Introduction to SEA and Systems Analysis (2) Focus: Environment & Economics

Anders EkbomEnvironmental Economics UnitDept of EconomicsUniversity of Gothenburganders.ekbom@economics.gu.se

The EconomicSystemCompaniesHouseholds/individualsThe State/municipalitiesBanks Subsidies, investmentsemploymentSubsidies,Investments,servicesTaxes,goods,servi-cesLoans,capitalSavings,goodsSavingsLoans,capitalEmployment, goods, ser- vicesLabourCredit, taxesCredit,Investm.,servicesLabour, taxes

The EconomicSystemCompaniesHouseholds/individualsThe State/municipalitiesBanks Subsidies, investmentsemploymentSubsidies,investmentsTaxesLoans,capitalSavingsSavingsLoans,capitalEmploymentLabourCredit, taxesCredit,Investm.Labour, taxesNatural resources,Ecosystem servicesPollution,depletionThe Ecological System

4 markets in the Economic System:The Labour marketThe Financial marketThe Goods marketThe Services market

1970: Most natural resources will be finished with 15-30 yearsAre they? Why not?

Growth

Copper

Gold

Iron

Lead

Mercury

Static (0%/yr)

36 yrs.

11

240

26

13

Exponent.

21

9

93

21

13

N. gas

Oil

Silver

Tin

Zink

Alumin.

38

31

16

17

23

100

22

20

13

15

18

31

Economics All markets interact => increasing inter-dependence!Increasing integration across scales (geographically, vertically)Economics: explains how markets function/are connected (micro-, sector-, macro-level (systems-) analyses eg CGE)

Economic analysisProduction functions: GDP = f(K,L,H,I; X)Consumption functions: C = f(K,L,H,I; X)K=physical capital, L=labour, H=Human capital, I=institutions, X=other factors (innovation, technology etc.)Prices: Supply, Demand analysis

Environmental Economics acknow-ledges links with Environment:

GDP=f(K,L,H,I,E; X) C=f(K,L,H,I,E; X)

State of Environment:E=f(GDP,C; soil, water, climate, geology etc;X)

Prices: affect E; are affected by E

When the Economic System and the Ecological systems meet some links & examples

Deforestation

Irrigation in Aral Sea

Aral Sea

Fossil water

Water hyacinth, L. Victoria

Desertification,Land degradation

Eutrophication: Nitrogen

Over-fishing25% of commercial fisheries over-exploitedDeclining catches since the late 1980s

Fisheries collapse in Canada

CO2-emissions by country groups

CO2-emissionsper person

SEA

SEAWhat is SEA?- Objectives- PrinciplesStrategic actions? tieringDifferent kinds (models) of SEAWhy SEA? Advantages, disadvantages?

What is SEA?SEA is a systematic process for evaluating the env consequences of porposed policy, plan or program initiatives in order to ensure they are fully included and appropriately addressed at the earliest appropriate stage of decisionmaking on par w. economic and social considerations (Sadler and Verheem, 1996)

SEA objectives, principlesImprove strategic actionPromote stakeholder participationFocus on key env/sustainability constraintsIdentify the best optionMinimize neg. (env) impacts, optimize positive impacts, compensate lossesEnsure PPP do not exceed limits (carrying capacity, irreversible effects etc.)

Strategic actions, tieringStrategic actions:- mega-projects- programs (sector)- plans (spatial)- policies (sector, national, legislation)Tiering, across:geographic scalesStrategic actions:

Advantages of SEABegins earlierDeals with impacts that are difficult to consider at the project levelPromotes a better coordination of alternativesInforms decisionmakers about env impacts of the proposed strategic actionsFacilitates public participation in decision-making

Disadvantages with SEATakes time and $Still a relatively new processBaselines may not be availableNeeds to cope w. a huge range of decision-making situations (appropriate?)Only one part of decision-making

Stylized linear SEA process:Screening Scoping Identification Prediction Evaluation of Impacts Mitigation Monitoring.Steps in SEA:The Rational Linear Model

