SEA at Level of Sectoral Reforms and Regional Plans:

Case Studies of Colombia

Juan David Quintero

The World Bank

Case Study #1: SEA for the Water and

Sanitation Sector (W&S) Program in Colombia

World Bank LoanMinistry of Development, Colombia

SEA process identified 3 priority environmental issues for the water & sanitation sector in the country:

1. Environmental pollution

2. Inefficiency in water use

3. Urban and rural impacts from construction of water systems

Economic Externalities from Environmental Pollution

(affect many economic and social sectors)

Public health Recreation Agricultural and

industrial production Natural ecosystems

Incidence of Diarrhea and Enteritis

in Children under 5 Years(Colombia, 1990–1997)

Annual Cost: US$315 to $400 milion dollars

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020406080100120

1990 1991 1992 1993 1994 1995 1996 1997

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Water-borne Diseases:Lack of potable water, bacterial pollution, and

inadequate hygiene habits are associated with water-borne diseases.

Water Inefficiency:A Major Issue for the Sector

Environmental, social, and economic cost for larger and more remote supply infrastructure

Losses and unaccounted-for water (UFW) in the production systems was 45% on average, 86% of annual income in 16 main cities

UFW Losses reached US$ 370 million for 16 main cities

Wasteful water use habits and lack of awareness in users

Lack of micro-metering

Rural and Urban Impacts(due to inadequate construction practices in the

sector)

Noise, dust, and construction waste pollution

Aesthetic and economic impacts on streets

Impacts on ecosystems for water projects

SEA Findings:Environmental regulations impose important restrictions on the development of the W&S

sector.

Sectoral environmental capacity is weak Unclear authority and accountability line Overlap of functions: environmental,

health, development ministries Control and enforcement functions:

unclear Nonexistent mechanisms for institutional

and inter-regional coordination

SEA Findings (Cont’d):The W&S sector is characterized by an early-

stage regulatory framework.

Uncertainty of a water model applied without any attention to local needs

Impossibility of municipalities to assume water service and sanitation responsibilities

Over-concentration of regulators in the sector

Marginal attention to environmental concerns

SEA Findings (Cont’d):Environmental policies for the sector were found

to be inefficient or outdated, mainly:

Efficient water use Service reliability Appropriate technologies Economic value of water Wastewater pollution

taxes

SEA: Strategic Options

Priority: service coverage Sectoral strengthening includes public

and private sector companies Using economic instruments to promote

and adopt water efficient technologies Organizational strengthening should

promote the role of the state as regulator and promote private sector participation

Sectoral environmental guidelines are needed

SEA Action Plan:Consolidating Sector Reform

Improvement/modifications in environmental regulations

Adjustment in EIA licensing processes and community participation

Clear definition of environmental responsibilities for water concessions

Sectoral guidelines for design, construction and operation of W&S systems

Institutional strengthening

SEA Action Plan:Defining clear and stable rules of the

game.

Coverage and service standards for water and sewage collection and treatment

Water source conservation Mechanisms to allocate water rights Rational water use Potable water quality Community participation, hand-

washing promotion

Case Study #2Energy Sector in Colombia

SEA for the energy sector was key for designing a new model for system expansion.

The model includes liabilities and externalities.

Traditional Model for Electric Sector Planning

FINANCIAL AND

PRODUCTION COSTS

Ccap + Cfix + Cvar

INTERNAL RATE OF RETURN

AND TARIFFSr (Ccap - Dep)/Even + (Cfix + Cvar)Evend

INCOME AND

PROFITS

COSTS OF ALTERNATIVE

OPTIONS

DEMAND PROJECTION

EXPANSION PLAN

Traditional Mechanisms for Incorporating Environmental

Concerns in Energy Management in Colombia

Over 50% of environmental impacts are associated with the energy sector

• Air Pollution: CO, NOx, SOx,• Water Pollution: PCBs, T. • Global change: CO2, O3

Reservoir siltation Over 50% of environmental licenses

issued are within the energy sector

New Alternative Model for Energy Planning

ALTERNATIVES FOR DEMAND SIDE MANAGENENT

EXPANSION PLAN

COSTS OF ALTERNATIVE ENERGY SOURCES

ENVIRONMENTAL

IMPACTS

DEMAND PROJECTION PRODUCTION

COSTS

RATE OF RETURN, RATES, AND INCENTIVES

INCOME +

PERFORMANCE

FEEDBACK OF PRICES AND INCENTIVES TO CONSUMERS

The Case of a Hydroelectric Project

Old and new way to estimate value

Firm Energy 1175 GWH

Spot Market Price (1999) 1.75 ctvs/KWH

NPV = US$ 148.5 mill.IRR = 14%

NPV = US$ 206.1 mill. IRR = 10%

IncomeNPV between US$ 148.5 - 206.1 mill.

