International Rivers Comments on ADB Draft Environment Policy Working Paper, August 2001

International Rivers submitted the following answers to the questionnaire circulated by ADB to solicit comments on the Draft Environment Policy Working Paper.

1. What were you pleased to see included in the Working Paper? What did you like?

International Rivers is pleased to see that the ADB is adopting an environmental policy to guide its operations and its policy dialogue with member countries. The document contains many commendable principles. We would also like to commend the ADB on the process of consulting a wide range of stakeholders in developing this policy, and we hope that these comments will be taken into consideration when rewriting the policy.

International Rivers recommends that the revised version of the Policy be made public at least 30 days before Board discussion. We would like to see evidence that comments have been taken into consideration, or where comments have not been incorporated, we would like to see explanations of why not.

2. What did you read in the Working Paper that concerned you? Please explain.

Overall, the policy does not appear to contain clear policy guidelines or stipulations, and therefore it is unclear how the statements in the policy will be translated into operational policies.

Furthermore, the Environment Policy makes no mention of the World Commission on Dams guidelines. The ADB has committed to implementing the recommendations of the WCD - see letter from President Chino to Secretary-General of the WCD, Kadar Asmal, dated December 22, 2001, in which President Chino commits ADB to "re-examine its own procedures, including our environment and social development policies, and determine the extent to which the report's recommendations may necessitate changes in these procedures." It is therefore puzzling to see a draft of the Environment Policy that does not even mention the WCD. Below I have included suggestions for parts of the WCD that should be incorporated into ADB's Environment Policy.

Environmental Impact Assessment Guidelines
The current ADB Operational Procedure on environmental assessment is very weak, contains no provisions for public participation, and has no clear statement on the purpose of environmental assessment. It needs revision.

The Environment Policy states that a revision of ADB EA guidelines will be completed by November 2001, yet there is no procedure outlined for how this will take place. There should be clearer goals outlined in the environmental policy that will govern the revision of ADB's EA guidelines. Furthermore, the Environment Policy should be finalized and approved before the EA guidelines are revised and prepared.

The WCD found that "EIA consists mostly of measures to compensate or mitigate the planned impacts and render them acceptable when the decision to proceed has already been taken."

"The WCD cites the ADB-funded Theun-Hinboun hydropower project as an example of a project where the EIA failed to influence decision-making because an acceptable EIA was completed one year after construction began (see p.183). The WCD recognizes that "the quality of assessments and their ability to genuinely influence outcomes is still under-developed. A huge political, technical and financial investment in the project has often already been made before the EIA is launched. EIAs are also often done with inadequate baseline data on demographic trends, socio-cultural systems and ecosystem functioning [which] leads to unsatisfactory outcomes."

The WCD recommends a new approach to EIA. Calling it "Strategic Impact Assessment", the WCD recommends moving this up into the initial phases of planning and options assessment. According to WCD, SA is a "broad assessment covering entire sectors, policies and programmes, and ensures that environmental, social, health and cultural implications of all options are considered at an early stage in planning."

The current ADB Environment Policy incorporates the concept of strategic environmental assessment into its evaluation of country strategies and programs. This is commendable. However, this concept should be broadened beyond just environmental concerns to also include social, health and cultural implications of all options, as recommended by the WCD (see p.282 of the WCD report for further details).

According to the WCD, the goals of SA include:

Recognizing the rights of stakeholders and assessing the risks;

• Incorporating environmental and social criteria in the selection of demand and supply options and projects before major funds to investigate individual projects are committed;
• Screening out inappropriate or unacceptable projects at an early stage;
• Reducing up-front planning and preparation costs for private investors and minimizing the risk that projects encounter serious opposition due to environmental and social considerations; and
• Providing an opportunity to look at the option of improving the performance of existing dams and other assets from economic, technical, social and environmental perspectives. (p.283 WCD Report)

It is recommended that the ADB adopt the concept of Strategic Impact Assessment in place of EIA, and that the Environment Policy includes a clear statement on the goals of SA similar to the points mentioned above. Strategic Impact Assessment should be applied to all ADB loans, include project loans, program loans, sectoral loans, and private sector loans.