Policy making as a Linear, Logical, and Rational Process

Political decision

Strategy

Policy formulation

Policy implemen-tation

Monitoring and Evaluation

olicy formulation

Changes as needed formulation

Policy making is dynamic, complexMediaForeigndonorsMilitaryLegislatureBureaucracyPoliticalpartiesMinistriesUniversities,Research institutesCivilsocietyIntl NGOsBusinesssectorOld elitesVestedinterestsJudiciary

Political decision

Strategy

Policy formulation

Policy implemen-tation

Monitoring and Evaluation

olicy formulation

Changes as needed formulation

SEA & different types of planningPlanningSEA Features:ParallelSeparateLinear Down-stream

PlanningSEA Features:Feeding prel. resultsNo feedbackSEA & different types of planning (2)

PlanningSEA Features:InteractiveFeedbackSEA & different types of planning (3)

PlanningFeatures:IntegratedUpstreamFocus on institutionsoutcomesSEA & different types of planning (4)

SEA Different Approaches

Linear (impact-centered) SEA Non-linear (institutions-centered) SEASEA at the Policy level (concepts and some examples) Understand Institutions (vs organisations) Discuss Adaptive and Inclusive SEA Approaches

2. Decision-making - the Rational Model (-the linear approach, 5 steps):

Determine the problem Establish preferences List all options or alternatives Gather all relevant information Make a choice that max./optimizes the likelihood of achieving goals.

Mini discussionThink of a Policy process or strategicplanning in your country (2 min.)

Discuss with neighbour (5 min.):What were the features of the process?How & to what extent were environm. issues addressed in the policy How did people participate?

Policy reforms and potential environment linkages

Policy area

Reform

Env. benefits

Env. risks

Measures to enhance env. benefits and mitigate risks

Energy

Fuel price reform, removal of subsidies.

Reduced emissions through increased production and consumption efficiency.

Removal of subsidies could lead to increased demand for fuel wood.

Property right reforms to reduce deforestation in search for fuel wood.

Agriculture

Land reform.

Strengthened property rights improves NRM.

Shrinking common property resources are overused by landless.

Ensure landless are considered. Enhance fertilizer, pesticide use.

Private sector development

Business climate issues, taxation and protection of property rights, privatisation.

Increased competition and use of price signals generally improve resource use efficiency.

Weak legal env. framework can lead to over-exploitation of NRs & more pollution.

Ensure adequate legal framework, monitoring and enforcement.

Policy reforms and potential environment linkages (ced)

Policy area

Reform

Env. benefits

Env. risks

Measures to enhance env. benefits and mitigate risks

Tax reform

Changed tax on income, assets, consumption, companies etc.

Pos. changes in households/firms behavior.

Neg./adverse changes in households/firms behavior.

Env fiscal reforms (tax on pollution, resources) can internalise env. costs, increase efficiency & tax incomes.

Decentralization

Power to regional or local administration to increase efficiency, service delivery, accountability.

Accountable, representative local institutions can improve management of NRs.

Poor capacity to deal with env. & NR issues. Local elites exploit local NRs

Capacity-building to strengthen local and regional administration.

Trade

Trade reform

Increased competition => improved NR use, reduced pollution.

More monocultures, Increased fertilizer, pesticide use, pollution; pressures on forests, or wetlands etc.

Improve env. legislation to avoid pollution havens.

1. Planning at strategic levels is not linear! Its a complex process, influenced by interest groups with conflicting interests and different agendas => look for windows of opportunity to initiate SEA during cycles of the decision-making process.

2. Relationships between alternative options and environmental effects are often indirect => Emphasize relevance vis--vis stakeholders (e.g. politicians, gov. agencies, civil society etc.).

3. Strategic issues cannot be tackled by a one-off analysis; => Adjust SEA approach as the Policy takes shape and is implemented.Experiences from Env. Integration

Difficult to achieve rational, linear environmental assessment in reality since:

people are limited information processors; policy-makers are not unitary/homogenous actors with clear and stable preferences (multiple actors w. multiple & conflicting goals); it is difficult or impossible to define a problem clearly at the policy level (many different views, uncertainty on env impacts!).Experiences from Env. Integration

Env., econ & social issues linked Integration necessary at the policy levelEnvl. IssuesPollutionEnv.-rel. diseaseNR depletionExtinctionHabitat LossDistorted eco-system functions