LiabilitiesNPV= US$ 105 mill.

Administration of LiabilitiesNPV= US$ 8.4 mill.

O&MNPV= US$ 38.5 mill.

Environmental Liabilities in Estimating Electric Companies’

Worth Estimated Value =

US$ 1 mill. Operational

Profits: US$ 2.85 mill./year

Discount Rate = 12%

Net Present Value = US$ 23.75 mill.

Electric company has significant numer of transformers with PCB’s

Number of Transformers = 22,000

Polluted Transformers = 11,000

Volume of mineral oil in each transformer = 70 liters

Real Cost Effective Value of the Electric Company After Discounting Environmental

Liabilities Net Present Value Income

= US $ 23.75 million NPV for Management of

Liabilities Associated with PCB’s = US $ 16.85 million

Real Value = US $ 6.90 million

Case Study #3:Regional Transportation

Planin Mompox

GoC proposed for Bank financing a major national road link going through the Mompox Region in order to jumpstart development

Complex institutional arrangement: confluence of 5 jurisdictions

Violence: a major focal point for insurgency Mompox: major, most important wetland

ecosystem in the country. Also, municipal capital is a World Heritage Site

Poor communities, isolated in “island” formation, subject annual flooding

Mompox in Colombia

Images of Mompox

SEA was based on:

Stakeholder identification: poor communities, landowners, NGOs, regional and local institutions

Participatory priority-definition exercises at the community level

Identification of inter-linkages: physical-biological-social-economic-cultural

SEA Main Findings

Land transport not a major priority for the local communities

Land tenure identified as a major constraint to development

Frail ecosystems being affected by existing roads and encroachment by landowners

Connection to mainland could endanger cultural resources

Fragmented institutional coordination

SEA Strategic Options

Connect island to mainland? Rural land transport vs.

improvement in river transport? Protecting natural ecosystems

when most land is in private lands?

Flood control vs. flood protection?

SEA Action Plan

Change the road link project to a regional development plan based on land tenure security and community driven development

Design and provide a mechanism and incentives to create protected areas in private lands

Include improved river transportation at the local level, including boat landings

Ensure municipal strengthening to prevent loss of cultural assets

Benefits from SEA in Mompox

Completely changed project strategy and development approach

Identified real priorities for the poor communities in the Region

Identified natural habitat and cultural property risks and needs

Established a precedent in the country for road development and rural transportation policy

Lessons Learned Lessons Learned from the Colombia from the Colombia

Case StudiesCase Studies

Strategic EAs for Policies and Plans Have evolved in Colombia during the

last decade Sectoral and/or regional EAS have been

carried out before defining national and regional priorities.

SEA processes have strengthened constitutional and regulatory frameworks.

SEAs have broadened the analysis of programs, institutions, organizations and linkages between environment, economic growth and poverty alleviation.

SEAs have placed environmental issues at the core of regional planning efforts and sectoral reform design and implementation.

Seas Have Created Additional Opportunities in

Colombia Promotion of interaction and inter-institutional coordination (development agencies and environment)

Have raised awareness about the linkages between economic development and environment

Improved screening of sectoral/regional programs before decisions on implementation are taken

Helped focus discussion on strategic decisions at the policy level rather than project specific impacts

Identification of institutional strengthening needs Increased capacity for community consultation

Yet, SEAs in Colombia Still Face Challenges…

Unsystematic decision making procedures

Program scoping Inter-institutional coordination

mechanisms Information/analytical base Project-specific EIA culture difficult

to break Public consultation mechanisms

Action Plans:Key for implementation of SEA

recommendations

Explore demand-side management options (energy efficiency, micro-metering in water)

Promote fiscal measures: tolls, pollution taxes

Non-structural measures: land use planning, community participation in decision making

Set up continuous improvement processes through strong institutions