecipients of such information should include those withresponsibility for ensuring timely implementation of mitigation measures, and for undertaking remedial ac-tions in response to breaches of monitoring thresholds.In addition, the structure, content and timing of report-ing to the Bank should be designed to facilitate supervi-sion. The Task Manager should carefully considerarrangements for tracking receipt (and subsequent dis-semination) of monitoring reports.

Cost estimates and sources of funds: These should bespecified for both the initial investment and recurring expenses for implementing all measures contained inthe EMP, integrated into the total project costs, andfactored into loan negotiations.



4

Where practicable, decisions regarding appropriatemitigation measures should be justified by an economicevaluation of potential environmental impacts, aimed at:

• Measuring the cost-effectiveness of different mitiga-tion options where a project is required to meet a setof environmental standards or achieve specificenvironmental objectives

• Determining the appropriate level of mitigation where there is scope for a trade-off between envi-ronmental quality and the costs (and benefits) of achieving it

• Internalizing the economic value of residual impactsor intended environmental improvements into thefinal economic appraisal of the project.

The level of mitigation required may be determinedby political or legal considerations, Bank requirements,international agreements (see Update no. 10: Interna-tional Agreements on Environment and Natural Resources ),stakeholder needs, or a combination of these factors. Itis important to capture all costs—including administra-tive, design and consultancy, and operational and main-tenance costs—resulting from meeting certain standardsor modifying project design. The aim is to satisfactorily mitigate adverse impacts at least cost.

The costs of preparing an EMP, which are borne by the borrower, vary depending on factors such as thecomplexity of potential impacts, the extent to whichinternational consultants are used, and the need to pre-pare separate EMPs for sub-projects (for example withsectoral investment loans). Options for financing in-

clude the borrower’s own resources, project preparationfacilities (PPF), institutional development funds (IDF),or trust funds. Implementation costs may be met fromthe project loan, the borrower’s/sponsor’s own re-sources, or from trust funds.

Maintaining flexibility of EMPs

EMPs should be dynamic flexible, and subject to peri-odic review. The extent to which EMPs should be reviewed and updated varies between and within sectors. As a rule, where the major environmental impacts areassociated with the operational rather than the con-struction phases (particularly where operations are in-herently variable), EMPs should be regularly revised. Inpart this is linked to the influence of changes in legisla-tion on such operations. For example, an EMP for aroad or a river crossing should be subject to review throughout the construction period, but thereafter theimpacts are either static or best controlled by trafficmanagement. Conversely, an EMP for a power plant ormining operation should be revised at regular intervalsthroughout the operational lifetime of the project.

Flexibility is best achieved by ensuring that responsearrangements can be rapidly adapted to new and chang-ing circumstances. Decentralization of responsibilitiesfor EMP implementation, where appropriate, can aidflexibility, for example by empowering those responsiblefor monitoring to sanction and undertake remedial mea-sures. In some cases, the project design changes follow-ing appraisal and even during implementation, which

highlights the importance of periodically revising EMPs.

Public involvement in developing EMPs

The EMP should clearly describe and justify the pro-posed mitigation measures to facilitate public consulta-tion. Consultation with affected people and NGOsshould be integral to all Category A projects, and are advisable for many Category B projects in order to under-stand the acceptability of proposed mitigation measuresto affected groups. In some situations, the developmentof environmental awareness amongst stakeholders is

important to ensuring effective consultation on theEMP. Where projects involve socially and politically sensitive land acquisition or resettlement, these issuesshould be fully addressed in either the EMP or resettle-ment action plan (RAP) or indigenous peoples develop-ment plan (IPDP).

The consultation process should help to designachievable mitigation measures. In this regard, it is rec-ommended that the affected public participate in thedesign of such measures, particularly where their suc-cess depends on buy-in or actions on their part. Whereappropriate, this may be supported by including formal

requirements within the TOR for public participation indeveloping the EMP.

Usually there are no formal mechanisms for the pub-lic to determine whether environmental commitmentsmade by a proponent or government in the EMP arefollowed. It is recommended that information onprogress with implementing mitigation and monitoring activities should be shared with the affected public.

EMPs for strategic EAs

Whereas the aim of project specific EAs is to ensure thatprojects are implemented in an environmentally accept-able manner, strategic EAs are aimed at ensuring thatthe choice and design of projects are inherently accept-able from an environmental perspective. They also aimto establish a sound basis for mitigation, monitoring,and management at the project level.