Social & econ. IssuesPoor public healthInvoluntary ResettlementDeprivation of RightsGender inequalityVulnerability, conflictLoss of Social capital, economic values

Globalization/regionalization Requires new solutions, increased scope (EU, MEA, WTO)

Need to move env. assessment upstream in decision process (local national, global)

Powerful policy tools beyond project level (e.g. Env Fiscal Reform)

Shift in Focus of Env. AssessmentImpact assessmentFocus on technical solutionsStakeholder consultn Attention to projectsUpstream analysisFocus on policies and institutionsStakeholder particip.Attention to country capacity

Inst.-centered SEA - more perspectives

Policy formulation & implementation are not separate processes. The policy formulation process never ends; the way it unfolds depends on the stakeholders participating in the processes (policy design, adoption, implementation) & the actions they take.

PolicyFormationDiscrete PolicyInterventionFocus of SEA is to integrate environmental considerations in discrete policy interventionsFocus of I-SEA is to integrate environmental considerations in policy formationLearning(feedback)Learning(feedback)Inst.-centered SEA more perspectives (2)

Inst.-centered SEA more perspectives (3)

Planning and decision-making at policy level often characterized by ambiguity and uncertainty

Ambiguity many ways of thinking about the same circumstances or phenomena

5. Adaptive & Inclusive SEA Approaches

Adaptive Management (1)No formula, key elements:Multiple decision points (timing!) Management objectives regularly revisited & revised (adjust!) A range of management choices (prioritize!)

Adaptive Management (2) Monitor & evaluate outcomes (not activities!) Institutionalize mechanisms for learning (social, technical, organizational) Create structure for broad & collaborative stakeholder participation (not one-off consultation!)

Inclusive Management (1)Primarily oriented towards enabling action (acknowledging ambiguity & uncertainty). Features:1) continuous iterative interactions, and 2) inclusive community participation (with wide involvement of perspectives), aimed at creating a truly collective process.

Inclusive Management (2)Features (ced):3) Emphasizes importance of combining multiple perspectives in problem-solving efforts,4) building capacity a goal, not a mean5) Policy (planning/implem.) = opportunity to mobilize people.

Inclusive Management (3)6) IM not about increasing the number of people who are involved in policy formulation, but to increase:the diversity of views represented,the possibility of otherwise neglected views to influence policy

Influences on Env. Prioritiespublic clamor (civil society preferences)cultural/historical/instl./pol. factors,Govt agency prioritiesInternational agreementsLegislation, regulation, judicial decisionsResults of technical studies employing analytical/quantitative techniques

Adaptive and Inclusive SEA (1) Move from one-time to continuous engagementIntegrate SEA process w. policymaking process (planning + implementation!) Focus on Priority Env. Issues Seek Equal RepresentationLess Focus on Reports, more on Outcomes

Inst.-centered SEA - SummaryPolicy-Based SEA brings in Institutions & Governance issuesEmphasizes Priority Setting of Env. Issues Broadest view of Stakeholder Representation Aims at Reinforcing Social Accountability for Improved Environmental Governance Stresses Learning in Environmental Policy Making and Implementation

Inst.-centered SEA Summary (2)Emphasizes the importance of Institutional AssessmentsRecommends Technical Assistance to promote Structural Learning & Capacity building for Env. ManagementPromotes Long-Term Engagement (as opposed to one-off engagement)

EXTRA

Policy SEAs some examples

Argentina & Colombia: SEA for Policy Reform in Water and Sanitation SectorsCanada: SEA for NAFTASouth Africa: KwaZulu-Natal Trade and Industry Policy

Argentina & Colombia: SEA for Policy Reform in Water and Sanitation SectorsInitially, impact-centered SEA; however, not feasible to identify impacts from reforms that had not yet been designed!Broadened focus, sector priorities set based on Cost-of-Env-Degradation study, institutional study, continuous policy dialogue, broad stakeholder involvement, & scheme to monitor policy outcomes

2. Canada: SEA for NAFTAFour-point plan: Env. representatives appointed to Intl. Trade Advisory Committee and to all 15 Sectoral Advisory Groups on Intl. Trade. Trade-related env. concerns included in all negotiation phases. Parallel discussions on env. cooperation among Canada, US & Mexico. SEA was conducted by NAFTAs Env. Review Committee, incl coordination among agencies.