Poverty, the environment and development
International Rivers is pleased to see that the ADB now recognizes that development, poverty and the environment are inextricably linked. However, we are concerned about the tendency to blame the poor for environmental problems, such as the statement in paragraph three on page one. What must be recognized is that the poor depend on the environment for their livelihoods, and therefore alterations to the environment or destruction of the environment can and does affect the poor. We would like to see recognition by the ADB that poverty is often caused by large-scale development projects such as dams and roads which result in environmental degradation that affects the livelihoods of communities.

Public participation
The concept of public participation is outlined on pages 6 and 12 of the policy. The ADB has a poor record of participation in devising and developing its projects, and there are few requirements in ADB Operational Policies that affected people be consulted before proceeding with a particular project. The policy principles outlined in the Environment Policy suggest that the public should be involved in the preparation and implementation of projects, and that public participation "may also help to provide and promote public understanding and acceptance". This is not enough. Public participation should occur at all stages of development planning.

The ADB should adopt clear guidelines for public participation in decisions at all levels, and should not just rely on DMC governments to do this. Paragraph 35, p.12 states that the "degree and approach to public participation varies from project to project and is highly dependent on the institutional and legal framework in each DMC". This language is of concern. The ADB should have its own standards for public participation that will govern all lending decisions. It is legitimate for the ADB to apply these standards when reviewing projects, just as it would apply other ADB Operational Policies.

The recommendations of the World Commission on Dams provides a framework for public participation in development decisions. These recommendations have implications for participation in development planning far beyond the energy and water sectors, and should be adopted by the ADB to guide all decision-making.

The WCD recognizes that public acceptance of all key decisions is essential for equitable and sustainable development. Decision-making processes and mechanisms should be used that enable informed participation by all groups of people, and result in the demonstrable acceptance of key decisions. This should be achieved through agreements negotiated in an open and transparent manner conducted in good faith and with the informed participation of all stakeholders. In order to achieve this, full access to information, legal and other support should be made available to affected communities in local languages. Decisions on projects affecting indigenous and tribal peoples should be guided by their free, prior and informed consent, achieved through formal and informal representative bodies.

The ADB's concept of public participation is currently narrowly defined to the project development and implementation stages. The WCD recommends a five-stage process that incorporates public participation at each stage. The first step is to validate the needs for water and energy services. The WCD recommends "an assessment based on participatory methods appropriate to the local context resulting in a clear set of development objectives that guide the subsequent assessment of options." The ADB should insist that all countries undertake a public, participatory needs assessment prior to any decisions on project options being made.

The second stage outlined by the WCD involves selecting alternatives - identifying the preferred development plan from a mix of alternatives. Again the WCD recommends a process whereby stakeholders participate in creating the inventory of options, assessing options, and in negotiating those outcomes that may affect them. At this stage a multi-criteria assessment should be used to screen and select preferred options from the full range of alternatives, the screening of options should be comprehensive and should give social and environmental aspects the same significance as economic and technical factors. The process is laid out in more detail in the WCD report.

Once the preferred options are chosen, there should be meaningful participation in preparatory studies such as baseline, impact and investigative studies for individual projects. (Stage 2A as defined by WCD). The studies and impact assessments should be "open and independent" and a careful analysis must be undertaken to recognize the rights and assess the risks of all stakeholder groups.

Only after these stages have been completed will project preparation take place. Stakeholders should participate in the project design and the negotiation of outcomes that affect them, and indigenous and tribal peoples should give their free, prior and informed consent to the project as designed. The requirement for free, prior and informed consent gives indigenous and tribal communities - the groups most seriously affected by development projects with the least power to safeguard their interests - the power to consent to projects or to negotiate the conditions under which they can proceed. The effective implementation of this practice marks a significant step forward in recognizing the rights of indigenous and tribal peoples, ensuring their genuine participation in decision-making and securing their long-term benefits.

The ADB's current definition of public participation leaves out the first two crucial stages of assessing needs, identifying options and undertaking investigative studies as identified by the WCD. These first two stages of public participation should be incorporated into the ADB's Environment Policy to establish a clear framework for developing projects in a participatory manner.

Therefore, it is recommended that the ADB incorporate the following policy principles into its Environment Policy. These principles have been adapted from the WCD's strategic priorities and criteria and guidelines.