An EMP derived from a regional EA should help toestablish a sound planning and management frameworkthat provides for addressing cumulative, direct and



5

indirect impacts of ongoing and planned investmentsthrough a spatial approach to mitigation, monitoring and management. EMPs for sectoral EAs should recom-mend measures for mitigating, monitoring, and manag-ing impacts within the sector of interest, taking intoaccount the overall environmental management capacity in the country.

EMPs for strategic EAs should include the following:

• Recommendations for mitigation measures, tied toalternative development scenarios, to be imple-mented at the national, area-wide or sector level

• Guidelines for strengthening, adjusting, developing or harmonizing long-term environmental monitor-ing programs, with reference to applicable standardsand international obligations

• Recommendations for changes to the environmentalmanagement framework to ensure adequate envi-ronmental resources management, and interagency

coordination.

Strategic EAs should highlight major impacts of con-cern in the sector or region, and strategic EMPs may prescribe standard approaches to subproject design andmitigation through environmental guidelines, manualsand monitoring requirements. This reduces the scope of work for individual EAs and EMPs for subprojects, andcan positively influence investment activities throughoutthe sector or region.

Ensuring implementation of EMP commitments

Effective implementation of commitments set out inEMPs is aided by the borrower and Bank staff under-standing their responsibilities at each stage of theproject cycle, and by translating these commitments intoa form that is legally binding. These aspects are dis-cussed below.

Responsibilities of Bank staff and borrowers

The borrower or sponsor is responsible for preparing and implementing the EMP, and TOR for EAs shouldclearly reflect the importance of preparing a comprehen-sive EMP. In practice, when the draft EA report andEMP are submitted to the Bank prior to appraisal, many mitigation measures will be tentative or illustrative.However, the EMP needs to be finalized during ap-praisal and agreed upon during negotiations, together with performance monitoring indicators.

The responsibilities of Bank staff vary depending onthe stage of the project cycle. During appraisal, Bankstaff are required to review the EMP with the borrower,to assess the adequacy of the institutions responsible for

environmental management, to ensure that the EMP isadequately budgeted, and to determine whether themitigation measures are properly addressed in projectdesign and economic analysis.

The Project Appraisal Document (PAD) should sum-marize the main measures contained in the EMP, de-scribe environment-related loan conditionalities and

covenants, and outline the program and budget for environmental supervision. During negotiations, Bank staff are responsible for translating the mitigation measuresin the EMP into the project implementation plan (PIP)and loan agreement. Implementation and supervision of the EMP provisions should occur during project imple-mentation, operation and evaluation.

During project implementation, the borrower reportson compliance with environmental commitments, thestatus of mitigatory measures, and the findings of moni-toring programs as specified in the project documents.

The Bank bases supervision of the project’s environ-mental aspects on the EMP as set out in the legal agree-ments for the project.

Translating EMP into legal agreement

It is important to translate the main findings and recom-mendations of the EMP into the legal documents, theprincipal legal instruments being the “loan agreement”(for the IBRD and IFC) or “development credit agree-ment” (for IDA) entered into with the borrower and the“project agreement” entered into with the project ex-ecuting agency (where applicable). The loan/credit

agreements normally include the terms of the loan orcredit/guarantee, repayment obligations, provisions forthe use of the proceeds of the loan and for the procure-ment financed by it and, in this context, obligations withrespect to the carrying out of the project in question.Such obligations can include the borrower’s undertak-ings with respect to the environment and are comple-mented at times by detailed requirements in “projectagreements” concluded with the project executing agencies.

A key condition for effective environmental imple-mentation is the extent to which there are clear andspecific environmental deliverables and performanceindicators in the EMP and PIP, including adequate bud-geting and specificity about financing of environmentalmeasures, and associated environmental clauses in loanagreement and contract documents. When this is notthe case: there is frequently less commitment on thepart of the borrower and its implementing agencies; it ismore difficult to supervise projects in terms of their environmental aspects; the supervision is less effective interms of influencing the subsequent course of action;



6

and there is generally less environmental information insupervision reports. Lack of specific environmentalclauses also makes it more difficult for implementing agencies and contractors to know what is expected.Some of the options for improving the legal basis forenvironmental mitigation are given in Box 2.

The vital link with the activities defined in the EMP isthe environmental conditions and covenants the bor-rower and the Bank agree on. The basic factor to beconsidered include required activities and timing, as-signment of responsibilities, and inclusion of appropri-ate funding and reporting arrangements. To reinforce

Box 2. Improving the legal basis for mitigation

It is increasingly important to translate EMP commitments into appropriate language for environment-related

conditions, covenants and implementation schedules in the legal agreements. For this purpose, several options

are available:

Conditions for loan negotiations, Board approval or effectiveness. This approach limits flexibility, but

may be the best means of ensuring progress with mitigation up to loan effectiveness.