3. South Africa: KwaZulu-Natal Trade and Industry PolicyFeatures: Early start, SEA initiated before policy process started; technical studies, stakeholder involvement, workshops, etc.SEA commissioned by Regional Economic Forum (responsible for the KZ-NT&IP planning process), legal foundations for doing SEA by SAs Devt Facilitation Act

Institutions matter!

Institutions coordinating human behaviourSocialcapitalTrad.,informalModern,formalInstitutionsOrgani-zationsRulesInformalFormalRulesTraditionsNormsNetworksSharedvaluesReligionTrustGovtagenciesConstitutionsLawsRegulationsEasy to changeDifficult to changePoliceCourtsNGOsFirms

Levels of Institutional Analysis LevelFrequency (yrs.)Customs, traditions, norms, religion100-1000 yrs.Formal rules of the game: (judiciary, bureaucracy etc)10-100 yrs.Governance: Play of the game: (contracts, aligning structures)1-10 yrs.Resource allocation and employment (budget, policy)continous

Points of departure for I-SEA ProgramWorld Banks Environment StrategyUpstream environmental analytical in Bank operationsFormulation of I-SEA approach (2005)OECD DAC Guidance on SEA (2006)SEA is a family of approachesSEA at policy level should focus on political, institutional and governance context underlying decision making processes

Steps to address institutional issues in SEA1: Institutional and governance assessment

Review country environmental management and governance systems Review analytical capacity Gain access to decision-making

Steps to address institutional issues in SEA (conted)2: Institutional and governance strengthening Support increased social accountability and improved governance

Adaptive learning - ensuring continuity in SEA processesOECD DAC (2006)

Steps to address institutional issues in SEA (conted)Prioritization of environmental issues in the policy agenda according to their effects on economic development and poverty alleviation.Ensure takeholder representation through mechanisms to particularly give those most affected by environmental degradation a voice in policy formation.Feedback mechanisms to enhance social accountability of decision makers.Systems for social learning to raise attention to changing priority environmental issues as a result of the new conditions created by development. World Bank (2005)

Examples of I-SEA:SEA of Kenya Forest ActFirst SEA in WB Pilot ProgramMarch 2006 to February 2007 Key Partners: Forest Reform Committee, Forest Reform Secretariat

I-SEA Pilots: Dhaka, BangladeshUrban Development SEAI-SEA for Urban Development Planning

Nov. 2006 Sept. 2007 Key partner: Dhaka Capital Development Authority

Sierra Leone Mining Sector SEARich mineral assetWeak capacity Lack of infrastructure undermines growth potentialMining project under preparation

Road Network in Hubei, China YiBA Project

SEA of Road Network Plan 2020Link to highway project and assesses the entire provincial planning process Assesses capacities of the provincial administration to address env. priority risks Outcome Value AddedEnv risk assessment at provincial levelProvides framework for detailed EIA studiesOpened inter-sector dialogue on infrastructure planning for env. sustainabilityIdentifies institutional & regulatory adjustments to improve env. management of infrastructure devt.

West Africa Mineral Sector SEA

*4 marknader: varu-, tjnste-, kapital-, arbetskrafts-

Utbyten: skatt (moms, arb.avgifter), subventioner (sjukfrskr.), sparande, investeringar, utlning*4 marknader: varu-, tjnste-, kapital-, arbetskrafts-

Utbyten: skatt (moms, arb.avgifter), subventioner (sjukfrskr.), sparande, investeringar, utlning*Note that the 2050 projection is from the original source, not from the MA Scenarios.*Battle of ideas, policies not always science-based*As we all know, Policy making is not only driven by research knowledge, science-based*Multiple complex links- Envt not a sector, a special issue=>- attaining ESD shared responsibility & task - requires integrated approach in understanding & addressing the issuesEnvl. work = Up-hill battle, compartmentalized several obstacles:- attain growth & poverty reduction first => crowds out E.- Limited understanding & knowledge- Envl issues complex, analytical tools difficult to grasp - Lack of priorities: NEAP/NCS/CESP = wishing lists- Time constraints, shortage of funds, uncertaintiesEnvl degradation not a marginal issue,

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