Country Environmental Analyses and Infrastructure Juan Carlos Belausteguigoitia Lead Environmental Economist World Bank IADB; November 2007

Contents Need of up-stream analytical work Need of up-stream analytical work Objective Objective Components Components Scope and cost Scope and cost Infrastructure-related CEAs Infrastructure-related CEAs Findings Findings Impact on country dialogue Impact on country dialogue Conclusions Conclusions

Background The traditional investment project approach has been supplemented by new instruments that promote long-term programmatic and policy based lending The traditional investment project approach has been supplemented by new instruments that promote long-term programmatic and policy based lending In this context, analytical work plays an increasingly critical role in the development assistance kit In this context, analytical work plays an increasingly critical role in the development assistance kit

Background Analytical work provides a foundation for the Banks policy dialogue with client countries, the development of country strategies, and the formulation and implementation of effective lending programs Analytical work provides a foundation for the Banks policy dialogue with client countries, the development of country strategies, and the formulation and implementation of effective lending programs It has the additional benefit of providing a framework for closer coordination of the efforts of the development community, as well NGOs, and academic and other institutions. It has the additional benefit of providing a framework for closer coordination of the efforts of the development community, as well NGOs, and academic and other institutions.

Changing Focus of Development Assistance From Emphasis on economic growth Emphasis on economic growth Environment as constraint, add on Environment as constraint, add on Investment in ring fenced projects Investment in ring fenced projectsTo Support to sustainable development Support to sustainable development Environment as part of the development agenda Environment as part of the development agenda Support to broad programs and policies Support to broad programs and policies

Shifting Focus of Environmental Tools From Impact Assessment Impact Assessment Focus on technical solutions Focus on technical solutions Attention to projects Attention to projectsTo Upstream analysis Upstream analysis Focus on policies and institutions Focus on policies and institutions Attention to country capacity Attention to country capacity

Objectives To facilitate mainstreaming by providing systematic guidance on integrating information on and analysis of key environment, development, and poverty links into the country policy dialogue (PRSPs, CASs and DPLs) To facilitate mainstreaming by providing systematic guidance on integrating information on and analysis of key environment, development, and poverty links into the country policy dialogue (PRSPs, CASs and DPLs) To guide environmental assistance and capacity building supported by the Bank or other development partners through an assessment of capacity issues, especially in relation to environmental priorities To guide environmental assistance and capacity building supported by the Bank or other development partners through an assessment of capacity issues, especially in relation to environmental priorities To facilitate a strategic approach to safeguard issues by providing information and analysis about environment-development links at the earliest stages of decision-making To facilitate a strategic approach to safeguard issues by providing information and analysis about environment-development links at the earliest stages of decision-making

Key Building Blocks State of the Environment and Priorities for Development Prioritization of environmental challenges Prioritization of environmental challenges Environmental trends in priority areas Environmental trends in priority areas Poverty-environment linkages Poverty-environment linkages Indicators Indicators Data gaps Data gaps Institutional Capacity Assessment Assessment of policy making, administrative efficiency and implementation capacity Assessment of policy making, administrative efficiency and implementation capacity Methodology and process for priority setting and cross sectoral coordination Methodology and process for priority setting and cross sectoral coordination Environmental expenditure reviews Environmental expenditure reviews Sectoral Analysis Identification of key macro-economic and sector policies with environmental implications Identification of key macro-economic and sector policies with environmental implications Lessons from SEAs, relevant studies and analytical work Lessons from SEAs, relevant studies and analytical work

Scope and Cost CEAs are a flexible tool that can take different forms depending on country context, gaps in available work, budget and so on. Broadly they can be of two types: CEAs are a flexible tool that can take different forms depending on country context, gaps in available work, budget and so on. Broadly they can be of two types: Full CEAs: They cover and undertake deep analysis of all three building blocks (US $300,000 – 500,000) Full CEAs: They cover and undertake deep analysis of all three building blocks (US $300,000 – 500,000) Rapid CEAs: They can be based primarily on desk review and some field analysis. As needed, they can include a snapshot view of two or more building blocks (US $80,000 – 100,000) Rapid CEAs: They can be based primarily on desk review and some field analysis. As needed, they can include a snapshot view of two or more building blocks (US $80,000 – 100,000)