Conditions for disbursement. While the Bank’s leverage decreases as project implementation progresses,

conditioning disbursement on the achievement of key environmental milestones carries considerable weight.

For example, when subprojects of sector loans that may be environmentally damaging are not appraised prior

to project approval, it is important to condition disbursement on satisfactory review of EA reports.

Dated covenants. NB—this needs revising; very general). These usually relate to the borrower’s manage-

ment decisions. As a result of these covenants, Bank supervision could effectively address problems and delays

in the concerned areas whereupon implementation performance improved. Covenants have the advantage of

bringing key issues to the full attention of both Bank supervision staff and the implementing agencies on the

borrower side.

Inclusion of mitigation measures within the Description of the Project under Schedule 2 in the legal

agreement. This approach is useful insofar as it recognizes that environmental aspects are integral to theproject, on an equal footing with other components. It is also a useful place for providing a detailed timetable

for undertaking mitigation measures. The timetable should ideally be reinforced by covenants and conditions in

the main sections of the legal agreement.

General statement. This commits the borrower to following applicable national environmental regulations

and/or international standards and practices, acceptable to the Bank. Where the regulations in a borrowers

country and capacity for implementation and enforcement are adequate, a general statement may be sufficient.

the legal documents it is recommended that a monitor-ing summary be prepared that is linked to the projectlegal agreement.

Bidding and contract documents

It is important to translate EMP requirements into bid-ding and contract documents to ensure that obligationsare clearly communicated to contractors. The bidding documents might also include environmental criteria as

part of the basis for selecting contractors. Contractorsshould also be obliged to follow appropriate environ-mental, health, and safety standards to reduce associ-ated risks during construction and operation (see EA Sourcebook). For example, construction specificationsmight include clauses relating to:

• Preservation of the natural landscape to the extentpossible, and restoration in the event of unavoidabledamages



7

• Conversion of construction camps and buildings intopermanent residences, or removal to avoid deteriora-tion into shantytowns

• Prevention of accidental spillage of contaminants,debris, or other pollutants, especially into streams orunderground water resources

• Noise, dust and sediment loading • Ensuring proper disposal of waste materials and

rubbish.

Supervision of the EMP

Bank experience confirms that systematic supervisionand monitoring are fundamental to the successful

implementation of projects, and EMPs in particular.Therefore, it is vital that an appropriate supervision pro-gram be developed—preferably in collaboration withgovernmental implementing and environmental agen-cies as well as with affected populations and NGOs—tomonitor progress and analyze and overcome any ob-stacles encountered in the implementation of the EMP.Detailed guidance on environmental performance moni-

toring and supervision is provided in EA Sourcebook Up-date no. 14: Environmental Performance Monitoring andSupervision.



Previously published EA Sourcebook Updates

Number and Tit le Dat e

Number and Tit le Date

1 The World Bank and Environmental

Assessment: An Overview

Apr. 93

2 Environmental Screening Apr. 93

3 Geographic Information Systems for

Environmental Assessment and Review

Apr. 93

4 Sectoral Environmental Assessment Oct. 93

5 Public Involvement in Environmental

Assessment: Requirements, Opportunities

and Issues

Oct. 93

6 Privatization and Environmental

Assessment: Issues and Appr oaches

Mar. 94

7 Coastal Zone Management and

Environmental Assessment (also in Arabic)

Mar. 94

8 Cultural Heritage in Environmental

Assessment (also in Arabic)

Sep. 94

9 Implementing Geographic Information

Systems in Environmental Assessment

Jan. 95

10 International Agreements on Environment

and N atural Resources: Relevance and

Application in Environm ental Assessment

Mar. 96

11 Environmental Auditing Aug. 95

12 Elimination of Ozone Depleting Substances Mar. 96

13 Guidelines for Marine Outfalls and

Alternative Disposal and Reuse Options

Mar. 96

14 Environmental Performance Monitoring

and Super vision

Jun. 96

15 Regional Environmental Assessment Jun. 96

16 Challen ges of Man agin g th e EA Process Dec. 96

17 Analysis of Alternatives in Environmental

Assessment

Dec. 96

18 Health Aspects of Environmental

Assessment

Jul. 97

19 Assessing the Environmental Impact of

Urban Development

Oct. 97

20 Biodiversity and Environmental

Assessment

Oct. 97

21 Environmental Hazard and Risk

Assessment

Dec. 97

22 Environmental Assessment of Mining

Pro ects

Mar. 98

23 Economic Analysis and Environmental

Assessment

Apr. 98

24 Environmental Assessment of Social Fund

Projects

Jan. 99

Bancomundial

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