1. All stakeholders whose rights may be affected, and all stakeholders who have risks imposed on them involuntarily, should be included in decision-making on development projects.

2. Access to information, legal and other support is available to all stakeholders, particularly indigenous and tribal peoples, women and other vulnerable groups, to enable their informed participation in decision-making processes. Information should be made available in local languages in a timely manner.

3. Demonstrable public acceptance of all key decisions is achieved through agreements negotiated in an open and transparent process conducted in good faith and with the informed participation of all stakeholders.

4. Decisions on projects affecting indigenous and tribal peoples are guided by their free, prior and informed consent achieved through formal and informal representative bodies.

5. Development needs and objectives are clearly formulated through an open and participatory process before the identification and assessment of options for development.

6. Planning approaches that take into account the full range of development objectives are used to assess all policy, institutional, management, and technical options before the decision is made to proceed with any program or project. Stakeholders should participate in creating the inventory of options, assessing options, and in negotiating those outcomes that may affect them.

7. Social and environmental aspects are given the same significance as technical, economic and financial factors in assessing options.

8. Stakeholders participate in baseline, impact and investigative studies such as pre-feasibility and feasibility studies and environmental impact assessments, and these studies are open and independent.

Access to proceedings for redress of environmental problems

It is commendable that the ADB recognizes that access to proceedings for redress of environmental problems is a sine-qua-non of environmental governance. However, the ADB refers only to the Bank's Inspection Function, and recommends that the DMCs institutionalize similar arrangements. The WCD recommends that legally binding mitigation, resettlement and development entitlements should be negotiated with affected people that are enforceable through legal means.

The ADB should insist that legally binding mitigation, resettlement and development agreements with affected people are in place before funding any project. To this end, it is recommended that the following policy principles be adopted by the ADB:

1. All recognized adversely affected people negotiate mutually agreed, formal and legally enforceable mitigation, resettlement and development entitlements. Accountability of responsible parties to agreed mitigation, resettlement and development provisions is ensured through legal means, such as contracts, and through accessible legal recourse at national and international levels.

2. Adversely affected people are recognized as first among the beneficiaries of the project, and their livelihoods should be improved as a result of the project. Mutually agreed and legally protected benefit sharing mechanisms are negotiated to ensure implementation.

Environmental Assessment for Program Loans
While it is heartening to see that the ADB requires that "the environmental impacts of policy and institutional covenants of program loans be evaluated", International Rivers is concerned that the Environment Policy does not mandate full-scale impact assessments for program loans. Program loans have potentially serious social and environmental impacts, sometimes more serious than project loans. For this reason, the ADB should require all program loans to be subjected to a full strategic impact assessment with public participation prior to any decision.

Monitoring and Evaluation
The section on monitoring and evaluation on p.13 is very weak, with only one vague sentence. This section needs to be expanded and clear guidelines for monitoring and evaluation need to be established. Appendix 8 reproduces the recommendations of the ADB's Study on Environmental Compliance During Project Implementation, yet there is no reference to any of these recommendations in the Environment Policy. These recommendations should be incorporated into the monitoring and evaluation section.

Specifically, the policy should include the following provisions:

A detailed review of the environmental aspects of Environment Category A projects should take place at least once a year to ensure that the borrower is implementing all the environmental management measures and acting in compliance with government and ADB regulations and guidelines. The review team should include a visit to the project site and interviews with affected people, and should have social and environmental experts on the team. The review report should be made publicly available. If the environmental management measures are not being complied with, all loan disbursements should be halted until such time as they are in compliance.

More specific, explicit, and substantive covenants on social and environmental aspects should be included in Loan Agreements. The policy should address who in the Bank is responsible for Environmental Policy compliance and what the consequences are for non-compliance.

Accountability of ADB
The ADB has an obligation to ensure that outstanding social issues, even for completed projects, are resolved. There are no provisions in the policy on how the Bank will deal with social and environmental problems not identified in the project preparation stage and for which no mitigation plan exists. The ADB should ensure that all people whose livelihoods have been negatively impacted by ADB-funded project or programs have their livelihoods restored. There should be a clear statement in the policy to this effect, and procedures for how to resolve outstanding social and environmental issues.