Country Environmental Analyses in Central America Main Objective: Analyze the efficiency and effectiveness of a country's environmental policy and institutional framework to address current and future environmental issues with special emphasis on those arising from trade liberalization and infrastructure expansion (OP 8.6). Main Objective: Analyze the efficiency and effectiveness of a country's environmental policy and institutional framework to address current and future environmental issues with special emphasis on those arising from trade liberalization and infrastructure expansion (OP 8.6). Other Objectives: Provide a foundation for the Banks policy dialogue with client countries, and facilitate the coordination among development partners. Other Objectives: Provide a foundation for the Banks policy dialogue with client countries, and facilitate the coordination among development partners. CEAs in CA: El Salvador and Guatemala CEAs in CA: El Salvador and Guatemala In process: Honduras and Panama In process: Honduras and Panama Programmed: Nicaragua Programmed: Nicaragua

Economic Growth & Infrastructure

Main Findings Environmental Impact Assessment (EIA) is the management tool used to address the environmental impacts of infrastructure works in CA. Environmental Impact Assessment (EIA) is the management tool used to address the environmental impacts of infrastructure works in CA.

The systems are over-burdened and backlogs are common. The systems are over-burdened and backlogs are common. Two lines of action Two lines of action Improve the EIA process (re-categorization; decentralization; on-line filing and follow-up; guidelines) Improve the EIA process (re-categorization; decentralization; on-line filing and follow-up; guidelines) Complement the EIA process with other management instruments (standards; strategic assessments; and zoning) Complement the EIA process with other management instruments (standards; strategic assessments; and zoning)

Main findings 1.Disconnect between environmental priorities and policies 2.Lack of policy coordination 3.Non-credible enforcement

Impact on Country Dialogue (El Salvador) Enrich existing DPL Enrich existing DPL Introduction of new policy instruments (regional development SEA) Introduction of new policy instruments (regional development SEA) Mainstreaming Mainstreaming Improvement of licensing and other management instruments Improvement of licensing and other management instruments

EIA for Roads Contract of Mitigation Measures (CMM) between SOPTRAVI and SERNA for cat. 3 projects – too general, not project specific & with many ways to avoid compliance Contract of Mitigation Measures (CMM) between SOPTRAVI and SERNA for cat. 3 projects – too general, not project specific & with many ways to avoid compliance Recommendations: Recommendations: Include technical environmental specifications in CMM Include technical environmental specifications in CMM Improve enforcement & implementation capacity Improve enforcement & implementation capacity Strengthen environmental supervision teams; include an environmental controller (Fiscal Medioambiental) Strengthen environmental supervision teams; include an environmental controller (Fiscal Medioambiental) Improve staff continuity in Environmental Management Units (EMUs) – increase staffing, knowledge sharing (e.g., library of good practices, lessons learnt, thematic maps) Improve staff continuity in Environmental Management Units (EMUs) – increase staffing, knowledge sharing (e.g., library of good practices, lessons learnt, thematic maps) Include sanctions for partial or total noncompliance in CMM Include sanctions for partial or total noncompliance in CMM Need for Strategic Environmental Assessment to consider alternative investment options & cumulative impacts Need for Strategic Environmental Assessment to consider alternative investment options & cumulative impacts

SEA & Hydropower Infrastructure Need strategic planning to optimize hydropower investments and minimize negative social and environmental impacts (also consider dams potential for leisure, water supply…) Need strategic planning to optimize hydropower investments and minimize negative social and environmental impacts (also consider dams potential for leisure, water supply…) Set up an inventory with detailed environmental data for hydropower projects Set up an inventory with detailed environmental data for hydropower projects Create a methodology to rank alternative projects taking long term social & environmental impacts into account Create a methodology to rank alternative projects taking long term social & environmental impacts into account Kendung Ombo project (Indonesia): displaced 29,000 people; generated only 30Mw Kendung Ombo project (Indonesia): displaced 29,000 people; generated only 30Mw Brokopondo Dam (Suriname): flooded 16,000 ha of tropical rainforest & created serious water quality problems; generated 30Mw Brokopondo Dam (Suriname): flooded 16,000 ha of tropical rainforest & created serious water quality problems; generated 30Mw Churchill Falls (Canada): 665,000 ha to create a reservoir; generated 5,225; no population displacement Churchill Falls (Canada): 665,000 ha to create a reservoir; generated 5,225; no population displacement Stakeholder involvement through (i) Monitoring & Evaluation Plans; (ii) Adaptation Plans; (iii) Indigenous Peoples Development Plans Stakeholder involvement through (i) Monitoring & Evaluation Plans; (ii) Adaptation Plans; (iii) Indigenous Peoples Development Plans

Conclusions Infrastructure deficit Infrastructure deficit Inadequateness of current environmental management tools (EIA) Inadequateness of current environmental management tools (EIA) Need to improve EIA process and to use other management tools Need to improve EIA process and to use other management tools Strategic assessments (regional or sectoral) offer good way to balance infrastructure needs and environmental quality Strategic assessments (regional or sectoral) offer good way to balance infrastructure needs and environmental quality